0001326160duk:DukeEnergyFloridaMemberduk:SpentNuclearFuelMattersMember2018-06-182018-06-18





UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ý☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal period ended December 31, 20182020 or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to________
Commission
file number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number
IRS Employer
Identification No.
duk-20201231_g1.jpg
1-32853
DUKE ENERGY CORPORATION
(a Delaware corporation)
550 South Tryon Street
Charlotte, NC
20-2777218
(a Delaware corporation)
550 South Tryon Street
Charlotte, North Carolina 28202-1803
704-382-3853
20-2777218
Commission file number1-4928Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification NumberCommission file numberRegistrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
1-4928
DUKE ENERGY CAROLINAS, LLC
56-0205520
(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.
56-2155481
(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
56-0165465
(a North Carolina limited liability company)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-0165465
1-3543
1-3274DUKE ENERGY FLORIDA, LLC59-0247770
(a Florida limited liability company)
299 First Avenue North
St. Petersburg, Florida 33701
704-382-3853
1-1232DUKE ENERGY OHIO, INC.31-0240030
(an Ohio corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
704-382-3853
1-3543DUKE ENERGY INDIANA, LLC35-0594457
(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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Registrant1-6196PIEDMONT NATURAL GAS COMPANY, INC.Title of each class
Name of each exchange on
which registered
Duke Energy Corporation
(Duke Energy)
Common Stock, $0.001 par valueNew York Stock Exchange LLC
Duke Energy5.125% Junior Subordinated Debentures due January 15, 2073New York Stock Exchange LLC
Duke Energy5.625% Junior Subordinated Debentures due September 15, 2078New York Stock Exchange LLC56-0556998

(a North Carolina corporation)
4720 Piedmont Row Drive
Charlotte, North Carolina 28210
704-364-3120



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

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ¨☐ No x☒ (Response applicable to all registrants.)
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ (Only applicable to Duke Energy)
Indicate by check mark whether Duke Energy is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer xAccelerated filer Filer ☒ Accelerated Filer ¨ Non-accelerated filer ¨Filer ☐ Smaller reporting company ¨Reporting Company ☐ Emerging growth company ¨Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether each of Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ¨Accelerated filer Filer ¨ Accelerated Filer ¨ Non-accelerated filer xFiler ☒ Smaller reporting company ¨Reporting Company ☐ Emerging growth company ¨Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7252(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether each of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x
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
Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2020.$58,688,204,289 
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, 2021.768,663,580 
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Duke Energy definitive proxy statement for the 20192021 Annual Meeting of the Shareholders or an amendment to this Annual Report are incorporated by reference into PART III, Items 10, 11 and 13 hereof.
This combined Form 10-K is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K and are, therefore, filing this Form 10-K with the reduced disclosure format specified in General Instructions I(2) of Form 10-K. 








TABLE OF CONTENTS


TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED December 31, 20182020
 Item 
Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 
GLOSSARY OF TERMS 
PART I. 
1.
9
DUKE ENERGY
9
GENERAL
9
BUSINESS SEGMENTS
9
EMPLOYEES
21
EXECUTIVE OFFICERS
23
ENVIRONMENTAL MATTERS
23
DUKE ENERGY CAROLINAS
24
PROGRESS ENERGY
24
DUKE ENERGY PROGRESS
24
DUKE ENERGY FLORIDA
24
DUKE ENERGY OHIO
25
DUKE ENERGY INDIANA
25
PIEDMONT
25
1A.
25
1B.
34
2.
35
3.
40
4.
40
PART II. 
5.
41
6.
41
7.
42
7A.
74
8.
75
9.
243
9A.
243
PART III. 
10.
245
11.
245
12.
245
13.
246
14.
246
PART IV. 
15.
247
 EXHIBIT INDEX
E-1
 
E-2

 Item 
 Page
   
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 
   
GLOSSARY OF TERMS 
   
PART I.  
1.
BUSINESS
9
 
DUKE ENERGY
9
 
GENERAL
9
 
BUSINESS SEGMENTS
9
 
EMPLOYEES
21
 
EXECUTIVE OFFICERS
22
 
ENVIRONMENTAL MATTERS
22
 
DUKE ENERGY CAROLINAS
23
 
PROGRESS ENERGY
23
 
DUKE ENERGY PROGRESS
23
 
DUKE ENERGY FLORIDA
23
 
DUKE ENERGY OHIO
24
 
DUKE ENERGY INDIANA
24
 PIEDMONT
24
   
1A.
RISK FACTORS
24
   
1B.
UNRESOLVED STAFF COMMENTS
32
   
2.
PROPERTIES
33
   
3.
LEGAL PROCEEDINGS
37
   
4.
MINE SAFETY DISCLOSURES
37
   
PART II.  
5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
38
   
6.
SELECTED FINANCIAL DATA
39
   
7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
40
   
7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
83
   
8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
84
   
9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
259
   
9A.
CONTROLS AND PROCEDURES
260
   
PART III.  
10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
262
   
11.
EXECUTIVE COMPENSATION
262
   
12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
262
   
13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
263
   
14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
263
   
PART IV.  
15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
264
 EXHIBIT INDEX
E-1
 
SIGNATURES
E-2







FORWARD LOOKING STATEMENTS


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:
◦The impact of the COVID-19 pandemic;
◦State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
◦The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
◦The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
◦The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
◦Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
◦Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;
◦Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;
◦Advancements in technology;
◦Additional competition in electric and natural gas markets and continued industry consolidation;
◦The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
◦Changing customer expectations and demands including heightened emphasis on environmental, social and governance concerns;
◦The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the United States electric grid or generating resources;
◦Operational interruptions to our natural gas distribution and transmission activities;
◦The availability of adequate interstate pipeline transportation capacity and natural gas supply;
◦The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
◦The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
◦The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
◦The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions and general market and economic conditions;
◦Credit ratings of the Duke Energy Registrants may be different from what is expected;
◦Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
◦Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
◦Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
◦The ability to control operation and maintenance costs;
◦The level of creditworthiness of counterparties to transactions;
◦The ability to obtain adequate insurance at acceptable costs;




◦State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
◦The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
◦The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
◦The costs of decommissioning Crystal River Unit 3 and other nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
◦Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
◦Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;
◦Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;
◦Advancements in technology;
◦Additional competition in electric and natural gas markets and continued industry consolidation;
◦The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
◦The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources;
◦The ability to obtain the necessary permits and approvals and to complete necessary or desirable pipeline expansion or infrastructure projects in our natural gas business;
◦Operational interruptions to our natural gas distribution and transmission activities;
◦The availability of adequate interstate pipeline transportation capacity and natural gas supply;
◦The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
◦The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
◦The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
◦The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions and general market and economic conditions;
◦Credit ratings of the Duke Energy Registrants may be different from what is expected;
◦Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
◦Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
◦Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
◦The ability to control operation and maintenance costs;
◦The level of creditworthiness of counterparties to transactions;
◦Employee workforce factors, including the potential inability to attract and retain key personnel;




FORWARD LOOKING STATEMENTS


◦Employee workforce factors, including the potential inability to attract and retain key personnel;
◦The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
◦The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;
◦The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;
◦The impact of U.S. tax legislation to our financial condition, results of operations or cash flows and our credit ratings;
◦The impacts from potential impairments of goodwill or equity method investment carrying values; and
◦The ability to implement our business strategy, including enhancing existing technology systems.
◦The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
◦The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;
◦The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;
◦The impact of United States tax legislation to our financial condition, results of operations or cash flows and our credit ratings;
◦The impacts from potential impairments of goodwill or equity method investment carrying values; and
◦The ability to implement our business strategy, including enhancing existing technology systems.
Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.






GLOSSARY OF TERMS


Glossary of Terms
The following terms or acronyms used in this Form 10-K are defined below:
Term or AcronymDefinition
Term or AcronymDefinition
2013 SettlementRevised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida OPCOffice of Public Counsel and other customer advocates
the 2015 PlanDuke Energy Corporation 2015 Long-Term Incentive Plan
2017 SettlementSecond Revised and Restated Settlement Agreement in 2017 among Duke Energy Florida, the Florida OPCOffice of Public Counsel and other customer advocates, which replaces and supplants the 2013 Settlement
ACEAffordable Clean Energy
ACPAtlantic Coast Pipeline, LLC, a limited liability company owned by Dominion, Duke Energy and Southern Company Gas
ACP pipelineThe approximately 600-mile proposedcanceled interstate natural gas pipeline
AFUDCAllowance for funds used during construction
AFSAvailable for Sale
the AgentsAMIWells Fargo Securities, LLC, Citigroup Global Market Inc., J.P. Morgan Securities, LLC
ALJAdministrative Law Judge
AMIAdvanced Metering Infrastructure
AMTAlternative Minimum Tax
AOCIAccumulated Other Comprehensive Income (Loss)
AROAsset Retirement Obligation
ASRATMAccelerated Stock Repurchase ProgramAt-the-market
ATMAt-the-market
Audit CommitteeAudit Committee of the Board of Directors
BarclaysBeckjordBarclays Capital Inc.
BCWFBenton County Wind Farm, LLC
BeckjordBeckjord Generating Station
Belews CreekBelews Creek Steam Station
BisonBison Insurance Company Limited
Board of DirectorsDuke Energy Board of Directors
BrunswickBrunswick Nuclear Plant
CAACardinalClean Air Act
CardinalCardinal Pipeline Company, LLC
CatawbaCatawba Nuclear Station
CCCombined Cycle
CCRCoal Combustion Residuals
CCSCinergyCarbon Capture and Storage
CECPCNCertificate of Environmental Compatibility and Public Convenience and Necessity
CEOChief Executive Officer
CertainTeedCertainTeed Gypsum NC, Inc.
CinergyCinergy Corp. (collectively with its subsidiaries)
Citrus County CCCitrus County Combined Cycle Facility
CO2
Carbon Dioxide
Coal Ash ActNorth Carolina Coal Ash Management Act of 2014
COLCombined Operating License
the CompanyDuke Energy Corporation and its subsidiaries



GLOSSARY OF TERMSConstitution


Constitution Pipeline Company, LLC
CPCN
ConstitutionConstitution Pipeline Company, LLC
COSOCommittee of Sponsoring Organizations of the Treadway Commission
CPCNCertificate of Public Convenience and Necessity
CPPCRCClean Power Plan
CRCCinergy Receivables Company LLC
Crystal River Unit 3Crystal River Unit 3 Nuclear Plant
CSACTComprehensive Site AssessmentCombustion Turbine
CSAPRCWACross-State Air Pollution Rule
CTCombustion Turbine
CTGChina Three Gorges (Luxembourg) Energy S.à.r.l.
CWAClean Water Act
DATCDuke-American Transmission Co.Company, LLC
D.C. Circuit CourtU.S. Court of Appeals for the District of Columbia


DCIGLOSSARY OF TERMSDistribution Capital Investment
DEFPFDuke Energy Florida Project Finance, LLC
DEFRDuke Energy Florida Receivables, LLC
DeloitteDeloitte & Touche LLP, and the member firms of Deloitte Touche Tohmatsu and their respective affiliates
DEPRDuke Energy Progress Receivables, LLC
DERFDuke Energy Receivables Finance Company, LLC
DHHSDOENorth Carolina Department of Health and Human Services
Directors' Savings PlanDuke Energy Corporation Directors' Savings Plan
DOEU.S. Department of Energy
DOJDominionDepartment of JusticeDominion Energy, Inc.
DominionDthDominion ResourcesDekatherms
DRIPDividend Reinvestment Program
DSMDemand Side Management
Duke EnergyDuke Energy Corporation (collectively with its subsidiaries)
Duke Energy CarolinasDuke Energy Carolinas, LLC
Duke Energy FloridaDuke Energy Florida, LLC
Duke Energy IndianaDuke Energy Indiana, LLC
Duke Energy KentuckyDuke Energy Kentucky, Inc.
Duke Energy OhioDuke Energy Ohio, Inc.
Duke Energy ProgressDuke Energy Progress, LLC
Duke Energy RegistrantsDuke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
East BendEast Bend Generating Station
the EDAEquity Distribution Agreement
EEEnergy efficiency
EGUElectric Generating Units
ELGEffluent Limitations Guidelines
EPAU.S. Environmental Protection Agency
EPCEngineering, Procurement and Construction agreement
EPSEarnings Per Share
ESPElectric Security Plan



GLOSSARY OF TERMSEast Bend


East Bend Generating Station
EEEnergy efficiency
ETR
EPAU.S. Environmental Protection Agency
EPCEngineering, Procurement and Construction agreement
EPSEarnings Per Share
ETREffective tax rate
Exchange ActSecurities Exchange Act of 1934
Executive Savings PlanFASBDuke Energy Corporation Executive Savings Plan
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
FESFirstEnergy Solutions Corp.
FitchFitch Ratings, Inc.
FirstEnergyFirstEnergy Corp.
Florida OPCFlorida Office of Public Counsel
Form S-3Registration statement
FP&LFPSCFlorida Power & Light Company
FPSCFlorida Public Service Commission
FTRFinancial transmission rights
FluorFV-NIFluor Enterprises, Inc.
FV-NIFair value through net income
GAAPGenerally Accepted Accounting Principles in the United States
GAAP Reported EarningsNet Income Attributable to Duke Energy Corporation
GAAP Reported EPSDilutedBasic EPS AttributableAvailable to Duke Energy Corporation common stockholders
GHGGreenhouse Gas
GWhGICGigawatt-hoursGIC Private Limited
GWhGigawatt-hour
Hardy StorageHardy Storage Company, LLC
HarrisShearon Harris Nuclear Plant
HinesHLBVHines Energy ComplexHypothetical Liquidation at Book Value
I SquaredIGCCISQ Enerlam Aggregator, L.P. and Enerlam (UK) Holding Ltd.
IBNRIncurred but not yet reported
ICPAInter-Company Power Agreement
IGCCIntegrated Gasification Combined Cycle


GLOSSARY OF TERMS
IMPAIndiana Municipal Power Agency
IMRIntegrity Management Rider
International Disposal GroupIRPDuke Energy's international business, excluding National Methanol Company
IRPIntegrated Resource Plans
IRSInternal Revenue Service
ISFSIISOIndependent Spent Fuel Storage Installation
ISOIndependent System Operator
ITCInvestment Tax Credit
IURCIndiana Utility Regulatory Commission
Investment TrustsGrantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana
JDAJoint Dispatch Agreement
KO TransmissionKO Transmission Company
KPSCKentucky Public Service Commission
kVKilovolt
LDCLocal Distribution Company
Lee Nuclear StationWilliam States Lee III Nuclear Station
LevyDuke Energy Florida’s proposed nuclear plant in Levy County, Florida



GLOSSARY OF TERMSKO Transmission


KO Transmission Company
LIBORKPSCKentucky Public Service Commission
LIBORLondon Interbank Offered Rate
LLCLimited Liability Company
Master TrustMcGuireDuke Energy Corporation Master Retirement Trust
McGuireMcGuire Nuclear Station
Merger AgreementMGPThe Agreement and Plan of Merger between Duke Energy and Piedmont
MGPManufactured gas plant
Midwest Generation Disposal GroupMISODuke Energy Ohio’s nonregulated Midwest generation business and Duke Energy Retail Sales, LLC
MISOMidcontinent Independent System Operator, Inc.
MMBtuMillion British Thermal Unit
MPPMTBEMoney Purchase Pension
Moody’sMoody’s Investors Service, Inc.
MTBEMethyl tertiary butyl ether
MTEPMWMISO Transmission Expansion PlanningMegawatt
MWMWhMegawattMegawatt-hour
MVPMulti Value Projects
MWhMegawatt-hour
NAAQSNational Ambient Air Quality Standards
NAVNet asset value
NAWNorth Allegheny Wind, LLC
NCDEQNorth Carolina Department of Environmental Quality (formerly the North Carolina Department of Environment and Natural Resources)
NCEMCNorth Carolina Electric Membership Corporation
NCEMPANorth Carolina Eastern Municipal Power Agency
NCRSNCUCNuclear Power Plant Cost Recovery Statutes
NCUCNorth Carolina Utilities Commission
NDTFNuclear decommissioning trust funds
NEILNuclear Electric Insurance Limited
New Source ReviewNew Source Review (NSR) is a CAAClean Air Act program that requires industrial facilities to install modern pollution control equipment when they are built or when making a change that increases emissions significantly
NYSDECNew York State Department of Environmental Conservation
NMCNational Methanol Company
NOLNet operating loss
NOVNotice of violation
NOx
Nitrogen oxide
NPDESNational Pollutant Discharge Elimination System
NPNSNormal purchase/normal sale
NPRMNotice of Proposed Rulemaking
NRCU.S. Nuclear Regulatory Commission
NSRNew Source Review
NWPANuclear Waste Policy Act of 1982 (as amended)
NYSENew York Stock Exchange
OconeeOconee Nuclear Station
OMBOffice of Management and Budget



GLOSSARY OF TERMSNMC


National Methanol Company
OPEBNOLNet operating loss
NPNSNormal purchase/normal sale
NRCU.S. Nuclear Regulatory Commission
NYSENew York Stock Exchange
OconeeOconee Nuclear Station
OPEBOther Post-Retirement Benefit Obligations
ORSOffice of Regulatory Staff
Osprey acquisitionOTTIDuke Energy Florida's purchase of a Calpine Corporation's 599-MW combined-cycle natural gas plant in Auburndale, FloridaOther-than-temporary impairment
OTTIOVECOther-than-temporary impairment
OVECOhio Valley Electric Corporation
the ParentDuke Energy Corporation holding company
PCAOBPGAPublic Company Accounting Oversight Board
PGAPurchased Gas Adjustments
Philadelphia Utility IndexPHMSAPhiladelphia Sector Index
PHMSAPipeline and Hazardous Materials Safety Administration


PiedmontGLOSSARY OF TERMS
PiedmontPiedmont Natural Gas Company, Inc.
Piedmont Pension AssetsQualified pension plan assets associated with the Retirement Plan of Piedmont
Piedmont Term LoanTerm loan facility with commitments totaling $350M entered in June 2017
Pine NeedlePine Needle LNG Company, LLC
PioneerPioneer Transmission, LLC
PJMPJM Interconnection, LLC
PMPAPiedmont Municipal Power Agency
PPAPISCCPost-in-service carrying costs
PPAPurchase Power Agreement
Progress EnergyProgress Energy, Inc.
PSCSCPublic Service Commission of South Carolina
PTCProduction Tax Credits
PUCOPublic Utilities Commission of Ohio
PUCO OrderPURPAOrder issued by PUCO approving a settlement of Duke Energy Ohio’s natural gas base rate case and authorizing the recovery of certain MGP costs
PURPAPublic Utility Regulatory Policies Act of 1978
QFQualifying Facility
RCRARECResource Conservation and Recovery Act
RECRenewable Energy Certificate
REC SolarREC Solar Corp.
Relative TSRTSR of Duke Energy stock relative to a predefined peer group
RobinsonRobinson Nuclear Plant
RRBAROURoanoke River Basin AssociationRight-of-use
RSURestricted Stock Unit
RTORegional Transmission Organization
SABStaff Accounting Bulletin
Sabal TrailSabal Trail Transmission, LLC
Sabal Trail pipelineSAFSTORSabal Trail Natural Gas Pipeline
SAFSTORA method of decommissioning in which a nuclear facility is placed and maintained in a condition that allows the facility to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use
SECSecurities and Exchange Commission
SEISSupplemental Environmental Impact Statement
SELCSouthern Environmental Law Center
Segment IncomeSpectra CapitalIncome from continuing operations net of income attributable to noncontrolling interests



Spectra Energy Capital, LLC
GLOSSARY OF TERMSS&P


Standard & Poor’s Rating Services
SO2
Sulfur dioxide
SouthStarSouthStar Energy Services, LLC
Spectra CapitalSpectra Energy Capital, LLC
S&PStandard & Poor’s Rating Services
S&P 500Standard & Poor's 500 Stock Index
SSOStandard Service Offer
State utility commissionsNCUC, PSCSC, FPSC, PUCO, IURC, KPSC and TPUC (Collectively)
State electric utility commissionsNCUC, PSCSC, FPSC, PUCO, IURC and KPSC (Collectively)
State gas utility commissionsNCUC, PSCSC, PUCO, TPUC and KPSC (Collectively)
Subsidiary RegistrantsDuke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
SuttonL.V. Sutton Combined Cycle Plant
the Tax ActTax Cuts and Jobs Act
TDSICTPUCTransmission, Distribution and Storage System Improvement Charge
Three Year RevolverDuke Energy (Parent) $1.0 billion revolving credit facility
TPUCTennessee Public Utility Commission
TSCATSRToxic Substances Control Act
TSRTotal shareholder return
U.S.United States
U.S. Court of AppealsVIEU.S. Court of Appeals for the Second Circuit
VEBAVoluntary Employees' Beneficiary Association
VIEVariable Interest Entity
WACCWeighted Average Cost of Capital
WestinghouseWestinghouse Electric Company
WNAWeather normalization adjustment
W.S. Lee CCWilliam States Lee Combined Cycle Facility
WVPAWabash Valley Power Association, Inc.




BUSINESSWVPAWabash Valley Power Association, Inc.






BUSINESS
ITEM 1. BUSINESS
DUKE ENERGY
General
Duke Energy was incorporated on May 3, 2005, and is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants,Subsidiary Registrants, including Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
Piedmont, a North Carolina corporation, is an energy services company whose principal business is the distribution of natural gas to over 1 million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including customers served by municipalities who are Piedmont's sales for resale customers. In October 2016, Duke Energy completed the acquisition of Piedmont. Piedmont's earnings and cash flows are only included in Duke Energy's consolidated results subsequent to the acquisition date. See Note 2 to the Consolidated Financial Statements, "Acquisitions and Dispositions," for additional information regarding the acquisition.
In December 2016, Duke Energy completed an exit of the Latin American market to focus on its domestic regulated business, which was further bolstered by the acquisition of Piedmont. The sale of the International Energy business segment, excluding an equity method investment in NMC, was completed through two transactions including a sale of assets in Brazil to CTG and a sale of Duke Energy's remaining Latin American assets in Peru, Chile, Ecuador, Guatemala, El Salvador and Argentina to I Squared (collectively, the International Disposal Group). See Note 2 to the Consolidated Financial Statements, "Acquisitions and Dispositions," for additional information on the sale of International Energy.
The Duke Energy Registrants electronically file reports with the SEC, including Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to such reports.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at sec.gov. Additionally, information about the Duke Energy Registrants, including reports filed with the SEC, is available through Duke Energy’s website at duke-energy.com. Such reports are accessible at no charge and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC.
Business Segments
Duke Energy's segment structure includes three reportable business segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. Duke Energy's chief operating decision-maker routinely reviews financial information about each of these business segments in deciding how to allocate resources and evaluate the performance of the business. For additional information on each of these business segments, including financial and geographic information, see Note 32 to the Consolidated Financial Statements, “Business Segments.” The following sections describe the business and operations of each of Duke Energy’s business segments, as well as Other.
ELECTRIC UTILITIES AND INFRASTRUCTURE
Electric Utilities and Infrastructure conducts operations primarily through the regulated public utilities of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana and Duke Energy Ohio. Electric Utilities and Infrastructure provides retail electric service through the generation, transmission, distribution and sale of electricity to approximately 7.77.9 million customers within the Southeast and Midwest regions of the U.S. The service territory is approximately 95,00091,000 square miles across six states with a total estimated population of 2425 million people. The operations include electricity sold wholesale to municipalities, electric cooperative utilities and other load-serving entities. Electric Utilities and Infrastructure is also a joint owner in certain electric transmission projects. Electric Utilities and Infrastructure has a 50 percent50% ownership interest in DATC, a partnership with American Transmission Company, formed to design, build and operate transmission infrastructure. DATC owns 72 percent72% of the transmission service rights to Path 15, an 84-mile transmission line in central California. Electric Utilities and Infrastructure also has a 50 percent50% ownership interest in Pioneer, Transmission, LLC, which builds, owns and operates electric transmission facilities in North America. The following map shows the service territory for Electric Utilities and Infrastructure as of December 31, 2018.2020.

9






BUSINESS


duk-20201231_g2.jpg
The electric operations and investments in projects are subject to the rules and regulations of the FERC, the NRC, the NCUC, the PSCSC, the FPSC, the IURC, the PUCO and the KPSC.
The following table represents the distribution of GWh billed sales by customer class for the year ended December 31, 2018.
2020.
Duke
 Duke
 Duke
 Duke
 Duke
DukeDukeDukeDukeDuke
Energy
 Energy
 Energy
 Energy
 Energy
EnergyEnergyEnergyEnergyEnergy
Carolinas
 Progress
 Florida
 Ohio
 Indiana
CarolinasProgressFloridaOhioIndiana
Residential32% 27% 50% 37% 28%Residential33 %27 %51 %38 %30 %
General service32% 23% 37% 38% 25%General service33 %22 %35 %37 %25 %
Industrial24% 15% 7% 23% 31%Industrial23 %16 %7 %23 %31 %
Total retail sales88% 65% 94% 98% 84%Total retail sales89 %65 %93 %98 %86 %
Wholesale and other sales12% 35% 6% 2% 16%Wholesale and other sales11 %35 %7 %2 %14 %
Total sales100% 100% 100% 100% 100%Total sales100 %100 %100 %100 %100 %
The number of residential and general service customers within the Electric Utilities and Infrastructure service territory is expected to increase over time. While economic conditionsSales growth is expected within the service territory remain strong, sales growthbut continues to be influenced by adoption of energy efficiencies and self-generation. Residential sales for 2018increased in 2020 compared to 2017 saw relatively strong2019 due to customer growth despiteand the impact from increasing amountsstay-at-home orders as a result of energy efficiency. However,the COVID-19 pandemic. Meanwhile, sales for general service and industrial customers decreased in 2020 due to the impacts of the COVID-19 pandemic. These trends in residential, general service and industrial sales may continue in the short term but are not expected to be permanent. It is still expected that the continued adoption of more efficient housing and appliances is expected towill have a negative impact on average usage per residential customer over time.
Seasonality and the Impact of Weather
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.

10






BUSINESS


The estimated impact of weather on earnings 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.
Heating-degreeHeating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling-degreeCooling 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-degreeheating degree day and each degree of temperature above the base temperature counts as one cooling-degreecooling degree day.
Competition
Retail
Electric Utilities and Infrastructure’s businesses operate as the sole supplier of electricity within their service territories, with the exception of Ohio, which has a competitive electricity supply market for generation service. Electric Utilities and Infrastructure owns and operates facilities necessary to generate, transmit, distribute and generatesell electricity. Services are priced by state commission approvedcommission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable electricity at fair prices.
In Ohio, Electric Utilities and Infrastructure conducts competitive auctions for electricity supply. The cost of energy purchased through these auctions is recovered from retail customers. Electric Utilities and Infrastructure earns retail margin in Ohio on the transmission and distribution of electricity, but not on the cost of the underlying energy.
Competition in the regulated electric distribution business is primarily from the development and deployment of alternative energy sources including on-site generation from industrial customers and distributed generation, such as private solar, at residential, general service and/or industrial customer sites.
Wholesale
Duke Energy competes with other utilities and merchant generators for bulk power sales, sales to municipalities and cooperatives and wholesale transactions under primarily cost-based contracts approved by FERC. The principal factors in competing for these sales are availability of capacity and power, reliability of service and price. Prices are influenced primarily by market conditions and fuel costs.
Increased competition in the wholesale electric utility industry and the availability of transmission access could affect Electric Utilities and Infrastructure’s load forecasts, plans for power supply and wholesale energy sales and related revenues. Wholesale energy sales will be impacted by the extent to which additional generation is available to sell to the wholesale market and the ability of Electric Utilities and Infrastructure to attract new customers and to retain existing customers.
Energy Capacity and Resources
Electric Utilities and Infrastructure owns approximately 50,88050,807 MW of generation capacity. For additional information on owned generation facilities, see Item 2, “Properties.”

Energy and capacity are also supplied through contracts with other generators and purchased on the open market. Factors that could cause Electric Utilities and Infrastructure to purchase power for its customers may include, but are not limited to, generating plant outages, extreme weather conditions, generation reliability, demand growth and price. Electric Utilities and Infrastructure has interconnections and arrangements with its neighboring utilities to facilitate planning, emergency assistance, sale and purchase of capacity and energy and reliability of power supply.
Electric Utilities and Infrastructure’s generation portfolio is a balanced mix of energy resources having different operating characteristics and fuel sources designed to provide energy at the lowest possible cost to meet its obligation to serve retail customers. All options, including owned generation resources and purchased power opportunities, are continually evaluated on a real-time basis to select and dispatch the lowest-cost resources available to meet system load requirements.

11






BUSINESS


Sources of Electricity
Electric Utilities and Infrastructure relies principally on coal,natural gas, nuclear fuel and natural gascoal for its generation of electricity. The following table lists sources of electricity and fuel costs for the three years ended December 31, 2018.
2020.
Cost of Delivered Fuel per Net
  Cost of Delivered Fuel per NetGeneration by SourceKilowatt-hour Generated (Cents)
Generation by Source Kilowatt-hour Generated (Cents)202020192018202020192018
2018
 2017
 2016
 2018
 2017
 2016
Natural gas and oil(a)
Natural gas and oil(a)
31.3 %29.2 %26.2 %2.55 2.96 3.57 
Nuclear(a)
Nuclear(a)
29.6 %28.6 %26.0 %0.58 0.60 0.50 
Coal(a)
24.4% 27.4% 27.1% 2.82
 2.72
 3.07
Coal(a)
18.1 %21.6 %24.4 %2.99 3.08 2.82 
Nuclear(a)
26.0% 27.8% 27.4% 0.50
 0.69
 0.66
Natural gas and oil(a)
26.2% 23.6% 22.9% 3.57
 2.85
 3.07
All fuels (cost-based on weighted average)(a)
76.6% 78.8% 77.4% 2.29
 2.04
 2.22
All fuels (cost-based on weighted average)(a)
79.0 %79.4 %76.6 %1.91 2.14 2.29 
Hydroelectric and solar(b)
1.3% 0.7% 0.7%      
Hydroelectric and solar(b)
1.9 %1.2 %1.3 %
Total generation77.9% 79.5% 78.1%      Total generation80.9 %80.6 %77.9 %
Purchased power and net interchange22.1% 20.5% 21.9%      Purchased power and net interchange19.1 %19.4 %22.1 %
Total sources of energy100.0% 100.0% 100.0%      Total sources of energy100.0 %100.0 %100.0 %
(a)
(a)    Statistics related to all fuels reflect Electric Utilities and Infrastructure's ownership interest in jointly owned generation facilities.
(b)Generating figures are net of output required to replenish pumped storage facilities during off-peak periods. 
Coal
Electric Utilities and Infrastructure meets its coal demand through a portfolio of long-term purchase contracts and short-term spot market purchase agreements. Large amounts of coal are purchased under long-term contracts with mining operators who mine both underground and at the surface. Electric Utilities and Infrastructure uses spot market purchases to meet coal requirements not met by long-term contracts. Expiration dates for its long-term contracts, which have various price adjustment provisions and market reopeners, range from 2019 to 2021 for Duke Energy Carolinas, Duke Energy Progress and Duke Energy Ohio, 2019 to 2020 for Duke Energy Florida and 2019 to 2025 for Duke Energy Indiana. Electric Utilities and Infrastructure expects to renew these contracts or enter into similar contracts with other suppliers as existing contracts expire, though prices will fluctuate over time as coal markets change. Electric Utilities and Infrastructure has an adequate supply of coal under contract to meet its hedging guidelines regarding projected future consumption. As a result of volatility in natural gas prices and the associated impacts on coal-fired dispatch within the generation fleet, coal inventories will continue to fluctuate. Electric Utilities and Infrastructure continues to actively manage its portfolio and has worked with suppliers to obtain increased flexibility in its coal contracts.
Coal purchased for the Carolinas is primarily produced from mines in Central Appalachia, Northern Appalachia and the Illinois Basin. Coal purchased for Florida is primarily produced from mines in Colorado and the Illinois Basin. Coal purchased for Kentucky is produced from mines along the Ohio River in Illinois, Ohio, West Virginia and Pennsylvania. Coal purchased for Indiana is primarily produced in Indiana and Illinois. The current average sulfur content of coal purchased by Electric Utilities and Infrastructure is between 1.5 percent and 2 percent for Duke Energy Carolinas and Duke Energy Progress, between 1 percent and 3 percent for Duke Energy Florida, between 3 percent and 3.5 percent for Duke Energy Ohio and between 2.5 percent and 3 percent for Duke Energy Indiana. Electric Utilities and Infrastructure's environmental controls,ownership interest in combination with the usejointly owned generation facilities.
(b)    Generating figures are net of SO2 emission allowances, enable Electric Utilities and Infrastructureoutput required to satisfy current SO2 emission limitations for its existing facilities.replenish pumped storage facilities during off-peak periods. 
Nuclear
The industrial processes for producing nuclear generating fuel generally involve the mining and milling of uranium ore to produce uranium concentrates and services to convert, enrich and fabricate fuel assemblies.
Electric Utilities and Infrastructure has contracted for uranium materials and services to fuel its nuclear reactors. Uranium concentrates, conversion services and enrichment services are primarily met through a diversified portfolio of long-term supply contracts. The contracts are diversified by supplier, country of origin and pricing. Electric Utilities and Infrastructure staggers its contracting so that its portfolio of long-term contracts covers the majority of its fuel requirements in the near term and decreasing portions of its fuel requirements over time thereafter. Near-term requirements not met by long-term supply contracts have been and are expected to be fulfilled with spot market purchases. Due to the technical complexities of changing suppliers of fuel fabrication services, Electric Utilities and Infrastructure generally sources these services to a single domestic supplier on a plant-by-plant basis using multiyear contracts.
Electric Utilities and Infrastructure has entered into fuel contracts that cover 100 percent of its uranium concentrates, conversion services and enrichment services requirements through at least 2019 and cover fabrication services requirements for these plants through at least 2027. For future requirements not already covered under long-term contracts, Electric Utilities and Infrastructure believes it will be able to renew contracts as they expire or enter into similar contractual arrangements with other suppliers of nuclear fuel materials and services.
Natural Gas and Fuel Oil
Natural gas and fuel oil supply, transportation and storage for Electric Utilities and Infrastructure’s generation fleet is purchased under standard industry agreements from various suppliers, including Piedmont. Natural gas supply agreements typically provide for a percentage of forecasted burns being procured over time, with varied expiration dates. Electric Utilities and Infrastructure believes it has access to an adequate supply of natural gas and fuel oil for the reasonably foreseeable future.

12



BUSINESS


Electric Utilities and Infrastructure has certain dual-fuel generating facilities that can operate utilizing both natural gas and fuel oil. The cost of Electric Utilities and Infrastructure’s natural gas and fuel oil is fixed price or determined by published market prices as reported in certain industry publications, plus any transportation and freight costs. Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana use derivative instruments to manage a portion of their exposure to price fluctuations for natural gas. For Duke Energy Florida, there is currently an agreed to moratorium with the FPSC on future hedging with the FPSC.of natural gas prices.
Electric Utilities and Infrastructure has firm interstate and intrastate natural gas transportation agreements and storage agreements in place to support generation needed for load requirements. Electric Utilities and Infrastructure may purchase additional shorter-term natural gas transportation and utilize natural gas interruptible transportation agreements to support generation needed for load requirements. The Electric Utilities and Infrastructure natural gas plants are served by various supply zones and multiple pipelines.
Nuclear
The industrial processes for producing nuclear generating fuel generally involve the mining and milling of uranium ore to produce uranium concentrates and services to convert, enrich and fabricate fuel assemblies.
Electric Utilities and Infrastructure has contracted for uranium materials and services to fuel its nuclear reactors. Uranium concentrates, conversion services and enrichment services are primarily met through a diversified portfolio of long-term supply contracts. The contracts are diversified by supplier, country of origin and pricing. Electric Utilities and Infrastructure staggers its contracting so that its portfolio of long-term contracts covers the majority of its fuel requirements in the near term and decreasing portions of its fuel requirements over time thereafter. Near-term requirements not met by long-term supply contracts have been and are expected to be fulfilled with spot market purchases. Due to the technical complexities of changing suppliers of fuel fabrication services, Electric Utilities and Infrastructure generally source these services to a single domestic supplier on a plant-by-plant basis using multiyear contracts.
Electric Utilities and Infrastructure has entered into fuel contracts that cover 100% of its uranium concentrates and conversion services through at least 2021, 100% of its enrichment services through at least 2022, and 100% of its fabrication services requirements for these plants through at least 2027. For future requirements not already covered under long-term contracts, Electric Utilities and Infrastructure believes it will be able to renew contracts as they expire or enter into similar contractual arrangements with other suppliers of nuclear fuel materials and services.
Coal
Electric Utilities and Infrastructure meets its coal demand through a portfolio of long-term purchase contracts and short-term spot market purchase agreements. Large amounts of coal are purchased under long-term contracts with mining operators who mine both underground and at the surface. Electric Utilities and Infrastructure uses spot market purchases to meet coal requirements not met by long-term contracts. Expiration dates for its long-term contracts, which may have various price adjustment provisions and market reopeners, range from 2021 to 2023 for Duke Energy Carolinas and Duke Energy Progress and 2021 to 2025 for Duke Energy Indiana. Expiration dates for Duke Energy Florida and Duke Energy Ohio are in 2021. Electric Utilities and Infrastructure expects to renew these contracts or enter into similar contracts with other suppliers as existing contracts expire, though prices will fluctuate over time as coal markets change. Electric Utilities and Infrastructure has an adequate supply of coal under contract to meet its risk management guidelines regarding projected future consumption. As a result of volatility in natural gas prices and the associated impacts on coal-fired dispatch within the generation fleet, coal inventories will continue to fluctuate. Electric Utilities and Infrastructure continues to actively manage its portfolio and has worked with suppliers to obtain increased flexibility in its coal contracts.
12



BUSINESS
Coal purchased for the Carolinas is primarily produced from mines in Central Appalachia, Northern Appalachia and the Illinois Basin. Coal purchased for Florida is primarily produced from mines in the Illinois Basin. Coal purchased for Kentucky is produced from mines along the Ohio River in Illinois, Ohio, West Virginia and Pennsylvania. Coal purchased for Indiana is primarily produced in Indiana and Illinois. There are adequate domestic coal reserves to serve Electric Utilities and Infrastructure's coal generation needs through end of life. The current average sulfur content of coal purchased by Electric Utilities and Infrastructure is between 1.5% and 2% for Duke Energy Carolinas and Duke Energy Progress, and between 2.5% and 3% for Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana. Electric Utilities and Infrastructure's environmental controls, in combination with the use of sulfur dioxide (SO2) emission allowances, enable Electric Utilities and Infrastructure to satisfy current SO2 emission limitations for its existing facilities.
Purchased Power
Electric Utilities and Infrastructure purchases a portion of its capacity and system requirements through purchase obligations, leases and purchase capacity contracts. Electric Utilities and Infrastructure believes it can obtain adequate purchased power capacity to meet future system load needs. However, during periods of high demand, the price and availability of purchased power may be significantly affected.
The following table summarizes purchased power for the previous three years:
202020192018
Purchase obligations and leases (in millions of MWh)(a)
32.7 34.8 21.3 
Purchase capacity under contract (in MW)(b)
4,716 4,238 4,025 
 2018
 2017
 2016
Purchase obligations and leases (in millions of MWh)(a)
21.3
 17.7
 18.0
Purchase capacity under contract (in MW)(b)
4,025
 4,028
 4,588
(a)    Represents approximately 13% of total system requirements for 2020, 14% for 2019 and 7% for 2018.
(a)Represents approximately 7 percent of total system requirements for 2018, 2017 and 2016.
(b)These agreements include approximately 412 MW of firm capacity under contract by Duke Energy Florida with QFs.
(b)    For 2020, 2019 and 2018, these agreements include approximately 412 MW of firm capacity under contract by Duke Energy Florida with QFs.
Inventory
Electric Utilities and Infrastructure must maintain an adequate stock of fuel and materials and supplies in order to ensure continuous operation of generating facilities and reliable delivery to customers. As of December 31, 2018,2020, the inventory balance for Electric Utilities and Infrastructure was approximately $2.9$3 billion. For additional information on inventory, see Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”
Ash Basin Management
During 2015, EPA issued regulations were enacted related to the management of CCR from power plants. These regulations classify CCR as nonhazardous waste under the RCRAResource Conservation and Recovery Act (RCRA) and apply to electric generating sites with new and existing landfills and new and existing surface impoundments structural fills and CCR piles, and establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments (ash basins or impoundments) will continue to be independently regulated by existing state laws, regulations and permits, includingsuch as the Coal Ash Management Act in North Carolina.
Electric Utilities and Infrastructure has and will periodically submit to applicable authorities required site-specific coal ash impoundment remediation or closure plans. TheseClosure plans and all associated permits must be approvedwill receive necessary approvals before any work can begin. Closure activities have begun in all of Duke Energy's jurisdictions. Excavation began in 2015 at the four sites specified as high priority by the NC Coal Ash Management Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of CCR materials to off-site locations for use as structural fill, to appropriate engineered off-site or on-site lined landfills or conversionfor reuse in an approved beneficial application. Duke Energy has completed excavation of coal ash at three of the ash for beneficial use.four high-priority NC sites. At other sites preliminarywhere CCR management is required, planning and closure methods have been studied and factored into the estimated retirement and management costs. costs, and closure activities have commenced.
The EPA CCR rule and the NC Coal Ash Management 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. Additionally, the RCRA required closure timing depends upon meeting or continuing to meet certain criteria.
The Coal Ash Act leavesleave the decision on cost recovery determinations related to closure of coal ash surface impoundments to the normal ratemaking processes before utility regulatory commissions. Duke Energy's electric utilities have included compliance costs associated with federal and state requirements in their respective rate proceedings. In January 2021, Duke Energy Carolinas and Duke Energy Progress have included compliancereached a settlement agreement on recovery of coal ash costs, associated withwhich is subject to review and approval of the EPA CCR rule and the Coal Ash Act in their respective rate case filings.NCUC. During 2017, Duke Energy Carolinas' and Duke Energy Progress’ wholesale contracts were amended to include the recovery of expenditures related to asset retirement obligationsAROs for the closure of coal ash basins. The amended contracts have retail disallowance parity or provisions limiting challenges to CCR cost recovery actions at FERC. FERC approved the amended wholesale rate schedules in 2017. For additional information on the ash basins and recovery, see Item 7, "Other Matters" and Notes 3, 4 5 and 9 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations," respectively.
Nuclear Matters
Duke Energy owns, wholly or partially, 11 operating nuclear reactors located at six operating stations. The Crystal River Unit 3 permanently ceased operation in February 2013. Nuclear insurance includes: nuclear liability coverage; property damage coverage; nuclear accident decontamination and premature decommissioning coverage; and accidental outage coverage for losses in the event of a major accidental outage. Joint owners reimburse Duke Energy for certain expenses associated with nuclear insurance in accordance with joint owner agreements. The Price-Anderson Act requires plant owners to provide for public nuclear liability claims resulting from nuclear incidents to the maximum total financial protection liability, which is approximately $14.1$13.8 billion. For additional information on nuclear insurance, see Note 54 to the Consolidated Financial Statements, “Commitments and Contingencies.”

13






BUSINESS


Duke Energy has a significant future financial commitment to dispose of spent nuclear fuel and decommission and decontaminate each plant safely. The NCUC, PSCSC and FPSC require Duke Energy to update their cost estimates for decommissioning their nuclear plants every five years.
The following table summarizes the fair value of NDTF balancesinvestments and the most recent site-specific nuclear decommissioning cost study results for Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida.studies. Decommissioning costs are stated in 2018 or 2019 dollars, for Duke Energy Carolinas, 2017 dollars for Duke Energy Florida and 2014 dollars for Duke Energy Progress,depending on the year of the cost study, and include costs to decommission plant components not subject to radioactive contamination.
NDTF(a)
 Decommissioning
 
NDTF(a)
Decommissioning
(in millions)December 31, 2018
 December 31, 2017
 
Costs(a)

 Year of Cost Study(in millions)December 31, 2020December 31, 2019
Costs(a)
Year of Cost Study
Duke Energy$6,720
 $7,097
 $8,737
 2014 and 2018Duke Energy$9,114 $8,140 $9,105 2018 or 2019
Duke Energy Carolinas(b)(c)
3,558
��3,772
 4,291
 2018
Duke Energy Carolinas(b)(c)
4,977 4,359 4,365 2018
Duke Energy Progress2,503
 2,588
 3,550
 2014
Duke Energy Florida(d)
659
 736
 896
 2018
Duke Energy Progress(d)
Duke Energy Progress(d)
3,500 3,047 4,181 2019
Duke Energy Florida(e)
Duke Energy Florida(e)
637 734 559 N/A
(a)Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.
(b)Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.
(c)Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2018 is expected to be filed with the NCUC and PSCSC by the second quarter 2019. Duke Energy Carolinas will also complete a new funding study, which will be completed and filed with the NCUC and PSCSC in 2019.
(d)Duke Energy Florida's site-specific nuclear decommissioning cost study and a new funding study were completed and filed with the FPSC in 2018. For the years ended December 31, 2017 and December 31, 2018, Duke Energy Florida received reimbursements from the NDTF for costs related to ongoing decommissioning activity of Crystal River Unit 3.
(a)    Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.
(b)    Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.
(c)    Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2018 was filed with the NCUC and PSCSC in 2019. A new funding study was also completed and filed with the NCUC and PSCSC in 2019.
(d)    Duke Energy Progress' site-specific nuclear decommissioning cost study completed in 2019 was filed with the NCUC and PSCSC in March 2020. Duke Energy Progress also completed a funding study, which was filed with the NCUC and PSCSC in July 2020.
(e)    During 2019, Duke Energy Florida reached an agreement to transfer decommissioning work for Crystal River Unit 3 to a third party and decommissioning costs are based on the agreement with this third party rather than a cost study. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 3 for more information.
The NCUC, PSCSC, FPSC and FERC have allowed Electric Utilities and Infrastructure to recover estimated decommissioning costs through retail and wholesale rates over the expected remaining service periods of their nuclear stations. Electric Utilities and Infrastructure believes the decommissioning costs being recovered through rates, when coupled with the existing fund balances and expected fund earnings, will be sufficient to provide for the cost of future decommissioning. For additional information, see Note 9 to the Consolidated Financial Statements, “Asset Retirement Obligations.”
The NWPANuclear Waste Policy Act of 1982 (as amended) provides the framework for development by the federal government of interim storage and permanent disposal facilities for high-level radioactive waste materials. The government has not yet developed a storage facility or disposal capacity, so Electric Utilities and Infrastructure will continue to store spent fuel on its reactor sites.
Under federal law, the DOE is responsible for the selection and construction of a facility for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE terminated the project to license and develop a geologic repository at Yucca Mountain, Nevada in 2010, and is currently taking no action to fulfill its responsibilities to dispose of spent fuel.
Until the DOE begins to accept the spent nuclear fuel, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida will continue to safely manage their spent nuclear fuel. Under current regulatory guidelines, Harris has sufficient storage capacity in its spent fuel pools through the expiration of its renewed operating license. Crystal River Unit 3 ceased operation in 2013 and was placed in a SAFSTOR condition in January 2018. As of January 2018, all spent fuel at Crystal River Unit 3 has been transferred from the spent fuel pool to dry storage at an on-site ISFSI. With certain modifications and approvals by the NRC to expand the on-site dry cask storage facilities, spent nuclear fuel dry storage facilities will be sufficient to provide storage space of spent fuel through the expiration of the operating licenses, including any license renewals, for Brunswick, Catawba, McGuire, Oconee and Robinson. Crystal River Unit 3 ceased operation in 2013 and was placed in a SAFSTOR condition in January 2018. As of January 2018, all spent fuel at Crystal River Unit 3 has been transferred from the spent fuel pool to dry storage at an on-site independent spent fuel storage installation. During 2020, the NRC and the FPSC approved an agreement to transfer ownership of spent fuel for Crystal River Unit 3 to a third party. See Note 3 for more information.
The nuclear power industry faces uncertainties with respect to the cost and long-term availability of disposal sites for spent nuclear fuel and other radioactive waste, compliance with changing regulatory requirements, capital outlays for modifications and new plant construction.

14






BUSINESS


Electric Utilities and Infrastructure is subject to the jurisdiction of the NRC for the design, construction and operation of its nuclear generating facilities. The following table includes the current year of expiration of nuclear operating licenses for nuclear stations in operation. NuclearDuring 2019, Duke Energy announced its intention to seek 20-year operating licenses are potentially subject to extension.
license renewals for each of the reactors it operates in Duke Energy Carolinas and Duke Energy Progress.
UnitYear of Expiration
Duke Energy Carolinas
Catawba Units 1 and 22043
McGuire Unit 12041
McGuire Unit 22043
Oconee Units 1 and 22033
Oconee Unit 32034
Duke Energy Progress
Brunswick Unit 12036
Brunswick Unit 22034
Harris2046
Robinson2030
The NRC has acknowledged permanent cessation of operation and permanent removal of fuel from the reactor vessel at Crystal River Unit 3. Therefore, the license no longer authorizes operation of the reactor. For additional information on nuclear decommissioning activity, see Notes 43 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations," respectively.
On October 27, 2016, and December 15, 2016, the NRC issued combined operating licenses for Levy and Lee Nuclear Station, respectively. On August 29, 2017, Duke Energy announced the complete abandonment of the Levy project; the operating license was formally terminated on April 26, 2018. On August 25, 2017, as part of Duke Energy Carolinas rate case filing, Duke Energy Carolinas requested NCUC approval to cancel the development of the Lee Nuclear Station project with the intent to maintain the combined operating licenses. For additional information on the Lee Nuclear Station, see Note 4 to the Consolidated Financial Statements, "Regulatory Matters."
Regulation
State
The NCUC, PSCSC, FPSC, PUCO, IURC and KPSC (collectively, the state electric utility commissions)commissions approve rates for Duke Energy's retail electric service within their respective states. The state electric utility commissions, to varying degrees, have authority over the construction and operation of Electric Utilities and Infrastructure’s generating facilities. CPCNCPCNs issued by the state electric utility commissions, as applicable, authorize Electric Utilities and Infrastructure to construct and operate its electric facilities and to sell electricity to retail and wholesale customers. Prior approval from the relevant state electric utility commission is required for the entities within Electric Utilities and Infrastructure to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus earn a reasonable rate of return on its invested capital, including equity.
In addition to rates approved in base rate cases, each of the state electric utility commissions allow recovery of certain costs through various cost-recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over or under-recovered costs, are prudent.
Fuel, fuel-related costs and certain purchased power costs are eligible for recovery by Electric Utilities and Infrastructure. Electric Utilities and Infrastructure uses coal, hydroelectric, natural gas, oil, renewable generation and nuclear fuel to generate electricity, thereby maintaining a diverse fuel mix that helps mitigate the impact of cost increases in any one fuel. Due to the associated regulatory treatment and the method allowed for recovery, changes in fuel costs from year to year have no material impact on operating results of Electric Utilities and Infrastructure, unless a commission finds a portion of such costs to have been imprudent. However, delays between the expenditure for fuel costs and recovery from customers can adversely impact the timing of cash flows of Electric Utilities and Infrastructure.

15






BUSINESS


The table below reflects significant electric rate case applications approved and effective in the past three years or applications currently pending approval.
Regulatory
Body
Annual
Increase
(Decrease)
(in millions)
Return
on
Equity
Equity
Component of
Capital Structure
Effective
Date
Regulatory
Body
Annual
Increase
(Decrease)
(in millions)
Return
on
Equity
Equity
Component of
Capital Structure
Effective
Date
Approved Rate Cases:    Approved Rate Cases:
Duke Energy Indiana 2019 Indiana Rate Case(a)
Duke Energy Indiana 2019 Indiana Rate Case(a)
IURC$146 9.7 %53 %7/30/2020
Duke Energy Kentucky 2019 Kentucky Electric Rate CaseDuke Energy Kentucky 2019 Kentucky Electric Rate CaseKPSC24 9.25 %48.23 %5/1/2020
Duke Energy Carolinas 2018 South Carolina Rate CaseDuke Energy Carolinas 2018 South Carolina Rate CasePSCSC45 9.5 %53 %6/1/2019
Duke Energy Progress 2018 South Carolina Rate CaseDuke Energy Progress 2018 South Carolina Rate CasePSCSC29 9.5 %53 %6/1/2019
Duke Energy Ohio 2017 Ohio Electric Rate CaseDuke Energy Ohio 2017 Ohio Electric Rate CasePUCO(19)9.84 %50.75 %1/2/2019
Duke Energy Carolinas 2017 North Carolina Rate CaseNCUC$(73)9.9%52%8/1/2018Duke Energy Carolinas 2017 North Carolina Rate CaseNCUC(73)9.9 %52 %8/1/2018
Duke Energy Kentucky 2017 Kentucky Electric Rate CaseDuke Energy Kentucky 2017 Kentucky Electric Rate CaseKPSC8 9.725 %49 %5/1/2018
Duke Energy Progress 2017 North Carolina Rate CaseNCUC151
9.9%52%3/16/2018Duke Energy Progress 2017 North Carolina Rate CaseNCUC151 9.9 %52 %3/16/2018
Duke Energy Ohio 2017 Ohio Electric Rate CasePUCO(19)9.84%50.75%1/2/2019
Duke Energy Kentucky 2017 Kentucky Electric Rate CaseKPSC8
9.725%49%5/1/2018
Duke Energy Progress 2016 South Carolina Rate CasePSCSC(a)
10.1%53%1/1/2017
    
Pending Rate Cases:    Pending Rate Cases:
Duke Energy Carolinas 2018 South Carolina Rate CasePSCSC$168
10.5%53%6/1/2019
Duke Energy Progress 2018 South Carolina Rate CasePSCSC59
10.5%53%6/1/2019
Duke Energy Carolinas 2019 North Carolina Rate Case(b)
Duke Energy Carolinas 2019 North Carolina Rate Case(b)
NCUC$291 10.3 %53 %8/1/2020
Duke Energy Progress 2019 North Carolina Rate Case(b)
Duke Energy Progress 2019 North Carolina Rate Case(b)
NCUC464 10.3 %53 %9/1/2020
(a)An increase of approximately $38 million in revenues was effective January 1, 2017, and an additional increase of approximately $19 million in revenues was effective January 1, 2018.
(a)    Step 1 rates are approximately 75% of the total and became effective July 30, 2020. Step 2 rates are approximately 25% of the total rate case increase and will be implemented in mid-2021. Amounts exclude the Utility Receipt Tax amounts.
(b)    Partial Settlements were reached on July 31, 2020, which are subject to approval by the NCUC. Components of the partial settlements included a return of equity of 9.6% and a capital structure of 52% equity. These temporary rates went into effect August 24, 2020, for Duke Energy Carolinas and September 1, 2020, for Duke Energy Progress. A settlement was also reached, subject to approval by the NCUC, on coal ash cost recovery in January of 2021.

Additionally, in January 2021, Duke Energy Florida filed a settlement agreement with the FPSC that, if approved, will allow annual increases to its base rates at an agreed upon return on equity (“ROE”) band and includes a base rate stay-out provision through 2024, among other provisions. For more information on rate matters and other regulatory proceedings, see Note 43 to the Consolidated Financial Statements, “Regulatory Matters.”
Federal
The FERC approves Electric Utilities and Infrastructure’s cost-based rates for electric sales to certain power and transmission wholesale customers. Regulations of FERC and the state electric utility commissions govern access to regulated electric and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with Electric Utilities and Infrastructure.
Regional Transmission Organizations (RTO).RTOs
PJM and MISO are the ISOs and FERC-approved RTOs for the regions in which Duke Energy Ohio and Duke Energy Indiana operate. PJM and MISO operate energy, capacity and other markets, and control the day-to-day operations of bulk power systems through central dispatch.
Duke Energy Ohio is a member of PJM and Duke Energy Indiana is a member of MISO. Transmission owners in these RTOs have turned over control of their transmission facilities and their transmission systems are currently under the dispatch control of the RTOs. Transmission service is provided on a regionwide, open-access basis using the transmission facilities of the RTO members at rates based on the costs of transmission service.
Environmental.Environmental
Electric Utilities and Infrastructure is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See the “Other Matters” section of Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.

16



BUSINESS


GAS UTILITIES AND INFRASTRUCTURE
Gas Utilities and Infrastructure conducts natural gas operations primarily through the regulated public utilities of Piedmont, Duke Energy Ohio and Duke Energy Ohio.Kentucky. The natural gas operations are subject to the rules and regulations of the NCUC, PSCSC, PUCO, KPSC, TPUC, PHMSA and the FERC. Gas Utilities and Infrastructure serves residential, commercial, industrial and power generation natural gas customers, including customers served by municipalities who are wholesale customers. Gas Utilities and Infrastructure has over 1.6 million customers, including more than 1.1 million customers located in North Carolina, South Carolina and Tennessee, and an additional 531,000541,000 customers located within southwestern Ohio and northern Kentucky. In the Carolinas, Ohio and Kentucky, the service areas are comprised of numerous cities, towns and communities. In Tennessee, the service area is the metropolitan area of Nashville. The following map shows the service territory and investments in operating and proposed midstream propertiespipelines for Gas Utilities and Infrastructure as of December 31, 2018.2020.
servicemap2018gas001.jpg
16



BUSINESS
duk-20201231_g3.jpg
The number of residential, commercial and industrial customers within the Gas Utilities and Infrastructure service territory is expected to increase over time. Average usage per residential customer is expected to remain flat or decline for the foreseeable future,future; however, decoupled rates in North Carolina and various rate design mechanisms in other jurisdictions partially mitigate the impact of the declining usage per customer on overall profitability. While total industrial and general service sales increased in 2018 when compared to 2017, the growth rate was modest when compared to historical periods.
Gas Utilities and Infrastructure also owns, operates and has investments in various pipeline transmission and natural gas storage facilities.
Natural Gas for Retail Distribution
Gas Utilities and Infrastructure is responsible for the distribution of natural gas to retail customers in its North Carolina, South Carolina, Tennessee, Ohio and Kentucky service territories. Gas Utilities and Infrastructure’s natural gas procurement strategy is to contract primarily with major and independent producers and marketers for natural gas supply. It also purchases a diverse portfolio of transportation and storage service from interstate pipelines. This strategy allows Gas Utilities and Infrastructure to assure reliable natural gas supply and transportation for its firm customers during peak winter conditions. When firm pipeline services or contracted natural gas supplies are temporarily not needed due to market demand fluctuations, Gas Utilities and Infrastructure may release these services and supplies in the secondary market under FERC-approved capacity release provisions or make wholesale secondary market sales. In 2018,2020, firm supply purchase commitment agreements provided 100 percent100% of the natural gas supply for both Piedmont and Duke Energy Ohio.

17






BUSINESS


Impact of Weather
Gas Utilities and Infrastructure revenues are generally protected from the impact of weather fluctuations due to the regulatory mechanisms that are available in most service territories. In North Carolina, margin decoupling provides protection from both weather and other usage variations like conservation for residential and commercial customer classes. Margin decoupling provides a set revenue per customer independent of actual usage. In South Carolina, Tennessee and Tennessee,Kentucky, weather normalization adjusts revenues either up or down depending on how much warmer or colder than normal a given month has been. Weather normalization adjustments occur from November through March in South Carolina, and from October through April in Tennessee.Tennessee and from November through April in Kentucky. Duke Energy Ohio collects most of its non-fuel revenue through a fixed monthly charge that is not impacted by usage fluctuations that result from weather changes or conservation. Kentucky, however, bills based on volumetric rates without weather protection.
Competition
Gas Utilities and Infrastructure’s businesses operate as the sole provider of natural gas service within their retail service territories. Gas Utilities and Infrastructure owns and operates facilities necessary to transport and distribute natural gas. Gas Utilities and Infrastructure earns retail margin on the transmission and distribution of natural gas and not on the cost of the underlying commodity. Services are priced by state commission approvedcommission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable natural gas service at fair prices.
In residential, commercial and industrial customer markets, natural gas distribution operations compete with other companies that supply energy, primarily electric companies, propane and fuel oil dealers, renewable energy providers and coal companies in relation to sources of energy for electric power plants, as well as nuclear energy. A significant competitive factor is price. Gas Utilities and Infrastructure's primary product competition is with electricity for heating, water heating and cooking. Increases in the price of natural gas or decreases in the price of other energy sources could negatively impact competitive position by decreasing the price benefits of natural gas to the consumer. In the case of industrial customers, such as manufacturing plants, adverse economic or market conditions, including higher natural gas costs, could cause these customers to suspend business operations or to use alternative sources of energy in favor of energy sources with lower per-unit costs.
Higher natural gas costs or decreases in the price of other energy sources may allow competition from alternative energy sources for applications that have traditionally used natural gas, encouraging some customers to move away from natural gas-fired equipment to equipment fueled by other energy sources. Competition between natural gas and other forms of energy is also based on efficiency, performance, reliability, safety and other non-price factors. Technological improvements in other energy sources and events that impair the public perception of the non-price attributes of natural gas could erode our competitive advantage. These factors in turn could decrease the demand for natural gas, impair our ability to attract new customers and cause existing customers to switch to other forms of energy or to bypass our systems in favor of alternative competitive sources. This could result in slow or no customer growth and could cause customers to reduce or cease using our product, thereby reducing our ability to make capital expenditures and otherwise grow our business, adversely affecting our earnings.
Pipeline and Storage Investments
Duke Energy, through its Gas Utilities and Infrastructure segment, is a 47 percent equity member of ACP, which plans to build and own the proposed ACP pipeline, an approximately 600-mile interstate natural gas pipeline, regulated by FERC. The ACP pipeline is intended to transport diverse natural gas supplies into southeastern markets. Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customers of the ACP pipeline. ACP expects to achieve a late 2020 in-service date for key segments of the project, while it expects a remainder to extend into 2021. Abnormal weather, work delays (including delays due to judicial or regulatory action) and other conditions may result in cost or schedule modifications in the future. ACP and Duke Energy will continue to consider their options with respect to the foregoing in light of their existing contractual and legal obligations.
Gas Utilities and Infrastructure also has a 7.5 percent7.5% equity ownership interest in Sabal Trail. Sabal Trail is a joint venture that owns the Sabal Trail pipelineNatural Gas Pipeline (Sabal Trail pipeline) to transport natural gas to Florida, regulated by FERC. The Sabal Trail phase onePhase I mainline was placed into service in July 2017 and traverses Alabama, Georgia and Florida. The remaining lateral line to the Duke Energy Florida's Citrus County CC was placed into service in March 2018. Phase II of Sabal Trail went into service in May 2020, adding approximately 200,000 Dth of capacity to the Sabal Trail pipeline.
Gas Utilities and Infrastructure has a 24 percent47% equity ownership interest in ACP, which planned to build the ACP pipeline, an approximately 600-mile interstate natural gas pipeline. The ACP pipeline was intended to transport diverse natural gas supplies into southeastern markets and would be regulated by FERC. Dominion Energy owns 53% of ACP and was contracted to construct and operate the ACP pipeline upon completion. On July 5, 2020, Dominion announced a sale of substantially all of its gas transmission and storage segment assets, which were critical to the ACP pipeline. Further, permitting delays and legal challenges had materially affected the timing and cost of the pipeline. As a result, Duke Energy determined that they would no longer invest in the construction of the ACP pipeline. For the year ended December 31, 2020, Duke Energy recorded $2.1 billion of costs related to ACP.
Gas Utilities and Infrastructure has a 24% equity ownership interest in Constitution, an interstate pipeline development company formed to develop, construct, own and operate a 124-mile natural gas pipeline and related facilities, regulated by FERC. Constitution iswas slated to transport natural gas supplies from the Marcellus supply region in northern Pennsylvania to major northeastern markets. As a result of permitting delaysFebruary 5, 2020, the Constitution partners formally resolved to initiate the dissolution of Constitution, and project uncertainty,to terminate the Constitution is unable to approximate an in-service date.Pipeline project.
Duke Energy, through its Gas Utilities and Infrastructure segment, has a 21.49 percent21.49% equity ownership interest in Cardinal, an intrastate pipeline located in North Carolina regulated by the NCUC, a 45 percent45% equity ownership in Pine Needle, an interstate liquefied natural gas storage facility located in North Carolina and a 50 percent50% equity ownership interest in Hardy Storage, an underground interstate natural gas storage facility located in Hardy and Hampshire counties in West Virginia. Pine Needle and Hardy Storage are regulated by FERC.
KO Transmission Company (KO Transmission), a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities is co-owned by Columbia Gas Transmission Corporation.
See Notes 4,3, 12 and 17 to the Consolidated Financial Statements, "Regulatory Matters," "Investments in Unconsolidated Affiliates" and "Variable Interest Entities," respectively, for further information on Duke Energy's pipeline investments.

18






BUSINESS


Inventory
Gas Utilities and Infrastructure must maintain adequate natural gas inventory in order to provide reliable delivery to customers. As of December 31, 2018,2020, the inventory balance for Gas Utilities and Infrastructure was $105$82 million. For more information on inventory, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."
Regulation
State
The NCUC, PSCSC, PUCO, TPUC and KPSC (collectively, the state gas utility commissions)commissions approve rates for Duke Energy's retail natural gas service within their respective states. The state gas utility commissions, to varying degrees, have authority over the construction and operation of Gas Utilities and Infrastructure’s natural gas distribution facilities. CPCN or Certificates of Environmental Compatibility and Public NecessityCPCNs issued by the state gas utility commissions or other government agencies, as applicable, authorize Gas Utilities and Infrastructure to construct and operate its natural gas distribution facilities and to sell natural gas to retail and wholesale customers. Prior approval from the relevant state gas utility commission is required for Gas Utilities and Infrastructure to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus a reasonable rate of return on its invested capital, including equity.
In addition to amounts collected from customers through approved base rates, each of the state gas utility commissions allow recovery of certain costs through various cost-recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over- or under-recovered costs, are prudent.
Natural gas costs are eligible for recovery by Gas Utilities and Infrastructure. Due to the associated regulatory treatment and the method allowed for recovery, changes in natural gas costs from year to year have no material impact on operating results of Gas Utilities and Infrastructure, unless a commission finds a portion of such costs to have not been prudent.imprudent. However, delays between the expenditure for natural gas and recovery from customers can adversely impact the timing of cash flows of Gas Utilities and Infrastructure.
The following table summarizes certain components underlying recently approved and effective base rates or rate stabilization filings in the last three years.
Annual
Increase
(Decrease)
(in millions)
 
Return
on
Equity
 
Equity
Component of
Capital Structure
 Effective Date
Annual
Increase
(Decrease)
(in millions)
Return
on
Equity
Equity
Component of
Capital Structure
Effective Date
Approved Rate Cases:      Approved Rate Cases:
Piedmont 2016 South Carolina Rate Stabilization Adjustment Filing$8
 10.2% 53.0% November 2016
Piedmont 2017 South Carolina Rate Stabilization Adjustment Filing6
 10.2% 53.0% November 2017Piedmont 2017 South Carolina Rate Stabilization Adjustment Filing$6 10.2 %53.0 %November 2017
Piedmont 2018 South Carolina Rate Stabilization Adjustment Filing(14) 10.2% 53.0% November 2018Piedmont 2018 South Carolina Rate Stabilization Adjustment Filing(14)10.2 %53.0 %November 2018
Pending Rate Cases:      
Duke Energy Kentucky 2018 Kentucky Gas Rate Case$11
 9.9% 50.755% April 2019
Piedmont 2019 South Carolina Rate Stabilization Adjustment FilingPiedmont 2019 South Carolina Rate Stabilization Adjustment Filing6 9.9 %55.4 %November 2019
Piedmont 2020 South Carolina Rate Stabilization Adjustment FilingPiedmont 2020 South Carolina Rate Stabilization Adjustment Filing7 9.8 %52.3 %November 2020
Duke Energy Kentucky 2018 Natural Gas Base Rate CaseDuke Energy Kentucky 2018 Natural Gas Base Rate Case7 9.7 %50.8 %April 2019
Piedmont 2019 North Carolina Natural Gas Base Rate CasePiedmont 2019 North Carolina Natural Gas Base Rate Case109 9.7 %52.0 %November 2019
Piedmont 2020 Tennessee Natural Gas Base Rate CasePiedmont 2020 Tennessee Natural Gas Base Rate Case16 9.8 %50.5 %January 2021
Gas Utilities and Infrastructure has IMR mechanisms in North Carolina and Tennessee designed to separately track and recover certain costs associated with capital investments incurred to comply with federal pipeline safety and integrity programs, as well as additional state safety and integrity requirements in Tennessee.programs. The following table summarizes information related to the recently approved or pending IMR filings.
filing.
 Cumulative
 Annual Margin
 Effective
(in millions)Investment
 Revenues
 Date
Piedmont 2018 IMR Filing – North Carolina$924
 $81
 December 2018
Pending Filing:    Proposed Effective Date
Piedmont 2018 IMR Filing – Tennessee$259
 $26
 January 2019
CumulativeAnnualEffective
(in millions)InvestmentRevenuesDate
Piedmont 2020 IMR Filing – North Carolina$307 $30 December 2020
In Piedmont's Tennessee rate case settled in February 2021, the Company included projected IMR investment through December 31, 2021, in its rate base. The recovery of integrity investment was requested in the rate case and not through the Tennessee IMR mechanism.
For more information on rate matters and other regulatory proceedings, see Note 43 to the Consolidated Financial Statements, “Regulatory Matters.”
Federal
Gas Utilities and Infrastructure is subject to various federal regulations, including regulations that are particular to the natural gas industry. These federal regulations include but are not limited to the following:
•Regulations of the FERC affect the certification and siting of new interstate natural gas pipeline projects, the purchase and sale of, the prices paid for, and the terms and conditions of service for the interstate transportation and storage of natural gas.
•Regulations of the PHMSA affect the design, construction, operation, maintenance, integrity, safety and security of natural gas distribution and transmission systems.

19






BUSINESS


•Regulations of the EPA relate to the environment including proposed air emissions regulations that would expand to include emissions of methane. For a discussion of environmental regulation, see “Environmental Matters” in this section. Refer to the “Other Matters” section of Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.
Regulations of the FERC and the state gas utility commissions govern access to regulated natural gas and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with Gas Utilities and Infrastructure.
Environmental.Environmental
Gas Utilities and Infrastructure is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See “Other Matters” section of Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.
COMMERCIAL RENEWABLES
Commercial Renewables primarily acquires, develops, builds, operates and owns wind and solar renewable generation throughout the continental U.S. The portfolio includes nonregulated renewable energy and energy storage businesses.
Commercial Renewables' renewable energy includes utility-scale wind and solar generation assets, distributed solar generation assets, distributed fuel cell assets and a battery storage project,projects, which total 2,9912,763 MW across 1921 states from 21 wind facilities, 100150 solar facilitiesprojects, 70 fuel cell locations and onetwo battery storage facility.facilities. Revenues are primarily generated by selling the power produced from renewable generation through long-term contracts to utilities, electric cooperatives, municipalities and commercial and industrialcorporate customers. In most instances, these customers have obligations under state-mandated renewable energy portfolio standards or similar state or local renewable energy goals. Energy and renewable energy credits generated by wind and solar projects are generally sold at contractual prices. The following map shows the service territory forlocations of renewable generation facilities of which Commercial Renewables has an ownership interest as of December 31, 2018.2020.
servicemap2018cr001.jpgduk-20201231_g4.jpg
As eligible wind and solar projects are placed in service, Commercial Renewables recognizes either PTCs as power is generated by wind projects over 10 years or ITCs when the renewable solar or windfuel cell project achieves commercial availability. ITCs are recognized over the useful life of the asset as a reduction to depreciation expense with the benefitexpense. Benefits of the tax basis adjustment due to the ITC beingare recognized in income in the year of commercial availability. The ITC for solar and fuel cells is being phased down from the current 30 percenta rate of 30% for projects that began construction before 2020 to a permanent 10 percent10% rate for solar and no ITC available for fuel cells if construction begins in 2019 through 2022.after 2023. The PTC is being phased out and wind turbines will earn 10 years of PTCs at phased-out rates if construction begins in 2017 through 2019.2021.

20






BUSINESS


As part of its growth strategy, Commercial Renewables has expanded its investment portfolio through the addition of distributed solar companies and projects, energy storage systems and energy management solutions specifically tailored to commercial businesses. These investments include REC Solar Corp., a California-based provider of solar installations for retail, manufacturing, agriculture, technology, government and nonprofit customers across the U.S. and Phoenix Energy Technologies Inc., a California-based provider of enterprise energy management and information software to commercial businesses.
Commercial Renewables has entered into agreements for certain of its solar generating assets that are held by LLCs whose members include a noncontrolling tax equity investor. The allocation of earnings, tax attributes and cash distributionsflows to the tax equity investor are based on certaingoverned by the provisions of the liquidation provisions pursuant to the LLC agreements. The GAAP earnings allocations to the tax equity investors can result in variability in earnings to Duke Energy.Energy as a result of the application of the HLBV method in allocating income or loss to the owners. As part of its growth strategy, Commercial Renewables expects to enter into these arrangements for future wind and solar generating assets.
For additional information on Commercial Renewables' generation facilities, see Item 2, “Properties.”
Market Environment and Competition
Commercial Renewables primarily competes for wholesale contracts for the generation and sale of electricity from wind and solar generation assets it either develops or acquires and owns. The market price of commodities and services, along with the quality and reliability of services provided, drive competition in the wholesale energy business. The number and type of competitors may vary based on location, generation type and project size. Commercial Renewables' main competitors include other nonregulated generators and wholesale power providers.
Sources of Electricity
Commercial Renewables relies on wind, solar, fuel cells and battery resources for its generation of electric energy.
Regulation
Commercial Renewables is subject to regulation at the federal level, primarily from the FERC. Regulations of the FERC govern access to regulated market information by nonregulated entities and services provided between regulated and nonregulated utilities.
OTHER
The remainder of Duke Energy’s operations is presented as Other. While it is not a business segment, Other primarily includes interest expense on holding company debt, unallocated corporate costs including costs to achieve strategic acquisitions, amounts related to certain companywide initiatives and contributions made to the Duke Energy Foundation. Other also includes Bison and an investment in NMC.
The Duke Energy Foundation is a nonprofit organization funded by Duke Energy shareholders that makes charitable contributions to selected nonprofits and government subdivisions.
Bison, a wholly owned subsidiary of Duke Energy, is a captive insurance company with the principal activity of providing Duke Energy subsidiaries with indemnification for financial losses primarily related to property, workers’ compensation and general liability.
Duke Energy owns a 17.5 percent17.5% equity interest in NMC. The joint venture company has production facilities in Jubail, Saudi Arabia, where it manufactures certain petrochemicals and plastics. The company annually produces approximately 1 million metric tons each of MTBE and methanol and has the capacity to produce 50,000 metric tons of polyacetal. The main feedstocks to produce these products are natural gas and butane. Duke Energy records the investment activity of NMC using the equity method of accounting and retains 25 percent25% of NMC's board of directorsdirectors' representation and voting rights.
Human Capital Management
Governance
Our employees are critical to the success of our company. Our Human Resources organization is responsible for our human capital management strategy, which includes recruiting and hiring, onboarding and training, diversity and inclusion, workforce planning, talent and succession planning, performance management and employee development. Key areas of focus include fostering a high-performance and inclusive culture built on strong leadership and highly engaged and diverse employees, building a pipeline of skilled workers and ensuring knowledge transfer as employees retire.
Our Board of Directors provides oversight on certain human capital management matters, primarily through the Compensation and People Development Committee, which is responsible for reviewing strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, employee engagement and talent development. The Compensation and People Development Committee also receives updates on employee engagement surveys and action plans.
Employees
On December 31, 2018,2020, Duke Energy had a total of 30,08327,535 full-time, part-time and temporary employees, on its payroll.the overwhelming majority of which were full-time employees. The total includes 5,4465,165 employees who are represented by labor unions under various collective bargaining agreements that generally cover wages, benefits, working practices, and other terms and conditions of employment.

21






BUSINESS

Compensation
The company seeks to attract and retain an appropriately qualified workforce and leverages Duke Energy’s leadership imperatives to foster a culture focused on customers, innovation, and highly engaged employees. Our compensation program is designed to link pay to performance with the goal of attracting and retaining talented employees, rewarding individual performance, encouraging long-term commitment to our business, and aligning the interests of our management team with those of key stakeholders, including shareholders and customers. In addition to competitive base pay, we provide eligible employees with compensation and benefits under a variety of plans and programs, including with respect to health care benefits, retirement savings, pension, health savings and flexible spending accounts, wellness, family leaves, employee assistance, as well as other benefits including a charitable matching program. We supplement our pay for performance program with a number of compensation policies that are aligned with the long-term interests of Duke Energy and our shareholders, including a short-term incentive plan and a long-term incentive plan for eligible employees.
Diversity and Inclusion
Duke Energy is committed to continuing to build a diverse workforce that reflects the communities we serve while strengthening a culture of inclusion where employees and customers feel respected and valued. Our Enterprise Diversity and Inclusion Advisory Council, which is chaired by our Chief Operating Officer, is responsible for reviewing our diversity and inclusion initiatives for continuous improvement, as well as helping to develop actionable outcomes and results. We have established aspirational goals with respect to diversity and inclusion, and we regularly report our progress toward achieving those goals. Our aspirational goals include achieving a workforce representation of at least 25% female and 20% racial and ethnic diversity. As of December 31, 2020, our workforce consisted of approximately 23% female and 18% racial and ethnic diversity.
The company also has a number of Employee Resource Groups (ERGs), which are networks of employees formed around a common dimension of diversity whose goals and objectives align with the company's goals and objectives. These groups focus on employee professional development and networking, community outreach, cultural awareness, recruiting and retention. They also serve as a resource to the company for advocacy and community outreach and improving customer service through innovation. ERG-sponsored forums include networking events, mentoring, scholarship banquets for aspiring college students, and workshops on topics such as time management, stress reduction, career planning and work-life balance. Our ERGs are open to all employees.
Among other efforts, the company has developed partnerships with community organizations, community colleges and historically black colleges and universities to support our strategy of building a diverse and highly skilled talent pipeline.
Operational Excellence
The foundation for our growth and success is our continued focus on operational excellence, the leading indicator of which is safety. As such, the safety of our workforce remains our top priority. The company closely monitors the Total Incident Case Rate (TICR), which is a metric based on strict OSHA definitions that measures the number of occupational injuries and illnesses per 100 employees. This objective emphasizes our focus on achieving an event-free and injury-free workplace. As an indication of our commitment to safety, we include safety metrics in both the short-term and long-term incentive plans based on the TICR for employees. Our employees delivered strong safety results in 2020, consistent with our industry-leading performance levels from 2016 through 2019.

COVID-19 Response
Safety continued to be of paramount importance during the COVID-19 pandemic and included executing on robust business continuity plans that helped ensure critical functions continued to operate under a broad range of circumstances while maintaining a safe work environment. Actions included the following:
•Engaged our environmental, health and safety experts to develop new safety protocols for thousands of essential workers
•Quickly transitioned thousands of employees to virtual status
•Added bandwidth for our information technology systems, reviewed inventory in supply chain, implemented a series of surveys to get employee input, and provided ongoing communications to keep them informed as conditions evolved
•Created a cross-functional COVID-19 case management team to track and disposition positive cases, ensure appropriate contact tracing and compliance with quarantine and safe return to work requirements
•Ensured power plants and electricity and natural gas delivery facilities were staffed, helping safeguard dependable service to customers
•Implemented stringent preventive measures in alignment with the Centers for Disease Control and Prevention’s (CDC) guidance to help keep employees and customers safe and help ensure we had adequate resources to maintain reliability
The company also provided additional benefits to support our workforce throughout the pandemic, including:
•60 hours of additional personal time off to employees who experienced a disruption in dependent care due to school, daycare or other dependent care issues
•A $1,500 stipend to assist with unplanned expenses resulting from costs related to COVID-19 to employees at a certain pay threshold
•Donated more than $550,000 to the Relief4Employees program, which is a fund that employees can draw upon for short-term financial help during times of personal need
22




BUSINESS
Information about Our Executive Officers of the Registrants
The following table sets forth the individuals who currently serve as executive officers. Executive officers serve until their successors are duly elected or appointed.
Name
Age(a)
Current and Recent Positions Held
Lynn J. Good5961 
Chair, President and Chief Executive Officer. Ms. Good has served as Chair, President and Chief Executive Officer of Duke Energy since January 1, 2016, and was Vice Chairman, President and Chief Executive Officer. Ms. Good was elected as ChairmanOfficer of the Board, effective January 1, 2016, and assumed her position as President and Chief Executive Officer inDuke Energy from July 2013.2013 through December 2015. Prior to that, she served as Executive Vice President and Chief Financial Officer since 2009.
Steven K. Young6062 
Executive Vice President and Chief Financial Officer. Mr. Young assumed his current position in August 2013. Prior to that, he served as Vice President, Chief Accounting Officer and Controller, assuming the role of Chief Accounting Officer in July 2012 and the role of Controller in December 2006.
Douglas F Esamann6163 
Executive Vice President, Energy Solutions and President, Midwest/Florida Regions and Natural Gas Business. Mr. Esamann assumed his current position in October 2019, was Executive Vice President, Energy Solutions and President, Midwest and Florida Regions. Mr. Esamann assumed his current position inRegions since September 2016 and was Executive Vice President and President, Midwest and Florida Regions since June 2015. Prior to that, he served as President, Duke Energy Indiana since November 2010.
Lloyd M. YatesKodwo Ghartey-Tagoe5857 
Executive Vice President, Customer and Delivery Operations and President, Carolinas Region. Mr. Yates assumed his current position in September 2016 and was Executive Vice President, Market Solutions and President, Carolinas Region since August 2014. He held the position of Executive Vice President, Regulated Utilities from November 2012 to August 2014, and prior to that, served as Executive Vice President, Customer Operations since July 2012, upon the merger of Duke Energy and Progress Energy.
Dhiaa M. Jamil62
Executive Vice President and Chief Operating Officer. Mr. Jamil assumed the role of Chief Operating Officer in May 2016. Prior to his current position, he held the title Executive Vice President and President, Regulated Generation and Transmission since June 2015. Prior to that, he served as Executive Vice President and President, Regulated Generation since August 2014. He served as Executive Vice President and President of Duke Energy Nuclear from March 2013 to August 2014, and was Chief Nuclear Officer from February 2008 to February 2013.
Franklin H. Yoho59
Executive Vice President and President, Natural Gas Business. Mr. Yoho assumed his current position in October 2016 upon the acquisition of Piedmont by Duke Energy. Prior to this appointment, he served as Senior Vice President and Chief Commercial Officer of Piedmont since August 2011.
Julia S. Janson54
Executive Vice President, External Affairs and Chief Legal Officer. Ms. Janson has held the position of Executive Vice President, External Affairs and Chief Legal Officer since November 2018. She originallyand Corporate Secretary. Mr. Ghartey-Tagoe assumed the position of Executive Vice President, Chief Legal Officer and Corporate Secretary in December 2012, and then assumed the responsibilities for External Affairs in February 2016.
Melissa H. Anderson54
Executive Vice President, Administration and Chief Human Resources Officer. Ms. Anderson assumed her position in May 2016 and had been2020. He was appointed Executive Vice President and Chief Human ResourcesLegal Officer in October 2019, after serving as President, South Carolina since January 2015. Prior to joining2017. Mr. Ghartey-Tagoe joined Duke Energy she served asin 2002 and has held numerous management positions in Duke Energy’s Legal Department, including Duke Energy's Senior Vice President of Human Resources at Domtar Inc. since 2010.State and Federal Regulatory Legal Support.
Dwight L. Jacobs5355 
Senior Vice President, Chief Accounting Officer, Tax and Controller. Mr. Jacobs has served as Senior Vice President, Chief Accounting Officer, Tax and Controller since January 1, 2019. Prior to that, he served as Senior Vice President, Chief Accounting Officer and Controller since June 1, 2018. Prior to that, he served as Senior Vice President, Financial Planning & Analysis since February 2016 and as Chief Risk Officer since July 2014. Prior to his role as Chief Risk Officer, Mr. Jacobs served as Vice President, Rates & Regulatory Strategy since May 2010.
Dhiaa M. Jamil64 
Executive Vice President and Chief Operating Officer. Mr. Jamil assumed the role of Chief Operating Officer in May 2016. Prior to his current position, he held the title Executive Vice President and President, Regulated Generation and Transmission since June 2015. Prior to that, he served as Executive Vice President and President, Regulated Generation since August 2014. He served as Executive Vice President and President of Duke Energy Nuclear from March 2013 to August 2014, and was Chief Nuclear Officer from February 2008 to February 2013.
Julia S. Janson56 
Executive Vice President, External Affairs and President, Carolinas Region. Ms. Janson has held the position of Executive Vice President, External Affairs and President, Carolinas Region since October 2019.Prior to that, she held the position of Executive Vice President, External Affairs and Chief Legal Officer since November 2018. She originally assumed the position of Executive Vice President, Chief Legal Officer and Corporate Secretary in December 2012, and then assumed the responsibilities for External Affairs in February 2016.
Brian D. Savoy45 
Senior Vice President, Chief Transformation and Administrative Officer. Mr. Savoy assumed his current position in October 2019. Prior to that, he served as Senior Vice President, Business Transformation and Technology since May 2016; Senior Vice President, Controller and Chief Accounting Officer from September 2013 to May 2016; Director, Forecasting and Analysis from 2009 to September 2013; and Vice President and Controller of the Commercial Power segment from 2006 to 2009.
Harry K. Sideris50 
Senior Vice President, Customer Experience and Services. Mr. Sideris assumed his current position in October 2019. Prior to that, he served as Senior Vice President and Chief Distribution Officer since June 2018; State President, Florida from January 2017 to June 2018; Senior Vice President of Environmental Health and Safety from August 2014 to January 2017; and Vice President of Power Generations for the Company's Fossil/Hydro Operations in the western portions of North Carolina and South Carolina from July 2012 to August 2014.
(a)    The ages of the officers provided are as of DecemberJanuary 31, 2018.2021.
There are no family relationships between any of the executive officers, nor any arrangement or understanding between any executive officer and any other person involved in officer selection.
Environmental Matters
The Duke Energy Registrants are subject to federal, state and local laws and regulations with regard to air and water quality, hazardous and solid waste disposal and other environmental matters. Environmental laws and regulations affecting the Duke Energy Registrants include, but are not limited to:
•The CAA,Clean Air Act, as well as state laws and regulations impacting air emissions, including State Implementation Plans related to existing and new national ambient air quality standards for ozone and particulate matter. Owners and/or operators of air emission sources are responsible for obtaining permits and for annual compliance and reporting.
•The CWA, which requires permits for facilities that discharge wastewaters into navigable waters.
•The Comprehensive Environmental Response, Compensation and Liability Act, which can require any individual or entity that currently owns or in the past owned or operated a disposal site, as well as transporters or generators of hazardous substances sent to a disposal site, to share in remediation costs.
23



BUSINESS
•The National Environmental Policy Act, which requires federal agencies to consider potential environmental impacts in their permitting and licensing decisions, including siting approvals.
•Coal Ash Act, as amended, which establishes requirements regarding the use and closure of existing ash basins, the disposal of ash at active coal plants and the handling of surface water and groundwater impacts from ash basins in North Carolina.

22



BUSINESS


•The Solid Waste Disposal Act, as amended by the RCRA, which creates a framework for the proper management of hazardous and nonhazardous solid waste; classifies CCR as nonhazardous waste; and establishes standards for landfill and surface impoundment placement, design, operation and closure, groundwater monitoring, corrective action, and post-closure care.
•The TSCA,Toxic Substances Control Act, which gives EPA the authority to require reporting, recordkeeping and testing requirements, and to place restrictions relating to chemical substances and/or mixtures, including polychlorinated biphenyls.
•
The proposed ACE rule, which will require states to develop CO2 reduction plans based on efficiency (heat rate) improvements at coal-fired power plants.
For more information on environmental matters, see Notes 54 and 9 to the Consolidated Financial Statements, “Commitments and Contingencies – Environmental” and "Asset Retirement Obligations," respectively, and the “Other Matters” section of Management's Discussion and Analysis. Except as otherwise described in these sections, costs to comply with current federal, state and local provisions regulating the discharge of materials into the environment or other potential costs related to protecting the environment are incorporated into the routine cost structure of our various business segments and are not expected to have a material adverse effect on the competitive position, consolidated results of operations, cash flows or financial position of the Duke Energy Registrants.
The "Other Matters" section of Management's Discussion and Analysis includes an estimate of future capital expenditures required to comply withmore information on certain environmental regulations and a discussion of Global Climate Change including the potential impact of current and future legislation related to GHG emissions on the Duke Energy Registrants' operations. Recently passed and potential future environmental statutes and regulations could have a significant impact on the Duke Energy Registrants’ results of operations, cash flows or financial position. However, if and when such statutes and regulations become effective, the Duke Energy Registrants will seek appropriate regulatory recovery of costs to comply within its regulated operations.
DUKE ENERGY CAROLINAS
Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas’ service area covers approximately 24,000 square miles and supplies electric service to 2.62.7 million residential, commercial and industrial customers. For information about Duke Energy Carolinas’ generating facilities, see Item 2, “Properties.” Duke Energy Carolinas is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Substantially all of Duke Energy Carolinas' operations are regulated and qualify for regulatory accounting. Duke Energy Carolinas operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 32 to the Consolidated Financial Statements, “Business Segments.”
PROGRESS ENERGY
Progress Energy is a public utility holding company primarily engaged in the regulated electric utility business and is subject to regulation by the FERC. Progress Energy conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. When discussing Progress Energy’s financial information, it necessarily includes the results of Duke Energy Progress and Duke Energy Florida.
Substantially all of Progress Energy’s operations are regulated and qualify for regulatory accounting. Progress Energy operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 32 to the Consolidated Financial Statements, “Business Segments.”
DUKE ENERGY PROGRESS
Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress’ service area covers approximately 32,00029,000 square miles and supplies electric service to approximately 1.6 million residential, commercial and industrial customers. For information about Duke Energy Progress’ generating facilities, see Item 2, “Properties.” Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Substantially all of Duke Energy Progress’ operations are regulated and qualify for regulatory accounting. Duke Energy Progress operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 32 to the Consolidated Financial Statements, “Business Segments.”
DUKE ENERGY FLORIDA
Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida’s service area covers approximately 13,000 square miles and supplies electric service to approximately 1.81.9 million residential, commercial and industrial customers. For information about Duke Energy Florida’s generating facilities, see Item 2, “Properties.” Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.
Substantially all of Duke Energy Florida’s operations are regulated and qualify for regulatory accounting. Duke Energy Florida operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 32 to the Consolidated Financial Statements, “Business Segments.”

24
23






BUSINESS


DUKE ENERGY OHIO
Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, in the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio also conducts competitive auctions for retail electricity supply in Ohio whereby recovery of the energy price is from retail customers. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC, PHMSA and FERC.
Duke Energy Ohio’s service area covers approximately 3,000 square miles and supplies electric service to approximately 860,000880,000 residential, commercial and industrial customers and provides transmission and distribution services for natural gas to approximately 538,000545,000 customers. For information about Duke Energy Ohio's generating facilities, see Item 2, “Properties.”
KO Transmission, a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities is co-owned by Columbia Gas Transmission Corporation.
Substantially all of Duke Energy Ohio's operations are regulated and qualify for regulatory accounting. Duke Energy Ohio has two reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. For additional information on these business segments, including financial information, see Note 32 to the Consolidated Financial Statements, “Business Segments.”
DUKE ENERGY INDIANA
Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana’s service area covers 23,000 square miles and supplies electric service to 840,000850,000 residential, commercial and industrial customers. For information about Duke Energy Indiana's generating facilities, see Item 2, “Properties.” Duke Energy Indiana is subject to the regulatory provisions of the IURC and FERC.
Substantially all of Duke Energy Indiana’s operations are regulated and qualify for regulatory accounting. Duke Energy Indiana operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 32 to the Consolidated Financial Statements, “Business Segments.”
PIEDMONT
Piedmont is a regulated public utility primarily engaged in the distribution of natural gas to over 11.1 million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including customers served by municipalities who are wholesale customers. For information about Piedmont's natural gas distribution facilities, see Item 2, "Properties." Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC, PHMSA and FERC.
Substantially all of Piedmont’s operations are regulated and qualify for regulatory accounting. Piedmont operates one reportable business segment, Gas Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 32 to the Consolidated Financial Statements, “Business Segments.”
ITEM 1A. RISK FACTORS
In addition to other disclosures within this Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations – Matters Impacting Future Results" for each registrant in Item 7, and other documents filed with the SEC from time to time, the following factors should be considered in evaluating Duke Energy and its subsidiaries. Such factors could affect actual results of operations and cause results to differ substantially from those currently expected or sought. Unless otherwise indicated, risk factors discussed below generally relate to risks associated with all of the Duke Energy Registrants. Risks identified at the Subsidiary Registrant level are generally applicable to Duke Energy.
Business Strategy RisksBUSINESS STRATEGY RISKS
Duke Energy’s future results could be adversely affected if it is unable to implement its business strategy.
Duke Energy’s results of operations depend, in significant part, on the extent to which it can implement its business strategy successfully. Duke Energy's strategy, includingwhich includes transforming the customer experience, modernizing the energy grid, generating cleaner energy, expansion of natural gas infrastructure,achieving net-zero carbon emissions by 2050, modernizing the regulatory construct and digital transformation, and engaging employees and stakeholders to accomplish these priorities, is subject to business, regulatory, economic and competitive uncertainties and contingencies, and required advancements in technology to achieve net-zero carbon emissions by 2050, many of which are beyond its control. As a consequence, Duke Energy may not be able to fully implement or realize the anticipated results of its strategy.

2425






RISK FACTORS


Regulatory, Legislative and Legal RisksREGULATORY, LEGISLATIVE AND LEGAL RISKS
The Duke Energy Registrants’ regulated utility revenues, earnings and results are dependent on state legislation and regulation that affect electric generation, electric and natural gas transmission, distribution and related activities, which may limit their ability to recover costs.
The Duke Energy Registrants’ regulated electric and natural gas utility businesses are regulated on a cost-of-service/rate-of-return basis subject to statutes and regulatory commission rules and procedures of North Carolina, South Carolina, Florida, Ohio, Tennessee, Indiana and Kentucky. If the Duke Energy Registrants’ regulated utility earnings exceed the returns established by the state utility commissions, retail electric and natural gas rates may be subject to review and possible reduction by the commissions,Commissions, which may decrease the Duke Energy Registrants’ earnings. Additionally, if regulatory bodies do not allow recovery of costs incurred in providing service, or do not do so on a timely basis, the Duke Energy Registrants’ earnings could be negatively impacted.
If legislative and regulatory structures were to evolve in such a way that the Duke Energy Registrants’ exclusive rights to serve their regulated customers were eroded, their earnings could be negatively impacted. Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiencyEE 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 and an increase in customer net energy metering, which allows customers with private solar to receive bill credits for surplus power at the full retail amount. Over time, customer adoption of these technologies and increased energy efficiencyEE could result in excess generation resources as well as stranded costs if Duke Energy is not able to fully recover the costs and investment in generation.
State regulators have approved various mechanisms to stabilize natural gas utility margins, including margin decoupling in North Carolina and rate stabilization in South Carolina. State regulators have approved other margin stabilizing mechanisms that, for example, allow for recovery of margin losses associated with negotiated transactions designed to retain large volume customers that could use alternative fuels or that may otherwise directly access natural gas supply through their own connection to an interstate pipeline. If regulators decided to discontinue the Duke Energy Registrants' use of tariff mechanisms, it would negatively impact results of operations, financial conditionposition and cash flows. In addition, regulatory authorities also review whether natural gas costs are prudentprudently incurred and can disallow the recovery of a portion of natural gas costs that the Duke Energy Registrants seek to recover from customers, which would adversely impact earnings.
The rates that the Duke Energy Registrants’ regulated utility businesses are allowed to charge are established by state utility commissions in rate case proceedings, which may limit their ability to recover costs and earn an appropriate return on investment.
The rates that the Duke Energy Registrants’ regulated utility business are allowed to charge significantly influences the results of operations, financial position and cash flows of the Duke Energy Registrants. The regulation of the rates that the regulated utility businesses charge customers is determined, in large part, by state utility commissions in rate case proceedings. Negative decisions made by these regulators, or by any court on appeal of a rate case proceeding, could have a material adverse effect on the Duke Energy Registrants’ results of operations, financial position or cash flows and affect the ability of the Duke Energy Registrants to recover costs and an appropriate return on the significant infrastructure investments being made.
Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs that could adversely affect the Duke Energy Registrants’ financial position, results of operations, financial position or cash flows and their utility businesses.
Increased competition resulting from deregulation or restructuring legislation could have a significant adverse impact on the Duke Energy Registrants’ results of operations, financial position or cash flows. If the retail jurisdictions served by the Duke Energy Registrants become subject to deregulation, the impairment of assets, loss of retail customers, lower profit margins or increased costs of capital, and recovery of stranded costs could have a significant adverse financial impact on the Duke Energy Registrants. Stranded costs primarily include the generation assets of the Duke Energy Registrants whose value in a competitive marketplace may be less than their current book value, as well as above-market purchased power commitments from QFs from whom the Duke Energy Registrants are legally obligated to purchase energy at an avoided cost rate under PURPA. The Duke Energy Registrants cannot predict the extent and timing of entry by additional competitors into the electric markets. The Duke Energy Registrants cannot predict if or when they will be subject to changes in legislation or regulation, nor can they predict the impact of these changes on their results of operations, financial position or cash flows.
The Duke Energy Registrants’ businesses are subject to extensive federal regulation and a wide variety of laws and governmental policies, including taxes, that may change over time in ways that affect operations and costs.
The Duke Energy Registrants are subject to regulations under a wide variety of U.S. federal and state regulations and policies, including by FERC, NRC, EPA and various other federal agencies as well as the North American Electric Reliability Corporation. Regulation affects almost every aspect of the Duke Energy Registrants’ businesses, including, among other things, their ability to: take fundamental business management actions; determine the terms and rates of transmission and distribution services; make acquisitions; issue equity or debt securities; engage in transactions with other subsidiaries and affiliates; and pay dividends upstream to the Duke Energy Registrants. Changes to federal regulations are continuous and ongoing. There can be no assurance that laws, regulations and policies will not be changed in ways that result in material modifications of business models and objectives or affect returns on investment by restricting activities and products, subjecting them to escalating costs, causing delays, or prohibiting them outright.

2526






RISK FACTORS


The Duke Energy Registrants are subject to numerous environmental laws and regulations requiring significant capital expenditures that can increase the cost of operations, and which may impact or limit business plans, or cause exposure to environmental liabilities.
The Duke Energy Registrants are subject to numerous environmental laws and regulations affecting many aspects of their present and future operations, including CCRs, air emissions, water quality, wastewater discharges, solid waste and hazardous waste. These laws and regulations can result in increased capital, operating and other costs. These laws and regulations generally require the Duke Energy Registrants to obtain and comply with a wide variety of environmental licenses, permits, inspections and other approvals. Compliance with environmental laws and regulations can require significant expenditures, including expenditures for cleanup costs and damages arising from contaminated properties. Failure to comply with environmental regulations may result in the imposition of fines, penalties and injunctive measures affecting operating assets. The steps the Duke Energy Registrants could be required to take to ensure their facilities are in compliance could be prohibitively expensive. As a result, the Duke Energy Registrants may be required to shut down or alter the operation of their facilities, which may cause the Duke Energy Registrants to incur losses. Further, the Duke Energy Registrants may not be successful in recovering capital and operating costs incurred to comply with new environmental regulations through existing regulatory rate structures and their contracts with customers. Also, the Duke Energy Registrants may not be able to obtain or maintain from time to time all required environmental regulatory approvals for their operating assets or development projects. Delays in obtaining any required environmental regulatory approvals, failure to obtain and comply with them or changes in environmental laws or regulations to more stringent compliance levels could result in additional costs of operation for existing facilities or development of new facilities being prevented, delayed or subject to additional costs. Although it is not expected that the costs to comply with current environmental regulations will have a material adverse effect on the Duke Energy Registrants’ results of operations, financial position and cash flows due to regulatory cost recovery, the Duke Energy Registrants are at risk that the costs of complying with environmental regulations in the future will have such an effect.
The EPA has enacted or proposed federal regulations governing the management of cooling water intake structures, wastewater and CO2 emissions. New state legislation, including the North Carolina Clean Energy Plan, could impose carbon reduction goals that are more aggressive than the company's plans. These regulations may require the Duke Energy Registrants to make additional capital expenditures and increase operating and maintenance costs.
Duke Energy Carolinas and Duke Energy Progress are subject to the terms of probation set out in judgments of the United States District Court for the Eastern District of North Carolina on May 14, 2015. The judgments are based on events and activities that took place prior to 2015. The terms of probation require the companies to comply with certain environmental regulatory obligations related to coal ash and subject the two companies to oversight by a Court Appointed Monitor. If Duke Energy Carolinas or Duke Energy Progress failed to comply with certain coal ash-related environmental laws and regulations or otherwise violated the terms of probation, it could result in the imposition of additional penalties, including the revocation of probation and re-prosecution of the underlying violations. Although it is not expected that the companies will violate the terms of probation or that additional material penalties would occur, a significant violation of probation could have a material adverse effect on the Duke Energy Registrants’ reputation, results of operations, financial position and cash flows.
The Duke Energy Registrants' operations, capital expenditures and financial results may be affected by regulatory changes related to the impacts of global climate change.
There is continued concern, and increasing activism, both nationally and internationally, about climate change. The EPA and state regulators may adopt and implement regulations to restrict emissions of GHGs to address global climate change. Increased regulation of GHG emissions could impose significant additional costs on the Duke Energy Registrants' electric and natural gas operations, their suppliers and customers. Regulatory changes could also result in generation facilities to be retired early and result in stranded costs if Duke Energy is not able to fully recover the costs and investment in generation.generation, and could also affect demand for energy conservation and renewable products, which could impact our electric and natural gas businesses.
Operational RisksOPERATIONAL RISKS
The Duke Energy Registrants’ operations have been and may be affected by COVID-19 in ways listed below and in ways the registrants cannot predict at this time.
The COVID-19 pandemic has impacted the Duke Energy Registrants' business strategy, results of operations, financial position and cash flows, albeit not materially as of this filing date, from specific activities listed below:
•Decreased demand for electricity and natural gas;
•Delays in rate cases and other legal proceedings;
•An inability to obtain labor or equipment necessary for the construction of generation projects or pipeline expansion;
•The health and availability of our critical personnel and their ability to perform business functions; and
•Actions of state utility commissions or federal or state governments to allow customers to suspend or delay payment of bills related to the provision of electric or natural gas services.
Furthermore, due to the unpredictability of the COVID-19 pandemic’s ongoing impact on global health and economic stability, the Duke Energy Registrants expect that the activities listed below could negatively impact their business strategy, results of operations, financial position and cash flows:
•An inability to procure satisfactory levels of fuels or other necessary equipment to continue production of electricity and delivery of natural gas;
•An inability to maintain information technology systems and protections from cyberattack;
•An inability to obtain financing in volatile financial markets;
•Additional federal regulation tied to stimulus and other aid packages; and
•Impairment charges, which could include real estate as options for working remotely are evaluated and goodwill.
27



RISK FACTORS
The Duke Energy Registrants’ results of operations may be negatively affected by overall market, economic and other conditions that are beyond their control.
Sustained downturns or sluggishness in the economy generally affect the markets in which the Duke Energy Registrants operate and negatively influence operations. Declines in demand for electricity or natural gas as a result of economic downturns in the Duke Energy Registrants’ regulated service territories will reduce overall sales and lessen cash flows, especially as industrial customers reduce production and, therefore, consumption of electricity and the use of natural gas. Although the Duke Energy Registrants’ regulated electric and natural gas businesses are subject to regulated allowable rates of return and recovery of certain costs, such as fuel and purchased natural gas costs, under periodic adjustment clauses, overall declines in electricity or natural gas sold as a result of economic downturn or recession could reduce revenues and cash flows, thereby diminishing results of operations. Additionally, prolonged economic downturns that negatively impact the Duke Energy Registrants’ results of operations and cash flows could result in future material impairment charges to write-down the carrying value of certain assets, including goodwill, to their respective fair values.
The Duke Energy Registrants also sell electricity into the spot market or other competitive power markets on a contractual basis. With respect to such transactions, the Duke Energy Registrants are not guaranteed any rate of return on their capital investments through mandated rates, and revenues and results of operations are likely to depend, in large part, upon prevailing market prices. These market prices may fluctuate substantially over relatively short periods of time and could reduce the Duke Energy Registrants’ revenues and margins, thereby diminishing results of operations.
Factors that could impact sales volumes, generation of electricity and market prices at which the Duke Energy Registrants are able to sell electricity and natural gas are as follows:
•weather conditions, including abnormally mild winter or summer weather that cause lower energy or natural gas usage for heating or cooling purposes, as applicable, and periods of low rainfall that decrease the ability to operate facilities in an economical manner;
•supply of and demand for energy commodities;
•transmission or transportation constraints or inefficiencies that impact nonregulated energy operations;

26



RISK FACTORS


•availability of competitively priced alternative energy sources, which are preferred by some customers over electricity produced from coal, nuclear or natural gas plants, and customer usage of energy-efficient equipment that reduces energy demand;
•natural gas, crude oil and refined products production levels and prices;
•ability to procure satisfactory levels of inventory, such as coal, natural gas and uranium; and
•capacity and transmission service into, or out of, the Duke Energy Registrants’ markets.
Natural disasters or operational accidents may adversely affect the Duke Energy Registrants’ operating results.
Natural disasters or other operational accidents within the company or industry (such as forest fires, earthquakes, hurricanes or natural gas transmission pipeline explosions) could have direct or indirect impacts to the Duke Energy Registrants or to key contractors and suppliers. Further, the generation of electricity and the transportation and storage of natural gas involve inherent operating risks that may result in accidents involving serious injury or loss of life, environmental damage or property damage. Such events could impact the Duke Energy Registrants through changes to policies, laws and regulations whose compliance costs have a significant impact on the Duke Energy Registrants’ results of operations, financial position and cash flows. In addition, if a serious operational accident were to occur, itexisting insurance policies may not cover all of the potential exposures or the actual amount of loss incurred. Any losses not covered by insurance, or any increases in the cost of applicable insurance as a result of such accident, could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.
The reputation and financial condition of the Duke Energy Registrants could be negatively impacted due to their obligations to comply with federal and state regulations, laws, and other legal requirements that govern the operations, assessments, storage, closure, remediation, disposal and monitoring relating to CCR, the high costs and new rate impacts associated with implementing these new CCR-related requirements and the strategies and methods necessary to implement these requirements in compliance with these legal obligations.
As a result of electricity produced for decades at coal-fired power plants, the Duke Energy Registrants manage large amounts of CCR that are primarily stored in dry storage within landfills or combined with water in other surface impoundments, all in compliance with applicable regulatory requirements. However, the potential exists for anotherA CCR-related incident, such as the one that occurred during the 2014 Dan River Steam Station ash basin release, that could raise environmental or public health concerns. Such a CCR-relatedoperational incident could have a material adverse impact on the reputation and results of operations, financial position and cash flows of the Duke Energy Registrants.
28



RISK FACTORS
During 2015, EPA regulations were enacted related to the management of CCR from power plants. These regulations classify CCR as nonhazardous waste under the RCRA and apply to electric generating sites with new and existing landfills and, new and existing surface impoundments, structural fills and CCR piles, and establishesestablish requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments will continue to be independently regulated by existing state laws, regulations and permits, as well as additional legal requirements that may be imposed in the future.future, such as the settlement reached with the NCDEQ to excavate seven of the nine remaining coal ash basins in North Carolina, and partially excavate the remaining two. These federal and state laws, regulations and other legal requirements may require or result in additional expenditures, including increased operating and maintenance costs, and/or result in closure of certain power generating facilities, which could affect the results of operations, financial position and cash flows of the Duke Energy Registrants. The Duke Energy Registrants will continue to seek full cost recovery for expenditures through the normal ratemaking process with state and federal utility commissions, who permit recovery in rates of necessary and prudently incurred costs associated with the Duke Energy Registrants’ regulated operations, and through other wholesale contracts with terms that contemplate recovery of such costs, although there is no guarantee of full cost recovery. In addition, the timing for and amount of recovery of such costs could have a material adverse impact on Duke Energy's cash flows.
The Duke Energy Registrants have recognized significant asset retirement obligationsAROs related to these CCR-related requirements. Closure activities began in 2015 at the four sites specified as high priority by the Coal Ash Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of large amounts of CCR materials to off-site locations for use as structural fill, to appropriate engineered off-site or on-site lined landfills or conversion of the ash for beneficial use. Duke Energy has completed excavation of coal ash at three of the four high priority sites. At other sites, preliminary planning and closure methods have been studied and factored into the estimated retirement and management costs. The Coal Ash Act requires CCR surface impoundments in North Carolina to be closed, with thecosts, and closure method and timing based on a risk ranking classification determined by legislation or state regulators. Additionally, the RCRA required closure timing depends upon meeting or continuing to meet certain criteria.activities have commenced. As the closure and CCR management work progresses and final closure plans and corrective action measures are developed and approved at each site, the scope and complexity of work and the amount of CCR material could be greater than estimates and could, therefore, materially increase compliance expenditures and rate impacts.
The Duke Energy Registrants’ financial position, results of operations, financial position and cash flows may be negatively affected by a lack of growth or slower growth in the number of customers, or decline in customer demand or number of customers.
Growth in customer accounts and growth of customer usage each directly influence demand for electricity and natural gas and the need for additional power generation and delivery facilities. Customer growth and customer usage are affected by a number ofseveral factors outside the control of the Duke Energy Registrants, such as mandated energy efficiencyEE measures, demand-side management goals, distributed generation resources and economic and demographic conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.
Certain regulatory and legislative bodies have introduced or are considering requirements and/or incentives to reduce energy consumption by certain dates. Additionally, technological advances driven by federal laws mandating new levels of energy efficiencyEE in end-use electric devices or other improvements in or applications of technology could lead to declines in per capita energy consumption.
Advances in distributed generation technologies that produce power, including fuel cells, microturbines, wind turbines and solar cells, may reduce the cost of alternative methods of producing power to a level competitive with central power station electric production utilized by the Duke Energy Registrants.

27



RISK FACTORS


Some or all of these factors could result in a lack of growth or decline in customer demand for electricity or number of customers and may cause the failure of the Duke Energy Registrants to fully realize anticipated benefits from significant capital investments and expenditures, which could have a material adverse effect on their results of operations, financial position and cash flows.
Furthermore, the Duke Energy Registrants currently have energy efficiencyEE riders in place to recover the cost of energy efficiencyEE programs in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky. Should the Duke Energy Registrants be required to invest in conservation measures that result in reduced sales from effective conservation, regulatory lag in adjusting rates for the impact of these measures could have a negative financial impact.
The Duke Energy Registrants future results may be impacted by changing customer expectations and demands including heightened emphasis on environmental, social and governance concerns.
Duke Energy’s outcomes are influenced by the expectations of our customers and stakeholders. Those expectations are based on the corefundamentals of reliability and affordability but are also increasingly focused on our ability to meet rapidly changing demands for new and varied products, services and offerings. Additionally, the risks of global climate change continues to shape our customers’ sustainability goals and energy needs. Failure to meet those expectations or to adequately address the risks and external pressures from regulators, investors and other stakeholders may impact favorable outcomes in future rate cases and the results of operations for the Duke Energy Registrants.
The Duke Energy Registrants’ operating results may fluctuate on a seasonal and quarterly basis and can be negatively affected by changes in weather conditions and severe weather, including extreme weather conditions associated with climate change.
Electric power generation and natural gas distribution are generally seasonal businesses. In most parts of the U.S., the demand for power peaks during the warmer summer months, with market prices also typically peaking at that time. In other areas, demand for power peaks during the winter. Demand for natural gas peaks during the winter months. Further, extreme weather conditions such as hurricanes, droughts, heat waves, winter storms and severe weather associated with climate change could cause these seasonal fluctuations to be more pronounced. As a result, the overall operating results of the Duke Energy Registrants’ businesses may fluctuate substantially on a seasonal and quarterly basis and thus make period-to-period comparison less relevant.
29



RISK FACTORS
Sustained severe drought conditions could impact generation by hydroelectric plants, as well as fossil and nuclear plant operations, as these facilities use water for cooling purposes and for the operation of environmental compliance equipment. Furthermore, destruction caused by severe weather events, such as hurricanes, flooding, tornadoes, severe thunderstorms, snow and ice storms, can result in lost operating revenues due to outages, property damage, including downed transmission and distribution lines, and additional and unexpected expenses to mitigate storm damage. The cost of storm restoration efforts may not be fully recoverable through the regulatory process.
The Duke Energy Registrants’ sales may decrease if they are unable to gain adequate, reliable and affordable access to transmission assets.
The Duke Energy Registrants depend on transmission and distribution facilities owned and operated by utilities and other energy companies to deliver electricity sold to the wholesale market. The FERC’s power transmission regulations require wholesale electric transmission services to be offered on an open-access, non-discriminatory basis. If transmission is disrupted, or if transmission capacity is inadequate, the Duke Energy Registrants’ ability to sell and deliver products may be hindered.
The different regional power markets have changing regulatory structures, which could affect growth and performance in these regions. In addition, the ISOs who oversee the transmission systems in regional power markets have imposed in the past, and may impose in the future, price limitations and other mechanisms to address volatility in the power markets. These types of price limitations and other mechanisms may adversely impact the profitability of the Duke Energy Registrants’ wholesale power marketing business.
Duke Energy may be unable to complete necessary or desirable pipeline expansion or infrastructure development or maintenance projects, which may prevent the Duke Energy Registrants from expanding the natural gas business.
In order to serve current or new natural gas customers or expand the service to existing customers, the Duke Energy Registrants need to maintain, expand or upgrade distribution, transmission and/or storage infrastructure, including laying new pipeline and building compressor stations. Duke Energy Registrants have made significant investments in a number of pipeline development projects, which are being operated and constructed by third-party joint venture partners. The Duke Energy Registrants must rely on their third-party joint venture partners for proper construction management of the projects and are dependent upon contractors for the successful and timely completion of the projects. In addition, various factors, such as the inability to obtain required approval from local, state and/or federal regulatory and governmental bodies, public opposition to projects, adverse litigation rulings, inability to obtain adequate financing, competition for labor and materials, construction delays, cost overruns and the inability to negotiate acceptable agreements relating to rights of way, construction or other material development components, may prevent or delay the completion of projects or materially increase the cost of such projects, which could have a material adverse effect on the results of operations and financial position of Duke Energy.
The availability of adequate interstate pipeline transportation capacity and natural gas supply may decrease.
The Duke Energy Registrants purchase almost all of their natural gas supply from interstate sources that must be transported to the applicable service territories. Interstate pipeline companies transport the natural gas to the Duke Energy Registrants' systems under firm service agreements that are designed to meet the requirements of their core markets. A significant disruption to interstate pipelines capacity or reduction in natural gas supply due to events including, but not limited to, operational failures or disruptions, hurricanes, tornadoes, floods, freeze off of natural gas wells, terrorist or cyberattacks or other acts of war or legislative or regulatory actions or requirements, including remediation related to integrity inspections, could reduce the normal interstate supply of natural gas and thereby reduce earnings. Moreover, if additional natural gas infrastructure, including, but not limited to, exploration and drilling rigs and platforms, processing and gathering systems, off-shoreoffshore pipelines, interstate pipelines and storage, cannot be built at a pace that meets demand, then growth opportunities could be limited and earnings negatively impacted.limited.
Fluctuations in commodity prices or availability may adversely affect various aspects of the Duke Energy Registrants’ operations as well as their financial position, results of operations, financial position and cash flows.
The Duke Energy Registrants are exposed to the effects of market fluctuations in the price of natural gas, coal, fuel oil, nuclear fuel, electricity and other energy-related commodities as a result of their ownership of energy-related assets. Fuel costs are recovered primarily through cost-recovery clauses, subject to the approval of state utility commissions.

28



RISK FACTORS


Additionally, the Duke Energy Registrants are exposed to risk that counterparties will not be able to fulfill their obligations. Disruption in the delivery of fuel, including disruptions as a result of, among other things, bankruptcies, transportation delays, weather, labor relations, force majeure events or environmental regulations affecting any of these fuel suppliers, could limit the Duke Energy Registrants' ability to operate their facilities. Should counterparties fail to perform, the Duke Energy Registrants might be forced to replace the underlying commitment at prevailing market prices possibly resulting in losses in addition to the amounts, if any, already paid to the counterparties.
Certain of the Duke Energy Registrants’ hedge agreements may result in the receipt of, or posting of, collateral with counterparties, depending on the daily market-based calculation of financial exposure of the derivative positions. Fluctuations in commodity prices that lead to the return of collateral received and/or the posting of collateral with counterparties could negatively impact liquidity. Downgrades in the Duke Energy Registrants’ credit ratings could lead to additional collateral posting requirements. The Duke Energy Registrants continually monitor derivative positions in relation to market price activity.
Potential terrorist activities, or military or other actions, could adversely affect the Duke Energy Registrants’ businesses.
The continued threat of terrorism and the impact of retaliatory military and other action by the U.S. and its allies may lead to increased political, economic and financial market instability and volatility in prices for natural gas and oil, which may have material adverse effects in ways the Duke Energy Registrants cannot predict at this time. In addition, future acts of terrorism and possible reprisals as a consequence of action by the U.S. and its allies could be directed against companies operating in the U.S. Information technology systems, transmission and distribution and generation facilities such as nuclear plants could be potential targets of terrorist activities or harmful activities by individuals or groups that could have a material adverse effect on Duke Energy Registrants' businesses. In particular, the Duke Energy Registrants may experience increased capital and operating costs to implement increased security for their information technology systems, transmission and distribution and generation facilities, including nuclear power plants under the NRC’s design basis threat requirements. These increased costs could include additional physical plant security and security personnel or additional capability following a terrorist incident.
The failure of Duke Energy information technology systems, or the failure to enhance existing information technology systems and implement new technology, could adversely affect the Duke Energy Registrants’ businesses.
Duke Energy’s operations are dependent upon the proper functioning of its internal systems, including the information technology systems that support our underlying business processes. Any significant failure or malfunction of such information technology systems may result in disruptions of our operations. In the ordinary course of business, we rely on information technology systems, including the internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data, including (i) intellectual property, (ii) proprietary business information, (iii) personally identifiable information of our customers and employees, and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain activities. Our information technology systems are dependent upon global communications and cloud service providers, as well as their respective vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such failures and outages in the future. These providers’ systems are susceptible to cybersecurity and data breaches, outages from fire, floods, power loss, telecommunications failures, break-ins and similar events. Failure to prevent or mitigate data loss from system failures or outages could materially affect the results of operations, financial position and cash flows of the Duke Energy Registrants.
In addition to maintaining our current information technology systems, Duke Energy believes the digital transformation of its business is key to driving internal efficiencies as well as providing additional capabilities to customers. Duke Energy’s information technology systems are critical to cost-effective, reliable daily operations and our ability to effectively serve our customers. We expect our customers to continue to demand more sophisticated technology-driven solutions and we must enhance or replace our information technology systems in response. This involves significant development and implementation costs to keep pace with changing technologies and customer demand. If we fail to successfully implement critical technology, or if it does not provide the anticipated benefits or meet customer demands, such failure could materially adversely affect our business strategy as well as impact the results of operations, financial position and cash flows of the Duke Energy Registrants.

29



RISK FACTORS


Cyberattacks and data security breaches could adversely affect the Duke Energy Registrants' businesses.
Cybersecurity risks have increased in recent years as a result of the proliferation of new technologies and the increased sophistication, magnitude and frequency of cyberattacks and data security breaches. Duke Energy relies on the continued operation of sophisticated digital information technology systems and network infrastructure, which are part of an interconnected regional grid. Additionally, connectivity to the internet continues to increase through grid modernization and other operational excellence initiatives. Because of the critical nature of the infrastructure, increased connectivity to the internet and technology systems’ inherent vulnerability to disability or failures due to hacking, viruses, acts of war or terrorism or other types of data security breaches, the Duke Energy Registrants face a heightened risk of cyberattack from foreign or domestic sources and have been subject, and will likely continue to be subject, to attempts to gain unauthorized access to information and/or information systems or to disrupt utility operations through computer viruses and phishing attempts either directly or indirectly through its material vendors or related third parties. In the event of a significant cybersecurity breach on either the Duke Energy Registrants or with one of our material vendors or related third parties, the Duke Energy Registrants could (i) have business operations disrupted, including the disruption of the operation of our assets and the power grid, theft of confidential company, employee, retiree, shareholder, vendor or customer information, and general business systems and process interruption or compromise, including preventing the Duke Energy Registrants from servicing customers, collecting revenues or the recording, processing and/or reporting financial information correctly, (ii) experience substantial loss of revenues, repair and restoration costs, penalties and costs for lack of compliance with relevant regulations, implementation costs for additional security measures to avert future cyberattacks and other financial loss and (iii) be subject to increased regulation, litigation and reputational damage. While Duke Energy maintains insurance relating to cybersecurity events, such insurance is subject to a number of exclusions and may be insufficient to offset any losses, costs or damage experienced. Also, the market for cybersecurity insurance is relatively new and coverage available for cybersecurity events may evolveis evolving as the industry matures.
30



RISK FACTORS
The Duke Energy Registrants are subject to standards enacted by the North American Electric Reliability Corporation and enforced by FERC regarding protection of the physical and cyber security of critical infrastructure assets required for operating North America's bulk electric system. The Duke Energy Registrants are also subject to regulations set by the Nuclear Regulatory Commission regarding the protection of digital computer and communication systems and networks required for the operation of nuclear power plants. While the Duke Energy Registrants believe they are in compliance with such standards and regulations, the Duke Energy Registrants have from time to time been, and may in the future be, found to be in violation of such standards and regulations. In addition, compliance with or changes in the applicable standards and regulations may subject the Duke Energy Registrants to higher operating costs and/or increased capital expenditures as well as substantial fines for non-compliance.
Failure to attract and retain an appropriately qualified workforce could unfavorably impact the Duke Energy Registrants’ results of operations.
Certain events, such as an aging workforce, mismatch of skill set or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge base and the lengthy time required for skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may increase. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or future availability and cost of contract labor may adversely affect the ability to manage and operate the business, especially considering the workforce needs associated with nuclear generation facilities and new skills required to operate a modernized, technology-enabled power grid. If the Duke Energy Registrants are unable to successfully attract and retain an appropriately qualified workforce, their results of operations, financial position and cash flows could be negatively affected.
The costs of decommissioning Duke Energy Florida’s Crystal River Unit 3 could prove to be more extensive than is currently identified.
Costs to decommission the plant could exceed estimates and, if not recoverable through the regulatory process, could adversely affect Duke Energy’s, Progress Energy’s and Duke Energy Florida’s results of operations, financial position and cash flows.
Duke Energy Ohio’s and Duke Energy Indiana’s membership in an RTO presents risks that could have a material adverse effect on their results of operations, financial position and cash flows.
The rules governing the various regional power markets may change, which could affect Duke Energy Ohio’s and Duke Energy Indiana’s costs and/or revenues. To the degree Duke Energy Ohio and Duke Energy Indiana incur significant additional fees and increased costs to participate in an RTO, their results of operations may be impacted. Duke Energy Ohio and Duke Energy Indiana may be allocated a portion of the cost of transmission facilities built by others due to changes in RTO transmission rate design. Duke Energy Ohio and Duke Energy Indiana may be required to expand their transmission system according to decisions made by an RTO rather than their own internal planning process. In addition, RTOs have been developing rules associated with the allocation and methodology of assigning costs associated with improved transmission reliability, reduced transmission congestion and firm transmission rights that may have a financial impact on the results of operations, financial position and cash flows of Duke Energy Ohio and Duke Energy Indiana.
As members of an RTO, Duke Energy Ohio and Duke Energy Indiana are subject to certain additional risks, including those associated with the allocation among RTO members, of losses caused by unreimbursed defaults of other participants in the RTO markets and those associated with complaint cases filed against an RTO that may seek refunds of revenues previously earned by RTO members.

30



RISK FACTORS


The Duke Energy Registrants may not recover costs incurred to begin construction on projects that are canceled.
Duke Energy’s long-term strategy requires the construction of new projects, either wholly owned or partially owned, which involve a number of risks, including construction delays, nonperformance by equipment and other third-party suppliers, and increases in equipment and labor costs. To limit the risks of these construction projects, the Duke Energy Registrants enter into equipment purchase orders and construction contracts and incur engineering and design service costs in advance of receiving necessary regulatory approvals and/or siting or environmental permits. If any of these projects are canceled for any reason, including failure to receive necessary regulatory approvals and/or siting or environmental permits, significant cancellation penalties under the equipment purchase orders and construction contracts could occur. In addition, if any construction work or investments have been recorded as an asset, an impairment may need to be recorded in the event the project is canceled.
Nuclear Generation RisksThe Duke Energy Registrants are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.
The financial condition of some insurance companies, actual or threatened physical or cyberattacks, and natural disasters, among other things, could have disruptive effects on insurance markets. The availability of insurance covering risks that the Duke Energy Registrants and their respective competitors typically insure against may decrease, and the insurance that the Duke Energy Registrants are able to obtain may have higher deductibles, higher premiums, and more restrictive policy terms. Further, the insurance policies may not cover all of the potential exposures or the actual amount of loss incurred. Any losses not covered by insurance, or any increases in the cost of applicable insurance, could adversely affect the results of operations, financial position or cash flows of the affected Duke Energy Registrant.
NUCLEAR GENERATION RISKS
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida may incur substantial costs and liabilities due to their ownership and operation of nuclear generating facilities.
Ownership interests in and operation of nuclear stations by Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida subject them to various risks. These risks include, among other things: the potential harmful effects on the environment and human health resulting from the current or past operation of nuclear facilities and the storage, handling and disposal of radioactive materials; limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations; and uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives.
Ownership and operation of nuclear generation facilities requires compliance with licensing and safety-related requirements imposed by the NRC. In the event of non-compliance, the NRC may increase regulatory oversight, impose fines or shut down a unit depending upon its assessment of the severity of the situation. Revised security and safety requirements promulgated by the NRC, which could be prompted by, among other things, events within or outside of the control of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, such as a serious nuclear incident at a facility owned by a third party, could necessitate substantial capital and other expenditures, as well as assessments to cover third-party losses. In addition, if a serious nuclear incident were to occur, it could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.
Liquidity, Capital Requirements and Common Stock Risks
31



RISK FACTORS
LIQUIDITY, CAPITAL REQUIREMENTS AND COMMON STOCK RISKS
The Duke Energy Registrants rely on access to short-term borrowings and longer-term debt and equity markets to finance their capital requirements and support their liquidity needs. Access to those markets can be adversely affected by a number of conditions, many of which are beyond the Duke Energy Registrants’ control.
The Duke Energy Registrants’ businesses are significantly financed through issuances of debt and equity. The maturity and repayment profile of debt used to finance investments often does not correlate to cash flows from their assets. Accordingly, as a source of liquidity for capital requirements not satisfied by the cash flows from their operations and to fund investments originally financed through debt instruments with disparate maturities, the Duke Energy Registrants rely on access to short-term money markets as well as longer-term capital markets. The Subsidiary Registrants also rely on access to short-term intercompany borrowings. If the Duke Energy Registrants are not able to access debt or equity at competitive rates or at all, the ability to finance their operations and implement their strategy and business plan as scheduled could be adversely affected. An inability to access debt and equity may limit the Duke Energy Registrants’ ability to pursue improvements or acquisitions that they may otherwise rely on for future growth.
Market disruptions may increase the cost of borrowing or adversely affect the ability to access one or more financial markets. Such disruptions could include: economic downturns, the bankruptcy of an unrelated energy company, unfavorable capital market conditions, market prices for electricity and natural gas, actual or threatened terrorist attacks, or the overall health of the energy industry. The availability of credit under Duke Energy’s Master Credit Facility depends upon the ability of the banks providing commitments under the facility to provide funds when their obligations to do so arise. Systematic risk of the banking system and the financial markets could prevent a bank from meeting its obligations under the facility agreement.
Duke Energy maintains a revolving credit facility to provide backup for its commercial paper program and letters of credit to support variable rate demand tax-exempt bonds that may be put to the Duke Energy Registrant issuer at the option of the holder. The facility includes borrowing sublimits for the Duke Energy Registrants, each of whom is a party to the credit facility, and financial covenants that limit the amount of debt that can be outstanding as a percentage of the total capital for the specific entity. Failure to maintain these covenants at a particular entity could preclude Duke Energy from issuing commercial paper or the Duke Energy Registrants from issuing letters of credit or borrowing under the Master Credit Facility.
The Duke Energy Registrants must meet credit quality standards and there is no assurance they will maintain investment grade credit ratings. If the Duke Energy Registrants are unable to maintain investment grade credit ratings, they would be required under credit agreements to provide collateral in the form of letters of credit or cash, which may materially adversely affect their liquidity.
Each of the Duke Energy Registrants’ senior long-term debt issuances is currently rated investment grade by various rating agencies. The Duke Energy Registrants cannot ensure their senior long-term debt will be rated investment grade in the future.
If the rating agencies were to rate the Duke Energy Registrants below investment grade, borrowing costs would increase, perhaps significantly. In addition, the potential pool of investors and funding sources would likely decrease. Further, if the short-term debt rating were to fall, access to the commercial paper market could be significantly limited.

31



RISK FACTORS


A downgrade below investment grade could also require the posting of additional collateral in the form of letters of credit or cash under various credit, commodity and capacity agreements and trigger termination clauses in some interest rate derivative agreements, which would require cash payments. All of these events would likely reduce the Duke Energy Registrants’ liquidity and profitability and could have a material effect on their results of operations, financial position and cash flows.
Non-compliance with debt covenants or conditions could adversely affect the Duke Energy Registrants’ ability to execute future borrowings.
The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements.
Market performance and other changes may decrease the value of the NDTF investments of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, which then could require significant additional funding.
Ownership and operation of nuclear generation facilities also requires the maintenance of funded trusts that are intended to pay for the decommissioning costs of the respective nuclear power plants. The performance of the capital markets affects the values of the assets held in trust to satisfy these future obligations. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have significant obligations in this area and hold significant assets in these trusts. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below projected rates of return. Although a number of factors impact funding requirements, a decline in the market value of the assets may increase the funding requirements of the obligations for decommissioning nuclear plants. If Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are unable to successfully manage their NDTF assets, their results of operations, financial position and cash flows could be negatively affected.
32



RISK FACTORS
Poor investment performance of the Duke Energy pension plan holdings and other factors impacting pension plan costs could unfavorably impact the Duke Energy Registrants’ liquidity and results of operations.
The costs of providing non-contributory defined benefit pension plans are dependent upon a number of factors, such as the rates of return on plan assets, discount rates, the level of interest rates used to measure the required minimum funding levels of the plans, future government regulation and required or voluntary contributions made to the plans. The Subsidiary Registrants are allocated their proportionate share of the cost and obligations related to these plans. Without sustained growth in the pension investments over time to increase the value of plan assets and, depending upon the other factors impacting costs as listed above, Duke Energy could be required to fund its plans with significant amounts of cash. Such cash funding obligations, and the Subsidiary Registrants’ proportionate share of such cash funding obligations, could have a material impact on the Duke Energy Registrants’ results of operations, financial position and cash flows.
Duke Energy is a holding company and depends on the cash flows from its subsidiaries to meet its financial obligations.
Because Duke Energy is a holding company with no operations or cash flows of its own, its ability to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on its common stock, is primarily dependent on the net income and cash flows of its subsidiaries and the ability of those subsidiaries to pay upstream dividends or to repay borrowed funds. Prior to funding Duke Energy, its subsidiaries have regulatory restrictions and financial obligations that must be satisfied. These subsidiaries are separate legal entities and have no obligation to provide Duke Energy with funds. In addition, Duke Energy may provide capital contributions or debt financing to its subsidiaries under certain circumstances, which would reduce the funds available to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on Duke Energy’s common stock.
GENERAL RISKS
The failure of Duke Energy information technology systems, or the failure to enhance existing information technology systems and implement new technology, could adversely affect the Duke Energy Registrants’ businesses.
Duke Energy’s operations are dependent upon the proper functioning of its internal systems, including the information technology systems that support our underlying business processes. Any significant failure or malfunction of such information technology systems may result in disruptions of our operations. In the ordinary course of business, we rely on information technology systems, including the internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data, including (i) intellectual property, (ii) proprietary business information, (iii) personally identifiable information of our customers, employees, retirees and shareholders and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain activities. Our information technology systems are dependent upon global communications and cloud service providers, as well as their respective vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such failures and outages in the future. These providers’ systems are susceptible to cybersecurity and data breaches, outages from fire, floods, power loss, telecommunications failures, break-ins and similar events. Failure to prevent or mitigate data loss from system failures or outages could materially affect the results of operations, financial position and cash flows of the Duke Energy Registrants.
In addition to maintaining our current information technology systems, Duke Energy believes the digital transformation of its business is key to driving internal efficiencies as well as providing additional capabilities to customers. Duke Energy’s information technology systems are critical to cost-effective, reliable daily operations and our ability to effectively serve our customers. We expect our customers to continue to demand more sophisticated technology-driven solutions and we must enhance or replace our information technology systems in response. This involves significant development and implementation costs to keep pace with changing technologies and customer demand. If we fail to successfully implement critical technology, or if it does not provide the anticipated benefits or meet customer demands, such failure could materially adversely affect our business strategy as well as impact the results of operations, financial position and cash flows of the Duke Energy Registrants.
Potential terrorist activities, or military or other actions, could adversely affect the Duke Energy Registrants’ businesses.
The continued threat of terrorism and the impact of retaliatory military and other action by the U.S. and its allies may lead to increased political, economic and financial market instability and volatility in prices for natural gas and oil, which may have material adverse effects in ways the Duke Energy Registrants cannot predict at this time. In addition, future acts of terrorism and possible reprisals as a consequence of action by the U.S. and its allies could be directed against companies operating in the U.S. Information technology systems, transmission and distribution and generation facilities such as nuclear plants could be potential targets of terrorist activities or harmful activities by individuals or groups that could have a material adverse effect on Duke Energy Registrants' businesses. In particular, the Duke Energy Registrants may experience increased capital and operating costs to implement increased security for their information technology systems, transmission and distribution and generation facilities, including nuclear power plants under the NRC’s design basis threat requirements. These increased costs could include additional physical plant security and security personnel or additional capability following a terrorist incident.
Failure to attract and retain an appropriately qualified workforce could unfavorably impact the Duke Energy Registrants’ results of operations.
Certain events, such as an aging workforce, mismatch of skill set or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge base and the lengthy time required for skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may increase. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or future availability and cost of contract labor may adversely affect the ability to manage and operate the business, especially considering the workforce needs associated with nuclear generation facilities and new skills required to operate a modernized, technology-enabled power grid. If the Duke Energy Registrants are unable to successfully attract and retain an appropriately qualified workforce, their results of operations, financial position and cash flows could be negatively affected.
33



UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

34
32



PROPERTIES


ITEM 2. PROPERTIES
ELECTRIC UTILITIES AND INFRASTRUCTURE
The following table provides information related to the Electric Utilities and Infrastructure's generation stations as of December 31, 2018.2020. The MW displayed in the table below are based on summer capacity. Ownership interest in all facilities is 100 percent100% unless otherwise indicated.
Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Carolinas
OconeeNuclearUraniumSC2,554 
McGuireNuclearUraniumNC2,316 
Catawba(a)
NuclearUraniumSC445 
Belews CreekFossilCoal/GasNC2,220 
MarshallFossilCoal/GasNC2,058 
J.E. Rogers FossilCoal/GasNC1,388 
Lincoln Combustion Turbine (CT)FossilGas/OilNC1,193 
AllenFossilCoalNC1,098 
Rockingham CTFossilGas/OilNC825 
W.S. Lee Combined Cycle (CC)(b)
FossilGasSC686 
Buck CCFossilGasNC668 
Dan River CCFossilGasNC662 
Mill Creek CTFossilGas/OilSC563 
W.S. LeeFossilGasSC170 
W.S. Lee CTFossilGas/OilSC84 
Clemson CHPFossilGasSC13 
Bad CreekHydroWaterSC1,440 
JocasseeHydroWaterSC780 
Cowans FordHydroWaterNC324 
KeoweeHydroWaterSC152 
Other small facilities (19 plants)HydroWaterNC/SC603 
Distributed generationRenewableSolarNC38 
Total Duke Energy Carolinas20,280
35


PROPERTIES
Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Progress
BrunswickNuclearUraniumNC1,870 
HarrisNuclearUraniumNC964 
RobinsonNuclearUraniumSC759 
RoxboroFossilCoalNC2,439 
Smith CCFossilGas/OilNC1,085 
H.F. Lee CCFossilGas/OilNC888 
Wayne County CTFossilGas/OilNC857 
Smith CTFossilGas/OilNC772 
MayoFossilCoalNC727 
L.V. Sutton CCFossilGas/OilNC607 
Owned MW
FacilityAsheville CCPlant TypeFossilPrimary FuelGas/OilLocationNCCapacity
Duke Energy Carolinas474 
OconeeNuclearUraniumSC2,554
McGuireNuclearUraniumNC2,316
Catawba(a)
NuclearUraniumSC445
Belews CreekFossilCoalNC2,220
MarshallFossilCoalNC2,058
J.E. Rogers FossilCoalNC1,388
Lincoln CTFossilGas/OilNC1,193
AllenFossilCoalNC1,098
Rockingham CTFossilGas/OilNC825
Buck CCFossilGasNC668
Dan River CCFossilGasNC662
Mill Creek CTFossilGas/OilSC563
W.S. Lee CC(b)
 Fossil Gas SC686
W.S. LeeFossilGasSC170
W.S. Lee CTFossilGas/OilSC84
Bad CreekHydroWaterSC1,360
JocasseeHydroWaterSC780
Cowans FordHydroWaterNC324
KeoweeHydroWaterSC152
Other small facilities (23 plants)HydroWaterNC/SC632
Distributed generationRenewableSolarNC31
Total Duke Energy Carolinas20,209
Owned MW
FacilityAsheville CTPlant TypeFossilPrimary FuelGas/OilLocationNCCapacity
320 
Duke Energy ProgressDarlington CTFossilGas/OilSC234 
BrunswickWeatherspoon CTNuclearFossilUraniumGas/OilNC1,870
124 
HarrisNuclearUraniumNC932
RobinsonNuclearUraniumSC741
RoxboroFossilCoalNC2,439
Smith CCFossilGas/OilNC1,073
H.F. Lee CCFossilGas/OilNC888
Wayne County CTFossilGas/OilNC857
Smith CTFossilGas/OilNC772
Darlington CTFossilGas/OilSC613
MayoFossilCoalNC727
L.V. Sutton CCFossilGas/OilNC607
AshevilleFossilCoalNC378
Asheville CTFossilGas/OilNC320
Weatherspoon CTFossilGas/OilNC124
L.V. Sutton CT (Black Start)FossilGas/OilNC78
78 
Blewett CTFossilOilNC52
52 
WaltersHydroWaterNC112
112 
Other small facilities (3 plants)(3)HydroWaterNC115
115 
Distributed generationRenewableSolarNC49
49 
Asheville – Rock Hill BatteryRenewableStorageNC7 
Total Duke Energy Progress12,747
12,533

33

Owned MW
PROPERTIESFacilityPlant TypePrimary FuelLocationCapacity


Duke Energy Florida
Hines CCFossilGas/OilFL2,054 
Citrus County CCFossilGasFL1,610 
Crystal RiverFossilCoalFL1,422 
Bartow CCFossilGas/OilFL1,169 
AncloteFossilGasFL1,013 
Intercession City CTFossilGas/OilFL951 
Osprey CCFossilGas/OilFL583 
DeBary CTFossilGas/OilFL559 
Tiger Bay CCFossilGas/OilFL200 
Bayboro CTFossilOilFL171 
Bartow CTFossilGas/OilFL168 
Suwannee River CTFossilGasFL149 
Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Florida
Citrus County CC Fossil Gas FL1,632
Crystal RiverFossilCoalFL1,422
Hines CCFossilGas/OilFL2,045
Bartow CCFossilGas/OilFL1,104
AncloteFossilGasFL1,003
Intercession City CTFossilGas/OilFL951
Osprey CCFossilGas/OilFL582
DeBary CTFossilGas/OilFL561
Tiger Bay CCFossilGas/OilFL200
Bartow CTFossilGas/OilFL168
Bayboro CTFossilOilFL171
Suwannee River CTFossilGasFL149
Higgins CTFossilGas/OilFL107
Avon Park CTFossilGas/OilFL48
University of Florida CoGen CTFossilGasFL44
HamiltonRenewableSolarFL43
Distributed generationRenewableSolarFL8
Total Duke Energy Florida10,238
Owned MW
FacilityUniversity of Florida CoGen CTPlant TypeFossilPrimary FuelGasLocationFLCapacity
43 
Duke Energy OhioDistributed generationRenewableSolarFL
East BendFossil195 CoalKY600
Woodsdale CTFossilGas/PropaneOH476
Beckjord Battery StorageRenewableStorageOH4
Total Duke Energy Ohio1,080
Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Indiana
Gibson(c)
FossilCoalIN2,822
Cayuga(d)
FossilCoal/OilIN1,005
EdwardsportFossilCoalIN595
Madison CTFossilGasOH566
Vermillion CT(e)
FossilGasIN360
Wheatland CTFossilGasIN450
Noblesville CCFossilGas/OilIN264
GallagherFossilCoalIN280
Henry County CTFossilGas/OilIN129
Cayuga CTFossilGas/OilIN80
MarklandHydroWaterIN45
Distributed generationRenewableSolarIN10
Total Duke Energy IndianaFlorida6,606
10,287

34

PROPERTIES


Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Ohio
East BendFossilCoalKY600 
Woodsdale CTFossilGas/PropaneOH476 
Total Duke Energy Ohio1,076
36


PROPERTIES
Owned MW
Totals byFacilityPlant TypePrimary FuelLocationCapacity
Total Electric UtilitiesDuke Energy Indiana50,880
Totals By Plant Type
Nuclear8,858
Fossil38,357
Hydro3,520
Renewable145
Total Electric Utilities50,880
(a)
Gibson(c)
Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA. Duke Energy Carolinas' ownership is 19.25 percent of the facility.Fossil
CoalIN2,822 
(b)
Cayuga(d)
Jointly owned with NCEMC. Duke Energy Carolinas' ownership is 86.67 percent of the facility.Fossil
Coal/OilIN1,005 
(c)EdwardsportDuke Energy Indiana owns and operates Gibson Station Units 1 through 4 and is a joint owner of unit 5 with WVPA and Indiana Municipal Power Agency. Duke Energy Indiana operates unit 5 and owns 50.05 percent.Fossil
CoalIN595 
(d)Madison CTIncludes Cayuga Internal Combustion.Fossil
GasOH566 
(e)Wheatland CTJointly owned with WVPA.FossilGasIN450 
Vermillion CT(e)
FossilGasIN360 
GallagherFossilCoalIN280 
Noblesville CCFossilGas/OilIN264 
Henry County CTFossilGas/OilIN129 
Cayuga CTFossilGas/OilIN86 
MarklandHydroWaterIN51 
Distributed generationRenewableSolarIN11 
Camp Atterbury BatteryRenewableStorageIN4 
Nabb BatteryRenewableStorageIN4 
Crane BatteryRenewableStorageIN4 
Total Duke Energy Indiana's ownership is 62.50 percent of the facility.Indiana6,631
Owned MW
Totals by TypeCapacity
Total Electric Utilities50,807
Totals by Plant Type
Nuclear8,908 
Fossil38,010 
Hydro3,577 
Renewable312 
Total Electric Utilities50,807
(a)Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA. Duke Energy Carolinas' ownership is 19.25% of the facility.
(b)Jointly owned with NCEMC. Duke Energy Carolinas' ownership is 87.27% of the facility.
(c)Duke Energy Indiana owns and operates Gibson Station Units 1 through 4 and is a joint owner of unit 5 with WVPA and IMPA. Duke Energy Indiana operates unit 5 and owns 50.05%.
(d)Includes Cayuga Internal Combustion.
(e)Jointly owned with WVPA. Duke Energy Indiana's ownership is 62.5% of the facility.
The following table provides information related to Electric Utilities and Infrastructure's electric transmission and distribution properties as of December 31, 2018.
2020.
 Duke
Duke
Duke
Duke
Duke
Duke
Duke
Energy
Energy
Energy
Energy
Energy
DukeEnergy
Energy
Carolinas
Progress
Florida
Ohio
Indiana
EnergyCarolinasProgressFloridaOhioIndiana
Electric Transmission Lines Electric Transmission Lines
Miles of 500 to 525 kV1,036
576
292
168
—
—
Miles of 500 to 525 kilovolt (kV)Miles of 500 to 525 kilovolt (kV)1,100 600 300 200 — — 
Miles of 345 kV1,145
—
—
—
421
724
Miles of 345 kV1,100 — — — 400 700 
Miles of 230 kV8,344
2,657
3,396
1,638
—
653
Miles of 230 kV8,400 2,700 3,400 1,600 — 700 
Miles of 100 to 161 kV12,509
6,830
2,565
891
821
1,402
Miles of 100 to 161 kV12,400 6,800 2,600 900 700 1,400 
Miles of 13 to 69 kV8,345
3,014
12
2,200
612
2,507
Miles of 13 to 69 kV8,300 3,000 — 2,200 600 2,500 
Total conductor miles of electric transmission lines31,379
13,077
6,265
4,897
1,854
5,286
Total conductor miles of electric transmission lines31,300 13,100 6,300 4,900 1,700 5,300 
Electric Distribution Lines Electric Distribution Lines
Miles of overhead lines174,200
66,600
46,500
25,600
13,300
22,200
Miles of overhead lines173,500 66,600 46,400 25,100 13,300 22,100 
Miles of underground line106,000
38,500
30,000
22,500
6,000
9,000
Miles of underground line108,900 40,400 31,800 21,100 6,200 9,400 
Total conductor miles of electric distribution lines280,200
105,100
76,500
48,100
19,300
31,200
Total conductor miles of electric distribution lines282,400 107,000 78,200 46,200 19,500 31,500 
Number of electric transmission and distribution substations3,291
1,476
512
493
310
500
Number of electric transmission and distribution substations3,200 1,400 500 500 300 500 
Substantially all of Electric Utilities and Infrastructure's electric plant in service is mortgaged under indentures relating to Duke Energy Carolinas’, Duke Energy Progress', Duke Energy Florida's, Duke Energy Ohio’s and Duke Energy Indiana’s various series of First Mortgage Bonds.
37


PROPERTIES
GAS UTILITIES AND INFRASTRUCTURE
Gas Utilities and Infrastructure owns transmission pipelines and distribution mains that are generally underground, located near public streets and highways, or on property owned by others for which Duke Energy Ohio and Piedmont have obtained the necessary legal rights to place and operate facilities on such property located within the Gas Utilities and Infrastructure service territories. The following table provides information related to Gas Utilities and Infrastructure's natural gas distribution.
 Duke
 Duke
Duke
Energy
 DukeEnergy
Energy
Ohio
Piedmont
EnergyOhioPiedmont
Miles of natural gas distribution and transmission pipelines33,300
7,200
26,100
Miles of natural gas distribution and transmission pipelines34,200 7,400 26,800 
Miles of natural gas service lines27,700
7,000
20,700
Miles of natural gas service lines27,200 6,300 20,900 

35

PROPERTIES


COMMERCIAL RENEWABLES
The following table provides information related to Commercial Renewables' electric generation facilities as of December 31, 2018.2020. The MW displayed in the table below are based on nameplate capacity. Ownership interest in all facilities is 100 percent unless otherwise indicated.
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Wind
Los Vientos (five sites)RenewableWindTX465 51 %
Mesteno(a)
RenewableWindTX202 100 %
Sweetwater IVRenewableWindTX113 47 %
FrontierRenewableWindOK103 51 %
Top of the WorldRenewableWindWY102 51 %
NotreesRenewableWindTX78 51 %
Mesquite CreekRenewableWindTX54 26 %
Campbell HillRenewableWindWY50 51 %
IronwoodRenewableWindKS44 26 %
Sweetwater VRenewableWindTX38 47 %
North AlleghenyRenewableWindPA36 51 %
Laurel HillRenewableWindPA35 51 %
Cimarron IIRenewableWindKS34 26 %
Kit CarsonRenewableWindCO26 51 %
Silver SageRenewableWindWY21 51 %
Happy JackRenewableWindWY15 51 %
ShirleyRenewableWindWI10 51 %
Total Renewables – Wind1,426 
38


PROPERTIES
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Solar
Holstein(a)
RenewableSolarTX200 100 %
Rambler(a)
RenewableSolarTX200 100 %
North Rosamond(a)
RenewableSolarCA150 100 %
Lapetus(a)
RenewableSolarTX100 100 %
Conetoe IIRenewableSolarNC80 100 %
Palmer(a)
RenewableSolarCO60 100 %
Seville I & IIRenewableSolarCA34 67 %
Rio Bravo I & IIRenewableSolarCA27 67 %
Wildwood I & IIRenewableSolarCA23 67 %
KelfordRenewableSolarNC22 100 %
DogwoodRenewableSolarNC20 100 %
Halifax AirportRenewableSolarNC20 100 %
PasquotankRenewableSolarNC20 100 %
ShawboroRenewableSolarNC20 100 %
CaprockRenewableSolarNM17 67 %
Creswell AlligoodRenewableSolarNC14 100 %
PumpjackRenewableSolarCA13 67 %
LongboatRenewableSolarCA13 67 %
Shoreham(a)
RenewableSolarNY13 51 %
Washington White PostRenewableSolarNC12 100 %
WhitakersRenewableSolarNC12 100 %
Highlander I & IIRenewableSolarCA11 51 %
Other small solar(a)
RenewableSolarVarious193 Various
Total Renewables – Solar1,274 
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Fuel Cells(a)
RenewableFuel CellVarious43 100 %
Total Renewables – Fuel Cells43 
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Energy Storage
Notrees Battery StorageRenewableStorageTX18 51 %
Beckjord Battery StorageRenewableStorageOH2 100 %
Total Renewables – Energy Storage20 
Owned MW
FacilityTotals by TypePlant TypeLocationCapacity
Capacity
Commercial Renewables – Wind
Los Vientos (five sites)RenewableTX1,426 912
Top of the WorldRenewableWY200
FrontierRenewableOK201
NotreesRenewableTX153
Campbell HillRenewableWY99
North AlleghenyRenewablePA70
Laurel HillRenewablePA69
OcotilloRenewableTX59
Kit CarsonRenewableCO51
Silver SageRenewableWY42
Happy JackRenewableWY29
ShirleyRenewableWI20
Sweetwater IV(a)
RenewableTX113
Sweetwater V(a)
RenewableTX38
Ironwood(a)
RenewableKS84
Cimarron II(a)
RenewableKS66
Mesquite Creek(a)
RenewableTX106
Total Renewables – Wind2,312
Commercial Renewables – Solar
Conetoe IIRenewableNC80
Seville I & IIRenewableCA50
Rio Bravo I & IIRenewableCA40
Wildwood I & IIRenewableCA35
CaprockRenewableNM25
Shoreham(b)
RenewableNY25
KelfordRenewableNC22
HighlanderRenewableCA21
DogwoodRenewableNC20
Halifax AirportRenewableNC20
PasquotankRenewableNC20
PumpjackRenewableCA20
ShawboroRenewableNC20
LongboatRenewableCA20
BagdadRenewableAZ15
TX SolarRenewableTX14
Creswell AlligoodRenewableNC14
VictoryRenewableCO13
Washington White PostRenewableNC12
WhitakersRenewableNC12
Other small solar(b)
RenewableVarious145
Total Renewables – Solar643
Commercial Renewables – Energy Storage
Notrees Battery StorageRenewableTX36
Total Renewables – Energy Storage36
Total Commercial Renewables2,991
(a)SolarCommercial Renewables owns 47 percent of Sweetwater IV and V and 50 percent of Ironwood, Cimarron II and Mesquite Creek.
1,274 
(b)Fuel CellsShoreham and certain projects included in Other small solar are in tax-equity structures where investors have differing interests in the project's economic attributes. 100 percent of the tax-equity project's capacity is included in the table above.


