0001326160 duk:~~DukeEnergyProgressMember~~PiedmontNaturalGasMember us-gaap:~~LineOfCreditMember 2019-09-30 0001326160 duk:DukeEnergyCarolinasMember duk:OtherRevenuesMember duk:ElectricUtilitiesandInfrastructureMember 2019-07-01 2019-09-30~~OtherNoncurrentLiabilitiesMember 2019-12-31

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to_________



Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number	IRS Employer Identification Number

1-32853	DUKE ENERGY CORPORATION	20-2777218

(a Delaware corporation)

550 South Tryon Street

Charlotte, North Carolina 28202-1803

704-382-3853



1-4928	DUKE ENERGY CAROLINAS, LLC	56-0205520

(a North Carolina limited liability company)

526 South Church Street

Charlotte, North Carolina 28202-1803

704-382-3853



1-15929	PROGRESS ENERGY, INC.	56-2155481

(a North Carolina corporation)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853



1-3382	DUKE ENERGY PROGRESS, LLC	56-0165465

(a North Carolina limited liability company)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853



1-3274	DUKE ENERGY FLORIDA, LLC	59-0247770

(a Florida limited liability company)

299 First Avenue North

St. Petersburg, Florida 33701

704-382-3853



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

(an Ohio corporation)

139 East Fourth Street

Cincinnati, Ohio 45202

704-382-3853



1-3543	DUKE ENERGY INDIANA, LLC	35-0594457

(an Indiana limited liability company)

1000 East Main Street

Plainfield, Indiana 46168

704-382-3853



1-6196	PIEDMONT NATURAL GAS COMPANY, INC.	56-0556998

(a North Carolina corporation)

4720 Piedmont Row Drive

Charlotte, North Carolina 28210

704-364-3120

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of each exchange on


Registrant	Title of each class Trading symbols which registered


Duke Energy	Common Stock, $0.001 par value DUK New York Stock Exchange LLC


Duke Energy	5.125% Junior Subordinated Debentures due DUKH New York Stock Exchange LLC

January 15, 2073


Duke Energy	5.625% Junior Subordinated Debentures due DUKB New York Stock Exchange LLC

September 15, 2078


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

interest in a share of 5.75% Series A Cumulative

Redeemable Perpetual Preferred Stock, par value

$0.001 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



Duke Energy	Yes	☒	No	☐	Duke Energy Florida	Yes	☒	No	☐
Duke Energy Carolinas	Yes	☒	No	☐	Duke Energy Ohio	Yes	☒	No	☐
Progress Energy	Yes	☒	No	☐	Duke Energy Indiana	Yes	☒	No	☐
Duke Energy Progress	Yes	☒	No	☐	Piedmont	Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Duke Energy	Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐
Duke Energy Carolinas	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐
Progress Energy	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐
Duke Energy Progress	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐
Duke Energy Florida	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐
Duke Energy Ohio	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐
Duke Energy Indiana	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐
Piedmont	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Duke Energy	Yes	☐	No	☒	Duke Energy Florida	Yes	☐	No	☒
Duke Energy Carolinas	Yes	☐	No	☒	Duke Energy Ohio	Yes	☐	No	☒
Progress Energy	Yes	☐	No	☒	Duke Energy Indiana	Yes	☐	No	☒
Duke Energy Progress	Yes	☐	No	☒	Piedmont	Yes	☐	No	☒

Number of shares of common stock outstanding at ~~October 31, 2019:~~April 30, 2020:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	~~729,032,868~~734,852,539

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



	Cautionary Statement Regarding Forward-Looking Information

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	Duke Energy Corporation Financial Statements	109

	Duke Energy Carolinas, LLC Financial Statements	1614

	Progress Energy, Inc. Financial Statements	2018

	Duke Energy Progress, LLC Financial Statements	2422

	Duke Energy Florida, LLC Financial Statements	2826

	Duke Energy Ohio, Inc. Financial Statements	3230

	Duke Energy Indiana, LLC Financial Statements	3634

	Piedmont Natural Gas Company, Inc. Financial Statements	4038

	Combined Notes to Condensed Consolidated Financial Statements
	Note 1 – Organization and Basis of Presentation	4442
	Note 2 – Business Segments	4644
	Note 3 – Regulatory Matters	4945
	Note 4 – Commitments and Contingencies	6258
	Note 5 – ~~Leases~~Debt and Credit Facilities	6561
	Note 6 – Goodwill	62
	Note 7 – Related Party Transactions	63
	Note 8 – Derivatives and Hedging	64
	Note 9 – Investments in Debt and ~~Credit Facilities~~Equity Securities	70
	Note ~~7 – Asset Retirement Obligations~~	72
	~~Note 8 – Goodwill~~	73
	~~Note 9 – Related Party Transactions~~	74
	~~Note~~ 10 – ~~Derivatives and Hedging~~Fair Value Measurements	75
	Note 11 – ~~Investments in Debt and Equity Securities~~Variable Interest Entities	80
	Note 12 – ~~Fair Value Measurements~~Revenue	8584
	Note 13 – ~~Variable Interest Entities~~Stockholders' Equity	9087
	Note 14 – ~~Revenue~~Employee Benefit Plans	9488
	Note 15 – ~~Stockholders' Equity~~Income Taxes	9989
	Note 16 – ~~Employee Benefit Plans~~	~~101~~
	~~Note 17 – Income Taxes~~	~~103~~
	~~Note 18 –~~ Subsequent Events	~~103~~90

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~104~~91

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~126~~109

Item 4.	Controls and Procedures	~~126~~109

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	~~128~~111

Item 1A.	Risk Factors	~~128~~111

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~128~~111

Item 6.	Exhibits	~~129~~112

	Signatures	~~132~~115



FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:

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

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

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

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

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

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

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

~~Advancements in technology;~~

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

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

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

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

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

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

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

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

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

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

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

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

Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;

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

~~The ability to control operation and maintenance costs;~~

~~The level of creditworthiness of counterparties to transactions;~~

~~Employee workforce factors, including the potential inability to attract and retain key personnel;~~

~~The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);~~


◦	The impact of the COVID-19 pandemic;


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


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


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


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


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


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


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


◦	Advancements in technology;


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


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


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


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


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


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


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


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


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


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


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


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

◦


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


◦	The ability to control operation and maintenance costs;


◦	The level of creditworthiness of counterparties to transactions;


◦	The ability to obtain adequate insurance at acceptable costs;


◦	Employee workforce factors, including the potential inability to attract and retain key personnel;



FORWARD-LOOKING STATEMENTS

~~The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;~~

~~The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;~~

~~The impact of U.S. tax legislation to our financial condition, results of operations or cash flows and our credit ratings;~~

~~The impacts from potential impairments of goodwill or equity method investment carrying values; and~~

~~The ability to implement our business strategy, including enhancing existing technology systems.~~


◦	The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);


◦	The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;


◦	The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;


◦	The impact of United States tax legislation to our financial condition, results of operations or cash flows and our credit ratings;


◦	The impacts from potential impairments of goodwill or equity method investment carrying values; and


◦	The ability to implement our business strategy, including enhancing existing technology systems.

Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



GLOSSARY OF TERMS

Glossary of Terms

The following terms or acronyms used in this Form 10-Q are defined below:



Term or Acronym	Definition

2013 Settlement	Revised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida OPC and other customer representatives

2017 Settlement	Second Revised and Restated Settlement Agreement in 2017 among Duke Energy Florida, the Florida OPC and other customer representatives, which replaces and supplants the 2013 Settlement

ACP	Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Inc., and Duke Energy ~~and Southern Company Gas~~

ACP pipeline	The approximately 600-mile proposed interstate natural gas pipeline

AFS	Available for Sale

AFUDC	Allowance for funds used during construction

~~the Agents~~	~~Wells Fargo Securities, LLC, Citigroup Global Market Inc., J.P. Morgan Securities, LLC~~

~~ALJ~~	~~Administrative Law Judge~~

AMI	Advanced Metering Infrastructure

AMT	Alternative Minimum Tax

~~AOCI~~	~~Accumulated Other Comprehensive Income (Loss)~~

ARO	Asset retirement obligations

~~ATM~~	~~At-the-market~~

~~Beckjord~~	~~Beckjord Generating Station~~

~~Belews Creek~~	~~Belews Creek Steam Station~~

Bison	Bison Insurance Company Limited

~~Cardinal~~	~~Cardinal Pipeline Company, LLC~~

~~CECL~~	~~Current expected credit loss~~

CC	Combined Cycle

CCR	Coal Combustion Residuals

CARES Act	Coronavirus Aid, Relief and Economic Security Act

Citrus County CC	Citrus County Combined Cycle Facility

Coal Ash Act	North Carolina Coal Ash Management Act of 2014

the Company	Duke Energy Corporation and its subsidiaries

Constitution	Constitution Pipeline Company, LLC

~~CPCN~~COVID-19	~~Certificate of Public Convenience and Necessity~~

~~CPRE~~	~~Competitive Procurement of Renewable Energy~~Coronavirus Disease 2019

CRC	Cinergy Receivables Company, LLC

Crystal River Unit 3	Crystal River Unit 3 Nuclear Plant

~~CWA~~	~~Clean Water Act~~

~~D.C. Circuit Court~~	~~U.S. Court of Appeals for the District of Columbia Circuit~~

DEFPF	Duke Energy Florida Project Finance, LLC

DEFR	Duke Energy Florida Receivables, LLC

DEPR	Duke Energy Progress Receivables, LLC

DERF	Duke Energy Receivables Finance Company, LLC

~~DRIP~~	~~Dividend Reinvestment Program~~

Duke Energy	Duke Energy Corporation (collectively with its subsidiaries)

Duke Energy Ohio	Duke Energy Ohio, Inc.



~~GLOSSARY OF TERMS~~



Duke Energy Progress	Duke Energy Progress, LLC

Duke Energy Carolinas	Duke Energy Carolinas, LLC

Duke Energy Florida	Duke Energy Florida, LLC

Duke Energy Indiana	Duke Energy Indiana, LLC

Duke Energy Kentucky	Duke Energy Kentucky, Inc.

Duke Energy Registrants	Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont

~~EDA~~	~~Equity Distribution Agreement~~

EDIT	Excess deferred income tax

EPA	U.S. Environmental Protection Agency

~~EPC~~	~~Engineering, Procurement and Construction agreement~~

EPS	Earnings Per Share

ESP	Electric Security Plan

ETR	Effective tax rate



GLOSSARY OF TERMS




Exchange Act	Securities Exchange Act of 1934

FASB	Financial Accounting Standards Board

FERC	Federal Energy Regulatory Commission

~~FES~~	~~FirstEnergy Solutions Corp.~~

~~Fitch~~	~~Fitch Ratings, Inc.~~

~~Fluor~~	~~Fluor Enterprises, Inc.~~

FPSC	Florida Public Service Commission

FTR	Financial transmission rights

~~FV-NI~~	~~Fair value through net income~~

GAAP	Generally accepted accounting principles in the U.S.

GAAP Reported Earnings	Net Income ~~Attributable~~Available to Duke Energy Corporation Common Stockholders

GAAP Reported EPS	~~Diluted~~Basic EPS ~~Attributable~~Available to Duke Energy Corporation common stockholders

GWh	Gigawatt-hours

~~Hardy Storage~~	~~Hardy Storage Company, LLC~~

~~HLBV~~	~~Hypothetical Liquidation at Book Value~~

~~ICPA~~	~~Inter-Company Power Agreement~~

IGCC	Integrated Gasification Combined Cycle

IMR	Integrity Management Rider

IRP	Integrated Resource Plan

IRS	Internal Revenue Service

Investment Trusts	NDTF investments and grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana

IURC	Indiana Utility Regulatory Commission

~~JDA~~	~~Joint Dispatch Agreement~~

KPSC	Kentucky Public Service Commission

~~Lee Nuclear Station~~LLC	~~William States Lee III Nuclear Station~~Limited Liability Company

MGP	Manufactured gas plant

~~MISO~~	~~Midcontinent Independent System Operator, Inc.~~

MMBtu	Million British Thermal Unit



~~GLOSSARY OF TERMS~~



~~Moody's~~	~~Moody's Investors Service, Inc.~~

MW	Megawatt

MWh	Megawatt-hour

~~NAV~~	~~Net asset value~~

NCDEQ	North Carolina Department of Environmental Quality

NCUC	North Carolina Utilities Commission

NDTF	Nuclear decommissioning trust funds

~~NMC~~	~~National Methanol Company~~

~~NPDES~~	~~National Pollutant Discharge Elimination System~~

NPNS	Normal purchase/normal sale

~~NRC~~	~~U.S. Nuclear Regulatory Commission~~

OPEB	Other Post-Retirement Benefit Obligations

ORS	South Carolina Office of Regulatory Staff

OTTI	Other-than-temporary impairment

OVEC	Ohio Valley Electric Corporation

Piedmont	Piedmont Natural Gas Company, Inc.

~~Piedmont Term Loan~~	~~Term loan facility with commitments totaling $350M entered in June 2017~~

~~Pine Needle~~	~~Pine Needle LNG Company, LLC~~

~~Pioneer~~	~~Pioneer Transmission, LLC~~

~~PJM~~	~~PJM Interconnection, LLC~~

~~PMPA~~	~~Piedmont Municipal Power Agency~~

PPA	Purchase Power Agreement

Progress Energy	Progress Energy, Inc.

PSCSC	Public Service Commission of South Carolina

PUCO	Public Utilities Commission of Ohio

~~REC~~	~~Renewable Energy Certificate~~

ROU assets	Right-of-use assets

~~RRBA~~	~~Roanoke River Basin Association~~

~~SELC~~	~~Southern Environmental Law Center~~

~~S&P~~	~~Standard & Poor's Rating Services~~

Subsidiary Registrants	Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont

the Tax Act	Tax Cuts and Jobs Act

TPUC	Tennessee Public Utility Commission

U.S.	United States

VIE	Variable Interest Entity

WACC	Weighted Average Cost of Capital

~~WNA~~	~~Weather normalization adjustment~~

~~W.S. Lee CC~~	~~William States Lee Combined Cycle Facility~~



FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions, except per-share amounts)	2019			2018			2019			2018
(in millions, except per share amounts)													2020			2019
Operating Revenues
Regulated electric	$	6,515		$	6,216		$	17,223		$	16,678		$	5,124		$	5,285
Regulated natural gas	223			230			1,231			1,221			638			728
Nonregulated electric and other	202			182			522			507			187			150
Total operating revenues	6,940			6,628			18,976			18,406			5,949			6,163
Operating Expenses
Fuel used in electric generation and purchased power	1,978			1,931			5,228			5,181			1,447			1,609
Cost of natural gas	48			58			451			460			199			327
Operation, maintenance and other	1,484			1,584			4,337			4,592			1,339			1,419
Depreciation and amortization	1,186			1,039			3,364			2,979			1,130			1,089
Property and other taxes	335			323			1,012			954			345			343
Impairment charges	(20		)	124			(16		)	339			2			—
Total operating expenses	5,011			5,059			14,376			14,505			4,462			4,787
Gains (Losses) on Sales of Other Assets and Other, net	—			10			—			(87		)	1			(3		)
Operating Income	1,929			1,579			4,600			3,814			1,488			1,373
Other Income and Expenses
Equity in earnings of unconsolidated affiliates	50			37			137			49			44			43
Other income and expenses, net	104			131			308			327			46			115
Total other income and expenses	154			168			445			376			90			158
Interest Expense	572			517			1,657			1,550			551			543
Income From Continuing Operations Before Income Taxes	1,511			1,230			3,388			2,640
Income Tax Expense From Continuing Operations	188			168			424			449
Income From Continuing Operations	1,323			1,062			2,964			2,191
Income (Loss) From Discontinued Operations, net of tax	—			4			—			(1		)
Income Before Income Taxes													1,027			988
Income Tax Expense													137			95
Net Income	1,323			1,066			2,964			2,190			890			893
Less: Net Loss Attributable to Noncontrolling Interests	(19		)	(16		)	(110		)	(12		)	(48		)	(7		)
Net Income Attributable to Duke Energy Corporation													938			900
Less: Preferred Dividends	15			—			27			—			39			—
Net Income Attributable to Duke Energy Corporation	$	1,327		$	1,082		$	3,047		$	2,202
Net Income Available to Duke Energy Corporation Common Stockholders													$	899		$	900

Earnings Per Share – Basic and Diluted
Income from continuing operations attributable to Duke Energy Corporation common stockholders
Basic	$	1.82		$	1.51		$	4.18		$	3.12
Diluted	$	1.82		$	1.51		$	4.18		$	3.11
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Net income available to Duke Energy Corporation common stockholders
Basic and Diluted	$	—		$	—		$	—		$	—		$	1.24		$	1.24
Net income attributable to Duke Energy Corporation common stockholders
Basic	$	1.82		$	1.51		$	4.18		$	3.12
Diluted	$	1.82		$	1.51		$	4.18		$	3.11
Weighted average shares outstanding
Basic	729			713			728			705			734			727
Diluted	729			714			728			706			736			727

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019
2018
2019
2018
Net Income $ 1,323
$ 1,066
$ 2,964
$ 2,190
Other Comprehensive (Loss) Income, net of tax
Pension and OPEB adjustments (2 ) 1
1
3
Net unrealized (losses) gains on cash flow hedges (16 ) (3 ) (62 ) 10
Reclassification into earnings from cash flow hedges 1
6
4
5
Unrealized gains (losses) on available-for-sale securities 2
—
10
(5 )
Other Comprehensive (Loss) Income, net of tax (15 ) 4
(47 ) 13
Comprehensive Income 1,308
1,070
2,917
2,203
Less: Comprehensive Loss Attributable to Noncontrolling Interests (19 ) (16 ) (110 ) (12 )
Less: Preferred Dividends 15
—
27
—
Comprehensive Income Attributable to Duke Energy Corporation $ 1,312
$ 1,086
$ 3,000
$ 2,215



	Three Months Ended
	March 31,
(in millions)	2020			2019
Net Income	$	890		$	893
Other Comprehensive Loss, net of tax^(a)
Pension and OPEB adjustments	1			—
Net unrealized losses on cash flow hedges	(81		)	(17		)
Reclassification into earnings from cash flow hedges	2			1
Unrealized gains on available-for-sale securities	1			4
Other Comprehensive Loss, net of tax	(77		)	(12		)
Comprehensive Income	813			881
Less: Comprehensive Loss Attributable to Noncontrolling Interests	(62		)	(7		)
Comprehensive Income Attributable to Duke Energy	875			888
Less: Preferred Dividends	39			—
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	836		$	888


(a)	Net of income tax impact of approximately $23 million in the first quarter of 2020 and immaterial income tax impact in the first quarter of 2019.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	379		$	442		$	1,450		$	311
Receivables (net of allowance for doubtful accounts of $20 at 2019 and $16 at 2018)	755			962
Receivables of VIEs (net of allowance for doubtful accounts of $53 at 2019 and $55 at 2018)	2,322			2,172
Receivables (net of allowance for doubtful accounts of $28 at 2020 and $22 at 2019)							809			1,066
Receivables of VIEs (net of allowance for doubtful accounts of $61 at 2020 and $54 at 2019)							1,828			1,994
Inventory	3,107			3,084			3,324			3,232
Regulatory assets (includes $52 at 2019 and 2018 related to VIEs)	1,723			2,005
Other (includes $188 at 2019 and $162 at 2018 related to VIEs)	1,333			1,049
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)							1,770			1,796
Other (includes $300 at 2020 and $242 at 2019 related to VIEs)							1,000			764
Total current assets	9,619			9,714			10,181			9,163
Property, Plant and Equipment
Cost	143,794			134,458			149,676			147,654
Accumulated depreciation and amortization	(45,149		)	(43,126		)	(46,599		)	(45,773		)
Generation facilities to be retired, net	267			362			31			246
Net property, plant and equipment	98,912			91,694			103,108			102,127
Other Noncurrent Assets
Goodwill	19,303			19,303			19,303			19,303
Regulatory assets (includes $1,002 at 2019 and $1,041 at 2018 related to VIEs)	13,916			13,617
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)							13,413			13,222
Nuclear decommissioning trust funds	7,695			6,720			7,052			8,140
Operating lease right-of-use assets, net	1,703			—			1,633			1,658
Investments in equity method unconsolidated affiliates	1,864			1,409			2,067			1,936
Other (includes $63 at 2019 and $261 at 2018 related to VIEs)	2,905			2,935
Other (includes $87 at 2020 and $110 at 2019 related to VIEs)							3,315			3,289
Total other noncurrent assets	47,386			43,984			46,783			47,548
Total Assets	$	155,917		$	145,392		$	160,072		$	158,838
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,946		$	3,487		$	2,364		$	3,487
Notes payable and commercial paper	2,469			3,410			3,033			3,135
Taxes accrued	712			577			493			392
Interest accrued	559			559			571			565
Current maturities of long-term debt (includes $231 at 2019 and $227 at 2018 related to VIEs)	3,096			3,406
Current maturities of long-term debt (includes $216 at 2020 and 2019 related to VIEs)							5,077			3,141
Asset retirement obligations	861			919			802			881
Regulatory liabilities	673			598			826			784
Other	2,074			2,085			2,004			2,367
Total current liabilities	13,390			15,041			15,170			14,752
Long-Term Debt (includes $4,060 at 2019 and $3,998 at 2018 related to VIEs)	54,818			51,123
Long-Term Debt (includes $3,966 at 2020 and $3,997 at 2019 related to VIEs)							56,311			54,985
Other Noncurrent Liabilities
Deferred income taxes	8,776			7,806			9,321			8,878
Asset retirement obligations	11,740			9,548			12,497			12,437
Regulatory liabilities	15,202			14,834			14,029			15,264
Operating lease liabilities	1,456			—			1,414			1,432
Accrued pension and other post-retirement benefit costs	900			988			919			934
Investment tax credits	579			568			659			624
Other (includes $218 at 2019 and $212 at 2018 related to VIEs)	1,649			1,650
Other (includes $258 at 2020 and $228 at 2019 related to VIEs)							1,669			1,581
Total other noncurrent liabilities	40,302			35,394			40,508			41,150
Commitments and Contingencies
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2019	973			—
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2019	990			—
Common stock, $0.001 par value, 2 billion shares authorized; 729 million shares outstanding at 2019 and 727 million shares outstanding at 2018	1			1
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019							973			973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019							989			989
Common stock, $0.001 par value, 2 billion shares authorized; 735 million shares outstanding at 2020 and 733 million shares outstanding at 2019							1			1
Additional paid-in capital	40,488			40,795			40,930			40,881
Retained earnings	4,139			3,113			4,221			4,108
Accumulated other comprehensive loss	(153		)	(92		)	(193		)	(130		)
Total Duke Energy Corporation stockholders' equity	46,438			43,817			46,921			46,822
Noncontrolling interests	969			17			1,162			1,129
Total equity	47,407			43,834			48,083			47,951
Total Liabilities and Equity	$	155,917		$	145,392		$	160,072		$	158,838

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,964		$	2,190		$	890		$	893
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	3,831			3,447			1,301			1,238
Equity component of AFUDC	(99		)	(175		)	(40		)	(31		)
Losses on sales of other assets	—			87
(Gains) Losses on sales of other assets							(1		)	3
Impairment charges	(16		)	339			2			—
Deferred income taxes	736			1,099			422			97
Equity in earnings of unconsolidated affiliates	(137		)	(49		)	(44		)	(43		)
Accrued pension and other post-retirement benefit costs	13			46
Contributions to qualified pension plans	(77		)	(141		)
Payments for asset retirement obligations	(582		)	(389		)	(132		)	(152		)
Payment for disposal of other assets	—			(105		)
Other rate case adjustments	—			37
Provision for rate refunds	61			375			(13		)	35
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(4		)	15			—			10
Receivables	62			(288		)	466			388
Inventory	(3		)	104			(92		)	(31		)
Other current assets	(134		)	(648		)	(131		)	98
Increase (decrease) in
Accounts payable	(538		)	389			(657		)	(636		)
Taxes accrued	125			122			113			(107		)
Other current liabilities	(198		)	(180		)	(455		)	(407		)
Other assets	(264		)	(585		)	(25		)	(162		)
Other liabilities	(103		)	(23		)	(50		)	46
Net cash provided by operating activities	5,637			5,667			1,554			1,239
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(8,084		)	(6,752		)	(2,832		)	(2,536		)
Contributions to equity method investments	(264		)	(298		)	(77		)	(94		)
Purchases of debt and equity securities	(3,105		)	(2,763		)	(1,392		)	(860		)
Proceeds from sales and maturities of debt and equity securities	3,092			2,718			1,347			851
Other	(272		)	(175		)	(68		)	(74		)
Net cash used in investing activities	(8,633		)	(7,270		)	(3,022		)	(2,713		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	6,131			4,110			1,954			2,737
Issuance of preferred stock	1,963			—			—			974
Issuance of common stock	41			834			40			13
Payments for the redemption of long-term debt	(2,737		)	(2,278		)	(292		)	(1,201		)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	339			243			1,784			135
Payments for the redemption of short-term debt with original maturities greater than 90 days	(479		)	(207		)	(17		)	(239		)
Notes payable and commercial paper	(879		)	638			(198		)	(304		)
Contributions from noncontrolling interests	615			—			103			6
Dividends paid	(1,990		)	(1,835		)	(707		)	(649		)
Other	(17		)	42			(74		)	(39		)
Net cash provided by financing activities	2,987			1,547			2,593			1,433
Net decrease in cash, cash equivalents and restricted cash	(9		)	(56		)
Net increase (decrease) in cash, cash equivalents and restricted cash							1,125			(41		)
Cash, cash equivalents and restricted cash at beginning of period	591			505			573			591
Cash, cash equivalents and restricted cash at end of period	$	582		$	449		$	1,698		$	550
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	1,073		$	1,016		$	934		$	811
Non-cash dividends	81			79			27			27

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Three Months Ended September 30, 2018 and 2019
Accumulated Other Comprehensive
(Loss) Income
Net Unrealized
Total

Net Gains
(Losses) Gains
Duke Energy

Common
Additional
(Losses) on
on Available-
Pension and
Corporation

Preferred
Stock
Common
Paid-in
Retained
Cash Flow
for-Sale-
OPEB
Stockholders'
Noncontrolling
Total
(in millions) Stock
Shares
Stock
Capital
Earnings
Hedges
Securities
Adjustments
Equity
Interests
Equity
Balance at June 30, 2018 $ —
712
$ 1
$ 39,682
$ 2,894
$ 2
$ (5 ) $ (67 ) $ 42,507
$ 8
$ 42,515
Net income (loss) —
—
—
—
1,082
—
—
—
1,082
(16 ) 1,066
Other comprehensive income —
—
—
—
—
3
—
1
4
—
4
Common stock issuances, including dividend reinvestment and employee benefits —
1
—
65
—
—
—
—
65
—
65
Common stock dividends —
—
—
—
(663 ) —
—
—
(663 ) —
(663 )
Other —
—
—
—
—
—
—
—
—
26
26
Balance at September 30, 2018 $ —
713
$ 1
$ 39,747
$ 3,313
$ 5
$ (5 ) $ (66 ) $ 42,995
$ 18
$ 43,013

Balance at June 30, 2019 $ 973
728
$ 1
$ 40,885
$ 3,502
$ (63 ) $ 4
$ (89 ) $ 45,213
$ 119
$ 45,332
Net income (loss) —
—
—
—
1,327
—
—
—
1,327
(19 ) 1,308
Other comprehensive (loss) income —
—
—
—
—
(15 ) 2
(2 ) (15 ) —
(15 )
Preferred stock, Series B, issuances, net of issuance costs^(c)
990
—
—
—
—
—
—
—
990
—
990
Common stock issuances, including dividend reinvestment and employee benefits —
1
—
69
—
—
—
—
69
—
69
Common stock dividends —
—
—
—
(690 ) —
—
—
(690 ) —
(690 )
Sale of noncontrolling interest^(d)
—
—
—
(465 ) —
10
—
—
(455 ) 863
408
Contribution from noncontrolling interest in subsidiaries^(e)
—
—
—
—
—
—
—
—
—
7
7
Other —
—
—
(1 ) —
—
—
—
(1 ) (1 ) (2 )
Balance at September 30, 2019 $ 1,963
729
$ 1
$ 40,488
$ 4,139
$ (68 ) $ 6
$ (91 ) $ 46,438
$ 969
$ 47,407



~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CORPORATION~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~


	Nine Months Ended September 30, 2018 and 2019
												Accumulated Other Comprehensive																													Accumulated Other Comprehensive
												(Loss) Income																													(Loss) Income
															Net Unrealized						Total																							Net Unrealized						Total
												Net Gains			(Losses) Gains						Duke Energy																				Net			(Losses) Gains						Duke Energy
			Common			Additional						(Losses) on			on Available-			Pension and			Corporation											Common			Additional						Losses on			on Available-			Pension and			Corporation
	Preferred		Stock	Common		Paid-in			Retained			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total			Preferred		Stock	Common		Paid-in			Retained			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Stock		Shares	Stock		Capital			Earnings			Hedges			Securities			Adjustments			Equity			Interests			Equity			Stock		Shares	Stock		Capital			Earnings			Hedges			Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2017	$	—	700	$	1	$	38,792		$	3,013		$	(10	)	$	12		$	(69	)	$	41,739		$	(2	)	$	41,737
Net income (loss)	—		—	—		—			2,202			—			—			—			2,202			(12		)	2,190
Other comprehensive income (loss)	—		—	—		—			—			15			(5		)	3			13			—			13
Common stock issuances, including dividend reinvestment and employee benefits	—		13	—		955			—			—			—			—			955			—			955
Common stock dividends	—		—	—		—			(1,914		)	—			—			—			(1,914		)	—			(1,914		)
Distributions to noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			(1		)	(1		)
Other^(a)	—		—	—		—			12			—			(12		)	—			—			33			33
Balance at September 30, 2018	$	—	713	$	1	$	39,747		$	3,313		$	5		$	(5	)	$	(66	)	$	42,995		$	18		$	43,013

Balance at December 31, 2018	$	—	727	$	1	$	40,795		$	3,113		$	(14	)	$	(3	)	$	(75	)	$	43,817		$	17		$	43,834		$	—	727	$	1	$	40,795		$	3,113		$	(14	)	$	(3	)	$	(75	)	$	43,817		$	17		$	43,834
Net income (loss)	—		—	—		—			3,047			—			—			—			3,047			(110		)	2,937			—		—	—		—			900			—			—			—			900			(7		)	893
Other comprehensive (loss) income	—		—	—		—			—			(58		)	10			1			(47		)	—			(47		)	—		—	—		—			—			(16		)	4			—			(12		)	—			(12		)
Preferred stock, Series A, issuances, net of issuance costs^(b)	973		—	—		—			—			—			—			—			973			—			973
Preferred stock, Series B, issuances, net of issuance costs^(c)	990		—	—		—			—			—			—			—			990			—			990
Preferred stock, Series A, issuances, net of issuance costs^(a)																														974		—	—		—			—			—			—			—			974			—			974
Common stock issuances, including dividend reinvestment and employee benefits	—		2	—		158			—			—			—			—			158			—			158			—		1	—		28			—			—			—			—			28			—			28
Common stock dividends	—		—	—		—			(2,044		)	—			—			—			(2,044		)	—			(2,044		)	—		—	—		—			(676		)	—			—			—			(676		)	—			(676		)
Sale of noncontrolling interest^(d)	—		—	—		(465		)	—			10			—			—			(455		)	863			408
Contributions from noncontrolling interest in subsidiaries^(e)	—		—	—		—			—			—			—			—			—			200			200
Other^(b)																														—		—	—		—			23			(6		)	(1		)	(17		)	(1		)	5			4
Balance at March 31, 2019																														$	974	728	$	1	$	40,823		$	3,360		$	(36	)	$	—		$	(92	)	$	45,030		$	15		$	45,045

Balance at December 31, 2019																														$	1,962	733	$	1	$	40,881		$	4,108		$	(51	)	$	3		$	(82	)	$	46,822		$	1,129		$	47,951
Net income (loss)																														—		—	—		—			899			—			—			—			899			(48		)	851
Other comprehensive (loss) income																														—		—	—		—			—			(65		)	1			1			(63		)	(14		)	(77		)
Common stock issuances, including dividend reinvestment and employee benefits																														—		2	—		50			—			—			—			—			50			—			50
Common stock dividends																														—		—	—		—			(695		)	—			—			—			(695		)	—			(695		)
Contributions from noncontrolling interest in subsidiaries																														—		—	—		—			—			—			—			—			—			103			103
Distributions to noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			(1		)	(1		)	—		—	—		—			—			—			—			—			—			(7		)	(7		)
Other^(f)	—		—	—		—			23			(6		)	(1		)	(17		)	(1		)	—			(1		)
Balance at September 30, 2019	$	1,963	729	$	1	$	40,488		$	4,139		$	(68	)	$	6		$	(91	)	$	46,438		$	969		$	47,407
Other^(c)																														—		—	—		(1		)	(91		)	—			—			—			(92		)	(1		)	(93		)
Balance at March 31, 2020																														$	1,962	735	$	1	$	40,930		$	4,221		$	(116	)	$	4		$	(81	)	$	46,921		$	1,162		$	48,083


(a)	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement.


~~(b)~~	Duke Energy issued 40 million depositary shares of preferred stock, ~~series A, in the first quarter of 2019.~~


~~(c)~~	~~Duke Energy issued 1 million shares of preferred stock, series B, in the third quarter of 2019.~~


~~(d)~~	~~See Note 2 for additional discussion of the transaction.~~


~~(e)~~	~~Relates to tax equity financing activity in the Commercial Renewables segment. See Note 1 for additional discussion.~~


~~(f)~~	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.



~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019
2018
2019
2018
Operating Revenues $ 2,162
$ 2,090
$ 5,619
$ 5,525
Operating Expenses
Fuel used in electric generation and purchased power 504
490
1,371
1,370
Operation, maintenance and other 443
514
1,324
1,464
Depreciation and amortization 350
305
1,013
866
Property and other taxes 66
67
221
214
Impairment charges 6
1
11
191
Total operating expenses 1,369
1,377
3,940
4,105
Losses on Sales of Other Assets and Other, net —
—
—
(1 )
Operating Income 793
713
1,679
1,419
Other Income and Expenses, net 34
34
106
108
Interest Expense 119
106
346
323
Income Before Income Taxes 708
641
1,439
1,204
Income Tax Expense 118
145
255
268
Net Income $ 590
$ 496
$ 1,184
$ 936
Other Comprehensive Income, net of tax
Reclassification into earnings from cash flow hedges —
—
—
1
Comprehensive Income $ 590
$ 496
$ 1,184
$ 937



~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

(in millions) September 30, 2019
December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents $ 23
$ 33
Receivables (net of allowance for doubtful accounts of $2 at 2019 and 2018) 234
219
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2019 and 2018) 775
699
Receivables from affiliated companies 108
182
Inventory 943
948
Regulatory assets 573
520
Other 19
72
Total current assets 2,675
2,673
Property, Plant and Equipment
Cost 47,815
44,741
Accumulated depreciation and amortization (16,359 ) (15,496 )
Net property, plant and equipment 31,456
29,245
Other Noncurrent Assets
Regulatory assets 3,587
3,457
Nuclear decommissioning trust funds 4,104
3,558
Operating lease right-of-use assets, net 135
—
Other 1,061
1,027
Total other noncurrent assets 8,887
8,042
Total Assets $ 43,018
$ 39,960
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 644
$ 988
Accounts payable to affiliated companies 174
230
Notes payable to affiliated companies 49
439
Taxes accrued 262
171
Interest accrued 138
102
Current maturities of long-term debt 457
6
Asset retirement obligations 214
290
Regulatory liabilities 197
199
Other 545
571
Total current liabilities 2,680

2,996
Long-Term Debt 11,001
10,633
Long-Term Debt Payable to Affiliated Companies 300
300
Other Noncurrent Liabilities
Deferred income taxes 3,853
3,689
Asset retirement obligations 5,184
3,659
Regulatory liabilities 6,364
5,999
Operating lease liabilities 108
—
Accrued pension and other post-retirement benefit costs 88
99
Investment tax credits 232
231
Other 617
671
Total other noncurrent liabilities 16,446
14,348
Commitments and Contingencies

Equity
Member's equity 12,598
11,689
Accumulated other comprehensive loss (7 ) (6 )
Total equity 12,591
11,683
Total Liabilities and Equity $ 43,018
$ 39,960



~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,184
$ 936
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel) 1,227
1,084
Equity component of AFUDC (29 ) (57 )
Losses on sales of other assets —
1
Impairment charges 11
191
Deferred income taxes 96
266
Accrued pension and other post-retirement benefit costs (5 ) 3
Contributions to qualified pension plans (7 ) (46 )
Payments for asset retirement obligations (234 ) (174 )
Provision for rate refunds 34
163
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions (7 ) 2
Receivables (80 ) (154 )
Receivables from affiliated companies 74
(63 )
Inventory 5
(11 )
Other current assets (117 ) (54 )
Increase (decrease) in
Accounts payable (284 ) 69
Accounts payable to affiliated companies (56 ) (67 )
Taxes accrued 91
(47 )
Other current liabilities 44
(129 )
Other assets 2
18
Other liabilities (43 ) (47 )
Net cash provided by operating activities 1,906
1,884
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,984 ) (2,006 )
Purchases of debt and equity securities (1,658 ) (1,386 )
Proceeds from sales and maturities of debt and equity securities 1,658
1,386
Other (80 ) (103 )
Net cash used in investing activities (2,064 ) (2,109 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 819
991
Payments for the redemption of long-term debt (5 ) (704 )
Notes payable to affiliated companies (390 ) 700
Distributions to parent (275 ) (750 )
Other (1 ) (1 )
Net cash provided by financing activities 148
236
Net (decrease) increase in cash and cash equivalents (10 ) 11
Cash and cash equivalents at beginning of period 33
16
Cash and cash equivalents at end of period $ 23
$ 27
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 261
$ 299



~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Three Months Ended September 30, 2018 and 2019
Accumulated Other
Comprehensive
Loss
Member's
Net Income (Losses) on
Total
(in millions) Equity
Cash Flow Hedges
Equity
Balance at June 30, 2018 $ 11,308
$ (6 ) $ 11,302
Net income 496
—
496
Distributions to parent (250 ) —
(250 )
Balance at September 30, 2018 $ 11,554
$ (6 ) $ 11,548

Balance at June 30, 2019 $ 12,283
$ (7 ) $ 12,276
Net income 590
—
590
Distributions to parent (275 ) —
(275 )
Balance at September 30, 2019 $ 12,598
$ (7 ) $ 12,591

Nine Months Ended September 30, 2018 and 2019
Accumulated Other
Comprehensive
Loss
Member's
Net Income (Losses) on
Total
(in millions) Equity
Cash Flow Hedges
Equity
Balance at December 31, 2017 $ 11,368
$ (7 ) $ 11,361
Net income 936
—
936
Other comprehensive income —
1
1
Distributions to parent (750 ) —
(750 )
Balance at September 30, 2018 $ 11,554
$ (6 ) $ 11,548

Balance at December 31, 2018 $ 11,689
$ (6 ) $ 11,683
Net income 1,184
—
1,184
Distributions to parent (275 ) —
(275 )
Other —
(1 ) (1 )
Balance at September 30, 2019 $ 12,598
$ (7 ) $ 12,591



~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019
2018
2019
2018
Operating Revenues $ 3,242
$ 3,045
$ 8,558
$ 8,119
Operating Expenses
Fuel used in electric generation and purchased power 1,187
1,148
3,100
3,019
Operation, maintenance and other 640
680
1,813
1,913
Depreciation and amortization 496
419
1,377
1,183
Property and other taxes 159
145
439
399
Impairment charges (25 ) 1
(25 ) 34
Total operating expenses 2,457
2,393
6,704
6,548
Gains on Sales of Other Assets and Other, net 1
11
—
23
Operating Income 786
663
1,854
1,594
Other Income and Expenses, net 41
51
106
128
Interest Expense 212
214
650
626
Income Before Income Taxes 615
500
1,310
1,096
Income Tax Expense 94
94
212
186
Net Income 521
406
1,098
910
Less: Net Income Attributable to Noncontrolling Interests —
2
—
6
Net Income Attributable to Parent $ 521
$ 404
$ 1,098
$ 904

Net Income $ 521
$ 406
$ 1,098
$ 910
Other Comprehensive Income, net of tax
Pension and OPEB adjustments —
—
2
2
Net unrealized gains on cash flow hedges 1
2
4
5
Unrealized gains (losses) on available-for-sale securities 1
—
2
(1 )
Other Comprehensive Income, net of tax 2

2

8

6
Comprehensive Income 523
408
1,106
916
Less: Comprehensive Income Attributable to Noncontrolling Interests —
2
—
6
Comprehensive Income Attributable to Parent $ 523

$ 406

$ 1,106

$ 910



~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

(in millions) September 30, 2019
December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents $ 82
$ 67
Receivables (net of allowance for doubtful accounts of $6 at 2019 and $5 at 2018) 181
220
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2019 and 2018) 1,042
909
Receivables from affiliated companies 33
168
Inventory 1,434
1,459
Regulatory assets (includes $52 at 2019 and 2018 related to VIEs) 881
1,137
Other (includes $16 at 2019 and $39 at 2018 related to VIEs) 242
125
Total current assets 3,895
4,085
Property, Plant and Equipment
Cost 53,491
50,260
Accumulated depreciation and amortization (16,917 ) (16,398 )
Generation facilities to be retired, net 267
362
Net property, plant and equipment 36,841
34,224
Other Noncurrent Assets
Goodwill 3,655
3,655
Regulatory assets (includes $1,002 at 2019 and $1,041 at 2018 related to VIEs) 6,733
6,564
Nuclear decommissioning trust funds 3,590
3,162
Operating lease right-of-use assets, net 814
—
Other 989
974
Total other noncurrent assets 15,781
14,355
Total Assets $ 56,517
$ 52,664
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 1,095
$ 1,172
Accounts payable to affiliated companies 354
360
Notes payable to affiliated companies 1,789
1,235
Taxes accrued 271
109
Interest accrued 212
246
Current maturities of long-term debt (includes $54 at 2019 and $53 at 2018 related to VIEs) 1,276
1,672
Asset retirement obligations 478
514
Regulatory liabilities 296
280
Other 850
821
Total current liabilities 6,621
6,409
Long-Term Debt (includes $1,631 at 2019 and $1,636 at 2018 related to VIEs) 17,693
17,089
Long-Term Debt Payable to Affiliated Companies 150
150
Other Noncurrent Liabilities
Deferred income taxes 4,389
3,941
Asset retirement obligations 5,610
4,897
Regulatory liabilities 5,165
5,049
Operating lease liabilities 710
—
Accrued pension and other post-retirement benefit costs 455
521
Other 361
351
Total other noncurrent liabilities 16,690
14,759
Commitments and Contingencies

Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2019 and 2018 —
—
Additional paid-in capital 9,143
9,143
Retained earnings 6,236
5,131
Accumulated other comprehensive loss (19 ) (20 )
Total Progress Energy, Inc. stockholders' equity 15,360
14,254
Noncontrolling interests 3
3
Total equity 15,363
14,257
Total Liabilities and Equity $ 56,517
$ 52,664



~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,098
$ 910
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel) 1,649
1,458
Equity component of AFUDC (48 ) (80 )
Gains on sales of other assets —
(23 )
Impairment charges (25 ) 34
Deferred income taxes 342
342
Accrued pension and other post-retirement benefit costs 14
18
Contributions to qualified pension plans (57 ) (45 )
Payments for asset retirement obligations (309 ) (164 )
Other rate case adjustments —
37
Provision for rate refunds 13
101
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 9
14
Receivables (128 ) (316 )
Receivables from affiliated companies 135
16
Inventory 45
119
Other current assets 79
(156 )
Increase (decrease) in
Accounts payable (64 ) 427
Accounts payable to affiliated companies (6 ) 76
Taxes accrued 150
143
Other current liabilities (96 ) (28 )
Other assets (281 ) (668 )
Other liabilities (90 ) (34 )
Net cash provided by operating activities 2,430
2,181
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,866 ) (2,689 )
Purchases of debt and equity securities (1,304 ) (1,216 )
Proceeds from sales and maturities of debt and equity securities 1,300
1,225
Net proceeds from the sales of other assets —
20
Notes receivable from affiliated companies —
(205 )
Other (130 ) (142 )
Net cash used in investing activities (3,000 ) (3,007 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 1,295
1,785
Payments for the redemption of long-term debt (1,263 ) (719 )
Notes payable to affiliated companies 554
(11 )
Dividends to parent —
(250 )
Other 8
(3 )
Net cash provided by financing activities 594
802
Net increase (decrease) in cash, cash equivalents and restricted cash 24
(24 )
Cash, cash equivalents and restricted cash at beginning of period 112
87
Cash, cash equivalents and restricted cash at end of period $ 136
$ 63
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 400
$ 441



~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Three Months Ended September 30, 2018 and 2019
Accumulated Other Comprehensive (Loss) Income
Net Gains
Net Unrealized
Total Progress

Additional
(Losses) on
Gains (Losses) on
Pension and
Energy, Inc.

Paid-in
Retained
Cash Flow
Available-for-
OPEB
Stockholders'
Noncontrolling
Total
(in millions) Capital
Earnings
Hedges
Sale Securities
Adjustments
Equity
Interests
Equity
Balance at June 30, 2018 $ 9,143
$ 4,855
$ (15 ) $ (1 ) $ (10 ) $ 13,972
$ —
$ 13,972
Net income —
404
—
—
—
404
2
406
Other comprehensive income —
—
2
—
—
2
—
2
Dividends to parent —
(250 ) —
—
—
(250 ) —
(250 )
Balance at September 30, 2018 $ 9,143
$ 5,009
$ (13 ) $ (1 ) $ (10 ) $ 14,128
$ 2
$ 14,130

Balance at June 30, 2019 $ 9,143
$ 5,715
$ (13 ) $ —
$ (8 ) $ 14,837
$ 2
$ 14,839
Net income —
521
—
—
—
521
—
521
Other comprehensive income —
—
1
1
—
2
—
2
Other —
—
—
(1 ) 1
—
1
1
Balance at September 30, 2019 $ 9,143
$ 6,236
$ (12 ) $ —
$ (7 ) $ 15,360
$ 3
$ 15,363

Nine Months Ended September 30, 2018 and 2019
Accumulated Other Comprehensive (Loss) Income
Net Gains
Net Unrealized
Total Progress

Additional
(Losses) on
Gains (Losses) on
Pension and
Energy, Inc.

Paid-in
Retained
Cash Flow
Available-for-
OPEB
Stockholders'
Noncontrolling
Total
Capital
Earnings
Hedges
Sale Securities
Adjustments
Equity
Interests
Equity
Balance at December 31, 2017 $ 9,143
$ 4,350
$ (18 ) $ 5
$ (12 ) $ 13,468
$ (3 ) $ 13,465
Net income —
904
—
—
—
904
6
910
Other comprehensive income (loss) —
—
5
(1 ) 2
6
—
6
Distributions to noncontrolling interests —
—
—
—
—
—
(1 ) (1 )
Dividends to parent —
(250 ) —
—
—
(250 ) —
(250 )
Other^(a)
—
5
—
(5 ) —
—
—
—
Balance at September 30, 2018 $ 9,143

$ 5,009

$ (13 )
$ (1 )
$ (10 ) $ 14,128

$ 2

$ 14,130

Balance at December 31, 2018 $ 9,143
$ 5,131
$ (12 ) $ (1 ) $ (7 ) $ 14,254
$ 3
$ 14,257
Net income —
1,098
—
—
—
1,098
—
1,098
Other comprehensive income —
—
4
2
2
8
—
8
Other^(b)
—
7
(4 ) (1 ) (2 ) —
—
—
Balance at September 30, 2019 $ 9,143

$ 6,236

$ (12 )
$ —

$ (7 ) $ 15,360

$ 3

$ 15,363


~~(a)~~	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement.Series A.


(b)	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.


