0001326160 duk:~~PiedmontNaturalGasMember~~ProgressEnergyMember duk:ElectricUtilitiesandInfrastructureMember 2019-12-31 0001326160 duk:DukeEnergyOhioMember duk:CommercialMember us-gaap:~~OtherNoncurrentLiabilitiesMember 2019-12-31~~NaturalGasUsRegulatedMember duk: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 ~~March 31,~~June 30, 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 ~~April 30,~~July 31, 2020:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	~~734,852,539~~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	9

	Duke Energy Carolinas, LLC Financial Statements	1415

	Progress Energy, Inc. Financial Statements	1819

	Duke Energy Progress, LLC Financial Statements	2223

	Duke Energy Florida, LLC Financial Statements	2627

	Duke Energy Ohio, Inc. Financial Statements	3031

	Duke Energy Indiana, LLC Financial Statements	3435

	Piedmont Natural Gas Company, Inc. Financial Statements	3839

	Combined Notes to Condensed Consolidated Financial Statements
	Note 1 – Organization and Basis of Presentation	4243
	Note 2 – Business Segments	4446
	Note 3 – Regulatory Matters	4548
	Note 4 – Commitments and Contingencies	5860
	Note 5 – Debt and Credit Facilities	6163
	Note 6 – Goodwill	6265
	Note 7 – Related Party Transactions	6366
	Note 8 – Derivatives and Hedging	6467
	Note 9 – Investments in Debt and Equity Securities	7072
	Note 10 – Fair Value Measurements	7577
	Note 11 – Variable Interest Entities	8083
	Note 12 – Revenue	8487
	Note 13 – Stockholders' Equity	8793
	Note 14 – Employee Benefit Plans	8894
	Note 15 – Income Taxes	8995
	Note 16 – Subsequent Events	9096

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	9197

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~109~~115

Item 4.	Controls and Procedures	~~109~~115

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	~~111~~117

Item 1A.	Risk Factors	~~111~~117

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~111~~117

Item 6.	Exhibits	~~112~~118

	Signatures	~~115~~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:


◦	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;

◦

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


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


◦	The ability to control operation and maintenance costs;


◦	The level of creditworthiness of counterparties to transactions;


◦	The ability to obtain adequate insurance at acceptable costs;


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



FORWARD-LOOKING STATEMENTS


◦	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

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

AFS	Available for Sale

AFUDC	Allowance for funds used during construction

~~AMI~~	~~Advanced Metering Infrastructure~~

AMT	Alternative Minimum Tax

ARO	Asset retirement obligations

Bison	Bison Insurance Company Limited

CC	Combined Cycle

CCR	Coal Combustion Residuals

CARES Act	Coronavirus Aid, Relief and Economic Security Act

~~Citrus County CC~~	~~Citrus County Combined Cycle Facility~~

Coal Ash Act	North Carolina Coal Ash Management Act of 2014

the Company	Duke Energy Corporation and its subsidiaries

Constitution	Constitution Pipeline Company, LLC

COVID-19	Coronavirus Disease 2019

CRC	Cinergy Receivables Company, LLC

Crystal River Unit 3	Crystal River Unit 3 Nuclear Plant

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

Duke Energy	Duke Energy Corporation (collectively with its subsidiaries)

Duke Energy Ohio	Duke Energy Ohio, Inc.

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

EDIT	Excess deferred income tax

EPA	U.S. Environmental Protection Agency

EPS	Earnings Per Share

ESP	Electric Security Plan

ETR	Effective tax rate

Exchange Act	Securities Exchange Act of 1934



GLOSSARY OF TERMS




~~Exchange Act~~	~~Securities Exchange Act of 1934~~

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

FERC	Federal Energy Regulatory Commission

FPSC	Florida Public Service Commission

FTR	Financial transmission rights

GAAP	Generally accepted accounting principles in the U.S.

GAAP Reported Earnings (Loss)	Net Income (Loss) Available to Duke Energy Corporation Common Stockholders

GAAP Reported ~~EPS~~Earnings (Loss) Per Share	Basic ~~EPS~~Earnings (Loss) Per Share Available to Duke Energy Corporation common stockholders

GWh	Gigawatt-hours

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

KPSC	Kentucky Public Service Commission

LLC	Limited Liability Company

MGP	Manufactured gas plant

MMBtu	Million British Thermal Unit

MW	Megawatt

MWh	Megawatt-hour

~~NCDEQ~~	~~North Carolina Department of Environmental Quality~~

NCUC	North Carolina Utilities Commission

NDTF	Nuclear decommissioning trust funds

NPNS	Normal purchase/normal sale

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.

PPA	Purchase Power Agreement

Progress Energy	Progress Energy, Inc.

PSCSC	Public Service Commission of South Carolina

PUCO	Public Utilities Commission of Ohio

~~ROU assets~~	~~Right-of-use assets~~

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



FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended						Three Months Ended					Six Months Ended
	March 31,						June 30,					June 30,
(in millions, except per share amounts)	2020			2019			2020			2019		2020			2019
Operating Revenues
Regulated electric	$	5,124		$	5,285		$	4,963		$	5,423	$	10,087		$	10,708
Regulated natural gas	638			728			263			280		901			1,008
Nonregulated electric and other	187			150			195			170		382			320
Total operating revenues	5,949			6,163			5,421			5,873		11,370			12,036
Operating Expenses
Fuel used in electric generation and purchased power	1,447			1,609			1,349			1,641		2,796			3,250
Cost of natural gas	199			327			59			76		258			403
Operation, maintenance and other	1,339			1,419			1,353			1,434		2,692			2,853
Depreciation and amortization	1,130			1,089			1,150			1,089		2,280			2,178
Property and other taxes	345			343			334			334		679			677
Impairment charges	2			—			6			4		8			4
Total operating expenses	4,462			4,787			4,251			4,578		8,713			9,365
Gains (Losses) on Sales of Other Assets and Other, net	1			(3		)
Gains on Sales of Other Assets and Other, net							7			3		8			—
Operating Income	1,488			1,373			1,177			1,298		2,665			2,671
Other Income and Expenses
Equity in earnings of unconsolidated affiliates	44			43
Equity in (losses) earnings of unconsolidated affiliates							(1,968		)	44		(1,924		)	87
Other income and expenses, net	46			115			137			89		183			204
Total other income and expenses	90			158			(1,831		)	133		(1,741		)	291
Interest Expense	551			543			554			542		1,105			1,085
Income Before Income Taxes	1,027			988
Income Tax Expense	137			95
Net Income	890			893
Less: Net Loss Attributable to Noncontrolling Interests	(48		)	(7		)
Net Income Attributable to Duke Energy Corporation	938			900
(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	39			—			15			12		54			12
Net Income Available to Duke Energy Corporation Common Stockholders	$	899		$	900
Net (Loss) Income Available to Duke Energy Corporation Common Stockholders							$	(817	)	$	820	$	82		$	1,720

Earnings Per Share – Basic and Diluted
Net income available 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	$	1.24		$	1.24		$	(1.13	)	$	1.12	$	0.11		$	2.36
Weighted average shares outstanding
Basic	734			727			735			728		734			728
Diluted	736			727			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
March 31,
(in millions) 2020
2019
Net Income $ 890
$ 893
Other Comprehensive Loss, net of tax^(a)

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



	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 ~~impact~~impacts of approximately ~~$23~~$20 million inand $10 million for the ~~first quarter of~~six months ended June 30, 2020, and 2019, respectively. All other periods presented include immaterial income tax ~~impact in the first quarter of 2019.~~impacts.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	1,450		$	311		$	341		$	311
Receivables (net of allowance for doubtful accounts of $28 at 2020 and $22 at 2019)	809			1,066
Receivables of VIEs (net of allowance for doubtful accounts of $61 at 2020 and $54 at 2019)	1,828			1,994
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	3,324			3,232			3,289			3,232
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)	1,770			1,796			1,774			1,796
Other (includes $300 at 2020 and $242 at 2019 related to VIEs)	1,000			764
Other (includes $260 at 2020 and $242 at 2019 related to VIEs)							1,031			764
Total current assets	10,181			9,163			9,237			9,163
Property, Plant and Equipment
Cost	149,676			147,654			151,592			147,654
Accumulated depreciation and amortization	(46,599		)	(45,773		)	(47,295		)	(45,773		)
Generation facilities to be retired, net	31			246			28			246
Net property, plant and equipment	103,108			102,127			104,325			102,127
Other Noncurrent Assets
Goodwill	19,303			19,303			19,303			19,303
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)	13,413			13,222
Regulatory assets (includes $969 at 2020 and $989 at 2019 related to VIEs)							13,285			13,222
Nuclear decommissioning trust funds	7,052			8,140			8,000			8,140
Operating lease right-of-use assets, net	1,633			1,658			1,580			1,658
Investments in equity method unconsolidated affiliates	2,067			1,936			861			1,936
Other (includes $87 at 2020 and $110 at 2019 related to VIEs)	3,315			3,289
Other (includes $85 at 2020 and $110 at 2019 related to VIEs)							3,458			3,289
Total other noncurrent assets	46,783			47,548			46,487			47,548
Total Assets	$	160,072		$	158,838		$	160,049		$	158,838
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,364		$	3,487		$	2,398		$	3,487
Notes payable and commercial paper	3,033			3,135			4,785			3,135
Taxes accrued	493			392			657			392
Interest accrued	571			565			569			565
Current maturities of long-term debt (includes $216 at 2020 and 2019 related to VIEs)	5,077			3,141
Current maturities of long-term debt (includes $462 at 2020 and $216 at 2019 related to VIEs)							3,756			3,141
Asset retirement obligations	802			881			729			881
Regulatory liabilities	826			784			898			784
Other	2,004			2,367			2,898			2,367
Total current liabilities	15,170			14,752			16,690			14,752
Long-Term Debt (includes $3,966 at 2020 and $3,997 at 2019 related to VIEs)	56,311			54,985
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	9,321			8,878			8,979			8,878
Asset retirement obligations	12,497			12,437			12,539			12,437
Regulatory liabilities	14,029			15,264			14,553			15,264
Operating lease liabilities	1,414			1,432			1,377			1,432
Accrued pension and other post-retirement benefit costs	919			934			911			934
Investment tax credits	659			624			683			624
Other (includes $258 at 2020 and $228 at 2019 related to VIEs)	1,669			1,581
Other (includes $251 at 2020 and $228 at 2019 related to VIEs)							1,563			1,581
Total other noncurrent liabilities	40,508			41,150			40,605			41,150
Commitments and Contingencies
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019	973			973			973			973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019	989			989			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			1			1
Additional paid-in capital	40,930			40,881			40,997			40,881
Retained earnings	4,221			4,108			2,707			4,108
Accumulated other comprehensive loss	(193		)	(130		)	(183		)	(130		)
Total Duke Energy Corporation stockholders' equity	46,921			46,822			45,484			46,822
Noncontrolling interests	1,162			1,129			1,127			1,129
Total equity	48,083			47,951			46,611			47,951
Total Liabilities and Equity	$	160,072		$	158,838		$	160,049		$	158,838

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	890		$	893
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)	1,301			1,238			2,651				2,483
Equity in losses (earnings) of unconsolidated affiliates							1,924				(87		)
Equity component of AFUDC	(40		)	(31		)	(76		)		(67		)
(Gains) Losses on sales of other assets	(1		)	3
Gains on sales of other assets							(8		)		—
Impairment charges	2			—			8				4
Deferred income taxes	422			97			105				527
Equity in earnings of unconsolidated affiliates	(44		)	(43		)
Payments for asset retirement obligations	(132		)	(152		)	(287		)		(336		)
Provision for rate refunds	(13		)	35			(12		)		57
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—			10			(24		)		(11		)
Receivables	466			388			281				304
Inventory	(92		)	(31		)	(56		)		(110		)
Other current assets	(131		)	98			(124		)		(265		)
Increase (decrease) in
Accounts payable	(657		)	(636		)	(638		)		(700		)
Taxes accrued	113			(107		)	273				(56		)
Other current liabilities	(455		)	(407		)	(344		)		(378		)
Other assets	(25		)	(162		)	(193		)		(1		)
Other liabilities	(50		)	46			(121		)		51
Net cash provided by operating activities	1,554			1,239			3,357				3,056
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,832		)	(2,536		)	(5,103		)		(5,465		)
Contributions to equity method investments	(77		)	(94		)	(164		)		(162		)
Purchases of debt and equity securities	(1,392		)	(860		)	(3,818		)		(2,316		)
Proceeds from sales and maturities of debt and equity securities	1,347			851			3,755				2,302
Other	(68		)	(74		)	(141		)		(147		)
Net cash used in investing activities	(3,022		)	(2,713		)	(5,471		)		(5,788		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	1,954			2,737			3,788				4,622
Issuance of preferred stock	—			974			—				973
Issuance of common stock	40			13			57				27
Payments for the redemption of long-term debt	(292		)	(1,201		)	(1,951		)		(2,155		)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	1,784			135			1,866				240
Payments for the redemption of short-term debt with original maturities greater than 90 days	(17		)	(239		)	(113		)		(299		)
Notes payable and commercial paper	(198		)	(304		)	(129		)		383
Contributions from noncontrolling interests	103			6			163				193
Dividends paid	(707		)	(649		)	(1,391		)		(1,312		)
Other	(74		)	(39		)	(108		)		(50		)
Net cash provided by financing activities	2,593			1,433			2,182				2,622
Net increase (decrease) in cash, cash equivalents and restricted cash	1,125			(41		)	68				(110		)
Cash, cash equivalents and restricted cash at beginning of period	573			591			573				591
Cash, cash equivalents and restricted cash at end of period	$	1,698		$	550		$	641			$	481
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	934		$	811		$	945			$	917
Non-cash dividends	27			27			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 June 30, 2019 and 2020
												Accumulated Other Comprehensive
												(Loss) Income
															Net Unrealized					Total
												Net Gains			(Losses) Gains					Duke Energy
				Common			Additional					(Losses) on			on Available-		Pension and			Corporation
	Preferred			Stock	Common		Paid-in		Retained			Cash Flow			for-Sale-		OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Stock			Shares	Stock		Capital		Earnings			Hedges			Securities		Adjustments			Equity			Interests			Equity
Balance at March 31, 2019	$	974		728	$	1	$	40,823	$	3,360		$	(36	)	$	—	$	(92	)	$	45,030		$	15		$	45,045
Net income (loss)	—			—	—		—		820			—			—		—			820			(84		)	736
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	—			—	—		61		—			—			—		—			61			—			61
Common stock dividends	—			—	—		—		(678		)	—			—		—			(678		)	—			(678		)
Contribution from noncontrolling interest in subsidiaries^(a)	—			—	—		—		—			—			—		—			—			193			193
Distributions to noncontrolling interest in subsidiaries	—			—	—		—		—			—			—		—			—			(1		)	(1		)
Other	—			—	—		1		—			—			—		—			1			(4		)	(3		)
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)	—			—	—		—		(817		)	—			—		—			(817		)	(90		)	(907		)
Other comprehensive (loss) income	—			—	—		—		—			5			6		(1		)	10			2			12
Common stock issuances, including dividend reinvestment and employee benefits	—			—	—		66		—			—			—		—			66			—			66
Common stock dividends	—			—	—		—		(696		)	—			—		—			(696		)	—			(696		)
Contribution from noncontrolling interest in subsidiaries^(a)	—			—	—		—		—			—			—		—			—			60			60
Distributions to noncontrolling interest in subsidiaries	—			—	—		—		—			—			—		—			—			(7		)	(7		)
Other	—			—	—		1		(1		)	—			—		—			—			—			—
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

Accumulated Other Comprehensive
(Loss) Income
Net Unrealized
Total

Net
(Losses) Gains
Duke Energy

Common
Additional
Losses on
on Available-
Pension and
Corporation

Preferred
Stock
Common
Paid-in
Retained
Cash Flow
for-Sale-
OPEB
Stockholders'
Noncontrolling
Total
(in millions) Stock
Shares
Stock
Capital
Earnings
Hedges
Securities
Adjustments
Equity
Interests
Equity
Balance at December 31, 2018 $ —
727
$ 1
$ 40,795
$ 3,113
$ (14 ) $ (3 ) $ (75 ) $ 43,817
$ 17
$ 43,834
Net income (loss) —
—
—
—
900
—
—
—
900
(7 ) 893
Other comprehensive (loss) income —
—
—
—
—
(16 ) 4
—
(12 ) —
(12 )
Preferred stock, Series A, issuances, net of issuance costs^(a)
974
—
—
—
—
—
—
—
974
—
974
Common stock issuances, including dividend reinvestment and employee benefits —
1
—
28
—
—
—
—
28
—
28
Common stock dividends —
—
—
—
(676 ) —
—
—
(676 ) —
(676 )
Other^(b)
—
—
—
—
23
(6 ) (1 ) (17 ) (1 ) 5
4
Balance at March 31, 2019 $ 974
728
$ 1
$ 40,823
$ 3,360
$ (36 ) $ —
$ (92 ) $ 45,030
$ 15
$ 45,045

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



	Six Months Ended June 30, 2019 and 2020
											Accumulated Other Comprehensive
											(Loss) Income
														Net Unrealized						Total
											Net			(Losses) Gains						Duke Energy
			Common			Additional					Losses on			on Available-			Pension and			Corporation
	Preferred		Stock	Common		Paid-in		Retained			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Stock		Shares	Stock		Capital		Earnings			Hedges			Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2018	$	—	727	$	1	$	40,795	$	3,113		$	(14	)	$	(3	)	$	(75	)	$	43,817		$	17		$	43,834
Net income (loss)	—		—	—		—		1,720			—			—			—			1,720			(91		)	1,629
Other comprehensive (loss) income	—		—	—		—		—			(43		)	8			3			(32		)	—			(32		)
Preferred stock, Series A, issuances, net of issuance costs^(b)	973		—	—		—		—			—			—			—			973			—			973
Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		89		—			—			—			—			89			—			89
Common stock dividends	—		—	—		—		(1,354		)	—			—			—			(1,354		)	—			(1,354		)
Contributions from noncontrolling interest in subsidiaries^(a)	—		—	—		—		—			—			—			—			—			193			193
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—			—			—			—			—			(1		)	(1		)
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)	Relates to tax equity financing activity in the Commercial Renewables segment.


(b)	Duke Energy issued 40 million depositary shares of preferred stock, Series A.


~~(b)~~(c)	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.~~

new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.


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

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended				Three Months Ended					Six Months Ended
	March 31,				June 30,					June 30,
(in millions)	2020		2019		2020			2019		2020		2019
Operating Revenues	$	1,748	$	1,744	$	1,610		$	1,713	$	3,358	$	3,457
Operating Expenses
Fuel used in electric generation and purchased power	453		472		376			395		829		867
Operation, maintenance and other	386		440		430			441		816		881
Depreciation and amortization	343		317		375			346		718		663
Property and other taxes	81		80		75			75		156		155
Impairment charges	2		—		—			5		2		5
Total operating expenses	1,265		1,309		1,256			1,262		2,521		2,571
Gains on Sales of Other Assets and Other, net	1		—
Losses on Sales of Other Assets and Other, net					(1		)	—		—		—
Operating Income	484		435		353			451		837		886
Other Income and Expenses, net	43		31		43			41		86		72
Interest Expense	123		110		125			117		248		227
Income Before Income Taxes	404		356		271			375		675		731
Income Tax Expense	65		63		37			74		102		137
Net Income and Comprehensive Income	$	339	$	293	$	234		$	301	$	573	$	594

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	16		$	18		$	24		$	18
Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019)	212			324
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)	616			642
Receivables (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	87			114			78			114
Notes receivable from affiliated companies	436			—
Inventory	1,067			996			1,080			996
Regulatory assets	524			550			490			550
Other	31			21			19			21
Total current assets	2,989			2,665			2,621			2,665
Property, Plant and Equipment
Cost	49,534			48,922			50,068			48,922
Accumulated depreciation and amortization	(16,884		)	(16,525		)	(17,098		)	(16,525		)
Net property, plant and equipment	32,650			32,397			32,970			32,397
Other Noncurrent Assets
Regulatory assets	3,427			3,360			3,440			3,360
Nuclear decommissioning trust funds	3,717			4,359			4,265			4,359
Operating lease right-of-use assets, net	132			123			125			123
Other	1,136			1,149			1,158			1,149
Total other noncurrent assets	8,412			8,991			8,988			8,991
Total Assets	$	44,051		$	44,053		$	44,579		$	44,053
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	605		$	954		$	615		$	954
Accounts payable to affiliated companies	225			210			147			210
Notes payable to affiliated companies	—			29			131			29
Taxes accrued	132			46			166			46
Interest accrued	144			115			127			115
Current maturities of long-term debt	457			458			508			458
Asset retirement obligations	197			206			194			206
Regulatory liabilities	275			255			293			255
Other	479			611			488			611
Total current liabilities	2,514			2,884			2,669			2,884
Long-Term Debt	12,050			11,142			11,713			11,142
Long-Term Debt Payable to Affiliated Companies	300			300			300			300
Other Noncurrent Liabilities
Deferred income taxes	3,968			3,921			4,004			3,921
Asset retirement obligations	5,552			5,528			5,566			5,528
Regulatory liabilities	5,766			6,423			6,232			6,423
Operating lease liabilities	112			102			106			102
Accrued pension and other post-retirement benefit costs	82			84			77			84
Investment tax credits	230			231			229			231
Other	640			627			611			627
Total other noncurrent liabilities	16,350			16,916			16,825			16,916
Commitments and Contingencies
Equity
Member's equity	12,844			12,818			13,079			12,818
Accumulated other comprehensive loss	(7		)	(7		)	(7		)	(7		)
Total equity	12,837			12,811			13,072			12,811
Total Liabilities and Equity	$	44,051		$	44,053		$	44,579		$	44,053

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	339		$	293		$	573		$	594
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	414			388			854			804
Equity component of AFUDC	(14		)	(9		)	(29		)	(21		)
Gains on sales of other assets	(1		)	—
Impairment charges	2			—			2			5
Deferred income taxes	22			64			31			54
Payments for asset retirement obligations	(41		)	(65		)	(86		)	(131		)
Provision for rate refunds	—			19			2			35
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—			1			—			(8		)
Receivables	156			124			40			83
Receivables from affiliated companies	27			94			36			81
Inventory	(72		)	(59		)	(84		)	(77		)
Other current assets	96			(35		)	170			(133		)
Increase (decrease) in
Accounts payable	(253		)	(266		)	(249		)	(282		)
Accounts payable to affiliated companies	15			18			(63		)	(41		)
Taxes accrued	87			(91		)	120			38
Other current liabilities	(108		)	(70		)	(134		)	(71		)
Other assets	(60		)	(31		)	(83		)	87
Other liabilities	(11		)	(7		)	(35		)	(18		)
Net cash provided by operating activities	598			368			1,065			999
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(724		)	(721		)	(1,271		)	(1,357		)
Purchases of debt and equity securities	(607		)	(405		)	(1,017		)	(1,114		)
Proceeds from sales and maturities of debt and equity securities	607			405			1,017			1,114
Notes receivable from affiliated companies	(436		)	—
Other	(18		)	(9		)	(73		)	(46		)
Net cash used in investing activities	(1,178		)	(730		)	(1,344		)	(1,403		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	910			25			938			25
Payments for the redemption of long-term debt	(2		)	(1		)	(454		)	(3		)
Notes payable to affiliated companies	(29		)	306			102			365
Distributions to parent	(300		)	—			(300		)	—
Other	(1		)	(1		)	(1		)	(1		)
Net cash provided by financing activities	578			329			285			386
Net decrease in cash and cash equivalents	(2		)	(33		)
Net increase (decrease) in cash and cash equivalents							6			(18		)
Cash and cash equivalents at beginning of period	18			33			18			33
Cash and cash equivalents at end of period	$	16		$	—		$	24		$	15
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	254		$	221		$	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 June 30, 2019 and 2020
													Accumulated Other
													Comprehensive
													Loss
										Member's			Net Losses on			Total
(in millions)										Equity			Cash Flow Hedges			Equity
Balance at March 31, 2019										$	11,982		$	(7	)	$	11,975
Net income										301			—			301
Balance at June 30, 2019										$	12,283		$	(7	)	$	12,276

Balance at March 31, 2020										$	12,844		$	(7	)	$	12,837
Net income										234			—			234
Other										1			—			1
Balance at June 30, 2020										$	13,079		$	(7	)	$	13,072

										Six Months Ended June 30, 2019 and 2020
				Accumulated Other									Accumulated Other
				Comprehensive									Comprehensive
				Loss									Loss
	Member's			Net 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, 2018	$	11,689		$	(6	)	$	11,683		$	11,689		$	(6	)	$	11,683
Net income	293			—			293			594			—			594
Other	—			(1		)	(1		)	—			(1		)	(1		)
Balance at March 31, 2019	$	11,982		$	(7	)	$	11,975
Balance at June 30, 2019										$	12,283		$	(7	)	$	12,276

Balance at December 31, 2019	$	12,818		$	(7	)	$	12,811		$	12,818		$	(7	)	$	12,811
Net income	339			—			339			573			—			573
Distributions to parent	(300		)	—			(300		)	(300		)	—			(300		)
Other^(a)	(13		)	—			(13		)	(12		)	—			(12		)
Balance at March 31, 2020	$	12,844		$	(7	)	$	12,837
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						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
(in millions)	2020			2019			2020			2019			2020		2019
Operating Revenues	$	2,422		$	2,572		$	2,498		$	2,744		$	4,920	$	5,316
Operating Expenses
Fuel used in electric generation and purchased power	763			925			777			988			1,540		1,913
Operation, maintenance and other	554			567			589			606			1,143		1,173
Depreciation and amortization	452			455			432			426			884		881
Property and other taxes	135			137			137			143			272		280
Total operating expenses	1,904			2,084			1,935			2,163			3,839		4,247
Losses on Sales of Other Assets and Other, net	(1		)	—
Gains (Losses) on Sales of Other Assets and Other, net							7			(1		)	6		(1		)
Operating Income	517			488			570			580			1,087		1,068
Other Income and Expenses, net	32			31			33			34			65		65
Interest Expense	206			219			199			219			405		438
Income Before Income Taxes	343			300			404			395			747		695
Income Tax Expense	60			52			60			66			120		118
Net Income	283			248			344			329			627		577
Less: Net Loss Attributable to Noncontrolling Interests	—			(1		)
Less: Net Income Attributable to Noncontrolling Interests							—			1			—		—
Net Income Attributable to Parent	$	283		$	249		$	344		$	328		$	627	$	577

Net Income	$	283		$	248		$	344		$	329		$	627	$	577
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	—			1			1			1			1		2
Net unrealized gains on cash flow hedges	1			2			1			1			2		3
Unrealized gains on available-for-sale securities	1			—
Unrealized (losses) gains on available-for-sale securities							(1		)	1			—		1
Other Comprehensive Income, net of tax	2			3			1			3			3		6
Comprehensive Income	285			251			345			332			630		583
Less: Comprehensive Loss Attributable to Noncontrolling Interests	—			(1		)
Less: Comprehensive Income Attributable to Noncontrolling Interests							—			1			—		—
Comprehensive Income Attributable to Parent	$	285		$	252		$	345		$	331		$	630	$	583

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	52		$	48		$	78		$	48
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)	159			220
Receivables of VIEs (net of allowance for doubtful accounts of $12 at 2020 and $9 at 2019)	745			830
Receivables (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	49			76			42			76
Notes receivable from affiliated companies	—			164			—			164
Inventory	1,463			1,423			1,466			1,423
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)	954			946			957			946
Other (includes $13 at 2020 and $39 at 2019 related to VIEs)	196			210
Other (includes $32 at 2020 and $39 at 2019 related to VIEs)							145			210
Total current assets	3,618			3,917			3,761			3,917
Property, Plant and Equipment
Cost	55,788			55,070			56,420			55,070
Accumulated depreciation and amortization	(17,461		)	(17,159		)	(17,704		)	(17,159		)
Generation facilities to be retired, net	31			246			28			246
Net property, plant and equipment	38,358			38,157			38,744			38,157
Other Noncurrent Assets
Goodwill	3,655			3,655			3,655			3,655
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)	6,489			6,346
Regulatory assets (includes $969 at 2020 and $989 at 2019 related to VIEs)							6,308			6,346
Nuclear decommissioning trust funds	3,335			3,782			3,734			3,782
Operating lease right-of-use assets, net	762			788			737			788
Other	1,121			1,049			1,164			1,049
Total other noncurrent assets	15,362			15,620			15,598			15,620
Total Assets	$	57,338		$	57,694		$	58,103		$	57,694
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	730		$	1,104		$	675		$	1,104
Accounts payable to affiliated companies	329			310			222			310
Notes payable to affiliated companies	2,300			1,821			2,373			1,821
Taxes accrued	117			46			201			46
Interest accrued	214			228			213			228
Current maturities of long-term debt (includes $54 at 2020 and 2019 related to VIEs)	1,828			1,577
Current maturities of long-term debt (includes $304 at 2020 and $54 at 2019 related to VIEs)							1,829			1,577
Asset retirement obligations	421			485			357			485
Regulatory liabilities	347			330			388			330
Other	821			902			847			902
Total current liabilities	7,107			6,803			7,105			6,803
Long-Term Debt (includes $1,603 at 2020 and $1,632 at 2019 related to VIEs)	17,377			17,907
Long-Term Debt (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	4,537			4,462			4,560			4,462
Asset retirement obligations	6,020			5,986			6,038			5,986
Regulatory liabilities	4,708			5,225			4,813			5,225
Operating lease liabilities	678			697			662			697
Accrued pension and other post-retirement benefit costs	480			488			480			488
Other	404			383			449			383
Total other noncurrent liabilities	16,827			17,241			17,002			17,241
Commitments and Contingencies
Equity
Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019	—			—			—			—
Additional paid-in capital	9,143			9,143			9,143			9,143
Retained earnings	6,747			6,465			7,090			6,465
Accumulated other comprehensive loss	(16		)	(18		)	(15		)	(18		)
Total Progress Energy, Inc. stockholders' equity	15,874			15,590			16,218			15,590
Noncontrolling interests	3			3			3			3
Total equity	15,877			15,593			16,221			15,593
Total Liabilities and Equity	$	57,338		$	57,694		$	58,103		$	57,694

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	283		$	248		$	627		$	577
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	552			546			1,118			1,061
Equity component of AFUDC	(14		)	(15		)	(24		)	(31		)
Losses on sales of other assets	1			—
(Gains) Losses on sales of other assets							(6		)	1
Deferred income taxes	80			82			94			126
Payments for asset retirement obligations	(79		)	(75		)	(173		)	(183		)
Provision for rate refunds	2			6			2			10
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	1			1			(22		)	(1		)
Receivables	149			187			(15		)	(42		)
Receivables from affiliated companies	27			122			34			119
Inventory	(40		)	(18		)	(42		)	(26		)
Other current assets	43			35			102			114
Increase (decrease) in
Accounts payable	(211		)	(196		)	(238		)	(196		)
Accounts payable to affiliated companies	19			(94		)	(88		)	(125		)
Taxes accrued	71			26			155			82
Other current liabilities	(128		)	(196		)	(64		)	(162		)
Other assets	(41		)	(111		)	(51		)	(82		)
Other liabilities	(56		)	(7		)	(97		)	24
Net cash provided by operating activities	659			541			1,312			1,266
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(972		)	(1,012		)	(1,812		)	(1,988		)
Purchases of debt and equity securities	(651		)	(409		)	(2,602		)	(1,094		)
Proceeds from sales and maturities of debt and equity securities	643			405			2,588			1,089
Notes receivable from affiliated companies	164			(31		)	164			—
Other	(39		)	(45		)	(81		)	(59		)
Net cash used in investing activities	(855		)	(1,092		)	(1,743		)	(2,052		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—			1,295			514			1,295
Payments for the redemption of long-term debt	(283		)	(1,132		)	(550		)	(1,188		)
Notes payable to affiliated companies	479			370			552			685
Other	(1		)	1			—			2
Net cash provided by financing activities	195			534			516			794
Net decrease in cash, cash equivalents and restricted cash	(1		)	(17		)
Net increase in cash, cash equivalents and restricted cash							85			8
Cash, cash equivalents and restricted cash at beginning of period	126			112			126			112
Cash, cash equivalents and restricted cash at end of period	$	125		$	95		$	211		$	120
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	310		$	310		$	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

Accumulated Other Comprehensive Loss
Net
Net Unrealized
Total Progress

Additional
Losses on
Losses on
Pension and
Energy, Inc.