36

43 
PROPERTIESEnergy Storage20 
Total Commercial Renewables(b)
2,763

(a)     Certain projects, including projects within Other small solar, are in tax-equity structures where investors have differing interests in the project's economic attributes. 100% of the tax-equity project's capacity is included in the table above.

(b)    Net proportion of MW capacity in operation is 3,937, which represents the amount managed or owned by Duke Energy.
OTHER
Duke Energy owns approximately 8 million square feet and leases approximately 2 million square feet of corporate, regional and district office space spread throughout its service territories.
39



LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES
ITEM 3. LEGAL PROCEEDINGS
For information regarding legal proceedings, including regulatory and environmental matters, see Note 4,3, “Regulatory Matters,” and Note 5,4, “Commitments and Contingencies,” to the Consolidated Financial Statements.
MTBE Litigation
On June 19, 2014, the Commonwealth of Pennsylvania filed suit against, among others, Duke Energy Merchants, alleging contamination of waters of the state by MTBE from leaking gasoline storage tanks. MTBE is a gasoline additive intended to increase the oxygen level in gasoline and make it burn cleaner. The lawsuit was moved to federal court and consolidated into an existing multidistrict litigation docket of pending MTBE cases. This suit was settled for an immaterial amount in December 2017 and dismissed in January 2018.
In December15, 2017, the state of Maryland filed a lawsuitsuit in Baltimore City Circuit Court against Duke Energy Merchants and other defendants alleging contamination of its water suppliesstate waters by MTBE leaking from MTBE.gasoline storage tanks. MTBE is a gasoline additive intended to increase the oxygen levels in gasoline and make it burn cleaner. The case was removed from Baltimore City Circuit Court to federal District Court. Initial motions to dismiss filed by the U.S. District Courtdefendants were denied by the court on September 4, 2019, and the matter is now in Baltimore.discovery. On December 18, 2020, the plaintiff and defendants selected 50 focus sites, none of which have any ties to Duke Energy Merchants, and discovery is likely to be specific to those sites. Duke Energy cannot predict the outcome of this matter.
ITEM 4. MINE SAFETY DISCLOSURES
This is not applicable for any of the Duke Energy Registrants.

40
37






SECURITIES INFORMATION


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The common stock of Duke Energy is listed and traded on the NYSE (ticker symbol DUK). As of January 31, 2019,2021, there were 149,275136,857 Duke Energy common stockholders of record. For information on dividends, see the "Dividend Payments" section of Management's DiscussionDiscussion and Analysis.
There is no market for the common equity securities of the Subsidiary Registrants, all of which are directly or indirectly owned by Duke Energy. See Note 1, "Summary of Significant Accounting Policies," to the Consolidated Financial Statements for information on the 2021 sale of a minority interest in Duke Energy Indiana.
Securities Authorized for Issuance Under Equity Compensation Plans
See Item 12 of Part III within this Annual Report for information regarding Securities Authorized for Issuance Under Equity Compensation Plans.
Issuer Purchases of Equity Securities for Fourth Quarter 2018
2020
ThereThere were no repurchases of equityequity securities during the fourth quarter of 2018.2020.
Stock Performance Graph
The following performance graph compares the cumulative total shareholder returnTSR from Duke Energy Corporation common stock, as compared with the SStandard & Poor's 500 Stock Index (S&P 500500) and the Philadelphia Utility Index for the past five years. The graph assumes an initial investment of $100 on December 31, 2013,2015, in Duke Energy common stock, in the S&P 500 and in the Philadelphia Utility Index and that all dividends were reinvested. The stockholder return shown below for the five-year historical period may not be indicative of future performance.
chart-b14dac52cdf95c868c9.jpgduk-20201231_g5.jpg
NYSE CEO Certification
Duke Energy has filed the certification of its Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to this Annual Report on Form 10-K for the year ended December 31, 2018.2020.

38



SELECTED FINANCIAL DATA


ITEM 6. SELECTED FINANCIAL DATA
The following table provides selected financial dataThis is not applicable for any of the years of 2014 through 2018. See also Item 7.Duke Energy Registrants.
41
(in millions, except per share amounts)2018
 2017
 2016
 2015
 2014
Statements of Operations(a)
         
Total operating revenues$24,521
 $23,565
 $22,743
 $22,371
 $22,509
Operating income4,685
 5,625
 5,202
 4,974
 4,795
Income from continuing operations2,625
 3,070
 2,578
 2,654
 2,538
Income (Loss) from discontinued operations, net of tax19
 (6) (408) 177
 (649)
Net income2,644
 3,064
 2,170
 2,831
 1,889
Net income attributable to Duke Energy Corporation2,666
 3,059
 2,152
 2,816
 1,883
Common Stock Data         
Income from continuing operations attributable to Duke Energy Corporation common stockholders         
Basic$3.73
 $4.37
 $3.71
 $3.80
 $3.58
Diluted3.73
 4.37
 3.71
 3.80
 3.58
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders         
Basic$0.03
 $(0.01) $(0.60) $0.25
 $(0.92)
Diluted0.03
 (0.01) (0.60) 0.25
 (0.92)
Net income attributable to Duke Energy Corporation common stockholders         
Basic$3.76
 $4.36
 $3.11
 $4.05
 $2.66
Diluted3.76
 4.36
 3.11
 4.05
 2.66
Dividends declared per share of common stock3.64
 3.49
 3.36
 3.24
 3.15
Balance Sheet         
Total assets$145,392
 $137,914
 $132,761
 $121,156
 $120,557
Long-term debt including capital leases, less current maturities51,123
 49,035
 45,576
 36,842
 36,075



(a)MD&ASignificant transactions reflected in the results above include: (i) regulatory and legislative charges related to Duke Energy Progress and Duke Energy Carolinas North Carolina rate case orders and impairment charges in 2018 (see Notes 4, 11 and 12 to the Consolidated Financial Statements, "Regulatory Matters," "Goodwill and Intangible Assets" and "Investments in Unconsolidated Affiliates"); (ii) the sale of the International Disposal Group in 2016, including a loss on sale recorded within discontinued operations (see Note 2 to the Consolidated Financial Statements, “Acquisitions and Dispositions”); (iii) the acquisition of Piedmont in 2016, including losses on interest rate swaps related to the acquisition financing (see Note 2); (iv) 2014 impairment related to the disposal of the Midwest Generation Disposal Group; (v) 2014 incremental tax expense resulting from the decision to repatriate all cumulative historical undistributed foreign earnings; (vi) 2014 increase in the litigation reserve related to a criminal investigation of the Dan River release.

39



MD&ADUKE ENERGY


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures such as adjusted earnings and adjusted earnings per shareEPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy Corporation (collectively with its subsidiaries, Duke Energy) and its subsidiariessubsidiaries. Duke Energy Carolinas, LLC, (Duke Energy Carolinas), Progress Energy, Inc. (Progress Energy), Duke Energy Progress, LLC, (Duke Energy Progress), Duke Energy Florida, LLC, (Duke Energy Florida), Duke Energy Ohio, Inc. (Duke Energy Ohio), Duke Energy Indiana, LLC (Duke Energy Indiana) and Piedmont Natural Gas Company, Inc. (Piedmont). However, none of the registrants make any representation as to information related solely to Duke Energy or the subsidiary registrants of Duke Energy other than itself. Subsequent to Duke Energy's acquisition of Piedmont on October 3, 2016, Piedmont is a wholly owned subsidiary of Duke Energy. The financial information for Duke Energy includes results of Piedmont subsequent to October 3, 2016. See Note 2 to
Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements "Acquisitions and Dispositions,Notes for the years ended December 31, 2020, 2019 and 2018.
See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in Duke Energy's Annual Report on Form 10-K for additional information regarding the acquisition.year ended December 31, 2019, filed with the SEC on February 20, 2020, for a discussion of variance drivers for the year ended December 31, 2019, as compared to December 31, 2018.
DUKE ENERGY
Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the U.S. primarily through its wholly owned subsidiaries, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of the Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the years ended December 31, 2018, 2017 and 2016.
Executive Overview
At Duke Energy the fundamentals of our business are strong.strong and allow us to deliver growth in earnings and dividends in a low-risk, predictable and transparent way. In 2018,2020, we met our near-term financial commitments and positionedcontinued to provide safe and reliable service while managing the impacts of the COVID-19 pandemic.
In early 2021, we continued to position the company for sustainable long-term growth.growth, executing an important coal ash settlement agreement in North Carolina and announcing the $2 billion sale of a minority interest in Duke Energy Indiana, providing a source of efficient capital at an attractive valuation. We areremain focused on a stable, predictable and regulated businessesbusiness portfolio tothat will deliver a reliable and growing dividend with 4 to 6 percent2020 representing the 94th consecutive year Duke Energy paid a cash dividend on its common stock. With these recent announcements, we also increased our long-term adjusted EPS growth rate to 5% to 7% through 2023. We have made progress advancing2025. This growth is supported by our long-term growth strategy$59 billion capital plan from 2021 to 2025, clean energy investments that delivers value tobenefit our customers, through investmentstimely cost-recovery mechanisms in cleaner energy, grid modernization, natural gas infrastructure,most jurisdictions and digital transformation, while also achieving constructive regulatory outcomes. The strength of our balance sheet is of vital importanceability to the cost-effective financing ofeffectively manage our growth strategy, and in 2018 we took proactive steps to strengthen it by issuing $2 billion of equity.

cost structure.
Financial Results
chart-55aa239c488750bd8a9.jpgchart-135659608c255edd923.jpgduk-20201231_g6.jpgduk-20201231_g7.jpg
42



(a)MD&ASee Results of Operations below for Duke Energy’s definition of adjusted earnings and adjusted diluted earnings per share as well as a reconciliation of this non-GAAP financial measure to net income attributable to Duke Energy and net income attributable to Duke Energy per diluted share.DUKE ENERGY
(a)See Results of Operations below for Duke Energy’s definition of adjusted earnings and adjusted EPS as well as a reconciliation of this non-GAAP financial measure to net income available to Duke Energy and net income available to Duke Energy per basic share.
Duke Energy's 2018 GAAP reported earnings2020 Net Income Available to Duke Energy Corporation (GAAP Reported Earnings) were impacted by favorable weather, improved residential volumesby: regulatory settlements related to coal ash cost recovery in Electric Utilities and ongoing cost management efforts, offset by charges which management believes are not indicativeInfrastructure; the cancellation of ongoing performance, including regulatorythe ACP pipeline in Gas Utilities and legislative items, impairments, a loss on the sale of a retired plant,Infrastructure; and severance.growth in project investments in Commercial Renewables. See “Results of Operations” below for a detailed discussion of the consolidated results of operations and a detailed discussion of financial results for each of Duke Energy’s reportable business segments, as well as Other.

40



MD&ADUKE ENERGY


20182020 Areas of Focus and Accomplishments
Operational ExcellenceClean Energy Transformation. Our industry has been undergoing an incredible transformation and Reliability. The safety of our workforce is a core value. Our employees delivered strong safety results in 2018, and we maintained our industry-leading performance levels from 2016 and 2017. The reliable and safe operation of our power plants, electric distribution system and natural gas infrastructure is foundational to our customers, our financial results and our credibility with stakeholders. Our nuclear and fossil/hydro generation fleets demonstrated strong performance, exceeding their respective reliability targets. Five of our six nuclear sites have achieved INPO 1 status, the industry’s highest distinction. Our electric distribution system performed well throughout the year, though we see opportunities to reduce outage durations.
Storm Response and System Restoration. 20182020 was a milestone year of intense storm activity, with Hurricane Florencefor our company where we articulated a clear vision for the future and Hurricane Michael deliveringoutlined investments to achieve a significant impact toclean energy future for our jurisdictions. Employees and utility partners worked tirelessly to restore 3 million outages during the hurricane season. Our team restored 93 percent of outages within five days during Hurricane Florence and 90 percent of outages within three days during Hurricane Michael. Our ability to effectively handle all facets of the 2018 storm response efforts is a testament to our team’s extensive preparation and coordination in advance of the storm, applying lessons learned from previous storms, and on-the-ground management throughout the restoration efforts.
Customer Satisfaction. Duke Energy continuescustomers. We continue to transform the customer experience through our use of customer data to better inform operational priorities and performance levels. This data-driven approach allows us to identifyby generating cleaner energy, modernizing the investments that are the most important to the customer experience. In 2018, we instituted more proactive communications, such as text alerts during outages, in response to customer expectations. Over time our work with data analytics will result in customer satisfaction improvement as measured through J.D. Power and other surveys.
Constructive Regulatory and Legislative Outcomes. One of our long-term strategic goals is to achieve modernized regulatory constructs in our jurisdictions. Modernized constructs provide benefits, which include improved earnings and cash flows through more timely recovery of investments, as well as stable pricing for customers. We achieved constructive regulatory outcomes in 2018 in North Carolina for both Duke Energy Carolinas and Duke Energy Progress, including the recovery of coal ash basin closure costs. The Ohio Comprehensive Settlement Agreement in 2018, approved by PUCO, was a favorable outcome that will enable the creation of a new PowerForward rider to recover costs associated with projects to modernize theenergy grid, and transformexpanding natural gas infrastructure.
Generating Cleaner Energy
In October 2020, we held our first-ever Environmental, Social, and Governance (ESG) Day for investors, successfully outlining our climate strategy and highlighting our strong progress to date in reducing carbon (a greater than 40% reduction from 2005) and our commitment to do more (at least 50% reduction by 2030 and net-zero by 2050). In the customer experience.Carolinas, we participated in extensive stakeholder processes focused on carbon reduction and regulatory reform and filed comprehensive IRP consistent with that strategy. Our planned coal retirements and transition to cleaner energy sources in the Carolinas are some of the largest in the industry. We are making progressalso committed to an all-electric light-duty fleet and 50% of all medium- and heavy-duty vehicles by 2030 – a pledge that also leads our industry. Our commitment for 2030 includes retiring plants, operating our existing carbon-free resources and investing in addressing tax reform acrossrenewables, our jurisdictions, targeting solutions that provide benefitsenergy delivery system, and natural gas infrastructure. As we look beyond 2030, we will need additional tools to customerscontinue our progress. We will work actively to advocate for research and support the long-term credit qualitydevelopment of our utilities.carbon-free, dispatchable resources. That includes longer-duration energy storage, advanced nuclear technologies, carbon capture and zero-carbon fuels.
Cost Management and Efficiencies. Duke Energy has a demonstrated track record of driving efficiencies and productivity into the business, including merger integration and continuous improvement efforts. We continue to leverage new technology and data analytics to drive additional efficiencies across the business in response to a transforming landscape. In 2018, we established a digital transformation initiative that is tasked with identifying the best ways to use digital capabilities throughout our business.
Modernizing the Power Grid.Grid
Our grid improvement programs continue to be a key component of our growth strategy. Modernization of the electric grid, including smart meters, storm hardening, self-healing and targeted undergrounding, helps to ensure the system is better prepared for severe weather, improves the system's reliability and flexibility, and provides better information and services for customers. Grid improvements enable successful storm response; for example, in the Carolinas, self-healing grid technologies rerouted power from damaged lines and systems to minimize outages. In 2018, we deployed 1.6 million2020, 98% of our jurisdictions were equipped with smart meters resulting in 4.3 million customers having accessand we remain on track to be fully deployed across all regions by the end of this technology across our regulated footprint. 
Generating Cleaner Energy. We advanced efforts to generate cleaner energy, including progress on several strategic investments during 2018. Overall, we have lowered our carbon emissions by over 30 percent since 2005, consistent with our goal to reduce carbon emissions by 40 percent by 2030. Two natural gas plants came online in 2018 and construction continues on a third one. In our Commercial Renewable business, our Shoreham solar facility came online in 2018.
Expanding the Natural Gas Platform.year. We continue to pursueexpand our self-optimizing grid capabilities, and in 2020, smart, self-healing technologies helped to avoid more than 800,000 extended customer outages across our six-state electric service area, saving customers more than 1.8 million hours of lost outage time. Duke Energy also has a demonstrated track record of driving efficiencies and productivity into the business and we continue to leverage new technology, digital tools and data analytics across the business in response to a transforming landscape.
Expanding Natural Gas Infrastructure
In July 2020, Duke Energy and Dominion announced the cancellation of the ACP pipeline. Litigation risks and delays presented too much uncertainty on our ability to economically complete the project on schedule to meet our customers’ needs. Additionally, Dominion reached a decision to exit their natural gas transmission business, further impeding our ability to consider ongoing investment in the project. The Company remains committed to pursuing natural gas infrastructure investments. We are working diligentlyinvestments and continues to construct the ACP pipeline to bring low-cost gas supply and economic development opportunities to the Mid-Atlantic. While we navigate the impacts of permitting delays and court rulings, we remain steadfastexplore additional resources in our commitment to this backbone infrastructureeastern North Carolina for the southeast U.S. In 2018, Piedmont announced planssystem and securing more transport capacity to constructsupport power generation. Construction is expected to be completed this year on a new liquefied natural gas facility in Robeson County, North Carolina, on property Piedmont already owns. This investment will help Piedmont provide a reliable gas supply to customers during peak usage periods.periods and protect customers from price volatility when there is a higher-than-normal demand for natural gas. In the fall of 2020, recognizing the continued importance of natural gas to our plans, we announced a net-zero methane emission goal by 2030 related to our gas distribution business, as well as our commitment to lead on reduction of upstream methane emissions through work with our natural gas supply chain.
Constructive Regulatory and Legislative Outcomes. One of our long-term strategic goals is to achieve modernized regulatory constructs in our jurisdictions. Modernized constructs provide benefits, which include improved earnings and cash flows through more timely recovery of investments, as well as stable pricing for customers.
In 2020, we conducted the bulk of proceedings related to our North Carolina rate cases for both Duke Energy Carolinas and Duke Energy Progress and achieved a partial settlement with the North Carolina Public Staff and ten other intervening parties. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached an important settlement agreement, which subject to NCUC approval, resolves historical coal ash prudence and cost recovery issues and provides clarity on coal ash cost recovery for the next decade. In 2020, we also achieved constructive rate case outcomes in Indiana (our first rate base request in 15 years) and Kentucky (electric). We expecthave a multiyear rate plan in Florida and in January 2021 reached a constructive settlement agreement with key consumer groups, subject to begin constructionFPSC approval, to bring additional certainty to rates through 2024, In addition, grid investment riders in the summer of 2019.Midwest enable more timely cost recovery and earnings growth.
Dividend GrowthCustomer Satisfaction. In 2018, Duke Energy continuedcontinues to growtransform the dividend paymentcustomer experience through our use of customer data to shareholdersbetter inform operational priorities and performance levels. This data-driven approach allows us to identify the investments that are the most important to the customer experience. Our work has been recognized by our customers with external measures showing Duke Energy is improving customer satisfaction at a rate greater than the utility industry. Additionally, in 2020, we surpassed our internal target that measures customer satisfaction by approximately 4 percent. 2018 represented the 92nd consecutive year Duke Energy paid a cash dividend on its common stock.

14%.
41
43






MD&ADUKE ENERGY


Operational Excellence, Safety and Reliability. The reliable and safe operation of our power plants, electric distribution system and natural gas infrastructure in our communities is foundational to our customers, our financial results and our credibility with stakeholders. Our regulated generation fleet and nuclear sites had strong performance throughout the year and our electric distribution system performed well. The safety of our workforce is a core value. Our employees delivered strong safety results in 2020, and we are at or near the top of our industry. Additionally, the 2020 Atlantic hurricane season was incredibly active and marked the fifth consecutive year of above-average damaging storms. Our ability to effectively handle all facets of the 2020 storm response efforts, including navigating COVID-19 protocols, is a testament to our team’s extensive preparation and coordination, applying lessons learned from previous storms, and to on-the-ground management throughout the restoration efforts.
Leading Through COVID-19. COVID-19 impacted all that we accomplished in 2020 and demonstrated our resiliency and agility:
•As the pandemic spread, stay-at-home orders coupled with recessionary economic conditions caused overall retail electric sales to decline by approximately 2%. To offset this challenge, as well as mild weather and other COVID-related costs, we successfully achieved the high end of our goal of $400 million to $450 million of broad-based O&M reductions and other mitigating actions. The Company’s results were within its adjusted EPS guidance range and we expect to sustain approximately $200 million of the 2020 O&M cost mitigation into 2021 forward.
•Duke Energy kept electricity and gas flowing while voluntarily making significant accommodations for our customers. We led the way in our sector nationally, suspending all nonpay disconnects in all jurisdictions and waiving late payment fees and other fees until the national state of emergency was lifted. In the fall, we began returning to normal business practices, ensuring diligent communication with our customers and providing flexible payment arrangements.
•We ensured the physical safety of our workers and provided support for our employees. As cases spiked nationally, we deployed COVID-19 safety protocols for our front-line essential workers and moved 18,000 colleagues to remote work. Our COVID-19 Case Management Team managed exposures of our workforce and IT ensured our networks could handle the remote work while strengthening cyber protection. Under our COVID-19 protocols, our front-line employees completed 150 fossil and nuclear outages, executed large major projects, restored service from storms and hurricanes, and managed high-water events. Overall, our operations continued, and our team completed their work with excellence.
Duke Energy Objectives – 20192021 and Beyond
Duke Energy will continue to deliver exceptional value to customers, be an integral part of the communities in which we do business and provide attractive returns to investors. We have an achievable, long-term strategy in place, and it is producing tangible results, yet the industry in which we operate is becoming more and more dynamic. We are adjusting, where necessary, and accelerating our focus in key areas to ensure the company is well positioned to be successful for many decades into the future. As we look ahead to 2019,2021, our plans include:
•Continuing to place the customer at the center of all that we do.do, which includes providing customized products and solutions
Advancing•Strengthening our relationships with all our vast stakeholders in the achievement of modernized regulatory constructs across all jurisdictions, including consideration of cost recovery models that break the link between load growthcommunities in which we operate and earnings.invest
Improving•Generating cleaner energy and working to achieve net-zero carbon emissions by 2050 and net zero methane emissions by 2030
•Modernizing and strengthening thea green-enabled energy grid to provide customers with more control, convenience and communications, and make the grid more resilient to severe weather and ever-evolving cyber threats.
Investing in both•Expanding our natural gas generationinfrastructure
•Maintaining the safety of our communities and infrastructureemployees
•Deploying digital tools across our business
Matters Impacting Future Results
The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.
Regulatory Matters
Coal Ash Costs
As a result of the NCDEQ settlement on December 31, 2019, Duke Energy Carolinas and Duke Energy Progress agreed to supportexcavate seven of the nine remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to lined landfills. The majority of spend is expected to occur over the next 15-20 years. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters," which is subject to review and approval of the NCUC. The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Carolinas and Duke Energy Progress took a charge of approximately $500 million each.
In 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC denying recovery of certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress have appealed these decisions to the South Carolina Supreme Court and those appeals are pending. An order from regulatory or judicial authorities that rejects our growingproposed settlement or disallows recovery of costs related to closure of these ash basins could have an adverse impact on future results.
44



MD&ADUKE ENERGY
Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's partial approval of Duke Energy Indiana’s ash pond closure plans. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash.
Storm Costs
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress and Duke Energy Florida's service territories. In 2020, Duke Energy Carolinas and Duke Energy Progress reached partial settlements in the 2019 North Carolina rates cases by filing a petition to securitize deferred storm costs, which is subject to review and approval of the NCUC. In January 2021, Duke Energy Florida filed a settlement agreement with the FPSC, which if approved, allows recovery of the remaining storm cost balance for hurricanes Michael and Dorian. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact.
Grid Improvement Costs
Duke Energy Carolinas received an order from the NCUC in 2018, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas and Duke Energy Progress have petitioned for deferral of future grid improvement costs in their 2019 rate cases. Partial settlements filed with the NCUC in July 2020 included the allowance for deferral for certain grid projects placed in service from June 2020 through December 2022. There could be adverse impacts if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.
Rate Cases
In 2019, Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. Several partial settlement agreements have been filed with the NCUC and are awaiting approval. The outcome of these rate cases could have a material impact.
MGP
The PUCO has issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed for a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact.
For additional information, see Note 3 to the Consolidated Financial Statements, “Regulatory Matters.”
Sale of Minority Interest in Duke Energy Indiana
In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund. The sale is subject to the satisfaction of certain customary conditions described in the investment agreement, including receipt of the approval of the FERC and completion of review by the Committee on Foreign Investments in the United States. Failure to obtain related approvals or satisfy the conditions in the investment agreement could result in the termination of the transaction and could result in an adverse impact. For additional information, see Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”
Commercial Renewables
Duke Energy continues to monitor recoverability of renewable merchant plants located in the Electric Reliability Council of Texas West market and PJM, due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas system, as we replace coal unitsprices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future undiscounted cash flows for the assets under review. A continued decline in energy market pricing would likely result in a future impairment. Impairment of these assets could result in adverse impacts. For additional information, see Note 10 to the Consolidated Financial Statements, "Property, Plant and Equipment."
In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. Both lost revenues and higher than expected purchased power costs are expected to negatively impact the operating results of these generating units. The estimated financial impact of the storm is expected to have a material impact on the Commercial Renewables segment's 2021 operating results. See Note 25 to the Consolidated Financial Statements, "Subsequent Events."
45



MD&ADUKE ENERGY
COVID-19
Duke Energy cannot predict the extent to which the COVID-19 pandemic will impact its results of operations, financial position and cash flows in the future. Duke Energy will continue to expand our LDC customer baseactively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown continues to cause an increase in certain costs, such as bad debt, and a reduction in the Carolinas and Midwest.
Increasing renewables, energy storage and next-generation demand-side management into our supply/demand resourcefor energy. Duke Energy has mitigation plans in pursuitplace to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results.The Company is in the process of reviewing the long-term real estate strategy due to a growth strategy that leverages these resources to provide choices that our customers value.
Modernizingpotential change of in-office work policies after the way weCOVID-19 pandemic. The plan and build our generation, transmission, distribution and customer systemsmay result in a fully integrated way through Integrated Systemreduction of physical work space which could create accounting impacts starting in 2021. Accounting impacts may include reassessments of lease terms and Operations Planning to accommodate increased distributed energy resources.lease modifications which could result in termination penalties, as well as, asset impairments on property, plant and equipment. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.
Transforming
Within this Item 7, see Liquidity and Capital Resources for a discussion on risks associated with the business using multiple levers, including digital tools, to increase productivity and reinvest the proceeds into new growth opportunities, improved customer service, and lower bills for customers.Tax Act.
Results of Operations
Non-GAAP Measures
Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted diluted EPS. These items represent income from continuing operations attributableavailable to Duke Energy common stockholders in dollar and per-share amounts, adjusted for the dollar and per shareper-share impact of special items. As discussed below, special items include certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. Management believes the presentation of adjusted earnings and adjusted diluted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.
Management uses these non-GAAP financial measures for planning and forecasting, and for reporting financial results to the Board of Directors, employees, stockholders, analysts and investors. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted diluted EPS are GAAP Reported Earnings and GAAPEPS Available to Duke Energy Corporation common stockholders (GAAP Reported EPS,EPS), respectively.
Special items included in the periods presented include the following, which management believes do not reflect ongoing costs:
Costs•Gas Pipeline Investments represents costs related to Achieve Mergers represents charges that result from strategic acquisitions.the cancellation of the ACP pipeline and additional exit costs related to Constitution.
•Regulatory and Legislative Impacts in 2018Settlements represents charges related to Duke Energy Carolinas' and Duke Energy Progress' CCR Settlement Agreement and the partial settlements in the 2019 North Carolina rate cases.
•Severance represents the reversal of 2018 costs, which were deferred as a result of a partial settlement in the Duke Energy Carolinas and the Duke Energy Progress and Duke Energy Carolinas2019 North Carolina rate case orders and the repeal of the South Carolina Base Load Review Act. For 2017, it represents charges related to the Levy nuclear project in Florida and the Mayo Zero Liquid Discharge and Sutton combustion turbine projects in North Carolina.cases.
•Impairment Charges in 2018 represents ana reduction of a prior year impairment at Citrus County CC a goodwill impairment at Commercial Renewables and an other-than-temporary impairment of anOTTI on the remaining investment in Constitution Pipeline Company, LLC. For 2017 and 2016, the charges represent goodwill and other-than-temporary asset impairments at Commercial Renewables.
Sale of Retired Plant represents the loss associated with selling Beckjord, a nonregulated generating facility in Ohio.
Impacts of the Tax Act represents amounts recognized related to the Tax Act.
Severance Charges relate to companywide initiatives, excluding merger integration, to standardize processes and systems, leverage technology and workforce optimization.
Adjusted earnings also include the operating results of the International Disposal Group, which has been classified as discontinued operations. Management believes inclusion of the operating results of the International Disposal Group within adjusted earnings and adjusted diluted EPS results in a better reflection of Duke Energy's financial performance during the period.Constitution.
Duke Energy’s adjusted earnings and adjusted diluted EPS may not be comparable to similarly titled measures of another company because other companies may not calculate the measures in the same manner.

42



MD&ADUKE ENERGY


Reconciliation of GAAP Reported Amounts to Adjusted Amounts
The following table presents a reconciliation of adjusted earnings and adjusted diluted EPS to the most directly comparable GAAP measures.
 Years Ended December 31,
20202019
(in millions, except per share amounts)EarningsEPSEarningsEPS
GAAP Reported Earnings/EPS$1,270 $1.72 $3,707 $5.06 
Adjustments to Reported:
Gas Pipeline Investments(a)
1,711 2.32 — — 
Regulatory Settlements(b)
872 1.19 — — 
Severance(c)
(75)(0.10)— — 
Impairment Charges(d)
— — (8)(0.01)
Discontinued Operations(7)(0.01)7 0.01 
Adjusted Earnings/Adjusted EPS$3,771 $5.12 $3,706 $5.06 
(a)    Net of tax benefit of $399 million.
(b)    Net of tax benefit of $263 million.
(c)    Net of tax expense of $23 million.
(d)    Net of tax expense of $3 million.
46
 Years Ended December 31,
 2018 2017 2016
(in millions, except per share amounts)Earnings EPS Earnings EPS Earnings EPS
GAAP Reported Earnings/EPS$2,666
 $3.76
 $3,059
 $4.36
 $2,152
 $3.11
Adjustments to Reported:           
Costs to Achieve Mergers(a)
65
 0.09
 64
 0.09
 329
 0.48
Regulatory and Legislative Impacts(b)
202
 0.29
 98
 0.14
 —
 —
Impairment Charges(c)
179
 0.25
 74
 0.11
 45
 0.07
Sale of Retired Plant(d)
82
 0.12
 —
 —
 —
 —
Impacts of the Tax Act(e)
20
 0.03
 (102) (0.14) —
 —
Severance Charges(f)
144
 0.21
 —
 —
 57
 0.08
Discontinued Operations(g)
(19) (0.03) 6
 0.01
 661
 0.95
Adjusted Earnings/Adjusted Diluted EPS$3,339
 $4.72
 $3,199
 $4.57
 $3,244
 $4.69



(a)MD&ANet of tax benefit of $19 million in 2018, $39 million in 2017, and $194 million in 2016.DUKE ENERGY
(b)Net of tax benefit of $63 million in 2018 and $60 million in 2017.
(c)Net of $27 million tax benefit and $2 million Noncontrolling Interests in 2018. Net of $28 million tax benefit in 2017 and $26 million in 2016.
(d)Net of $25 million tax benefit.
(e)The Tax Act reduced the corporate income tax rate from 35 to 21 percent, effective January 1, 2018. As the tax change was enacted in 2017, Duke Energy was required to remeasure its existing deferred tax assets and liabilities at the lower rate at December 31, 2017. For Duke Energy's regulated operations, where the reduction in the net accumulated deferred income tax liability is expected to be returned to customers in future rates, the remeasurement has been deferred as a regulatory liability. For 2018, the amount represents a true up of existing regulatory liabilities related to the Tax Act. See Note 23 to the Consolidated Financial Statements, "Income Taxes" for more information.
(f)Net of tax benefit of $43 million in 2018 and $35 million in 2016.
(g)For 2016, includes a loss on sale of the International Disposal Group. Represents the GAAP reported Loss from Discontinued Operations, less the International Disposal Group operating results, which are included in adjusted earnings. For 2017 and 2018, amounts reflect adjustments related to the sale of the International Disposal Group, primarily related to estimated tax expense.
Year Ended December 31, 2018,2020, as compared to 20172019
Duke Energy’s full-year 2018 GAAPGAAP Reported EPS was $3.76$1.72 for the year ended December 31, 2020, compared to $4.36$5.06 for full-year 2017. In addition to the adjusted diluted EPS drivers discussed below,year ended December 31, 2019. The decrease in GAAP Reported Earnings/EPS in 2018 was lower primarily due to regulatorythe cancellation of the ACP pipeline and legislative impacts, impairment charges, severance charges and a loss on sale of a retired plant.the CCR Settlement Agreement filed with the NCUC.
As discussed and shown in the table above, management also evaluates financial performance based on adjusted earnings.EPS. Duke Energy’s full-year 2018 adjusted diluted EPS was $4.72$5.12 for the year ended December 31, 2020, compared to $4.57$5.06 for full-year 2017.the year ended December 31, 2019. The increase in adjusted dilutedAdjusted Earnings/Adjusted EPS was primarily due to:
Higher regulated electric revenues due to favorable weather and higher retail sales volumes in the current year;
Positive impacts from the North Carolinapositive rate case orders;contributions, growth in wholesale, lower operations and
Rider growth.
Partially offset by:
Higher interest maintenance expense due to higher debt outstanding and higher interest rates;
Higher depreciation and amortization expense at Electric Utilities and Infrastructure primarily due to rate base growth; and
A reduced tax benefit on holding company interest as a result of the Tax Act.
Year Ended December 31, 2017, as compared to 2016
Duke Energy’s full-year 2017 GAAP Reported EPS was $4.36 compared to $3.11 for full-year 2016. In additionin response to the adjusted diluted EPS drivers discussed below, GAAP Reported EPSpandemic and growth in 2017 was higher primarily due to a $0.14 benefit per share related to the Tax Act in 2017, lower costs to achieve the Piedmont merger and a loss on sale and impairments associated with the sale of the International Disposal Group in 2016,Commercial Renewables, partially offset by chargeshigher depreciation expense from a growing asset base, impacts of $0.14 related to regulatory settlements in Electric Utilitiesthe pandemic, mild weather and Infrastructure.the loss of ACP earnings.
As discussed, management also evaluates financial performance based on adjusted earnings. Duke Energy’s full-year 2017 adjusted diluted EPS was $4.57 compared to $4.69 for full-year 2016. The decrease in adjusted diluted EPS was primarily due to:
Lower regulated electric revenues due to less favorable weather in the current year, including lost revenues related to Hurricane Irma;

43



MD&ADUKE ENERGY


The prior year operating results from the International Disposal Group, which was sold in December 2016. The 2016 operating results included a benefit from the valuation of deferred income taxes. See Note 23 to the Consolidated Financial Statements, "Income Taxes," for additional information;
Higher financing costs, primarily due to the Piedmont acquisition; and
Higher depreciation and amortization expense at Electric Utilities and Infrastructure primarily due to higher depreciable base.
Partially offset by:
Higher regulated electric revenues from increased pricing and riders driven by new rates in Duke Energy Progress South Carolina, base rate adjustments in Florida and energy efficiency rider revenues in North Carolina, as well as growth in weather-normal retail volumes;
Lower operations, maintenance and other expenses, net of amounts recoverable in rates, at Electric Utilities and Infrastructure resulting from ongoing cost efficiency efforts and lower year-to-date storm costs than the prior year; and
Additional earnings from incremental investments in ACP and Sabal Trail natural gas pipelines.
SEGMENT RESULTSMatters Impacting Future Results
The remaining information presented in this discussionmatters discussed herein could materially impact the future operating results, financial condition and cash flows of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income includes intercompany revenuesthe Duke Energy Registrants and expenses that are eliminated in the Consolidated Financial Statements.Business Segments.
Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 3 to the Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.Regulatory Matters
The Tax ActCoal Ash Costs
On December 22, 2017, President Trump signed the Tax Act into law. Among other provisions, the Tax Act lowered the corporate federal income tax rate from 35 to 21 percent, limits interest deductions outside of regulated utility operations, requires the normalization of excess deferred taxes associated with property under the average rate assumption method as a prerequisite to qualifying for accelerated depreciation and repealed the federal manufacturing deduction. The Tax Act also repealed the corporate AMT and stipulates a refund of 50 percent of remaining AMT credit carryforwards (to the extent the credits exceed regular tax for the year) for tax years 2018, 2019 and 2020 with all remaining AMT credits to be refunded in tax year 2021.

As a result of the Tax Act, Duke Energy revalued its existing deferred tax assets and deferred tax liabilities as ofNCDEQ settlement on December 31, 2017, to account for the estimated future impact of lower corporate tax rates on these deferred tax amounts. During the year ended December 31, 2018, Duke Energy recorded measurement period adjustments to the provisional estimate recorded as of December 31, 2017, in accordance with SAB 118. For Duke Energy's regulated operations, where the net reduction in the net accumulated deferred income tax liability is expected to be returned to customers in future rates, the remeasurement has been deferred as a regulatory liability. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters," for additional information on the Tax Act's impact to the regulatory asset and liability accounts. The following table shows the expense (benefit) recorded on Duke Energy's Consolidated Statements of Operations.
 Years Ended December 31,
(in millions)20182017
Electric Utilities and Infrastructure(c)
$24
$(231)
Gas Utilities and Infrastructure(d)(e)
1
(26)
Commercial Renewables(3)(442)
Other(f)
(2)597
Total impact of the Tax Act(a)(b)(d)
$20
$(102)
(a)Except where noted below, amounts are included within Income Tax Expense From Continuing Operations on the Consolidated Statements of Operations.
(b)See Notes 4 and 23 to the Consolidated Financial Statements, "Regulatory Matters" and "Income Taxes," respectively, for information about the Tax Act's impact on Duke Energy's Consolidated Balance Sheets.
(c)Amount primarily relates to the 2017 remeasurement, and true up of that remeasurement in 2018, of net deferred tax liabilities that are excluded for ratemaking purposes related to abandoned or impaired assets and certain wholesale fixed rate contracts.
(d)2017 amount includes a $16 million expense recorded within Equity in earnings (losses) of unconsolidated affiliates on the Consolidated Statement of Operations.
(e)2017 amount primarily relates to the remeasurement of net deferred tax liabilities related to equity method investments.
(f)2017 amount primarily relates to the remeasurement of Foreign Tax Credits, federal NOLs and nonregulated deferred tax assets.

44



MD&ASEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE


Electric Utilities and Infrastructure
 Years Ended December 31,
     Variance
   Variance
 





2018 vs.




2017 vs.
(in millions)2018

2017

2017

2016

2016
Operating Revenues$22,273
 $21,331
 $942
 $21,366
 $(35)
Operating Expenses    

   

Fuel used in electric generation and purchased power6,917
 6,379
 538
 6,595
 (216)
Operations, maintenance and other5,631
 5,360
 271
 5,433
 (73)
Depreciation and amortization3,523
 3,010
 513
 2,897
 113
Property and other taxes1,134
 1,079
 55
 1,021
 58
Impairment charges309
 176
 133
 16
 160
Total operating expenses17,514
 16,004
 1,510
 15,962
 42
Gains on Sales of Other Assets and Other, net8
 6
 2
 —
 6
Operating Income4,767
 5,333
 (566) 5,404
 (71)
Other Income and Expenses, net378
 472
 (94) 444
 28
Interest Expense1,288
 1,240
 48
 1,136
 104
Income Before Income Taxes3,857
 4,565
 (708) 4,712
 (147)
Income Tax Expense799
 1,355
 (556) 1,672
 (317)
Segment Income$3,058
 $3,210
 $(152) $3,040
 $170
          
Duke Energy Carolinas Gigawatt-hours (GWh) sales92,280
 87,305
 4,975
 88,545
 (1,240)
Duke Energy Progress GWh sales69,331
 66,822
 2,509
 69,049
 (2,227)
Duke Energy Florida GWh sales41,559
 40,591
 968
 40,404
 187
Duke Energy Ohio GWh sales25,329
 24,639
 690
 25,163
 (524)
Duke Energy Indiana GWh sales34,229
 33,145
 1,084
 34,368
 (1,223)
Total Electric Utilities and Infrastructure GWh sales262,728
 252,502
 10,226
 257,529
 (5,027)
Net proportional MW capacity in operation49,684
 48,828
 856
 49,295
 (467)
Year Ended December 31, 2018, as compared to 2017
Electric Utilities and Infrastructure's results were impacted by higher legislative and regulatory charges compared to the prior year and higher depreciation from a growing asset base, partially offset by favorable weather in the current year, improved retail volumes, lower income tax expense and a positive net contribution from the Duke Energy Progress and Duke Energy Carolinas North Carolina rate cases. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
a $577 million increase in fuel related revenues due to higher sales volumes driven primarily by favorable weather in the current year, and increases in fuel rates billed to customers, which reflects higher average fuel prices;
a $331 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;
a $236 million increase in retail pricing primarily due to the Duke Energy Progress and Duke Energy Carolinas North Carolina rate cases and Duke Energy Florida base rate adjustments related to generation assets being placed into service;
a $109 million increase in wholesale power revenues, net of fuel, primarily due to higher recovery of coal ash costs at Duke Energy Progress and Duke Energy Carolinas, partially offset by contracts that expired in the prior year at Duke Energy Indiana and customer refunds in the current year at Duke Energy Carolinas related to a FERC order on a complaint filed by PMPA;
an $82 million increase in weather-normal retail sales volumes driven by residential growth;
a $73 million net increase in retail rider revenues, primarily related to capital investment riders at Duke Energy Indiana and Duke Energy Ohio, partially offset by a net decrease in rider revenues related to the implementation of new base rates at Duke Energy Carolinas and Duke Energy Progress; and
a $49 million increase in other revenues at Duke Energy Carolinas primarily due to the recognition of previously deferred revenues associated with storm restoration costs in South Carolina and favorable transmission revenues.

45



MD&ASEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE


Partially offset by:
a $578 million decrease in retail and wholesale sales due to revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act.
Operating Expenses. The variance was driven primarily by:
a $538 million increase in fuel used in electric generation and purchased power due to higher sales and higher amortization of deferred fuel expenses;
a $513 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs, additional plant in service and new depreciation rates associated with the Duke Energy Progress and Duke Energy Carolinas North Carolina rate cases;
a $271 million increase in operation, maintenance and other expense primarily due to impacts associated with the Duke Energy Progress North Carolina rate case and higher storm costs, partially offset by a FERC approved settlement refund of certain transmission costs previously billed by PJM; and
a $133 million increase in impairment charges primarily due to the impacts associated with the2019, Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins in North Carolina rates caseswith ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to lined landfills. The majority of spend is expected to occur over the Duke Energy Florida Citrus County CC impairments in the current year, offset by the write-off of remaining unrecovered Levy Nuclear project costs at Duke Energy Florida in the prior year.
Other Income and Expenses, net. The decrease was primarily due to lower post in-service equity returns for projects that had been completed prior to being reflected in customer rates atnext 15-20 years. In January 2021, Duke Energy Carolinas and lower income from non-service components of employee benefit costs in the current year at Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters," which is subject to review and approval of the NCUC. The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Florida. For additional information on employee benefit costs, see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans."
Interest Expense. The variance was due to higher debt outstanding in the current year, partially offset by lower deferred debt costs on major projects.
Income Tax Expense. The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act, a decrease in pretax income and the impact of the Tax Act in the prior year. The ETRs for the years ended December 31, 2018, and 2017 were 20.7 percent and 29.7 percent, respectively. The decrease in the ETR was primarily due to the lower statutory federal corporate tax rate under the Tax Act and the amortization of excess deferred taxes partially offset by the impact of the Tax Act in the prior year. See the Tax Act section above for additional information.
Year Ended December 31, 2017, as compared to 2016
Electric Utilities and Infrastructure's results were impacted by the Tax Act, growth from investments, lower operations and maintenance expense and higher weather-normal retail sales volumes, partially offset by less favorable weather, impairment charges due to regulatory settlements, increased depreciation and amortization, higher interest expense and higher property and other taxes. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
a $292 million decrease in retail sales, net of fuel revenue, due to less favorable weather in the current year; and
a $235 million decrease in fuel revenues driven by lower retail sales volumes, lower fuel prices included in rates and changes in the generation mix.
Partially offset by:
a $364 million increase in rider revenues including increased revenues related to energy efficiency programs, Duke Energy Florida’s nuclear asset securitization, Midwest transmission and distribution capital investmentsCarolinas and Duke Energy Indiana’s Edwardsport IGCC plant, as well as an increase in retail pricing due to base rate adjustments forProgress took a charge of approximately $500 million each.
In 2019, Duke Energy Florida’s Osprey acquisitionCarolinas and Hines Chillers and the Duke Energy Progress South Carolina rate case;
an $86 million increase in weather-normal sales volumes to customers; and
a $26 million increase in other revenues primarily due to favorable transmission revenues.
Operating Expenses. The variance was driven primarily by:
a $160 million increase in impairment charges primarily due toreceived orders from the write-off of remaining unrecovered Levy Nuclear Project costs in the current year at Duke Energy Florida and the disallowance from rate basePSCSC denying recovery of certain projects at the Mayo and Sutton plants in the current year at Duke Energy Progress related to the partial settlement in the North Carolina rate case;
a $113 million increase in depreciation and amortization expense primarily due to additional plant in service; and
a $58 million increase in property and other taxes primarily due to higher property taxes.

46



MD&ASEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE


Partially offset by:
a $216 million decrease in fuel expense (including purchased power) primarily due to lower retail sales and changes in the generation mix; and
a $73 million decrease in operation, maintenance and other expense primarily due to lower plant outage, storm restoration and labor and benefits costs partially offset by higher operational costs that are recoverable in rates.
Interest Expense. The variance was due to higher debt outstanding in the current year and Duke Energy Florida's Crystal River Unit 3 regulatory asset debt return ending in June 2016 upon securitization.
Income Tax Expense. The variance was primarily due to a decrease in pretax income and the impact of the Tax Act. The effective tax rates for the years ended December 31, 2017, and 2016 were 29.7 percent and 35.5 percent, respectively. The decrease in the effective tax rate was primarily due to the impact of the Tax Act. See the Tax Act section above for additional information.
Matters Impacting Future Electric Utilities and Infrastructure Results
On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, were eligible for reassessment as low risk pursuant to legislation enacted on July 14, 2016. On November 14, 2018, NCDEQ issued final low-risk classifications for these impoundments, indicating thatcosts. Duke Energy Carolinas and Duke Energy Progress have satisfied the permanent replacement water supply and certain dam improvement requirements set out in the Coal Ash Management Act. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 9appealed these decisions to the Consolidated Financial Statements, "Asset Retirement Obligations," for additional information.
Duke Energy is a party to multiple lawsuitsSouth Carolina Supreme Court and could be subject to fines and other penaltiesthose appeals are pending. An order from regulatory or judicial authorities that rejects our proposed settlement or disallows recovery of costs related to operations at certain North Carolina facilities with ash basins. In addition, the orders issued in the Duke Energy Carolinas and Duke Energy Progress North Carolinas rate cases supporting recovery of past coal ash remediation costs have been appealed by various parties. The outcomeclosure of these appeals, lawsuits and potential fines and penaltiesash basins could have an adverse impact on Electric Utilitiesfuture results.
44



MD&ADUKE ENERGY
Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and Infrastructure's resultshas assessed the amounts of operations, financial position, and cash flows. See Notes 4 and 5coal ash subject to the Consolidated Financial Statements, "Regulatory Matters"rule and “Commitments and Contingencies,” respectively, for additional information.
On June 22, 2018,a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's partial approval of Duke Energy Carolinas received an order fromIndiana’s ash pond closure plans. Interpretation of the NCUC,requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which denied the Grid Rider Stipulationcould result in additional ash basin closure requirements, higher costs of compliance and deferral treatment of grid improvement costs.greater AROs. Additionally, Duke Energy Carolinas may petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulationIndiana has retired facilities that includes greater consensus among intervening parties on costs being classified as grid modernization. Whileare not subject to the CCR rule. Duke Energy Progress did not request recoveryIndiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of these costs in its most recent case with the NCUC, Duke Energy Progress may request recovery of certain grid modernization costs in future regulatory proceedings. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.coal ash.
During the last half of 2018, Storm Costs
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms.storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 45 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. A significant portion of the incremental operationIn September 2019, Hurricane Dorian impacted Duke Energy Progress and maintenance expenses related to these storms have been deferred. On December 21, 2018,Duke Energy Florida's service territories. In 2020, Duke Energy Carolinas and Duke Energy Progress filed withreached partial settlements in the NCUC petitions for approval2019 North Carolina rates cases by filing a petition to defer the incrementalsecuritize deferred storm costs, incurredwhich is subject to a regulatory asset for recovery inreview and approval of the next base rate case. Duke Energy Progress filed a similar request with the PSCSC onNCUC. In January 11, 2019, which also included a request for the continuation of prior deferrals requested for other storms, and on January 30, 2019, the PSCSC issued a directive approving the deferral request.2021, Duke Energy Florida anticipates filingfiled a petition in the first half of 2019settlement agreement with the FPSC, to recover incrementalwhich if approved, allows recovery of the remaining storm costs consistent with the provisions in its 2017 Settlement.cost balance for hurricanes Michael and Dorian. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Electric Utilitiesimpact.
Grid Improvement Costs
Duke Energy Carolinas received an order from the NCUC in 2018, which denied the Grid Rider Stipulation and Infrastructure's resultsdeferral treatment of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters," for additional information.
Appeals of recently approved rate cases forgrid improvement costs. Duke Energy Carolinas and Duke Energy Progress are pending athave petitioned for deferral of future grid improvement costs in their 2019 rate cases. Partial settlements filed with the North Carolina Supreme Court. The North Carolina Attorney General and various intervenors primarily disputeNCUC in July 2020 included the allowance offor deferral for certain grid projects placed in service from June 2020 through December 2022. There could be adverse impacts if grid improvement costs are not ultimately approved for recovery of coal ash costs from customers, which was approved byand/or deferral treatment.
Rate Cases
In 2019, Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. Several partial settlement agreements have been filed with the NCUC and are awaiting approval. The outcome of these appealsrate cases could have a material impact.
MGP
The PUCO has issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed for a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact to Electric Utilities and Infrastructure's results of operations, financial position and cash flows. Seeimpact.
For additional information, see Note 4 to3 to the Consolidated Financial Statements, “Regulatory Matters,Matters.” for additional information.
On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018Sale of Minority Interest in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filedIndiana
In January 2021, Duke Energy entered into a definitive agreement providing for recoverythe sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund. The sale is subject to the satisfaction of certain customary conditions described in the investment agreement, including receipt of the storm costs. Storm costs are currently expectedapproval of the FERC and completion of review by the Committee on Foreign Investments in the United States. Failure to be fully recovered by approximately mid-2021. The commission has scheduledobtain related approvals or satisfy the hearing to begin on May 21, 2019. An order disallowing recoveryconditions in the investment agreement could result in the termination of these coststhe transaction and could haveresult in an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. Seeimpact. For additional information, see Note 4 to1 to the Consolidated Financial Statements, “Regulatory Matters,“Summary of Significant Accounting Policies.” for additional information.
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.Commercial Renewables

47



MD&ASEGMENT RESULTS - GAS UTILITIES AND INFRASTRUCTURE


Gas Utilities and Infrastructure
 Years Ended December 31,
     Variance
   Variance
     2018 vs.
   2017 vs.
(in millions)2018
 2017
 2017
 2016
 2016
Operating Revenues$1,881
 $1,836
 $45
 $901
 $935
Operating Expenses    

   

Cost of natural gas697
 632
 65
 265
 367
Operation, maintenance and other421
 383
 38
 184
 199
Depreciation and amortization245
 231
 14
 115
 116
Property and other taxes107
 106
 1
 70
 36
Total operating expenses1,470

1,352
 118
 634
 718
(Loss) Gains on Sales of Other Assets and Other, net—
 —
 —
 (1) 1
Operating Income411
 484
 (73) 266
 218
Other Income and Expenses, net47
 56
 (9) 22
 34
Interest Expense106
 105
 1
 46
 59
Income Before Income Taxes352
 435
 (83) 242
 193
Income Tax Expense78
 116
 (38) 90
 26
Segment Income$274
 $319
 $(45) $152
 $167
          
Piedmont LDC throughput (dekatherms)(a)
557,145,128
 468,259,777
 88,885,351
 120,908,508
 347,351,269
Duke Energy Midwest LDC throughput (MCF)90,604,833
 80,934,836
 9,669,997
 81,870,489
 (935,653)
(a)Includes throughput subsequent to Duke Energy's acquisition of Piedmont on October 3, 2016.
Year Ended December 31, 2018, as compared to 2017
Gas Utilities and Infrastructure's results were primarily impacted by the OTTI recorded on the Constitution investment and higher operation, maintenance and other expenses, partially offset by favorable price adjustments, customer growth and other income. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
a $76 million increase primarily due to higher natural gas costs passed through to customers as a result of higher volumes sold driven primarily by weather and higher natural gas prices; and
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 $69 million decrease primarily due to revenues subject to refund to customers associated with the lower statutory corporate tax rate under the Tax Act.
Operating Expenses. The variance was driven primarily by:
a $65 million increase in natural gas costs primarily due to higher costs passed through to customers, as a result of a higher natural gas prices;
a $38 million increase in operations, maintenance, and other expense primarily due to increased shared services, costs to achieve merger expenses and a pension settlement charge at Piedmont in 2017; and
a $14 million increase in depreciation and amortization expense due to additional plant in service and higher amortization of software costs.
Other Income and Expenses, net. The variance was driven primarily by:
a $55 million impairment recorded for the investment in Constitution in 2018.
Partially offset by:
a $25 million increase in non-service components of employee benefit costs in 2018. For additional information on employee benefit costs, see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans"; and

48



MD&ASEGMENT RESULTS - GAS UTILITIES AND INFRASTRUCTURE


a $20 million increase in equity earnings from pipeline investments.
Income Tax Expense. The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act, a decrease in pretax income and the impact of the Tax Act in the prior year. The ETRs for the years ended December 31, 2018, and 2017 were 22.2 percent and 26.7 percent, respectively. The decrease in the ETR was primarily due to the lower statutory federal corporate tax rate under the Tax Act partially offset by the impact of the Tax Act in the prior year. See the Tax Act section above for additional information.
Year Ended December 31, 2017, as compared to 2016
Gas Utilities and Infrastructure's higher results were primarily due to the inclusion of Piedmont's earnings in the current year as a result of Duke Energy's acquisition of Piedmont on October 3, 2016, as well as additional equity earnings from investments in the ACP and Sabal Trail pipelines.
Operating Revenues. The variance was driven primarily by:
an $884 million increase in operating revenues due to the inclusion of Piedmont's operating revenues beginning in October 2016; and
a $47 million increase in Piedmont's fourth quarter results due to colder weather, higher natural gas prices, IMR rate adjustments, customer growth and new power generation customers.
Operating Expenses. The variance was driven primarily by:
a $686 million increase in operating expenses due to the inclusion of Piedmont's operating expenses beginning in October 2016; and
a $34 million increase in Piedmont's fourth quarter results primarily due to higher natural gas costs passed through to customers due to the higher price per dekatherm of natural gas.
Other Income and Expenses, net. The increase was driven primarily by higher equity earnings from pipeline investments.
Interest Expense. The variance was primarily due to the inclusion of Piedmont's interest expense beginning in October 2016.
Income Tax Expense. The variance was primarily due to an increase in pretax income due to the inclusion of Piedmont's earnings beginning in October 2016, partially offset by prior period true ups. The effective tax rates for the years ended December 31, 2017, and 2016 were 26.7 percent and 37.2 percent, respectively. The decrease in the effective tax rate was primarily due to the prior period true ups and the impact of the Tax Act. See the Tax Act section above for additional information.
Matters Impacting Future Gas Utilities and Infrastructure Results
Gas Utilities and Infrastructure has a 47 percent ownership interest in ACP, which is building an approximately 600-mile interstate natural gas pipeline intended to transport diverse natural gas supplies into southeastern markets. Affected states (West Virginia, Virginia and North Carolina) have issued certain necessary permits; the project remains subject to other pending federal and state approvals, which will allow full construction activities to begin. In 2018, FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route. Project cost estimates are a range of $7.0 billion to $7.8 billion, excluding financing costs. ACP expects to achieve a late 2020 in-service date for key segments of the project, while it expects a remainder to extend into 2021. Project construction activities, schedule and final costs are subject to uncertainty due to abnormal weather, work delays (including delays due to judicial or regulatory action) and other conditions and risks that could result in potential higher project costs, a potential delay in the targeted in-service dates and potential impairment charges. ACP and Duke Energy will continuecontinues to consider their options with respect to the foregoing in lightmonitor recoverability of their existing contractual and legal obligations. See Notes 4 and 12 to the Consolidated Financial Statements, "Regulatory Matters" and "Investments in Unconsolidated Affiliates," respectively, for additional information.
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.

49



MD&ASEGMENT RESULTS - COMMERCIAL RENEWABLES


Commercial Renewables
 Years Ended December 31,
     Variance
   Variance
     2018 vs.
   2017 vs.
(in millions)2018
 2017
 2017
 2016
 2016
Operating Revenues$477
 $460
 $17
 $484
 $(24)
Operating Expenses    

   

Operation, maintenance and other304
 267
 37
 337
 (70)
Depreciation and amortization155
 155
 —
 130
 25
Property and other taxes25
 33
 (8) 25
 8
Impairment charges93
 99
 (6) —
 99
Total operating expenses577
 554
 23
 492
 62
(Loss) Gains on Sales of Other Assets and Other, net(1) 1
 (2) 5
 (4)
Operating Loss(101) (93) (8) (3) (90)
Other Income and Expenses, net23
 (12) 35
 (83) 71
Interest Expense88
 87
 1
 53
 34
Loss Before Income Taxes(166) (192) 26
 (139) (53)
Income Tax Benefit(147) (628) 481
 (160) (468)
Less: Loss Attributable to Noncontrolling Interests(28) (5) (23) (2) (3)
Segment Income$9
 $441
 $(432) $23
 $418
          
Renewable plant production, GWh 8,522
 8,260
 262
 7,446
 814
Net proportional MW capacity in operation(a)
2,991
 2,907
 84
 2,892
 15
(a)Certain projects are included in tax-equity structures where investors have differing interests in the project's economic attributes. In 2018, 100 percent of the tax-equity project's capacity is included in the table above.
Year Ended December 31, 2018, as compared to 2017
Commercial Renewables' results were unfavorably impacted by the higher tax benefit in 2017 from the Tax Act. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The increase in revenues was primarily due to an increase in the number of EPC agreements at REC Solar, partially offset by unfavorable wind portfolio revenue.
Operating Expenses. The increase in operating expenses was primarily due to an increase in the number of EPC agreements at REC Solar, higher wind portfolio expenses and higher solar development costs, partially offset by lower property taxes due to non-recurring property tax payments made in the prior year and lower impairment charges.
Other Income and Expenses, net. The favorable variance in other income and expenses was primarily due to the bankruptcy court approved NAW and FES settlement agreement, which allowed retention of previously collected cash collateral under the PPAs, sale of the FES unsecured claim, impairment of certain cost investments in the prior year and lower equity losses in the current year.
Income Tax Benefit.The decrease in tax benefit in 2018 was primarily due to the one-time impact of the Tax Act in 2017 and lower statutory federal corporate tax rate under the Tax Act. See the Tax Act section above for additional information.
Loss Attributable to Noncontrolling Interests. The increase is primarily driven by the new tax-equity structures entered into during 2018.
Year Ended December 31, 2017, as compared to 2016
Commercial Renewables' higher earnings were primarily due to the Tax Act, partially offset by pretax impairment charges. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The decrease was primarily due to lower EPC revenues from REC Solar.
Operating Expenses. The increase was primarily due to a $99 million in pretax impairment charges in 2017 related to a wholly owned non-contracted wind project and other investments and higher expenses associated with new wind and solar projects, partially offset by lower operations and maintenance expense at REC Solar due to fewer projects under construction. See Notes 10 and 11 to the Consolidated Financial Statements, “Property, Plant and Equipment” and “Goodwill and Intangible Assets,” respectively, for additional information.
Other Income and Expenses, net. The variance was primarily due to a $71 million pretax impairment charge in 2016 related to certain equity method investments. For additional information, see Note 12 to the Consolidated Financial Statements, “Investments in Unconsolidated Affiliates.”

50



MD&ASEGMENT RESULTS - COMMERCIAL RENEWABLES


Interest Expense. The variance was primarily due to new project financings and less capitalized interest due to fewer projects under construction.
Income Tax Benefit.The variance was primarily due to the impact of the Tax Act and higher PTCs, partially offset by lower ITCs. See the Tax Act section above for additional information on the Tax Act and the impact on the effective tax rate.
Matters Impacting Future Commercial Renewables Results
Persistently low market pricing for wind resources, primarilyrenewable merchant plants located in the Electric Reliability Council of Texas West market and PJM, West marketsdue to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future expirationundiscounted cash flows for the assets under review. A continued decline in energy market pricing would likely result in a future impairment. Impairment of tax incentives including ITCs and PTCsthese assets could result in adverse impactsimpacts. For additional information, see Note 10 to the futureConsolidated Financial Statements, "Property, Plant and Equipment."
In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. Both lost revenues and higher than expected purchased power costs are expected to negatively impact the operating results of these generating units. The estimated financial impact of the storm is expected to have a material impact on the Commercial Renewables segment's 2021 operating results. See Note 25 to the Consolidated Financial Statements, "Subsequent Events."
45



MD&ADUKE ENERGY
COVID-19
Duke Energy cannot predict the extent to which the COVID-19 pandemic will impact its results of operations, financial position and cash flows of Commercial Renewables.
On September 26, 2018, Duke Energy announced it is seeking a minority investor forin the commercial renewables business.future. Duke Energy will continue to develop projects, grow its portfolioactively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and manage its renewables assets.governmental agencies. The pandemic and resultant economic slowdown continues to cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Renewable Services, an operationshas mitigation plans in place to partially offset these impacts, and maintenance business for third-party customers, and REC Solar are not includedthe ability to execute these plans is critical to preserving future financial results.The Company is in the process of reviewing the long-term real estate strategy due to a potential transaction. A salechange of in-office work policies after the COVID-19 pandemic. The plan may result in a minority interest is dependentreduction of physical work space which could create accounting impacts starting in 2021. Accounting impacts may include reassessments of lease terms and lease modifications which could result in termination penalties, as well as, asset impairments on property, plant and equipment. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a numberdiscussion of factors and cannot be predicted at this time.liquidity impacts of COVID-19.

Within this Item 7, see the Tax Act section above as well as Liquidity and Capital Resources below for a discussion ofon risks associated with the Tax Act.
OtherResults of Operations
Non-GAAP Measures
Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. These items represent income from continuing operations available to Duke Energy common stockholders in dollar and per-share amounts, adjusted for the dollar and per-share impact of special items. As discussed below, special items include certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. Management believes the presentation of adjusted earnings and adjusted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.
Management uses these non-GAAP financial measures for planning and forecasting, and for reporting financial results to the Board of Directors, employees, stockholders, analysts and investors. Adjusted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and EPS Available to Duke Energy Corporation common stockholders (GAAP Reported EPS), respectively.
Special items included in the periods presented include the following, which management believes do not reflect ongoing costs:
•Gas Pipeline Investments represents costs related to the cancellation of the ACP pipeline and additional exit costs related to Constitution.
•Regulatory Settlements represents charges related to Duke Energy Carolinas' and Duke Energy Progress' CCR Settlement Agreement and the partial settlements in the 2019 North Carolina rate cases.
•Severance represents the reversal of 2018 costs, which were deferred as a result of a partial settlement in the Duke Energy Carolinas and the Duke Energy Progress 2019 North Carolina rate cases.
•Impairment Charges represents a reduction of a prior year impairment at Citrus County CC and an OTTI on the remaining investment in Constitution.
Duke Energy’s adjusted earnings and adjusted EPS may not be comparable to similarly titled measures of another company because other companies may not calculate the measures in the same manner.
Reconciliation of GAAP Reported Amounts to Adjusted Amounts
The following table presents a reconciliation of adjusted earnings and adjusted EPS to the most directly comparable GAAP measures.
 Years Ended December 31,
20202019
(in millions, except per share amounts)EarningsEPSEarningsEPS
GAAP Reported Earnings/EPS$1,270 $1.72 $3,707 $5.06 
Adjustments to Reported:
Gas Pipeline Investments(a)
1,711 2.32 — — 
Regulatory Settlements(b)
872 1.19 — — 
Severance(c)
(75)(0.10)— — 
Impairment Charges(d)
— — (8)(0.01)
Discontinued Operations(7)(0.01)7 0.01 
Adjusted Earnings/Adjusted EPS$3,771 $5.12 $3,706 $5.06 
(a)    Net of tax benefit of $399 million.
(b)    Net of tax benefit of $263 million.
(c)    Net of tax expense of $23 million.
(d)    Net of tax expense of $3 million.
46



MD&ADUKE ENERGY
 Years Ended December 31,
     Variance
   Variance
     2018 vs.
   2017 vs.
(in millions)2018
 2017
 2017
 2016
 2016
Operating Revenues$89
 $138
 $(49) $117
 $21
Operating Expenses    

   

Fuel used in electric generation and purchased power—
 58
 (58) 51
 7
Operation, maintenance and other214
 46
 168
 371
 (325)
Depreciation and amortization152
 131
 21
 152
 (21)
Property and other taxes14
 14
 —
 28
 (14)
Impairment charges—
 7
 (7) 2
 5
Total operating expenses380
 256
 124
 604
 (348)
(Losses) Gains on Sales of Other Assets and Other, net(96) 21
 (117) 23
 (2)
Operating Loss(387) (97) (290) (464) 367
Other Income and Expenses, net73
 129
 (56) 75
 54
Interest Expense657
 574
 83
 693
 (119)
Loss Before Income Taxes(971) (542) (429) (1,082) 540
Income Tax (Benefit) Expense(282) 353
 (635) (446) 799
Less: Net Income Attributable to Noncontrolling Interests5
 10
 (5) 9
 1
Net Loss$(694) $(905) $211
 $(645) $(260)
Year Ended December 31, 2018,2020, as compared to 20172019
Other’s lower net lossGAAP Reported EPS was driven by prior year impacts from the Tax Act, partially offset by severance charges, loss on the sale of the retired Beckjord station, higher interest expense and prior year proceeds resulting from the settlement of the shareholder litigation related to the Progress Energy merger. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The decrease was primarily due to prior year revenues related to Duke Energy Ohio’s entitlement of capacity and energy from OVEC’s power plants. For the year ended December 31, 2018, the revenues and related expenses for OVEC are reflected in the Electric Utilities and Infrastructure segment due to the PUCO Order that approved Duke Energy to recover or credit amounts through Rider PSR. These amounts are deemed immaterial. Therefore, no prior period amounts were restated. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters" for additional information.
Operating Expenses. The increase was primarily due to severance charges related to a corporate initiative partially offset by prior year fuel expense related to OVEC, which is reflected in the Electric Utilities and Infrastructure segment for year ended December 31, 2018. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters" for additional information.
(Losses) Gains on Sales of Other Assets and Other, net. The variance was driven by the loss on sale of the retired Beckjord station, a nonregulated facility retired during 2014, including the transfer of coal ash basins and other real property and indemnification from all potential future claims related to the property, whether arising under environmental laws or otherwise.
Other Income and Expenses, net. The variance was primarily due to insurance proceeds received in the prior year resulting from settlement of the shareholder litigation related to the Progress Energy merger and lower returns on investments that fund certain employee benefit obligations.

51



MD&ASEGMENT RESULTS - OTHER


Interest Expense. The increase was primarily due to an increase in long-term debt as well as higher interest rates on short-term debt.
Income Tax (Benefit) Expense. The variance was primarily due to the prior year impact of the Tax Act and an increase in pretax loss. See the Tax Act section above for additional information on the Tax Act and the impact on the effective tax rate.
Year Ended December 31, 2017, as compared to 2016
Other’s higher net loss was driven by the Tax Act, partially offset by prior year losses on forward-starting interest rate swaps and other costs related to the Piedmont acquisition, decreased severance charges, donations to the Duke Energy Foundation in 2016 and insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The increase was primarily due to higher OVEC revenues and prior year customer credits related to Piedmont merger commitments. See Note 2 to the Consolidated Financial Statements, "Acquisitions and Dispositions," for additional information.
Operating Expenses. The decrease was primarily due to lower transaction and integration costs associated with the Piedmont acquisition, prior year severance charges related to cost savings initiatives, donations to the Duke Energy Foundation in 2016 as well as prior year depreciation expense and other integration costs related to the Progress Energy merger. The Duke Energy Foundation is a nonprofit organization funded by Duke Energy shareholders that makes charitable contributions to selected nonprofits and government subdivisions.
Other Income and Expenses, net. The increase was primarily driven by insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger, higher earnings from the equity method investment in NMC and increased returns on investments that fund certain employee benefit obligations.
Interest Expense. The decrease was primarily due to prior year losses on forward-starting interest rate swaps related to Piedmont pre-acquisition financing, partially offset by higher interest costs on $3.75 billion of debt issued in August 2016 to fund the acquisition. For additional information see Notes 2, 6 and 14 to the Consolidated Financial Statements, "Acquisitions and Dispositions," "Debt and Credit Facilities" and "Derivatives and Hedging," respectively.
Income Tax Benefit. The variance was primarily due to the impact of the Tax Act and a decrease in pretax loss. See the Tax Act section above for additional information on the Tax Act and the impact on the effective tax rate.
Matters Impacting Future Other 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.
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
 Years Ended December 31,
     Variance
   Variance
     2018 vs.
   2017 vs.
(in millions)2018
 2017
 2017
 2016
 2016
Income (Loss) From Discontinued Operations, net of tax$19
 $(6) $25
 $(408) $402
Year Ended December 31, 2018, as compared to 2017
The variance was primarily driven by tax adjustments related to the International Disposal Groups. See Note 2 to the Consolidated Financial Statements, "Acquisitions and Dispositions," for additional information.
Year Ended December 31, 2017, as compared to 2016
The variance was primarily driven by the prior year loss on the disposal of Duke Energy's Latin American generation business and an impairment charge related to certain assets in Central America, partially offset by a tax benefit related to historic unremitted foreign earnings and immaterial out of period tax adjustments unrelated to the International Disposal Group. See Note 2 to the Consolidated Financial Statements, "Acquisitions and Dispositions," for additional information.

52



MD&ASUBSIDIARY REGISTRANTS


SUBSIDIARY REGISTRANTS
As a result of the Tax Act, the Subsidiary Registrants revalued their deferred tax assets and deferred tax liabilities, as of December 31, 2017, to account for the estimated future impact of lower corporate tax rates on these deferred tax amounts. During the year ended December 31, 2018, the Subsidiary Registrants recorded measurement period adjustments to the provisional estimate recorded as of December 31, 2017, in accordance with SAB 118. For the Subsidiary Registrants' regulated operations, where the net reduction in the net accumulated deferred income tax liability is expected to be returned to customers in future rates, the remeasurement has been deferred as a regulatory liability. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters" for additional information on the Tax Act's impact to the regulatory asset and liability accounts. The change in each Subsidiary Registrant's effective tax rate$1.72 for the year ended December 31, 2018,2020, compared to $5.06 for the year ended December 31, 2019. The decrease in GAAP Reported Earnings/EPS was primarily due to the impactcancellation of the Tax Act, unless noted below. The following table shows the expense (benefit) recorded on the Subsidiary Registrant's Consolidated Statements of Operations and Comprehensive Income,ACP pipeline and the effective tax rate for each Subsidiary Registrant.
 
Impacts of the Tax Act(a)(b)
  Effective Tax Rate
 Years Ended December 31,  Years Ended December 31, 
(in millions)2018
2017
 2018
 2017
Duke Energy Carolinas$1
$15
 22.1% 34.9%
Progress Energy25
(246)
(c) 
17.4% 17.2%
Duke Energy Progress19
(40)
(d) 
19.3% 29.0%
Duke Energy Florida—
(226)
(c) 
15.4% 6.1%
Duke Energy Ohio2
(23)
(e) 
19.6% 23.4%
Duke Energy Indiana—
55
(f) 
24.6% 46.0%
Piedmont—
(2)
(d)(g) 
22.3% 30.8%
(a)
Except where noted below, amounts are included within Income Tax Expense From Continuing Operations or Income Tax Expense on the Consolidated Statements of Operations and Comprehensive Income.
(b)See Notes 4 and 23 to the Consolidated Financial Statements, "Regulatory Matters" and "Income Taxes," respectively, for information about the Tax Act's impact on Duke Energy's Consolidated Balance Sheets.
(c)2017 amount primarily relates to the remeasurement of deferred tax liabilities that are excluded for ratemaking purposes related to abandoned assets and certain wholesale fixed rate contracts.
(d)2017 amount primarily relates to the remeasurement of deferred tax liabilities of certain wholesale fixed rate contracts.
(e)2017 amount primarily relates to the remeasurement of deferred tax assets that are excluded for ratemaking purposes related to a prior transfer of certain electric generating assets.
(f)2017 amount primarily relates to the remeasurement of deferred tax liabilities that are excluded for ratemaking purposes related to impaired assets.
(g)2017 amount includes a $16 million expense recorded within Equity in earnings (losses) of unconsolidated affiliates on the Consolidated Statements of Operations and Comprehensive Income.

DUKE ENERGY CAROLINAS
Introduction
Management’s Discussion and Analysis should be read in conjunctionCCR Settlement Agreement filed with the accompanying Consolidated Financial StatementsNCUC.
As discussed and Notesshown in the table above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $5.12 for the yearsyear ended December 31, 2018, 2017 and 2016.
Basis of Presentation
The results of operations and variance discussion2020, compared to $5.06 for Duke Energy Carolinas is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.

53



MD&ADUKE ENERGY CAROLINAS


Results of Operations
 Years Ended December 31,
(in millions)2018
 2017
 Variance
Operating Revenues$7,300
 $7,302
 $(2)
Operating Expenses    

Fuel used in electric generation and purchased power1,821
 1,822
 (1)
Operation, maintenance and other2,130
 2,021
 109
Depreciation and amortization1,201
 1,090
 111
Property and other taxes295
 281
 14
Impairment charges192
 —
 192
Total operating expenses5,639
 5,214
 425
(Losses) Gains on Sales of Other Assets and Other, net(1) 1
 (2)
Operating Income1,660
 2,089
 (429)
Other Income and Expenses, net153
 199
 (46)
Interest Expense439
 422
 17
Income Before Income Taxes1,374
 1,866
 (492)
Income Tax Expense303
 652
 (349)
Net Income$1,071
 $1,214
 $(143)
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Carolinas. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities and to public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year2018 2017
Residential sales11.7 % (4.8)%
General service sales4.5 % (1.8)%
Industrial sales(0.3)% (0.8)%
Wholesale power sales12.5 % 6.3 %
Joint dispatch sales23.1 % 18.2 %
Total sales5.7 % (1.4)%
Average number of customers1.5 % 1.5 %
Year Endedyear ended December 31, 2018, as compared to 2017
Operating Revenues.2019. The varianceincrease in Adjusted Earnings/Adjusted EPS was driven primarily by:
a $263 million decrease in retail sales due to revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act;
a $68 million decrease in retail rider revenues primarily related to the implementation of new base rates; and
an $8 million decrease in wholesale power revenues, net of sharing and fuel, primarily due to positive rate case contributions, growth in wholesale, customer refundslower operations and maintenance expense in response to the current year related to a FERC order on a complaint filed by PMPA,pandemic and growth in Commercial Renewables, partially offset by higher revenues related to recovery of coal ash costs.
Partially offset by:
depreciation expense from a $169 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;
an $83 million increase in retail pricing fromgrowing asset base, impacts of the North Carolina rate case;
a $49 million increase in other revenues primarily due to the recognition of previously deferred revenues associated with storm restoration costs in South Carolina and favorable transmission revenues; and
a $36 million increase in weather-normal retail sales volumes.
Operating Expenses.The variance was driven primarily by:
a $192 million increase in impairment charges primarily due to the impacts of the North Carolina rate order and charges related to coal ash costs in South Carolina;
a $111 million increase in depreciation and amortization expense primarily due to additional plant in service, new depreciation rates associated with the North Carolina rate case and higher amortization of deferred coal ash costs, partially offset by lower amortization of certain regulatory assets; and

54



MD&ADUKE ENERGY CAROLINAS


a $109 million increase in operations, maintenance and other expense primarily due to severance charges.
Other Income and Expenses, net.The variance was primarily due to lower AFUDC equity related to the Lee Nuclear Project and W.S. Lee CC and a decrease in recognition of post in-service equity returns for projects that had been completed prior to being reflected in customer rates.
Interest Expense. The variance was primarily due to higher debt outstanding in the current year.
Income Tax Expense. The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act. The ETRs for the years ended December 31, 2018, and 2017 were 22.1 percent and 34.9 percent, respectively. The decrease in the ETR was primarily due to the lower statutory federal corporate tax rate under the Tax Actpandemic, mild weather and the amortizationloss of state excess deferred taxes.ACP earnings.
Matters Impacting Future Results
On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, were eligible for reassessment as low-risk pursuant to legislation enacted on July 14, 2016. On November 14, 2018, NCDEQ issued final low risk classifications for these impoundments, indicating that Duke Energy Carolinas had satisfied the permanent replacement water supply and certain dam improvement requirements set out in the Coal Ash Management Act. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Duke Energy Carolinas' results of operations, financial position and cash flows. See Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations," for additional information.
Duke Energy Carolinas is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. In addition, the order issued in the Duke Energy Carolinas North Carolinas rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Duke Energy Carolinas’ results of operations, financial position and cash flows. See Notes 4 and 5 to the Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.
On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas may petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
During the last half of 2018, Duke Energy Carolinas’ service territory was impacted by several named storms. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms have been deferred. On December 21, 2018, Duke Energy Carolinas filed with the NCUC a petition for approval to defer the incremental storm costs incurred to a regulatory asset for recovery in the next base rate case. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Carolinas' results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters," for additional information.
Appeals of the recently approved rate case for Duke Energy Carolinas are pending at the North Carolina Supreme Court. The North Carolina Attorney General and various intervenors primarily dispute the allowance of recovery of coal ash costs from customers, which was approved by the NCUC. The outcome of these appeals could have an adverse impact to Duke Energy Carolina's results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
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.
PROGRESS ENERGY
Introduction
Management’s Discussion and Analysis should be read in conjunction with the accompanying Consolidated Financial Statements and Notes for the years ended December 31, 2018, 2017 and 2016.
Basis of Presentation
The results of operations and variance discussion for Progress Energy is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.

55



MD&APROGRESS ENERGY


Results of Operations
 Years Ended December 31,
(in millions)2018
 2017
 Variance
Operating Revenues$10,728
 $9,783
 $945
Operating Expenses     
Fuel used in electric generation and purchased power3,976
 3,417
 559
Operation, maintenance and other2,613
 2,301
 312
Depreciation and amortization1,619
 1,285
 334
Property and other taxes529
 503
 26
Impairment charges87
 156
 (69)
Total operating expenses8,824
 7,662
 1,162
Gains on Sales of Other Assets and Other, net24
 26
 (2)
Operating Income1,928
 2,147
 (219)
Other Income and Expenses, net165
 209
 (44)
Interest Expense842
 824
 18
Income Before Income Taxes1,251
 1,532
 (281)
Income Tax Expense218
 264
 (46)
Net Income1,033
 1,268
 (235)
Less: Net Income Attributable to Noncontrolling Interests6
 10
 (4)
Net Income Attributable to Parent$1,027
 $1,258
 $(231)
Year Ended December 31, 2018, as compared to 2017
Operating Revenues. The variance was driven primarily by:
a $614 million increase in fuel and capacity revenues primarily due to an increase in fuel and capacity rates billed to retail customers and increased demand;
a $149 million increase in retail pricing due to the impacts of the Duke Energy Progress North Carolina and South Carolina rate cases and Duke Energy Florida base rate adjustments related to generation assets being placed into service;
a $108 million increase in retail sales due to favorable weather in the current year, net of lost revenue impacts associated with Hurricane Irma in 2017 and Hurricane Florence in 2018;
a $96 million increase in wholesale power revenues, net of fuel, primarily due to recovery of coal ash costs and higher peak demand at Duke Energy Progress;
a $34 million net increase in retail rider revenues in conjunction with the implementation of new base rates at Duke Energy Progress; and
a $47 million increase in weather-normal retail sales volumes.
Partially offset by:
a $119 million decrease in retail sales due to revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act at Duke Energy Progress.
Operating Expenses.The variance was driven primarily by:
a $559 million increase in fuel used in electric generation and purchased power primarily due to higher amortization of deferred fuel and capacity expenses, increased demand and changes in generation mix;
a $334 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs and new depreciation rates associated with the North Carolina rate case at Duke Energy Progress, and accelerated depreciation of Crystal River Units 4 and 5 at Duke Energy Florida;
a $312 million increase in operation, maintenance and other expense primarily due to higher costs related to storms, vegetation management costs and severance charges; and
a $26 million increase in property and other taxes primarily due to higher revenue related taxes at Duke Energy Florida.

56



MD&APROGRESS ENERGY


Partially offset by:
a $69 million decrease in impairment charges primarily due to the write-off of remaining unrecovered Levy Nuclear Project costs in the prior year, offset by the current year impairment of the Citrus County CC at Duke Energy Florida and the impacts associated with the North Carolina rate case at Duke Energy Progress.
Other Income and Expenses, net. The variance was primarily due to lower income from non-service components of employee benefit costs in the current year at Duke Energy Progress and Duke Energy Florida. For additional information on employee benefit costs, see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans."
Interest Expense. The variance was primarily due to new debt issuances at Duke Energy Progress.
Income Tax Expense. The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act partially offset by the favorable impact of the Tax Act in the prior year. The effective tax rate for the years ended December 31, 2018, and 2017 were 17.4 percent and 17.2 percent, respectively. The change in the effective tax rate was primarily due to the favorable impact of the Tax Act in the prior year mostly offset by the lower statutory federal corporate tax rate under the Tax Act and the amortization of federal and state excess deferred taxes in the current year.
Matters Impacting Future Results
On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, were eligible for reassessment as low-risk pursuant to legislation enacted on July 14, 2016. On November 14, 2018, NCDEQ issued final low risk classifications for these impoundments, indicating that Progress Energy had satisfied the permanent replacement water supply and certain dam improvement requirements set out in the Coal Ash Management Act. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Progress Energy's results of operations, financial position and cash flows. See Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations," for additional information.
Duke Energy Progress is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. As noted above, the order issued in the Duke Energy Progress North Carolinas rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Progress Energy’s results of operations, financial position and cash flows. See Notes 4 and 5 to the Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.
Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. The NCUC did allow Duke Energy Carolinas to petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. While Duke Energy Progress did not request recovery of these costs in its most recent case with the NCUC, Duke Energy Progress may request recovery of certain grid modernization costs in future regulatory proceedings. If the NCUC were to rule similarly, Progress Energy's results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
During the last half of 2018, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territory of Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 4 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. A significant portion of the incremental operation and maintenance expenses related to these storms have been deferred. On December 21, 2018, Duke Energy Progress filed with the NCUC a petition for approval to defer the incremental storm costs incurred to a regulatory asset for recovery in the next base rate case. Duke Energy Progress filed a similar request with the PSCSC on January 11, 2019, which also included a request for the continuation of prior deferrals requested for other storms, and on January 30, 2019, the PSCSC issued a directive approving the deferral request. Duke Energy Florida anticipates filing a petition in the first half of 2019 with the FPSC to recover incremental storm costs consistent with the provisions in its 2017 Settlement. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Progress Energy's results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters," for additional information.
Appeals of the recently approved rate case for Duke Energy Progress are pending at the North Carolina Supreme Court. The North Carolina Attorney General and various intervenors primarily dispute the allowance of recovery of coal ash costs from customers, which was approved by the NCUC. The outcome of these appeals could have an adverse impact to Progress Energy's results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filed for recovery of the storm costs. Storm costs are currently expected to be fully recovered by approximately mid-2021. The commission has scheduled the hearing to begin on May 21, 2019. An order disallowing recovery of these costs could have an adverse impact on Progress Energy's results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
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.

57



MD&ADUKE ENERGY PROGRESS


DUKE ENERGY PROGRESS
Introduction
Management’s Discussion and Analysis should be read in conjunction with the accompanying Consolidated Financial Statements and Notes for the years ended December 31, 2018, 2017 and 2016.
Basis of Presentation
The results of operations and variance discussion for Duke Energy Progress is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.
Results of Operations
 Years Ended December 31,
(in millions)2018
 2017
 Variance
Operating Revenues$5,699
 $5,129
 $570
Operating Expenses     
Fuel used in electric generation and purchased power1,892
 1,609
 283
Operation, maintenance and other1,578
 1,439
 139
Depreciation and amortization991
 725
 266
Property and other taxes155
 156
 (1)
Impairment charges33
 19
 14
Total operating expenses4,649
 3,948
 701
Gains on Sales of Other Assets and Other, net9
 4
 5
Operating Income1,059
 1,185
 (126)
Other Income and Expenses, net87
 115
 (28)
Interest Expense319
 293
 26
Income Before Income Taxes827
 1,007
 (180)
Income Tax Expense160
 292
 (132)
Net Income$667
 $715
 $(48)
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Progress. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities and to public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year2018
 2017
Residential sales9.9% (2.6)%
General service sales2.3% (1.3)%
Industrial sales0.8% 1.1 %
Wholesale power sales4.6% (2.9)%
Joint dispatch sales2.1% (17.1)%
Total sales3.8% (3.2)%
Average number of customers1.5% 1.4 %
Year Ended December 31, 2018, as compared to 2017
Operating Revenues.The variance was driven primarily by:
a $324 million increase in fuel revenues driven by higher retail sales and changes in generation mix;
a $125 million increase in retail pricing due to the impacts from the North Carolina and South Carolina rate cases;
a $96 million increase in wholesale power revenues, net of fuel, primarily due to recovery of coal ash costs and higher peak demand;
a $34 million net increase in retail rider revenues in conjunction with the implementation of new base rates;
a $61 million increase in retail sales due to favorable weather in the current year, net of the impact of lost revenues due to Hurricane Florence; and
a $35 million increase in weather-normal retail sales volumes.
Partially offset by:
a $119 million decrease in retail sales due to revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act.

58



MD&ADUKE ENERGY PROGRESS


Operating Expenses.The variance was driven primarily by:
a $283 million increase in fuel used in electric generation and purchased power primarily due to higher retail sales and changes in generation mix;
a $266 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs and new depreciation rates associated with the North Carolina rate case;
a $139 million increase in operation, maintenance and other expense primarily due to higher storm costs, impacts associated with the North Carolina rate case and severance charges; and
a $14 million increase in impairment charges associated with the North Carolina rate case.
Other Income and Expenses, net. The variance was primarily driven by lower income from non-service components of employment benefit costs. For additional information on employee benefit costs, see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans."
Interest Expense. The variance was primarily driven by new debt issuances.
Income Tax Expense. The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act partially offset by the favorable impact of the Tax Act in the prior year. The effective tax rates for the years ended December 31, 2018, and 2017 were 19.3 percent and 29.0 percent, respectively. The decrease in the effective tax rate was primarily due to the lower statutory federal corporate tax rate under the Tax Act and the amortization of state excess deferred taxes partially offset by the impact of the Tax Act in the prior year.
Matters Impacting Future Results
On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, were eligible for reassessment as low-risk pursuant to legislation enacted on July 14, 2016. On November 14, 2018, NCDEQ issued final low risk classifications for these impoundments, indicating that Duke Energy Progress had satisfied the permanent replacement water supply and certain dam improvement requirements set out in the Coal Ash Management Act. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Duke Energy Progress' results of operations, financial position and cash flows. See Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations," for additional information.
Duke Energy Progress is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. As noted above, the order issued in the Duke Energy Progress North Carolinas rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Duke Energy Progress’ results of operations, financial position and cash flows. See Notes 4 and 5 to the Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.
Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. The NCUC did allow Duke Energy Carolinas to petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. While Duke Energy Progress did not request recovery of these costs in its most recent case with the NCUC, Duke Energy Progress may request recovery of certain grid modernization costs in future regulatory proceedings. If the NCUC were to rule similarly, Duke Energy Progress' results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
During the last half of 2018, Duke Energy Progress' service territory was impacted by several named storms. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms have been deferred. On December 21, 2018, Duke Energy Progress filed with the NCUC a petition for approval to defer the incremental storm costs incurred to a regulatory asset for recovery in the next base rate case. Duke Energy Progress filed a similar request with the PSCSC on January 11, 2019, which also included a request for the continuation of prior deferrals requested for other storms, and on January 30, 2019, the PSCSC issued a directive approving the deferral request. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Progress' results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters," for additional information.
Appeals of the recently approved rate case for Duke Energy Progress are pending at the North Carolina Supreme Court. The North Carolina Attorney General and various intervenors primarily dispute the allowance of recovery of coal ash costs from customers, which was approved by the NCUC. The outcome of these appeals could have an adverse impact to Duke Energy Progress' results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
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.

59



MD&ADUKE ENERGY FLORIDA


DUKE ENERGY FLORIDA
Introduction
Management’s Discussion and Analysis should be read in conjunction with the accompanying Consolidated Financial Statements and Notes for the years ended December 31, 2018, 2017 and 2016.
Basis of Presentation
The results of operations and variance discussion for Duke Energy Florida is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.
Results of Operations
 Years Ended December 31,
(in millions)2018
 2017
 Variance
Operating Revenues$5,021
 $4,646
 $375
Operating Expenses     
Fuel used in electric generation and purchased power2,085
 1,808
 277
Operation, maintenance and other1,025
 853
 172
Depreciation and amortization628
 560
 68
Property and other taxes374
 347
 27
Impairment charges54
 138
 (84)
Total operating expenses4,166
 3,706
 460
Gains on Sales of Other Assets and Other, net1
 1
 —
Operating Income856
 941
 (85)
Other Income and Expenses, net86
 96
 (10)
Interest Expense287
 279
 8
Income Before Income Taxes655
 758
 (103)
Income Tax Expense101
 46
 55
Net Income$554
 $712
 $(158)
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Florida. The below percentages for retail customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities and to public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year2018
 2017
Residential sales4.3 % (2.3)%
General service sales1.9 % (1.3)%
Industrial sales(0.4)% (2.4)%
Wholesale power sales5.2 % 20.1 %
Total sales2.4 % 0.5 %
Average number of customers1.5 % 1.6 %
Year Ended December 31, 2018, as compared to 2017
Operating Revenues. The variance was driven primarily by:
a $290 million increase in fuel and capacity revenues primarily due to an increase in fuel and capacity rates billed to retail customers and increased demand;
a $47 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year and impacts of lost revenue resulting from Hurricane Irma in the prior year:
a $24 million increase in retail pricing due to base rate adjustments related to generation assets being placed into service; and
a $12 million increase in weather-normal retail sales volumes.
Operating Expenses. The variance was driven primarily by:
a $277 million increase in fuel used in electric generation and purchased power primarily due to higher amortization of deferred fuel and capacity expenses and increased purchased power and demand;
a $172 million increase in operation, maintenance and other expense primarily due to higher storm cost amortization, vegetation management costs and severance charges, partially offset by lower storm restoration costs in the current year;

60



MD&ADUKE ENERGY FLORIDA


a $68 million increase in depreciation and amortization expense primarily due to accelerated depreciation of Crystal River Units 4 and 5 and additional plant in service; and
a $27 million increase in property and other taxes primarily due to higher revenue related taxes.
Partially offset by:
an $84 million decrease in impairment charges primarily due to the write-off of remaining unrecovered Levy Nuclear Project costs in the prior year, offset by the current year impairment of the Citrus County CC.
Other Income and Expenses, net. The variance was driven primarily by lower 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."
Income Tax Expense.The variance was primarily due to the favorable impact of the Tax Act in the prior year partially offset by the lower statutory federal corporate tax rate under the Tax Act in the current year. The effective tax rates for the years ended December 31, 2018, and 2017 were 15.4 percent and 6.1 percent, respectively. The increase in the effective tax rate was primarily due to the favorable impact of the Tax Act in the prior year partially offset by the lower statutory federal corporate tax rate under the Tax Act and the amortization of federal excess deferred taxes in the current year.
Matters Impacting Future Results
On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage within the service territory of Duke Energy Florida, particularly from Panama City Beach to Mexico Beach. Duke Energy Florida has not completed the final accumulation of total estimated storm restoration costs incurred. Given the magnitude of the storm, Duke Energy Florida anticipates filing a petition in the first half of 2019 with the FPSC to recover incremental storm costs consistent with the provisions in its 2017 Settlement. An order from regulatory authorities disallowing the future recovery of storm restoration costs could have an adverse impact on Duke Energy Florida's financial position, results of operations and cash flows. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filed for recovery of the storm costs. Storm costs are currently expected to be fully recovered by approximately mid-2021. The commission has scheduled the hearing to begin on May 21, 2019. An order disallowing recovery of these costs could have an adverse impact on Duke Energy Florida's results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
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.

61



MD&ADUKE ENERGY OHIO


DUKE ENERGY OHIO
Introduction
Management’s Discussion and Analysis should be read in conjunction with the accompanying Consolidated Financial Statements and Notes for the years ended December 31, 2018, 2017 and 2016.
Basis of Presentation
The results of operations and variance discussion for Duke Energy Ohio is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.
Results of Operations
 Years Ended December 31,
(in millions)2018
2017
Variance
Operating Revenues  

Regulated electric$1,450
$1,373
$77
Regulated natural gas506
508
(2)
Nonregulated electric and other1
42
(41)
Total operating revenues1,957
1,923
34
Operating Expenses   
Fuel used in electric generation and purchased power – regulated412
369
43
Fuel used in electric generation and purchased power – nonregulated—
58
(58)
Cost of natural gas 113
107
6
Operation, maintenance and other480
530
(50)
Depreciation and amortization268
261
7
Property and other taxes290
278
12
Impairment charges—
1
(1)
Total operating expenses1,563
1,604
(41)
(Losses) Gains on Sales of Other Assets and Other, net(106)1
(107)
Operating Income288
320
(32)
Other Income and Expenses, net23
23
—
Interest Expense92
91
1
Income from Continuing Operations Before Income Taxes219
252
(33)
Income Tax Expense from Continuing Operations43
59
(16)
Income from Continuing Operations176
193
(17)
(Loss) Income from Discontinued Operations, net of tax—
(1)1
Net Income$176
$192
$(16)
The following table shows the percent changes in GWh sales of electricity, dekatherms of natural gas delivered and average number of electric and natural gas customers for Duke Energy Ohio. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities and to public and private utilities and power marketers. Amounts are not weather-normalized.
 Electric Natural Gas
Increase (Decrease) over prior year2018
 2017
 2018
 2017
Residential sales12.2 % (4.0)% 18.0% (2.6)%
General service sales3.3 % (3.1)% 15.4% 0.7 %
Industrial sales1.0 % (2.7)% 8.1% (2.8)%
Wholesale electric power sales(46.6)% 65.7 % n/a
 n/a
Other natural gas salesn/a
 n/a
 0.7% (0.3)%
Total sales2.8 % (2.1)% 11.9% (1.1)%
Average number of customers0.8 % 0.8 % 0.9% 0.7 %

62



MD&ADUKE ENERGY OHIO


Year Ended December 31, 2018, as compared to 2017
Operating Revenues. In 2018, the revenues and related expenses for OVEC are reflected in regulated electric due to the PUCO Order that approved Duke Energy Ohio to recover or credit amounts, through Rider PSR, that result from wholesale market transactions relating to Duke Energy Ohio's entitlement to capacity and energy from OVEC's power plants. In 2017, the revenues and related expenses for OVEC are reflected in nonregulated electric. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters" for additional information.
The variance was driven primarily by:
a $44 million increase in electric and natural gas retail sales, net of fuel revenues, due to favorable weather in the current year;
a $17 million increase in rider revenue primarily related to capital investment riders;
a $16 million increase in financial transmission rights revenues;
a $7 million increase in point-to-point transmission revenues; and
a $6 million increase in fuel revenues due to higher natural gas costs.
Partially offset by:
a $48 million decrease in regulated revenues due to revenues subject to refund to customers associated with the lower statutory corporate tax rate under the Tax Act; and
a $7 million decrease in bulk power marketing sales.
Operating Expenses. The variance was driven by:
a $50 million decrease in operations, maintenance and other expense primarily due to the FERC approved settlement refund of certain transmission costs previously billed by PJM; and
a $15 million decrease in fuel used in electric generation and purchased power related to the deferral of OVEC purchased power, which is reflected in regulated electric in 2018 and nonregulated electric in 2017, as noted above in the Operating Revenues section.
Partially offset by:
a $12 million increase in property and other taxes primarily due to higher property taxes and kilowatt tax;
a $7 million increase in depreciation and amortization expense primarily due to additional plant in service and increased amortization of regulatory assets; and
a $6 million increase in cost of natural gas primarily due to an increase in natural gas sales volumes.
(Losses) Gains on Sales of Other Assets and Other, net. The decrease was driven by the loss on the sale of Beckjord, a nonregulated facility retired during 2014, including the transfer of coal ash basins and other real property and indemnification from any and all potential future claims related to the property, whether arising under environmental laws or otherwise.
Income Tax Expense. The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act and a decrease in pretax income. The effective tax rates for the years ended December 31, 2018, and 2017 were 19.6 percent and 23.4 percent, respectively. The decrease in the effective tax rate was primarily due to the lower statutory federal corporate tax rate under the Tax Act partially offset by the impact of the Tax Act in the prior year.
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.

63



MD&ADUKE ENERGY INDIANA


DUKE ENERGY INDIANA
Introduction
Management’s Discussion and Analysis should be read in conjunction with the accompanying Consolidated Financial Statements and Notes for the years ended December 31, 2018, 2017 and 2016.
Basis of Presentation
The results of operations and variance discussion for Duke Energy Indiana is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.
Results of Operations
 Years Ended December 31,
(in millions)2018
2017
Variance
Operating Revenues$3,059
$3,047
$12
Operating Expenses   
Fuel used in electric generation and purchased power1,000
966
34
Operation, maintenance and other788
743
45
Depreciation and amortization520
458
62
Property and other taxes78
76
2
Impairment charges30
18
12
Total operating expenses2,416
2,261
155
Operating Income643
786
(143)
Other Income and Expenses, net45
47
(2)
Interest Expense167
178
(11)
Income Before Income Taxes521
655
(134)
Income Tax Expense128
301
(173)
Net Income $393
$354
$39
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Indiana. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities and to public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year2018
 2017
Residential sales12.5 % (3.8)%
General service sales2.8 % (2.4)%
Industrial sales0.5 % 0.3 %
Wholesale power sales(0.9)% (10.5)%
Total sales3.3 % (3.6)%
Average number of customers1.3 % 0.8 %
Year Ended December 31, 2018, as compared to 2017
Operating Revenues.The variance was driven primarily by:
a $65 million increase in rate rider revenues primarily related to the Edwardsport IGCC plant and the TDSIC rider;
a $50 million increase in fuel and other revenues primarily due to higher base fuel, non-native fuel and Midwest Independent System Operator rider revenues;
a $13 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year; and
a $13 million increase in weather-normal retail sales volumes.
Partially offset by:
a $105 million decrease due to revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act; and
a $27 million decrease in wholesale power revenues, net of fuel, primarily due to contracts that expired in the prior year.
Operating Expenses.The variance was driven primarily by:
a $62 million increase in depreciation and amortization expense primarily due to additional plant in service and the deferral of certain asset retirement obligations in the prior year;

64



MD&ADUKE ENERGY INDIANA


a $45 million increase in operation, maintenance and other expense primarily due to amortization of previously deferred expenses, and higher transmission, storm and customer related costs;
a $34 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas costs; and
a $12 million increase in impairment charges primarily due to the reduction of a regulatory asset pertaining to the Edwardsport IGCC settlement agreement in the current year, partially offset by the impairment of certain metering equipment in the prior year.
Interest Expense. The variance was primarily due to lower post in-service carrying costs due to three coal ash projects placed in service in December 2017, partially offset by higher intercompany money pool interest expense, higher AFUDC debt balances and higher floating rate debt interest expense.
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 24.6 percent and 46.0 percent, respectively. The decrease in the effective tax rate was primarily due to the lower statutory federal corporate tax rate under the Tax Act and by the impact of the Tax Act in the prior year.
Matters Impacting Future Results
On April 17, 2015, the EPA published in the Federal Register a rule to regulate the disposal of CCR from electric utilities as solid waste. Duke Energy Indiana has interpreted the rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. Duke Energy Indiana's interpretation of the requirements of the CCR rule is subject to potential legal challenges and further regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash. An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could have an adverse impact on Duke Energy Indiana's results of operations, financial position and cash flows. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
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.
PIEDMONT
Introduction
Management’s Discussion and Analysis should be read in conjunction with the accompanying Consolidated Financial Statements and Notes for the years ended December 31, 2018, and 2017, Piedmont's Annual Report on Form 10-K for the year ended October 31, 2016, and the Form 10-QT as of December 31, 2016, for the transition period from November 1, 2016, to December 31, 2016. The unaudited results of operations for the year ended December 31, 2016, were derived from data previously reported in the reports noted above.
Basis of Presentation
The results of operations and variance discussion for Piedmont is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.

65



MD&APIEDMONT


Results of Operations
 Years Ended December 31,
(in millions)2018
 2017
 Variance
Operating Revenues     
Regulated natural gas$1,365
 $1,319
 $46
Nonregulated natural gas and other10
 9
 1
Total operating revenues1,375
 1,328
 47
Operating Expenses     
Cost of natural gas584
 524
 60
Operation, maintenance and other357
 304
 53
Depreciation and amortization159
 148
 11
Property and other taxes49
 48
 1
Impairment charges—
 7
 (7)
Total operating expenses1,149
 1,031
 118
Operating Income226
 297
 (71)
Equity in earnings (losses) of unconsolidated affiliates7
 (6) 13
Other income and expenses, net14
 (11) 25
Total other income and expenses21
 (17) 38
Interest Expense81
 79
 2
Income Before Income Taxes166
 201
 (35)
Income Tax Expense37
 62
 (25)
Net Income$129
 $139
 $(10)
The following table shows the percent changes in dekatherms delivered and average number of customers. The percentages for all throughput deliveries represent billed and unbilled sales. Amounts are not weather-normalized.
Increase (Decrease) over prior year2018
2017
Residential deliveries23.6 %(8.1)%
Commercial deliveries14.9 %(4.3)%
Industrial deliveries4.2 %(2.2)%
Power generation deliveries23.6 %(5.8)%
For resale17.0 %(20.9)%
Total throughput deliveries19.0 %(5.4)%
Secondary market volumes(8.1)%(4.2)%
Average number of customers1.6 %1.7 %
Piedmont's throughput was 557,145,128 dekatherms and 468,259,777 dekatherms for the years ended December 31, 2018, and 2017, respectively. Due to the margin decoupling mechanism in North Carolina and WNA mechanisms in South Carolina and Tennessee, changes in throughput deliveries do not have a material impact on Piedmont's revenues or earnings. The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The WNA mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.
Year Ended December 31, 2018, as compared to 2017
Operating Revenues.The variance was driven primarily by:
a $60 million increase primarily due to higher natural gas costs passed through to customers due to higher volumes sold and higher natural gas prices; and
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.

66



MD&APIEDMONT


Operating Expenses.The variance was driven by:
a $60 million increase in cost of natural gas primarily due to higher volumes sold and higher natural gas costs passed through to customers due to the higher price per dekatherm of natural gas;
a $53 million increase in operations, maintenance and other expense primarily due to increased shared services, cost to achieve merger expenses and pension settlement charge; and
an $11 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
The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.
Regulatory Matters
Coal Ash Costs
As a result of the NCDEQ settlement on December 31, 2019, Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to lined landfills. The majority of spend is expected to occur over the next 15-20 years. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters," which is subject to review and approval of the NCUC. The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Carolinas and Duke Energy Progress took a charge of approximately $500 million each.
In 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC denying recovery of certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress have appealed these decisions to the South Carolina Supreme Court and those appeals are pending. An order from regulatory or judicial authorities that rejects our proposed settlement or disallows recovery of costs related to closure of these ash basins could have an adverse impact on future results.
44



MD&ADUKE ENERGY
Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's partial approval of Duke Energy Indiana’s ash pond closure plans. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash.
Storm Costs
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress and Duke Energy Florida's service territories. In 2020, Duke Energy Carolinas and Duke Energy Progress reached partial settlements in the 2019 North Carolina rates cases by filing a petition to securitize deferred storm costs, which is subject to review and approval of the NCUC. In January 2021, Duke Energy Florida filed a settlement agreement with the FPSC, which if approved, allows recovery of the remaining storm cost balance for hurricanes Michael and Dorian. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact.
Grid Improvement Costs
Duke Energy Carolinas received an order from the NCUC in 2018, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas and Duke Energy Progress have petitioned for deferral of future grid improvement costs in their 2019 rate cases. Partial settlements filed with the NCUC in July 2020 included the allowance for deferral for certain grid projects placed in service from June 2020 through December 2022. There could be adverse impacts if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.
Rate Cases
In 2019, Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. Several partial settlement agreements have been filed with the NCUC and are awaiting approval. The outcome of these rate cases could have a material impact.
MGP
The PUCO has issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed for a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact.
For additional information, see Note 3 to the Consolidated Financial Statements, “Regulatory Matters.”
Sale of Minority Interest in Duke Energy Indiana
In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund. The sale is subject to the satisfaction of certain customary conditions described in the investment agreement, including receipt of the approval of the FERC and completion of review by the Committee on Foreign Investments in the United States. Failure to obtain related approvals or satisfy the conditions in the investment agreement could result in the termination of the transaction and could result in an adverse impact. For additional information, see Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”
Commercial Renewables
Duke Energy continues to monitor recoverability of renewable merchant plants located in the Electric Reliability Council of Texas West market and PJM, due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future undiscounted cash flows for the assets under review. A continued decline in energy market pricing would likely result in a future impairment. Impairment of these assets could result in adverse impacts. For additional information, see Note 10 to the Consolidated Financial Statements, "Property, Plant and Equipment."
In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. Both lost revenues and higher than expected purchased power costs are expected to negatively impact the operating results of these generating units. The estimated financial impact of the storm is expected to have a material impact on the Commercial Renewables segment's 2021 operating results. See Note 25 to the Consolidated Financial Statements, "Subsequent Events."
45



MD&ADUKE ENERGY
COVID-19
Duke Energy cannot predict the extent to which the COVID-19 pandemic will impact its results of operations, financial position and cash flows in the future. Duke Energy will continue to actively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown continues to cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy has mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results.The Company is in the process of reviewing the long-term real estate strategy due to a potential change of in-office work policies after the COVID-19 pandemic. The plan may result in a reduction of physical work space which could create accounting impacts starting in 2021. Accounting impacts may include reassessments of lease terms and lease modifications which could result in termination penalties, as well as, asset impairments on property, plant and equipment. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

Within this Item 7, see the Tax Act section above as well as Liquidity and Capital Resources below for a discussion ofon risks associated with the Tax Act.
Results of Operations
Non-GAAP Measures
Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. These items represent income from continuing operations available to Duke Energy common stockholders in dollar and per-share amounts, adjusted for the dollar and per-share impact of special items. As discussed below, special items include certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. Management believes the presentation of adjusted earnings and adjusted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.
Management uses these non-GAAP financial measures for planning and forecasting, and for reporting financial results to the Board of Directors, employees, stockholders, analysts and investors. Adjusted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and EPS Available to Duke Energy Corporation common stockholders (GAAP Reported EPS), respectively.
Special items included in the periods presented include the following, which management believes do not reflect ongoing costs:
•Gas Pipeline Investments represents costs related to the cancellation of the ACP pipeline and additional exit costs related to Constitution.
•Regulatory Settlements represents charges related to Duke Energy Carolinas' and Duke Energy Progress' CCR Settlement Agreement and the partial settlements in the 2019 North Carolina rate cases.
•Severance represents the reversal of 2018 costs, which were deferred as a result of a partial settlement in the Duke Energy Carolinas and the Duke Energy Progress 2019 North Carolina rate cases.
•Impairment Charges represents a reduction of a prior year impairment at Citrus County CC and an OTTI on the remaining investment in Constitution.
Duke Energy’s adjusted earnings and adjusted EPS may not be comparable to similarly titled measures of another company because other companies may not calculate the measures in the same manner.
Reconciliation of GAAP Reported Amounts to Adjusted Amounts
The following table presents a reconciliation of adjusted earnings and adjusted EPS to the most directly comparable GAAP measures.
 Years Ended December 31,
20202019
(in millions, except per share amounts)EarningsEPSEarningsEPS
GAAP Reported Earnings/EPS$1,270 $1.72 $3,707 $5.06 
Adjustments to Reported:
Gas Pipeline Investments(a)
1,711 2.32 — — 
Regulatory Settlements(b)
872 1.19 — — 
Severance(c)
(75)(0.10)— — 
Impairment Charges(d)
— — (8)(0.01)
Discontinued Operations(7)(0.01)7 0.01 
Adjusted Earnings/Adjusted EPS$3,771 $5.12 $3,706 $5.06 
(a)    Net of tax benefit of $399 million.
(b)    Net of tax benefit of $263 million.
(c)    Net of tax expense of $23 million.
(d)    Net of tax expense of $3 million.
46



MD&ADUKE ENERGY
Year Ended December 31, 2020, as compared to 2019
GAAP Reported EPS was $1.72 for the year ended December 31, 2020, compared to $5.06 for the year ended December 31, 2019. The decrease in GAAP Reported Earnings/EPS was primarily due to the cancellation of the ACP pipeline and the CCR Settlement Agreement filed with the NCUC.
As discussed and shown in the table above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $5.12 for the year ended December 31, 2020, compared to $5.06 for the year ended December 31, 2019. The increase in Adjusted Earnings/Adjusted EPS was primarily due to positive rate case contributions, growth in wholesale, lower operations and maintenance expense in response to the pandemic and growth in Commercial Renewables, partially offset by higher depreciation expense from a growing asset base, impacts of the pandemic, mild weather and the loss of ACP earnings.
SEGMENT RESULTS
The remaining information presented in this discussion of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Consolidated Financial Statements.
Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 2 to the Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.
Electric Utilities and Infrastructure
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$21,720 $22,831 $(1,111)
Operating Expenses
Fuel used in electric generation and purchased power6,128 6,904 (776)
Operations, maintenance and other5,391 5,497 (106)
Depreciation and amortization4,068 3,951 117 
Property and other taxes1,188 1,175 13 
Impairment charges971 (8)979 
Total operating expenses17,746 17,519 227 
Gains on Sales of Other Assets and Other, net11 1 10 
Operating Income3,985 5,313 (1,328)
Other Income and Expenses, net344 353 (9)
Interest Expense1,320 1,345 (25)
Income Before Income Taxes3,009 4,321 (1,312)
Income Tax Expense340 785 (445)
Segment Income$2,669 $3,536 $(867)
Duke Energy Carolinas GWh sales84,574 89,920 (5,346)
Duke Energy Progress GWh sales65,240 68,356 (3,116)
Duke Energy Florida GWh sales42,490 42,173 317 
Duke Energy Ohio GWh sales23,484 24,729 (1,245)
Duke Energy Indiana GWh sales30,528 31,886 (1,358)
Total Electric Utilities and Infrastructure GWh sales246,316 257,064 (10,748)
Net proportional MW capacity in operation50,419 50,070 349 
Year Ended December 31, 2020, as compared to 2019
Electric Utilities and Infrastructure’s variance is primarily due to impairment charges and revenue reductions related to the CCR settlement agreement filed with the NCUC to resolve coal ash cost recovery issues, unfavorable weather and lower volumes driven by impacts from the COVID-19 pandemic, partially offset by base rate adjustments in various jurisdictions. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
•an $826 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic;
•a $237 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021 and decreased volumes;
47



MD&ASEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE
•a $207 million decrease in retail sales, net of fuel revenues, due to unfavorable weather;
•a $130 million decrease in rider revenues from EE programs;
•a $44 million decrease in nuclear cost recovery rider revenue due to recovery of the Crystal River 3 uprate regulatory asset in 2019 at Duke Energy Florida; and
•a $17 million decrease in weather-normal retail sale volumes driven by lower nonresidential customer demand due to impacts from the COVID-19 pandemic.
Partially offset by:
•a $214 million increase due to higher pricing from the Indiana retail rate case, net of rider revenues;
•a $92 million increase in retail pricing due to Duke Energy Florida's base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment; and
•a $32 million increase due to higher pricing from South Carolina retail rate cases, net of a return of EDIT to customers.
Operating Expenses. The variance was driven primarily by:
•a $979 million increase in impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021;
•a $117 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates from the Indiana retail rate cases; and
•a $13 million increase in property and other taxes primarily due to prior year property tax reassessments.
Partially offset by:
•a $776 million decrease in fuel used in electric generation and purchased power primarily due to lower generation demand and lower fuel and natural gas costs; and
•a $106 million decrease in operation, maintenance and other expense primarily driven by cost mitigation efforts.
Interest Expense. The variance was primarily due to lower interest rates on outstanding debt.
Income Tax Expense. The ETRs for the years ended December 31, 2020, and 2019, were 11.3% and 18.2%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.
48



MD&ASEGMENT RESULTS - GAS UTILITIES AND INFRASTRUCTURE
Gas Utilities and Infrastructure
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$1,748 $1,866 $(118)
Operating Expenses
Cost of natural gas460 627 (167)
Operation, maintenance and other430 446 (16)
Depreciation and amortization258 256 2 
Property and other taxes112 106 6 
Impairment charges7 — 7 
Total operating expenses1,267 1,435 (168)
Operating Income481 431 50 
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates(2,017)114 (2,131)
Other Income and Expenses, net56 26 30 
Total other income and expenses(1,961)140 (2,101)
Interest Expense135 117 18 
(Loss) Income Before Income Taxes(1,615)454 (2,069)
Income Tax (Benefit) Expense(349)22 (371)
Segment (Loss) Income$(1,266)$432 $(1,698)
Piedmont Local Distribution Company (LDC) throughput (Dth)490,071,039 511,243,774 (21,172,735)
Duke Energy Midwest LDC throughput (MCF)84,160,162 89,025,972 (4,865,810)
Year Ended December 31, 2020, as compared to 2019
Gas Utilities and Infrastructure’s results were impacted primarily by the cancellation of the ACP pipeline. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues.The variance was driven primarily by:
•a $167 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs; and
•a $47 million decrease due to return of EDIT to customers.
Partially offset by:
•an $87 million increase due to North Carolina base rate case increases.
Operating Expenses.The variance was driven primarily by:
•a $167 million decrease in cost of natural gas due to lower natural gas prices, lower volumes and decreased off-system sales natural gas costs.
Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by the cancellation of the ACP pipeline.
Other Income and Expenses, net.The variance was driven primarily by AFUDC equity and other income related to Belews Creek and Marshall Power Generation contracts.
Income Tax (Benefit) Expense. The increase in tax benefit was primarily due to a decrease in pretax income driven by the impact of the cancellation of the ACP pipeline. The ETRs for the years ended December 31, 2020, and 2019, were 21.6% and 4.8%, respectively. The increase in the ETR was primarily due to an adjustment, recorded in the first quarter of 2019, related to the income tax recognition for equity method investments. The equity method investment adjustment was immaterial and relates to prior years.
49



MD&ASEGMENT RESULTS - COMMERCIAL RENEWABLES
Commercial Renewables
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$502 $487 $15 
Operating Expenses
Operation, maintenance and other285 297 (12)
Depreciation and amortization199 168 31 
Property and other taxes27 23 4 
Impairment charges6 — 6 
Total operating expenses517 488 29 
Losses on Sales of Other Assets and Other, net(1)(3)2 
Operating Loss(16)(4)(12)
Other Income and Expenses, net7 5 2 
Interest Expense66 95 (29)
Loss Before Income Taxes(75)(94)19 
Income Tax Benefit(65)(115)50 
Add: Loss Attributable to Noncontrolling Interests296 177 119 
Segment Income$286 $198 $88 
Renewable plant production, GWh 10,204 8,574 1,630 
Net proportional MW capacity in operation(a)
3,937 3,485 452 
(a)    Certain projects are included in tax-equity structures where investors have differing interests in the project's economic attributes. Amounts shown represent 100% of the tax-equity project's capacity.
Year Ended December 31, 2020, as compared to 2019
Commercial Renewables' results were favorable primarily due to growth of new project investments. Since December 31, 2019, Commercial Renewables has placed in service approximately 500 MW of capacity.
The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was primarily driven by a $39 million increase associated with the growth of new projects placed in service, partially offset by a $24 million decrease primarily within the distributed energy portfolios for lower engineering and construction activities related to delays from COVID-19.
Operating Expenses. The variance was primarily driven by a $52 million increase in operating expenses due to the growth of new projects placed in service. This was partially offset by a $24 million decrease in operating expenses within the distributed energy portfolios for lower engineering and construction costs related to delays from COVID-19.
Interest Expense. The decrease was primarily driven by non-qualifying hedge activity in the prior year, higher capitalized interest in the current year for solar and wind projects in development and lower outstanding debt balances.
Income Tax Benefit. The decrease in the tax benefit was primarily driven by an increase in taxes associated with tax equity investments and a decrease in PTCs generated.
Loss Attributable to Noncontrolling Interests. The increase was driven primarily by the growth of new projects financed by tax equity.
50



MD&ASEGMENT RESULTS - OTHER
Other
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$97 $95 $2 
Operating Expenses12 117 (105)
Losses on Sales of Other Assets and Other, net— (2)2 
Operating Income (Loss)85 (24)109 
Other Income and Expenses, net92 145 (53)
Interest Expense657 705 (48)
Loss Before Income Taxes(480)(584)104 
Income Tax Benefit(162)(173)11 
Less: Net Income Attributable to Noncontrolling Interests1 — 1 
Less: Preferred Dividends107 4166 
Net Loss$(426)$(452)$26 
Year Ended December 31, 2020, as compared to 2019
The variance was primarily driven by a reversal of corporate allocated severance costs, obligations to the Duke Energy Foundation in 2019, and lower state income tax expense, partially offset by lower returns on investments, higher loss experience related to captive insurance claims, the declaration of preferred stock dividends, and lower earnings on the NMC investment. The following is a detailed discussion of the variance drivers by line item.
Operating Expenses. The decrease was primarily due to the deferral of 2018 corporate allocated severance costs due to the Duke Energy Carolinas and Duke Energy Progress partial settlements in the 2019 North Carolina retail rate case and obligations to the Duke Energy Foundation in 2019, partially offset by higher loss experience related to captive insurance claims and higher franchise tax expense.
Other Income and Expenses, net. The variance was primarily due to lower returns on investments that fund certain employee benefit obligations and lower earnings on the NMC investment primarily due to lower pricing.
Interest Expense. The variance was primarily due to lower outstanding short-term debt and lower interest rates.
Income Tax Benefit. The decrease in the tax benefit was primarily driven by a decrease in pretax losses, partially offset by an increase in state income tax benefits. The ETRs for the years ended December 31, 2020, and 2019, were 33.8% and 29.6%, respectively. The increase in the ETR was primarily due to an increase in state income tax benefits in 2020, in relation to pretax losses.
Preferred Dividends. The variance was driven by the declaration of preferred stock dividends on preferred stock issued in late 2019.
51



MD&ADUKE ENERGY CAROLINAS
SUBSIDIARY REGISTRANTS
Basis of Presentation
The results of operations and variance discussion for the Subsidiary Registrants is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.
DUKE ENERGY CAROLINAS
Results of Operations
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$7,015 $7,395 $(380)
Operating Expenses
Fuel used in electric generation and purchased power1,682 1,804 (122)
Operation, maintenance and other1,743 1,868 (125)
Depreciation and amortization1,462 1,388 74 
Property and other taxes299 292 7 
Impairment charges476 17 459 
Total operating expenses5,662 5,369 293 
Gains on Sales of Other Assets and Other, net1 — 1 
Operating Income1,354 2,026 (672)
Other Income and Expenses, net177 151 26 
Interest Expense487 463 24 
Income Before Income Taxes1,044 1,714 (670)
Income Tax Expense88 311 (223)
Net Income$956 $1,403 $(447)
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Carolinas. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year20202019
Residential sales(3.1)%(2.9)%
General service sales(6.7)%(0.1)%
Industrial sales(8.0)%(1.9)%
Wholesale power sales(2.0)%(13.6)%
Joint dispatch sales(46.0)%4.7 %
Total sales(5.9)%(2.6)%
Average number of customers1.9 %2.1 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues.The variance was driven primarily by:
•a $151 million decrease in fuel revenues due to lower prices and retail sales volumes;
•a $149 million decrease in retail sales due to unfavorable weather in the current year;
•a $73 million decrease in rider revenues primarily due to EE programs; and
•a $50 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021.
Partially offset by:
•a $25 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers; and
•a $22 million increase in weather-normal retail sales volumes.
52



MD&ADUKE ENERGY CAROLINAS
Operating Expenses. The variance was driven primarily by:
•a $459 million increase in impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021; and
•a $74 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the South Carolina rate case.
Partially offset by:
•a $125 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, and cost mitigation efforts, partially offset by higher storm restoration costs; and
•a $122 million decrease in fuel used in electric generation and purchased power primarily due to lower retail sales volumes, net of a prior period true up.
Other Income and Expenses, net. The variance was primarily due to higher AFUDC equity in the current year.
Interest Expense. The variance was primarily due to higher debt outstanding in the current year.
Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes.
PROGRESS ENERGY
Results of Operations
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$10,627 $11,202 $(575)
Operating Expenses
Fuel used in electric generation and purchased power3,479 4,024 (545)
Operation, maintenance and other2,479 2,495 (16)
Depreciation and amortization1,818 1,845 (27)
Property and other taxes545 561 (16)
Impairment charges495 (24)519 
Total operating expenses8,816 8,901 (85)
Gains on Sales of Other Assets and Other, net9 — 9 
Operating Income1,820 2,301 (481)
Other Income and Expenses, net129 141 (12)
Interest Expense790 862 (72)
Income Before Income Taxes1,159 1,580 (421)
Income Tax Expense113 253 (140)
Net Income1,046 1,327 (281)
Less: Net Income Attributable to Noncontrolling Interests1 — 1 
Net Income Attributable to Parent$1,045 $1,327 $(282)
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
•a $567 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the COVID-19 pandemic at Duke Energy Florida and lower fuel prices, volumes and native load transfer sales in the current year at Duke Energy Progress;
•a $169 million decrease in wholesale revenue primarily driven by the Duke Energy Progress' CCR Settlement Agreement filed with the NCUC in January 2021 and decreased volumes at Duke Energy Progress, partially offset by increased demand at Duke Energy Florida;
•a $55 million decrease in rider revenues primarily due to the Crystal River 3 uprate regulatory asset being fully recovered in 2019 at Duke Energy Florida;
•a $31 million decrease in retail sales, net of fuel revenues, due to unfavorable weather at Duke Energy Progress, partially offset by favorable weather in the current year at Duke Energy Florida; and
•a $17 million decrease in weather-normal retail sales volumes.
53



MD&APROGRESS ENERGY
Partially offset by:
•a $147 million increase in storm revenues due to Hurricane Dorian collections at Duke Energy Florida;
•a $92 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment at Duke Energy Florida; and
•a $16 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers at Duke Energy Progress.
Operating Expenses. The variance was driven primarily by:
•a $545 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix at Duke Energy Progress and lower demand and fuel costs at Duke Energy Florida;
•a $27 million decrease in depreciation and amortization expense primarily driven by a decrease in coal ash amortization, partially offset by a higher depreciable base and impacts from North Carolina and the South Carolina rate cases at Duke Energy Progress;
•a $16 million decrease in operation, maintenance and other expense at Duke Energy Progress primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Progress and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and other cost mitigation efforts, partially offset by storm cost amortizations at Duke Energy Florida; and
•a $16 million decrease in property and other taxes driven primarily by lower gross receipts taxes due to decreased fuel revenues at Duke Energy Florida.
Partially offset by:
•a $519 million increase in impairment charges primarily driven by the Duke Energy Progress' CCR Settlement Agreement filed with the NCUC in January 2021, and the prior year's impairment reduction related to Citrus County CC at Duke Energy Florida.
Interest Expense. The variance was driven primarily by lower interest rates on outstanding debt at Duke Energy Progress.
Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes at Duke Energy Progress, partially offset by an increase in pretax income and a decrease in the amortization of excess deferred taxes at Duke Energy Florida.
DUKE ENERGY PROGRESS
Results of Operations
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$5,422 $5,957 $(535)
Operating Expenses
Fuel used in electric generation and purchased power1,743 2,012 (269)
Operation, maintenance and other1,332 1,446 (114)
Depreciation and amortization1,116 1,143 (27)
Property and other taxes167 176 (9)
Impairment charges499 12 487 
Total operating expenses4,857 4,789 68 
Gains on Sales of Other Assets and Other, net8 — 8 
Operating Income573 1,168 (595)
Other Income and Expenses, net75 100 (25)
Interest Expense269 306 (37)
Income Before Income Taxes379 962 (583)
Income Tax (Benefit) Expense(36)157 (193)
Net Income$415 $805 $(390)
54



MD&ADUKE ENERGY PROGRESS
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Progress. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year20202019
Residential sales(3.2)%(4.0)%
General service sales(7.4)%(1.6)%
Industrial sales(3.9)%0.6 %
Wholesale power sales(9.1)%(1.5)%
Joint dispatch sales9.9 %(0.8)%
Total sales(4.6)%(1.4)%
Average number of customers1.8 %1.3 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
•a $272 million decrease in fuel cost recovery driven by lower fuel prices and volumes as well as less native load transfer sales in the current year;
•a $180 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021, and decreased volumes, partially offset by increased capacity rates;
•a $77 million decrease in retail sales due to unfavorable weather; and
•a $10 million decrease in weather-normal retail sales volumes.
Partially Offset by:
•a $16 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers.
Operating Expenses. The variance was driven primarily by:
•a $487 million increase in impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021.
Partially Offset by:
•a $269 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix;
•a $114 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Progress and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and other costs mitigation efforts; and
•a $27 million decrease in depreciation and amortization expense primarily driven by a decrease in coal ash amortization, partially offset by a higher depreciable base and impacts from the South Carolina rate cases.
Other Income and Expenses, net. The variance was primarily due to lower AFUDC equity in the current year.
Interest Expense. The variance was driven primarily by lower interest rates on outstanding debt.
Income Tax (Benefit) Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes.
55



MD&ADUKE ENERGY FLORIDA
DUKE ENERGY FLORIDA
Results of Operations
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$5,188 $5,231 $(43)
Operating Expenses
Fuel used in electric generation and purchased power1,737 2,012 (275)
Operation, maintenance and other1,131 1,034 97 
Depreciation and amortization702 702 — 
Property and other taxes381 392 (11)
Impairment charges(4)(36)32 
Total operating expenses3,947 4,104 (157)
Gains on Sales of Other Assets and Other, net1 — 1 
Operating Income1,242 1,127 115 
Other Income and Expenses, net53 48 5 
Interest Expense326 328 (2)
Income Before Income Taxes969 847 122 
Income Tax Expense198 155 43 
Net Income$771 $692 $79 
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Florida. The below percentages for retail customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year20202019
Residential sales3.3 %0.7 %
General service sales(5.3)%0.3 %
Industrial sales6.2 %(4.6)%
Wholesale power sales(1.7)%28.8 %
Total sales0.8 %1.5 %
Average number of customers1.8 %1.6 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
•a $295 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs to customers in response to the COVID-19 pandemic;
•a $55 million decrease in rider revenues primarily due to full recovery of the Crystal River 3 uprate regulatory asset in 2019; and
•a $7 million decrease in weather-normal retail sales volumes.
Partially offset by:
•a $147 million increase in storm revenues due to recovery of Hurricane Dorian costs;
•a $92 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment;
•a $46 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;
•an $18 million increase in other revenues primarily due to increased transmission revenues and lighting equipment rentals, partially offset by lower late payment and service charge revenues due to a moratorium during the COVID-19 pandemic; and
•an $11 million increase in wholesale power revenues, net of fuel, primarily due to increased capacity charges.
Operating Expenses. The variance was driven primarily by:
•a $275 million decrease in fuel used in electric generation and purchased power primarily due to lower fuel costs; and
•an $11 million decrease in property and other taxes driven by lower gross receipts taxes due to decreased fuel revenues.
56



MD&ADUKE ENERGY FLORIDA
Partially offset by:
•a $97 million increase in operation, maintenance and other expense primarily due to storm cost amortizations; and
•a $32 million increase in impairment charges primarily due to the prior year's impairment reduction related to Citrus County CC.
Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes.
DUKE ENERGY OHIO
Results of Operations
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues
Regulated electric$1,405 $1,456 $(51)
Regulated natural gas453 484 (31)
Total operating revenues1,858 1,940 (82)
Operating Expenses
Fuel used in electric generation and purchased power – regulated339 388 (49)
Cost of natural gas 73 95 (22)
Operation, maintenance and other463 520 (57)
Depreciation and amortization278 265 13 
Property and other taxes324 308 16 
Total operating expenses1,477 1,576 (99)
Operating Income381 364 17 
Other Income and Expenses, net16 24 (8)
Interest Expense102 109 (7)
Income from Continuing Operations Before Income Taxes295 279 16 
Income Tax Expense from Continuing Operations43 40 3 
Income from Continuing Operations252 239 13 
Loss from Discontinued Operations, net of tax— (1)1 
Net Income$252 $238 $14 
The following table shows the percent changes in GWh sales of electricity, MCF of natural gas delivered and average number of electric and natural gas customers for Duke Energy Ohio. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
ElectricNatural Gas
Increase (Decrease) over prior year2020201920202019
Residential sales(1.9)%(3.9)%(5.7)%(3.7)%
General service sales(7.7)%(1.9)%(8.4)%(1.2)%
Industrial sales(6.6)%(2.1)%(4.1)%(0.4)%
Wholesale electric power sales(21.3)%(4.9)%n/an/a
Other natural gas salesn/an/a(2.2)%0.7 %
Total sales(5.0)%(2.4)%(5.5)%(1.7)%
Average number of customers1.3 %0.7 %1.1 %0.7 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
•a $61 million decrease in fuel related revenues primarily due to lower prices and decreased volumes;
•a $22 million decrease in retail revenue riders, primarily due to lower EE program revenues, volume impacts of the Distribution Decoupling rider, suspension of the MGP rider and higher taxes returned to customers via the Tax Cuts and Job Acts rider, partially offset by an increase in the Distribution Capital Investment rider due to increased capital investment;
•a $15 million decrease in revenues due to unfavorable weather in the current year;
•an $11 million decrease in other revenues due to lower OVEC sales into PJM;
57



MD&ADUKE ENERGY OHIO
•a $5 million decrease in bulk power marketing sales, and
•a $4 million decrease in weather-normal sales volumes.
Partially offset by:
•a $23 million increase in retail pricing primarily due to rate case impacts in Kentucky; and
•an $18 million increase in PJM transmission revenues as a result of increased capital spend.
Operating Expenses. The variance was driven primarily by:
•a $71 million decrease in fuel expense, primarily driven by lower fuel prices, decreased volumes and lower OVEC costs; and
•a $57 million decrease in operations, maintenance and other expense primarily due to a new customer program and other deferrals, the timing of EE programs and outage costs, lower employee benefit expenses and lower vegetation and pole maintenance costs.
Partially offset by:
•a $16 million increase in property and other taxes primarily due to higher property taxes due to increased plant in service, partially offset by lower franchise and other taxes; and
•a $13 million increase in depreciation and amortization primarily driven by an increase in distribution plant, partially offset by lower amortization due to the suspension of the MGP rider in Ohio and environmental surcharge mechanism amortization of deferred coal ash pond ARO.
DUKE ENERGY INDIANA
Results of Operations
 Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$2,795 $3,004 $(209)
Operating Expenses
Fuel used in electric generation and purchased power767 935 (168)
Operation, maintenance and other762 790 (28)
Depreciation and amortization569 525 44 
Property and other taxes81 69 12 
Total operating expenses2,179 2,319 (140)
Operating Income616 685 (69)
Other Income and Expenses, net37 41 (4)
Interest Expense161 156 5 
Income Before Income Taxes492 570 (78)
Income Tax Expense84 134 (50)
Net Income $408 $436 $(28)
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Indiana. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year20202019
Residential sales(2.7)%(3.9)%
General service sales(7.0)%(2.2)%
Industrial sales(7.6)%(2.6)%
Wholesale power sales3.8 %(27.7)%
Total sales(4.3)%(6.8)%
Average number of customers1.4 %1.2 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues.The variance was driven primarily by:
•a $193 million decrease in rider revenues primarily due to lower sales volumes and credit adjustment rider refunds;
•a $179 million decrease in fuel revenues primarily due to lower fuel cost recovery driven by customer demand and fuel prices;
•a $20 million decrease in weather-normal retail sales volumes driven by lower nonresidential customer demand;
58



MD&ADUKE ENERGY INDIANA
•a $16 million decrease in retail sales due to unfavorable weather in the current year; and
•a $10 million decrease in wholesale revenues primarily related to the true up of wholesale transmission revenues and lower rates in the current year.
Partially offset by:
•a $214 million increase primarily due to higher pricing from the Indiana retail rate case, net of certain rider revenues.
Operating Expenses.The variance was driven primarily by:
•a $168 million decrease in fuel used in electric generation and purchased power expense primarily due to lower purchased power expense, lower amortization of deferred fuel costs and lower coal and natural gas costs; and
•a $28 million decrease in operation, maintenance and other primarily due to lower storm restoration costs, training costs, employee related costs and a new customer program deferral.
Partially offset by:
•a $44 million increase in depreciation and amortization primarily due to a change in depreciation rates from the Indiana retail rate case and additional plant in service; and
•a $12 million increase in property and other taxes primarily due to additional plant in service and property tax true ups for prior periods.
Income Tax Expense. The decrease in income tax expense was primarily due to an increase in the amortization of excess deferred taxes and a decrease in pretax income.
PIEDMONT
Results of Operations
Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$1,297 $1,381 $(84)
Operating Expenses
Cost of natural gas386 532 (146)
Operation, maintenance and other322 328 (6)
Depreciation and amortization180 172 8 
Property and other taxes53 45 8 
Impairment charges7 — 7 
Total operating expenses948 1,077 (129)
Operating Income349 304 45 
Equity in earnings of unconsolidated affiliates9 8 1 
Other income and expenses, net51 20 31 
Total other income and expenses60 28 32 
Interest Expense118 87 31 
Income Before Income Taxes291 245 46 
Income Tax Expense18 43 (25)
Net Income$273 $202 $71 
The following table shows the percent changes in Dth delivered and average number of customers. The percentages for all throughput deliveries represent billed and unbilled sales. Amounts are not weather-normalized.
Increase (Decrease) over prior year20202019
Residential deliveries(3.5)%(8.0)%
Commercial deliveries(9.1)%(4.6)%
Industrial deliveries(2.9)%1.7 %
Power generation deliveries(3.7)%(11.8)%
For resale(9.7)%4.8 %
Total throughput deliveries(4.1)%(8.2)%
Secondary market volumes(9.1)%(0.5)%
Average number of customers2.3 %1.4 %
The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The weather normalization adjustment mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.
59



MD&APIEDMONT
Year Ended December 31, 2020, as compared to 2019
Operating Revenues.The variance was driven primarily by:
•a $146 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs;
•a $47 million decrease due to return of EDIT to customers; and
•a $7 million decrease due to NCUC approval related to tax reform accounting from fixed-rate contracts in the prior year.
Partially offset by:
•an $87 million increase due to North Carolina base rate case increases;
•a $20 million increase due to North Carolina IMR increases; and
•an $18 million increase due to addition of Belews Creek and Marshall Power Generation capacity contracts.
Operating Expenses.The variance was driven primarily by:
•a $146 million decrease in cost of natural gas due to lower natural gas prices, lower volumes, and decreased off-system sales natural gas costs.
Partially offset by:
•an $8 million increase in depreciation and amortization due to additional plant in service and higher depreciation rates, partially offset by Belews Creek and Marshall Power Generation contracts and amortization of EDIT interest expense; and
•an $8 million increase in property and other taxes due to prior year property tax true ups.
Other Income and Expenses, net.The variance was driven primarily by AFUDC equity and other income related to Belews Creek and Marshall Power Generation contracts.
Interest Expense.The variance was driven primarily by interest on tax reform related deferrals being returned to customers and higher debt outstanding in the current year.
Income Tax Expense. The decrease in income tax expense was primarily due to an increase in the amortization of excess deferred taxes and an increase in AFUDC Equity, partially offset by an increase in pretax income.
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;
60



MD&ACRITICAL ACCOUNTING POLICIES AND ESTIMATES
•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.

67



MD&ACRITICAL ACCOUNTING POLICIES AND ESTIMATES


Goodwill Impairment Assessments
Duke Energy performed its annual goodwill impairment tests for all reporting units as of August 31, 2018,2020. 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, 2020, 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.
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 20182020 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, 2018,2020, for each of Duke Energy’s reporting units ranged from 5.5 percent5.2% to 6.9 percent.5.7%. 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 11 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 2020, Duke Energy Florida, assumesclosed an agreement for the accelerated decommissioning of the Crystal River Unit 3 will be placed into a safe storage configuration until eventual dismantlement is completed by 2074.nuclear power station after receiving approval from the NRC and FPSC. The retirement obligations for the decommissioning of Crystal River Unit 3 nuclear power station are measured based on accelerated decommissioning from 2020 continuing through 2027. 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 weightingsplans. During 2020, the Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication challenging the potentialIndiana Department of Environmental Management's partial approval of Duke Energy Indiana's ash pond closure methods ifplan. Due to these challenges, in 2020, Duke Energy Indiana remeasured and increased the closure plans are under development and multiple closure options are being considered and evaluated on a site-by-site basis.estimates for certain coal ash impoundments.
For further information, see NoteNotes 3, 4 and 9 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations."
61



MD&ACRITICAL ACCOUNTING POLICIES AND ESTIMATES
Long-Lived Asset Impairment Assessments, Excluding Regulated Operations, and Equity Method Investments
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 to Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the Consolidated Financial Statements, "Property, Plant and Equipment."

68



MD&ACRITICAL ACCOUNTING POLICIES AND ESTIMATES


Equity Method Investments
equity method. Equity method investments are assessed for impairment when conditions exist that indicate that the fair value of the investment is less than book value. IfIt the decline in value is considered to be other-than-temporary, an impairment charge is recorded andother than temporary, 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,During 2020, Duke Energy evaluated recoverability of certain renewable merchant plants due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices, capital cost of new renewables and increase renewable penetration. It was determined 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,assets were all recoverable as the carrying value of the equity method investment in ACP is $0.8 billion, and Duke Energy's maximum exposure to loss for its guarantee ofassets approximated or exceeded the ACP revolving credit facility is $0.7 billion. During the fourth quarter of 2018, 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 Energyaggregate 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. A discount rate of 6.1 percent was used in the analysis. 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 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.flows.
For further information, see NoteNotes 2, 10 and 12 to the Consolidated Financial Statements, “Investments"Business Segments," "Property, Plant and Equipment" and "Investments in Unconsolidated 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:
are the expected long-term rate of return on plan assets;
assets and the assumed discount rate applied to future projected benefit payments; and
the heath care cost trend rate.

payments.
Duke Energy elects to amortize net actuarial gain or loss amounts that are in excess of 10 percent10% 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.

69



MD&ACRITICAL ACCOUNTING POLICIES AND ESTIMATES


As of December 31, 2018,2020, Duke Energy assumes pension and other post-retirement plan assets will generate a long-term rate of return of 6.85 percent.6.50%. 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 percent2.60% as of December 31, 2018.2020. 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, 2018,2020, 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 qualityhigh-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.
62



MD&ACRITICAL ACCOUNTING POLICIES AND ESTIMATES
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 20182020 pretax pension expense, pretax other post-retirement expense, pension obligation and other post-retirement benefit obligation if a 0.25 percent0.25% change in rates were to occur.
Qualified and Non- Other Post-RetirementQualified and Non-Other Post-Retirement
Qualified Pension Plans Plans Qualified Pension PlansPlans
(in millions)0.25% (0.25)% 0.25% (0.25)%(in millions)0.25 %(0.25)%0.25 %(0.25)%
Effect on 2018 pretax pension and other post-retirement expense       
Effect on 2020 pretax pension and other post-retirement expense:Effect on 2020 pretax pension and other post-retirement expense:   
Expected long-term rate of return$(22) $22
 $(1) $1
Expected long-term rate of return$(21)$21 $(1)$1 
Discount rate(12) 12
 1
 (1)Discount rate(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, 2020:Effect on pension and other post-retirement benefit obligation at December 31, 2020:
Discount rate(183) 188
 (13) 13
Discount rate(208)213 (13)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, 2018,2020, the health care cost trend rate was 6.5 percent,6.25%, trending down to 4.75 percent4.75% 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.2028. 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, 201822
 (20)
For further information, see Note 22 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 lowerslowered the corporate federal income tax rate from 3535% to 21 percent21% and eliminateseliminated bonus depreciation for regulated utilities. For Duke Energy’s regulated operations, the reduction in federal income taxes is expected towill 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 payertaxpayer through at least 2022.2029. 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 the Tax Act to Duke Energy’s cash flows and credit metrics are subject to the regulatory actions of its state commissions and the FERC. See Note 43 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 6 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for additional discussion of the money pool arrangement.