(c)	Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2020		2019
Operating Revenues	$	1,748	$	1,744
Operating Expenses
Fuel used in electric generation and purchased power	453		472
Operation, maintenance and other	386		440
Depreciation and amortization	343		317
Property and other taxes	81		80
Impairment charges	2		—
Total operating expenses	1,265		1,309
Gains on Sales of Other Assets and Other, net	1		—
Operating Income	484		435
Other Income and Expenses, net	43		31
Interest Expense	123		110
Income Before Income Taxes	404		356
Income Tax Expense	65		63
Net Income and Comprehensive Income	$	339	$	293

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	16		$	18
Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019)	212			324
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)	616			642
Receivables from affiliated companies	87			114
Notes receivable from affiliated companies	436			—
Inventory	1,067			996
Regulatory assets	524			550
Other	31			21
Total current assets	2,989			2,665
Property, Plant and Equipment
Cost	49,534			48,922
Accumulated depreciation and amortization	(16,884		)	(16,525		)
Net property, plant and equipment	32,650			32,397
Other Noncurrent Assets
Regulatory assets	3,427			3,360
Nuclear decommissioning trust funds	3,717			4,359
Operating lease right-of-use assets, net	132			123
Other	1,136			1,149
Total other noncurrent assets	8,412			8,991
Total Assets	$	44,051		$	44,053
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	605		$	954
Accounts payable to affiliated companies	225			210
Notes payable to affiliated companies	—			29
Taxes accrued	132			46
Interest accrued	144			115
Current maturities of long-term debt	457			458
Asset retirement obligations	197			206
Regulatory liabilities	275			255
Other	479			611
Total current liabilities	2,514			2,884
Long-Term Debt	12,050			11,142
Long-Term Debt Payable to Affiliated Companies	300			300
Other Noncurrent Liabilities
Deferred income taxes	3,968			3,921
Asset retirement obligations	5,552			5,528
Regulatory liabilities	5,766			6,423
Operating lease liabilities	112			102
Accrued pension and other post-retirement benefit costs	82			84
Investment tax credits	230			231
Other	640			627
Total other noncurrent liabilities	16,350			16,916
Commitments and Contingencies
Equity
Member's equity	12,844			12,818
Accumulated other comprehensive loss	(7		)	(7		)
Total equity	12,837			12,811
Total Liabilities and Equity	$	44,051		$	44,053

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	339		$	293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	414			388
Equity component of AFUDC	(14		)	(9		)
Gains on sales of other assets	(1		)	—
Impairment charges	2			—
Deferred income taxes	22			64
Payments for asset retirement obligations	(41		)	(65		)
Provision for rate refunds	—			19
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—			1
Receivables	156			124
Receivables from affiliated companies	27			94
Inventory	(72		)	(59		)
Other current assets	96			(35		)
Increase (decrease) in
Accounts payable	(253		)	(266		)
Accounts payable to affiliated companies	15			18
Taxes accrued	87			(91		)
Other current liabilities	(108		)	(70		)
Other assets	(60		)	(31		)
Other liabilities	(11		)	(7		)
Net cash provided by operating activities	598			368
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(724		)	(721		)
Purchases of debt and equity securities	(607		)	(405		)
Proceeds from sales and maturities of debt and equity securities	607			405
Notes receivable from affiliated companies	(436		)	—
Other	(18		)	(9		)
Net cash used in investing activities	(1,178		)	(730		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	910			25
Payments for the redemption of long-term debt	(2		)	(1		)
Notes payable to affiliated companies	(29		)	306
Distributions to parent	(300		)	—
Other	(1		)	(1		)
Net cash provided by financing activities	578			329
Net decrease in cash and cash equivalents	(2		)	(33		)
Cash and cash equivalents at beginning of period	18			33
Cash and cash equivalents at end of period	$	16		$	—
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	254		$	221

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



				Accumulated Other
				Comprehensive
				Loss
	Member's			Net Losses on			Total
(in millions)	Equity			Cash Flow Hedges			Equity
Balance at December 31, 2018	$	11,689		$	(6	)	$	11,683
Net income	293			—			293
Other	—			(1		)	(1		)
Balance at March 31, 2019	$	11,982		$	(7	)	$	11,975

Balance at December 31, 2019	$	12,818		$	(7	)	$	12,811
Net income	339			—			339
Distributions to parent	(300		)	—			(300		)
Other^(a)	(13		)	—			(13		)
Balance at March 31, 2020	$	12,844		$	(7	)	$	12,837


(a)	Amounts primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2020			2019
Operating Revenues	$	2,422		$	2,572
Operating Expenses
Fuel used in electric generation and purchased power	763			925
Operation, maintenance and other	554			567
Depreciation and amortization	452			455
Property and other taxes	135			137
Total operating expenses	1,904			2,084
Losses on Sales of Other Assets and Other, net	(1		)	—
Operating Income	517			488
Other Income and Expenses, net	32			31
Interest Expense	206			219
Income Before Income Taxes	343			300
Income Tax Expense	60			52
Net Income	283			248
Less: Net Loss Attributable to Noncontrolling Interests	—			(1		)
Net Income Attributable to Parent	$	283		$	249

Net Income	$	283		$	248
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	—			1
Net unrealized gains on cash flow hedges	1			2
Unrealized gains on available-for-sale securities	1			—
Other Comprehensive Income, net of tax	2			3
Comprehensive Income	285			251
Less: Comprehensive Loss Attributable to Noncontrolling Interests	—			(1		)
Comprehensive Income Attributable to Parent	$	285		$	252

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	52		$	48
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)	159			220
Receivables of VIEs (net of allowance for doubtful accounts of $12 at 2020 and $9 at 2019)	745			830
Receivables from affiliated companies	49			76
Notes receivable from affiliated companies	—			164
Inventory	1,463			1,423
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)	954			946
Other (includes $13 at 2020 and $39 at 2019 related to VIEs)	196			210
Total current assets	3,618			3,917
Property, Plant and Equipment
Cost	55,788			55,070
Accumulated depreciation and amortization	(17,461		)	(17,159		)
Generation facilities to be retired, net	31			246
Net property, plant and equipment	38,358			38,157
Other Noncurrent Assets
Goodwill	3,655			3,655
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)	6,489			6,346
Nuclear decommissioning trust funds	3,335			3,782
Operating lease right-of-use assets, net	762			788
Other	1,121			1,049
Total other noncurrent assets	15,362			15,620
Total Assets	$	57,338		$	57,694
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	730		$	1,104
Accounts payable to affiliated companies	329			310
Notes payable to affiliated companies	2,300			1,821
Taxes accrued	117			46
Interest accrued	214			228
Current maturities of long-term debt (includes $54 at 2020 and 2019 related to VIEs)	1,828			1,577
Asset retirement obligations	421			485
Regulatory liabilities	347			330
Other	821			902
Total current liabilities	7,107			6,803
Long-Term Debt (includes $1,603 at 2020 and $1,632 at 2019 related to VIEs)	17,377			17,907
Long-Term Debt Payable to Affiliated Companies	150			150
Other Noncurrent Liabilities
Deferred income taxes	4,537			4,462
Asset retirement obligations	6,020			5,986
Regulatory liabilities	4,708			5,225
Operating lease liabilities	678			697
Accrued pension and other post-retirement benefit costs	480			488
Other	404			383
Total other noncurrent liabilities	16,827			17,241
Commitments and Contingencies
Equity
Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019	—			—
Additional paid-in capital	9,143			9,143
Retained earnings	6,747			6,465
Accumulated other comprehensive loss	(16		)	(18		)
Total Progress Energy, Inc. stockholders' equity	15,874			15,590
Noncontrolling interests	3			3
Total equity	15,877			15,593
Total Liabilities and Equity	$	57,338		$	57,694

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	283		$	248
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	552			546
Equity component of AFUDC	(14		)	(15		)
Losses on sales of other assets	1			—
Deferred income taxes	80			82
Payments for asset retirement obligations	(79		)	(75		)
Provision for rate refunds	2			6
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	1			1
Receivables	149			187
Receivables from affiliated companies	27			122
Inventory	(40		)	(18		)
Other current assets	43			35
Increase (decrease) in
Accounts payable	(211		)	(196		)
Accounts payable to affiliated companies	19			(94		)
Taxes accrued	71			26
Other current liabilities	(128		)	(196		)
Other assets	(41		)	(111		)
Other liabilities	(56		)	(7		)
Net cash provided by operating activities	659			541
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(972		)	(1,012		)
Purchases of debt and equity securities	(651		)	(409		)
Proceeds from sales and maturities of debt and equity securities	643			405
Notes receivable from affiliated companies	164			(31		)
Other	(39		)	(45		)
Net cash used in investing activities	(855		)	(1,092		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—			1,295
Payments for the redemption of long-term debt	(283		)	(1,132		)
Notes payable to affiliated companies	479			370
Other	(1		)	1
Net cash provided by financing activities	195			534
Net decrease in cash, cash equivalents and restricted cash	(1		)	(17		)
Cash, cash equivalents and restricted cash at beginning of period	126			112
Cash, cash equivalents and restricted cash at end of period	$	125		$	95
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	310		$	310

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



						Accumulated Other Comprehensive Loss
						Net			Net Unrealized						Total Progress
	Additional					Losses on			Losses on			Pension and			Energy, Inc.
	Paid-in		Retained			Cash Flow			Available-for-			OPEB			Stockholders'			Noncontrolling			Total
	Capital		Earnings			Hedges			Sale Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2018	$	9,143	$	5,131		$	(12	)	$	(1	)	$	(7	)	$	14,254		$	3		$	14,257
Net income (loss)	—		249			—			—			—			249			(1		)	248
Other comprehensive income	—		—			2			—			1			3			—			3
Other^(a)	—		6			(4		)	—			(2		)	—			—			—
Balance at March 31, 2019	$	9,143	$	5,386		$	(14	)	$	(1	)	$	(8	)	$	14,506		$	2		$	14,508

Balance at December 31, 2019	$	9,143	$	6,465		$	(10	)	$	(1	)	$	(7	)	$	15,590		$	3		$	15,593
Net income	—		283			—			—			—			283			—			283
Other comprehensive income	—		—			1			1			—			2			—			2
Other	—		(1		)	—			—			—			(1		)	—			(1		)
Balance at March 31, 2020	$	9,143	$	6,747		$	(9	)	$	—		$	(7	)	$	15,874		$	3		$	15,877


(a)	Amounts in Retained Earnings and Accumulated Other Comprehensive Loss primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions)	2019		2018		2019		2018		2020			2019
Operating Revenues	$	1,688	$	1,582	$	4,559	$	4,333	$	1,338		$	1,484
Operating Expenses
Fuel used in electric generation and purchased power	577		535		1,571		1,452		405			515
Operation, maintenance and other	378		431		1,070		1,187		305			335
Depreciation and amortization	314		253		855		723		287			290
Property and other taxes	46		40		131		115		47			44
Impairment charges	—		—		—		33
Total operating expenses	1,315		1,259		3,627		3,510		1,044			1,184
Gains on Sales of Other Assets and Other, net	—		7		—		9
Losses on Sales of Other Assets and Other, net									(1		)	—
Operating Income	373		330		932		832		293			300
Other Income and Expenses, net	27		24		75		61		22			24
Interest Expense	74		82		232		241		69			77
Income Before Income Taxes	326		272		775		652		246			247
Income Tax Expense	48		56		125		120		42			44
Net Income and Comprehensive Income	$	278	$	216	$	650	$	532	$	204		$	203

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	49		$	23		$	32		$	22
Receivables (net of allowance for doubtful accounts of $2 at 2019 and 2018)	75			75
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2019 and 2018)	564			547
Receivables (net of allowance for doubtful accounts of $2 at 2020 and $3 at 2019)							77			123
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2020 and $5 at 2019)							410			489
Receivables from affiliated companies	34			23			50			52
Inventory	939			954			956			934
Regulatory assets	515			703			503			526
Other	95			62			48			60
Total current assets	2,271			2,387			2,076			2,206
Property, Plant and Equipment
Cost	33,594			31,459			34,898			34,603
Accumulated depreciation and amortization	(11,761		)	(11,423		)	(12,114		)	(11,915		)
Generation facilities to be retired, net	267			362			31			246
Net property, plant and equipment	22,100			20,398			22,815			22,934
Other Noncurrent Assets
Regulatory assets	4,363			4,111			4,392			4,152
Nuclear decommissioning trust funds	2,872			2,503			2,644			3,047
Operating lease right-of-use assets, net	397			—			377			387
Other	595			612			682			651
Total other noncurrent assets	8,227			7,226			8,095			8,237
Total Assets	$	32,598		$	30,011		$	32,986		$	33,377
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	550		$	660		$	319		$	629
Accounts payable to affiliated companies	198			278			208			203
Notes payable to affiliated companies	79			294			229			66
Taxes accrued	101			53			43			17
Interest accrued	89			116			90			110
Current maturities of long-term debt	306			603			1,006			1,006
Asset retirement obligations	476			509			421			485
Regulatory liabilities	210			178			263			236
Other	416			408			429			478
Total current liabilities	2,425			3,099			3,008			3,230
Long-Term Debt	8,593			7,451			7,903			7,902
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	2,316			2,119			2,446			2,388
Asset retirement obligations	5,038			4,311			5,442			5,408
Regulatory liabilities	4,152			3,955			3,790			4,232
Operating lease liabilities	360			—			344			354
Accrued pension and other post-retirement benefit costs	230			237			235			238
Investment tax credits	138			142			135			137
Other	105			106			83			92
Total other noncurrent liabilities	12,339			10,870			12,475			12,849
Commitments and Contingencies
Equity
Member's Equity	9,091			8,441			9,450			9,246
Total Liabilities and Equity	$	32,598		$	30,011		$	32,986		$	33,377

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	650		$	532		$	204		$	203
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	996			869			331			336
Equity component of AFUDC	(44		)	(41		)	(10		)	(14		)
Gains on sales of other assets	—			(9		)
Impairment charges	—			33
Losses on sales of other assets							1			—
Deferred income taxes	144			187			43			33
Accrued pension and other post-retirement benefit costs	2			11
Contributions to qualified pension plans	(4		)	(25		)
Payments for asset retirement obligations	(288		)	(133		)	(75		)	(68		)
Other rate case adjustments	—			37
Provision for rate refunds	13			101			2			6
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(4		)	3			(2		)	(3		)
Receivables	(9		)	(154		)	133			87
Receivables from affiliated companies	(11		)	(3		)	2			(5		)
Inventory	15			62			(22		)	(5		)
Other current assets	65			(239		)	54			96
Increase (decrease) in
Accounts payable	(54		)	325			(220		)	(196		)
Accounts payable to affiliated companies	(80		)	73			5			(57		)
Taxes accrued	37			28			26			(4		)
Other current liabilities	(17		)	(27		)	(73		)	(109		)
Other assets	(197		)	(358		)	(51		)	(47		)
Other liabilities	33			11			(8		)	(7		)
Net cash provided by operating activities	1,247			1,283			340			246
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,592		)	(1,526		)	(466		)	(548		)
Purchases of debt and equity securities	(656		)	(831		)	(550		)	(315		)
Proceeds from sales and maturities of debt and equity securities	632			807			540			308
Net proceeds from the sales of other assets	—			20
Notes receivable from affiliated companies	—			(52		)	—			(38		)
Other	(56		)	(82		)	(16		)	(20		)
Net cash used in investing activities	(1,672		)	(1,664		)	(492		)	(613		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,270			796			—			1,270
Payments for the redemption of long-term debt	(603		)	(2		)	(1		)	(601		)
Notes payable to affiliated companies	(215		)	(240		)	163			(294		)
Distributions to parent	—			(175		)
Other	(1		)	(1		)	—			(1		)
Net cash provided by financing activities	451			378			162			374
Net increase (decrease) in cash and cash equivalents	26			(3		)
Net increase in cash and cash equivalents							10			7
Cash and cash equivalents at beginning of period	23			20			22			23
Cash and cash equivalents at end of period	$	49		$	17		$	32		$	30
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	182		$	261		$	87		$	117

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Three Months Ended
September 30, 2018 and 2019
Member's
(in millions) Equity
Balance at June 30, 2018 $ 8,265
Net income 216
Distributions to parent (175 )
Balance at September 30, 2018 $ 8,306

Balance at June 30, 2019 $ 8,813
Net income 278
Balance at September 30, 2019 $ 9,091

Nine Months Ended
September 30, 2018 and 2019
Member's
(in millions) Equity
Balance at December 31, 2017 $ 7,949
Net income 532
Distributions to parent (175 )
Balance at September 30, 2018 $ 8,306

Balance at December 31, 2018 $ 8,441
Net income 650
Balance at September 30, 2019 $ 9,091



	Member's
(in millions)	Equity
Balance at December 31, 2018	$	8,441
Net income	203
Balance at March 31, 2019	$	8,644

Balance at December 31, 2019	$	9,246
Net income	204
Balance at March 31, 2020	$	9,450

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended					Nine Months Ended						Three Months Ended
	September 30,					September 30,						March 31,
(in millions)	2019			2018		2019			2018			2020		2019
Operating Revenues	$	1,548		$	1,462	$	3,987		$	3,780		$	1,080	$	1,086
Operating Expenses
Fuel used in electric generation and purchased power	610			614		1,529			1,567			358		410
Operation, maintenance and other	256			245		730			719			245		230
Depreciation and amortization	182			166		522			460			165		165
Property and other taxes	113			105		309			284			88		93
Impairment charges	(25		)	1		(25		)	1
Total operating expenses	1,136			1,131		3,065			3,031			856		898
Gains on Sales of Other Assets and Other, net	1			—		—			—
Operating Income	413			331		922			749			224		188
Other Income and Expenses, net	14			28		39			75			10		13
Interest Expense	81			73		246			210			84		82
Income Before Income Taxes	346			286		715			614			150		119
Income Tax Expense	57			43		129			100			30		23
Net Income	$	289		$	243	$	586		$	514		$	120	$	96
Other Comprehensive Income (Loss), net of tax
Unrealized gains (losses) on available-for-sale securities	1			—		2			(1		)
Other Comprehensive Income, net of tax
Unrealized gains on available-for-sale securities												1		1
Comprehensive Income	$	290		$	243	$	588		$	513		$	121	$	97

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	24		$	36		$	12		$	17
Receivables (net of allowance for doubtful accounts of $3 at 2019 and 2018)	104			143
Receivables of VIEs (net of allowance for doubtful accounts of $3 at 2019 and 2018)	478			362
Receivables from affiliated companies	1			28
Receivables (net of allowance for doubtful accounts of $6 at 2020 and $3 at 2019)							80			96
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019)							335			341
Notes receivable from affiliated companies							—			173
Inventory	495			504			508			489
Regulatory assets (includes $52 at 2019 and 2018 related to VIEs)	367			434
Other (includes $16 at 2019 and $39 at 2018 related to VIEs)	42			46
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)							451			419
Other (includes $13 at 2020 and $39 at 2019 related to VIEs)							37			58
Total current assets	1,511			1,553			1,423			1,593
Property, Plant and Equipment
Cost	19,887			18,792			20,880			20,457
Accumulated depreciation and amortization	(5,148		)	(4,968		)	(5,339		)	(5,236		)
Net property, plant and equipment	14,739			13,824			15,541			15,221
Other Noncurrent Assets
Regulatory assets (includes $1,002 at 2019 and $1,041 at 2018 related to VIEs)	2,370			2,454
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)							2,097			2,194
Nuclear decommissioning trust funds	718			659			691			734
Operating lease right-of-use assets, net	417			—			386			401
Other	307			311			329			311
Total other noncurrent assets	3,812			3,424			3,503			3,640
Total Assets	$	20,062		$	18,801		$	20,467		$	20,454
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	542		$	511		$	411		$	474
Accounts payable to affiliated companies	158			91			111			131
Notes payable to affiliated companies	356			108			305			—
Taxes accrued	175			74			74			43
Interest accrued	72			75			79			75
Current maturities of long-term debt (includes $54 at 2019 and $53 at 2018 related to VIEs)	621			270
Asset retirement obligations	2			5
Current maturities of long-term debt (includes $54 at 2020 and 2019 related to VIEs)							322			571
Regulatory liabilities	87			102			84			94
Other	423			406			383			415
Total current liabilities	2,436			1,642			1,769			1,803
Long-Term Debt (includes $1,306 at 2019 and $1,336 at 2018 related to VIEs)	6,511			7,051
Long-Term Debt (includes $1,278 at 2020 and $1,307 at 2019 related to VIEs)							7,384			7,416
Other Noncurrent Liabilities
Deferred income taxes	2,199			1,986			2,192			2,179
Asset retirement obligations	572			586			578			578
Regulatory liabilities	1,013			1,094			918			993
Operating lease liabilities	350			—			334			343
Accrued pension and other post-retirement benefit costs	196			254			214			218
Other	102			93			169			136
Total other noncurrent liabilities	4,432			4,013			4,405			4,447
Commitments and Contingencies
Equity
Member's equity	6,683			6,097			6,909			6,789
Accumulated other comprehensive loss	—			(2		)	—			(1		)
Total equity	6,683			6,095			6,909			6,788
Total Liabilities and Equity	$	20,062		$	18,801		$	20,467		$	20,454

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	586		$	514		$	120		$	96
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	647			581			219			207
Equity component of AFUDC	(4		)	(40		)	(4		)	(1		)
Impairment charges	(25		)	1
Deferred income taxes	164			169			34			45
Accrued pension and other post-retirement benefit costs	8			4
Contributions to qualified pension plans	(53		)	(20		)
Payments for asset retirement obligations	(21		)	(31		)	(5		)	(7		)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	9			7			3			2
Receivables	(119		)	(163		)	15			55
Receivables from affiliated companies	27			(18		)	—			(6		)
Inventory	29			57			(19		)	(13		)
Other current assets	100			51			7			(35		)
Increase (decrease) in
Accounts payable	(11		)	101			11			—
Accounts payable to affiliated companies	67			9			(20		)	(62		)
Taxes accrued	101			198			31			20
Other current liabilities	(77		)	1			(58		)	(84		)
Other assets	(81		)	(308		)	13			(63		)
Other liabilities	(127		)	(58		)	(46		)	(1		)
Net cash provided by operating activities	1,220			1,055			301			153
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,274		)	(1,162		)	(506		)	(422		)
Purchases of debt and equity securities	(648		)	(385		)	(101		)	(95		)
Proceeds from sales and maturities of debt and equity securities	668			418			103			97
Notes receivable from affiliated companies	—			(80		)	173			—
Other	(73		)	(61		)	(23		)	(25		)
Net cash used in investing activities	(1,327		)	(1,270		)	(354		)	(445		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	25			989			—			25
Payments for the redemption of long-term debt	(210		)	(717		)	(282		)	(81		)
Notes payable to affiliated companies	248			—			305			291
Distributions to parent	—			(75		)
Other	9			(1		)	(1		)	2
Net cash provided by financing activities	72			196			22			237
Net decrease in cash, cash equivalents and restricted cash	(35		)	(19		)	(31		)	(55		)
Cash, cash equivalents and restricted cash at beginning of period	75			53			56			75
Cash, cash equivalents and restricted cash at end of period	$	40		$	34		$	25		$	20
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	218		$	180		$	223		$	193

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Three Months Ended September 30, 2018 and 2019
Accumulated
Other
Comprehensive
Income (Loss)
Net Unrealized

Gains (Losses) on

Member's
Available-for-Sale
Total
(in millions) Equity
Securities
Equity
Balance at June 30, 2018 $ 5,890
$ (2 ) $ 5,888
Net income 243
—
243
Distributions to parent (75 ) —
(75 )
Balance at September 30, 2018 $ 6,058
$ (2 ) $ 6,056

Balance at June 30, 2019 $ 6,394
$ (1 ) $ 6,393
Net income 289
—
289
Other comprehensive income —
1
1
Balance at September 30, 2019 $ 6,683
$ —
$ 6,683

Nine Months Ended September 30, 2018 and 2019
Accumulated
Other
Comprehensive
Income (Loss)
Net Unrealized

Gains (Losses) on

Member's
Available-for-Sale
Total
(in millions) Equity
Securities
Equity
Balance at December 31, 2017 $ 5,614
$ 4
$ 5,618
Net income 514
—
514
Other comprehensive loss —
(1 ) (1 )
Distributions to parent (75 ) —
(75 )
Other^(a)
5
(5 ) —
Balance at September 30, 2018 $ 6,058
$ (2 ) $ 6,056

Balance at December 31, 2018 $ 6,097
$ (2 ) $ 6,095
Net income 586
—
586
Other comprehensive income —
2
2
Balance at September 30, 2019 $ 6,683
$ —
$ 6,683



			Accumulated
			Other
			Comprehensive
			Income (Loss)
			Net Unrealized
			Gains on
	Member's		Available-for-Sale			Total
(in millions)	Equity		Securities			Equity
Balance at December 31, 2018	$	6,097	$	(2	)	$	6,095
Net income	96		—			96
Other comprehensive income	—		1			1
Balance at March 31, 2019	$	6,193	$	(1	)	$	6,192

Balance at December 31, 2019	$	6,789	$	(1	)	$	6,788
Net income	120		—			120
Other comprehensive income	—		1			1
Balance at March 31, 2020	$	6,909	$	—		$	6,909


~~(a)~~	Amounts in Member's Equity and Accumulated Other Comprehensive Income (Loss) represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended				Nine Months Ended					Three Months Ended
	September 30,				September 30,					March 31,
(in millions)	2019		2018		2019		2018			2020		2019
Operating Revenues
Regulated electric	$	408	$	373	$	1,099	$	1,055		$	346	$	355
Regulated natural gas	81		84		354		361			152		176
Nonregulated electric and other	—		12		—		36
Total operating revenues	489		469		1,453		1,452			498		531
Operating Expenses
Fuel used in electric generation and purchased power – regulated	114		99		293		284
Fuel used in electric generation and purchased power – nonregulated	—		14		—		43
Fuel used in electric generation and purchased power										87		93
Cost of natural gas	4		4		68		73			37		54
Operation, maintenance and other	123		76		378		337			123		132
Depreciation and amortization	69		64		199		196			68		64
Property and other taxes	71		73		229		218			83		84
Total operating expenses	381		330		1,167		1,151			398		427
Losses on Sales of Other Assets and Other, net	—		—		—		(106		)
Operating Income	108		139		286		195			100		104
Other Income and Expenses, net	4		3		19		17			3		9
Interest Expense	27		23		81		68			24		30
Income Before Income Taxes	85		119		224		144			79		83
Income Tax Expense	11		19		34		23			14		14
Net Income and Comprehensive Income	$	74	$	100	$	190	$	121		$	65	$	69

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	11		$	21		$	14		$	17
Receivables (net of allowance for doubtful accounts of $4 at 2019 and $2 at 2018)	81			102
Receivables (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019)							84			84
Receivables from affiliated companies	63			114			52			92
Notes receivable from affiliated companies	74			—
Inventory	128			126			121			135
Regulatory assets	47			33			33			49
Other	28			24			11			21
Total current assets	432			420			315			398
Property, Plant and Equipment
Cost	9,993			9,360			10,401			10,241
Accumulated depreciation and amortization	(2,785		)	(2,717		)	(2,883		)	(2,843		)
Net property, plant and equipment	7,208			6,643			7,518			7,398
Other Noncurrent Assets
Goodwill	920			920			920			920
Regulatory assets	553			531			567			549
Operating lease right-of-use assets, net	22			—			21			21
Other	48			41			56			52
Total other noncurrent assets	1,543			1,492			1,564			1,542
Total Assets	$	9,183		$	8,555		$	9,397		$	9,338
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	266		$	316		$	227		$	288
Accounts payable to affiliated companies	69			78			68			68
Notes payable to affiliated companies	167			274			399			312
Taxes accrued	162			202			170			219
Interest accrued	29			22			30			30
Current maturities of long-term debt	100			551
Asset retirement obligations	3			6			3			1
Regulatory liabilities	64			57			66			64
Other	74			74			68			75
Total current liabilities	934			1,580			1,031			1,057
Long-Term Debt	2,594			1,589			2,595			2,594
Long-Term Debt Payable to Affiliated Companies	25			25			25			25
Other Noncurrent Liabilities
Deferred income taxes	901			817			942			922
Asset retirement obligations	82			87			78			79
Regulatory liabilities	793			840			760			763
Operating lease liabilities	21			—			20			21
Accrued pension and other post-retirement benefit costs	103			79			101			100
Other	95			93			97			94
Total other noncurrent liabilities	1,995			1,916			1,998			1,979
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2019 and 2018	762			762
Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019							762			762
Additional paid-in capital	2,776			2,776			2,776			2,776
Retained Earnings (Accumulated deficit)	97			(93		)
Retained earnings							210			145
Total equity	3,635			3,445			3,748			3,683
Total Liabilities and Equity	$	9,183		$	8,555		$	9,397		$	9,338

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	190		$	121		$	65		$	69
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	202			199			69			65
Equity component of AFUDC	(9		)	(10		)	(1		)	(3		)
Losses on sales of other assets	—			106
Deferred income taxes	68			9			14			20
Accrued pension and other post-retirement benefit costs	1			3
Contributions to qualified pension plans	(2		)	—
Payments for asset retirement obligations	(7		)	(3		)	—			(1		)
Provision for rate refunds	5			23			3			4
(Increase) decrease in
Receivables	24			(44		)	1			5
Receivables from affiliated companies	51			62			40			35
Inventory	(2		)	(2		)	14			15
Other current assets	(15		)	12			8			(6		)
Increase (decrease) in
Accounts payable	(40		)	(47		)	(19		)	(5		)
Accounts payable to affiliated companies	(9		)	(8		)	—			(8		)
Taxes accrued	(40		)	(31		)	(49		)	(45		)
Other current liabilities	(4		)	19			2			14
Other assets	(10		)	3			(2		)	(10		)
Other liabilities	(25		)	(17		)	(8		)	(4		)
Net cash provided by operating activities	378			395			137			145
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(714		)	(588		)	(217		)	(233		)
Notes receivable from affiliated companies	(74		)	14			—			(463		)
Other	(45		)	(62		)	(10		)	(11		)
Net cash used in investing activities	(833		)	(636		)	(227		)	(707		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,003			—			—			794
Payments for the redemption of long-term debt	(451		)	(3		)
Notes payable to affiliated companies	(107		)	239			87			(236		)
Net cash provided by financing activities	445			236			87			558
Net decrease in cash and cash equivalents	(10		)	(5		)	(3		)	(4		)
Cash and cash equivalents at beginning of period	21			12			17			21
Cash and cash equivalents at end of period	$	11		$	7		$	14		$	17
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	100		$	83		$	66		$	68
Non-cash equity contribution from parent	—			106

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Three Months Ended September 30, 2018 and 2019
Additional
Retained

Common
Paid-in
Earnings
Total
(in millions) Stock
Capital
(Deficit)
Equity
Balance at June 30, 2018 $ 762
$ 2,776
$ (248 ) $ 3,290
Net income —
—
100
100
Balance at September 30, 2018 $ 762
$ 2,776
$ (148 ) $ 3,390

Balance at June 30, 2019 $ 762
$ 2,776
$ 23
$ 3,561
Net income —
—
74
74
Balance at September 30, 2019 $ 762
$ 2,776
$ 97
$ 3,635

Nine Months Ended September 30, 2018 and 2019
Additional
Retained

Common
Paid-in
Earnings
Total
(in millions) Stock
Capital
(Deficit)
Equity
Balance at December 31, 2017 $ 762
$ 2,670
$ (269 ) $ 3,163
Net income —
—
121
121
Contribution from parent^(a)
—
106
—
106
Balance at September 30, 2018 $ 762
$ 2,776
$ (148 ) $ 3,390

Balance at December 31, 2018 $ 762
$ 2,776
$ (93 ) $ 3,445
Net income —
—
190
190
Balance at September 30, 2019 $ 762

$ 2,776

$ 97

$ 3,635



			Additional		Retained
	Common		Paid-in		Earnings			Total
(in millions)	Stock		Capital		(Deficit)			Equity
Balance at December 31, 2018	$	762	$	2,776	$	(93	)	$	3,445
Net income	—		—		69			69
Balance at March 31, 2019	$	762	$	2,776	$	(24	)	$	3,514

Balance at December 31, 2019	$	762	$	2,776	$	145		$	3,683
Net income	—		—		65			65
Balance at March 31, 2020	$	762	$	2,776	$	210		$	3,748


~~(a)~~	~~Represents a non-cash settlement through equity of an intercompany payable from Duke Energy Ohio to its parent.~~

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions)	2019		2018		2019		2018		2020		2019
Operating Revenues	$	807	$	819	$	2,289	$	2,288	$	692	$	768
Operating Expenses
Fuel used in electric generation and purchased power	234		272		720		730		194		257
Operation, maintenance and other	192		198		569		576		186		189
Depreciation and amortization	130		130		393		386		132		131
Property and other taxes	16		16		55		56		22		19
Impairment charges	—		30		—		30
Total operating expenses	572		646		1,737		1,778		534		596
Losses on Sales of Other Assets and Other, net									—		(3		)
Operating Income	235		173		552		510		158		169
Other Income and Expenses, net	8		23		35		36		10		19
Interest Expense	40		42		111		125		43		43
Income Before Income Taxes	203		154		476		421		125		145
Income Tax Expense	47		35		113		104		26		35
Net Income and Comprehensive Income	$	156	$	119	$	363	$	317	$	99	$	110

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	20		$	24		$	15		$	25
Receivables (net of allowance for doubtful accounts of $3 at 2019 and $2 at 2018)	56			52
Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019)							50			60
Receivables from affiliated companies	85			122			76			79
Notes receivable from affiliated companies	213			—			543			—
Inventory	478			422			538			517
Regulatory assets	91			175			78			90
Other	29			35			36			60
Total current assets	972			830			1,336			831
Property, Plant and Equipment
Cost	16,137			15,443			16,481			16,305
Accumulated depreciation and amortization	(5,200		)	(4,914		)	(5,349		)	(5,233		)
Net property, plant and equipment	10,937			10,529			11,132			11,072
Other Noncurrent Assets
Regulatory assets	1,088			982			1,098			1,082
Operating lease right-of-use assets, net	58			—			57			57
Other	211			194			214			234
Total other noncurrent assets	1,357			1,176			1,369			1,373
Total Assets	$	13,266		$	12,535		$	13,837		$	13,276
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	196		$	200		$	157		$	201
Accounts payable to affiliated companies	74			83			66			87
Notes payable to affiliated companies	—			167			—			30
Taxes accrued	29			43			81			49
Interest accrued	54			58			60			58
Current maturities of long-term debt	651			63			503			503
Asset retirement obligations	165			109			181			189
Regulatory liabilities	39			25			46			55
Other	107			107			92			112
Total current liabilities	1,315			855			1,186			1,284
Long-Term Debt	3,407			3,569			3,950			3,404
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	1,119			1,009			1,158			1,150
Asset retirement obligations	659			613			645			643
Regulatory liabilities	1,684			1,722			1,672			1,685
Operating lease liabilities	55			—			54			55
Accrued pension and other post-retirement benefit costs	157			115			148			148
Investment tax credits	161			147			170			164
Other	57			16			30			18
Total other noncurrent liabilities	3,892			3,622			3,877			3,863
Commitments and Contingencies
Equity
Member's Equity	4,502			4,339			4,674			4,575
Total Liabilities and Equity	$	13,266		$	12,535		$	13,837		$	13,276

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	363		$	317		$	99		$	110
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	395			388			133			132
Equity component of AFUDC	(13		)	(28		)	(6		)	(4		)
Impairment charges	—			30
Losses on sale of other assets							—			3
Deferred income taxes	108			94			16			28
Accrued pension and other post-retirement benefit costs	3			5
Contributions to qualified pension plans	(2		)	(8		)
Payments for asset retirement obligations	(31		)	(49		)	(12		)	(11		)
Provision for rate refunds	—			58
(Increase) decrease in
Receivables	1			1			15			4
Receivables from affiliated companies	37			27			3			20
Inventory	(56		)	16			(21		)	(13		)
Other current assets	91			(59		)	25			19
Increase (decrease) in
Accounts payable	1			28			(13		)	8
Accounts payable to affiliated companies	(9		)	(6		)	(21		)	(11		)
Taxes accrued	(14		)	(51		)	43			20
Other current liabilities	(12		)	6			(27		)	(15		)
Other assets	(73		)	29			(4		)	12
Other liabilities	62			(13		)	8			6
Net cash provided by operating activities	851			785			238			308
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(663		)	(619		)	(210		)	(208		)
Purchases of debt and equity securities	(19		)	(42		)	(5		)	(6		)
Proceeds from sales and maturities of debt and equity securities	15			18			2			4
Notes receivable from affiliated companies	(213		)	—			(543		)	—
Other	(33		)	3			(6		)	(11		)
Net cash used in investing activities	(913		)	(640		)	(762		)	(221		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	485			—			544			—
Payments for the redemption of long-term debt	(60		)	(1		)	—			(60		)
Notes payable to affiliated companies	(167		)	40			(30		)	(31		)
Distributions to parent	(200		)	(175		)
Other	—			(1		)
Net cash provided by (used in) financing activities	58			(137		)	514			(91		)
Net (decrease) increase in cash and cash equivalents	(4		)	8
Net decrease in cash and cash equivalents							(10		)	(4		)
Cash and cash equivalents at beginning of period	24			9			25			24
Cash and cash equivalents at end of period	$	20		$	17		$	15		$	20
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	82		$	71		$	70		$	76

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Three Months Ended
September 30, 2018 and 2019
Member's
(in millions) Equity
Balance at June 30, 2018 $ 4,244
Net income 119
Distributions to parent (100 )
Balance at September 30, 2018 $ 4,263

Balance at June 30, 2019 $ 4,546
Net income 156
Distributions to parent (200 )
Balance at September 30, 2019 $ 4,502

Nine Months Ended
September 30, 2018 and 2019
Member's
(in millions) Equity
Balance at December 31, 2017 $ 4,121
Net income 317
Distributions to parent (175 )
Balance at September 30, 2018
$ 4,263

Balance at December 31, 2018 $ 4,339
Net income 363
Distributions to parent (200 )
Balance at September 30, 2019
$ 4,502



	Member's
(in millions)	Equity
Balance at December 31, 2018	$	4,339
Net income	110
Balance at March 31, 2019	$	4,449

Balance at December 31, 2019	$	4,575
Net income	99
Balance at March 31, 2020	$	4,674

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended						Nine Months Ended				Three Months Ended
	September 30,						September 30,				March 31,
(in millions)	2019			2018			2019		2018		2020		2019
Operating Revenues	$	168		$	172		$	956	$	940	$	512	$	579
Operating Expenses
Cost of natural gas	46			54			384		387		162		273
Operation, maintenance and other	78			85			241		252		80		80
Depreciation and amortization	43			40			127		118		45		42
Property and other taxes	14			12			39		36		12		12
Total operating expenses	181			191			791		793		299		407
Operating (Loss) Income	(13		)	(19		)	165		147
Operating Income											213		172
Other Income and Expenses, net	7			6			19		15		12		6
Interest Expense	22			19			65		60		27		22
(Loss) Income Before Income Taxes	(28		)	(32		)	119		102
Income Tax (Benefit) Expense	(10		)	(11		)	22		21
Net (Loss) Income and Comprehensive (Loss) Income	$	(18	)	$	(21	)	$	97	$	81
Income Before Income Taxes											198		156
Income Tax Expense											20		34
Net Income and Comprehensive Income											$	178	$	122

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $5 at 2019 and $2 at 2018)	$	78		$	266
Cash and cash equivalents							$	4		$	—
Receivables (net of allowance for doubtful accounts of $9 at 2020 and $6 at 2019)							191			241
Receivables from affiliated companies	10			22			13			10
Inventory	47			70			39			72
Regulatory assets	48			54			96			73
Other	122			19			13			28
Total current assets	305			431			356			424
Property, Plant and Equipment
Cost	8,234			7,486			8,653			8,446
Accumulated depreciation and amortization	(1,652		)	(1,575		)	(1,703		)	(1,681		)
Net property, plant and equipment	6,582			5,911			6,950			6,765
Other Noncurrent Assets
Goodwill	49			49			49			49
Regulatory assets	306			303			263			290
Operating lease right-of-use assets, net	25			—			23			24
Investments in equity method unconsolidated affiliates	82			64			84			83
Other	42			52			132			121
Total other noncurrent assets	504			468			551			567
Total Assets	$	7,391		$	6,810		$	7,857		$	7,756
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	140		$	203		$	145		$	215
Accounts payable to affiliated companies	50			38			12			3
Notes payable to affiliated companies	262			198			486			476
Taxes accrued	33			84			36			24
Interest accrued	32			31			32			33
Current maturities of long-term debt	—			350
Regulatory liabilities	77			37			91			81
Other	63			58			54			67
Total current liabilities	657			999			856			899
Long-Term Debt	2,384			1,788			2,385			2,384
Other Noncurrent Liabilities
Deferred income taxes	663			551			742			708
Asset retirement obligations	20			19			17			17
Regulatory liabilities	1,154			1,181			1,087			1,131
Operating lease liabilities	24			—			22			23
Accrued pension and other post-retirement benefit costs	6			4			7			3
Other	145			177			121			148
Total other noncurrent liabilities	2,012			1,932			1,996			2,030
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2019 and 2018	1,310			1,160
Common stock, no par value: 100 shares authorized and outstanding at 2020 and 2019							1,310			1,310
Retained earnings	1,028			931			1,310			1,133
Total equity	2,338			2,091			2,620			2,443
Total Liabilities and Equity	$	7,391		$	6,810		$	7,857		$	7,756

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	97		$	81		$	178		$	122
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	129			120			46			42
Equity component of AFUDC							(5		)	—
Deferred income taxes	110			2			12			23
Equity in earnings from unconsolidated affiliates	(6		)	(6		)	(2		)	(2		)
Accrued pension and other post-retirement benefit costs	(7		)	(3		)
Contributions to qualified pension plans	(1		)	—
Provision for rate refunds	9			31			(18		)	7
(Increase) decrease in
Receivables	192			192			65			27
Receivables from affiliated companies	12			(3		)	(3		)	12
Inventory	23			16			33			45
Other current assets	(95		)	58			(9		)	22
Increase (decrease) in
Accounts payable	(93		)	(48		)	(76		)	(44		)
Accounts payable to affiliated companies	12			14			9			(4		)
Taxes accrued	(51		)	11			12			(49		)
Other current liabilities	(6		)	8			(12		)	15
Other assets	(4		)	(4		)	1			(3		)
Other liabilities	(4		)	(5		)	(1		)	(5		)
Net cash provided by operating activities	317			464			230			208
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(751		)	(497		)	(231		)	(209		)
Contributions to equity method investments	(16		)	—
Notes receivable from affiliated companies	—			(11		)
Other	(10		)	(5		)	(5		)	(2		)
Net cash used in investing activities	(777		)	(513		)	(236		)	(211		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	596			100
Payments for the redemption of long-term debt	(350		)	—
Notes payable to affiliated companies	64			(364		)	10			3
Capital contributions from parent	150			300
Net cash provided by financing activities	460			36			10			3
Net decrease in cash and cash equivalents	—			(13		)
Net increase in cash and cash equivalents							4			—
Cash and cash equivalents at beginning of period	—			19			—			—
Cash and cash equivalents at end of period	$	—		$	6		$	4		$	—
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	121		$	89		$	114		$	92

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Three Months Ended September 30, 2018 and 2019
Common
Retained
Total
(in millions) Stock
Earnings
Equity
Balance at June 30, 2018 $ 1,160
$ 904
$ 2,064
Net loss —
(21 ) (21 )
Balance at September 30, 2018 $ 1,160
$ 883
$ 2,043

Balance at June 30, 2019 $ 1,310
$ 1,046
$ 2,356
Net loss —
(18 ) (18 )
Balance at September 30, 2019 $ 1,310
$ 1,028
$ 2,338

Nine Months Ended September 30, 2018 and 2019
Common
Retained
Total
(in millions) Stock
Earnings
Equity
Balance at December 31, 2017 $ 860
$ 802
$ 1,662
Net income —
81
81
Contribution from parent 300
—
300
Balance at September 30, 2018 $ 1,160
$ 883
$ 2,043

Balance at December 31, 2018 $ 1,160
$ 931
$ 2,091
Net income —
97
97
Contribution from parent 150
—
150
Balance at September 30, 2019 $ 1,310
$ 1,028
$ 2,338



	Common		Retained			Total
(in millions)	Stock		Earnings			Equity
Balance at December 31, 2018	$	1,160	$	931		$	2,091
Net income	—		122			122
Balance at March 31, 2019	$	1,160	$	1,053		$	2,213

Balance at December 31, 2019	$	1,310	$	1,133		$	2,443
Net income	—		178			178
Other	—		(1		)	(1		)
Balance at March 31, 2020	$	1,310	$	1,310		$	2,620

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Index to Combined Notes to Condensed Consolidated Financial Statements

The unaudited notes to the Condensed Consolidated Financial Statements that follow are a combined presentation. The following list indicates the registrants to which the footnotes apply.

Applicable Notes

Registrant

Duke Energy

•

Duke Energy Carolinas

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Indiana

•

Piedmont

•

Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.

1. ORGANIZATION AND BASIS OF PRESENTATION

BASIS OF PRESENTATION

These Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all information and notes required by GAAP for annual financial statements and should be read in conjunction with the Consolidated Financial Statements in the Duke Energy Registrants’ combined Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Condensed Consolidated Financial Statements. However, none of the registrants make any representations as to information related solely to Duke Energy or the subsidiaries of Duke Energy other than itself.

These Condensed Consolidated Financial Statements, in the opinion of the respective companies’ management, reflect all normal recurring adjustments necessary to fairly present the financial position and results of operations of each of the Duke Energy Registrants. Amounts reported in Duke Energy’s interim Condensed Consolidated Statements of Operations and each of the Subsidiary Registrants’ interim Condensed Consolidated Statements of Operations and Comprehensive Income are not necessarily indicative of amounts expected for the respective annual periods due to effects of seasonal temperature variations on energy consumption, regulatory rulings, timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

BASIS OF CONSOLIDATION

These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 1311 for additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities.

COVID-19

The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The COVID-19 pandemic has not had a material financial impact on the Duke Energy Registrants as of March 31, 2020; however, the extent to which the COVID-19 pandemic will impact the Duke Energy Registrants during 2020 and beyond is uncertain at this time. The Duke Energy Registrants are monitoring developments closely. See Notes 3, 5, 11, 12 and 15 for information on COVID-19 and steps taken to mitigate the impacts to our business and customers.

NONCONTROLLING INTEREST

Duke Energy maintains a controlling financial interest in certain ~~less-than~~less than wholly owned ~~non-regulated~~nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Condensed Consolidated Balance Sheet.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of earnings, tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the ~~HLBV~~Hypothetical Liquidation at Book Value (HLBV) method in allocating ~~book profit~~income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of ~~profit~~income or loss allocated to each owner for the reporting period. Duke ~~Energy’s North Rosamond solar farm commenced commercial operations resulting in~~Energy has received $103 million for the ~~allocation~~sale of noncontrolling interests to tax equity members for the three months ended March 31, 2020. Duke Energy allocated approximately $49 million and $7 million of losses to ~~the~~ noncontrolling tax equity members ~~of $12 million and $86 million~~utilizing the HLBV method for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, and March 31, 2019, ~~respectively, utilizing the HLBV method.~~



~~FINANCIAL STATEMENTS~~	~~ORGANIZATION AND BASIS OF PRESENTATION~~

respectively.

Other operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.

During the third quarter of 2019, Duke Energy completed a sale of a minority interest in a portion of certain renewable assets to John Hancock. John Hancock's ownership interest in the assets represents a noncontrolling interest. See Note 2 for additional information on the sale.

~~OTHER CURRENT ASSETS~~

Included in Other within Current Assets on the Piedmont Condensed Consolidated Balance Sheets are income taxes receivable of $90 million and $11 million as of September 30, 2019, and December 31, 2018, respectively, and prepaid assets of $30 million and $5 million as of September 30, 2019, and December 31, 2018, respectively. The income taxes receivable relates to increased projected NOL utilization for Piedmont as well as intercompany tax settlements. The prepaid assets relate to replenishment of depleted natural gas supply as required by natural gas supply asset management contracts.

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See Note 1311 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Condensed Consolidated Balance Sheets.


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
					Duke						Duke						Duke						Duke
	Duke		Progress		Energy		Duke		Progress		Energy		Duke		Progress		Energy		Duke		Progress		Energy
	Energy		Energy		Florida		Energy		Energy		Florida		Energy		Energy		Florida		Energy		Energy		Florida
Current Assets
Cash and cash equivalents	$	379	$	82	$	24	$	442	$	67	$	36	$	1,450	$	52	$	12	$	311	$	48	$	17
Other	163		16		16		141		39		39		185		13		13		222		39		39
Other Noncurrent Assets
Other	40		38		—		8		6		—		63		60		—		40		39		—
Total cash, cash equivalents and restricted cash	$	582	$	136	$	40	$	591	$	112	$	75	$	1,698	$	125	$	25	$	573	$	126	$	56

INVENTORY

Provisions for inventory write-offs were not material at ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018.~~2019. The components of inventory are presented in the tables below.


	September 30, 2019																March 31, 2020
			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	$	2,284	$	749	$	1,056	$	710	$	346	$	75	$	325	$	4	$	2,280	$	759	$	1,018	$	678	$	340	$	83	$	319	$	5
Coal	490		153		172		118		54		12		152		—		742		268		246		167		79		10		218		—
Natural gas, oil and other fuel	333		41		206		111		95		41		1		43		302		40		199		111		89		28		1		34
Total inventory	$	3,107	$	943	$	1,434	$	939	$	495	$	128	$	478	$	47	$	3,324	$	1,067	$	1,463	$	956	$	508	$	121	$	538	$	39


	December 31, 2018																December 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,238	$	731	$	1,049	$	734	$	315	$	84	$	312	$	2	$	2,297	$	768	$	1,038	$	686	$	351	$	79	$	318	$	5
Coal	491		175		192		106		86		14		109		—		586		187		186		138		48		15		198		—
Natural gas, oil and other fuel	355		42		218		114		103		28		1		68		349		41		199		110		90		41		1		67
Total inventory	$	3,084	$	948	$	1,459	$	954	$	504	$	126	$	422	$	70	$	3,232	$	996	$	1,423	$	934	$	489	$	135	$	517	$	72

NEW ACCOUNTING STANDARDS

~~Except as noted below, the~~The following new accounting ~~standards~~standard was adopted ~~for 2018 and 2019 had no material impact on the presentation or results of operations, cash flows or financial position of~~by the Duke Energy ~~Registrants.~~Registrants in 2020.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

~~Leases.~~ Current Expected Credit Losses.In ~~February~~June 2016, the FASB issued ~~revised~~new 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. This resulted in a material impact on the presentation for the statement of financial position of thecredit losses. Duke Energy ~~Registrants~~adopted the new accounting guidance for the period ended September 30, 2019, and an immaterial impact to the Duke Energy Registrants' results of operations for the three and nine months ended September 30, 2019, and cash flows for the nine months ended September 30, 2019.