Paid-in
Retained
Cash Flow
Available-for-
OPEB
Stockholders'
Noncontrolling
Total
Capital
Earnings
Hedges
Sale Securities
Adjustments
Equity
Interests
Equity
Balance at December 31, 2018 $ 9,143
$ 5,131
$ (12 ) $ (1 ) $ (7 ) $ 14,254
$ 3
$ 14,257
Net income (loss) —
249
—
—
—
249
(1 ) 248
Other comprehensive income —
—
2
—
1
3
—
3
Other^(a)
—
6
(4 ) —
(2 ) —
—
—
Balance at March 31, 2019 $ 9,143

$ 5,386

$ (14 )
$ (1 )
$ (8 ) $ 14,506

$ 2

$ 14,508

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

$ 6,747

$ (9 )
$ —

$ (7 ) $ 15,874

$ 3

$ 15,877


(a)	Amounts in Retained Earnings and Accumulated Other Comprehensive ~~Loss~~(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					Three Months Ended				Six Months Ended
	March 31,					June 30,				June 30,
(in millions)	2020			2019		2020		2019		2020		2019
Operating Revenues	$	1,338		$	1,484	$	1,243	$	1,387	$	2,581	$	2,871
Operating Expenses
Fuel used in electric generation and purchased power	405			515		395		479		800		994
Operation, maintenance and other	305			335		317		357		622		692
Depreciation and amortization	287			290		257		251		544		541
Property and other taxes	47			44		44		41		91		85
Total operating expenses	1,044			1,184		1,013		1,128		2,057		2,312
Losses on Sales of Other Assets and Other, net	(1		)	—
Gains on Sales of Other Assets and Other, net						6		—		5		—
Operating Income	293			300		236		259		529		559
Other Income and Expenses, net	22			24		19		24		41		48
Interest Expense	69			77		68		81		137		158
Income Before Income Taxes	246			247		187		202		433		449
Income Tax Expense	42			44		26		33		68		77
Net Income and Comprehensive Income	$	204		$	203	$	161	$	169	$	365	$	372

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets							��
Cash and cash equivalents	$	32		$	22		$	51		$	22
Receivables (net of allowance for doubtful accounts of $2 at 2020 and $3 at 2019)	77			123
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2020 and $5 at 2019)	410			489
Receivables (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	50			52			42			52
Inventory	956			934			980			934
Regulatory assets	503			526			526			526
Other	48			60			37			60
Total current assets	2,076			2,206			2,164			2,206
Property, Plant and Equipment
Cost	34,898			34,603			35,120			34,603
Accumulated depreciation and amortization	(12,114		)	(11,915		)	(12,303		)	(11,915		)
Generation facilities to be retired, net	31			246			28			246
Net property, plant and equipment	22,815			22,934			22,845			22,934
Other Noncurrent Assets
Regulatory assets	4,392			4,152			4,448			4,152
Nuclear decommissioning trust funds	2,644			3,047			3,023			3,047
Operating lease right-of-use assets, net	377			387			367			387
Other	682			651			688			651
Total other noncurrent assets	8,095			8,237			8,526			8,237
Total Assets	$	32,986		$	33,377		$	33,535		$	33,377
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	319		$	629		$	287		$	629
Accounts payable to affiliated companies	208			203			153			203
Notes payable to affiliated companies	229			66			257			66
Taxes accrued	43			17			88			17
Interest accrued	90			110			102			110
Current maturities of long-term debt	1,006			1,006			1,006			1,006
Asset retirement obligations	421			485			357			485
Regulatory liabilities	263			236			306			236
Other	429			478			468			478
Total current liabilities	3,008			3,230			3,024			3,230
Long-Term Debt	7,903			7,902			7,907			7,902
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	2,446			2,388			2,485			2,388
Asset retirement obligations	5,442			5,408			5,457			5,408
Regulatory liabilities	3,790			4,232			4,087			4,232
Operating lease liabilities	344			354			339			354
Accrued pension and other post-retirement benefit costs	235			238			237			238
Investment tax credits	135			137			134			137
Other	83			92			105			92
Total other noncurrent liabilities	12,475			12,849			12,844			12,849
Commitments and Contingencies
Equity
Member's Equity	9,450			9,246			9,610			9,246
Total Liabilities and Equity	$	32,986		$	33,377		$	33,535		$	33,377

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	204		$	203		$	365		$	372
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	331			336			635			634
Equity component of AFUDC	(10		)	(14		)	(19		)	(28		)
Losses on sales of other assets	1			—
Gains on sales of other assets							(6		)	—
Deferred income taxes	43			33			60			26
Payments for asset retirement obligations	(75		)	(68		)	(164		)	(166		)
Provision for rate refunds	2			6			2			10
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(2		)	(3		)	(5		)	(5		)
Receivables	133			87			96			58
Receivables from affiliated companies	2			(5		)	10			(17		)
Inventory	(22		)	(5		)	(46		)	(26		)
Other current assets	54			96			87			115
Increase (decrease) in
Accounts payable	(220		)	(196		)	(260		)	(223		)
Accounts payable to affiliated companies	5			(57		)	(50		)	(96		)
Taxes accrued	26			(4		)	71			53
Other current liabilities	(73		)	(109		)	(16		)	(74		)
Other assets	(51		)	(47		)	(86		)	(3		)
Other liabilities	(8		)	(7		)	(5		)	25
Net cash provided by operating activities	340			246			669			655
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(466		)	(548		)	(795		)	(1,115		)
Purchases of debt and equity securities	(550		)	(315		)	(569		)	(473		)
Proceeds from sales and maturities of debt and equity securities	540			308			548			458
Notes receivable from affiliated companies	—			(38		)
Other	(16		)	(20		)	(21		)	(20		)
Net cash used in investing activities	(492		)	(613		)	(837		)	(1,150		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—			1,270			20			1,270
Payments for the redemption of long-term debt	(1		)	(601		)	(13		)	(602		)
Notes payable to affiliated companies	163			(294		)	191			(167		)
Other	—			(1		)	(1		)	(1		)
Net cash provided by financing activities	162			374			197			500
Net increase in cash and cash equivalents	10			7			29			5
Cash and cash equivalents at beginning of period	22			23			22			23
Cash and cash equivalents at end of period	$	32		$	30		$	51		$	28
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	87		$	117		$	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
			June 30, 2019 and 2020
			Member's
(in millions)			Equity
Balance at March 31, 2019			$	8,644
Net income			169
Balance at June 30, 2019			$	8,813

Balance at March 31, 2020			$	9,450
Net income			161
Other			(1		)
Balance at June 30, 2020			$	9,610

			Six Months Ended
			June 30, 2019 and 2020
	Member's		Member's
(in millions)	Equity		Equity
Balance at December 31, 2018	$	8,441	$	8,441
Net income	203		372
Balance at March 31, 2019	$	8,644
Balance at June 30, 2019			$	8,813

Balance at December 31, 2019	$	9,246	$	9,246
Net income	204		365
Balance at March 31, 2020	$	9,450
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				Three Months Ended						Six Months Ended
	March 31,				June 30,						June 30,
(in millions)	2020		2019		2020			2019			2020		2019
Operating Revenues	$	1,080	$	1,086	$	1,250		$	1,353		$	2,330	$	2,439
Operating Expenses
Fuel used in electric generation and purchased power	358		410		382			509			740		919
Operation, maintenance and other	245		230		269			244			514		474
Depreciation and amortization	165		165		175			175			340		340
Property and other taxes	88		93		92			103			180		196
Total operating expenses	856		898		918			1,031			1,774		1,929
Losses on Sales of Other Assets and Other, net					—			(1		)	—		(1		)
Operating Income	224		188		332			321			556		509
Other Income and Expenses, net	10		13		15			12			25		25
Interest Expense	84		82		80			83			164		165
Income Before Income Taxes	150		119		267			250			417		369
Income Tax Expense	30		23		51			49			81		72
Net Income	$	120	$	96	$	216		$	201		$	336	$	297
Other Comprehensive Income, net of tax
Unrealized gains on available-for-sale securities	1		1
Unrealized (losses) gains on available-for-sale securities					(1		)	—			—		1
Comprehensive Income	$	121	$	97	$	215		$	201		$	336	$	298

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	12		$	17		$	20		$	17
Receivables (net of allowance for doubtful accounts of $6 at 2020 and $3 at 2019)	80			96
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019)	335			341
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							2			—
Notes receivable from affiliated companies	—			173			—			173
Inventory	508			489			486			489
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)	451			419			432			419
Other (includes $13 at 2020 and $39 at 2019 related to VIEs)	37			58
Other (includes $32 at 2020 and $39 at 2019 related to VIEs)							44			58
Total current assets	1,423			1,593			1,525			1,593
Property, Plant and Equipment
Cost	20,880			20,457			21,290			20,457
Accumulated depreciation and amortization	(5,339		)	(5,236		)	(5,394		)	(5,236		)
Net property, plant and equipment	15,541			15,221			15,896			15,221
Other Noncurrent Assets
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)	2,097			2,194
Regulatory assets (includes $969 at 2020 and $989 at 2019 related to VIEs)							1,860			2,194
Nuclear decommissioning trust funds	691			734			711			734
Operating lease right-of-use assets, net	386			401			370			401
Other	329			311			327			311
Total other noncurrent assets	3,503			3,640			3,268			3,640
Total Assets	$	20,467		$	20,454		$	20,689		$	20,454
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	411		$	474		$	388		$	474
Accounts payable to affiliated companies	111			131			80			131
Notes payable to affiliated companies	305			—			232			—
Taxes accrued	74			43			177			43
Interest accrued	79			75			67			75
Current maturities of long-term debt (includes $54 at 2020 and 2019 related to VIEs)	322			571
Current maturities of long-term debt (includes $304 at 2020 and $54 at 2019 related to VIEs)							323			571
Regulatory liabilities	84			94			82			94
Other	383			415			372			415
Total current liabilities	1,769			1,803			1,721			1,803
Long-Term Debt (includes $1,278 at 2020 and $1,307 at 2019 related to VIEs)	7,384			7,416
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	2,192			2,179			2,181			2,179
Asset retirement obligations	578			578			581			578
Regulatory liabilities	918			993			726			993
Operating lease liabilities	334			343			323			343
Accrued pension and other post-retirement benefit costs	214			218			211			218
Other	169			136			194			136
Total other noncurrent liabilities	4,405			4,447			4,216			4,447
Commitments and Contingencies
Equity
Member's equity	6,909			6,789			7,125			6,789
Accumulated other comprehensive loss	—			(1		)	(1		)	(1		)
Total equity	6,909			6,788			7,124			6,788
Total Liabilities and Equity	$	20,467		$	20,454		$	20,689		$	20,454

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	120		$	96		$	336		$	297
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	219			207			478			423
Equity component of AFUDC	(4		)	(1		)	(6		)	(2		)
Losses on sales of other assets							—			1
Deferred income taxes	34			45			37			82
Payments for asset retirement obligations	(5		)	(7		)	(9		)	(17		)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	3			2			(20		)	2
Receivables	15			55			(110		)	(101		)
Receivables from affiliated companies	—			(6		)	(2		)	10
Inventory	(19		)	(13		)	4			1
Other current assets	7			(35		)	(11		)	8
Increase (decrease) in
Accounts payable	11			—			23			27
Accounts payable to affiliated companies	(20		)	(62		)	(51		)	(29		)
Taxes accrued	31			20			134			74
Other current liabilities	(58		)	(84		)	(50		)	(80		)
Other assets	13			(63		)	37			(77		)
Other liabilities	(46		)	(1		)	(91		)	(8		)
Net cash provided by operating activities	301			153			699			611
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(506		)	(422		)	(1,016		)	(873		)
Purchases of debt and equity securities	(101		)	(95		)	(2,033		)	(621		)
Proceeds from sales and maturities of debt and equity securities	103			97			2,040			631
Notes receivable from affiliated companies	173			—			173			—
Other	(23		)	(25		)	(60		)	(37		)
Net cash used in investing activities	(354		)	(445		)	(896		)	(900		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—			25			495			25
Payments for the redemption of long-term debt	(282		)	(81		)	(537		)	(136		)
Notes payable to affiliated companies	305			291			232			369
Other	(1		)	2			2			3
Net cash provided by financing activities	22			237			192			261
Net decrease in cash, cash equivalents and restricted cash	(31		)	(55		)	(5		)	(28		)
Cash, cash equivalents and restricted cash at beginning of period	56			75			56			75
Cash, cash equivalents and restricted cash at end of period	$	25		$	20		$	51		$	47
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	223		$	193		$	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 June 30, 2019 and 2020
										Accumulated
										Other
										Comprehensive
										Income (Loss)
										Net Unrealized
										Gains (Losses) on
								Member's		Available-for-Sale			Total
(in millions)								Equity		Securities			Equity
Balance at March 31, 2019								$	6,193	$	(1	)	$	6,192
Net income								201		—			201
Balance at June 30, 2019								$	6,394	$	(1	)	$	6,393

Balance at March 31, 2020								$	6,909	$	—		$	6,909
Net income								216		—			216
Other comprehensive income								—		(1		)	(1		)
Balance at June 30, 2020								$	7,125	$	(1	)	$	7,124

								Six Months Ended June 30, 2019 and 2020
			Accumulated							Accumulated
			Other							Other
			Comprehensive							Comprehensive
			Income (Loss)							Income (Loss)
			Net Unrealized							Net Unrealized
			Gains 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, 2018	$	6,097	$	(2	)	$	6,095	$	6,097	$	(2	)	$	6,095
Net income	96		—			96		297		—			297
Other comprehensive income	—		1			1		—		1			1
Balance at March 31, 2019	$	6,193	$	(1	)	$	6,192
Balance at June 30, 2019								$	6,394	$	(1	)	$	6,393

Balance at December 31, 2019	$	6,789	$	(1	)	$	6,788	$	6,789	$	(1	)	$	6,788
Net income	120		—			120		336		—			336
Other comprehensive income	—		1			1
Balance at March 31, 2020	$	6,909	$	—		$	6,909
Balance at June 30, 2020								$	7,125	$	(1	)	$	7,124

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				Three Months Ended				Six Months Ended
	March 31,				June 30,				June 30,
(in millions)	2020		2019		2020		2019		2020		2019
Operating Revenues
Regulated electric	$	346	$	355	$	330	$	336	$	676	$	691
Regulated natural gas	152		176		93		97		245		273
Total operating revenues	498		531		423		433		921		964
Operating Expenses
Fuel used in electric generation and purchased power	87		93		77		86		164		179
Cost of natural gas	37		54		6		10		43		64
Operation, maintenance and other	123		132		95		123		218		255
Depreciation and amortization	68		64		68		66		136		130
Property and other taxes	83		84		78		74		161		158
Total operating expenses	398		427		324		359		722		786
Operating Income	100		104		99		74		199		178
Other Income and Expenses, net	3		9		4		6		7		15
Interest Expense	24		30		25		24		49		54
Income Before Income Taxes	79		83		78		56		157		139
Income Tax Expense	14		14		12		9		26		23
Net Income and Comprehensive Income	$	65	$	69	$	66	$	47	$	131	$	116

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	14		$	17		$	8		$	17
Receivables (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019)	84			84			83			84
Receivables from affiliated companies	52			92			47			92
Notes receivable from affiliated companies							35			—
Inventory	121			135			129			135
Regulatory assets	33			49			32			49
Other	11			21			14			21
Total current assets	315			398			348			398
Property, Plant and Equipment
Cost	10,401			10,241			10,591			10,241
Accumulated depreciation and amortization	(2,883		)	(2,843		)	(2,923		)	(2,843		)
Net property, plant and equipment	7,518			7,398			7,668			7,398
Other Noncurrent Assets
Goodwill	920			920			920			920
Regulatory assets	567			549			593			549
Operating lease right-of-use assets, net	21			21			21			21
Other	56			52			59			52
Total other noncurrent assets	1,564			1,542			1,593			1,542
Total Assets	$	9,397		$	9,338		$	9,609		$	9,338
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	227		$	288		$	249		$	288
Accounts payable to affiliated companies	68			68			58			68
Notes payable to affiliated companies	399			312			79			312
Taxes accrued	170			219			210			219
Interest accrued	30			30			31			30
Asset retirement obligations	3			1			5			1
Regulatory liabilities	66			64			69			64
Other	68			75			71			75
Total current liabilities	1,031			1,057			772			1,057
Long-Term Debt	2,595			2,594			2,994			2,594
Long-Term Debt Payable to Affiliated Companies	25			25			25			25
Other Noncurrent Liabilities
Deferred income taxes	942			922			958			922
Asset retirement obligations	78			79			77			79
Regulatory liabilities	760			763			751			763
Operating lease liabilities	20			21			20			21
Accrued pension and other post-retirement benefit costs	101			100			102			100
Other	97			94			96			94
Total other noncurrent liabilities	1,998			1,979			2,004			1,979
Commitments and Contingencies
Equity
Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019	762			762			762			762
Additional paid-in capital	2,776			2,776			2,776			2,776
Retained earnings	210			145			276			145
Total equity	3,748			3,683			3,814			3,683
Total Liabilities and Equity	$	9,397		$	9,338		$	9,609		$	9,338

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	65		$	69		$	131		$	116
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	69			65			138			132
Equity component of AFUDC	(1		)	(3		)	(2		)	(7		)
Deferred income taxes	14			20			24			45
Payments for asset retirement obligations	—			(1		)	—			(5		)
Provision for rate refunds	3			4			6			3
(Increase) decrease in
Receivables	1			5			2			24
Receivables from affiliated companies	40			35			45			64
Inventory	14			15			6			2
Other current assets	8			(6		)	8			(13		)
Increase (decrease) in
Accounts payable	(19		)	(5		)	(22		)	(44		)
Accounts payable to affiliated companies	—			(8		)	(10		)	—
Taxes accrued	(49		)	(45		)	(9		)	(67		)
Other current liabilities	2			14			2			2
Other assets	(2		)	(10		)	(24		)	(18		)
Other liabilities	(8		)	(4		)	(3		)	(15		)
Net cash provided by operating activities	137			145			292			219
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(217		)	(233		)	(403		)	(473		)
Notes receivable from affiliated companies	—			(463		)	(35		)	—
Other	(10		)	(11		)	(27		)	(31		)
Net cash used in investing activities	(227		)	(707		)	(465		)	(504		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—			794			397			794
Payments for the redemption of long-term debt							—			(451		)
Notes payable to affiliated companies	87			(236		)	(233		)	(71		)
Net cash provided by financing activities	87			558			164			272
Net decrease in cash and cash equivalents	(3		)	(4		)	(9		)	(13		)
Cash and cash equivalents at beginning of period	17			21			17			21
Cash and cash equivalents at end of period	$	14		$	17		$	8		$	8
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	66		$	68		$	94		$	93

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


										Three Months Ended June 30, 2019 and 2020
												Additional		Retained
										Common		Paid-in		Earnings			Total
(in millions)										Stock		Capital		(Deficit)			Equity
Balance at March 31, 2019										$	762	$	2,776	$	(24	)	$	3,514
Net income										—		—		47			47
Balance at June 30, 2019										$	762	$	2,776	$	23		$	3,561

Balance at March 31, 2020										$	762	$	2,776	$	210		$	3,748
Net income										—		—		66			66
Balance at June 30, 2020										$	762	$	2,776	$	276		$	3,814

										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, 2018	$	762	$	2,776	$	(93	)	$	3,445	$	762	$	2,776	$	(93	)	$	3,445
Net income	—		—		69			69		—		—		116			116
Balance at March 31, 2019	$	762	$	2,776	$	(24	)	$	3,514
Balance at June 30, 2019										$	762	$	2,776	$	23		$	3,561

Balance at December 31, 2019	$	762	$	2,776	$	145		$	3,683	$	762	$	2,776	$	145		$	3,683
Net income	—		—		65			65		—		—		131			131
Balance at March 31, 2020	$	762	$	2,776	$	210		$	3,748
Balance at June 30, 2020										$	762	$	2,776	$	276		$	3,814

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					Three Months Ended				Six Months Ended
	March 31,					June 30,				June 30,
(in millions)	2020		2019			2020		2019		2020		2019
Operating Revenues	$	692	$	768		$	617	$	714	$	1,309	$	1,482
Operating Expenses
Fuel used in electric generation and purchased power	194		257			161		229		355		486
Operation, maintenance and other	186		189			171		188		357		377
Depreciation and amortization	132		131			134		132		266		263
Property and other taxes	22		19			20		20		42		39
Total operating expenses	534		596			486		569		1,020		1,165
Losses on Sales of Other Assets and Other, net	—		(3		)
Gains on Sales of Other Assets and Other, net						—		3		—		—
Operating Income	158		169			131		148		289		317
Other Income and Expenses, net	10		19			9		8		19		27
Interest Expense	43		43			42		28		85		71
Income Before Income Taxes	125		145			98		128		223		273
Income Tax Expense	26		35			17		31		43		66
Net Income and Comprehensive Income	$	99	$	110		$	81	$	97	$	180	$	207

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	15		$	25		$	16		$	25
Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019)	50			60			44			60
Receivables from affiliated companies	76			79			59			79
Notes receivable from affiliated companies	543			—			425			—
Inventory	538			517			489			517
Regulatory assets	78			90			90			90
Other	36			60			45			60
Total current assets	1,336			831			1,168			831
Property, Plant and Equipment
Cost	16,481			16,305			16,736			16,305
Accumulated depreciation and amortization	(5,349		)	(5,233		)	(5,472		)	(5,233		)
Net property, plant and equipment	11,132			11,072			11,264			11,072
Other Noncurrent Assets
Regulatory assets	1,098			1,082			1,113			1,082
Operating lease right-of-use assets, net	57			57			56			57
Other	214			234			251			234
Total other noncurrent assets	1,369			1,373			1,420			1,373
Total Assets	$	13,837		$	13,276		$	13,852		$	13,276
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	157		$	201		$	204		$	201
Accounts payable to affiliated companies	66			87			74			87
Notes payable to affiliated companies	—			30			—			30
Taxes accrued	81			49			46			49
Interest accrued	60			58			64			58
Current maturities of long-term debt	503			503			503			503
Asset retirement obligations	181			189			172			189
Regulatory liabilities	46			55			51			55
Other	92			112			104			112
Total current liabilities	1,186			1,284			1,218			1,284
Long-Term Debt	3,950			3,404			3,950			3,404
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	1,158			1,150			1,195			1,150
Asset retirement obligations	645			643			643			643
Regulatory liabilities	1,672			1,685			1,655			1,685
Operating lease liabilities	54			55			54			55
Accrued pension and other post-retirement benefit costs	148			148			150			148
Investment tax credits	170			164			170			164
Other	30			18			12			18
Total other noncurrent liabilities	3,877			3,863			3,879			3,863
Commitments and Contingencies
Equity
Member's Equity	4,674			4,575			4,655			4,575
Total Liabilities and Equity	$	13,837		$	13,276		$	13,852		$	13,276

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	99		$	110		$	180		$	207
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	133			132			267			265
Equity component of AFUDC	(6		)	(4		)	(12		)	(9		)
Losses on sale of other assets	—			3
Deferred income taxes	16			28			38			60
Payments for asset retirement obligations	(12		)	(11		)	(28		)	(17		)
(Increase) decrease in
Receivables	15			4			19			5
Receivables from affiliated companies	3			20			20			39
Inventory	(21		)	(13		)	28			(41		)
Other current assets	25			19			13			48
Increase (decrease) in
Accounts payable	(13		)	8			22			26
Accounts payable to affiliated companies	(21		)	(11		)	(13		)	(17		)
Taxes accrued	43			20			4			(18		)
Other current liabilities	(27		)	(15		)	(22		)	(13		)
Other assets	(4		)	12			(29		)	(33		)
Other liabilities	8			6			(6		)	15
Net cash provided by operating activities	238			308			481			517
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(210		)	(208		)	(456		)	(443		)
Purchases of debt and equity securities	(5		)	(6		)	(14		)	(14		)
Proceeds from sales and maturities of debt and equity securities	2			4			7			11
Notes receivable from affiliated companies	(543		)	—			(425		)	—
Other	(6		)	(11		)	(16		)	(21		)
Net cash used in investing activities	(762		)	(221		)	(904		)	(467		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	544			—			544			—
Payments for the redemption of long-term debt	—			(60		)	—			(60		)
Notes payable to affiliated companies	(30		)	(31		)	(30		)	(2		)
Distributions to parent							(100		)	—
Net cash provided by (used in) financing activities	514			(91		)	414			(62		)
Net decrease in cash and cash equivalents	(10		)	(4		)	(9		)	(12		)
Cash and cash equivalents at beginning of period	25			24			25			24
Cash and cash equivalents at end of period	$	15		$	20		$	16		$	12
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	70		$	76		$	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
			June 30, 2019 and 2020
			Member's
(in millions)			Equity
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			81
Distributions to parent			(100		)
Balance at June 30, 2020			$	4,655

			Six Months Ended
			June 30, 2019 and 2020
	Member's		Member's
(in millions)	Equity		Equity
Balance at December 31, 2018	$	4,339	$	4,339
Net income	110		207
Balance at March 31, 2019	$	4,449
Balance at June 30, 2019			$	4,546