70



MD&ALIQUIDITY 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.
Equity Issuance
In orderDuring March 2020, in response to strengthen its balance sheetmarket volatility and credit metrics and bolster cash flows,the ongoing economic uncertainty related to COVID-19, Duke Energy planstook several actions to issueenhance the company's liquidity position including:
•Duke Energy drew down the remaining $500 million of availability under the existing $1 billion Three-Year Revolving Credit Facility. That additional borrowing was subsequently repaid during the second quarter of 2020; and
•Duke Energy entered into and borrowed the full amount under a $1.5 billion, 364-day Term Loan Credit Agreement. The Term Loan Credit Agreement contained a provision for additional borrowing capacity of $500 million. Duke Energy exercised the provision and borrowed an additional $188 million, for a total borrowing of approximately $1.7 billion. By November 2020, Duke Energy repaid the entire borrowing under the 364-day Term Loan.
Following March 2020, access to credit and equity markets has normalized. In addition to the March 2020 financings to address the company's liquidity position, for the year ended December 31, 2020, Duke Energy issued approximately $5.6 billion in debt and raised approximately $2.9 billion of common stock equity per year through 2023 throughequity forward agreements and the DRIPcompany's dividend reinvestment and ATM programs. A portion of the proceeds from the equity forward settlements will be used to fully repay Duke Energy's portion of the ACP construction loan of approximately $860 million. Despite the recovery in capital markets, Duke Energy continues to monitor access to credit and equity markets amid the ongoing economic uncertainty related to COVID-19.
63



MD&ALIQUIDITY AND CAPITAL RESOURCES
In addition to actions taken by the company, the CARES Act, enacted in March 2020, as an emergency economic stimulus package in response to the COVID-19 pandemic, included provisions providing relief to entities with remaining AMT credit refund allowances. Through the CARES Act, Duke Energy accelerated remaining AMT credit refund allowances and claimed a refund in full for any AMT credit carryforwards. As a result, in the third quarter of 2020, Duke Energy received $572 million related to AMT credit carryforwards and $19 million of interest income. See Note 23 to the Consolidated Financial Statements, "Income Taxes," for additional information.
As of December 31, 2020, Duke Energy had approximately $259 million of cash on hand, $5.6 billion available under its $8 billion Master Credit Facility and $500 million available under the $1 billion Three-Year Revolving Credit Facility. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Refer to Notes 6 and 19 to the Consolidated Financial Statements, "Common Stock,"Debt and Credit Facilities" and "Stockholders' Equity," respectively, for further information regarding Duke Energy's debt and equity issuances, in 2018.debt maturities and available credit facilities including the Master Credit Facility.
Credit Facilities and Registration Statements
See Note 6 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
(in millions)202120222023
New generation$375
$125
$220
New generation$60 $20 $85 
Regulated renewables415
410
710
Regulated renewables665 710 755 
Environmental240
125
35
Environmental795 820 600 
Nuclear fuel430
505
390
Nuclear fuel425 400 380 
Major nuclear305
315
250
Major nuclear280 270 205 
Customer additions505
480
475
Customer additions565 555 560 
Grid modernization and other transmission and distribution projects2,835
3,160
2,980
Grid modernization and other transmission and distribution projects3,460 5,025 4,840 
Maintenance and other3,395
2,605
2,390
Maintenance and other2,200 2,650 2,750 
Total Electric Utilities and Infrastructure8,500
7,725
7,450
Total Electric Utilities and Infrastructure8,450 10,450 10,175 
Gas Utilities and Infrastructure1,675
2,000
1,600
Gas Utilities and Infrastructure1,250 1,275 1,150 
Commercial Renewables and Other925
825
625
Commercial Renewables and Other775 1,075 750 
Total projected capital and investment expenditures$11,100
$10,550
$9,675
Total projected capital and investment expenditures$10,475 $12,800 $12,075 
DEBT MATURITIES
See Note 6 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant components of Current Maturities of Long-Term Debt on the Consolidated Balance Sheets.
DIVIDEND PAYMENTS
In 2018,2020, Duke Energy paid quarterly cash dividends for the 92nd94th consecutive year and expects to continue its policy of paying regular cash dividends in the future. There is no assurance as to the amount of future dividends because they depend on future earnings, capital requirements, financial condition and are subject to the discretion of the Board of Directors.
Duke Energy targets a dividend payout ratio of between 6565% and 75 percent,75%, based upon adjusted diluted EPS, and expects this trend to continue through 2023. In 2017 and 2018,2025. Duke Energy increased the dividend by approximately 4 percent2% annually in both 2020 and 2019, and the company remains committed to continued growth of the dividend.
Dividend and Other Funding Restrictions of Duke Energy Subsidiaries
As discussed in Note 43 to the Consolidated Financial Statements, “Regulatory Matters,” Duke Energy’s wholly owned public utility operating companies have restrictions on the amount of funds that can be transferred to Duke Energy through dividends, advances or loans as a result of conditions imposed by various regulators in conjunction with merger transactions. Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures and Articles of Incorporation, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Additionally, certain other Duke Energy subsidiaries have other restrictions, such as minimum working capital and tangible net worth requirements pursuant to debt and other agreements that limit the amount of funds that can be transferred to Duke Energy. At December 31, 2018,2020, the amount of restricted net assets of wholly owned subsidiaries of Duke Energy that may not be distributed to Duke Energy in the form of a loan or dividend does not exceed a material amount of Duke Energy’s net assets. Duke Energy does not have any legal or other restrictions on paying common stock dividends to shareholders out of its consolidated equity accounts. Although these restrictions cap the amount of funding the various operating subsidiaries can provide to Duke Energy, management does not believe these restrictions will have a significant impact on Duke Energy’s ability to access cash to meet its payment of dividends on common stock and other future funding obligations.

64
71






MD&ALIQUIDITY AND CAPITAL RESOURCES


CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operations of Electric Utilities and Infrastructure and Gas Utilities and Infrastructure are primarily driven by sales of electricity and natural gas, respectively, and costs of operations. These cash flows from operations are relatively stable and comprise a substantial portion of Duke Energy’s operating cash flows. Weather conditions, working capital and commodity price fluctuations and unanticipated expenses including unplanned plant outages, storms, legal costs and related settlements can affect the timing and level of cash flows from operations.
As part of Duke Energy’s continued effort to improve its cash flows from operations and liquidity, Duke Energy works with vendors to improve terms and conditions, including the extension of payment terms. To support this effort, Duke Energy established a supply chain finance program (the “program”) in 2020, under which suppliers, at their sole discretion, may sell their receivables from Duke Energy to the participating financial institution. The financial institution administers the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. A significant deterioration in the credit quality of Duke Energy, economic downturn or changes in the financial markets could limit the financial institutions willingness to participate in the program. Duke Energy does not believe such risk would have a material impact on our cash flows from operations or liquidity, as substantially all our payments are made outside the program.
Duke Energy believes it has sufficient liquidity resources through the commercial paper markets, and ultimately, the Master Credit Facility, to support these operations. Cash flows from operations are subject to a number of other factors, including, but not limited to, regulatory constraints, economic trends and market volatility (see Item 1A, “Risk Factors,” for additional information).
At December 31, 2018, Duke Energy had cash and cash equivalents and short-term investments of $442 million.
DEBT ISSUANCES
Depending on availability based on the issuing entity, the credit rating of the issuing entity, and market conditions, the Subsidiary Registrants prefer to issue first mortgage bonds and secured debt, followed by unsecured debt. This preference is the result of generally higher credit ratings for first mortgage bonds and secured debt, which typically result in lower interest costs. Duke Energy Corporation primarily issues unsecured debt.
In 2019,2021, Duke Energy anticipates issuing additional securities of $8 billion through debt of $7.5 billion,capital markets. Additionally, Duke Energy may utilize other instruments, including equity-content securities, such as preferred stock. Proceeds will primarily be for the purpose of funding capital expenditures and debt maturities. See to Note 6 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt issuances in 2018.2020.
Duke Energy’s capitalization is balanced between debt and equity as shown in the table below.
Projected 2019
 Actual 2018
 Actual 2017
 Projected 2021Actual 2020Actual 2019
Equity44% 43% 43%Equity44 %44 %44 %
Debt56% 57% 57%Debt56 %56 %56 %
Restrictive Debt Covenants
Duke Energy’s 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 to not exceed 65 percent65% for each borrower, excluding Piedmont, and 70 percent70% for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements or sublimits thereto. As of December 31, 2018,2020, 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.

7265






MD&ALIQUIDITY AND CAPITAL RESOURCES


Credit Ratings
Moody’s Investors Service, Inc. and S&P and Fitch Ratings, Inc. provide credit ratings for various Duke Energy Registrants. During January 2021, S&P downgraded the issuer credit rating for Duke Energy (Parent) and all of its subsidiaries senior unsecured debt, excluding Progress Energy, from A- to BBB+. Additionally, S&P downgraded the credit rating for Duke Energy (Parent) and Progress Energy senior unsecured debt from BBB+ to BBB. As part of the credit rating report, S&P affirmed their credit rating on senior secured debt for Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana, while also affirming the short-term and commercial paper credit ratings. These actions followed a December 2020, report by S&P to revise the credit rating outlook from stable to negative for Duke Energy and all its subsidiaries. As a result of the downgrade, credit rating outlooks returned to stable. Additionally, during October 2020, Moody's revised their credit rating outlook for Duke Energy (Parent), Duke Energy Carolinas and Duke Energy Progress from stable to negative and in February 2021, revised the credit rating outlook for these same registrants to review for downgrade. The following table includes Duke Energy and certain subsidiaries’ credit ratings and ratings outlook as of February 2019.
2021.
Moody'sS&PFitch
Duke Energy CorporationStableReview for DowngradeStableStable
Issuer Credit RatingBaa1A-BBB+BBB+
Senior Unsecured DebtBaa1BBB+BBBBBB+
Commercial PaperP-2A-2F-2
Duke Energy CarolinasStableReview for DowngradeStableN/A
Senior Secured DebtAa2AN/A
Senior Unsecured DebtA1A-BBB+N/A
Progress EnergyStableStableN/A
Senior Unsecured DebtBaa1BBB+BBBN/A
Duke Energy ProgressStableReview for DowngradeStableN/A
Senior Secured DebtAa3AN/A
Senior Unsecured DebtA2BBB+
Duke Energy FloridaStableStableN/A
Senior Secured DebtA1AN/A
Senior Unsecured DebtA3A-BBB+N/A
Duke Energy OhioStableStableN/A
Senior Secured DebtA2AN/A
Senior Unsecured DebtBaa1A-BBB+N/A
Duke Energy IndianaStableStableN/A
Senior Secured DebtAa3AN/A
Senior Unsecured DebtA2A-BBB+N/A
Duke Energy KentuckyStableStableN/A
Senior Unsecured DebtBaa1A-BBB+N/A
Piedmont Natural GasStableStableN/A
Senior UnsecuredA3A-BBB+
N/A
Credit ratings are intended to provide credit lenders a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold. The Duke Energy Registrants’ credit ratings are dependent on the rating agencies’ assessments of their ability to meet their debt principal and interest obligations when they come due. If, as a result of market conditions or other factors, the Duke Energy Registrants are unable to maintain current balance sheet strength, or if earnings and cash flow outlook materially deteriorates, credit ratings could be negatively impacted.
Cash Flow Information
The following table summarizes Duke Energy’s cash flows for the threetwo most recently completed fiscal years.
Years Ended December 31,
Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)20202019
Cash flows provided by (used in):     Cash flows provided by (used in):
Operating activities$7,186
 $6,624
 $6,863
Operating activities$8,856 $8,209 
Investing activities(10,060) (8,442) (11,528)Investing activities(10,604)(11,957)
Financing activities2,960
 1,782
 4,251
Financing activities1,731 3,730 
Changes in cash and cash equivalents included in assets held for sale—
 —
 474
Net increase (decrease) in cash, cash equivalents and restricted cash86
 (36) 60
Net decrease in cash, cash equivalents and restricted cashNet decrease in cash, cash equivalents and restricted cash(17)(18)
Cash, cash equivalents and restricted cash at beginning of period505
 541
 481
Cash, cash equivalents and restricted cash at beginning of period573 591 
Cash, cash equivalents and restricted cash at end of period$591
 $505
 $541
Cash, cash equivalents and restricted cash at end of period$556 $573 
73
66






MD&ALIQUIDITY AND CAPITAL RESOURCES


OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows for the threetwo most recently completed fiscal years.
Years Ended December 31, Years Ended December 31,
    Variance
   Variance
    2018 vs.
   2017 vs.
(in millions)2018

2017
 2017

2016
 2016
(in millions)20202019Variance
Net income$2,644
 $3,064
 $(420) $2,170
 $894
Net income$1,082 $3,571 $(2,489)
Non-cash adjustments to net income6,484
 5,380
 1,104
 5,305
 75
Non-cash adjustments to net income8,343 5,737 2,606 
Contributions to qualified pension plans(141) (19) (122) (155) 136
Payments for AROs(533) (571) 38
 (608) 37
Payments for AROs(610)(746)136 
Payment for disposal of other assets(105) —
 (105) —
 —
Refund of AMT credit carryforwardsRefund of AMT credit carryforwards572 573 (1)
Working capital(1,163) (1,230) 67
 151
 (1,381)Working capital(531)(926)395 
Net cash provided by operating activities$7,186

$6,624
 $562

$6,863
 $(239)Net cash provided by operating activities$8,856 $8,209 $647 
For the year ended December 31, 2018, compared to 2017, theThe variance was driven primarily by:
•a $684$117 million increase in net income after adjustment for non-cash items primarily due to favorable weatherincreases in current year non-cash adjustments, partially offset by decreases in revenues due to lower sales volumes, accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic and increased pricinglower wholesale revenue driven by the CCR Settlement Agreement;
•a $395 million decrease in cash outflows from working capital primarily due to fluctuations in inventory levels, accounts payable levels and volumeslower income taxes paid in the current period;year; and
a $38 million decrease in payments to AROs.
Offset by:
a $122 million increase in contributions to qualified pension plans; and
a $105 million payment for disposal of Beckjord.
For the year ended December 31, 2017, compared to 2016, the variance was driven primarily by:
a $1,381 million decrease in working capital due to weather, payment of merger transaction and integration related costs and increased property tax payments in 2017.
Offset by:
a $969 million increase in net income after non-cash adjustments primarily due to the inclusion of Piedmont's earnings for a full year, favorable pricing and weather-normal retail volumes driven by the residential class in the Electric Utilities and Infrastructure segment combined with continued strong cost control;
•a $136 million decrease in contributions to qualified pension plans; andpayments for AROs.
a $37 million decrease in payments to AROs.
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows for the threetwo most recently completed fiscal years.
Years Ended December 31, Years Ended December 31,
    Variance
   Variance
    2018 vs.
   2017 vs.
(in millions)2018

2017
 2017

2016
 2016
(in millions)20202019Variance
Capital, investment and acquisition expenditures$(9,668) $(8,198) $(1,470) $(13,215) $5,017
Capital, investment and acquisition expenditures, net of return of investment capitalCapital, investment and acquisition expenditures, net of return of investment capital$(10,144)$(11,435)$1,291 
Debt and equity securities, net(15) 27
 (42) 83
 (56)Debt and equity securities, net(62)(5)(57)
Net proceeds from the sales of discontinued operations and other assets, net of cash divested41
 —
 41
 1,418
 (1,418)
Other investing items(418) (271) (147) 186
 (457)Other investing items(398)(517)119 
Net cash used in investing activities$(10,060)
$(8,442) $(1,618)
$(11,528) $3,086
Net cash used in investing activities$(10,604)$(11,957)$1,353 

74



MD&ALIQUIDITY AND CAPITAL RESOURCES


The primary use of cash related to investing activities is capital, investment and acquisition expenditures, net of return of investment capital detailed by reportable business segment in the following table.
 Years Ended December 31,
(in millions)2018

2017

2016
Electric Utilities and Infrastructure$8,086
 $7,024
 $6,649
Gas Utilities and Infrastructure1,133
 907
 5,519
Commercial Renewables193
 92
 857
Other256
 175
 190
Total capital, investment and acquisition expenditures$9,668

$8,198

$13,215
For the year ended December 31, 2018, compared The decrease relates primarily to 2017, the variance was driven primarily by:
a $1,470 million increasedecreases in capital investment and acquisition expenditures in all reportable business segments, including expenditures related to W.S. Lee CC, Asheville and Citrus County CC at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, respectively.
For the year ended December 31, 2017, compared to 2016, the variance was driven primarily by:
a $5,017 million decrease in capital, investment and acquisition expenditures mainly due to the Piedmont acquisitionlower overall investments in the prior year.Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables segments.
Partially offset by:
a $1,418 million decrease in net proceeds from sales of discontinued operations due to the prior year sale of the International business.
 Years Ended December 31,
(in millions)20202019Variance
Electric Utilities and Infrastructure$7,629 $8,258 $(629)
Gas Utilities and Infrastructure1,309 1,533 (224)
Commercial Renewables1,075 1,423 (348)
Other264 221 43 
Total capital, investment and acquisition expenditures, net of return of investment capital$10,277 $11,435 $(1,158)
FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows for the threetwo most recently completed fiscal years.
 Years Ended December 31,
(in millions)20202019Variance
Issuance of common stock$2,745 $384 $2,361 
Issuance of preferred stock— 1,962 (1,962)
Issuances of long-term debt, net1,824 3,615 (1,791)
Notes payable and commercial paper(319)(380)61 
Dividends paid(2,812)(2,668)(144)
Contributions from noncontrolling interests426 843 (417)
Other financing items(133)(26)(107)
Net cash provided by financing activities$1,731 $3,730 $(1,999)
67



MD&ALIQUIDITY AND CAPITAL RESOURCES
 Years Ended December 31,
     Variance
   Variance
     2018 vs.
   2017 vs.
(in millions)2018
 2017
 2017
 2016
 2016
Issuance of common stock$1,838
 $—
 $1,838
 $731
 $(731)
Issuances of long-term debt, net2,393
 4,593
 (2,200) 7,315
 (2,722)
Notes payable and commercial paper1,171
 (362) 1,533
 (1,447) 1,085
Dividends paid(2,471) (2,450) (21) (2,332) (118)
Other financing items29
 1
 28
 (16) 17
Net cash provided by financing activities$2,960
 $1,782
 $1,178
 $4,251
 $(2,469)
For the year ended December 31, 2018, compared to 2017, theThe variance was driven primarily by:
•a $1,838$1,962 million increasedecrease in proceeds from the issuance of commonpreferred stock; and
•a $1,533 million increase in net borrowings from notes payable and commercial paper primarily due to increased funding requirements for capital expenditures and storm costs.
Partially offset by:
a $2,200$1,791 million net decrease in proceeds from issuances of long-term debt primarily due to timing related to refinancing of existing maturities, fund growthissuances and general corporate needs.
For the year ended December 31, 2017, compared to 2016, the variance was driven primarily by:
a $2,722 million net decrease in proceeds from issuancesredemptions of long-term debt driven principally by the prior year $3,750 million of senior unsecured notes used to fund debt; and
•a portion of the Piedmont acquisition, offset primarily by $900 million of first mortgage bonds issued by Duke Energy Florida in the current year to fund capital expenditures for ongoing construction and capital maintenance and for general corporate purposes;
a $731$417 million decrease in proceedscontributions from stock issuances usednoncontrolling interests, primarily due to fund$415 million related to the sale of a portion ofnoncontrolling interest in the Piedmont acquisitionCommercial Renewables segment in 2016; and
a $118 million current year increase in dividends paid.2019.
Partially offset by:
•a $1,085$2,361 million decreaseincrease in net borrowings from notes payable and commercial paper primarily due to the use of proceeds from $1,294 million nuclear asset-recovery bonds issued at Duke Energy Florida in 2016 to pay down outstanding commercial paper.the issuance of common stock, primarily from the settlement of equity forwards.

75



MD&AOFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS


Off-Balance Sheet Arrangements
Duke Energy and certain of its subsidiaries enter into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties. These arrangements include performance guarantees, standby letters of credit, debt guarantees, surety bonds and indemnifications.
Most of the guarantee arrangements entered into by Duke Energy enhance the credit standing of certain subsidiaries, non-consolidated entities or less than wholly owned entities, enabling them to conduct business. As such, these guarantee arrangements involve elements of performance and credit risk, which are not always included on the Consolidated Balance Sheets. The possibility of Duke Energy, either on its own or on behalf of Spectra Energy Capital LLC (Spectra Capital) through indemnification agreements entered into as part of the January 2, 2007, spin-off of Spectra Energy Corp, having to honor its contingencies is largely dependent upon the future operations of the subsidiaries, investees and other third parties, or the occurrence of certain future events.
Duke Energy performs ongoing assessments of its respective guarantee obligations to determine whether any liabilities have been incurred as a result of potential increased non-performancenonperformance risk by third parties for which Duke Energy has issued guarantees. See Note 7 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further details of the guarantee arrangements. Issuance of these guarantee arrangements is not required for the majority of Duke Energy’s operations. Thus, if Duke Energy discontinued issuing these guarantees, there would not be a material impact to the consolidated results of operations, cash flows or financial position.
Other than the guarantee arrangements discussed above normal operating lease arrangements and off-balance sheet debt related to non-consolidated VIEs, Duke Energy does not have any material off-balance sheet financing entities or structures. For additional information, see Notes 5 andNote 17 to the Consolidated Financial Statements, “Commitments and Contingencies" and "Variable Interest Entities,Entities." respectively.
Contractual Obligations
Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. The following table summarizes Duke Energy’s contractual cash obligations as of December 31, 2018.2020.
 Payments Due By Period
More than
Less than2-3 years4-5 years5 years
1 year(2022 &(2024 &(2026 &
(in millions)Total(2021)2023)2025)beyond)
Long-term debt(a)
$58,134 $4,110 $8,011 $4,408 $41,605 
Interest payments on long-term debt(b)
33,858 2,099 3,898 3,577 24,284 
Finance leases(c)
1,465 186 347 170 762 
Operating leases(c)
1,861 229 414 348 870 
Purchase obligations:(d)
     
Fuel and purchased power(e)(f)
16,591 3,489 4,248 2,998 5,856 
Other purchase obligations(g)
9,916 8,850 974 52 40 
Nuclear decommissioning trust annual funding(h)
363 20 40 40 263 
Land easements(i)
400 12 24 24 340 
Total contractual cash obligations(j)(k)
$122,588 $18,995 $17,956 $11,617 $74,020 
(a)See Note 6 to the Consolidated Financial Statements, “Debt and Credit Facilities.”
(b)Interest payments on variable rate debt instruments were calculated using December 31, 2020, interest rates and holding them constant for the life of the instruments.
(c)See Note 5 to the Consolidated Financial Statements, “Leases.” Amounts in the table above include the interest component of finance leases based on the interest rates stated in the lease agreements and exclude certain related executory costs. Amounts exclude contingent lease obligations.
(d)Current liabilities, except for current maturities of long-term debt, and purchase obligations reflected on the Consolidated Balance Sheets have been excluded from the above table.
68
 Payments Due By Period
         More than
   Less than
 2-3 years
 4-5 years
 5 years
   1 year
 (2020 &
 (2022 &
 (2024 &
(in millions)Total
 (2019)
 2021)
 2023)
 beyond)
Long-term debt(a)
$52,446
 $3,291
 $8,311
 $5,861
 $34,983
Interest payments on long-term debt(b)
32,834
 2,121
 3,823
 3,329
 23,561
Capital leases(c)
1,428
 170
 351
 330
 577
Operating leases(c)
1,991
 239
 405
 330
 1,017
Purchase obligations:(d)
 
  
  
  
  
Fuel and purchased power(e)(f)
20,496
 4,329
 5,315
 3,153
 7,699
Other purchase obligations(g)
12,436
 4,617
 1,178
 775
 5,866
Nuclear decommissioning trust annual funding(h)
482
 24
 48
 48
 362
Land easements(i)
234
 10
 20
 20
 184
Total contractual cash obligations(j)(k)
$122,347
 $14,801
 $19,451
 $13,846
 $74,249



(a)MD&ASee Note 6 to the Consolidated Financial Statements, “Debt and Credit Facilities.”
(b)Interest payments on variable rate debt instruments were calculated using December 31, 2018, interest rates and holding them constant for the life of the instruments.
(c)See Note 5 to the Consolidated Financial Statements, “Commitments and Contingencies.” Amounts in the table above include the interest component of capital leases based on the interest rates stated in the lease agreements and exclude certain related executory costs. Amounts exclude contingent lease obligations.
(d)Current liabilities, except for current maturities of long-term debt, and purchase obligations reflected on the Consolidated Balance Sheets have been excluded from the above table.
(e)Includes firm capacity payments that provide Duke Energy with uninterrupted firm access to electricity transmission capacity and natural gas transportation contracts, as well as undesignated contracts and contracts that qualify as NPNS. For contracts where the price paid is based on an index, the amount is based on market prices at December 31, 2018, or the best projections of the index. For certain of these amounts, Duke Energy may settle on a net cash basis since Duke Energy has entered into payment netting arrangements with counterparties that permit Duke Energy to offset receivables and payables with such counterparties.
(f)Amounts exclude obligations under the OVEC purchase power agreement. See Note 17 to the Consolidated Financial Statements, "Variable Interest Entities," for additional information.
(g)Includes contracts for software, telephone, data and consulting or advisory services. Amount also includes contractual obligations for EPC costs for new generation plants, wind and solar facilities, plant refurbishments, maintenance and day-to-day contract work and commitments to buy certain products. Amount excludes certain open purchase orders for services that are provided on demand, for which the timing of the purchase cannot be determined.
(h)Related to future annual funding obligations to NDTF through nuclear power stations' relicensing dates. See Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations."
(i)Related to Commercial Renewables wind and solar facilities.

76



MD&AOFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS


(e)Includes firm capacity payments that provide Duke Energy with uninterrupted firm access to electricity transmission capacity and natural gas transportation contracts, as well as undesignated contracts and contracts that qualify as NPNS. For contracts where the price paid is based on an index, the amount is based on market prices at December 31, 2020, or the best projections of the index. For certain of these amounts, Duke Energy may settle on a net cash basis since Duke Energy has entered into payment netting arrangements with counterparties that permit Duke Energy to offset receivables and payables with such counterparties.
(j)Unrecognized tax benefits of $24 million are not reflected in this table as Duke Energy cannot predict when open income tax years will close with completed examinations. See Note 23 to the Consolidated Financial Statements, "Income Taxes."
(k)The table above excludes reserves for litigation, environmental remediation, asbestos-related injuries and damages claims and self-insurance claims (see Note 5 to the Consolidated Financial Statements, “Commitments and Contingencies”) because Duke Energy is uncertain as to the timing and amount of cash payments that will be required. Additionally, the table above excludes annual insurance premiums that are necessary to operate the business, including nuclear insurance (see Note 5 to the Consolidated Financial Statements, “Commitments and Contingencies”), funding of pension and other post-retirement benefit plans (see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans"), AROs, including ash management expenditures (see Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations") and regulatory liabilities (see Note 4 to the Consolidated Financial Statements, “Regulatory Matters”) because the amount and timing of the cash payments are uncertain. Also excluded are Deferred Income Taxes and ITCs recorded on the Consolidated Balance Sheets since cash payments for income taxes are determined based primarily on taxable income for each discrete fiscal year.
(f)Amounts exclude obligations under the OVEC PPA. See Note 17 to the Consolidated Financial Statements, "Variable Interest Entities," for additional information.
(g)Includes contracts for software, telephone, data and consulting or advisory services. Amount also includes contractual obligations for EPC costs for new generation plants, wind and solar facilities, plant refurbishments, maintenance and day-to-day contract work and commitments to buy certain products. Amount excludes certain open purchase orders for services that are provided on demand for which the timing of the purchase cannot be determined.
(h)Related to future annual funding obligations to NDTF through nuclear power stations' relicensing dates. See Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations."
(i)Related to Commercial Renewables wind facilities.
(j)Unrecognized tax benefits of $125 million are not reflected in this table as Duke Energy cannot predict when open income tax years will close with completed examinations. See Note 23 to the Consolidated Financial Statements, "Income Taxes."
(k)The table above excludes reserves for litigation, environmental remediation, asbestos-related injuries and damages claims and self-insurance claims (see Note 4 to the Consolidated Financial Statements, “Commitments and Contingencies”) because Duke Energy is uncertain as to the timing and amount of cash payments that will be required. Additionally, the table above excludes annual insurance premiums that are necessary to operate the business, including nuclear insurance (see Note 4 to the Consolidated Financial Statements, “Commitments and Contingencies”), funding of pension and other post-retirement benefit plans (see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans"), AROs, including ash management expenditures (see Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations") and regulatory liabilities (see Note 3 to the Consolidated Financial Statements, “Regulatory Matters”) because the amount and timing of the cash payments are uncertain. Also excluded are Deferred Income Taxes and ITCs recorded on the Consolidated Balance Sheets since cash payments for income taxes are determined based primarily on taxable income for each discrete fiscal year.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management Policies
The Enterprise Risk Management policy framework at Duke Energy includes strategy, operational, project execution and financial or transaction related risks. Enterprise Risk Management includes market risk as part of the financial and transaction related risks in its framework.
Duke Energy is exposed to market risks associated with commodity prices, interest rates and equity prices. Duke Energy has established comprehensive risk management policies to monitor and manage these market risks. Duke Energy’s Chief Executive Officer and Chief Financial Officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The Finance and Risk Management Committee of the Board of Directors receives periodic updates from the Chief Risk Officer and other members of management on market risk positions, corporate exposures and overall risk management activities. The Chief Risk Officer is responsible for the overall governance of managing commodity price risk, including monitoring exposure limits.
The following disclosures about market risk contain forward-looking statements that involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. See Item 1A, “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Information” for a discussion of the factors that may impact any such forward-looking statements made herein.
Commodity Price Risk
Duke Energy is exposed to the impact of market fluctuations in the prices of electricity, coal, natural gas and other energy-related products marketed and purchased as a result of its ownership of energy-related assets. Duke Energy’s exposure to these fluctuations is primarily limited by the cost-based regulation of its regulated operations as these operations are typically allowed to recover substantially all of these costs through various cost-recovery clauses, including fuel clauses, formula basedformula-based contracts, or other cost-sharing mechanisms. While there may be a delay in timing between when these costs are incurred and when they are recovered through rates, changes from year to year generally do not have a material impact on operating results of these regulated operations. Within Duke Energy’s Commercial Renewables segment, the company has limited exposure to market price fluctuations in prices of energy-related products as a result of its ownership of renewable assets.
Price risk represents the potential risk of loss from adverse changes in the market price of electricity or other energy commodities. Duke Energy’s exposure to commodity price risk is influenced by a number of factors, including contract size, length, market liquidity, market conditions, location and unique or specific contract terms. Duke Energy employs established policies and procedures to manage risks associated with these market fluctuations, which may include using various commodity derivatives, such as swaps, futures, forwards and options. For additional information, see Note 14 to the Consolidated Financial Statements, “Derivatives and Hedging.”
The inputs and methodologies used to determine the fair value of contracts are validated by an internal group separate from Duke Energy’s deal origination function. While Duke Energy uses common industry practices to develop its valuation techniques, changes in its pricing methodologies or the underlying assumptions could result in significantly different fair values and income recognition.
Hedging Strategies
Duke Energy closely monitors risks associated with commodity price changes on its future operations and, where appropriate, uses various commodity instruments such as electricity, coal and natural gas forward contracts and options to mitigate the effect of such fluctuations on operations. Duke Energy’s primary use of energy commodity derivatives is to hedge against exposure to the prices of power, fuel for generation and natural gas for customers. Additionally, Duke Energy’s Commercial Renewables business may enter into short-term or long-term hedge agreements to manage price risk associated with project output.
69



MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The majority of instruments used to manage Duke Energy’s commodity price exposure are either not designated as hedges or do not qualify for hedge accounting. These instruments are referred to as undesignated contracts. Mark-to-market changes for undesignated contracts entered into by regulated businesses are reflected as regulatory assets or liabilities on the Consolidated Balance Sheets. Undesignated contracts entered into by unregulatednonregulated businesses are marked-to-market each period, with changes in the fair value of the derivative instruments reflected in earnings.
Duke Energy may also enter into other contracts that qualify for the NPNS exception. When a contract meets the criteria to qualify as NPNS, Duke Energy applies such exception. Income recognition and realization related to NPNS contracts generally coincide with the physical delivery of the commodity. For contracts qualifying for the NPNS exception, no recognition of the contract’s fair value in the Consolidated Financial Statements is required until settlement of the contract as long as the transaction remains probable of occurring.

77



MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Generation Portfolio Risks 
The Duke Energy Registrants optimize the value of their generation portfolios, which include generation assets, fuel and emission allowances. Modeled forecasts of future generation output and fuel requirements are based on forward power and fuel markets. The component pieces of the portfolio are bought and sold based on models and forecasts of generation in order to manage the economic value of the portfolio in accordance with the strategies of the business units.
For the Electric Utilities and Infrastructure segment, the generation portfolio not utilized to serve retail operations or committed load is subject to commodity price fluctuations. However, the impact on the Consolidated Statements of Operations is partially offset by mechanisms in these regulated jurisdictions that result in the sharing of net profits from these activities with retail customers.
Interest Rate Risk
Duke Energy is exposed to risk resulting from changes in interest rates as a result of its issuance or anticipated issuance of variable and fixed-rate debt and commercial paper. Duke Energy manages interest rate exposure by limiting variable-rate exposures to a percentage of total debt and by monitoring the effects of market changes in interest rates. Duke Energy also enters into financial derivative instruments, which may include instruments such as, but not limited to, interest rate swaps, swaptions and U.S. Treasury lock agreements to manage and mitigate interest rate risk exposure. See Notes 1, 6, 14 and 16 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” “Debt and Credit Facilities,” “Derivatives and Hedging,” and “Fair Value Measurements.”
At December 31, 2018, Duke Energy had $1.2 billion of U.S. treasury lock agreements, $644 million notional amount of floating-to-fixed swaps outstanding, $500 million notional amount of fixed-to-floating swaps outstanding and $300 million forward-starting swaps outstanding. Duke Energy had $8.0had $7.6 billion of unhedged long- and short-term floating interest rate exposure at December 31, 2018.2020. The impact of a 100 basis100-basis point change in interest rates on pretax income is approximately $80$76 million at December 31, 2018.2020. This amount was estimated by considering the impact of the hypothetical interest rates on variable-rate securities outstanding, adjusted for interest rate hedges as of December 31, 2018.2020.
Certain Duke Energy Registrants have variable-rate debt and manage interest rate risk by entering into financial contracts including interest rate swaps. See NoteNotes 6 and 14 "Derivatives and Hedging," to the Consolidated Financial Statements, "Debt and Credit Facilities" and "Derivatives and Hedging." Such financial arrangements generally are indexed based upon LIBOR, which is expected to be phased out by the end of 2021. The Secured Overnight Financing Rate (SOFR) has been identified by regulators and industry participants as the preferred successor rate for additional information aboutU.S. dollar-based LIBOR at that time. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination and renegotiation to fully adapt to a post-LIBOR environment, and there may be uncertainty regarding the forward-starting interest rate swaps related toeffectiveness of any such alternative index methodologies. Alternative index provisions are being assessed and incorporated into new financial arrangements that extend beyond 2021. Additionally, the Piedmont acquisition.progress of the phaseout is being monitored, including proposed transition relief from the FASB.
Credit Risk
Credit risk represents the loss that the Duke Energy Registrants would incur if a counterparty fails to perform under its contractual obligations. Where exposed to credit risk, the Duke Energy Registrants analyze the counterparty's financial condition prior to entering into an agreement and monitor exposure on an ongoing basis. The Duke Energy Registrants establish credit limits where appropriate in the context of contractual arrangements and monitor such limits.
To reduce credit exposure, the Duke Energy Registrants seek to include netting provisions with counterparties, which permit the offset of receivables and payables with such counterparties. The Duke Energy Registrants also frequently use master agreements with credit support annexes to further mitigate certain credit exposures. The master agreements provide for a counterparty to post cash or letters of credit to the exposed party for exposure in excess of an established threshold. The threshold amount represents a negotiated unsecured credit limit for each party to the agreement, determined in accordance with the Duke Energy Registrants’ internal corporate credit practices and standards. Collateral agreements generally also provide that the inabilityfailure to post collateral when required is sufficient cause to terminate contractstransactions and liquidate all positions.
The Duke Energy Registrants also obtain cash, or letters of credit, or surety bonds from certain counterparties to provide credit support outside of collateral agreements, where appropriate, based on a financial analysis of the counterparty and the regulatory or contractual terms and conditions applicable to each transaction. See Note 14 to the Consolidated Financial Statements, “Derivatives and Hedging,” for additional information regarding credit risk related to derivative instruments.
The Duke Energy Registrants’ principal counterparties for its electric and natural gas businesses are regional transmission organizations,RTOs, distribution companies, municipalities, electric cooperatives and utilities located throughout the U.S. Exposure to these entities consists primarily of amounts due to Duke Energy Registrants for delivered electricity. Additionally, there may be potential risks associated with remarketing of energy and capacity in the event of default by wholesale power customers. The Duke Energy Registrants have concentrations of receivables from certain of such entities throughout these regions. These concentrations of receivablesthat may affect the Duke Energy Registrants’ overall credit risk in that risk factors can negatively impact the credit quality of the entire sector.risk.
70



MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Duke Energy Registrants are also subject to credit risk from transactions with their suppliers that involve prepayments or milestone payments in conjunction with outsourcing arrangements, major construction projects and certain commodity purchases. The Duke Energy Registrants’ credit exposure to such suppliers may take the form of increased costs or project delays in the event of non-performance.nonperformance. The Duke Energy Registrants' frequently require guarantees or letters of credit from suppliers to mitigate this credit risk.
Credit risk associated with the Duke Energy Registrants’ service to residential, commercial and industrial customers is generally limited to outstanding accounts receivable. The Duke Energy Registrants mitigate this credit risk by requiring tariff customers to provide a cash deposit, letter of credit or surety bond until a satisfactory payment history is established, subject to the rules and regulations in effect in each retail jurisdiction at which time the deposit is typically refunded. Charge-offs for retail customers have historically been insignificant to the operations of the Duke Energy Registrants and are typically recovered through retail rates. Management continually monitors customer charge-offs, and payment patterns and the impact of current economic conditions on customers' ability to pay their outstanding balance to ensure the adequacy of bad debt reserves.
In response to the COVID-19 pandemic, in March 2020, the Duke Energy Registrants announced a suspension of disconnections for nonpayment to be effective throughout the national emergency. While disconnections have resumed, the company continues to offer flexible options to customers struggling with the pandemic and the economic fallout, including extended payment arrangements to satisfy delinquent balances. In addition, the Duke Energy Registrants are monitoring the effects of the resultant economic slowdown on counterparties’ abilities to perform under their contractual obligations. The Duke Energy Registrants have observed a significant increase in utility account arrears, which were roughly double historical levels as of December 31, 2020. There is an expectation of an increase in charge-offs in the future. See Notes 1, 3 and 18 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies," "Regulatory Matters" and "Revenue," respectively, for more information. Duke Energy Ohio and Duke Energy Indiana sell certain of their accounts receivable and related collections through CRC, a Duke Energy consolidated variable interest entity.VIE. Losses on collection are first absorbed by the equity of CRC and next by the subordinated retained interests held by Duke Energy Ohio, Duke Energy Kentucky and Duke Energy Indiana. See Note 17 to the Consolidated Financial Statements, “Variable Interest Entities.”
The Duke Energy also providesRegistrants provide certain non-tariff services, primarily to large commercial and industrial customers in which incurred costs, including invested capital, are intended to be recovered from the individual customer and therefore are not subject to rate recovery in the event of customer default. Customer credit worthinesscreditworthiness is assessed prior to entering into these transactions.

78



MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Credit concentration related to these transactions exists for certain of these customers.
Duke Energy’s Commercial Renewables business segment enters into long-term agreements with certain creditworthy buyers that may not include the right to call for collateral in the event of a credit rating downgrade, anddowngrade. Credit concentration exists to certain counterparties on these agreements, including entities that could be subject to wildfire liability. Additionally, Commercial Renewables may invest in projects for which buyers are below investment grade, although such buyers are required to post negotiated amounts of credit support. Also, power sales agreements and/or hedges of project output are generally for an initial term that does not cover the entire life of the asset. As a result, Commercial Renewables is therefore exposed to market price risk and credit risk related to these agreements. Credit concentration exists to certain counterparties on these agreements.
Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. See Note 54 to the Consolidated Financial Statements, "Commitments and Contingencies" for information on asbestos-related injuries and damages claims.
The Duke Energy Registrants also have credit risk exposure through issuance of performance and financial guarantees, letters of credit and surety bonds on behalf of less than wholly owned entities and third parties. Where the Duke Energy Registrants have issued these guarantees, it is possible that they could be required to perform under these guarantee obligations in the event the obligor under the guarantee fails to perform. Where the Duke Energy Registrants have issued guarantees related to assets or operations that have been disposed of via sale, they attempt to secure indemnification from the buyer against all future performance obligations under the guarantees. See Note 7 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further information on guarantees issued by the Duke Energy Registrants.
Based on the Duke Energy Registrants’ policies for managing credit risk, their exposures and their credit and other reserves, the Duke Energy Registrants do not currently anticipate a materially adverse effect on their consolidated financial position or results of operations as a result of non-performancenonperformance by any counterparty.
Marketable Securities Price Risk
As described further in Note 15 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” Duke Energy invests in debt and equity securities as part of various investment portfolios to fund certain obligations. The vast majority of investments in equity securities are within the NDTF and assets of the various pension and other post-retirement benefit plans.
Pension Plan Assets
Duke Energy maintains investments to facilitate funding the costs of providing non-contributory defined benefit retirement and other post-retirement benefit plans. These investments are exposed to price fluctuations in equity markets and changes in interest rates. The equity securities held in these pension plans are diversified to achieve broad market participation and reduce the impact of any single investment, sector or geographic region. Duke Energy has established asset allocation targets for its pension plan holdings, which take into consideration the investment objectives and the risk profile with respect to the trust in which the assets are held. See Note 22 to the Consolidated Financial Statements, “Employee Benefit Plans,” for additional information regarding investment strategy of pension plan assets.
A significant decline in the value of plan asset holdings could require Duke Energy to increase funding of its pension plans in future periods, which could adversely affect cash flows in those periods. Additionally, a decline in the fair value of plan assets, absent additional cash contributions to the plan, could increase the amount of pension cost required to be recorded in future periods, which could adversely affect Duke Energy’s results of operations in those periods.
71



MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Nuclear Decommissioning Trust Funds
As required by the NRC, NCUC, PSCSC and FPSC, subsidiaries of Duke Energy maintain trust funds to fund the costs of nuclear decommissioning. As of December 31, 2018,2020, these funds were invested primarily in domestic and international equity securities, debt securities, cash and cash equivalents and short-term investments. Per the NRC, Internal Revenue Code, NCUC, PSCSC and FPSC requirements, these funds may be used only for activities related to nuclear decommissioning. These investments are exposed to price fluctuations in equity markets and changes in interest rates. Duke Energy actively monitors its portfolios by benchmarking the performance of its investments against certain indices and by maintaining, and periodically reviewing, target allocation percentages for various asset classes.
Accounting for nuclear decommissioning recognizes that costs are recovered through retail and wholesale rates; therefore, fluctuations in investment prices do not materially affect the Consolidated Statements of Operations, as changes in the fair value of these investments are primarily deferred as regulatory assets or regulatory liabilities pursuant to Orders by the NCUC, PSCSC, FPSC and FERC. Earnings or losses of the fundfunds will ultimately impact the amount of costs recovered through retail and wholesale rates. See Note 9 to the Consolidated Financial Statements, “Asset Retirement Obligations,” for additional information regarding nuclear decommissioning costs. See Note 15 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” for additional information regarding NDTF assets.
OTHER MATTERS
Environmental Regulations
The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants.
On May 14, 2020, the five-year probation period following the Dan River coal ash spill ended. The court-appointed monitor confirmed in U.S. District Court for the Eastern District of North Carolina that Duke Energy met or exceeded every obligation throughout the process. Separately, in a final report to the EPA, it was noted that the company made significant enhancements to its Ethics and Compliance Program and its environmental compliance programs.
The following sections outline various proposed and recently enacted legislation and regulations that may impact the Duke Energy Registrants. Refer to Note 43 to the Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.

79



MD&AOTHER MATTERS


Coal Combustion Residuals
In April 2015, EPA published a rule to regulate the disposal of CCR from electric utilities as solid waste. The federal regulation classifies CCR as nonhazardous waste and allows for beneficial use of CCR with some restrictions. The regulation applies to all new and existing landfills, new and existing surface impoundments receiving CCR and existing surface impoundments that arelocated at stations generating electricity (regardless of fuel source), which were no longer receiving CCR but contain liquid located at stations currently generating electricity (regardlesscontained liquids as of fuel source).the effective date of the rule. The rule establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures to ensure the safe disposal and management of CCR. Various industry and environmental parties have appealed EPA's CCR rule in the D.C. Circuit Court. On April 18, 2016, EPA filed a motion with the federal court to settle five issues raised in litigation. On June 14, 2016, the court approved the motion with respect to all of those issues. Duke Energy does not expect a material impact from the settlement or that it will result in additional ARO adjustments. On September 13, 2017, EPA responded to a petition by the Utility Solid Waste Activities Group that the agency would reconsider certain provisions of the final rule, and asked the D.C. Circuit Court to suspend the litigation. The D.C. Circuit Court denied EPA’s petition to suspend the litigation and oral argument was held on November 20, 2017. On August 21, 2018, the D.C. Circuit issued its decision in the CCR rule litigation denying relief for industry petitioners' remaining claims and ruling in favor of environmental petitioners on a number of their challenges, including the regulation of inactive CCR surface impoundments at retired plants and the continued operation of unlined impoundments.
On March 15, 2018, EPA published proposed amendments to the federal CCR rule, including revisions that were required as part of a CCR litigation settlement, as well as changes that the agency considers warranted due to the passage of the Water Infrastructure Improvements for the Nation Act, which provides statutory authority for state and federal permit programs. On July 17, 2018, EPA issued a final rule (Phase 1, Part 1) finalizing certain, but not all, elements included in the agency's March 15, 2018, proposal. The final rule revisesrevising certain closure deadlines and groundwater protection standards in the CCR rule. ItThe rule does not change the primary requirements for groundwater monitoring, corrective action, inspections and maintenance, and closure, and thus does not materially affect Duke Energy’s coal ash basin closure plans or compliance obligations under the CCR rule. On October 22, 2018, a coalition of environmental groups filed a petition for review in the D.C.U.S. Court of Appeals for the District of Columbia (D.C. Circuit CourtCourt) challenging EPA's final Phase 1, Part 1 revisions to the CCR rule. BriefingOn March 13, 2019, the D.C. Circuit Court issued an order in the case concludedPhase 1, Part 1 litigation granting EPA’s motion to remand the rule without vacatur. To date, EPA has finalized two notice-and-comment rulemakings to implement the court’s decision on remand. The “Part A” rule, which was promulgated on August 28, 2020, establishes an April 11, 2021 deadline to cease placement of CCR and non-CCR waste streams into unlined ash basins and initiate closure, and the “Part B” rule, which was promulgated on November 12, 2020, establishes procedures to allow facilities to request approval to operate an existing CCR surface impoundment with an alternate liner. A future rulemaking is expected to address legacy impoundments. Duke Energy does not expect these rulemakings to have a material impact in February 2019.light of its progress in closing CCR units across the enterprise.
In addition to the requirements of the federal CCR regulation,rule, CCR landfills and surface impoundments will continue to be independently regulated by mostthe states. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions and via wholesale contracts, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. For more information, see Notes 43 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations," respectively.
Coal Ash Management Act of 2014
AROs recorded on the Duke Energy Carolinas and Duke Energy Progress Consolidated Balance Sheets at December 31, 2018,2020, and December 31, 2017,2019, include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of the Coal Ash Act, the EPA CCR rule and other agreements. The Coal Ash Act includes a variance procedure for compliance deadlines and other issues surrounding the management of CCR and CCR surface impoundments and prohibits cost recovery in customer rates for unlawful discharge of ash impoundment waters occurring after January 1, 2014. The Coal Ash Act leaves the decision on cost recovery determinations related to closure of ash impoundments to the normal ratemaking processes before utility regulatory commissions.
Consistent with the requirements of the Coal Ash Act, Duke Energy haspreviously submitted comprehensive site assessments and groundwater corrective plans to NCDEQNCDEQ. In addition, on December 31, 2019, Duke Energy submitted updated groundwater corrective action plans and will submit to NCDEQ site-specific coal ash impoundment closure plans in advance of closure. In support of these closure plans, on November 15, 2018, Duke Energy submitted options analyses, groundwater modeling and net environmental benefits analyses for six sites potentially eligible for closure by cap in place. Separately, on November 16, 2018, Duke Energy submitted a variance application requesting that NCDEQ grant a six-month extension to the closure deadline applicable to the CCR surface impoundments at the Sutton Plant. NCDEQ held a public meeting on January 14, 2019 at which it announced that an extension would be appropriate. A final decision on the variance application is expected by April 15, 2019.

NCDEQ.
80
72






MD&AOTHER MATTERS


The current plans for each site are listed in the table below.
NCDEQ Risk ClassificationMD&APlants/Current Closure DateExpected Closure Method
Low
Allen – December 31, 2029(a)
Belews Creek – December 31, 2029(a)
Buck – December 31, 2029(a)(b)
Rogers – December 31, 2029(a)
Marshall – December 31, 2029(a)
Mayo – December 31, 2029(a)
Roxboro – December 31, 2029(a)
Combination of a cap system and a groundwater monitoring system, or for selected sites, conversion for beneficial use.
Medium
H.F. Lee – December 31, 2029(b)
Cape Fear – December 31, 2029(b)
Weatherspoon – August 1, 2028
Excavation, which may include conversion of the basin to a lined industrial landfill, transferring coal ash to an engineered landfill, or for selected sites, conversion for beneficial use.
High
Sutton – August 1, 2019
Riverbend – August 1, 2019
Dan River – August 1, 2019
Asheville – August 1, 2022
Excavation, which may include a combination of transferring coal ash to an engineered landfill or for selected sites, conversion for beneficial use.OTHER MATTERS
(a)In November 2018, the closure deadline for these basins was extended to December 31, 2029 as a result of the completion of certain dam improvement projects and alternative drinking water source projects by October 15, 2018.
(b)The Coal Ash Act requires the installation and operation of three large-scale coal ash beneficiation projects to produce reprocessed ash for use in the concrete industry. Duke Energy has selected the Buck, H.F. Lee and Cape Fear plants for these projects. Closure at these sites is required to be completed no later than December 31, 2029.
On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments at the Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro facilities in North Carolina. 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 December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins at these sites with ash moved to on-site lined landfills, including two at Allen, one at Belews Creek, one at Mayo, one at Roxboro, and two at Rogers. At the two 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.
Following NCDEQ's April 1 Order, Duke Energy estimated the incremental undiscounted cost to close the nine remaining impoundments by excavation would be approximately $4 billion to $5 billion, potentially increasing the total estimated costs to permanently close all ash basins in North Carolina and South Carolina to $9.5 billion to $10.5 billion. The settlement lowers the estimated total undiscounted cost to close the nine remaining basins by excavation by approximately $1.5 billion as compared to Duke Energy’s original estimate that followed the order. As a result, the estimated total cost to permanently close all ash basins in North Carolina and South Carolina is approximately $8 billion to $9 billion of which approximately $2.8 billion has been spent through 2020. The majority of the remaining spend is expected to occur over the next 15 to 20 years.
Duke Energy has completed excavation of all coal ash at the Riverbend, Dan River and Sutton plants
For further information on ash basins and recovery, see Notes 43 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and “Asset Retirement Obligations,” respectively.
Estimated Cost and Impacts of Rulemakings
Duke Energy will incur capital expenditures to comply with the environmental regulations and rules discussed above. The following table, as of December 31, 2018, provides five-year estimated costs, excluding AFUDC, of new control equipment that may need to be installed on existing power plants primarily to comply with the Coal Ash Act requirements for conversion to dry disposal of bottom ash and fly ash, CWA 316(b) and ELGs through December 31, 2023. The table excludes ash basin closure costs recorded in Asset retirement obligations on the Consolidated Balance Sheets. For more information related to AROs, see Note 9 to the Consolidated Financial Statements.
(in millions)Five-Year Estimated Costs
Duke Energy$420
Duke Energy Carolinas185
Progress Energy200
Duke Energy Progress80
Duke Energy Florida120
Duke Energy Ohio15
Duke Energy Indiana20
The Duke Energy Registrants also expect to incur increased fuel, purchased power, operation and maintenance and other expenses, in addition to costs for replacement generation for potential coal-fired power plant retirements, as a result of these regulations. Actual compliance costs incurred may be materially different from these estimates due to reasons such as the timing and requirements of EPA regulations and the resolution of legal challenges to the rules. The Duke Energy Registrants intend to seek rate recovery of necessary and prudently incurred costs associated with regulated operations to comply with these regulations.
Other Environmental Regulations
The Duke Energy Registrants are also subject to various federal, state and local regulationslaws regarding air and water quality, hazardous and solid waste disposal and other environmental matters, including the following:
Clean Water Act•CWA
•Steam Effluent Limitation Guidelines
•Cross-State Air Pollution Rule
Carbon Pollution Standards for New, Modified and Reconstructed Power Plants
Clean Power Plan/ACE Rule
Duke Energy continues to comply with enacted environmental lawsstatutes and regulations even as certain of these regulations are in various stages of clarification, revision or legal challenges.challenge. The Duke Energy Registrants cannot predict the outcome of these matters.

81



MD&AOTHER MATTERS


Section 126 Petitions
On November 16, 2016, the state of Maryland filed a petition with EPA under Section 126 of the Clean Air Act alleging that 19 power plants, including two plants (three units) that Duke Energy Registrants own and operate, contribute to violations of EPA’s NAAQSNational Ambient Air Quality Standards (NAAQS) for ozone in the state of Maryland. On March 12, 2018, the state of New York filed a petition with EPA, also under Section 126 of the Clean Air Act, alleging that over 60 power plants, including fourfive that Duke Energy Registrants own and operate, contribute to violations of EPA’s ozone NAAQS in the state of New York. Both Maryland and New York seeksought EPA orders requiring the states in which the named power plants operate impose more stringent NOxnitrogen oxide emission limitations on the plants. On October 5, 2018, EPA published a final rule denyingdenied the Maryland petition. That same day, Maryland appealed EPA's denialdenial. On October 18, 2019, EPA denied the New York petition, and New York appealed that decision on October 29, 2019. On May 19, 2020, the U.S. Court of their Section 126 petition toAppeals for the D.C. Circuit Court.issued its decision, finding, with one exception, that EPA reasonably denied the Maryland petition. The impactcourt remanded one issue to EPA regarding target sources lacking catalytic controls. All of the Duke Energy units targeted have selective catalytic reduction, so the decision is favorable for these petitions could be more stringent requirementsunits.
A different panel of the same court heard oral argument in New York’s appeal of EPA’s denial of its Section 126 Petition on May 7, 2020, and on July 14, 2020, the panel issued its decision remanding the Petition to EPA for the operation of NOx emission controls at these plants.further review. The Duke Energy Registrants cannot predict the outcome of these matters.this matter.
North Carolina Clean Energy Plan (NCCEP)
On October 29, 2018, Governor Roy Cooper signed an executive order calling for a 40% reduction in statewide greenhouse gas emissions by 2025. The order tasked the NCDEQ with developing a clean energy plan for North Carolina. In October 2019, the NCDEQ published its plan, which includes the reduction of electric power sector greenhouse gas emissions by 70% below 2005 levels by 2030 and attainment of carbon neutrality by 2050, fostering long-term energy affordability and price stability for North Carolina’s residents and businesses by modernizing regulatory and planning processes, and acceleration of clean energy innovation to create economic opportunities for both rural and urban areas. Duke Energy Carolinas and Duke Energy Progress are significant stakeholders in this process. The magnitude and timing of investment in response to the NCCEP will depend on the speed of adoption and consensus developed by other stakeholders on how best to successfully transition to this clean energy future while establishing a regulatory model that incentivizes business decisions that benefit both the utilities and the public. The Duke Energy Registrants cannot predict the outcome of this matter.
Global Climate Change
On September 17, 2019, Duke Energy announced an updated climate strategy with new goals of at least 50% reduction in carbon emissions from electric generation by 2030 and net-zero carbon emissions from electric generation by 2050. On October 9, 2020, Duke Energy announced a new goal to achieve net-zero methane emissions from its natural gas distribution system by 2030. Timelines and initiatives, as well as implementation of new technologies, will vary in each state in which the company operates and will involve collaboration with regulators, customers and other stakeholders.
73



MD&AOTHER MATTERS
The Duke Energy Registrants’ GHG emissions consist primarily of CO2 and result primarily from operating a fleet of coal-fired and natural gas-fired power plants. In 2018, the Duke Energy Registrants’ power plants emitted approximately 105 million tons of CO2. Future levels of CO2 emissions will be influenced by variables that include economic conditions that affect electricity demand, fuel prices, market prices, compliance with new or existing regulations economic conditions that affect electricity demand and the technologies deployed to generate the electricity necessary to meet the customer demand.
The Duke Energy Registrants have taken actions that have resulted in a reduction of CO2 emissions over time. Actions have included the retirement of 4751 coal-fired EGUselectric generating units with a combined generating capacity of 5,4256,539 MW. Much of that capacity has been replaced with state-of-the-art highly efficient natural gas-fired generation that produces far fewer CO2 emissions per unit of electricity generated. Duke Energy also has made investments to expand its portfolio of wind and solar projects, increase energy efficiencyEE offerings and invest in ensure continued operations of its zero-CO2 emissions hydropower and nuclear plants. These efforts have diversified its system and significantly reduced CO2 emissions. Between 2005 and 2018,2020, the Duke Energy Registrants have collectively lowered the CO2 emissions from their electricity generation by 31 percent,more than 40%, which potentially lowers the exposure to any future mandatory CO2 emission reduction requirements or carbon tax, whether as a result of federal legislation,legislation, EPA regulation, state regulation or other as yet unknown emission reduction requirement. Duke Energy will continue to explore the use of currently available and commercially demonstrated technology to reduce CO2 emissions, including energy efficiency,EE, wind, solar, storage, carbon capture, utilization and sequestration, the use of hydrogen and other low-carbon fuels and advanced nuclear. Duke Energy will adjust to evolving and innovative technologies in a way that balances the reliability and affordability that customers expect.meet regulatory requirements and customer demands. Under any future scenario involving mandatory CO2 limitations, the Duke Energy Registrants would plan to seek recovery of their compliance costs through appropriate regulatory mechanisms.
The Duke Energy Registrants recognize certain groupsthat scientists associate severe weather events with increasing levels of GHGs in the atmosphere and forecast the possibility these weather events could have a material impact on future results of operations should they occur more frequently and with greater severity. However, the uncertain nature of potential changes in extreme weather events (such as increased frequency, duration and severity), the long period of time over which any potential changes might take place and the inability to predict potential changes with any degree of accuracy, make estimating with any certainty any potential future financial risk to the Duke Energy Registrants’ operations impossible.difficult.
The Duke Energy Registrants annually, biannuallybiennially or triennially prepare lengthy, forward-looking IRPs. These detailed, highly technical plans are based on the company’s thorough analysis of numerous factors that can impact the cost of producing and delivering electricity that influence long-term resource planning decisions. The IRP process helps to evaluate a range of options, taking into account stakeholder input as well as forecasts of future electricity demand, fuel prices, transmission improvements, new generating capacity, integration of renewables, energy storage, energy efficiencyEE and demand response initiatives. The IRP process also helps evaluate potential environmental and regulatory scenarios to better mitigate policy and economic risks. The IRPs we file with regulators look out 10 to 20 years depending on the jurisdiction.
For a number of years, the Duke Energy Registrants have included a price on CO2 emissions in their IRP planning process to account for the potential regulation of CO2 emissions. Incorporating a price on CO2 emissions in the IRPs allows for the evaluation of existing and future resource needs against potential climate change policy risk in the absence of policy certainty. One of the challenges with using a CO2 price, especially in the absence of a clear and certain policy, is determining the appropriate price to use. To address this uncertainty and ensure the company remains agile, the Duke Energy Registrants typically use a range of potential CO2 prices to reflect a range of potential policy outcomes.
The Duke Energy Registrants routinely take steps to reduce the potential impact of severe weather events on their electric transmission and distribution systems byand natural gas facilities. The steps include modernizing the electric grid through smart meters, storm hardening, self-healing and targeted undergrounding and applying lessons learned from previous storms to restoration efforts. The Duke Energy Registrants’ electric generating facilities and natural gas facilities are designed to withstand extreme weather events without significant damage. The Duke Energy Registrants maintain an inventoryinventories of coal, oil and oil on-siteliquified natural gas to mitigate the effects of any potential short-term disruption in fuel supply so they can continue to provide customers with an uninterrupted supply of electricity.electricity and/or natural gas.
State Legislation
In July 2017, the North Carolina General Assembly passed House Bill 589, and it was subsequently enactedsigned into law by the governor. The law includes, among other things, overall reform of the application of PURPA for new solar projects in the state, a requirement for the utility to procure approximately 2,600 MW of renewable energy through a competitive bidding process administered by an independent third party and recovery of costs related to the competitive bidding process through the fuel clause and a competitive procurement rider. The law stipulated certain deadlinesprocess used was approved by the NCUC to select projects that would deliver the lowest cost of renewable energy for Duke Energy to file for NCUC approval of programs required under the law. Duke Energy has made some regulatory filings since the passage of the law and will continue to implement the requirements of House Bill 589.customers.
In July 2018, Duke Energy issued an RFP for the first tranche of 680 MW. In accordance with the provisions of HBHouse Bill 589, total procurement will be changed based upon how much generation with no economic dispatch or curtailment occurs over the procurement period. Most of this type of generation is solar procured under PURPA. Based upon the current forecasted amount of such generation that will occur over procurement period, Duke Energy estimates the total under HB 589 competitive procurement will be approximately 1,5001,185 to 2,0001,385 MW. Duke Energy will own or purchase at least 1,185 MW of energy from renewable energy projects under the North Carolina’s CPRE program. Two tranches of the CPRE process have been completed with contracts executed for winning proposals. Five Duke Energy projects, totaling about 190 MW, were selected during the first tranche and none were selected during the second tranche. Two of the Duke Energy winning projects achieved commercial operation in December 2020 and the remaining three will be online by the third quarter 2021. The need for a third tranche of CPRE will be determined prior to November 2021.
In various states, legislation is being considered to allow third-party sales of electricity. Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs. The Duke Energy Registrants cannot predict the outcome of these initiatives.

82



MD&AOTHER MATTERS


Liquefied Natural Gas Facility
Piedmont Natural Gas plans to build a liquefied natural gas facility in Robeson County, North Carolina. The project is expected to be completed in the summer of 2021 at a cost of $250 million. Construction will begin in the summer of 2019.
New Accounting Standards
See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Quantitative and Qualitative Disclosures About Market Risk.”

74
83






FINANCIAL STATEMENTS


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Duke Energy
Report of Independent Registered Public Accounting Firm
8677
Consolidated Statements of Operations
8779
Consolidated Statements of Comprehensive Income
8880
Consolidated Balance Sheets
8981
Consolidated Statements of Cash Flows 
9082
Consolidated Statements of Changes in Equity
9183
Duke Energy Carolinas
Report of Independent Registered Public Accounting Firm
9284
Consolidated Statements of Operations and Comprehensive Income
9386
Consolidated Balance Sheets
9487
Consolidated Statements of Cash Flows
9588
Consolidated Statements of Changes in Equity
9689
Progress Energy
Report of Independent Registered Public Accounting Firm
9790
Consolidated Statements of Operations and Comprehensive Income
9892
Consolidated Balance Sheets
9993
Consolidated Statements of Cash Flows
10094
Consolidated Statements of Changes in Equity
10195
Duke Energy Progress
Report of Independent Registered Public Accounting Firm
10296
Consolidated Statements of Operations and Comprehensive Income
10398
Consolidated Balance Sheets
10499
Consolidated Statements of Cash Flows
105100
Consolidated Statements of Changes in Equity
106101
Duke Energy Florida
Report of Independent Registered Public Accounting Firm
107102
Consolidated Statements of Operations and Comprehensive Income
108104
Consolidated Balance Sheets
109105
Consolidated Statements of Cash Flows
110106
Consolidated Statements of Changes in Equity
111107
Duke Energy Ohio
Report of Independent Registered Public Accounting Firm
112108
Consolidated Statements of Operations and Comprehensive Income
113110
Consolidated Balance Sheets
114111
Consolidated Statements of Cash Flows
115112
Consolidated Statements of Changes in Equity
116113
Duke Energy Indiana
Report of Independent Registered Public Accounting Firm
117114
Consolidated Statements of Operations and Comprehensive Income
118116
Consolidated Balance Sheets
119117
Consolidated Statements of Cash Flows
120118
Consolidated Statements of Changes in Equity
121119
Piedmont
Report of Independent Registered Public Accounting Firm
122120
Consolidated Statements of Operations and Comprehensive Income
123122
Consolidated Balance Sheets
124123
Consolidated Statements of Cash Flows
125124
Consolidated Statements of Changes in Equity
126125

8475






FINANCIAL STATEMENTS
FINANCIAL STATEMENTS


Combined Notes to Consolidated Financial Statements
Note 1 – Summary of Significant Accounting Policies
127126
Note 2 – Acquisitions and DispositionsBusiness Segments
137135
Note 3 – Business SegmentsRegulatory Matters
140139
Note 4 – Regulatory Matters
144
Note 5 – Commitments and Contingencies
166163
Note 5 – Leases
168
Note 6 – Debt and Credit Facilities
174173
Note 7 – Guarantees and Indemnifications
181179
Note 8 – Joint Ownership of Generating and Transmission Facilities
182180
Note 9 – Asset Retirement Obligations
182180
Note 10 – Property, Plant and Equipment
185183
Note 11 – Goodwill and Intangible Assets
187185
Note 12 – Investments in Unconsolidated Affiliates
189186
Note 13 – Related Party Transactions
191189
Note 14 – Derivatives and Hedging
192190
Note 15 – Investments in Debt and Equity Securities
198195
Note 16 – Fair Value Measurements
203201
Note 17 – Variable Interest Entities
209207
Note 18 – Revenue
213211
Note 19 – Common StockStockholders' Equity
217
Note 20 – Severance
218219
Note 21 – Stock-Based Compensation
219
Note 22 – Employee Benefit Plans
221
Note 23 – Income Taxes
243235
Note 24 – Other Income and Expenses, Net
251242
Note 25 – Subsequent Events
252242
Note 26 – Quarterly Financial Data (Unaudited)
253

85




76



REPORTS
REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control -— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2019,25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.



Critical Audit Matter


The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to regulation by federal and state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric and natural gas distribution companies. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $14 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

77



REPORTS
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP

Charlotte, North Carolina
February 28, 201925, 2021 

We have served as the Company's auditor since 1947.


86
78






FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,Years Ended December 31,
(in millions, except per share amounts)2018
 2017
 2016
(in millions, except per share amounts)202020192018
Operating Revenues     Operating Revenues
Regulated electric$22,097
 $21,177
 $21,221
Regulated electric$21,461 $22,615 $22,097 
Regulated natural gas1,773
 1,734
 863
Regulated natural gas1,642 1,759 1,773 
Nonregulated electric and other651
 654
 659
Nonregulated electric and other765 705 651 
Total operating revenues24,521
 23,565
 22,743
Total operating revenues23,868 25,079 24,521 
Operating Expenses     Operating Expenses
Fuel used in electric generation and purchased power6,831
 6,350
 6,625
Fuel used in electric generation and purchased power6,051 6,826 6,831 
Cost of natural gas697
 632
 265
Cost of natural gas460 627 697 
Operation, maintenance and other6,463
 5,944
 6,224
Operation, maintenance and other5,788 6,066 6,463 
Depreciation and amortization4,074
 3,527
 3,294
Depreciation and amortization4,705 4,548 4,074 
Property and other taxes1,280
 1,233
 1,142
Property and other taxes1,337 1,307 1,280 
Impairment charges402
 282
 18
Impairment charges984 (8)402 
Total operating expenses19,747
 17,968
 17,568
Total operating expenses19,325 19,366 19,747 
(Losses) Gains on Sales of Other Assets and Other, net(89) 28
 27
Gains (Losses) on Sales of Other Assets and Other, netGains (Losses) on Sales of Other Assets and Other, net10 (4)(89)
Operating Income4,685
 5,625
 5,202
Operating Income4,553 5,709 4,685 
Other Income and Expenses     Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates83
 119
 (15)
Equity in (losses) earnings of unconsolidated affiliatesEquity in (losses) earnings of unconsolidated affiliates(2,005)162 83 
Other income and expenses, net399
 508
 463
Other income and expenses, net453 430 399 
Total other income and expenses482
 627
 448
Total other income and expenses(1,552)592 482 
Interest Expense2,094
 1,986
 1,916
Interest Expense2,162 2,204 2,094 
Income From Continuing Operations Before Income Taxes3,073
 4,266
 3,734
Income From Continuing Operations Before Income Taxes839 4,097 3,073 
Income Tax Expense From Continuing Operations448
 1,196
 1,156
Income Tax (Benefit) Expense From Continuing OperationsIncome Tax (Benefit) Expense From Continuing Operations(236)519 448 
Income From Continuing Operations2,625
 3,070
 2,578
Income From Continuing Operations1,075 3,578 2,625 
Income (Loss) From Discontinued Operations, net of tax19
 (6) (408)Income (Loss) From Discontinued Operations, net of tax7 (7)19 
Net Income2,644
 3,064
 2,170
Net Income1,082 3,571 2,644 
Less: Net (Loss) Income Attributable to Noncontrolling Interests(22) 5
 18
Add: Net Loss Attributable to Noncontrolling InterestsAdd: Net Loss Attributable to Noncontrolling Interests295 177 22 
Net Income Attributable to Duke Energy Corporation$2,666
 $3,059
 $2,152
Net Income Attributable to Duke Energy Corporation1,377 3,748 2,666 
Less: Preferred DividendsLess: Preferred Dividends107 41 — 
Net Income Available to Duke Energy Corporation Common StockholdersNet Income Available to Duke Energy Corporation Common Stockholders$1,270 $3,707 $2,666 
     
Earnings Per Share – Basic and Diluted
     
Earnings Per Share – Basic and Diluted
Income from continuing operations attributable to Duke Energy Corporation common stockholders     
Basic$3.73
 $4.37
 $3.71
Diluted$3.73
 $4.37
 $3.71
Income from continuing operations available to Duke Energy Corporation common stockholdersIncome from continuing operations available to Duke Energy Corporation common stockholders
Basic and DilutedBasic and Diluted$1.71 $5.07 $3.73 
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
    Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic$0.03
 $(0.01) $(0.60)
Diluted$0.03
 $(0.01) $(0.60)
Net income attributable to Duke Energy Corporation common stockholders
    
Basic$3.76
 $4.36
 $3.11
Diluted$3.76
 $4.36
 $3.11
Basic and DilutedBasic and Diluted$0.01 $(0.01)$0.03 
Net income available to Duke Energy Corporation common stockholdersNet income available to Duke Energy Corporation common stockholders
Basic and DilutedBasic and Diluted$1.72 $5.06 $3.76 
Weighted average shares outstanding     Weighted average shares outstanding
Basic708
 700
 691
Basic737 729 708 
Diluted708
 700
 691
Diluted738 729 708 
See Notes to Consolidated Financial Statements

79
87






FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,Years Ended December 31,
(in millions)
2018
 2017
 2016
(in millions)202020192018
Net Income$2,644
 $3,064
 $2,170
Net Income$1,082 $3,571 $2,644 
Other Comprehensive (Loss) Income, net of tax     
Foreign currency translation adjustments—
 —
 694
Other Comprehensive (Loss) Income, net of tax(a)
Other Comprehensive (Loss) Income, net of tax(a)
Pension and OPEB adjustments(6) 3
 (11)Pension and OPEB adjustments6 9 (6)
Net unrealized (losses) gains on cash flow hedges(10) 2
 17
Net unrealized losses on cash flow hedgesNet unrealized losses on cash flow hedges(138)(47)(10)
Reclassification into earnings from cash flow hedges6
 8
 13
Reclassification into earnings from cash flow hedges11 6 6 
Unrealized (losses) gains on available-for-sale securities(3) 13
 2
Other Comprehensive (Loss) Income, net of tax
(13) 26
 715
Unrealized gains (losses) on available-for-sale securitiesUnrealized gains (losses) on available-for-sale securities3 8 (3)
Other Comprehensive Loss, net of taxOther Comprehensive Loss, net of tax(118)(24)(13)
Comprehensive Income
2,631
 3,090
 2,885
Comprehensive Income964 3,547 2,631 
Less: Comprehensive (Loss) Income Attributable to Noncontrolling Interests
(22) 5
 20
Add: Comprehensive Loss Attributable to Noncontrolling InterestsAdd: Comprehensive Loss Attributable to Noncontrolling Interests306 177 22 
Comprehensive Income Attributable to Duke Energy Corporation
$2,653
 $3,085
 $2,865
Comprehensive Income Attributable to Duke Energy Corporation1,270 3,724 2,653 
Less: Preferred DividendsLess: Preferred Dividends107 41 — 
Comprehensive Income Available to Duke Energy Corporation Common StockholdersComprehensive Income Available to Duke Energy Corporation Common Stockholders$1,163 $3,683 $2,653 

(a)     Net of income tax impacts of approximately $35 million for the year ended December 31, 2020. Tax impacts are immaterial for other periods presented.
See Notes to Consolidated Financial Statements

80
88
FINANCIAL STATEMENTS



DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,December 31,
(in millions)2018
 2017
(in millions)20202019
ASSETS   ASSETS
Current Assets   Current Assets
Cash and cash equivalents$442
 $358
Cash and cash equivalents$259 $311 
Receivables (net of allowance for doubtful accounts of $16 at 2018 and $14 at 2017)962
 779
Receivables of VIEs (net of allowance for doubtful accounts of $55 at 2018 and $54 at 2017)2,172
 1,995
Receivables (net of allowance for doubtful accounts of $29 at 2020 and $22 at 2019)Receivables (net of allowance for doubtful accounts of $29 at 2020 and $22 at 2019)1,009 1,066 
Receivables of VIEs (net of allowance for doubtful accounts of $117 at 2020 and $54 at 2019)Receivables of VIEs (net of allowance for doubtful accounts of $117 at 2020 and $54 at 2019)2,144 1,994 
Inventory3,084

3,250
Inventory3,167 3,232 
Regulatory assets (includes $52 at 2018 and $51 at 2017 related to VIEs)2,005
 1,437
Other (includes $162 at 2018 and $214 at 2017 related to VIEs)1,049
 634
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)1,641 1,796 
Other (includes $296 at 2020 and $242 at 2019 related to VIEs)Other (includes $296 at 2020 and $242 at 2019 related to VIEs)462 764 
Total current assets9,714
 8,453
Total current assets8,682 9,163 
Property, Plant and Equipment   Property, Plant and Equipment
Cost134,458
 127,507
Cost155,580 147,654 
Accumulated depreciation and amortization(43,126) (41,537)Accumulated depreciation and amortization(48,827)(45,773)
Generation facilities to be retired, net362
 421
Generation facilities to be retired, net29 246 
Net property, plant and equipment91,694
 86,391
Net property, plant and equipment106,782 102,127 
Other Noncurrent Assets   Other Noncurrent Assets
Goodwill19,303
 19,396
Goodwill19,303 19,303 
Regulatory assets (includes $1,041 at 2018 and $1,091 at 2017 related to VIEs)13,617
 12,442
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)12,421 13,222 
Nuclear decommissioning trust funds6,720
 7,097
Nuclear decommissioning trust funds9,114 8,140 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net1,524 1,658 
Investments in equity method unconsolidated affiliates1,409
 1,175
Investments in equity method unconsolidated affiliates961 1,936 
Other2,935
 2,960
Other (includes $81 at 2020 and $110 at 2019 related to VIEs)Other (includes $81 at 2020 and $110 at 2019 related to VIEs)3,601 3,289 
Total other noncurrent assets43,984
 43,070
Total other noncurrent assets46,924 47,548 
Total Assets$145,392
 $137,914
Total Assets$162,388 $158,838 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Current Liabilities   Current Liabilities
Accounts payable$3,487
 $3,043
Accounts payable$3,144 $3,487 
Notes payable and commercial paper3,410
 2,163
Notes payable and commercial paper2,873 3,135 
Taxes accrued577
 551
Taxes accrued482 392 
Interest accrued559
 525
Interest accrued537 565 
Current maturities of long-term debt (includes $227 at 2018 and $225 at 2017 related to VIEs)3,406
 3,244
Current maturities of long-term debt (includes $472 at 2020 and $216 at 2019 related to VIEs)Current maturities of long-term debt (includes $472 at 2020 and $216 at 2019 related to VIEs)4,238 3,141 
Asset retirement obligations919
 689
Asset retirement obligations718 881 
Regulatory liabilities598
 402
Regulatory liabilities1,377 784 
Other2,085
 1,865
Other2,936 2,367 
Total current liabilities15,041
 12,482
Total current liabilities16,305 14,752 
Long-Term Debt (includes $3,998 at 2018 and $4,306 at 2017 related to VIEs)51,123
 49,035
Long-Term Debt (includes $3,535 at 2020 and $3,997 at 2019 related to VIEs)Long-Term Debt (includes $3,535 at 2020 and $3,997 at 2019 related to VIEs)55,625 54,985 
Other Noncurrent Liabilities   Other Noncurrent Liabilities
Deferred income taxes7,806
 6,621
Deferred income taxes9,244 8,878 
Asset retirement obligations9,548
 9,486
Asset retirement obligations12,286 12,437 
Regulatory liabilities14,834
 15,330
Regulatory liabilities15,029 15,264 
Operating lease liabilitiesOperating lease liabilities1,340 1,432 
Accrued pension and other post-retirement benefit costs988
 1,103
Accrued pension and other post-retirement benefit costs969 934 
Investment tax credits568
 539
Investment tax credits687 624 
Other (includes $212 at 2018 and $241 at 2017 related to VIEs)1,650
 1,581
Other (includes $316 at 2020 and $228 at 2019 related to VIEs)Other (includes $316 at 2020 and $228 at 2019 related to VIEs)1,719 1,581 
Total other noncurrent liabilities35,394
 34,660
Total other noncurrent liabilities41,274 41,150 
Commitments and Contingencies   Commitments and Contingencies00
Equity   Equity
Common stock, $0.001 par value, 2 billion shares authorized; 727 million shares outstanding at 2018 and 700 million shares outstanding at 20171
 1
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019973 973 
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019989 989 
Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2020 and 733 million shares outstanding at 2019Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2020 and 733 million shares outstanding at 20191 1 
Additional paid-in capital40,795
 38,792
Additional paid-in capital43,767 40,881 
Retained earnings3,113
 3,013
Retained earnings2,471 4,108 
Accumulated other comprehensive loss(92) (67)Accumulated other comprehensive loss(237)(130)
Total Duke Energy Corporation stockholders' equity43,817
 41,739
Total Duke Energy Corporation stockholders' equity47,964 46,822 
Noncontrolling interests17
 (2)Noncontrolling interests1,220 1,129 
Total equity43,834
 41,737
Total equity49,184 47,951 
Total Liabilities and Equity$145,392
 $137,914
Total Liabilities and Equity$162,388 $158,838 
See Notes to Consolidated Financial Statements

81
89
FINANCIAL STATEMENTS



DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES     CASH FLOWS FROM OPERATING ACTIVITIES
Net income$2,644
 $3,064
 $2,170
Net income$1,082 $3,571 $2,644 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)4,696
 4,046
 3,880
Depreciation, amortization and accretion (including amortization of nuclear fuel)5,486 5,176 4,696 
Equity in losses (earnings) of unconsolidated affiliatesEquity in losses (earnings) of unconsolidated affiliates2,005 (162)(83)
Equity component of AFUDC(221) (237) (200)Equity component of AFUDC(154)(139)(221)
Losses (Gains) on sales of other assets88
 (33) 477
(Gains) Losses on sales of other assets(Gains) Losses on sales of other assets(10)4 88 
Impairment charges402
 282
 212
Impairment charges984 (8)402 
Deferred income taxes1,079
 1,433
 900
Deferred income taxes54 806 1,079 
Equity in (earnings) losses of unconsolidated affiliates(83) (119) 15
Accrued pension and other post-retirement benefit costs61
 8
 21
Contributions to qualified pension plans(141) (19) (155)
Payments for asset retirement obligations(533) (571) (608)Payments for asset retirement obligations(610)(746)(533)
Payment for the disposal of other assets(105) —
 —
Payment for the disposal of other assets— — (105)
Other rate case adjustments37
 —
 —
Provision for rate refunds425
 —
 —
Provision for rate refunds(22)60 425 
Refund of AMT credit carryforwardsRefund of AMT credit carryforwards572 573 — 
(Increase) decrease in     (Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions22
 18
 34
Net realized and unrealized mark-to-market and hedging transactions63 (48)22 
Receivables(345) (83) (372)Receivables(56)78 (345)
Inventory156
 268
 272
Inventory66 (122)156 
Other current assets(721) (400) (174)Other current assets205 10 (721)
Increase (decrease) in     Increase (decrease) in
Accounts payable479
 (204) 296
Accounts payable(21)(164)479 
Taxes accrued23
 149
 236
Taxes accrued117 (224)23 
Other current liabilities270
 (482) 182
Other current liabilities(65)172 270 
Other assets(1,008) (436) (186)Other assets(398)(559)(1,062)
Other liabilities(39) (60) (137)Other liabilities(442)(69)(28)
Net cash provided by operating activities7,186

6,624

6,863
Net cash provided by operating activities8,856 8,209 7,186 
CASH FLOWS FROM INVESTING ACTIVITIES     CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(9,389) (8,052) (7,901)Capital expenditures(9,907)(11,122)(9,389)
Contributions to equity method investments(416) (414) (307)Contributions to equity method investments(370)(324)(416)
Acquisitions, net of cash acquired—
 (13) (4,778)
Return of investment capital137
 281
 1
Return of investment capital133 11 137 
Purchases of debt and equity securities(3,762) (4,071) (5,153)Purchases of debt and equity securities(8,011)(3,348)(3,762)
Proceeds from sales and maturities of debt and equity securities3,747
 4,098
 5,236
Proceeds from sales and maturities of debt and equity securities7,949 3,343 3,747 
Proceeds from the sales of discontinued operations and other assets, net of cash divested41
 —
 1,418
Other(418) (271) (44)Other(398)(517)(377)
Net cash used in investing activities(10,060)
(8,442)
(11,528)Net cash used in investing activities(10,604)(11,957)(10,060)
CASH FLOWS FROM FINANCING ACTIVITIES     CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:     Proceeds from the:
Issuance of long-term debt5,299
 6,909
 9,238
Issuance of long-term debt6,330 7,091 5,299 
Issuance of preferred stockIssuance of preferred stock— 1,962 — 
Issuance of common stock1,838
 —
 731
Issuance of common stock2,745 384 1,838 
Payments for the redemption of long-term debt(2,906) (2,316) (1,923)Payments for the redemption of long-term debt(4,506)(3,476)(2,906)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days472
 319
 2,081
Proceeds from the issuance of short-term debt with original maturities greater than 90 days3,009 397 472 
Payments for the redemption of short-term debt with original maturities greater than 90 days(282) (272) (2,166)Payments for the redemption of short-term debt with original maturities greater than 90 days(2,147)(479)(282)
Notes payable and commercial paper981
 (409) (1,362)Notes payable and commercial paper(1,181)(298)981 
Contributions from noncontrolling interestsContributions from noncontrolling interests426 843 41 
Dividends paid(2,471) (2,450) (2,332)Dividends paid(2,812)(2,668)(2,471)
Other29
 1
 (16)Other(133)(26)(12)
Net cash provided by financing activities2,960

1,782

4,251
Net cash provided by financing activities1,731 3,730 2,960 
Changes in cash and cash equivalents included in assets held for sale—
 —
 474
Net increase (decrease) in cash, cash equivalents, and restricted cash86

(36)
60
Net (decrease) increase in cash, cash equivalents, and restricted cashNet (decrease) increase in cash, cash equivalents, and restricted cash(17)(18)86 
Cash, cash equivalents, and restricted cash at beginning of period505
 541
 481
Cash, cash equivalents, and restricted cash at beginning of period573 591 505 
Cash, cash equivalents, and restricted cash at end of period$591

$505

$541
Cash, cash equivalents, and restricted cash at end of period$556 $573 $591 
Supplemental Disclosures:     Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$2,086
 $1,963
 $1,794
Cash paid for interest, net of amount capitalized$2,186 $2,195 $2,086 
Cash (received from) paid for income taxes(266) 4
 229
Cash received from income taxesCash received from income taxes(585)(651)(266)
Significant non-cash transactions:     Significant non-cash transactions:
Accrued capital expenditures1,112
 1,032
 1,000
Accrued capital expenditures1,116 1,356 1,112 
Non-cash dividends107
 —
 —
Non-cash dividends110 108 107 
See Notes to Consolidated Financial Statements

82
90
FINANCIAL STATEMENTS



DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Duke Energy Corporation Stockholders'
Accumulated Other Comprehensive
Income (Loss)
Net UnrealizedTotal
NetGains (Losses)Duke Energy
CommonAdditionalLosses onon Available-Pension andCorporation
PreferredStockCommonPaid-inRetainedCash Flowfor-Sale-OPEBStockholders'NoncontrollingTotal
(in millions)StockSharesStockCapitalEarningsHedgesSecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2017$— 700 $1 $38,792 $3,013 $(10)$12 $(69)$41,739 $(2)$41,737 
Net income— — — — 2,666 — — — 2,666 (22)2,644 
Other comprehensive loss— — — — — (4)(3)(6)(13)— (13)
Common stock issuances, including dividend reinvestment and employee benefits— 27 — 2,003 — — — — 2,003 — 2,003 
Common stock dividends— — — — (2,578)— — — (2,578)— (2,578)
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (1)(1)
Other(a)
— — — — 12 — (12)— — 42 42 
Balance at December 31, 2018$— 727 $1 $40,795 $3,113 $(14)$(3)$(75)$43,817 $17 $43,834 
Net income— — — — 3,707 — — — 3,707 (177)3,530 
Other comprehensive (loss) Income— — — — — (41)8 9 (24)— (24)
Preferred stock, Series A, issuances, net of issuance costs(b)
973 — — — — — — — 973 — 973 
Preferred stock, Series B, issuances, net of issuance costs(b)
989 — — — — — — — 989 — 989 
Common stock issuances, including dividend reinvestment and employee benefits— 6 — 552 — — — — 552 — 552 
Common stock dividends— — — — (2,735)— — — (2,735)— (2,735)
Sale of noncontrolling interest(c)
— — — (466)— 10 — — (456)863 407 
Contribution from noncontrolling interest (f)
— — — — — — — — — 428 428 
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (4)(4)
Other(d)
— — — — 23 (6)(2)(16)(1)2 1 
Balance at December 31, 2019$1,962 733 $1 $40,881 $4,108 $(51)$3 $(82)$46,822 $1,129 $47,951 
Net income— — — — 1,270 — — — 1,270 (295)975 
Other comprehensive (loss) income— — — — — (116)3 6 (107)(11)(118)
Common stock issuances, including dividend reinvestment and employee benefits— 36 — 2,902 — — — — 2,902 — 2,902 
Common stock dividends— — — — (2,815)— — — (2,815)— (2,815)
Contribution from noncontrolling interest, net of transaction costs(f)
— — — (17)— — — — (17)426 409 
Distributions to noncontrolling interests in subsidiaries— — — — — — — — — (30)(30)
Other(e)
— — — 1 (92)— — — (91)1 (90)
Balance at December 31, 2020$1,962 769 $1 $43,767 $2,471 $(167)$6 $(76)$47,964 $1,220 $49,184 
         
Duke Energy Corporation Stockholders'
Accumulated Other Comprehensive Loss
      
             Net Unrealized
   Total
    
         Foreign
 Net
 Gains (Losses)
   Duke Energy
    
 Common
   Additional
   Currency
 Losses on
 on Available-
 Pension and
 Corporation
    
 Stock
 Common
 Paid-in
 Retained
 Translation
 Cash Flow
 for-Sale-
 OPEB
 Stockholders'
 Noncontrolling
 Total
(in millions)Shares
 Stock
 Capital
 Earnings
 Adjustments
 Hedges
 Securities
 Adjustments
 Equity
 Interests
 Equity
Balance at December 31, 2015688
 $1
 $37,968
 $2,564
 $(692) $(50) $(3) $(61) $39,727
 $44
 $39,771
Net income—
 —
 —
 2,152
 —
 —
 —
 —
 2,152
 18
 2,170
Other comprehensive income (loss)(a)
—
 —
 —
 —
 692
 30
 2
 (11) 713
 2
 715
Common stock issuances, including dividend reinvestment and employee benefits12
 —
 773
 —
 —
 —
 —
 —
 773
 —
 773
Common stock dividends—
 —
 —
 (2,332) —
 —
 —
 —
 (2,332) —
 (2,332)
Distributions to noncontrolling interest in subsidiaries—
 —
 —
 —
 —
 —
 —
 —
 —
 (6) (6)
Other(b)
—
 —
 —
 —
 —
 —
 —
 —
 —
 (50) (50)
Balance at December 31, 2016700

$1

$38,741

$2,384

$—

$(20)
$(1)
$(72)
$41,033

$8

$41,041
Net income—
 —
 —
 3,059
 —
 —
 —
 —
 3,059
 5
 3,064
Other comprehensive income—
 —
 —
 —
 —
 10
 13
 3
 26
 —
 26
Common stock issuances, including dividend reinvestment and employee benefits—
 —
 51
 —
 —
 —
 —
 —
 51
 —
 51
Common stock dividends—
 —
 —
 (2,450) —
 —
 —
 —
 (2,450) —
 (2,450)
Distributions to noncontrolling interest in subsidiaries—
 —
 —
 —
 —
 —
 —
 —
 —
 (2) (2)
Other(c)
—
 —
 —
 20
 —
 —
 —
 —
 20
 (13) 7
Balance at December 31, 2017700

$1

$38,792

$3,013

$—

$(10)
$12

$(69)
$41,739

$(2)
$41,737
Net income—
 —
 —
 2,666
 —
 —
 —
 —
 2,666
 (22) 2,644
Other comprehensive (loss) income—
 —
 —
 —
 —
 (4) (3) (6) (13) —
 (13)
Common stock issuances, including dividend reinvestment and employee benefits27
 —
 2,003
 —
 —
 —
 —
 —
 2,003
 —
 2,003
Common stock dividends—
 —
 —
 (2,578) —
 —
 —
 —
 (2,578) —
 (2,578)
Distributions to noncontrolling interests in subsidiaries—
 —
 —
 —
 —
 —
 —
 —
 —
 (1) (1)
Other(d)
—
 —
 —
 12
 —
 —
 (12) —
 —
 42
 42
Balance at December 31, 2018727
 $1
 $40,795
 $3,113
 $—
 $(14) $(3) $(75) $43,817
 $17
 $43,834
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information. Amount in Noncontrolling Interests primarily relates to tax equity financing activity in the Commercial Renewables segment.
(a)Foreign Currency Translation Adjustments amount includes $620 million of cumulative adjustment realized as a result of the sale of the Latin American generation business. See Note 2 to the Consolidated Financial Statements.
(b)Noncontrolling Interests amount is primarily related to the sale of the Latin American generation business. See Note 2 to the Consolidated Financial Statements.
(c)Retained Earnings relates to a cumulative-effect adjustment due to implementation of a new accounting standard related to stock-based compensation and the associated income taxes. See Note 1 to the Consolidated Financial Statements for additional information. Noncontrolling Interests relates to the purchase of remaining interest in REC Solar.
(d)Amounts in Retained Earnings and Accumulated Other Comprehensive Loss represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information. Amount in Noncontrolling Interests primarily relates to tax equity financing activity in the Commercial Renewables segment.
(b)     Duke Energy issued 40 million depositary shares of preferred stock, Series A, in the first quarter of 2019 and 1 million shares of preferred stock, Series B, in the third quarter of 2019.
(c)    See Note 1 for additional discussion of the transaction.
(d)    Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
(e)     Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.
(f)    Relates to tax equity financing activity in the Commercial Renewables segment.
See Notes to Consolidated Financial Statements

83
91






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.


Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $3.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
84



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 201925, 2021
We have served as the Company's auditor since 1947.



92
85





FINANCIAL STATEMENTS


DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
Operating Revenues$7,300
 $7,302
 $7,322
Operating Revenues$7,015 $7,395 $7,300 
Operating Expenses     Operating Expenses   
Fuel used in electric generation and purchased power1,821

1,822
 1,797
Fuel used in electric generation and purchased power1,682 1,804 1,821 
Operation, maintenance and other2,130

2,021
 2,158
Operation, maintenance and other1,743 1,868 2,130 
Depreciation and amortization1,201

1,090
 1,075
Depreciation and amortization1,462 1,388 1,201 
Property and other taxes295

281
 276
Property and other taxes299 292 295 
Impairment charges192

—
 1
Impairment charges476 17 192 
Total operating expenses5,639
 5,214
 5,307
Total operating expenses5,662 5,369 5,639 
(Losses) Gains on Sales of Other Assets and Other, net(1) 1
 (5)
Gains (Losses) on Sales of Other Assets and Other, netGains (Losses) on Sales of Other Assets and Other, net1 — (1)
Operating Income1,660
 2,089
 2,010
Operating Income1,354 2,026 1,660 
Other Income and Expenses, net153
 199
 214
Other Income and Expenses, net177 151 153 
Interest Expense439
 422
 424
Interest Expense487 463 439 
Income Before Income Taxes1,374
 1,866
 1,800
Income Before Income Taxes1,044 1,714 1,374 
Income Tax Expense303
 652
 634
Income Tax Expense88 311 303 
Net Income$1,071
 $1,214
 $1,166
Net Income$956 $1,403 $1,071 
Other Comprehensive Income, net of tax     Other Comprehensive Income, net of tax   
Reclassification into earnings from cash flow hedges1
 2
 2
Reclassification into earnings from cash flow hedges— — 1 
Other Comprehensive Income, net of tax1
 2
 2
Other Comprehensive Income, net of tax— — 1 
Comprehensive Income$1,072
 $1,216
 $1,168
Comprehensive Income$956 $1,403 $1,072 
See Notes to Consolidated Financial Statements

86
93





FINANCIAL STATEMENTS


DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED BALANCE SHEETS
 December 31, December 31,
(in millions) 2018
 2017
(in millions)20202019
ASSETS    ASSETS  
Current Assets    Current Assets  
Cash and cash equivalents $33
 $16
Cash and cash equivalents$21 $18 
Receivables (net of allowance for doubtful accounts of $2 at 2018 and 2017) 219
 200
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2018 and 2017) 699
 640
Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019)Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019)247 324 
Receivables of VIEs (net of allowance for doubtful accounts of $22 at 2020 and $7 at 2019)Receivables of VIEs (net of allowance for doubtful accounts of $22 at 2020 and $7 at 2019)696 642 
Receivables from affiliated companies 182
 95
Receivables from affiliated companies124 114 
Inventory 948

971
Inventory1,010 996 
Regulatory assets 520
 299
Regulatory assets473 550 
Other 72
 19
Other20 21 
Total current assets 2,673
 2,240
Total current assets2,591 2,665 
Property, Plant and Equipment    Property, Plant and Equipment  
Cost 44,741
 42,939
Cost50,640 48,922 
Accumulated depreciation and amortization (15,496) (15,063)Accumulated depreciation and amortization(17,453)(16,525)
Net property, plant and equipment 29,245
 27,876
Net property, plant and equipment33,187 32,397 
Other Noncurrent Assets    Other Noncurrent Assets
Regulatory assets 3,457
 2,853
Regulatory assets2,996 3,360 
Nuclear decommissioning trust funds 3,558
 3,772
Nuclear decommissioning trust funds4,977 4,359 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net110 123 
Other 1,027
 979
Other1,187 1,149 
Total other noncurrent assets 8,042
 7,604
Total other noncurrent assets9,270 8,991 
Total Assets $39,960
 $37,720
Total Assets$45,048 $44,053 
LIABILITIES AND EQUITY    LIABILITIES AND EQUITY  
Current Liabilities    Current Liabilities  
Accounts payable $988
 $842
Accounts payable$1,000 $954 
Accounts payable to affiliated companies 230
 209
Accounts payable to affiliated companies199 210 
Notes payable to affiliated companies 439
 104
Notes payable to affiliated companies506 29 
Taxes accrued 171
 234
Taxes accrued76 46 
Interest accrued 102
 108
Interest accrued117 115 
Current maturities of long-term debt 6
 1,205
Current maturities of long-term debt506 458 
Asset retirement obligations 290
 337
Asset retirement obligations264 206 
Regulatory liabilities 199
 126
Regulatory liabilities473 255 
Other 571
 486
Other546 611 
Total current liabilities 2,996
 3,651
Total current liabilities3,687 2,884 
Long-Term Debt 10,633
 8,598
Long-Term Debt11,412 11,142 
Long-Term Debt Payable to Affiliated Companies 300
 300
Long-Term Debt Payable to Affiliated Companies300 300 
Other Noncurrent Liabilities    Other Noncurrent Liabilities  
Deferred income taxes 3,689
 3,413
Deferred income taxes3,842 3,921 
Asset retirement obligations 3,659
 3,273
Asset retirement obligations5,086 5,528 
Regulatory liabilities 5,999
 6,231
Regulatory liabilities6,535 6,423 
Operating lease liabilitiesOperating lease liabilities97 102 
Accrued pension and other post-retirement benefit costs 99
 95
Accrued pension and other post-retirement benefit costs73 84 
Investment tax credits 231
 232
Investment tax credits236 231 
Other 671
 566
Other626 627 
Total other noncurrent liabilities 14,348
 13,810
Total other noncurrent liabilities16,495 16,916 
Commitments and Contingencies 
 
Commitments and Contingencies00
Equity    Equity  
Member's equity 11,689
 11,368
Member's equity13,161 12,818 
Accumulated other comprehensive loss (6) (7)Accumulated other comprehensive loss(7)(7)
Total equity 11,683
 11,361
Total equity13,154 12,811 
Total Liabilities and Equity $39,960
 $37,720
Total Liabilities and Equity$45,048 $44,053 
See Notes to Consolidated Financial Statements

87
94





FINANCIAL STATEMENTS


DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES     CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$1,071
 $1,214
 $1,166
Net income$956 $1,403 $1,071 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)1,487
 1,409
 1,382
Depreciation and amortization (including amortization of nuclear fuel)1,731 1,671 1,487 
Equity component of AFUDC(73) (106) (102)Equity component of AFUDC(62)(42)(73)
Losses (Gains) on sales of other assets1
 (1) 5
(Gains) Losses on sales of other assets(Gains) Losses on sales of other assets(1)— 1 
Impairment charges192
 —
 1
Impairment charges476 17 192 
Deferred income taxes305
 410
 470
Deferred income taxes(260)133 305 
Accrued pension and other post-retirement benefit costs4
 (4) 4
Contributions to qualified pension plans(46) —
 (43)
Payments for asset retirement obligations(230) (271) (287)Payments for asset retirement obligations(162)(278)(230)
Provision for rate refunds182
 —
 —
Provision for rate refunds(5)36 182 
(Increase) decrease in
    (Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions2
 9
 5
Net realized and unrealized mark-to-market and hedging transactions(4)(8)2 
Receivables(86) (9) (76)Receivables52 (21)(86)
Receivables from affiliated companies(87) 68
 (56)Receivables from affiliated companies(10)68 (87)
Inventory25
 78
 215
Inventory(14)(48)25 
Other current assets(161) 7
 67
Other current assets209 (73)(161)
Increase (decrease) in
    Increase (decrease) in
Accounts payable168
 23
 (69)Accounts payable55 (50)168 
Accounts payable to affiliated companies21
 (38) 18
Accounts payable to affiliated companies(11)(20)21 
Taxes accrued(65) 86
 187
Taxes accrued30 (127)(65)
Other current liabilities89
 (161) 63
Other current liabilities(56)127 89 
Other assets(179) (49) 20
Other assets(101)(42)(221)
Other liabilities(90) (31) 6
Other liabilities(47)(37)(90)
Net cash provided by operating activities2,530
 2,634
 2,976
Net cash provided by operating activities2,776 2,709 2,530 
CASH FLOWS FROM INVESTING ACTIVITIES
    CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(2,706) (2,524) (2,220)Capital expenditures(2,669)(2,714)(2,706)
Purchases of debt and equity securities(1,810) (2,124) (2,832)Purchases of debt and equity securities(1,602)(1,658)(1,810)
Proceeds from sales and maturities of debt and equity securities1,810
 2,128
 2,832
Proceeds from sales and maturities of debt and equity securities1,602 1,658 1,810 
Notes receivable from affiliated companies—
 66
 97
Other(147) (109) (83)Other(164)(204)(147)
Net cash used in investing activities(2,853) (2,563) (2,206)Net cash used in investing activities(2,833)(2,918)(2,853)
CASH FLOWS FROM FINANCING ACTIVITIES     CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt1,983
 569
 1,587
Proceeds from the issuance of long-term debt998 886 1,983 
Payments for the redemption of long-term debt(1,205) (116) (356)Payments for the redemption of long-term debt(813)(6)(1,205)
Notes payable to affiliated companies335
 104
 —
Notes payable to affiliated companies477 (410)335 
Distributions to parent(750) (625) (2,000)Distributions to parent(600)(275)(750)
Other(23) (1) —
Other(2)(1)(23)
Net cash provided by (used in) financing activities340
 (69) (769)
Net increase in cash and cash equivalents17
 2
 1
Net cash provided by financing activitiesNet cash provided by financing activities60 194 340 
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents3 (15)17 
Cash and cash equivalents at beginning of period16
 14
 13
Cash and cash equivalents at beginning of period18 33 16 
Cash and cash equivalents at end of period$33
 $16
 $14
Cash and cash equivalents at end of period$21 $18 $33 
Supplemental Disclosures:     Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$452
 $398
 $393
Cash paid for interest, net of amount capitalized$481 $433 $452 
Cash paid for (received from) income taxes89
 193
 (60)
Cash paid for income taxesCash paid for income taxes321 122 89 
Significant non-cash transactions:     Significant non-cash transactions:
Accrued capital expenditures302
 315
 347
Accrued capital expenditures365 347 302 
See Notes to Consolidated Financial Statements

88
95





FINANCIAL STATEMENTS


DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
  Accumulated Other  Accumulated Other
  Comprehensive    Comprehensive 
  Loss  Loss
  Net Losses
  Net Gains
  on Cash
  (Losses) on
Member's
 Flow
 Total
Member'sCash FlowTotal
(in millions)Equity
 Hedges
 Equity
(in millions)EquityHedgesEquity
Balance at December 31, 2015$11,617
 $(11) $11,606
Net income1,166
 —
 1,166
Other comprehensive income—
 2
 2
Distributions to parent(2,000) —
 (2,000)
Other(2) —
 (2)
Balance at December 31, 2016$10,781
 $(9) $10,772
Net income1,214
 —
 1,214
Other comprehensive income—
 2
 2
Distributions to parent(625) —
 (625)
Other(2) —
 (2)
Balance at December 31, 2017$11,368
 $(7) $11,361
Balance at December 31, 2017$11,368 $(7)$11,361 
Net income
1,071
 —
 1,071
Net income1,071 — 1,071 
Other comprehensive income
—
 1
 1
Other comprehensive income— 1 1 
Distributions to parent
(750) —
 (750)Distributions to parent(750)— (750)
Balance at December 31, 2018$11,689
 $(6) $11,683
Balance at December 31, 2018$11,689 $(6)$11,683 
Net incomeNet income1,403 — 1,403 
Distributions to parentDistributions to parent(275)— (275)
OtherOther1 (1)0 
Balance at December 31, 2019Balance at December 31, 2019$12,818 $(7)$12,811 
Net incomeNet income956 — 956 
Distributions to parentDistributions to parent(600)— (600)
Other(a)
Other(a)
(13)— (13)
Balance at December 31, 2020Balance at December 31, 2020$13,161 $(7)$13,154 
(a)     Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.
See Notes to Consolidated Financial Statements

89
96






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Progress Energy, Inc. and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.


Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $6.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
90



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 201925, 2021
We have served as the Company's auditor since 1930.



97
91






FINANCIAL STATEMENTS


PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
Operating Revenues$10,728
 $9,783
 $9,853
Operating Revenues$10,627 $11,202 $10,728 
Operating Expenses     Operating Expenses   
Fuel used in electric generation and purchased power3,976
 3,417
 3,644
Fuel used in electric generation and purchased power3,479 4,024 3,976 
Operation, maintenance and other2,613
 2,301
 2,458
Operation, maintenance and other2,479 2,495 2,613 
Depreciation and amortization1,619
 1,285
 1,213
Depreciation and amortization1,818 1,845 1,619 
Property and other taxes529
 503
 487
Property and other taxes545 561 529 
Impairment charges87
 156
 7
Impairment charges495 (24)87 
Total operating expenses8,824

7,662

7,809
Total operating expenses8,816 8,901 8,824 
Gains on Sales of Other Assets and Other, net24
 26
 25
Gains on Sales of Other Assets and Other, net9 — 24 
Operating Income1,928

2,147

2,069
Operating Income1,820 2,301 1,928 
Other Income and Expenses, net165
 209
 186
Other Income and Expenses, net129 141 165 
Interest Expense842
 824
 689
Interest Expense790 862 842 
Income From Continuing Operations Before Income Taxes1,251

1,532

1,566
Income Tax Expense From Continuing Operations218
 264
 527
Income From Continuing Operations1,033

1,268

1,039
Income From Discontinued Operations, net of tax—
 —
 2
Income Before Income TaxesIncome Before Income Taxes1,159 1,580 1,251 
Income Tax ExpenseIncome Tax Expense113 253 218 
Net Income1,033

1,268

1,041
Net Income1,046 1,327 1,033 
Less: Net Income Attributable to Noncontrolling Interests6
 10
 10
Less: Net Income Attributable to Noncontrolling Interests1 — 6 
Net Income Attributable to Parent$1,027

$1,258

$1,031
Net Income Attributable to Parent$1,045 $1,327 $1,027 
     
Net Income
$1,033

$1,268

$1,041
Net Income$1,046 $1,327 $1,033 
Other Comprehensive Income, net of tax
     Other Comprehensive Income, net of tax   
Pension and OPEB adjustments5
 4
 1
Pension and OPEB adjustments(1)2 5 
Net unrealized gain on cash flow hedges6
 5
 —
Net unrealized gain on cash flow hedges5 5 6 
Reclassification into earnings from cash flow hedges—
 —
 8
Unrealized (losses) gains on available-for-sale securities(1) 4
 1
Unrealized (losses) gains on available-for-sale securities(1)1 (1)
Other Comprehensive Income, net of tax
10

13

10
Other Comprehensive Income, net of tax3 8 10 
Comprehensive Income
1,043

1,281

1,051
Comprehensive Income1,049 1,335 1,043 
Less: Comprehensive Income Attributable to Noncontrolling Interests6
 10
 10
Less: Comprehensive Income Attributable to Noncontrolling Interests1 — 6 
Comprehensive Income Attributable to Parent$1,037

$1,271

$1,041
Comprehensive Income Attributable to Parent$1,048 $1,335 $1,037 
See Notes to Consolidated Financial Statements

92
98
FINANCIAL STATEMENTS


PROGRESS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(in millions)2018
 2017
(in millions)20202019
ASSETS   ASSETS  
Current Assets   Current Assets  
Cash and cash equivalents$67
 $40
Cash and cash equivalents$59 $48 
Receivables (net of allowance for doubtful accounts of $5 at 2018 and $4 at 2017)220
 123
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2018 and $7 at 2017)909
 780
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)228 220 
Receivables of VIEs (net of allowance for doubtful accounts of $29 at 2020 and $9 at 2019)Receivables of VIEs (net of allowance for doubtful accounts of $29 at 2020 and $9 at 2019)901 830 
Receivables from affiliated companies168
 31
Receivables from affiliated companies157 76 
Notes receivable from affiliated companies—
 240
Notes receivable from affiliated companies— 164 
Inventory1,459

1,592
Inventory1,375 1,423 
Regulatory assets (includes $52 at 2018 and $51 at 2017 related to VIEs)1,137
 741
Other (includes $39 at 2018 and $44 at 2017 related to VIEs)125
 334
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)758 946 
Other (includes $39 at 2020 and 2019 related to VIEs)Other (includes $39 at 2020 and 2019 related to VIEs)109 210 
Total current assets4,085
 3,881
Total current assets3,587 3,917 
Property, Plant and Equipment   Property, Plant and Equipment  
Cost50,260
 47,323
Cost57,892 55,070 
Accumulated depreciation and amortization(16,398) (15,857)Accumulated depreciation and amortization(18,368)(17,159)
Generation facilities to be retired, net362
 421
Generation facilities to be retired, net29 246 
Net property, plant and equipment34,224
 31,887
Net property, plant and equipment39,553 38,157 
Other Noncurrent Assets   Other Noncurrent Assets  
Goodwill3,655
 3,655
Goodwill3,655 3,655 
Regulatory assets (includes $1,041 at 2018 and $1,091 at 2017 related to VIEs)6,564
 6,010
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)5,775 6,346 
Nuclear decommissioning trust funds3,162
 3,324
Nuclear decommissioning trust funds4,137 3,782 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net690 788 
Other974
 931
Other1,227 1,049 
Total other noncurrent assets14,355
 13,920
Total other noncurrent assets15,484 15,620 
Total Assets$52,664
 $49,688
Total Assets$58,624 $57,694 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY  
Current Liabilities   Current Liabilities  
Accounts payable$1,172
 $1,006
Accounts payable$919 $1,104 
Accounts payable to affiliated companies360
 251
Accounts payable to affiliated companies289 310 
Notes payable to affiliated companies1,235
 805
Notes payable to affiliated companies2,969 1,821 
Taxes accrued109
 101
Taxes accrued121 46 
Interest accrued246
 212
Interest accrued202 228 
Current maturities of long-term debt (includes $53 at 2018 and 2017 related to VIEs)1,672
 771
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)1,426 1,577 
Asset retirement obligations514
 295
Asset retirement obligations283 485 
Regulatory liabilities280
 213
Regulatory liabilities640 330 
Other821
 729
Other793 902 
Total current liabilities6,409
 4,383
Total current liabilities7,642 6,803 
Long-Term Debt (includes $1,636 at 2018 and $1,689 at 2017 related to VIEs)17,089
 16,916
Long-Term Debt (includes $1,252 at 2020 and $1,632 at 2019 related to VIEs)Long-Term Debt (includes $1,252 at 2020 and $1,632 at 2019 related to VIEs)17,688 17,907 
Long-Term Debt Payable to Affiliated Companies150
 150
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities   Other Noncurrent Liabilities  
Deferred income taxes3,941
 3,502
Deferred income taxes4,396 4,462 
Asset retirement obligations4,897
 5,119
Asset retirement obligations5,866 5,986 
Regulatory liabilities5,049
 5,306
Regulatory liabilities5,051 5,225 
Operating lease liabilitiesOperating lease liabilities623 697 
Accrued pension and other post-retirement benefit costs521
 545
Accrued pension and other post-retirement benefit costs505 488 
Other351
 302
Other462 383 
Total other noncurrent liabilities14,759
 14,774
Total other noncurrent liabilities16,903 17,241 
Commitments and Contingencies
 
Commitments and Contingencies00
Equity   Equity  
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2018 and 2017—
 —
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019Common stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019— — 
Additional paid-in capital9,143
 9,143
Additional paid-in capital9,143 9,143 
Retained earnings5,131
 4,350
Retained earnings7,109 6,465 
Accumulated other comprehensive loss(20) (25)Accumulated other comprehensive loss(15)(18)
Total Progress Energy, Inc. stockholder's equity14,254
 13,468
Total Progress Energy, Inc. stockholder's equity16,237 15,590 
Noncontrolling interests3
 (3)Noncontrolling interests4 3 
Total equity14,257
 13,465
Total equity16,241 15,593 
Total Liabilities and Equity$52,664

$49,688
Total Liabilities and Equity$58,624 $57,694 
See Notes to Consolidated Financial Statements

93
99






FINANCIAL STATEMENTS


PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES     CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$1,033
 $1,268
 $1,041
Net income$1,046 $1,327 $1,033 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)1,987
 1,516
 1,435
Depreciation, amortization and accretion (including amortization of nuclear fuel)2,327 2,207 1,987 
Equity component of AFUDC(104) (92) (76)Equity component of AFUDC(42)(66)(104)
Gains on sales of other assets(24) (28) (34)Gains on sales of other assets(9)— (24)
Impairment charges87
 156
 7
Impairment charges495 (24)87 
Deferred income taxes358
 703
 532
Deferred income taxes(197)433 358 
Accrued pension and other post-retirement benefit costs24
 (28) (24)
Contributions to qualified pension plans(45) —
 (43)
Payments for asset retirement obligations(230) (248) (270)Payments for asset retirement obligations(384)(412)(230)
Other rate case adjustments37
 —
 —
Provision for rate refunds122
 —
 —
Provision for rate refunds2 15 122 
(Increase) decrease in     (Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions18
 —
 42
Net realized and unrealized mark-to-market and hedging transactions(9)(34)18 
Receivables(207) (89) 7
Receivables(69)47 (207)
Receivables from affiliated companies(137) 71
 211
Receivables from affiliated companies(81)81 (137)
Inventory121
 125
 35
Inventory49 62 121 
Other current assets(12) (397) 50
Other current assets223 184 (12)
Increase (decrease) in     Increase (decrease) in
Accounts payable217
 (260) 252
Accounts payable(62)(4)217 
Accounts payable to affiliated companies109
 (97) 37
Accounts payable to affiliated companies(21)(50)109 
Taxes accrued8
 17
 15
Taxes accrued75 (74)8 
Other current liabilities129
 (166) (42)Other current liabilities139 25 129 
Other assets(913) (300) (248)Other assets(128)(341)(896)
Other liabilities(34) (98) (36)Other liabilities(177)(167)(35)
Net cash provided by operating activities2,544

2,053

2,891
Net cash provided by operating activities3,177 3,209 2,544 
CASH FLOWS FROM INVESTING ACTIVITIES     CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(3,854) (3,152) (3,306)Capital expenditures(3,488)(3,952)(3,854)
Asset Acquisitions—
 —
 (10)
Purchases of debt and equity securities(1,753) (1,806) (2,143)Purchases of debt and equity securities(5,998)(1,511)(1,753)
Proceeds from sales and maturities of debt and equity securities1,769
 1,824
 2,187
Proceeds from sales and maturities of debt and equity securities6,010 1,504 1,769 
Net proceeds from sales of other assets20
 —
 —
Proceeds from insurance—
 7
 58
Proceeds from the sale of nuclear fuel—
 20
 20
Notes receivable from affiliated companies240
 (160) (80)Notes receivable from affiliated companies164 (164)240 
Other(182) (86) 47
Other(160)(190)(162)
Net cash used in investing activities(3,760) (3,353) (3,227)Net cash used in investing activities(3,472)(4,313)(3,760)
CASH FLOWS FROM FINANCING ACTIVITIES     CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt1,833
 2,118
 2,375
Proceeds from the issuance of long-term debt1,791 2,187 1,833 
Payments for the redemption of long-term debt(771) (813) (327)Payments for the redemption of long-term debt(2,157)(1,667)(771)
Notes payable to affiliated companies430
 100
 444
Notes payable to affiliated companies1,148 586 430 
Dividends to parent(250) (124) (2,098)Dividends to parent(400)— (250)
Other(1) (4) (3)Other(13)12 (1)
Net cash provided by financing activities1,241

1,277

391
Net cash provided by financing activities369 1,118 1,241 
Net increase (decrease) in cash, cash equivalents, and restricted cash25

(23)
55
Net increase in cash, cash equivalents, and restricted cashNet increase in cash, cash equivalents, and restricted cash74 14 25 
Cash, cash equivalents, and restricted cash at beginning of period87
 110
 55
Cash, cash equivalents, and restricted cash at beginning of period126 112 87 
Cash, cash equivalents, and restricted cash at end of period$112
 $87
 $110
Cash, cash equivalents, and restricted cash at end of period$200 $126 $112 
Supplemental Disclosures:     Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$798
 $773
 $673
Cash paid for interest, net of amount capitalized$819 $892 $798 
Cash received from income taxes(348) (146) (187)
Cash paid for (received from) income taxesCash paid for (received from) income taxes149 (79)(348)
Significant non-cash transactions:     Significant non-cash transactions:
Accrued capital expenditures478
 391
 317
Accrued capital expenditures363 447 478 
Equitization of certain notes payable to affiliates—
 1,047
 —
Dividend to parent related to a legal entity restructuring—
 547
 —
See Notes to Consolidated Financial Statements

94
100






FINANCIAL STATEMENTS


PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 
  
 Accumulated Other Comprehensive Loss  
  
  
   Accumulated Other Comprehensive Income (Loss)   
    Net
 Net Unrealized
   Total Progress
    Net GainsNet UnrealizedTotal Progress
Additional
   Losses on
 Gains (Losses)
 Pension and
 Energy, Inc.
    Additional(Losses) onGains (Losses)Pension andEnergy, Inc.
Paid-in
 Retained
 Cash Flow
 on Available-for-
 OPEB
 Stockholder's
 Noncontrolling
 Total
Paid-inRetainedCash Flowon Available-for-OPEBStockholder'sNoncontrollingTotal
(in millions)Capital
 Earnings
 Hedges
 Sale Securities
 Adjustments
 Equity
 Interests
 Equity
(in millions)CapitalEarningsHedgesSale SecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2015$8,092
 $4,831
 $(31) $—
 $(17) $12,875
 $(22) $12,853
Net income—
 1,031
 —
 —
 —
 1,031
 10
 1,041
Other comprehensive income—
 —
 8
 1
 1
 10
 —
 10
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1) (1)
Dividends to parent—
 (2,098) —
 —
 —
 (2,098) —
 (2,098)
Other2
 —
 —
 —
 —
 2
 —
 2
Balance at December 31, 2016$8,094

$3,764

$(23)
$1

$(16)
$11,820

$(13)
$11,807
Net income—
 1,258
 —
 —
 —
 1,258
 10
 1,268
Other comprehensive income—
 —
 5
 4
 4
 13
 —
 13
Dividends to parent(a)
—
 (672) —
 —
 —
 (672) —
 (672)
Equitization of certain notes payable to affiliates1,047
 —
 —
 —
 —
 1,047
 —
 1,047
Other2
 —
 —
 —
 —
 2
 —
 2
Balance at December 31, 2017$9,143

$4,350

$(18)
$5

$(12)
$13,468

$(3)
$13,465
Balance at December 31, 2017$9,143 $4,350 $(18)$5 $(12)$13,468 $(3)$13,465 
Net income—
 1,027
 —
 —
 —
 1,027
 6
 1,033
Net income— 1,027 — — — 1,027 6 1,033 
Other comprehensive income (loss)—
 —
 6
 (1) 5
 10
 —
 10
Other comprehensive income (loss)— — 6 (1)5 10 — 10 
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1) (1)Distributions to noncontrolling interests— — — — — — (1)(1)
Dividends to parent—
 (250) —
 —
 —
 (250) —
 (250)Dividends to parent— (250)— — — (250)— (250)
Other(a)
Other(a)
— 4 — (5)— (1)1 0 
Balance at December 31, 2018Balance at December 31, 2018$9,143 $5,131 $(12)$(1)$(7)$14,254 $3 $14,257 
Net incomeNet income— 1,327 — — — 1,327 — 1,327 
Other comprehensive incomeOther comprehensive income— — 5 1 2 8 — 8 
Other(b)
—
 4
 —
 (5) —
 (1) 1
 —
Other(b)
— 7 (3)(1)(2)1 — 1 
Balance at December 31, 2018$9,143

$5,131

$(12)
$(1)
$(7)
$14,254

$3

$14,257
Balance at December 31, 2019Balance at December 31, 2019$9,143 $6,465 $(10)$(1)$(7)$15,590 $3 $15,593 
Net incomeNet income— 1,045 — — — 1,045 1 1,046 
Other comprehensive income (loss)Other comprehensive income (loss)— — 5 (1)(1)3 — 3 
Dividends to parentDividends to parent— (400)— — — (400)— (400)
OtherOther— (1)— — — (1)— (1)
Balance at December 31, 2020Balance at December 31, 2020$9,143 $7,109 $(5)$(2)$(8)$16,237 $4 $16,241 
(a)Includes a $547 million non-cash dividend related to a legal entity restructuring.
(b)Amounts in Retained Earnings and Accumulated Other Comprehensive Loss represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
(b)    Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
See Notes to Consolidated Financial Statements

95
101






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Progress, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Progress, LLC and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.


Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $4.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
96



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 201925, 2021
We have served as the Company's auditor since 1930.



102
97






FINANCIAL STATEMENTS


DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
Operating Revenues$5,699
 $5,129
 $5,277
Operating Revenues$5,422 $5,957 $5,699 
Operating Expenses     Operating Expenses   
Fuel used in electric generation and purchased power1,892
 1,609
 1,830
Fuel used in electric generation and purchased power1,743 2,012 1,892 
Operation, maintenance and other1,578
 1,439
 1,565
Operation, maintenance and other1,332 1,446 1,578 
Depreciation and amortization991
 725
 703
Depreciation and amortization1,116 1,143 991 
Property and other taxes155
 156
 156
Property and other taxes167 176 155 
Impairment charges33
 19
 1
Impairment charges499 12 33 
Total operating expenses4,649
 3,948
 4,255
Total operating expenses4,857 4,789 4,649 
Gains on Sales of Other Assets and Other, net9
 4
 3
Gains on Sales of Other Assets and Other, net8 — 9 
Operating Income1,059
 1,185
 1,025
Operating Income573 1,168 1,059 
Other Income and Expenses, net87
 115
 132
Other Income and Expenses, net75 100 87 
Interest Expense319
 293
 257
Interest Expense269 306 319 
Income Before Income Taxes827
 1,007
 900
Income Before Income Taxes379 962 827 
Income Tax Expense160
 292
 301
Income Tax (Benefit) ExpenseIncome Tax (Benefit) Expense(36)157 160 
Net Income and Comprehensive Income$667
 $715
 $599
Net Income and Comprehensive Income$415 $805 $667 
See Notes to Consolidated Financial Statements

98
103

FINANCIAL STATEMENTS


DUKE ENERGY PROGRESS, LLC
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(in millions)2018
 2017
(in millions)20202019
ASSETS   ASSETS  
Current Assets   Current Assets  
Cash and cash equivalents$23
 $20
Cash and cash equivalents$39 $22 
Receivables (net of allowance for doubtful accounts of $2 at 2018 and $1 at 2017)75
 56
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2018 and 2017)547
 459
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)132 123 
Receivables of VIEs (net of allowance for doubtful accounts of $19 at 2020 and $5 at 2019)Receivables of VIEs (net of allowance for doubtful accounts of $19 at 2020 and $5 at 2019)500 489 
Receivables from affiliated companies23
 3
Receivables from affiliated companies50 52 
Inventory954

1,017
Inventory911 934 
Regulatory assets703
 352
Regulatory assets492 526 
Other62
 97
Other60 60 
Total current assets2,387
 2,004
Total current assets2,184 2,206 
Property, Plant and Equipment   Property, Plant and Equipment
Cost31,459
 29,583
Cost35,759 34,603 
Accumulated depreciation and amortization(11,423) (10,903)Accumulated depreciation and amortization(12,801)(11,915)
Generation facilities to be retired, net362
 421
Generation facilities to be retired, net29 246 
Net property, plant and equipment20,398
 19,101
Net property, plant and equipment22,987 22,934 
Other Noncurrent Assets   Other Noncurrent Assets
Regulatory assets4,111
 3,507
Regulatory assets3,976 4,152 
Nuclear decommissioning trust funds2,503
 2,588
Nuclear decommissioning trust funds3,500 3,047 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net346 387 
Other612
 599
Other740 651 
Total other noncurrent assets7,226
 6,694
Total other noncurrent assets8,562 8,237 
Total Assets$30,011
 $27,799
Total Assets$33,733 $33,377 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Current Liabilities   Current Liabilities
Accounts payable$660
 $402
Accounts payable$454 $629 
Accounts payable to affiliated companies278
 179
Accounts payable to affiliated companies215 203 
Notes payable to affiliated companies294
 240
Notes payable to affiliated companies295 66 
Taxes accrued53
 64
Taxes accrued85 17 
Interest accrued116
 102
Interest accrued99 110 
Current maturities of long-term debt603
 3
Current maturities of long-term debt603 1,006 
Asset retirement obligations509
 295
Asset retirement obligations283 485 
Regulatory liabilities178
 139
Regulatory liabilities530 236 
Other408
 376
Other411 478 
Total current liabilities3,099
 1,800
Total current liabilities2,975 3,230 
Long-Term Debt7,451
 7,204
Long-Term Debt8,505 7,902 
Long-Term Debt Payable to Affiliated Companies150
 150
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities   Other Noncurrent Liabilities
Deferred income taxes2,119
 1,883
Deferred income taxes2,298 2,388 
Asset retirement obligations4,311
 4,378
Asset retirement obligations5,352 5,408 
Regulatory liabilities3,955
 3,999
Regulatory liabilities4,394 4,232 
Operating lease liabilitiesOperating lease liabilities323 354 
Accrued pension and other post-retirement benefit costs237
 248
Accrued pension and other post-retirement benefit costs242 238 
Investment tax credits142
 143
Investment tax credits132 137 
Other106
 45
Other102 92 
Total other noncurrent liabilities10,870
 10,696
Total other noncurrent liabilities12,843 12,849 
Commitments and Contingencies   Commitments and Contingencies00
Equity   Equity
Member's Equity8,441
 7,949
Member's Equity9,260 9,246 
Total Liabilities and Equity$30,011
 $27,799
Total Liabilities and Equity$33,733 $33,377 
See Notes to Consolidated Financial Statements

99
104

FINANCIAL STATEMENTS


DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, Years Ended December 31,
(in millions)2018 2017 2016(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES     CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$667
 $715
 $599
Net income$415 $805 $667 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)1,183
 936
 907
Depreciation and amortization (including amortization of nuclear fuel)1,299 1,329 1,183 
Equity component of AFUDC(57) (47) (50)Equity component of AFUDC(29)(60)(57)
Gains on sales of other assets(9) (5) (6)Gains on sales of other assets(8)— (9)
Impairment charges33
 19
 1
Impairment charges499 12 33 
Deferred income taxes236
 384
 384
Deferred income taxes(234)197 236 
Accrued pension and other post-retirement benefit costs15
 (20) (32)
Contributions to qualified pension plans(25) —
 (24)
Payments for asset retirement obligations(195) (192) (212)Payments for asset retirement obligations(304)(390)(195)
Other rate case adjustments37
 —
 —
Provisions for rate refunds122
 —
 —
Provisions for rate refunds2 12 122 
(Increase) decrease in     (Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions5
 (4) 4
Net realized and unrealized mark-to-market and hedging transactions1 (6)5 
Receivables(107) (58) (17)Receivables(4)21 (107)
Receivables from affiliated companies(20) 2
 11
Receivables from affiliated companies2 (29)(20)
Inventory63
 59
 12
Inventory23 20 63 
Other current assets(201) (75) 84
Other current assets98 101 (201)
Increase (decrease) in     Increase (decrease) in
Accounts payable219
 (230) 181
Accounts payable(127)32 219 
Accounts payable to affiliated companies99
 (48) 37
Accounts payable to affiliated companies12 (75)99 
Taxes accrued(11) (39) 90
Taxes accrued68 (46)(11)
Other current liabilities46
 (131) 114
Other current liabilities157 68 46 
Other assets(484) (53) (163)Other assets(207)(205)(465)
Other liabilities12
 (18) 12
Other liabilities3 37 20 
Net cash provided by operating activities1,628
 1,195
 1,932
Net cash provided by operating activities1,666 1,823 1,628 
CASH FLOWS FROM INVESTING ACTIVITIES     CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(2,220) (1,715) (1,733)Capital expenditures(1,581)(2,108)(2,220)
Purchases of debt and equity securities(1,236) (1,249) (1,658)Purchases of debt and equity securities(1,555)(842)(1,236)
Proceeds from sales and maturities of debt and equity securities1,206
 1,207
 1,615
Proceeds from sales and maturities of debt and equity securities1,516 810 1,206 
Net proceeds from the sales of other assets20
 —
 —
Proceeds from insurance—
 4
 —
Notes receivable from affiliated companies—
 165
 (165)
Other(115) (55) 26
Other(57)(119)(95)
Net cash used in investing activities(2,345) (1,643) (1,915)Net cash used in investing activities(1,677)(2,259)(2,345)
CASH FLOWS FROM FINANCING ACTIVITIES     CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt845
 812
 505
Proceeds from the issuance of long-term debt1,296 1,269 845 
Payments for the redemption of long-term debt(3) (470) (15)Payments for the redemption of long-term debt(1,085)(605)(3)
Notes payable to affiliated companies54
 240
 (209)Notes payable to affiliated companies229 (228)54 
Distributions to parent(175) (124) (300)Distributions to parent(400)— (175)
Other(1) (1) (2)Other(12)(1)(1)
Net cash provided by (used in) financing activities720
 457
 (21)
Net cash provided by financing activitiesNet cash provided by financing activities28 435 720 
Net increase (decrease) in cash and cash equivalents3
 9
 (4)Net increase (decrease) in cash and cash equivalents17 (1)3 
Cash and cash equivalents at beginning of period20
 11
 15
Cash and cash equivalents at beginning of period22 23 20 
Cash and cash equivalents at end of period$23
 $20
 $11
Cash and cash equivalents at end of period$39 $22 $23 
Supplemental Disclosures:     Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$303
 $291
 $248
Cash paid for interest, net of amount capitalized$301 $331 $303 
Cash (received from) paid for income taxes(112) 59
 (287)
Cash paid for (received from) income taxesCash paid for (received from) income taxes123 (30)(112)
Significant non-cash transactions:     Significant non-cash transactions:
Accrued capital expenditures220
 191
 147
Accrued capital expenditures149 175 220 
See Notes to Consolidated Financial Statements

100
105






FINANCIAL STATEMENTS


DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 Member's
(in millions)Equity
Balance at December 31, 2015$7,059
Net income599
Distribution to parent(300)
Balance at December 31, 2016$7,358
Net income715
Distribution to parent(124)
Balance at December 31, 2017$7,949
Net income667
Distribution to parent(175)
Balance at December 31, 2018$8,441
Member's
(in millions)Equity
Balance at December 31, 2017$7,949 
Net income667 
Distribution to parent(175)
Balance at December 31, 2018$8,441 
Net income805 
Balance at December 31, 2019$9,246 
Net income415
Distribution to parent(400)
Other(1)
Balance at December 31, 2020$9,260
See Notes to Consolidated Financial Statements

101
106






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Florida, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Florida, LLC and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.



Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $2.1 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

102



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, including the settlement agreement filed with the Commission subsequent to December 31, 2020, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 201925, 2021
We have served as the Company's auditor since 2001.



107
103





FINANCIAL STATEMENTS


DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
Operating Revenues$5,021
 $4,646
 $4,568
Operating Revenues$5,188 $5,231 $5,021 
Operating Expenses     Operating Expenses   
Fuel used in electric generation and purchased power2,085
 1,808
 1,814
Fuel used in electric generation and purchased power1,737 2,012 2,085 
Operation, maintenance and other1,025
 853
 884
Operation, maintenance and other1,131 1,034 1,025 
Depreciation and amortization628
 560
 509
Depreciation and amortization702 702 628 
Property and other taxes374
 347
 333
Property and other taxes381 392 374 
Impairment charges54
 138
 6
Impairment charges(4)(36)54 
Total operating expenses4,166
 3,706
 3,546
Total operating expenses3,947 4,104 4,166 
Gains on Sales of Other Assets and Other, net1
 1
 —
Gains on Sales of Other Assets and Other, net1 — 1 
Operating Income856
 941
 1,022
Operating Income1,242 1,127 856 
Other Income and Expenses, net86
 96
 63
Other Income and Expenses, net53 48 86 
Interest Expense287
 279
 212
Interest Expense326 328 287 
Income Before Income Taxes655
 758
 873
Income Before Income Taxes969 847 655 
Income Tax Expense101
 46
 322
Income Tax Expense198 155 101 
Net Income$554
 $712
 $551
Net Income$771 $692 $554 
Other Comprehensive (Loss) Income, net of tax     
Other Comprehensive Income (Loss), net of taxOther Comprehensive Income (Loss), net of tax   
Unrealized (losses) gains on available-for-sale securities(1) 3
 1
Unrealized (losses) gains on available-for-sale securities(1)1 (1)
Other Comprehensive (Loss) Income, net of tax(1) 3
 1
Other Comprehensive (Loss) Income, net of tax(1)1 (1)
Comprehensive Income$553
 $715
 $552
Comprehensive Income$770 $693 $553 
See Notes to Consolidated Financial Statements

104
108





FINANCIAL STATEMENTS


DUKE ENERGY FLORIDA, LLC
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(in millions)2018
 2017
(in millions)20202019
ASSETS   ASSETS  
Current Assets   Current Assets  
Cash and cash equivalents$36
 $13
Cash and cash equivalents$11 $17 
Receivables (net of allowance for doubtful accounts of $3 at 2018 and 2017)143
 65
Receivables of VIEs (net of allowance for doubtful accounts of $3 at 2018 and $2 at 2017)362
 321
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)94 96 
Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $4 at 2019)Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $4 at 2019)401 341 
Receivables from affiliated companies28
 2
Receivables from affiliated companies3 — 
Notes receivable from affiliated companies—
 313
Notes receivable from affiliated companies— 173 
Inventory504

574
Inventory464 489 
Regulatory assets (includes $52 at 2018 and $51 at 2017 related to VIEs)434
 389
Other (includes $39 at 2018 and $40 at 2017 related to VIEs)46
 86
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)265 419 
Other (includes $39 at 2020 and 2019 related to VIEs)Other (includes $39 at 2020 and 2019 related to VIEs)41 58 
Total current assets1,553
 1,763
Total current assets1,279 1,593 
Property, Plant and Equipment   Property, Plant and Equipment  
Cost18,792
 17,730
Cost22,123 20,457 
Accumulated depreciation and amortization(4,968) (4,947)Accumulated depreciation and amortization(5,560)(5,236)
Net property, plant and equipment13,824
 12,783
Net property, plant and equipment16,563 15,221 
Other Noncurrent Assets   Other Noncurrent Assets  
Regulatory assets (includes $1,041 at 2018 and $1,091 at 2017 related to VIEs)2,454
 2,503
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)1,799 2,194 
Nuclear decommissioning trust funds659
 736
Nuclear decommissioning trust funds637 734 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net344 401 
Other311
 284
Other335 311 
Total other noncurrent assets3,424
 3,523
Total other noncurrent assets3,115 3,640 
Total Assets$18,801
 $18,069
Total Assets$20,957 $20,454 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY  
Current Liabilities   Current Liabilities  
Accounts payable$511
 $602
Accounts payable$465 $474 
Accounts payable to affiliated companies91
 74
Accounts payable to affiliated companies85 131 
Notes payable to affiliated companies108
 —
Notes payable to affiliated companies196 — 
Taxes accrued74
 34
Taxes accrued82 43 
Interest accrued75
 56
Interest accrued69 75 
Current maturities of long-term debt (includes $53 at 2018 and 2017 related to VIEs)270
 768
Asset retirement obligations5
 —
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)823 571 
Regulatory liabilities102
 74
Regulatory liabilities110 94 
Other406
 334
Other374 415 
Total current liabilities1,642
 1,942
Total current liabilities2,204 1,803 
Long-Term Debt (includes $1,336 at 2018 and $1,389 at 2017 related to VIEs)7,051
 6,327
Long-Term Debt (includes $1,002 at 2020 and $1,307 at 2019 related to VIEs)Long-Term Debt (includes $1,002 at 2020 and $1,307 at 2019 related to VIEs)7,092 7,416 
Other Noncurrent Liabilities   Other Noncurrent Liabilities  
Deferred income taxes1,986
 1,761
Deferred income taxes2,191 2,179 
Asset retirement obligations586
 742
Asset retirement obligations514 578 
Regulatory liabilities1,094
 1,307
Regulatory liabilities658 993 
Operating lease liabilitiesOperating lease liabilities300 343 
Accrued pension and other post-retirement benefit costs254
 264
Accrued pension and other post-retirement benefit costs231 218 
Other93
 108
Other209 136 
Total other noncurrent liabilities4,013
 4,182
Total other noncurrent liabilities4,103 4,447 
Commitments and Contingencies   Commitments and Contingencies00
Equity   Equity  
Member's equity6,097
 5,614
Member's equity7,560 6,789 
Accumulated other comprehensive income(2) 4
Accumulated other comprehensive lossAccumulated other comprehensive loss(2)(1)
Total equity6,095
 5,618
Total equity7,558 6,788 
Total Liabilities and Equity$18,801
 $18,069
Total Liabilities and Equity$20,957 $20,454 
See Notes to Consolidated Financial Statements

105
109





FINANCIAL STATEMENTS


DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES     CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$554
 $712
 $551
Net income$771 $692 $554 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion793
 570
 516
Depreciation, amortization and accretion1,019 869 793 
Equity component of AFUDC(47) (45) (26)Equity component of AFUDC(12)(6)(47)
Gains on sales of other assets(1) (1) —
Gains on sales of other assets(1)— (1)
Impairment charges54
 138
 6
Impairment charges(4)(36)54 
Deferred income taxes159
 245
 224
Deferred income taxes27 180 159 
Accrued pension and other post-retirement benefit costs5
 (13) 2
Contributions to qualified pension plans(20) —
 (20)
Payments for asset retirement obligations(35) (56) (58)Payments for asset retirement obligations(80)(22)(35)
(Increase) decrease in     (Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions7
 5
 38
Net realized and unrealized mark-to-market and hedging transactions(14)(33)7 
Receivables(100) (38) 23
Receivables(64)26 (100)
Receivables from affiliated companies(26) —
 21
Receivables from affiliated companies(3)17 (26)
Inventory58
 66
 23
Inventory26 42 58 
Other current assets59
 (138) (86)Other current assets40 156 59 
Increase (decrease) in     Increase (decrease) in
Accounts payable(1) (32) 71
Accounts payable66 (36)(1)
Accounts payable to affiliated companies17
 (51) 9
Accounts payable to affiliated companies(46)40 17 
Taxes accrued40
 1
 (117)Taxes accrued39 (31)40 
Other current liabilities82
 (37) (149)Other current liabilities(7)(36)82 
Other assets(428) (229) (84)Other assets85 (131)(429)
Other liabilities(61) (82) (53)Other liabilities(181)(213)(75)
Net cash provided by operating activities1,109
 1,015
 891
Net cash provided by operating activities1,661 1,478 1,109 
CASH FLOWS FROM INVESTING ACTIVITIES     CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(1,634) (1,437) (1,583)Capital expenditures(1,907)(1,844)(1,634)
Purchases of debt and equity securities(517) (557) (485)Purchases of debt and equity securities(4,443)(669)(517)
Proceeds from sales and maturities of debt and equity securities563
 617
 572
Proceeds from sales and maturities of debt and equity securities4,495 695 563 
Proceeds from insurance—
 4
 58
Proceeds from the sale of nuclear fuel—
 20
 20
Notes receivable from affiliated companies313
 (313) —
Notes receivable from affiliated companies173 (173)313 
Other(65) (31) 21
Other(103)(67)(65)
Net cash used in investing activities(1,340) (1,697) (1,397)Net cash used in investing activities(1,785)(2,058)(1,340)
CASH FLOWS FROM FINANCING ACTIVITIES     CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt988
 1,306
 1,870
Proceeds from the issuance of long-term debt495 918 988 
Payments for the redemption of long-term debt(769) (342) (12)Payments for the redemption of long-term debt(572)(262)(769)
Notes payable to affiliated companies108
 (297) (516)Notes payable to affiliated companies196 (108)108 
Distribution to parent(75) —
 (775)Distribution to parent— — (75)
Other1
 (1) —
Other(1)13 1 
Net cash provided by financing activities253
 666
 567
Net cash provided by financing activities118 561 253 
Net increase (decrease) in cash, cash equivalents, and restricted cash22
 (16) 61
Net (decrease) increase in cash, cash equivalents, and restricted cashNet (decrease) increase in cash, cash equivalents, and restricted cash(6)(19)22 
Cash, cash equivalents, and restricted cash at beginning of period53
 69
 8
Cash, cash equivalents, and restricted cash at beginning of period56 75 53 
Cash, cash equivalents, and restricted cash at end of period$75
 $53
 $69
Cash, cash equivalents, and restricted cash at end of period$50 $56 $75 
Supplemental Disclosures:     Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$270
 $274
 $208
Cash paid for interest, net of amount capitalized$321 $332 $270 
Cash (received from) paid for income taxes(120) (197) 216
Cash paid for (received from) income taxesCash paid for (received from) income taxes138 1 (120)
Significant non-cash transactions:     Significant non-cash transactions:
Accrued capital expenditures258
 199
 170
Accrued capital expenditures214 272 258 
See Notes to Consolidated Financial Statements

106
110





FINANCIAL STATEMENTS


DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
   Accumulated Accumulated
   Other Other
   Comprehensive Comprehensive
   Income (Loss) Income (Loss)
   Net Unrealized
  Net Unrealized
   Gains (Losses) on
  Gains (Losses) on
 Member's
 Available-for-
 Total
 Member'sAvailable-for-Total
(in millions) Equity
 Sale Securities
 Equity
(in millions)EquitySale SecuritiesEquity
Balance at December 31, 2015 $5,121
 $—
 $5,121
Net income 551
 —
 551
Other comprehensive income —
 1
 1
Distribution to parent (775) —
 (775)
Other 2
 —
 2
Balance at December 31, 2016 $4,899
 $1
 $4,900
Net income 712
 —
 712
Other comprehensive income —
 3
 3
Other 3
 —
 3
Balance at December 31, 2017 $5,614
 $4
 $5,618
Balance at December 31, 2017$5,614 $4 $5,618 
Net income 554
 —
 554
Net income554 — 554 
Other comprehensive loss —
 (1) (1)Other comprehensive loss— (1)(1)
Distribution to parent (75) —
 (75)Distribution to parent(75)— (75)
Other(a)
 4
 (5) (1)
Other(a)
4 (5)(1)
Balance at December 31, 2018 $6,097
 $(2) $6,095
Balance at December 31, 2018$6,097 $(2)$6,095 
Net incomeNet income692 — 692 
Other comprehensive incomeOther comprehensive income— 1 1 
Balance at December 31, 2019Balance at December 31, 2019$6,789 $(1)$6,788 
Net incomeNet income771 — 771 
Other comprehensive lossOther comprehensive loss— (1)(1)
Balance at December 31, 2020Balance at December 31, 2020$7,560 $(2)$7,558 
(a)Amounts represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
(a)    Amounts represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
See Notes to Consolidated Financial Statements

107
111






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Ohio, Inc. and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.



CriticalAuditMatter


The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $650 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
108



REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 201925, 2021
We have served as the Company's auditor since 2002.