~~Duke Energy elected~~credit losses effective January 1, 2020, using the modified retrospective method of adoption, ~~effective January 1, 2019. Under the modified retrospective method~~which does not require restatement of ~~adoption,~~ prior year ~~reported results are not restated. For adoption,~~results. Duke Energy ~~has elected to apply the following~~did not adopt any practical ~~expedients:~~



~~Practical Expedient~~	~~Description~~
~~Package of transition practical expedients (for leases commenced prior to adoption date and must be adopted as a package)~~	Do not need to 1) reassess whether any expired or existing contracts are/or contain leases, 2) reassess the lease classification for any expired or existing leases and 3) reassess initial direct costs for any existing leases.
~~Short-term lease expedient (elect by class of underlying asset)~~	~~Elect as an accounting policy to not apply the recognition requirements to short-term leases by asset class.~~
~~Lease and non-lease components (elect by class of underlying asset)~~	Elect as an accounting policy to not separate non-lease components from lease components and instead account for each lease and associated non-lease component as a single lease component by asset class.
~~Hindsight expedient (when determining lease term)~~	~~Elect to use hindsight to determine the lease term.~~
~~Existing and expired land easements not previously accounted for as leases~~	~~Elect to not evaluate existing or expired easements under the new guidance and carry forward current accounting treatment.~~
~~Comparative reporting requirements for initial adoption~~	Elect to apply transition requirements at adoption date, recognize cumulative effect adjustment to retained earnings in period of adoption and not apply the new requirements to comparative periods, including disclosures.
~~Lessor expedient (elect by class of underlying asset)~~	Elect as an accounting policy to aggregate non-lease components with the related lease component when specified conditions are met by asset class. Account for the combined component based on its predominant characteristic (revenue or operating lease).

expedients.

Duke Energy ~~evaluated~~recognizes allowances for credit losses based on management's estimate of losses expected to be incurred over the ~~financial statement impact~~lives of ~~adopting~~certain assets or guarantees. Management monitors credit quality, changes in expected credit losses and the ~~standard and monitored industry implementation issues. Under agreements considered leases, where~~ appropriateness of the allowance for credit losses on a forward-looking basis. Management reviews the risk of loss periodically as part of the existing assessment of collectability of receivables.

Duke Energy isreviews the ~~lessee, for the use~~credit quality of ~~certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (barges~~its counterparties as part of its regular risk management process and ~~railcars), land, office space~~requires credit enhancements, such as deposits or letters of credit, as appropriate and ~~PPAs are now recognized on the balance sheet. The~~ as allowed by regulators.

Duke Energy ~~Registrants did not have a material change~~recorded cumulative effects of changes in accounting principles related to ~~the financial statements from~~ the adoption of ~~the~~ new credit loss standard, for ~~contracts where it is~~allowances for credit losses of trade and other receivables, insurance receivables and financial guarantees. These amounts are included in the ~~lessor.~~Condensed Consolidated Balance Sheets in Receivables, Receivables of VIEs, Other Noncurrent Assets and Other Noncurrent Liabilities. See ~~Note 5~~Notes 4 and 12 for ~~further~~more information.

Duke Energy recorded an adjustment for the cumulative effect of a change in accounting principle due to the adoption of this standard on January 1, 2020, as shown in the table below:



	January 1, 2020
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Piedmont
Total pretax impact to Retained Earnings	$	120	$	16	$	2	$	1	$	1	$	1

The following new accounting standard has been issued but not yet adopted by the Duke Energy Registrants as of ~~September 30, 2019.~~March 31, 2020.

~~Credit Losses.~~Reference Rate Reform. In ~~June 2016,~~March 2020, the FASB issued new accounting guidance for ~~credit losses.~~reference rate reform. This guidance ~~establishes~~is elective and provides expedients to facilitate financial reporting for the ~~new CECL impairment model applicable to certain financial assets, including trade~~anticipated transition away from the London Inter-bank Offered Rate (LIBOR) and other ~~receivables, net investments in leases, and debt securities classified as held-for-sale investments.~~interbank reference rates by the end of 2021. The ~~model also applies to financial guarantees.~~optional expedients are effective for modification of existing contracts or new arrangements executed between March 12, 2020, through December 31, 2022.

~~For~~ Duke Energy ~~this guidance is effective for interim~~has variable-rate debt and ~~annual periods beginning January 1, 2020. This guidance will be applied using~~manages interest rate risk by entering into financial contracts including interest rate swaps that are generally indexed to LIBOR. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination to fully adapt to a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of January 1, 2020. The updated guidance requires Duke Energy to establish an allowance for credit losses based on management's estimate of losses expected to be incurred over the life of the asset or guarantee.post-LIBOR environment. Duke Energy is ~~currently~~assessing these financial arrangements and is evaluating the ~~impact~~use of ~~adopting this standard.~~optional expedients outlined in the new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that extend beyond 2021.

2. BUSINESS SEGMENTS

Duke Energy

Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The Electric Utilities and Infrastructure segment primarily includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The Gas Utilities and Infrastructure segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky, and Duke Energy's natural gas storage and midstream pipeline investments.

The Commercial Renewables segment is primarily comprised of nonregulated utility-scale wind and solar generation assets located throughout the U.S. On April 24, 2019, Duke Energy executed an agreement to sell a minority interest in a portion of certain renewable assets. The sale closed on September 6, 2019, and resulted in pretax proceeds to Duke Energy of $415 million. The portion of Duke Energy’s commercial renewables energy portfolio sold includes 49% of 37 operating wind, solar and battery storage assets and 33% of 11 operating solar assets across the U.S. Duke Energy retained control of these assets, and, therefore, no gain or loss was recognized on the Condensed Consolidated Statements of Operations. The difference between the fair value of the consideration received and the carrying value of the noncontrolling interest claim on net assets of $465 million, net of a tax benefit of $8 million, was recorded in equity.



~~FINANCIAL STATEMENTS~~	~~BUSINESS SEGMENTS~~

During 2019, Duke Energy evaluated recoverability of the wind and solar generation assets included in the minority interest sale as a result of the portfolio fair value of consideration received being less than the carrying value of the assets and determined the assets were all recoverable. Additionally, in 2019, Duke Energy evaluated recoverability of its renewable merchant plants principally located in the Electric Reliability Council of Texas West market due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Duke Energy determined that the assets were not impaired because the carrying value of $160 million approximates the aggregate estimated future cash flows and further testing was not required. A continued decline in energy market pricing would likely result in a future impairment.

The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of interest expense on holding company debt, unallocated corporate costs, Duke Energy’s wholly owned captive insurance company, Bison, and Duke Energy's interest in ~~NMC.~~National Methanol Company.

~~Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.~~

Three Months Ended September 30, 2019
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Total
Unaffiliated revenues $ 6,569
$ 225
$ 138
$ 6,932
$ 8
$ —
$ 6,940
Intersegment revenues 8
24
—
32
17
(49 ) —
Total revenues $ 6,577
$ 249
$ 138
$ 6,964
$ 25
$ (49 ) $ 6,940
Segment income (loss)^(a)
$ 1,385
$ 26
$ 40
$ 1,451
$ (124 ) $ —
$ 1,327
Add back noncontrolling interests^(b)
(19 )
Add back preferred stock dividend 15
Net income $ 1,323
Segment assets $ 133,296
$ 13,424
$ 5,278
$ 151,998
$ 3,734
$ 185
$ 155,917

Three Months Ended September 30, 2018
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Total
Unaffiliated revenues $ 6,253
$ 232
$ 127
$ 6,612
$ 16
$ —
$ 6,628
Intersegment revenues 7
24
—
31
18
(49 ) —
Total revenues $ 6,260
$ 256
$ 127
$ 6,643
$ 34
$ (49 ) $ 6,628
Segment income (loss)^(c)(d)(e)
$ 1,167
$ 17
$ (62 ) $ 1,122
$ (44 ) $ —
$ 1,078
Add back noncontrolling interests (16 )
Loss from discontinued operations, net of tax 4
Net income $ 1,066

Nine Months Ended September 30, 2019
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Total
Unaffiliated revenues $ 17,357
$ 1,239
$ 362
$ 18,958
$ 18
$ —
$ 18,976
Intersegment revenues 24
72
—
96
53
(149 ) —
Total revenues $ 17,381
$ 1,311
$ 362
$ 19,054
$ 71
$ (149 ) $ 18,976
Segment income (loss)^(a)
$ 2,944
$ 292
$ 139
$ 3,375
$ (328 ) $ —
$ 3,047
Add back noncontrolling interests^(b)
(110 )
Add back preferred stock dividend 27
Net income $ 2,964



FINANCIAL STATEMENTS	BUSINESS SEGMENTS

Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.



	Three Months Ended March 31, 2020
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	5,174	$	640	$	129	$	5,943	$	6		$	—		$	5,949
Intersegment revenues	9		24		—		33		17			(50		)	—
Total revenues	$	5,183	$	664	$	129	$	5,976	$	23		$	(50	)	$	5,949
Segment income (loss)^(a)	$	705	$	249	$	57	$	1,011	$	(112	)	$	—		$	899
Add: Noncontrolling interests^(b)															(48		)
Add: Preferred stock dividend															39
Net income															$	890
Segment assets	$	134,838	$	14,098	$	6,184	$	155,120	$	4,964		$	(12	)	$	160,072


	Nine Months Ended September 30, 2018																		Three Months Ended March 31, 2019
	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			Total			Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	16,783	$	1,229	$	347		$	18,359	$	47		$	—		$	18,406		$	5,321	$	732	$	106	$	6,159	$	4		$	—		$	6,163
Intersegment revenues	23		72		—			95		54			(149		)	—			8		24		—		32		17			(49		)	—
Total revenues	$	16,806	$	1,301	$	347		$	18,454	$	101		$	(149	)	$	18,406		$	5,329	$	756	$	106	$	6,191	$	21		$	(49	)	$	6,163
Segment income (loss)^(h)	$	2,492	$	161	$	(4	)	$	2,649	$	(446	)	$	—		$	2,203		$	750	$	226	$	13	$	989	$	(89	)	$	—		$	900
Add back noncontrolling interests																(12		)
Loss from discontinued operations, net of tax																(1		)
Add: Noncontrolling interests^(b)																																	(7		)
Net income																$	2,190																$	893

(a)

~~Electric Utilities and Infrastructure~~Other includes a ~~reduction~~$98 million reversal, included in Operations, maintenance and other on the Condensed Consolidated Statements of ~~a prior year impairment at Citrus County CC related~~Operations, of 2018 severance costs due to the ~~plant's cost cap.~~partial settlement of the Duke Energy Carolina's 2019 North Carolina rate case. See Note 3 for additional information.


(b)	Includes the allocation of losses to noncontrolling tax equity members. See Note 1 for additional information.


~~(c)~~	~~All segments include adjustments of prior year tax estimates related to the Tax Act.~~


~~(d)~~	~~Commercial Renewables includes an impairment charge related to goodwill.~~


~~(e)~~	~~Other includes costs to achieve the Piedmont acquisition.~~


~~(f)~~	Electric Utilities and Infrastructure includes regulatory and legislative charges related to rate case orders, settlements or other actions of regulators or legislative bodies. See Note 3 for additional information.


~~(g)~~	~~Gas Utilities and Infrastructure includes an impairment of the investment in Constitution. See Note 3 for additional information.~~


~~(h)~~	~~Other includes the loss on the sale of Beckjord described below and a valuation allowance recorded against the AMT credits.~~

~~In February 2018, Duke Energy sold Beckjord, a nonregulated facility retired during 2014, and recorded a pretax loss of $106 million within~~ ~~Gains (Losses) on Sales of Other Assets and Other, net~~ and $1 million within Operation, maintenance and other on Duke Energy's Condensed Consolidated Statements of Operations for the nine months ended September 30, 2018. The sale included the transfer of coal ash basins and other real property and indemnification from any and all potential future claims related to the property, whether arising under environmental laws or otherwise.

Duke Energy Ohio

Duke Energy Ohio has 2 reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. The remainder of Duke Energy Ohio's operations is presented as Other.


	Three Months Ended September 30, 2019														Three Months Ended March 31, 2020
	Electric		Gas		Total										Electric		Gas		Total
	Utilities and		Utilities and		Reportable										Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total		Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	408	$	81	$	489	$	—		$	—		$	489	$	346	$	152	$	498	$	—		$	—		$	498
Segment income/Net (loss) income	$	62	$	13	$	75	$	(1	)	$	—		$	74	$	30	$	36	$	66	$	(1	)	$	—		$	65
Segment assets	$	6,107	$	3,049	$	9,156	$	30		$	(3	)	$	9,183	$	6,238	$	3,135	$	9,373	$	26		$	(2	)	$	9,397


	Three Months Ended September 30, 2018										Three Months Ended March 31, 2019
	Electric		Gas		Total						Electric		Gas		Total
	Utilities and		Utilities and		Reportable						Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Total		Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	373	$	84	$	457	$	12	$	469	$	355	$	176	$	531	$	—		$	531
Segment income/Net income	$	85	$	12	$	97	$	3	$	100
Segment income/Net (loss) income											$	36	$	35	$	71	$	(2	)	$	69

Nine Months Ended September 30, 2019
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Total
Total revenues $ 1,099
$ 354
$ 1,453
$ —
$ 1,453
Segment income/Net (loss) income $ 129
$ 65
$ 194
$ (4 ) $ 190



~~FINANCIAL STATEMENTS~~	~~BUSINESS SEGMENTS~~

Nine Months Ended September 30, 2018
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Total
Total revenues $ 1,055
$ 361
$ 1,416
$ 36
$ 1,452
Segment income/Net (loss) income^(a)
$ 157
$ 64
$ 221
$ (100 ) $ 121

~~(a) Other includes the loss on the sale of Beckjord described above.~~

3. REGULATORY MATTERS

RATE-RELATED INFORMATION

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



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Carolinas and Duke Energy Progress

~~Hurricane Florence, Hurricane Michael and Winter Storm Diego Deferral~~COVID-19 Filings

North Carolina

On ~~December 21, 2018,~~March 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring a state of emergency due to the COVID-19 pandemic. In an effort to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, Duke Energy Carolinas and Duke Energy Progress filed a request with the NCUC ~~petitions~~seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for ~~approval~~checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to ~~defer~~have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the ~~incremental costs incurred in connection~~other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the ~~response~~use of credit cards or debit cards to ~~Hurricane Florence, Hurricane Michael and Winter Storm Diego~~pay residential electric utility bills, effective March 21, 2020. The NCUC granted the companies’ request on March 20, 2020.

On March 31, 2020, the governor issued Executive Order No. 124, which, in addition to ~~a regulatory asset for recovery~~requiring the steps in the ~~next base rate case. The~~NCUC order noted above, stated that nothing in Executive Order No. 124 shall relieve a customer of its obligation to pay bills for receipt of utility services provided. Executive Order No. 124 remains in effect for 60 days unless otherwise rescinded or replaced with a superseding Executive Order.

On March 31, 2020, the Carolina Utility Customers Association (CUCA) filed a petition with the NCUC to temporarily suspend minimum demand charges for commercial and industrial customers. On April 2, 2020, the NCUC issued an order ~~requesting comments on the deferral positions. On March 5, 2019,~~requiring the North Carolina Public Staff (Public Staff) ~~filed comments.~~and Duke Energy Carolinas, Duke Energy Progress and other utilities to file responses. On April ~~2, 2019,~~9, 2020, Duke Energy Carolinas and Duke Energy Progress filed responses to CUCA’s petition opposing CUCA’s request. The companies assert that voiding commission-approved tariffs and allowing all commercial and industrial customers on the requested rate schedules to avoid paying a portion of their bills is not legally permissible and would result in these costs unfairly being shifted to other customers that are already paying their respective fair share of similar fixed components. Pursuant to the NCUC’s April 2 order, reply comments ~~which included revised estimates of approximately $553 million in incremental operation~~were filed by CUCA, the Public Staff and ~~maintenance expenses ($171 million and $382 million for~~ Duke Energy Carolinas and Duke Energy Progress respectively) and approximately $96 million in capital costs ($20 million and $76 million for Duke Energy Carolinas and Duke Energy Progress, respectively). On September 30, 2019, Duke Energy Carolinas requested thaton April 15, 2020. A final order from the NCUC ~~consolidate its pending deferral~~deciding CUCA's request ~~with its general rate case filed on that date. On October 30, 2019, Duke Energy Progress requested that the NCUC consolidate its pending deferral request with its general rate case filed on that date.~~is pending. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of ~~these matters.~~this matter.

South Carolina

On March 13, 2020, Governor Henry McMaster issued Executive Order No. 2020-08 declaring a state of emergency due to the COVID-19 pandemic. The governor also issued a letter on March 14, 2020, to the ORS Executive Director regarding the suspension of disconnection of essential utility services for nonpayment. On March 16, 2020, citing the governor’s letter, the ORS filed a request asking the PSCSC to grant waivers so that utilities could suspend disconnections of utility services for nonpayment. Duke Energy Carolinas and Duke Energy Progress supported such motion. On March 18, 2020, the PSCSC issued an order approving such waivers, and also approved waivers for regulations related to late fees and reconnect fees. The PSCSC's order also required utilities to track the financial impacts of actions taken pursuant to such waivers for possible reporting to the PSCSC.

On April 30, 2020, the ORS requested the PSCSC grant a waiver of the applicable regulations to allow customers the flexibility to obtain deferred payment plans longer than 6 months for past-due amounts. On May 5, 2020, Duke Energy Carolinas and Duke Energy Progress filed responsive comments stating that while utility bills will remain due, Duke Energy Carolinas and Duke Energy Progress do not plan to immediately reinstitute disconnection upon the expiration of the state of emergency and intend to work through a ~~deferral~~potential grace period as economic recovery begins. Duke Energy Carolinas and Duke Energy Progress also concurred with the observation of the ORS that reduced usage is impacting the fixed cost recovery and revenue assumptions included in rates. Those costs include not only ongoing operational and financing costs necessary to serve customers, but also the borrowings necessary to support extended payment arrangements that will be an important part of emerging from the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress will continue to track such costs, lost revenues and potential cost savings for future evaluation by the PSCSC.

Additionally, on May 8, 2020, the ORS filed a motion for the PSCSC to solicit comments from utilities and interested stakeholders regarding measures to be taken to mitigate impacts of COVID-19 on utility customers and require recordkeeping. In a detailed motion, the ORS specifically asked the PSCSC to: (1) solicit input from utilities regarding the temporary mitigation measures to address COVID-19; (2) request ~~for these storms~~utilities to inform the PSCSC of the plans utilities have to return to normalized operations; (3) require utilities to track revenue impacts, incremental costs and savings related to COVID-19 and file the findings with the PSCSC on ~~January 11, 2019, which also included~~ a ~~request for the continuation of prior deferrals requested for ice storms~~quarterly basis; and ~~Hurricane Matthew, and on January 30, 2019,~~(4) include any other matters that the PSCSC ~~issued~~believes should be addressed. The ORS requests that such comments be filed within 30 days of a ~~directive~~PSCSC order approving the ~~deferral request, followed by an order issued on February 21, 2019. On March 15, 2019,~~motion. Duke Energy Carolinas and Duke Energy Progress filed a request with FERC requesting permission to defer transmission-related storm costs that would be charged to wholesale transmission customers through Duke Energy Progress' Open Access Transmission Tariff (OATT) and to recover those costs from wholesale transmission customers over a three-year recovery period. FERC acceptedcannot predict the ~~filing on May 14, 2019, which allows Duke Energy Progress to proceed with the proposed cost deferral and recovery.~~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 represented an approximate 13.6% increase in annual base revenues. The request for rate increase was driven by capital investments subsequent to the previous base rate case, including the ~~W.S.~~William States Lee ~~CC,~~Combined Cycle Facility, grid improvement projects, AMI, investments in customer service technologies, costs of complying with CCR regulations and the Coal Ash Act and recovery of costs related to licensing and development of the William States Lee III Nuclear Station.

On February 28, 2018, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9% and a capital structure of 52% equity and 48% debt. As a result of the settlement, Duke Energy Carolinas recorded a pretax charge of approximately $4 million in the first quarter of 2018 to Operation, maintenance and other on the Condensed Consolidated Statements of Operations.

On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction. As a result of the order, Duke Energy Carolinas recorded a pretax charge of approximately $150 million to Impairment charges and Operation, maintenance and other on the Condensed Consolidated Statements of Operations. The charge was primarily related to the denial of a return on the Lee Nuclear Project and the assessment of a $70 million management penalty by reducing the annual recovery of deferred coal ash costs by $14 million per year over a five-year recovery period. On July 27, 2018, NCUC approved Duke Energy Carolinas' compliance filing. As a result, revised customer rates were effective on August 1, 2018.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On July 20, 2018, the North Carolina Attorney General filed a Notice of Appeal to the North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction issued by the NCUC. The Attorney General contends the commission’s order should be reversed and remanded, as it is in excess of the commission’s statutory authority; affected by errors of law; unsupported by competent, material and substantial evidence in view of the entire record as submitted; and arbitrary or capricious. The Sierra Club, North Carolina Sustainable Energy Association, North Carolina Justice Center, North Carolina Housing Coalition, Natural Resource Defense Council and Southern Alliance for Clean Energy also filed Notices of Appeal to the North Carolina Supreme Court. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court, which contends the commission’s June 22, 2018, order should be reversed and remanded, as it is affected by errors of law, and is unsupported by substantial evidence with regard to the commission’s failure to consider substantial evidence of coal ash related environmental violations. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Carolinas and Duke Energy Progress appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. On November 29, 2018, the North Carolina Supreme Court adopted a schedule for briefing set forth in the motion to consolidate the Duke Energy Carolinas and Duke Energy Progress appeals. ~~Appellant’s brief was~~Appellant briefs were filed on April 26, 2019. The Appellee response briefs were filed on September 25, 2019. Oral arguments before the North Carolina Supreme Court were held on March 11, 2020. Duke Energy Carolinas cannot predict the outcome of this matter.

2019 North Carolina Rate Case

On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which ~~represents~~represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request iswas $445 million, which iswas offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase iswas driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas ~~requests~~requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the commission.

On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:

Removal of deferred storm costs from the rate case;

Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;

Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing; and

Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.

On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. The joint motion suggests, health and safety permitting, that the commission consider the possibility of holding the consolidated hearing in July. If the NCUC grants the joint motion, Duke Energy Carolinas expects the NCUC to issue an order on its net rate increase by the end of the year. Duke Energy Carolinas cannot predict the outcome of this matter.

2018 South Carolina Rate Case

On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million, which ~~represents~~represented an approximate 10% increase in retail revenues. The request for rate increase was driven by capital investments and environmental compliance progress made by Duke Energy Carolinas since its previous rate case, including the further implementation of Duke Energy Carolinas’ generation modernization program, which consists of retiring, replacing and upgrading generation plants, investments in customer service technologies and continued investments in base work to maintain its transmission and distribution systems. The request included net tax benefits resulting from the Tax Act of $66 million to reflect the change in ongoing tax expense, primarily from the reduction in the federal income tax rate from 35% to 21%. The request also included $46 million to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change and benefits of $17 million from a reduction in North Carolina state income taxes allocable to South Carolina (EDIT Rider).



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Carolinas also requested approval of its proposed Grid Improvement Plan (GIP), adjustments to its Prepaid Advantage Program and a variety of accounting orders related to ongoing costs for environmental compliance, including recovery over a five-year period of $242 million of deferred coal ash related compliance costs, grid investments between rate changes, incremental depreciation expense, a result of new depreciation rates from the depreciation study approved in the 2017 North Carolina Rate Case above, and the balance of development costs associated with the cancellation of the Lee Nuclear Project. Finally, Duke Energy Carolinas sought approval to establish a reserve and accrual for end-of-life nuclear costs for nuclear fuel and materials and supplies. On March 8, 2019, the ORS moved to establish a new and separate hearing docket to review and consider the GIP proposed by Duke Energy Carolinas. Subsequently, on March 12, 2019, the ORS and Duke Energy Carolinas executed a Stipulation resolving the ORS’s motion. The Stipulation provided that costs incurred for the GIP after January 1, 2019, ~~will~~would be deferred with a return, subject to evaluation in a future rate ~~proceeding, and that Duke Energy Carolinas will refile for consideration of the GIP in a new docket for resolution by January 1, 2020.~~proceeding. The Stipulation was approved by the PSCSC on June 19, 2019. On December 16, 2019, Duke Energy Carolinas and Duke Energy Progress filed a Joint Petition to Establish an Informational Docket for Review and Consideration of Grid Improvement Plans through which Duke Energy Carolinas and Duke Energy Progress would provide interested stakeholders information on the companies' grid activities. The PSCSC requested parties comment on procedural matters by January 31, 2020; accordingly, various groups filed comments, none of which opposed an informational docket. Duke Energy Carolinas cannot predict the outcome of this matter.

After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:

Approval of cancellation of the Lee Nuclear Project, with Duke Energy Carolinas maintaining the Combined Operating License;

Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of a return on the deferred balance of costs;

Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas' WACC;

Denial of recovery of $115 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;

Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;

Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and

Approval of a $17 million decrease through the EDIT Rider related to reductions in the North Carolina state income tax rate from 6.9% to 2.5% to be returned over a five-year period.



~~FINANCIAL STATEMENTS~~	~~REGULATORY MATTERS~~

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the commission on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equity and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas ~~intends to file~~filed a notice of appeal ~~within 30 days~~on November 15, 2019, with the Supreme Court of ~~the date of the order with~~South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme ~~Court.~~Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal. Initial briefs were filed on April 21, 2020. Response briefs and reply briefs are due July 6, 2020, and August 11, 2020, respectively. Also on April 21, 2020, the South Carolina Energy User's Committee filed a brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Based on legal analysis and ~~Duke Energy Carolinas' intention to file such an~~the filing of the appeal, Duke Energy Carolinas has not recorded an adjustment for its deferred coal ash costs. Duke Energy Carolinas cannot predict the outcome of this matter.

~~FERC Formula Rate Matter~~

On July 31, 2017, PMPA filed a complaint with FERC alleging that Duke Energy Carolinas misapplied the formula rate under the PPA between the parties by including in its rates amortization expense associated with regulatory assets and recorded in a certain account without FERC approval. On February 15, 2018, FERC issued an order ruling in favor of PMPA and ordered Duke Energy Carolinas to refund to PMPA all amounts improperly collected under the PPA. Duke Energy Carolinas has issued to PMPA and similarly situated wholesale customers refunds of approximately $25 million. FERC also set the matter for settlement and hearing. PMPA and other customers filed a protest to Duke Energy Carolinas' refund report claiming that the refunds are inadequate in that (1) Duke Energy Carolinas invoked the limitations periods in the contracts to limit the time period for which the refunds were paid and the customers disagree that this limitation applies, and (2) Duke Energy Carolinas refunded only amounts recovered through a certain account and the customers have asserted that the order applies to all regulatory assets. On July 3, 2018, FERC issued an order accepting Duke Energy Carolinas' refund report and ruling that these two claims are outside the scope of FERC's February order. The settlement agreements and revised formula rates for all parties to the proceeding were filed on December 28, 2018. On April 2, 2019, FERC issued an order approving the settlement agreement as filed. Since then, Duke Energy Carolinas has implemented the terms of the settlement in rates with all wholesale customers, including non-intervening customers. On July 25, 2019, Duke Energy Carolinas received FERC approval for the accounting treatment requested for certain assets included in the settlement agreements. This is the final approval needed from FERC and concludes this proceeding.

~~Sale of Hydroelectric (Hydro) Plants~~

In May 2018, Duke Energy Carolinas entered an agreement for the sale of five hydro plants with a combined 18.7-MW generation capacity in the Western Carolinas region to Northbrook Energy. The completion of the transaction was subject to approval from FERC for the four FERC-licensed plants, as well as other state regulatory agencies and was contingent upon regulatory approval from the NCUC and PSCSC to defer the total estimated loss on the sale of approximately $40 million. On July 5, 2018, Duke Energy Carolinas filed with NCUC for approval of the sale of the five hydro plants to Northbrook, to transfer the CPCNs for the four North Carolina hydro plants and to establish a regulatory asset for the North Carolina retail portion of the difference between sales proceeds and net book value. On June 5, 2019, the NCUC issued an order approving the transfer of the hydro plants from Duke Energy Carolinas to Northbrook, granting deferral accounting and denying the Public Staff's motion for reconsideration.

On August 28, 2018, Duke Energy Carolinas filed with PSCSC an Application for Approval of Transfer and Sale of Hydroelectric Generation Facilities, Acceptance for Filing of a Power Purchase Agreement and an Accounting Order to Establish a Regulatory Asset. On September 10, 2018, the ORS provided a letter to the commission stating its position on the application and on September 18, 2018, Duke Energy Carolinas requested this matter be carried over to allow Duke Energy Carolinas time to discuss certain accounting issues with the ORS. At their June 26, 2019, agenda meeting, the PSCSC voted to approve the transfer and sale subject to the recommendation of the ORS that the issuance of an Accounting Order will not preclude the ORS, the commission or any other party from addressing the reasonableness of these costs, any return sought and including any carrying costs in the next rate case.

On August 9, 2018, Duke Energy Carolinas and Northbrook filed a joint Application for Transfer of Licenses with the FERC. On December 27, 2018, the FERC issued its Order Approving Transfer of Licenses (“Order”) for the four FERC-licensed hydro plants. On January 18, 2019, Duke Energy Carolinas and Northbrook Carolina Hydro II, LLC requested a six-month extension of time to comply with the requirement of the Order that Northbrook submit to FERC certified copies of all instruments of conveyance and signed acceptance sheets within 60 days of the date of the Order. On February 14, 2019, FERC issued an order granting extensions until August 26, 2019, to comply with the requirements of the December 27, 2018, Order.

The closing occurred on August 16, 2019. A regulatory asset was established for approximately $32 million, which represents the total deferral amount for North Carolina and South Carolina retail. The North Carolina retail portion will be amortized pursuant to an order from the NCUC. Duke Energy Carolinas will purchase all the capacity and energy generated by these facilities at the avoided cost for five years through power purchase agreements.

Duke Energy 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 represented an approximate 14.9% increase in annual base revenues. Subsequent to the filing, Duke Energy Progress adjusted the requested amount to $420 million, representing an approximate 13% increase. The request for rate increase was driven by capital investments subsequent to the previous base rate case, costs of complying with CCR regulations and the Coal Ash Act, costs relating to storm recovery, investments in customer service technologies and recovery of costs associated with renewable purchased power.

On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation.



FINANCIAL STATEMENTS	REGULATORY MATTERS

The order also impacted certain amounts that were similarly recorded on Duke Energy Carolinas' Condensed Consolidated Balance Sheets. As a result of the order, Duke Energy Progress and Duke Energy Carolinas recorded pretax charges of $68 million and $14 million, respectively, in the first quarter of 2018 to Impairment charges, Operation, maintenance and other and Interest Expense on the Condensed Consolidated Statements of Operations. Revised customer rates became effective on March 16, 2018.

On May 15, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court from the NCUC's February 23, 2018, ~~Order.~~order. The Public Staff contends the NCUC’s order should be reversed and remanded, as it is affected by errors of law, and is unsupported by competent, material and substantial evidence in view of the entire record as submitted. The North Carolina Attorney General and Sierra Club also filed Notices of Appeal to the North Carolina Supreme Court from the February 23, 2018, ~~Order.~~order. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Progress and Duke Energy Carolinas appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. ~~Appellant’s brief was~~Appellant briefs were filed on April 26, 2019. The Appellee response briefs were filed on September 25, 2019. Oral arguments before the North Carolina Supreme Court were held on March 11, 2020. Duke Energy Progress cannot predict the outcome of this matter.

2019 North Carolina Rate Case

On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which ~~represents~~represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request iswas $586 million, which iswas offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase iswas driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress seeks to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requests rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020. On May 6, 2020, Duke Energy Progress, Duke Energy Carolinas and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. The joint motion suggests, health and safety permitting, that the commission consider the possibility of holding the consolidated hearing in July. If the NCUC grants the joint motion, Duke Energy Progress expects the NCUC to issue an order on its net rate increase by the end of the year. Duke Energy Progress cannot predict the outcome of this matter.

Hurricane Dorian

Hurricane Dorian reached the Carolinas in September 2019 as a Category 2 hurricane making landfall within Duke Energy Progress’ service territory. Approximately 270,000 North Carolina customers and 30,000 South Carolina customers were impacted by the slow-moving storm that brought high winds, tornadoes and heavy rain. With storm-response mobilization occurring in preparation for the storm and the assistance of mutual aid partners, full restoration was accomplished within four days for all customers able to receive service. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately ~~$208~~$177 million with an additional ~~$10~~$4 million in capital investments made for restoration efforts. Approximately ~~$182~~$151 million and $179 million of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of ~~September~~March 31, 2020, and December 31, 2019, respectively. A request for an accounting order to defer incremental storm costs associated with Hurricane Dorian was included in Duke Energy Progress' October 30, ~~2019. The balance~~2019, general rate case filing with the NCUC. Duke Energy Progress cannot predict the outcome of this matter.

On February 7, 2020, a petition was filed with the PSCSC in the 2019 storm deferrals docket requesting deferral of approximately $22 million in operation and maintenance expenses ~~are included in Operation, maintenance~~to an existing storm deferral balance previously approved by the PSCSC. The PSCSC voted to approve the request on March 4, 2020, and ~~other~~issued a final order on ~~the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019.~~April 7, 2020.

2018 South Carolina Rate Case

On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million, which ~~represents~~represented an approximate 10.3% increase in annual base revenues. The request for rate increase was driven by capital investments and environmental compliance progress made by Duke Energy Progress since its previous rate case, including the further implementation of Duke Energy Progress’ generation modernization program, which consists of retiring, replacing and upgrading generation plants, investments in customer service technologies and continued investments in base work to maintain its transmission and distribution systems. The request included a decrease resulting from the Tax Act of $17 million to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%. The request also included $10 million to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change (EDIT Rider) and a $12 million increase due to the expiration of EDITs related to reductions in North Carolina state income taxes allocable to South Carolina.

Duke Energy Progress also requested approval of its proposed GIP, approval of a Prepaid Advantage Program and a variety of accounting orders related to ongoing costs for environmental compliance, including recovery over a five-year period of $51 million of deferred coal ash related compliance costs, AMI deployment, grid investments between rate changes and regulatory asset treatment related to the retirement of a generating plant located in Asheville, North Carolina. Finally, Duke Energy Progress sought approval to establish a reserve and accrual for end-of-life nuclear costs for materials and supplies and nuclear fuel. On March 8, 2019, the ORS moved to establish a new and separate hearing docket to review and consider the GIP proposed by Duke Energy Progress. Subsequently, on March 12, 2019, the ORS and Duke Energy Carolinas executed a Stipulation resolving the ORS’s motion, and Duke Energy Progress agreed to the Stipulation, as did other parties in the rate case. The Stipulation ~~provides~~provided that costs incurred for the GIP after January 1, 2019, ~~will~~would be deferred with a return, with all costs subject to evaluation in a future rate proceeding, and that Duke Energy Progress ~~will~~would refile for consideration of the GIP in a new docket for resolution by January 1, 2020. The Stipulation was approved by the PSCSC on June 19, 2019. On December 16, 2019, Duke Energy Progress and Duke Energy Carolinas filed a Joint Petition to Establish an Informational Docket for Review and Consideration of Grid Improvement Plans through which Duke Energy Progress and Duke Energy Carolinas would provide interested stakeholders information on the companies' grid activities. The PSCSC requested parties comment on procedural matters by January 31, 2020; accordingly, various groups filed comments, none of which opposed an informational docket. Duke Energy Progress cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:

Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;

Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;

Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;



~~FINANCIAL STATEMENTS~~	~~REGULATORY MATTERS~~

Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and

Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the commission on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equity and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress ~~intends to file~~filed a notice of appeal ~~within 30 days of the date of the order~~on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina ~~Supreme Court.~~on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal. Initial briefs were filed on April 21, 2020. Response briefs and reply briefs are due July 6, 2020, and August 11, 2020, respectively. Based on legal analysis and ~~Duke Energy Progress' intention to file such an~~the filing of the appeal, Duke Energy Progress has not recorded an adjustment for its deferred coal ash costs. 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 ~~worked with~~retired the ~~local natural gas distribution company~~376-MW Asheville coal-fired plant on January 29, 2020, at which time the net book value, including associated ash basin closure costs, of $214 million was transferred from Generation facilities to ~~upgrade~~be retired, net to Regulatory assets within Current Assets and ~~lease an existing natural gas pipeline to serve~~Other Noncurrent Assets on the ~~natural gas plant. The lease for the new pipeline became effective on March 2, 2019.~~Condensed Consolidated Balance Sheets.

On March 28, 2016, the NCUC issued an order approving a ~~CPCN~~Certificate of Public Convenience and Necessity (CPCN) for the new combined-cycle natural gas plants with an estimated cost of $893 million, but ~~is requiring~~required Duke Energy Progress to refile for CPCN approval for the contingent simple cycle unit.

On ~~March 28,~~December 27, 2019, Asheville Combined Cycle Power Block 1 and the common systems that serve both combined cycle units went into commercial operation. Power Block 1 consists of the Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator (which together form the first combined cycle unit approved in the CPCN Order). Power Block 2 consists of the Unit 7 Combustion Turbine and Unit 8 Steam Turbine Generator (which together form the second combined cycle unit approved in the CPCN Order). Duke Energy Progress ~~filed an annual progress report for~~placed the ~~construction~~Unit 7 Combustion Turbine portion of ~~the combined-cycle plants with the NCUC, with an estimated cost of $893 million. Site preparation activities for the combined-cycle plants are complete and construction of these plants began~~Power Block 2 into commercial operation in ~~2017, with an expected in-service date in late 2019.~~simple-cycle mode on January 15, 2020. The Unit 8 Steam Turbine Generator went into commercial operation on April 5, 2020.

On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility. On March 22, 2019, Duke Energy Progress and the Public Staff filed a Joint Proposed Order. On May 10, 2019, the NCUC issued an Order Granting Certificate of Public Convenience and Necessity with Conditions.

The carrying value of the 376-MW Asheville coal-fired plant, including associated ash basin closure costs, of $234 million and $327 million is included in Generation facilities to be retired, net on Duke Energy Progress' Condensed Consolidated Balance Sheets as of September 30, On November 19, 2019, and December 31, 2018, respectively. Duke Energy Progress' request for a regulatory asset at the time of retirement with amortization over a 10-year period was approved by the NCUC on February 23, 2018.

~~FERC Return on Equity Complaint~~

~~On October 11, 2019, North Carolina Eastern Municipal Power Agency (Power Agency) filed a complaint at FERC against~~ Duke Energy Progress ~~pursuant~~filed a semiannual progress report for its Hot Springs Microgrid Solar and Battery Storage Facility. As required by an NCUC order issued December 6, 2019, an updated progress report was filed on January 15, 2020. An evidentiary hearing was held on March 5, 2020. Construction is expected to ~~Section 206 of the Federal Power Act (FPA). The complaint alleges that the return on equity component~~begin in the ~~formula rate contained within the Full Requirements Power Purchase Agreement (FRPPA) is unjust and unreasonable. The FRPPA’s return on equity is 11% as applied~~second quarter of 2020 with commercial operation expected to the Production Capacity Rate for the full requirements service provided by Duke Energy Progress. The complaint does not definitively propose a replacement return on equity. Under FPA Section 206, the earliest refund effective date that FERC can establish is the date of the filing of the complaint. The complaint could raise risks across the Duke Energy Progress wholesale business because, depending on how FERC treats Power Agency’s complaint, other parties may come forward with similar complaints. Duke Energy Progress cannot predict the outcome of this matter.begin in December 2020.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Florida

~~Storm Restoration Cost Recovery~~COVID-19 Filings

~~In September 2017, Duke Energy Florida’s service territory suffered significant damage from Hurricane Irma, resulting~~On March 1, 2020, Governor Ron DeSantis issued Executive Order No. 20-51 directing the State Health Officer of Florida to declare a public health emergency in ~~approximately 1 million customers experiencing outages. In~~Florida related to the ~~fourth quarter~~COVID-19 pandemic. The governor then issued a second Executive Order No. 20-52 on March 9, 2020, in which he declared a state of ~~2017,~~emergency in Florida and directed the Director of the Division of Emergency Management to implement the state’s Comprehensive Emergency Management Plan. The governor issued additional Executive Orders – Nos. 2020-68, 2020-69, 2020-71, 2020-72 and 2020-83 – in response to the ongoing health care emergency that, among other things, suspended the in-person public meeting requirements for state agencies and local governments and directed the state surgeon general to issue public health advisories to limit potential exposure to COVID-19, advising against gatherings of 10 or more persons. On March 19, 2020, Duke Energy Florida ~~also incurred preparation costs related~~filed a request to ~~Hurricane Nate.~~modify its tariff to allow it to waive late fees for customers, and on April 6, 2020, the FPSC issued an order approving the request. Duke Energy Florida had already voluntarily waived reconnect fees and credit card fees, and is not disconnecting customers for nonpayment. On ~~December 28, 2017,~~April 2, 2020, Duke Energy Florida filed a petition with the FPSC to ~~recover incremental storm restoration costs for Hurricane Irma and Hurricane Nate and~~accelerate a $78 million fuel cost refund to ~~replenish~~customers in the ~~storm reserve. On February 6, 2018,~~month of May 2020. Typically, the refund would be made over the course of 2021. The FPSC approved ~~a stipulation that would apply tax savings resulting from~~ the ~~Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filed a~~ petition for approval of actual storm restoration costs and associated recovery process related to Hurricane Irma and Hurricane Nate. The petition sought the approval for the recovery in the amount of $510 million in actual recoverable storm restoration costs, including the replenishment of Duke Energy Florida’s storm reserve of $132 million, and the process for recovering these recoverable storm costs. On August 20, 2018, the FPSC approved Duke Energy Florida's unopposed Motion for Continuance filed August 17, 2018, to allow for an evidentiary hearing in this matter. On Januaryon April 28, 2019, Duke Energy Florida made a supplemental filing to reduce the total storm cost recovery from $510 million to $508 million. On April 3, 2019, the FPSC issued an Order abating all remaining filing dates. On April 9, 2019, Duke Energy Florida filed an unopposed motion to approve a settlement agreement resolving all outstanding issues in this docket. On June 13, 2019, the FPSC issued its order approving the settlement agreement. The 2020.

Storm Restoration Cost Settlement Agreement obligates Duke Energy Florida to capitalize $18 million of storm costs and remove $6 million of operating and maintenance expense, thereby reducing the requested storm cost recovery amount by $24 million. Duke Energy Florida will also implement process changes with respect to storm cost restoration. At September 30, 2019, and December 31, 2018, Duke Energy Florida's Condensed Consolidated Balance Sheets included approximately $80 million and $217 million, respectively, of recoverable costs under the FPSC's storm rule in Regulatory assets within Current Assets and Other Noncurrent Assets related to storm recovery for Hurricane Irma and Hurricane Nate.Recovery

In October 2018, Duke Energy Florida’s service territory suffered damage when Hurricane Michael made landfall as a Category 5 hurricane with maximum sustained winds of 160 mph. The storm caused catastrophic damage from wind and storm surge, particularly from Panama City Beach to Mexico Beach, resulting in widespread outages and significant damage to transmission and distribution facilities across the central Florida Panhandle. In response to Hurricane Michael, Duke Energy Florida restored service to approximately 72,000 customers. Total estimated incremental operation and maintenance and capital costs are ~~$360~~$311 million. Approximately ~~$85~~$106 million and ~~$35~~$107 million of the costs are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, respectively. Approximately ~~$220~~$205 million and ~~$165~~$204 million of costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, respectively, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates.

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover the retail portion of estimated incremental storm restoration costs for Hurricane Michael. ~~The estimated recovery amount is approximately $221 million.~~ On June 11, 2019, the FPSC approved the petition for recovery of estimated incremental storm restoration costs related to Hurricane Michael. The FPSC also approved the stipulation Duke Energy Florida filed, which will allow Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by approximately year-end 2021. On November 22, 2019, Duke Energy Florida ~~expects to file actual costs~~filed a petition for approval ~~with~~of actual retail recoverable storm restoration costs related to Hurricane Michael in the ~~FPSC in 2019.~~amount of $191 million plus interest. An Order Establishing Procedure was issued on January 30, 2020, and hearings are scheduled to begin September 15, 2020. Duke Energy Florida cannot predict the outcome of this matter.

Hurricane Dorian

In September 2019, Duke Energy Florida’s service territory was threatened by Hurricane Dorian with landfall as a possible Category 5 hurricane. For several days, various forecasts and models predicted significant impact to Duke Energy Florida’s service territory; accordingly, Duke Energy Florida incurred costs to secure necessary resources to be prepared for that potential impact. Although Hurricane Dorian never made landfall in Florida, ~~affects~~its effects were still felt, and outages did occur. Preparations were required so that, if Hurricane Dorian had made landfall and impacts had been more severe, Duke Energy Florida would have been prepared to restore its customers’ power in a timely fashion.

~~Total current~~On December 19, 2019, Duke Energy Florida filed a petition with the FPSC to recover $169 million, the estimated retail portion of these costs, consistent with the provisions in the 2017 Settlement. On February 24, 2020, the commission approved the request for recovery over a 12-month period with rates effective in March 2020 and subject to true up. The final actual amount will be filed later in 2020 and the FPSC will hold a hearing to determine the final amount of incremental ~~costs are approximately $153 million. These~~costs. Duke Energy Florida cannot predict the outcome of this matter. Approximately $147 million and $167 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of ~~September 30,~~March 31, 2020, and December 31, 2019, respectively, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates. Duke Energy Florida anticipates filing a petition with the FPSC to recover these costs, consistent with the provisions in the 2017 Settlement. Duke Energy Florida cannot predict the outcome of this matter.

~~Tax Act~~

Pursuant to Duke Energy Florida's 2017 Settlement, on May 31, 2018, Duke Energy Florida filed a petition related to the Tax Act, which included revenue requirement impacts of annual tax savings of $134 million and estimated annual amortization of EDIT of $67 million for a total of $201 million. Of this amount, $50 million would be offset by accelerated depreciation of Crystal River 4 and 5 coal units and an estimated $151 million would be offset by Hurricane Irma storm cost recovery as explained in the Storm Restoration Cost Recovery section above. On December 27, 2018, Duke Energy Florida filed actual EDIT balances and amortization based on its 2017 filed tax return. This increased the revenue requirement impact of the amortization of EDIT by $4 million, from $67 million to $71 million, which increased the total storm amortization from $151 million to $155 million. On January 8, 2019, the FPSC approved a joint motion by Duke Energy Florida and the Office of Public Counsel resolving all stipulated positions. As part of that stipulation, Duke Energy Florida agreed to seek a Private Letter Ruling (PLR) from the IRS on its treatment of cost of removal (COR) as mostly protected by tax normalization rules. If the IRS rules that COR is not protected by tax normalization rules, then Duke Energy Florida will make a final adjustment to the amortization of EDIT and an adjustment to the storm recovery amount retroactive to January 2018. The IRS has communicated that it will not issue individual PLRs on the treatment of COR. Rather, the IRS is drafting a notice that will request comments on a number of issues, including COR, and the IRS plans to issue industrywide guidance on those issues. Duke Energy Florida cannot predict the outcome of this matter.



~~FINANCIAL STATEMENTS~~	~~REGULATORY MATTERS~~

Solar Base Rate Adjustment

On July 31, 2018, Duke Energy Florida petitioned the FPSC to include in base rates the revenue requirements for its first two solar generation projects, the Hamilton Project and the Columbia Project, as authorized by the 2017 Settlement. The Hamilton Project, which was placed into service on December 22, 2018, ~~has~~had an annual retail revenue requirement of $15 million. At its October 30, 2018, Agenda Conference, the FPSC approved the rate increase related to the Hamilton Project to go into effect beginning with the first billing cycle in January 2019 under its file and suspend authority, and revised customer rates became effective in January 2019. The Columbia Project has a projected annual revenue requirement of $14 million and a projected in-service date in early 2020; the associated rate increase would take place with the first month’s billing cycle after the Columbia Project goes into service. On April 2, 2019, the commission approved both solar projects as filed. The Columbia Project, which has a projected annual revenue requirement of $14 million, was placed in service in March 2020 and revised customer rates became effective in April 2020.

On March 25, 2019, Duke Energy Florida petitioned the FPSC to include in base rates the revenue requirements for its next wave of solar generation projects, the Trenton, Lake Placid and DeBary Solar Projects, as authorized by the 2017 Settlement. The annual retail revenue requirement for the Trenton and Lake Placid Projects iswas $13 million and $8 million, respectively, and they were placed into service in December 2019 with ~~projected in-service dates~~rates taking effect in ~~the fourth quarter of 2019.~~January 2020. The DeBary Project has a projected annual revenue requirement of $11 million and a projected in-service date in the ~~first~~second quarter of 2020. The associated rate increase would take place with the first month’s billing cycle after each solar generation project goes into service. On July 22, 2019, the FPSC issued an order approving Duke Energy Florida's request.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Crystal River Unit 3 Accelerated Decommissioning Filing

On May 29, 2019, Duke Energy Florida entered into a Decommissioning Services Agreement for the accelerated decommissioning of the Crystal River Unit 3 nuclear power station located in Citrus County, Florida, with ADP CR3, LLC and ADP SF1, LLC, each of which is a wholly owned subsidiary of Accelerated Decommissioning Partners, LLC, a joint venture between NorthStar Group Services, Inc. and Orano USA LLC. Closing of this agreement is contingent upon the approval of the ~~NRC~~U.S. Nuclear Regulatory Commission (NRC) and FPSC. If approved, the decommissioning will be accelerated starting in 2020 and continuing through 2027, rather than the expected time frame under SAFSTOR of starting in 2067 and ending in 2074. Duke Energy Florida expects that the assets of the Nuclear Decommissioning Trust Fund will be sufficient to cover the contract price. On July 10, 2019, Duke Energy Florida petitioned the FPSC for approval of the agreement. On April 1, 2020, the NRC issued an order approving the license transfer application. Following the NRC order, on April 15, 2020, the FPSC issued its Second Order Modifying Order Establishing Procedure in which hearings are scheduled to begin July 7, 2020. Duke Energy Florida cannot predict the outcome of this matter.

~~Citrus County CC~~

Construction of the 1,640-MW combined-cycle natural gas plant in Citrus County, Florida, began in October 2015 with an estimated cost of $1.5 billion, including AFUDC. Both units came on-line in the fourth quarter of 2018. The ultimate cost of the facility was estimated to be $1.6 billion, and Duke Energy Florida recorded Impairment charges on Duke Energy’s Consolidated Statements of Operations of $60 million in the fourth quarter of 2018 for the overrun. In September 2019, Duke Energy Florida recorded a $25 million reduction to a prior-year impairment due to a decrease in the cost estimate of the Citrus County CC, primarily related to the settlement agreement with Fluor, the EPC contractor. See Note 4 for additional information.

