0001326160 duk:~~DukeEnergyProgressMember us-gaap:LineOfCreditMember 2019-09-30~~ProgressEnergyMember duk:ElectricUtilitiesandInfrastructureMember 2019-12-31 0001326160 duk:~~DukeEnergyCarolinasMember~~DukeEnergyOhioMember duk:~~OtherRevenuesMember~~CommercialMember us-gaap:NaturalGasUsRegulatedMember duk:~~ElectricUtilitiesandInfrastructureMember 2019-07-01 2019-09-30~~GasUtilitiesandInfrastructureMember 2019-04-01 2019-06-30

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~~June 30, ~~2019~~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~~July 31, ~~2019:~~2020:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	~~729,032,868~~735,432,137

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	1615

	Progress Energy, Inc. Financial Statements	2019

	Duke Energy Progress, LLC Financial Statements	2423

	Duke Energy Florida, LLC Financial Statements	2827

	Duke Energy Ohio, Inc. Financial Statements	3231

	Duke Energy Indiana, LLC Financial Statements	3635

	Piedmont Natural Gas Company, Inc. Financial Statements	4039

	Combined Notes to Condensed Consolidated Financial Statements
	Note 1 – Organization and Basis of Presentation	4443
	Note 2 – Business Segments	46
	Note 3 – Regulatory Matters	4948
	Note 4 – Commitments and Contingencies	6260
	Note 5 – ~~Leases~~Debt and Credit Facilities	63
	Note 6 – Goodwill	65
	Note 67 – ~~Debt and Credit Facilities~~Related Party Transactions	70
	~~Note 7 – Asset Retirement Obligations~~	7266
	Note 8 – ~~Goodwill~~Derivatives and Hedging	7367
	Note 9 ~~– Related Party Transactions~~	74
	~~Note 10 – Derivatives and Hedging~~	75
	~~Note 11~~ – Investments in Debt and Equity Securities	8072
	Note 10 – Fair Value Measurements	77
	Note 11 – Variable Interest Entities	83
	Note 12 – ~~Fair Value Measurements~~Revenue	8587
	Note 13 – ~~Variable Interest Entities~~Stockholders' Equity	9093
	Note 14 – ~~Revenue~~Employee Benefit Plans	94
	Note 15 – ~~Stockholders' Equity~~Income Taxes	9995
	Note 16 – ~~Employee Benefit Plans~~	~~101~~
	~~Note 17 – Income Taxes~~	~~103~~
	~~Note 18 –~~ Subsequent Events	~~103~~96

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~104~~97

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~126~~115

Item 4.	Controls and Procedures	~~126~~115

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	~~128~~117

Item 1A.	Risk Factors	~~128~~117

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~128~~117

Item 6.	Exhibits	~~129~~118

	Signatures	~~132~~121



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~~canceled 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

~~Citrus County CC~~CARES Act	~~Citrus County Combined Cycle Facility~~Coronavirus Aid, Relief and Economic Security Act

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

Exchange Act	Securities Exchange Act of 1934

~~FASB~~		~~Financial Accounting Standards Board~~

GLOSSARY OF TERMS



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 (Loss)	Net Income ~~Attributable~~(Loss) Available to Duke Energy Corporation Common Stockholders

GAAP Reported ~~EPS~~Earnings (Loss) Per Share	~~Diluted EPS Attributable~~Basic Earnings (Loss) Per Share 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					Six Months Ended
	September 30,						September 30,						June 30,					June 30,
(in millions, except per-share amounts)	2019			2018			2019			2018
(in millions, except per share amounts)													2020			2019		2020			2019
Operating Revenues
Regulated electric	$	6,515		$	6,216		$	17,223		$	16,678		$	4,963		$	5,423	$	10,087		$	10,708
Regulated natural gas	223			230			1,231			1,221			263			280		901			1,008
Nonregulated electric and other	202			182			522			507			195			170		382			320
Total operating revenues	6,940			6,628			18,976			18,406			5,421			5,873		11,370			12,036
Operating Expenses
Fuel used in electric generation and purchased power	1,978			1,931			5,228			5,181			1,349			1,641		2,796			3,250
Cost of natural gas	48			58			451			460			59			76		258			403
Operation, maintenance and other	1,484			1,584			4,337			4,592			1,353			1,434		2,692			2,853
Depreciation and amortization	1,186			1,039			3,364			2,979			1,150			1,089		2,280			2,178
Property and other taxes	335			323			1,012			954			334			334		679			677
Impairment charges	(20		)	124			(16		)	339			6			4		8			4
Total operating expenses	5,011			5,059			14,376			14,505			4,251			4,578		8,713			9,365
Gains (Losses) on Sales of Other Assets and Other, net	—			10			—			(87		)
Gains on Sales of Other Assets and Other, net													7			3		8			—
Operating Income	1,929			1,579			4,600			3,814			1,177			1,298		2,665			2,671
Other Income and Expenses
Equity in earnings of unconsolidated affiliates	50			37			137			49
Equity in (losses) earnings of unconsolidated affiliates													(1,968		)	44		(1,924		)	87
Other income and expenses, net	104			131			308			327			137			89		183			204
Total other income and expenses	154			168			445			376			(1,831		)	133		(1,741		)	291
Interest Expense	572			517			1,657			1,550			554			542		1,105			1,085
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		)
Net Income	1,323			1,066			2,964			2,190
Less: Net Loss Attributable to Noncontrolling Interests	(19		)	(16		)	(110		)	(12		)
(Loss) Income Before Income Taxes													(1,208		)	889		(181		)	1,877
Income Tax (Benefit) Expense													(316		)	141		(179		)	236
Net (Loss) Income													(892		)	748		(2		)	1,641
Add: Net Loss Attributable to Noncontrolling Interests													90			84		138			91
Net (Loss) Income Attributable to Duke Energy Corporation													(802		)	832		136			1,732
Less: Preferred Dividends	15			—			27			—			15			12		54			12
Net Income Attributable to Duke Energy Corporation	$	1,327		$	1,082		$	3,047		$	2,202
Net (Loss) Income Available to Duke Energy Corporation Common Stockholders													$	(817	)	$	820	$	82		$	1,720

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
Earnings (Loss) Per Share – Basic and Diluted
Net (loss) income available to Duke Energy Corporation common stockholders
Basic and Diluted	$	—		$	—		$	—		$	—		$	(1.13	)	$	1.12	$	0.11		$	2.36
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			735			728		734			728
Diluted	729			714			728			706			735			728		735			728

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						Six Months Ended
	June 30,						June 30,
(in millions)	2020			2019			2020			2019
Net (Loss) Income	$	(892	)	$	748		$	(2	)	$	1,641
Other Comprehensive Loss, net of tax^(a)
Pension and OPEB adjustments	(1		)	3			—			3
Net unrealized gains (losses) on cash flow hedges	5			(29		)	(76		)	(46		)
Reclassification into earnings from cash flow hedges	2			2			4			3
Unrealized gains on available-for-sale securities	6			4			7			8
Other Comprehensive Income (Loss), net of tax	12			(20		)	(65		)	(32		)
Comprehensive (Loss) Income	(880		)	728			(67		)	1,609
Add: Comprehensive Loss Attributable to Noncontrolling Interests	88			84			150			91
Comprehensive (Loss) Income Attributable to Duke Energy	(792		)	812			83			1,700
Less: Preferred Dividends	15			12			54			12
Comprehensive (Loss) Income Available to Duke Energy Corporation Common Stockholders	$	(807	)	$	800		$	29		$	1,688


(a)	Net of income tax impacts of approximately $20 million and $10 million for the six months ended June 30, 2020, and 2019, respectively. All other periods presented include immaterial income tax impacts.

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			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	379		$	442		$	341		$	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 $23 at 2020 and $22 at 2019)							753			1,066
Receivables of VIEs (net of allowance for doubtful accounts of $79 at 2020 and $54 at 2019)							2,049			1,994
Inventory	3,107			3,084			3,289			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)							1,774			1,796
Other (includes $260 at 2020 and $242 at 2019 related to VIEs)							1,031			764
Total current assets	9,619			9,714			9,237			9,163
Property, Plant and Equipment
Cost	143,794			134,458			151,592			147,654
Accumulated depreciation and amortization	(45,149		)	(43,126		)	(47,295		)	(45,773		)
Generation facilities to be retired, net	267			362			28			246
Net property, plant and equipment	98,912			91,694			104,325			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 $969 at 2020 and $989 at 2019 related to VIEs)							13,285			13,222
Nuclear decommissioning trust funds	7,695			6,720			8,000			8,140
Operating lease right-of-use assets, net	1,703			—			1,580			1,658
Investments in equity method unconsolidated affiliates	1,864			1,409			861			1,936
Other (includes $63 at 2019 and $261 at 2018 related to VIEs)	2,905			2,935
Other (includes $85 at 2020 and $110 at 2019 related to VIEs)							3,458			3,289
Total other noncurrent assets	47,386			43,984			46,487			47,548
Total Assets	$	155,917		$	145,392		$	160,049		$	158,838
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,946		$	3,487		$	2,398		$	3,487
Notes payable and commercial paper	2,469			3,410			4,785			3,135
Taxes accrued	712			577			657			392
Interest accrued	559			559			569			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 $462 at 2020 and $216 at 2019 related to VIEs)							3,756			3,141
Asset retirement obligations	861			919			729			881
Regulatory liabilities	673			598			898			784
Other	2,074			2,085			2,898			2,367
Total current liabilities	13,390			15,041			16,690			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 $3,643 at 2020 and $3,997 at 2019 related to VIEs)							56,143			54,985
Other Noncurrent Liabilities
Deferred income taxes	8,776			7,806			8,979			8,878
Asset retirement obligations	11,740			9,548			12,539			12,437
Regulatory liabilities	15,202			14,834			14,553			15,264
Operating lease liabilities	1,456			—			1,377			1,432
Accrued pension and other post-retirement benefit costs	900			988			911			934
Investment tax credits	579			568			683			624
Other (includes $218 at 2019 and $212 at 2018 related to VIEs)	1,649			1,650
Other (includes $251 at 2020 and $228 at 2019 related to VIEs)							1,563			1,581
Total other noncurrent liabilities	40,302			35,394			40,605			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			40,997			40,881
Retained earnings	4,139			3,113			2,707			4,108
Accumulated other comprehensive loss	(153		)	(92		)	(183		)	(130		)
Total Duke Energy Corporation stockholders' equity	46,438			43,817			45,484			46,822
Noncontrolling interests	969			17			1,127			1,129
Total equity	47,407			43,834			46,611			47,951
Total Liabilities and Equity	$	155,917		$	145,392		$	160,049		$	158,838

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,964		$	2,190
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							$	(2	)	��	$	1,641
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	3,831			3,447			2,651				2,483
Equity in losses (earnings) of unconsolidated affiliates							1,924				(87		)
Equity component of AFUDC	(99		)	(175		)	(76		)		(67		)
Losses on sales of other assets	—			87
Gains on sales of other assets							(8		)		—
Impairment charges	(16		)	339			8				4
Deferred income taxes	736			1,099			105				527
Equity in earnings of unconsolidated affiliates	(137		)	(49		)
Accrued pension and other post-retirement benefit costs	13			46
Contributions to qualified pension plans	(77		)	(141		)
Payments for asset retirement obligations	(582		)	(389		)	(287		)		(336		)
Payment for disposal of other assets	—			(105		)
Other rate case adjustments	—			37
Provision for rate refunds	61			375			(12		)		57
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(4		)	15			(24		)		(11		)
Receivables	62			(288		)	281				304
Inventory	(3		)	104			(56		)		(110		)
Other current assets	(134		)	(648		)	(124		)		(265		)
Increase (decrease) in
Accounts payable	(538		)	389			(638		)		(700		)
Taxes accrued	125			122			273				(56		)
Other current liabilities	(198		)	(180		)	(344		)		(378		)
Other assets	(264		)	(585		)	(193		)		(1		)
Other liabilities	(103		)	(23		)	(121		)		51
Net cash provided by operating activities	5,637			5,667			3,357				3,056
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(8,084		)	(6,752		)	(5,103		)		(5,465		)
Contributions to equity method investments	(264		)	(298		)	(164		)		(162		)
Purchases of debt and equity securities	(3,105		)	(2,763		)	(3,818		)		(2,316		)
Proceeds from sales and maturities of debt and equity securities	3,092			2,718			3,755				2,302
Other	(272		)	(175		)	(141		)		(147		)
Net cash used in investing activities	(8,633		)	(7,270		)	(5,471		)		(5,788		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	6,131			4,110			3,788				4,622
Issuance of preferred stock	1,963			—			—				973
Issuance of common stock	41			834			57				27
Payments for the redemption of long-term debt	(2,737		)	(2,278		)	(1,951		)		(2,155		)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	339			243			1,866				240
Payments for the redemption of short-term debt with original maturities greater than 90 days	(479		)	(207		)	(113		)		(299		)
Notes payable and commercial paper	(879		)	638			(129		)		383
Contributions from noncontrolling interests	615			—			163				193
Dividends paid	(1,990		)	(1,835		)	(1,391		)		(1,312		)
Other	(17		)	42			(108		)		(50		)
Net cash provided by financing activities	2,987			1,547			2,182				2,622
Net decrease in cash, cash equivalents and restricted cash	(9		)	(56		)
Net increase (decrease) in cash, cash equivalents and restricted cash							68				(110		)
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		$	641			$	481
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	1,073		$	1,016		$	945			$	917
Non-cash dividends	81			79			54				54

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																													Three Months Ended June 30, 2019 and 2020
												Accumulated Other Comprehensive																													Accumulated Other Comprehensive
												(Loss) Income																													(Loss) Income
															Net Unrealized						Total																							Net Unrealized					Total
												Net Gains			(Losses) Gains						Duke Energy																				Net Gains			(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 June 30, 2018	$	—	712	$	1	$	39,682		$	2,894		$	2		$	(5	)	$	(67	)	$	42,507		$	8		$	42,515
Balance at March 31, 2019																														$	974		728	$	1	$	40,823	$	3,360		$	(36	)	$	—	$	(92	)	$	45,030		$	15		$	45,045
Net income (loss)	—		—	—		—			1,082			—			—			—			1,082			(16		)	1,066			—			—	—		—		820			—			—		—			820			(84		)	736
Other comprehensive income	—		—	—		—			—			3			—			1			4			—			4
Other comprehensive (loss) income																														—			—	—		—		—			(27		)	4		3			(20		)	—			(20		)
Preferred stock issuances, net of issuance costs																														(1		)	—	—		—		—			—			—		—			(1		)	—			(1		)
Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		65			—			—			—			—			65			—			65			—			—	—		61		—			—			—		—			61			—			61
Common stock dividends	—		—	—		—			(663		)	—			—			—			(663		)	—			(663		)	—			—	—		—		(678		)	—			—		—			(678		)	—			(678		)
Contribution from noncontrolling interest in subsidiaries^(a)																														—			—	—		—		—			—			—		—			—			193			193
Distributions to noncontrolling interest in subsidiaries																														—			—	—		—		—			—			—		—			—			(1		)	(1		)
Other	—		—	—		—			—			—			—			—			—			26			26			—			—	—		1		—			—			—		—			1			(4		)	(3		)
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

Balance at June 30, 2019	$	973	728	$	1	$	40,885		$	3,502		$	(63	)	$	4		$	(89	)	$	45,213		$	119		$	45,332
Balance at March 31, 2020																														$	1,962		735	$	1	$	40,930	$	4,221		$	(116	)	$	4	$	(81	)	$	46,921		$	1,162		$	48,083
Net income (loss)	—		—	—		—			1,327			—			—			—			1,327			(19		)	1,308			—			—	—		—		(817		)	—			—		—			(817		)	(90		)	(907		)
Other comprehensive (loss) income	—		—	—		—			—			(15		)	2			(2		)	(15		)	—			(15		)	—			—	—		—		—			5			6		(1		)	10			2			12
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			—			—	—		66		—			—			—		—			66			—			66
Common stock dividends	—		—	—		—			(690		)	—			—			—			(690		)	—			(690		)	—			—	—		—		(696		)	—			—		—			(696		)	—			(696		)
Sale of noncontrolling interest^(d)	—		—	—		(465		)	—			10			—			—			(455		)	863			408
Contribution from noncontrolling interest in subsidiaries^(e)	—		—	—		—			—			—			—			—			—			7			7
Contribution from noncontrolling interest in subsidiaries^(a)																														—			—	—		—		—			—			—		—			—			60			60
Distributions to noncontrolling interest in subsidiaries																														—			—	—		—		—			—			—		—			—			(7		)	(7		)
Other	—		—	—		(1		)	—			—			—			—			(1		)	(1		)	(2		)	—			—	—		1		(1		)	—			—		—			—			—			—
Balance at September 30, 2019	$	1,963	729	$	1	$	40,488		$	4,139		$	(68	)	$	6		$	(91	)	$	46,438		$	969		$	47,407
Balance at June 30, 2020																														$	1,962		735	$	1	$	40,997	$	2,707		$	(111	)	$	10	$	(82	)	$	45,484		$	1,127		$	46,611

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

~~DUKE ENERGY CORPORATION~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~


	Nine Months Ended September 30, 2018 and 2019																													Six Months Ended June 30, 2019 and 2020
												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			—		—	—		—		1,720			—			—			—			1,720			(91		)	1,629
Other comprehensive (loss) income	—		—	—		—			—			(58		)	10			1			(47		)	—			(47		)	—		—	—		—		—			(43		)	8			3			(32		)	—			(32		)
Preferred stock, Series A, issuances, net of issuance costs^(b)	973		—	—		—			—			—			—			—			973			—			973			973		—	—		—		—			—			—			—			973			—			973
Preferred stock, Series B, issuances, net of issuance costs^(c)	990		—	—		—			—			—			—			—			990			—			990
Common stock issuances, including dividend reinvestment and employee benefits	—		2	—		158			—			—			—			—			158			—			158			—		1	—		89		—			—			—			—			89			—			89
Common stock dividends	—		—	—		—			(2,044		)	—			—			—			(2,044		)	—			(2,044		)	—		—	—		—		(1,354		)	—			—			—			(1,354		)	—			(1,354		)
Sale of noncontrolling interest^(d)	—		—	—		(465		)	—			10			—			—			(455		)	863			408
Contributions from noncontrolling interest in subsidiaries^(e)	—		—	—		—			—			—			—			—			—			200			200
Contributions from noncontrolling interest in subsidiaries^(a)																														—		—	—		—		—			—			—			—			—			193			193
Distributions to noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			(1		)	(1		)	—		—	—		—		—			—			—			—			—			(1		)	(1		)
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		23			(6		)	(1		)	(17		)	—			1			1
Balance at June 30, 2019																														$	973	728	$	1	$	40,885	$	3,502		$	(63	)	$	4		$	(89	)	$	45,213		$	119		$	45,332

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)																														—		—	—		—		82			—			—			—			82			(138		)	(56		)
Other comprehensive (loss) income																														—		—	—		—		—			(60		)	7			—			(53		)	(12		)	(65		)
Common stock issuances, including dividend reinvestment and employee benefits																														—		2	—		116		—			—			—			—			116			—			116
Common stock dividends																														—		—	—		—		(1,391		)	—			—			—			(1,391		)	—			(1,391		)
Contributions from noncontrolling interest in subsidiaries^(a)																														—		—	—		—		—			—			—			—			—			163			163
Distributions to noncontrolling interest in subsidiaries																														—		—	—		—		—			—			—			—			—			(14		)	(14		)
Other^(d)																														—		—	—		—		(92		)	—			—			—			(92		)	(1		)	(93		)
Balance at June 30, 2020																														$	1,962	735	$	1	$	40,997	$	2,707		$	(111	)	$	10		$	(82	)	$	45,484		$	1,127		$	46,611


(a)	~~Amounts~~Relates to tax equity financing activity 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.the Commercial Renewables segment.


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


(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.


(d)	Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.~~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				Nine Months Ended					Three Months Ended					Six Months Ended
	September 30,				September 30,					June 30,					June 30,
(in millions)	2019		2018		2019		2018			2020			2019		2020		2019
Operating Revenues	$	2,162	$	2,090	$	5,619	$	5,525		$	1,610		$	1,713	$	3,358	$	3,457
Operating Expenses
Fuel used in electric generation and purchased power	504		490		1,371		1,370			376			395		829		867
Operation, maintenance and other	443		514		1,324		1,464			430			441		816		881
Depreciation and amortization	350		305		1,013		866			375			346		718		663
Property and other taxes	66		67		221		214			75			75		156		155
Impairment charges	6		1		11		191			—			5		2		5
Total operating expenses	1,369		1,377		3,940		4,105			1,256			1,262		2,521		2,571
Losses on Sales of Other Assets and Other, net	—		—		—		(1		)	(1		)	—		—		—
Operating Income	793		713		1,679		1,419			353			451		837		886
Other Income and Expenses, net	34		34		106		108			43			41		86		72
Interest Expense	119		106		346		323			125			117		248		227
Income Before Income Taxes	708		641		1,439		1,204			271			375		675		731
Income Tax Expense	118		145		255		268			37			74		102		137
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
Net Income and Comprehensive Income										$	234		$	301	$	573	$	594

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	23		$	33		$	24		$	18
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 (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019)							255			324
Receivables of VIEs (net of allowance for doubtful accounts of $13 at 2020 and $7 at 2019)							675			642
Receivables from affiliated companies	108			182			78			114
Inventory	943			948			1,080			996
Regulatory assets	573			520			490			550
Other	19			72			19			21
Total current assets	2,675			2,673			2,621			2,665
Property, Plant and Equipment
Cost	47,815			44,741			50,068			48,922
Accumulated depreciation and amortization	(16,359		)	(15,496		)	(17,098		)	(16,525		)
Net property, plant and equipment	31,456			29,245			32,970			32,397
Other Noncurrent Assets
Regulatory assets	3,587			3,457			3,440			3,360
Nuclear decommissioning trust funds	4,104			3,558			4,265			4,359
Operating lease right-of-use assets, net	135			—			125			123
Other	1,061			1,027			1,158			1,149
Total other noncurrent assets	8,887			8,042			8,988			8,991
Total Assets	$	43,018		$	39,960		$	44,579		$	44,053
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	644		$	988		$	615		$	954
Accounts payable to affiliated companies	174			230			147			210
Notes payable to affiliated companies	49			439			131			29
Taxes accrued	262			171			166			46
Interest accrued	138			102			127			115
Current maturities of long-term debt	457			6			508			458
Asset retirement obligations	214			290			194			206
Regulatory liabilities	197			199			293			255
Other	545			571			488			611
Total current liabilities	2,680			2,996			2,669			2,884
Long-Term Debt	11,001			10,633			11,713			11,142
Long-Term Debt Payable to Affiliated Companies	300			300			300			300
Other Noncurrent Liabilities
Deferred income taxes	3,853			3,689			4,004			3,921
Asset retirement obligations	5,184			3,659			5,566			5,528
Regulatory liabilities	6,364			5,999			6,232			6,423
Operating lease liabilities	108			—			106			102
Accrued pension and other post-retirement benefit costs	88			99			77			84
Investment tax credits	232			231			229			231
Other	617			671			611			627
Total other noncurrent liabilities	16,446			14,348			16,825			16,916
Commitments and Contingencies
Equity
Member's equity	12,598			11,689			13,079			12,818
Accumulated other comprehensive loss	(7		)	(6		)	(7		)	(7		)
Total equity	12,591			11,683			13,072			12,811
Total Liabilities and Equity	$	43,018		$	39,960		$	44,579		$	44,053

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,184		$	936		$	573		$	594
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,227			1,084			854			804
Equity component of AFUDC	(29		)	(57		)	(29		)	(21		)
Losses on sales of other assets	—			1
Impairment charges	11			191			2			5
Deferred income taxes	96			266			31			54
Accrued pension and other post-retirement benefit costs	(5		)	3
Contributions to qualified pension plans	(7		)	(46		)
Payments for asset retirement obligations	(234		)	(174		)	(86		)	(131		)
Provision for rate refunds	34			163			2			35
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(7		)	2			—			(8		)
Receivables	(80		)	(154		)	40			83
Receivables from affiliated companies	74			(63		)	36			81
Inventory	5			(11		)	(84		)	(77		)
Other current assets	(117		)	(54		)	170			(133		)
Increase (decrease) in
Accounts payable	(284		)	69			(249		)	(282		)
Accounts payable to affiliated companies	(56		)	(67		)	(63		)	(41		)
Taxes accrued	91			(47		)	120			38
Other current liabilities	44			(129		)	(134		)	(71		)
Other assets	2			18			(83		)	87
Other liabilities	(43		)	(47		)	(35		)	(18		)
Net cash provided by operating activities	1,906			1,884			1,065			999
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,984		)	(2,006		)	(1,271		)	(1,357		)
Purchases of debt and equity securities	(1,658		)	(1,386		)	(1,017		)	(1,114		)
Proceeds from sales and maturities of debt and equity securities	1,658			1,386			1,017			1,114
Other	(80		)	(103		)	(73		)	(46		)
Net cash used in investing activities	(2,064		)	(2,109		)	(1,344		)	(1,403		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	819			991			938			25
Payments for the redemption of long-term debt	(5		)	(704		)	(454		)	(3		)
Notes payable to affiliated companies	(390		)	700			102			365
Distributions to parent	(275		)	(750		)	(300		)	—
Other	(1		)	(1		)	(1		)	(1		)
Net cash provided by financing activities	148			236			285			386
Net (decrease) increase in cash and cash equivalents	(10		)	11
Net increase (decrease) in cash and cash equivalents							6			(18		)
Cash and cash equivalents at beginning of period	33			16			18			33
Cash and cash equivalents at end of period	$	23		$	27		$	24		$	15
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	261		$	299		$	256		$	252

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Three Months Ended September 30, 2018 and 2019									Three Months Ended June 30, 2019 and 2020
				Accumulated Other									Accumulated Other
				Comprehensive									Comprehensive
				Loss									Loss
	Member's			Net Income (Losses) on			Total			Member's			Net Losses on			Total
(in millions)	Equity			Cash Flow Hedges			Equity			Equity			Cash Flow Hedges			Equity
Balance at June 30, 2018	$	11,308		$	(6	)	$	11,302
Balance at March 31, 2019										$	11,982		$	(7	)	$	11,975
Net income	496			—			496			301			—			301
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

Balance at June 30, 2019	$	12,283		$	(7	)	$	12,276
Balance at March 31, 2020										$	12,844		$	(7	)	$	12,837
Net income	590			—			590			234			—			234
Distributions to parent	(275		)	—			(275		)
Balance at September 30, 2019	$	12,598		$	(7	)	$	12,591
Other										1			—			1
Balance at June 30, 2020										$	13,079		$	(7	)	$	13,072

	Nine Months Ended September 30, 2018 and 2019									Six Months Ended June 30, 2019 and 2020
				Accumulated Other									Accumulated Other
				Comprehensive									Comprehensive
				Loss									Loss
	Member's			Net Income (Losses) on			Total			Member's			Net Losses on			Total
(in millions)	Equity			Cash Flow Hedges			Equity			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		$	11,689		$	(6	)	$	11,683
Net income	1,184			—			1,184			594			—			594
Other										—			(1		)	(1		)
Balance at June 30, 2019										$	12,283		$	(7	)	$	12,276

Balance at December 31, 2019										$	12,818		$	(7	)	$	12,811
Net income										573			—			573
Distributions to parent	(275		)	—			(275		)	(300		)	—			(300		)
Other	—			(1		)	(1		)
Balance at September 30, 2019	$	12,598		$	(7	)	$	12,591
Other^(a)										(12		)	—			(12		)
Balance at June 30, 2020										$	13,079		$	(7	)	$	13,072


(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					Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,					September 30,						June 30,						June 30,
(in millions)	2019			2018		2019			2018			2020			2019			2020		2019
Operating Revenues	$	3,242		$	3,045	$	8,558		$	8,119		$	2,498		$	2,744		$	4,920	$	5,316
Operating Expenses
Fuel used in electric generation and purchased power	1,187			1,148		3,100			3,019			777			988			1,540		1,913
Operation, maintenance and other	640			680		1,813			1,913			589			606			1,143		1,173
Depreciation and amortization	496			419		1,377			1,183			432			426			884		881
Property and other taxes	159			145		439			399			137			143			272		280
Impairment charges	(25		)	1		(25		)	34
Total operating expenses	2,457			2,393		6,704			6,548			1,935			2,163			3,839		4,247
Gains on Sales of Other Assets and Other, net	1			11		—			23
Gains (Losses) on Sales of Other Assets and Other, net												7			(1		)	6		(1		)
Operating Income	786			663		1,854			1,594			570			580			1,087		1,068
Other Income and Expenses, net	41			51		106			128			33			34			65		65
Interest Expense	212			214		650			626			199			219			405		438
Income Before Income Taxes	615			500		1,310			1,096			404			395			747		695
Income Tax Expense	94			94		212			186			60			66			120		118
Net Income	521			406		1,098			910			344			329			627		577
Less: Net Income Attributable to Noncontrolling Interests	—			2		—			6			—			1			—		—
Net Income Attributable to Parent	$	521		$	404	$	1,098		$	904		$	344		$	328		$	627	$	577

Net Income	$	521		$	406	$	1,098		$	910		$	344		$	329		$	627	$	577
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	—			—		2			2			1			1			1		2
Net unrealized gains on cash flow hedges	1			2		4			5			1			1			2		3
Unrealized gains (losses) on available-for-sale securities	1			—		2			(1		)
Unrealized (losses) gains on available-for-sale securities												(1		)	1			—		1
Other Comprehensive Income, net of tax	2			2		8			6			1			3			3		6
Comprehensive Income	523			408		1,106			916			345			332			630		583
Less: Comprehensive Income Attributable to Noncontrolling Interests	—			2		—			6			—			1			—		—
Comprehensive Income Attributable to Parent	$	523		$	406	$	1,106		$	910		$	345		$	331		$	630	$	583

