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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2021March 31, 2022
OR
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________to_________
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| 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)
526 South Church Street
Charlotte, North Carolina 28202-1803
704-382-3853
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| 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
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| 1-15929 | PROGRESS ENERGY, INC. | 56-2155481 |
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
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| 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
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| 1-3274 | DUKE ENERGY FLORIDA, LLC | 59-0247770 |
(a Florida limited liability company)
299 First Avenue North
St. Petersburg, Florida 33701
704-382-3853
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| 1-1232 | DUKE ENERGY OHIO, INC. | 31-0240030 |
(an Ohio corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
704-382-3853
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| 1-3543 | DUKE ENERGY INDIANA, LLC | 35-0594457 |
(an Indiana limited liability company)
1000 East Main Street
Plainfield, Indiana 46168
704-382-3853
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| 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 5.625% 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.
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| 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).
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| 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.
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| Duke Energy | Large Accelerated Filer | ☒ | Accelerated filer | ☐ | Non-accelerated Filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Duke Energy Carolinas | Large Accelerated Filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Progress Energy | Large Accelerated Filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Duke Energy Progress | Large Accelerated Filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Duke Energy Florida | Large Accelerated Filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Duke Energy Ohio | Large Accelerated Filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Duke Energy Indiana | Large Accelerated Filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Piedmont | Large Accelerated Filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Duke Energy | Yes | ☐ | No | ☒ | | Duke Energy Florida | Yes | ☐ | No | ☒ |
| Duke Energy Carolinas | Yes | ☐ | No | ☒ | | Duke Energy Ohio | Yes | ☐ | No | ☒ |
| Progress Energy | Yes | ☐ | No | ☒ | | Duke Energy Indiana | Yes | ☐ | No | ☒ |
| Duke Energy Progress | Yes | ☐ | No | ☒ | | Piedmont | Yes | ☐ | No | ☒ |
Number of shares of common stock outstanding at October 31, 2021:April 30, 2022:
| | | | | | | | |
| Registrant | Description | Shares |
| Duke Energy | Common stock, $0.001 par value | 769,343,372769,900,482 |
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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
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| PART I. FINANCIAL INFORMATION |
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| Piedmont Natural Gas Company, Inc. Financial Statements | |
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| Note 1 – Organization and Basis of Presentation | |
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| Note 2 – Business Segments | |
| Note 3 – Regulatory Matters | |
| Note 4 – Commitments and Contingencies | |
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| Note 5 – Debt and Credit Facilities | |
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| Note 6 – Goodwill | |
| Note 7 – Related Party Transactions | |
| Note 8 – Derivatives and Hedging | |
| Note 9 – Investments in Debt and Equity Securities | |
| Note 10 – Fair Value Measurements | |
| Note 11 – Variable Interest Entities | |
| Note 12 – Revenue | |
| Note 13 – Stockholders' Equity | |
| Note 14 – Employee Benefit Plans | |
| Note 15 – Income Taxes | |
| Note 16 – Subsequent Events | |
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| PART II. OTHER INFORMATION |
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| 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, asset retirement and construction costs related to carbon emissions reductions, 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, natural gas building and appliance electrification, 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, natural gas electrification, and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in a reduced number of customers, leaving the electric distribution system, excess generation resources as well as stranded costs;
◦Advancements in technology;
◦Additional competition in electric and natural gas markets and continued industry consolidation;
◦The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
◦Changing investor, customer and other stakeholder expectations and demands including heightened emphasis on environmental, social and governance concerns;
◦The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources;
◦Operational interruptions to our natural gas distribution and transmission activities;
◦The availability of adequate interstate pipeline transportation capacity and natural gas supply;
◦The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
◦The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
◦The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
◦The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions, an individual utility's generation mix, 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;
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| FORWARD-LOOKING STATEMENTS | |
◦The ability to obtain adequate insurance at acceptable costs;
◦Employee workforce factors, including the potential inability to attract and retain key personnel;
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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 U.S. tax legislation to our financial condition, results of operations or cash flows and our credit ratings;
◦The impacts from potential impairments of goodwill or equity method investment carrying values;
◦Asset or business acquisitions and dispositions, including our ability to successfully consummate the second closing of the minority investment in Duke Energy Indiana, may not yield the anticipated benefits;
◦The actions of activist shareholders could disrupt our operations, impact our ability to execute on our business strategy, or cause fluctuations in the trading price of our common stock; and
◦The ability to implement our business strategy, including enhancing existing technology systems.its carbon emission reduction goals.
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
The following terms or acronyms used in this Form 10-Q are defined below:
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| Term or Acronym | Definition |
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2013 Settlement | Revised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida Office of Public Counsel and other customer representatives |
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| 2017 Settlement | Second Revised and Restated Settlement Agreement in 2017 among Duke Energy Florida, the Florida Office of Public Counsel and other customer representatives, which replaces and supplants the 2013 Settlement |
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| 2021 Settlement | Settlement Agreement in 2021 among Duke Energy Florida, the Florida Office of Public Counsel, the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PSC Phosphate and NUCOR Steel Florida, Inc. |
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| ACP | Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Inc. and Duke Energy |
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ACP pipeline | The approximately 600-mile canceled interstate natural gas pipeline |
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| AFS | Available for Sale |
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| AFUDC | Allowance for funds used during construction |
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| ARO | Asset retirement obligations |
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| Bison | Bison Insurance Company Limited |
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Board | Duke Energy Board of Directors |
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| CCR | Coal Combustion Residuals |
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Coal Ash Act | North Carolina Coal Ash Management Act of 2014 |
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| the company | Duke Energy Corporation and its subsidiaries |
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| COVID-19 | Coronavirus Disease 2019 |
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| CRC | Cinergy Receivables Company, LLC |
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| Crystal River Unit 3 | Crystal River Unit 3 Nuclear Plant |
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| DEFPF | Duke Energy Florida Project Finance, LLC |
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| DEFR | Duke Energy Florida Receivables, LLC |
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| DEPR | Duke Energy Progress Receivables, LLC |
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| DERF | Duke Energy Receivables Finance Company, LLC |
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| DOE | Department of Energy |
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| Duke Energy | Duke Energy Corporation (collectively with its subsidiaries) |
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| Duke Energy Ohio | Duke Energy Ohio, Inc. |
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| Duke Energy Progress | Duke Energy Progress, LLC |
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| Duke Energy Carolinas | Duke Energy Carolinas, LLC |
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| Duke Energy Florida | Duke Energy Florida, LLC |
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| Duke Energy Indiana | Duke Energy Indiana, LLC |
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Duke Energy Kentucky | Duke Energy Kentucky, Inc. |
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Duke Energy Registrants | Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont |
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| EDIT | Excess deferred income tax |
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ElliottEPS | Elliott Investment Management, L.P.Earnings Per Share |
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EPSERCOT | Earnings Per ShareElectric Reliability Council of Texas |
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| ETR | Effective tax rate |
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| Exchange Act | Securities Exchange Act of 1934 |
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| FERC | Federal Energy Regulatory Commission |
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| FPSC | Florida Public Service Commission |
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| FTR | Financial transmission rights |
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| GAAP | Generally accepted accounting principles in the U.S. |
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| GAAP Reported Earnings | Net Income Available to Duke Energy Corporation Common Stockholders |
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| GAAP Reported EPS | Basic Earnings Per Share Available to Duke Energy Corporation common stockholders |
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| GIC | GIC Private Limited, Singapore's sovereign wealth fund and an experienced investor in U.S. infrastructure |
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| GWh | Gigawatt-hours |
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IMR | Integrity Management Rider |
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| IRS | Internal Revenue Service |
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| Investment Trusts | NDTF investments and grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana |
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| IURC | Indiana Utility Regulatory Commission |
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| KPSC | Kentucky Public Service Commission |
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| LLC | Limited Liability Company |
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| MGP | Manufactured gas plant |
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| MGP Settlement | Stipulation and Recommendation filed jointly by Duke Energy Ohio the staff of the PUCO, the Office of the Ohio Consumers' Counsel and the Ohio Energy Group on August 31, 2021 |
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| MW | Megawatt |
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| MWh | Megawatt-hour |
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| NCUC | North Carolina Utilities Commission |
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| NDTF | Nuclear decommissioning trust funds |
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| NPNS | Normal purchase/normal sale |
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| OPEB | Other Post-Retirement Benefit Obligations |
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| OVEC | Ohio Valley Electric Corporation |
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| PBR | Performance-Based Regulation |
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| Piedmont | Piedmont Natural Gas Company, Inc. |
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| PJM | Pennsylvania-New Jersey-Maryland Interconnection |
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| PPA | Purchase Power Agreement |
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| Progress Energy | Progress Energy, Inc. |
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| PSCSC | Public Service Commission of South Carolina |
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| PUCO | Public Utilities Commission of Ohio |
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| RTO | Regional Transmission Organization |
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| Subsidiary Registrants | Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont |
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| the Tax Act | Tax Cuts and Jobs Act |
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| TPUC | Tennessee Public Utility Commission |
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| U.S. | United States |
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| VIE | Variable Interest Entity |
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WACC | Weighted Average Cost of Capital |
ITEM 1. FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| | September 30, | | September 30, | | | | March 31, |
| (in millions, except per share amounts) | (in millions, except per share amounts) | 2021 | | 2020 | | 2021 | | 2020 | (in millions, except per share amounts) | | | 2022 | | 2021 |
| Operating Revenues | Operating Revenues | | Operating Revenues | | |
| Regulated electric | Regulated electric | $ | 6,495 | | | $ | 6,315 | | | $ | 16,972 | | | $ | 16,402 | | Regulated electric | | | $ | 5,933 | | | $ | 5,219 | |
| Regulated natural gas | Regulated natural gas | 263 | | | 214 | | | 1,314 | | | 1,115 | | Regulated natural gas | | | 1,002 | | | 749 | |
| Nonregulated electric and other | Nonregulated electric and other | 193 | | | 192 | | | 573 | | | 574 | | Nonregulated electric and other | | | 197 | | | 182 | |
| Total operating revenues | Total operating revenues | 6,951 | | | 6,721 | | | 18,859 | | | 18,091 | | Total operating revenues | | | 7,132 | | | 6,150 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 1,844 | | | 1,849 | | | 4,702 | | | 4,645 | | Fuel used in electric generation and purchased power | | | 1,817 | | | 1,443 | |
| Cost of natural gas | Cost of natural gas | 75 | | | 41 | | | 430 | | | 299 | | Cost of natural gas | | | 481 | | | 276 | |
| Operation, maintenance and other | Operation, maintenance and other | 1,507 | | | 1,450 | | | 4,319 | | | 4,142 | | Operation, maintenance and other | | | 1,630 | | | 1,402 | |
| Depreciation and amortization | Depreciation and amortization | 1,265 | | | 1,217 | | | 3,698 | | | 3,497 | | Depreciation and amortization | | | 1,320 | | | 1,226 | |
| Property and other taxes | Property and other taxes | 371 | | | 324 | | | 1,073 | | | 1,003 | | Property and other taxes | | | 392 | | | 353 | |
| Impairment of assets and other charges | Impairment of assets and other charges | 211 | | | 28 | | | 342 | | | 36 | | Impairment of assets and other charges | | | 215 | | | — | |
| Total operating expenses | Total operating expenses | 5,273 | | | 4,909 | | | 14,564 | | | 13,622 | | Total operating expenses | | | 5,855 | | | 4,700 | |
| Gains on Sales of Other Assets and Other, net | Gains on Sales of Other Assets and Other, net | 9 | | | 2 | | | 11 | | | 10 | | Gains on Sales of Other Assets and Other, net | | | 2 | | | — | |
| Operating Income | Operating Income | 1,687 | | | 1,814 | | | 4,306 | | | 4,479 | | Operating Income | | | 1,279 | | | 1,450 | |
| Other Income and Expenses | Other Income and Expenses | | Other Income and Expenses | | |
| Equity in earnings (losses) of unconsolidated affiliates | Equity in earnings (losses) of unconsolidated affiliates | 22 | | | (80) | | | 14 | | | (2,004) | | Equity in earnings (losses) of unconsolidated affiliates | | | 25 | | | (17) | |
| Other income and expenses, net | Other income and expenses, net | 238 | | | 127 | | | 493 | | | 310 | | Other income and expenses, net | | | 89 | | | 127 | |
| Total other income and expenses | Total other income and expenses | 260 | | | 47 | | | 507 | | | (1,694) | | Total other income and expenses | | | 114 | | | 110 | |
| Interest Expense | Interest Expense | 581 | | | 522 | | | 1,688 | | | 1,627 | | Interest Expense | | | 587 | | | 535 | |
| Income Before Income Taxes | Income Before Income Taxes | 1,366 | | | 1,339 | | | 3,125 | | | 1,158 | | Income Before Income Taxes | | | 806 | | | 1,025 | |
| Income Tax Expense (Benefit) | 90 | | | 105 | | | 210 | | | (74) | | |
| Income Tax (Benefit) Expense | | Income Tax (Benefit) Expense | | | (14) | | | 84 | |
| | Net Income | Net Income | 1,276 | | | 1,234 | | | 2,915 | | | 1,232 | | Net Income | | | 820 | | | 941 | |
| Add: Net Loss Attributable to Noncontrolling Interests | Add: Net Loss Attributable to Noncontrolling Interests | 129 | | | 70 | | | 247 | | | 208 | | Add: Net Loss Attributable to Noncontrolling Interests | | | 37 | | | 51 | |
| Net Income Attributable to Duke Energy Corporation | Net Income Attributable to Duke Energy Corporation | 1,405 | | | 1,304 | | | 3,162 | | | 1,440 | | Net Income Attributable to Duke Energy Corporation | | | 857 | | | 992 | |
| Less: Preferred Dividends | Less: Preferred Dividends | 39 | | | 39 | | | 92 | | | 93 | | Less: Preferred Dividends | | | 39 | | | 39 | |
| Net Income Available to Duke Energy Corporation Common Stockholders | Net Income Available to Duke Energy Corporation Common Stockholders | $ | 1,366 | | | $ | 1,265 | | | $ | 3,070 | | | $ | 1,347 | | Net Income Available to Duke Energy Corporation Common Stockholders | | | $ | 818 | | | $ | 953 | |
| | Earnings Per Share – Basic and Diluted | Earnings Per Share – Basic and Diluted | | Earnings Per Share – Basic and Diluted | | |
| | Net income available to Duke Energy Corporation common stockholders | Net income available to Duke Energy Corporation common stockholders | | Net income available to Duke Energy Corporation common stockholders | | |
| Basic and Diluted | Basic and Diluted | $ | 1.79 | | | $ | 1.74 | | | $ | 4.00 | | | $ | 1.85 | | Basic and Diluted | | | $ | 1.08 | | | $ | 1.25 | |
| | Weighted Average Shares Outstanding | Weighted Average Shares Outstanding | | Weighted Average Shares Outstanding | | |
| Basic and Diluted | Basic and Diluted | 769 | | | 735 | | | 769 | | | 735 | | Basic and Diluted | | | 770 | | | 769 | |
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See Notes to Condensed Consolidated Financial Statements
9
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | Three Months Ended |
| | September 30, | | September 30, | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | 2022 | | 2021 |
| Net Income | Net Income | $ | 1,276 | | | $ | 1,234 | | | $ | 2,915 | | | $ | 1,232 | | Net Income | | $ | 820 | | | $ | 941 | |
Other Comprehensive Income (Loss), net of tax(a) | Other Comprehensive Income (Loss), net of tax(a) | | Other Comprehensive Income (Loss), net of tax(a) | | |
| | Pension and OPEB adjustments | Pension and OPEB adjustments | 1 | | | 1 | | | 3 | | | 1 | | Pension and OPEB adjustments | | 2 | | | 2 | |
| Net unrealized gains (losses) on cash flow hedges | 9 | | | (83) | | | (59) | | | (159) | | |
| Net unrealized gains on cash flow hedges | | Net unrealized gains on cash flow hedges | | 113 | | | 29 | |
| Reclassification into earnings from cash flow hedges | Reclassification into earnings from cash flow hedges | 2 | | | 4 | | | 9 | | | 8 | | Reclassification into earnings from cash flow hedges | | 5 | | | 3 | |
| | Unrealized (losses) gains on available-for-sale securities | (2) | | | (2) | | | (6) | | | 5 | | |
| Unrealized losses on available-for-sale securities | | Unrealized losses on available-for-sale securities | | (13) | | | (8) | |
| | Other Comprehensive Income (Loss), net of tax | 10 | | | (80) | | | (53) | | | (145) | | |
| Other Comprehensive Income, net of tax | | Other Comprehensive Income, net of tax | | 107 | | | 26 | |
| Comprehensive Income | Comprehensive Income | 1,286 | | | 1,154 | | | 2,862 | | | 1,087 | | Comprehensive Income | | 927 | | | 967 | |
| Add: Comprehensive Loss Attributable to Noncontrolling Interests | Add: Comprehensive Loss Attributable to Noncontrolling Interests | 128 | | | 70 | | | 240 | | | 220 | | Add: Comprehensive Loss Attributable to Noncontrolling Interests | | 29 | | | 44 | |
| Comprehensive Income Attributable to Duke Energy | Comprehensive Income Attributable to Duke Energy | 1,414 | | | 1,224 | | | 3,102 | | | 1,307 | | Comprehensive Income Attributable to Duke Energy | | 956 | | | 1,011 | |
| Less: Preferred Dividends | Less: Preferred Dividends | 39 | | | 39 | | | 92 | | | 93 | | Less: Preferred Dividends | | 39 | | | 39 | |
| Comprehensive Income Available to Duke Energy Corporation Common Stockholders | Comprehensive Income Available to Duke Energy Corporation Common Stockholders | $ | 1,375 | | | $ | 1,185 | | | $ | 3,010 | | | $ | 1,214 | | Comprehensive Income Available to Duke Energy Corporation Common Stockholders | | $ | 917 | | | $ | 972 | |
(a)Net of income tax impacts of approximately $24$32 million and $8 million for the three months ended September 30, 2020,March 31, 2022, and $16 million and $43 million for the nine months ended September 30, 2021, and 2020, respectively. All other periods presented include immaterial income tax impacts.