Duke Energy Ohio

Duke Energy Ohio COVID-19 Filing

In response to the COVID-19 pandemic, on March 9, 2020, Governor Mike DeWine issued Executive Order No. 2020-01D declaring a state of emergency in the State of Ohio. The PUCO issued an order directing utilities to cease disconnections for nonpayment and waive late payment and reconnection fees and to minimize direct customer contact. The PUCO also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response, Duke Energy Ohio has ceased all disconnections except for safety-related concerns and is waiving late payment and reconnection fees. On March 19, 2020, Duke Energy Ohio filed its compliance plan with the PUCO and sought waiver of several regulations to minimize direct customer contact.

On April 16, 2020, Duke Energy Ohio filed an application for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. The proposal is conditioned on full recovery via Duke Energy Ohio's existing Economic Competitiveness Fund Rider (Rider ECF), which has been used by Duke Energy Ohio in the past for other reasonable arrangements with customers. On April 24, 2020, the Staff of the PUCO filed its recommendation finding Duke Energy Ohio’s application is reasonable and that the PUCO should approve it. Duke Energy Ohio cannot predict the outcome of this matter.

On May 11, 2020, Duke Energy Ohio filed with the PUCO a request seeking deferral of incremental costs incurred, as well as specific miscellaneous lost revenues. The request seeks to use existing bad debts and uncollectible riders already in place for both electric and natural gas operations. Duke Energy Ohio would subsequently file for rider recovery at a later date. Duke Energy Ohio cannot predict the outcome of this matter.

Duke Energy Kentucky COVID-19

In response to the COVID-19 pandemic, on March 6, 2020, Governor Andy Beshear issued Executive Order No. 2020-215 declaring a state of emergency in the Commonwealth of Kentucky. The KPSC issued an order directing utilities to cease disconnections for nonpayment and waive late payment and reconnection fees. The KPSC also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers if necessary. Duke Energy Kentucky had already voluntarily ceased all disconnections except for safety-related concerns and was waiving late payment and reconnection fees.

2017 Electric Security Plan Filing

On June 1, 2017, Duke Energy Ohio filed with the PUCO a request for a standard service offer in the form of an ESP. On February 15, 2018, the procedural schedule was suspended to facilitate ongoing settlement discussions. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases pending before the PUCO, including, but not limited to, its Electric Base Rate Case. Additionally, on April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving certain issues in this proceeding. The term of the ESP would be from June 1, 2018, to May 31, 2025, and included 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. The Stipulation established a regulatory model for the next seven years via the approval of the ESP and continued the current model for procuring supply for non-shopping customers, including recovery mechanisms. On December 19, 2018, the PUCO approved the Stipulation without material modification. Several parties, including the Office of the Ohio Consumers' Counsel (OCC), filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for Rehearing as a matter of law. On September 13, 2019, Interstate Gas Supply/Retail Supply Association filed appeals to the ~~Ohio~~ Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the ~~Office of the Ohio Consumers' Counsel (OCC)~~OCC filed an appeal challenging the PUCO’s approval of OVEC recovery through Duke Energy Ohio's Price Stability Rider (Rider PSR) alleging the FPA pre-empts the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were filed on January 6, 2020. Appellee briefs were scheduled to be filed on March 16, 2020. On ~~October 11, 2019,~~March 13, 2020, the ~~OCC filed~~Supreme Court of Ohio granted OCC's motion to withdraw its ~~Third Application for Rehearing arguing~~appeal related to OVEC recovery. On April 22, 2020, the ~~PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy~~Supreme Court of Ohio ~~filed its Memorandum Contra on October 21, 2019. Duke Energy Ohio cannot predict~~dismissed all remaining appeals of PUCO's December 19, 2018 order approving the ~~outcome of this matter.~~stipulation. The case has been resolved.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Electric Base Rate Case

Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio requested an estimated annual increase of approximately $15 million and a return on equity of 10.4%. The application also included requests to continue certain current riders and establish new riders. On September 26, 2017, the PUCO staff filed a report recommending a revenue decrease between approximately $18 million and $29 million and a return on equity between 9.22% and 10.24%. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases pending before the PUCO. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the Stipulation with the PUCO resolving numerous issues including those in this base rate proceeding. Major components of the Stipulation related to the base distribution rate case included a $19 million decrease in annual base distribution revenue with a return on equity unchanged from the current rate of 9.84% based upon a capital structure of 50.75% equity and 49.25% debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation ended as these costs would be recovered through base rates. The Stipulation also renewed 14 existing riders, some of which were included in the company's ESP, and added two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10 million per year (operation and maintenance only) and the PowerForward Rider to recover costs incurred to enhance the customer experience and further transform the grid (operation and maintenance and capital). In addition to the changes in revenue attributable to the Stipulation, Duke Energy Ohio’s capital-related riders, including the Distribution Capital Investments Rider, began to reflect the lower federal income tax rate associated with the Tax Act with updates to customers’ bills beginning April 1, 2018. This change reduced electric revenue by approximately $20 million on an annualized basis. On December 19, 2018, the PUCO approved the Stipulation without material modification. New base rates were implemented effective January 2, 2019. Several parties, including the OCC, filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for Rehearing as a matter of law. On September 13, 2019, Interstate Gas Supply/Retail Supply Association filed appeals to the ~~Ohio~~ Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the OCC filed an appeal challenging the PUCO’s approval of OVEC recovery through Rider PSR alleging the FPA pre-empts the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were filed on January 6, 2020. Appellee briefs were scheduled to be filed on March 16, 2020. On ~~October 11, 2019,~~March 13, 2020, the ~~OCC filed~~Supreme Court of Ohio granted OCC's motion to withdraw its ~~Third Application for Rehearing arguing~~appeal related to OVEC recovery. On April 22, 2020, the ~~PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy~~Supreme Court of Ohio ~~filed its Memorandum Contra on October 21, 2019. Duke Energy Ohio cannot predict~~dismissed all remaining appeals of PUCO's December 19, 2018 order approving the ~~outcome of this matter.~~stipulation. The case has been resolved.

Ohio Valley Electric Corporation

On March 31, 2017, Duke Energy Ohio filed for approval to adjust its existing Rider PSR to pass through net costs related to its contractual entitlement to capacity and energy from the generating assets owned by OVEC. Duke Energy Ohio sought deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR were put into effect. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases currently pending before the PUCO. Also, on April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation with the PUCO resolving numerous issues including those related to Rider PSR. The Stipulation activated Rider PSR for recovery of net costs incurred from January 1, 2018, through May 2025. On December 19, 2018, the PUCO approved the Stipulation without material modification. The PSR rider became effective April 1, 2019. Several parties, including the OCC, filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for Rehearing as a matter of law. On September 13, 2019, Interstate Gas Supply/Retail Supply Association filed appeals to the ~~Ohio~~ Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the OCC filed an appeal challenging the PUCO’s approval of OVEC recovery through Rider PSR alleging the FPA pre-empts the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were filed on January 6, 2020. Appellee briefs were scheduled to be filed on March 16, 2020. On ~~October 11, 2019,~~March 13, 2020, the ~~OCC filed~~Supreme Court of Ohio granted OCC's motion to withdraw its ~~Third Application for Rehearing arguing~~appeal related to OVEC recovery. On April 22, 2020, the ~~PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy~~Supreme Court of Ohio ~~filed its Memorandum Contra on October 21, 2019. Duke Energy Ohio cannot predict~~dismissed all remaining appeals of PUCO's December 19, 2018 order approving the ~~outcome of this matter.~~stipulation. The case has been resolved.

On July 23, 2019, an Ohio bill was signed into law that ~~will be~~became effective January 1, 2020. Among other things, the bill allows for recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery shall be through a non-bypassable rider that is to replace any existing recovery mechanism approved by the PUCO and will remain in place through 2030. The amounts recoverable from customers will be subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 13 for additional discussion of Duke Energy Ohio's ownership interest in OVEC.

~~Tax Act – Ohio~~

On July 25, 2018, Duke Energy Ohio filed an application to establish a new rider to implement the benefits of the Tax Act for electric distribution customers. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from 35% to 21% since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. Duke Energy Ohio's transmission rates reflect lower federal income tax but guidance from FERC on amortization of both protected and unprotected transmission-related EDITs is still pending. On October 24, 2018, the PUCO issued a Finding and Order that, among other things, directed all utilities over which the commission has ratemaking authority to file an application to pass the benefits of the Tax Act to customers by January 1, 2019, unless otherwise exempted or directed by the PUCO. Duke Energy Ohio's July 25, 2018, filing for electric distribution operations is consistent with the commission's October 24, 2018, Finding and Order and no further action is needed. On February 20, 2019, the PUCO approved the application without material modification. Rates became effective March 1, 2019.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On December 21, 2018, Duke Energy Ohio filed an application to change its base rates and establish a new rider to implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio requested commission approval to implement the changes and rider effective April 1, 2019. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from 35% to 21% since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO established a procedural schedule and testimony was filed on July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. Duke Energy Ohio cannot predict the outcome of this matter.

Energy Efficiency Cost Recovery

On March 28, 2014, Duke Energy Ohio filed an application for recovery of program costs, lost distribution revenue and performance incentives related to its energy efficiency and peak demand reduction programs. These programs are undertaken to comply with environmental mandates set forth in Ohio law. 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. In December 2016, the PUCO granted the intervenors request for rehearing for the purpose of further review. On April 10, 2019, the PUCO issued an Entry on Rehearing denying the rehearing applications. On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio filed an Application for Rehearing seeking clarification on the final true-up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing for further consideration.

On June 15, 2016, Duke Energy Ohio filed an application for approval of a three-year energy efficiency and peak demand reduction portfolio of programs. A stipulation and modified stipulation were filed on December 22, 2016, and January 27, 2017, respectively. Under the terms of the stipulations, which included support for deferral authority of all costs and a cap on shared savings incentives, Duke Energy Ohio has offered its energy efficiency and peak demand reduction programs throughout 2017. On February 3, 2017, Duke Energy Ohio filed for deferral authority of its costs incurred in 2017 in respect of its proposed energy efficiency and peak demand reduction portfolio. On September 27, 2017, the PUCO issued an order approving a modified stipulation. The modifications impose an annual cap of approximately $38 million on program costs and shared savings incentives combined, but allowed for Duke Energy Ohio to file for a waiver of costs in excess of the cap in 2017. The PUCO approved the waiver request for 2017 up to a total cost of $56 million. On November 21, 2017, the PUCO granted Duke Energy Ohio's and intervenor's applications for rehearing of the September 27, 2017, order. On January 10, 2018, the PUCO denied the OCC's application for rehearing of the PUCO order granting Duke Energy Ohio's waiver request; however, a decision on Duke Energy Ohio's application for rehearing remains pending. Duke Energy Ohio cannot predict the outcome of this matter.

~~2014 Electric Security Plan~~

On May 30, 2018, the PUCO approved an extension of Duke Energy Ohio’s then-current ESP, including all terms and conditions thereof, excluding an extension of Duke Energy Ohio’s Rider DCI. Following rehearing, on July 25, 2018, the PUCO granted the request and allowed a continuing cap on recovery under Rider DCI. The orders were upheld on rehearing requested by the Ohio Manufacturers' Association (OMA) and OCC. The time period for parties to file for rehearing or appeal has expired.

In 2018, the OMA and OCC filed separate appeals of PUCO's approval of Duke Energy Ohio’s ESP with the Ohio Supreme Court, challenging PUCO's approval of Duke Energy Ohio’s Rider PSR as a placeholder and its Rider DCI to recover incremental revenue requirement for distribution capital since Duke Energy Ohio’s last base rate case. The Ohio Supreme Court issued an order on March 13, 2019, for the appellants to show cause why the appeals should not be dismissed as moot in light of the commission’s approval of Duke Energy Ohio’s current ESP. The OCC and OMA made the requested filings on March 20, 2019, and Duke Energy Ohio filed its response on March 27, 2019. Subsequent to OCC and OMA making the requested filings, the Ohio Supreme Court dismissed the appeals as moot on May 8, 2019.

Natural Gas Pipeline Extension

Duke Energy Ohio is proposing to install a new natural gas pipeline (the Central Corridor Project) in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. Duke Energy Ohio currently estimates the pipeline development costs and construction activities will range from $163 million to $245 million in direct costs (excluding overheads and AFUDC). On January 20, 2017, Duke Energy Ohio filed an amended application with the Ohio Power Siting Board (OPSB) for approval of one of two proposed routes. A public hearing was held on June 15, 2017. In April 2018, Duke Energy Ohio filed a motion with OPSB to establish a procedural schedule and filed supplemental information supporting its application. On December 18, 2018, the OPSB established a procedural schedule that included a local public hearing on March 21, 2019. An evidentiary hearing began on April 9, 2019, and concluded on April 11, 2019. Briefs were filed on May 13, 2019, and reply briefs were filed on June 10, 2019. IfOn November 21, 2019, the OPSB approved ~~construction~~Duke Energy Ohio's application subject to 41 conditions on construction. Applications for rehearing were filed by several stakeholders on December 23, 2019, arguing that the OPSB approval was incorrect. Duke Energy Ohio filed a memorandum contra on January 2, 2020. On February 20, 2020, the OPSB denied the rehearing requests. Construction of the pipeline extension is expected to be completed before the 2021/2022 winter season. On April 15, 2020, Joint Appellants filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor application. On April 16, 2020, several of the Joint Appellants filed a motion for a Stay asking the court to suspend the OPSB’s order. On April 27, 2020, Duke Energy Ohio ~~expects~~and the OPSB each filed a ~~decision by~~motion in opposition to the ~~end of 2019.~~Stay. If the Stay is granted, Duke Energy Ohio cannot continue working during the appeal process. Duke Energy Ohio cannot predict the outcome of this matter.



~~FINANCIAL STATEMENTS~~	~~REGULATORY MATTERS~~

2012 Natural Gas Rate Case/MGP Cost Recovery

As part of its 2012 natural gas base rate case, Duke Energy Ohio has approval to defer and recover costs related to environmental remediation at two sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has made annual applications for recovery of these deferred costs. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs between 2009 through 2012 through a separate rider, Rider MGP, which is currently suspended. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2017. On September 28, 2018, the staff of the PUCO issued a report recommending a disallowance of approximately $12 million of the $26 million in MGP remediation costs incurred between 2013 through 2017 that staff believes are not eligible for recovery. Staff interprets the PUCO’s 2012 Order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the staff’s recommendations and explaining, among other things, the obligation Duke Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. To date, the PUCO has not ruled on Duke Energy Ohio’s applications. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2018 seeking recovery of approximately $20 million in remediation costs. On July 12, 2019, the staff recommended a disallowance of approximately $11 million for work that staff believes occurred in areas not authorized for recovery. Additionally, staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. ~~The PUCO has established a procedural schedule with an~~An evidentiary hearing ~~to commence~~began on November 18, 2019, and concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. Duke Energy Ohio cannot predict the outcome of this matter.

The 2012 PUCO order also contained conditional deadlines for completing the MGP environmental investigation and remediation costs at the MGP sites. Subsequent to the order, the deadline was extended to December 31, 2019. On May 10, 2019, Duke Energy Ohio filed an application requesting a continuation of its existing deferral authority for MGP remediation and investigation that must occur after December 31, 2019. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on October 2, 2019, Duke Energy Ohio filed reply comments. Duke Energy Ohio cannot predict the outcome of this matter.

~~Duke Energy Kentucky Natural Gas Base Rate Case~~

On August 31, 2018, Duke Energy Kentucky filed an application with the KPSC requesting an increase in natural gas base rates of approximately $11 million, an approximate 11.1% average increase across all customer classes. The increase was net of approximately $5 million in annual savings as a result of the Tax Act. The drivers for this case were capital invested since Duke Energy Kentucky’s last rate case in 2009. Duke Energy Kentucky also sought implementation of a Weather Normalization Adjustment Mechanism, amortization of regulatory assets and to implement the impacts of the Tax Act, prospectively. On January 30, 2019, Duke Energy Kentucky entered into a settlement agreement with the Attorney General of Kentucky, the only intervenor in the case. The settlement provided for an approximate $7 million increase in natural gas base revenue, a return on equity of 9.7% and approval of the proposed Weather Normalization Mechanism. A hearing was held on February 5, 2019. The commission issued its order approving the settlement without material modification on March 27, 2019. Revised customer rates were effective April 1, 2019.

Duke Energy Kentucky Electric Base Rate Case

On September 3, 2019, Duke Energy Kentucky filed a rate case with the KPSC requesting an increase in electric base rates of approximately $46 million, which represents an approximate 12.5% increase across all customer classes. The request for rate increase is driven by increased investment in utility plant since the last electric base rate case in 2017. Duke Energy Kentucky seeks to implement a Storm Deferral Mechanism that will enable Duke Energy Kentucky to defer actual costs incurred for major storms that are over or under amounts in base rates. In response to large customers’ desire to have access to renewable resources, Duke Energy Kentucky is proposing a Green Source Advantage tariff designed for those large customers that wish to invest in renewable energy resources to meet sustainability goals. Duke Energy Kentucky is proposing an electric vehicle (EV) infrastructure pilot and modest incentives to assist customers in investing in EV technologies. Additionally, Duke Energy Kentucky is proposing to build an approximate ~~5.5 MW~~3.4-MW distribution battery energy storage system to be attached to Duke Energy Kentucky’s distribution system providing frequency regulation and enhanced reliability to Kentucky customers. The commission issued a procedural schedule with two rounds of discovery and opportunities for intervenor and rebuttal testimony. The Kentucky Attorney General filed its testimony recommending an increase of approximately $26 million. On January 31, 2020, Duke Energy Kentucky ~~anticipates that~~filed rebuttal testimony updating its rate increase calculations to approximately $44 million. Hearings were held on February 19-20, 2020, with briefing completed March 20, 2020. On April 27, 2020, the KPSC issued its decision approving a $24 million increase for Duke Energy Kentucky with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates ~~will go into effect in~~were effective on May 1, 2020. Duke Energy Kentucky is evaluating the ~~second quarter of 2020.~~order and whether to seek rehearing. Duke Energy Kentucky cannot predict the outcome of this matter.

Duke Energy Indiana

COVID-19

In response to the COVID-19 pandemic, on March 6, 2020, Governor Eric Holcomb issued Executive Order No. 20-02, which by law expired in 30 days unless extended, declaring a public health disaster emergency in the state of Indiana. On April 3, 2020, the governor then issued Executive Order No. 20-17 which renewed the public health disaster emergency declaration for an additional 30 days to May 5, 2020. On May 1, 2020, Executive Order No, 20-25 further renewed the public health disaster emergency an additional 30 days to June 4, 2020. All other Executive Orders issued since March 6, 2020, (Nos. 20-04 – 20-16) were renewed for the same 30-day period, provided they were supplements to Executive Order No. 20-02. Executive Order No. 20-05 was issued on March 19, 2020, requiring utilities in the state to suspend disconnections of utility service. Duke Energy Indiana had already voluntarily suspended all disconnections and is waiving late payment fees and check return fees. The utility is also waiving credit card fees for residential customers.

On May 8, 2020, Duke Energy Indiana, along with other Indiana utilities, filed a request with the IURC for approval of deferral treatment for costs and revenue reductions associated with the COVID-19 pandemic. The utilities requested initial deferral approval in July 2020, with individual subdockets for each utility to be established for consideration of utility-specific cost and revenue impacts, cost recovery timing and customer payment plans. The same day, the Indiana Office of Utility Consumer Counselor filed a petition asking the IURC to continue to suspend disconnections, allow the utilities accounting deferrals and require tacking of cost savings. Duke Energy Indiana cannot predict the outcome of thIs matter.

2019 Indiana Rate Case

On July 2, 2019, Duke Energy Indiana filed a general rate case with the IURC, its first general rate case ~~in Indiana~~ in 16 years, for a rate increase for retail customers of approximately $395 million. The request for rate increase is driven by strategic investments to generate cleaner electricity, improve reliability and serve a growing customer base. The request is premised upon a Duke Energy Indiana rate base of $10.2 billion as of December 31, 2018, and adjusted for projected changes through December 31, 2020. On September 9, 2019, Duke Energy Indiana revised its revenue request from $395 million to $393 million and filed updated testimony for the Retail Rate Case. The updated filing reflects a clarification in the presentation of Utility Receipts Tax, a $2 million reduction in the revenue requirement for revenues that will remain in riders and changes to allocation of revenue requirements within rate classes. The Utility Receipts Tax is currently embedded in base rates and rider rates. The proposed treatment is to include the Utility Receipts Tax as a line item on the customer bill rather than included in rates. The request is an approximate 15% increase in retail revenues and approximately 17% when including estimated Utility Receipts Tax. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020, and rates are expected to ~~commence in early 2020, with rates to~~ be effective by mid-2020. Duke Energy Indiana cannot predict the outcome of these matters.

The IURC determined to take two issues out of the rate case and place them in separate subdocket proceedings due to the complexity of the rate case. The commission moved the request for approval of an electric transportation pilot and future coal ash recovery issues to separate subdockets. Coal ash expenditures prior to 2019 are still included in the rate case. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing is scheduled to begin on September 14, 2020, and an order is expected in the first quarter of 2021. Duke Energy Indiana cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

~~FERC Transmission Return~~Piedmont

COVID-19 Filings

North Carolina

On March 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring a state of emergency due to the COVID-19 pandemic. In an effort to help mitigate the financial impacts of the COVID-19 pandemic on ~~Equity Complaint~~

~~Customer groups have~~their customers, on March 19, 2020, Piedmont filed a request with the ~~FERC complaints against MISO~~NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted Piedmont’s request on March 20, 2020.

On March 31, 2020, the governor issued Executive Order No. 124, which, in addition to requiring the steps in the NCUC order noted above, stated that nothing in Executive Order No. 124 shall relieve a customer of its ~~transmission-owning members, including Duke Energy Indiana, alleging, among other things, that the current base rate~~obligation to pay bills for receipt of ~~return on equity earned by MISO transmission owners~~utility services provided. Executive Order No. 124 remains in effect for 60 days unless otherwise rescinded or replaced with a superseding Executive Order.

South Carolina

On March 13, 2020, Governor Henry McMaster issued Executive Order No. 2020-08 declaring a state of 12.38% is unjust and unreasonable. The complaints claim, among other things, that the current base rate of return on equity earned by MISO transmission owners should be reduced to 8.67%. On January 5, 2015, the FERC issued an order accepting the MISO transmission owners' adder of 0.5%emergency due to the ~~base rate of return~~COVID-19 pandemic. The governor also issued a letter 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%. 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 9.7%. The Initial Decision in the second complaint is pending FERC review. On AprilMarch 14, ~~2017, the D.C. Circuit Court, in~~ ~~Emera Maine v. FERC, reversed and remanded certain aspects of the methodology employed by FERC to establish rates of return on equity. On October 16, 2018, FERC issued an order in response~~2020, to the ~~Emera remand proceeding proposing~~ORS Executive Director regarding the suspension of disconnection of essential utility services for nonpayment. On March 16, 2020, citing the governor’s letter, the ORS filed a ~~new method~~request asking the PSCSC to grant waivers so that utilities could suspend disconnections of utility services for ~~determining whether an existing return on equity is unjust and unreasonable, and a new process for determining a just and reasonable return on equity.~~nonpayment. Piedmont supported such motion. On ~~November 14, 2018, FERC directed parties to~~March 18, 2020, the MISO complaints to file briefs on how the new process for determining return on equity proposed in the Emera proceeding should be applied to the complaints involving the MISO transmission owners’ return on equity. Initial briefs were filed on February 13, 2019, and reply briefs were filed April 10, 2019. Duke Energy Indiana currently believes these matters will not have a material impact on its results of operations, cash flows and financial position.

~~Edwardsport Integrated Gasification Combined Cycle Plant~~

On September 20, 2018, Duke Energy Indiana, the Indiana Office of Utility Consumer Counselor, the Duke Industrial Group and Nucor Steel – Indiana entered into a settlement agreement to resolve IGCC ratemaking issues for calendar years 2018 and 2019. The agreement will remain in effect until new rates are established in Duke Energy Indiana's next base rate case, which was filed on July 2, 2019, with rates to be effective in mid-2020. An evidentiary hearing was held in December 2018, and on June 5, 2019, the IURCPSCSC issued an order approving such waivers, and also approved waivers for regulations related to late fees and reconnect fees. The PSCSC's order also required utilities to track the ~~2018 Settlement Agreement.~~financial impacts of actions taken pursuant to such waivers for possible reporting to the PSCSC.

On April 30, 2020, the ORS requested the PSCSC grant a waiver of the applicable regulations to allow customers the flexibility to obtain deferred payment plans longer than 6 months for past-due amounts. On May 5, 2020, Piedmont filed responsive comments stating that while utility bills will remain due, Piedmont does not plan to immediately reinstitute disconnection upon the expiration of the state of emergency and intends to work through a potential grace period as economic recovery begins. Piedmont also concurred with the observation of the ORS that reduced usage is impacting the fixed cost recovery and revenue assumptions included in rates. Those costs include not only ongoing operational and financing costs necessary to serve customers, but also the borrowings necessary to support extended payment arrangements that will be an important part of emerging from the COVID-19 pandemic. Piedmont will continue to track such costs, lost revenues and potential cost savings for future evaluation by the PSCSC.

Tennessee

On March 12, 2020, Governor Bill Lee issued Executive Order No. 14 declaring a state of emergency due to the COVID-19 pandemic. In an effort to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 20, 2020, Piedmont filed a request with the TPUC seeking authorization to waive, effective March 21, 2020: (1) any late payment charges incurred by a residential or nonresidential customer; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; and (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit. The TPUC granted Piedmont’s request by Order issued March 31,2020. The Order also stated that customers were not relieved of their obligation to pay for utility services received.

North Carolina Integrity Management Rider Filing

~~On October 31, 2019,~~In April 2020, Piedmont filed a petition with the NCUC under the IMR mechanism to collect an additional ~~$11~~$15 million in annual revenues, effective ~~December 1, 2019, based on the eligible capital investments closed to integrity and safety projects between July 1, 2019, and September 30, 2019. Piedmont cannot predict the outcome of this matter.~~

~~On April 30, 2019, Piedmont filed a petition under the IMR mechanism to update rates,~~June 2020, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, ~~2019. The NCUC approved~~2020. Piedmont cannot predict the ~~petition on May 29, 2019, and rates became effective June 1, 2019. The effect~~outcome of ~~the update was an increase to annual revenues of approximately $9 million.~~this matter.

Tennessee Integrity Management Rider Filing

In November ~~2018,~~2019, Piedmont filed a petition with the TPUC under the IMR mechanism to collect an additional $3$2 million in annual revenues, effective January ~~2019,~~2020, based on the eligible capital investments closed to integrity and safety projects over the 12-month period ending October 31, ~~2018. A~~2019. An evidentiary hearing occurred on ~~the matter was held on March~~May 11, ~~2019. On May 20, 2019,~~2020. Upon approval from the TPUC, ~~approved Piedmont's IMR application as filed and revised customer rates were effective June 1, 2019.~~the revenue adjustment will be implemented, retroactive to January 2020. Piedmont cannot predict the outcome of this matter.

~~2019 North Carolina Rate Case~~

On April 1, 2019, Piedmont filed an application with the NCUC, its first general rate case in North Carolina in six years, for a rate increase for retail customers of approximately $83 million, which represents an approximate 9% increase in retail revenues. The request for rate increase is driven by significant infrastructure upgrade investments (plant additions) since the last general rate case through June 30, 2019, offset by savings that customers will begin receiving due to federal and state tax reform. Approximately half of the plant additions being included in rate base are categories of plant investment not covered under the IMR mechanism, which was originally approved as part of the 2013 North Carolina Rate Case.

On August 13, 2019, Piedmont, the Public Staff, and two groups representing industrial customers filed an Agreement and Stipulation Settlement resolving issues in the base rate proceeding, which included a return on equity of 9.7% and a capital structure of 52% equity and 48% debt. The North Carolina Attorney General's Office did not support the settlement. Other major components of the Stipulation included:

~~An annual increase in revenues of $109 million before consideration of riders associated with federal and state tax reform;~~

A decrease through a rider mechanism of $23 million per year to return unprotected federal EDIT over a five-year period and deferred revenues related to the federal rate reduction of $37 million to be returned over one year;

~~A decrease through a rider mechanism of $21 million per year related to reductions in the North Carolina state income tax rate to be returned over a three-year period;~~


•	~~An overall cap on net revenue increase of~~ ~~$83 million. This will impact Piedmont beginning November 1, 2022 only if the company does not file another general rate case in the interim;~~

~~Continuation of the IMR mechanism; and~~



FINANCIAL STATEMENTS	REGULATORY MATTERS

~~Establishment of a new Distribution Integrity Management Program (DIMP) deferral mechanism for average annual pretax operations and maintenance expenses of approximately $11 million.~~

~~An evidentiary hearing began on August 19, 2019. On October 31, 2019, the NCUC approved the Stipulation and the revised customer rates were effective November 1, 2019.~~

OTHER REGULATORY MATTERS

Atlantic Coast Pipeline, LLC

On September 2, 2014, Duke Energy, Dominion Energy, Inc. (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, in part, the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. Dominion will be responsible for building and operating the ACP pipeline and holds a leading ownership percentage in ACP of ~~48%.~~53%, following the purchase in March 2020 of Southern Company Gas' 5% ownership interest. Duke Energy owns a 47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment. ~~Southern Company Gas maintains a 5% interest.~~ See Note 1311 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.

In 2018, the FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route, including supply header and compressors. On May 11, 2018, and October 19, 2018, FERC issued Notices to Proceed allowing full construction activities in all areas of West Virginia except in the Monongahela National Forest. On July 24, 2018, FERC issued a Notice to Proceed allowing full construction activities along the project route in North Carolina. On October 19, 2018, the conditions to effectiveness of the Virginia 401 water quality certification were satisfied and, following receipt of the Virginia 401 certification, ACP filed a request for FERC to issue a Notice to Proceed with full construction activities in Virginia. Due to legal challenges not directly related to the request for a Notice to Proceed in Virginia, this request is still pending.

ACP is the subject of challenges in state and federal courts and agencies, including, among others, challenges of the project’s biological opinion (BiOp) and incidental take statement (ITS), crossings of the Blue Ridge Parkway, the Appalachian Trail, and the Monongahela and George Washington National Forests, the project’s U.S. Army Corps of Engineers (USACE) 404 permit, the project's air permit for a compressor station at Buckingham, Virginia, the FERC Environmental Impact Statement order and the FERC order approving the Certificate of Public Convenience and Necessity. Each of these challenges alleges non-compliance on the part of federal and state permitting authorities and adverse ecological consequences if the project is permitted to proceed. Since December 2018, notable developments in these challenges include a stay in December 2018 issued by the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) and the same court's July 26, 2019, vacatur of the project's BiOp and ITS (which stay and subsequent vacatur halted most project construction activity), a Fourth Circuit decision vacating the project's permits to cross the Monongahela and George Washington National Forests and the Appalachian Trail, the Fourth Circuit's remand to USACE of ACP's Huntington District 404 verification, ~~and~~ the Fourth Circuit’s remand to the National Park Service of ACP’s Blue Ridge Parkway ~~right-of-way.~~right-of-way and the most recent vacatur of the air permit for a compressor station at Buckingham, Virginia. ACP is vigorously defending these challenges and coordinating with the federal and state authorities which are the direct parties to the challenges. The Solicitor General of the United States and ACP filed petitions for certiorari to the Supreme Court of the United States on June 25, 2019, regarding the Appalachian Trail crossing and certiorari was granted on October 4, 2019. AThe Supreme Court hearing took place on February 24, 2020, and a ruling is expected in the second quarter of 2020. ~~ACP is also evaluating possible legislative remedies to this issue.~~

In anticipation of the Fourth Circuit's vacatur of the BiOp and ITS, ACP and the FWS commenced work in mid-May of 2019 to set the basis for a reissued BiOp and ITS. On February 10, 2020, the FERC issued a letter to FWS requesting the re-initiation of formal consultation in support of reissuing the BiOp and ITS, and on April 14, 2020, ACP submitted the Biological Assessment, which may form the foundation for FWS' BiOp. ACP continues coordinating and working with FWS and other parties in preparation for a reissuance of the BiOp and ITS.

ACP triggered the Adverse Government Actions (AGA) clause of its agreements with its customers in December 2019. Formal negotiations have resulted in agreement on material terms, such as updated pricing and construction milestones. The modified customer agreements are expected to be executed by the third quarter of 2020.

On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (Northern Plains), vacating USACE’s Nationwide Permit 12 (NWP 12) and remanding it to USACE for consultation under the Endangered Species Act (ESA) of 1973. In Northern Plains, the court ruled that NWP 12 was unlawful because USACE did not consult under the ESA with the FWS and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its application enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the situation. ACP is reviewing the potential impact of this ruling to its own reliance on NWP 12 for small water body crossings along the pipeline route, as well as potential mitigation measures.

Given the legal challenges ~~described above~~ and ongoing discussions with customers, ACP expects ~~mechanical completion of~~ the project to enter full ~~project in late 2021 with~~ in-service ~~likely~~ in the first half of 2022.

The delays resulting from the legal challenges described above have also impacted the cost ~~and schedule~~ for the project. Project cost ~~estimates are $7.3 billion to $7.8~~is approximately $8 billion, excluding financing costs. ~~Given~~This estimate is based on the ~~status of~~ current ~~discussions with FWS regarding a new BiOp~~facts available around construction costs and ~~ITS, as well as discussions with contractors regarding efficiencies which may be realized going forward, these estimates are under review~~timelines, and is subject to ~~upward pressure.~~future changes as those facts develop. Abnormal weather, work delays (including delays due to judicial or regulatory ~~action)~~action or COVID-19 social distancing) and other conditions may ~~also~~ result in cost or schedule modifications, a suspension of AFUDC for ACP and/or impairment charges potentially material to Duke Energy's cash flows, financial position and results of operations.

Duke Energy’s investment in ACP was ~~$1.1~~$1.2 billion at ~~September 30, 2019.~~March 31, 2020. Duke Energy evaluated this investment for impairment at ~~September 30,~~March 31, 2020, and December 31, 2019, and determined that fair value approximated carrying value and therefore no impairment was necessary. Duke Energy also has a guarantee agreement supporting its share of the ACP revolving credit facility. Duke Energy’s maximum exposure to loss under the terms of the guarantee is ~~$802~~$845 million, which represents 47% of the outstanding borrowings under the credit facility as of ~~September 30, 2019.~~March 31, 2020. See Note 13 for additional information.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Constitution Pipeline Company, LLC

Duke Energy ~~owns~~owned a 24% ownership interest in Constitution, which iswas accounted for as an equity method investment. Constitution iswas 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~~was to be constructed and operated by Williams Partners L.P., which ~~has~~had a 41% ownership share. The remaining interest iswas held by Cabot Oil and Gas Corporation and WGL Holdings, Inc. Before the permitting delays discussed below, Duke Energy's total anticipated contributions were approximately $229 million. As a result of the permitting delays and project uncertainty, total anticipated contributions by Duke Energy can no longer be reasonably estimated. Since April 2016, with the actions of the New York State Department of Environmental Conservation (NYSDEC), Constitution stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved.



~~FINANCIAL STATEMENTS~~	~~REGULATORY MATTERS~~

In December 2014, Constitution received approval from the FERC to construct and operate the proposed pipeline. However, onsince April ~~22,~~ 2016, Constitution had stopped construction and discontinued capitalization of future development costs due to permitting delays and adverse rulings by regulatory agencies and courts.

In late 2019, Constitution determined that its principal shipper would not agree to an amended precedent agreement. Without such an amendment, the ~~NYSDEC denied Constitution’s application for a necessary water quality certification for the New York portion~~project would no longer be viable and, as of February 5, 2020, the Constitution ~~pipeline.~~partners formally resolved to initiate the dissolution of Constitution, ~~filed a series of legal actions challenging~~and to terminate the ~~legality and appropriateness of the NYSDEC’s decision, culminating in an appeal to the Supreme Court of the United States, which appeal was denied on April 30, 2018. In addition, in October 2017,~~ Constitution filed a petition for declaratory order requesting FERC to find that, by not acting on Constitution's application within a reasonable period of time as required by statute, the NYSDEC waived its rights to issue a Section 401 water quality certification. Constitution's petition was denied on January 11, 2018.

~~On January 25, 2019, the D.C. Circuit Court rendered a decision in~~ ~~Hoopa Valley Tribe v. FERC~~ that withdrawal and resubmission of an application for a Section 401 water quality certification constituted a waiver by the relevant state agency when such withdrawals and resubmissions were intended to extend the one-year limit on accepting or rejecting such an application. As Constitution had made similar arguments in its 2018 petition to FERC for a declaratory order, on April 1, 2019, Constitution filed a new petition for declaratory order requesting FERC find a waiver on the part of NYSDEC in accordance with the D.C. Circuit Court’s newly established precedent. On August 28, 2019, FERC issued an order declaring that NYSDEC had in fact waived its water quality certification authority. On September 27, 2019, NYSDEC and numerous intervenors filed requests for rehearing of FERC’s August 28, 2019, waiver determination.

Constitution is currently unable to approximate an in-service date for the project due to the NYSDEC's denial of the water quality certification. The Constitution partners remain committed to the project and are evaluating next steps to move the project forward. On June 25, 2018, Constitution filed with FERC a Request for Extension of Time until December 2, 2020, for construction of thePipeline project. ~~On November 5, 2018, FERC issued an Order Granting Extension of Time.~~

During the nine months ended September 30, 2018, Duke Energy recorded an OTTI of $55 million within Equity in earnings of unconsolidated affiliates on Duke Energy's Condensed Consolidated Statements of Income. The charge represented 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 actions taken by the courts and regulators to uphold the NYSDEC's denial of the certification and uncertainty associated with the remaining legal and regulatory challenges.

See Note 1311 for additional information related to ownership interest and carrying value of the investment. Williams Partners L.P., as project Operator, is currently working to liquidate the project's assets.

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file IRPs with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful lives. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives and plans to seek regulatory recovery for amounts that would not be otherwise recovered when any of these assets are retired.

The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of ~~September 30, 2019,~~March 31, 2020, 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	$	154	585	$	149
Duke Energy Indiana
Gallagher Units 2 and 4^(b)	280	116		280	118
Gibson Units 1-5^(c)	3,132	1,949		3,132	1,708
Cayuga Units 1-2^(c)	1,005	974		1,005	964
Total Duke Energy	5,002	$	3,193	5,002	$	2,939


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


(b)	Duke Energy Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as part of the 2016 settlement of Edwardsport IGCC matters.


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

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

Duke Energy Carolinas and Duke Energy Progress are evaluating the potential for coal-fired generating unit retirements with a net carrying value of approximately ~~$732~~$707 million and $1.2 billion, respectively, included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of ~~September 30, 2019.~~

~~Refer to the "Western Carolinas Modernization Plan" discussion above for details of Duke Energy Progress' planned retirements.~~March 31, 2020.



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

4. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL

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



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Remediation Activities

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

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

Nine Months Ended September 30, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Balance at beginning of period $ 77
$ 11
$ 11
$ 4
$ 6
$ 48
$ 5
$ 2
Provisions/adjustments 30
4
9
3
5
10
—
6
Cash reductions (35 ) (4 ) (3 ) (2 ) (1 ) (28 ) —
—
Balance at end of period $ 72
$ 11
$ 17
$ 5
$ 10
$ 30
$ 5
$ 8


	Nine Months Ended September 30, 2018																							Three Months Ended March 31, 2020
				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	$	81		$	10		$	15		$	3		$	12		$	47		$	5		$	2	$	58		$	11		$	16		$	4	$	9	$	19		$	4	$	8
Provisions/adjustments	7			3			2			3			(1		)	3			1			—		3			—			—			1		—		1			1		—
Cash reductions	(20		)	(2		)	(5		)	(1		)	(4		)	(12		)	(1		)	—		(3		)	(1		)	(1		)	—		—		(1		)	—		—
Balance at end of period	$	68		$	11		$	12		$	5		$	7		$	38		$	5		$	2	$	58		$	10		$	15		$	5	$	9	$	19		$	5	$	8

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	$	49	$	58
Duke Energy Carolinas	11		11
Duke Energy Ohio	31		41
Piedmont	2		2



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

LITIGATION

Duke Energy Carolinas and Duke Energy Progress

~~NCDEQ Closure Litigation~~

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

On June 14, 2019, NCDEQ filed a motion to dismiss several claims in Duke Energy Carolinas' and Duke Energy Progress' appeals. On August 2, 2019, the court entered an order granting NCDEQ's motion to dismiss several of the claims. Duke Energy has filed a petition with the North Carolina Superior Court seeking review of this order. The lawsuit will proceed on the remaining issues, including whether the NCDEQ's decision was arbitrary and capricious. On September 24, 2019, NCDEQ filed a Motion for Partial Summary Judgment on the issue of whether Duke Energy had notice that NCDEQ was going to make a closure determination on April 1, 2019. On October 28, 2019, the court entered an order granting NCDEQ’s Partial Motion for Summary Judgment. Duke Energy has until November 27, 2019 to file an appeal of that decision. The trial is expected to occur in June 2020. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

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-related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. OnDespite a stay of the litigation from May ~~14,~~ 2019 ~~the court granted an extension of stay, until~~through September ~~15,~~ 2019 to allow the parties to discuss potential ~~resolution. As~~resolution, no resolution was reached, and litigation ~~has resumed with fact discovery. The trial~~resumed. In February and March 2020, the court heard arguments on numerous cross motions filed by the parties to seek legal determinations concerning several insurance related defenses raised by the insurance providers. Trial is ~~now~~ scheduled for February 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

~~NCDEQ State Enforcement Actions~~

~~In the first quarter of 2013, the SELC sent notices of intent to sue~~ Duke Energy Carolinas and Duke Energy Progress related to alleged CWA violations from coal ash basins at two of their coal-fired power plants in North Carolina. The NCDEQ filed enforcement actions against Duke Energy Carolinas and Duke Energy Progress alleging violations of water discharge permits and North Carolina groundwater standards. The cases have been consolidated and are being heard before a single judge 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 for Partial Summary Judgment for 7 of the 14 North Carolina plants named in the enforcement actions. On February 13, 2017, the court issued an order denying motions for partial summary judgment brought by both the environmental groups and Duke Energy Carolinas and Duke Energy Progress for the remaining 7 plants. On March 15, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Notice of Appeal with the North Carolina Court of Appeals to challenge the trial court’s order. The parties were unable to reach an agreement at mediation in April 2017 and submitted briefs to the trial court on remaining issues to be tried. On August 1, 2018, the Court of Appeals dismissed the appeal and the matter is proceeding before the trial court. The court decided to stay any activity in the case and has been holding periodic status conferences while NCDEQ works through the Coal Ash Act process and the ongoing appeal of the April 1 closure decision. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

~~Federal Citizens Suits~~

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

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

On May 8, 2018, on motion from Duke Energy Progress, the court ordered trial in both of the above matters to be consolidated. On April 5, 2019, Duke Energy Progress filed a motion to stay the case following the NCDEQ’s April 1 Order. On August 2, 2019, the court ordered that this case is stayed and shall remain stayed pending further order from the court.



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

On December 5, 2017, various parties filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina for alleged violations at Duke Energy Carolinas' Belews Creek under the CWA. Duke Energy Carolinas' answer to the complaint was filed on August 27, 2018. On October 10, 2018, Duke Energy Carolinas filed Motions to Dismiss for lack of standing, Motion for Judgment on the Pleadings and Motion to Stay Discovery. On January 9, 2019, the court entered an order denying Duke Energy Carolinas' motion to stay discovery. There has been no ruling on the other pending motions. On April 5, 2019, Duke Energy Carolinas filed a motion to stay the case following the NCDEQ’s April 1 Order. On August 2, 2019, the court ordered that this case is stayed and shall remain stayed pending further order from the court.

~~Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of these matters.~~

Asbestos-related Injuries and Damages Claims

Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of ~~September 30, 2019,~~March 31, 2020, there were ~~121~~118 asserted claims for non-malignant cases with cumulative relief sought of up to ~~$32~~$30 million, and 4051 asserted claims for malignant cases with cumulative relief sought of up to ~~$13~~$17 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.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Duke Energy Carolinas has recognized asbestos-related reserves of ~~$592~~$596 million at ~~September 30, 2019,~~March 31, 2020, and ~~$630~~$604 million at December 31, ~~2018.~~2019. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Condensed Consolidated Balance Sheets. These reserves are based upon Duke Energy Carolinas' best estimate for current and future asbestos claims through ~~2038~~2039 and are recorded on an undiscounted basis. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after ~~2038~~2039 related to such potential claims. It is possible Duke Energy Carolinas may incur asbestos liabilities in excess of the recorded reserves.

Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. Duke Energy Carolinas’ cumulative payments began to exceed the self-insured retention in 2008. Future payments up to the policy limit will be reimbursed by the third-party insurance carrier. The insurance policy limit for potential future insurance recoveries indemnification and medical cost claim payments is $747 million in excess of the self-insured retention. Receivables for insurance recoveries were ~~$722~~$742 million at ~~September 30, 2019,~~March 31, 2020, and ~~$739~~$742 million at December 31, ~~2018.~~2019. 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.

Duke Energy Progress and Duke Energy Florida

Spent Nuclear Fuel Matters

On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims for damages incurred for the period 2014 through 2018. The lawsuit claimed the Department of Energy breached a contract in failing to accept spent nuclear fuel under the Nuclear Waste Policy Act of 1982 and asserted damages for the cost of on-site storage in the amount of $100 million and $203 million for Duke Energy Progress and Duke Energy Florida, respectively. Discovery is ongoing and a trial is expected to occur in ~~2020.~~early 2021.

Duke Energy ~~Florida~~Indiana

~~Fluor Contract Litigation~~Coal Ash Basin Closure Plan Appeal

On January ~~29, 2019, Fluor~~27, 2020, Hoosier Environmental Council filed a ~~breach~~Petition for Administrative Review with the Indiana Office of ~~contract lawsuit in~~Environmental Adjudication (the court) challenging the ~~U.S. District Court for the Middle District~~Indiana Department of ~~Florida against~~Environmental Management’s December 10, 2019, partial approval of Duke Energy Florida related to an EPC agreement for the combined-cycle natural gas plant in Citrus County, Florida. Fluor filed an amended complaint on February 13, 2019. Fluor’s multicount complaint sought civil, statutory and contractual remedies related toIndiana’s ash pond closure plan. On March 11, 2020, Duke Energy ~~Florida’s $67 million draw in early 2019,~~Indiana filed a Motion to Dismiss. On May 5, 2020, the court entered an order denying that motion. The court will schedule a trial on ~~Fluor’s letter of credit and offset of invoiced amounts.~~the merits for a future date. Duke Energy ~~Florida moved to dismiss all counts~~Indiana cannot predict the outcome of ~~Fluor's amended complaint, and on April 16, 2019, the court dismissed Fluor's complaint without prejudice. On April 26, 2019, Fluor filed a second amended complaint.~~this matter.

On August 1, 2019, Duke Energy Florida and Fluor reached a settlement to resolve the pending litigation and other outstanding issues related to completing the Citrus County CC. Pursuant to the terms of the settlement, Fluor filed a notice of voluntary dismissal, and on August 27, 2019, the court dismissed the case with prejudice. As a result of the settlement with Fluor, Duke Energy Florida recorded a $25 million reduction to a prior-year impairment within Impairment charges on Duke Energy's Condensed Consolidated Statements of Operations in the third quarter of 2019.

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.



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

The table below presents recorded reserves based on management’s best estimate of probable loss for legal matters, excluding asbestos-related reserves discussed above. Reserves are classified on the Condensed Consolidated Balance Sheets in Other within Other Noncurrent Liabilities and Other within Current Liabilities. The reasonably possible range of loss in excess of recorded reserves is not material, other than as described above.


(in millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Reserves for Legal Matters
Duke Energy	$	62	$	65	$	61	$	62
Duke Energy Carolinas	8		9		3		2
Progress Energy	52		54		52		55
Duke Energy Progress	13		12		9		12
Duke Energy Florida	22		24		23		22
Piedmont	1		1		1		1

OTHER COMMITMENTS AND CONTINGENCIES

General

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



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

In addition, the Duke Energy Registrants enter into various fixed-price, noncancelable commitments to purchase or sell power or natural gas, take-or-pay arrangements, transportation, or throughput agreements and other contracts that may or may not be recognized on their respective Condensed Consolidated Balance Sheets. Some of these arrangements may be recognized at fair value on their respective Condensed Consolidated Balance Sheets if such contracts meet the definition of a derivative and the NPNS exception does not apply. In most cases, the Duke Energy Registrants’ purchase obligation contracts contain provisions for price adjustments, minimum purchase levels and other financial commitments.

~~5. LEASES~~

As described in Note 1, Duke Energy adopted the ~~revised accounting~~new guidance for ~~Leases~~credit losses effective January 1, ~~2019,~~2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. ~~Adoption~~The reserve for credit losses for insurance receivables based on adoption of the new standard ~~resulted in the recording of ROU assets and operating lease liabilities as follows:~~

As of January 1, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

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

~~As part of its operations,~~is $15 million for Duke Energy leases certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (barges and railcars), land and office space under various terms and expiration dates. Additionally, Duke Energy Carolinas, Duke Energy Progress and Duke Energy ~~Indiana have finance leases related to firm natural gas pipeline transportation capacity. Duke Energy Progress and Duke Energy Florida have entered into certain PPAs, which~~Carolinas. Insurance receivables are ~~classified as finance and operating leases.~~

~~Duke Energy has certain lease agreements, which include variable lease payments that are~~evaluated based on the ~~usage~~risk of ~~an asset. These variable lease payments~~ ~~are not included~~default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the ~~measurement~~risk of default from credit agencies.

