UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,September 30, 2017
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.
 
dukeenergylogo4ca29.jpg
 
1-32853
DUKE ENERGY CORPORATION
(a Delaware corporation)
550 South Tryon Street
Charlotte, North Carolina 28202-1803
704-382-3853
20-2777218
Commission file numberRegistrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number Commission 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
(a North Carolina limited liability company)
526 South Church Street
Charlotte, North Carolina 28202-1803
704-382-3853
56-0205520
 1-3274
DUKE ENERGY FLORIDA, LLC
(a Florida limited liability company)
299 First Avenue North
St. Petersburg, Florida 33701
704-382-3853
59-0247770
1-15929
PROGRESS ENERGY, INC.
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-2155481
 1-1232
DUKE ENERGY OHIO, INC.
(an Ohio corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
704-382-3853
31-0240030
1-3382
DUKE ENERGY PROGRESS, LLC
(a North Carolina limited liability company)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-0165465
 1-3543
DUKE ENERGY INDIANA, LLC
(an Indiana limited liability company)
1000 East Main Street
Plainfield, Indiana 46168
704-382-3853
35-0594457
1-6196
PIEDMONT NATURAL GAS COMPANY, INC.
(a North Carolina corporation)
4720 Piedmont Row Drive
Charlotte, North Carolina 28210
704-364-3120
56-0556998
   
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Duke Energy Corporation (Duke Energy)
Yes x
No ¨
 Duke Energy Florida, LLC (Duke Energy Florida)
Yes x
No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)
Yes x
No ¨
 Duke Energy Ohio, Inc. (Duke Energy Ohio)
Yes x
No ¨
Progress Energy, Inc. (Progress Energy)
Yes x
No ¨
 Duke Energy Indiana, LLC (Duke Energy Indiana)
Yes x
No ¨
Duke Energy Progress, LLC (Duke Energy Progress)
Yes x
No ¨
 Piedmont Natural Gas Company, Inc. (Piedmont)
Yes x
No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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).
Duke Energy
Yes x
No ¨
 Duke Energy Florida
Yes x
No ¨
Duke Energy Carolinas
Yes x
No ¨
 Duke Energy Ohio
Yes x
No ¨
Progress Energy
Yes x
No ¨
 Duke Energy Indiana
Yes x
No ¨
Duke Energy Progress
Yes x
No ¨
 Piedmont
Yes x
No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Duke Energy
Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Carolinas
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging Growth Company ¨
Progress Energy
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Progress
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Florida
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Ohio
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Indiana
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging Growth Company ¨
Piedmont
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging Growth Company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Duke Energy
Yes ¨
No x
 Duke Energy Florida
Yes ¨
No x
Duke Energy Carolinas
Yes ¨
No x
 Duke Energy Ohio
Yes ¨
No x
Progress Energy
Yes ¨
No x
 Duke Energy Indiana
Yes ¨
No x
Duke Energy Progress
Yes ¨
No x
 Piedmont
Yes ¨
No x
Number of shares of Common stock outstanding at March 31,September 30, 2017:
RegistrantDescriptionShares
Duke EnergyCommon stock, $0.001 par value699,883,528699,975,614
This combined Form 10-Q is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.



TABLE OF CONTENTSDUKE ENERGY CORPORATION
(a Delaware corporation)
550 South Tryon Street
Charlotte, North Carolina 28202-1803
704-382-3853
20-2777218
Commission file numberRegistrant, 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
(a North Carolina limited liability company)
526 South Church Street
Charlotte, North Carolina 28202-1803
704-382-3853
56-0205520
1-3274
DUKE ENERGY FLORIDA, LLC
(a Florida limited liability company)
299 First Avenue North
St. Petersburg, Florida 33701
704-382-3853
59-0247770
1-15929
PROGRESS ENERGY, INC.
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-2155481
1-1232
DUKE ENERGY OHIO, INC.
(an Ohio corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
704-382-3853
31-0240030
1-3382
DUKE ENERGY PROGRESS, LLC
(a North Carolina limited liability company)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-0165465
1-3543
DUKE ENERGY INDIANA, LLC
(an Indiana limited liability company)
1000 East Main Street
Plainfield, Indiana 46168
704-382-3853
35-0594457
1-6196
PIEDMONT NATURAL GAS COMPANY, INC.
(a North Carolina corporation)
4720 Piedmont Row Drive
Charlotte, North Carolina 28210
704-364-3120
56-0556998
   
PART I. FINANCIAL INFORMATION
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Item 1.
Financial Statements
Duke Energy Corporation Financial Statements
6
Duke Energy Carolinas, LLC Financial Statements
11
Progress Energy, Inc. Financial Statements
15
Duke Energy Progress, LLC Financial Statements
19
Duke Energy Florida, LLC Financial Statements
23
Duke Energy Ohio, Inc. Financial Statements
27
Duke Energy Indiana, LLC Financial Statements
31
Piedmont Natural Gas Company, Inc. Financial Statements
35
Combined Notes to Condensed Consolidated Financial Statements
Note 1 – Organization and Basis of Presentation
39
Note 2 – Acquisitions and Dispositions
43
Note 3 – Business Segments
45
Note 4 – Regulatory Matters
47
Note 5 – Commitments and Contingencies
53
Note 6 – Debt and Credit Facilities
59
Note 7 – Goodwill and Intangible Assets
60
Note 8 – Related Party Transactions
61
Note 9 – Derivatives and Hedging
62
Note 10 – Investments in Debt and Equity Securities
67
Note 11 – Fair Value Measurements
73
Note 12 – Variable Interest Entities
81
Note 13 – Common Stock
85
Note 14 – Stock-Based Compensation
86
Note 15 – Employee Benefit Plans
86
Note 16 – Income Taxes
89
Note 17 – Subsequent Events
89
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
90
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
117
Item 4.
Controls and Procedures
117
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
119
Item 1A.
Risk Factors
119
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
119
Item 6.
Exhibits
120
Signatures
123
Duke Energy Corporation (Duke Energy)
Yesx
No ¨
Duke Energy Florida, LLC (Duke Energy Florida)
Yesx
No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)
Yesx
No ¨
Duke Energy Ohio, Inc. (Duke Energy Ohio)
Yesx
No ¨
Progress Energy, Inc. (Progress Energy)
Yesx
No ¨
Duke Energy Indiana, LLC (Duke Energy Indiana)
Yesx
No ¨
Duke Energy Progress, LLC (Duke Energy Progress)
Yesx
No ¨
Piedmont Natural Gas Company, Inc. (Piedmont)
Yesx
No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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).
Duke Energy
Yesx
No ¨
Duke Energy Florida
Yesx
No ¨
Duke Energy Carolinas
Yesx
No ¨
Duke Energy Ohio
Yesx
No ¨
Progress Energy
Yesx
No ¨
Duke Energy Indiana
Yesx
No ¨
Duke Energy Progress
Yesx
No ¨
Piedmont
Yesx
No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Duke Energy
Large accelerated filerx
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Carolinas
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Progress Energy
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Progress
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Florida
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Ohio
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Indiana
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Piedmont
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Duke Energy
Yes ¨
Nox
Duke Energy Florida
Yes ¨
Nox
Duke Energy Carolinas
Yes ¨
Nox
Duke Energy Ohio
Yes ¨
Nox
Progress Energy
Yes ¨
Nox
Duke Energy Indiana
Yes ¨
Nox
Duke Energy Progress
Yes ¨
Nox
Piedmont
Yes ¨
Nox
Number of shares of Common stock outstanding at September 30, 2017:
RegistrantDescriptionShares
Duke EnergyCommon stock, $0.001 par value699,975,614
This combined Form 10-Q is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:
State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements or 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 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 variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, including 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 complete necessary or desirable pipeline expansion or infrastructure projects in our natural gas business;
Operational interruptions to our gas distribution and transmission activities;
The availability of adequate interstate pipeline transportation capacity and natural gas supply;
The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, and other catastrophic events such as fires, explosions, pandemic health events or other similar occurrences;
The inherent risks associated with the operation and potential construction 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, and general economic conditions;
Credit ratings of the Duke Energy Registrants may be different from what is expected;
Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
The ability to control operation and maintenance costs;
The level of creditworthiness of counterparties to transactions;
Employee workforce factors, including the potential inability to attract and retain key personnel;
The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;
The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;


Substantial revision to the U.S. tax code, such as changes to the corporate tax rate or material change in the deductibility of interest;
The impact of potential goodwill impairments;
The ability to successfully complete future merger, acquisition or divestiture plans; and
The ability to successfully integrate the natural gas businesses following the acquisition of Piedmont Natural Gas Company, Inc. and realize anticipated benefits.
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 www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations(a Delaware corporation)
(Unaudited)550 South Tryon Street
Charlotte, North Carolina 28202-1803
704-382-3853
20-2777218
 Three Months Ended
 March 31,
(in millions, except per-share amounts)2017
 2016
Operating Revenues   
Regulated electric$4,913
 $5,053
Regulated natural gas646
 169
Nonregulated electric and other170
 155
Total operating revenues5,729
 5,377
Operating Expenses   
Fuel used in electric generation and purchased power1,449
 1,588
Cost of natural gas258
 49
Operation, maintenance and other1,433
 1,416
Depreciation and amortization859
 793
Property and other taxes304
 295
Impairment charges
 3
Total operating expenses4,303
 4,144
Gains on Sales of Other Assets and Other, net11
 7
Operating Income1,437
 1,240
Other Income and Expenses   
Equity in earnings of unconsolidated affiliates29
 8
Other income and expenses, net86
 70
Total other income and expenses115
 78
Interest Expense491
 489
Income From Continuing Operations Before Income Taxes1,061
 829
Income Tax Expense from Continuing Operations344
 252
Income From Continuing Operations717
 577
Income From Discontinued Operations, net of tax
 122
Net Income717
 699
Less: Net Income Attributable to Noncontrolling Interests1
 5
Net Income Attributable to Duke Energy Corporation$716
 $694
    
Earnings Per Share – Basic and Diluted   
Income from continuing operations attributable to Duke Energy Corporation common stockholders   
Basic$1.02
 $0.83
Diluted$1.02
 $0.83
Income from discontinued operations attributable to Duke Energy Corporation common stockholders   
Basic$
 $0.18
Diluted$
 $0.18
Net income attributable to Duke Energy Corporation common stockholders   
Basic$1.02
 $1.01
Diluted$1.02
 $1.01
Weighted average shares outstanding   
Basic700
 689
Diluted700
 689

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements
Commission file numberRegistrant, State of Comprehensive Income
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
Net Income$717
 $699
Other Comprehensive Income, net of tax   
Foreign currency translation adjustments
 49
Pension and OPEB adjustments1
 
Net unrealized gains (losses) on cash flow hedges2
 (14)
Reclassification into earnings from cash flow hedges1
 2
Unrealized gains on available-for-sale securities4
 4
Other Comprehensive Income, net of tax8
 41
Comprehensive Income725
 740
Less: Comprehensive Income Attributable to Noncontrolling Interests1
 6
Comprehensive Income Attributable to Duke Energy Corporation$724
 $734


PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)March 31, 2017 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$878
 $392
Receivables (net of allowance for doubtful accounts of $13 at 2017 and $14 at 2016)623
 751
Receivables of VIEs (net of allowance for doubtful accounts of $57 at 2017 and $54 at 2016)1,682
 1,893
Inventory3,366
 3,522
Regulatory assets (includes $53 at 2017 and $50 at 2016 related to VIEs)1,031
 1,023
Other425
 458
Total current assets8,005
 8,039
Property, Plant and Equipment   
Cost123,301
 121,397
Accumulated depreciation and amortization(40,293) (39,406)
Generation facilities to be retired, net508
 529
Net property, plant and equipment83,516
 82,520
Other Noncurrent Assets   
Goodwill19,425
 19,425
Regulatory assets (includes $1,131 at 2017 and $1,142 at 2016 related to VIEs)12,838
 12,878
Nuclear decommissioning trust funds6,448
 6,205
Investments in equity method unconsolidated affiliates1,122
 925
Other2,754
 2,769
Total other noncurrent assets42,587
 42,202
Total Assets$134,108
 $132,761
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$2,203
 $2,994
Notes payable and commercial paper3,558
 2,487
Taxes accrued363
 384
Interest accrued526
 503
Current maturities of long-term debt (includes $281 at 2017 and $260 at 2016 related to VIEs)1,977
 2,319
Asset retirement obligations404
 411
Regulatory liabilities340
 409
Other1,570
 2,044
Total current liabilities10,941
 11,551
Long-Term Debt (includes $4,108 at 2017 and $3,587 at 2016 related to VIEs)47,021
 45,576
Other Noncurrent Liabilities   
Deferred income taxes14,443
 14,155
Asset retirement obligations10,186
 10,200
Regulatory liabilities6,972
 6,881
Accrued pension and other post-retirement benefit costs1,115
 1,111
Investment tax credits537
 493
Other1,707
 1,753
Total other noncurrent liabilities34,960
 34,593
Commitments and Contingencies

 

Equity   
Common stock, $0.001 par value, 2 billion shares authorized; 700 million shares outstanding at 2017 and 20161
 1
Additional paid-in capital38,742
 38,741
Retained earnings2,521
 2,384
Accumulated other comprehensive loss(85) (93)
Total Duke Energy Corporation stockholders' equity41,179
 41,033
Noncontrolling interests7
 8
Total equity41,186
 41,041
Total Liabilities and Equity$134,108
 $132,761

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated StatementsIncorporation or Organization, Address of Cash Flows
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$717
 $699
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)991
 931
Equity component of AFUDC(62) (42)
Gains on sales of other assets(11) (9)
Impairment charges
 3
Deferred income taxes342
 181
Equity in earnings of unconsolidated affiliates(29) (8)
Accrued pension and other post-retirement benefit costs6
 4
Payments for asset retirement obligations(134) (112)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions(38) 102
Receivables343
 139
Inventory155
 89
Other current assets16
 13
Increase (decrease) in   
Accounts payable(463) (210)
Taxes accrued(28) 40
Other current liabilities(478) (81)
Other assets(40) 45
Other liabilities2
 (102)
Net cash provided by operating activities1,289
 1,682
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(2,160) (1,645)
Contributions to equity method investments(175) (59)
Purchases of available-for-sale securities(1,386) (1,347)
Proceeds from sales and maturities of available-for-sale securities1,405
 1,362
Change in restricted cash(34) (32)
Other(49) (37)
Net cash used in investing activities(2,399) (1,758)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the:   
Issuance of long-term debt1,563
 1,140
Issuance of common stock related to employee benefit plans
 7
Payments for the redemption of long-term debt(408) (389)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days25
 
Payments for the redemption of short-term debt with original maturities greater than 90 days(7) (92)
Notes payable and commercial paper1,045
 (66)
Change in bank overdrafts5
 
Dividends paid(600) (570)
Other(27) (33)
Net cash provided by (used in) financing activities1,596
 (3)
Changes in cash and cash equivalents associated with assets held for sale
 30
Net increase (decrease) in cash and cash equivalents486
 (49)
Cash and cash equivalents at beginning of period392
 383
Cash and cash equivalents at end of period$878
 $334
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$575
 $576

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated StatementsPrincipal Executive Offices, Telephone Number and IRS Employer Identification Number
Commission file numberRegistrant, State of Changes in Equity
(Unaudited)
         Accumulated Other Comprehensive Loss      
             Net Unrealized
   Total
    
         Foreign
 Net
 (Losses) Gains
   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
 
 
 694
 
 
 
 
 694
 5
 699
Other comprehensive income (loss)
 
 
 
 48
 (12) 4
 
 40
 1
 41
Common stock issuances, including dividend reinvestment and employee benefits1
 
 1
 
 
 
 
 
 1
 
 1
Common stock dividends
 
 
 (570) 
 
 
 
 (570) 
 (570)
Distributions to noncontrolling interest in subsidiaries
 
 
 
 
 
 
 
 
 (1) (1)
Balance at March 31, 2016689
 $1

$37,969

$2,688

$(644)
$(62)
$1

$(61)
$39,892

$49

$39,941
                      
Balance at December 31, 2016700
 $1
 $38,741
 $2,384
 $
 $(20) $(1) $(72) $41,033
 $8
 $41,041
Net income
 
 
 716
 
 
 
 
 716
 1
 717
Other comprehensive income
 
 
 
 
 3
 4
 1
 8
 
 8
Common stock issuances, including dividend reinvestment and employee benefits
 
 1
 
 
 
 
 
 1
 
 1
Common stock dividends
 
 
 (600) 
 
 
 
 (600) 
 (600)
Distributions to noncontrolling interest in subsidiaries
 
 
 
 
 
 
 
 
 (2) (2)
Other(a)

 
 
��21
 
 
 
 
 21
 
 21
Balance at March 31, 2017700

$1

$38,742

$2,521

$

$(17)
$3

$(71)
$41,179

$7

$41,186
Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
1-4928
(a)Cumulative-effect adjustment due to implementation of a new accounting standard related to stock-based compensation and the associated income taxes. See Note 1 for more information.

PART I


DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income(a North Carolina limited liability company)
(Unaudited)526 South Church Street
Charlotte, North Carolina 28202-1803
 Three Months Ended
 March 31,
(in millions)2017
 2016
Operating Revenues$1,716
 $1,740
Operating Expenses   
Fuel used in electric generation and purchased power428
 421
Operation, maintenance and other482
 512
Depreciation and amortization254
 259
Property and other taxes68
 67
Total operating expenses1,232
 1,259
Operating Income484
 481
Other Income and Expenses, net37
 37
Interest Expense103
 107
Income Before Income Taxes418
 411
Income Tax Expense148
 140
Net Income$270
 $271
Other Comprehensive Income, net of tax   
Reclassification into earnings from cash flow hedges
 1
Comprehensive Income$270
 $272

704-382-3853
PART I56-0205520

1-3274
DUKE ENERGY CAROLINAS,FLORIDA, LLC
Condensed Consolidated Balance Sheets(a Florida limited liability company)
(Unaudited)299 First Avenue North
St. Petersburg, Florida 33701
(in millions)March 31, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$11
 $14
Receivables (net of allowance for doubtful accounts of $2 at 2017 and 2016)166
 160
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2017 and 2016)563
 645
Receivables from affiliated companies109
 163
Notes receivable from affiliated companies
 66
Inventory1,051
 1,055
Regulatory assets233
 238
Other65
 37
Total current assets2,198
 2,378
Property, Plant and Equipment   
Cost41,600
 41,127
Accumulated depreciation and amortization(14,649) (14,365)
Net property, plant and equipment26,951
 26,762
Other Noncurrent Assets   
Regulatory assets3,098
 3,159
Nuclear decommissioning trust funds3,406
 3,273
Other926
 943
Total other noncurrent assets7,430
 7,375
Total Assets$36,579
 $36,515
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$602
 $833
Accounts payable to affiliated companies250
 247
Notes payable to affiliated companies337
 
Taxes accrued90
 143
Interest accrued134
 102
Current maturities of long-term debt404
 116
Asset retirement obligations224
 222
Regulatory liabilities118
 161
Other345
 468
Total current liabilities2,504

2,292
Long-Term Debt8,787
 9,187
Long-Term Debt Payable to Affiliated Companies300
 300
Other Noncurrent Liabilities   
Deferred income taxes6,668
 6,544
Asset retirement obligations3,658
 3,673
Regulatory liabilities2,860
 2,840
Accrued pension and other post-retirement benefit costs103
 97
Investment tax credits237
 203
Other595
 607
Total other noncurrent liabilities14,121
 13,964
Commitments and Contingencies

 

Equity   
Member's equity10,876
 10,781
Accumulated other comprehensive loss(9) (9)
Total equity10,867
 10,772
Total Liabilities and Equity$36,579
 $36,515

704-382-3853
PART I59-0247770

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$270
 $271
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)339
 330
Equity component of AFUDC(30) (23)
Deferred income taxes162
 145
Accrued pension and other post-retirement benefit costs
 1
Payments for asset retirement obligations(65) (52)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions3
 3
Receivables66
 2
Receivables from affiliated companies54
 33
Inventory4
 40
Other current assets(26) 102
Increase (decrease) in   
Accounts payable(131) (165)
Accounts payable to affiliated companies3
 21
Taxes accrued(53) 52
Other current liabilities(125) 21
Other assets(3) 26
Other liabilities(2) (26)
Net cash provided by operating activities466
 781
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(563) (459)
Purchases of available-for-sale securities(722) (785)
Proceeds from sales and maturities of available-for-sale securities722
 785
Notes receivable from affiliated companies66
 (691)
Other(20) (18)
Net cash used in investing activities(517) (1,168)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt
 992
Payments for the redemption of long-term debt(113) (1)
Notes payable to affiliated companies337
 
Distributions to parent(175) (600)
Other(1) 
Net cash provided by financing activities48
 391
Net (decrease) increase in cash and cash equivalents(3) 4
Cash and cash equivalents at beginning of period14
 13
Cash and cash equivalents at end of period$11
 $17
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$164
 $179

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
   Accumulated Other  
   Comprehensive  
   Loss  
   Net Losses on
  
 Member's
 Cash Flow
 Total
(in millions)Equity
 Hedges
 Equity
Balance at December 31, 2015$11,617
 $(11) $11,606
Net income271
 
 271
Other comprehensive income
 1
 1
Distributions to parent(600) 
 (600)
Balance at March 31, 2016$11,288
 $(10) $11,278
      
Balance at December 31, 2016$10,781
 $(9) $10,772
Net income270
 
 270
Distributions to parent(175) 
 (175)
Balance at March 31, 2017$10,876
 $(9) $10,867

PART I


1-15929
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income(a North Carolina corporation)
(Unaudited)410 South Wilmington Street
Raleigh, North Carolina 27601-1748
 Three Months Ended
 March 31,
(in millions)2017
 2016
Operating Revenues$2,179
 $2,332
Operating Expenses   
Fuel used in electric generation and purchased power726
 860
Operation, maintenance and other544
 592
Depreciation and amortization313
 290
Property and other taxes117
 119
Impairment charges
 2
Total operating expenses1,700
 1,863
Gains on Sales of Other Assets and Other, net8
 6
Operating Income487
 475
Other Income and Expenses, net24
 20
Interest Expense206
 160
Income Before Income Taxes305
 335
Income Tax Expense104
 123
Net Income201
 212
Less: Net Income Attributable to Noncontrolling Interests2
 3
Net Income Attributable to Parent$199
 $209
    
Net Income$201
 $212
Other Comprehensive Income, net of tax   
Pension and OPEB adjustments1
 1
Reclassification into earnings from cash flow hedges1
 1
Unrealized gains on available-for-sale securities1
 1
Other Comprehensive Income, net of tax3

3
Comprehensive Income204
 215
Less: Comprehensive Income Attributable to Noncontrolling Interests2
 3
Comprehensive Income Attributable to Parent$202

$212
704-382-3853

56-2155481
1-1232

PART I

PROGRESSDUKE ENERGY OHIO, INC.
Condensed Consolidated Balance Sheets(an Ohio corporation)
(Unaudited)139 East Fourth Street
Cincinnati, Ohio 45202
(in millions)March 31, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$38
 $46
Receivables (net of allowance for doubtful accounts of $3 at 2017 and $6 at 2016)80
 114
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2017 and 2016)612
 692
Receivables from affiliated companies2
 106
Notes receivable from affiliated companies184
 80
Inventory1,652
 1,717
Regulatory assets (includes $53 at 2017 and $50 at 2016 related to VIEs)447
 401
Other252
 148
Total current assets3,267
 3,304
Property, Plant and Equipment   
Cost45,902
 44,864
Accumulated depreciation and amortization(15,618) (15,212)
Generation facilities to be retired, net508
 529
Net property, plant and equipment30,792
 30,181
Other Noncurrent Assets   
Goodwill3,655
 3,655
Regulatory assets (includes $1,131 at 2017 and $1,142 at 2016 related to VIEs)5,815
 5,722
Nuclear decommissioning trust funds3,041
 2,932
Other851
 856
Total other noncurrent assets13,362
 13,165
Total Assets$47,421
 $46,650
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$678
 $1,003
Accounts payable to affiliated companies316
 348
Notes payable to affiliated companies866
 729
Taxes accrued96
 83
Interest accrued224
 201
Current maturities of long-term debt (includes $55 at 2017 and $62 at 2016 related to VIEs)521
 778
Asset retirement obligations180
 189
Regulatory liabilities157
 189
Other627
 745
Total current liabilities3,665
 4,265
Long-Term Debt (includes $1,713 at 2017 and $1,741 at 2016 related to VIEs)16,454
 15,590
Long-Term Debt Payable to Affiliated Companies1,173
 1,173
Other Noncurrent Liabilities   
Deferred income taxes5,484
 5,246
Asset retirement obligations5,289
 5,286
Regulatory liabilities2,472
 2,395
Accrued pension and other post-retirement benefit costs540
 547
Other332
 341
Total other noncurrent liabilities14,117
 13,815
Commitments and Contingencies
 
Equity   
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2017 and 2016
 
Additional paid-in capital8,094
 8,094
Retained earnings3,963
 3,764
Accumulated other comprehensive loss(35) (38)
Total Progress Energy, Inc. stockholders' equity12,022
 11,820
Noncontrolling interests(10) (13)
Total equity12,012
 11,807
Total Liabilities and Equity$47,421
 $46,650

704-382-3853
PART I31-0240030

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$201
 $212
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)365
 342
Equity component of AFUDC(24) (14)
Gains on sales of other assets(9) (7)
Impairment charges
 2
Deferred income taxes220
 182
Accrued pension and other post-retirement benefit costs(3) (6)
Payments for asset retirement obligations(60) (54)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions(2) 6
Receivables115
 70
Receivables from affiliated companies100
 295
Inventory65
 3
Other current assets(173) (76)
Increase (decrease) in   
Accounts payable(228) 9
Accounts payable to affiliated companies(32) (55)
Taxes accrued12
 42
Other current liabilities(121) (64)
Other assets(53) (46)
Other liabilities(14) (7)
Net cash provided by operating activities359
 834
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(1,011) (750)
Purchases of available-for-sale securities(629) (533)
Proceeds from sales and maturities of available-for-sale securities635
 548
Proceeds from insurance4
 43
Notes receivable from affiliated companies(104) 
Change in restricted cash5
 
Other(4) (15)
Net cash used in investing activities(1,104) (707)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt892
 53
Payments for the redemption of long-term debt(288) (310)
Notes payable to affiliated companies137
 128
Distributions to noncontrolling interests(1) (1)
Other(3) 
Net cash provided by (used in) financing activities737
 (130)
Net decrease in cash and cash equivalents(8) (3)
Cash and cash equivalents at beginning of period46
 44
Cash and cash equivalents at end of period$38
 $41
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$219
 $228

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
     Accumulated Other Comprehensive Loss      
     Net (Losses)
 Net Unrealized
   Total Progress
    
 Additional
   Gains on
 Gains on
 Pension and
 Energy, Inc.
    
 Paid-in
 Retained
 Cash Flow
 Available-for-
 OPEB
 Stockholders'
 Noncontrolling
 Total
(in millions)Capital
 Earnings
 Hedges
 Sale Securities
 Adjustments
 Equity
 Interests
 Equity
Balance at December 31, 2015$8,092
 $4,831
 $(31) $
 $(17) $12,875
 $(22) $12,853
Net income
 209
 
 
 
 209
 3
 212
Other comprehensive income
 
 1
 1
 1
 3
 
 3
Distributions to noncontrolling interests
 
 
 
 
 
 (1) (1)
Balance at March 31, 2016$8,092

$5,040

$(30)
$1

$(16)
$13,087

$(20)
$13,067
                
Balance at December 31, 2016$8,094
 $3,764
 $(23) $1
 $(16) $11,820
 $(13) $11,807
Net income
 199
 
 
 
 199
 2
 201
Other comprehensive income
 
 1
 1
 1
 3
 
 3
Other
 
 
 
 
 
 1
 1
Balance at March 31, 2017$8,094

$3,963

$(22)
$2

$(15)
$12,022

$(10)
$12,012


PART I


1-3382
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income(a North Carolina limited liability company)
(Unaudited)410 South Wilmington Street
Raleigh, North Carolina 27601-1748
 Three Months Ended
 March 31,
(in millions)2017
 2016
Operating Revenues$1,219
 $1,307
Operating Expenses   
Fuel used in electric generation and purchased power364
 448
Operation, maintenance and other350
 386
Depreciation and amortization181
 175
Property and other taxes40
 41
Total operating expenses935
 1,050
Gains on Sales of Other Assets and Other, net2
 1
Operating Income286
 258
Other Income and Expenses, net19
 17
Interest Expense82
 63
Income Before Income Taxes223
 212
Income Tax Expense76
 75
Net Income and Comprehensive Income$147
 $137
704-382-3853

56-0165465

PART I

DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)March 31, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$11
 $11
Receivables (net of allowance for doubtful accounts of $1 at 2017 and $4 at 2016)28
 51
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2017 and 2016)364
 404
Receivables from affiliated companies6
 5
Notes receivable from affiliated companies
 165
Inventory1,053
 1,076
Regulatory assets187
 188
Other102
 57
Total current assets1,751
 1,957
Property, Plant and Equipment   
Cost28,769
 28,419
Accumulated depreciation and amortization(10,716) (10,561)
Generation facilities to be retired, net508
 529
Net property, plant and equipment18,561
 18,387
Other Noncurrent Assets   
Regulatory assets3,338
 3,243
Nuclear decommissioning trust funds2,315
 2,217
Other535
 525
Total other noncurrent assets6,188
 5,985
Total Assets$26,500
 $26,329
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$317
 $589
Accounts payable to affiliated companies244
 227
Notes payable to affiliated companies502
 
Taxes accrued35
 104
Interest accrued90
 102
Current maturities of long-term debt202
 452
Asset retirement obligations180
 189
Regulatory liabilities149
 158
Other294
 365
Total current liabilities2,013
 2,186
Long-Term Debt6,409
 6,409
Long-Term Debt Payable to Affiliated Companies150
 150
Other Noncurrent Liabilities   
Deferred income taxes3,453
 3,323
Asset retirement obligations4,516
 4,508
Regulatory liabilities2,012
 1,946
Accrued pension and other post-retirement benefit costs247
 252
Investment tax credits146
 146
Other49
 51
Total other noncurrent liabilities10,423
 10,226
Commitments and Contingencies
 
Equity   
Member's Equity7,505
 7,358
Total Liabilities and Equity$26,500
 $26,329

PART I

DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$147
 $137
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)228
 223
Equity component of AFUDC(13) (10)
Gains on sales of other assets(3) (2)
Deferred income taxes120
 100
Accrued pension and other post-retirement benefit costs(5) (8)
Payments for asset retirement obligations(47) (42)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions(2) (1)
Receivables65
 18
Receivables from affiliated companies(1) 10
Inventory23
 15
Other current assets(60) 83
Increase (decrease) in   
Accounts payable(192) (16)
Accounts payable to affiliated companies17
 (14)
Taxes accrued(68) 18
Other current liabilities(81) (39)
Other assets(44) (17)
Other liabilities(10) (4)
Net cash provided by operating activities74
 451
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(474) (379)
Purchases of available-for-sale securities(476) (390)
Proceeds from sales and maturities of available-for-sale securities470
 384
Notes receivable from affiliated companies165
 
Other(9) (13)
Net cash used in investing activities(324) (398)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt
 53
Payments for the redemption of long-term debt(250) (8)
Notes payable to affiliated companies502
 (101)
Other(2) (1)
Net cash provided by (used in) financing activities250
 (57)
Net decrease in cash and cash equivalents
 (4)
Cash and cash equivalents at beginning of period11
 15
Cash and cash equivalents at end of period$11
 $11
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$66
 $55

PART I

DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 Member's
(in millions)Equity
Balance at December 31, 2015$7,059
Net income137
Balance at March 31, 2016$7,196
  
Balance at December 31, 2016$7,358
Net income147
Balance at March 31, 2017$7,505


PART I


DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
Operating Revenues$959
 $1,024
Operating Expenses   
Fuel used in electric generation and purchased power362
 412
Operation, maintenance and other191
 205
Depreciation and amortization132
 114
Property and other taxes77
 78
Impairment charges1
 2
Total operating expenses763
 811
Operating Income196
 213
Other Income and Expenses, net16
 5
Interest Expense70
 41
Income Before Income Taxes142
 177
Income Tax Expense52
 67
Net Income$90
 $110
Other Comprehensive Income, net of tax
 
Unrealized gains on available-for-sale securities1
 1
Comprehensive Income$91
 $111


PART I

DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)March 31, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$7
 $16
Receivables (net of allowance for doubtful accounts of $2 at 2017 and 2016)50
 61
Receivables of VIEs (net of allowance for doubtful accounts of $2 at 2017 and 2016)248
 288
Receivables from affiliated companies2
 5
Notes receivable from affiliated companies293
 
Inventory599
 641
Regulatory assets (includes $53 at 2017 and $50 at 2016 related to VIEs)260
 213
Other (includes $14 at 2017 and $53 at 2016 related to VIEs)104
 125
Total current assets1,563
 1,349
Property, Plant and Equipment   
Cost17,122
 16,434
Accumulated depreciation and amortization(4,894) (4,644)
Net property, plant and equipment12,228
 11,790
Other Noncurrent Assets   
Regulatory assets (includes $1,131 at 2017 and $1,142 at 2016 related to VIEs)2,476
 2,480
Nuclear decommissioning trust funds726
 715
Other268
 278
Total other noncurrent assets3,470
 3,473
Total Assets$17,261
 $16,612
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$361
 $413
Accounts payable to affiliated companies77
 125
Notes payable to affiliated companies
 297
Taxes accrued62
 33
Interest accrued76
 49
Current maturities of long-term debt (includes $55 at 2017 and $62 at 2016 related to VIEs)319
 326
Regulatory liabilities7
 31
Other309
 352
Total current liabilities1,211
 1,626
Long-Term Debt (includes $1,414 at 2017 and $1,442 at 2016 related to VIEs)6,662
 5,799
Other Noncurrent Liabilities   
Deferred income taxes2,800
 2,694
Asset retirement obligations773
 778
Regulatory liabilities459
 448
Accrued pension and other post-retirement benefit costs261
 262
Other104
 105
Total other noncurrent liabilities4,397
 4,287
Commitments and Contingencies
 
Equity   
Member's equity4,989
 4,899
Accumulated other comprehensive income2
 1
Total equity4,991
 4,900
Total Liabilities and Equity$17,261
 $16,612

PART I

DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$90
 $110
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion134
 116
Equity component of AFUDC(11) (4)
Impairment charges1
 2
Deferred income taxes100
 83
Accrued pension and other post-retirement benefit costs1
 1
Payments for asset retirement obligations(14) (12)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions
 7
Receivables51
 52
Receivables from affiliated companies(1) 14
Inventory42
 (12)
Other current assets(33) (44)
Increase (decrease) in   
Accounts payable(35) 25
Accounts payable to affiliated companies(48) (40)
Taxes accrued29
 (70)
Other current liabilities(47) (14)
Other assets(13) (30)
Other liabilities(5) (6)
Net cash provided by operating activities241
 178
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(538) (370)
Purchases of available-for-sale securities(153) (143)
Proceeds from sales and maturities of available-for-sale securities165
 164
Proceeds from insurance4
 43
Notes receivable from affiliated companies(293) 
Other9
 (1)
Net cash used in investing activities(806) (307)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt892
 
Payments for the redemption of long-term debt(38) (2)
Notes payable to affiliated companies(297) 135
Other(1) 
Net cash provided by financing activities556
 133
Net (decrease) increase in cash and cash equivalents(9) 4
Cash and cash equivalents at beginning of period16
 8
Cash and cash equivalents at end of period$7
 $12
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$153
 $173

PART I

DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
   Accumulated  
   Other  
   Comprehensive  
   Income  
   Net Unrealized
  
   Gains on
  
 Member's
 Available-for-Sale
 Total
(in millions)Equity
 Securities
 Equity
Balance at December 31, 2015$5,121
 $
 $5,121
Net income110
 
 110
Other comprehensive income
 1
 1
Balance at March 31, 2016$5,231
 $1
 $5,232
      
Balance at December 31, 2016$4,899
 $1
 $4,900
Net income90
 
 90
Other comprehensive income
 1
 1
Balance at March 31, 2017$4,989
 $2
 $4,991

PART I


DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
Operating Revenues   
Regulated electric$337
 $340
Regulated natural gas170
 170
Nonregulated electric and other11
 6
Total operating revenues518
 516
Operating Expenses   
Fuel used in electric generation and purchased power – regulated97
 111
Fuel used in electric generation and purchased power – nonregulated15
 10
Cost of natural gas54
 49
Operation, maintenance and other130
 119
Depreciation and amortization67
 61
Property and other taxes72
 71
Total operating expenses435
 421
Gains on Sales of Other Assets and Other, net
 1
Operating Income83
 96
Other Income and Expenses, net4
 2
Interest Expense22
 20
Income From Continuing Operations Before Income Taxes65
 78
Income Tax Expense From Continuing Operations23
 21
Income From Continuing Operations42
 57
Income From Discontinued Operations, net of tax
 2
Net Income and Comprehensive Income$42
 $59


PART I

DUKE ENERGY OHIO, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)March 31, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$13
 $13
Receivables (net of allowance for doubtful accounts of $2 at 2017 and 2016)63
 71
Receivables from affiliated companies88
 129
Notes receivable from affiliated companies179
 94
Inventory118
 137
Regulatory assets21
 37
Other34
 37
Total current assets516
 518
Property, Plant and Equipment   
Cost8,236
 8,126
Accumulated depreciation and amortization(2,611) (2,579)
Net property, plant and equipment5,625
 5,547
Other Noncurrent Assets   
Goodwill920
 920
Regulatory assets525
 520
Other23
 23
Total other noncurrent assets1,468
 1,463
Total Assets$7,609
 $7,528
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$252
 $282
Accounts payable to affiliated companies64
 63
Notes payable to affiliated companies8
 16
Taxes accrued127
 178
Interest accrued33
 19
Current maturities of long-term debt1
 1
Regulatory liabilities21
 21
Other83
 91
Total current liabilities589
 671
Long-Term Debt1,951
 1,858
Long-Term Debt Payable to Affiliated Companies25
 25
Other Noncurrent Liabilities   
Deferred income taxes1,472
 1,443
Asset retirement obligations76
 77
Regulatory liabilities236
 236
Accrued pension and other post-retirement benefit costs56
 56
Other166
 166
Total other noncurrent liabilities2,006
 1,978
Commitments and Contingencies
 
Equity   
Common stock, $8.50 par value, 120,000,000 shares authorized; 89,663,086 shares outstanding at 2017 and 2016762
 762
Additional paid-in capital2,695
 2,695
Accumulated deficit(419) (461)
Total equity3,038
 2,996
Total Liabilities and Equity$7,609
 $7,528

PART I

DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$42
 $59
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization68
 62
Equity component of AFUDC(2) (1)
Gains on sales of other assets
 (1)
Deferred income taxes30
 11
Accrued pension and other post-retirement benefit costs1
 1
Payments for asset retirement obligations(2) (1)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions1
 2
Receivables7
 (18)
Receivables from affiliated companies41
 (9)
Inventory19
 1
Other current assets9
 78
Increase (decrease) in   
Accounts payable(10) (1)
Accounts payable to affiliated companies1
 
Taxes accrued(52) (31)
Other current liabilities9
 14
Other assets(6) (2)
Other liabilities(3) 
Net cash provided by operating activities153
 164
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(143) (85)
Notes receivable from affiliated companies(85) (19)
Other(8) (4)
Net cash used in investing activities(236) (108)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt93
 95
Payments for the redemption of long-term debt(1) (51)
Notes payable to affiliated companies(8) (95)
Other(1) 
Net cash provided by (used in) financing activities83
 (51)
Net increase in cash and cash equivalents
 5
Cash and cash equivalents at beginning of period13
 14
Cash and cash equivalents at end of period$13
 $19
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$57
 $31

PART I

DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
   Additional
    
 Common
 Paid-in
 Accumulated
 Total
(in millions)Stock
 Capital
 Deficit
 Equity
Balance at December 31, 2015$762
 $2,720
 $(698) $2,784
Net income
 
 59
 59
Balance at March 31, 2016$762
 $2,720
 $(639) $2,843
        
Balance at December 31, 2016$762
 $2,695
 $(461) $2,996
Net income
 
 42
 42
Balance at March 31, 2017$762

$2,695

$(419)
$3,038


PART I


1-3543
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income(an Indiana limited liability company)
(Unaudited)1000 East Main Street
Plainfield, Indiana 46168
 Three Months Ended
 March 31,
(in millions)2017
 2016
Operating Revenues$758
 $714
Operating Expenses   
Fuel used in electric generation and purchased power251
 228
Operation, maintenance and other174
 162
Depreciation and amortization125
 125
Property and other taxes22
 23
Total operating expenses572
 538
Operating Income186
 176
Other Income and Expenses, net8
 4
Interest Expense44
 44
Income Before Income Taxes150
 136
Income Tax Expense59
 41
Net Income$91
 $95
Other Comprehensive Loss, net of tax   
Reclassification into earnings from cash flow hedges
 (1)
Comprehensive Income$91
 $94
704-382-3853

35-0594457

PART I

DUKE ENERGY INDIANA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)March 31, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$15
 $17
Receivables (net of allowance for doubtful accounts of $1 at 2017 and 2016)72
 105
Receivables from affiliated companies88
 114
Notes receivable from affiliated companies199
 86
Inventory478
 504
Regulatory assets156
 149
Other35
 45
Total current assets1,043
 1,020
Property, Plant and Equipment   
Cost14,411
 14,241
Accumulated depreciation and amortization(4,426) (4,317)
Net property, plant and equipment9,985
 9,924
Other Noncurrent Assets   
Regulatory assets1,066
 1,073
Other156
 147
Total other noncurrent assets1,222
 1,220
Total Assets$12,250
 $12,164
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$210
 $263
Accounts payable to affiliated companies75
 74
Taxes accrued72
 31
Interest accrued52
 61
Current maturities of long-term debt3
 3
Regulatory liabilities44
 40
Other75
 93
Total current liabilities531
 565
Long-Term Debt3,631
 3,633
Long-Term Debt Payable to Affiliated Companies150
 150
Other Noncurrent Liabilities   
Deferred income taxes1,921
 1,900
Asset retirement obligations867
 866
Regulatory liabilities743
 748
Accrued pension and other post-retirement benefit costs77
 71
Investment tax credits148
 137
Other24
 27
Total other noncurrent liabilities3,780
 3,749
Commitments and Contingencies
 
Equity   
Member's Equity4,158
 4,067
Total Liabilities and Equity$12,250
 $12,164

PART I

DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$91
 $95
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion126
 127
Equity component of AFUDC(6) (3)
Deferred income taxes37
 (16)
Accrued pension and other post-retirement benefit costs1
 2
Payments for asset retirement obligations(7) (5)
(Increase) decrease in   
Receivables44
 16
Receivables from affiliated companies26
 7
Inventory26
 45
Other current assets(2) (19)
Increase (decrease) in   
Accounts payable(32) (44)
Accounts payable to affiliated companies1
 (22)
Taxes accrued41
 30
Other current liabilities(15) (18)
Other assets(11) (4)
Other liabilities(3) (11)
Net cash provided by operating activities317
 180
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(189) (151)
Purchases of available-for-sale securities(4) (5)
Proceeds from sales and maturities of available-for-sale securities2
 4
Notes receivable from affiliated companies(113) (19)
Other(12) (1)
Net cash used in investing activities(316) (172)
CASH FLOWS FROM FINANCING ACTIVITIES   
Payments for the redemption of long-term debt(2) 
Other(1) 
Net cash used in financing activities(3) 
Net (decrease) increase in cash and cash equivalents(2)
8
Cash and cash equivalents at beginning of period17
 9
Cash and cash equivalents at end of period$15
 $17
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$84
 $42

PART I

DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
         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
 
 
 95
 
 95
Other comprehensive loss
 
 
 
 (1) (1)
Transfer to Member's Equity(1) (1,384) (2,450) 3,835
 
 
Balance at March 31, 2016$
 $
 $

$3,930
 $
 $3,930
            
Balance at December 31, 2016$
 $
 $
 $4,067
 $
 $4,067
Net income
 
 
 91
 
 91
Balance at March 31, 2017$
 $
 $

$4,158
 $
 $4,158


PART I


1-6196
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income(a North Carolina corporation)
(Unaudited)4720 Piedmont Row Drive
Charlotte, North Carolina 28210
704-364-3120
56-0556998
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 Three Months Ended
 March 31,
 2017
 2016
Operating Revenues   
Regulated natural gas$498
 $481
Nonregulated natural gas and other2
 2
Total operating revenues500
 483
Operating Expenses   
Cost of natural gas205
 197
Operation, maintenance and other77
 74
Depreciation and amortization35
 34
Property and other taxes13
 11
Total operating expenses330
 316
Operating Income170
 167
Equity in Earnings of Unconsolidated Affiliates3
 16
Interest Expense20
 17
Income Before Income Taxes153
 166
Income Tax Expense58
 63
Net Income and Comprehensive Income$95
 $103
Duke Energy Corporation (Duke Energy)
Yesx
No ¨
Duke Energy Florida, LLC (Duke Energy Florida)

Yesx
PART INo ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)
Yesx

No ¨
Duke Energy Ohio, Inc. (Duke Energy Ohio)
PIEDMONT NATURAL GAS COMPANY, INC.Yesx
Condensed Consolidated Balance SheetsNo ¨
Progress Energy, Inc. (Progress Energy)
(Unaudited)Yesx
No ¨
Duke Energy Indiana, LLC (Duke Energy Indiana)
Yesx
No ¨
Duke Energy Progress, LLC (Duke Energy Progress)
Yesx
No ¨
Piedmont Natural Gas Company, Inc. (Piedmont)
Yesx
No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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).
(in millions)March 31, 2017 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$15
 $25
Receivables (net of allowance for doubtful accounts of $5 at 2017 and $3 at 2016)193
 232
Receivables from affiliated companies7
 7
Inventory29
 66
Regulatory assets98
 124
Other21
 21
Total current assets363
 475
Property, Plant and Equipment   
Cost6,297
 6,174
Accumulated depreciation and amortization(1,390) (1,360)
Net property, plant and equipment4,907
 4,814
Other Noncurrent Assets   
Goodwill49
 49
Regulatory assets350
 373
Investments in equity method unconsolidated affiliates225
 212
Other19
 21
Total other noncurrent assets643
 655
Total Assets$5,913
 $5,944
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$104
 $155
Accounts payable to affiliated companies3
 8
Notes payable and commercial paper
 330
Notes payable to affiliated companies261
 
Taxes accrued69
 67
Interest accrued27
 33
Current maturities of long-term debt35
 35
Other70
 102
Total current liabilities569
 730
Long-Term Debt1,786
 1,786
Other Noncurrent Liabilities   
Deferred income taxes981
 931
Asset retirement obligations14
 14
Regulatory liabilities613
 608
Accrued pension and other post-retirement benefit costs14
 14
Other169
 189
Total other noncurrent liabilities1,791
 1,756
Commitments and Contingencies
 
Equity   
Common stock, no par value: 100 shares authorized and outstanding at 2017 and 2016860
 860
Retained earnings907
 812
Total equity1,767
 1,672
Total Liabilities and Equity$5,913
 $5,944
Duke Energy
Yesx
No ¨
Duke Energy Florida

Yesx
PART INo ¨
Duke Energy Carolinas
Yesx

No ¨
Duke Energy Ohio
PIEDMONT NATURAL GAS COMPANY, INC.Yesx
Condensed Consolidated Statements of Cash FlowsNo ¨
Progress Energy
(Unaudited)Yesx
No ¨
Duke Energy Indiana
Yesx
No ¨
Duke Energy Progress
Yesx
No ¨
Piedmont
Yesx
No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 Three Months Ended
 March 31,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$95
 $103
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization37
 37
Deferred income taxes50
 68
Equity in earnings from unconsolidated affiliates(3) (16)
Accrued pension and other post-retirement benefit costs3
 1
Payments for asset retirement obligations
 (1)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions(41) 
Receivables40
 (14)
Inventory37
 49
Other current assets24
 20
Increase (decrease) in   
Accounts payable(31) (21)
Accounts payable to affiliated companies(5) 
Taxes accrued2
 3
Other current liabilities(17) (9)
Other assets25
 23
Other liabilities(1) (20)
Net cash provided by operating activities215
 223
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(141) (132)
Contributions to equity method investments(12) (9)
Other(3) (1)
Net cash used in investing activities(156) (142)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of common stock
 7
Notes payable and commercial paper(330) (80)
Notes payable to affiliated companies261
 
Dividends paid
 (27)
Net cash used in financing activities(69) (100)
Net decrease in cash and cash equivalents(10) (19)
Cash and cash equivalents at beginning of period25
 33
Cash and cash equivalents at end of period$15
 $14
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$24
 $43
Duke Energy
Large accelerated filerx
Accelerated filer ¨

Non-accelerated filer ¨
PART ISmaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Carolinas

Large accelerated filer ¨
PIEDMONT NATURAL GAS COMPANY, INC.Accelerated filer ¨
Condensed Consolidated Statements of Changes in EquityNon-accelerated filerx
(Unaudited)Smaller reporting company ¨
Emerging Growth Company ¨
Progress Energy
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Progress
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Florida
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Ohio
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Duke Energy Indiana
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
Piedmont
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filerx
Smaller reporting company ¨
Emerging Growth Company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
     Accumulated  
     Other  
     Comprehensive  
     Income  
     Net Loss on
  
     Hedging Activities
  
 Common
 Retained
 of Unconsolidated
 Total
(in millions)Stock
 Earnings
 Affiliates
 Equity
Balance at December 31, 2015$728
 $731
 $(1) $1,458
Net income
 103
 
 103
Common stock issuances, including dividend reinvestments and employee benefits7
 
 
 7
Common stock dividends
 (27) 
 (27)
Balance at March 31, 2016$735
 $807
 $(1) $1,541
        
Balance at December 31, 2016$860
 $812
 $
 $1,672
Net income
 95
 
 95
Balance at March 31, 2017$860
 $907
 $
 $1,767
Duke Energy
Yes ¨
Nox
Duke Energy Florida
Yes ¨
Nox
Duke Energy Carolinas
Yes ¨
Nox
Duke Energy Ohio
Yes ¨
Nox
Progress Energy
Yes ¨
Nox
Duke Energy Indiana
Yes ¨
Nox
Duke Energy Progress
Yes ¨
Nox
Piedmont
Yes ¨
Nox
Number of shares of Common stock outstanding at September 30, 2017:

RegistrantDescriptionShares
Duke EnergyCommon stock, $0.001 par value699,975,614
This combined Form 10-Q is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.