See Notes to Condensed Consolidated Financial Statements
10
DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
| | (in millions) | (in millions) | September 30, 2021 | | December 31, 2020 | (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | ASSETS | | ASSETS | |
| Current Assets | Current Assets | | Current Assets | |
| Cash and cash equivalents | Cash and cash equivalents | $ | 548 | | | $ | 259 | | Cash and cash equivalents | $ | 853 | | | $ | 343 | |
| | Receivables (net of allowance for doubtful accounts of $48 at 2021 and $29 at 2020) | 998 | | | 1,009 | | |
| Receivables of VIEs (net of allowance for doubtful accounts of $75 at 2021 and $117 at 2020) | 2,431 | | | 2,144 | | |
| Receivables (net of allowance for doubtful accounts of $68 at 2022 and $46 at 2021) | | Receivables (net of allowance for doubtful accounts of $68 at 2022 and $46 at 2021) | 1,148 | | | 1,173 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $72 at 2022 and $76 at 2021) | | Receivables of VIEs (net of allowance for doubtful accounts of $72 at 2022 and $76 at 2021) | 2,590 | | | 2,437 | |
| Inventory | Inventory | 2,900 | | | 3,167 | | Inventory | 3,171 | | | 3,199 | |
| | Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs) | 1,791 | | | 1,641 | | |
| Other (includes $347 at 2021 and $296 at 2020 related to VIEs) | 768 | | | 462 | | |
| Regulatory assets (includes $105 at 2022 and 2021 related to VIEs) | | Regulatory assets (includes $105 at 2022 and 2021 related to VIEs) | 2,334 | | | 2,150 | |
| Other (includes $249 at 2022 and $256 at 2021 related to VIEs) | | Other (includes $249 at 2022 and $256 at 2021 related to VIEs) | 946 | | | 638 | |
| Total current assets | Total current assets | 9,436 | | | 8,682 | | Total current assets | 11,042 | | | 9,940 | |
| Property, Plant and Equipment | Property, Plant and Equipment | | Property, Plant and Equipment | |
| Cost | Cost | 160,652 | | | 155,580 | | Cost | 163,700 | | | 161,819 | |
| Accumulated depreciation and amortization | Accumulated depreciation and amortization | (50,543) | | | (48,827) | | Accumulated depreciation and amortization | (51,517) | | | (50,555) | |
| Facilities to be retired, net | Facilities to be retired, net | 127 | | | 29 | | Facilities to be retired, net | 133 | | | 144 | |
| Net property, plant and equipment | Net property, plant and equipment | 110,236 | | | 106,782 | | Net property, plant and equipment | 112,316 | | | 111,408 | |
| Other Noncurrent Assets | Other Noncurrent Assets | | Other Noncurrent Assets | |
| Goodwill | Goodwill | 19,303 | | | 19,303 | | Goodwill | 19,303 | | | 19,303 | |
| Regulatory assets (includes $896 at 2021 and $937 at 2020 related to VIEs) | 12,247 | | | 12,421 | | |
| Regulatory assets (includes $1,800 at 2022 and $1,823 at 2021 related to VIEs) | | Regulatory assets (includes $1,800 at 2022 and $1,823 at 2021 related to VIEs) | 12,506 | | | 12,487 | |
| Nuclear decommissioning trust funds | Nuclear decommissioning trust funds | 9,861 | | | 9,114 | | Nuclear decommissioning trust funds | 9,827 | | | 10,401 | |
| Operating lease right-of-use assets, net | Operating lease right-of-use assets, net | 1,287 | | | 1,524 | | Operating lease right-of-use assets, net | 1,255 | | | 1,266 | |
| Investments in equity method unconsolidated affiliates | Investments in equity method unconsolidated affiliates | 951 | | | 961 | | Investments in equity method unconsolidated affiliates | 976 | | | 970 | |
| | Other (includes $134 at 2021 and $81 at 2020 related to VIEs) | 3,686 | | | 3,601 | | |
| Other (includes $111 at 2022 and $92 at 2021 related to VIEs) | | Other (includes $111 at 2022 and $92 at 2021 related to VIEs) | 3,995 | | | 3,812 | |
| Total other noncurrent assets | Total other noncurrent assets | 47,335 | | | 46,924 | | Total other noncurrent assets | 47,862 | | | 48,239 | |
| Total Assets | Total Assets | $ | 167,007 | | | $ | 162,388 | | Total Assets | $ | 171,220 | | | $ | 169,587 | |
| LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | | LIABILITIES AND EQUITY | |
| Current Liabilities | Current Liabilities | | Current Liabilities | |
| Accounts payable | Accounts payable | $ | 2,888 | | | $ | 3,144 | | Accounts payable | $ | 3,175 | | | $ | 3,629 | |
| Notes payable and commercial paper | Notes payable and commercial paper | 2,098 | | | 2,873 | | Notes payable and commercial paper | 3,262 | | | 3,304 | |
| Taxes accrued | Taxes accrued | 908 | | | 482 | | Taxes accrued | 642 | | | 749 | |
| Interest accrued | Interest accrued | 558 | | | 537 | | Interest accrued | 575 | | | 533 | |
| Current maturities of long-term debt (includes $221 at 2021 and $472 at 2020 related to VIEs) | 4,873 | | | 4,238 | | |
| Current maturities of long-term debt (includes $395 at 2022 and $243 at 2021 related to VIEs) | | Current maturities of long-term debt (includes $395 at 2022 and $243 at 2021 related to VIEs) | 3,884 | | | 3,387 | |
| | Asset retirement obligations | Asset retirement obligations | 673 | | | 718 | | Asset retirement obligations | 648 | | | 647 | |
| Regulatory liabilities | Regulatory liabilities | 1,319 | | | 1,377 | | Regulatory liabilities | 1,238 | | | 1,211 | |
| Other | Other | 2,239 | | | 2,936 | | Other | 2,001 | | | 2,471 | |
| Total current liabilities | Total current liabilities | 15,556 | | | 16,305 | | Total current liabilities | 15,425 | | | 15,931 | |
| Long-Term Debt (includes $3,923 at 2021 and $3,535 at 2020 related to VIEs) | 57,929 | | | 55,625 | | |
| Long-Term Debt (includes $4,687 at 2022 and $4,854 at 2021 related to VIEs) | | Long-Term Debt (includes $4,687 at 2022 and $4,854 at 2021 related to VIEs) | 62,196 | | | 60,448 | |
| Other Noncurrent Liabilities | Other Noncurrent Liabilities | | Other Noncurrent Liabilities | |
| Deferred income taxes | Deferred income taxes | 9,875 | | | 9,244 | | Deferred income taxes | 9,673 | | | 9,379 | |
| Asset retirement obligations | Asset retirement obligations | 12,278 | | | 12,286 | | Asset retirement obligations | 12,112 | | | 12,129 | |
| Regulatory liabilities | Regulatory liabilities | 15,530 | | | 15,029 | | Regulatory liabilities | 16,037 | | | 16,152 | |
| Operating lease liabilities | Operating lease liabilities | 1,093 | | | 1,340 | | Operating lease liabilities | 1,068 | | | 1,074 | |
| Accrued pension and other post-retirement benefit costs | Accrued pension and other post-retirement benefit costs | 988 | | | 969 | | Accrued pension and other post-retirement benefit costs | 832 | | | 855 | |
| Investment tax credits | Investment tax credits | 804 | | | 687 | | Investment tax credits | 831 | | | 833 | |
| | Other (includes $341 at 2021 and $316 at 2020 related to VIEs) | 1,714 | | | 1,719 | | |
| Other (includes $360 at 2022 and $319 at 2021 related to VIEs) | | Other (includes $360 at 2022 and $319 at 2021 related to VIEs) | 1,794 | | | 1,650 | |
| Total other noncurrent liabilities | Total other noncurrent liabilities | 42,282 | | | 41,274 | | Total other noncurrent liabilities | 42,347 | | | 42,072 | |
| Commitments and Contingencies | Commitments and Contingencies | 0 | | 0 | Commitments and Contingencies | 0 | | 0 |
| Equity | Equity | | Equity | |
| Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2021 and 2020 | 973 | | | 973 | | |
| Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2021 and 2020 | 989 | | | 989 | | |
| Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2021 and 2020 | 1 | | | 1 | | |
| Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021 | | Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021 | 973 | | | 973 | |
| Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021 | | Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021 | 989 | | | 989 | |
| Common stock, $0.001 par value, 2 billion shares authorized; 770 million shares outstanding at 2022 and 769 million shares outstanding at 2021 | | Common stock, $0.001 par value, 2 billion shares authorized; 770 million shares outstanding at 2022 and 769 million shares outstanding at 2021 | 1 | | | 1 | |
| Additional paid-in capital | Additional paid-in capital | 44,348 | | | 43,767 | | Additional paid-in capital | 44,364 | | | 44,371 | |
| Retained earnings | Retained earnings | 3,293 | | | 2,471 | | Retained earnings | 3,323 | | | 3,265 | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | (297) | | | (237) | | Accumulated other comprehensive loss | (204) | | | (303) | |
| Total Duke Energy Corporation stockholders' equity | Total Duke Energy Corporation stockholders' equity | 49,307 | | | 47,964 | | Total Duke Energy Corporation stockholders' equity | 49,446 | | | 49,296 | |
| Noncontrolling interests | Noncontrolling interests | 1,933 | | | 1,220 | | Noncontrolling interests | 1,806 | | | 1,840 | |
| Total equity | Total equity | 51,240 | | | 49,184 | | Total equity | 51,252 | | | 51,136 | |
| Total Liabilities and Equity | Total Liabilities and Equity | $ | 167,007 | | | $ | 162,388 | | Total Liabilities and Equity | $ | 171,220 | | | $ | 169,587 | |
See Notes to Condensed Consolidated Financial Statements
11
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | Nine Months Ended | | Three Months Ended |
| | September 30, | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | CASH FLOWS FROM OPERATING ACTIVITIES | | CASH FLOWS FROM OPERATING ACTIVITIES | |
| Net income | Net income | $ | 2,915 | | | $ | 1,232 | | Net income | $ | 820 | | | $ | 941 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | | Adjustments to reconcile net income to net cash provided by operating activities: | |
| Depreciation, amortization and accretion (including amortization of nuclear fuel) | Depreciation, amortization and accretion (including amortization of nuclear fuel) | 4,189 | | | 4,081 | | Depreciation, amortization and accretion (including amortization of nuclear fuel) | 1,480 | | | 1,385 | |
| Equity in (earnings) losses of unconsolidated affiliates | Equity in (earnings) losses of unconsolidated affiliates | (14) | | | 2,004 | | Equity in (earnings) losses of unconsolidated affiliates | (25) | | | 17 | |
| Equity component of AFUDC | Equity component of AFUDC | (126) | | | (112) | | Equity component of AFUDC | (46) | | | (42) | |
| | Impairment of assets and other charges | Impairment of assets and other charges | 342 | | | 36 | | Impairment of assets and other charges | 215 | | | — | |
| Deferred income taxes | Deferred income taxes | 206 | | | 210 | | Deferred income taxes | (11) | | | 86 | |
| | Payments for asset retirement obligations | Payments for asset retirement obligations | (389) | | | (463) | | Payments for asset retirement obligations | (119) | | | (114) | |
| | Provision for rate refunds | Provision for rate refunds | (41) | | | (15) | | Provision for rate refunds | (31) | | | — | |
| Refund of AMT credit carryforwards | — | | | 572 | | |
| | (Increase) decrease in | (Increase) decrease in | | (Increase) decrease in | |
| Net realized and unrealized mark-to-market and hedging transactions | Net realized and unrealized mark-to-market and hedging transactions | 116 | | | 87 | | Net realized and unrealized mark-to-market and hedging transactions | 215 | | | — | |
| Receivables | Receivables | (167) | | | 58 | | Receivables | 5 | | | 377 | |
| Inventory | Inventory | 268 | | | 43 | | Inventory | 28 | | | 91 | |
| Other current assets | Other current assets | (643) | | | 199 | | Other current assets | (327) | | | (47) | |
| Increase (decrease) in | Increase (decrease) in | | Increase (decrease) in | |
| Accounts payable | Accounts payable | (146) | | | (563) | | Accounts payable | (160) | | | (467) | |
| Taxes accrued | Taxes accrued | 431 | | | 386 | | Taxes accrued | (90) | | | 104 | |
| Other current liabilities | Other current liabilities | 10 | | | (284) | | Other current liabilities | (269) | | | (263) | |
| Other assets | Other assets | 199 | | | (338) | | Other assets | (26) | | | 51 | |
| Other liabilities | Other liabilities | 77 | | | (367) | | Other liabilities | 136 | | | (31) | |
| Net cash provided by operating activities | Net cash provided by operating activities | 7,227 | | | 6,766 | | Net cash provided by operating activities | 1,795 | | | 2,088 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | CASH FLOWS FROM INVESTING ACTIVITIES | | CASH FLOWS FROM INVESTING ACTIVITIES | |
| Capital expenditures | Capital expenditures | (7,089) | | | (7,408) | | Capital expenditures | (2,551) | | | (2,215) | |
| | Contributions to equity method investments | Contributions to equity method investments | (30) | | | (276) | | Contributions to equity method investments | (17) | | | — | |
| | Purchases of debt and equity securities | Purchases of debt and equity securities | (4,292) | | | (6,160) | | Purchases of debt and equity securities | (1,516) | | | (1,584) | |
| Proceeds from sales and maturities of debt and equity securities | Proceeds from sales and maturities of debt and equity securities | 4,335 | | | 6,087 | | Proceeds from sales and maturities of debt and equity securities | 1,530 | | | 1,601 | |
| | Disbursements to canceled equity method investments | Disbursements to canceled equity method investments | (855) | | | — | | Disbursements to canceled equity method investments | — | | | (855) | |
| Other | Other | (269) | | | (207) | | Other | (145) | | | (84) | |
| Net cash used in investing activities | Net cash used in investing activities | (8,200) | | | (7,964) | | Net cash used in investing activities | (2,699) | | | (3,137) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | CASH FLOWS FROM FINANCING ACTIVITIES | | CASH FLOWS FROM FINANCING ACTIVITIES | |
| Proceeds from the: | Proceeds from the: | | Proceeds from the: | |
| Issuance of long-term debt | Issuance of long-term debt | 6,379 | | | 6,162 | | Issuance of long-term debt | 3,506 | | | 608 | |
| | Issuance of common stock | Issuance of common stock | 5 | | | 75 | | Issuance of common stock | — | | | 5 | |
| | Payments for the redemption of long-term debt | Payments for the redemption of long-term debt | (3,696) | | | (3,468) | | Payments for the redemption of long-term debt | (1,215) | | | (76) | |
| | Proceeds from the issuance of short-term debt with original maturities greater than 90 days | Proceeds from the issuance of short-term debt with original maturities greater than 90 days | 109 | | | 2,372 | | Proceeds from the issuance of short-term debt with original maturities greater than 90 days | — | | | 50 | |
| Payments for the redemption of short-term debt with original maturities greater than 90 days | Payments for the redemption of short-term debt with original maturities greater than 90 days | (997) | | | (1,143) | | Payments for the redemption of short-term debt with original maturities greater than 90 days | (257) | | | (909) | |
| Notes payable and commercial paper | Notes payable and commercial paper | 165 | | | (969) | | Notes payable and commercial paper | 213 | | | 2,046 | |
| | Contributions from noncontrolling interests | Contributions from noncontrolling interests | 1,556 | | | 402 | | Contributions from noncontrolling interests | 23 | | | 303 | |
| Dividends paid | Dividends paid | (2,340) | | | (2,113) | | Dividends paid | (799) | | | (783) | |
| | Other | Other | (21) | | | (93) | | Other | (67) | | | (59) | |
| Net cash provided by financing activities | Net cash provided by financing activities | 1,160 | | | 1,225 | | Net cash provided by financing activities | 1,404 | | | 1,185 | |
| | Net increase in cash, cash equivalents and restricted cash | Net increase in cash, cash equivalents and restricted cash | 187 | | | 27 | | Net increase in cash, cash equivalents and restricted cash | 500 | | | 136 | |
| Cash, cash equivalents and restricted cash at beginning of period | Cash, cash equivalents and restricted cash at beginning of period | 556 | | | 573 | | Cash, cash equivalents and restricted cash at beginning of period | 520 | | | 556 | |
| Cash, cash equivalents and restricted cash at end of period | Cash, cash equivalents and restricted cash at end of period | $ | 743 | | | $ | 600 | | Cash, cash equivalents and restricted cash at end of period | $ | 1,020 | | | $ | 692 | |
| Supplemental Disclosures: | Supplemental Disclosures: | | Supplemental Disclosures: | |
| | Significant non-cash transactions: | Significant non-cash transactions: | | Significant non-cash transactions: | |
| Accrued capital expenditures | Accrued capital expenditures | $ | 998 | | | $ | 992 | | Accrued capital expenditures | $ | 1,028 | | | $ | 921 | |
| Non-cash dividends | — | | | 82 | | |
| |
See Notes to Condensed Consolidated Financial Statements
12
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2020 and 2021 |
| | | | | | | | Accumulated Other Comprehensive | | | |
| | | | | | | | (Loss) Income | | | |
| | | | | | | | | Net Unrealized | | Total | | |
| | | | | | | | Net Gains | (Losses) Gains | | Duke Energy | | |
| | | Common | | Additional | | | (Losses) on | on Available- | Pension and | Corporation | | |
| | Preferred | Stock | Common | Paid-in | Retained | | Cash Flow | for-Sale- | OPEB | Stockholders' | Noncontrolling | Total |
| (in millions) | | Stock | Shares | Stock | Capital | Earnings | | Hedges | Securities | Adjustments | Equity | Interests | Equity |
| Balance at June 30, 2020 | | $ | 1,962 | | 735 | | $ | 1 | | $ | 40,997 | | $ | 2,707 | | | $ | (111) | | $ | 10 | | $ | (82) | | $ | 45,484 | | $ | 1,127 | | $ | 46,611 | |
| Net income (loss) | | — | | — | | — | | — | | 1,265 | | | — | | — | | — | | 1,265 | | (70) | | 1,195 | |
| Other comprehensive (loss) income | | — | | — | | — | | — | | — | | | (79) | | (2) | | 1 | | (80) | | — | | (80) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Common stock issuances, including dividend reinvestment and employee benefits | | — | | 1 | | — | | 65 | | — | | | — | | — | | — | | 65 | | — | | 65 | |
| | | | | | | | | | | | | |
| Common stock dividends | | — | | — | | — | | — | | (712) | | | — | | — | | — | | (712) | | — | | (712) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Contribution from noncontrolling interests, net of transaction costs(a) | | — | | — | | — | | (17) | | — | | | — | | — | | — | | (17) | | 239 | | 222 | |
| Distributions to noncontrolling interest in subsidiaries | | — | | — | | — | | — | | — | | | — | | — | | — | | — | | (8) | | (8) | |
| Other | | — | | — | | — | | 1 | | — | | | — | | — | | — | | 1 | | 1 | | 2 | |
| Balance at September 30, 2020 | | $ | 1,962 | | $ | 736 | | $ | 1 | | $ | 41,046 | | $ | 3,260 | | | $ | (190) | | $ | 8 | | $ | (81) | | $ | 46,006 | | $ | 1,289 | | $ | 47,295 | |
| | | | | | | | | | | | | |
| Balance at June 30, 2021 | | $ | 1,962 | | 769 | | $ | 1 | | $ | 43,788 | | $ | 2,687 | | | $ | (234) | | $ | 2 | | $ | (74) | | $ | 48,132 | | $ | 1,413 | | $ | 49,545 | |
| Net income (loss) | | — | | — | | — | | — | | 1,366 | | | — | | — | | — | | 1,366 | | (129) | | 1,237 | |
| Other comprehensive income (loss) | | — | | — | | — | | — | | — | | | 10 | | (2) | | 1 | | 9 | | 1 | | 10 | |
| | | | | | | | | | | | | |
| Common stock issuances, including dividend reinvestment and employee benefits | | — | | — | | — | | 20 | | — | | | — | | — | | — | | 20 | | — | | 20 | |
| | | | | | | | | | | | | |
| Common stock dividends | | — | | — | | — | | — | | (760) | | | — | | — | | — | | (760) | | — | | (760) | |
Sale of noncontrolling interest(c) | | — | | — | | — | | 545 | | — | | | — | | — | | — | | 545 | | 454 | | 999 | |
Contribution from noncontrolling interests, net of transaction costs(a) | | — | | — | | — | | (3) | | — | | | — | | — | | — | | (3) | | 213 | | 210 | |
| Distributions to noncontrolling interest in subsidiaries | | — | | — | | — | | — | | — | | | — | | — | | — | | — | | (22) | | (22) | |
| Other | | — | | — | | — | | (2) | | — | | | — | | — | | — | | (2) | | 3 | | 1 | |
| Balance at September 30, 2021 | | $ | 1,962 | | $ | 769 | | $ | 1 | | $ | 44,348 | | $ | 3,293 | | | $ | (224) | | $ | — | | $ | (73) | | $ | 49,307 | | $ | 1,933 | | $ | 51,240 | |
See Notes to Condensed Consolidated Financial Statements
13
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | Nine Months Ended September 30, 2020 and 2021 | | | Three Months Ended March 31, 2021 and 2022 |
| | | | | Accumulated Other Comprehensive | | | | | | Accumulated Other Comprehensive | |
| | | | | (Loss) Income | | | | | | (Loss) Income | |
| | | | | | Net Unrealized | | Total | | | | | | | Net Unrealized | | Total | |
| | | | | Net Gains | Gains (Losses) | | Duke Energy | | | | | | Net Gains | Gains (Losses) | | Duke Energy | |
| | | | Common | | Additional | | | (Losses) on | on Available- | Pension and | Corporation | | | | | Common | | Additional | | | (Losses) on | on Available- | Pension and | Corporation | |
| | | Preferred | Stock | Common | Paid-in | Retained | | Cash Flow | for-Sale- | OPEB | Stockholders' | Noncontrolling | Total | | | Preferred | Stock | Common | Paid-in | Retained | | Cash Flow | for-Sale- | OPEB | Stockholders' | Noncontrolling | Total |
| (in millions) | (in millions) | | Stock | Shares | Stock | Capital | Earnings | | Hedges | Securities | Adjustments | Equity | Interests | Equity | (in millions) | | Stock | Shares | Stock | Capital | Earnings | | Hedges | Securities | Adjustments | Equity | Interests | Equity |
| Balance at December 31, 2019 | | $ | 1,962 | | 733 | | $ | 1 | | $ | 40,881 | | $ | 4,108 | | | $ | (51) | | $ | 3 | | $ | (82) | | $ | 46,822 | | $ | 1,129 | | $ | 47,951 | | |
| Balance at December 31, 2020 | | Balance at December 31, 2020 | | $ | 1,962 | | 769 | | $ | 1 | | $ | 43,767 | | $ | 2,471 | | | $ | (167) | | $ | 6 | | $ | (76) | | $ | 47,964 | | $ | 1,220 | | $ | 49,184 | |
| Net income (loss) | Net income (loss) | | — | | — | | — | | — | | 1,347 | | | — | | — | | — | | 1,347 | | (208) | | 1,139 | | Net income (loss) | | — | | — | | — | | — | | 953 | | | — | | — | | — | | 953 | | (51) | | 902 | |
| Other comprehensive (loss) income | | — | | — | | — | | — | | — | | | (139) | | 5 | | 1 | | (133) | | (12) | | (145) | | |
| Other comprehensive income (loss) | | Other comprehensive income (loss) | | — | | — | | — | | — | | — | | | 25 | | (8) | | 2 | | 19 | | 7 | | 26 | |
| | Common stock issuances, including dividend reinvestment and employee benefits | Common stock issuances, including dividend reinvestment and employee benefits | | — | | 3 | | — | | 181 | | — | | | — | | — | | — | | 181 | | — | | 181 | | Common stock issuances, including dividend reinvestment and employee benefits | | — | | — | | — | | (3) | | — | | | — | | — | | — | | (3) | | — | | (3) | |
| | Common stock dividends | Common stock dividends | | — | | — | | — | | — | | (2,103) | | | — | | — | | — | | (2,103) | | — | | (2,103) | | Common stock dividends | | — | | — | | — | | — | | (744) | | | — | | — | | — | | (744) | | — | | (744) | |
| Contributions from noncontrolling interests, net of transaction costs(a) | Contributions from noncontrolling interests, net of transaction costs(a) | | — | | — | | — | | (17) | | — | | | — | | — | | — | | (17) | | 402 | | 385 | | Contributions from noncontrolling interests, net of transaction costs(a) | | — | | — | | — | | (3) | | — | | | — | | — | | — | | (3) | | 303 | | 300 | |
| Distributions to noncontrolling interest in subsidiaries | Distributions to noncontrolling interest in subsidiaries | | — | | — | | — | | — | | — | | | — | | — | | — | | — | | (22) | | (22) | | Distributions to noncontrolling interest in subsidiaries | | — | | — | | — | | — | | — | | | — | | — | | — | | — | | (7) | | (7) | |
Other(b) | | — | | — | | — | | 1 | | (92) | | | — | | — | | — | | (91) | | — | | (91) | | |
| Balance at September 30, 2020 | | $ | 1,962 | | 736 | | $ | 1 | | $ | 41,046 | | $ | 3,260 | | | $ | (190) | | $ | 8 | | $ | (81) | | $ | 46,006 | | $ | 1,289 | | $ | 47,295 | | |
| | Balance at December 31, 2020 | | $ | 1,962 | | 769 | | $ | 1 | | $ | 43,767 | | $ | 2,471 | | | $ | (167) | | $ | 6 | | $ | (76) | | $ | 47,964 | | $ | 1,220 | | $ | 49,184 | | |
| Balance at March 31, 2021 | | Balance at March 31, 2021 | | $ | 1,962 | | 769 | | $ | 1 | | $ | 43,761 | | $ | 2,680 | | | $ | (142) | | $ | (2) | | $ | (74) | | $ | 48,186 | | $ | 1,472 | | $ | 49,658 | |
| | Balance at December 31, 2021 | | Balance at December 31, 2021 | | $ | 1,962 | | 769 | | $ | 1 | | $ | 44,371 | | $ | 3,265 | | | $ | (232) | | $ | (2) | | $ | (69) | | $ | 49,296 | | $ | 1,840 | | $ | 51,136 | |
| Net income (loss) | Net income (loss) | | — | | — | | — | | — | | 3,070 | | | — | | — | | — | | 3,070 | | (247) | | 2,823 | | Net income (loss) | | — | | — | | — | | — | | 818 | | | — | | — | | — | | 818 | | (37) | | 781 | |
| Other comprehensive (loss) income | | — | | — | | — | | — | | — | | | (57) | | (6) | | 3 | | (60) | | 7 | | (53) | | |
| Other comprehensive income (loss) | | Other comprehensive income (loss) | | — | | — | | — | | — | | — | | | 110 | | (13) | | 2 | | 99 | | 8 | | 107 | |
| | Common stock issuances, including dividend reinvestment and employee benefits | Common stock issuances, including dividend reinvestment and employee benefits | | — | | — | | — | | 43 | | — | | | — | | — | | — | | 43 | | — | | 43 | | Common stock issuances, including dividend reinvestment and employee benefits | | — | | 1 | | — | | (7) | | — | | | — | | — | | — | | (7) | | — | | (7) | |
| | Common stock dividends | Common stock dividends | | — | | — | | — | | — | | (2,248) | | | — | | — | | — | | (2,248) | | — | | (2,248) | | Common stock dividends | | — | | — | | — | | — | | (760) | | | — | | — | | — | | (760) | | — | | (760) | |
Sale of noncontrolling interest(c) | | — | | — | | — | | 545 | | — | | | — | | — | | — | | 545 | | 454 | | 999 | | |
| Contributions from noncontrolling interests, net of transaction costs(a) | Contributions from noncontrolling interests, net of transaction costs(a) | | — | | — | | — | | (6) | | — | | | — | | — | | — | | (6) | | 531 | | 525 | | Contributions from noncontrolling interests, net of transaction costs(a) | | — | | — | | — | | — | | — | | | — | | — | | — | | — | | 23 | | 23 | |
| Distributions to noncontrolling interest in subsidiaries | Distributions to noncontrolling interest in subsidiaries | | — | | — | | — | | — | | — | | | — | | — | | — | | — | | (34) | | (34) | | Distributions to noncontrolling interest in subsidiaries | | — | | — | | — | | — | | — | | | — | | — | | — | | — | | (28) | | (28) | |
| Other | | — | | — | | — | | (1) | | — | | | — | | — | | — | | (1) | | 2 | | 1 | | |
| Balance at September 30, 2021 | | $ | 1,962 | | 769 | | $ | 1 | | $ | 44,348 | | $ | 3,293 | | | $ | (224) | | $ | — | | $ | (73) | | $ | 49,307 | | $ | 1,933 | | $ | 51,240 | | |
| | Balance at March 31, 2022 | | Balance at March 31, 2022 | | $ | 1,962 | | 770 | | $ | 1 | | $ | 44,364 | | $ | 3,323 | | | $ | (122) | | $ | (15) | | $ | (67) | | $ | 49,446 | | $ | 1,806 | | $ | 51,252 | |
(a)Relates to tax equity financing activity in the Commercial Renewables segment.