Balance at December 31, 2019	$	4,575	$	4,575
Net income	99		180
Balance at March 31, 2020	$	4,674
Distributions to parent			(100		)
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				Three Months Ended						Six Months Ended
	March 31,				June 30,						June 30,
(in millions)	2020		2019		2020			2019			2020		2019
Operating Revenues	$	512	$	579	$	197		$	209		$	709	$	788
Operating Expenses
Cost of natural gas	162		273		53			65			215		338
Operation, maintenance and other	80		80		79			83			159		163
Depreciation and amortization	45		42		43			42			88		84
Property and other taxes	12		12		12			13			24		25
Total operating expenses	299		407		187			203			486		610
Operating Income	213		172		10			6			223		178
Other Income and Expenses, net	12		6		16			6			28		12
Interest Expense	27		22		33			21			60		43
Income Before Income Taxes	198		156
Income Tax Expense	20		34
Net Income and Comprehensive Income	$	178	$	122
(Loss) Income Before Income Taxes					(7		)	(9		)	191		147
Income Tax (Benefit) Expense					(9		)	(2		)	11		32
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)	March 31, 2020			December 31, 2019			June 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	4		$	—
Receivables (net of allowance for doubtful accounts of $9 at 2020 and $6 at 2019)	191			241
Receivables (net of allowance for doubtful accounts of $6 at 2020 and 2019)							$	102		$	241
Receivables from affiliated companies	13			10			14			10
Inventory	39			72			29			72
Regulatory assets	96			73			118			73
Other	13			28			54			28
Total current assets	356			424			317			424
Property, Plant and Equipment
Cost	8,653			8,446			8,701			8,446
Accumulated depreciation and amortization	(1,703		)	(1,681		)	(1,715		)	(1,681		)
Net property, plant and equipment	6,950			6,765			6,986			6,765
Other Noncurrent Assets
Goodwill	49			49			49			49
Regulatory assets	263			290			280			290
Operating lease right-of-use assets, net	23			24			22			24
Investments in equity method unconsolidated affiliates	84			83			85			83
Other	132			121			278			121
Total other noncurrent assets	551			567			714			567
Total Assets	$	7,857		$	7,756		$	8,017		$	7,756
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	145		$	215		$	138		$	215
Accounts payable to affiliated companies	12			3			36			3
Notes payable to affiliated companies	486			476			200			476
Taxes accrued	36			24			28			24
Interest accrued	32			33			34			33
Current maturities of long-term debt							160			—
Regulatory liabilities	91			81			97			81
Other	54			67			56			67
Total current liabilities	856			899			749			899
Long-Term Debt	2,385			2,384			2,619			2,384
Other Noncurrent Liabilities
Deferred income taxes	742			708			763			708
Asset retirement obligations	17			17			17			17
Regulatory liabilities	1,087			1,131			1,078			1,131
Operating lease liabilities	22			23			21			23
Accrued pension and other post-retirement benefit costs	7			3			7			3
Other	121			148			141			148
Total other noncurrent liabilities	1,996			2,030			2,027			2,030
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2020 and 2019	1,310			1,310			1,310			1,310
Retained earnings	1,310			1,133			1,312			1,133
Total equity	2,620			2,443			2,622			2,443
Total Liabilities and Equity	$	7,857		$	7,756		$	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)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	178		$	122		$	180		$	115
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	46			42			89			85
Equity component of AFUDC	(5		)	—			(9		)	—
Deferred income taxes	12			23			17			40
Equity in earnings from unconsolidated affiliates	(2		)	(2		)	(4		)	(4		)
Provision for rate refunds	(18		)	7			(24		)	9
(Increase) decrease in
Receivables	65			27			154			168
Receivables from affiliated companies	(3		)	12			(4		)	5
Inventory	33			45			42			37
Other current assets	(9		)	22			(69		)	(17		)
Increase (decrease) in
Accounts payable	(76		)	(44		)	(68		)	(70		)
Accounts payable to affiliated companies	9			(4		)	33			14
Taxes accrued	12			(49		)	5			(61		)
Other current liabilities	(12		)	15			(4		)	10
Other assets	1			(3		)	(13		)	(9		)
Other liabilities	(1		)	(5		)	7			(2		)
Net cash provided by operating activities	230			208			332			320
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(231		)	(209		)	(438		)	(480		)
Contributions to equity method investments							—			(16		)
Notes receivable from affiliated companies							—			(16		)
Other	(5		)	(2		)	(11		)	(6		)
Net cash used in investing activities	(236		)	(211		)	(449		)	(518		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt							394			596
Payments for the redemption of long-term debt							—			(350		)
Notes payable to affiliated companies	10			3			(277		)	(198		)
Capital contributions from parent							—			150
Net cash provided by financing activities	10			3			117			198
Net increase in cash and cash equivalents	4			—			—			—
Cash and cash equivalents at beginning of period	—			—			—			—
Cash and cash equivalents at end of period	$	4		$	—		$	—		$	—
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	114		$	92		$	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 June 30, 2019 and 2020
									Common		Retained			Total
(in millions)									Stock		Earnings			Equity
Balance at March 31, 2019									$	1,160	$	1,053		$	2,213
Net loss									—		(7		)	(7		)
Contribution from parent									150		—			150
Balance at June 30, 2019									$	1,310	$	1,046		$	2,356

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

									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, 2018	$	1,160	$	931		$	2,091		$	1,160	$	931		$	2,091
Net income	—		122			122			—		115			115
Balance at March 31, 2019	$	1,160	$	1,053		$	2,213
Contribution from parent									150		—			150
Balance at June 30, 2019									$	1,310	$	1,046		$	2,356

Balance at December 31, 2019	$	1,310	$	1,133		$	2,443		$	1,310	$	1,133		$	2,443
Net income	—		178			178			—		180			180
Other	—		(1		)	(1		)	—		(1		)	(1		)
Balance at March 31, 2020	$	1,310	$	1,310		$	2,620
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, 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 11 for additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities.

COVID-19

The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization ~~(WHO)~~ declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The ~~COVID-19 pandemic has not had a material financial impact on the Duke Energy Registrants as of March 31, 2020; however, the~~ extent to which the COVID-19 pandemic will impact the Duke Energy Registrants during 2020 and beyond is uncertain, ~~at this time. The~~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 ~~on COVID-19 and~~as well as steps taken to mitigate the impacts to our business and ~~customers.~~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 wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Condensed Consolidated Balance Sheet.



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

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

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.

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~~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.


	March 31, 2020						December 31, 2019						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	$	1,450	$	52	$	12	$	311	$	48	$	17	$	341	$	78	$	20	$	311	$	48	$	17
Other	185		13		13		222		39		39		193		31		31		222		39		39
Other Noncurrent Assets
Other	63		60		—		40		39		—		107		102		—		40		39		—
Total cash, cash equivalents and restricted cash	$	1,698	$	125	$	25	$	573	$	126	$	56	$	641	$	211	$	51	$	573	$	126	$	56

~~INVENTORY~~

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

March 31, 2020
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Materials and supplies $ 2,280
$ 759
$ 1,018
$ 678
$ 340
$ 83
$ 319
$ 5
Coal 742
268
246
167
79
10
218
—
Natural gas, oil and other fuel 302
40
199
111
89
28
1
34
Total inventory $ 3,324
$ 1,067
$ 1,463
$ 956
$ 508
$ 121
$ 538
$ 39
44

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 standard was adopted by the Duke Energy Registrants in 2020.~~



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

INVENTORY

Provisions for inventory write-offs were not material at June 30, 2020, and December 31, 2019. The components of inventory are presented in the 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 standard was adopted by the Duke Energy Registrants in 2020.

Current Expected Credit Losses. In June 2016, the ~~FASB~~Financial Accounting Standards Board (FASB) issued new accounting guidance for credit losses. Duke Energy adopted the new accounting guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year results. Duke Energy did not adopt any practical expedients.

Duke Energy recognizes allowances for credit losses based on management's estimate of losses expected to be incurred over the lives of certain assets or guarantees. Management monitors credit quality, changes in expected credit losses and the appropriateness of the allowance for credit losses on a forward-looking basis. Management reviews the risk of loss periodically as part of the existing assessment of collectability of receivables.

Duke Energy reviews the credit quality of its counterparties as part of its regular risk management process and requires credit enhancements, such as deposits or letters of credit, as appropriate and as allowed by regulators.

Duke Energy recorded cumulative effects of changes in accounting principles related to the adoption of new credit loss standard, for allowances for credit losses of trade and other receivables, insurance receivables and financial guarantees. These amounts are included in the Condensed Consolidated Balance Sheets in Receivables, Receivables of VIEs, Other Noncurrent Assets and Other Noncurrent Liabilities. See Notes 4 and 12 for more information.

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



	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 ~~March 31,~~June 30, 2020.

Reference Rate Reform. In March 2020, the FASB issued new accounting guidance for reference rate reform. This guidance is elective and provides expedients to facilitate financial reporting for the anticipated transition away from the London Inter-bank Offered Rate (LIBOR) and other interbank reference rates by the end of 2021. The optional expedients are effective for modification of existing contracts or new arrangements executed between March 12, 2020, through December 31, 2022.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Duke Energy has variable-rate debt and manages interest rate risk by entering into financial contracts including interest rate swaps that are generally indexed to LIBOR. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination to fully adapt to a post-LIBOR environment. Duke Energy is assessing these financial arrangements and is evaluating the use of optional expedients outlined in the new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that extend beyond 2021. The full outcome of the transition away from LIBOR cannot be determined at this time, but is not expected to have a material impact 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. In 2020, Duke Energy evaluated recoverability of a renewable merchant 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 asset was not impaired because the carrying value of $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 National Methanol Company.

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



	Three 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	$	5,026	$	265		$	123	$	5,414		$	7		$	—		$	5,421
Intersegment revenues	8		24			—		32			19			(51		)	—
Total revenues	$	5,034	$	289		$	123	$	5,446		$	26		$	(51	)	$	5,421
Segment income (loss)^(a)	$	753	$	(1,576	)	$	90	$	(733	)	$	(84	)	$	—		$	(817	)
Less: Noncontrolling interests^(c)																	90
Add: Preferred stock dividend																	15
Net Loss																	$	(892	)
Segment assets	$	136,724	$	13,072		$	6,386	$	156,182		$	3,874		$	(7	)	$	160,049



	Three Months Ended June 30, 2019
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	5,467	$	282	$	118	$	5,867	$	6		$	—		$	5,873
Intersegment revenues	8		24		—		32		19			(51		)	—
Total revenues	$	5,475	$	306	$	118	$	5,899	$	25		$	(51	)	$	5,873
Segment income (loss)	$	809	$	40	$	86	$	935	$	(115	)	$	—		$	820
Less: Noncontrolling interests^(c)															84
Add: Preferred stock dividend															12
Net Income															$	748



FINANCIAL STATEMENTS	BUSINESS SEGMENTS

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

Three Months Ended March 31, 2020
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

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



	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	)


	Three Months Ended March 31, 2019																	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	$	5,321	$	732	$	106	$	6,159	$	4		$	—		$	6,163		$	10,788	$	1,014	$	224	$	12,026	$	10		$	—		$	12,036
Intersegment revenues	8		24		—		32		17			(49		)	—			16		48		—		64		36			(100		)	—
Total revenues	$	5,329	$	756	$	106	$	6,191	$	21		$	(49	)	$	6,163		$	10,804	$	1,062	$	224	$	12,090	$	46		$	(100	)	$	12,036
Segment income (loss)	$	750	$	226	$	13	$	989	$	(89	)	$	—		$	900		$	1,559	$	266	$	99	$	1,924	$	(204	)	$	—		$	1,720
Add: Noncontrolling interests^(b)															(7		)
Net income															$	893
Less: Noncontrolling interests^(c)																																91
Add: Preferred stock dividend																																12
Net Income																																$	1,641


(a)	Gas Utilities and Infrastructure includes $2.0 billion of pretax costs related to the 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.

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 March 31, 2020														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	$	346	$	152	$	498	$	—		$	—		$	498	$	330	$	93	$	423	$	—		$	—		$	423
Segment income/Net (loss) income	$	30	$	36	$	66	$	(1	)	$	—		$	65	$	44	$	23	$	67	$	(1	)	$	—		$	66
Segment assets	$	6,238	$	3,135	$	9,373	$	26		$	(2	)	$	9,397	$	6,378	$	3,213	$	9,591	$	26		$	(8	)	$	9,609


	Three Months Ended March 31, 2019											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	$	355	$	176	$	531	$	—		$	531	$	336	$	97	$	433	$	—		$	433
Segment income/Net (loss) income	$	36	$	35	$	71	$	(2	)	$	69	$	31	$	17	$	48	$	(1	)	$	47



FINANCIAL STATEMENTS	BUSINESS SEGMENTS



	Six Months Ended June 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	676	$	245	$	921	$	—		$	921
Segment income/Net (loss) income	$	74	$	59	$	133	$	(2	)	$	131



	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.



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

Duke Energy Carolinas and Duke Energy Progress

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

On March 31, 2020, the governor issued Executive Order No. 124, which, in addition to requiring the steps in the NCUC order noted above, stated that nothing in Executive Order No. 124 shall relieve a customer of its 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 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 31, 2020, the Carolina Utility Customers Association (CUCA) filed a petition with the NCUC to temporarily suspend minimum demand charges for commercial and industrial customers. On April 2, 2020, the NCUC issued an order requiring the North Carolina Public Staff (Public Staff) and Duke Energy Carolinas, Duke Energy Progress and other utilities to file responses. On April 9,July 10, 2020, Duke Energy Carolinas and Duke Energy Progress filed ~~responses to CUCA’s~~a petition ~~opposing CUCA’s request. The companies assert that voiding commission-approved tariffs and allowing all commercial and industrial~~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 ~~requested rate schedules to avoid paying a portion~~NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of ~~their bills is not legally permissible and would result in these costs unfairly being shifted to other customers that are already paying their respective fair share of similar fixed components.~~Arrearages Pursuant to Special Repayment Plans. The order contained the ~~NCUC’s April 2~~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 ~~reply comments were filed by CUCA,~~of the ~~Public Staff~~commission; 3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and 4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions.

Duke Energy Carolinas and Duke Energy Progress filed a joint petition on ~~April 15, 2020. A final order from~~August 7, 2020, with the NCUC ~~deciding CUCA's request is pending.~~for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

South Carolina

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



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 6six 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~~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. ~~The~~On May 14, 2020, the PSCSC adopted the ORS' motion.

On May 13, 2020, the ORS ~~requests~~filed a letter with the PSCSC that ~~such comments be~~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 ~~within~~a report on June 30, ~~days of a~~2020, as required by PSCSC order, ~~approving~~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 ~~motion.~~PSCSC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Carolinas

2017 North Carolina Rate Case

On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million, which 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 William States Lee Combined Cycle Facility, grid improvement projects, AMI, investments in customer service technologies, costs of complying with CCR regulations and the Coal Ash Act and recovery of costs related to licensing and development of the William States Lee III Nuclear Station.

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.

On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction.



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

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

Removal of deferred storm costs from the rate case;

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

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

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



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. ~~The~~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 ~~suggests, health~~with Duke Energy Progress and ~~safety permitting,~~the Public Staff notifying the commission that the ~~commission consider~~parties reached a joint partial settlement with the ~~possibility~~Public Staff and requesting a postponement of ~~holding~~ the ~~consolidated~~evidentiary hearing ~~in July. If the~~until August 24, 2020. The NCUC ~~grants~~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 represented an approximate 10% increase in retail revenues. The request for rate increase was driven by capital investments and environmental compliance progress made by Duke Energy Carolinas since its previous rate case, including the further implementation of Duke Energy Carolinas’ generation modernization program, which consists of retiring, replacing and upgrading generation plants, investments in customer service technologies and continued investments in base work to maintain its transmission and distribution systems. The request included net tax benefits resulting from the Tax Act of $66 million to reflect the change in ongoing tax expense, primarily from the reduction in the federal income tax rate from 35% to 21%. The request also included $46 million to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change and benefits of $17 million from a reduction in North Carolina state income taxes allocable to South Carolina (EDIT Rider).



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

Duke Energy Carolinas also requested approval of its proposed Grid Improvement Plan (GIP), adjustments to its Prepaid Advantage Program and a variety of accounting orders related to ongoing costs for environmental compliance, including recovery over a five-year period of $242 million of deferred coal ash related compliance costs, grid investments between rate changes, incremental depreciation expense, a result of new depreciation rates from the depreciation study approved in the 2017 North Carolina Rate Case above, and the balance of development costs associated with the cancellation of the Lee Nuclear Project. Finally, Duke Energy Carolinas sought approval to establish a reserve and accrual for end-of-life nuclear costs for nuclear fuel and materials and supplies. On March 8, 2019, the ORS moved to establish a new and separate hearing docket to review and consider the GIP proposed by Duke Energy Carolinas. Subsequently, on March 12, 2019, the ORS and Duke Energy Carolinas executed a Stipulation resolving the ORS’s motion. The Stipulation provided that costs incurred for the GIP after January 1, 2019, would be deferred with a return, subject to evaluation in a future rate proceeding. The Stipulation was approved by the PSCSC on June 19, 2019. On December 16, 2019, Duke Energy Carolinas and Duke Energy Progress filed a Joint Petition to Establish an Informational Docket for Review and Consideration of Grid Improvement Plans through which Duke Energy Carolinas and Duke Energy Progress would provide interested stakeholders information on the companies' grid activities. The PSCSC requested parties comment on procedural matters by January 31, 2020; accordingly, various groups filed comments, none of which opposed an informational docket. Duke Energy Carolinas cannot predict the outcome of this matter.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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their ~~appeal.~~appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, ~~2020. Response briefs and reply briefs are due July 6,~~ 2020, ~~and August 11, 2020, respectively. Also on April 21, 2020,~~which included the South Carolina Energy User's Committee ~~filed a~~ brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. Based on legal analysis and 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.

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~~

~~On May 15, 2018, the~~ 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 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 represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase was driven by major capital investments subsequent to the 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. ~~The~~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 ~~suggests, health~~with Duke Energy Carolinas and ~~safety permitting,~~the Public Staff notifying the commission that the ~~commission consider~~parties reached a joint partial settlement with the ~~possibility~~Public Staff and requesting a postponement of ~~holding~~ the ~~consolidated~~evidentiary hearing ~~in July. If the~~until August 24, 2020. The NCUC ~~grants~~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 ~~$177~~$165 million with an additional $4 million in capital investments made for restoration efforts. Approximately ~~$151~~$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 ~~March 31,~~June 30, 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 to an existing storm deferral balance previously approved by the PSCSC. The PSCSC voted to approve the request on March 4, 2020, and issued a final order on April 7, 2020. On July 1, 2020, Duke Energy Progress filed a supplemental true up reducing the actual costs to $17 million.

2018 South Carolina Rate Case

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

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



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

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%;

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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their ~~appeal.~~appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs are due ~~July 6, 2020, and~~on August 11, ~~2020, respectively.~~2020. Based on legal analysis and 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~~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 June 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	330	$	93	$	423	$	—		$	—		$	423
Segment income/Net (loss) income	$	44	$	23	$	67	$	(1	)	$	—		$	66
Segment assets	$	6,378	$	3,213	$	9,591	$	26		$	(8	)	$	9,609



	Three Months Ended June 30, 2019
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	336	$	97	$	433	$	—		$	433
Segment income/Net (loss) income	$	31	$	17	$	48	$	(1	)	$	47



FINANCIAL STATEMENTS	BUSINESS SEGMENTS



	Six Months Ended June 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	676	$	245	$	921	$	—		$	921
Segment income/Net (loss) income	$	74	$	59	$	133	$	(2	)	$	131



	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

Duke Energy Carolinas ~~Modernization Plan~~

~~On November 4, 2015,~~and Duke Energy Progress announced a Western Carolinas Modernization Plan, which included retirement of the existing Asheville coal-fired plant, the construction of two 280‑MW combined-cycle natural gas plants having dual-fuel capability, with the option to build a third natural gas simple cycle unit in 2023 based upon the outcome of initiatives to reduce the region's power demand. The plan also included upgrades to existing transmission lines and substations, installation of solar generation and a pilot battery storage project.

Duke Energy Progress retired the 376-MW Asheville coal-fired plant on January 29, 2020, at which time the net book value, including associated ash basin closure costs, of $214 million was transferred from Generation facilities to be retired, net to Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.COVID-19 Filings

North Carolina

On March ~~28, 2016,~~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 ~~approving a Certificate~~directing that utilities under its jurisdiction suspend disconnections for nonpayment of ~~Public Convenience~~utility bills during the state of emergency (as defined by Executive Order No. 116) and ~~Necessity (CPCN)~~allow for customers to enter into payment arrangements to pay off arrearages accumulated during the ~~new combined-cycle natural gas plants with an estimated cost~~state of ~~$893 million, but required~~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 ~~Progress to refile for CPCN approval for the contingent simple cycle unit.~~

~~On December 27, 2019, Asheville Combined Cycle Power Block 1~~Carolinas and the common systems that serve both combined cycle units went into commercial operation. Power Block 1 consists of the Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator (which together form the first combined cycle unit approved in the CPCN Order). Power Block 2 consists of the Unit 7 Combustion Turbine and Unit 8 Steam Turbine Generator (which together form the second combined cycle unit approved in the CPCN Order). Duke Energy Progress placed the Unit 7 Combustion Turbine portion of Power Block 2 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 October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct~~ ~~the Hot Springs Microgrid Solar and Battery Storage Facility. On March 22, 2019, Duke Energy Progress and the Public Staff filed a Joint Proposed Order.~~ ~~On May 10, 2019, the NCUC issued an Order Granting Certificate of Public Convenience and Necessity with Conditions. On November 19, 2019,~~ Duke Energy Progress filed a ~~semiannual progress report~~request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for ~~its Hot Springs Microgrid Solar~~checks returned for insufficient funds for residential and ~~Battery Storage Facility. As required by an~~nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted the companies’ request on March 20, 2020.

On March 31, 2020, the governor issued Executive Order No. 124, which, in addition to requiring the steps in the NCUC order noted above, stated that nothing in Executive Order No. 124 shall relieve a customer of its 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 ~~December 6, 2019, an updated progress report~~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 July 10, 2020, Duke Energy Carolinas and Duke Energy Progress filed a petition with the NCUC for clarification regarding when they may begin working with customers on ~~January 15,~~establishing payment arrangements for arrears accumulated since March 13, 2020. ~~An evidentiary hearing was held~~On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to Special Repayment Plans. The order contained the following: 1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; 2) the late fee moratorium will continue through the end of the state of emergency or until further order of the commission; 3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and 4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions.

Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of 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 ~~5, 2020. Construction is expected~~14, 2020, to ~~begin in~~ the ~~second quarter~~ORS Executive Director regarding the suspension of disconnection of essential utility services for nonpayment. On March 18, 2020, ~~with commercial operation expected~~the PSCSC issued an order approving such waivers, and also approved waivers for regulations related to ~~begin in December 2020.~~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 ~~Florida~~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 ~~Filings~~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 ~~March 1,~~May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor ~~Ron DeSantis issued Executive Order No. 20-51 directing~~McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the ~~State Health Officer~~PSCSC conditionally vacated the regulation waivers regarding termination of ~~Florida~~service and suspension of disconnect fees. Prior to ~~declare~~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 ~~public health emergency in Florida~~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 for deferral treatment of incremental costs and waived customer fees due 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.

~~Storm Restoration Cost Recovery~~

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

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover the retail portion of estimated incremental storm restoration costs for Hurricane Michael. On June 11, 2019, the FPSC approved the petition for recovery of estimated incremental storm restoration costs related to Hurricane Michael. The FPSC also approved the stipulation Duke Energy Florida filed, which will allow Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by approximately year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the amount of $191 million plus interest. An Order Establishing Procedure was issued on January 30, 2020, and hearings are scheduled to begin September 15, 2020. Duke Energy FloridaProgress 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~~Carolinas

2017 North Carolina Rate Case

On August 25, 2017, Duke Energy ~~Florida’s service territory; accordingly,~~Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. On February 28, 2018, Duke Energy ~~Florida incurred costs~~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. On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction.

The North Carolina Attorney General and other parties separately filed Notices of Appeal to ~~secure necessary resources~~the North Carolina Supreme Court. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to be prepared for that potential impact. Although Hurricane Dorian never made landfall in Florida, its effects were still felt, and outages did occur. Preparations were required so that, if Hurricane Dorian had made landfall and impacts had been more severe,the North Carolina Supreme 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 ~~Florida would have been prepared to restore its customers’ power in a timely fashion.~~

~~On December 19, 2019,~~Carolinas and Duke Energy ~~Florida filed a petition with~~Progress appeals and enter an order adopting the ~~FPSC to recover $169 million, the estimated retail portion of these costs, consistent with the provisions~~parties’ proposed briefing schedule as set out in the ~~2017 Settlement.~~filing. On ~~February 24, 2020,~~November 29, 2018, the ~~commission approved~~North Carolina Supreme Court adopted a schedule for briefing set forth in the ~~request for recovery over a 12-month period with rates effective in March 2020 and subject~~motion to ~~true up. The final actual amount will be filed later in 2020 and~~consolidate the ~~FPSC will hold a hearing to determine the final amount of incremental costs.~~ Duke Energy ~~Florida~~Carolinas and Duke Energy Progress appeals. 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. Approximately $147 million and $167 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of March 31, 2020, and December 31,

2019 ~~respectively, representing recoverable costs under the FPSC’s storm rule and~~North Carolina Rate Case

On September 30, 2019, Duke Energy ~~Florida's OATT formula~~Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates.

~~Solar Base Rate Adjustment~~

~~On July 31,~~ The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy ~~Florida petitioned~~Carolinas requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the ~~FPSC to include~~COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in ~~base rates~~ the ~~revenue requirements~~rate case, including issuing discovery requests, and postponement of the evidentiary hearing for ~~its first two solar generation projects,~~60 days. Also on March 16, 2020, the ~~Hamilton Project~~NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the ~~Columbia Project, as authorized~~evidentiary hearing until further order by the 2017 Settlement. The Hamilton Project, which was placed into service on December 22, 2018, had an annual retail revenue requirement of $15 million. At its October 30, 2018, Agenda Conference, the FPSC approved the rate increase related to the Hamilton Project to go into effect beginning with the first billing cycle in January 2019 under its file and suspend authority, and revised customer rates became effective in January 2019. On April 2, 2019, the commission approved both solar projects as filed. The Columbia Project, which has a projected annual revenue requirement of $14 million, was placed in service in March 2020 and revised customer rates became effective in April 2020.commission.

On March 25, ~~2019,~~2020, Duke Energy ~~Florida petitioned~~Carolinas and the ~~FPSC~~Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to ~~include in base rates~~review and approval of 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 was $13 million and $8 million, respectively, and they were placed into service in December 2019 with rates taking effect in January 2020. The DeBary Project has a projected annual revenue requirement of $11 million and a projected in-service dateNCUC, resolving certain issues in the ~~second quarter~~base rate proceeding. Major components of ~~2020. The associated~~the settlement included:

Removal of deferred storm costs from the rate ~~increase would take place with~~case;

Filing a petition seeking to securitize the ~~first month’s billing cycle after each solar generation project goes into service. On July 22, 2019,~~deferred storm costs within 120 days of a commission order in this rate case regarding the ~~FPSC issued an order approving Duke Energy Florida's request.~~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

~~Crystal River Unit 3 Accelerated Decommissioning Filing~~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.

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 ~~29,~~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.

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.

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

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 $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 ~~Florida entered into~~Carolinas filed a ~~Decommissioning Services Agreement~~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 ~~accelerated decommissioning~~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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to 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 the filing 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 U.S. Nuclear Regulatory Commission (NRC) and FPSC. If approved, the decommissioning will be accelerated starting in 2020 and continuing through 2027, rather than the expected time frame under SAFSTOR of starting in 2067 and ending in 2074.appeal, 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,~~Carolinas has not recorded an adjustment for its deferred coal ash costs. Duke Energy Florida petitioned the FPSC for approval of the agreement. On April 1, 2020, the NRC issued an order approving the license transfer application. Following the NRC order, on April 15, 2020, the FPSC issued its Second Order Modifying Order Establishing Procedure in which hearings are scheduled to begin July 7, 2020. Duke Energy FloridaCarolinas cannot predict the outcome of this matter.

Duke Energy Progress

2017 North Carolina Rate Case

On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which was subsequently adjusted to $420 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. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notes of appeal to the North Carolina Supreme Court.

2019 North Carolina Rate Case

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

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.

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. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $165 million with an additional $4 million in capital investments made for restoration efforts. Approximately $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 June 30, 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.

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.

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%;

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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. Based on legal analysis and 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.

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 June 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	330	$	93	$	423	$	—		$	—		$	423
Segment income/Net (loss) income	$	44	$	23	$	67	$	(1	)	$	—		$	66
Segment assets	$	6,378	$	3,213	$	9,591	$	26		$	(8	)	$	9,609



	Three Months Ended June 30, 2019
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	336	$	97	$	433	$	—		$	433
Segment income/Net (loss) income	$	31	$	17	$	48	$	(1	)	$	47



FINANCIAL STATEMENTS	BUSINESS SEGMENTS



	Six Months Ended June 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	676	$	245	$	921	$	—		$	921
Segment income/Net (loss) income	$	74	$	59	$	133	$	(2	)	$	131



	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

Duke Energy Carolinas and Duke Energy Progress

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

On July 10, 2020, Duke Energy Carolinas and Duke Energy Progress filed 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 Arrearages Pursuant to Special Repayment Plans. The order contained the following: 1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; 2) the late fee moratorium will continue through the end of the state of emergency or until further order of the commission; 3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and 4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions.