TABLE OF CONTENTS
PART II. FINANCIAL INFORMATION
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS,Financial Statements
DUKE ENERGY PROGRESS,11
Piedmont Natural Gas Company, Inc. Financial Statements
Note 1 (Unaudited)Organization and Basis of Presentation
Note 2 – Acquisitions and Dispositions
Note 3 – Business Segments
Note 4 – Regulatory Matters
Note 5 – Commitments and Contingencies
Note 6 – Debt and Credit Facilities
Note 7 – Asset Retirement Obligations
Note 8 – Goodwill and Intangible Assets
Note 9 – Related Party Transactions
Note 10 – Derivatives and Hedging
Note 11 – Investments in Debt and Equity Securities
Note 12 – Fair Value Measurements
Note 13 – Variable Interest Entities
Note 14 – Common Stock
Note 15 – Stock-Based Compensation
Note 16 – Employee Benefit Plans
Note 17 – Income Taxes
Note 18 – Subsequent Events
PART II. OTHER INFORMATION



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:
State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
The costs of decommissioning Crystal River Unit 3 and other nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;
Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;
Advancements in technology;
Additional competition in electric and natural gas markets and continued industry consolidation;
The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources;
The ability to complete necessary or desirable pipeline expansion or infrastructure projects in our natural gas business;
Operational interruptions to our natural gas distribution and transmission activities;
The availability of adequate interstate pipeline transportation capacity and natural gas supply;
The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches and other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
The inherent risks associated with the operation and potential construction 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 and general economic conditions;
Credit ratings of the Duke Energy Registrants may be different from what is expected;
Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
The ability to control operation and maintenance costs;
The level of creditworthiness of counterparties to transactions;
Employee workforce factors, including the potential inability to attract and retain key personnel;
The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;
The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;



Index to Combined Notes to Condensed Consolidated Financial Statements
The unaudited notes
Substantial revision to the condensed consolidated financial statements that follow are a combined presentation. U.S. tax code, such as changes to the corporate tax rate or material change in the deductibility of interest;
The impact of potential goodwill impairments;
The ability to successfully complete future merger, acquisition or divestiture plans;
The ability to successfully integrate the natural gas businesses following list indicates the registrantsacquisition of Piedmont Natural Gas Company, Inc. and realize anticipated benefits; and
The ability to which the footnotes apply.implement our business strategy.
Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions, except per-share amounts)2017
 2016
 2017
 2016
Operating Revenues       
Regulated electric$6,091
 $6,303
 $16,122
 $16,321
Regulated natural gas247
 89
 1,168
 355
Nonregulated electric and other144
 184
 476
 490
Total operating revenues6,482
 6,576
 17,766
 17,166
Operating Expenses    
 
Fuel used in electric generation and purchased power1,863
 2,031
 4,853
 5,140
Cost of natural gas68
 6
 402
 64
Operation, maintenance and other1,442
 1,460
 4,282
 4,227
Depreciation and amortization900
 819
 2,594
 2,402
Property and other taxes313
 302
 924
 887
Impairment charges207
 10
 216
 14
Total operating expenses4,793
 4,628
 13,271
 12,734
Gains on Sales of Other Assets and Other, net6
 6
 24
 21
Operating Income1,695
 1,954
 4,519
 4,453
Other Income and Expenses    

 

Equity in earnings (losses) of unconsolidated affiliates36
 (60) 101
 (37)
Other income and expenses, net88
 86
 255
 237
Total other income and expenses124
 26
 356
 200
Interest Expense498
 464
 1,475
 1,431
Income From Continuing Operations Before Income Taxes1,321
 1,516
 3,400
 3,222
Income Tax Expense from Continuing Operations364
 515
 1,035
 1,020
Income From Continuing Operations957
 1,001
 2,365
 2,202
(Loss) Income From Discontinued Operations, net of tax(2) 180
 (4) 190
Net Income955
 1,181
 2,361
 2,392
Less: Net Income Attributable to Noncontrolling Interests1
 5
 5
 13
Net Income Attributable to Duke Energy Corporation$954
 $1,176
 $2,356
 $2,379
        
Earnings Per Share – Basic and Diluted       
Income from continuing operations attributable to Duke Energy Corporation common stockholders       
Basic$1.36
 $1.44
 $3.37
 $3.19
Diluted$1.36
 $1.44
 $3.37
 $3.18
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders       
Basic$
 $0.26
 $(0.01) $0.26
Diluted$
 $0.26
 $(0.01) $0.26
Net income attributable to Duke Energy Corporation common stockholders       
Basic$1.36
 $1.70
 $3.36
 $3.45
Diluted$1.36
 $1.70
 $3.36
 $3.44
Weighted average shares outstanding       
Basic700
 689
 700
 689
Diluted700
 691
 700
 690

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Net Income$955
 $1,181
 $2,361
 $2,392
Other Comprehensive Income, net of tax       
Foreign currency translation adjustments
 (12) 
 95
Pension and OPEB adjustments
 
 2
 2
Net unrealized gains (losses) on cash flow hedges2
 6
 (2) (19)
Reclassification into earnings from cash flow hedges(2) 1
 3
 3
Unrealized gains on available-for-sale securities2
 
 10
 7
Other Comprehensive Income (Loss), net of tax2
 (5) 13
 88
Comprehensive Income957
 1,176
 2,374
 2,480
Less: Comprehensive Income Attributable to Noncontrolling Interests1
 4
 5
 16
Comprehensive Income Attributable to Duke Energy Corporation$956
 $1,172
 $2,369
 $2,464


PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$282
 $392
Receivables (net of allowance for doubtful accounts of $13 at 2017 and $14 at 2016)528
 751
Receivables of VIEs (net of allowance for doubtful accounts of $54 at 2017 and 2016)2,089
 1,893
Inventory3,265
 3,522
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)1,109
 1,023
Other433
 458
Total current assets7,706
 8,039
Property, Plant and Equipment   
Cost125,582
 121,397
Accumulated depreciation and amortization(41,161) (39,406)
Generation facilities to be retired, net441
 529
Net property, plant and equipment84,862
 82,520
Other Noncurrent Assets   
Goodwill19,418
 19,425
Regulatory assets (includes $1,101 at 2017 and $1,142 at 2016 related to VIEs)13,367
 12,878
Nuclear decommissioning trust funds6,814
 6,205
Investments in equity method unconsolidated affiliates1,366
 925
Other2,792
 2,769
Total other noncurrent assets43,757
 42,202
Total Assets$136,325
 $132,761
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$2,645
 $2,994
Notes payable and commercial paper1,899
 2,487
Taxes accrued627
 384
Interest accrued538
 503
Current maturities of long-term debt (includes $215 at 2017 and $260 at 2016 related to VIEs)2,485
 2,319
Asset retirement obligations619
 411
Regulatory liabilities273
 409
Other1,734
 2,044
Total current liabilities10,820
 11,551
Long-Term Debt (includes $4,219 at 2017 and $3,587 at 2016 related to VIEs)48,929
 45,576
Other Noncurrent Liabilities   
Deferred income taxes15,058
 14,155
Asset retirement obligations9,586
 10,200
Regulatory liabilities7,027
 6,881
Accrued pension and other post-retirement benefit costs1,105
 1,111
Investment tax credits534
 493
Other1,624
 1,753
Total other noncurrent liabilities34,934
 34,593
Commitments and Contingencies

 

Equity   
Common stock, $0.001 par value, 2 billion shares authorized; 700 million shares outstanding at 2017 and 20161
 1
Additional paid-in capital38,774
 38,741
Retained earnings2,936
 2,384
Accumulated other comprehensive loss(80) (93)
Total Duke Energy Corporation stockholders' equity41,631
 41,033
Noncontrolling interests11
 8
Total equity41,642
 41,041
Total Liabilities and Equity$136,325
 $132,761

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$2,361
 $2,392
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)2,990
 2,847
Equity component of AFUDC(175) (140)
Gains on sales of other assets(28) (27)
Impairment charges216
 279
Deferred income taxes1,016
 648
Equity in earnings of unconsolidated affiliates(101) (34)
Accrued pension and other post-retirement benefit costs19
 12
Contributions to qualified pension plans(8) 
Payments for asset retirement obligations(420) (443)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions4
 36
Receivables80
 (276)
Inventory248
 455
Other current assets(176) (163)
Increase (decrease) in   
Accounts payable(554) (207)
Taxes accrued233
 417
Other current liabilities(532) (157)
Other assets(160) (64)
Other liabilities(2) 36
Net cash provided by operating activities5,011
 5,611
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(5,841) (5,252)
Contributions to equity method investments(370) (198)
Purchases of available-for-sale securities(3,170) (4,048)
Proceeds from sales and maturities of available-for-sale securities3,199
 4,107
Change in restricted cash(29) (34)
Other(149) (130)
Net cash used in investing activities(6,360) (5,555)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the:   
Issuance of long-term debt5,710
 8,647
Issuance of common stock related to employee benefit plans
 7
Payments for the redemption of long-term debt(2,035) (988)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days265
 1,424
Payments for the redemption of short-term debt with original maturities greater than 90 days(237) (492)
Notes payable and commercial paper(647) (1,579)
Dividends paid(1,825) (1,731)
Other8
 (22)
Net cash provided by financing activities1,239
 5,266
Changes in cash and cash equivalents associated with assets held for sale
 11
Net (decrease) increase in cash and cash equivalents(110) 5,333
Cash and cash equivalents at beginning of period392
 383
Cash and cash equivalents at end of period$282
 $5,716
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$740
 $631

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
         Accumulated Other Comprehensive Loss      
             Net Unrealized
   Total
    
         Foreign
 Net
 (Losses) Gains
   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
 
 
 2,379
 
 
 
 
 2,379
 13
 2,392
Other comprehensive income (loss)
 
 
 
 92
 (16) 7
 2
 85
 3
 88
Common stock issuances, including dividend reinvestment and employee benefits1
 
 29
 
 
 
 
 
 29
 
 29
Common stock dividends
 
 
 (1,731) 
 
 
 
 (1,731) 
 (1,731)
Distributions to noncontrolling interest in subsidiaries
 
 
 
 
 
 
 
 
 (3) (3)
Balance at September 30, 2016689
 $1

$37,997

$3,212

$(600)
$(66)
$4

$(59)
$40,489

$57

$40,546
                      
Balance at December 31, 2016700
 $1
 $38,741
 $2,384
 $
 $(20) $(1) $(72) $41,033
 $8
 $41,041
Net income
 
 
 2,356
 
 
 
 
 2,356
 5
 2,361
Other comprehensive income
 
 
 
 
 1
 10
 2
 13
 
 13
Common stock issuances, including dividend reinvestment and employee benefits
 
 33
 
 
 
 
 
 33
 
 33
Common stock dividends
 
 
 (1,825) 
 
 
 
 (1,825) 
 (1,825)
Distributions to noncontrolling interest in subsidiaries
 
 
 
 
 
 
 
 
 (2) (2)
Other(a)

 
 
 21
 
 
 
 
 21
 
 21
Balance at September 30, 2017700

$1

$38,774

$2,936

$

$(19)
$9

$(70)
$41,631

$11

$41,642
 Applicable Notes
Registrant1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Duke Energy Corporation                 
Duke Energy Carolinas, LLC                    
Progress Energy, Inc.                   
Duke Energy Progress, LLC                    
Duke Energy Florida, LLC                    
Duke Energy Ohio, Inc.                    
Duke Energy Indiana, LLC                    
Piedmont Natural Gas Company, Inc.                 
Tables within the notes may not sum across
(a)Cumulative-effect adjustment due to (i) Progress Energy's consolidationimplementation of Duke Energy Progress, Duke Energy Floridaa new accounting standard related to stock-based compensation and other subsidiaries that are not registrants, (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances and (iii) the Piedmont registrant not included in the consolidated Duke Energy resultsassociated income taxes. See Note 1 for the three months ended March 31,more information.

PART I


DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Operating Revenues$2,136
 $2,226
 $5,581
 $5,641
Operating Expenses       
Fuel used in electric generation and purchased power531
 581
 1,394
 1,391
Operation, maintenance and other480
 493
 1,431
 1,481
Depreciation and amortization281
 268
 804
 802
Property and other taxes67
 68
 206
 206
Total operating expenses1,359
 1,410
 3,835
 3,880
Loss on Sales of Other Assets and Other, net
 (1) 
 (1)
Operating Income777
 815
 1,746
 1,760
Other Income and Expenses, net26
 39
 99
 121
Interest Expense108
 102
 314
 316
Income Before Income Taxes695
 752
 1,531
 1,565
Income Tax Expense229
 258
 522
 539
Net Income$466
 $494
 $1,009
 $1,026
Other Comprehensive Income, net of tax       
Reclassification into earnings from cash flow hedges
 
 1
 1
Comprehensive Income$466
 $494
 $1,010
 $1,027

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$18
 $14
Receivables (net of allowance for doubtful accounts of $2 at 2017 and 2016)180
 160
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2017 and 2016)691
 645
Receivables from affiliated companies146
 163
Notes receivable from affiliated companies
 66
Inventory1,000
 1,055
Regulatory assets237
 238
Other27
 37
Total current assets2,299
 2,378
Property, Plant and Equipment   
Cost42,321
 41,127
Accumulated depreciation and amortization(14,969) (14,365)
Net property, plant and equipment27,352
 26,762
Other Noncurrent Assets   
Regulatory assets3,077
 3,159
Nuclear decommissioning trust funds3,621
 3,273
Other910
 943
Total other noncurrent assets7,608
 7,375
Total Assets$37,259
 $36,515
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$726
 $833
Accounts payable to affiliated companies159
 247
Notes payable to affiliated companies468
 
Taxes accrued368
 143
Interest accrued135
 102
Current maturities of long-term debt705
 116
Asset retirement obligations304
 222
Regulatory liabilities105
 161
Other435
 468
Total current liabilities3,405

2,292
Long-Term Debt8,520
 9,187
Long-Term Debt Payable to Affiliated Companies300
 300
Other Noncurrent Liabilities   
Deferred income taxes6,796
 6,544
Asset retirement obligations3,297
 3,673
Regulatory liabilities2,884
 2,840
Accrued pension and other post-retirement benefit costs108
 97
Investment tax credits234
 203
Other559
 607
Total other noncurrent liabilities13,878
 13,964
Commitments and Contingencies

 

Equity   
Member's equity11,164
 10,781
Accumulated other comprehensive loss(8) (9)
Total equity11,156
 10,772
Total Liabilities and Equity$37,259
 $36,515

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$1,009
 $1,026
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)1,051
 1,020
Equity component of AFUDC(79) (75)
Losses on sales of other assets and other, net
 1
Deferred income taxes330
 382
Accrued pension and other post-retirement benefit costs
 3
Payments for asset retirement obligations(201) (204)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions1
 4
Receivables(40) (191)
Receivables from affiliated companies17
 19
Inventory50
 217
Other current assets8
 81
Increase (decrease) in   
Accounts payable(78) (179)
Accounts payable to affiliated companies(88) (100)
Taxes accrued225
 248
Other current liabilities(149) 51
Other assets(18) 57
Other liabilities(26) (15)
Net cash provided by operating activities2,012
 2,345
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(1,747) (1,531)
Purchases of available-for-sale securities(1,660) (2,070)
Proceeds from sales and maturities of available-for-sale securities1,664
 2,070
Notes receivable from affiliated companies66
 131
Other(58) (65)
Net cash used in investing activities(1,735) (1,465)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt
 992
Payments for the redemption of long-term debt(115) (3)
Notes payable to affiliated companies468
 
Distributions to parent(625) (1,800)
Other(1) 
Net cash used in financing activities(273) (811)
Net increase in cash and cash equivalents4
 69
Cash and cash equivalents at beginning of period14
 13
Cash and cash equivalents at end of period$18
 $82
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$292
 $228

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
   Accumulated Other  
   Comprehensive  
   Loss  
   Net Losses on
  
 Member's
 Cash Flow
 Total
(in millions)Equity
 Hedges
 Equity
Balance at December 31, 2015$11,617
 $(11) $11,606
Net income1,026
 
 1,026
Other comprehensive income
 1
 1
Distributions to parent(1,800) 
 (1,800)
Other(3) 
 (3)
Balance at September 30, 2016$10,840
 $(10) $10,830
      
Balance at December 31, 2016$10,781
 $(9) $10,772
Net income1,009
 
 1,009
Other comprehensive income
 1
 1
Distributions to parent(625) 
 (625)
Other(1) 
 (1)
Balance at September 30, 2017$11,164
 $(8) $11,156

PART I


PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Operating Revenues$2,864
 $2,965
 $7,435
 $7,645
Operating Expenses       
Fuel used in electric generation and purchased power1,031
 1,120
 2,588
 2,832
Operation, maintenance and other572
 582
 1,650
 1,699
Depreciation and amortization334
 318
 958
 904
Property and other taxes140
 136
 386
 375
Impairment charges135
 1
 137
 4
Total operating expenses2,212
 2,157
 5,719
 5,814
Gains on Sales of Other Assets and Other, net5
 6
 19
 18
Operating Income657
 814
 1,735
 1,849
Other Income and Expenses, net20
 31
 65
 79
Interest Expense193
 177
 595
 497
Income Before Income Taxes484
 668
 1,205
 1,431
Income Tax Expense141
 219
 384
 496
Net Income343
 449
 821
 935
Less: Net Income Attributable to Noncontrolling Interests2
 3
 7
 8
Net Income Attributable to Parent$341
 $446
 $814
 $927
        
Net Income$343
 $449
 $821
 $935
Other Comprehensive Income, net of tax       
Pension and OPEB adjustments3
 
 5
 2
Net unrealized (loss) gain on cash flow hedges(2) 
 4
 
Reclassification into earnings from cash flow hedges
 1
 
 4
Unrealized gains on available-for-sale securities1
 1
 3
 2
Other Comprehensive Income, net of tax2

2

12

8
Comprehensive Income345
 451
 833
 943
Less: Comprehensive Income Attributable to Noncontrolling Interests2
 3
 7
 8
Comprehensive Income Attributable to Parent$343

$448

$826

$935


PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$30
 $46
Receivables (net of allowance for doubtful accounts of $4 at 2017 and $6 at 2016)93
 114
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2017 and 2016)900
 692
Receivables from affiliated companies
 106
Notes receivable from affiliated companies170
 80
Inventory1,584
 1,717
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)440
 401
Other243
 148
Total current assets3,460
 3,304
Property, Plant and Equipment   
Cost46,659
 44,864
Accumulated depreciation and amortization(15,760) (15,212)
Generation facilities to be retired, net441
 529
Net property, plant and equipment31,340
 30,181
Other Noncurrent Assets   
Goodwill3,655
 3,655
Regulatory assets (includes $1,101 at 2017 and $1,142 at 2016 related to VIEs)6,438
 5,722
Nuclear decommissioning trust funds3,194
 2,932
Other909
 856
Total other noncurrent assets14,196
 13,165
Total Assets$48,996
 $46,650
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$1,015
 $1,003
Accounts payable to affiliated companies289
 348
Notes payable to affiliated companies576
 729
Taxes accrued227
 83
Interest accrued216
 201
Current maturities of long-term debt (includes $53 at 2017 and $62 at 2016 related to VIEs)770
 778
Asset retirement obligations250
 189
Regulatory liabilities121
 189
Other652
 745
Total current liabilities4,116
 4,265
Long-Term Debt (includes $1,689 at 2017 and $1,741 at 2016 related to VIEs)16,717
 15,590
Long-Term Debt Payable to Affiliated Companies150
 1,173
Other Noncurrent Liabilities   
Deferred income taxes6,463
 5,246
Asset retirement obligations5,189
 5,286
Regulatory liabilities2,511
 2,395
Accrued pension and other post-retirement benefit costs535
 547
Other298
 341
Total other noncurrent liabilities14,996
 13,815
Commitments and Contingencies
 
Equity   
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2017 and 2016
 
Additional paid-in capital9,143
 8,094
Retained earnings3,906
 3,764
Accumulated other comprehensive loss(26) (38)
Total Progress Energy, Inc. stockholders' equity13,023
 11,820
Noncontrolling interests(6) (13)
Total equity13,017
 11,807
Total Liabilities and Equity$48,996
 $46,650

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$821
 $935
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)1,130
 1,071
Equity component of AFUDC(68) (51)
Gains on sales of other assets(20) (23)
Impairment charges137
 4
Deferred income taxes651
 425
Accrued pension and other post-retirement benefit costs(9) (19)
Payments for asset retirement obligations(190) (203)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions1
 33
Receivables(182) (155)
Receivables from affiliated companies102
 329
Inventory126
 99
Other current assets(279) (30)
Increase (decrease) in   
Accounts payable(281) (24)
Accounts payable to affiliated companies(59) (109)
Taxes accrued143
 159
Other current liabilities(184) (156)
Other assets(100) (90)
Other liabilities(85) (4)
Net cash provided by operating activities1,654
 2,191
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(2,419) (2,286)
Purchases of available-for-sale securities(1,393) (1,849)
Proceeds from sales and maturities of available-for-sale securities1,411
 1,899
Proceeds from insurance4
 58
Notes receivable from affiliated companies(90) (43)
Change in restricted cash5
 (6)
Other(40) (17)
Net cash used in investing activities(2,522) (2,244)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt1,720
 2,375
Payments for the redemption of long-term debt(611) (327)
Notes payable to affiliated companies(129) (798)
Dividends to parent(125) (1,075)
Other(3) (1)
Net cash provided by financing activities852
 174
Net (decrease) increase in cash and cash equivalents(16) 121
Cash and cash equivalents at beginning of period46
 44
Cash and cash equivalents at end of period$30
 $165
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$174
 $228
Equitization of certain notes payable to affiliates1,047
 
Dividend to parent related to a legal entity restructuring547
 

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
     Accumulated Other Comprehensive Loss      
       Net Unrealized
   Total Progress
    
 Additional
   Net Losses on
 Gains on
 Pension and
 Energy, Inc.
    
 Paid-in
 Retained
 Cash Flow
 Available-for-
 OPEB
 Stockholders'
 Noncontrolling
 Total
(in millions)Capital
 Earnings
 Hedges
 Sale Securities
 Adjustments
 Equity
 Interests
 Equity
Balance at December 31, 2015$8,092
 $4,831
 $(31) $
 $(17) $12,875
 $(22) $12,853
Net income
 927
 
 
 
 927
 8
 935
Other comprehensive income
 
 4
 2
 2
 8
 
 8
Distributions to noncontrolling interests
 
 
 
 
 
 (1) (1)
Dividends to parent
 (1,075) 
 
 
 (1,075) 
 (1,075)
Other4
 
 
 
 
 4
 (1) 3
Balance at September 30, 2016$8,096

$4,683

$(27)
$2

$(15)
$12,739

$(16)
$12,723
                
Balance at December 31, 2016$8,094
 $3,764
 $(23) $1
 $(16) $11,820
 $(13) $11,807
Net income
 814
 
 
 
 814
 7
 821
Other comprehensive income
 
 4
 3
 5
 12
 
 12
Dividends to parent(a)

 (672) 
 
 
 (672) 
 (672)
Equitization of certain notes payable to affiliates1,047
 
 
 
 
 1,047
 
 1,047
Other2
 
 
 
 
 2
 
 2
Balance at September 30, 2017$9,143

$3,906

$(19)
$4

$(11)
$13,023

$(6)
$13,017
(a)Includes a $547 million non-cash dividend related to a legal entity restructuring.

PART I


DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Operating Revenues$1,460
 $1,583
 $3,878
 $4,103
Operating Expenses       
Fuel used in electric generation and purchased power475
 569
 1,214
 1,441
Operation, maintenance and other352
 360
 1,032
 1,067
Depreciation and amortization182
 176
 536
 526
Property and other taxes40
 40
 120
 119
Impairment charges
 1
 
 1
Total operating expenses1,049
 1,146
 2,902
 3,154
Gains on Sales of Other Assets and Other, net
 1
 3
 2
Operating Income411
 438
 979
 951
Other Income and Expenses, net14
 18
 47
 47
Interest Expense65
 61
 217
 188
Income Before Income Taxes360
 395
 809
 810
Income Tax Expense114
 124
 262
 271
Net Income and Comprehensive Income$246
 $271
 $547
 $539


PART I

DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$15
 $11
Receivables (net of allowance for doubtful accounts of $1 at 2017 and $4 at 2016)29
 51
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2017 and 2016)472
 404
Receivables from affiliated companies8
 5
Notes receivable from affiliated companies101
 165
Inventory1,018
 1,076
Regulatory assets230
 188
Other40
 57
Total current assets1,913
 1,957
Property, Plant and Equipment   
Cost29,104
 28,419
Accumulated depreciation and amortization(10,793) (10,561)
Generation facilities to be retired, net441
 529
Net property, plant and equipment18,752
 18,387
Other Noncurrent Assets   
Regulatory assets3,588
 3,243
Nuclear decommissioning trust funds2,463
 2,217
Other565
 525
Total other noncurrent assets6,616
 5,985
Total Assets$27,281
 $26,329
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$271
 $589
Accounts payable to affiliated companies207
 227
Taxes accrued137
 104
Interest accrued91
 102
Current maturities of long-term debt203
 452
Asset retirement obligations250
 189
Regulatory liabilities107
 158
Other318
 365
Total current liabilities1,584
 2,186
Long-Term Debt7,204
 6,409
Long-Term Debt Payable to Affiliated Companies150
 150
Other Noncurrent Liabilities   
Deferred income taxes3,606
 3,323
Asset retirement obligations4,426
 4,508
Regulatory liabilities2,097
 1,946
Accrued pension and other post-retirement benefit costs246
 252
Investment tax credits144
 146
Other44
 51
Total other noncurrent liabilities10,563
 10,226
Commitments and Contingencies
 
Equity   
Member's Equity7,780
 7,358
Total Liabilities and Equity$27,281
 $26,329

PART I

DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$547
 $539
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)691
 679
Equity component of AFUDC(35) (34)
Gains on sales of other assets(4) (4)
Impairment charges
 1
Deferred income taxes287
 325
Accrued pension and other post-retirement benefit costs(15) (24)
Payments for asset retirement obligations(149) (163)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions(2) 
Receivables(47) (78)
Receivables from affiliated companies(3) 11
Inventory52
 91
Other current assets(34) 37
Increase (decrease) in   
Accounts payable(286) (44)
Accounts payable to affiliated companies(20) (47)
Taxes accrued33
 76
Other current liabilities(139) 37
Other assets(49) (32)
Other liabilities(9) (10)
Net cash provided by operating activities818
 1,360
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(1,247) (1,106)
Purchases of available-for-sale securities(995) (1,470)
Proceeds from sales and maturities of available-for-sale securities974
 1,448
Notes receivable from affiliated companies64
 (65)
Other(26) (27)
Net cash used in investing activities(1,230) (1,220)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt812
 505
Payments for the redemption of long-term debt(270) (15)
Notes payable to affiliated companies
 (209)
Distributions to parent(125) (301)
Other(1) 1
Net cash provided by (used in) financing activities416
 (19)
Net increase in cash and cash equivalents4
 121
Cash and cash equivalents at beginning of period11
 15
Cash and cash equivalents at end of period$15
 $136
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$116
 $66

PART I

DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 Member's
(in millions)Equity
Balance at December 31, 2015$7,059
Net income539
Distributions to parent(301)
Balance at September 30, 2016$7,297
  
Balance at December 31, 2016$7,358
Net income547
Distributions to parent(125)
Balance at September 30, 2017$7,780


PART I


DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Operating Revenues$1,401
 $1,381
 $3,551
 $3,538
Operating Expenses       
Fuel used in electric generation and purchased power557
 550
 1,374
 1,391
Operation, maintenance and other216
 219
 610
 623
Depreciation and amortization154
 142
 423
 378
Property and other taxes99
 96
 265
 256
Impairment charges135
 1
 137
 4
Total operating expenses1,161
 1,008
 2,809
 2,652
Operating Income240
 373
 742
 886
Other Income and Expenses, net15
 11
 45
 30
Interest Expense71
 62
 211
 143
Income Before Income Taxes184
 322
 576
 773
Income Tax Expense64
 116
 208
 286
Net Income$120
 $206
 $368
 $487
Other Comprehensive Income, net of tax
 
 

 

Unrealized gains on available-for-sale securities1
 1
 3
 2
Comprehensive Income$121
 $207
 $371

$489


PART I

DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$8
 $16
Receivables (net of allowance for doubtful accounts of $3 at 2017 and $2 at 2016)61
 61
Receivables of VIEs (net of allowance for doubtful accounts of $2 at 2017 and 2016)428
 288
Receivables from affiliated companies
 5
Notes receivable from affiliated companies70
 
Inventory566
 641
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)211
 213
Other (includes $20 at 2017 and $53 at 2016 related to VIEs)154
 125
Total current assets1,498
 1,349
Property, Plant and Equipment   
Cost17,546
 16,434
Accumulated depreciation and amortization(4,960) (4,644)
Net property, plant and equipment12,586
 11,790
Other Noncurrent Assets   
Regulatory assets (includes $1,101 at 2017 and $1,142 at 2016 related to VIEs)2,850
 2,480
Nuclear decommissioning trust funds731
 715
Other293
 278
Total other noncurrent assets3,874
 3,473
Total Assets$17,958
 $16,612
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$744
 $413
Accounts payable to affiliated companies90
 125
Notes payable to affiliated companies
 297
Taxes accrued143
 33
Interest accrued71
 49
Current maturities of long-term debt (includes $53 at 2017 and $62 at 2016 related to VIEs)567
 326
Regulatory liabilities14
 31
Other310
 352
Total current liabilities1,939
 1,626
Long-Term Debt (includes $1,389 at 2017 and $1,442 at 2016 related to VIEs)6,129
 5,799
Other Noncurrent Liabilities   
Deferred income taxes3,076
 2,694
Asset retirement obligations763
 778
Regulatory liabilities414
 448
Accrued pension and other post-retirement benefit costs257
 262
Other106
 105
Total other noncurrent liabilities4,616
 4,287
Commitments and Contingencies
 
Equity   
Member's equity5,270
 4,899
Accumulated other comprehensive income4
 1
Total equity5,274
 4,900
Total Liabilities and Equity$17,958
 $16,612

PART I

DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$368
 $487
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion431
 383
Equity component of AFUDC(33) (16)
Impairment charges137
 4
Deferred income taxes366
 136
Accrued pension and other post-retirement benefit costs3
 2
Payments for asset retirement obligations(41) (41)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions3
 34
Receivables(140) (78)
Receivables from affiliated companies1
 41
Inventory74
 8
Other current assets(162) (32)
Increase (decrease) in   
Accounts payable6
 20
Accounts payable to affiliated companies(35) (55)
Taxes accrued109
 61
Other current liabilities(45) (183)
Other assets(35) (56)
Other liabilities(71) 1
Net cash provided by operating activities936
 716
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(1,172) (1,179)
Purchases of available-for-sale securities(398) (379)
Proceeds from sales and maturities of available-for-sale securities437
 450
Proceeds from insurance4
 58
Notes receivable from affiliated companies(70) 
Change in restricted cash
 (6)
Other(14) 10
Net cash used in investing activities(1,213) (1,046)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt908
 1,870
Payments for the redemption of long-term debt(341) (12)
Notes payable to affiliated companies(297) (750)
Distributions to parent
 (774)
Other(1) (2)
Net cash provided by financing activities269
 332
Net (decrease) increase in cash and cash equivalents(8) 2
Cash and cash equivalents at beginning of period16
 8
Cash and cash equivalents at end of period$8
 $10
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$102
 $162

PART I

DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
   Accumulated  
   Other  
   Comprehensive  
   Income  
   Net Unrealized
  
   Gains on
  
 Member's
 Available-for-Sale
 Total
(in millions)Equity
 Securities
 Equity
Balance at December 31, 2015$5,121
 $
 $5,121
Net income487
 
 487
Other comprehensive income
 2
 2
Distributions to parent(774) 
 (774)
Other3
 
 3
Balance at September 30, 2016$4,837
 $2
 $4,839
      
Balance at December 31, 2016$4,899
 $1
 $4,900
Net income368
 
 368
Other comprehensive income
 3
 3
Other3
 
 3
Balance at September 30, 2017$5,270
 $4
 $5,274

PART I


DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017

2016
Operating Revenues       
Regulated electric$371
 $390
 $1,036
 $1,053
Regulated natural gas90
 89
 360
 358
Nonregulated electric and other10
 10
 30
 22
Total operating revenues471
 489
 1,426
 1,433
Operating Expenses       
Fuel used in electric generation and purchased power – regulated100
 129
 283
 340
Fuel used in electric generation and purchased power – nonregulated13
 14
 42
 37
Cost of natural gas5
 6
 69
 64
Operation, maintenance and other124
 126
 385
 367
Depreciation and amortization63
 50
 193
 175
Property and other taxes65
 59
 204
 195
Impairment charges
 
 1
 
Total operating expenses370
 384
 1,177
 1,178
Gains on Sales of Other Assets and Other, net1
 1
 1
 2
Operating Income102
 106
 250
 257
Other Income and Expenses, net4
 3
 12
 6
Interest Expense22
 22
 67
 63
Income From Continuing Operations Before Income Taxes84
 87
 195
 200
Income Tax Expense From Continuing Operations28
 32
 67
 65
Income From Continuing Operations56
 55
 128
 135
(Loss) Income From Discontinued Operations, net of tax(1) 34
 (1) 36
Net Income and Comprehensive Income$55
 $89
 $127
 $171


PART I

DUKE ENERGY OHIO, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$7
 $13
Receivables (net of allowance for doubtful accounts of $2 at 2017 and 2016)68
 71
Receivables from affiliated companies81
 129
Notes receivable from affiliated companies87
 94
Inventory139
 137
Regulatory assets57
 37
Other18
 37
Total current assets457
 518
Property, Plant and Equipment   
Cost8,509
 8,126
Accumulated depreciation and amortization(2,658) (2,579)
Net property, plant and equipment5,851
 5,547
Other Noncurrent Assets   
Goodwill920
 920
Regulatory assets510
 520
Other27
 23
Total other noncurrent assets1,457
 1,463
Total Assets$7,765
 $7,528
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$251
 $282
Accounts payable to affiliated companies59
 63
Notes payable to affiliated companies
 16
Taxes accrued157
 178
Interest accrued33
 19
Current maturities of long-term debt
 1
Asset retirement obligations6
 
Regulatory liabilities15
 21
Other74
 91
Total current liabilities595
 671
Long-Term Debt2,042
 1,858
Long-Term Debt Payable to Affiliated Companies25
 25
Other Noncurrent Liabilities   
Deferred income taxes1,512
 1,443
Asset retirement obligations75
 77
Regulatory liabilities232
 236
Accrued pension and other post-retirement benefit costs52
 56
Other134
 166
Total other noncurrent liabilities2,005
 1,978
Commitments and Contingencies
 
Equity   
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2017 and 2016762
 762
Additional paid-in capital2,670
 2,695
Accumulated deficit(334) (461)
Total equity3,098
 2,996
Total Liabilities and Equity$7,765
 $7,528

PART I

DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$127
 $171
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization196
 178
Equity component of AFUDC(8) (4)
Gains on sales of other assets(1) (2)
Impairment charges1
 
Deferred income taxes70
 36
Accrued pension and other post-retirement benefit costs3
 4
Contributions to qualified pension plans(4) 
Payments for asset retirement obligations(4) (4)
(Increase) decrease in   
Net realized and unrealized mark-to-market and hedging transactions1
 
Receivables3
 (1)
Receivables from affiliated companies48
 (3)
Inventory1
 (5)
Other current assets(8) 50
Increase (decrease) in   
Accounts payable(48) 13
Accounts payable to affiliated companies(4) (4)
Taxes accrued(21) (13)
Other current liabilities(6) (53)
Other assets(13) (8)
Other liabilities(2) (28)
Net cash provided by operating activities331
 327
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(457) (334)
Notes receivable from affiliated companies7
 (47)
Other(25) (21)
Net cash used in investing activities(475) (402)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt182
 341
Payments for the redemption of long-term debt(2) (53)
Notes payable to affiliated companies(16) (103)
Dividends to parent(25) (25)
Other(1) 
Net cash provided by financing activities138
 160
Net (decrease) increase in cash and cash equivalents(6) 85
Cash and cash equivalents at beginning of period13
 14
Cash and cash equivalents at end of period$7
 $99
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$65
 $56

PART I

DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
   Additional
    
 Common
 Paid-in
 Accumulated
 Total
(in millions)Stock
 Capital
 Deficit
 Equity
Balance at December 31, 2015$762
 $2,720
 $(698) $2,784
Net income
 
 171
 171
Dividends to parent
 (25) 
 (25)
Contribution from parent
 
 9
 9
Balance at September 30, 2016$762
 $2,695
 $(518) $2,939
        
Balance at December 31, 2016$762
 $2,695
 $(461) $2,996
Net income
 
 127
 127
Dividends to parent
 (25) 
 (25)
Balance at September 30, 2017$762

$2,670

$(334)
$3,098


PART I


DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Operating Revenues$802
 $809
 $2,302
 $2,225
Operating Expenses       
Fuel used in electric generation and purchased power259
 242
 744
 690
Operation, maintenance and other175
 175
 541
 526
Depreciation and amortization120
 123
 336
 345
Property and other taxes19
 22
 56
 67
Impairment charges
 8
 
 8
Total operating expenses573
 570
 1,677
 1,636
Gain on Sale of Other Assets and Other, net1


 1
 
Operating Income230
 239

626

589
Other Income and Expenses, net10
 5
 27
 15
Interest Expense44
 45
 132
 136
Income Before Income Taxes196
 199

521

468
Income Tax Expense75
 70
 203
 159
Net Income$121
 $129

$318

$309
Other Comprehensive Loss, net of tax       
Reclassification into earnings from cash flow hedges
 
 
 (1)
Comprehensive Income$121
 $129

$318

$308


PART I

DUKE ENERGY INDIANA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$22
 $17
Receivables (net of allowance for doubtful accounts of $1 at 2017 and 2016)74
 105
Receivables from affiliated companies83
 114
Notes receivable from affiliated companies29
 86
Inventory450
 504
Regulatory assets158
 149
Other34
 45
Total current assets850
 1,020
Property, Plant and Equipment   
Cost14,716
 14,241
Accumulated depreciation and amortization(4,592) (4,317)
Net property, plant and equipment10,124
 9,924
Other Noncurrent Assets   
Regulatory assets1,123
 1,073
Other170
 147
Total other noncurrent assets1,293
 1,220
Total Assets$12,267
 $12,164
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$188
 $263
Accounts payable to affiliated companies73
 74
Taxes accrued146
 31
Interest accrued54
 61
Current maturities of long-term debt3
 3
Asset retirement obligations58
 
Regulatory liabilities28
 40
Other111
 93
Total current liabilities661
 565
Long-Term Debt3,632
 3,633
Long-Term Debt Payable to Affiliated Companies150
 150
Other Noncurrent Liabilities   
Deferred income taxes1,979
 1,900
Asset retirement obligations735
 866
Regulatory liabilities735
 748
Accrued pension and other post-retirement benefit costs78
 71
Investment tax credits147
 137
Other65
 27
Total other noncurrent liabilities3,739
 3,749
Commitments and Contingencies
 
Equity   
Member's Equity4,085
 4,067
Total Liabilities and Equity$12,267
 $12,164

PART I

DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$318
 $309
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion339
 347
Equity component of AFUDC(20) (11)
Gain on sale of other assets and other, net(1) 
Impairment charges
 8
Deferred income taxes101
 122
Accrued pension and other post-retirement benefit costs4
 6
Payments for asset retirement obligations(26) (31)
(Increase) decrease in   
Receivables53
 16
Receivables from affiliated companies31
 (3)
Inventory54
 146
Other current assets18
 (105)
Increase (decrease) in   
Accounts payable(71) (14)
Accounts payable to affiliated companies(1) (1)
Taxes accrued115
 12
Other current liabilities(18) (85)
Other assets(24) (38)
Other liabilities32
 64
Net cash provided by operating activities904
 742
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(603) (540)
Purchases of available-for-sale securities(15) (12)
Proceeds from sales and maturities of available-for-sale securities6
 9
Notes receivable from affiliated companies57
 45
Other(40) (28)
Net cash used in investing activities(595) (526)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt
 495
Payments for the redemption of long-term debt(3) (476)
Distributions to parent(300) (149)
Other(1) (1)
Net cash used in financing activities(304) (131)
Net increase in cash and cash equivalents5

85
Cash and cash equivalents at beginning of period17
 9
Cash and cash equivalents at end of period$22
 $94
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$101
 $56

PART I

DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
         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
 
 
 309
 
 309
Other comprehensive loss
 
 
 
 (1) (1)
Distributions to parent
 
 
 (149) 
 (149)
Transfer to Member's Equity(1) (1,384) (2,450) 3,835
 
 
Balance at September 30, 2016$
 $
 $

$3,995
 $
 $3,995
            
Balance at December 31, 2016$
 $
 $
 $4,067
 $
 $4,067
Net income
 
 
 318
 
 318
Distributions to parent
 
 
 (300) 
 (300)
Balance at September 30, 2017$
 $
 $

$4,085
 $
 $4,085


PART I


PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017
 2016
 2017
 2016
Operating Revenues       
Regulated natural gas$181
 $155
 $877
 $815
Nonregulated natural gas and other2
 3
 7
 8
Total operating revenues183
 158
 884
 823
Operating Expenses       
Cost of natural gas63
 42
 333
 289
Operation, maintenance and other73
 74
 226
 221
Depreciation and amortization38
 35
 109
 103
Property and other taxes13
 11
 38
 33
Impairment charges
 
 7
 
Total operating expenses187
 162
 713
 646
Operating (Loss) Income(4) (4) 171
 177
Equity in earnings of unconsolidated affiliates3
 2
 8
 25
Other income and expenses, net
 (1) (1) (1)
Total other income and expenses3
 1
 7
 24
Interest Expense20
 17
 59
 50
(Loss) Income Before Income Taxes(21) (20) 119
 151
Income Tax (Benefit) Expense(10) (8) 43
 57
Net (Loss) Income$(11) $(12) $76
 $94
Other Comprehensive Income, net of tax       
Reclassification into earnings from hedging activities of equity method investments
 1
 
 1
Comprehensive (Loss) Income$(11) $(11) $76
 $95

PART I

PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
ASSETS   
Current Assets   
Cash and cash equivalents$12
 $25
Receivables (net of allowance for doubtful accounts of $2 at 2017 and $3 at 2016)77
 232
Receivables from affiliated companies8
 7
Inventory53
 66
Regulatory assets133
 124
Income taxes receivable99
 9
Other31
 12
Total current assets413
 475
Property, Plant and Equipment   
Cost6,579
 6,174
Accumulated depreciation and amortization(1,454) (1,360)
Net property, plant and equipment5,125
 4,814
Other Noncurrent Assets   
Goodwill49
 49
Regulatory assets322
 373
Investments in equity method unconsolidated affiliates76
 212
Other11
 21
Total other noncurrent assets458
 655
Total Assets$5,996
 $5,944
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$98
 $155
Accounts payable to affiliated companies7
 8
Notes payable and commercial paper
 330
Notes payable to affiliated companies284
 
Taxes accrued30
 67
Interest accrued24
 33
Current maturities of long-term debt
 35
Regulatory liabilities3
 
Other72
 102
Total current liabilities518
 730
Long-Term Debt2,036
 1,786
Other Noncurrent Liabilities   
Deferred income taxes1,046
 931
Asset retirement obligations15
 14
Regulatory liabilities627
 608
Accrued pension and other post-retirement benefit costs14
 14
Other141
 189
Total other noncurrent liabilities1,843
 1,756
Commitments and Contingencies
 
Equity   
Common stock, no par value: 100 shares authorized and outstanding at 2017 and 2016860
 860
Retained earnings739
 812
Total equity1,599
 1,672
Total Liabilities and Equity$5,996
 $5,944

PART I

PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 30,
(in millions)2017
 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$76
 $94
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization112
 111
Impairment charges7
 
Deferred income taxes127
 50
Equity in earnings from unconsolidated affiliates(8) (25)
Accrued pension and other post-retirement benefit costs9
 2
Contributions to qualified pension plans
 (1)
Payments for asset retirement obligations
 (5)
(Increase) decrease in   
Receivables157
 88
Receivables from affiliated companies(1) 
Inventory13
 33
Other current assets(129) (50)
Increase (decrease) in   
Accounts payable(52) 11
Accounts payable to affiliated companies(1) 
Taxes accrued(37) 12
Other current liabilities(21) (11)
Other assets(9) 55
Other liabilities(7) 17
Net cash provided by operating activities236
 381
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(407) (416)
Contributions to equity method investments(12) (40)
Other2
 (2)
Net cash used in investing activities(417) (458)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the:   
Issuance of long-term debt250
 296
Issuance of common stock
 121
Payments for the redemption of long-term debt(35) (40)
Notes payable and commercial paper(330) (210)
Notes payable to affiliated companies284
 
Dividends paid
 (82)
Other(1) 
Net cash provided by financing activities168
 85
Net (decrease) increase in cash and cash equivalents(13) 8
Cash and cash equivalents at beginning of period25
 33
Cash and cash equivalents at end of period$12
 $41
Supplemental Disclosures:   
Significant non-cash transactions:   
Accrued capital expenditures$47
 $30
Transfer of ownership interest of certain equity method investees to parent149
 

PART I

PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
     Accumulated  
     Other  
     Comprehensive  
     Income  
     Net Loss on
  
     Hedging Activities
  
 Common
 Retained
 of Unconsolidated
 Total
(in millions)Stock
 Earnings
 Affiliates
 Equity
Balance at December 31, 2015$728
 $731
 $(1) $1,458
Net income
 94
 
 94
Other comprehensive income
 
 1
 1
Common stock issuances, including dividend reinvestments and employee benefits121
 
 
 121
Common stock dividends
 (87) 
 (87)
Balance at September 30, 2016$849
 $738
 $
 $1,587
        
Balance at December 31, 2016$860
 $812
 $
 $1,672
Net income
 76
 
 76
Transfer of ownership interest of certain equity method investees to parent
 (149) 
 (149)
Balance at September 30, 2017$860
 $739
 $
 $1,599


PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements (Unaudited)


Index to Combined Notes to Condensed Consolidated Financial Statements
The unaudited notes to the condensed consolidated financial statements that follow are a combined presentation. The following list indicates the registrants to which the footnotes apply.
 Applicable Notes
Registrant1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Duke Energy Corporation                  
Duke Energy Carolinas, LLC                     
Progress Energy, Inc.                    
Duke Energy Progress, LLC                     
Duke Energy Florida, LLC                     
Duke Energy Ohio, Inc.                    
Duke Energy Indiana, LLC                     
Piedmont Natural Gas Company, Inc.                  
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, (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances and (iii) the Piedmont registrant not included in the consolidated Duke Energy results for the three and nine months ended September 30, 2016, as Piedmont results were not consolidated by Duke Energy until after the acquisition date of October 3, 2016.
1. ORGANIZATION AND BASIS OF PRESENTATION
NATURE OF OPERATIONS AND BASIS OF CONSOLIDATION
Duke Energy Corporation (collectively with its subsidiaries, Duke Energy) is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the Federal Energy Regulatory Commission (FERC). Duke Energy operates in the United States (U.S.) primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants, including Duke Energy Carolinas, LLC (Duke Energy Carolinas); Progress Energy, Inc. (Progress Energy); Duke Energy Progress, LLC (Duke Energy Progress); Duke Energy Florida, LLC (Duke Energy Florida); Duke Energy Ohio, Inc. (Duke Energy Ohio), Duke Energy Indiana, LLC (Duke Energy Indiana) and Piedmont Natural Gas Company, Inc. (Piedmont). When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate subsidiary registrants (collectively referred to as the Subsidiary Registrants), which, along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
On October 3, 2016, Duke Energy completed the acquisition of Piedmont. Piedmont's results of operations and cash flows are included in the accompanying condensed consolidated financial statements of Duke Energy for the three and nine months ended March 31,September 30, 2017, but not for the three and nine months ended March 31,September 30, 2016, as Piedmont's earnings and cash flows are only included in Duke Energy's consolidated results subsequent to the acquisition date. 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 National Methanol Company (NMC), was completed through two transactions including a sale of assets in Brazil to China Three Gorges (Luxembourg) Energy S.à.r.l. (China Three Gorges) and a sale of Duke Energy's remaining Latin American assets in Peru, Chile, Ecuador, Guatemala, El Salvador and Argentina to ISQ Enerlam Aggregator, L.P. and Enerlam (UK) Holding Ltd. (I Squared Capital) (collectively, the International Disposal Group). See Note 2 for additional information on the sale of International Energy.
The results of operations of the International Disposal Group have been classified as Discontinued Operations on the Condensed 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 Condensed Consolidated Financial Statements exclude amounts related to discontinued operations. See Note 2 for additional information.
These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries where the respective Duke Energy Registrants have control. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.
Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas is subject to the regulatory provisions of the North Carolina Utilities Commission (NCUC), Public Service Commission of South Carolina (PSCSC), U.S. Nuclear Regulatory Commission (NRC) and FERC.
Progress Energy is a public utility holding company headquartered in Raleigh, North Carolina, subject to regulation by FERC. Progress Energy conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida.
Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida is subject to the regulatory provisions of the Florida Public Service Commission (FPSC), NRC and FERC.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the energy price is recovered from retail customers and recorded in Operating Revenues on the Condensed Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky, Inc. (Duke Energy Kentucky). References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the Public Utilities Commission of Ohio (PUCO), Kentucky Public Service Commission (KPSC) and FERC.
Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana is subject to the regulatory provisions of the Indiana Utility Regulatory Commission (IURC) and FERC.
Piedmont is a regulated public utility primarily engaged in the distribution of natural gas in portions of North Carolina, South Carolina and Tennessee. Piedmont is also invested in joint venture, energy-related businesses, including regulated interstate natural gas transportation and storage and intrastate natural gas transportation businesses. Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, Tennessee Public Utility Commission (formerly the Tennessee Regulatory Authority) (TPUC) and FERC.
BASIS OF PRESENTATION
These Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the U.S. for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all information and notes required by GAAP in the U.S. for annual financial statements. Since the interim Condensed Consolidated Financial Statements and Notes do not include all information and notes required by GAAP in the U.S. for annual financial statements, the Condensed Consolidated Financial Statements and other information included in this quarterly report should be read in conjunction with the Consolidated Financial Statements and Notes in the Duke Energy Registrants’ combined Annual Report on Form 10-K for the year ended December 31, 2016, and the Consolidated Financial Statements and Notes in the Piedmont Annual Report on Form 10-K10‑K for the year ended October 31, 2016.
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) as of December 31, 2016, for the transition period from November 1, 2016, to December 31, 2016.
The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Condensed Consolidated Financial Statements. However, none of the registrants make any representations as to information related solely to Duke Energy or the subsidiaries of Duke Energy other than itself.
These Condensed Consolidated Financial Statements, in the opinion of the respective companies’ management, reflect all normal recurring adjustments necessary to fairly present the financial position and results of operations of each of the Duke Energy Registrants. Amounts reported in Duke Energy’s interim Condensed Consolidated Statements of Operations and each of the Subsidiary Registrants’ interim Condensed Consolidated Statements of Operations and Comprehensive Income are not necessarily indicative of amounts expected for the respective annual periods due to effects of seasonal temperature variations on energy consumption, regulatory rulings, timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices and other factors.
In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform to the current year presentation.
UNBILLED REVENUE
Revenues on sales of electricity and natural gas are recognized when service is provided or the product is delivered. Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy and 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, meter reading schedules, and the impact of weather normalization or margin decoupling mechanisms.
Unbilled revenues are included within Receivables and Receivables of variable interest entities (VIEs) on the Condensed Consolidated Balance Sheets as shown in the following table.
(in millions)March 31, 2017
 December 31, 2016
September 30, 2017
 December 31, 2016
Duke Energy$724
 $831
$771
 $831
Duke Energy Carolinas296
 313
307
 313
Progress Energy151
 161
216
 161
Duke Energy Progress84
 102
113
 102
Duke Energy Florida67
 59
103
 59
Duke Energy Ohio2
 2
2
 2
Duke Energy Indiana27
 32
29
 32
Piedmont38
 77
4
 77