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	82		$	67		$	78		$	48
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 (net of allowance for doubtful accounts of $9 at 2020 and $7 at 2019)							153			220
Receivables of VIEs (net of allowance for doubtful accounts of $20 at 2020 and $9 at 2019)							920			830
Receivables from affiliated companies	33			168			42			76
Notes receivable from affiliated companies							—			164
Inventory	1,434			1,459			1,466			1,423
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
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)							957			946
Other (includes $32 at 2020 and $39 at 2019 related to VIEs)							145			210
Total current assets	3,895			4,085			3,761			3,917
Property, Plant and Equipment
Cost	53,491			50,260			56,420			55,070
Accumulated depreciation and amortization	(16,917		)	(16,398		)	(17,704		)	(17,159		)
Generation facilities to be retired, net	267			362			28			246
Net property, plant and equipment	36,841			34,224			38,744			38,157
Other Noncurrent Assets
Goodwill	3,655			3,655			3,655			3,655
Regulatory assets (includes $1,002 at 2019 and $1,041 at 2018 related to VIEs)	6,733			6,564
Regulatory assets (includes $969 at 2020 and $989 at 2019 related to VIEs)							6,308			6,346
Nuclear decommissioning trust funds	3,590			3,162			3,734			3,782
Operating lease right-of-use assets, net	814			—			737			788
Other	989			974			1,164			1,049
Total other noncurrent assets	15,781			14,355			15,598			15,620
Total Assets	$	56,517		$	52,664		$	58,103		$	57,694
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,095		$	1,172		$	675		$	1,104
Accounts payable to affiliated companies	354			360			222			310
Notes payable to affiliated companies	1,789			1,235			2,373			1,821
Taxes accrued	271			109			201			46
Interest accrued	212			246			213			228
Current maturities of long-term debt (includes $54 at 2019 and $53 at 2018 related to VIEs)	1,276			1,672
Current maturities of long-term debt (includes $304 at 2020 and $54 at 2019 related to VIEs)							1,829			1,577
Asset retirement obligations	478			514			357			485
Regulatory liabilities	296			280			388			330
Other	850			821			847			902
Total current liabilities	6,621			6,409			7,105			6,803
Long-Term Debt (includes $1,631 at 2019 and $1,636 at 2018 related to VIEs)	17,693			17,089
Long-Term Debt (includes $1,361 at 2020 and $1,632 at 2019 related to VIEs)							17,625			17,907
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	4,389			3,941			4,560			4,462
Asset retirement obligations	5,610			4,897			6,038			5,986
Regulatory liabilities	5,165			5,049			4,813			5,225
Operating lease liabilities	710			—			662			697
Accrued pension and other post-retirement benefit costs	455			521			480			488
Other	361			351			449			383
Total other noncurrent liabilities	16,690			14,759			17,002			17,241
Commitments and Contingencies
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2019 and 2018	—			—
Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019							—			—
Additional paid-in capital	9,143			9,143			9,143			9,143
Retained earnings	6,236			5,131			7,090			6,465
Accumulated other comprehensive loss	(19		)	(20		)	(15		)	(18		)
Total Progress Energy, Inc. stockholders' equity	15,360			14,254			16,218			15,590
Noncontrolling interests	3			3			3			3
Total equity	15,363			14,257			16,221			15,593
Total Liabilities and Equity	$	56,517		$	52,664		$	58,103		$	57,694

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,098		$	910		$	627		$	577
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			1,118			1,061
Equity component of AFUDC	(48		)	(80		)	(24		)	(31		)
Gains on sales of other assets	—			(23		)
Impairment charges	(25		)	34
(Gains) Losses on sales of other assets							(6		)	1
Deferred income taxes	342			342			94			126
Accrued pension and other post-retirement benefit costs	14			18
Contributions to qualified pension plans	(57		)	(45		)
Payments for asset retirement obligations	(309		)	(164		)	(173		)	(183		)
Other rate case adjustments	—			37
Provision for rate refunds	13			101			2			10
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	9			14			(22		)	(1		)
Receivables	(128		)	(316		)	(15		)	(42		)
Receivables from affiliated companies	135			16			34			119
Inventory	45			119			(42		)	(26		)
Other current assets	79			(156		)	102			114
Increase (decrease) in
Accounts payable	(64		)	427			(238		)	(196		)
Accounts payable to affiliated companies	(6		)	76			(88		)	(125		)
Taxes accrued	150			143			155			82
Other current liabilities	(96		)	(28		)	(64		)	(162		)
Other assets	(281		)	(668		)	(51		)	(82		)
Other liabilities	(90		)	(34		)	(97		)	24
Net cash provided by operating activities	2,430			2,181			1,312			1,266
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,866		)	(2,689		)	(1,812		)	(1,988		)
Purchases of debt and equity securities	(1,304		)	(1,216		)	(2,602		)	(1,094		)
Proceeds from sales and maturities of debt and equity securities	1,300			1,225			2,588			1,089
Net proceeds from the sales of other assets	—			20
Notes receivable from affiliated companies	—			(205		)	164			—
Other	(130		)	(142		)	(81		)	(59		)
Net cash used in investing activities	(3,000		)	(3,007		)	(1,743		)	(2,052		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,295			1,785			514			1,295
Payments for the redemption of long-term debt	(1,263		)	(719		)	(550		)	(1,188		)
Notes payable to affiliated companies	554			(11		)	552			685
Dividends to parent	—			(250		)
Other	8			(3		)	—			2
Net cash provided by financing activities	594			802			516			794
Net increase (decrease) in cash, cash equivalents and restricted cash	24			(24		)
Net increase in cash, cash equivalents and restricted cash							85			8
Cash, cash equivalents and restricted cash at beginning of period	112			87			126			112
Cash, cash equivalents and restricted cash at end of period	$	136		$	63		$	211		$	120
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	400		$	441		$	287		$	278

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended June 30, 2019 and 2020
						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 March 31, 2019	$	9,143	$	5,386		$	(14	)	$	(1	)	$	(8	)	$	14,506		$	2		$	14,508
Net income	—		328			—			—			—			328			1			329
Other comprehensive income	—		—			1			1			1			3			—			3
Other	—		1			—			—			(1		)	—			(1		)	(1		)
Balance at June 30, 2019	$	9,143	$	5,715		$	(13	)	$	—		$	(8	)	$	14,837		$	2		$	14,839

Balance at March 31, 2020	$	9,143	$	6,747		$	(9	)	$	—		$	(7	)	$	15,874		$	3		$	15,877
Net income	—		344			—			—			—			344			—			344
Other comprehensive income	—		—			1			(1		)	1			1			—			1
Distributions to noncontrolling interests	—		—			—			—			—			—			(1		)	(1		)
Other	—		(1		)	—			—			—			(1		)	1			—
Balance at June 30, 2020	$	9,143	$	7,090		$	(8	)	$	(1	)	$	(6	)	$	16,218		$	3		$	16,221

	Six Months Ended June 30, 2019 and 2020
						Accumulated Other Comprehensive Loss
						Net Gains			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	—		577			—			—			—			577			—			577
Other comprehensive income	—		—			3			1			2			6			—			6
Other^(a)	—		7			(4		)	—			(3		)	—			(1		)	(1		)
Balance at June 30, 2019	$	9,143	$	5,715		$	(13	)	$	—		$	(8	)	$	14,837		$	2		$	14,839

Balance at December 31, 2019	$	9,143	$	6,465		$	(10	)	$	(1	)	$	(7	)	$	15,590		$	3		$	15,593
Net income	—		627			—			—			—			627			—			627
Other comprehensive income	—		—			2			—			1			3			—			3
Distributions to noncontrolling interests	—		—			—			—			—			—			(1		)	(1		)
Other	—		(2		)	—			—			—			(2		)	1			(1		)
Balance at June 30, 2020	$	9,143	$	7,090		$	(8	)	$	(1	)	$	(6	)	$	16,218		$	3		$	16,221

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.


~~(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.

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				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
(in millions)	2019		2018		2019		2018		2020		2019		2020		2019
Operating Revenues	$	1,688	$	1,582	$	4,559	$	4,333	$	1,243	$	1,387	$	2,581	$	2,871
Operating Expenses
Fuel used in electric generation and purchased power	577		535		1,571		1,452		395		479		800		994
Operation, maintenance and other	378		431		1,070		1,187		317		357		622		692
Depreciation and amortization	314		253		855		723		257		251		544		541
Property and other taxes	46		40		131		115		44		41		91		85
Impairment charges	—		—		—		33
Total operating expenses	1,315		1,259		3,627		3,510		1,013		1,128		2,057		2,312
Gains on Sales of Other Assets and Other, net	—		7		—		9		6		—		5		—
Operating Income	373		330		932		832		236		259		529		559
Other Income and Expenses, net	27		24		75		61		19		24		41		48
Interest Expense	74		82		232		241		68		81		137		158
Income Before Income Taxes	326		272		775		652		187		202		433		449
Income Tax Expense	48		56		125		120		26		33		68		77
Net Income and Comprehensive Income	$	278	$	216	$	650	$	532	$	161	$	169	$	365	$	372

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			June 30, 2020			December 31, 2019
ASSETS
Current Assets							��
Cash and cash equivalents	$	49		$	23		$	51		$	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 $4 at 2020 and $3 at 2019)							77			123
Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $5 at 2019)							451			489
Receivables from affiliated companies	34			23			42			52
Inventory	939			954			980			934
Regulatory assets	515			703			526			526
Other	95			62			37			60
Total current assets	2,271			2,387			2,164			2,206
Property, Plant and Equipment
Cost	33,594			31,459			35,120			34,603
Accumulated depreciation and amortization	(11,761		)	(11,423		)	(12,303		)	(11,915		)
Generation facilities to be retired, net	267			362			28			246
Net property, plant and equipment	22,100			20,398			22,845			22,934
Other Noncurrent Assets
Regulatory assets	4,363			4,111			4,448			4,152
Nuclear decommissioning trust funds	2,872			2,503			3,023			3,047
Operating lease right-of-use assets, net	397			—			367			387
Other	595			612			688			651
Total other noncurrent assets	8,227			7,226			8,526			8,237
Total Assets	$	32,598		$	30,011		$	33,535		$	33,377
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	550		$	660		$	287		$	629
Accounts payable to affiliated companies	198			278			153			203
Notes payable to affiliated companies	79			294			257			66
Taxes accrued	101			53			88			17
Interest accrued	89			116			102			110
Current maturities of long-term debt	306			603			1,006			1,006
Asset retirement obligations	476			509			357			485
Regulatory liabilities	210			178			306			236
Other	416			408			468			478
Total current liabilities	2,425			3,099			3,024			3,230
Long-Term Debt	8,593			7,451			7,907			7,902
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	2,316			2,119			2,485			2,388
Asset retirement obligations	5,038			4,311			5,457			5,408
Regulatory liabilities	4,152			3,955			4,087			4,232
Operating lease liabilities	360			—			339			354
Accrued pension and other post-retirement benefit costs	230			237			237			238
Investment tax credits	138			142			134			137
Other	105			106			105			92
Total other noncurrent liabilities	12,339			10,870			12,844			12,849
Commitments and Contingencies
Equity
Member's Equity	9,091			8,441			9,610			9,246
Total Liabilities and Equity	$	32,598		$	30,011		$	33,535		$	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						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	650		$	532		$	365		$	372
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	996			869			635			634
Equity component of AFUDC	(44		)	(41		)	(19		)	(28		)
Gains on sales of other assets	—			(9		)	(6		)	—
Impairment charges	—			33
Deferred income taxes	144			187			60			26
Accrued pension and other post-retirement benefit costs	2			11
Contributions to qualified pension plans	(4		)	(25		)
Payments for asset retirement obligations	(288		)	(133		)	(164		)	(166		)
Other rate case adjustments	—			37
Provision for rate refunds	13			101			2			10
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(4		)	3			(5		)	(5		)
Receivables	(9		)	(154		)	96			58
Receivables from affiliated companies	(11		)	(3		)	10			(17		)
Inventory	15			62			(46		)	(26		)
Other current assets	65			(239		)	87			115
Increase (decrease) in
Accounts payable	(54		)	325			(260		)	(223		)
Accounts payable to affiliated companies	(80		)	73			(50		)	(96		)
Taxes accrued	37			28			71			53
Other current liabilities	(17		)	(27		)	(16		)	(74		)
Other assets	(197		)	(358		)	(86		)	(3		)
Other liabilities	33			11			(5		)	25
Net cash provided by operating activities	1,247			1,283			669			655
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,592		)	(1,526		)	(795		)	(1,115		)
Purchases of debt and equity securities	(656		)	(831		)	(569		)	(473		)
Proceeds from sales and maturities of debt and equity securities	632			807			548			458
Net proceeds from the sales of other assets	—			20
Notes receivable from affiliated companies	—			(52		)
Other	(56		)	(82		)	(21		)	(20		)
Net cash used in investing activities	(1,672		)	(1,664		)	(837		)	(1,150		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,270			796			20			1,270
Payments for the redemption of long-term debt	(603		)	(2		)	(13		)	(602		)
Notes payable to affiliated companies	(215		)	(240		)	191			(167		)
Distributions to parent	—			(175		)
Other	(1		)	(1		)	(1		)	(1		)
Net cash provided by financing activities	451			378			197			500
Net increase (decrease) in cash and cash equivalents	26			(3		)
Net increase in cash and cash equivalents							29			5
Cash and cash equivalents at beginning of period	23			20			22			23
Cash and cash equivalents at end of period	$	49		$	17		$	51		$	28
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	182		$	261		$	95		$	112

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Three Months Ended			Three Months Ended
	September 30, 2018 and 2019			June 30, 2019 and 2020
	Member's			Member's
(in millions)	Equity			Equity
Balance at June 30, 2018	$	8,265
Balance at March 31, 2019				$	8,644
Net income	216			169
Distributions to parent	(175		)
Balance at September 30, 2018	$	8,306
Balance at June 30, 2019				$	8,813

Balance at June 30, 2019	$	8,813
Balance at March 31, 2020				$	9,450
Net income	278			161
Balance at September 30, 2019	$	9,091
Other				(1		)
Balance at June 30, 2020				$	9,610

	Nine Months Ended			Six Months Ended
	September 30, 2018 and 2019			June 30, 2019 and 2020
	Member's			Member's
(in millions)	Equity			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		$	8,441
Net income	650			372
Balance at September 30, 2019	$	9,091
Balance at June 30, 2019				$	8,813

Balance at December 31, 2019				$	9,246
Net income				365
Other				(1		)
Balance at June 30, 2020				$	9,610

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						Six Months Ended
	September 30,					September 30,						June 30,						June 30,
(in millions)	2019			2018		2019			2018			2020			2019			2020		2019
Operating Revenues	$	1,548		$	1,462	$	3,987		$	3,780		$	1,250		$	1,353		$	2,330	$	2,439
Operating Expenses
Fuel used in electric generation and purchased power	610			614		1,529			1,567			382			509			740		919
Operation, maintenance and other	256			245		730			719			269			244			514		474
Depreciation and amortization	182			166		522			460			175			175			340		340
Property and other taxes	113			105		309			284			92			103			180		196
Impairment charges	(25		)	1		(25		)	1
Total operating expenses	1,136			1,131		3,065			3,031			918			1,031			1,774		1,929
Gains on Sales of Other Assets and Other, net	1			—		—			—
Losses on Sales of Other Assets and Other, net												—			(1		)	—		(1		)
Operating Income	413			331		922			749			332			321			556		509
Other Income and Expenses, net	14			28		39			75			15			12			25		25
Interest Expense	81			73		246			210			80			83			164		165
Income Before Income Taxes	346			286		715			614			267			250			417		369
Income Tax Expense	57			43		129			100			51			49			81		72
Net Income	$	289		$	243	$	586		$	514		$	216		$	201		$	336	$	297
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 (losses) gains on available-for-sale securities												(1		)	—			—		1
Comprehensive Income	$	290		$	243	$	588		$	513		$	215		$	201		$	336	$	298

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			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	24		$	36		$	20		$	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 (net of allowance for doubtful accounts of $5 at 2020 and $3 at 2019)							72			96
Receivables of VIEs (net of allowance for doubtful accounts of $9 at 2020 and $4 at 2019)							469			341
Receivables from affiliated companies	1			28			2			—
Notes receivable from affiliated companies							—			173
Inventory	495			504			486			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)							432			419
Other (includes $32 at 2020 and $39 at 2019 related to VIEs)							44			58
Total current assets	1,511			1,553			1,525			1,593
Property, Plant and Equipment
Cost	19,887			18,792			21,290			20,457
Accumulated depreciation and amortization	(5,148		)	(4,968		)	(5,394		)	(5,236		)
Net property, plant and equipment	14,739			13,824			15,896			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 $969 at 2020 and $989 at 2019 related to VIEs)							1,860			2,194
Nuclear decommissioning trust funds	718			659			711			734
Operating lease right-of-use assets, net	417			—			370			401
Other	307			311			327			311
Total other noncurrent assets	3,812			3,424			3,268			3,640
Total Assets	$	20,062		$	18,801		$	20,689		$	20,454
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	542		$	511		$	388		$	474
Accounts payable to affiliated companies	158			91			80			131
Notes payable to affiliated companies	356			108			232			—
Taxes accrued	175			74			177			43
Interest accrued	72			75			67			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 $304 at 2020 and $54 at 2019 related to VIEs)							323			571
Regulatory liabilities	87			102			82			94
Other	423			406			372			415
Total current liabilities	2,436			1,642			1,721			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 $1,028 at 2020 and $1,307 at 2019 related to VIEs)							7,628			7,416
Other Noncurrent Liabilities
Deferred income taxes	2,199			1,986			2,181			2,179
Asset retirement obligations	572			586			581			578
Regulatory liabilities	1,013			1,094			726			993
Operating lease liabilities	350			—			323			343
Accrued pension and other post-retirement benefit costs	196			254			211			218
Other	102			93			194			136
Total other noncurrent liabilities	4,432			4,013			4,216			4,447
Commitments and Contingencies
Equity
Member's equity	6,683			6,097			7,125			6,789
Accumulated other comprehensive loss	—			(2		)	(1		)	(1		)
Total equity	6,683			6,095			7,124			6,788
Total Liabilities and Equity	$	20,062		$	18,801		$	20,689		$	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						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	586		$	514		$	336		$	297
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	647			581			478			423
Equity component of AFUDC	(4		)	(40		)	(6		)	(2		)
Impairment charges	(25		)	1
Losses on sales of other assets							—			1
Deferred income taxes	164			169			37			82
Accrued pension and other post-retirement benefit costs	8			4
Contributions to qualified pension plans	(53		)	(20		)
Payments for asset retirement obligations	(21		)	(31		)	(9		)	(17		)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	9			7			(20		)	2
Receivables	(119		)	(163		)	(110		)	(101		)
Receivables from affiliated companies	27			(18		)	(2		)	10
Inventory	29			57			4			1
Other current assets	100			51			(11		)	8
Increase (decrease) in
Accounts payable	(11		)	101			23			27
Accounts payable to affiliated companies	67			9			(51		)	(29		)
Taxes accrued	101			198			134			74
Other current liabilities	(77		)	1			(50		)	(80		)
Other assets	(81		)	(308		)	37			(77		)
Other liabilities	(127		)	(58		)	(91		)	(8		)
Net cash provided by operating activities	1,220			1,055			699			611
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,274		)	(1,162		)	(1,016		)	(873		)
Purchases of debt and equity securities	(648		)	(385		)	(2,033		)	(621		)
Proceeds from sales and maturities of debt and equity securities	668			418			2,040			631
Notes receivable from affiliated companies	—			(80		)	173			—
Other	(73		)	(61		)	(60		)	(37		)
Net cash used in investing activities	(1,327		)	(1,270		)	(896		)	(900		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	25			989			495			25
Payments for the redemption of long-term debt	(210		)	(717		)	(537		)	(136		)
Notes payable to affiliated companies	248			—			232			369
Distributions to parent	—			(75		)
Other	9			(1		)	2			3
Net cash provided by financing activities	72			196			192			261
Net decrease in cash, cash equivalents and restricted cash	(35		)	(19		)	(5		)	(28		)
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		$	51		$	47
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	218		$	180		$	192		$	166

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									Three Months Ended June 30, 2019 and 2020
				Accumulated								Accumulated
				Other								Other
				Comprehensive								Comprehensive
				Income (Loss)								Income (Loss)
				Net Unrealized								Net Unrealized
				Gains (Losses) on								Gains (Losses) on
	Member's			Available-for-Sale			Total			Member's		Available-for-Sale			Total
(in millions)	Equity			Securities			Equity			Equity		Securities			Equity
Balance at June 30, 2018	$	5,890		$	(2	)	$	5,888
Balance at March 31, 2019										$	6,193	$	(1	)	$	6,192
Net income	243			—			243			201		—			201
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

Balance at June 30, 2019	$	6,394		$	(1	)	$	6,393
Balance at March 31, 2020										$	6,909	$	—		$	6,909
Net income	289			—			289			216		—			216
Other comprehensive income	—			1			1			—		(1		)	(1		)
Balance at September 30, 2019	$	6,683		$	—		$	6,683
Balance at June 30, 2020										$	7,125	$	(1	)	$	7,124

	Nine Months Ended September 30, 2018 and 2019									Six Months Ended June 30, 2019 and 2020
				Accumulated								Accumulated
				Other								Other
				Comprehensive								Comprehensive
				Income (Loss)								Income (Loss)
				Net Unrealized								Net Unrealized
				Gains (Losses) on								Gains on
	Member's			Available-for-Sale			Total			Member's		Available-for-Sale			Total
(in millions)	Equity			Securities			Equity			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		$	6,097	$	(2	)	$	6,095
Net income	586			—			586			297		—			297
Other comprehensive income	—			2			2			—		1			1
Balance at September 30, 2019	$	6,683		$	—		$	6,683
Balance at June 30, 2019										$	6,394	$	(1	)	$	6,393

Balance at December 31, 2019										$	6,789	$	(1	)	$	6,788
Net income										336		—			336
Balance at June 30, 2020										$	7,125	$	(1	)	$	7,124


~~(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				Six Months Ended
	September 30,				September 30,					June 30,				June 30,
(in millions)	2019		2018		2019		2018			2020		2019		2020		2019
Operating Revenues
Regulated electric	$	408	$	373	$	1,099	$	1,055		$	330	$	336	$	676	$	691
Regulated natural gas	81		84		354		361			93		97		245		273
Nonregulated electric and other	—		12		—		36
Total operating revenues	489		469		1,453		1,452			423		433		921		964
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										77		86		164		179
Cost of natural gas	4		4		68		73			6		10		43		64
Operation, maintenance and other	123		76		378		337			95		123		218		255
Depreciation and amortization	69		64		199		196			68		66		136		130
Property and other taxes	71		73		229		218			78		74		161		158
Total operating expenses	381		330		1,167		1,151			324		359		722		786
Losses on Sales of Other Assets and Other, net	—		—		—		(106		)
Operating Income	108		139		286		195			99		74		199		178
Other Income and Expenses, net	4		3		19		17			4		6		7		15
Interest Expense	27		23		81		68			25		24		49		54
Income Before Income Taxes	85		119		224		144			78		56		157		139
Income Tax Expense	11		19		34		23			12		9		26		23
Net Income and Comprehensive Income	$	74	$	100	$	190	$	121		$	66	$	47	$	131	$	116

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			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	11		$	21		$	8		$	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)							83			84
Receivables from affiliated companies	63			114			47			92
Notes receivable from affiliated companies	74			—			35			—
Inventory	128			126			129			135
Regulatory assets	47			33			32			49
Other	28			24			14			21
Total current assets	432			420			348			398
Property, Plant and Equipment
Cost	9,993			9,360			10,591			10,241
Accumulated depreciation and amortization	(2,785		)	(2,717		)	(2,923		)	(2,843		)
Net property, plant and equipment	7,208			6,643			7,668			7,398
Other Noncurrent Assets
Goodwill	920			920			920			920
Regulatory assets	553			531			593			549
Operating lease right-of-use assets, net	22			—			21			21
Other	48			41			59			52
Total other noncurrent assets	1,543			1,492			1,593			1,542
Total Assets	$	9,183		$	8,555		$	9,609		$	9,338
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	266		$	316		$	249		$	288
Accounts payable to affiliated companies	69			78			58			68
Notes payable to affiliated companies	167			274			79			312
Taxes accrued	162			202			210			219
Interest accrued	29			22			31			30
Current maturities of long-term debt	100			551
Asset retirement obligations	3			6			5			1
Regulatory liabilities	64			57			69			64
Other	74			74			71			75
Total current liabilities	934			1,580			772			1,057
Long-Term Debt	2,594			1,589			2,994			2,594
Long-Term Debt Payable to Affiliated Companies	25			25			25			25
Other Noncurrent Liabilities
Deferred income taxes	901			817			958			922
Asset retirement obligations	82			87			77			79
Regulatory liabilities	793			840			751			763
Operating lease liabilities	21			—			20			21
Accrued pension and other post-retirement benefit costs	103			79			102			100
Other	95			93			96			94
Total other noncurrent liabilities	1,995			1,916			2,004			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							276			145
Total equity	3,635			3,445			3,814			3,683
Total Liabilities and Equity	$	9,183		$	8,555		$	9,609		$	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						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	190		$	121		$	131		$	116
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	202			199			138			132
Equity component of AFUDC	(9		)	(10		)	(2		)	(7		)
Losses on sales of other assets	—			106
Deferred income taxes	68			9			24			45
Accrued pension and other post-retirement benefit costs	1			3
Contributions to qualified pension plans	(2		)	—
Payments for asset retirement obligations	(7		)	(3		)	—			(5		)
Provision for rate refunds	5			23			6			3
(Increase) decrease in
Receivables	24			(44		)	2			24
Receivables from affiliated companies	51			62			45			64
Inventory	(2		)	(2		)	6			2
Other current assets	(15		)	12			8			(13		)
Increase (decrease) in
Accounts payable	(40		)	(47		)	(22		)	(44		)
Accounts payable to affiliated companies	(9		)	(8		)	(10		)	—
Taxes accrued	(40		)	(31		)	(9		)	(67		)
Other current liabilities	(4		)	19			2			2
Other assets	(10		)	3			(24		)	(18		)
Other liabilities	(25		)	(17		)	(3		)	(15		)
Net cash provided by operating activities	378			395			292			219
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(714		)	(588		)	(403		)	(473		)
Notes receivable from affiliated companies	(74		)	14			(35		)	—
Other	(45		)	(62		)	(27		)	(31		)
Net cash used in investing activities	(833		)	(636		)	(465		)	(504		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,003			—			397			794
Payments for the redemption of long-term debt	(451		)	(3		)	—			(451		)
Notes payable to affiliated companies	(107		)	239			(233		)	(71		)
Net cash provided by financing activities	445			236			164			272
Net decrease in cash and cash equivalents	(10		)	(5		)	(9		)	(13		)
Cash and cash equivalents at beginning of period	21			12			17			21
Cash and cash equivalents at end of period	$	11		$	7		$	8		$	8
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	100		$	83		$	94		$	93
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									Three Months Ended June 30, 2019 and 2020
			Additional		Retained							Additional		Retained
	Common		Paid-in		Earnings			Total		Common		Paid-in		Earnings			Total
(in millions)	Stock		Capital		(Deficit)			Equity		Stock		Capital		(Deficit)			Equity
Balance at June 30, 2018	$	762	$	2,776	$	(248	)	$	3,290
Balance at March 31, 2019										$	762	$	2,776	$	(24	)	$	3,514
Net income	—		—		100			100		—		—		47			47
Balance at September 30, 2018	$	762	$	2,776	$	(148	)	$	3,390
Balance at June 30, 2019										$	762	$	2,776	$	23		$	3,561

Balance at June 30, 2019	$	762	$	2,776	$	23		$	3,561
Balance at March 31, 2020										$	762	$	2,776	$	210		$	3,748
Net income	—		—		74			74		—		—		66			66
Balance at September 30, 2019	$	762	$	2,776	$	97		$	3,635
Balance at June 30, 2020										$	762	$	2,776	$	276		$	3,814

	Nine Months Ended September 30, 2018 and 2019									Six Months Ended June 30, 2019 and 2020
			Additional		Retained							Additional		Retained
	Common		Paid-in		Earnings			Total		Common		Paid-in		Earnings			Total
(in millions)	Stock		Capital		(Deficit)			Equity		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	$	762	$	2,776	$	(93	)	$	3,445
Net income	—		—		190			190		—		—		116			116
Balance at September 30, 2019	$	762	$	2,776	$	97		$	3,635
Balance at June 30, 2019										$	762	$	2,776	$	23		$	3,561

Balance at December 31, 2019										$	762	$	2,776	$	145		$	3,683
Net income										—		—		131			131
Balance at June 30, 2020										$	762	$	2,776	$	276		$	3,814


~~(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				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
(in millions)	2019		2018		2019		2018		2020		2019		2020		2019
Operating Revenues	$	807	$	819	$	2,289	$	2,288	$	617	$	714	$	1,309	$	1,482
Operating Expenses
Fuel used in electric generation and purchased power	234		272		720		730		161		229		355		486
Operation, maintenance and other	192		198		569		576		171		188		357		377
Depreciation and amortization	130		130		393		386		134		132		266		263
Property and other taxes	16		16		55		56		20		20		42		39
Impairment charges	—		30		—		30
Total operating expenses	572		646		1,737		1,778		486		569		1,020		1,165
Gains on Sales of Other Assets and Other, net									—		3		—		—
Operating Income	235		173		552		510		131		148		289		317
Other Income and Expenses, net	8		23		35		36		9		8		19		27
Interest Expense	40		42		111		125		42		28		85		71
Income Before Income Taxes	203		154		476		421		98		128		223		273
Income Tax Expense	47		35		113		104		17		31		43		66
Net Income and Comprehensive Income	$	156	$	119	$	363	$	317	$	81	$	97	$	180	$	207

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			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	20		$	24		$	16		$	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)							44			60
Receivables from affiliated companies	85			122			59			79
Notes receivable from affiliated companies	213			—			425			—
Inventory	478			422			489			517
Regulatory assets	91			175			90			90
Other	29			35			45			60
Total current assets	972			830			1,168			831
Property, Plant and Equipment
Cost	16,137			15,443			16,736			16,305
Accumulated depreciation and amortization	(5,200		)	(4,914		)	(5,472		)	(5,233		)
Net property, plant and equipment	10,937			10,529			11,264			11,072
Other Noncurrent Assets
Regulatory assets	1,088			982			1,113			1,082
Operating lease right-of-use assets, net	58			—			56			57
Other	211			194			251			234
Total other noncurrent assets	1,357			1,176			1,420			1,373
Total Assets	$	13,266		$	12,535		$	13,852		$	13,276
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	196		$	200		$	204		$	201
Accounts payable to affiliated companies	74			83			74			87
Notes payable to affiliated companies	—			167			—			30
Taxes accrued	29			43			46			49
Interest accrued	54			58			64			58
Current maturities of long-term debt	651			63			503			503
Asset retirement obligations	165			109			172			189
Regulatory liabilities	39			25			51			55
Other	107			107			104			112
Total current liabilities	1,315			855			1,218			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			1,195			1,150
Asset retirement obligations	659			613			643			643
Regulatory liabilities	1,684			1,722			1,655			1,685
Operating lease liabilities	55			—			54			55
Accrued pension and other post-retirement benefit costs	157			115			150			148
Investment tax credits	161			147			170			164
Other	57			16			12			18
Total other noncurrent liabilities	3,892			3,622			3,879			3,863
Commitments and Contingencies
Equity
Member's Equity	4,502			4,339			4,655			4,575
Total Liabilities and Equity	$	13,266		$	12,535		$	13,852		$	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						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	363		$	317		$	180		$	207
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	395			388			267			265
Equity component of AFUDC	(13		)	(28		)	(12		)	(9		)
Impairment charges	—			30
Deferred income taxes	108			94			38			60
Accrued pension and other post-retirement benefit costs	3			5
Contributions to qualified pension plans	(2		)	(8		)
Payments for asset retirement obligations	(31		)	(49		)	(28		)	(17		)
Provision for rate refunds	—			58
(Increase) decrease in
Receivables	1			1			19			5
Receivables from affiliated companies	37			27			20			39
Inventory	(56		)	16			28			(41		)
Other current assets	91			(59		)	13			48
Increase (decrease) in
Accounts payable	1			28			22			26
Accounts payable to affiliated companies	(9		)	(6		)	(13		)	(17		)
Taxes accrued	(14		)	(51		)	4			(18		)
Other current liabilities	(12		)	6			(22		)	(13		)
Other assets	(73		)	29			(29		)	(33		)
Other liabilities	62			(13		)	(6		)	15
Net cash provided by operating activities	851			785			481			517
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(663		)	(619		)	(456		)	(443		)
Purchases of debt and equity securities	(19		)	(42		)	(14		)	(14		)
Proceeds from sales and maturities of debt and equity securities	15			18			7			11
Notes receivable from affiliated companies	(213		)	—			(425		)	—
Other	(33		)	3			(16		)	(21		)
Net cash used in investing activities	(913		)	(640		)	(904		)	(467		)
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		)	(2		)
Distributions to parent	(200		)	(175		)	(100		)	—
Other	—			(1		)
Net cash provided by (used in) financing activities	58			(137		)	414			(62		)
Net (decrease) increase in cash and cash equivalents	(4		)	8
Net decrease in cash and cash equivalents							(9		)	(12		)
Cash and cash equivalents at beginning of period	24			9			25			24
Cash and cash equivalents at end of period	$	20		$	17		$	16		$	12
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	82		$	71		$	83		$	84