(b)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.
(c)Relates to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.
See Notes to Condensed Consolidated Financial Statements
1413
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | Three Months Ended |
| | September 30, | | September 30, | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | 2022 | | 2021 |
| Operating Revenues | Operating Revenues | $ | 2,104 | | | $ | 2,058 | | | $ | 5,430 | | | $ | 5,416 | | Operating Revenues | | $ | 1,888 | | | $ | 1,716 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 452 | | | 497 | | | 1,218 | | | 1,326 | | Fuel used in electric generation and purchased power | | 448 | | | 422 | |
| Operation, maintenance and other | Operation, maintenance and other | 471 | | | 402 | | | 1,347 | | | 1,218 | | Operation, maintenance and other | | 512 | | | 441 | |
| Depreciation and amortization | Depreciation and amortization | 366 | | | 372 | | | 1,088 | | | 1,090 | | Depreciation and amortization | | 379 | | | 359 | |
| Property and other taxes | Property and other taxes | 91 | | | 57 | | | 248 | | | 213 | | Property and other taxes | | 93 | | | 83 | |
| Impairment of assets and other charges | Impairment of assets and other charges | 163 | | | 20 | | | 238 | | | 22 | | Impairment of assets and other charges | | 3 | | | — | |
| Total operating expenses | Total operating expenses | 1,543 | | | 1,348 | | | 4,139 | | | 3,869 | | Total operating expenses | | 1,435 | | | 1,305 | |
| (Losses) Gains on Sales of Other Assets and Other, net | (1) | | | 1 | | | 1 | | | 1 | | |
| | Operating Income | Operating Income | 560 | | | 711 | | | 1,292 | | | 1,548 | | Operating Income | | 453 | | | 411 | |
| Other Income and Expenses, net | Other Income and Expenses, net | 126 | | | 42 | | | 218 | | | 128 | | Other Income and Expenses, net | | 55 | | | 48 | |
| Interest Expense | Interest Expense | 137 | | | 122 | | | 400 | | | 370 | | Interest Expense | | 141 | | | 124 | |
| Income Before Income Taxes | Income Before Income Taxes | 549 | | | 631 | | | 1,110 | | | 1,306 | | Income Before Income Taxes | | 367 | | | 335 | |
| Income Tax Expense | Income Tax Expense | 16 | | | 76 | | | 40 | | | 178 | | Income Tax Expense | | 27 | | | 23 | |
| Net Income and Comprehensive Income | Net Income and Comprehensive Income | $ | 533 | | | $ | 555 | | | $ | 1,070 | | | $ | 1,128 | | Net Income and Comprehensive Income | | $ | 340 | | | $ | 312 | |
|
See Notes to Condensed Consolidated Financial Statements
14
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 4 | | | $ | 7 | |
| Receivables (net of allowance for doubtful accounts of $22 at 2022 and $1 at 2021) | 234 | | | 300 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $30 at 2022 and $41 at 2021) | 858 | | | 844 | |
| Receivables from affiliated companies | 134 | | | 190 | |
| Notes receivable from affiliated companies | 492 | | | — | |
| Inventory | 1,040 | | | 1,026 | |
| Regulatory assets (includes $12 at 2022 and 2021 related to VIEs) | 652 | | | 544 | |
| Other (includes $5 at 2022 and $0 at 2021 related to VIEs) | 246 | | | 95 | |
| Total current assets | 3,660 | | | 3,006 | |
| Property, Plant and Equipment | | | |
| Cost | 52,423 | | | 51,874 | |
| Accumulated depreciation and amortization | (18,058) | | | (17,854) | |
| Facilities to be retired, net | 98 | | | 102 | |
| Net property, plant and equipment | 34,463 | | | 34,122 | |
| Other Noncurrent Assets | | | |
| Regulatory assets (includes $217 at 2022 and $220 at 2021 related to VIEs) | 3,085 | | | 2,935 | |
| Nuclear decommissioning trust funds | 5,441 | | | 5,759 | |
| Operating lease right-of-use assets, net | 87 | | | 92 | |
| Other | 1,297 | | | 1,248 | |
| Total other noncurrent assets | 9,910 | | | 10,034 | |
| Total Assets | $ | 48,033 | | | $ | 47,162 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 752 | | | $ | 988 | |
| Accounts payable to affiliated companies | 267 | | | 266 | |
| Notes payable to affiliated companies | — | | | 226 | |
| Taxes accrued | 124 | | | 274 | |
| Interest accrued | 140 | | | 125 | |
| Current maturities of long-term debt (includes $10 at 2022 and $5 at 2021 related to VIEs) | 1,367 | | | 362 | |
| Asset retirement obligations | 251 | | | 249 | |
| Regulatory liabilities | 465 | | | 487 | |
| Other | 442 | | | 546 | |
| Total current liabilities | 3,808 | | | 3,523 | |
| Long-Term Debt (includes $722 at 2022 and $703 at 2021 related to VIEs) | 12,803 | | | 12,595 | |
| Long-Term Debt Payable to Affiliated Companies | 300 | | | 318 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 3,769 | | | 3,634 | |
| Asset retirement obligations | 5,067 | | | 5,052 | |
| Regulatory liabilities | 7,151 | | | 7,198 | |
| Operating lease liabilities | 74 | | | 78 | |
| Accrued pension and other post-retirement benefit costs | 48 | | | 50 | |
| Investment tax credits | 286 | | | 287 | |
| Other | 545 | | | 536 | |
| Total other noncurrent liabilities | 16,940 | | | 16,835 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's equity | 14,188 | | | 13,897 | |
| Accumulated other comprehensive loss | (6) | | | (6) | |
| Total equity | 14,182 | | | 13,891 | |
| Total Liabilities and Equity | $ | 48,033 | | | $ | 47,162 | |
See Notes to Condensed Consolidated Financial Statements
15
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance SheetsStatements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| (in millions) | September 30, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 21 | | | $ | 21 | |
| Receivables (net of allowance for doubtful accounts of $2 at 2021 and $1 at 2020) | 278 | | | 247 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2021 and $22 at 2020) | 915 | | | 696 | |
| Receivables from affiliated companies | 85 | | | 124 | |
| | | |
| Inventory | 969 | | | 1,010 | |
| Regulatory assets | 460 | | | 473 | |
| Other | 104 | | | 20 | |
| Total current assets | 2,832 | | | 2,591 | |
| Property, Plant and Equipment | | | |
| Cost | 51,790 | | | 50,640 | |
| Accumulated depreciation and amortization | (17,959) | | | (17,453) | |
| Facilities to be retired, net | 89 | | | — | |
| Net property, plant and equipment | 33,920 | | | 33,187 | |
| Other Noncurrent Assets | | | |
| Regulatory assets | 2,743 | | | 2,996 | |
| Nuclear decommissioning trust funds | 5,434 | | | 4,977 | |
| Operating lease right-of-use assets, net | 95 | | | 110 | |
| Other | 1,197 | | | 1,187 | |
| Total other noncurrent assets | 9,469 | | | 9,270 | |
| Total Assets | $ | 46,221 | | | $ | 45,048 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 673 | | | $ | 1,000 | |
| Accounts payable to affiliated companies | 184 | | | 199 | |
| Notes payable to affiliated companies | 86 | | | 506 | |
| Taxes accrued | 391 | | | 76 | |
| Interest accrued | 137 | | | 117 | |
| Current maturities of long-term debt | 357 | | | 506 | |
| Asset retirement obligations | 245 | | | 264 | |
| Regulatory liabilities | 503 | | | 473 | |
| Other | 516 | | | 546 | |
| Total current liabilities | 3,092 | | | 3,687 | |
| Long-Term Debt | 12,318 | | | 11,412 | |
| Long-Term Debt Payable to Affiliated Companies | 300 | | | 300 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 3,893 | | | 3,842 | |
| Asset retirement obligations | 5,134 | | | 5,086 | |
| Regulatory liabilities | 6,867 | | | 6,535 | |
| Operating lease liabilities | 83 | | | 97 | |
| Accrued pension and other post-retirement benefit costs | 64 | | | 73 | |
| Investment tax credits | 288 | | | 236 | |
| Other | 558 | | | 626 | |
| Total other noncurrent liabilities | 16,887 | | | 16,495 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's equity | 13,631 | | | 13,161 | |
| Accumulated other comprehensive loss | (7) | | | (7) | |
| Total equity | 13,624 | | | 13,154 | |
| Total Liabilities and Equity | $ | 46,221 | | | $ | 45,048 | |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 340 | | | $ | 312 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization (including amortization of nuclear fuel) | 447 | | | 428 | |
| Equity component of AFUDC | (22) | | | (16) | |
| | | |
| | | |
| Impairment of assets and other charges | 3 | | | — | |
| Deferred income taxes | 44 | | | (8) | |
| | | |
| | | |
| | | |
| Payments for asset retirement obligations | (35) | | | (35) | |
| Provision for rate refunds | (18) | | | — | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | 50 | | | — | |
| Receivables | 77 | | | 156 | |
| Receivables from affiliated companies | 56 | | | 5 | |
| Inventory | (13) | | | (11) | |
| Other current assets | (230) | | | (48) | |
| Increase (decrease) in | | | |
| Accounts payable | (225) | | | (255) | |
| Accounts payable to affiliated companies | (17) | | | 7 | |
| Taxes accrued | (150) | | | 62 | |
| Other current liabilities | 56 | | | (77) | |
| Other assets | 6 | | | 43 | |
| Other liabilities | (44) | | | (17) | |
| Net cash provided by operating activities | 325 | | | 546 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (717) | | | (622) | |
| | | |
| Purchases of debt and equity securities | (1,008) | | | (1,128) | |
| Proceeds from sales and maturities of debt and equity securities | 1,008 | | | 1,128 | |
| Notes receivable from affiliated companies | (492) | | | — | |
| Other | (54) | | | (43) | |
| Net cash used in investing activities | (1,263) | | | (665) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 1,217 | | | 142 | |
| Payments for the redemption of long-term debt | (1) | | | (33) | |
| Notes payable to affiliated companies | (226) | | | 2 | |
| Distributions to parent | (50) | | | — | |
| Other | (1) | | | (1) | |
| Net cash provided by financing activities | 939 | | | 110 | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | 1 | | | (9) | |
| Cash, cash equivalents and restricted cash at beginning of period | 8 | | | 21 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 9 | | | $ | 12 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 352 | | | $ | 268 | |
See Notes to Condensed Consolidated Financial Statements
16
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash FlowsChanges in Equity
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| (in millions) | 2021 | | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 1,070 | | | $ | 1,128 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization (including amortization of nuclear fuel) | 1,295 | | | 1,295 | |
| Equity component of AFUDC | (46) | | | (46) | |
| | | |
| Loss on sales of other assets | (1) | | | — | |
| Impairment of assets and other charges | 238 | | | 22 | |
| Deferred income taxes | (146) | | | (103) | |
| | | |
| | | |
| | | |
| Payments for asset retirement obligations | (132) | | | (127) | |
| Provision for rate refunds | (29) | | | (1) | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | (1) | | | — | |
| Receivables | (172) | | | 41 | |
| Receivables from affiliated companies | 39 | | | 50 | |
| Inventory | 41 | | | 4 | |
| Other current assets | (153) | | | 197 | |
| Increase (decrease) in | | | |
| Accounts payable | (254) | | | (313) | |
| Accounts payable to affiliated companies | (15) | | | (55) | |
| Taxes accrued | 315 | | | 352 | |
| Other current liabilities | 72 | | | (121) | |
| Other assets | 52 | | | (72) | |
| Other liabilities | 167 | | | (23) | |
| Net cash provided by operating activities | 2,340 | | | 2,228 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (1,947) | | | (1,931) | |
| | | |
| Purchases of debt and equity securities | (2,465) | | | (1,313) | |
| Proceeds from sales and maturities of debt and equity securities | 2,465 | | | 1,313 | |
| Notes receivable from affiliated companies | — | | | (65) | |
| Other | (122) | | | (105) | |
| Net cash used in investing activities | (2,069) | | | (2,101) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 1,367 | | | 965 | |
| Payments for the redemption of long-term debt | (616) | | | (457) | |
| Notes payable to affiliated companies | (421) | | | (29) | |
| Distributions to parent | (600) | | | (600) | |
| Other | (1) | | | (1) | |
| Net cash used in financing activities | (271) | | | (122) | |
| Net increase in cash and cash equivalents | — | | | 5 | |
| Cash and cash equivalents at beginning of period | 21 | | | 18 | |
| Cash and cash equivalents at end of period | $ | 21 | | | $ | 23 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 308 | | | $ | 295 | |
| | | | | | | | | | | | | | | | | |
| |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Three Months Ended March 31, 2021 and 2022 |
| | | Accumulated Other | | |
| | | Comprehensive | | |
| | | Loss | | |
| Member's | | Net Losses on | | Total |
| (in millions) | Equity | | Cash Flow Hedges | | Equity |
| Balance at December 31, 2020 | $ | 13,161 | | | $ | (7) | | | $ | 13,154 | |
| Net income | 312 | | | — | | | 312 | |
| | | | | |
| | | | | |
| | | | | |
| Balance at March 31, 2021 | $ | 13,473 | | | $ | (7) | | | $ | 13,466 | |
| | | | | |
| Balance at December 31, 2021 | $ | 13,897 | | | $ | (6) | | | $ | 13,891 | |
| Net income | 340 | | | — | | | 340 | |
| | | | | |
| Distributions to parent | (50) | | | — | | | (50) | |
| Other | 1 | | | — | | | 1 | |
| Balance at March 31, 2022 | $ | 14,188 | | | $ | (6) | | | $ | 14,182 | |
See Notes to Condensed Consolidated Financial Statements
17
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2020 and 2021 |
| | | Accumulated Other | | |
| | | Comprehensive | | |
| | | Loss | | |
| Member's | | Net Losses on | | Total |
| (in millions) | Equity | | Cash Flow Hedges | | Equity |
| Balance at June 30, 2020 | $ | 13,079 | | | $ | (7) | | | $ | 13,072 | |
| Net income | 555 | | | — | | | 555 | |
| | | | | |
| Distributions to parent | (300) | | | — | | | (300) | |
| Other | (1) | | | — | | | (1) | |
| Balance at September 30, 2020 | $ | 13,333 | | | $ | (7) | | | $ | 13,326 | |
| | | | | |
| Balance at June 30, 2021 | $ | 13,399 | | | $ | (7) | | | $ | 13,392 | |
| Net income | 533 | | | — | | | 533 | |
| | | | | |
| Distributions to parent | (300) | | | — | | | (300) | |
| Other | (1) | | | — | | | (1) | |
| Balance at September 30, 2021 | $ | 13,631 | | | $ | (7) | | | $ | 13,624 | |
| | | | | |
| Nine Months Ended September 30, 2020 and 2021 |
| | | Accumulated Other | | |
| | | Comprehensive | | |
| | | Loss | | |
| Member's | | Net Losses on | | Total |
| (in millions) | Equity | | Cash Flow Hedges | | Equity |
| Balance at December 31, 2019 | $ | 12,818 | | | $ | (7) | | | $ | 12,811 | |
| Net income | 1,128 | | | — | | | 1,128 | |
| | | | | |
| Distributions to parent | (600) | | | — | | | (600) | |
Other(a) | (13) | | | — | | | (13) | |
| Balance at September 30, 2020 | $ | 13,333 | | | $ | (7) | | | $ | 13,326 | |
| | | | | |
| Balance at December 31, 2020 | $ | 13,161 | | | $ | (7) | | | $ | 13,154 | |
| Net income | 1,070 | | | — | | | 1,070 | |
| | | | | |
| Distributions to parent | (600) | | | — | | | (600) | |
| | | | | |
| Balance at September 30, 2021 | $ | 13,631 | | | $ | (7) | | | $ | 13,624 | |
(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
18
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| | September 30, | | September 30, | | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | | 2022 | | 2021 |
| Operating Revenues | Operating Revenues | $ | 3,233 | | | $ | 3,197 | | | $ | 8,417 | | | $ | 8,117 | | Operating Revenues | | | $ | 2,992 | | | $ | 2,505 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 1,074 | | | 1,088 | | | 2,702 | | | 2,628 | | Fuel used in electric generation and purchased power | | | 1,064 | | | 795 | |
| Operation, maintenance and other | Operation, maintenance and other | 636 | | | 646 | | | 1,863 | | | 1,789 | | Operation, maintenance and other | | | 645 | | | 601 | |
| Depreciation and amortization | Depreciation and amortization | 504 | | | 472 | | | 1,430 | | | 1,356 | | Depreciation and amortization | | | 536 | | | 485 | |
| Property and other taxes | Property and other taxes | 144 | | | 147 | | | 419 | | | 419 | | Property and other taxes | | | 152 | | | 142 | |
| Impairment of assets and other charges | 42 | | | 1 | | | 79 | | | 1 | | |
| | Total operating expenses | Total operating expenses | 2,400 | | | 2,354 | | | 6,493 | | | 6,193 | | Total operating expenses | | | 2,397 | | | 2,023 | |
| Gains on Sales of Other Assets and Other, net | Gains on Sales of Other Assets and Other, net | 8 | | | 3 | | | 9 | | | 9 | | Gains on Sales of Other Assets and Other, net | | | 2 | | | — | |
| Operating Income | Operating Income | 841 | | | 846 | | | 1,933 | | | 1,933 | | Operating Income | | | 597 | | | 482 | |
| Other Income and Expenses, net | Other Income and Expenses, net | 86 | | | 24 | | | 167 | | | 89 | | Other Income and Expenses, net | | | 35 | | | 43 | |
| Interest Expense | Interest Expense | 200 | | | 194 | | | 592 | | | 599 | | Interest Expense | | | 211 | | | 192 | |
| Income Before Income Taxes | Income Before Income Taxes | 727 | | | 676 | | | 1,508 | | | 1,423 | | Income Before Income Taxes | | | 421 | | | 333 | |
| Income Tax Expense | Income Tax Expense | 94 | | | 70 | | | 174 | | | 190 | | Income Tax Expense | | | 67 | | | 43 | |
| | Net Income | Net Income | 633 | | | 606 | | | $ | 1,334 | | | $ | 1,233 | | Net Income | | | $ | 354 | | | $ | 290 | |
| Less: Net Income Attributable to Noncontrolling Interests | 1 | | | 1 | | | 1 | | | 1 | | |
| Net Income Attributable to Parent | $ | 632 | | | $ | 605 | | | $ | 1,333 | | | $ | 1,232 | | |
| | | Net Income | Net Income | $ | 633 | | | $ | 606 | | | $ | 1,334 | | | $ | 1,233 | | Net Income | | | $ | 354 | | | $ | 290 | |
| Other Comprehensive Income, net of tax | Other Comprehensive Income, net of tax | | Other Comprehensive Income, net of tax | | |
| Pension and OPEB adjustments | (1) | | | — | | | — | | | 1 | | |
| | Net unrealized gains on cash flow hedges | Net unrealized gains on cash flow hedges | 1 | | | 1 | | | 2 | | | 3 | | Net unrealized gains on cash flow hedges | | | 1 | | | 1 | |
| | Unrealized gains on available-for-sale securities | — | | | 1 | | | — | | | 1 | | |
| Unrealized losses on available-for-sale securities | | Unrealized losses on available-for-sale securities | | | (2) | | | (1) | |
| | Other Comprehensive Income, net of tax | — | | | 2 | | | 2 | | | 5 | | |
| Other Comprehensive Loss, net of tax | | Other Comprehensive Loss, net of tax | | | (1) | | | — | |
| Comprehensive Income | Comprehensive Income | 633 | | | 608 | | | $ | 1,336 | | | $ | 1,238 | | Comprehensive Income | | | $ | 353 | | | $ | 290 | |
| Less: Comprehensive Income Attributable to Noncontrolling Interests | 1 | | | 1 | | | 1 | | | 1 | | |
| Comprehensive Income Attributable to Parent | $ | 632 | | | $ | 607 | | | $ | 1,335 | | | $ | 1,237 | | |
|
See Notes to Condensed Consolidated Financial Statements
18
PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 63 | | | $ | 70 | |
| Receivables (net of allowance for doubtful accounts of $11 at 2022 and 2021) | 286 | | | 247 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2022 and $25 at 2021) | 1,166 | | | 1,006 | |
| Receivables from affiliated companies | 37 | | | 121 | |
| Notes receivable from affiliated companies | 237 | | | — | |
| Inventory | 1,403 | | | 1,398 | |
| Regulatory assets (includes $93 at 2022 and 2021 related to VIEs) | 1,101 | | | 1,030 | |
| Other (includes $27 at 2022 and $39 at 2021 related to VIEs) | 319 | | | 125 | |
| Total current assets | 4,612 | | | 3,997 | |
| Property, Plant and Equipment | | | |
| Cost | 61,629 | | | 60,894 | |
| Accumulated depreciation and amortization | (19,702) | | | (19,214) | |
| Facilities to be retired, net | 24 | | | 26 | |
| Net property, plant and equipment | 41,951 | | | 41,706 | |