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 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 for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Carolinas

2017 North Carolina Rate Case

On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. 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. On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction.

The North Carolina Attorney General and other 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. 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 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

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.

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

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.

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

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 $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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to 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 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.

Duke Energy Progress

2017 North Carolina Rate Case

2019 North Carolina Rate Case

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

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.

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

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.

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%;

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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. Based on legal analysis and 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 December 27, 2019, Asheville Combined Cycle Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator and the common systems that serve combined cycle units went into commercial operation. Duke Energy Progress 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 PSCSC for an accounting order for the deferral of post-in-service costs incurred in connection with the addition of the Asheville combined cycle generating plant. The petition requested the PSCSC issue an accounting order authorizing Duke Energy Progress to defer post-in-service costs including the Asheville combined cycle’s depreciation expense, property taxes, incremental O&M and carrying costs at WACC of approximately $8 million annually. On June 17, 2020, the PSCSC voted to approve the petition and 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, which was approved with certain conditions on May 10, 2019. A hearing to update the NCUC on 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 (NCEMPA) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA). 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. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for 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, in consideration of the specific facts and circumstances of risks under the provisions of the FRPPA, the 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

Storm Restoration Cost Recovery

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved 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 filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the 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 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.

Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. Approved storm costs are currently expected to be recovered over a 12-month period with rates effective in March 2020 and subject to true up. The final actual amount will be filed later in 2020 and the FPSC will hold a hearing to determine the final amount of incremental costs. 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 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 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 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 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 fuel cost recovery clause. Duke Energy Florida cannot predict the outcome of this matter.

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 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.

Storm Protection Plan

On April 10, 2020, Duke Energy Florida filed its initial Storm Protection Plan (SPP) with the FPSC. The SPP outlines storm protection programs over a 10-year planning period intended to enhance the existing infrastructure for the 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 entered into a settlement with certain intervenors in support of this filing. Duke Energy Florida cannot predict the outcome of 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~~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. ~~The proposal is conditioned on full recovery via~~On June 17, 2020, the PUCO denied Duke Energy Ohio's ~~existing Economic Competitiveness Fund Rider (Rider ECF), which has been used by~~application for a reasonable arrangement and ordered the Duke Energy Ohio ~~in the past for other reasonable arrangements~~to work with ~~customers. On April 24, 2020, the Staff of~~ the PUCO ~~filed its recommendation finding Duke Energy Ohio’s application is reasonable and that the PUCO should approve it. Duke Energy Ohio cannot predict the outcome of this matter.~~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. The request seeks to use~~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 ~~cannot predict the outcome~~to also track potential savings experienced as a result of ~~this matter.~~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~~commonwealth of Kentucky. The KPSC issued an order directing utilities to cease disconnections for nonpayment and waive late ~~payment and reconnection fees.~~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 ~~had already voluntarily~~has ceased all disconnections except for safety-related concerns and ~~was~~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~~On September 13, 2019, and continued the current model for procuring supply for non-shopping customers, including recovery mechanisms. On December 19, 2018, the PUCO approved the Stipulation without material modification. Several parties, including the Office ofSeptember 16, 2019, Interstate Gas Supply/Retail Supply Association and the Ohio Consumers' Counsel (OCC), filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for Rehearing as a matter of law. On September 13, 2019, Interstate Gas Supply/Retail Supply Associationrespectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the OCC filed an appeal challenging the PUCO’s approval of OVEC recovery through Duke Energy Ohio's Price Stability Rider (Rider PSR) alleging the FPA pre-empts the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were filed on January 6, 2020. Appellee briefs were scheduled to be filed on March 16, 2020.error. On March 13, 2020, the Supreme Court of Ohio ~~granted~~dismissed OCC's ~~motion to withdraw its appeal related to OVEC recovery.~~appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the stipulation. The case has been resolved.



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

Electric Base Rate Case

Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio requested an estimated annual increase of approximately $15 million and a return on equity of 10.4%. The application also included requests to continue certain current riders and establish new riders. On September 26, 2017, the PUCO staff filed a report recommending a revenue decrease between approximately $18 million and $29 million and a return on equity between 9.22% and 10.24%. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases pending before the PUCO. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the Stipulation with the PUCO ~~resolving numerous issues~~ including ~~those in this base rate proceeding. Major components of the Stipulation related to the base distribution rate case included~~ a $19 million decrease in annual base distribution revenue with a return on equity unchanged from the current rate of 9.84% based upon a capital structure of 50.75% equity and 49.25% debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation ended as these costs would be recovered through base rates. The Stipulation also renewed 14 existing riders, some of which were included in the company's ESP, and added two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10 million per year (operation and maintenance only) and the 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, including the OCC, filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for Rehearing as a matter of law. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC, respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the OCC filed an appeal challenging the PUCO’s approval of OVEC recovery through Rider PSR alleging the FPA pre-empts the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were filed on January 6, 2020. Appellee briefs were scheduled to be filed on March 16, 2020.error. On March 13, 2020, the Supreme Court of Ohio ~~granted~~dismissed OCC's ~~motion to withdraw its appeal related to OVEC recovery.~~appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the stipulation. The case has been resolved.

Ohio Valley Electric Corporation

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

On July 23, 2019, ~~an Ohio bill~~House Bill 6 (HB6) was signed into law that 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. In July 2020, legislation to repeal HB 6 has been proposed in both the Ohio House and Senate. Duke Energy Ohio cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Energy Efficiency Cost Recovery

On March 28, 2014, Duke Energy Ohio filed an application for recovery of program costs, lost distribution revenue and performance incentives related to its energy efficiency and peak demand reduction programs. ~~These programs are undertaken to comply with environmental mandates set forth in Ohio law.~~ The PUCO approved Duke Energy Ohio’s application but found that Duke Energy Ohio was not permitted to use banked energy savings from previous years in order to calculate the amount of allowed incentive. This conclusion represented a change to the cost recovery mechanism that had been agreed upon by intervenors and approved by the PUCO in previous cases. The PUCO granted the applications for rehearing filed by Duke Energy Ohio and an intervenor. On January 6, 2016, Duke Energy Ohio and the PUCO Staff entered into a stipulation, pending the PUCO's approval, to resolve issues related to performance incentives and the PUCO Staff audit of 2013 costs, among other issues. In December 2015, based upon the stipulation, Duke Energy Ohio re-established approximately $20 million of the revenues that had been previously reversed. On October 26, 2016, the PUCO issued an order approving the stipulation without modification. ~~In December 2016, the PUCO granted the intervenors request for rehearing for the purpose of further review. On April 10, 2019, the PUCO issued an Entry on Rehearing denying the rehearing applications.~~ On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio filed an Application for Rehearing seeking clarification on the final ~~true-up~~true up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing 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.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. On November 21, 2019, the OPSB approved Duke Energy Ohio's application subject to 41 conditions on construction. Applications for rehearing were filed by several stakeholders on December 23, 2019, arguing that the OPSB approval was incorrect. ~~Duke Energy Ohio filed a memorandum contra on January 2, 2020.~~ On February 20, 2020, the OPSB denied the rehearing requests. ~~Construction of the pipeline extension is expected to be completed before the 2021/2022 winter season.~~ On April 15, 2020, Joint Appellants filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor application. On ~~April 16,~~June 4, 2020, ~~several~~the OPSB filed a motion to dismiss claims raised by one of the Joint Appellants ~~filed a motion for a Stay asking the court~~and to suspend the ~~OPSB’s order.~~briefing schedule while the court considers the motion to dismiss. On ~~April 27,~~August 5, 2020, ~~Duke Energy~~the Supreme Court of Ohio ~~and~~dismissed one of the ~~OPSB each filed a motion in opposition to the Stay. If the Stay is granted, Duke Energy Ohio cannot continue working during~~Joint Appellants from the appeal ~~process.~~and established a new briefing schedule, with appellants' briefs due in 20 days. Duke Energy Ohio cannot predict the outcome of this matter.

~~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. An evidentiary hearing ~~began on November 18, 2019, and~~ concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.



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

On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. 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.



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. Duke Energy Kentucky seeks to implement a Storm Deferral Mechanism that will enable Duke Energy Kentucky to defer actual costs incurred for major storms that are over or under amounts in base rates. In response to large customers’ desire to have access to renewable resources, Duke Energy Kentucky is proposing a Green Source Advantage tariff designed for those large customers that wish to invest in renewable energy resources to meet sustainability goals. Duke Energy Kentucky is proposing an electric vehicle (EV) infrastructure pilot and modest incentives to assist customers in investing in EV technologies. Additionally, Duke Energy Kentucky is proposing to build an approximate 3.4-MW distribution battery energy storage system to be attached to Duke Energy Kentucky’s distribution system providing frequency regulation and enhanced reliability to Kentucky customers. The commission issued a procedural schedule with two rounds of discovery and opportunities for intervenor and rebuttal testimony. The Kentucky Attorney General filed its testimony recommending an increase of approximately $26 million. On January 31, 2020, Duke Energy Kentucky filed rebuttal testimony updating its rate increase calculations to approximately $44 million. Hearings ~~were held~~concluded on February ~~19-20,~~20, 2020, ~~with~~and briefing was completed March 20, 2020. On April 27, 2020, the KPSC issued its decision approving a $24 million increase for Duke Energy Kentucky with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky ~~is evaluating~~filed its motion for rehearing and on June 4, 2020, the motion was granted in part and denied in part by the KPSC. On August 6, 2020, Duke Energy Kentucky 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 ~~whether to seek rehearing.~~should be corrected, resulting in an approximate $5 million increase in the 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. ~~On April 3, 2020,~~Subsequently, the governor ~~then~~ issued Executive ~~Order No.~~Orders Nos. 20-17, ~~which renewed~~20-25, 20-30 and 20-34, each renewing the public health disaster emergency declaration for an additional 30 days, ~~to May 5, 2020. On May 1, 2020, Executive Order No, 20-25 further renewed the public health disaster emergency an additional 30 days to June 4,~~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. ~~The same day, the Indiana Office of Utility Consumer Counselor filed a petition asking~~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 ~~continue~~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 ~~suspend disconnections, allow~~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 ~~utilities accounting deferrals~~impact of any costs or offsetting savings can be presented and ~~require tacking of cost savings.~~considered in an evidentiary hearing. Duke Energy Indiana cannot predict the outcome of ~~thIs~~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 16 years,~~ for a rate increase for retail customers of approximately $395 million. The request for rate increase is driven by strategic investments to generate cleaner electricity, improve reliability and serve a growing customer base. The request is premised upon a Duke Energy Indiana rate base of $10.2 billion as of December 31, 2018, and adjusted for projected changes through December 31, 2020. On September 9, 2019, Duke Energy Indiana revised its revenue request from $395 million to $393 million and filed updated testimony for the Retail Rate Case. The updated filing reflects a clarification in the presentation of Utility Receipts Tax, a $2 million reduction in the revenue requirement for revenues that will remain in riders and changes to allocation of revenue requirements within rate classes. The Utility Receipts Tax is currently embedded in base rates and rider rates. The proposed treatment is to include the Utility Receipts Tax as a line item on the customer bill rather than included in rates. The request is an approximate 15% increase in retail revenues and approximately 17% when including estimated Utility Receipts Tax. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued the order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order provided for an overall cost of capital of 5.7% based on a 9.7% return on equity and a 53% equity component of the capital structure, and approved Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of December 31, 2020, including the Edwardsport IGCC Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction is due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% is due to the approved 9.7% return on equity versus requested 10.4% and approximately 20% is related to miscellaneous earnings neutral adjustments. The rates ~~are expected to be~~were effective ~~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 ~~these matters.~~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 ~~determined~~opened a subdocket to ~~take two issues out of~~deal with the ~~rate case and place them in separate subdocket proceedings due to the complexity of the rate case. The commission moved the request for approval of an electric transportation pilot and future~~post-2018 coal ash ~~recovery issues to separate subdockets. Coal ash expenditures prior to 2019 are still included in the rate case.~~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

Piedmont

COVID-19 Filings

North Carolina

On March 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring a state of emergency due to the COVID-19 pandemic. ~~In an effort~~On March 19, 2020, the NCUC issued on 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 NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted Piedmont’s request on March 20, 2020.

South Carolina

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

On April 30, 2020, the ORS requested the PSCSC grant a waiver of the applicable regulations to allow customers the flexibility to obtain deferred payment plans longer than 6six 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~~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.

On May 13, 2020, the ORS ~~requests~~filed a letter with the PSCSC that ~~such comments be~~included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Piedmont filed ~~within~~a report on June 30, ~~days of a~~2020, as required by PSCSC order, ~~approving the motion.~~reporting revenue impact, costs and savings related to COVID-19 to date. Piedmont cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Tennessee

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

~~North Carolina Integrity Management Rider Filing~~2020 Tennessee Rate Case

~~In April~~On July 2, 2020, Piedmont filed ~~a petition~~an application with the ~~NCUC~~TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately $30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since its previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, ~~to collect an additional $15 million~~which was approved in annual revenues, effective June 2020, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, 2020. Piedmont cannot predict the outcome of this matter.

~~Tennessee Integrity Management Rider Filing~~

In November 2019, Piedmont filed a petition with the TPUC under the IMR mechanism to collect an additional $2 million in annual revenues, effective January 2020, based on the eligible capital investments closed to integrity and safety projects over the 12-month period ending October 31, 2019.2013. An evidentiary hearing ~~occurred on May 11, 2020. Upon approval from the TPUC, the revenue adjustment will~~is expected to be ~~implemented, retroactive~~scheduled for fall 2020, and a decision and revised customer rates are expected to become effective January ~~2020.~~1, 2021. Piedmont cannot predict the outcome of this matter.



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

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 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. See Note 11 for additional information related to Duke Energy's ownership interest. Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customers of the pipeline. Purchases will be made under several 20-year supply contracts, subject to state regulatory approval.

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

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

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

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

On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (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 ~~FWS~~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 ~~is reviewing~~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 ~~of this ruling to its own reliance~~ on ~~NWP 12~~the cost and schedule for ~~small water body crossings along~~ the ~~pipeline route, as well as potential mitigation measures.~~

~~Given~~project, the ongoing legal challenges and ~~ongoing discussions with customers, ACP expects~~ the ~~project~~risk of additional legal challenges and delays through the construction period and Dominion’s decision to ~~enter full in-service~~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 ~~first half of 2022.~~

~~The delays resulting from the legal challenges described above have also impacted the cost for the~~ project. Project cost is approximately $8 billion, excluding financing costs. This estimate is based on the current facts available around construction costs and timelines, and is subject to future changes as those facts develop. Abnormal weather, work delays (including delays due to judicial or regulatory action or COVID-19 social distancing) and other conditions may result in cost or schedule modifications, a suspension of AFUDC for ACP and/or impairment charges potentially material to Duke Energy's cash flows, financial position and results of operations.

~~Duke Energy’s investment in ACP was $1.2 billion at March 31, 2020.~~On July 5, 2020, Duke Energy ~~evaluated this investment for impairment at March 31, 2020,~~ and ~~December 31, 2019, and determined that fair value approximated carrying value and therefore no impairment was necessary. Duke Energy also has a guarantee agreement supporting its share~~Dominion announced the cancellation of the ACP ~~revolving credit facility.~~pipeline.

As a result, Duke ~~Energy’s maximum exposure~~Energy recorded a pretax charge to ~~loss under~~earnings of approximately $2.0 billion for the ~~terms~~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 ~~guarantee is $845~~pretax charge to earnings of approximately $2.0 billion, Duke Energy established a $920 million ~~which~~current liability related to the abandonment of ACP within Current Liabilities in the Gas Utilities and Infrastructure segment. The liability represents ~~47%~~Duke Energy's obligation of ~~the~~approximately $860 million to fund ACP's outstanding ~~borrowings under the credit facility as of March 31, 2020.~~ debt and approximately $60 million to satisfy ARO requirements to restore construction sites.

See ~~Note 13~~Notes 1, 4 and 11 for additional ~~information.~~information regarding this transaction.



FINANCIAL STATEMENTS	REGULATORY MATTERS

~~Constitution Pipeline Company, LLC~~

Duke Energy owned a 24% ownership interest in Constitution, which was accounted for as an equity method investment. Constitution was 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 was to be constructed and operated by Williams Partners L.P., which had a 41% ownership share. The remaining interest was held by Cabot Oil and Gas Corporation and WGL Holdings, Inc. In December 2014, Constitution received approval from the FERC to construct and operate the proposed pipeline. However, since April 2016, Constitution had stopped construction and discontinued capitalization of future development costs due to permitting delays and adverse rulings by regulatory agencies and courts.

In late 2019, Constitution determined that its principal shipper would not agree to an amended precedent agreement. Without such an amendment, the project would no longer be viable and, as of February 5, 2020, the Constitution partners formally resolved to initiate the dissolution of Constitution, and to terminate the Constitution Pipeline project. See Note 11 for additional information related to ownership interest and carrying value of the investment. Williams Partners L.P., as project Operator, is currently working to liquidate the project's assets.

~~Potential Coal Plant Retirements~~Duke Energy Carolinas

2017 North Carolina Rate Case

The ~~Subsidiary Registrants periodically file IRPs~~North Carolina Attorney General and other 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. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with ~~their state regulatory commissions.~~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 briefs were filed on April 26, 2019. The ~~IRPs provide~~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 ~~view~~net rate increase for retail customers of ~~forecasted energy needs over a long term (10~~approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to ~~20 years) and options being considered~~return to ~~meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in~~customers North Carolina and ~~Indiana earlier than their current estimated useful lives.~~federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy ~~continues~~Carolinas requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to ~~evaluate~~begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the ~~potential need~~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 ~~retire these coal-fired generating facilities earlier than~~review and approval of the ~~current~~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.

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 $0.8 billion and agreement to ~~seek regulatory~~withdraw Duke Energy Carolinas' request for deferral of remaining grid projects of $0.5 billion.

On August 4, 2020, Duke Energy Carolinas, filed an amended motion for ~~amounts that would~~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 ~~be otherwise recovered when any~~begin the amortization or implementation of these ~~assets~~items until a final order is issued in the rate case and new base rates are ~~retired.~~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.

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 ~~table below contains~~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 $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 $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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to 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 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.

Duke Energy Progress

2017 North Carolina Rate Case

2019 North Carolina Rate Case

On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net ~~carrying value~~rate increase for retail customers of ~~generating facilities planned~~approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for ~~retirement or~~rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy 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.

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 ~~recent IRPs as evaluated~~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 ~~potential retirement. Dollar amounts~~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 ~~table below~~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 ~~included~~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 ~~Net property, plant~~the rate case and ~~equipment~~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. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $165 million with an additional $4 million in capital investments made for restoration efforts. Approximately $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 ~~March 31,~~June 30, 2020, and ~~exclude capitalized asset retirement costs.~~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.

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.

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%;

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%.

Remaining Net
Capacity
Book Value
(in MW)
(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3^(a)
585
$ 149
Duke Energy Indiana
Gallagher Units 2 and 4^(b)
280
118
Gibson Units 1-5^(c)
3,132
1,708
Cayuga Units 1-2^(c)
1,005
964
Total Duke Energy 5,002
$ 2,939



~~(a)~~FINANCIAL STATEMENTS	~~Duke Energy Carolinas will retire Allen Steam Station Units 1 through 3 by December 31, 2024, as part of the resolution of a lawsuit involving alleged New Source Review violations.~~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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. Based on legal analysis and 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

FERC Return on Equity Complaint

Duke Energy Florida

COVID-19 Filings



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


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

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

Storm Restoration Cost Recovery

Duke Energy ~~Carolinas~~Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy ~~Progress~~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 ~~evaluating~~currently expected to be fully recovered by approximately year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the ~~potential for coal-fired generating unit retirements with~~amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a ~~net carrying value of~~supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately ~~$707~~$3 million, resulting in 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 ~~$1.2 billion, respectively,~~$204 million of these costs are included in ~~Net property, plant~~Regulatory assets within Current Assets and ~~equipment~~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.

Clean Energy Connection

Crystal River Unit 3 Accelerated Decommissioning Filing

Storm Protection Plan

~~4. COMMITMENTS AND CONTINGENCIES~~

~~ENVIRONMENTAL~~

~~The~~ Duke Energy ~~Registrants are subject~~Ohio

Duke Energy Ohio COVID-19 Filing

In response to ~~federal,~~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 ~~local~~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 ~~regarding air~~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 ~~water quality, hazardous~~the accompanying waivers reasonable and ~~solid waste disposal, coal ash~~directed Duke Energy Ohio to work with the PUCO Staff on a comprehensive plan for resumption of activities and ~~other environmental matters. These regulations can~~operations, to be ~~changed from time~~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 ~~time, imposing new obligations on~~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 ~~Registrants. The following environmental matters impact all~~Ohio to work with the PUCO Staff on payment arrangements for impacted nonresidential customers.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On May 11, 2020, Duke Energy ~~Registrants.~~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 April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving 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 approved new rider mechanisms relating to costs incurred to enhance the customer experience and transform the grid and a service reliability rider for vegetation management. 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 Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the stipulation. The case has been resolved.

Electric Base Rate Case

Ohio Valley Electric Corporation

On July 23, 2019, House Bill 6 (HB6) was signed into law that 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. In July 2020, legislation to repeal HB 6 has been proposed in both the Ohio House and Senate. Duke Energy Ohio cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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. 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. On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio filed an Application for Rehearing seeking clarification on the final true up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing for further consideration.

On June 8, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposes a mechanism for recovery of program costs, lost margins and a 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 withdrew its application.

Natural Gas Pipeline Extension

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 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 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. 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. An evidentiary hearing concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.



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. On January 31, 2020, Duke Energy Kentucky filed rebuttal testimony updating its rate increase calculations to 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 $24 million increase for Duke Energy Kentucky with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky filed its motion for rehearing and on June 4, 2020, the motion was granted in part and denied in part by the KPSC. On August 6, 2020, Duke Energy Kentucky 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 should be corrected, resulting in an approximate $5 million increase in the 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 for a rate increase for retail customers of approximately $395 million. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued the order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order provided for an overall cost of capital of 5.7% based on a 9.7% return on equity and a 53% equity component of the capital structure, and approved Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of December 31, 2020, including the Edwardsport IGCC Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction is due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% is due to the approved 9.7% return on equity versus requested 10.4% and approximately 20% is related to miscellaneous earnings neutral adjustments. The rates were effective 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	~~COMMITMENTS AND CONTINGENCIES~~REGULATORY MATTERS

~~Remediation Activities~~Piedmont

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

On March 31, 2020, the governor issued Executive Order No. 124, which, in addition to ~~AROs recorded as~~requiring the steps in the NCUC order noted above, stated that nothing in Executive Order No. 124 shall relieve a ~~result~~customer of ~~various environmental regulations,~~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 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 July 10, 2020, Piedmont filed 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 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 ~~Registrants are responsible~~utilities may reinstate fees for ~~environmental remediation at various sites. These include certain properties that are part~~checks returned for insufficient funds as well as transaction fees for use of ~~ongoing operations~~credit cards or debit cards for bills first rendered on or after September 1, 2020; and sites formerly owned or used by Duke Energy entities. These sites are in various stages of investigation, remediation and monitoring. Managed in conjunction with relevant federal, state and local agencies, remediation activities vary based upon site conditions and location, remediation requirements, complexity and sharing of responsibility. If remediation activities involve joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Duke Energy Registrants could potentially be held responsible for environmental impacts caused by other potentially responsible parties and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. Liabilities are recorded when losses become probable and are reasonably estimable. The total costs that may be incurred cannot be estimated because the extent of environmental impact, allocation among potentially responsible parties, remediation alternatives and/or regulatory decisions have not yet been determined at all sites. Additional costs associated with remediation activities are likely to be incurred in the future and could be significant. Costs are typically expensed as Operation, maintenance and other on the Condensed Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.

The following 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.

Three Months Ended March 31, 2020
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Balance at beginning of period $ 58
$ 11
$ 16
$ 4
$ 9
$ 19
$ 4
$ 8
Provisions/adjustments 3
—
—
1
—
1
1
—
Cash reductions (3 ) (1 ) (1 ) —
—
(1 ) —
—
Balance at end of period $ 58
$ 10
$ 15
$ 5
$ 9
$ 19
$ 5
$ 8

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

(in millions)
Duke Energy $ 58
Duke Energy Carolinas 11
Duke Energy Ohio 41
Piedmont 2

~~LITIGATION~~

~~Duke Energy Carolinas and Duke Energy Progress~~

~~Coal Ash Insurance Coverage Litigation~~

In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in North Carolina Superior Court against various insurance providers. The lawsuit seeks payment for coal ash-related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. Despite a stay of the litigation from May 2019 through4) no sooner than September ~~2019 to allow the parties to discuss potential resolution, no resolution was reached, and litigation resumed. In February and March~~1, 2020, the ~~court heard arguments on numerous cross motions filed by the parties~~collection of past due or delinquent accounts accrued up to ~~seek legal determinations concerning several insurance related defenses raised by the insurance providers. Trial is scheduled for February 2021. Duke Energy Carolinas~~ and ~~Duke Energy Progress~~including August 31, 2020, may proceed subject to conditions. Piedmont cannot predict the outcome of 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.

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, 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.

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. Piedmont filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. Piedmont cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Tennessee

2020 Tennessee Rate Case

On July 2, 2020, Piedmont filed an application with the TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately $30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since its previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. An evidentiary hearing is expected to be scheduled for fall 2020, and a decision and revised customer rates are expected to become effective January 1, 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 was designed to meet, in part, the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. Dominion would have been responsible for building and operating the ACP pipeline and holds a leading ownership percentage in ACP of 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.

On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (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 the risk of additional legal challenges and delays through the construction period 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.

As part of the pretax charge to earnings of approximately $2.0 billion, Duke Energy established a $920 million 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 of 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 11 for additional information regarding this transaction.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Carolinas

2017 North Carolina Rate Case

2019 North Carolina Rate Case

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.

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

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.

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

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 $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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to 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 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.

Duke Energy Progress

2017 North Carolina Rate Case

2019 North Carolina Rate Case

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

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.

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

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.

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%;

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 filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. Based on legal analysis and 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

FERC Return on Equity Complaint

Duke Energy Florida

COVID-19 Filings



FINANCIAL STATEMENTS	REGULATORY MATTERS

Storm Restoration Cost Recovery

Clean Energy Connection

Crystal River Unit 3 Accelerated Decommissioning Filing

Storm Protection Plan

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

2017 Electric Security Plan Filing

Electric Base Rate Case

Ohio Valley Electric Corporation



FINANCIAL STATEMENTS	REGULATORY MATTERS

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. 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. On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio filed an Application for Rehearing seeking clarification on the final true up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing for further consideration.

Natural Gas Pipeline Extension

MGP Cost Recovery



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Kentucky Electric Base Rate Case

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

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

Piedmont

COVID-19 Filings

North Carolina

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.

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, 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.

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. Piedmont filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. Piedmont cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Tennessee

2020 Tennessee Rate Case

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 was designed to meet, in part, the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. Dominion would have been responsible for building and operating the ACP pipeline and holds a leading ownership percentage in ACP of 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.

On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (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.

See Notes 1, 4 and 11 for additional information regarding this transaction.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file 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 June 30, 2020, and exclude capitalized asset retirement costs.



		Remaining Net
	Capacity	Book Value
	(in MW)	(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3^(a)	585	$	145
Duke Energy Indiana
Gallagher Units 2 and 4^(b)	280	116
Gibson Units 1-5^(c)	3,132	1,690
Cayuga Units 1-2^(c)	1,005	953
Total Duke Energy	5,002	$	2,904


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


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

(c)

On July 1, 2019, Duke Energy Indiana filed its 2018 IRP with the IURC. The 2018 IRP included scenarios evaluating the potential retirement of coal-fired generating units at Gibson and Cayuga. The rate case filed July 2, 2019, 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 Carolinas and Duke Energy Progress are evaluating the potential for coal-fired generating unit retirements with a net carrying value of approximately $693 million and $1.2 billion, respectively, included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of June 30, 2020.

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



(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



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

LITIGATION

Duke Energy Carolinas and Duke Energy Progress

Coal Ash Insurance Coverage Litigation

In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in North Carolina 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. In February and March 2020, the court heard arguments on numerous cross motions filed by the parties to seek legal determinations concerning several insurance related defenses raised by the insurance providers. 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 issued a new scheduling order and the trial is now scheduled for January 2022. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Carolinas

Asbestos-related Injuries and Damages Claims

Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of ~~March 31,~~June 30, 2020, there were 118 asserted claims for non-malignant cases with cumulative relief sought of up to ~~$30~~$27 million, and 5159 asserted claims for malignant cases with cumulative relief sought of up to ~~$17~~$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.