112
109





FINANCIAL STATEMENTS


DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, Years Ended December 31,
(in millions) 2018
 2017
 2016
(in millions)202020192018
Operating Revenues     Operating Revenues   
Regulated electric$1,450
 $1,373
 $1,410
Regulated electric$1,405 $1,456 $1,450 
Regulated natural gas506
 508
 503
Regulated natural gas453 484 506 
Nonregulated electric and other1
 42
 31
Nonregulated electric and other— — 1 
Total operating revenues1,957
 1,923
 1,944
Total operating revenues1,858 1,940 1,957 
Operating Expenses
     Operating Expenses   
Fuel used in electric generation and purchased power – regulated412
 369
 442
Fuel used in electric generation and purchased power – regulated339 388 412 
Fuel used in electric generation and purchased power – nonregulated—
 58
 51
Cost of natural gas 113
 107
 103
Cost of natural gas73 95 113 
Operation, maintenance and other480
 530
 514
Operation, maintenance and other463 520 480 
Depreciation and amortization268
 261
 233
Depreciation and amortization278 265 268 
Property and other taxes290
 278
 258
Property and other taxes324 308 290 
Impairment charges—
 1
 —
Total operating expenses1,563
 1,604
 1,601
Total operating expenses1,477 1,576 1,563 
(Losses) Gains on Sales of Other Assets and Other, net(106) 1
 2
Losses on Sales of Other Assets and Other, netLosses on Sales of Other Assets and Other, net— — (106)
Operating Income288
 320
 345
Operating Income381 364 288 
Other Income and Expenses, net23
 23
 11
Other Income and Expenses, net16 24 23 
Interest Expense92
 91
 86
Interest Expense102 109 92 
Income From Continuing Operations Before Income Taxes219
 252
 270
Income From Continuing Operations Before Income Taxes295 279 219 
Income Tax Expense From Continuing Operations43
 59
 78
Income Tax Expense From Continuing Operations43 40 43 
Income From Continuing Operations176
 193
 192
Income From Continuing Operations252 239 176 
(Loss) Income From Discontinued Operations, net of tax—
 (1) 36
Loss From Discontinued Operations, net of taxLoss From Discontinued Operations, net of tax— (1)— 
Net Income and Comprehensive Income$176
 $192
 $228
Net Income and Comprehensive Income$252 $238 $176 
See Notes to Consolidated Financial Statements

110
113





FINANCIAL STATEMENTS


DUKE ENERGY OHIO, INC.
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(in millions)2018
 2017
(in millions)20202019
ASSETS   ASSETS  
Current Assets   Current Assets  
Cash and cash equivalents$21
 $12
Cash and cash equivalents$14 $17 
Receivables (net of allowance for doubtful accounts of $2 at 2018 and $3 at 2017)102
 68
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $4 at 2019)Receivables (net of allowance for doubtful accounts of $4 at 2020 and $4 at 2019)98 84 
Receivables from affiliated companies114
 133
Receivables from affiliated companies102 92 
Notes receivable from affiliated companies—
 14
Inventory126

133
Inventory110 135 
Regulatory assets33
 49
Regulatory assets39 49 
Other24
 39
Other31 21 
Total current assets420
 448
Total current assets394 398 
Property, Plant and Equipment   Property, Plant and Equipment  
Cost9,360
 8,732
Cost11,022 10,241 
Accumulated depreciation and amortization(2,717) (2,691)Accumulated depreciation and amortization(3,013)(2,843)
Net property, plant and equipment6,643
 6,041
Net property, plant and equipment8,009 7,398 
Other Noncurrent Assets   Other Noncurrent Assets  
Goodwill920
 920
Goodwill920 920 
Regulatory assets531
 445
Regulatory assets610 549 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net20 21 
Other41
 21
Other72 52 
Total other noncurrent assets1,492
 1,386
Total other noncurrent assets1,622 1,542 
Total Assets$8,555
 $7,875
Total Assets$10,025 $9,338 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY  
Current Liabilities   Current Liabilities  
Accounts payable$316
 $313
Accounts payable$279 $288 
Accounts payable to affiliated companies78
 62
Accounts payable to affiliated companies68 68 
Notes payable to affiliated companies274
 29
Notes payable to affiliated companies169 312 
Taxes accrued202
 190
Taxes accrued247 219 
Interest accrued22
 21
Interest accrued31 30 
Current maturities of long-term debt551
 3
Current maturities of long-term debt50 — 
Asset retirement obligations6
 3
Asset retirement obligations3 1 
Regulatory liabilities57
 36
Regulatory liabilities65 64 
Other74
 71
Other70 75 
Total current liabilities1,580
 728
Total current liabilities982 1,057 
Long-Term Debt1,589
 2,039
Long-Term Debt3,014 2,594 
Long-Term Debt Payable to Affiliated Companies25
 25
Long-Term Debt Payable to Affiliated Companies25 25 
Other Noncurrent Liabilities   Other Noncurrent Liabilities  
Deferred income taxes817
 781
Deferred income taxes981 922 
Asset retirement obligations87
 81
Asset retirement obligations108 79 
Regulatory liabilities840
 891
Regulatory liabilities748 763 
Operating lease liabilitiesOperating lease liabilities20 21 
Accrued pension and other post-retirement benefit costs79
 59
Accrued pension and other post-retirement benefit costs113 100 
Other93
 108
Other99 94 
Total other noncurrent liabilities1,916
 1,920
Total other noncurrent liabilities2,069 1,979 
Commitments and Contingencies   Commitments and Contingencies00
Equity   Equity  
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2018 and 2017762
 762
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019762 762 
Additional paid-in capital2,776
 2,670
Additional paid-in capital2,776 2,776 
Accumulated deficit(93) (269)
Retained earningsRetained earnings397 145 
Total equity3,445
 3,163
Total equity3,935 3,683 
Total Liabilities and Equity$8,555
 $7,875
Total Liabilities and Equity$10,025 $9,338 
See Notes to Consolidated Financial Statements

111
114





FINANCIAL STATEMENTS


DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES     CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$176
 $192
 $228
Net income$252 $238 $176 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion271
 265
 237
Depreciation, amortization and accretion283 269 271 
Equity component of AFUDC(11) (11) (6)Equity component of AFUDC(7)(13)(11)
Losses (Gains) on sales of other assets106
 (1) (2)
Impairment charges—
 1
 —
Losses on sales of other assetsLosses on sales of other assets0 0 106 
Deferred income taxes25
 90
 55
Deferred income taxes31 81 25 
Accrued pension and other post-retirement benefit costs3
 2
 6
Contributions to qualified pension plans—
 (4) (5)
Payments for asset retirement obligations(3) (7) (5)Payments for asset retirement obligations(2)(8)(3)
Provision for rate refunds24
 —
 —
Provision for rate refunds14 7 24 
(Increase) decrease in     (Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions—
 —
 (2)
Receivables(33) 2
 (4)Receivables(13)20 (33)
Receivables from affiliated companies19
 (4) (36)Receivables from affiliated companies9 22 19 
Inventory7
 6
 (32)Inventory25 (9)7 
Other current assets16
 (22) 79
Other current assets(18)(5)16 
Increase (decrease) in     Increase (decrease) in   
Accounts payable(19) 12
 19
Accounts payable2 (17)(19)
Accounts payable to affiliated companies16
 (1) 10
Accounts payable to affiliated companies0 (10)16 
Taxes accrued12
 11
 3
Taxes accrued30 17 12 
Other current liabilities14
 (19) (54)Other current liabilities3 1 14 
Other assets(26) (28) (35)Other assets(32)(26)(24)
Other liabilities(27) (5) (31)Other liabilities(2)(41)(26)
Net cash provided by operating activities570
 479
 425
Net cash provided by operating activities575 526 570 
CASH FLOWS FROM INVESTING ACTIVITIES     CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(827) (686) (476)Capital expenditures(834)(952)(827)
Notes receivable from affiliated companies14
 80
 (94)Notes receivable from affiliated companies(19)— 14 
Other(89) (41) (30)Other(48)(68)(89)
Net cash used in investing activities(902) (647) (600)Net cash used in investing activities(901)(1,020)(902)
CASH FLOWS FROM FINANCING ACTIVITIES     CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt99
 182
 341
Proceeds from the issuance of long-term debt467 1,003 99 
Payments for the redemption of long-term debt(3) (2) (53)Payments for the redemption of long-term debt— (551)(3)
Notes payable to affiliated companies245
 13
 (87)Notes payable to affiliated companies(144)38 245 
Dividends to parent—
 (25) (25)
Other—
 (1) (2)
Net cash provided by financing activities341
 167
 174
Net cash provided by financing activities323 490 341 
Net increase (decrease) in cash and cash equivalents9
 (1) (1)
Net (decrease) increase in cash and cash equivalentsNet (decrease) increase in cash and cash equivalents(3)(4)9 
Cash and cash equivalents at beginning of period12
 13
 14
Cash and cash equivalents at beginning of period17 21 12 
Cash and cash equivalents at end of period$21
 $12
 $13
Cash and cash equivalents at end of period$14 $17 $21 
Supplemental Disclosures:     Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$87
 $85
 $81
Cash paid for interest, net of amount capitalized$97 $97 $87 
Cash received from income taxes(6) (8) (46)Cash received from income taxes— (37)(6)
Significant non-cash transactions:     Significant non-cash transactions:
Accrued capital expenditures95
 82
 83
Accrued capital expenditures104 109 95 
Non-cash equity contribution from parent106
 —
 —
Non-cash equity contribution from parent— — 106 
See Notes to Consolidated Financial Statements

112
115





FINANCIAL STATEMENTS


DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
  Additional
    AdditionalRetained
Common
 Paid-in
 Accumulated
 Total
CommonPaid-inEarningsTotal
(in millions)Stock
 Capital
 Deficit
 Equity
(in millions)StockCapital(Deficit)Equity
Balance at December 31, 2015$762
 $2,720
 $(698) $2,784
Net income—
 —
 228
 228
Contribution from parent—
 —
 9
 9
Dividends to parent—
 (25) —
 (25)
Balance at December 31, 2016$762
 $2,695
 $(461) $2,996
Net income—
 —
 192
 192
Dividends to parent—
 (25) —
 (25)
Balance at December 31, 2017$762

$2,670

$(269)
$3,163
Balance at December 31, 2017$762 $2,670 $(269)$3,163 
Net income—
 —
 176
 176
Net income— — 176 176 
Contribution from parent—
 106
 —
 106
Contribution from parent— 106 — 106 
Balance at December 31, 2018$762
 $2,776
 $(93) $3,445
Balance at December 31, 2018$762 $2,776 $(93)$3,445 
Net incomeNet income— — 238 238 
Balance at December 31, 2019Balance at December 31, 2019$762 $2,776 $145 $3,683 
Net incomeNet income— — 252 252 
Balance at December 31, 2020Balance at December 31, 2020$762 $2,776 $397 $3,935 
See Notes to Consolidated Financial Statements

113
116






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Indiana, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Indiana, LLC and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.


Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Indiana Utility Regulatory Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $1.3 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

114



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

Duke Energy Indiana Coal Ash Asset Retirement Obligations – Refer to Notes 3, 4, and 9 to the financial statements

Critical Audit Matter Description

Duke Energy Indiana has asset retirement obligations associated with coal ash impoundments at operating and retired coal generation facilities. These legal obligations are the result of Indiana state and federal regulations. There is significant judgment in determining the assumptions used in estimating the closure costs for each site since Duke Energy Indiana does not have approved closure plans for certain sites. Potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods (“probability weightings”) creates estimation uncertainty. The liability for coal ash asset retirement obligations at Duke Energy Indiana was $1,140 million at December 31, 2020.

We identified the asset retirement obligations associated with coal ash impoundments at Duke Energy Indiana as a critical audit matter because of the significant management estimates and assumptions, including projected closure costs as well as the different potential closure methods. The audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods required a high degree of auditor judgment and an increased extent of effort, including the need to involve our environmental specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the underlying estimated closure costs for coal ash asset retirement obligations at Duke Energy Indiana included the following, among others:

•We tested the effectiveness of controls over management’s coal ash asset retirement obligation estimate, including those over management’s determination of the estimated closure costs and probability weightings.

•We evaluated management’s ability to accurately estimate future closure costs by comparing actual closure costs to management’s historical estimates.

•We tested the mathematical accuracy of management’s coal ash asset retirement obligation calculations, including the application of probability weightings.

•We made inquiries of internal and external legal counsel regarding the status of the legal matters associated with the probability weightings.

•We inspected the opinions from internal and external legal counsel supporting the probability weightings.

•We inspected the Company’s filings with and orders from the Indiana Department of Environmental Management, for evidence that might contradict management’s assertions regarding the estimated closure costs and probability weightings.

•With the assistance of our environmental specialists, we evaluated the reasonableness of management’s estimated closure costs by comparing the costs to actual costs incurred at comparable coal ash impoundments, underlying contracts, and publicly available industry cost data, as applicable.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 201925, 2021
We have served as the Company's auditor since 2002.



117
115






FINANCIAL STATEMENTS


DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
Operating Revenues$3,059
 $3,047
 $2,958
Operating Revenues$2,795 $3,004 $3,059 
Operating Expenses     Operating Expenses   
Fuel used in electric generation and purchased power1,000

966
 909
Fuel used in electric generation and purchased power767 935 1,000 
Operation, maintenance and other788

743
 727
Operation, maintenance and other762 790 788 
Depreciation and amortization520

458
 496
Depreciation and amortization569 525 520 
Property and other taxes78

76
 58
Property and other taxes81 69 78 
Impairment charges30

18
 8
Impairment charges— — 30 
Total operating expenses2,416
 2,261
 2,198
Total operating expenses2,179 2,319 2,416 
Gains on Sales of Other Assets and Other, net—
 —
 1
Operating Income643
 786
 761
Operating Income616 685 643 
Other Income and Expenses, net45
 47
 26
Other Income and Expenses, net37 41 45 
Interest Expense167
 178
 181
Interest Expense161 156 167 
Income Before Income Taxes521

655

606
Income Before Income Taxes492 570 521 
Income Tax Expense128
 301
 225
Income Tax Expense84 134 128 
Net Income$393

$354

$381
Other Comprehensive Loss, net of tax     
Reclassification into earnings from cash flow hedges—
 —
 (1)
Comprehensive Income$393

$354

$380
Net Income and Comprehensive IncomeNet Income and Comprehensive Income$408 $436 $393 
See Notes to Consolidated Financial Statements

116
118






FINANCIAL STATEMENTS


DUKE ENERGY INDIANA, LLC
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(in millions)2018
 2017
(in millions)20202019
ASSETS   ASSETS  
Current Assets   Current Assets  
Cash and cash equivalents$24
 $9
Cash and cash equivalents$7 $25 
Receivables (net of allowance for doubtful accounts of $2 at 2018 and 2017)52
 57
Receivables (net of allowance for doubtful accounts of $3 at 2020 and $3 at 2019)Receivables (net of allowance for doubtful accounts of $3 at 2020 and $3 at 2019)55 60 
Receivables from affiliated companies122
 125
Receivables from affiliated companies112 79 
Inventory422

450
Inventory473 517 
Regulatory assets175
 165
Regulatory assets125 90 
Other35
 30
Other37 60 
Total current assets830
 836
Total current assets809 831 
Property, Plant and Equipment   Property, Plant and Equipment  
Cost15,443
 14,948
Cost17,382 16,305 
Accumulated depreciation and amortization(4,914) (4,662)Accumulated depreciation and amortization(5,661)(5,233)
Net property, plant and equipment10,529
 10,286
Net property, plant and equipment11,721 11,072 
Other Noncurrent Assets  
Other Noncurrent Assets 
Regulatory assets982
 978
Regulatory assets1,203 1,082 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net55 57 
Other194
 189
Other253 234 
Total other noncurrent assets1,176
 1,167
Total other noncurrent assets1,511 1,373 
Total Assets$12,535
 $12,289
Total Assets$14,041 $13,276 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY  
Current Liabilities   Current Liabilities  
Accounts payable$200
 $196
Accounts payable$188 $201 
Accounts payable to affiliated companies83
 78
Accounts payable to affiliated companies88 87 
Notes payable to affiliated companies167
 161
Notes payable to affiliated companies131 30 
Taxes accrued43
 95
Taxes accrued62 49 
Interest accrued58
 57
Interest accrued51 58 
Current maturities of long-term debt63
 3
Current maturities of long-term debt70 503 
Asset retirement obligations109
 54
Asset retirement obligations168 189 
Regulatory liabilities25
 24
Regulatory liabilities111 55 
Other107
 104
Other83 112 
Total current liabilities855
 772
Total current liabilities952 1,284 
Long-Term Debt3,569
 3,630
Long-Term Debt3,871 3,404 
Long-Term Debt Payable to Affiliated Companies150
 150
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities   Other Noncurrent Liabilities  
Deferred income taxes1,009
 925
Deferred income taxes1,228 1,150 
Asset retirement obligations613
 727
Asset retirement obligations1,008 643 
Regulatory liabilities1,722
 1,723
Regulatory liabilities1,627 1,685 
Operating lease liabilitiesOperating lease liabilities53 55 
Accrued pension and other post-retirement benefit costs115
 76
Accrued pension and other post-retirement benefit costs171 148 
Investment tax credits147
 147
Investment tax credits168 164 
Other16
 18
Other30 18 
Total other noncurrent liabilities3,622
 3,616
Total other noncurrent liabilities4,285 3,863 
Commitments and Contingencies   Commitments and Contingencies00
Equity   Equity  
Member's Equity4,339
 4,121
Member's Equity4,783 4,575 
Total Liabilities and Equity$12,535
 $12,289
Total Liabilities and Equity$14,041 $13,276 
See Notes to Consolidated Financial Statements

117
119






FINANCIAL STATEMENTS


DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,Years Ended December 31,
(in millions)2018
 2017
 2016
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES     CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$393
 $354
 $381
Net income$408 $436 $393 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization, and accretion524
 462
 499
Depreciation, amortization, and accretion572 531 524 
Equity component of AFUDC(32) (28) (16)Equity component of AFUDC(23)(18)(32)
Impairment charges30
 18
 8
Impairment charges— — 30 
Deferred income taxes95
 152
 213
Deferred income taxes29 156 95 
Accrued pension and other post-retirement benefit costs7
 2
 8
Contributions to qualified pension plans(8) —
 (9)
Payments for asset retirement obligations(69) (45) (46)Payments for asset retirement obligations(63)(48)(69)
Provision for rate refunds53
 —
 —
Provision for rate refunds— — 53 
(Increase) decrease in     (Increase) decrease in   
Receivables7
 59
 (2)Receivables8 (8)7 
Receivables from affiliated companies3
 (11) (43)Receivables from affiliated companies0 41 3 
Inventory28
 54
 66
Inventory44 (95)28 
Other current assets(25) 28
 (67)Other current assets(3)76 (25)
Increase (decrease) in     Increase (decrease) in   
Accounts payable37
 (86) 8
Accounts payable(12)(10)37 
Accounts payable to affiliated companies5
 4
 (9)Accounts payable to affiliated companies1 4 5 
Taxes accrued(52) 64
 (4)Taxes accrued13 (25)(52)
Other current liabilities14
 (10) (81)Other current liabilities6 15 14 
Other assets29
 (28) (27)Other assets(68)(74)26 
Other liabilities(33) (20) (8)Other liabilities26 16 (31)
Net cash provided by operating activities1,006
 969
 871
Net cash provided by operating activities938 997 1,006 
CASH FLOWS FROM INVESTING ACTIVITIES     CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(832) (840) (755)Capital expenditures(888)(876)(832)
Purchases of debt and equity securities(48) (20) (14)Purchases of debt and equity securities(37)(26)(48)
Proceeds from sales and maturities of debt and equity securities44
 7
 11
Proceeds from sales and maturities of debt and equity securities22 20 44 
Proceeds from the sales of other assets15
 —
 —
Notes receivable from affiliated companies—
 86
 (3)Notes receivable from affiliated companies(33)— — 
Other3
 (65) 32
Other48 (49)18 
Net cash used in investing activities(818) (832) (729)Net cash used in investing activities(888)(931)(818)
CASH FLOWS FROM FINANCING ACTIVITIES     CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt—
 —
 494
Proceeds from the issuance of long-term debt544 485 — 
Payments for the redemption of long-term debt(3) (5) (478)Payments for the redemption of long-term debt(513)(213)(3)
Notes payable to affiliated companies6
 161
 —
Notes payable to affiliated companies101 (137)6 
Distributions to parent(175) (300) (149)Distributions to parent(200)(200)(175)
Other(1) (1) (1)Other— — (1)
Net cash used in financing activities(173) (145) (134)Net cash used in financing activities(68)(65)(173)
Net increase (decrease) in cash and cash equivalents15
 (8) 8
Net (decrease) increase in cash and cash equivalentsNet (decrease) increase in cash and cash equivalents(18)1 15 
Cash and cash equivalents at beginning of period9
 17
 9
Cash and cash equivalents at beginning of period25 24 9 
Cash and cash equivalents at end of period$24
 $9
 $17
Cash and cash equivalents at end of period$7 $25 $24 
Supplemental Disclosures:     Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$162
 $179
 $171
Cash paid for interest, net of amount capitalized$164 $150 $162 
Cash paid for (received from) income taxes75
 117
 (7)Cash paid for (received from) income taxes36 (6)75 
Significant non-cash transactions:     Significant non-cash transactions:
Accrued capital expenditures88
 125
 99
Accrued capital expenditures101 102 88 
See Notes to Consolidated Financial Statements

118
120






FINANCIAL STATEMENTS


DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
         Accumulated  
         Other  
         Comprehensive  
         Income  
   Additional
     Net Gains on
  
 Common
 Paid-in
 Retained
 Member's
 Cash Flow
 Total
(in millions)Stock
 Capital
 Earnings
 Equity
 Hedges
 Equity
Balance at December 31, 2015$1
 $1,384
 $2,450
 $—
 $1
 $3,836
Net income—
 —
 —
 381
 —
 381
Other comprehensive loss—
 —
 —
 —
 (1) (1)
Distributions to parent—
 —
 —
 (149) —
 (149)
Transfer to Member's Equity(1) (1,384) (2,450) 3,835
 —
 —
Balance at December 31, 2016$—

$—

$—

$4,067
 $—

$4,067
Net income—
 —
 —
 354
 —
 354
Distributions to parent—
 —
 —
 (300) —
 (300)
Balance at December 31, 2017$—

$—

$—

$4,121
 $—

$4,121
Net income—
 —
 —
 393
 —
 393
Distributions to parent—
 —
 —
 (175) —
 (175)
Balance at December 31, 2018$—

$—

$—

$4,339
 $—

$4,339
Member's
(in millions)Equity
Balance at December 31, 2017$4,121 
Net income393 
Distributions to parent(175)
Balance at December 31, 2018$4,339 
Net income436 
Distributions to parent(200)
Balance at December 31, 2019$4,575 
Net income408
Distributions to parent(200)
Balance at December 31, 2020$4,783
See Notes to Consolidated Financial Statements

121
119






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Piedmont Natural Gas Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Piedmont Natural Gas Company, Inc. and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the periodsperiod ended December 31, 2018, December 31, 2017, October 31 2016, and for the two months ended December 31, 20162020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the periodsperiod ended December 31, 2018, December 31, 2017, October 31, 2016, and for the two months ended December 31, 2016,2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Emphasis
Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of Matter
As discussed in Note 1the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements effectiveand (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, the Public Service Commission of South Carolina, and the Tennessee Public Utility Commission (collectively the “Commissions”), which have jurisdiction with respect to the gas rates of the Company. Management has determined it meets the criteria for fiscal year 2016,the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company changedhas approximately $450 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its fiscal year endassertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

120



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from October 31 to December 31. This resulted in a two-month transition period beginning November 1, 2016 through December 31, 2016.management asserting that regulatory assets recorded on the financial statements are probable of recovery.







/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 201925, 2021
We have served as the Company's auditor since 1951.



122
121






FINANCIAL STATEMENTS


PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, Two Months Ended
December 31,		 Year Ended
October 31,		Years Ended December 31,
(in millions)2018
 2017
 2016
 2016
(in millions)202020192018
Operating Revenues       Operating Revenues
Regulated natural gas$1,365
 $1,319
 $320
 $1,139
Regulated natural gas$1,286 $1,369 $1,365 
Nonregulated natural gas and other10
 9
 2
 10
Nonregulated natural gas and other11 12 10 
Total operating revenues1,375
 1,328
 322
 1,149
Total operating revenues1,297 1,381 1,375 
Operating Expenses       Operating Expenses 
Cost of natural gas584
 524
 144
 391
Cost of natural gas386 532 584 
Operation, maintenance and other357
 304
 50
 353
Operation, maintenance and other322 328 357 
Depreciation and amortization159
 148
 23
 137
Depreciation and amortization180 172 159 
Property and other taxes49
 48
 7
 43
Property and other taxes53 45 49 
Impairment charges—
 7
 —
 —
Impairment charges7 — — 
Total operating expenses1,149
 1,031

224
 924
Total operating expenses948 1,077 1,149 
Operating Income226
 297

98
 225
Operating Income349 304 226 
Equity in earnings (losses) of unconsolidated affiliates7
 (6) 2
 29
Gain on sale of unconsolidated affiliates—
 —
 —
 133
Equity in earnings of unconsolidated affiliatesEquity in earnings of unconsolidated affiliates9 8 7 
Other income and expense, net14
 (11) (2) (1)Other income and expense, net51 20 14 
Total other income and expenses21
 (17)
—
 161
Total other income and expenses60 28 21 
Interest Expense81
 79
 12
 69
Interest Expense118 87 81 
Income Before Income Taxes166
 201

86
 317
Income Before Income Taxes291 245 166 
Income Tax Expense37
 62
 32
 124
Income Tax Expense18 43 37 
Net Income$129
 $139

$54
 $193
Other Comprehensive Income, net of tax       
Unrealized loss from hedging activities of equity method investments—
 —
 —
 (3)
Reclassification into earnings from hedging activities of equity method investments—
 —
 —
 4
Other Comprehensive Income, net of tax—
 —
 —
 1
Comprehensive Income$129
 $139
 $54
 $194
Net Income and Comprehensive IncomeNet Income and Comprehensive Income$273 $202 $129 
See Notes to Consolidated Financial Statements

122

123






FINANCIAL STATEMENTS


PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
December 31,December 31,
(in millions)2018
 2017
(in millions)20202019
ASSETS   ASSETS
Current Assets   Current Assets
Cash and cash equivalents$—
 $19
Receivables (net of allowance for doubtful accounts of $2 at 2018 and 2017)266
 275
Receivables (net of allowance for doubtful accounts of $12 at 2020 and $6 at 2019)Receivables (net of allowance for doubtful accounts of $12 at 2020 and $6 at 2019)$250 $241 
Receivables from affiliated companies22
 7
Receivables from affiliated companies10 10 
Inventory70
 66
Inventory68 72 
Regulatory assets54
 95
Regulatory assets153 73 
Other19
 52
Other20 28 
Total current assets431
 514
Total current assets501 424 
Property, Plant and Equipment   Property, Plant and Equipment
Cost7,486
 6,725
Cost9,134 8,446 
Accumulated depreciation and amortization(1,575) (1,479)Accumulated depreciation and amortization(1,749)(1,681)
Net property, plant and equipment5,911
 5,246
Net property, plant and equipment7,385 6,765 
Other Noncurrent Assets   Other Noncurrent Assets
Goodwill49
 49
Goodwill49 49 
Regulatory assets303
 283
Regulatory assets302 290 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net20 24 
Investments in equity method unconsolidated affiliates64
 61
Investments in equity method unconsolidated affiliates88 83 
Other52
 65
Other270 121 
Total other noncurrent assets468
 458
Total other noncurrent assets729 567 
Total Assets$6,810
 $6,218
Total Assets$8,615 $7,756 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Current Liabilities   Current Liabilities
Accounts payable$203
 $125
Accounts payable$230 $215 
Accounts payable to affiliated companies38
 13
Accounts payable to affiliated companies79 3 
Notes payable to affiliated companies198
 364
Notes payable to affiliated companies530 476 
Taxes accrued84
 19
Taxes accrued23 24 
Interest accrued31
 31
Interest accrued34 33 
Current maturities of long-term debt350
 250
Current maturities of long-term debt160 0 
Regulatory liabilities37
 3
Regulatory liabilities88 81 
Other58
 69
Other69 67 
Total current liabilities999
 874
Total current liabilities1,213 899 
Long-Term Debt1,788
 1,787
Long-Term Debt2,620 2,384 
Other Noncurrent Liabilities   Other Noncurrent Liabilities
Deferred income taxes551
 564
Deferred income taxes821 708 
Asset retirement obligations19
 15
Asset retirement obligations20 17 
Regulatory liabilities1,181
 1,141
Regulatory liabilities1,044 1,131 
Operating lease liabilitiesOperating lease liabilities19 23 
Accrued pension and other post-retirement benefit costs4
 5
Accrued pension and other post-retirement benefit costs8 3 
Other177
 170
Other155 148 
Total other noncurrent liabilities1,932
 1,895
Total other noncurrent liabilities2,067 2,030 
Commitments and Contingencies   Commitments and Contingencies00
Equity   Equity
Common stock, no par value: 100 shares authorized and outstanding at 2018 and 20171,160
 860
Common stock, 0 par value: 100 shares authorized and outstanding at 2020 and 2019Common stock, 0 par value: 100 shares authorized and outstanding at 2020 and 20191,310 1,310 
Retained earnings931
 802
Retained earnings1,405 1,133 
Total equity2,091
 1,662
Total equity2,715 2,443 
Total Liabilities and Equity$6,810
 $6,218
Total Liabilities and Equity$8,615 $7,756 
See Notes to Consolidated Financial Statements

123

124






FINANCIAL STATEMENTS


PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, Two Months Ended December 31, Year Ended October 31,Years Ended December 31,
(in millions)2018
 2017
 2016
 2016
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES       CASH FLOWS FROM OPERATING ACTIVITIES
Net income$129
 $139
 $54
 $193
Net income$273 $202 $129 
Adjustments to reconcile net income to net cash provided by operating activities:       Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization161
 151
 25
 148
Depreciation and amortization182 174 161 
Gains on sales of other assets—
 —
 —
 (133)
Equity component of AFUDCEquity component of AFUDC(19)— — 
Impairment charges—
 7
 —
 —
Impairment charges7 — — 
Deferred income taxes(31) 154
 26
 74
Deferred income taxes53 136 (31)
Equity in (earnings) losses from unconsolidated affiliates(7) 6
 (2) (29)Equity in (earnings) losses from unconsolidated affiliates(9)(8)(7)
Accrued pension and other post-retirement benefit costs(4) 23
 5
 3
Contributions to qualified pension plans—
 (11) (10) (14)
Payments for asset retirement obligations—
 —
 (1) (6)
Provision for rate refunds43
 —
 —
 —
Provision for rate refunds(33)2 43 
(Increase) decrease in       (Increase) decrease in
Receivables7
 (40) (157) 12
Receivables10 28 7 
Receivables from affiliated companies(15) —
 —
 (7)Receivables from affiliated companies— 12 (15)
Inventory(4) —
 (11) 14
Inventory3 (2)(4)
Other current assets71
 (20) 8
 (98)Other current assets(66)(25)71 
Increase (decrease) in       Increase (decrease) in
Accounts payable15
 (13) 35
 6
Accounts payable16 (7)15 
Accounts payable to affiliated companies25
 5
 4
 6
Accounts payable to affiliated companies76 (35)25 
Taxes accrued65
 (48) (2) 38
Taxes accrued3 (60)65 
Other current liabilities21
 (9) 2
 28
Other current liabilities(11)1 21 
Other assets6
 7
 (7) (91)Other assets(11)1 3 
Other liabilities(4) (2) 5
 180
Other liabilities7 (10)(5)
Net cash provided by (used in) operating activities478
 349
 (26) 324
Net cash provided by operating activitiesNet cash provided by operating activities481 409 478 
CASH FLOWS FROM INVESTING ACTIVITIES       CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(721) (585) (113) (522)Capital expenditures(901)(1,053)(721)
Contributions to equity method investments—
 (12) (12) (47)Contributions to equity method investments— (16)— 
Proceeds from the sales of other assets—
 —
 —
 175
Other(10) (6) 1
 5
Other(28)(14)(10)
Net cash used in investing activities(731) (603) (124) (389)Net cash used in investing activities(929)(1,083)(731)
CASH FLOWS FROM FINANCING ACTIVITIES       CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:       
Issuance of long-term debt100
 250
 —
 295
Issuance of common stock—
 —
 —
 122
Proceeds from the issuance of long-term debtProceeds from the issuance of long-term debt394 596 100 
Payments for the redemption of long-term debt—
 (35) —
 (40)Payments for the redemption of long-term debt— (350)— 
Notes payable and commercial paper—
 (330) 185
 (195)
Notes payable to affiliated companies(166) 364
 —
 —
Notes payable to affiliated companies54 278 (166)
Capital contribution from parent300
 —
 —
 —
Capital contribution from parent— 150 300 
Dividends to parent—
 —
 (27) —
Dividends paid—
 —
 —
 (114)
Other—
 (1) —
 —
Net cash provided by financing activities234
 248
 158
 68
Net cash provided by financing activities448 674 234 
Net (decrease) increase in cash and cash equivalents(19) (6) 8
 3
Net decrease in cash and cash equivalentsNet decrease in cash and cash equivalents— — (19)
Cash and cash equivalents at beginning of period19
 25
 17
 14
Cash and cash equivalents at beginning of period— — 19 
Cash and cash equivalents at end of period$—
 $19
 $25
 $17
Cash and cash equivalents at end of period$— $— $— 
Supplemental Disclosures:       Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$79
 $78
 $11
 $81
Cash paid for interest, net of amount capitalized$115 $84 $79 
Cash received from income taxes(16) (12) —
 (25)Cash received from income taxes(36)(31)(16)
Significant non-cash transactions:       Significant non-cash transactions:
Accrued capital expenditures96
 34
 48
 63
Accrued capital expenditures106 109 96 
Transfer of ownership interest of certain equity method investees to parent—
 149
 —
 —
See Notes to Consolidated Financial Statements

124

125






FINANCIAL STATEMENTS


PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
    Accumulated  
    Other  
     Comprehensive   
    Income (Loss)  
    Net Gain on
  
    Hedging Activities
  
Common
 Retained
 of Unconsolidated
 Total
CommonRetainedTotal
(in millions)Stock
 Earnings
 Affiliates
 Equity
(in millions)StockEarningsEquity
Balance at October 31, 2015$721
 $706
 $(1) $1,426
Net income —
 193
 —
 193
Other comprehensive income—
 —
 1
 1
Common stock issuances, including dividend reinvestment and employee benefits139
 —
 —
 139
Common stock dividends—
 (114) —
 (114)
Balance at October 31, 2016$860
 $785
 $—
 $1,645
Net income—
 54
 —
 54
Dividends to parent—
 (27) —
 (27)
Balance at December 31, 2016$860
 $812
 $—
 $1,672
Net income—
 139
 —
 139
Transfer of ownership interest of certain equity method investees to parent—
 (149) —
 (149)
Balance at December 31, 2017$860
 $802
 $—
 $1,662
Balance at December 31, 2017$860 $802 $1,662 
Net income
—
 129
 —
 129
Net income— 129 129 
Contribution from parent300
 —
 —
 300
Contribution from parent300 — 300 
Balance at December 31, 2018$1,160
 $931
 $—
 $2,091
Balance at December 31, 2018$1,160 $931 $2,091 
Net incomeNet income— 202 202 
Contribution from parentContribution from parent150 — 150 
Balance at December 31, 2019Balance at December 31, 2019$1,310 $1,133 $2,443 
Net incomeNet income— 273 273 
OtherOther— (1)(1)
Balance at December 31, 2020Balance at December 31, 2020$1,310 $1,405 $2,715 
See Notes to Consolidated Financial Statements

125

126






FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Index to Combined Notes To Consolidated Financial Statements
The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.
Applicable Notes Applicable Notes
Registrant1234567891011121314151617181920212223242526Registrant12345678910111213141516171819202122232425
Duke Energy• •Duke Energy•• •
Duke Energy Carolinas• • • •Duke Energy Carolinas••• • •
Progress Energy• • • • •Progress Energy••• • •
Duke Energy Progress• •  • • •Duke Energy Progress•• • • •
Duke Energy Florida• • • • •Duke Energy Florida••• • •
Duke Energy Ohio• • • • • •Duke Energy Ohio•• • • • •
Duke Energy Indiana• • • • •Duke Energy Indiana•• • • •
Piedmont• • • • •Piedmont••••••
Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Consolidation
Duke Energy is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants, including Duke Energy Carolinas; Progress Energy; Duke Energy Progress; Duke Energy Florida; Duke Energy Ohio; Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
In October 2016, Duke Energy completed the acquisition of Piedmont. Duke Energy's consolidated financial statements include Piedmont's results of operations and cash flows activity subsequent to the acquisition date. Effective November 1, 2016, Piedmont's fiscal year-end was changed from October 31 to December 31, the year-end of Duke Energy. A transition report was filed on Form 10-Q (Form 10-QT) for the transition period from November 1, 2016, to December 31, 2016. See Note 2 for additional information regarding the acquisition.
In December 2016, Duke Energy completed an exit of the Latin American market to focus on its domestic regulated business, which was further bolstered by the acquisition of Piedmont. The sale of the International Energy business segment, excluding an equity method investment in NMC, was completed through two transactions including a sale of assets in Brazil to CTG and a sale of Duke Energy's remaining Latin American assets in Peru, Chile, Ecuador, Guatemala, El Salvador and Argentina to I Squared (collectively, the International Disposal Group). See Note 2 for additional information on the sale of International Energy.
The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Consolidated Financial Statements. However, none of the Subsidiary Registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.
These Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 17 for additional information on VIEs. These Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. See Note 8 for additional information on joint ownership. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.
Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Progress Energy is a public utility holding company, which conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. Progress Energy is subject to regulation by FERC and other regulatory agencies listed below.
Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.

127



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the energy price is recovered from retail customers and recorded in Operating Revenues on the Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC and FERC.
Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana is subject to the regulatory provisions of the IURC and FERC.
Piedmont is a regulated public utility primarily engaged in the distribution of natural gas in portions of North Carolina, South Carolina and Tennessee. Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC and FERC.
Certain prior year amounts have been reclassified to conform to the current year presentation.
126



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COVID-19
The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and the federal government proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The Duke Energy Registrants are monitoring developments closely and responding appropriately. The company incurred approximately $112 million of incremental COVID-19 costs before deferral for the year ended December 31, 2020, included in Operation, maintenance and other on the Consolidated Statements of Operations. Further, the company waived approximately $64 million of late payment fees for the year ended December 31, 2020. The company has deferred approximately $76 million of the incremental costs, which were primarily bad debt expense, personal protective equipment and cleaning supplies, and a cost component of late payment fees. See Notes 3, 6, 17, 18 and 23 for additional information as well as steps taken to mitigate the impacts to our business and customers from the COVID-19 pandemic.
Other Current Assets and Liabilities
The following table provides a description of amounts included in Other within Current Assets or Current Liabilities that exceed 5 percent5% of total Current Assets or Current Liabilities on the Duke Energy Registrants' Consolidated Balance Sheets at either December 31, 2018,2020, or 2017.
2019.
 December 31,December 31,
(in millions)Location 2018
 2017
(in millions)Location20202019
Duke Energy    Duke Energy
Income taxes receivableCurrent Assets $729
 $330
Other accrued liabilitiesOther accrued liabilitiesCurrent Liabilities$1,455 $604 
Accrued compensationCurrent Liabilities 793
 757
Accrued compensationCurrent Liabilities662 862 
Duke Energy Carolinas    Duke Energy Carolinas
Accrued compensationCurrent Liabilities $251
 $252
Accrued compensationCurrent Liabilities$213 $271 
Other accrued liabilitiesOther accrued liabilitiesCurrent Liabilities178 147 
Progress Energy   
  
Progress Energy   
Income taxes receivableCurrent Assets $66
 $278
Customer depositsCurrent Liabilities 345
 338
Customer depositsCurrent Liabilities$347 $354 
Duke Energy Progress   
  
Customer depositsCurrent Liabilities $137
 $129
Accrued compensationCurrent Liabilities 130
 132
Duke Energy Florida   
  
Duke Energy Florida   
Customer depositsCurrent Liabilities $208
 $208
Customer depositsCurrent Liabilities$203 $209 
Other accrued liabilitiesCurrent Liabilities 85
 16
Duke Energy Ohio   
  
Duke Energy Ohio   
Gas StorageGas StorageCurrent Assets$21 $0 
Duke Energy IndianaDuke Energy Indiana   
Income taxes receivableCurrent Assets $13
 $36
Income taxes receivableCurrent Assets$9 $44 
Customer depositsCurrent Liabilities 44
 46
Duke Energy Indiana   
  
Customer depositsCurrent Liabilities $47
 $45
Piedmont    
Income taxes receivableCurrent Assets $11
 $43
Discontinued Operations
The results of operations of the International Disposal Group have been classified as Discontinued Operations on Duke Energy's Consolidated Statements of Operations. Duke Energy has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these consolidated financial statements exclude amounts related to discontinued operations for all periods presented. See Note 2 for additional information.
Amounts Attributable to Controlling Interests
For the years ended December 31, 2018,2020, 2019 and 2017,2018, the Income (Loss) From Discontinued Operations, net of tax on Duke Energy's Consolidated Statements of Operations is entirely attributable to controlling interest. For
Noncontrolling Interest
Duke Energy maintains a controlling financial interest in certain less than wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the year ended December 31, 2016, $18 millionthird-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is attributableincluded as a component of equity on the Consolidated Balance Sheet.
Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to noncontrolling interests, which consisted of $7 million included in Income from Continuing Operations and $11 million included in Income (Loss) From Discontinued Operations, netallocations of tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the HLBV method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners, most of which is over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of income or loss allocated to each owner for the reporting period.
Other operating agreements of Duke Energy's Consolidated Statementsubsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of Operations.

the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.
128
127






FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


During the third quarter of 2019, Duke Energy completed a sale of minority interest in a portion of certain renewable assets within the Commercial Renewables Segment for pretax proceeds to Duke Energy of $415 million. The portion of Duke Energy's commercial renewables energy portfolio sold includes 49% of 37 operating wind, solar and battery storage assets and 33% of 11 operating solar assets across the U.S. Duke Energy retained control of these assets, and, therefore, no gain or loss was recognized on the Consolidated Statements of Operations. The difference between the consideration received and the carrying value of the noncontrolling interest claim on net assets is $466 million, net of tax benefit of $8 million, and was recorded to equity.
The following table presents cash received for the sale of noncontrolling interest and allocated losses to noncontrolling interest for the years ended December 31, 2020, and 2019.
December 31,
(in millions)20202019
Noncontrolling Interest Capital Contributions
Cash received for the sale of noncontrolling interest to tax equity members$426 $428 
Cash received for the sale of noncontrolling interest to pro rata share members— 415 
Total Noncontrolling Interest Capital Contributions$426 $843 
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method$271 $165 
Allocated losses to noncontrolling members based on pro rata shares of ownership24 12 
Total Noncontrolling Interest Allocated Losses$295 $177 
2021 Sale of Minority Interest in Duke Energy Indiana
In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund and an experienced investor in U.S. infrastructure. To facilitate the transaction, Duke Energy will issue and sell membership interests in Duke Energy Indiana Holdco, LLC. a newly created holding company that will own 100% of the issued and outstanding membership interests in Duke Energy Indiana. The transaction will be completed following two closings for an aggregate purchase price of approximately $2 billion. The first closing is expected to be completed in the second quarter of 2021 and Duke Energy will issue and sell 11.1% of the membership interests in exchange for 50% of the purchase price. Under the terms of the agreement, Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023. At the second closing, Duke Energy will issue and sell additional membership interests such that GIC will own 19.9% of the membership interests for the remaining 50% of the purchase price. Duke Energy will continue to operate and retain control of Duke Energy Indiana and, therefore, no gain or loss is expected to be recognized in the Consolidated Statements of Operations. Additionally, the transaction will be reflected within Duke Energy Corporations' stockholders' equity as a sale of a noncontrolling interest.
Acquisitions
The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.
Significant Accounting Policies
Use of Estimates
In preparing financial statements that conform to GAAP, the Duke Energy Registrants must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Regulatory Accounting
The majority of the Duke Energy Registrants’ operations are subject to price regulation for the sale of electricity and natural gas by state utility commissions or FERC. When prices are set on the basis of specific costs of the regulated operations and an effective franchise is in place such that sufficient natural gas or electric services can be sold to recover those costs, the Duke Energy Registrants apply regulatory accounting. Regulatory accounting changes the timing of the recognition of costs or revenues relative to a company that does not apply regulatory accounting. As a result, regulatory assets and regulatory liabilities are recognized on the Consolidated Balance Sheets. Regulatory assets and liabilities are amortized consistent with the treatment of the related cost in the ratemaking process. Regulatory assets are reviewed for recoverability each reporting period. If a regulatory asset is no longer deemed probable of recovery, the deferred cost is charged to earnings. See Note 43 for further information.
Regulatory accounting rules also require recognition of a disallowance (also called "impairment") loss if it becomes probable that part of the cost of a plant under construction (or a recently completed plant or an abandoned plant) will be disallowed for ratemaking purposes and a reasonable estimate of the amount of the disallowance can be made. For example, if a cost cap is set for a plant still under construction, the amount of the disallowance is a result of a judgment as to the ultimate cost of the plant. These disallowances can require judgments on allowed future rate recovery.
128



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
When it becomes probable that regulated generation, transmission or distribution assets will be abandoned, the cost of the asset is removed from plant in service. The value that may be retained as a regulatory asset on the balance sheet for the abandoned property is dependent upon amounts that may be recovered through regulated rates, including any return. As such, an impairment charge could be partially or fully offset by the establishment of a regulatory asset if rate recovery is probable. The impairment charge for a disallowance of costs for regulated plants under construction, recently completed or abandoned is based on discounted cash flows.
The Duke Energy Registrants utilize cost-tracking mechanisms, commonly referred to as fuel adjustment clauses or PGA clauses. These clauses allow for the recovery of fuel and fuel-related costs, portions of purchased power, natural gas costs and hedging costs through surcharges on customer rates. The difference between the costs incurred and the surcharge revenues is recorded either as an adjustment to Operating Revenues, Operating Expenses – Fuel used in electric generation or Operating Expenses – Cost of natural gas on the Consolidated Statements of Operations, with an off-setting impact on regulatory assets or liabilities.

129



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Cash, Cash Equivalents and Restricted Cash
All highly liquid investments with maturities of three months or less at the date of acquisition are considered cash equivalents. Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See Note 17 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Consolidated Balance Sheets.
December 31, 2018 December 31, 2017December 31, 2020December 31, 2019
 Duke
  Duke
DukeDuke
Duke
Progress
Energy
 Duke
Progress
Energy
DukeProgressEnergyDukeProgressEnergy
Energy
Energy
Florida
 Energy
Energy
Florida
EnergyFloridaEnergyFlorida
Current Assets   Current Assets
Cash and cash equivalents$442
$67
$36
 $358
$40
$13
Cash and cash equivalents$259 $59 $11 $311 $48 $17 
Other141
39
39
 138
40
40
Other194 39 39 222 39 39 
Other Noncurrent Assets   Other Noncurrent Assets
Other8
6
—
 9
7
—
Other103 102 — 40 39 — 
Total cash, cash equivalents and restricted cash$591
$112
$75
 $505
$87
$53
Total cash, cash equivalents and restricted cash$556 $200 $50 $573 $126 $56 
Inventory
Inventory is used for operations and is recorded primarily using the average cost method. Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Materials and supplies are recorded as inventory when purchased and subsequentlyInventory is charged to expense or capitalized to property, plant and equipment when installed. Inventory, including excessissued, primarily using the average cost method. Excess or obsolete inventory is written-downwritten down to the lower of cost or marketnet realizable value. Once inventory has been written-down,written down, it creates a new cost basis for the inventory that is not subsequently written-up.written up. Provisions for inventory write-offs were not material at December 31, 2018,2020, and 2017.2019, respectively. The components of inventory are presented in the tables below.
 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
Materials and supplies$2,238
 $731
 $1,049
 $734
 $315
 $84
 $312
 $2
Coal491
 175
 192
 106
 86
 14
 109
 —
Natural gas, oil and other355
 42
 218
 114
 103
 28
 1
 68
Total inventory$3,084
 $948
 $1,459
 $954
 $504
 $126
 $422
 $70
December 31, 2017 December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies$2,293
 $744
 $1,118
 $774
 $343
 $82
 $309
 $2
Materials and supplies$2,312 $785 $999 $673 $325 $78 $307 $12 
Coal603
 192
 255
 139
 116
 17
 139
 —
Coal561 186 193 131 63 16 165 — 
Natural gas, oil and other354
 35
 219
 104
 115
 34
 2
 64
Natural gas, oil and other294 39 183 107 76 16 1 56 
Total inventory$3,250
 $971
 $1,592
 $1,017
 $574
 $133
 $450
 $66
Total inventory$3,167 $1,010 $1,375 $911 $464 $110 $473 $68 
 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies$2,297 $768 $1,038 $686 $351 $79 $318 $5 
Coal586 187 186 138 48 15 198 — 
Natural gas, oil and other349 41 199 110 90 41 1 67 
Total inventory$3,232 $996 $1,423 $934 $489 $135 $517 $72 
129



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in Debt and Equity Securities
The Duke Energy Registrants classify investments in equity securities as FV-NI and investments in debt securities as AFS. Both categories are recorded at fair value on the Consolidated Balance Sheets. Realized and unrealized gains and losses on securities classified as FV-NI are reported through net income. Unrealized gains and losses for debt securities classified as AFS are included in AOCI until realized, except OTTIs that are included in earnings immediately. Atunless it is determined the time gains and losses for debt securities are realized, they are reported through net income.carrying value of an investment has a credit loss. For certain investments of regulated operations, such as substantially all of the NDTF, realized and unrealized gains and losses (including any OTTIs)credit losses) on debt securities are recorded as a regulatory asset or liability. The credit loss portion of debt securities of nonregulated operations are included in earnings. Investments in debt and equity securities are classified as either current or noncurrent based on management’s intent and ability to sell these securities, taking into consideration current market liquidity. See Note 15 for further information.

130



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Goodwill and Intangible Assets
Goodwill
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont perform annual goodwill impairment tests as of August 31 each year at the reporting unit level, which is determined to be a business segment or one level below. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update these tests between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. See Note 11 for further information.
Intangible Assets
Intangible assets are included in Other in Other Noncurrent Assets on the Consolidated Balance Sheets. Generally, intangible assets are amortized using an amortization method that reflects the pattern in which the economic benefits of the intangible asset are consumed or on a straight-line basis if that pattern is not readily determinable. Amortization of intangibles is reflected in Depreciation and amortization on the Consolidated Statements of Operations. Intangible assets are subject to impairment testing and if impaired, the carrying value is accordingly reduced.
Emission allowances permit the holder of the allowance to emit certain gaseous byproducts of fossil fuel combustion, including SO2 and NOX. Allowances are issued by the EPA at zero cost and may also be bought and sold via third-party transactions. Allowances allocated to or acquired by the Duke Energy Registrants are held primarily for consumption. Carrying amounts for emission allowances are based on the cost to acquire the allowances or, in the case of a business combination, on the fair value assigned in the allocation of the purchase price of the acquired business. Emission allowances are expensed to Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.
RECs are used to measure compliance with renewable energy standards and are held primarily for consumption. See Note 11 for further information.
Long-Lived Asset Impairments
The Duke Energy Registrants evaluate long-lived assets, excluding goodwill, for impairment when circumstances indicate the carrying value of those assets may not be recoverable. An impairment exists when a long-lived asset’s carrying value exceeds the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the carrying value of the asset is written-downwritten down to its then-currentthen current estimated fair value and an impairment charge is recognized.
The Duke Energy Registrants assess fair value of long-lived assets using various methods, including recent comparable third-party sales, internally developed discounted cash flow analysis and analysis from outside advisors. Triggering events to reassess cash flows may include, but are not limited to, significant changes in commodity prices, the condition of an asset or management’s interest in selling the asset.
Equity Method Investment Impairments
Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method. Equity method investments are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the decline in value is considered to be other than temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment.
Impairment assessments use a discounted cash flow income approach and include consideration of the severity and duration of any decline in the fair value of the investments. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. Key inputs that involve estimates and significant management judgment include cash flow projections, selection of a discount rate, probability weighting of potential outcomes, and whether any decline in value is considered temporary.

131130






FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Property, Plant and Equipment
Property, plant and equipment are stated at the lower of depreciated historical cost net of any disallowances or fair value, if impaired. The Duke Energy Registrants capitalize all construction-related direct labor and material costs, as well as indirect construction costs such as general engineering, taxes and financing costs. See “Allowance for Funds Used During Construction and Interest Capitalized” for information on capitalized financing costs. Costs of renewals and betterments that extend the useful life of property, plant and equipment are also capitalized. The cost of repairs, replacements and major maintenance projects, which do not extend the useful life or increase the expected output of the asset, are expensed as incurred. Depreciation is generally computed over the estimated useful life of the asset using the composite straight-line method. Depreciation studies are conducted periodically to update composite rates and are approved by state utility commissions and/or the FERC when required. The composite weighted average depreciation rates, excluding nuclear fuel, are included in the table that follows.
Years Ended December 31, Years Ended December 31,
2018
 2017
 2016
 202020192018
Duke Energy3.0% 2.8% 2.8%Duke Energy3.0 %3.1 %3.0 %
Duke Energy Carolinas2.8% 2.8% 2.8%Duke Energy Carolinas2.8 %2.8 %2.8 %
Progress Energy2.9% 2.6% 2.7%Progress Energy3.2 %3.1 %2.9 %
Duke Energy Progress2.9% 2.6% 2.6%Duke Energy Progress3.1 %3.1 %2.9 %
Duke Energy Florida3.0% 2.8% 2.8%Duke Energy Florida3.3 %3.1 %3.0 %
Duke Energy Ohio2.8% 2.8% 2.6%Duke Energy Ohio2.9 %2.6 %2.8 %
Duke Energy Indiana3.3% 3.0% 3.1%Duke Energy Indiana3.5 %3.3 %3.3 %
Piedmont(a)
2.5% 2.3%  
PiedmontPiedmont2.3 %2.4 %2.5 %
(a)Piedmont's weighted average depreciation rate was 2.4 percent for the annualized two months ended December 31, 2016, and for the year ended October 31, 2016.
In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value and any depreciation already recognized, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as Generation facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory assets on the Consolidated Balance Sheets if deemed recoverable (see discussion of long-lived asset impairments above). When it becomes probable an asset will be abandoned, the cost of the asset and accumulated depreciation is reclassified to Regulatory assets on the Consolidated Balance Sheets for amounts recoverable in rates. The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.
When the Duke Energy Registrants sell entire regulated operating units, or retire or sell nonregulated properties, the original cost and accumulated depreciation and amortization balances are removed from Property, Plant and Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded in earnings, unless otherwise required by the applicable regulatory body. See Note 10 for additional information.
Leases
Duke Energy determines if an arrangement is a lease at contract inception based on whether the arrangement involves the use of a physically distinct identified asset and whether Duke Energy has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period as well as the right to direct the use of the asset. As a policy election, Duke Energy does not evaluate arrangements with initial contract terms of less than one year as leases.
Operating leases are included in Operating lease ROU assets, net, Other current liabilities and Operating lease liabilities on the Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, Current maturities of long-term debt and Long-Term Debt on the Consolidated Balance Sheets.
For lessee and lessor arrangements, Duke Energy has elected a policy to not separate lease and non-lease components for all asset classes. For lessor arrangements, lease and non-lease components are only combined under one arrangement and accounted for under the lease accounting framework if the non-lease components are not the predominant component of the arrangement and the lease component would be classified as an operating lease.
Nuclear Fuel
Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets.
Nuclear fuel in the front-end fuel processing phase is considered work in progress and not amortized until placed in service. Amortization of nuclear fuel is included within Fuel used in electric generation and purchased power on the Consolidated Statements of Operations. Amortization is recorded using the units-of-production method.
Allowance for Funds Used During Construction and Interest Capitalized
For regulated operations, the debt and equity costs of financing the construction of property, plant and equipment are reflected as AFUDC and capitalized as a component of the cost of property, plant and equipment. AFUDC equity is reported on the Consolidated Statements of Operations as non-cash income in Other income and expenses, net. AFUDC debt is reported as a non-cash offset to Interest Expense. After construction is completed, the Duke Energy Registrants are permitted to recover these costs through their inclusion in rate base and the corresponding subsequent depreciation or amortization of those regulated assets.
131



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AFUDC equity, a permanent difference for income taxes, reduces the ETR when capitalized and increases the ETR when depreciated or amortized. See Note 23 for additional information.
For nonregulated operations, interest is capitalized during the construction phase with an offsetting non-cash credit to Interest Expense on the Consolidated Statements of Operations.
Asset Retirement Obligations
AROs are recognized for legal obligations associated with the retirement of property, plant and equipment. Substantially all AROs are related to regulated operations. When recording an ARO, the present value of the projected liability is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted over time. For operating plants, the present value of the liability is added to the cost of the associated asset and depreciated over the remaining life of the asset. For retired plants, the present value of the liability is recorded as a regulatory asset unless determined not to be probable of recovery.

132



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding timing of future cash flows, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change. Depreciation expense is adjusted prospectively for any changes to the carrying amount of the associated asset. The Duke Energy Registrants receive amounts to fund the cost of the ARO for regulated operations through a combination of regulated revenues and earnings on the NDTF. As a result, amounts recovered in regulated revenues, earnings on the NDTF, accretion expense and depreciation of the associated asset are netted and deferred as a regulatory asset or liability.
Obligations for nuclear decommissioningAccounts Payable
During 2020, Duke Energy established a supply chain finance program (the “program”) with a global financial institution. The program is voluntary and allows Duke Energy suppliers, at their sole discretion, to sell their receivables from Duke Energy to the financial institution at a rate that leverages Duke Energy’s credit rating and, which may result in favorable terms compared to the rate available to the supplier on their own credit rating. Suppliers participating in the program, determine at their sole discretion which invoices they will sell to the financial institution. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on site-specific cost studies.commercial terms negotiated between Duke Energy Carolinas and the supplier regardless of program participation. The commercial terms negotiated between Duke Energy Progress assume prompt dismantlementand its suppliers are consistent regardless of whether the supplier elects to participate in the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program.
At December 31, 2020, $15 million, $1 million and $14 million of the nuclear facilities after operations are ceased.outstanding Accounts payable balance for Duke Energy, Florida assumes Crystal River Unit 3 will be placed into a safe storage configuration until eventual dismantlement is completed by 2074. Duke Energy Carolinas,Ohio and Piedmont, respectively, was sold to the financial institution by our suppliers. Suppliers invoices sold to the financial institution under the program totaled $45 million, $9 million and $36 million for the year ended December 31, 2020, for Duke Energy, Progress and Duke Energy Florida also assume that spent fuel will be stored on-site until such time that it can be transferredOhio and Piedmont, respectively. All activity related to a yetamounts due to be built DOE facility.
Obligations for closuresuppliers who elected to participate in the program are included within Net cash provided by operating activities on the Consolidated Statements of ash basins are based upon discounted cash flows of estimated costs for site-specific plans, if known, or probability weightings of the potential closure methods if the closure plans are under development and multiple closure options are being considered and evaluated on a site-by-site basis. See Note 9 for additional information.Cash Flows.
Revenue Recognition
Duke Energy recognizes revenue as customers obtain control of promised goods and services in an amount that reflects consideration expected in exchange for those goods or services. Generally, the delivery of electricity and natural gas results in the transfer of control to customers at the time the commodity is delivered and the amount of revenue recognized is equal to the amount billed to each customer, including estimated volumes delivered when billings have not yet occurred. See Note 18 for further information.
Derivatives and Hedging
Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the NPNS exception, are recorded on the Consolidated Balance Sheets at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The effective portion of the change in the fair value of cash flow hedges is recorded in AOCI. The effective portion of the change in the fair value of a fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As a result, changes in fair value of these derivatives have no immediate earnings impact.
Formal documentation, including transaction type and risk management strategy, is maintained for all contracts accounted for as a hedge. At inception and at least every three months thereafter, the hedge contract is assessed to see if it is highly effective in offsetting changes in cash flows or fair values of hedged items.
See Note 14 for further information.
Captive Insurance Reserves
Duke Energy has captive insurance subsidiaries that provide coverage, on an indemnity basis, to the Subsidiary Registrants as well as certain third parties, on a limited basis, for financial losses, primarily related to property, workers’ compensation and general liability. Liabilities include provisions for estimated losses IBNR,incurred but not reported (IBNR), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from experience.
132



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Duke Energy, through its captive insurance entities, also has reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable.
Unamortized Debt Premium, Discount and Expense
Premiums, discounts and expenses incurred with the issuance of outstanding long-term debt are amortized over the term of the debt issue. The gain or loss on extinguishment associated with refinancing higher-cost debt obligations in the regulated operations is amortized.amortized over the remaining life of the original instrument. Amortization expense is recorded as Interest Expense in the Consolidated Statements of Operations and is reflected as Depreciation, amortization and accretion within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
Premiums, discounts and expenses are presented as an adjustment to the carrying value of the debt amount and included in Long-Term Debt on the Consolidated Balance Sheets presented.
Preferred Stock
Preferred stock is reviewed to determine the appropriate balance sheet classification and embedded features, such as call options, are evaluated to determine if they should be bifurcated and accounted for separately. Costs directly related to the issuance of preferred stock is recorded as a reduction of the proceeds received. The liability for the dividend is recognized when declared. The accumulated dividends on the cumulative preferred stock is recognized to net income available to Duke Energy Corporation in the EPS calculation. See Note 19 for further information.
Loss Contingencies and Environmental Liabilities
Contingent losses are recorded when it is probable a loss has occurred and can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. Unless otherwise required by GAAP, legal fees are expensed as incurred.
Environmental liabilities are recorded on an undiscounted basis when environmental remediation or other liabilities become probable and can be reasonably estimated. Environmental expenditures related to past operations that do not generate current or future revenues are expensed. Environmental expenditures related to operations that generate current or future revenues are expensed or capitalized, as appropriate. Certain environmental expenditures receive regulatory accounting treatment and are recorded as regulatory assets.
See Notes 43 and 54 for further information.

133



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Pension and Other Post-Retirement Benefit Plans
Duke Energy maintains qualified, non-qualified and other post-retirement benefit plans. Eligible employees of the Subsidiary Registrants participate in the respective qualified, non-qualified and other post-retirement benefit plans and the Subsidiary Registrants are allocated their proportionate share of benefit costs. See Note 22 for further information, including significant accounting policies associated with these plans.
SeveranceNew Accounting Standards
See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Management’s Discussion and Special Termination BenefitsAnalysis of Results of Operations and Financial Condition – Quantitative and Qualitative Disclosures About Market Risk.”
74



FINANCIAL STATEMENTS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Duke Energy
Report of Independent Registered Public Accounting Firm
77
Consolidated Statements of Operations
79
Consolidated Statements of Comprehensive Income
80
Consolidated Balance Sheets
81
Consolidated Statements of Cash Flows 
82
Consolidated Statements of Changes in Equity
83
Duke Energy Carolinas
Report of Independent Registered Public Accounting Firm
84
Consolidated Statements of Operations and Comprehensive Income
86
Consolidated Balance Sheets
87
Consolidated Statements of Cash Flows
88
Consolidated Statements of Changes in Equity
89
Progress Energy
Report of Independent Registered Public Accounting Firm
90
Consolidated Statements of Operations and Comprehensive Income
92
Consolidated Balance Sheets
93
Consolidated Statements of Cash Flows
94
Consolidated Statements of Changes in Equity
95
Duke Energy Progress
Report of Independent Registered Public Accounting Firm
96
Consolidated Statements of Operations and Comprehensive Income
98
Consolidated Balance Sheets
99
Consolidated Statements of Cash Flows
100
Consolidated Statements of Changes in Equity
101
Duke Energy Florida
Report of Independent Registered Public Accounting Firm
102
Consolidated Statements of Operations and Comprehensive Income
104
Consolidated Balance Sheets
105
Consolidated Statements of Cash Flows
106
Consolidated Statements of Changes in Equity
107
Duke Energy Ohio
Report of Independent Registered Public Accounting Firm
108
Consolidated Statements of Operations and Comprehensive Income
110
Consolidated Balance Sheets
111
Consolidated Statements of Cash Flows
112
Consolidated Statements of Changes in Equity
113
Duke Energy Indiana
Report of Independent Registered Public Accounting Firm
114
Consolidated Statements of Operations and Comprehensive Income
116
Consolidated Balance Sheets
117
Consolidated Statements of Cash Flows
118
Consolidated Statements of Changes in Equity
119
Piedmont
Report of Independent Registered Public Accounting Firm
120
Consolidated Statements of Operations and Comprehensive Income
122
Consolidated Balance Sheets
123
Consolidated Statements of Cash Flows
124
Consolidated Statements of Changes in Equity
125
75



FINANCIAL STATEMENTS
Combined Notes to Consolidated Financial Statements
Note 1 – Summary of Significant Accounting Policies
126
Note 2 – Business Segments
135
Note 3 – Regulatory Matters
139
Note 4 – Commitments and Contingencies
163
Note 5 – Leases
168
Note 6 – Debt and Credit Facilities
173
Note 7 – Guarantees and Indemnifications
179
Note 8 – Joint Ownership of Generating and Transmission Facilities
180
Note 9 – Asset Retirement Obligations
180
Note 10 – Property, Plant and Equipment
183
Note 11 – Goodwill and Intangible Assets
185
Note 12 – Investments in Unconsolidated Affiliates
186
Note 13 – Related Party Transactions
189
Note 14 – Derivatives and Hedging
190
Note 15 – Investments in Debt and Equity Securities
195
Note 16 – Fair Value Measurements
201
Note 17 – Variable Interest Entities
207
Note 18 – Revenue
211
Note 19 – Stockholders' Equity
217
Note 20 – Severance
219
Note 21 – Stock-Based Compensation
219
Note 22 – Employee Benefit Plans
221
Note 23 – Income Taxes
235
Note 24 – Other Income and Expenses, Net
242
Note 25 – Subsequent Events
242

76



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to regulation by federal and state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric and natural gas distribution companies. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $14 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

77



REPORTS
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP

Charlotte, North Carolina
February 25, 2021 

We have served as the Company's auditor since 1947.

78



FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
(in millions, except per share amounts)202020192018
Operating Revenues
Regulated electric$21,461 $22,615 $22,097 
Regulated natural gas1,642 1,759 1,773 
Nonregulated electric and other765 705 651 
Total operating revenues23,868 25,079 24,521 
Operating Expenses
Fuel used in electric generation and purchased power6,051 6,826 6,831 
Cost of natural gas460 627 697 
Operation, maintenance and other5,788 6,066 6,463 
Depreciation and amortization4,705 4,548 4,074 
Property and other taxes1,337 1,307 1,280 
Impairment charges984 (8)402 
Total operating expenses19,325 19,366 19,747 
Gains (Losses) on Sales of Other Assets and Other, net10 (4)(89)
Operating Income4,553 5,709 4,685 
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates(2,005)162 83 
Other income and expenses, net453 430 399 
Total other income and expenses(1,552)592 482 
Interest Expense2,162 2,204 2,094 
Income From Continuing Operations Before Income Taxes839 4,097 3,073 
Income Tax (Benefit) Expense From Continuing Operations(236)519 448 
Income From Continuing Operations1,075 3,578 2,625 
Income (Loss) From Discontinued Operations, net of tax7 (7)19 
Net Income1,082 3,571 2,644 
Add: Net Loss Attributable to Noncontrolling Interests295 177 22 
Net Income Attributable to Duke Energy Corporation1,377 3,748 2,666 
Less: Preferred Dividends107 41 — 
Net Income Available to Duke Energy Corporation Common Stockholders$1,270 $3,707 $2,666 
Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted$1.71 $5.07 $3.73 
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted$0.01 $(0.01)$0.03 
Net income available to Duke Energy Corporation common stockholders
Basic and Diluted$1.72 $5.06 $3.76 
Weighted average shares outstanding
Basic737 729 708 
Diluted738 729 708 
See Notes to Consolidated Financial Statements
79



FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,
(in millions)202020192018
Net Income$1,082 $3,571 $2,644 
Other Comprehensive (Loss) Income, net of tax(a)
Pension and OPEB adjustments6 9 (6)
Net unrealized losses on cash flow hedges(138)(47)(10)
Reclassification into earnings from cash flow hedges11 6 6 
Unrealized gains (losses) on available-for-sale securities3 8 (3)
Other Comprehensive Loss, net of tax(118)(24)(13)
Comprehensive Income964 3,547 2,631 
Add: Comprehensive Loss Attributable to Noncontrolling Interests306 177 22 
Comprehensive Income Attributable to Duke Energy Corporation1,270 3,724 2,653 
Less: Preferred Dividends107 41 — 
Comprehensive Income Available to Duke Energy Corporation Common Stockholders$1,163 $3,683 $2,653 
(a)     Net of income tax impacts of approximately $35 million for the year ended December 31, 2020. Tax impacts are immaterial for other periods presented.
See Notes to Consolidated Financial Statements
80
FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
(in millions)20202019
ASSETS
Current Assets
Cash and cash equivalents$259 $311 
Receivables (net of allowance for doubtful accounts of $29 at 2020 and $22 at 2019)1,009 1,066 
Receivables of VIEs (net of allowance for doubtful accounts of $117 at 2020 and $54 at 2019)2,144 1,994 
Inventory3,167 3,232 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)1,641 1,796 
Other (includes $296 at 2020 and $242 at 2019 related to VIEs)462 764 
Total current assets8,682 9,163 
Property, Plant and Equipment
Cost155,580 147,654 
Accumulated depreciation and amortization(48,827)(45,773)
Generation facilities to be retired, net29 246 
Net property, plant and equipment106,782 102,127 
Other Noncurrent Assets
Goodwill19,303 19,303 
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)12,421 13,222 
Nuclear decommissioning trust funds9,114 8,140 
Operating lease right-of-use assets, net1,524 1,658 
Investments in equity method unconsolidated affiliates961 1,936 
Other (includes $81 at 2020 and $110 at 2019 related to VIEs)3,601 3,289 
Total other noncurrent assets46,924 47,548 
Total Assets$162,388 $158,838 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$3,144 $3,487 
Notes payable and commercial paper2,873 3,135 
Taxes accrued482 392 
Interest accrued537 565 
Current maturities of long-term debt (includes $472 at 2020 and $216 at 2019 related to VIEs)4,238 3,141 
Asset retirement obligations718 881 
Regulatory liabilities1,377 784 
Other2,936 2,367 
Total current liabilities16,305 14,752 
Long-Term Debt (includes $3,535 at 2020 and $3,997 at 2019 related to VIEs)55,625 54,985 
Other Noncurrent Liabilities
Deferred income taxes9,244 8,878 
Asset retirement obligations12,286 12,437 
Regulatory liabilities15,029 15,264 
Operating lease liabilities1,340 1,432 
Accrued pension and other post-retirement benefit costs969 934 
Investment tax credits687 624 
Other (includes $316 at 2020 and $228 at 2019 related to VIEs)1,719 1,581 
Total other noncurrent liabilities41,274 41,150 
Commitments and Contingencies00
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019973 973 
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019989 989 
Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2020 and 733 million shares outstanding at 20191 1 
Additional paid-in capital43,767 40,881 
Retained earnings2,471 4,108 
Accumulated other comprehensive loss(237)(130)
Total Duke Energy Corporation stockholders' equity47,964 46,822 
Noncontrolling interests1,220 1,129 
Total equity49,184 47,951 
Total Liabilities and Equity$162,388 $158,838 
See Notes to Consolidated Financial Statements
81
FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$1,082 $3,571 $2,644 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)5,486 5,176 4,696 
Equity in losses (earnings) of unconsolidated affiliates2,005 (162)(83)
Equity component of AFUDC(154)(139)(221)
(Gains) Losses on sales of other assets(10)4 88 
Impairment charges984 (8)402 
Deferred income taxes54 806 1,079 
Payments for asset retirement obligations(610)(746)(533)
Payment for the disposal of other assets— — (105)
Provision for rate refunds(22)60 425 
Refund of AMT credit carryforwards572 573 — 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions63 (48)22 
Receivables(56)78 (345)
Inventory66 (122)156 
Other current assets205 10 (721)
Increase (decrease) in
Accounts payable(21)(164)479 
Taxes accrued117 (224)23 
Other current liabilities(65)172 270 
Other assets(398)(559)(1,062)
Other liabilities(442)(69)(28)
Net cash provided by operating activities8,856 8,209 7,186 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(9,907)(11,122)(9,389)
Contributions to equity method investments(370)(324)(416)
Return of investment capital133 11 137 
Purchases of debt and equity securities(8,011)(3,348)(3,762)
Proceeds from sales and maturities of debt and equity securities7,949 3,343 3,747 
Other(398)(517)(377)
Net cash used in investing activities(10,604)(11,957)(10,060)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt6,330 7,091 5,299 
Issuance of preferred stock— 1,962 — 
Issuance of common stock2,745 384 1,838 
Payments for the redemption of long-term debt(4,506)(3,476)(2,906)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days3,009 397 472 
Payments for the redemption of short-term debt with original maturities greater than 90 days(2,147)(479)(282)
Notes payable and commercial paper(1,181)(298)981 
Contributions from noncontrolling interests426 843 41 
Dividends paid(2,812)(2,668)(2,471)
Other(133)(26)(12)
Net cash provided by financing activities1,731 3,730 2,960 
Net (decrease) increase in cash, cash equivalents, and restricted cash(17)(18)86 
Cash, cash equivalents, and restricted cash at beginning of period573 591 505 
Cash, cash equivalents, and restricted cash at end of period$556 $573 $591 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$2,186 $2,195 $2,086 
Cash received from income taxes(585)(651)(266)
Significant non-cash transactions:
Accrued capital expenditures1,116 1,356 1,112 
Non-cash dividends110 108 107 
See Notes to Consolidated Financial Statements
82
FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Duke Energy Corporation Stockholders'
Accumulated Other Comprehensive
Income (Loss)
Net UnrealizedTotal
NetGains (Losses)Duke Energy
CommonAdditionalLosses onon Available-Pension andCorporation
PreferredStockCommonPaid-inRetainedCash Flowfor-Sale-OPEBStockholders'NoncontrollingTotal
(in millions)StockSharesStockCapitalEarningsHedgesSecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2017$— 700 $1 $38,792 $3,013 $(10)$12 $(69)$41,739 $(2)$41,737 
Net income— — — — 2,666 — — — 2,666 (22)2,644 
Other comprehensive loss— — — — — (4)(3)(6)(13)— (13)
Common stock issuances, including dividend reinvestment and employee benefits— 27 — 2,003 — — — — 2,003 — 2,003 
Common stock dividends— — — — (2,578)— — — (2,578)— (2,578)
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (1)(1)
Other(a)
— — — — 12 — (12)— — 42 42 
Balance at December 31, 2018$— 727 $1 $40,795 $3,113 $(14)$(3)$(75)$43,817 $17 $43,834 
Net income— — — — 3,707 — — — 3,707 (177)3,530 
Other comprehensive (loss) Income— — — — — (41)8 9 (24)— (24)
Preferred stock, Series A, issuances, net of issuance costs(b)
973 — — — — — — — 973 — 973 
Preferred stock, Series B, issuances, net of issuance costs(b)
989 — — — — — — — 989 — 989 
Common stock issuances, including dividend reinvestment and employee benefits— 6 — 552 — — — — 552 — 552 
Common stock dividends— — — — (2,735)— — — (2,735)— (2,735)
Sale of noncontrolling interest(c)
— — — (466)— 10 — — (456)863 407 
Contribution from noncontrolling interest (f)
— — — — — — — — — 428 428 
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (4)(4)
Other(d)
— — — — 23 (6)(2)(16)(1)2 1 
Balance at December 31, 2019$1,962 733 $1 $40,881 $4,108 $(51)$3 $(82)$46,822 $1,129 $47,951 
Net income— — — — 1,270 — — — 1,270 (295)975 
Other comprehensive (loss) income— — — — — (116)3 6 (107)(11)(118)
Common stock issuances, including dividend reinvestment and employee benefits— 36 — 2,902 — — — — 2,902 — 2,902 
Common stock dividends— — — — (2,815)— — — (2,815)— (2,815)
Contribution from noncontrolling interest, net of transaction costs(f)
— — — (17)— — — — (17)426 409 
Distributions to noncontrolling interests in subsidiaries— — — — — — — — — (30)(30)
Other(e)
— — — 1 (92)— — — (91)1 (90)
Balance at December 31, 2020$1,962 769 $1 $43,767 $2,471 $(167)$6 $(76)$47,964 $1,220 $49,184 
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information. Amount in Noncontrolling Interests primarily relates to tax equity financing activity in the Commercial Renewables segment.
(b)     Duke Energy issued 40 million depositary shares of preferred stock, Series A, in the first quarter of 2019 and 1 million shares of preferred stock, Series B, in the third quarter of 2019.
(c)    See Note 1 for additional discussion of the transaction.
(d)    Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
(e)     Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.
(f)    Relates to tax equity financing activity in the Commercial Renewables segment.
See Notes to Consolidated Financial Statements
83



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $3.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
84



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1947.

85


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$7,015 $7,395 $7,300 
Operating Expenses   
Fuel used in electric generation and purchased power1,682 1,804 1,821 
Operation, maintenance and other1,743 1,868 2,130 
Depreciation and amortization1,462 1,388 1,201 
Property and other taxes299 292 295 
Impairment charges476 17 192 
Total operating expenses5,662 5,369 5,639 
Gains (Losses) on Sales of Other Assets and Other, net1 — (1)
Operating Income1,354 2,026 1,660 
Other Income and Expenses, net177 151 153 
Interest Expense487 463 439 
Income Before Income Taxes1,044 1,714 1,374 
Income Tax Expense88 311 303 
Net Income$956 $1,403 $1,071 
Other Comprehensive Income, net of tax   
Reclassification into earnings from cash flow hedges— — 1 
Other Comprehensive Income, net of tax— — 1 
Comprehensive Income$956 $1,403 $1,072 
See Notes to Consolidated Financial Statements
86


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$21 $18 
Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019)247 324 
Receivables of VIEs (net of allowance for doubtful accounts of $22 at 2020 and $7 at 2019)696 642 
Receivables from affiliated companies124 114 
Inventory1,010 996 
Regulatory assets473 550 
Other20 21 
Total current assets2,591 2,665 
Property, Plant and Equipment  
Cost50,640 48,922 
Accumulated depreciation and amortization(17,453)(16,525)
Net property, plant and equipment33,187 32,397 
Other Noncurrent Assets
Regulatory assets2,996 3,360 
Nuclear decommissioning trust funds4,977 4,359 
Operating lease right-of-use assets, net110 123 
Other1,187 1,149 
Total other noncurrent assets9,270 8,991 
Total Assets$45,048 $44,053 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$1,000 $954 
Accounts payable to affiliated companies199 210 
Notes payable to affiliated companies506 29 
Taxes accrued76 46 
Interest accrued117 115 
Current maturities of long-term debt506 458 
Asset retirement obligations264 206 
Regulatory liabilities473 255 
Other546 611 
Total current liabilities3,687 2,884 
Long-Term Debt11,412 11,142 
Long-Term Debt Payable to Affiliated Companies300 300 
Other Noncurrent Liabilities  
Deferred income taxes3,842 3,921 
Asset retirement obligations5,086 5,528 
Regulatory liabilities6,535 6,423 
Operating lease liabilities97 102 
Accrued pension and other post-retirement benefit costs73 84 
Investment tax credits236 231 
Other626 627 
Total other noncurrent liabilities16,495 16,916 
Commitments and Contingencies00
Equity  
Member's equity13,161 12,818 
Accumulated other comprehensive loss(7)(7)
Total equity13,154 12,811 
Total Liabilities and Equity$45,048 $44,053 
See Notes to Consolidated Financial Statements
87


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$956 $1,403 $1,071 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)1,731 1,671 1,487 
Equity component of AFUDC(62)(42)(73)
(Gains) Losses on sales of other assets(1)— 1 
Impairment charges476 17 192 
Deferred income taxes(260)133 305 
Payments for asset retirement obligations(162)(278)(230)
Provision for rate refunds(5)36 182 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(4)(8)2 
Receivables52 (21)(86)
Receivables from affiliated companies(10)68 (87)
Inventory(14)(48)25 
Other current assets209 (73)(161)
Increase (decrease) in
Accounts payable55 (50)168 
Accounts payable to affiliated companies(11)(20)21 
Taxes accrued30 (127)(65)
Other current liabilities(56)127 89 
Other assets(101)(42)(221)
Other liabilities(47)(37)(90)
Net cash provided by operating activities2,776 2,709 2,530 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(2,669)(2,714)(2,706)
Purchases of debt and equity securities(1,602)(1,658)(1,810)
Proceeds from sales and maturities of debt and equity securities1,602 1,658 1,810 
Other(164)(204)(147)
Net cash used in investing activities(2,833)(2,918)(2,853)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt998 886 1,983 
Payments for the redemption of long-term debt(813)(6)(1,205)
Notes payable to affiliated companies477 (410)335 
Distributions to parent(600)(275)(750)
Other(2)(1)(23)
Net cash provided by financing activities60 194 340 
Net increase (decrease) in cash and cash equivalents3 (15)17 
Cash and cash equivalents at beginning of period18 33 16 
Cash and cash equivalents at end of period$21 $18 $33 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$481 $433 $452 
Cash paid for income taxes321 122 89 
Significant non-cash transactions:
Accrued capital expenditures365 347 302 
See Notes to Consolidated Financial Statements
88


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated Other
  Comprehensive 
Loss
Net Gains
(Losses) on
Member'sCash FlowTotal
(in millions)EquityHedgesEquity
Balance at December 31, 2017$11,368 $(7)$11,361 
Net income1,071 — 1,071 
Other comprehensive income— 1 1 
Distributions to parent(750)— (750)
Balance at December 31, 2018$11,689 $(6)$11,683 
Net income1,403 — 1,403 
Distributions to parent(275)— (275)
Other1 (1)0 
Balance at December 31, 2019$12,818 $(7)$12,811 
Net income956 — 956 
Distributions to parent(600)— (600)
Other(a)
(13)— (13)
Balance at December 31, 2020$13,161 $(7)$13,154 
(a)     Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.
See Notes to Consolidated Financial Statements
89



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Progress Energy, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $6.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
90



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1930.

91



FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$10,627 $11,202 $10,728 
Operating Expenses   
Fuel used in electric generation and purchased power3,479 4,024 3,976 
Operation, maintenance and other2,479 2,495 2,613 
Depreciation and amortization1,818 1,845 1,619 
Property and other taxes545 561 529 
Impairment charges495 (24)87 
Total operating expenses8,816 8,901 8,824 
Gains on Sales of Other Assets and Other, net9 — 24 
Operating Income1,820 2,301 1,928 
Other Income and Expenses, net129 141 165 
Interest Expense790 862 842 
Income Before Income Taxes1,159 1,580 1,251 
Income Tax Expense113 253 218 
Net Income1,046 1,327 1,033 
Less: Net Income Attributable to Noncontrolling Interests1 — 6 
Net Income Attributable to Parent$1,045 $1,327 $1,027 
Net Income$1,046 $1,327 $1,033 
Other Comprehensive Income, net of tax   
Pension and OPEB adjustments(1)2 5 
Net unrealized gain on cash flow hedges5 5 6 
Unrealized (losses) gains on available-for-sale securities(1)1 (1)
Other Comprehensive Income, net of tax3 8 10 
Comprehensive Income1,049 1,335 1,043 
Less: Comprehensive Income Attributable to Noncontrolling Interests1 — 6 
Comprehensive Income Attributable to Parent$1,048 $1,335 $1,037 
See Notes to Consolidated Financial Statements
92
FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$59 $48 
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)228 220 
Receivables of VIEs (net of allowance for doubtful accounts of $29 at 2020 and $9 at 2019)901 830 
Receivables from affiliated companies157 76 
Notes receivable from affiliated companies— 164 
Inventory1,375 1,423 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)758 946 
Other (includes $39 at 2020 and 2019 related to VIEs)109 210 
Total current assets3,587 3,917 
Property, Plant and Equipment  
Cost57,892 55,070 
Accumulated depreciation and amortization(18,368)(17,159)
Generation facilities to be retired, net29 246 
Net property, plant and equipment39,553 38,157 
Other Noncurrent Assets  
Goodwill3,655 3,655 
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)5,775 6,346 
Nuclear decommissioning trust funds4,137 3,782 
Operating lease right-of-use assets, net690 788 
Other1,227 1,049 
Total other noncurrent assets15,484 15,620 
Total Assets$58,624 $57,694 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$919 $1,104 
Accounts payable to affiliated companies289 310 
Notes payable to affiliated companies2,969 1,821 
Taxes accrued121 46 
Interest accrued202 228 
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)1,426 1,577 
Asset retirement obligations283 485 
Regulatory liabilities640 330 
Other793 902 
Total current liabilities7,642 6,803 
Long-Term Debt (includes $1,252 at 2020 and $1,632 at 2019 related to VIEs)17,688 17,907 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities  
Deferred income taxes4,396 4,462 
Asset retirement obligations5,866 5,986 
Regulatory liabilities5,051 5,225 
Operating lease liabilities623 697 
Accrued pension and other post-retirement benefit costs505 488 
Other462 383 
Total other noncurrent liabilities16,903 17,241 
Commitments and Contingencies00
Equity  
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019— — 
Additional paid-in capital9,143 9,143 
Retained earnings7,109 6,465 
Accumulated other comprehensive loss(15)(18)
Total Progress Energy, Inc. stockholder's equity16,237 15,590 
Noncontrolling interests4 3 
Total equity16,241 15,593 
Total Liabilities and Equity$58,624 $57,694 
See Notes to Consolidated Financial Statements
93



FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$1,046 $1,327 $1,033 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)2,327 2,207 1,987 
Equity component of AFUDC(42)(66)(104)
Gains on sales of other assets(9)— (24)
Impairment charges495 (24)87 
Deferred income taxes(197)433 358 
Payments for asset retirement obligations(384)(412)(230)
Provision for rate refunds2 15 122 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(9)(34)18 
Receivables(69)47 (207)
Receivables from affiliated companies(81)81 (137)
Inventory49 62 121 
Other current assets223 184 (12)
Increase (decrease) in
Accounts payable(62)(4)217 
Accounts payable to affiliated companies(21)(50)109 
Taxes accrued75 (74)8 
Other current liabilities139 25 129 
Other assets(128)(341)(896)
Other liabilities(177)(167)(35)
Net cash provided by operating activities3,177 3,209 2,544 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(3,488)(3,952)(3,854)
Purchases of debt and equity securities(5,998)(1,511)(1,753)
Proceeds from sales and maturities of debt and equity securities6,010 1,504 1,769 
Notes receivable from affiliated companies164 (164)240 
Other(160)(190)(162)
Net cash used in investing activities(3,472)(4,313)(3,760)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt1,791 2,187 1,833 
Payments for the redemption of long-term debt(2,157)(1,667)(771)
Notes payable to affiliated companies1,148 586 430 
Dividends to parent(400)— (250)
Other(13)12 (1)
Net cash provided by financing activities369 1,118 1,241 
Net increase in cash, cash equivalents, and restricted cash74 14 25 
Cash, cash equivalents, and restricted cash at beginning of period126 112 87 
Cash, cash equivalents, and restricted cash at end of period$200 $126 $112 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$819 $892 $798 
Cash paid for (received from) income taxes149 (79)(348)
Significant non-cash transactions:
Accrued capital expenditures363 447 478 
See Notes to Consolidated Financial Statements
94



FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
   Accumulated Other Comprehensive Income (Loss)   
Net GainsNet UnrealizedTotal Progress
Additional(Losses) onGains (Losses)Pension andEnergy, Inc.
Paid-inRetainedCash Flowon Available-for-OPEBStockholder'sNoncontrollingTotal
(in millions)CapitalEarningsHedgesSale SecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2017$9,143 $4,350 $(18)$5 $(12)$13,468 $(3)$13,465 
Net income— 1,027 — — — 1,027 6 1,033 
Other comprehensive income (loss)— — 6 (1)5 10 — 10 
Distributions to noncontrolling interests— — — — — — (1)(1)
Dividends to parent— (250)— — — (250)— (250)
Other(a)
— 4 — (5)— (1)1 0 
Balance at December 31, 2018$9,143 $5,131 $(12)$(1)$(7)$14,254 $3 $14,257 
Net income— 1,327 — — — 1,327 — 1,327 
Other comprehensive income— — 5 1 2 8 — 8 
Other(b)
— 7 (3)(1)(2)1 — 1 
Balance at December 31, 2019$9,143 $6,465 $(10)$(1)$(7)$15,590 $3 $15,593 
Net income— 1,045 — — — 1,045 1 1,046 
Other comprehensive income (loss)— — 5 (1)(1)3 — 3 
Dividends to parent— (400)— — — (400)— (400)
Other— (1)— — — (1)— (1)
Balance at December 31, 2020$9,143 $7,109 $(5)$(2)$(8)$16,237 $4 $16,241 
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
(b)    Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
See Notes to Consolidated Financial Statements
95



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Progress, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Progress, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $4.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
96



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1930.

97



FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$5,422 $5,957 $5,699 
Operating Expenses   
Fuel used in electric generation and purchased power1,743 2,012 1,892 
Operation, maintenance and other1,332 1,446 1,578 
Depreciation and amortization1,116 1,143 991 
Property and other taxes167 176 155 
Impairment charges499 12 33 
Total operating expenses4,857 4,789 4,649 
Gains on Sales of Other Assets and Other, net8 — 9 
Operating Income573 1,168 1,059 
Other Income and Expenses, net75 100 87 
Interest Expense269 306 319 
Income Before Income Taxes379 962 827 
Income Tax (Benefit) Expense(36)157 160 
Net Income and Comprehensive Income$415 $805 $667 
See Notes to Consolidated Financial Statements
98

FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$39 $22 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)132 123 
Receivables of VIEs (net of allowance for doubtful accounts of $19 at 2020 and $5 at 2019)500 489 
Receivables from affiliated companies50 52 
Inventory911 934 
Regulatory assets492 526 
Other60 60 
Total current assets2,184 2,206 
Property, Plant and Equipment
Cost35,759 34,603 
Accumulated depreciation and amortization(12,801)(11,915)
Generation facilities to be retired, net29 246 
Net property, plant and equipment22,987 22,934 
Other Noncurrent Assets
Regulatory assets3,976 4,152 
Nuclear decommissioning trust funds3,500 3,047 
Operating lease right-of-use assets, net346 387 
Other740 651 
Total other noncurrent assets8,562 8,237 
Total Assets$33,733 $33,377 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$454 $629 
Accounts payable to affiliated companies215 203 
Notes payable to affiliated companies295 66 
Taxes accrued85 17 
Interest accrued99 110 
Current maturities of long-term debt603 1,006 
Asset retirement obligations283 485 
Regulatory liabilities530 236 
Other411 478 
Total current liabilities2,975 3,230 
Long-Term Debt8,505 7,902 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities
Deferred income taxes2,298 2,388 
Asset retirement obligations5,352 5,408 
Regulatory liabilities4,394 4,232 
Operating lease liabilities323 354 
Accrued pension and other post-retirement benefit costs242 238 
Investment tax credits132 137 
Other102 92 
Total other noncurrent liabilities12,843 12,849 
Commitments and Contingencies00
Equity
Member's Equity9,260 9,246 
Total Liabilities and Equity$33,733 $33,377 
See Notes to Consolidated Financial Statements
99

FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$415 $805 $667 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)1,299 1,329 1,183 
Equity component of AFUDC(29)(60)(57)
Gains on sales of other assets(8)— (9)
Impairment charges499 12 33 
Deferred income taxes(234)197 236 
Payments for asset retirement obligations(304)(390)(195)
Provisions for rate refunds2 12 122 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions1 (6)5 
Receivables(4)21 (107)
Receivables from affiliated companies2 (29)(20)
Inventory23 20 63 
Other current assets98 101 (201)
Increase (decrease) in
Accounts payable(127)32 219 
Accounts payable to affiliated companies12 (75)99 
Taxes accrued68 (46)(11)
Other current liabilities157 68 46 
Other assets(207)(205)(465)
Other liabilities3 37 20 
Net cash provided by operating activities1,666 1,823 1,628 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(1,581)(2,108)(2,220)
Purchases of debt and equity securities(1,555)(842)(1,236)
Proceeds from sales and maturities of debt and equity securities1,516 810 1,206 
Other(57)(119)(95)
Net cash used in investing activities(1,677)(2,259)(2,345)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt1,296 1,269 845 
Payments for the redemption of long-term debt(1,085)(605)(3)
Notes payable to affiliated companies229 (228)54 
Distributions to parent(400)— (175)
Other(12)(1)(1)
Net cash provided by financing activities28 435 720 
Net increase (decrease) in cash and cash equivalents17 (1)3 
Cash and cash equivalents at beginning of period22 23 20 
Cash and cash equivalents at end of period$39 $22 $23 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$301 $331 $303 
Cash paid for (received from) income taxes123 (30)(112)
Significant non-cash transactions:
Accrued capital expenditures149 175 220 
See Notes to Consolidated Financial Statements
100



FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Member's
(in millions)Equity
Balance at December 31, 2017$7,949 
Net income667 
Distribution to parent(175)
Balance at December 31, 2018$8,441 
Net income805 
Balance at December 31, 2019$9,246 
Net income415
Distribution to parent(400)
Other(1)
Balance at December 31, 2020$9,260
See Notes to Consolidated Financial Statements
101



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Florida, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Florida, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $2.1 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

102



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, including the settlement agreement filed with the Commission subsequent to December 31, 2020, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2001.

103


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$5,188 $5,231 $5,021 
Operating Expenses   
Fuel used in electric generation and purchased power1,737 2,012 2,085 
Operation, maintenance and other1,131 1,034 1,025 
Depreciation and amortization702 702 628 
Property and other taxes381 392 374 
Impairment charges(4)(36)54 
Total operating expenses3,947 4,104 4,166 
Gains on Sales of Other Assets and Other, net1 — 1 
Operating Income1,242 1,127 856 
Other Income and Expenses, net53 48 86 
Interest Expense326 328 287 
Income Before Income Taxes969 847 655 
Income Tax Expense198 155 101 
Net Income$771 $692 $554 
Other Comprehensive Income (Loss), net of tax   
Unrealized (losses) gains on available-for-sale securities(1)1 (1)
Other Comprehensive (Loss) Income, net of tax(1)1 (1)
Comprehensive Income$770 $693 $553 
See Notes to Consolidated Financial Statements
104


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$11 $17 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)94 96 
Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $4 at 2019)401 341 
Receivables from affiliated companies3 — 
Notes receivable from affiliated companies— 173 
Inventory464 489 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)265 419 
Other (includes $39 at 2020 and 2019 related to VIEs)41 58 
Total current assets1,279 1,593 
Property, Plant and Equipment  
Cost22,123 20,457 
Accumulated depreciation and amortization(5,560)(5,236)
Net property, plant and equipment16,563 15,221 
Other Noncurrent Assets  
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)1,799 2,194 
Nuclear decommissioning trust funds637 734 
Operating lease right-of-use assets, net344 401 
Other335 311 
Total other noncurrent assets3,115 3,640 
Total Assets$20,957 $20,454 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$465 $474 
Accounts payable to affiliated companies85 131 
Notes payable to affiliated companies196 — 
Taxes accrued82 43 
Interest accrued69 75 
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)823 571 
Regulatory liabilities110 94 
Other374 415 
Total current liabilities2,204 1,803 
Long-Term Debt (includes $1,002 at 2020 and $1,307 at 2019 related to VIEs)7,092 7,416 
Other Noncurrent Liabilities  
Deferred income taxes2,191 2,179 
Asset retirement obligations514 578 
Regulatory liabilities658 993 
Operating lease liabilities300 343 
Accrued pension and other post-retirement benefit costs231 218 
Other209 136 
Total other noncurrent liabilities4,103 4,447 
Commitments and Contingencies00
Equity  
Member's equity7,560 6,789 
Accumulated other comprehensive loss(2)(1)
Total equity7,558 6,788 
Total Liabilities and Equity$20,957 $20,454 
See Notes to Consolidated Financial Statements
105


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$771 $692 $554 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion1,019 869 793 
Equity component of AFUDC(12)(6)(47)
Gains on sales of other assets(1)— (1)
Impairment charges(4)(36)54 
Deferred income taxes27 180 159 
Payments for asset retirement obligations(80)(22)(35)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(14)(33)7 
Receivables(64)26 (100)
Receivables from affiliated companies(3)17 (26)
Inventory26 42 58 
Other current assets40 156 59 
Increase (decrease) in
Accounts payable66 (36)(1)
Accounts payable to affiliated companies(46)40 17 
Taxes accrued39 (31)40 
Other current liabilities(7)(36)82 
Other assets85 (131)(429)
Other liabilities(181)(213)(75)
Net cash provided by operating activities1,661 1,478 1,109 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(1,907)(1,844)(1,634)
Purchases of debt and equity securities(4,443)(669)(517)
Proceeds from sales and maturities of debt and equity securities4,495 695 563 
Notes receivable from affiliated companies173 (173)313 
Other(103)(67)(65)
Net cash used in investing activities(1,785)(2,058)(1,340)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt495 918 988 
Payments for the redemption of long-term debt(572)(262)(769)
Notes payable to affiliated companies196 (108)108 
Distribution to parent— — (75)
Other(1)13 1 
Net cash provided by financing activities118 561 253 
Net (decrease) increase in cash, cash equivalents, and restricted cash(6)(19)22 
Cash, cash equivalents, and restricted cash at beginning of period56 75 53 
Cash, cash equivalents, and restricted cash at end of period$50 $56 $75 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$321 $332 $270 
Cash paid for (received from) income taxes138 1 (120)
Significant non-cash transactions:
Accrued capital expenditures214 272 258 
See Notes to Consolidated Financial Statements
106


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated
Other
Comprehensive
Income (Loss)
Net Unrealized
Gains (Losses) on
 Member'sAvailable-for-Total
(in millions)EquitySale SecuritiesEquity
Balance at December 31, 2017$5,614 $4 $5,618 
Net income554 — 554 
Other comprehensive loss— (1)(1)
Distribution to parent(75)— (75)
Other(a)
4 (5)(1)
Balance at December 31, 2018$6,097 $(2)$6,095 
Net income692 — 692 
Other comprehensive income— 1 1 
Balance at December 31, 2019$6,789 $(1)$6,788 
Net income771 — 771 
Other comprehensive loss— (1)(1)
Balance at December 31, 2020$7,560 $(2)$7,558 
(a)    Amounts represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
See Notes to Consolidated Financial Statements
107



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Ohio, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

CriticalAuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $650 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
108



REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2002.

109


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues   
Regulated electric$1,405 $1,456 $1,450 
Regulated natural gas453 484 506 
Nonregulated electric and other— — 1 
Total operating revenues1,858 1,940 1,957 
Operating Expenses   
Fuel used in electric generation and purchased power – regulated339 388 412 
Cost of natural gas73 95 113 
Operation, maintenance and other463 520 480 
Depreciation and amortization278 265 268 
Property and other taxes324 308 290 
Total operating expenses1,477 1,576 1,563 
Losses on Sales of Other Assets and Other, net— — (106)
Operating Income381 364 288 
Other Income and Expenses, net16 24 23 
Interest Expense102 109 92 
Income From Continuing Operations Before Income Taxes295 279 219 
Income Tax Expense From Continuing Operations43 40 43 
Income From Continuing Operations252 239 176 
Loss From Discontinued Operations, net of tax— (1)— 
Net Income and Comprehensive Income$252 $238 $176 
See Notes to Consolidated Financial Statements
110


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$14 $17 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $4 at 2019)98 84 
Receivables from affiliated companies102 92 
Inventory110 135 
Regulatory assets39 49 
Other31 21 
Total current assets394 398 
Property, Plant and Equipment  
Cost11,022 10,241 
Accumulated depreciation and amortization(3,013)(2,843)
Net property, plant and equipment8,009 7,398 
Other Noncurrent Assets  
Goodwill920 920 
Regulatory assets610 549 
Operating lease right-of-use assets, net20 21 
Other72 52 
Total other noncurrent assets1,622 1,542 
Total Assets$10,025 $9,338 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$279 $288 
Accounts payable to affiliated companies68 68 
Notes payable to affiliated companies169 312 
Taxes accrued247 219 
Interest accrued31 30 
Current maturities of long-term debt50 — 
Asset retirement obligations3 1 
Regulatory liabilities65 64 
Other70 75 
Total current liabilities982 1,057 
Long-Term Debt3,014 2,594 
Long-Term Debt Payable to Affiliated Companies25 25 
Other Noncurrent Liabilities  
Deferred income taxes981 922 
Asset retirement obligations108 79 
Regulatory liabilities748 763 
Operating lease liabilities20 21 
Accrued pension and other post-retirement benefit costs113 100 
Other99 94 
Total other noncurrent liabilities2,069 1,979 
Commitments and Contingencies00
Equity  
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019762 762 
Additional paid-in capital2,776 2,776 
Retained earnings397 145 
Total equity3,935 3,683 
Total Liabilities and Equity$10,025 $9,338 
See Notes to Consolidated Financial Statements
111


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$252 $238 $176 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion283 269 271 
Equity component of AFUDC(7)(13)(11)
Losses on sales of other assets0 0 106 
Deferred income taxes31 81 25 
Payments for asset retirement obligations(2)(8)(3)
Provision for rate refunds14 7 24 
(Increase) decrease in   
Receivables(13)20 (33)
Receivables from affiliated companies9 22 19 
Inventory25 (9)7 
Other current assets(18)(5)16 
Increase (decrease) in   
Accounts payable2 (17)(19)
Accounts payable to affiliated companies0 (10)16 
Taxes accrued30 17 12 
Other current liabilities3 1 14 
Other assets(32)(26)(24)
Other liabilities(2)(41)(26)
Net cash provided by operating activities575 526 570 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(834)(952)(827)
Notes receivable from affiliated companies(19)— 14 
Other(48)(68)(89)
Net cash used in investing activities(901)(1,020)(902)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt467 1,003 99 
Payments for the redemption of long-term debt— (551)(3)
Notes payable to affiliated companies(144)38 245 
Net cash provided by financing activities323 490 341 
Net (decrease) increase in cash and cash equivalents(3)(4)9 
Cash and cash equivalents at beginning of period17 21 12 
Cash and cash equivalents at end of period$14 $17 $21 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$97 $97 $87 
Cash received from income taxes— (37)(6)
Significant non-cash transactions:
Accrued capital expenditures104 109 95 
Non-cash equity contribution from parent— — 106 
See Notes to Consolidated Financial Statements
112


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
AdditionalRetained
CommonPaid-inEarningsTotal
(in millions)StockCapital(Deficit)Equity
Balance at December 31, 2017$762 $2,670 $(269)$3,163 
Net income— — 176 176 
Contribution from parent— 106 — 106 
Balance at December 31, 2018$762 $2,776 $(93)$3,445 
Net income— — 238 238 
Balance at December 31, 2019$762 $2,776 $145 $3,683 
Net income— — 252 252 
Balance at December 31, 2020$762 $2,776 $397 $3,935 
See Notes to Consolidated Financial Statements
113



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Indiana, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Indiana, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Indiana Utility Regulatory Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $1.3 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

114



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

Duke Energy Indiana Coal Ash Asset Retirement Obligations – Refer to Notes 3, 4, and 9 to the financial statements

Critical Audit Matter Description

Duke Energy Indiana has asset retirement obligations associated with coal ash impoundments at operating and retired coal generation facilities. These legal obligations are the result of Indiana state and federal regulations. There is significant judgment in determining the assumptions used in estimating the closure costs for each site since Duke Energy Indiana does not have approved closure plans for certain sites. Potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods (“probability weightings”) creates estimation uncertainty. The liability for coal ash asset retirement obligations at Duke Energy Indiana was $1,140 million at December 31, 2020.

We identified the asset retirement obligations associated with coal ash impoundments at Duke Energy Indiana as a critical audit matter because of the significant management estimates and assumptions, including projected closure costs as well as the different potential closure methods. The audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods required a high degree of auditor judgment and an increased extent of effort, including the need to involve our environmental specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the underlying estimated closure costs for coal ash asset retirement obligations at Duke Energy Indiana included the following, among others:

•We tested the effectiveness of controls over management’s coal ash asset retirement obligation estimate, including those over management’s determination of the estimated closure costs and probability weightings.

•We evaluated management’s ability to accurately estimate future closure costs by comparing actual closure costs to management’s historical estimates.

•We tested the mathematical accuracy of management’s coal ash asset retirement obligation calculations, including the application of probability weightings.

•We made inquiries of internal and external legal counsel regarding the status of the legal matters associated with the probability weightings.

•We inspected the opinions from internal and external legal counsel supporting the probability weightings.

•We inspected the Company’s filings with and orders from the Indiana Department of Environmental Management, for evidence that might contradict management’s assertions regarding the estimated closure costs and probability weightings.

•With the assistance of our environmental specialists, we evaluated the reasonableness of management’s estimated closure costs by comparing the costs to actual costs incurred at comparable coal ash impoundments, underlying contracts, and publicly available industry cost data, as applicable.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2002.

115



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$2,795 $3,004 $3,059 
Operating Expenses   
Fuel used in electric generation and purchased power767 935 1,000 
Operation, maintenance and other762 790 788 
Depreciation and amortization569 525 520 
Property and other taxes81 69 78 
Impairment charges— — 30 
Total operating expenses2,179 2,319 2,416 
Operating Income616 685 643 
Other Income and Expenses, net37 41 45 
Interest Expense161 156 167 
Income Before Income Taxes492 570 521 
Income Tax Expense84 134 128 
Net Income and Comprehensive Income$408 $436 $393 
See Notes to Consolidated Financial Statements
116



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$7 $25 
Receivables (net of allowance for doubtful accounts of $3 at 2020 and $3 at 2019)55 60 
Receivables from affiliated companies112 79 
Inventory473 517 
Regulatory assets125 90 
Other37 60 
Total current assets809 831 
Property, Plant and Equipment  
Cost17,382 16,305 
Accumulated depreciation and amortization(5,661)(5,233)
Net property, plant and equipment11,721 11,072 
Other Noncurrent Assets 
Regulatory assets1,203 1,082 
Operating lease right-of-use assets, net55 57 
Other253 234 
Total other noncurrent assets1,511 1,373 
Total Assets$14,041 $13,276 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$188 $201 
Accounts payable to affiliated companies88 87 
Notes payable to affiliated companies131 30 
Taxes accrued62 49 
Interest accrued51 58 
Current maturities of long-term debt70 503 
Asset retirement obligations168 189 
Regulatory liabilities111 55 
Other83 112 
Total current liabilities952 1,284 
Long-Term Debt3,871 3,404 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities  
Deferred income taxes1,228 1,150 
Asset retirement obligations1,008 643 
Regulatory liabilities1,627 1,685 
Operating lease liabilities53 55 
Accrued pension and other post-retirement benefit costs171 148 
Investment tax credits168 164 
Other30 18 
Total other noncurrent liabilities4,285 3,863 
Commitments and Contingencies00
Equity  
Member's Equity4,783 4,575 
Total Liabilities and Equity$14,041 $13,276 
See Notes to Consolidated Financial Statements
117



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$408 $436 $393 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization, and accretion572 531 524 
Equity component of AFUDC(23)(18)(32)
Impairment charges— — 30 
Deferred income taxes29 156 95 
Payments for asset retirement obligations(63)(48)(69)
Provision for rate refunds— — 53 
(Increase) decrease in   
Receivables8 (8)7 
Receivables from affiliated companies0 41 3 
Inventory44 (95)28 
Other current assets(3)76 (25)
Increase (decrease) in   
Accounts payable(12)(10)37 
Accounts payable to affiliated companies1 4 5 
Taxes accrued13 (25)(52)
Other current liabilities6 15 14 
Other assets(68)(74)26 
Other liabilities26 16 (31)
Net cash provided by operating activities938 997 1,006 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(888)(876)(832)
Purchases of debt and equity securities(37)(26)(48)
Proceeds from sales and maturities of debt and equity securities22 20 44 
Notes receivable from affiliated companies(33)— — 
Other48 (49)18 
Net cash used in investing activities(888)(931)(818)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt544 485 — 
Payments for the redemption of long-term debt(513)(213)(3)
Notes payable to affiliated companies101 (137)6 
Distributions to parent(200)(200)(175)
Other— — (1)
Net cash used in financing activities(68)(65)(173)
Net (decrease) increase in cash and cash equivalents(18)1 15 
Cash and cash equivalents at beginning of period25 24 9 
Cash and cash equivalents at end of period$7 $25 $24 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$164 $150 $162 
Cash paid for (received from) income taxes36 (6)75 
Significant non-cash transactions:
Accrued capital expenditures101 102 88 
See Notes to Consolidated Financial Statements
118



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Member's
(in millions)Equity
Balance at December 31, 2017$4,121 
Net income393 
Distributions to parent(175)
Balance at December 31, 2018$4,339 
Net income436 
Distributions to parent(200)
Balance at December 31, 2019$4,575 
Net income408
Distributions to parent(200)
Balance at December 31, 2020$4,783
See Notes to Consolidated Financial Statements
119



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Piedmont Natural Gas Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Piedmont Natural Gas Company, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, the Public Service Commission of South Carolina, and the Tennessee Public Utility Commission (collectively the “Commissions”), which have jurisdiction with respect to the gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $450 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

120



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1951.

121



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31,
(in millions)202020192018
Operating Revenues
Regulated natural gas$1,286 $1,369 $1,365 
Nonregulated natural gas and other11 12 10 
Total operating revenues1,297 1,381 1,375 
Operating Expenses 
Cost of natural gas386 532 584 
Operation, maintenance and other322 328 357 
Depreciation and amortization180 172 159 
Property and other taxes53 45 49 
Impairment charges7 — — 
Total operating expenses948 1,077 1,149 
Operating Income349 304 226 
Equity in earnings of unconsolidated affiliates9 8 7 
Other income and expense, net51 20 14 
Total other income and expenses60 28 21 
Interest Expense118 87 81 
Income Before Income Taxes291 245 166 
Income Tax Expense18 43 37 
Net Income and Comprehensive Income$273 $202 $129 
See Notes to Consolidated Financial Statements
122



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
(in millions)20202019
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $12 at 2020 and $6 at 2019)$250 $241 
Receivables from affiliated companies10 10 
Inventory68 72 
Regulatory assets153 73 
Other20 28 
Total current assets501 424 
Property, Plant and Equipment
Cost9,134 8,446 
Accumulated depreciation and amortization(1,749)(1,681)
Net property, plant and equipment7,385 6,765 
Other Noncurrent Assets
Goodwill49 49 
Regulatory assets302 290 
Operating lease right-of-use assets, net20 24 
Investments in equity method unconsolidated affiliates88 83 
Other270 121 
Total other noncurrent assets729 567 
Total Assets$8,615 $7,756 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$230 $215 
Accounts payable to affiliated companies79 3 
Notes payable to affiliated companies530 476 
Taxes accrued23 24 
Interest accrued34 33 
Current maturities of long-term debt160 0 
Regulatory liabilities88 81 
Other69 67 
Total current liabilities1,213 899 
Long-Term Debt2,620 2,384 
Other Noncurrent Liabilities
Deferred income taxes821 708 
Asset retirement obligations20 17 
Regulatory liabilities1,044 1,131 
Operating lease liabilities19 23 
Accrued pension and other post-retirement benefit costs8 3 
Other155 148 
Total other noncurrent liabilities2,067 2,030 
Commitments and Contingencies00
Equity
Common stock, 0 par value: 100 shares authorized and outstanding at 2020 and 20191,310 1,310 
Retained earnings1,405 1,133 
Total equity2,715 2,443 
Total Liabilities and Equity$8,615 $7,756 
See Notes to Consolidated Financial Statements
123



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$273 $202 $129 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization182 174 161 
Equity component of AFUDC(19)— — 
Impairment charges7 — — 
Deferred income taxes53 136 (31)
Equity in (earnings) losses from unconsolidated affiliates(9)(8)(7)
Provision for rate refunds(33)2 43 
(Increase) decrease in
Receivables10 28 7 
Receivables from affiliated companies— 12 (15)
Inventory3 (2)(4)
Other current assets(66)(25)71 
Increase (decrease) in
Accounts payable16 (7)15 
Accounts payable to affiliated companies76 (35)25 
Taxes accrued3 (60)65 
Other current liabilities(11)1 21 
Other assets(11)1 3 
Other liabilities7 (10)(5)
Net cash provided by operating activities481 409 478 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(901)(1,053)(721)
Contributions to equity method investments— (16)— 
Other(28)(14)(10)
Net cash used in investing activities(929)(1,083)(731)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt394 596 100 
Payments for the redemption of long-term debt— (350)— 
Notes payable to affiliated companies54 278 (166)
Capital contribution from parent— 150 300 
Net cash provided by financing activities448 674 234 
Net decrease in cash and cash equivalents— — (19)
Cash and cash equivalents at beginning of period— — 19 
Cash and cash equivalents at end of period$— $— $— 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$115 $84 $79 
Cash received from income taxes(36)(31)(16)
Significant non-cash transactions:
Accrued capital expenditures106 109 96 
See Notes to Consolidated Financial Statements
124



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
CommonRetainedTotal
(in millions)StockEarningsEquity
Balance at December 31, 2017$860 $802 $1,662 
Net income— 129 129 
Contribution from parent300 — 300 
Balance at December 31, 2018$1,160 $931 $2,091 
Net income— 202 202 
Contribution from parent150 — 150 
Balance at December 31, 2019$1,310 $1,133 $2,443 
Net income— 273 273 
Other— (1)(1)
Balance at December 31, 2020$1,310 $1,405 $2,715 
See Notes to Consolidated Financial Statements
125



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Index to Combined Notes To Consolidated Financial Statements
The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.
 Applicable Notes
Registrant12345678910111213141516171819202122232425
Duke Energy•••••••••••• ••••••••••••
Duke Energy Carolinas•••••••••• •••••• ••••••
Progress Energy••••••••• •••••• ••••••
Duke Energy Progress•••••• ••• •••••• ••••••
Duke Energy Florida••••••••• •••••• ••••••
Duke Energy Ohio•••••• ••• •• ••• ••••••
Duke Energy Indiana•••••• •••• •••••• ••••••
Piedmont••••••••••••••••••••
Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Consolidation
Duke Energy is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants, including Duke Energy Carolinas; Progress Energy; Duke Energy Progress; Duke Energy Florida; Duke Energy Ohio; Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Consolidated Financial Statements. However, none of the Subsidiary Registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.
These Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 17 for additional information on VIEs. These Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. See Note 8 for additional information on joint ownership. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.
Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Progress Energy is a public utility holding company, which conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. Progress Energy is subject to regulation by FERC and other regulatory agencies listed below.
Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.
Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the energy price is recovered from retail customers and recorded in Operating Revenues on the Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC and FERC.
Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana is subject to the regulatory provisions of the IURC and FERC.
Piedmont is a regulated public utility primarily engaged in the distribution of natural gas in portions of North Carolina, South Carolina and Tennessee. Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC and FERC.
Certain prior year amounts have been reclassified to conform to the current year presentation.
126



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COVID-19
The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and the federal government proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The Duke Energy Registrants are monitoring developments closely and responding appropriately. The company incurred approximately $112 million of incremental COVID-19 costs before deferral for the year ended December 31, 2020, included in Operation, maintenance and other on the Consolidated Statements of Operations. Further, the company waived approximately $64 million of late payment fees for the year ended December 31, 2020. The company has deferred approximately $76 million of the incremental costs, which were primarily bad debt expense, personal protective equipment and cleaning supplies, and a cost component of late payment fees. See Notes 3, 6, 17, 18 and 23 for additional information as well as steps taken to mitigate the impacts to our business and customers from the COVID-19 pandemic.
Other Current Assets and Liabilities
The following table provides a description of amounts included in Other within Current Assets or Current Liabilities that exceed 5% of total Current Assets or Current Liabilities on the Duke Energy Registrants' Consolidated Balance Sheets at either December 31, 2020, or 2019.
December 31,
(in millions)Location20202019
Duke Energy
Other accrued liabilitiesCurrent Liabilities$1,455 $604 
Accrued compensationCurrent Liabilities662 862 
Duke Energy Carolinas
Accrued compensationCurrent Liabilities$213 $271 
Other accrued liabilitiesCurrent Liabilities178 147 
Progress Energy   
Customer depositsCurrent Liabilities$347 $354 
Duke Energy Florida   
Customer depositsCurrent Liabilities$203 $209 
Duke Energy Ohio   
Gas StorageCurrent Assets$21 $0 
Duke Energy Indiana   
Income taxes receivableCurrent Assets$9 $44 
Discontinued Operations
Duke Energy has severance plans underelected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these consolidated financial statements exclude amounts related to discontinued operations for all periods presented. For the years ended December 31, 2020, 2019 and 2018, the Income (Loss) From Discontinued Operations, net of tax on Duke Energy's Consolidated Statements of Operations is entirely attributable to controlling interest.
Noncontrolling Interest
Duke Energy maintains a controlling financial interest in certain less than wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Consolidated Balance Sheet.
Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the HLBV method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners, most of which is over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in general, the longer a terminated employee worked prioramount that each owner would hypothetically receive at the reporting date compared to termination the greateramount it would have received on the previous reporting date represents the amount of severance benefits. Aincome or loss allocated to each owner for the reporting period.
Other operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.
127



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
During the third quarter of 2019, Duke Energy completed a sale of minority interest in a portion of certain renewable assets within the Commercial Renewables Segment for pretax proceeds to Duke Energy of $415 million. The portion of Duke Energy's commercial renewables energy portfolio sold includes 49% of 37 operating wind, solar and battery storage assets and 33% of 11 operating solar assets across the U.S. Duke Energy retained control of these assets, and, therefore, no gain or loss was recognized on the Consolidated Statements of Operations. The difference between the consideration received and the carrying value of the noncontrolling interest claim on net assets is $466 million, net of tax benefit of $8 million, and was recorded to equity.
The following table presents cash received for the sale of noncontrolling interest and allocated losses to noncontrolling interest for the years ended December 31, 2020, and 2019.
December 31,
(in millions)20202019
Noncontrolling Interest Capital Contributions
Cash received for the sale of noncontrolling interest to tax equity members$426 $428 
Cash received for the sale of noncontrolling interest to pro rata share members— 415 
Total Noncontrolling Interest Capital Contributions$426 $843 
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method$271 $165 
Allocated losses to noncontrolling members based on pro rata shares of ownership24 12 
Total Noncontrolling Interest Allocated Losses$295 $177 
2021 Sale of Minority Interest in Duke Energy Indiana
In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund and an experienced investor in U.S. infrastructure. To facilitate the transaction, Duke Energy will issue and sell membership interests in Duke Energy Indiana Holdco, LLC. a newly created holding company that will own 100% of the issued and outstanding membership interests in Duke Energy Indiana. The transaction will be completed following two closings for an aggregate purchase price of approximately $2 billion. The first closing is expected to be completed in the second quarter of 2021 and Duke Energy will issue and sell 11.1% of the membership interests in exchange for 50% of the purchase price. Under the terms of the agreement, Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023. At the second closing, Duke Energy will issue and sell additional membership interests such that GIC will own 19.9% of the membership interests for the remaining 50% of the purchase price. Duke Energy will continue to operate and retain control of Duke Energy Indiana and, therefore, no gain or loss is expected to be recognized in the Consolidated Statements of Operations. Additionally, the transaction will be reflected within Duke Energy Corporations' stockholders' equity as a sale of a noncontrolling interest.
Acquisitions
The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.
Significant Accounting Policies
Use of Estimates
In preparing financial statements that conform to GAAP, the Duke Energy Registrants must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Regulatory Accounting
The majority of the Duke Energy Registrants’ operations are subject to price regulation for the sale of electricity and natural gas by state utility commissions or FERC. When prices are set on the basis of specific costs of the regulated operations and an effective franchise is in place such that sufficient natural gas or electric services can be sold to recover those costs, the Duke Energy Registrants apply regulatory accounting. Regulatory accounting changes the timing of the recognition of costs or revenues relative to a company that does not apply regulatory accounting. As a result, regulatory assets and regulatory liabilities are recognized on the Consolidated Balance Sheets. Regulatory assets and liabilities are amortized consistent with the treatment of the related cost in the ratemaking process. Regulatory assets are reviewed for recoverability each reporting period. If a regulatory asset is no longer deemed probable of recovery, the deferred cost is charged to earnings. See Note 3 for further information.
Regulatory accounting rules also require recognition of a disallowance (also called "impairment") loss if it becomes probable that part of the cost of a plant under construction (or a recently completed plant or an abandoned plant) will be disallowed for ratemaking purposes and a reasonable estimate of the amount of the disallowance can be made. For example, if a cost cap is set for a plant still under construction, the amount of the disallowance is a result of a judgment as to the ultimate cost of the plant. These disallowances can require judgments on allowed future rate recovery.
128



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
When it becomes probable that regulated generation, transmission or distribution assets will be abandoned, the cost of the asset is removed from plant in service. The value that may be retained as a regulatory asset on the balance sheet for the abandoned property is dependent upon amounts that may be recovered through regulated rates, including any return. As such, an impairment charge could be partially or fully offset by the establishment of a regulatory asset if rate recovery is probable. The impairment charge for a disallowance of costs for regulated plants under construction, recently completed or abandoned is based on discounted cash flows.
The Duke Energy Registrants utilize cost-tracking mechanisms, commonly referred to as fuel adjustment clauses or PGA clauses. These clauses allow for the recovery of fuel and fuel-related costs, portions of purchased power, natural gas costs and hedging costs through surcharges on customer rates. The difference between the costs incurred and the surcharge revenues is recorded either as an adjustment to Operating Revenues, Operating Expenses – Fuel used in electric generation or Operating Expenses – Cost of natural gas on the Consolidated Statements of Operations, with an off-setting impact on regulatory assets or liabilities.
Cash, Cash Equivalents and Restricted Cash
All highly liquid investments with maturities of three months or less at the date of acquisition are considered cash equivalents. Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See Note 17 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Consolidated Balance Sheets.
December 31, 2020December 31, 2019
DukeDuke
DukeProgressEnergyDukeProgressEnergy
EnergyEnergyFloridaEnergyEnergyFlorida
Current Assets
Cash and cash equivalents$259 $59 $11 $311 $48 $17 
Other194 39 39 222 39 39 
Other Noncurrent Assets
Other103 102 — 40 39 — 
Total cash, cash equivalents and restricted cash$556 $200 $50 $573 $126 $56 
Inventory
Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Inventory is charged to expense or capitalized to property, plant and equipment when issued, primarily using the average cost method. Excess or obsolete inventory is written down to the lower of cost or net realizable value. Once inventory has been written down, it creates a new cost basis for the inventory that is not subsequently written up. Provisions for inventory write-offs were not material at December 31, 2020, and 2019, respectively. The components of inventory are presented in the tables below.
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies$2,312 $785 $999 $673 $325 $78 $307 $12 
Coal561 186 193 131 63 16 165 — 
Natural gas, oil and other294 39 183 107 76 16 1 56 
Total inventory$3,167 $1,010 $1,375 $911 $464 $110 $473 $68 
 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies$2,297 $768 $1,038 $686 $351 $79 $318 $5 
Coal586 187 186 138 48 15 198 — 
Natural gas, oil and other349 41 199 110 90 41 1 67 
Total inventory$3,232 $996 $1,423 $934 $489 $135 $517 $72 
129



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in Debt and Equity Securities
The Duke Energy Registrants classify investments in equity securities as FV-NI and investments in debt securities as AFS. Both categories are recorded at fair value on the Consolidated Balance Sheets. Realized and unrealized gains and losses on securities classified as FV-NI are reported through net income. Unrealized gains and losses for debt securities classified as AFS are included in AOCI until realized, unless it is determined the carrying value of an investment has a credit loss. For certain investments of regulated operations, such as substantially all of the NDTF, realized and unrealized gains and losses (including any credit losses) on debt securities are recorded as a regulatory asset or liability. The credit loss portion of debt securities of nonregulated operations are included in earnings. Investments in debt and equity securities are classified as either current or noncurrent based on management’s intent and ability to sell these securities, taking into consideration current market liquidity. See Note 15 for further information.
Goodwill
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont perform annual goodwill impairment tests as of August 31 each year at the reporting unit level, which is determined to be a business segment or one level below. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update these tests between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. See Note 11 for further information.
Intangible Assets
Intangible assets are included in Other in Other Noncurrent Assets on the Consolidated Balance Sheets. Generally, intangible assets are amortized using an amortization method that reflects the pattern in which the economic benefits of the intangible asset are consumed or on a straight-line basis if that pattern is not readily determinable. Amortization of intangibles is reflected in Depreciation and amortization on the Consolidated Statements of Operations. Intangible assets are subject to impairment testing and if impaired, the carrying value is accordingly reduced.
RECs are used to measure compliance with renewable energy standards and are held primarily for consumption. See Note 11 for further information.
Long-Lived Asset Impairments
The Duke Energy Registrants evaluate long-lived assets, excluding goodwill, for impairment when circumstances indicate the carrying value of those assets may not be recoverable. An impairment exists when a long-lived asset’s carrying value exceeds the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the carrying value of the asset is written down to its then current estimated fair value and an impairment charge is recognized.
The Duke Energy Registrants assess fair value of long-lived assets using various methods, including recent comparable third-party sales, internally developed discounted cash flow analysis and analysis from outside advisors. Triggering events to reassess cash flows may include, but are not limited to, significant changes in commodity prices, the condition of an asset or management’s interest in selling the asset.
Equity Method Investment Impairments
Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method. Equity method investments are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the decline in value is considered to be other than temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment.
Impairment assessments use a discounted cash flow income approach and include consideration of the severity and duration of any decline in the fair value of the investments. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. Key inputs that involve estimates and significant management judgment include cash flow projections, selection of a discount rate, probability weighting of potential outcomes, and whether any decline in value is considered temporary.
130



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property, Plant and Equipment
Property, plant and equipment are stated at the lower of depreciated historical cost net of any disallowances or fair value, if impaired. The Duke Energy Registrants capitalize all construction-related direct labor and material costs, as well as indirect construction costs such as general engineering, taxes and financing costs. See “Allowance for Funds Used During Construction and Interest Capitalized” for information on capitalized financing costs. Costs of renewals and betterments that extend the useful life of property, plant and equipment are also capitalized. The cost of repairs, replacements and major maintenance projects, which do not extend the useful life or increase the expected output of the asset, are expensed as incurred. Depreciation is generally computed over the estimated useful life of the asset using the composite straight-line method. Depreciation studies are conducted periodically to update composite rates and are approved by state utility commissions and/or the FERC when required. The composite weighted average depreciation rates, excluding nuclear fuel, are included in the table that follows.
 Years Ended December 31,
 202020192018
Duke Energy3.0 %3.1 %3.0 %
Duke Energy Carolinas2.8 %2.8 %2.8 %
Progress Energy3.2 %3.1 %2.9 %
Duke Energy Progress3.1 %3.1 %2.9 %
Duke Energy Florida3.3 %3.1 %3.0 %
Duke Energy Ohio2.9 %2.6 %2.8 %
Duke Energy Indiana3.5 %3.3 %3.3 %
Piedmont2.3 %2.4 %2.5 %
In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value and any depreciation already recognized, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as Generation facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory assets on the Consolidated Balance Sheets if deemed recoverable (see discussion of long-lived asset impairments above). The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.
When the Duke Energy Registrants sell entire regulated operating units, or retire or sell nonregulated properties, the original cost and accumulated depreciation and amortization balances are removed from Property, Plant and Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded in earnings, unless otherwise required by the applicable regulatory body. See Note 10 for additional information.
Leases
Duke Energy determines if an arrangement is a lease at contract inception based on whether the arrangement involves the use of a physically distinct identified asset and whether Duke Energy has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period as well as the right to direct the use of the asset. As a policy election, Duke Energy does not evaluate arrangements with initial contract terms of less than one year as leases.
Operating leases are included in Operating lease ROU assets, net, Other current liabilities and Operating lease liabilities on the Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, Current maturities of long-term debt and Long-Term Debt on the Consolidated Balance Sheets.
For lessee and lessor arrangements, Duke Energy has elected a policy to not separate lease and non-lease components for all asset classes. For lessor arrangements, lease and non-lease components are only combined under one arrangement and accounted for under the lease accounting framework if the non-lease components are not the predominant component of the arrangement and the lease component would be classified as an operating lease.
Nuclear Fuel
Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets.
Nuclear fuel in the front-end fuel processing phase is considered work in progress and not amortized until placed in service. Amortization of nuclear fuel is included within Fuel used in electric generation and purchased power on the Consolidated Statements of Operations. Amortization is recorded using the units-of-production method.
Allowance for Funds Used During Construction and Interest Capitalized
For regulated operations, the debt and equity costs of financing the construction of property, plant and equipment are reflected as AFUDC and capitalized as a component of the cost of property, plant and equipment. AFUDC equity is reported on the Consolidated Statements of Operations as non-cash income in Other income and expenses, net. AFUDC debt is reported as a non-cash offset to Interest Expense. After construction is completed, the Duke Energy Registrants are permitted to recover these costs through their inclusion in rate base and the corresponding subsequent depreciation or amortization of those regulated assets.
131



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AFUDC equity, a permanent difference for income taxes, reduces the ETR when capitalized and increases the ETR when depreciated or amortized. See Note 23 for additional information.
For nonregulated operations, interest is capitalized during the construction phase with an offsetting non-cash credit to Interest Expense on the Consolidated Statements of Operations.
Asset Retirement Obligations
AROs are recognized for legal obligations associated with the retirement of property, plant and equipment. Substantially all AROs are related to regulated operations. When recording an ARO, the present value of the projected liability is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted over time. For operating plants, the present value of the liability is added to the cost of the associated asset and depreciated over the remaining life of the asset. For retired plants, the present value of the liability is recorded as a regulatory asset unless determined not to be probable of recovery.
The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding timing of future cash flows, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change. Depreciation expense is adjusted prospectively for any changes to the carrying amount of the associated asset. The Duke Energy Registrants receive amounts to fund the cost of the ARO for regulated operations through a combination of regulated revenues and earnings on the NDTF. As a result, amounts recovered in regulated revenues, earnings on the NDTF, accretion expense and depreciation of the associated asset are netted and deferred as a regulatory asset or liability.
Accounts Payable
During 2020, Duke Energy established a supply chain finance program (the “program”) with a global financial institution. The program is voluntary and allows Duke Energy suppliers, at their sole discretion, to sell their receivables from Duke Energy to the financial institution at a rate that leverages Duke Energy’s credit rating and, which may result in favorable terms compared to the rate available to the supplier on their own credit rating. Suppliers participating in the program, determine at their sole discretion which invoices they will sell to the financial institution. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. The commercial terms negotiated between Duke Energy and its suppliers are consistent regardless of whether the supplier elects to participate in the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program.
At December 31, 2020, $15 million, $1 million and $14 million of the outstanding Accounts payable balance for Duke Energy, Duke Energy Ohio and Piedmont, respectively, was sold to the financial institution by our suppliers. Suppliers invoices sold to the financial institution under the program totaled $45 million, $9 million and $36 million for the year ended December 31, 2020, for Duke Energy, Duke Energy Ohio and Piedmont, respectively. All activity related to amounts due to suppliers who elected to participate in the program are included within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
Revenue Recognition
Duke Energy recognizes revenue as customers obtain control of promised goods and services in an amount that reflects consideration expected in exchange for those goods or services. Generally, the delivery of electricity and natural gas results in the transfer of control to customers at the time the commodity is delivered and the amount of revenue recognized is equal to the amount billed to each customer, including estimated volumes delivered when billings have not yet occurred. See Note 18 for further information.
Derivatives and Hedging
Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the NPNS exception, are recorded on the Consolidated Balance Sheets at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The effective portion of the change in the fair value of cash flow hedges is recorded in AOCI. The effective portion of the change in the fair value of a fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As a result, changes in fair value of these derivatives have no immediate earnings impact.
Formal documentation, including transaction type and risk management strategy, is maintained for all contracts accounted for as a hedge. At inception and at least every three months thereafter, the hedge contract is assessed to see if it is highly effective in offsetting changes in cash flows or fair values of hedged items.
See Note 14 for further information.
Captive Insurance Reserves
Duke Energy has captive insurance subsidiaries that provide coverage, on an indemnity basis, to the Subsidiary Registrants as well as certain third parties, on a limited basis, for financial losses, primarily related to property, workers’ compensation and general liability. Liabilities include provisions for estimated losses incurred but not reported (IBNR), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from experience.
132



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Duke Energy, through its captive insurance entities, also has reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable.
Unamortized Debt Premium, Discount and Expense
Premiums, discounts and expenses incurred with the issuance of outstanding long-term debt are amortized over the term of the debt issue. The gain or loss on extinguishment associated with refinancing higher-cost debt obligations in the regulated operations is amortized over the remaining life of the original instrument. Amortization expense is recorded as Interest Expense in the Consolidated Statements of Operations and is reflected as Depreciation, amortization and accretion within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
Premiums, discounts and expenses are presented as an adjustment to the carrying value of the debt amount and included in Long-Term Debt on the Consolidated Balance Sheets presented.
Preferred Stock
Preferred stock is reviewed to determine the appropriate balance sheet classification and embedded features, such as call options, are evaluated to determine if they should be bifurcated and accounted for separately. Costs directly related to the issuance of preferred stock is recorded as a reduction of the proceeds received. The liability for involuntary severancethe dividend is recognized when declared. The accumulated dividends on the cumulative preferred stock is recognized to net income available to Duke Energy Corporation in the EPS calculation. See Note 19 for further information.
Loss Contingencies and Environmental Liabilities
Contingent losses are recorded oncewhen it is probable a loss has occurred and can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. Unless otherwise required by GAAP, legal fees are expensed as incurred.
Environmental liabilities are recorded on an involuntary severance plan is committed to by management if involuntary severances areundiscounted basis when environmental remediation or other liabilities become probable and can be reasonably estimated. For involuntary severance benefits incrementalEnvironmental expenditures related to its ongoing severance plan benefits, the fair value of the obligation ispast operations that do not generate current or future revenues are expensed. Environmental expenditures related to operations that generate current or future revenues are expensed at the communication date if there are no future service requirements or over the required future service period. Duke Energy also offers special termination benefits under voluntary severance programs. Special termination benefitscapitalized, as appropriate. Certain environmental expenditures receive regulatory accounting treatment and are recorded immediately upon employee acceptance absent a significant retention period. Otherwise, the cost is recorded over the remaining service period. Employee acceptance of voluntary severance benefits is determined by management based on the factsas regulatory assets.
See Notes 3 and circumstances of the benefits being offered. See Note 204 for further information.
Guarantees
If necessary, liabilities are recognized at the time of issuance or material modification of a guarantee for the estimated fair value of the obligation it assumes. Fair value is estimated using a probability-weighted approach. The obligation is reduced over the term of the guarantee or related contract in a systematicPension and rational method as risk is reduced. Any additional contingent loss for guarantee contracts subsequent to the initial recognition of a liability is accounted for and recognized at the time a loss is probable and can be reasonably estimated. See Note 7 for further information.
Stock-Based Compensation
Stock-based compensation represents costs related to stock-based awards granted to employees and Board of Directors members. Duke Energy recognizes stock-based compensation based upon the estimated fair value of awards, net of estimated forfeitures at the date of issuance. The recognition period for these costs begins at either the applicable service inception date or grant date and continues throughout the requisite service period. Compensation cost is recognized as expense or capitalized as a component of property, plant and equipment. See Note 21 for further information.
Income TaxesOther Post-Retirement Benefit Plans
Duke Energy and its subsidiaries file a consolidated federal income tax returnmaintains qualified, non-qualified and other statepost-retirement benefit plans. Eligible employees of the Subsidiary Registrants participate in the respective qualified, non-qualified and foreign jurisdictional returns. Theother post-retirement benefit plans and the Subsidiary Registrants are parties to a tax-sharing agreement with Duke Energy. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. Deferred income taxes have been providedallocated their proportionate share of benefit costs. See Note 22 for temporary differences between GAAP and tax bases of assets and liabilities because the differences create taxable or tax-deductible amounts for future periods. ITCsfurther information, including significant accounting policies associated with regulated operations are deferred and amortized as a reduction of income tax expense over the estimated useful lives of the related properties.these plans.
Accumulated deferred income taxes are valued using the enacted tax rate expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be settled or realized. In the event of a change in tax rates, deferred tax assets and liabilities are remeasured as of the enactment date of the new rate. To the extent that the change in the value of the deferred tax represents an obligation to customers, the impact of the remeasurement is deferred to a regulatory liability. Remaining impacts are recorded in income from continuing operations. If Duke Energy's estimate of the tax effect of reversing temporary differences is not reflective of actual outcomes, is modified to reflect new developments or interpretations of the tax law, revised to incorporate new accounting principles, or changes in the expected timing or manner of the reversal then Duke Energy's results of operations could be impacted.
Tax-related interest and penalties are recorded in Interest Expense and Other Income and Expenses, net in the Consolidated Statements of Operations.
See Note 23 for further information.
Accounting for Renewable Energy Tax Credits
When Duke Energy receives ITCs on wind or solar facilities, it reduces the basis of the property recorded on the Consolidated Balance Sheets by the amount of the ITC and, therefore, the ITC benefit is ultimately recognized in the statement of operations through reduced depreciation expense. Additionally, certain tax credits and government grants result in an initial tax depreciable base in excess of the book carrying value by an amount equal to one half of the ITC. Deferred tax benefits are recorded as a reduction to income tax expense in the period that the basis difference is created.

134



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Excise Taxes
Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Otherwise, the taxes are accounted for net. Excise taxes accounted for on a gross basis within both Operating Revenues and Property and other taxes in the Consolidated Statements of Operations were as follows.
 Years Ended December 31,
(in millions)2018
 2017
 2016
Duke Energy$405
 $376
 $362
Duke Energy Carolinas35
 36
 31
Progress Energy241
 220
 213
Duke Energy Progress19
 19
 18
Duke Energy Florida222
 201
 195
Duke Energy Ohio105
 98
 100
Duke Energy Indiana22
 20
 17
Piedmont(a)
2
 2
  
(a)Piedmont's excise taxes were immaterial for the two months ended December 31, 2016, and $2 million for the year ended October 31, 2016.
Dividend Restrictions and Unappropriated Retained Earnings
Duke Energy does not have any legal, regulatory or other restrictions on paying common stock dividends to shareholders. However, as further described in Note 4, due to conditions established by regulators in conjunction with merger transaction approvals, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Indiana and Piedmont have restrictions on paying dividends or otherwise advancing funds to Duke Energy. At December 31, 2018, and 2017, an insignificant amount of Duke Energy’s consolidated Retained earnings balance represents undistributed earnings of equity method investments.
New Accounting Standards
TheSee Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards adopted for 2018standards.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Management’s Discussion and 2017 had no material impact on the presentation or resultsAnalysis of operations, cash flows or financial positionResults of the Duke Energy Registrants. The following accounting standards were adopted by the Duke Energy Registrants during 2018.
Revenue from Contracts with Customers. In May 2014, the FASB issued revised accounting guidance for revenue recognition from contracts with customers. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration expected in exchange for those goods or services. The amendments also required disclosure of sufficient information to allow users to understand the nature, amount, timingOperations and uncertainty of revenueFinancial Condition – Quantitative and cash flows arising from contracts with customers. The majority of Duke Energy’s revenue is in scope of the new guidance. Other revenue arrangements, such as alternative revenue programs and certain PPAs and lighting agreements accounted for as leases, are excluded from the scope of this guidance and, therefore, are accounted for and evaluated for separate presentation and disclosure under other relevant accounting guidance.
Duke Energy elected the modified retrospective method of adoption effective January 1, 2018. Under the modified retrospective method of adoption, prior year reported results are not restated. Adoption of this standard did not result in a material change in the timing or pattern of revenue recognition and a cumulative-effect adjustment was not recorded at January 1, 2018. Duke Energy utilized certain practical expedients including applying this guidance to open contracts at the date of adoption, expensing costs to obtain a contract where the amortization period of the asset would have been one year or less, ignoring the effects of a significant financing when the period between transfer of the good or service and payment is one year or less and recognizing revenues for certain contracts under the invoice practical expedient, which allows revenue recognition to be consistent with invoiced amounts (including unbilled estimates) provided certain criteria are met, including consideration of whether the invoiced amounts reasonably represent the value provided to customers.
In preparation for adoption, Duke Energy identified material revenue streams and reviewed representative contracts and tariffs, including those associated with certain long-term customer contracts such as wholesale contracts, PPAs and other customer arrangements. Duke Energy also monitored the activities of the power and utilities industry revenue recognition task force and has reviewed published positions on specific industry issues to evaluate the impact, if any, on Duke Energy’s specific contracts and conclusions. Duke Energy applied the available practical expedient to portfolios of tariffs and contracts with similar characteristics. The vast majority of sales, including energy provided to retail customers, are from tariff offerings that provide natural gas or electricity without a defined contractual term ("at-will"). In most circumstances, revenue from contracts with customers is equivalent to the electricity or natural gas supplied and billed in that period (including unbilled estimates). As such, adoption of the new rules did not result in a shift in the timing or pattern of revenue recognition for such sales. While there have been changes to the captions and descriptions of revenues in Duke Energy’s financial statements, the most significant impact as a result of adopting the standard are additional disclosures around the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. See Note 18 for further information.

Qualitative Disclosures About Market Risk.”
135
74



FINANCIAL STATEMENTS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Duke Energy
Report of Independent Registered Public Accounting Firm
77
Consolidated Statements of Operations
79
Consolidated Statements of Comprehensive Income
80
Consolidated Balance Sheets
81
Consolidated Statements of Cash Flows 
82
Consolidated Statements of Changes in Equity
83
Duke Energy Carolinas
Report of Independent Registered Public Accounting Firm
84
Consolidated Statements of Operations and Comprehensive Income
86
Consolidated Balance Sheets
87
Consolidated Statements of Cash Flows
88
Consolidated Statements of Changes in Equity
89
Progress Energy
Report of Independent Registered Public Accounting Firm
90
Consolidated Statements of Operations and Comprehensive Income
92
Consolidated Balance Sheets
93
Consolidated Statements of Cash Flows
94
Consolidated Statements of Changes in Equity
95
Duke Energy Progress
Report of Independent Registered Public Accounting Firm
96
Consolidated Statements of Operations and Comprehensive Income
98
Consolidated Balance Sheets
99
Consolidated Statements of Cash Flows
100
Consolidated Statements of Changes in Equity
101
Duke Energy Florida
Report of Independent Registered Public Accounting Firm
102
Consolidated Statements of Operations and Comprehensive Income
104
Consolidated Balance Sheets
105
Consolidated Statements of Cash Flows
106
Consolidated Statements of Changes in Equity
107
Duke Energy Ohio
Report of Independent Registered Public Accounting Firm
108
Consolidated Statements of Operations and Comprehensive Income
110
Consolidated Balance Sheets
111
Consolidated Statements of Cash Flows
112
Consolidated Statements of Changes in Equity
113
Duke Energy Indiana
Report of Independent Registered Public Accounting Firm
114
Consolidated Statements of Operations and Comprehensive Income
116
Consolidated Balance Sheets
117
Consolidated Statements of Cash Flows
118
Consolidated Statements of Changes in Equity
119
Piedmont
Report of Independent Registered Public Accounting Firm
120
Consolidated Statements of Operations and Comprehensive Income
122
Consolidated Balance Sheets
123
Consolidated Statements of Cash Flows
124
Consolidated Statements of Changes in Equity
125
75






FINANCIAL STATEMENTS
Combined Notes to Consolidated Financial Statements
Note 1 – Summary of Significant Accounting Policies
126
Note 2 – Business Segments
135
Note 3 – Regulatory Matters
139
Note 4 – Commitments and Contingencies
163
Note 5 – Leases
168
Note 6 – Debt and Credit Facilities
173
Note 7 – Guarantees and Indemnifications
179
Note 8 – Joint Ownership of Generating and Transmission Facilities
180
Note 9 – Asset Retirement Obligations
180
Note 10 – Property, Plant and Equipment
183
Note 11 – Goodwill and Intangible Assets
185
Note 12 – Investments in Unconsolidated Affiliates
186
Note 13 – Related Party Transactions
189
Note 14 – Derivatives and Hedging
190
Note 15 – Investments in Debt and Equity Securities
195
Note 16 – Fair Value Measurements
201
Note 17 – Variable Interest Entities
207
Note 18 – Revenue
211
Note 19 – Stockholders' Equity
217
Note 20 – Severance
219
Note 21 – Stock-Based Compensation
219
Note 22 – Employee Benefit Plans
221
Note 23 – Income Taxes
235
Note 24 – Other Income and Expenses, Net
242
Note 25 – Subsequent Events
242

76



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to regulation by federal and state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric and natural gas distribution companies. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $14 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

77



REPORTS
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP

Charlotte, North Carolina
February 25, 2021 

We have served as the Company's auditor since 1947.

78



FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
(in millions, except per share amounts)202020192018
Operating Revenues
Regulated electric$21,461 $22,615 $22,097 
Regulated natural gas1,642 1,759 1,773 
Nonregulated electric and other765 705 651 
Total operating revenues23,868 25,079 24,521 
Operating Expenses
Fuel used in electric generation and purchased power6,051 6,826 6,831 
Cost of natural gas460 627 697 
Operation, maintenance and other5,788 6,066 6,463 
Depreciation and amortization4,705 4,548 4,074 
Property and other taxes1,337 1,307 1,280 
Impairment charges984 (8)402 
Total operating expenses19,325 19,366 19,747 
Gains (Losses) on Sales of Other Assets and Other, net10 (4)(89)
Operating Income4,553 5,709 4,685 
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates(2,005)162 83 
Other income and expenses, net453 430 399 
Total other income and expenses(1,552)592 482 
Interest Expense2,162 2,204 2,094 
Income From Continuing Operations Before Income Taxes839 4,097 3,073 
Income Tax (Benefit) Expense From Continuing Operations(236)519 448 
Income From Continuing Operations1,075 3,578 2,625 
Income (Loss) From Discontinued Operations, net of tax7 (7)19 
Net Income1,082 3,571 2,644 
Add: Net Loss Attributable to Noncontrolling Interests295 177 22 
Net Income Attributable to Duke Energy Corporation1,377 3,748 2,666 
Less: Preferred Dividends107 41 — 
Net Income Available to Duke Energy Corporation Common Stockholders$1,270 $3,707 $2,666 
Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted$1.71 $5.07 $3.73 
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted$0.01 $(0.01)$0.03 
Net income available to Duke Energy Corporation common stockholders
Basic and Diluted$1.72 $5.06 $3.76 
Weighted average shares outstanding
Basic737 729 708 
Diluted738 729 708 
See Notes to Consolidated Financial Statements
79



FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,
(in millions)202020192018
Net Income$1,082 $3,571 $2,644 
Other Comprehensive (Loss) Income, net of tax(a)
Pension and OPEB adjustments6 9 (6)
Net unrealized losses on cash flow hedges(138)(47)(10)
Reclassification into earnings from cash flow hedges11 6 6 
Unrealized gains (losses) on available-for-sale securities3 8 (3)
Other Comprehensive Loss, net of tax(118)(24)(13)
Comprehensive Income964 3,547 2,631 
Add: Comprehensive Loss Attributable to Noncontrolling Interests306 177 22 
Comprehensive Income Attributable to Duke Energy Corporation1,270 3,724 2,653 
Less: Preferred Dividends107 41 — 
Comprehensive Income Available to Duke Energy Corporation Common Stockholders$1,163 $3,683 $2,653 
(a)     Net of income tax impacts of approximately $35 million for the year ended December 31, 2020. Tax impacts are immaterial for other periods presented.
See Notes to Consolidated Financial Statements
80
FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
(in millions)20202019
ASSETS
Current Assets
Cash and cash equivalents$259 $311 
Receivables (net of allowance for doubtful accounts of $29 at 2020 and $22 at 2019)1,009 1,066 
Receivables of VIEs (net of allowance for doubtful accounts of $117 at 2020 and $54 at 2019)2,144 1,994 
Inventory3,167 3,232 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)1,641 1,796 
Other (includes $296 at 2020 and $242 at 2019 related to VIEs)462 764 
Total current assets8,682 9,163 
Property, Plant and Equipment
Cost155,580 147,654 
Accumulated depreciation and amortization(48,827)(45,773)
Generation facilities to be retired, net29 246 
Net property, plant and equipment106,782 102,127 
Other Noncurrent Assets
Goodwill19,303 19,303 
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)12,421 13,222 
Nuclear decommissioning trust funds9,114 8,140 
Operating lease right-of-use assets, net1,524 1,658 
Investments in equity method unconsolidated affiliates961 1,936 
Other (includes $81 at 2020 and $110 at 2019 related to VIEs)3,601 3,289 
Total other noncurrent assets46,924 47,548 
Total Assets$162,388 $158,838 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$3,144 $3,487 
Notes payable and commercial paper2,873 3,135 
Taxes accrued482 392 
Interest accrued537 565 
Current maturities of long-term debt (includes $472 at 2020 and $216 at 2019 related to VIEs)4,238 3,141 
Asset retirement obligations718 881 
Regulatory liabilities1,377 784 
Other2,936 2,367 
Total current liabilities16,305 14,752 
Long-Term Debt (includes $3,535 at 2020 and $3,997 at 2019 related to VIEs)55,625 54,985 
Other Noncurrent Liabilities
Deferred income taxes9,244 8,878 
Asset retirement obligations12,286 12,437 
Regulatory liabilities15,029 15,264 
Operating lease liabilities1,340 1,432 
Accrued pension and other post-retirement benefit costs969 934 
Investment tax credits687 624 
Other (includes $316 at 2020 and $228 at 2019 related to VIEs)1,719 1,581 
Total other noncurrent liabilities41,274 41,150 
Commitments and Contingencies00
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019973 973 
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019989 989 
Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2020 and 733 million shares outstanding at 20191 1 
Additional paid-in capital43,767 40,881 
Retained earnings2,471 4,108 
Accumulated other comprehensive loss(237)(130)
Total Duke Energy Corporation stockholders' equity47,964 46,822 
Noncontrolling interests1,220 1,129 
Total equity49,184 47,951 
Total Liabilities and Equity$162,388 $158,838 
See Notes to Consolidated Financial Statements
81
FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$1,082 $3,571 $2,644 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)5,486 5,176 4,696 
Equity in losses (earnings) of unconsolidated affiliates2,005 (162)(83)
Equity component of AFUDC(154)(139)(221)
(Gains) Losses on sales of other assets(10)4 88 
Impairment charges984 (8)402 
Deferred income taxes54 806 1,079 
Payments for asset retirement obligations(610)(746)(533)
Payment for the disposal of other assets— — (105)
Provision for rate refunds(22)60 425 
Refund of AMT credit carryforwards572 573 — 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions63 (48)22 
Receivables(56)78 (345)
Inventory66 (122)156 
Other current assets205 10 (721)
Increase (decrease) in
Accounts payable(21)(164)479 
Taxes accrued117 (224)23 
Other current liabilities(65)172 270 
Other assets(398)(559)(1,062)
Other liabilities(442)(69)(28)
Net cash provided by operating activities8,856 8,209 7,186 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(9,907)(11,122)(9,389)
Contributions to equity method investments(370)(324)(416)
Return of investment capital133 11 137 
Purchases of debt and equity securities(8,011)(3,348)(3,762)
Proceeds from sales and maturities of debt and equity securities7,949 3,343 3,747 
Other(398)(517)(377)
Net cash used in investing activities(10,604)(11,957)(10,060)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt6,330 7,091 5,299 
Issuance of preferred stock— 1,962 — 
Issuance of common stock2,745 384 1,838 
Payments for the redemption of long-term debt(4,506)(3,476)(2,906)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days3,009 397 472 
Payments for the redemption of short-term debt with original maturities greater than 90 days(2,147)(479)(282)
Notes payable and commercial paper(1,181)(298)981 
Contributions from noncontrolling interests426 843 41 
Dividends paid(2,812)(2,668)(2,471)
Other(133)(26)(12)
Net cash provided by financing activities1,731 3,730 2,960 
Net (decrease) increase in cash, cash equivalents, and restricted cash(17)(18)86 
Cash, cash equivalents, and restricted cash at beginning of period573 591 505 
Cash, cash equivalents, and restricted cash at end of period$556 $573 $591 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$2,186 $2,195 $2,086 
Cash received from income taxes(585)(651)(266)
Significant non-cash transactions:
Accrued capital expenditures1,116 1,356 1,112 
Non-cash dividends110 108 107 
See Notes to Consolidated Financial Statements
82
FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Duke Energy Corporation Stockholders'
Accumulated Other Comprehensive
Income (Loss)
Net UnrealizedTotal
NetGains (Losses)Duke Energy
CommonAdditionalLosses onon Available-Pension andCorporation
PreferredStockCommonPaid-inRetainedCash Flowfor-Sale-OPEBStockholders'NoncontrollingTotal
(in millions)StockSharesStockCapitalEarningsHedgesSecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2017$— 700 $1 $38,792 $3,013 $(10)$12 $(69)$41,739 $(2)$41,737 
Net income— — — — 2,666 — — — 2,666 (22)2,644 
Other comprehensive loss— — — — — (4)(3)(6)(13)— (13)
Common stock issuances, including dividend reinvestment and employee benefits— 27 — 2,003 — — — — 2,003 — 2,003 
Common stock dividends— — — — (2,578)— — — (2,578)— (2,578)
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (1)(1)
Other(a)
— — — — 12 — (12)— — 42 42 
Balance at December 31, 2018$— 727 $1 $40,795 $3,113 $(14)$(3)$(75)$43,817 $17 $43,834 
Net income— — — — 3,707 — — — 3,707 (177)3,530 
Other comprehensive (loss) Income— — — — — (41)8 9 (24)— (24)
Preferred stock, Series A, issuances, net of issuance costs(b)
973 — — — — — — — 973 — 973 
Preferred stock, Series B, issuances, net of issuance costs(b)
989 — — — — — — — 989 — 989 
Common stock issuances, including dividend reinvestment and employee benefits— 6 — 552 — — — — 552 — 552 
Common stock dividends— — — — (2,735)— — — (2,735)— (2,735)
Sale of noncontrolling interest(c)
— — — (466)— 10 — — (456)863 407 
Contribution from noncontrolling interest (f)
— — — — — — — — — 428 428 
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (4)(4)
Other(d)
— — — — 23 (6)(2)(16)(1)2 1 
Balance at December 31, 2019$1,962 733 $1 $40,881 $4,108 $(51)$3 $(82)$46,822 $1,129 $47,951 
Net income— — — — 1,270 — — — 1,270 (295)975 
Other comprehensive (loss) income— — — — — (116)3 6 (107)(11)(118)
Common stock issuances, including dividend reinvestment and employee benefits— 36 — 2,902 — — — — 2,902 — 2,902 
Common stock dividends— — — — (2,815)— — — (2,815)— (2,815)
Contribution from noncontrolling interest, net of transaction costs(f)
— — — (17)— — — — (17)426 409 
Distributions to noncontrolling interests in subsidiaries— — — — — — — — — (30)(30)
Other(e)
— — — 1 (92)— — — (91)1 (90)
Balance at December 31, 2020$1,962 769 $1 $43,767 $2,471 $(167)$6 $(76)$47,964 $1,220 $49,184 
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information. Amount in Noncontrolling Interests primarily relates to tax equity financing activity in the Commercial Renewables segment.
(b)     Duke Energy issued 40 million depositary shares of preferred stock, Series A, in the first quarter of 2019 and 1 million shares of preferred stock, Series B, in the third quarter of 2019.
(c)    See Note 1 for additional discussion of the transaction.
(d)    Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
(e)     Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.
(f)    Relates to tax equity financing activity in the Commercial Renewables segment.
See Notes to Consolidated Financial Statements
83



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $3.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
84



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1947.