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Three Months Ended			Three Months Ended
	September 30, 2018 and 2019			June 30, 2019 and 2020
	Member's			Member's
(in millions)	Equity			Equity
Balance at June 30, 2018	$	4,244
Balance at March 31, 2019				$	4,449
Net income				97
Balance at June 30, 2019				$	4,546

Balance at March 31, 2020				$	4,674
Net income	119			81
Distributions to parent	(100		)	(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
Balance at June 30, 2020				$	4,655

	Nine Months Ended			Six Months Ended
	September 30, 2018 and 2019			June 30, 2019 and 2020
	Member's			Member's
(in millions)	Equity			Equity
Balance at December 31, 2017	$	4,121
Balance at December 31, 2018				$	4,339
Net income				207
Balance at June 30, 2019				$	4,546

Balance at December 31, 2019				$	4,575
Net income	317			180
Distributions to parent	(175		)	(100		)
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
Balance at June 30, 2020				$	4,655

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						Six Months Ended
	September 30,						September 30,				June 30,						June 30,
(in millions)	2019			2018			2019		2018		2020			2019			2020		2019
Operating Revenues	$	168		$	172		$	956	$	940	$	197		$	209		$	709	$	788
Operating Expenses
Cost of natural gas	46			54			384		387		53			65			215		338
Operation, maintenance and other	78			85			241		252		79			83			159		163
Depreciation and amortization	43			40			127		118		43			42			88		84
Property and other taxes	14			12			39		36		12			13			24		25
Total operating expenses	181			191			791		793		187			203			486		610
Operating (Loss) Income	(13		)	(19		)	165		147
Operating Income											10			6			223		178
Other Income and Expenses, net	7			6			19		15		16			6			28		12
Interest Expense	22			19			65		60		33			21			60		43
(Loss) Income Before Income Taxes	(28		)	(32		)	119		102		(7		)	(9		)	191		147
Income Tax (Benefit) Expense	(10		)	(11		)	22		21		(9		)	(2		)	11		32
Net (Loss) Income and Comprehensive (Loss) Income	$	(18	)	$	(21	)	$	97	$	81
Net Income (Loss) and Comprehensive Income (Loss)											$	2		$	(7	)	$	180	$	115

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			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $5 at 2019 and $2 at 2018)	$	78		$	266
Receivables (net of allowance for doubtful accounts of $6 at 2020 and 2019)							$	102		$	241
Receivables from affiliated companies	10			22			14			10
Inventory	47			70			29			72
Regulatory assets	48			54			118			73
Other	122			19			54			28
Total current assets	305			431			317			424
Property, Plant and Equipment
Cost	8,234			7,486			8,701			8,446
Accumulated depreciation and amortization	(1,652		)	(1,575		)	(1,715		)	(1,681		)
Net property, plant and equipment	6,582			5,911			6,986			6,765
Other Noncurrent Assets
Goodwill	49			49			49			49
Regulatory assets	306			303			280			290
Operating lease right-of-use assets, net	25			—			22			24
Investments in equity method unconsolidated affiliates	82			64			85			83
Other	42			52			278			121
Total other noncurrent assets	504			468			714			567
Total Assets	$	7,391		$	6,810		$	8,017		$	7,756
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	140		$	203		$	138		$	215
Accounts payable to affiliated companies	50			38			36			3
Notes payable to affiliated companies	262			198			200			476
Taxes accrued	33			84			28			24
Interest accrued	32			31			34			33
Current maturities of long-term debt	—			350			160			—
Regulatory liabilities	77			37			97			81
Other	63			58			56			67
Total current liabilities	657			999			749			899
Long-Term Debt	2,384			1,788			2,619			2,384
Other Noncurrent Liabilities
Deferred income taxes	663			551			763			708
Asset retirement obligations	20			19			17			17
Regulatory liabilities	1,154			1,181			1,078			1,131
Operating lease liabilities	24			—			21			23
Accrued pension and other post-retirement benefit costs	6			4			7			3
Other	145			177			141			148
Total other noncurrent liabilities	2,012			1,932			2,027			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			1,312			1,133
Total equity	2,338			2,091			2,622			2,443
Total Liabilities and Equity	$	7,391		$	6,810		$	8,017		$	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						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	97		$	81		$	180		$	115
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	129			120			89			85
Equity component of AFUDC							(9		)	—
Deferred income taxes	110			2			17			40
Equity in earnings from unconsolidated affiliates	(6		)	(6		)	(4		)	(4		)
Accrued pension and other post-retirement benefit costs	(7		)	(3		)
Contributions to qualified pension plans	(1		)	—
Provision for rate refunds	9			31			(24		)	9
(Increase) decrease in
Receivables	192			192			154			168
Receivables from affiliated companies	12			(3		)	(4		)	5
Inventory	23			16			42			37
Other current assets	(95		)	58			(69		)	(17		)
Increase (decrease) in
Accounts payable	(93		)	(48		)	(68		)	(70		)
Accounts payable to affiliated companies	12			14			33			14
Taxes accrued	(51		)	11			5			(61		)
Other current liabilities	(6		)	8			(4		)	10
Other assets	(4		)	(4		)	(13		)	(9		)
Other liabilities	(4		)	(5		)	7			(2		)
Net cash provided by operating activities	317			464			332			320
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(751		)	(497		)	(438		)	(480		)
Contributions to equity method investments	(16		)	—			—			(16		)
Notes receivable from affiliated companies	—			(11		)	—			(16		)
Other	(10		)	(5		)	(11		)	(6		)
Net cash used in investing activities	(777		)	(513		)	(449		)	(518		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	596			100			394			596
Payments for the redemption of long-term debt	(350		)	—			—			(350		)
Notes payable to affiliated companies	64			(364		)	(277		)	(198		)
Capital contributions from parent	150			300			—			150
Net cash provided by financing activities	460			36			117			198
Net decrease in cash and cash equivalents	—			(13		)
Net increase in cash and cash equivalents							—			—
Cash and cash equivalents at beginning of period	—			19			—			—
Cash and cash equivalents at end of period	$	—		$	6		$	—		$	—
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	121		$	89		$	98		$	115

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								Three Months Ended June 30, 2019 and 2020
	Common		Retained			Total			Common		Retained			Total
(in millions)	Stock		Earnings			Equity			Stock		Earnings			Equity
Balance at June 30, 2018	$	1,160	$	904		$	2,064
Balance at March 31, 2019									$	1,160	$	1,053		$	2,213
Net loss	—		(21		)	(21		)	—		(7		)	(7		)
Balance at September 30, 2018	$	1,160	$	883		$	2,043
Contribution from parent									150		—			150
Balance at June 30, 2019									$	1,310	$	1,046		$	2,356

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
Balance at March 31, 2020									$	1,310	$	1,310		$	2,620
Net income									—		2			2
Balance at June 30, 2020									$	1,310	$	1,312		$	2,622

	Nine Months Ended September 30, 2018 and 2019								Six Months Ended June 30, 2019 and 2020
	Common		Retained			Total			Common		Retained			Total
(in millions)	Stock		Earnings			Equity			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		$	1,160	$	931		$	2,091
Net income	—		97			97			—		115			115
Contribution from parent	150		—			150			150		—			150
Balance at September 30, 2019	$	1,310	$	1,028		$	2,338
Balance at June 30, 2019									$	1,310	$	1,046		$	2,356

Balance at December 31, 2019									$	1,310	$	1,133		$	2,443
Net income									—		180			180
Other									—		(1		)	(1		)
Balance at June 30, 2020									$	1,310	$	1,312		$	2,622

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 declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The extent to which the COVID-19 pandemic will impact the Duke Energy Registrants during 2020 and beyond is uncertain, and the Duke Energy Registrants are monitoring developments closely. The company incurred approximately $34 million and $40 million of incremental COVID-19 costs for the three and six months ended June 30, 2020, respectively, included in Operation, maintenance and other on the Condensed Consolidated Statements of Operations. These costs were primarily bad debt expense, personal protective equipment and cleaning supplies. Further the company experienced approximately another $25 million of waived late payment fees for the three and six months ended June 30, 2020. See Notes 3, 5, 11, 12 and 15 for additional information as well as steps taken to mitigate the impacts to our business and customers from the COVID-19 pandemic.

OTHER CURRENT ASSETS

Included in Other within Current Assets on the Piedmont Condensed Consolidated Balance Sheets are income taxes receivable of $22 million and $14 million as of June 30, 2020, and December 31, 2019, respectively, and prepaid assets of $19 million and $3 million as of June 30, 2020, and December 31, 2019, respectively. The income taxes receivable relates to increases of net operating losses for Piedmont and intercompany tax settlements. The prepaid assets relate to natural gas storage injections and inventory transfers classified as prepaid assets until winter season when the gas is moved to Inventory on the Piedmont Condensed Consolidated Balance Sheets under certain agreements.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

OTHER CURRENT LIABILITIES

During the second quarter of 2020, Duke Energy recorded a current liability related to the abandonment of ACP within Current Liabilities in the Gas Utilities and Infrastructure segment. The liability represents Duke Energy's obligation to fund ACP's obligations of outstanding debt and satisfy ARO requirements to restore construction sites. As a result, Liabilities associated with unconsolidated affiliates is $920 million, and exceeds 5% of Total current liabilities on the Duke Energy Condensed Consolidated Balance Sheets as of June 30, 2020. See Notes 3, 4 and 11 for further information.

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.

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 over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of ~~profit~~income or loss allocated to each owner for the reporting period. ~~Duke Energy’s North Rosamond solar farm commenced commercial operations resulting in~~The following table presents cash received for the ~~allocation~~sale of noncontrolling interest to tax equity members and allocated losses to ~~the~~ noncontrolling tax equity members ~~of $12 million and $86 million~~utilizing the HLBV method for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively, utilizing the HLBV method.~~2020, and 2019.



	Three Months Ended				Six Months Ended
(in millions)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Cash received for the sale of noncontrolling interest to tax equity members	$	60	$	187	$	163	$	193
Allocated losses to noncontrolling tax equity members utilizing the HLBV method	79		83		128		90



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

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 13~~Notes 9 and 11 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						June 30, 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	$	341	$	78	$	20	$	311	$	48	$	17
Other	163		16		16		141		39		39		193		31		31		222		39		39
Other Noncurrent Assets
Other	40		38		—		8		6		—		107		102		—		40		39		—
Total cash, cash equivalents and restricted cash	$	582	$	136	$	40	$	591	$	112	$	75	$	641	$	211	$	51	$	573	$	126	$	56

~~INVENTORY~~

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

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
Materials and supplies $ 2,284
$ 749
$ 1,056
$ 710
$ 346
$ 75
$ 325
$ 4
Coal 490
153
172
118
54
12
152
—
Natural gas, oil and other fuel 333
41
206
111
95
41
1
43
Total inventory $ 3,107
$ 943
$ 1,434
$ 939
$ 495
$ 128
$ 478
$ 47
44

December 31, 2018
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Materials and supplies $ 2,238
$ 731
$ 1,049
$ 734
$ 315
$ 84
$ 312
$ 2
Coal 491
175
192
106
86
14
109
—
Natural gas, oil and other fuel 355
42
218
114
103
28
1
68
Total inventory $ 3,084
$ 948
$ 1,459
$ 954
$ 504
$ 126
$ 422
$ 70

~~NEW ACCOUNTING STANDARDS~~

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



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

INVENTORY

~~Leases.~~ ~~In February 2016,~~Provisions for inventory write-offs were not material at June 30, 2020, and December 31, 2019. The components of inventory are presented in the ~~FASB issued revised~~tables below.



	June 30, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,220	$	769	$	1,014	$	682	$	333	$	83	$	254	$	5
Coal	776		271		257		189		68		13		234		—
Natural gas, oil and other fuel	293		40		195		109		85		33		1		24
Total inventory	$	3,289	$	1,080	$	1,466	$	980	$	486	$	129	$	489	$	29



	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
Materials and supplies	$	2,297	$	768	$	1,038	$	686	$	351	$	79	$	318	$	5
Coal	586		187		186		138		48		15		198		—
Natural gas, oil and other fuel	349		41		199		110		90		41		1		67
Total inventory	$	3,232	$	996	$	1,423	$	934	$	489	$	135	$	517	$	72

NEW ACCOUNTING STANDARDS

The following 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 ofstandard was adopted by the Duke Energy Registrants in 2020.

Current Expected Credit Losses. In June 2016, the Financial Accounting Standards Board (FASB) issued new accounting guidance for ~~the period ended September 30, 2019, and an immaterial impact to the~~credit losses. Duke Energy ~~Registrants' results of operations~~adopted the new accounting guidance 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~~June 30, ~~2019.~~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~~



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

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 use of optional expedients outlined in the new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that extend beyond 2021. The full outcome of the transition away from LIBOR cannot be determined at this time, but is not expected to have a material impact ~~of adopting this standard.~~on the financial statements.

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,~~In 2020, 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~~plant 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~~asset was not impaired because the carrying value of ~~$160~~$155 million approximates the aggregate estimated future cash flows and therefore further testing was not required. A continued decline in energy market pricing would likely result in a future impairment. Duke Energy retained 51% ownership interest in this facility following the 2019 transaction to sell a minority interest in certain renewable assets.

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																	Three Months Ended June 30, 2020
	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	$	6,569	$	225	$	138	$	6,932	$	8		$	—		$	6,940		$	5,026	$	265		$	123	$	5,414		$	7		$	—		$	5,421
Intersegment revenues	8		24		—		32		17			(49		)	—			8		24			—		32			19			(51		)	—
Total revenues	$	6,577	$	249	$	138	$	6,964	$	25		$	(49	)	$	6,940		$	5,034	$	289		$	123	$	5,446		$	26		$	(51	)	$	5,421
Segment income (loss)^(a)	$	1,385	$	26	$	40	$	1,451	$	(124	)	$	—		$	1,327		$	753	$	(1,576	)	$	90	$	(733	)	$	(84	)	$	—		$	(817	)
Add back noncontrolling interests^(b)															(19		)
Add back preferred stock dividend															15
Net income															$	1,323
Less: Noncontrolling interests^(c)																																		90
Add: Preferred stock dividend																																		15
Net Loss																																		$	(892	)
Segment assets	$	133,296	$	13,424	$	5,278	$	151,998	$	3,734		$	185		$	155,917		$	136,724	$	13,072		$	6,386	$	156,182		$	3,874		$	(7	)	$	160,049


	Three Months Ended September 30, 2018																		Three Months Ended June 30, 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	$	6,253	$	232	$	127		$	6,612	$	16		$	—		$	6,628		$	5,467	$	282	$	118	$	5,867	$	6		$	—		$	5,873
Intersegment revenues	7		24		—			31		18			(49		)	—			8		24		—		32		19			(51		)	—
Total revenues	$	6,260	$	256	$	127		$	6,643	$	34		$	(49	)	$	6,628		$	5,475	$	306	$	118	$	5,899	$	25		$	(51	)	$	5,873
Segment income (loss)^(e)	$	1,167	$	17	$	(62	)	$	1,122	$	(44	)	$	—		$	1,078		$	809	$	40	$	86	$	935	$	(115	)	$	—		$	820
Add back noncontrolling interests																(16		)
Loss from discontinued operations, net of tax																4
Net income																$	1,066
Less: Noncontrolling interests^(c)																																	84
Add: Preferred stock dividend																																	12
Net Income																																	$	748

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



	Six Months Ended June 30, 2020
	Electric		Gas					Total
	Utilities and		Utilities and			Commercial		Reportable
(in millions)	Infrastructure		Infrastructure			Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	10,200	$	905		$	252	$	11,357	$	13		$	—		$	11,370
Intersegment revenues	17		48			—		65		36			(101		)	—
Total revenues	$	10,217	$	953		$	252	$	11,422	$	49		$	(101	)	$	11,370
Segment income (loss)^(a)(b)	$	1,458	$	(1,327	)	$	147	$	278	$	(196	)	$	—		$	82
Less: Noncontrolling interests^(c)																138
Add: Preferred stock dividend																54
Net Loss																$	(2	)


	Nine Months Ended September 30, 2018																		Six Months Ended June 30, 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		$	10,788	$	1,014	$	224	$	12,026	$	10		$	—		$	12,036
Intersegment revenues	23		72		—			95		54			(149		)	—			16		48		—		64		36			(100		)	—
Total revenues	$	16,806	$	1,301	$	347		$	18,454	$	101		$	(149	)	$	18,406		$	10,804	$	1,062	$	224	$	12,090	$	46		$	(100	)	$	12,036
Segment income (loss)^(h)	$	2,492	$	161	$	(4	)	$	2,649	$	(446	)	$	—		$	2,203		$	1,559	$	266	$	99	$	1,924	$	(204	)	$	—		$	1,720
Add back noncontrolling interests																(12		)
Loss from discontinued operations, net of tax																(1		)
Net income																$	2,190
Less: Noncontrolling interests^(c)																																	91
Add: Preferred stock dividend																																	12
Net Income																																	$	1,641


(a)	~~Electric~~Gas Utilities and Infrastructure includes ~~a reduction~~$2.0 billion of ~~a prior year impairment at Citrus County CC~~pretax costs related to the ~~plant's cost cap.~~abandonment of its ACP investment recorded within Equity in (losses) earnings of unconsolidated affiliates on the Condensed Consolidated Statements of Operations. See Notes 1, 3 and Note 11 for additional information.


(b)	Other includes a $98 million reversal, included in Operations, maintenance and other on the Condensed Consolidated Statements of Operations, of 2018 severance costs due to the partial settlement of the Duke Energy Carolina's 2019 North Carolina rate case. See Note 3 for additional information.


~~(b)~~(c)	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 June 30, 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	$	330	$	93	$	423	$	—		$	—		$	423
Segment income/Net (loss) income	$	62	$	13	$	75	$	(1	)	$	—		$	74	$	44	$	23	$	67	$	(1	)	$	—		$	66
Segment assets	$	6,107	$	3,049	$	9,156	$	30		$	(3	)	$	9,183	$	6,378	$	3,213	$	9,591	$	26		$	(8	)	$	9,609


	Three Months Ended September 30, 2018										Three Months Ended June 30, 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	$	336	$	97	$	433	$	—		$	433
Segment income/Net income	$	85	$	12	$	97	$	3	$	100
Segment income/Net (loss) income											$	31	$	17	$	48	$	(1	)	$	47

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											Six Months Ended June 30, 2020
	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	$	1,055	$	361	$	1,416	$	36		$	1,452	$	676	$	245	$	921	$	—		$	921
Segment income/Net (loss) income^(a)	$	157	$	64	$	221	$	(100	)	$	121	$	74	$	59	$	133	$	(2	)	$	131

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



	Six Months Ended June 30, 2019
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	691	$	273	$	964	$	—		$	964
Segment income/Net (loss) income	$	67	$	52	$	119	$	(3	)	$	116

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.

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. On March 19, 2020, the NCUC issued an order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency (as defined by Executive Order No. 116) and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, Duke Energy Carolinas and Duke Energy Progress filed a request with the NCUC ~~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 May 30, 2020, the governor issued ~~an order requesting comments on the deferral positions.~~ Executive Order No. 142, which extended effective period for Executive Order No. 124 to July 29, 2020. Executive Order No. 142 was not extended.

On ~~March 5, 2019, the North Carolina Public Staff (Public Staff) filed comments. On April 2, 2019,~~July 10, 2020, Duke Energy Carolinas and Duke Energy Progress filed ~~reply comments, which included revised estimates~~a petition with the NCUC for clarification regarding when they may begin working with customers on establishing payment arrangements for arrears accumulated since March 13, 2020. On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of ~~approximately $553 million in incremental operation~~Arrearages Pursuant to Special Repayment Plans. The order contained the following: 1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; 2) the late fee moratorium will continue through the end of the state of emergency or until further order of the commission; 3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and ~~maintenance expenses ($171 million~~4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and ~~$382 million for~~ including August 31, 2020, may proceed subject to conditions.

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 thatfiled a joint petition on August 7, 2020, with the NCUC ~~consolidate its pending~~for deferral ~~request with its general rate case filed on that date. On October 30, 2019, Duke Energy Progress requested that~~treatment of incremental costs and waived customer fees due to the ~~NCUC consolidate its pending deferral request with its general rate case filed on that date.~~COVID-19 pandemic. 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 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.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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 six 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 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 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 a quarterly basis; and (4) include any other matters that the PSCSC believes should be addressed. On May 14, 2020, the PSCSC adopted the ORS' motion.

On May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Duke Energy Carolinas and Duke Energy Progress filed a ~~deferral request for these storms~~report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. Duke Energy Carolinas and Duke Energy Progress are evaluating a filing with the PSCSC ~~on January 11, 2019, which also included a request~~ for deferral treatment of incremental costs and waived customer fees due to the ~~continuation of prior deferrals requested for ice storms~~COVID-19 pandemic. Duke Energy Carolinas and ~~Hurricane Matthew, and on January 30, 2019, the PSCSC issued a directive approving the deferral request, followed by an order issued on February 21, 2019. On March 15, 2019,~~ 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. Lee CC, grid improvement projects, AMI, investments in customer service technologies, costs of complying with CCR regulations and the Coal Ash Act and recovery of costs related to licensing and development of the Lee Nuclear Station.

million. On February 28, 2018, Duke Energy Carolinas and the North Carolina Public Staff (Public Staff) filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9% 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~~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 alsoother parties separately 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.Court. 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 a 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.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: 1) a hearing on issues common to both rate cases conducted remotely; 2) a hearing on Duke Energy Carolinas specific rate case issues conducted in person, followed immediately by; 3) a hearing on Duke Energy Progress specific rate case issues conducted in person. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff and requesting a postponement of the evidentiary hearing until August 24, 2020. The NCUC granted the joint motion on July 27, 2020. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement.

On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:

A return on equity of 9.6% and a capital structure of 52% equity and 48% debt;

Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;

Agreement on the inclusion of plant in service and other revenue requirement updates through May 31, 2020, subject to Public Staff review. Annual revenue requirement associated with the May 31 update is estimated at $45 million; and

Settlement on certain grid deferral projects of $0.8 billion and agreement to withdraw Duke Energy Carolinas' request for deferral of remaining grid projects of $0.5 billion.

The remaining items to be litigated at hearing include recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and amortization of the hydro station sale. As a result of the additional settlement terms, the NCUC ordered the Duke Energy Carolinas and Duke Energy Progress remote, consolidated evidentiary hearing to be delayed until August 24, 2020.

On August 4, 2020, Duke Energy Carolinas, filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates is based on and consistent with the base rate component of the Second Partial Settlement with the Public Staff and excludes the items to be litigated noted above. Duke Energy Carolinas will not begin the amortization or implementation of these items until a final order is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Carolinas also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Carolinas on a permanent basis. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020.

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 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).

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 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. The Stipulation was approved by the PSCSC on June 19, 2019.million.

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, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. 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~~was subsequently 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.

million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9% 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, the North Carolina Attorney General and the Sierra Club filed ~~a Notice~~notes of ~~Cross Appeal~~appeal to the North Carolina Supreme Court from the NCUC's February 23, 2018, 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. Court.

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 June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:

Removal of deferred storm costs from the rate case;

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

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

Agreement that the Asheville CC project is complete and in service and agreement on the amount to be included in rate base; and

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

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. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: 1) a hearing on issues common to both rate cases conducted remotely; 2) a hearing on Duke Energy Carolinas specific rate case issues conducted in person, followed immediately by; 3) a hearing on Duke Energy Progress specific rate case issues conducted in person. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff and requesting a postponement of the evidentiary hearing until August 24, 2020. The NCUC granted the joint motion on July 27, 2020.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:

A return on equity of 9.6% and a capital structure of 52% equity and 48% debt;

Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;

Settlement on certain grid deferral projects of $0.5 billion and agreement to withdraw Duke Energy Progress' request for deferral of remaining grid projects of $0.5 billion.

The remaining items to be litigated at hearing include recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates. As a result of the additional settlement terms, the NCUC ordered the Duke Energy Progress and Duke Energy Carolinas remote, consolidated evidentiary hearing to be delayed until August 24, 2020.

On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates is based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excludes items to be litigated noted above. Duke Energy Progress will not begin the amortization or implementation of these items until a final determination is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Progress also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Progress on a permanent basis.

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~~$165 million with an additional ~~$10~~$4 million in capital investments made for restoration efforts. Approximately ~~$182~~$139 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~~June 30, ~~2019. The balance~~2020, and December 31, 2019, respectively. A request for an accounting order to defer incremental storm costs associated with Hurricane Dorian was included in Duke Energy Progress' October 30, 2019, general rate case filing with the NCUC. Terms of the June 2, 2020, Agreement and Stipulation of Partial Settlement removed incremental storm costs from the general rate case. A petition seeking to securitize these costs will be filed within 120 days of an NCUC order in the general rate case. 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 April 7, 2020. On July 1, 2020, Duke Energy Progress filed a supplemental true up reducing the ~~Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019.~~actual costs to $17 million.

2018 South Carolina Rate Case

On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million, which represents 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 that costs incurred for the GIP after January 1, 2019, will be deferred with a return, with all costs subject to evaluation in a future rate proceeding, and that Duke Energy Progress will 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.million.

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

Approval of recovery of $4 million 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%.



FINANCIAL STATEMENTS	REGULATORY MATTERS

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the 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 on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme ~~Court.~~Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. 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~~retired the ~~existing~~376-MW Asheville coal-fired plant on January 29, 2020, at which time the ~~construction~~net book value, including associated ash basin closure costs, of ~~two 280‑MW combined-cycle natural gas plants having dual-fuel capability, with~~$214 million was transferred from Generation facilities to be retired, net to Regulatory assets within Current Assets and Other Noncurrent Assets on the ~~option to build a third natural gas simple~~Condensed Consolidated Balance Sheets.

On December 27, 2019, Asheville Combined Cycle Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator and the common systems that serve combined cycle unit in 2023 based upon the outcome of initiatives to reduce the region's power demand. The plan also included upgrades to existing transmission lines and substations, installation of solar generation and a pilot battery storage project. These investments will be made within the next seven years.units went into commercial operation. Duke Energy Progress ~~worked~~placed the Unit 7 Combustion Turbine into commercial operation in simple-cycle mode on January 15, 2020. The Unit 8 Steam Turbine Generator went into commercial operation on April 5, 2020. On June 2, 2020, Duke Energy Progress filed a request with the ~~local natural gas distribution company to upgrade and lease~~PSCSC for an ~~existing natural gas pipeline to serve~~accounting order for the ~~natural gas~~deferral of post-in-service costs incurred in connection with the addition of the Asheville combined cycle generating plant. The ~~lease for~~petition requested the ~~new pipeline became effective on March 2, 2019.~~

~~On March 28, 2016, the NCUC issued~~PSCSC issue an accounting order ~~approving a CPCN for the new combined-cycle natural gas plants, but is requiring~~authorizing Duke Energy Progress to ~~refile for CPCN approval for~~defer post-in-service costs including the ~~contingent simple cycle unit.~~Asheville combined cycle’s depreciation expense, property taxes, incremental O&M and carrying costs at WACC of approximately $8 million annually. On ~~March 28, 2019, Duke Energy Progress filed an annual progress report for~~June 17, 2020, the ~~construction of~~PSCSC voted to approve the ~~combined-cycle plants with the NCUC, with an estimated cost of $893 million. Site preparation activities for the combined-cycle plants are complete~~petition and ~~construction of these plants began in 2017, with an expected in-service date in late 2019.~~issued its final order on July 6, 2020.

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

~~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~~A hearing to be retired, net on Duke Energy Progress' Condensed Consolidated Balance Sheets as of September 30, 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 byupdate the NCUC on ~~February 23, 2018.~~the status of the project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in December 2020.

FERC Return on Equity Complaint

On October 11, 2019, North Carolina Eastern Municipal Power Agency ~~(Power Agency)~~(NCEMPA) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA). ~~The complaint alleges that the return on equity component in the formula rate contained within~~Duke Energy Progress provides NCEMPA with service under the Full Requirements Power Purchase Agreement (FRPPA). The complaint alleges that the 11% stated return on equity (ROE) component contained in the FRPPA’s demand formula rate is unjust and unreasonable. ~~The FRPPA’s return on equity is 11% as applied to~~On July 16, 2020, the ~~Production Capacity Rate~~FERC set this matter for ~~the full requirements service provided by Duke Energy Progress. The complaint does not definitively propose~~hearing and settlement judge procedures and established a ~~replacement return on equity. Under FPA Section 206, the earliest~~ refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for variation to the base transmission-related ROE methodology developed in Order No. 569-A, through the introduction of “specific facts and circumstances” involving the parties to this case. It is Duke Energy Progress’ view that, ~~FERC can establish is the date~~in consideration of the ~~filing~~specific facts and circumstances of risks under the provisions of the ~~complaint. The complaint could raise risks across~~FRPPA, the ~~Duke Energy Progress wholesale business because, depending on how FERC treats Power Agency’s complaint, other parties may come forward with similar complaints.~~stated 11% ROE applied to NCEMPA’s metered billing demand is just and reasonable. Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Florida

COVID-19 Filings

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 Florida related to the 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 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 filed a request to 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 April 2, 2020, Duke Energy Florida filed a petition with the FPSC to accelerate a $78 million fuel cost refund to customers in the month of May 2020. Typically, the refund would be made over the course of 2021. The FPSC approved the petition on April 28, 2020.