| Other Noncurrent Assets | | | |
| Goodwill | 3,655 | | | 3,655 | |
| Regulatory assets (includes $1,583 at 2022 and $1,603 at 2021 related to VIEs) | 6,024 | | | 5,909 | |
| Nuclear decommissioning trust funds | 4,385 | | | 4,642 | |
| Operating lease right-of-use assets, net | 701 | | | 691 | |
| Other | 1,336 | | | 1,242 | |
| Total other noncurrent assets | 16,101 | | | 16,139 | |
| Total Assets | $ | 62,664 | | | $ | 61,842 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 982 | | | $ | 1,099 | |
| Accounts payable to affiliated companies | 364 | | | 506 | |
| Notes payable to affiliated companies | 377 | | | 2,809 | |
| Taxes accrued | 157 | | | 128 | |
| Interest accrued | 195 | | | 192 | |
| Current maturities of long-term debt (includes $88 at 2022 and $71 at 2021 related to VIEs) | 1,095 | | | 1,082 | |
| Asset retirement obligations | 268 | | | 275 | |
| Regulatory liabilities | 469 | | | 478 | |
| Other | 760 | | | 868 | |
| Total current liabilities | 4,667 | | | 7,437 | |
| Long-Term Debt (includes $2,246 at 2022 and $2,293 at 2021 related to VIEs) | 20,412 | | | 19,591 | |
| Long-Term Debt Payable to Affiliated Companies | 150 | | | 150 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 4,702 | | | 4,564 | |
| Asset retirement obligations | 5,821 | | | 5,837 | |
| Regulatory liabilities | 5,671 | | | 5,566 | |
| Operating lease liabilities | 619 | | | 606 | |
| Accrued pension and other post-retirement benefit costs | 409 | | | 417 | |
| Other | 531 | | | 526 | |
| Total other noncurrent liabilities | 17,753 | | | 17,516 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2022 and 2021 | — | | | — | |
| Additional paid-in capital | 9,149 | | | 9,149 | |
| Retained earnings | 10,543 | | | 8,007 | |
| Accumulated other comprehensive loss | (12) | | | (11) | |
| Total Progress Energy, Inc. stockholders' equity | 19,680 | | | 17,145 | |
| Noncontrolling interests | 2 | | | 3 | |
| Total equity | 19,682 | | | 17,148 | |
| Total Liabilities and Equity | $ | 62,664 | | | $ | 61,842 | |
See Notes to Condensed Consolidated Financial Statements
19
PROGRESS ENERGY, INC.
Condensed Consolidated Balance SheetsStatements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| (in millions) | September 30, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 102 | | | $ | 59 | |
| Receivables (net of allowance for doubtful accounts of $11 at 2021 and $8 at 2020) | 268 | | | 228 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $25 at 2021 and $29 at 2020) | 981 | | | 901 | |
| Receivables from affiliated companies | 61 | | | 157 | |
| | | |
| Inventory | 1,255 | | | 1,375 | |
| Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs) | 864 | | | 758 | |
| Other (includes $17 at 2021 and $39 at 2020 related to VIEs) | 178 | | | 109 | |
| Total current assets | 3,709 | | | 3,587 | |
| Property, Plant and Equipment | | | |
| Cost | 59,976 | | | 57,892 | |
| Accumulated depreciation and amortization | (19,211) | | | (18,368) | |
| Facilities to be retired, net | 27 | | | 29 | |
| Net property, plant and equipment | 40,792 | | | 39,553 | |
| Other Noncurrent Assets | | | |
| Goodwill | 3,655 | | | 3,655 | |
| Regulatory assets (includes $896 at 2021 and $937 at 2020 related to VIEs) | 5,785 | | | 5,775 | |
| Nuclear decommissioning trust funds | 4,427 | | | 4,137 | |
| Operating lease right-of-use assets, net | 714 | | | 690 | |
| Other | 1,175 | | | 1,227 | |
| Total other noncurrent assets | 15,756 | | | 15,484 | |
| Total Assets | $ | 60,257 | | | $ | 58,624 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 898 | | | $ | 919 | |
| Accounts payable to affiliated companies | 221 | | | 289 | |
| Notes payable to affiliated companies | 3,123 | | | 2,969 | |
| Taxes accrued | 284 | | | 121 | |
| Interest accrued | 175 | | | 202 | |
| Current maturities of long-term debt (includes $56 at 2021 and $305 at 2020 related to VIEs) | 1,932 | | | 1,426 | |
| Asset retirement obligations | 234 | | | 283 | |
| Regulatory liabilities | 541 | | | 640 | |
| Other | 856 | | | 793 | |
| Total current liabilities | 8,264 | | | 7,642 | |
| Long-Term Debt (includes $1,546 at 2021 and $1,252 at 2020 related to VIEs) | 17,406 | | | 17,688 | |
| Long-Term Debt Payable to Affiliated Companies | 150 | | | 150 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 4,784 | | | 4,396 | |
| Asset retirement obligations | 5,850 | | | 5,866 | |
| Regulatory liabilities | 5,335 | | | 5,051 | |
| Operating lease liabilities | 623 | | | 623 | |
| Accrued pension and other post-retirement benefit costs | 490 | | | 505 | |
| Other | 473 | | | 462 | |
| Total other noncurrent liabilities | 17,555 | | | 16,903 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2021 and 2020 | — | | | — | |
| Additional paid-in capital | 9,149 | | | 9,143 | |
| Retained earnings | 7,743 | | | 7,109 | |
| Accumulated other comprehensive loss | (13) | | | (15) | |
| Total Progress Energy, Inc. stockholders' equity | 16,879 | | | 16,237 | |
| Noncontrolling interests | 3 | | | 4 | |
| Total equity | 16,882 | | | 16,241 | |
| Total Liabilities and Equity | $ | 60,257 | | | $ | 58,624 | |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 354 | | | $ | 290 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, amortization and accretion (including amortization of nuclear fuel) | 625 | | | 575 | |
| Equity component of AFUDC | (12) | | | (13) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Deferred income taxes | 72 | | | 79 | |
| | | |
| | | |
| Payments for asset retirement obligations | (68) | | | (69) | |
| | | |
| Provision for rate refunds | (16) | | | — | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | 164 | | | 6 | |
| Receivables | (123) | | | 214 | |
| Receivables from affiliated companies | 102 | | | 81 | |
| Inventory | (5) | | | 39 | |
| Other current assets | (224) | | | (150) | |
| Increase (decrease) in | | | |
| Accounts payable | 26 | | | (69) | |
| Accounts payable to affiliated companies | (142) | | | 32 | |
| Taxes accrued | 30 | | | 23 | |
| Other current liabilities | (113) | | | (60) | |
| Other assets | (80) | | | (27) | |
| Other liabilities | 40 | | | (64) | |
| Net cash provided by operating activities | 630 | | | 887 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (981) | | | (796) | |
| | | |
| | | |
| Purchases of debt and equity securities | (531) | | | (517) | |
| Proceeds from sales and maturities of debt and equity securities | 548 | | | 537 | |
| | | |
| | | |
| | | |
| Notes receivable from affiliated companies | (237) | | | — | |
| | | |
| Other | (28) | | | (59) | |
| Net cash used in investing activities | (1,229) | | | (835) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 889 | | | 98 | |
| | | |
| Payments for the redemption of long-term debt | (54) | | | (34) | |
| | | |
| | | |
| | | |
| | | |
| Notes payable to affiliated companies | (1) | | | (125) | |
| | | |
| | | |
| | | |
| Dividends to parent | (250) | | | — | |
| Other | (3) | | | (2) | |
| Net cash provided by (used in) financing activities | 581 | | | (63) | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (18) | | | (11) | |
| Cash, cash equivalents and restricted cash at beginning of period | 113 | | | 200 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 95 | | | $ | 189 | |
| Supplemental Disclosures: | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 349 | | | $ | 317 | |
| | | |
| | | |
See Notes to Condensed Consolidated Financial Statements
20
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| (in millions) | 2021 | | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 1,334 | | | $ | 1,233 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, amortization and accretion (including amortization of nuclear fuel) | 1,707 | | | 1,734 | |
| Equity component of AFUDC | (37) | | | (30) | |
| | | |
| | | |
| | | |
| | | |
| Impairment of assets and other charges | 79 | | | 1 | |
| Deferred income taxes | 235 | | | (3) | |
| | | |
| | | |
| Payments for asset retirement obligations | (206) | | | (287) | |
| | | |
| Provision for rate refunds | (22) | | | 4 | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | 117 | | | (13) | |
| Receivables | (123) | | | (207) | |
| Receivables from affiliated companies | 96 | | | 32 | |
| Inventory | 120 | | | 46 | |
| Other current assets | (347) | | | 214 | |
| Increase (decrease) in | | | |
| Accounts payable | 79 | | | (124) | |
| Accounts payable to affiliated companies | (68) | | | (102) | |
| Taxes accrued | 161 | | | 263 | |
| Other current liabilities | (36) | | | (41) | |
| Other assets | (3) | | | (154) | |
| Other liabilities | (139) | | | (102) | |
| Net cash provided by operating activities | 2,947 | | | 2,464 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (2,628) | | | (2,602) | |
| | | |
| | | |
| Purchases of debt and equity securities | (1,583) | | | (4,554) | |
| Proceeds from sales and maturities of debt and equity securities | 1,649 | | | 4,543 | |
| | | |
| | | |
| | | |
| Notes receivable from affiliated companies | — | | | 164 | |
| | | |
| Other | (131) | | | (114) | |
| Net cash used in investing activities | (2,693) | | | (2,563) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 1,190 | | | 1,791 | |
| | | |
| Payments for the redemption of long-term debt | (977) | | | (1,555) | |
| | | |
| | | |
| | | |
| | | |
| Notes payable to affiliated companies | 154 | | | 338 | |
| | | |
| | | |
| | | |
| Dividends to parent | (700) | | | (400) | |
| Other | (2) | | | (13) | |
| Net cash (used in) provided by financing activities | (335) | | | 161 | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (81) | | | 62 | |
| Cash, cash equivalents and restricted cash at beginning of period | 200 | | | 126 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 119 | | | $ | 188 | |
| Supplemental Disclosures: | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 290 | | | $ | 311 | |
| | | |
| | | |
See Notes to Condensed Consolidated Financial Statements
21
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | Three Months Ended September 30, 2020 and 2021 | |
| | Accumulated Other Comprehensive Loss | | |
| Net Gains | | Net Unrealized | | | Total Progress | | |
| Additional | | (Losses) on | | Gains (Losses) on | | Pension and | | Energy, Inc. | | |
| Paid-in | | Retained | | Cash Flow | | Available-for- | | OPEB | | Stockholders' | | Noncontrolling | | Total | |
| (in millions) | Capital | | Earnings | | Hedges | | Sale Securities | | Adjustments | | Equity | | Interests | | Equity | |
| Balance at June 30, 2020 | $ | 9,143 | | | $ | 7,090 | | | $ | (8) | | | $ | (1) | | | $ | (6) | | | $ | 16,218 | | | $ | 3 | | | $ | 16,221 | | |
| Net income | — | | | 605 | | | — | | | — | | | — | | | 605 | | | 1 | | | 606 | | |
| Other comprehensive income | — | | | — | | | 1 | | | 1 | | | — | | | 2 | | | — | | | 2 | | |
| | Dividends to parent | — | | | (400) | | | — | | | — | | | — | | | (400) | | | — | | | (400) | | |
| Other | — | | | 1 | | | — | | | — | | | — | | | 1 | | | (1) | | | — | | |
| Balance at September 30, 2020 | $ | 9,143 | | | $ | 7,296 | | | $ | (7) | | | $ | — | | | $ | (6) | | | $ | 16,426 | | | $ | 3 | | | $ | 16,429 | | |
| | Balance at June 30, 2021 | $ | 9,143 | | | $ | 7,809 | | | $ | (4) | | | $ | (2) | | | $ | (7) | | | $ | 16,939 | | | $ | 3 | | | $ | 16,942 | | |
| Net income | — | | | 632 | | | — | | | — | | | — | | | 632 | | | 1 | | | 633 | | |
| Other comprehensive income (loss) | — | | | — | | | 1 | | | — | | | (1) | | | — | | | — | | | — | | |
| | Dividends to parent | — | | | (700) | | | — | | | — | | | — | | | (700) | | | — | | | (700) | | |
| | Other | 6 | | | 2 | | | — | | | — | | | — | | | 8 | | | (1) | | | 7 | | |
| Balance at September 30, 2021 | $ | 9,149 | | | $ | 7,743 | | | $ | (3) | | | $ | (2) | | | $ | (8) | | | $ | 16,879 | | | $ | 3 | | | $ | 16,882 | | |
| | | Nine Months Ended September 30, 2020 and 2021 | |
| | | Accumulated Other Comprehensive Loss | | |
| | Net Gains | | Net Unrealized | | | Total Progress | | |
| | Additional | | (Losses) on | | Gains (Losses) on | | Pension and | | Energy, Inc. | | |
| | Paid-in | | Retained | | Cash Flow | | Available-for- | | OPEB | | Stockholders' | | Noncontrolling | | Total | |
| | Capital | | Earnings | | Hedges | | Sale Securities | | Adjustments | | Equity | | Interests | | Equity | |
| Balance at December 31, 2019 | $ | 9,143 | | | $ | 6,465 | | | $ | (10) | | | $ | (1) | | | $ | (7) | | | $ | 15,590 | | | $ | 3 | | | $ | 15,593 | | |
| | | | | Three Months Ended March 31, 2021 and 2022 |
| | | | Accumulated Other Comprehensive Loss | |
| | | Net Gains | | Net Unrealized | | | Total Progress | |
| | | Additional | | (Losses) on | | Gains (Losses) on | | Pension and | | Energy, Inc. | |
| | | Paid-in | | Retained | | Cash Flow | | Available-for- | | OPEB | | Stockholders' | | Noncontrolling | | Total |
| | | Capital | | Earnings | | Hedges | | Sale Securities | | Adjustments | | Equity | | Interests | | Equity |
| Balance at December 31, 2020 | | Balance at December 31, 2020 | $ | 9,143 | | | $ | 7,109 | | | $ | (5) | | | $ | (2) | | | $ | (8) | | | $ | 16,237 | | | $ | 4 | | | $ | 16,241 | |
| Net income | Net income | — | | | 1,232 | | | — | | | — | | | — | | | 1,232 | | | 1 | | | 1,233 | | Net income | — | | | 290 | | | — | | | — | | | — | | | 290 | | | — | | | 290 | |
| Other comprehensive income | — | | | — | | | 3 | | | 1 | | | 1 | | | 5 | | | — | | | 5 | | |
| Other comprehensive income (loss) | | Other comprehensive income (loss) | — | | | — | | | 1 | | | (1) | | | — | | | — | | | — | | | — | |
| | Distributions to noncontrolling interests | Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (1) | | | (1) | | Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (1) | | | (1) | |
| Dividends to parent | — | | | (400) | | | — | | | — | | | — | | | (400) | | | — | | | (400) | | |
| | | Other | Other | — | | | (1) | | | — | | | — | | | — | | | (1) | | | — | | | (1) | | Other | — | | | 1 | | | — | | | — | | | — | | | 1 | | | (1) | | | — | |
| Balance at September 30, 2020 | $ | 9,143 | | | $ | 7,296 | | | $ | (7) | | | $ | — | | | $ | (6) | | | $ | 16,426 | | | $ | 3 | | | $ | 16,429 | | |
| Balance at March 31, 2021 | | Balance at March 31, 2021 | $ | 9,143 | | | $ | 7,400 | | | $ | (4) | | | $ | (3) | | | $ | (8) | | | $ | 16,528 | | | $ | 2 | | | $ | 16,530 | |
| | Balance at December 31, 2020 | $ | 9,143 | | | $ | 7,109 | | | $ | (5) | | | $ | (2) | | | $ | (8) | | | $ | 16,237 | | | $ | 4 | | | $ | 16,241 | | |
| Balance at December 31, 2021 | | Balance at December 31, 2021 | $ | 9,149 | | | $ | 8,007 | | | $ | (2) | | | $ | (2) | | | $ | (7) | | | $ | 17,145 | | | $ | 3 | | | $ | 17,148 | |
| Net income | Net income | — | | | 1,333 | | | — | | | — | | | — | | | 1,333 | | | 1 | | | 1,334 | | Net income | — | | | 354 | | | — | | | — | | | — | | | 354 | | | — | | | 354 | |
| Other comprehensive income | — | | | — | | | 2 | | | — | | | — | | | 2 | | | — | | | 2 | | |
| Other comprehensive income (loss) | | Other comprehensive income (loss) | — | | | — | | | 1 | | | (2) | | | — | | | (1) | | | — | | | (1) | |
| Distributions to noncontrolling interests | Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (1) | | | (1) | | Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (1) | | | (1) | |
| Dividends to parent | Dividends to parent | — | | | (700) | | | — | | | — | | | — | | | (700) | | | — | | | (700) | | Dividends to parent | — | | | (250) | | | — | | | — | | | — | | | (250) | | | — | | | (250) | |
| | Equitization of certain notes payable to affiliates | | Equitization of certain notes payable to affiliates | — | | | 2,431 | | | — | | | — | | | — | | | 2,431 | | | — | | | 2,431 | |
| Other | Other | 6 | | | 1 | | | — | | | — | | | — | | | 7 | | | (1) | | | 6 | | Other | — | | | 1 | | | — | | | — | | | — | | | 1 | | | — | | | 1 | |
| Balance at September 30, 2021 | $ | 9,149 | | | $ | 7,743 | | | $ | (3) | | | $ | (2) | | | $ | (8) | | | $ | 16,879 | | | $ | 3 | | | $ | 16,882 | | |
| Balance at March 31, 2022 | | Balance at March 31, 2022 | $ | 9,149 | | | $ | 10,543 | | | $ | (1) | | | $ | (4) | | | $ | (7) | | | $ | 19,680 | | | $ | 2 | | | $ | 19,682 | |
See Notes to Condensed Consolidated Financial Statements
2221
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| | September 30, | | September 30, | | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | | 2022 | | 2021 |
| Operating Revenues | Operating Revenues | $ | 1,667 | | | $ | 1,626 | | | $ | 4,417 | | | $ | 4,207 | | Operating Revenues | | | $ | 1,632 | | | $ | 1,401 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 523 | | | 537 | | | 1,368 | | | 1,337 | | Fuel used in electric generation and purchased power | | | 574 | | | 436 | |
| Operation, maintenance and other | Operation, maintenance and other | 368 | | | 348 | | | 1,092 | | | 970 | | Operation, maintenance and other | | | 391 | | | 357 | |
| Depreciation and amortization | Depreciation and amortization | 290 | | | 289 | | | 811 | | | 833 | | Depreciation and amortization | | | 306 | | | 285 | |
| Property and other taxes | Property and other taxes | 39 | | | 38 | | | 129 | | | 129 | | Property and other taxes | | | 49 | | | 49 | |
| Impairment of assets and other charges | 42 | | | 5 | | | 60 | | | 5 | | |
| | Total operating expenses | Total operating expenses | 1,262 | | | 1,217 | | | 3,460 | | | 3,274 | | Total operating expenses | | | 1,320 | | | 1,127 | |
| Gains on Sales of Other Assets and Other, net | Gains on Sales of Other Assets and Other, net | 7 | | | 3 | | | 8 | | | 8 | | Gains on Sales of Other Assets and Other, net | | | 1 | | | — | |
| Operating Income | Operating Income | 412 | | | 412 | | | 965 | | | 941 | | Operating Income | | | 313 | | | 274 | |
| Other Income and Expenses, net | Other Income and Expenses, net | 67 | | | 11 | | | 111 | | | 52 | | Other Income and Expenses, net | | | 22 | | | 24 | |
| Interest Expense | Interest Expense | 79 | | | 66 | | | 226 | | | 203 | | Interest Expense | | | 85 | | | 69 | |
| Income Before Income Taxes | Income Before Income Taxes | 400 | | | 357 | | | 850 | | | 790 | | Income Before Income Taxes | | | 250 | | | 229 | |
| Income Tax Expense | Income Tax Expense | 25 | | | 11 | | | 50 | | | 79 | | Income Tax Expense | | | 35 | | | 19 | |
| Net Income and Comprehensive Income | Net Income and Comprehensive Income | $ | 375 | | | $ | 346 | | | $ | 800 | | | $ | 711 | | Net Income and Comprehensive Income | | | $ | 215 | | | $ | 210 | |
|
See Notes to Condensed Consolidated Financial Statements
22
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 42 | | | $ | 35 | |
| Receivables (net of allowance for doubtful accounts of $4 at 2022 and 2021) | 188 | | | 127 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $27 at 2022 and $17 at 2021) | 658 | | | 574 | |
| Receivables from affiliated companies | 20 | | | 65 | |
| Notes receivable from affiliated companies | 328 | | | — | |
| Inventory | 940 | | | 921 | |
| Regulatory assets (includes $39 at 2022 and 2021 related to VIEs) | 595 | | | 533 | |
| Other (includes $14 in 2022 and $0 in 2021 related to VIEs) | 200 | | | 83 | |
| Total current assets | 2,971 | | | 2,338 | |
| Property, Plant and Equipment | | | |
| Cost | 37,361 | | | 37,018 | |
| Accumulated depreciation and amortization | (13,691) | | | (13,387) | |
| Facilities to be retired, net | 24 | | | 26 | |
| Net property, plant and equipment | 23,694 | | | 23,657 | |
| Other Noncurrent Assets | | | |
| Regulatory assets (includes $711 at 2022 and $720 at 2021 related to VIEs) | 4,124 | | | 4,118 | |
| Nuclear decommissioning trust funds | 3,872 | | | 4,089 | |
| Operating lease right-of-use assets, net | 410 | | | 389 | |