The reserve for credit losses for financial guarantees based on adoption of the ~~ROU assets or operating lease liabilities~~new standard is $99 million for Duke Energy. Management considers financial guarantees for evaluation under this standard based on the ~~Condensed Consolidated Financial Statements.~~

~~Certain Duke Energy lease agreements include options~~anticipated amount outstanding at the time of default. The reserve for ~~renewal and early termination. The intent to renew a lease varies depending~~credit losses is based on the ~~lease type~~evaluation of the contingent components of financial guarantees. Management evaluates the risk of default, exposure and ~~asset. Renewal options that are reasonably certain to be exercised are included~~length of time remaining in the ~~lease measurements. The decision to terminate a lease early is dependent on various economic factors. No termination options have been included in any of the lease measurements.~~

Duke Energy operates various renewable energy projects and sells the generated output to utilities, electric cooperatives, municipalities and commercial and industrial customers through long-term PPAs. In certain situations, these PPAs and the associated renewable energy projects qualify as operating leases. Rental income from these leases is accountedperiod for as Nonregulated electric and other revenues in the Condensed Consolidated Statements of Operations. There are no minimum lease payments as all payments are contingent based on actual electricity generated by the renewable energy projects. Contingent lease payments were $69 million and $205 million for the three and nine months ended September 30, 2019, respectively. As of September 30, 2019, renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,347 million and accumulated depreciation of $692 million. These assets are principally classified as nonregulated electric generation and transmission assets.each contract.



~~FINANCIAL STATEMENTS~~	~~LEASES~~

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

Three Months Ended September 30, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Operating lease expense^(a)
$ 75
$ 13
$ 39
$ 16
$ 23
$ 3
$ 5
$ 1
Short-term lease expense^(a)
2
—
—
—
—
—
1
—
Variable lease expense^(a)
27
6
22
21
1
—
—
—
Finance lease expense
Amortization of leased assets^(b)
28
2
9
1
8
—
—
—
Interest on lease liabilities^(c)
7
3
12
10
2
—
—
—
Total finance lease expense 35
5
21
11
10
—
—
—
Total lease expense $ 139
$ 24
$ 82
$ 48
$ 34
$ 3
$ 6
$ 1

Nine Months Ended September 30, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Operating lease expense^(a)
$ 220
$ 36
$ 121
$ 52
$ 69
$ 9
$ 15
$ 4
Short-term lease expense^(a)
15
4
7
3
4
1
2
—
Variable lease expense^(a)
48
18
29
24
5
—
—
—
Finance lease expense
Amortization of leased assets^(b)
84
4
17
3
14
1
—
—
Interest on lease liabilities^(c)
44
10
31
24
7
—
1
—
Total finance lease expense 128
14
48
27
21
1
1
—
Total lease expense $ 411
$ 72
$ 205
$ 106
$ 99
$ 11
$ 18
$ 4


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


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


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

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

(in millions) Year Ended December 31, 2018
Duke Energy $ 268
Duke Energy Carolinas 49
Progress Energy 143
Duke Energy Progress 75
Duke Energy Florida 68
Duke Energy Ohio 13
Duke Energy Indiana 21
Piedmont 11



~~FINANCIAL STATEMENTS~~	~~LEASES~~

~~The following table presents operating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.~~

Twelve Months Ended September 30,
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
2020 $ 278
$ 32
$ 129
$ 51
$ 78
$ 2
$ 6
$ 5
2021 220
20
100
45
55
2
4
5
2022 201
19
95
40
55
2
4
5
2023 192
18
95
41
54
2
4
5
2024 179
14
95
41
54
2
4
5
Thereafter 1,008
60
480
291
189
22
63
6
Total operating lease payments 2,078
163
994
509
485
32
85
31
Less: present value discount (410 ) (28 ) (185 ) (113 ) (72 ) (10 ) (27 ) (3 )
Total operating lease liabilities^(a)
$ 1,668
$ 135
$ 809
$ 396
$ 413
$ 22
$ 58
$ 28


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

~~The following table presents future minimum lease payments under operating leases, which at inception had a noncancelable term of more than one year, as reported under the old lease standard.~~

December 31, 2018
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

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

~~The following table presents finance lease maturities and a reconciliation of the undiscounted cash flows to finance lease liabilities.~~

Twelve Months Ended September 30,
Duke
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Indiana
2020 $ 179
$ 19
$ 69
$ 44
$ 25
$ 1
2021 184
16
69
44
25
1
2022 177
14
69
44
25
1
2023 173
14
69
44
25
1
2024 149
14
57
44
13
1
Thereafter 827
189
552
539
13
27
Total finance lease payments 1,689
266
885
759
126
32
Less: amounts representing interest (699 ) (160 ) (477 ) (451 ) (26 ) (22 )
Total finance lease liabilities $ 990
$ 106
$ 408
$ 308
$ 100
$ 10



~~FINANCIAL STATEMENTS~~	~~LEASES~~

~~The following table presents future minimum lease payments under finance leases, as reported under the old lease standard.~~

December 31, 2018
Duke
Duke
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
2019 $ 170
$ 20
$ 45
$ 20
$ 25
$ 2
$ 1
2020 174
20
46
21
25
—
1
2021 177
15
45
20
25
—
1
2022 165
15
45
21
24
—
1
2023 165
15
45
21
24
—
1
Thereafter 577
204
230
209
21
—
27
Minimum annual payments 1,428
289
456
312
144
2
32
Less: amount representing interest (487 ) (180 ) (205 ) (175 ) (30 ) —
(22 )
Total $ 941
$ 109
$ 251
$ 137
$ 114
$ 2
$ 10

~~The following tables contain additional information related to leases.~~

September 30, 2019

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Classification Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Assets
Operating Operating lease ROU assets, net $ 1,703
$ 135
$ 814
$ 397
$ 417
$ 22
$ 58
$ 25
Finance Net property, plant and equipment 952
125
448
309
139
—
10
—
Total lease assets $ 2,655
$ 260
$ 1,262
$ 706
$ 556
$ 22
$ 68
$ 25
Liabilities
Current
Operating Other current liabilities $ 212
$ 27
$ 99
$ 36
$ 63
$ 1
$ 3
$ 4
Finance Current maturities of long-term debt 117
6
23
6
17
—
—
—
Noncurrent
Operating Operating lease liabilities 1,456
108
710
360
350
21
55
24
Finance Long-Term Debt 873
100
385
302
83
—
10
—
Total lease liabilities $ 2,658
$ 241
$ 1,217
$ 704
$ 513
$ 22
$ 68
$ 28



~~FINANCIAL STATEMENTS~~	~~LEASES~~

Nine Months Ended September 30, 2019

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Cash paid for amounts included in the measurement of lease liabilities^(a)

Operating cash flows from operating leases $ 221
$ 26
$ 104
$ 43
$ 61
$ 1
$ 5
$ 6
Operating cash flows from finance leases 44
10
31
24
7
—
1
—
Financing cash flows from finance leases 84
4
17
3
14
1
—
—

Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating^(b)
$ 147
$ 44
$ 30
$ 30
$ —
$ —
$ —
$ 1
Finance 175
—
175
175
—
—
—
—


~~(a)~~	~~No amounts were classified as investing cash flows from operating leases for the nine months ended September 30, 2019.~~


~~(b)~~	~~Does not include ROU assets recorded as a result of the adoption of the new lease standard.~~

September 30, 2019

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Weighted-average remaining lease term (years)
Operating leases 11
9
10
12
8
18
18
6
Finance leases 13
18
16
18
11
—
27
—
Weighted-average discount rate^(a)

Operating leases 3.9 % 3.5 % 3.8 % 3.9 % 3.8 % 4.3 % 4.1 % 3.6 %
Finance leases 8.0 % 12.9 % 11.8 % 12.4 % 8.3 % — % 11.9 % — %

~~(a)~~

The discount rate is calculated using the rate implicit in a lease if it is readily determinable. Generally, the rate used by the lessor is not provided to Duke Energy and in these cases the incremental borrowing rate is used. Duke Energy will typically use its fully collateralized incremental borrowing rate as of the commencement date to calculate and record the lease. The incremental borrowing rate is influenced by the lessee’s credit rating and lease term and as such may differ for individual leases, embedded leases or portfolios of leased assets.



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

6.5. DEBT AND CREDIT FACILITIES

SUMMARY OF SIGNIFICANT DEBT ISSUANCES

The following table summarizes significant debt issuances (in millions).

Nine Months Ended September 30, 2019
Duke
Duke
Duke
Duke
Duke

Maturity Interest
Duke
Energy
Energy
Energy
Energy
Energy

Issuance Date Date Rate
Energy
(Parent)
Carolinas
Progress
Ohio
Indiana
Piedmont
Unsecured Debt
March 2019^(a)
March 2022 2.788 %
^(b)
$ 300
$ 300
$ —
$ —
$ —
$ —
$ —
March 2019^(a)
March 2022 3.227 % 300
300
—
—
—
—
—
May 2019^(e)
June 2029 3.500 % 600
—
—
—
—
—
600
June 2019^(a)
June 2029 3.400 % 600
600
—
—
—
—
—
June 2019^(a)
June 2049 4.200 % 600
600
—
—
—
—
—
July 2019^(g)
July 2049 4.320 % 40
—
—
—
40
—
—
September 2019^(g)
October 2025 3.230 % 95
—
—
—
95
—
—
September 2019^(g)
October 2029 3.560 % 75
—
—
—
75
—
—
First Mortgage Bonds
January 2019^(c)
February 2029 3.650 % 400
—
—
—
400
—
—
January 2019^(c)
February 2049 4.300 % 400
—
—
—
400
—
—
March 2019^(d)
March 2029 3.450 %
600

—
—
600
—
—
—
August 2019^(a)
August 2029 2.450 % 450
—
450
—
—
—
—
August 2019^(a)
August 2049 3.200 % 350
—
350
—
—
—
—
September 2019^(f)
October 2049 3.250 % 500
—
—
—
—
500
—
Total issuances $ 5,310
$ 1,800

$ 800

$ 600
$ 1,010

$ 500
$ 600



					Three Months Ended March 31, 2020
							Duke		Duke		Duke
	Maturity	Interest			Duke		Energy		Energy		Energy
Issuance Date	Date	Rate			Energy		(Parent)		Carolinas		Indiana
Unsecured Debt
March 2020^(a)	March 2021	1.400	%	^(b)	$	1,688	$	1,688	$	—	$	—
First Mortgage Bonds
January 2020^(c)	February 2030	2.450	%		500		—		500		—
January 2020^(c)	August 2049	3.200	%		400		—		400		—
March 2020^(d)	April 2050	2.750	%		550		—		—		550
Total issuances					$	3,138	$	1,688	$	900	$	550


(a)	Debt issued in response to ~~pay down short-term debt~~market volatility concerns related to the COVID-19 pandemic. Refer to Note 1 for additional information on the COVID-19 pandemic. Proceeds will be used to reduce outstanding commercial paper and for general corporate purposes.


(b)	Debt issuance has a floating interest rate.


(c)	Debt issued to repay at maturity $450 million first mortgage bonds due ~~April 2019, pay down short-term debt~~June 2020 and for general corporate purposes.


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


~~(e)~~	~~Debt issued~~repay at maturity $500 million first mortgage bonds due July 2020 and to ~~repay in full the outstanding~~ ~~$350 million~~ ~~Piedmont unsecured term loan due September 2019,~~ pay down short-term ~~debt and for general corporate purposes.~~ debt.


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


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



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

CURRENT MATURITIES OF LONG-TERM DEBT

The following table shows the significant components of Current Maturities of Long-Term Debt on the 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, 2019		Maturity Date	Interest Rate			March 31, 2020
Unsecured Debt
Duke Energy Kentucky	October 2019	4.650	%		$	100
Progress Energy	December 2019	4.875	%		350
Duke Energy (Parent)							June 2020	2.100	%		$	330
Duke Energy Progress							December 2020	2.292	%	^(a)	700
Progress Energy, Inc							January 2021	4.400	%		500
Duke Energy (Parent)	June 2020	2.100	%		330		March 2021	1.400	%	^(a)	1,688
First Mortgage Bonds
Duke Energy Florida	January 2020	1.850	%		250
Duke Energy Florida	April 2020	4.550	%		250		April 2020	4.550	%		250
Duke Energy Carolinas	June 2020	4.300	%		450		June 2020	4.300	%		450
Duke Energy Indiana	July 2020	3.750	%		500		July 2020	3.750	%		500
Duke Energy Progress	September 2020	2.282	%	^(a)	300		September 2020	1.076	%	^(a)	300
Other^(b)					566						359
Current maturities of long-term debt					$	3,096					$	5,077

(a) Debt issuance has a floating interest rate.

(b) Includes finance lease obligations, amortizing debt and small bullet maturities.



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

AVAILABLE CREDIT FACILITIES

Master Credit Facility

In March ~~2019,~~2020, Duke Energy amended its existing $8 billion Master Credit Facility to extend the termination date to March ~~2024.~~2025. 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. This requirement expires on May 15, 2020.

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

September 30, 2019

Duke
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Energy
Energy
Energy
Energy
Energy

(in millions) Energy
(Parent)
Carolinas
Progress
Florida
Ohio
Indiana
Piedmont
Facility size^(a)
$ 8,000
$ 2,650
$ 1,750
$ 1,250
$ 800
$ 450
$ 600
$ 500
Reduction to backstop issuances
Commercial paper^(b)
(1,971 ) (627 ) (338 ) (211 ) (277 ) (164 ) (150 ) (204 )
Outstanding letters of credit (51 ) (43 ) (4 ) (2 ) —
—
—
(2 )
Tax-exempt bonds (81 ) —
—
—
—
—
(81 ) —
Coal ash set-aside (500 ) —
(250 ) (250 ) —
—
—
—
Available capacity under the Master Credit Facility $ 5,397

$ 1,980

$ 1,158

$ 787

$ 523

$ 286

$ 369
$ 294



	March 31, 2020
				Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana			Piedmont
Facility size^(a)	$	8,000		$	2,650		$	1,500		$	1,250		$	800		$	600		$	600		$	600
Reduction to backstop issuances
Commercial paper^(b)	(2,540		)	(1,140		)	(300		)	(275		)	(167		)	(243		)	(150		)	(265		)
Outstanding letters of credit	(49		)	(42		)	(4		)	(2		)	—			—			—			(1		)
Tax-exempt bonds	(81		)	—			—			—			—			—			(81		)	—
Coal ash set-aside	(500		)	—			(250		)	(250		)	—			—			—			—
Available capacity under the Master Credit Facility	$	4,830		$	1,468		$	946		$	723		$	633		$	357		$	369		$	334


(a)	Represents the sublimit of each borrower.


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



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

Other Credit Facilities


	September 30, 2019				March 31, 2020
(in millions)	Facility size		Amount drawn		Facility size		Amount drawn
Duke Energy (Parent) Three-Year Revolving Credit Facility^(a)	$	1,000	$	500	$	1,000	$	1,000
Duke Energy Progress Term Loan Facility	700		700		700		700


(a)	In ~~May 2019,~~March 2020, Duke Energy (Parent) ~~extended~~drew down the ~~termination date to May 2022.~~remaining $500 million.

~~In May 2019, the~~ ~~$350 million~~ ~~Piedmont term loan was paid off in full with proceeds from the~~ ~~$600 million~~ ~~Piedmont debt offering.~~

~~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. Actual closure costs incurred could be materially different from current estimates that form the basis of the recorded AROs.

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

September 30, 2019
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)
$ 5,789
$ 2,435
$ 3,295
$ 2,769
$ 526
$ —
$ —
$ —
Closure of ash impoundments 6,486
2,917
2,722
2,707
15
43
804
—
Other 326
46
71
38
33
42
20
20
Total ARO $ 12,601
$ 5,398
$ 6,088
$ 5,514
$ 574
$ 85
$ 824
$ 20
Less: current portion 861
214
478
476
2
3
165
—
Total noncurrent ARO $ 11,740

$ 5,184

$ 5,610

$ 5,038

$ 572

$ 82

$ 659
$ 20

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

~~ARO Liability Rollforward~~

~~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, 2018^(a)
$ 10,467
$ 3,949
$ 5,411
$ 4,820
$ 591
$ 93
$ 722
$ 19
Accretion expense^(b)
377
173
190
171
19
3
21
1
Liabilities settled^(c)
(691 ) (276 ) (375 ) (341 ) (34 ) (9 ) (32 ) —
Revisions in estimates of cash flows^(d)
2,448
1,552
862
864
(2 ) (2 ) 113
—
Balance at September 30, 2019 $ 12,601
$ 5,398
$ 6,088
$ 5,514
$ 574
$ 85
$ 824
$ 20


~~(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, 2019, substantially all accretion expense relates to Duke Energy's regulated operations and has been deferred in accordance with regulatory accounting treatment.


~~(c)~~	~~Primarily relates to ash impoundment closures.~~


~~(d)~~	Primarily relates to increases in closure estimates for certain ash impoundments as a result of the NCDEQ's April 1 Order. See Note 4 for more information. The incremental amount recorded represents the discounted cash flows for estimated closure costs based upon the probability weightings of the potential closure methods as evaluated on a site-by-site basis.

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.



~~FINANCIAL STATEMENTS~~	~~ASSET RETIREMENT OBLIGATIONS~~

~~Nuclear Decommissioning Trust Funds~~

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida each maintain NDTFs that are intended to pay for the decommissioning costs of their respective nuclear power plants. The following table presents the fair value of NDTF assets legally restricted for purposes of settling AROs associated with nuclear decommissioning. Duke Energy Florida is actively decommissioning Crystal River Unit 3 and was granted an exemption from the NRC, which allows for use of the NDTF for all aspects of nuclear decommissioning. The entire balance of Duke Energy Florida's NDTF may be applied toward license termination, spent fuel and site restoration costs incurred to decommission Crystal River Unit 3 and is excluded from the table below. See Note 12 for additional information related to the fair value of the Duke Energy Registrants' NDTFs.

(in millions) September 30, 2019 December 31, 2018
Duke Energy $ 6,403
$ 5,579
Duke Energy Carolinas 3,614
3,133
Duke Energy Progress 2,789
2,446

8.6. GOODWILL

Duke Energy

The following table presents the goodwill by reportable segment included on Duke Energy's Condensed Consolidated Balance Sheets at ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018.~~2019.



	Electric Utilities		Gas Utilities		Commercial
(in millions)	and Infrastructure		and Infrastructure		Renewables			Total
Goodwill balance	$	17,379	$	1,924	$	122		$	19,425
Accumulated impairment charges	—		—		(122		)	(122		)
Goodwill, adjusted for accumulated impairment charges	$	17,379	$	1,924	$	—		$	19,303

Duke Energy Ohio

Duke Energy Ohio's Goodwill balance of $920 million, allocated $596 million to Electric Utilities and Infrastructure and $324 million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $216 million on the Condensed Consolidated Balance Sheets at ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018.~~2019.



FINANCIAL STATEMENTS	GOODWILL

Progress Energy

Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure segment and there are 0 accumulated impairment charges.

Piedmont

Piedmont's Goodwill is included in the Gas Utilities and Infrastructure segment and there are 0 accumulated impairment charges.

~~Impairment Testing~~

Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. As the fair value for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis, no goodwill impairment charges were recorded in the third quarter of 2019.



~~FINANCIAL STATEMENTS~~	~~RELATED PARTY TRANSACTIONS~~

9.7. 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 on the Condensed Consolidated Statements of Operations and Comprehensive Income are presented in the following table.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(in millions)	2019		2018		2019		2018		2020		2019
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	197	$	214	$	606	$	647	$	134	$	212
Indemnification coverages^(b)	5		6		15		17		5		5
JDA revenue^(c)	12		13		52		66
Joint Dispatch Agreement (JDA) revenue^(c)									7		23
JDA expense^(c)	32		61		145		134		24		93
Intercompany natural gas purchases^(d)	—		3		7		11		6		4
Progress Energy
Corporate governance and shared service expenses^(a)	$	194	$	216	$	553	$	613	$	146	$	176
Indemnification coverages^(b)	8		8		27		25		9		9
JDA revenue^(c)	32		61		145		134		24		93
JDA expense^(c)	12		13		52		66		7		23
Intercompany natural gas purchases^(d)	19		20		57		58		19		19
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	114	$	138	$	328	$	382	$	75	$	106
Indemnification coverages^(b)	3		3		11		9		4		4
JDA revenue^(c)	32		61		145		134		24		93
JDA expense^(c)	12		13		52		66		7		23
Intercompany natural gas purchases^(d)	19		20		57		58		19		19
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	80	$	78	$	225	$	231	$	71	$	70
Indemnification coverages^(b)	5		5		16		16		5		5
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	90	$	85	$	258	$	264	$	84	$	85
Indemnification coverages^(b)	1		1		3		3		1		1
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	109	$	105	$	299	$	302	$	106	$	97
Indemnification coverages^(b)	2		2		5		6		2		2
Piedmont
Corporate governance and shared service expenses^(a)	$	33	$	39	$	102	$	115	$	34	$	32
Indemnification coverages^(b)	1		1		2		2		1		1
Intercompany natural gas sales^(d)	19		23		64		69		25		23
Natural gas storage and transportation costs^(e)	6		6		17		18		6		5



FINANCIAL STATEMENTS	RELATED PARTY TRANSACTIONS

(a)

The Subsidiary Registrants are charged their proportionate share of corporate governance and other shared services costs, primarily related to human resources, employee benefits, information technology, legal and accounting fees, as well as other third-party costs. These amounts are primarily recorded in Operation, maintenance and other on the 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, which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power and expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues and Fuel used in electric generation and purchased power, respectively, on the Condensed Consolidated Statements of Operations and Comprehensive Income.

(d)

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


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



~~FINANCIAL STATEMENTS~~	~~RELATED PARTY TRANSACTIONS~~

In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions, such as pipeline lease arrangements, and their proportionate share of certain charged expenses. These transactions of the Subsidiary Registrants are incurred in the ordinary course of business and are eliminated in consolidation.

As discussed in Note 1311, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.

Intercompany Income Taxes

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


	Duke				Duke		Duke		Duke		Duke				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
September 30, 2019
March 31, 2020
Intercompany income tax receivable	$	—	$	178	$	60	$	10	$	14	$	3	$	85	$	—	$	114	$	1	$	4	$	—	$	—	$	—
Intercompany income tax payable	71		—		—		—		—		—		—		44		—		—		—		—		6		10

December 31, 2018
December 31, 2019
Intercompany income tax receivable	$	52	$	47	$	29	$	—	$	—	$	8	$	��	$	—	$	125	$	28	$	—	$	9	$	28	$	13
Intercompany income tax payable	—		—		—		16		3		—		45		5		—		—		2		—		—		—

~~10.~~8. DERIVATIVES AND HEDGING

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

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

INTEREST RATE RISK

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Cash Flow Hedges

For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. Gains and losses reclassified out of ~~AOCI~~accumulated other comprehensive income (loss) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, and 2019, ~~and 2018,~~ were not material. Duke Energy's interest rate derivatives designated as hedges include interest rate swaps used to hedge existing debt within the Commercial Renewables business and forward-starting interest rate swaps not accounted for under regulatory accounting.

Undesignated Contracts

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

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



~~FINANCIAL STATEMENTS~~	~~DERIVATIVES AND HEDGING~~

The following table shows notional amounts of outstanding derivatives related to interest rate risk.


	September 30, 2019												March 31, 2020
			Duke				Duke		Duke		Duke				Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges	$	1,031	$	—	$	—	$	—	$	—	$	—	$	991	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,577		450		1,100		250		850		27		2,027		400		1,600		1,050		550		27
Total notional amount^(a)	$	2,608	$	450	$	1,100	$	250	$	850	$	27	$	3,018	$	400	$	1,600	$	1,050	$	550	$	27


	December 31, 2018												December 31, 2019
			Duke				Duke		Duke		Duke				Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges	$	923	$	—	$	—	$	—	$	—	$	—	$	993	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,721		300		1,200		650		550		27		1,277		450		800		250		550		27
Total notional amount^(a)	$	2,644	$	300	$	1,200	$	650	$	550	$	27	$	2,270	$	450	$	800	$	250	$	550	$	27


(a)	Duke Energy includes amounts related to consolidated VIEs of ~~$731~~$691 million in cash flow hedges as of ~~September 30, 2019,~~March 31, 2020, and ~~$422~~$693 million in cash flow hedges ~~and $194 million in undesignated contracts~~ as of December 31, ~~2018.~~2019.

COMMODITY PRICE RISK

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Volumes

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


	September 30, 2019								March 31, 2020
		Duke		Duke	Duke	Duke	Duke			Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (GWh)	25,658	—	—	—	—	2,774	22,884	—	6,737	—	—	—	—	977	5,760	—
Natural gas (millions of dekatherms)	729	130	175	175	—	—	4	420	709	145	158	158	—	—	4	402


	December 31, 2018								December 31, 2019
		Duke		Duke	Duke	Duke	Duke			Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (GWh)	15,286	—	—	—	—	1,786	13,500	—	15,858	—	—	—	—	1,887	13,971	—
Natural gas (millions of dekatherms)	739	121	169	166	3	—	1	448	704	130	160	160	—	—	3	411

U.S. EQUITY SECURITIES RISK

In May 2019, Duke Energy Florida entered into a Decommissioning Services Agreement for the accelerated decommissioning of Crystal River Unit 3 with ADP CR3, LLC and ADP SF1, LLC. See Note 3 for additional information on the accelerated decommissioning. Duke Energy Florida executed U.S. equity option collars within the NDTF in May 2019 to preserve the U.S. equity portfolio value in the Duke Energy Florida NDTF in the event the accelerated decommissioning is approved. These option collars were executed as a purchase of a put option and the sale of a call option on certain U.S. equity index funds. The put and call options create a collar to guarantee a minimum and maximum investment value for the Duke Energy Florida NDTF U.S. equity portfolio. The put and call options were entered into at zero-cost, with the price to purchase the puts offset entirely by the funds received to sell the calls. As of ~~September 30, 2019,~~March 31, 2020, the aggregate notional amount of both the put and call options was 305,000 units in U.S. equity security index funds. The options are not designated as hedging instruments. Substantially all of Duke Energy Florida’s NDTF qualifies for regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the options are deferred as regulatory liabilities or regulatory assets, respectively. The Duke Energy Florida NDTF liquidated the options in April 2020, and received proceeds of approximately $7 million.



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

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

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

Derivative Assets September 30, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current $ 23
$ —
$ —
$ —
$ —
$ 5
$ 16
$ 2
Total Derivative Assets – Commodity Contracts $ 23
$ —
$ —
$ —
$ —
$ 5
$ 16
$ 2
Interest Rate Contracts
Designated as Hedging Instruments
Current $ 3
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Total Derivative Assets – Interest Rate Contracts $ 3
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Equity Securities Contracts
Not Designated as Hedging Instruments
Current 5
—
5
—
5
—
—
—
Total Derivative Assets – Equity Securities Contracts $ 5
$ —
$ 5
$ —
$ 5
$ —
$ —
$ —
Total Derivative Assets $ 31

$ —

$ 5

$ —

$ 5

$ 5

$ 16
$ 2


Derivative Liabilities	September 30, 2019
Derivative Assets																	March 31, 2020
			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	$	66	$	33	$	24	$	24	$	—	$	—	$	—	$	9	$	6	$	—	$	—	$	—	$	—	$	—	$	2	$	3
Noncurrent	147		12		34		18		—		—		—		102		4		2		1		1		—		1		—		—
Total Derivative Liabilities – Commodity Contracts	$	213	$	45	$	58	$	42	$	—	$	—	$	—	$	111
Total Derivative Assets – Commodity Contracts																	$	10	$	2	$	1	$	1	$	—	$	1	$	2	$	3
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	2	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	56		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	64		22		42		1		41		1		—		—		$	3	$	—	$	3	$	3	$	—	$	—	$	—	$	—
Noncurrent	8		—		3		—		3		5		—		—		1		—		1		1		—		—		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	130	$	22	$	45	$	1	$	44	$	6	$	—	$	—
Total Derivative Assets – Interest Rate Contracts																	$	4	$	—	$	4	$	4	$	—	$	—	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current	10		—		10		—		10		—		—		—
Total Derivative Liabilities – Equity Securities Contracts	$	10	$	—	$	10	$	—	$	10	$	—	$	—	$	—
Total Derivative Liabilities	$	353	$	67	$	113	$	43	$	54	$	6	$	—	$	111
Noncurrent^(a)																	20		—		20		—		20		—		—		—
Total Derivative Assets – Equity Securities Contracts																	$	20	$	—	$	20	$	—	$	20	$	—	$	—	$	—
Total Derivative Assets																	$	34	$	2	$	25	$	5	$	20	$	1	$	2	$	3


(a)	Equity security contracts are current since they were set to expire in May 2020 but are classified as noncurrent assets on the Condensed Consolidated Balance Sheet because the amount is presented within the NDTF.



Derivative Liabilities	March 31, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	79	$	40	$	31	$	31	$	—	$	—	$	—	$	8
Noncurrent	130		11		35		20		—		—		—		83
Total Derivative Liabilities – Commodity Contracts	$	209	$	51	$	66	$	51	$	—	$	—	$	—	$	91
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	69	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	54		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	30		—		29		—		29		1		—		—
Noncurrent	28		23		—		—		—		6		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	181	$	23	$	29	$	—	$	29	$	7	$	—	$	—
Total Derivative Liabilities	$	390	$	74	$	95	$	51	$	29	$	7	$	—	$	91



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING


Derivative Assets	December 31, 2018																December 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	35	$	2	$	2	$	2	$	—	$	6	$	23	$	3	$	17	$	—	$	—	$	—	$	—	$	3	$	13	$	1
Noncurrent	4		1		2		2		—		—		—		—		1		—		—		—		—		1		—		—
Total Derivative Assets – Commodity Contracts	$	39	$	3	$	4	$	4	$	—	$	6	$	23	$	3	$	18	$	—	$	—	$	—	$	—	$	4	$	13	$	1
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	3		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	2		—		—		—		—		—		—		—		6		—		6		—		6		—		—		—
Noncurrent	12		—		—		—		—		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	18	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	6	$	—	$	6	$	—	$	6	$	—	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current																	1		—		1		—		1		—		—		—
Total Derivative Assets – Equity Securities Contracts																	$	1	$	—	$	1	$	—	$	1	$	—	$	—	$	—
Total Derivative Assets	$	57	$	3	$	4	$	4	$	—	$	6	$	23	$	3	$	25	$	—	$	7	$	—	$	7	$	4	$	13	$	1


Derivative Liabilities	December 31, 2018																December 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	33	$	14	$	10	$	5	$	6	$	—	$	—	$	8	$	67	$	33	$	26	$	26	$	—	$	—	$	1	$	7
Noncurrent	158		10		15		6		—		—		—		133		156		10		37		22		—		—		—		110
Total Derivative Liabilities – Commodity Contracts	$	191	$	24	$	25	$	11	$	6	$	—	$	—	$	141	$	223	$	43	$	63	$	48	$	—	$	—	$	1	$	117
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	12	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	19	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	6		—		—		—		—		—		—		—		21		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	23		9		13		11		2		1		—		—		8		6		1		1		—		1		—		—
Noncurrent	10		—		6		5		1		4		—		—		5		—		—		—		—		5		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	51	$	9	$	19	$	16	$	3	$	5	$	—	$	—	$	53	$	6	$	1	$	1	$	—	$	6	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current																	24		—		24		—		24		—		—		—
Total Derivative Liabilities – Equity Securities Contracts																	$	24	$	—	$	24	$	—	$	24	$	—	$	—	$	—
Total Derivative Liabilities	$	242	$	33	$	44	$	27	$	9	$	5	$	—	$	141	$	300	$	49	$	88	$	49	$	24	$	6	$	1	$	117



~~FINANCIAL STATEMENTS~~	~~DERIVATIVES AND HEDGING~~

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.

Derivative Assets September 30, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Current
Gross amounts recognized $ 31
$ —
$ 5
$ —
$ 5
$ 5
$ 16
$ 2
Gross amounts offset (5 ) —
(5 ) —
(5 ) —
—
—
Net amounts presented in Current Assets: Other $ 26
$ —
$ —
$ —
$ —
$ 5
$ 16
$ 2

Derivative Liabilities September 30, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Current
Gross amounts recognized $ 142
$ 55
$ 76
$ 25
$ 51
$ 1
$ —
$ 9
Gross amounts offset (10 ) —
(10 ) —
(10 ) —
—
—
Net amounts presented in Current Liabilities: Other $ 132
$ 55
$ 66
$ 25
$ 41
$ 1
$ —
$ 9
Noncurrent
Gross amounts recognized $ 211
$ 12
$ 37
$ 18
$ 3
$ 5
$ —
$ 102
Gross amounts offset —
—
—
—
—
—
—
—
Net amounts presented in Other Noncurrent Liabilities: Other $ 211
$ 12
$ 37
$ 18
$ 3
$ 5
$ —
$ 102

Derivative Assets December 31, 2018
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING


Derivative Liabilities	December 31, 2018
Derivative Assets																					March 31, 2020
				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	$	68		$	23		$	23		$	16		$	8	$	1	$	—	$	8	$	9		$	—		$	3		$	3		$	—	$	—	$	2	$	3
Gross amounts offset	(4		)	(2		)	(2		)	(2		)	—		—		—		—		—			—			—			—			—		—		—		—
Net amounts presented in Current Liabilities: Other	$	64		$	21		$	21		$	14		$	8	$	1	$	—	$	8
Net amounts presented in Current Assets: Other																					$	9		$	—		$	3		$	3		$	—	$	—	$	2	$	3
Noncurrent
Gross amounts recognized	$	174		$	10		$	21		$	11		$	1	$	4	$	—	$	133	$	25		$	2		$	22		$	2		$	20	$	1	$	—	$	—
Gross amounts offset	(3		)	(1		)	(2		)	(2		)	—		—		—		—		(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	171		$	9		$	19		$	9		$	1	$	4	$	—	$	133
Net amounts presented in Other Noncurrent Assets: Other																					$	2		$	—		$	1		$	1		$	—	$	1	$	—	$	—
Net amounts presented in NDTF																					$	20		$	—		$	20		$	—		$	20	$	—	$	—	$	—



Derivative Liabilities	March 31, 2020
				Duke						Duke			Duke		Duke		Duke
	Duke			Energy			Progress			Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	178		$	40		$	60		$	31		$	29	$	1	$	—	$	8
Gross amounts offset	—			—			—			—			—		—		—		—
Net amounts presented in Current Liabilities: Other	$	178		$	40		$	60		$	31		$	29	$	1	$	—	$	8
Noncurrent
Gross amounts recognized	$	212		$	34		$	35		$	20		$	—	$	6	$	—	$	83
Gross amounts offset	(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	209		$	32		$	34		$	19		$	—	$	6	$	—	$	83



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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



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

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.


	September 30, 2019								March 31, 2020
			Duke				Duke				Duke				Duke
	Duke		Energy		Progress		Energy		Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	82	$	40	$	42	$	42	$	96	$	45	$	51	$	51
Fair value of collateral already posted	—		—		—		—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	82		40		42		42		96		45		51		51


	December 31, 2018								December 31, 2019
			Duke				Duke				Duke				Duke
	Duke		Energy		Progress		Energy		Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	44	$	19	$	25	$	25	$	79	$	35	$	44	$	44
Fair value of collateral already posted	—		—		—		—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	44		19		25		25		79		35		44		44

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

~~11.~~9. INVESTMENTS IN DEBT AND EQUITY SECURITIES

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

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

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

Investment Trusts

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



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

Other AFS Securities

Unrealized gains and losses on all other AFS securities are included in other comprehensive income until realized, unless it is determined the carrying value of an investment ~~is other-than-temporarily impaired.~~has a credit loss. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value ~~should be considered other-than-temporary.~~is related to a credit loss. If an ~~OTTI~~credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018.~~2019.

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 debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	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		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	114	$	—	$	—	$	88	$	—	$	—	$	119	$	—	$	—	$	101
Equity securities	3,118		63		5,222		2,402		95		4,475		2,499		170		4,488		3,523		55		5,661
Corporate debt securities	40		1		633		4		13		566		26		16		642		37		1		603
Municipal bonds	14		—		370		1		4		353		10		2		404		13		—		368
U.S. government bonds	39		—		1,217		14		12		1,076		70		—		1,212		33		1		1,256
NDTF equity security contracts													20		—		20		—		—		—
Other debt securities	4		—		142		—		2		148		4		3		163		3		—		141
Total NDTF Investments	$	3,215	$	64	$	7,698	$	2,421	$	126	$	6,706	$	2,629	$	191	$	7,048	$	3,609	$	57	$	8,130
Other Investments
Cash and cash equivalents	$	—	$	—	$	53	$	—	$	—	$	22	$	—	$	—	$	78	$	—	$	—	$	52
Equity securities	48		—		112		36		1		99		31		1		95		57		—		122
Corporate debt securities	2		—		72		—		2		60		—		—		89		3		—		67
Municipal bonds	5		—		94		—		1		85		6		1		98		4		—		94
U.S. government bonds	3		—		40		1		—		45		5		—		51		2		—		41
Other debt securities	1		—		65		—		1		58		—		—		52		—		—		56
Total Other Investments	$	59	$	—	$	436	$	37	$	5	$	369	$	42	$	2	$	463	$	66	$	—	$	432
Total Investments	$	3,274	$	64	$	8,134	$	2,458	$	131	$	7,075	$	2,671	$	193	$	7,511	$	3,675	$	57	$	8,562

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, and 2019, ~~and 2018,~~ were as follows.


	Three Months Ended				Nine Months Ended				Three Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	60	$	19	$	161	$	85	$	23	$	35
Realized losses	43		16		136		60		65		30
AFS:
Realized gains	53		4		110		14		20		10
Realized losses	36		7		83		32		6		11



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY CAROLINAS

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


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	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		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	36	$	—	$	—	$	29	$	—	$	—	$	33	$	—	$	—	$	21
Equity securities	1,680		15		2,901		1,309		54		2,484		1,355		81		2,498		1,914		8		3,154
Corporate debt securities	24		1		409		2		9		341		15		12		392		21		1		361
Municipal bonds	4		—		96		—		1		81		3		1		128		3		—		96
U.S. government bonds	19		—		517		5		8		475		35		—		502		16		1		578
Other debt securities	4		—		137		—		2		143		3		3		159		3		—		137
Total NDTF Investments	$	1,731	$	16	$	4,096	$	1,316	$	74	$	3,553	$	1,411	$	97	$	3,712	$	1,957	$	10	$	4,347


	Three Months Ended				Nine Months Ended				Three Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	34	$	11	$	101	$	47	$	9	$	23
Realized losses	26		8		95		30		45		21
AFS:
Realized gains	21		4		46		13		12		9
Realized losses	13		6		34		24		5		10

PROGRESS ENERGY

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


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	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		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	78	$	—	$	—	$	59	$	—	$	—	$	86	$	—	$	—	$	80
Equity securities	1,438		48		2,321		1,093		41		1,991		1,144		89		1,990		1,609		47		2,507
Corporate debt securities	16		—		224		2		4		225		11		4		250		16		—		242
Municipal bonds	10		—		274		1		3		272		7		1		276		10		—		272
U.S. government bonds	20		—		700		9		4		601		35		—		710		17		—		678
NDTF equity security contracts													20		—		20		—		—		—
Other debt securities	—		—		5		—		—		5		1		—		4		—		—		4
Total NDTF Investments	$	1,484	$	48	$	3,602	$	1,105	$	52	$	3,153	$	1,218	$	94	$	3,336	$	1,652	$	47	$	3,783
Other Investments
Cash and cash equivalents	$	—	$	—	$	49	$	—	$	—	$	17	$	—	$	—	$	69	$	—	$	—	$	49
Municipal bonds	4		—		52		—		—		47		5		—		53		3		—		51
Total Other Investments	$	4	$	—	$	101	$	—	$	—	$	64	$	5	$	—	$	122	$	3	$	—	$	100
Total Investments	$	1,488	$	48	$	3,703	$	1,105	$	52	$	3,217	$	1,223	$	94	$	3,458	$	1,655	$	47	$	3,883



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES


	Three Months Ended				Nine Months Ended				Three Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	26	$	8	$	60	$	38	$	14	$	12
Realized losses	17		8		41		30		20		9
AFS:
Realized gains	31		—		62		1		5		1
Realized losses	23		1		49		8		1		1

DUKE ENERGY PROGRESS

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


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	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		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	52	$	—	$	—	$	46	$	—	$	—	$	51	$	—	$	—	$	53
Equity securities	1,107		30		1,907		833		30		1,588		881		79		1,631		1,258		21		2,077
Corporate debt securities	16		—		224		2		3		171		11		4		250		16		—		242
Municipal bonds	10		—		274		1		3		271		7		1		276		10		—		272
U.S. government bonds	19		—		420		6		3		415		34		—		436		16		—		403
Other debt securities	—		—		5		—		—		3		1		—		4		—		—		4
Total NDTF Investments	$	1,152	$	30	$	2,882	$	842	$	39	$	2,494	$	934	$	84	$	2,648	$	1,300	$	21	$	3,051
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	6	$	—	$	—	$	2	$	—	$	—	$	2
Total Other Investments	$	—	$	—	$	2	$	—	$	—	$	6	$	—	$	—	$	2	$	—	$	—	$	2
Total Investments	$	1,152	$	30	$	2,884	$	842	$	39	$	2,500	$	934	$	84	$	2,650	$	1,300	$	21	$	3,053


	Three Months Ended				Nine Months Ended				Three Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	10	$	7	$	27	$	32	$	14	$	10
Realized losses	9		7		24		27		20		8
AFS:
Realized gains	2		—		4		1		5		1
Realized losses	—		1		2		6		1		1



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY FLORIDA

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


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	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		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	26	$	—	$	—	$	13	$	—	$	—	$	35	$	—	$	—	$	27
Equity securities	331		18		414		260		11		403		263		10		359		351		26		430
Corporate debt securities	—		—		—		—		1		54
Municipal bonds	—		—		—		—		—		1
U.S. government bonds	1		—		280		3		1		186		1		—		274		1		—		275
Other debt securities	—		—		—		—		—		2
NDTF equity security contracts													20		—		20		—		—		—
Total NDTF Investments^(a)	$	332	$	18	$	720	$	263	$	13	$	659	$	284	$	10	$	688	$	352	$	26	$	732
Other Investments
Cash and cash equivalents	$	—	$	—	$	4	$	—	$	—	$	1	$	—	$	—	$	3	$	—	$	—	$	4
Municipal bonds	4		—		52		—		—		47		5		—		53		3		—		51
Total Other Investments	$	4	$	—	$	56	$	—	$	—	$	48	$	5	$	—	$	56	$	3	$	—	$	55
Total Investments	$	336	$	18	$	776	$	263	$	13	$	707	$	289	$	10	$	744	$	355	$	26	$	787


(a)	During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of Crystal River Unit 3.

Three Months Ended Nine Months Ended
(in millions) September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
FV-NI:
Realized gains $ 16
$ 1
$ 33
$ 6
Realized losses 8
1
17
3
AFS:
Realized gains 29
—
58
—
Realized losses 23
—
47
2

DUKE ENERGY INDIANA

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


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	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		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
Investments
Equity securities	$	37	$	—	$	74	$	29	$	—	$	67	$	26	$	1	$	63	$	43	$	—	$	81
Corporate debt securities	—		—		6		—		—		8		—		—		4		—		—		6
Municipal bonds	1		—		36		—		1		33		1		1		36		1		—		36
U.S. government bonds	—		—		1		—		—		—		—		—		3		—		—		2
Total Investments	$	38	$	—	$	117	$	29	$	1	$	108	$	27	$	2	$	106	$	44	$	—	$	125



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DEBT SECURITY MATURITIES

The table below summarizes the maturity date for debt securities.


	September 30, 2019												March 31, 2020
			Duke				Duke		Duke		Duke				Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Indiana		Energy		Carolinas		Energy		Progress		Florida		Indiana
Due in one year or less	$	400	$	65	$	328	$	48	$	280	$	4	$	333	$	25	$	302	$	26	$	276	$	3
Due after one through five years	524		220		253		243		10		15		538		234		236		227		9		17
Due after five through 10 years	450		187		209		201		8		5		465		188		214		207		7		7
Due after 10 years	1,259		687		465		431		34		19		1,375		734		541		506		35		16
Total	$	2,633	$	1,159	$	1,255	$	923	$	332	$	43	$	2,711	$	1,181	$	1,293	$	966	$	327	$	43

~~12.~~10. FAIR VALUE MEASUREMENTS

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

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

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

Transfers between levels represent assets or liabilities that were previously (i) categorized at a higher level for which the inputs to the estimate became less observable or (ii) classified at a lower level for which the inputs became more observable during the period. The Duke Energy Registrant’s policy is to recognize transfers between levels of the fair value hierarchy at the end of the period. There were 0 transfers between levels during the nine months ended September 30, 2019, and 2018.

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

Investments in equity securities

The majority of investments in equity securities are valued using Level 1 measurements. Investments in equity securities are typically valued at the closing price in the principal active market as of the last business day of the quarter. Principal active markets for equity prices include published exchanges such as the New York Stock Exchange 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.



~~FINANCIAL STATEMENTS~~	~~FAIR VALUE MEASUREMENTS~~

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 1112 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, for a discussion of the valuation of goodwill and intangible assets.



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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 tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note ~~10.~~8. See Note 119 for additional information related to investments by major security type for the Duke Energy Registrants.


	September 30, 2019														March 31, 2020
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized		Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	5,222		$	5,168		$	—		$	—		$	54	$	4,488		$	4,440		$	—		$	—		$	48
NDTF debt securities	2,476			804			1,672			—			—		2,540			767			1,773			—			—
Other equity securities	112			112			—			—			—		95			95			—			—			—
Other debt securities	324			92			232			—			—		368			126			242			—			—
NDTF equity security contracts															20			—			20			—			—
Derivative assets	31			2			8			21			—		34			3			28			3			—
Total assets	8,165			6,178			1,912			21			54		7,545			5,431			2,063			3			48
Derivative liabilities	(353		)	(25		)	(217		)	(111		)	—		(390		)	(49		)	(250		)	(91		)	—
Net assets (liabilities)	$	7,812		$	6,153		$	1,695		$	(90	)	$	54	$	7,155		$	5,382		$	1,813		$	(88	)	$	48


	December 31, 2018														December 31, 2019
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized		Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	4,475		$	4,410		$	—		$	—		$	65	$	5,684		$	5,633		$	—		$	—		$	51
NDTF debt securities	2,231			576			1,655			—			—		2,469			826			1,643			—			—
Other equity securities	99			99			—			—			—		122			122			—			—			—
Other debt securities	270			67			203			—			—		310			91			219			—			—
Derivative assets	57			4			25			28			—		25			3			7			15			—
Total assets	7,132			5,156			1,883			28			65		8,610			6,675			1,869			15			51
NDTF equity security contracts															(23		)	—			(23		)	—			—
Derivative liabilities	(242		)	(11		)	(90		)	(141		)	—		(277		)	(15		)	(145		)	(117		)	—
Net assets (liabilities)	$	6,890		$	5,145		$	1,793		$	(113	)	$	65	$	8,310		$	6,660		$	1,701		$	(102	)	$	51

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


	Derivatives (net)												Derivatives (net)
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2019			2018			2019			2018				2020			2019
Balance at beginning of period	$	(79	)	$	(97	)	$	(113	)	$	(114	)		$	(102	)	$	(113	)
Purchases, sales, issuances and settlements:
Purchases	—			—			38			56
Settlements	(9		)	(14		)	(32		)	(43		)		(9		)	(12		)
Total (losses) gains included on the Condensed Consolidated Balance Sheet	(2		)	(5		)	17			(15		)
Total gains included on the Condensed Consolidated Balance Sheet														23			10
Balance at end of period	$	(90	)	$	(116	)	$	(90	)	$	(116	)		$	(88	)	$	(115	)



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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.


	September 30, 2019										March 31, 2020
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized		Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	2,901		$	2,847	$	—		$	54	$	2,498		$	2,450	$	—		$	48
NDTF debt securities	1,195			189		1,006			—		1,214			182		1,032			—
Derivative assets											2			—		2			—
Total assets	4,096			3,036		1,006			54		3,714			2,632		1,034			48
Derivative liabilities	(67		)	—		(67		)	—		(74		)	—		(74		)	—
Net assets	$	4,029		$	3,036	$	939		$	54	$	3,640		$	2,632	$	960		$	48


	December 31, 2018										December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized		Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	2,484		$	2,419	$	—		$	65	$	3,154		$	3,103	$	—		$	51
NDTF debt securities	1,069			149		920			—		1,193			227		966			—
Derivative assets	3			—		3			—
Total assets	3,556			2,568		923			65		4,347			3,330		966			51
Derivative liabilities	(33		)	—		(33		)	—		(49		)	—		(49		)	—
Net assets	$	3,523		$	2,568	$	890		$	65	$	4,298		$	3,330	$	917		$	51

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.