FINANCIAL STATEMENTS	REGULATORY MATTERS

~~Duke Energy Florida~~

Storm Restoration Cost Recovery

In September 2017, Duke Energy Florida’s service territory suffered significant damage from Hurricane Irma, resulting in approximately 1 million customers experiencing outages. In the fourth quarter of 2017, Duke Energy Florida also incurred preparation costs related to Hurricane Nate. On December 28, 2017, Duke Energy Florida filed a petition with the FPSC to recover incremental storm restoration costs for Hurricane Irma and Hurricane Nate and to replenish the storm reserve. On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filed 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 January 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 Storm 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.

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 million. Approximately $85 million and $35 million of the costs are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of September 30, 2019, and December 31, 2018, respectively. Approximately $220 million and $165 million of costs are included in Regulatory assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of September 30, 2019, and December 31, 2018, 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~~$223 million of estimated retail ~~portion of~~ incremental storm restoration costs for Hurricane ~~Michael. The estimated recovery amount is approximately $221 million. On June 11, 2019,~~Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition ~~for recovery of incremental storm restoration costs related to Hurricane Michael.~~on June 11, 2019. The FPSC also approved ~~the stipulation Duke Energy Florida filed, which will allow~~allowing 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~~amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately $3 million, resulting in ~~2019.~~a total request to recover $188 million actual retail recoverable storm restoration costs, plus interest. An Order Establishing Procedure was issued on January 30, 2020, and hearings are scheduled to begin September 15, 2020. Approximately $163 million and $204 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of June 30, 2020, and December 31, 2019, respectively. 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~~filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs ~~to secure necessary resources~~for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. Approved storm costs are currently expected to be ~~prepared for that potential impact. Although Hurricane Dorian never made landfall~~recovered over a 12-month period with rates effective in ~~Florida, affects were still felt,~~March 2020 and ~~outages did occur. Preparations were required so that, if Hurricane Dorian had made landfall~~subject to true up. The final actual amount will be filed later in 2020 and ~~impacts had been more severe, Duke Energy Florida would have been prepared~~the FPSC will hold a hearing to ~~restore its customers’ power in a timely fashion.~~

~~Total current estimated~~determine the final amount of incremental ~~costs are approximately $153 million. These~~costs. Approximately $95 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~~June 30, 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~~cannot predict the outcome of this matter.

Clean Energy Connection

On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to ~~recover these costs, consistent~~support cost effective solar development in Florida. Participants will pay a subscription fee based on per kilowatt-subscriptions and receive a credit on their bill based on the generation associated with their portion of the ~~provisions~~solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next four years, and this investment will be included in base rates offset by the revenue from the subscription fees. The credits will be included for recovery in the ~~2017 Settlement.~~fuel cost recovery clause. 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 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.

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 is $13 million and $8 million, respectively, with projected in-service dates in the fourth quarter of 2019. The DeBary Project has a projected annual revenue requirement of $11 million and a projected in-service date in the first 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.

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), which was received on April 1, 2020, 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. The FPSC held the hearing on July 7-9, 2020, and is expected to vote on the petition at its August 18 Agenda Conference. Duke Energy Florida cannot predict the outcome of this matter.

~~Citrus County CC~~Storm Protection Plan

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, andOn April 10, 2020, Duke Energy Florida ~~recorded Impairment charges on Duke Energy’s Consolidated Statements of Operations of $60 million in~~filed its initial Storm Protection Plan (SPP) with the ~~fourth quarter of 2018~~FPSC. The SPP outlines storm protection programs over a 10-year planning period intended to enhance the existing infrastructure for the ~~overrun. In September 2019,~~purpose of reducing restoration costs and reducing outage times associated with extreme weather conditions therefore improving overall service reliability. The FPSC will hold a hearing to determine whether to approve, deny, or approve the SPP with modifications beginning on August 10, 2020. On July 31, 2020, Duke Energy Florida ~~recorded~~entered into a ~~$25 million reduction to a prior-year impairment due to a decrease~~settlement with certain intervenors in support of this filing. Duke Energy Florida cannot predict the ~~cost estimate~~outcome of ~~the Citrus County CC, primarily related to the settlement agreement with Fluor, the EPC contractor. See Note 4 for additional information.~~this matter.

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 May 4, 2020, Duke Energy Ohio filed a motion to suspend payment rules to enable proactive outreach to residential customers offering additional options for managing their utility bills. PUCO found the proposal to address the state of emergency and the accompanying waivers reasonable and directed Duke Energy Ohio to work with the PUCO Staff on a comprehensive plan for resumption of activities and operations, to be filed 45 days before resumption of activities. The transition plan was filed on June 26, 2020, and approved by the PUCO on July 29, 2020.

On April 16, 2020, Duke Energy Ohio filed an application for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. On June 17, 2020, the PUCO denied Duke Energy Ohio's application for a reasonable arrangement and ordered the Duke Energy Ohio to work with the PUCO Staff on payment arrangements for impacted nonresidential customers.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On May 11, 2020, Duke Energy Ohio filed with the PUCO a request seeking deferral of incremental costs incurred, as well as specific miscellaneous lost revenues using existing 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. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application. The commission denied the accrual of carrying costs and ordered Duke Energy Ohio to also track potential savings experienced as a result of COVID-19.

Duke Energy Kentucky COVID-19

In response to the COVID-19 pandemic, on March 6, 2020, Governor Andy Beshear 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. The KPSC also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers if necessary. In response, Duke Energy Kentucky has ceased all disconnections except for safety-related concerns and is waiving late payment and reconnection fees. On June 23, 2020, the KPSC issued data requests to all jurisdictional utilities seeking information on customer bill impacts, arrearages, bad debt and incremental costs and savings due to COVID-19. Responses were filed on July 21, 2020. Duke Energy Kentucky cannot predict the outcome of this matter.

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~~that 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~~approved 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 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 September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the Ohio Consumers' Counsel (OCC), respectively, 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.~~error. On ~~September 16, 2019,~~March 13, 2020, the ~~Office~~Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the ~~Ohio Consumers' Counsel (OCC) filed an appeal challenging~~PUCO's December 19, 2018 order approving 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. 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. Duke Energy Ohio cannot predict the outcome of this matter.



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

stipulation. The case has been resolved.

Electric Base Rate Case

Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio requested an estimated annual increase of approximately $15 million and a return on equity of 10.4%. 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 Power Future Initiatives Rider (formerly PowerForward ~~Rider~~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 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 September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC, respectively, 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.~~error. On ~~September 16, 2019,~~March 13, 2020, the ~~OCC filed an appeal challenging~~Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the ~~PUCO’s approval~~Supreme Court of ~~OVEC recovery through Rider PSR alleging~~Ohio dismissed all remaining appeals of the ~~FPA pre-empts~~PUCO's December 19, 2018 order approving the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. 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. Duke Energy Ohio cannot predict 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 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 September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC 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.~~error. On ~~September 16, 2019,~~March 13, 2020, the ~~OCC filed an appeal challenging~~Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the ~~PUCO’s approval~~Supreme Court of ~~OVEC recovery through Rider PSR alleging~~Ohio dismissed all remaining appeals of the ~~FPA pre-empts~~PUCO's December 19, 2018 order approving the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. 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. Duke Energy Ohio cannot predict the outcome of this matter.stipulation. The case has been resolved.

On July 23, 2019, ~~an Ohio bill~~House Bill 6 (HB6) was signed into law that ~~will be~~became effective January 1, 2020. Among other things, the bill allows for funding of two nuclear generating facilities located in Northern Ohio through a charge on utility bills owned by Energy Harbor (f/k/a FirstEnergy Solutions), repeal of energy efficiency mandates, and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery 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 –~~ In July 2020, legislation to repeal HB 6 has been proposed in both the Ohio

~~On July 25, 2018,~~ House and Senate. Duke Energy Ohio ~~filed an application to establish a new rider to implement~~cannot predict the ~~benefits~~outcome 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.this matter.



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,~~February 26, 2020, the PUCO issued an ~~Entry~~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 ~~Rehearing denying~~ the final true up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing ~~applications.~~for further consideration.

On June ~~15, 2016,~~8, 2020, Duke Energy Ohio filed an application ~~for approval of~~to implement a ~~three-year~~voluntary energy efficiency ~~and peak demand reduction~~program portfolio to commence on January 1, 2021. The application proposes a mechanism for recovery 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 allprogram costs, lost margins and a ~~cap on~~ shared savings incentive mechanism similar to those previously approved by the PUCO. On June 17, 2020, the PUCO, on its own motion, struck Duke Energy Ohio’s proposal to include a shared savings mechanism in its plan finding such incentives are not permissible or supportable under Ohio law. On June 26, 2020, Duke Energy Ohio ~~has offered~~withdrew 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.application.

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~~ and that construction of 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~~pipeline extension is expected to ~~establish a procedural schedule and filed supplemental information supporting its application. On December 18, 2018,~~be completed before the ~~OPSB established a procedural schedule that included a local public hearing on March 21, 2019.~~2021/2022 winter season. An evidentiary hearing ~~began on April 9, 2019,~~for a Certificate of Environmental Compatibility and Public Need 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. On February 20, 2020, the OPSB denied the rehearing requests. On April 15, 2020, Joint Appellants filed a notice of appeal at the Supreme Court of Ohio of the ~~pipeline extension is expected to be completed before the 2021/2022 winter season.~~OPSB’s decision approving Duke Energy Ohio’s Central Corridor application. On June 4, 2020, the OPSB filed a motion to dismiss claims raised by one of the Joint Appellants and to suspend the briefing schedule while the court considers the motion to dismiss. On August 5, 2020, the Supreme Court of Ohio ~~expects~~dismissed one of the Joint Appellants from the appeal and established a ~~decision by the end of 2019.~~new briefing schedule, with appellants' briefs due in 20 days. 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~~2 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~~concluded on November ~~18,~~21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.

On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. On July 23, 2020, the staff recommended a disallowance of approximately $4 million for work the staff believes occurred in areas not authorized for recovery. Additionally, the staff recommended insurance proceeds, net of litigation costs and attorney fees, should be reimbursed to customers and not be held by Duke Energy Ohio until all investigation and remediation is complete. 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 the deferral of 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.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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.million. On January 31, 2020, Duke Energy Kentucky ~~seeks~~filed rebuttal testimony updating its rate increase calculations to ~~implement~~approximately $44 million. Hearings concluded on February 20, 2020, and briefing was completed March 20, 2020. On April 27, 2020, the KPSC issued its decision approving a ~~Storm Deferral Mechanism that will enable~~$24 million increase for Duke Energy Kentucky ~~to defer actual costs incurred for~~with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major ~~storms that are over or under amounts in base rates. In response to large customers’ desire to have access to renewable resources,~~storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky ~~is proposing a Green Source Advantage tariff designed~~filed its motion for ~~those large customers that wish to invest~~rehearing and on June 4, 2020, the motion was granted in ~~renewable energy resources to meet sustainability goals.~~part and denied in part by the KPSC. On August 6, 2020, Duke Energy Kentucky ~~is proposing an electric vehicle (EV) infrastructure pilot~~submitted a letter to the commission submitting the case for decision without hearing. On August 6, 2020, the Kentucky Attorney General also filed a letter requesting to submit the rehearing case for decision without hearing. The Attorney General’s letter also stated that the commission’s reduction to the company’s forecasted capital in its initial order was overstated and ~~modest incentives to assist customers~~should be corrected, resulting in ~~investing in EV technologies. Additionally, Duke Energy Kentucky is proposing to build~~ an approximate 5.5 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.~~Duke Energy Kentucky anticipates that rates will go into effect~~$5 million increase in the ~~second quarter of 2020.~~company’s revenue requirement. 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. Subsequently, the governor issued Executive Orders Nos. 20-17, 20-25, 20-30 and 20-34, each renewing the public health disaster emergency declaration for an additional 30 days, which is currently extended through September 2, 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. On June 29, 2020, the IURC issued an order in Phase 1 wherein it extended the disconnection moratorium for jurisdictional utilities until August 14, 2020, along with requiring six month payment arrangements, waiver of late fees, reconnection fees, convenience fees and deposits. The IURC permitted jurisdictional utilities to use regulatory accounting for any impacts associated with the prohibition on utility disconnections, waiver or exclusion of certain utility fees (i.e., late fees, convenience fees, deposits, and reconnection fees), the use of expanded payment arrangements to aid customers, and for COVID-19 related uncollectible and incremental bad debt expense. The IURC did not permit recovery of lost revenues due to load reduction or carrying costs. In Phase 2 filings, individual utilities may choose to request regulatory accounting for other COVID-19 related operation and maintenance costs wherein evidence of the impact of any costs or offsetting savings can be presented and considered in an evidentiary hearing. 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~~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, ~~is driven by strategic investments to generate cleaner electricity, improve reliability~~including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued the order in the rate case approving a revenue increase of $146 million before certain adjustments and ~~serve~~ratemaking refinements. The order provided for an overall cost of capital of 5.7% based on a ~~growing customer base. The request is premised upon~~9.7% return on equity and a 53% equity component of the capital structure, and approved Duke Energy ~~Indiana~~Indiana’s requested forecasted rate base of $10.2 billion as of December 31, ~~2018, and adjusted for projected changes through December 31, 2020. On September 9, 2019,~~2020, including the Edwardsport IGCC Plant. The IURC reduced Duke Energy ~~Indiana revised its revenue~~Indiana’s request ~~from $395~~by slightly more than $200 million, ~~to $393 million and filed updated testimony~~when accounting for the ~~Retail Rate Case. The updated filing reflects~~utility receipts tax and other adjustments. Approximately 50% of the reduction is due to a ~~clarification~~prospective change in depreciation and use of regulatory asset for the ~~presentation of Utility Receipts Tax, a $2 million reduction in~~end-of-life inventory at retired generating plants, approximately 20% is due to 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 itemapproved 9.7% return on ~~the customer bill rather than included in rates. The request is an approximate 15% increase in retail revenues~~equity versus requested 10.4% and approximately ~~17% when including estimated Utility Receipts Tax. Hearings are expected~~20% is related to ~~commence in early 2020, with~~miscellaneous earnings neutral adjustments. The rates ~~to be~~were effective ~~by mid-2020.~~July 30, 2020. Several groups filed notices of appeal of the IURC order on July 29, 2020. Duke Energy Indiana cannot predict the outcome of this matter.

2020 Indiana Coal Ash Recovery Case

In Duke Energy Indiana’s rate case, the IURC approved coal ash basin closure costs expended through 2018 including financing costs as a regulatory asset and included in rate base. The IURC opened a subdocket to deal with the post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing 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. On March 19, 2020, the NCUC issued on ~~Equity Complaint~~

~~Customer groups have~~order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency (as defined by Executive Order No. 116) and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, 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 ~~its transmission-owning members,~~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 ~~Duke Energy Indiana, alleging, among other things, that~~re-establishment of credit; and (4) the ~~current base rate~~fees and charges associated with the use of ~~return~~credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted Piedmont’s request on ~~equity earned by MISO transmission owners of 12.38% is unjust and unreasonable. The complaints claim, among other things, that~~March 20, 2020.

On March 31, 2020, the ~~current base rate of return on equity earned by MISO transmission owners should be reduced~~governor issued Executive Order No. 124, which, in addition to ~~8.67%. On January 5, 2015,~~requiring the FERC issued an order accepting the MISO transmission owners' adder of 0.5% to the base rate of return on equity based on participation in an RTO subject to it being applied to a return on equity that is shown to be just and reasonablesteps in the ~~pending return on equity complaints.~~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 ~~December 22, 2015,~~May 30, 2020, the ~~presiding FERC ALJ in the first complaint~~governor issued ~~an Initial Decision in~~Executive Order No. 142, which ~~the base rate of return on equity~~extended effective period for Executive Order No. 124 to July 29, 2020. Executive Order No. 142 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 April 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 to the Emera remand proceeding proposing a new method 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. On November 14, 2018, FERC directed parties to 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~~extended.

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 IURC issued an order approving the 2018 Settlement Agreement.~~

~~Piedmont~~

~~North Carolina Integrity Management Rider Filing~~

~~On October 31, 2019,~~10, 2020, Piedmont filed a petition ~~under~~with the ~~IMR mechanism~~NCUC for clarification regarding when they may begin working with customers on establishing payment arrangements for arrears accumulated since March 13, 2020. On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to ~~collect an additional $11 million in annual revenues effective December~~Special Repayment Plans. The order contained the following: 1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, ~~2019, based~~2020, after appropriate notice; 2) the late fee moratorium will continue through the end of the state of emergency or until further order of the commission; 3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and 4) no sooner than September 1, 2020, the ~~eligible capital investments closed~~collection of past due or delinquent accounts accrued up to ~~integrity~~ and ~~safety projects between July 1, 2019, and September 30, 2019.~~including August 31, 2020, may proceed subject to conditions. Piedmont cannot predict the outcome of this matter.

South Carolina

On April 30, ~~2019,~~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 six 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 Integrity Management Rider Filing~~

In November 2018, Piedmont filed a petition with the TPUC under the IMR mechanism to collect an additional $3 million in annual revenues, effective January 2019, based on the eligible capital investments closed to integrity and safety projects over the 12-month period ending October 31, 2018. A hearing on the matter was held on March 11, 2019. On May 20, 2019, the TPUC approved Piedmont's IMR application as filed and revised customer rates were effective June 1, 2019.

~~2019 North Carolina Rate Case~~

On April 1, 2019, Piedmont filed an application with the NCUC, its first general rate case in North Carolina in six years, 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~~2020, as required by ~~savings that customers will begin receiving due to federal~~PSCSC order, reporting revenue impact, costs 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~~savings related to COVID-19 to date. Piedmont cannot predict the ~~federal rate reduction~~outcome of ~~$37 million to be returned over one year;~~this matter.

~~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~~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 ~~new Distribution Integrity Management Program (DIMP) deferral mechanism~~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 ~~average annual pretax operations~~checks returned for insufficient funds for residential and ~~maintenance expenses~~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.

2020 Tennessee Rate Case

On July 2, 2020, Piedmont filed an application with the TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately ~~$11 million.~~

$30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since its previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. An evidentiary hearing ~~began on August 19, 2019. On October 31, 2019, the NCUC approved the Stipulation~~is expected to be scheduled for fall 2020, and ~~the~~a decision and revised customer rates ~~were~~are expected to become effective ~~November~~January 1, ~~2019.~~2021. Piedmont cannot predict the outcome of this matter.

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 iswas designed to meet, in part, the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. Dominion ~~will be~~would have been 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 13~~

On April 15, 2020, the United States District Court for ~~additional information related to Duke Energy's ownership interest. Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customers~~the District of Montana granted partial summary judgment in favor of the ~~pipeline. Purchases will be made under several 20-year supply contracts, subject to state regulatory approval.~~

In 2018, the FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route, including supply header and compressors. On May 11, 2018, and October 19, 2018, FERC issued Notices to Proceed allowing full construction activitiesplaintiffs in all areas of West Virginia except in the Monongahela National Forest. On July 24, 2018, FERC issued a Notice to Proceed allowing full construction activities along the project route in North Carolina. On October 19, 2018, the conditions to effectiveness of the Virginia 401 water quality certification were satisfied 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’sNorthern Plains Resource Council v. U.S. Army Corps of Engineers (USACE) ~~404 permit,~~(Northern Plains), vacating USACE’s Nationwide Permit 12 (NWP 12) and remanding it to USACE for consultation under the ~~project's air permit for a compressor station at Buckingham, Virginia,~~Endangered Species Act (ESA) of 1973. In Northern Plains, the ~~FERC Environmental Impact Statement order~~court ruled that NWP 12 was unlawful because USACE did not consult under the ESA with the U.S. Fish and Wildlife Service and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its application enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the 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 bysituation.

On May 28, 2020, the U.S. Court of Appeals for the ~~Fourth~~Ninth Circuit ~~(Fourth Circuit) and~~issued a ruling that limited the ~~same court's~~NWP 12 vacatur to energy infrastructure projects. In 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. 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 to2020, the Supreme Court of the United States ~~on June 25, 2019, regarding~~issued an order allowing other new oil and gas pipeline projects to use the ~~Appalachian Trail~~NWP 12 process pending appeal to the U.S. Court of Appeals for the Ninth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. Together, these rulings indicated that the timeline to reinstate the necessary water crossing permits for ACP would likely cause further delays and ~~certiorari was granted on October 4, 2019. A ruling is expected in~~cost increases.

On July 5, 2020, Dominion announced a sale of substantially all of its gas transmission and storage segment assets, operations core to the ~~second quarter of 2020.~~ ACP ~~is also evaluating possible legislative remedies to this issue.~~pipeline project.

~~In anticipation~~As a result of the ~~Fourth Circuit's vacatur of~~uncertainty created by the ~~BiOp and ITS, ACP and~~NWP 12 rulings, the FWS commenced work in mid-May of 2019 to set the basis for a reissued BiOp and ITS. ACP continues coordinating and working with FWS and other parties in preparation for a reissuance of the BiOp and ITS.

~~Given the legal challenges described above and ongoing discussions with customers, ACP expects mechanical completion of the 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 impacted~~potential impact on the cost and schedule for the ~~project. Project cost estimates are $7.3 billion~~project, the ongoing legal challenges and the risk of additional legal challenges and delays through the construction period and Dominion’s decision to ~~$7.8 billion, excluding financing costs. Given the status~~sell substantially all of ~~current discussions with FWS regarding a new BiOp~~its gas transmission and ITS, as well as discussions with contractors regarding efficiencies which may be realized going forward, these estimates are under review and subject to upward pressure. Abnormal weather, work delays (including delays due to judicial or regulatory action) and other conditions may also result in cost or schedule modifications, a suspension of AFUDC for ACP and/or impairment charges potentially material tostorage segment assets, Duke Energy's ~~cash flows, financial position~~Board of Directors and ~~results of operations.~~

~~Duke Energy’s investment~~management decided that it was not prudent to continue to invest in ~~ACP was $1.1 billion at September 30, 2019.~~the project. On July 5, 2020, Duke Energy ~~evaluated this investment for impairment at September 30, 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~~Dominion announced the cancellation of the ACP revolving credit facility. Duke Energy’s maximum exposure to loss under the terms of the guarantee is $802 million, which represents 47% of the outstanding borrowings under the credit facility as of September 30, 2019. See Note 13 for additional information.pipeline.

~~Constitution Pipeline Company, LLC~~

Duke Energy owns a 24% ownership interest in Constitution, which is accounted for as an equity method investment. Constitution is a natural gas pipeline project slated to transport natural gas supplies from the Marcellus supply region in northern Pennsylvania to major northeastern markets. The pipeline will be constructed and operated by Williams Partners L.P., which has a 41% ownership share. The remaining interest is held by Cabot Oil and Gas Corporation and WGL Holdings, Inc. Before the permitting delays discussed below, Duke Energy's total anticipated contributions were approximately $229 million. As a result, Duke Energy recorded a pretax charge to earnings of approximately $2.0 billion for the three months and six months ended June 30, 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Condensed Consolidated Statements of Operations. The tax benefit associated with this abandonment was $374 million and is recorded in Income Tax (Benefit) Expense on the Duke Energy Condensed Consolidated Statements of Operations. Additional charges of less than $100 million are expected to be recorded within the next 12 months as ACP incurs obligations to exit operations.

As part of the ~~permitting delays and project uncertainty, total anticipated contributions by~~pretax charge to earnings of approximately $2.0 billion, Duke Energy ~~can no longer be reasonably estimated. Since April 2016, with~~established a $920 million current liability related to the ~~actions~~abandonment of ACP within Current Liabilities in the ~~New York State Department~~Gas Utilities and Infrastructure segment. The liability represents Duke Energy's obligation of ~~Environmental Conservation (NYSDEC), Constitution stopped~~approximately $860 million to fund ACP's outstanding debt and approximately $60 million to satisfy ARO requirements to restore construction sites.

See Notes 1, 4 and ~~discontinued capitalization of future development costs until the project's uncertainty is resolved.~~11 for additional information regarding this transaction.



FINANCIAL STATEMENTS	REGULATORY MATTERS

In December 2014, Constitution received approval from the FERC to construct and operate the proposed pipeline. However, on April 22, 2016, the NYSDEC denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution filed a series of legal actions challenging 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 the 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 13 for additional information related to ownership interest and carrying value of the investment.~~

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file ~~IRPs~~integrated resource plans (IRPs) with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful lives. 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~~June 30, ~~2019,~~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	$	145
Duke Energy Indiana
Gallagher Units 2 and 4^(b)	280	116		280	116
Gibson Units 1-5^(c)	3,132	1,949		3,132	1,690
Cayuga Units 1-2^(c)	1,005	974		1,005	953
Total Duke Energy	5,002	$	3,193	5,002	$	2,904


(a)	Duke Energy Carolinas will retire Allen Steam Station ~~Units~~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~~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~~included proposed depreciation rates reflecting retirement dates from 2026 to 2038. These updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.

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~~$693 million and $1.2 billion, respectively, included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2019.~~

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

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.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

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
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 $ 81
$ 10
$ 15
$ 3
$ 12
$ 47
$ 5
$ 2
Provisions/adjustments 7
3
2
3
(1 ) 3
1
—
Cash reductions (20 ) (2 ) (5 ) (1 ) (4 ) (12 ) (1 ) —
Balance at end of period $ 68
$ 11
$ 12
$ 5
$ 7
$ 38
$ 5
$ 2



(in millions)	June 30, 2020		December 31, 2019
Reserves for Environmental Remediation
Duke Energy	$	55	$	58
Duke Energy Carolinas	10		11
Progress Energy	14		16
Duke Energy Progress	5		4
Duke Energy Florida	8		9
Duke Energy Ohio	19		19
Duke Energy Indiana	5		4
Piedmont	7		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	$	59
Duke Energy Carolinas	11		11
Duke Energy Ohio	31		42
Piedmont	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~~Business Court against various insurance providers. The lawsuit seeks payment for coal ash-related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. ~~On May 14, 2019,~~In February and March 2020, the court ~~granted an extension of stay, until September 15, 2019, to allow~~heard arguments on numerous cross motions filed by the parties to ~~discuss potential resolution. As no resolution was reached,~~seek legal determinations concerning several insurance related defenses raised by the insurance providers. On June 5, 2020, the court issued four rulings in favor of Duke Energy's legal positions in the coal ash recovery litigation proceedings. Due to COVID-19, the court has ~~resumed with fact discovery. The~~issued a new scheduling order and the trial is now scheduled for ~~February 2021.~~January 2022. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

~~NCDEQ State Enforcement Actions~~

~~In the first quarter of 2013, 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~~June 30, ~~2019,~~2020, there were ~~121~~118 asserted claims for non-malignant cases with cumulative relief sought of up to ~~$32~~$27 million, and 4059 asserted claims for malignant cases with cumulative relief sought of up to ~~$13~~$20 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.

Duke Energy Carolinas has recognized asbestos-related reserves of ~~$592~~$590 million at ~~September~~June 30, ~~2019,~~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~~June 30, ~~2019,~~2020, and ~~$739 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.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

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.~~2021.

Duke Energy Florida

~~Fluor Contract Litigation~~Power Purchase Dispute Arbitration

Duke Energy Florida, on behalf of its customers, entered into a power purchase contract for the purchase of firm capacity and energy from a qualified facility. Duke Energy Florida determined the qualified facility did not perform in accordance with the power purchase contract, and Duke Energy Florida terminated the power purchase contract. The qualified facility counterparty filed a confidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the power purchase contract and seeking damages. Duke Energy Florida denies liability and is vigorously defending the arbitration claim. The final arbitration hearing is scheduled for December 2020. Duke Energy Florida cannot predict the outcome of this matter.

Duke Energy Indiana

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~~Indiana filed a Motion to Dismiss. On May 5, 2020, the court entered an order denying that motion. The parties are engaged in ~~early 2019, on Fluor’s letter of credit~~discovery and ~~offset of invoiced amounts.~~a hearing is scheduled for February 22, 2021. 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		June 30, 2020		December 31, 2019
Reserves for Legal Matters
Duke Energy	$	62	$	65	$	60	$	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.

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~~



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

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, whichas of June 30, 2020. 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.

As of June 30, 2020, Duke Energy recognized $860 million related to the ~~ROU assets or operating lease~~guarantees of ACP's outstanding debt of which $95 million was previously recognized due the adoption of new guidance for credit losses effective January 1, 2020. This reserve is included within Other current liabilities on the Condensed Consolidated ~~Financial Statements.~~

~~Certain Duke Energy lease agreements include options~~Balance Sheets. See Notes 1, 3 and 11 for ~~renewal and early termination.~~more information. The ~~intent to renew a lease varies depending~~remaining reserve for credit losses for financial guarantees of $4 million as of June 30, 2020, is included within Other noncurrent liabilities on the ~~lease type~~Duke Energy's Condensed Consolidated Balance Sheets. Management considers financial guarantees for evaluation under this standard based on the anticipated amount outstanding at the time of default. The reserve for credit losses is based on the evaluation of the contingent components of financial guarantees. Management evaluates the risk of default, exposure and ~~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).



				Six Months Ended June 30, 2020
						Duke		Duke		Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Florida		Ohio		Indiana		Piedmont
Unsecured Debt
May 2020^(a)	Jun 2030	2.450	%	$	500	$	500	$	—	$	—	$	—	$	—	$	—
May 2020^(b)	Jun 2050	3.350	%	400		—		—		—		—		—		400
First Mortgage Bonds
January 2020^(c)	Feb 2030	2.450	%	500		—		500		—		—		—		—
January 2020^(c)	Aug 2049	3.200	%	400		—		400		—		—		—		—
March 2020^(d)	Apr 2050	2.750	%	550		—		—		—		—		550		—
May 2020^(b)	Jun 2030	2.125	%	400		—		—		—		400		—		—
June 2020^(b)	Jun 2030	1.750	%	500		—		—		500		—		—		—
Total issuances				$	3,250	$	500	$	900	$	500	$	400	$	550	$	400

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


(a)	Debt issued to ~~pay down short-term debt~~repay $500 million borrowing made under Duke Energy (Parent) revolving credit facility in March 2020, and for general corporate purposes.


(b)	Debt ~~issuance has a floating interest rate.~~issued to repay short-term debt and for general corporate purposes.


(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			June 30, 2020
Unsecured Debt
Duke Energy Kentucky	October 2019	4.650	%		$	100
Progress Energy	December 2019	4.875	%		350
Duke Energy Progress							December 2020	0.986	%	^(a)	$	700
Progress Energy, Inc							January 2021	4.400	%		500
Duke Energy (Parent)	June 2020	2.100	%		330		May 2021	0.924	%	^(a)	500
Piedmont							June 2021	4.240	%		160
Secured Debt
Duke Energy Florida							April 2021	1.384	%	^(a)	250
First Mortgage Bonds
Duke Energy Florida	January 2020	1.850	%		250
Duke Energy Florida	April 2020	4.550	%		250
Duke Energy Carolinas	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	0.498	%	^(a)	300
Duke Energy Carolinas							June 2021	3.900	%		500
Other^(b)					566						346
Current maturities of long-term debt					$	3,096					$	3,756

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

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

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.