| Other | 867 | | | 792 | |
| Total other noncurrent assets | 9,273 | | | 9,388 | |
| Total Assets | $ | 35,938 | | | $ | 35,383 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 450 | | | $ | 476 | |
| Accounts payable to affiliated companies | 260 | | | 310 | |
| Notes payable to affiliated companies | — | | | 172 | |
| Taxes accrued | 77 | | | 163 | |
| Interest accrued | 76 | | | 96 | |
| Current maturities of long-term debt (includes $32 at 2022 and $15 at 2021 related to VIEs) | 568 | | | 556 | |
| Asset retirement obligations | 268 | | | 274 | |
| Regulatory liabilities | 378 | | | 381 | |
| Other | 400 | | | 448 | |
| Total current liabilities | 2,477 | | | 2,876 | |
| Long-Term Debt (includes $1,080 at 2022 and $1,097 at 2021 related to VIEs) | 10,396 | | | 9,543 | |
| Long-Term Debt Payable to Affiliated Companies | 150 | | | 150 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 2,275 | | | 2,208 | |
| Asset retirement obligations | 5,411 | | | 5,401 | |
| Regulatory liabilities | 4,898 | | | 4,868 | |
| Operating lease liabilities | 372 | | | 350 | |
| Accrued pension and other post-retirement benefit costs | 218 | | | 221 | |
| Investment tax credits | 128 | | | 128 | |
| Other | 96 | | | 87 | |
| Total other noncurrent liabilities | 13,398 | | | 13,263 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's Equity | 9,517 | | | 9,551 | |
| | | |
| | | |
| Total Liabilities and Equity | $ | 35,938 | | | $ | 35,383 | |
See Notes to Condensed Consolidated Financial Statements
23
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Balance SheetsStatements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| (in millions) | September 30, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 51 | | | $ | 39 | |
| Receivables (net of allowance for doubtful accounts of $4 at 2021 and 2020) | 162 | | | 132 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $17 at 2021 and $19 at 2020) | 532 | | | 500 | |
| Receivables from affiliated companies | 68 | | | 50 | |
| | | |
| Inventory | 815 | | | 911 | |
| Regulatory assets | 499 | | | 492 | |
| Other | 116 | | | 60 | |
| Total current assets | 2,243 | | | 2,184 | |
| Property, Plant and Equipment | | | |
| Cost | 36,666 | | | 35,759 | |
| Accumulated depreciation and amortization | (13,365) | | | (12,801) | |
| Facilities to be retired, net | 27 | | | 29 | |
| Net property, plant and equipment | 23,328 | | | 22,987 | |
| Other Noncurrent Assets | | | |
| Regulatory assets | 3,955 | | | 3,976 | |
| Nuclear decommissioning trust funds | 3,857 | | | 3,500 | |
| Operating lease right-of-use assets, net | 402 | | | 346 | |
| Other | 772 | | | 740 | |
| Total other noncurrent assets | 8,986 | | | 8,562 | |
| Total Assets | $ | 34,557 | | | $ | 33,733 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 392 | | | $ | 454 | |
| Accounts payable to affiliated companies | 113 | | | 215 | |
| Notes payable to affiliated companies | 117 | | | 295 | |
| Taxes accrued | 163 | | | 85 | |
| Interest accrued | 68 | | | 99 | |
| Current maturities of long-term debt | 1,207 | | | 603 | |
| Asset retirement obligations | 234 | | | 283 | |
| Regulatory liabilities | 439 | | | 530 | |
| Other | 442 | | | 411 | |
| Total current liabilities | 3,175 | | | 2,975 | |
| Long-Term Debt | 8,491 | | | 8,505 | |
| Long-Term Debt Payable to Affiliated Companies | 150 | | | 150 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 2,488 | | | 2,298 | |
| Asset retirement obligations | 5,407 | | | 5,352 | |
| Regulatory liabilities | 4,685 | | | 4,394 | |
| Operating lease liabilities | 359 | | | 323 | |
| Accrued pension and other post-retirement benefit costs | 234 | | | 242 | |
| Investment tax credits | 129 | | | 132 | |
| Other | 79 | | | 102 | |
| Total other noncurrent liabilities | 13,381 | | | 12,843 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's Equity | 9,360 | | | 9,260 | |
| | | |
| | | |
| Total Liabilities and Equity | $ | 34,557 | | | $ | 33,733 | |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 215 | | | $ | 210 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization (including amortization of nuclear fuel) | 350 | | | 331 | |
| Equity component of AFUDC | (7) | | | (8) | |
| | | |
| | | |
| | | |
| Deferred income taxes | 19 | | | 6 | |
| | | |
| | | |
| Payments for asset retirement obligations | (41) | | | (46) | |
| | | |
| Provision for rate refunds | (16) | | | — | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | 164 | | | 2 | |
| Receivables | (70) | | | 131 | |
| Receivables from affiliated companies | 63 | | | (20) | |
| Inventory | (19) | | | 29 | |
| Other current assets | (75) | | | (21) | |
| Increase (decrease) in | | | |
| Accounts payable | 18 | | | (62) | |
| Accounts payable to affiliated companies | (50) | | | 10 | |
| Taxes accrued | (85) | | | (12) | |
| Other current liabilities | (67) | | | (25) | |
| Other assets | (56) | | | (35) | |
| Other liabilities | 47 | | | (15) | |
| Net cash provided by operating activities | 390 | | | 475 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (467) | | | (400) | |
| | | |
| | | |
| Purchases of debt and equity securities | (481) | | | (382) | |
| Proceeds from sales and maturities of debt and equity securities | 480 | | | 380 | |
| | | |
| Notes receivable from affiliated companies | (328) | | | — | |
| | | |
| Other | (19) | | | (29) | |
| Net cash used in investing activities | (815) | | | (431) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 889 | | | 98 | |
| Payments for the: | | | |
| Payments for the redemption of long-term debt | (21) | | | (2) | |
| | | |
| | | |
| Notes payable to affiliated companies | (172) | | | (132) | |
| | | |
| Distributions to parent | (250) | | | — | |
| | | |
| Other | (1) | | | (1) | |
| Net cash provided by (used in) financing activities | 445 | | | (37) | |
| Net increase in cash, cash equivalents and restricted cash | 20 | | | 7 | |
| Cash, cash equivalents and restricted cash at beginning of period | 39 | | | 39 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 59 | | | $ | 46 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 111 | | | $ | 96 | |
| | | |
See Notes to Condensed Consolidated Financial Statements
24
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| (in millions) | 2021 | | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 800 | | | $ | 711 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization (including amortization of nuclear fuel) | 951 | | | 972 | |
| Equity component of AFUDC | (25) | | | (22) | |
| | | |
| | | |
| Impairment of assets and other charges | 60 | | | 5 | |
| Deferred income taxes | 22 | | | (33) | |
| | | |
| | | |
| Payments for asset retirement obligations | (129) | | | (249) | |
| | | |
| Provision for rate refunds | (22) | | | 4 | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | 108 | | | — | |
| Receivables | (66) | | | (34) | |
| Receivables from affiliated companies | (18) | | | 7 | |
| Inventory | 95 | | | 24 | |
| Other current assets | (79) | | | 82 | |
| Increase (decrease) in | | | |
| Accounts payable | 20 | | | (185) | |
| Accounts payable to affiliated companies | (102) | | | (59) | |
| Taxes accrued | 75 | | | 190 | |
| Other current liabilities | (36) | | | (24) | |
| Other assets | 48 | | | (185) | |
| Other liabilities | (32) | | | 21 | |
| Net cash provided by operating activities | 1,670 | | | 1,225 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (1,313) | | | (1,142) | |
| | | |
| | | |
| Purchases of debt and equity securities | (1,306) | | | (1,269) | |
| Proceeds from sales and maturities of debt and equity securities | 1,291 | | | 1,238 | |
| | | |
| | | |
| | | |
| Other | (36) | | | (31) | |
| Net cash used in investing activities | (1,364) | | | (1,204) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 1,190 | | | 1,296 | |
| | | |
| Payments for the redemption of long-term debt | (605) | | | (985) | |
| | | |
| | | |
| Notes payable to affiliated companies | (178) | | | 101 | |
| | | |
| Distributions to parent | (700) | | | (400) | |
| | | |
| Other | (1) | | | (12) | |
| Net cash used in financing activities | (294) | | | — | |
| Net increase in cash and cash equivalents | 12 | | | 21 | |
| Cash and cash equivalents at beginning of period | 39 | | | 22 | |
| Cash and cash equivalents at end of period | $ | 51 | | | $ | 43 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 82 | | | $ | 124 | |
| | | |
See Notes to Condensed Consolidated Financial Statements
25
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | | | | | | | | |
| | | | | Three Months Ended | | |
| | | | | September 30, 2020 and 2021 | | |
| | | | | | | |
(in millions) | | | | | Member's Equity | | |
Balance at June 30, 2020 | | | | | $ | 9,610 | | | |
Net income | | | | | 346 | | | |
Distributions to parent | | | | | (400) | | | |
| | | | | | | |
| | | | | | | |
Balance at September 30, 2020 | | | | | $ | 9,556 | | | |
| | | | | | | |
Balance at June 30, 2021 | | | | | $ | 9,685 | | | |
Net income | | | | | 375 | | | |
| | | | | | | |
Distributions to parent | | | | | (700) | | | |
| | | | | | | |
Balance at September 30, 2021 | | | | | $ | 9,360 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | NineThree Months Ended | | |
| | | | | September 30, 2020March 31, 2021 and 20212022 | | |
| | | | | | | |
| (in millions) | | | | | Member's Equity | | |
Balance at December 31, 2019 | | | | | $ | 9,246 | | | |
Net income | | | | | 711 | | | |
Distributions to parent | | | | | (400) | | | |
Other | | | | | (1) | | | |
| | | | | | | |
Balance at September 30, 2020 | | | | | $ | 9,556 | | | |
| | | | | | | |
Balance at December 31, 2020 | | | | | $ | 9,260 | | | |
| Net income | | | | | 800210 | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Balance at March 31, 2021 | | | | | $ | 9,470 | | | |
| | | | | | | |
| Balance at December 31, 2021 | | | | | $ | 9,551 | | | |
| Net income | | | | | 215 | | | |
| | | | | | | |
| | | | | | | |
| Distributions to parent | | | | | (700)(250) | | | |
| Other | | | | | 1 | | | |
Balance at September 30, 2021March 31, 2022 | | | | | $ | 9,3609,517 | | | |
See Notes to Condensed Consolidated Financial Statements
2625
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| | September 30, | | September 30, | | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | | 2022 | | 2021 |
| Operating Revenues | Operating Revenues | $ | 1,561 | | | $ | 1,567 | | | $ | 3,987 | | | $ | 3,897 | | Operating Revenues | | | $ | 1,355 | | | $ | 1,101 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 552 | | | 551 | | | 1,335 | | | 1,291 | | Fuel used in electric generation and purchased power | | | 490 | | | 359 | |
| Operation, maintenance and other | Operation, maintenance and other | 263 | | | 292 | | | 760 | | | 806 | | Operation, maintenance and other | | | 249 | | | 242 | |
| Depreciation and amortization | Depreciation and amortization | 214 | | | 183 | | | 619 | | | 523 | | Depreciation and amortization | | | 231 | | | 200 | |
| Property and other taxes | Property and other taxes | 105 | | | 110 | | | 290 | | | 290 | | Property and other taxes | | | 103 | | | 93 | |
| Impairment of assets and other charges | — | | | (4) | | | 19 | | | (4) | | |
| | Total operating expenses | Total operating expenses | 1,134 | | | 1,132 | | | 3,023 | | | 2,906 | | Total operating expenses | | | 1,073 | | | 894 | |
| Gains on Sales of Other Assets and Other, net | Gains on Sales of Other Assets and Other, net | 1 | | | — | | | 1 | | | — | | Gains on Sales of Other Assets and Other, net | | | 1 | | | — | |
| Operating Income | Operating Income | 428 | | | 435 | | | 965 | | | 991 | | Operating Income | | | 283 | | | 207 | |
| Other Income and Expenses, net | Other Income and Expenses, net | 18 | | | 11 | | | 54 | | | 36 | | Other Income and Expenses, net | | | 15 | | | 18 | |
| Interest Expense | Interest Expense | 79 | | | 81 | | | 239 | | | 245 | | Interest Expense | | | 84 | | | 80 | |
| Income Before Income Taxes | Income Before Income Taxes | 367 | | | 365 | | | 780 | | | 782 | | Income Before Income Taxes | | | 214 | | | 145 | |
| Income Tax Expense | Income Tax Expense | 70 | | | 78 | | | 149 | | | 159 | | Income Tax Expense | | | 43 | | | 28 | |
| Net Income | Net Income | $ | 297 | | | $ | 287 | | | $ | 631 | | | $ | 623 | | Net Income | | | $ | 171 | | | $ | 117 | |
| | Other Comprehensive Income, net of tax | | |
| Other Comprehensive Loss, net of tax | | Other Comprehensive Loss, net of tax | | |
| | Unrealized gains on available-for-sale securities | — | | | 1 | | | — | | | 1 | | |
| Unrealized losses on available-for-sale securities | | Unrealized losses on available-for-sale securities | | | (1) | | | (1) | |
| | Comprehensive Income | Comprehensive Income | $ | 297 | | | $ | 288 | | | $ | 631 | | | $ | 624 | | Comprehensive Income | | | $ | 170 | | | $ | 116 | |
See Notes to Condensed Consolidated Financial Statements
26
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 13 | | | $ | 23 | |
| Receivables (net of allowance for doubtful accounts of $8 at 2022 and 2021) | 97 | | | 117 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $13 at 2022 and $8 at 2021) | 508 | | | 432 | |
| Receivables from affiliated companies | 16 | | | 16 | |
| | | |
| Inventory | 463 | | | 477 | |
| Regulatory assets (includes $54 at 2022 and 2021 related to VIEs) | 505 | | | 497 | |
| Other (includes $13 at 2022 and $39 at 2021 related to VIEs) | 79 | | | 80 | |
| Total current assets | 1,681 | | | 1,642 | |
| Property, Plant and Equipment | | | |
| Cost | 24,257 | | | 23,865 | |
| Accumulated depreciation and amortization | (6,003) | | | (5,819) | |
| Net property, plant and equipment | 18,254 | | | 18,046 | |
| Other Noncurrent Assets | | | |
| Regulatory assets (includes $872 at 2022 and $883 at 2021 related to VIEs) | 1,899 | | | 1,791 | |
| Nuclear decommissioning trust funds | 514 | | | 553 | |
| Operating lease right-of-use assets, net | 291 | | | 302 | |
| Other | 418 | | | 399 | |
| Total other noncurrent assets | 3,122 | | | 3,045 | |
| Total Assets | $ | 23,057 | | | $ | 22,733 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 532 | | | $ | 623 | |
| Accounts payable to affiliated companies | 120 | | | 209 | |
| Notes payable to affiliated companies | 468 | | | 199 | |
| Taxes accrued | 96 | | | 51 | |
| Interest accrued | 84 | | | 68 | |
| Current maturities of long-term debt (includes $56 at 2022 and 2021 related to VIEs) | 77 | | | 76 | |
| Asset retirement obligations | 1 | | | 1 | |
| Regulatory liabilities | 91 | | | 98 | |
| Other | 349 | | | 408 | |
| Total current liabilities | 1,818 | | | 1,733 | |
| Long-Term Debt (includes $1,166 at 2022 and $1,196 at 2021 related to VIEs) | 8,374 | | | 8,406 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 2,503 | | | 2,434 | |
| Asset retirement obligations | 411 | | | 436 | |
| Regulatory liabilities | 772 | | | 698 | |
| Operating lease liabilities | 247 | | | 256 | |
| Accrued pension and other post-retirement benefit costs | 161 | | | 166 | |
| Other | 306 | | | 309 | |
| Total other noncurrent liabilities | 4,400 | | | 4,299 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's equity | 8,469 | | | 8,298 | |
| Accumulated other comprehensive loss | (4) | | | (3) | |
| Total equity | 8,465 | | | 8,295 | |
| Total Liabilities and Equity | $ | 23,057 | | | $ | 22,733 | |
See Notes to Condensed Consolidated Financial Statements
27
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Balance SheetsStatements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| (in millions) | September 30, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 40 | | | $ | 11 | |
| Receivables (net of allowance for doubtful accounts of $8 at 2021 and $4 at 2020) | 104 | | | 94 | |
| Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2021 and $10 at 2020) | 449 | | | 401 | |
| Receivables from affiliated companies | 3 | | | 3 | |
| | | |
| Inventory | 439 | | | 464 | |
| Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs) | 365 | | | 265 | |
| Other (includes $17 at 2021 and $39 at 2020 related to VIEs) | 35 | | | 41 | |
| Total current assets | 1,435 | | | 1,279 | |
| Property, Plant and Equipment | | | |
| Cost | 23,300 | | | 22,123 | |
| Accumulated depreciation and amortization | (5,839) | | | (5,560) | |
| Net property, plant and equipment | 17,461 | | | 16,563 | |
| Other Noncurrent Assets | | | |
| Regulatory assets (includes $896 at 2021 and $937 at 2020 related to VIEs) | 1,829 | | | 1,799 | |
| Nuclear decommissioning trust funds | 570 | | | 637 | |
| Operating lease right-of-use assets, net | 312 | | | 344 | |
| Other | 351 | | | 335 | |
| Total other noncurrent assets | 3,062 | | | 3,115 | |
| Total Assets | $ | 21,958 | | | $ | 20,957 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 506 | | | $ | 465 | |
| Accounts payable to affiliated companies | 129 | | | 85 | |
| Notes payable to affiliated companies | 603 | | | 196 | |
| Taxes accrued | 177 | | | 82 | |
| Interest accrued | 72 | | | 69 | |
| Current maturities of long-term debt (includes $56 at 2021 and $305 at 2020 related to VIEs) | 276 | | | 823 | |
| | | |
| Regulatory liabilities | 102 | | | 110 | |
| Other | 403 | | | 374 | |
| Total current liabilities | 2,268 | | | 2,204 | |
| Long-Term Debt (includes $1,196 at 2021 and $1,002 at 2020 related to VIEs) | 7,273 | | | 7,092 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 2,382 | | | 2,191 | |
| Asset retirement obligations | 443 | | | 514 | |
| Regulatory liabilities | 649 | | | 658 | |
| Operating lease liabilities | 265 | | | 300 | |
| Accrued pension and other post-retirement benefit costs | 225 | | | 231 | |
| Other | 265 | | | 209 | |
| Total other noncurrent liabilities | 4,229 | | | 4,103 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's equity | 8,190 | | | 7,560 | |
| Accumulated other comprehensive loss | (2) | | | (2) | |
| Total equity | 8,188 | | | 7,558 | |
| Total Liabilities and Equity | $ | 21,958 | | | $ | 20,957 | |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 171 | | | $ | 117 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, amortization and accretion | 273 | | | 243 | |
| Equity component of AFUDC | (5) | | | (4) | |
| | | |
| | | |
| Deferred income taxes | 52 | | | 74 | |
| | | |
| | | |
| | | |
| Payments for asset retirement obligations | (28) | | | (24) | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | — | | | 2 | |
| Receivables | (54) | | | 83 | |
| Receivables from affiliated companies | — | | | (4) | |
| Inventory | 14 | | | 10 | |
| Other current assets | (72) | | | (101) | |
| Increase (decrease) in | | | |
| Accounts payable | 9 | | | (7) | |
| Accounts payable to affiliated companies | (89) | | | 23 | |
| Taxes accrued | 45 | | | 3 | |
| Other current liabilities | (52) | | | (41) | |
| Other assets | (24) | | | 12 | |
| Other liabilities | (6) | | | (48) | |
| Net cash provided by operating activities | 234 | | | 338 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (514) | | | (396) | |
| | | |
| | | |
| Purchases of debt and equity securities | (49) | | | (134) | |
| Proceeds from sales and maturities of debt and equity securities | 69 | | | 157 | |
| | | |
| | | |
| | | |
| | | |
| Other | (10) | | | (30) | |
| Net cash used in investing activities | (504) | | | (403) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| | | |
| | | |
| Payments for the redemption of long-term debt | (34) | | | (33) | |
| | | |
| | | |
| Notes payable to affiliated companies | 269 | | | 83 | |
| | | |
| | | |
| Other | (1) | | | — | |
| Net cash provided by financing activities | 234 | | | 50 | |