	September 30, 2019								December 31, 2018								March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	2,321		$	2,321	$	—		$	1,991		$	1,991	$	—		$	1,990		$	1,990	$	—		$	2,530		$	2,530	$	—
NDTF debt securities	1,281			615		666			1,162			427		735			1,326			585		741			1,276			599		677
Other debt securities	101			49		52			64			17		47			122			69		53			100			49		51
NDTF equity security contracts																	20			—		20			—			—		—
Derivative assets	5			—		5			4			—		4			25			—		25			7			—		7
Total assets	3,708			2,985		723			3,221			2,435		786			3,483			2,644		839			3,913			3,178		735
NDTF equity security contracts																	—			—		—			(23		)	—		(23		)
Derivative liabilities	(113		)	—		(113		)	(44		)	—		(44		)	(95		)	—		(95		)	(65		)	—		(65		)
Net assets	$	3,595		$	2,985	$	610		$	3,177		$	2,435	$	742		$	3,388		$	2,644	$	744		$	3,825		$	3,178	$	647

DUKE ENERGY PROGRESS

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


	September 30, 2019								December 31, 2018								March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	1,907		$	1,907	$	—		$	1,588		$	1,588	$	—		$	1,631		$	1,631	$	—		$	2,077		$	2,077	$	—
NDTF debt securities	975			309		666			906			294		612			1,017			276		741			974			297		677
Other debt securities	2			2		—			6			6		—			2			2		—			2			2		—
Derivative assets	—			—		—			4			—		4			5			—		5			—			—		—
Total assets	2,884			2,218		666			2,504			1,888		616			2,655			1,909		746			3,053			2,376		677
Derivative liabilities	(43		)	—		(43		)	(27		)	—		(27		)	(51		)	—		(51		)	(49		)	—		(49		)
Net assets	$	2,841		$	2,218	$	623		$	2,477		$	1,888	$	589		$	2,604		$	1,909	$	695		$	3,004		$	2,376	$	628



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY FLORIDA

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


	September 30, 2019								December 31, 2018								March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	414		$	414	$	—		$	403		$	403	$	—		$	359		$	359	$	—		$	453		$	453	$	—
NDTF debt securities	306			306		—			256			133		123			309			309		—			302			302		—
Other debt securities	56			4		52			48			1		47			56			3		53			55			4		51
NDTF equity security contracts																	20			—		20			—			—		—
Derivative assets	5			—		5			—			—		—			—			—		—			7			—		7
Total assets	781			724		57			707			537		170			744			671		73			817			759		58
NDTF equity security contracts																	—			—		—			(23		)	—		(23		)
Derivative liabilities	(54		)	—		(54		)	(9		)	—		(9		)	(29		)	—		(29		)	(1		)	—		(1		)
Net assets	$	727		$	724	$	3		$	698		$	537	$	161		$	715		$	671	$	44		$	793		$	759	$	34

DUKE ENERGY OHIO

The recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets were not material at ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018~~2019.

DUKE ENERGY INDIANA

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


	September 30, 2019								December 31, 2018								March 31, 2020								December 31, 2019
(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		Total Fair Value			Level 1			Level 2		Level 3
Other equity securities	$	74	$	74	$	—	$	—	$	67	$	67	$	—	$	—	$	63	$	63	$	—	$	—	$	81		$	81		$	—	$	—
Other debt securities	43		—		43		—		41		—		41		—		43		—		43		—		44			—			44		—
Derivative assets	16		—		—		16		23		1		—		22		2		—		—		2		13			2			—		11
Total assets	$	133	$	74	$	43	$	16	$	131	$	68	$	41	$	22	$	108	$	63	$	43	$	2	$	138		$	83		$	44	$	11
Derivative liabilities																	—		—		—		—		(1		)	(1		)	—		—
Net assets																	$	108	$	63	$	43	$	2	$	137		$	82		$	44	$	11

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


	Derivatives (net)												Derivatives (net)
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2019			2018			2019			2018				2020			2019
Balance at beginning of period	$	28		$	44		$	22		$	27			$	11		$	22
Purchases, sales, issuances and settlements:
Purchases	—			—			29			49
Settlements	(7		)	(13		)	(26		)	(41		)		(6		)	(10		)
Total losses included on the Condensed Consolidated Balance Sheet	(5		)	(2		)	(9		)	(6		)		(3		)	(7		)
Balance at end of period	$	16		$	29		$	16		$	29			$	2		$	5



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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.


	September 30, 2019								December 31, 2018								March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3
Derivative assets	$	2		$	2	$	—		$	3		$	3	$	—		$	3		$	3	$	—		$	1		$	1	$	—
Derivative liabilities	(111		)	—		(111		)	(141		)	—		(141		)	(91		)	—		(91		)	(117		)	—		(117		)
Net (liabilities) assets	$	(109	)	$	2	$	(111	)	$	(138	)	$	3	$	(141	)	$	(88	)	$	3	$	(91	)	$	(116	)	$	1	$	(117	)

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


	Derivatives (net)												Derivatives (net)
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2019			2018			2019			2018				2020			2019
Balance at beginning of period	$	(114	)	$	(150	)	$	(141	)	$	(142	)		$	(117	)	$	(141	)
Total gains (losses) and settlements	3			(3		)	30			(11		)
Total gains and settlements														26			20
Balance at end of period	$	(111	)	$	(153	)	$	(111	)	$	(153	)		$	(91	)	$	(121	)

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

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


												March 31, 2020
	September 30, 2019																						Weighted
	Fair Value											Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy Ohio
FTRs	$	5		RTO auction pricing	FTR price – per MWh	$	0.57		-	$	3.38	$	1		RTO auction pricing	FTR price – per MWh	$	0.04		-	$	3.29	$	1.03
Duke Energy Indiana
FTRs	16			RTO auction pricing	FTR price – per MWh	(0.52		)	-	6.85		2			RTO auction pricing	FTR price – per MWh	(0.37		)	-	6.06		0.54
Piedmont
Natural gas contracts	(111		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.85			-	2.99		(91		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.64			-	2.41		1.94
Duke Energy
Total Level 3 derivatives	$	(90	)									$	(88	)


												December 31, 2019
	December 31, 2018																						Weighted
	Fair Value											Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy Ohio
FTRs	$	6		RTO auction pricing	FTR price – per MWh	$	1.19		-	$	4.59	$	4		RTO auction pricing	FTR price – per MWh	$	0.59		-	$	3.47	$	2.07
Duke Energy Indiana
FTRs	22			RTO auction pricing	FTR price – per MWh	(2.07		)	-	8.27		11			RTO auction pricing	FTR price – per MWh	(0.66		)	-	9.24		1.15
Piedmont
Natural gas contracts	(141		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.87			-	2.95		(117		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.59			-	2.46		1.91
Duke Energy
Total Level 3 derivatives	$	(113	)									$	(102	)



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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.


	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
(in millions)	Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value
Duke Energy^(a)	$	57,914	$	63,276	$	54,529	$	54,534	$	61,388	$	65,644	$	58,126	$	63,062
Duke Energy Carolinas	11,758		13,462		10,939		11,471		12,807		14,312		11,900		13,516
Progress Energy	19,119		21,952		18,911		19,885		19,355		21,802		19,634		22,291
Duke Energy Progress	9,049		9,995		8,204		8,300		9,059		9,798		9,058		9,934
Duke Energy Florida	7,132		8,356		7,321		7,742		7,706		8,831		7,987		9,131
Duke Energy Ohio	2,719		3,096		2,165		2,239		2,620		2,904		2,619		2,964
Duke Energy Indiana	4,208		5,018		3,782		4,158		4,603		5,433		4,057		4,800
Piedmont	2,384		2,664		2,138		2,180		2,385		2,551		2,384		2,642


(a)	Book value of long-term debt includes $1.4 billion at March 31, 2020, and $1.5 billion ~~as of September 30, 2019, and $1.6 billion as of~~at December 31, ~~2018,~~2019, of unamortized debt discount and premium, net inof purchase accounting adjustments related to the mergers with Progress Energy and Piedmont that are excluded from fair value of long-term debt.

At both ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, fair value of cash and cash equivalents, accounts and notes receivable, accounts payable, notes payable and commercial paper and nonrecourse notes payable of VIEs are not materially different from their carrying amounts because of the short-term nature of these instruments and/or because the stated rates approximate market rates.

~~13.~~11. VARIABLE INTEREST ENTITIES

CONSOLIDATED VIEs

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

NaN financial support was provided to any of the consolidated VIEs during the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, and the year ended December 31, ~~2018,~~2019, or is expected to be provided in the future that was not previously contractually required.

Receivables Financing – ~~DERF / DEPR /~~ DERF/DEPR/DEFR

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

DERF, DEPR and DEFR borrow amounts under credit facilities to buy these receivables. Borrowing availability from the credit facilities is limited to the amount of qualified receivables purchased. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities are reflected on the 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 are considered the primary beneficiaries and consolidate DERF, DEPR and DEFR, respectively, as they make those decisions. Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. See Note 3 for information about COVID-19 filings with state utility commissions.

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



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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~~is not ~~performed~~held by the equity holder and (iii) deficiencies in net worth of CRC are funded by Duke Energy. The most significant activities that impact the economic performance of CRC are decisions made to manage delinquent receivables. Duke Energy is considered the primary beneficiary and consolidates CRC as it makes these decisions. Neither Duke Energy Ohio nor Duke Energy Indiana consolidate CRC.



~~FINANCIAL STATEMENTS~~	~~VARIABLE INTEREST ENTITIES~~

Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. See Note 3 for information about COVID-19 filings with state utility commissions.

Receivables Financing – Credit Facilities

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

Duke Energy
Duke Energy
Duke Energy
Duke Energy
Carolinas
Progress
Florida
(in millions) CRC
DERF
DEPR
DEFR
Expiration date December 2020
December 2020
February 2021
April 2021
Credit facility amount $ 350
$ 475
$ 325
$ 250
Amounts borrowed at September 30, 2019 350
475
325
250
Amounts borrowed at December 31, 2018 325
450
300
225
Restricted Receivables at September 30, 2019 505
775
564
471
Restricted Receivables at December 31, 2018 564
699
547
357



	Duke Energy
			Duke Energy		Duke Energy		Duke Energy
			Carolinas		Progress		Florida
(in millions)	CRC		DERF		DEPR		DEFR
Expiration date	February 2023		December 2022		April 2023		April 2021
Credit facility amount	$	350	$	475	$	375	$	250
Amounts borrowed at March 31, 2020	350		475		325		250
Amounts borrowed at December 31, 2019	350		474		325		250
Restricted Receivables at March 31, 2020	467		616		410		331
Restricted Receivables at December 31, 2019	522		642		489		336

Nuclear Asset-Recovery Bonds – DEFPF

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

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

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

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


(in millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Receivables of VIEs	$	7	$	5	$	4	$	5
Regulatory Assets: Current	52		52		53		52
Current Assets: Other	16		39		13		39
Other Noncurrent Assets: Regulatory assets	1,002		1,041		980		989
Current Liabilities: Other	2		10		2		10
Current maturities of long-term debt	54		53		54		54
Long-Term Debt	1,056		1,111		1,028		1,057

Commercial Renewables

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

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

(in millions) September 30, 2019
December 31, 2018
Current Assets: Other $ 172
$ 123
Property, Plant and Equipment: Cost 5,160
4,007
Accumulated depreciation and amortization (996 ) (698 )
Other Noncurrent Assets: Other 63
261
Current maturities of long-term debt 177
174
Long-Term Debt 1,604
1,587
Other Noncurrent Liabilities: Asset retirement obligations 125
106
Other Noncurrent Liabilities: Other 218
212



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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



(in millions)	March 31, 2020			December 31, 2019
Current Assets: Other	$	287		$	203
Property, Plant and Equipment: Cost	6,106			5,747
Accumulated depreciation and amortization	(1,094		)	(1,041		)
Other Noncurrent Assets: Other	82			106
Current maturities of long-term debt	162			162
Long-Term Debt	1,538			1,541
Other Noncurrent Liabilities: AROs	129			127
Other Noncurrent Liabilities: Other	258			228

NON-CONSOLIDATED VIEs

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


	September 30, 2019														March 31, 2020
	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		Investments			Renewables			VIEs			Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	—	$	—	$	—		$	48	$	76	$	—		$	(1	)	$	—		$	(1	)	$	39	$	48
Investments in equity method unconsolidated affiliates	1,152			235		55		1,442			—		—		1,243			371			—			1,614			—		—
Total assets	$	1,152		$	235	$	55	$	1,442		$	48	$	76	$	1,243		$	370		$	—		$	1,613		$	39	$	48
Taxes accrued	(2		)	—		—		(2		)	—		—		(1		)	—			—			(1		)	—		—
Other current liabilities	—			—		3		3			—		—		—			—			3			3			—		—
Deferred income taxes	57			—		—		57			—		—		69			—			—			69			—		—
Other noncurrent liabilities	—			—		11		11			—		—		105			—			11			116			—		—
Total liabilities	$	55		$	—	$	14	$	69		$	—	$	—	$	173		$	—		$	14		$	187		$	—	$	—
Net assets	$	1,097		$	235	$	41	$	1,373		$	48	$	76
Net assets (liabilities)															$	1,070		$	370		$	(14	)	$	1,426		$	39	$	48


	December 31, 2018														December 31, 2019
	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		Investments			Renewables			VIEs			Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	—	$	—	$	—		$	93	$	118	$	—		$	(1	)	$	—		$	(1	)	$	64	$	77
Investments in equity method unconsolidated affiliates	822			190		48		1,060			—		—		1,179			300			—			1,479			—		—
Total assets	$	822		$	190	$	48	$	1,060		$	93	$	118	$	1,179		$	299		$	—		$	1,478		$	64	$	77
Taxes accrued	(1		)	—		—		(1		)	—		—		(1		)	—			—			(1		)	—		—
Other current liabilities	—			—		4		4			—		—		—			—			4			4			—		—
Deferred income taxes	21			—		—		21			—		—		59			—			—			59			—		—
Other noncurrent liabilities	—			—		12		12			—		—		—			—			11			11			—		—
Total liabilities	$	20		$	—	$	16	$	36		$	—	$	—	$	58		$	—		$	15		$	73		$	—	$	—
Net assets	$	802		$	190	$	32	$	1,024		$	93	$	118
Net assets (liabilities)															$	1,121		$	299		$	(15	)	$	1,405		$	64	$	77

The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the PPA with OVEC, which is discussed below, and various guarantees, including Duke Energy's guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is ~~$802~~$845 million, which represents 47% of the outstanding borrowings under the credit facility as of ~~September 30, 2019.~~March 31, 2020. For more information on various guarantees, refer to Note 4.

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.

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

VIE Investment Amount (in millions)
Ownership September 30, December 31,
Entity Name Interest 2019 2018
ACP^(a)
47 % $ 1,127
$ 797
Constitution 24 % 25
25
Total $ 1,152
$ 822


~~(a)~~	Duke Energy evaluated this investment for impairment as of September 30, 2019, and December 31, 2018, and determined that fair value approximated carrying value and therefore no impairment was necessary.



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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



			VIE Investment Amount (in millions)
	Ownership		March 31,		December 31,
Entity Name	Interest		2020		2019
ACP^(a)	47	%	$	1,243	$	1,179
Constitution^(b)	24	%	—		—
Total			$	1,243	$	1,179


(a)	Duke Energy evaluated this investment for impairment as of March 31, 2020, and December 31, 2019, and determined that fair value approximated carrying value and therefore no impairment was necessary.


(b)	During the year ended December 31, 2019, Duke Energy recorded an OTTI related to Constitution. This charge resulted in the full write-down of Duke Energy's investment in Constitution.

Commercial Renewables

Duke Energy has investments in various renewable energy project entities. Some of these entities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Duke Energy does not consolidate these VIEs because power to direct and control key activities is shared jointly by Duke Energy and other owners.

~~Pioneer~~

In 2019, Duke Energy ~~holds~~acquired a ~~50% equity interest~~majority ownership in ~~Pioneer. During~~a portfolio of distributed fuel cell projects from Bloom Energy Corporation. Duke Energy is not the nine months ended September 30, 2019, Pioneer was considered a VIE due to having insufficient equity to finance its own activities without subordinated financial support. On October 1, 2019, Pioneer closed on a private placement debt offering that gave Pioneer sufficient equity to finance its own activitiesprimary beneficiary of the assets within the portfolio and ~~therefore, is no longer considered a VIE. Duke Energy's investment~~does not consolidate the assets in ~~Pioneer was $55 million at September 30, 2019.~~the portfolio.

OVEC

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

As a counterparty to an ~~ICPA,~~Inter-Company Power Agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business. On March 31, 2018, ~~FES,~~FirstEnergy Solutions Corp (FES), a subsidiary of FirstEnergy Corp. and an ICPA counterparty with a power participation ratio of 4.85%, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. ~~Duke Energy Ohio cannot predict the impact of the bankruptcy filing on its OVEC interests.~~ In addition, certain proposed environmental rulemaking could result in future increased OVEC cost allocations. See Note 3 for additional information.

CRC

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

Amounts included in Receivables from affiliated companies in the above table for Duke Energy Ohio and Duke Energy Indiana reflect their retained interest in receivables sold to CRC. These subordinated notes held by Duke Energy Ohio and Duke Energy Indiana are stated at fair value.

The following table shows the gross and net receivables sold.


	Duke Energy Ohio				Duke Energy Indiana				Duke Energy Ohio				Duke Energy Indiana
(in millions)	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Receivables sold	$	217	$	269	$	326	$	336	$	234	$	253	$	274	$	307
Less: Retained interests	48		93		76		118		39		64		48		77
Net receivables sold	$	169	$	176	$	250	$	218	$	195	$	189	$	226	$	230



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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


	Duke Energy Ohio								Duke Energy Indiana								Duke Energy Ohio				Duke Energy Indiana
	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended				Three Months Ended				Three Months Ended
	September 30,				September 30,				September 30,				September 30,				March 31,				March 31,
(in millions)	2019		2018		2019		2018		2019		2018		2019		2018		2020		2019		2020		2019
Sales
Receivables sold	$	479	$	450	$	1,483	$	1,478	$	762	$	754	$	2,172	$	2,140	$	537	$	575	$	647	$	734
Loss recognized on sale	4		4		11		10		4		5		13		12		4		4		4		5
Cash flows
Cash proceeds from receivables sold	$	471	$	449	$	1,516	$	1,499	$	762	$	743	$	2,200	$	2,140	$	559	$	597	$	672	$	758
Collection fees received	—		—		1		1		—		—		1		1
Return received on retained interests	1		2		5		5		2		3		7		7		2		2		2		3

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



~~FINANCIAL STATEMENTS~~	~~REVENUE~~

~~14.~~12. REVENUE

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

Electric Utilities and Infrastructure

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

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


	Remaining Performance Obligations														Remaining Performance Obligations
(in millions)	2019		2020		2021		2022		2023		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total
Progress Energy	$	31	$	121	$	86	$	81	$	38	$	41	$	398	$	84	$	92	$	87	$	44	$	45	$	58	$	410
Duke Energy Progress	2		8		8		8		8		8		42		6		8		8		8		8		—		38
Duke Energy Florida	29		113		78		73		30		33		356		78		84		79		36		37		58		372
Duke Energy Indiana	2		10		5		—		—		—		17		8		5		—		—		—		—		13

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

Gas Utilities and Infrastructure

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

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


	Remaining Performance Obligations														Remaining Performance Obligations
(in millions)	2019		2020		2021		2022		2023		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total
Piedmont	$	17	$	69	$	64	$	64	$	61	$	430	$	705	$	51	$	65	$	64	$	61	$	58	$	376	$	675

Commercial Renewables

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

~~Other~~

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



FINANCIAL STATEMENTS	REVENUE

Other

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

Disaggregated Revenues

Disaggregated revenues are presented as follows:


	Three Months Ended September 30, 2019																		Three Months Ended March 31, 2020
			Duke				Duke		Duke		Duke			Duke							Duke				Duke		Duke		Duke			Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy			Energy					Duke		Energy		Progress		Energy		Energy		Energy			Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio			Indiana			Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio			Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	2,923	$	892	$	1,522	$	625	$	897	$	215		$	294		$	—	$	2,261	$	756	$	1,064	$	502	$	562	$	176		$	265	$	—
General	1,885		687		843		399		444		127			225			—		1,492		549		648		319		329		114			181		—
Industrial	869		372		255		189		66		40			204			—		693		269		216		154		62		35			175		—
Wholesale	617		113		429		368		61		13			63			—		497		114		321		279		42		7			55		—
Other revenues	198		76		118		70		48		18			22			—		191		60		118		63		55		20			16		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	6,492	$	2,140	$	3,167	$	1,651	$	1,516	$	413		$	808		$	—	$	5,134	$	1,748	$	2,367	$	1,317	$	1,050	$	352		$	692	$	—

Gas Utilities and Infrastructure
Residential	$	113	$	—	$	—	$	—	$	—	$	53		$	—		$	59	$	362	$	—	$	—	$	—	$	—	$	97		$	—	$	264
Commercial	68		—		—		—		—		21			—			47		169		—		—		—		—		43			—		126
Industrial	26		—		—		—		—		4			—			25		41		—		—		—		—		6			—		36
Power Generation	—		—		—		—		—		—			—			13		—		—		—		—		—		—			—		11
Other revenues	16		—		—		—		—		3			—			13		30		—		—		—		—		6			—		24
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	223	$	—	$	—	$	—	$	—	$	81		$	—		$	157	$	602	$	—	$	—	$	—	$	—	$	152		$	—	$	461

Commercial Renewables
Revenue from contracts with customers	$	69	$	—	$	—	$	—	$	—	$	—		$	—		$	—	$	58	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Other
Revenue from contracts with customers	$	8	$	—	$	—	$	—	$	—	$	—		$	—		$	—	$	6	$	—	$	—	$	—	$	—	$	—		$	—	$	—
Total revenue from contracts with customers	$	6,792	$	2,140	$	3,167	$	1,651	$	1,516	$	494		$	808		$	157	$	5,800	$	1,748	$	2,367	$	1,317	$	1,050	$	504		$	692	$	461

Other revenue sources^(a)	$	148	$	22	$	75	$	37	$	32	$	(5	)	$	(1	)	$	11	$	149	$	—	$	55	$	21	$	30	$	(6	)	$	—	$	51
Total revenues	$	6,940	$	2,162	$	3,242	$	1,688	$	1,548	$	489		$	807		$	168	$	5,949	$	1,748	$	2,422	$	1,338	$	1,080	$	498		$	692	$	512


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



FINANCIAL STATEMENTS	REVENUE


	Three Months Ended September 30, 2018																Three Months Ended March 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	2,729	$	823	$	1,425	$	572	$	853	$	203	$	279	$	—	$	2,370	$	760	$	1,114	$	536	$	578	$	189	$	306	$	—
General	1,763		635		800		373		427		112		218		—		1,427		496		632		306		326		103		197		—
Industrial	835		352		246		177		69		33		202		—		711		266		222		161		61		33		190		—
Wholesale	589		132		372		335		37		3		81		—		541		119		353		315		38		14		54		—
Other revenues	225		109		134		90		44		20		29		—		172		78		172		125		47		16		17		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	6,141	$	2,051	$	2,977	$	1,547	$	1,430	$	371	$	809	$	—	$	5,221	$	1,719	$	2,493	$	1,443	$	1,050	$	355	$	764	$	—

Gas Utilities and Infrastructure
Residential	$	116	$	—	$	—	$	—	$	—	$	59	$	—	$	57	$	414	$	—	$	—	$	—	$	—	$	112	$	—	$	302
Commercial	66		—		—		—		—		20		—		46		206		—		—		—		—		49		—		157
Industrial	28		—		—		—		—		3		—		24		48		—		—		—		—		7		—		42
Power Generation	—		—		—		—		—		—		—		13		—		—		—		—		—		—		—		13
Other revenues	23		—		—		—		—		1		—		22		63		—		—		—		—		8		—		56
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	233	$	—	$	—	$	—	$	—	$	83	$	—	$	162	$	731	$	—	$	—	$	—	$	—	$	176	$	—	$	570

Commercial Renewables
Revenue from contracts with customers	$	61	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	42	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	16	$	—	$	—	$	—	$	—	$	12	$	—	$	—	$	4	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total revenue from contracts with customers	$	6,451	$	2,051	$	2,977	$	1,547	$	1,430	$	466	$	809	$	162	$	5,998	$	1,719	$	2,493	$	1,443	$	1,050	$	531	$	764	$	570

Other revenue sources^(a)	$	177	$	39	$	68	$	35	$	32	$	3	$	10	$	10	$	165	$	25	$	79	$	41	$	36	$	—	$	4	$	9
Total revenues	$	6,628	$	2,090	$	3,045	$	1,582	$	1,462	$	469	$	819	$	172	$	6,163	$	1,744	$	2,572	$	1,484	$	1,086	$	531	$	768	$	579


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

As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The following table presents the reserve for credit losses for trade and other receivables based on adoption of the new standard.



	March 31, 2020
				Duke						Duke			Duke			Duke		Duke
	Duke			Energy			Progress			Energy			Energy			Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio		Indiana		Piedmont
Balance at December 31, 2019	$	76		$	10		$	16		$	8		$	7		$	4	$	3	$	6
Cumulative Change in Accounting Principle	5			1			2			1			1			—		—		1
Write-Offs	(10		)	(3		)	(4		)	(2		)	(2		)	—		—		(1		)
Credit Loss Expense	18			3			6			2			5			1		—		3
Balance at March 31, 2020	$	89		$	11		$	20		$	9		$	11		$	5	$	3	$	9

Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss annually for trade and other receivables. Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The specific actions taken by each Duke Energy Registrant are described in Note 3. The impact of COVID-19 and Duke Energy’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates.



FINANCIAL STATEMENTS	REVENUE

Nine Months Ended September 30, 2019
Duke
Duke
Duke
Duke
Duke

(in millions) Duke
Energy
Progress
Energy
Energy
Energy
Energy

By market or type of customer Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Electric Utilities and Infrastructure
   Residential $ 7,597
$ 2,331
$ 3,879
$ 1,657
$ 2,222
$ 563
$ 825
$ —
   General 4,896
1,714
2,225
1,044
1,181
335
619
—
   Industrial 2,339
927
708
514
194
109
595
—
   Wholesale 1,685
341
1,133
992
141
36
176
—
   Other revenues 557
222
389
239
150
59
66
—
Total Electric Utilities and Infrastructure revenue from contracts with customers $ 17,074
$ 5,535
$ 8,334
$ 4,446
$ 3,888
$ 1,102
$ 2,281
$ —

Gas Utilities and Infrastructure
   Residential $ 673
$ —
$ —
$ —
$ —
$ 229
$ —
$ 443
   Commercial 359
—
—
—
—
96
—
263
   Industrial 103
—
—
—
—
14
—
91
   Power Generation —
—
—
—
—
—
—
39
   Other revenues 101
—
—
—
—
13
—
88
Total Gas Utilities and Infrastructure revenue from contracts with customers $ 1,236
$ —
$ —
$ —
$ —
$ 352
$ —
$ 924

Commercial Renewables
Revenue from contracts with customers $ 157
$ —
$ —
$ —
$ —
$ —
$ —
$ —

Other
Revenue from contracts with customers $ 18
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Total Revenue from contracts with customers $ 18,485
$ 5,535
$ 8,334
$ 4,446
$ 3,888
$ 1,454
$ 2,281
$ 924

Other revenue sources^(a)
$ 491
$ 84
$ 224
$ 113
$ 99
$ (1 ) $ 8
$ 32
Total revenues $ 18,976
$ 5,619
$ 8,558
$ 4,559
$ 3,987
$ 1,453
$ 2,289
$ 956


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

The aging of trade receivables is presented in the table below. Duke Energy considers receivables greater than 30 days outstanding past due.



	March 31, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Unbilled Receivables	$	716	$	285	$	195	$	85	$	110	$	1	$	16	$	32
0-30 days	1,584		448		585		321		262		45		24		134
30-60 days	216		69		67		44		23		9		1		18
60-90 days	65		18		20		14		6		2		1		5
90+ days	145		19		57		32		25		32		11		11
Trade and Other Receivables	$	2,726	$	839	$	924	$	496	$	426	$	89	$	53	$	200



~~FINANCIAL STATEMENTS~~	~~REVENUE~~

Nine Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Duke

(in millions) Duke
Energy
Progress
Energy
Energy
Energy
Energy

By market or type of customer Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Electric Utilities and Infrastructure
   Residential $ 7,264
$ 2,263
$ 3,636
$ 1,540
$ 2,096
$ 564
$ 802
$ —
   General 4,619
1,608
2,109
972
1,137
318
584
—
   Industrial 2,235
893
678
481
197
96
567
—
   Wholesale 1,737
366
1,140
1,019
121
5
226
—
   Other revenues 558
261
359
222
137
57
66
—
Total Electric Utilities and Infrastructure revenue from contracts with customers $ 16,413
$ 5,391
$ 7,922
$ 4,234
$ 3,688
$ 1,040
$ 2,245
$ —

Gas Utilities and Infrastructure
   Residential $ 682
$ —
$ —
$ —
$ —
$ 236
$ —
$ 446
   Commercial 354
—
—
—
—
97
—
257
   Industrial 107
—
—
—
—
13
—
93
   Power Generation —
—
—
—
—
—
—
40
   Other revenues 101
—
—
—
—
13
—
88
Total Gas Utilities and Infrastructure revenue from contracts with customers $ 1,244
$ —
$ —
$ —
$ —
$ 359
$ —
$ 924

Commercial Renewables
Revenue from contracts with customers $ 141
$ —
$ —
$ —
$ —
$ —
$ —
$ —

Other
Revenue from contracts with customers $ 47
$ —
$ —
$ —
$ —
$ 36
$ —
$ —
Total Revenue from contracts with customers $ 17,845
$ 5,391
$ 7,922
$ 4,234
$ 3,688
$ 1,435
$ 2,245
$ 924

Other revenue sources^(a)
$ 561
$ 134
$ 197
$ 99
$ 92
$ 17
$ 43
$ 16
Total revenues $ 18,406
$ 5,525
$ 8,119
$ 4,333
$ 3,780
$ 1,452
$ 2,288
$ 940


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

UNBILLED REVENUE

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

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


(in millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Duke Energy	$	831	$	896	$	716	$	843
Duke Energy Carolinas	312		313		285		298
Progress Energy	265		244		195		217
Duke Energy Progress	141		148		85		122
Duke Energy Florida	124		96		110		95
Duke Energy Ohio	2		2		1		1
Duke Energy Indiana	19		23		16		16
Piedmont	2		73		32		78



~~FINANCIAL STATEMENTS~~	~~REVENUE~~

Additionally, Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC, and account for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Condensed Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 1311 for further information. These receivables for unbilled revenues are shown in the table below.


(in millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Duke Energy Ohio	$	74	$	86	$	61	$	82
Duke Energy Indiana	124		128		94		115

~~15.~~13. STOCKHOLDERS' EQUITY

Basic EPS is computed by dividing net income ~~attributable~~available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income ~~attributable~~available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common 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. Dividends declared on preferred stock are recorded on the ~~income statement~~Condensed Consolidated Statements of Operations as a reduction of net income to arrive at net income ~~attributable~~available to Duke Energy common stockholders. Dividends accumulated on preferred stock are ~~a reduction~~an adjustment to net income used in the calculation of basic and diluted EPS.



FINANCIAL STATEMENTS	STOCKHOLDERS' EQUITY

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

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per-share amounts) 2019
2018
2019
2018
Income from continuing operations attributable to Duke Energy common stockholders excluding impact of participating securities $ 1,324
$ 1,077
$ 3,041
$ 2,199

Weighted average common shares outstanding – basic 729
713
728
705
Equity Forwards —
1
—
1
Weighted average common shares outstanding – diluted 729
714
728
706
EPS from continuing operations attributable to Duke Energy common stockholders
Basic $ 1.82
$ 1.51
$ 4.18
$ 3.12
Diluted $ 1.82
$ 1.51
$ 4.18
$ 3.11
Potentially dilutive items excluded from the calculation^(a)
2
2
2
2
Dividends declared per common share $ 0.945
$ 0.9275
$ 2.800
$ 2.7075
Dividends declared on Series A preferred stock per depositary share $ 0.359
$ —
$ 0.667
$ —



	Three Months Ended March 31,
(in millions, except per share amounts)	2020		2019
Income from continuing operations available to Duke Energy common stockholders excluding impact of participating securities and including accumulated preferred stock dividends adjustment	$	911	$	898

Weighted average common shares outstanding – basic	734		727
Equity forwards	2		—
Weighted average common shares outstanding – diluted	736		727
EPS from continuing operations available to Duke Energy common stockholders
Basic and diluted	$	1.24	$	1.24
Potentially dilutive items excluded from the calculation^(a)	2		2
Dividends declared per common share	$	0.945	$	0.9275
Dividends declared on Series A preferred stock per depositary share^(b)	$	0.359	$	—
Dividends declared on Series B preferred stock per share^(c)	$	24.917	$	—


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


(b)	5.75% Series A Cumulative Redeemable Perpetual Preferred Stock dividends are payable quarterly in arrears on the 16th day of March, June, September and December. The preferred stock has a $25 liquidation preference per depositary share.


(c)	4.875% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock dividends are payable semiannually in arrears on the 16th day of March and September. The preferred stock has a $1,000 liquidation preference per share.

Common Stock

~~On February 20, 2018,~~In November 2019, Duke Energy filed a prospectus supplement and executed an ~~EDA~~Equity Distribution Agreement (EDA) under which it may sell up to $1$1.5 billion of its common stock through an ~~ATM~~at-the-market (ATM) offering program, including an equity forward sales component. ~~The EDA was entered into with the Agents.~~ Under the terms of the EDA, Duke Energy ~~was allowed to~~may issue and sell ~~through any of the Agents, shares of common stock. The existing ATM offering program expired on September 23, 2019. Duke Energy expects to reestablish an ATM offering program during November 2019.~~

~~In June 2018, Duke Energy marketed two separate tranches, each for 1.3 million~~ shares of common stock through ~~equity forward transactions under the ATM program.~~September 2022. In ~~December 2018,~~March 2020, Duke Energy ~~physically settled these equity forwards by delivering 2.6 million~~marketed approximately 940,000 shares of common stock ~~in exchange for net proceeds~~through an equity forward transaction under the ATM with an initial forward price of ~~approximately $195 million.~~$89.76 per share.

Separately, in ~~March 2018,~~November 2019, Duke Energy marketed an equity offering of ~~21.3~~28.75 million shares of common stock through an Underwriting Agreement. In connection with the offering, Duke Energy entered into an equity forward sale agreements. The equity forwards required Duke Energy to either physically settle the transactions by issuing 21.3 million shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreements, or net settle in whole or in part through the delivery or receipt of cash or shares. In June 2018, Duke Energy physically settled one-half of the equity forwards by delivering approximately 10.6 million shares of common stock in exchange for net cash proceeds of approximately $781 million. In December 2018, Duke Energy physically settled the remaining equity forward by delivering 10.6 million shares of common stock in exchange for net cash proceeds of approximately $766 million.



~~FINANCIAL STATEMENTS~~	~~STOCKHOLDERS' EQUITY~~

~~In 2018, Duke Energy also issued 2.2 million shares through its DRIP~~sales agreement with an increase in additional paid-in capital of approximately $174 million. For the nine months ended September 30, 2019, Duke Energy issued 1.4 million shares through its DRIP with an increase in additional paid-in capital of approximately $120 million.

~~In March and April 2019, Duke Energy marketed two separate tranches, each for 1.1 million shares, of common stock through equity forward transactions under the ATM program. The first tranche had~~ an initial forward price of ~~$89.83~~$85.99 per ~~share and the second tranche had an initial forward price of $88.82 per~~ share. ~~In May and June 2019, a third tranche of 1.6 million shares of common stock was marketed and had an initial forward price of $86.23.~~

The equity ~~forwards~~forward sales agreements require Duke Energy to either physically settle the transaction by issuing shares in exchange for net proceeds at the then-applicable forward sale price specified by the ~~agreements~~agreement, or net settle in whole or in part through the delivery or receipt of cash or shares. The settlement ~~alternative is~~alternatives are at Duke Energy's election. ~~No amounts have or will be recorded in Duke Energy's Condensed Consolidated Financial Statements with respect to these ATM offerings until settlements~~Settlement of the ~~equity forwards~~forward sales agreements are expected to occur ~~which is expected by~~on or prior to December 31, ~~2019. The initial forward sale price will be subject to adjustment based on a floating interest rate factor and other fixed amounts specified in the relevant forward sale agreements.~~2020. Until settlement of the equity forwards, EPS dilution resulting from the agreements, if any, will be determined under the treasury stock method.

~~Preferred Stock~~

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

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

On September 12, 2019, Duke Energy completed the issuance of 1 million shares of its Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, at a price of $1,000 per share. The transaction resulted in net proceeds of $990 million after issuance costs with proceeds being used to pay down short-term debt, repay at maturity $500 million senior notes due September 2019 and for general corporate purposes. The preferred stock has a $1,000 liquidation preference per share and earns dividends on a cumulative basis at an initial rate of 4.875% per annum. Dividends are payable semiannual in arrears on the 16th day of March and September, beginning on March 16, 2020. On September 16, 2024, the First Call Date, and any fifth anniversary of the First Call Date (each a Reset Date),the dividend rate will reset based on the then current five-year U.S. treasury rate plus a spread of 3.388%.

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

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

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

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

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

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

junior to all of existing and future indebtedness (including indebtedness outstanding under Duke Energy's credit facilities, unsecured senior notes, junior subordinated debentures and commercial paper) and other liabilities with respect to assets available to satisfy claims against Duke Energy; and

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



~~FINANCIAL STATEMENTS~~	~~STOCKHOLDERS' EQUITY~~

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

~~16.~~14. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT RETIREMENT PLANS

Duke Energy and certain subsidiaries maintain, 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 qualified defined benefit pension plans.~~

Duke Energy uses a December 31 measurement date for its qualified non-contributory defined benefit retirement plan assets and obligations. However, because Duke Energy believed it was probable in 2019 that total lump-sum benefit payments would exceed the settlement threshold, which is defined as the sum of the service cost and interest cost on projected benefit obligation components of net periodic pension costs, Duke Energy remeasured the plan assets and plan obligations associated with one of its qualified pension plans as of June 30, 2019, and September 30, 2019, (total lump-sum benefit payments exceeded the settlement threshold as of September 30, 2019). The discount rate used for the remeasurements was 3.5% and 3.2% as of June 30, 2019, and September 30, 2019, respectively. The cash balance interest crediting rate was 4.0% as of June 30, 2019, and September 30, 2019. All other assumptions used for the June 30, 2019, and September 30, 2019, remeasurements were consistent with the measurement as of December 31, 2018.

As a result of the June 30, 2019, remeasurement, Duke Energy recognized a remeasurement gain of $18 million, which was recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of June 30, 2019. The remeasurement gain, which represents an increase in funded status, reflects an increase of $275 million in the fair value of plan assets and an increase of $257 million in the projected benefit obligation. As a result of the September 30, 2019, remeasurement, Duke Energy recognized a remeasurement loss of $136 million, which was recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of September 30, 2019. The remeasurement loss, which represents a decrease in funded status, reflects a decrease of $10 million in the fair value of plan assets and an increase of $126 million in the projected benefit obligation.

As the result of settlement accounting, Duke Energy recognized settlement charges of $69 million and $16 million, primarily as a regulatory asset within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of June 30, 2019, and September 30, 2019, respectively (an immaterial amount was recorded in Other income and expenses, net within the Condensed Consolidated Statement of Operations). Settlement charges recognized by the Subsidiary Registrants as of June 30, 2019, were $43 million for Duke Energy Carolinas, $16 million for Duke Energy Progress, $3 million for Duke Energy Florida, $3 million for Duke Energy Indiana, $1 million for Duke Energy Ohio and $3 million for Piedmont. Settlement charges recognized by the Subsidiary Registrants as of September 30, 2019 were $6 million for Duke Energy Carolinas, $3 million for Duke Energy Progress, $2 million for Duke Energy Florida, $1 million for Duke Energy Indiana and $3 million for Piedmont. The settlement charges reflect the recognition of a pro-rata portion of previously unrecognized actuarial losses, equal to the percentage of reduction in the projected benefit obligation resulting from total lump-sum benefits payments as of September 30, 2019.



FINANCIAL STATEMENTS	EMPLOYEE BENEFIT PLANS

QUALIFIED PENSION PLANS

The following tables include the components of net periodic pension costs for qualified pension plans.


	Three Months Ended September 30, 2019																								Three Months Ended March 31, 2020
				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	$	42		$	13		$	13		$	7		$	5		$	1		$	2		$	1		$	41		$	12		$	12		$	6		$	5		$	1		$	2		$	1
Interest cost on projected benefit obligation	77			17			24			10			14			5			6			2			67			16			21			10			12			4			6			2
Expected return on plan assets	(140		)	(36		)	(45		)	(22		)	(22		)	(7		)	(11		)	(5		)	(143		)	(36		)	(48		)	(22		)	(25		)	(7		)	(11		)	(5		)
Amortization of actuarial loss	28			6			10			4			6			2			3			2			34			7			11			5			6			2			3			2
Amortization of prior service credit	(8		)	(2		)	(1		)	—			—			—			—			(2		)	(8		)	(2		)	(1		)	—			—			—			—			(2		)
Amortization of settlement charges																									2			1			1			—			—			—			—			—
Net periodic pension costs	$	(1	)	$	(2	)	$	1		$	(1	)	$	3		$	1		$	—		$	(2	)	$	(7	)	$	(2	)	$	(4	)	$	(1	)	$	(2	)	$	—		$	—		$	(2	)

Three Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 47
$ 15
$ 13
$ 7
$ 5
$ 2
$ 2
$ 2
Interest cost on projected benefit obligation 74
18
24
10
13
4
6
3
Expected return on plan assets (140 ) (37 ) (45 ) (21 ) (23 ) (7 ) (10 ) (6 )
Amortization of actuarial loss 33
7
11
6
6
1
2
3
Amortization of prior service credit (8 ) (2 ) (1 ) —
—
—
—
(3 )
Net periodic pension costs $ 6
$ 1
$ 2
$ 2
$ 1
$ —
$ —
$ (1 )

Nine Months Ended September 30, 2019
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 116
$ 37
$ 34
$ 19
$ 15
$ 3
$ 6
$ 4
Interest cost on projected benefit obligation 242
58
76
34
41
14
19
8
Expected return on plan assets (426 ) (111 ) (134 ) (66 ) (66 ) (21 ) (32 ) (16 )
Amortization of actuarial loss 77
17
28
10
18
3
6
5
Amortization of prior service credit (24 ) (6 ) (2 ) (1 ) (1 ) —
(1 ) (7 )
Net periodic pension costs $ (15 ) $ (5 ) $ 2
$ (4 ) $ 7
$ (1 ) $ (2 ) $ (6 )


	Nine Months Ended September 30, 2018																								Three Months Ended March 31, 2019
				Duke						Duke			Duke			Duke			Duke									Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy						Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont			Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	137		$	45		$	39		$	22		$	16		$	4		$	7		$	6		$	37		$	12		$	11		$	6		$	4		$	1		$	2		$	1
Interest cost on projected benefit obligation	224			54			70			31			38			13			18			9			83			20			26			12			14			5			6			3
Expected return on plan assets	(420		)	(111		)	(133		)	(63		)	(69		)	(21		)	(31		)	(18		)	(143		)	(38		)	(44		)	(23		)	(22		)	(8		)	(11		)	(5		)
Amortization of actuarial loss	99			21			33			16			18			3			6			9			24			6			9			3			6			1			2			2
Amortization of prior service credit	(24		)	(6		)	(3		)	(1		)	(1		)	—			—			(9		)	(8		)	(2		)	(1		)	—			—			—			—			(3		)
Net periodic pension costs	$	16		$	3		$	6		$	5		$	2		$	(1	)	$	—		$	(3	)	$	(7	)	$	(2	)	$	1		$	(2	)	$	2		$	(1	)	$	(1	)	$	(2	)

NON-QUALIFIED PENSION PLANS

Net periodic pension costs for non-qualified pension plans were not material for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, and ~~2018.~~2019.

OTHER POST-RETIREMENT BENEFIT PLANS

Net periodic costs for ~~OPEB~~other post-retirement benefit plans were not material for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, and ~~2018.~~2019.



~~FINANCIAL STATEMENTS~~	~~INCOME TAXES~~

~~17.~~15. INCOME TAXES

EFFECTIVE TAX RATES

The ETRs from continuing operations for each of the Duke Energy Registrants are included in the following table.


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2019		2018		2019		2018		2020		2019
Duke Energy	12.4	%	13.7	%	12.5	%	17.0	%	13.3	%	9.6	%
Duke Energy Carolinas	16.7	%	22.6	%	17.7	%	22.3	%	16.1	%	17.7	%
Progress Energy	15.3	%	18.8	%	16.2	%	17.0	%	17.5	%	17.3	%
Duke Energy Progress	14.7	%	20.6	%	16.1	%	18.4	%	17.1	%	17.8	%
Duke Energy Florida	16.5	%	15.0	%	18.0	%	16.3	%	20.0	%	19.3	%
Duke Energy Ohio	12.9	%	16.0	%	15.2	%	16.0	%	17.7	%	16.9	%
Duke Energy Indiana	23.2	%	22.7	%	23.7	%	24.7	%	20.8	%	24.1	%
Piedmont	35.7	%	34.4	%	18.5	%	20.6	%	10.1	%	21.8	%

The ~~decrease~~increase in the ETR for Duke Energy for the three months ended ~~September 30, 2019,~~March 31, 2020, was primarily due to ~~an increase in the amortization of excess deferred taxes.~~

~~The decrease in the ETR for Duke Energy for the nine months ended September 30, 2019, was primarily due to a one-time valuation allowance charge in the prior year,~~ an adjustment related to the income tax recognition for equity method investments recorded in the first quarter of 2019, ~~and~~partially offset by an increase in the amortization of excess deferred taxes. The equity method investment adjustment was immaterial and relates to prior years.

The decrease in the ETR for Duke Energy Carolinas for the three ~~and nine~~ months ended ~~September 30, 2019, was primarily due to an increase in the amortization of excess deferred taxes.~~

The decrease in the ETR for Progress Energy for the three months ended September 30, 2019, was primarily due to an increase in the amortization of excess deferred taxes and favorable tax return true ups partially offset by a decrease in AFUDC equity in the current year.

The decrease in the ETR for Duke Energy Progress for the three and nine months ended September 30, 2019, was primarily due to an increase in the amortization of excess deferred taxes and favorable tax return true ups.

~~The increase in the ETR for Duke Energy Florida for the three and nine months ended September 30, 2019, was primarily due to a decrease in AFUDC equity in the current year.~~

~~The decrease in the ETR for Duke Energy Ohio for the three months ended September 30, 2019,~~March 31, 2020, was primarily due to an increase in the amortization of excess deferred taxes.

The ~~increase~~decrease in the ETR ~~in relation to pretax losses,~~ for ~~Piedmont~~Duke Energy Indiana for the three months ended ~~September 30, 2019,~~March 31, 2020, was primarily due to an increase in the amortization of excess deferred ~~taxes and partially offset by a decrease in favorable tax return true ups.~~ taxes.



FINANCIAL STATEMENTS	INCOME TAXES

The decrease in the ETR for Piedmont for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, was primarily due to an increase in the amortization of excess deferred ~~taxes and partially offset by a decrease in favorable tax return true ups.~~taxes.

OTHER TAX MATTERS

On ~~October 23, 2019, Duke Energy received~~March 27, 2020, the CARES Act was enacted. The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic. Among other provisions, the CARES Act accelerates the remaining AMT credit refund allowances resulting in taxpayers being able to immediately claim a refund in full for any AMT credit carryforwards. As a result, the remaining AMT credit carryforwards have been reclassified to a current receivable included in Other within Current Assets on the Condensed Consolidated Balance Sheets as of ~~$573 million~~March 31, 2020. The total income tax receivable related to AMT credit carryforwards ~~based on~~is approximately $572 million. The other provisions within the ~~filing of~~CARES Act do not materially impact Duke Energy's ~~2018~~ income tax ~~return in 2019.~~accounting. See Note 1 for information on COVID-19.

~~18.~~16. SUBSEQUENT EVENTS

For information on subsequent events related to regulatory matters, ~~stockholders' equity~~commitments and ~~income taxes,~~contingencies and derivatives and hedging, see Notes 3, 154 and ~~17, respectively.~~8.



MD&A	DUKE ENERGY

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 and Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. However, none of the registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.

DUKE ENERGY

Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the U.S. primarily through its wholly owned subsidiaries, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of the Subsidiary Registrants, which, along with Duke Energy, are collectively referred to as the Duke Energy Registrants.

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Executive Overview

~~Global Climate Change~~COVID-19

~~On September 17, 2019, Duke Energy announced an updated climate strategy with~~The COVID-19 pandemic is having a ~~new goal of net-zero carbon emissions from electric generation by 2050. Timelines~~significant impact on global health and ~~initiatives, as well as implementation of new technologies, will vary in each state in which the company operates and will involve collaboration with regulators, customers and other stakeholders.~~

~~Hurricane Dorian~~

economic environments. In the third quarter of 2019, Hurricane Dorian impacted approximately 270,000 North Carolina customers and 30,000 South Carolina customers within the Duke Energy Progress service territory. Duke Energy Florida’s service territory was also threatened by Hurricane Dorian and therefore, Duke Energy Florida also incurred costs to be prepared for potential impact. Estimated restoration costs for Duke Energy are approximately $400 million. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

~~Regulatory Activity~~

~~In 2019, Duke Energy advanced regulatory activity in multiple jurisdictions. The following rate cases are underway:~~

~~Duke Energy Kentucky filed an electric rate case with the KPSC on September 3, 2019. Hearings are expected to begin in~~ the first quarter of 2020, ~~with rates anticipated~~the World Health Organization (WHO) declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The Duke Energy Registrants are monitoring developments closely, have taken steps to ~~go into effect~~mitigate the impacts to our business, and have a pandemic response plan in place to protect our employees, customers and communities. Financial impacts to Duke Energy’s first quarter 2020 results were not material. Volumes are expected to decline in the second quarter ~~of 2020.~~

and then begin a gradual rebound thereafter. The Duke Energy ~~Indiana filed a general rate case~~Registrants are developing cost containment plans to offset revenue declines.

Employees. The health of our employees is of paramount importance. Power plants and electricity and natural gas delivery facilities are staffed. Employees who are not involved with power generation, power delivery, customer service or certain other functions have been performing their work duties remotely from home. Employees who need to interact with customers in-person are following the ~~IURC on July 2, 2019. Hearings are expected to begin in early 2020, with rates to be effective mid-2020.~~

~~Additionally, as a result~~Centers for Disease Control and Prevention’s safety guidelines, including social distancing and use of ~~regulatory orders or settlements, customer rates were impacted in 2019 as follows:~~

~~On October 31, 2019, Piedmont received an order from the NCUC~~face masks. Operating procedure changes include additional cleaning and ~~revised customer rates became effective on November 1, 2019.~~disinfection procedures at our facilities.