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

Duke Energy Carolinas has recognized asbestos-related reserves of ~~$596~~$590 million at ~~March 31,~~June 30, 2020, and $604 million at December 31, 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 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 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 $742 million at ~~March 31,~~June 30, 2020, and ~~$742 million at~~ December 31, 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 ~~early~~ 2021.

Duke Energy Florida

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 27, 2020, Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication (the court) challenging the Indiana Department of Environmental Management’s December 10, 2019, partial approval of Duke Energy Indiana’s ash pond closure plan. On March 11, 2020, Duke Energy Indiana filed a Motion to Dismiss. On May 5, 2020, the court entered an order denying that motion. The ~~court will schedule~~parties are engaged in discovery and a ~~trial on the merits~~hearing is scheduled for ~~a future date.~~February 22, 2021. Duke Energy Indiana cannot predict the outcome of this matter.

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.

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)	March 31, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Reserves for Legal Matters
Duke Energy	$	61	$	62	$	60	$	62
Duke Energy Carolinas	3		2		3		2
Progress Energy	52		55		52		55
Duke Energy Progress	9		12		9		12
Duke Energy Florida	23		22		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 uncapped maximum potential payments. However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position.



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

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



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The reserve for credit losses for insurance receivables based on adoption of the new standard is $15 million for Duke Energy and Duke Energy ~~Carolinas.~~Carolinas as of June 30, 2020. Insurance receivables are evaluated based on the risk of default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the risk of default from credit agencies.

As of June 30, 2020, Duke Energy recognized $860 million related to the 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 Balance Sheets. See Notes 1, 3 and 11 for more information. The remaining reserve for credit losses for financial guarantees ~~based~~of $4 million as of June 30, 2020, is included within Other noncurrent liabilities on ~~adoption of~~ the ~~new standard is $99 million for~~ Duke ~~Energy.~~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 length of time remaining in the period for each contract.

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

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

$ 900

$ 550


(a)	Debt issued to repay $500 million borrowing made under Duke Energy (Parent) revolving credit facility in response to market volatility concerns related to the COVID-19 pandemic. Refer to Note 1 for additional information on the COVID-19 pandemic. Proceeds will be used to reduce outstanding commercial paperMarch 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 June 2020 and for general corporate purposes.


(d)	Debt issued to repay at maturity $500 million first mortgage bonds due July 2020 and to pay down short-term debt.



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			March 31, 2020		Maturity Date	Interest Rate			June 30, 2020
Unsecured Debt
Duke Energy (Parent)	June 2020	2.100	%		$	330
Duke Energy Progress	December 2020	2.292	%	^(a)	700		December 2020	0.986	%	^(a)	$	700
Progress Energy, Inc	January 2021	4.400	%		500		January 2021	4.400	%		500
Duke Energy (Parent)	March 2021	1.400	%	^(a)	1,688		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	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	1.076	%	^(a)	300		September 2020	0.498	%	^(a)	300
Duke Energy Carolinas							June 2021	3.900	%		500
Other^(b)					359						346
Current maturities of long-term debt					$	5,077					$	3,756

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

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



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

AVAILABLE CREDIT FACILITIES

Master Credit Facility

In March 2020, Duke Energy amended its existing $8 billion Master Credit Facility to extend the termination date to March 2025. The Duke Energy Registrants, excluding Progress Energy, have borrowing capacity under the Master Credit Facility up to a specified sublimit for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder. Duke Energy Carolinas and Duke Energy Progress are also required to each maintain $250 million of available capacity under the Master Credit Facility as security to meet obligations under plea agreements reached with the U.S. Department of Justice in 2015 related to violations at North Carolina facilities with ash basins. This requirement expires on May 15, 2020.

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


	March 31, 2020																								June 30, 2020
				Duke			Duke			Duke			Duke			Duke			Duke									Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy			Energy			Energy						Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana			Piedmont			Energy			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana			Piedmont
Facility size^(a)	$	8,000		$	2,650		$	1,500		$	1,250		$	800		$	600		$	600		$	600		$	8,000		$	2,650		$	1,500		$	1,250		$	800		$	600		$	600		$	600
Reduction to backstop issuances
Commercial paper^(b)	(2,540		)	(1,140		)	(300		)	(275		)	(167		)	(243		)	(150		)	(265		)	(2,480		)	(1,248		)	(389		)	(323		)	(156		)	(79		)	(150		)	(135		)
Outstanding letters of credit	(49		)	(42		)	(4		)	(2		)	—			—			—			(1		)	(47		)	(40		)	(3		)	(2		)	—			—			—			(2		)
Tax-exempt bonds	(81		)	—			—			—			—			—			(81		)	—			(81		)	—			—			—			—			—			(81		)	—
Coal ash set-aside	(500		)	—			(250		)	(250		)	—			—			—			—
Available capacity under the Master Credit Facility	$	4,830		$	1,468		$	946		$	723		$	633		$	357		$	369		$	334		$	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


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


(a)	In March 2020, Duke Energy (Parent) drew down the remaining $500 million. In May 2020, Duke Energy (Parent) repaid $500 million with proceeds of May 2020 unsecured debt issuance.

6. GOODWILL

Duke Energy

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



~~FINANCIAL STATEMENTS~~	~~GOODWILL~~

Progress Energy

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

Piedmont

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



FINANCIAL STATEMENTS	RELATED PARTY TRANSACTIONS

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 March 31,
(in millions) 2020
2019
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)
$ 134
$ 212
Indemnification coverages^(b)
5
5
Joint Dispatch Agreement (JDA) revenue^(c)
7
23
JDA expense^(c)
24
93
Intercompany natural gas purchases^(d)
6
4
Progress Energy
Corporate governance and shared service expenses^(a)
$ 146
$ 176
Indemnification coverages^(b)
9
9
JDA revenue^(c)
24
93
JDA expense^(c)
7
23
Intercompany natural gas purchases^(d)
19
19
Duke Energy Progress
Corporate governance and shared service expenses^(a)
$ 75
$ 106
Indemnification coverages^(b)
4
4
JDA revenue^(c)
24
93
JDA expense^(c)
7
23
Intercompany natural gas purchases^(d)
19
19
Duke Energy Florida
Corporate governance and shared service expenses^(a)
$ 71
$ 70
Indemnification coverages^(b)
5
5
Duke Energy Ohio
Corporate governance and shared service expenses^(a)
$ 84
$ 85
Indemnification coverages^(b)
1
1
Duke Energy Indiana
Corporate governance and shared service expenses^(a)
$ 106
$ 97
Indemnification coverages^(b)
2
2
Piedmont
Corporate governance and shared service expenses^(a)
$ 34
$ 32
Indemnification coverages^(b)
1
1
Intercompany natural gas sales^(d)
25
23
Natural gas storage and transportation costs^(e)
6
5



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



	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	196	$	197	$	330	$	409
Indemnification coverages^(b)	5		5		10		10
Joint Dispatch Agreement (JDA) revenue^(c)	3		17		10		40
JDA expense^(c)	20		20		44		113
Intercompany natural gas purchases^(d)	10		3		16		7
Progress Energy
Corporate governance and shared service expenses^(a)	$	189	$	183	$	335	$	359
Indemnification coverages^(b)	9		10		18		19
JDA revenue^(c)	20		20		44		113
JDA expense^(c)	3		17		10		40
Intercompany natural gas purchases^(d)	19		19		38		38
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	113	$	108	$	188	$	214
Indemnification coverages^(b)	5		4		9		8
JDA revenue^(c)	20		20		44		113
JDA expense^(c)	3		17		10		40
Intercompany natural gas purchases^(d)	19		19		38		38
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	76	$	75	$	147	$	145
Indemnification coverages^(b)	4		6		9		11
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	77	$	83	$	161	$	168
Indemnification coverages^(b)	1		1		2		2
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	92	$	93	$	198	$	190
Indemnification coverages^(b)	2		1		4		3
Piedmont
Corporate governance and shared service expenses^(a)	$	37	$	37	$	71	$	69
Indemnification coverages^(b)	—		—		1		1
Intercompany natural gas sales^(d)	29		22		54		45
Natural gas storage and transportation costs^(e)	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 11, 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
March 31, 2020
June 30, 2020
Intercompany income tax receivable	$	—	$	114	$	1	$	4	$	—	$	—	$	—	$	—	$	63	$	—	$	—	$	—	$	10	$	23
Intercompany income tax payable	44		—		—		—		—		6		10		19		—		7		51		1		—		—

December 31, 2019
Intercompany income tax receivable	$	—	$	125	$	28	$	—	$	9	$	28	$	13	$	—	$	125	$	28	$	—	$	9	$	28	$	13
Intercompany income tax payable	5		—		—		2		—		—		—		5		—		—		2		—		—		—

8. DERIVATIVES AND HEDGING

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

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

INTEREST RATE RISK

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



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

Cash Flow Hedges

For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. Gains and losses reclassified out of accumulated other comprehensive income (loss) for the three and six months ended ~~March 31,~~June 30, 2020, and 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.


	March 31, 2020												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	$	991	$	—	$	—	$	—	$	—	$	—	$	650	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	2,027		400		1,600		1,050		550		27		1,477		400		1,050		1,050		—		27
Total notional amount^(a)	$	3,018	$	400	$	1,600	$	1,050	$	550	$	27	$	2,127	$	400	$	1,050	$	1,050	$	—	$	27



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


(a)	Duke Energy includes amounts related to consolidated VIEs of ~~$691~~$650 million in cash flow hedges as of ~~March 31,~~June 30, 2020, and $693 million in cash flow hedges as of December 31, 2019.

COMMODITY PRICE RISK

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



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

Volumes

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


	March 31, 2020								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)	6,737	—	—	—	—	977	5,760	—	28,179	—	—	—	4,405	23,774	—
Natural gas (millions of dekatherms)	709	145	158	158	—	—	4	402	707	147	165	165	—	4	391


	December 31, 2019								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)	15,858	—	—	—	—	1,887	13,971	—	15,858	—	—	—	1,887	13,971	—
Natural gas (millions of dekatherms)	704	130	160	160	—	—	3	411	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 March 31, 2020, the aggregate notional amount of both the put and call options was 305,000 units in U.S. equity security index funds. The options are not designated as hedging instruments. Substantially all of Duke Energy Florida’s NDTF qualifies for regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the options are deferred as regulatory liabilities or regulatory assets, respectively. The Duke Energy Florida NDTF liquidated the options in April 2020, and received proceeds of approximately $7 million.



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

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

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


Derivative Assets	March 31, 2020																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	$	6	$	—	$	—	$	—	$	—	$	—	$	2	$	3	$	20	$	2	$	1	$	1	$	—	$	3	$	10	$	4
Noncurrent	4		2		1		1		—		1		—		—		7		5		2		2		—		—		—		—
Total Derivative Assets – Commodity Contracts	$	10	$	2	$	1	$	1	$	—	$	1	$	2	$	3	$	27	$	7	$	3	$	3	$	—	$	3	$	10	$	4
Interest Rate Contracts
Not Designated as Hedging Instruments
Current	$	3	$	—	$	3	$	3	$	—	$	—	$	—	$	—	$	3	$	—	$	3	$	3	$	—	$	—	$	—	$	—
Noncurrent	1		—		1		1		—		—		—		—		2		—		2		2		—		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	4	$	—	$	4	$	4	$	—	$	—	$	—	$	—	$	5	$	—	$	5	$	5	$	—	$	—	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Noncurrent^(a)	20		—		20		—		20		—		—		—
Total Derivative Assets – Equity Securities Contracts	$	20	$	—	$	20	$	—	$	20	$	—	$	—	$	—
Total Derivative Assets	$	34	$	2	$	25	$	5	$	20	$	1	$	2	$	3	$	32	$	7	$	8	$	8	$	—	$	3	$	10	$	4


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


Derivative Liabilities	March 31, 2020																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	$	79	$	40	$	31	$	31	$	—	$	—	$	—	$	8	$	55	$	29	$	17	$	17	$	—	$	—	$	1	$	7
Noncurrent	130		11		35		20		—		—		—		83		138		8		32		16		—		—		—		98
Total Derivative Liabilities – Commodity Contracts	$	209	$	51	$	66	$	51	$	—	$	—	$	—	$	91	$	193	$	37	$	49	$	33	$	—	$	—	$	1	$	105
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	69	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	14	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	54		—		—		—		—		—		—		—		56		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	30		—		29		—		29		1		—		—		68		20		48		48		—		1		—		—
Noncurrent	28		23		—		—		—		6		—		—		30		—		24		24		—		6		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	181	$	23	$	29	$	—	$	29	$	7	$	—	$	—	$	168	$	20	$	72	$	72	$	—	$	7	$	—	$	—
Total Derivative Liabilities	$	390	$	74	$	95	$	51	$	29	$	7	$	—	$	91	$	361	$	57	$	121	$	105	$	—	$	7	$	1	$	105



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



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



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

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.



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING


Derivative Assets	March 31, 2020																				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	$	9		$	—		$	3		$	3		$	—	$	—	$	2	$	3	$	23		$	2		$	4		$	4		$	—	$	3	$	10	$	4
Gross amounts offset	—			—			—			—			—		—		—		—		(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Current Assets: Other	$	9		$	—		$	3		$	3		$	—	$	—	$	2	$	3	$	20		$	—		$	3		$	3		$	—	$	3	$	10	$	4
Noncurrent
Gross amounts recognized	$	25		$	2		$	22		$	2		$	20	$	1	$	—	$	—	$	9		$	5		$	4		$	4		$	—	$	—	$	—	$	—
Gross amounts offset	(3		)	(2		)	(1		)	(1		)	—		—		—		—		(4		)	(2		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	2		$	—		$	1		$	1		$	—	$	1	$	—	$	—	$	5		$	3		$	2		$	2		$	—	$	—	$	—	$	—
Net amounts presented in NDTF	$	20		$	—		$	20		$	—		$	20	$	—	$	—	$	—


Derivative Liabilities	March 31, 2020																				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	$	178		$	40		$	60		$	31		$	29	$	1	$	—	$	8	$	137		$	49		$	65		$	65		$	—	$	1	$	1	$	7
Gross amounts offset	—			—			—			—			—		—		—		—		(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Current Liabilities: Other	$	178		$	40		$	60		$	31		$	29	$	1	$	—	$	8	$	134		$	47		$	64		$	64		$	—	$	1	$	1	$	7
Noncurrent
Gross amounts recognized	$	212		$	34		$	35		$	20		$	—	$	6	$	—	$	83	$	224		$	8		$	56		$	40		$	—	$	6	$	—	$	98
Gross amounts offset	(3		)	(2		)	(1		)	(1		)	—		—		—		—		(4		)	(2		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	209		$	32		$	34		$	19		$	—	$	6	$	—	$	83	$	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.


	March 31, 2020								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	$	96	$	45	$	51	$	51	$	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	96		45		51		51		63		29		34		34



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

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.

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 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 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 has a credit loss. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value is related to a credit loss. If ana credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of ~~March 31,~~June 30, 2020, and December 31, 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.


	March 31, 2020						December 31, 2019						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	$	—	$	—	$	119	$	—	$	—	$	101	$	—	$	—	$	731	$	—	$	—	$	101
Equity securities	2,499		170		4,488		3,523		55		5,661		3,034		92		5,039		3,523		55		5,661
Corporate debt securities	26		16		642		37		1		603		66		2		806		37		1		603
Municipal bonds	10		2		404		13		—		368		18		1		417		13		—		368
U.S. government bonds	70		—		1,212		33		1		1,256		62		—		813		33		1		1,256
NDTF equity security contracts	20		—		20		—		—		—
Other debt securities	4		3		163		3		—		141		9		1		194		3		—		141
Total NDTF Investments	$	2,629	$	191	$	7,048	$	3,609	$	57	$	8,130	$	3,189	$	96	$	8,000	$	3,609	$	57	$	8,130
Other Investments
Cash and cash equivalents	$	—	$	—	$	78	$	—	$	—	$	52	$	—	$	—	$	113	$	—	$	—	$	52
Equity securities	31		1		95		57		—		122		51		—		116		57		—		122
Corporate debt securities	—		—		89		3		—		67		8		—		125		3		—		67
Municipal bonds	6		1		98		4		—		94		5		1		103		4		—		94
U.S. government bonds	5		—		51		2		—		41		3		—		40		2		—		41
Other debt securities	—		—		52		—		—		56		1		1		34		—		—		56
Total Other Investments	$	42	$	2	$	463	$	66	$	—	$	432	$	68	$	2	$	531	$	66	$	—	$	432
Total Investments	$	2,671	$	193	$	7,511	$	3,675	$	57	$	8,562	$	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 six months ended ~~March 31,~~June 30, 2020, and 2019, were as follows.


	Three Months Ended				Three Months Ended				Six Months Ended
(in millions)	March 31, 2020		March 31, 2019		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	23	$	35	$	302	$	66	$	325	$	101
Realized losses	65		30		67		63		132		93
AFS:
Realized gains	20		10		27		47		47		57
Realized losses	6		11		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.


	March 31, 2020						December 31, 2019						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	$	—	$	—	$	33	$	—	$	—	$	21	$	—	$	—	$	30	$	—	$	—	$	21
Equity securities	1,355		81		2,498		1,914		8		3,154		1,796		47		2,989		1,914		8		3,154
Corporate debt securities	15		12		392		21		1		361		41		2		519		21		1		361
Municipal bonds	3		1		128		3		—		96		6		—		133		3		—		96
U.S. government bonds	35		—		502		16		1		578		30		—		399		16		1		578
Other debt securities	3		3		159		3		—		137		7		1		188		3		—		137
Total NDTF Investments	$	1,411	$	97	$	3,712	$	1,957	$	10	$	4,347	$	1,880	$	50	$	4,258	$	1,957	$	10	$	4,347


	Three Months Ended				Three Months Ended				Six Months Ended
(in millions)	March 31, 2020		March 31, 2019		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	9	$	23	$	27	$	44	$	36	$	67
Realized losses	45		21		25		48		70		69
AFS:
Realized gains	12		9		18		16		30		25
Realized losses	5		10		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.


	March 31, 2020						December 31, 2019						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	$	—	$	—	$	86	$	—	$	—	$	80	$	—	$	—	$	701	$	—	$	—	$	80
Equity securities	1,144		89		1,990		1,609		47		2,507		1,238		45		2,050		1,609		47		2,507
Corporate debt securities	11		4		250		16		—		242		25		—		287		16		—		242
Municipal bonds	7		1		276		10		—		272		12		1		284		10		—		272
U.S. government bonds	35		—		710		17		—		678		32		—		414		17		—		678
NDTF equity security contracts	20		—		20		—		—		—
Other debt securities	1		—		4		—		—		4		2		—		6		—		—		4
Total NDTF Investments	$	1,218	$	94	$	3,336	$	1,652	$	47	$	3,783	$	1,309	$	46	$	3,742	$	1,652	$	47	$	3,783
Other Investments
Cash and cash equivalents	$	—	$	—	$	69	$	—	$	—	$	49	$	—	$	—	$	108	$	—	$	—	$	49
Municipal bonds	5		—		53		3		—		51		4		—		52		3		—		51
Total Other Investments	$	5	$	—	$	122	$	3	$	—	$	100	$	4	$	—	$	160	$	3	$	—	$	100
Total Investments	$	1,223	$	94	$	3,458	$	1,655	$	47	$	3,883	$	1,313	$	46	$	3,902	$	1,655	$	47	$	3,883



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES


	Three Months Ended				Three Months Ended				Six Months Ended
(in millions)	March 31, 2020		March 31, 2019		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	14	$	12	$	275	$	22	$	289	$	34
Realized losses	20		9		42		15		62		24
AFS:
Realized gains	5		1		6		30		11		31
Realized losses	1		1		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.


	March 31, 2020						December 31, 2019						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	$	—	$	—	$	51	$	—	$	—	$	53	$	—	$	—	$	63	$	—	$	—	$	53
Equity securities	881		79		1,631		1,258		21		2,077		1,176		45		1,977		1,258		21		2,077
Corporate debt securities	11		4		250		16		—		242		25		—		287		16		—		242
Municipal bonds	7		1		276		10		—		272		12		1		284		10		—		272
U.S. government bonds	34		—		436		16		—		403		32		—		414		16		—		403
Other debt securities	1		—		4		—		—		4		2		—		6		—		—		4
Total NDTF Investments	$	934	$	84	$	2,648	$	1,300	$	21	$	3,051	$	1,247	$	46	$	3,031	$	1,300	$	21	$	3,051
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	2	$	—	$	—	$	1	$	—	$	—	$	2
Total Other Investments	$	—	$	—	$	2	$	—	$	—	$	2	$	—	$	—	$	1	$	—	$	—	$	2
Total Investments	$	934	$	84	$	2,650	$	1,300	$	21	$	3,053	$	1,247	$	46	$	3,032	$	1,300	$	21	$	3,053


	Three Months Ended				Three Months Ended				Six Months Ended
(in millions)	March 31, 2020		March 31, 2019		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	14	$	10	$	26	$	7	$	40	$	17
Realized losses	20		8		27		7		47		15
AFS:
Realized gains	5		1		6		1		11		2
Realized losses	1		1		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.


	March 31, 2020						December 31, 2019						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	$	—	$	—	$	35	$	—	$	—	$	27	$	—	$	—	$	638	$	—	$	—	$	27
Equity securities	263		10		359		351		26		430		62		—		73		351		26		430
U.S. government bonds	1		—		274		1		—		275		—		—		—		1		—		275
NDTF equity security contracts	20		—		20		—		—		—
Total NDTF Investments^(a)	$	284	$	10	$	688	$	352	$	26	$	732	$	62	$	—	$	711	$	352	$	26	$	732
Other Investments
Cash and cash equivalents	$	—	$	—	$	3	$	—	$	—	$	4	$	—	$	—	$	2	$	—	$	—	$	4
Municipal bonds	5		—		53		3		—		51		4		—		52		3		—		51
Total Other Investments	$	5	$	—	$	56	$	3	$	—	$	55	$	4	$	—	$	54	$	3	$	—	$	55
Total Investments	$	289	$	10	$	744	$	355	$	26	$	787	$	66	$	—	$	765	$	355	$	26	$	787


(a)	During the ~~three~~six months ended ~~March 31,~~June 30, 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				Six Months Ended
(in millions)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
FV-NI:
Realized gains	$	249	$	15	$	249	$	17
Realized losses	15		8		15		9
AFS:
Realized gains	—		29		—		29
Realized losses	—		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.


	March 31, 2020						December 31, 2019						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	$	26	$	1	$	63	$	43	$	—	$	81	$	39	$	—	$	77	$	43	$	—	$	81
Corporate debt securities	—		—		4		—		—		6		—		—		3		—		—		6
Municipal bonds	1		1		36		1		—		36		1		1		39		1		—		36
U.S. government bonds	—		—		3		—		—		2		—		—		3		—		—		2
Total Investments	$	27	$	2	$	106	$	44	$	—	$	125	$	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.


	March 31, 2020												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	$	333	$	25	$	302	$	26	$	276	$	3	$	63	$	19	$	30	$	28	$	2	$	3
Due after one through five years	538		234		236		227		9		17		563		254		244		235		9		15
Due after five through 10 years	465		188		214		207		7		7		587		270		226		219		7		9
Due after 10 years	1,375		734		541		506		35		16		1,319		696		543		509		34		18
Total	$	2,711	$	1,181	$	1,293	$	966	$	327	$	43	$	2,532	$	1,239	$	1,043	$	991	$	52	$	45

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 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.

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

Interest rate derivatives

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

Other fair value considerations

See Note 12 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 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 8. See Note 9 for additional information related to investments by major security type for the Duke Energy Registrants.


	March 31, 2020														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	$	4,488		$	4,440		$	—		$	—		$	48	5,039			4,991			—			—			48
NDTF debt securities	2,540			767			1,773			—			—		2,230			336			1,894			—			—
Other equity securities	95			95			—			—			—		116			116			—			—			—
Other debt securities	368			126			242			—			—		302			36			266			—			—
NDTF equity security contracts	20			—			20			—			—
Other cash and cash equivalents															113			113			—			—			—
Derivative assets	34			3			28			3			—		32			4			15			13			—
Total assets	7,545			5,431			2,063			3			48		8,563			6,327			2,175			13			48
Derivative liabilities	(390		)	(49		)	(250		)	(91		)	—		(361		)	(1		)	(255		)	(105		)	—
Net assets (liabilities)	$	7,155		$	5,382		$	1,813		$	(88	)	$	48	$	8,202		$	6,326		$	1,920		$	(92	)	$	48


	December 31, 2019														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	$	5,684		$	5,633		$	—		$	—		$	51	5,684			5,633			—			—			51
NDTF debt securities	2,469			826			1,643			—			—		2,368			725			1,643			—			—
Other equity securities	122			122			—			—			—		122			122			—			—			—
Other debt securities	310			91			219			—			—		258			39			219			—			—
Other cash and cash equivalents															52			52			—			—			—
Derivative assets	25			3			7			15			—		25			3			7			15			—
Total assets	8,610			6,675			1,869			15			51		8,610			6,675			1,869			15			51
NDTF equity security contracts	(23		)	—			(23		)	—			—		(23		)	—			(23		)	—			—
Derivative liabilities	(277		)	(15		)	(145		)	(117		)	—		(277		)	(15		)	(145		)	(117		)	—
Net assets (liabilities)	$	8,310		$	6,660		$	1,701		$	(102	)	$	51	$	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 March 31,						Three Months Ended June 30,						Six Months Ended June 30,
(in millions)		2020			2019			2020			2019			2020			2019
Balance at beginning of period		$	(102	)	$	(113	)	$	(88	)	$	(115	)	$	(102	)	$	(113	)
Purchases, sales, issuances and settlements:
Purchases								14			38			14			38
Settlements		(9		)	(12		)	(6		)	(11		)	(15		)	(23		)
Total gains included on the Condensed Consolidated Balance Sheet		23			10
Total (losses) gains included on the Condensed Consolidated Balance Sheet								(12		)	9			11			19
Balance at end of period		$	(88	)	$	(115	)	$	(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.


	March 31, 2020										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	$	2,498		$	2,450	$	—		$	48	2,989			2,941		—			48
NDTF debt securities	1,214			182		1,032			—		1,239			125		1,114			—
Derivative assets	2			—		2			—		7			—		7			—
Total assets	3,714			2,632		1,034			48		4,265			3,096		1,121			48
Derivative liabilities	(74		)	—		(74		)	—		(57		)	—		(57		)	—
Net assets	$	3,640		$	2,632	$	960		$	48	$	4,208		$	3,096	$	1,064		$	48


	December 31, 2019										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	$	3,154		$	3,103	$	—		$	51	3,154			3,103		—			51
NDTF debt securities	1,193			227		966			—		1,172			206		966			—
Total assets	4,347			3,330		966			51		4,347			3,330		966			51
Derivative liabilities	(49		)	—		(49		)	—		(49		)	—		(49		)	—
Net assets	$	4,298		$	3,330	$	917		$	51	$	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.


	March 31, 2020								December 31, 2019								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	$	1,990		$	1,990	$	—		$	2,530		$	2,530	$	—		2,050			2,050		—			2,530			2,530		—
NDTF debt securities	1,326			585		741			1,276			599		677			991			211		780			1,196			519		677
Other debt securities	122			69		53			100			49		51			52			—		52			51			—		51
NDTF equity security contracts	20			—		20			—			—		—
Other cash and cash equivalents																	108			108		—			49			49		—
Derivative assets	25			—		25			7			—		7			8			—		8			7			—		7
Total assets	3,483			2,644		839			3,913			3,178		735			3,910			3,070		840			3,913			3,178		735
NDTF equity security contracts	—			—		—			(23		)	—		(23		)	—			—		—			(23		)	—		(23		)
Derivative liabilities	(95		)	—		(95		)	(65		)	—		(65		)	(121		)	—		(121		)	(65		)	—		(65		)
Net assets	$	3,388		$	2,644	$	744		$	3,825		$	3,178	$	647		$	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.


	March 31, 2020								December 31, 2019								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	$	1,631		$	1,631	$	—		$	2,077		$	2,077	$	—		1,977			1,977		—			2,077			2,077		—
NDTF debt securities	1,017			276		741			974			297		677			991			211		780			921			244		677
Other debt securities	2			2		—			2			2		—
Other cash and cash equivalents																	1			1		—			2			2		—
Derivative assets	5			—		5			—			—		—			8			—		8			—			—		—
Total assets	2,655			1,909		746			3,053			2,376		677			3,040			2,252		788			3,053			2,376		677
Derivative liabilities	(51		)	—		(51		)	(49		)	—		(49		)	(105		)	—		(105		)	(49		)	—		(49		)
Net assets	$	2,604		$	1,909	$	695		$	3,004		$	2,376	$	628		$	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.