| Net decrease in cash, cash equivalents and restricted cash | (36) | | | (15) | |
| Cash, cash equivalents and restricted cash at beginning of period | 62 | | | 50 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 26 | | | $ | 35 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 237 | | | $ | 222 | |
See Notes to Condensed Consolidated Financial Statements
28
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| (in millions) | 2021 | | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 631 | | | $ | 623 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, amortization and accretion | 752 | | | 755 | |
| Equity component of AFUDC | (12) | | | (8) | |
| | | |
| Impairment of assets and other charges | 19 | | | (4) | |
| Deferred income taxes | 207 | | | 19 | |
| | | |
| | | |
| | | |
| Payments for asset retirement obligations | (77) | | | (38) | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | 7 | | | (17) | |
| Receivables | (57) | | | (172) | |
| Receivables from affiliated companies | — | | | (3) | |
| Inventory | 25 | | | 22 | |
| Other current assets | (247) | | | 41 | |
| Increase (decrease) in | | | |
| Accounts payable | 59 | | | 63 | |
| Accounts payable to affiliated companies | 44 | | | (54) | |
| Taxes accrued | 95 | | | 217 | |
| Other current liabilities | (5) | | | (20) | |
| Other assets | (46) | | | 48 | |
| Other liabilities | (94) | | | (136) | |
| Net cash provided by operating activities | 1,301 | | | 1,336 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (1,316) | | | (1,460) | |
| | | |
| | | |
| Purchases of debt and equity securities | (277) | | | (3,284) | |
| Proceeds from sales and maturities of debt and equity securities | 358 | | | 3,305 | |
| | | |
| | | |
| Notes receivable from affiliated companies | — | | | 173 | |
| | | |
| Other | (95) | | | (82) | |
| Net cash used in investing activities | (1,330) | | | (1,348) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | — | | | 495 | |
| | | |
| Payments for the redemption of long-term debt | (372) | | | (570) | |
| | | |
| | | |
| Notes payable to affiliated companies | 408 | | | 66 | |
| | | |
| | | |
| | | |
| Net cash provided by (used in) financing activities | 36 | | | (9) | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | 7 | | | (21) | |
| Cash, cash equivalents and restricted cash at beginning of period | 50 | | | 56 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 57 | | | $ | 35 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 208 | | | $ | 187 | |
See Notes to Condensed Consolidated Financial Statements
29
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2020 and 2021 |
| | | Accumulated | | |
| | | Other | | |
| | | Comprehensive | | |
| | | Income (Loss) | | |
| | | Net Unrealized | | |
| | | Losses on | | |
| Member's | | Available-for-Sale | | Total |
| (in millions) | Equity | | Securities | | Equity |
| Balance at June 30, 2020 | $ | 7,125 | | | $ | (1) | | | $ | 7,124 | |
| Net income | 287 | | | — | | | 287 | |
| Other comprehensive income | — | | | 1 | | | 1 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Other | (1) | | | — | | | (1) | |
| Balance at September 30, 2020 | $ | 7,411 | | | $ | — | | | $ | 7,411 | |
| | | | | |
| Balance at June 30, 2021 | $ | 7,893 | | | $ | (2) | | | $ | 7,891 | |
| Net income | 297 | | | — | | | 297 | |
| | | | | |
| | | | | |
| Balance at September 30, 2021 | $ | 8,190 | | | $ | (2) | | | $ | 8,188 | |
| | | | | |
| Nine Months Ended September 30, 2020 and 2021 |
| | | Accumulated | | |
| | | Other | | |
| | | Comprehensive | | |
| | | Income (Loss) | | |
| | | Net Unrealized | | |
| | | Losses on | | |
| Member's | | Available-for-Sale | | Total |
| (in millions) | Equity | | Securities | | Equity |
| Balance at December 31, 2019 | $ | 6,789 | | | $ | (1) | | | $ | 6,788 | |
| Net income | 623 | | | — | | | 623 | |
| Other comprehensive income | — | | | 1 | | | 1 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Other | (1) | | | — | | | (1) | |
| Balance at September 30, 2020 | $ | 7,411 | | | $ | — | | | $ | 7,411 | |
| | | | | |
| Balance at December 31, 2020 | $ | 7,560 | | | $ | (2) | | | $ | 7,558 | |
| Net income | 631 | | | — | | | 631 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Other | (1) | | | — | | | (1) | |
| Balance at September 30, 2021 | $ | 8,190 | | | $ | (2) | | | $ | 8,188 | |
| | | | | | | | | | | | | | | | | |
| |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Three Months Ended March 31, 2021 and 2022 |
| | | Accumulated | | |
| | | Other | | |
| | | Comprehensive | | |
| | | Loss | | |
| | | Net Unrealized | | |
| | | Losses on | | |
| Member's | | Available-for-Sale | | Total |
| (in millions) | Equity | | Securities | | Equity |
| Balance at December 31, 2020 | $ | 7,560 | | | $ | (2) | | | $ | 7,558 | |
| Net income | 117 | | | — | | | 117 | |
| Other comprehensive loss | — | | | (1) | | | (1) | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Balance at March 31, 2021 | $ | 7,677 | | | $ | (3) | | | $ | 7,674 | |
| | | | | |
| Balance at December 31, 2021 | $ | 8,298 | | | $ | (3) | | | $ | 8,295 | |
| Net income | 171 | | | — | | | 171 | |
| Other comprehensive loss | — | | | (1) | | | (1) | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Balance at March 31, 2022 | $ | 8,469 | | | $ | (4) | | | $ | 8,465 | |
See Notes to Condensed Consolidated Financial Statements
3029
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended | |
| | September 30, | | September 30, | | March 31, | |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | 2022 | | 2021 | |
| Operating Revenues | Operating Revenues | | Operating Revenues | | |
| Regulated electric | Regulated electric | $ | 413 | | | $ | 394 | | | $ | 1,119 | | | $ | 1,070 | | Regulated electric | $ | 412 | | | $ | 363 | | |
| Regulated natural gas | Regulated natural gas | 93 | | | 79 | | | 375 | | | 324 | | Regulated natural gas | 226 | | | 169 | | |
| | Total operating revenues | Total operating revenues | 506 | | | 473 | | | 1,494 | | | 1,394 | | Total operating revenues | 638 | | | 532 | | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 119 | | | 94 | | | 294 | | | 258 | | Fuel used in electric generation and purchased power | 127 | | | 82 | | |
| | Cost of natural gas | Cost of natural gas | 9 | | | 3 | | | 76 | | | 46 | | Cost of natural gas | 107 | | | 51 | | |
| Operation, maintenance and other | Operation, maintenance and other | 116 | | | 115 | | | 335 | | | 333 | | Operation, maintenance and other | 178 | | | 108 | | |
| Depreciation and amortization | Depreciation and amortization | 79 | | | 72 | | | 228 | | | 208 | | Depreciation and amortization | 80 | | | 74 | | |
| Property and other taxes | Property and other taxes | 91 | | | 83 | | | 266 | | | 244 | | Property and other taxes | 101 | | | 92 | | |
| Impairment of assets and other charges | — | | | — | | | 5 | | | — | | |
| | Total operating expenses | Total operating expenses | 414 | | | 367 | | | 1,204 | | | 1,089 | | Total operating expenses | 593 | | | 407 | | |
| | Operating Income | Operating Income | 92 | | | 106 | | | 290 | | | 305 | | Operating Income | 45 | | | 125 | | |
| Other Income and Expenses, net | Other Income and Expenses, net | 4 | | | 4 | | | 14 | | | 11 | | Other Income and Expenses, net | 6 | | | 5 | | |
| Interest Expense | Interest Expense | 29 | | | 26 | | | 82 | | | 75 | | Interest Expense | 30 | | | 25 | | |
| Income Before Income Taxes | Income Before Income Taxes | 67 | | | 84 | | | 222 | | | 241 | | Income Before Income Taxes | 21 | | | 105 | | |
| Income Tax Expense | 9 | | | 14 | | | 34 | | | 40 | | |
| Income Tax (Benefit) Expense | | Income Tax (Benefit) Expense | (56) | | | 14 | | |
| | Net Income and Comprehensive Income | Net Income and Comprehensive Income | $ | 58 | | | $ | 70 | | | $ | 188 | | | $ | 201 | | Net Income and Comprehensive Income | $ | 77 | | | $ | 91 | | |
|
See Notes to Condensed Consolidated Financial Statements
30
DUKE ENERGY OHIO, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 15 | | | $ | 13 | |
| Receivables (net of allowance for doubtful accounts of $4 at 2022 and 2021) | 101 | | | 96 | |
| Receivables from affiliated companies | 93 | | | 122 | |
| Notes receivable from affiliated companies | — | | | 15 | |
| Inventory | 114 | | | 116 | |
| | | |
| Regulatory assets | 60 | | | 72 | |
| Other | 23 | | | 57 | |
| Total current assets | 406 | | | 491 | |
| Property, Plant and Equipment | | | |
| Cost | 11,818 | | | 11,725 | |
| Accumulated depreciation and amortization | (3,102) | | | (3,106) | |
| Generation facilities to be retired, net | — | | | 6 | |
| Net property, plant and equipment | 8,716 | | | 8,625 | |
| Other Noncurrent Assets | | | |
| Goodwill | 920 | | | 920 | |
| Regulatory assets | 584 | | | 635 | |
| | | |
| Operating lease right-of-use assets, net | 18 | | | 19 | |
| | | |
| Other | 87 | | | 84 | |
| Total other noncurrent assets | 1,609 | | | 1,658 | |
| Total Assets | $ | 10,731 | | | $ | 10,774 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 379 | | | $ | 348 | |
| Accounts payable to affiliated companies | 68 | | | 64 | |
| Notes payable to affiliated companies | 123 | | | 103 | |
| Taxes accrued | 219 | | | 275 | |
| Interest accrued | 32 | | | 30 | |
| | | |
| | | |
| Asset retirement obligations | 13 | | | 13 | |
| Regulatory liabilities | 67 | | | 62 | |
| Other | 73 | | | 82 | |
| Total current liabilities | 974 | | | 977 | |
| Long-Term Debt | 3,168 | | | 3,168 | |
| Long-Term Debt Payable to Affiliated Companies | 25 | | | 25 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 1,078 | | | 1,050 | |
| Asset retirement obligations | 124 | | | 123 | |
| Regulatory liabilities | 593 | | | 739 | |
| Operating lease liabilities | 18 | | | 18 | |
| Accrued pension and other post-retirement benefit costs | 109 | | | 109 | |
| | | |
| Other | 100 | | | 101 | |
| Total other noncurrent liabilities | 2,022 | | | 2,140 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2022 and 2021 | 762 | | | 762 | |
| Additional paid-in capital | 3,100 | | | 3,100 | |
| Retained earnings | 680 | | | 602 | |
| | | |
| Total equity | 4,542 | | | 4,464 | |
| Total Liabilities and Equity | $ | 10,731 | | | $ | 10,774 | |
See Notes to Condensed Consolidated Financial Statements
31
DUKE ENERGY OHIO, INC.
Condensed Consolidated Balance SheetsStatements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| (in millions) | September 30, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 16 | | | $ | 14 | |
| Receivables (net of allowance for doubtful accounts of $4 at 2021 and 2020) | 107 | | | 98 | |
| Receivables from affiliated companies | 77 | | | 102 | |
| | | |
| Inventory | 114 | | | 110 | |
| | | |
| Regulatory assets | 61 | | | 39 | |
| Other | 45 | | | 31 | |
| Total current assets | 420 | | | 394 | |
| Property, Plant and Equipment | | | |
| Cost | 11,531 | | | 11,022 | |
| Accumulated depreciation and amortization | (3,102) | | | (3,013) | |
| | | |
| Net property, plant and equipment | 8,429 | | | 8,009 | |
| Other Noncurrent Assets | | | |
| Goodwill | 920 | | | 920 | |
| Regulatory assets | 634 | | | 610 | |
| | | |
| Operating lease right-of-use assets, net | 19 | | | 20 | |
| | | |
| Other | 83 | | | 72 | |
| Total other noncurrent assets | 1,656 | | | 1,622 | |
| Total Assets | $ | 10,505 | | | $ | 10,025 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 304 | | | $ | 279 | |
| Accounts payable to affiliated companies | 59 | | | 68 | |
| Notes payable to affiliated companies | 451 | | | 169 | |
| Taxes accrued | 210 | | | 247 | |
| Interest accrued | 32 | | | 31 | |
| Current maturities of long-term debt | 50 | | | 50 | |
| | | |
| Asset retirement obligations | 17 | | | 3 | |
| Regulatory liabilities | 63 | | | 65 | |
| Other | 68 | | | 70 | |
| Total current liabilities | 1,254 | | | 982 | |
| Long-Term Debt | 3,017 | | | 3,014 | |
| Long-Term Debt Payable to Affiliated Companies | 25 | | | 25 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 1,032 | | | 981 | |
| Asset retirement obligations | 95 | | | 108 | |
| Regulatory liabilities | 734 | | | 748 | |
| Operating lease liabilities | 19 | | | 20 | |
| Accrued pension and other post-retirement benefit costs | 114 | | | 113 | |
| | | |
| Other | 92 | | | 99 | |
| Total other noncurrent liabilities | 2,086 | | | 2,069 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2021 and 2020 | 762 | | | 762 | |
| Additional paid-in capital | 2,776 | | | 2,776 | |
| Retained earnings | 585 | | | 397 | |
| | | |
| Total equity | 4,123 | | | 3,935 | |
| Total Liabilities and Equity | $ | 10,505 | | | $ | 10,025 | |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 77 | | | $ | 91 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 81 | | | 75 | |
| Equity component of AFUDC | (3) | | | (2) | |
| | | |
| | | |
| Deferred income taxes | (51) | | | 12 | |
| | | |
| | | |
| | | |
| Provision for rate refunds | 5 | | | — | |
| (Increase) decrease in | | | |
| | | |
| Receivables | (5) | | | — | |
| Receivables from affiliated companies | 15 | | | 5 | |
| Inventory | 2 | | | 2 | |
| Other current assets | 48 | | | (5) | |
| Increase (decrease) in | | | |
| Accounts payable | 88 | | | 8 | |
| Accounts payable to affiliated companies | — | | | (12) | |
| Taxes accrued | (56) | | | (55) | |
| Other current liabilities | (89) | | | (8) | |
| Other assets | (17) | | | (16) | |
| Other liabilities | 74 | | | 1 | |
| Net cash provided by operating activities | 169 | | | 96 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (210) | | | (220) | |
| | | |
| | | |
| Notes receivable from affiliated companies | 29 | | | 37 | |
| | | |
| Other | (6) | | | (10) | |
| Net cash used in investing activities | (187) | | | (193) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| | | |
| | | |
| Notes payable to affiliated companies | 21 | | | 101 | |
| | | |
| Other | (1) | | | — | |
| Net cash provided by financing activities | 20 | | | 101 | |
| Net increase in cash and cash equivalents | 2 | | | 4 | |
| Cash and cash equivalents at beginning of period | 13 | | | 14 | |
| Cash and cash equivalents at end of period | $ | 15 | | | $ | 18 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 82 | | | $ | 84 | |
| | | |
See Notes to Condensed Consolidated Financial Statements
32
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| (in millions) | 2021 | | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 188 | | | $ | 201 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 231 | | | 211 | |
| Equity component of AFUDC | (5) | | | (4) | |
| | | |
| Impairment of assets and other charges | 5 | | | — | |
| Deferred income taxes | 27 | | | 31 | |
| | | |
| | | |
| Payments for asset retirement obligations | (1) | | | (1) | |
| Provision for rate refunds | 12 | | | 10 | |
| (Increase) decrease in | | | |
| | | |
| Receivables | (9) | | | (5) | |
| Receivables from affiliated companies | (11) | | | 35 | |
| Inventory | (4) | | | 5 | |
| Other current assets | (34) | | | 5 | |
| Increase (decrease) in | | | |
| Accounts payable | 27 | | | (28) | |
| Accounts payable to affiliated companies | (9) | | | (14) | |
| Taxes accrued | (37) | | | (23) | |
| Other current liabilities | (12) | | | 6 | |
| Other assets | (35) | | | (24) | |
| Other liabilities | 8 | | | (7) | |
| Net cash provided by operating activities | 341 | | | 398 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (615) | | | (611) | |
| | | |
| | | |
| Notes receivable from affiliated companies | 36 | | | — | |
| | | |
| Other | (42) | | | (34) | |
| Net cash used in investing activities | (621) | | | (645) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | — | | | 467 | |
| | | |
| Notes payable to affiliated companies | 282 | | | (227) | |
| | | |
| | | |
| Net cash provided by financing activities | 282 | | | 240 | |
| Net increase (decrease) in cash and cash equivalents | 2 | | | (7) | |
| Cash and cash equivalents at beginning of period | 14 | | | 17 | |
| Cash and cash equivalents at end of period | $ | 16 | | | $ | 10 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 103 | | | $ | 92 | |
| | | |
See Notes to Condensed Consolidated Financial Statements
33
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | | | Three Months Ended September 30, 2020 and 2021 | | Three Months Ended March 31, 2021 and 2022 |
| | | Additional | | | | | | Additional | | | |
| | Common | | Paid-in | | Retained | | | Total | | Common | | Paid-in | | Retained | | | Total |
| (in millions) | (in millions) | Stock | | Capital | | Earnings | | | Equity | (in millions) | Stock | | Capital | | Earnings | | | Equity |
| Balance at June 30, 2020 | $ | 762 | | | $ | 2,776 | | | $ | 276 | | | | $ | 3,814 | | |
| Net income | — | | | — | | | 70 | | | | 70 | | |
| | Balance at September 30, 2020 | $ | 762 | | | $ | 2,776 | | | $ | 346 | | | | $ | 3,884 | | |
| | Balance at June 30, 2021 | $ | 762 | | | $ | 2,776 | | | $ | 527 | | | | $ | 4,065 | | |
| Net income | — | | | — | | | 58 | | | | 58 | | |
| | Balance at September 30, 2021 | $ | 762 | | | $ | 2,776 | | | $ | 585 | | | | $ | 4,123 | | |
| | Nine Months Ended September 30, 2020 and 2021 | |
| | Additional | | | | |
| Common | | Paid-in | | Retained | | | Total | |
| (in millions) | Stock | | Capital | | Earnings | | | Equity | |
| Balance at December 31, 2019 | $ | 762 | | | $ | 2,776 | | | $ | 145 | | | | $ | 3,683 | | |
| Net income | — | | | — | | | 201 | | | | 201 | | |
| | Balance at September 30, 2020 | $ | 762 | | | $ | 2,776 | | | $ | 346 | | | | $ | 3,884 | | |
| | Balance at December 31, 2020 | Balance at December 31, 2020 | $ | 762 | | | $ | 2,776 | | | $ | 397 | | | | $ | 3,935 | | Balance at December 31, 2020 | $ | 762 | | | $ | 2,776 | | | $ | 397 | | | | $ | 3,935 | |
| Net income | Net income | — | | | — | | | 188 | | | | 188 | | Net income | — | | | — | | | 91 | | | | 91 | |
| | Balance at March 31, 2021 | | Balance at March 31, 2021 | $ | 762 | | | $ | 2,776 | | | $ | 488 | | | | $ | 4,026 | |
| | Balance at September 30, 2021 | $ | 762 | | | $ | 2,776 | | | $ | 585 | | | | $ | 4,123 | | |
| Balance at December 31, 2021 | | Balance at December 31, 2021 | $ | 762 | | | $ | 3,100 | | | $ | 602 | | | | $ | 4,464 | |
| Net income | | Net income | — | | | — | | | 77 | | | | 77 | |
| | Other | | Other | — | | | — | | | 1 | | | | 1 | |
| Balance at March 31, 2022 | | Balance at March 31, 2022 | $ | 762 | | | $ | 3,100 | | | $ | 680 | | | | $ | 4,542 | |
See Notes to Condensed Consolidated Financial Statements
3433
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| | September 30, | | September 30, | | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | | 2022 | | 2021 |
| Operating Revenues | Operating Revenues | $ | 886 | | | $ | 761 | | | $ | 2,366 | | | $ | 2,070 | | Operating Revenues | | | $ | 822 | | | $ | 745 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 292 | | | 222 | | | 710 | | | 577 | | Fuel used in electric generation and purchased power | | | 319 | | | 217 | |
| Operation, maintenance and other | Operation, maintenance and other | 173 | | | 207 | | | 543 | | | 564 | | Operation, maintenance and other | | | 192 | | | 178 | |
| Depreciation and amortization | Depreciation and amortization | 154 | | | 149 | | | 458 | | | 415 | | Depreciation and amortization | | | 156 | | | 152 | |
| Property and other taxes | Property and other taxes | 16 | | | 15 | | | 57 | | | 57 | | Property and other taxes | | | 25 | | | 21 | |
| Impairment of assets and other charges | Impairment of assets and other charges | — | | | — | | | 8 | | | — | | Impairment of assets and other charges | | | 211 | | | — | |