In May 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC and revised customer rates became effective June 1, 2019. As a result of the Directive allowing litigation-related costs, Duke Energy Progress customer rates were revised again July 1, 2019.

~~Duke Energy Kentucky revised customer rates on April 1, 2019, following settlement on January 30, 2019, of its 2018 Natural Gas Base Rate Case.~~

At Duke Energy Florida, revised customer rates went into effect in January 2019 as a result of a July 2018 petition to the FPSC to include in base rates the revenue requirement for Duke Energy Florida’s first solar generation project, the Hamilton Project. The FPSC in July 2019, issued an order to allow Duke Energy Florida to include in base rates the revenue requirements for its next wave of three solar generation projects, with projected in-service dates ranging from the fourth quarter of 2019 to the first quarter of 2020.

•

Customers. The Duke Energy Subsidiary Registrants voluntarily announced, in the first quarter of 2020, a suspension of disconnections for nonpayment in order to give customers experiencing financial hardship extra time to make payments. This is expected to result in an increase in future charge-offs over historical levels. In addition, several Subsidiary Registrants are waiving late payment charges and other fees for credit cards and returned checks. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information. The COVID-19 pandemic and stay-at-home orders have impacted commercial and industrial customers, and many of them have suspended operations which is impacting the Duke Energy Registrants’ volumes. Several large industrial customers have announced plans to restart their businesses in May.

Communities. The Duke Energy Foundation announced approximately $6 million in donations and grants as of April 30, 2020, to support hunger relief, local health and human services nonprofits, and education initiatives across the Duke Energy Registrants’ service territories.


•	Balance Sheet Strength and Liquidity Assurance. See Notes 5 and 13 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders Equity," respectively, for additional information.


◦	Duke Energy issued approximately $1.5 billion of debt during the first quarter of 2020.


◦	Duke Energy entered into and borrowed approximately $1.7 billion under a 364-day Term Loan Credit Agreement.


◦	Duke Energy drew down the remaining $500 million of availability under its existing $1 billion Three-Year Revolving Credit Facility.


◦	Duke Energy issued $85 million of common stock through a forward sales agreement which is expected to settle on or prior to December 31, 2020.



MD&A	DUKE ENERGY

Rate Case activity and delays. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.

◦

Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC on September 30, 2019, and October 30, 2019, respectively, requesting rate increases go into effect in the third quarter of 2020. On March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the Duke Energy Carolinas evidentiary hearing until further order by the commission. On March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on the Duke Energy Progress case indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule. On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. The joint motion suggests, health and safety permitting, that the commission consider the possibility of holding the consolidated hearing in July.


◦	Duke Energy Florida filed a petition with the FPSC on April 2, 2020, to accelerate a fuel cost refund to customers in the month of May 2020. Typically, the refund would be made over the course of 2021. The FPSC approved the petition on April 28, 2020.

◦

Duke Energy Ohio filed an application on April 16, 2020, for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. The proposal is conditioned on full recovery via Duke Energy Ohio's existing Economic Competitiveness Fund Rider, which has been used by Duke Energy Ohio in the past for other reasonable arrangements with customers. On April 24, 2020, the Staff of the PUCO filed its recommendation finding Duke Energy Ohio’s application is reasonable and that the PUCO should approve it.


◦	Duke Energy Kentucky filed an electric rate case with the KPSC on September 3, 2019. On April 27, 2020, the KPSC issued its decision and new customer rates were effective on May 1, 2020.


◦	Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019. Hearings concluded on February 7, 2020, with rates expected to be effective mid-2020. Duke Energy Indiana is awaiting an order from the IURC.

Policymaker actions. The CARES Act was signed by President Trump on March 27, 2020. Duke Energy Registrants will benefit from certain provisions such as the AMT acceleration and deferral of certain payroll taxes. See Note 15 to the Condensed Consolidated Financial Statements, “Income Taxes” for additional information.

ACP and other assets. At present, we have not experienced any delays in ACP construction activity related to COVID-19, but we are constantly monitoring that important project. We experienced no impairments of long-lived or intangible assets resulting from this pandemic in the first quarter 2020.

Results of Operations

Non-GAAP Measures

Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures such as adjusted earnings and adjusted EPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. 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.



~~MD&A~~	~~DUKE ENERGY~~

Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted ~~diluted~~ EPS. Adjusted earnings and adjusted ~~diluted~~ EPS represent income from continuing operations ~~attributable~~available to Duke Energy common stockholders in dollar and ~~per-share~~per share amounts, adjusted for the dollar and ~~per-share~~per 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. The most directly comparable GAAP measures for adjusted earnings and adjusted ~~diluted~~ EPS are GAAP Reported Earnings and GAAP Reported EPS, respectively.

~~Special items~~The special item in the periods presented below ~~include the following:~~

~~Impairment Charges represents~~includes a ~~reduction~~reversal of 2018 severance costs which were deferred as a ~~prior year impairment at Citrus County CC, an OTTI of an investment in Constitution and a Commercial Renewables goodwill impairment.~~

~~Costs to Achieve Piedmont Merger represents charges that resulted from the Piedmont acquisition.~~

~~Regulatory and Legislative Impacts represents charges related to rate case orders, settlements or other actions of regulators or legislative bodies.~~

~~Sale of Retired Plant represents the loss associated with selling Beckjord, a nonregulated generating facility in Ohio.~~

~~Impacts~~result of the ~~Tax Act represents an AMT valuation allowance recognized and a true up of prior year tax estimates related to~~partial settlement in the ~~Tax Act.~~Duke Energy Carolinas 2019 North Carolina rate case.

Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

GAAP Reported EPS was ~~$1.82~~$1.24 for the ~~third~~first quarter of ~~2019 compared to $1.51 for~~2020 and the ~~third~~first quarter of ~~2018. The increase in~~2019. GAAP reported earnings ~~was primarily~~increased due to ~~favorable weather,~~ positive rate case impacts and ~~lower operating expenses in Electric Utilities and Infrastructure and a prior year goodwill impairment charge~~growth in Commercial ~~Renewables; these items were partially~~Renewables. This was offset by ~~higher~~lower returns on corporate ~~interest expense.~~held investments and unfavorable weather.

As discussed above, management also evaluates financial performance based on adjusted ~~diluted~~ EPS. Duke Energy’s ~~third~~first quarter ~~2019~~2020 adjusted ~~diluted~~ EPS was ~~$1.79~~$1.14 compared to ~~$1.65~~$1.24 for the ~~third~~first quarter of ~~2018.~~2019.

~~The following table reconciles non-GAAP measures, including adjusted diluted EPS, to their most directly comparable GAAP measures.~~

Three Months Ended September 30,
2019 2018
(in millions, except per-share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS $ 1,327
$ 1.82
$ 1,082
$ 1.51
Adjustments:
Impairment charges^(a)
(19 ) (0.03 ) 91
0.12
Costs to Achieve Piedmont Merger^(b)
—
—
13
0.02
Impacts of the Tax Act^(c)
—
—
(3 ) —
Discontinued Operations —
—
(4 ) —
Adjusted Earnings/Adjusted Diluted EPS $ 1,308
$ 1.79
$ 1,179
$ 1.65


~~(a)~~	~~Net of $6 million tax expense in 2019. Net of $2 million Noncontrolling Interests in 2018.~~


~~(b)~~	~~Net of $3 million tax benefit.~~


~~(c)~~	~~Represents a true up of prior year tax estimates related to the Tax Act.~~

~~Nine Months Ended September 30, 2019, as compared to September 30, 2018~~

GAAP Reported EPS was $4.18 for the nine months ended September 30, 2019, compared to $3.11 for the nine months ended September 30, 2018. The increase in GAAP Reported earnings was primarily due to positive rate case impacts and lower operating expenses in Electric Utilities and Infrastructure, partially offset by higher depreciation and share dilution from equity issuances; the allocation of losses to noncontrolling tax equity members resulting primarily from the Commercial Renewables North Rosamond solar farm commencing commercial operations; an adjustment related to income tax recognition for equity method investments in Gas Utilities and Infrastructure; and prior year regulatory and legislative impacts, impairments charges, an AMT valuation allowance and a loss on sale of a retired plant.

As discussed above, management also evaluates financial performance based on adjusted diluted EPS. Duke Energy’s adjusted diluted EPS was $4.15 for the nine months ended September 30, 2019, compared to $3.87 for the nine months ended September 30, 2018.



MD&A	DUKE ENERGY

The following table reconciles non-GAAP measures, including adjusted ~~diluted~~ EPS, to their most directly comparable GAAP measures.

Nine Months Ended September 30,
2019 2018
(in millions, except per-share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS $ 3,047
$ 4.18
$ 2,202
$ 3.11
Adjustments:
Costs to Achieve Piedmont Merger^(a)
—
—
41
0.06
Regulatory and Legislative Impacts^(b)
—
—
202
0.29
Sale of Retired Plant^(c)
—
—
82
0.12
Impairment Charges^(d)
(19 ) (0.03 ) 133
0.19
Impacts of the Tax Act^(e)
—
—
73
0.10
Discontinued Operations —
—
1
—
Adjusted Earnings/Adjusted Diluted EPS $ 3,028
$ 4.15
$ 2,734
$ 3.87



	Three Months Ended March 31,
	2020						2019
(in millions, except per share amounts)	Earnings			EPS			Earnings		EPS
GAAP Reported Earnings/GAAP Reported EPS	$	899		$	1.24		$	900	$	1.24
Adjustments:
Severance^(a)	(75		)	(0.10		)	—		—
Adjusted Earnings/Adjusted EPS	$	824		$	1.14		$	900	$	1.24


~~(a)~~	~~Net of $12 million tax benefit.~~


~~(b)~~	~~Net of $63 million tax benefit.~~


~~(c)~~	~~Net of $25 million tax benefit.~~


~~(d)~~	~~Net of $6 million tax expense in 2019. Net of $13 million tax benefit and $2 million Noncontrolling Interests in 2018.~~


~~(e)~~	~~Represents a recognition of AMT valuation allowance and true up of prior year tax estimates related to the Tax Act.~~

(a) Net of tax expense of $23 million.

SEGMENT RESULTS

The remaining information presented in this discussion of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements.

Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 2 to the Condensed Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.

Electric Utilities and Infrastructure


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended March 31,
(in millions)	2019			2018		Variance			2019			2018		Variance			2020		2019			Variance
Operating Revenues	$	6,577		$	6,260	$	317		$	17,381		$	16,806	$	575		$	5,183	$	5,329		$	(146	)
Operating Expenses
Fuel used in electric generation and purchased power	1,994			1,935		59			5,286			5,202		84			1,467		1,630			(163		)
Operation, maintenance and other	1,357			1,431		(74		)	3,957			4,151		(194		)	1,325		1,282			43
Depreciation and amortization	1,026			897		129			2,924			2,570		354			977		947			30
Property and other taxes	301			289		12			899			842		57			303		301			2
Impairment charges	(20		)	31		(51		)	(16		)	246		(262		)	2		—			2
Total operating expenses	4,658			4,583		75			13,050			13,011		39			4,074		4,160			(86		)
Gains on Sales of Other Assets and Other, net	—			8		(8		)	—			9		(9		)
Gains (Losses) on Sales of Other Assets and Other, net																	1		(3		)	4
Operating Income	1,919			1,685		234			4,331			3,804		527			1,110		1,166			(56		)
Other Income and Expenses, net	87			107		(20		)	267			286		(19		)	85		91			(6		)
Interest Expense	336			322		14			1,004			955		49			339		338			1
Income Before Income Taxes	1,670			1,470		200			3,594			3,135		459			856		919			(63		)
Income Tax Expense	285			303		(18		)	650			643		7			151		169			(18		)
Segment Income	$	1,385		$	1,167	$	218		$	2,944		$	2,492	$	452		$	705	$	750		$	(45	)

Duke Energy Carolinas GWh sales	25,587			25,607		(20		)	69,019			70,506		(1,487		)	21,236		21,828			(592		)
Duke Energy Progress GWh sales	19,502			19,625		(123		)	52,072			52,747		(675		)	15,670		16,348			(678		)
Duke Energy Florida GWh sales	12,996			12,375		621			32,468			31,798		670			8,617		8,321			296
Duke Energy Ohio GWh sales	7,135			6,964		171			18,959			19,183		(224		)	5,823		6,164			(341		)
Duke Energy Indiana GWh sales	8,711			9,114		(403		)	24,181			25,900		(1,719		)	7,606		8,033			(427		)
Total Electric Utilities and Infrastructure GWh sales	73,931			73,685		246			196,699			200,134		(3,435		)	58,952		60,694			(1,742		)
Net proportional MW capacity in operation									49,711			48,757		954			49,561		49,725			(164		)

Three Months Ended March 31, 2020, as compared to March 31, 2019

Electric Utilities and Infrastructure’s results were driven by unfavorable weather and lower wholesale revenues, partially offset by higher revenues resulting from the South Carolina retail rate cases and Duke Energy Florida base and solar rate adjustments. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

a $147 million decrease in fuel revenues primarily due to lower fuel cost recovery;

a $45 million decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year; and



MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

~~Three Months Ended September 30, 2019, as compared~~a $17 million decrease in wholesale revenues, net of fuel, primarily due to ~~September 30, 2018~~

~~Electric Utilities and Infrastructure’s results were impacted by a positive contribution from~~coal ash cost recovery in the prior year at Duke Energy ~~Carolinas North and~~Progress.

Partially offset by:

a $19 million increase due to higher pricing from South Carolina retail rate ~~cases, Duke Energy Florida's base rate adjustments due~~case, net of a return of EDIT to ~~the Citrus County CC being placed in service, favorable weather in the current year and lower operation, maintenance and other expense.~~

~~These drivers were partially offset by higher depreciation from a growing asset base and higher interest expense. The following is a detailed discussion of the variance drivers by line item.~~

~~Operating Revenues.~~ ~~The variance was driven primarily by:~~customers;

a ~~$167~~$17 million increase in retail pricing ~~primarily~~ due to ~~the Duke Energy Carolinas North and South Carolina rate cases and~~ Duke Energy Florida's base rate adjustments related to ~~Citrus County CC being placed in service;~~annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment; and

~~an $88~~a $17 million increase in weather-normal retail sales ~~net of fuel revenues, due to favorable weather in the current year; and~~

~~a $51 million increase in fuel related revenues.~~volumes.

Operating Expenses. The variance was driven primarily by:

a ~~$129~~$163 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix at Duke Energy Progress and lower coal and natural gas costs and lower amortization of deferred fuel costs at Duke Energy Indiana.

Partially offset by:

a $43 million increase in operation, maintenance and other expense primarily due to higher employee benefit costs and increased vegetation management costs; and

a $30 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the ~~prior year Duke Energy Carolinas and Duke Energy Progress North~~South Carolina retail rate ~~cases and Duke Energy Florida's Citrus County CC being placed in service;~~

a $59 million increase in fuel used in electric generation and purchased power primarily due to an increase in the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard requirement from the prior year at Duke Energy Progress; and

~~a $12 million increase in property and other taxes primarily due to higher property taxes for additional plant in service at Duke Energy Florida.~~

~~Partially offset by:~~

a $74 million decrease in operation, maintenance and other expense primarily due to lower storm costs at Duke Energy Progress and Duke Energy Carolinas in the current year and lower payroll costs resulting from prior year workforce reductions; and

a $51 million decrease in impairment charges primarily due to a reduction of a prior year impairment at Duke Energy Florida's Citrus County CC and the prior year Edwardsport IGCC settlement at Duke Energy Indiana.

~~Other Income and Expenses, net.~~ ~~The variance was driven primarily by AFUDC equity return ending on the Citrus County CC in the fourth quarter of 2018 at Duke Energy Florida.~~

~~Interest Expense.~~ ~~The variance was driven primarily by higher debt outstanding in the current year and AFUDC debt return ending in the fourth quarter of 2018 on the Citrus County CC at Duke Energy Florida.~~case.

Income Tax Expense. The decrease in tax expense was primarily due to ~~an increase in the amortization of excess deferred taxes, partially offset by an increase~~a decrease in pretax income. The ETRs for the three months ended ~~September 30,~~March 31, 2020, and 2019, were 17.6% and ~~2018, were 17.1% and 20.6%~~18.4%, respectively. ~~The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.~~

~~Nine Months Ended September 30, 2019, as compared to September 30, 2018~~

Electric Utilities and Infrastructure’s results were impacted by a positive contribution from the 2018 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases, Duke Energy Florida's base rate adjustments due to the Citrus County CC being placed in service and lower operation, maintenance and other expense.

~~These drivers were partially offset by higher depreciation from a growing asset base and higher interest expense. The following is a detailed discussion of the variance drivers by line item.~~

~~Operating Revenues.~~ ~~The variance was driven primarily by:~~

a $493 million increase in retail pricing primarily due to the prior year Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases and Duke Energy Florida's base rate adjustments related to Citrus County CC being placed in service; and

~~an $85 million increase in fuel related revenues.~~

~~Operating Expenses.~~ ~~The variance was driven primarily by:~~

a $354 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the prior year Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases and Duke Energy Florida's Citrus County CC being placed in service;

an $84 million increase in fuel used in electric generation and purchased power primarily due to an increase in the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard requirement from the prior year at Duke Energy Progress; and

a $57 million increase in property and other taxes primarily due to higher property taxes for additional plant in service at Duke Energy Florida and current year property tax reassessments at Duke Energy Progress.



~~MD&A~~	~~SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE~~

~~Partially offset by:~~

~~a $262 million decrease in impairment charges primarily due to the impacts associated with the prior year Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases; and~~

a $194 million decrease in operation, maintenance and other expense primarily due to lower payroll and benefit costs resulting from prior year workforce reductions and lower storm costs at Duke Energy Progress and Duke Energy Carolinas in the current year.

~~Other Income and Expenses, net.~~ ~~The variance was driven primarily by AFUDC equity return ending on the Citrus County CC in the fourth quarter of 2018 at Duke Energy Florida.~~

~~Income Tax Expense.~~ The increase in tax expense was primarily due to an increase in pretax income, mostly offset by an increase in the amortization of excess deferred taxes. The ETRs for the nine months ended September 30, 2019, and 2018, were 18.1% and 20.5%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.

Matters Impacting Future Electric Utilities and Infrastructure Results

The COVID-19 pandemic has not had a material impact on Electric Utilities and Infrastructure as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Electric Utilities and Infrastructure results of operations, financial position and cash flows in the future. Electric Utilities and Infrastructure will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Electric Utilities and Infrastructure customers, suppliers and partners and could cause Electric Utilities and Infrastructure to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Electric Utilities and Infrastructure also has various pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows.

On May 21, 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC granting the companies’ requests for retail rate increases but denying recovery of certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress ~~intend~~have appealed these decisions to ~~file notices of appeals with~~ the South Carolina Supreme Court ~~within 30 days of the order that was received on October 18, 2019.~~and those appeals are pending. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

~~On April 1,~~In 2019, ~~NCDEQ issued a closure determination requiring~~ Duke Energy ~~Carolinas~~Indiana filed a general rate case with the IURC, and ~~Duke Energy Progress to excavate all remaining coal ash impoundments in North Carolina, even though they had been deemed low risk by NCDEQ on November 14, 2018. On April 26, 2019,~~ Duke Energy Carolinas and Duke Energy Progress filed ~~a Petition for Contested Case Hearings in~~general rate cases with the ~~Office~~NCUC. The outcome of Administrative Hearings to challenge NCDEQ's April 1 Order. Duke Energy Carolinas and Duke Energy Progress intend to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore,these rate cases could materially impact Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note ~~4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies," 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. In addition, the orders issued in the Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases supporting recovery of past coal ash remediation costs have been appealed by various parties. The outcome of these appeals, lawsuits and potential fines and penalties could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Notes 3 ~~and 4~~ to the Condensed Consolidated Financial Statements, "Regulatory ~~Matters" and “Commitments and Contingencies,” respectively,~~Matters," for additional information.

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas and Duke Energy Progress have petitioned for deferral of future grid improvement costs in their 2019 rate cases. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

~~During the last half of 2018,~~ Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named ~~storms.~~storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress and Duke Energy Florida's service territories. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

~~In 2019,~~



MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

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 ~~filed~~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 ~~general rate case with the IURC, and~~method of compliance. Duke Energy ~~Carolinas~~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 ~~Progress filed general rate cases~~Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with ~~the NCUC. The outcome~~environmental regulations or to mitigate risks associated with on-site storage of ~~these rate cases~~coal ash. An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could ~~materially~~have an adverse impact ~~Electric Utilities and Infrastructure's~~on Duke Energy Indiana's results of operations, financial position and cash flows. ~~See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.~~

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, ~~2018,~~2019, for discussion of risks associated with the Tax Act.

Gas Utilities and Infrastructure



	Three Months Ended March 31,
(in millions)	2020		2019		Variance
Operating Revenues	$	664	$	756	$	(92	)
Operating Expenses
Cost of natural gas	199		327		(128		)
Operation, maintenance and other	110		110		—
Depreciation and amortization	66		65		1
Property and other taxes	30		33		(3		)
Total operating expenses	405		535		(130		)
Operating Income	259		221		38
Other Income and Expenses, net	49		40		9
Interest Expense	31		30		1
Income Before Income Taxes	277		231		46
Income Tax Expense	28		5		23
Segment Income	$	249	$	226	$	23

Piedmont LDC throughput (dekatherms)	148,503,995		151,662,741		(3,158,746		)
Duke Energy Midwest LDC throughput (Mcf)	33,785,834		38,538,272		(4,752,438		)

Three Months Ended March 31, 2020, as compared to March 31, 2019

Gas Utilities and Infrastructure’s results were impacted by an increase in operating income primarily due to the North Carolina base rate case and IMR, partially offset by prior year tax benefits related to AFUDC equity from ACP. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues.The variance was driven primarily by:

a $134 million decrease due to lower natural gas costs passed through to customers and lower volumes due to warmer weather;

a $20 million decrease due to return of EDIT to customers; and

a $7 million decrease due to NCUC approval related to tax reform accounting from fixed-rate contracts in the prior year.

Partially offset by:

a $53 million increase due to North Carolina base rate case increases; and

a $12 million increase due to North Carolina IMR increases.

Operating Expenses.The variance was driven primarily by:

a $128 million decrease in cost of natural gas due to lower natural gas prices, lower volumes and decreased off-system sales natural gas costs.

Other Income and Expenses, net. The variance was driven primarily by higher equity earnings from ACP in the current year.

Income Tax Expense. The increase in tax expense was primarily due to an adjustment, recorded in the first quarter of 2019, related to the income tax recognition for equity method investments and an increase in pretax income, partially offset by an increase in the amortization of excess deferred taxes. The ETRs for the three months ended March 31, 2020, and 2019, were 10.1% and 2.2%, respectively. The increase in the ETR was primarily due to an adjustment related to the income tax recognition for equity method investments recorded in the first quarter of 2019, partially offset by an increase in the amortization of excess deferred taxes. The equity method investment adjustment was immaterial and relates to prior years.



MD&A	SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE

~~Gas Utilities and Infrastructure~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2019
2018
Variance
2019
2018
Variance
Operating Revenues $ 249
$ 256
$ (7 ) $ 1,311
$ 1,301
$ 10
Operating Expenses
Cost of natural gas 48
58
(10 ) 451
460
(9 )
Operation, maintenance and other 108
101
7
325
312
13
Depreciation and amortization 64
61
3
192
182
10
Property and other taxes 24
24
—
84
81
3
Total operating expenses 244
244
—
1,052
1,035
17
Operating Income 5
12
(7 ) 259
266
(7 )
Other Income and Expenses, net 42
29
13
119
16
103
Interest Expense 29
25
4
86
78
8
Income Before Income Taxes 18
16
2
292
204
88
Income Tax (Benefit) Expense (8 ) (1 ) (7 ) —
43
(43 )
Segment Income $ 26
$ 17
$ 9
$ 292
$ 161
$ 131

Piedmont LDC throughput (dekatherms) 121,378,484
135,403,188
(14,024,704 ) 377,729,141
407,144,529
(29,415,388 )
Duke Energy Midwest LDC throughput (Mcf) 9,997,444
9,370,743
626,701
62,278,623
62,111,858
166,765

~~Three Months Ended September 30, 2019, as compared to September 30, 2018~~

Gas Utilities and Infrastructure’s results were primarily impacted by tax benefits related to current year AFUDC equity and higher equity earnings from ACP. These drivers are partially offset by lower revenues. The following is a detailed discussion of the variance drivers by line item.

~~Operating Revenues.The variance was driven by:~~

~~a $10 million decrease primarily due to lower natural gas costs passed through to customers and lower volumes due to unfavorable weather.~~

~~Partially offset by:~~

~~a $3 million increase primarily due to North Carolina and Tennessee IMR increases.~~

~~Operating Expenses.The drivers were:~~

~~a $10 million decrease in cost of natural gas primarily due to lower off-system sales natural gas costs and lower natural gas prices.~~

~~Partially offset by:~~

a $7 million increase in operation, maintenance and other expense primarily due to increased information technology outside services costs and increased bad debt expense related to a Piedmont industrial customer; and

~~a $3 million increase in depreciation and amortization expense primarily due to additional plant in service.~~

~~Other Income and Expenses, net.~~ ~~The variance was driven by higher equity earnings from ACP in the current year.~~

~~Interest Expense.~~ The variance was driven by higher debt outstanding in the current year, higher interest expense due to customers as a result of tax reform deferrals, and intercompany interest, partially offset by favorable AFUDC debt interest.

~~Income Tax (Benefit) Expense.~~ ~~The increase in the tax benefit was primarily due to current year AFUDC equity.~~

~~Nine Months Ended September 30, 2019, as compared to September 30, 2018~~

Gas Utilities and Infrastructure’s results were primarily impacted by the prior year OTTI recorded on the Constitution investment and a 2019 adjustment related to the income tax recognition for equity method investments. The equity method investment adjustment was immaterial and relates to prior years. The following is a detailed discussion of the variance drivers by line item.

~~Operating Revenues.The variance was driven by:~~

~~a $12 million increase primarily due to North Carolina and Tennessee IMR increases;~~

~~a $9 million increase primarily due to NCUC approval related to tax reform accounting from fixed rate contracts; and~~

~~a $4 million increase in pricing primarily in residential and commercial sectors in the Midwest.~~



~~MD&A~~	~~SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE~~

~~Partially offset by:~~

an $8 million decrease due to lower natural gas costs passed through to customers and unfavorable weather in the Midwest, partially offset by higher natural gas prices associated with off-system sales at Piedmont; and

~~a $7 million decrease primarily due to a reduction of rates in South Carolina.~~

~~Operating Expenses.The variance was driven by:~~

a $13 million increase in operation, maintenance and other expense primarily due to information technology outside services, higher gas operations labor costs, and increased bad debt expense related to a Piedmont industrial customer; and

•~~a $10 million increase in depreciation and amortization expense primarily due to additional plant in service.~~

~~Partially offset by:~~

~~a $9 million decrease in cost of natural gas primarily due to lower natural gas prices in the Midwest and lower sales volumes partially offset by higher off-system sales natural gas costs at Piedmont.~~

~~Other Income and Expenses, net.~~ ~~The increase was primarily due to the prior year OTTI recorded on the Constitution investment and higher earnings from ACP in the current year.~~

~~Interest Expense.~~ The variance was driven by higher debt outstanding in the current year and higher interest expense due to customers as a result of tax reform deferrals, partially offset by favorable AFUDC debt interest.

~~Income Tax Expense.~~ The decrease in tax expense was primarily due to an adjustment related to the income tax recognition for equity method investments and current year AFUDC equity, partially offset by an increase in pretax income. The equity method investment adjustment was immaterial and relates to prior years. The ETRs for the nine months ended September 30, 2019, and 2018, were 0.0% and 21.1%, respectively. The decrease in the ETR was primarily due to an adjustment related to the income tax recognition for equity method investments that was recorded during the first quarter of 2019 and current year AFUDC equity. The equity method investment adjustment was immaterial and relates to prior years.

Matters Impacting Future Gas Utilities and Infrastructure Results

The COVID-19 pandemic has not had a material impact on Gas Utilities and Infrastructure as of March 31, 2020; however we cannot predict the extent to which the COVID-19 pandemic will impact Gas Utilities and Infrastructure results of operations, financial position and cash flows in the future. Gas Utilities and Infrastructure will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Gas Utilities and Infrastructure customers, suppliers and partners and could cause Gas Utilities and Infrastructure to experience an increase in certain costs, such as bad debt, or cause constructions delays with ACP. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

Gas Utilities and Infrastructure has a 47% ownership interest in ACP, which is building an approximately 600-mile interstate natural gas pipeline intended to transport diverse natural gas supplies into southeastern markets. Affected states (West Virginia, Virginia and North Carolina) have issued certain necessary permits; the project remains subject to other pending federal and state approvals, which will allow full construction activities to begin. In 2018, FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route. Given the legal challenges and ongoing discussions with customers, ACP expects ~~mechanical completion of~~ the project to enter full ~~project in late 2021 with~~ in-service ~~likely~~ in the first half of ~~2022. The~~2022.The delays resulting from legal challenges have impacted the cost ~~and schedule~~ for the project. Project cost ~~estimates are $7.3 billion to $7.8~~is approximately $8 billion, excluding financing costs. ~~Given~~This estimate is based on the ~~status of~~ current ~~discussions with FWS regarding a new BiOp~~facts available around construction costs and ~~ITS, as well as discussions with contractors regarding efficiencies which may be realized going forward, these estimates are under review~~timelines, and is subject to ~~upward pressure.~~future changes as those facts develop. Abnormal weather, work delays (including delays due to judicial or regulatory ~~action)~~action or COVID-19 social distancing) and other conditions may ~~also~~ result in cost or schedule modifications, a suspension of AFUDC for ACP and/or impairment charges potentially material to Duke Energy's cash flows, financial position and results of operations. ACP and Duke Energy will continue to consider their options with respect to the foregoing given their existing contractual and legal obligations. See Notes 3 and 1311 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and "Variable Interest Entities," respectively, for additional information.

On November 13, 2013, the PUCO issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed for a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact on Gas Utilities and Infrastructure’s results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, 2018, for discussion of risks associated with the Tax Act.



~~MD&A~~	~~SEGMENT RESULTS — COMMERCIAL RENEWABLES~~

Commercial Renewables


	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended March 31,
(in millions)	2019			2018			Variance			2019				2018			Variance			2020			2019			Variance
Operating Revenues	$	138		$	127		$	11		$	362			$	347		$	15		$	129		$	106		$	23
Operating Expenses
Operation, maintenance and other	81			85			(4		)	211				209			2			69			66			3
Depreciation and amortization	43			40			3			123				116			7			48			40			8
Property and other taxes	6			6			—			18				19			(1		)	8			6			2
Impairment charges	—			93			(93		)	—				93			(93		)
Total operating expenses	130			224			(94		)	352				437			(85		)	125			112			13
Operating Income (Loss)	8			(97		)	105			10				(90		)	100			4			(6		)	10
Other Income and Expenses, net	13			2			11			3				22			(19		)	(1		)	(2		)	1
Interest Expense	35			21			14			78				66			12			18			21			(3		)
Loss Before Income Taxes	(14		)	(116		)	102			(65		)		(134		)	69			(15		)	(29		)	14
Income Tax Benefit	(35		)	(37		)	2			(94		)	��	(112		)	18			(24		)	(35		)	11
Less: Loss Attributable to Noncontrolling Interests	(19		)	(17		)	(2		)	(110		)		(18		)	(92		)	(48		)	(7		)	(41		)
Segment Income (Loss)	$	40		$	(62	)	$	102		$	139			$	(4	)	$	143
Segment Income																				$	57		$	13		$	44

Renewable plant production, GWh	2,146			1,897			249			6,528				6,548			(20		)	2,437			2,068			369
Net proportional MW capacity in operation^(a)										3,162				2,976			186			3,502			2,996			506


(a)	Certain projects are included in tax equity structures where investors have differing interests in the project's economic attributes. One hundred percent of the tax equity project's capacity is included in the table above.

Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Commercial Renewables' results were favorable primarily due to ~~higher revenues~~new tax equity structures and ~~prior year goodwill impairment charges.~~favorable wind revenue. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The increase was primarily due to favorable wind portfolio revenue ~~due to~~as a result of favorable market pricing, favorable wind ~~resource.~~resource and new solar projects placed in service.

Operating Expenses. ~~The decrease was primarily due to goodwill impairment charges in the prior year.~~

~~Interest Expense.~~ ~~The increase was primarily due to mark-to-market losses in the solar portfolio in the current year.~~

~~Nine Months Ended September 30, 2019, as compared to September 30, 2018~~

Commercial Renewables' results were favorable primarily due to higher revenues, new tax equity solar projects in the current year and prior year goodwill impairment charges, partially offset by mark-to-market losses in the solar portfolio in the current year and FES settlement agreement in the prior year. The following is a detailed discussion of the variance drivers by line item.

~~Operating Revenues.~~ The increase was primarily due to ~~favorable solar portfolio revenue due to~~higher depreciation expense as a result of new ~~solar~~ projects placed in ~~service and higher irradiance.~~

~~Operating Expenses.~~ ~~The decrease was primarily due to goodwill impairment charges in the prior year.~~

~~Other Income and Expenses, net.~~ ~~The decrease was primarily due to income from the North Allegheny Wind, LLC and FES settlement agreement in the prior year.~~

~~Interest Expense.~~ ~~The increase was primarily due to mark-to-market losses in the solar portfolio in the current year.~~service.

Income Tax Benefit.The decrease in the tax benefit was primarily driven by an increase in taxes associated with Duke Energy's interest in a tax equity ~~solar project recorded in the second quarter of 2019~~projects and a ~~reduction~~decrease in ~~production tax credits generated.~~pretax losses.



MD&A	SEGMENT RESULTS — COMMERCIAL RENEWABLES

Loss Attributable to Noncontrolling ~~Interests.~~Interests The increase was primarily due to ~~the~~ new tax equity ~~solar projects entered into during 2019.~~structures.

Matters Impacting Future Commercial Renewables Results

~~During 2019,~~ The COVID-19 pandemic has not had a material impact on Commercial Renewables as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Commercial Renewables results of operations, financial position and cash flows in the future. Commercial Renewables will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Commercial Renewables customers, suppliers and partners and could cause Commercial Renewables to experience delays in project construction and availability of financing. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

Commercial Renewables continues to experience growth with tax equity structures; however, the future expiration of federal tax incentives could result in adverse impacts to future results of operations, financial position and cash flows.

Duke Energy evaluated recoverability of the wind and solar generation assets included in the minority interest sale as a result of the portfolio fair value of consideration received being less than the carrying value of the assets and determined the assets were all recoverable. Additionally, in 2019, Duke Energy evaluatedcontinues to monitor recoverability of its renewable merchant plants principally in the Electric Reliability Council of Texas West market, due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. ~~These~~Although these assets were not ~~impaired; however,~~impaired, a continued decline in energy market pricing would likely result in a future impairment. Impairment of these assets could result in adverse impacts to the future results of operations, financial position and cash flows of Commercial Renewables. ~~See Note 2 to the Condensed Consolidated Financial Statements, "Business Segments," for additional information.~~



~~MD&A~~	~~SEGMENT RESULTS — COMMERCIAL RENEWABLES~~

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, 2018, for discussion of risks associated with the Tax Act.

Other


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	2019			2018			Variance			2019			2018			Variance			2020			2019			Variance
Operating Revenues	$	25		$	34		$	(9	)	$	71		$	101		$	(30	)	$	23		$	21		$	2
Operating Expenses	27			54			(27		)	66			167			(101		)	(89		)	28			(117		)
Gains (Losses) on Sales of Other Assets and Other, net	—			3			(3		)	—			(96		)	96
Operating (Loss) Income	(2		)	(17		)	15			5			(162		)	167
Operating Income (Loss)																			112			(7		)	119
Other Income and Expenses, net	24			40			(16		)	98			81			17			(33		)	44			(77		)
Interest Expense	185			163			22			536			484			52			171			171			—
Loss Before Income Taxes	(163		)	(140		)	(23		)	(433		)	(565		)	132			(92		)	(134		)	42
Income Tax Benefit	(54		)	(98		)	44			(132		)	(125		)	(7		)	(19		)	(45		)	26
Less: Net Income Attributable to Noncontrolling Interests	—			2			(2		)	—			6			(6		)
Less: Preferred Dividends	15			—			15			27			—			27			39			—			39
Net Loss	$	(124	)	$	(44	)	$	(80	)	$	(328	)	$	(446	)	$	118		$	(112	)	$	(89	)	$	(23	)

Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

The variance was driven by lower ~~income tax benefit, higher interest expense,~~returns on investments and the declaration of ~~the~~ preferred stock dividends, partially offset by ~~the absence in the current year~~a reversal of ~~costs related to the Piedmont acquisition~~.corporate allocated severance costs. The following is a detailed discussion of the variance drivers by line item.

Operating Expenses. The decrease was primarily driven by the deferral of 2018 corporate allocated severance costs due to ~~costs~~the partial settlement between Duke Energy Carolinas and the Public Staff of the NCUC related to the ~~Piedmont acquisition and OVEC fuel expense in the prior year.~~2019 North Carolina retail rate case.

Other Income and Expenses, net. The variance was primarily due to lower returns on investments that fund certain employee benefit obligations ~~and~~as well as lower ~~earnings on the NMC investment.~~

~~Interest Expense.~~ ~~The variance was primarily due to higher outstanding debt in the current year.~~Bison investment income.

Income Tax Benefit. The decrease in the tax benefit was primarily driven by ~~favorable tax return true ups and tax levelization in the prior year, partially offset by an increase~~a decrease in pretax losses.

Preferred Dividends. The variance was driven by the declaration of ~~the~~ preferred stock ~~dividend~~dividends on preferred stock issued in 2019.

~~Nine Months Ended September 30, 2019, as compared to September 30, 2018~~Matters Impacting Future Other Results

The ~~variance was driven by~~COVID-19 pandemic has not had a material impact on Other as of March 31, 2020; however, we cannot predict the ~~prior year loss on sale~~extent to which the COVID-19 pandemic will impact Other results of ~~the retired Beckjord station, prior year valuation allowance against AMT credits,~~operations, financial position and ~~absence~~cash flows in the ~~current year~~future. Other will continue to actively monitor the impacts of ~~costs related to~~COVID-19 including the ~~Piedmont acquisition, offset~~potential economic slowdown caused by ~~higher interest expense~~business closures or by reduced operations of businesses and ~~the declarations of the preferred stock dividend. The following is a detailed~~governmental agencies. See Item 1A. Risk Factors for discussion of ~~the variance drivers by line item.~~

~~Operating Revenues.~~ Lower operating revenues were due to amounts in the prior year related to Duke Energy Ohio’s entitlement of capacity and energy from OVEC’s power plants. In the current year, the revenues and expenses for OVEC are reflected in the Electric Utilities and Infrastructure segment due to the 2018 PUCO Order that approved Duke Energy to recover or credit amounts through Rider PSR. These amounts are deemed immaterial. Therefore, the prior period amounts were not restated.

~~Operating Expenses.~~ ~~The variance was primarily due to costs~~risks associated with ~~the Piedmont acquisition~~COVID-19 and ~~OVEC fuel expense in the prior year.~~

~~Gains (Losses) on Sales~~Liquidity and Capital Resources within this section for a discussion of ~~Other Assets and Other, net.~~ ~~The variance was driven by the prior year loss on sale~~liquidity impacts of the retired Beckjord station, including the transfer of coal ash basins and other real property and indemnification from all potential future claims related to the property, whether arising under environmental laws or otherwise.

~~Other Income and Expenses, net.~~ ~~The variance was primarily due to higher returns on investments that fund certain employee benefit obligations.~~

~~Interest Expense.~~ ~~The variance was primarily due to higher outstanding debt in the current year and higher short-term interest rates.~~

~~Income Tax Benefit.~~ ~~The increase in the tax benefit was primarily driven by a prior year valuation allowance against AMT credits, partially offset by a decrease in pretax losses.~~

~~Preferred Dividends.~~ ~~The variance was driven by the declarations of preferred stock dividend on preferred stock issued in 2019.~~COVID-19.



MD&A	DUKE ENERGY CAROLINAS

DUKE ENERGY CAROLINAS

Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2019, and 2018, and the Annual Report on Form 10-K for the year ended December 31, 2018.

Results of Operations


	Nine Months Ended September 30,								Three Months Ended March 31,
(in millions)	2019		2018			Variance			2020		2019		Variance
Operating Revenues	$	5,619	$	5,525		$	94		$	1,748	$	1,744	$	4
Operating Expenses
Fuel used in electric generation and purchased power	1,371		1,370			1			453		472		(19		)
Operation, maintenance and other	1,324		1,464			(140		)	386		440		(54		)
Depreciation and amortization	1,013		866			147			343		317		26
Property and other taxes	221		214			7			81		80		1
Impairment charges	11		191			(180		)	2		—		2
Total operating expenses	3,940		4,105			(165		)	1,265		1,309		(44		)
Losses on Sales of Other Assets and Other, net	—		(1		)	1
Gains on Sales of Other Assets and Other, net									1		—		1
Operating Income	1,679		1,419			260			484		435		49
Other Income and Expenses, net	106		108			(2		)	43		31		12
Interest Expense	346		323			23			123		110		13
Income Before Income Taxes	1,439		1,204			235			404		356		48
Income Tax Expense	255		268			(13		)	65		63		2
Net Income	$	1,184	$	936		$	248		$	339	$	293	$	46

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 year	~~2019~~2020
Residential sales	(~~3.2~~5.1	)%
General service sales	(~~1.8~~0.1	)%
Industrial sales	(~~4.1~~1.2	)%
Wholesale power sales	(~~13.4~~3.0	)%
Joint dispatch sales	~~23.0~~(54.0	)%
Total sales	(~~2.1~~2.7	)%
Average number of customers	~~2.2~~1.8	%

~~Nine~~Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$151~~$23 million increase in weather-normal retail ~~pricing~~sales volumes; and

an $11 million increase due to higher pricing from the ~~impacts of the prior year North~~South Carolina retail rate case, ~~and the current year South Carolina rate case; and~~

~~a $7 million increase in retail sales,~~ net of ~~fuel revenues, due~~a return of EDIT to ~~favorable weather in the current year.~~customers.

Partially offset by:

a ~~$47~~$26 million decrease in ~~rider revenues primarily~~retail sales due to ~~excess deferred taxes and energy efficiency programs, partially offset by a decrement rider relating to nuclear decommissioning that ended~~unfavorable weather in the ~~prior year; and~~

~~a $24 million decrease in weather-normal retail sales volumes.~~current year.

Operating Expenses. The variance was driven primarily by:

~~a $180 million decrease in impairment charges primarily due to impacts of the prior year North Carolina rate order and charges related to coal ash costs in South Carolina; and~~


•	a $~~140~~$54 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to ~~decreased labor costs~~the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, partially offset by higher storm restoration ~~costs in the prior year.~~costs; and

a $19 million decrease in fuel used in electric generation and purchased power primarily due to changes in the generation mix.

Partially offset by:

a ~~$147~~$26 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the ~~prior year North Carolina rate case and the current year~~ South Carolina rate ~~case~~case.

Other Income and Expenses, net. The variance was primarily due to higher ~~amortization of deferred coal ash costs associated with~~AFUDC equity in the ~~prior year North Carolina rate case.~~current year.

Interest Expense. The variance was primarily due to higher debt outstanding in the current year.



MD&A	DUKE ENERGY CAROLINAS

~~Interest Expense.~~Matters Impacting Future Results

The ~~variance was primarily due~~COVID-19 pandemic has not had a material impact on Duke Energy Carolinas as of March 31, 2020; however, we cannot predict the extent to ~~higher debt outstanding~~which the COVID-19 pandemic will impact Duke Energy Carolinas results of operations, financial position and cash flows in the ~~current year.~~

~~Income Tax Expense.~~future. Duke Energy Carolinas will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The ~~decrease in tax expense was primarily due~~pandemic and resultant economic slowdown could adversely affect Duke Energy Carolinas customers, suppliers and partners and could cause Duke Energy Carolinas to experience an increase in certain costs, such as bad debt, and a reduction in the ~~amortization~~demand for energy. Duke Energy Carolinas also has pending rate case proceedings that have been delayed. Furthermore, the actions of ~~excess deferred taxes~~federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and ~~favorable tax return true ups, partially offset by~~Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On December 31, 2019, Duke Energy Carolinas entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas agreed to excavate five of the six remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an ~~increase in pretax income.~~

~~Matters Impacting Future Results~~adverse impact on Duke Energy Carolinas’ results of operations, financial position and cash flows.

Duke Energy Carolinas filed a general rate case with the NCUC on September 30, 2019. The outcome of this rate case could materially impact Duke Energy Carolina's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," ~~for additional information.~~

On May 21, 2019, the PSCSC issued an order granting Duke Energy Carolinas request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Carolinas intends to file a notice of appeal with the South Carolina Supreme Court within 30 days of the order that was received on October 18, 2019. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas to excavate all remaining coal ash impoundments in North Carolina, even though they had been deemed low risk by NCDEQ on November 14, 2018. On April 26, 2019, Duke Energy Carolinas filed a Petition for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's April 1 Order. Duke Energy Carolinas intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Duke Energy Carolinas' results of operations, financial position and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies," for additional information.

Duke Energy Carolinas is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. In addition, the order issued in the Duke Energy Carolinas North Carolina rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Duke Energy Carolinas’ results of operations, financial position and cash flows. See Notes 3 and 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas has petitioned for deferral of future grid improvement costs in its 2019 rate case. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

~~During the last half of 2018,~~ Duke Energy Carolinas’ service territory was impacted by several named ~~storms.~~storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the ~~deferral and~~ future recovery of storm restoration costs could have an adverse impact on Duke Energy Carolinas' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On May 21, 2019, the PSCSC issued an order granting Duke Energy Carolinas request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Carolinas has appealed this decision to the South Carolina Supreme Court and that appeal is pending. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

PROGRESS ENERGY

Results of Operations



	Three Months Ended March 31,
(in millions)	2020			2019			Variance
Operating Revenues	$	2,422		$	2,572		$	(150	)
Operating Expenses
Fuel used in electric generation and purchased power	763			925			(162		)
Operation, maintenance and other	554			567			(13		)
Depreciation and amortization	452			455			(3		)
Property and other taxes	135			137			(2		)
Total operating expenses	1,904			2,084			(180		)
Losses on Sales of Other Assets and Other, net	(1		)	—			(1		)
Operating Income	517			488			29
Other Income and Expenses, net	32			31			1
Interest Expense	206			219			(13		)
Income Before Income Taxes	343			300			43
Income Tax Expense	60			52			8
Net Income	283			248			35
Less: Net Loss Attributable to Noncontrolling Interests	—			(1		)	1
Net Income Attributable to Parent	$	283		$	249		$	34



MD&A	PROGRESS ENERGY

~~PROGRESS ENERGY~~

~~Results of Operations~~

Nine Months Ended September 30,
(in millions) 2019
2018
Variance
Operating Revenues $ 8,558
$ 8,119
$ 439
Operating Expenses
Fuel used in electric generation and purchased power 3,100
3,019
81
Operation, maintenance and other 1,813
1,913
(100 )
Depreciation and amortization 1,377
1,183
194
Property and other taxes 439
399
40
Impairment charges (25 ) 34
(59 )
Total operating expenses 6,704
6,548
156
Gains on Sales of Other Assets and Other, net —
23
(23 )
Operating Income 1,854
1,594
260
Other Income and Expenses, net 106
128
(22 )
Interest Expense 650
626
24
Income Before Income Taxes 1,310
1,096
214
Income Tax Expense 212
186
26
Net Income 1,098
910
188
Less: Net Income Attributable to Noncontrolling Interests —
6
(6 )
Net Income Attributable to Parent $ 1,098
$ 904
$ 194

~~Nine~~Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$299~~$160 million ~~increase~~decrease in ~~retail pricing~~fuel cost recovery driven by lower fuel prices and volumes as well as less Duke Energy Progress native load transfer sales in the current year;

a $16 million decrease in wholesale power revenues, net of fuel, primarily due to the impacts of the prior year North Carolina rate case and current year South Carolina rate case at Duke Energy Progress, Duke Energy Florida's base rate adjustments related to Citrus County CC being placed in service and annual increases from the 2017 Settlement Agreement;

~~a $76 million increase in fuel revenues primarily related to increased fuel~~coal ash cost recovery ~~due to extreme weather~~ in the prior year at Duke Energy Progress, partially offset by ~~a decrease in fuel and capacity rates billed to retail customers~~increased demand at Duke Energy Florida;

a ~~$56~~$15 million ~~increase~~decrease in ~~wholesale power~~rider revenues ~~net of fuel,~~ primarily due to ~~increased demand;~~the Crystal River 3 Uprate regulatory asset being fully recovered in 2019 at Duke Energy Florida; and

a ~~$17~~$7 million ~~increase~~decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year at Duke Energy Progress, partially offset by favorable weather in the current year at Duke Energy ~~Florida; and~~Florida.

Partially offset by:

a $17 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment at Duke Energy Florida;

a $12 million increase in storm revenues due to Hurricane Dorian collections at Duke Energy Florida;

a $10 million increase in other revenues primarily due to increased transmission revenues ~~and non-regulated products and services revenues~~ at Duke Energy ~~Florida.~~Florida; and

~~Partially offset by:~~

an $8 million increase due to higher pricing from the South Carolina retail rate case, net of a ~~$32 million decrease in retail rider revenues primarily related~~return of EDIT to ~~decreased revenue requirements in the current year.~~customers at Duke Energy Progress.