85


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$7,015 $7,395 $7,300 
Operating Expenses   
Fuel used in electric generation and purchased power1,682 1,804 1,821 
Operation, maintenance and other1,743 1,868 2,130 
Depreciation and amortization1,462 1,388 1,201 
Property and other taxes299 292 295 
Impairment charges476 17 192 
Total operating expenses5,662 5,369 5,639 
Gains (Losses) on Sales of Other Assets and Other, net1 — (1)
Operating Income1,354 2,026 1,660 
Other Income and Expenses, net177 151 153 
Interest Expense487 463 439 
Income Before Income Taxes1,044 1,714 1,374 
Income Tax Expense88 311 303 
Net Income$956 $1,403 $1,071 
Other Comprehensive Income, net of tax   
Reclassification into earnings from cash flow hedges— — 1 
Other Comprehensive Income, net of tax— — 1 
Comprehensive Income$956 $1,403 $1,072 
See Notes to Consolidated Financial Statements
86


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$21 $18 
Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019)247 324 
Receivables of VIEs (net of allowance for doubtful accounts of $22 at 2020 and $7 at 2019)696 642 
Receivables from affiliated companies124 114 
Inventory1,010 996 
Regulatory assets473 550 
Other20 21 
Total current assets2,591 2,665 
Property, Plant and Equipment  
Cost50,640 48,922 
Accumulated depreciation and amortization(17,453)(16,525)
Net property, plant and equipment33,187 32,397 
Other Noncurrent Assets
Regulatory assets2,996 3,360 
Nuclear decommissioning trust funds4,977 4,359 
Operating lease right-of-use assets, net110 123 
Other1,187 1,149 
Total other noncurrent assets9,270 8,991 
Total Assets$45,048 $44,053 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$1,000 $954 
Accounts payable to affiliated companies199 210 
Notes payable to affiliated companies506 29 
Taxes accrued76 46 
Interest accrued117 115 
Current maturities of long-term debt506 458 
Asset retirement obligations264 206 
Regulatory liabilities473 255 
Other546 611 
Total current liabilities3,687 2,884 
Long-Term Debt11,412 11,142 
Long-Term Debt Payable to Affiliated Companies300 300 
Other Noncurrent Liabilities  
Deferred income taxes3,842 3,921 
Asset retirement obligations5,086 5,528 
Regulatory liabilities6,535 6,423 
Operating lease liabilities97 102 
Accrued pension and other post-retirement benefit costs73 84 
Investment tax credits236 231 
Other626 627 
Total other noncurrent liabilities16,495 16,916 
Commitments and Contingencies00
Equity  
Member's equity13,161 12,818 
Accumulated other comprehensive loss(7)(7)
Total equity13,154 12,811 
Total Liabilities and Equity$45,048 $44,053 
See Notes to Consolidated Financial Statements
87


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$956 $1,403 $1,071 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)1,731 1,671 1,487 
Equity component of AFUDC(62)(42)(73)
(Gains) Losses on sales of other assets(1)— 1 
Impairment charges476 17 192 
Deferred income taxes(260)133 305 
Payments for asset retirement obligations(162)(278)(230)
Provision for rate refunds(5)36 182 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(4)(8)2 
Receivables52 (21)(86)
Receivables from affiliated companies(10)68 (87)
Inventory(14)(48)25 
Other current assets209 (73)(161)
Increase (decrease) in
Accounts payable55 (50)168 
Accounts payable to affiliated companies(11)(20)21 
Taxes accrued30 (127)(65)
Other current liabilities(56)127 89 
Other assets(101)(42)(221)
Other liabilities(47)(37)(90)
Net cash provided by operating activities2,776 2,709 2,530 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(2,669)(2,714)(2,706)
Purchases of debt and equity securities(1,602)(1,658)(1,810)
Proceeds from sales and maturities of debt and equity securities1,602 1,658 1,810 
Other(164)(204)(147)
Net cash used in investing activities(2,833)(2,918)(2,853)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt998 886 1,983 
Payments for the redemption of long-term debt(813)(6)(1,205)
Notes payable to affiliated companies477 (410)335 
Distributions to parent(600)(275)(750)
Other(2)(1)(23)
Net cash provided by financing activities60 194 340 
Net increase (decrease) in cash and cash equivalents3 (15)17 
Cash and cash equivalents at beginning of period18 33 16 
Cash and cash equivalents at end of period$21 $18 $33 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$481 $433 $452 
Cash paid for income taxes321 122 89 
Significant non-cash transactions:
Accrued capital expenditures365 347 302 
See Notes to Consolidated Financial Statements
88


FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated Other
  Comprehensive 
Loss
Net Gains
(Losses) on
Member'sCash FlowTotal
(in millions)EquityHedgesEquity
Balance at December 31, 2017$11,368 $(7)$11,361 
Net income1,071 — 1,071 
Other comprehensive income— 1 1 
Distributions to parent(750)— (750)
Balance at December 31, 2018$11,689 $(6)$11,683 
Net income1,403 — 1,403 
Distributions to parent(275)— (275)
Other1 (1)0 
Balance at December 31, 2019$12,818 $(7)$12,811 
Net income956 — 956 
Distributions to parent(600)— (600)
Other(a)
(13)— (13)
Balance at December 31, 2020$13,161 $(7)$13,154 
(a)     Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.
See Notes to Consolidated Financial Statements
89



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Progress Energy, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $6.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
90



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1930.

91



FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$10,627 $11,202 $10,728 
Operating Expenses   
Fuel used in electric generation and purchased power3,479 4,024 3,976 
Operation, maintenance and other2,479 2,495 2,613 
Depreciation and amortization1,818 1,845 1,619 
Property and other taxes545 561 529 
Impairment charges495 (24)87 
Total operating expenses8,816 8,901 8,824 
Gains on Sales of Other Assets and Other, net9 — 24 
Operating Income1,820 2,301 1,928 
Other Income and Expenses, net129 141 165 
Interest Expense790 862 842 
Income Before Income Taxes1,159 1,580 1,251 
Income Tax Expense113 253 218 
Net Income1,046 1,327 1,033 
Less: Net Income Attributable to Noncontrolling Interests1 — 6 
Net Income Attributable to Parent$1,045 $1,327 $1,027 
Net Income$1,046 $1,327 $1,033 
Other Comprehensive Income, net of tax   
Pension and OPEB adjustments(1)2 5 
Net unrealized gain on cash flow hedges5 5 6 
Unrealized (losses) gains on available-for-sale securities(1)1 (1)
Other Comprehensive Income, net of tax3 8 10 
Comprehensive Income1,049 1,335 1,043 
Less: Comprehensive Income Attributable to Noncontrolling Interests1 — 6 
Comprehensive Income Attributable to Parent$1,048 $1,335 $1,037 
See Notes to Consolidated Financial Statements
92
FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$59 $48 
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)228 220 
Receivables of VIEs (net of allowance for doubtful accounts of $29 at 2020 and $9 at 2019)901 830 
Receivables from affiliated companies157 76 
Notes receivable from affiliated companies— 164 
Inventory1,375 1,423 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)758 946 
Other (includes $39 at 2020 and 2019 related to VIEs)109 210 
Total current assets3,587 3,917 
Property, Plant and Equipment  
Cost57,892 55,070 
Accumulated depreciation and amortization(18,368)(17,159)
Generation facilities to be retired, net29 246 
Net property, plant and equipment39,553 38,157 
Other Noncurrent Assets  
Goodwill3,655 3,655 
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)5,775 6,346 
Nuclear decommissioning trust funds4,137 3,782 
Operating lease right-of-use assets, net690 788 
Other1,227 1,049 
Total other noncurrent assets15,484 15,620 
Total Assets$58,624 $57,694 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$919 $1,104 
Accounts payable to affiliated companies289 310 
Notes payable to affiliated companies2,969 1,821 
Taxes accrued121 46 
Interest accrued202 228 
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)1,426 1,577 
Asset retirement obligations283 485 
Regulatory liabilities640 330 
Other793 902 
Total current liabilities7,642 6,803 
Long-Term Debt (includes $1,252 at 2020 and $1,632 at 2019 related to VIEs)17,688 17,907 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities  
Deferred income taxes4,396 4,462 
Asset retirement obligations5,866 5,986 
Regulatory liabilities5,051 5,225 
Operating lease liabilities623 697 
Accrued pension and other post-retirement benefit costs505 488 
Other462 383 
Total other noncurrent liabilities16,903 17,241 
Commitments and Contingencies00
Equity  
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019— — 
Additional paid-in capital9,143 9,143 
Retained earnings7,109 6,465 
Accumulated other comprehensive loss(15)(18)
Total Progress Energy, Inc. stockholder's equity16,237 15,590 
Noncontrolling interests4 3 
Total equity16,241 15,593 
Total Liabilities and Equity$58,624 $57,694 
See Notes to Consolidated Financial Statements
93



FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$1,046 $1,327 $1,033 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)2,327 2,207 1,987 
Equity component of AFUDC(42)(66)(104)
Gains on sales of other assets(9)— (24)
Impairment charges495 (24)87 
Deferred income taxes(197)433 358 
Payments for asset retirement obligations(384)(412)(230)
Provision for rate refunds2 15 122 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(9)(34)18 
Receivables(69)47 (207)
Receivables from affiliated companies(81)81 (137)
Inventory49 62 121 
Other current assets223 184 (12)
Increase (decrease) in
Accounts payable(62)(4)217 
Accounts payable to affiliated companies(21)(50)109 
Taxes accrued75 (74)8 
Other current liabilities139 25 129 
Other assets(128)(341)(896)
Other liabilities(177)(167)(35)
Net cash provided by operating activities3,177 3,209 2,544 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(3,488)(3,952)(3,854)
Purchases of debt and equity securities(5,998)(1,511)(1,753)
Proceeds from sales and maturities of debt and equity securities6,010 1,504 1,769 
Notes receivable from affiliated companies164 (164)240 
Other(160)(190)(162)
Net cash used in investing activities(3,472)(4,313)(3,760)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt1,791 2,187 1,833 
Payments for the redemption of long-term debt(2,157)(1,667)(771)
Notes payable to affiliated companies1,148 586 430 
Dividends to parent(400)— (250)
Other(13)12 (1)
Net cash provided by financing activities369 1,118 1,241 
Net increase in cash, cash equivalents, and restricted cash74 14 25 
Cash, cash equivalents, and restricted cash at beginning of period126 112 87 
Cash, cash equivalents, and restricted cash at end of period$200 $126 $112 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$819 $892 $798 
Cash paid for (received from) income taxes149 (79)(348)
Significant non-cash transactions:
Accrued capital expenditures363 447 478 
See Notes to Consolidated Financial Statements
94



FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
   Accumulated Other Comprehensive Income (Loss)   
Net GainsNet UnrealizedTotal Progress
Additional(Losses) onGains (Losses)Pension andEnergy, Inc.
Paid-inRetainedCash Flowon Available-for-OPEBStockholder'sNoncontrollingTotal
(in millions)CapitalEarningsHedgesSale SecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2017$9,143 $4,350 $(18)$5 $(12)$13,468 $(3)$13,465 
Net income— 1,027 — — — 1,027 6 1,033 
Other comprehensive income (loss)— — 6 (1)5 10 — 10 
Distributions to noncontrolling interests— — — — — — (1)(1)
Dividends to parent— (250)— — — (250)— (250)
Other(a)
— 4 — (5)— (1)1 0 
Balance at December 31, 2018$9,143 $5,131 $(12)$(1)$(7)$14,254 $3 $14,257 
Net income— 1,327 — — — 1,327 — 1,327 
Other comprehensive income— — 5 1 2 8 — 8 
Other(b)
— 7 (3)(1)(2)1 — 1 
Balance at December 31, 2019$9,143 $6,465 $(10)$(1)$(7)$15,590 $3 $15,593 
Net income— 1,045 — — — 1,045 1 1,046 
Other comprehensive income (loss)— — 5 (1)(1)3 — 3 
Dividends to parent— (400)— — — (400)— (400)
Other— (1)— — — (1)— (1)
Balance at December 31, 2020$9,143 $7,109 $(5)$(2)$(8)$16,237 $4 $16,241 
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
(b)    Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
See Notes to Consolidated Financial Statements
95



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Progress, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Progress, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $4.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
96



REPORTS

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1930.

97



FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$5,422 $5,957 $5,699 
Operating Expenses   
Fuel used in electric generation and purchased power1,743 2,012 1,892 
Operation, maintenance and other1,332 1,446 1,578 
Depreciation and amortization1,116 1,143 991 
Property and other taxes167 176 155 
Impairment charges499 12 33 
Total operating expenses4,857 4,789 4,649 
Gains on Sales of Other Assets and Other, net8 — 9 
Operating Income573 1,168 1,059 
Other Income and Expenses, net75 100 87 
Interest Expense269 306 319 
Income Before Income Taxes379 962 827 
Income Tax (Benefit) Expense(36)157 160 
Net Income and Comprehensive Income$415 $805 $667 
See Notes to Consolidated Financial Statements
98

FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$39 $22 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)132 123 
Receivables of VIEs (net of allowance for doubtful accounts of $19 at 2020 and $5 at 2019)500 489 
Receivables from affiliated companies50 52 
Inventory911 934 
Regulatory assets492 526 
Other60 60 
Total current assets2,184 2,206 
Property, Plant and Equipment
Cost35,759 34,603 
Accumulated depreciation and amortization(12,801)(11,915)
Generation facilities to be retired, net29 246 
Net property, plant and equipment22,987 22,934 
Other Noncurrent Assets
Regulatory assets3,976 4,152 
Nuclear decommissioning trust funds3,500 3,047 
Operating lease right-of-use assets, net346 387 
Other740 651 
Total other noncurrent assets8,562 8,237 
Total Assets$33,733 $33,377 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$454 $629 
Accounts payable to affiliated companies215 203 
Notes payable to affiliated companies295 66 
Taxes accrued85 17 
Interest accrued99 110 
Current maturities of long-term debt603 1,006 
Asset retirement obligations283 485 
Regulatory liabilities530 236 
Other411 478 
Total current liabilities2,975 3,230 
Long-Term Debt8,505 7,902 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities
Deferred income taxes2,298 2,388 
Asset retirement obligations5,352 5,408 
Regulatory liabilities4,394 4,232 
Operating lease liabilities323 354 
Accrued pension and other post-retirement benefit costs242 238 
Investment tax credits132 137 
Other102 92 
Total other noncurrent liabilities12,843 12,849 
Commitments and Contingencies00
Equity
Member's Equity9,260 9,246 
Total Liabilities and Equity$33,733 $33,377 
See Notes to Consolidated Financial Statements
99

FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$415 $805 $667 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)1,299 1,329 1,183 
Equity component of AFUDC(29)(60)(57)
Gains on sales of other assets(8)— (9)
Impairment charges499 12 33 
Deferred income taxes(234)197 236 
Payments for asset retirement obligations(304)(390)(195)
Provisions for rate refunds2 12 122 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions1 (6)5 
Receivables(4)21 (107)
Receivables from affiliated companies2 (29)(20)
Inventory23 20 63 
Other current assets98 101 (201)
Increase (decrease) in
Accounts payable(127)32 219 
Accounts payable to affiliated companies12 (75)99 
Taxes accrued68 (46)(11)
Other current liabilities157 68 46 
Other assets(207)(205)(465)
Other liabilities3 37 20 
Net cash provided by operating activities1,666 1,823 1,628 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(1,581)(2,108)(2,220)
Purchases of debt and equity securities(1,555)(842)(1,236)
Proceeds from sales and maturities of debt and equity securities1,516 810 1,206 
Other(57)(119)(95)
Net cash used in investing activities(1,677)(2,259)(2,345)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt1,296 1,269 845 
Payments for the redemption of long-term debt(1,085)(605)(3)
Notes payable to affiliated companies229 (228)54 
Distributions to parent(400)— (175)
Other(12)(1)(1)
Net cash provided by financing activities28 435 720 
Net increase (decrease) in cash and cash equivalents17 (1)3 
Cash and cash equivalents at beginning of period22 23 20 
Cash and cash equivalents at end of period$39 $22 $23 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$301 $331 $303 
Cash paid for (received from) income taxes123 (30)(112)
Significant non-cash transactions:
Accrued capital expenditures149 175 220 
See Notes to Consolidated Financial Statements
100



FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Member's
(in millions)Equity
Balance at December 31, 2017$7,949 
Net income667 
Distribution to parent(175)
Balance at December 31, 2018$8,441 
Net income805 
Balance at December 31, 2019$9,246 
Net income415
Distribution to parent(400)
Other(1)
Balance at December 31, 2020$9,260
See Notes to Consolidated Financial Statements
101



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Florida, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Florida, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $2.1 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

102



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, including the settlement agreement filed with the Commission subsequent to December 31, 2020, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2001.

103


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$5,188 $5,231 $5,021 
Operating Expenses   
Fuel used in electric generation and purchased power1,737 2,012 2,085 
Operation, maintenance and other1,131 1,034 1,025 
Depreciation and amortization702 702 628 
Property and other taxes381 392 374 
Impairment charges(4)(36)54 
Total operating expenses3,947 4,104 4,166 
Gains on Sales of Other Assets and Other, net1 — 1 
Operating Income1,242 1,127 856 
Other Income and Expenses, net53 48 86 
Interest Expense326 328 287 
Income Before Income Taxes969 847 655 
Income Tax Expense198 155 101 
Net Income$771 $692 $554 
Other Comprehensive Income (Loss), net of tax   
Unrealized (losses) gains on available-for-sale securities(1)1 (1)
Other Comprehensive (Loss) Income, net of tax(1)1 (1)
Comprehensive Income$770 $693 $553 
See Notes to Consolidated Financial Statements
104


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$11 $17 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)94 96 
Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $4 at 2019)401 341 
Receivables from affiliated companies3 — 
Notes receivable from affiliated companies— 173 
Inventory464 489 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)265 419 
Other (includes $39 at 2020 and 2019 related to VIEs)41 58 
Total current assets1,279 1,593 
Property, Plant and Equipment  
Cost22,123 20,457 
Accumulated depreciation and amortization(5,560)(5,236)
Net property, plant and equipment16,563 15,221 
Other Noncurrent Assets  
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)1,799 2,194 
Nuclear decommissioning trust funds637 734 
Operating lease right-of-use assets, net344 401 
Other335 311 
Total other noncurrent assets3,115 3,640 
Total Assets$20,957 $20,454 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$465 $474 
Accounts payable to affiliated companies85 131 
Notes payable to affiliated companies196 — 
Taxes accrued82 43 
Interest accrued69 75 
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)823 571 
Regulatory liabilities110 94 
Other374 415 
Total current liabilities2,204 1,803 
Long-Term Debt (includes $1,002 at 2020 and $1,307 at 2019 related to VIEs)7,092 7,416 
Other Noncurrent Liabilities  
Deferred income taxes2,191 2,179 
Asset retirement obligations514 578 
Regulatory liabilities658 993 
Operating lease liabilities300 343 
Accrued pension and other post-retirement benefit costs231 218 
Other209 136 
Total other noncurrent liabilities4,103 4,447 
Commitments and Contingencies00
Equity  
Member's equity7,560 6,789 
Accumulated other comprehensive loss(2)(1)
Total equity7,558 6,788 
Total Liabilities and Equity$20,957 $20,454 
See Notes to Consolidated Financial Statements
105


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$771 $692 $554 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion1,019 869 793 
Equity component of AFUDC(12)(6)(47)
Gains on sales of other assets(1)— (1)
Impairment charges(4)(36)54 
Deferred income taxes27 180 159 
Payments for asset retirement obligations(80)(22)(35)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(14)(33)7 
Receivables(64)26 (100)
Receivables from affiliated companies(3)17 (26)
Inventory26 42 58 
Other current assets40 156 59 
Increase (decrease) in
Accounts payable66 (36)(1)
Accounts payable to affiliated companies(46)40 17 
Taxes accrued39 (31)40 
Other current liabilities(7)(36)82 
Other assets85 (131)(429)
Other liabilities(181)(213)(75)
Net cash provided by operating activities1,661 1,478 1,109 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(1,907)(1,844)(1,634)
Purchases of debt and equity securities(4,443)(669)(517)
Proceeds from sales and maturities of debt and equity securities4,495 695 563 
Notes receivable from affiliated companies173 (173)313 
Other(103)(67)(65)
Net cash used in investing activities(1,785)(2,058)(1,340)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt495 918 988 
Payments for the redemption of long-term debt(572)(262)(769)
Notes payable to affiliated companies196 (108)108 
Distribution to parent— — (75)
Other(1)13 1 
Net cash provided by financing activities118 561 253 
Net (decrease) increase in cash, cash equivalents, and restricted cash(6)(19)22 
Cash, cash equivalents, and restricted cash at beginning of period56 75 53 
Cash, cash equivalents, and restricted cash at end of period$50 $56 $75 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$321 $332 $270 
Cash paid for (received from) income taxes138 1 (120)
Significant non-cash transactions:
Accrued capital expenditures214 272 258 
See Notes to Consolidated Financial Statements
106


FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated
Other
Comprehensive
Income (Loss)
Net Unrealized
Gains (Losses) on
 Member'sAvailable-for-Total
(in millions)EquitySale SecuritiesEquity
Balance at December 31, 2017$5,614 $4 $5,618 
Net income554 — 554 
Other comprehensive loss— (1)(1)
Distribution to parent(75)— (75)
Other(a)
4 (5)(1)
Balance at December 31, 2018$6,097 $(2)$6,095 
Net income692 — 692 
Other comprehensive income— 1 1 
Balance at December 31, 2019$6,789 $(1)$6,788 
Net income771 — 771 
Other comprehensive loss— (1)(1)
Balance at December 31, 2020$7,560 $(2)$7,558 
(a)    Amounts represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
See Notes to Consolidated Financial Statements
107



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Ohio, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

CriticalAuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $650 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
108



REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2002.

109


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues   
Regulated electric$1,405 $1,456 $1,450 
Regulated natural gas453 484 506 
Nonregulated electric and other— — 1 
Total operating revenues1,858 1,940 1,957 
Operating Expenses   
Fuel used in electric generation and purchased power – regulated339 388 412 
Cost of natural gas73 95 113 
Operation, maintenance and other463 520 480 
Depreciation and amortization278 265 268 
Property and other taxes324 308 290 
Total operating expenses1,477 1,576 1,563 
Losses on Sales of Other Assets and Other, net— — (106)
Operating Income381 364 288 
Other Income and Expenses, net16 24 23 
Interest Expense102 109 92 
Income From Continuing Operations Before Income Taxes295 279 219 
Income Tax Expense From Continuing Operations43 40 43 
Income From Continuing Operations252 239 176 
Loss From Discontinued Operations, net of tax— (1)— 
Net Income and Comprehensive Income$252 $238 $176 
See Notes to Consolidated Financial Statements
110


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$14 $17 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $4 at 2019)98 84 
Receivables from affiliated companies102 92 
Inventory110 135 
Regulatory assets39 49 
Other31 21 
Total current assets394 398 
Property, Plant and Equipment  
Cost11,022 10,241 
Accumulated depreciation and amortization(3,013)(2,843)
Net property, plant and equipment8,009 7,398 
Other Noncurrent Assets  
Goodwill920 920 
Regulatory assets610 549 
Operating lease right-of-use assets, net20 21 
Other72 52 
Total other noncurrent assets1,622 1,542 
Total Assets$10,025 $9,338 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$279 $288 
Accounts payable to affiliated companies68 68 
Notes payable to affiliated companies169 312 
Taxes accrued247 219 
Interest accrued31 30 
Current maturities of long-term debt50 — 
Asset retirement obligations3 1 
Regulatory liabilities65 64 
Other70 75 
Total current liabilities982 1,057 
Long-Term Debt3,014 2,594 
Long-Term Debt Payable to Affiliated Companies25 25 
Other Noncurrent Liabilities  
Deferred income taxes981 922 
Asset retirement obligations108 79 
Regulatory liabilities748 763 
Operating lease liabilities20 21 
Accrued pension and other post-retirement benefit costs113 100 
Other99 94 
Total other noncurrent liabilities2,069 1,979 
Commitments and Contingencies00
Equity  
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019762 762 
Additional paid-in capital2,776 2,776 
Retained earnings397 145 
Total equity3,935 3,683 
Total Liabilities and Equity$10,025 $9,338 
See Notes to Consolidated Financial Statements
111


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$252 $238 $176 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion283 269 271 
Equity component of AFUDC(7)(13)(11)
Losses on sales of other assets0 0 106 
Deferred income taxes31 81 25 
Payments for asset retirement obligations(2)(8)(3)
Provision for rate refunds14 7 24 
(Increase) decrease in   
Receivables(13)20 (33)
Receivables from affiliated companies9 22 19 
Inventory25 (9)7 
Other current assets(18)(5)16 
Increase (decrease) in   
Accounts payable2 (17)(19)
Accounts payable to affiliated companies0 (10)16 
Taxes accrued30 17 12 
Other current liabilities3 1 14 
Other assets(32)(26)(24)
Other liabilities(2)(41)(26)
Net cash provided by operating activities575 526 570 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(834)(952)(827)
Notes receivable from affiliated companies(19)— 14 
Other(48)(68)(89)
Net cash used in investing activities(901)(1,020)(902)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt467 1,003 99 
Payments for the redemption of long-term debt— (551)(3)
Notes payable to affiliated companies(144)38 245 
Net cash provided by financing activities323 490 341 
Net (decrease) increase in cash and cash equivalents(3)(4)9 
Cash and cash equivalents at beginning of period17 21 12 
Cash and cash equivalents at end of period$14 $17 $21 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$97 $97 $87 
Cash received from income taxes— (37)(6)
Significant non-cash transactions:
Accrued capital expenditures104 109 95 
Non-cash equity contribution from parent— — 106 
See Notes to Consolidated Financial Statements
112


FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
AdditionalRetained
CommonPaid-inEarningsTotal
(in millions)StockCapital(Deficit)Equity
Balance at December 31, 2017$762 $2,670 $(269)$3,163 
Net income— — 176 176 
Contribution from parent— 106 — 106 
Balance at December 31, 2018$762 $2,776 $(93)$3,445 
Net income— — 238 238 
Balance at December 31, 2019$762 $2,776 $145 $3,683 
Net income— — 252 252 
Balance at December 31, 2020$762 $2,776 $397 $3,935 
See Notes to Consolidated Financial Statements
113



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Indiana, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Indiana, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Indiana Utility Regulatory Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $1.3 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

114



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

Duke Energy Indiana Coal Ash Asset Retirement Obligations – Refer to Notes 3, 4, and 9 to the financial statements

Critical Audit Matter Description

Duke Energy Indiana has asset retirement obligations associated with coal ash impoundments at operating and retired coal generation facilities. These legal obligations are the result of Indiana state and federal regulations. There is significant judgment in determining the assumptions used in estimating the closure costs for each site since Duke Energy Indiana does not have approved closure plans for certain sites. Potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods (“probability weightings”) creates estimation uncertainty. The liability for coal ash asset retirement obligations at Duke Energy Indiana was $1,140 million at December 31, 2020.

We identified the asset retirement obligations associated with coal ash impoundments at Duke Energy Indiana as a critical audit matter because of the significant management estimates and assumptions, including projected closure costs as well as the different potential closure methods. The audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods required a high degree of auditor judgment and an increased extent of effort, including the need to involve our environmental specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the underlying estimated closure costs for coal ash asset retirement obligations at Duke Energy Indiana included the following, among others:

•We tested the effectiveness of controls over management’s coal ash asset retirement obligation estimate, including those over management’s determination of the estimated closure costs and probability weightings.

•We evaluated management’s ability to accurately estimate future closure costs by comparing actual closure costs to management’s historical estimates.

•We tested the mathematical accuracy of management’s coal ash asset retirement obligation calculations, including the application of probability weightings.

•We made inquiries of internal and external legal counsel regarding the status of the legal matters associated with the probability weightings.

•We inspected the opinions from internal and external legal counsel supporting the probability weightings.

•We inspected the Company’s filings with and orders from the Indiana Department of Environmental Management, for evidence that might contradict management’s assertions regarding the estimated closure costs and probability weightings.

•With the assistance of our environmental specialists, we evaluated the reasonableness of management’s estimated closure costs by comparing the costs to actual costs incurred at comparable coal ash impoundments, underlying contracts, and publicly available industry cost data, as applicable.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2002.

115



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$2,795 $3,004 $3,059 
Operating Expenses   
Fuel used in electric generation and purchased power767 935 1,000 
Operation, maintenance and other762 790 788 
Depreciation and amortization569 525 520 
Property and other taxes81 69 78 
Impairment charges— — 30 
Total operating expenses2,179 2,319 2,416 
Operating Income616 685 643 
Other Income and Expenses, net37 41 45 
Interest Expense161 156 167 
Income Before Income Taxes492 570 521 
Income Tax Expense84 134 128 
Net Income and Comprehensive Income$408 $436 $393 
See Notes to Consolidated Financial Statements
116



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$7 $25 
Receivables (net of allowance for doubtful accounts of $3 at 2020 and $3 at 2019)55 60 
Receivables from affiliated companies112 79 
Inventory473 517 
Regulatory assets125 90 
Other37 60 
Total current assets809 831 
Property, Plant and Equipment  
Cost17,382 16,305 
Accumulated depreciation and amortization(5,661)(5,233)
Net property, plant and equipment11,721 11,072 
Other Noncurrent Assets 
Regulatory assets1,203 1,082 
Operating lease right-of-use assets, net55 57 
Other253 234 
Total other noncurrent assets1,511 1,373 
Total Assets$14,041 $13,276 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$188 $201 
Accounts payable to affiliated companies88 87 
Notes payable to affiliated companies131 30 
Taxes accrued62 49 
Interest accrued51 58 
Current maturities of long-term debt70 503 
Asset retirement obligations168 189 
Regulatory liabilities111 55 
Other83 112 
Total current liabilities952 1,284 
Long-Term Debt3,871 3,404 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities  
Deferred income taxes1,228 1,150 
Asset retirement obligations1,008 643 
Regulatory liabilities1,627 1,685 
Operating lease liabilities53 55 
Accrued pension and other post-retirement benefit costs171 148 
Investment tax credits168 164 
Other30 18 
Total other noncurrent liabilities4,285 3,863 
Commitments and Contingencies00
Equity  
Member's Equity4,783 4,575 
Total Liabilities and Equity$14,041 $13,276 
See Notes to Consolidated Financial Statements
117



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$408 $436 $393 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization, and accretion572 531 524 
Equity component of AFUDC(23)(18)(32)
Impairment charges— — 30 
Deferred income taxes29 156 95 
Payments for asset retirement obligations(63)(48)(69)
Provision for rate refunds— — 53 
(Increase) decrease in   
Receivables8 (8)7 
Receivables from affiliated companies0 41 3 
Inventory44 (95)28 
Other current assets(3)76 (25)
Increase (decrease) in   
Accounts payable(12)(10)37 
Accounts payable to affiliated companies1 4 5 
Taxes accrued13 (25)(52)
Other current liabilities6 15 14 
Other assets(68)(74)26 
Other liabilities26 16 (31)
Net cash provided by operating activities938 997 1,006 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(888)(876)(832)
Purchases of debt and equity securities(37)(26)(48)
Proceeds from sales and maturities of debt and equity securities22 20 44 
Notes receivable from affiliated companies(33)— — 
Other48 (49)18 
Net cash used in investing activities(888)(931)(818)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt544 485 — 
Payments for the redemption of long-term debt(513)(213)(3)
Notes payable to affiliated companies101 (137)6 
Distributions to parent(200)(200)(175)
Other— — (1)
Net cash used in financing activities(68)(65)(173)
Net (decrease) increase in cash and cash equivalents(18)1 15 
Cash and cash equivalents at beginning of period25 24 9 
Cash and cash equivalents at end of period$7 $25 $24 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$164 $150 $162 
Cash paid for (received from) income taxes36 (6)75 
Significant non-cash transactions:
Accrued capital expenditures101 102 88 
See Notes to Consolidated Financial Statements
118



FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Member's
(in millions)Equity
Balance at December 31, 2017$4,121 
Net income393 
Distributions to parent(175)
Balance at December 31, 2018$4,339 
Net income436 
Distributions to parent(200)
Balance at December 31, 2019$4,575 
Net income408
Distributions to parent(200)
Balance at December 31, 2020$4,783
See Notes to Consolidated Financial Statements
119



REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Piedmont Natural Gas Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Piedmont Natural Gas Company, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical AuditMatter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, the Public Service Commission of South Carolina, and the Tennessee Public Utility Commission (collectively the “Commissions”), which have jurisdiction with respect to the gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $450 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

120



REPORTS
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
◦We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
◦We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
◦We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
◦We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1951.

121



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31,
(in millions)202020192018
Operating Revenues
Regulated natural gas$1,286 $1,369 $1,365 
Nonregulated natural gas and other11 12 10 
Total operating revenues1,297 1,381 1,375 
Operating Expenses 
Cost of natural gas386 532 584 
Operation, maintenance and other322 328 357 
Depreciation and amortization180 172 159 
Property and other taxes53 45 49 
Impairment charges7 — — 
Total operating expenses948 1,077 1,149 
Operating Income349 304 226 
Equity in earnings of unconsolidated affiliates9 8 7 
Other income and expense, net51 20 14 
Total other income and expenses60 28 21 
Interest Expense118 87 81 
Income Before Income Taxes291 245 166 
Income Tax Expense18 43 37 
Net Income and Comprehensive Income$273 $202 $129 
See Notes to Consolidated Financial Statements
122



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
(in millions)20202019
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $12 at 2020 and $6 at 2019)$250 $241 
Receivables from affiliated companies10 10 
Inventory68 72 
Regulatory assets153 73 
Other20 28 
Total current assets501 424 
Property, Plant and Equipment
Cost9,134 8,446 
Accumulated depreciation and amortization(1,749)(1,681)
Net property, plant and equipment7,385 6,765 
Other Noncurrent Assets
Goodwill49 49 
Regulatory assets302 290 
Operating lease right-of-use assets, net20 24 
Investments in equity method unconsolidated affiliates88 83 
Other270 121 
Total other noncurrent assets729 567 
Total Assets$8,615 $7,756 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$230 $215 
Accounts payable to affiliated companies79 3 
Notes payable to affiliated companies530 476 
Taxes accrued23 24 
Interest accrued34 33 
Current maturities of long-term debt160 0 
Regulatory liabilities88 81 
Other69 67 
Total current liabilities1,213 899 
Long-Term Debt2,620 2,384 
Other Noncurrent Liabilities
Deferred income taxes821 708 
Asset retirement obligations20 17 
Regulatory liabilities1,044 1,131 
Operating lease liabilities19 23 
Accrued pension and other post-retirement benefit costs8 3 
Other155 148 
Total other noncurrent liabilities2,067 2,030 
Commitments and Contingencies00
Equity
Common stock, 0 par value: 100 shares authorized and outstanding at 2020 and 20191,310 1,310 
Retained earnings1,405 1,133 
Total equity2,715 2,443 
Total Liabilities and Equity$8,615 $7,756 
See Notes to Consolidated Financial Statements
123



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$273 $202 $129 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization182 174 161 
Equity component of AFUDC(19)— — 
Impairment charges7 — — 
Deferred income taxes53 136 (31)
Equity in (earnings) losses from unconsolidated affiliates(9)(8)(7)
Provision for rate refunds(33)2 43 
(Increase) decrease in
Receivables10 28 7 
Receivables from affiliated companies— 12 (15)
Inventory3 (2)(4)
Other current assets(66)(25)71 
Increase (decrease) in
Accounts payable16 (7)15 
Accounts payable to affiliated companies76 (35)25 
Taxes accrued3 (60)65 
Other current liabilities(11)1 21 
Other assets(11)1 3 
Other liabilities7 (10)(5)
Net cash provided by operating activities481 409 478 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(901)(1,053)(721)
Contributions to equity method investments— (16)— 
Other(28)(14)(10)
Net cash used in investing activities(929)(1,083)(731)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt394 596 100 
Payments for the redemption of long-term debt— (350)— 
Notes payable to affiliated companies54 278 (166)
Capital contribution from parent— 150 300 
Net cash provided by financing activities448 674 234 
Net decrease in cash and cash equivalents— — (19)
Cash and cash equivalents at beginning of period— — 19 
Cash and cash equivalents at end of period$— $— $— 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$115 $84 $79 
Cash received from income taxes(36)(31)(16)
Significant non-cash transactions:
Accrued capital expenditures106 109 96 
See Notes to Consolidated Financial Statements
124



FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
CommonRetainedTotal
(in millions)StockEarningsEquity
Balance at December 31, 2017$860 $802 $1,662 
Net income— 129 129 
Contribution from parent300 — 300 
Balance at December 31, 2018$1,160 $931 $2,091 
Net income— 202 202 
Contribution from parent150 — 150 
Balance at December 31, 2019$1,310 $1,133 $2,443 
Net income— 273 273 
Other— (1)(1)
Balance at December 31, 2020$1,310 $1,405 $2,715 
See Notes to Consolidated Financial Statements
125



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Index to Combined Notes To Consolidated Financial Statements
Financial Instruments Classification and Measurement. On January 1, 2018,The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.
 Applicable Notes
Registrant12345678910111213141516171819202122232425
Duke Energy•••••••••••• ••••••••••••
Duke Energy Carolinas•••••••••• •••••• ••••••
Progress Energy••••••••• •••••• ••••••
Duke Energy Progress•••••• ••• •••••• ••••••
Duke Energy Florida••••••••• •••••• ••••••
Duke Energy Ohio•••••• ••• •• ••• ••••••
Duke Energy Indiana•••••• •••• •••••• ••••••
Piedmont••••••••••••••••••••
Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy adopted FASB guidance, which revised the classificationProgress, Duke Energy Florida and measurement of certain financial instruments. The adopted guidance changes the presentation of realized and unrealized gains and losses in certain equity securities that were previously recorded in AOCI. These gains and losses are now recorded in net income. An entity's equity investmentsother subsidiaries that are accounted for under the equity method of accountingnot registrants and (ii) subsidiaries that are not registrants but included withinin the scopeconsolidated Duke Energy balances.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Consolidation
Duke Energy is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the new guidance. This guidance had a minimal impact onFERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants, including Duke Energy Carolinas; Progress Energy; Duke Energy Progress; Duke Energy Florida; Duke Energy Ohio; Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrant's Consolidated Statements of Operations and Comprehensive Income as changesRegistrants.
The information in the fair value of mostthese combined notes relates to each of the Duke Energy Registrants' equity securities are deferredRegistrants as regulatory assets or liabilities pursuantnoted in the Index to accounting guidance for regulated operations. The resulting adjustmentCombined Notes to Consolidated Financial Statements. However, none of unrealized gains and losses in AOCIthe Subsidiary Registrants make any representation as to retained earnings was immaterial. The primary impactinformation related solely to Duke Energy as a resultor the Subsidiary Registrants of implementing this guidance is adding disclosure requirements to present separately the financial assets and financial liabilities by measurement category and form of financial asset. See Notes 15 and 16 for further information.
Statement of Cash Flows. In November 2016, the FASB issued revised accounting guidance to reduce diversity in practice for the presentation and classification of restricted cash on the Consolidated Statements of Cash Flows. Under the updated guidance, restricted cash and restricted cash equivalents are included within beginning-of-period and end-of-period cash and cash equivalents on the Consolidated Statements of Cash Flows. Duke Energy adopted this guidance on January 1, 2018. The guidance has been applied using a retrospective transition method to each period presented. The adoption by Duke Energyother than itself.
These Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the revised guidance resulted in a change to the amount of Cash, cash equivalents and restricted cash explained when reconciling the beginning-of-period and end-of-period total amounts shown on the Consolidated Statements of Cash Flows. In addition, a reconciliation has been provided of Cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sums to the total of the same such amounts in the Consolidated Statements of Cash Flows. Prior to adoption, the Duke Energy Registrants reflected changes in noncurrent restricted cash within Cash Flows from Investing Activities and changes in current restricted cash within Cash Flows from Operating Activitiessubsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 17 for additional information on VIEs. These Consolidated Financial Statements also reflect the Consolidated StatementsDuke Energy Registrants’ proportionate share of Cash Flows.
In August 2016, the FASB issued accounting guidance addressing diversity in practicecertain jointly owned generation and transmission facilities. See Note 8 for eight separate cash flow issues. The guidance requires entities to classify distributions received from equity method investees using either the cumulative earnings approach or the natureadditional information on joint ownership. Substantially all of the distribution approach. Subsidiary Registrants' operations qualify for regulatory accounting.
Duke Energy adopted this guidance on January 1, 2018,Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and electedsale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas is subject to the nature of distribution approach. This approach requires all distributions received to be categorized based on legal documentation describing the natureregulatory provisions of the activities generatingNCUC, PSCSC, NRC and FERC.
Progress Energy is a public utility holding company, which conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. Progress Energy is subject to regulation by FERC and other regulatory agencies listed below.
Duke Energy Progress is a regulated public utility primarily engaged in the distribution. Cash inflows resultinggeneration, transmission, distribution and sale of electricity in a return on investment (surplus) will be reflected in Cash Flows from Operating Activities on the Consolidated Statementsportions of Cash Flows, whereas cash inflows resulting in a return of investment (capital) will be reflected in Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows. The guidance has been applied using the retrospective transition method to each period presented. There are no changesNorth Carolina and South Carolina. Duke Energy Progress is subject to the Consolidated Statementsregulatory provisions of Cash Flowsthe NCUC, PSCSC, NRC and FERC.
Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.
Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the periods presented as a result of this accounting change.
Retirement Benefits. In March 2017, the FASB issued revised accounting guidance for the presentation of net periodic costs related to benefit plans. Previous guidance required the aggregation of all the components of net periodic costsenergy price is recovered from retail customers and recorded in Operating Revenues on the Consolidated Statements of Operations and did not requireComprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the disclosureregulatory provisions of the location of net periodic costs on the Consolidated Statements of Operations. Under the amended guidance, the service cost component of net periodic costs is included within Operating Income within the same line as other compensation expenses. All other components of net periodic costs are outside of Operating Income. In addition, the updated guidance permits only the service cost component of net periodic costs to be capitalized to Inventory or Property, PlantPUCO, KPSC and Equipment. This represents a change from previous guidance, which permitted all components of net periodic costs to be eligible for capitalization.FERC.
Duke Energy adopted this guidance on January 1, 2018. Under previous guidance,Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy presentedIndiana is subject to the total non-capitalized net periodicregulatory provisions of the IURC and FERC.
Piedmont is a regulated public utility primarily engaged in the distribution of natural gas in portions of North Carolina, South Carolina and Tennessee. Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC and FERC.
Certain prior year amounts have been reclassified to conform to the current year presentation.
126



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COVID-19
The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and the federal government proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The Duke Energy Registrants are monitoring developments closely and responding appropriately. The company incurred approximately $112 million of incremental COVID-19 costs withinbefore deferral for the year ended December 31, 2020, included in Operation, maintenance and other on the Consolidated Statements of Operations. Further, the company waived approximately $64 million of late payment fees for the year ended December 31, 2020. The adoption of this guidance resulted in a retrospective change to reclassify the presentationcompany has deferred approximately $76 million of the non-serviceincremental costs, which were primarily bad debt expense, personal protective equipment and cleaning supplies, and a cost (benefit) componentscomponent of net periodic costslate payment fees. See Notes 3, 6, 17, 18 and 23 for additional information as well as steps taken to mitigate the impacts to our business and customers from the COVID-19 pandemic.
Other incomeCurrent Assets and expenses.Liabilities
The following table provides a description of amounts included in Other within Current Assets or Current Liabilities that exceed 5% of total Current Assets or Current Liabilities on the Duke Energy utilizedRegistrants' Consolidated Balance Sheets at either December 31, 2020, or 2019.
December 31,
(in millions)Location20202019
Duke Energy
Other accrued liabilitiesCurrent Liabilities$1,455 $604 
Accrued compensationCurrent Liabilities662 862 
Duke Energy Carolinas
Accrued compensationCurrent Liabilities$213 $271 
Other accrued liabilitiesCurrent Liabilities178 147 
Progress Energy   
Customer depositsCurrent Liabilities$347 $354 
Duke Energy Florida   
Customer depositsCurrent Liabilities$203 $209 
Duke Energy Ohio   
Gas StorageCurrent Assets$21 $0 
Duke Energy Indiana   
Income taxes receivableCurrent Assets$9 $44 
Discontinued Operations
Duke Energy has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the practical expedientnotes to these consolidated financial statements exclude amounts related to discontinued operations for retrospective presentation.all periods presented. For the years ended December 31, 2020, 2019 and 2018, the Income (Loss) From Discontinued Operations, net of tax on Duke Energy's Consolidated Statements of Operations is entirely attributable to controlling interest.
Noncontrolling Interest
Duke Energy maintains a controlling financial interest in certain less than wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Consolidated Balance Sheet.
Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the HLBV method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners, most of which is over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in componentsthe amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of income or loss allocated to each owner for the reporting period.
Other operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net periodic costs eligible for capitalization is applicable prospectively. Since Duke Energy’s service cost component is greater than the total net periodic costs, the change results in increased capitalization of net periodic costs, higher Operation, maintenanceincome or loss and other and higher Othercomprehensive income and expenses. The resulting prospective impactor loss of these subsidiaries to the owners based on their pro rata shares.
127



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
During the third quarter of 2019, Duke Energy completed a sale of minority interest in a portion of certain renewable assets within the Commercial Renewables Segment for pretax proceeds to Duke Energy is an immaterial increase in Net Income. See Note 22 for further information.
Forof $415 million. The portion of Duke Energy's commercial renewables energy portfolio sold includes 49% of 37 operating wind, solar and battery storage assets and 33% of 11 operating solar assets across the U.S. Duke Energy retained control of these assets, and, therefore, no gain or loss was recognized on the retrospective change resulted in higher Operation, maintenanceConsolidated Statements of Operations. The difference between the consideration received and other and higher Other income and expenses,the carrying value of the noncontrolling interest claim on net assets is $466 million, net of $156tax benefit of $8 million, and $139 millionwas recorded to equity.
The following table presents cash received for the sale of noncontrolling interest and allocated losses to noncontrolling interest for the years ended December 31, 2017,2020, and 2016, respectively. There was no change to Net Income for these prior periods.2019.
The following new accounting standards have been issued, but have not yet been adopted by the
December 31,
(in millions)20202019
Noncontrolling Interest Capital Contributions
Cash received for the sale of noncontrolling interest to tax equity members$426 $428 
Cash received for the sale of noncontrolling interest to pro rata share members— 415 
Total Noncontrolling Interest Capital Contributions$426 $843 
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method$271 $165 
Allocated losses to noncontrolling members based on pro rata shares of ownership24 12 
Total Noncontrolling Interest Allocated Losses$295 $177 
2021 Sale of Minority Interest in Duke Energy Registrants, as of December 31, 2018.Indiana
Leases. In February 2016, the FASB issued revised accounting guidance for leases. The core principle of this guidance is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet.
ForJanuary 2021, Duke Energy this guidance is effectiveentered into a definitive agreement providing for interimthe sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund and annual periods beginning January 1, 2019.an experienced investor in U.S. infrastructure. To facilitate the transaction, Duke Energy will issue and sell membership interests in Duke Energy Indiana Holdco, LLC. a newly created holding company that will own 100% of the issued and outstanding membership interests in Duke Energy Indiana. The guidancetransaction will be applied using a modified retrospective approach.completed following two closings for an aggregate purchase price of approximately $2 billion. The first closing is expected to be completed in the second quarter of 2021 and Duke Energy will issue and sell 11.1% of the membership interests in exchange for 50% of the purchase price. Under the modified retrospective approachterms of adoption, prior year reported results are not restatedthe agreement, Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023. At the second closing, Duke Energy will issue and a cumulative-effect adjustment, if applicable, is recorded to retained earnings at January 1, 2019. Upon adoption, agreements considered leasessell additional membership interests such that GIC will own 19.9% of the membership interests for the useremaining 50% of certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (bargesthe purchase price. Duke Energy will continue to operate and railcars), landretain control of Duke Energy Indiana and, office spacetherefore, no gain or loss is expected to be recognized in the Consolidated Statements of Operations. Additionally, the transaction will be recognized on the balance sheet.reflected within Duke Energy expects to adopt the following practical expedients:Corporations' stockholders' equity as a sale of a noncontrolling interest.


136



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Practical ExpedientDescriptionElection
Package of transition practical expedients (for leases commenced prior to adoption date and must be adopted as a package)Do not need to 1) reassess whether any expired or existing contracts are/or contain leases, 2) reassess the lease classification for any expired or existing leases and 3) reassess initial direct costs for any existing leases.Duke Energy plans to elect this practical expedient.
Short-term lease expedient (elect by class of underlying asset)Elect as an accounting policy to not apply the recognition requirements to short-term leases by asset class.Duke Energy plans to elect this practical expedient for all asset classes.
Lease and non-lease components (elect by class of underlying asset)Elect as an accounting policy to not separate non-lease components from lease components and instead account for each lease and associated non-lease component as a single lease component by asset class.Duke Energy plans to elect this practical expedient for all asset classes.
Hindsight expedient (when determining lease term)Elect to use hindsight to determine the lease term.Duke Energy plans to elect this practical expedient.
Existing and expired land easements not previously accounted for as leasesElect to not evaluate existing or expired easements under the new guidance and carry forward current accounting treatment.Duke Energy plans to elect this practical expedient.
Comparative reporting requirements for initial adoption

Elect to apply transition requirements at adoption date, recognize cumulative effect adjustment to retained earnings in period of adoption and not apply ASC 842 to comparative periods, including disclosures.Duke Energy plans to elect this practical expedient.
Lessor expedient (elect by class of underlying asset)

Elect as an accounting policy to aggregate non-lease components with the related lease component when specified conditions are met by asset class. Account for the combined component based on its predominant characteristic (revenue or operating lease).Duke Energy plans to elect this practical expedient for all asset classes.
Duke Energy currently expects to record right-of-use assets and operating lease liabilities on its balance sheet as shown in approximate amounts in the table below:
 (in millions)
Duke Energy$1,700
Duke Energy Carolinas150
Progress Energy850
Duke Energy Progress400
Duke Energy Florida450
Duke Energy Ohio25
Duke Energy Indiana60
Piedmont30
In addition to the recognition of operating leases on the balance sheet, Duke Energy expects additional disclosures including both finance and operating lease costs, short-term lease costs, variable lease costs, weighted-average remaining lease term as well as weighted-average discount rates. Duke Energy does not expect a material change to its financial statements from adoption of the new standard for contracts where it is the lessor.
2. ACQUISITIONS AND DISPOSITIONS
ACQUISITIONSAcquisitions
The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.
2016 AcquisitionSignificant Accounting Policies
Use of Piedmont Natural GasEstimates
On October 3, 2016,In preparing financial statements that conform to GAAP, the Duke Energy acquired all outstanding common stockRegistrants must make estimates and assumptions that affect the reported amounts of Piedmontassets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Regulatory Accounting
The majority of the Duke Energy Registrants’ operations are subject to price regulation for the sale of electricity and natural gas by state utility commissions or FERC. When prices are set on the basis of specific costs of the regulated operations and an effective franchise is in place such that sufficient natural gas or electric services can be sold to recover those costs, the Duke Energy Registrants apply regulatory accounting. Regulatory accounting changes the timing of the recognition of costs or revenues relative to a company that does not apply regulatory accounting. As a result, regulatory assets and regulatory liabilities are recognized on the Consolidated Balance Sheets. Regulatory assets and liabilities are amortized consistent with the treatment of the related cost in the ratemaking process. Regulatory assets are reviewed for recoverability each reporting period. If a regulatory asset is no longer deemed probable of recovery, the deferred cost is charged to earnings. See Note 3 for further information.
Regulatory accounting rules also require recognition of a disallowance (also called "impairment") loss if it becomes probable that part of the cost of a plant under construction (or a recently completed plant or an abandoned plant) will be disallowed for ratemaking purposes and a reasonable estimate of the amount of the disallowance can be made. For example, if a cost cap is set for a total cash purchase price of $5.0 billion and assumed Piedmont's existing long-term debt, which had a fair value of approximately $2.0 billion atplant still under construction, the timeamount of the acquisition. The acquisition providesdisallowance is a foundation for Duke Energyresult of a judgment as to establish a broader, long-term strategic natural gas infrastructure platform to complement its existing natural gas pipeline investments and regulated natural gas business in the Midwest. In connection with the closingultimate cost of the acquisition, Piedmont became a wholly owned subsidiary of Duke Energy.

plant. These disallowances can require judgments on allowed future rate recovery.
137
128






FINANCIAL STATEMENTSACQUISITIONS AND DISPOSITIONSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


When it becomes probable that regulated generation, transmission or distribution assets will be abandoned, the cost of the asset is removed from plant in service. The value that may be retained as a regulatory asset on the balance sheet for the abandoned property is dependent upon amounts that may be recovered through regulated rates, including any return. As such, an impairment charge could be partially or fully offset by the establishment of a regulatory asset if rate recovery is probable. The impairment charge for a disallowance of costs for regulated plants under construction, recently completed or abandoned is based on discounted cash flows.
Accounting Charges Related to the Acquisition
The Duke Energy incurred pretax transaction and integration costs associated with the acquisition of $84 million, $103 million and $439 millionRegistrants utilize cost-tracking mechanisms, commonly referred to as fuel adjustment clauses or PGA clauses. These clauses allow for the years ended December 31, 2018, 2017recovery of fuel and 2016, respectively. Amountsfuel-related costs, portions of purchased power, natural gas costs and hedging costs through surcharges on customer rates. The difference between the costs incurred and the surcharge revenues is recorded either as an adjustment to Operating Revenues, Operating Expenses – Fuel used in electric generation or Operating Expenses – Cost of natural gas on the Consolidated Statements of Operations, with an off-setting impact on regulatory assets or liabilities.
Cash, Cash Equivalents and Restricted Cash
All highly liquid investments with maturities of three months or less at the date of acquisition are considered cash equivalents. Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See Note 17 for additional information. Restricted cash amounts are included in 2018Other within Current Assets and 2017Other Noncurrent Assets on the Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Consolidated Balance Sheets.
December 31, 2020December 31, 2019
DukeDuke
DukeProgressEnergyDukeProgressEnergy
EnergyEnergyFloridaEnergyEnergyFlorida
Current Assets
Cash and cash equivalents$259 $59 $11 $311 $48 $17 
Other194 39 39 222 39 39 
Other Noncurrent Assets
Other103 102 — 40 39 — 
Total cash, cash equivalents and restricted cash$556 $200 $50 $573 $126 $56 
Inventory
Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Inventory is charged to expense or capitalized to property, plant and equipment when issued, primarily using the average cost method. Excess or obsolete inventory is written down to the lower of cost or net realizable value. Once inventory has been written down, it creates a new cost basis for the inventory that is not subsequently written up. Provisions for inventory write-offs were not material at December 31, 2020, and 2019, respectively. The components of inventory are presented in the tables below.
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies$2,312 $785 $999 $673 $325 $78 $307 $12 
Coal561 186 193 131 63 16 165 — 
Natural gas, oil and other294 39 183 107 76 16 1 56 
Total inventory$3,167 $1,010 $1,375 $911 $464 $110 $473 $68 
 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies$2,297 $768 $1,038 $686 $351 $79 $318 $5 
Coal586 187 186 138 48 15 198 — 
Natural gas, oil and other349 41 199 110 90 41 1 67 
Total inventory$3,232 $996 $1,423 $934 $489 $135 $517 $72 
129



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in Debt and Equity Securities
The Duke Energy Registrants classify investments in equity securities as FV-NI and investments in debt securities as AFS. Both categories are recorded at fair value on the Consolidated Balance Sheets. Realized and unrealized gains and losses on securities classified as FV-NI are reported through net income. Unrealized gains and losses for debt securities classified as AFS are included in AOCI until realized, unless it is determined the carrying value of an investment has a credit loss. For certain investments of regulated operations, such as substantially all of the NDTF, realized and unrealized gains and losses (including any credit losses) on debt securities are recorded as a regulatory asset or liability. The credit loss portion of debt securities of nonregulated operations are included in earnings. Investments in debt and equity securities are classified as either current or noncurrent based on management’s intent and ability to sell these securities, taking into consideration current market liquidity. See Note 15 for further information.
Goodwill
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont perform annual goodwill impairment tests as of August 31 each year at the reporting unit level, which is determined to be a business segment or one level below. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update these tests between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. See Note 11 for further information.
Intangible Assets
Intangible assets are included in Other in Other Noncurrent Assets on the Consolidated Balance Sheets. Generally, intangible assets are amortized using an amortization method that reflects the pattern in which the economic benefits of the intangible asset are consumed or on a straight-line basis if that pattern is not readily determinable. Amortization of intangibles is reflected in Depreciation and amortization on the Consolidated Statements of Operations. Intangible assets are subject to impairment testing and if impaired, the carrying value is accordingly reduced.
RECs are used to measure compliance with renewable energy standards and are held primarily system integrationfor consumption. See Note 11 for further information.
Long-Lived Asset Impairments
The Duke Energy Registrants evaluate long-lived assets, excluding goodwill, for impairment when circumstances indicate the carrying value of those assets may not be recoverable. An impairment exists when a long-lived asset’s carrying value exceeds the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the carrying value of the asset is written down to its then current estimated fair value and an impairment charge is recognized.
The Duke Energy Registrants assess fair value of long-lived assets using various methods, including recent comparable third-party sales, internally developed discounted cash flow analysis and analysis from outside advisors. Triggering events to reassess cash flows may include, but are not limited to, significant changes in commodity prices, the condition of an asset or management’s interest in selling the asset.
Equity Method Investment Impairments
Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method. Equity method investments are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the decline in value is considered to be other than temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment.
Impairment assessments use a discounted cash flow income approach and include consideration of the severity and duration of any decline in the fair value of the investments. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. Key inputs that involve estimates and significant management judgment include cash flow projections, selection of a discount rate, probability weighting of potential outcomes, and whether any decline in value is considered temporary.
130



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property, Plant and Equipment
Property, plant and equipment are stated at the lower of depreciated historical cost net of any disallowances or fair value, if impaired. The Duke Energy Registrants capitalize all construction-related direct labor and material costs, as well as indirect construction costs such as general engineering, taxes and financing costs. See “Allowance for Funds Used During Construction and Interest Capitalized” for information on capitalized financing costs. Costs of renewals and betterments that extend the useful life of property, plant and equipment are also capitalized. The cost of repairs, replacements and major maintenance projects, which do not extend the useful life or increase the expected output of the asset, are expensed as incurred. Depreciation is generally computed over the estimated useful life of the asset using the composite straight-line method. Depreciation studies are conducted periodically to update composite rates and are approved by state utility commissions and/or the FERC when required. The composite weighted average depreciation rates, excluding nuclear fuel, are included in the table that follows.
 Years Ended December 31,
 202020192018
Duke Energy3.0 %3.1 %3.0 %
Duke Energy Carolinas2.8 %2.8 %2.8 %
Progress Energy3.2 %3.1 %2.9 %
Duke Energy Progress3.1 %3.1 %2.9 %
Duke Energy Florida3.3 %3.1 %3.0 %
Duke Energy Ohio2.9 %2.6 %2.8 %
Duke Energy Indiana3.5 %3.3 %3.3 %
Piedmont2.3 %2.4 %2.5 %
In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value and any depreciation already recognized, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as Generation facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory assets on the Consolidated Balance Sheets if deemed recoverable (see discussion of long-lived asset impairments above). The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.
When the Duke Energy Registrants sell entire regulated operating units, or retire or sell nonregulated properties, the original cost and accumulated depreciation and amortization balances are removed from Property, Plant and Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded in earnings, unless otherwise required by the applicable regulatory body. See Note 10 for additional information.
Leases
Duke Energy determines if an arrangement is a lease at contract inception based on whether the arrangement involves the use of a physically distinct identified asset and whether Duke Energy has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period as well as the right to direct the use of the asset. As a policy election, Duke Energy does not evaluate arrangements with initial contract terms of less than one year as leases.
Operating leases are included in Operating lease ROU assets, net, Other current liabilities and Operating lease liabilities on the Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, Current maturities of long-term debt and Long-Term Debt on the Consolidated Balance Sheets.
For lessee and lessor arrangements, Duke Energy has elected a policy to not separate lease and non-lease components for all asset classes. For lessor arrangements, lease and non-lease components are only combined under one arrangement and accounted for under the lease accounting framework if the non-lease components are not the predominant component of the arrangement and the lease component would be classified as an operating lease.
Nuclear Fuel
Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets.
Nuclear fuel in the front-end fuel processing phase is considered work in progress and not amortized until placed in service. Amortization of nuclear fuel is included within Fuel used in electric generation and purchased power on the Consolidated Statements of Operations. Amortization is recorded using the units-of-production method.
Allowance for Funds Used During Construction and Interest Capitalized
For regulated operations, the debt and equity costs of $78 millionfinancing the construction of property, plant and $71 million, respectively,equipment are reflected as AFUDC and capitalized as a component of the cost of property, plant and equipment. AFUDC equity is reported on the Consolidated Statements of Operations as non-cash income in Other income and expenses, net. AFUDC debt is reported as a non-cash offset to Interest Expense. After construction is completed, the Duke Energy Registrants are permitted to recover these costs through their inclusion in rate base and the corresponding subsequent depreciation or amortization of those regulated assets.
131



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AFUDC equity, a permanent difference for income taxes, reduces the ETR when capitalized and increases the ETR when depreciated or amortized. See Note 23 for additional information.
For nonregulated operations, interest is capitalized during the construction phase with an offsetting non-cash credit to Interest Expense on the Consolidated Statements of Operations.
Asset Retirement Obligations
AROs are recognized for legal obligations associated with the retirement of property, plant and equipment. Substantially all AROs are related to combiningregulated operations. When recording an ARO, the various operationalpresent value of the projected liability is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted over time. For operating plants, the present value of the liability is added to the cost of the associated asset and depreciated over the remaining life of the asset. For retired plants, the present value of the liability is recorded as a regulatory asset unless determined not to be probable of recovery.
The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding timing of future cash flows, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change. Depreciation expense is adjusted prospectively for any changes to the carrying amount of the associated asset. The Duke Energy Registrants receive amounts to fund the cost of the ARO for regulated operations through a combination of regulated revenues and earnings on the NDTF. As a result, amounts recovered in regulated revenues, earnings on the NDTF, accretion expense and depreciation of the associated asset are netted and deferred as a regulatory asset or liability.
Accounts Payable
During 2020, Duke Energy established a supply chain finance program (the “program”) with a global financial systems ofinstitution. The program is voluntary and allows Duke Energy suppliers, at their sole discretion, to sell their receivables from Duke Energy to the financial institution at a rate that leverages Duke Energy’s credit rating and, which may result in favorable terms compared to the rate available to the supplier on their own credit rating. Suppliers participating in the program, determine at their sole discretion which invoices they will sell to the financial institution. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and Piedmont, including a one-time software impairment resulting from planned accounting system and process integration in 2017. A $7 million charge was recorded within Impairment Charges, with the remaining $64 million recorded within Operation, maintenance and other in 2017.
Amounts recorded in 2016 include:
Interest expensesupplier regardless of $234 million related to the acquisition financing, including realized losses on forward-starting interest rate swaps of $190 million. See Note 14 for additional information on the swaps.
Charges of $104 million related to commitments made in conjunction with the transaction, including charitable contributions and a one-time bill credit to Piedmont customers. $10 million was recorded as a reduction in Operating Revenues, with the remaining $94 million recorded within Operation, maintenance and other.
Other transaction and integration costs of $101 million recorded to Operation, maintenance and other, including professional fees and severance charges.
program participation. The majority of transition and integration activities were completed by the end of 2018.
Pro Forma Financial Information
The following unaudited pro forma financial information reflects the combined results of operations ofcommercial terms negotiated between Duke Energy and Piedmont as ifits suppliers are consistent regardless of whether the merger had occurred as of January 1, 2015. The pro forma financial informationsupplier elects to participate in the program. Duke Energy does not include potential cost savings, intercompany revenues, Piedmont’s earnings from a certain equity method investment sold immediately priorissue any guarantees with respect to the merger or non-recurring transactionprogram and integration costs incurred bydoes not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and Piedmont. The after-tax transactionreceives no interest, fees or other benefit from the financial institution based on supplier participation in the program.
At December 31, 2020, $15 million, $1 million and integration costs incurred by$14 million of the outstanding Accounts payable balance for Duke Energy, Duke Energy Ohio and Piedmont, were $279respectively, was sold to the financial institution by our suppliers. Suppliers invoices sold to the financial institution under the program totaled $45 million, $9 million and $36 million for the year ended December 31, 2016.
This information has been presented2020, for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Duke Energy.
 Year Ended December 31,
(in millions)2016
Operating Revenues$23,504
Net Income Attributable to Duke Energy Corporation2,442
Piedmont's Earnings
Piedmont's revenues and net income included in Duke Energy's Consolidated Statements of Operations for the year ended December 31, 2016, were $367 million and $20 million, respectively. Piedmont's revenues and net income for the year ended December 31, 2016, include the impact of non-recurring transaction costs of $10 million and $46 million, respectively.
DISPOSITIONS
For the years ended December 31, 2018, and 2017, the Income (Loss) from Discontinued Operations, net of tax, was immaterial. The following table summarizes the Loss from Discontinued Operations, net of tax recorded on Duke Energy's Consolidated Statements of Operations for the year ended December 31, 2016:
 Year Ended December 31,
(in millions)2016
International Disposal Group$(534)
Other(a)
126
Loss from Discontinued Operations, net of tax$(408)
(a)Amount represents an income tax benefit resulting from immaterial out of period deferred tax liability adjustments for previously sold businesses not related to the International Disposal Group.
2016 Sale of International Energy
In February 2016, Duke Energy, announced it had initiated a process to divest the International Disposal Group, and in October 2016, announced it had entered into two separate purchase and sale agreements to execute the divestiture. Both sales closed in December of 2016, resulting in available cash proceeds of $1.9 billion, excluding transaction costs. Proceeds were primarily used to reduce the Parent debt. Existing favorable tax attributes result in no immediate U.S. federal-level cash tax impacts. Details of each transaction are as follows:

138



FINANCIAL STATEMENTSACQUISITIONS AND DISPOSITIONS


On December 20, 2016, Duke Energy closed on the sale of its ownership interests in businesses in Argentina, Chile, Ecuador, El Salvador, GuatemalaOhio and PeruPiedmont, respectively. All activity related to I Squared Capital. The assets sold included approximately 2,230 MW of hydroelectric and natural gas generation capacity, transmission infrastructure and natural gas processing facilities. I Squared Capital purchased the businesses for an enterprise value of $1.2 billion.
On December 29, 2016, Duke Energy closed on the sale of its Brazilian business, which included approximately 2,090 MW of hydroelectric generation capacity,amounts due to CTG for an enterprise value of $1.2 billion. With the closing of the CTG deal, Duke Energy finalized its exit from the Latin American market.
Assets Held For Sale and Discontinued Operations
As a result of the transactions, the International Disposal Group was classified as held for sale and as discontinued operationssuppliers who elected to participate in the fourth quarter of 2016. Interest expense directly associated with the International Disposal Group was allocated to discontinued operations. No interest from corporate level debt was allocated to discontinued operations.
The following table presents the results of the International Disposal Group for the year ended December 31, 2016, whichprogram are included in Loss from Discontinued Operations, net of tax in Duke Energy's Consolidated Statements of Operations.
 Year Ended December 31,
(in millions)2016
Operating Revenues$988
Fuel used in electric generation and purchased power227
Cost of natural gas43
Operation, maintenance and other341
Depreciation and amortization(a)
62
Property and other taxes15
Impairment charges (b)
194
(Losses) Gains on Sales of Other Assets and Other, net(3)
Other Income and Expenses, net58
Interest Expense82
Pretax loss on disposal(c)
(514)
Loss before income taxes(d)
(435)
Income tax expense(e)(f)
99
Loss from discontinued operations of the International Disposal Group$(534)
(a)Upon meeting the criteria for assets held for sale, beginning in the fourth quarter of 2016 depreciation expense ceased.
(b)In conjunction with the advancements of marketing efforts during 2016, Duke Energy performed recoverability tests of the long-lived asset groups of International Energy. As a result, Duke Energy determined the carrying value of certain assets in Central America was not fully recoverable and recorded a pretax impairment charge of $194 million. The charge represents the excess of carrying value over the estimated fair value of the assets, which was based on a Level 3 Fair Value measurement that was primarily determined from the income approach using discounted cash flows but also considered market information obtained in 2016.
(c)The pretax loss on disposal includes the recognition of cumulative foreign currency translation losses of $620 million as of the disposal date. See the Consolidated Statements of Changes in Equity for additional information.
(d)Pretax Loss attributable to Duke Energy Corporation was $(445) million for the year ended December 31, 2016.
(e)Amount includes $126 million of income tax expense on the disposal, which primarily reflects in-country taxes incurred as a result of the sale. The after-tax loss on disposal was $640 million.
(f)Amount includes an income tax benefit of $95 million. See Note 23, "Income Taxes," for additional information.
Duke Energy has elected not to separately disclose discontinued operationswithin Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
Revenue Recognition
Duke Energy recognizes revenue as customers obtain control of promised goods and services in an amount that reflects consideration expected in exchange for those goods or services. Generally, the delivery of electricity and natural gas results in the transfer of control to customers at the time the commodity is delivered and the amount of revenue recognized is equal to the amount billed to each customer, including estimated volumes delivered when billings have not yet occurred. See Note 18 for further information.
Derivatives and Hedging
Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the NPNS exception, are recorded on the Consolidated Balance Sheets at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The following table summarizes Duke Energy'seffective portion of the change in the fair value of cash flow hedges is recorded in AOCI. The effective portion of the change in the fair value of a fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As a result, changes in fair value of these derivatives have no immediate earnings impact.
Formal documentation, including transaction type and risk management strategy, is maintained for all contracts accounted for as a hedge. At inception and at least every three months thereafter, the hedge contract is assessed to see if it is highly effective in offsetting changes in cash flows or fair values of hedged items.
See Note 14 for further information.
Captive Insurance Reserves
Duke Energy has captive insurance subsidiaries that provide coverage, on an indemnity basis, to the Subsidiary Registrants as well as certain third parties, on a limited basis, for financial losses, primarily related to property, workers’ compensation and general liability. Liabilities include provisions for estimated losses incurred but not reported (IBNR), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from discontinuedexperience.
132



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Duke Energy, through its captive insurance entities, also has reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable.
Unamortized Debt Premium, Discount and Expense
Premiums, discounts and expenses incurred with the issuance of outstanding long-term debt are amortized over the term of the debt issue. The gain or loss on extinguishment associated with refinancing higher-cost debt obligations in the regulated operations is amortized over the remaining life of the original instrument. Amortization expense is recorded as Interest Expense in the Consolidated Statements of Operations and is reflected as Depreciation, amortization and accretion within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
Premiums, discounts and expenses are presented as an adjustment to the carrying value of the debt amount and included in Long-Term Debt on the Consolidated Balance Sheets presented.
Preferred Stock
Preferred stock is reviewed to determine the appropriate balance sheet classification and embedded features, such as call options, are evaluated to determine if they should be bifurcated and accounted for separately. Costs directly related to the International Disposal Group.
 Year Ended December 31,
(in millions)2016
Cash flows provided by (used in): 
Operating activities$204
Investing activities(434)
Other Sale Related Matters
During 2017,issuance of preferred stock is recorded as a reduction of the proceeds received. The liability for the dividend is recognized when declared. The accumulated dividends on the cumulative preferred stock is recognized to net income available to Duke Energy provided certain transition services to CTGCorporation in the EPS calculation. See Note 19 for further information.
Loss Contingencies and I Squared Capital. Cash flowsEnvironmental Liabilities
Contingent losses are recorded when it is probable a loss has occurred and can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. Unless otherwise required by GAAP, legal fees are expensed as incurred.
Environmental liabilities are recorded on an undiscounted basis when environmental remediation or other liabilities become probable and can be reasonably estimated. Environmental expenditures related to providingpast operations that do not generate current or future revenues are expensed. Environmental expenditures related to operations that generate current or future revenues are expensed or capitalized, as appropriate. Certain environmental expenditures receive regulatory accounting treatment and are recorded as regulatory assets.
See Notes 3 and 4 for further information.
Pension and Other Post-Retirement Benefit Plans
Duke Energy maintains qualified, non-qualified and other post-retirement benefit plans. Eligible employees of the transition servicesSubsidiary Registrants participate in the respective qualified, non-qualified and other post-retirement benefit plans and the Subsidiary Registrants are allocated their proportionate share of benefit costs. See Note 22 for further information, including significant accounting policies associated with these plans.
Severance and Special Termination Benefits
Duke Energy has severance plans under which in general, the longer a terminated employee worked prior to termination the greater the amount of severance benefits. A liability for involuntary severance is recorded once an involuntary severance plan is committed to by management if involuntary severances are probable and can be reasonably estimated. For involuntary severance benefits incremental to its ongoing severance plan benefits, the fair value of the obligation is expensed at the communication date if there are no future service requirements or over the required future service period. Duke Energy also offers special termination benefits under voluntary severance programs. Special termination benefits are recorded immediately upon employee acceptance absent a significant retention period. Otherwise, the cost is recorded over the remaining service period. Employee acceptance of voluntary severance benefits is determined by management based on the facts and circumstances of the benefits being offered. See Note 20 for further information.
Guarantees
If necessary, liabilities are recognized at the time of issuance or material modification of a guarantee for the estimated fair value of the obligation it assumes. Fair value is estimated using a probability weighted approach. The obligation is reduced over the term of the guarantee or related contract in a systematic and rational method as risk is reduced. Duke Energy recognizes a liability for the best estimate of its loss due to the nonperformance of the guaranteed party. This liability is recognized at the inception of a guarantee and is updated periodically. See Note 7 for further information.
Stock-Based Compensation
Stock-based compensation represents costs related to stock-based awards granted to employees and Board of Directors members. Duke Energy recognizes stock-based compensation based upon the estimated fair value of awards, net of estimated forfeitures at the date of issuance. The recognition period for these costs begins at either the applicable service inception date or grant date and continues throughout the requisite service period. Compensation cost is recognized as expense or capitalized as a component of property, plant and equipment. See Note 21 for further information.
133



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes
Duke Energy and its subsidiaries file a consolidated federal income tax return and other state and foreign jurisdictional returns. The Subsidiary Registrants are parties to a tax-sharing agreement with Duke Energy. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. Deferred income taxes have been provided for temporary differences between GAAP and tax bases of assets and liabilities because the differences create taxable or tax-deductible amounts for future periods. ITCs associated with regulated operations are deferred and amortized as a reduction of income tax expense over the estimated useful lives of the related properties. For ITCs associated with nonregulated operations see “Accounting for Renewable Energy Tax Credits.”
Accumulated deferred income taxes are valued using the enacted tax rate expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be settled or realized. In the event of a change in tax rates, deferred tax assets and liabilities are remeasured as of the enactment date of the new rate. To the extent that the change in the value of the deferred tax represents an obligation to customers, the impact of the remeasurement is deferred to a regulatory liability. Remaining impacts are recorded in income from continuing operations. Duke Energy's results of operations could be impacted if the estimate of the tax effect of reversing temporary differences is not reflective of actual outcomes, is modified to reflect new developments or interpretations of the tax law, revised to incorporate new accounting principles, or changes in the expected timing or manner of a reversal.
Tax-related interest and penalties are recorded in Interest Expense and Other Income and Expenses, net in the Consolidated Statements of Operations.
See Note 23 for further information.
Accounting for Renewable Energy Tax Credits
When Duke Energy receives ITCs on wind or solar facilities associated with its nonregulated operations, it reduces the basis of the property recorded on the Consolidated Balance Sheets by the amount of the ITC and, therefore, the ITC benefit is ultimately recognized in the statement of operations through reduced depreciation expense. Additionally, certain tax credits and government grants result in an initial tax depreciable base in excess of the book carrying value by an amount equal to one half of the ITC. Deferred tax benefits are recorded as a reduction to income tax expense in the period that the basis difference is created.
When Duke Energy receives ITCs on wind or solar facilities associated with its regulated operations, the ITC is deferred and amortized as a reduction of income tax expense over the estimated useful lives of the related properties.
Duke Energy receives PTCs on wind facilities that are recognized as electricity is produced and records related amounts as a reduction of income tax expense.
Excise Taxes
Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Taxes for which Duke Energy operates merely as a collection agent for the state and local government are accounted for on a net basis. Excise taxes accounted for on a gross basis within both Operating Revenues and Property and other taxes in the Consolidated Statements of Operations were as follows.
Years Ended December 31,
(in millions)202020192018
Duke Energy$415 $421 $405 
Duke Energy Carolinas43 39 35 
Progress Energy249 256 241 
Duke Energy Progress26 21 19 
Duke Energy Florida223 235 222 
Duke Energy Ohio96 101 105 
Duke Energy Indiana25 23 22 
Piedmont2 2 2 
Dividend Restrictions and Unappropriated Retained Earnings
Duke Energy does not materialhave any current legal, regulatory or other restrictions on paying common stock dividends to shareholders. However, if Duke Energy were to defer dividend payments on the preferred stock, the declaration of common stock dividends would be prohibited. See Note 19 for more information. Additionally, as further described in Note 3, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Indiana and Piedmont have restrictions on paying dividends or otherwise advancing funds to Duke Energy due to conditions established by regulators in conjunction with merger transaction approvals. At December 31, 2020, and 2019, an insignificant amount of Duke Energy’s consolidated Retained earnings balance represents undistributed earnings of equity method investments.
New Accounting Standards
The following new accounting standard was adopted by Duke Energy Registrants in 2020.
Credit Losses. In June 2016, the FASB issued new accounting guidance for credit losses. Duke Energy adopted the new accounting guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year results. Duke Energy did not adopt any practical expedients.
134



FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Duke Energy recognizes allowances for credit losses based on management's estimate of losses expected to be incurred over the lives of certain assets or guarantees. Management monitors credit quality, changes in expected credit losses and the appropriateness of the allowance for credit losses on a forward-looking basis. Management reviews the risk of loss periodically as part of the existing assessment of collectability of receivables.
Duke Energy reviews the credit quality of its counterparties as part of its regular risk management process and requires credit enhancements, such as deposits or letters of credit, as appropriate and as allowed by regulators.
Duke Energy recorded cumulative effects of changes in accounting principles related to the adoption of new credit loss standard, for allowances and credit losses of trade and other receivables, insurance receivables and financial guarantees. These amounts are included in the Condensed Consolidated Balance Sheets in Receivables, Receivables of VIEs, Other Noncurrent Assets and Other Noncurrent Liabilities. See Notes 7 and 18 for more information.
Duke Energy recorded an adjustment for the cumulative effect of a change in accounting principle due to the adoption of this standard on January 1, 2020, as shown in the table below:
 December 31, 2020
DukeDukeDuke
DukeEnergyProgressEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaPiedmont
Total pretax impact to Retained Earnings$120 $16 $2 $1 $1 $1 
The following new accounting standard has been issued but not yet adopted by the Duke Energy Registrants as of December 31, 2017. All2020.
Reference Rate Reform. In March 2020, the FASB issued new accounting guidance for reference rate reform. This guidance is elective and provides expedients to facilitate financial reporting for the anticipated transition services related to the International Disposal Group ended in 2017. Additionally, Duke Energy will reimburse CTG and I Squared Capital for all tax obligations arisingaway from the period preceding consummation onLondon Inter-bank Offered Rate (LIBOR) and other interbank reference rates by the transactions, and recorded a liabilityend of $54 million and $78 million as2021. The optional expedients are effective for modification of existing contracts or new arrangements executed between March 12, 2020, through December 31, 2018, and 2017, respectively. 2022.
Duke Energy has variable-rate debt and manages interest rate risk by entering into financial contracts including interest rate swaps that are generally indexed to LIBOR. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination to fully adapt to a post-LIBOR environment. Duke Energy is assessing these financial arrangements and is evaluating the use of optional expedients outlined in the new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that extend beyond 2021. The full outcome of the transition away from LIBOR cannot be determined at this time, but is not recorded any other liabilities, contingent liabilities or indemnifications relatedexpected to have a material impact on the International Disposal Group.financial statements.

139



FINANCIAL STATEMENTSBUSINESS SEGMENTS


3.2. BUSINESS SEGMENTS
Reportable segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business. Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests.interests and preferred stock dividends. Segment income, as discussed below, includes intercompany revenues and expenses that are eliminated on the Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.
Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost. Segment assets as presented in the tables that follow exclude all intercompany assets.
Duke Energy
Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.
The Electric Utilities and Infrastructure segment includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The regulated electric utilities conduct operations through the Subsidiary Registrants that are substantially all regulated and, accordingly, qualify for regulatory accounting treatment. Electric Utilities and Infrastructure also includes Duke Energy's commercial electric transmission infrastructure investments.
The Gas Utilities and Infrastructure segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky, and Duke Energy's natural gas storage and midstream pipeline investments. Gas Utilities and Infrastructure's operations are substantially all regulated and, accordingly, qualify for regulatory accounting treatment.
The Commercial Renewables segment is primarily comprised of nonregulated utility scaleutility-scale wind and solar generation assets located throughout the U.S.
The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of interest expense on holding company debt, unallocated corporate costs and Duke Energy’s wholly owned captive insurance company, Bison. Other also includes Duke Energy's interest in NMC. See Note 12 for additional information on the investment in NMC.
135



FINANCIAL STATEMENTSBUSINESS SEGMENTS
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
Year Ended December 31, 2020
ElectricGasTotal
Utilities andUtilities andCommercialReportable
(in millions)InfrastructureInfrastructureRenewablesSegmentsOtherEliminationsTotal
Unaffiliated Revenues$21,687 $1,653 $502 $23,842 $26 $— $23,868 
Intersegment Revenues33 95 — 128 71 (199)— 
Total Revenues$21,720 $1,748 $502 $23,970 $97 $(199)$23,868 
Interest Expense$1,320 $135 $66 $1,521 $657 $(16)$2,162 
Depreciation and amortization4,068 258 199 4,525 209 (29)4,705 
Equity in earnings (losses) of unconsolidated affiliates(1)(2,017)— (2,018)13 — (2,005)
Income tax expense (benefit)340 (349)(65)(74)(162)— (236)
Segment income (loss)(a)(b)(c)
2,669 (1,266)286 1,689 (426)— 1,263 
Less noncontrolling interest295 
Add back preferred stock dividend107 
Income from discontinued operations, net of tax7 
Net income$1,082 
Capital investments expenditures and acquisitions$7,629 $1,309 $1,219 $10,157 $264 $— $10,421 
Segment assets138,225 13,849 6,716 158,790 3,598 — 162,388 
(a)    Electric Utilities and Infrastructure includes $948 million of Impairment charges and a reversal of $152 million included in Regulated electric operating revenue related to the CCR Settlement Agreement filed with the NCUC. Additionally, Electric Utilities and Infrastructure includes $19 million of Impairment charges related to the Clemson University Combined Heat and Power Plant, $5 million of Impairment charges related to the gas pipeline assets and $16 million of shareholder contributions within Operations, maintenance and other related to Duke Energy Carolinas' and Duke Energy Progress' 2019 North Carolina rate cases. See Note 3 for additional information.
(b)    Gas Utilities and Infrastructure includes $2.1 billion recorded within Equity in (losses) earnings of unconsolidated affiliates and $7 million of Impairment charges related to gas pipeline investments. See Notes 3 and 12 for additional information.
(c)    Other includes a $98 million reversal of 2018 severance costs due to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case. See Note 3 and 20 for additional information.
Year Ended December 31, 2019
ElectricGasTotal
Utilities andUtilities andCommercialReportable
(in millions)InfrastructureInfrastructureRenewablesSegmentsOtherEliminationsTotal
Unaffiliated Revenues$22,798 $1,770 $487 $25,055 $24 $— $25,079 
Intersegment Revenues33 96 — 129 71 (200)— 
Total Revenues$22,831 $1,866 $487 $25,184 $95 $(200)$25,079 
Interest Expense$1,345 $117 $95 $1,557 $705 $(58)$2,204 
Depreciation and amortization3,951 256 168 4,375 178 (5)4,548 
Equity in earnings (losses) of unconsolidated affiliates9 114 (4)119 43 — 162 
Income tax expense (benefit)785 22 (115)692 (173)— 519 
Segment income (loss)(a)(b)
3,536 432 198 4,166 (452)— 3,714 
Less noncontrolling interest177 
Add back preferred stock dividend41 
Loss from discontinued operations, net of tax(7)
Net income$3,571 
Capital investments expenditures and acquisitions$8,263 $1,539 $1,423 $11,225 $221 $— $11,446 
Segment assets135,561 13,921 6,020 155,502 3,148 188 158,838 
(a)    Electric Utilities and Infrastructure includes a $27 million reduction of a prior year impairment at Citrus County CC related to the plant's cost cap. See Note 3 for additional information.
(b)    Gas Utilities and Infrastructure includes an after-tax impairment charge of $19 million for the remaining investment in Constitution. See Note 12 for additional information.
136
 Year Ended December 31, 2018
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Total
Unaffiliated Revenues$22,242
 $1,783
 $477
 $24,502
 $19
 $—
 $24,521
Intersegment Revenues31
 98
 —
 129
 70
 (199) —
Total Revenues$22,273
 $1,881
 $477
 $24,631
 $89
 $(199) $24,521
Interest Expense$1,288
 $106
 $88
 $1,482
 $657
 $(45) $2,094
Depreciation and amortization3,523
 245
 155
 3,923
 152
 (1) 4,074
Equity in earnings (losses) of unconsolidated affiliates5
 27
 (1) 31
 52
 —
 83
Income tax expense (benefit)(a)
799
 78
 (147) 730
 (282) —
 448
Segment income (loss)(b)(c)(d)(e)
3,058
 274
 9
 3,341
 (694) —
 2,647
Add back noncontrolling interest component  
   
   
   
   
   
 (22)
Income from discontinued operations, net of tax  
   
   
   
   
   
 19
Net income  
   
   
   
   
   
 $2,644
Capital investments expenditures and acquisitions$8,086
 $1,133
 $193
 $9,412
 $256
 $—
 $9,668
Segment assets125,364
 12,361
 4,204
 141,929
 3,275
 188
 145,392



(a)All segments include adjustments to the December 31, 2017 estimate of the income tax effects of the Tax Act. Electric Utilities and Infrastructure includes a $24 million expense, Gas Utilities and Infrastructure includes a $1 million expense, Commercial Renewables includes a $3 million benefit and Other includes a $2 million benefit. See Note 23 for additional information.
(b)Electric Utilities and Infrastructure includes after-tax regulatory and legislative impairment charges of $202 million related to rate case orders, settlements or other actions of regulators or legislative bodies and an after-tax impairment charge of $46 million related to the Citrus County CC at Duke Energy Florida. See Note 4 for additional information.
(c)Gas Utilities and Infrastructure includes an after-tax impairment charge of $42 million for the investment in Constitution. See Note 12 for additional information.
(d)Commercial Renewables includes an impairment charge of $91 million, net of $2 million Noncontrolling interests, related to goodwill. See Note 11 for additional information.

140



FINANCIAL STATEMENTSBUSINESS SEGMENTS


Year Ended December 31, 2018
ElectricGasTotal
Utilities andUtilities andCommercialReportable
(in millions)InfrastructureInfrastructureRenewablesSegmentsOtherEliminationsTotal
Unaffiliated Revenues$22,242 $1,783 $477 $24,502 $19 $— $24,521 
Intersegment Revenues31 98 — 129 70 (199)— 
Total Revenues$22,273 $1,881 $477 $24,631 $89 $(199)$24,521 
Interest Expense$1,288 $106 $88 $1,482 $657 $(45)$2,094 
Depreciation and amortization3,523 245 155 3,923 152 (1)4,074 
Equity in earnings (losses) of unconsolidated affiliates5 27 (1)31 52 — 83 
Income tax expense (benefit)(a)
799 78 (147)730 (282)— 448 
Segment income (loss)(b)(c)(d)(e)
3,058 274 9 3,341 (694)— 2,647 
Less noncontrolling interest22 
Income from discontinued operations, net of tax19 
Net income$2,644 
Capital investments expenditures and acquisitions$8,086 $1,133 $193 $9,412 $256 $— $9,668 
Segment assets125,364 12,361 4,204 141,929 3,275 188 145,392 
(e)Other includes $65 million of after-tax costs to achieve the Piedmont merger, $144 million of after-tax severance charges related to a companywide initiative and an $82 million after-tax loss on the sale of the retired Beckjord Generating Station described below. For additional information, see Note 2 for the Piedmont Merger and Note 20 for severance charges.
(a)    All segments include adjustments to the December 31, 2017, estimate of the income tax effects of the Tax Act. Electric Utilities and Infrastructure includes a $24 million expense, Gas Utilities and Infrastructure includes a $1 million expense, Commercial Renewables includes a $3 million benefit and Other includes a $2 million benefit. See Note 23 for additional information.
(b)    Electric Utilities and Infrastructure includes after-tax regulatory and legislative impairment charges of $202 million related to rate case orders, settlements or other actions of regulators or legislative bodies and an after-tax impairment charge of $46 million related to the Citrus County CC at Duke Energy Florida. See Note 3 for additional information.
(c)    Gas Utilities and Infrastructure includes an after-tax impairment charge of $42 million for the investment in Constitution. See Note 12 for additional information.
(d)    Commercial Renewables includes an impairment charge of $91 million, net of $2 million Noncontrolling interests, related to goodwill. See Note 11 for additional information.
(e)    Other includes $65 million of after-tax costs to achieve the Piedmont merger, $144 million of after-tax severance charges related to a companywide initiative and an $82 million after-tax loss on the sale of Beckjord described below. For additional information, see Note 1 for the Piedmont merger and Note 20 for severance charges.
In February 2018, Duke Energy sold Beckjord, a nonregulated facility retired during 2014, and recorded a pretax loss of $106 million within Gains (Losses) Gains on Sales of Other Assets and Other, net and $1 million within Operation, maintenance and other on Duke Energy's Consolidated Statements of Operations for the year ended December 31, 2018. The sale included the transfer of coal ash basins and other real property and indemnification from any and all potential future claims related to the property, whether arising under environmental laws or otherwise.
 Year Ended December 31, 2017
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Total
Unaffiliated Revenues$21,300

$1,743

$460
 $23,503
 $62
 $—
 $23,565
Intersegment Revenues31

93

—
 124
 76
 (200) —
Total Revenues$21,331
 $1,836
 $460
 $23,627
 $138
 $(200) $23,565
Interest Expense$1,240

$105

$87
 $1,432
 $574
 $(20) $1,986
Depreciation and amortization3,010

231

155
 3,396
 131
 —
 3,527
Equity in earnings (losses) of unconsolidated affiliates5

62

(5) 62
 57
 —
 119
Income tax expense (benefit)(a)
1,355
 116
 (628) 843
 353
 —
 1,196
Segment income (loss)(b)(c)(d)
3,210
 319
 441
 3,970
 (905) —
 3,065
Add back noncontrolling interest component  
   
   
   
   
   
 5
Loss from discontinued operations, net of tax  
   
   
   
   
   
 (6)
Net income  
   
   
   
   
   
 $3,064
Capital investments expenditures and acquisitions$7,024
 $907
 $92
 $8,023
 $175
 $—
 $8,198
Segment assets119,423
 11,462
 4,156
 135,041
 2,685
 188
 137,914
(a)All segments include impacts of the Tax Act. Electric Utilities and Infrastructure includes a $231 million benefit, Gas Utilities and Infrastructure includes a $26 million benefit, Commercial Renewables includes a $442 million benefit and Other includes charges of $597 million.
(b)Electric Utilities and Infrastructure includes after-tax regulatory settlement charges of $98 million. See Note 4 for additional information.
(c)Commercial Renewables includes after-tax impairment charges of $74 million related to certain wind projects and the Energy Management Solutions reporting unit. See Notes 10 and 11 for additional information.
(d)Other includes $64 million of after-tax costs to achieve the Piedmont merger. See Note 2 for additional information.
 Year Ended December 31, 2016
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Total
Unaffiliated Revenues$21,336
 $875
 $484
 $22,695
 $48
 $—
 $22,743
Intersegment Revenues30
 26
 —
 56
 69
 (125) —
Total Revenues$21,366
 $901
 $484
 $22,751
 $117
 $(125) $22,743
Interest Expense$1,136
 $46
 $53
 $1,235
 $693
 $(12) $1,916
Depreciation and amortization2,897
 115
 130
 3,142
 152
 —
 3,294
Equity in earnings (losses) of unconsolidated affiliates(a)
5
 19
 (82) (58) 43
 —
 (15)
Income tax expense (benefit)1,672
 90
 (160) 1,602
 (446) —
 1,156
Segment income (loss)(b)(c)
3,040
 152
 23
 3,215
 (645) 1
 2,571
Add back noncontrolling interest component  
   
   
   
   
   
 7
Loss from discontinued operations, net of tax(d)
  
   
   
   
   
   
 (408)
Net income  
   
   
   
   
   
 $2,170
Capital investments expenditures and acquisitions(e)
$6,649
 $5,519
 $857
 $13,025
 $190
 $—
 $13,215
Segment assets114,993
 10,760
 4,377
 130,130
 2,443
 188
 132,761

141



FINANCIAL STATEMENTSBUSINESS SEGMENTS


(a)Commercial Renewables includes a pretax impairment charge of $71 million. See Note 12 for additional information.
(b)Other includes $329 million of after-tax costs to achieve mergers. See Note 2 for additional information on costs related to the Piedmont merger.
(c)Other includes after-tax charges of $57 million related to cost savings initiatives. See Note 20 for further information.
(d)Includes a loss on sale of the International Disposal Group. Refer to Note 2 for further information.
(e)Other includes $26 million of capital investment expenditures related to the International Disposal Group. Gas Utilities and Infrastructure includes the Piedmont acquisition of $5 billion. See Note 2 for more information on the Piedmont acquisition.
Geographical Information
AllSubstantially all assets and revenues from continuing operations are within the U.S.
Major Customers
For the year ended December 31, 2018,2020, revenues from one customer of Duke Energy Progress are $633$553 million. Duke Energy Progress has one1 reportable segment, Electric Utilities and Infrastructure. No other Subsidiary Registrant has an individual customer representing more than 10 percent10% of its revenues.
137



FINANCIAL STATEMENTSBUSINESS SEGMENTS
Products and Services
The following table summarizes revenues of the reportable segments by type.
Retail
 Wholesale
 Retail
   Total
RetailWholesaleRetailTotal
(in millions)Electric
 Electric
 Natural Gas
 Other
 Revenues
(in millions)ElectricElectricNatural GasOtherRevenues
20202020
Electric Utilities and InfrastructureElectric Utilities and Infrastructure$18,898 $1,878 $— $944 $21,720 
Gas Utilities and InfrastructureGas Utilities and Infrastructure— — 1,691 57 1,748 
Commercial RenewablesCommercial Renewables— 434 — 68 502 
Total Reportable SegmentsTotal Reportable Segments$18,898 $2,312 $1,691 $1,069 $23,970 
20192019
Electric Utilities and InfrastructureElectric Utilities and Infrastructure$19,745 $2,231 $— $855 $22,831 
Gas Utilities and InfrastructureGas Utilities and Infrastructure— — 1,782 84 1,866 
Commercial RenewablesCommercial Renewables— 389 — 98 487 
Total Reportable SegmentsTotal Reportable Segments$19,745 $2,620 $1,782 $1,037 $25,184 
2018        
2018
Electric Utilities and Infrastructure$19,013
 $2,345
 $—
 $915
 $22,273
Electric Utilities and Infrastructure$19,013 $2,345 $— $915 $22,273 
Gas Utilities and Infrastructure—
 —
 1,817
 64
 1,881
Gas Utilities and Infrastructure— — 1,817 64 1,881 
Commercial Renewables—
 375
 —
 102
 477
Commercial Renewables— 375 — 102 477 
Total Reportable Segments$19,013
 $2,720
 $1,817

$1,081
 $24,631
Total Reportable Segments$19,013 $2,720 $1,817 $1,081 $24,631 
2017        
Electric Utilities and Infrastructure$18,177
 $2,104
 $—
 $1,050
 $21,331
Gas Utilities and Infrastructure—
 —
 1,732
 104
 1,836
Commercial Renewables—
 375
 —
 85
 460
Total Reportable Segments$18,177
 $2,479
 $1,732

$1,239
 $23,627
2016        
Electric Utilities and Infrastructure$18,338
 $2,095
 $—
 $933
 $21,366
Gas Utilities and Infrastructure—
 —
 871
 30
 901
Commercial Renewables—
 303
 —
 181
 484
Total Reportable Segments$18,338
 $2,398
 $871

$1,144
 $22,751
Duke Energy Ohio
Duke Energy Ohio has two2 reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure.
Electric Utilities and Infrastructure transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. Gas Utilities and Infrastructure transports and sells natural gas in portions of Ohio and Northern Kentucky. Both reportable segments conduct operations primarily through Duke Energy Ohio and its wholly owned subsidiary, Duke Energy Kentucky.
The remainder of Duke Energy Ohio's operations is presented as Other. In December 2018, the PUCO approved an order which allows the recovery or credit of revenues and expenses related to Duke Energy Ohio's contractual arrangement to buy power from OVEC power plants. Due to the change in regulatory treatment of these amounts, OVEC revenues and expenses are now reflected in the Electric Utilities and Infrastructure segment. Previously, OVEC revenues and expense were included in Other. These amounts are deemed immaterial for Duke Energy Ohio. Therefore, no prior period amounts were restated. See Note 4 for additional information on the PUCO order.

142



FINANCIAL STATEMENTSBUSINESS SEGMENTS


All Duke Energy Ohio assets and revenues from continuing operations are within the U.S.
Year Ended December 31, 2020
ElectricGasTotal
Utilities andUtilities andReportable
(in millions)InfrastructureInfrastructureSegmentsOtherEliminationsTotal
Total revenues$1,405 $453 $1,858 $— $— $1,858 
Interest expense$85 $17 $102 $— $— $102 
Depreciation and amortization200 78 278 — — 278 
Income tax expense (benefit)19 26 45 (2)— 43 
Segment income (loss)/Net income162 96 258 (6)— 252 
Capital expenditures$548 $286 $834 $— $— $834 
Segment assets6,615 3,380 9,995 32 (2)10,025 
138



FINANCIAL STATEMENTSBUSINESS SEGMENTS
Year Ended December 31, 2018Year Ended December 31, 2019
Electric
 Gas
 Total
    ElectricGasTotal
Utilities and
 Utilities and
 Reportable
    Utilities andUtilities andReportable
(in millions)
Infrastructure
 Infrastructure
 Segments
 Other
 Total
(in millions)InfrastructureInfrastructureSegmentsOtherEliminationsTotal
Total revenues$1,450
 $506
 $1,956
 $1
 $1,957
Total revenues$1,456 $484 $1,940 $— $— $1,940 
Interest expense $67
 $24
 $91
 $1
 $92
Interest expense$80 $29 $109 $— $— $109 
Depreciation and amortization 183
 85
 268
 —
 268
Depreciation and amortization182 83 265 — — 265 
Income tax expense (benefit) 47
 24
 71
 (28) 43
Income tax expense (benefit)20 21 41 (1)— 40 
Segment income (loss)/Net income(a)
186
 93
 279
 (103) 176
Segment income (loss)Segment income (loss)159 85 244 (5)— 239 
Loss from discontinued operations, net of taxLoss from discontinued operations, net of tax(1)
Net incomeNet income$238 
Capital expenditures $655
 $172
 $827
 $—
 $827
Capital expenditures$680 $272 $952 $— $— $952 
Segment assets 5,643
 2,874
 8,517
 38
 8,555
Segment assets6,188 3,116 9,304 34 — 9,338 
Year Ended December 31, 2018
ElectricGasTotal
Utilities andUtilities andReportable
(in millions)InfrastructureInfrastructureSegmentsOtherEliminationsTotal
Total revenues$1,450 $506 $1,956 $1 $— $1,957 
Interest expense$67 $24 $91 $1 $— $92 
Depreciation and amortization183 85 268 — — 268 
Income tax expense (benefit)47 24 71 (28)— 43 
Segment income (loss)/Net Income(a)
186 93 279 (103)— 176 
Capital expenditures$655 $172 $827 $— $— $827 
Segment assets5,643 2,874 8,517 38 — 8,555 
(a)    Other includes the loss on the sale of Beckjord, see discussion above.
 Year Ended December 31, 2017
 Electric
 Gas
 Total
      
 Utilities and
 Utilities and
 Reportable
      
(in millions)  Infrastructure
 Infrastructure
 Segments
 Other
 Eliminations
 Total
Total revenues$1,373
 $508
 $1,881
 $42
 $—
 $1,923
Interest expense  $62
 $28
 $90
 $1
 $—
 $91
Depreciation and amortization  178
 83
 261
 —
 —
 261
Income tax expense (benefit)  40
 39
 79
 (20) —
 59
Segment income (loss)138
 85
 223
 (30) —
 193
Loss from discontinued operations, net of tax          (1)
Net income

 

 

 

   $192
Capital expenditures  $491
 $195
 $686
 $—
 $—
 $686
Segment assets  5,066
 2,758
 7,824
 66
 (15) 7,875
 Year Ended December 31, 2016
 Electric
 Gas
 Total
      
 Utilities and
 Utilities and
 Reportable
      
(in millions)  Infrastructure
 Infrastructure
 Segments
 Other
 Eliminations
 Total
Total revenues$1,410
 $503
 $1,913
 $31
 $—
 $1,944
Interest expense  $58
 $27
 $85
 $1
 $—
 $86
Depreciation and amortization  151
 80
 231
 2
 —
 233
Income tax expense (benefit)  55
 44
 99
 (21) —
 78
Segment income (loss)154
 77
 231
 (39) —
 192
Income from discontinued operations, net of tax          36
Net income

 

 

 

   $228
Capital expenditures  $322
 $154
 $476
 $—
 $—
 $476
Segment assets4,782
 2,696
 7,478
 62
 (12) 7,528

143



FINANCIAL STATEMENTSREGULATORY MATTERS


4.3. REGULATORY MATTERS
REGULATORY ASSETS AND LIABILITIES
The Duke Energy Registrants record regulatory assets and liabilities that result from the ratemaking process. See Note 1 for further information.
139



FINANCIAL STATEMENTSREGULATORY MATTERS
The following tables present the regulatory assets and liabilities recorded on the Consolidated Balance Sheets of Duke Energy and Progress Energy. See separate tables below for balances by individual registrant.
Duke Energy Progress EnergyDuke EnergyProgress Energy
December 31, December 31,December 31,December 31,
(in millions)2018
 2017
 2018
 2017
(in millions)2020201920202019
Regulatory Assets       Regulatory Assets
AROs – coal ash$4,255
 $4,025
 $2,061
 $1,984
AROs – coal ash$3,408 $4,084 $1,357 $1,843 
AROs – nuclear and other772
 852
 601
 655
AROs – nuclear and other754 739 685 668 
Accrued pension and OPEB2,654
 2,249
 1,074
 906
Accrued pension and OPEB2,317 2,391 875 897 
Retired generation facilities445
 480
 367
 386
Debt fair value adjustment1,099
 1,197
 —
 —
Deferred asset – Lee COLA383
 —
 —
 —
Storm cost deferrals1,117
 531
 953
 526
Storm cost deferrals1,102 1,399 893 1,214 
Nuclear asset securitized balance, net1,093
 1,142
 1,093
 1,142
Nuclear asset securitized balance, net991 1,042 991 1,042 
Debt fair value adjustmentDebt fair value adjustment950 1,019 — — 
Retired generation facilitiesRetired generation facilities417 331 363 266 
Post-in-service carrying costs (PISCC) and deferred operating expensesPost-in-service carrying costs (PISCC) and deferred operating expenses402 329 51 33 
Deferred asset – Lee and Harris COLADeferred asset – Lee and Harris COLA356 388 32 38 
Hedge costs deferrals204
 234
 74
 94
Hedge costs deferrals351 356 148 129 
Derivatives – natural gas supply contracts141
 142
 —
 —
Demand side management (DSM)/Energy efficiency (EE)449
 530
 256
 281
Grid modernization31
 39
 —
 —
Advanced metering infrastructure (AMI)Advanced metering infrastructure (AMI)311 338 102 114 
Demand side management (DSM)/Energy Efficiency (EE)Demand side management (DSM)/Energy Efficiency (EE)288 343 241 241 
Vacation accrual213
 213
 41
 42
Vacation accrual221 214 42 41 
Deferred fuel and purchased power838
 507
 600
 349
Deferred fuel and purchased power213 528 162 305 
COR settlementCOR settlement128 133 33 35 
NCEMPA deferralsNCEMPA deferrals124 72 124 72 
Nuclear deferral133
 119
 46
 35
Nuclear deferral123 107 35 40 
Post-in-service carrying costs (PISCC) and deferred operating expenses320
 366
 36
 38
Transmission expansion obligation39
 46
 —
 —
Derivatives – natural gas supply contractsDerivatives – natural gas supply contracts122 117 — — 
CEP deferralCEP deferral117 76 — — 
Amounts due from customersAmounts due from customers110 36 — — 
Qualifying facility contract buyoutsQualifying facility contract buyouts107 121 107 121 
Customer connect projectCustomer connect project105 65 55 37 
Manufactured gas plant (MGP)99
 91
 —
 —
Manufactured gas plant (MGP)104 102 — — 
Advanced metering infrastructure (AMI)367
 362
 127
 150
NCEMPA deferrals50
 53
 50
 53
East Bend deferrals47
 45
 —
 —
ABSAT, coal ash basin closureABSAT, coal ash basin closure98 65 27 15 
Deferred pipeline integrity costs65
 54
 —
 —
Deferred pipeline integrity costs92 79 — — 
Amounts due from customers24
 64
 —
 —
Deferred severance chargesDeferred severance charges86 — 29 — 
Incremental COVID-19 expensesIncremental COVID-19 expenses76 — 23 — 
Other784
 538
 322
 110
Other589 544 158 141 
Total regulatory assets15,622
 13,879

7,701

6,751
Total regulatory assets14,062 15,018 6,533 7,292 
Less: current portion2,005
 1,437
 1,137
 741
Less: current portion1,641 1,796 758 946 
Total noncurrent regulatory assets$13,617
 $12,442

$6,564

$6,010
Total noncurrent regulatory assets$12,421 $13,222 $5,775 $6,346 
Regulatory Liabilities       Regulatory Liabilities
Net regulatory liability related to income taxesNet regulatory liability related to income taxes$7,368 $7,872 $2,411 $2,595 
Costs of removal$5,421
 $5,968
 $2,135
 $2,537
Costs of removal5,883 5,756 2,666 2,561 
AROs – nuclear and other538
 806
 —
 —
AROs – nuclear and other1,512 1,100 — — 
Net regulatory liability related to income taxes8,058
 8,113
 2,710
 2,802
Provision for rate refundsProvision for rate refunds344 370 123 123 
Accrued pension and OPEBAccrued pension and OPEB177 176 — — 
Amounts to be refunded to customers34
 10
 —
 —
Amounts to be refunded to customers51 34 — — 
Storm reserve—
 20
 —
 —
Accrued pension and OPEB301
 146
 149
 —
Deferred fuel and purchased power16
 47
 16
 1
Deferred fuel and purchased power18 1 — 1 
Other1,064
 622
 319
 179
Other1,053 739 491 275 
Total regulatory liabilities15,432
 15,732
 5,329
 5,519
Total regulatory liabilities16,406 16,048 5,691 5,555 
Less: current portion598
 402
 280
 213
Less: current portion1,377 784 640 330 
Total noncurrent regulatory liabilities$14,834
 $15,330
 $5,049
 $5,306
Total noncurrent regulatory liabilities$15,029 $15,264 $5,051 $5,225 
Descriptions of regulatory assets and liabilities summarized in the tables above and below follow. See tables below for recovery and amortization periods at the separate registrants.

144140






FINANCIAL STATEMENTSREGULATORY MATTERS


AROs – coal ash. Represents deferred depreciation and accretion related to the legal obligation to close ash basins. The costs are deferred until recovery treatment has been determined. See Notes 1 and 9 for additional information.
AROs – nuclear and other. Represents regulatory assets or liabilities, including deferred depreciation and accretion, related to legal obligations associated with the future retirement of property, plant and equipment, excluding amounts related to coal ash. The AROs relate primarily to decommissioning nuclear power facilities. The amounts also include certain deferred gains and losses on NDTF investments. See Notes 1 and 9 for additional information.
Accrued pension and OPEB. Accrued pension and OPEB represent regulatory assets and liabilities related to each of the Duke Energy Registrants’ respective shares of unrecognized actuarial gains and losses and unrecognized prior service cost and credit attributable to Duke Energy’s pension plans and OPEB plans. The regulatory asset or liability is amortized with the recognition of actuarial gains and losses and prior service cost and credit to net periodic benefit costs for pension and OPEB plans. The accrued pension and OPEB regulatory asset isassets are expected to be recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
Retired generation facilities. Represents amounts to be recovered for facilities that have been retired and are probable of recovery.
Debt fair value adjustment. Purchase accounting adjustments recorded to state the carrying value of Progress Energy and Piedmont at fair value in connection with the 2012 and 2016 mergers, respectively. Amount is amortized over the life of the related debt.
Net regulatory asset or liability related to income taxes. Amounts for all registrants include regulatory liabilities related primarily to impacts from the Tax Act. See Note 23 for additional information. Amounts have no immediate impact on rate base as regulatory assets are offset by deferred tax liabilities.
Deferred asset – Lee COLA. Represents deferred costs incurred for the canceled Lee nuclear project.
Storm cost deferrals. Represents deferred incremental costs incurred related to extraordinarymajor weather-related events.
Nuclear asset securitized balance, net.Represents the balance associated with Crystal River Unit 3 retirement approved for recovery by the FPSC on September 15, 2015, and the upfront financing costs securitized in 2016 with issuance of the associated bonds. The regulatory asset balance is net of the AFUDC equity portion.
HedgeDebt fair value adjustment. Purchase accounting adjustments recorded to state the carrying value of Progress Energy and Piedmont at fair value in connection with the 2012 and 2016 mergers, respectively. Amount is amortized over the life of the related debt.
Retired generation facilities. Represents amounts to be recovered for facilities that have been retired and are probable of recovery.
Post-in-service carrying costs (PISCC) and other deferrals. Amounts relate to unrealized gains and losses on derivatives recorded as a regulatory asset or liability, respectively, until the contracts are settled.
Derivatives – natural gas supply contracts.deferred operating expenses. Represents costs for certain long-dated, fixed quantity forward gas supply contracts, which are recoverable through PGA clauses.
DSM/EE. Deferred costs related to various DSM and EE programs recoverable through various mechanisms.
Grid modernization. Amounts represent deferred depreciation and operating expenses as well as carrying costs on the portion of capital expenditures placed in service but not yet reflected in retail rates as plant in service.
Deferred asset – Lee and Harris COLA. Represents deferred costs incurred for the canceled Lee and Harris nuclear projects.
Hedge costs deferrals. Amounts relate to unrealized gains and losses on derivatives recorded as a regulatory asset or liability, respectively, until the contracts are settled.
AMI. Represents deferred costs related to the installation of AMI meters and remaining net book value of non-AMI meters to be replaced at Duke Energy Carolinas, net book value of existing meters at Duke Energy Florida, Duke Energy Progress and Duke Energy Ohio and future recovery of net book value of electromechanical meters that have been replaced with AMI meters at Duke Energy Indiana.
DSM/EE. Deferred costs related to various DSM and EE programs recoverable through various mechanisms.
Vacation accrual. Represents.vacation Represents vacation entitlement, which is generally recovered in the following year.
Deferred fuel and purchased power. Represents certain energy-related costs that are recoverable or refundable as approved by the applicable regulatory body.
COR settlement. Represents approved COR settlements that are being amortized over the average remaining lives, at the time of approval, of the associated assets.
NCEMPA deferrals. Represents retail allocated cost deferrals and returns associated with the additional ownership interest in assets acquired from NCEMPA in 2015.
Nuclear deferral. Includes amounts related to levelizing nuclear plant outage costs, which allows for the recognition of nuclear outage expenses over the refueling cycle rather than when the outage occurs, resulting in the deferral of operations and maintenance costs associated with refueling.
Post-in-service carryingDerivatives – natural gas supply contracts. Represents costs and deferred operating expenses.for certain long-dated, fixed quantity forward gas supply contracts, which are recoverable through PGA clauses.
CEP deferral. Represents deferred depreciation, PISCC and deferred property tax for Duke Energy Ohio Gas capital assets for the Capital Expenditure Program (CEP).
Amounts due from customers. Relates primarily to margin decoupling and IMR recovery mechanisms.
Qualifying facility contract buyouts. Represents termination payments for regulatory recovery through the capacity clause.
Customer connect project. Represents incremental operating expenses as well asand carrying costs on the portion of capital expenditures placed in service but not yet reflected in retail rates as plant in service.
Transmission expansion obligation. Represents transmission expansion obligationsdeferred amounts related to Duke Energy Ohio’s withdrawal from Midcontinent Independent System Operator, Inc. (MISO).the deployment of the new customer information system known as the Customer Connect Project.
MGP. Represents remediation costs incurred at former MGP sites and the deferral of costs to be incurred at Duke Energy Ohio's East End and West End sites.
AMI. ABSAT, coal ash basin closure. Represents deferred costs related to the installation of AMI meters and remaining net book value of non-AMI meters to be replaced at Duke Energy Carolinas, net book value of existing meters at Duke Energy Florida, Duke Energy Progress and Duke Energy Ohio and expected future recovery of net book value of electromechanical meters that have been replaced with AMI meters at Duke Energy Indiana.
NCEMPA deferrals. Represents retail allocated cost deferralsdepreciation and returns associated with Ash Basin Strategic Action Team (ABSAT) capital assets related to converting the additional ownership interest in assets acquiredash handling system from NCEMPA in 2015.wet to dry.
East Bend deferrals. Represents both deferred operating expenses and deferred depreciation as well as carrying costs on the portion of East Bend that was acquired from Dayton Power and Light and that had been previously operated as a jointly owned facility.
141



FINANCIAL STATEMENTSREGULATORY MATTERS
Deferred pipeline integrity costs. Represents pipeline integrity management costs in compliance with federal regulations recovered through a rider mechanism.

Deferred severance charges. Represents costs incurred for employees separation from Duke Energy.
145

Incremental COVID-19 expenses. Representsincremental costs related to ensuring continuity and quality of service in a safe manner during the COVID-19 pandemic.


FINANCIAL STATEMENTSREGULATORY MATTERS


Net regulatory liability related to income taxes. Amounts due from customers. Relatesfor all registrants include regulatory liabilities related primarily to margin decoupling and IMR recovery mechanisms.impacts from the Tax Act. See Note 23 for additional information. Amounts have no immediate impact on rate base as regulatory assets are offset by deferred tax liabilities.
Costs of removal. Represents funds received from customers to cover the future removal of property, plant and equipment from retired or abandoned sites as property is retired. Also includes certain deferred gains on NDTF investments.
Provisions for rate refunds. Represents estimated amounts due to customers based on recording interim rates subject to refund.
Amounts to be refunded to customers. Represents required rate reductions to retail customers by the applicable regulatory body.
Storm reserve. Amounts are used to offset future incurred costs for named storms as approved by regulatory commissions.
RESTRICTIONS ON THE ABILITY OF CERTAIN SUBSIDIARIES TO MAKE DIVIDENDS, ADVANCES AND LOANS TO DUKE ENERGY
As a condition to the approval of merger transactions, the NCUC, PSCSC, PUCO, KPSC and IURC imposed conditions on the ability of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Kentucky, Duke Energy Indiana and Piedmont to transfer funds to Duke Energy through loans or advances, as well as restricted amounts available to pay dividends to Duke Energy. Certain subsidiaries may transfer funds to the parentParent by obtaining approval of the respective state regulatory commissions. These conditions imposed restrictions on the ability of the public utility subsidiaries to pay cash dividends as discussed below.
Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Amounts restricted as a result of these provisions were not material at December 31, 2018.2020.
Duke Energy Indiana has certain dividend restrictions as a result of the agreement entered in January 2021 to sell a minority interest to GIC. Duke Energy Indiana will not declare a dividend prior to the first closing, which is expected to be completed in the second quarter of 2021, and will declare dividends between the first closing and the second closing, which is required to be completed no later than January 2023, in accordance with the sale agreement. See additional information in Note 1.
Additionally, certain other subsidiaries of Duke Energy have restrictions on their ability to dividend, loan or advance funds to Duke Energy due to specific legal or regulatory restrictions, including, but not limited to, minimum working capital and tangible net worth requirements.
The restrictions discussed below were not a material amount of Duke Energy's and Progress Energy's net assets at December 31, 2018.2020.
Duke Energy Carolinas
Duke Energy Carolinas must limit cumulative distributions subsequent to mergers to (i) the amount of retained earnings on the day prior to the closing of the mergers, plus (ii) any future earnings recorded.
Duke Energy Progress
Duke Energy Progress must limit cumulative distributions subsequent to the mergers between Duke Energy and Progress Energy and Duke Energy and Piedmont to (i) the amount of retained earnings on the day prior to the closing of the respective mergers, plus (ii) any future earnings recorded.
Duke Energy Ohio
Duke Energy Ohio will not declare and pay dividends out of capital or unearned surplus without the prior authorization of the PUCO. Duke Energy Ohio received FERC and PUCO approval to pay dividends from its equity accounts that are reflective of the amount that it would have in its retained earnings account had push-down accounting for the Cinergy merger not been applied to Duke Energy Ohio’s balance sheet. The conditions include a commitment from Duke Energy Ohio that equity, adjusted to remove the impacts of push-down accounting, will not fall below 30 percent30% of total capital.
Duke Energy Kentucky is required to pay dividends solely out of retained earnings and to maintain a minimum of 35 percent35% equity in its capital structure.
Duke Energy Indiana
Duke Energy Indiana must limit cumulative distributions subsequent to the merger between Duke Energy and Cinergy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded. In addition, Duke Energy Indiana will not declare and pay dividends out of capital or unearned surplus without prior authorization of the IURC.
Piedmont
Piedmont must limit cumulative distributions subsequent to the acquisition of Piedmont by Duke Energy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded.
142



FINANCIAL STATEMENTSREGULATORY MATTERS
RATE-RELATED INFORMATION
The NCUC, PSCSC, FPSC, IURC, PUCO, TPUC and KPSC approve rates for retail electric and natural gas services within their states. The FERC approves rates for electric sales to wholesale customers served under cost-based rates (excluding Ohio and Indiana), as well as sales of transmission service. The FERC also regulates certification and siting of new interstate natural gas pipeline projects.
Duke Energy Carolinas and Duke Energy Progress
Grid Improvement – 2021 Coal Ash Settlement
On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the Coal Combustion Residuals Settlement Agreement (the “CCR Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the North Carolina Attorney General’s Office and the Sierra Club (collectively, the "Settling Parties"), which was filed with the NCUC on January 25, 2021. The CCR Settlement Agreement resolves all coal ash prudence and cost recovery issues in connection with 2019 rate cases filed by Duke Energy Carolinas and Duke Energy Progress with the NCUC, as well as the equitable sharing issue on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases as a result of the December 11, 2020, North Carolina Supreme Court opinion. The settlement also provides clarity on coal ash cost recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress through January 2030 and February 2030 (the "Term"), respectively.
Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery of approximately $1 billion of systemwide deferred coal ash expenditures, but will retain the ability to earn a debt and equity return during the amortization period, which shall be five years in the pending 2019 North Carolina rate cases and will be set by the NCUC in future rate case proceedings. The equity return and the amortization period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases will remain unaffected. The equity return on deferred coal ash costs under the 2019 North Carolina rate cases and future rate cases in North Carolina will be set at 150 basis points lower than the authorized return on equity then in effect, with a capital structure composed of 48% debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the ability to earn a full WACC return during the deferral period, which is the period from when costs are incurred until they are recovered in rates.
The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.
The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers, if achieved.
The settlement is subject to the review and approval of the NCUC. The Settling Parties requested an expedited review by the NCUC and anticipate an order on the pending 2019 North Carolina rate cases for Duke Energy Carolinas and Duke Energy Progress by the second quarter of 2021. On January 29, 2021, Duke Energy Carolinas and Duke Energy Progress filed joint motions with the Settling Parties seeking approval of the CCR Settlement Agreement, along with supporting testimony and exhibits from Duke Energy Carolinas and Duke Energy Progress. On February 5, 2021, the Public Staff filed testimony and exhibits supporting the CCR Settlement Agreement.
As a result of the CCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.
COVID-19 Filings
North Carolina
On March 10, 2020, Governor Roy Cooper declared a state of emergency due to the COVID-19 pandemic. On March 19, 2020, the NCUC issued an order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, Duke Energy Carolinas and Duke Energy Progress filed a request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted the companies’ request on March 20, 2020.
143



FINANCIAL STATEMENTSREGULATORY MATTERS
On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to Special Repayment Plans. The order contained the following: (1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; (2) the late fee moratorium will continue through the end of the state of emergency or until further order of the Commission; (3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and (4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions. Duke Energy Carolinas and Duke Energy Progress resumed normal billing practices as of October 1, 2020, with the exception of the billing of late payment charges. Customers were notified of the resumption of normal billing practices, the option of deferred payment arrangements and where to find assistance, if necessary. Service disconnections for nonpayment for residential customers resumed on November 2, 2020.
Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. Comments on the joint petition were filed on November 5, 2020, and reply comments were filed on November 30, 2020. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
South Carolina
On March 13, 2020, Governor Henry McMaster declared a state of emergency due to the COVID-19 pandemic. The governor also issued a letter on March 14, 2020, to the ORS Executive Director regarding the suspension of disconnection of essential utility services for nonpayment. On March 18, 2020, the PSCSC issued an order approving such waivers, and also approved waivers for regulations related to late fees and reconnect fees. The PSCSC's order also required utilities to track the financial impacts of actions taken pursuant to such waivers for possible reporting to the PSCSC.
On May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Duke Energy Carolinas and Duke Energy Progress filed a report on June 22, 2018,30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. On August 14, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the PSCSC seekingfor approval of an accounting order authorizing deferral of certainto defer incremental COVID-19 related costs incurred in connection with grid reliability, resiliencythrough June 30, 2020, and modernization work that is being performed underfor the companies’ grid improvement initiative.ongoing months during the duration of the COVID-19 pandemic. The deferral request did not include lost revenues. Updates on cost impacts were filed on September 30, 2020, and included financial impacts through the end of August 2020. On October 3, 2018,16, 2020, the ORS requested the PSCSC granted Duke Energy Carolinas' and Duke Energy Progress' joint petition, which authorizesdelay taking formal action on the deferral of these costsrequest until the rate effectiveORS and any intervenors complete discovery. The PSCSC issued an order on October 21, 2020, to grant additional time to complete discovery until January 20, 2021, and to establish a procedural schedule. Updates on cost impacts were filed on December 30, 2020, and included financial impacts through November 30, 2020. On January 15, 2021, ORS requested the PSCSC suspend the dates of each Company’s next general rate case.

146



FINANCIAL STATEMENTSREGULATORY MATTERS


Hurricane Florence, Hurricane Michaelfor the ORS report and Winter Storm Diego
In September 2018, Hurricane Florence made landfall and inflicted severe damage topublic hearing. The ORS conferred with the Duke Energy Carolinas and Duke Energy Progress territories in North Carolina and South Carolina. Approximately 2 million customers were impacted. The companies incurred approximately $500 million in incremental operation and maintenance expenses ($70 million and $430 million for Duke Energy Carolinas and Duke Energy Progress, respectively,) and approximately $90 million in capital costs ($5 million and $85 million for Duke Energy Carolinas and Duke Energy Progress, respectively,) which are included in Net property, plant and equipment onregarding the Consolidated Balance Sheets as of December 31, 2018, resulting from the hurricane restoration efforts. Moststatus of the operationdocket, and maintenance expenses are deferredthe parties mutually agreed that recently enacted federal laws addressing COVID-19 aid and recovery should be studied before further action is taken in Regulatory assets within Other Noncurrent Assetsthis docket. On January 27, 2021, the PSCSC voted to grant the ORS request to suspend the virtual public hearing. ORS is to file its report on the Consolidated Balance Sheets as of December 31, 2018. The balance of operation and maintenance expenses are included in Operation, maintenance and other on the Consolidated Statements of Operations for the year ended December 31, 2018.
In October 2018, the remnants of Hurricane Michael inflicted severe damage to the Duke Energy Carolinas and Duke Energy Progress territories in North Carolina and South Carolina. Approximately 1 million customers were impacted. The companies incurred approximately $100 million in incremental operation and maintenance expenses ($75 million and $25 million for Duke Energy Carolinas and Duke Energy Progress, respectively,) and approximately $21 million in capital costs ($12 million and $9 million for Duke Energy Carolinas and Duke Energy Progress, respectively,) which are included in Net property, plant and equipment on the Consolidated Balance Sheets as of December 31, 2018, resulting from the hurricane restoration efforts. Most of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2018. The balance of operation and maintenance expenses are included in Operation, maintenance and other on the Consolidated Statements of Operations for the year ended December 31, 2018.
In December 2018, Winter Storm Diego inflicted severe damage to the Duke Energy Carolinas and Duke Energy Progress territories in North Carolina and South Carolina. Approximately 800,000 customers were impacted. The companies incurred approximately $85 million in incremental operation and maintenance expenses ($60 million and $25 million for Duke Energy Carolinas and Duke Energy Progress, respectively,) and approximately $9 million in capital costs ($7 million and $2 million for Duke Energy Carolinas and Duke Energy Progress, respectively,) which are included in Net property, plant and equipment on the Consolidated Balance Sheets as of December 31, 2018, resulting from the winter storm restoration efforts. Most of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2018. The balance of operation and maintenance expenses are included in Operation, maintenance and other on the Consolidated Statements of Operations for the year ended December 31, 2018.or before March 29, 2021.
On December 21, 2018,August 17, 2020, Duke Energy Carolinas and Duke Energy Progress filed withan update on their planned return to normal operations during the NCUC petitionsCOVID-19 pandemic. Normal billing practices resumed in South Carolina as of October 1, 2020, and service disconnections for approvalnonpayment resumed on October 12, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to defer the incremental costs incurred to a regulatory asset for recovery in the next base rate case. The NCUC issued an order requesting comments on the deferral positions.find assistance, if necessary. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter. Duke Energy Progress filed a similar request with the PSCSC on January 11, 2019, which also included a request for the continuation of prior deferrals requested for ice storms and Hurricane Matthew, and on January 30, 2019, the PSCSC issued a directive approving the deferral request.
2020 North Carolina State Corporate Income TaxStorm Securitization Filings
On December 12, 2018,October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed requests to reduce their rates effective January 1, 2019, based on a reduction in North Carolina’s corporate income tax rate from 3 to 2.5 percent, as enacted by the General Assembly in Session Law 2017-57, which became law on June 28, 2017,joint petition with an effective date of January 1, 2019. On December 17, 2018, the NCUC, issued orders approvingas agreed to in partial settlements reached in the 2019 North Carolina Rate Cases for Duke Energy Carolinas and Duke Energy Progress, rate decrements.

seeking authorization for the financing of the costs of each utility's storm recovery activities required as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically, Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find that their storm recovery costs and related financing costs are appropriately financed by debt secured by storm recovery property, and that the Commission issue financing orders by which each utility may accomplish such financing using a securitization structure. On January 27, 2021, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain accounting issues, including agreement to support an 18- to 20-year bond period. The total revenue requirement over a proposed 20-year bond period for the storm recovery charges is approximately $287 million for Duke Energy Carolinas and $920 million for Duke Energy Progress. A remote evidentiary hearing ended on January 29, 2021, and on February 1, 2021, the NCUC granted a motion by Duke Energy Carolinas and Duke Energy Progress for a temporary 30-day waiver of the 135-day time frame for the NCUC to issue orders on the joint petition, extending the deadline for the NCUC to issue an order to no later than April 9, 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
147
144






FINANCIAL STATEMENTSREGULATORY MATTERS


Duke Energy Carolinas
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Carolinas' Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash$1,414 $1,696  (h) (b)
Accrued pension and OPEB(c)
427 477 Yes (i)
Storm cost deferrals205 178  Yes (b)
Retired generation facilities(c)
11 16  Yes2023
PISCC(c)
32 33  Yes (b)
Deferred asset – Lee COLA324 350    (b)
Hedge costs deferrals(c)
174 198  Yes 2041
AMI154 166  Yes (b)
DSM/EE46 100  (g) (g)
Vacation accrual84 80  2021
Deferred fuel and purchased power42 222 (e) 2022
COR settlement95 98 Yes(b)
Nuclear deferral88 67   2022
Customer connect project50 28  Yes(b)
ABSAT, coal ash basin closure71 50 Yes(b)
Deferred severance charges57 —   2022
Incremental COVID-19 expenses31 —  Yes (b)
Other164 151    (b)
Total regulatory assets3,469 3,910 
Less: current portion473 550 
Total noncurrent regulatory assets$2,996 $3,360 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(d)
$2,874 $3,060 (b)
Costs of removal(c)
1,975 1,936 Yes(f)
AROs – nuclear and other1,512 1,100 (b)
Provision for rate refunds(c)
170 175 Yes
Accrued pension and OPEB(c)
32 39 Yes(i)
Deferred fuel and purchased power18 — (e)2020
Other427 368 (b)
Total regulatory liabilities7,008 6,678 
Less: current portion473 255 
Total noncurrent regulatory liabilities$6,535 $6,423 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)     Included in rate base.
(d)    Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note 23. Portions are included in rate base.
(e)    Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.
(f)    Recovered over the life of the associated assets.
(g)    Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
(h)    Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(i)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
145
 December 31, Earns/PaysRecovery/Refund
(in millions)2018
2017
 a ReturnPeriod Ends
Regulatory Assets(a)
     
AROs – coal ash$1,725
$1,645
 (i)(b)
Accrued pension and OPEB581
410
  (j)
Retired generation facilities(c)
21
29
 X2023
Deferred Asset – Lee COLA383
—
  (b)
Storm cost deferrals160
—
 X(b)
Hedge costs deferrals(c)
101
109
 X2041
DSM/EE169
210
 (h)(h)
Vacation accrual78
83
 (e)2019
Deferred fuel and purchased power196
140
 (f)2020
Nuclear deferral87
84
  2020
PISCC(c)
34
35
 X(b)
AMI176
185
 X(b)
Other266
222
  (b)
Total regulatory assets3,977
3,152
   
Less: current portion520
299
   
Total noncurrent regulatory assets$3,457
$2,853
   
Regulatory Liabilities(a)
     
Costs of removal(c)
$1,968
$2,054
 X(g)
ARO – nuclear and other538
806
  (b)
Net regulatory liability related to income taxes(d)
3,082
3,028
  (b)
Storm reserve(c)
—
20
  (b)
Accrued pension and OPEB38
44
  (j)
Deferred fuel and purchased power—
46
 (f)2020
Other572
359
  (b)
Total regulatory liabilities6,198
6,357
   
Less: current portion199
126
   
Total noncurrent regulatory liabilities$5,999
$6,231
   



(a)FINANCIAL STATEMENTSRegulatory assets and liabilities are excluded from rate base unless otherwise noted.REGULATORY MATTERS
(b)The expected recovery or refund period varies or has not been determined.
(c)Included in rate base.
(d)Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note 23.
(e)Earns a return on outstanding balance in North Carolina.
(f)Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.
(g)Recovered over the life of the associated assets.
(h)Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
(i)Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(j)Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million, which represented an approximate 13.6 percent increase in annual base revenues. The rate increase was driven by capital investments subsequent to the previous base rate case, including the W.S. Lee CC discussed below, grid improvement projects, AMI, investments in customer service technologies, costs of complying with CCR regulations and the Coal Ash Act and recovery of costs related to licensing and development of the Lee Nuclear Station discussed below.

148



FINANCIAL STATEMENTSREGULATORY MATTERS


million. On February 28, 2018, Duke Energy Carolinas and the North Carolina Public Staff (Public Staff) filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9 percent9.9% and a capital structure of 52 percent52% equity and 48 percent48% debt. As a result of the settlement, Duke Energy Carolinas recorded a pretax charge of approximately $4 million to Operation, maintenance and other on the Consolidated Statements of Operations.
On June 1, 2018, Duke Energy Carolinas and certain intervenors filed a Pilot Grid Rider Agreement and Stipulation (Grid Rider Stipulation) in which the parties agreed to the proposal Duke Energy Carolinas introduced in a post-hearing brief on April 27, 2018, along with additional commitments by Duke Energy Carolinas. Also on June 1, 2018, Duke Energy Carolinas and the Commercial Group filed a Partial Stipulation and Settlement Agreement to be considered in conjunction with the Stipulation.
Components of the Grid Rider Stipulation included:
Duke Energy Carolinas would recover grid improvement costs through a pilot, three-year Grid Rider except for costs related to targeted undergrounding of power lines, cable and conduit replacement, and power pole replacement;
Excluded costs were to be deferred with a return until Duke Energy Carolinas’ next base rate case proceeding; and
Costs incurred during the three-year pilot, both rider recoverable and deferred, were subject to a 4.5 percent cumulative cap of total annual electric service revenue.
On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction. The order also included the following material components not covered in the Stipulation:
Recovery of $554 million of deferred coal ash basin closure costs over a five-year period with a return at Duke Energy Carolinas' WACC;
Assessment of a $70 million management penalty ratably over a five-year period by reducing the annual recovery of the deferred coal ash costs;
Denial of Duke Energy Carolinas' request for recovery of future estimated ongoing annual coal ash costs of $201 million with approval to defer such costs with a return at Duke Energy Carolinas' WACC, to be considered for recovery in the next rate case;
Inclusion in rates of costs related to the W.S. Lee CC, two new solar facilities, and AMI deployment as requested;
Recovery of Lee Nuclear Station licensing and development cost of $347 million over a 12-year period, but denial of a return on the deferred balance of costs;
Reduction in revenue related to lower income tax expense resulting from the Tax Act, and a requirement to maintain all excess deferred income tax (EDIT) resulting from the Tax Act in a regulatory liability account pending flow back to customers as approved by the commission at the earlier of three years or Duke Energy Carolinas’ next general rate case proceeding; and
Denial of the proposed Grid Rider Stipulation related to grid improvement costs and denial of deferral accounting treatment of the costs at this time. Duke Energy Carolinas may petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization.
As a result of the Order,June 22, 2018, order, Duke Energy Carolinas recorded a pretax charge of approximately $150 million to Impairment charges and Operation, maintenance and other on the Consolidated Statements of Operations. The charge iswas primarily related to the denial of a return on the Lee Nuclear Project and for previously recognized return impactedthe assessment of a $70 million cost of service penalty by reducing the annual recovery of deferred coal ash management penalty described above. On July 27, 2018, NCUC approved Duke Energy Carolinas' compliance filing. Ascosts by $14 million per year over a result, revised customer rates were effective on August 1, 2018.five-year recovery period.
On July 20, 2018, theThe North Carolina Attorney General filed a Notice of Appeal to the North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction issued by the NCUC. The Attorney General contends the commission’s order should be reversed and remanded, as it is in excess of the commission’s statutory authority; affected by errors of law; unsupported by competent, material and substantial evidence in view of the entire record as submitted; and arbitrary or capricious. The Sierra Club, North Carolina Sustainable Energy Association, North Carolina Justice Center, North Carolina Housing Coalition, Natural Resource Defense Council and Southern Alliance for Clean Energy have alsoother parties separately filed Notices of Appeal to the North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to theCourt. The North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction issued by the NCUC. The Public Staff contends the commission’s order should be reversed and remanded, as it is affected by errors of law, and is unsupported by substantial evidence with regard to the commission’s failure to consider substantial evidence of coal ash related environmental violations. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Carolinas and Duke Energy Progress appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. On November 29, 2018, the North Carolina Supreme Court adopted a schedule for briefing set forth in the motion to consolidateconsolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion on the consolidated appeals of the 2018 Duke Energy Carolinas and Duke Energy Progress rate case orders which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The Appelleecourt also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response briefs are due July 29, 2019.to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases, or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Carolinas cannot predict the outcome of this matter.

2019 North Carolina Rate Case
On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the Commission.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
•Removal of deferred storm costs from the rate case;
•Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;
•Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing; and
•Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.
On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: (1) a hearing on issues common to both rate cases conducted remotely; (2) a hearing on Duke Energy Carolinas specific rate case issues, followed immediately by; (3) a hearing on Duke Energy Progress specific rate case issues. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the Commission that the parties reached a joint partial settlement with the Public Staff. Also, on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement.
On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:
•A return on equity of 9.6% and a capital structure of 52% equity and 48% debt;
•Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;
•Agreement on the inclusion of plant in service and other revenue requirement updates through May 31, 2020, subject to Public Staff review. Annual revenue requirement associated with the May 31 update is estimated at $45 million; and
•Settlement to allow the deferral of costs for certain grid projects placed in service between June 1, 2020, and December 31, 2022, totaling $0.8 billion.
149
146






FINANCIAL STATEMENTSREGULATORY MATTERS


The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.
On August 4, 2020, Duke Energy Carolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates is based on and consistent with the base rate component of the Second Partial Settlement with the Public Staff and excludes the items to be litigated noted above. Duke Energy Carolinas will not begin the amortization or implementation of these items until a final order is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Carolinas also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Carolinas on a permanent basis. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. Duke Energy Carolinas expects the NCUC to issue an order on its net rate increase by the second quarter of 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Carolinas cannot predict the outcome of this matter.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million,million.
After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which represents an approximate 10.0 percent increase in retail revenues.included a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The rate increase is driven by capital investments and environmental compliance progress made byorder also included the following material components:
•Approval of cancellation of the Lee Nuclear Project, with Duke Energy Carolinas since its previous rate case, includingmaintaining the further implementationCombined Operating License;
•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of a return on the deferred balance of costs;
•Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas’ generation modernization program, which consistsCarolinas' WACC;
•Denial of retiring, replacingrecovery of $115 million of certain coal ash costs deemed to be related to the Coal Ash Act and upgrading generation plants, investments in customer service technologies and continued investments inincremental to the federal CCR rule;
•Approval of a $66 million decrease to base work to maintain its transmission and distribution systems. The request includes net tax benefits resulting from the Tax Act of $66 millionrates to reflect the change in ongoing tax expense, primarily from the reduction in the federal income tax rate from 3535% to 21 percent, and $4621%;
•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and benefitsEquipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and
•Approval of a $17 million from a reductiondecrease through the EDIT Rider related to reductions in the North Carolina state income taxes allocabletax rate from 6.9% to South Carolina.2.5% to be returned over a five-year period.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas also requested approvalfiled a Petition for Rehearing or Reconsideration of its proposed Grid Improvement Plan, adjustmentsthat order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to its Prepaid Advantage Programrehear or reconsider the Commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equity and the recovery of a varietyreturn on deferred operation and maintenance expenses. An order detailing the Commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of accounting ordersappeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to ongoing coststhe Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled by the Supreme Court of South Carolina. Based on legal analysis and the filing of the appeal, Duke Energy Carolinas has not recorded an adjustment for environmental compliance, including recovery over a five-year period of $242 million ofits deferred coal ash related compliance costs grid investments between rate changes, incremental depreciation expense, a result of new depreciation rates from the depreciation study approved in the 2017 North Carolina Rate Case above, and the balance of development costs associated with the cancellation of the Lee Nuclear Project. Finally, Duke Energy Carolinas sought approval to establish a reserve and accrual for end of life nuclear costs for nuclear fuel and materials and supplies. An evidentiary hearing is scheduled to begin on March 21, 2019, and a decision and revised customer rates are expected by mid-2019.this matter. Duke Energy Carolinas cannot predict the outcome of this matter.
FERC Formula Rate Matter
147
On July 31, 2017, PMPA filed a complaint with FERC alleging that Duke Energy Carolinas misapplied the formula rate under the PPA between the parties by including in its rates amortization expense associated with regulatory assets and recorded in a certain account without FERC approval. On February 15, 2018, FERC issued an order ruling in favor of PMPA and ordered Duke Energy Carolinas to refund to PMPA all amounts improperly collected under the PPA. Duke Energy Carolinas has issued to PMPA and similarly situated wholesale customers refunds of approximately $25 million. FERC also set the matter for settlement and hearing. PMPA and other customers filed a protest to Duke Energy Carolinas' refund report claiming that the refunds are inadequate in that (1) Duke Energy Carolinas invoked the limitations periods in the contracts to limit the time period for which the refunds were paid and the customers disagree that this limitation applies, and (2) Duke Energy Carolinas refunded only amounts recovered through a certain account and the customers have asserted that the order applies to all regulatory assets. On July 3, 2018, FERC issued an order accepting Duke Energy Carolinas' refund report and ruling that these two claims are outside the scope of FERC's February order. The settlement agreements and revised formula rates for all parties to the proceeding were filed on December 28, 2018. Duke Energy Carolinas cannot predict the outcome of this matter.
W.S. Lee CC
On April 9, 2014, the PSCSC granted Duke Energy Carolinas and NCEMC a CECPCN for the construction and operation of a 750-megawatt (MW) combined-cycle natural gas-fired generating plant at Duke Energy Carolinas' existing William States Lee Generating Station in Anderson, South Carolina. Duke Energy Carolinas began construction in July 2015 and its share of the cost to build the facility was approximately $650 million, including AFUDC. Approximately $600 million is being recovered through base rate or deferral filings in North Carolina and South Carolina. The remaining amount will be included in future rate filings. The project commenced commercial operation on April 5, 2018. NCEMC owns approximately 13 percent of the project.
Lee Nuclear Station
In December 2007, Duke Energy Carolinas applied to the NRC for COLs for two Westinghouse AP1000 reactors for the proposed William States Lee III Nuclear Station to be located at a site in Cherokee County, South Carolina. The NCUC and PSCSC concurred with the prudency of Duke Energy Carolinas incurring certain project development and preconstruction costs through several separately issued orders, although full cost recovery is not guaranteed. In December 2016, the NRC issued a COL for each reactor. Duke Energy Carolinas is not required to build the nuclear reactors as a result of the COLs being issued.
The Duke Energy Carolinas 2017 North Carolina Rate Case filing discussed above included a request to cancel the development of the Lee Nuclear project, recover incurred licensing and development costs and maintain the license issued by the NRC as an option for potential future development. The cancellation request was due to the Westinghouse bankruptcy filing and other market activity. The NCUC Order issued on June 22, 2018, approved the cancellation of the Lee Nuclear Project, allowed Duke Energy Carolinas to continue to maintain the COLs, provided for recovery of the North Carolina retail allocation of project development costs, including AFUDC accrued through December 31, 2017, over 12 years and disallowed any return on the unamortized balance during the 12-year recovery period.
Given the repeal of certain sections of the Base Load Review Act in South Carolina combined with the cancellation of the project, Duke Energy Carolinas determined that it was no longer probable it would be allowed a return on its share of project development costs attributable to South Carolina. As a result, Duke Energy Carolinas recorded a pretax impairment in the second quarter of 2018 of $29 million within Impairment charges on the Consolidated Statements of Operations and Comprehensive Income.
South Carolina Petition
On June 22, 2018, Duke Energy Carolinas filed a petition with the PSCSC requesting an accounting order to defer certain costs incurred in connection with the addition of the W.S. Lee CC, the ongoing deployment of Duke Energy Carolinas new billing and Customer Information System and the addition of the Carolinas West Primary Distribution Control Center. This request totaling approximately $33 million was approved on July 25, 2018.