| Total operating expenses | Total operating expenses | 635 | | | 593 | | | 1,776 | | | 1,613 | | Total operating expenses | | | 903 | | | 568 | |
| Gains on Sales of Other Assets and Other, net | 1 | | | — | | | — | | | — | | |
| Operating Income | 252 | | | 168 | | | 590 | | | 457 | | |
| | Operating (Loss) Income | | Operating (Loss) Income | | | (81) | | | 177 | |
| Other Income and Expenses, net | Other Income and Expenses, net | 12 | | | 9 | | | 31 | | | 28 | | Other Income and Expenses, net | | | 10 | | | 9 | |
| Interest Expense | Interest Expense | 49 | | | 29 | | | 148 | | | 114 | | Interest Expense | | | 45 | | | 50 | |
| Income Before Income Taxes | 215 | | | 148 | | | 473 | | | 371 | | |
| Income Tax Expense | 34 | | | 29 | | | 77 | | | 72 | | |
| Net Income and Comprehensive Income | $ | 181 | | | $ | 119 | | | $ | 396 | | | $ | 299 | | |
| (Loss) Income Before Income Taxes | | (Loss) Income Before Income Taxes | | | (116) | | | 136 | |
| Income Tax (Benefit) Expense | | Income Tax (Benefit) Expense | | | (37) | | | 24 | |
| Net (Loss) Income and Comprehensive (Loss) Income | | Net (Loss) Income and Comprehensive (Loss) Income | | | $ | (79) | | | $ | 112 | |
|
See Notes to Condensed Consolidated Financial Statements
34
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 19 | | | $ | 6 | |
| Receivables (net of allowance for doubtful accounts of $3 at 2022 and 2021) | 83 | | | 100 | |
| Receivables from affiliated companies | 69 | | | 98 | |
| Notes receivable from affiliated companies | 20 | | | 134 | |
| Inventory | 430 | | | 418 | |
| Regulatory assets | 301 | | | 277 | |
| Other | 72 | | | 68 | |
| Total current assets | 994 | | | 1,101 | |
| Property, Plant and Equipment | | | |
| Cost | 17,494 | | | 17,343 | |
| Accumulated depreciation and amortization | (5,693) | | | (5,583) | |
| | | |
| Net property, plant and equipment | 11,801 | | | 11,760 | |
| Other Noncurrent Assets | | | |
| Regulatory assets | 1,077 | | | 1,278 | |
| | | |
| Operating lease right-of-use assets, net | 52 | | | 53 | |
| Other | 295 | | | 296 | |
| Total other noncurrent assets | 1,424 | | | 1,627 | |
| Total Assets | $ | 14,219 | | | $ | 14,488 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 268 | | | $ | 282 | |
| Accounts payable to affiliated companies | 187 | | | 221 | |
| | | |
| Taxes accrued | 131 | | | 73 | |
| Interest accrued | 56 | | | 49 | |
| Current maturities of long-term debt | 31 | | | 84 | |
| Asset retirement obligations | 115 | | | 110 | |
| Regulatory liabilities | 140 | | | 127 | |
| Other | 108 | | | 105 | |
| Total current liabilities | 1,036 | | | 1,051 | |
| Long-Term Debt | 4,089 | | | 4,089 | |
| Long-Term Debt Payable to Affiliated Companies | 150 | | | 150 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 1,234 | | | 1,303 | |
| Asset retirement obligations | 861 | | | 877 | |
| Regulatory liabilities | 1,557 | | | 1,565 | |
| Operating lease liabilities | 49 | | | 50 | |
| Accrued pension and other post-retirement benefit costs | 168 | | | 167 | |
| Investment tax credits | 177 | | | 177 | |
| Other | 74 | | | 44 | |
| Total other noncurrent liabilities | 4,120 | | | 4,183 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's Equity | 4,824 | | | 5,015 | |
| Total Liabilities and Equity | $ | 14,219 | | | $ | 14,488 | |
See Notes to Condensed Consolidated Financial Statements
35
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Balance SheetsStatements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| (in millions) | September 30, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 14 | | | $ | 7 | |
| Receivables (net of allowance for doubtful accounts of $3 at 2021 and 2020) | 81 | | | 55 | |
| Receivables from affiliated companies | 62 | | | 112 | |
| Notes receivable from affiliated companies | 252 | | | — | |
| Inventory | 367 | | | 473 | |
| Regulatory assets | 196 | | | 125 | |
| Other | 59 | | | 37 | |
| Total current assets | 1,031 | | | 809 | |
| Property, Plant and Equipment | | | |
| Cost | 17,320 | | | 17,382 | |
| Accumulated depreciation and amortization | (5,550) | | | (5,661) | |
| | | |
| Net property, plant and equipment | 11,770 | | | 11,721 | |
| Other Noncurrent Assets | | | |
| Regulatory assets | 1,300 | | | 1,203 | |
| | | |
| Operating lease right-of-use assets, net | 51 | | | 55 | |
| Other | 276 | | | 253 | |
| Total other noncurrent assets | 1,627 | | | 1,511 | |
| Total Assets | $ | 14,428 | | | $ | 14,041 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 239 | | | $ | 188 | |
| Accounts payable to affiliated companies | 198 | | | 88 | |
| Notes payable to affiliated companies | — | | | 131 | |
| Taxes accrued | 83 | | | 62 | |
| Interest accrued | 59 | | | 51 | |
| Current maturities of long-term debt | 151 | | | 70 | |
| Asset retirement obligations | 177 | | | 168 | |
| Regulatory liabilities | 147 | | | 111 | |
| Other | 104 | | | 83 | |
| Total current liabilities | 1,158 | | | 952 | |
| Long-Term Debt | 3,791 | | | 3,871 | |
| Long-Term Debt Payable to Affiliated Companies | 150 | | | 150 | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 1,289 | | | 1,228 | |
| Asset retirement obligations | 966 | | | 1,008 | |
| Regulatory liabilities | 1,573 | | | 1,627 | |
| Operating lease liabilities | 49 | | | 53 | |
| Accrued pension and other post-retirement benefit costs | 172 | | | 171 | |
| Investment tax credits | 172 | | | 168 | |
| Other | 53 | | | 30 | |
| Total other noncurrent liabilities | 4,274 | | | 4,285 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Member's Equity | 5,055 | | | 4,783 | |
| Total Liabilities and Equity | $ | 14,428 | | | $ | 14,041 | |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net (loss) income | $ | (79) | | | $ | 112 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, amortization and accretion | 157 | | | 153 | |
| Equity component of AFUDC | (7) | | | (5) | |
| | | |
| Impairment of assets and other charges | 211 | | | — | |
| Deferred income taxes | (81) | | | (12) | |
| | | |
| | | |
| Payments for asset retirement obligations | (15) | | | (10) | |
| | | |
| (Increase) decrease in | | | |
| Net realized and unrealized mark-to-market and hedging transactions | — | | | 1 | |
| Receivables | 4 | | | (9) | |
| Receivables from affiliated companies | 12 | | | — | |
| Inventory | (12) | | | 38 | |
| Other current assets | (22) | | | (23) | |
| Increase (decrease) in | | | |
| Accounts payable | 19 | | | 1 | |
| Accounts payable to affiliated companies | (22) | | | (16) | |
| Taxes accrued | 74 | | | 71 | |
| Other current liabilities | 14 | | | 20 | |
| Other assets | (10) | | | 3 | |
| Other liabilities | 50 | | | 12 | |
| Net cash provided by operating activities | 293 | | | 336 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (212) | | | (186) | |
| | | |
| Purchases of debt and equity securities | (16) | | | (5) | |
| Proceeds from sales and maturities of debt and equity securities | 13 | | | 4 | |
| | | |
| Notes receivable from affiliated companies | 131 | | | (1) | |
| Other | (17) | | | (7) | |
| Net cash used in investing activities | (101) | | | (195) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| | | |
| Payments for the redemption of long-term debt | (53) | | | — | |
| Notes payable to affiliated companies | — | | | (131) | |
| | | |
| Distributions to parent | (125) | | | — | |
| Other | (1) | | | — | |
| Net cash used in financing activities | (179) | | | (131) | |
| Net increase in cash and cash equivalents | 13 | | | 10 | |
| Cash and cash equivalents at beginning of period | 6 | | | 7 | |
| Cash and cash equivalents at end of period | $ | 19 | | | $ | 17 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 82 | | | $ | 74 | |
See Notes to Condensed Consolidated Financial Statements
36
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| (in millions) | 2021 | | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 396 | | | $ | 299 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, amortization and accretion | 460 | | | 416 | |
| Equity component of AFUDC | (19) | | | (18) | |
| | | |
| Impairment of assets and other charges | 8 | | | — | |
| Deferred income taxes | 19 | | | 11 | |
| | | |
| | | |
| Payments for asset retirement obligations | (49) | | | (48) | |
| | | |
| (Increase) decrease in | | | |
| | | |
| Receivables | (7) | | | 15 | |
| Receivables from affiliated companies | 17 | | | (5) | |
| Inventory | 106 | | | 10 | |
| Other current assets | (58) | | | 12 | |
| Increase (decrease) in | | | |
| Accounts payable | 46 | | | (1) | |
| Accounts payable to affiliated companies | (15) | | | (22) | |
| Taxes accrued | 25 | | | 65 | |
| Other current liabilities | 23 | | | (2) | |
| Other assets | 11 | | | (41) | |
| Other liabilities | 3 | | | 104 | |
| Net cash provided by operating activities | 966 | | | 795 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (584) | | | (669) | |
| | | |
| Purchases of debt and equity securities | (34) | | | (24) | |
| Proceeds from sales and maturities of debt and equity securities | 16 | | | 15 | |
| | | |
| Notes receivable from affiliated companies | (218) | | | — | |
| Other | (8) | | | (24) | |
| Net cash used in investing activities | (828) | | | (702) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | — | | | 544 | |
| Payments for the redemption of long-term debt | — | | | (500) | |
| Notes payable to affiliated companies | (131) | | | 53 | |
| | | |
| Distributions to parent | — | | | (200) | |
| | | |
| Net cash used in financing activities | (131) | | | (103) | |
| Net increase (decrease) in cash and cash equivalents | 7 | | | (10) | |
| Cash and cash equivalents at beginning of period | 7 | | | 25 | |
| Cash and cash equivalents at end of period | $ | 14 | | | $ | 15 | |
| Supplemental Disclosures: | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 105 | | | $ | 73 | |
See Notes to Condensed Consolidated Financial Statements
37
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | Three Months Ended |
| | | | | | | | | | | September 30, 2020March 31, 2021 and 20212022 |
| | | | | | | | | | | |
| (in millions) | | | | | | | | | | | Member's Equity |
Balance at June 30, 2020 | | | | | | | | | | | $ | 4,655 | |
Net income | | | | | | | | | | | 119 | |
| | | | | | | | | | | |
Distributions to parent | | | | | | | | | | | (100) | |
Balance at September 30, 2020 | | | | | | | | | | | $ | 4,674 | |
| | | | | | | | | | | |
Balance at June 30, 2021 | | | | | | | | | | | $ | 4,999 | |
Net income | | | | | | | | | | | 181 | |
Distributions to parent | | | | | | | | | | | (125) | |
Balance at September 30, 2021 | | | | | | | | | | | $ | 5,055 | |
| | | | | | | | | | | |
| | | | | | | | | | | Nine Months Ended |
| | | | | | | | | | | September 30, 2020 and 2021 |
| | | | | | | | | | | |
(in millions) | | | | | | | | | | | Member's Equity |
Balance at December 31, 2019 | | | | | | | | | | | $ | 4,575 | |
Net income | | | | | | | | | | | 299 | |
| | | | | | | | | | | |
Distributions to parent | | | | | | | | | | | (200) | |
| | | | | | | | | | | |
Balance at September 30, 2020 | | | | | | | | | | | $ | 4,674 | |
| | | | | | | | | | | |
| Balance at December 31, 2020 | | | | | | | | | | | $ | 4,783 | |
| Net income | | | | | | | | | | | 396112 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other | | | | | | | | | | | 1 | |
| Balance at March 31, 2021 | | | | | | | | | | | $ | 4,896 | |
| | | | | | | | | | | |
| Balance at December 31, 2021 | | | | | | | | | | | $ | 5,015 | |
| Net loss | | | | | | | | | | | (79) | |
| | | | | | | | | | | |
| Distributions to parent | | | | | | | | | | | (125)(113) | |
| Other | | | | | | | | | | | 1 | |
| | | | | | | | | | | |
Balance at September 30, 2021March 31, 2022 | | | | | | | | | | | $ | 5,0554,824 | |
See Notes to Condensed Consolidated Financial Statements
3837
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | | Three Months Ended |
| | September 30, | | September 30, | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | 2022 | | 2021 |
| | Operating Revenues | Operating Revenues | $ | 195 | | | $ | 162 | | | $ | 1,016 | | | $ | 871 | | Operating Revenues | | $ | 805 | | | $ | 606 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Cost of natural gas | Cost of natural gas | 66 | | | 39 | | | 354 | | | 254 | | Cost of natural gas | | 374 | | | 225 | |
| Operation, maintenance and other | Operation, maintenance and other | 77 | | | 75 | | | 231 | | | 234 | | Operation, maintenance and other | | 95 | | | 78 | |
| Depreciation and amortization | Depreciation and amortization | 51 | | | 45 | | | 150 | | | 133 | | Depreciation and amortization | | 54 | | | 48 | |
| Property and other taxes | Property and other taxes | 16 | | | 13 | | | 44 | | | 37 | | Property and other taxes | | 16 | | | 14 | |
| Impairment of assets and other charges | 4 | | | 7 | | | 9 | | | 7 | | |
| | Total operating expenses | Total operating expenses | 214 | | | 179 | | | 788 | | | 665 | | Total operating expenses | | 539 | | | 365 | |
| | Operating (Loss) Income | (19) | | | (17) | | | 228 | | | 206 | | |
| Operating Income | | Operating Income | | 266 | | | 241 | |
| | Other Income and Expenses, net | Other Income and Expenses, net | 16 | | | 16 | | | 51 | | | 44 | | Other Income and Expenses, net | | 13 | | | 17 | |
| | Interest Expense | Interest Expense | 29 | | | 29 | | | 88 | | | 89 | | Interest Expense | | 32 | | | 29 | |
| (Loss) Income Before Income Taxes | (32) | | | (30) | | | 191 | | | 161 | | |
| Income Tax (Benefit) Expense | (8) | | | (5) | | | 16 | | | 6 | | |
| Net (Loss) Income and Comprehensive (Loss) Income | $ | (24) | | | $ | (25) | | | $ | 175 | | | $ | 155 | | |
| Income Before Income Taxes | | Income Before Income Taxes | | 247 | | | 229 | |
| Income Tax Expense | | Income Tax Expense | | 33 | | | 26 | |
| Net Income and Comprehensive Income | | Net Income and Comprehensive Income | | $ | 214 | | | $ | 203 | |
|
See Notes to Condensed Consolidated Financial Statements
38
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| (in millions) | March 31, 2022 | | December 31, 2021 |
| ASSETS | | | |
| Current Assets | | | |
| | | |
| Receivables (net of allowance for doubtful accounts of $17 at 2022 and $15 at 2021) | $ | 303 | | | $ | 318 | |
| Receivables from affiliated companies | 13 | | | 11 | |
| | | |
| Inventory | 51 | | | 109 | |
| Regulatory assets | 133 | | | 141 | |
| | | |
| Other | 16 | | | 9 | |
| Total current assets | 516 | | | 588 | |
| Property, Plant and Equipment | | | |
| Cost | 10,110 | | | 9,918 | |
| Accumulated depreciation and amortization | (1,952) | | | (1,899) | |
| Facilities to be retired, net | 10 | | | 11 | |
| Net property, plant and equipment | 8,168 | | | 8,030 | |
| Other Noncurrent Assets | | | |
| Goodwill | 49 | | | 49 | |
| Regulatory assets | 349 | | | 316 | |
| Operating lease right-of-use assets, net | 15 | | | 16 | |
| Investments in equity method unconsolidated affiliates | 97 | | | 95 | |
| Other | 307 | | | 288 | |
| Total other noncurrent assets | 817 | | | 764 | |
| Total Assets | $ | 9,501 | | | $ | 9,382 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 170 | | | $ | 196 | |
| Accounts payable to affiliated companies | 52 | | | 40 | |
| | | |
| Notes payable to affiliated companies | 360 | | | 518 | |
| Taxes accrued | 79 | | | 63 | |
| Interest accrued | 35 | | | 37 | |
| | | |
| Regulatory liabilities | 98 | | | 56 | |
| Other | 73 | | | 81 | |
| Total current liabilities | 867 | | | 991 | |
| Long-Term Debt | 2,969 | | | 2,968 | |
| | | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 831 | | | 815 | |
| Asset retirement obligations | 22 | | | 22 | |
| Regulatory liabilities | 1,041 | | | 1,058 | |
| Operating lease liabilities | 13 | | | 14 | |
| Accrued pension and other post-retirement benefit costs | 7 | | | 7 | |
| | | |
| Other | 188 | | | 158 | |
| Total other noncurrent liabilities | 2,102 | | | 2,074 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Common stock, no par value: 100 shares authorized and outstanding at 2022 and 2021 | 1,635 | | | 1,635 | |
| | | |
| Retained earnings | 1,928 | | | 1,714 | |
| | | |
| Total equity | 3,563 | | | 3,349 | |
| Total Liabilities and Equity | $ | 9,501 | | | $ | 9,382 | |
See Notes to Condensed Consolidated Financial Statements
39
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Balance SheetsStatements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| (in millions) | September 30, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current Assets | | | |
| | | |
| Receivables (net of allowance for doubtful accounts of $15 at 2021 and $12 at 2020) | $ | 96 | | | $ | 250 | |
| Receivables from affiliated companies | 11 | | | 10 | |
| | | |
| Inventory | 68 | | | 68 | |
| Regulatory assets | 125 | | | 153 | |
| | | |
| Other | 59 | | | 20 | |
| Total current assets | 359 | | | 501 | |
| Property, Plant and Equipment | | | |
| Cost | 9,733 | | | 9,134 | |
| Accumulated depreciation and amortization | (1,862) | | | (1,749) | |
| Facilities to be retired, net | 11 | | | — | |
| Net property, plant and equipment | 7,882 | | | 7,385 | |
| Other Noncurrent Assets | | | |
| Goodwill | 49 | | | 49 | |
| Regulatory assets | 335 | | | 302 | |
| Operating lease right-of-use assets, net | 17 | | | 20 | |
| Investments in equity method unconsolidated affiliates | 100 | | | 88 | |
| Other | 282 | | | 270 | |
| Total other noncurrent assets | 783 | | | 729 | |
| Total Assets | $ | 9,024 | | | $ | 8,615 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 184 | | | $ | 230 | |
| Accounts payable to affiliated companies | 31 | | | 79 | |
| | | |
| Notes payable to affiliated companies | 315 | | | 530 | |
| Taxes accrued | 41 | | | 23 | |
| Interest accrued | 35 | | | 34 | |
| Current maturities of long-term debt | — | | | 160 | |
| Regulatory liabilities | 64 | | | 88 | |
| Other | 76 | | | 69 | |
| Total current liabilities | 746 | | | 1,213 | |
| Long-Term Debt | 2,968 | | | 2,620 | |
| | | |
| Other Noncurrent Liabilities | | | |
| Deferred income taxes | 875 | | | 821 | |
| Asset retirement obligations | 21 | | | 20 | |
| Regulatory liabilities | 1,004 | | | 1,044 | |
| Operating lease liabilities | 15 | | | 19 | |
| Accrued pension and other post-retirement benefit costs | 6 | | | 8 | |
| | | |
| Other | 175 | | | 155 | |
| Total other noncurrent liabilities | 2,096 | | | 2,067 | |
| Commitments and Contingencies | 0 | | 0 |
| Equity | | | |
| Common stock, no par value: 100 shares authorized and outstanding at 2021 and 2020 | 1,635 | | | 1,310 | |
| | | |
| Retained earnings | 1,579 | | | 1,405 | |
| | | |
| Total equity | 3,214 | | | 2,715 | |
| Total Liabilities and Equity | $ | 9,024 | | | $ | 8,615 | |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 214 | | | $ | 203 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 55 | | | 48 | |
| Equity component of AFUDC | (1) | | | (6) | |
| | | |
| | | |
| | | |
| | | |
| Deferred income taxes | (11) | | | (12) | |
| Equity in earnings from unconsolidated affiliates | (2) | | | (2) | |
| | | |
| | | |
| | | |
| Provision for rate refunds | (2) | | | — | |
| (Increase) decrease in | | | |
| | | |
| Receivables | 15 | | | (8) | |
| Receivables from affiliated companies | (2) | | | — | |
| Inventory | 58 | | | 31 | |
| Other current assets | 7 | | | 66 | |
| Increase (decrease) in | | | |
| Accounts payable | (16) | | | (63) | |
| Accounts payable to affiliated companies | 12 | | | (21) | |
| Taxes accrued | 16 | | | 45 | |
| Other current liabilities | 36 | | | (16) | |
| Other assets | (13) | | | 2 | |
| Other liabilities | — | | | (2) | |