Operating Expenses. The variance was driven primarily by:

a ~~$194~~$162 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs, new depreciation rates associated with the prior year Duke Energy Progress North Carolina rate case and Duke Energy Florida's base rate adjustments related to Citrus County CC being placed in service;

~~an $81 million increase~~decrease in fuel used in electric generation and purchased power primarily due to ~~an increase~~lower demand and changes in ~~the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard requirement from the prior year~~generation mix at Duke Energy Progress ~~partially offset by lower purchased power~~ and lower fuel costs, net of deferrals at Duke Energy Florida; and

a $40 million increase in property and other taxes primarily due to current year property tax reassessments and a favorable sales and use tax credit in the prior year at Duke Energy Progress, and higher property taxes for additional plant in service at Duke Energy Florida.



~~MD&A~~	~~PROGRESS ENERGY~~

~~Partially offset by:~~

~~a $100~~$13 million decrease in operation, maintenance and other expense ~~primarily due to lower storm costs, reduced outage costs, and lower employee benefit costs, partially offset by increased vegetation management costs at Duke Energy Florida; and~~

~~a $59 million decrease in impairment charges primarily due to prior year impacts associated with the North Carolina rate case~~ at Duke Energy Progress primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and ~~a reduction~~the Public Staff of ~~a prior year impairment~~the NCUC related to the 2019 North Carolina retail rate case, partially offset by storm cost amortizations and employee benefits at Duke Energy ~~Florida's Citrus County CC.~~

~~Other Income and Expenses, net.~~ The variance was driven primarily by AFUDC equity return ending on the Citrus County CC in the fourth quarter of 2018 at Duke Energy Florida, partially offset by life insurance proceeds at Duke Energy Progress.Florida.

Interest Expense. The variance was driven primarily by ~~AFUDC~~lower interest rates on outstanding debt ~~return ending in the fourth quarter of 2018 on the Citrus County CC~~ at Duke Energy ~~Florida.~~Progress.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax ~~income, partially offset by an increase in the amortization of excess deferred taxes.~~income.

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Progress Energy as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Progress Energy results of operations, financial position and cash flows in the future. Progress Energy will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Progress Energy customers, suppliers and partners and could cause Progress Energy to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Progress Energy also has various pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On December 31, 2019, Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Progress agreed to excavate two of the three remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on Duke Energy Progress’ results of operations, financial position and cash flows.

Duke Energy Progress filed a general rate case with the NCUC on October 30, 2019. The outcome of this rate case could materially impact Progress Energy's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On May 21, 2019, the PSCSC issued an order granting Duke Energy Progress' request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress intends to file a notice of appeal with the South Carolina Supreme Court within 30 days of the order that was received on October 18, 2019. Progress Energy's results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Progress to excavate all remaining coal ash impoundments in North Carolina, even though they had been deemed low risk by NCDEQ on November 14, 2018. On April 26, 2019, Duke Energy Progress filed a Petition for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's April 1 Order. Duke Energy Progress intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Progress Energy's results of operations, financial position and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies," for additional information.

Duke Energy Progress is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. As noted above, the order issued in the Duke Energy Progress North Carolina rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Progress Energy’s results of operations, financial position and cash flows. See Notes 3 and 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.

Duke Energy Progress has petitioned for deferral of future grid improvement costs in its 2019 rate case. Progress Energy's results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

~~During the last half of 2018,~~ Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named ~~storms.~~storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territory of Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress' and Duke Energy Florida's service territories. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Progress Energy's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

100



MD&A	PROGRESS ENERGY

On May 21, 2019, the PSCSC issued an order granting Duke Energy Progress' request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress has appealed this decision to the South Carolina Supreme Court and that appeal is pending. Progress Energy's results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.



~~MD&A~~	DUKE ENERGY PROGRESS

~~DUKE ENERGY PROGRESS~~

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2019		2018		Variance			2020			2019		Variance
Operating Revenues	$	4,559	$	4,333	$	226		$	1,338		$	1,484	$	(146	)
Operating Expenses
Fuel used in electric generation and purchased power	1,571		1,452		119			405			515		(110		)
Operation, maintenance and other	1,070		1,187		(117		)	305			335		(30		)
Depreciation and amortization	855		723		132			287			290		(3		)
Property and other taxes	131		115		16			47			44		3
Impairment charges	—		33		(33		)
Total operating expenses	3,627		3,510		117			1,044			1,184		(140		)
Gains on Sales of Other Assets and Other, net	—		9		(9		)
Losses on Sales of Other Assets and Other, net								(1		)	—		(1		)
Operating Income	932		832		100			293			300		(7		)
Other Income and Expenses, net	75		61		14			22			24		(2		)
Interest Expense	232		241		(9		)	69			77		(8		)
Income Before Income Taxes	775		652		123			246			247		(1		)
Income Tax Expense	125		120		5			42			44		(2		)
Net Income	$	650	$	532	$	118		$	204		$	203	$	1



Increase (Decrease) over prior period	~~2019~~2020
Residential sales	(~~4.1~~5.7	)%
General service sales	(~~1.6~~1.9	)%
Industrial sales	~~1.6~~(0.2	)%
Wholesale power sales	(~~2.2~~7.4	)%
Joint dispatch sales	(~~0.3~~0.5	)%
Total sales	(~~1.3~~4.1	)%
Average number of customers	~~1.3~~1.4	%

~~Nine~~Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$101~~$109 million ~~increase~~decrease in ~~fuel revenues primarily related to increased~~ fuel cost recovery driven by lower fuel prices and volumes as well as less native load transfer sales in the current year;

a $24 million decrease in retail sales due to ~~extreme~~unfavorable weather in the ~~prior~~current year;

~~a $91 million increase in retail pricing due to the impacts of the prior year North Carolina rate case and the current year South Carolina rate case;~~ and

a ~~$47~~$23 million ~~increase~~decrease in wholesale power revenues, net of fuel, primarily due to coal ash cost recovery in the ~~current~~prior year.

Partially Offset by:

~~a $17~~an $8 million ~~decrease primarily~~increase due to higher pricing from the South Carolina retail rate case, net of a return of ~~excess deferred incomes taxes created by the reduction in the corporate income tax rate, partially offset by increase in rider revenues related~~EDIT to ~~energy efficiency programs.~~customers.

Operating Expenses. The variance was driven primarily by:

a ~~$132~~$110 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs and new depreciation rates associated with the prior year North Carolina and current year South Carolina rate cases, partially offset by the amortization credit for the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard requirement increase from prior year;

~~a $119 million increase~~decrease in fuel used in electric generation and purchased power primarily due to ~~a higher deferred fuel balance and an increase in the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard requirement from prior year, partially offset by~~ lower demand and changes in generation mix; and

a ~~$16~~$30 million ~~increase~~decrease in ~~property~~operation, maintenance and other ~~taxes~~expense primarily driven by the deferral of 2018 severance costs due to ~~current year property tax reassessments~~the partial settlement agreement between Duke Energy Carolinas and ~~a favorable sales and use tax credit in~~ the ~~prior year.~~Public Staff of the NCUC related to the 2019 North Carolina retail rate case.

Interest Expense. The variance was driven primarily by lower interest rates on outstanding debt.

101



MD&A	DUKE ENERGY PROGRESS

~~Partially offset by:~~Matters Impacting Future Results

The COVID-19 pandemic has not had a ~~$117 million decrease~~material impact on Duke Energy Progress as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Progress results of operations, financial position and cash flows in ~~operation, maintenance~~the future. Duke Energy Progress will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and ~~other expense primarily due~~governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Progress customers, suppliers and partners and could cause Duke Energy Progress to ~~lower storm costs in current year, reduced outage costs and lower employee benefit costs; and~~

~~a $33 million decrease in impairment charges due to prior year impacts associated with the North Carolina rate case.~~

~~Other Income and Expenses, net.~~ ~~The variance was driven primarily by life insurance proceeds~~.

~~Income Tax Expense.~~ ~~The increase in tax expense was primarily due to~~experience an increase in ~~pretax income, partially offset by an increase~~certain costs, such as bad debt, and a reduction in the ~~amortization~~demand for energy. Duke Energy Progress also has pending rate case proceedings that have been delayed. Furthermore, the actions of ~~excess deferred taxes.~~federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

~~Matters Impacting Future Results~~On December 31, 2019, Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Progress agreed to excavate two of the three remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on Duke Energy Progress’ results of operations, financial position and cash flows.

Duke Energy Progress filed a general rate case with the NCUC on October 30, 2019. The outcome of this rate case could materially impact Duke Energy Progress' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On May 21, 2019, the PSCSC issued an order granting Duke Energy Progress' request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress ~~intends~~has appealed this decision to ~~file a notice of appeal with~~ the South Carolina Supreme Court ~~within 30 days of the order~~and that ~~was received on October 18, 2019.~~appeal is pending. Duke Energy Progress' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," ~~for additional information.~~

On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Progress to excavate all remaining coal ash impoundments in North Carolina, even though they had been deemed low risk by NCDEQ on November 14, 2018. On April 26, 2019, Duke Energy Progress filed a Petition for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's April 1 Order. Duke Energy Progress intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Duke Energy Progress' results of operations, financial position and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies," for additional information.

Duke Energy Progress is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. As noted above, the order issued in the Duke Energy Progress North Carolina rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Duke Energy Progress’ results of operations, financial position and cash flows. See Notes 3 and 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.

Duke Energy Progress has petitioned for deferral of future grid improvement costs in its 2019 rate case. Duke Energy Progress' results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

~~During the last half of 2018,~~ Duke Energy Progress' service territory was impacted by several named ~~storms.~~storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. In September 2019, Hurricane Dorian reached the Carolinas bringing high winds, tornadoes and heavy rain, impacting about 300,000 customers within the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Progress' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

DUKE ENERGY FLORIDA

Results of Operations



	Three Months Ended March 31,
(in millions)	2020		2019		Variance
Operating Revenues	$	1,080	$	1,086	$	(6	)
Operating Expenses
Fuel used in electric generation and purchased power	358		410		(52		)
Operation, maintenance and other	245		230		15
Depreciation and amortization	165		165		—
Property and other taxes	88		93		(5		)
Total operating expenses	856		898		(42		)
Operating Income	224		188		36
Other Income and Expenses, net	10		13		(3		)
Interest Expense	84		82		2
Income Before Income Taxes	150		119		31
Income Tax Expense	30		23		7
Net Income	$	120	$	96	$	24

102



MD&A	DUKE ENERGY FLORIDA

~~DUKE ENERGY FLORIDA~~

~~Results of Operations~~

Nine Months Ended September 30,
(in millions) 2019
2018
Variance
Operating Revenues $ 3,987
$ 3,780
$ 207
Operating Expenses
Fuel used in electric generation and purchased power 1,529
1,567
(38 )
Operation, maintenance and other 730
719
11
Depreciation and amortization 522
460
62
Property and other taxes 309
284
25
Impairment charges (25 ) 1
(26 )
Total operating expenses 3,065
3,031
34
Operating Income 922
749
173
Other Income and Expenses, net 39
75
(36 )
Interest Expense 246
210
36
Income Before Income Taxes 715
614
101
Income Tax Expense 129
100
29
Net Income $ 586
$ 514
$ 72

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 period	~~2019~~2020
Residential sales	~~2.2~~(3.7	)%
General service sales	~~1.0~~0.4	%
Industrial sales	~~(6.3~~13.6	)%
Wholesale and other	~~32.4~~(18.0	)%
Total sales	~~2.1~~3.6	%
Average number of customers	~~1.6~~1.5	%

~~Nine~~Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$208~~$51 million decrease in fuel revenues primarily due to a decrease in fuel rates billed to retail customers; and

a $15 million decrease in rider revenue requirements primarily due to the Crystal River 3 Uprate regulatory asset being fully recovered in 2019.

Partially offset by:

a $17 million increase in retail pricing due to base rate adjustments related to ~~Citrus County CC being placed in service,~~ annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment;

a $17 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;

a ~~$17~~$12 million increase in storm revenues due to Hurricane Dorian collections;

a $10 million increase in other revenues primarily due to increased transmission ~~revenues and non-regulated products and services~~ revenues; and

a $9$7 million increase in wholesale power revenues, net of fuel, primarily due to increased demand.

~~Partially offset by:~~

~~a $25 million decrease in fuel and capacity revenues primarily due to a decrease in fuel and capacity rates billed to retail customers; and~~

~~a $22 million decrease in retail rider revenues primarily related to decreased revenue requirements in the current year.~~

Operating Expenses. The variance was driven primarily by:

a $62 million increase in depreciation and amortization expense primarily due to base rate adjustments related to Citrus County CC being placed in service, other additional plant in service and increases resulting from the 2018 Crystal River Unit 3 nuclear decommissioning cost study;

~~a $25 million increase in property and other taxes primarily due to higher property taxes from additional plant in service; and~~

~~an $11 million increase in operation, maintenance and other expense primarily due to increased vegetation management costs and Hurricane Dorian costs, partially offset by lower outage costs.~~



~~MD&A~~	~~DUKE ENERGY FLORIDA~~

~~Partially offset by:~~

~~a $38~~$52 million decrease in fuel used in electric generation and purchased power primarily due to lower ~~purchased power and lower~~ fuel costs, net of ~~deferrals; and~~deferrals.

Partially offset by:

a ~~$26~~$15 million ~~decrease~~increase in ~~impairment charges~~operation, maintenance and other expense primarily due to ~~a reduction of a prior year impairment at Citrus County CC.~~

~~Other Income~~storm cost amortizations and ~~Expenses, net.~~ ~~The variance was driven primarily by AFUDC equity return ending on the Citrus County CC in the fourth quarter of 2018.~~

~~Interest Expense.~~ ~~The variance was driven primarily by AFUDC debt return ending on the Citrus County CC in the fourth quarter of 2018 and higher debt outstanding in the current year.~~employee benefits.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income.

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Duke Energy Florida as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Florida results of operations, financial position and cash flows in the future. Duke Energy Florida will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Florida customers, suppliers and partners and could cause Duke Energy Florida to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 5 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage within the service territory of Duke Energy Florida, particularly from Panama City Beach to Mexico Beach. In September 2019, Duke Energy Florida’s service territory was threatened by Hurricane Dorian with landfall as a possible Category 5 hurricane and therefore Duke Energy Florida incurred costs to secure necessary resources to be prepared for that potential impact. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the future recovery of storm restoration costs could have an adverse impact on Duke Energy Florida's financial position, results of operations and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, 2018, for discussion of risks associated with the Tax Act.

103

~~DUKE ENERGY OHIO~~

~~Results of Operations~~

Nine Months Ended September 30,
(in millions) 2019
2018
Variance
Operating Revenues
Regulated electric $ 1,099
$ 1,055
$ 44
Regulated natural gas 354
361
(7 )
Nonregulated electric and other —
36
(36 )
Total operating revenues 1,453
1,452
1
Operating Expenses
Fuel used in electric generation and purchased power – regulated 293
284
9
Fuel used in electric generation and purchased power – nonregulated —
43
(43 )
Cost of natural gas 68
73
(5 )
Operation, maintenance and other 378
337
41
Depreciation and amortization 199
196
3
Property and other taxes 229
218
11
Total operating expenses 1,167
1,151
16
Losses on Sales of Other Assets and Other, net —
(106 ) 106
Operating Income 286
195
91
Other Income and Expenses, net 19
17
2
Interest Expense 81
68
13
Income Before Income Taxes 224
144
80
Income Tax Expense 34
23
11
Net Income $ 190
$ 121
$ 69



MD&A	DUKE ENERGY OHIO

DUKE ENERGY OHIO

Results of Operations



	Three Months Ended March 31,
(in millions)	2020		2019		Variance
Operating Revenues
Regulated electric	$	346	$	355	$	(9	)
Regulated natural gas	152		176		(24		)
Total operating revenues	498		531		(33		)
Operating Expenses
Fuel used in electric generation and purchased power	87		93		(6		)
Cost of natural gas	37		54		(17		)
Operation, maintenance and other	123		132		(9		)
Depreciation and amortization	68		64		4
Property and other taxes	83		84		(1		)
Total operating expenses	398		427		(29		)
Operating Income	100		104		(4		)
Other Income and Expenses, net	3		9		(6		)
Interest Expense	24		30		(6		)
Income Before Income Taxes	79		83		(4		)
Income Tax Expense	14		14		—
Net Income	$	65	$	69	$	(4	)

The following table shows the percent changes in GWh sales of electricity, dekatherms of natural gas delivered and average number of electric and natural gas customers. 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.


	Electric		Natural Gas		Electric		Natural Gas
Increase (Decrease) over prior year	2019		2019		2020		2020
Residential sales	(4.7	)%	(1.2	)%	(9.2	)%	(16.1	)%
General service sales	(2.6	)%	0.8	%	(3.4	)%	(13.9	)%
Industrial sales	(1.4	)%	1.9	%	(2.1	)%	(2.5	)%
Wholesale electric power sales	46.8	%	n/a		(33.1	)%	n/a
Other natural gas sales	n/a		1.4	%	n/a		(1.9	)%
Total sales	(1.2	)%	0.3	%	(5.5	)%	(12.3	)%
Average number of customers	0.6	%	0.8	%	0.8	%	0.6	%

~~Nine~~Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$52 million increase in retail pricing primarily due to rate case impacts; and~~

~~a $15 million increase in point-to-point transmission revenues.~~

~~Partially offset by:~~

a $28 million decrease in fuel related revenues primarily due to ~~a decrease in price;~~lower natural gas prices as well as decreased volumes;

a ~~$15~~$10 million decrease due to unfavorable weather in the current year; and

a $5 million decrease in ~~FTR rider revenues;~~other revenues due to lower OVEC sales into PJM.

Partially offset by:

a ~~$14~~$5 million ~~decrease~~increase in retail pricing primarily due to gas rate case impacts in Kentucky; and

a $4 million increase in rider revenues primarily related to the ~~implementation~~Distribution Capital Investment rider as a result of additional investments and the new ~~base rates; and~~Legacy Generation Riders arising from Ohio HB6, which provide an alternative method of recovering OVEC losses, partially offset by decreased Energy Efficiency Rider Revenue.

~~a $9 million decrease in OVEC revenues.~~

104



MD&A	DUKE ENERGY OHIO

Operating Expenses. The variance was driven primarily by:

a ~~$41~~$23 million ~~increase~~decrease in fuel expense, primarily driven by lower natural gas prices; and

a $9 million decrease in operations, maintenance and other expense primarily due to the ~~FERC approved settlement refund~~timing of ~~certain transmission costs previously billed by PJM recorded in 2018;~~training and

~~an $11 million increase in property~~ inspection programs for Customer Delivery and ~~other taxes primarily due to additional plant in service.~~Customer Solutions as well as lower storm costs.

Partially offset by:

a ~~$34~~$4 million ~~decrease~~increase in ~~fuel used~~depreciation and amortization primarily driven by an increase in ~~electric generation~~distribution plant.

Other Income and ~~purchased power expense due to the prior year outage at East Bend Station and the deferral of OVEC related purchased power costs.~~

~~Losses on Sales of Other Assets and Other,~~Expenses, net. The ~~increase~~variance was ~~driven by the loss on the prior year sale of Beckjord.~~primarily due to lower intercompany interest income due to decreased borrowing and lower AFUDC equity.

Interest Expense. The variance was primarily driven ~~primarily~~ by ~~higher~~lower debt outstanding in the current ~~year.~~

~~Income Tax Expense.~~ ~~The increase in tax expense was primarily due to an increase in pretax income,~~year and lower post in-service carrying costs, partially offset by ~~an increase in the amortization of excess deferred taxes.~~higher intercompany interest expense due to increased borrowing.

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Duke Energy Ohio as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Ohio results of operations, financial position and cash flows in the future. Duke Energy Ohio will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Ohio customers, suppliers and partners and could cause Duke Energy Ohio to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On November 13, 2013, the PUCO issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact on Duke Energy Ohio’s results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, 2018, for discussion of risks associated with the Tax Act.



~~MD&A~~	~~DUKE ENERGY INDIANA~~

DUKE ENERGY INDIANA

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2019		2018		Variance			2020		2019			Variance
Operating Revenues	$	2,289	$	2,288	$	1		$	692	$	768		$	(76	)
Operating Expenses
Fuel used in electric generation and purchased power	720		730		(10		)	194		257			(63		)
Operation, maintenance and other	569		576		(7		)	186		189			(3		)
Depreciation and amortization	393		386		7			132		131			1
Property and other taxes	55		56		(1		)	22		19			3
Impairment charges	—		30		(30		)
Total operating expenses	1,737		1,778		(41		)	534		596			(62		)
Losses on Sales of Other Assets and Other, net								—		(3		)	3
Operating Income	552		510		42			158		169			(11		)
Other Income and Expenses, net	35		36		(1		)	10		19			(9		)
Interest Expense	111		125		(14		)	43		43			—
Income Before Income Taxes	476		421		55			125		145			(20		)
Income Tax Expense	113		104		9			26		35			(9		)
Net Income	$	363	$	317	$	46		$	99	$	110		$	(11	)



Increase (Decrease) over prior year	~~2019~~2020
Residential sales	(~~4.9~~10.0	)%
General service sales	(~~2.5~~4.8	)%
Industrial sales	(~~2.3~~2.6	)%
Wholesale power sales	~~(28.9~~1.8	)%
Total sales	(~~6.6~~5.3	)%
Average number of customers	~~1.2~~1.1	%

105



MD&A	DUKE ENERGY INDIANA

~~Nine~~Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$25~~$58 million ~~increase~~decrease in fuel revenues primarily due to ~~higher TDSIC rider revenues.~~lower cost of fuel and unseasonably milder weather;

~~Partially offset by:~~

~~an $18~~a $9 million decrease in ~~wholesale power revenues primarily~~retail sales due to unfavorable weather in the ~~expiration of a contract with a wholesale customer;~~current year; and

an $8 million decrease in ~~weather-normal retail~~rider revenues primarily related to lower Edwardsport IGCC sales volumes.

Operating Expenses. The variance was driven primarily by:

a ~~$30 million decrease in impairments primarily due to the prior year Edwardsport IGCC settlement; and~~

~~a $10~~$63 million decrease in fuel used in electric generation and purchased power expense primarily due to lower coal and natural gas costs ~~partially offset by higher~~and lower amortization of deferred fuel costs, ~~and~~partially offset by higher ~~purchase~~purchased power ~~fuel clause.~~expense.

~~Interest Expense~~Other Income and Expenses, net. . The ~~variance~~decrease was primarily due to ~~recording a debt return on~~life insurance proceeds received in the ~~cumulative balance of deferred coal ash spend based on probability of recovery. This adjustment was immaterial and primarily relates to~~ prior ~~years.~~year.

Income Tax Expense. The ~~increase~~decrease in income tax expense was primarily due to a decrease in pretax income and an increase in ~~pretax income.~~the amortization of excess deferred taxes.



~~MD&A~~	~~DUKE ENERGY INDIANA~~

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Duke Energy Indiana as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Indiana results of operations, financial position and cash flows in the future. Duke Energy Indiana will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Indiana customers, suppliers and partners and could cause Duke Energy Indiana to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Indiana also has a pending rate case proceeding that could be delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019, its first general rate case in 16 years. The outcome of this rate case could materially impact Duke Energy Indiana's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On April 17, 2015, the EPA published in the Federal Register a rule to regulate the disposal of CCR from electric utilities as solid waste. Duke Energy Indiana has interpreted the rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. Duke Energy Indiana's interpretation of the requirements of the CCR rule is subject to potential legal challenges and further regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash. An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could have an adverse impact on Duke Energy Indiana's results of operations, financial position and cash flows.

Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019, its first general rate case in Indiana in 16 years. The outcome of this rate case could materially impact Duke Energy Indiana's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, 2018, for discussion of risks associated with the Tax Act.

PIEDMONT

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2019, and 2018, and the Annual Report on Form 10-K for the year ended December 31, 2018.

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2019		2018		Variance			2020		2019		Variance
Operating Revenues	$	956	$	940	$	16		$	512	$	579	$	(67	)
Operating Expenses
Cost of natural gas	384		387		(3		)	162		273		(111		)
Operation, maintenance and other	241		252		(11		)	80		80		—
Depreciation and amortization	127		118		9			45		42		3
Property and other taxes	39		36		3			12		12		—
Total operating expenses	791		793		(2		)	299		407		(108		)
Operating Income	165		147		18			213		172		41
Other Income and Expenses, net	19		15		4			12		6		6
Interest Expense	65		60		5			27		22		5
Income Before Income Taxes	119		102		17			198		156		42
Income Tax Expense	22		21		1			20		34		(14		)
Net Income	$	97	$	81	$	16		$	178	$	122	$	56

106



MD&A	PIEDMONT

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 year	~~2019~~2020
Residential deliveries	(~~7.5~~13.1	)%
Commercial deliveries	(~~4.2~~12.4	)%
Industrial deliveries	~~2.9~~(2.1	)%
Power generation deliveries	~~(10.5~~5.8	)%
For resale	~~5.9~~(23.7	)%
Total throughput deliveries	(~~7.2~~2.1	)%
Secondary market volumes	~~2.0~~(26.3	)%
Average number of customers	~~1.3~~1.4	%

Due to the margin decoupling mechanism in North Carolina and the ~~WNA~~weather normalization adjustment (WNA) mechanisms in South Carolina and Tennessee and fixed-price contracts with most power generation customers, 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 ~~offsets~~offset the impact of weather on bills rendered, but do not ensure ~~precise~~full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

~~Nine~~Three Months Ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~September 30, 2018~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$12~~$111 million ~~increase primarily~~decrease due to ~~North Carolina and Tennessee IMR increases;~~lower natural gas costs passed through to customers;

a $20 million decrease due to return of EDIT to customers; and

a $9$7 million ~~increase primarily~~decrease due to NCUC approval related to tax reform accounting from ~~fixed rate contracts.~~



~~MD&A~~	~~PIEDMONT~~

fixed-rate contracts in the prior year.

Partially offset by:

a $7$53 million ~~decrease primarily~~increase due to North Carolina base rate case increases; and

a ~~reduction of rates in South Carolina.~~$12 million increase due to North Carolina IMR increases.

Operating Expenses. The variance was driven primarily by:

~~an $11~~a $111 million decrease in ~~operations, maintenance and other~~cost of natural gas due to lower natural gas prices.

Income Tax Expense. The decrease in income tax expense was primarily due to ~~lower labor and information technology outside services costs and a portion of rent expense being charged to shared services~~an increase in the ~~current year.~~

~~Partially offset by:~~

~~a $9 million increase in depreciation and~~ amortization ~~expense primarily due to additional plant in service.~~

~~Interest Expense.~~ ~~The variance was driven by higher debt outstanding in the current year, higher interest expense due to customers as a result~~ of ~~tax reform deferrals and intercompany interest,~~excess deferred taxes, partially offset by ~~favorable AFUDC debt interest.~~an increase in pretax income.

Matters Impacting Future Results

~~See "Item 7. Management's Discussion~~The COVID-19 pandemic has not had a material impact on Piedmont as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Piedmont results of operations, financial position and ~~Analysis of Financial Condition and Results of Operations,"~~cash flows in the ~~Duke Energy Registrants' Annual Reports on Form 10-K for~~future. Piedmont will continue to actively monitor the ~~year ended December 31, 2018,~~impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Piedmont customers, suppliers and partners and could cause Piedmont to experience an increase in certain costs, such as bad debt. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with ~~the Tax Act.~~COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Duke Energy relies primarily upon cash flows from operations, debt and equity issuances and its existing cash and cash equivalents to fund its liquidity and capital requirements. Duke Energy’s capital requirements arise primarily from capital and investment expenditures, repaying long-term debt and paying dividends to shareholders. ~~See~~ Duke Energy’s Annual Report on Form 10-K for the year ended December 31, ~~2018, for~~2019, included a summary and detailed discussion of projected primary sources and uses of cash for ~~2019~~2020 to ~~2021.~~2022.

In March 2020, capital markets experienced significant liquidity challenges as a result of the ongoing uncertainty around the economic impacts from COVID-19. Investor demand for liquidity and cash holdings created substantial volatility, particularly in the short-term commercial paper market. As such, issuers of commercial paper experienced difficulties issuing commercial paper for longer duration at competitive interest rates. During March 2020 and in response to market volatility and the ongoing economic uncertainty related to COVID-19, Duke Energy ~~issued $5.3 billion~~took several actions to enhance the Company's liquidity position including:

Duke Energy drew down the remaining $500 million of ~~debt, drew $650 million~~availability under the existing $1 billion Three-Year Revolving Credit Facility; and

Duke Energy ~~Progress~~entered into and borrowed the full amount under a $1.5 billion, 364-day Term Loan ~~Facility and paid off in full the $350 million Piedmont term loan during the~~ ~~nine months ended September 30, 2019. Refer to Note 6 to the Condensed Consolidated Financial Statements, "Debt and~~ Credit ~~Facilities,"~~Agreement. The Term Loan Credit Agreement contains a provision for ~~information regarding Duke Energy's debt issuances, debt maturities and available credit facilities including the Master Credit Facility.~~

~~In March 2019 and September 2019,~~additional borrowing capacity of $500 million. Duke Energy ~~issued preferred stock~~exercised the provision and borrowed an additional $188 million, for ~~net proceeds~~a total borrowing of ~~$973 million and $990 million, respectively. In addition, for the nine months ended September 30, 2019, Duke Energy raised~~ approximately ~~$120 million of common equity through its DRIP. Refer to Note 15 to the CondensedConsolidated Financial Statements, "Stockholders' Equity," for information regarding Duke Energy's equity issuances.~~$1.7 billion.

In November 2019, Duke Energy announced plans to issue approximately $2.5 billion of incremental equity by the end of 2020. This equity would support Duke Energy's five-year growth plan by strengthening the balance sheet and allowing the Company to absorb a wide range of outcomes associated with ACP.

~~Credit Ratings~~

In May 2019, S&P revised the credit ratings outlook for Duke Energy Corporation and all other Duke Energy Registrants from stable to negative, principally due to concerns of weaker financial measures due to 2018 storms, uncertainty over coal ash remediation costs and recovery in the Carolinas, regulatory lag during a period of robust capital spending and delays related to the ACP pipeline. There have been no changes to the credit ratings of any of the Duke Energy Registrants during 2019 by any of the rating agencies. Moody's and Fitch continue to maintain a stable outlook on Duke Energy Corporation.

~~Cash Flow Information~~

~~The following table summarizes Duke Energy’s cash flows.~~

107

Nine Months Ended
September 30,
(in millions) 2019
2018
Cash flows provided by (used in):
Operating activities $ 5,637
$ 5,667
Investing activities (8,633 ) (7,270 )
Financing activities 2,987
1,547
Net decrease in cash, cash equivalents and restricted cash (9 ) (56 )
Cash, cash equivalents and restricted cash at beginning of period 591
505
Cash, cash equivalents and restricted cash at end of period $ 582
$ 449



MD&A	LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2020, Duke Energy had approximately $1.5 billion of cash on hand and $4.8 billion available under its $8 billion Master Credit Facility. Duke Energy has additional liquidity available totaling approximately $2.6 billion under outstanding equity forward agreements. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Duke Energy continues to monitor access to credit and equity markets.

In addition to the $500 million draw under the Three-Year Revolving Credit Facility and $1.7 billion of incremental borrowings under the new 364-day Term Loan Credit Agreement, Duke Energy also issued approximately $1.5 billion of debt and raised $67 million of common equity through its dividend reinvestment program during the three months ended March 31, 2020. Refer to Notes 5 and 13 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders' Equity," respectively, for information regarding Duke Energy's debt and equity issuances, debt maturities and available credit facilities including the Master Credit Facility.

In light of the COVID-19 pandemic, Duke Energy currently does not expect significant changes to the projected capital and investment expenditures provided in the Form 10-K for the year ended December 31, 2019. However, Duke Energy will continue to reassess capital projects depending on the duration and severity of economic impacts caused by the pandemic.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.



	Three Months Ended
	March 31,
(in millions)	2020			2019
Cash flows provided by (used in):
Operating activities	$	1,554		$	1,239
Investing activities	(3,022		)	(2,713		)
Financing activities	2,593			1,433
Net increase (decrease) in cash, cash equivalents and restricted cash	1,125			(41		)
Cash, cash equivalents and restricted cash at beginning of period	573			591
Cash, cash equivalents and restricted cash at end of period	$	1,698		$	550

OPERATING CASH FLOWS

The following table summarizes key components of Duke Energy’s operating cash flows.


	Nine Months Ended									Three Months Ended
	September 30,									March 31,
(in millions)	2019			2018			Variance			2020			2019			Variance
Net income	$	2,964		$	2,190		$	774		$	890		$	893		$	(3	)
Non-cash adjustments to net income	4,389			5,206			(817		)	1,627			1,299			328
Contributions to qualified pension plans	(77		)	(141		)	64
Payments for asset retirement obligations	(582		)	(389		)	(193		)	(132		)	(152		)	20
Payment for disposal of other assets	—			(105		)	105
Working capital	(1,057		)	(1,094		)	37			(831		)	(801		)	(30		)
Net cash provided by operating activities	$	5,637		$	5,667		$	(30	)	$	1,554		$	1,239		$	315

The variance was primarily due ~~to:~~

~~a $193 million increase in~~to timing of payments ~~for asset retirement obligations.~~

~~Partially offset by:~~

~~a $64 million decrease in contributions to qualified pension plans; and~~

~~a $105 million payment for disposal~~ of ~~Beckjord~~property taxes, higher Nuclear Electric Insurance Limited (NEIL) refunds in the ~~prior~~current year and lower storm costs in the current year.

INVESTING CASH FLOWS

The following table summarizes key components of Duke Energy’s investing cash flows.


	Nine Months Ended									Three Months Ended
	September 30,									March 31,
(in millions)	2019			2018			Variance			2020			2019			Variance
Capital, investment and acquisition expenditures	$	(8,348	)	$	(7,050	)	$	(1,298	)	$	(2,909	)	$	(2,630	)	$	(279	)
Other investing items	(285		)	(220		)	(65		)	(113		)	(83		)	(30		)
Net cash used in investing activities	$	(8,633	)	$	(7,270	)	$	(1,363	)	$	(3,022	)	$	(2,713	)	$	(309	)

The variance relates ~~primarily~~ to an increase in capital expenditures due to higher overall investments ~~in the Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables segments.~~

~~FINANCING CASH FLOWS~~

~~The following table summarizes key components of Duke Energy’s financing cash flows.~~

Nine Months Ended
September 30,
(in millions) 2019
2018
Variance
Issuances of long-term debt, net $ 3,394
$ 1,832
$ 1,562
Issuances of common stock 41
834
(793 )
Issuances of preferred stock 1,963
—
1,963
Notes payable and commercial paper (1,019 ) 674
(1,693 )
Dividends paid (1,990 ) (1,835 ) (155 )
Contributions from noncontrolling interests 615
—
615
Other financing items (17 ) 42
(59 )
Net cash provided by financing activities $ 2,987
$ 1,547
$ 1,440

~~The variance was~~ primarily ~~due to:~~

~~a $1,963 million increase in proceeds from the issuance of preferred stock;~~

~~a $1,562 million increase in proceeds from net issuances of long-term debt primarily due to the timing of issuances and redemptions of long-term debt;~~

~~a $415 million increase related to the sale of a noncontrolling interest in the Commercial Renewables segment; and~~

~~a $200 million increase related to contributions from noncontrolling interests for tax equity financing activity~~ in the Commercial Renewables segment.

108



MD&A	LIQUIDITY AND CAPITAL RESOURCES

~~Partially offset by:~~FINANCING CASH FLOWS

The following table summarizes key components of Duke Energy’s financing cash flows.



	Three Months Ended
	March 31,
(in millions)	2020			2019			Variance
Issuances of long-term debt, net	$	1,662		$	1,536		$	126
Issuances of common stock	40			13			27
Issuances of preferred stock	—			974			(974		)
Notes payable, commercial paper and other short-term borrowings	1,569			(408		)	1,977
Dividends paid	(707		)	(649		)	(58		)
Contributions from noncontrolling interests	103			6			97
Other financing items	(74		)	(39		)	(35		)
Net cash provided by financing activities	$	2,593		$	1,433		$	1,160

The variance was primarily due to:

a ~~$1,693~~$1,977 million ~~decrease~~increase in net proceeds from issuances of notes payable and commercial paper primarily due to borrowings of $1.7 billion under the ~~use of proceeds from the preferred stock issuance and increased long-term debt issuances to pay down outstanding commercial paper; and~~364-day Term Loan Credit Agreement.

~~a $793 million decrease in proceeds from the issuance of common stock due primarily to prior year issuances under equity forward agreements.~~Partially offset by:


•	a $974 million decrease in proceeds from the issuance of preferred stock.

OTHER MATTERS

Environmental Regulations

The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants. Refer to Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.

~~Coal Ash Management Act of 2014~~

On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments at the Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro facilities in North Carolina. With respect to the final six sites, which NCDEQ has ruled as low risk, science and engineering support a variety of closure methods including capping in place and hybrid cap-in-place as appropriate solutions that protect public health and the environment. On April 26, 2019, Duke Energy Carolinas and Duke Energy Progress filed Petitions for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ’s April 1 Order. For more information, see Note 4, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements.

Duke Energy estimates the undiscounted, unadjusted cost to close the remaining impoundments by excavation, as outlined in the NCDEQ closure determination, will be approximately $4 billion to $5 billion more than the prior project cost estimate of $5.6 billion in the aggregate for the closure for all Duke Energy Carolinas and Duke Energy Progress impoundments. Excavation would likely extend beyond the required federal and state deadlines for impoundment closure. Duke Energy intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. AROs recorded on the Duke Energy Carolinas and Duke Energy Progress Condensed Consolidated Balance Sheets at September 30, 2019, and December 31, 2018, 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. For more information, see Note 7, "Asset Retirement Obligations," to the Condensed Consolidated Financial Statements.

~~Duke Energy has completed excavation of all coal ash at the Riverbend and Dan River plants and coal ash regulated by the Coal Ash Act at the Sutton plant.~~

~~North Carolina Competitive Procurement~~

Based on an independent evaluation process, Duke Energy will own or purchase a total of 551 MW of renewable energy from projects under the North Carolina’s CPRE program. The process used was approved by the NCUC to select projects that would deliver the lowest cost renewable energy for customers. Five Duke Energy projects, totaling about 190 MW, were selected during the competitive bidding process. Duke Energy has completed the contracting process for the winning projects. A second tranche for CPRE opened in October 2019, and the current target date for completion of all tranche 2 contracts is August 2020.

Off-Balance Sheet Arrangements

During the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, there were no material changes to Duke Energy’s off-balance sheet arrangements. See Note 11 – Variable Interest Entities and Note 13 – Stockholders' Equity to the Condensed Consolidated Financial Statements ~~"Variable Interest Entities,"~~ for ~~a discussion of off-balance sheet arrangements~~information regarding ~~ACP.~~ACP and equity forward sales agreements. 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, ~~2018.~~2019.

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 ~~September 30, 2019,~~March 31, 2020, there were no material changes in Duke Energy'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, ~~2018.~~2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~During the three and nine months ended September 30, 2019, 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. During the three months ended March 31, 2020, there were no material changes to the Duke Energy Registrants' disclosures about market risk, other than as described below.

Credit Risk

In response to the COVID-19 pandemic, in March 2020, the Duke Energy Subsidiary Registrants announced a suspension of disconnections for nonpayment to be effective throughout the national emergency. This is expected to result in an increase in charge-offs over historical levels. In addition, the Registrants are monitoring the effects of the resultant economic slowdown on counterparties’ abilities to perform under their contractual obligations.

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 Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC rules and forms.

109



MD&A	OTHER MATTERS

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

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated the effectiveness of their disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September 30, 2019,~~March 31, 2020, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.

Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated changes in internal control over financial reporting (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act) that occurred during the fiscal quarter ended ~~September 30, 2019,~~March 31, 2020, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

110



OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding material legal proceedings, including regulatory and environmental matters, see Note 3, "Regulatory Matters," and Note 4, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements. For additional information, see Item 3, "Legal Proceedings," in Duke Energy's Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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 for the year ended December 31, ~~2018,~~2019, which could materially affect the Duke Energy Registrants’ financial condition or future results. As described in the Duke Energy Form 8-K Filing on May 8, 2020, the information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019.

The Duke Energy Registrants’ operations have been and may be affected by COVID-19 in ways listed below and in ways the registrants cannot predict at this time.

The COVID-19 pandemic has begun to impact the Duke Energy Registrants' business strategy, results of operations, financial position and cash flows, albeit not materially as of this filing date, from specific activities listed below:

Decreased demand for electricity and natural gas;

Delays in rate cases and other legal proceedings; and

The health and availability of our critical personnel and their ability to perform business functions.

Furthermore, due to the unpredictability of the COVID-19 pandemic’s ongoing impact on global health and economic stability as of this filing date, the Duke Energy Registrants expect that the activities listed below could negatively impact their business strategy, results of operations, financial position and cash flows:

An inability to procure satisfactory levels of fuels or other necessary equipment to continue production of electricity and delivery of natural gas;

An inability to obtain labor or equipment necessary for the construction of generation projects or pipeline expansion;

An inability to maintain information technology systems and protections from cyberattack;

An inability to obtain financing in volatile financial markets;

Additional federal regulation tied to stimulus and other aid packages;

Impairment charges to certain assets, including goodwill; and

Actions of state utility commissions or federal or state governments to allow customers to suspend or delay payment of bills related to the provision of electric or gas services.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

111



EXHIBITS

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

Exhibit

Duke

Energy

Progress

Energy

Number

Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

~~3.1~~4.1

~~Certificate~~One-Hundred and Second Supplemental Indenture, dated as of ~~Designation with respect to the Series B Preferred Stock, dated September 11,~~August 14, 2019 (incorporated by reference to Exhibit ~~3.1~~4.1 to ~~registrant’s~~Registrant’s Current Report on Form 8-K filed on ~~September~~January 8, 2020, File No. 1-4928).

4.2

One-Hundred and Third Supplemental Indenture, dated as of January 8, 2020 (incorporated by reference to Exhibit 4.2 to Registrant’s Current Report on Form 8-K filed on January 8, 2020, File No. 1-4928).

4.3

One-Hundred and Fourth Supplemental Indenture, dated as of January 8, 2020 (incorporated by reference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K filed on January 8, 2020, File No. 1-4928).

4.4

Seventieth Supplemental Indenture, dated as of March 12, ~~2019,~~2020 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on March 12, 2020, File No. 1-3543).

10.1

Amendment No. 5 and Consent, dated as of March 16, 2020, among Registrants, the Lenders party thereto, the Issuing Lenders party thereto, and Wells Fargo Bank, N.A., 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, 2020, File Nos. 1-32853, 1-4928, 1-3382, 1-3274, 1-1232, 1-3543, 1-6196).

10.2

$1.5 billion 364-Day Term Loan Credit Agreement, dated as of March 19, 2020, among the Registrant, as Borrower, certain Lenders from time to time parties thereto, and PNC Bank, N.A., as Administrative Agent, and Registrant's borrowing of the remaining $500 million under Registrant's existing $1 billion revolving credit facility on March 17, 2020 (incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on March 19, 2020, File No. 1-32853).

~~4.1~~*10.2.1

~~One-Hundred and Second Supplemental Indenture,~~Joinder Agreement, dated as of ~~August 14, 2019 (incorporated~~March 27, 2020, by ~~reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on August 14, 2019, File No. 1-04928).~~and among the Registrant, each of the Incremental Lenders listed therein, and PNC BANK, N.A., as Administrative Agent.

~~4.2~~10.3

~~Sixty-Ninth Supplemental Indenture, dated as~~Duke Energy Carolinas Summary of ~~September 27, 2019~~Partial Settlement in North Carolina Rate Case (incorporated by reference to Exhibit ~~4.1~~99.1 to ~~registrant’s~~Registrants’ Current Report on Form 8-K filed on ~~September 27, 2019,~~March 26, 2020, File ~~No. 1-3543)~~Nos. 1-32853, 1-4928, 1-3382).

*10.4**

Performance Award Agreement

112



EXHIBITS

*31.1.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.2

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.3

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.4

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.5

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.6

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.7

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.8

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.1

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.2

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.3

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.4

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.5

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.6

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



~~EXHIBITS~~

*31.2.7

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.8

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.3

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.4

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.5

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.6

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

113



EXHIBITS

*32.1.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.8

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.3

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.4

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.5

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.6

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.8

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS

XBRL Instance Document (this does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).



~~EXHIBITS~~

*101.SCH

XBRL Taxonomy Extension Schema Document.

*101.CAL

XBRL Taxonomy Calculation Linkbase Document.

*101.LAB

XBRL Taxonomy Label Linkbase Document.

*101.PRE

XBRL Taxonomy Presentation Linkbase Document.

*101.DEF

XBRL Taxonomy Definition Linkbase Document.

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% 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.

114



SIGNATURES

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:	~~November 8, 2019~~May 12, 2020	/s/ STEVEN K. YOUNG
		Steven K. Young Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date:	~~November 8, 2019~~May 12, 2020	/s/ DWIGHT L. JACOBS
		Dwight L. Jacobs Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)

~~132~~115



	Three Months Ended September 30, 2018 and 2019
						Accumulated Other Comprehensive (Loss) Income
						Net Gains			Net Unrealized						Total Progress
	Additional					(Losses) on			Gains (Losses) on			Pension and			Energy, Inc.
	Paid-in		Retained			Cash Flow			Available-for-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Capital		Earnings			Hedges			Sale Securities			Adjustments			Equity			Interests			Equity
Balance at June 30, 2018	$	9,143	$	4,855		$	(15	)	$	(1	)	$	(10	)	$	13,972		$	—		$	13,972
Net income	—		404			—			—			—			404			2			406
Other comprehensive income	—		—			2			—			—			2			—			2
Dividends to parent	—		(250		)	—			—			—			(250		)	—			(250		)
Balance at September 30, 2018	$	9,143	$	5,009		$	(13	)	$	(1	)	$	(10	)	$	14,128		$	2		$	14,130

Balance at June 30, 2019	$	9,143	$	5,715		$	(13	)	$	—		$	(8	)	$	14,837		$	2		$	14,839
Net income	—		521			—			—			—			521			—			521
Other comprehensive income	—		—			1			1			—			2			—			2
Other	—		—			—			(1		)	1			—			1			1
Balance at September 30, 2019	$	9,143	$	6,236		$	(12	)	$	—		$	(7	)	$	15,360		$	3		$	15,363

	Nine Months Ended September 30, 2018 and 2019
						Accumulated Other Comprehensive (Loss) Income
						Net Gains			Net Unrealized						Total Progress
	Additional					(Losses) on			Gains (Losses) on			Pension and			Energy, Inc.
	Paid-in		Retained			Cash Flow			Available-for-			OPEB			Stockholders'			Noncontrolling			Total
	Capital		Earnings			Hedges			Sale Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2017	$	9,143	$	4,350		$	(18	)	$	5		$	(12	)	$	13,468		$	(3	)	$	13,465
Net income	—		904			—			—			—			904			6			910
Other comprehensive income (loss)	—		—			5			(1		)	2			6			—			6
Distributions to noncontrolling interests	—		—			—			—			—			—			(1		)	(1		)
Dividends to parent	—		(250		)	—			—			—			(250		)	—			(250		)
Other^(a)	—		5			—			(5		)	—			—			—			—
Balance at September 30, 2018	$	9,143	$	5,009		$	(13	)	$	(1	)	$	(10	)	$	14,128		$	2		$	14,130

Balance at December 31, 2018	$	9,143	$	5,131		$	(12	)	$	(1	)	$	(7	)	$	14,254		$	3		$	14,257
Net income	—		1,098			—			—			—			1,098			—			1,098
Other comprehensive income	—		—			4			2			2			8			—			8
Other^(b)	—		7			(4		)	(1		)	(2		)	—			—			—
Balance at September 30, 2019	$	9,143	$	6,236		$	(12	)	$	—		$	(7	)	$	15,360		$	3		$	15,363



	Three Months Ended
	September 30, 2018 and 2019
	Member's
(in millions)	Equity
Balance at June 30, 2018	$	8,265
Net income	216
Distributions to parent	(175		)
Balance at September 30, 2018	$	8,306

Balance at June 30, 2019	$	8,813
Net income	278
Balance at September 30, 2019	$	9,091

	Nine Months Ended
	September 30, 2018 and 2019
	Member's
(in millions)	Equity
Balance at December 31, 2017	$	7,949
Net income	532
Distributions to parent	(175		)
Balance at September 30, 2018	$	8,306

Balance at December 31, 2018	$	8,441
Net income	650
Balance at September 30, 2019	$	9,091



	Nine Months Ended September 30, 2019
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	17,357	$	1,239	$	362	$	18,958	$	18		$	—		$	18,976
Intersegment revenues	24		72		—		96		53			(149		)	—
Total revenues	$	17,381	$	1,311	$	362	$	19,054	$	71		$	(149	)	$	18,976
Segment income (loss)^(a)	$	2,944	$	292	$	139	$	3,375	$	(328	)	$	—		$	3,047
Add back noncontrolling interests^(b)															(110		)
Add back preferred stock dividend															27
Net income															$	2,964



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



(in millions)	Year Ended December 31, 2018
Duke Energy	$	268
Duke Energy Carolinas	49
Progress Energy	143
Duke Energy Progress	75
Duke Energy Florida	68
Duke Energy Ohio	13
Duke Energy Indiana	21
Piedmont	11



	Twelve Months Ended September 30,
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
2020	$	278		$	32		$	129		$	51		$	78		$	2		$	6		$	5
2021	220			20			100			45			55			2			4			5
2022	201			19			95			40			55			2			4			5
2023	192			18			95			41			54			2			4			5
2024	179			14			95			41			54			2			4			5
Thereafter	1,008			60			480			291			189			22			63			6
Total operating lease payments	2,078			163			994			509			485			32			85			31
Less: present value discount	(410		)	(28		)	(185		)	(113		)	(72		)	(10		)	(27		)	(3		)
Total operating lease liabilities^(a)	$	1,668		$	135		$	809		$	396		$	413		$	22		$	58		$	28