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Additionally, Duke Energy Ohio and Duke Energy Indiana sell nearly all of their retail accounts receivable to an affiliate, Cinergy Receivables Company, LLC (CRC), on a revolving basis. These transfers of receivables are accounted for as sales and include receivables for unbilled revenues. Accordingly, the receivables sold are not reflected on the Condensed Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 1213 for further information. These receivables for unbilled revenues are shown in the table below.
(in millions)March 31, 2017
 December 31, 2016
September 30, 2017
 December 31, 2016
Duke Energy Ohio$69
 $97
$70
 $97
Duke Energy Indiana106
 123
119
 123
AMOUNTS ATTRIBUTABLE TO CONTROLLING INTERESTS
Duke Energy's amount of IncomeFor the three and nine months ended September 30, 2017, the Loss from Discontinued Operations, net of tax presented on theDuke Energy's Condensed Consolidated Statements of Operations for the three months ended March 31, 2016, includes amountsis entirely attributable to noncontrolling interest.controlling interests. The following table presents Net Income Attributable to Duke Energy Corporation for continuing operations and discontinued operations.operations for the three and nine months ended September 30, 2016.
Three Months EndedThree Months Ended Nine Months Ended
(in millions)March 31, 2016September 30, 2016 September 30, 2016
Income from Continuing Operations$577
$1,001
 $2,202
Income from Continuing Operations Attributable to Noncontrolling Interests3
2
 5
Income from Continuing Operations Attributable to Duke Energy Corporation$574
$999
 $2,197
Income from Discontinued Operations, net of tax$122
$180
 $190
Income from Discontinued Operations Attributable to Noncontrolling Interests, net of tax2
3
 8
Income from Discontinued Operations Attributable to Duke Energy Corporation, net of tax$120
$177
 $182
Net Income$699
$1,181
 $2,392
Net Income Attributable to Noncontrolling Interests5
5
 13
Net Income Attributable to Duke Energy Corporation$694
$1,176
 $2,379
INVENTORY
Inventory is used for operations and is recorded primarily using the average cost method. Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Materials and supplies are recorded as inventory when purchased and subsequently charged to expense or capitalized to property, plant and equipment when installed. Inventory, including excess or obsolete inventory, is written-down to the lower of cost or market value. Once inventory has been written-down, it creates a new cost basis for the inventory that is not subsequently written-up. Provisions for inventory write-offs were not material for the three months ended March 31,at September 30, 2017, and December 31, 2016. The components of inventory are presented in the tables below.
March 31, 2017September 30, 2017
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Materials and supplies$2,328
 $766
 $1,122
 $780
 $341
 $85
 $315
 $2
$2,335
 $767
 $1,132
 $780
 $351
 $83
 $312
 $2
Coal724
 248
 297
 162
 135
 17
 161
 
581
 197
 231
 130
 101
 17
 136
 
Natural gas, oil and other fuel314
 37
 233
 111
 123
 16
 2
 27
349
 36
 221
 108
 114
 39
 2
 51
Total inventory$3,366
 $1,051
 $1,652
 $1,053
 $599
 $118
 $478
 $29
$3,265
 $1,000
 $1,584
 $1,018
 $566
 $139
 $450
 $53
December 31, 2016  December 31, 2016
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Materials and supplies$2,374
 $767
 $1,167
 $813
 $354
 $84
 $312
 $1
$2,374
 $767
 $1,167
 $813
 $354
 $84
 $312
 $1
Coal774
 251
 314
 148
 166
 19
 190
 
774
 251
 314
 148
 166
 19
 190
 
Natural gas, oil and other fuel374
 37
 236
 115
 121
 34
 2
 65
374
 37
 236
 115
 121
 34
 2
 65
Total inventory$3,522
 $1,055
 $1,717
 $1,076
 $641
 $137
 $504
 $66
$3,522
 $1,055
 $1,717
 $1,076
 $641
 $137
 $504
 $66
EXCISE TAXES
Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Otherwise, excise taxes are accounted for net.on a net basis.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Excise taxes accounted for on a gross basis as both operating revenues and property and other taxes on the Condensed Consolidated Statements of Operations were as follows.
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
2017
 2016
 2017
 2016
Duke Energy$91

$91
$107

$107

$289

$285
Duke Energy Carolinas9
 8
9
 6
 27
 21
Progress Energy46
 47
67
 65
 168
 161
Duke Energy Progress5
 5
5
 4
 14
 13
Duke Energy Florida41
 42
62
 61
 154
 148
Duke Energy Ohio28
 28
24
 26
 75
 77
Duke Energy Indiana7
 8
6
 10
 16
 26
Piedmont1
 1
1
 1
 3
 2
NEW ACCOUNTING STANDARDS
The new accounting standards adopted for 2017 and 2016 had no material impact on the presentation or results of operations, cash flows or financial position of the Duke Energy Registrants. While immaterial, adoption of the following accounting standardstandards had the most significant impact on the Duke Energy results of operations, cash flows and financial position for the threenine months ended March 31,September 30, 2017.
Stock-Based Compensation and Income Taxes. In Marchfirst quarter 2017, Duke Energy adopted Financial Accounting Standards Board (FASB) guidance, which revised the accounting for stock-based compensation and the associated income taxes. The adopted guidance changes certain aspects of accounting for stock-based payment awards to employees including the accounting for income taxes and classification on the Condensed Consolidated Statements of Cash Flows. The primary impact to Duke Energy as a result of implementing this guidance was a cumulative-effect adjustment to retained earnings for tax benefits not previously recognized and higheradditional income tax expense for the threenine months ended March 31,September 30, 2017. See the Duke Energy Condensed Consolidated Statements of Changes in Equity and Note 16 for further information.
Goodwill Impairment. In January 2017, the FASB issued revised guidance for the subsequent measurement of goodwill. Under the guidance, a company will recognize an impairment to goodwill for the amount by which a reporting unit's carrying value exceeds the reporting unit's fair value, not to exceed the amount of goodwill allocated to that reporting unit. Duke Energy early adopted this guidance for the 2017 annual goodwill impairment test.
The following new Accounting Standards Updates (ASUs) have been issued, but have not yet been adopted by Duke Energy, as of March 31,September 30, 2017.
Retirement Benefits. In March 2017, the FASB issued revised accounting guidance for the presentation of net periodic costs related to benefit plans. Current GAAP permits the aggregation of all the components of net periodic costs on the income statement and does not require the disclosure of the location of net periodic costs on the Condensed Consolidated Statement of Operations. Under the amended guidance, the service cost component of net periodic costs must be included within Operating income within the same line as other compensation expenses. All other components of net periodic costs must be outside of Operating income. In addition, the updated guidance permits only the service cost component of net periodic costs to be capitalized to Inventory or Property, Plant and Equipment. This represents a change from current GAAP, which permits all components of net periodic costs to be capitalized. These amendments should be applied retrospectively for the presentation of the various components of net periodic costs and prospectively for the change in eligible costs to be capitalized. The guidance allows for a practical expedient that permits a company to use amounts disclosed in prior-period financial statements as the estimation basis for applying the retrospective presentation requirements.
For Duke Energy, this guidance is effective for interim and annual periods beginning January 1, 2018. These amendments should be applied retrospectively for the presentation of the various components of net periodic costs and prospectively for the change in eligible costs to be capitalized. Duke Energy currently presents all of the components oftotal non-capitalized net periodic costs that are not capitalized within Operation, maintenance and other on the Condensed Consolidated Statement of Operations. UnderThe adoption of this updated guidance Duke Energy will retrospectively move allresult in a retrospective change to reclassify the presentation of the non-service cost (benefit) components of net periodic costs exceptto Other income and expenses. Duke Energy intends to utilize the practical expedient for retrospective presentation. The change in net periodic costs eligible for capitalization is applicable prospectively. Since Duke Energy’s service cost component is expected to be greater than the total net periodic costs, the change will result in increased capitalization of net periodic costs, higher Operation, maintenance and other and higher Other income and expenses. The resulting impact to Duke Energy is expected to be an immaterial increase in net income resulting from the limitation of eligible capitalization of net periodic costs to the service cost component, to below Operating income. However, Duke Energy will continue to presentwhich is larger than the service cost component not capitalized within Operation, maintenance and other as this line item includes other compensation expense. Duke Energy is currently evaluating the financial statement impact, if any, of adopting this standard and whether or not the practical expedient will be utilized.
Goodwill Impairment. In January 2017, the FASB issued revised guidance for subsequent measurement of goodwill. Under the guidance, a company will recognize an impairment to goodwill for the amount by which a reporting unit's carrying value exceeds the reporting unit's fair value, not to exceed the amount of goodwill allocated to that reporting unit. For Duke Energy, this guidance is effective for interim and annual periods beginning January 1, 2020. However, Duke Energy expects to early adopt this guidance on a prospective basis for the next interim or annual goodwill impairment test. Duke Energy does not expect adopting this guidance will have a material impact to its results of operations or financial position.total net periodic costs.
Revenue from Contracts with Customers. In May 2014, the FASB issued revised accounting guidance for revenue recognition from contracts with customers. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy has identified material revenue streams, which served as the basis for accounting analysis and documentation of the impact of this guidance on revenue recognition. The accounting analysis included reviewing representative contracts and tariffs for each material revenue stream. Most of Duke Energy’s revenue is expected to be in scope of the new guidance. The majority of our sales, including energy provided to residential customers, are from tariff offerings that provide natural gas or electricity without a defined contractual term (‘at-will’("at-will"). For such arrangements, Duke Energy expects that the revenue from contracts with customers will be equivalent to the electricity or natural gas supplied and billed in that period (including estimated billings). As such, Duke Energy does not expect that there will be a significant shift in the timing or pattern of revenue recognition for such sales.
Also included in the accounting analysis was the evaluation of certain long-term revenue streams including electric wholesale contracts and renewables power purchase agreements (PPAs) under this guidance. For such arrangements, Duke Energy does not expect material changes to the pattern of revenue recognition on the registrants. In addition, the power and utilities industry revenue recognition task force released several draft positions on specific industry issues in October 2017 for public comment. Duke Energy has been working closely with the industry task force and will be reviewing these updated positions to evaluate the impact, if any, on Duke Energy’s specific contracts and preliminary conclusions to date. The evaluation of other revenue streams is ongoing including long-term contractsalong with industrial customersconsideration of potential revisions to processes, policies and long-term purchase power agreements (PPA).controls, primarily related to evaluating supplemental disclosures required as a result of adopting this guidance. Some revenue arrangements, such as alternative revenue programs and certain PPAs accounted for as leases, are excluded from the scope of this guidance and, therefore, will be accounted for and evaluated for separate presentation and disclosure under other relevant accounting guidance.
Duke Energy continues to evaluate what information would be most useful for users of the financial statements, including information already provided in disclosures outside of the financial statement footnotes. These additional disclosures could include the disaggregation of revenues by geographic location, type of service, customer class or by duration of contract (‘at-will’("at-will" versus contracted revenue). Revenues from contracts with customers, revenue recognized under regulated operations accounting and revenue from lease accounting will also be disclosed.
Duke Energy intends to use the modified retrospective method of adoption effective January 1, 2018. ThisUnder the modified retrospective method of adoption, prior year reported results inare not restated and a cumulative-effect adjustment, that will beif applicable, is recorded to retained earnings as ofat January 1, 2018, as if the standard had always been in effect. Disclosures for 2018 willIn addition, disclosures, if applicable, include a comparison to what would have been reported for 2018 under the currentprevious revenue recognition rules in order to assist financial statement users in understanding how revenue recognition has changed as a result of this standard and to facilitate comparability with prior year reported results, which are not restated under the modified retrospective approach.approach as described above. Duke Energy also plans to utilize certain practical expedients including applying this guidance to open contracts at the date of adoption and recognizing revenues for certain contracts under the invoice practical expedient, which allows revenue recognition to be consistent with invoiced amounts (including estimated billings) provided certain criteria are met, including consideration of whether the invoiced amounts reasonably represent the value provided to customers. While the adoption of this guidance, including the cumulative-effect adjustment, is not expected to have a material impact on either the timing or amount of revenues recognized in Duke Energy's financial statements, Duke Energy anticipates additional disclosures around the nature, amount, timing and uncertainty of our revenues and cash flows arising from contracts with customers and will continue to evaluate the requirements, as well as any additional clarifying guidance that may be issued.
Leases. In February 2016, the FASB issued revised accounting guidance for leases. The core principle of this guidance is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet.
For Duke Energy, this guidance is effective for interim and annual periods beginning January 1, 2019, although it can be early adopted. The guidance is applied using a modified retrospective approach. Duke Energy is currently evaluating the financial statement impact of adopting this standard.standard and is continuing to monitor industry implementation issues, including easements, pole attachments and renewable PPAs. Other than an expected increase in assets and liabilities, the ultimate impact of the new standard has not yet been determined. Significant system enhancements, including additional processes and controls, may be required to facilitate the identification, tracking and reporting of potential leases based upon requirements of the new lease standard.
Statement of Cash Flows. In November 2016, the FASB issued revised accounting guidance to reduce diversity in practice for the presentation and classification of restricted cash on the statement of cash flows. Under the updated guidance, restricted cash and restricted cash equivalents will be included within beginning-of-period and end-of-period cash and cash equivalents on the statement of cash flows.
For Duke Energy, this guidance is effective for the interim and annual periods beginning January 1, 2018, although it can be early adopted.2018. The guidance will be applied using a retrospective transition method to each period presented. Upon adoption by Duke Energy, the revised guidance will result in a change to the amount of cash and cash equivalents and restricted cash explained when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior to adoption, the Duke Energy Registrants reflect changes in non-current restricted cash within Cash Flows from Investing Activities and changes in current restricted cash within Cash Flows from Operating Activities on the Condensed Consolidated Statement of Cash Flows.
Financial Instruments Classification and Measurement. In January 2016, the FASB issued revised accounting guidance for the classification and measurement of financial instruments. Changes in the fair value of all equity securities will be required to be recorded in net income. Current GAAP allows some changes in fair value for available-for-sale equity securities to be recorded in Accumulated other comprehensive income (AOCI). Additional disclosures will be required to present separately the financial assets and financial liabilities by measurement category and form of financial asset. An entity's equity investments that are accounted for under the equity method of accounting are not included within the scope of the new guidance.
For Duke Energy, the revised accounting guidance is effective for interim and annual periods beginning January 1, 2018, by recording a cumulative-effect adjustment to retained earnings as of January 1, 2018. This guidance is expected to have minimal impact on the Duke Energy Registrant's Condensed Consolidated Statements of Operations and Comprehensive Income as changes in the fair value of most of the Duke Energy Registrants' available-for-sale equity securities are deferred as regulatory assets or liabilities pursuant to accounting guidance for regulated operations.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





2. ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS
The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.
2016 Acquisition of Piedmont Natural Gas
On October 3, 2016, Duke Energy acquired all outstanding common stock of Piedmont for a total cash purchase price of $5.0 billion and assumed Piedmont's existing long-term debt, which had a fair value of approximately $2.0 billion at the time of the acquisition. The acquisition provides a foundation for Duke Energy to establish a broader, long-term strategic natural gas infrastructure platform to complement its existing natural gas pipeline investments and regulated natural gas business in the Midwest. In connection with the closing of the acquisition, Piedmont became a wholly owned subsidiary of Duke Energy.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Purchase Price Allocation
The purchase price allocation of the Piedmont acquisition is as follows:
(in millions) 
Current assets$497
Property, plant and equipment, net4,714
Goodwill3,353
Other long-term assets804
Total assets9,368
Current liabilities, including current maturities of long-term debt576
Long-term liabilities1,790
Long-term debt2,002
Total liabilities4,368
Total purchase price$5,000
The fair value of Piedmont's assets and liabilities werewas determined based on significant estimates and assumptions that are judgmental in nature, including the amount and timing of projected future cash flows, (including timing), discount rates reflecting risk inherent in the future cash flows and market prices of long-term debt.
The majority of Piedmont’s operations are subject to the rate-setting authority of the NCUC, the PSCSC and the TPUC and are accounted for pursuant to accounting guidance for regulated operations. The rate-setting and cost recovery provisions currently in place for Piedmont’s regulated operations provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. Thus, the fair value of Piedmont's assets and liabilities subject to these rate-setting provisions approximates the pre-acquisition carrying value and does not reflect any net valuation adjustments.
The significant assets and liabilities for which valuation adjustments were reflected within the purchase price allocation include the acquired equity method investments and long-term debt. The difference between the fair value and the pre-acquisition carrying value of long-term debt for regulated operations was recorded as a regulatory asset.
The excess of the purchase price over the fair value of Piedmont's assets and liabilities on the acquisition date was recorded as goodwill. The goodwill reflects the value paid by Duke Energy primarily for establishing a broader, long-term strategic natural gas infrastructure growth platform, an improved risk profile and expected synergies resulting from the combined entities.
Under Securities and Exchange Commission (SEC) regulations, Duke Energy elected not to apply push down accounting to the stand-alone Piedmont financial statements.
Accounting Charges Related to the AcquisitionOther Acquisition-Related Matters
Duke Energy incurred pretax nonrecurring transaction and integration costs associated with the acquisition of $16 million and $101 million for the three months ended March 31, 2017 and 2016, respectively. The 2016 amount includes $100 million of Interest Expense, which was driven by $93 million of unrealizedrecorded realized losses on forward-starting interest rate swaps related to the acquisition financing.financing of $22 million and $190 million for the three and nine months ended September 30, 2016, respectively. See Note 910 for additional information oninformation.
During the swaps.nine months ended September 30, 2017, Piedmont recorded a $7 million software impairment resulting from planned accounting system and process integration.
Pro Forma Financial Information
The following unaudited pro forma financial information reflects the combined results of operations of Duke Energy and Piedmont as if the merger had occurred as of January 1, 2016. The pro forma financial information excludes potential cost savings, intercompany revenues, Piedmont’s earnings from the equity method investment in SouthStar Energy Services, LLC (SouthStar) sold immediately prior to the merger, and after-tax nonrecurring transaction and integration costs incurred by Duke Energy and Piedmont of $63 million.$41 million and $161 million for the three and nine months ended September 30, 2016, respectively. See Note 3 for additional information on Piedmont's sale of SouthStar.
This information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Duke Energy.
 Three Months Ended
(in millions)March 31, 2016
Operating Revenues$5,840
Net Income Attributable to Duke Energy Corporation832

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





This information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Duke Energy.
 Three Months Ended Nine Months Ended
(in millions)September 30, 2016 September 30, 2016
Operating Revenues$6,713
 $17,927
Net Income Attributable to Duke Energy Corporation1,180
 2,552
DISPOSITIONS
2016 Sale of International Energy
In December 2016, Duke Energy sold its International Energy businesses, excluding the equity method investment in NMC (the International Disposal Group), in two separate transactions. Duke Energy sold its Brazilian business to China Three Gorges for approximately $1.2 billion, including the assumption of debt, and its remaining Central and South American businesses to I Squared Capital in a deal also valued at approximately $1.2 billion, including the assumption of debt. The transactions generated cash proceeds of $1.9 billion, excluding transaction costs, which were primarily used to reduce Duke Energy holding company debt.
The following table presents the results of the International Disposal Group, which are included in (Loss) Income from Discontinued Operations, net of tax in Duke Energy's Condensed Consolidated Statements of Operations. 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.
Three Months EndedThree Months Ended Nine Months Ended
(in millions)March 31, 2016September 30, 2016 September 30, 2016
Operating Revenues$246
$245
 $761
Fuel used in electric generation and purchased power47
60
 177
Cost of natural gas11
11
 34
Operation, maintenance and other71
85
 240
Depreciation and amortization22
18
 62
Property and other taxes3
1
 6
Impairment charges (a)

 194
Loss on Sales of Other Assets and Other, net(3) (2)
Other Income and Expenses, net10
14
 35
Interest Expense22
19
 63
Income before income taxes80
62
 18
Income tax benefit(a)
(39)
Income tax expense (benefit) (b)
4
 (48)
Income from discontinued operations of the International Disposal Group119
58
 66
Income from discontinued operations of other businesses3
Income from discontinued operations of other businesses(c)
122
 124
Income from Discontinued Operations, net of tax$122
$180
 $190
(a)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 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.
(b)Includes an income tax benefit of $95 million for the nine months ended September 30, 2016, related to historical undistributed foreign earnings. See Note 1617 for additional information.
(c)Duke Energy recognized an income tax benefit of $122 million resulting from immaterial out of period deferred tax liability adjustments for the three and nine months ended September 30, 2016. The amount includes $34 million recorded at Duke Energy Ohio.
Duke Energy has elected not to separately disclose discontinued operations on the Condensed Consolidated Statements of Cash Flows. The following table summarizes Duke Energy's cash flows from discontinued operations related to the International Disposal Group.
Three Months EndedNine Months Ended
(in millions)March 31, 2016September 30, 2016
Cash flows provided by (used in):  
Operating activities$85
$201
Investing activities(9)(35)

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Other Sale RelatedSale-Related Matters
During 2017, Duke Energy will provideprovided certain transition services to China Three Gorges and I Squared Capital for a period not to extend beyond November 2017 and December 2017, respectively.Capital. Cash flows related to providing the transition services arewere not material. In addition,material and as of September 30, 2017, all transition services related to the International Disposal Group ended. Additionally, Duke Energy will reimburse China Three Gorges and I Squared Capital for all tax obligations arising from the period preceding consummation on the transactions, totaling approximately $78 million. Duke Energy has not recorded any other liabilities, contingent liabilities or indemnifications related to the International Disposal Group.
3. BUSINESS SEGMENTS
Operating segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business. Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income includes intercompany revenues and expenses that are eliminated inon the Condensed Consolidated Financial Statements. Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost.
Duke Energy
Due to the Piedmont acquisition and the sale of International Energy in the fourth quarter of 2016, Duke Energy's segment structure has beenwas realigned to include the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. Prior period information has been recast to conform to the current segment structure. See Note 2 for further information on the Piedmont and International Energy transactions.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The Electric Utilities and Infrastructure segment includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The regulated electric utilities conduct operations through the Subsidiary Registrants that are substantially all regulated and, accordingly, qualify for regulatory accounting treatment. Electric Utilities and Infrastructure also includes Duke Energy's electric transmission infrastructure investments.
The Gas Utilities and Infrastructure segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky, and Duke Energy's natural gas storage and mid-streammidstream pipeline investments. Gas Utilities and Infrastructure's operations are substantially all regulated and, accordingly, qualify for regulatory accounting treatment.
Commercial Renewables is primarily comprised of nonregulated utility scale wind and solar generation assets located throughout the U.S.
The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of unallocated corporate interest expense, unallocated corporate costs, contributions to the Duke Energy Foundation and the operations of Duke Energy’s wholly owned captive insurance subsidiary, Bison Insurance Company Limited (Bison). Other also includes Duke Energy's 25 percent interest in NMC, a large regional producer of methyl tertiary butyl ether (MTBE) located in Saudi Arabia. In October 2017, Duke Energy's economic ownership interest in NMC decreased from 25 percent to 17.5 percent. The investment in NMC is accounted for under the equity method of accounting.
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
 Three Months Ended March 31, 2017
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Unaffiliated revenues$4,939
 $648
 $128
 $5,715
 $14
 $
 $5,729
Intersegment revenues8
 22
 
 30
 19
 (49) 
Total revenues$4,947
 $670
 $128
 $5,745
 $33
 $(49) $5,729
Segment income (loss)$635
 $133
 $25
 $793
 $(77) $
 $716
Add back noncontrolling interests            1
Net income            $717
Segment assets$115,766
 $10,866
 $4,400
 $131,032
 $2,898
 $178
 $134,108
Three Months Ended March 31, 2016Three Months Ended September 30, 2017
Electric
 Gas
   Total
      Electric
 Gas
   Total
      
Utilities and
 Utilities and
 Commercial
 Reportable
      Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Unaffiliated revenues$5,081
 $169
 $114
 $5,364
 $13
 $
 $5,377
$6,122
 $249
 $95
 $6,466
 $16
 $
 $6,482
Intersegment revenues8
 1
 
 9
 16
 (25) 
7
 23
 
 30
 19
 (49) 
Total revenues$5,089
 $170
 $114
 $5,373
 $29
 $(25) $5,377
$6,129
 $272
 $95
 $6,496
 $35
 $(49) $6,482
Segment income (loss)(a)(c)
$664
 $32
 $26
 $722
 $(148) $
 $574
$1,020
 $19
 $(49) $990
 $(34) $
 $956
Add back noncontrolling interests            3
            1
Income from discontinued operations, net of tax            122
Loss from discontinued operations, net of tax            (2)
Net income            $699
            $955
Segment assets$118,323
 $11,361
 $4,216
 $133,900
 $2,240
 $185
 $136,325

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





 Three Months Ended September 30, 2016
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Unaffiliated revenues$6,332
 $89
 $139
 $6,560
 $16
 $
 $6,576
Intersegment revenues8
 
 
 8
 16
 (24) 
Total revenues$6,340
 $89
 $139
 $6,568
 $32
 $(24) $6,576
Segment income (loss)(a)(c)
$1,189
 $15
 $(24) $1,180
 $(181) $
 $999
Add back noncontrolling interests            2
Income from discontinued operations, net of tax(d)
            180
Net income            $1,181
 Nine Months Ended September 30, 2017
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Unaffiliated revenues$16,211
 $1,175
 $333
 $17,719
 $47
 $
 $17,766
Intersegment revenues23
 68
 
 91
 56
 (147) 
Total revenues$16,234
 $1,243
 $333
 $17,810
 $103
 $(147) $17,766
Segment income (loss)(a)(b)(c)
$2,384
 $179
 $2
 $2,565
 $(205) $
 $2,360
Add back noncontrolling interests            5
Loss from discontinued operations, net of tax            (4)
Net income            $2,361
 Nine Months Ended September 30, 2016
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Unaffiliated revenues$16,406
 $355
 $365
 $17,126
 $40
 $
 $17,166
Intersegment revenues24
 3
 
 27
 51
 (78) 
Total revenues$16,430
 $358
 $365
 $17,153
 $91
 $(78) $17,166
Segment income (loss)(a)(c)
$2,557
 $63
 $13
 $2,633
 $(436) $
 $2,197
Add back noncontrolling interests            5
Income from discontinued operations, net of tax(d)
            190
Net income            $2,392
(a)Other includes $74 million of after-tax costs to achieve mergers, including losses on forward-starting interest rate swaps related to the Piedmont acquisition financing.acquisition. See Note 9Notes 2 and 10 for additional information.
(b)For the three and nine months ended September 30, 2017, Electric Utilities and Infrastructure includes an impairment charge related to the Florida settlement agreement. See Note 4 for additional information.
(c)Commercial Renewables includes impairment charges related to certain wind projects. See discussion below.
(d)For the three and nine months ended September 30, 2016, Income from Discontinued Operations includes an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. See Note 2 for additional information.
During the three and nine months ended September 30, 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 Condensed 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 non-contracted wind project being located in a market that has experienced declining market pricing during 2017 and declining long-term forecasted energy and capacity prices, driven by low natural gas prices, additional renewable generation placed in service and lack of significant load growth.
During the three and nine months ended September 30, 2016, Duke Energy recorded an other than temporary impairment (OTTI) of certain Commercial Renewables wind project investments accounted for under the equity method. The $71 million pretax impairment was recorded within Equity in earnings (losses) of unconsolidated affiliates on Duke Energy's Condensed Consolidated Statements of Operations. The other than temporary decline in value of these investments was primarily attributable to a sustained decline in market pricing where the wind investments are located, the continued projected net losses for the projects and a reduction in the projected cash distributions to the class of investment owned by Duke Energy.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy Ohio
Duke Energy Ohio has two reportable operating segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure.
Electric Utilities and Infrastructure transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. Gas Utilities and Infrastructure transports and sells natural gas in portions of Ohio and northernNorthern Kentucky. It conducts 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, which is primarily comprised of governance costs allocated by its parent, Duke Energy, and revenues and expenses related to Duke Energy Ohio's contractual arrangement to buy power from the Ohio Valley Electric Corporation's (OVEC) power plants. See Note 9 for additional information on related party transactions.
 Three Months Ended September 30, 2017
 Electric
 Gas
 Total
    
 Utilities and
 Utilities and
 Reportable
    
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Consolidated
Total revenues$371
 $90
 $461
 $10
 $471
Segment income (loss)50
 14
 64
 (8) 56
Loss from discontinued operations, net of tax        (1)
Net income        55
Segment assets$5,006
 $2,708
 $7,714
 $51
 $7,765
 Three Months Ended September 30, 2016
 Electric
 Gas
 Total
    
 Utilities and
 Utilities and
 Reportable
    
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Consolidated
Total revenues$390
 $89
 $479
 $10
 $489
Segment income (loss)52
 12
 64
 (9) 55
Income from discontinued operations, net of tax(a)
        34
Net income        $89
 Nine Months Ended September 30, 2017
 Electric
 Gas
 Total
    
 Utilities and
 Utilities and
 Reportable
    
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Consolidated
Total revenues$1,036
 $360
 $1,396
 $30
 $1,426
Segment income (loss)96
 56
 152
 (24) 128
Loss from discontinued operations, net of tax        (1)
Net income        $127
 Nine Months Ended September 30, 2016
 Electric
 Gas
 Total
    
 Utilities and
 Utilities and
 Reportable
    
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Consolidated
Total revenues$1,053
 $358
 $1,411
 $22
 $1,433
Segment income (loss)107
 57
 164
 (29) 135
Income from discontinued operations, net of tax(a)
        36
Net income        $171
(a)For the three and nine months ended September 30, 2016, Income from Discontinued Operations includes an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. See Note 2 for additional information.
DUKE ENERGY CAROLINAS, PROGRESS ENERGY, DUKE ENERGY PROGRESS, DUKE ENERGY FLORIDA, DUKE ENERGY INDIANA AND PIEDMONT
Piedmont has one reportable segment, Gas Utilities and Infrastructure, which transports and sells natural gas. The remainder of Piedmont's operations is presented as Other, which is comprised of certain unallocated corporate costs, including acquisition-related expenses, and earnings from Piedmont's equity method investment in SouthStar prior to its sale. Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016. Piedmont's income, net of tax, from SouthStar for the three and nine months ended September 30, 2016, was $2 million and $12 million, respectively.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Other is primarily comprised of governance costs allocated by its parent, Duke Energy, and revenues and expenses related to Duke Energy Ohio's contractual arrangement to buy power from the Ohio Valley Electric Corporation's (OVEC) power plants. See Note 8 for additional information on related party transactions.
 Three Months Ended March 31, 2017
 Electric
 Gas
 Total
      
 Utilities and
 Utilities and
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Eliminations
 Consolidated
Total revenues$337
 $170
 $507
 $11
 $
 $518
Segment income (loss)/Net Income24
 26
 50
 (8) 
 42
Segment assets4,856
 2,696
 7,552
 71
 (14) 7,609
 Three Months Ended March 31, 2016
 Electric
 Gas
 Total
      
 Utilities and
 Utilities and
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Eliminations
 Consolidated
Total revenues$340
 $170
 $510
 $6
 $
 $516
Segment income (loss)$36
 $31
 $67
 $(9) $(1) $57
Income from discontinued operations, net of tax          2
Net income          $59
DUKE ENERGY CAROLINAS, PROGRESS ENERGY, DUKE ENERGY PROGRESS, DUKE ENERGY FLORIDA, DUKE ENERGY INDIANA AND PIEDMONT
Piedmont has one reportable segment, Gas Utilities and Infrastructure, which transports and sells natural gas. The remainder of Piedmont's operations is classified as Other. While not considered a reportable segment, Other primarily consists of certain unallocated corporate costs, including acquisition-related expenses, and Piedmont's equity method investment in SouthStar Energy Services, LLC (SouthStar) prior to its sale. Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016. Piedmont's income, net of tax, from SouthStar for the three months ended March 31, 2016 was $7 million.
The remaining Subsidiary Registrants each have one reportable operating segment, Electric Utilities and Infrastructure, which generates, transmits, distributes and sells electricity. The remainder of each company's operations is classifiedpresented as Other. While not considered a reportable segment for any of these companies, Other, consistswhich is comprised of certain unallocated corporate costs. Other for Progress Energy also includes interest expense on corporate debt instruments of $55$56 million and $56$167 million for the three and nine months ended March 31,September 30, 2017, respectively, and $55 million and $166 million for the three and nine months ended September 30, 2016, respectively. The following table summarizes the net loss(loss) income of Other for each of these entities.
Three Months EndedThree Months EndedNine Months Ended
March 31,September 30,
(in millions)2017
 2016
2017
 2016
2017
 2016
Duke Energy Carolinas$(6) $(17)$(6) $(16)$(18) $(50)
Progress Energy(43) (49)(32) (45)(120) (139)
Duke Energy Progress(3) (8)(4) (10)(11) (26)
Duke Energy Florida(2) (4)(2) (5)(7) (14)
Duke Energy Indiana(2) (2)(2) (3)(5) (10)
Piedmont(4) 6
(5) 
(18) 7
The assets at Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana are substantially all included within the Electric Utilities and Infrastructure segment at March 31,September 30, 2017. The assets at Piedmont are substantially all included within the Gas Utilities and Infrastructure segment at March 31,September 30, 2017.
4. REGULATORY MATTERS
RATE RELATEDRATE-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.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy Carolinas and Duke Energy Progress
Ash Basin Closure Costs Deferral
On December 30, 2016, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC seeking an accounting order authorizing deferral of certain costs incurred in connection with federal and state environmental remediation requirements related to the permanent closure of ash basins and other ash storage units at coal-fired generating facilities that have provided or are providing generation to customers located in North Carolina. Initial comments were received in March 2017, and reply comments were filed on April 19, 2017. The NCUC has consolidated Duke Energy Carolinas' and Duke Energy Progress’ coal ash deferral requests into their respective general rate case dockets for decision. See "2017 North Carolina Rate Case" sections below for additional discussion. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Carolinas
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million, which represents an approximate 13.6 percent increase in annual base revenues. The rate increase is driven by capital investments subsequent to the previous base rate case, including grid improvement projects, investments in customer service technologies, costs of complying with coal combustion residuals (CCR) regulations and the North Carolina Coal Ash Management Act of 2014 (Coal Ash Act) and recovery of costs related to licensing and development of the William States Lee III Nuclear Station (Lee Nuclear Station) discussed below. An evidentiary hearing is scheduled to begin on February 19, 2018. Duke Energy Carolinas cannot predict the outcome of this matter.
Lincoln County Combustion Turbine Addition
On June 12, 2017, Duke Energy Carolinas filed an application with the NCUC for a Certificate of Public Convenience and Necessity (CPCN) to construct and operate a new 402-megawatt (MW) simple cycle advanced combustion turbine natural gas-fueled electric generating unit at its existing Lincoln County site. The request also included construction of related transmission and natural gas pipeline interconnection facilities. If approved, construction would begin in 2018 with an extended commissioning and validation period from 2020-2024 and an estimated commercial operation date in 2024. An evidentiary hearing was held in August 2017. Briefs and proposed orders were filed on October 9, 2017. A decision is expected by the end of 2017. Duke Energy Carolinas cannot predict the outcome of this matter.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





William States Lee Combined Cycle Facility
On April 9, 2014, the PSCSC granted Duke Energy Carolinas and North Carolina Electric Membership Corporation (NCEMC) a Certificate of Environmental Compatibility and Public Convenience and Necessity (CECPCN) for the construction and operation of a 750-MW combined-cycle natural gas-fired generating plant at Duke Energy Carolinas' existing William States Lee Generating Station in Anderson, South Carolina. Duke Energy Carolinas began construction in July 2015 and estimates a cost to build of $600 million for its share of the facility, including AFUDC.allowance for funds used during construction (AFUDC). The project is expected to be commercially available in late 2017. NCEMC will own approximately 13 percent of the project. On July 3, 2014, the South Carolina Coastal Conservation League (SCCL) and Southern Alliance for Clean Energy (SACE) jointly filed a Notice of Appeal with the Court of Appeals of South Carolina (S.C. Court of Appeals) seeking the court's review of the PSCSC's decision, claiming the PSCSC did not properly consider a request related to a proposed solar facility prior to granting approval of the CECPCN. The S.C. Court of Appeals affirmed the PSCSC's decision on February 10, 2016, and on March 24, 2016, denied a request for rehearing filed by SCCL and SACE. On April 21, 2016, SCCL and SACE petitioned the South Carolina Supreme Court for review of the S.C. Court of Appeals decision. On March 24, 2017, the South Carolina Supreme Court denied the request for review, thus concluding the matter.
William States Lee III Nuclear Station
In December 2007, Duke Energy Carolinas applied to the NRC for combined operating licenses (COLs) for two Westinghouse Electric Company (Westinghouse) AP1000 reactors for the proposed William States Lee III Nuclear Station to be located at a site in Cherokee County, South Carolina. The NCUC and PSCSC have concurred with the prudency of Duke Energy Carolinas decisions to incur certain project development and preconstruction costs through several separately issued orders through 2011, 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.
On March 29, 2017, Westinghouse filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York. On May 15, 2017, the NCUC issued an order requiring Duke Energy Carolinas to provide information regarding potential impacts of the Westinghouse bankruptcy on the Lee Nuclear Station, as well as Duke Energy Carolinas' plans for cost recovery and additional financial information regarding the project. As part of its 2017 North Carolina Rate Case discussed above, Duke Energy Carolinas is monitoringseeking NCUC approval to cancel the development of the Lee Nuclear Station project due to the Westinghouse bankruptcy proceedings to assessfiling and other market activity and is requesting recovery of incurred licensing and development costs. Duke Energy Carolinas will maintain the impact it will have onlicense issued by the future constructionNRC in December 2016. Duke Energy Carolinas cannot predict the outcome of nuclear plants.this matter.
Duke Energy Progress
2017 North Carolina Rate Case
On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which represents an approximate 14.9 percent increase in annual base revenues. 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. Intervenors in the case filed testimony in October 2017 and Duke Energy Progress' responses are due November 6, 2017. An evidentiary hearing is scheduled to begin November 20, 2017. Duke Energy Progress cannot predict the outcome of this matter.
Storm Cost Deferral Filing
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. Duke Energy Progress proposed in the filing to true-up the total costs quarterly through August 2017. The currentfinal estimate of incremental operation and maintenance and capital costs isof $116 million.million was filed with the NCUC in September 2017. On March 15, 2017, the NCUC Public Staff filed comments supporting deferral of a portion of Duke Energy Progress’ requested amount. Duke Energy Progress filed reply comments on April 12, 2017. On July 10, 2017, the NCUC consolidated Duke Energy Progress' storm deferral request into the Duke Energy Progress rate case docket for decision. See "2017 North Carolina Rate Case" for additional discussion. 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 of the existing Asheville coal-fired plant, the construction of two 280‑MW combined-cycle natural gas plants having dual fuel capability, with the option to build a third natural gas simple cycle unit in 2023 based upon the outcome of initiatives to reduce the region's power demand. The plan also included upgrades to existing transmission lines and substations, installation of solar generation and a pilot battery storage project. These investments will be made within the next seven years. Duke Energy Progress is also working with the local natural gas distribution company to upgrade an existing natural gas pipeline to serve the natural gas plant.
On March 28, 2016, the NCUC issued an order approving a Certificate of Public Convenience and Necessity (CPCN)CPCN for the new combined-cycle natural gas plants, but denying the CPCN for the contingent simple cycle unit without prejudice to Duke Energy Progress to refile for approval in the future. On March 28, 2017, Duke Energy Progress filed an annual progress report for the construction of the combined-cycle plants with the NCUC, with an estimated cost of $893 million. Site preparation activities for the combined-cycle plants are underway and construction of these plants is scheduled to begin in fall 2017, with an expected in-service date in late 2019. Duke Energy Progress plans to file for future approvals related to the proposed solar generation and pilot battery storage project.
The carrying value of the 376-MW Asheville coal-fired plant, including associated ash basin closure costs, of $471$405 million and $492 million areis included in Generation facilities to be retired, net on Duke Energy Progress' Condensed Consolidated Balance SheetSheets as of March 31,September 30, 2017, and December 31, 2016, respectively.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy Florida
Hines Chiller Uprate ProjectHurricane Irma Storm Damage
In September 2017, all of Duke Energy Florida’s service territory was impacted by Hurricane Irma, which caused significant damage, resulting in approximately 1.3 million customers experiencing outages. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. These estimates could change as Duke Energy Florida receives additional information on actual costs. After depleting any existing storm reserves, which were approximately $60 million before Hurricane Irma, Duke Energy Florida is permitted to petition the FPSC for recovery of additional incremental operation and maintenance costs resulting from the storm and to replenish the storm reserve to approximately $132 million for retail customers. Duke Energy Florida plans to make this petition by the end of 2017. At September 30, 2017, Duke Energy Florida's Condensed Consolidated Balance Sheets included approximately $400 million of recoverable costs under the FPSC's storm rule in Regulatory assets within Other Noncurrent Assets related to deferred Hurricane Irma storm costs. This amount is in addition to the storm reserve replenishment discussed above as part of Duke Energy Florida's petition to the FPSC.
2017 Second Revised and Restated Settlement Agreement
On FebruaryOctober 25, 2017, the FPSC approved a 2017 Second Revised and Restated Settlement Agreement (2017 Settlement) filed by Duke Energy Florida. The 2017 Settlement replaces and supplants the Revised and Restated Stipulation and Settlement Agreement approved in November 2013 (2013 Settlement). The 2017 Settlement extends the base rate case stay-out provision from the 2013 Settlement through the end of 2021 unless actual or projected return on equity falls below 9.5 percent; however, Duke Energy Florida is allowed a multiyear increase to its base rates of $67 million per year in 2019, 2020 and 2021, as well as base rate increases for solar generation. In addition to carrying forward the provisions contained in the 2013 Settlement related to the Crystal River 1 and 2 coal units and future generation needs in Florida, the 2017 Settlement contains provisions related to future investments in solar and renewable energy technology, future investments in AMI technology as well as recovery of existing meters, impacts of potential tax reform, an electric vehicle charging station pilot program, as well as the termination of the proposed Levy Nuclear Project discussed below. As part of the 2017 Settlement, Duke Energy Florida will not move forward with building the Levy nuclear plant and recorded an pretax impairment charge of approximately $135 million in third quarter 2017 to write off all unrecovered Levy Nuclear Project costs, including the COL.
The 2017 Settlement includes provisions to recover 2017 under-recovered fuel costs of approximately $196 million over a 24-month period beginning in January 2018. On September 1, 2017, Duke Energy Florida filed a petition seeking approval to include in base ratessubmitted Alternate 2018 Fuel and Capacity clause projection filings consistent with the revenue requirement for a Chiller Uprate Project (Uprate Project) atterms of the Hines2017 Settlement. The updated capacity filing reflects the removal of all Levy costs. The FPSC approved Duke Energy Complex. The Uprate Project was placed into service in March 2017 at a costFlorida's 2018 Alternate projection filings on October 25, 2017. A final order is expected by the end of approximately $150 million. The retail revenue requirement is approximately $19 million. On March 28, 2017, the FPSC issued an order approving the revenue requirement which were included in base rates for the first billing cycle of April 2017.
Levy Nuclear Project
On July 28, 2008, Duke Energy Florida applied to the NRC for COLs for two Westinghouse AP1000 reactors at Levy.Levy (Levy Nuclear Project). In 2008, the FPSC granted Duke Energy Florida’s petition for an affirmative Determination of Need and related orders requesting cost recovery under Florida’s nuclear cost-recovery rule, together with the associated facilities, including transmission lines and substation facilities. In October 2016, the NRC issued COLs for the proposed Levy Nuclear Plant Units 1 and 2. Duke Energy Florida is not required to build the nuclear reactors as a result of the COLs being issued.
On January 28, 2014, Duke Energy Florida terminated the Levy engineering, procurement and construction agreement (EPC). Duke Energy Florida may be required to pay for work performed under the EPC. Duke Energy Florida recorded an exit obligation in 2014 for the termination of the EPC. This liability was recorded within Other in Deferred Credits and Other Noncurrent Liabilities with an offset primarily to Regulatory assets on the Condensed Consolidated Balance Sheets. Duke Energy Florida is allowed to recover reasonable and prudent EPC cancellation costs from its retail customers. On May 1, 2017, Duke Energy Florida filed a request with the FPSC to recover approximately $82 million of Levy Nuclear Project costs from retail customers in 2018. AAs part of the 2017 Settlement discussed above, Duke Energy Florida is no longer seeking recovery of costs related to the Levy Nuclear Project and the ongoing Westinghouse litigation discussed in Note 5. All remaining Levy Nuclear Project issues have been resolved.
Hines Chiller Uprate Project
On February 2, 2017, Duke Energy Florida filed a petition seeking approval to include in base rates the revenue requirement for a Chiller Uprate Project (Uprate Project) at the Hines Energy Complex. The Uprate Project was placed into service in March 2017 at a cost of approximately $150 million. The annual retail revenue requirement is approximately $19 million. On March 28, 2017, the FPSC issued an order approving the revenue requirement, which was included in base rates for the first billing cycle of April 2017.
Duke Energy Ohio
Duke Energy Kentucky Rate Case
On September 1, 2017, 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. The rate increase is driven by increased investment in utility plant, increased operations and maintenance expenses, and recovery of regulatory assets. The application also includes implementation of the Environmental Surcharge Mechanism to recover environmental costs not recovered in base rates, requests to establish a Distribution Capital Investment Rider to recover incremental costs of specific programs, requests to establish a FERC Transmission Cost Reconciliation Rider to recover escalating transmission costs and modification to the Profit Sharing Mechanism to increase customers' share of proceeds from the benefits of owning generation and to mitigate shareholder risks associated with that generation. The KPSC set filing deadlines of December 29, 2017, and February 14, 2018, for intervenor testimony and rebuttal testimony, respectively. An evidentiary hearing ishas not been scheduled.Duke Energy Kentucky anticipates that rates will go into effect in mid-April 2018. Duke Energy Kentucky cannot predict the outcome of this matter.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Electric Security Plan Filing
On June 1, 2017, Duke Energy Ohio filed with the PUCO a request for a standard service offer in the form of an electric security plan (ESP). If approved by the PUCO, the term of the ESP would be from June 1, 2018, to May 31, 2024. Terms of the ESP include continuation of market-based customer rates through competitive procurement processes for generation, continuation and expansion of existing rider mechanisms and proposed new rider mechanisms relating to regulatory mandates, costs incurred to enhance the customer experience and transform the grid and a service reliability rider for vegetation management. Public hearings were held in October 2017 and an evidentiary hearing scheduled in Augustto begin on November 13, 2017, has been continued to November 28, 2017. Duke Energy FloridaOhio cannot predict the outcome of this matter.
Woodsdale Station Fuel System Filing
On March 29, 2017, Westinghouse filedJune 9, 2015, the FERC ruled in favor of PJM Interconnection, LLC (PJM) on a revised Tariff and Reliability Assurance Agreement including implementation of a Capacity Performance (CP) proposal and to amend sections of the Operating Agreement related to generation non-performance. The CP proposal includes performance-based penalties for voluntary Chapter 11 bankruptcynon-compliance. Duke Energy Kentucky is a Fixed Resource Requirement (FRR) entity, and therefore is subject to the compliance standards through its FRR plans. A partial CP obligation will apply to Duke Energy Kentucky in the U.S. Bankruptcy Courtdelivery year beginning June 1, 2019, with full compliance beginning June 1, 2020. Duke Energy Kentucky has developed strategies for CP compliance investments. On May 31, 2017, Duke Energy Kentucky filed an application with the KPSC requesting authority to construct an ultra-low sulfur diesel backup fuel system for the Southern DistrictWoodsdale Station. The back-up fuel system is projected to cost approximately $55 million and, if approved, is anticipated to be in service prior to the CP compliance deadline of New York.April 2019. Duke Energy Florida is monitoringKentucky cannot predict the bankruptcy proceedings to assess the impact it will have on the future constructionoutcome of nuclear plants.
Duke Energy Ohiothis matter.
Ohio Valley Electric Corporation
On March 31, 2017, Duke Energy Ohio filed for approval to adjust its existing price stabilization rider (Rider PSR), which is currently set at zero dollars, to pass through net costs related to its contractual entitlement to capacity and energy from the generating assets owned by OVEC. The PUCO approved Rider PSR, but set it at zero dollars in connection with the most recent electric security plan. The applicationfiling seeks to adjust Rider PSR as offor OVEC costs subsequent to April 1, 2017. Duke Energy Ohio is seeking deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR are put into effect. Various intervenors have filed motions to dismiss or stay the proceeding and Duke Energy Ohio has opposed these filings. See Note 1213 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. Duke Energy Ohio cannot predict the outcome of this proceeding.matter.
East Bend Coal Ash Basin Filing
On December 2, 2016, Duke Energy Kentucky filed with the KPSC a request for a CPCN for construction projects necessary to close and repurpose an ash basin at the East Bend facility as a result of current and proposed U.S. Environmental Protection Agency (EPA) regulations. Duke Energy Kentucky estimated a total cost of approximately $93 million in the filing and expects in-service date in the fourth quarter of 2018. Duke Energy Kentucky expectsOn June 6, 2017, the KPSC to issue an order inapproved the second quarter of 2017.CPCN request.
Base Rate Case
Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio has requested an estimated annual increase of approximately $15 million and a return on equity of 10.4 percent. The application also includes requests to continue certain current riders and establish new riders related to LED Outdoor Lighting Service and regulatory mandates. 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. Objections to the staff report are due by November 9, 2017. Public hearings were held in late October and early November. An evidentiary hearing is scheduled to begin on December 11, 2017. Duke Energy Ohio cannot predict the outcome of this matter.
Natural Gas Pipeline Extension
Duke Energy Ohio is proposing to install a new natural gas pipeline in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. On January 20, 2017, Duke Energy Ohio filed an amended application with the Ohio Power Siting Board for approval of one of two proposed routes. A public hearing was held on June 15, 2017, and an adjudicatory hearing was scheduled to begin September 11, 2017. On August 24, 2017, an administrative law judge (ALJ) granted a request made by Duke Energy Ohio to delay the procedural schedule while it works through various issues related to the pipeline route. If approved, construction of the pipeline extension is expected to be completed before the 2019/20202020/2021 winter season. A public hearing is scheduled for June 15, 2017, and an adjudicatory hearing is scheduled to begin July 12, 2017. The proposed project involves the installation of a natural gas line and is estimated to cost between $86 million andapproximately $110 million, excluding AFUDC.
Advanced Metering Infrastructure
On April 25, 2016, Duke Energy Kentucky filed with the KPSC an application for approval of a CPCN for the construction of advanced metering infrastructure. Duke Energy Kentucky estimates the $49 million project if approved, will take two years to complete. Duke Energy Kentucky also requested approval to establish a regulatory asset of approximately $10 million for the remaining book value of existing meter equipment and inventory to be replaced. Duke Energy Kentucky and the Kentucky Attorney Generalattorney general entered into a stipulation to settle matters related to the application. An evidentiary hearing onOn May 25, 2017, the application andKPSC issued an order to approve the stipulation was held on December 8, 2016.with certain modifications. On June 1, 2017, Duke Energy Kentucky cannot predictfiled its acceptance of the outcomemodifications. Duke Energy Ohio has approximately $7 million included in Regulatory assets on its Condensed Consolidated Balance Sheets at September 30, 2017, for the book value of this matter.existing meter equipment.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Accelerated Natural Gas Service Line Replacement Rider
On January 20, 2015, Duke Energy Ohio filed an application for approval of an accelerated natural gas service line replacement program (ASRP). Under the ASRP, Duke Energy Ohio proposed to replace certain natural gas service lines on an accelerated basis over a 10-year period. Duke Energy Ohio also proposed to complete preliminary survey and investigation work related to natural gas service lines that are customer owned and for which it does not have valid records and, further, to relocate interior natural gas meters to suitable exterior locations where such relocation can be accomplished. Duke Energy Ohio's current projected total capital and operations and maintenance expenditures under the ASRP arewere approximately $240 million. The filing also sought approval of a rider mechanism (Rider ASRP) to recover related expenditures. Duke Energy Ohio proposed to update Rider ASRP on an annual basis. Intervenors opposed the ASRP, primarily because they believe the program is neither required nor necessary under federal pipeline regulation. On October 26, 2016, the PUCO issued an order denying the proposed ASRP. The PUCO did, however, encourage Duke Energy Ohio to work with the PUCO Staff and intervenors. Duke Energy Ohio filed anOhio's application for rehearing of the PUCO decision. In December 2016, the PUCO granted the request for the purpose of further review. Duke Energy Ohio cannot predict the outcome of this matter.decision was denied on May 17, 2017.
Energy Efficiency Cost Recovery
On March 28, 2014, Duke Energy Ohio filed an application for recovery of program costs, lost distribution revenue and performance incentives related to its energy efficiency and peak demand reduction programs. These programs are undertaken to comply with environmental mandates set forth in Ohio law. The PUCO approved Duke Energy Ohio’s application but found that Duke Energy Ohio was not permitted to use banked energy savings from previous years in order to calculate the amount of allowed incentive. This conclusion represented a change to the cost recovery mechanism that had been agreed upon by intervenors and approved by the PUCO in previous cases. The PUCO granted the applications for rehearing filed by Duke Energy Ohio and an intervenor. On January 6, 2016, Duke Energy Ohio and the PUCO Staff entered into a stipulation, pending the PUCO's approval, to resolve issues related to performance incentives and the PUCO Staff audit of 2013 costs, among other issues. In December 2015, based upon the stipulation, Duke Energy Ohio re-established approximately $20 million of the revenues that had been previously reversed. On October 26, 2016, the PUCO issued an order approving the stipulation without modification. Intervenors requested a rehearing of the PUCO decision. In December 2016, the PUCO granted a rehearing for the purpose of further review. Duke Energy Ohio cannot predict the outcome of this matter.
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. The PUCO staff and one intervenor have proposed a cap on both program costs and shared savings. 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. On October 12, 2017, Duke Energy Ohio filed a motion for a waiver for recovery of costs incurred in 2017 above the annual cap. Duke Energy Ohio cannot predict the outcome of this matter.
2012 Natural Gas Rate Case/Manufactured Gas Plant Cost Recovery
On November 13, 2013, the PUCO issued an order approving a settlement of Duke Energy Ohio’s natural gas base rate case and authorizing the recovery of costs incurred between 2008 and 2012 for environmental investigation and remediation of two former manufactured gas plant (MGP) sites. The PUCO order also authorized Duke Energy Ohio to continue deferring MGP environmental investigation and remediation costs incurred subsequent to 2012 and to submit annual filings to adjust the MGP rider for future costs. Intervening parties appealed this decision to the Ohio Supreme Court and that appeal remains pending. Oral argumenton June 29, 2017, the Ohio Supreme Court issued its decision affirming the PUCO order. Appellants filed a request for reconsideration, which was hearddenied on February 28,September 27, 2017. Incurred and projectedThis matter is now final.
The PUCO order also contained deadlines for completing the MGP environmental investigation and remediation expensescosts at these MGP sites that have not been collected through the MGP rider aresites. For the property known as the East End site, the PUCO order established a deadline of December 31, 2016, which was subsequently extended to December 31, 2019. In January 2017, intervening parties filed for rehearing of the PUCO's decision. On February 8, 2017, the PUCO denied the rehearing request. As of September 30, 2017, Duke Energy Ohio had approximately $100$36 million and are recorded asincluded in Regulatory assets on Duke Energy Ohio'sthe Condensed Consolidated Balance Sheet as of March 31, 2017. Duke Energy Ohio cannot predictSheets for future remediation costs expected to be incurred at the outcome of this matter.East End site.
Regional Transmission Organization Realignment
Duke Energy Ohio, including Duke Energy Kentucky, transferred control of its transmission assets from Midcontinent Independent System Operator, Inc. (MISO) to PJM, Interconnection, LLC (PJM), effective December 31, 2011. The PUCO approved a settlement related to Duke Energy Ohio’s recovery of certain costs of the Regional Transmission Organization (RTO) realignment via a non-bypassable rider. Duke Energy Ohio is allowed to recover all MISO Transmission Expansion Planning (MTEP) costs, including but not limited to Multi Value Project (MVP) costs, directly or indirectly charged to Ohio customers. Duke Energy Ohio also agreed to vigorously defend against any charges for MVP projects from MISO. The KPSC also approved a request to effect the RTO realignment, subject to a commitment not to seek double recovery in a future rate case of the transmission expansion fees that may be charged by MISO and PJM in the same period or overlapping periods.
Duke Energy Ohio had a recorded liability for its exit obligation and share of MTEP costs, excluding MVP, of $90 million at March 31,September 30, 2017, and December 31, 2016, recorded within Other in Current liabilities and Other in Other Noncurrent Liabilities on the Condensed 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 March 31,September 30, 2017, and December 31, 2016, Duke Energy Ohio had $71 million recorded in Regulatory assets on the Condensed Consolidated Balance Sheets.
MVP. MISO approved 17 MVP proposals prior to Duke Energy Ohio’s exit from MISO on December 31, 2011. Construction of these projects is expected to continue through 2020. Costs of these projects, including operating and maintenance costs, property and income taxes, depreciation and an allowed return, are allocated and billed to MISO transmission owners.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