	March 31, 2020								December 31, 2019								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	$	359		$	359	$	—		$	453		$	453	$	—		73		73		—		453			453		—
NDTF debt securities	309			309		—			302			302		—			—		—		—		275			275		—
Other debt securities	56			3		53			55			4		51			52		—		52		51			—		51
NDTF equity security contracts	20			—		20			—			—		—
Other cash and cash equivalents																	2		2		—		4			4		—
Derivative assets	—			—		—			7			—		7			—		—		—		7			—		7
Total assets	744			671		73			817			759		58			765		713		52		817			759		58
NDTF equity security contracts	—			—		—			(23		)	—		(23		)	—		—		—		(23		)	—		(23		)
Derivative liabilities	(29		)	—		(29		)	(1		)	—		(1		)	—		—		—		(1		)	—		(1		)
Net assets	$	715		$	671	$	44		$	793		$	759	$	34		$	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 ~~March 31,~~June 30, 2020, and December 31, 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.


	March 31, 2020								December 31, 2019										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	$	63	$	63	$	—	$	—	$	81		$	81		$	—	$	—	$	77		$	77		$	—	$	—	$	81		$	81		$	—	$	—
Other debt securities	43		—		43		—		44			—			44		—		45			—			45		—		44			—			44		—
Derivative assets	2		—		—		2		13			2			—		11		10			—			—		10		13			2			—		11
Total assets	$	108	$	63	$	43	$	2	$	138		$	83		$	44	$	11	$	132		$	77		$	45	$	10	$	138		$	83		$	44	$	11
Derivative liabilities	—		—		—		—		(1		)	(1		)	—		—		(1		)	(1		)	—		—		(1		)	(1		)	—		—
Net assets	$	108	$	63	$	43	$	2	$	137		$	82		$	44	$	11	$	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)							Derivatives (net)
		Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
(in millions)		2020			2019			2020			2019			2020			2019
Balance at beginning of period		$	11		$	22		$	(91	)	$	(121	)	$	(117	)	$	(141	)
Purchases, sales, issuances and settlements:
Settlements		(6		)	(10		)
Total losses included on the Condensed Consolidated Balance Sheet		(3		)	(7		)
Total gains and settlements								(14		)	7			12			27
Balance at end of period		$	2		$	5		$	(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.~~

March 31, 2020 December 31, 2019
(in millions) Total Fair Value
Level 1
Level 3
Total Fair Value
Level 1
Level 3
Derivative assets $ 3
$ 3
$ —
$ 1
$ 1
$ —
Derivative liabilities (91 ) —
(91 ) (117 ) —
(117 )
Net (liabilities) assets $ (88 ) $ 3
$ (91 ) $ (116 ) $ 1
$ (117 )

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

Derivatives (net)
Three Months Ended March 31,
(in millions) 2020
2019
Balance at beginning of period $ (117 ) $ (141 )
Total gains and settlements 26
20
Balance at end of period $ (91 ) $ (121 )

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

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


	March 31, 2020													June 30, 2020
												Weighted													Weighted
	Fair Value											Average		Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						Range		(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy Ohio
FTRs	$	1		RTO auction pricing	FTR price – per MWh	$	0.04		-	$	3.29	$	1.03	$	3		RTO auction pricing	FTR price – per MWh	$	0.23		-	$	1.45	$	0.69
Duke Energy Indiana
FTRs	2			RTO auction pricing	FTR price – per MWh	(0.37		)	-	6.06		0.54		10			RTO auction pricing	FTR price – per MWh	(1.03		)	-	6.19		0.71
Piedmont
Natural gas contracts	(91		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.64			-	2.41		1.94		(105		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.73			-	2.39		2.01
Duke Energy
Total Level 3 derivatives	$	(88	)											$	(92	)



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



~~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.


	March 31, 2020				December 31, 2019				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)	$	61,388	$	65,644	$	58,126	$	63,062	$	59,899	$	68,428	$	58,126	$	63,062
Duke Energy Carolinas	12,807		14,312		11,900		13,516		12,521		15,046		11,900		13,516
Progress Energy	19,355		21,802		19,634		22,291		19,604		23,476		19,634		22,291
Duke Energy Progress	9,059		9,798		9,058		9,934		9,063		10,506		9,058		9,934
Duke Energy Florida	7,706		8,831		7,987		9,131		7,951		9,655		7,987		9,131
Duke Energy Ohio	2,620		2,904		2,619		2,964		3,019		3,551		2,619		2,964
Duke Energy Indiana	4,603		5,433		4,057		4,800		4,603		5,617		4,057		4,800
Piedmont	2,385		2,551		2,384		2,642		2,779		3,289		2,384		2,642


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

At both ~~March 31,~~June 30, 2020, and December 31, 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.



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. 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 ~~three~~six months ended ~~March 31,~~June 30, 2020, and the year ended December 31, 2019, or is expected to be provided in the future that was not previously contractually required.

Receivables Financing – DERF/DEPR/DEFR

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

DERF, DEPR and DEFR borrow amounts under credit facilities to buy these receivables. Borrowing availability from the credit facilities is limited to the amount of qualified receivables ~~purchased.~~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. Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. See Note 3 for information about COVID-19 filings with state utility commissions.

Receivables Financing – CRC

CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to ~~CRC.~~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.



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

Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The 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 is not held by the equity holder and (iii) deficiencies in net worth of CRC are funded by Duke Energy. The most significant activities that impact the economic performance of CRC are decisions made to manage delinquent receivables. Duke Energy is considered the primary beneficiary and consolidates CRC as it makes these decisions. Neither Duke Energy Ohio nor Duke Energy Indiana consolidate CRC. Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. See Note 3 for information about COVID-19 filings with state utility commissions.



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		Duke Energy				Duke Energy		Duke Energy		Duke Energy
			Carolinas		Progress		Florida				Carolinas		Progress		Florida
(in millions)	CRC		DERF		DEPR		DEFR		CRC		DERF		DEPR		DEFR
Expiration date	February 2023		December 2022		April 2023		April 2021		February 2023		December 2022		April 2023		April 2021
Credit facility amount	$	350	$	475	$	375	$	250	$	350	$	475	$	350	$	250
Amounts borrowed at March 31, 2020	350		475		325		250
Amounts borrowed at June 30, 2020									350		475		333		250
Amounts borrowed at December 31, 2019	350		474		325		250		350		474		325		250
Restricted Receivables at March 31, 2020	467		616		410		331
Restricted Receivables at June 30, 2020									454		675		451		463
Restricted Receivables at December 31, 2019	522		642		489		336		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 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)	March 31, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Receivables of VIEs	$	4	$	5	$	6	$	5
Regulatory Assets: Current	53		52		53		52
Current Assets: Other	13		39		32		39
Other Noncurrent Assets: Regulatory assets	980		989		969		989
Current Liabilities: Other	2		10		10		10
Current maturities of long-term debt	54		54		54		54
Long-Term Debt	1,028		1,057		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 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 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)	June 30, 2020			December 31, 2019
Current Assets: Other	$	228		$	203
Property, Plant and Equipment: Cost	6,198			5,747
Accumulated depreciation and amortization	(1,145		)	(1,041		)
Other Noncurrent Assets: Other	75			106
Current maturities of long-term debt	158			162
Long-Term Debt	1,457			1,541
Other Noncurrent Liabilities: AROs	144			127
Other Noncurrent Liabilities: Other	251			228



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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

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

NON-CONSOLIDATED VIEs

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


	March 31, 2020																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	$	—		$	(1	)	$	—		$	(1	)	$	39	$	48	$	—		$	(1	)	$	—		$	(1	)	$	34	$	49
Investments in equity method unconsolidated affiliates	1,243			371			—			1,614			—		—		—			413			1			414			—		—
Deferred tax asset																	439			—			—			439			—		—
Total assets	$	1,243		$	370		$	—		$	1,613		$	39	$	48	$	439		$	412		$	1		$	852		$	34	$	49
Taxes accrued	(1		)	—			—			(1		)	—		—		9			—			—			9			—		—
Other current liabilities	—			—			3			3			—		—		920			—			4			924			—		—
Deferred income taxes	69			—			—			69			—		—
Other noncurrent liabilities	105			—			11			116			—		—		—			—			10			10			—		—
Total liabilities	$	173		$	—		$	14		$	187		$	—	$	—	$	929		$	—		$	14		$	943		$	—	$	—
Net assets (liabilities)	$	1,070		$	370		$	(14	)	$	1,426		$	39	$	48
Net (liabilities) assets																	$	(490	)	$	412		$	(13	)	$	(91	)	$	34	$	49



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

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 $845 million, which represents 47% of the outstanding borrowings under the credit facility~~ as ~~of March 31, 2020. 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 unaudited summarized financial information for ACP.



	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



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)						VIE Investment Amount (in millions)
	Ownership		March 31,		December 31,		Ownership		June 30,			December 31,
Entity Name	Interest		2020		2019		Interest		2020			2019
ACP^(a)	47	%	$	1,243	$	1,179	47	%	$	(920	)	$	1,179
Constitution^(b)	24	%	—		—		24	%	—			—
Total			$	1,243	$	1,179			$	(920	)	$	1,179

(a)

During the quarter ended June 30, 2020, Duke Energy ~~evaluated this~~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 ~~impairment as of March 31, 2020, and December 31, 2019, and determined that fair value approximated carrying value and therefore no impairment was necessary.~~more information.


(b)	During the year ended December 31, 2019, Duke Energy recorded an ~~OTTI~~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.

Other

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

OVEC

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

As a counterparty to an Inter-Company Power Agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business. On March 31, 2018, 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. 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)	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019		June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Receivables sold	$	234	$	253	$	274	$	307	$	221	$	253	$	280	$	307
Less: Retained interests	39		64		48		77		34		64		49		77
Net receivables sold	$	195	$	189	$	226	$	230	$	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				Three Months Ended				Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	March 31,				March 31,				June 30,				June 30,				June 30,				June 30,
(in millions)	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
Sales
Receivables sold	$	537	$	575	$	647	$	734	$	429	$	429	$	966	$	1,004	$	583	$	676	$	1,230	$	1,410
Loss recognized on sale	4		4		4		5		2		3		6		7		2		4		6		9
Cash flows
Cash proceeds from receivables sold	$	559	$	597	$	672	$	758	$	431	$	448	$	990	$	1,045	$	580	$	680	$	1,252	$	1,438
Return received on retained interests	2		2		2		3		—		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.

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)	2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total
Progress Energy	$	84	$	92	$	87	$	44	$	45	$	58	$	410	$	58	$	92	$	94	$	44	$	45	$	58	$	391
Duke Energy Progress	6		8		8		8		8		—		38		4		8		8		8		8		—		36
Duke Energy Florida	78		84		79		36		37		58		372		54		84		86		36		37		58		355
Duke Energy Indiana	8		5		—		—		—		—		13		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 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)	2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total
Piedmont	$	51	$	65	$	64	$	61	$	58	$	376	$	675	$	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 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.



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 March 31, 2020																	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	$	2,261	$	756	$	1,064	$	502	$	562	$	176		$	265	$	—	$	2,249	$	677	$	1,173	$	460	$	713	$	169	$	231	$	—
General	1,492		549		648		319		329		114			181		—		1,379		507		611		298		313		103		161		—
Industrial	693		269		216		154		62		35			175		—		658		260		212		154		58		33		152		—
Wholesale	497		114		321		279		42		7			55		—		435		101		285		240		45		5		44		—
Other revenues	191		60		118		63		55		20			16		—		284		62		191		70		121		19		25		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	5,134	$	1,748	$	2,367	$	1,317	$	1,050	$	352		$	692	$	—	$	5,005	$	1,607	$	2,472	$	1,222	$	1,250	$	329	$	613	$	—

Gas Utilities and Infrastructure
Residential	$	362	$	—	$	—	$	—	$	—	$	97		$	—	$	264	$	157	$	—	$	—	$	—	$	—	$	62	$	—	$	96
Commercial	169		—		—		—		—		43			—		126		75		—		—		—		—		23		—		52
Industrial	41		—		—		—		—		6			—		36		27		—		—		—		—		3		—		22
Power Generation	—		—		—		—		—		—			—		11		—		—		—		—		—		—		—		6
Other revenues	30		—		—		—		—		6			—		24		12		—		—		—		—		3		—		11
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	602	$	—	$	—	$	—	$	—	$	152		$	—	$	461	$	271	$	—	$	—	$	—	$	—	$	91	$	—	$	187

Commercial Renewables
Revenue from contracts with customers	$	58	$	—	$	—	$	—	$	—	$	—		$	—	$	—	$	55	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	6	$	—	$	—	$	—	$	—	$	—		$	—	$	—	$	7	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total revenue from contracts with customers	$	5,800	$	1,748	$	2,367	$	1,317	$	1,050	$	504		$	692	$	461	$	5,338	$	1,607	$	2,472	$	1,222	$	1,250	$	420	$	613	$	187

Other revenue sources^(a)	$	149	$	—	$	55	$	21	$	30	$	(6	)	$	—	$	51	$	83	$	3	$	26	$	21	$	—	$	3	$	4	$	10
Total revenues	$	5,949	$	1,748	$	2,422	$	1,338	$	1,080	$	498		$	692	$	512	$	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 March 31, 2019																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	$	2,370	$	760	$	1,114	$	536	$	578	$	189	$	306	$	—	$	2,304	$	679	$	1,243	$	496	$	747	$	159	$	225	$	—
General	1,427		496		632		306		326		103		197		—		1,584		531		750		339		411		105		197		—
Industrial	711		266		222		161		61		33		190		—		759		289		231		164		67		36		201		—
Wholesale	541		119		353		315		38		14		54		—		527		109		351		309		42		9		59		—
Other revenues	172		78		172		125		47		16		17		—		187		68		99		44		55		25		27		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	5,221	$	1,719	$	2,493	$	1,443	$	1,050	$	355	$	764	$	—	$	5,361	$	1,676	$	2,674	$	1,352	$	1,322	$	334	$	709	$	—

Gas Utilities and Infrastructure
Residential	$	414	$	—	$	—	$	—	$	—	$	112	$	—	$	302	$	146	$	—	$	—	$	—	$	—	$	64	$	—	$	82
Commercial	206		—		—		—		—		49		—		157		85		—		—		—		—		26		—		59
Industrial	48		—		—		—		—		7		—		42		29		—		—		—		—		3		—		24
Power Generation	—		—		—		—		—		—		—		13		—		—		—		—		—		—		—		13
Other revenues	63		—		—		—		—		8		—		56		22		—		—		—		—		2		—		19
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	731	$	—	$	—	$	—	$	—	$	176	$	—	$	570	$	282	$	—	$	—	$	—	$	—	$	95	$	—	$	197

Commercial Renewables
Revenue from contracts with customers	$	42	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	46	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	4	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	6	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total revenue from contracts with customers	$	5,998	$	1,719	$	2,493	$	1,443	$	1,050	$	531	$	764	$	570	$	5,695	$	1,676	$	2,674	$	1,352	$	1,322	$	429	$	709	$	197

Other revenue sources^(a)	$	165	$	25	$	79	$	41	$	36	$	—	$	4	$	9	$	178	$	37	$	70	$	35	$	31	$	4	$	5	$	12
Total revenues	$	6,163	$	1,744	$	2,572	$	1,484	$	1,086	$	531	$	768	$	579	$	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



	Six Months Ended June 30, 2020
			Duke				Duke		Duke		Duke			Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy			Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio			Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	4,515	$	1,433	$	2,242	$	962	$	1,280	$	345		$	496	$	—
General	2,887		1,056		1,275		617		658		217			342		—
Industrial	1,351		529		428		308		120		68			327		—
Wholesale	932		215		606		519		87		12			99		—
Other revenues	475		122		309		133		176		39			41		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	10,160	$	3,355	$	4,860	$	2,539	$	2,321	$	681		$	1,305	$	—

Gas Utilities and Infrastructure
Residential	$	519	$	—	$	—	$	—	$	—	$	159		$	—	$	360
Commercial	244		—		—		—		—		66			—		178
Industrial	68		—		—		—		—		9			—		58
Power Generation	—		—		—		—		—		—			—		17
Other revenues	42		—		—		—		—		9			—		35
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	873	$	—	$	—	$	—	$	—	$	243		$	—	$	648

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

Other
Revenue from contracts with customers	$	13	$	—	$	—	$	—	$	—	$	—		$	—	$	—
Total Revenue from contracts with customers	$	11,159	$	3,355	$	4,860	$	2,539	$	2,321	$	924		$	1,305	$	648

Other revenue sources^(a)	$	211	$	3	$	60	$	42	$	9	$	(3	)	$	4	$	61
Total revenues	$	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



	Six Months Ended June 30, 2019
			Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	4,674	$	1,439	$	2,357	$	1,032	$	1,325	$	348	$	531	$	—
General	3,011		1,027		1,382		645		737		208		394		—
Industrial	1,470		555		453		325		128		69		391		—
Wholesale	1,068		228		704		624		80		23		113		—
Other revenues	359		146		271		169		102		41		44		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	10,582	$	3,395	$	5,167	$	2,795	$	2,372	$	689	$	1,473	$	—

Gas Utilities and Infrastructure
Residential	$	560	$	—	$	—	$	—	$	—	$	176	$	—	$	384
Commercial	291		—		—		—		—		75		—		216
Industrial	77		—		—		—		—		10		—		66
Power Generation	—		—		—		—		—		—		—		26
Other revenues	85		—		—		—		—		10		—		75
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,013	$	—	$	—	$	—	$	—	$	271	$	—	$	767

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

Other
Revenue from contracts with customers	$	10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Revenue from contracts with customers	$	11,693	$	3,395	$	5,167	$	2,795	$	2,372	$	960	$	1,473	$	767

Other revenue sources^(a)	$	343	$	62	$	149	$	76	$	67	$	4	$	9	$	21
Total revenues	$	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

March 31, 2020
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

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



	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 ~~annually~~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.



~~FINANCIAL STATEMENTS~~	~~REVENUE~~

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


	March 31, 2020																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
Unbilled Receivables	$	716	$	285	$	195	$	85	$	110	$	1	$	16	$	32	$	829	$	332	$	274	$	137	$	137	$	1	$	7	$	6
0-30 days	1,584		448		585		321		262		45		24		134		1,624		470		685		336		344		48		28		73
30-60 days	216		69		67		44		23		9		1		18		152		49		56		28		28		6		1		6
60-90 days	65		18		20		14		6		2		1		5		90		29		34		17		17		4		1		5
90+ days	145		19		57		32		25		32		11		11		209		64		53		24		29		29		10		18
Trade and Other Receivables	$	2,726	$	839	$	924	$	496	$	426	$	89	$	53	$	200	$	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)	March 31, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Duke Energy	$	716	$	843	$	829	$	843
Duke Energy Carolinas	285		298		332		298
Progress Energy	195		217		274		217
Duke Energy Progress	85		122		137		122
Duke Energy Florida	110		95		137		95
Duke Energy Ohio	1		1		1		1
Duke Energy Indiana	16		16		7		16
Piedmont	32		78		6		78

Additionally, Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC, and 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 11 for further information. These receivables for unbilled revenues are shown in the table below.


(in millions)	March 31, 2020		December 31, 2019		June 30, 2020		December 31, 2019
Duke Energy Ohio	$	61	$	82	$	68	$	82
Duke Energy Indiana	94		115		106		115

13. STOCKHOLDERS' EQUITY

Basic EPS is computed by dividing net income 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 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 Condensed Consolidated Statements of Operations as a reduction of net income to arrive at net income available to Duke Energy common stockholders. Dividends accumulated on preferred stock are an adjustment to net income used in the calculation of basic and diluted EPS.



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

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


	Three Months Ended March 31,				Three Months Ended June 30,					Six Months Ended June 30,
(in millions, except per share amounts)	2020		2019		2020			2019		2020		2019
Income from continuing operations available to Duke Energy common stockholders excluding impact of participating securities and including accumulated preferred stock dividends adjustment	$	911	$	898
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	734		727		735			728		734		728
Equity forwards	2		—		—			—		1		—
Weighted average common shares outstanding – diluted	736		727		735			728		735		728
EPS from continuing operations available to Duke Energy common stockholders
Earnings (Loss) Per Share available to Duke Energy common stockholders
Basic and diluted	$	1.24	$	1.24	$	(1.13	)	$	1.12	$	0.11	$	2.36
Potentially dilutive items excluded from the calculation^(a)	2		2		2			2		2		2
Dividends declared per common share	$	0.945	$	0.9275	$	0.945		$	0.928	$	1.890	$	1.855
Dividends declared on Series A preferred stock per depositary share^(b)	$	0.359	$	—	$	0.359		$	0.307	$	0.719	$	0.307
Dividends declared on Series B preferred stock per share^(c)	$	24.917	$	—	$	—		$	—	$	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.



FINANCIAL STATEMENTS	STOCKHOLDERS' EQUITY

Common Stock

In November 2019, Duke Energy 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 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 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 November 2019, Duke Energy marketed an equity offering of 28.75 million shares of common stock through an Underwriting Agreement. In connection with the offering, Duke Energy entered into an equity forward sales agreement with an initial forward price of $85.99 per share.

The equity forward sales agreements require Duke Energy to either physically settle the transaction by issuing shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement, or net settle in whole or in part through the delivery or receipt of cash or shares. The settlement alternatives are at Duke Energy's election. Settlement of the forward sales agreements are expected to occur on or prior to December 31, 2020. Until settlement of the equity forwards, EPS dilution resulting from the agreements, if any, will be determined under the treasury stock method.

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



	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	)



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 March 31, 2020																								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	$	41		$	12		$	12		$	6		$	5		$	1		$	2		$	1		$	83		$	26		$	24		$	14		$	11		$	2		$	4		$	3
Interest cost on projected benefit obligation	67			16			21			10			12			4			6			2			135			31			43			19			23			8			11			5
Expected return on plan assets	(143		)	(36		)	(48		)	(22		)	(25		)	(7		)	(11		)	(5		)	(286		)	(72		)	(95		)	(44		)	(51		)	(14		)	(21		)	(11		)
Amortization of actuarial loss	34			7			11			5			6			2			3			2			64			14			20			9			11			3			6			5
Amortization of prior service credit	(8		)	(2		)	(1		)	—			—			—			—			(2		)	(16		)	(4		)	(2		)	(1		)	(1		)	—			(1		)	(5		)
Amortization of settlement charges	2			1			1			—			—			—			—			—			5			2			1			1			—			—			—			—
Net periodic pension costs	$	(7	)	$	(2	)	$	(4	)	$	(1	)	$	(2	)	$	—		$	—		$	(2	)	$	(15	)	$	(3	)	$	(9	)	$	(2	)	$	(7	)	$	(1	)	$	(1	)	$	(3	)


	Three Months Ended March 31, 2019																								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	$	37		$	12		$	11		$	6		$	4		$	1		$	2		$	1		$	74		$	24		$	21		$	12		$	10		$	2		$	4		$	3
Interest cost on projected benefit obligation	83			20			26			12			14			5			6			3			165			41			52			24			27			9			13			6
Expected return on plan assets	(143		)	(38		)	(44		)	(23		)	(22		)	(8		)	(11		)	(5		)	(286		)	(75		)	(89		)	(44		)	(44		)	(14		)	(21		)	(11		)
Amortization of actuarial loss	24			6			9			3			6			1			2			2			49			11			18			6			12			1			3			3
Amortization of prior service credit	(8		)	(2		)	(1		)	—			—			—			—			(3		)	(16		)	(4		)	(1		)	(1		)	(1		)	—			(1		)	(5		)
Net periodic pension costs	$	(7	)	$	(2	)	$	1		$	(2	)	$	2		$	(1	)	$	(1	)	$	(2	)	$	(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 six months ended ~~March 31,~~June 30, 2020, and 2019.

OTHER POST-RETIREMENT BENEFIT PLANS

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

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				Three Months Ended				Six Months Ended
	March 31,				June 30,				June 30,
	2020		2019		2020		2019		2020		2019
Duke Energy	13.3	%	9.6	%	26.2	%	15.9	%	98.9	%	12.6	%
Duke Energy Carolinas	16.1	%	17.7	%	13.7	%	19.7	%	15.1	%	18.7	%
Progress Energy	17.5	%	17.3	%	14.9	%	16.7	%	16.1	%	17.0	%
Duke Energy Progress	17.1	%	17.8	%	13.9	%	16.3	%	15.7	%	17.1	%
Duke Energy Florida	20.0	%	19.3	%	19.1	%	19.6	%	19.4	%	19.5	%
Duke Energy Ohio	17.7	%	16.9	%	15.4	%	16.1	%	16.6	%	16.5	%
Duke Energy Indiana	20.8	%	24.1	%	17.3	%	24.2	%	19.3	%	24.2	%
Piedmont	10.1	%	21.8	%	128.6	%	22.2	%	5.8	%	21.8	%

The increase in the ETR for Duke Energy for the three and six months ended ~~March 31,~~June 30, 2020, was primarily due to the impact of an ~~adjustment related to~~abandonment of the ~~income tax recognition for equity method investments recorded in the first quarter of 2019, partially offset by~~ACP investment 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 for the three months ended ~~March 31,~~June 30, 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 ~~Duke~~Progress Energy ~~Indiana~~ for the three months ended ~~March 31,~~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 ~~Piedmont~~Duke Energy Progress for the three and six months ended ~~March 31,~~June 30, 2020, was primarily due to an increase in the amortization of excess deferred taxes.

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

The increase in the ETR for Piedmont for the three months ended June 30, 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 an increase in AFUDC equity.

OTHER TAX MATTERS

On March 27, 2020, the CARES Act was enacted. The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic. Among other provisions, the CARES Act accelerates the remaining AMT credit refund allowances resulting in taxpayers being able to immediately claim a refund in full for any AMT credit carryforwards. As a result, the remaining AMT credit carryforwards ~~have been~~were reclassified in the first quarter 2020 to a current receivable included in Other within Current Assets on the Condensed Consolidated Balance ~~Sheets as of March 31, 2020.~~Sheets. The total income tax receivable related to AMT credit carryforwards is approximately $572 ~~million.~~million as of June 30, 2020. The other provisions within the CARES Act do not materially impact Duke Energy's income tax accounting. See Note 1 for information on COVID-19.

16. SUBSEQUENT EVENTS

For information on subsequent events related to regulatory matters ~~commitments~~ and ~~contingencies and derivatives and hedging,~~variable interest entities, see Notes 3 4 and 8.11.



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 ~~three~~six months ended ~~March 31,~~June 30, 2020, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2019.

Executive Overview

ACP

On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (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.

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 important fuel to help Duke Energy reach its carbon reduction goals of 50% by 2030 and net-zero carbon emissions by 2050 in a reliable and cost effective manner. In addition, Duke Energy will continue advancing its clean energy goals by investing in renewables, battery storage, energy efficiency programs and grid projects.

Social Justice and Racial Equity

In response to national events, in June and July 2020, the Duke Energy 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. InRetail electric sales are down 6.5% for the ~~first~~ 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 ~~World Health Organization (WHO) declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency.~~six months ended June 30, 2020. The Duke Energy 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. ~~Financial impacts~~We expect to ~~Duke Energy’s first quarter 2020 results were not material. Volumes are expected to decline in~~begin a sales rebound during the second ~~quarter~~half of 2020 and ~~then begin a gradual rebound thereafter. The Duke Energy Registrants are developing~~have cost ~~containment plans to offset revenue declines.~~ 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 or certain other functions have been performing their work duties remotely from home. Employees who need to interact with customers ~~in-person~~in person are following the Centers for Disease Control and 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 ~~voluntarily announced,~~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"~~Matters," for additional information. The COVID-19 pandemic and stay-at-home orders have impacted commercial and industrial customers, and many of them have suspended operations which is impacting the Duke Energy Registrants’ volumes. Several large industrial customers have ~~announced plans~~begun to restart their businesses since initially closing in ~~May.~~late March and April.

Communities. The Duke Energy Foundation announced approximately $6 million in donations and grants as of ~~April~~June 30, 2020, to support hunger relief, local health and human services nonprofits, and education initiatives across the Duke Energy Registrants’ service territories.


•	Balance Sheet Strength and Liquidity Assurance. See Notes 5 and 13 to the Condensed Consolidated Financial Statements, "Debt and Credit ~~Facilities"~~Facilities," and "Stockholders Equity," respectively, for additional information. During the six months ended June 30, 2020:


◦	Duke Energy issued approximately ~~$1.5~~$3.3 billion of ~~debt during the first quarter of 2020.~~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.



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

~~Rate Case activity and delays. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.~~

◦

Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC on September 30, 2019, and October 30, 2019, respectively, requesting rate increases go into effect in the third quarter of 2020. On March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the Duke Energy Carolinas evidentiary hearing until further order by the commission. On March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on the Duke Energy Progress case indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule. On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. The joint motion suggests, health and safety permitting, that the commission consider the possibility of holding the consolidated hearing in July.


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

◦

Duke Energy Ohio filed an application on April 16, 2020, for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. The proposal is conditioned on full recovery via Duke Energy Ohio's existing Economic Competitiveness Fund Rider, which has been used by Duke Energy Ohio in the past for other reasonable arrangements with customers. On April 24, 2020, the Staff of the PUCO filed its recommendation finding Duke Energy Ohio’s application is reasonable and that the PUCO should approve it.