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



	June 30, 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)	(2,480		)	(1,248		)	(389		)	(323		)	(156		)	(79		)	(150		)	(135		)
Outstanding letters of credit	(47		)	(40		)	(3		)	(2		)	—			—			—			(2		)
Tax-exempt bonds	(81		)	—			—			—			—			—			(81		)	—
Available capacity under the Master Credit Facility	$	5,392		$	1,362		$	1,108		$	925		$	644		$	521		$	369		$	463


(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.

Term Loan Facility

In response to market volatility and ongoing liquidity impacts from COVID-19, in March 2020, Duke Energy (Parent) entered into a $1.5 billion, 364-day Term Loan Credit Agreement, borrowing the full $1.5 billion available on March 19, 2020. The term loan contains a provision for increasing the amount available for borrowing by up to $500 million. Duke Energy (Parent) exercised this provision on March 27, 2020, borrowing an additional $188 million. Proceeds were used to reduce outstanding commercial paper and for general corporate purposes. Refer to Note 1 for additional information on the COVID-19 pandemic.



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

Other Credit Facilities


	September 30, 2019				June 30, 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	$	500
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~~remaining $500 million. In May ~~2022.~~2020, Duke Energy (Parent) repaid $500 million with proceeds of May 2020 unsecured debt issuance.

~~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~~June 30, ~~2019,~~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~~June 30, ~~2019,~~2020, and December 31, ~~2018.~~2019.

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 June 30,				Six Months Ended June 30,
(in millions)	2019		2018		2019		2018		2020		2019		2020		2019
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	197	$	214	$	606	$	647	$	196	$	197	$	330	$	409
Indemnification coverages^(b)	5		6		15		17		5		5		10		10
JDA revenue^(c)	12		13		52		66
Joint Dispatch Agreement (JDA) revenue^(c)									3		17		10		40
JDA expense^(c)	32		61		145		134		20		20		44		113
Intercompany natural gas purchases^(d)	—		3		7		11		10		3		16		7
Progress Energy
Corporate governance and shared service expenses^(a)	$	194	$	216	$	553	$	613	$	189	$	183	$	335	$	359
Indemnification coverages^(b)	8		8		27		25		9		10		18		19
JDA revenue^(c)	32		61		145		134		20		20		44		113
JDA expense^(c)	12		13		52		66		3		17		10		40
Intercompany natural gas purchases^(d)	19		20		57		58		19		19		38		38
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	114	$	138	$	328	$	382	$	113	$	108	$	188	$	214
Indemnification coverages^(b)	3		3		11		9		5		4		9		8
JDA revenue^(c)	32		61		145		134		20		20		44		113
JDA expense^(c)	12		13		52		66		3		17		10		40
Intercompany natural gas purchases^(d)	19		20		57		58		19		19		38		38
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	80	$	78	$	225	$	231	$	76	$	75	$	147	$	145
Indemnification coverages^(b)	5		5		16		16		4		6		9		11
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	90	$	85	$	258	$	264	$	77	$	83	$	161	$	168
Indemnification coverages^(b)	1		1		3		3		1		1		2		2
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	109	$	105	$	299	$	302	$	92	$	93	$	198	$	190
Indemnification coverages^(b)	2		2		5		6		2		1		4		3
Piedmont
Corporate governance and shared service expenses^(a)	$	33	$	39	$	102	$	115	$	37	$	37	$	71	$	69
Indemnification coverages^(b)	1		1		2		2		—		—		1		1
Intercompany natural gas sales^(d)	19		23		64		69		29		22		54		45
Natural gas storage and transportation costs^(e)	6		6		17		18		6		6		12		11

(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
June 30, 2020
Intercompany income tax receivable	$	—	$	178	$	60	$	10	$	14	$	3	$	85	$	—	$	63	$	—	$	—	$	—	$	10	$	23
Intercompany income tax payable	71		—		—		—		—		—		—		19		—		7		51		1		—		—

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.

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~~six months ended ~~September~~June 30, ~~2019,~~2020, and ~~2018,~~2019, 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												June 30, 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	$	—	$	—	$	—	$	—	$	—	$	650	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,577		450		1,100		250		850		27		1,477		400		1,050		1,050		—		27
Total notional amount^(a)	$	2,608	$	450	$	1,100	$	250	$	850	$	27	$	2,127	$	400	$	1,050	$	1,050	$	—	$	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~~$650 million in cash flow hedges as of ~~September~~June 30, ~~2019,~~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.

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								June 30, 2020
		Duke		Duke	Duke	Duke	Duke			Duke		Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	Ohio	Indiana	Piedmont
Electricity (GWh)	25,658	—	—	—	—	2,774	22,884	—	28,179	—	—	—	4,405	23,774	—
Natural gas (millions of dekatherms)	729	130	175	175	—	—	4	420	707	147	165	165	—	4	391


	December 31, 2018								December 31, 2019
		Duke		Duke	Duke	Duke	Duke			Duke		Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	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, 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 onliquidated the options ~~are deferred as regulatory liabilities or regulatory assets, respectively.~~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																	June 30, 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	$	20	$	2	$	1	$	1	$	—	$	3	$	10	$	4
Noncurrent	147		12		34		18		—		—		—		102		7		5		2		2		—		—		—		—
Total Derivative Liabilities – Commodity Contracts	$	213	$	45	$	58	$	42	$	—	$	—	$	—	$	111
Total Derivative Assets – Commodity Contracts																	$	27	$	7	$	3	$	3	$	—	$	3	$	10	$	4
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		—		—		2		—		2		2		—		—		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	130	$	22	$	45	$	1	$	44	$	6	$	—	$	—
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
Total Derivative Assets – Interest Rate Contracts																	$	5	$	—	$	5	$	5	$	—	$	—	$	—	$	—
Total Derivative Assets																	$	32	$	7	$	8	$	8	$	—	$	3	$	10	$	4



Derivative Liabilities	June 30, 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	$	55	$	29	$	17	$	17	$	—	$	—	$	1	$	7
Noncurrent	138		8		32		16		—		—		—		98
Total Derivative Liabilities – Commodity Contracts	$	193	$	37	$	49	$	33	$	—	$	—	$	1	$	105
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	14	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	56		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	68		20		48		48		—		1		—		—
Noncurrent	30		—		24		24		—		6		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	168	$	20	$	72	$	72	$	—	$	7	$	—	$	—
Total Derivative Liabilities	$	361	$	57	$	121	$	105	$	—	$	7	$	1	$	105



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																					June 30, 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	$	23		$	2		$	4		$	4		$	—	$	3	$	10	$	4
Gross amounts offset	(4		)	(2		)	(2		)	(2		)	—		—		—		—		(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Current Liabilities: Other	$	64		$	21		$	21		$	14		$	8	$	1	$	—	$	8
Net amounts presented in Current Assets: Other																					$	20		$	—		$	3		$	3		$	—	$	3	$	10	$	4
Noncurrent
Gross amounts recognized	$	174		$	10		$	21		$	11		$	1	$	4	$	—	$	133	$	9		$	5		$	4		$	4		$	—	$	—	$	—	$	—
Gross amounts offset	(3		)	(1		)	(2		)	(2		)	—		—		—		—		(4		)	(2		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	171		$	9		$	19		$	9		$	1	$	4	$	—	$	133
Net amounts presented in Other Noncurrent Assets: Other																					$	5		$	3		$	2		$	2		$	—	$	—	$	—	$	—



Derivative Liabilities	June 30, 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	$	137		$	49		$	65		$	65		$	—	$	1	$	1	$	7
Gross amounts offset	(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Current Liabilities: Other	$	134		$	47		$	64		$	64		$	—	$	1	$	1	$	7
Noncurrent
Gross amounts recognized	$	224		$	8		$	56		$	40		$	—	$	6	$	—	$	98
Gross amounts offset	(4		)	(2		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	220		$	6		$	54		$	38		$	—	$	6	$	—	$	98



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								June 30, 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	$	63	$	29	$	34	$	34
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		63		29		34		34


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



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~~a credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of ~~September~~June 30, ~~2019,~~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						June 30, 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	$	—	$	—	$	731	$	—	$	—	$	101
Equity securities	3,118		63		5,222		2,402		95		4,475		3,034		92		5,039		3,523		55		5,661
Corporate debt securities	40		1		633		4		13		566		66		2		806		37		1		603
Municipal bonds	14		—		370		1		4		353		18		1		417		13		—		368
U.S. government bonds	39		—		1,217		14		12		1,076		62		—		813		33		1		1,256
Other debt securities	4		—		142		—		2		148		9		1		194		3		—		141
Total NDTF Investments	$	3,215	$	64	$	7,698	$	2,421	$	126	$	6,706	$	3,189	$	96	$	8,000	$	3,609	$	57	$	8,130
Other Investments
Cash and cash equivalents	$	—	$	—	$	53	$	—	$	—	$	22	$	—	$	—	$	113	$	—	$	—	$	52
Equity securities	48		—		112		36		1		99		51		—		116		57		—		122
Corporate debt securities	2		—		72		—		2		60		8		—		125		3		—		67
Municipal bonds	5		—		94		—		1		85		5		1		103		4		—		94
U.S. government bonds	3		—		40		1		—		45		3		—		40		2		—		41
Other debt securities	1		—		65		—		1		58		1		1		34		—		—		56
Total Other Investments	$	59	$	—	$	436	$	37	$	5	$	369	$	68	$	2	$	531	$	66	$	—	$	432
Total Investments	$	3,274	$	64	$	8,134	$	2,458	$	131	$	7,075	$	3,257	$	98	$	8,531	$	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~~six months ended ~~September~~June 30, ~~2019,~~2020, and ~~2018,~~2019, were as follows.


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	60	$	19	$	161	$	85	$	302	$	66	$	325	$	101
Realized losses	43		16		136		60		67		63		132		93
AFS:
Realized gains	53		4		110		14		27		47		47		57
Realized losses	36		7		83		32		13		36		19		47



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						June 30, 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	$	—	$	—	$	30	$	—	$	—	$	21
Equity securities	1,680		15		2,901		1,309		54		2,484		1,796		47		2,989		1,914		8		3,154
Corporate debt securities	24		1		409		2		9		341		41		2		519		21		1		361
Municipal bonds	4		—		96		—		1		81		6		—		133		3		—		96
U.S. government bonds	19		—		517		5		8		475		30		—		399		16		1		578
Other debt securities	4		—		137		—		2		143		7		1		188		3		—		137
Total NDTF Investments	$	1,731	$	16	$	4,096	$	1,316	$	74	$	3,553	$	1,880	$	50	$	4,258	$	1,957	$	10	$	4,347


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	34	$	11	$	101	$	47	$	27	$	44	$	36	$	67
Realized losses	26		8		95		30		25		48		70		69
AFS:
Realized gains	21		4		46		13		18		16		30		25
Realized losses	13		6		34		24		8		11		13		21

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						June 30, 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	$	—	$	—	$	701	$	—	$	—	$	80
Equity securities	1,438		48		2,321		1,093		41		1,991		1,238		45		2,050		1,609		47		2,507
Corporate debt securities	16		—		224		2		4		225		25		—		287		16		—		242
Municipal bonds	10		—		274		1		3		272		12		1		284		10		—		272
U.S. government bonds	20		—		700		9		4		601		32		—		414		17		—		678
Other debt securities	—		—		5		—		—		5		2		—		6		—		—		4
Total NDTF Investments	$	1,484	$	48	$	3,602	$	1,105	$	52	$	3,153	$	1,309	$	46	$	3,742	$	1,652	$	47	$	3,783
Other Investments
Cash and cash equivalents	$	—	$	—	$	49	$	—	$	—	$	17	$	—	$	—	$	108	$	—	$	—	$	49
Municipal bonds	4		—		52		—		—		47		4		—		52		3		—		51
Total Other Investments	$	4	$	—	$	101	$	—	$	—	$	64	$	4	$	—	$	160	$	3	$	—	$	100
Total Investments	$	1,488	$	48	$	3,703	$	1,105	$	52	$	3,217	$	1,313	$	46	$	3,902	$	1,655	$	47	$	3,883



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	26	$	8	$	60	$	38	$	275	$	22	$	289	$	34
Realized losses	17		8		41		30		42		15		62		24
AFS:
Realized gains	31		—		62		1		6		30		11		31
Realized losses	23		1		49		8		4		25		5		26

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						June 30, 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	$	—	$	—	$	63	$	—	$	—	$	53
Equity securities	1,107		30		1,907		833		30		1,588		1,176		45		1,977		1,258		21		2,077
Corporate debt securities	16		—		224		2		3		171		25		—		287		16		—		242
Municipal bonds	10		—		274		1		3		271		12		1		284		10		—		272
U.S. government bonds	19		—		420		6		3		415		32		—		414		16		—		403
Other debt securities	—		—		5		—		—		3		2		—		6		—		—		4
Total NDTF Investments	$	1,152	$	30	$	2,882	$	842	$	39	$	2,494	$	1,247	$	46	$	3,031	$	1,300	$	21	$	3,051
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	6	$	—	$	—	$	1	$	—	$	—	$	2
Total Other Investments	$	—	$	—	$	2	$	—	$	—	$	6	$	—	$	—	$	1	$	—	$	—	$	2
Total Investments	$	1,152	$	30	$	2,884	$	842	$	39	$	2,500	$	1,247	$	46	$	3,032	$	1,300	$	21	$	3,053


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	10	$	7	$	27	$	32	$	26	$	7	$	40	$	17
Realized losses	9		7		24		27		27		7		47		15
AFS:
Realized gains	2		—		4		1		6		1		11		2
Realized losses	—		1		2		6		4		1		5		2



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						June 30, 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	$	—	$	—	$	638	$	—	$	—	$	27
Equity securities	331		18		414		260		11		403		62		—		73		351		26		430
Corporate debt securities	—		—		—		—		1		54
Municipal bonds	—		—		—		—		—		1
U.S. government bonds	1		—		280		3		1		186		—		—		—		1		—		275
Other debt securities	—		—		—		—		—		2
Total NDTF Investments^(a)	$	332	$	18	$	720	$	263	$	13	$	659	$	62	$	—	$	711	$	352	$	26	$	732
Other Investments
Cash and cash equivalents	$	—	$	—	$	4	$	—	$	—	$	1	$	—	$	—	$	2	$	—	$	—	$	4
Municipal bonds	4		—		52		—		—		47		4		—		52		3		—		51
Total Other Investments	$	4	$	—	$	56	$	—	$	—	$	48	$	4	$	—	$	54	$	3	$	—	$	55
Total Investments	$	336	$	18	$	776	$	263	$	13	$	707	$	66	$	—	$	765	$	355	$	26	$	787


(a)	During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~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				Three Months Ended				Six Months Ended
(in millions)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	16	$	1	$	33	$	6	$	249	$	15	$	249	$	17
Realized losses	8		1		17		3		15		8		15		9
AFS:
Realized gains	29		—		58		—		—		29		—		29
Realized losses	23		—		47		2		—		24		—		24

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						June 30, 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	$	39	$	—	$	77	$	43	$	—	$	81
Corporate debt securities	—		—		6		—		—		8		—		—		3		—		—		6
Municipal bonds	1		—		36		—		1		33		1		1		39		1		—		36
U.S. government bonds	—		—		1		—		—		—		—		—		3		—		—		2
Total Investments	$	38	$	—	$	117	$	29	$	1	$	108	$	40	$	1	$	122	$	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												June 30, 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	$	63	$	19	$	30	$	28	$	2	$	3
Due after one through five years	524		220		253		243		10		15		563		254		244		235		9		15
Due after five through 10 years	450		187		209		201		8		5		587		270		226		219		7		9
Due after 10 years	1,259		687		465		431		34		19		1,319		696		543		509		34		18
Total	$	2,633	$	1,159	$	1,255	$	923	$	332	$	43	$	2,532	$	1,239	$	1,043	$	991	$	52	$	45

~~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														June 30, 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 cash and cash equivalents															$	731		$	731		$	—		$	—		$	—
NDTF equity securities	$	5,222		$	5,168		$	—		$	—		$	54	5,039			4,991			—			—			48
NDTF debt securities	2,476			804			1,672			—			—		2,230			336			1,894			—			—
Other equity securities	112			112			—			—			—		116			116			—			—			—
Other debt securities	324			92			232			—			—		302			36			266			—			—
Other cash and cash equivalents															113			113			—			—			—
Derivative assets	31			2			8			21			—		32			4			15			13			—
Total assets	8,165			6,178			1,912			21			54		8,563			6,327			2,175			13			48
Derivative liabilities	(353		)	(25		)	(217		)	(111		)	—		(361		)	(1		)	(255		)	(105		)	—
Net assets (liabilities)	$	7,812		$	6,153		$	1,695		$	(90	)	$	54	$	8,202		$	6,326		$	1,920		$	(92	)	$	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 cash and cash equivalents															$	101		$	101		$	—		$	—		$	—
NDTF equity securities	$	4,475		$	4,410		$	—		$	—		$	65	5,684			5,633			—			—			51
NDTF debt securities	2,231			576			1,655			—			—		2,368			725			1,643			—			—
Other equity securities	99			99			—			—			—		122			122			—			—			—
Other debt securities	270			67			203			—			—		258			39			219			—			—
Other cash and cash equivalents															52			52			—			—			—
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 June 30,						Six Months Ended June 30,
(in millions)	2019			2018			2019			2018			2020			2019			2020			2019
Balance at beginning of period	$	(79	)	$	(97	)	$	(113	)	$	(114	)	$	(88	)	$	(115	)	$	(102	)	$	(113	)
Purchases, sales, issuances and settlements:
Purchases	—			—			38			56			14			38			14			38
Settlements	(9		)	(14		)	(32		)	(43		)	(6		)	(11		)	(15		)	(23		)
Total (losses) gains included on the Condensed Consolidated Balance Sheet	(2		)	(5		)	17			(15		)	(12		)	9			11			19
Balance at end of period	$	(90	)	$	(116	)	$	(90	)	$	(116	)	$	(92	)	$	(79	)	$	(92	)	$	(79	)



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										June 30, 2020
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized		Total Fair Value			Level 1		Level 2			Not Categorized
NDTF cash and cash equivalents											$	30		$	30	$	—		$	—
NDTF equity securities	$	2,901		$	2,847	$	—		$	54	2,989			2,941		—			48
NDTF debt securities	1,195			189		1,006			—		1,239			125		1,114			—
Derivative assets											7			—		7			—
Total assets	4,096			3,036		1,006			54		4,265			3,096		1,121			48
Derivative liabilities	(67		)	—		(67		)	—		(57		)	—		(57		)	—
Net assets	$	4,029		$	3,036	$	939		$	54	$	4,208		$	3,096	$	1,064		$	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 cash and cash equivalents											$	21		$	21	$	—		$	—
NDTF equity securities	$	2,484		$	2,419	$	—		$	65	3,154			3,103		—			51
NDTF debt securities	1,069			149		920			—		1,172			206		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								June 30, 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 cash and cash equivalents																	$	701		$	701	$	—		$	80		$	80	$	—
NDTF equity securities	$	2,321		$	2,321	$	—		$	1,991		$	1,991	$	—		2,050			2,050		—			2,530			2,530		—
NDTF debt securities	1,281			615		666			1,162			427		735			991			211		780			1,196			519		677
Other debt securities	101			49		52			64			17		47			52			—		52			51			—		51
Other cash and cash equivalents																	108			108		—			49			49		—
Derivative assets	5			—		5			4			—		4			8			—		8			7			—		7
Total assets	3,708			2,985		723			3,221			2,435		786			3,910			3,070		840			3,913			3,178		735
NDTF equity security contracts																	—			—		—			(23		)	—		(23		)
Derivative liabilities	(113		)	—		(113		)	(44		)	—		(44		)	(121		)	—		(121		)	(65		)	—		(65		)
Net assets	$	3,595		$	2,985	$	610		$	3,177		$	2,435	$	742		$	3,789		$	3,070	$	719		$	3,825		$	3,178	$	647



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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								June 30, 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
NTDF cash and cash equivalents																	$	63		$	63	$	—		$	53		$	53	$	—
NDTF equity securities	$	1,907		$	1,907	$	—		$	1,588		$	1,588	$	—		1,977			1,977		—			2,077			2,077		—
NDTF debt securities	975			309		666			906			294		612			991			211		780			921			244		677
Other debt securities	2			2		—			6			6		—
Other cash and cash equivalents																	1			1		—			2			2		—
Derivative assets	—			—		—			4			—		4			8			—		8			—			—		—
Total assets	2,884			2,218		666			2,504			1,888		616			3,040			2,252		788			3,053			2,376		677
Derivative liabilities	(43		)	—		(43		)	(27		)	—		(27		)	(105		)	—		(105		)	(49		)	—		(49		)
Net assets	$	2,841		$	2,218	$	623		$	2,477		$	1,888	$	589		$	2,935		$	2,252	$	683		$	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								June 30, 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 cash and cash equivalents																	$	638	$	638	$	—	$	27		$	27	$	—
NDTF equity securities	$	414		$	414	$	—		$	403		$	403	$	—		73		73		—		453			453		—
NDTF debt securities	306			306		—			256			133		123			—		—		—		275			275		—
Other debt securities	56			4		52			48			1		47			52		—		52		51			—		51
Other cash and cash equivalents																	2		2		—		4			4		—
Derivative assets	5			—		5			—			—		—			—		—		—		7			—		7
Total assets	781			724		57			707			537		170			765		713		52		817			759		58
NDTF equity security contracts																	—		—		—		(23		)	—		(23		)
Derivative liabilities	(54		)	—		(54		)	(9		)	—		(9		)	—		—		—		(1		)	—		(1		)
Net assets	$	727		$	724	$	3		$	698		$	537	$	161		$	765	$	713	$	52	$	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~~June 30, ~~2019,~~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								June 30, 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	$	—	$	—	$	77		$	77		$	—	$	—	$	81		$	81		$	—	$	—
Other debt securities	43		—		43		—		41		—		41		—		45			—			45		—		44			—			44		—
Derivative assets	16		—		—		16		23		1		—		22		10			—			—		10		13			2			—		11
Total assets	$	133	$	74	$	43	$	16	$	131	$	68	$	41	$	22	$	132		$	77		$	45	$	10	$	138		$	83		$	44	$	11
Derivative liabilities																	(1		)	(1		)	—		—		(1		)	(1		)	—		—
Net assets																	$	131		$	76		$	45	$	10	$	137		$	82		$	44	$	11



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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



	Derivatives (net)
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020			2019			2020			2019
Balance at beginning of period	$	2		$	5		$	11		$	22
Purchases, sales, issuances and settlements:
Purchases	10			29			10			29
Settlements	(4		)	(9		)	(10		)	(19		)
Total gains (losses) included on the Condensed Consolidated Balance Sheet	2			3			(1		)	(4		)
Balance at end of period	$	10		$	28		$	10		$	28

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.



	June 30, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3
Derivative assets	$	4		$	4	$	—		$	1		$	1	$	—
Derivative liabilities	(105		)	—		(105		)	(117		)	—		(117		)
Net (liabilities) assets	$	(101	)	$	4	$	(105	)	$	(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)
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2019
2018
2019
2018
Balance at beginning of period $ 28
$ 44
$ 22
$ 27
Purchases, sales, issuances and settlements:

Purchases —
—
29
49
Settlements (7 ) (13 ) (26 ) (41 )
Total losses included on the Condensed Consolidated Balance Sheet (5 ) (2 ) (9 ) (6 )
Balance at end of period $ 16
$ 29
$ 16
$ 29



	Derivatives (net)
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020			2019			2020			2019
Balance at beginning of period	$	(91	)	$	(121	)	$	(117	)	$	(141	)
Total gains and settlements	(14		)	7			12			27
Balance at end of period	$	(105	)	$	(114	)	$	(105	)	$	(114	)



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
(in millions) Total Fair Value
Level 1
Level 3
Total Fair Value
Level 1
Level 3
Derivative assets $ 2
$ 2
$ —
$ 3
$ 3
$ —
Derivative liabilities (111 ) —
(111 ) (141 ) —
(141 )
Net (liabilities) assets $ (109 ) $ 2
$ (111 ) $ (138 ) $ 3
$ (141 )

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

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

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

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


												June 30, 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	$	3		RTO auction pricing	FTR price – per MWh	$	0.23		-	$	1.45	$	0.69
Duke Energy Indiana
FTRs	16			RTO auction pricing	FTR price – per MWh	(0.52		)	-	6.85		10			RTO auction pricing	FTR price – per MWh	(1.03		)	-	6.19		0.71
Piedmont
Natural gas contracts	(111		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.85			-	2.99		(105		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.73			-	2.39		2.01
Duke Energy
Total Level 3 derivatives	$	(90	)									$	(92	)


												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				June 30, 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	$	59,899	$	68,428	$	58,126	$	63,062
Duke Energy Carolinas	11,758		13,462		10,939		11,471		12,521		15,046		11,900		13,516
Progress Energy	19,119		21,952		18,911		19,885		19,604		23,476		19,634		22,291
Duke Energy Progress	9,049		9,995		8,204		8,300		9,063		10,506		9,058		9,934
Duke Energy Florida	7,132		8,356		7,321		7,742		7,951		9,655		7,987		9,131
Duke Energy Ohio	2,719		3,096		2,165		2,239		3,019		3,551		2,619		2,964
Duke Energy Indiana	4,208		5,018		3,782		4,158		4,603		5,617		4,057		4,800
Piedmont	2,384		2,664		2,138		2,180		2,779		3,289		2,384		2,642


(a)	Book value of long-term debt includes $1.4 billion at June 30, 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~~June 30, ~~2019,~~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.~~



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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~~six months ended ~~September~~June 30, ~~2019,~~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.~~purchased which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities for DERF and DEPR are reflected on the Condensed Consolidated Balance Sheets as Long-Term Debt. Amounts borrowed under the credit facilities for DEFR are reflected on the Condensed Consolidated Balance Sheets as Current maturities of long-term debt.

Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In the second quarter of 2020, DERF, DEPR and DEFR executed amendments to their credit facilities to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.

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

Receivables Financing – CRC

CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to ~~CRC.~~CRC which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligation is cash collections from the receivables. Amounts borrowed under the credit facility are reflected on Duke Energy's 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.

Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Ohio and Duke Energy Indiana have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In July of 2020, CRC executed an amendment to its credit facility to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.

CRC is considered a VIE because (i) equity capitalization is insufficient to support its operations, (ii) power to direct the activities that most significantly impact the economic performance of the entity ~~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

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	$	350	$	250
Amounts borrowed at June 30, 2020	350		475		333		250
Amounts borrowed at December 31, 2019	350		474		325		250
Restricted Receivables at June 30, 2020	454		675		451		463
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		June 30, 2020		December 31, 2019
Receivables of VIEs	$	7	$	5	$	6	$	5
Regulatory Assets: Current	52		52		53		52
Current Assets: Other	16		39		32		39
Other Noncurrent Assets: Regulatory assets	1,002		1,041		969		989
Current Liabilities: Other	2		10		10		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			June 30, 2020			December 31, 2019
Current Assets: Other	$	172		$	123		$	228		$	203
Property, Plant and Equipment: Cost	5,160			4,007			6,198			5,747
Accumulated depreciation and amortization	(996		)	(698		)	(1,145		)	(1,041		)
Other Noncurrent Assets: Other	63			261			75			106
Current maturities of long-term debt	177			174			158			162
Long-Term Debt	1,604			1,587			1,457			1,541
Other Noncurrent Liabilities: Asset retirement obligations	125			106
Other Noncurrent Liabilities: AROs							144			127
Other Noncurrent Liabilities: Other	218			212			251			228



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

NON-CONSOLIDATED VIEs

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


	September 30, 2019														June 30, 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	)	$	34	$	49
Investments in equity method unconsolidated affiliates	1,152			235		55		1,442			—		—		—			413			1			414			—		—
Deferred tax asset															439			—			—			439			—		—
Total assets	$	1,152		$	235	$	55	$	1,442		$	48	$	76	$	439		$	412		$	1		$	852		$	34	$	49
Taxes accrued	(2		)	—		—		(2		)	—		—		9			—			—			9			—		—
Other current liabilities	—			—		3		3			—		—		920			—			4			924			—		—
Deferred income taxes	57			—		—		57			—		—
Other noncurrent liabilities	—			—		11		11			—		—		—			—			10			10			—		—
Total liabilities	$	55		$	—	$	14	$	69		$	—	$	—	$	929		$	—		$	14		$	943		$	—	$	—
Net assets	$	1,097		$	235	$	41	$	1,373		$	48	$	76
Net (liabilities) assets															$	(490	)	$	412		$	(13	)	$	(91	)	$	34	$	49


	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~~future exit costs associated with the abandonment of the investment in ACP, ~~revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is $802 million, which represents 47% of the outstanding borrowings under the credit facility~~ as ~~of September 30, 2019. For more information on various guarantees, refer to Note~~ 4.discussed below.

Pipeline Investments

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

On July 5, 2020, Duke Energy determined that it would no longer invest in the construction of the ACP pipeline. See Notes 1, 3 and 4 for further information regarding this transaction.

For the three and six months ended June 30, 2020, the ACP investment is considered a significant subsidiary because its income exceeds 20% of Duke Energy’s income. The table below presents ~~Duke Energy's ownership interest and investment balances in these joint ventures.~~unaudited summarized financial information for ACP.

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



	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2020			2019		2020			2019
Net (Loss) Income	$	(4,414	)	$	61	$	(4,342	)	$	114


~~(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		June 30,			December 31,
Entity Name	Interest		2020			2019
ACP^(a)	47	%	$	(920	)	$	1,179
Constitution^(b)	24	%	—			—
Total			$	(920	)	$	1,179


(a)	During the quarter ended June 30, 2020, Duke Energy abandoned its investment in ACP as described above. The current liability related to the abandonment of ACP represents Duke Energy's obligation to fund ACP's obligations. See Notes 1, 3 and 4 for more information.