On December 29, 2011, MISO filed a tariff with the FERC providing for the allocation of MVP costs to a withdrawing owner based on monthly energy usage. The FERC set for hearing (i) whether MISO’s proposed cost allocation methodology to transmission owners who withdrew from MISO prior to January 1, 2012, is consistent with the tariff at the time of their withdrawal from MISO and, (ii) if not, what the amount of and methodology for calculating any MVP cost responsibility should be. In 2012, MISO estimated Duke Energy Ohio’s MVP obligation over the period from 2012 to 2071 at $2.7 billion, on an undiscounted basis. On July 16, 2013, a FERC Administrative Law Judge (ALJ)ALJ issued an initial decision. Under this Initial Decision, Duke Energy Ohio would be liable for MVP costs. Duke Energy Ohio filed exceptions to the initial decision, requesting FERC to overturn the ALJ’s decision.
On October 29, 2015, the FERC issued an order reversing the ALJ's decision. The FERC ruled the cost allocation methodology is not consistent with the MISO tariff and that Duke Energy Ohio has no liability for MVP costs after its withdrawal from MISO. On May 19, 2016, the FERC denied the request for rehearing filed by MISO and the MISO Transmission Owners. On July 15, 2016, the MISO Transmission Owners filed a petition for review with the U.S. Court of Appeals for the Sixth Circuit. On June 21, 2017, a three-judge panel affirmed FERC's 2015 decision holding that Duke Energy Ohio cannot predicthas no liability for the outcomecost of the MVP projects constructed after Duke Energy Ohio's withdrawal from MISO. MISO did not file further petitions for review and this matter.matter is now final.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy Indiana
Coal Combustion Residual Plan
On March 17, 2016, Duke Energy Indiana filed with the IURC a request for approval of its first group of federally mandated Coal Combustion Residual (CCR)CCR rule compliance projects (Phase I CCR Compliance Projects) to comply with the EPA's CCR rule. The projects in this Phase I filing are CCR compliance projects, including the conversion of Cayuga and Gibson stations to dry bottom ash handling and related water treatment. Duke Energy Indiana has requested timely recovery of approximately $380 million in retail capital costs, including AFUDC, and recovery of incremental operating and maintenance costs including AFUDC, under a federal mandate tracker that provides for timely recovery of 80 percent of such costs and deferral with carrying costs of 20 percent of such costs for recovery in a subsequent retail base rate case. On January 24, 2017, Duke Energy Indiana and various Intervenorsintervenors filed a settlement agreement with the IURC. Terms of the settlement include recovery of 60 percent of the estimated CCR compliance construction project capital costs through existing rider mechanisms and deferral of 40 percent of these costs until Duke Energy Indiana's next general retail rate case. The deferred costs will earn a return based on Duke Energy Indiana's long-term debt rate of 4.73 percent until costs are included in retail rates, at which time the deferred costs will earn a full return. Costs are to be capped at $365 million, plus actual AFUDC. Costs above the cap maywould be recoverableconsidered for recovery in the next rate case. Terms of the settlement agreement also require Duke Energy Indiana to perform certain reporting and groundwater monitoring. The settlement is subject to approval by the IURC. An evidentiary hearing was held on February 23, 2017, and Duke Energy Indiana filed a proposed order with the IURC on March 30, 2017. Duke Energy Indiana cannot predictOn May 24, 2017, the outcome of this matter.IURC approved the settlement agreement.
FERC Transmission Return on Equity Complaints
Customer groups have filed with the FERC complaints against MISO and its transmission-owning members, including Duke Energy Indiana, alleging, among other things, that the current base rate of return on equity earned by MISO transmission owners of 12.38 percent is unjust and unreasonable. The complaints, among other things, claim that the current base rate of return on equity earned by MISO transmission owners should be reduced to 8.67 percent. On January 5, 2015, the FERC issued an order accepting the MISO transmission owners' adder of 0.50 percent to the base rate of return on equity based on participation in an RTO subject to it being applied to a return on equity that is shown to be just and reasonable in the pending return on equity complaints. On December 22, 2015, the presiding FERC ALJ in the first complaint issued an Initial Decision in which the base rate of return on equity was set at 10.32 percent. On September 28, 2016, the Initial Decision in the first complaint was affirmed by FERC, but is subject to rehearing requests. On June 30, 2016, the presiding FERC ALJ in the second complaint issued an Initial Decision setting the base rate of return on equity at 9.70 percent. The Initial Decision in the second complaint is pending FERC review. On April 14, 2017, the U.S. 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. This decision may affect the outcome of the complaints against Duke Energy Indiana. Duke Energy Indiana currently believes these matters will not have a material impact on its results of operations, cash flows and financial position.
Piedmont
North Carolina Integrity Management Rider FilingsGrid Infrastructure Improvement Plan
In OctoberJune 2016, Piedmontthe IURC issued an order approving a settlement agreement among Duke Energy Indiana and certain parties related to a proposed grid infrastructure improvement plan. The settlement agreement included the removal of an AMI project and also provided for deferral accounting for depreciation and post-in-service carrying costs for AMI projects outside the plan. Duke Energy Indiana withdrew its request for a regulatory asset for current meters and will retain any savings associated with future AMI installation until the next retail base rate case, which is required to be filed prior to the end of the plan. During the third quarter of 2016, Duke Energy Indiana decided to implement the AMI project. This decision resulted in a petition withpretax impairment charge related to existing or non-AMI meters of approximately $8 million for the NCUCthree and nine months ended September 30, 2016, based in part on the requirement to file a base rate case in 2022 under the integrity management rider (IMR) mechanism seeking authority to collect an additional $8 million in annual revenues, effective December 2016, based on the eligible capital investments closed to integrity and safety projects over the six-month period endingapproved plan. As of September 30, 2016. In November 2016, the NCUC approved the request.
On May 1, 2017, Piedmont filed a petition with the NCUC under the IMR mechanism to collect an additional $11.6 million in annual revenues, effective June 2017, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, 2017.  A ruling from the NCUC is pending.
Tennessee IMR Filings
In November 2016, Piedmont filed an annual report with the TPUC under the IMR mechanism seeking authority to collect an additional $1.7 million in annual revenues effective January 2017, based on the capital investments in integrity and safety projects over the 12-month period ending October 31, 2016. The TPUC approved the request at a hearing on April 10, 2017.
OTHER REGULATORY MATTERS
Atlantic Coast Pipeline
On September 2, 2014, Duke Energy Dominion Resources (Dominion), PiedmontIndiana's remaining net book value of non-AMI meters is approximately $43 million and Southern Company Gas announcedwill be depreciated through 2022. In the formation of Atlantic Coast Pipeline, LLC (ACP) to build and own the proposed Atlantic Coast Pipeline (ACP pipeline), an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. The ACP pipeline is designed to meet the needs identified in RFPs byevent that Duke Energy Carolinas, Duke Energy Progress and Piedmont. The ACP pipeline development costs are estimated between $5.0 billionIndiana were to $5.5 billion. Dominion will build and operate the ACP pipeline and holdsfile a leading ownership percentagebase rate case earlier than 2022, it would result in ACP of 48 percent. Duke Energy owns a 47 percent interest through its Gas Utilities and Infrastructure segment. Southern Company Gas maintains a 5 percent interest. See Note 12 for additional information related to Duke Energy's ownership interest.impairment charges.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Benton County Wind Farm Dispute
On December 16, 2013, Benton County Wind Farm LLC (BCWF) filed a lawsuit against Duke Energy Indiana seeking damages for past generation losses totaling approximately $16 million alleging Duke Energy Indiana violated its obligations under a 2006 PPA by refusing to offer electricity to the market at negative prices. Damage claims continue to increase during times that BCWF is not dispatched. Under 2013 revised MISO market rules, Duke Energy Indiana is required to make a price offer to MISO for the power it proposes to sell into MISO markets and MISO determines whether BCWF is dispatched. Because market prices would have been negative due to increased market participation, Duke Energy Indiana determined it would not bid at negative prices in order to balance customer needs against BCWF's need to run. BCWF contends Duke Energy Indiana must bid at the lowest negative price to ensure dispatch, while Duke Energy Indiana contends it is not obligated to bid at any particular price, that it cannot ensure dispatch with any bid and that it has reasonably balanced the parties' interests. On July 6, 2015, the U.S. District Court for the Southern District of Indiana entered judgment against BCWF on all claims. BCWF appealed the decision and on December 9, 2016, the appeals court ruled in favor of BCWF. On June 30, 2017, the parties finalized a settlement agreement. Terms of the settlement included Duke Energy Indiana paying $29 million for back damages. Additionally, the parties agreed on the method by which the contract will be bid into the market in the future. Duke Energy Indiana recorded an obligation and a regulatory asset related to the settlement amount in fourth quarter 2016. The settlement amount was paid in June 2017. The IURC issued an order on September 27, 2017, approving recovery of the settlement amount through Duke Energy Indiana's fuel clause. The IURC order has been appealed to the Indiana Court of Appeals. Duke Energy Indiana cannot predict the outcome of this matter.
Piedmont
South Carolina Rate Stabilization Adjustment Filing
In June 2017, Piedmont filed with the PSCSC under the South Carolina Rate Stabilization Act its quarterly monitoring report for the 12-month period ending March 31, 2017. The filing included a revenue deficiency calculation and tariff rates in order to permit Piedmont the opportunity to earn the rate of return on equity of 12.6 percent established in its last general rate case. On October 4, 2017, the PSCSC approved a settlement agreement between Piedmont and the PSCSC Office of Regulatory Staff. Terms of the settlement included implementation of rates for the 12-month period beginning November 2017 with a return on equity of 10.2 percent.
North Carolina Integrity Management Rider Filings
In October 2017, Piedmont filed a petition under the Integrity Management Rider (IMR) mechanism to collect an additional $8.9 million in annual revenues, effective December 2017, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending September 30, 2017. Piedmont cannot predict the outcome of this matter.
In May 2017, Piedmont filed, and the NCUC approved, a petition under the IMR mechanism to collect an additional $11.6 million in annual revenues, effective June 2017, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, 2017.
OTHER REGULATORY MATTERS
Atlantic Coast Pipeline, LLC
On September 2, 2014, Duke Energy, Dominion Resources (Dominion), Piedmont and Southern Company Gas announced the formation of Atlantic Coast Pipeline, LLC (ACP) to build and own the proposed Atlantic Coast Pipeline (ACP pipeline), an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. The ACP pipeline is designed to meet the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. The ACP pipeline development costs are estimated between $5.0 billion to $5.5 billion, excluding financing costs. Dominion will build and operate the ACP pipeline and holds a leading ownership percentage in ACP of 48 percent. Duke Energy owns a 47 percent interest through its Gas Utilities and Infrastructure segment. Southern Company Gas maintains a 5 percent interest. See Note 13 for additional information related to Duke Energy's ownership interest.
Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customers of the pipeline. Purchases will be made under several 20-year supply contracts, subject to state regulatory approval. On September 18, 2015, ACP filed an application with the FERC requesting a CPCN authorizing ACP to construct the pipeline. ACP executed a construction agreement in September 2016. ACP also requested approval of an open access tariff and the precedent agreements it entered into with future pipeline customers. In December 2016, FERC issued a draft Environmental Impact Statement (EIS) indicating that the proposed pipeline would not cause significant harm to the environment or protected populations. The draft EIS comment period ended in April 2017, and ACP is working to resolve items identified throughFERC issued the comment process. The final EIS is expected in summerJuly 2017. On October 13, 2017, FERC approval ofissued an order approving the application is expected within 90 days ofCPCN, subject to conditions. On October 16, 2017, ACP accepted the issuance of the final EIS.FERC order subject to reserving its right to file a request for rehearing or clarification on a timely basis. Construction is projected to begin in the second-halffourth quarter of 2017, with a targeted in-service date in the second half oflate 2019. The project remains subject to other pending federal and state approvals.
Sabal Trail Transmission, LLC Pipeline
On May 4, 2015, Duke Energy acquired a 7.5 percent ownership interest in Sabal Trail Transmission, LLC (Sabal Trail) from Spectra Energy Partners, LP, a master limited partnership, formed by 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 that is constructingto 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 will traversetraverses Alabama, Georgia and Florida. The primary customers of the Sabal Trail pipeline, Duke Energy Florida and Florida Power & Light Company (FP&L), have each contracted to buy pipeline capacity for 25-year initial terms. See Note 13 for additional information related to Duke Energy's ownership interest.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





On February 3, 2016, the FERC issued an order granting the request for a CPCN to construct and operate the pipeline. On September 7, 2016, FERC denied the intervenors' rehearing requests. On September 21, 2016, intervenors filed an appeal of FERC's CPCN orders to the U.S. Court of Appeals for the District of Columbia Circuit. Oral argumentOn August 22, 2017, the appeals court ruled against FERC in the case for failing to include enough information on the appeal was heldimpact of greenhouse-gas emissions carried by the pipeline and vacated the CPCN order. In response to the August 2017 court decision, the FERC issued a draft Supplemental Environmental Impact Statement (SEIS) on April 18,September 27, 2017. Comments on the SEIS are due by November 20, 2017. On October 6, 2017, FERC filed a petition with the D.C. Circuit Court of Appeals requesting a rehearing regarding the court's decision to vacate the CPCN order. On October 6, 2017, Sabal Trail and other natural gas shippers, including Duke Energy Florida, also filed a rehearing request with the D.C. Circuit Court of Appeals regarding the decision to vacate the CPCN order. It is expected inunclear how this matter will impact the summer of 2017.project going forward. The Sabal Trail pipeline has received other required regulatory approvals and construction beganthe phase one mainline was placed in the summer of 2016,service in July 2017. On October 12, 2017, Sabal Trail filed a request with an expectedFERC to place in-service date in mid-2017. See Note 12 for additional information relateda lateral line to Duke Energy's ownership interest.Energy Florida's Citrus County Combined Cycle facility.
Constitution Pipeline Company, LLC
Duke Energy ownshas a 24 percent ownership interest in Constitution Pipeline Company, LLC (Constitution). 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. Duke Energy's total anticipated contributions are approximately $229 million.
On April 22, 2016, the New York State Department of Environmental Conservation (NYSDEC) denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution filed legal actions in the U.S. District Court for the Northern District of New York and in the U.S. Court of Appeals for the Second Circuit (U.S. Court of Appeals) challenging the legality and appropriateness of the NYSDEC’s decision. Both courts granted Constitution's motionsdecision and on August 18, 2017, the petition was denied in part and dismissed in part. On September 1, 2017, Constitution filed a petition for a rehearing of portions of the decision unrelated to expedite the schedules for the legal actions. On November 16, 2016, oral arguments were heard inwater quality certification, which was denied by the U.S. Court of Appeals. On March 16,October 11, 2017, Constitution filed a petition for declaratory order with the U.S. District Court forFERC requesting FERC to issue an order finding the Northern DistrictNYSDEC waived its rights to issue a water quality certification by not acting on Constitution's application within the time frame required by statute, which would allow the project to proceed. Constitution has revised the target in-service date to as early as the first half of New York dismissed without prejudice Constitution’s claim that New York State permits were preempted by2019 due to the federal permitting process. The ruling on oral arguments made in the U.S. Court of Appeals regarding NYSDEC'sNYDSEC's denial of the water quality certification is currently expected in mid-2017.
Constitution remains steadfastly committed to pursuingand the project and intends to pursue all available optionslegal actions being taken to challenge the NYSDEC's decision. In lightdecision, assuming the timely receipt of a Notice to Proceed from the denial ofFERC. Duke Energy cannot predict the certification, Constitution revised its target in-service date of the project to be as early as the second half of 2018, assuming that the challenge process is satisfactorily and promptly concluded.
In July 2016, Constitution requested, and the FERC approved, an extension of the construction period and in-service deadline of the project to December 2018. Also in July, the FERC denied the New York Attorney General's (NYAG) complaint and request for a stay of the certificate order authorizing the project on the grounds that Constitution had improperly cut trees along the proposed route. The FERC found the complaint procedurally deficient and that there was no justification for a stay; it did find the filing constituted a valid request for investigation and thus referred the matter to FERC staff for further examination as may be appropriate. On November 22, 2016, the FERC denied the NYAG's request for reconsiderationoutcome of this order.matter.
Since April 2016, with the actions of the NYSDEC, Constitution stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved. As a result, Duke Energy evaluatedTo the investment in the Constitution project for other-than-temporary impairments (OTTIs). At this time, no OTTI has been determined and therefore no impairment charge to reduce the carrying value of the investment has been recorded. However, to the extent that the legal and regulatory proceedings have unfavorable outcomes, or if Constitution concludes that the project is not viable or does not go forward, as legal and regulatory actions progress, the conclusions with respect to OTTIs could change and may require that an impairment charge of up to the recorded investment in the project, net of any cash and working capital returned, may be recorded. Duke Energy will continue to monitor and update the OTTI analysis as required. Different assumptions could affect the timing and amount of any charge recorded in a period.
Pending the outcome of the matters described above, and when construction proceeds, Duke Energy remains committed to fund an amount in proportion to its ownership interest for the development and construction of the new pipeline. Duke Energy's total anticipated contributions are approximately $229 million.
See Note 1213 for additional information related to ownership interest and carrying value of the investment.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Potential Coal Plant Retirements
The Subsidiary Registrants periodically file Integrated Resource Plans (IRP) with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. Recent IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina, Florida and Indiana earlier than their current estimated useful lives primarily because facilities do not have the requisite emission control equipment to meet EPA regulations recently approved or proposed.
The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of March 31,September 30, 2017, and exclude capitalized asset retirement costs.
  Remaining Net
  Remaining Net
Capacity
 Book Value
Capacity
 Book Value
(in MW)
 (in millions)
(in MW)
 (in millions)
Duke Energy Carolinas      
Allen Steam Station Units 1-3(a)
585
 $167
585
 $164
Progress Energy and Duke Energy Florida      
Crystal River Units 1 and 2(b)
873
 117
873
 111
Duke Energy Indiana      
Gallagher Units 2 and 4(c)
280
 135
280
 130
Total Duke Energy1,738
 $419
1,738
 $405
(a)Duke Energy Carolinas will retire Allen Steam Station Units 1 through 3 by December 31, 2024, as part of the resolution of a lawsuit involving alleged New Source Review violations.
(b)Duke Energy Florida will likely retire these coal units by 2018 to comply with environmental regulations.
(c)Duke Energy Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as part of the settlement of Edwardsport IGCC matters.
Refer to the "Western Carolinas Modernization Plan" discussion above for details of Duke Energy Progress' planned retirements.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





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

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The following tables contain information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Accounts Payable within Current Liabilities and Other within Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.
Three Months Ended March 31, 2017Nine Months Ended September 30, 2017
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Balance at beginning of period$98
 $10
 $18
 $3
 $14
 $59
 $10
 $1
$98
 $10
 $18
 $3
 $14
 $59
 $10
 $1
Provisions/adjustments6
 1
 
 
 1
 4
 (1) 1
(1) 2
 1
 
 1
 (3) (2) 1
Cash reductions(6) 
 (1) 
 (1) (4) 
 
(13) (2) (3) 
 (3) (7) (1) 
Balance at end of period$98
 $11
 $17
 $3
 $14
 $59
 $9
 $2
$84
 $10
 $16
 $3
 $12
 $49
 $7
 $2
Three Months Ended March 31, 2016Nine Months Ended September 30, 2016
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Balance at beginning of period$94
 $10
 $17
 $3
 $14
 $54
 $12
 $1
$94
 $10
 $17
 $3
 $14
 $54
 $12
 $1
Provisions/adjustments10
 2
 1
 
 1
 
 6
 
34
 5
 5
 2
 3
 6
 20
 
Cash reductions(3) (1) (2) (1) (1) 
 
 
(12) (4) (6) (2) (4) (1) (2) 
Balance at end of period$101
 $11
 $16
 $2
 $14
 $54
 $18
 $1
$116
 $11
 $16
 $3
 $13
 $59
 $30
 $1
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$71
$58
Duke Energy Carolinas22
20
Duke Energy Ohio36
30
Duke Energy Indiana7
3
Piedmont2
2
North Carolina and South Carolina Ash Basins
In February 2014, a break in a stormwater pipe beneath an ash basin at Duke Energy Carolinas’ retired Dan River Steam Station caused a release of ash basin water and ash into the Dan River. Duke Energy Carolinas estimates 30,000 to 39,000 tons of ash and 24 million to 27 million gallons of basin water were released into the river. In July 2014, Duke Energy completed remediation work identified by the EPA and continues to cooperate with the EPA's civil enforcement process.EPA. Future costs related to the Dan River release, including future state or federal civil enforcement, proceedings, future regulatory directives, natural resources damages, future claims or litigation and long-term environmental impact costs, cannot be reasonably estimated at this time.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The North Carolina Department of Environmental Quality (NCDEQ) has historically assessed Duke Energy Carolinas and Duke Energy Progress with NoticeNotices of Violations (NOV) for violations that were most often resolved through satisfactory corrective actions and minor, if any, fines or penalties. Subsequent to the Dan River ash release, Duke Energy Carolinas and Duke Energy Progress have been served with a higher level of NOVs, including assessed penalties for violations at L.V. Sutton Combined Cycle Plant (Sutton) and Dan River Steam Station. Duke Energy Carolinas and Duke Energy Progress cannot predict whether the NCDEQ will assess future penalties related to existing unresolved NOVs and if such penalties would be material. See "NCDEQ Notices of Violation" section below for additional discussion.
LITIGATION
Duke Energy
Duke Energy no longer has exposure to litigation matters related to the International Energy Disposal Group as a result of the divestiture of the business in December 2016. See Note 2 for additional information related to the sale of International Energy.
Ash Basin Shareholder Derivative Litigation
Five shareholder derivative lawsuits were filed in Delaware Chancery Court relatingrelated to the release at Dan River and to the management of Duke Energy’s ash basins. On October 31, 2014, the five lawsuits were consolidated in a single proceeding titled In Re Duke Energy Corporation Coal Ash Derivative Litigation. On December 2, 2014, plaintiffs filed a Corrected Verified Consolidated Shareholder Derivative Complaint (Consolidated Complaint). The Consolidated Complaint names as defendants several current and former Duke Energy officers and directors (collectively, the Duke Energy Defendants). Duke Energy is named as a nominal defendant.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The Consolidated Complaint alleges the Duke Energy Defendants breached their fiduciary duties by failing to adequately oversee Duke Energy’s ash basins and that these breaches of fiduciary duty may have contributed to the incident at Dan River and continued thereafter. The lawsuit also asserts claims against the Duke Energy Defendants for corporate waste (relating to the money Duke Energy has spent and will spend as a result of the fines, penalties and coal ash removal) and unjust enrichment (relating to the compensation and director remuneration that was received despite these alleged breaches of fiduciary duty). The lawsuit seeks both injunctive relief against Duke Energy and restitution from the Duke Energy Defendants. On April 22, 2016, plaintiffs filed an Amended Verified Consolidated Shareholder Derivative Complaint (Amended Complaint) making the same allegations as in the Consolidated Complaint. The Duke Energy Defendants filed a motion to dismiss the Amended Complaint on June 21, 2016. On December 14, 2016, the Delaware Chancery Court entered an order dismissing the Amended Complaint. Plaintiffs filed an appeal to the Delaware Supreme Court on January 9, 2017. The parties have completed briefing in the caseOral argument was held on September 27, 2017, and a date for oral argument has not been set.decision is pending.
On October 30, 2015, shareholder Saul Bresalier filed a shareholder derivative complaint (Bresalier Complaint) in the U.S. District Court for the District of Delaware. The lawsuit alleges that several current and former Duke Energy officers and directors (Bresalier Defendants) breached their fiduciary duties in connection with coal ash environmental issues, the post-merger change in Chief Executive Officer (CEO) and oversight of political contributions. Duke Energy is named as a nominal defendant. The Bresalier Complaint contends that the appointed Demand Review Committee failed to appropriately consider the shareholder’s earlier demand for litigation and improperly decided not to pursue claims against the Bresalier Defendants. On March 30, 2017, the court granted Defendants’ Motion to Dismiss on the claims relating to coal ash environmental issues and political contributions. A notice of appeal has not been filed. As discussed below, an agreement-in-principle has been reached to settlea settlement agreement was approved for the merger relatedmerger-related claims in the Bresalier Complaint, and those claims were also dismissed subjectdismissed. On September 8, 2017, Bresalier filed a notice of appeal to that agreement.the U.S. Court of Appeals for the Third Circuit (Third Circuit Court) challenging the dismissal of his coal ash and political contribution claims. Pursuant to a scheduling order issued by the Third Circuit Court, briefing will be complete on December 20, 2017.
It is not possible to predict whether Duke Energy will incur any liability or to estimate the damages, if any, it might incur in connection with these matters.
Progress Energy Merger Shareholder Litigation
On May 31, 2013, the Delaware Chancery Court consolidated four shareholder derivative lawsuits filed in 2012. The Court also appointed a lead plaintiff and counsel for plaintiffs and designated the case as In Re Duke Energy Corporation Derivative Litigation (Merger Chancery Litigation). The lawsuit names as defendants the Legacy Duke Energy Directors. Duke Energy is named as a nominal defendant. The case alleges claims for breach of fiduciary duties of loyalty and care in connection with the post-merger change in CEO.
Two shareholder Derivative Complaints, filed in 2012 in federal district court in Delaware, were consolidated as Tansey v. Rogers, et al. The case alleges claims against the Legacy Duke Energy Directors for breach of fiduciary duty and waste of corporate assets, as well as claims under Section 14(a) and 20(a) of the Exchange Act. Duke Energy is named as a nominal defendant. On December 21, 2015, Plaintiff filed a Consolidated Amended Complaint asserting the same claims contained in the original complaints.
The Legacy Duke Energy Directors have reached an agreement-in-principle to settle the Merger Chancery Litigation, conditioned on dismissal as well, of the Tansey v. Rogers, et al case and the merger relatedmerger-related claims in the Bresalier Complaint discussed above, for a total of $27 million.which was approved by the Delaware Chancery Court on July 13, 2017. The entire settlement amount is to bewas funded by insurance. The settlement amount, less court-approved attorney fees, will be payabletotaled $20 million and was paid to Duke Energy. Settlement documents have been submittedEnergy in third quarter 2017.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to the court for approval and a hearing has been set for July 13, 2017.Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Price Reporting Cases
Duke Energy Trading and Marketing, LLC (DETM), a non-operating Duke Energy affiliate, was a defendant, along with numerous other energy companies, in four class-action lawsuits and a fifth single-plaintiff lawsuit in a consolidated federal court proceeding in Nevada. Each of these lawsuits contained similar claims that defendants allegedly manipulated natural gas markets by various means, including providing false information to natural gas trade publications and entering into unlawful arrangements and agreements in violation of the antitrust laws of the respective states. Plaintiffs sought damages in unspecified amounts. In February 2016, DETM reached agreements in principle to settle all of the pending lawsuits. Settlement of the single-plaintiff settlement was finalized and paid in March 2016. The proposed settlement of the class action lawsuits was submitted toapproved by the Court and preliminarily approved on January 26, 2017. The Court will consider final approval of the classall settlement following notice to the class members. The settlement amounts, which are not material to Duke Energy.Energy, have been paid.
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 North Carolina Superior 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 North Carolina Coal Ash Management Act of 2014, as amended, (Coal Ash Act) and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
NCDEQ State Enforcement Actions
In the first quarter of 2013, SELCthe Southern Environmental Law Center (SELC) sent notices of intent to sue Duke Energy Carolinas and Duke Energy Progress related to alleged CWAClean Water Act (CWA) violations from coal ash basins at two of their coal-fired power plants in North Carolina. The NCDEQ filed enforcement actions against Duke Energy Carolinas and Duke Energy Progress alleging violations of water discharge permits and North Carolina groundwater standards. The cases have been consolidated and are being heard before a single judge.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





judge in the North Carolina Superior Court.
On August 16, 2013, the NCDEQ filed an enforcement action against Duke Energy Carolinas and Duke Energy Progress related to their remaining plants in North Carolina, alleging violations of the CWA and violations of the North Carolina groundwater standards. Both of these cases have been assigned to the judge handling the enforcement actions discussed above. SELC is representing several environmental groups who have been permitted to intervene in these cases.
The court issued orders in 2016 granting Motions'Motions for Partial Summary Judgment for seven of the 14 North Carolina plants named in the enforcement actions. The litigation is concluded for these seven plants. Litigation continues for the remaining seven plants. In response to a motion for partial summary judgment on the groundwater claims filed by the environmental groups, on October 17, 2016, Duke Energy Carolinas and Duke Energy Progress filed a cross-motion for partial summary judgment on the groundwater claims. On February 13, 2017, the court issued an order denying both the environmental groups' motionmotions for partial summary judgment brought by both the environmental groups and Duke Energy Carolinas and Duke Energy Progress' cross-motion for partial summary judgment.Progress. On March 15, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Notice of Appeal to challenge the trial court’s denial of their cross-motion for partial summary judgment.order. The parties were unable to reach an agreement at mediation in April 2017. The parties submitted briefs to the court on April 18,remaining issues to be tried and a ruling is pending. On August 22, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Petition for Discretionary Review, requesting the North Carolina Supreme Court to accept the appeal. On August 24, 2017, SELC filed a motion to dismiss the appeal. Duke Energy Carolinas' and Duke Energy Progress’ opening appellate briefs were filed on October 12, 2017.
It is not possible to predict any liability or estimate any damages Duke Energy Carolinas or Duke Energy Progress might incur in connection with these matters.
Federal Citizens Suits
On June 13, 2016, the Roanoke River Basin Association (RRBA) filed a federal citizen suit in the Middle District of North Carolina alleging unpermitted discharges to surface water and groundwater violations at the Mayo Plant. On August 19, 2016, Duke Energy Progress filed a Motion to Dismiss. On April 26, 2017, the court entered an order dismissing four of the claims in the federal citizen suit. Two claims relating to alleged violations of National Pollutant Discharge Elimination System (NPDES) permit provisions survived the motion to dismiss, and Duke Energy Progress’Progress filed its response is due on May 10, 2017. The parties are engaged in pre-trial discovery. Trial has been scheduled for July 9, 2018.
On March 16, 2017, the Roanoke River Basin AssociationRRBA served Duke Energy Progress with a 60-day noticeNotice of intentIntent to bring suit pursuant to the citizen suit provision ofSue under the CWA for alleged violations of effluent standards and limitations at the Roxboro Plant. In anticipation of litigation, Duke Energy Progress filed a Complaint for Declaratory Relief in the U.S. District Court for the Western District of Virginia on May 11, 2017, which was subsequently dismissed. 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 and one claim relating to the use of nearby water bodies.
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 on August 21, 2017.
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.
On October 3, 2017, various parties served Duke Energy Carolinas with a Notice of Intent to Sue under the CWA for alleged violations at Duke Energy Carolinas' Belews Creek Steam Station (Belews Creek). A lawsuit may be filed sixty days after service of notice.
It is not possible to predict whether Duke Energy Carolinas or Duke Energy Progress will incur any liability or to estimate the damages, if any, itthey might incur in connection with this matter.these matters.
Five previously filed cases involving the Riverbend, Cape Fear, H.F. Lee, Sutton and Buck plants were dismissed or settled in 2016.
Potential

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Groundwater Contamination Claims
Beginning in May 2015, a number of residents living in the vicinity of the North Carolina facilities with ash basins received letters from the NCDEQ advising them not to drink water from the private wells on their land tested by the NCDEQ as the samples were found to have certain substances at levels higher than the criteria set by the North Carolina Department of Health and Human Services (DHHS). The criteria, in some cases, are considerably more stringent than federal drinking water standards established to protect human health and welfare. The Coal Ash Act requires additional groundwater monitoring and assessments for eachResults of the 14 coal-fired plants in North Carolina, including sampling of private water supply wells. The data gathered through these Comprehensive Site Assessments (CSAs) will be usedtesting performed by NCDEQ to determine whether the water quality of these private water supply wells has been adversely impacted by the ash basins. Duke Energy has submitted CSAs documentingunder the results of extensive groundwater monitoring around coal ash basins at all 14 of the plants with coal ash basins. Generally, the data gathered through the installation of new monitoring wells and soil and water samples across the stateCoal 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 leadsled investigators to believe these constituents are naturally occurring. In March 2016, DHHS rescinded the advisories.
Duke Energy Carolinas and Duke Energy Progress have received formal demand letters from residents near Duke Energy Carolinas' and Duke Energy Progress' coal ash basins. The residents claim damages for nuisance and diminution in property value, among other things. The parties held three days of mediation discussions that ended at an impasse. On January 6, 2017, Duke Energy Carolinas and Duke Energy Progress received the plaintiffs' notice of their intent to file suits should the matter not settle. The NCDEQ preliminarily approved Duke Energy’s permanent water solution plans on January 13, 2017, and as a result shortly thereafter, Duke Energy issued a press release, providing additional details regarding the homeowner compensation package. This package consists of three components: (i) a $5,000 goodwill payment to each eligible well owner to support the transition to a new water supply, (ii) where a public water supply is available and selected by the eligible well owner, a stipend to cover 25 years of water bills and (iii) the Property Value Protection Plan. The Property Value Protection Plan is a program offered by Duke Energy designed to guarantee eligible plant neighbors the fair market value of their residential property should they decide to sell their property during the time that the plan is offered. Duke Energy received a letter from Plaintiffs' counsel indicating their intent to file suit on February 2, 2017, should a settlement not be reached by that date. Plaintiff’s counsel did not file suit upon the expiration of the tolling agreement on February 2, 2017, and no suit has been filed to date. Duke Energy Carolinas and Duke Energy Progress have recognized reserves of $18$19 million and $4 million, respectively. On August 23, 2017, a class action suit was filed in Wake County Superior Court, North Carolina, against Duke Energy Carolinas and Duke Energy Progress on behalf of certain property owners living near coal ash impoundments at Allen, Asheville, Belews Creek, Buck, Cliffside, Lee, Marshall, Mayo and Roxboro. The class is defined as those who are “well-eligible” under the Coal Ash Act or those to whom Duke Energy has promised a permanent replacement water supply and seeks declaratory and injunctive relief, along with compensatory damages. Plaintiffs allege that Duke Energy’s improper maintenance of coal ash impoundments caused harm, particularly through groundwater contamination. Despite NCDEQ’s preliminary approval, Plaintiffs contend that Duke Energy’s proposed permanent water solutions plan fails to comply with the Coal Ash Act. On September 28, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Motion to Dismiss and Motion to Strike the class designation.
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 one mile from Duke Energy Progress' Sutton Steam Plant (Sutton). The homeowners allege that coal ash constituents have been migrating from ash impoundments at Sutton into their groundwater for decades and that in 2015, Duke Energy Progress discovered these releases of coal ash, but failed to notify any officials or neighbors and failed to take remedial action. The homeowners claim unspecified physical and mental injuries as a result of consuming their well water and seek actual damages for personal injury, medical monitoring and punitive damages.
It is not possible to estimate the maximum exposure of loss, if any, that may occur in connection with current claims or future claims, which might be made by these residents.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





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 March 31,September 30, 2017, there were 111120 asserted claims for non-malignant cases with the cumulative relief sought of up to $29 million, and 5857 asserted claims for malignant cases with the cumulative relief sought of up to $16 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.
Duke Energy Carolinas has recognized asbestos-related reserves of $506$486 million at March 31,September 30, 2017, and $512 million at December 31, 2016. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Condensed Consolidated Balance Sheets. These reserves are based upon the minimum amount of the range of loss for current and future asbestos claims through 2036, are recorded on an undiscounted basis and incorporate anticipated inflation. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after 2036 related to such potential claims. It is possible Duke Energy Carolinas may incur asbestos liabilities in excess of the recorded reserves.
Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. Duke Energy Carolinas’ cumulative payments began to exceed the self-insurance retention in 2008. Future payments up to the policy limit will be reimbursed by the third-party insurance carrier. The insurance policy limit for potential future insurance recoveries indemnification and medical cost claim payments is $814$797 million in excess of the self-insured retention. Receivables for insurance recoveries were $570 million at September 30, 2017, and $587 million at March 31, 2017 and December 31, 2016. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the Condensed Consolidated Balance Sheets. Duke Energy Carolinas is not aware of any uncertainties regarding the legal sufficiency of insurance claims. Duke Energy Carolinas believes the insurance recovery asset is probable of recovery as the insurance carrier continues to have a strong financial strength rating.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy Florida
Class Action Lawsuit
On February 22, 2016, a lawsuit was filed in the U.S. District Court for the Southern District of Florida on behalf of a putative class of Duke Energy Florida and FP&L’s customers in Florida. The suit alleges the State of Florida’s nuclear power plant cost recovery statutes (NCRS) are unconstitutional and pre-empted by federal law. Plaintiffs claim they are entitled to repayment of all money paid by customers of Duke Energy Florida and FP&L as a result of the NCRS, as well as an injunction against any future charges under those statutes. The constitutionality of the NCRS has been challenged unsuccessfully in a number of prior cases on alternative grounds. Duke Energy Florida and FP&L filed motions to dismiss the complaint on May 5, 2016. On September 21, 2016, the Court granted the motions to dismiss with prejudice. Plaintiffs filed a motion for reconsideration, which was denied. On January 4, 2017, plaintiffs filed a notice of appeal. Plaintiffs filed an appellate briefappeal to the Eleventh Circuit U.S. Court of Appeals. The appeal, which has been fully briefed, was heard on March 16,August 22, 2017, and Duke Energy Florida filed responses on April 17, 2017.a decision is pending. Duke Energy Florida cannot predict the outcome of this appeal.
Westinghouse Contract Litigation
On March 28, 2014, Duke Energy Florida filed a lawsuit against Westinghouse in the U.S. District Court for the Western District of North Carolina. The lawsuit seeks recovery of $54 million in milestone payments in excess of work performed under 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 the EPC. Duke Energy Florida recognized an exit obligation as a result of the termination of the EPC.
On March 31, 2014, Westinghouse filed a lawsuit against Duke Energy Florida in U.S. District Court for the Western District of Pennsylvania. The Pennsylvania lawsuit alleged damages under the EPC in excess of $510 million for engineering and design work, costs to end supplier contracts and an alleged termination fee.
On June 9, 2014, the judge in the North Carolina case ruled that the litigation will proceed in the Western District of North Carolina. On July 11, 2016, Duke Energy Florida and Westinghouse filed separate Motions for Summary Judgment. On September 29, 2016, the court issued its ruling on the parties' respective Motions for Summary Judgment, ruling in favor of Westinghouse on a $30 million termination fee claim and dismissing Duke Energy Florida's $54 million refund claim, but stating that Duke Energy Florida could use the refund claim to offset any damages for termination costs. Westinghouse's claim for termination costs was unaffected by this ruling and continued to trial. At trial, Westinghouse reduced its claim for termination costs from $482 million to $424 million. Following a trial on the matter, the court issued its final order in December 2016 denying Westinghouse’s claim for termination costs and re-affirming its earlier ruling in favor of Westinghouse on the $30 million termination fee and Duke Energy Florida’s refund claim. Judgment was entered against Duke Energy Florida in the amount of approximately $34 million, which includes prejudgment interest. Westinghouse has appealed the trial court's order to the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit Court) and Duke Energy Florida has cross-appealed.
It is not possible to Duke Energy Florida cannot predict the ultimate outcome of the appeal of the trial court's order.
On March 29, 2017, Westinghouse filed Chapter 11 bankruptcy in the Southern District of New York, which automatically stayed the appeal. On May 23, 2017, the bankruptcy court entered an order lifting the stay with respect to the appeal. Briefing of the appeal concluded on October 20, 2017, and the parties await a decision form the Fourth Circuit Court on whether it will allow oral argument of the appeal.
Ultimate resolution of these matters could have a material effect on the results of operations, financial position or cash flows of Duke Energy Florida. However, appropriate regulatory recovery will be pursued for the retail portion of any costs incurred in connection with such resolution.
On March 29, 2017, Westinghouse filed Chapter 11 bankruptcy in the Southern District of New York, which could delay the timingSee discussion of the appeal. Additional impacts, if any,2017 Settlement and the Levy Nuclear Project in Note 4 for additional information regarding recovery of this bankruptcy filing on the resolution of the pending appeal and cross-appeal are unknown at this time.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notescosts related to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)Westinghouse.