150






FINANCIAL STATEMENTSREGULATORY MATTERS


Sale of Hydroelectric (Hydro) Plants
In May 2018, Duke Energy Carolinas entered an agreement for the sale of five hydro plants with a combined 18.7-MW generation capacity in the Western Carolinas region to Northbrook Energy. The completion of the transaction is subject to approval from FERC for the four FERC-licensed plants, as well as other state regulatory agencies and is contingent upon regulatory approval from the NCUC and PSCSC to defer the total estimated loss on the sale of approximately $40 million. On July 5, 2018, Duke Energy Carolinas filed with NCUC for approval of the sale of the five hydro plants to Northbrook, to transfer the CPCNs for the four North Carolina hydro plants and to establish a regulatory asset for the North Carolina retail portion of the difference between sales proceeds and net book value. On September 4, 2018, the Public Staff filed comments supporting the CPCN transfer with conditions. On September 18, 2018, Duke Energy Carolinas filed reply comments opposing the Public Staff’s proposed conditions. On November 29, 2018, the NCUC issued a procedural order and held an evidentiary hearing on this matter on February 5, 2019. On August 28, 2018, Duke Energy Carolinas filed with PSCSC its Application for Approval of Transfer and Sale of Hydroelectric Generation Facilities, Acceptance for Filing of a Power Purchase Agreement and an Accounting Order to Establish a Regulatory Asset. On September 10, 2018, the ORS provided a letter to the commission stating its position on the application and on September 18, 2018, Duke Energy Carolinas requested this matter be carried over to allow Duke Energy Carolinas time to discuss certain accounting issues with the ORS. On August 9, 2018, Duke Energy Carolinas and Northbrook filed a joint Application for Transfer of Licenses with the FERC. On December 27, 2018, the FERC issued its Order Approving Transfer of Licenses (“Order”) for the four FERC-licensed hydro plants. On January 18, 2019, Duke Energy Carolinas and Northbrook Carolina Hydro II, LLC requested a six-month extension of time to comply with the requirement of the Order that Northbrook submit to FERC certified copies of all instruments of conveyance and signed acceptance sheets within 60 days of the date of the Order, given that compliance by the deadline set in the Order is not possible because the conveyance of the projects is contingent on the receipt of state regulatory approvals, which are not anticipated to be issued by February 25, 2019.
If commission approvals are not received, Duke Energy Carolinas can cancel the sales agreement and retain the hydro facilities. If commission approvals are received, the closing is expected to occur during the second quarter of 2019. After closing, Duke Energy Carolinas will purchase all the capacity and energy generated by these facilities at the avoided cost for five years through power purchase agreements. Duke Energy Carolinas cannot predict the outcome of this matter.
Duke Energy Progress
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Progress' Consolidated Balance Sheets.
December 31, Earns/PaysRecovery/RefundDecember 31,Earns/PaysRecovery/Refund
(in millions)2018
2017
 a ReturnPeriod Ends(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
  
Regulatory Assets(a)
AROs – coal ash$2,051
$1,975
 (h)(b)AROs – coal ash$1,347 $1,834  (h) (b)
AROs – nuclear and other429
359
 (c)AROs – nuclear and other683 509    (c)
Accrued pension and OPEB542
430
 (k)Accrued pension and OPEB393 423    (k)
Storm cost deferrals(d)
Storm cost deferrals(d)
785 801  Yes (b)
Retired generation facilities148
170
 X(b)Retired generation facilities189 83  Yes (b)
Storm cost deferrals(d)
571
150
 X(b)
PISCC and deferred operating expensesPISCC and deferred operating expenses51 33  Yes2054
Deferred asset – Harris COLADeferred asset – Harris COLA32 38     (b)
Hedge costs deferrals54
64
 (b)Hedge costs deferrals89 85    (b)
AMIAMI57 61 Yes (b)
DSM/EE(e)
235
264
 (i)
DSM/EE(e)
224 216  (i)
Vacation accrual41
42
 2019Vacation accrual42 41   2021
Deferred fuel and purchased power397
130
 (f)2020Deferred fuel and purchased power158 266  (f)2022
COR settlementCOR settlement33 35 Yes (e)
NCEMPA deferralsNCEMPA deferrals124 72  (g)2042
Nuclear deferral46
35
 2020Nuclear deferral35 40   2022
PISCC and deferred operating expenses36
38
 X2054
AMI67
75
 (b)
NCEMPA deferrals50
53
 (g)2042
Customer connect projectCustomer connect project25 17  Yes(b)
ABSAT, coal ash basin closureABSAT, coal ash basin closure27 15 Yes(b)
Deferred severance chargesDeferred severance charges29 —   2022
Incremental COVID-19 expensesIncremental COVID-19 expenses23 — Yes (b)
Other147
74
 (b)Other122 109    (b)
Total regulatory assets4,814
3,859
 Total regulatory assets4,468 4,678 
Less: current portion703
352
 Less: current portion492 526 
Total noncurrent regulatory assets$4,111
$3,507
 Total noncurrent regulatory assets$3,976 $4,152 
Regulatory Liabilities(a)
  
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(l)
Net regulatory liability related to income taxes(l)
$1,662 $1,802 (b)
Costs of removal$1,878
$2,122
 X(j)Costs of removal2,666 2,294 Yes(j)
Accrued pension and OPEB93
—
 (k)
Net regulatory liability related to income taxes(l)
1,863
1,854
 (b)
Deferred fuel and purchased power—
1
 (f)2020
Provision for rate refundsProvision for rate refunds123 123 Yes
Other299
161
 (b)Other473 249 (b)
Total regulatory liabilities4,133
4,138
 Total regulatory liabilities4,924 4,468 
Less: current portion178
139
 Less: current portion530 236 
Total noncurrent regulatory liabilities$3,955
$3,999
 Total noncurrent regulatory liabilities$4,394 $4,232 

(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Recovery period for costs related to nuclear facilities runs through the decommissioning period of each unit.
(d)    South Carolina storm costs are included in rate base.
(e)    Included in rate base.
(f)    Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.
(g)    South Carolina retail allocated costs are earning a return.
(h)    Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(i)    Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
(j)    Recovered over the life of the associated assets.
(k)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
(l)    Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note 23. Portions are included in rate base.
151
148






FINANCIAL STATEMENTSREGULATORY MATTERS


(a)Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)The expected recovery or refund period varies or has not been determined.
(c)Recovery period for costs related to nuclear facilities runs through the decommissioning period of each unit.
(d)South Carolina storm costs are included in rate base.
(e)Included in rate base.
(f)Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.
(g)South Carolina retail allocated costs are earning a return.
(h)Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(i)Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
(j)Recovered over the life of the associated assets.
(k)Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
(l)Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note 23.
2017 North Carolina Rate Case
On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which represented an approximate 14.9 percent increase in annual base revenues. Subsequent to the filing, Duke Energy Progresswas subsequently adjusted the requested amount to $420 million, representing an approximate 13 percent increase. The rate increase is driven by capital investments subsequent to the previous base rate case, costs of complying with CCR regulations and the Coal Ash Act, costs relating to storm recovery, investments in customer service technologies and recovery of costs associated with renewable purchased power.
On December 16, 2016, Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer certain costs incurred in connection with response to Hurricane Matthew and other significant storms in 2016. The final estimate of incremental operation and maintenance and capital costs of $116 million was filed with the NCUC in September 2017. On July 10, 2017, the NCUC consolidated Duke Energy Progress' storm deferral request into the Duke Energy Progress rate case docket for decision.
million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9 percent9.9% and a capital structure of 52 percent52% equity and 48 percent48% debt. As a result of the settlement, in 2017 Duke Energy Progress recorded pretax charges totaling approximately $25 million to Impairment charges and Operation, maintenance and other on the Consolidated Statements of Operations, principally related to disallowances from rate base of certain projects at the Mayo and Sutton plants. On February 23, 2018, the NCUC issued an order approving the stipulation. The order also included the following material components not covered in the stipulation:
Recovery of the remaining $234 million of deferred coal ash basin closure costs over a five-year period with a return at Duke Energy Progress' WACC, excluding $10 million of retail deferred coal ash basin costs related to ash hauling at Duke Energy Progress' Asheville Plant;
Assessment of a $30 million management penalty ratably over a five-year period by reducing the annual recovery of the deferred coal ash costs;
Denial of Duke Energy Progress' request for recovery of future estimated ongoing annual coal ash costs of $129 million with approval to defer such costs with a return at Duke Energy Progress' WACC, to be considered for recovery in the next rate case; and
Approval to recover $51 million of the approximately $80 million deferred storm costs over a five-year period with amortization beginning in October 2016. The order did not allow the deferral of the associated capital costs or a return on the deferred balance during the deferral period.
The order also impacted certain amounts that were similarly recorded on Duke Energy Carolinas' Consolidated Balance Sheets. As a result of the order, Duke Energy Progress and Duke Energy Carolinas recorded pretax charges of $68 million and $14 million, respectively, in the first quarter of 2018 to Impairment charges, Operation, maintenance and other and Interest Expense on the Consolidated Statements of Operations. These charges primarily related to the coal ash basin disallowance and previously recognized return impacted by the coal ash management penalty and deferred storm cost adjustments. Revised customer rates became effective on March 16, 2018.
On May 15, 2018, theThe Public Staff, the North Carolina Attorney General and the Sierra Club filed a Noticenotices of Cross Appealappeal to the North Carolina Supreme Court from the February 23, 2018, Order Accepting Stipulation, Deciding Contested Issues and Granting Partial Rate Increase issued by the NCUC. The Public Staff contend the commission’s order should be reversed and remanded, as it is affected by errors of law, and is unsupported by competent, material and substantial evidence in view of the entire record as submitted. Court.
The North Carolina Attorney GeneralSupreme Court consolidated the Duke Energy Carolinas and Sierra Club have also filed Notices of Appeal toDuke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court fromissued an opinion on the February 23,consolidated appeals of the 2018 Order Accepting Stipulation, Deciding Contested IssuesDuke Energy Carolinas and Granting Partial Rate Increase. On November 29, 2018,Duke Energy Progress rate case orders which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General's OfficeGeneral, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed a motion withjoint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina Supreme Court requestingrate cases or in the court consolidatealternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas appeals and enter an order adoptingentered into the parties’CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. For information on the proposed briefing schedule as set out insettlement pending before the filing. On November 29, 2018, the North Carolina Supreme Court adopted a schedule for briefing set forth in the motion to consolidate the Duke Energy Progress and Duke Energy Carolinas appeals. The Appellee response briefs are due July 29, 2019.NCUC, see "2021 Coal Ash Settlement." Duke Energy Progress cannot predict the outcome of this matter.

152



FINANCIAL STATEMENTSREGULATORY MATTERS


2016 South2019 North Carolina Rate Case
In December 2016,On October 30, 2019, Duke Energy Progress filed an application with the PSCSC approvedNCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case settlement agreement amongrevenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase was driven by major capital investments subsequent to the ORS, intervenorsprevious base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress. TermsProgress seeks to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requests rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
•Removal of deferred storm costs from the rate case;
•Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;
•Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing;
•Agreement that the Asheville CC project is complete and in service and agreement on the amount to be included an approximate $56 million increase in revenues over a two-year period. An increaserate base; and
•Agreement on certain accounting matters, including recovery of approximately $38 million in revenues was effective January 1, 2017,employee incentives, severance, aviation costs and an additional increase of approximately $19 million in revenues was effective January 1, 2018.executive compensation.
On May 6, 2020, Duke Energy Progress, amortized approximately $19 million fromDuke Energy Carolinas and the costPublic Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: (1) a hearing on issues common to both rate cases conducted remotely; (2) a hearing on Duke Energy Carolinas specific rate case issues, followed immediately by; (3) a hearing on Duke Energy Progress specific rate case issues. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the Commission that the parties reached a joint partial settlement with the Public Staff.
On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of removal reservePartial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in 2017. Other settlement terms included athe base rate proceeding. Major components of the Second Partial Settlement included:
•A return on equity of 10.1 percent,9.6% and a capital structure of 52% equity and 48% debt;
•Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;
•Agreement on the inclusion of plant in service and other revenue requirement updates through May 31, 2020, subject to Public Staff review. Annual revenue requirement associated with the May 31 update is estimated at $25 million; and
•Settlement to allow the deferral of costs for certain grid projects placed in service between June 1, 2020, and December 31, 2022, of $0.5 billion.
149



FINANCIAL STATEMENTSREGULATORY MATTERS
The remaining items litigated at hearing included recovery of deferred coal ash compliance costs incurred from Januarythat are subject to asset retirement obligation accounting and implementation of new depreciation rates.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2015,2020. The revenue requirement to be recovered subject to refund through June 30, 2016, over a 15‑year periodthe temporary rates is based on and ongoing deferralconsistent with the terms of allocated ash basin closure costs from July 1, 2016, until the next base rate case. Thecomponent of the settlement also provides thatagreements with the Public Staff and excludes items to be litigated noted above. Duke Energy Progress will not seekbegin the amortization or implementation of these items until a final determination is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Progress also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Progress on a permanent basis. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.
The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. Duke Energy Progress expects the NCUC to issue an order on its net rate increase by the second quarter of 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Progress cannot predict the outcome of this matter.
Hurricane Dorian
Hurricane Dorian reached the Carolinas in ratesSeptember 2019 as a Category 2 hurricane making landfall within Duke Energy Progress’ service territory. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $168 million with an additional $4 million in Southcapital investments made for restoration efforts. Approximately $145 million and $179 million of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2020, and December 31, 2019, respectively. A request for an accounting order to defer incremental storm costs associated with Hurricane Dorian was included in Duke Energy Progress' October 30, 2019, general rate case filing with the NCUC. Terms of the June 2, 2020, Agreement and Stipulation of Partial Settlement removed incremental storm costs from the general rate case. A petition seeking to securitize these costs, along with costs from Hurricane Florence, Hurricane Michael and Winter Storm Diego, was filed on October 26, 2020, with the NCUC. For information on the securitization filing, see "2020 North Carolina Storm Securitization Filings." Duke Energy Progress cannot predict the outcome of this matter.
On February 7, 2020, a petition was filed with the PSCSC in the 2019 storm deferrals docket requesting deferral of approximately $22 million in operation and maintenance expenses to occur prioran existing storm deferral balance previously approved by the PSCSC. The PSCSC voted to 2019, with limited exceptions.approve the request on March 4, 2020, and issued a final order on April 7, 2020. On July 1, 2020, Duke Energy Progress filed a supplemental true up reducing the actual costs to $17 million.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of recovery of $4 million which represents an approximate 10.3 percent increase in annual base revenues. The rate increase is driven by capital investments and environmental compliance progress made byof coal ash costs over a five-year period with a return at Duke Energy Progress since its previous rate case, includingProgress' WACC;
•Denial of recovery of $65 million of certain coal ash costs deemed to be related to the further implementation of Duke Energy Progress’ generation modernization program, which consists of retiring, replacingCoal Ash Act and upgrading generation plants, investments in customer service technologies and continued investments in base workincremental to maintain its transmission and distribution systems. The request includes net tax benefits of $15 million consistingthe federal CCR rule;
•Approval of a $12$17 million increase duedecrease to the expiration of EDITs related to reductions in North Carolina state income taxes allocable to South Carolina and decreases resulting from the Tax Act of $17 millionbase rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 3535% to 21 percent, and $1021%;
•Approval of a $12 million to returndecrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change.
Duke Energy Progress also requested approval of its proposed Grid Improvement Plan, approval ofchange, to be returned in accordance with ARAM for protected EDIT, over a Prepaid Advantage Program20-year period for unprotected EDIT associated with Property, Plant and a variety of accounting orders related to ongoing costs for environmental compliance, including recoveryEquipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and
•Approval of $51a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.
150



FINANCIAL STATEMENTSREGULATORY MATTERS
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the Commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equity and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the Commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled by the Supreme Court of South Carolina. Based on legal analysis and the filing of the appeal, Duke Energy Progress has not recorded an adjustment for its deferred coal ash related compliance costs AMI deployment, grid investments between rate changes and regulatory asset treatment related to the retirement of a generating plant located in Asheville, North Carolina. Finally, Duke Energy Progress sought approval to establish a reserve and accrual for end of life nuclear costs for materials and supplies and nuclear fuel. An evidentiary hearing is scheduled to begin on April 11, 2019, and a decision and revised customer rates are expected by mid-2019.this matter. Duke Energy Progress cannot predict the outcome of this matter.
Western Carolinas Modernization Plan
On November 4, 2015, Duke Energy Progress announced a Western Carolinas Modernization Plan, which included retirement ofretired the existing376-MW Asheville coal-fired plant on January 29, 2020, at which time the constructionnet book value, including associated ash basin closure costs, of two 280‑MW combined-cycle natural gas plants having dual-fuel capability, with$214 million was transferred from Generation facilities to be retired, net to Regulatory assets within Current Assets and Other Noncurrent Assets on the option to build a third natural gas simpleConsolidated Balance Sheets.
On December 27, 2019, Asheville Combined Cycle Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator and the common systems that serve combined cycle unit in 2023 based upon the outcome of initiatives to reduce the region's power demand. The plan also included upgrades to existing transmission lines and substations, installation of solar generation and a pilot battery storage project. These investments will be made within the next seven years.units went into commercial operation. Duke Energy Progress is also workingplaced the Unit 7 Combustion Turbine into commercial operation in simple-cycle mode on January 15, 2020. The Unit 8 Steam Turbine Generator went into commercial operation on April 5, 2020. On June 2, 2020, Duke Energy Progress filed a request with the local natural gas distribution company to upgradePSCSC for an existing natural gas pipeline to serve the natural gas plant.
On March 28, 2016, the NCUC issued anaccounting order approving a CPCN for the newdeferral of post-in-service costs incurred in connection with the addition of the Asheville combined-cycle natural gas plants, but denyinggenerating plant. The petition requested the CPCN for the contingent simple cycle unit without prejudice toPSCSC issue an accounting order authorizing Duke Energy Progress to refile for approval indefer post-in-service costs including the future.Asheville combined-cycle’s depreciation expense, property taxes, incremental operations and maintenance expenses and carrying costs at WACC of approximately $8 million annually. On March 28, 2018, Duke Energy Progress filed an annual progress report forJune 17, 2020, the construction ofPSCSC voted to approve the combined-cycle plants with the NCUC, with an estimated cost of $893 million. Site preparation activities for the combined-cycle plants are completepetition and construction of these plants began in 2017, with an expected in-service date in late 2019.issued its final order on July 6, 2020.
On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility. On November 30, 2018, the NCUC issued an order scheduling hearings, requiring filing of testimony, establishing discovery guidelines and requiring public notice. On February 7, 2019, Duke Energy Progress made a joint filing with the Public Staff,Facility, which accepted the Public Staff’s proposed conditions and requested that the NCUC cancel the evidentiary hearing. Duke Energy Progress cannot predict the outcome of this matter.
The carrying value of the 376-MW Asheville coal-fired plant, including associated ash basin closure costs, of $327 million and $385 million is included in Generation facilities to be retired, net on Duke Energy Progress' Consolidated Balance Sheets as of December 31, 2018, and 2017, respectively. Duke Energy Progress' request for a regulatory asset at the time of retirement with amortization over a 10-year period was approved bywith certain conditions on May 10, 2019. A hearing to update the NCUC on February 23, 2018.the status of the project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in October 2021.
Shearon Harris Nuclear Plant Expansion
In 2006, Duke Energy Progress selected a site at Harris to evaluate for possible future nuclear expansion. On February 19, 2008,July 27, 2020, Duke Energy Progress filed its COLan application with the NRCNCUC for two Westinghouse AP1000 reactors at Harris, whicha CPCN to construct the NRC docketed for review. On May 2, 2013, Duke Energy Progress filedWoodfin Solar Facility, a letter with the NRC requesting the NRC to suspend its review activities associated with the COL at the Harris site. The NCUC and PSCSC approved deferral of retail costs. Total deferred costs are approximately $43 million as of December 31, 2018, and are recorded in Regulatory assets on Duke Energy Progress’ Consolidated Balance Sheets. On November 17, 2016, the FERC approved Duke Energy Progress’ rate recovery request filing for the wholesale ratepayers’ share of the abandonment costs, including a debt-only return5-MW solar generating facility to be recovered through revised formula rates and amortized overconstructed on a 15-year period beginning May 1, 2014. As part of the settlement agreement for the 2017 North Carolina Rate Case discussed above, Duke Energy Progress will amortize the regulatory asset over an eight-year period. NCUC approved the settlementclosed landfill in Buncombe County. The expert hearing was held on February 23, 2018.

153



FINANCIAL STATEMENTSREGULATORY MATTERS


South Carolina Petitions
On June 22, 2018, Duke Energy Progress filed a petition with the PSCSC seeking an accounting order authorizing Duke Energy Progress to adopt new depreciation rates, effective March 16, 2018, that reflect the results of Duke Energy Progress’ most recent depreciation study. Also on June 22, 2018, Duke Energy Progress filed a petition with the PSCSC requesting an accounting order to defer certain costs incurred in connection with the deployment of AMI, the ongoing deployment of Duke Energy Progress' new billing and Customer Information System, new depreciation rates and costs incurred in connection with the return of certain excess deferred state income taxes from North Carolina. These requests totaling approximately $20 million were approved on July 25, 2018.
FERC Form 1 Reporting Matter
On OctoberNovember 18, 2017, Fayetteville Public Works Commission (FPWC) filed with FERC a complaint against Duke Energy Progress. In the complaint, FPWC alleges that Duke Energy Progress’ change in its method of reporting materials and supplies inventory on FERC Form 1 for 2015 constituted a change in accounting practice that Duke Energy Progress was not permitted to implement without first obtaining FERC approval. On April 23, 2018, FERC issued an order finding that Duke Energy Progress’ new reporting methodology was not proper and required Duke Energy Progress to revise its FERC Form 1s beginning in 2014 and to issue refunds to formula rate customers. Duke Energy Progress estimates that these refunds will total approximately $14 million. On May 23, 2018, Duke Energy Progress filed a request for rehearing alleging that FERC’s order is incorrect. Duke Energy Progress revised its FERC Form 1 filings in June 2018. On August 31, 2018, Duke Energy Progress filed with FERC a refund report memorializing its payment of refunds to FPWC.2020. Duke Energy Progress cannot predict the outcome of this matter.
Tax ActFERC Return on Equity Complaints
As ordered byOn October 11, 2019, NCEMPA filed a complaint at the NCUC on October 5, 2018,FERC against Duke Energy Progress filed a proposalpursuant to Section 206 of the Federal Power Act (FPA), alleging that the 11% stated return on October 25, 2018, to adjust rates to reflect the reduction in federal corporate income tax rate from 35 to 21 percent for taxable years beginning after December 31, 2017, as outlinedequity (ROE) component contained in the Tax Act.demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress proposedis unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. It is Duke Energy Progress’ view that, this rate decrement be effective for service rendered onin consideration of the specific facts and after December 1, 2018. On November 28, 2018,circumstances of risks under the NCUC approvedprovisions of the proposal to implementFRPPA, the changestated 11% ROE is just and reasonable. The parties are currently in the federal corporate income tax rate and effective December 1, 2018,FERC settlement procedures. Duke Energy Progress implementedcannot predict the rate reduction. Also, as ordered byoutcome of this matter.
On October 16, 2020, NCEMC filed a complaint at the NCUC on October 5, 2018,FERC against Duke Energy Progress shall continuepursuant to holdSection 206 of the FPA, alleging that the 11% stated ROE component in a deferred regulatory liability account the differencedemand formula rate in the Power Supply and Coordination Agreement between revenues billed underNCEMC and Duke Energy Progress is unjust and unreasonable. Under FPA Section 206, the prior federal corporate income tax rateearliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress responded to the complaint on November 20, 2020, demonstrating that the 11% ROE is just and the federal corporate income tax rate resulting from the Tax Actreasonable for the period January 1, 2018 through November 30, 2018.service provided. The disposition of such regulatory liability may be considered inparties have filed additional pleadings. The FERC has not issued an order, and there is no deadline for the FERC to act. Duke Energy Progress' next general rate case proceeding or in three years, whichever is sooner. EDIT related toProgress cannot predict the corporate income tax rate reduction shall be held in a deferred tax regulatory liability account until they can be addressed for ratemaking purposes in the next general rate case proceeding or in three years, whichever is sooner.

outcome of this matter.
154
151






FINANCIAL STATEMENTSREGULATORY MATTERS


Duke Energy Florida
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Florida's Consolidated Balance Sheets.
 December 31, Earns/PaysRecovery/Refund
(in millions)2018
2017
 a ReturnPeriod Ends
Regulatory Assets(a)
     
AROs – coal ash(c)
$10
$9
  (b)
AROs – nuclear and other(c)
172
296
  (b)
Accrued pension and OPEB(c)
532
476
 X(g)
Retired generation facilities(c)
219
216
 X(b)
Storm cost deferrals(c)(h)
382
376
 (e)2021
Nuclear asset securitized balance, net1,093
1,142
  2036
Hedge costs deferrals20
30
  2020
DSM/EE(c)
21
17
 X2023
Deferred fuel and purchased power(c)
203
219
 (f)2020
AMI(c)
60
75
 X2032
Other176
36
 (d)(b)
Total regulatory assets2,888
2,892
   
Less: current portion434
389
   
Total noncurrent regulatory assets$2,454
$2,503
   
Regulatory Liabilities(a)
     
Costs of removal(c)
$257
$415
 (d)(b)
Net regulatory liability related to income taxes(c)
847
948
  (b)
Accrued pension and OPEB56
—
 X(g)
Deferred fuel and purchased power(c)
16
—
 (f)2020
Other20
18
 (d)(b)
Total regulatory liabilities1,196
1,381
   
Less: current portion102
74
   
Total noncurrent regulatory liabilities$1,094
$1,307
   
(a)Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)The expected recovery or refund period varies or has not been determined.
(c)Included in rate base.
(d)Certain costs earn a return.
(e)Earns a debt return/interest once collections begin.
(f)Earns commercial paper rate.
(g)Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
(h)Balance includes $165 million for Hurricane Michael. Duke Energy Florida expects to seek recovery of these costs in the first half of 2019.
Storm Restoration Cost Recovery
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash(c)
$10 $9    (b)
AROs – nuclear and other(c)
2 159  Yes (b)
Accrued pension and OPEB(c)
482 474  Yes (g)
Storm cost deferrals(c)
108 413  (e) (b)
Nuclear asset securitized balance, net991 1,042    2036
Retired generation facilities(c)
174 183  Yes (b)
Hedge costs deferrals59 44  Yes 2038
AMI(c)
45 53  Yes 2032
DSM/EE(c)
17 25  Yes 2025
Deferred fuel and purchased power4 39  (f)2022
Qualifying facility contract buyouts107 121  Yes2034
Customer connect project30 20   2037
Other35 31  (d) (b)
Total regulatory assets2,064 2,613 
Less: current portion265 419 
Total noncurrent regulatory assets$1,799 $2,194 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(c)
$749 $793 (b)
Costs of removal(c)
— 267 (d)(b)
Deferred fuel and purchased power(c)
— 1 (f)
Other19 26 (d)(b)
Total regulatory liabilities768 1,087 
Less: current portion110 94 
Total noncurrent regulatory liabilities$658 $993 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Certain costs earn/pay a return.
(e)    Earns a debt return/interest once collections begin.
(f)    Earns commercial paper rate.
(g)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
COVID-19 Filings
In September 2017, Duke Energy Florida’s service territory suffered significant damage from Hurricane Irma, resultingMarch 2020, Governor Ron DeSantis directed the State Health Officer of Florida to declare a public health emergency in approximately 1 million customers experiencing outages. InFlorida related to the fourth quarterCOVID-19 pandemic. The governor also issued an Executive Order on March 9, 2020, in which he declared a state of 2017,emergency in Florida and directed the Director of the Division of Emergency Management to implement the state’s Comprehensive Emergency Management Plan. On March 19, 2020, Duke Energy Florida also incurred preparation costs relatedfiled a request to Hurricane Nate.modify its tariff to allow it to waive late fees for customers, and on April 6, 2020, the FPSC issued an order approving the request. Duke Energy Florida had already voluntarily waived reconnect fees and credit card fees and ceased disconnecting customers for nonpayment. On December 28, 2017,April 2, 2020, Duke Energy Florida filed a petition with the FPSC to accelerate a $78 million fuel cost refund to customers in the month of May 2020. Typically, the refund would be made over the course of 2021. The FPSC approved the petition on April 28, 2020. Duke Energy Florida resumed normal billing practices as of August 24, 2020, with the exception of the billing of late payment charges. Customers were notified of the resumption of normal billing practices, the option of deferred payment arrangements and where to find assistance, if necessary. Service disconnections for nonpayment for residential customers resumed on October 5, 2020.
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “Settlement”) with the FPSC. The parties to the Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
152



FINANCIAL STATEMENTSREGULATORY MATTERS
Pursuant to the Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to a return on equity (“ROE”) band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the DOE award of $173 million for spent nuclear fuel, which is expected to be received in 2022, in order to mitigate customer rates over the term of the Settlement. In return, Duke Energy Florida will be able to recognize the $173 million into earnings from 2022 through 2024.
In addition to these terms, the Settlement contains provisions related to the accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new cost effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and resiliency projects, among other things. The Settlement also resolves remaining unrecovered storm costs for hurricanes Dorian and Michael.
The Settlement is subject to the review and approval of the FPSC, which may occur in the second quarter of 2021. If the FPSC approves the Settlement, the new rates will be effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024. Duke Energy Florida cannot predict the outcome of this matter.
Storm Restoration Cost Recovery
Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane IrmaMichael, consistent with the provisions in the 2017 Settlement, and Hurricane Nate and to replenish the storm reserve. On February 6, 2018, the FPSC approved a stipulation that would applythe petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act towardto recover these storm costs effective January 2018 in lieu of implementing a storm surcharge. StormApproved storm costs are currently expected to be fully recovered by approximately mid-2021.year-end 2021. On May 31, 2018,November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs and associated recovery process related to Hurricane Irma and Hurricane Nate. The petition is seeking the approval for the recoveryMichael in the amount of $510$191 million inplus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs including the replenishment of Duke Energy Florida’s storm reserve of $132related to Hurricane Michael by approximately $3 million, and the process for recovering theseresulting in a total request to recover $188 million actual retail recoverable storm costs.restoration costs, plus interest. On August 20, 2018, the FPSC approved Duke Energy Florida's unopposed Motion for Continuance filed August 17, 2018, to allow for an evidentiary hearing in this matter. On January 28, 2019,November 12, 2020, Duke Energy Florida madeand OPC requested a supplemental filing90 day abatement to reduceengage in discussions to narrow the total storm cost recovery from $510 million to $508 million.issues being litigated. The commission has scheduled the hearing to beginPrehearing Officer approved this request on May 21, 2019. At December 31, 2018,November 16, 2020, and ordered Duke Energy Florida's Consolidated Balance Sheets included approximately $217Florida and OPC to update the commission on their discussions by February 12, 2021. Approximately $80 million and $204 million of recoverablethese costs under the FPSC's storm ruleare included in Regulatory assets within Current Assets and Other Noncurrent Assets related to storm recovery for Hurricane Irma and Hurricane Nate. Duke Energy Florida cannot predict the outcome of this matter.

155



FINANCIAL STATEMENTSREGULATORY MATTERS


In October 2018, Duke Energy Florida’s service territory suffered damage when Hurricane Michael made landfall as a strong Category 4 hurricane with maximum sustained winds of 155 mph. The storm caused catastrophic damage from wind and storm surge, particularly from Panama City Beach to Mexico Beach, resulting in widespread outages and significant damage to transmission and distribution facilities across the central Florida Panhandle. In response to Hurricane Michael, Duke Energy Florida restored service to approximately 72,000 customers. Duke Energy Florida incurred approximately $200 million of costs resulting from the hurricane restoration efforts. Approximately $35 million of the costs are included in Net property, plant and equipment on the Consolidated Balance Sheets as of December 31, 2018. The remaining $165 million of costs represent recoverable costs under the FPSC’s storm rule and Duke Energy Florida's Open Access Transmission Tariff formula rates and are included in Regulatory assets within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2018. 2020, and December 31, 2019, respectively.
Duke Energy Florida anticipates filingfiled a petition with the FPSC in the first half ofon December 19, 2019, to recover these$169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement. and the FPSC approved the petition on February 24, 2020. Approximately $167 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2019, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates. The amount at December 31, 2020 was immaterial. The final actual amount of $145 million was filed on September 30, 2020. Pursuant to the 2021 Settlement Agreement filed for FPSC approval on January 14, 2021, all matters regarding storm cost recovery relating to hurricanes Michael and Dorian have been resolved.
Clean Energy Connection
On July 1, 2020, Duke Energy Florida cannot predictpetitioned the outcomeFPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost-effective solar development in Florida by paying a subscription fee based on per kilowatt-subscriptions and receiving a credit on their bill based on the actual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next four years, and this matter.investment will be included in base rates offset by the revenue from the subscription fees. The credits will be included for recovery in the fuel cost recovery clause. A remote hearing was held on November 17, 2020, and post-hearing briefs were filed with the FPSC from all parties by December 9, 2020. The FPSC voted to approve the program on January 5, 2021, and issued its written order on January 26, 2021.
Tax ActCrystal River Unit 3 Accelerated Decommissioning Filing
Pursuant to Duke Energy Florida's 2017 Settlement, onOn May 31, 2018,29, 2019, Duke Energy Florida filedentered into a petition related toDecommissioning Services Agreement for the Tax Act, which included revenue requirement impacts of annual tax savings of $134 million and estimated annual amortization of EDIT of $67 million for a total of $201 million. Of this amount, $50 million would be offset by accelerated depreciationdecommissioning of Crystal River 4Unit 3 located in Citrus County, Florida, with ADP CR3, LLC and 5 coal unitsADP SF1, LLC, each of which is a wholly owned subsidiary of Accelerated Decommissioning Partners, LLC (ADP), a joint venture between NorthStar Group Services, Inc. and an estimated $151 million would be offset by Hurricane Irma storm cost recovery as explained in the Storm Restoration Cost Recovery section above. On December 27, 2018, Duke Energy Florida filed actual EDIT balances and amortization based on its 2017 filed tax return. This increased the revenue requirement impactOrano USA LLC. The agreement will allow for completion of the amortizationdecommissioning of EDITCrystal River Unit 3 by $4 million, from $67 million to $71 million. On January 8, 2019, the FPSC approved a joint motion by Duke Energy Florida and the Office of Public Counsel resolving all stipulated positions. As part of that stipulation,2027, rather than 2074 as originally planned. Duke Energy Florida will seek a Private Letter Ruling fromalso sell and assign the IRS on its treatment of COR as mostly protected by tax normalization rules. If the IRS rules that COR is not protected by tax normalization rules, thenspent nuclear fuel, storage canisters, high-level waste and existing dry spent fuel storage installation and certain related assets, together with certain associated liabilities and obligations to ADP SF1, LLC. Duke Energy Florida expects that the assets of the Nuclear Decommissioning Trust Fund as of December 31, 2020, will make a final adjustmentbe sufficient to cover the amortization of EDITcontract price. The U.S. Nuclear Regulatory Commission approved the transaction on April 1, 2020, and the FPSC issued an adjustment toorder approving the storm recovery amount retroactive to January 2018. Duke Energy Florida cannot predict the outcome of this matter.transaction on August 27, 2020. The transaction closed on October 1, 2020.
153



FINANCIAL STATEMENTSREGULATORY MATTERS
Citrus County CC
On October 2, 2014,Construction of the FPSC granted Duke Energy Florida a Determination of Need for the construction of a 1,640-MW combined-cycle natural gas plant in Citrus County, Florida. At that time, theFlorida, began in October 2015 with an estimated cost of the facility was $1.5 billion, including AFUDC. On May 5, 2015,Both units came online in the Florida Departmentfourth quarter of Environmental Protection approved Duke Energy Florida's Site Certification Application and construction began in October 2015. On July 10, 2018, the FPSC approved Duke Energy Florida's request to include the annual revenue requirement of $200 million for the new Citrus County combined-cycle units in base rates. The first 820-MW power block came on-line on October 26, 2018, and the rate increase for this unit was effective in December 2018. The second 820-MW power block came on-line November 24, 2018. The rate increase for the second unit was effective in January 2019. The ultimate cost of the facility iswas estimated to be $1.6 billion, and Duke Energy Florida recorded Impairment charges on Duke Energy’s Consolidated Statements of Operations of $60 million in the fourth quarter of 2018 for the overrun, which may changeoverrun. In the year ended December 31, 2019, Duke Energy Florida recorded a $36 million reduction to the prior year impairment due to a decrease in lightthe cost estimate of recoveries fromthe Citrus County CC, primarily related to the settlement agreement with Fluor, the EPC contractor. The plant began receiving natural gas fromThis adjustment reduced the Sabal Trail pipeline in August 2018. As a resultestimated cost of the combined-cycle natural gas plant coming on-line, Crystal River coal-fired units 1 and 2 were retired in December 2018. See Note 5 for additional information on Citrus.facility to $1.5 billion.
Solar Base Rate Adjustment
On July 31, 2018, Duke Energy Florida petitioned the FPSC to include in base rates the revenue requirements for its first two solar generation projects, the Hamilton Project and the Columbia Project, as authorized by the 2017 Settlement. The Hamilton Project, which was placed into service on December 22, 2018, has an annual retail revenue requirement of $15 million and the increase was effective in January 2019. The Columbia Project has a projected annual revenue requirement of $14 million and a projected in-service date in early 2020; the associated rate increase would take place with the first month’s billing cycle after the Columbia Project goes into service. At its October 30, 2018, Agenda Conference, the FPSC approved the rate increase related to the Hamilton Project to go into effect beginning with the first billing cycle in January 2019 under its file and suspend authority. Rates are subject to true up pending the outcome of the final hearing, which is scheduled to take place on April 2, 2019. Duke Energy Florida cannot predict the outcome of this matter.

156



FINANCIAL STATEMENTSREGULATORY MATTERS


Duke Energy Ohio
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Ohio's Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash$22 $16  Yes (b)
Accrued pension and OPEB149 155    (g)
Storm cost deferrals4 7   2023
PISCC and deferred operating expenses(c)
16 17  Yes2083
Hedge costs deferrals7 6   (b)
AMI36 40   (b)
DSM/EE1 2  (f)(e)
Vacation accrual6 5   2021
Deferred fuel and purchased power— 1   2021
CEP deferral117 76  Yes (b)
MGP104 102    (b)
Deferred pipeline integrity costs21 17  Yes (b)
Other166 154    (b)
Total regulatory assets649 598 
Less: current portion39 49 
Total noncurrent regulatory assets$610 $549 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes$628 $654 (b)
Costs of removal68 86 (d)
Provision for rate refunds45 31 (b)
Accrued pension and OPEB17 16 (g)
Other55 40 (b)
Total regulatory liabilities813 827 
Less: current portion65 64 
Total noncurrent regulatory liabilities$748 $763 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Recovery over the life of the associated assets.
(e)    Recovered via a rider mechanism.
(f)    Includes incentives on DSM/EE investments.
(g)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
154
 December 31, Earns/PaysRecovery/Refund
(in millions)2018
2017
 a ReturnPeriod Ends
Regulatory Assets(a)
     
AROs – coal ash$20
$17
 X(b)
Accrued pension and OPEB146
139
  (g)
Storm cost deferrals4
5
  2023
Hedge costs deferrals5
6
  (b)
DSM/EE10
18
 (f)(e)
Grid modernization31
39
 X(e)
Vacation accrual5
5
  2019
Deferred fuel and purchased power2
—
  2019
PISCC and deferred operating expenses(c)
17
19
 X2083
Transmission expansion obligation43
50
  (e)
MGP99
91
  (b)
AMI46
6
  (b)
East Bend deferrals47
45
 X(b)
Deferred pipeline integrity costs14
12
 X(b)
Other75
42
  (b)
Total regulatory assets564
494
   
Less: current portion33
49
   
Total noncurrent regulatory assets$531
$445
   
Regulatory Liabilities(a)
     
Costs of removal$126
$189
  (d)
Net regulatory liability related to income taxes678
688
  (b)
Accrued pension and OPEB18
16
  (g)
Other75
34
  (b)
Total regulatory liabilities897
927
   
Less: current portion57
36
   
Total noncurrent regulatory liabilities$840
$891
   



(a)FINANCIAL STATEMENTSRegulatory assets and liabilities are excluded from rate base unless otherwise noted.REGULATORY MATTERS
(b)The expected recovery or refund period varies or has not been determined.
(c)Included in rate base.
(d)Recovery over the life of the associated assets.
(e)Recovered via a rider mechanism.
(f)Includes incentives on DSM/EE investments.
(g)Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
Duke Energy Ohio COVID-19 Filings
In response to the COVID-19 pandemic, on March 9, 2020, Governor Mike DeWine declared a state of emergency in the state of Ohio. The PUCO issued an order directing utilities to cease disconnections for nonpayment and waive late payment and reconnection fees and to minimize direct customer contact. The PUCO also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response, Duke Energy Ohio ceased all disconnections except for safety-related concerns and waived late payment and reconnection fees. On March 19, 2020, Duke Energy Ohio filed its compliance plan with the PUCO and sought waiver of several regulations to minimize direct customer contact. On May 4, 2020, Duke Energy Ohio filed a motion to suspend payment rules to enable proactive outreach to residential customers offering additional options for managing their utility bills. PUCO found the proposal to address the state of emergency and the accompanying waivers reasonable and directed Duke Energy Ohio to work with the PUCO Staff on a comprehensive plan for resumption of activities and operations, to be filed 45 days before resumption of activities. The transition plan to resume normal operations to pre-COVID-19 levels was filed on June 26, 2020, and approved by the PUCO on July 29, 2020. Pursuant to the transition plan, suspended work and activities resumed beginning August 10, 2020, and disconnections resumed on September 8, 2020, for nonresidential customers and October 5, 2020, for residential customers.
On April 16, 2020, Duke Energy Ohio filed an application for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. On June 17, 2020, the PUCO denied Duke Energy Ohio's application for a reasonable arrangement and ordered Duke Energy Ohio to work with the PUCO Staff on payment arrangements for impacted nonresidential customers.
On May 11, 2020, Duke Energy Ohio filed with the PUCO a request seeking deferral of incremental costs incurred, as well as specific miscellaneous lost revenues using existing uncollectible riders already in place for both electric and natural gas operations. Duke Energy Ohio would subsequently file for rider recovery at a later date. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application. The Commission denied the accrual of carrying costs and ordered Duke Energy Ohio to also track potential savings experienced as a result of COVID-19.
Duke Energy Kentucky COVID-19
In response to the COVID-19 pandemic, on March 6, 2020, Governor Andy Beshear declared a state of emergency in the commonwealth of Kentucky. The KPSC issued an order directing utilities to cease disconnections for nonpayment and waive late payment fees. The KPSC also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response, Duke Energy Kentucky ceased all disconnections except for safety-related concerns and waived late payment and reconnection fees. On September 21, 2020, the KPSC issued an order ending the disconnection moratorium for residential and nonresidential customers effective no earlier than October 20, 2020. Utilities are required to offer residential customers a default payment plan for any arrearages accumulated through the October 2020 billing cycle. Assessment of late payment charges for nonresidential customers resumed beginning October 20, 2020, and resumed for residential customers after December 31, 2020. Duke Energy Kentucky is following the order, as clarified on September 30, 2020, by the KPSC.
2017 Electric Security Plan Filing
On June 1, 2017, Duke Energy Ohio filed with the PUCO a request for a standard service offer in the form of an ESP. On February 15, 2018, the procedural schedule was suspended to facilitate ongoing settlement discussions. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases currently pending before the PUCO, including, but not limited to, its Electric Base Rate Case. Additionally, on April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving certain issues in this proceeding. Thethat the term of the ESP would be from June 1, 2018, to May 31, 2025, and includesincluded continuation of market-based customer rates through competitive procurement processes for generation, continuation and expansion of existing rider mechanisms and proposedapproved new rider mechanisms relating to regulatory mandates, costs incurred to enhance the customer experience and transform the grid and a service reliability rider for vegetation management. The Stipulation establishes a regulatory model forOn September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the next seven years viaOhio Consumers' Counsel (OCC), respectively, filed appeals to the approvalSupreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the ESP and continues the current model for procuring supply for non-shopping customers, including recovery mechanisms. OnPUCO's December 19, 2018 order approving the PUCO approved the Stipulation without material modification. Several parties have filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. Duke Energy Ohio cannot predict the outcome of this matter.

157



FINANCIAL STATEMENTSREGULATORY MATTERS


Stipulation. The case has been resolved.
Electric Base Rate Case
Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio requested an estimated annual increase of approximately $15 million and a return on equity of 10.4 percent. The application also included requests to continue certain current riders and establish new riders. On September 26, 2017, the PUCO staff filed a report recommending a revenue decrease between approximately $18 million and $29 million and a return on equity between 9.22 percent and 10.24 percent. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases pending before the PUCO.10.4%. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the Stipulation with the PUCO resolving numerous issues including those in this base rate proceeding. Major components of the Stipulation related to the base distribution rate case include a $19$19 million decrease in annual base distribution revenue with a return on equity unchanged from the current rate of 9.84 percent9.84% based upon a capital structure of 50.75 percent50.75% equity and 49.25 percent49.25% debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation endsended as these costs willwould be recovered through base rates. The Stipulation also renewsrenewed 14 existing riders, some of which were included in the company'sDuke Energy Ohio's ESP, and addsadded two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10$10 million per year (operation and maintenance only) and the Power Future Initiatives Rider (formerly PowerForward RiderRider) to recover costs incurred to enhance the customer experience and further transform the grid (operation and maintenance and capital). In addition to the changes in revenue attributable to the Stipulation, Duke Energy Ohio’s capital-related riders, including the Distribution Capital Investments Rider, began to reflect the lower federal income tax rate associated with the Tax Act with updates to customers’ bills beginning April 1, 2018. This change reducesreduced electric revenue by approximately $20$20 million on an annualized basis. On December 19, 2018, the PUCO approved the Stipulation without material modification. New base rates were implemented effective January 2, 2019. Several parties haveOn September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC, respectively, filed applications for rehearing.appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On February 6, 2019,March 13, 2020, the PUCO grantedSupreme Court of Ohio dismissed the parties rehearing. Duke EnergyOCC's appeal. On April 22, 2020, the Supreme Court of Ohio cannot predictdismissed all remaining appeals of the outcome of this matter.PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.
155



FINANCIAL STATEMENTSREGULATORY MATTERS
Ohio Valley Electric Corporation
On March 31, 2017, Duke Energy Ohio filed for approval to adjust its existing price stabilization rider (Rider PSR), which is currently set at zero dollars,Rider PSR to pass through net costs related to its contractual entitlement to capacity and energy from the generating assets owned by OVEC. Duke Energy Ohio sought deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR arewere put into effect. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases currently pending before the PUCO. Also on April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation with the PUCO resolving numerous issues including those related to Rider PSR. The Stipulation activatesactivated Rider PSR for recovery of net costs incurred from January 1, 2018, through May 2025. On December 19, 2018, the PUCO approved the Stipulation without material modification. Several parties haveThe PSR rider became effective April 1, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC filed applicationsappeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.
On July 23, 2019, House Bill 6 (HB 6) was signed into law that became effective January 1, 2020. Among other things, the bill allows for rehearing. On February 6, 2019,funding through a rider mechanism referred to as the Clean Air Fund (Rider CAF), of two nuclear generating facilities located in Northern Ohio owned by Energy Harbor (f/k/a FirstEnergy Solutions), repeal of energy efficiency mandates and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery is through a non-bypassable rider that replaced any existing recovery mechanism approved by the PUCO granted the parties rehearing.and will remain in place through 2030. As such, Duke Energy Ohio cannot predictcreated the outcome of this matter.Legacy Generation Rider (Rider LGR) that replaced Rider PSR effective January 1, 2020. The amounts recoverable from customers are subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 17 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. In July 2020, legislation to repeal HB 6 was proposed in both the Ohio House and Senate, with subsequent hearings to receive witness testimony. On December 21, 2020, the Franklin County Circuit Court issued an injunction against the PUCO’s Order that approved the nuclear plant funding through Rider CAF set to become effective on January 1, 2021. On December 28, 2020, in a separate proceeding, the Ohio Supreme Court, ordered a temporary stay on the implementation of Rider CAF. Duke Energy Ohio is not impacted by any changes in Rider CAF. The General Assembly’s session ended without addressing HB 6. Duke Energy Ohio cannot predict the outcome of this matter.
Tax Act – Ohio
On July 25, 2018, Duke Energy Ohio filed an application to establish a new rider to implement the benefits of the Tax Act for electric distribution customers. Duke Energy Ohio requested commission approval to implement the rider effective October 1, 2018, as a credit to all distribution customers based upon a percent reduction to Duke Energy Ohio’s distribution rates. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from 35 to 21 percent since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. Duke Energy Ohio's transmission rates reflect lower federal income tax but guidance from FERC on amortization of both protected and unprotected transmission-related EDITs is still pending. On October 24, 2018, the PUCO issued a Finding and Order that, among other things, directed all utilities over which the commission has rate-making authority to file an application to pass the benefits of the Tax Act to customers by January 1, 2019, unless otherwise exempted or directed by the PUCO. Duke Energy Ohio's July 25, 2018, filing for electric distribution operations is consistent with the commission's October 24, 2018, Finding and Order and no further action is needed. On February 20, 2019, the PUCO approved the application without material modification. Rates will be effective March 1, 2019. On December 21, 2018, Duke Energy Ohio filed an application to change its base ratesrate tariffs and establish a new rider to implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio requested commission approval to implement the changes and rider effective April 1, 2019. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from 3535% to 21 percent21% since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO has not yet ruledestablished a procedural schedule and testimony was filed on the application for changes for natural gas customers.July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. Duke Energy Ohio cannot predict the outcome of this matter.
Energy Efficiency Cost Recovery
On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 28, 2014,27, 2020, Duke Energy Ohio filed an Application for Rehearing seeking clarification on the final true up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing for further consideration. The PUCO issued two orders on November 18, 2020, on the application for rehearing. The first order was a Third Entry on Rehearing on the Duke Energy Ohio portfolio holding the cost cap previously imposed was unlawful, a shared savings cap of $8 million pretax should be imposed and lost distribution revenues could not be recovered after December 31, 2020. The second order directs all utilities set the rider to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020. On December 18, 2020, Duke Energy Ohio filed an application for recovery of program costs, lost distribution revenue and performance incentives related to its energy efficiency and peak demand reduction programs. These programs are undertaken to comply with environmental mandates set forth in Ohio law. The PUCO approved Duke Energy Ohio’s application but found that Duke Energy Ohio was not permitted to use banked energy savings from previous years in order to calculate the amount of allowed incentive. This conclusion represented a change to the cost recovery mechanism that had been agreed upon by intervenors and approved by the PUCO in previous cases. The PUCO granted the applications for rehearing filed by Duke Energy Ohio and an intervenor.rehearing. On January 6, 2016, Duke Energy Ohio and13, 2021, the PUCO Staff entered into a stipulation, pending the PUCO's approval, to resolve issues related to performance incentives and the PUCO Staff audit of 2013 costs, among other issues. In December 2015, based upon the stipulation, Duke Energy Ohio re-established approximately $20 million of the revenues that had been previously reversed. On October 26, 2016, the PUCO issued an order approving the stipulation without modification. In December 2016, the PUCO granted the intervenors request for rehearing for the purpose of further review. Duke Energy Ohio cannot predict the outcome of this matter.

158



FINANCIAL STATEMENTSREGULATORY MATTERS


On June 15, 2016, Duke Energy Ohio filed an application for approval of a three-year energy efficiency and peak demand reduction portfolio of programs. A stipulation and modified stipulation were filed on December 22, 2016, and January 27, 2017, respectively. Under the terms of the stipulations, which included support for deferral authority of all costs and a cap on shared savings incentives, Duke Energy Ohio has offered its energy efficiency and peak demand reduction programs throughout 2017. On February 3, 2017, Duke Energy Ohio filed for deferral authority of its costs incurred in 2017 in respect of its proposed energy efficiency and peak demand reduction portfolio. On September 27, 2017, the PUCO issued an order approving a modified stipulation. The modifications impose an annual cap of approximately $38 million on program costs and shared savings incentives combined, but allowed for Duke Energy Ohio to file for a waiver of costs in excess of the cap in 2017. The PUCO approved the waiver request for 2017 up to a total cost of $56 million. On November 21, 2017, the PUCO granted Duke Energy Ohio's and intervenor's applications for rehearing of the September 27, 2017, order. On January 10, 2018, the PUCO denied the Ohio Consumers' Counsel’s application for rehearing of the PUCO order granting Duke Energy Ohio's waiver request; however, a decision on Duke Energy Ohio's application for rehearing remains pending. Duke Energy Ohio cannot predict the outcome of this matter.
2014 Electric Security Plan
In April 2015, the PUCO modified and approved Duke Energy Ohio's proposed ESP, with a three-year term and an effective date of June 1, 2015. The PUCO approved a competitive procurement process for SSO load, a distribution capital investment rider (Rider DCI) and a tracking mechanism for incremental distribution expenses caused by major storms. The PUCO also approved a placeholder tariff for a price stabilization rider, but denied Duke Energy Ohio's specific request to include Duke Energy Ohio's entitlement to generation from OVEC in the rider at this time; however, the order allows Duke Energy Ohio to submit additional information to request recovery in the future. On May 4, 2015, Duke Energy Ohio filed an application for rehearing requesting the PUCO to modify or amend certain aspects of the order. On May 28, 2015, the PUCOwas granted all applications for rehearing filed in the case for future consideration. On March 21, 2018, the PUCO issued an order denying Duke Energy Ohio's issues on rehearing. On April 20, 2018, Duke Energy Ohio filed a second application for rehearing based upon the commission’s March 21, 2018, Order. On May 16, 2018, the commission issued its third Entry on Rehearing granting in part, and denying in part, Duke Energy Ohio’s rehearing request.
On March 9, 2018, Duke Energy Ohio filed a motion to extend its then-current ESP, including all terms and conditions thereof, pending approval of a new ESP. On May 30, 2018, the PUCO granted the request, with modification. Specifically, the PUCO did not extend the cap applicable to Rider DCI beyond July 31, 2018. Duke Energy Ohio sought rehearing of this finding. On July 25, 2018, the PUCO granted the request and allowed a continuing cap on recovery under Rider DCI. On August 24, 2018, OMA and OCC filed an Application for Rehearing of the commission's decision. Duke Energy Ohio filed a Memorandum Contra OCC's request for rehearing of the commission's continuation of Rider DCI on September 4, 2018. On September 19, 2018, the PUCO issued an Order granting rehearing on the matter for further consideration. Duke Energy Ohio cannot predict the outcome of this matter.
On May 21, 2018, the Ohio Manufacturers' Association (OMA) filed a notice of appeal of PUCO's approval of Duke Energy Ohio’s ESP with the Ohio Supreme Court, challenging PUCO's approval of Duke Energy Ohio’s Price Stability Rider as a placeholder and its Rider DCI to recover incremental revenue requirement for distribution capital since Duke Energy Ohio’s last base rate case. On July 16, 2018, the Office of the Ohio Consumers' Counsel (OCC) filed its own appeal of Duke Energy Ohio’s ESP with the Ohio Supreme Court raising similar issues to that of the OMA.October 9, 2020, Duke Energy Ohio filed an application to implement a Motionvoluntary efficiency program portfolio to Intervene in the two Ohio Supreme Court appeals. OMA's Supreme Court brief was filedcommence on August 20, 2018. PUCO submitted its brief on October 26, 2018,January 1, 2021. The application proposes a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review. As of January 1, 2021, Duke Energy Ohio filedsuspended its brief on October 29, 2018. The OCC’s Supreme Court brief was filed on October 15, 2018. Duke Energyenergy efficiency programs due to changes in Ohio filed its brief on December 20, 2018. The PUCO submitted its brief on December 21, 2018.law. Duke Energy Ohio cannot predict the outcome of this matter.
156



FINANCIAL STATEMENTSREGULATORY MATTERS
Natural Gas Pipeline Extension
Duke Energy Ohio is proposing to install a new natural gas pipeline (the Central Corridor Project) in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. Duke Energy Ohio currently estimates the pipeline development costs and construction activities will range from $163$163 million to $245$245 million in direct costs (excluding overheads and AFUDC). On January 20, 2017, Duke Energy Ohio filed an amended application with the Ohio Power Siting Board (OPSB) for approval of one of two proposed routes. A public hearing was held on June 15, 2017. In April 2018, Duke Energy Ohio filed a motion with OPSB to establish a procedural schedule and filed supplemental information supporting its application. On December 18, 2018, the OPSB established a procedural schedule that includes a local public hearing on March 21, 2019, and an evidentiary hearing starting on April 9, 2019. If approved, construction of the pipeline extension is expected to be completed before the 2021/2022 winter season. An evidentiary hearing for a Certificate of Environmental Compatibility and Public Need concluded on April 11, 2019. On November 21, 2019, the Ohio Power Siting Board (OPSB) approved Duke Energy Ohio's application subject to 41 conditions on construction. Applications for rehearing were filed by several stakeholders on December 23, 2019, arguing that the OPSB approval was incorrect. On February 20, 2020, the OPSB denied the rehearing requests. On April 15, 2020, Joint Appellants filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor application. On June 4, 2020, the OPSB filed a motion to dismiss claims raised by one of the Joint Appellants and on August 5, 2020, the Supreme Court of Ohio dismissed one of the Joint Appellants from the appeal. Joint Appellants filed their merit briefs on August 26, 2020. Appellee briefs were filed October 15, 2020. Appellants' briefs were filed on November 24, 2020. On September 22, 2020, Duke Energy Ohio filed an application with the OPSB for approval to amend the certificated pipeline route due to changes in the route negotiated with property owners and municipalities. The staff report was filed on December 21, 2020, recommending approval subject to three conditions that reaffirm previous conditions, and provide guidance regarding local permitting and construction supervision.. On December 23, 2020, Duke Energy Ohio filed a letter indicating its acceptance of these conditions if required by the OPSB. On January 21, 2021, the OPSB approved the amended filing with the recommended conditions. On January 27, 2021, the Ohio Supreme Court set oral argument for March 31, 2021. Duke Energy Ohio cannot predict the outcome of this matter.
2012 Natural Gas Rate Case/MGP Cost Recovery
On November 13, 2013, the PUCO issued an order approving a settlementAs part of Duke Energy Ohio’sits 2012 natural gas base rate case, Duke Energy Ohio has approval to defer and authorizing the recovery ofrecover costs related to environmental remediation at two sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs incurred between 20082009 through 2012 through Rider MGP, which is currently suspended. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas base rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2019. On September 28, 2018, the staff of the PUCO issued a report recommending a disallowance of approximately $12 million of the $26 million in MGP remediation costs incurred between 2013 through 2017 that staff believes are not eligible for recovery. Staff interprets the PUCO’s 2012 Order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and 2012West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the staff’s recommendations and explaining, among other things, the obligation Duke Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for environmentalthe calendar year 2018 seeking recovery of approximately $20 million in remediation costs. On July 12, 2019, the staff recommended a disallowance of approximately $11 million for work that staff believes occurred in areas not authorized for recovery. Additionally, staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.
On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. On July 23, 2020, the staff recommended a disallowance of approximately $4 million for work the staff believes occurred in areas not authorized for recovery. Additionally, the staff recommended insurance proceeds, net of litigation costs and attorney fees, should be reimbursed to customers and not be held by Duke Energy Ohio until all investigation and remediation of two former MGP sites. The PUCO order also authorizedis complete. Duke Energy Ohio to continue deferring MGP environmental investigation and remediation costs incurred subsequent to 2012 and to submit annual filings to adjust the MGP rider for future costs. Intervening parties appealed this decisionfiled comments in response to the staff report on August 21, 2020, and intervenor comments were filed on November 9, 2020. Duke Energy Ohio Supreme Court and on June 29, 2017,cannot predict the Ohio Supreme Court issued its decision affirming the PUCO order. Appellants filed a request for reconsideration, which was denied on September 27, 2017. This matter is now final.outcome of this matter.
The 2012 PUCO order also contained conditional deadlines for completing the MGP environmental investigationremediation and the deferral of remediation costs at the MGP sites. As ofSubsequent to the order, the deadline was extended to December 31, 2018,2019. On May 10, 2019, Duke Energy Ohio had approximately $24 millionfiled an application requesting a continuation of its existing deferral authority for futureMGP remediation costs expected to be incurred atthat must occur after December 31, 2019. On July 12, 2019, staff recommended the East End siteCommission deny the deferral authority request. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and approximately $23 million for future remediation costs expected to be incurred aton October 2, 2019, Duke Energy Ohio filed reply comments. Duke Energy Ohio cannot predict the West End site included in Regulatory assets within Other Noncurrent Assets on the Consolidated Balance Sheets.

159



FINANCIAL STATEMENTSREGULATORY MATTERS


outcome of this matter.
Duke Energy Kentucky Electric Base Rate Case
On September 1, 2017,3, 2019, Duke Energy Kentucky filed a rate case with the KPSC requesting an increase in electric base rates of approximately $49 million, which represents an approximate 15 percent increase on the average customer bill. Subsequent to the filing,$46 million. On January 31, 2020, Duke Energy Kentucky adjustedfiled rebuttal testimony updating its rate increase request to approximately $44 million. Hearings concluded on February 20, 2020, and briefing was completed March 20, 2020. On April 27, 2020, the requested amount to $30.1KPSC issued its decision approving a $24 million, increase for Duke Energy Kentucky with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky filed its motion for rehearing and on June 4, 2020, the motion was granted in part to reflectand denied in part by the benefits of the Tax Act, representing an approximate 9 percent increase on the average customer bill. The rate increase was driven by increased investment in utility plant, increased operations and maintenance expenses and recovery of regulatory assets. The application also includes requests to implement an Environmental Surcharge Mechanism to recover environmental costs not recovered in base rates, to establish a Distribution Capital Investment Rider to recover incremental costs of specific programs, to establish a FERC Transmission Cost Reconciliation Rider to recover escalating transmission costs and to modify existing Profit Sharing Mechanism to increase customers' share of proceeds from the benefits of owning generation and to mitigate shareholder risks associated with that generation. An evidentiary hearing concluded on March 8, 2018, andKPSC. On October 16, 2020, the KPSC issued an orderOrder on April 13, 2018. Major components of the Order include approval ofRehearing authorizing an $8additional $4 million increase in base rates with a return on equity at 9.725 percent based upon a capital structure of 49 percent equity on a total allocable capitalization of approximately $650 million. The Order approved the Environmental Surcharge Mechanism Rider and in June 2018 recovery began of capital-related environmental costs, including costs related to ash and ash disposal, and environmental operation and maintenance expenses formerly recovered in base rates, including expenses for environmental reagents and emission allowances. The incremental revenue from this rider will be approximately $13 million on an annualized basis. The order settles all issues associated with the Tax Act as it relates to the electric business by lowering the income tax component of the revenue requirement and refunding protected EDIT under allowable normalization rules and unprotected EDIT over 10 years.bringing the total authorized revenue requirement increase to $28 million. Revised customer rates took effect in November 2020. The Order denied requests to implement riders for certain transmission costs and distribution capital investments. Duke Energy Kentucky implemented new base rates on May 1, 2018. On May 3, 2018, Duke Energy Kentucky filed an application for rehearing on certain aspects of the order; on May 23, 2018, the KPSC granted a rehearing. On October 2, 2018, the KPSC issued its rehearing order correcting certain findings in its initial order and making additional changes that are immaterial to the company's earnings.
Duke Energy Kentucky Natural Gas Base Rate Case
On August 31, 2018, Duke Energy Kentucky filed an application with the KPSC requesting an increase in natural gas base rates of approximately $11 million, an approximate 11.1 percent average increase across all customer classes. The increase is net of approximately $5 million in annual savings as a result of the Tax Act. The drivers for this case are capital invested since Duke Energy Kentucky’s last rate case in 2009. Duke Energy Kentucky is also seeking implementation of a Weather Normalization Adjustment Mechanism, amortization of regulatory assets and to implement the impacts of the Tax Act, prospectively. On January 30, 2019, Duke Energy Kentucky entered into a settlement agreement with the Attorney General of Kentucky, the only intervenor in the case, which if approved would resolve the matter. The settlement provides for an approximate $7 million increase and approval of the proposed Weather Normalization Mechanism. A hearing was held on February 5, 2019. A ruling is expected in late first quarter 2019. Duke Energy Kentucky cannot predict the outcome of this matter.
FERC 494 Refund of Regional Transmission Enhancement Projects
FERC Order No. 494 Settlement Agreement (FERC 494 Settlement Agreement) was entered into by most of the PJM transmission owners, including Duke Energy Ohio and Duke Energy Kentucky, and the PJM state regulatory commissions approximately two years ago and was planned to be effective on January 1, 2016; however, it was not approved by FERC until May 31, 2018. The FERC 494 Settlement Agreement was due to the Seventh Circuit Court of Appeals finding that FERC had failed to adequately justify the costs that the customers in the western part of PJM were being charged for high voltage transmission projects, or Regional Transmission Expansion Plan (RTEP) projects (500 kV and above) built in the east. These costs were being allocated to all PJM customers on a load-ratio share basis but the court determined that these costs were not justifiable to customers in the west, including Duke Energy Ohio and Duke Energy Kentucky, that did not benefit from the RTEP projects. Costs for the periods 2012 through 2015 are expected to be refunded to Duke Energy Ohio and Duke Energy Kentucky on a monthly basis through December 2025. The refund amount for similar costs incurred beginning in 2016 through June 30, 2018, prior to the change in cost allocation by PJM was determined in the third quarter of 2018 and these amounts will be refunded over a 12-month period beginning in July 2018. These refunds, totaling approximately $47 million for Duke Energy Ohio and Duke Energy Kentucky, havehas been recorded to Operation, maintenance and other on the Consolidated Statements of Operations for the year ended December 31, 2018.resolved.
Regional Transmission Organization Realignment
Duke Energy Ohio, including Duke Energy Kentucky, transferred control of its transmission assets from MISO to PJM, effective December 31, 2011. The PUCO approved a settlement related to Duke Energy Ohio’s recovery of certain costs of the RTO realignment via a non-bypassable rider. Duke Energy Ohio is allowed to recover all MTEPMISO Transmission Expansion Planning (MTEP) costs directly or indirectly charged to Ohio customers. The KPSC also approved a request to effect the RTO realignment, subject to a commitment not to seek double recovery in a future rate case of the transmission expansion fees that may be charged by MISO and PJM in the same period or overlapping periods.
157



FINANCIAL STATEMENTSREGULATORY MATTERS
The following table provides a reconciliation of the beginning and ending balance of Duke Energy Ohio’s recorded liability for its exit obligation and share of MTEP costs recorded in Other within Current Liabilities and Other Noncurrent Liabilities on the Consolidated Balance Sheets. The retail portions of MTEP costs billed by MISO are recovered by Duke Energy Ohio through a non-bypassable rider. As of December 31, 2018,2020, and 2017, $432019, $37 million and $50$40 million,, respectively, are recorded in Regulatory assets on Duke Energy Ohio's Consolidated Balance Sheets.
  Provisions/
 Cash
  Provisions/Cash
(in millions)December 31, 2017
 Adjustments
 Reductions
 December 31, 2018
(in millions)December 31, 2019AdjustmentsReductionsDecember 31, 2020
Duke Energy Ohio$66
 $(4) $(4) $58
Duke Energy Ohio$54 $(1)$(3)$50 

160



FINANCIAL STATEMENTSREGULATORY MATTERS


Duke Energy Indiana
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Indiana's Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash$615 $529 Yes(b)
Accrued pension and OPEB245 243 (e)
Retired generation facilities(c)
43 49 Yes2030
PISCC and deferred operating expenses(c)
303 246 Yes(b)
Hedge costs deferrals22 23 (b)
AMI19 18 2031
Vacation accrual12 12 2021
Deferred fuel and purchased power9 — 2021
Other60 52 (b)
Total regulatory assets1,328 1,172 
Less: current portion125 90 
Total noncurrent regulatory assets$1,203 $1,082 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes$956 $1,008 (b)
Costs of removal599 599 (d)
Accrued pension and OPEB100 90 (e)
Amounts to be refunded to customers17 — (b)
Other66 43 (b)
Total regulatory liabilities1,738 1,740 
Less: current portion111 55 
Total noncurrent regulatory liabilities$1,627 $1,685 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Refunded over the life of the associated assets.
(e)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
COVID-19 Filing
In response to the COVID-19 pandemic, on March 6, 2020, Governor Eric Holcomb declared a public health disaster emergency in the state of Indiana, which is currently still in effect. At that time, Duke Energy Indiana had already voluntarily suspended all disconnections and waived late payment fees and check return fees. The utility also waived credit card fees for residential customers. The Executive Order requiring utilities in the state to suspend disconnection of utility service expired July 1, 2020.
158
 December 31, Earns/PaysRecovery/Refund
(in millions)2018
2017
 a ReturnPeriod Ends
Regulatory Assets(a)
     
AROs – coal ash$450
$380
  (b)
Accrued pension and OPEB222
197
  (f)
Retired generation facilities(c)
57
65
 X2026
Hedge costs deferrals24
25
  (b)
DSM/EE14
21
 (e)(e)
Vacation accrual11
11
  2019
Deferred fuel and purchased power40
18
  2019
PISCC and deferred operating expenses(c)
233
274
 X(b)
AMI(c)
18
21
 X(b)
Other88
131
  (b)
Total regulatory assets1,157
1,143
   
Less: current portion175
165
   
Total noncurrent regulatory assets$982
$978
   
Regulatory Liabilities(a)
     
Costs of removal$628
$644
  (d)
Net regulatory liability related to income taxes1,009
998
  (b)
Amounts to be refunded to customers1
10
  2019
Accrued pension and OPEB67
64
  (f)
Other42
31
  (b)
Total regulatory liabilities1,747
1,747
   
Less: current portion25
24
   
Total noncurrent regulatory liabilities$1,722
$1,723
   



(a)FINANCIAL STATEMENTSRegulatory assets and liabilities are excluded from rate base unless otherwise noted.REGULATORY MATTERS
(b)The expected recovery or refund period varies or has not been determined.
(c)Included in rate base.
(d)Recovery over the life of the associated assets.
(e)Includes incentives on DSM/EE investments and is recovered through a tracker mechanism over a two-year period.
(f)Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
FERC Transmission Return on Equity Complaint
Customer groups have filed with the FERC complaints against Midcontinent Independent System Operator, Inc. (MISO) and its transmission-owning members, includingOn May 8, 2020, Duke Energy Indiana, alleging, amongalong with other things, thatIndiana utilities, filed a request with the current base rateIURC for approval of return on equity earned by MISO transmission owners of 12.38 percent is unjustdeferral treatment for costs and unreasonable.revenue reductions associated with the COVID-19 pandemic. The complaints claim, among other things, that the current base rate of return on equity earned by MISO transmission owners should be reduced to 8.67 percent. On January 5, 2015, the FERC issued an order accepting the MISO transmission owners' adder of 0.50 percent to the base rate of return on equity based on participationutilities requested initial deferral approval in an RTO subject to it being applied to a return on equity that is shownJuly 2020, with individual subdockets for each utility to be justestablished for consideration of utility-specific cost and reasonable in the pending return on equity complaints. On December 22, 2015, the presiding FERC ALJ in the first complaint issued an Initial Decision in which the base rate of return on equity was set at 10.32 percent. On September 28, 2016, the Initial Decision in the first complaint was affirmed by FERC, but is subject to rehearing requests.revenue impacts, cost recovery timing and customer payment plans. On June 30, 2016,29, 2020, the presiding FERC ALJ in the second complaint issued an Initial Decision setting the base rate of return on equity at 9.70 percent. The Initial Decision in the second complaint is pending FERC review. On April 14, 2017, the U.S. Court of Appeals for the District of Columbia Circuit, in Emera Maine v. FERC, reversed and remanded certain aspects of the methodology employed by FERC to establish rates of return on equity. On October 16, 2018, FERCIURC issued an order in responsePhase 1 wherein it extended the disconnection moratorium for jurisdictional utilities until August 14, 2020, along with requiring six-month payment arrangements, waiver of late fees, reconnection fees, convenience fees and deposits. The IURC permitted jurisdictional utilities to use regulatory accounting for any impacts associated with the Emera remand proceeding proposingprohibition on utility disconnections, waiver or exclusion of certain utility fees (i.e., late fees, convenience fees, deposits, and reconnection fees), the use of expanded payment arrangements to aid customers, and for COVID-19 related uncollectible and incremental bad debt expense. The IURC did not permit recovery of lost revenues due to load reduction or carrying costs. In Phase 2 filings, individual utilities may choose to request regulatory accounting for other COVID-19 related operation and maintenance costs wherein evidence of the impact of any costs or offsetting savings can be presented and considered in an evidentiary hearing. On August 12, 2020, the IURC issued a new methodsupplemental order extending the requirement for determining whether an existing return on equity is unjustsix-month payment arrangements and unreasonable, and a new processwaiver of certain customer fees for determining a just and reasonable return on equity. On November 14, 2018, FERC directed parties toanother 60 days but did not extend the MISO complaints to file briefs on how the new process for determining return on equity proposed in the Emera proceeding should be applied to the complaints involving the MISO transmission owners’ return on equity. Initial briefs were filed on February 13, 2019, and reply briefs will be due April 10, 2019.disconnect moratorium. As such, Duke Energy Indiana currently believes these matters will not have a material impact on its results of operations, cash flows and financial position.

161



FINANCIAL STATEMENTSREGULATORY MATTERS


Benton County Wind Farm Dispute
On December 16, 2013, BCWF filed a lawsuit againstresumed service disconnections for nonpayment in mid-September 2020. Normal billing practices resumed in mid-October 2020, except that Duke Energy Indiana seeking damageshas committed to provide extended payment arrangements into 2021 and to waive credit card and pay station fees for past generation losses alleging Duke Energy Indiana violated its obligations under a 2006 PPA by refusing to offer electricity toresidential customers through the market at negative prices. Damage claims continue to increase during times that BCWF is not dispatched. Under 2013 revised MISO market rules, Duke Energy Indiana is required to make a price offer to MISO for the power it proposes to sell into MISO markets and MISO determines whether BCWF is dispatched. Because market prices would have been negative due to increased market participation, Duke Energy Indiana determined it would not bid at negative prices in order to balance customer needs against BCWF's need to run. BCWF contends Duke Energy Indiana must bid at the lowest negative price to ensure dispatch, while Duke Energy Indiana contends it is not obligated to bid at any particular price, that it cannot ensure dispatch with any bid and that it has reasonably balanced the parties' interests. On July 6, 2015, the U.S. District Court for the Southern Districtend of Indiana entered judgment against BCWF on all claims. BCWF appealed the decision and on December 9, 2016, the appeals court ruled in favor of BCWF. Duke Energy Indiana recorded an obligation and a regulatory asset related to the settlement amount in fourth quarter 2016. On June 30, 2017, the parties finalized a settlement agreement. Terms2020. Customers were notified of the settlement included Duke Energy Indiana paying $29 million for back damages. Additionally,resumption of normal billing practices, the parties agreed on the method by which the contract will be bid into the market in the future. The settlement amount was paid in June 2017. The IURC issued an order on September 27, 2017, approving recoveryoption of the settlement amount through Duke Energy Indiana's fuel clause. The IURC order has been appealeddeferred payment arrangements and where to the Indiana Court of Appeals. On May 21, 2018, the Indiana Court of Appeals upheld the commission's decision. The appellants have requested rehearing at the Indiana Court of Appeals. The Indiana Court of Appeals denied the request for rehearing. The appellants have requested transfer to the Indiana Supreme Court, including briefs in support from environmental groups. The Indiana Supreme Court denied transfer concluding this matter in favor of Duke Energy Indiana.
Edwardsport Integrated Gasification Combined Cycle Plant
On September 20, 2018, Duke Energy Indiana, the Indiana Office of Utility Consumer Counselor, the Duke Industrial Group and Nucor Steel – Indiana entered into a settlement agreement to resolve IGCC ratemaking issues for calendar years 2018 and 2019. The agreement will remain in effect until new rates are established in Duke Energy Indiana's next base rate case, which is expected to be filed in mid-2019 with rates effective in mid-2020. It addresses the pending Edwardsport filing at the commission and eliminates the need for future filings until the overall rate case. This settlement includes caps on Duke Energy Indiana’s retail operating expenses for 2018 and 2019, reduces Duke Energy Indiana's regulatory asset by $30 million (with a corresponding reduction of the amount of amortization of the regulatory asset included in rates by $10 million annually beginning with the implementation of final IGCC 17 rates), and provides funding for low-incomefind assistance, and clean energy projects. Duke Energy Indiana recognized pretax impairment and related charges of $32 million in the third quarter of 2018. The settlement is subject to IURC approval. An evidentiary hearing was held December 2018 and an IURC Order is expected in March 2019.if necessary. Duke Energy Indiana cannot predict the outcome of this matter.
Tax Act2019 Indiana Rate Case
On June 27, 2018,July 2, 2019, Duke Energy Indiana the Indiana Office of Utility Consumer Counselor, the Indiana Industrial Group and Nucor Steel – Indiana filed testimony consistent with their Stipulation and Settlement Agreement (Settlement Agreement) in the federal tax act proceedinga general rate case with the IURC.IURC for a rate increase for retail customers of approximately $395 million. The Settlement Agreement outlines how Duke Energy Indiana will implementrebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the Tax Act. Material componentsUtility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued the order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order provided for an overall cost of capital of 5.7% based on a 9.7% return on equity and a 53% equity component of the Settlement Agreement werecapital structure, and approved Duke Energy Indiana's requested forecasted rate base of $10.2 billion as follows:
Ridersof December 31, 2020, including the Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana's request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction is due to reflect thea prospective change in depreciation and use of regulatory asset for the statutory federal taxend-of-life inventory at retired generating plants, approximately 20% is due to the approved 9.7% return on equity versus requested 10.4% and approximately 20% is related to miscellaneous earnings neutral adjustments. Step one rates are estimated to be approximately 75% of the total and became effective on July 30, 2020. Step two rates are estimated to be the remaining 25% of the total rate from 35 to 21 percent as they areincrease and will be implemented in mid-2021. Several groups filed in 2018;
Base rates to reflectnotices of appeal of the changeIURC order on July 29, 2020. Appellate briefs were filed on October 14, 2020, focusing on three issues: wholesale sales allocations, coal ash basin cost recovery and the Edwardsport IGCC operating and maintenance expense level approved. The appeal was fully briefed in January 2021, and a decision is expected in the statutory federal tax rate from 35 to 21 percent upon IURC approval, but no later than September 1, 2018;
first or second quarter of 2021. Duke Energy Indiana cannot predict the outcome of this matter.
2020 Indiana Coal Ash Recovery Case
In Duke Energy Indiana’s rate case, the IURC approved coal ash basin closure costs expended through 2018 including financing costs as a regulatory asset and included in rate base. The IURC opened a subdocket to continue to defer protected federal EDIT until January 1, 2020, at which time it will be returned to customers according todeal with the Average Rate Assumption Method required by the Internal Revenue Service over approximately 26 years; and
post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020, and the parties have agreed on a delayed briefing schedule that allows for the Indiana Rate Case appeal to begin returning unprotected federal EDIT upon IURC approval, over 10 years. In order to mitigate the negative impacts to cash flow and credit metrics, the Settlement Agreement allowsproceed. Briefing will be completed by mid-May 2021. Duke Energy Indiana to return $7 million per year overcannot predict the first five years, with a step up to $35 million per year in the following five years.
On August 22, 2018, the IURC approved the settlement and rates were adjusted effective September 1, 2018.

outcome of this matter.
162
159






FINANCIAL STATEMENTSREGULATORY MATTERS


Piedmont
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Piedmont's Consolidated Balance Sheets.
December 31, Earns/PaysRecovery/RefundDecember 31,Earns/PaysRecovery/Refund
(in millions)2018
2017
 a ReturnPeriod Ends(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
  
Regulatory Assets(a)
AROs – other$19
$15
 (d)
AROs – nuclear and otherAROs – nuclear and other$20 $16 (d)
Accrued pension and OPEB(c)
99
91
 X(f)
Accrued pension and OPEB(c)
88 90 (f)
Derivatives – gas supply contracts(e)
141
142
 
Vacation accrual12
10
 Vacation accrual12 12 2021
Derivatives – natural gas supply contracts(e)
Derivatives – natural gas supply contracts(e)
122 117 
Amounts due from customersAmounts due from customers110 36 Yes(b)
Deferred pipeline integrity costs(c)
51
42
 X(b)
Deferred pipeline integrity costs(c)
71 62 2023
Amount due from customers24
64
 X(b)
Other11
14
 (b)Other32 30 (b)
Total regulatory assets357
378
 Total regulatory assets455 363 
Less: current portion54
95
 Less: current portion153 73 
Total noncurrent regulatory assets$303
$283
 Total noncurrent regulatory assets$302 $290 
Regulatory Liabilities(a)
  
Regulatory Liabilities(a)
Net regulatory liability related to income taxesNet regulatory liability related to income taxes$499 $555 (b)
Costs of removal$564
$544
 (d)Costs of removal575 574 (d)
Net regulatory liability related to income taxes579
597
 (b)
Provision for rate refundsProvision for rate refunds6 41 Yes
Accrued pension and OPEB(c)
1
—
 X(f)
Accrued pension and OPEB(c)
3 3 (f)
Amount due to customers33
—
 X(b)
Amounts to be refunded to customersAmounts to be refunded to customers34 34 Yes(b)
Other41
3
 (b)Other15 5 (b)
Total regulatory liabilities1,218
1,144
 Total regulatory liabilities1,132 1,212 
Less: current portion37
3
 Less: current portion88 81 
Total noncurrent regulatory liabilities$1,181
$1,141
 Total noncurrent regulatory liabilities$1,044 $1,131 
(a)Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)The expected recovery or refund period varies or has not been determined.
(c)Included in rate base.
(d)Recovery over the life of the associated assets.
(e)Balance will fluctuate with changes in the market. Current contracts extend into 2031.
(f)Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
South(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Recovery over the life of the associated assets.
(e)    Balance will fluctuate with changes in the market. Current contracts extend into 2031.
(f)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
COVID-19 Filings
North Carolina Rate Stabilization Adjustment Filing
On June 15, 2018, Piedmont filed withMarch 10, 2020, Governor Roy Cooper declared a state of emergency due to the PSCSCCOVID-19 pandemic. On March 19, 2020, the NCUC issued on order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the South Carolina Rate Stabilization Act its quarterly monitoring reportstate of emergency and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the 12-month period ending March 31, 2018. The filing included a revenue deficiency calculation and tariff rates in orderstate of emergency after the end of the state of emergency. Additionally, to permit Piedmonthelp mitigate the opportunity to earn the rate of return on common equity established in its last general rate case. The filing also incorporated thefinancial impacts of the Tax ActCOVID-19 pandemic on their customers, on March 19, 2020, Piedmont filed a request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by loweringa residential or nonresidential customer, effective March 21, 2020; (2) the income tax componentapplication of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the revenue requirement, refunding protected EDIT under allowable normalization rules, unprotected EDITreconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and amounts over collected fromto work with customers regarding the customers from Januaryother requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted Piedmont’s request on March 20, 2020.
On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to Special Repayment Plans. The order contained the following: (1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2018,2020, after appropriate notice; (2) the late fee moratorium will continue through the end of the review periodstate of emergency or until further order of the commission; (3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and (4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions.
Normal billing practices resumed as of October 1, 2020, with the exception of billing of late payment charges. Service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary. The NCUC's moratorium for the billing of late payment charges is still in effect until further order from the NCUC. Piedmont cannot predict the outcome of this proceeding.matter.
160



FINANCIAL STATEMENTSREGULATORY MATTERS
South Carolina
On March 13, 2020, Governor Henry McMaster declared a state of emergency due to the COVID-19 pandemic. The governor also issued a letter on March 14, 2020, to the ORS Executive Director regarding the suspension of disconnection of essential utility services for nonpayment. On March 18, 2020, the PSCSC issued an order approving such waivers, and also approved waivers for regulations related to late fees and reconnect fees. The PSCSC's order also required utilities to track the financial impacts of actions taken pursuant to such waivers for possible reporting to the PSCSC.
On May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Piedmont filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. Updates on cost impacts were filed on September 30, 2020, and on December 31, 2020, and included financial impacts through the end of August 2020, and the end of November 2020, respectively.
On September 30, 2020, Piedmont filed an update on its planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed as of October 1, 2020, and service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary.
Tennessee
On March 12, 2020, Governor Bill Lee declared a state of emergency due to the COVID-19 pandemic. In an effort to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 20, 2020, Piedmont filed a request with the TPUC seeking authorization to waive, effective March 21, 2020: (1) any late payment charges incurred by a residential or nonresidential customer; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; and (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit. The TPUC granted Piedmont’s request by Order issued March 31,2020. The Order also stated that customers were not relieved of their obligation to pay for utility services received.
The TPUC held its regularly scheduled Commission Conference electronically on August 10, 2020, and on September 16, 2020, issued an Order Lifting Suspension of Disconnections of Service for Lack of Payment with Conditions, effective August 29, 2020. The conditions relate to required customer communications, payment plan options for past-due amounts and ongoing reporting to the TPUC. Potential recovery of costs related to the COVID-19 pandemic may be considered in future, individual docketed proceedings.
On October 15, 2020, Piedmont filed a report on its planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed as of October 1, 2020, and service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary.
2020 Tennessee Rate Case
On July 2, 2020, Piedmont filed an application with the TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately $30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since its previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. Piedmont amended its requested increase to approximately $26 million in December 2020. As authorized under Tennessee law, Piedmont implemented interim rates on January 2, 2021, at the level requested in its adjusted request. A settlement agreement reached between Piedmont and ORSwith the Tennessee Consumer Advocate in mid-January was filed with the PSCSCTPUC on September 14, 2018, and approved by the PSCSC on October 3, 2018. TermsFebruary 2, 2021. The settlement results in an increase of the settlement include implementation of rates for the 12-month period beginning November 2018 with a return on equity of 10.2 percent.
North Carolina Integrity Management Rider Filing
In October 2018, Piedmont filed a petition under the IMR mechanism to collect an additional $10 million in annual revenues, effective December 2018, based on the eligible capital investments closed to integrity and safety projects over the six-month period ended September 30, 2018. On November 27, 2018, the NCUC approved the requested rate adjustment.
In May 2018, Piedmont filed, and the NCUC approved, a petition under the IMR mechanism to update rates, effective June 2018, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, 2018, and the decrease in the corporate federal income tax rate effective January 1, 2018. The combined effect of the update was a reduction to annual revenues of approximately $6 million.
Tennessee Integrity Management Rider Filing
In November 2018, Piedmont filed$16 million and a petition withROE of 9.8%. At a hearing on February 16, 2021, the TPUC undervoted to accept the IMR mechanism to collect an additional $3 million in annual revenues,settlement, with new rates effective January 2019, based on2, 2021. Piedmont must refund customers the eligible capital investments closed to integritydifference between bills previously rendered under interim rates and safety projects over the 12-month period ending October 31, 2018. A hearing on this matter is scheduled for March 2019.such bills if rendered under approved rates, plus interest.

163



FINANCIAL STATEMENTSREGULATORY MATTERS


20182021 North Carolina Rate Case
On February 27, 2019,19, 2021, Piedmont filed a notice with the NCUC of its intent to file a general rate case on or about March 22, 2021. Piedmont’s last general rate case in North Carolina was filed in April 2019, with rates effective November 2019.
2019 North Carolina Rate Case
On April 1, 2019, Piedmont filed an application with the NCUC, its first general rate case in North Carolina in six years. On August 13, 2019, Piedmont, the Public Staff, and two groups representing industrial customers filed an Agreement and Stipulation Settlement resolving issues in the base rate adjustment application no earlier than 30 days fromproceeding, which included a return on equity of 9.7% and a capital structure of 52% equity and 48% debt. Other major components of the notice submittal date.Stipulation included:
•An annual increase in revenues of $109 million before consideration of riders associated with federal and state tax reform;
•A decrease through a rider mechanism of $23 million per year to return unprotected federal EDIT over a five-year period and deferred revenues related to the federal rate reduction of $37 million to be returned over one year;
•A decrease through a rider mechanism of $21 million per year related to reductions in the North Carolina state income tax rate to be returned over a three-year period;
•An overall cap on net revenue increase of $83 million. This will impact Piedmont beginning November 1, 2022, only if the company does not file another general rate case in the interim;
161



FINANCIAL STATEMENTSREGULATORY MATTERS
•Continuation of the IMR mechanism; and
•Establishment of a new deferral mechanism for certain Distribution Integrity Management Program (DIMP) operations and maintenance expenses incurred effective November 1, 2019, and thereafter.
On October 31, 2019, the NCUC approved the Stipulation and the revised customer rates were effective November 1, 2019.
OTHER REGULATORY MATTERS
Progress Energy Merger FERC Mitigation
Since December 2014, the FERC Office of Enforcement has conducted an investigation of Duke Energy’s market power filings in its application for approval of the Progress Energy merger submitted in 2012. On June 8, 2018, the FERC issued an order approving a settlement agreement under which Duke Energy paid a penalty of $3.5 million. The FERC Office of Enforcement stated in its conclusion that Duke Energy violated FERC regulations by failing to fully and accurately describe certain specific matters in its market power filings. Duke Energy neither admitted nor denied the alleged violations.
Atlantic Coast Pipeline, LLC
On September 2, 2014, Duke Energy, Dominion Resources (Dominion), Piedmont and Southern Company Gas announced the formation of Atlantic Coast Pipeline, LLC (ACP) to build and own the proposed Atlantic Coast Pipeline (ACP pipeline), was planned to be an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. The ACP pipeline is designed to meet, in part, the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. Dominion will be responsible for building and operating the ACP pipeline and holds a leading ownership percentage in ACP of 48 percent. Duke Energyindirectly owns a 47 percent47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment. Southern Company Gas maintains a 5 percent interest. See Notes 12 and 17
On April 15, 2020, the United States District Court for additional information related to Duke Energy's ownership interest. Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customersthe District of Montana granted partial summary judgment in favor of the pipeline. Purchases will be made under several 20-year supply contracts, subject to state regulatory approval.
In 2018, the FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route, including supply header and compressors. On May 11, 2018, and October 19, 2018, FERC issued Notices to Proceed allowing full construction activitiesplaintiffs in all areas of West Virginia except in the Monongahela National Forest. On July 24, 2018, FERC issued a Notice to Proceed allowing full construction activities along the project route in North Carolina. On October 19, 2018, the conditions to effectiveness of the Virginia 401 water quality certification were satisfied. Immediately following receipt of the Virginia 401 certification, ACP filed a request for FERC to issue a Notice to Proceed with full construction activities in Virginia. We appreciate the professional and collaborative process by the permitting agencies designed to ensure that this critical energy infrastructure project will meet the stringent environmental standards required by law and regulation.
ACP is the subject of challenges in state and federal courts and agencies, including, among others, challenges of the project’s incidental take statement (ITS), crossings of the Blue Ridge Parkway, the Appalachian Trail, and the Monongahela and George Washington National Forests, the project’sNorthern Plains Resource Council v. U.S. Army Corps of Engineers (USACE) 404 permit,(Northern Plains), vacating USACE’s Nationwide Permit 12 (NWP 12) and remanding it to USACE for consultation under the Virginia conditional 401 water quality certification,Endangered Species Act (ESA) of 1973. In Northern Plains, the FERC Environmental Impact Statement order andcourt ruled that NWP 12 was unlawful because USACE did not consult under the FERC order approving the Certificate of Public Convenience and Necessity. Each of these challenges alleges non-compliance on the part of federal and state permitting authorities and adverse ecological consequences if the project is permitted to proceed. ACP is vigorously defending these challenges and coordinatingESA with the federalU.S. Fish and state authorities which areWildlife Service and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its application enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the direct parties to the challenges. Since July 2018, notable developments in these challenges include a stay issued bysituation.
On May 28, 2020, the U.S. Court of Appeals for the FourthNinth Circuit (Fourth Circuit) on construction activities throughissued a ruling that limited the Monongahela and George Washington National Forests, a reissuanceNWP 12 vacatur to energy infrastructure projects. In July 2020, the Supreme Court of the project’s ITS and Blue Ridge Parkway right-of-way and renewed challenges of these reissued permits, a stay issued by the Fourth Circuit of the project's biological opinion and ITS (which stay has halted most project construction activity), a Fourth Circuit decision vacating the project's permits to cross the Monongahela and George Washington National Forests and the Appalachian Trail and the Fourth Circuit's remand to USACE of ACP's Huntington District 404 verification.
The delays resulting from the legal challenges described above have impacted the cost and schedule for the project. As a result, project cost estimates have increased to $7.0 billion to $7.8 billion, excluding financing costs. ACP expects to achieve a late 2020 in-service date for key segments of the project, while it expects the remainder to extend into 2021. Abnormal weather, work delays (including delays due to judicial or regulatory action) and other conditions may result in cost or schedule modifications in the future.
Sabal Trail Transmission, LLC
On May 4, 2015, Duke Energy acquired a 7.5 percent ownership interest in Sabal Trail, which is accounted for as an equity method investment, from Spectra Energy Partners, LP, a master limited partnership, formed by Enbridge Inc. (formerly Spectra Energy Corp.). Spectra Energy Partners, LP holds a 50 percent ownership interest in Sabal Trail and NextEra Energy has a 42.5 percent ownership interest. Sabal Trail is a joint venture to construct a 515-mile natural gas pipeline (Sabal Trail pipeline) to transport natural gas to Florida. Total estimated project costs are approximately $3.2 billion. The Sabal Trail pipeline traverses Alabama, Georgia and Florida. The primary customers of the Sabal Trail pipeline, Duke Energy Florida and FP&L have each contracted to buy pipeline capacity for 25-year initial terms. See Notes 12 and 17 for additional information related to Duke Energy's ownership interest.
On February 3, 2016, the FERCUnited States issued an order grantingallowing other new oil and gas pipeline projects to use the request for a CPCN to construct and operate the pipeline. The Sabal Trail pipeline received other required regulatory approvals and the Phase 1 mainline was placed in service in July 2017. On OctoberNWP 12 2017, Sabal Trail filed a request with FERC to place in-service a lateral line to Duke Energy Florida's Citrus County CC. This request is required to support commissioning and testing activities at the facility. On March 16, 2018, FERC approved the Citrus lateral and it was placed in service.

164



FINANCIAL STATEMENTSREGULATORY MATTERS


On September 21, 2016, intervenors filed anprocess pending appeal of FERC's CPCN orders to the U.S. Court of Appeals for the DistrictNinth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. Together, these rulings indicated that the timeline to reinstate the necessary water crossing permits for ACP would likely cause further delays and cost increases.
On July 5, 2020, Dominion Energy, Inc. announced a sale of Columbia Circuit (D.C. Circuit Courtsubstantially all of Appeals). On August 22, 2017, the appeals court ruled against FERC in the case for failing to include enough information on the impact of greenhouse-gas emissions carried by the pipeline, vacated the CPCN orderits gas transmission and remanded the case to FERC. In responsestorage segment assets, operations core to the August 2017 court decision, the FERC issued a draft Supplemental Environmental Impact Statement (SEIS) on September 27, 2017. On October 6, 2017, FERC and a group of industry intervenors, including Sabal Trail and Duke Energy Florida, filed separate petitions with the D.C. Circuit Court of Appeals requesting rehearing regarding the court's decision to vacate the CPCN order. On January 31, 2018, the D.C. Circuit Court of Appeals denied the requests for rehearing. On February 2, 2018, Sabal Trail filed a request with FERC for expedited issuance of its order on remand and reissuance of the CPCN. In the alternative, theACP pipeline requested that FERC issue a temporary emergency CPCN to allow for continued operations. On February 5, 2018, FERC issued the final SEIS. On February 6, 2018, FERC and the intervenors in this case each filed motions for stay with the D.C. Circuit Court to stay the court's mandate. On March 7, 2018, the D.C. Circuit Court of Appeals granted FERC and Sabal Trail’s stay request. On March 14, 2018, FERC issued its final order on remand, which recertified the project. On August 10, 2018, FERC denied requests for rehearing of the final order on remand.
Constitution Pipeline Company, LLC
Duke Energy owns a 24 percent ownership interest in Constitution, which is accounted for as an equity method investment. Constitution is a natural gas pipeline project slated to transport natural gas supplies from the Marcellus supply region in northern Pennsylvania to major northeastern markets. The pipeline will be constructed and operated by Williams Partners L.P., which has a 41 percent ownership share. The remaining interest is held by Cabot Oil and Gas Corporation and WGL Holdings, Inc. Before the permitting delays discussed below, Duke Energy's total anticipated contributions were approximately $229 million. As a result of the permitting delays and project uncertainty total anticipated contributions by Duke Energy can no longer be reasonably estimated. Since April 2016, with the actions of the New York State Department of Environmental Conservation (NYSDEC), Constitution stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved.
In December 2014, Constitution received approval from the FERC to construct and operate the proposed pipeline. However, on April 22, 2016, the NYSDEC denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution filed legal actions in the U.S. Court of Appeals for the Second Circuit (U.S. Court of Appeals) challenging the legality and appropriateness of the NYSDEC’s decision and on August 18, 2017, the petition was denied in part and dismissed in part. In September 2017, Constitution filed a petition for a rehearing of portions of the decision unrelated to the water quality certification, which was deniedcreated by the U.S. Court of Appeals. In January 2018, Constitution petitionedNWP 12 rulings, the Supreme Court ofpotential impact on the United States to review the U.S. Court of Appeals decision,cost and on April 30, 2018, the Supreme Court denied Constitution's petition. In October 2017, Constitution filed a petition for declaratory order requesting FERC to find that the NYSDEC waived its rights to issue a Section 401 water quality certification by not acting on Constitution's application within a reasonable period of time as required by statute. This petition was based on precedent established by another pipeline’s successful petition with FERC following a District of Columbia Circuit Court ruling. On January 11, 2018, FERC denied Constitution's petition. In February 2018, Constitution filed a rehearing request with FERC of its finding that the NYSDEC did not waive the Section 401 certification requirement. On July 19, 2018, FERC denied Constitution's rehearing request. Constitution is currently unable to approximate an in-service dateschedule for the project, duethe ongoing legal challenges and the risk of additional legal challenges and delays through the construction period and Dominion’s decision to the NYSDEC's denialsell substantially all of the water quality certification. The Constitution partners remain committedits gas transmission and storage segment assets, Duke Energy's Board of Directors and management decided that it was not prudent to the project and are evaluating next stepscontinue to move the project forward. On June 25, 2018, Constitution filed with FERC a Request for Extension of Time until December 2, 2020, for construction ofinvest in the project. On NovemberJuly 5, 2018, FERC issued an Order Granting Extension2020, Duke Energy and Dominion announced the cancellation of Time.the ACP pipeline project.
As a result, Duke Energy recorded pretax charges to earnings of approximately $2.1 billion for the year ended December 31, 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Consolidated Statements of Operations. The tax benefit associated with this cancellation was $393 million and is recorded in Income Tax Expense (Benefit) Expense on the Duke Energy Consolidated Statements of Operations. Additional charges of less than $20 million are expected to be recorded within the next three years as ACP incurs obligations to exit operations.
As part of the pretax charges to earnings of approximately $2.1 billion, Duke Energy has liabilities related to the cancellation of the ACP pipeline project of $928 million and $8 million within Other Current Liabilities and Other Noncurrent Liabilities, respectively, in the Gas Utilities and Infrastructure segment. The liability represents Duke Energy's obligation of approximately $860 million to fund ACP's outstanding debt and $76 million to satisfy remaining ARO requirements to restore construction sites.
See Notes 127 and 1712 for additional information related to ownership interest and carrying value of the investment.regarding this transaction.
Potential Coal Plant Retirements
The Subsidiary Registrants periodically file IRPsintegrated resource plans (IRPs) with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful lives primarily because facilities do not have the requisite emission control equipment to meet regulatory requirements expected to apply in the near future.lives. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives and plans to seek regulatory recovery for amounts that would not be otherwise recovered when any of these assets are retired.
162



FINANCIAL STATEMENTSREGULATORY MATTERS
The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement due to a lack of requisite environmental control equipment.retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Consolidated Balance Sheets as of December 31, 2018,2020, and exclude capitalized asset retirement costs.
   Remaining Net
 Capacity
 Book Value
 (in MW)
 (in millions)
Duke Energy Carolinas   
Allen Steam Station Units 1-3(a)
585
 $162
Duke Energy Indiana   
Gallagher Units 2 and 4(b)
280
 121
Total Duke Energy865
 $283
(a)Duke Energy Carolinas will retire Allen Steam Station Units 1 through 3 by December 31, 2024, as part of the resolution of a lawsuit involving alleged New Source Review violations.
(b)Duke Energy Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as part of the 2016 settlement of Edwardsport IGCC matters.

Remaining Net
CapacityBook Value
(in MW)(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3(a)
604 $113 
Allen Steam Station Units 4-5(b)
526 338 
Cliffside Unit 5(b)
546 350 
Duke Energy Progress
Mayo Unit 1(b)
746 676 
Roxboro Units 3-4(b)
1,409 484 
Duke Energy Florida
Crystal River Units 4-5(c)
1,430 1,696 
Duke Energy Indiana
Gallagher Units 2 and 4(d)
280 102 
Gibson Units 1-5(e)
2,845 1,866 
Cayuga Units 1-2(e)
1,005 777 
Total Duke Energy9,391 $6,402 
165

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

(b)    These units are included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. In 2019, Duke Energy Carolinas and Duke Energy Progress filed North Carolina rate cases that included depreciation studies that accelerate end-of-life dates for these plants. A decision by NCUC is expected by the end of the first quarter 2021.

FINANCIAL STATEMENTSREGULATORY MATTERS


Refer to(c)    On January 14, 2021, Duke Energy Florida filed a settlement agreement with the "Western Carolinas Modernization Plan" discussion aboveFPSC, which proposed depreciation rates reflecting retirement dates for detailsDuke Energy Florida's last 2 coal-fired generating facilities, Crystal River Units 4-5, eight years ahead of schedule in 2034 rather than in 2042, in support of Duke Energy's carbon reduction goals. A request for the FPSC to hold a hearing has been made and a decision by the FPSC is expected in the second quarter 2021.
(d)    Duke Energy Progress' planned retirements.Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as part of the 2016 settlement of Edwardsport IGCC matters. In February 2021, upon approval by MISO of a new retirement date, Duke Energy Indiana determined it would modify the retirement date to June 1, 2021.
(e)    On July 1, 2019, Duke Energy Indiana filed its 2018 IRP with the IURC. The 2018 IRP included scenarios evaluating the potential retirement of coal-fired generating units at Gibson and Cayuga. The rate case filed July 2, 2019, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. The depreciation rates reflecting these updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.
5.
4. 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 4,3, 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.
163



FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
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 two2 reactors. Oconee has three3 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 one1 reactor. Brunswick has two2 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.
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$13.8 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$13.3 billion of coverage per incident through the Price-Anderson Act’s mandatory industrywideindustry-wide 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 9997 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 STATEMENTSCOMMITMENTS 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.
164



FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
NEIL’s Accidental Outage policy provides some coverage, such assimilar 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 percent100% of the availableapplicable weekly limits for 52 weeks and 80 percent80% of the availableapplicable weekly limits for up to the next 110 weeks. Coverage is provided until these availableapplicable weekly periods are met, where the accidental outage policy limit will not exceed $490 million for McGuire and Catawba, and$434 million for Harris, $476$420 million for Brunswick, $462$392 million for Oconee and $392$336 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$156 million, $97$93 million and $1 million, respectively. Duke Energy Carolinas' maximum assessment amount includes 100 percent100% 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 regulationslaws regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulationslaws can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all of the Duke Energy Registrants.
Remediation Activities
In addition to the ARO recorded as a result of various environmental regulations, discussed in Note 9, the Duke Energy Registrants are responsible for environmental remediation at various sites. These include certain properties that are part of ongoing operations and sites formerly owned or used by Duke Energy entities. These sites are in various stages of investigation, remediation and monitoring. Managed in conjunction with relevant federal, state and local agencies, remediation activities vary based upon site conditions and location, remediation requirements, complexity and sharing of responsibility. If remediation activities involve joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Duke Energy Registrants could potentially be held responsible for environmental impacts caused by other potentially responsible parties and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. Liabilities are recorded when losses become probable and are reasonably estimable. The total costs that may be incurred cannot be estimated because the extent of environmental impact, allocation among potentially responsible parties, remediation alternatives and/or regulatory decisions have not yet been determined at all sites. Additional costs associated with remediation activities are likely to be incurred in the future and could be significant. Costs are typically expensed as Operation, maintenance and other in the Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.

167



FINANCIAL STATEMENTSCOMMITMENTS 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
Balance at December 31, 2015$94
 $10
 $17
 $3
 $14
 $54
 $12
Provisions/adjustments19
 4
 7
 2
 4
 7
 1
Cash reductions(15) (4) (6) (2) (4) (2) (3)
Balance at December 31, 201698
 10
 18
 3
 14
 59
 10
Provisions/adjustments8
 3
 3
 2
 2
 3
 (4)
Cash reductions(25) (3) (6) (2) (4) (15) (1)
Balance at December 31, 201781
 10
 15
 3
 12
 47
 5
Provisions/adjustments26
 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
(in millions)December 31, 2020December 31, 2019
Reserves for Environmental Remediation
Duke Energy$75 $58 
Duke Energy Carolinas19 11 
Progress Energy19 16 
Duke Energy Progress6 4 
Duke Energy Florida12 9 
Duke Energy Ohio22 19 
Duke Energy Indiana6 4 
Piedmont10 8 
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$25
Duke Energy Carolinas12
Duke Energy Ohio4
Piedmont2
165
(in millions) 
Duke Energy$46
Duke Energy Carolinas17
Duke Energy Ohio19
Piedmont2

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.
FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
LITIGATION
Duke Energy Carolinas and Duke Energy Progress
Coal Ash Insurance Coverage Litigation
In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in the North Carolina SuperiorBusiness Court against various insurance providers. The lawsuit seeks payment for coal ash-relatedash related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and SouthSouth Carolina. On January 23, 2019, the court granted the parties’ joint motion for a four month stay of the proceedings, until June 3, 2019,Fact discovery has been completed. The parties filed dispositive pretrial motions relating to allow the partieskey legal issues on December 4, 2020. Hearings on these motions are scheduled to discuss potential resolution. If the casebegin on February 24, 2021, and trial is not fully resolved at that time, litigation will resume. The trial remains scheduled for August 2020.January 24, 2022. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
NCDEQ State Enforcement Actions
In the first quarter of 2013, 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
NTE Carolinas and Duke Energy Progress alleging violations of water discharge permits and North Carolina groundwater standards. The cases have been consolidated and are being heard before a single judge in the North Carolina Superior Court.II, LLC Litigation
On August 16, 2013, the NCDEQ filed an enforcement action against Duke Energy Carolinas and Duke Energy Progress related to 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 STATEMENTSCOMMITMENTS AND CONTINGENCIES


The court issued orders in 2016 granting Motions for Partial Summary Judgment for seven 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 plants. On March 15,In November 2017, Duke Energy Carolinas entered into a standard FERC large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC (NTE), a company that proposed to build a combined-cycle natural gas plant in Rockingham County, North Carolina. On September 6, 2019, Duke Energy Carolinas filed a lawsuit in Mecklenburg County Superior Court against NTE for breach of contract and alleging that NTE's failure to pay benchmark payments for Duke Energy Carolinas' transmission system upgrades required under the interconnection agreement constituted a termination of the interconnection agreement. Duke Energy Carolinas is seeking a monetary judgment against NTE because NTE failed to make multiple milestone payments. The lawsuit was moved to federal court in North Carolina. NTE filed a motion to dismiss Duke Energy Carolinas’ complaint and brought counterclaims alleging anti-competitive conduct and violations of state and federal statutes. Duke Energy Carolinas filed a motion to dismiss NTE's counterclaims.
On May 21, 2020, in response to a NTE petition challenging Duke Energy Carolina's termination of the LGIA, FERC issued a ruling (i) that it has exclusive jurisdiction to determine whether a transmission provider may terminate a LGIA, (ii) FERC approval is required to terminate a conforming LGIA if objected to by the interconnection customer, and (iii) Duke Energy may not announce the termination of a conforming LGIA unless FERC has approved the termination.
On August 17, 2020, the court denied both NTE’s and Duke Energy Progress filed a Notice of Appeal with the North Carolina Court of AppealsCarolinas’ Motion to challenge the trial court’s order.Dismiss. The parties were unable to reach an agreement at mediationare in April 2017active discovery and submitted briefs to the trial court on remaining issues to be tried. On August 1, 2018, the Court of Appeals dismissed the appeal and the matter is proceeding before the trial court. No trial date has been scheduled.scheduled for June 20, 2022. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Federal Citizens Suits
On June 13, 2016, RRBA filed a federal citizen suit in the Middle District of North Carolina alleging unpermitted discharges to surface water and groundwater violations at the Mayo Plant. On August 19, 2016, Duke Energy Progress filed a Motion to Dismiss. On April 26, 2017, the court entered an order dismissing four of the claims in the federal citizen suit. Two claims relating to alleged violations of NPDES permit provisions survived the motion to dismiss, and Duke Energy Progress filed its response on May 10, 2017. Duke Energy Progress and RRBA each filed motions for summary judgment on March 23, 2018. The court has not yet ruled on these motions.
On May 16, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina, which asserts two claims relating to alleged violations of NPDES permit provisions at the Roxboro Plant and one claim relating to the use of nearby water bodies. Duke Energy Progress and RRBA each filed motions for summary judgment on April 17, 2018, and the court has not yet ruled on these motions.
On May 8, 2018, on motion from Duke Energy Progress, the court ordered trial in both of the above matters to be consolidated. Trial is currently scheduled 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. Duke Energy Progress filed a motion to dismiss, which was granted by the court on March 30, 2018. RRBA had until April 30, 2018, to file an appeal to the Fourth Circuit but did not do so.
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 by 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.
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.
Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of these matters.
Groundwater Contamination Claims
Beginning in May 2015, a number of residents living in the vicinity of the North Carolina facilities with ash basins received letters from the NCDEQ advising them not to drink water from the private wells on their land tested by the NCDEQ as the samples were found to have certain substances at levels higher than the criteria set by the 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 under the Coal Ash Act or those to whom Duke Energy has promised a permanent replacement water supply and seeks declaratory and injunctive relief, along with compensatory damages. Plaintiffs allege that Duke Energy’s improper maintenance of coal ash impoundments caused harm, particularly through groundwater contamination. Despite NCDEQ’s preliminary approval, Plaintiffs contend that Duke Energy’s proposed permanent water solutions plan fails to comply with the Coal Ash Act. On September 28, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Motion to Dismiss and Motion to Strike the class designation. The parties entered into a Settlement Agreement on January 24, 2018, which resulted in the dismissal of the underlying class action on January 25, 2018.

169



FINANCIAL STATEMENTSCOMMITMENTS 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, 2018,2020, there were 164145 asserted claims for non-malignant cases with the cumulative relief sought of up to $42$39 million and 8756 asserted claims for malignant cases with the cumulative relief sought of up to $21$20 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$572 million and $489$604 million at December 31, 2018,2020, and 2017,2019, 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 20382040 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 20382040 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$714 million in excess of the self-insured retention. Receivables for insurance recoveries were $739$704 million and $585$742 million at December 31, 2018,2020, and 2017,2019, 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.
As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The reserve for credit losses for insurance receivables for the asbestos-related injuries and damages based on adoption of the new standard is $15 million for Duke Energy and Duke Energy Carolinas as of December 31, 2020. The insurance receivable is evaluated based on the risk of default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the risk of default from credit agencies.
166



FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
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 $200 million for Duke Energy Progress and Duke Energy Florida, asserted damagesrespectively. Discovery is ongoing and a trial is expected to occur in 2021.
Duke Energy Florida
Power Purchase Dispute Arbitration
Duke Energy Florida, on behalf of its customers, entered into a PPA for the period January 1, 2011, through December 31, 2013,purchase of $48 millionfirm capacity and $25 million, respectively. On November 17, 2017,energy from a qualifying facility under the Court awardedPublic Utilities Regulatory Policies Act of 1978. Duke Energy ProgressFlorida determined the qualifying facility did not perform in accordance with the PPA, and Duke Energy Florida $48 millionterminated the PPA. The qualifying facility counterparty filed a confidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the PPA and $21 million, respectively, subject to appeal. No appeals were filed and Duke Energy Progress andseeking damages. Duke Energy Florida recognizeddenies liability and is vigorously defending the recoveries inarbitration claim.
The final arbitration hearing occurred during 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. Asweek 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 STATEMENTSCOMMITMENTS AND CONTINGENCIES


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 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 to recover from Fluor $110 million in additional costs incurred by Duke Energy Florida.7, 2020. An arbitral award has not yet been issued. Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Indiana
Coal Ash Basin Closure Plan Appeal
On January 27, 2020, Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication (the court) challenging the Indiana Department of Environmental Management’s December 10, 2019, partial approval of Duke Energy Indiana’s ash pond closure plan. On March 11, 2020, Duke Energy Indiana filed a Motion to Dismiss. On May 5, 2020, the court denied the motion. The parties have completed discovery and will now prepare to file dispositive motions. Summary judgment briefing will be completed by March 30, 2021. If these claims survive dispositive motions, a hearing is scheduled for April 26, 2021. Duke Energy Indiana cannot predict the outcome of this matter. See Note 49 for additional information.
Class-Action Lawsuit
On February 22, 2016, a lawsuit was filed in the U.S. District Court for the Southern District of Florida on behalf of a class of Duke Energy Florida and FP&L’s customers in Florida. The suit alleges the State of Florida’s NCRS are unconstitutional and pre-empted by federal law. Plaintiffs claim they are entitled to repayment of all money paid by customers of Duke Energy Florida and FP&L as a result of the NCRS, as well as an injunction against any future charges under those statutes. The constitutionality of the NCRS has been challenged unsuccessfully in a number of prior cases on alternative grounds. Duke Energy Florida and FP&L filed motions to dismiss the complaint on May 5, 2016. On September 21, 2016, the Court granted the motions to dismiss with prejudice. Plaintiffs filed a motion for reconsideration, which was denied. On January 4, 2017, plaintiffs filed a notice of appeal to the Eleventh Circuit U.S. Court of Appeals (Eleventh Circuit). On July 11, 2018, the Eleventh Circuit affirmed the U.S. District Court's dismissal of the lawsuit. The deadline to file a petition for cert was October 9, 2018, and no petition was filed; therefore, the dismissal of the lawsuit is final.
Westinghouse Contract Litigation
On March 28, 2014, Duke Energy Florida filed a lawsuit against Westinghouse in the U.S. District Court for the Western District of North Carolina. The lawsuit 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.
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 STATEMENTSCOMMITMENTS 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, December 31,
(in millions)
2018
 2017
(in millions)20202019
Reserves for Legal Matters   Reserves for Legal Matters  
Duke Energy$65
 $88
Duke Energy$68 $62 
Duke Energy Carolinas9
 30
Duke Energy Carolinas2 2 
Progress Energy54
 55
Progress Energy61 55 
Duke Energy Progress12
 13
Duke Energy Progress13 12 
Duke Energy Florida24
 24
Duke Energy Florida28 22 
Piedmont1
 2
Piedmont1 1 
OTHER COMMITMENTS AND CONTINGENCIES
General
As part of their normal business, the Duke Energy Registrants are party to various financial guarantees, performance guarantees and other contractual commitments to extend guarantees of credit and other assistance to various subsidiaries, investees and other third parties. These guarantees involve elements of performance and credit risk, which are not fully recognized on the Consolidated Balance Sheets and have unlimiteduncapped 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 7 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.
167



FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
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, 2020
Contract              Contract
(in millions)Expiration 2019
 2020
 2021
 2022
 2023
 Thereafter
 Total
(in millions)Expiration20212022202320242025ThereafterTotal
Duke Energy Progress(a)
2022-2031 $51
 $52
 $53
 $30
 $25
 $215
 $426
Duke Energy Progress(a)
2025-2032$66 $73 $66 $67 $69 $69 $410 
Duke Energy Florida(b)
2021-2025 363
 380
 365
 363
 382
 361
 2,214
Duke Energy Florida(b)
2023-2025335 354 374 262 91 — 1,416 
Duke Energy Ohio(c)(d)
2020-2022 146
 117
 53
 11
 —
 —
 327
Duke Energy Ohio(c)(d)
2022130 55 — — — — 185 
(a)Contracts represent 100 percent of net plant output.
(b)Contracts represent between 81 percent and 100 percent of net plant output.
(c)Contracts represent between 1 percent and 8 percent of net plant output.
(d)Excludes PPA with OVEC. See Note 17 for additional information.
(a)    Contracts represent either 100% of net plant output or vary.
(b)    Contracts represent 100% of net plant output.
(c)    Contracts represent between 1% and 11% of net plant output.
(d)    Excludes PPA with OVEC. See Note 17 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 upup to 1615 years. The time periods for fixed payments under natural gas supply contracts are up to sevensix 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 STATEMENTSCOMMITMENTS AND CONTINGENCIES


The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, 2018.2020.
(in millions)Duke EnergyDuke Energy OhioPiedmont
2021$311 $41 $270 
2022270 28 242 
2023197 20 177 
2024139 17 122 
2025125 14 111 
Thereafter662 60 602 
Total$1,704 $180 $1,524 
5. LEASES
(in millions)Duke EnergyDuke Energy OhioPiedmont
2019$314
$38
$276
2020287
30
257
2021255
29
226
2022225
11
214
2023148
4
144
Thereafter1,067
—
1,067
Total$2,296
$112
$2,184
Operating and Capital Lease Commitments
TheAs part of its operations, Duke Energy Registrants leaseleases 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 withspace under various terms and expiration dates. Additionally, Duke Energy Carolinas, Duke Energy Progress and Duke Energy ProgressIndiana have capitalfinance 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 capitalizedFinancial Statements.
Certain Duke Energy lease obligationsagreements 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 classifiedreasonably 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 Liabilitiesa 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. AmortizationSheets 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 capitalthe debt.
168



FINANCIAL STATEMENTSLEASES
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 includedaccounted for as Nonregulated electric and other revenues in Depreciationthe 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 $275 million, $264 million and amortization$268 million for the years ended December 31, 2020, 2019, and 2018, respectively. Renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,335 million and $3,349 million and accumulated depreciation of $848 million and $721 million at December 31, 2020, and 2019, respectively. These assets are principally classified as nonregulated electric generation and transmission assets.
Piedmont has certain agreements with Duke Energy Carolinas for the construction and transportation of natural gas pipelines to supply its natural gas plant needs. Piedmont accounts for these pipeline lateral contracts as sales-type leases since the present value of the sum of the lease payments equals the fair value of the assets. These pipeline lateral assets owned by Piedmont had a current net investment basis of $2 million and $4 million as of December 31, 2020, and 2019, respectively, and a long-term net investment basis of $205 million and $70 million as of December 31, 2020, and 2019, respectively. 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 contracts as finance leases. The activity for these contracts is eliminated in consolidation at Duke Energy.
The following tables present the components of lease expense.
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Operating lease expense(a)
$283 $53 $162 $72 $90 $11 $19 $7 
Short-term lease expense(a)
4 — 2 1 1 0 1 0 
Variable lease expense(a)
30 13 13 5 8 0 1 1 
Finance lease expense
Amortization of leased assets(b)
119 8 24 6 18 0 1 0 
Interest on lease liabilities(c)
61 30 44 37 7 0 0 0 
Total finance lease expense180 38 68 43 25 0 1 — 
Total lease expense$497 $104 $245 $121 $124 $11 $22 $8 
(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.
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
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 0 — 
Interest on lease liabilities(c)
61 15 42 33 9 0 1 0 
Total finance lease expense172 21 63 38 25 1 1 0 
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.
169



FINANCIAL STATEMENTSLEASES
The following tables presenttable 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,
(in millions)2018
 2017
 2016
Duke Energy$268
 $241
 $242
Duke Energy Carolinas49
 44
 45
Progress Energy143
 130
 140
Duke Energy Progress75
 75
 68
Duke Energy Florida68
 55
 72
Duke Energy Ohio13
 15
 16
Duke Energy Indiana21
 23
 23
 Years Ended December 31,Two Months Ended December 31, Year Ended October 31,
(in millions)2018 20172016 2016
Piedmont$11
 $7
$1
 $5
Year Ended
(in millions)December 31, 2018
Duke Energy$268 
Duke Energy Carolinas49 
Progress Energy143 
Duke Energy Progress75 
Duke Energy Florida68 
Duke Energy Ohio13 
Duke Energy Indiana21 
Piedmont11 
The following table presents future minimumoperating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
2021$229 $24 $99 $44 $55 $2 $5 $5 
2022212 22 95 40 55 2 4 5 
2023202 20 95 41 54 2 4 5 
2024186 14 95 41 54 2 4 5 
2025162 10 85 31 54 2 4 5 
Thereafter870 51 376 252 124 20 59 — 
Total operating lease payments1,861 141 845 449 396 30 80 25 
Less: present value discount(344)(24)(149)(95)(54)(9)(24)(2)
Total operating lease liabilities(a)
$1,517 $117 $696 $354 $342 $21 $56 $23 
(a)    Certain operating lease payments under operating leases, which at inception had a non-cancelable term of more than one year.
include renewal options that are reasonably certain to be exercised.
 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
2020219
 29
 90
 46
 44
 2
 5
5
2021186
 19
 79
 37
 42
 2
 4
5
2022170
 19
 76
 34
 42
 2
 4
5
2023160
 17
 77
 35
 42
 2
 5
6
Thereafter1,017
 68
 455
 314
 141
 23
 66
11
Total$1,991
 $185
 $874
 $515
 $359
 $33
 $90
$37

173



FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES


The following table presents future minimumfinance lease payments under capital leases.maturities and a reconciliation of the undiscounted cash flows to finance lease liabilities.
December 31, 2020
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaIndiana
2021$186 $38 $68 $43 $25 $1 
2022173 38 68 43 25 1 
2023174 38 68 43 25 1 
2024119 38 52 43 9 1 
202551 38 48 43 5 1 
Thereafter762 502 481 475 6 26 
Total finance lease payments1,465 692 785 690 95 31 
Less: amounts representing interest(620)(398)(408)(394)(14)(21)
Total finance lease liabilities$845 $294 $377 $296 $81 $10 
170



FINANCIAL STATEMENTSLEASES
 December 31, 2018
   Duke
   Duke
 Duke
 Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
2019$170
 $20
 $45
 $20
 $25
 $2
 $1
2020174
 20
 46
 21
 25
 —
 1
2021177
 15
 45
 20
 25
 —
 1
2022165
 15
 45
 21
 24
 —
 1
2023165
 15
 45
 21
 24
 —
 1
Thereafter577
 204
 230
 209
 21
 —
 27
Minimum annual payments1,428
 289
 456
 312
 144
 2
 32
Less: amount representing interest(487) (180) (205) (175) (30) —
 (22)
Total$941
 $109
 $251
 $137
 $114
 $2
 $10
The following tables contain additional information related to leases.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)ClassificationEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Assets
OperatingOperating lease ROU assets, net$1,524 $110 $690 $346 $344 $20 $55 $20 
FinanceNet property, plant and equipment797 312 416 297 119 — 7 — 
Total lease assets$2,321 $422 $1,106 $643 $463 $20 $62 $20 
Liabilities
Current
OperatingOther current liabilities$177 $20 $73 $31 $42 $1 $3 $4 
FinanceCurrent maturities of long-term debt129 5 26 7 19 — — — 
Noncurrent
OperatingOperating lease liabilities1,340 97 623 323 300 20 53 19 
FinanceLong-Term Debt716 289 351 289 62 — 10 — 
Total lease liabilities$2,362 $411 $1,073 $650 $423 $21 $66 $23 
December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)ClassificationEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Assets
OperatingOperating lease ROU assets, net$1,658 $123 $788 $387 $401 $21 $57 $24 
FinanceNet property, plant and equipment926 198 443 308 135 — 7 — 
Total lease assets$2,584 $321 $1,231 $695 $536 $21 $64 $24 
Liabilities
Current
OperatingOther current liabilities$208 $27 $95 $37 $58 $1 $3 $4 
FinanceCurrent maturities of long-term debt119 7 24 6 18 — — — 
Noncurrent
OperatingOperating lease liabilities1,432 102 697 354 343 21 55 23 
FinanceLong-Term Debt850 172 381 301 80 — 10 — 
Total lease liabilities$2,609 $308 $1,197 $698 $499 $22 $68 $27 
171



FINANCIAL STATEMENTSLEASES
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Cash paid for amounts included in the measurement of lease liabilities(a)
Operating cash flows from operating leases$271 $31 $124 $52 $72 $2 $6 $5 
Operating cash flows from finance leases61 30 44 37 7 — — — 
Financing cash flows from finance leases119 8 24 6 18 — 1 — 
Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating(b)
$116 $17 $— $— $— $— $1 $— 
Finance125 125 — — — — — — 
(a)    No amounts were classified as investing cash flows from operating leases for the year ended December 31, 2020.
(b)    Does not include ROU assets recorded as a result of the adoption of the new lease standard.
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Cash paid for amounts included in the measurement of lease liabilities(a)
Operating cash flows from operating leases$285 $34 $131 $53 $78 $2 $7 $7 
Operating cash flows from finance leases61 15 42 33 9 — 1 — 
Financing cash flows from finance leases111 6 21 5 16 1 — — 
Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating(b)
$194 $44 $30 $30 $— $— $— $1 
Finance251 76 175 175 — — — — 
(a)    No amounts were classified as investing cash flows from operating leases for the year ended December 31, 2019.
(b)    Does not include ROU assets recorded as a result of the adoption of the new lease standard.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Weighted average remaining lease term (years)
Operating leases1091012817185
Finance leases1319151711— 25— 
Weighted average discount rate(a)
Operating leases3.8 %3.4 %3.8 %3.9 %3.8 %4.2 %4.2 %3.6 %
Finance leases8.4 %11.6 %11.9 %12.4 %8.2 %0 %11.9 %0 %
(a)    The discount rate is calculated using the rate implicit in a lease if it is readily determinable. Generally, the rate used by the lessor is not provided to Duke Energy and in these cases the incremental borrowing rate is used. Duke Energy will typically use its fully collateralized incremental borrowing rate as of the commencement date to calculate and record the lease. The incremental borrowing rate is influenced by the lessee’s credit rating and lease term and as such may differ for individual leases, embedded leases or portfolios of leased assets.
172



FINANCIAL STATEMENTSLEASES
December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Weighted average remaining lease term (years)
Operating leases1191012817186
Finance leases1319161811— 26— 
Weighted average discount rate(a)
Operating leases3.9 %3.5 %3.8 %3.9 %3.8 %4.2 %4.1 %3.6 %
Finance leases8.1 %11.8 %11.9 %12.4 %8.3 %0 %11.9 %0 %
(a)    The discount rate is calculated using the rate implicit in a lease if it is readily determinable. Generally, the rate used by the lessor is not provided to Duke Energy and in these cases the incremental borrowing rate is used. Duke Energy will typically use its fully collateralized incremental borrowing rate as of the commencement date to calculate and record the lease. The incremental borrowing rate is influenced by the lessee’s credit rating and lease term and as such may differ for individual leases, embedded leases or portfolios of leased assets.
6. DEBT AND CREDIT FACILITIES
Summary of Debt and Related Terms
The following tables summarize outstanding debt.
December 31, 2018 December 31, 2020
Weighted
  Weighted
Average
  Duke
 Duke
Duke
Duke
Duke
 AverageDukeDuke
Interest
 Duke
Energy
Progress
Energy
Energy
Energy
Energy
 InterestDukeEnergyProgressEnergy
(in millions)Rate
 Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
(in millions)RateEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unsecured debt, maturing 2019-20784.26% $20,955
$1,150
$3,800
$50
$350
$1,000
$408
$2,150
Secured debt, maturing 2020-20373.69% 4,297
450
1,703
300
1,403
—
—
—
First mortgage bonds, maturing 2019-2048(a)
4.32% 25,628
8,759
13,100
7,574
5,526
1,099
2,670
—
Capital leases, maturing 2019-2051(b)
5.06% 941
109
251
137
114
2
10
—
Tax-exempt bonds, maturing 2019-2041(c)
3.40% 941
243
48
48
—
77
572
—
Unsecured debt, maturing 2021-2078Unsecured debt, maturing 2021-20783.71 %$23,669 $1,150 $3,150 $700 $350 $1,180 $403 $2,800 
Secured debt, maturing 2021-2052Secured debt, maturing 2021-20522.67 %4,270 543 1,584 252 1,332 — — — 
First mortgage bonds, maturing 2021-2050(a)
First mortgage bonds, maturing 2021-2050(a)
4.00 %29,177 10,008 14,100 7,875 6,225 1,850 3,219 — 
Finance leases, maturing 2022-2051(b)
Finance leases, maturing 2022-2051(b)
6.96 %845 294 377 296 81 — 10 — 
Tax-exempt bonds, maturing 2027-2041(c)
Tax-exempt bonds, maturing 2027-2041(c)
0.75 %477 — 48 48 — 77 352 — 
Notes payable and commercial paper(d)
2.73% 4,035
—
—
—
—
—
—
—
Notes payable and commercial paper(d)
0.51 %3,407 — — — — — — — 
Money pool/intercompany borrowings  —
739
1,385
444
108
299
317
198
Money pool/intercompany borrowings 0 806 3,119 445 196 194 281 530 
Fair value hedge carrying value adjustment  5
5
—
—
—
—
—
—
Fair value hedge carrying value adjustment 4 4 — — — — — — 
Unamortized debt discount and premium, net(e)
  1,434
(23)(29)(15)(11)(31)(8)(1)
Unamortized debt discount and premium, net(e)
 1,217 (20)(31)(19)(11)(29)(18)(5)
Unamortized debt issuance costs(f)
  (297)(54)(112)(40)(61)(7)(20)(11)
Unamortized debt issuance costs(f)
(330)(62)(113)(44)(62)(14)(25)(15)
Total debt4.13% $57,939
$11,378
$20,146
$8,498
$7,429
$2,439
$3,949
$2,336
Total debt3.62 %$62,736 $12,723 $22,234 $9,553 $8,111 $3,258 $4,222 $3,310 
Short-term notes payable and commercial paper  (3,410)—
—
—
—
—
—
—
Short-term notes payable and commercial paper (2,873)— — — — — — — 
Short-term money pool/intercompany borrowings  —
(439)(1,235)(294)(108)(274)(167)(198)Short-term money pool/intercompany borrowings— (506)(2,969)(295)(196)(169)(131)(530)
Current maturities of long-term debt(g)
  (3,406)(6)(1,672)(603)(270)(551)(63)(350)
Current maturities of long-term debt(g)
 (4,238)(506)(1,426)(603)(823)(50)(70)(160)
Total long-term debt(g)

 $51,123
$10,933
$17,239
$7,601
$7,051
$1,614
$3,719
$1,788
Total long-term debt(g)
$55,625 $11,711 $17,839 $8,655 $7,092 $3,039 $4,021 $2,620 
174
173






FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES

(a)Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b)Duke Energy includes $24 million and $341 million of finance lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to PPAs that are not accounted for as finance leases in their respective financial statements because of grandfathering provisions in GAAP.
(c)Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.
(d)Includes $625 million classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper program was 23 days.
(e)Duke Energy includes $1,196 million and $117 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.
(f)Duke Energy includes $33 million in purchase accounting adjustments primarily related to the merger with Progress Energy.
(g)Refer to Note 17 for additional information on amounts from consolidated VIEs.
 December 31, 2019
Weighted
AverageDukeDukeDukeDukeDuke
InterestDukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)RateEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unsecured debt, maturing 2020-20784.02 %$22,477 $1,150 $3,650 $700 $350 $1,110 $405 $2,399 
Secured debt, maturing 2020-20523.30 %4,537 544 1,722 335 1,387 — — — 
First mortgage bonds, maturing 2020-2049(a)
4.13 %27,977 9,557 13,800 7,575 6,225 1,449 3,169 — 
Finance leases, maturing 2022-2051(b)
6.60 %969 179 405 307 98 — 10 — 
Tax-exempt bonds, maturing 2022-2041(c)
2.90 %730 243 48 48 — 77 362 — 
Notes payable and commercial paper(d)
1.98 %3,588 — — — — — — — 
Money pool/intercompany borrowings — 329 1,970 216 — 337 180 476 
Fair value hedge carrying value adjustment 5 5 — — — — — — 
Unamortized debt discount and premium, net(e)
 1,294 (23)(29)(17)(11)(30)(19)(2)
Unamortized debt issuance costs(f)
(316)(55)(111)(40)(62)(12)(20)(13)
Total debt3.92 %$61,261 $11,929 $21,455 $9,124 $7,987 $2,931 $4,087 $2,860 
Short-term notes payable and commercial paper (3,135)— — — — — — — 
Short-term money pool/intercompany borrowings— (29)(1,821)(66)— (312)(30)(476)
Current maturities of long-term debt(g)
 (3,141)(458)(1,577)(1,006)(571)— (503)— 
Total long-term debt(g)
$54,985 $11,442 $18,057 $8,052 $7,416 $2,619 $3,554 $2,384 
(a)    Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b)    Duke Energy includes $44 million and $419 million of finance lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to PPAs that are not accounted for as finance leases in their respective financial statements because of grandfathering provisions in GAAP.
(c)    Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.
(d)    Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper programs was 14 days.
(e)    Duke Energy includes $1,275 million and $137 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.
(f)    Duke Energy includes $37 million in purchase accounting adjustments primarily related to the merger with Progress Energy.
(g)     Refer to Note 17 for additional information on amounts from consolidated VIEs.
174




(a)Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b)Duke Energy includes $63 million and $531 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.
(c)Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.
(d)Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper program was 16 days.
(e)Duke Energy includes $1,380 million and $156 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.
(f)Duke Energy includes $41 million in purchase accounting adjustments primarily related to the merger with Progress Energy.
(g)Refer to Note 17 for additional information on amounts from consolidated VIEs.
 December 31, 2017
 Weighted
         
 Average
  Duke
 Duke
Duke
Duke
Duke
 
 Interest
 Duke
Energy
Progress
Energy
Energy
Energy
Energy
 
(in millions)Rate
 Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Unsecured debt, maturing 2018-20734.17% $20,409
$1,150
$3,950
$—
$550
$900
$411
$2,050
Secured debt, maturing 2018-20373.15% 4,458
450
1,757
300
1,457
—
—
—
First mortgage bonds, maturing 2018-2047(a)
4.51% 23,529
7,959
11,801
6,776
5,025
1,100
2,669
—
Capital leases, maturing 2018-2051(b)
4.55% 1,000
61
269
139
129
5
11
—
Tax-exempt bonds, maturing 2019-2041(c)
3.23% 941
243
48
48
—
77
572
—
Notes payable and commercial paper(d)
1.57% 2,788
—
—
—
—
—
—
—
Money pool/intercompany borrowings  —
404
955
390
—
54
311
364
Fair value hedge carrying value adjustment  6
6
—
—
—
—
—
—
Unamortized debt discount and premium, net(e)
  1,582
(19)(30)(16)(10)(33)(9)(1)
Unamortized debt issuance costs(f)
  (271)(47)(108)(40)(56)(7)(21)(12)
Total debt4.09% $54,442
$10,207
$18,642
$7,597
$7,095
$2,096
$3,944
$2,401
Short-term notes payable and commercial paper  (2,163)—
—
—
—
—
—
—
Short-term money pool/intercompany borrowings  —
(104)(805)(240)—
(29)(161)(364)
Current maturities of long-term debt(g)
  (3,244)(1,205)(771)(3)(768)(3)(3)(250)
Total long-term debt(g)

 $49,035
$8,898
$17,066
$7,354
$6,327
$2,064
$3,780
$1,787
(a)Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b)Duke Energy includes $81 million and $603 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.
(c)Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.
(d)Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper programs was 14 days.
(e)Duke Energy includes $1,509 million and $176 million purchase accounting adjustments related to the mergers with Progress Energy and Piedmont, respectively.
(f)Duke Energy includes $47 million in purchase accounting adjustments primarily related to the merger with Progress Energy.
(g)Refer to Note 17 for additional information on amounts from consolidated VIEs.

175



FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES


Current Maturities of Long-Term Debt
The following table shows the significant components of Current maturities of Long-Term Debt on the Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.
(in millions)Maturity Date Interest Rate
 December 31, 2018
(in millions)Maturity DateInterest RateDecember 31, 2020
Unsecured Debt    
Progress EnergyMarch 2019 7.050% $450
Unsecured Debt(a)
Unsecured Debt(a)
Duke Energy (Parent)September 2019 5.050% 500
Duke Energy (Parent)May 20210.721 %(b)$500 
PiedmontSeptember 2019 3.155%
(b) 
350
PiedmontJune 20214.240 %160 
Duke Energy KentuckyOctober 2019 4.65% 100
Progress EnergyDecember 2019 4.875% 350
Duke Energy (Parent)Duke Energy (Parent)September 20213.550 %500 
Duke Energy (Parent)Duke Energy (Parent)September 20211.800 %750 
Duke Energy FloridaDuke Energy FloridaNovember 20210.482 %(b)200 
Secured DebtSecured Debt
Duke Energy FloridaDuke Energy FloridaApril 20210.972 %(b)250 
First Mortgage Bonds    First Mortgage Bonds
Duke Energy CarolinasDuke Energy CarolinasJune 20213.900 %500 
Duke Energy FloridaDuke Energy FloridaAugust 20213.100 %300 
Duke Energy ProgressJanuary 2019 5.300% 600
Duke Energy ProgressSeptember 20213.000 %500 
Duke Energy OhioApril 2019 5.450% 450
Other(a)
   606
Duke Energy ProgressDuke Energy ProgressSeptember 20218.625 %100 
Other(c)
Other(c)
478 
Current maturities of long-term debt   $3,406
Current maturities of long-term debt$4,238 
(a)Includes capital lease obligations, amortizing debt and small bullet maturities.
(b)Debt has a floating interest rate.
(a)    During October 2020, Progress Energy early retired $500 million of unsecured debt with an original maturity of January 15, 2021.
(b)    Debt has a floating interest rate.
(c)    Includes finance lease obligations, amortizing debt and small bullet maturities.
Maturities and Call Options
The following table shows the annual maturities of long-term debt for the next five years and thereafter. Amounts presented exclude short-term notes payable, and commercial paper and money pool borrowings and debt issuance costs for the Subsidiary Registrants.
December 31, 2018 December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)
Energy(a)

 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)
Energy(a)
CarolinasEnergyProgressFloridaOhioIndianaPiedmont
2019$3,408
 $6
 $1,674
 $603
 $270
 552
 $63
 $350
20203,765
 907
 926
 354
 572
 —
 503
 —
20214,803
 503
 2,004
 904
 600
 50
 70
 160
2021$4,238 $506 $1,426 $603 $823 $50 $70 $160 
20222,745
 353
 1,032
 505
 77
 —
 94
 —
20224,905 721 1,736 1,208 78 — 84 — 
20233,375
 1,303
 535
 456
 79
 350
 153
 45
20233,356 1,008 638 561 77 325 3 45 
202420241,344 9 76 10 66 — 4 40 
202520253,153 310 725 661 64 270 154 205 
Thereafter35,288
 7,940
 12,880
 5,437
 5,793
 1,251
 2,925
 1,595
Thereafter41,983 9,745 14,802 6,274 6,878 2,486 3,818 2,350 
Total long-term debt, including current maturities$53,384

$11,012

$19,051

$8,259

$7,391

$2,203

$3,808
 $2,150
Total long-term debt, including current maturities$58,979 $12,299 $19,403 $9,317 $7,986 $3,131 $4,133 $2,800 
(a)Excludes $1,578 million in purchase accounting adjustments related to the Progress Energy merger and the Piedmont acquisition.
(a)    Excludes $1,346 million in purchase accounting adjustments related to the Progress Energy merger and the Piedmont acquisition.
The Duke Energy Registrants have the ability under certain debt facilities to call and repay the obligation prior to its scheduled maturity. Therefore, the actual timing of future cash repayments could be materially different than as presented above.

176175






FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES


Short-Term Obligations Classified as Long-Term Debt
Tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder and certain commercial paper issuances and money pool borrowings are classified as Long-Term Debt on the Consolidated Balance Sheets. These tax-exempt bonds, commercial paper issuances and money pool borrowings, which are short-term obligations by nature, are classified as long termlong-term due to Duke Energy’s intent and ability to utilize such borrowings as long-term financing. As Duke Energy’s Master Credit Facility and other bilateral letter of credit agreements have non-cancelable terms in excess of one year as of the balance sheet date, Duke Energy has the ability to refinance these short-term obligations on a long-term basis. The following tables show short-term obligations classified as long-term debt.
 December 31, 2018
   Duke
 Duke
 Duke
 Duke
 Duke
 Energy
 Energy
 Energy
 Energy
(in millions)Energy
 Carolinas
 Progress
 Ohio
 Indiana
Tax-exempt bonds$312
 $—
 $—
 $27
 $285
Commercial paper(a)
625
 300
 150
 25
 150
Total$937

$300
 $150

$52

$435
December 31, 2017 December 31, 2020
  Duke
 Duke
 Duke
 Duke
DukeDukeDukeDuke
Duke
 Energy
 Energy
 Energy
 Energy
DukeEnergyEnergyEnergyEnergy
(in millions)Energy
 Carolinas
 Progress
 Ohio
 Indiana
(in millions)EnergyCarolinasProgressOhioIndiana
Tax-exempt bonds$312
 $—
 $—
 $27
 $285
Tax-exempt bonds$312 $— $— $27 $285 
Commercial paper(a)
625
 300
 150
 25
 150
Commercial paper(a)
625 300 150 25 150 
Total$937

$300

$150
 $52

$435
Total$937 $300 $150 $52 $435 
 December 31, 2019
DukeDukeDukeDuke
DukeEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasProgressOhioIndiana
Tax-exempt bonds$312 $— $— $27 $285 
Commercial paper(a)
625 300 150 25 150 
Total$937 $300 $150 $52 $435 
(a)
(a)    Progress Energy amounts are equal to Duke Energy Progress amounts.

177



FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES


Summary of Significant Debt Issuances
In January 2019,The following tables summarize significant debt issuances (in millions).
Year Ended December 31, 2020
DukeDukeDukeDukeDukeDuke
MaturityInterestDukeEnergyEnergyEnergyEnergyEnergyEnergy
Issuance DateDateRateEnergy(Parent)CarolinasProgressFloridaOhioIndianaPiedmont
Unsecured Debt
May 2020(a)
Jun 20302.450 %$500 $500 $— $— $— $— $— $— 
May 2020(b)
Jun 20503.350 %400 — — — — — — 400 
August 2020(c)
Feb 20220.400 %(d)700 — — 700 — — — — 
September 2020(e)
Sep 20250.900 %650 650 — — — — — — 
September 2020(e)
Jun 20302.450 %350 350 — — — — — — 
First Mortgage Bonds
January 2020(f)
Feb 20302.450 %500 — 500 — — — — — 
January 2020(f)
Aug 20493.200 %400 — 400 — — — — — 
March 2020(g)
Apr 20502.750 %550 — — — — — 550 — 
May 2020(b)
Jun 20302.125 %

400 — — — — 400 — — 
June 2020(b)
Jun 20301.750 %500 — — — 500 — — — 
August 2020(h)
Aug 20502.500 %600 — — 600 — — — — 
Total issuances$5,550 $1,500 $900 $1,300 $500 $400 $550 $400 
(a)Debt issued to repay $500 million borrowing made under Duke Energy Ohio(Parent) revolving credit facility in March 2020, and for general corporate purposes.
(b)Debt issued $800to repay short-term debt and for general corporate purposes.
(c)Debt issued to repay $700 million term loan due December 2020.
(d)Debt issuance has a floating interest rate.
(e)Debt issued to repay a portion of first mortgage bonds. The issuance was split betweenoutstanding commercial paper, to repay 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 millionportion of Duke Energy Ohio(Parent)'s outstanding $1.7 billion term loan due March 2021 and for general corporate purposes.
(f)Debt issued to repay at maturity $450 million first mortgage bonds maturing in April 2019,due June 2020 and for general corporate purposes.
(g)Debt issued to repay at maturity $500 million first mortgage bonds due July 2020 and to pay down short-term debt.
(h)Debt issued to repay at maturity $300 million first mortgage bonds due September 2020 and for general corporate purposes.
176



FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
Year Ended December 31, 2019
DukeDukeDukeDukeDukeDuke
MaturityInterestDukeEnergyEnergyEnergyEnergyEnergyEnergy
Issuance DateDateRateEnergy(Parent)CarolinasProgressFloridaOhioIndianaPiedmont
Unsecured Debt
March 2019(a)
Mar 20222.538 %(b)$300 $300 $— $— $— $— $— $— 
March 2019(a)
Mar 20223.227 %300 300 — — — — — — 
May 2019(e)
Jun 20293.500 %600 — — — — — — 600 
June 2019(a)
Jun 20293.400 %600 600 — — — — — — 
June 2019(a)
Jun 20494.200 %600 600 — — — — — — 
July 2019(g)
Jul 20494.320 %40 — — — — 40 — — 
September 2019(g)
Oct 20253.230 %95 — — — — 95 — — 
September 2019(g)
Oct 20293.560 %75 — — — — 75 — — 
November 2019(h)
Nov 20212.167 %(b)200 — — — 200 — — — 
First Mortgage Bonds
January 2019(c)
Feb 20293.650 %400 — — — — 400 — — 
January 2019(c)
Feb 20494.300 %400 — — — — 400 — — 
March 2019(d)
Mar 20293.450 %600 — — 600 — — — — 
August 2019(a)
Aug 20292.450 %450 — 450 — — — — — 
August 2019(a)
Aug 20493.200 %350 — 350 — — — — — 
September 2019(f)
Oct 20493.250 %500 — — — — — 500 — 
November 2019(i)
Dec 20292.500 %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.
The following tables summarize significant(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 issuances (in millions).
and for general corporate purposes.
     Year Ended December 31, 2018
       Duke
 Duke
 Duke
 Duke
 Maturity Interest
 Duke
 Energy
 Energy
 Energy
 Energy
Issuance DateDate 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.
(d)
Debt issued to repay at maturity a $300 million first mortgage bond due April 2018, pay down intercompany short-term debt and for general corporate purposes.
(e)Debt issued to repay a portion of intercompany short-term debt under 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.