(b)	During the year ended December 31, 2019, Duke Energy recorded an other-than-temporary impairment 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~~Other

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. In July 2020, legislation was proposed to repeal HB 6. Duke Energy cannot predict the outcome in this matter. 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		June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Receivables sold	$	217	$	269	$	326	$	336	$	221	$	253	$	280	$	307
Less: Retained interests	48		93		76		118		34		64		49		77
Net receivables sold	$	169	$	176	$	250	$	218	$	187	$	189	$	231	$	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				Six Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				September 30,				September 30,				June 30,				June 30,				June 30,				June 30,
(in millions)	2019		2018		2019		2018		2019		2018		2019		2018		2020		2019		2020		2019		2020		2019		2020		2019
Sales
Receivables sold	$	479	$	450	$	1,483	$	1,478	$	762	$	754	$	2,172	$	2,140	$	429	$	429	$	966	$	1,004	$	583	$	676	$	1,230	$	1,410
Loss recognized on sale	4		4		11		10		4		5		13		12		2		3		6		7		2		4		6		9
Cash flows
Cash proceeds from receivables sold	$	471	$	449	$	1,516	$	1,499	$	762	$	743	$	2,200	$	2,140	$	431	$	448	$	990	$	1,045	$	580	$	680	$	1,252	$	1,438
Collection fees received	—		—		1		1		—		—		1		1
Return received on retained interests	1		2		5		5		2		3		7		7		—		2		2		4		1		2		3		5

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	$	58	$	92	$	94	$	44	$	45	$	58	$	391
Duke Energy Progress	2		8		8		8		8		8		42		4		8		8		8		8		—		36
Duke Energy Florida	29		113		78		73		30		33		356		54		84		86		36		37		58		355
Duke Energy Indiana	2		10		5		—		—		—		17		5		5		—		—		—		—		10

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	$	34	$	65	$	64	$	61	$	58	$	376	$	658

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 June 30, 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		$	—	$	2,249	$	677	$	1,173	$	460	$	713	$	169	$	231	$	—
General	1,885		687		843		399		444		127			225			—		1,379		507		611		298		313		103		161		—
Industrial	869		372		255		189		66		40			204			—		658		260		212		154		58		33		152		—
Wholesale	617		113		429		368		61		13			63			—		435		101		285		240		45		5		44		—
Other revenues	198		76		118		70		48		18			22			—		284		62		191		70		121		19		25		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	6,492	$	2,140	$	3,167	$	1,651	$	1,516	$	413		$	808		$	—	$	5,005	$	1,607	$	2,472	$	1,222	$	1,250	$	329	$	613	$	—

Gas Utilities and Infrastructure
Residential	$	113	$	—	$	—	$	—	$	—	$	53		$	—		$	59	$	157	$	—	$	—	$	—	$	—	$	62	$	—	$	96
Commercial	68		—		—		—		—		21			—			47		75		—		—		—		—		23		—		52
Industrial	26		—		—		—		—		4			—			25		27		—		—		—		—		3		—		22
Power Generation	—		—		—		—		—		—			—			13		—		—		—		—		—		—		—		6
Other revenues	16		—		—		—		—		3			—			13		12		—		—		—		—		3		—		11
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	223	$	—	$	—	$	—	$	—	$	81		$	—		$	157	$	271	$	—	$	—	$	—	$	—	$	91	$	—	$	187

Commercial Renewables
Revenue from contracts with customers	$	69	$	—	$	—	$	—	$	—	$	—		$	—		$	—	$	55	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	8	$	—	$	—	$	—	$	—	$	—		$	—		$	—	$	7	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total revenue from contracts with customers	$	6,792	$	2,140	$	3,167	$	1,651	$	1,516	$	494		$	808		$	157	$	5,338	$	1,607	$	2,472	$	1,222	$	1,250	$	420	$	613	$	187

Other revenue sources^(a)	$	148	$	22	$	75	$	37	$	32	$	(5	)	$	(1	)	$	11	$	83	$	3	$	26	$	21	$	—	$	3	$	4	$	10
Total revenues	$	6,940	$	2,162	$	3,242	$	1,688	$	1,548	$	489		$	807		$	168	$	5,421	$	1,610	$	2,498	$	1,243	$	1,250	$	423	$	617	$	197


(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 June 30, 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	$	—	$	2,304	$	679	$	1,243	$	496	$	747	$	159	$	225	$	—
General	1,763		635		800		373		427		112		218		—		1,584		531		750		339		411		105		197		—
Industrial	835		352		246		177		69		33		202		—		759		289		231		164		67		36		201		—
Wholesale	589		132		372		335		37		3		81		—		527		109		351		309		42		9		59		—
Other revenues	225		109		134		90		44		20		29		—		187		68		99		44		55		25		27		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	6,141	$	2,051	$	2,977	$	1,547	$	1,430	$	371	$	809	$	—	$	5,361	$	1,676	$	2,674	$	1,352	$	1,322	$	334	$	709	$	—

Gas Utilities and Infrastructure
Residential	$	116	$	—	$	—	$	—	$	—	$	59	$	—	$	57	$	146	$	—	$	—	$	—	$	—	$	64	$	—	$	82
Commercial	66		—		—		—		—		20		—		46		85		—		—		—		—		26		—		59
Industrial	28		—		—		—		—		3		—		24		29		—		—		—		—		3		—		24
Power Generation	—		—		—		—		—		—		—		13		—		—		—		—		—		—		—		13
Other revenues	23		—		—		—		—		1		—		22		22		—		—		—		—		2		—		19
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	233	$	—	$	—	$	—	$	—	$	83	$	—	$	162	$	282	$	—	$	—	$	—	$	—	$	95	$	—	$	197

Commercial Renewables
Revenue from contracts with customers	$	61	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	46	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	16	$	—	$	—	$	—	$	—	$	12	$	—	$	—	$	6	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total revenue from contracts with customers	$	6,451	$	2,051	$	2,977	$	1,547	$	1,430	$	466	$	809	$	162	$	5,695	$	1,676	$	2,674	$	1,352	$	1,322	$	429	$	709	$	197

Other revenue sources^(a)	$	177	$	39	$	68	$	35	$	32	$	3	$	10	$	10	$	178	$	37	$	70	$	35	$	31	$	4	$	5	$	12
Total revenues	$	6,628	$	2,090	$	3,045	$	1,582	$	1,462	$	469	$	819	$	172	$	5,873	$	1,713	$	2,744	$	1,387	$	1,353	$	433	$	714	$	209


(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


	Nine Months Ended September 30, 2019																	Six Months Ended June 30, 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	$	7,597	$	2,331	$	3,879	$	1,657	$	2,222	$	563		$	825	$	—	$	4,515	$	1,433	$	2,242	$	962	$	1,280	$	345		$	496	$	—
General	4,896		1,714		2,225		1,044		1,181		335			619		—		2,887		1,056		1,275		617		658		217			342		—
Industrial	2,339		927		708		514		194		109			595		—		1,351		529		428		308		120		68			327		—
Wholesale	1,685		341		1,133		992		141		36			176		—		932		215		606		519		87		12			99		—
Other revenues	557		222		389		239		150		59			66		—		475		122		309		133		176		39			41		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	17,074	$	5,535	$	8,334	$	4,446	$	3,888	$	1,102		$	2,281	$	—	$	10,160	$	3,355	$	4,860	$	2,539	$	2,321	$	681		$	1,305	$	—

Gas Utilities and Infrastructure
Residential	$	673	$	—	$	—	$	—	$	—	$	229		$	—	$	443	$	519	$	—	$	—	$	—	$	—	$	159		$	—	$	360
Commercial	359		—		—		—		—		96			—		263		244		—		—		—		—		66			—		178
Industrial	103		—		—		—		—		14			—		91		68		—		—		—		—		9			—		58
Power Generation	—		—		—		—		—		—			—		39		—		—		—		—		—		—			—		17
Other revenues	101		—		—		—		—		13			—		88		42		—		—		—		—		9			—		35
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,236	$	—	$	—	$	—	$	—	$	352		$	—	$	924	$	873	$	—	$	—	$	—	$	—	$	243		$	—	$	648

Commercial Renewables
Revenue from contracts with customers	$	157	$	—	$	—	$	—	$	—	$	—		$	—	$	—	$	113	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Other
Revenue from contracts with customers	$	18	$	—	$	—	$	—	$	—	$	—		$	—	$	—	$	13	$	—	$	—	$	—	$	—	$	—		$	—	$	—
Total Revenue from contracts with customers	$	18,485	$	5,535	$	8,334	$	4,446	$	3,888	$	1,454		$	2,281	$	924	$	11,159	$	3,355	$	4,860	$	2,539	$	2,321	$	924		$	1,305	$	648

Other revenue sources^(a)	$	491	$	84	$	224	$	113	$	99	$	(1	)	$	8	$	32	$	211	$	3	$	60	$	42	$	9	$	(3	)	$	4	$	61
Total revenues	$	18,976	$	5,619	$	8,558	$	4,559	$	3,987	$	1,453		$	2,289	$	956	$	11,370	$	3,358	$	4,920	$	2,581	$	2,330	$	921		$	1,309	$	709


(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


	Nine Months Ended September 30, 2018																Six Months Ended June 30, 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	$	7,264	$	2,263	$	3,636	$	1,540	$	2,096	$	564	$	802	$	—	$	4,674	$	1,439	$	2,357	$	1,032	$	1,325	$	348	$	531	$	—
General	4,619		1,608		2,109		972		1,137		318		584		—		3,011		1,027		1,382		645		737		208		394		—
Industrial	2,235		893		678		481		197		96		567		—		1,470		555		453		325		128		69		391		—
Wholesale	1,737		366		1,140		1,019		121		5		226		—		1,068		228		704		624		80		23		113		—
Other revenues	558		261		359		222		137		57		66		—		359		146		271		169		102		41		44		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	16,413	$	5,391	$	7,922	$	4,234	$	3,688	$	1,040	$	2,245	$	—	$	10,582	$	3,395	$	5,167	$	2,795	$	2,372	$	689	$	1,473	$	—

Gas Utilities and Infrastructure
Residential	$	682	$	—	$	—	$	—	$	—	$	236	$	—	$	446	$	560	$	—	$	—	$	—	$	—	$	176	$	—	$	384
Commercial	354		—		—		—		—		97		—		257		291		—		—		—		—		75		—		216
Industrial	107		—		—		—		—		13		—		93		77		—		—		—		—		10		—		66
Power Generation	—		—		—		—		—		—		—		40		—		—		—		—		—		—		—		26
Other revenues	101		—		—		—		—		13		—		88		85		—		—		—		—		10		—		75
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,244	$	—	$	—	$	—	$	—	$	359	$	—	$	924	$	1,013	$	—	$	—	$	—	$	—	$	271	$	—	$	767

Commercial Renewables
Revenue from contracts with customers	$	141	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	88	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	47	$	—	$	—	$	—	$	—	$	36	$	—	$	—	$	10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Revenue from contracts with customers	$	17,845	$	5,391	$	7,922	$	4,234	$	3,688	$	1,435	$	2,245	$	924	$	11,693	$	3,395	$	5,167	$	2,795	$	2,372	$	960	$	1,473	$	767

Other revenue sources^(a)	$	561	$	134	$	197	$	99	$	92	$	17	$	43	$	16	$	343	$	62	$	149	$	76	$	67	$	4	$	9	$	21
Total revenues	$	18,406	$	5,525	$	8,119	$	4,333	$	3,780	$	1,452	$	2,288	$	940	$	12,036	$	3,457	$	5,316	$	2,871	$	2,439	$	964	$	1,482	$	788


(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

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.



	Three Months Ended June 30, 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 March 31, 2020	$	89		$	11		$	20		$	9		$	11	$	5	$	3	$	9
Write-Offs	(9		)	(3		)	(3		)	(3		)	—		—		—		(4		)
Credit Loss Expense	15			6			12			8			3		—		—		1
Other Adjustments	7			—			—			—			—		—		—		—
Balance at June 30, 2020	$	102		$	14		$	29		$	14		$	14	$	5	$	3	$	6



	Six Months Ended June 30, 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	(19		)	(6		)	(7		)	(5		)	(2		)	—		—		(5		)
Credit Loss Expense	33			9			18			10			8			1		—		4
Other Adjustments	7			—			—			—			—			—		—		—
Balance at June 30, 2020	$	102		$	14		$	29		$	14		$	14		$	5	$	3	$	6

Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions, including the impacts of COVID-19, as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss periodically for trade and other receivables. Due to the COVID-19 pandemic, as described in Note 1, 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.

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



	June 30, 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	$	829	$	332	$	274	$	137	$	137	$	1	$	7	$	6
0-30 days	1,624		470		685		336		344		48		28		73
30-60 days	152		49		56		28		28		6		1		6
60-90 days	90		29		34		17		17		4		1		5
90+ days	209		64		53		24		29		29		10		18
Trade and Other Receivables	$	2,904	$	944	$	1,102	$	542	$	555	$	88	$	47	$	108

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.



FINANCIAL STATEMENTS	REVENUE

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		June 30, 2020		December 31, 2019
Duke Energy	$	831	$	896	$	829	$	843
Duke Energy Carolinas	312		313		332		298
Progress Energy	265		244		274		217
Duke Energy Progress	141		148		137		122
Duke Energy Florida	124		96		137		95
Duke Energy Ohio	2		2		1		1
Duke Energy Indiana	19		23		7		16
Piedmont	2		73		6		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		June 30, 2020		December 31, 2019
Duke Energy Ohio	$	74	$	86	$	68	$	82
Duke Energy Indiana	124		128		106		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.

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 June 30,					Six Months Ended June 30,
(in millions, except per share amounts)	2020			2019		2020		2019
Net (loss) income available to Duke Energy common stockholders excluding impact of participating securities	$	(817	)	$	819	$	82	$	1,718
Accumulated preferred stock dividends	(12		)	—		—		—
Net (loss) income available to Duke Energy common stockholders excluding impact of participating securities and including accumulated preferred stock dividends	$	(829	)	$	819	$	82	$	1,718

Weighted average common shares outstanding – basic	735			728		734		728
Equity forwards	—			—		1		—
Weighted average common shares outstanding – diluted	735			728		735		728
Earnings (Loss) Per Share available to Duke Energy common stockholders
Basic and diluted	$	(1.13	)	$	1.12	$	0.11	$	2.36
Potentially dilutive items excluded from the calculation^(a)	2			2		2		2
Dividends declared per common share	$	0.945		$	0.928	$	1.890	$	1.855
Dividends declared on Series A preferred stock per depositary share^(b)	$	0.359		$	0.307	$	0.719	$	0.307
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, Duke Energy filed a prospectus supplement and executed an EDA under which it may sell up to $1 billion of its common stock through an ATM offering program, including an equity forward sales component. The EDA was entered into with the Agents. Under the terms of the EDA, Duke Energy was allowed to 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. In December 2018, Duke Energy physically settled these equity forwards by delivering 2.6 million shares of common stock in exchange for net proceeds of approximately $195 million.

Separately, in March 2018, Duke Energy marketed an equity offering of 21.3 million shares of common stock through an Underwriting Agreement. In connection with the offering, Duke Energy entered into 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

Common Stock

In ~~2018, Duke Energy also issued 2.2 million shares through its DRIP with an increase in additional paid-in capital of approximately $174 million. For the nine months ended September 30,~~November 2019, Duke Energy ~~issued 1.4 million~~filed a prospectus supplement and executed an Equity Distribution Agreement (EDA) under which it may sell up to $1.5 billion of its common stock through an at-the-market (ATM) offering program, including an equity forward sales component. Under the terms of the EDA, Duke Energy may issue and sell shares of common stock through ~~its DRIP~~September 2022. In March 2020, Duke Energy marketed approximately 940,000 shares of common stock through an equity forward transaction under the ATM with an ~~increase~~initial forward price of $89.76 per share. In May 2020, Duke Energy marketed approximately 903,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $82.44 per share.

Separately, in ~~additional paid-in capital of approximately $120 million.~~

~~In March and April~~November 2019, Duke Energy marketed ~~two separate tranches, each for 1.1~~an equity offering of 28.75 million shares of common stock through an Underwriting Agreement. In connection with the offering, Duke Energy entered into an equity forward ~~transactions under the ATM program. The first tranche had~~sales agreement with 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.

QUALIFIED PENSION PLANS

The following ~~table includes information related to~~tables include 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~~for 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.plans.

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.



	Three Months Ended June 30, 2020
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	42		$	14		$	12		$	8		$	6		$	1		$	2		$	2
Interest cost on projected benefit obligation	68			15			22			9			11			4			5			3
Expected return on plan assets	(143		)	(36		)	(47		)	(22		)	(26		)	(7		)	(10		)	(6		)
Amortization of actuarial loss	30			7			9			4			5			1			3			3
Amortization of prior service credit	(8		)	(2		)	(1		)	(1		)	(1		)	—			(1		)	(3		)
Amortization of settlement charges	3			1			—			1			—			—			—			—
Net periodic pension costs	$	(8	)	$	(1	)	$	(5	)	$	(1	)	$	(5	)	$	(1	)	$	(1	)	$	(1	)



	Three Months Ended June 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	$	37		$	12		$	10		$	6		$	6		$	1		$	2		$	2
Interest cost on projected benefit obligation	82			21			26			12			13			4			7			3
Expected return on plan assets	(143		)	(37		)	(45		)	(21		)	(22		)	(6		)	(10		)	(6		)
Amortization of actuarial loss	25			5			9			3			6			—			1			1
Amortization of prior service credit	(8		)	(2		)	—			(1		)	(1		)	—			(1		)	(2		)
Net periodic pension costs	$	(7	)	$	(1	)	$	—		$	(1	)	$	2		$	(1	)	$	(1	)	$	(2	)

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
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 42
$ 13
$ 13
$ 7
$ 5
$ 1
$ 2
$ 1
Interest cost on projected benefit obligation 77
17
24
10
14
5
6
2
Expected return on plan assets (140 ) (36 ) (45 ) (22 ) (22 ) (7 ) (11 ) (5 )
Amortization of actuarial loss 28
6
10
4
6
2
3
2
Amortization of prior service credit (8 ) (2 ) (1 ) —
—
—
—
(2 )
Net periodic pension costs $ (1 ) $ (2 ) $ 1
$ (1 ) $ 3
$ 1
$ —
$ (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																								Six Months Ended June 30, 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	$	116		$	37		$	34		$	19		$	15		$	3		$	6		$	4		$	83		$	26		$	24		$	14		$	11		$	2		$	4		$	3
Interest cost on projected benefit obligation	242			58			76			34			41			14			19			8			135			31			43			19			23			8			11			5
Expected return on plan assets	(426		)	(111		)	(134		)	(66		)	(66		)	(21		)	(32		)	(16		)	(286		)	(72		)	(95		)	(44		)	(51		)	(14		)	(21		)	(11		)
Amortization of actuarial loss	77			17			28			10			18			3			6			5			64			14			20			9			11			3			6			5
Amortization of prior service credit	(24		)	(6		)	(2		)	(1		)	(1		)	—			(1		)	(7		)	(16		)	(4		)	(2		)	(1		)	(1		)	—			(1		)	(5		)
Amortization of settlement charges																									5			2			1			1			—			—			—			—
Net periodic pension costs	$	(15	)	$	(5	)	$	2		$	(4	)	$	7		$	(1	)	$	(2	)	$	(6	)	$	(15	)	$	(3	)	$	(9	)	$	(2	)	$	(7	)	$	(1	)	$	(1	)	$	(3	)


	Nine Months Ended September 30, 2018																								Six Months Ended June 30, 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		$	74		$	24		$	21		$	12		$	10		$	2		$	4		$	3
Interest cost on projected benefit obligation	224			54			70			31			38			13			18			9			165			41			52			24			27			9			13			6
Expected return on plan assets	(420		)	(111		)	(133		)	(63		)	(69		)	(21		)	(31		)	(18		)	(286		)	(75		)	(89		)	(44		)	(44		)	(14		)	(21		)	(11		)
Amortization of actuarial loss	99			21			33			16			18			3			6			9			49			11			18			6			12			1			3			3
Amortization of prior service credit	(24		)	(6		)	(3		)	(1		)	(1		)	—			—			(9		)	(16		)	(4		)	(1		)	(1		)	(1		)	—			(1		)	(5		)
Net periodic pension costs	$	16		$	3		$	6		$	5		$	2		$	(1	)	$	—		$	(3	)	$	(14	)	$	(3	)	$	1		$	(3	)	$	4		$	(2	)	$	(2	)	$	(4	)

NON-QUALIFIED PENSION PLANS

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

OTHER POST-RETIREMENT BENEFIT PLANS

Net periodic costs for OPEB plans were not material for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~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				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Duke Energy	12.4	%	13.7	%	12.5	%	17.0	%	26.2	%	15.9	%	98.9	%	12.6	%
Duke Energy Carolinas	16.7	%	22.6	%	17.7	%	22.3	%	13.7	%	19.7	%	15.1	%	18.7	%
Progress Energy	15.3	%	18.8	%	16.2	%	17.0	%	14.9	%	16.7	%	16.1	%	17.0	%
Duke Energy Progress	14.7	%	20.6	%	16.1	%	18.4	%	13.9	%	16.3	%	15.7	%	17.1	%
Duke Energy Florida	16.5	%	15.0	%	18.0	%	16.3	%	19.1	%	19.6	%	19.4	%	19.5	%
Duke Energy Ohio	12.9	%	16.0	%	15.2	%	16.0	%	15.4	%	16.1	%	16.6	%	16.5	%
Duke Energy Indiana	23.2	%	22.7	%	23.7	%	24.7	%	17.3	%	24.2	%	19.3	%	24.2	%
Piedmont	35.7	%	34.4	%	18.5	%	20.6	%	128.6	%	22.2	%	5.8	%	21.8	%

The increase in the ETR for Duke Energy for the three and six months ended June 30, 2020, was primarily due to the impact of an abandonment of the ACP investment and an increase in the amortization of excess deferred taxes.

The decrease in the ETR for Duke Energy Carolinas for the three months ended ~~September~~June 30, ~~2019,~~2020, was primarily due to an increase in the amortization of excess deferred taxes and certain favorable tax credits.

The decrease in the ETR for Duke Energy Carolinas for the six months ended June 30, 2020, 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 June 30, 2020, was primarily due to an increase in the amortization of excess deferred taxes.



FINANCIAL STATEMENTS	INCOME TAXES

The decrease in the ETR for Duke Energy Progress for the three and six months ended June 30, 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 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~~Indiana for the three and ~~nine~~six months ended ~~September~~June 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,~~2020, was primarily due to an increase in the amortization of excess deferred taxes.

The increase in the ETR ~~in relation to pretax losses,~~ for Piedmont for the three months ended ~~September~~June 30, ~~2019,~~2020, was primarily due to an increase in AFUDC Equity, in relation to pretax losses.

The decrease in the ETR for Piedmont for the six months ended June 30, 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. The decrease in the ETR for the nine months ended September 30, 2019, 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.~~AFUDC equity.

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 ~~of $573 million~~in full for any AMT credit carryforwards. As a result, the remaining AMT credit carryforwards were reclassified in the first quarter 2020 to a current receivable included in Other within Current Assets on the Condensed Consolidated Balance Sheets. The total income tax receivable related to AMT credit carryforwards ~~based on~~is approximately $572 million as of June 30, 2020. 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~~ and ~~income taxes,~~variable interest entities, see Notes 3 15 and ~~17, respectively.~~11.



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~~six months ended ~~September~~June 30, ~~2019,~~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~~ACP

On ~~September 17, 2019,~~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 (USACE) (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 U.S. Fish and Wildlife Service and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its application enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the situation.

On May 28, 2020, the U.S. Court of Appeals for the Ninth Circuit issued a ruling that limited the NWP 12 vacatur to energy infrastructure projects. In July 2020, the Supreme Court of the United States issued an order allowing other new oil and gas pipeline projects to use the NWP 12 process pending appeal to the U.S. Court of Appeals for the Ninth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. Together, these rulings indicated that the timeline to reinstate the necessary water crossing permits for ACP would likely cause further delays and cost increases.

On July 5, 2020, Dominion announced a sale of substantially all of its gas transmission and storage segment assets, operations core to the ACP pipeline project.

As a result of the uncertainty created by the NWP 12 rulings, the potential impact on the cost and schedule for the project, the ongoing legal challenges and risk of additional legal challenges throughout construction and Dominion’s decision to sell substantially all of its gas transmission and storage segment assets, Duke Energy's Board of Directors and management decided that it was not prudent to continue to invest in the project. On July 5, 2020, Duke Energy and Dominion announced the cancellation of the ACP pipeline.

As a result, Duke Energy recorded a pretax charge to earnings of approximately $2.0 billion for the three months and six months ended June 30, 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Condensed Consolidated Statements of Operations. The tax benefit associated with this abandonment was $374 million and is recorded in Income Tax (Benefit) Expense on the Duke Energy Condensed Consolidated Statements of Operations. Additional charges of less than $100 million are expected to be recorded within the next 12 months as ACP incurs obligations to exit operations.

See Notes 3, 4, and 11 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” “Commitments and Contingencies,” and “Variable Interest Entities,” respectively, for additional information.

Even though the ACP pipeline was a critical infrastructure project for transporting natural gas into the Southeastern United States, natural gas still is an ~~updated climate strategy with a new goal~~important fuel to help Duke Energy reach its carbon reduction goals of 50% by 2030 and net-zero carbon emissions ~~from electric generation~~ by ~~2050. Timelines~~2050 in a reliable and ~~initiatives, as well as implementation of new technologies,~~cost effective manner. In addition, Duke Energy will ~~vary~~continue advancing its clean energy goals by investing in ~~each state in which the company operates~~renewables, battery storage, energy efficiency programs and ~~will involve collaboration with regulators, customers~~grid projects.

Social Justice and ~~other stakeholders.~~

~~Hurricane Dorian~~Racial Equity

In ~~the third quarter of 2019, Hurricane Dorian impacted approximately 270,000 North Carolina customers~~response to national events, in June and ~~30,000 South Carolina customers within~~July 2020, the Duke Energy ~~Progress service territory.~~Foundation pledged $1.75 million to nonprofit organizations committed to social justice and racial equity. This grant builds upon the company’s past efforts to support and encourage diversity, inclusion and equity in our company and communities. The company will continue to engage its employees, local organizations and leaders to understand how to be a part of the long-term solution to the social justice issues our communities and organizations face.

COVID-19

The COVID-19 pandemic is having a significant impact on global health and economic environments. Retail electric sales are down 6.5% for the quarter compared to the prior year due to the pandemic. This reduction however is not as steep as expected in our revised March 2020 forecast reflecting the potential economic impact of COVID-19 on 2020 results. The company also incurred approximately $40 million of incremental COVID-19 costs, primarily bad debt expense, personal protective equipment and cleaning supplies, and experienced another $25 million of waived late payment fees for the six months ended June 30, 2020. The Duke Energy ~~Florida’s~~Registrants are monitoring developments closely, have taken steps to mitigate the impacts to our business, and have a pandemic response plan in place to protect our employees, customers and communities. We expect to begin a sales rebound during the second half of 2020 and have cost mitigation plans.



MD&A	DUKE ENERGY

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 ~~territory was also threatened by Hurricane Dorian~~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 Centers for Disease Control and ~~therefore,~~Prevention’s safety guidelines, including social distancing and use of face masks. Operating procedure changes include additional cleaning and disinfection procedures at our facilities.

•

Customers. The Duke Energy Subsidiary Registrants began, 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 begun to restart their businesses since initially closing in late March and April.

Communities. The Duke Energy ~~Florida also incurred costs~~Foundation announced approximately $6 million in donations and grants as of June 30, 2020, to ~~be prepared for potential impact. Estimated restoration costs for~~support hunger relief, local health and human services nonprofits, and education initiatives across the Duke Energy ~~are approximately $400 million.~~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. During the six months ended June 30, 2020:


◦	Duke Energy issued approximately $3.3 billion of debt.


◦	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.

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.

Rate Case and utility commission filings. 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:~~

•

On July 31, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain remaining issues in the 2019 base rate proceeding. As a result of the additional settlement terms, the NCUC ordered the remote evidentiary hearing to be delayed until August 24, 2020. Duke Energy Carolinas and Duke Energy Progress expect the NCUC to issue an order on each net rate increase by the end of the year. On August 4, 2020 and August 7, 2020, respectively, Duke Energy Carolinas and Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund.

Duke Energy ~~Carolinas and Duke Energy Progress~~Florida filed ~~general rate cases~~a petition with the ~~NCUC~~FPSC on ~~September 30, 2019, and October 30, 2019, respectively, requesting rate increases go into effect~~April 2, 2020, to accelerate a fuel cost refund to customers in the ~~third quarter~~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 Kentucky filed an electric rate case with the KPSC on September 3, 2019. ~~Hearings are expected to begin~~On April 27, 2020, the KPSC issued its decision and new customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky filed its motion for rehearing, and on June 4, 2020, the motion was granted in part and denied in part by the ~~first quarter of 2020 with rates anticipated to go into effect in the second quarter of 2020.~~KPSC.

Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019. ~~Hearings are expected to begin in early~~The IURC issued its order June 29, 2020, ~~with rates to be effective mid-2020.~~

~~Additionally, as~~approving a ~~result~~revenue increase of ~~regulatory orders or settlements, customer~~approximately $146 million, before utility receipt taxes. Customer rates were ~~impacted in 2019 as follows:~~

~~On October 31, 2019, Piedmont received an order from the NCUC and revised customer rates became~~ effective ~~on November 1, 2019.~~

~~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~~July 30, 2020. Several groups filed notices of appeal of the ~~Directive allowing litigation-related costs, Duke Energy Progress customer rates were revised again~~IURC order on 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 of29, 2020.

~~See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.~~COVID-19 deferral requests


◦	Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic on August 7, 2020. Duke Energy Carolinas and Duke Energy Progress are evaluating a filing with the PSCSC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic.

◦

Duke Energy Ohio on May 11, 2020, filed with the PUCO a request seeking deferral of incremental costs incurred due to the COVID-19 pandemic, 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. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application.

◦

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 associated with the COVID-19 pandemic. On June 29, 2020, the IURC issued its order permitting jurisdictional utilities to use regulatory accounting for any impacts associated with the prohibition on utility disconnections, waiver or exclusion of certain utility fees, the use of expanded payment arrangements to aid customers, and for COVID-19 related uncollectible and incremental bad debt expense.



MD&A	DUKE ENERGY

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 Corporation 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 (Loss) and GAAP Reported ~~EPS,~~Earnings (Loss) Per Share, respectively.

Special items included in the periods presented below include the ~~following:~~following, which management believes do not reflect ongoing costs:

~~Impairment Charges~~ACP represents ~~a reduction of 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 of the Tax Act represents an AMT valuation allowance recognized and a true up of prior year tax estimates~~costs related to the ~~Tax Act.~~abandonment of the ACP investment.

Severance represents the reversal of 2018 costs which were deferred as a result of the partial settlement in the Duke Energy Carolinas 2019 North Carolina rate case.

Three Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

GAAP ~~Reported EPS~~reported loss per share was ~~$1.82~~$(1.13) for the ~~third~~second quarter of ~~2019~~2020 compared to ~~$1.51 for~~earnings per share of $1.12 in the ~~third~~second quarter of ~~2018. The increase in~~2019. GAAP reported earnings ~~was~~decreased primarily due to ~~favorable weather, positive rate case impacts, and lower operating expenses~~the abandonment of the investment in ~~Electric Utilities and Infrastructure and a prior year goodwill impairment charge in Commercial Renewables; these items were partially offset by higher corporate interest expense.~~ACP.