◦	~~Duke Energy Kentucky filed an electric rate case with the KPSC on September 3, 2019. On April 27, 2020, the KPSC issued its decision and new customer rates were effective on May 1, 2020.~~


◦	Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019. Hearings concluded on February 7, 2020, with rates expected to be effective mid-2020. Duke Energy Indiana is awaiting an order from the IURC.

Policymaker actions. The CARES Act was signed by President Trump on March 27, 2020. Duke Energy Registrants will benefit from certain provisions such as the AMT acceleration and deferral of certain payroll taxes. See Note 15 to the Condensed Consolidated Financial Statements, “Income ~~Taxes”~~Taxes,” for additional information.

~~ACP~~Rate Case and ~~other assets. At present, we have not experienced any delays in ACP construction activity related~~utility commission filings. See Note 3 to ~~COVID-19, but we are constantly monitoring that important project. We experienced no impairments of long-lived or intangible assets resulting from this pandemic~~the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

•

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 Florida filed a petition with the FPSC on April 2, 2020, to accelerate a fuel cost refund to customers in the ~~first 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. 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 KPSC.

Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019. The IURC issued its order June 29, 2020, approving a revenue increase of approximately $146 million, before utility receipt taxes. Customer rates were effective July 30, 2020. Several groups filed notices of appeal of the IURC order on July 29, 2020.

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.

Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. Adjusted earnings and adjusted EPS represent income from continuing operations available to Duke Energy Corporation common stockholders in dollar and per share amounts, adjusted for the dollar and 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 EPS are GAAP Reported Earnings (Loss) and GAAP Reported ~~EPS,~~Earnings (Loss) Per Share, respectively.

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

ACP represents costs related to the abandonment of the ACP investment.

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

Three Months Ended ~~March 31,~~June 30, 2020, as compared to ~~March 31,~~June 30, 2019

GAAP ~~Reported EPS~~reported loss per share was ~~$1.24~~$(1.13) for the ~~first~~second quarter of 2020 ~~and~~compared to earnings per share of $1.12 in the ~~first~~second quarter of 2019. GAAP reported earnings ~~increased~~decreased primarily due to ~~positive rate case impacts and growth~~the abandonment of the investment in ~~Commercial Renewables. This was offset by lower returns on corporate held investments and unfavorable weather.~~ACP.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s ~~first~~second quarter 2020 adjusted EPS was ~~$1.14~~$1.08 compared to ~~$1.24~~$1.12 for the ~~first~~second quarter of 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 EPS, to their most directly comparable GAAP measures.



	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 tax benefit of $374 million.

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

GAAP Reported EPS was $0.11 for the six months ended June 30, 2020, compared to $2.36 for the six months ended June 30, 2019. GAAP reported earnings decreased primarily due to the abandonment of the investment in ACP.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $2.22 for the six months ended June 30, 2020, compared to $2.36 for the six months ended June 30, 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 EPS, to their most directly comparable GAAP measures.


	Three Months Ended March 31,										Six Months Ended June 30,
	2020						2019				2020						2019
(in millions, except per share amounts)	Earnings			EPS			Earnings		EPS
(in millions, except per-share amounts)											Earnings			EPS			Earnings		EPS
GAAP Reported Earnings/GAAP Reported EPS	$	899		$	1.24		$	900	$	1.24	$	82		$	0.11		$	1,720	$	2.36
Adjustments:
Severance^(a)	(75		)	(0.10		)	—		—
ACP^(a)											1,626			2.21			—		—
Severance^(b)											(75		)	(0.10		)	—		—
Adjusted Earnings/Adjusted EPS	$	824		$	1.14		$	900	$	1.24	$	1,633		$	2.22		$	1,720	$	2.36

~~(a) Net of tax expense of $23 million.~~


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


(b)	Net of tax expense of $23 million.

SEGMENT RESULTS

The remaining information presented in this discussion of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements.

Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 2 to the Condensed Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.

Electric Utilities and Infrastructure


	Three Months Ended March 31,								Three Months Ended June 30,							Six Months Ended June 30,
(in millions)	2020		2019			Variance			2020		2019		Variance			2020		2019		Variance
Operating Revenues	$	5,183	$	5,329		$	(146	)	$	5,034	$	5,475	$	(441	)	$	10,217	$	10,804	$	(587	)
Operating Expenses
Fuel used in electric generation and purchased power	1,467		1,630			(163		)	1,367		1,662		(295		)	2,834		3,292		(458		)
Operation, maintenance and other	1,325		1,282			43			1,240		1,318		(78		)	2,565		2,600		(35		)
Depreciation and amortization	977		947			30			993		951		42			1,970		1,898		72
Property and other taxes	303		301			2			296		297		(1		)	599		598		1
Impairment charges	2		—			2			1		4		(3		)	3		4		(1		)
Total operating expenses	4,074		4,160			(86		)	3,897		4,232		(335		)	7,971		8,392		(421		)
Gains (Losses) on Sales of Other Assets and Other, net	1		(3		)	4
Gains on Sales of Other Assets and Other, net									7		3		4			8		—		8
Operating Income	1,110		1,166			(56		)	1,144		1,246		(102		)	2,254		2,412		(158		)
Other Income and Expenses, net	85		91			(6		)	89		89		—			174		180		(6		)
Interest Expense	339		338			1			344		330		14			683		668		15
Income Before Income Taxes	856		919			(63		)	889		1,005		(116		)	1,745		1,924		(179		)
Income Tax Expense	151		169			(18		)	136		196		(60		)	287		365		(78		)
Segment Income	$	705	$	750		$	(45	)	$	753	$	809	$	(56	)	$	1,458	$	1,559	$	(101	)

Duke Energy Carolinas GWh sales	21,236		21,828			(592		)	19,083		21,604		(2,521		)	40,319		43,432		(3,113		)
Duke Energy Progress GWh sales	15,670		16,348			(678		)	14,807		16,222		(1,415		)	30,477		32,570		(2,093		)
Duke Energy Florida GWh sales	8,617		8,321			296			10,800		11,301		(501		)	19,417		19,622		(205		)
Duke Energy Ohio GWh sales	5,823		6,164			(341		)	5,262		5,660		(398		)	11,085		11,824		(739		)
Duke Energy Indiana GWh sales	7,606		8,033			(427		)	6,773		7,437		(664		)	14,379		15,470		(1,091		)
Total Electric Utilities and Infrastructure GWh sales	58,952		60,694			(1,742		)	56,725		62,224		(5,499		)	115,677		122,918		(7,241		)
Net proportional MW capacity in operation	49,561		49,725			(164		)								50,364		49,725		639

Three Months Ended ~~March 31,~~June 30, 2020, as compared to ~~March 31,~~June 30, 2019

Electric Utilities and Infrastructure’s ~~results were~~variance is due to unfavorable weather, lower weather-normal retail sale volumes driven by ~~unfavorable weather~~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 ~~$147~~$332 million decrease in fuel revenues ~~primarily due to~~driven by lower ~~fuel cost recovery;~~

~~a $45 million decrease in retail~~ sales ~~net~~volumes as well as an accelerated refund of fuel ~~revenues, due~~costs at Duke Energy Florida in response to ~~unfavorable weather in~~ the ~~current year; and~~COVID-19 pandemic;

100



MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

a ~~$17~~$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 ~~recovery~~ in the prior year and lower capacity volumes at Duke Energy ~~Progress.~~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 ~~$19 million increase due to higher pricing from South Carolina retail rate case, net of a return of EDIT to customers;~~

~~a $17~~$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 ~~$17~~$13 million increase ~~in weather-normal~~due to higher pricing from South Carolina retail ~~sales volumes.~~rate case, net of a return of EDIT to customers.

Operating Expenses. The variance was driven primarily by:

a ~~$163~~$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

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 $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

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 six months ended June 30, 2020, and 2019, were 16.4% and 19.0%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.

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 June 30, 2020, as compared to June 30, 2019

Gas Utilities and Infrastructure’s results were impacted primarily by the abandonment of the investment in ACP. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues.The variance was driven primarily by:

a $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 due to North Carolina base rate case increases.

Operating Expenses.The variance was driven primarily by:

a $16 million decrease in cost of natural gas due to lower natural gas prices and decreased off-system sales natural gas costs; and

an $8 million decrease in operation, maintenance and other due to deferral of previously expensed IT project costs and lower employee benefits costs.

Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by the abandonment of the investment in 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, offset by lower AFUDC debt income.

Income Tax 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 three months ended June 30, 2020, and 2019, were 19.2% and 7%, respectively. The increase in the ETR was primarily due to the impact of an abandonment of the ACP investment.

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

Gas Utilities and Infrastructure’s results were impacted primarily by the abandonment of ACP. The following is a detailed discussion of the variance drivers by line item.

102



MD&A	SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE

Operating Revenues.The variance was driven primarily by:

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

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

Partially offset by:

a $60 million increase due to North Carolina base rate case increases.

Operating Expenses.The variance was driven primarily by:

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

an $8 million decrease in operation, maintenance and other due to deferral of previously expensed IT project costs and lower employee benefits costs.

Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by the abandonment of the investment in 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, offset by lower AFUDC debt income.

Income Tax 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 ETR was primarily due to an adjustment, recorded in the first quarter of 2019, related to the income tax recognition for equity method investments. The equity method investment adjustment was immaterial and relates to prior years.

Commercial Renewables



	Three Months Ended June 30,									Six Months Ended June 30,
(in millions)	2020			2019			Variance			2020			2019			Variance
Operating Revenues	$	123		$	118		$	5		$	252		$	224		$	28
Operating Expenses
Operation, maintenance and other	63			64			(1		)	132			130			2
Depreciation and amortization	48			40			8			96			80			16
Property and other taxes	8			6			2			16			12			4
Impairment charges	6			—			6			6			—			6
Total operating expenses	125			110			15			250			222			28
Operating (Loss) Income	(2		)	8			(10		)	2			2			—
Other Income and Expenses, net	2			(8		)	10			1			(10		)	11
Interest Expense	13			22			(9		)	31			43			(12		)
Loss Before Income Taxes	(13		)	(22		)	9			(28		)	(51		)	23
Income Tax Benefit	(13		)	(24		)	11			(37		)	(59		)	22
Add: Loss Attributable to Noncontrolling Interests	90			84			6			138			91			47
Segment Income	$	90		$	86		$	4		$	147		$	99		$	48

Renewable plant production, GWh	2,660			2,314			346			5,097			4,382			715
Net proportional MW capacity in operation^(a)										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 June 30, 2020, as compared to June 30, 2019

Commercial Renewables' results were favorable primarily due to 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 new solar projects placed in service.

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.

103



MD&A	SEGMENT RESULTS — COMMERCIAL RENEWABLES

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

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

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

Commercial Renewables' results were favorable primarily due to new investments in renewable projects and favorable wind revenue. Since the second quarter of 2019, Commercial Renewables has placed in service over 700MW of 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.

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 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, lower earnings on the NMC investment and lower interest income due to a tax true up in the prior year.

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

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

104



MD&A	DUKE ENERGY CAROLINAS

DUKE ENERGY CAROLINAS

Results of Operations



	Six Months Ended June 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	3,358	$	3,457	$	(99	)
Operating Expenses
Fuel used in electric generation and purchased power	829		867		(38		)
Operation, maintenance and other	816		881		(65		)
Depreciation and amortization	718		663		55
Property and other taxes	156		155		1
Impairment charges	2		5		(3		)
Total operating expenses	2,521		2,571		(50		)
Operating Income	837		886		(49		)
Other Income and Expenses, net	86		72		14
Interest Expense	248		227		21
Income Before Income Taxes	675		731		(56		)
Income Tax Expense	102		137		(35		)
Net Income	$	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	2020
Residential sales	(5.0	)%
General service sales	(6.7	)%
Industrial sales	(9.6	)%
Wholesale power sales	(3.0	)%
Joint dispatch sales	(60.0	)%
Total sales	(7.2	)%
Average number of customers	1.8	%

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

Operating Revenues.The variance was driven primarily by:

a $77 million decrease in retail sales due to unfavorable weather in the current year; and

a $66 million decrease in fuel revenues due to lower prices and retail sales volumes.

Partially offset by:

a $37 million increase in weather-normal retail sales 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 $65 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, partially offset by higher storm restoration 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 $55 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the South Carolina rate case.

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.

105



MD&A	PROGRESS ENERGY

PROGRESS ENERGY

Results of Operations



	Six Months Ended June 30,
(in millions)	2020		2019			Variance
Operating Revenues	$	4,920	$	5,316		$	(396	)
Operating Expenses
Fuel used in electric generation and purchased power	1,540		1,913			(373		)
Operation, maintenance and other	1,143		1,173			(30		)
Depreciation and amortization	884		881			3
Property and other taxes	272		280			(8		)
Total operating expenses	3,839		4,247			(408		)
Gains (Losses) on Sales of Other Assets and Other, net	6		(1		)	7
Operating Income	1,087		1,068			19
Other Income and Expenses, net	65		65			—
Interest Expense	405		438			(33		)
Income Before Income Taxes	747		695			52
Income Tax Expense	120		118			2
Net Income	627		577			50

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

Operating Revenues. The variance was driven primarily by:

a $380 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the COVID-19 pandemic at Duke Energy Florida and lower fuel prices, volumes and native load transfer sales in the current year at Duke Energy Progress;

a $49 million 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 at Duke Energy Florida;

a $44 million 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 $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 at Duke Energy Florida.

Operating Expenses. The variance was driven primarily by:

a $373 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix at Duke Energy Progress and lower ~~coal and natural gas costs and lower amortization of deferred~~ fuel costs at Duke Energy ~~Indiana.~~Florida;

a $30 million decrease in operation, maintenance and other expense at Duke Energy Progress primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy 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

an $8 million decrease in property and other taxes primarily due to lower revenue related taxes as a result of the decreased fuel revenues, and lower accrued property taxes at Duke Energy Florida.

Interest Expense. The variance was driven primarily by lower interest rates on outstanding debt at Duke Energy Progress.

106



MD&A	DUKE ENERGY PROGRESS

DUKE ENERGY PROGRESS

Results of Operations



	Six Months Ended June 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	2,581	$	2,871	$	(290	)
Operating Expenses
Fuel used in electric generation and purchased power	800		994		(194		)
Operation, maintenance and other	622		692		(70		)
Depreciation and amortization	544		541		3
Property and other taxes	91		85		6
Total operating expenses	2,057		2,312		(255		)
Gains on Sales of Other Assets and Other, net	5		—		5
Operating Income	529		559		(30		)
Other Income and Expenses, net	41		48		(7		)
Interest Expense	137		158		(21		)
Income Before Income Taxes	433		449		(16		)
Income Tax Expense	68		77		(9		)
Net Income	$	365	$	372	$	(7	)



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

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

Operating Revenues. The variance was driven primarily by:

a $185 million decrease in fuel cost recovery driven by lower fuel prices and volumes as well as less native load transfer sales in the current year;

a $61 million decrease in wholesale power revenues, net of fuel, primarily due to higher recovery of coal ash cost 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~~Offset by:

a ~~$43~~$15 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 $194 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix; and

a $70 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to ~~higher employee benefit costs~~the partial settlement agreement between Duke Energy Carolinas and ~~increased vegetation management costs; and~~

~~a $30 million increase in depreciation and amortization expense primarily due~~the Public Staff of the NCUC related to ~~additional plant in service and new depreciation rates associated with~~ the ~~South~~2019 North Carolina retail rate ~~case.~~case, reduced outage costs and energy efficiency program costs.

Interest Expense. The variance was driven primarily by lower interest rates on outstanding debt.

Income Tax Expense.The decrease in tax expense was primarily due to a decrease in pretax ~~income. The ETRs for~~income and an increase in the ~~three months ended March 31, 2020, and 2019, were 17.6% and 18.4%, respectively.~~amortization of excess deferred taxes.

107



MD&A	DUKE ENERGY FLORIDA

DUKE ENERGY FLORIDA

Results of Operations



	Six Months Ended June 30,
(in millions)	2020		2019			Variance
Operating Revenues	$	2,330	$	2,439		$	(109	)
Operating Expenses
Fuel used in electric generation and purchased power	740		919			(179		)
Operation, maintenance and other	514		474			40
Depreciation and amortization	340		340			—
Property and other taxes	180		196			(16		)
Total operating expenses	1,774		1,929			(155		)
Losses on Sales of Other Assets and Other, net	—		(1		)	1
Operating Income	556		509			47
Other Income and Expenses, net	25		25			—
Interest Expense	164		165			(1		)
Income Before Income Taxes	417		369			48
Income Tax Expense	81		72			9
Net Income	$	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	2020
Residential sales	1.2	%
General service sales	(6.6	)%
Industrial sales	5.4	%
Wholesale and other	(10.7	)%
Total sales	(1.0	)%
Average number of customers	1.7	%

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

Operating Revenues. The variance was driven primarily by:

a $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 annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment;

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

a $12 million increase in other revenues primarily due to increased transmission revenues; and

a $12 million increase in wholesale power revenues, net of fuel, primarily due to increased demand.

Operating Expenses. The variance was driven primarily by:

a $179 million decrease in fuel used in electric generation and purchased power primarily due to lower fuel costs; and

a $16 million decrease in 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 storm cost amortizations.

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

108



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
Increase (Decrease) over prior year	2020		2020
Residential sales	(2.3	)%	(7.5	)%
General service sales	(8.1	)%	(10.1	)%
Industrial sales	(8.0	)%	(3.2	)%
Wholesale electric power sales	(52.0	)%	n/a
Other natural gas sales	n/a		(0.5	)%
Total sales	(6.3	)%	(6.5	)%
Average number of customers	1.3	%	0.8	%

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

Operating Revenues. The variance was driven primarily by:

a $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 in Kentucky.

Operating Expenses. The variance was driven primarily by:

a $36 million 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 timing of energy efficiency programs and outage costs, lower employee benefit expenses and lower vegetation and pole maintenance costs.

Partially offset by:

a $6 million increase in depreciation and amortization primarily driven by an increase in distribution plant, partially offset by lower amortization due to the suspension of the MGP rider in Ohio.

Other Income and Expenses, net. The variance was primarily due to lower AFUDC equity and lower intercompany interest income.

109



MD&A	DUKE ENERGY INDIANA

DUKE ENERGY INDIANA

Results of Operations



	Six Months Ended June 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	1,309	$	1,482	$	(173	)
Operating Expenses
Fuel used in electric generation and purchased power	355		486		(131		)
Operation, maintenance and other	357		377		(20		)
Depreciation and amortization	266		263		3
Property and other taxes	42		39		3
Total operating expenses	1,020		1,165		(145		)
Operating Income	289		317		(28		)
Other Income and Expenses, net	19		27		(8		)
Interest Expense	85		71		14
Income Before Income Taxes	223		273		(50		)
Income Tax Expense	43		66		(23		)
Net Income	$	180	$	207	$	(27	)



Increase (Decrease) over prior year	2020
Residential sales	(3.5	)%
General service sales	(9.3	)%
Industrial sales	(9.8	)%
Wholesale power sales	(4.3	)%
Total sales	(7.1	)%
Average number of customers	1.4	%

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

Operating Revenues.The variance was driven primarily by:

a $118 million decrease in fuel revenues primarily due to lower fuel cost recovery driven by customer demand and fuel prices;

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

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

a $9 million decrease primarily related to the true up of wholesale revenues in the current year.

Operating Expenses.The variance was driven primarily by:

a $131 million decrease in fuel used in electric generation and purchased power expense primarily due to lower coal and natural gas costs, lower amortization of deferred fuel costs and lower purchased power 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. The variance was primarily due to 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.

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

110



MD&A	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 ~~Electric Utilities and Infrastructure~~ Results

The ~~COVID-19 pandemic has not had a material~~matters discussed herein could materially impact ~~on Electric Utilities~~the future operating results, financial condition and ~~Infrastructure as~~cash flows of ~~March 31, 2020; however, we~~the Duke Energy Registrants and Business Segments.

COVID-19

Duke Energy cannot predict the extent to which the COVID-19 pandemic will impact ~~Electric Utilities and Infrastructure~~its results of operations, financial position and cash flows in the future. ~~Electric Utilities and Infrastructure~~Duke Energy will continue to actively monitor the impacts of COVID-19 including the ~~potential~~ economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown ~~could~~will adversely affect ~~Electric Utilities and Infrastructure~~the company’s customers, suppliers and partners and could cause ~~Electric Utilities and Infrastructure to experience~~ an increase in certain costs, such as bad debt, and a reduction in the demand for energy. ~~Electric Utilities~~It could also cause delays in construction for Commercial Renewables and ~~Infrastructure~~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 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 ~~NCDEQ~~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. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows.

~~On May 21, 2019,~~ Duke Energy Carolinas and Duke Energy Progress 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. ~~Electric Utilities and Infrastructure's results~~Appeals of ~~operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately~~the 2017 North Carolina approved ~~for recovery. 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~~cases for Duke Energy Carolinas and Duke Energy Progress ~~filed general rate cases with~~are still pending at the ~~NCUC.~~North Carolina Supreme Court. The ~~outcome~~North Carolina Attorney General and various intervenors primarily dispute the allowance of ~~these rate cases could materially impact Electric Utilities and Infrastructure's results~~recovery of ~~operations, financial position and cash flows. See Note 3 to~~coal ash costs from customers, which was approved by the ~~Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.~~

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas and Duke Energy Progress have petitioned for deferral of future grid improvement costs in their 2019 rate cases. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress and Duke Energy Florida's service territories. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred.NCUC. An order from regulatory or judicial authorities disallowing ~~the deferral and future~~ recovery of ~~storm restoration~~ costs related to closure of these ash basins could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.future results.



~~MD&A~~	~~SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE~~

~~On April 17,~~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 results of operations, financial position and cash flows.~~

~~See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the~~Carolinas, Duke Energy ~~Registrants' Annual Reports on Form 10-K for the year ended December 31, 2019, for discussion of risks associated with the Tax Act.~~

~~Gas Utilities~~Progress and ~~Infrastructure~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 664
$ 756
$ (92 )
Operating Expenses
Cost of natural gas 199
327
(128 )
Operation, maintenance and other 110
110
—
Depreciation and amortization 66
65
1
Property and other taxes 30
33
(3 )
Total operating expenses 405
535
(130 )
Operating Income 259
221
38
Other Income and Expenses, net 49
40
9
Interest Expense 31
30
1
Income Before Income Taxes 277
231
46
Income Tax Expense 28
5
23
Segment Income $ 249
$ 226
$ 23

Piedmont LDC throughput (dekatherms) 148,503,995
151,662,741
(3,158,746 )
Duke Energy Midwest LDC throughput (Mcf) 33,785,834
38,538,272
(4,752,438 )

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

~~Gas Utilities and Infrastructure’s results~~Duke Energy Florida’s service territories were impacted by ~~an increase~~several named storms in ~~operating income primarily due~~2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the ~~North Carolina base rate case and IMR, partially offset by prior year tax benefits related to AFUDC equity from ACP. The following is a detailed discussion~~service territories of ~~the variance drivers by line item.~~

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

~~a $134 million decrease due to lower natural gas costs passed through to customers and lower volumes due to warmer weather;~~

~~a $20 million decrease due to return of EDIT to customers; and~~

~~a $7 million decrease due to NCUC approval related to tax reform accounting from fixed-rate contracts in the prior year.~~

~~Partially offset by:~~

~~a $53 million increase due to North Carolina base rate case increases; and~~

~~a $12 million increase due to North Carolina IMR increases.~~

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

~~a $128 million decrease in cost of natural gas due to lower natural gas prices, lower volumes and decreased off-system sales natural gas costs.~~

~~Other Income and Expenses, net.~~ ~~The variance was driven primarily by higher equity earnings from ACP in the current year.~~

~~Income Tax Expense.~~ The increase in tax expense was primarily due to an adjustment, recorded in the first quarter of 2019, related to the income tax recognition for equity method investments and an increase in pretax income, partially offset by an increase in the amortization of excess deferred taxes. The ETRs for the three months ended March 31, 2020, and 2019, were 10.1% and 2.2%, respectively. The increase in the ETR was primarily due to an adjustment related to the income tax recognition for equity method investments recorded in the first quarter of 2019, partially offset by an increase in the amortization of excess deferred taxes. The equity method investment adjustment was immaterial and relates to prior years.



~~MD&A~~	~~SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE~~

~~Matters Impacting Future Gas Utilities and Infrastructure Results~~

The COVID-19 pandemic has not had a material impact on Gas Utilities and Infrastructure as of March 31, 2020; however we cannot predict the extent to which the COVID-19 pandemic will impact Gas Utilities and Infrastructure results of operations, financial position and cash flows in the future. Gas Utilities and Infrastructure will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Gas Utilities and Infrastructure customers, suppliers and partners and could cause Gas Utilities and Infrastructure to experience an increase in certain costs, such as bad debt, or cause constructions delays with ACP. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

Gas Utilities and Infrastructure has a 47% ownership interest in ACP, which is building an approximately 600-mile interstate natural gas pipeline intended to transport diverse natural gas supplies into southeastern markets. Affected states (West Virginia, Virginia and North Carolina) have issued certain necessary permits; the project remains subject to other pending federal and state approvals, which will allow full construction activities to begin. In 2018, FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route. Given the legal challenges and ongoing discussions with customers, ACP expects the project to enter full in-service in the first half of 2022.The delays resulting from legal challenges have impacted the cost for the project. Project cost is approximately $8 billion, excluding financing costs. This estimate is based on the current facts available around construction costs and timelines, and is subject to future changes as those facts develop. Abnormal weather, work delays (including delays due to judicial or regulatory action or COVID-19 social distancing) and other conditions may 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~~Energy Carolinas and Duke Energy ~~will continue~~Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to ~~consider~~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 ~~options~~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 ~~respect to~~ the foregoing given their existing contractual and legal obligations. See Notes 3 and 11 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and "Variable Interest Entities," respectively, for additional information.NCUC. The outcome of these rate cases could have a material impact.

~~On November 13, 2013, the~~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 on Gas Utilities and Infrastructure’s results of operations, financial position and cash flows. See~~impact.

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

Other Matters

~~Commercial Renewables~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 129
$ 106
$ 23
Operating Expenses
Operation, maintenance and other 69
66
3
Depreciation and amortization 48
40
8
Property and other taxes 8
6
2
Total operating expenses 125
112
13
Operating Income (Loss) 4
(6 ) 10
Other Income and Expenses, net (1 ) (2 ) 1
Interest Expense 18
21
(3 )
Loss Before Income Taxes (15 ) (29 ) 14
Income Tax Benefit (24 ) (35 ) 11
Less: Loss Attributable to Noncontrolling Interests (48 ) (7 ) (41 )
Segment Income $ 57
$ 13
$ 44

Renewable plant production, GWh 2,437
2,068
369
Net proportional MW capacity in operation^(a)
3,502
2,996
506


~~(a)~~	Certain projects are included in tax equity structures where investors have differing interests in the project's economic attributes. One hundred percent of the tax equity project's capacity is included in the table above.

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

~~Commercial Renewables' results were favorable primarily due to new tax equity structures and favorable wind revenue. The following is a detailed discussion of the variance drivers by line item.~~

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

~~Operating Expenses.~~ ~~The increase was primarily due to higher depreciation expense as a result of new projects placed in service.~~

~~Income Tax Benefit.~~ ~~The decrease in the tax benefit was primarily driven by an increase in taxes associated with~~ Duke ~~Energy's interest in tax equity projects and a decrease in pretax losses.~~



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

~~Loss Attributable to Noncontrolling Interests~~ ~~The increase was primarily due to new tax equity structures~~.

~~Matters Impacting Future Commercial Renewables Results~~

The COVID-19 pandemic has not had a material impact on Commercial Renewables as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Commercial Renewables results of operations, financial position and cash flows in the future. Commercial Renewables will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Commercial Renewables customers, suppliers and partners and could cause Commercial Renewables to experience delays in project construction and availability of financing. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

~~Commercial Renewables~~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 continues to monitor recoverability of ~~its~~a 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. ~~Although these assets were~~Based on 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 ~~impaired, a~~required. A continued decline in energy market pricing would likely result in a future impairment. Impairment of ~~these assets~~this asset could result in adverse ~~impacts to the future results of operations, financial position and cash flows of Commercial Renewables.~~

~~Other~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 23
$ 21
$ 2
Operating Expenses (89 ) 28
(117 )
Operating Income (Loss) 112
(7 ) 119
Other Income and Expenses, net (33 ) 44
(77 )
Interest Expense 171
171
—
Loss Before Income Taxes (92 ) (134 ) 42
Income Tax Benefit (19 ) (45 ) 26
Less: Preferred Dividends 39
—
39
Net Loss $ (112 ) $ (89 ) $ (23 )

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~Operating Expenses.~~ The decrease was primarily driven by the deferral of 2018 corporate allocated severance costs due to the partial settlement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 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 as well as lower Bison investment income.~~

~~Income Tax Benefit~~. ~~The decrease in the tax benefit was primarily driven by a decrease in pretax losses.~~

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

~~Matters Impacting Future Other Results~~

The COVID-19 pandemic has not had a material impact on Other as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Other results of operations, financial position and cash flows in the future. Other will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. 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.