(d)Debt issued to fund eligible green energy projects in the Carolinas.
178

(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.
FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
(i)Debt issued to reimburse the payment of existing and new Eligible Green Expenditures in Florida.

AVAILABLE CREDIT FACILITIES

     Year Ended December 31, 2017
       Duke
 Duke
 Duke
 Duke
 Duke
 Maturity Interest
 Duke
 Energy
 Energy
 Energy
 Energy
 Energy
Issuance DateDate 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.
AvailableMaster Credit FacilitiesFacility
In January 2018,March 2020, Duke Energy extended the termination date of substantially all ofamended 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, 2023.2025. The Duke Energy Registrants, excluding Progress Energy, (Parent), have borrowing capacity under the Master Credit Facility up to a specified sublimitssublimit 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
177






FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES


The table below includes the current borrowing sublimits and available capacity under these credit facilities.
December 31, 2018 December 31, 2020
  Duke
 Duke
 Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDukeDuke
Duke
 Energy
 Energy
 Energy
 Energy
 Energy
 Energy
  DukeEnergyEnergyEnergyEnergyEnergyEnergy
(in millions)Energy
 (Parent)
 Carolinas
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)Energy(Parent)CarolinasProgressFloridaOhioIndianaPiedmont
Facility size(a)
$8,000
 $2,650
 $1,750
 $1,400
 $650
 $450
 $600
 $500
Facility size(a)
$8,000 $2,650 $1,475 $1,250 $800 $625 $600 $600 
Reduction to backstop issuances               Reduction to backstop issuances
Commercial paper(b)
(3,022) (917) (739) (444) (108) (299) (317) (198)
Commercial paper(b)
(2,239)— (736)(407)(179)(176)(257)(484)
Outstanding letters of credit(53) (45) (4) (2) —
 —
 —
 (2)Outstanding letters of credit(40)(34)(4)(2)— — — — 
Tax-exempt bonds(81) —
 —
 —
 —
 —
 (81) —
Tax-exempt bonds(81)— — — — — (81)— 
Coal ash set-aside(500) —
 (250) (250) —
 —
 —
 —
Available capacity$4,344

$1,688

$757

$704

$542

$151

$202
 $300
Available capacity$5,640 $2,616 $735 $841 $621 $449 $262 $116 
(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.
(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.
Term Loan Facility
In response to market volatility and ongoing liquidity impacts from COVID-19, in March 2020, Duke Energy (Parent) entered into a $1.5 billion, 364-day Term Loan Credit Agreement, borrowing the full $1.5 billion available on March 19, 2020. The term loan contained a provision for increasing the amount available for borrowing by up to $500 million. Duke Energy (Parent) exercised this provision on March 27, 2020, borrowing an additional $188 million. Proceeds were used to reduce outstanding commercial paper and for general corporate purposes. The loan was repaid by Duke Energy (Parent) as of December 31, 2020. Refer to Note 1 for additional information on the COVID-19 pandemic.
Three-Year Revolving Credit Facility
Duke Energy (Parent) has a $1.0$1 billion revolving credit facility. The facility throughhad 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, 2018,2020, $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. During the first quarter of 2020, an additional $500 million was drawn under this facility to manage liquidity impacts from COVID-19. The additional $500 million was paid down during the second quarter of 2020. The terms and conditions of the Three Year Revolverfacility 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 bewere used to pay storm-related costs, pay down commercial paper and to partially finance an upcoming bond maturity. As of December 31, 2018, $502019, the entire $700 million hashad been drawn under the term loan. The balance isloan and was classified as Long-termCurrent maturities of long-term debt on Duke Energy Progress' Consolidated Balance Sheets. In January and February 2019, the remaining $650August 2020, Duke Energy Progress repaid its $700 million was drawn under the term loan.
Piedmont Term Loan Facility
In September 2018, Piedmont executed an amendment to its existing senior unsecuredtwo-year 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 Consolidated Balance Sheets. The terms and conditions of the Piedmont Term Loan are generally consistent with those governing Duke Energy's Master Credit Facility.
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, including preferred stock, 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.
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, 2018,2020, and 20172019, was $1,010$1,168 million and $986$1,049 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.

180178






FINANCIAL STATEMENTSDEBT 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 percent65% for each borrower, excluding Piedmont, and 70 percent70% 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, 2018,2020, 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, 2018,2020, and 2017,2019, Duke Energy had loans outstanding of $741$817 million, including $37$35 million at Duke Energy Progress and $701$777 million, including $38$36 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.
7. GUARANTEES AND INDEMNIFICATIONS
Duke Energy and Progress Energy havehas 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 enterenters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. At December 31, 2018,2020, Duke Energy and Progress Energy dodoes not believe conditions are likely for significant performance under these guarantees.guarantees, except for ACP as described below. 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, 2018,2020, the maximum potential amount of future payments associated with these guarantees was $205were $56 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. In July 2020, ACP reduced the size of the credit facility to $1.9 billion. Duke Energy's maximum exposure to loss under the terms of the guarantee is $677$860 million as of December 31, 2018.2020. This amount represents 47 percent47% of the outstanding borrowings under the credit facility.
Duke Energy guaranteed debt issued byrecognized the $860 million within Other Current Liabilities on the Consolidated Balance Sheets at December 31, 2020, of which $95 million was previously recognized due the adoption of new guidance for credit losses effective January 1, 2020. See Notes 3 and 12 for more information. The remaining reserve for credit losses for financial guarantees of $4 million at December 31, 2020, is included within Other Noncurrent Liabilities on the Duke Energy's Consolidated Balance Sheets. Management considers financial guarantees for evaluation under this standard based on the anticipated amount outstanding at the time of default. The reserve for credit losses is based on the evaluation of the contingent components of financial guarantees. Management evaluates the risk of default, exposure and length of time remaining in the period for each contract.
In addition to the Spectra Capital and ACP revolving credit facility guarantees above, Duke Energy Carolinashas issued performance guarantees to customers and other third parties that guarantee the payment and performance of $650 millionother parties, including certain non-wholly owned entities, as well as guarantees of debt of certain non-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 these entities. The maximum potential amount of future payments required under these guarantees as of December 31, 2018,2020, was $56 million of which $53 million expire between 2021 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 issuersdoes 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, 2018,2020, Duke Energy had issued a total of $454$566 million in letters of credit, which expire between 20192021 and 2022.2023. The unused amount under these letters of credit was $60$76 million.
Duke Energy recognized $23$11 million and $21$23 million as of December 31, 2018,2020, and 2017,2019, respectively, 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.

179
181






FINANCIAL STATEMENTSJOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES


8. JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES
The Duke Energy Registrants maintain ownership interests in certain jointly owned generating and transmission facilities. The Duke Energy Registrants are entitled to a share of the generating capacity and output of each unit equal to their respective ownership interests. The Duke Energy Registrants pay their ownership share of additional construction costs, fuel inventory purchases and operating expenses. The Duke Energy Registrants share of revenues and operating costs of the jointly owned facilities is included within the corresponding line in the Consolidated Statements of Operations. Each participant in the jointly owned facilities must provide its own financing.
The following table presents the Duke Energy Registrants' interest of jointly owned plant or facilities and amounts included on the Consolidated Balance Sheets. All facilities are operated by the Duke Energy Registrants and are included in the Electric Utilities and Infrastructure segment.
December 31, 2018 December 31, 2020
      Construction
Construction
Ownership
 Property, Plant
 Accumulated
 Work in
OwnershipProperty, PlantAccumulatedWork in
(in millions except for ownership interest)Interest
 and Equipment
 Depreciation
 Progress
(in millions except for ownership interest)Interestand EquipmentDepreciationProgress
Duke Energy Carolinas 
      Duke Energy Carolinas    
Catawba (units 1 and 2)(a)
19.25% $989
 $483
 $17
Catawba (units 1 and 2)(a)
19.25 %$1,017 $518 $23 
W.S. Lee CC(b)
86.67% 593
 12
 4
W.S. Lee CC(b)
87.27 %632 49 1 
Duke Energy Indiana 
  
  
  
Duke Energy Indiana    
Gibson (unit 5)(c)
50.05% 390
 173
 3
Gibson (unit 5)(c)
50.05 %447 199 4 
Vermillion(d)
62.50% 168
 135
 —
Vermillion(d)
62.50 %174 101 1 
Transmission and local facilities(c)
Various
 5,037
 1,769
 —
Transmission and local facilities(c)
Various5,817 1,508 150 
(a)
(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.
(d)Jointly owned with WVPA.
Effective June 30, 2018, Duke Energy Ohio, Ohio Power Company,Agency Number 1, NCEMC and The Dayton PowerPMPA.
(b)    Jointly owned with NCEMC.
(c)    Jointly owned with WVPA and Light Company, completed an asset exchange that reallocated their ownership interest in certain jointlyIMPA.
(d)    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.with WVPA.
9. ASSET RETIREMENT OBLIGATIONS
Duke Energy records an ARO when it has a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. Certain assets of the Duke Energy Registrants have an indeterminate life, such as transmission and distribution facilities, and thus the fair value of the retirement obligation is not reasonably estimable. A liability for these AROs will be recorded when a fair value is determinable.
The Duke Energy Registrants’ regulated operations accrue costs of removal for property that does not have an associated legal retirement obligation based on regulatory orders from state commissions. These costs of removal are recorded as a regulatory liability in accordance with regulatory accounting treatment. The Duke Energy Registrants do not accrue the estimated cost of removal for any nonregulated assets. See Note 43 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, 2018December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Decommissioning of nuclear power facilities(a)
$5,696
 $2,335
 $3,209
 $2,679
 $530
 $—
 $—
 $—
Decommissioning of nuclear power facilities(a)
$6,845 $2,695 $4,101 $3,642 $459 $— $— $— 
Closure of ash impoundments4,446
 1,568
 2,123
 2,103
 20
 52
 702
 —
Closure of ash impoundments5,778 2,597 1,973 1,950 23 67 1,140 — 
Other(b)
325
 46
 79
 38
 41
 41
 20
 19
OtherOther381 58 75 43 32 44 36 20 
Total asset retirement obligation$10,467
 $3,949
 $5,411
 $4,820
 $591
 $93
 $722

$19
Total asset retirement obligation$13,004 $5,350 $6,149 $5,635 $514 $111 $1,176 $20 
Less: current portion919
 290
 514
 509
 5
 6
 109
 —
Less: Current portionLess: Current portion718 264 283 283 — 3 168 — 
Total noncurrent asset retirement obligation$9,548
 $3,659
 $4,897
 $4,311
 $586
 $87
 $613

$19
Total noncurrent asset retirement obligation$12,286 $5,086 $5,866 $5,352 $514 $108 $1,008 $20 
(a)
(a)    Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.
(b)Primarily includes obligations related to asbestos removal. Duke Energy Ohio and Piedmont also include AROs related to the retirement of natural gas mains and services. Duke Energy includes AROs related to the removal of renewable energy generation assets.

182



FINANCIAL STATEMENTSASSET RETIREMENT OBLIGATIONS


Nuclear Decommissioning Liability
AROs related to nuclear decommissioning are based on site-specific cost studies. The NCUC, PSCSC and FPSC require updated cost estimates for decommissioning nuclear plants every five years.
180



FINANCIAL STATEMENTSASSET RETIREMENT OBLIGATIONS
The following table summarizes information about the most recent site-specific nuclear decommissioning cost studies. Decommissioning costs are stated in 2018 or 2019 dollars, for Duke Energy Carolinas, 2017 dollars for Duke Energy Florida and 2014 dollars for Duke Energy Progress,depending on the year of the cost study, and include costs to decommission plant components not subject to radioactive contamination.
Annual Funding
 Decommissioning
 Annual FundingDecommissioning
(in millions)
Requirement(a)

 
Costs(a)

 Year of Cost Study(in millions)
Requirement(a)
Costs(a)
Year of Cost Study
Duke Energy$24
 $8,737

2014 and 2018Duke Energy$27 $9,105 2018 or 2019
Duke Energy Carolinas(b)(c)
—
 4,291

2018
Duke Energy Carolinas(b)(c)
— 4,365 2018
Duke Energy Progress24
 3,550

2014
Duke Energy Florida(d)
—
 896

2018
Duke Energy Progress(d)
Duke Energy Progress(d)
27 4,181 2019
Duke Energy Florida(e)
Duke Energy Florida(e)
— 559 N/A
(a)Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.
(b)Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.
(c)Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2018 is expected to be filed with the NCUC and PSCSC by the second quarter 2019. Duke Energy Carolinas will also complete a new funding study, which will be completed and filed with the NCUC and PSCSC in 2019.
(d)Duke Energy Florida's site-specific nuclear decommissioning cost study and a new funding study were completed and filed with the FPSC in 2018.
(a)    Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.
(b)    Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.
(c)    Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2018 was filed with the NCUC and PSCSC in 2019. A new funding study was also completed and filed with the NCUC and PSCSC in 2019.
(d)    Duke Energy Progress' site-specific nuclear decommissioning cost study completed in 2019 was filed with the NCUC and PSCSC in March 2020. Duke Energy Progress also completed a funding study, which was filed with the NCUC and PSCSC in July 2020.
(e)    During 2019, Duke Energy Florida reached an agreement to transfer decommissioning work for Crystal River Unit 3 to a third party and decommissioning costs are based on the agreement with this third party rather than a cost study. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 3 for more information.
Nuclear Decommissioning Trust Funds
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida each maintain NDTFs that are intended to pay for the decommissioning costs of their respective nuclear power plants. The NDTF investments are managed and invested in accordance with applicable requirements of various regulatory bodies including the NRC, FERC, NCUC, PSCSC, FPSC and the IRS.
Use of the NDTF investments is restricted to nuclear decommissioning activities including license termination, spent fuel and site restoration. The license termination and spent fuel obligations relate to contaminated decommissioning and are recorded as AROs. The site restoration obligation relates to non-contaminated decommissioning and is recorded to cost of removal within Regulatory liabilities on the Consolidated Balance Sheets.
The following table presents the fair value of NDTF assets legally restricted for purposes of settling AROs associated with nuclear decommissioning. Duke Energy Florida is actively decommissioningentered into an agreement with a third party to decommission Crystal River Unit 3 and was granted an exemption from the NRC, which allows for use of the NDTF for all aspects of nuclear decommissioning. The entire balance of Duke Energy Florida's NDTF may be applied toward license termination, spent fuel and site restoration costs incurred to decommission Crystal River Unit 3 and is excluded from the table below. See Note 16 for additional information related to the fair value of the Duke Energy Registrants' NDTFs.
December 31,December 31,
(in millions)2018 2017(in millions)20202019
Duke Energy$5,579
 $5,864
Duke Energy$7,726 $6,766 
Duke Energy Carolinas3,133
 3,321
Duke Energy Carolinas4,381 3,837 
Duke Energy Progress2,446
 2,543
Duke Energy Progress3,345 2,929 
Nuclear Operating Licenses
Operating licenses for nuclear units are potentially subject to extension. The following table includes the current expiration of nuclear operating licenses.
UnitYear of Expiration
Duke Energy Carolinas
Catawba Units 1 and 22043
UnitYear of Expiration
Duke Energy Carolinas
Catawba Units 1 and 22043
McGuire Unit 12041
McGuire Unit 22043
Oconee Units 1 and 22033
Oconee Unit 32034
Duke Energy Progress
Brunswick Unit 12036
Brunswick Unit 22034
Harris2046
Robinson2030

183



Oconee Unit 32034
Duke Energy Progress
Brunswick Unit 12036
Brunswick Unit 22034
Harris2046
Robinson2030
181



FINANCIAL STATEMENTSASSET RETIREMENT OBLIGATIONS


The NRC has acknowledged permanent cessation of operation and permanent removal of fuel from the reactor vessel at Crystal River Unit 3. Therefore, the license no longer authorizes operation of the reactor. In January 2018,During 2019, Duke Energy Florida entered into an agreement for the accelerated decommissioning of Crystal River Unit 3. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 3 reached a SAFSTOR status.for more information.
Closure of Ash Impoundments
The Duke Energy Registrants are subject to state and federal regulations covering the closure of coal ash impoundments, including the EPA CCR rule and the Coal Ash Act, and other agreements. AROs recorded on the Duke Energy Registrants' Consolidated Balance Sheets include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of these regulations and agreements.
The ARO amount recorded on the Consolidated Balance Sheets is based upon estimated closure costs for impacted ash impoundments. The amount recorded represents the discounted cash flows for estimated closure costs based upon either specific closure plans or the probability weightings of the potential closure methods as evaluated on a site-by-site basis.plans. Actual costs to be incurred will be dependent upon factors that vary from site to site. The most significant factors are the method and time frame of closure at the individual sites. Closure methods considered include removing the water from ash basins, consolidating material as necessary and capping the ash with a synthetic barrier, excavating and relocating the ash to a lined structural fill or lined landfill or recycling the ash for concrete or some other beneficial use. The ultimate method and timetable for closure will be in compliance with standards set by federal and state regulations and other agreements. The ARO amount will be adjusted as additional information is gained through the closure and post-closure process, including acceptance and approval of compliance approaches, which may change management assumptions, and may result in a material change to the balance. See ARO Liability Rollforward section below for information on revisions made to the coal ash liability during 20182020 and 2017.2019.
Asset retirement costs associated with the AROs for operating plants and retired plants are included in Net property, plant and equipment and Regulatory assets, respectively, on the Consolidated Balance Sheets. See Note 43 for additional information on Regulatory assets related to AROs.
Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. See Note 43 for additional information on recovery of coal ash costs.
ARO Liability Rollforward
The following tables present changes in the liability associated with AROs.
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Balance at December 31, 2018$10,467 $3,949 $5,411 $4,820 $591 $93 $722 $19 
Accretion expense(a)
508 235 252 227 25 3 28 1 
Liabilities settled(b)
(895)(329)(499)(460)(39)(12)(54)— 
Liabilities incurred in the current year25 18 7 — 7 — — — 
Revisions in estimates of cash flows(c)
3,213 1,861 1,300 1,306 (6)(4)136 (3)
Balance at December 31, 201913,318 5,734 6,471 5,893 578 80 832 17 
Accretion expense(a)
542 258 246 225 21 4 33 1 
Liabilities settled(b)
(724)(198)(451)(358)(93)(2)(74)— 
Liabilities incurred in the current year22 — 5 — 5 — — — 
Revisions in estimates of cash flows(d)
(154)(444)(122)(125)3 29 385 2 
Balance at December 31, 2020$13,004 $5,350 $6,149 $5,635 $514 $111 $1,176 $20 
(a)    Substantially all accretion expense for the years ended December 31, 2020, and 2019, relates to Duke Energy’s regulated operations and has been deferred in accordance with regulatory accounting treatment.
(b)    Amounts primarily relate to ash impoundment closures and nuclear decommissioning.
(c)    Amounts primarily relate to increases in closure estimates for certain ash impoundments as a result of the NCDEQ's April 1, 2019, Order and the related settlement agreement dated December 31, 2019.
(d)    Primarily relates to decreases due to revised basin closure cost estimates, partially offset by increases related to new closure plan approvals, post closure maintenance and beneficiation costs. Duke Energy Indiana estimates also include the impacts of closure estimates for certain ash impoundments due to the impact of Hoosier Environmental Council’s petition filed with the court challenging the Indiana Department of Environmental Management’s partial approval of Duke Energy Indiana’s ash pond closure plan. See Note 4 for more information on Hoosier Environmental Council's petition. The incremental amount recorded represents the discounted cash flows for estimated closure costs based upon the probability weightings of the potential closure methods as evaluated on a site-by-site basis.
182
   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$10,611
 $3,895
 $5,475
 $4,697
 $778
 $77
 $866
 $14
Accretion expense(a)
435
 184
 228
 195
 33
 3
 32
 1
Liabilities settled(b)  
(619) (282) (270) (204) (65) (7) (49) (8)
Liabilities incurred in the current year(c)
51
 5
 —
 —
 —
 7
 29
 8
Revisions in estimates of cash flows(303) (192) (19) (15) (4) 4
 (97) —
Balance at December 31, 201710,175

3,610

5,414

4,673

742

84

781
 15
Accretion expense(a)
427
 179
 225
 196
 29
 4
 29
 1
Liabilities settled(b)  
(638) (281) (272) (227) (45) (5) (79) —
Liabilities incurred in the current year(c)
39
 8
 5
 —
 5
 —
 25
 —
Revisions in estimates of cash flows(d)
464
 433
 39
 178
 (140) 10
 (34) 3
Balance at December 31, 2018$10,467

$3,949

$5,411

$4,820

$591

$93

$722
 $19



(a)Substantially all accretion expense for the years ended December 31, 2018, and 2017 relates to Duke Energy’s regulated operations and has been deferred in accordance with regulatory accounting treatment.
(b)Amounts primarily relate to ash impoundment closures and nuclear decommissioning of Crystal River Unit 3.
(c)Amounts primarily relate to AROs recorded as a result of state agency closure requirements at Duke Energy Indiana.
(d)Amounts primarily relate to increases in groundwater monitoring estimates for closure of ash impoundments and an increase for nuclear decommissioning costs at Duke Energy Carolinas' nuclear sites compared to original estimates, partially offset by a reduction for nuclear decommissioning at Crystal River Unit 3 compared to original estimates and modifications to the timing of expected cash flows for coal ash AROs.

184



FINANCIAL STATEMENTSPROPERTY, PLANT AND EQUIPMENT


10. PROPERTY, PLANT AND EQUIPMENT
The following tables summarize the property, plant and equipment for Duke Energy and its subsidiary registrants.
December 31, 2018December 31, 2020
Estimated                Average
Useful   Duke
   Duke
 Duke
 Duke
 Duke
  RemainingDukeDukeDukeDukeDuke
Life Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Useful LifeDukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)(Years) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont(in millions)(Years)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Land $2,072
 $472
 $868
 $445
 $423
 $136
 $116
 $448
Land$2,046 $536 $908 $463 $445 $171 $118 $279 
Plant – Regulated                Plant – Regulated
Electric generation, distribution and transmission15-100 100,706
 38,468
 42,760
 26,147
 16,613
 5,182
 14,292
 —
Electric generation, distribution and transmission39117,107 44,059 50,785 31,375 19,410 6,255 16,008 — 
Natural gas transmission and distribution12-80 8,808
 —
 —
 —
 —
 2,719
 —
 6,089
Natural gas transmission and distribution5410,799 — — — — 3,136 — 7,663 
Other buildings and improvements24-90 1,966
 681
 636
 295
 341
 270
 253
 126
Other buildings and improvements362,038 740 459 197 262 374 300 165 
Plant – Nonregulated                 Plant – Nonregulated 
Electric generation, distribution and transmission5-30 4,410
 —
 —
 —
 —
 —
 —
 —
Electric generation, distribution and transmission275,444 — — — — — — — 
Other buildings and improvements25-35 494
 —
 —
 —
 —
 —
 —
 —
Other buildings and improvements10519 — — — — — — — 
Nuclear fuel
 3,460
 1,898
 1,562
 1,562
 —
 —
 —
 —
Nuclear fuel3,284 1,837 1,447 1,447 — — — — 
Equipment3-55 2,141
 467
 565
 399
 166
 384
 178
 141
Equipment152,608 620 759 498 261 385 238 122 
Construction in process
 5,726
 1,678
 2,515
 1,659
 856
 412
 325
 382
Construction in process6,645 1,645 2,013 709 1,304 407 409 581 
Other3-40 4,675
 1,077
 1,354
 952
 393
 257
 279
 300
Other145,090 1,203 1,521 1,070 441 294 309 324 
Total property, plant and equipment(a)(d)
 134,458
 44,741
 50,260
 31,459
 18,792
 9,360
 15,443
 7,486
Total accumulated depreciation – regulated(b)(c)(d)
 (41,079) (15,496) (16,398) (11,423) (4,968) (2,717) (4,914) (1,575)
Total accumulated depreciation – nonregulated(c)(d)
 (2,047) —
 —
 —
 —
 —
 —
 —
Total property, plant and equipment(a)(e)
Total property, plant and equipment(a)(e)
155,580 50,640 57,892 35,759 22,123 11,022 17,382 9,134 
Total accumulated depreciation – regulated(b)(c)
Total accumulated depreciation – regulated(b)(c)
(46,216)(17,453)(18,368)(12,801)(5,560)(3,013)(5,661)(1,749)
Total accumulated depreciation – nonregulated(d)(e)
Total accumulated depreciation – nonregulated(d)(e)
(2,611)— — — — — — — 
Generation facilities to be retired, net 362
 —
 362
 362
 —
 —
 —
 —
Generation facilities to be retired, net29 — 29 29 — — — — 
Total net property, plant and equipment $91,694

$29,245

$34,224

$20,398

$13,824

$6,643
 $10,529
 $5,911
Total net property, plant and equipment$106,782 $33,187 $39,553 $22,987 $16,563 $8,009 $11,721 $7,385 
(a)Includes capitalized leases of $1,237 million, $135 million, $257 million, $137 million, $120 million, $73 million and $35 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $131 million, $14 million and $117 million, respectively, of accumulated amortization of capitalized leases.
(b)Includes $1,947 million, $1,087 million, $860 million and $860 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(c)Includes accumulated amortization of capitalized leases of $61 million, $12 million, $20
(a)    Includes finance leases of $832 million, $335 million, $416 million, $297 million, $119 million and $10 million at Duke Energy, Duke Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana, respectively.
(d)Includes gross property, plant and equipment cost of consolidated VIEs of $4,007 million and accumulated depreciation of consolidated VIEs of $698 million at Duke Energy.

185



FINANCIAL STATEMENTSPROPERTY, PLANT AND EQUIPMENT


 December 31, 2017
 Estimated                
 Useful   Duke
   Duke
 Duke
 Duke
 Duke
  
 Life Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)(Years) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Land  $1,559
 $467
 $767
 $424
 $343
 $134
 $111
 $41
Plant – Regulated                 
Electric generation, distribution and transmission8-100 93,687
 35,657
 39,419
 24,502
 14,917
 4,870
 13,741
 —
Natural gas transmission and distribution12-80 8,292
 —
 —
 —
 —
 2,559
 —
 5,733
Other buildings and improvements15-100 1,936
 647
 652
 316
 336
 243
 240
 154
Plant – Nonregulated                 
Electric generation, distribution and transmission(a)
5-30 4,273
 —
 —
 —
 —
 —
 —
 —
Other buildings and improvements25-35 465
 —
 —
 —
 —
 —
 —
 —
Nuclear fuel  3,680
 2,120
 1,560
 1,560
 —
 —
 —
 —
Equipment3-55 2,122
 402
 555
 416
 139
 348
 169
 266
Construction in process  6,995
 2,614
 3,059
 1,434
 1,625
 350
 416
 231
Other3-40 4,498
 1,032
 1,311
 931
 370
 228
 271
 300
Total property, plant and equipment(b)(e)
  127,507
 42,939
 47,323
 29,583
 17,730
 8,732
 14,948
 6,725
Total accumulated depreciation – regulated(c)(d)(e)
  (39,742) (15,063) (15,857) (10,903) (4,947) (2,691) (4,662) (1,479)
Total accumulated depreciation – nonregulated(d)(e)
  (1,795) —
 —
 —
 —
 —
 —
 —
Generation facilities to be retired, net  421
 —
 421
 421
 —
 —
 —
 —
Total net property, plant and equipment  $86,391
 $27,876
 $31,887
 $19,101
 $12,783
 $6,041
 $10,286
 $5,246
(a)Includes a pretax impairment charge of $58 million on a wholly owned non-contracted wind project. See discussion below.
(b)Includes capitalized leases of $1,294 million, $81 million, $272 million, $139 million, $133 million, $80 million and $35 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $114 million, $11 million and $103 million, respectively, of accumulated amortization of capitalized leases.
(c)Includes $2,113 million, $1,283 million, $831 million and $831 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(d)Includes accumulated amortization of capitalized leases of $57 million, $11 million, $21 million and $9 million at Duke Energy, Duke Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana, respectively.
(e)Includes gross property, plant and equipment cost of consolidated VIEs of $3,941 million and accumulated depreciation of consolidated VIEs of $598 million at Duke Energy.
During the year ended December 31, 2017, Duke Energy, recorded a pretax impairment chargeDuke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $69$141 million, on a wholly owned non-contracted wind project. The impairment was recorded within Impairment charges on Duke Energy’s Consolidated Statements$24 million and $117 million, respectively, of Operations. $58accumulated amortization of finance leases.
(b)    Includes $1,832 million, $1,010 million, $822 million and $822 million of the impairment related toaccumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(c)    Includes accumulated amortization of finance leases of $12 million, $23 million and $3 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.
(d)    Includes accumulated amortization of finance leases of $23 million at Duke Energy.
(e)    Includes gross property, plant and equipment cost of consolidated VIEs of $6,394 million and $11accumulated depreciation of consolidated VIEs of $1,242 million at Duke Energy.
In 2020, Duke Energy evaluated recoverability of its renewable merchant plants principally located in the impairment related to a net intangible asset; see Note 11 for additional information. The charge representsElectric Reliability Council of Texas West market and in the excess carrying value over the estimated fair value of the project, which was based on a Level 3 Fair Value measurement that was determined from the income approach using discounted cash flows. The impairment was primarilyPJM West market due to the non-contracted wind project being located in a market that has experienced continued declining market pricing during 2017 and declining long-term forecasted energy and capacity prices, primarily driven by lowlower forecasted natural gas prices, additionalprices. Duke Energy determined that the assets were not impaired because the carrying value of $210 million approximates the aggregate estimated future undiscounted cash flows. A continued decline in energy market pricing would likely result in a future impairment. Duke Energy retained 51% ownership interest in these facilities following the 2019 transaction to sell a minority interest in certain renewable generation placed in service and lack of significant load growth.

assets. See Note 1 for further information.
186
183






FINANCIAL STATEMENTSPROPERTY, PLANT AND EQUIPMENT


December 31, 2019
Average
RemainingDukeDukeDukeDukeDuke
Useful LifeDukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)(Years)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Land$2,091 $520 $884 $449 $435 $150 $117 $388 
Plant – Regulated
Electric generation, distribution and transmission39111,739 42,723 48,142 30,018 18,124 5,838 15,032 — 
Natural gas transmission and distribution549,839 — — — — 2,892 — 6,947 
Other buildings and improvements321,810 714 401 162 239 269 278 148 
Plant – Nonregulated 
Electric generation, distribution and transmission285,103 — — — — — — — 
Other buildings and improvements9488 — — — — — — — 
Nuclear fuel3,253 1,891 1,362 1,362 — — — — 
Equipment132,313 546 665 452 213 319 205 128 
Construction in process6,102 1,389 2,149 1,114 1,035 504 381 531 
Other134,916 1,139 1,467 1,046 411 269 292 304 
Total property, plant and equipment(a)(e)
147,654 48,922 55,070 34,603 20,457 10,241 16,305 8,446 
Total accumulated depreciation – regulated(b)(c)
(43,419)(16,525)(17,159)(11,915)(5,236)(2,843)(5,233)(1,681)
Total accumulated depreciation – nonregulated(d)(e)
(2,354)— — — — — — — 
Generation facilities to be retired, net246 — 246 246 — — — — 
Total net property, plant and equipment$102,127 $32,397 $38,157 $22,934 $15,221 $7,398 $11,072 $6,765 
(a)    Includes finance leases of $952 million, $211 million, $443 million, $308 million, $135 million, and $10 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $143 million, $17 million and $126 million, respectively, of accumulated amortization of finance leases.
(b)    Includes $1,807 million, $1,082 million, $725 million and $725 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(c)    Includes accumulated amortization of finance leases of $6 million, $13 million, and $3 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.
(d)    Includes accumulated amortization of finance leases of $20 million at Duke Energy.
(e)    Includes gross property, plant and equipment cost of consolidated VIEs of $5,747 million and accumulated depreciation of consolidated VIEs of $1,041 million at Duke Energy.
The following tables present capitalized interest, which includes the debt component of AFUDC.
Years Ended December 31,
(in millions)202020192018
Duke Energy$112 $159 $161 
Duke Energy Carolinas28 30 35 
Progress Energy17 31 51 
Duke Energy Progress12 28 26 
Duke Energy Florida5 3 25 
Duke Energy Ohio26 22 17 
Duke Energy Indiana10 26 27 
Piedmont8 26 17 
184
 Years Ended December 31,
(in millions)2018
 2017
 2016
Duke Energy$161
 $128
 $100
Duke Energy Carolinas35
 45
 38
Progress Energy51
 45
 31
Duke Energy Progress26
 21
 17
Duke Energy Florida25
 24
 14
Duke Energy Ohio17
 10
 8
Duke Energy Indiana27
 9
 7


 Years Ended December 31, Two Months Ended December 31, 
Year Ended
October 31,
(in millions)2018 2017 2016 2016
Piedmont$17
 $12
 $2
 $12

Operating Leases
FINANCIAL STATEMENTSGOODWILL AND INTANGIBLE ASSETS
Duke Energy's Commercial Renewables segment operates various renewable energy projects and sells the generated output to utilities, electric cooperatives, municipalities and commercial and industrial customers through long-term contracts. In certain situations, these long-term contracts and the associated renewable energy projects qualify as operating leases. Rental income from these leases is accounted for as Operating Revenues in the Consolidated Statements of Operations. There are no minimum lease payments as all payments are contingent based on actual electricity generated by the renewable energy projects. Contingent lease payments were $268 million, $262 million, and $216 million for the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018, renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,358 million and accumulated depreciation of $602 million. These assets are principally classified as nonregulated electric generation and transmission assets.
11. GOODWILL AND INTANGIBLE ASSETS
GoodwillGOODWILL
Duke Energy
The following table presents goodwill by reportable segment for Duke Energy included on Duke Energy's Consolidated Balance Sheets at December 31, 2020, and 2019.
Electric UtilitiesGas UtilitiesCommercial
(in millions)and Infrastructureand InfrastructureRenewablesTotal
Goodwill Balance at December 31, 2019$17,379 $1,924 $122 $19,425 
Accumulated impairment charges— — (122)(122)
Goodwill balance at December 31, 2019, adjusted for accumulated impairment charges$17,379 $1,924 $— $19,303 
Goodwill Balance at December 31, 2020$17,379 $1,924 $122 $19,425 
Accumulated impairment charges— — (122)(122)
Goodwill balance at December 31, 2020, adjusted for accumulated impairment charges$17,379 $1,924 $— $19,303 
(a)    Duke Energy evaluated the recoverability of goodwill during 2018 and 2017.2017 and recorded impairment charges of $93 million and $29 million, respectively, related to the Commercial Renewables reporting unit included in Impairment charges on Duke Energy's Consolidated Statements of Operations. The fair value of the reporting unit was determined based on the income approach and market approach in 2018 and 2017, respectively. See "Goodwill Impairment Testing" below for the results of the 2020 goodwill impairment test.
 Electric Utilities
 Gas Utilities
 Commercial
  
(in millions)and Infrastructure
 and Infrastructure
 Renewables
 Total
Goodwill Balance at December 31, 2017$17,379
 $1,924
 $122
 $19,425
Accumulated impairment charges(a)
—
 —
 (29) (29)
Goodwill balance at December 31, 2017, adjusted for accumulated impairment charges$17,379
 $1,924
 $93
 $19,396
        
Goodwill Balance at December 31, 2018$17,379
 $1,924
 $122
 $19,425
Accumulated impairment charges(a)
$—
 $—
 $(122) $(122)
Goodwill balance at December 31, 2018, adjusted for accumulated impairment charges$17,379
 $1,924
 $—
 $19,303
(a)Duke Energy evaluated the recoverability of goodwill during 2017 and recorded impairment charges of $29 million related to the Energy Management Solutions reporting unit within the Commercial Renewables segment. The fair value of the reporting unit was determined based on the market approach. See "Goodwill Impairment Testing" below for the results of the 2018 goodwill impairment test.
Duke Energy Ohio
Duke Energy Ohio's Goodwill balance of $920$920 million,, allocated $596 million to Electric Utilities and Infrastructure and $324 million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $216 million on the Consolidated Balance Sheets at December 31, 2018,2020, and 2017.2019.
Progress Energy
Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure segment and there are no0 accumulated impairment charges.

187



FINANCIAL STATEMENTSGOODWILL AND INTANGIBLE ASSETS


Piedmont
Piedmont's Goodwill is included in the Gas Utilities and Infrastructure segment and there are no0 accumulated impairment charges.
Goodwill Impairment Testing
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.
In the third quarter of 2018, based on the results of the annual quantitative goodwill impairment test, management determined that As the fair value
of the Commercial Renewables reporting unit was below its respective carrying value, including goodwill. Determination of the Commercial Renewables reporting unit fair value was based on an income approach, which estimates the fair value based on discounted future cash flows. The fair value of the Commercial Renewables reporting unit is impacted by several factors, including forecasted tax credit utilization, the cost of capital, current and forecasted solar and wind volumes, and legislative developments. Certain assumptions used in determining the fair value of the reporting unit in the 2018 impairment test changed from those used in the 2017 annual impairment test including the cost of capital as a result of rising interest rates and the timing of tax credit utilization due to tax reform and IRS clarification on bonus depreciation in August 2018. Based on the quantitative impairment test, the estimated fair value of the Commercial Renewables reporting unit was below its carrying value by an immaterial amount but still more than the goodwill balance assigned to the reporting unit. As such, the entire remaining goodwill balance of approximately $93 million was impaired during the third quarter of 2018.

The fair value of all other reporting units for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis.analysis, 0 goodwill impairment charges were recorded in 2020.
Intangible Assets
185



FINANCIAL STATEMENTSGOODWILL AND INTANGIBLE ASSETS
INTANGIBLE ASSETS
The following tables show the carrying amount and accumulated amortization of intangible assets included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets of the Duke Energy Registrants at December 31, 2018,2020, and 2017.
2019.
December 31, 2018 December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Emission allowances$18
 $—
 $5
 $2
 $3
 $—
 $12
 $—
Emission allowances$8 $— $5 $2 $3 $— $2 $— 
Renewable energy certificates168
 46
 120
 120
 —
 2
 —
 —
Renewable energy certificates196 65 130 130 — 1 — — 
Natural gas, coal and power contracts24
 —
 —
 —
 —
 —
 24
 —
Natural gas, coal and power contracts24 — — — — — 24 — 
Renewable operating and development projects84
 —
 —
 —
 —
 —
 —
 —
Renewable operating and development projects107 — — — — — — — 
Other6
 —
 —
 —
 —
 —
 —
 3
Other20 — — — — — — — 
Total gross carrying amounts300
 46
 125
 122
 3
 2
 36
 3
Total gross carrying amounts355 65 135 132 3 1 26 — 
Accumulated amortization – natural gas, coal and power contracts(20) —
 —
 —
 —
 —
 (20) —
Accumulated amortization – natural gas, coal and power contracts(23)— — — — — (23)— 
Accumulated amortization – renewable operating and development projects(29) —
 —
 —
 —
 —
 —
 —
Accumulated amortization – renewable operating and development projects(34)— — — — — — — 
Accumulated amortization – other(5) —
 —
 —
 —
 —
 —
 (3)Accumulated amortization – other(3)— — — — — — — 
Total accumulated amortization(54) —
 —
 —
 —
 —
 (20) (3)Total accumulated amortization(60)— — — — — (23)— 
Total intangible assets, net$246

$46

$125

$122

$3

$2

$16
 $—
Total intangible assets, net$295 $65 $135 $132 $3 $1 $3 $— 

 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Emission allowances$18 $— $5 $2 $3 $— $12 $— 
Renewable energy certificates172 53 118 118 — 1 — — 
Natural gas, coal and power contracts24 — — — — — 24 — 
Renewable operating and development projects89 — — — — — — — 
Other2 — — — — — — — 
Total gross carrying amounts305 53 123 120 3 1 36 — 
Accumulated amortization – natural gas, coal and power contracts(21)— — — — — (21)— 
Accumulated amortization – renewable operating and development projects(34)— — — — — — — 
Accumulated amortization – other(1)— — — — — — — 
Total accumulated amortization(56)— — — — — (21)— 
Total intangible assets, net$249 $53 $123 $120 $3 $1 $15 $— 
188



FINANCIAL STATEMENTSGOODWILL AND INTANGIBLE ASSETS


 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
Emission allowances$19
 $1
 $5
 $2
 $3
 $—
 $13
 $—
Renewable energy certificates148
 38
 107
 107
 —
 3
 —
 —
Natural gas, coal and power contracts24
 —
 —
 —
 —
 —
 24
 —
Renewable operating and development projects79
 —
 —
 —
 —
 —
 —
 —
Other6
 —
 —
 —
 —
 —
 —
 3
Total gross carrying amounts276
 39
 112
 109
 3
 3
 37
 3
Accumulated amortization – natural gas, coal and power contracts(19) —
 —
 —
 —
 —
 (19) —
Accumulated amortization – renewable operating and development projects(22) —
 —
 —
 —
 —
 —
 —
Accumulated amortization – other(5) —
 —
 —
 —
 —
 —
 (3)
Total accumulated amortization(46) —
 —
 —
 —
 —
 (19) (3)
Total intangible assets, net$230

$39

$112

$109

$3

$3

$18
 $—
During the year ended December 31, 2017, Duke Energy recorded a pretax impairment charge of $69 million on a wholly owned non-contracted wind project. The impairment was recorded within Impairment charges on Duke Energy’s Consolidated Statements of Operations. $58 million of the impairment related to property, plant and equipment and $11 million of the impairment related to a net intangible asset that was recorded in 2007 when the project was acquired. Prior to the impairment, the gross amount of the intangible asset was $18 million and the accumulated amortization was $7 million. The intangible asset was fully impaired. See Note 10 for additional information.
Amortization Expense
Amortization expense amounts for natural gas, coal and power contracts, renewable operating projects and other intangible assets are immaterial for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, and are expected to be immaterial for the next five years as of December 31, 2018.2020.
12. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
EQUITY METHOD INVESTMENTS
Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method.
186



FINANCIAL STATEMENTSINVESTMENTS IN UNCONSOLIDATED AFFILIATES
The following table presents Duke Energy’s investments in unconsolidated affiliates accounted for under the equity method, as well as the respective equity in earnings, by segment.
Years Ended December 31, Years Ended December 31,
2018 2017 2016 202020192018
  Equity in
   Equity in
  Equity in
Equity inEquity inEquity in
(in millions)Investments
 earnings
 Investments
 earnings
 Investments
earnings
(in millions)InvestmentsearningsInvestmentsearningsInvestmentsearnings
Electric Utilities and Infrastructure$97
 $6
 $89
 $5
 $93
$5
Electric Utilities and Infrastructure$105 $(1)$122 $9 $97 $6 
Gas Utilities and Infrastructure1,003
 27
 763
 62
 566
19
Gas Utilities and Infrastructure215 (2,017)1,388 114 1,003 27 
Commercial Renewables201
 (1) 190
 (5) 185
(82)Commercial Renewables534 — 314 (4)201 (1)
Other108
 51
 133
 57
 81
43
Other107 13 112 43 108 51 
Total$1,409

$83

$1,175

$119

$925
$(15)Total$961 $(2,005)$1,936 $162 $1,409 $83 
During the years ended December 31, 2018, 20172020, 2019 and 2016,2018, Duke Energy received distributions from equity investments of $108$37 million, $13$55 million and $31$108 million, respectively, which are included in Other assets within Cash Flows from Operating Activities on the Consolidated Statements of Cash Flows. During the years ended December 31, 2018,2020, 2019 and 2017,2018, Duke Energy received distributions from equity investments of $137$133 million, $11 million and $281$137 million, respectively, which are included in Return of investment capital within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows.
During the years ended December 31, 2018,2020, 2019 and 2017, and the two months ended December 31, 2016, and the year ended October 31, 2016,2018, Piedmont received distributions from equity investments of $1 million, $4$2 million, $1 million and $26$1 million, respectively, which are included in Other assets within Cash Flows from Operating Activities and $3 million, $2 million, $1$4 million and $18$3 million, respectively, which are included within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows.
Significant investments in affiliates accounted for under the equity method are discussed below.

189



FINANCIAL STATEMENTSINVESTMENTS IN UNCONSOLIDATED AFFILIATES


Electric Utilities and Infrastructure
Duke Energy owns a 50 percent interest50% interests in both 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 NameInterest 2018 2017
Pipeline Investments     
Atlantic Coast Pipeline, LLC(a)
47% $797
 $397
Sabal Trail Transmission, LLC7.5% 112
(d) 
219
Constitution Pipeline, LLC(a)
24% 25
 81
Cardinal Pipeline Company, LLC(b)
21.49% 10
 11
Storage Facilities     
Pine Needle LNG Company, LLC(b)
45% 13
 13
Hardy Storage Company, LLC(b)
50% 46
 42
Total Investments(c)
  $1,003
 $763
Investment Amount (in millions)
OwnershipDecember 31,
Entity NameInterest20202019
Pipeline Investments(a)
ACP(b)
47 %$— $1,179 
Sabal Trail7.5 %120 121 
Cardinal(c)
21.49 %9 9 
Storage Facilities
Pine Needle(c)
45 %27 28 
Hardy Storage(c)
50 %56 51 
Other29.68 %3 — 
Total Investments(d)
$215 $1,388 
(a)
During the year ended December 31, 2017, Piedmont transferred its share of ownership interest in ACP and Constitution to a wholly owned subsidiary of Duke Energy at book value.
(b)Piedmont owns the Cardinal, Pine Needle and Hardy Storage investments.
(c)Duke Energy includes purchase accounting adjustments related to Piedmont.
(d)Sabal Trail returned capital of $112 million during the year ended December 31, 2018.
In October 2017,    Duke Energy entered into a guarantee agreementrecorded OTTIs of $25 million and $55 million within Equity in (losses) earnings of unconsolidated affiliates on Duke Energy's Consolidated Statements of Operations for the years ended December 31, 2019, and 2018, respectively, to supportcompletely impair its share24% ownership interest in Constitution.
(b)    In 2020, Duke Energy determined it would no longer continue its investment in the construction of the ACP revolving credit facility.pipeline. See NoteNotes 3 and 7 for additionalfurther information. As a result of
(c)    Piedmont owns the financing, ACP returned capital of $265 million to Duke Energy.Cardinal, Pine Needle and Hardy Storage investments.
Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016, for $160 million resulting in an after tax gain of $81 million during the year ended October 31, 2016. Piedmont's Equity in Earnings in SouthStar was $19 million for the year ended October 31, 2016.
During the fourth quarter of 2018, ACP received several adverse court rulings as described in Note 4. As a result,(d)    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 17.includes purchase accounting adjustments related to Piedmont.
Commercial Renewables
Duke Energy has a 50 percent interest in DS Cornerstone, LLC, which owns wind farm projects in the U.S.
Impairment was part of Equity Method Investments
During the year ended December 31, 2018, Duke Energy recorded an OTTIa sale of the Constitution investmentminority interest in a certain portion of $55 million within Equityrenewable assets in earnings of unconsolidated affiliates on Duke Energy's Consolidated Statements of Operations. The charge represents the excess carrying value over the estimated fair value of the project, which was based on a Level 3 Fair Value measurement that was determined from the income approach using discounted cash flows. The impairment was primarily due to the recent actions taken by the courts and regulators to uphold the NYSDEC's denial of the certification and uncertainty associated with the remaining legal and regulatory challenges. For additional2019. See Note 1 for more information on the Constitution investment, see Note 4.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.
During the year endedAs of December 31, 2016,2020, Duke Energy recorded an OTTIcompleted its acquisition of certain wind project investments. The $71 million pretax impairment was recorded within Equity in earnings (losses)70 distributed fuel cell projects from Bloom Energy Corporation, which approximates 43 MW of unconsolidated affiliates oncapacity serving commercial and industrial customers across the U.S. Duke Energy's Consolidated StatementsEnergy is not the primary beneficiary of Operations. The other-than-temporary decline in value ofthe distributed fuel cell portfolio and does not consolidate these investments was primarily attributable to a sustained decline in market pricing where the wind investments are located, projected net losses for the projects and a reduction in the projected cash distribution to the class of investment owned by Duke Energy.assets.
187



FINANCIAL STATEMENTSINVESTMENTS IN UNCONSOLIDATED AFFILIATES
Other
Duke Energy ownshas a 17.5 percent17.5% indirect economic ownership interest and 25% board representation and voting rights interest in NMC, which owns and operates a methanol and MTBE business in Jubail, Saudi Arabia.
Significant Subsidiaries
For the year ended December 31, 2020, Duke Energy's economic ownership interest decreased from 25investment in ACP met the requirements of S-X Rule 4-08(g) to 17.5 percent withprovide summarized financial information. The following table provides summary information for ACP as required under S-X Rule 1-02(bb) for the successful startupcomparative periods in Duke Energy's consolidated balance sheets and consolidated statements of NMC's polyacetal production facility in 2017. Duke Energy retains 25 percent of the board representation and voting rights of NMC.operations.

December 31,
(in millions)20202019
Current assets$43 $17 
Noncurrent assets93 4,091 
Current liabilities1,965 37 
Noncurrent liabilities167 1,760 
Membership interests(1,996)2,311 
Years Ended December 31,
202020192018
Net revenues$0 $— $— 
Operating loss(4,612)(5)(6)
Net (loss) income(4,512)246 138 
Net (loss) income attributable to Duke Energy$(2,121)$116 $65 
190
188






FINANCIAL STATEMENTSRELATED PARTY TRANSACTIONS


13. 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)202020192018
Duke Energy Carolinas   
Corporate governance and shared service expenses(a)
$753 $841 $985 
Indemnification coverages(b)
20 20 22 
Joint Dispatch Agreement (JDA) revenue(c)
25 60 84 
JDA expense(c)
114 186 207 
Intercompany natural gas purchases(d)
15 15 15 
Progress Energy   
Corporate governance and shared service expenses(a)
$715 $778 $906 
Indemnification coverages(b)
36 37 34 
JDA revenue(c)
114 186 207 
JDA expense(c)
25 60 84 
Intercompany natural gas purchases(d)
75 76 78 
Duke Energy Progress   
Corporate governance and shared service expenses(a)
$420 $462 $577 
Indemnification coverages(b)
17 15 13 
JDA revenue(c)
114 186 207 
JDA expense(c)
25 60 84 
Intercompany natural gas purchases(d)
75 76 78 
Duke Energy Florida   
Corporate governance and shared service expenses(a)
$295 $316 $329 
Indemnification coverages(b)
19 22 21 
Duke Energy Ohio   
Corporate governance and shared service expenses(a)
$326 $354 $374 
Indemnification coverages(b)
4 4 5 
Duke Energy Indiana   
Corporate governance and shared service expenses(a)
$401 $412 $405 
Indemnification coverages(b)
8 7 7 
Piedmont
Corporate governance and shared service expenses(a)
$140 $138 $170 
Indemnification coverages(b)
3 3 2 
Intercompany natural gas sales(d)
90 91 93 
Natural gas storage and transportation costs(e)
23 23 25 
(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.
189
 Years Ended December 31,
(in millions)2018
 2017
 2016
Duke Energy Carolinas     
Corporate governance and shared service expenses(a)
$985
 $858
 $831
Indemnification coverages(b)
22
 23
 22
JDA revenue(c)
84
 49
 38
JDA expense(c)
207
 145
 156
Intercompany natural gas purchases(d)
15
 9
 2
Progress Energy     
Corporate governance and shared service expenses(a)
$906
 $736
 $710
Indemnification coverages(b)
34
 38
 35
JDA revenue(c)
207
 145
 156
JDA expense(c)
84
 49
 38
Intercompany natural gas purchases(d)
78
 77
 19
Duke Energy Progress     
Corporate governance and shared service expenses(a)
$577
 $438
 $397
Indemnification coverages(b)
13
 15
 14
JDA revenue(c)
207
 145
 156
JDA expense(c)
84
 49
 38
Intercompany natural gas purchases(d)
78
 77
 19
Duke Energy Florida     
Corporate governance and shared service expenses(a)
$329
 $298
 $313
Indemnification coverages(b)
21
 23
 21
Duke Energy Ohio     
Corporate governance and shared service expenses(a)
$374
 $363
 $356
Indemnification coverages(b)
5
 5
 5
Duke Energy Indiana     
Corporate governance and shared service expenses(a)
$405
 $370
 $366
Indemnification coverages(b)
7
 8
 8
Piedmont     
Corporate governance and shared service expenses(a)
$170
 $50
  
Indemnification coverages(b)

2
 2
  
Intercompany natural gas sales(d)

93
 86
  
Natural gas storage and transportation costs(e)
25
 25
  



(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. For the two months ended December 31, 2016, and for sales made subsequent to the acquisition for the year ended October 31, 2016, Piedmont recorded $14 million and $7 million, respectively, of natural gas sales with Duke Energy. For sales made prior to the acquisition for the year ended October 31, 2016, Piedmont recorded $74 million of natural gas sales with Duke Energy.

191



FINANCIAL STATEMENTSRELATED PARTY TRANSACTIONS


(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. For the two months ended December 31, 2016, and for the year ended October 31, 2016, Piedmont recorded $6 million and $29 million, respectively, of natural gas storage and transportation costs.
In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions and their proportionate share of certain charged expenses. See Note 6 for more information regarding money pool. These transactions of the Subsidiary Registrants are incurred in the ordinary course of business and are eliminated in consolidation.
As discussed in Note 17, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.
Intercompany Income Taxes
Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.
DukeDukeDukeDukeDuke
EnergyProgressEnergyEnergyEnergyEnergy
(in millions)CarolinasEnergyProgressFloridaOhioIndianaPiedmont
December 31, 2020
Intercompany income tax receivable$— $— $— $— $— $9 $10 
Intercompany income tax payable31 33 46 35 2 — — 
December 31, 2019
Intercompany income tax receivable$— $125 $28 $— $9 $28 $13 
Intercompany income tax payable5 — — 2 — — — 
 Duke
 Duke
Duke
Duke
Duke
 
 Energy
Progress
Energy
Energy
Energy
Energy
 
(in millions)Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
December 31, 2018       
Intercompany income tax receivable$52
$47
$29
$—
$—
$8
$—
Intercompany income tax payable—
—
—
16
3
—
45
        
December 31, 2017       
Intercompany income tax receivable$—
$168
$—
$44
$22
$—
$7
Intercompany income tax payable44
—
21
—
—
35
—
14. 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 swapsderivatives 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.
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, 2018, 20172020, 2019 and 20162018, 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.segment and forward-starting interest rate swaps not accounted for under regulatory accounting.
Undesignated Contracts
Undesignated contracts primarily include contracts not designated as a hedge because they are accounted for under regulatory accounting or contracts that do not qualify for hedge accounting.

192



FINANCIAL STATEMENTSDERIVATIVES AND HEDGING


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.
In August 2016, Duke Energy unwound $1.4 billion of forward-starting interest rate swaps associated with the Piedmont acquisition financing. The swaps were considered undesignated as they did not qualify for hedge accounting. Losses on the swaps of $190 million are included within Interest Expense on the Consolidated Statements of Operations for the year ended December 31, 2016. See Note 2 for additional information related to the Piedmont acquisition.
190



FINANCIAL STATEMENTSDERIVATIVES AND HEDGING
The following tables show notional amounts of outstanding derivatives related to interest rate risk.
 December 31, 2018
   Duke
   Duke
 Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
Cash flow hedges$923
 $—
 $—
 $—
 $—
 $—
Undesignated contracts1,721
 300
 1,200
 650
 550
 27
Total notional amount(a)
$2,644
 $300
 $1,200
 $650
 $550
 $27
December 31, 2017December 31, 2020
  Duke
   Duke
 Duke
 Duke
DukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
DukeEnergyProgressEnergyEnergyEnergy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
(in millions)EnergyCarolinasEnergyProgressFloridaOhio
Cash flow hedges(a)
$660
 $—
 $—
 $—
 $—
 $—
Cash flow hedgesCash flow hedges$632 $— $— $— $— $— 
Undesignated contracts927
 400
 500
 250
 250
 27
Undesignated contracts1,177 400 750 750 — 27 
Total notional amount$1,587
 $400
 $500
 $250
 $250
 $27
Total notional amount(a)
Total notional amount(a)
$1,809 $400 $750 $750 $— $27 
December 31, 2019
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhio
Cash flow hedges$993 $— $— $— $— $— 
Undesignated contracts1,277 450 800 250 550 27 
Total notional amount(a)
$2,270 $450 $800 $250 $550 $27 
(a)Duke Energy includes amounts related to consolidated VIEs of $422 million in cash flow hedges and $194 million in undesignated contracts as of December 31, 2018, and $660 million in cash flow hedges as of December 31, 2017.
(a)    Duke Energy includes amounts related to consolidated VIEs of $632 million in cash flow hedges as of December 31, 2020, and $693 million in cash flow hedges as of December 31, 2019.
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. To manage risk associated with commodity prices, the Duke Energy Registrants may enter into long-term power purchase or sales contracts and long-term natural gas supply agreements.
Cash Flow Hedges
For derivatives designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Gains and losses reclassified out of accumulated other comprehensive income (loss) for the year ended December 31, 2020, 2019 and 2018, were not material. Duke Energy’s commodity derivatives designated as hedges include long-term electricity sales in the Commercial Renewables segment.
Undesignated Contracts
For the Subsidiary Registrants, bulk power electricity and coal and natural gas purchases flow through fuel adjustment clauses, formula basedformula-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.
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, 2018
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Electricity (gigawatt-hours)15,286
 —
 —
 —
 —
 1,786
 13,500
 —
Natural gas (millions of dekatherms)739
 121
 169
 166
 3
 —
 1
 448
 December 31, 2017
   Duke
   Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Indiana
 Piedmont
Electricity (gigawatt-hours)34
 —
 —
 —
 —
 34
 —
Natural gas (millions of dekatherms)770
 105
 183
 133
 50
 2
 480

December 31, 2020
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
EnergyCarolinasEnergyProgressOhioIndianaPiedmont
Electricity (GWh)(a)
35,409 — — — 2,559 10,802 — 
Natural gas (millions of Dth)678 145 158 158 — 2 373 
193
191






FINANCIAL STATEMENTSDERIVATIVES AND HEDGING


December 31, 2019
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
EnergyCarolinasEnergyProgressOhioIndianaPiedmont
Electricity (GWh)15,858 — — — 1,887 13,971 — 
Natural gas (millions of Dth)704 130 160 160 — 3 411 
(a)    Duke Energy includes 22,048 GWh that relates to cash flow hedges.
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, 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
Derivative AssetsDerivative AssetsDecember 31, 2020
   Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts                Commodity Contracts
Not Designated as Hedging Instruments                Not Designated as Hedging Instruments
Current $33
 $14
 $10
 $5
 $6
 $—
 $—
 $8
Current$30 $14 $9 $9 $— $1 $6 $1 
Noncurrent 158
 10
 15
 6
 —
 —
 —
 133
Noncurrent13 6 6 6 — — — — 
Total Derivative Liabilities – Commodity Contracts $191
 $24
 $25
 $11
 $6
 $—
 $—
 $141
Total Derivative Assets – Commodity ContractsTotal Derivative Assets – Commodity Contracts$43 $20 $15 $15 $— $1 $6 $1 
Interest Rate Contracts                Interest Rate Contracts
Designated as Hedging Instruments                
Current $12
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Noncurrent 6
 —
 —
 —
 —
 —
 —
 —
Not Designated as Hedging Instruments                Not Designated as Hedging Instruments
Current 23
 9
 13
 11
 2
 1
 —
 —
Current$18 $0 $18 $18 $— $— $— $— 
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
Total Derivative Assets – Interest Rate ContractsTotal Derivative Assets – Interest Rate Contracts$18 $0 $18 $18 $— $— $— $— 
Total Derivative AssetsTotal Derivative Assets$61 $20 $33 $33 $— $1 $6 $1 

Derivative LiabilitiesDecember 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts
Designated as Hedging Instruments
Current$14 $— $— $— $— $— $— $— 
Noncurrent70 — — — — — — — 
Not Designated as Hedging Instruments
Current$30 $13 $2 $2 $— $— $1 $15 
Noncurrent137 3 27 12 — — — 107 
Total Derivative Liabilities – Commodity Contracts$251 $16 $29 $14 $— $— $1 $122 
Interest Rate Contracts
Designated as Hedging Instruments
Current$15 $— $— $— $— $— $— $— 
Noncurrent48 — — — — — — — 
Not Designated as Hedging Instruments
Current5 4 — — — 1 — — 
Noncurrent5 — — — — 5 — — 
Total Derivative Liabilities – Interest Rate Contracts$73 $4 $— $— $— $6 $— $— 
Total Derivative Liabilities$324 $20 $29 $14 $— $6 $1 $122 
194
192






FINANCIAL STATEMENTSDERIVATIVES AND HEDGING


Derivative AssetsDecember 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current$17 $— $— $— $— $3 $13 $1 
Noncurrent1 — — — — 1 — — 
Total Derivative Assets – Commodity Contracts$18 $— $— $— $— $4 $13 $1 
Interest Rate Contracts
Not Designated as Hedging Instruments
Current6 — 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 LiabilitiesDecember 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current$67 $33 $26 $26 $— $— $1 $7 
Noncurrent156 10 37 22 — — — 110 
Total Derivative Liabilities – Commodity Contracts$223 $43 $63 $48 $— $— $1 $117 
Interest Rate Contracts
Designated as Hedging Instruments
Current$19 $— $— $— $— $— $— $— 
Noncurrent21 — — — — — — — 
Not Designated as Hedging Instruments
Current8 6 1 1 — 1 — — 
Noncurrent5 — — — — 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 Securities Contracts$24 $— $24 $— $24 $— $— $— 
Total Derivative Liabilities$300 $49 $88 $49 $24 $6 $1 $117 
Derivative Assets 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
Commodity Contracts                
Not Designated as Hedging Instruments                
Current $34
 $2
 $2
 $1
 $1
 $1
 $27
 $2
Noncurrent 1
 —
 1
 1
 —
 —
 —
 —
Total Derivative Assets – Commodity Contracts $35
 $2
 $3
 $2
 $1
 $1
 $27

$2
Interest Rate Contracts                
Designated as Hedging Instruments                
Current $1
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Noncurrent 15
 —
 —
 —
 —
 —
 —
 —
Total Derivative Assets – Interest Rate Contracts $16
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Total Derivative Assets $51
 $2
 $3
 $2
 $1
 $1
 $27
 $2
193
Derivative Liabilities 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
Commodity Contracts                
Not Designated as Hedging Instruments                
Current $36
 $6
 $18
 $8
 $10
 $—
 $—
 $11
Noncurrent 146
 4
 10
 4
 —
 —
 —
 131
Total Derivative Liabilities – Commodity Contracts $182
 $10
 $28
 $12
 $10
 $—
 $—
 $142
Interest Rate Contracts                
Designated as Hedging Instruments                
Current $29
 $25
 $—
 $—
 $—
 $—
 $—
 $—
Noncurrent 6
 —
 —
 —
 —
 —
 —
 —
Not Designated as Hedging Instruments                
Current 1
 —
 1
 —
 —
 1
 —
 —
Noncurrent 12
 —
 7
 6
 2
 4
 —
 —
Total Derivative Liabilities – Interest Rate Contracts $48
 $25
 $8
 $6
 $2
 $5
 $—
 $—
Total Derivative Liabilities $230
 $35
 $36
 $18
 $12
 $5
 $—
 $142

195






FINANCIAL STATEMENTSDERIVATIVES 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, 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  
Derivative AssetsDerivative AssetsDecember 31, 2020
   Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current                Current
Gross amounts recognized $68
 $23
 $23
 $16
 $8
 $1
 $—
 $8
Gross amounts recognized$48 $14 $27 $27 $— $1 $6 $1 
Gross amounts offset (4) (2) (2) (2) —
 —
 —
 —
Gross amounts offset(3)(2)(2)(2)— — — — 
Net amounts presented in Current Liabilities: Other $64
 $21
 $21
 $14
 $8
 $1
 $—
 $8
Net amounts presented in Current Assets: OtherNet amounts presented in Current Assets: Other$45 $12 $25 $25 $— $1 $6 $1 
Noncurrent                Noncurrent
Gross amounts recognized $174
 $10
 $21
 $11
 $1
 $4
 $—
 $133
Gross amounts recognized$13 $6 $6 $6 $— $— $— $— 
Gross amounts offset (3) (1) (2) (2) —
 —
 —
 —
Gross amounts offset(5)(1)(4)(4)— — — — 
Net amounts presented in Other Noncurrent Liabilities: Other $171
 $9
 $19
 $9
 $1
 $4
 $—
 $133
Net amounts presented in Other Noncurrent Assets: OtherNet amounts presented in Other Noncurrent Assets: Other$8 $5 $2 $2 $— $— $— $— 

Derivative LiabilitiesDecember 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current
Gross amounts recognized$64 $17 $2 $2 $0 $1 $1 $15 
Gross amounts offset(3)(2)(2)(2)0 0 0 0 
Net amounts presented in Current Liabilities: Other$61 $15 $— $— $0 $1 $1 $15 
Noncurrent
Gross amounts recognized$260 $3 $27 $12 $0 $5 $0 $107 
Gross amounts offset(5)(1)(4)(4)0 0 0 0 
Net amounts presented in Other Noncurrent Liabilities: Other$255 $2 $23 $8 $0 $5 $0 $107 
Derivative AssetsDecember 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
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 $— $— 
196
194






FINANCIAL STATEMENTSDERIVATIVES AND HEDGING


Derivative Assets 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
Current                
Gross amounts recognized $35
 $2
 $2
 $1
 $1
 $1
 $27
 $2
Gross amounts offset —
 —
 —
 —
 —
 —
 —
 —
Net amounts presented in Current Assets: Other $35
 $2
 $2
 $1
 $1
 $1
 $27
 $2
Noncurrent                
Gross amounts recognized $16
 $—
 $1
 $1
 $—
 $—
 $—
 $—
Gross amounts offset —
 —
 —
 —
 —
 —
 —
 —
Net amounts presented in Other Noncurrent Assets: Other $16
 $—
 $1
 $1
 $—
 $—
 $—
 $—
Derivative Liabilities December 31, 2017Derivative LiabilitiesDecember 31, 2019
   Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current                Current
Gross amounts recognized $66
 $31
 $19
 $8
 $10
 $1
 $—
 $11
Gross amounts recognized$118 $39 $51 $27 $24 $1 $1 $7 
Gross amounts offset (3) (2) (2) (2) —
 —
 —
 —
Gross amounts offset(24)— (24)— (24)— — — 
Net amounts presented in Current Liabilities: Other $63
 $29
 $17
 $6
 $10
 $1
 $—
 $11
Net amounts presented in Current Liabilities: Other$94 $39 $27 $27 $— $1 $1 $7 
Noncurrent                Noncurrent
Gross amounts recognized $164
 $4
 $17
 $10
 $2
 $4
 $—
 $131
Gross amounts recognized$182 $10 $37 $22 $— $5 $— $110 
Gross amounts offset (1) —
 (1) (1) —
 —
 —
 —
Gross amounts offset— — — — — — — — 
Net amounts presented in Other Noncurrent Liabilities: Other $163
 $4
 $16
 $9
 $2
 $4
 $—
 $131
Net amounts presented in Other Noncurrent Liabilities: Other$182 $10 $37 $22 $— $5 $— $110 
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, 2018
   Duke
   Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
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 triggered44
 19
 25
 25
 —
December 31, 2017December 31, 2020
  Duke
   Duke
 Duke
DukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
DukeEnergyProgressEnergy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
(in millions)EnergyCarolinasEnergyProgress
Aggregate fair value of derivatives in a net liability position$59
 $35
 $25
 $15
 $10
Aggregate fair value of derivatives in a net liability position$24 $9 $14 $14 
Fair value of collateral already posted—
 —
 —
 —
 —
Fair value of collateral already posted0 0 0 0 
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered59
 35
 25
 15
 10
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered24 9 14 14 
December 31, 2019
DukeDuke
DukeEnergyProgressEnergy
(in millions)EnergyCarolinasEnergyProgress
Aggregate fair value of derivatives in a net liability position$79 $35 $44 $44 
Fair value of collateral already posted0 0 0 0 
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered79 35 44 44 
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.

197



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES


15. INVESTMENTS IN DEBT AND EQUITY SECURITIES
Duke Energy'sEnergy’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.
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 thoughthrough 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'sEnergy’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.
195



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
Investment Trusts
The investments within the NDTF and the Investment Trusts are managed by independent investment managers with discretion to buy, sell and invest pursuant to the objectives set forth by the investment manager agreements and 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.has a credit loss. 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.is related to a credit loss. If an OTTIa credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of December 31, 2018,2020, and 2017.2019.
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, 2018 December 31, 2017December 31, 2020December 31, 2019
Gross
 Gross
   Gross
 Gross
  GrossGrossGrossGross
Unrealized
 Unrealized
   Unrealized
 Unrealized
  UnrealizedUnrealizedUnrealizedUnrealized
Holding
 Holding
 Estimated
 Holding
 Holding
 Estimated
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions)Gains
 Losses
 Fair Value
 Gains
 Losses
 Fair Value
(in millions)GainsLossesFair ValueGainsLossesFair Value
NDTF         
  NDTF      
Cash and cash equivalents$—
 $—
 $88
 $—
 $—
 $115
Cash and cash equivalents$— $— $177 $— $— $101 
Equity securities2,402
 95
 4,475
 2,805
 27
 4,914
Equity securities4,138 54 6,235 3,523 55 5,661 
Corporate debt securities4
 13
 566
 17
 2
 570
Corporate debt securities76 1 806 37 1 603 
Municipal bonds1
 4
 353
 4
 3
 344
Municipal bonds22 0 370 13 0 368 
U.S. government bonds14
 12
 1,076
 11
 7
 1,027
U.S. government bonds51 — 1,361 33 1 1,256 
Other debt securities—
 2
 148
 —
 1
 118
Other debt securities8 0 180 3 0 141 
Total NDTF Investments$2,421
 $126
 $6,706
 $2,837
 $40
 $7,088
Total NDTF Investments$4,295 $55 $9,129 $3,609 $57 $8,130 
Other Investments 
  
  
  
  
  
Other Investments      
Cash and cash equivalents$—
 $—
 $22
 $—
 $—
 $15
Cash and cash equivalents$— $— $127 $— $— $52 
Equity securities36
 1
 99
 59
 —
 123
Equity securities79 0 146 57 0 122 
Corporate debt securities—
 2
 60
 1
 —
 57
Corporate debt securities8 0 110 3 0 67 
Municipal bonds—
 1
 85
 2
 1
 83
Municipal bonds5 0 86 4 0 94 
U.S. government bonds1
 —
 45
 —
 —
 41
U.S. government bonds0 0 42 2 0 41 
Other debt securities—
 1
 58
 —
 1
 44
Other debt securities0 0 47 0 0 56 
Total Other Investments$37
 $5
 $369
 $62
 $2
 $363
Total Other Investments$92 $0 $558 $66 $0 $432 
Total Investments$2,458
 $131
 $7,075
 $2,899
 $42
 $7,451
Total Investments$4,387 $55 $9,687 $3,675 $57 $8,562 

198



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES


The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2020
Due in one year or less$149
Due after one through five years922
Due after five through 10 years671
Due after 10 years1,260
Total$3,002
196
(in millions)December 31, 2018
Due in one year or less$98
Due after one through five years501
Due after five through 10 years570
Due after 10 years1,222
Total$2,391



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
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, 2018, and from sales of AFS securities for the years ended December 31, 2017,2020, 2019 and 2016,2018, were as follows.
 Year Ended December 31,
(in millions)2018
FV-NI: 
Realized gains$168
Realized losses126
AFS: 
Realized gains22
Realized losses51
Years Ended December 31,Years Ended December 31,
(in millions)2017
 2016
(in millions)202020192018
FV-NI:FV-NI:
Realized gains$202
 $246
Realized gains$366 $172 $168 
Realized losses160
 187
Realized losses174 151 126 
AFS:AFS:
Realized gainsRealized gains96 94 22 
Realized lossesRealized losses51 67 51 
DUKE ENERGY CAROLINAS
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
December 31, 2018 December 31, 2017 December 31, 2020 December 31, 2019
Gross
 Gross
   Gross
 Gross
  GrossGrossGrossGross
Unrealized
 Unrealized
   Unrealized
 Unrealized
  UnrealizedUnrealizedUnrealizedUnrealized
Holding
 Holding
 Estimated
 Holding
 Holding
 Estimated
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions)Gains
 Losses
 Fair Value
 Gains
 Losses
 Fair Value
(in millions)GainsLossesFair ValueGainsLossesFair Value
NDTF           
NDTF      
Cash and cash equivalents$—
 $—
 $29
 $—
 $—
 $32
Cash and cash equivalents$— $— $30 $— $— $21 
Equity securities1,309
 54
 2,484
 1,531
 12
 2,692
Equity securities2,442 23 3,685 1,914 8 3,154 
Corporate debt securities2
 9
 341
 9
 2
 359
Corporate debt securities49 1 510 21 1 361 
Municipal bonds—
 1
 81
 —
 1
 60
Municipal bonds6 — 91 3 — 96 
U.S. government bonds5
 8
 475
 3
 4
 503
U.S. government bonds25 — 475 16 1 578 
Other debt securities—
 2
 143
 —
 1
 112
Other debt securities7 — 174 3 — 137 
Total NDTF Investments$1,316
 $74
 $3,553
 $1,543
 $20
 $3,758
Total NDTF Investments$2,529 $24 $4,965 $1,957 $10 $4,347 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2018
Due in one year or less$6
Due after one through five years142
Due after five through 10 years303
Due after 10 years589
Total$1,040

199



FINANCIAL STATEMENTS(in millions)INVESTMENTS IN DEBT AND EQUITY SECURITIESDecember 31, 2020
Due in one year or less$14
Due after one through five years299
Due after five through 10 years279
Due after 10 years658
Total$1,250


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, 2018, and from sales of AFS securities for the years ended December 31, 2017,2020, 2019 and 2016,2018, were as follows.
Year Ended December 31,Years Ended December 31,
(in millions)2018
(in millions)202020192018
FV-NI: FV-NI:
Realized gains$89
Realized gains$64 $113 $89 
Realized losses73
Realized losses99 107 73 
AFS: AFS:
Realized gains19
Realized gains60 55 19 
Realized losses35
Realized losses37 38 35 
197
 Years Ended December 31,
(in millions)2017
 2016
Realized gains$135
 $157
Realized losses103
 121



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
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, 2018 December 31, 2017December 31, 2020December 31, 2019
Gross
 Gross
   Gross
 Gross
  GrossGrossGrossGross
Unrealized
 Unrealized
   Unrealized
 Unrealized
  UnrealizedUnrealizedUnrealizedUnrealized
Holding
 Holding
 Estimated
 Holding
 Holding
 Estimated
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions)Gains
 Losses
 Fair Value
 Gains
 Losses
 Fair Value
(in millions)GainsLossesFair ValueGainsLossesFair Value
NDTF           NDTF      
Cash and cash equivalents$—
 $—
 $59
 $—
 $—
 $83
Cash and cash equivalents$— $— $147 $— $— $80 
Equity securities1,093
 41
 1,991
 1,274
 15
 2,222
Equity securities1,696 31 2,550 1,609 47 2,507 
Corporate debt securities2
 4
 225
 8
 —
 211
Corporate debt securities27 0 296 16 — 242 
Municipal bonds1
 3
 272
 4
 2
 284
Municipal bonds16 0 279 10 — 272 
U.S. government bonds9
 4
 601
 8
 3
 524
U.S. government bonds26 0 886 17 — 678 
Other debt securities—
 —
 5
 —
 —
 6
Other debt securities1 0 6 0 0 4 
Total NDTF Investments$1,105
 $52
 $3,153
 $1,294
 $20
 $3,330
Total NDTF Investments$1,766 $31 $4,164 $1,652 $47 $3,783 
Other Investments 
  
  
  
  
  
Other Investments      
Cash and cash equivalents$—
 $—
 $17
 $—
 $—
 $12
Cash and cash equivalents$— $— $106 $— $— $49 
Municipal bonds—
 —
 47
 2
 —
 47
Municipal bonds3 0 26 3 0 51 
Total Other Investments$—
 $—
 $64
 $2
 $—
 $59
Total Other Investments$3 $0 $132 $3 $0 $100 
Total Investments$1,105
 $52
 $3,217
 $1,296
 $20
 $3,389
Total Investments$1,769 $31 $4,296 $1,655 $47 $3,883 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2018
Due in one year or less$87
Due after one through five years306
Due after five through 10 years216
Due after 10 years541
Total$1,150

200



FINANCIAL STATEMENTS(in millions)INVESTMENTS IN DEBT AND EQUITY SECURITIESDecember 31, 2020
Due in one year or less$109
Due after one through five years567
Due after five through 10 years298
Due after 10 years519
Total$1,493


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, 2018, and from sales of AFS securities for the years ended December 31, 2017,2020, 2019 and 2016,2018, were as follows.
Year Ended December 31,Years Ended December 31,
(in millions)2018
(in millions)202020192018
FV-NI: FV-NI:
Realized gains$79
Realized gains$302 $59 $79 
Realized losses53
Realized losses75 44 53 
AFS: AFS:
Realized gains3
Realized gains24 36 3 
Realized losses15
Realized losses13 29 15 
198
 Years Ended December 31,
(in millions)2017
 2016
Realized gains$65
 $84
Realized losses56
 64



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
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, 2018 December 31, 2017 December 31, 2020December 31, 2019
Gross
 Gross
   Gross
 Gross
  GrossGrossGrossGross
Unrealized
 Unrealized
   Unrealized
 Unrealized
  UnrealizedUnrealizedUnrealizedUnrealized
Holding
 Holding
 Estimated
 Holding
 Holding
 Estimated
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions)Gains
 Losses
 Fair Value
 Gains
 Losses
 Fair Value
(in millions)GainsLossesFair ValueGainsLossesFair Value
NDTF           NDTF      
Cash and cash equivalents$—
 $—
 $46
 $—
 $—
 $50
Cash and cash equivalents$— $— $76 $— $— $53 
Equity securities833
 30
 1,588
 980
 12
 1,795
Equity securities1,617 31 2,459 1,258 21 2,077 
Corporate debt securities2
 3
 171
 6
 —
 149
Corporate debt securities27 — 296 16 — 242 
Municipal bonds1
 3
 271
 4
 2
 283
Municipal bonds16 — 279 10 — 272 
U.S. government bonds6
 3
 415
 5
 2
 310
U.S. government bonds26 — 412 16 — 403 
Other debt securities—
 —
 3
 —
 —
 4
Other debt securities1 0 6 0 0 4 
Total NDTF Investments$842
 $39
 $2,494
 $995
 $16
 $2,591
Total NDTF Investments$1,687 $31 $3,528 $1,300 $21 $3,051 
Other Investments 
  
  
  
   
  
Other Investments      
Cash and cash equivalents$—
 $—
 $6
 $—
 $—
 $1
Cash and cash equivalents$— $— $1 $— $— $2 
Total Other Investments$—
 $—
 $6
 $—
 $—
 $1
Total Other Investments$0 $0 $1 $0 $0 $2 
Total Investments$842
 $39
 $2,500
 $995
 $16
 $2,592
Total Investments$1,687 $31 $3,529 $1,300 $21 $3,053 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2018
Due in one year or less$49
Due after one through five years231
Due after five through 10 years161
Due after 10 years419
Total$860

201



FINANCIAL STATEMENTS(in millions)INVESTMENTS IN DEBT AND EQUITY SECURITIESDecember 31, 2020
Due in one year or less$21
Due after one through five years259
Due after five through 10 years210
Due after 10 years503
Total$993


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, 2018, and from sales of AFS securities for the years ended December 31, 2017,2020, 2019 and 2016,2018, were as follows.
Year Ended December 31,Years Ended December 31,
(in millions)2018
(in millions)202020192018
FV-NI: FV-NI:
Realized gains$68
Realized gains$52 $38 $68 
Realized losses48
Realized losses59 33 48 
AFS: AFS:
Realized gains$2
Realized gains24 7 2 
Realized losses10
Realized losses13 5 10 
199
 Years Ended December 31,
(in millions)2017
 2016
Realized gains$54
 $71
Realized losses48
 55



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
DUKE ENERGY FLORIDA
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
December 31, 2018 December 31, 2017 December 31, 2020December 31, 2019
Gross
 Gross
   Gross
 Gross
  GrossGrossGrossGross
Unrealized
 Unrealized
   Unrealized
 Unrealized
  UnrealizedUnrealizedUnrealizedUnrealized
Holding
 Holding
 Estimated
 Holding
 Holding
 Estimated
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions)Gains
 Losses
 Fair Value
 Gains
 Losses
 Fair Value
(in millions)GainsLossesFair ValueGainsLossesFair Value
NDTF            NDTF       
Cash and cash equivalents$—
 $—
 $13
 $—
 $—
 $33
Cash and cash equivalents$— $— $71 $— $— $27 
Equity securities260
 11
 403
 294
 3
 427
Equity securities79 — 91 351 26 430 
Corporate debt securities—
 1
 54
 2
 —
 62
Municipal bonds—
 —
 1
 —
 —
 1
U.S. government bonds3
 1
 186
 3
 1
 214
U.S. government bonds— — 474 1 — 275 
Other debt securities—
 —
 2
 —
 —
 2
Total NDTF Investments(a)
$263
 $13
 $659
 $299
 $4
 $739
Total NDTF Investments(a)
$79 $0 $636 $352 $26 $732 
Other Investments 
  
  
  
  
  
Other Investments      
Cash and cash equivalents$—
 $—
 $1
 $—
 $—
 $1
Cash and cash equivalents$— $— $1 $— $— $4 
Municipal bonds—
 —
 47
 2
 —
 47
Municipal bonds3 0 26 3 0 51 
Total Other Investments$—
 $—
 $48
 $2
 $—
 $48
Total Other Investments$3 $0 $27 $3 $0 $55 
Total Investments$263
 $13
 $707
 $301
 $4
 $787
Total Investments$82 $0 $663 $355 $26 $787 
(a)During the year ended December 31, 2018, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3 nuclear plant.
(a)    During the years ended December 31, 2020, and 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, 2018
Due in one year or less$38
Due after one through five years75
Due after five through 10 years55
Due after 10 years122
Total$290

202



FINANCIAL STATEMENTS(in millions)INVESTMENTS IN DEBT AND EQUITY SECURITIESDecember 31, 2020
Due in one year or less$88
Due after one through five years308
Due after five through 10 years88
Due after 10 years16
Total$500


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, 2018, and from sales of AFS securities for the years ended December 31, 2017,2020, 2019 and 2016,2018, were as follows.
Year Ended December 31,Years Ended December 31,
(in millions)2018
(in millions)202020192018
FV-NI: FV-NI:
Realized gains$11
Realized gains$250 $21 $11 
Realized losses5
Realized losses16 11 5 
AFS: AFS:
Realized gains1
Realized gains0 29 1 
Realized losses5
Realized losses0 24 5 
200
 Years Ended December 31,
(in millions)2017
 2016
Realized gains$11
 $13
Realized losses8
 9



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
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, 2018 December 31, 2017 December 31, 2020December 31, 2019
Gross
 Gross
   Gross
 Gross
  GrossGrossGrossGross
Unrealized
 Unrealized
   Unrealized
 Unrealized
  UnrealizedUnrealizedUnrealizedUnrealized
Holding
 Holding
 Estimated
 Holding
 Holding
 Estimated
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions)Gains
 Losses
 Fair Value
 Gains
 Losses
 Fair Value
(in millions)GainsLossesFair ValueGainsLossesFair Value
Investments           Investments      
Cash and cash equivalentsCash and cash equivalents$— $— $1 $— $— $— 
Equity securities$29
 $—
 $67
 $49
 $—
 $97
Equity securities58 0 97 43 0 81 
Corporate debt securities—
 —
 8
 —
 —
 3
Corporate debt securities0 0 3 0 0 6 
Municipal bonds—
 1
 33
 —
 1
 28
Municipal bonds1 0 38 1 0 36 
U.S. government bondsU.S. government bonds0 — 4 0 — 2 
Total Investments$29
 $1
 $108
 $49
 $1
 $128
Total Investments$59 $— $143 $44 $0 $125 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2018
Due in one year or less$3
Due after one through five years20
Due after five through 10 years4
Due after 10 years14
Total$41
(in millions)December 31, 2020
Due in one year or less$3
Due after one through five years17
Due after five through 10 years10
Due after 10 years15
Total$45
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, 2018, and from sales of AFS securities for the years ended December 31, 2017,2020, 2019 and 2016,2018, were insignificant.immaterial.
16. 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 categorized within the fair value hierarchy. These investments are measured at fair value using the NAVnet asset value per share practical expedient. The NAVnet 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.

203



FINANCIAL STATEMENTSFAIR 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.
Transfers between levels represent assets or liabilities that were previously (i) categorized at a higher level for which the inputs to the estimate became less observable or (ii) classified at a lower level for which the inputs became more observable during the period. The Duke Energy Registrant’s policy is to recognize transfers between levels of the fair value hierarchy at the end of the period. There were no transfers between levels during the years ended December 31, 2018, 2017 and 2016. In addition, for Piedmont, there were no transfers between levels during the two months ended December 31, 2016, and the year ended October 31, 2016.
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 the 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.
201



FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
Commodity derivatives
Commodity derivatives with clearinghouses are classified as Level 1. Other commodityCommodity derivatives including Piedmont's natural gas supply contracts,with observable forward curves are primarily valued using internally developed discounted cash flow models that incorporate forward price, adjustments for liquidity (bid-ask spread) and credit or non-performance risk (after reflecting credit enhancements suchclassified as collateral), and are discounted to present value. Pricing inputs are derived from published exchange transaction prices and other observable data sources. In the absence of an active market, the last available price may be used.Level 2. 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
Most over-the-counter interest rate contract derivatives are valued using financial models that utilize observable inputs for similar instruments and are classified as Level 2. Inputs include forward interest rate curves, notional amounts, interest rates and credit quality of the counterparties.
Other fair value considerations
See Note 11 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 14. See Note 15 for additional information related to investments by major security type for the Duke Energy Registrants.
December 31, 2018 December 31, 2020
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
(in millions)Total Fair ValueLevel 1Level 2Level 3Not Categorized
NDTF cash and cash equivalentsNDTF cash and cash equivalents$177 $177 $0 $0 $0 
NDTF equity securities$4,475
$4,410
$—
$—
$65
NDTF equity securities6,235 6,189 — — 46 
NDTF debt securities2,231
576
1,655
—
—
NDTF debt securities2,717 874 1,843 — — 
Other equity securities99
99
—
—
—
Other equity securities146 146 — — — 
Other debt securities270
67
203
—
—
Other debt securities285 37 248 — — 
Other cash and cash equivalentsOther cash and cash equivalents127 127 0 0 0 
Derivative assets57
4
25
28
—
Derivative assets61 1 53 7 — 
Total assets7,132
5,156
1,883
28
65
Total assets9,748 7,551 2,144 7 46 
Derivative liabilities(242)(11)(90)(141)—
Derivative liabilities(324)0 (240)(84)— 
Net assets (liabilities)$6,890
$5,145
$1,793
$(113)$65
Net assets (liabilities)$9,424 $7,551 $1,904 $(77)$46 

 December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Level 3Not Categorized
NDTF cash and cash equivalents$101 $101 $0 $0 $0 
NDTF equity securities5,684 5,633 — — 51 
NDTF debt securities2,368 725 1,643 — — 
Other equity securities122 122 — — — 
Other debt securities258 39 219 — — 
Other cash and cash equivalents52 52 0 0 0 
Derivative assets25 3 7 15 — 
Total assets8,610 6,675 1,869 15 51 
NDTF equity security contracts(23)0 (23)0 — 
Derivative liabilities(277)(15)(145)(117)— 
Net assets (liabilities)$8,310 $6,660 $1,701 $(102)$51 
204
202






FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS


 December 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
NDTF equity securities$4,914
$4,840
$—
$—
$74
NDTF debt securities2,174
635
1,539
—
—
Other equity securities123
123
—
—
—
Other debt securities241
57
184
—
—
Derivative assets51
3
20
28
—
Total assets7,503
5,658
1,743
28
74
Derivative liabilities(230)(2)(86)(142)—
Net assets (liabilities)$7,273
$5,656
$1,657
$(114)$74
The following tables providetable provides reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements. Amounts included in earnings for derivatives are primarily included in Cost of natural gas on the Duke Energy Registrants' Consolidated Statements of Operations and Comprehensive Income. Amounts included in changes of net assets on the Duke Energy Registrants' Consolidated Balance Sheets are included in regulatory assets or liabilities. All derivative assets and liabilities are presented on a net basis.
Derivatives (net)
December 31, 2018 December 31, 2017 Years Ended December 31,
       
(in millions)Derivatives (net)
 Investments
 Derivatives (net)
 Total
(in millions)20202019
Balance at beginning of period$(114) $5
 $(166) $(161)Balance at beginning of period$(102)$(113)
Total pretax realized or unrealized gains included in comprehensive income—
 1
 —
 1
Total pretax realized or unrealized losses included in comprehensive incomeTotal pretax realized or unrealized losses included in comprehensive income(84)0 
Purchases, sales, issuances and settlements:       Purchases, sales, issuances and settlements:
Purchases57
 —
 55
 55
Purchases14 37 
Sales—
 (6) —
 (6)
Settlements(57) —
 (47) (47)Settlements(19)(44)
Total gains included on the Consolidated Balance Sheet1
 —
 44
 44
Net transfers Out of Level 3(a)
Net transfers Out of Level 3(a)
117 0 
Total (losses) gains included on the Consolidated Balance SheetTotal (losses) gains included on the Consolidated Balance Sheet(3)18 
Balance at end of period$(113) $—
 $(114) $(114)Balance at end of period$(77)$(102)
(a)Transferred from Level 3 to Level 2 because observable market data became available.
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, 2018 December 31, 2020
(in millions)Total Fair Value
Level 1
Level 2
Not Categorized
(in millions)Total Fair ValueLevel 1Level 2Not Categorized
NDTF cash and cash equivalentsNDTF cash and cash equivalents$30 $30 $0 $0 
NDTF equity securities$2,484
$2,419
$—
$65
NDTF equity securities3,685 3,639 — 46 
NDTF debt securities1,069
149
920
—
NDTF debt securities1,250 192 1,058 — 
Derivative assets3
—
3
—
Derivative assets20 0 20 0 
Total assets3,556
2,568
923
65
Total assets4,985 3,861 1,078 46 
Derivative liabilities(33)—
(33)—
Derivative liabilities(20)— (20)— 
Net assets$3,523
$2,568
$890
$65
Net assets$4,965 $3,861 $1,058 $46 
 December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Not Categorized
NDTF cash and cash equivalents$21 $21 $0 $0 
NDTF equity securities3,154 3,103 — 51 
NDTF debt securities1,172 206 966 — 
Total assets4,347 3,330 966 51 
Derivative liabilities(49)— (49)— 
Net assets$4,298 $3,330 $917 $51 
203
 December 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Not Categorized
NDTF equity securities$2,692
$2,618
$—
$74
NDTF debt securities1,066
204
862
—
Derivative assets2
—
2
—
Total assets3,760
2,822
864
74
Derivative liabilities(35)(1)(34)—
Net assets$3,725
$2,821
$830
$74

205






FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS


The following table provides reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 Investments
 Year Ended December 31,
(in millions)2017
Balance at beginning of period$3
Total pretax realized or unrealized gains included in comprehensive income1
Purchases, sales, issuances and settlements: 
Sales(4)
Balance at end of period$—
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, 2018 December 31, 2017 December 31, 2020December 31, 2019
(in millions)Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 2
NDTF cash and cash equivalentsNDTF cash and cash equivalents$147 $147 $0 $80 $80 $0 
NDTF equity securities$1,991
$1,991
$—
 $2,222
$2,222
$—
NDTF equity securities2,550 2,550 — 2,530 2,530 — 
NDTF debt securities1,162
427
735
 1,108
431
677
NDTF debt securities1,467 682 785 1,196 519 677 
Other debt securities64
17
47
 59
12
47
Other debt securities26 — 26 51 — 51 
Other cash and cash equivalentsOther cash and cash equivalents106 106 049 49 0 
Derivative assets4
—
4
 3
1
2
Derivative assets33 — 33 7 — 7 
Total assets3,221
2,435
786
 3,392
2,666
726
Total assets4,329 3,485 844 3,913 3,178 735 
NDTF equity security contractsNDTF equity security contracts— — — (23)— (23)
Derivative liabilities(44)—
(44) (36)(1)(35)Derivative liabilities(29)— (29)(65)— (65)
Net assets$3,177
$2,435
$742
 $3,356
$2,665
$691
Net assets$4,300 $3,485 $815 $3,825 $3,178 $647 
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, 2018 December 31, 2017 December 31, 2020December 31, 2019
(in millions)Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 2
NDTF cash and cash equivalentsNDTF cash and cash equivalents$76 $76 $0 $53 $53 $0 
NDTF equity securities$1,588
$1,588
$—
 $1,795
$1,795
$—
NDTF equity securities2,459 2,459 — 2,077 2,077 — 
NDTF debt securities906
294
612
 796
243
553
NDTF debt securities993 237 756 921 244 677 
Other debt securities6
6
—
 1
1
—
Other cash and cash equivalentsOther cash and cash equivalents1 1 0 2 2 0 
Derivative assets4
—
4
 2
1
1
Derivative assets33 — 33 — — 0 
Total assets2,504
1,888
616
 2,594
2,040
554
Total assets3,562 2,773 789 3,053 2,376 677 
Derivative liabilities(27)—
(27) (18)(1)(17)Derivative liabilities(14)— (14)(49)— (49)
Net assets$2,477
$1,888
$589
 $2,576
$2,039
$537
Net assets$3,548 $2,773 $775 $3,004 $2,376 $628 
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, 2018 December 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
NDTF equity securities$403
$403
$—
 $427
$427
$—
NDTF debt securities256
133
123
 312
188
124
Other debt securities48
1
47
 48
1
47
Derivative assets—
—
—
 1
—
1
Total assets707
537
170
 788
616
172
Derivative liabilities(9)—
(9) (12)—
(12)
Net assets$698
$537
$161
 $776
$616
$160

206



FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS


 December 31, 2020December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 2
NDTF cash and cash equivalents$71 $71 $0 $27 $27 $0 
NDTF equity securities91 91 — 453 453 — 
NDTF debt securities474 445 29 275 275 — 
Other debt securities26 — 26 51 — 51 
Other cash and cash equivalents1 1 0 4 4 0 
Derivative assets— — — 7 — 7 
Total assets663 608 55 817 759 58 
NDTF equity security contracts— — — (23)— (23)
Derivative liabilities— — — (1)— (1)
Net assets$663 $608 $55 $793 $759 $34 
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, 2020, and 2019.
204



FINANCIAL STATEMENTSFAIR 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, 2018 December 31, 2017 December 31, 2020December 31, 2019
(in millions)Total Fair Value
Level 2
Level 3
 Total Fair Value
Level 2
Level 3
(in millions)Total Fair ValueLevel 1Level 2Level 3Total Fair ValueLevel 1Level 2Level 3
Other equity securitiesOther equity securities$97 $97 $— $— $81 $81 $— $— 
Other debt securitiesOther debt securities45 — 45 — 44 — 44 — 
Other cash equivalentsOther cash equivalents1 1 0 0 0 0 0 — 
Derivative assets$6
$—
$6
 $1
$—
$1
Derivative assets6 — — 6 13 2 — 11 
Total assetsTotal assets149 98 45 6 138 83 44 11 
Derivative liabilities(5)(5)—
 (5)(5)—
Derivative liabilities(1)(1)— — (1)(1)— — 
Net assets (liabilities)$1
$(5)$6
 $(4)$(5)$1
Total assetsTotal assets$148 $97 $45 $6 $137 $82 $44 $11 
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
Derivatives (net) Derivatives (net)
Years Ended December 31, Years Ended December 31,
(in millions)2018
 2017
(in millions)20202019
Balance at beginning of period$1
 $5
Balance at beginning of period$11 $22 
Purchases, sales, issuances and settlements:   Purchases, sales, issuances and settlements:
Purchases7
 3
Purchases10 28 
Settlements(4) (4)Settlements(13)(36)
Total gains included on the Consolidated Balance Sheet2
 (3)
Total losses included on the Consolidated Balance SheetTotal losses included on the Consolidated Balance Sheet(2)(3)
Balance at end of period$6
 $1
Balance at end of period$6 $11 
DUKE ENERGY INDIANAPIEDMONT
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, 2018 December 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Level 3
 Total Fair Value
Level 1
Level 2
Level 3
Other equity securities$67
$67
$—
$—
 $97
$97
$—
$—
Other debt securities41
—
41
—
 31
—
31
—
Derivative assets23
1
—
22
 27
—
—
27
Total assets$131
$68
$41
$22
 $155
$97
$31
$27
 December 31, 2020December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 3
Derivative assets$1 $1 $— $1 $1 $— 
Derivative liabilities(122)— (122)(117)— (117)
Net (liabilities) assets$(121)$1 $(122)$(116)$1 $(117)
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)2018
 2017
Balance at beginning of period$27
 $16
Purchases, sales, issuances and settlements:   
Purchases50
 52
Settlements(53) (43)
Total (losses) gains included on the Consolidated Balance Sheet(2) 2
Balance at end of period$22
 $27
 Derivatives (net)
 Years Ended December 31,
(in millions)20202019
Balance at beginning of period$(117)$(141)
Net transfers Out of Level 3(a)
117 0 
Total gains and settlements0 24 
Balance at end of period$0 $(117)

(a)    Transferred from Level 3 to Level 2 because observable market data became available.
207
205






FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS


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, 2018 December 31, 2017
(in millions)Total Fair Value
Level 1
Level 3
 Total Fair Value
Level 1
Level 3
Other debt securities$—
$—
$—
 $1
$1
$—
Derivative assets3
3
—
 2
2
—
Total assets3
3
—
 3
3
—
Derivative liabilities(141)—
(141) (142)—
(142)
Net (liabilities) assets$(138)$3
$(141) $(139)$3
$(142)
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 Derivatives (net)
 Years Ended December 31,
(in millions)2018
 2017
Balance at beginning of period$(142) $(187)
Total gains and settlements1
 45
Balance at end of period$(141) $(142)
QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS
The following tables include quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.
 December 31, 2018
 Fair Value     
Investment Type(in millions)Valuation TechniqueUnobservable InputRange
Duke Energy Ohio      
FTRs$6
RTO auction pricingFTR price – per MWh$1.19
–$4.59
Duke Energy Indiana      
FTRs22
RTO auction pricingFTR price – per MWh(2.07)–8.27
Piedmont      
Natural gas contracts(141)Discounted cash flowForward natural gas curves — price per MMBtu1.87
–2.95
Duke Energy      
Total Level 3 derivatives$(113)     
December 31, 2020
December 31, 2017Weighted
Fair Value    Fair ValueAverage
Investment Type(in millions)Valuation TechniqueUnobservable InputRangeInvestment Type(in millions)Valuation TechniqueUnobservable InputRangeRange
Duke EnergyDuke Energy
Electricity contractsElectricity contracts$(84)Discounted cash flowForward electricity curves – price per MWh$14.68 –$151.84 $28.84 
Duke Energy Ohio     Duke Energy Ohio
FTRs$1
RTO auction pricingFTR price – per MWh$0.07
–$1.41
FTRs1 RTO auction pricingFTR price – per MWh0.25 –1.68 0.79 
Duke Energy Indiana     Duke Energy Indiana
FTRs27
RTO auction pricingFTR price – per MWh(0.77)–7.44
FTRs6 RTO auction pricingFTR price – per MWh(2.40)–7.41 1.05 
Piedmont     
Natural gas contracts(142)Discounted cash flowForward natural gas curves — price per MMBtu2.10
–2.88
Duke Energy     Duke Energy
Total Level 3 derivatives$(114)    Total Level 3 derivatives$(77)

208



FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS


December 31, 2019
Weighted
Fair ValueAverage
Investment Type(in millions)Valuation TechniqueUnobservable InputRangeRange
Duke Energy Ohio
FTRs$4 RTO auction pricingFTR price – per MWh$0.59 –$3.47 $2.07 
Duke Energy Indiana
FTRs11 RTO auction pricingFTR price – per MWh(0.66)–9.24 1.15 
Piedmont
Natural gas contracts(117)Discounted cash flowForward natural gas curves – price per MMBtu1.59 –2.46 1.91 
Duke Energy
Total Level 3 derivatives$(102)
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, 2018 December 31, 2017 December 31, 2020December 31, 2019
(in millions)Book Value
 Fair Value
 Book Value
 Fair Value
(in millions)Book ValueFair ValueBook ValueFair Value
Duke Energy(a)
$54,529
 $54,534
 $52,279
 $55,331
Duke Energy(a)
$59,863 $69,292 $58,126 $63,062 
Duke Energy Carolinas10,939
 11,471
 10,103
 11,372
Duke Energy Carolinas12,218 14,917 11,900 13,516 
Progress Energy18,911
 19,885
 17,837
 20,000
Progress Energy19,264 23,470 19,634 22,291 
Duke Energy Progress8,204
 8,300
 7,357
 7,992
Duke Energy Progress9,258 10,862 9,058 9,934 
Duke Energy Florida7,321
 7,742
 7,095
 7,953
Duke Energy Florida7,915 9,756 7,987 9,131 
Duke Energy Ohio2,165
 2,239
 2,067
 2,249
Duke Energy Ohio3,089 3,650 2,619 2,964 
Duke Energy Indiana3,782
 4,158
 3,783
 4,464
Duke Energy Indiana4,091 5,204 4,057 4,800 
Piedmont2,138
 2,180
 2,037
 2,209
Piedmont2,780 3,306 2,384 2,642 
(a)Book value of long-term debt includes $1.6 billion as of December 31, 2018, and $1.7 billion as of December 31, 2017, 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.
(a)    Book value of long-term debt includes $1.3 billion as of December 31, 2020, and $1.5 billion as of December 31, 2019, 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, 2018,2020, and December 31, 2017,2019, 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.
206



FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES
17. 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
The obligations of thesethe 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.
NoNaN financial support was provided to any of the consolidated VIEs during the years ended December 31, 2018, 20172020, 2019 and 2016,2018, 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 limited liability companiesLLCs 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.purchased, which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities for DERF and DEPR are reflected on the Consolidated Balance Sheets as Long-Term Debt. Amounts borrowed under the credit facilities for DEFR are reflected on the Consolidated Balance Sheets as Current maturities of long-term debt.
Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. Since taking action to suspend customer disconnections for nonpayment, certain jurisdictions have now returned to normal operations and billing practices. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In 2020, DERF, DEPR and DEFR executed amendments to their credit facilities to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.
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.CRC, which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. 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 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 percent75% cash and 25 percent25% 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.

209



FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. Since taking action to suspend customer disconnections for nonpayment, certain jurisdictions have now returned to normal operations and billing practices. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Ohio and Duke Energy Indiana have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In July of 2020, CRC executed an amendment to its credit facility to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.
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 areis not performedheld 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.
207



FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES
Receivables Financing – Credit Facilities
The following table outlinessummarizes 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
 CRC
 DERF
 DEPR
 DEFR
Expiration dateDecember 2020
 December 2020
 February 2021
 April 2021
Credit facility amount (in millions)$325
 $450
 $300
 $225
Amounts borrowed at December 31, 2018325
 450
 300
 225
Amounts borrowed at December 31, 2017325
 450
 300
 225
Restricted Receivables at December 31, 2018564
 699
 547
 357
Restricted Receivables at December 31, 2017545
 640
 459
 317
Duke Energy
Duke EnergyDuke EnergyDuke Energy
CarolinasProgressFlorida
(in millions)CRCDERFDEPRDEFR
Expiration dateFebruary 2023December 2022April 2023April 2021
Credit facility amount$350 $475 $350 $250 
Amounts borrowed at December 31, 2020350 364 250 250 
Amounts borrowed at December 31, 2019350 474 325 250 
Restricted Receivables at December 31, 2020547 696 500 397 
Restricted Receivables at December 31, 2019522 642 489 336 
Nuclear Asset-Recovery Bonds – DEFPFDuke 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. For additional information see Notes 4 and 6.
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)December 31, 2018
December 31, 2017
(in millions)20202019
Receivables of VIEs$5
$4
Receivables of VIEs$4 $5 
Regulatory Assets: Current52
51
Regulatory Assets: Current53 52 
Current Assets: Other39
40
Current Assets: Other39 39 
Other Noncurrent Assets: Regulatory assets1,041
1,091
Other Noncurrent Assets: Regulatory assets937 989 
Current Liabilities: Other10
10
Current Liabilities: Other10 10 
Current maturities of long-term debt53
53
Current maturities of long-term debt55 54 
Long-Term Debt1,111
1,164
Long-Term Debt1,002 1,057 
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–partythird-party investors in order to finance the cost of solar energy systemsrenewable 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.

210208






FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


The table below presents material balances reported on Duke Energy's Consolidated Balance Sheets related to renewablesCommercial Renewables VIEs.
December 31,
(in millions)December 31, 2018
December 31, 2017
(in millions)20202019
Current Assets: Other$123
$174
Current Assets: Other$257 $203 
Property, plant and equipment, cost4,007
3,923
Property, Plant and Equipment: CostProperty, Plant and Equipment: Cost6,394 5,747 
Accumulated depreciation and amortization(698)(591)Accumulated depreciation and amortization(1,242)(1,041)
Other Noncurrent Assets: Other261
50
Other Noncurrent Assets: Other67 106 
Current maturities of long-term debt174
170
Current maturities of long-term debt167 162 
Long-Term Debt1,587
1,700
Long-Term Debt1,569 1,541 
Other Noncurrent Liabilities: Deferred income taxes—
(148)
Other Noncurrent Liabilities: Asset Retirement Obligations106
83
Other Noncurrent Liabilities: AROsOther Noncurrent Liabilities: AROs148 127 
Other Noncurrent Liabilities: Other212
241
Other Noncurrent Liabilities: Other316 228 
NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Consolidated Balance Sheets.
December 31, 2018 December 31, 2020
Duke Energy Duke
 Duke
 Duke EnergyDukeDuke
Pipeline
 Commercial
 Other
   Energy
 Energy
PipelineCommercialEnergyEnergy
(in millions)Investments
 Renewables
 VIEs
 Total
 Ohio
 Indiana
(in millions)InvestmentsRenewablesTotalOhioIndiana
Receivables from affiliated companies$—
 $—
 $—
 $—
 $93
 $118
Receivables from affiliated companies$— $— $— $83 $110 
Investments in equity method unconsolidated affiliates822
 190
 48
 1,060
 —
 —
Investments in equity method unconsolidated affiliates— 530 530 — — 
Other noncurrent assetsOther noncurrent assets31 — 31 — — 
Total assets$822
 $190
 $48
 $1,060
 $93
 $118
Total assets$31 $530 $561 $83 $110 
Taxes accrued(1) —
 —
 (1) —
 —
Other current liabilities—
 —
 4
 4
 —
 —
Other current liabilities928 5 933 — — 
Deferred income taxes21
 —
 —
 21
 —
 —
Other noncurrent liabilities—
 —
 12
 12
 —
 —
Other noncurrent liabilities8 10 18 — — 
Total liabilities$20
 $—
 $16
 $36
 $—
 $—
Total liabilities$936 $15 $951 $— $— 
Net assets$802
 $190
 $32
 $1,024
 $93
 $118
Net assets (liabilities)Net assets (liabilities)$(905)$515 $(390)$83 $110 
December 31, 2017 December 31, 2019
Duke Energy Duke
 Duke
 Duke EnergyDukeDuke
Pipeline
 Commercial
 Other
   Energy
 Energy
PipelineCommercialEnergyEnergy
(in millions)Investments
 Renewables
 VIEs
 Total
 Ohio
 Indiana
(in millions)InvestmentsRenewablesTotalOhioIndiana
Receivables from affiliated companies$—
 $—
 $—
 $—
 $87
 $106
Receivables from affiliated companies$— $(1)$(1)$64 $77 
Investments in equity method unconsolidated affiliates697
 180
 42
 919
 —
 —
Investments in equity method unconsolidated affiliates1,179 300 1,479 — — 
Other noncurrent assets17
 —
 —
 17
 —
 —
Total assets$714
 $180
 $42
 $936
 $87
 $106
Total assets$1,179 $299 $1,478 $64 $77 
Taxes accrued(29) —
 —
 (29) —
 —
Taxes accrued(1)— (1)— — 
Other current liabilities—
 —
 4
 4
 —
 —
Other current liabilities— 4 4 — — 
Deferred income taxes42
 —
 —
 42
 —
 —
Deferred income taxes59 — 59 — — 
Other noncurrent liabilities—
 —
 12
 12
 —
 —
Other noncurrent liabilities— 11 11 — — 
Total liabilities$13
 $—
 $16
 $29
 $—
 $—
Total liabilities$58 $15 $73 $— $— 
Net assets$701
 $180
 $26
 $907
 $87
 $106
Net assets$1,121 $284 $1,405 $64 $77 
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 agreementPPA with OVEC, which is discussed below, and various guarantees, including Duke Energy's guarantee agreement to support its sharefuture exit costs associated with the cancellation of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is $677 millionpipeline, as of December 31, 2018. For more information on various guarantees, refer to Note 7.discussed below.
Pipeline Investments
Duke Energy has investments in various joint ventures withto construct and operate pipeline projects currently under construction.projects. 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.

Duke Energy has a 47% ownership interest in ACP. In 2020, Duke Energy determined that it would no longer invest in the construction of the ACP pipeline. The current liability related to the cancellation of the ACP pipeline represents Duke Energy's continuing obligation to fund its share of ACP's obligations. See Notes 3, 7 and 12 for further information regarding this transaction.
211
209






FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


The table below presents Duke Energy's ownership interest and investment balance in these joint ventures.
   Investment Amount (in millions)
 Ownership December 31, December 31,
Entity NameInterest 2018 2017
ACP47% $797
 $397
Sabal Trail(a)
7.5% —
 219
Constitution(b)
24% 25
 81
Total  $822
 $697
(a)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.
(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.

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.
Pioneer
Duke Energy holds a 50 percent equity interest in Pioneer. Pioneer is considered a VIE due to having insufficient equity to finance their own activities without subordinated financial support. The activities that most significantly impact Pioneer's economic performance are decisions related to the development of new transmission facilities. The power to direct these activities is jointly and equally shared by Duke Energy and the other joint venture partner, American Electric Power; therefore, Duke Energy does not consolidate Pioneer.
OVEC
Duke Energy Ohio’s 9 percent9% 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 ICPA,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 percent,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. In July 2020, legislation was proposed to repeal HB 6. Duke Energy cannot predict the outcome of this matter. See Note 43 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 percent10% and a 20 percent20% 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 STATEMENTSVARIABLE INTEREST ENTITIES


Key assumptions used in estimating fair value are detailed in the following table.
Duke Energy Ohio Duke Energy Indiana Duke Energy OhioDuke Energy Indiana
2018
 2017
 2018
 2017
 2020201920202019
Anticipated credit loss ratio0.5% 0.5% 0.3% 0.3%Anticipated credit loss ratio0.5 %0.6 %0.3 %0.3 %
Discount rate3.0% 2.1% 3.0% 2.1%Discount rate1.6 %3.3 %1.6 %3.3 %
Receivable turnover rate13.5% 13.5% 11.0% 10.7%Receivable turnover rate13.4 %13.4 %11.3 %11.5 %
The following table shows the gross and net receivables sold.
 Duke Energy OhioDuke Energy Indiana
December 31,December 31,
(in millions)2020201920202019
Receivables sold$270 $253 $344 $307 
Less: Retained interests83 64 110 77 
Net receivables sold$187 $189 $234 $230 
210



FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES
 Duke Energy Ohio Duke Energy Indiana
(in millions)2018
 2017
 2018
 2017
Receivables sold$269
 $273
 $336
 $312
Less: Retained interests93
 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 Duke Energy OhioDuke Energy Indiana
Years Ended December 31, Years Ended December 31, Years Ended December 31,Years Ended December 31,
(in millions)2018
 2017
 2016
 2018
 2017
 2016
(in millions)202020192018202020192018
Sales           Sales      
Receivables sold$1,987
 $1,879
 $1,926
 $2,842
 $2,711
 $2,635
Receivables sold$1,905 $1,979 $1,987 $2,631 $2,837 $2,842 
Loss recognized on sale13
 10
 9
 16
 12
 11
Loss recognized on sale10 14 13 12 17 16 
Cash Flows           
Cash flowsCash flows    
Cash proceeds from receivables sold1,967
 1,865
 1,882
 2,815
 2,694
 2,583
Cash proceeds from receivables sold1,875 1,993 1,967 2,586 2,860 2,815 
Collection fees received1
 1
 1
 1
 1
 1
Collection fees received1 1 1 1 1 1 
Return received on retained interests6
 3
 2
 9
 7
 5
Return received on retained interests4 6 6 5 9 9 
Cash flows from the sales of receivables are reflected within Cash Flows From Operating Activities and Cash Flows from Investing 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 percent.1%.
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 STATEMENTSREVENUE


As described above, the majority of Duke Energy’s tariff revenues are at-will and, as such, related contracts with customers have an expected duration of one year or less and will not have future performance obligations for disclosure. Additionally, other long-term revenue streams, including wholesale contracts, generally provide services that are part of a single performance obligation, the delivery of electricity or natural gas. As such, other than material fixed consideration under long-term contracts, related disclosures for future performance obligations are also not applicable.
Duke Energy earns substantially all of its revenues through its reportable segments, Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.
Electric Utilities and Infrastructure
Electric Utilities and Infrastructure earns the majority of its revenues through retail and wholesale electric service through the generation, transmission, distribution and sale of electricity. Duke Energy generally provides retail and wholesale electric service customers with their full electric load requirements or with supplemental load requirements when the customer has other sources of electricity.
Retail electric service is generally marketed throughout Duke Energy's electric service territory through standard service offers. The standard service offers are through tariffs determined by regulators in Duke Energy's regulated service territory. Each tariff, which is assigned to customers based on customer class, has multiple components such as an energy charge, a demand charge, a basic facilities charge and applicable riders. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing electric service, or in the case of distribution only customers in Duke Energy Ohio, for delivering electricity. Electricity is considered a single performance obligation satisfied over time consistent with the series guidance and is provided and consumed over the billing period, generally one month. Retail electric service is typically provided to at-will customers 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).
211



FINANCIAL STATEMENTSREVENUE
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 ObligationsRemaining Performance Obligations
(in millions)2019
2020
2021
2022
2023
Thereafter
Total
(in millions)20212022202320242025ThereafterTotal
Progress Energy$112
$121
$80
$82
$39
$42
$476
Progress Energy$93 $107 $44 $45 $7 $51 $347 
Duke Energy Progress9
9
9
9
9
9
54
Duke Energy Progress8 8 8 8 — — 32 
Duke Energy Florida103
112
71
73
30
33
422
Duke Energy Florida85 99 36 37 7 51 315 
Duke Energy Indiana9
10
5
—
—
—
24
Duke Energy Indiana5 — 7 12 12 24 60 
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 STATEMENTSREVENUE


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 ObligationsRemaining Performance Obligations
(in millions)2019
2020
2021
2022
2023
Thereafter
Total
(in millions)20212022202320242025ThereafterTotal
Piedmont$70
$68
$63
$63
$60
$430
$754
Piedmont$65 $64 $61 $59 $58 $319 $626 
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.
212



FINANCIAL STATEMENTSREVENUE
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 STATEMENTSREVENUE


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, 2018Year Ended December 31, 2020
 Duke
 Duke
Duke
Duke
Duke
 DukeDuke
(in millions)Duke
Energy
Progress
Energy
Energy
Energy
Energy
 (in millions)DukeEnergyProgressEnergy
By market or type of customerEnergy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
By market or type of customerEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Electric Utilities and Infrastructure Electric Utilities and Infrastructure
Residential$9,587
$2,981
$4,785
$2,019
$2,766
$743
$1,076
$—
Residential$9,806 $2,997 $5,017 $2,059 $2,958 $726 $1,064 $— 
General6,127
2,119
2,809
1,280
1,529
422
778
—
General6,194 2,233 2,779 1,312 1,467 442 740 — 
Industrial2,974
1,180
904
642
262
131
760
—
Industrial2,859 1,137 901 649 252 137 683 — 
Wholesale2,324
508
1,462
1,303
159
57
298
—
Wholesale1,864 380 1,228 1,034 194 32 224 — 
Other revenues717
320
502
320
182
73
91
—
Other revenues914 281 596 294 302 82 72 — 
Total Electric Utilities and Infrastructure revenue from contracts with customers$21,729
$7,108
$10,462
$5,564
$4,898
$1,426
$3,003
$—
Total Electric Utilities and Infrastructure revenue from contracts with customers$21,637 $7,028 $10,521 $5,348 $5,173 $1,419 $2,783 $— 
 
Gas Utilities and Infrastructure Gas Utilities and Infrastructure
Residential$1,000
$—
$—
$—
$—
$331
$—
$669
Residential$930 $— $— $— $— $300 $— $630 
Commercial514
—
—
—
—
135
—
378
Commercial446 — — — — 117 — 329 
Industrial147
—
—
—
—
18
—
128
Industrial127 — — — — 17 — 110 
Power Generation—
—
—
—
—
—
—
54
Power Generation— — — — — — — 34 
Other revenues139
—
—
—
—
19
—
120
Other revenues87 — — — — 17 — 70 
Total Gas Utilities and Infrastructure revenue from contracts with customers$1,800
$—
$—
$—
$—
$503
$—
$1,349
Total Gas Utilities and Infrastructure revenue from contracts with customers$1,590 $— $— $— $— $451 $— $1,173 
 
Commercial Renewables Commercial Renewables
Revenue from contracts with customers$209
$—
$—
$—
$—
$—
$—
$—
Revenue from contracts with customers$227 $— $— $— $— $— $— $— 
 
Other Other
Revenue from contracts with customers$19
$—
$—
$—
$—
$1
$—
$—
Revenue from contracts with customers$26 $— $— $— $— $— $— $— 
 
Total revenue from contracts with customers$23,757
$7,108
$10,462
$5,564
$4,898
$1,930
$3,003
$1,349
Total revenue from contracts with customers$23,480 $7,028 $10,521 $5,348 $5,173 $1,870 $2,783 $1,173 
 
Other revenue sources(a)
$764
$192
$266
$135
$123
$27
$56
$26
Other revenue sources(a)
$388 $(13)$106 $74 $15 $(12)$12 $124 
Total revenues$24,521
$7,300
$10,728
$5,699
$5,021
$1,957
$3,059
$1,375
Total revenues$23,868 $7,015 $10,627 $5,422 $5,188 $1,858 $2,795 $1,297 
213



(a)FINANCIAL STATEMENTSOther 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.REVENUE
(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.
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
(in millions)DukeEnergyProgressEnergyEnergyEnergyEnergy
By market or type of customerEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Electric Utilities and Infrastructure
Residential$9,863 $3,044 $4,998 $2,144 $2,854 $733 $1,087 $— 
General6,431 2,244 2,935 1,368 1,567 451 802 — 
Industrial3,071 1,215 934 675 259 147 774 — 
Wholesale2,212 462 1,468 1,281 187 46 235 — 
Other revenues770 276 548 317 231 80 89 — 
Total Electric Utilities and Infrastructure revenue from contracts with customers$22,347 $7,241 $10,883 $5,785 $5,098 $1,457 $2,987 $— 
Gas Utilities and Infrastructure
Residential$976 $— $— $— $— $315 $— $661 
Commercial508 — — — — 130 — 378 
Industrial141 — — — — 19 — 122 
Power Generation— — — — — — — 51 
Other revenues129 — — — — 19 — 110 
Total Gas Utilities and Infrastructure revenue from contracts with customers$1,754 $— $— $— $— $483 $— $1,322 
Commercial Renewables
Revenue from contracts with customers$223 $— $— $— $— $— $— $— 
Other
Revenue from contracts with customers$24 $— $— $— $— $— $— $— 
Total revenue from contracts with customers$24,348 $7,241 $10,883 $5,785 $5,098 $1,940 $2,987 $1,322 
Other revenue sources(a)
$731 $154 $319 $172 $133 $— $17 $59 
Total revenues$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.
214



FINANCIAL STATEMENTSREVENUE
Year Ended December 31, 2018
DukeDukeDukeDukeDuke
(in millions)DukeEnergyProgressEnergyEnergyEnergyEnergy
By market or type of customerEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Electric Utilities and Infrastructure
Residential$9,587 $2,981 $4,785 $2,019 $2,766 $743 $1,076 $— 
General6,127 2,119 2,809 1,280 1,529 422 778 — 
Industrial2,974 1,180 904 642 262 131 760 — 
Wholesale2,324 508 1,462 1,303 159 57 298 — 
Other revenues717 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 
Commercial514 — — — — 135 — 378 
Industrial147 — — — — 18 — 128 
Power Generation— — — — — — — 54 
Other revenues139 — — — — 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.
As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The following table presents the reserve for credit losses for trade and other receivables based on adoption of the new standard.
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Balance at December 31, 2019$76 $10 $16 $8 $7 $4 $3 $6 
Cumulative Change in Accounting Principle5 1 2 1 1 — — 1 
Write-Offs(58)(13)(23)(8)(14)— — (6)
Credit Loss Expense75 13 29 9 20 — — 11 
Other Adjustments48 12 13 13 — — — — 
Balance at December 31, 2020$146 $23 $37 $23 $14 $4 $3 $12 
215



FINANCIAL STATEMENTSREVENUE
Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions, including the impacts of COVID-19, as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss periodically for trade and other receivables. Due to the COVID-19 pandemic, as described in Note 1, certain jurisdictions have resumed standard billing and credit practices, disconnections for nonpayment and late payment charges, all of which were previously suspended in the first quarter of 2020. The specific actions taken by each Duke Energy Registrant are described in Note 3 and the impact of COVID-19 on certain receivables financing entities are described in Note 17. The impact of COVID-19 and Duke Energy’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates.
The aging of trade receivables is presented in the table below. Duke Energy considers receivables greater than 30 days outstanding past due.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unbilled Receivables$969 $328 $283 $167 $116 $2 $16 $86 
0-30 days1,789 445 707 398 307 60 26 149 
30-60 days185 80 54 25 29 8 3 8 
60-90 days22 1 10 4 6 2 1 3 
90+ days119 16 32 9 23 30 12 9 
Deferred Payment Arrangements(a)
215 96 80 52 28 — — 7 
Trade and Other Receivables$3,299 $966 $1,166 $655 $509 $102 $58 $262 
(a)    Due to certain customer financial hardships created by the COVID-19 pandemic and resulting stay-at-home orders, Duke Energy permitted customers to defer payment of past-due amounts through an installment payment plan over a period of several months.
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-degreeHeating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling-degreeCooling 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-degreeheating degree day and each degree of temperature above the base temperature counts as one cooling-degreecooling degree day.

216



FINANCIAL STATEMENTSREVENUE


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 OhioKentucky 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 TennesseeKentucky revenues are adjusted solely based on weather. Ohio primarily employs a fixed charge each month regardless of the season and usage.
UNBILLED REVENUE
Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer mix, average price in effect for customer classes, timing of rendering customer bills and meter reading schedules, and the impact of weather normalization or margin decoupling mechanisms.
216



FINANCIAL STATEMENTSREVENUE
Unbilled revenues are included within Receivables and Receivables of VIEs on the Consolidated Balance Sheets as shown in the following table.
December 31,December 31,
(in millions)2018
 2017
(in millions)20202019
Duke Energy$896
 $944
Duke Energy$969 $843 
Duke Energy Carolinas313
 342
Duke Energy Carolinas328 298 
Progress Energy244
 228
Progress Energy283 217 
Duke Energy Progress148
 143
Duke Energy Progress167 122 
Duke Energy Florida96
 85
Duke Energy Florida116 95 
Duke Energy Ohio2
 4
Duke Energy Ohio2 1 
Duke Energy Indiana23
 21
Duke Energy Indiana16 16 
Piedmont73
 86
Piedmont86 78 
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 accountsaccount for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 17 for further information. These receivables for unbilled revenues are shown in the table below.
December 31,
(in millions)20202019
Duke Energy Ohio$87 $82 
Duke Energy Indiana134 115 
 December 31,
(in millions)2018
 2017
Duke Energy Ohio$86
 $104
Duke Energy Indiana128
 132
19. COMMON STOCKSTOCKHOLDERS' EQUITY
Basic EPS is computed by dividing net income attributableavailable to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributableavailable to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, 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 unitsRSUs that are entitled to dividends declared on Duke Energy common stock during the restrictedRSUs 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 an adjustment to net income used in the calculation of basic and diluted EPS.

217



FINANCIAL STATEMENTSCOMMON STOCK


The following table presents Duke Energy’s basic and diluted EPS calculations, and reconciles the weighted average number of common shares outstanding and common and preferred share dividends declared.
Years Ended December 31,
(in millions, except per share amounts)202020192018
Net Income available to Duke Energy common stockholders$1,270 $3,707 $2,666 
Less: Income (Loss) from discontinued operations7 (7)19 
Accumulated preferred stock dividends adjustment1 (15)0 
Less: Impact of participating securities2 5 5 
Income from continuing operations available to Duke Energy common stockholders$1,262 $3,694 $2,642 
Weighted average common shares outstanding – basic737 729 708 
Equity forwards1 0 0 
Weighted average common shares outstanding – diluted738 729 708 
EPS from continuing operations available to Duke Energy common stockholders
Basic and Diluted$1.71 $5.07 $3.73 
Potentially dilutive items excluded from the calculation(a)
2 2 2 
Dividends declared per common share$3.82 $3.75 $3.64 
Dividends declared on Series A preferred stock per depositary share$1.437 $1.03 $— 
Dividends declared on Series B preferred stock per share$49.292 $— $0 
(a)    Performance stock outstandingawards were not included in the dilutive securities calculation because the performance measures related to the diluted weighted average number of common stock outstanding.awards had not been met.
217
 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 – basic708
 700
 691
Weighted average shares outstanding – diluted708
 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



(a)FINANCIAL STATEMENTSPerformance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.STOCKHOLDERS' EQUITY
Equity Issuances
On February 20, 2018,Common Stock
In November 2019, Duke Energy filed a prospectus supplement and executed an EDAEquity Distribution Agreement (EDA) under which it may sell up to $1$1.5 billion of its common stock through ana new 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 issue and sell through any of the Agents, shares of common stock during the period endingthrough September 23, 2019. In June 2018, Duke Energy marketed two separate tranches, each for 1.3 million shares, of common stock. The first tranche was marketed with Wells Fargo Bank at an initial forward price of $72.02 per share and the second tranche was marketed with Citibank at an initial forward price of $78.71 per share through equity forward transactions under the ATM program. The Equity Forwards require Duke Energy to either physically settle the transactions by issuing 2.6 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. 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.2022.
Separately, in March 2018,November 2019, Duke Energy marketed an equity offering of 21.328.75 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.Agreement. In connection with the offering, Duke Energy entered into equity forward salesales 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$85.99 per share. The Equity Forwards requireIn March 2020, Duke Energy to either physically settlemarketed approximately 940,000 shares of common stock through an equity forward transaction under the transactions by issuing 21.3 millionATM with an initial forward price of $89.76 per share. In May 2020, Duke Energy marketed approximately 903,000 shares in exchange for net proceeds atof common stock through an equity forward transaction under the then-applicableATM with an initial forward sale price specified byof $82.44 per share. In August 2020, Duke Energy marketed approximately 936,000 shares of common stock through an equity forward transaction under the agreements, or net settle in whole or in part through the delivery or receiptATM with an initial forward price of cash or shares. The settlement alternative was at Duke Energy's election. $79.52 per share.
In June 2018,December 2020, Duke Energy physically settled one-half of the equity forwards by delivering approximately 10.632 million shares of common stock in exchange for net cash proceeds of approximately $781 million. In December 2018,$2.6 billion.
Preferred Stock
On March 29, 2019, Duke Energy physically settledcompleted the remaining equity forward by delivering 10.6issuance of 40 million depositary shares, each representing 1/1,000th share of common stockits Series A Cumulative Redeemable Perpetual Preferred Stock, at a price of $25 per depositary share. The transaction resulted in exchange for net cash proceeds of approximately $766 million.$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.
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, Duke Energy marketed an equity offering of 10.6 million shares of common stock. In lieu of issuing equityThe Series A Preferred Stock has no maturity or mandatory redemption date, is not redeemable at the timeoption of the offering, Duke Energy entered into Equity Forwards with Barclays.holders and includes separate call options. The Equity Forwards requiredfirst call option allows Duke Energy to either physically settlecall the transactions by issuing 10.6 million shares,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 net settlechanges 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, through the deliveryat any time, on or receiptafter June 15, 2024, at a redemption price of cash or shares. On October 5, 2016, following the close of the Piedmont acquisition,$25 per depositary share. Duke Energy physically settledis also required to redeem all accumulated and unpaid dividends if either call option is exercised.
On September 12, 2019, Duke Energy completed the Equity Forwards in full by delivering 10.6issuance 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 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 $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, and began on March 16, 2020. On September 16, 2024, the First Call Date, and any fifth anniversary of the First Call Date (each a 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 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 Directors. However, the deferral of dividend payments on the preferred stock prohibits the declaration of common stock in exchange for net cash proceedsdividends.
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 approximately $723 million. The net proceeds were used to finance a portioncapital stock established after the original issue date of the Piedmont acquisition. AsSeries A and Series B Preferred Stock that is expressly made subordinated to the Series A and Series B Preferred Stock;
•on a resultparity with any class or series of capital stock established after the original issue date of the acquisition,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 of Piedmont's issuedexisting and future indebtedness (including indebtedness outstanding stock became the issuedunder Duke Energy's credit facilities, unsecured senior notes, junior subordinated debentures and outstanding shares of a wholly owned subsidiarycommercial 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 2Energy's subsidiaries and future preferred stock of subsidiaries.
218



FINANCIAL STATEMENTSSTOCKHOLDERS' EQUITY
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 relatedBoard members to the Piedmont acquisition.Board of Directors.
20. SEVERANCE
During 2020, as a result of partial settlements between Duke Energy Carolinas, Duke Energy Progress and the Public Staff, Duke Energy Carolinas and Duke Energy Progress deferred as Regulatory assets on the Consolidated Balance Sheets, approximately $65 million and $33 million, respectively, of previously recorded severance charges within Operation, maintenance and other on the Consolidated Statements of Operations. These severance charges were previously recorded during 2018, as 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 skillsetsskill sets 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. See Note 3 for more information.
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 STATEMENTSSEVERANCE

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 recordedaccrued for approximately 30 employees in 2020, 140 employees in 2019, and 1,900 employees in 2018, by the Duke Energy Registrants. Amounts are includedRegistrants within Operation, maintenance and other on the Consolidated Statements of Operations.
 Duke
 Duke
Duke
Duke
Duke
 DukeDuke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
 DukeEnergyProgressEnergy
(in millions)Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont(a)

(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Year Ended December 31, 2020(a)(b)
Year Ended December 31, 2020(a)(b)
$(85)$(58)$(28)$(31)$3 $— $— $— 
Year Ended December 31, 2019Year Ended December 31, 201916 8 6 3 3 — 1 1 
Year Ended December 31, 2018$187
$102
$69
$52
$17
$6
$7
$2
Year Ended December 31, 2018187 102 69 52 17 6 7 2 
Year Ended December 31, 201715
2
2
1
1
—
1
9
Year Ended December 31, 2016118
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.
(a)    Includes unamortized deferred severance charges of approximately $(86) million, $(57) million, $(29) million and $(29) million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(b)    Includes adjustments associated with 2018 severance charges of approximately $(6) million, $(2) million, $(3) million and $(2) million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
The table below presents the severance liability for past and ongoing severance plans including the plans described above.
 Duke
 Duke
Duke
Duke
Duke
 DukeDukeDukeDuke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
 DukeEnergyProgressEnergy
(in millions)Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Balance at December 31, 2017$19
$5
$2
$1
$—
$—
$—
$5
Balance at December 31, 2019Balance at December 31, 2019$41 $11 $13 $6 $7 $1 $2 $— 
Provision/Adjustments200
98
50
40
10
2
2
—
Provision/Adjustments1 — — (2)2 (1)— — 
Cash Reductions(14)(3)(1)—
(1)—
—
(5)Cash Reductions(31)(9)(10)(3)(7)— (1)— 
Balance at December 31, 2018$205
$100
$51
$41
$9
$2
$2
$—
Balance at December 31, 2020Balance at December 31, 2020$11 $2 $3 $1 $2 $— $1 $— 
21. 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.
219



FINANCIAL STATEMENTSSTOCK-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
(in millions)202020192018
Duke Energy$56
 $43
 $35
Duke Energy$61 $65 $56 
Duke Energy Carolinas20
 15
 12
Duke Energy Carolinas22 24 20 
Progress Energy21
 16
 12
Progress Energy23 24 21 
Duke Energy Progress13
 10
 7
Duke Energy Progress15 15 13 
Duke Energy Florida8
 6
 5
Duke Energy Florida9 9 8 
Duke Energy Ohio4
 3
 2
Duke Energy Ohio4 5 4 
Duke Energy Indiana5
 4
 3
Duke Energy Indiana6 6 5 
Piedmont(a)
3
 3
  
PiedmontPiedmont3 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)2018
 2017
 2016
Restricted stock unit awards$43
 $41
 $36
Performance awards35
 27
 19
Pretax stock-based compensation cost$78
 $68
 $55
Stock-based compensation costs capitalized5
 4
 2
Stock-based compensation expense$73
 $64
 $53
Tax benefit associated with stock-based compensation expense$17
 $25
 $20

219



FINANCIAL STATEMENTSSTOCK-BASED COMPENSATION


 Years Ended December 31,
(in millions)202020192018
RSU awards$46 $44 $43 
Performance awards38 45 35 
Pretax stock-based compensation cost$84 $89 $78 
Stock-based compensation costs capitalized5 5 5 
Stock-based compensation expense$79 $84 $73 
Tax benefit associated with stock-based compensation expense$18 $19 $17 
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,
Years Ended December 31, 202020192018
2018
 2017
 2016
Shares awarded (in thousands)649
 583
 684
Shares granted (in thousands)Shares granted (in thousands)498 571 649 
Fair value (in millions)$49
 $47
 $52
Fair value (in millions)$50 $51 $49 
The following table summarizes information about RSU awards outstanding.
Weighted Average
  Weighted Average
SharesGrant Date Fair Value
Shares
 Grant Date Fair Value
 (in thousands)(per share)
(in thousands)
 (per share)
Outstanding at December 31, 20171,121
 $78
Outstanding at December 31, 2019Outstanding at December 31, 20191,010 $83 
Granted649
 76
Granted498 100 
Vested(545) 78
Vested(532)82 
Forfeited(72) 77
Forfeited(37)92 
Outstanding at December 31, 20181,153
 77
Restricted stock unit awards expected to vest1,101
 77
Outstanding at December 31, 2020Outstanding at December 31, 2020939 93 
RSU awards expected to vestRSU awards expected to vest898 93 
The total grant date fair value of shares vested during the years ended December 31, 2018, 20172020, 2019 and 2016,2018, was $43 million, $42$49 million and $38$43 million, respectively. At December 31, 2018,2020, Duke Energy had $29$31 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 23 months.
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 percent200% of target shares, depending on the level of performance achieved.
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 conditionare based on Duke Energy's cumulative adjusted EPS. Performance awards granted in 2018EPS 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 componentis based on TSR of Duke Energy's performance awardsEnergy relative to a predefined peer group.
220



FINANCIAL STATEMENTSSTOCK-BASED COMPENSATION
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 2018,2020, the model used a risk-free interest rate of 2.4 percent,1.4%, which reflects the yield on three-year Treasury bonds as of the grant date, and an expected volatility of 16.0 percent13.6% 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, Years Ended December 31,
2018
 2017
 2016
 202020192018
Shares granted assuming target performance (in thousands)372
 461
 338
Shares granted assuming target performance (in thousands)319 320 372 
Fair value (in millions)$27
 $37
 $25
Fair value (in millions)$34 $27 $27 


220



FINANCIAL STATEMENTSSTOCK-BASED COMPENSATION


The following table summarizes information about stock-based performance awards outstanding and assumes payout at the target level.
Weighted Average
  Weighted Average
SharesGrant Date Fair Value
Shares
 Grant Date Fair Value
 (in thousands)(per share)
Outstanding at December 31, 2019Outstanding at December 31, 20191,109 $80 
GrantedGranted319 105 
(in thousands)
 (per share)
Outstanding at December 31, 20171,065
 $79
Granted372
 73
Vested(155) 81
Vested(448)81 
Forfeited(165) 80
Forfeited(18)88 
Outstanding at December 31, 20181,117
 77
Outstanding at December 31, 2020Outstanding at December 31, 2020962 87 
Stock-based performance awards expected to vest1,086
 77
Stock-based performance awards expected to vest937 87 
The total grant date fair value of shares vested during the years ended December 31, 2018,2020, and 2016,2019, was $13$36 million and $25$23 million, respectively. No performance awards vested during the year ended December 31, 2017. At December 31, 2018,2020, Duke Energy had $30$23 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 21 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 expense6
Net of tax stock-based compensation cost$10
22. 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. Actuarial gains experienced by the defined benefit retirement plans in remeasuring plan assets as of December 31, 2020, and 2019, were attributable to actual investment performance that exceeded expected investment performance. Actuarial losses experienced by the defined benefit retirement plans in remeasuring plan obligations as of December 31, 2020, and 2019, were primarily attributable to the decrease in the discount rate used to measure plan 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).
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.
221






FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


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.
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 2019.2021. 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(a)

Contributions Made:  
  
   
   
   
   
   
   
  
2018$141
 $46
 $45
 $25
 $20
 $—
 $8
 $—
201719
 —
 —
 —
 —
 4
 —
 11
2016155
 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 STATEMENTSEMPLOYEE BENEFIT PLANS


DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Contributions Made:
2020$0 $0 $0 $0 $0 $0 $0 $0 
201977 7 57 4 53 2 2 1 
2018141 46 45 25 20 0 8 0 
QUALIFIED PENSION PLANS
Components of Net Periodic Pension Costs
  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, 2017Year Ended December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost $159
 $48
 $45
 $26
 $19
 $4
 $9
 $10
Service cost$165 $51 $48 $27 $21 $5 $9 $6 
Interest cost on projected benefit obligation 328
 79
 100
 47
 53
 18
 26
 14
Interest cost on projected benefit obligation269 62 85 38 46 15 22 9 
Expected return on plan assets (545) (142) (167) (82) (85) (27) (42) (24)Expected return on plan assets(572)(145)(190)(87)(101)(28)(42)(21)
Amortization of actuarial loss 146
 31
 52
 23
 29
 5
 12
 11
Amortization of actuarial loss128 28 41 18 23 6 12 9 
Amortization of prior service credit(24) (8) (3) (2) (1) (1) (2) (2)Amortization of prior service credit(32)(8)(3)(2)(1)0 (2)(9)
Settlement charge12
 —
 —
 —
 —
 —
 —
 12
Other 8
 2
 2
 1
 1
 —
 1
 1
Amortization of settlement chargesAmortization of settlement charges18 9 7 6 1 0 1 1 
Net periodic pension costs(a)(b)
$84
 $10
 $29
 $13
 $16
 $(1) $4
 $22
Net periodic pension costs(a)(b)
$(24)$(3)$(12)$0 $(11)$(2)$0 $(5)
Year Ended December 31, 2016Year Ended December 31, 2019
  Duke
   Duke
 Duke
 Duke
 Duke
DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost $147
 $48
 $42
 $24
 $19
 $4
 $9
Service cost$158 $49 $46 $26 $20 $4 $9 $5 
Interest cost on projected benefit obligation 335
 86
 106
 49
 55
 19
 28
Interest cost on projected benefit obligation317 75 100 45 54 18 26 10 
Expected return on plan assets (519) (142) (168) (82) (84) (27) (42)Expected return on plan assets(567)(147)(178)(88)(89)(28)(43)(22)
Amortization of actuarial loss 134
 33
 51
 23
 29
 4
 11
Amortization of actuarial loss108 24 39 15 24 4 8 8 
Amortization of prior service credit(17) (8) (3) (2) (1) —
 (1)Amortization of prior service credit(32)(8)(3)(2)(1)0 (2)(9)
Settlement charge3
 —
 —
 —
 —
 —
 —
Other 8
 2
 3
 1
 1
 1
 1
Amortization of settlement chargesAmortization of settlement charges6 2 1 1 0 2 0 0 
Net periodic pension costs(a)(b)
$91
 $19
 $31
 $13
 $19
 $1
 $6
Net periodic pension costs(a)(b)
$(10)$(5)$5 $(3)$8 $0 $(2)$(8)
222



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

223



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$182 $58 $51 $29 $22 $5 $11 $7 
Interest cost on projected benefit obligation299 72 94 43 50 17 23 11 
Expected return on plan assets(559)(147)(178)(85)(91)(28)(42)(22)
Amortization of actuarial loss132 29 44 21 23 5 10 11 
Amortization of prior service credit(32)(8)(3)(2)(1)0 (2)(10)
Net periodic pension costs(a)(b)
$22 $4 $8 $6 $3 $(1)$0 $(3)
(a)    Duke Energy amounts exclude $4 million, $4 million and $5 million for the years ended December 2020, 2019 and 2018, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
  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 charge3
 —
Net periodic pension costs$4
 $2
(b)     Duke Energy Ohio amounts exclude $2 million, $2 million and $2 million for the years ended December 2020, 2019 and 2018, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets
  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
Regulatory assets, net increase (decrease)$298
 $170
��$40
 $31
 $9
 $10
 $30
 $8
Accumulated other comprehensive loss (income)               
Deferred income tax expense$(2) —
 1
 —
 —
 —
 —
 —
Amortization of prior year service credit1
 —
 —
 —
 —
 —
 —
 —
Amortization of prior year actuarial losses  10
 —
 (4) —
 —
 —
 —
 —
Net amount recognized in accumulated other comprehensive income  $9
 $—
 $(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
Regulatory assets, net (decrease) increase$(212) $(70) $(49) $(37) $(11) $9
 $(19) $(64)
Accumulated other comprehensive (income) loss    
   
   
   
   
   
   
  
Deferred income tax expense$—
 $—
 $3
 $—
 $—
 $—
 $—
 $—
Prior year service credit arising during the year  1
 —
 —
 —
 —
 —
 —
 —
Amortization of prior year actuarial losses  (7) —
 (7) —
 —
 —
 —
 —
Net amount recognized in accumulated other comprehensive income  $(6) $—
 $(4) $—
 $—
 $—
 $—
 $—
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net increase (decrease)$(62)$(39)$(26)$(30)$4 $(2)$5 $(1)
Accumulated other comprehensive loss (income)
Deferred income tax expense (benefit)$2 $0 $1 $0 $1 $0 $0 $0 
Amortization of prior year service credit1 0 0 0 0 0 0 0 
Amortization of prior year actuarial losses(11)0 (1)0 (3)0 0 0 
Net amount recognized in accumulated other comprehensive income$(8)$0 $0 $0 $(2)$0 $0 $0 
Piedmont's regulatory asset net increase was $34 million and $35 million for the two months ended December 31, 2016, and for the year ended October 31, 2016, respectively.

Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net (decrease) increase$(212)$(156)$(79)$(59)$(20)$12 $22 $0 
Accumulated other comprehensive (income) loss
Deferred income tax expense (benefit)$20 $0 $1 $0 $(1)$0 $0 $0 
Amortization of prior year service credit1 0 0 0 0 0 0 0 
Amortization of prior year actuarial losses(15)0 (2)0 3 0 0 0 
Net amount recognized in accumulated other comprehensive income$6 $0 $(1)$0 $2 $0 $0 $0 
224
223






FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Reconciliation of Funded Status to Net Amount Recognized
  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
Change in Projected Benefit Obligation  
  
                    
Obligation at prior measurement date  $8,448
 $2,029
 $2,637
 $1,211
 $1,410
 $479
 $669
 $313
Service cost  174
 56
 49
 28
 21
 5
 10
 7
Interest cost  299
 72
 94
 43
 50
 17
 23
 11
Actuarial gain(485) (44) (204) (87) (114) (29) (29) (18)
Transfers  —
 —
 —
 —
 —
 —
 —
 (16)
Benefits paid  (567) (159) (143) (70) (72) (37) (55) (33)
Obligation at measurement date  $7,869

$1,954

$2,433

$1,125

$1,295

$435

$618
 $264
Accumulated Benefit Obligation at measurement date  $7,818
 $1,954
 $2,404
 $1,125
 $1,265
 $425
 $614
 $264
Change in Fair Value of Plan Assets  
  
   
   
   
   
   
   
  
Plan assets at prior measurement date  
$9,003
 $2,372
 $2,814
 $1,366
 $1,429
 $458
 $684
 $368
Employer contributions141
 46
 45
 25
 20
 —
 8
 —
Actual return on plan assets  (344) (91) (110) (53) (55) (16) (26) (14)
Benefits paid  (567) (159) (143) (70)
(72)
(37)
(55) (33)
Transfers  —
 —
 —
 —

—

—

—
 (16)
Plan assets at measurement date  $8,233
 $2,168
 $2,606
 $1,268
 $1,322
 $405
 $611
 $305
Funded status of plan  $364
 $214
 $173
 $143
 $27
 $(30) $(7) $41
Year Ended December 31, 2017Year Ended December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
                     Change in Projected Benefit Obligation
Obligation at prior measurement date $8,131
 $1,952
 $2,512
 $1,158
 $1,323
 $447
 $658
 $344
Obligation at prior measurement date$8,321 $1,923 $2,608 $1,170 $1,424 $481 $693 $292 
Service cost 159
 48
 45
 26
 19
 4
 9
 10
Service cost157 49 46 26 20 4 8 5 
Interest cost 328
 79
 100
 47
 53
 18
 26
 14
Interest cost269 62 85 38 46 15 22 9 
Actuarial loss455
 68
 158
 57
 99
 35
 26
 38
Actuarial loss433 83 144 50 93 21 46 14 
Transfers —
 27
 (32) (2) (15) 12
 —
 —
Transfers0 8 (8)(8)0 15 0 0 
Plan amendments (61) —
 —
 —
 —
 —
 —
 (61)
Benefits paid (537) (145) (146) (75) (69) (37) (50) (5)Benefits paid(541)(137)(160)(83)(76)(34)(49)(27)
Benefits paid — settlements(27) —
 —
 —
 —
 —
 —
 (27)
Benefits paid – settlementsBenefits paid – settlements(5)0 0 0 0 0 (5)0 
Obligation at measurement date $8,448
 $2,029
 $2,637
 $1,211
 $1,410
 $479
 $669
 $313
Obligation at measurement date$8,634 $1,988 $2,715 $1,193 $1,507 $502 $715 $293 
Accumulated Benefit Obligation at measurement date
$8,369
 $2,029
 $2,601
 $1,211
 $1,375
 $468
 $652
 $313
Accumulated Benefit Obligation at measurement date$8,577 $1,989 $2,684 $1,194 $1,476 $493 $709 $294 
Change in Fair Value of Plan Assets
  
   
   
   
   
   
   
  Change in Fair Value of Plan Assets
Plan assets at prior measurement date $8,531
 $2,225
 $2,675
 $1,290
 $1,352
 $428
 $657
 $346
Plan assets at prior measurement date$8,910 $2,263 $2,898 $1,364 $1,515 $443 $667 $335 
Employer contributions19
 —
 —
 —
 —
 4
 —
 11
Actual return on plan assets 1,017
 265
 317
 153
 161
 51
 77
 43
Actual return on plan assets973 247 319 149 166 48 71 35 
Benefits paid (537) (145) (146) (75) (69) (37) (50) (5)Benefits paid(541)(137)(160)(83)(76)(34)(49)(27)
Benefits paid — settlements(27) —
 —
 —
 —
 —
 —
 (27)
Benefits paid – settlementsBenefits paid – settlements(5)0 0 0 0 0 (5)0 
Transfers —
 27
 (32) (2) (15) 12
 —
 —
Transfers0 8 (8)(8)0 15 0 0 
Plan assets at measurement date $9,003
 $2,372
 $2,814
 $1,366
 $1,429
 $458
 $684
 $368
Plan assets at measurement date$9,337 $2,381 $3,049 $1,422 $1,605 $472 $684 $343 
Funded status of plan $555
 $343
 $177
 $155
 $19
 $(21) $15
 $55
Funded status of plan$703 $393 $334 $229 $98 $(30)$(31)$50 

Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
Obligation at prior measurement date$7,869 $1,954 $2,433 $1,125 $1,295 $435 $618 $264 
Service cost150 47 43 25 18 4 8 5 
Interest cost317 75 100 45 54 18 26 10 
Actuarial loss716 101 223 87 135 54 87 33 
Transfers0 11 0 0 0 0 0 0 
Benefits paid(731)(265)(191)(112)(78)(30)(46)(20)
Obligation at measurement date$8,321 $1,923 $2,608 $1,170 $1,424 $481 $693 $292 
Accumulated Benefit Obligation at measurement date$8,262 $1,923 $2,578 $1,170 $1,392 $471 $686 $292 
Change in Fair Value of Plan Assets
Plan assets at prior measurement date$8,233 $2,168 $2,606 $1,268 $1,322 $405 $611 $305 
Employer contributions77 7 57 4 53 2 2 1 
Actual return on plan assets1,331 342 426 204 218 66 100 49 
Benefits paid(731)(265)(191)(112)(78)(30)(46)(20)
Transfers0 11 0 0 0 0 0 0 
Plan assets at measurement date$8,910 $2,263 $2,898 $1,364 $1,515 $443 $667 $335 
Funded status of plan$589 $340 $290 $194 $91 $(38)$(26)$43 
225
224






FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Amounts Recognized in the Consolidated Balance Sheets
  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
Prefunded pension(a)
$433
 $214
 $242
 $143
 $96
 $24
 $39
 $41
Noncurrent pension liability(b)
$69
 $—
 $69
 $—
 $69
 $54
 $46
 $—
Net asset (liability) recognized  $364

$214

$173

$143

$27

$(30)
$(7) $41
Regulatory assets  $2,184
 $576
 $796
 $372
 $424
 $100
 $182
 $81
Accumulated other comprehensive (income) loss    
   
   
   
   
   
   
   
Deferred income tax benefit$(43) $—
 $(2) $—
 $—
 $—
 $—
 $—
Prior service credit  (4) —
 —
 —
 —
 —
 —
 —
Net actuarial loss  126
 —
 5
 —
 —
 —
 —
 —
Net amounts recognized in accumulated other comprehensive loss$79
 $—
 $3
 $—
 $—
 $—
 $—
 $—
Amounts to be recognized in net periodic pension costs in the next year    
   
   
   
   
   
   
   
Unrecognized net actuarial loss  $97
 $22
 $37
 $13
 $24
 $3
 $5
 $7
Unrecognized prior service credit  
(32) (8) (3) (2) (1) —
 (2) (9)
  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
Prefunded pension(a)
$680
 $343
 $245
 $155
 $87
 $8
 $16
 $55
Noncurrent pension liability(b)
$125
 $—
 $68
 $—
 $68
 $29
 $1
 $—
Net asset recognized  $555
 $343
 $177
 $155
 $19
 $(21) $15
 $55
Regulatory assets  $1,886
 $406
 $756
 $341
 $415
 $90
 $152
 $73
Accumulated other comprehensive (income) loss    
   
   
   
   
   
   
  
Deferred income tax benefit$(41) $—
 $(3) $—
 $—
 $—
 $—
 $—
Prior service credit  (5) —
 —
 —
 —
 —
 —
 —
Net actuarial loss  116
 —
 9
 —
 —
 —
 —
 —
Net amounts recognized in accumulated other comprehensive loss$70
 $—
 $6
 $—
 $—
 $—
 $—
 $—
Amounts to be recognized in net periodic pension costs in the next year               
Unrecognized net actuarial loss$132
 $29
 $44
 $21
 $23
 $5
 $7
 $11
Unrecognized prior service credit$(32) $(8) $(3) $(2) $(1) $—
 $(2) $(9)
(a)Included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.
(b)Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.

December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Prefunded pension(a)
$780 $393 $379 $229 $143 $58 $79 $50 
Noncurrent pension liability(b)
$77 $0 $45 $0 $45 $88 $110 $0 
Net asset (liability) recognized$703 $393 $334 $229 $98 $(30)$(31)$50 
Regulatory assets$1,910 $381 $691 $283 $408 $110 $209 $80 
Accumulated other comprehensive (income) loss 
Deferred income tax benefit$(21)$0 $0 $0 $0 $0 $0 $0 
Prior service credit(2)0 0 0 0 0 0 0 
Net actuarial loss100 0 2 0 0 0 0 0 
Net amounts recognized in accumulated other comprehensive loss$77 $0 $2 $0 $0 $0 $0 $0 
226

December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Prefunded pension(a)
$621 $340 $322 $194 $123 $38 $57 $43 
Noncurrent pension liability(b)
$32 $0 $32 $0 $32 $76 $83 $0 
Net asset recognized$589 $340 $290 $194 $91 $(38)$(26)$43 
Regulatory assets$1,972 $420 $717 $313 $404 $112 $204 $81 
Accumulated other comprehensive (income) loss
Deferred income tax benefit$(23)$0 $(1)$0 $(1)$0 $0 $0 
Prior service credit(3)0 0 0 0 0 0 0 
Net actuarial loss111 0 3 0 3 0 0 0 
Net amounts recognized in accumulated other comprehensive loss$85 $0 $2 $0 $2 $0 $0 $0 
Amounts to be recognized in net periodic pension costs in the next year
Unrecognized net actuarial loss$135 $29 $43 $19 $24 $7 $10 $9 
Unrecognized prior service credit(32)(8)(3)(2)(1)(1)(2)(9)

(a)    Included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.

(b)    Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.
FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Information for Plans with Accumulated Benefit Obligation in Excess of Plan Assets
  December 31, 2018
   Duke
Duke
Duke
 Duke
Progress
Energy
Energy
Energy
(in millions)  Energy
Energy
Florida
Ohio
Indiana
Projected benefit obligation  $679
$679
$679
$123
$203
Accumulated benefit obligation  651
651
651
115
199
Fair value of plan assets  610
610
610
69
159
December 31, 2017December 31, 2020
 Duke
Duke
DukeDukeDuke
Duke
Progress
Energy
Energy
DukeProgressEnergyEnergyEnergy
(in millions) Energy
Energy
Florida
Ohio
(in millions)EnergyFloridaOhioIndiana
Projected benefit obligation $1,386
$718
$718
$337
Projected benefit obligation$4,914 $828 $828 $184 $293 
Accumulated benefit obligation 1,326
683
683
326
Accumulated benefit obligation4,856 796 796 176 285 
Fair value of plan assets 1,260
650
650
308
Fair value of plan assets4,837 783 783 96 183 
225



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
December 31, 2019
DukeDuke
EnergyEnergy
(in millions)OhioIndiana
Projected benefit obligation$155 $260 
Accumulated benefit obligation146 252 
Fair value of plan assets79 177 
Assumptions Used for Pension Benefits Accounting
The discount rate used to determine the current year pension obligation and following year’s pension expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high qualityhigh-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.
The average remaining service period for participants in active plans and life expectancy of participants in inactive plans is 13 years for Duke Energy, Duke Energy Indiana and Duke Energy Ohio, 14 years for Progress Energy, Duke Energy Progress and Duke Energy Florida, 12 years for Duke Energy Carolinas Progress Energy, and Duke Energy Florida, 14 years for Duke Energy Ohio and Duke Energy Indiana, and 10nine years for Piedmont.
The following tables present the assumptions or range of assumptions used for pension benefit accounting.
 December 31,December 31,
 2018 2017 2016202020192018
Benefit Obligations               Benefit Obligations
Discount rate    4.30%   3.60%   4.10%Discount rate2.60%3.30%4.30%
Interest crediting rateInterest crediting rate4.00%4.00%4.00%
Salary increase 3.50%–4.00% 3.50%–4.00% 4.00%–4.50%Salary increase3.50 %–4.00%3.50 %–4.00%3.50 %–4.00%
Net Periodic Benefit Cost               Net Periodic Benefit Cost
Discount rate    3.60%   4.10% 

 4.40%Discount rate3.30%4.30%3.60%
Interest crediting rateInterest crediting rate4.00%4.00%4.00%
Salary increase
 3.50%–4.00% 4.00%–4.50% 4.00%–4.40%Salary increase3.50 %–4.00%3.50 %–4.00%3.50 %–4.00%
Expected long-term rate of return on plan assets  

 6.50% 6.50%–6.75% 6.50%–6.75%Expected long-term rate of return on plan assets6.85%6.85%06.50%
  Piedmont
   Two Months Ended Year Ended
   December 31, 2016 October 31, 2016
Benefit Obligations      
Discount rate   4.10% 3.80%
Salary increase 4.50% 4.05%
Net Periodic Benefit Cost     
Discount rate   3.80% 4.34%
Salary increase  
 4.05% 4.07%
Expected long-term rate of return on plan assets   6.75% 7.25%

227



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Expected Benefit Payments
 Duke
 Duke
Duke
Duke
Duke
 DukeDuke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
 DukeEnergyProgressEnergy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Years ending December 31,    Years ending December 31,
2019$662
$210
$179
$105
$73
$33
$47
$20
2020651
177
171
90
80
37
51
24
2021663
182
177
95
81
37
51
23
2021$667 $169 $177 $94 $82 $40 $53 $29 
2022662
189
179
94
84
37
49
22
2022650 170 176 92 83 39 51 25 
2023655
185
181
95
85
35
47
22
2023655 174 181 95 85 38 49 22 
2024-20282,993
794
902
451
447
158
217
96
20242024644 168 184 96 87 37 49 21 
20252025617 163 181 93 88 35 47 19 
2025-20292025-20292,745 677 846 399 443 154 217 83 
NON-QUALIFIED PENSION PLANS
Components of Net Periodic Pension Costs
  Year Ended December 31, 2018
  Duke
 Duke
Duke
 Duke
Energy
Progress
Energy
Energy
(in millions)  Energy
Carolinas
Energy
Progress
Florida
Service cost  $2
$1
$—
$—
$—
Interest cost on projected benefit obligation  12
—
4
1
2
Amortization of actuarial loss  8
—
2
1
1
Amortization of prior service credit  (2)—
—
—
—
Net periodic pension costs  $20
$1
$6
$2
$3
  Year Ended December 31, 2017
  Duke
 Duke
Duke
 Duke
Energy
Progress
Energy
Energy
(in millions)  Energy
Carolinas
Energy
Progress
Florida
Service cost  $2
$1
$—
$—
$—
Interest cost on projected benefit obligation  13
1
5
1
2
Amortization of actuarial loss  8
—
2
1
1
Amortization of prior service credit  (2)—
—
—
—
Net periodic pension costs  $21
$2
$7
$2
$3
  Year Ended December 31, 2016
  Duke
 Duke
Duke
 Duke
Energy
Progress
Energy
Energy
(in millions)  Energy
Carolinas
Energy
Progress
Florida
Service cost  $2
$—
$—
$—
$—
Interest cost on projected benefit obligation  14
1
5
1
2
Amortization of actuarial loss  8
1
1
1
1
Amortization of prior service credit  (1)—
—
—
—
Net periodic pension costs  $23
$2
$6
$2
$3
  Piedmont
 Year Ended
(in millions)  
October 31, 2016
Amortization of prior service cost$—
Settlement charge1
Net periodic pension costs$1

228



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets and Liabilities
  Year Ended December 31, 2018
  Duke
 Duke
Duke
 Duke
Energy
Progress
Energy
Energy
(in millions)  Energy
Carolinas
Energy
Progress
Florida
Regulatory assets, net (decrease) increase   $(16)$1
$(6)$(3)$(3)
Accumulated other comprehensive (income) loss    
  
  
  
  
Deferred income tax benefit   $1
$—
$1
$—
$—
Actuarial gain arising during the year  (4)—
(3)—
—
Net amount recognized in accumulated other comprehensive loss (income)   $(3)$—
$(2)$—
$—
  Year Ended December 31, 2017
  Duke
 Duke
Duke
 Duke
Energy
Progress
Energy
Energy
(in millions)  Energy
Carolinas
Energy
Progress
Florida
Regulatory assets, net increase (decrease)$5
$(1)$3
$1
$2
Accumulated other comprehensive (income) loss       
Prior service credit arising during the year$(1)$—
$—
$—
$—
Actuarial loss arising during the year  2
—
—
—
—
Net amount recognized in accumulated other comprehensive loss (income)   $1
$—
$—
$—
$—
Reconciliation of Funded Status to Net Amount Recognized
  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
Change in Projected Benefit Obligation  
  
  
  
  
  
  
  
 
Obligation at prior measurement date  $331
$14
$116
$35
$47
$4
$3
$4
Service cost  2
1
—
—
—
—
—
—
Interest cost  12
—
4
1
2
—
—
—
Actuarial gain(17)—
(6)(2)(3)(1)—
(1)
Benefits paid  (24)(1)(8)(3)(3)—
—
—
Obligation at measurement date  $304
$14
$106
$31
$43
$3
$3
$3
Accumulated Benefit Obligation at measurement date  
$304
$14
$106
$31
$43
$3
$3
$3
Change in Fair Value of Plan Assets  
  
  
  
  
  
  
  
  
Benefits paid  $(24)$(1)$(8)$(3)$(3)$—
$—
$—
Employer contributions  24
1
8
3
3
—
—
—
Plan assets at measurement date  $—
$—
$—
$—
$—
$—
$—
$—

229



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


  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
Change in Projected Benefit Obligation  
    
  
  
  
  
  
 
Obligation at prior measurement date  $332
$14
$114
$33
$46
$4
$3
$4
Service cost  2
1
—
—
—
—
—
—
Interest cost  13
1
5
1
2
—
—
—
Actuarial loss (gain)15
—
5
4
2
—
—
—
Benefits paid  (31)(2)(8)(3)(3)—
—
—
Obligation at measurement date  $331
$14
$116
$35
$47
$4
$3
$4
Accumulated Benefit Obligation at measurement date  $331
$14
$116
$35
$47
$4
$3
$4
Change in Fair Value of Plan Assets    
  
  
  
  
  
  
  
Benefits paid  $(31)$(2)$(8)$(3)$(3)$—
$—
$—
Employer contributions  31
2
8
3
3
—
—
—
Plan assets at measurement date  $—
$—
$—
$—
$—
$—
$—
$—

230



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Amounts Recognized inThe accumulated benefit obligation, which equals the Consolidated Balance Sheets
  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 pension liability(a)
$21
$2
$8
$3
$3
$—
$—
$—
Noncurrent pension liability(b)
283
12
98
28
40
3
3
3
Total accrued pension liability  $304
$14
$106
$31
$43
$3
$3
$3
Regulatory assets  $62
$5
$15
$5
$10
$1
$—
$1
Accumulated other comprehensive (income) loss     
  
  
  
  
  
  
Deferred income tax benefit$(3)$—
$(2)$—
$—
$—
$—
$—
Prior service credit(1)—
—
—
—
—
—
—
Net actuarial loss  8
—
6
—
—
—
—
—
Net amounts recognized in accumulated other comprehensive loss$4
$—
$4
$—
$—
$—
$—
$—
Amounts to be recognized in net periodic pension expense in the next year     
  
  
  
  
  
  
Unrecognized net actuarial loss  $6
$—
$2
$1
$1
$—
$—
$—
Unrecognized prior service credit  
(2)—
—
—
—
—
—
—
  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
Current pension liability(a)
$23
$2
$8
$3
$3
$—
$—
$—
Noncurrent pension liability(b)
308
12
108
32
44
4
3
4
Total accrued pension liability  $331
$14
$116
$35
$47
$4
$3
$4
Regulatory assets  $78
$4
$21
$8
$13
$1
$—
$1
Accumulated other comprehensive (income) loss    
  
  
  
  
  
  
  
Deferred income tax benefit$(4)$—
$(3)$—
$—
$—
$—
$—
Prior service credit(1)—
—
—
—
—
—
—
Net actuarial loss12
—
9
—
—
—
—
—
Net amounts recognized in accumulated other comprehensive loss  $7
$—
$6
$—
$—
$—
$—
$—
Amounts to be recognized in net periodic pension expense in the next year        
Unrecognized net actuarial loss$8
$—
$2
$1
$1
$—
$—
$—
Unrecognized prior service credit$(2)$—
$—
$—
$—
$—
$—
$—
(a)    Included in Other within Current Liabilities on the Consolidated Balance Sheets.
(b)    Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.

231



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Information for Plans with Accumulated Benefit Obligation in Excess of Plan 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
Projected benefit obligation  $304
$14
$106
$31
$43
$3
$3
$3
Accumulated benefit obligation  304
14
106
31
43
3
3
3
  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
Projected benefit obligation  $331
$14
$116
$35
$47
$4
$3
$4
Accumulated benefit obligation  331
14
116
35
47
4
3
4
Assumptions Used for Pension Benefits Accounting
The discount rate used to determine the current year pension obligation and following year’s pension expense is based on 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.
The average remaining service period of active covered employees is 10 yearsobligation for non-qualified pension plans, was $320 million for Duke Energy, 13 years$13 million for Duke Energy Carolinas, $111 million for Progress Energy, 11 years$33 million for Duke Energy Progress, 15 years$45 million for Duke Energy Florida, eight years$4 million for Duke Energy Ohio, $2 million for Duke Energy Indiana and $4 million for Piedmont as of December 31, 2020.
Employer contributions, which equal benefits paid for non-qualified pension plans, were $23 million for Duke Energy, $2 million for Duke Energy Carolinas, $8 million for Progress Energy, $3 million for Duke Energy Progress and $3 million for Duke Energy Florida for the year ended December 31, 2020. Employer contributions were not material for Duke Energy Ohio, Duke Energy Indiana and Piedmont. The following tables presentor Piedmont for the assumptions usedyear ended December 31, 2020.
Net periodic pension costs for non-qualified pension benefit accounting.
   December 31,
   2018 2017 2016
Benefit Obligations  
     
     
   
Discount rate   

 4.30%   3.60% 4.10%
Salary increase    3.50%–4.00% 3.50%–4.00% 4.40%
Net Periodic Benefit Cost  
     
     
   
Discount rate     3.60%   4.10% 4.40%
Salary increase  
 3.50%–4.00%   4.40% 4.40%
plans were not material for the years ended December 31, 2020, 2019 or 2018.
226
  Piedmont
   Two Months Ended Year Ended
   December 31, 2016 October 31, 2016
Benefit Obligations      
Discount rate   4.10% 3.80%
Net Periodic Benefit Cost     
Discount rate   3.80% 3.85%
Expected Benefit Payments
  Duke
 Duke
Duke
Duke
Duke
 
 Duke
Energy
Progress
Energy
Energy
Energy
Energy
 
(in millions)  Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Years ending December 31,                 
2019$22
$2
$8
$3
$3
$—
$—
$—
202021
1
8
2
3
—
—
—
202123
1
8
2
3
—
—
—
202225
1
8
2
3
—
—
—
202325
3
7
2
3
—
—
—
2024-2028125
10
37
11
15
1
1
2

232






FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


OTHER POST-RETIREMENT BENEFIT PLANS
Duke Energy provides, and the Subsidiary Registrants participate in, some health care and life insurance benefits for retired employees on a contributory and non-contributory basis. Employees are eligible for these benefits if they have met age and service requirements at retirement, as defined in the plans. The health care benefits include medical, dental and prescription drug coverage and are subject to certain limitations, such as deductibles and copayments.
Duke Energy did not make any pre-funding contributions to its other post-retirement benefit plans during the years ended December 31, 2018, 20172020, 2019 or 2016.2018.
Components of Net Periodic Other Post-Retirement Benefit Costs
Year Ended December 31, 2018Year Ended December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost $6
 $1
 $1
 $—
 $1
 $1
 $1
 $1
Service cost$4 $1 $1 $0 $0 $0 $1 $0 
Interest cost on accumulated post-retirement benefit obligation 28
 7
 12
 6
 6
 1
 3
 1
Interest cost on accumulated post-retirement benefit obligation23 5 10 5 4 1 2 1 
Expected return on plan assets (13) (8) —
 —
 —
 —
 —
 (2)Expected return on plan assets(13)(8)0 0 0 0 0 (2)
Amortization of actuarial loss6
 3
 1
 1
 —
 —
 4
 —
Amortization of actuarial loss2 0 1 0 1 0 4 0 
Amortization of prior service credit (19) (5) (8) (1) (7) (1) (1) (2)Amortization of prior service credit(14)(4)(3)(1)(2)(1)(1)(2)
Net periodic post-retirement benefit costs (a)(b)
$8
 $(2) $6
 $6
 $—
 $1
 $7
 $(2)
Net periodic post-retirement benefit costs (a)(b)
$2 $(6)$9 $4 $3 $0 $6 $(3)
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$4 $1 $1 $0 $1 $0 $1 $0 
Interest cost on accumulated post-retirement benefit obligation30 7 12 7 5 1 3 1 
Expected return on plan assets(12)(7)0 0 0 0 0 (1)
Amortization of actuarial loss4 2 1 0 1 0 4 0 
Amortization of prior service credit(19)(5)(8)(1)(7)(1)(1)(2)
Net periodic post-retirement benefit costs(a)(b)
$7 $(2)$6 $6 $0 $0 $7 $(2)
Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$6 $1 $1 $0 $1 $1 $1 $1 
Interest cost on accumulated post-retirement benefit obligation28 7 12 6 6 1 3 1 
Expected return on plan assets(13)(8)0 0 0 0 0 (2)
Amortization of actuarial loss6 3 1 1 0 0 4 0 
Amortization of prior service credit(19)(5)(8)(1)(7)(1)(1)(2)
Net periodic post-retirement benefit costs(a)(b)
$8 $(2)$6 $6 $0 $1 $7 $(2)
(a)Duke Energy amounts exclude $6 million, $6 million and $7 million for the years ended December 2020, 2019 and 2018, 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 $1 million, $2 million and $2 million for the years ended December 2020, 2019 and 2018, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
227
  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  $4
 $1
 $—
 $—
 $—
 $—
 $—
 $1
Interest cost on accumulated post-retirement benefit obligation  34
 8
 13
 7
 6
 1
 3
 1
Expected return on plan assets  (14) (8) —
 —
 —
 —
 (1) (2)
Amortization of actuarial loss (gain)  10
 (2) 21
 12
 9
 (2) (1) 1
Amortization of prior service credit  (115) (10) (84) (54) (30) —
 (1) —
Curtailment credit (c)
(30) (4) (16) —
 (16) (2) (2) —
Net periodic post-retirement benefit costs(a)(b)
$(111) $(15) $(66) $(35) $(31) $(3) $(2) $1


  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  $3
 $1
 $1
 $—
 $1
 $—
 $—
Interest cost on accumulated post-retirement benefit obligation  35
 8
 15
 8
 7
 1
 4
Expected return on plan assets  (12) (8) —
 —
 —
 —
 (1)
Amortization of actuarial loss (gain)  6
 (3) 22
 13
 9
 (2) (1)
Amortization of prior service credit  (141) (14) (103) (68) (35) —
 (1)
Net periodic post-retirement benefit costs(a)(b)
$(109) $(16) $(65) $(47) $(18) $(1) $1

(a)Duke Energy amounts exclude $7 million, $7 million and $8 million for the years ended December 2018, 2017 and 2016, 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, $2 million and $2 million for the years ended December 2018, 2017 and 2016, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
(c)Curtailment credit resulted from a reduction in average future service of plan participants due to a plan amendment.

233



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


  Piedmont
 Year Ended
(in millions)  
October 31, 2016
Service cost  $1
Interest cost on projected benefit obligation  1
Expected return on plan assets  (2)
Amortization of actuarial loss  1
Net periodic pension costs$1
Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets and Liabilities
  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
Regulatory assets, net increase (decrease)$137
 $—
 $133
 $84
 $49
 $—
 $(5) $4
Regulatory liabilities, net increase (decrease)  $154
 $(6) $149
 $93
 $56
 $2
 $3
 $—
Accumulated other comprehensive (income) loss                 
Deferred income tax benefit   $(1) $—
 $—
 $—
 $—
 $—
 $—
 $—
Amortization of prior year actuarial gain  1
 —
 —
 —
 —
 —
 —
 —
Net amount recognized in accumulated other comprehensive income  $—
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Year Ended December 31, 2017Year Ended December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net increase (decrease)$71
 $—
 $81
 $42
 $39
 $—
 $(5) $(11)Regulatory assets, net increase (decrease)$9 $0 $9 $6 $3 $0 $(4)$0 
Regulatory liabilities, net increase (decrease) $(27) $(2) $—
 $—
 $—
 $(3) $(7) $—
Regulatory liabilities, net increase (decrease)$(10)$(7)$0 $0 $0 $0 $(1)$0 
Accumulated other comprehensive (income) loss                Accumulated other comprehensive (income) loss
Deferred income tax benefit $(1) $—
 $—
 $—
 $—
 $—
 $—
 $—
Deferred income tax benefit$0 $0 $0 $0 $0 $0 $0 $0 
Amortization of prior year prior service credit 3
 —
 —
 —
 —
 —
 —
 —
Amortization of prior year service creditAmortization of prior year service credit1 0 0 0 0 0 0 0 
Net amount recognized in accumulated other comprehensive income $2
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Net amount recognized in accumulated other comprehensive income$1 $0 $0 $0 $0 $0 $0 $0 
Piedmont's regulatory assets net decreased $1 million for the two months ended December 31, 2016, and increased $2 million for the year ended October 31, 2016.

Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net increase (decrease)$(127)$0 $(127)$(82)$(45)$0 $(5)$0 
Regulatory liabilities, net increase (decrease)$(152)$1 $(149)$(93)$(56)$(1)$(4)$3 
Accumulated other comprehensive (income) loss
Deferred income tax benefit$0 $0 $0 $0 $0 $0 $0 $0 
Amortization of prior year actuarial gain(4)0 0 0 0 0 0 0 
Net amount recognized in accumulated other comprehensive income$(4)$0 $0 $0 $0 $0 $0 $0 
234
228






FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Reconciliation of Funded Status to Accrued Other Post-Retirement Benefit Costs
Year Ended December 31, 2018Year Ended December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
  
                    Change in Projected Benefit Obligation
Accumulated post-retirement benefit obligation at prior measurement date $813
 $189
 $342
 $184
 $156
 $30
 $78
 $32
Accumulated post-retirement benefit obligation at prior measurement date$723 $175 $303 $168 $135 $29 $64 $30 
Service cost 6
 1
 1
 —
 1
 1
 1
 1
Service cost4 1 1 0 0 0 1 0 
Interest cost 28
 7
 12
 6
 6
 1
 3
 1
Interest cost23 5 10 5 4 1 2 1 
Plan participants' contributions 18
 3
 6
 4
 3
 1
 2
 —
Plan participants' contributions15 3 5 3 2 1 2 0 
Actuarial gains(51) (8) (23) (9) (13) (2) (5) (1)
Transfers —
 —
 —
 —
 —
 —
 —
 (1)
Actuarial lossesActuarial losses19 8 8 5 2 0 1 1 
Benefits paid (86) (18) (35) (19) (16) (2) (12) (2)Benefits paid(75)(18)(28)(15)(13)(4)(9)(2)
Accumulated post-retirement benefit obligation at measurement date $728
 $174
 $303
 $166
 $137
 $29
 $67
 $30
Accumulated post-retirement benefit obligation at measurement date$709 $174 $299 $166 $130 $27 $61 $30 
Change in Fair Value of Plan Assets
  
   
   
   
   
   
   
   
Change in Fair Value of Plan Assets
Plan assets at prior measurement date
$225
 $133
 $—
 $—
 $—
 $7
 $11
 $31
Plan assets at prior measurement date$220 $130 $(1)$(1)$0 $9 $5 $34 
Actual return on plan assets (8) (5) —
 —
 —
 —
 —
 (1)Actual return on plan assets24 14 0 0 0 0 1 4 
Benefits paid (86) (18) (35) (19) (16) (2) (12) (2)Benefits paid(75)(18)(28)(15)(13)(4)(9)(2)
Employer contributions46
 2
 29
 15
 13
 2
 4
 1
Employer contributions53 10 23 11 10 3 8 1 
Plan participants' contributions 18
 3
 6

4

3

1

2
 —
Plan participants' contributions15 3 5 3 2 1 2 0 
Plan assets at measurement date $195
 $115
 $—
 $—
 $—
 $8
 $5
 $29
Plan assets at measurement date$237 $139 $(1)$(2)$(1)$9 $7 $37 
Funded status of plan$(533) $(59) $(303) $(166) $(137) $(21) $(62) $(1)Funded status of plan$(472)$(35)$(300)$(168)$(131)$(18)$(54)$7 
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
Accumulated post-retirement benefit obligation at prior measurement date$728 $174 $303 $166 $137 $29 $67 $30 
Service cost4 1 1 0 1 0 1 0 
Interest cost30 7 12 7 5 1 3 1 
Plan participants' contributions16 3 6 3 2 1 2 0 
Actuarial losses28 9 13 9 5 1 2 0 
Benefits paid(83)(19)(32)(17)(15)(3)(11)(1)
Accumulated post-retirement benefit obligation at measurement date$723 $175 $303 $168 $135 $29 $64 $30 
Change in Fair Value of Plan Assets
Plan assets at prior measurement date$195 $115 $0 $0 $0 $8 $5 $29 
Actual return on plan assets32 20 (1)0 0 1 0 6 
Benefits paid(83)(19)(32)(17)(15)(3)(11)(1)
Employer contributions60 11 26 13 13 2 9 0 
Plan participants' contributions16 3 6 3 2 1 2 0 
Plan assets at measurement date$220 $130 $(1)$(1)$0 $9 $5 $34 
Funded status of plan$(503)$(45)$(304)$(169)$(135)$(20)$(59)$4 
229
  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
Change in Projected Benefit Obligation  
                      
Accumulated post-retirement benefit obligation at prior measurement date  $868
 $201
 $357
 $191
 $164
 $32
 $83
 $39
Service cost  4
 1
 —
 —
 —
 —
 —
 1
Interest cost  34
 8
 13
 7
 6
 1
 3
 1
Plan participants' contributions  17
 3
 6
 3
 3
 1
 2
 —
Actuarial losses (gains)4
 (3) 4
 1
 3
 —
 3
 1
Transfers  —
 2
 (1) —
 (1) 1
 —
 —
Plan amendments  (28) (5) (3) (1) (2) (2) (2) (9)
Benefits paid  (86) (18) (34) (17) (17) (3) (11) (1)
Accumulated post-retirement benefit obligation at measurement date  $813
 $189
 $342
 $184
 $156
 $30
 $78
 $32
Change in Fair Value of Plan Assets  
  
   
   
   
   
   
   
  
Plan assets at prior measurement date  $244
 $137
 $1
 $—
 $—
 $7
 $22
 $29
Actual return on plan assets  25
 15
 1
 —
 —
 2
 1
 3
Benefits paid  (86) (18) (34) (17) (17) (3) (11) (1)
Employer contributions (reimbursements)25
 (4) 26
 14
 14
 —
 (3) —
Plan participants' contributions  17
 3
 6
 3
 3
 1
 2
 —
Plan assets at measurement date  $225
 $133
 $—
 $—
 $—
 $7
 $11
 $31
Funded status of plan$(588) $(56) $(342) $(184) $(156) $(23) $(67) $(1)

235






FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Amounts Recognized in the Consolidated Balance Sheets
  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 post-retirement liability(a)
$8
 $—
 $5
 $3
 $2
 $2
 $—
 $—
Noncurrent post-retirement liability(b)
525
 59
 298
 163
 135
 19
 62
 1
Total accrued post-retirement liability  $533
 $59
 $303
 $166
 $137
 $21
 $62
 $1
Regulatory assets  $262
 $—
 $262
 $164
 $98
 $—
 $41
 $—
Regulatory liabilities  $301
 $38
 $149
 $93
 $56
 $18
 $67
 $—
Accumulated other comprehensive (income) loss    
   
   
   
   
   
   
   
Deferred income tax expense$3
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Prior service credit  (2) —
 —
 —
 —
 —
 —
 —
Net actuarial gain  (9) —
 —
 —
 —
 —
 —
 —
Net amounts recognized in accumulated other comprehensive income  $(8) $—
 $—
 $—
 $—
 $—
 $—
 $—
Amounts to be recognized in net periodic pension expense in the next year    
   
   
   
   
   
   
   
Unrecognized net actuarial loss  $4
 $2
 $1
 $—
 $—
 $—
 $—
 $—
Unrecognized prior service credit(19) (5) (7) (1) (6) (1) (1) (2)
December 31, 2017December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Prefunded post-retirement benefitPrefunded post-retirement benefit$8 $0 $0 $0 $0 $1 $0 $7 
Current post-retirement liability(a)
$36
 $—
 $29
 $15
 $14
 $2
 $—
 $—
Current post-retirement liability(a)
9 0 6 4 2 2 0 0 
Noncurrent post-retirement liability(b)
552
 56
 313
 169
 142
 21
 67
 1
Noncurrent post-retirement liability(b)
471 35 294 164 129 17 54 0 
Total accrued post-retirement liability $588
 $56
 $342
 $184
 $156
 $23
 $67
 $1
Net liability (asset) recognizedNet liability (asset) recognized$472 $35 $300 $168 $131 $18 $54 $(7)
Regulatory assets $125
 $—
 $129
 $80
 $49
 $—
 $46
 $(4)Regulatory assets$144 $0 $144 $88 $56 $0 $32 $0 
Regulatory liabilities $147
 $44
 $—
 $—
 $—
 $16
 $64
 $—
Regulatory liabilities$139 $32 $0 $0 $0 $17 $62 $3 
Accumulated other comprehensive (income) loss   
   
   
   
   
   
   
   
Accumulated other comprehensive (income) loss
Deferred income tax expense$4
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Deferred income tax expense$3 $0 $0 $0 $0 $0 $0 $0 
Prior service credit (2) —
 —
 —
 —
 —
 —
 —
Prior service credit(1)0 0 0 0 0 0 0 
Net actuarial gain (10) —
 —
 —
 —
 —
 —
 —
Net actuarial gain(13)0 0 0 0 0 0 0 
Net amounts recognized in accumulated other comprehensive income $(8) $—
 $—
 $—
 $—
 $—
 $—
 $—
Net amounts recognized in accumulated other comprehensive income$(11)$0 $0 $0 $0 $0 $0 $0 
Amounts to be recognized in net periodic pension expense in the next year               
Unrecognized net actuarial loss (gain)$5
 $3
 $1
 $—
 $1
 $—
 $—
 $—
Unrecognized prior service credit(19) (5) (7) (1) (6) (1) (1) (2)
December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current post-retirement liability(a)
$9 $0 $5 $3 $2 $1 $0 $0 
Noncurrent post-retirement liability(b)
494 45 299 163 133 19 59 (4)
Total accrued post-retirement liability$503 $45 $304 $166 $135 $20 $59 $(4)
Regulatory assets$135 $0 $135 $82 $53 $0 $36 $0 
Regulatory liabilities$149 $39 $0 $0 $0 $17 $63 $3 
Accumulated other comprehensive (income) loss
Deferred income tax expense$3 $0 $0 $0 $0 $0 $0 $0 
Prior service credit(2)0 0 0 0 0 0 0 
Net actuarial gain(13)0 0 0 0 0 0 0 
Net amounts recognized in accumulated other comprehensive income$(12)$0 $0 $0 $0 $0 $0 $0 
Amounts to be recognized in net periodic pension expense in the next year
Unrecognized net actuarial loss$5 $3 $1 $0 $1 $0 $0 $0 
Unrecognized prior service credit(14)(4)(3)(1)(2)(1)(1)(2)
(a)Included in Other within Current Liabilities on the Consolidated Balance Sheets. 
(b)
(a)    Included in Other within Current Liabilities on the Consolidated Balance Sheets. 
(b)    Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.

236



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Assumptions Used for Other Post-Retirement Benefits Accounting
The discount rate used to determine the current year other post-retirement benefits obligation and following year’s other post-retirement benefits expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high qualityhigh-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.
The average remaining service period of active covered employees is nine years for Duke Energy, eight years for Duke Energy, Carolinas, seven years for Duke Energy Florida, Duke Energy Ohio, and Piedmont, and six years for Progress Energy, Duke Energy Progress,Florida and Duke Energy Indiana.Ohio and six years for Duke Energy Carolinas, Duke Energy Progress, Duke Energy Indiana and Piedmont.
230



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
The following tables present the assumptions used for other post-retirement benefits accounting.
 December 31,December 31,
 2018
 2017
 2016
202020192018
Benefit Obligations
   
   
   Benefit Obligations
Discount rate  4.30% 3.60% 4.10%Discount rate2.60 %3.30 %4.30 %
Net Periodic Benefit Cost
   
   
   Net Periodic Benefit Cost
Discount rate  3.60% 4.10% 4.40%Discount rate3.30 %4.30 %3.60 %
Expected long-term rate of return on plan assets  6.50% 6.50% 6.50%Expected long-term rate of return on plan assets6.85 %6.85 %6.50 %
Assumed tax rate  35% 35% 35%Assumed tax rate23 %23 %35 %
  Piedmont
   Two Months Ended Year Ended
   December 31, 2016 October 31, 2016
Benefit Obligations      
Discount rate   4.10% 3.80%
Net Periodic Benefit Cost     
Discount rate   3.80% 4.38%
Expected long-term rate of return on plan assets   6.75% 7.25%
Assumed Health Care Cost Trend Rate
December 31,December 31,
2018
 2017
20202019
Health care cost trend rate assumed for next year 6.50% 7.00%Health care cost trend rate assumed for next year6.25 %6.00 %
Rate to which the cost trend is assumed to decline (the ultimate trend rate) 4.75% 4.75%Rate to which the cost trend is assumed to decline (the ultimate trend rate)4.75 %4.75 %
Year that rate reaches ultimate trend 2024
 2024
Year that rate reaches ultimate trend20282026
Sensitivity to Changes in Assumed Health Care Cost Trend Rates
  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
1-Percentage Point Increase  
          
     
Effect on total service and interest costs  $1
$—
$1
$1
$—
$—
$—
$—
Effect on post-retirement benefit obligation  22
5
9
5
4
1
2
1
1-Percentage Point Decrease        
Effect on total service and interest costs  (1)—
(1)(1)—
—
—
—
Effect on post-retirement benefit obligation  (20)(5)(8)(5)(4)(1)(2)(1)

237



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Expected Benefit Payments
 Duke
 Duke
Duke
Duke
Duke
 DukeDuke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
 DukeEnergyProgressEnergy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Years ending December 31,    
   Years ending December 31,
2019$81
$19
$30
$16
$14
$3
$9
$2
202075
18
29
15
13
3
8
2
202171
18
28
15
13
3
7
2
2021$73 $17 $28 $15 $12 $3 $8 $2 
202268
17
27
14
12
3
7
3
202266 16 26 14 12 3 7 2 
202364
16
26
14
12
3
6
3
202362 15 25 14 11 3 6 2 
2024-2028266
64
109
59
50
11
26
12
2024202458 14 24 13 11 2 6 2 
2025202554 13 22 12 10 2 5 2 
2026-20302026-2030223 54 94 52 41 9 21 11 
PLAN ASSETS
Description and Allocations
Duke Energy Master Retirement Trust
Assets for both the qualified pension and other post-retirement benefits are maintained in the Duke Energy Master Retirement Trust. Qualified pension and other post-retirement assets related to Piedmont were transferred into the Duke Energy Master Retirement Trust during 2017. Approximately 98 percent98% of the Duke Energy Master Retirement Trust assets were allocated to qualified pension plans and approximately 2 percent2% were allocated to other post-retirement plans (comprised of 401(h) accounts), as of December 31, 2018,2020, and 2017.2019. The investment objective of the Duke Energy Master Retirement Trust is to invest in a diverse portfolio of assets that is expected to generate positive surplus return over time (i.e., asset growth greater than liability growth) subject to a prudent level of portfolio risk, for the purpose of enhancing the security of benefits for plan participants.
As of December 31, 2018,2020, Duke Energy assumes pension and other post-retirement plan assets will generate a long-term rate of return of 6.85 percent.6.5%. 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 plan liability. Real assets, returnplan. Return seeking fixed income,debt securities, 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 or investments.
Effective January 1, 2019,2020, the target asset allocation for the Duke Energy Retirement Master Trust is 58 percent58% liability hedging assets and 42 percent42% return-seeking assets. Duke Energy periodically reviews its asset allocation targets, and over time, as the funded status of the benefit plans increase, the level of asset risk relative to plan liabilities may be reduced to better manage Duke Energy's benefit plan liabilities and reduce funded status volatility.
231



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
The Duke Energy Master Retirement Trust is authorized to engage in the lending of certain plan assets. Securities lending is an investment management enhancement that utilizes certain existing securities of the Duke Energy Master Retirement Trust to earn additional income. Securities lending involves the loaning of securities to approved parties. In return for the loaned securities, the Duke Energy Master Retirement Trust receives collateral in the form of cash and securities as a safeguard against possible default of any borrower on the return of the loan under terms that permit the Duke Energy Master Retirement Trust to sell the securities. The Duke Energy Master Retirement Trust mitigates credit risk associated with securities lending arrangements by monitoring the fair value of the securities loaned, with additional collateral obtained or refunded as necessary. The fair value of securities on loan was approximately $154$482 million and $195$351 million at December 31, 2018,2020, and 2017,2019, respectively. Cash and securities obtained as collateral exceeded the fair value of the securities loaned at December 31, 2018,2020, and 2017,2019, respectively. Securities lending income earned by the Duke Energy Master Retirement Trust was immaterial for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively.
Qualified pension and other post-retirement benefits for the Subsidiary Registrants are derived from the Duke Energy Master Retirement Trust, as such, each are allocated their proportionate share of the assets discussed below.

238



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


The following table includes the target asset allocations by asset class at December 31, 2018,2020, and the actual asset allocations for the Duke Energy Master Retirement Trust.
Actual Allocation at
   Actual Allocation atTargetDecember 31,
Target
 December 31,
Allocation
 2018
 2017
Allocation20202019
U.S. equity securities 10% 11% 11%
Non-U.S. equity securities 8% 8% 8%
Global equity securities 10% 10% 10%Global equity securities28 %30 %27 %
Global private equity securities 3% 2% 2%Global private equity securities1 %1 %1 %
Debt securities 63% 63% 63%Debt securities58 %55 %57 %
Return seeking debt securitiesReturn seeking debt securities4 %5 %5 %
Hedge funds 2% 2% 2%Hedge funds3 %3 %3 %
Real estate and cash 2% 2% 2%Real estate and cash6 %6 %7 %
Other global securities 2% 2% 2%
Total 100% 100% 100%Total100 %100 %100 %
Other post-retirement assets
Duke Energy's other post-retirement assets are comprised of VEBAVoluntary Employees' Beneficiary Association (VEBA) trusts and 401(h) accounts held within the Duke Energy Master Retirement Trust. Duke Energy's investment objective is to achieve sufficient returns, subject to a prudent level of portfolio risk, for the purpose of promoting the security of plan benefits for participants.
The following table presents target and actual asset allocations for the VEBA trusts at December 31, 2018.
2020.
   Actual Allocation atActual Allocation at
Target
 December 31,TargetDecember 31,
Allocation
 2018
 2017
Allocation20202019
U.S. equity securities 32% 43% 41%U.S. equity securities30 %36 %35 %
Non-U.S. equity securities6% 8% 8%Non-U.S. equity securities6 %6 %9 %
Real estate2% 2% 2%Real estate2 %2 %2 %
Debt securities 45% 40% 36%Debt securities45 %42 %37 %
Cash 15% 7% 13%Cash17 %14 %17 %
Total 100% 100% 100%Total100 %100 %100 %
Fair Value Measurements
Duke Energy classifies recurring and non-recurring fair value measurements based on the fair value hierarchy as discussed in Note 16.
Valuation methods of the primary fair value measurements disclosed below are as follows:
Investments in equity securities
Investments in equity securities are typically valued at the closing price in the principal active market as of the last business day of the reporting period. Principal active markets for equity prices include published exchanges such as NASDAQ and NYSE. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. Prices have not been adjusted to reflect after-hours market activity. The majority of investments in equity securities are valued using Level 1 measurements. When the price of an institutional commingled fund is unpublished, it is not categorized in the fair value hierarchy, even though the funds are readily available at the fair value.
Investments in corporate debt securities and U.S. government securities
Most debt investments are valued based on a calculation using 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. Most debt valuations are Level 2 measurements. If the market for a particular fixed-income security is relatively inactive or illiquid, the measurement is Level 3. U.S. Treasury debt is typically Level 2.
232



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Investments in short-term investment funds
Investments in short-term investment funds are valued at the net asset value of units held at year end and are readily redeemable at the measurement date. Investments in short-term investment funds with published prices are valued as Level 1. Investments in short-term investment funds with unpublished prices are valued as Level 2.

239



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


Investments in real estate limited partnerships
Investments in real estate limited partnerships are valued by the trustee at each valuation date (monthly). As part of the trustee’s valuation process, properties are externally appraised generally on an annual basis, conducted by reputable, independent appraisal firms, and signed by appraisers that are members of the Appraisal Institute, with the professional designation MAI. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three valuation techniques that can be used to value investments in real estate assets: the market, income or cost approach. The appropriateness of each valuation technique depends on the type of asset or business being valued. In addition, the trustee may cause additional appraisals to be performed as warranted by specific asset or market conditions. Property valuations and the salient valuation-sensitive assumptions of each direct investment property are reviewed by the trustee quarterly and values are adjusted if there has been a significant change in circumstances related to the investment property since the last valuation. Value adjustments for interim capital expenditures are only recognized to the extent that the valuation process acknowledges a corresponding increase in fair value. An independent firm is hired to review and approve quarterly direct real estate valuations. Key inputs and assumptions used to determine fair value includes among others, rental revenue and expense amounts and related revenue and expense growth rates, terminal capitalization rates and discount rates. Development investments are valued using cost incurred to date as a primary input until substantive progress is achieved in terms of mitigating construction and leasing risk at which point a discounted cash flow approach is more heavily weighted. Key inputs and assumptions in addition to those noted above used to determine the fair value of development investments include construction costs and the status of construction completion and leasing. Investments in real estate limited partnerships are valued at net asset value of units held at year end and are not readily redeemable at the measurement date. Investments in real estate limited partnerships are not categorized within the fair value hierarchy.
Duke Energy Master Retirement Trust
The following tables provide the fair value measurement amounts for the Duke Energy Master Retirement Trust qualified pension and other post-retirement assets.
December 31, 2020
Total FairNot
(in millions)ValueLevel 1Level 2Level 3
Categorized(b)
Equity securities$3,202 $3,162 $0 $0 $40 
Corporate debt securities4,162 0 4,162 0 0 
Short-term investment funds397 247 150 0 0 
Partnership interests97 0 0 0 97 
Hedge funds198 0 0 0 198 
U.S. government securities1,164 0 1,164 0 0 
Governments bonds – foreign73 0 73 0 0 
Cash98 98 0 0 0 
Net pending transactions and other investments88 34 54 0 0 
Total assets(a)
$9,479 $3,541 $5,603 $0 $335 
(a)    Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont were allocated approximately 26%, 32%, 15%, 17%, 5%, 7% and 4%, respectively, of the Duke Energy Master Retirement Trust at December 31, 2020. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)    Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.
December 31, 2019
Total FairNot
(in millions)ValueLevel 1Level 2Level 3
Categorized(b)
Equity securities$2,730 $2,712 $0 $0 $18 
Corporate debt securities3,999 0 3,999 0 0 
Short-term investment funds545 455 90 0 0 
Partnership interests104 0 0 0 104 
Hedge funds206 0 0 0 206 
U.S. government securities1,231 0 1,231 0 0 
Guaranteed investment contracts11 0 0 11 0 
Governments bonds – foreign78 0 78 0 0 
Cash75 75 0 0 0 
Net pending transactions and other investments46 (43)89 0 0 
Total assets(a)
$9,025 $3,199 $5,487 $11 $328 
(a)    Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont were allocated approximately 26%, 31%, 15%, 17%, 5%, 7% and 4%, respectively, of the Duke Energy Master Retirement Trust at December 31, 2019. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)    Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.
233
  December 31, 2018
 Total Fair
       Not
(in millions)  Value
 Level 1
 Level 2
 Level 3
 
Categorized(b)

Equity securities  $2,373
 $1,751
 $—
 $—
 $622
Corporate debt securities  4,054
 —
 4,054
 —
 —
Short-term investment funds  363
 279
 84
 —
 —
Partnership interests  120
 —
 —
 —
 120
Hedge funds  226
 —
 —
 —
 226
Real estate limited partnerships  144
 —
 —
 —
 144
U.S. government securities  961
 —
 961
 —
 —
Guaranteed investment contracts  27
 —
 —
 27
 —
Governments bonds – foreign  30
 —
 30
 —
 —
Cash  28
 28
 —
 —
 —
Net pending transactions and other investments  (2) (6) 4
 —
 —
Total assets(a)
$8,324
 $2,052
 $5,133
 $27

$1,112



(a)Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana, and Piedmont were allocated approximately 27 percent, 31 percent, 15 percent, 16 percent, 5 percent, 7 percent, and 4 percent, respectively, of the Duke Energy Master Retirement Trust at December 31, 2018. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.

240



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


  December 31, 2017
 Total Fair
       Not
(in millions)  Value
 Level 1
 Level 2
 Level 3
 
Categorized(b)

Equity securities  $2,823
 $1,976
 $—
 $—
 $847
Corporate debt securities  4,694
 —
 4,694
 —
 —
Short-term investment funds  246
 192
 54
 —
 —
Partnership interests  137
 —
 —
 —
 137
Hedge funds  226
 —
 —
 —
 226
Real estate limited partnerships  135
 —
 —
 —
 135
U.S. government securities  762
 —
 762
 —
 —
Guaranteed investment contracts  28
 —
 —
 28
 —
Governments bonds – foreign  38
 —
 38
 —
 —
Cash  6
 6
 —
 —
 —
Government and commercial mortgage backed securities  2
 —
 2
 —
 —
Net pending transactions and other investments  17
 15
 2
 —
 —
Total assets(a)
$9,114
 $2,189
 $5,552
 $28
 $1,345
(a)Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana, and Piedmont were allocated approximately 27 percent, 30 percent, 15 percent, 15 percent, 5 percent, 8 percent, and 4 percent, respectively, of the Duke Energy Master Retirement Trust and Piedmont's Pension assets at December 31, 2017. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.
The following table provides a reconciliation of beginning and ending balances of Duke Energy Master Retirement Trust qualified pension and other post-retirement assets at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3).
(in millions)  2018
 
2017(a)

Balance at January 1  $28
 $38
Sales  (1) (2)
Total gains and other, net  —
 1
Transfer of Level 3 assets to other classifications—
 (9)
Balance at December 31  $27
 $28
(a)Balance at January 1 includes $9 million associated with Piedmont pension assets.

241



FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


(in millions)20202019
Balance at January 1$11 $27 
Sales(12)(18)
Total gains and other, net1 2 
Transfer of Level 3 assets to other classifications0 0 
Balance at December 31$0 $11 
Other post-retirement assets
The following tables provide the fair value measurement amounts for VEBA trust assets.
  December 31, 2018
 Total Fair
  
(in millions)  Value
 Level 2
Cash and cash equivalents  $3
 $3
Real estate1
 1
Equity securities  25
 25
Debt securities  20
 20
Total assets  $49
 $49
December 31, 2017December 31, 2020
Total Fair
  Total Fair
(in millions) Value
 Level 2
(in millions)ValueLevel 2
Cash and cash equivalents $8
 $8
Cash and cash equivalents$5 $5 
Real estate1
 1
Real estate1 1 
Equity securities 28
 28
Equity securities23 23 
Debt securities 21
 21
Debt securities19 19 
Total assets $58
 $58
Total assets$48 $48 
December 31, 2019
Total Fair
(in millions)ValueLevel 2
Cash and cash equivalents$9 $9 
Real estate1 1 
Equity securities22 22 
Debt securities18 18 
Total assets$50 $50 
EMPLOYEE SAVINGS PLANS
Retirement Savings Plan
Duke Energy or its affiliates sponsor, and the Subsidiary Registrants participate in, employee savings plans that cover substantially all U.S. employees. Most employees participate in a matching contribution formula where Duke Energy provides a matching contribution generally equal to 100 percent100% of employee before-tax and Roth 401(k) contributions of up to 6 percent6% of eligible pay per pay period. Dividends on Duke Energy shares held by the savings plans are charged to retained earnings when declared and shares held in the plans are considered outstanding in the calculation of basic and diluted EPS.
For new and rehired employees who are not eligible to participate in Duke Energy’s defined benefit plans, an additional employer contribution of 4 percent4% of eligible pay per pay period, which is subject to a three-year vesting schedule, is provided to the employee’s savings plan account. Certain Piedmont employees whose participation in a prior Piedmont defined benefit plan (that was frozen as of December 31, 2017) are eligible for employer transition credit contributions of 33% to 5 percent5% of eligible pay per period, for each pay period during the three-year period ending December 31, 2020.
The following table includes pretax employer matching contributions made by Duke Energy and expensed by the Subsidiary Registrants.
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Years ended December 31,
2020$213 $67 $57 $38 $19 $5 $11 $13 
2019214 66 58 38 20 5 11 13 
2018213 68 58 40 19 4 10 12 
234
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)  Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 
Piedmont(a)

Years ended December 31,                        
2018$213
 $68
 $58
 $40
 $19
 $4
 $10
 $12
2017179
 61
 53
 37
 16
 3
 9
 7
2016169
 57
 50
 35
 15
 3
 8
 




(a)Piedmont's pretax employer matching contributions were $1 million and $7 million during the two months ended December 31, 2016, and for the year ended October 31, 2016, respectively.
Money Purchase Pension Plan
Piedmont sponsored the MPP plan, which is a defined contribution pension plan that allowed employees to direct investments and assume risk of investment returns. Under the MPP plan, Piedmont annually deposited a percentage of each participant’s pay into an account of the MPP plan. This contribution equaled 4 percent of the participant’s eligible compensation plus an additional 4 percent of eligible compensation above the Social Security wage base up to the IRS compensation limit. The participant was vested in MPP plan after three years of service. No contributions were made to the MPP plan during the two months ended December 31, 2016. Piedmont contributed $2 million to the MPP plan during each of the years ended December 31, 2017, and October 31, 2016. Effective December 31, 2017, the MPP Plan was merged into the Retirement Savings Plan and the money purchase plan formula was discontinued. Beginning with the 2018 plan year, the former MPP Plan participants are eligible to receive the additional employer contribution under the Retirement Savings Plan, discussed above.

242



FINANCIAL STATEMENTSINCOME TAXES


23. INCOME TAXES
Consolidated Appropriations Act
On December 27, 2020, President Trump signed the Consolidated Appropriations Act (CAA) into law. In addition to the CAA providing funding for government operations, it also provided tax provisions to assist with COVID-19 relief, including extending certain expiring tax provisions. The Company has reviewed the provisions of the CAA and has determined that there is no material impact on the 2020 financial statements as a result of the CAA being signed into law.
CARES Act
On March 27, 2020, the CARES Act was enacted. The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic. Among other provisions, the CARES Act accelerates the remaining AMT credit refund allowances resulting in taxpayers being able to immediately claim a refund in full for any AMT credit carryforwards and deferral of certain 2020 payroll taxes. In the third quarter of 2020, Duke Energy received $572 million related to these AMT credit carryforwards and $19 million of interest income. In addition, the Company has deferred approximately $117 million of payroll taxes, with 50% payable by December 31, 2021, and the remaining 50% payable by December 31, 2022. The other provisions within the CARES Act do not materially impact Duke Energy's income tax accounting. See Note 1 for information on COVID-19.
Tax Act
On December 22, 2017, President Trump signed the Tax Act into law. Among other provisions, the Tax Act lowered the corporate federal income tax rate from 3535% to 21 percent,21%, limits interest deductions outside of regulated utility operations, requires the normalization of excess deferred taxes associated with property under the average rate assumption method as a prerequisite to qualifying for accelerated depreciation and repealed the federal manufacturing deduction. The Tax Act also repealed the corporate AMT and stipulates a refund of 50 percent50% of remaining AMT credit carryforwards (to the extent the credits exceed regular tax for the year) for tax years 2018, 2019, and 2020, with all remaining AMT credits to be refunded in tax year 2021.
On December 22, 2017, the SEC staff issued SABStaff Accounting Bulletin (SAB) 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company acting in good faith may complete the accounting for the impacts of the Tax Act under ASC Topic 740. In accordance with SAB 118, a company must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC Topic 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, a company can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the first reporting period in which a reasonable estimate can be determined.
As of December 31, 2018, the accounting for the effects of the Tax Act iswas complete. During the year ended December 31, 2018, Duke Energy recorded the following measurement period adjustments in accordance with SAB 118:
•Additional tax expense of $23 million related to the completion of the analysis of Duke Energy’s existing regulatory liability related to deferred taxes;
•A $10 million tax benefit for the remeasurement of deferred tax assets and deferred tax liabilities primarily related to the guidance on bonus depreciation issued by the IRS in August 2018, affecting the computation of the Company's 2017 Federal income tax liability;
•Additional tax expense of $7 million related to the portion of the deferred tax asset as of December 31, 2017, that represents nondeductible long-term incentives under the Tax Act’s limitation on the deductibility of executive compensation; and
•During the fourth quarter of 2018, the Company released the $76 million valuation allowance that it recorded in the first quarter of 2018 as a result of additional guidance published by the IRS that stated refundable AMT credits would not be subject to sequestration.
•The majority of Duke Energy’s operations are regulated and it is expected that the Subsidiary Registrants will ultimately pass on the savings associated with the amount representing the remeasurement of deferred tax balances related to regulated operations to customers. For Duke Energy's regulated operations, where the reduction is expected to be returned to customers in future rates, the remeasurement has been deferred as a regulatory liability. During 2018, Duke Energy recorded an additional regulatory liability of $83 million, representing the revaluation of those deferred tax balances. The Subsidiary Registrants continue to respond to requests from regulators in various jurisdictions to determine the timing and magnitude of savings they will pass on to customers.
In addition, during 2018, Duke Energy reclassified $573 million of AMT credit carryforwards from noncurrent deferred tax liabilities to a current federal income tax receivable as the Company expects to receive this amount viareceivable. In 2019, Duke Energy received a refund from the IRS in 2019,of $573 million related to AMT credit carryforwards based on the expected filing of Duke Energy's 2018 income tax return in the second quarter2019 and reclassified $286 million of 2019.

AMT credits from noncurrent deferred tax liabilities to a current federal income tax receivable.
243
235






FINANCIAL STATEMENTSINCOME TAXES


Income Tax Expense
Components of Income Tax Expense
 Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current income taxes
Federal$(281)$314 $280 $181 $148 $10 $48 $(27)
State(9)35 29 17 24 1 7 (8)
Foreign1 — — — — — — — 
Total current income taxes(289)349 309 198 172 11 55 (35)
Deferred income taxes      
Federal155 (171)(167)(180)1 30 12 60 
State(92)(86)(24)(49)25 2 17 (7)
Total deferred income taxes(a)
63 (257)(191)(229)26 32 29 53 
ITC amortization(10)(4)(5)(5)— — — — 
Income tax (benefit) expense from continuing operations(236)88 113 (36)198 43 84 18 
Tax expense from discontinued operations2 — — — — — — — 
Total income tax (benefit) expense included in Consolidated Statements of Operations$(234)$88 $113 $(36)$198 $43 $84 $18 
(a)     Total deferred income taxes includes the generation of NOL carryforwards and tax credit carryforwards of $20 million at Duke Energy Carolinas, $3 million at Duke Energy Progress, $8 million at Duke Energy Indiana, and $11 million at Piedmont. In addition, total deferred income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $39 million at Progress Energy, $30 million at Duke Energy Florida and $79 million at Duke Energy.
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current income taxes       
Federal$(299)$164 $(173)$(36)$(43)$(41)$(23)$(92)
State10 13 (7)(3)18 (1)1 (1)
Foreign2 0 0 0 0 0 0 0 
Total current income taxes(287)177 (180)(39)(25)(42)(22)(93)
Deferred income taxes      
Federal855 175 422 220 153 77 128 133 
State(38)(37)17 (18)27 5 28 3 
Total deferred income taxes(a)
817 138 439 202 180 82 156 136 
ITC amortization(11)(4)(6)(6)0 0 0 0 
Income tax expense from continuing operations519 311 253 157 155 40 134 43 
Tax benefit from discontinued operations(2)— — — — — — — 
Total income tax expense included in Consolidated Statements of Operations$517 $311 $253 $157 $155 $40 $134 $43 
(a)    Total deferred income taxes includes the generation of tax credit carryforwards of $8 million at Duke Energy Carolinas. In addition, total deferred income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $243 million at Progress Energy, $35 million at Duke Energy Progress, $152 million at Duke Energy Florida, $25 million at Duke Energy Ohio, $60 million at Duke Energy Indiana, $90 million at Piedmont and $775 million at Duke Energy.
236
 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
Current income taxes        
Federal$(647)$(8)$(135)$(71)$(49)$20
$29
$67
State(11)6
(5)(5)(10)(1)3
1
Foreign3
—
—
—
—
—
—
—
Total current income taxes(655)(2)(140)(76)(59)19
32
68
Deferred income taxes        
Federal1,064
299
341
256
115
21
74
(36)
State49
11
20
(17)45
3
22
5
Total deferred income taxes(a)(b)
1,113
310
361
239
160
24
96
(31)
Investment tax credit amortization(10)(5)(3)(3)—
—
—
—
Income tax expense from continuing operations448
303
218
160
101
43
128
37
Tax benefit from discontinued operations(26)—
—
—
—
—
—
—
Total income tax expense included in Consolidated Statements of Operations$422
$303
$218
$160
$101
$43
$128
$37



(a)Includes benefits of NOL carryforwards and tax credit carryforwards of $22 million at Duke Energy Carolinas, $293 million at Progress Energy, $59 million at Duke Energy Progress, $219 million at Duke Energy Florida, $17 million at Duke Energy Ohio, $21 million at Duke Energy Indiana and $39 million at Piedmont. In addition, total deferred income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $18 million at Duke Energy.
(b)For the year ended December 31, 2018, the Company has revised the December 31, 2017, estimates of the income tax effects of the Tax Act, in accordance with SAB 118. See the Statutory Rate Reconciliation section below for additional information on the Tax Act's impact on income tax expense.
 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
Current income taxes        
Federal$(247)$221
$(436)$(95)$(188)$(37)$128
$(90)
State4
20
(5)2
(11)2
21
(3)
Foreign3
—
—
—
—
—
—
—
Total current income taxes(240)241
(441)(93)(199)(35)149
(93)
Deferred income taxes        
Federal1,344
381
664
378
194
99
138
147
State102
35
44
10
51
(4)14
8
Total deferred income taxes(a)(b)
1,446
416
708
388
245
95
152
155
Investment tax credit amortization(10)(5)(3)(3)—
(1)—
—
Income tax expense from continuing operations1,196
652
264
292
46
59
301
62
Tax benefit from discontinued operations(6)—
—
—
—
—
—
—
Total income tax expense included in Consolidated Statements of Operations$1,190
$652
$264
$292
$46
$59
$301
$62
(a)Includes utilization of NOL carryforwards and tax credit carryforwards of $428 million at Duke Energy, $74 million at Progress Energy, $36 million at Duke Energy Florida, $17 million at Duke Energy Ohio, $42 million at Duke Energy Indiana and $79 million at Piedmont. In addition, total deferred income taxes includes benefits of NOL carryforwards and tax credit carryforwards of $10 million at Duke Energy Carolinas and $1 million at Duke Energy Progress.
(b)As a result of the Tax Act, Duke Energy's deferred tax assets and liabilities were revalued as of December 31, 2017. See the Statutory Rate Reconciliation section below for additional information on the Tax Act's impact on income tax expense.

244



FINANCIAL STATEMENTSINCOME TAXES


 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current income taxes       
Federal$(647)$(8)$(135)$(71)$(49)$20 $29 $67 
State(11)6 (5)(5)(10)(1)3 1 
Foreign3 0 0 0 0 0 0 0 
Total current income taxes(655)(2)(140)(76)(59)19 32 68 
Deferred income taxes       
Federal1,064 299 341 256 115 21 74 (36)
State49 11 20 (17)45 3 22 5 
Total deferred income taxes(a)(b)
1,113 310 361 239 160 24 96 (31)
ITC amortization(10)(5)(3)(3)0 0 0 0 
Income tax expense from continuing operations448 303 218 160 101 43 128 37 
Tax benefit from discontinued operations(26)— — — — — — — 
Total income tax expense included in Consolidated Statements of Operations$422 $303 $218 $160 $101 $43 $128 $37 
(a)    Includes benefits of NOL carryforwards and tax credit carryforwards of $22 million at Duke Energy Carolinas, $293 million at Progress Energy, $59 million at Duke Energy Progress, $219 million at Duke Energy Florida, $17 million at Duke Energy Ohio, $21 million at Duke Energy Indiana and $39 million at Piedmont. In addition, total deferred income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $18 million at Duke Energy.
 Year Ended December 31, 2016
  Duke
 Duke
Duke
Duke
Duke
 Duke
Energy
Progress
Energy
Energy
Energy
Energy
(in millions)  
Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Current income taxes       
Federal$—
$139
$15
$(59)$76
$(7)$7
State(15)25
(19)(25)22
(13)6
Foreign2
—
—
—
—
—
—
Total current income taxes(13)164
(4)(84)98
(20)13
Deferred income taxes       
Federal1,064
430
486
350
199
88
202
State117
45
50
40
25
11
11
Total deferred income taxes(a)
1,181
475
536
390
224
99
213
Investment tax credit amortization(12)(5)(5)(5)—
(1)(1)
Income tax expense from continuing operations1,156
634
527
301
322
78
225
Tax (benefit) expense from discontinued operations(30)—
1
—
—
(36)—
Total income tax expense included in Consolidated Statements of Operations$1,126
$634
$528
$301
$322
$42
$225
(a)Includes benefits of NOL carryforwards and utilization of NOL and tax credit carryforwards of $648 million at Duke Energy, $4 million at Duke Energy Carolinas, $190 million at Progress Energy, $60 million at Duke Energy Progress, $49 million at Duke Energy Florida, $26 million at Duke Energy Ohio and $58 million at Duke Energy Indiana.
(b)    For the year ended December 31, 2018, the Company has revised the December 31, 2017, estimates of the income tax effects of the Tax Act, in accordance with SAB 118. See the Statutory Rate Reconciliation section below for additional information on the Tax Act's impact on income tax expense    .
 Piedmont
 Two Months EndedYear Ended October 31,
(in millions)  
December 31, 20162016
Current income taxes  
Federal$4
$27
State(2)12
Total current income taxes2
39
Deferred income taxes  
Federal24
79
State6
6
Total deferred income taxes(a)
30
85
Total income tax expense from continuing operations included in Consolidated Statements of Operations$32
$124
(a)Includes benefits of NOL and tax carryforwards of $17 million and $91 million for the two months ended December 31, 2016, and the year ended October 31, 2016, respectively.
Duke Energy Income from Continuing Operations before Income Taxes
 Years Ended December 31,
(in millions)202020192018
Domestic$826 $4,053 $3,018 
Foreign13 44 55 
Income from continuing operations before income taxes$839 $4,097 $3,073 
237
 Years Ended December 31,
(in millions)2018 2017 2016
Domestic(a)
$3,018
 $4,207
 $3,689
Foreign55
 59
 45
Income from continuing operations before income taxes$3,073
 $4,266
 $3,734



(a)Includes a $16 million expense in 2017 related to the Tax Act impact on equity earnings included within Equity in earnings (losses) of unconsolidated affiliates on the Consolidated Statement of Operations.
Taxes on Foreign Earnings
In February 2016, Duke Energy announced it had initiated a process to divest the International Disposal Group and, accordingly, no longer intended to indefinitely reinvest post-2014 undistributed foreign earnings. This change in the company's intent, combined with the extension of bonus depreciation by Congress in late 2015, allowed Duke Energy to more efficiently utilize foreign tax credits and reduce U.S. deferred tax liabilities associated with the historical unremitted foreign earnings by approximately $95 million during the year ended December 31, 2016.

245



FINANCIAL STATEMENTSINCOME TAXES


Due to the classification of the International Disposal Group as discontinued operations beginning in the fourth quarter of 2016, income tax amounts related to the International Disposal Group's foreign earnings are presented within Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations. In December 2016, Duke Energy closed on the sale of the International Disposal Group in two separate transactions to execute the divestiture. See Note 2 for additional information on the sale.
Statutory Rate Reconciliation
The following tables present a reconciliation of income tax expense at the U.S. federal statutory tax rate to the actual tax expense from continuing operations.
 Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Income tax expense, computed at the statutory rate of 21%$176 $219 $243 $80 $204 $62 $103 $61 
State income tax, net of federal income tax effect(80)(40)4 (25)39 2 19 (12)
Amortization of excess deferred income tax(276)(82)(118)(68)(49)(20)(36)(21)
AFUDC equity income(48)(13)(9)(6)(3)(2)(4)(10)
AFUDC equity depreciation103 19 10 5 5 1 4 — 
Noncontrolling Interests62 — — — — — 0 — 
Renewable energy PTCs(110)— — — — — — — 
Other tax credits(37)(13)(16)(14)(2)(1)(3)(2)
Tax true up(12)(3)1 (5)5 0 (1)1 
Other items, net(14)1 (2)(3)(1)1 2 1 
Income tax (benefit) expense from continuing operations$(236)$88 $113 $(36)$198 $43 $84 $18 
Effective tax rate(28.1)%8.4 %9.7 %(9.5)%20.4 %14.6 %17.1 %6.2 %
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Income tax expense, computed at the statutory rate of 21%$860 $360 $332 $202 $178 $59 $120 $51 
State income tax, net of federal income tax effect(22)(19)8 (17)35 3 22 2 
Amortization of excess deferred income tax(121)(29)(64)(10)(54)(12)(6)(10)
AFUDC equity income(52)(9)(14)(13)(1)(3)(3)— 
AFUDC equity depreciation34 19 10 5 5 1 4 — 
Renewable energy PTCs(120)— — — — — — — 
Other tax credits(23)(11)(9)(7)(2)(1)(1)(1)
Tax true up(64)(9)(8)(3)(5)(7)(1)0 
Other items, net27 9 (2)0 (1)0 (1)1 
Income tax expense from continuing operations$519 $311 $253 $157 $155 $40 $134 $43 
Effective tax rate12.7 %18.1 %16.0 %16.3 %18.3 %14.3 %23.5 %17.6 %
238
 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
Income tax expense, computed at the statutory rate of 21 percent$645
$288
$263
$174
$137
$46
$109
$35
State income tax, net of federal income tax effect30
14
13
(17)28
2
20
4
Amortization of excess deferred income tax(61)—
(55)(1)(54)(3)(2)—
AFUDC equity income(42)(15)(22)(12)(10)(2)(2)—
AFUDC equity depreciation31
18
9
5
4
1
4
—
Renewable energy production tax credits(129)—
—
—
—
—
—
—
Other tax credits(28)(7)(13)(5)(8)(1)(1)(3)
Tax Act(a)
20
1
25
19
—
2
—
—
Other items, net(18)4
(2)(3)4
(2)—
1
Income tax expense from continuing operations$448
$303
$218
$160
$101
$43
$128
$37
Effective tax rate14.6%22.1%17.4%19.3%15.4%19.6%24.6%22.3%



(a)FINANCIAL STATEMENTSFor the year ended December 31, 2018, the Company revised the December 31, 2017 estimates of the income tax effects of the Tax Act, in accordance with SAB 118. Amounts primarily include but are not limited to items that are excluded for ratemaking purposes related certain wholesale fixed rate contracts, remeasurement of nonregulated net deferred tax liabilities, Federal net operating losses,INCOME TAXES
 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Income tax expense, computed at the statutory rate of 21%$645 $288 $263 $174 $137 $46 $109 $35 
State income tax, net of federal income tax effect30 14 13 (17)28 2 20 4 
Amortization of excess deferred income tax(61)— (55)(1)(54)(3)(2)— 
AFUDC equity income(42)(15)(22)(12)(10)(2)(2)— 
AFUDC equity depreciation31 18 9 5 4 1 4 — 
Renewable energy PTCs(129)— — — — — — — 
Other tax credits(28)(7)(13)(5)(8)(1)(1)(3)
Tax Act(a)
20 1 25 19 0 2 — — 
Other items, net(18)4 (2)(3)4 (2)— 1 
Income tax expense from continuing operations$448 $303 $218 $160 $101 $43 $128 $37 
Effective tax rate14.6 %22.1 %17.4 %19.3 %15.4 %19.6 %24.6 %22.3 %
(a)     For the year ended December 31, 2018, the Company revised the December 31, 2017, estimates of the income tax effects of the Tax Act, in accordance with SAB 118. Amounts primarily include but are not limited to items that are excluded for ratemaking purposes related certain wholesale fixed-rate contracts, remeasurement of nonregulated net deferred tax liabilities, Federal NOLs, and valuation allowance on foreign tax credits.
 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
Income tax expense, computed at the statutory rate of 35 percent$1,493
$653
$536
$353
$265
$88
$229
$70
State income tax, net of federal income tax effect69
36
25
8
26
(1)23
3
AFUDC equity income(81)(37)(32)(17)(16)(4)(8)—
Renewable energy production tax credits(132)—
—
—
—
—
—
—
Tax Act(a)
(112)15
(246)(40)(226)(23)55
(12)
Tax true up(52)(24)(19)(13)(7)(5)(6)—
Other items, net11
9
—
1
4
4
8
1
Income tax expense from continuing operations$1,196
$652
$264
$292
$46
$59
$301
$62
Effective tax rate28.0%34.9%17.2%29.0%6.1%23.4%46.0%30.8%
(a)Amounts primarily include but are not limited to items that are excluded for ratemaking purposes related to abandoned or impaired assets, certain wholesale fixed rate contracts, remeasurement of nonregulated net deferred tax liabilities, Federal net operating losses, and valuation allowance on foreign tax credits.

246



FINANCIAL STATEMENTSINCOME TAXES


 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
Income tax expense, computed at the statutory rate of 35 percent$1,307
$630
$548
$315
$306
$95
$212
State income tax, net of federal income tax effect64
46
20
10
30
(2)11
AFUDC equity income(70)(36)(26)(17)(9)(2)(6)
Renewable energy production tax credits(97)—
—
—
—
—
—
Audit adjustment5
3
—
—
—
—
—
Tax true up(14)(14)(11)(3)(9)(16)2
Other items, net(39)5
(4)(4)4
3
6
Income tax expense from continuing operations$1,156
$634
$527
$301
$322
$78
$225
Effective tax rate31.0%35.2%33.7%33.4%36.9%28.9%37.1%
 Piedmont
 Two Months EndedYear Ended October 31,
(in millions)  
December 31, 20162016
Income tax expense, computed at the statutory rate of 35 percent$30
$111
State income tax, net of federal income tax effect1
11
Other items, net1
2
Income tax expense from continuing operations$32
$124
Effective tax rate37.2%39.1%
Valuation allowances have been established for certain state NOL carryforwards and state income tax credits that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in the State income tax, net of federal income tax effect, in the above tables.

247



FINANCIAL STATEMENTSINCOME TAXES


Valuation allowances have been established for foreign tax credits that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in Tax Act in the above tables.
DEFERRED TAXES
Net Deferred Income Tax Liability Components
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Deferred credits and other liabilities$286 $85 $87 $67 $18 $21 $7 $38 
Lease obligations515 96 208 120 87 5 16 5 
Pension, post-retirement and other employee benefits236 (30)68 24 38 16 26 (5)
Progress Energy merger purchase accounting adjustments(a)
441 — — — — — — — 
Tax credits and NOL carryforwards3,909 285 508 179 282 16 183 29 
Regulatory liabilities and deferred credits— 11 — — — 18 0 — 
Investments and other assets— — — — — 7 0— 
Other93 8 14 9 4 7 1 8 
Valuation allowance(586)— — — — — — — 
Total deferred income tax assets4,894 455 885 399 429 90 233 75 
Investments and other assets(2,267)(1,127)(669)(507)(164)— (14)(48)
Accelerated depreciation rates(10,729)(3,170)(3,868)(1,778)(2,124)(1,071)(1,433)(844)
Regulatory assets and deferred debits, net(1,142)— (744)(412)(332)— (14)(4)
Total deferred income tax liabilities(14,138)(4,297)(5,281)(2,697)(2,620)(1,071)(1,461)(896)
Net deferred income tax liabilities$(9,244)$(3,842)$(4,396)$(2,298)$(2,191)$(981)$(1,228)$(821)
(a)    Primarily related to lease obligations and debt fair value adjustments.
239
 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
Deferred credits and other liabilities$164
$64
$35
$53
$—
$17
$6
$17
Capital lease obligations60
26
—
—
—
—
2
—
Pension, post-retirement and other employee benefits347
24
110
47
58
16
24
(1)
Progress Energy merger purchase accounting adjustments(a)
483
—
—
—
—
—
—
—
Tax credits and NOL carryforwards4,580
257
693
215
363
42
237
110
Regulatory liabilities and deferred credits—
—
—
—
—
56
—
48
Investments and other assets—
—
—
—
—
18
—
16
Other25
6
5
5
—
1
(1)—
Valuation allowance(484)—
—
—
—
—
—
—
Total deferred income tax assets5,175
377
843
320
421
150
268
190
Investments and other assets(1,317)(795)(430)(272)(163)—
(5)—
Accelerated depreciation rates(10,124)(3,207)(3,369)(1,735)(1,670)(967)(1,081)(733)
Regulatory assets and deferred debits, net(1,540)(64)(985)(432)(574)—
(191)—
Other—
—
—
—
—
—
—
(8)
Total deferred income tax liabilities(12,981)(4,066)(4,784)(2,439)(2,407)(967)(1,277)(741)
Net deferred income tax liabilities$(7,806)$(3,689)$(3,941)$(2,119)$(1,986)$(817)$(1,009)$(551)



(a)FINANCIAL STATEMENTSPrimarily related to capital lease obligations and debt fair value adjustments.INCOME TAXES
The following table presents the expiration of tax credits and NOL carryforwards.
 December 31, 2020
(in millions)AmountExpiration Year
General Business Credits$2,033 2024—2040
Federal NOL carryforwards(a) (f)
154 2024—Indefinite
Capital loss carryforward(e)
85 2024
State carryforwards and credits(b) (f)
340 2021—Indefinite
Foreign NOL carryforwards(c)
12 2027—2037
Foreign Tax Credits(d)
1,272 2024—2027
Charitable contribution carryforwards13 2025
Total tax credits and NOL carryforwards$3,909    
(a)    A valuation allowance of $4 million has been recorded on the Federal NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(b)    A valuation allowance of $97 million has been recorded on the state NOL and attribute carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(c)    A valuation allowance of $12 million has been recorded on the foreign NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(d)    A valuation allowance of $388 million has been recorded on the foreign tax credits, as presented in the Net Deferred Income Tax Liability Components table.
(e)    A valuation allowance of $85 million has been recorded on the Federal capital loss carryforward, as presented in the Net Deferred Income Tax Liability Components table.
(f)    Indefinite carryforward for Federal NOLs, and NOLs for states that have adopted the Tax Act's NOL provisions, generated in tax years beginning after December 31, 2017.
 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Deferred credits and other liabilities$125 $24 $25 $49 $— $14 $5 $22 
Lease obligations462 72 193 92 102 5 17 6 
Pension, post-retirement and other employee benefits303 (5)88 38 44 17 27 (3)
Progress Energy merger purchase accounting adjustments(a)
389 — — — — — — — 
Tax credits and NOL carryforwards3,925 262 486 176 253 16 176 19 
Regulatory liabilities and deferred credits— — — — — 36 52 42 
Investments and other assets— — — — — 10 — 2 
Other97 5 8 3 2 8 1 6 
Valuation allowance(587)— — — — — — — 
Total deferred income tax assets4,714 358 800 358 401 106 278 94 
Investments and other assets(1,664)(981)(577)(390)(190)— (12)— 
Accelerated depreciation rates(10,813)(3,254)(3,798)(1,918)(1,913)(1,028)(1,416)(802)
Regulatory assets and deferred debits, net (1,115)(44)(887)(438)(477)— — — 
Total deferred income tax liabilities(13,592)(4,279)(5,262)(2,746)(2,580)(1,028)(1,428)(802)
Net deferred income tax liabilities$(8,878)$(3,921)$(4,462)$(2,388)$(2,179)$(922)$(1,150)$(708)
(a)    Primarily related to finance lease obligations and debt fair value adjustments.
240
 December 31, 2018
(in millions)  
Amount
 Expiration Year
Investment tax credits$1,614
 2024 — 2038
Alternative minimum tax credits574
 Refundable by 2021
Federal NOL carryforwards(a)(e)
788
 2022 — Indefinite
State NOL carryforwards and credits(b)(e)
301
 2019 — Indefinite
Foreign NOL carryforwards(c)
12
 2027 — 2037
Foreign Tax Credits(d)
1,271
 2024 — 2027
Charitable contribution carryforwards20
 2019 — 2023
Total tax credits and NOL carryforwards$4,580
      



(a)A valuation allowance of $4 million has been recorded on the Federal NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(b)A valuation allowance of $85 million has been recorded on the state NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(c)A valuation allowance of $12 million has been recorded on the foreign NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(d)A valuation allowance of $383 million has been recorded on the foreign tax credits, as presented in the Net Deferred Income Tax Liability Components table.
(e)Indefinite carryforward for Federal NOLs, and NOLs for states that have adopted the Tax Act's NOL provisions, generated in tax years beginning after December 31, 2017.

248



FINANCIAL STATEMENTSINCOME TAXES


 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
Deferred credits and other liabilities$143
$33
$78
$23
$49
$11
$6
$(5)
Capital lease obligations49
14
—
—
—
—
2
—
Pension, post-retirement and other employee benefits295
(17)111
44
60
14
18
(4)
Progress Energy merger purchase accounting adjustments(a)
536
—
—
—
—
—
—
—
Tax credits and NOL carryforwards4,527
234
402
156
143
25
216
70
Regulatory liabilities and deferred credits—
222
—
—
—
65
—
61
Investments and other assets—
—
—
—
—
—
1
18
Other73
10
1
4
—
—
—
—
Valuation allowance(519)—
(14)—
—
—
—
—
Total deferred income tax assets5,104
496
578
227
252
115
243
140
Investments and other assets(1,419)(849)(470)(289)(187)—
(14)—
Accelerated depreciation rates(9,216)(3,060)(2,803)(1,583)(1,257)(896)(966)(697)
Regulatory assets and deferred debits, net (1,090)—
(807)(238)(569)—
(188)—
Other—
—
—
—
—
—
—
(7)
Total deferred income tax liabilities(11,725)(3,909)(4,080)(2,110)(2,013)(896)(1,168)(704)
Net deferred income tax liabilities$(6,621)$(3,413)$(3,502)$(1,883)$(1,761)$(781)$(925)$(564)
(a)Primarily related to capital lease obligations and debt fair value adjustments.
On June 28, 2017, the North Carolina General Assembly amended N.C. Gen. Stat. 105-130.3, reducing the North Carolina corporate income tax rate from a statutory rate of 3.0 to 2.5 percent beginning January 1, 2019. Duke Energy recorded a net reduction of approximately $55 million to their North Carolina deferred tax liabilities in the second quarter of 2017. The significant majority of this deferred tax liability reduction was offset by recording a regulatory liability pending NCUC determination of the disposition of amounts related to Duke Energy Carolinas, Duke Energy Progress and Piedmont. The impact did not have a significant impact on the financial position, results of operation or cash flows of Duke Energy, Duke Energy Carolinas, Progress Energy or Duke Energy Progress.
UNRECOGNIZED TAX BENEFITS
The following tables present changes to unrecognized tax benefits.
Year Ended December 31, 2018 Year Ended December 31, 2020
 Duke
 Duke
Duke
Duke
Duke
 DukeDuke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
 DukeEnergyProgressEnergy
(in millions)
Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unrecognized tax benefits – January 1$25
$5
$5
$5
$5
$1
$1
$3
Unrecognized tax benefits – January 1$126 $8 $9 $6 $3 $1 $1 $4 
Unrecognized tax benefits increases (decreases) 
Gross decreases – tax positions in prior periods(2)(1)—
—
(4)—
—
—
Gross decreases – tax positions in prior periods(2)— — — — — — — 
Gross increases – current period tax positions7
2
4
1
2
—
—
1
Gross increases – current period tax positions4 2 1 0 0 0 — — 
Decreases due to settlements(6)—
—
—
—
—
—
—
Reduction due to lapse of statute of limitationsReduction due to lapse of statute of limitations(3)— — — — — — (3)
Total changes(1)1
4
1
(2)—
—
1
Total changes(1)2 1 — — — — (3)
Unrecognized tax benefits – December 31$24
$6
$9
$6
$3
$1
$1
$4
Unrecognized tax benefits – December 31$125 $10 $10 $6 $3 $1 $1 $1 

 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unrecognized tax benefits – January 1$24 $6 $9 $6 $3 $1 $1 $4 
Unrecognized tax benefits increases105 2 1 1 — — — — 
Gross decreases – tax positions in prior periods(3)— (1)(1)— — — — 
Total changes102 2 0 0 0 — — — 
Unrecognized tax benefits – December 31$126 $8 $9 $6 $3 $1 $1 $4 
249

 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unrecognized tax benefits – January 1$25 $5 $5 $5 $5 $1 $1 $3 
Unrecognized tax benefits increases (decreases)
Gross decreases – tax positions in prior periods(2)(1)— — (4)— — — 
Gross increases – tax positions in prior periods7 2 4 1 2 — — 1 
Decreases due to settlements(6)— — — — — — — 
Total changes(1)1 4 1 (2)0 0 1 
Unrecognized tax benefits – December 31$24 $6 $9 $6 $3 $1 $1 $4 


FINANCIAL STATEMENTSINCOME TAXES


 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
Unrecognized tax benefits – January 1$17
$1
$2
$2
$4
$4
$—
$—
Unrecognized tax benefits increases (decreases)        
Gross increases – tax positions in prior periods12
4
3
3
1
1
1
3
Gross decreases – tax positions in prior periods(4)—
—
—
—
(4)—
—
Total changes8
4
3
3
1
(3)1
3
Unrecognized tax benefits – December 31$25
$5
$5
$5
$5
$1
$1
$3
 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
Unrecognized tax benefits – January 1$88
$72
$1
$3
$—
$—
$1
Unrecognized tax benefits increases (decreases)       
Gross increases – tax positions in prior periods—
—
—
—
4
4
—
Gross decreases – tax positions in prior periods(4)(4)(1)(1)—
—
—
Decreases due to settlements(68)(67)—
—
—
—
(1)
Reduction due to lapse of statute of limitations1
—
2
—
—
—
—
Total changes(71)(71)1
(1)4
4
(1)
Unrecognized tax benefits – December 31$17
$1
$2
$2
$4
$4
$—
The following table includes additional information regarding the Duke Energy Registrants' unrecognized tax benefits at December 31, 2018. All2020. Duke Energy Registrants do not anticipate a material increase or decrease in unrecognized tax benefits within the next 12 months.
December 31, 2018 December 31, 2020
 Duke
 Duke
Duke
Duke
Duke
 DukeDuke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
 DukeEnergyProgressEnergy
(in millions)
Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Amount that if recognized, would affect the
effective tax rate or regulatory liability(a)
$21
$6
$9
$6
$3
$1
$1
$4
Amount that if recognized, would affect the
effective tax rate or regulatory liability(a)
$122 $10 $10 $6 $3 $1 $1 $1 
Amount that if recognized, would be recorded as
a component of discontinued operations
2
—
—
—
—
—
—
—
(a)Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont are unable to estimate the specific amounts that would affect the effective tax rate
(a)    The Duke Energy Registrants are unable to estimate the specific amounts that would affect the ETR versus the regulatory liability.

250



FINANCIAL STATEMENTSINCOME TAXES


OTHER TAX MATTERS
The following tables include interest recognized in the Consolidated Statements of Operations and the Consolidated Balance Sheets.
 Year Ended December 31, 2018
   Duke
 Duke
Progress
Energy
(in millions)  
Energy
Energy
Progress
Net interest income recognized related to income taxes$2
$—
$—
Interest payable related to income taxes3
1
1
 Year Ended December 31, 2017
  Duke
 Duke
Duke
 Duke
Energy
Progress
Energy
Energy
(in millions)  
Energy
Carolinas
Energy
Progress
Florida
Net interest income recognized related to income taxes$—
$—
$1
$—
$1
Net interest expense recognized related to income taxes—
2
—
—
—
Interest payable related to income taxes5
25
1
1
—
 Year Ended December 31, 2016
  Duke
 Duke
Duke
 Duke
Energy
Progress
Energy
Energy
(in millions)  
Energy
Carolinas
Energy
Progress
Florida
Net interest income recognized related to income taxes$—
$—
$1
$—
$2
Net interest expense recognized related to income taxes—
7
—
—
—
Interest payable related to income taxes4
23
1
1
—
Piedmont recognized $1 million in net interest income related to income taxes in the Consolidated Statements of Operations for the year ended October 31, 2016.
Duke Energy and its subsidiaries are no longer subject to U.S. federal examination for years before 2015.2016. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 2015.2016.
241



FINANCIAL STATEMENTSOTHER INCOME AND EXPENSES, NET
24. OTHER INCOME AND EXPENSES, NET
The components of Other income and expenses, net on the Consolidated Statements of Operations are as follows.
 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
Interest income$20
 $1
 $18
 $1
 $18
 $7
 $9
 $1
AFUDC equity221
 73
 104
 57
 47
 11
 32
 —
Post in-service equity returns15
 9
 5
 5
 —
 1
 —
 —
Nonoperating income, other143
 70
 38
 24
 21
 4
 4
 13
Other income and expense, net$399
 $153
 $165
 $87
 $86
 $23
 $45
 $14
Year Ended December 31, 2017 Year Ended December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Interest income$13
 $2
 $6
 $2
 $5
 $6
 $8
 $—
Interest income$32 $4 $8 $2 $6 $4 $6 $17 
AFUDC equity237
 106
 92
 47
 45
 11
 28
 —
AFUDC equity154 62 42 29 12 7 23 19 
Post in-service equity returns40
 28
 12
 12
 —
 —
 —
 —
Post in-service equity returns27 17 8 8 — 1 1 — 
Nonoperating income, other218
 63
 99
 54
 46
 6
 11
 (11)Nonoperating income, other240 94 71 36 35 4 7 15 
Other income and expense, net$508
 $199
 $209
 $115
 $96
 $23
 $47
 $(11)Other income and expense, net$453 $177 $129 $75 $53 $16 $37 $51 

 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Interest income$31 $1 $11 $0 $11 $10 $10 $1 
AFUDC equity139 42 66 60 6 13 18 — 
Post in-service equity returns29 20 7 7 — 1 — — 
Nonoperating income, other231 88 57 33 31 0 13 19 
Other income and expense, net$430 $151 $141 $100 $48 $24 $41 $20 
251

 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Interest income$20 $1 $18 $1 $18 $7 $9 $1 
AFUDC equity221 73 104 57 47 11 32 — 
Post in-service equity returns15 9 5 5 — 1 — — 
Nonoperating income, other143 70 38 24 21 4 4 13 
Other income and expense, net$399 $153 $165 $87 $86 $23 $45 $14 


FINANCIAL STATEMENTSOTHER INCOME AND EXPENSES, NET


 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
Interest income$21
 $4
 $4
 $3
 $2
 $5
 $6
AFUDC equity200
 102
 76
 50
 26
 6
 16
Post in-service equity returns67
 55
 12
 12
 —
 —
 —
Nonoperating income, other175
 53
 94
 67
 35
 —
 4
Other income and expense, net(a)
$463
 $214
 $186
 $132
 $63
 $11
 $26
(a)Amounts for Piedmont for the two months ended December 31, 2016, and for the year ended October 31, 2016, were not material.
25. SUBSEQUENT EVENTS
For information on subsequent events related to the adoptionsale of the new lease accounting standard,a minority interest in Duke Energy Indiana and regulatory matters, commitments and contingencies and debt and credit facilities, see Notes 1 4, 5 and 6,3, respectively.

In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. The financial impact of the storm is estimated to be between approximately $75 million and $100 million on a pre-tax basis.
252
242






FINANCIAL STATEMENTSINDEPENDENT ACCOUNTANTSQUARTERLY FINANCIAL DATA


26. QUARTERLY FINANCIAL DATA (UNAUDITED)
DUKE ENERGY
Quarterly EPS amounts may not sum to the full-year total due to changes in the weighted average number of common shares outstanding and rounding.
 First
 Second
 Third
 Fourth
  
(in millions, except per share data)Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$6,135
 $5,643
 $6,628
 $6,115
 $24,521
Operating income1,256
 979
 1,579
 871
 4,685
Income from continuing operations622
 507
 1,062
 434
 2,625
(Loss) Income from discontinued operations, net of tax—
 (5) 4
 20
 19
Net income622
 502
 1,066
 454
 2,644
Net income attributable to Duke Energy Corporation620
 500
 1,082
 464
 2,666
Earnings per share:         
Income from continuing operations attributable to Duke Energy Corporation common stockholders         
Basic$0.88
 $0.72
 $1.51
 $0.62
 $3.73
Diluted$0.88
 $0.72
 $1.51
 $0.62
 $3.73
(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders         
Basic$—
 $(0.01) $—
 $0.03
 $0.03
Diluted$—
 $(0.01) $—
 $0.03
 $0.03
Net income attributable to Duke Energy Corporation common stockholders         
Basic$0.88
 $0.71
 $1.51
 $0.65
 $3.76
Diluted$0.88
 $0.71
 $1.51
 $0.65
 $3.76
2017         
Operating revenues$5,729
 $5,555
 $6,482
 $5,799
 $23,565
Operating income1,402
 1,353
 1,661
 1,209
 5,625
Income from continuing operations717
 691
 957
 705
 3,070
Loss from discontinued operations, net of tax—
 (2) (2) (2) (6)
Net income717
 689
 955
 703
 3,064
Net income attributable to Duke Energy Corporation716
 686
 954
 703
 3,059
Earnings per share:         
Income from continuing operations attributable to Duke Energy Corporation common stockholders         
Basic$1.02
 $0.98
 $1.36
 $1.00
 $4.37
Diluted$1.02
 $0.98
 $1.36
 $1.00
 $4.37
Loss from discontinued operations attributable to Duke Energy Corporation common stockholders         
Basic$—
 $—
 $—
 $—
 $(0.01)
Diluted$—
 $—
 $—
 $—
 $(0.01)
Net income attributable to Duke Energy Corporation common stockholders         
Basic$1.02
 $0.98
 $1.36
 $1.00
 $4.36
Diluted$1.02
 $0.98
 $1.36
 $1.00
 $4.36

253



FINANCIAL STATEMENTSQUARTERLY FINANCIAL DATA


The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$(17) $(20) $(16) $(31) $(84)
Regulatory and Legislative Impacts (see Note 4)(86) (179) —
 —
 (265)
Sale of Retired Plant (see Note 3)(107) —
 —
 —
 (107)
Impairment Charges (see Notes 4, 11 and 12)(55) —
 (93) (60) (208)
Severance Charges (see Note 20)—
 —
 —
 (187) (187)
Impacts of the Tax Act (see Note 23)(76) —
 3
 53
 (20)
Total$(341) $(199) $(106) $(225) $(871)
2017         
Costs to Achieve Mergers (see Note 2)$(16) $(30) $(23) $(34) $(103)
Regulatory Settlements (see Note 4)—
 —
 (135) (23) (158)
Commercial Renewables Impairments (see Notes 10 and 11)—
 —
 (84) (18) (102)
Impacts of the Tax Act (see Note 23)—
 —
 —
 102
 102
Total$(16) $(30) $(242) $27
 $(261)
DUKE ENERGY CAROLINAS
 First
 Second
 Third
 Fourth
  
(in millions)Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$1,763
 $1,672
 $2,090
 $1,775
 $7,300
Operating income482
 224
 713
 241
 1,660
Net income323
 117
 496
 135
 1,071
2017         
Operating revenues$1,716
 $1,729
 $2,136
 $1,721
 $7,302
Operating income471
 471
 763
 384
 2,089
Net income270
 273
 466
 205
 1,214
The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$(4) $(2) $(2)
$(1) $(9)
Regulatory and Legislative Impacts (see Note 4)(19) (179) —
 —
 (198)
Severance Charges (see Note 20)—
 —
 —
 (102) (102)
Impacts of the Tax Act (see Note 23)—
 —
 (1) —
 (1)
Total$(23) $(181) $(3) $(103) $(310)
2017         
Costs to Achieve Piedmont Merger (see Note 2)$(4) $(6) $(5) $(5) $(20)
Impacts of the Tax Act (see Note 23)—
 —
 —
 (15) (15)
Total$(4) $(6) $(5) $(20) $(35)

254



FINANCIAL STATEMENTSQUARTERLY FINANCIAL DATA


PROGRESS ENERGY
 First
 Second
 Third
 Fourth
  
(in millions)Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$2,576
 $2,498
 $3,045
 $2,609
 $10,728
Operating income447
 484
 663
 334
 1,928
Net income237
 267
 406
 123
 1,033
Net income attributable to Parent235
 265
 404
 123
 1,027
2017         
Operating revenues$2,179
 $2,392
 $2,864
 $2,348
 $9,783
Operating income471
 576
 641
 459
 2,147
Net income201
 277
 343
 447
 1,268
Net income attributable to Parent199
 274
 341
 444
 1,258
The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$(4) $(3) $(1) $(2) $(10)
Regulatory and Legislative Impacts (see Note 4)(67) —
 —
 —
 (67)
Impairment Charges (see Note 4)—
 —
 —
 (60) (60)
Severance Charges (see Note 20)—
 —
 —
 (69) (69)
Impacts of the Tax Act (see Note 23)(1) —
 (5) (19) (25)
Total$(72) $(3) $(6) $(150) $(231)
2017         
Costs to Achieve Piedmont Merger (see Note 2)$(4) $(7) $(6) $(6) $(23)
Regulatory Settlements (see Note 4)—
 —
 (135) (23) (158)
Impacts of the Tax Act (see Note 23)—
 —
 —
 246
 246
Total$(4) $(7) $(141) $217
 $65
DUKE ENERGY PROGRESS
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$1,460
 $1,291
 $1,582
 $1,366
 $5,699
Operating income269
 233
 330
 227
 1,059
Net income177
 139
 216
 135
 667
2017         
Operating revenues$1,219
 $1,199
 $1,460
 $1,251
 $5,129
Operating income274
 270
 398
 243
 1,185
Net income147
 154
 246
 168
 715

255



FINANCIAL STATEMENTSQUARTERLY FINANCIAL DATA


The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$(2) $(2) $(1) $(1) $(6)
Regulatory and Legislative Impacts (see Note 4)(67) —
 —
 —
 (67)
Severance Charges (see Note 20)—
 —
 —
 (52) (52)
Impacts of the Tax Act (see Note 23)—
 —
 (4) (15) (19)
Total$(69)
$(2)
$(5)
$(68)
$(144)
2017         
Costs to Achieve Piedmont Merger (see Note 2)$(2) $(4) $(4) $(4) $(14)
Regulatory Settlements (see Note 4)—
 —
 —
 (23) (23)
Impacts of the Tax Act (see Note 23)—
 —
 —
 40
 40
Total$(2) $(4) $(4) $13
 $3
DUKE ENERGY FLORIDA
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$1,115
 $1,203
 $1,462
 $1,241
 $5,021
Operating income173
 245
 331
 107
 856
Net income103
 168
 243
 40
 554
2017         
Operating revenues$959
 $1,191
 $1,401
 $1,095
 $4,646
Operating income192
 301
 236
 212
 941
Net income90
 158
 120
 344
 712
The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$(2) $(1) $—
 $(1) $(4)
Impairment Charges (see Note 4)—
 —
 —
 (60) (60)
Severance Charges (see Note 20)—
 —
 —
 (17) (17)
Impacts of the Tax Act (see Note 23)—
 —
 (2) 2
 —
Total$(2) $(1) $(2) $(76) $(81)
2017         
Costs to Achieve Piedmont Merger (see Note 2)$(2) $(3) $(2) $(2) $(9)
Regulatory Settlements (see Note 4)—
 —
 (135) —
 (135)
Impacts of the Tax Act (see Note 23)—
 —
 —
 226
 226
Total$(2) $(3) $(137) $224
 $82

256



FINANCIAL STATEMENTSQUARTERLY FINANCIAL DATA


DUKE ENERGY OHIO
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$524
 $459
 $469
 $505
 $1,957
Operating (loss) income(21) 77
 139
 93
 288
Net (loss) income(25) 46
 100
 55
 176
2017         
Operating revenues$518
 $437
 $471
 $497
 $1,923
Operating income82
 64
 101
 73
 320
Loss from discontinued operations, net of tax—
 —
 (1) —
 (1)
Net income42
 30
 55
 65
 192
The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$(3) $(5) $—
 $(6) $(14)
Sale of Retired Plant (see Note 3)(107) —
 —
 —
 (107)
Severance Charges (see Note 20)—
 —
 —
 (6) (6)
Impacts of the Tax Act (see Note 23)—
 —
 —
 (2) (2)
Total$(110) $(5) $—
 $(14) $(129)
2017         
Costs to Achieve Piedmont Merger (see Note 2)$(1) $(1) $(2) $(2) $(6)
Impacts of the Tax Act (see Note 23)—
 —
 —
 23
 23
Total$(1) $(1) $(2) $21
 $17
DUKE ENERGY INDIANA
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$731
 $738
 $819
 $771
 $3,059
Operating income168
 169
 173
 133
 643
Net income100
 98
 119
 76
 393
2017         
Operating revenues$758
 $742
 $802
 $745
 $3,047
Operating income184
 208
 228
 166
 786
Net income91
 106
 121
 36
 354
The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)  
Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$—
 $—
 $(2) $—
 $(2)
Severance Charges (see Note 20)—
 —
 —
 (7) (7)
Total$—
 $—
 $(2) $(7) $(9)
2017         
Costs to Achieve Piedmont Merger (see Note 2)$(1) $(2) $(2) $(1) $(6)
Impacts of the Tax Act (see Note 23)—
 —
 —
 (55) (55)
Total$(1) $(2) $(2) $(56) $(61)

257



FINANCIAL STATEMENTSQUARTERLY FINANCIAL DATA


PIEDMONT
 First
 Second
 Third
 Fourth
  
(in millions)Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Operating revenues$553
 $215
 $172
 $435
 $1,375
Operating income (loss)161
 5
 (19) 79
 226
Net income (loss)110
 (8) (21) 48
 129
2017         
Operating revenues$500
 $201
 $183
 $444
 $1,328
Operating income (loss)170
 5
 (4) 126
 297
Net income (loss)95
 (8) (11) 63
 139
The following table includes unusual or infrequently occurring items in each quarter during the two most recently completed fiscal years. All amounts discussed below are pretax.
 First
 Second
 Third
 Fourth
  
(in millions)Quarter
 Quarter
 Quarter
 Quarter
 Total
2018         
Costs to Achieve Piedmont Merger (see Note 2)$(6) $(9) $(11) $(22) $(48)
Severance Charges (see Note 20)—
 —
 —
 (2) (2)
Total$(6) $(9) $(11) $(24) $(50)
2017         
Costs to Achieve Piedmont Merger (see Note 2)$(6) $(13) $(8) $(19) $(46)
Impacts of the Tax Act (see Note 23)—
 —
 —
 2
 2
Total$(6) $(13) $(8) $(17) $(44)

258



INDEPENDENT ACCOUNTANTS


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

259



CONTROLS AND PROCEDURES


ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated the effectiveness of their disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2018,2020, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.
Changes in Internal Control Over Financial Reporting
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated changes in internal control over financial reporting (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2018,2020, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
The Duke Energy Registrants’ management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Duke Energy Registrants’ internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States.GAAP. Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
The Duke Energy Registrants’ management, including their Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of their internal control over financial reporting as of December 31, 2018,2020, based on the framework in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management concluded that its internal controls over financial reporting were effective as of December 31, 2018.2020.
Deloitte & Touche LLP, Duke Energy’s independent registered public accounting firm, has issued an attestation report on the effectiveness of Duke Energy’s internal control over financial reporting, which is included herein. This report is not applicable to the Subsidiary Registrants as these companies are not accelerated or large accelerated filers.

243
260






REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Duke Energy Corporation and subsidiaries (the “Company”) as of December 31, 2018,2020, based on criteria established in Internal Control -— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control -— Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2018,2020, of the Company and our report dated February 28, 2019,25, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 28, 2019

25, 2021
261
244






OTHER INFORMATION


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding Duke Energy's Executive Officers is set forth in Part I, Item 1, "Business – Information about Our Executive Officers, of the Registrants," in this Annual Report on Form 10-K. Duke Energy will provide information that is responsive to the remainder of this Item 10 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 10 by reference.
ITEM 11. EXECUTIVE COMPENSATION
Duke Energy will provide information that is responsive to this Item 11 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 11 by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table shows information as of December 31, 2018,2020, about securities to be issued upon exercise of outstanding options, warrants and rights under Duke Energy's equity compensation plans, along with the weighted-averageweighted average exercise price of the outstanding options, warrants and rights and the number of securities remaining available for future issuance under the plans.
Plan Category
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)(1)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
Plan Category
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)(1)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
Equity compensation plans approved by security holders3,729,606
(2) 
n/a6,080,741
(3) 
Equity compensation plans approved by security holders3,256,542 (2)n/a4,450,675(3)
Equity compensation plans not approved by security holders186,900
(4) 
n/a
(5) 
Equity compensation plans not approved by security holders143,272 (4)n/a(5)
Total3,916,506
 n/a6,080,741 Total3,399,814 n/a4,450,675
(1)As of December 31, 2018, no options were outstanding under equity compensation plans.
(2)Includes restricted stock units and performance shares (assuming the maximum payout level) granted under the Duke Energy Corporation 2015 Long-Term Incentive Plan, as well as shares that could be payable with respect to certain compensation deferred under the Executive Savings Plan or the Directors’ Savings Plan.
(3)Includes shares remaining available for issuance pursuant to stock awards under the Duke Energy Corporation 2015 Long-Term Incentive Plan.
(4)Includes shares that could be payable with respect to certain compensation deferred under the Executive Savings Plan or and the Directors' Savings Plan, each of which is a non-qualified deferred compensation plan described in more detail below.
(5)The number of shares remaining available for future issuance under equity compensation plans not approved by security holders cannot be determined because it is based on the amount of future voluntary deferrals, if any, under the Executive Savings Plan and the Directors' Savings Plan.
(1)    As of December 31, 2020, no options were outstanding under equity compensation plans.
(2)    Includes RSUs and performance shares (assuming the maximum payout level) granted under the Duke Energy Corporation 2015 Long-Term Incentive Plan, as well as shares that could be payable with respect to certain compensation deferred under the Duke Energy Corporation Executive Savings Plan (Executive Savings Plan) or the Directors’ Savings Plan.
(3)    Includes shares remaining available for issuance pursuant to stock awards under the Duke Energy Corporation 2015 Long-Term Incentive Plan.
(4)    Includes shares that could be payable with respect to certain compensation deferred under the Executive Savings Plan or the Duke Energy Corporation Directors' Savings Plan (Directors' Savings Plan), each of which is a non-qualified deferred compensation plan described in more detail below.
(5)    The number of shares remaining available for future issuance under equity compensation plans not approved by security holders cannot be determined because it is based on the amount of future voluntary deferrals, if any, under the Executive Savings Plan and the Directors' Savings Plan.
Under the Executive Savings Plan, participants can elect to defer a portion of their base salary and short‑term incentive compensation. Participants also receive a company matching contribution in excess of the contribution limits prescribed by the Internal Revenue Code under the Duke Energy Retirement Savings Plan, which is the 401(k) plan in which employees are generally eligible to participate. Eligible participants may also earn pay credits based on age and length of service on eligible earnings that exceed limited prescribed by the Internal Revenue Code.
In general, payments are made following termination of employment or death in the form of a lump sum or installments, as selected by the participant. Participants may direct the deemed investment of base salary deferrals, short-term incentive compensation deferrals and matching contributionstheir accounts (with certain exceptions) among investment options available under the Duke Energy Retirement Savings Plan, including the Duke Energy Common Stock Fund. Participants may change their investment elections on a daily basis. Deferrals of equity awards are credited with earnings and losses based on the performance of the Duke Energy Common Stock Fund. The benefits payable under the plan are unfunded and subject to the claims of Duke Energy’s creditors.
Under the Directors’ Savings Plan, outside directors may elect to defer all or a portion of their annual compensation, generally consisting of retainers. Deferred amounts are credited to an unfunded account, the balance of which is adjusted for the performance of phantom investment options, including the Duke Energy common stock fund,Common Stock Fund, as elected by the director, and generally are paid when the director terminates his or her service from the Board of Directors.
Duke Energy will provide additional information that is responsive to this Item 12 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 12 by reference.

245
262






OTHER INFORMATION


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Duke Energy will provide information that is responsive to this Item 13 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 13 by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Deloitte provided professional services to the Duke Energy Registrants. The following tables present the Deloitte fees for services rendered to the Duke Energy Registrants during 20182020 and 2017.
 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
Types of Fees  
               
Audit Fees(a)
$14.0
 $5.0
 $5.5
 $3.3
 $2.2
 $0.9
 $1.4
 $0.8
Audit-Related Fees(b)
0.4
 —
 0.1
 —
 0.1
 —
 —
 —
Tax Fees(c)
0.6
 0.2
 0.2
 0.1
 0.1
 —
 0.1
 0.1
Other Fees(d)
—
 —
 —
 —
 —
 —
 —
 —
Total Fees$15.0
 $5.2
 $5.8
 $3.4
 $2.4
 $0.9
 $1.5
 $0.9
2019.
Year Ended December 31, 2017   Year Ended December 31, 2020
  Duke
   Duke
 Duke
 Duke
 Duke
  DukeDukeDukeDukeDuke
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Types of Fees
               Types of Fees       
Audit Fees(a)
$13.6
 $4.7
 $5.6
 $3.1
 $2.4
 $0.8
 $1.4
 $0.8
Audit Fees(a)
$12.9 $3.0 $4.5 $2.3 $2.2 $1.9 $1.7 $1.3 
Audit-Related Fees(b)
0.2
 —
 —
 —
 —
 —
 —
 —
Audit-Related Fees(b)
1.7 0.2 0.3 0.1 0.2 0.3 0.1 — 
Tax Fees(c)
1.7
 0.6
 0.1
 0.4
 —
 0.1
 0.1
 0.1
Tax Fees(c)
0.1 — — — — — — — 
Other Fees(d)
0.1
 —
 —
 —
 —
 —
 —
 —
Total Fees$15.6
 $5.3
 $5.7
 $3.5
 $2.4
 $0.9
 $1.5
 $0.9
Total Fees$14.7 $3.2 $4.8 $2.4 $2.4 $2.2 $1.8 $1.3 
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Types of Fees       
Audit Fees(a)
$13.5 $4.6 $5.3 $3.1 $2.2 $0.9 $1.4 $0.8 
Audit-Related Fees(b)
0.6 0.1 0.2 0.1 0.1 0.2 — — 
Tax Fees(c)
0.2 0.1 0.1 — — — — — 
Total Fees$14.3 $4.8 $5.6 $3.2 $2.3 $1.1 $1.4 $0.8 
(a)Audit Fees are fees billed, or expected to be billed, by Deloitte for professional services for the financial statement audits, audit of the Duke Energy Registrants’ financial statements included in the Annual Report on Form 10-K, reviews of financial statements included in Quarterly Reports on Form 10‑Q, and services associated with securities filings such as comfort letters and consents.
(b)Audit-Related Fees are fees billed, or expected to be billed, by Deloitte for assurance and related services that are reasonably related to the performance of an audit or review of financial statements, including statutory reporting requirements.
(c)
(a)    Audit Fees are fees billed, or expected to be billed, by Deloitte for professional services for the financial statement audits, audit of the Duke Energy Registrants’ financial statements included in the Annual Report on Form 10-K, reviews of financial statements included in Quarterly Reports on Form 10‑Q, and services associated with securities filings such as comfort letters and consents.
(b)    Audit-Related Fees are fees billed, or expected to be billed, by Deloitte for assurance and related services that are reasonably related to the performance of an audit or review of financial statements, including statutory reporting requirements.
(c)    Tax Fees are fees billed by Deloitte for tax return assistance and preparation, tax examination assistance and professional services related to tax planning and tax strategy.
(d)Other Fees are billed by Deloitte for attendance at Deloitte-sponsored conferences and access to Deloitte research tools and subscription services.

To safeguard the continued independence of the independent auditor, the Audit Committee of Duke Energy adopted a policy that all services provided by the independent auditor require preapproval by the Audit Committee. Pursuant to the policy, certain audit services, audit-related services, tax services and other services have been specifically preapproved up to fee limits. In the event the cost of any of these services may exceed the fee limits, the Audit Committee must specifically approve the service. All services performed in 20182020 and 20172019 by the independent accountant were approved by the Audit Committee pursuant to the preapproval policy.

246
263

EXHIBITS



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)Consolidated Financial Statements, Supplemental Financial Data and Supplemental Schedules included in Part II of this Annual Report are as follows:
(a)     Consolidated Financial Statements and Supplemental Schedules included in Part II of this Annual Report are as follows:
Duke Energy Corporation
Consolidated Financial Statements
Consolidated Statements of Operations for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Balance Sheets as of December 31, 2018,2020, and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited, included in Note 26 to the Consolidated Financial Statements)
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Carolinas, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Balance Sheets as of December 31, 2018,2020, and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited, included in Note 26 to the Consolidated Financial Statements)
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Progress Energy, Inc.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Balance Sheets as of December 31, 2018,2020, and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited, included in Note 26 to the Consolidated Financial Statements)
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Progress, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Balance Sheets as of December 31, 2018,2020, and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited, included in Note 26 to the Consolidated Financial Statements)
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Florida, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Balance Sheets as of December 31, 2018,2020, and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited, included in Note 26 to the Consolidated Financial Statements)
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.

264

EXHIBITS


Duke Energy Ohio, Inc.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 2017 and 2016
Consolidated Balance Sheets as of December 31, 2018, and 2017
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 2017 and 2016
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited, included in Note 26 to the Consolidated Financial Statements)
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Indiana, LLCOhio, Inc.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Balance Sheets as of December 31, 2018,2020, and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 20172020, 2019 and 20162018
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited,Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in Note 26the Consolidated Financial Statements or Notes.
247
EXHIBITS
Duke Energy Indiana, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements)Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Piedmont Natural Gas Company, Inc.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018,2020, 2019 and 2017, Two Months Ended December 31, 2016, and the Year Ended October 31, 20162018
Consolidated Balance Sheets as of December 31, 2018,2020, and 20172019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018,2020, 2019 and 2017, Two Months Ended December 31, 2016, and the Year Ended October 31, 20162018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018,2020, 2019 and 2017, Two Months Ended December 31, 2016, and the Year Ended October 31, 20162018
Notes to the Consolidated Financial Statements
Quarterly Financial Data, (unaudited, included in Note 26 to the Consolidated Financial Statements)
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.

248
265






EXHIBITS


EXHIBIT INDEX
Exhibits filed herewithinherewith are designated by an asterisk (*). All exhibits not so designated are incorporated by reference to a prior filing, as indicated. Items constituting management contracts or compensatory plans or arrangements are designated by a double asterisk (**). The Company agrees to furnish upon request to the Commission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***).
DukeDukeDukeDukeDuke
ExhibitDukeEnergyProgressEnergyEnergyEnergyEnergy
NumberEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
2.1XX
2.2XX
3.1X
3.2X
3.3X
3.3.1X
3.4X
3.4.1X
3.5X
3.5.1X
3.5.2X
3.5.3X
3.5.4X
3.6X
3.7X
3.8X
3.8.1X
3.8.2X
3.9X
3.9.1X
3.9.2X
3.9.3X
3.10X
3.10.1
X
3.10.2X
3.10.3X
3.11X
3.11.1X
4.13.12

X
3.13

X
3.14X
3.15X
3.16X
3.17

X
3.18

X
3.19X
3.20X
4.1X
4.1.1X
4.1.2X
4.1.3X
4.1.4X
4.1.5X
4.1.6X
4.1.7X
4.1.8X
4.1.9X
4.1.10X
4.1.11X
4.1.12X
4.1.13X
4.1.14
Fourteenth Supplemental Indenture, dated as of August 12, 2016 (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on August 12, 2016, File No. 1-32853).
X
4.1.15X
4.1.16X
4.1.17X
4.1.18X
4.1.19


X
4.1.20X
4.2
4.1.21

X
4.1.22

X
4.1.23X
4.1.24X
4.2X
4.2.1X
4.2.2X
4.3First and Refunding Mortgage from Duke Energy Carolinas, LLC to The Bank of New York Mellon Trust Company, N.A., successor trustee to Guaranty Trust Company of New York, dated as of December 1, 1927 (incorporated by reference to Exhibit 7(a) to registrant's Form S-1, effective October 15, 1947, File No. 2-7224).X
4.3.1X
4.3.2Ninth Supplemental Indenture, dated as of February 1, 1949 (incorporated by reference to Exhibit 7(j) to registrant's Form S-1 filed on February 3, 1949, File No. 2-7808).X
4.3.3Twentieth Supplemental Indenture, dated as of June 15, 1964 (incorporated by reference to Exhibit 4-B-20 to registrant's Form S-1 filed on August 23, 1966, File No. 2-25367).X
4.3.4Twenty-third Supplemental Indenture, dated as of February 1, 1968 (incorporated by reference to Exhibit 2-B-26 to registrant's Form S-9 filed on January 21, 1969, File No. 2-31304).X
4.3.5Sixtieth Supplemental Indenture, dated as of March 1, 1990 (incorporated by reference to Exhibit 4-B-61 to registrant's Annual Report on Form 10-K for the year ended December 31, 1990, File No.1-4928).X
4.3.6Sixty-third Supplemental Indenture, dated as of July 1, 1991 (incorporated by reference to Exhibit 4-B-64 to registrant's Registration Statement on Form S-3 filed on February 13, 1992, File No. 33-45501).X
4.3.7X
4.3.8X
4.3.9X
4.3.10X
4.3.11X
4.3.12X
4.3.13X
4.3.14X
4.3.15X
4.3.16X
4.3.17X
4.3.18X
4.3.19X
4.3.20X
4.44.3.21X
4.3.22X
4.3.23X
4.4Mortgage and Deed of Trust between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and The Bank of New York Mellon (formerly Irving Trust Company) and Frederick G. Herbst (Tina D. Gonzalez, successor), as Trustees, dated as of May 1, 1940.X
4.4.1First through Fifth Supplemental Indentures thereto (incorporated by reference to Exhibit 2(b), File No. 2-64189).X
4.4.2Sixth Supplemental Indenture dated April 1, 1960 (incorporated by reference to Exhibit 2(b)-5, File No. 2-16210).X
4.4.3Seventh Supplemental Indenture dated November 1, 1961 (incorporated by reference to Exhibit 2(b)-6, File No. 2-16210).X
4.4.4Eighth Supplemental Indenture dated July 1, 1964 (incorporated by reference to Exhibit 4(b)-8, File No. 2-19118).X
4.4.5Ninth Supplemental Indenture dated April 1, 1966 (incorporated by reference to Exhibit 4(b)-2, File No. 2-22439).X
4.4.6Tenth Supplemental Indenture dated October 1, 1967 (incorporated by reference to Exhibit 4(b)-2, File No. 2-24624).X
4.4.7Eleventh Supplemental Indenture dated October 1, 1968 (incorporated by reference to Exhibit 2(c), File No. 2-27297).X
4.4.8Twelfth Supplemental Indenture dated January 1, 1970 (incorporated by reference to Exhibit 2(c), File No. 2-30172).X
4.4.9Thirteenth Supplemental Indenture dated August 1, 1970 (incorporated by reference to Exhibit 2(c), File No. 2-35694).X
4.4.10Fourteenth Supplemental Indenture dated January 1, 1971 (incorporated by reference to Exhibit 2(c), File No. 2-37505).X
4.4.11Fifteenth Supplemental Indenture dated October 1, 1971 (incorporated by reference to Exhibit 2(c), File No. 2-39002).X
4.4.12Sixteenth Supplemental Indenture dated May 1, 1972 (incorporated by reference to Exhibit 2(c), File No. 2-41738).X
4.4.13Seventeenth Supplemental Indenture dated November 1, 1973 (incorporated by reference to Exhibit 2(c), File No. 2-43439).X
4.4.14Eighteenth Supplemental Indenture dated (incorporated by reference to Exhibit 2(c), File No. 2-47751).X
4.4.15Nineteenth Supplemental Indenture dated May 1, 1974 (incorporated by reference to Exhibit 2(c), File No. 2-49347).X
4.4.16Twentieth Supplemental Indenture dated December 1, 1974 (incorporated by reference to Exhibit 2(c), File No. 2-53113).X
4.4.17Twenty-first Supplemental Indenture dated April 15, 1975 (incorporated by reference to Exhibit 2(d), File No. 2-53113).X
4.4.18Twenty-second Supplemental Indenture dated October 1, 1977 (incorporated by reference to Exhibit 2(c), File No. 2-59511).X
4.4.19Twenty-third Supplemental Indenture dated June 1, 1978 (incorporated by reference to Exhibit 2(c), File No. 2-61611).X
4.4.20Twenty-fourth Supplemental Indenture dated May 15, 1979 (incorporated by reference to Exhibit 2(d), File No. 2-64189).X
4.4.21Twenty-fifth Supplemental Indenture dated November 1, 1979 (incorporated by reference to Exhibit 2(c), File No. 2-65514).X
4.4.22Twenty-sixth Supplemental Indenture dated November 1, 1979 (incorporated by reference to Exhibit 2(c), File No. 2-66851).X
4.4.23Twenty-seventh Supplemental Indenture dated April 1, 1980 (incorporated by reference to Exhibit 2 (d), File No. 2-66851).X
4.4.24Twenty-eighth Supplemental Indenture dated October 1, 1980 (incorporated by reference to Exhibit 4(b)-1, File No. 2-81299).X
4.4.25Twenty-ninth Supplemental Indenture dated October 1, 1980 (incorporated by reference to Exhibit 4(b)-2, File No. 2-81299).X
4.4.26Thirtieth Supplemental Indenture dated December 1, 1982 (incorporated by reference to Exhibit 4(b)- 3, File No. 2-81299).X
4.4.27Thirty-first Supplemental Indenture dated March 15, 1983 (incorporated by reference to Exhibit 4(c)-1, File No. 2-95505).X
4.4.28Thirty-second Supplemental Indenture dated March 15, 1983 (incorporated by reference to Exhibit 4(c)-2, File No. 2-95505).X
4.4.29Thirty-third Supplemental Indenture dated December 1, 1983 (incorporated by reference to Exhibit 4(c)-3, File No. 2-95505).X
4.4.30Thirty-fourth Supplemental Indenture dated December 15, 1983 (incorporated by reference to Exhibit 4(c)-4, File No. 2-95505).X
4.4.31Thirty-fifth Supplemental Indenture dated April 1, 1984 (incorporated by reference to Exhibit 4(c)-5, File No. 2-95505).X
4.4.32Thirty-sixth Supplemental Indenture dated June 1, 1984 (incorporated by reference to Exhibit 4(c)-6, File No. 2-95505).X
4.4.33Thirty-seventh Supplemental Indenture dated June 1, 1984 (incorporated by reference to Exhibit 4(c)-7, File No. 2-95505).X
4.4.34Thirty-eighth Supplemental Indenture dated June 1, 1984 (incorporated by reference to Exhibit 4(c)- 8, File No. 2-95505).X
4.4.35Thirty-ninth Supplemental Indenture dated April 1, 1985 (incorporated by reference to Exhibit 4(b), File No. 33-25560).X
4.4.36Fortieth Supplemental Indenture dated October 1, 1985 (incorporated by reference to Exhibit 4(c), File No. 33-25560).X
4.4.37Forty-first Supplemental Indenture dated March 1, 1986 (incorporated by reference to Exhibit 4(d), File No. 33-25560).X
4.4.38Forty-second Supplemental Indenture dated July 1, 1986 (incorporated by reference to Exhibit 4(e), File No. 33-25560).X
4.4.39Forty-third Supplemental Indenture dated January 1, 1987 (incorporated by reference to Exhibit 4(f), File No. 33-25560).X
4.4.40Forty-fourth Supplemental Indenture dated December 1, 1987 (incorporated by reference to Exhibit 4(g), File No. 33-25560).X
4.4.41Forty-fifth supplementalSupplemental Indenture dated September 1, 1988 (incorporated by reference to Exhibit 4(h), File No. 33-25560).X
4.4.42Forty-sixth Supplemental Indenture dated April 1, 1989 (incorporated by reference to Exhibit 4(b), File No. 33-33431).X
4.4.43Forty-seventh Supplemental Indenture dated August 1, 1989 (incorporated by reference to Exhibit 4(c), File No. 33-33431).X
4.4.44Forty-eighth Supplemental Indenture dated November 15, 1990 (incorporated by reference to Exhibit 4(b), File No. 33-38298).X
4.4.45Forty-ninth Supplemental Indenture dated November 15, 1990 (incorporated by reference to Exhibit 4(c), File No. 33-38298).X
4.4.46Fiftieth Supplemental Indenture dated February 15, 1991 (incorporated by reference to Exhibit 4(h), File No. 33-42869).X
4.4.47Fifty-first Supplemental Indenture dated April 1, 1991 (incorporated by reference to Exhibit 4(i), File No. 33-42869).X
4.4.48Fifty-second Supplemental Indenture dated September 15, 1991(incorporated by reference to Exhibit 4(e), File No. 33-48607).X
4.4.49Fifty-third Supplemental Indenture dated January 1, 1992 (incorporated by reference to Exhibit 4(f), File No. 33-48607).X
4.4.50Fifty-fourth Supplemental Indenture dated April 15, 1992 (incorporated by reference to Exhibit 4 (g), File No. 33-48607).X
4.4.51Fifty-fifth Supplemental Indenture dated July 1, 1992 (incorporated by reference to Exhibit 4(e), File No. 33-55060).X
4.4.52Fifty-sixth Supplemental Indenture dated October 1, 1992 (incorporated by reference to Exhibit 4(f), File No. 33-55060).X
4.4.53Fifty-seventh Supplemental Indenture dated February 1, 1993 (incorporated by reference to Exhibit 4(e), File No. 33-60014).X
4.4.54Fifty-eighth Supplemental Indenture dated March 1, 1993 (incorporated by reference to Exhibit 4(f), File No. 33-60014).X
4.4.55Fifty-ninth Supplemental Indenture dated July 1, 1993 (incorporated by reference to Exhibit 4(a) to Post-Effective Amendment No. 1, File No. 33-38349).X
4.4.56Sixtieth Supplemental Indenture dated July 1, 1993 (incorporated by reference to Exhibit 4(b) to Post-Effective Amendment No. 1, File No. 33-38349).X
4.4.57Sixty-first Supplemental Indenture dated August 15, 1993 (incorporated by reference to Exhibit 4(e), File No. 33-50597).X
4.4.58X
4.4.59X
4.4.60X
4.4.61X
4.4.62X
4.4.63X
4.4.64X
4.4.65X
4.4.66X
4.4.67X
4.4.68X
4.4.69X
4.4.70X
4.4.71X
4.4.72X
4.4.73X
4.4.74X
4.4.75X
4.4.76X
4.4.77X
4.4.78X
4.4.79X
4.4.80X
4.4.81X
4.54.4.82

X
4.4.83X
4.4.84X
4.5X
4.6X
4.7Indenture (for First Mortgage Bonds) between Duke Energy Florida, Inc. (formerly Florida Power Corporation) and The Bank of New York Mellon (as successor to Guaranty Trust Company of New York and The Florida National Bank of Jacksonville), as Trustee, dated as of January 1, 1944, (incorporated by reference to Exhibit B-18 to registrant's Form A-2, File No. 2-5293).X
4.7.1Seventh Supplemental Indenture (incorporated by reference to Exhibit 4(b) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).X
4.7.2Eighth Supplemental Indenture (incorporated by reference to Exhibit 4(c) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).X
4.7.3Sixteenth Supplemental Indenture (incorporated by reference to Exhibit 4(d) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).X
4.7.4Twenty-ninth Supplemental Indenture (incorporated by reference to Exhibit 4(c) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 17, 1982, File No. 2-79832).X
4.7.5X
4.7.6X
4.7.7X
4.7.8X
4.7.9X
4.7.10X
4.7.11X
4.7.12X
4.7.13X
4.7.14X
4.7.15X
4.7.16X
4.7.17

X
4.84.7.18X
4.7.19X
4.8X
4.8.1X
4.94.8.2X
4.9X
4.10X
4.10.1X
4.10.2X
4.11Original Indenture (First Mortgage Bonds) between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Bank of New York Mellon Trust Company, N.A., as Successor Trustee, dated as of August 1, 1936 (incorporated by reference to an exhibit to registrant's Registration Statement No. 2-2374).X
4.11.1X
4.11.2X
4.11.3X
4.11.4X
4.11.5X
4.124.11.6X
4.12X
4.12.1X
4.12.2X
4.12.3X
4.12.4X
4.13Original Indenture (First Mortgage Bonds) between Duke Energy Indiana, LLC (formerly PSI Energy, Inc.) and Deutsche Bank National Trust Company, as Successor Trustee, dated as of September 1, 1939, (filed as an exhibit in File No. 70-258).X
4.13.1Tenth Supplemental Indenture, dated as of July 1, 1952, (filed as an exhibit in File No. 2-9687).X
4.13.2Twenty-third Supplemental Indenture, dated as of January 1, 1977, (filed as an exhibit in File No. 2-57828).X
4.13.3Twenty-fifth Supplemental Indenture, dated as of September 1, 1978, (filed as an exhibit in File No. 2-62543).X
4.13.4Twenty-sixth Supplemental Indenture, dated as of September 1, 1978, (filed as an exhibit in File No. 2-62543).�� X
4.13.5Thirtieth Supplemental Indenture, dated as of August 1, 1980, (filed as an exhibit in File No. 2-68562).X
4.13.6Thirty-fifth Supplemental Indenture, dated as of March 30, 1984, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1984, File No. 1-3543).X
4.13.7Forty-sixth Supplemental Indenture, dated as of June 1, 1990, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 1-3543).X
4.13.8Forty-seventh Supplemental Indenture, dated as of July 15, 1991, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 1-3543).X
4.13.9Forty-eighth Supplemental Indenture, dated as of July 15, 1992, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-3543).X
4.13.10X
4.13.11X
4.13.12X
4.13.13X
4.13.14X
4.13.15X
4.13.16X
4.13.17X
4.13.18X
4.13.19X
4.13.20X
4.13.21X
4.13.22
Sixty-eighth Supplemental Indenture, dated as of May 12, 2016 (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on May 12, 2016, File No. 1-3543).
X
4.144.13.23X
4.13.24X
4.14Repayment Agreement between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Dayton Power and Light Company, dated as of December 23, 1992, (filed with registrant's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-1232).X
4.15X
4.16 ��X
4.17X
4.18X
4.19X
4.20X
4.21X
4.22X
4.23X
4.24X
4.25X
4.26X
4.26.1X
4.26.2X
4.26.3X
4.26.4X
4.26.5X
4.26.6X
4.274.26.7

X
4.26.8X
4.27Medium-Term Note, Series A, dated as of October 6, 1993 (incorporated by reference to Exhibit 4.8 to registrant's Annual Report on Form 10-K for the year ended October 31, 1993, File No. 1-06196).X
4.28X
4.29X
4.30X
4.31X
4.32X
4.33X
4.34X
10.1X
10.2X
10.3X
10.4X
10.5X
10.6X
10.7X
10.8X
10.9X
10.10X
10.11**X
10.12XX
10.13**X
10.14
$6,000,000,000 Five-Year Credit Agreement between Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Carolina Power and Light Company d/b/a Duke Energy Progress, Inc. and Florida Power Corporation, d/b/a Duke Energy Florida, Inc., as Borrowers, the lenders listed therein, Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A. and The Royal Bank of Scotland plc, as Co-Syndication Agents and Bank of China, New York Branch, Barclays Bank PLC, Citibank, N.A., Credit Suisse AG, Cayman Islands Branch, Industrial and Commercial Bank of China Limited, New York Branch, JPMorgan Chase Bank, N.A. and UBS Securities LLC, as Co-Documentation Agents, dated as of November 18, 2011 (incorporated(incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on November 25, 2011, File Nos. 1-32853, 1-4928, 1-1232 and 1-3543).
XXXX
10.14.1XXXXXX
10.14.2XXXXXX
10.14.3XXXXXXX
10.15**10.14.4XXXXXXX
10.14.5XXXXXXX
10.15**X
10.15.1**X
10.16**X
*10.16.1**X
10.17**
Form of Performance Award Agreement of Duke Energy Corporation under the Duke Energy Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.110.16.1 to registrant's CurrentDuke Energy Corporation's Annual Report on Form 8-K10-K for the year ended December 31, 2018, filed on February 18, 2016,28, 2019, File No. 1-32853).
X
10.18*10.17**X
10.19**
Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 filed on May 9, 2017, File No. 1-32853).
X
10.20*10.18**X
10.21*10.19**X
10.22*10.20**X
10.23*10.21**X
10.2410.22**X
10.23**X
10.24**X
10.25X
10.2510.26X
10.26**10.27XX
10.28XXX
10.29**X
10.27*10.30**X
10.2810.30.1**X
10.31Purchase, Construction and Ownership Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency, amending letter, dated as of February 18, 1982, and amendment, dated as of February 24, 1982 (incorporated by reference to Exhibit 10(a) to registrant's File No. 33-25560).X
10.2910.32Operating and Fuel Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency, amending letters, dated as of August 21, 1981, and December 15, 1981, and amendment, dated as of February 24, 1982 (incorporated by reference to Exhibit 10(b) to registrant's File No. 33-25560).X
10.3010.33Power Coordination Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency and amending letter, dated as of January 29, 1982 (incorporated by reference to Exhibit 10(c) to registrant's File No. 33-25560).X
10.3110.34Amendment, dated as of December 16, 1982, to Purchase, Construction and Ownership Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Eastern Municipal Power Agency (incorporated by reference to Exhibit 10(d) to registrant's File No. 33-25560).X
10.32*10.35**X
10.3310.36
Precedent and Related Agreements between Duke Energy Florida, Inc. (formerly Florida Power Corporation d/b/a Progress Energy Florida, Inc. (“PEF”)), Southern Natural Gas Company, Florida Gas Transmission Company (“FGT”), and BG LNG Services, LLC (“BG”), including: a) Precedent Agreement between Southern Natural Gas Company and PEF, dated as of December 2, 2004; b) Gas Sale and Purchase Contract between BG and PEF, dated as of December 1, 2004; c) Interim Firm Transportation Service Agreement by and between FGT and PEF, dated as of December 2, 2004; d) Letter Agreement between FGT and PEF, dated as of December 2, 2004, and Firm Transportation Service Agreement between FGT and PEF to be entered into upon satisfaction of certain conditions precedent; e) Discount Agreement between FGT and PEF, dated as of December 2, 2004; f) Amendment to Gas Sale and Purchase Contract between BG and PEF, dated as of January 28, 2005; and g) Letter Agreement between FGT and PEF, dated as of January 31, 2005 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K/A filed on March 15, 2005, File Nos. 1-15929 and 1-3274). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.)
XX
10.3410.37XX
10.35*10.38**X
10.35.1*10.38.1**X
10.36*10.39**X
10.37*10.40**X
10.38*10.41**X
10.38.110.41.1**X
10.3910.41.2**X
10.42XX
10.4010.43XX
10.41
Change in Control Agreement between Duke Energy Corporation and Lloyd M. Yates, dated as of April 30, 2014, (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Current Report on Form 8-K filed on May 6, 2014, File No. 1-32853).
X
10.4210.44X
10.4310.45X
10.4410.46X
10.4510.47X
10.46
Purchase and Sale Agreement by and among Duke Energy International Group S.à.r.l., Duke Energy International Brazil Holdings S.à.r.l. and China Three Gorges (Luxembourg) Energy S.à.r.l., dated as of October 10, 2016 (incorporated by reference to Exhibit 2.1 to registrant's Current Report on Form 8-K filed on October 13, 2016, File No. 1-32853).
X
10.4710.48
Purchase and Sale Agreement by and among Duke Energy Brazil Holdings II, C.V., Duke Energy International Uruguay Investments SRL, Duke Energy International Group S.à.r.l., Duke Energy International España Holdings SL, Duke Energy International Investments No. 2 Ltd., ISQ Enerlam Aggregator, L.P., and Enerlam (UK) Holdings Ltd., dated as of October 10, 2016 (incorporated by reference to Exhibit 2.2. to registrant's Current Report on Form 8-K filed on October 13, 2016, File No. 1-32853).
X
10.48*10.49**
Amended and Restated Employment Agreement, dated May 25, 2012, between Piedmont Natural Gas Company, Inc. and Franklin H. Yoho (incorporated by reference to Exhibits 10.1 and 10.2 to Piedmont Natural Gas Company, Inc.'s Quarterly Report on Form 10-Q for the quarter ended July 31, 2012, filed on September 7, 2012, File No. 1-06196).
X
10.49*10.50**
Severance Agreements with Thomas E. Skains and Franklin H. Yoho, dated September 4, 2007 (incorporated by reference to Exhibits 10.2 and 10.2a to Piedmont Natural Gas Company, Inc's Quarterly Report on Form 10-Q for the quarter ended July 31, 2007, filed on September 7, 2007, File No. 1-06196).
X
10.50*10.51**
Piedmont Natural Gas Company, Inc. Incentive Compensation Plan (incorporated by reference to Exhibit 10.64 to registrant's Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 24, 2017, File No. 1-32853).
X
10.50.1*10.51.1**
First Amendment to Piedmont Natural Gas Company, Inc. Incentive Compensation Plan (incorporated by reference to Exhibit 4.2 to registrant's Registration Statement on Form S-8 filed on October 3, 2016, File No. 1-32853).
X
10.51*10.52**
Form of Performance Unit Award Agreement (incorporated by reference to Exhibit 10.4 to registrant's Quarterly Report on Form 10-Q for the quarter ended January 31, 2016, filed on March 9, 2016, File No. 1-06196).
X
10.52**
Waiver of Certain Rights to Terminate for Good Reason between Duke Energy Corporation and Franklin H. Yoho (incorporated by reference to Exhibit 10.66 to registrant's Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 24, 2017, File No. 1-32853).
X
10.53**
Notice of Non-Renewal of Employment Agreement between Duke Energy Corporation and Franklin H. Yoho (incorporated by reference to Exhibit 10.67 to registrant's Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 24, 2017, File No. 1-32853).
X
10.54**
Retention Award Agreement, dated as of October 24, 2015, between Duke Energy Corporation and Franklin H. Yoho (incorporated by reference to Exhibit 10.68 to registrant's Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 24, 2017, File No. 1-32853).
X
10.5510.55**
Consulting Agreement, dated as of October 4, 2019, between Duke Energy Corporation and Franklin H. Yoho (incorporated by reference to Exhibit 10.54 to registrant's Annual Report of Form 10-K for the year ended December 31, 2019, filed on February 20, 2020, File No. 1-32853).
X
10.56X
10.5610.57

X
10.58XX
10.56.110.58.1

X
10.5710.59X
10.5810.60X
10.58.110.60.1X
10.58.210.60.2X
10.5910.61X
10.6010.62X
*2110.63X
10.64

X
10.65X
10.66X
10.67X
*21X
*23.1.1X
*23.1.2X
*23.1.3X
*23.1.4X
*23.1.5X
*23.1.6X
*23.1.7X
*24.1X
*24.2X
*31.1.1X
*31.1.2X
*31.1.3X
*31.1.4X
*31.1.5X
*31.1.6X
*31.1.7X
*31.1.8X
*31.2.1X
*31.2.2X
*31.2.3X
*31.2.4X
*31.2.5X
*31.2.6X
*31.2.7X
*31.2.8X
*32.1.1X
*32.1.2X
*32.1.3X
*32.1.4X
*32.1.5X
*32.1.6X
*32.1.7X
*32.1.8XX
*32.1.832.2.1XX
*32.2.132.2.2XX
*32.2.232.2.3XX
*32.2.332.2.4XX
*32.2.432.2.5XX
*32.2.532.2.6XX
*32.2.632.2.7XX
*32.2.732.2.8XX
*32.2.8101.INS
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
*101.INSXBRL Instance Document (this does not appear in the Interactive Data File because it's XBRL tags are embedded within the Inline XBRL document).XXXXXXXX
*101.SCHXBRL Taxonomy Extension Schema DocumentXXXXXXXX
*101.CALXBRL Taxonomy Calculation Linkbase DocumentXXXXXXXX
*101.LABXBRL Taxonomy Label Linkbase DocumentXXXXXXXX
*101.PREXBRL Taxonomy Presentation Linkbase DocumentXXXXXXXX
*101.DEFXBRL Taxonomy Definition Linkbase DocumentXXXXXXXX
*104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).XXXXXXXX
The total amount of securities of each respective registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed 10 percent10% of the total assets of such registrant and its subsidiaries on a consolidated basis. Each registrant agrees, upon request of the SEC, to furnish copies of any or all of such instruments to it.

E-1






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
DUKE ENERGY CORPORATION
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chairman,
Chair, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chairman,Chair, President and Chief Executive Officer (Principal Executive Officer and Director)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
Michael G. Browning*James B. Hyler, Jr.*John T. Herron*
Annette K. Clayton*William E. Kennard*
Theodore F. Craver, Jr.*E. Marie McKee*
Robert M. Davis*Charles W. Moorman IV*Marya M. Rose*
Daniel R. DiMicco*Carlos A. Saladrigas*
John H. Forsgren*Thomas E. Skains*
Lynn J. Good*Nicholas C. Fanandakis*William E. Webster, Jr.*
John T. Herron*Lynn J. Good*
Steven K. Young, by signing his name hereto, does hereby sign this document on behalf of the registrant and on behalf of each of the above-named persons previously indicated by asterisk (*) pursuant to a power of attorney duly executed by the registrant and such persons, filed with the Securities and Exchange Commission as an exhibit hereto.
By:/s/ STEVEN K. YOUNG
Attorney-In-Fact
 Date: February 28, 201925, 2021

E-2






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
DUKE ENERGY CAROLINAS, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good

Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer (Principal Executive Officer)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
/s/ LLOYD M. YATESJULIA S. JANSON
Lloyd M. YatesJulia S. Janson
Date: February 28, 201925, 2021

E-3






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
PROGRESS ENERGY, INC.
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good

Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer (Principal Executive Officer)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
/s/ KODWO GHARTEY-TAGOE
Kodwo Ghartey-Tagoe
/s/ LYNN J. GOOD
Lynn J. Good
/s/ JULIA S. JANSON
Julia S. Janson
Date: February 28, 201925, 2021

E-4






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
DUKE ENERGY PROGRESS, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good

Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer (Principal Executive Officer)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
/s/ KODWO GHARTEY-TAGOE
Kodwo Ghartey-Tagoe
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
/s/ JULIA S. JANSON
Julia S. Janson
/s/ LLOYD M. YATES
Lloyd M. Yates
Date: February 28, 201925, 2021

E-5






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
DUKE ENERGY FLORIDA, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good

Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer (Principal Executive Officer)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
/s/ KODWO GHARTEY-TAGOE
Kodwo Ghartey-Tagoe
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
/s/ JULIA S. JANSON
Julia S. Janson
/s/ LLOYD M. YATES
Lloyd M. Yates
Date: February 28, 201925, 2021

E-6






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
DUKE ENERGY OHIO, INC.
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good

Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer (Principal Executive Officer)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
Date: February 28, 201925, 2021

E-7






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
DUKE ENERGY INDIANA, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good

Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer (Principal Executive Officer)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
/s/ KELLEY A. KARN
Kelley A. Karn
/s/ STAN PINEGAR
Stan Pinegar
Date: February 28, 201925, 2021

E-8






SIGNATURES


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2019
25, 2021
PIEDMONT NATURAL GAS COMPANY, INC.
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good

Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer (Principal Executive Officer)
(ii)/s/ STEVEN K. YOUNG
Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
(iii)/s/ DWIGHT L. JACOBS
Dwight L. Jacobs
Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
(iv)Directors:
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
/s/ FRANKLIN H. YOHO
Franklin H. Yoho
Date: February 28, 201925, 2021



E-9