As discussed above, management also evaluates financial performance based on adjusted ~~diluted~~ EPS. Duke Energy’s ~~third~~second quarter ~~2019~~2020 adjusted ~~diluted~~ EPS was ~~$1.79~~$1.08 compared to ~~$1.65~~$1.12 for the ~~third~~second quarter of ~~2018.~~2019. The decrease in adjusted earnings was primarily due to unfavorable weather, lower volumes and higher depreciation expense, partially offset by lower operations and maintenance expense.

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



	Three Months Ended June 30,
	2020						2019
(in millions, except per share amounts)	(Loss) Earnings			(Loss) Earnings Per Share			Earnings		EPS
GAAP Reported (Loss) Earnings/GAAP Reported (Loss) Earnings Per Share	$	(817	)	$	(1.13	)	$	820	$	1.12
Adjustments:
ACP^(a)	1,626			2.21			—		—
Adjusted Earnings/Adjusted EPS	$	809		$	1.08		$	820	$	1.12


(a)	Net of ~~$6 million~~ tax ~~expense in 2019. Net~~benefit of ~~$2 million Noncontrolling Interests in 2018.~~$374 million.


~~(b)~~	~~Net of $3 million tax benefit.~~


~~(c)~~	~~Represents a true up of prior year tax estimates related to the Tax Act.~~

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

GAAP Reported EPS was ~~$4.18~~$0.11 for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to ~~$3.11~~$2.36 for the ~~nine~~six months ended ~~September~~June 30, ~~2018. The increase in~~2019. GAAP ~~Reported~~reported earnings ~~was~~decreased primarily due to ~~positive rate case impacts and lower operating expenses~~the abandonment of the investment 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.ACP.

As discussed above, management also evaluates financial performance based on adjusted ~~diluted~~ EPS. Duke Energy’s adjusted ~~diluted~~ EPS was ~~$4.15~~$2.22 for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to ~~$3.87~~$2.36 for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The decrease in adjusted earnings was primarily due to unfavorable weather, lower volumes, higher depreciation expense, higher financing costs and a prior year adjustment related to income tax recognition for equity method investments. This was partially offset by positive rate case impacts, growth in Commercial Renewables and lower operations and maintenance expense.



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



	Six Months Ended June 30,
	2020						2019
(in millions, except per-share amounts)	Earnings			EPS			Earnings		EPS
GAAP Reported Earnings/GAAP Reported EPS	$	82		$	0.11		$	1,720	$	2.36
Adjustments:
ACP^(a)	1,626			2.21			—		—
Severance^(b)	(75		)	(0.10		)	—		—
Adjusted Earnings/Adjusted EPS	$	1,633		$	2.22		$	1,720	$	2.36


(a)	Net of ~~$12 million~~ tax ~~benefit.~~benefit of $374 million.


(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.~~$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 June 30,							Six Months Ended June 30,
(in millions)	2019			2018		Variance			2019			2018		Variance			2020		2019		Variance			2020		2019		Variance
Operating Revenues	$	6,577		$	6,260	$	317		$	17,381		$	16,806	$	575		$	5,034	$	5,475	$	(441	)	$	10,217	$	10,804	$	(587	)
Operating Expenses
Fuel used in electric generation and purchased power	1,994			1,935		59			5,286			5,202		84			1,367		1,662		(295		)	2,834		3,292		(458		)
Operation, maintenance and other	1,357			1,431		(74		)	3,957			4,151		(194		)	1,240		1,318		(78		)	2,565		2,600		(35		)
Depreciation and amortization	1,026			897		129			2,924			2,570		354			993		951		42			1,970		1,898		72
Property and other taxes	301			289		12			899			842		57			296		297		(1		)	599		598		1
Impairment charges	(20		)	31		(51		)	(16		)	246		(262		)	1		4		(3		)	3		4		(1		)
Total operating expenses	4,658			4,583		75			13,050			13,011		39			3,897		4,232		(335		)	7,971		8,392		(421		)
Gains on Sales of Other Assets and Other, net	—			8		(8		)	—			9		(9		)	7		3		4			8		—		8
Operating Income	1,919			1,685		234			4,331			3,804		527			1,144		1,246		(102		)	2,254		2,412		(158		)
Other Income and Expenses, net	87			107		(20		)	267			286		(19		)	89		89		—			174		180		(6		)
Interest Expense	336			322		14			1,004			955		49			344		330		14			683		668		15
Income Before Income Taxes	1,670			1,470		200			3,594			3,135		459			889		1,005		(116		)	1,745		1,924		(179		)
Income Tax Expense	285			303		(18		)	650			643		7			136		196		(60		)	287		365		(78		)
Segment Income	$	1,385		$	1,167	$	218		$	2,944		$	2,492	$	452		$	753	$	809	$	(56	)	$	1,458	$	1,559	$	(101	)

Duke Energy Carolinas GWh sales	25,587			25,607		(20		)	69,019			70,506		(1,487		)	19,083		21,604		(2,521		)	40,319		43,432		(3,113		)
Duke Energy Progress GWh sales	19,502			19,625		(123		)	52,072			52,747		(675		)	14,807		16,222		(1,415		)	30,477		32,570		(2,093		)
Duke Energy Florida GWh sales	12,996			12,375		621			32,468			31,798		670			10,800		11,301		(501		)	19,417		19,622		(205		)
Duke Energy Ohio GWh sales	7,135			6,964		171			18,959			19,183		(224		)	5,262		5,660		(398		)	11,085		11,824		(739		)
Duke Energy Indiana GWh sales	8,711			9,114		(403		)	24,181			25,900		(1,719		)	6,773		7,437		(664		)	14,379		15,470		(1,091		)
Total Electric Utilities and Infrastructure GWh sales	73,931			73,685		246			196,699			200,134		(3,435		)	56,725		62,224		(5,499		)	115,677		122,918		(7,241		)
Net proportional MW capacity in operation									49,711			48,757		954										50,364		49,725		639

Three Months Ended June 30, 2020, as compared to June 30, 2019

Electric Utilities and Infrastructure’s variance is due to unfavorable weather, lower weather-normal retail sale volumes driven by impacts from the COVID-19 pandemic 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 $332 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic;

100



MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

a $79 million decrease in retail sales, net of fuel revenues, due to unfavorable weather compared to prior year;

a $47 million decrease in wholesale revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year and lower capacity volumes at Duke Energy Progress; and

a $32 million decrease in weather-normal retail sale volumes due to lower nonresidential customer demand driven by impacts from the COVID-19 pandemic.

Partially offset by:

a $23 million increase in retail pricing due to Duke Energy Florida's base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment; and

a $13 million increase due to higher pricing from South Carolina retail rate case, net of a return of EDIT to customers.

Operating Expenses. The variance was driven primarily by:

a $295 million decrease in fuel used in electric generation and purchased power primarily due to lower generation demand and lower fuel, coal, and natural gas costs; and

a $78 million decrease in operation, maintenance and other expense driven by lower employee benefit costs and lower outage costs.

Partially offset by:

a $42 million increase in depreciation and amortization expense primarily due to additional plant in service and impacts from the South Carolina retail rate cases.

Interest Expense. The variance was primarily due to higher outstanding debt in the current year and favorable debt return on deferred coal ash spend in the prior year.

Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes. The ETRs for the three months ended June 30, 2020, and June 30, 2019, were 15.3% and 19.5%. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.

Six Months Ended June 30, 2020, as compared to June 30, 2019

Operating Revenues. The variance was driven primarily by:

a $482 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic;

a $124 million decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year;

a $63 million decrease in wholesale revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year and lower capacity volumes at Duke Energy Progress; and

a $15 million decrease in weather-normal retail sale volumes due to lower nonresidential customer demand driven by impacts from the COVID-19 pandemic.

Partially offset by:

a $39 million increase in retail pricing due to Duke Energy Florida's base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment; and

a $32 million increase due to higher pricing from South Carolina retail rate case, net of a return of EDIT to customers.

Operating Expenses. The variance was driven primarily by:

a $458 million decrease in fuel used in electric generation and purchased power primarily due to lower generation demand and lower fuel, coal, and natural gas costs; and

a $35 million decrease in operation, maintenance and other expense primarily lower employee benefit costs and lower outage costs.

Partially offset by:

a $72 million increase in depreciation and amortization expense primarily due to additional plant in service and impacts from the South Carolina retail rate cases.

Interest Expense. The variance was primarily due to higher outstanding debt in the current year and favorable debt return on deferred coal ash spend in the prior year.

101



MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

~~Three 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 Duke Energy Carolinas North and South Carolina rate cases, Duke Energy Florida's base rate adjustments due 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:~~

a $167 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;

~~an $88 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year; and~~

~~a $51 million increase in fuel related revenues.~~

~~Operating Expenses.~~ ~~The variance was driven primarily by:~~

a $129 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;

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.~~

Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred ~~taxes, partially offset by an increase in pretax income.~~taxes. The ETRs for the ~~three~~six months ended ~~September~~June 30, 2020, and 2019, were 16.4% and ~~2018, were 17.1% and 20.6%~~19.0%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.

~~Nine~~Gas Utilities and Infrastructure



	Three Months Ended June 30,								Six Months Ended June 30,
(in millions)	2020			2019		Variance			2020			2019		Variance
Operating Revenues	$	289		$	306	$	(17	)	$	953		$	1,062	$	(109	)
Operating Expenses
Cost of natural gas	60			76		(16		)	259			403		(144		)
Operation, maintenance and other	99			107		(8		)	209			217		(8		)
Depreciation and amortization	62			63		(1		)	128			128		—
Property and other taxes	26			27		(1		)	56			60		(4		)
Total operating expenses	247			273		(26		)	652			808		(156		)
Operating Income	42			33		9			301			254		47
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates	(1,970		)	31		(2,001		)	(1,933		)	64		(1,997		)
Other income and expenses, net	14			6		8			26			13		13
Total other income and expenses	(1,956		)	37		(1,993		)	(1,907		)	77		(1,984		)
Interest Expense	37			27		10			68			57		11
(Loss) Income Before Income Taxes	(1,951		)	43		(1,994		)	(1,674		)	274		(1,948		)
Income Tax (Benefit) Expense	(375		)	3		(378		)	(347		)	8		(355		)
Segment (Loss) Income	$	(1,576	)	$	40	$	(1,616	)	$	(1,327	)	$	266	$	(1,593	)

Piedmont LDC throughput (dekatherms)	96,807,940			104,684,733		(7,876,793		)	245,311,935			256,347,474		(11,035,539		)
Duke Energy Midwest LDC throughput (Mcf)	15,106,407			13,742,907		1,363,500			48,892,241			52,281,179		(3,388,938		)

Three Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

~~Electric~~Gas Utilities and Infrastructure’s results were impacted primarily 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~~abandonment of the ~~Citrus County CC being placed~~investment 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.~~ACP. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

a ~~$493~~$16 million decrease due to lower natural gas costs passed through to customers and decreased off-system sales natural gas costs; and

a $7 million decrease due to return of EDIT to customers.

Partially offset by:

a $7 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.~~case increases.

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~~$16 million decrease in ~~impairment charges primarily~~cost of natural gas due to ~~the impacts associated with the prior year Duke Energy Carolinas~~lower natural gas prices and ~~Duke Energy Progress North Carolina rate cases;~~decreased off-system sales natural gas costs; and

~~a $194~~an $8 million decrease in operation, maintenance and other ~~expense primarily~~ due to ~~lower payroll and benefit~~deferral of previously expensed IT project costs ~~resulting from prior year workforce reductions~~ and lower ~~storm costs at Duke Energy Progress and Duke Energy Carolinas~~employee benefits costs.

Equity in ~~the current year.~~

~~Other Income and Expenses, net.~~(losses) earnings of unconsolidated affiliates. The variance was driven primarily by ~~AFUDC equity return ending on~~ the ~~Citrus County CC~~abandonment of the investment in ~~the fourth quarter of 2018 at Duke Energy Florida.~~ACP.

Interest Expense.The variance was driven primarily by interest on the EDIT balance being returned to customers and higher debt outstanding in the current year, ~~and~~offset by lower AFUDC debt ~~return ending in the fourth quarter of 2018 on the Citrus County CC at Duke Energy Florida.~~income.

Income Tax ~~Expense.~~Benefit. The ~~increase~~decrease in tax expense was primarily due to ~~an increase~~a decrease in pretax income ~~mostly offset~~driven by the impact of an ~~increase in~~abandonment of the ~~amortization of excess deferred taxes.~~ACP investment. The ETRs for the ~~nine~~three months ended ~~September~~June 30, 2020, and 2019, were 19.2% and ~~2018, were 18.1% and 20.5%~~7%, respectively. The ~~decrease~~increase in the ETR was primarily due to the impact of an ~~increase in~~abandonment of the ~~amortization of excess deferred taxes.~~ACP investment.

~~Matters Impacting Future Electric~~Six Months Ended June 30, 2020, as compared to June 30, 2019

Gas Utilities and ~~Infrastructure Results~~

~~On May 21, 2019, Duke Energy Carolinas and Duke Energy Progress received orders from~~Infrastructure’s results were impacted primarily by the ~~PSCSC granting the companies’ requests for retail rate increases but denying recovery~~abandonment of ~~certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress intend to file notices of appeals with the South Carolina Supreme Court within 30 days~~ACP. The following is a detailed discussion of the order that was received on October 18, 2019. 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.variance drivers by line item.

On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas 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 the Office 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, 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, for additional information.

102

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. 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, Duke Energy Indiana filed a general rate case with the IURC, and Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. The outcome of these rate cases could materially impact 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.

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 — 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 primarily by:

a ~~$10~~$144 million decrease ~~primarily~~ due to lower natural gas costs passed through to customers and ~~lower volumes~~decreased off-system sales natural gas costs; and

a $27 million decrease due to ~~unfavorable weather.~~return of EDIT to customers.

Partially offset by:

a $3$60 million increase ~~primarily~~ due to North Carolina ~~and Tennessee IMR~~base rate case increases.

Operating Expenses. The ~~drivers were:~~variance was driven primarily by:

a ~~$10~~$144 million decrease in cost of natural gas ~~primarily~~ due to lower natural gas prices and decreased off-system sales natural gas ~~costs~~costs; and ~~lower natural gas prices.~~

~~Partially offset by:~~

~~a $7~~an $8 million ~~increase~~decrease in operation, maintenance and other ~~expense primarily~~ due to ~~increased information technology outside services~~deferral of previously expensed IT project 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.~~lower employee benefits costs.

~~Other Income and Expenses, net.~~Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by ~~higher equity earnings from ACP~~the abandonment of the investment in ~~the current year.~~ACP.

Interest Expense. The variance was driven primarily by interest on the EDIT balance being returned to customers and 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~~lower AFUDC debt ~~interest.~~income.

Income Tax ~~(Benefit) Expense.~~ Benefit. The decrease in tax expense was primarily due to a decrease in pretax income driven by the impact of an abandonment of the ACP investment. The ETRs for the six months ended June 30, 2020, and 2019, were 20.7% and 2.9%, respectively. The increase in the ~~tax benefit~~ETR was primarily due to ~~current year AFUDC equity.~~

~~Nine Months Ended September 30,~~an adjustment, recorded in the first quarter of 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~~

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 legal challenges and ongoing discussions with customers, ACP expects mechanical completion of the full project in late 2021 with in-service likely in the first half of 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 billion, excluding financing costs. Given the status of current discussions with FWS regarding a new BiOp and ITS, as well as discussions with contractors regarding efficiencies which may be realized going forward, these estimates are under review and subject to upward pressure. Abnormal weather, work delays (including delays due to judicial or regulatory action) 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 13 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. 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.



~~MD&A~~	~~SEGMENT RESULTS — COMMERCIAL RENEWABLES~~

Commercial Renewables


	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended June 30,									Six Months Ended June 30,
(in millions)	2019			2018			Variance			2019				2018			Variance			2020			2019			Variance			2020			2019			Variance
Operating Revenues	$	138		$	127		$	11		$	362			$	347		$	15		$	123		$	118		$	5		$	252		$	224		$	28
Operating Expenses
Operation, maintenance and other	81			85			(4		)	211				209			2			63			64			(1		)	132			130			2
Depreciation and amortization	43			40			3			123				116			7			48			40			8			96			80			16
Property and other taxes	6			6			—			18				19			(1		)	8			6			2			16			12			4
Impairment charges	—			93			(93		)	—				93			(93		)	6			—			6			6			—			6
Total operating expenses	130			224			(94		)	352				437			(85		)	125			110			15			250			222			28
Operating Income (Loss)	8			(97		)	105			10				(90		)	100
Operating (Loss) Income																				(2		)	8			(10		)	2			2			—
Other Income and Expenses, net	13			2			11			3				22			(19		)	2			(8		)	10			1			(10		)	11
Interest Expense	35			21			14			78				66			12			13			22			(9		)	31			43			(12		)
Loss Before Income Taxes	(14		)	(116		)	102			(65		)		(134		)	69			(13		)	(22		)	9			(28		)	(51		)	23
Income Tax Benefit	(35		)	(37		)	2			(94		)	��	(112		)	18			(13		)	(24		)	11			(37		)	(59		)	22
Less: Loss Attributable to Noncontrolling Interests	(19		)	(17		)	(2		)	(110		)		(18		)	(92		)
Segment Income (Loss)	$	40		$	(62	)	$	102		$	139			$	(4	)	$	143
Add: Loss Attributable to Noncontrolling Interests																				90			84			6			138			91			47
Segment Income																				$	90		$	86		$	4		$	147		$	99		$	48

Renewable plant production, GWh	2,146			1,897			249			6,528				6,548			(20		)	2,660			2,314			346			5,097			4,382			715
Net proportional MW capacity in operation^(a)										3,162				2,976			186												3,779			3,157			622


(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~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

Commercial Renewables' results were favorable primarily due to ~~higher revenues and prior year goodwill impairment charges.~~new investments in solar projects. During the second quarter of 2020, Commercial Renewables had over 250MW of capacity placed in service. 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 favorable wind resource.~~new solar projects placed in service.

Operating Expenses. The ~~decrease~~increase was primarily due to ~~goodwill~~higher depreciation and property tax expense as a result of new projects placed in service and an impairment ~~charges~~charge in the ~~prior year.~~current year related to a non-contracted wind project.

~~Interest Expense.~~Other Income and Expenses, net. The increase was primarily due to mark-to-market losses in the solar portfolio in the ~~current~~prior 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.~~Interest Expense. ~~The increase was primarily due to favorable solar portfolio revenue due to new solar projects placed in service and higher irradiance.~~

~~Operating Expenses.~~The decrease was primarily due to ~~goodwill impairment charges~~higher capitalized interest for solar and wind projects in ~~the prior year.~~development.

~~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.~~

103

~~Income Tax Benefit.~~ The decrease in the tax benefit was primarily driven by taxes associated with Duke Energy's interest in a tax equity solar project recorded in the second quarter of 2019 and a reduction in production tax credits generated.

~~Loss Attributable to Noncontrolling Interests.~~ ~~The increase was primarily due to the new tax equity solar projects entered into during 2019.~~

~~Matters Impacting Future Commercial Renewables Results~~

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 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 assets were not impaired; however, 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,"~~Income Tax Benefit. The decrease in the ~~Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, 2018, for discussion of risks~~tax benefit was primarily driven by a decrease in production tax credits generated and an increase in taxes associated with ~~the Tax Act.~~new tax equity investments.

Loss Attributable to Noncontrolling Interests. The increase was primarily due to tax equity structures related to new renewable investments.

~~Other~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2019
2018
Variance
2019
2018
Variance
Operating Revenues $ 25
$ 34
$ (9 ) $ 71
$ 101
$ (30 )
Operating Expenses 27
54
(27 ) 66
167
(101 )
Gains (Losses) on Sales of Other Assets and Other, net —
3
(3 ) —
(96 ) 96
Operating (Loss) Income (2 ) (17 ) 15
5
(162 ) 167
Other Income and Expenses, net 24
40
(16 ) 98
81
17
Interest Expense 185
163
22
536
484
52
Loss Before Income Taxes (163 ) (140 ) (23 ) (433 ) (565 ) 132
Income Tax Benefit (54 ) (98 ) 44
(132 ) (125 ) (7 )
Less: Net Income Attributable to Noncontrolling Interests —
2
(2 ) —
6
(6 )
Less: Preferred Dividends 15
—
15
27
—
27
Net Loss $ (124 )
$ (44 ) $ (80 ) $ (328 ) $ (446 ) $ 118

~~Three~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

~~The variance was driven by lower income tax benefit, higher interest expense,~~Commercial Renewables' results were favorable primarily due to new investments in renewable projects and favorable wind revenue. Since the ~~declaration~~second quarter of ~~the preferred stock dividends, offset by the absence~~2019, Commercial Renewables has placed in ~~the current year~~service over 700MW of ~~costs related to the Piedmont acquisition~~.capacity.

The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The increase was primarily due to new projects placed in service and favorable wind portfolio revenue as a result of favorable market pricing and wind resource.

Operating Expenses. The increase was primarily due to higher depreciation and property tax expense as a result of new projects placed in service and an impairment charge in the current year related to a non-contracted wind project.

Other Income and Expenses, net. The increase was primarily due to mark-to-market losses in the solar portfolio in the prior year.

Interest Expense. The decrease was primarily due to higher capitalized interest for solar and wind projects in development.

Income Tax Benefit. The decrease in the tax benefit was primarily driven by an increase in taxes associated with new tax equity investments and a decrease in production tax credits generated.

Loss Attributable to Noncontrolling Interests. The increase was primarily due to tax equity structures related to new renewable investments.

Other



	Three Months Ended June 30,									Six Months Ended June 30,
(in millions)	2020			2019			Variance			2020			2019			Variance
Operating Revenues	$	26		$	25		$	1		$	49		$	46		$	3
Operating Expenses	37			11			26			(52		)	39			(91		)
Operating (Loss) Income	(11		)	14			(25		)	101			7			94
Other Income and Expenses, net	45			30			15			12			74			(62		)
Interest Expense	167			180			(13		)	338			351			(13		)
Loss Before Income Taxes	(133		)	(136		)	3			(225		)	(270		)	45
Income Tax Benefit	(64		)	(33		)	(31		)	(83		)	(78		)	(5		)
Less: Preferred Dividends	15			12			3			54			12			42
Net Loss	$	(84	)	$	(115	)	$	31		$	(196	)	$	(204	)	$	8

Three Months Ended June 30, 2020, as compared to June 30, 2019

The variance was primarily driven by lower state income tax expense. The following is a detailed discussion of the variance drivers by line item.

Operating Expenses. The increase was primarily driven by higher loss experience related to non-property captive insurance claims and higher expenses associated with certain employee benefit obligations.

Other Income and Expenses, net. The variance was primarily due to higher returns on investments that fund certain employee benefit obligations, partially offset by lower earnings on the NMC investment.

Interest Expense. The variance was primarily due to lower outstanding short-term debt and lower interest rates.

Income Tax Benefit. The increase in the tax benefit was primarily driven by lower state income tax expense. The ETRs for the three months ended June 30, 2020, and 2019 were 48.1% and 24.3%, respectively. The increase in the ETR was primarily due to lower state income tax expense.

Six Months Ended June 30, 2020, as compared to June 30, 2019

The variance was primarily driven by a reversal of corporate allocated severance costs, partially offset by lower returns on investments and the declaration of preferred stock dividends. The following is a detailed discussion of the variance drivers by line item.

Operating Expenses. The decrease was primarily due to the deferral of 2018 corporate allocated severance costs due to the 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~~ lower earnings on the NMC ~~investment.~~investment and lower interest income due to a tax true up in the prior year.

Interest Expense. The variance was primarily due to ~~higher~~lower outstanding short-term debt ~~in the current year.~~

~~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 in pretax losses.~~lower interest rates.

Preferred Dividends. The variance was driven by the declaration of ~~the~~ preferred stock ~~dividend on preferred stock issued in 2019.~~

~~Nine Months Ended September 30, 2019, as compared to September 30, 2018~~

The variance was driven by the prior year loss on sale of the retired Beckjord station, prior year valuation allowance against AMT credits, and absence in the current year of costs related to the Piedmont acquisition, offset by higher interest expense and the declarations of the preferred stock dividend. The following is a detailed 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 associated with the Piedmont acquisition and OVEC fuel expense in the prior year.~~

~~Gains (Losses) on Sales of Other Assets and Other, net.~~ The variance was driven by the prior year loss on sale 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~~dividends on preferred stock issued in 2019.

104



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,								Six Months Ended June 30,
(in millions)	2019		2018			Variance			2020		2019		Variance
Operating Revenues	$	5,619	$	5,525		$	94		$	3,358	$	3,457	$	(99	)
Operating Expenses
Fuel used in electric generation and purchased power	1,371		1,370			1			829		867		(38		)
Operation, maintenance and other	1,324		1,464			(140		)	816		881		(65		)
Depreciation and amortization	1,013		866			147			718		663		55
Property and other taxes	221		214			7			156		155		1
Impairment charges	11		191			(180		)	2		5		(3		)
Total operating expenses	3,940		4,105			(165		)	2,521		2,571		(50		)
Losses on Sales of Other Assets and Other, net	—		(1		)	1
Operating Income	1,679		1,419			260			837		886		(49		)
Other Income and Expenses, net	106		108			(2		)	86		72		14
Interest Expense	346		323			23			248		227		21
Income Before Income Taxes	1,439		1,204			235			675		731		(56		)
Income Tax Expense	255		268			(13		)	102		137		(35		)
Net Income	$	1,184	$	936		$	248		$	573	$	594	$	(21	)

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~~5.0	)%
General service sales	(~~1.8~~6.7	)%
Industrial sales	(~~4.1~~9.6	)%
Wholesale power sales	(~~13.4~~3.0	)%
Joint dispatch sales	~~23.0~~(60.0	)%
Total sales	(~~2.1~~7.2	)%
Average number of customers	~~2.2~~1.8	%

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

Operating Revenues. The variance was driven primarily by:

a ~~$151~~$77 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 $7 million increase~~decrease in retail sales ~~net of~~due to unfavorable weather in the current year; and

a $66 million decrease in fuel revenues due to ~~favorable weather in the current year.~~lower prices and retail sales volumes.

Partially offset by:

a ~~$47~~$37 million decrease in rider revenues primarily due to excess deferred taxes and energy efficiency programs, partially offset by a decrement rider relating to nuclear decommissioning that ended in the prior year; and

~~a $24 million decrease~~increase in weather-normal retail sales ~~volumes.~~volumes; and

a $17 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers.

Operating Expenses. The variance was driven primarily by:

~~a $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~~$65 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 $38 million decrease in fuel used in electric generation and purchased power primarily due to lower retail sales volumes, net of a prior period true up.

Partially offset by:

a ~~$147~~$55 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 and higher amortization of deferred coal ash costs associated with the prior year North~~ Carolina rate case.



~~MD&A~~	~~DUKE ENERGY CAROLINAS~~

Other Income and Expenses, net. The variance was primarily due to higher AFUDC equity in the current year.

Interest Expense. The variance was primarily due to higher debt outstanding in the current year.

Income Tax Expense.The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred ~~taxes and favorable tax return true ups, partially offset by an increase in pretax income.~~taxes.

~~Matters Impacting Future Results~~

105

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. 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.



MD&A	PROGRESS ENERGY

PROGRESS ENERGY

Results of Operations


	Nine Months Ended September 30,								Six Months Ended June 30,
(in millions)	2019			2018		Variance			2020		2019			Variance
Operating Revenues	$	8,558		$	8,119	$	439		$	4,920	$	5,316		$	(396	)
Operating Expenses
Fuel used in electric generation and purchased power	3,100			3,019		81			1,540		1,913			(373		)
Operation, maintenance and other	1,813			1,913		(100		)	1,143		1,173			(30		)
Depreciation and amortization	1,377			1,183		194			884		881			3
Property and other taxes	439			399		40			272		280			(8		)
Impairment charges	(25		)	34		(59		)
Total operating expenses	6,704			6,548		156			3,839		4,247			(408		)
Gains on Sales of Other Assets and Other, net	—			23		(23		)
Gains (Losses) on Sales of Other Assets and Other, net									6		(1		)	7
Operating Income	1,854			1,594		260			1,087		1,068			19
Other Income and Expenses, net	106			128		(22		)	65		65			—
Interest Expense	650			626		24			405		438			(33		)
Income Before Income Taxes	1,310			1,096		214			747		695			52
Income Tax Expense	212			186		26			120		118			2
Net Income	1,098			910		188			627		577			50
Less: Net Income Attributable to Noncontrolling Interests	—			6		(6		)
Net Income Attributable to Parent	$	1,098		$	904	$	194

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

Operating Revenues. The variance was driven primarily by:

a ~~$299~~$380 million ~~increase~~decrease in ~~retail pricing primarily due~~fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the ~~impacts of the prior year North Carolina rate case and current year South Carolina rate case~~COVID-19 pandemic at Duke Energy ~~Progress, Duke Energy Florida's base rate adjustments related to Citrus County CC being placed in service~~Florida and ~~annual increases from the 2017 Settlement Agreement;~~

~~a $76 million increase in~~lower fuel ~~revenues primarily related to increased fuel cost recovery due to extreme weather~~prices, volumes and native load transfer sales in the ~~prior~~current year at Duke Energy ~~Progress, partially offset by a decrease in fuel and capacity rates billed to retail customers at Duke Energy Florida;~~Progress;

a ~~$56~~$49 million ~~increase~~decrease in wholesale power revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year and lower capacity volumes at Duke Energy Progress, partially offset by increased ~~demand;~~demand at Duke Energy Florida;

a ~~$17~~$44 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;

a $32 million decrease in rider revenues primarily due to the Crystal River 3 uprate regulatory asset being fully recovered in 2019 at Duke Energy Florida; and

a ~~$17~~$29 million decrease in weather-normal retail sales volume.

Partially offset by:

a $55 million increase in storm revenues due to Hurricane Dorian collections at Duke Energy Florida;

a $39 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 $15 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers at Duke Energy Progress; and

a $12 million increase in other revenues primarily due to increased transmission revenues ~~and non-regulated products and services revenues~~ at Duke Energy Florida.

~~Partially offset by:~~

~~a $32 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 ~~$194~~$373 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~~at Duke Energy Florida;

a $30 million decrease in operation, maintenance and other expense at Duke Energy Progress primarily driven by the deferral of ~~deferrals,~~2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and energy efficiency program costs, partially offset by storm cost amortizations at Duke Energy Florida; and

~~a $40~~an $8 million ~~increase~~decrease in property and other taxes primarily due to ~~current year~~lower revenue related taxes as a result of the decreased fuel revenues, and lower accrued property ~~tax reassessments and a favorable sales and use tax credit in the prior year~~taxes 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 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 and a reduction of a prior year impairment 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.