MGP Cost Recovery Action
On December 30, 2011, Duke Energy Florida filed a lawsuit against FirstEnergy Corp. (FirstEnergy) to recover investigation and remediation costs incurred by Duke Energy Florida in connection with the restoration of two former MGP sites in Florida. Duke Energy Florida alleged that FirstEnergy, as the successor to Associated Gas & Electric Co., owes past and future contribution and response costs of up to $43 million for the investigation and remediation of MGP sites. On December 6, 2016, the trial court entered judgment against Duke Energy Florida in the case. In January 2017, Duke Energy Florida appealed the decision to the U.S. Court of Appeals for the 6th Circuit.Circuit and briefing has been completed. Duke Energy Florida cannot predict the outcome of this appeal.
Duke Energy Indiana
Benton County Wind Farm Dispute
On December 16, 2013, Benton County Wind Farm LLC (BCWF) filed a lawsuit against Duke Energy Indiana seeking damages for past generation losses totaling approximately $16 million alleging Duke Energy Indiana violated its obligations under a 2006 PPA by refusing to offer electricity to the market at negative prices. Damage claims continue to increase during times that BCWF is not dispatched. Under 2013 revised MISO market rules, Duke Energy Indiana is required to make a price offer to MISO for the power it proposes to sell into MISO markets and MISO determines whether BCWF is dispatched. Because market prices would have been negative due to increased market participation, Duke Energy Indiana determined it would not bid at negative prices in order to balance customer needs against BCWF's need to run. BCWF contends Duke Energy Indiana must bid at the lowest negative price to ensure dispatch, while Duke Energy Indiana contends it is not obligated to bid at any particular price, that it cannot ensure dispatch with any bid and that is has reasonably balanced the parties' interests. On July 6, 2015, the U.S. District Court for the Southern District of Indiana entered judgment against BCWF on all claims. BCWF appealed the decision and on December 9, 2016, the appeals court ruled in favor of BCWF. The matter has been remanded to a lower court to determine damages. A settlement conference is scheduled on May 31, 2017. Duke Energy Indiana cannot predict the outcome of this matter. Ultimate resolution of this matter could have a material effect on the results of operations, financial position or cash flows of Duke Energy Indiana. However, appropriate regulatory recovery will be pursued for the retail portion of any costs incurred in connection with such resolution.
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.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The table below presents recorded reserves based on management’s best estimate of probable loss for legal matters, excluding asbestos-related reserves and the exit obligation discussed above related to the termination of an EPC contract. Reserves are classified on the Condensed Consolidated Balance Sheets in Other within Other Noncurrent Liabilities and Accounts payable and Other within Current Liabilities. The reasonably possible range of loss in excess of recorded reserves is not material, other than as described above.
(in millions)March 31, 2017
 December 31, 2016
September 30, 2017
 December 31, 2016
Reserves for Legal Matters      
Duke Energy$91
 $98
$83
 $98
Duke Energy Carolinas23
 23
23
 23
Progress Energy57
 59
56
 59
Duke Energy Progress13
 14
13
 14
Duke Energy Florida27
 28
28
 28
Duke Energy Ohio4
 4

 4
Piedmont2
 2
2
 2
OTHER COMMITMENTS AND CONTINGENCIES
General
As part of their normal business, the Duke Energy Registrants are party to various financial guarantees, performance guarantees and other contractual commitments to extend guarantees of credit and other assistance to various subsidiaries, investees and other third parties. These guarantees involve elements of performance and credit risk, which are not fully recognized on the Condensed Consolidated Balance Sheets and have unlimited maximum potential payments. However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position.
In addition, the Duke Energy Registrants enter into various fixed-price, noncancelable commitments to purchase or sell power or natural gas, take-or-pay arrangements, transportation, or throughput agreements and other contracts that may or may not be recognized on their respective Condensed Consolidated Balance Sheets. Some of these arrangements may be recognized at fair value on their respective Condensed Consolidated Balance Sheets if such contracts meet the definition of a derivative and the normal purchase/normal sale (NPNS) exception does not apply. In most cases, the Duke Energy Registrants’ purchase obligation contracts contain provisions for price adjustments, minimum purchase levels and other financial commitments.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





6. DEBT AND CREDIT FACILITIES
SUMMARY OF SIGNIFICANT DEBT ISSUANCES
The following table summarizes significant debt issuances (in millions). Refer to the "Available Credit Facilities" section below regarding amounts issued under the Three Year Revolver and the Piedmont Term Loan facilities.
    Three Months Ended March 31, 2017
      Duke
 Duke
 MaturityInterest
 Duke
 Energy
 Energy
Issuance DateDateRate
 Energy
 Florida
 Ohio
Secured Debt        
February 2017(a)
June 20344.120% $587
 $
 $
First Mortgage Bonds        
January 2017(b)
January 20201.850% 250
 250
 
January 2017(b)
January 20273.200% 650
 650
 
March 2017(c)
June 20463.700%
100


 100
Total issuances   $1,587
 $900

$100
(a)Portfolio financing of four Texas and Oklahoma wind facilities. Secured by substantially all of the assets of these wind facilities and nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.
(b)Debt issued to fund capital expenditures for ongoing construction and capital maintenance, to repay at maturity a $250 million aggregate principal amount of bonds due September 2017 and for general corporate purposes.
(c)Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance and for general corporate purposes.
In April 2017, Duke Energy (Parent) issued $420 million of unsecured notes with a fixed interest rate of 3.364 percent and maturity date of April 2025. The net proceeds were used to refinance $400 million of unsecured debt at maturity and to repay outstanding commercial paper.
CURRENT MATURITIES OF LONG-TERM DEBT
The following table shows the significant components of Current Maturities of Long-Term Debt on the Condensed Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.
(in millions)Maturity Date Interest Rate
 March 31, 2017
Unsecured Debt     
Duke Energy (Parent)August 2017 1.625% $700
PiedmontSeptember 2017 8.510% 35
Secured Debt     
Duke EnergyJune 2017 2.605% 45
Duke EnergyJune 2017 2.455% 34
First Mortgage Bonds     
Duke Energy FloridaSeptember 2017 5.800% 250
Duke Energy ProgressNovember 2017 1.252% 200
Duke Energy CarolinasJanuary 2018 5.250% 400
Other(a)
    313
Current maturities of long-term debt    $1,977
(a)    Includes capital lease obligations, amortizing debt and small bullet maturities.
    Nine Months Ended September 30, 2017
      Duke
 Duke
 Duke
 Duke
 MaturityInterest
 Duke
 Energy
 Energy
 Energy
 Energy
Issuance DateDateRate
 Energy
 (Parent)
 Progress
 Florida
 Ohio
Unsecured Debt            
April 2017(a)
April 20253.364% $420
 $420
 $
 $
 $
June 2017(b)
June 20202.100% 330
 330
 
 
 
August 2017(c)
August 20222.400% 500
 500
 
 
 
August 2017(c)
August 20273.150% 750
 750
 
 
 
August 2017(c)
August 20473.950% 500
 500
 
 
 
Secured Debt            
February 2017(d)
June 20344.120% 587
 
 
 
 
August 2017(e)
December 20364.110% 233
 
 
 
 
First Mortgage Bonds            
January 2017(f)
January 20201.850% 250
 
 
 250
 
January 2017(f)
January 20273.200% 650
 
 
 650
 
March 2017(g)
June 20463.700%
100


 
 
 100
September 2017(h)
September 20201.500%
(i) 
300


 300
 
 
September 2017(h)
September 20473.600% 500
 
 500
 
 
Total issuances   $5,120
 $2,500

$800
 $900

$100

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





(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)Portfolio financing of four Texas and Oklahoma wind facilities. Secured by substantially all of the assets of these wind facilities and nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.
(e)Portfolio financing of eight solar facilities located in California, Colorado and New Mexico. Secured by substantially all of the assets of these solar facilities and nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.
(f)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.
(g)Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance and for general corporate purposes.
(h)Debt issued to repay at maturity a $200 million aggregate principal amount of bonds due November 2017, pay down intercompany short-term debt and for general corporate purposes, including capital expenditures.
(i)    Debt issuance has a floating interest rate.
CURRENT MATURITIES OF LONG-TERM DEBT
The following table shows the significant components of Current Maturities of Long-Term Debt on the Condensed Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.
(in millions)Maturity Date Interest Rate
 September 30, 2017
Unsecured Debt     
Duke Energy (Parent)June 2018 6.250% $250
Duke Energy (Parent)June 2018 2.100% 500
First Mortgage Bonds     
Duke Energy ProgressNovember 2017 1.516%
(b) 
200
Duke Energy CarolinasJanuary 2018 5.250% 400
Duke Energy CarolinasApril 2018 5.100% 300
Duke Energy FloridaJune 2018 5.650% 500
Other(a)
    335
Current maturities of long-term debt    $2,485
(a)    Includes capital lease obligations, amortizing debt and small bullet maturities.
(b)    Debt issuance has a floating interest rate.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





AVAILABLE CREDIT FACILITIES
Master Credit Facility
In March 2017, Duke Energy amended its Master Credit Facility to increase its capacity from $7.5 billion to $8 billion, and to extend the termination date of the facility from January 30, 2020, to March 16, 2022. The amendment also added Piedmont as a borrower within the Master Credit Facility. Piedmont's separate $850 million credit facility was terminated in connection with the amendment. With the amendment, the Duke Energy Registrants, excluding Progress Energy (Parent), have borrowing capacity under the Master Credit Facility up to a specified sublimit for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder. Duke Energy Carolinas and Duke Energy Progress are also required to each maintain $250 million of available capacity under the Master Credit Facility as security to meet obligations under plea agreements reached with the U.S. Department of Justice in 2015 related to violations at North Carolina facilities with ash basins. The table below includes the current borrowing sublimits and available capacity under the Master Credit Facility.
March 31, 2017  September 30, 2017


 Duke
 Duke
 Duke
 Duke
 Duke
 Duke
  

 Duke
 Duke
 Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Energy
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Energy
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 (Parent)
 Carolinas
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 (Parent)
 Carolinas
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Facility size(a)
$8,000
 $3,400
 $1,100
 $1,000
 $950
 $450
 $600
 $500
$8,000
 $2,850
 $1,350
 $1,250
 $1,000
 $450
 $600
 $500
Reduction to backstop issuances                              
Commercial paper(b)
(3,134) (1,822) (469) (402) 
 (30) (150) (261)(1,569) (404) (636) (150) 
 (25) (150) (204)
Outstanding letters of credit(71) (62) (4) (2) (1) 
 
 (2)(60) (51) (4) (2) (1) 
 
 (2)
Tax-exempt bonds(81) 
 
 
 
 
 (81) 
(81) 
 
 
 
 
 (81) 
Coal ash set-aside(500) 
 (250) (250) 
 
 
 
(500) 
 (250) (250) 
 
 
 
Available capacity$4,214

$1,516

$377

$346

$949

$420

$369
 $237
Available capacity under the Master Credit Facility$5,790

$2,395

$460

$848

$999

$425

$369
 $294
(a)Represents the sublimit of each borrower. Certain sublimits were reallocated in May 2017 to provide additional liquidity to certain borrowers in light of near-term funding needs.
(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 inon the Condensed Consolidated Balance Sheets.
Three-Year Revolving Credit Facility
In June 2017, Duke Energy (Parent) entered into a three-year $1.0 billion revolving credit facility (the Three Year Revolver). Borrowings under this facility will be used for general corporate purposes.
As of September 30, 2017, $270 million has been drawn under the Three Year Revolver. This balance is classified as Long-Term Debt on Duke Energy's Condensed Consolidated Balance Sheets. Any undrawn commitments can be drawn, and borrowings can be prepaid, at any time throughout the term of the facility. The terms and conditions of the Three Year Revolver are generally consistent with those governing Duke Energy's Master Credit Facility.
Piedmont Term Loan Facility
In June 2017, Piedmont entered into an 18-month term loan facility with commitments totaling $250 million (the Piedmont Term Loan). Borrowings under the facility will be used for general corporate purposes.
As of September 30, 2017, the entire $250 million has been drawn under the Piedmont Term Loan. This balance is classified as Long-Term Debt on Piedmont's Condensed Consolidated Balance Sheets. The terms and conditions of the Piedmont Term Loan are generally consistent with those governing Duke Energy's Master Credit Facility.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





7. ASSET RETIREMENT OBLIGATIONS
The Duke Energy Registrants record AROs when there is a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. The following table presents the AROs recorded on the Condensed Consolidated Balance Sheets.
 September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Decommissioning of Nuclear Power Facilities(a)
$5,337
 $1,916
 $3,235
 $2,536
 $699
 $
 $
 $
Closure of Ash Impoundments4,594
 1,650
 2,124
 2,105
 19
 42
 777
 
Other274
 35
 80
 35
 45
 39
 16
 15
Total ARO$10,205
 $3,601
 $5,439
 $4,676
 $763
 $81
 $793
 $15
Less: current portion619
 304
 250
 250
 
 6
 58
 
Total noncurrent ARO$9,586

$3,297

$5,189

$4,426

$763

$75

$735
 $15
(a)    Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.
ARO Liability Rollforward
Actual closure costs incurred could be materially different from current estimates that form the basis of the recorded AROs. The following table presents the change in liability associated with AROs for the Duke Energy Registrants.
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Balance at December 31, 2016(a)
$10,611
 $3,895
 $5,475
 $4,697
 $778
 $77
 $866
 $14
Accretion expense(b)
329
 140
 172
 147
 25
 3
 25
 1
Liabilities settled(c)
(430) (201) (193) (152) (41) (4) (26) (7)
Liabilities incurred in the current year48
 5
 
 
 
 7
 27
 7
Revisions in estimates of cash flows(d)
(353) (238) (15) (16) 1
 (2) (99) 
Balance at September 30, 2017$10,205
 $3,601
 $5,439
 $4,676
 $763
 $81
 $793
 $15
(a)Primarily relates to decommissioning nuclear power facilities, closure of ash impoundments, asbestos removal, closure of landfills at fossil generation facilities, retirement of natural gas mains and removal of renewable energy generation assets.
(b)For the nine months ended September 30, 2017, substantially all accretion expense relates to Duke Energy's regulated electric operations and has been deferred in accordance with regulatory accounting treatment.
(c)Primarily relates to ash impoundment closures and nuclear decommissioning of Crystal River Unit 3.
(d)Primarily relates to favorable contract prices for closure of ash impoundments compared to original estimates.
Asset retirement costs associated with the AROs for operating plants and retired plants are included in Net property, plant and equipment and Regulatory assets within Other Noncurrent Assets, respectively, on the Condensed Consolidated Balance Sheets.
7.8. GOODWILL AND INTANGIBLE ASSETS
GOODWILL
Duke Energy
The following table presents the goodwill by reportable operating segment included on Duke Energy's Condensed Consolidated Balance Sheets at March 31,September 30, 2017, and December 31, 2016.
Electric Utilities
 Gas Utilities
 Commercial
  Electric Utilities
 Gas Utilities
 Commercial
  
(in millions)and Infrastructure
 and Infrastructure
 Renewables
 Total
and Infrastructure
 and Infrastructure
 Renewables
 Total
Goodwill$17,379
 $1,924
 $122
 $19,425
Goodwill Balance at December 31, 2016$17,379
 $1,924
 $122
 $19,425
Accumulated impairment charges (a)

 
 (7) (7)
Goodwill Balance at September 30, 2017$17,379
 $1,924
 $115
 $19,418
(a)Duke Energy evaluated the recoverability of goodwill in the third quarter of 2017 and recorded an impairment of $7 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, which estimates fair value based on market comparables within the energy technologies industry.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Duke Energy Ohio
Duke Energy Ohio's Goodwill balance of $920 million, allocated $596 million to Electric Utilities and Infrastructure and $324 million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $216 million on the Condensed Consolidated Balance Sheets at March 31,September 30, 2017, and December 31, 2016.
Progress Energy
Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure operating segment and there are no accumulated impairment charges.
Piedmont
Piedmont's Goodwill is included in the Gas Utilities and Infrastructure operating segment and there are no accumulated impairment charges. Effective November 1, 2016, Piedmont's fiscal year was changed from October 31 to December 31. Effective with this change, Piedmont changed the date of theirits annual impairment testing of goodwill from October 31 to August 31 to align with the other Duke Energy Registrants.
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. Except for the Energy Management Solutions reporting unit, the fair value of all other reporting units for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis. As such, no other impairment charges were recorded in the third quarter of 2017.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





8.9. RELATED PARTY TRANSACTIONS
The Subsidiary Registrants engage in related party transactions in accordance with applicable state and federal commission regulations. Refer to the Condensed Consolidated Balance Sheets of the Subsidiary Registrants for balances due to or due from related parties. Material amounts related to transactions with related parties included inon the Condensed Consolidated Statements of Operations and Comprehensive Income are presented in the following table.
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
2017
 2016
 2017
 2016
Duke Energy Carolinas          
Corporate governance and shared service expenses(a)
$199
 $217
$205
 $204
 $645
 $620
Indemnification coverages(b)
6
 5
5
 5
 17
 16
JDA revenue(c)
16
 9
9
 10
 42
 21
JDA expense(c)
31
 41
39
 36
 91
 127
Intercompany natural gas purchases(d)
1
 
3
 
 5
 
Progress Energy          
Corporate governance and shared service expenses(a)
$169
 $174
$208
 $182
 $555
 $515
Indemnification coverages(b)
10
 9
10
 9
 29
 25
JDA revenue(c)
31
 41
39
 36
 91
 127
JDA expense(c)
16
 9
9
 10
 42
 21
Intercompany natural gas purchases(d)
19
 
19
 
 57
 
Duke Energy Progress          
Corporate governance and shared service expenses(a)
$103
 $100
$114
 $103
 $321
 $292
Indemnification coverages(b)
4
 4
4
 4
 11
 10
JDA revenue(c)
31
 41
39
 36
 91
 127
JDA expense(c)
16
 9
9
 10
 42
 21
Intercompany natural gas purchases(d)
19
 
19
 
 57
 
Duke Energy Florida          
Corporate governance and shared service expenses(a)
$66
 $74
$94
 $79
 $234
 $223
Indemnification coverages(b)
6
 5
6
 5
 18
 15
Duke Energy Ohio          
Corporate governance and shared service expenses(a)
$90
 $85
$90
 $89
 $275
 $261
Indemnification coverages(b)
1
 1
1
 1
 3
 4
Duke Energy Indiana          
Corporate governance and shared service expenses(a)
$90
 $94
$93
 $96
 $281
 $279
Indemnification coverages(b)
2
 2
2
 2
 6
 6
Piedmont          
Corporate governance and shared service expenses(a)
$6
 $
$10
 $
 $25
 $
Indemnification coverages(b)
1
 
1
 
 2
 
Intercompany natural gas sales(d)
20
 
22
 
 62
 
(a)The Subsidiary Registrants are charged their proportionate share of corporate governance and other shared services costs, primarily related to human resources, employee benefits, information technology, legal and accounting fees, as well as other third-party costs. These amounts are primarily recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.
(b)The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison, Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.
(c)Duke Energy Carolinas and Duke Energy Progress participate in a JDA,Joint Dispatch Agreement (JDA), which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power underand expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues on the Condensed Consolidated Statements of Operations and Comprehensive Income. Expenses from the purchase of power under the JDA are recorded in Fuel used in electric generation and purchased power, respectively, on the Condensed Consolidated Statements of Operations and Comprehensive Income.
(d)Piedmont provides long-term natural gas delivery service to certain Duke Energy Carolinas and Duke Energy Progress'Progress natural gas-fired generation facilities. Piedmont recordedrecords the sales in Operating Revenues – Regulated natural gas revenues, and Duke Energy Carolinas and Duke Energy Progress recordedrecord the related purchases in Operating Expenses – Cost of natural gasFuel used in electric generation and purchased power on their respective Condensed Consolidated Statements of Operations and Comprehensive Income. The amounts are not eliminated in accordance with rate-based accounting regulations. For the three and nine months ended March 31,September 30, 2016, which was prior to the Piedmont acquisition, Piedmont recorded $19 million and $1$57 million, respectively, of natural gas sales with Duke Energy Progress and $1 million and $3 million, respectively, with Duke Energy Carolinas, respectively.Carolinas.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





In addition to the amounts presented above, the Subsidiary Registrants record the impact on net income ofhave 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 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016, for more information regarding the money pool. The net impactThese transactions of these transactions wasthe Subsidiary Registrants were not material for the three and nine months ended March 31,September 30, 2017, and 2016, for the Subsidiary Registrants.2016.
As discussed in Note 1213, 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 also include a subordinated note from the affiliate for a portion of the purchase price.
Equity Method Investments
Piedmont has related party transactions as a customer of its equity method investments in natural gas storage and transportation facilities. Below areThe following table presents expenses for the three and nine months ended March 31,September 30, 2017, and 2016, which are included in Operating Expenses – Cost of natural gas on Piedmont's Condensed Consolidated StatementStatements of Operations and Comprehensive Income.
 Three Months Ended March 31, Three Months Ended September 30, Nine Months Ended September 30,
(in millions)Type of expense20172016Type of expense20172016 20172016
CardinalTransportation Costs$2
$2
Transportation Costs$2
$3
 $6
$7
Pine NeedleGas Storage Costs2
3
Natural Gas Storage Costs2
3
 6
8
Hardy StorageGas Storage Costs2
2
Natural Gas Storage Costs2
2
 7
7
Total $6
$7
 $6
$8
 $19
$22
In association with these transactions, Piedmont hashad accounts payable to its equity method investments of $2 million at March 31,September 30, 2017, and December 31, 2016.2016, related to these transactions. These amounts are included in Accounts payable on the Condensed Consolidated Balance Sheets.
Intercompany Income Taxes
Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.
Duke
 Duke
Duke
Duke
Duke
 Duke
 Duke
Duke
Duke
Duke
 
Energy
Progress
Energy
Energy
Energy
Energy
 Energy
Progress
Energy
Energy
Energy
Energy
 
(in millions)Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
March 31, 2017 
September 30, 2017 
Intercompany income tax receivable$19
$139
$47
$48
$8
$
$
$
$170
$
$120
$
$
$89
Intercompany income tax payable




23
44
173

46

18
104

  
December 31, 2016  
Intercompany income tax receivable$1
$
$
$37
$
$
$
$1
$
$
$37
$
$
$
Intercompany income tax payable
37
90

1
3
38

37
90

1
3
38
9.10. DERIVATIVES AND HEDGING
The Duke Energy Registrants use commodity and interest rate contracts to manage commodity price risk and interest rate risk. The primary use of commodity derivatives is to hedge the generation portfolio against changes in the prices of electricity and natural gas. Piedmont enters into natural gas supply contracts to provide diversification, reliability and natural gas cost benefits to theirits customers. Interest rate swaps are used to manage interest rate risk associated with borrowings.
All derivative instruments not identified as NPNS are recorded at fair value as assets or liabilities on the Condensed Consolidated Balance Sheets. Cash collateral related to derivative instruments executed under master netting arrangements is offset against the collateralized derivatives on the Condensed Consolidated Balance Sheets. The cash impacts of settled derivatives are recorded as operating activities on the Condensed Consolidated Statements of Cash Flows.
INTEREST RATE RISK
The Duke Energy Registrants are exposed to changes in interest rates as a result of their issuance or anticipated issuance of variable-rate and fixed-rate debt and commercial paper. Interest rate risk is managed by limiting variable-rate exposures to a percentage of total debt and by monitoring changes in interest rates. To manage risk associated with changes in interest rates, the Duke Energy Registrants may enter into interest rate swaps, U.S. Treasury lock agreements and other financial contracts. In anticipation of certain fixed-rate debt issuances, a series of forward-starting interest rate swaps or Treasury locks may be executed to lock in components of current market interest rates. These instruments are later terminated prior to or upon the issuance of the corresponding debt.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Cash Flow Hedges
For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. Gains and losses reclassified out of AOCI for the three and nine months ended March 31,September 30, 2017, were not material. Duke Energy's interest rate derivatives designated as hedges include interest rate swaps used to hedge existing debt within the Commercial Renewables business.
Undesignated Contracts
Undesignated contracts include contracts not designated as a hedge because they are accounted for under regulatory accounting and contracts that do not qualify for hedge accounting.
Duke Energy’s interest rate swaps for its regulated operations employ regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the swaps are deferred as regulatory liabilities or regulatory assets, respectively. Regulatory assets and liabilities are amortized consistent with the treatment of the related costs in the ratemaking process. The accrual of interest on the swaps is recorded as Interest Expense.
As of March 31,In August 2016, Duke Energy entered intounwound $1.4 billion of forward-starting interest rate swaps to manage interest rate exposure related toassociated with the Piedmont acquisition financing. The swaps were considered undesignated as they did not qualify for hedge accounting and were marked-to-market, with any gains or losses included within earnings.accounting. For the three and nine months ended March 31,September 30, 2016, unrealized losses on the swaps of $93$22 million and $190 million, respectively, were included within Interest Expense on Duke Energy's Condensed Consolidated Statements of Operations. The swaps were unwound in August 2016 in conjunction with the acquisition financing. See Note 2 for additional information related to the Piedmont acquisition.
The following table shows notional amounts of outstanding derivatives related to interest rate risk as of March 31, 2017 and December 31, 2016.risk.
 September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
Cash flow hedges(a)
$703
 $
 $
 $
 $
 $
Undesignated contracts927
 400
 500
 250
 250
 27
Total notional amount$1,630

$400

$500

$250

$250

$27
 December 31, 2016
   Duke
   Duke
 Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
Cash flow hedges(a)
$750
 $
 $
 $
 $
 $
Undesignated contracts927
 400
 500
 250
 250
 27
Total notional amount$1,677
 $400
 $500
 $250
 $250
 $27
   Duke
   Duke
 Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
Cash flow hedges(a)
$750
 $
 $
 $
 $
 $
Undesignated contracts927
 400
 500
 250
 250
 27
Total notional amount$1,677

$400

$500

$250

$250

$27
(a)    Duke Energy includes amounts related to consolidated VIEs of $750 million as of March 31, 2017 and December 31, 2016.
(a)
Duke Energy includes amounts related to consolidated VIEs of $703 million and $750 million as of September 30, 2017, and December 31, 2016, respectively.
COMMODITY PRICE RISK
The Duke Energy Registrants are exposed to the impact of changes in the prices of electricity purchased and sold in bulk power markets and coal and natural gas purchases, including Piedmont's natural gas supply contracts. Exposure to commodity price risk is influenced by a number of factors including the term of contracts, the liquidity of markets and delivery locations. For the Subsidiary Registrants, bulk power electricity and coal and natural gas purchases flow through fuel adjustment clauses, formula basedformula-based contracts or other cost sharingcost-sharing mechanisms. Differences between the costs included in rates and the incurred costs, including undesignated derivative contracts, are largely deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for the use of financial instruments to hedge commodity price risks. The strategy and objective of these hedging programs are to use the financial instruments to reduce natural gas costs volatility for customers.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Volumes
The tables below include volumes of outstanding commodity derivatives. Amounts disclosed represent the absolute value of notional volumes of commodity contracts excluding NPNS. The Duke Energy Registrants have netted contractual amounts where offsetting purchase and sale contracts exist with identical delivery locations and times of delivery. Where all commodity positions are perfectly offset, no quantities are shown.
March 31, 2017September 30, 2017
  Duke
   Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  
Energy
 Carolinas
 Energy
 Progress
 Florida
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Indiana
 Piedmont
Electricity (gigawatt-hours)184
 
 
 
 
 184
 
112
 
 
 
 
 112
 
Natural gas (millions of dekatherms)817
 85
 228
 105
 123
 
 504
786
 103
 193
 124
 69
 1
 489
December 31, 2016December 31, 2016
  Duke
   Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  
Energy
 Carolinas
 Energy
 Progress
 Florida
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Indiana
 Piedmont
Electricity (gigawatt-hours)147
 
 
 
 
 147
 
147
 
 
 
 
 147
 
Natural gas (millions of dekatherms)890
 91
 269
 118
 151
 1
 529
890
 91
 269
 118
 151
 1
 529

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





LOCATION AND FAIR VALUE OF DERIVATIVE ASSETS AND LIABILITIES RECOGNIZED INON THE CONDENSED CONSOLIDATED BALANCE SHEETS
The following tables show the fair value and balance sheet location of derivative instruments. Although derivatives subject to master netting arrangements are netted on the Condensed Consolidated Balance Sheets, the fair values presented below are shown gross and cash collateral on the derivatives has not been netted against the fair values shown.
Derivative Assets March 31, 2017 September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Commodity Contracts                                
Not Designated as Hedging Instruments                                
Current $58
 $16
 $30
 $19
 $11
 $
 $9
 $2
 $48
 $6
 $10
 $5
 $4
 $2
 $28
 $2
Noncurrent 5
 1
 2
 1
 1
 1
 
 
 6
 2
 4
 3
 1
 
 
 
Total Derivative Assets – Commodity Contracts $63
 $17
 $32
 $20
 $12
 $1
 $9
 $2
 $54
 $8
 $14
 $8
 $5
 $2
 $28
 $2
Interest Rate Contracts                                
Designated as Hedging Instruments                                
Noncurrent $18
 $
 $
 $
 $
 $
 $
 $
 $14
 $
 $
 $
 $
 $
 $
 $
Not Designated as Hedging Instruments                                
Current 2
 
 2
 
 2
 
 
 
 1
 
 1
 
 1
 
 
 
Total Derivative Assets – Interest Rate Contracts $20
 $
 $2
 $
 $2
 $
 $
 $
 $15
 $
 $1
 $
 $1
 $
 $
 $
Total Derivative Assets $83

$17

$34

$20

$14

$1

$9
 $2
 $69

$8

$15

$8

$6

$2

$28
 $2
Derivative Liabilities March 31, 2017 September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Commodity Contracts                                
Not Designated as Hedging Instruments                                
Current $32
 $
 $17
 $1
 $17
 $
 $
 $14
 $29
 $1
 $11
 $2
 $9
 $
 $
 $18
Noncurrent 145
 4
 11
 4
 1
 
 
 131
 113
 1
 7
 1
 
 
 
 105
Total Derivative Liabilities – Commodity Contracts $177
 $4
 $28
 $5
 $18
 $
 $
 $145
 $142
 $2
 $18
 $3
 $9
 $
 $
 $123
Interest Rate Contracts                                
Designated as Hedging Instruments                                
Current $8
 $
 $
 $
 $
 $
 $
 $
 $7
 $
 $
 $
 $
 $
 $
 $
Noncurrent 9
 
 
 
 
 
 
 
 9
 
 
 
 
 
 
 
Not Designated as Hedging Instruments                                
Current 1
 
 
 
 
 1
 
 
 24
 23
 
 
 
 1
 
 
Noncurrent 21
 10
 6
 5
 1
 4
 
 
 9
 
 4
 4
 
 4
 
 
Total Derivative Liabilities – Interest Rate Contracts $39
 $10
 $6
 $5
 $1
 $5
 $
 $
 $49
 $23
 $4
 $4
 $
 $5
 $
 $
Total Derivative Liabilities $216

$14

$34

$10

$19

$5

$
 $145
 $191

$25

$22

$7

$9

$5

$
 $123

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Derivative Assets December 31, 2016 December 31, 2016
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Commodity Contracts                                
Not Designated as Hedging Instruments                                
Current $108
 $23
 $61
 $35
 $26
 $4
 $16
 $3
 $108
 $23
 $61
 $35
 $26
 $4
 $16
 $3
Noncurrent 32
 10
 21
 10
 11
 1
 
 
 32
 10
 21
 10
 11
 1
 
 
Total Derivative Assets – Commodity Contracts $140
 $33
 $82
 $45
 $37
 $5
 $16
 $3
 $140
 $33
 $82
 $45
 $37
 $5
 $16
 $3
Interest Rate Contracts                                
Designated as Hedging Instruments                                
Noncurrent $19
 $
 $
 $
 $
 $
 $
 $
 $19
 $
 $
 $
 $
 $
 $
 $
Not Designated as Hedging Instruments                                
Current 3
 
 3
 1
 2
 
 
 
 3
 
 3
 1
 2
 
 
 
Total Derivative Assets – Interest Rate Contracts $22
 $
 $3
 $1
 $2
 $
 $
 $
 $22
 $
 $3
 $1
 $2
 $
 $
 $
Total Derivative Assets $162
 $33
 $85
 $46
 $39
 $5
 $16
 $3
 $162
 $33
 $85
 $46
 $39
 $5
 $16
 $3
Derivative Liabilities December 31, 2016 December 31, 2016
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Commodity Contracts                                
Not Designated as Hedging Instruments                                
Current $43
 $
 $12
 $
 $12
 $
 $2
 $35
 $43
 $
 $12
 $
 $12
 $
 $2
 $35
Noncurrent 166
 1
 7
 1
 
 
 
 152
 166
 1
 7
 1
 
 
 
 152
Total Derivative Liabilities – Commodity Contracts $209
 $1
 $19
 $1
 $12
 $
 $2
 $187
 $209
 $1
 $19
 $1
 $12
 $
 $2
 $187
Interest Rate Contracts                                
Designated as Hedging Instruments                                
Current $8
 $
 $
 $
 $
 $
 $
 $
 $8
 $
 $
 $
 $
 $
 $
 $
Noncurrent 8
 
 
 
 
 
 
 
 8
 
 
 
 
 
 
 
Not Designated as Hedging Instruments               
               
Current 1
 
 
 
 
 1
 
 
 1
 
 
 
 
 1
 
 
Noncurrent 26
 15
 6
 6
 
 5
 
 
 26
 15
 6
 6
 
 5
 
 
Total Derivative Liabilities – Interest Rate Contracts $43
 $15
 $6
 $6
 $
 $6
 $
 $
 $43
 $15
 $6
 $6
 $
 $6
 $
 $
Total Derivative Liabilities $252
 $16
 $25
 $7
 $12
 $6
 $2
 $187
 $252
 $16
 $25
 $7
 $12
 $6
 $2
 $187
OFFSETTING ASSETS AND LIABILITIES
The following tables present the line items on the Condensed Consolidated Balance Sheets where derivatives are reported. Substantially all of Duke Energy's outstanding derivative contracts are subject to enforceable master netting arrangements. The Gross amounts offset in the tables below show the effect of these netting arrangements on financial position, and include collateral posted to offset the net position. The amounts shown are calculated by counterparty. Accounts receivable or accounts payable may also be available to offset exposures in the event of bankruptcy. These amounts are not included in the tables below.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Derivative Assets March 31, 2017 September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Current                                
Gross amounts recognized $60
 $16
 $32
 $19
 $13
 $
 $9
 $2
 $49
 $6
 $11
 $5
 $5
 $2
 $28
 $2
Gross amounts offset (7) 
 (7) (1) (6) 
 
 
 (3) 
 (3) (1) (2) 
 
 
Net amounts presented in Current Assets: Other $53
 $16
 $25
 $18
 $7
 $
 $9
 $2
 $46
 $6
 $8
 $4
 $3
 $2
 $28
 $2
Noncurrent                                
Gross amounts recognized $23
 $1
 $2
 $1
 $1
 $1
 $
 $
 $20
 $2
 $4
 $3
 $1
 $
 $
 $
Gross amounts offset (2) (1) (1) (1) 
 
 
 
 (2) (1) (1) (1) 
 
 
 
Net amounts presented in Other Noncurrent Assets: Other $21
 $
 $1
 $
 $1
 $1
 $
 $
 $18
 $1
 $3
 $2
 $1
 $
 $
 $
Derivative Liabilities March 31, 2017 September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Current                                
Gross amounts recognized $41
 $
 $17
 $1
 $17
 $1
 $
 $14
 $60
 $24
 $11
 $2
 $9
 $1
 $
 $18
Gross amounts offset (7) 
 (7) (1) (6) 
 
 
 (4) (1) (3) (1) (2) 
 
 
Net amounts presented in Current Liabilities: Other $34
 $
 $10
 $
 $11
 $1
 $
 $14
 $56
 $23
 $8
 $1
 $7
 $1
 $
 $18
Noncurrent                                
Gross amounts recognized $175
 $14
 $17
 $9
 $2
 $4
 $
 $131
 $131
 $1
 $11
 $5
 $
 $4
 $
 $105
Gross amounts offset (2) (1) (1) (1) 
 
 
 
 (2) (1) (1) (1) 
 
 
 
Net amounts presented in Other Noncurrent Liabilities: Other $173
 $13
 $16
 $8
 $2
 $4
 $
 $131
 $129
 $
 $10
 $4
 $
 $4
 $
 $105
Derivative Assets December 31, 2016 December 31, 2016
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Current                                
Gross amounts recognized $111
 $23
 $64
 $36
 $28
 $4
 $16
 $3
 $111
 $23
 $64
 $36
 $28
 $4
 $16
 $3
Gross amounts offset (11) 
 (11) 
 (11) 
 
 
 (11) 
 (11) 
 (11) 
 
 
Net amounts presented in Current Assets: Other $100
 $23
 $53
 $36
 $17
 $4
 $16
 $3
 $100
 $23
 $53
 $36
 $17
 $4
 $16
 $3
Noncurrent                                
Gross amounts recognized $51
 $10
 $21
 $10
 $11
 $1
 $
 $
 $51
 $10
 $21
 $10
 $11
 $1
 $
 $
Gross amounts offset (2) (1) (1) (1) 
 
 
 
 (2) (1) (1) (1) 
 
 
 
Net amounts presented in Other Noncurrent Assets: Other $49
 $9
 $20
 $9
 $11
 $1
 $
 $
 $49
 $9
 $20
 $9
 $11
 $1
 $
 $

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Derivative Liabilities December 31, 2016 December 31, 2016
   Duke
   Duke
 Duke
 Duke
 Duke
     Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
   Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions) Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
 Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Current                                
Gross amounts recognized $52
 $
 $12
 $
 $12
 $1
 $2
 $35
 $52
 $
 $12
 $
 $12
 $1
 $2
 $35
Gross amounts offset (11) 
 (11) 
 (11) 
 
 
 (11) 
 (11) 
 (11) 
 
 
Net amounts presented in Current Liabilities: Other $41
 $
 $1
 $
 $1
 $1
 $2
 $35
 $41
 $
 $1
 $
 $1
 $1
 $2
 $35
Noncurrent                                
Gross amounts recognized $200
 $16
 $13
 $7
 $
 $5
 $
 $152
 $200
 $16
 $13
 $7
 $
 $5
 $
 $152
Gross amounts offset (2) (1) (1) (1) 
 
 
 
 (2) (1) (1) (1) 
 
 
 
Net amounts presented in Other Noncurrent Liabilities: Other $198
 $15
 $12
 $6
 $
 $5
 $
 $152
 $198
 $15
 $12
 $6
 $
 $5
 $
 $152
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. Amounts for Duke Energy Ohio, Duke Energy Indiana and Piedmont were not material.
March 31, 2017September 30, 2017
  Duke
   Duke
 Duke
  Duke
   Duke
 Duke
Duke
 Energy
 Progress
 Energy
 Energy
Duke
 Energy
 Progress
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
Energy
 Carolinas
 Energy
 Progress
 Florida
Aggregate fair value of derivatives in a net liability position$40
 $14
 $25
 $9
 $17
$40
 $25
 $15
 $6
 $9
Fair value of collateral already posted
 
 
 
 

 
 
 
 
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered40
 14
 25
 9
 17
40
 25
 15
 6
 9
December 31, 2016December 31, 2016
  Duke
   Duke
 Duke
  Duke
   Duke
 Duke
Duke
 Energy
 Progress
 Energy
 Energy
Duke
 Energy
 Progress
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
Energy
 Carolinas
 Energy
 Progress
 Florida
Aggregate fair value of derivatives in a net liability position$34
 $16
 $18
 $6
 $12
$34
 $16
 $18
 $6
 $12
Fair value of collateral already posted
 
 
 
 

 
 
 
 
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered34
 16
 18
 6
 12
34
 16
 18
 6
 12
The Duke Energy Registrants have elected to offset cash collateral and fair values of derivatives. For amounts to be netted, the derivative and cash collateral must be executed with the same counterparty under the same master netting arrangement.
 
10.11. INVESTMENTS IN DEBT AND EQUITY SECURITIES
The Duke Energy Registrants classify their investments in debt and equity securities as either trading or available-for-sale.
TRADING SECURITIES
Piedmont's investments in debt and equity securities held in rabbi trusts associated with certain deferred compensation plans are classified as trading securities. The fair value of these investments was $1 million and $5 million as of March 31,September 30, 2017, and December 31, 2016.2016, respectively.
AVAILABLE-FOR-SALE (AFS) SECURITIES
All other investments in debt and equity securities are classified as available-for-sale.AFS.
Duke Energy’s available-for-sale securities are primarily comprised of investments held in (i) the nuclear decommissioning trust fund (NDTF) at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to Other Post-Retirement Benefit Obligations (OPEB) plans and (iii) Bison.
Duke Energy classifies all other investments in debt and equity securities as long term, unless otherwise noted.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Investment Trusts
The investments within the NDTF investments and the Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana grantor trusts (Investment Trusts) are managed by independent investment managers with discretion to buy, sell and invest pursuant to the objectives set forth by the trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt and equity securities within the Investment Trusts are considered OTTIsother-than-temporary impairments (OTTIs) and are recognized immediately.
Investments within the Investment Trusts generally qualify for regulatory accounting, and accordingly realized and unrealized gains and losses are deferred as a regulatory asset or liability.
Substantially all amounts of the Duke Energy Registrants' gross unrealized holding losses as of September 30, 2017, and December 31, 2016, are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.
Other Available-for-SaleAFS Securities
Unrealized gains and losses on all other available-for-saleAFS securities are included in other comprehensive income until realized, unless it is determined the carrying value of an investment is other-than-temporarily impaired. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value should be considered other-than-temporary. If an OTTI exists, the unrealized credit loss is included in earnings. There were no material credit losses as of March 31,September 30, 2017, and December 31, 2016.
Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
DUKE ENERGY
The following table presents the estimated fair value of investments in available-for-saleAFS securities.
March 31, 2017 December 31, 2016September 30, 2017 December 31, 2016
Gross
 Gross
   Gross
 Gross
  Gross
 Gross
   Gross
 Gross
  
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
(in millions)Gains
 
Losses(a)

 Value
 Gains
 
Losses(a)

 Value
Gains
 Losses
 Value
 Gains
 Losses
 Value
NDTF                      
Cash and cash equivalents$
 $
 $114
 $
 $
 $111
$
 $
 $129
 $
 $
 $111
Equity securities2,250
 32
 4,284
 2,092
 54
 4,106
2,549
 28
 4,627
 2,092
 54
 4,106
Corporate debt securities10
 5
 576
 10
 8
 528
16
 2
 600
 10
 8
 528
Municipal bonds3
 6
 336
 3
 10
 331
5
 2
 334
 3
 10
 331
U.S. government bonds10
 8
 949
 10
 8
 984
10
 4
 984
 10
 8
 984
Other debt securities
 3
 132
 
 3
 124

 1
 120
 
 3
 124
Total NDTF$2,273
 $54
 $6,391
 $2,115
 $83
 $6,184
$2,580
 $37
 $6,794
 $2,115
 $83
 $6,184
Other Investments                      
Cash and cash equivalents$
 $
 $18
 $
 $
 $25
$
 $
 $15
 $
 $
 $25
Equity securities44
 
 106
 38
 
 104
52
 
 115
 38
 
 104
Corporate debt securities1
 
 60
 1
 1
 66
1
 
 64
 1
 1
 66
Municipal bonds2
 1
 84
 2
 1
 82
3
 1
 83
 2
 1
 82
U.S. government bonds
 
 43
 
 1
 51

 
 44
 
 1
 51
Other debt securities
 2
 42
 
 2
 42

 
 37
 
 2
 42
Total Other Investments(b)
$47
 $3
 $353
 $41
 $5
 $370
$56
 $1
 $358
 $41
 $5
 $370
Total Investments$2,320
 $57
 $6,744
 $2,156
 $88
 $6,554
$2,636
 $38
 $7,152
 $2,156
 $88
 $6,554
(a)Substantially all amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.
(b)These amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
The table below summarizes the maturity date for debt securities.
(in millions)March 31, 2017
September 30, 2017
Due in one year or less$82
$92
Due after one through five years640
584
Due after five through 10 years514
514
Due after 10 years986
1,076
Total$2,222
$2,266

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-saleAFS securities were as follows.
Three Months EndedThree Months Ended Nine Months Ended
March 31,September 30, September 30,
(in millions)2017
 2016
2017
 2016
 2017
 2016
Realized gains$93
 $54
$37
 $82
 $170
 $200
Realized losses62
 50
25
 42
 124
 134
DUKE ENERGY CAROLINAS
The following table presents the estimated fair value of investments in available-for-saleAFS securities.
March 31, 2017 December 31, 2016September 30, 2017 December 31, 2016
Gross
 Gross
   Gross
 Gross
  Gross
 Gross
   Gross
 Gross
  
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
(in millions)Gains
 
Losses(a)

 Value
 Gains
 
Losses(a)

 Value
Gains
 Losses
 Value
 Gains
 Losses
 Value
NDTF                      
Cash and cash equivalents$
 $
 $20
 $
 $
 $18
$
 $
 $34
 $
 $
 $18
Equity securities1,229
 15
 2,366
 1,157
 28
 2,245
1,395
 14
 2,553
 1,157
 28
 2,245
Corporate debt securities5
 4
 388
 5
 6
 354
9
 2
 395
 5
 6
 354
Municipal bonds1
 1
 67
 1
 2
 67
1
 
 52
 1
 2
 67
U.S. government bonds3
 5
 431
 2
 5
 458
3
 3
 466
 2
 5
 458
Other debt securities
 3
 120
 
 3
 116

 1
 113
 
 3
 116
Total NDTF$1,238
 $28

$3,392
 $1,165
 $44
 $3,258
$1,408
 $20

$3,613
 $1,165
 $44
 $3,258
Other Investments                      
Other debt securities$
 $1
 $3
 $
 $1
 $3

 
 
 
 1
 3
Total Other Investments(b)
$
 $1
 $3
 $
 $1
 $3
Total Investments$1,238
 $29
 $3,395
 $1,165
 $45
 $3,261
$1,408
 $20
 $3,613
 $1,165
 $45
 $3,261
(a)Substantially all amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.
(b)These amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
The table below summarizes the maturity date for debt securities.
(in millions)March 31, 2017
September 30, 2017
Due in one year or less$2
$5
Due after one through five years221
218
Due after five through 10 years269
264
Due after 10 years517
539
Total$1,009
$1,026
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-saleAFS securities were as follows.
Three Months EndedThree Months Ended Nine Months Ended
March 31,September 30, September 30,
(in millions)2017
 2016
2017
 2016
 2017
 2016
Realized gains$66
 $34
$20
 $58
 $110
 $125
Realized losses40
 37
13
 28
 76
 84

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





PROGRESS ENERGY
The following table presents the estimated fair value of investments in available-for-saleAFS securities.
March 31, 2017 December 31, 2016September 30, 2017 December 31, 2016
Gross
 Gross
   Gross
 Gross
  Gross
 Gross
   Gross
 Gross
  
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
(in millions)Gains
 
Losses(a)

 Value
 Gains
 
Losses(a)

 Value
Gains
 Losses
 Value
 Gains
 Losses
 Value
NDTF                      
Cash and cash equivalents$
 $
 $94
 $
 $
 $93
$
 $
 $95
 $
 $
 $93
Equity securities1,021
 17
 1,918
 935
 26
 1,861
1,154
 14
 2,074
 935
 26
 1,861
Corporate debt securities5
 1
 188
 5
 2
 174
7
 
 205
 5
 2
 174
Municipal bonds2
 5
 269
 2
 8
 264
4
 2
 282
 2
 8
 264
U.S. government bonds7
 3
 518
 8
 3
 526
7
 1
 518
 8
 3
 526
Other debt securities
 
 12
 
 
 8

 
 7
 
 
 8
Total NDTF$1,035
 $26
 $2,999
 $950
 $39
 $2,926
$1,172
 $17
 $3,181
 $950
 $39
 $2,926
Other Investments                      
Cash and cash equivalents$
 $
 $12
 $
 $
 $21
$
 $
 $11
 $
 $
 $21
Municipal bonds2
 
 46
 2
 
 44
3
 
 47
 2
 
 44
Total Other Investments(b)
$2
 $
 $58
 $2
 $
 $65
$3
 $
 $58
 $2
 $
 $65
Total Investments$1,037
 $26
 $3,057
 $952
 $39
 $2,991
$1,175
 $17
 $3,239
 $952
 $39
 $2,991
(a)Substantially all amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.
(b)These amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
The table below summarizes the maturity date for debt securities.
(in millions)March 31, 2017
September 30, 2017
Due in one year or less$72
$74
Due after one through five years355
309
Due after five through 10 years189
194
Due after 10 years417
482
Total$1,033
$1,059
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-saleAFS securities were as follows.
Three Months EndedThree Months Ended Nine Months Ended
March 31,September 30, September 30,
(in millions)2017
 2016
2017
 2016
 2017
 2016
Realized gains$27
 $19
$16
 $21
 $58
 $71
Realized losses21
 13
12
 13
 47
 49

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





DUKE ENERGY PROGRESS
The following table presents the estimated fair value of investments in available-for-saleAFS securities.
March 31, 2017 December 31, 2016September 30, 2017 December 31, 2016
Gross
 Gross
   Gross
 Gross
  Gross
 Gross
   Gross
 Gross
  
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
(in millions)Gains
 
Losses(a)

 Value
 Gains
 
Losses(a)

 Value
Gains
 Losses
 Value
 Gains
 Losses
 Value
NDTF                      
Cash and cash equivalents$
 $
 $43
 $
 $
 $45
$
 $
 $46
 $
 $
 $45
Equity securities772
 13
 1,541
 704
 21
 1,505
882
 11
 1,683
 704
 21
 1,505
Corporate debt securities4
 1
 131
 4
 1
 120
5
 
 144
 4
 1
 120
Municipal bonds2
 5
 268
 2
 8
 263
4
 2
 281
 2
 8
 263
U.S. government bonds5
 2
 284
 5
 2
 275
5
 1
 303
 5
 2
 275
Other debt securities
 
 7
 
 
 5

 
 4
 
 
 5
Total NDTF$783
 $21
 $2,274
 $715
 $32
 $2,213
$896
 $14
 $2,461
 $715
 $32
 $2,213
Other Investments                      
Cash and cash equivalents$
 $
 $1
 $
 $
 $1
$
 $
 $1
 $
 $
 $1
Total Other Investments(b)
$
 $
 $1
 $
 $
 $1
Total Investments$783
 $21
 $2,275
 $715
 $32
 $2,214
$896
 $14
 $2,462
 $715
 $32
 $2,214
(a)Substantially all amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.
(b)These amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
The table below summarizes the maturity date for debt securities.
(in millions)March 31, 2017
September 30, 2017
Due in one year or less$17
$16
Due after one through five years215
209
Due after five through 10 years142
136
Due after 10 years316
371
Total$690
$732
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-saleAFS securities were as follows.
Three Months EndedThree Months Ended Nine Months Ended
March 31,September 30, September 30,
(in millions)2017
 2016
2017
 2016
 2017
 2016
Realized gains$24
 $15
$14
 $18
 $49
 $60
Realized losses19
 11
11
 11
 41
 42

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





DUKE ENERGY FLORIDA
The following table presents the estimated fair value of investments in available-for-saleAFS securities.
March 31, 2017 December 31, 2016September 30, 2017 December 31, 2016
Gross
 Gross
   Gross
 Gross
  Gross
 Gross
   Gross
 Gross
  
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
(in millions)Gains
 
Losses(a)

 Value
 Gains
 
Losses(a)

 Value
Gains
 Losses
 Value
 Gains
 Losses
 Value
NDTF                      
Cash and cash equivalents$
 $
 $51
 $
 $
 $48
$
 $
 $49
 $
 $
 $48
Equity securities249
 4
 377
 231
 5
 356
272
 3
 391
 231
 5
 356
Corporate debt securities1
 
 57
 1
 1
 54
2
 
 61
 1
 1
 54
Municipal bonds
 
 1
 
 
 1

 
 1
 
 
 1
U.S. government bonds2
 1
 234
 3
 1
 251
2
 
 215
 3
 1
 251
Other debt securities
 
 5
 
 
 3

 
 3
 
 
 3
Total NDTF(b)(a)
$252
 $5
 $725
 $235
 $7
 $713
$276
 $3
 $720
 $235
 $7
 $713
Other Investments                      
Cash and cash equivalents$
 $
 $1
 $
 $
 $4
$
 $
 $
 $
 $
 $4
Municipal bonds2
 
 46
 2
 
 44
3
 
 47
 2
 
 44
Total Other Investments(c)
$2
 $
 $47
 $2
 $
 $48
$3
 $
 $47
 $2
 $
 $48
Total Investments$254
 $5
 $772
 $237
 $7
 $761
$279
 $3
 $767
 $237
 $7
 $761
(a)Substantially all amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.
(b)During the threenine months ended March 31,September 30, 2017, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing commissioningdecommissioning activity of the Crystal River Unit 3 nuclear plant.
(c)These amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
The table below summarizes the maturity date for debt securities.
(in millions)March 31, 2017
September 30, 2017
Due in one year or less$55
$58
Due after one through five years140
100
Due after five through 10 years47
58
Due after 10 years101
111
Total$343
$327
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-saleAFS securities were as follows.
Three Months EndedThree Months Ended Nine Months Ended
March 31,September 30, September 30,
(in millions)2017
 2016
2017
 2016
 2017
 2016
Realized gains$3
 $4
$2
 $3
 $9
 $11
Realized losses2
 2
1
 2
 6
 7

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





DUKE ENERGY INDIANA
The following table presents the estimated fair value of investments in available-for-saleAFS securities.
March 31, 2017 December 31, 2016September 30, 2017 December 31, 2016
Gross
 Gross
   Gross
 Gross
  Gross
 Gross
   Gross
 Gross
  
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Unrealized
 Unrealized
 Estimated
 Unrealized
 Unrealized
 Estimated
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
Holding
 Holding
 Fair
 Holding
 Holding
 Fair
(in millions)Gains
 
Losses(a)

 Value
 Gains
 
Losses(a)

 Value
Gains
 Losses
 Value
 Gains
 Losses
 Value
Other Investments           
Investments           
Equity securities$38
 $
 $84
 $33
 $
 $79
$44
 $
 $91
 $33
 $
 $79
Corporate debt securities
 
 2
 
 
 2

 
 3
 
 
 2
Municipal bonds
 1
 28
 
 1
 28

 1
 28
 
 1
 28
U.S. government bonds
 
 1
 
 
 1

 
 
 
 
 1
Total Other Investments(b)
$38
 $1

$115
 $33
 $1
 $110
Total Investments$38
 $1
 $115
 $33
 $1
 $110
$44
 $1
 $122
 $33
 $1
 $110
(a)Substantially all amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.
(b)These amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
The table below summarizes the maturity date for debt securities.
(in millions)March 31, 2017
September 30, 2017
Due in one year or less$2
$4
Due after one through five years15
12
Due after five through 10 years9
8
Due after 10 years5
7
Total$31
$31
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-saleAFS securities were insignificant for the three and nine months ended March 31,September 30, 2017, and 2016.
11.12. FAIR VALUE MEASUREMENTS
Fair value is the exchange price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value definition focuses on an exit price versus the acquisition cost. Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data or generally unobservable. Valuation techniques maximize the use of observable inputs and minimize use of unobservable inputs. A midmarket pricing convention (the midpoint price between bid and ask prices) is permitted for use as a practical expedient.
Fair value measurements are classified in three levels based on the fair value hierarchy:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. An active market is one in which transactions for an asset or liability occur with sufficient frequency and volume to provide ongoing pricing information.
Level 2 – A fair value measurement utilizing inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly, for an asset or liability. Inputs include (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active (iii) and inputs other than quoted market prices that are observable for the asset or liability, such as interest rate curves and yield curves observable at commonly quoted intervals, volatilities and credit spreads. A Level 2 measurement cannot have more than an insignificant portion of its valuation based on unobservable inputs. Instruments in this category include non-exchange-traded derivatives, such as over-the-counter forwards, swaps and options; certain marketable debt securities; and financial instruments traded in less-than-active markets.
Level 3 – Any fair value measurement that includes unobservable inputs for more than an insignificant portion of the valuation. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Level 3 measurements may include longer-term instruments that extend into periods in which observable inputs are not available.
Not Categorized – Certain investments are not categorized within the Fair Value hierarchy. These investments are measured based on the fair value of the underlying investments but may not be readily redeemable at that fair value.
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.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Transfers between levels represent assets or liabilities that were previously (i) categorized at a higher level for which the inputs to the estimate became less observable or (ii) classified at a lower level for which the inputs became more observable during the period. The Duke Energy Registrant’s policy is to recognize transfers between levels of the fair value hierarchy at the end of the period. There were no transfers between levels during the three and nine months ended March 31,September 30, 2017, and 2016.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





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 New York Stock Exchange (NYSE) and Nasdaq Stock Market. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. There was no after-hours market activity that was required to be reflected in the reported fair value measurements.
Investments in debt securities
Most investments in debt securities are valued using Level 2 measurements because the valuations use interest rate curves and credit spreads applied to the terms of the debt instrument (maturity and coupon interest rate) and consider the counterparty credit rating. If the market for a particular fixed-income security is relatively inactive or illiquid, the measurement is Level 3.
Commodity derivatives
Commodity derivatives with clearinghouses are classified as Level 1. Other commodity derivatives, including Piedmont's natural gas supply contracts, are primarily valued using internally developed discounted cash flow models that incorporate forward price, adjustments for liquidity (bid-ask spread) and credit or non-performance risk (after reflecting credit enhancements such as collateral), and are discounted to present value. Pricing inputs are derived from published exchange transaction prices and other observable data sources. In the absence of an active market, the last available price may be used. If forward price curves are not observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.
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 2 related to the acquisition of Piedmont in 2016. See Note 11 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, 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 Condensed Consolidated Balance Sheets. Derivative amounts in the tabletables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note 9.10. See Note 1011 for additional information related to investments by major security type.type for the Duke Energy Registrants.
March 31, 2017September 30, 2017
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Not categorized
Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
Nuclear decommissioning trust fund equity securities$4,284
$4,207
$
$
$77
Nuclear decommissioning trust fund debt securities2,107
602
1,505