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

~~DUKE ENERGY CAROLINAS~~

~~Results of Operations~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 1,748
$ 1,744
$ 4
Operating Expenses
Fuel used in electric generation and purchased power 453
472
(19 )
Operation, maintenance and other 386
440
(54 )
Depreciation and amortization 343
317
26
Property and other taxes 81
80
1
Impairment charges 2
—
2
Total operating expenses 1,265
1,309
(44 )
Gains on Sales of Other Assets and Other, net 1
—
1
Operating Income 484
435
49
Other Income and Expenses, net 43
31
12
Interest Expense 123
110
13
Income Before Income Taxes 404
356
48
Income Tax Expense 65
63
2
Net Income $ 339
$ 293
$ 46



~~Increase (Decrease) over prior year~~	~~2020~~
~~Residential sales~~	~~(5.1~~	)%
~~General service sales~~	~~(0.1~~	)%
~~Industrial sales~~	~~(1.2~~	)%
~~Wholesale power sales~~	~~(3.0~~	)%
~~Joint dispatch sales~~	~~(54.0~~	)%
~~Total sales~~	~~(2.7~~	)%
~~Average number of customers~~	~~1.8~~	%

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~a $23 million increase in weather-normal retail sales volumes; and~~

~~an $11 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers.~~

~~Partially offset by:~~

~~a $26 million decrease in retail sales due to unfavorable weather in the current year.~~

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


•	a $54 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, part~~ially offset by higher storm restoration costs; and~~

~~a $19 million decrease in fuel used in electric generation and purchased power primarily due to changes in the generation mix.~~

~~Partially offset by:~~

~~a $26 million increase in depreciation and amortization expense primarily due to~~impacts. For additional ~~plant in service and new depreciation rates associated with the South Carolina rate case.~~

~~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.~~



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

~~Matters Impacting Future Results~~

The COVID-19 pandemic has not had a material impact on Duke Energy Carolinas as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Carolinas results of operations, financial position and cash flows in the future. Duke Energy Carolinas will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Carolinas customers, suppliers and partners and could cause Duke Energy Carolinas to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Carolinas also has pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On December 31, 2019, Duke Energy Carolinas entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas agreed to excavate five of the six remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on Duke Energy Carolinas’ results of operations, financial position and cash flows.

Duke Energy Carolinas filed a general rate case with the NCUC on September 30, 2019. The outcome of this rate case could materially impact Duke Energy Carolina's results of operations, financial position and cash flows. Seeinformation, see Note 32 to the Condensed Consolidated Financial Statements, ~~"Regulatory Matters,~~"Business Segments." ~~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.

Duke Energy Carolinas’ service territory was impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the future recovery of storm restoration costs could have an adverse impact on Duke Energy Carolinas' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On May 21, 2019, the PSCSC issued an order granting Duke Energy Carolinas request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Carolinas has appealed this decision to the South Carolina Supreme Court and that appeal is pending. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

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, 2019, for discussion of risks associated with the Tax Act.

~~PROGRESS ENERGY~~

~~Results of Operations~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 2,422
$ 2,572
$ (150 )
Operating Expenses
Fuel used in electric generation and purchased power 763
925
(162 )
Operation, maintenance and other 554
567
(13 )
Depreciation and amortization 452
455
(3 )
Property and other taxes 135
137
(2 )
Total operating expenses 1,904
2,084
(180 )
Losses on Sales of Other Assets and Other, net (1 ) —
(1 )
Operating Income 517
488
29
Other Income and Expenses, net 32
31
1
Interest Expense 206
219
(13 )
Income Before Income Taxes 343
300
43
Income Tax Expense 60
52
8
Net Income 283
248
35
Less: Net Loss Attributable to Noncontrolling Interests —
(1 ) 1
Net Income Attributable to Parent $ 283
$ 249
$ 34



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

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~a $160 million decrease in fuel cost recovery driven by lower fuel prices and volumes as well as less Duke Energy Progress native load transfer sales in the current year;~~

a $16 million decrease in wholesale power revenues, net of fuel, primarily due to coal ash cost recovery in the prior year at Duke Energy Progress, partially offset by increased demand at Duke Energy Florida;

~~a $15 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 $7 million 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.

~~Partially offset by:~~

~~a $17 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment at Duke Energy Florida;~~

~~a $12 million increase in storm revenues due to Hurricane Dorian collections at Duke Energy Florida;~~

~~a $10 million increase in other revenues primarily due to increased transmission revenues at Duke Energy Florida; and~~

~~an $8 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers at Duke Energy Progress.~~

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

a $162 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix at Duke Energy Progress and lower fuel costs, net of deferrals at Duke Energy Florida; and

a $13 million decrease in operation, maintenance and other expense at Duke Energy Progress primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, partially offset by storm cost amortizations and employee benefits at Duke Energy Florida.

~~Interest Expense.~~ ~~The variance was driven primarily by lower interest rates on outstanding debt at Duke Energy Progress.~~

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

~~Matters Impacting Future Results~~

The COVID-19 pandemic has not had a material impact on Progress Energy as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Progress Energy results of operations, financial position and cash flows in the future. Progress Energy will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Progress Energy customers, suppliers and partners and could cause Progress Energy to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Progress Energy also has various pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On December 31, 2019, Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Progress agreed to excavate two of the three remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on Duke Energy Progress’ results of operations, financial position and cash flows.

Duke Energy Progress filed a general rate case with the NCUC on October 30, 2019. The outcome of this rate case could materially impact Progress Energy's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

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.

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 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~~	~~PROGRESS ENERGY~~

On May 21, 2019, the PSCSC issued an order granting Duke Energy Progress' request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress has appealed this decision to the South Carolina Supreme Court and that appeal is pending. Progress Energy's results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

~~DUKE ENERGY PROGRESS~~

~~Results of Operations~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 1,338
$ 1,484
$ (146 )
Operating Expenses
Fuel used in electric generation and purchased power 405
515
(110 )
Operation, maintenance and other 305
335
(30 )
Depreciation and amortization 287
290
(3 )
Property and other taxes 47
44
3
Total operating expenses 1,044
1,184
(140 )
Losses on Sales of Other Assets and Other, net (1 ) —
(1 )
Operating Income 293
300
(7 )
Other Income and Expenses, net 22
24
(2 )
Interest Expense 69
77
(8 )
Income Before Income Taxes 246
247
(1 )
Income Tax Expense 42
44
(2 )
Net Income $ 204
$ 203
$ 1



~~Increase (Decrease) over prior period~~	~~2020~~
~~Residential sales~~	~~(5.7~~	)%
~~General service sales~~	~~(1.9~~	)%
~~Industrial sales~~	~~(0.2~~	)%
~~Wholesale power sales~~	~~(7.4~~	)%
~~Joint dispatch sales~~	~~(0.5~~	)%
~~Total sales~~	~~(4.1~~	)%
~~Average number of customers~~	~~1.4~~	%

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~a $109 million decrease in fuel cost recovery driven by lower fuel prices and volumes as well as less native load transfer sales in the current year;~~

~~a $24 million decrease in retail sales due to unfavorable weather in the current year; and~~

~~a $23 million decrease in wholesale power revenues, net of fuel, primarily due to coal ash cost recovery in the prior year.~~

~~Partially Offset by:~~

~~an $8 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 $110 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix; and~~

a $30 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case.

~~Interest Expense.~~ ~~The variance was driven primarily by lower interest rates on outstanding debt.~~



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

~~Matters Impacting Future Results~~

The COVID-19 pandemic has not had a material impact on Duke Energy Progress as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Progress results of operations, financial position and cash flows in the future. Duke Energy Progress will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Progress customers, suppliers and partners and could cause Duke Energy Progress to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Progress also has pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

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 has appealed this decision to the South Carolina Supreme Court and that appeal is pending. Duke Energy Progress' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

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.

Duke Energy Progress' service territory was impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. In September 2019, Hurricane Dorian reached the Carolinas bringing high winds, tornadoes and heavy rain, impacting about 300,000 customers within the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Progress' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

~~DUKE ENERGY FLORIDA~~

~~Results of Operations~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 1,080
$ 1,086
$ (6 )
Operating Expenses
Fuel used in electric generation and purchased power 358
410
(52 )
Operation, maintenance and other 245
230
15
Depreciation and amortization 165
165
—
Property and other taxes 88
93
(5 )
Total operating expenses 856
898
(42 )
Operating Income 224
188
36
Other Income and Expenses, net 10
13
(3 )
Interest Expense 84
82
2
Income Before Income Taxes 150
119
31
Income Tax Expense 30
23
7
Net Income $ 120
$ 96
$ 24



~~MD&A~~	~~DUKE ENERGY FLORIDA~~



~~Increase (Decrease) over prior period~~	~~2020~~
~~Residential sales~~	~~(3.7~~	)%
~~General service sales~~	~~0.4~~	%
~~Industrial sales~~	~~13.6~~	%
~~Wholesale and other~~	~~(18.0~~	)%
~~Total sales~~	~~3.6~~	%
~~Average number of customers~~	~~1.5~~	%

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~a $51 million decrease in fuel revenues primarily due to a decrease in fuel rates billed to retail customers; and~~

~~a $15 million decrease in rider revenue requirements primarily due to the Crystal River 3 Uprate regulatory asset being fully recovered in 2019.~~

~~Partially offset by:~~

~~a $17 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment;~~

~~a $17 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;~~

~~a $12 million increase in storm revenues due to Hurricane Dorian collections;~~

~~a $10 million increase in other revenues primarily due to increased transmission revenues; and~~

~~a $7 million increase in wholesale power revenues, net of fuel, primarily due to increased demand.~~

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

~~a $52 million decrease in fuel used in electric generation and purchased power primarily due to lower fuel costs, net of deferrals.~~

~~Partially offset by:~~

~~a $15 million increase in operation, maintenance and other expense primarily due to storm cost amortizations and employee benefits.~~

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

~~Matters Impacting Future Results~~

The COVID-19 pandemic has not had a material impact on Duke Energy Florida as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Florida results of operations, financial position and cash flows in the future. Duke Energy Florida will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Florida customers, suppliers and partners and could cause Duke Energy Florida to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 5 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage within the service territory of Duke Energy Florida, particularly from Panama City Beach to Mexico Beach. In September 2019, Duke Energy Florida’s service territory was threatened by Hurricane Dorian with landfall as a possible Category 5 hurricane and therefore Duke Energy Florida incurred costs to secure necessary resources to be prepared for that potential impact. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the future recovery of storm restoration costs could have an adverse impact on Duke Energy Florida's financial position, results of operations and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.



~~MD&A~~	~~DUKE ENERGY OHIO~~

~~DUKE ENERGY OHIO~~

~~Results of Operations~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues
Regulated electric $ 346
$ 355
$ (9 )
Regulated natural gas 152
176
(24 )
Total operating revenues 498
531
(33 )
Operating Expenses
Fuel used in electric generation and purchased power 87
93
(6 )
Cost of natural gas 37
54
(17 )
Operation, maintenance and other 123
132
(9 )
Depreciation and amortization 68
64
4
Property and other taxes 83
84
(1 )
Total operating expenses 398
427
(29 )
Operating Income 100
104
(4 )
Other Income and Expenses, net 3
9
(6 )
Interest Expense 24
30
(6 )
Income Before Income Taxes 79
83
(4 )
Income Tax Expense 14
14
—
Net Income $ 65
$ 69
$ (4 )

Electric Natural Gas
Increase (Decrease) over prior year 2020
2020
Residential sales (9.2 )% (16.1 )%
General service sales (3.4 )% (13.9 )%
Industrial sales (2.1 )% (2.5 )%
Wholesale electric power sales (33.1 )% n/a
Other natural gas sales n/a
(1.9 )%
Total sales (5.5 )% (12.3 )%
Average number of customers 0.8 % 0.6 %

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~a $28 million decrease in fuel related revenues primarily due to lower natural gas prices as well as decreased volumes;~~

~~a $10 million decrease due to unfavorable weather in the current year; and~~

~~a $5 million decrease in other revenues due to lower OVEC sales into PJM.~~

~~Partially offset by:~~

~~a $5 million increase in retail pricing primarily due to gas rate case impacts in Kentucky; and~~

a $4 million increase in rider revenues primarily related to the Distribution Capital Investment rider as a result of additional investments and the new Legacy Generation Riders arising from Ohio HB6, which provide an alternative method of recovering OVEC losses, partially offset by decreased Energy Efficiency Rider Revenue.



~~MD&A~~	~~DUKE ENERGY OHIO~~

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

~~a $23 million decrease in fuel expense, primarily driven by lower natural gas prices; and~~

a $9 million decrease in operations, maintenance and other expense primarily due to the timing of training and inspection programs for Customer Delivery and Customer Solutions as well as lower storm costs.

~~Partially offset by:~~

~~a $4 million increase in depreciation and amortization primarily driven by an increase in distribution plant.~~

~~Other Income and Expenses, net.~~ ~~The variance was primarily due to lower intercompany interest income due to decreased borrowing and lower AFUDC equity.~~

~~Interest Expense.~~ The variance was primarily driven by lower debt outstanding in the current year and lower post in-service carrying costs, partially offset by higher intercompany interest expense due to increased borrowing.

~~Matters Impacting Future Results~~

The COVID-19 pandemic has not had a material impact on Duke Energy Ohio as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Ohio results of operations, financial position and cash flows in the future. Duke Energy Ohio will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Ohio customers, suppliers and partners and could cause Duke Energy Ohio to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

On November 13, 2013, the PUCO issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact on Duke Energy Ohio’s results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

~~DUKE ENERGY INDIANA~~

~~Results of Operations~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 692
$ 768
$ (76 )
Operating Expenses
Fuel used in electric generation and purchased power 194
257
(63 )
Operation, maintenance and other 186
189
(3 )
Depreciation and amortization 132
131
1
Property and other taxes 22
19
3
Total operating expenses 534
596
(62 )
Losses on Sales of Other Assets and Other, net —
(3 ) 3
Operating Income 158
169
(11 )
Other Income and Expenses, net 10
19
(9 )
Interest Expense 43
43
—
Income Before Income Taxes 125
145
(20 )
Income Tax Expense 26
35
(9 )
Net Income $ 99
$ 110
$ (11 )



~~Increase (Decrease) over prior year~~	~~2020~~
~~Residential sales~~	~~(10.0~~	)%
~~General service sales~~	~~(4.8~~	)%
~~Industrial sales~~	~~(2.6~~	)%
~~Wholesale power sales~~	~~1.8~~	%
~~Total sales~~	~~(5.3~~	)%
~~Average number of customers~~	~~1.1~~	%



~~MD&A~~	~~DUKE ENERGY INDIANA~~

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~a $58 million decrease in fuel revenues primarily due to lower cost of fuel and unseasonably milder weather;~~

~~a $9 million decrease in retail sales due to unfavorable weather in the current year; and~~

~~an $8 million decrease in rider revenues primarily related to lower Edwardsport IGCC sales volumes.~~

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

a $63 million decrease in fuel used in electric generation and purchased power expense primarily due to lower coal and natural gas costs and lower amortization of deferred fuel costs, partially offset by higher purchased power expense.

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

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

~~Matters Impacting Future Results~~

The COVID-19 pandemic has not had a material impact on Duke Energy Indiana as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Indiana results of operations, financial position and cash flows in the future. Duke Energy Indiana will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Indiana customers, suppliers and partners and could cause Duke Energy Indiana to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Indiana also has a pending rate case proceeding that could be delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019, its first general rate case in 16 years. The outcome of this rate case could materially impact Duke Energy Indiana's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On April 17, 2015, the EPA published in the Federal Register a rule to regulate the disposal of CCR from electric utilities as solid waste. Duke Energy Indiana has interpreted the rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. Duke Energy Indiana's interpretation of the requirements of the CCR rule is subject to potential legal challenges and further regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash. An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could have an adverse impact on Duke Energy Indiana's results of operations, financial position and cash flows.

~~PIEDMONT~~

~~Results of Operations~~

Three Months Ended March 31,
(in millions) 2020
2019
Variance
Operating Revenues $ 512
$ 579
$ (67 )
Operating Expenses
Cost of natural gas 162
273
(111 )
Operation, maintenance and other 80
80
—
Depreciation and amortization 45
42
3
Property and other taxes 12
12
—
Total operating expenses 299
407
(108 )
Operating Income 213
172
41
Other Income and Expenses, net 12
6
6
Interest Expense 27
22
5
Income Before Income Taxes 198
156
42
Income Tax Expense 20
34
(14 )
Net Income $ 178
$ 122
$ 56



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



~~Increase (Decrease) over prior year~~	~~2020~~
~~Residential deliveries~~	~~(13.1~~	)%
~~Commercial deliveries~~	~~(12.4~~	)%
~~Industrial deliveries~~	~~(2.1~~	)%
~~Power generation deliveries~~	~~5.8~~	%
~~For resale~~	~~(23.7~~	)%
~~Total throughput deliveries~~	~~(2.1~~	)%
~~Secondary market volumes~~	~~(26.3~~	)%
~~Average number of customers~~	~~1.4~~	%

~~Three Months Ended March 31, 2020, as compared to March 31, 2019~~

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

~~a $111 million decrease due to lower natural gas costs passed through to customers;~~

~~a $20 million decrease due to return of EDIT to customers; and~~

~~a $7 million decrease due to NCUC approval related to tax reform accounting from fixed-rate contracts in the prior year.~~

~~Partially offset by:~~

~~a $53 million increase due to North Carolina base rate case increases; and~~

~~a $12 million increase due to North Carolina IMR increases.~~

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

~~a $111 million decrease in cost of natural gas due to lower natural gas prices.~~

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

~~Matters Impacting Future Results~~

The COVID-19 pandemic has not had a material impact on Piedmont as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Piedmont results of operations, financial position and cash flows in the future. Piedmont will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Piedmont customers, suppliers and partners and could cause Piedmont to experience an increase in certain costs, such as bad debt. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Duke Energy relies primarily upon cash flows from operations, debt and equity issuances and its existing cash and cash equivalents to fund its liquidity and capital requirements. Duke Energy’s capital requirements arise primarily from capital and investment expenditures, repaying long-term debt and paying dividends to shareholders. Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2019, included a summary and detailed discussion of projected primary sources and uses of cash for 2020 to 2022.

In March 2020, capital markets experienced significant liquidity challenges as a result of the ongoing uncertainty around the economic impacts from COVID-19. Investor demand for liquidity and cash holdings created substantial volatility, particularly in the short-term commercial paper market. As such, issuers of commercial paper experienced difficulties issuing commercial paper for longer duration at competitive interest rates. During March 2020, ~~and~~ in response to market volatility and the ongoing economic uncertainty related to COVID-19, Duke Energy took several actions to enhance the ~~Company's~~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;~~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.



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

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 approximately $3.3 billion in debt, raised $111 million of 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 ~~March 31,~~June 30, 2020, Duke Energy had approximately ~~$1.5 billion~~$341 million of cash on hand, ~~and $4.8~~$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 has additional liquidity available totaling approximately $2.6 billion under outstanding equity forward agreements. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Duke Energy continues to monitor access to credit and equity markets.

In addition to the $500 million draw under the Three-Year Revolving Credit Facility and $1.7 billion of incremental borrowings under the new 364-day Term Loan Credit Agreement, Duke Energy also issued approximately $1.5 billion of debt and raised $67 million of common equity through its dividend reinvestment program during the three months ended March 31, 2020. Refer to Notes 5 and 13 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders' Equity," respectively, for information regarding Duke Energy's debt and equity issuances, debt maturities and available credit facilities including the Master Credit Facility.

In light of the COVID-19 pandemic and cancellation of the ACP pipeline, Duke Energy currently does not expect significant changes to the total projected capital and investment expenditures provided in the Form 10-K for the year ended December 31, 2019. However, Duke Energy will continue to reassess capital projects depending on the duration and severity of economic impacts caused by the pandemic.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.


	Three Months Ended						Six Months Ended
	March 31,						June 30,
(in millions)	2020			2019			2020			2019
Cash flows provided by (used in):
Operating activities	$	1,554		$	1,239		$	3,357		$	3,056
Investing activities	(3,022		)	(2,713		)	(5,471		)	(5,788		)
Financing activities	2,593			1,433			2,182			2,622
Net increase (decrease) in cash, cash equivalents and restricted cash	1,125			(41		)	68			(110		)
Cash, cash equivalents and restricted cash at beginning of period	573			591			573			591
Cash, cash equivalents and restricted cash at end of period	$	1,698		$	550		$	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.


	Three Months Ended									Six Months Ended
	March 31,									June 30,
(in millions)	2020			2019			Variance			2020			2019			Variance
Net income	$	890		$	893		$	(3	)
Net (loss) income										$	(2	)	$	1,641		$	(1,643	)
Non-cash adjustments to net income	1,627			1,299			328			4,592			2,917			1,675
Payments for asset retirement obligations	(132		)	(152		)	20			(287		)	(336		)	49
Working capital	(831		)	(801		)	(30		)	(946		)	(1,166		)	220
Net cash provided by operating activities	$	1,554		$	1,239		$	315		$	3,357		$	3,056		$	301

The variance was primarily due to timing of payments of property taxes, higher Nuclear Electric Insurance Limited (NEIL) refunds in the 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.


	Three Months Ended									Six Months Ended
	March 31,									June 30,
(in millions)	2020			2019			Variance			2020			2019			Variance
Capital, investment and acquisition expenditures	$	(2,909	)	$	(2,630	)	$	(279	)	$	(5,267	)	$	(5,627	)	$	360
Other investing items	(113		)	(83		)	(30		)	(204		)	(161		)	(43		)
Net cash used in investing activities	$	(3,022	)	$	(2,713	)	$	(309	)	$	(5,471	)	$	(5,788	)	$	317

The variance relates to ~~an increase in~~lower capital expenditures ~~due to higher overall investments primarily~~ in the ~~Commercial Renewables segment.~~



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

current year for plants now in service.

FINANCING CASH FLOWS

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


	Three Months Ended									Six Months Ended
	March 31,									June 30,
(in millions)	2020			2019			Variance			2020			2019			Variance
Issuances of long-term debt, net	$	1,662		$	1,536		$	126		$	1,837		$	2,467		$	(630	)
Issuances of common stock	40			13			27			57			27			30
Issuances of preferred stock	—			974			(974		)	—			973			(973		)
Notes payable, commercial paper and other short-term borrowings	1,569			(408		)	1,977			1,624			324			1,300
Dividends paid	(707		)	(649		)	(58		)	(1,391		)	(1,312		)	(79		)
Contributions from noncontrolling interests	103			6			97			163			193			(30		)
Other financing items	(74		)	(39		)	(35		)	(108		)	(50		)	(58		)
Net cash provided by financing activities	$	2,593		$	1,433		$	1,160		$	2,182		$	2,622		$	(440	)

The variance was primarily due to:

a ~~$1,977 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 364-day Term Loan Credit Agreement.

Partially offset by:


•	a $~~974~~973 million decrease in proceeds from the issuance of preferred ~~stock.~~stock; and

a $630 million decrease in proceeds from net issuances of long-term debt primarily due to the timing of issuances and redemptions of long-term 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.

114



MD&A	OTHER MATTERS

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

Section 126 Petitions

On November 16, 2016, the state of Maryland filed a petition with EPA under Section 126 of the Clean Air Act alleging that 19 power plants, including two plants (three units) that Duke Energy Registrants own and operate, contribute to violations of EPA’s National Ambient Air Quality Standards (NAAQS) for ozone in the state of Maryland. On March 12, 2018, the state of New York filed a petition with EPA, also under Section 126 of the Clean Air Act alleging that over 60 power plants, including six that Duke Energy Registrants own and operate, contribute to violations of EPA’s ozone NAAQS in the state of New York. Both Maryland and New York sought EPA orders requiring the states in which the named power plants operate to impose more 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 New York appealed that decision on October 29, 2019. On May 19, 2020, the U.S. Court of Appeals for the D.C. Circuit issued its decision, finding, with one exception, that EPA reasonably denied the Maryland petition. The court remanded one issue to EPA regarding target sources lacking catalytic controls. All of the Duke Energy units targeted have selective catalytic reduction so the decision is favorable for these 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 Registrants cannot predict the outcome of this matter.

Off-Balance Sheet Arrangements

During the three and six months ended ~~March 31,~~June 30, 2020, there were no material changes to Duke Energy’s off-balance sheet arrangements. See ~~Note~~Notes 1, 3, 4 and 11 ~~– Variable Interest Entities and Note 13 – Stockholders' Equity~~ 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, "Stockholders' Equity," for information regarding ~~ACP and~~ equity forward sales agreements. For additional information on Duke Energy’s off-balance sheet arrangements, see “Off-Balance Sheet Arrangements” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 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 six months ended ~~March 31,~~June 30, 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, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE 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 ~~March 31,~~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 ~~is expected to result~~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 ~~March 31,~~June 30, 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 ~~March 31,~~June 30, 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, 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, 2019, which could materially affect the Duke Energy Registrants’ financial condition or future results. ~~As described in the Duke Energy Form 8-K Filing on May 8, 2020, the~~The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019.

The Duke Energy Registrants’ operations have been and may be affected by COVID-19 in ways listed below and in ways the registrants cannot predict at this time.

The COVID-19 pandemic has begun to impact the Duke Energy Registrants' business strategy, results of operations, financial position and cash flows, albeit not materially as of this filing date, from specific activities listed below:

Decreased demand for electricity and natural gas;

Delays in rate cases and other legal proceedings; ~~and~~

The health and availability of our critical personnel and their ability to perform business ~~functions.~~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, ~~to certain assets, including goodwill;~~which could include real estate as options for working remotely are evaluated 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.~~ 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

4.1

~~One-Hundred and Second~~Twenty-third Supplemental Indenture, dated as of ~~August 14, 2019 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on January 8, 2020, File No. 1-4928).~~

~~4.2~~

One-Hundred and Third Supplemental Indenture, dated as of January 8, 2020 (incorporated by reference to Exhibit 4.2 to Registrant’s Current Report on Form 8-K filed on January 8, 2020, File No. 1-4928).

~~4.3~~

One-Hundred and Fourth Supplemental Indenture, dated as of January 8, 2020 (incorporated by reference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K filed on January 8, 2020, File No. 1-4928).

~~4.4~~

~~Seventieth Supplemental Indenture, dated as of March 12,~~May 15, 2020 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on ~~March 12, 2020, File No. 1-3543).~~

~~10.1~~

Amendment No. 5 and Consent, dated as of March 16, 2020, among Registrants, the Lenders party thereto, the Issuing Lenders party thereto, and Wells Fargo Bank, N.A., as Administrative Agent, and Swingline Lender (incorporated by reference to Exhibit 10.1 to Registrants' Current Report on Form 8-K, filed on March 17, 2020, File Nos. 1-32853, 1-4928, 1-3382, 1-3274, 1-1232, 1-3543, 1-6196).

~~10.2~~

$1.5 billion 364-Day Term Loan Credit Agreement, dated as of March 19, 2020, among the Registrant, as Borrower, certain Lenders from time to time parties thereto, and PNC Bank, N.A., as Administrative Agent, and Registrant's borrowing of the remaining $500 million under Registrant's existing $1 billion revolving credit facility on March 17, 2020 (incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on March 19,May 15, 2020, File No. 1-32853).

*10.2.14.2

~~Joinder Agreement,~~Forty-seventh Supplemental Indenture, dated as of ~~March 27,~~May 21, 2020 (incorporated by ~~and among the Registrant, each of the Incremental Lenders listed therein, and PNC BANK, N.A., as Administrative Agent.~~reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on May 21, 2020, File No. 1-1232).

4.3

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

~~10.3~~4.4

~~Duke Energy Carolinas Summary~~Fifty-seventh Supplemental Indenture, dated as of ~~Partial Settlement in North Carolina Rate Case~~June 1, 2020 (incorporated by reference to Exhibit ~~99.1~~4.1 to ~~Registrants’~~Registrant’s Current Report on Form 8-K filed on ~~March 26,~~June 11, 2020, File ~~Nos. 1-32853, 1-4928, 1-3382)~~No. 1-3274).

~~*10.4**~~

~~Performance Award Agreement~~



~~EXHIBITS~~

*31.1.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.2

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.3

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.4

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.5

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.6

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.7

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.8

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.1

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.2

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.3

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.4

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.5

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

118



EXHIBITS

*31.2.6

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*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.



~~EXHIBITS~~

*32.1.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.8

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.3

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.4

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.5

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.6

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.8

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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).

*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:	~~May 12,~~August 10, 2020	/s/ STEVEN K. YOUNG
		Steven K. Young Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date:	~~May 12,~~August 10, 2020	/s/ DWIGHT L. JACOBS
		Dwight L. Jacobs Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)

~~115~~121