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 pretax income, partially offset by an increase in the amortization of excess deferred taxes.~~

106

~~Matters Impacting Future Results~~

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. 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.



MD&A	DUKE ENERGY PROGRESS

DUKE ENERGY PROGRESS

Results of Operations


	Nine Months Ended September 30,							Six Months Ended June 30,
(in millions)	2019		2018		Variance			2020		2019		Variance
Operating Revenues	$	4,559	$	4,333	$	226		$	2,581	$	2,871	$	(290	)
Operating Expenses
Fuel used in electric generation and purchased power	1,571		1,452		119			800		994		(194		)
Operation, maintenance and other	1,070		1,187		(117		)	622		692		(70		)
Depreciation and amortization	855		723		132			544		541		3
Property and other taxes	131		115		16			91		85		6
Impairment charges	—		33		(33		)
Total operating expenses	3,627		3,510		117			2,057		2,312		(255		)
Gains on Sales of Other Assets and Other, net	—		9		(9		)	5		—		5
Operating Income	932		832		100			529		559		(30		)
Other Income and Expenses, net	75		61		14			41		48		(7		)
Interest Expense	232		241		(9		)	137		158		(21		)
Income Before Income Taxes	775		652		123			433		449		(16		)
Income Tax Expense	125		120		5			68		77		(9		)
Net Income	$	650	$	532	$	118		$	365	$	372	$	(7	)



Increase (Decrease) over prior period	~~2019~~2020
Residential sales	(~~4.1~~6.0	)%
General service sales	(~~1.6~~8.8	)%
Industrial sales	~~1.6~~(4.8	)%
Wholesale power sales	(~~2.2~~12.2	)%
Joint dispatch sales	~~(0.3~~22.8	)%
Total sales	(~~1.3~~6.4	)%
Average number of customers	~~1.3~~1.6	%

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

Operating Revenues. The variance was driven primarily by:

a ~~$101~~$185 million ~~increase~~decrease in ~~fuel revenues primarily related to increased~~ fuel cost recovery ~~due to extreme weather~~driven by lower fuel prices and volumes as well as less native load transfer sales in the ~~prior~~current year;

a ~~$91~~$61 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 million increase~~decrease in wholesale power revenues, net of fuel, primarily due to higher recovery of coal ash cost ~~recovery~~in the prior year and decreased volumes, partially offset by increased capacity rates;

a $60 million decrease in retail sales due to unfavorable weather in the current year; and

a $13 million decrease in weather-normal retail sales volumes in the current year.

Partially Offset by:

a ~~$17~~$15 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~~$194 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 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.~~



~~MD&A~~	~~DUKE ENERGY PROGRESS~~

~~Partially offset by:~~

~~a $117~~$70 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to ~~lower storm costs in current year,~~the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, 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.~~energy efficiency program costs.

~~Other Income and Expenses, net.~~Interest Expense. The variance was driven primarily by ~~life insurance proceeds~~.lower interest rates on outstanding debt.

Income Tax Expense. The ~~increase~~decrease in tax expense was primarily due to ~~an increase~~a decrease in pretax income ~~partially offset by~~and an increase in the amortization of excess deferred taxes.

~~Matters Impacting Future Results~~

107

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 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 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. 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.



MD&A	DUKE ENERGY FLORIDA

DUKE ENERGY FLORIDA

Results of Operations


	Nine Months Ended September 30,								Six Months Ended June 30,
(in millions)	2019			2018		Variance			2020		2019			Variance
Operating Revenues	$	3,987		$	3,780	$	207		$	2,330	$	2,439		$	(109	)
Operating Expenses
Fuel used in electric generation and purchased power	1,529			1,567		(38		)	740		919			(179		)
Operation, maintenance and other	730			719		11			514		474			40
Depreciation and amortization	522			460		62			340		340			—
Property and other taxes	309			284		25			180		196			(16		)
Impairment charges	(25		)	1		(26		)
Total operating expenses	3,065			3,031		34			1,774		1,929			(155		)
Losses on Sales of Other Assets and Other, net									—		(1		)	1
Operating Income	922			749		173			556		509			47
Other Income and Expenses, net	39			75		(36		)	25		25			—
Interest Expense	246			210		36			164		165			(1		)
Income Before Income Taxes	715			614		101			417		369			48
Income Tax Expense	129			100		29			81		72			9
Net Income	$	586		$	514	$	72		$	336	$	297		$	39

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~~1.2	%
General service sales	~~1.0~~(6.6	)%
Industrial sales	~~(6.3~~5.4	)%
Wholesale and other	~~32.4~~(10.7	)%
Total sales	~~2.1~~(1.0	)%
Average number of customers	~~1.6~~1.7	%

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

Operating Revenues. The variance was driven primarily by:

a ~~$208~~$195 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the COVID-19 pandemic;

a $32 million decrease in rider revenues primarily due to full recovery of the Crystal River 3 uprate regulatory asset in 2019; and

a $16 million decrease in weather-normal retail sales volumes.

Partially offset by:

a $55 million increase in storm revenues due to Hurricane Dorian collections;

a $39 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~~$16 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;

a ~~$17~~$12 million increase in other revenues primarily due to increased transmission ~~revenues and non-regulated products and services~~ revenues; and

a $9$12 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~~$179 million decrease in fuel used in electric generation and purchased power primarily due to lower ~~purchased power and lower~~ fuel ~~costs, net of deferrals;~~costs; and

a ~~$26~~$16 million decrease in ~~impairment charges~~property and other taxes driven by lower gross receipts taxes due to decreased fuel revenues as well as lower accrued property taxes.

Partially offset by:

a $40 million increase in operation, maintenance and other expense primarily due to ~~a reduction of a prior year impairment at 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.~~

~~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.~~storm cost amortizations.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income.

~~Matters Impacting Future Results~~

108

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.

~~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



	Six Months Ended June 30,
(in millions)	2020		2019		Variance
Operating Revenues
Regulated electric	$	676	$	691	$	(15	)
Regulated natural gas	245		273		(28		)
Total operating revenues	921		964		(43		)
Operating Expenses
Fuel used in electric generation and purchased power	164		179		(15		)
Cost of natural gas	43		64		(21		)
Operation, maintenance and other	218		255		(37		)
Depreciation and amortization	136		130		6
Property and other taxes	161		158		3
Total operating expenses	722		786		(64		)
Operating Income	199		178		21
Other Income and Expenses, net	7		15		(8		)
Interest Expense	49		54		(5		)
Income Before Income Taxes	157		139		18
Income Tax Expense	26		23		3
Net Income	$	131	$	116	$	15

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	)%	(2.3	)%	(7.5	)%
General service sales	(2.6	)%	0.8	%	(8.1	)%	(10.1	)%
Industrial sales	(1.4	)%	1.9	%	(8.0	)%	(3.2	)%
Wholesale electric power sales	46.8	%	n/a		(52.0	)%	n/a
Other natural gas sales	n/a		1.4	%	n/a		(0.5	)%
Total sales	(1.2	)%	0.3	%	(6.3	)%	(6.5	)%
Average number of customers	0.6	%	0.8	%	1.3	%	0.8	%

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

Operating Revenues. The variance was driven primarily by:

a ~~$52~~$34 million decrease in fuel related revenues primarily due to lower natural gas prices and decreased volumes;

an $8 million decrease in other revenues due to lower OVEC sales into PJM; and

a $6 million decrease in bulk power marketing sales.

Partially offset by:

a $10 million increase in retail pricing primarily due to rate case ~~impacts; and~~

~~a $15 million increase~~impacts in ~~point-to-point transmission revenues.~~

~~Partially offset by:~~

~~a $28 million decrease in fuel related revenues primarily due to a decrease in price;~~

~~a $15 million decrease in FTR rider revenues;~~

~~a $14 million decrease in rider revenues primarily related to the implementation of new base rates; and~~

~~a $9 million decrease in OVEC revenues.~~Kentucky.

Operating Expenses. The variance was driven primarily by:

a ~~$41~~$36 million ~~increase~~decrease in fuel expense, primarily driven by lower natural gas prices and decreased volumes; and

a $37 million decrease in operations, maintenance and other expense primarily due to Customer Connect and Network Integration Transmission Services deferrals, the ~~FERC approved settlement refund~~timing of ~~certain transmission~~energy efficiency programs and outage costs, ~~previously billed by PJM recorded in 2018;~~lower employee benefit expenses and

~~an $11 million increase in property~~ lower vegetation and ~~other taxes primarily due to additional plant in service.~~pole maintenance costs.

Partially offset by:

a ~~$34~~$6 million ~~decrease~~increase in ~~fuel used~~depreciation and amortization primarily driven by an increase in ~~electric generation and purchased power expense~~distribution plant, partially offset by lower amortization due to the ~~prior year outage at East Bend Station~~suspension of the MGP rider in Ohio.

Other Income and ~~the deferral of OVEC related purchased power costs.~~

~~Losses on Sales of Other Assets and Other,~~Expenses, net.~~The increase was driven by the loss on the prior year sale of Beckjord.~~

~~Interest Expense.~~ The variance was ~~driven primarily by higher debt outstanding in the current year.~~

~~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.~~lower AFUDC equity and lower intercompany interest income.

~~Matters Impacting Future Results~~

109

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. 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.



MD&A	DUKE ENERGY INDIANA

DUKE ENERGY INDIANA

Results of Operations


	Nine Months Ended September 30,							Six Months Ended June 30,
(in millions)	2019		2018		Variance			2020		2019		Variance
Operating Revenues	$	2,289	$	2,288	$	1		$	1,309	$	1,482	$	(173	)
Operating Expenses
Fuel used in electric generation and purchased power	720		730		(10		)	355		486		(131		)
Operation, maintenance and other	569		576		(7		)	357		377		(20		)
Depreciation and amortization	393		386		7			266		263		3
Property and other taxes	55		56		(1		)	42		39		3
Impairment charges	—		30		(30		)
Total operating expenses	1,737		1,778		(41		)	1,020		1,165		(145		)
Operating Income	552		510		42			289		317		(28		)
Other Income and Expenses, net	35		36		(1		)	19		27		(8		)
Interest Expense	111		125		(14		)	85		71		14
Income Before Income Taxes	476		421		55			223		273		(50		)
Income Tax Expense	113		104		9			43		66		(23		)
Net Income	$	363	$	317	$	46		$	180	$	207	$	(27	)



Increase (Decrease) over prior year	~~2019~~2020
Residential sales	(~~4.9~~3.5	)%
General service sales	(~~2.5~~9.3	)%
Industrial sales	(~~2.3~~9.8	)%
Wholesale power sales	(~~28.9~~4.3	)%
Total sales	(~~6.6~~7.1	)%
Average number of customers	~~1.2~~1.4	%

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~September~~June 30, ~~2018~~2019

Operating Revenues. The variance was driven primarily by:

a ~~$25~~$118 million ~~increase~~decrease in fuel revenues primarily due to ~~higher TDSIC rider revenues.~~lower fuel cost recovery driven by customer demand and fuel prices;

~~Partially offset by:~~a $20 million decrease in weather-normal retail sales volumes driven by lower nonresidential customer demand;

an $18 million decrease in ~~wholesale power~~rider revenues primarily ~~due~~related to lower Edwardsport IGCC sales volumes; and

a $9 million decrease primarily related to the ~~expiration~~true up of ~~a contract with a~~ wholesale ~~customer; and~~

~~an $8 million decrease~~revenues in ~~weather-normal retail sales volumes.~~the current year.

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~~$131 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~~lower amortization of deferred fuel costs and ~~higher purchase~~lower purchased power ~~fuel clause.~~expense; and

a $20 million decrease in operation, maintenance and other expense primarily due to lower outage expenses, storm restoration costs, training costs, employee related costs and the Customer Connect deferral.

Other Income and Expenses, net. The decrease was primarily due to life insurance proceeds received in the prior year.

Interest ~~Expense~~Expense. . The variance was primarily due to ~~recording~~higher fixed-rate debt outstanding in the current year and a favorable debt return, in the prior year, on the cumulative balance of deferred coal ash ~~spend based on probability of recovery. This adjustment was immaterial and primarily relates to prior years.~~spend.

Income Tax ~~Expense~~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.

110



MD&A	~~DUKE ENERGY INDIANA~~PIEDMONT

PIEDMONT

Results of Operations



	Six Months Ended June 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	709	$	788	$	(79	)
Operating Expenses
Cost of natural gas	215		338		(123		)
Operation, maintenance and other	159		163		(4		)
Depreciation and amortization	88		84		4
Property and other taxes	24		25		(1		)
Total operating expenses	486		610		(124		)
Operating Income	223		178		45
Other Income and Expenses, net	28		12		16
Interest Expense	60		43		17
Income Before Income Taxes	191		147		44
Income Tax Expense	11		32		(21		)
Net Income	$	180	$	115	$	65

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	2020
Residential deliveries	(4.6	)%
Commercial deliveries	(11.8	)%
Industrial deliveries	(3.3	)%
Power generation deliveries	(2.8	)%
For resale	(15.0	)%
Total throughput deliveries	(4.3	)%
Secondary market volumes	(17.7	)%
Average number of customers	1.7	%

Due to the margin decoupling mechanism in North Carolina and the 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 offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

Six Months Ended June 30, 2020, as compared to June 30, 2019

Operating Revenues.The variance was driven primarily by:

a $123 million decrease due to lower natural gas costs passed through to customers and decreased off-system sales natural gas costs;

a $27 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 $60 million increase due to North Carolina base rate case increases; and

a $15 million increase due to North Carolina IMR increases.

Operating Expenses.The variance was driven primarily by:

a $123 million decrease in cost of natural gas due to lower natural gas prices and decreased off-system sales natural gas costs.

Other Income and Expenses, net.The variance was driven primarily by AFUDC equity and intercompany interest related to Belews Creek and Marshall Power Generation contracts.

Interest Expense.The variance was driven primarily by interest on the EDIT balance being returned to customers and higher debt outstanding in the current year, partially offset by lower AFUDC debt income.

Income Tax Expense. The decrease in income tax expense was primarily due to an increase in the amortization of excess deferred taxes and an increase in AFUDC Equity, partially offset by an increase in pretax income.

111



MD&A	MATTERS IMPACTING FUTURE RESULTS

Matters Impacting Future Results

The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.

COVID-19

Duke Energy cannot predict the extent to which the COVID-19 pandemic will impact its results of operations, financial position and cash flows in the future. Duke Energy will continue to actively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown will adversely affect the company’s customers, suppliers and partners and could cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. It could also cause delays in construction for Commercial Renewables and availability of financing. The company also has various pending rate case proceedings that have been delayed. Duke Energy has cost mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results. 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.

ACP

On ~~April 17,~~July 5, 2020, Duke Energy and Dominion Energy determined that they would no longer invest in the construction of the Atlantic Coast Pipeline. Duke Energy has recorded $2.0 billion of pretax charges and expects additional charges of less than $100 million to be recorded when certain exit costs related to the project are incurred by ACP. Estimates used to calculate the loss could be revised and exit obligations which have not yet been incurred or recorded could have an adverse impact on future results. Furthermore, the loss of earnings from this project, including AFUDC, will lower Duke Energy's future expected results. See Notes 1, 3, 4 and 11 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation," "Regulatory Matters," "Commitments and Contingencies," and "Variable Interest Entities," respectively, for additional information.

Regulatory Matters

On December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with North Carolina Department of Environmental Quality 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. Duke Energy Carolinas and Duke Energy Progress have also 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 have appealed these decisions to the South Carolina Supreme Court and those appeals are pending. Appeals of the 2017 North Carolina approved rate cases for Duke Energy Carolinas and Duke Energy Progress are still pending at the North Carolina Supreme Court. The North Carolina Attorney General and various intervenors primarily dispute the allowance of recovery of coal ash costs from customers, which was approved by the NCUC. An order from regulatory or judicial authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on future results.

In 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~~ impact.

Duke Energy ~~Indiana's~~Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress and Duke Energy Florida's service territories. 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.

Duke Energy Carolinas received an order from the NCUC in 2018, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas and Duke Energy Progress have petitioned for deferral of future grid improvement costs in their 2019 rate cases. There could be adverse impact if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

In 2019, Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. The outcome of these rate cases could have a material impact.

The PUCO has issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed for a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact.

For additional information, see Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters.”

Other Matters

Duke Energy continues to experience growth in Commercial Renewables 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.

112



MD&A	MATTERS IMPACTING FUTURE RESULTS

Duke Energy ~~Indiana filed~~continues to monitor recoverability of a ~~general rate case with~~renewable merchant plant located in the ~~IURC~~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. Based on ~~July 2, 2019, its first general rate case~~the most recent recoverability test performed this quarter, the carrying value approximated the aggregate estimated future cash flows for this plant and therefore further testing was not required. A continued decline in ~~Indiana~~energy market pricing would likely result in ~~16 years. The outcome~~a future impairment. Impairment of this ~~rate case~~asset could ~~materially impact Duke Energy Indiana's results of operations, financial position and cash flows. See~~result in adverse impacts. For additional information, see Note 32 to the Condensed Consolidated Financial Statements, ~~"Regulatory Matters,~~"Business Segments." ~~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.

~~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,
(in millions) 2019
2018
Variance
Operating Revenues $ 956
$ 940
$ 16
Operating Expenses
Cost of natural gas 384
387
(3 )
Operation, maintenance and other 241
252
(11 )
Depreciation and amortization 127
118
9
Property and other taxes 39
36
3
Total operating expenses 791
793
(2 )
Operating Income 165
147
18
Other Income and Expenses, net 19
15
4
Interest Expense 65
60
5
Income Before Income Taxes 119
102
17
Income Tax Expense 22
21
1
Net Income $ 97
$ 81
$ 16



~~Increase (Decrease) over prior year~~	~~2019~~
~~Residential deliveries~~	~~(7.5~~	)%
~~Commercial deliveries~~	~~(4.2~~	)%
~~Industrial deliveries~~	~~2.9~~	%
~~Power generation deliveries~~	~~(10.5~~	)%
~~For resale~~	~~5.9~~	%
~~Total throughput deliveries~~	~~(7.2~~	)%
~~Secondary market volumes~~	~~2.0~~	%
~~Average number of customers~~	~~1.3~~	%

Due to the margin decoupling mechanism in North Carolina and the WNA in South Carolina and Tennessee, changes in throughput deliveries do not have a material impact on Piedmont's revenues or earnings. The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The WNA mostly offsets the impact of weather on bills rendered, but do not ensure precise recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

~~Nine Months Ended September 30, 2019, as compared to September 30, 2018~~

~~Operating Revenues.The variance was driven primarily by:~~

~~a $12 million increase primarily due to North Carolina and Tennessee IMR increases; and~~

~~a $9 million increase primarily due to NCUC approval related to tax reform accounting from fixed rate contracts.~~



~~MD&A~~	~~PIEDMONT~~

~~Partially offset by:~~

~~a $7 million decrease primarily due to a reduction of rates in South Carolina.~~

~~Operating Expenses.The variance was driven primarily by:~~

an $11 million decrease in operations, maintenance and other expense primarily due to lower labor and information technology outside services costs and a portion of rent expense being charged to shared services 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, partially offset by favorable AFUDC debt interest.

~~Matters Impacting Future Results~~

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.

During March 2020, in response to market volatility and the ongoing economic uncertainty related to COVID-19, Duke Energy took several actions to enhance the company's liquidity position including:

Duke Energy drew down the remaining $500 million of availability under the existing $1 billion Three-Year Revolving Credit Facility, which was subsequently repaid during the second quarter of 2020; and

Duke Energy entered into and borrowed the full amount under a $1.5 billion, 364-day Term Loan Credit Agreement. The Term Loan Credit Agreement contains a provision for additional borrowing capacity of $500 million. Duke Energy exercised the provision and borrowed an additional $188 million, for a total borrowing of approximately $1.7 billion.

Following March 2020, access to credit and equity markets has normalized. In addition to the financings to address the company's liquidity position, for the six months ended June 30, 2020, Duke Energy issued ~~$5.3~~approximately $3.3 billion in debt, raised $111 million of ~~debt, drew $650~~common equity through its dividend reinvestment program, and paid down $500 million on the Three-Year Revolving Credit Facility. Despite the recovery in capital markets, Duke Energy continues to monitor access to credit and equity markets amid the ongoing economic uncertainty related to COVID-19.

As of June 30, 2020, Duke Energy had approximately $341 million of cash on hand, $5.4 billion available under its $8 billion Master Credit Facility and $500 million available under the $1 billion Three-Year Revolving Credit Facility. Duke Energy ~~Progress Term Loan Facility~~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 ~~paid off in full the $350 million Piedmont term loan during the~~ ~~nine months ended September 30, 2019~~.available credit capacity to support its funding needs. Duke Energy continues to monitor access to credit and equity markets. Refer to ~~Note 6~~Notes 5 and 13 to the Condensed Consolidated Financial Statements, "Debt and Credit ~~Facilities,~~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 ~~March 2019~~light of the COVID-19 pandemic and ~~September 2019,~~cancellation of the ACP pipeline, Duke Energy issued preferred stock for net proceeds 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 Condensed~~Consolidated Financial Statements, "Stockholders' Equity," for information regarding Duke Energy's equity issuances.~~

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 nocurrently does not expect significant changes to the ~~credit ratings of any of~~total projected capital and investment expenditures provided in the Form 10-K for the year ended December 31, 2019. However, Duke Energy ~~Registrants during 2019 by any of the rating agencies. Moody's and Fitch~~will continue to ~~maintain a stable outlook~~reassess capital projects depending on ~~Duke Energy Corporation.~~the duration and severity of economic impacts caused by the pandemic.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
(in millions)	2019			2018			2020			2019
Cash flows provided by (used in):
Operating activities	$	5,637		$	5,667		$	3,357		$	3,056
Investing activities	(8,633		)	(7,270		)	(5,471		)	(5,788		)
Financing activities	2,987			1,547			2,182			2,622
Net decrease in cash, cash equivalents and restricted cash	(9		)	(56		)
Net increase (decrease) in cash, cash equivalents and restricted cash							68			(110		)
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		$	641		$	481

113



MD&A	LIQUIDITY AND CAPITAL RESOURCES

OPERATING CASH FLOWS

The following table summarizes key components of Duke Energy’s operating cash flows.


	Nine Months Ended									Six Months Ended
	September 30,									June 30,
(in millions)	2019			2018			Variance			2020			2019			Variance
Net income	$	2,964		$	2,190		$	774
Net (loss) income										$	(2	)	$	1,641		$	(1,643	)
Non-cash adjustments to net income	4,389			5,206			(817		)	4,592			2,917			1,675
Contributions to qualified pension plans	(77		)	(141		)	64
Payments for asset retirement obligations	(582		)	(389		)	(193		)	(287		)	(336		)	49
Payment for disposal of other assets	—			(105		)	105
Working capital	(1,057		)	(1,094		)	37			(946		)	(1,166		)	220
Net cash provided by operating activities	$	5,637		$	5,667		$	(30	)	$	3,357		$	3,056		$	301

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									Six Months Ended
	September 30,									June 30,
(in millions)	2019			2018			Variance			2020			2019			Variance
Capital, investment and acquisition expenditures	$	(8,348	)	$	(7,050	)	$	(1,298	)	$	(5,267	)	$	(5,627	)	$	360
Other investing items	(285		)	(220		)	(65		)	(204		)	(161		)	(43		)
Net cash used in investing activities	$	(8,633	)	$	(7,270	)	$	(1,363	)	$	(5,471	)	$	(5,788	)	$	317

The variance relates ~~primarily~~ to ~~an increase in~~lower capital expenditures ~~due to higher overall investments~~ in the ~~Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables segments.~~current year for plants now in service.

FINANCING CASH FLOWS

The following table summarizes key components of Duke Energy’s financing cash flows.


	Nine Months Ended									Six Months Ended
	September 30,									June 30,
(in millions)	2019			2018			Variance			2020			2019			Variance
Issuances of long-term debt, net	$	3,394		$	1,832		$	1,562		$	1,837		$	2,467		$	(630	)
Issuances of common stock	41			834			(793		)	57			27			30
Issuances of preferred stock	1,963			—			1,963			—			973			(973		)
Notes payable and commercial paper	(1,019		)	674			(1,693		)
Notes payable, commercial paper and other short-term borrowings										1,624			324			1,300
Dividends paid	(1,990		)	(1,835		)	(155		)	(1,391		)	(1,312		)	(79		)
Contributions from noncontrolling interests	615			—			615			163			193			(30		)
Other financing items	(17		)	42			(59		)	(108		)	(50		)	(58		)
Net cash provided by financing activities	$	2,987		$	1,547		$	1,440		$	2,182		$	2,622		$	(440	)

The variance was primarily due to:

a ~~$1,963 million~~$1.3 billion increase in net proceeds from issuances of notes payable and commercial paper primarily due to borrowings of $1.7 billion under the ~~issuance of preferred stock;~~364-day Term Loan Credit Agreement.

Partially offset by:


•	a $973 million decrease in proceeds from the issuance of preferred stock; and

a ~~$1,562~~$630 million ~~increase~~decrease 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.~~



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

~~Partially offset by:~~

a $1,693 million decrease in net proceeds from issuances of notes payable and commercial paper primarily due to the use of proceeds from the preferred stock issuance and increased long-term debt issuances to pay down outstanding commercial paper; and

~~a $793 million decrease in proceeds from the issuance of common stock due primarily to prior year issuances under equity forward agreements.~~debt.

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~~

114



MD&A	OTHER MATTERS

On ~~April 1, 2019, NCDEQ issued a closure determination requiring~~May 14, 2020, the five-year probation period following the Dan River coal ash spill ended. The court appointed monitor confirmed in U.S. District Court for the Eastern District of North Carolina that Duke Energy ~~Carolinas~~met or exceeded every obligation throughout the process. Separately, in a final report to the EPA, it was noted that the company made significant enhancements to its Ethics and Compliance Program and its environmental compliance programs.

Section 126 Petitions

On November 16, 2016, the state of Maryland filed a petition with EPA under Section 126 of the Clean Air Act alleging that 19 power plants, including two plants (three units) that Duke Energy ~~Progress~~Registrants own and operate, contribute to ~~excavate all remaining coal ash impoundments at~~violations of EPA’s National Ambient Air Quality Standards (NAAQS) for ozone in the ~~Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro facilities in North Carolina. With respect to~~state of Maryland. On March 12, 2018, the ~~final~~state of New York filed a petition with EPA, also under Section 126 of the Clean Air Act alleging that over 60 power plants, including 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~~Registrants own and ~~Duke Energy Progress filed Petitions for Contested Case Hearings~~operate, contribute to violations of EPA’s ozone NAAQS in the ~~Office~~state of ~~Administrative Hearings~~New York. Both Maryland and New York sought EPA orders requiring the states in which the named power plants operate to ~~challenge NCDEQ’s April 1 Order. For~~impose more ~~information, see Note 4, "Commitments~~stringent NOx emission limitations on the plants. On October 5, 2018, EPA denied the Maryland petition. That same day, Maryland appealed EPA's denial. On October 18, 2019, EPA denied the New York petition, and ~~Contingencies," to~~New York appealed that decision on October 29, 2019. On May 19, 2020, 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 estimateU.S. Court of ~~$5.6 billion in the aggregate~~Appeals for the ~~closure for all Duke Energy Carolinas and Duke Energy Progress impoundments. Excavation would likely extend beyond~~D.C. Circuit issued its decision, finding, with one exception, that EPA reasonably denied the ~~required federal and state deadlines for impoundment closure. Duke Energy intends~~Maryland petition. The court remanded one issue to ~~seek recovery~~EPA regarding target sources lacking catalytic controls. All of ~~all costs through the ratemaking process consistent with previous proceedings. AROs recorded on~~ the Duke Energy ~~Carolinas~~units targeted have selective catalytic reduction so the decision is favorable for these units. A different panel of the same court heard oral argument in New York’s appeal of EPA’s denial of its Section 126 Petition on May 7, 2020, and on July 14, 2020, the panel issued its decision remanding the Petition to EPA for further review. The Duke Energy ~~Progress Condensed Consolidated Balance Sheets at September 30, 2019, and December 31, 2018, include~~Registrants cannot predict the ~~legal obligation for closure~~outcome 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.this matter.

Off-Balance Sheet Arrangements

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, there were no material changes to Duke Energy’s off-balance sheet arrangements. See Notes 1, 3, 4 and 11 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation," "Regulatory Matters," "Commitments and Contingencies," and "Variable Interest Entities," respectively, for additional information on ACP. See Note 13 to the Condensed Consolidated Financial Statements, ~~"Variable Interest Entities,~~"Stockholders' Equity," for ~~a discussion of off-balance sheet arrangements~~information regarding ~~ACP.~~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~~six months ended ~~September~~June 30, ~~2019,~~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 and six months ended June 30, 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 has resulted 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.



~~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~~June 30, ~~2019,~~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.

115



ITEM 4.	CONTROLS AND PROCEDURES

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~~June 30, ~~2019,~~2020, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

116



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. 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;

The health and availability of our critical personnel and their ability to perform business functions; and

Actions of state utility commissions or federal or state governments to allow customers to suspend or delay payment of bills related to the provision of electric or gas services.

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; and

Impairment charges, which could include real estate as options for working remotely are evaluated and goodwill.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

117



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~~Twenty-third Supplemental Indenture, dated as of ~~Designation with respect to the Series B Preferred Stock, dated September 11, 2019~~May 15, 2020 (incorporated by reference to Exhibit ~~3.1~~4.1 to ~~registrant’s~~Registrant’s Current Report on Form 8-K filed on ~~September 12, 2019,~~May 15, 2020, File No. 1-32853).

~~4.1~~4.2

~~One-Hundred and Second~~Forty-seventh Supplemental Indenture, dated as of ~~August 14, 2019~~May 21, 2020 (incorporated by reference to Exhibit 4.1 to ~~registrant’s~~Registrant’s Current Report on Form 8-K filed on ~~August 14, 2019,~~May 21, 2020, File No. ~~1-04928)~~1-1232).

~~4.2~~4.3

~~Sixty-Ninth~~Tenth Supplemental Indenture, dated as of ~~September 27, 2019~~May 21, 2020 (incorporated by reference to Exhibit 4.1 to ~~registrant’s~~Registrant’s Current Report on Form 8-K filed on ~~September 27, 2019,~~May 21, 2020, File No. ~~1-3543)~~1-6196).

4.4

Fifty-seventh Supplemental Indenture, dated as of June 1, 2020 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on June 11, 2020, File No. 1-3274).

*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.

118



EXHIBITS

*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.

*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.

119



EXHIBITS

*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.

*104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

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.

120



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~~August 10, 2020	/s/ STEVEN K. YOUNG
		Steven K. Young Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date:	~~November 8, 2019~~August 10, 2020	/s/ DWIGHT L. JACOBS
		Dwight L. Jacobs Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)

~~132~~121



	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