Other trading and available-for-sale equity securities110
110



Other trading and available-for-sale debt securities248
61
182
5

NDTF equity securities$4,627
$4,549
$
$
$78
NDTF debt securities2,167
617
1,550


Other trading and AFS equity securities116
116



Other AFS debt securities243
59
184


Derivative assets83
2
71
10

69
4
35
30

Total assets6,832
4,982
1,758
15
77
7,222
5,345
1,769
30
78
Derivative liabilities(216)
(71)(145)
(191)
(68)(123)
Net assets (liabilities)$6,616
$4,982
$1,687
$(130)$77
$7,031
$5,345
$1,701
$(93)$78

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





December 31, 2016December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Not categorized
Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
Nuclear decommissioning trust fund equity securities$4,106
$4,029
$
$
$77
Nuclear decommissioning trust fund debt securities2,078
632
1,446


Other trading and available-for-sale equity securities104
104



Other trading and available-for-sale debt securities266
75
186
5

NDTF equity securities$4,106
$4,029
$
$
$77
NDTF debt securities2,078
632
1,446


Other trading and AFS equity securities104
104



Other trading and AFS debt securities266
75
186
5

Derivative assets162
5
136
21

162
5
136
21

Total assets6,716
4,845
1,768
26
77
6,716
4,845
1,768
26
77
Derivative liabilities(252)(2)(63)(187)
(252)(2)(63)(187)
Net assets (liabilities)$6,464
$4,843
$1,705
$(161)$77
$6,464
$4,843
$1,705
$(161)$77
The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements. Amounts included in earnings for derivatives are primarily included in Operating Revenues.Cost of natural gas on the Duke Energy Registrants' Condensed Consolidated Statements of Operations and Comprehensive Income. Amounts included in changes of net assets on the Duke Energy Registrants' Condensed Consolidated Balance Sheets are included in regulatory assets or liabilities. All derivative assets and liabilities are presented on a net basis.
 Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
(in millions)Investments
 Derivatives (net)
 Total
 Investments
 Derivatives (net)
 Total
Balance at beginning of period$
 $(91) $(91) $4
 $34
 $38
Purchases, sales, issuances and settlements:    

      
Settlements
 (12) (12) 
 (9) (9)
Total gains (losses) included on the Condensed Consolidated Balance Sheet
 10
 10
 
 (2) (2)
Balance at end of period$
 $(93) $(93) $4
 $23
 $27
 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(in millions)Investments
 Derivatives (net)
 Total
 Investments
 Derivatives (net)
 Total
Balance at beginning of period$5
 $(166) $(161) $5
 $10
 $15
Total pretax realized or unrealized gains included in comprehensive income1
 
 1
 
 
 
Purchases, sales, issuances and settlements:           
Purchases
 55
 55
 
 34
 34
Sales(6) 
 (6) (1) 
 (1)
Settlements
 (30) (30) 
 (22) (22)
Total gains included on the Condensed Consolidated Balance Sheet
 48
 48
 
 1
 1
Balance at end of period$
 $(93) $(93) $4
 $23
 $27
 Three Months Ended March 31, 2017
(in millions)Investments
 Derivatives (net)
 Total
Balance at beginning of period$5
 $(166) $(161)
Purchases, sales, issuances and settlements:     
Settlements
 (9) (9)
Total amount included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities
 40
 40
Balance at end of period$5
 $(135) $(130)
 Three Months Ended March 31, 2016
(in millions)Investments
 Derivatives (net)
 Total
Balance at beginning of period$5
 $10
 $15
Purchases, sales, issuances and settlements:     
Sales(1) 
 (1)
Settlements
 (7) (7)
Total losses included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities
 (1) (1)
Balance at end of period$4
 $2
 $6

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





DUKE ENERGY CAROLINAS
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the table below exclude cash collateral, which is disclosed in Note 9. See Note 10 for additional information related to investments by major security type.
March 31, 2017September 30, 2017
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Not categorized
Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
Nuclear decommissioning trust fund equity securities$2,366
$2,289
$
$
$77
Nuclear decommissioning trust fund debt securities1,026
146
880


Other available-for-sale debt securities3


3

NDTF equity securities$2,553
$2,475
$
$
$78
NDTF debt securities1,060
178
882


Derivative assets17

17


8

8


Total assets3,412
2,435
897
3
77
3,621
2,653
890

78
Derivative liabilities(14)
(14)

(25)
(25)

Net assets$3,398
$2,435
$883
$3
$77
$3,596
$2,653
$865
$
$78
December 31, 2016December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Not categorized
Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
Nuclear decommissioning trust fund equity securities$2,245
$2,168
$
$
$77
Nuclear decommissioning trust fund debt securities1,013
178
835


Other available-for-sale debt securities3


3

NDTF equity securities$2,245
$2,168
$
$
$77
NDTF debt securities1,013
178
835


Other AFS debt securities3


3

Derivative assets33

33


33

33


Total assets3,294
2,346
868
3
77
3,294
2,346
868
3
77
Derivative liabilities(16)
(16)

(16)
(16)

Net assets$3,278
$2,346
$852
$3
$77
$3,278
$2,346
$852
$3
$77
There was no change to theThe following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 balance during the three months ended March 31, 2017 and March 31, 2016.measurements.
 Investments
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)20172016 20172016
Balance at beginning of period$
$3
 $3
$3
Total pretax realized or unrealized gains included in comprehensive income

 1

Purchases, sales, issuances and settlements:     
Sales

 (4)
Balance at end of period$
$3
 $
$3
 
PROGRESS ENERGY
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the table below exclude cash collateral, which is disclosed in Note 9. See Note 10 for additional information related to investments by major security type.
 March 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Nuclear decommissioning trust fund equity securities$1,918
$1,918
$
Nuclear decommissioning trust fund debt securities1,081
456
625
Other available-for-sale debt securities58
12
46
Derivative assets34

34
Total assets3,091
2,386
705
Derivative liabilities(34)
(34)
Net assets$3,057
$2,386
$671
December 31, 2016September 30, 2017 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
Nuclear decommissioning trust fund equity securities$1,861
$1,861
$
Nuclear decommissioning trust fund debt securities1,065
454
611
Other available-for-sale debt securities65
21
44
NDTF equity securities$2,074
$2,074
$
 $1,861
$1,861
$
NDTF debt securities1,107
439
668
 1,065
454
611
Other AFS debt securities58
11
47
 65
21
44
Derivative assets85

85
15
1
14
 85

85
Total assets3,076
2,336
740
3,254
2,525
729
 3,076
2,336
740
Derivative liabilities(25)
(25)(22)
(22) (25)
(25)
Net assets$3,051
$2,336
$715
$3,232
$2,525
$707
 $3,051
$2,336
$715

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





DUKE ENERGY PROGRESS
The following tables providetable provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the table below exclude cash collateral, which is disclosed in Note 9. See Note 10 for additional information related to investments by major security type.
 March 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Nuclear decommissioning trust fund equity securities$1,541
$1,541
$
Nuclear decommissioning trust fund debt securities and other733
221
512
Other available-for-sale debt securities and other1
1

Derivative assets20

20
Total assets2,295
1,763
532
Derivative liabilities(10)
(10)
Net assets$2,285
$1,763
$522
December 31, 2016September 30, 2017 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
Nuclear decommissioning trust fund equity securities$1,505
$1,505
$
Nuclear decommissioning trust fund debt securities and other708
207
501
Other available-for-sale debt securities and other1
1

NDTF equity securities$1,683
$1,683
$
 $1,505
$1,505
$
NDTF debt securities778
231
547
 708
207
501
Other AFS debt securities1
1

 1
1

Derivative assets46

46
8
1
7
 46

46
Total assets2,260
1,713
547
2,470
1,916
554
 2,260
1,713
547
Derivative liabilities(7)
(7)(7)
(7) (7)
(7)
Net assets$2,253
$1,713
$540
$2,463
$1,916
$547
 $2,253
$1,713
$540
DUKE ENERGY FLORIDA
The following tables providetable provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in
 September 30, 2017 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
NDTF equity securities$391
$391
$
 $356
$356
$
NDTF debt securities329
208
121
 357
247
110
Other AFS debt securities47

47
 48
4
44
Derivative assets6

6
 39

39
Total assets773
599
174
 800
607
193
Derivative liabilities(9)
(9) (12)
(12)
Net assets$764
$599
$165
 $788
$607
$181
DUKE ENERGY OHIO
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
 September 30, 2017 December 31, 2016
(in millions)Total Fair Value
Level 2
Level 3
 Total Fair Value
Level 2
Level 3
Derivative assets$2
$
$2
 $5
$
$5
Derivative liabilities(5)(5)
 (6)(6)
Net (liabilities) assets$(3)$(5)$2
 $(1)$(6)$5
The following table below exclude cash collateral, which is disclosed in Note 9. See Note 10 for additional information related to investments by major security type.provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 March 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Nuclear decommissioning trust fund equity securities$377
$377
$
Nuclear decommissioning trust fund debt securities and other348
235
113
Other available-for-sale debt securities and other47
1
46
Derivative assets14

14
Total assets786
613
173
Derivative liabilities(19)
(19)
Net assets$767
$613
$154
 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
Nuclear decommissioning trust fund equity securities$356
$356
$
Nuclear decommissioning trust fund debt securities and other357
247
110
Other available-for-sale debt securities and other48
4
44
Derivative assets39

39
Total assets800
607
193
Derivative liabilities(12)
(12)
Net assets$788
$607
$181
 Derivatives (net)
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
 2017
 2016
Balance at beginning of period$3
 $5
 $5
 $3
Purchases, sales, issuances and settlements:       
Purchases
 
 3
 5
Settlements(1) (2) (3) (4)
Total losses included on the Condensed Consolidated Balance Sheet
 
 (3) (1)
Balance at end of period$2
 $3
 $2
 $3

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





DUKE ENERGY OHIOINDIANA
The following tables providetable provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the table below exclude cash collateral, which are disclosed in Note 9.
 March 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Derivative assets$1
$
$
$1
Derivative liabilities(5)
(5)
Net (liabilities) assets$(4)$
$(5)$1
December 31, 2016September 30, 2017 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Total Fair Value
Level 1
Level 2
Level 3
 Total Fair Value
Level 1
Level 2
Level 3
Other AFS equity securities$91
$91
$
$
 $79
$79
$
$
Other AFS debt securities31

31

 31

31

Derivative assets$5
$
$
$5
28


28
 16


16
Total assets150
91
31
28
 126
79
31
16
Derivative liabilities(6)
(6)




 (2)(2)

Net (liabilities) assets$(1)$
$(6)$5
Net assets$150
$91
$31
$28
 $124
$77
$31
$16
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 Derivatives (net)
 Three Months Ended March 31,
(in millions)2017
 2016
Balance at beginning of period$5
 $3
Purchases, sales, issuances and settlements:   
Settlements(1) (2)
Total losses included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities(3) (1)
Balance at end of period$1
 $
DUKE ENERGY INDIANA
 Derivatives (net)
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
 2017
 2016
Balance at beginning of period$51
 $29
 $16
 $7
Purchases, sales, issuances and settlements:
      
Purchases
 
 52
 29
Settlements(11) (7) (27) (18)
Total (losses) gains included on the Condensed Consolidated Balance Sheet(12) (2) (13) 2
Balance at end of period$28
 $20
 $28
 $20
PIEDMONT
The following tables providetable provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the
 September 30, 2017 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 3
 Total Fair Value
Level 1
Level 3
Other trading equity securities$1
$1
$
 $4
$4
$
Other trading debt securities


 1
1

Derivative assets2
2

 3
3

Total assets3
3

 8
8

Derivative liabilities(123)
(123) (187)
(187)
Net (liabilities) assets$(120)$3
$(123) $(179)$8
$(187)
The following table below exclude cash collateral, which is disclosed in Note 9. See Note 10 for additional information related to investments by major security type.provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 March 31, 2017
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Other available-for-sale equity securities$84
$84
$
$
Other available-for-sale debt securities and other31

31

Derivative assets9


9
Net assets$124
$84
$31
$9
 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Other available-for-sale equity securities$79
$79
$
$
Other available-for-sale debt securities and other31

31

Derivative assets16


16
Total assets126
79
31
16
Derivative liabilities(2)(2)

Net assets$124
$77
$31
$16
 Derivatives (net)
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
 2017
 2016
Balance at beginning of period$(145) $(190) $(187) $(149)
Total gains (losses) and settlements22
 (5) 64
 (46)
Balance at end of period$(123) $(195) $(123) $(195)

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 Derivatives (net)
 Three Months Ended March 31,
(in millions)2017
 2016
Balance at beginning of period$16
 $7
Purchases, sales, issuances and settlements:   
Settlements(7) (5)
Balance at end of period$9
 $2
PIEDMONT
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. See Note 10 for additional information related to investments.
 March 31, 2017
(in millions)Total Fair Value
Level 1
Level 3
Other trading equity securities4
4

Other trading debt securities1
1

Derivative assets2
2

Total assets7
7

Derivative liabilities(145)
(145)
Net (liabilities) assets$(138)$7
$(145)
 December 31, 2016
(in millions)Total Fair Value
Level 1
Level 3
Other trading equity securities$4
$4
$
Other trading debt securities1
1

Derivative assets3
3

Total assets8
8

Derivative liabilities(187)
(187)
Net (liabilities) assets$(179)$8
$(187)

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 Derivatives (net)
 Three Months Ended March 31,
(in millions)2017
 2016
Balance at beginning of period$(187) $(149)
Total gains and settlements42
 23
Balance at end of period$(145) $(126)
QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS
The following table includestables include quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.
March 31, 2017September 30, 2017
Fair Value    Fair Value    
Investment Type(in millions)Valuation TechniqueUnobservable InputRange(in millions)Valuation TechniqueUnobservable InputRange
Duke Energy Ohio 
     
    
Financial Transmission Rights (FTRs)$1
RTO auction pricingFTR price – per megawatt-hour (MWh)$0.23
-$2.02
$2
RTO auction pricingFTR price – per megawatt-hour (MWh)$
-$1.08
Duke Energy Indiana 
     
    
FTRs9
RTO auction pricingFTR price – per MWh(1.08)-5.33
28
RTO auction pricingFTR price – per MWh(0.82)-6.19
Piedmont          
Natural gas contracts(145)Discounted cash flowForward natural gas curves – price per million British thermal unit (MMBtu)2.08
-3.57
(123)Discounted cash flowForward natural gas curves – price per million British thermal unit (MMBtu)2.12
-3.36
Duke Energy          
Total Level 3 derivatives$(135)    $(93)    
December 31, 2016December 31, 2016
Fair Value    Fair Value    
Investment Type(in millions)Valuation TechniqueUnobservable InputRange(in millions)Valuation TechniqueUnobservable InputRange
Duke Energy Ohio 
     
    
FTRs$5
RTO auction pricingFTR price – per MWh$0.77
-$3.52
$5
RTO auction pricingFTR price – per MWh$0.77
-$3.52
Duke Energy Indiana 
     
    
FTRs16
RTO auction pricingFTR price – per MWh(0.83)-9.32
16
RTO auction pricingFTR price – per MWh(0.83)-9.32
Piedmont          
Natural gas contracts(187)Discounted cash flowForward natural gas curves – price per MMBtu2.31
-4.18
(187)Discounted cash flowForward natural gas curves – price per MMBtu2.31
-4.18
Duke Energy          
Total Level 3 derivatives$(166)    $(166)    
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.
 March 31, 2017 December 31, 2016
(in millions)Book Value
 Fair Value
 Book Value
 Fair Value
Duke Energy$48,998
 $50,480
 $47,895
 $49,161
Duke Energy Carolinas9,491
 10,405
 9,603
 10,494
Progress Energy18,148
 19,742
 17,541
 19,107
Duke Energy Progress6,761
 7,103
 7,011
 7,357
Duke Energy Florida6,981
 7,596
 6,125
 6,728
Duke Energy Ohio1,977
 2,122
 1,884
 2,020
Duke Energy Indiana3,784
 4,292
 3,786
 4,260
Piedmont1,821
 1,954
 1,821
 1,933

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





 September 30, 2017 December 31, 2016
(in millions)Book Value
 Fair Value
 Book Value
 Fair Value
Duke Energy$51,414
 $53,985
 $47,895
 $49,161
Duke Energy Carolinas9,525
 10,653
 9,603
 10,494
Progress Energy17,637
 19,615
 17,541
 19,107
Duke Energy Progress7,557
 8,075
 7,011
 7,357
Duke Energy Florida6,696
 7,475
 6,125
 6,728
Duke Energy Ohio2,067
 2,242
 1,884
 2,020
Duke Energy Indiana3,785
 4,407
 3,786
 4,260
Piedmont2,036
 2,193
 1,821
 1,933
At both March 31,September 30, 2017, and December 31, 2016, 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.
12.13. VARIABLE INTEREST ENTITIES
A VIE is an entity that is evaluated for consolidation using more than a simple analysis of voting control. The analysis to determine whether an entity is a VIE considers contracts with an entity, credit support for an entity, the adequacy of the equity investment of an entity and the relationship of voting power to the amount of equity invested in an entity. This analysis is performed either upon the creation of a legal entity or upon the occurrence of an event requiring reevaluation,re-evaluation, such as a significant change in an entity’s assets or activities. A qualitative analysis of control determines the party that consolidates a VIE. This assessment is based on (i) what party has the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) what party has rights to receive benefits or is obligated to absorb losses that could potentially be significant to the VIE. The analysis of the party that consolidates a VIE is a continual reassessment.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





CONSOLIDATED VIEs
The obligations of the consolidated VIEs discussed in the following paragraphs are nonrecourse to the Duke Energy registrants. The registrants have no requirement to provide liquidity to, purchase assets of or guarantee performance of these VIEs unless noted in the following paragraphs.
No financial support was provided to any of the consolidated VIEs during the threenine months ended March 31,September 30, 2017, and the year ended December 31, 2016, or is expected to be provided in the future, that was not previously contractually required.
Receivables Financing – DERF / DEPR / DEFR
Duke Energy Receivables Finance Company, LLC (DERF), Duke Energy Progress Receivables, LLC (DEPR) and Duke Energy Florida Receivables, LLC (DEFR) are bankruptcy remote, special purpose subsidiaries of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, respectively. DERF, DEPR and DEFR are wholly owned limited liability companies with separate legal existence from their parent companies, and their assets are not generally available to creditors of their parent companies. On a revolving basis, DERF, DEPR and DEFR buy certain accounts receivable arising from the sale of electricity and related services from their parent companies.
DERF, DEPR and DEFR borrow amounts under credit facilities to buy these receivables. Borrowing availability from the credit facilities is limited to the amount of qualified receivables purchased. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities are reflected on the Condensed Consolidated Balance Sheets as Long-Term Debt.
The most significant activity that impacts the economic performance of DERF, DEPR and DEFR are the decisions made to manage delinquent receivables. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida consolidate DERF, DEPR and DEFR, respectively, as they make those decisions.
Receivables Financing – CRC
CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to CRC. The sole source of funds to satisfy the related debt obligation is cash collections from the receivables. Amounts borrowed under the credit facility are reflected on Duke Energy's Condensed Consolidated Balance Sheets as Long-Term Debt.
The proceeds Duke Energy Ohio and Duke Energy Indiana receive from the sale of receivables to CRC are typically 75 percent cash and 25 percent in the form of a subordinated note from CRC. The subordinated note is a retained interest in the receivables sold. Depending on collection experience, additional equity infusions to CRC may be required by Duke Energy to maintain a minimum equity balance of $3 million.
CRC is considered a VIE because (i) equity capitalization is insufficient to support its operations, (ii) power to direct the activities that most significantly impact the economic performance of the entity are not performed by the equity holder and (iii) deficiencies in net worth of CRC are funded by Duke Energy. The most significant activities that impact the economic performance of CRC are decisions made to manage delinquent receivables. Duke Energy consolidates CRC as it makes these decisions. Neither Duke Energy Ohio nor Duke Energy Indiana consolidate CRC.
Receivables Financing – Credit Facilities
The following table summarizes the amounts and expiration dates of the credit facilities described above.
 Duke Energy
   Duke Energy
 Duke Energy
 Duke Energy
   Carolinas
 Progress
 Florida
(in millions)CRC
 DERF
 DEPR
 DEFR
Expiration dateDecember 2018
 December 2018
 February 2019
 April 2019
Credit facility amount$325
 $425
 $300
 $225
Amounts borrowed at March 31, 2017325
 425
 300
 225
Amounts borrowed at December 31, 2016325
 425
 300
 225

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





 Duke Energy
   Duke Energy
 Duke Energy
 Duke Energy
   Carolinas
 Progress
 Florida
(in millions)CRC
 DERF
 DEPR
 DEFR
Expiration dateDecember 2018
 December 2018
 February 2019
 April 2019
Credit facility amount$325
 $425
 $300
 $225
Amounts borrowed at September 30, 2017325
 425
 300
 225
Amounts borrowed at December 31, 2016325
 425
 300
 225
Nuclear Asset-Recovery Bonds – DEFPF
Duke Energy Florida Project Finance, LLC (DEFPF) is a bankruptcy remote, wholly owned special purpose subsidiary of Duke Energy Florida. DEFPF was formed in 2016 for the sole purpose of issuing nuclear asset-recovery bonds to finance Duke Energy Florida's unrecovered regulatory asset related to Crystal River Unit 3.
In June 2016, DEFPF issued $1,294 million of 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 Note 4.
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.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The following table summarizes the impact of DEFPF on Duke Energy Florida's Condensed Consolidated Balance Sheets.
(in millions)March 31, 2017
December 31, 2016
September 30, 2017
December 31, 2016
Receivables of VIEs$4
$6
$6
$6
Current Assets: Regulatory assets53
50
51
50
Current Assets: Other14
53
20
53
Other Noncurrent Assets: Regulatory assets1,131
1,142
1,101
1,142
Current Liabilities: Other3
17
3
17
Current maturities of long-term debt55
62
53
62
Long-Term Debt1,189
1,217
1,164
1,217
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. The activities that most significantly impact the economic performance of these renewable energy facilities were decisions associated with siting, negotiating PPAs, engineering, procurement and construction and decisions associated with ongoing operations and maintenance-related activities. Duke Energy consolidates the entities as it is responsible for all of these decisions. The table below presents material balances reported on Duke Energy's Condensed Consolidated Balance Sheets related to renewables VIEs.
(in millions)March 31, 2017
December 31, 2016
September 30, 2017
December 31, 2016
Current Assets: Other$336
$223
$399
$223
Property, plant and equipment, cost3,671
3,419
3,923
3,419
Accumulated depreciation and amortization(448)(453)(556)(453)
Current maturities of long-term debt227
198
162
198
Long-Term Debt1,645
1,097
1,780
1,097
Deferred income taxes321
275
223
275
Other Noncurrent Liabilities: Other251
252
247
252

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Condensed Consolidated Balance Sheets.
March 31, 2017September 30, 2017
Duke Energy Duke
 Duke
  Duke Energy Duke
 Duke
Pipeline
 Commercial
 Other
   Energy
 Energy
  Pipeline
 Commercial
 Other
   Energy
 Energy
(in millions)Investments
 Renewables
 VIEs
 Total
 Ohio
 Indiana
 Piedmont
Investments
 Renewables
 
VIEs(a)

 Total
 Ohio
 Indiana
Receivables from affiliated companies$
 $
 $
 $
 $53
 $69
 $
$
 $
 $
 $
 $46
 $75
Investments in equity method unconsolidated affiliates673
 173
 92
 938
 
 
 152
895
 172
 39
 1,106
 
 
Other noncurrent assets12
 
 
 12
 
 
 
18
 
 
 18
 
 
Total assets$685
 $173
 $92
 $950
 $53
 $69
 $152
$913
 $172
 $39
 $1,124
 $46
 $75
Taxes accrued(a)
23
 
 
 23
 
 
 (1)
Other current liabilities
 
 2
 2
 
 
 

 
 3
 3
 
 
Deferred income taxes(a)
(7) 
 
 (7) 
 
 4
Deferred income taxes29
 
 
 29
 
 
Other noncurrent liabilities
 
 13
 13
 
 
 

 
 12
 12
 
 
Total liabilities$16
 $
 $15
 $31
 $
 $
 $3
$29
 $
 $15
 $44
 $
 $
Net assets$669
 $173
 $77
 $919
 $53
 $69
 $149
$884
 $172
 $24
 $1,080
 $46
 $75
(a)Taxes accruedDuke Energy holds a 50 percent equity interest in Duke-American Transmission Company, LLC (DATC). As of December 31, 2016, DATC was considered a VIE due to having insufficient equity to finance its own activities without subordinated financial support. However, DATC has sufficient equity to finance its own activities as of September 30, 2017, and, Deferred income taxes are netted by jurisdiction ontherefore, is no longer considered a consolidated basis on the Condensed Consolidated Balance Sheets.VIE. Duke Energy's investment in DATC was $45 million at September 30, 2017.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)




 December 31, 2016
 Duke Energy Duke
 Duke
  
 Pipeline
 Commercial
 Other
   Energy
 Energy
  
(in millions)Investments
 Renewables
 VIEs
 Total
 Ohio
 Indiana
 Piedmont
Receivables from affiliated companies$
 $
 $
 $
 $82
 $101
 $
Investments in equity method unconsolidated affiliates487
 174
 90
 751
 
 
 139
Other noncurrent assets12
 
 
 12
 
 
 
Total assets$499
 $174
 $90
 $763
 $82
 $101
 $139
Other current liabilities
 
 3
 3
 
 
 
Other noncurrent liabilities
 
 13
 13
 
 
 4
Total liabilities$
 $
 $16
 $16
 $
 $
 4
Net assets$499
 $174
 $74
 $747
 $82
 $101
 $135

 December 31, 2016
 Duke Energy Duke
 Duke
  
 Pipeline
 Commercial
 Other
   Energy
 Energy
  
(in millions)Investments
 Renewables
 VIEs
 Total
 Ohio
 Indiana
 
Piedmont(a)

Receivables from affiliated companies$
 $
 $
 $
 $82
 $101
 $
Investments in equity method unconsolidated affiliates487
 174
 90
 751
 
 
 139
Other noncurrent assets12
 
 
 12
 
 
 
Total assets$499
 $174
 $90
 $763
 $82
 $101
 $139
Other current liabilities
 
 3
 3
 
 
 
Other noncurrent liabilities
 
 13
 13
 
 
 4
Total liabilities$
 $
 $16
 $16
 $
 $
 4
Net assets$499
 $174
 $74
 $747
 $82
 $101
 $135
(a)In April 2017, Piedmont transferred its non-consolidated VIE investments to a wholly owned subsidiary of Duke Energy. See "Pipeline Investments" section below for additional detail.
The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the power purchase agreement with OVEC, which is discussed below, and various guarantees, some of which are reflected in the table above as Other noncurrent liabilities. For more information on various guarantees, refer to Note 5.
Pipeline Investments
Duke Energy has investments in various joint ventures with pipeline projects currently under construction. These entities are considered VIEs due to having insufficient equity to finance their own activities without subordinated financial support. Duke Energy does not have the power to direct the activities that most significantly impact the economic performance, the obligation to absorb losses or the right to receive benefits of these VIEs and therefore does not consolidate these entities.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The table below presents theDuke Energy's ownership interest and investment balances in these joint ventures.
Duke Energy Piedmont
  Investment Amount (in millions)   Investment Amount (in millions)  VIE Investment Amount (in millions)
Ownership March 31, December 31, Ownership March 31, December 31,Ownership September 30, December 31,
Entity NameInterest 2017 2016 
Interest(a)
 2017 2016Interest 2017 2016
ACP47% $403
 $265
 7% $59
 $46
47% $595
 $265
Sabal Trail7.5% 188
 140
      7.5% 218
 140
Constitution(b)
24% 82
 82
 24% 93
 93
Constitution24% 82
 82
Total  $673
 $487
   $152
 $139
  $895
 $487
(a)On April 1, 2017, Piedmont transferred its ownership interests in ACP and Constitution to a wholly owned subsidiary of Duke Energy at Piedmont's book value.
(b)Duke Energy's investment amount includes purchase accounting adjustments not recorded at the Piedmont registrant.
At December 31, 2016, Piedmont had a 7 percent ownership interest in ACP and a 24 percent ownership interest in Constitution. In April 2017, Piedmont transferred its ownership interests in ACP and Constitution to a wholly owned subsidiary of Duke Energy at book value.
In October 2017, ACP executed a $3.4 billion revolving credit facility with a stated maturity date of October 2021. Duke Energy entered into a guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is limited to 47 percent of the outstanding borrowings under the credit facility. Through October 2017, ACP has borrowed $570 million against the revolving credit facility.
Commercial Renewables
Duke Energy has investments in various renewable energy project entities. Some of these entities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Duke Energy does not consolidate these VIEs because power to direct and control key activities is shared jointly by Duke Energy and other owners.
Other VIEs
Duke Energy holds a 50 percent equity interest in Duke-American Transmission Company, LLC (DATC). DATC is considered a VIE due to having insufficient equity to finance their own activities without subordinated financial support. The activities that most significantly impact DATC's economic performance are decisions related to investing in existing and 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 Transmission Company, LLC, therefore Duke Energy does not consolidate DATC.
Duke Energy holds a 50 percent equity interest in Pioneer Transmission, LLC (Pioneer). Pioneer is considered a VIE due to having insufficient equity to finance theirits 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,Power; therefore, Duke Energy does not consolidate Pioneer.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





OVEC
Duke Energy Ohio’s 9 percent ownership interest in OVEC is considered a non-consolidated VIE due to OVEC having insufficient equity to finance theirits activities without subordinated financial support. As a counterparty to an inter-company power agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business, including costs associated with its 2,256 MW of coal-fired generation capacity. Deterioration in the credit quality or bankruptcy of one or more parties to the ICPA could increase the costs of OVEC. In addition, certain proposed environmental rulemaking could result in future increased cost allocations.
CRC
See discussion under Consolidated VIEs for additional information related to CRC.
Amounts included in Receivables from affiliated companies in the above table for Duke Energy Ohio and Duke Energy Indiana reflect their retained interest in receivables sold to CRC. These subordinated notes held by Duke Energy Ohio and Duke Energy Indiana are stated at fair value. Carrying values of retained interests are determined by allocating carrying value of the receivables between assets sold and interests retained based on relative fair value. The allocated bases of the subordinated notes are not materially different than their face value because (i) the receivables generally turn over in less than two months, (ii) credit losses are reasonably predictable due to the broad customer base and lack of significant concentration and (iii) the equity in CRC is subordinate to all retained interests and thus would absorb losses first. The hypothetical effect on fair value of the retained interests assuming both a 10 percent and a 20 percent unfavorable variation in credit losses or discount rates is not material due to the short turnover of receivables and historically low credit loss history. Interest accrues to Duke Energy Ohio and Duke Energy Indiana on the retained interests using the acceptable yield method. This method generally approximates the stated rate on the notes since the allocated basis and the face value are nearly equivalent. An impairment charge is recorded against the carrying value of both retained interests and purchased beneficial interest whenever it is determined that an OTTI has occurred.
Key assumptions used in estimating fair value are detailed in the following table.
Duke Energy Ohio Duke Energy IndianaDuke Energy Ohio Duke Energy Indiana
2017
 2016
 2017
 2016
2017
 2016
 2017
 2016
Anticipated credit loss ratio0.5% 0.5% 0.3% 0.3%0.5% 0.5% 0.3% 0.3%
Discount rate1.8% 1.5% 1.8% 1.5%2.0% 1.5% 2.0% 1.5%
Receivable turnover rate13.4% 13.3% 10.7% 10.6%13.4% 13.3% 10.7% 10.6%
The following table shows the gross and net receivables sold.
 Duke Energy Ohio Duke Energy Indiana
(in millions)September 30, 2017
 December 31, 2016
 September 30, 2017
 December 31, 2016
Receivables sold$209
 $267
 $304
 $306
Less: Retained interests46
 82
 75
 101
Net receivables sold$163
 $185
 $229
 $205
The following table shows sales and cash flows related to receivables sold.
 Duke Energy Ohio Duke Energy Indiana
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 September 30, September 30, September 30, September 30,
(in millions)2017
 2016
 2017
 2016
 2017
 2016
 2017
 2016
Sales               
Receivables sold$438
 $481
 $1,392
 $1,442
 $720
 $722
 $2,047
 $1,980
Loss recognized on sale2
 2
 7
 7
 3
 3
 9
 8
Cash flows               
Cash proceeds from receivables sold$434
 $468
 $1,421
 $1,432
 $713
 $703
 $2,064
 $1,958
Collection fees received1
 1
 1
 1
 
 
 1
 1
Return received on retained interests
 1
 2
 2
 2
 2
 5
 4
Cash flows from sales of receivables are reflected within Operating Activities on Duke Energy Ohio’s and Duke Energy Indiana’s Condensed Consolidated Statements of Cash Flows.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The following table shows the gross and net receivables sold.
 Duke Energy Ohio Duke Energy Indiana
(in millions)March 31, 2017
 December 31, 2016
 March 31, 2017
 December 31, 2016
Receivables sold$238
 $267
 $277
 $306
Less: Retained interests53
 82
 69
 101
Net receivables sold$185
 $185
 $208
 $205
The following table shows sales and cash flows related to receivables sold.
 Duke Energy Ohio Duke Energy Indiana
 Three Months Ended Three Months Ended
 March 31, March 31,
(in millions)2017
 2016
 2017
 2016
Sales       
Receivables sold$533
 $532
 $664
 $635
Loss recognized on sale2
 3
 3
 3
Cash flows       
Cash proceeds from receivables sold$559
 $537
 $693
 $643
Return received on retained interests1
 1
 2
 1
Cash flows from sales of receivables are reflected within Operating Activities on Duke Energy Ohio’s and Duke Energy Indiana’s Condensed Consolidated Statements of Cash Flows.
Collection fees received in connection with servicing transferred accounts receivable are included in Operation, maintenance and other on Duke Energy Ohio’s and Duke Energy Indiana’s Condensed Consolidated Statements of Operations and Comprehensive Income. The loss recognized on sales of receivables is calculated monthly by multiplying receivables sold during the month by the required discount. The required discount is derived monthly utilizing a three-year weighted average formula that considers charge-off history, late charge history and turnover history on the sold receivables, as well as a component for the time value of money. The discount rate, or component for the time value of money, is the prior month-end LIBOR plus a fixed rate of 1.00 percent.
13.14. COMMON STOCK
Basic Earnings Per Share (EPS) is computed by dividing net income attributable to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options and equity forward sale agreements, were exercised or settled. Duke Energy’s participating securities are restricted stock units that are entitled to dividends declared on Duke Energy common stock during the restricted stock unit’s vesting periods.
The following table presents Duke Energy’s basic and diluted EPS calculations and reconciles the weighted average number of common shares outstanding to the diluted weighted average number of common shares outstanding.
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share amounts)2017
 2016
(in millions, except per-share amounts)2017
 2016
 2017
 2016
Income from continuing operations attributable to Duke Energy common stockholders excluding impact of participating securities$715
 $574
$954
 $998
 $2,356
 $2,194
Weighted average shares outstanding – basic700
 689
700
 689
 700
 689
Equity Forwards
 2
 
 1
Weighted average shares outstanding – diluted700 689700 691 700 690
Earnings per share from continuing operations attributable to Duke Energy common stockholders          
Basic$1.02
 $0.83
$1.36
 $1.44
 $3.37
 $3.19
Diluted$1.02
 $0.83
$1.36
 $1.44
 $3.37
 $3.18
Potentially dilutive items excluded from the calculation(a)
2 22
 2
 2 2
Dividends declared per common share$0.855
 $0.825
$0.89
 $0.855
 $2.60
 $2.505
(a)Performance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Equity Forwards
In March 2016, Duke Energy marketed an equity offering of 10.6 million shares of common stock. In lieu of issuing equity at the time of the offering, Duke Energy entered into equity forward sale agreements with Barclays (the Equity Forwards). The Equity Forwards required Duke Energy to either physically settle the transactions by issuing 10.6 million shares, or net settle in whole or in part through the delivery or receipt of cash or shares. As of March 31,September 30, 2016, share dilution resulting from the agreements was determined under the treasury stock method.
Duke Energy physically settled the Equity Forwards in full in October 2016 following the close of the Piedmont acquisition. See Note 2 for additional information related to the Piedmont acquisition.
14.15. STOCK-BASED COMPENSATION
For employee awards, equity classified stock-based compensation cost is measured at the service inception date or the grant date, based on the estimated achievement of certain performance metrics or the fair value of the award, and is recognized as expense or capitalized as a component of property, plant and equipment over the requisite service period.
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.
 Three Months EndedThree Months Ended Nine Months Ended
 March 31,September 30, September 30,
(in millions) 2017
 2016
2017
 2016
 2017
 2016
Restricted stock unit awards $8
 $7
$10
 $8
 $30
 $25
Performance awards 7
 5
7
 4
 20
 14
Pretax stock-based compensation cost $15
 $12
$17
 $12
 $50
 $39
Tax benefit associated with stock-based compensation expense $5
 $4
$6
 $5
 $18
 $14
Stock-based compensation costs capitalized 1
 1
1
 
 2
 2

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Prior to Duke Energy acquiring Piedmont, Piedmont had an incentive compensation plan for eligible officers and other participants. Piedmont's total pretax stock-based compensation costs were approximately $2 million and $5 million for the three and nine months ended March 31, 2016.September 30, 2016, respectively. The tax benefit associated with Piedmont's stock-based compensation expense for the three and nine months ended September 30, 2016, was immaterial.
15.16. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT RETIREMENT PLANS
Duke Energy maintains, and the Subsidiary Registrants participate in, qualified and non-qualified, non-contributory defined benefit retirement plans. 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. The following table includes information related to the Duke Energy Registrants' contributions to its U.S. qualified defined benefit pension plans.
   Duke
  
 Duke
 Energy
  
(in millions)Energy
 Ohio
 Piedmont
Anticipated 2017 contributions$19
 $4
 $11
Contributions made during the nine months ended September 30, 20178
 4
 
Remaining estimated contributions to be made in 2017$11
 $
 $11
Duke Energy did not make any contributions to its U.S. qualified defined benefit pension plans during the threenine months ended March 31, 2017 andSeptember 30, 2016.
Net periodic benefit costs disclosed in the tables below represent the cost of the respective benefit plan for the periods presented. However, portions of the net periodic benefit costs disclosed in the tables below have been capitalized as a component of property, plant and equipment. Amounts presented in the tables below for the Subsidiary Registrants represent the amounts of pension and other post-retirement benefit costs allocated by Duke Energy for employees of the Subsidiary Registrants. Additionally, the Subsidiary Registrants are allocated their proportionate share of pension and post-retirement benefit costs for employees of Duke Energy’s shared services affiliate that provides support to the Subsidiary Registrants. These allocated amounts are included in the governance and shared service costs discussed in Note 89. Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





QUALIFIED PENSION PLANS
The following tables include the components of net periodic pension costs for qualified pension plans.
Three Months Ended March 31, 2017Three Months Ended September 30, 2017
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$40
 $12
 $12
 $6
 $5
 $1
 $2
 $3
$40
 $12
 $12
 $6
 $5
 $1
 $2
 $3
Interest cost on projected benefit obligation82
 20
 25
 12
 13
 5
 7
 3
82
 20
 25
 12
 13
 4
 7
 3
Expected return on plan assets(136) (35) (43) (21) (21) (7) (11) (6)(136) (35) (43) (21) (21) (7) (11) (6)
Amortization of actuarial loss36
 8
 14
 6
 7
 1
 3
 3
36
 8
 14
 6
 7
 1
 3
 3
Amortization of prior service credit(6) (2) (1) 
 
 
 
 (1)(6) (2) (1) 
 
 
 
 (1)
Other2
 
 1
 
 
 
 
 
2
 
 1
 
 
 
 
 
Net periodic pension costs$18
 $3
 $8
 $3
 $4
 $
 $1
 $2
$18
 $3
 $8
 $3
 $4
 $(1) $1
 $2
Three Months Ended March 31, 2016Three Months Ended September 30, 2016
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$36
 $12
 $11
 $6
 $5
 $1
 $2
 $3
$36
 $12
 $11
 $6
 $4
 $1
 $2
 $3
Interest cost on projected benefit obligation83
 21
 26
 12
 14
 5
 7
 2
83
 21
 27
 12
 14
 5
 7
 2
Expected return on plan assets(129) (35) (42) (21) (21) (7) (10) (6)(128) (35) (42) (21) (21) (6) (10) (6)
Amortization of actuarial loss33
 8
 14
 6
 7
 1
 3
 2
33
 8
 14
 6
 7
 1
 3
 2
Amortization of prior service credit(4) (2) (1) 
 
 
 
 
(4) (2) (1) 
 (1) 
 
 (1)
Other3
 1
 1
 
 
 
 
 
2
 1
 1
 
 1
 
 
 
Net periodic pension costs$22
 $5
 $9
 $3
 $5
 $
 $2
 $1
$22
 $5
 $10
 $3
 $4
 $1
 $2
 $
 Nine Months Ended September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$120
 $36
 $36
 $18
 $15
 $3
 $6
 $9
Interest cost on projected benefit obligation246
 60
 75
 36
 39
 14
 21
 9
Expected return on plan assets(408) (106) (129) (63) (63) (21) (33) (18)
Amortization of actuarial loss108
 24
 42
 18
 21
 3
 9
 9
Amortization of prior service credit(18) (6) (3) 
 
 
 
 (3)
Other6
 
 3
 1
 
 
 
 1
Net periodic pension costs$54
 $8
 $24
 $10
 $12
 $(1) $3
 $7
 Nine Months Ended September 30, 2016
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$109
 $36
 $32
 $18
 $14
 $3
 $6
 $8
Interest cost on projected benefit obligation249
 64
 80
 37
 42
 15
 21
 7
Expected return on plan assets(386) (106) (126) (62) (63) (20) (31) (18)
Amortization of actuarial loss99
 24
 41
 17
 21
 3
 9
 6
Amortization of prior service credit(12) (6) (3) (1) (1) 
 
 (2)
Other6
 2
 2
 1
 1
 
 
 
Net periodic pension costs$65
 $14
 $26
 $10
 $14
 $1
 $5
 $1

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





NON-QUALIFIED PENSION PLANS
NetThe following tables include the components of net periodic pension costs for non-qualified pension plans were not material for the three months ended March 31, 2017 and 2016.registrants with non-qualified pension costs.
 Three Months Ended September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
Service cost$
 $
 $
 $
 $
Interest cost on projected benefit obligation4
 
 1
 1
 1
Amortization of actuarial loss2
 
 1
 
 
Net periodic pension costs$6
 $
 $2
 $1
 $1
 Three Months Ended September 30, 2016
   Duke
   Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
Service cost$1
 $
 $
 $
 $
Interest cost on projected benefit obligation4
 
 2
 
 
Amortization of actuarial loss2
 
 1
 1
 1
Amortization of prior service credit(1) 
 
 
 
Net periodic pension costs$6

$

$3

$1

$1
 Nine Months Ended September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
Service cost$
 $
 $
 $
 $
Interest cost on projected benefit obligation10
 1
 3
 2
 2
Amortization of actuarial loss6
 
 3
 
 
Net periodic pension costs$16
 $1
 $6
 $2
 $2
 Nine Months Ended September 30, 2016
   Duke
   Duke
 Duke
 Duke
 Energy
 Progress
 Energy
 Energy
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
Service cost$2
 $
 $
 $
 $
Interest cost on projected benefit obligation11
 1
 4
 1
 1
Amortization of actuarial loss6
 
 2
 1
 1
Amortization of prior service credit(1) 
 
 
 
Net periodic pension costs$18

$1

$6

$2

$2
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.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The following tables include the components of net periodic other post-retirement benefit costs.
Three Months Ended March 31, 2017Three Months Ended September 30, 2017
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$1
 $
 $
 $
 $
 $
 $
 $
$1
 $
 $
 $
 $
 $
 $
 $
Interest cost on accumulated post-retirement benefit obligation9
 2
 4
 2
 2
 
 
 
9
 2
 4
 2
 2
 
 1
 
Expected return on plan assets(3) (2) 
 
 
 
 
 
(3) (2) 
 
 
 
 
 
Amortization of actuarial loss (gain)2
 (1) 5
 3
 2
 
 
 
Amortization of actuarial loss2
 
 5
 3
 2
 
 
 
Amortization of prior service credit(29) (2) (21) (14) (8) 
 
 
(29) (2) (21) (14) (8) 
 
 
Net periodic other post-retirement benefit$(20) $(3) $(12) $(9) $(4) $
 $
 $
Net periodic other post-retirement benefit costs$(20) $(2) $(12) $(9) $(4) $
 $1
 $
Three Months Ended March 31, 2016Three Months Ended September 30, 2016
  Duke
   Duke
 Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$1
 $
 $
 $
 $
 $
 $
 $
$
 $
 $1
 $
 $
 $
 $
 $1
Interest cost on accumulated post-retirement benefit obligation8
 2
 4
 2
 2
 
 1
 
9
 2
 4
 2
 3
 
 1
 
Expected return on plan assets(3) (2) 
 
 
 
 
 
(2) (2) (1) 
 
 
 
 
Amortization of actuarial loss (gain)1
 (1) 5
 3
 2
 
 (1) 
2
 
 5
 3
 2
 (1) 
 
Amortization of prior service credit(35) (3) (26) (17) (9) 
 
 
(35) (4) (26) (16) (8) 
 (1) 
Net periodic other post-retirement benefit$(28) $(4) $(17) $(12) $(5) $
 $
 $
Net periodic other post-retirement benefit costs$(26) $(4) $(17) $(11) $(3) $(1) $
 $1
 Nine Months Ended September 30, 2017
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$3
 $
 $
 $
 $
 $
 $
 $
Interest cost on accumulated post-retirement benefit obligation27
 6
 11
 6
 6
 
 1
 
Expected return on plan assets(10) (6) 
 
 
 
 
 
Amortization of actuarial loss (gain)6
 (2) 15
 9
 6
 (1) 
 
Amortization of prior service credit(87) (6) (63) (41) (23) 
 
 
Net periodic other post-retirement benefit costs$(61) $(8) $(37) $(26) $(11) $(1) $1
 $
 Nine Months Ended September 30, 2016
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$2
 $
 $1
 $
 $
 $
 $
 $1
Interest cost on accumulated post-retirement benefit obligation26
 6
 11
 6
 6
 1
 3
 1
Expected return on plan assets(9) (6) (1) 
 
 
 (1) (1)
Amortization of actuarial loss (gain)5
 (2) 16
 9
 7
 (2) (1) 
Amortization of prior service credit(106) (10) (77) (50) (26) 
 (1) 
Net periodic other post-retirement benefit costs$(82) $(12) $(50) $(35) $(13) $(1) $
 $1
DEFINED CONTRIBUTION RETIREMENT PLANS
EMPLOYEE SAVINGS PLAN
Duke Energy sponsors, and the Subsidiary Registrants participate in, employee savings plans that cover substantially all U.S. employees.
The following table presents employer contributions made by Duke Energy and expensed by the Subsidiary Registrants.
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Three Months Ended March 31,               
2017$65
 $22
 $18
 $13
 $5
 $1
 $3
 $2
201652
 18
 15
 11
 4
 1
 2
 2
MONEY PURCHASE PENSION PLAN
Duke Energy provides, and Piedmont participates in, the Money Purchase Pension (MPP) plan, which is a defined contribution pension plan that allows employees to direct investments and assume risk of investment returns. In January 2017, a $2 million contribution was made to the MPP plan.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





16.DEFINED CONTRIBUTION RETIREMENT PLANS
EMPLOYEE SAVINGS PLANS
Duke Energy sponsors, and the Subsidiary Registrants participate in, employee savings plans that cover substantially all U.S. employees. The following table presents employer contributions made by Duke Energy and expensed by the Subsidiary Registrants.
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Three Months Ended September 30,               
2017$43
 $14
 $12
 $9
 $4
 $1
 $2
 $2
201639
 13
 12
 8
 3
 1
 2
 2
Nine Months Ended September 30,            
2017$147
 $49
 $42
 $30
 $13
 $3
 $7
 $5
2016130
 44
 39
 27
 11
 3
 6
 5
MONEY PURCHASE PENSION PLAN
Duke Energy provides, and Piedmont participates in, the Money Purchase Pension (MPP) plan, which is a defined contribution pension plan that allows certain employees to direct investments and assume risk of investment returns. In January 2017, a $2 million contribution was made to the MPP plan.
17. INCOME TAXES
EFFECTIVE TAX RATES
The effective tax rates from continuing operations for each of the Duke Energy Registrants are included in the following table.
Three Months EndedThree Months Ended Nine Months Ended
March 31,September 30, September 30,
2017
 2016
2017
 2016
 2017
 2016
Duke Energy32.4% 30.4%27.6% 34.0% 30.4% 31.7%
Duke Energy Carolinas35.4% 34.1%32.9% 34.3% 34.1% 34.4%
Progress Energy34.1% 36.7%29.1% 32.8% 31.9% 34.7%
Duke Energy Progress34.1% 35.4%31.7% 31.4% 32.4% 33.5%
Duke Energy Florida36.6% 37.9%34.8% 36.0% 36.1% 37.0%
Duke Energy Ohio35.4% 26.9%33.3% 36.8% 34.4% 32.5%
Duke Energy Indiana39.3% 30.2%38.3% 35.2% 39.0% 34.0%
Piedmont(a)37.9% 38.0%47.6% 40.0% 36.1% 37.7%
(a) Piedmont is in a net loss position for the three months ended September 30, 2017, and 2016.
The increasedecrease in the effective tax rate (ETR) for Duke Energy for the three months ended March 31,September 30, 2017, is primarily due to lower investmenthigher research credits, tax creditsbenefits of legal entity restructuring and prior year unfavorable impacts of finalizing federal tax audits. The decrease in the ETR for Duke Energy for the nine months ended September 30, 2017, is primarily due to lower solar investments in the current year, the inclusionhigher research credits, tax benefits of Piedmont's earnings at a higher ETR,legal entity restructuring and a tax charge related to the implementation of a new accounting standard related to stock compensation; partially offset by higher production tax credits related to wind projects placed in service. See Note 1 for additional information on the new accounting standard.service; partially offset by lower investment tax credits due to lower solar investments.
The increasedecrease in the ETR for Duke Energy Carolinas for the three months ended March 31,September 30, 2017, is primarily due to athe favorable state resolution booked in 2016 relatedimpact of research credits, provision to prior yearreturn true ups, and lower North Carolina corporate tax returns.rates.
The decrease in the ETR for Progress Energy for the three and nine months ended March 31,September 30, 2017, is primarily due to higher AFUDC equitythe favorable impact of research credits and the amortization of excesslower North Carolina deferred tax.corporate tax rates.
The decrease in the ETR for Duke Energy Progress for the threenine months ended March 31,September 30, 2017, is primarily due to the amortizationfavorable impact of excessresearch credits and lower North Carolina deferred tax.corporate tax rates.
The decrease in the ETR for Duke Energy Florida for the three months ended March 31,September 30, 2017, is primarily due to higher AFUDC equity.the favorable impact of research credits.
The increasedecrease in the ETR for Duke Energy Ohio for the three months ended March 31,September 30, 2017, is primarily due to the favorable impact of research credits. The increase in the ETR for Duke Energy Ohio for the nine months ended September 30, 2017, is primarily due to an immaterial out of period adjustment in the prior year related to deferred tax balances associated with property, plant and equipment.

PART I
DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –
DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





The increase in the ETR for Duke Energy Indiana for the three months ended September 30, 2017, is primarily due to state tax credits recorded in the prior year. The increase in the ETR for Duke Energy Indiana for the nine months ended September 30, 2017, is primarily due to an immaterial out of period adjustment in the prior year related to deferred tax balances associated with property, plant and equipment.
The increase in the ETR for Duke Energy IndianaPiedmont for the three months ended March 31,September 30, 2017, is primarily due to an immaterial out of period adjustmentfavorable tax return true ups and lower North Carolina corporate tax rates in relation to pretax losses. The decrease in the prior year relatedETR for Piedmont for the nine months ended September 30, 2017, is primarily due to deferredfavorable tax balances associated with property, plantreturn true ups and equipment.lower North Carolina corporate tax rates.
TAXES ON FOREIGN EARNINGS
As of December 31, 2015, Duke Energy's intention was to indefinitely reinvest any future undistributed foreign earnings earned after December 31, 2014. 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 historical unremitted foreign earnings by approximately $95 million for the threenine months ended March 31,September 30, 2016. Due to the classification of the International Disposal Group as discontinued operations, income tax amounts related to the International Disposal Group's foreign earnings are presented within (Loss) Income from Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations. See Note 2 for additional information related to the sale of the International Disposal Group.
17.18. SUBSEQUENT EVENTS
For information on additional subsequent events related to business segments, regulatory matters, commitments and contingencies debt and credit facilities, and variable interest entitiesVIEs, see Notes 3, 4, 5 6 and 12, respectively.13.

PART I

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy Corporation (collectively with its subsidiaries, Duke Energy) and Duke Energy Carolinas, LLC (Duke Energy Carolinas), Progress Energy, Inc. (Progress Energy), Duke Energy Progress, LLC (Duke Energy Progress), Duke Energy Florida, LLC (Duke Energy Florida), Duke Energy Ohio, Inc. (Duke Energy Ohio), Duke Energy Indiana, LLC (Duke Energy Indiana) and Piedmont Natural Gas Company, Inc. (Piedmont) (collectively referred to as the Subsidiary Registrants). However, none of the registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.
DUKE ENERGY
Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the United States (U.S.) 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. Piedmont's results of operations are included in Duke Energy's results for the three and nine months ended March 31,September 30, 2017, but not for the three and nine months ended March 31,September 30, 2016, as Piedmont's earnings are only included in Duke Energy's consolidated results subsequent to the acquisition date. See below for additional information regarding the acquisition.
Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016, Piedmont's Annual Report on Form 10-K for the year ended October 31, 2016, and the transition report filed by Piedmont on Form 10-Q (Form 10-QT) as of December 31, 2016, for the transition period from November 1, 2016, to December 31, 2016.
Executive Overview
Hurricane Irma
In September 2017, Hurricane Irma caused widespread damage across the Southeast region, at its peak leaving approximately 1.3 million Duke Energy Florida customers without power. Duke Energy's restoration efforts in response to this devastating storm utilized a team of over 12,000 line and service crews and hundreds of employee volunteers. Storm restoration costs (including capital) for the Duke Energy Florida service territory are currently estimated at approximately $500 million. The vast majority of these costs have been deferred to the balance sheet for future recovery from customers in Florida, per existing state statute. Lost revenues associated with Hurricane Irma were approximately $20 million in the third quarter of 2017. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.
Regulatory Activity
In the third quarter of 2017, Duke Energy advanced regulatory activity underway in multiple jurisdictions, achieving several key milestones.
In August 2017, Duke Energy Carolinas filed a base rate case with the North Carolina Utilities Commission. The rate request was driven by capital investments in new, highly efficient natural gas combined-cycle plants and other plant upgrades, coal ash basin closure activities and grid improvement projects. Hearings are scheduled to commence in February 2018.
In Florida, Duke Energy worked closely with stakeholders to build upon and extend the existing settlement agreement from 2013. In late August, Duke Energy Florida reached a favorable agreement with numerous parties in the state, including the consumer advocate, and that agreement was approved by the Florida Public Service Commission (FPSC) in late October. As outlined in the settlement, Duke Energy Florida agreed to no longer recover any remaining costs associated with the canceled Levy Nuclear Project and as a result incurred a pretax impairment charge of $135 million during the third quarter.
See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.
2016 Acquisition of Piedmont Natural Gas
On October 3, 2016, Duke Energy completed the acquisition of Piedmont 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 at the time of the acquisition. The acquisition provides a foundation for Duke Energy to establish a broader, long-term strategic natural gas infrastructure growth platform to complement itsthe existing natural gas pipeline investments and regulated natural gas business in the Midwest.
Duke Energy incurred pretax nonrecurring transaction and integration costs associated with the acquisition of $16$23 million and $101$69 million for the three and nine months ended March 31,September 30, 2017, respectively, and $65 million and $256 million for the three and nine months ended September 30, 2016, respectively. The 2016 amount includes $100 million of Interest Expense, which was driven by unrealizedAcquisition-related costs in the prior year were principally due to losses on forward-starting interest rate swaps related to the acquisition financing. financing of $22 million and $190 million for the three and nine months ended September 30, 2016, respectively. For additional information on the swaps see Note 10 to the Condensed Consolidated Financial Statements, "Derivatives and Hedging."
Duke Energy expects to incur system integration and other acquisition-related transition costs, primarily through 2018, that are necessary to achieve certain anticipated cost savings, efficiencies and other benefits. See Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions," for additional information regarding the transaction.

PART I

2016 Sale of International Energy
In December 2016, Duke Energy sold its Latin American generation businesses (International Disposal Group) in two separate transactions for a combined enterprise value of $2.4 billion. Duke Energy sold its Brazilian business to China Three Gorges for approximately $1.2 billion, including the assumption of debt, and its remaining Central and South American businesses to I Squared Capital in a deal also valued at approximately $1.2 billion, including the assumption of debt. The transactions generated cash proceeds of $1.9 billion, excluding transaction costs, which were primarily used to reduce Duke Energy holding company debt. Existing favorable tax attributes resulted in no immediate U.S. federal-level cash tax impacts.
Due to the transactions, results of the International Disposal Group are classified as discontinued operations. See Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" for additional information.
Results of Operations
Non-GAAP Measures
Management’s Discussion and Analysis includes financial information prepared in accordance with generally accepted accounting principles (GAAP) in the U.S., as well as certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures presented may not be comparable to similarly titled measures used by other companies because other companies may not calculate the measures in the same manner.
Duke Energy managementManagement evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted diluted EPS.earnings per share (EPS). Adjusted earnings and adjusted diluted EPS represent income from continuing operations attributable to Duke Energy, adjusted for the dollar and per shareper-share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance.

PART I

Management believes the presentation of adjusted earnings and adjusted diluted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods. Management uses these non-GAAP financial measures for planning and forecasting and for reporting financial results to the Duke Energy Board of Directors, employees, stockholders, analysts and investors. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted diluted EPS are Net Income Attributable to Duke Energy Corporation (GAAP Reported Earnings) and Diluted EPS Attributable to Duke Energy Corporation common stockholders (GAAP Reported EPS), respectively.
Special items included in the periods presented include the following items, which management believes do not reflect ongoing costs:
Costs to Achieve Mergers represent charges that result from strategic acquisitions.
Cost Savings Initiatives representsrepresent severance charges related to company-widecompanywide initiatives, excluding merger integration, to standardize processes and systems, leverage technology and workforce optimization.
Commercial Renewables Impairments represents other-than-temporary and asset impairments.
Florida Settlement represents an impairment charge related to the Levy nuclear project based on a settlement agreement approved by regulators.
Adjusted earnings also include operating results of the International Disposal Group, which have been classified as discontinued operations. Management believes inclusion of the operating results of the Disposal Group within adjusted earnings and adjusted diluted EPS results in a better reflection of Duke Energy's financial performance during the period.
Reconciliation of GAAP Reported Amounts to Adjusted Amounts
The following table reconciles non-GAAP measures to their most directly comparable GAAP measures.
 Three Months Ended March 31,
 2017 2016
(in millions, except per-share amounts)Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS$716
 $1.02
 $694
 $1.01
Adjustments to Reported:       
Costs to Achieve Mergers(a)
10
 0.02
 74
 0.11
Cost Savings Initiatives(b)

 
 12
 0.02
Discontinued Operations(c)

 
 (3) (0.01)
Adjusted Earnings/Adjusted Diluted EPS$726
 $1.04
 $777
 $1.13
(a)Net of tax of $6 million in 2017 and $46 million in 2016.
(b)Net of tax of $8 million in 2016.
(c)The 2016 amount represents GAAP reported Income from Discontinued Operations, less the International Disposal Group operating results, which are included in adjusted earnings.
Three Months Ended March 31,September 30, 2017, as compared to March 31,September 30, 2016
GAAP Reported EPS was $1.02$1.36 for the firstthird quarter of 2017 compared to $1.01$1.70 for the firstthird quarter of 2016. The increasedecrease in GAAP Reported EPS was drivenprimarily due to less favorable weather, an impairment at Duke Energy Florida and prior year income from discontinued operations including International Energy which was sold in 2016; partially offset by the inclusion of Piedmont's earnings,a lower effective tax rate, lower costs to achieve mergers including losses in the prior year on forward-starting interest rate swaps related toassociated with the Piedmont acquisition financing, as well as lower operations and maintenance expense at Electric Utilities and Infrastructure; partially offset by warm winter weather in the current year and the absence of the International Disposal Group's earnings.growth from investments.
As discussed above, management also evaluates financial performance based on adjusted diluted EPS. Duke Energy’s firstthird quarter 2017 adjusted diluted EPS was $1.04$1.59 compared to $1.13$1.68 for the firstthird quarter of 2016. The following table reconciles non-GAAP measures, including adjusted diluted EPS, to their most directly comparable GAAP measures.
 Three Months Ended September 30,
 2017 2016
(in millions, except per-share amounts)Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS$954
 $1.36
 $1,176
 $1.70
Adjustments:       
Costs to Achieve Mergers(a)
14
 0.03
 52
 0.07
Cost Savings Initiatives(b)

 
 12
 0.02
Commercial Renewables Impairments (c)
56
 0.08
 45
 0.07
Florida Settlement (d)
84
 0.12
 
 
Discontinued Operations(e)
2
 
 (122) (0.18)
Adjusted Earnings/Adjusted Diluted EPS$1,110
 $1.59
 $1,163
 $1.68

PART I

(a)Net of $9 million tax benefit in 2017 and $32 million tax benefit in 2016.
(b)Net of $7 million tax benefit in 2016.
(c)Net of $28 million tax benefit in 2017 and $26 million tax benefit in 2016.
(d)Net of $51 million tax benefit in 2017.
(e)The 2016 amount represents tax adjustments related to previously sold businesses not related to the International Disposal Group.
The decrease in adjusted earnings for the three months ended March 31,September 30, 2017, compared to the same period in 2016 was primarily due to:
Lower regulated electric revenues due to less favorable weather in the current year, including lost revenues related to Hurricane Irma;
The prior year operating results of the International Disposal Group, which was sold in December 2016; and
Higher financing costs, primarily due to the Piedmont acquisition.
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;
Additional earnings from incremental investments in the Atlantic Coast Pipeline (ACP) natural gas pipeline; and
Lower income taxes due to prior year unfavorable tax adjustments and benefits in the current year from legal entity restructuring.
Nine Months Ended September 30, 2017, as compared to September 30, 2016
Duke Energy's GAAP Reported EPS was $3.36 for the nine months ended September 30, 2017, compared to $3.44 for the nine months ended September 30, 2016. The decrease in GAAP Reported EPS was driven by less favorable weather compared to the prior year, an impairment at Duke Energy Florida and prior year income from discontinued operations including International Energy which was sold in 2016; partially offset by lower costs associated with the Piedmont acquisition, lower severance charges, effective cost control and growth from investments.
As discussed above, management also evaluates financial performance based on adjusted diluted EPS. Duke Energy’s adjusted diluted EPS for the nine months ended September 30, 2017, was $3.63 compared to $3.88 for the nine months ended September 30, 2016. The following table reconciles non-GAAP measures, including adjusted diluted EPS, to their most directly comparable GAAP measures.
 Nine Months Ended September 30,
 2017 2016
(in millions, except per-share amounts)Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS$2,356
 $3.36
 $2,379
 $3.44
Adjustments:       
Costs to Achieve Mergers(a)
43
 0.06
 195
 0.28
Cost Savings Initiatives(b)

 
 39
 0.06
Commercial Renewables Impairments (c)
56
 0.08
 45
 0.07
Florida Settlement (d)
84
 0.12
 
 
Discontinued Operations(e)
4
 0.01
 21
 0.03
Adjusted Earnings/Adjusted Diluted EPS$2,543
 $3.63
 $2,679
 $3.88
(a)Net of $26 million tax benefit in 2017 and $120 million tax benefit in 2016.
(b)Net of $24 million tax benefit in 2016.
(c)Net of $28 million tax benefit in 2017 and $26 million tax benefit in 2016.
(d)Net of $51 million tax benefit in 2017.
(e)The 2016 amount includes an impairment charge related to certain assets in Central America that were sold in 2016, partially offset by a tax benefit related to previously sold businesses not related to the International Disposal Group.
The decrease in adjusted earnings for the nine months ended September 30, 2017, compared to the same period in 2016 was primarily due to:
Lower regulated electric revenues due to unfavorable weather compared to the prior year; and
The prior year operating results of the International Disposal Group, which was sold in December 2016. The 2016 operating results included a benefit from the revaluation of deferred income taxes. See Note 1617 to the Condensed Consolidated Financial Statements, "Income Taxes," for additional information; and
Lower regulated electric revenues due to warm winter weather in the current year.information.
Partially offset by:
Piedmont's earnings contribution, net of financing costs, due to the acquisition on October 3, 2016;
Lower operations and maintenance expense at Electric Utilities and Infrastructure due to ongoing cost efficiency efforts and significant storm costs in the prior year; and
Higher regulated electric revenues from increased pricing and riders driven by new rates in DEPDuke 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.volumes;
Lower operations, maintenance and other expense, 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;
Higher allowance for funds used during construction (AFUDC) equity due to capital investments at the electric utilities; and
Additional earnings from incremental investments in the ACP and Sabal Trail natural gas pipelines.

PART I

SEGMENT RESULTS
Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income includes intercompany revenues and expenses that are eliminated inon the Condensed Consolidated Financial Statements.
Due to the Piedmont acquisition and the sale of International Energy in the fourth quarter of 2016, Duke Energy's segment structure has beenwas realigned to include 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. Prior period information has been recast to conform to the current segment structure. See Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions," for further information on the Piedmont acquisition and International Energy sale and Note 3, “Business Segments,” for additional information on Duke Energy’s segments.
Electric Utilities and Infrastructure
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
 2017
 2016
 Variance
Operating Revenues$4,947
 $5,089
 $(142)$6,129
 $6,340
 $(211) $16,234
 $16,430
 $(196)
Operating Expenses                
Fuel used in electric generation and purchased power1,454
 1,577
 (123)1,872
 2,016
 (144) 4,875
 5,102
 (227)
Operation, maintenance and other1,271
 1,298
 (27)1,297
 1,291
 6
 3,833
 3,819
 14
Depreciation and amortization737
 709
 28
777
 729
 48
 2,228
 2,139
 89
Property and other taxes261
 262
 (1)277
 274
 3
 808
 799
 9
Impairment charges
 2
 (2)132
 9
 123
 134
 12
 122
Total operating expenses3,723
 3,848
 (125)4,355
 4,319
 36
 11,878
 11,871
 7
Gains on Sales of Other Assets and Other, net3
 1
 2

 1
 (1) 4
 3
 1
Operating Income1,227
 1,242
 (15)1,774
 2,022
 (248) 4,360
 4,562
 (202)
Other Income and Expenses79
 63
 16
67
 75
 (8) 222
 215
 7
Interest Expense315
 270
 45
305
 287
 18
 925
 829
 96
Income Before Income Taxes991
 1,035
 (44)1,536
 1,810
 (274) 3,657
 3,948
 (291)
Income Tax Expense356
 371
 (15)516
 621
 (105) 1,273
 1,391
 (118)
Segment Income$635
 $664
 $(29)$1,020
 $1,189
 $(169) $2,384
 $2,557
 $(173)
    

          

Duke Energy Carolinas Gigawatt-hours (GWh) sales20,781
 21,625
 (844)
Duke Energy Carolinas gigawatt-hours (GWh) sales24,135
 25,508
 (1,373) 66,159
 67,890
 (1,731)
Duke Energy Progress GWh sales15,637
 17,149
 (1,512)18,827
 20,033
 (1,206) 50,026
 54,011
 (3,985)
Duke Energy Florida GWh sales8,305
 8,456
 (151)12,132
 12,440
 (308) 31,177
 31,542
 (365)
Duke Energy Ohio GWh sales6,059
 6,107
 (48)6,672
 7,214
 (542) 18,632
 19,117
 (485)
Duke Energy Indiana GWh sales8,208
 9,394
 (1,186)8,795
 9,073
 (278) 24,975
 26,624
 (1,649)
Total Electric Utilities and Infrastructure GWh sales58,990
 62,731
 (3,741)70,561
 74,268
 (3,707) 190,969
 199,184
 (8,215)
Net proportional Megawatt (MW) capacity in operation48,964
 50,111
 (1,147)
Net proportional megawatt (MW) capacity in operation    

 48,909
 49,411
 (502)
Three Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Electric Utilities and Infrastructure’s results were impacted by warm winterless favorable weather and increased depreciation and amortization expense,an impairment at Duke Energy Florida, partially offset by increased rider revenues and lower operations and maintenance expense.growth from investments. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
a $159$163 million decrease in fuel revenues due to lower retail sales volumes; and
a $160 million decrease in retail sales, net of fuel revenues, due to warm winterless favorable weather in the current year, including lost revenues related to Hurricane Irma.
Partially offset by:
a $90 million increase in retail pricing due to Duke Energy Florida's base rate adjustments for the Osprey acquisition and Hines Chillers and the Duke Energy Progress South Carolina rate case, as well as increased rider revenues related to energy efficiency programs, Duke Energy Florida's nuclear asset securitization, and Midwest capital investments.
Operating Expenses. The variance was driven primarily by:
a $123 million increase in impairment charges primarily due to write-off of remaining unrecovered Levy Nuclear Project costs at Duke Energy Florida in the current year; and
a $108$48 million increase in depreciation and amortization expense primarily due to additional plant in service.

PART I

Partially offset by:
a $144 million decrease in fuel expense, including purchased power, driven by lower retail sales.
Interest Expense. The increase was primarily due to higher debt outstanding in the current year to fund growth.
Income Tax Expense. The variance was primarily due to a decrease in pretax income and higher research credits, partially offset by the North Carolina corporate tax rate reduction in the prior year. The effective tax rates for the three months ended September 30, 2017, and 2016 were 33.6 percent and 34.3 percent, respectively.
Nine Months Ended September 30, 2017, as Compared to September 30, 2016
Electric Utilities and Infrastructure’s results were impacted by less favorable weather compared to the prior year and an impairment at Duke Energy Florida, partially offset by growth from investments and higher weather-normal retail sales volumes. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
a $380 million decrease in retail sales, net of fuel revenues, due to unfavorable weather compared to the prior year, including lost revenues related to Hurricane Irma; and
a $256 million decrease in fuel revenues driven byprimarily due to lower retail sales volumes.
Partially offset by:
a $108$346 million increase in rider revenues related to energy efficiency programs, Duke Energy Florida's nuclear asset securitization, revenues,Midwest transmission and distribution capital investments, and Duke Energy Indiana's clean coal equipment,Edwardsport Integrated Gasification Combined Cycle (IGCC) plant, as well as increasedan increase in retail pricing due to Duke Energy Florida's base rate adjustments for the Osprey acquisition and Hines Chillers and the Duke Energy Progress South Carolina rate case and Duke Energy Florida's base rate adjustment for the Osprey acquisition;case; and
an $11a $59 million increase in weather-normal sales volumes to retail customers in the current year.customers.
Operating Expenses. The variance was driven primarily by:
a $123$122 million decreaseincrease in fuel expense, including purchased power,impairment charges primarily due to lower sales volumes and lower coal prices, partially offset by higher natural gas prices;the write-off of remaining unrecovered Levy Nuclear Project costs in the current year at Duke Energy Florida; and

PART I

a $27 million decrease in operations and maintenance expense primarily due to lower storm restoration costs and decreased labor costs, partially offset by higher environmental costs.
Partially offset by:
a $28an $89 million increase in depreciation and amortization expense primarily due to additional plant in service.service;
Other IncomePartially offset by:
a $227 million decrease in fuel expense, including purchased power, primarily due to lower retail sales and Expenses. The variance was driven primarily by higher allowance for funds used during construction (AFUDC) equity.changes in generation mix.
Interest Expense. The increase was primarily due to higher debt outstanding in the current year.year and Duke Energy Florida's Crystal River 3 (CR3) regulatory asset debt return ending in June 2016 upon securitization.
Income Tax Expense. The variance was primarily due to a decrease in pretax income.income and higher research credits, partially offset by the North Carolina corporate tax rate reduction. The effective tax rates for both the threenine months ended March 31,September 30, 2017, and 2016 were 35.9 percent.34.8 percent and 35.2 percent, respectively.
Matters Impacting Future Electric Utilities and Infrastructure Results
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Electric Utilities and Infrastructure's financial position, results of operations and cash flows. See Note 4 and Note 7 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," respectively, for additional information.
On May 18, 2016, the NCDEQNorth Carolina Department of Environmental Quality (NCDEQ) issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the North Carolina Coal Ash Management Act of 2014 (Coal Ash Act) were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Electric Utilities and Infrastructure's estimated asset retirement obligations (AROs) related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, 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 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 financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.
Duke Energy is a party to multiple lawsuits and could be subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. The outcome of these lawsuits and potential fines and penalties could have an adverse impact on Electric Utilities and Infrastructure's financial position, results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.

PART I

In the fourth quarter of 2016, Hurricane Matthew caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Duke Energy Progress filed a petition with the North Carolina Utilities Commission (NCUC) requesting an accounting order to defer incremental operation and maintenance and capital costs incurred in response to Hurricane Matthew and other significant 2016 storms. Current estimated incremental costs are approximately $116 million. The NCUC has not ruled on the petition.will address this request in Duke Energy Progress' currently pending rate case. A final order from the NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred could result in an adverse impact on Electric Utilities and Infrastructure's financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.
Duke Energy has several rate cases pending. Duke Energy Kentucky filed an electric rate case with the Kentucky Public Service Commission (KPSC) on September 1, 2017, to recover costs of capital investments in generation, transmission and distribution systems and to recover other incremental expenses since its previous rate case. Duke Energy Carolinas and Duke Energy Progress intend to filefiled general rate cases in North Carolina inwith the NCUC on August 25, 2017, and June 1, 2017, respectively, to recover costs of complying with CCRCoal Combustion Residuals (CCR) regulations and the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previous rate cases. Duke Energy Progress has filed notice with the NCUC that it intends to file a general rate case on or about June 1, 2017. In March 2017, Duke Energy Ohio filed an electric distribution base rate case application and supporting testimony.testimony with the Public Utility Commission of Ohio (PUCO). Electric Utilities and Infrastructure's earnings could be impacted adversely impacted if these rate casesincreases are delayed or denied by the KPSC, NCUC or PUCO. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.
On August 29, 2017, Duke Energy Florida filed a 2017 Second Revised and Restated Settlement Agreement (2017 Settlement) with the FPSC. The 2017 Settlement was approved by the FPSC on October 25, 2017. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information about the 2017 Settlement. In accordance with the 2017 Settlement, Duke Energy Florida will not seek recovery of any costs associated with the ongoing Westinghouse contract litigation, which is currently being appealed. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies” for additional information about the litigation. An unfavorable appeals ruling on that matter could have an adverse impact on Electric Utilities and Infrastructure’s financial position, results of operations and cash flows. 
In September 2017, Hurricane Irma caused extensive damage and widespread power outages within the Duke Energy Florida service territory. Duke Energy Florida has not completed the final accumulation of storm restoration costs incurred. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. In accordance with a regulatory order with FPSC, certain incremental operation and maintenance storm restoration costs are classified as a regulatory asset recognizing the probable recoverability of these costs under FPSC's storm rule. The Company will make a petition by the end of 2017 to FPSC for recovery of costs. Duke Energy Florida's cash flows could be impacted by the timing of cost recovery. See Note 4, "Regulatory Matters," to the Condensed Consolidated Financial Statements for additional information.

PART I

Gas Utilities and Infrastructure
 Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
 2016
 Variance
2017
 2016
 Variance
 2017
 2016
 Variance
Operating Revenues $670
 $170
 $500
$272
 $89
 $183
 $1,243
 $358
 $885
Operating Expenses                 
Cost of natural gas 258
 49
 209
68
 6
 62
 402
 64
 338
Operation, maintenance and other 105
 32
 73
93
 30
 63
 291
 90
 201
Depreciation and amortization 57
 20
 37
57
 19
 38
 171
 59
 112
Property and other taxes 30
 18
 12
25
 12
 13
 81
 44
 37
Total operating expenses 450
 119
 331
243
 67
 176
 945
 257
 688
Operating Income 220
 51
 169
29
 22
 7
 298
 101
 197
Other Income and Expenses 18
 3
 15
22
 7
 15
 60
 13
 47
Interest Expense 26
 7
 19
26
 6
 20
 78
 19
 59
Income Before Income Taxes 212
 47
 165
25
 23
 2
 280
 95
 185
Income Tax Expense 79
 15
 64
6
 8
 (2) 101
 32
 69
Segment Income $133
 $32
 $101
$19
 $15
 $4
 $179
 $63
 $116
                 
Piedmont LDC throughput (dekatherms) (a)
 133,276,787
 
 133,276,787
107,490,775
 
 107,490,775
 334,781,316
 
 334,781,316
Duke Energy Midwest LDC throughput (MCF) 30,830,999
 34,741,520
 (3,910,521)
Duke Energy Midwest LDC throughput (Mcf)9,904,644
 9,568,340
 336,304
 52,940,410
 57,023,986
 (4,083,576)
(a)     Includes throughput subsequent to Duke Energy's acquisition of Piedmont on October 3, 2016.
Three Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Gas Utilities and Infrastructure’s higher results were almost entirelyprimarily due to increased investments in the ACP pipeline. Piedmont's losses included in Gas Utilities and Infrastructure's results were $5 million for the three months ended September 30, 2017. All variances are related to the inclusion of Piedmont's results of operations as a result of Duke Energy's acquisition of Piedmont on October 3, 2016, except for the following:
Other Income and Expenses. The variance was driven primarily by increased investments in the ACP pipeline.

PART I

Nine Months Ended September 30, 2017, as Compared to September 30, 2016
Gas Utilities and Infrastructure’s higher results were 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, 2016.2016, as well as growth from investments in ACP and Sabal Trail pipelines. Piedmont's earnings included in Gas Utilities and Infrastructure's results were $99$95 million for the threenine months ended March 31,September 30, 2017. All variances are related to the inclusion of Piedmont's results of operations, except for the following:
Other Income and Expenses. The variance was driven primarily by higher earnings from Duke Energy's mid-stream gas pipelineincreased investments that were owned prior toin the Piedmont acquisition.ACP and Sabal Trail pipelines.
Matters Impacting Future Gas Utilities and Infrastructure Results
Gas Utilities and Infrastructure has a 24 percent ownership interest in Constitution Pipeline Company, LLC (Constitution), a natural gas pipeline project slated to transport natural gas supplies to major northeastern markets. On April 22, 2016, the New York State Department of Environmental Conservation denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution has stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved. To the extent the legal and regulatory proceedings have unfavorable outcomes, or if Constitution concludes that the project is not viable or does not go forward, an impairment charge of up to the recorded investment in the project, net of any cash and working capital returned, may be recorded. With the project on hold, funding of project costs has ceased until resolution of legal actions. At September 30, 2017, Duke Energy is contractually obligated to provide funding of required operating costs, including the ownership percentage of legal expenses to obtain the necessary permitting for the project and project costs incurred priorEnergy's investment in Constitution was $82 million.
Rapidly rising interest rates without timely or adequate updates to the denialregulated allowed return on equity or failure to achieve the anticipated benefits of the water permit. IfPiedmont merger, including cost savings and growth targets, could significantly impact the legal actions resultestimated fair value of reporting units in an outcome whereGas Utilities and Infrastructure. In the project is abandoned, Constitution is obligated under various contracts to pay breakage fees thatevent of a significant decline in the estimated fair value of the reporting units, goodwill impairment charges could be recorded. The carrying value of goodwill within Gas Utilities and Infrastructure would be obligated to fund up to the ownership percentage, or potentially up to $10 million.was approximately $1,924 million at September 30, 2017.
In 2013, the PUCO issued an order (PUCO order) approving Duke Energy Ohio’s recovery of costs incurred between 2008 and 2012 for environmental investigation and remediation of two former MGP sites. At March 31, 2017, Duke Energy Ohio had recorded in Regulatory assets on the Condensed Consolidated Balance Sheet approximately $100 million of estimated MGP remediation costs not yet recovered through the MGP rider mechanism. Intervenors have appealed to the Ohio Supreme Court the PUCO order authorizing recovery of these amounts. That appeal remains pending. Duke Energy Ohio cannot predict the outcome of the appeal before the Ohio Supreme Court or future action by the PUCO. If Duke Energy Ohio is not able to recover these remediation costs in rates, the costs could have an adverse impact on Gas Utilities and Infrastructure's financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

PART I

Commercial Renewables
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
 2017
 2016
 Variance
Operating Revenues$128
 $114
 $14
$95
 $139
 $(44) $333
 $365
 $(32)
Operating Expenses                
Operation, maintenance and other77
 73
 4
56
 98
 (42) 191
 253
 (62)
Depreciation and amortization39
 30
 9
39
 34
 5
 116
 96
 20
Property and other taxes9
 6
 3
9
 8
 1
 26
 20
 6
Impairment charges76
 
 76
 76
 
 76
Total operating expenses125
 109
 16
180
 140
 40
 409
 369
 40
Gains on Sales of Other Assets and Other, net2
 1
 1
1
 2
 (1) 5
 4
 1
Operating Income5
 6
 (1)
Operating (Loss) Income(84) 1
 (85) (71) 
 (71)
Other Income and Expenses(1) (2) 1
(10) (76) 66
 (12) (78) 66
Interest Expense19
 11
 8
22
 15
 7
 64
 38
 26
Loss Before Income Taxes(15) (7) (8)(116) (90) (26) (147) (116) (31)
Income Tax Benefit(39) (33) (6)(65) (65) 
 (146) (127) (19)
Less: Loss Attributable to Noncontrolling Interests(1) 
 (1)(2) (1) (1) (3) (2) (1)
Segment Income$25
 $26
 $(1)
Segment (Loss) Income$(49)
$(24) $(25) $2
 $13
 $(11)
                
Renewable plant production, GWh2,285
 2,060
 225
1,760
 1,801
 (41) 6,276
 5,619
 657
Net proportional MW capacity in operation2,907
 1,963
 944
    

 2,908
 2,725
 183
Three Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Commercial Renewables' results were impacted by lower investment tax credits (ITCs), higher financing costsinterest expense on new debt financings and higher losses from Duke Energy's REC Solar investment. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The decrease was primarily due to lower engineering, procurement and construction revenues from REC Solar.
Operating Expenses. The increase was primarily due to a $69 million pretax impairment charge in the current year related to a wholly owned non-contracted wind project, partially offset by lower operations and maintenance expense at REC Solar. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”
Other Income and Expenses. The variance was primarily due to a $71 million pretax impairment charge in the prior year related to certain equity method investments. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”
Interest Expense. The increase was primarily due to new renewablesproject financings.
Income Tax Benefit. Lower ITCs due to lower solar investments in the current year were offset by higher production tax credits (PTCs) related to wind projects placed in service.


PART I

Nine Months Ended September 30, 2017, as Compared to September 30, 2016
Commercial Renewables' results were impacted by lower ITCs, higher interest expense on new debt financings and higher losses from REC Solar, partially offset by increased PTCs. The following is a detailed discussion of the variance drivers by line item.
Operating RevenuesRevenues. The decrease was primarily due to lower engineering, procurement and construction revenues from REC Solar.
Operating Expenses. The increases wereincrease was primarily due to a $69 million pretax impairment charge in the current year related to a wholly owned non-contracted wind project and higher operating expenses related to new wind and solar generationprojects placed in service.service, partially offset by lower operations and maintenance expense at REC Solar. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”
Other Income and Expenses. The variance was primarily due to a $71 million pretax impairment charge in the prior year related to certain equity method investments. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”
Interest Expense. The variance was driven primarily bydue to new wind project financings and less capitalized interest.interest due to fewer projects under construction.
Income Tax Benefit. The variance was primarily due to an increase in pretax losses and higher production tax credits (PTCs)PTCs related to wind projects placed in service, partially offset by lower investment tax credits (ITCs)ITCs due to lower solar investments in the current year.
Matters Impacting Future Commercial Renewables Results
Changes or variability in assumptions used in calculating the fair value of the Commercial Renewables reporting units for goodwill testing purposes including but not limited to legislative actions related to tax credit extensions, long-term growth rates and discount rates could significantly impact the estimated fair value of the Commercial Renewables reporting units. In the event of a significant decline in the estimated fair value of the Commercial Renewables reporting units, goodwill or other asset impairment charges could be recorded. The carrying value of goodwill within Commercial Renewables was approximately $122$115 million at March 31,September 30, 2017.
Persistently low market pricing for wind resources, primarily in the EnergyElectric Reliability Council of Texas West market, and the future expiration of tax incentives including ITCs and PTCs could result in adverse impacts to the future results of Commercial Renewables.

PART I

Other
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
 2017
 2016
 Variance
Operating Revenues$33
 $29
 $4
$35
 $32
 $3
 $103
 $91
 $12
Operating Expenses                
Fuel used in electric generation and purchased power15
 11
 4
13
 14
 (1) 42
 37
 5
Operation, maintenance and other8
 36
 (28)21
 70
 (49) 47
 145
 (98)
Depreciation and amortization26
 34
 (8)27
 37
 (10) 79
 108
 (29)
Property and other taxes3
 9
 (6)3
 8
 (5) 10
 25
 (15)
Impairment charges
 2
 (2)
 
 
 7
 2
 5
Total operating expenses52
 92
 (40)64
 129
 (65) 185
 317
 (132)
Gains on Sales of Other Assets and Other, net5
 5
 
4
 3
 1
 15
 14
 1
Operating Loss(14) (58) 44
(25) (94) 69
 (67) (212) 145
Other Income and Expenses21
 17
 4
51
 24
 27
 100
 60
 40
Interest Expense134
 205
 (71)150
 157
 (7) 423
 553
 (130)
Loss Before Income Taxes(127) (246) 119
(124) (227) 103
 (390) (705) 315
Income Tax Benefit(52) (101) 49
(93) (49) (44) (193) (276) 83
Less: Income Attributable to Noncontrolling Interests2
 3
 (1)3
 3
 
 8
 7
 1
Net Expense$(77) $(148) $71
$(34) $(181) $147
 $(205) $(436) $231
Three Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Other's lower net expense was driven by lower interest expensetax benefits, insurance proceeds resulting from settlement of the shareholder litigation related to the Piedmont acquisition financing, decreasedProgress Energy merger, prior year donations to the Duke Energy Foundation and lower severance accruals and decreased charitable donations.expenses. The following is a detailed discussion of the variance drivers by line item.
Operating Expenses. The variancedecrease was primarily due to a decrease in severance accruals and a decrease inprior year donations to the Duke Energy Foundation. The Duke Energy Foundation, is a nonprofit organization funded by Duke Energy shareholders that makes charitable contributionsless captive insurance losses for Bison Insurance Company Limited and prior year severance expense related to selected nonprofits and government subdivisions.cost savings initiatives.
Other Income and Expenses. The increase was primarily driven by insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and higher earnings from NMC due to higher commodity prices.the equity method investment in National Methanol Company (NMC).
Interest Expense. The decrease was primarily due to Piedmont acquisition financing costs in thedriven by prior year including $93 million of unrealized losses on forward-starting interest rate swaps.swaps related to Piedmont pre-acquisition financing, partially offset by additional long-term debt outstanding in the current year. For additional information see Notes 2 and 910 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" and "Derivatives and Hedging," respectively.

PART I

Income Tax Benefit. The variance was primarily due to higher tax benefits resulting from legal entity restructuring, the 2016 North Carolina corporate tax rate reduction and prior year unfavorable impacts of finalizing federal tax audits, partially offset by lower pretax losses.
Nine Months Ended September 30, 2017, as Compared to September 30, 2016
Other's lower net expense was driven by prior year losses on forward-starting interest rate swaps, prior year donations to the Duke Energy Foundation, insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and decreased severance expenses. The following is a detailed discussion of the variance drivers by line item.
Operating Expenses. The decrease was primarily due to prior year severance expenses related to cost savings initiatives, prior year donations to the Duke Energy Foundation and lower franchise taxes resulting from a North Carolina law change.
Other Income and Expenses. The increase was driven by insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and higher earnings from the equity method investment in NMC.
Interest Expense. The decrease was primarily by 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 and 10 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" and "Derivatives and Hedging," respectively.
Income Tax Benefit. The variance was primarily due to a decrease in pretax losses. The effectivelosses, partially offset by tax rates forbenefits resulting from legal entity restructuring and the three months ended March 31,net impact of North Carolina corporate tax rate reductions in 2017 and 2016 were 40.9 percent and 41.1 percent, respectively.2016.
Matters Impacting Future Other Results
Included in Other is Duke Energy Ohio's 9 percent ownership interest in OVEC,the Ohio Valley Electric Corporation (OVEC), which owns 2,256 MW of coal-fired generation capacity. As a counterparty to an inter-company power agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA, including Duke Energy Ohio, based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuations in power prices and changes in OVEC’s costs of business. Deterioration in the credit quality or bankruptcy of one or more parties to the ICPA could increase the costs of OVEC. In addition, certain proposed environmental rulemaking costs could result in future increased cost allocations. For information on Duke Energy's regulatory filings related to OVEC, see Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters.”
The retired Beckjord generating station (Beckjord), a nonregulated facility retired during 2014, is not subject to the EPAU.S. Environmental Protection Agency (EPA) rule related to the disposal of CCR from electric utilities. However, if costs are incurred as a result of environmental regulations or to mitigate risk associated with on-site storage of coal ash, the costs could have an adverse impact on Other's financial position, results of operations and cash flows.
Earnings from an equity method investment in NMC reflect sales of methanol and methyl tertiary butyl ether (MTBE), which generate margins that are directionally correlated with Brent crude oil prices. Weakness in the market price of Brent crude oil and related commodities may result in a decline in earnings. In October 2017, Duke Energy's economic ownership interest will decreasein NMC decreased from 25 percent to 17.5 percent upon successful startuppercent.
On November 2, 2017, the U.S. House of NMC's polyacetal production facility, whichRepresentatives issued its proposal for comprehensive tax reform. The U.S. Senate has not yet issued its related proposal. There is expecteduncertainty as to occurwhether any form of tax reform will become law and, if so, what provisions may be included in the second quarter of 2017.
U.S. federalfinal tax reform has become an important priority of the current Congress and Administration.reform. Any substantial revision to the U.S. tax code, including a loss of the ability to deduct interest expense, could adversely impact Duke Energy's future earnings, cash flows or financial position.

PART I

(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
 2017
 2016
 Variance
(Loss) Income From Discontinued Operations, net of tax$(2) $180
 $(182) $(4) $190
 $(194)
Three Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Discontinued Operations, Net of Tax.The variance was primarily driven by 2016a $122 million income tax benefit in the prior year resulting from immaterial out of period deferred tax liability adjustments, as well as earnings from the International Disposal Group, which was sold in December 2016. SeeFor additional information see Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions,Dispositions." for
Nine Months Ended September 30, 2017, as Compared to September 30, 2016
The variance was primarily driven by a $122 million income tax benefit in the prior year resulting from immaterial out of period deferred tax liability adjustments, as well as operating earnings from the International Disposal Group, partially offset by an impairment charged related to certain assets in Central America that were sold in 2016. For additional information.information see Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions."

PART I

DUKE ENERGY CAROLINAS
Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, and 2016 and the Annual Report on Form 10-K for the year ended December 31, 2016.
Results of Operations
Three Months Ended March 31,Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
Operating Revenues$1,716
 $1,740
 $(24)$5,581
 $5,641
 $(60)
Operating Expenses          
Fuel used in electric generation and purchased power428
 421
 7
1,394
 1,391
 3
Operation, maintenance and other482
 512
 (30)1,431
 1,481
 (50)
Depreciation and amortization254
 259
 (5)804
 802
 2
Property and other taxes68
 67
 1
206
 206
 
Total operating expenses1,232
 1,259
 (27)3,835
 3,880
 (45)
Losses on Sales of Other Assets and Other, net
 (1) 1
Operating Income484
 481
 3
1,746
 1,760
 (14)
Other Income and Expenses37
 37
 
99
 121
 (22)
Interest Expense103
 107
 (4)314
 316
 (2)
Income Before Income Taxes418
 411
 7
1,531
 1,565
 (34)
Income Tax Expense148
 140
 8
522
 539
 (17)
Net Income$270
 $271
 $(1)$1,009
 $1,026
 $(17)
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year2017
Residential sales(9.46.7)%
General service sales(2.1)%
Industrial sales(0.30.5)%
Wholesale power sales1.83.9 %
Joint dispatch sales69.287.6 %
Total sales(3.92.5)%
Average number of customers1.41.5 %
ThreeNine Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Operating Revenues. The variance was driven primarily by:
an $84a $213 million decrease in retail sales, net of fuel revenues, due to warm winterless favorable weather in the current year.
Partially offset by:
a $31an $89 million increase in rider revenues and retail pricing primarily related to energy efficiency programs;
a $23$30 million increase in weather-normal sales volumes to retail customers, net of fuel revenues;
a $15 million increase in wholesale power revenues, net of sharing and fuel revenues, primarily due to additional volumes for customers served under long-term contracts; and
an $8 million increase in fuel revenues primarily due to changes in generation mix, partially offset by lower sales volumes; and
a $5 million increase in weather-normal retail sales volumes, net of fuel revenues.mix.
Operating Expenses. The variance was driven primarily bydue to a $30$50 million decrease in operationsoperation, maintenance and maintenanceother expense primarily due to lower expenses at generating plants, lower storm restoration costs and decreased labor costs,lower severance expenses, partially offset by higher energy efficiency program costs.costs and higher distribution maintenance expenses.
Other Income and Expenses. The variance was primarily due to a decrease in recognition of post in-service equity returns for projects that had been completed prior to being reflected in customer rates.
Income Tax Expense. The variance was primarily due to an increasea decrease in pretax income and a higher effective tax rate.the favorable impact of research credits. The effective tax rates for the threenine months ended March 31,September 30, 2017, and 2016 were 35.434.1 percent and 34.134.4 percent, respectively. The increase in the effective tax rate was primarily due to a favorable state resolution booked in 2016 related to prior year tax returns.

PART I

Matters Impacting Future Results
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Duke Energy Carolinas' financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

PART I

On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Duke Energy Carolinas' estimated AROs related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, 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' financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "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. The outcome of these lawsuits, fines and penalties could have an adverse impact on Duke Energy Carolinas’ financial position, results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.
Duke Energy Carolinas intends to filefiled a general rate case in North Carolina inon August 25, 2017, to recover costs of complying with CCR regulations and the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previous rate cases. Duke Energy Carolinas' earnings could be adversely impacted if the rate caseincrease is delayed or denied by the NCUC.

PART I

PROGRESS ENERGY
Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, and 2016 and the Annual Report on Form 10-K for the year ended December 31, 2016.
Results of Operations
Three Months Ended March 31,Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
Operating Revenues$2,179
 $2,332
 $(153)$7,435
 $7,645
 $(210)
Operating Expenses          
Fuel used in electric generation and purchased power726
 860
 (134)2,588
 2,832
 (244)
Operation, maintenance and other544
 592
 (48)1,650
 1,699
 (49)
Depreciation and amortization313
 290
 23
958
 904
 54
Property and other taxes117
 119
 (2)386
 375
 11
Impairment charges
 2
 (2)137
 4
 133
Total operating expenses1,700
 1,863
 (163)5,719
 5,814
 (95)
Gains on Sales of Other Assets and Other, net8
 6
 2
19
 18
 1
Operating Income487
 475
 12
1,735
 1,849
 (114)
Other Income and Expenses24
 20
 4
65
 79
 (14)
Interest Expense206
 160
 46
595
 497
 98
Income Before Income Taxes305
 335
 (30)1,205
 1,431
 (226)
Income Tax Expense104
 123
 (19)384
 496
 (112)
Net Income201
 212
 (11)821
 935
 (114)
Less: Net Income Attributable to Noncontrolling Interests2
 3
 (1)7
 8
 (1)
Net Income Attributable to Parent$199
 $209
 $(10)$814
 $927
 $(113)
ThreeNine Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Operating Revenues. The variance was driven primarily by:
a $126$256 million decrease in fuel revenues driven bydue to lower retail sales and changes in generation mix at Duke Energy Progress, as well as decreased demand and capacity rates to retail customers at Duke Energy Florida;Florida, partially offset by an increase in fuel rates to retail customers; and
a $67$132 million decrease in retail sales, net of fuel revenues, due to warm winterless favorable weather in the current year; and
a $10 million decrease in wholesale poweryear, including lost revenues primarily duerelated to contracts that expired in the prior yearHurricane Irma at Duke Energy Florida, partially offset by higher peak demand at Duke Energy Progress.Florida.
Partially offset by:
an $81 million increase in retail pricing due to the base rate adjustment for the Osprey acquisition and the completion of the Hines Energy Complex Chiller Uprate Project, as well as the Duke Energy Progress South Carolina rate case; and
a $29$79 million increase in rider revenues related to energy efficiency programs at Duke Energy Progress, andas well as nuclear asset securitization revenues beginning in July 2016 and extended uprate project revenues beginning in 2017 at Duke Energy Florida; and
a $15 million increase in retail pricing due to the Duke Energy Progress South Carolina rate case and Duke Energy Florida's base rate adjustment for the Osprey acquisition.Florida.
Operating Expenses. The variance was driven primarily by:
a $134$244 million decrease in fuel expense primarily due to lower retail sales and changes in generation mix at Duke Energy Progress, as well as decreased purchased power and lower capacity costs, partially offset by higher generation and deferred fuel costs and decreased purchased power at Duke Energy Florida; and
a $48$49 million decrease in operationsoperation, maintenance and maintenanceother expense due to lower storm restoration costs as well as decreased laborat Duke Energy Progress, lower planned outage costs and plant outage costs.lower severance expenses, partially offset by higher storm restoration costs at Duke Energy Florida.
Partially offset by:
a $23$133 million increase in impairment charges primarily due to the write-off of remaining unrecovered Levy Nuclear Project costs in the current year at Duke Energy Florida; and
a $54 million increase in depreciation and amortization expense primarily due to nuclear regulatory asset amortization, as well as additional plant in service and nuclear regulatory asset amortization.at Duke Energy Florida.
Interest Expense. The variance was primarily due to higher debt outstanding.outstanding, as well as interest charges on North Carolina fuel overcollections at Duke Energy Progress and lower debt returns driven by the CR3 regulatory asset debt return ending in June 2016 upon securitization at Duke Energy Florida.

PART I

Income Tax Expense. The variance was primarily due to a decrease in pretax income and a lower effective tax rate.income. The effective tax rates for the threenine months ended March 31,September 30, 2017, and 2016 were 34.131.9 percent and 36.734.7 percent, respectively. The decrease in the effective tax rate was primarily due to higher AFUDC equitythe favorable impact of research credits and the amortization of excesslower North Carolina deferred tax.corporate tax rates.

PART I

Matters Impacting Future Results
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Progress Energy’s financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.
On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Progress Energy's estimated AROs related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, 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 financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "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. The outcome of these lawsuits, fines and penalties could have an adverse impact on Progress Energy’s financial position, results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.
In the fourth quarter of 2016, Hurricane Matthew caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer incremental operation and maintenance and capital costs incurred in response to Hurricane Matthew and other significant 2016 storms. Current estimated incremental costs are approximately $116 million. The NCUC has not ruled on the petition.will address this request in Duke Energy Progress' currently pending rate case. A final order from the NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred could result in an adverse impact on Progress Energy's financial position, results of operations and cash flows.
On May 2, 2017, Duke Energy Progress filed notice with the NCUC that it intends to file a general rate case with the NCUC on or about June 1, 2017. Duke Energy Progress will seek to recover costs of complying with CCR regulations and the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previous rate cases. Progress Energy's earnings could be adversely impacted if the rate caseincrease is delayed or denied by the NCUC.
On August 29, 2017, Duke Energy Florida filed the 2017 Settlement with the FPSC. The 2017 Settlement was approved by the FPSC on October 25, 2017.  See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information about the 2017 Settlement.  In accordance with the 2017 Settlement, Duke Energy Florida will not seek recovery of any costs associated with the ongoing Westinghouse contract litigation, which is currently being appealed.  See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies” for additional information about the litigation.  An unfavorable appeals ruling on that matter could have an adverse impact on Duke Energy Florida’s financial position, results of operations and cash flows. 

In September 2017, Hurricane Irma caused extensive damage and widespread power outages within the Duke Energy Florida service territory. Duke Energy Florida has not completed the final accumulation of storm restoration costs incurred. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. In accordance with a regulatory order with FPSC, certain incremental operation and maintenance storm restoration costs are classified as a regulatory asset recognizing the probable recoverability of these costs under FPSC's storm rule. The Company will make a petition by the end of 2017 to FPSC for recovery of costs. Duke Energy Florida's cash flows could be impacted by the timing of cost recovery. See Note 4, "Regulatory Matters," to the Condensed Consolidated Financial Statements for additional information.

PART I

DUKE ENERGY PROGRESS
Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, and 2016 and the Annual Report on Form 10-K for the year ended December 31, 2016.
Results of Operations
Three Months Ended March 31,Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
Operating Revenues$1,219
 $1,307
 $(88)$3,878
 $4,103
 $(225)
Operating Expenses          
Fuel used in electric generation and purchased power364
 448
 (84)1,214
 1,441
 (227)
Operation, maintenance and other350
 386
 (36)1,032
 1,067
 (35)
Depreciation and amortization181
 175
 6
536
 526
 10
Property and other taxes40
 41
 (1)120
 119
 1
Impairment charges
 1
 (1)
Total operating expenses935
 1,050
 (115)2,902
 3,154
 (252)
Gains on Sales of Other Assets and Other, net2
 1
 1
3
 2
 1
Operating Income286
 258
 28
979
 951
 28
Other Income and Expenses19
 17
 2
47
 47
 
Interest Expense82
 63
 19
217
 188
 29
Income Before Income Taxes223
 212
 11
809
 810
 (1)
Income Tax Expense76
 75
 1
262
 271
 (9)
Net Income and Comprehensive Income$147
 $137
 $10
Net Income$547
 $539
 $8
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales, and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior period2017
Residential sales(7.34.6)%
General service sales(3.02.0)%
Industrial sales2.10.5 %
Wholesale power sales(11.65.6)%
Joint dispatch sales(18.535.3)%
Total sales(8.87.4)%
Average number of customers1.3 %
ThreeNine Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Operating Revenues. The variance was driven primarily by:
a $76$242 million decrease in fuel revenues driven bydue to lower retail sales and changes in generation mix; and
a $40$73 million decrease in retail sales, net of fuel revenues, due to warm winterless favorable weather in the current year.
Partially offset by:
a $13$41 million increase in rider revenues relatedprimarily due to energy efficiency programs;
a $9$29 million increase in retail pricing due to the Duke Energy Progress South Carolina rate case; and
an $8a $21 million increase in wholesale power revenues, net of fuel, primarily due to higher peak demand.
Operating Expenses. The variance was driven primarily by:
an $84a $227 million decrease in fuel expense primarily due to lower retail sales and changes in generation mix; and
a $36$35 million decrease in operationsoperation, maintenance and maintenanceother expense primarily due to lower storm restoration costs.
Interest Expense. The varianceincrease was primarily due to higher debt outstanding, as well as interest charges on North Carolina fuel overcollections.
Income Tax Expense. The variance was primarily due to an increase in pretax income, partially offset by athe favorable impact of research credits and lower effectiveNorth Carolina corporate tax rate.rates. The effective tax rates for the threenine months ended March 31,September 30, 2017, and 2016 were 34.132.4 percent and 35.433.5 percent, respectively. The decrease in the effective tax rate was primarily due to the amortizationfavorable impact of excessresearch credits and lower North Carolina deferred tax.corporate tax rates.

PART I

Matters Impacting Future Results
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Duke Energy Progress’ financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.
On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Duke Energy Progress' estimated AROs related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, 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' financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "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. The outcome of these lawsuits, fines and penalties could have an adverse impact on Duke Energy Progress’ financial position, results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.
In the fourth quarter of 2016, Hurricane Matthew caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer incremental operation and maintenance and capital costs incurred in response to Hurricane Matthew and other significant 2016 storms. Current estimated incremental costs are approximately $116 million. The NCUC has not ruled on the petition.will address this request in Duke Energy Progress' currently pending rate case. A final order from the NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred could result in an adverse impact on Duke Energy Progress' financial position, results of operations and cash flows.
On May 2, 2017, Duke Energy Progress filed notice with the NCUC that it intends to file a general rate case with the NCUC on or about June 1, 2017. Duke Energy Progress will seek to recover costs of complying with CCR regulations and the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previous rate cases. Duke Energy Progress' earnings could be adversely impacted if the rate caseincrease is delayed or denied by the NCUC.

PART I

DUKE ENERGY FLORIDA
Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, and 2016 and the Annual Report on Form 10-K for the year ended December 31, 2016.
Results of Operations
Three Months Ended March 31,Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
Operating Revenues$959
 $1,024
 $(65)$3,551
 $3,538
 $13
Operating Expenses          
Fuel used in electric generation and purchased power362
 412
 (50)1,374
 1,391
 (17)
Operation, maintenance and other191
 205
 (14)610
 623
 (13)
Depreciation and amortization132
 114
 18
423
 378
 45
Property and other taxes77
 78
 (1)265
 256
 9
Impairment charges1
 2
 (1)137
 4
 133
Total operating expenses763
 811
 (48)2,809
 2,652
 157
Operating Income196
 213
 (17)742
 886
 (144)
Other Income and Expenses16
 5
 11
45
 30
 15
Interest Expense70
 41
 29
211
 143
 68
Income Before Income Taxes142
 177
 (35)576
 773
 (197)
Income Tax Expense52
 67
 (15)208
 286
 (78)
Net Income$90
 $110
 $(20)$368
 $487
 $(119)
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales, and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior period2017
Residential sales(8.43.6)%
General service sales0.4(1.3)%
Industrial sales0.4(1.4)%
Wholesale and other5.118.5 %
Total sales(1.81.2)%
Average number of customers1.41.5 %
ThreeNine Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Operating Revenues. The variance was driven primarily by:
a $50$52 million decreaseincrease in fuel and capacity revenuesretail pricing primarily due to decreased demandthe base rate adjustment for the Osprey acquisition and capacity rates to retail customers;the completion of the Hines Energy Complex Chiller Uprate Project;
a $27 million decrease in retail sales, net of fuel revenues, due to warm winter weather in the current year; and
an $18 million decrease in wholesale power revenues primarily driven by contracts that expired in the prior year.
Partially offset by:
a $16$38 million increase in rider revenues primarily due to nuclear asset securitization beginning in July 2016 and extended power uprate project revenues beginning in July 2016;2017; and
an $11a $30 million increase in weather-normal sales volumes to retail customers in the current year.
Partially offset by:
a $59 million decrease in retail sales, net of fuel revenues, due to less favorable weather in the current year, including lost revenues related to Hurricane Irma;
a $31 million decrease in wholesale power revenues primarily due to contracts that expired in the prior year; and
a $6$14 million decrease in fuel and capacity revenues primarily due to a decrease in capacity rates to retail customers, partially offset by an increase in fuel rates to retail pricing due to the base rate adjustment for the Osprey acquisition.customers.
Operating Expenses. The variance was driven primarily by:
a $50$133 million decreaseincrease in fuel expenseimpairment charges primarily due to lower deferred fuelthe write-off of remaining unrecovered Levy Nuclear Project costs and decreased purchased power, partially offset by higher generation costs;in the current year; and
a $14 million decrease in operations and maintenance expense primarily due to decreased labor costs and planned outage costs.
Partially offset by:
an $18$45 million increase in depreciation and amortization expense primarily due to nuclear regulatory asset amortization, as well as additional plant in service, as well as nuclear regulatory asset amortization.service.

PART I

Partially offset by:
a $17 million decrease in fuel expense primarily due to decreased purchased power and lower capacity costs, partially offset by higher generation and deferred fuel costs; and
a $13 million decrease in operation, maintenance and other expense primarily due to lower planned outage costs and lower severance expenses, partially offset by higher storm restoration costs in the current year.
Other Income and Expenses. The variance was driven by higher AFUDC equity return on the Citrus County Combined Cycle and Hines Energy Complex Chiller Uprate projects in the current year and gains on insurance policies.equity.

PART I

Interest Expense. The variance was primarily due to higher debt outstanding and lower debt returns driven by the CR3 regulatory asset debt return recorded prior to the securitization of CR3ending in June of 2016.2016 upon securitization.
Income Tax Expense. The variance was primarily due to a decrease in pretax income and a decrease in effective tax rate.income. The effective tax rates for the threenine months ended March 31,September 30, 2017, and 2016 were 36.636.1 percent and 37.937.0 percent, respectively.
Matters Impacting Future Results
In September 2017, Hurricane Irma caused extensive damage and widespread power outages within the Duke Energy Florida service territory. Duke Energy Florida has not completed the final accumulation of storm restoration costs incurred. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. In accordance with a regulatory order with FPSC, certain incremental operation and maintenance storm restoration costs are classified as a regulatory asset recognizing the probable recoverability of these costs under FPSC's storm rule. The decrease inCompany will make a petition by the effective tax rateend of 2017 to FPSC for recovery of costs. Duke Energy Florida's cash flows could be impacted by the timing of cost recovery. See Note 4, "Regulatory Matters," to the Condensed Consolidated Financial Statements for additional information.
On August 29, 2017, Duke Energy Florida filed the 2017 Settlement with the FPSC. The 2017 Settlement was primarily dueapproved by the FPSC on October 25, 2017. See Note 4 to higher AFUDC equity.the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information about the 2017 Settlement. In accordance with the 2017 Settlement, Duke Energy Florida will not seek recovery of any costs associated with the ongoing Westinghouse contract litigation, which is currently being appealed. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies” for additional information about the litigation. An unfavorable appeals ruling on that matter could have an adverse impact on Duke Energy Florida’s financial position, results of operations and cash flows. 

PART I

DUKE ENERGY OHIO
Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, and 2016 and the Annual Report on Form 10-K for the year ended December 31, 2016.
Results of Operations
Three Months Ended March 31,Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
Operating Revenues          
Regulated electric$337
 $340
 $(3)$1,036
 $1,053
 $(17)
Regulated natural gas170
 170
 
360
 358
 2
Nonregulated electric and other11
 6
 5
30
 22
 8
Total operating revenues518
 516
 2
1,426
 1,433
 (7)
Operating Expenses          
Fuel used in electric generation and purchased power – regulated97
 111
 (14)283
 340
 (57)
Fuel used in electric generation and purchased power – nonregulated15
 10
 5
42
 37
 5
Cost of natural gas54
 49
 5
69
 64
 5
Operation, maintenance and other130
 119
 11
385
 367
 18
Depreciation and amortization67
 61
 6
193
 175
 18
Property and other taxes72
 71
 1
204
 195
 9
Impairment charges1
 
 1
Total operating expenses435
 421
 14
1,177
 1,178
 (1)
Gains on Sales of Other Assets and Other, net
 1
 (1)1
 2
 (1)
Operating Income83
 96
 (13)250
 257
 (7)
Other Income and Expenses4
 2
 2
12
 6
 6
Interest Expense22
 20
 2
67
 63
 4
Income from Continuing Operations Before Income Taxes65
 78
 (13)195
 200
 (5)
Income Tax Expense from Continuing Operations23
 21
 2
67
 65
 2
Income from Continuing Operations42
 57
 (15)128
 135
 (7)
Income from Discontinued Operations, net of tax
 2
 (2)
(Loss) Income from Discontinued Operations, net of tax(1) 36
 (37)
Net Income$42
 $59
 $(17)$127
 $171
 $(44)
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year2017
Residential sales(2.95.8)%
General service sales(1.73.2)%
Industrial sales(0.21.3)%
Wholesale power sales153.2127.3 %
Total sales(0.82.5)%
Average number of customers0.8 %
ThreeNine Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Operating Revenues. The variance was driven primarily by:
an $8a $59 million increasedecrease in PJM transmission revenues;fuel revenues primarily due to lower electric fuel prices and sales volumes, partially offset by higher costs passed through to natural gas customers due to higher natural gas prices; and
a $6$16 million decrease in electric retail sales, net of fuel revenues, due to less favorable weather in the current year.
Partially offset by:
a $40 million increase in rider revenues primarily due to energy efficiency programs and a rate increase for the distribution capital investment rider, partially offset by a decrease in the percentage of income payment plan rider due to a rate decrease:decrease;
a $17 million increase in PJM Interconnection, LLC (PJM) transmission revenues; and
a $5$9 million increase in other revenues related to Ohio Valley Electric Corporation (OVEC).
Partially offset by:
an $11 million decrease in fuel revenues primarily due to lower electric fuel prices and sales volumes, partially offset by higher costs passed through to natural gas customers due to higher natural gas prices; and
an $8 million decrease in electric retail sales, net of fuel revenues, due to warm winter weather in the current year.OVEC.

PART I

Operating Expenses. The variance was driven primarily by:
an $11$18 million increase in operationsoperation, maintenance and maintenanceother expense due to higher energy efficiency program costs higher storm costs, and higher transmission and distribution operations costs; and
a $6an $18 million increase in depreciation and amortization expense due to additional plant in service.service and a true up related to Smart Grid assets in the prior year;
a $9 million increase in property and other taxes primarily due to higher property taxes;
a $5 million increase in nonregulated fuel expenses related to OVEC; and
a $5 million increase in natural gas costs due to higher natural gas prices.
Partially offset by:
a $14$57 million decrease in fuel expense driven by lower sales volumes and lower electric fuel costs.
Other Income Taxand Expenses. The increase was primarily driven by higher AFUDC equity.
Interest Expense.The increase was primarily driven by interest related to new debt issued in June 2016.
Discontinued Operations, Net of Tax. The variance was primarily due to a decrease in pretax income, partially offsetdriven by a higher effectiveprior year income tax rate. The effective tax rate for the three months ended March 31, 2017 and 2016 were 35.4 percent and 26.9 percent, respectively. The increase in the effective tax rate was primarily due to anbenefit resulting from immaterial out of period adjustment in the prior yeardeferred tax liability adjustments related to deferred tax balances associated with property, plant and equipment.the Midwest Generation Disposal Group.
Matters Impacting Future Results
An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could have an adverse impact on Duke Energy Ohio's financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.
Duke Energy Ohio’s nonregulated Beckjord station, a facility retired during 2014, is not subject to the EPA rule related to the disposal of CCR from electric utilities. However, if costs are incurred as a result of environmental regulations or to mitigate risk associated with on-site storage of coal ash at the facility, the costs could have an adverse impact on Duke Energy Ohio's financial position, results of operations and cash flows.
In 2013, the PUCO issued an order (PUCO order) approving Duke Energy Ohio’s recovery of costs incurred between 2008 and 2012 for environmental investigation and remediation of two former MGP sites. At March 31, 2017, Duke Energy Ohio had recorded in Regulatory assets on the Condensed Consolidated Balance Sheet approximately $100 million of estimated MGP remediation costs not yet recovered through the MGP rider mechanism. Intervenors have appealed to the Ohio Supreme Court the PUCO order authorizing recovery of these amounts. That appeal remains pending. Duke Energy Ohio cannot predict the outcome of the appeal before the Ohio Supreme Court or future action by the PUCO. If Duke Energy Ohio is not able to recover these remediation costs in rates, the costs could have an adverse impact on Duke Energy Ohio's financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.
Duke Energy Ohio has a 9 percent ownership interest in OVEC, which owns 2,256 MW of coal-fired generation capacity. As a counterparty to an ICPA, Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio’s ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA, including Duke Energy Ohio, based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuations in power prices and changes in OVEC’s costs of business. Deterioration in the credit quality or bankruptcy of one or more parties to the ICPA could increase the costs of OVEC. In addition, certain proposed environmental rulemaking costs could result in future increased cost allocations.
On March 2, 2017, Duke Energy Ohio filed an electric distribution base rate application with the PUCO to address recovery of electric distribution system capital investments and any increase in expenditures subsequent to previous rate cases. The application also includes requests to continue certain current riders and establish new riders related to LED Outdoor Lighting Service and regulatory mandates. Duke Energy Ohio's earnings could be adversely impacted if the rate case and requested riders are delayed or denied by the PUCO. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.
On September 1, 2017, Duke Energy Kentucky filed a base rate case with the KPSC to recover costs of capital investments in generation, transmission and distribution systems and to recover other incremental expenses since its last rate case filed in 2006. Duke Energy Kentucky’s earnings could be adversely impacted if the rate increase is delayed or denied by the KPSC.

PART I

DUKE ENERGY INDIANA
Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, and 2016 and the Annual Report on Form 10-K for the year ended December 31, 2016.
Results of Operations
Three Months Ended March 31,Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
Operating Revenues$758
 $714
 $44
$2,302
 $2,225
 $77
Operating Expenses          
Fuel used in electric generation and purchased power251
 228
 23
744
 690
 54
Operation, maintenance and other174
 162
 12
541
 526
 15
Depreciation and amortization125
 125
 
336
 345
 (9)
Property and other taxes22
 23
 (1)56
 67
 (11)
Impairment charges
 8
 (8)
Total operating expenses572
 538
 34
1,677
 1,636
 41
Gains on Sales of Other Assets and Other, net1
 
 1
Operating Income186
 176
 10
626
 589
 37
Other Income and Expenses8
 4
 4
27
 15
 12
Interest Expense44
 44
 
132
 136
 (4)
Income Before Income Taxes150
 136
 14
521
 468
 53
Income Tax Expense59
 41
 18
203
 159
 44
Net Income$91
 $95
 $(4)$318
 $309
 $9
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year2017
Residential sales(4.15.5)%
General service sales(1.32.5)%
Industrial sales0.1 %
Wholesale power sales(42.719.8)%
Total sales(12.66.2)%
Average number of customers1.20.8 %
ThreeNine Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Operating Revenues. The variance was driven primarily by:
a $28$64 million increase in rider revenues related to the Edwardsport IGCC plant and energy efficiency programs; and
a $17$47 million increase in fuel revenues primarily due to higher purchased power costs passed through to customers and higher financial transmission right (FTR) revenues.
Partially offset by:
an $18 million decrease in retail sales due to less favorable weather in the current year; and
a $15 million decrease in wholesale power revenues, net of fuel, primarily due to a decrease in demand rates and contracts that expired in the current year.
Operating Expenses. The variance was driven primarily by:
a $23$54 million increase in fuel and purchased power expense, primarily due to higher purchased power volumes and prices, partially offset by lower fuel costs due to lower generation;prices; and
a $14$15 million increase in operationsoperation, maintenance and maintenanceother expense due to growth in energy efficiency programs and higher expenses at Edwardsport IGCC.transmission costs.
Partially offset by:
an $11 million decrease in property and other taxes primarily due to utilization of ITCs;
a $9 million decrease in depreciation and amortization primarily due to the 2017 deferral of certain asset retirement obligations and the completion of the amortization of a regulated asset for costs associated with the termination of a gasification services agreement in 2000, partially offset by new IGCC rider rates that result in a lower deferral amount and higher depreciation due to additional plant in service; and

PART I

an $8 million decrease in impairments and other charges primarily due to the early retirement of certain metering equipment in the prior year.
Other Income and Expenses. The varianceincrease was primarily driven by higher AFUDC equity.
Income Tax Expense. The variance was primarily due to an increase in pretax income and a higher effective tax rate.income. The effective tax rates for the threenine months ended March 31,September 30, 2017, and 2016 were 39.339.0 percent and 30.234.0 percent, respectively. The increase in the effective tax rate was primarily due to an immaterial out of period adjustment in the prior year related to deferred tax balances associated with property, plant and equipment.
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 financial position, results of operations and cash flows.

PART I

See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.
The IURCIndiana Utility Regulatory Commission (IURC) approved a settlement agreement between Duke Energy Indiana and multiple parties that resolves all disputes, claims and issues from the IURC proceedings related to post-commercial operating performance and recovery of ongoing operating and capital costs at the Edwardsport IGCC generating facility. Pursuant to the terms of thisThe settlement agreement the agreement imposesimposed a cost cap for retail recoverable operations and maintenance costs through 2017. An inability to manage operating costs in accordance with caps imposed pursuant to the agreement could have an adverse impact on Duke Energy Indiana's financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

PART I

PIEDMONT
Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the threenine months ended March 31,September 30, 2017, Piedmont's Annual Report on Form 10-K for the year ended October 31, 2016, and the transition report filed on Form 10-Q (Form 10-QT)10‑QT as of December 31, 2016, for the transition period from November 1, 2016, to December 31, 2016.
Results of Operations
Three Months Ended March 31,Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
2017
 2016
 Variance
Operating Revenues          
Regulated natural gas$498
 $481
 17
$877
 $815
 $62
Nonregulated natural gas and other2
 2
 
7
 8
 (1)
Total operating revenues500
 483
 17
884
 823
 61
Operating Expenses          
Cost of natural gas205
 197
 8
333
 289
 44
Operation, maintenance and other77
 74
 3
226
 221
 5
Depreciation and amortization35
 34
 1
109
 103
 6
Property and other taxes13
 11
 2
38
 33
 5
Impairment charges7
 
 7
Total operating expenses330
 316
 14
713
 646
 67
Operating Income170
 167
 3
171
 177
 (6)
Equity in Earnings of Unconsolidated Affiliates3
 16
 (13)
Equity in earnings of unconsolidated affiliates8
 25
 (17)
Other income and expenses, net(1) (1) 
Total other income and expenses7
 24
 (17)
Interest Expense20
 17
 3
59
 50
 9
Income Before Income Taxes153
 166
 (13)119
 151
 (32)
Income Tax Expense58
 63
 (5)43
 57
 (14)
Net Income$95
 $103
 $(8)$76
 $94
 $(18)
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 year2017
Residential deliveries(23.219.2)%
Commercial deliveries(19.911.8)%
Industrial deliveries(7.14.3)%
Power generation deliveries(12.411.0)%
For resale(12.76.9)%
Total throughput deliveries(14.310.5)%
Secondary market volumes(1.76.2)%
Average number of customers1.51.6 %
Piedmont's throughput was 133,276,787334,781,316 dekatherms and 155,446,586374,214,204 dekatherms for the threenine months ended March 31,September 30, 2017, and 2016, respectively. Due to the margin decoupling mechanism in North Carolina and weather normalization adjustment (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.
ThreeNine Months Ended March 31,September 30, 2017, as Compared to March 31,September 30, 2016
Operating Revenues. The variance was driven primarily by:
a $13$44 million increase due to higher natural gas costs passed through to customers primarily due to higher natural gas prices; and
a $17 million increase in revenues to residential and commercial customers, net of natural gas costs passed through to customers, primarily due to IMRIntegrity Management Rider (IMR) rate adjustments and customer growth, partially offset by decreased volumes delivered due to warmer weather; and
an $8 million increase due to higher natural gas costs passed through to customers, primarily due to higher natural gas prices.
Partially offset by:
a $3 million decrease in secondary market activity primarily due to lower margin sales.wholesale marketing revenue.

PART I

Operating Expenses. The variance was driven by:
An $8a $44 million increase in costs of natural gas primarily due to higher natural gas prices and decreased opportunity for capacity release transactions; andprices;
A $6an $11 million increase in other operating expenses, primarilydepreciation expense and property and franchise taxes due to higher severance expense, increased property taxes and depreciation attributable to additional plant in service.service; and
a $7 million increase due to an impairment of software resulting from planned accounting system and process integration in 2018.
Equity in Earnings of Unconsolidated Affiliates. The variancedecrease was primarily due to equity earnings from the investment in SouthStar Energy Services, LLC (SouthStar) in the prior year. Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016.
Income Tax Expense. The variance was primarily due to a decrease in pretax income. The effective tax rates for the threenine months ended March 31,September 30, 2017, and 2016 were 37.936.1 percent and 38.037.7 percent, respectively.
Matters Impacting Future Results
On April 1, 2017, Piedmont transferred its ownership interests The decrease in Atlantic Coast Pipeline, LLC (ACP)the effective tax rate was primarily due to favorable tax return true ups and Constitution to a wholly owned subsidiary of Duke Energy at book value. As a result, Piedmont will not recognize equity earnings (or losses) from these investments in future periods.lower North Carolina corporate tax rates.

PART I

LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
Duke Energy relies primarily upon cash flows from operations, debt issuances and its existing cash and cash equivalents to fund its liquidity and capital requirements. Duke Energy’s capital requirements arise primarily from capital and investment expenditures, repaying long-term debt and paying dividends to shareholders. See Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016, for a summary and detailed discussion of projected primary sources and uses of cash for 2017 to 2019.
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.
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 may exceed current assets resulting from the use of short-term debt as a funding source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its business.
CREDIT FACILITIES AND REGISTRATION STATEMENTS
MasterRefer to Note 6 to the Condensed Consolidated Financial Statements, "Debt and Credit Facility Summary
In March 2017,Facilities," for further information regarding Duke Energy amended its Master Credit Facility to increase its capacity from $7.5 billion to $8 billion, and to extend the termination date of the facility from January 30, 2020, to March 16, 2022. The amendment also added Piedmont as a borrower withinEnergy's available credit facilities, including the Master Credit Facility. Piedmont's separate $850 million credit facility was terminated in connection with the amendment. With the amendment, the Duke Energy Registrants, excluding Progress Energy (Parent), have borrowing capacity under the Master Credit Facility up to a specified sublimit for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder. Duke Energy Carolinas and Duke Energy Progress are also required to each maintain $250 million of available capacity under the Master Credit Facility as security to meet obligations under plea agreements reached with the U.S. Department of Justice in 2015 related to violations at North Carolina facilities with ash basins. The table below includes the current borrowing sublimits and available capacity under the Master Credit Facility.
 March 31, 2017
   Duke
 Duke
 Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Energy
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 (Parent)
 Carolinas
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Facility size(a)
$8,000
 $3,400
 $1,100
 $1,000
 $950
 $450
 $600
 $500
Reduction to backstop issuances               
Commercial paper(b)
(3,134) (1,822) (469) (402) 
 (30) (150) (261)
Outstanding letters of credit(71) (62) (4) (2) (1) 
 
 (2)
Tax-exempt bonds(81) 
 
 
 
 
 (81) 
Coal ash set-aside(500) 
 (250) (250) 
 
 
 
Available capacity$4,214

$1,516

$377

$346

$949

$420

$369
 $237
(a)Represents the sublimit of each borrower. Certain sublimits were reallocated in May 2017 to provide additional liquidity to certain borrowers in light of near-term funding needs.
(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 Condensed Consolidated Balance Sheets.
Shelf Registration
In September 2016, Duke Energy filed a registration statement (Form S-3) with the SEC.U.S. Securities and Exchange Commission (SEC). Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy, may issue debt and other securities in the future at amounts, prices and with terms to be determined at the time of future offerings. The registration statement also allows for the issuance of common stock by Duke Energy.
In January 2017, Duke Energy amended its Form S-3 to add Piedmont as a registrant and included in the amendment a prospectus for Piedmont under which it may issue debt securities in the same manner as other Duke Energy Registrants.

PART I

DEBT MATURITIES
The following table showsRefer to Note 6 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant components of Current maturitiesMaturities of Long-Term Debt on the Condensed Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.
(in millions)Maturity Date Interest Rate
 March 31, 2017
Unsecured Debt     
Duke Energy (Parent)August 2017 1.625% 700
PiedmontSeptember 2017 8.510% 35
Secured Debt     
Duke EnergyJune 2017 2.605% 45
Duke EnergyJune 2017 2.455% 34
First Mortgage Bonds     
Duke Energy FloridaSeptember 2017 5.800% 250
Duke Energy ProgressNovember 2017 1.252% 200
Duke Energy CarolinasJanuary 2018 5.250% 400
Other(a)
    313
Current maturities of long-term debt    $1,977
(a)Includes capital lease obligations, amortizing debt and small bullet maturities.
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.
Duke Energy believes it has sufficient liquidity resources through the commercial paper markets, and ultimately the Master Credit Facility,and Revolving Facilities, to support these operations.operations, including Hurricane Irma storm restoration costs. Cash flows from operations are subject to a number of other factors, including but not limited to regulatory constraints, economic trends and market volatility (see “Item 1A. Risk Factors,” in the Duke Energy Registrants’ Annual Reports on Form 10-K for additional information).
Restrictive Debt Covenants
The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. The Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio not to exceed 65 percent for all borrowers except Piedmont. The debt-to-total capitalization ratio for Piedmont is not to exceed 70 percent. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements. As of March 31,September 30, 2017, each of the Duke Energy Registrants werewas in compliance with all covenants related to their debt agreements. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.
Credit Ratings
Credit ratings are intended to provide credit lenders a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold. The Duke Energy Registrants’ credit ratings are dependent on the rating agencies’ assessments of their ability to meet their debt principal and interest obligations when they come due. If, as a result of market conditions or other factors, the Duke Energy Registrants are unable to maintain current balance sheet strength or if earnings and cash flow outlook materially deteriorate, credit ratings could be negatively impacted.
The Duke Energy Registrants each hold credit ratings by Moody’s Investors Service, Inc. (Moody’s) and Standard & Poor’s Rating Services (S&P). In April 2017, Fitch Ratings, Inc. (Fitch) withdrew credit ratings of the Subsidiary Registrants, with the exclusion of Piedmont, whowhich was not previously rated by Fitch due to commercial reasons. Fitch will continue to provide credit ratings for Duke Energy Corporation.
In May 2017, Moody’s changed its rating outlook for Duke Energy Corporation to stable from negative and affirmed Duke Energy Corporation's credit ratings. In August 2017, Moody's changed its rating outlook for Duke Energy Ohio to positive from stable and affirmed Duke Energy Ohio's credit ratings.

PART I

Cash Flow Information
The following table summarizes Duke Energy’s cash flows.
 Three Months Ended Nine Months Ended
 March 31, September 30,
(in millions) 2017
 2016
 2017
 2016
Cash flows provided by (used in):        
Operating activities $1,289
 $1,682
 $5,011
 $5,611
Investing activities (2,399) (1,758) (6,360) (5,555)
Financing activities 1,596
 (3) 1,239
 5,266
Changes in cash and cash equivalents included in assets held for sale 
 30
 
 11
Net increase (decrease) in cash and cash equivalents 486
 (49)
Net (decrease) increase in cash and cash equivalents (110) 5,333
Cash and cash equivalents at beginning of period 392
 383
 392
 383
Cash and cash equivalents at end of period $878
 $334
 $282
 $5,716
OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows.
 Three Months Ended Nine Months Ended
 March 31, September 30,
(in millions) 2017
 2016
 2017
 2016
Net income $717
 $699
 $2,361
 $2,392
Non-cash adjustments to net income 1,237
 1,060
 3,937
 3,585
Contributions to qualified pension plans (8) 
Payments for asset retirement obligations (134) (112) (420) (443)
Working capital (531) 35
 (859) 77
Net cash provided by operating activities $1,289
 $1,682
 $5,011
 $5,611
The variance was primarily due to:
a $566$936 million decrease in cash flows from working capital due to the timing of the payment of accruals, increased taxes accrued resulting from an increased effective tax rate, warmer winter weather and the absence of the International Disposal Group's operating cash flows, lower regulated electric revenues due to warmer winter weather in the current year and the timing of payment of accruals.flows.
Partially offset by:
a $195$321 million increase in net income after non-cash adjustments, primarily due to lower operation, maintenance and other expense and the additional Piedmont earnings attributed tocontribution in the Piedmont acquisition.current year.
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows.
 Three Months Ended Nine Months Ended
 March 31, September 30,
(in millions) 2017
 2016
 2017
 2016
Capital, investment and acquisition expenditures $(2,335) $(1,704) $(6,211) $(5,450)
Available for sale securities, net 19
 15
Other investing items (83) (69) (149) (105)
Net cash used in investing activities $(2,399) $(1,758) $(6,360) $(5,555)
The variance was primarily due to:
a $631$761 million increase in capital, investment and acquisition expenditures due to growth in regulated generation investments and natural gas infrastructure.

infrastructure, partially offset by a reduction in Commercial Renewables capital expenditures.

PART I

FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows.
 Three Months Ended Nine Months Ended
 March 31, September 30,
(in millions) 2017
 2016
 2017
 2016
Issuances of long-term debt, net $1,155
 $751
 $3,675
 $7,659
Notes payable and commercial paper 1,063
 (158) (619) (647)
Dividends paid (600) (570) (1,825) (1,731)
Other financing items (22) (26) 8
 (15)
Net cash provided by (used in) financing activities $1,596
 $(3)
Net cash provided by financing activities $1,239
 $5,266
The variance was primarily due to:
a $1,221$3,984 million increasenet decrease in net proceeds from issuances of notes payable and commercial paper primarily as a result of the repayment of commercial paper at the end of 2016 with proceeds from the sale of the international business; and
a $404 million increase in proceeds from net issuances of long-term debt mainly duedriven principally by the prior year $3,750 million of senior unsecured notes used to fund a portion of the timing of issuancesPiedmont acquisition, and redemptions of long-term debt.prior year $1,294 million nuclear asset-recovery bonds, offset by a $1,047 million increase in current year redemptions; and
a $94 million current year increase in dividends paid.
Summary of Significant Debt Issuances
The following table summarizesRefer to Note 6 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt issuances (in millions).
    Three Months Ended March 31, 2017
      Duke
 Duke
 MaturityInterest
 Duke
 Energy
 Energy
Issuance DateDateRate
 Energy
 Florida
 Ohio
Secured Debt        
February 2017(a)
June 20344.120% $587
 $
 $
First Mortgage Bonds       
January 2017(b)
January 20201.850% 250
 250
 
January 2017(b)
January 20273.200% 650
 650
 
March 2017(c)
June 20463.700% 100
 
 100
Total issuances   $1,587

$900

$100
(a)Portfolio financing of four Texas and Oklahoma wind facilities. Secured by substantially all of the assets of these wind facilities and nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.
(b)Debt issued to fund capital expenditures for ongoing construction and capital maintenance, to repay at maturity a $250 million aggregate principal amount of bonds due September 2017 and for general corporate purposes.
(c)Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance and for general corporate purposes.
In April 2017, Duke Energy (Parent) issued $420 million of unsecured notes with a fixed interest rate of 3.364 percent and maturity date of April 2025. The net proceeds were used to refinance $400 million of unsecured debt at maturity and to repay outstanding commercial paper.issuances.
OTHER MATTERS
Environmental Regulations
The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants.
The following sections outline various proposed and recently enacted regulations that may impact the Duke Energy Registrants. Refer to Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.

PART I

Coal Combustion Residuals
In April 2015, the EPA published a rule to regulate the disposal of CCR from electric utilities as solid waste. The federal regulation classifies CCR as nonhazardous waste and allows for beneficial use of CCR with some restrictions. The regulation applies to all new and existing landfills, new and existing surface impoundments receiving CCR and existing surface impoundments that are no longer receiving CCR but contain liquid located at stations currently generating electricity (regardless of fuel source). The rule establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures to ensure the safe disposal and management of CCR. As a result of the EPA rule, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Ohio and Duke Energy Indiana recorded additional ARO amounts during 2015. Various industry and environmental parties have appealed the EPA's CCR rule in the U.S. Court of Appeals for the District of Columbia (D.C. Circuit Court). On April 18, 2016, the EPA filed a motion with the federal court to settle five issues raised in litigation. On June 14, 2016, the court approved the motion with respect to all of those issues. A decision by the court on the remaining issues is expected in the third quarter of 2017. Duke Energy does not expect a material impact from the settlement or that it will result in additional ARO adjustments. The Utility Solid Waste Activities Group filed a petition with the EPA seeking to have EPA reconsider certain provisions of the final rule, extend remaining compliance deadlines and ask the D.C. Circuit Court to hold the litigation in abeyance. While EPA has confirmed that it will reconsider certain provisions of the final rule, the D.C. Circuit Court denied EPA’s petition to hold the litigation in abeyance. Oral argument is scheduled for November 20, 2017.
In addition to the requirements of the federal CCR regulation, CCR landfills and surface impoundments will continue to be independently regulated by most states. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions and via wholesale contracts, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. For more information, see Note 9, “Asset Retirement Obligations,” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.

PART I

Coal Ash Management Act of 2014
Asset retirement obligations recorded on the Duke Energy Carolinas and Duke Energy Progress Condensed Consolidated Balance Sheets at March 31,September 30, 2017, and December 31, 2016, include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of the Coal Ash Act, the EPA CCR rule and other agreements. In January 2016, the NCDEQ published draft risk classifications for sites not specifically delineated by the Coal Ash Act as high priority. These risk rankings were generally determined based on three primary criteria: structural integrity of the impoundments and impacts to surface water and to groundwater. The NCDEQ's draft proposed classifications categorized 12 basins at four sites as intermediate risk and four basins at three sites as low risk. The NCDEQ's draft proposed classifications also categorized nine basins at six sites as “low-to-intermediate” risk, thereby not assigning a definitive risk ranking at that time. On May 18, 2016, the NCDEQ issued new proposed risk classifications, proposing to rank all originally proposed low risk and "low-to-intermediate" risk sites as intermediate.
On July 14, 2016, the former governor of North Carolina signed legislation, which amended the Coal Ash Act and requiredwas amended, requiring Duke Energy to undertake dam improvement projects and to provide access to a permanent alternative drinking water source to certain residents within a halfhalf- mile of coal ash basin compliance boundaries and to certain other potentially impacted residents. The new legislation also ranksranked basins at the H.F. Lee, Cape Fear and Weatherspoon stations as intermediate risk, consistent with Duke Energy's previously announced plans to excavate those basins. These specific intermediate-risk basins require closure through excavation including a combination of transferring ash to an appropriate engineered landfill or conversion of the ash for beneficial use. Closure of these specific intermediate-risk basins is required to be completed no later than August 1, 2028. Upon satisfactory completion of the dam improvement projects and installation of alternative drinking water sources by October 15, 2018, the legislation requires the NCDEQ to reclassify all remaining sites, proposed as intermediate risk, excluding H.F. Lee, Cape Fear and Weatherspoon, as low risk. In January 2017, NCDEQ issued preliminary approval of Duke Energy's plans for the alternative water sources.
Additionally, the July 2016 legislation requires the installation and operation of three large-scale coal ash beneficiation projects, which are expected to produce reprocessed ash for use in the concrete industry. Closure of basins at sites with these beneficiation projects areis required to be completed no later than December 31, 2029. On October 5, 2016, Duke Energy announced Buck Steam Station as a first location for one of the beneficiation projects. On December 13, 2016, Duke Energy announced H.F. Lee as the second location. On June 30, 2017, Duke Energy intends to announceannounced the Cape Fear Plant as the third location by July 1, 2017.beneficiation location.
Provisions of the Coal Ash Act prohibit cost recovery in customer rates for unlawful discharge of ash impoundment waters occurring after January 1, 2014. The Coal Ash Act leaves the decision on cost recovery determinations related to closure of ash impoundments to the normal ratemaking processes before utility regulatory commissions. Consistent with the requirements of the Coal Ash Act, Duke Energy has submitted comprehensive site assessments and groundwater corrective plans to NCDEQ and will submit to NCDEQ site-specific coal ash impoundment closure plans in advance of closure. These plans and all associated permits must be approved by NCDEQ before closure work can begin.
For more information, see Note 9, “Asset Retirement Obligations,” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.
Clean Water Act 316(b)
The EPA published the final 316(b) cooling water intake structure rule on August 15, 2014, with an effective date of October 14, 2014. The rule applies to 26 of the electric generating facilities the Duke Energy Registrants own and operate. The rule allows for several options to demonstrate compliance and provides flexibility to the state environmental permitting agencies to make determinations on controls, if any, that will be required for cooling water intake structures. Any required intake structure modifications and/or retrofits are expected to be installed in the 2019 to 2022 time frame. Petitions challenging the rule have been filed by several groups. Oral argument was held on September 14, 2017. It is unknown when the courts will rule on the petitions. The Duke Energy Registrants cannot predict the outcome of these matters.

PART I

Steam Electric Effluent Limitations Guidelines
On January 4, 2016, the final Steam Electric Effluent Limitations Guidelines (ELG) rule became effective. The rule establishes new requirements for wastewater streams associated with steam electric power generation and includes more stringent controls for any new coal plants that may be built in the future. AffectedAs originally written, affected facilities mustwere required to comply between 2018 and 2023, depending on timing of new Clean Water Act (CWA) permits.permits and waste stream. Most if not all, of the steam electric generating facilities the Duke Energy Registrants own are likely affected sources. The Duke Energy Registrants are well-positioned to meet the majority of the requirements of the rule due to current efforts to convert to dry ash handling. Petitions challenging the rule have been filed by several groups. On March 16, 2015, Duke Energy Indiana filed its own legal challenge to the rule with the Seventh Circuit Court of Appeals specific to the ELG for wastewater associated rule focused on the limits imposed on integrated gas combined-cycle facilities.IGCC facilities (gasification wastewater). All challenges to the rule have beenwere consolidated in the Fifth Circuit Court of Appeals. On April 13, 2017, the EPA administrator granted petitions from the Utility Water Act Group and U.S. Small Business Administration requesting reconsideration and an administrative stay of compliance dates in the ELG rule that have not yet passed pending judicial review, effective April 25, 2017. Briefing in the case was scheduled to conclude on July 5, 2017, however, on April 24, 2017, theThe Fifth Circuit Court of Appeals granted EPA's request to stay the pending litigation on the ELG rule until August 12, 2017. By2017, and on August 22, 2017, the Fifth Circuit Court of Appeals granted EPA’s Motion to Govern Further Proceedings, thereby severing and suspending the claims related to flue gas desulfurization wastewater, bottom ash transport water and gasification wastewater. Claims regarding gasification wastewater were stayed, pending the issuance of the variance to Duke Energy Indiana. The litigation will continue as to claims related to other waste streams. 
On August 7, 2017, EPA issued a public notice regarding its proposed decision to grant a variance to Duke Energy Indiana for mercury and total suspended solids for gasification wastewater at its Edwardsport facility. The public comment period has ended, but EPA has not finalized its decision. Separate from the litigation, EPA finalized a rule on September 12, 2017, postponing the initial applicability date for bottom ash transport water and flue gas desulfurization wastewater from 2018 to 2020 and retaining the end applicability date of the stay period, EPA intends to inform the court of the portions2023. Also, as part of the rule, if any, that it will seekEPA reiterated its intent to have remandedconduct a new rulemaking to the agencyrevise limitation guidelines for further rulemaking. bottom ash transport water and flue gas desulfurization wastewater.
The Duke Energy Registrants cannot predict the outcome of these matters.

PART I

Estimated Cost and Impacts of Rulemakings
Duke Energy will incur capital expenditures to comply with the environmental regulations and rules discussed above. The following table provides five-year estimated costs, excluding AFUDC, of new control equipment that may need to be installed on existing power plants primarily to comply with the Coal Ash Act requirements for conversion to dry disposal of bottom ash and fly ash, CWA 316(b) and ELGs through December 31, 2021. The table excludes ash basin closure costs recorded in Asset retirement obligations on the Condensed Consolidated Balance Sheets. For more information related to AROs, see Note 9, “Asset Retirement Obligations” in Duke Energy’s Annual Report on Form 10‑K for the year ended December 31, 2016.
(in millions)Estimated Cost
Estimated Cost
Duke Energy$1,235
$1,340
Duke Energy Carolinas530
580
Progress Energy360
420
Duke Energy Progress260
310
Duke Energy Florida100
110
Duke Energy Ohio125
90
Duke Energy Indiana220
250
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.
Cross-State Air Pollution Rule
On December 3, 2015, the EPA proposed a rule to lower the Cross-State Air Pollution Rule (CSAPR) Phase 2 state ozone season nitrogen oxide (NOX) emission budgets for 23 eastern states, including North Carolina, Ohio, Kentucky and Indiana. The EPA also proposed to eliminate the CSAPR Phase 2 ozone season state NOX budgets for Florida and South Carolina. On September 7, 2016, the EPA finalized the CSAPR Update Rule that reduces the CSAPR Phase 2 state ozone season NOX emission budgets for 22 eastern states, including Ohio, Kentucky and Indiana. In the final CSAPR Update Rule, the EPA removed Florida, South Carolina and North Carolina from the ozone season NOx program. Beginning in 2017, Duke Energy Registrants in these states will not be subject to any CSAPR ozone season NOx emission limitations. For the states that remain in the program, the reduced state ozone season NOx emission budgets took effect on May 1, 2017. In Kentucky and Indiana, where Duke Energy Registrants own and operate coal-fired electric generating units (EGUs) subject to the final rule requirements, potential near-term responses could include changing unit dispatch to run certain generating units less frequently and/or purchasing NOx allowances from the trading market. Longer term, upgrading the performance of existing NOx controls is an option. The Indiana Utility Group and the Indiana Energy Association jointly filed a petition for reconsideration asking that the EPA correct errors it made in calculating the Indiana budget and increase the budget accordingly. EPA has yet to act on the petition. Numerous parties have filed petitions with the D.C. Circuit Court challenging various aspects of the CSAPR Update Rule. Briefing in the case began on August 21, 2017. The courtdate for oral argument has yet to set a briefing schedule.not been established. The Duke Energy Registrants cannot predict the outcome of these matters.
Carbon Pollution Standards for New, Modified and Reconstructed Power Plants
On October 23, 2015, the EPA published a final rule in the Federal Register establishing carbon dioxide (CO2) emissions limits for new, modified and reconstructed power plants. The requirements for new plants apply to plants that commenced construction after January 8, 2014. The EPA set an emissions standard for coal units of 1,400 pounds of CO2 per gross MWh, which would require the application of partial carbon capture and storage (CCS) technology for a coal unit to be able to meet the limit. Utility-scale CCS is not currently a demonstrated and commercially available technology for coal-fired EGUs, and therefore the final standard effectively prevents the development of new coal-fired generation. The EPA set a final standard of 1,000 pounds of CO2 per gross MWh for new natural gas combined-cycle units.

PART I

On March 28, 2017, President Trump signed an Executive Orderexecutive order directing EPA to review the rule and determine whether to suspend, revise or rescind it. On the same day, the Department of Justice (DOJ) filed a motion with the D.C. Circuit Court requesting that the court stay the litigation of the rule while it is reviewed by EPA. Subsequent to the DOJ motion, the D.C. Circuit Court canceled oral argument in the case, which had been scheduled for April 17, 2017. On April 28,August 10, 2017, the court ordered that the litigation be suspended for 60 days and directing parties to file supplemental briefs by May 15, 2017, addressing whether the rule should be remanded to EPA rather than be suspended.indefinitely. The rule remains in effect pending the outcome of litigation and EPA’s review. EPA has not announced a schedule for completing its review. The Duke Energy Registrants cannot predict the outcome of these matters, but do not expect the impacts of the current final standards will be material to Duke Energy's financial position, results of operations or cash flows.
Clean Power Plan
On October 23, 2015, the EPA published in the Federal Register the final Clean Power Plan (CPP) rule that regulatesto regulate CO2 emissions from existing fossil fuel-fired EGUs. The CPP established CO2 emission rates and mass cap goals that apply to existing fossil fuel-fired EGUs. Petitions challenging the rule have been filed by several groups and on February 9, 2016, the Supreme Court issued a stay of the final CPP rule, halting implementation of the CPP until legal challenges are resolved. States in which the Duke Energy Registrants operate have suspended work on the CPP in response to the stay. Oral arguments before 10 of the 11 judges on D.C. Circuit Court were heard on September 27, 2016. The court has not issued its opinion in the case.

PART I

On March 28, 2017, President Trump signed an Executive Orderexecutive order directing EPA to review the CPP and determine whether to suspend, revise or rescind the rule. On the same day, the DOJ filed a motion with the D.C. Circuit Court requesting that the court stay the litigation of the rule while it is reviewed by EPA. On April 28, 2017, the court issued an order to suspend the litigation for 60 daysdays. On August 8, 2017, the court, on its own motion, extended the suspension of the litigation for an additional 60 days. On October 10, 2017, EPA issued a Notice of Proposed Rulemaking to repeal the CPP based on a change to EPA’s legal interpretation of the section of the Clean Air Act (CAA) on which the CPP was based. In the proposal EPA indicates that it has not determined whether it will issue a rule to replace the CPP, and directing parties to file supplemental briefs by Mayif it will do so, when and what form that rule will take. The comment period on EPA's proposal ends December 15, 2017, addressing whether the rule should be remanded to the EPA rather than be suspended. Neither the Executive Order nor the court's order changes the current status2017. Litigation of the CPP which is under a legalremains on hold byin the D.C. Circuit and the February 2016 U.S. Supreme Court. The EPA has not announced a schedule for completing its review.Court stay of the CPP remains in effect. The Duke Energy Registrants cannot predict the outcome of these matters.
Global Climate Change
For other information on global climate change and the potential impacts on Duke Energy, see “Other Matters” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.
North Carolina Legislation
In July 2017, the North Carolina General Assembly passed House Bill 589 and it was subsequently enacted into law by the governor. The law includes, among other things, overall reform of the application of the Public Utility Regulatory Policies Act of 1978 (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 and recovery of costs related to the competitive bidding process through the fuel clause and a competitive procurement rider. Duke Energy is evaluating the impact of this law.
Nuclear Matters
For other information on nuclear matters and the potential impacts on Duke Energy, see “Other Matters” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.
New Accounting Standards
See Note 1 to the Condensed Consolidated Financial Statements, “Organization and Basis of Presentation,” for a discussion of the impact of new accounting standards.
Off-Balance Sheet Arrangements
During the three and nine months ended March 31,September 30, 2017, there were no material changes to Duke Energy’s off-balance sheet arrangements. See Note 13 to the Condensed Consolidated Financial Statements, "Variable Interest Entities," for a discussion of off-balance sheet arrangements regarding Atlantic Coast Pipeline. For additional information on Duke Energy’s off-balance sheet arrangements, see “Off-Balance Sheet Arrangements” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.
Contractual Obligations
Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. During the three and nine months ended March 31,September 30, 2017, there were no material changes in Duke Energy’sEnergy's contractual obligations. For an in-depth discussion of Duke Energy’s contractual obligations, see “Contractual Obligations” and “Quantitative and Qualitative Disclosures about Market Risk” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.
Subsequent Events
See Note 1718 to the Condensed Consolidated Financial Statements, “Subsequent Events,” for a discussion of subsequent events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the three and nine months ended March 31,September 30, 2017, there were no material changes to the Duke Energy Registrants' disclosures about market risk. For an in-depth discussion of the Duke Energy Registrants' market risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7 of the Annual Report on Form 10-K for the Duke Energy Registrants.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Securities Exchange Act of 1934 (Exchange Act) are recorded, processed, summarized and reported within the time periods specified by the SEC rules and forms.

PART I

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act are accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

PART I

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 March 31,September 30, 2017, 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(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended March 31,September 30, 2017, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS
For information regarding material legal proceedings, including regulatory and environmental matters, see Note 4, "Regulatory Matters," and Note 5, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements.
MTBE Litigation
On June 19, 2014, For additional information, see Item 3, "Legal Proceedings," in Duke Energy’s Annual Report on Form 10-K for the Commonwealth of Pennsylvania filed suit against Duke Energy Merchants, LLC, an indirect wholly owned subsidiary of Duke Energy, among others, 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 case was moved to federal court and consolidated in an existing multidistrict litigation docket of pending MTBE cases. The case is currently in the discovery phase.year ended December 31, 2016.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in the Duke Energy Registrants' Annual Report on Form 10-K, which could materially affect the Duke Energy Registrants’ financial condition or future results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUER PURCHASES OF EQUITY SECURITIES
There were no issuer purchases of equity securities during the firstthird quarter of 2017.

PART II

ITEM 6. EXHIBITS
Exhibits filed herein are designated by an asterisk (*). All exhibits not so designated are incorporated by reference to a prior filing, as indicated. Items constituting management contracts or compensatory plans or arrangements are designated by a double asterisk (**). The Company agrees to furnish upon request to the Commission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***).
     Duke   Duke Duke Duke Duke  
Exhibit Duke Energy Progress Energy Energy Energy Energy  
Number Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
4.1Forty-fifthX
*4.2Fifteenth Supplemental Indenture, dated as of April 11, 2017.X
10.1Amendment No. 3 and Consent, dated as of March 16, 2017, among registrants, the Lenders party thereto, the Issuing Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent and Swingline Lender (incorporated by reference to Exhibit 10.1 to Registrants' Current Report on Form 8-K filed on March 17, 2017, File Nos. 1-32853, 1-04928, 1-03382, 1-03274, 1-01232, 1-03543, 1-06196).XXXXXXX
*10.2**
Performance-Based Retention Award Agreement.

X              
*10.3**4.2Performance Award Agreement.X      X        
*10.4**10.1Restricted Stock Unit Award Agreement.X              
*12X              
*31.1.1X              
*31.1.2  X            
*31.1.3    X          
*31.1.4      X        
*31.1.5        X      
*31.1.6          X    
*31.1.7            X  
*31.1.8              X
*31.2.1X              
*31.2.2  X            
*31.2.3    X          

PART II

*31.2.4      X        
*31.2.5        X      
*31.2.6X
*31.2.7Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.X
*31.2.8Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.X
*32.1.1Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.1.2Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.1.3Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.1.4Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.1.5Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.1.6Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.1.7Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.1.8Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.2.1Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.2.2Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.2.3Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.2.4Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.2.5Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X
*32.2.6Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.          X    

PART II

*32.2.731.2.7X
*31.2.8X
*32.1.1X
*32.1.2X
*32.1.3X
*32.1.4X
*32.1.5X
*32.1.6X
*32.1.7X
*32.1.8X
*32.2.1X
*32.2.2X
*32.2.3X
*32.2.4X
*32.2.5X
*32.2.6X
*32.2.7            X  
*32.2.8              X
*101.INSXBRL Instance Document.X X X X X X X X
*101.SCHXBRL Taxonomy Extension Schema Document.X X X X X X X X

PART II

*101.CALXBRL Taxonomy Calculation Linkbase Document.X X X X X X X X
*101.LABXBRL Taxonomy Label Linkbase Document.X X X X X X X X
*101.PREXBRL Taxonomy Presentation Linkbase Document.X X X X X X X X
*101.DEFXBRL Taxonomy Definition Linkbase Document.X X X X X X X X
The total amount of securities of the registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees, upon request of the SEC, to furnish copies of any or all of such instruments to it.

PART II

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
  

DUKE ENERGY CORPORATION
DUKE ENERGY CAROLINAS, LLC
PROGRESS ENERGY, INC.
DUKE ENERGY PROGRESS, LLC
DUKE ENERGY FLORIDA, LLC
DUKE ENERGY OHIO, INC.
DUKE ENERGY INDIANA, LLC
PIEDMONT NATURAL GAS COMPANY, INC.

   
Date:May 9,November 3, 2017/s/ STEVEN K. YOUNG
  Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
   
Date:May 9,November 3, 2017/s/ WILLIAM E. CURRENS JR.
  William E. Currens Jr.
Senior Vice President, Chief Accounting Officer
and Controller
(Principal Accounting Officer)

123132