| Net cash provided by operating activities | 366 | | | 265 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (199) | | | (200) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Notes receivable from affiliated companies | — | | | (198) | |
| | | |
| | | |
| Other | (8) | | | (8) | |
| Net cash used in investing activities | (207) | | | (406) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | — | | | 347 | |
| | | |
| | | |
| | | |
| | | |
| Notes payable to affiliated companies | (158) | | | (530) | |
| | | |
| | | |
| Capital contributions from parent | — | | | 325 | |
| | | |
| | | |
| Other | (1) | | | — | |
| Net cash (used in) provided by financing activities | (159) | | | 142 | |
| Net increase in cash and cash equivalents | — | | | 1 | |
| Cash and cash equivalents at beginning of period | — | | | — | |
| Cash and cash equivalents at end of period | $ | — | | | $ | 1 | |
| Supplemental Disclosures: | | | |
| | | |
| | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 87 | | | $ | 106 | |
| | | |
See Notes to Condensed Consolidated Financial Statements
40
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Cash FlowsChanges in Equity
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| (in millions) | 2021 | | 2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 175 | | | $ | 155 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 152 | | | 135 | |
| Equity component of AFUDC | (19) | | | (14) | |
| | | |
| | | |
| | | |
| Impairment of assets and other charges | 10 | | | 7 | |
| Deferred income taxes | 10 | | | 24 | |
| Equity in earnings from unconsolidated affiliates | (7) | | | (7) | |
| | | |
| | | |
| | | |
| Provision for rate refunds | (3) | | | (27) | |
| (Increase) decrease in | | | |
| | | |
| Receivables | 151 | | | 164 | |
| Receivables from affiliated companies | (1) | | | (1) | |
| Inventory | — | | | 25 | |
| Other current assets | 7 | | | (59) | |
| Increase (decrease) in | | | |
| Accounts payable | (55) | | | (53) | |
| Accounts payable to affiliated companies | (48) | | | 60 | |
| Taxes accrued | 17 | | | 16 | |
| Other current liabilities | (32) | | | (4) | |
| Other assets | 3 | | | (14) | |
| Other liabilities | 2 | | | 7 | |
| Net cash provided by operating activities | 362 | | | 414 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (628) | | | (641) | |
| | | |
| Contributions to equity method investments | (9) | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Return of investment capital | 1 | | | — | |
| | | |
| Other | (23) | | | (18) | |
| Net cash used in investing activities | (659) | | | (659) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 347 | | | 394 | |
| | | |
| Payments for the redemption of long-term debt | (160) | | | — | |
| | | |
| | | |
| Notes payable to affiliated companies | (215) | | | (149) | |
| | | |
| | | |
| Capital contributions from parent | 325 | | | — | |
| | | |
| | | |
| | | |
| Net cash provided by financing activities | 297 | | | 245 | |
| Net increase in cash and cash equivalents | — | | | — | |
| Cash and cash equivalents at beginning of period | — | | | — | |
| Cash and cash equivalents at end of period | $ | — | | | $ | — | |
| Supplemental Disclosures: | | | |
| | | |
| | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 115 | | | $ | 123 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Three Months Ended March 31, 2021 and 2022 |
| Common | | | | Retained | | | | | | Total |
| (in millions) | Stock | | | | Earnings | | | | | | Equity |
| Balance at December 31, 2020 | $ | 1,310 | | | | | $ | 1,405 | | | | | | | $ | 2,715 | |
| Net income | — | | | | | 203 | | | | | | | 203 | |
| | | | | | | | | | | |
| Contribution from parent | 325 | | | | | — | | | | | | | 325 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Balance at March 31, 2021 | $ | 1,635 | | | | | $ | 1,608 | | | | | | | $ | 3,243 | |
| | | | | | | | | | | |
| Balance at December 31, 2021 | $ | 1,635 | | | | | $ | 1,714 | | | | | | | $ | 3,349 | |
| Net income | — | | | | | 214 | | | | | | | 214 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Balance at March 31, 2022 | $ | 1,635 | | | | | $ | 1,928 | | | | | | | $ | 3,563 | |
See Notes to Condensed Consolidated Financial Statements
41
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2020 and 2021 |
| Common | | | | Retained | | | | | | Total |
| (in millions) | Stock | | | | Earnings | | | | | | Equity |
| Balance at June 30, 2020 | $ | 1,310 | | | | | $ | 1,312 | | | | | | | $ | 2,622 | |
| Net loss | — | | | | | (25) | | | | | | | (25) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Balance at September 30, 2020 | $ | 1,310 | | | | | $ | 1,287 | | | | | | | $ | 2,597 | |
| | | | | | | | | | | |
| Balance at June 30, 2021 | $ | 1,635 | | | | | $ | 1,604 | | | | | | | $ | 3,239 | |
| Net loss | — | | | | | (24) | | | | | | | (24) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other | — | | | | | (1) | | | | | | | (1) | |
| | | | | | | | | | | |
| Balance at September 30, 2021 | $ | 1,635 | | | | | $ | 1,579 | | | | | | | $ | 3,214 | |
| | | | | | | | | | | |
| Nine Months Ended September 30, 2020 and 2021 |
| Common | | | | Retained | | | | | | Total |
| (in millions) | Stock | | | | Earnings | | | | | | Equity |
| Balance at December 31, 2019 | $ | 1,310 | | | | | $ | 1,133 | | | | | | | $ | 2,443 | |
| Net income | — | | | | | 155 | | | | | | | 155 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other | — | | | | | (1) | | | | | | | (1) | |
| Balance at September 30, 2020 | $ | 1,310 | | | | | $ | 1,287 | | | | | | | $ | 2,597 | |
| | | | | | | | | | | |
| Balance at December 31, 2020 | $ | 1,310 | | | | | $ | 1,405 | | | | | | | $ | 2,715 | |
| Net income | — | | | | | 175 | | | | | | | 175 | |
| | | | | | | | | | | |
| Contribution from parent | 325 | | | | | — | | | | | | | 325 | |
| | | | | | | | | | | |
| Other | — | | | | | (1) | | | | | | | (1) | |
| Balance at September 30, 2021 | $ | 1,635 | | | | | $ | 1,579 | | | | | | | $ | 3,214 | |
See Notes to Condensed Consolidated Financial Statements
42
| | | | | |
| 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 | 1 | | 2 | | 3 | | 4 | | | | 5 | | | | 6 | | 7 | | 8 | | 9 | | 10 | | 11 | | 12 | | 13 | | 14 | | 15 | | 16 |
| 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, 2020.2021.
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.
OTHER CURRENT LIABILITIES
Included in Other within Current Liabilities on the Duke Energy Condensed Consolidated Balance Sheet is a current liability of $36 million and $936 million as of September 30, 2021, and December 31, 2020, respectively. The current liability, initially recorded in 2020, primarily represented Duke Energy's share of ACP's obligations of outstanding debt and to satisfy ARO requirements to restore construction sites. See Notes 3 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.Sheets.
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.
| | | | | |
FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION |
During September 2021, Duke Energy completed the initial minority interest investment in a portion of Duke Energy Indiana to an affiliate of GIC. GIC's ownership interest in Duke Energy Indiana represents a noncontrolling interest. See Note 2 for additional information on the sale.
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.
| | | | | |
| FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION |
The following table presents allocated losses to noncontrolling interest for the three and nine months ended September 30, 2021,March 31, 2022, and 2020.2021.
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended March 31, | |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | 2022 | | 2021 | |
| | Noncontrolling Interest Allocation of Income | Noncontrolling Interest Allocation of Income | | Noncontrolling Interest Allocation of Income | | |
| Allocated losses to noncontrolling tax equity members utilizing the HLBV method | Allocated losses to noncontrolling tax equity members utilizing the HLBV method | $ | 119 | | | $ | 59 | | | $ | 217 | | | $ | 187 | | Allocated losses to noncontrolling tax equity members utilizing the HLBV method | $ | 24 | | | $ | 43 | | |
| Allocated losses to noncontrolling members based on pro rata shares of ownership | Allocated losses to noncontrolling members based on pro rata shares of ownership | 10 | | | 11 | | | 30 | | | 21 | | Allocated losses to noncontrolling members based on pro rata shares of ownership | 13 | | | 8 | | |
| Total Noncontrolling Interest Allocated Losses | Total Noncontrolling Interest Allocated Losses | $ | 129 | | | $ | 70 | | | $ | 247 | | | $ | 208 | | Total Noncontrolling Interest Allocated Losses | $ | 37 | | | $ | 51 | | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See Notes 9 and 11 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Condensed Consolidated Balance Sheets.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | | Duke | | | Duke | | | Duke | | Duke | | | Duke | | Duke |
| | Duke | Progress | Energy | | Duke | Progress | Energy | | Duke | Energy | Progress | Energy | | Duke | Energy | Progress | Energy |
| | Energy | Florida | | Energy | Florida | | Energy | Carolinas | Energy | Progress | Florida | | Energy | Carolinas | Energy | Progress | Florida |
| Current Assets | Current Assets | | Current Assets | |
| Cash and cash equivalents | Cash and cash equivalents | $ | 548 | | $ | 102 | | $ | 40 | | | $ | 259 | | $ | 59 | | $ | 11 | | Cash and cash equivalents | $ | 853 | | $ | 4 | | $ | 63 | | $ | 42 | | $ | 13 | | | $ | 343 | | $ | 7 | | $ | 70 | | $ | 35 | | $ | 23 | |
| Other | Other | 194 | | 17 | | 17 | | | 194 | | 39 | | 39 | | Other | 151 | | 4 | | 28 | | 13 | | 13 | | | 170 | | — | | 39 | | — | | 39 | |
| Other Noncurrent Assets | Other Noncurrent Assets | | Other Noncurrent Assets | |
| Other | Other | 1 | | — | | — | | | 103 | | 102 | | — | | Other | 16 | | 1 | | 4 | | 4 | | — | | | 7 | | 1 | | 4 | | 4 | | — | |
| Total cash, cash equivalents and restricted cash | Total cash, cash equivalents and restricted cash | $ | 743 | | $ | 119 | | $ | 57 | | | $ | 556 | | $ | 200 | | $ | 50 | | Total cash, cash equivalents and restricted cash | $ | 1,020 | | $ | 9 | | $ | 95 | | $ | 59 | | $ | 26 | | | $ | 520 | | $ | 8 | | $ | 113 | | $ | 39 | | $ | 62 | |
|
INVENTORY
Provisions for inventory write-offs were not material at September 30, 2021,March 31, 2022, and December 31, 2020.2021. The components of inventory are presented in the tables below.
| | | | September 30, 2021 | | March 31, 2022 |
| | | 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) | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Materials and supplies | Materials and supplies | $ | 2,317 | | | $ | 779 | | | $ | 1,009 | | | $ | 674 | | | $ | 336 | | | $ | 85 | | | $ | 305 | | | $ | 11 | | Materials and supplies | $ | 2,455 | | | $ | 810 | | | $ | 1,089 | | | $ | 744 | | | $ | 345 | | | $ | 89 | | | $ | 320 | | | $ | 14 | |
| Coal | Coal | 312 | | | 152 | | | 89 | | | 45 | | | 43 | | | 10 | | | 61 | | | — | | Coal | 469 | | | 196 | | | 149 | | | 93 | | | 56 | | | 16 | | | 108 | | | — | |
| Natural gas, oil and other fuel | Natural gas, oil and other fuel | 271 | | | 38 | | | 157 | | | 96 | | | 60 | | | 19 | | | 1 | | | 57 | | Natural gas, oil and other fuel | 247 | | | 34 | | | 165 | | | 103 | | | 62 | | | 9 | | | 2 | | | 37 | |
| Total inventory | Total inventory | $ | 2,900 | | | $ | 969 | | | $ | 1,255 | | | $ | 815 | | | $ | 439 | | | $ | 114 | | | $ | 367 | | | $ | 68 | | Total inventory | $ | 3,171 | | | $ | 1,040 | | | $ | 1,403 | | | $ | 940 | | | $ | 463 | | | $ | 114 | | | $ | 430 | | | $ | 51 | |
| | | | December 31, 2020 | | December 31, 2021 |
| | | 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) | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Materials and supplies | Materials and supplies | $ | 2,312 | | | $ | 785 | | | $ | 999 | | | $ | 673 | | | $ | 325 | | | $ | 78 | | | $ | 307 | | | $ | 12 | | Materials and supplies | $ | 2,397 | | | $ | 793 | | | $ | 1,067 | | | $ | 729 | | | $ | 338 | | | $ | 80 | | | $ | 311 | | | $ | 14 | |
| Coal | Coal | 561 | | | 186 | | | 193 | | | 131 | | | 63 | | | 16 | | | 165 | | | — | | Coal | 486 | | | 195 | | | 167 | | | 94 | | | 73 | | | 19 | | | 105 | | | — | |
| Natural gas, oil and other fuel | Natural gas, oil and other fuel | 294 | | | 39 | | | 183 | | | 107 | | | 76 | | | 16 | | | 1 | | | 56 | | Natural gas, oil and other fuel | 316 | | | 38 | | | 164 | | | 98 | | | 66 | | | 17 | | | 2 | | | 95 | |
| Total inventory | Total inventory | $ | 3,167 | | | $ | 1,010 | | | $ | 1,375 | | | $ | 911 | | | $ | 464 | | | $ | 110 | | | $ | 473 | | | $ | 68 | | Total inventory | $ | 3,199 | | | $ | 1,026 | | | $ | 1,398 | | | $ | 921 | | | $ | 477 | | | $ | 116 | | | $ | 418 | | | $ | 109 | |
| | | | | |
FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION |
PROPERTY, PLANT & EQUIPMENT AND LEASES
Duke Energy continues to execute on its business transformation strategy, including the evaluation of in-office work policies considering the experience with the COVID-19 pandemic and also workforce realignment of roles and responsibilities. In May 2021, Duke Energy management approved the sale of certain properties and entered into an agreement to exit certain leased space on December 31, 2021. The sale of the properties is subject to abandonment accounting and resulted in an impairment charge. Additionally, the exit of the leased space resulted in the impairment of related furniture, fixtures and equipment. The total 2021 charges related to the reduction in physical workspace, including these impairments, are expected to be approximately $200 million. During the three months ended September 30, 2021, Duke Energy recorded a pretax charge to earnings of $9 million on the Condensed Consolidated Statements of Operations, which includes $8 million within Impairment of assets and other charges and $1 million within Operations, maintenance and other. During the nine months ended September 30, 2021, Duke Energy recorded a pretax charge to earnings of $184 million on the Condensed Consolidated Statements of Operations, which includes $139 million within Impairment of assets and other charges, $28 million within Operations, maintenance and other and $17 million within Depreciation and amortization.
NEW ACCOUNTING STANDARDS
The followingNo new accounting standard wasstandards were adopted by the Duke Energy Registrants in 2021.
Leases with Variable Lease Payments. In July 2021, the Financial Accounting Standards Board (FASB) issued new accounting guidance requiring lessors to classify a lease with variable lease payments that do not depend on a reference index or rate as an operating lease if both of the following are met: (1) the lease would have to be classified as a sales-type or direct financing lease under prior guidance, and (2) the lessor would have recognized a day-one loss. Duke Energy elected to adopt the guidance immediately upon issuance of the new standard and will be applying the new standard prospectively to new lease arrangements meeting the criteria. Duke Energy does not currently have any lease arrangements that this new accounting guidance will materially impact.
The following accounting standard was adopted by the Duke Energy Registrants in 2020.
Current Expected Credit Losses. In June 2016, the FASB issued new accounting guidance for credit losses. Duke Energy adopted the new accounting guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year results. Duke Energy did not adopt any practical expedients.
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 the 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 September 30, 2021.
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 2022. The optional expedients are effective for modification of existing contracts or new arrangements executed between March 12, 2020, through December 31, 2022.
Duke Energy has variable-rate debt and manages interest rate risk by entering into financial contracts including interest rate swaps that are generally indexed to LIBOR. Impacted financial arrangements extending beyond 2022 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 2022. 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.
| | | | | |
| FINANCIAL STATEMENTS | BUSINESS SEGMENTS |
The Electric Utilities and Infrastructure segment primarily includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. On January 28, 2021, Duke Energy executed an agreement providing for an investment by an affiliate of GIC in Duke Energy Indiana in exchange for a 19.9% minority interest issued by Duke Energy Indiana Holdco, LLC, the holding company for Duke Energy Indiana. The transaction will be completed following 2 closings for an aggregate purchase price of approximately $2 billion. The first closing, which occurred on September 8, 2021, resulted in Duke Energy Indiana Holdco, LLC issuing 11.05% of its membership interests in exchange for approximately $1,025 million or 50% of the purchase price. Duke Energy retained indirect control of these assets, and, therefore, no gain or loss was recognized on the Condensed Consolidated Statements of Operations. The difference betweenDuke Energy has the cash consideration received, net of transaction costs of approximately $27 million, anddiscretion to determine the carrying valuetiming of the noncontrolling interest is $545 millionsecond closing, but it will occur no later than January 2023. At the second closing, Duke Energy will issue and was recorded as an increase to equity.sell additional membership interests such that GIC will own 19.9% of the membership interests for the remaining 50% of the purchase price.
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, midstream pipeline and renewable natural gas investments.
The Commercial Renewables segment is primarily comprised of nonregulated utility-scale wind and solar generation assets located throughout the U.S. In 2021, Duke Energy continues to monitor recoverability of its renewable merchant plants located in the Electric Reliability Council of TexasERCOT West market and in the PJM West market due to fluctuating market pricing and long-term forecasted energy prices. The assets were not impaired as of September 30, 2021,March 31, 2022, because the carrying value of approximately $206$200 million continues to approximate the aggregate estimated future undiscounted cash flows. Duke Energy has a 50%51% ownership interest in these assets. A continued decline in energy market pricing or other factors unfavorably impacting the economics would likely result in a future impairment.
The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of interest expense on holding company debt, unallocated corporate costs, Duke Energy’s wholly owned captive insurance company, Bison, and Duke Energy's ownership interest in National Methanol Company.
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
| | | Three Months Ended September 30, 2021 | | Three Months Ended March 31, 2022 |
| | Electric | | Gas | | Total | | | Electric | | Gas | | Total | |
| | Utilities and | | Utilities and | | Commercial | | Reportable | | | Utilities and | | Utilities and | | Commercial | | Reportable | |
| (in millions) | (in millions) | Infrastructure | | Infrastructure | | Renewables | | Segments | | Other | | Eliminations | | Total | (in millions) | Infrastructure | | Infrastructure | | Renewables | | Segments | | Other | | Eliminations | | Total |
| Unaffiliated revenues | Unaffiliated revenues | $ | 6,560 | | | $ | 266 | | | $ | 117 | | | $ | 6,943 | | | $ | 8 | | | $ | — | | | $ | 6,951 | | Unaffiliated revenues | $ | 5,995 | | | $ | 1,009 | | | $ | 121 | | | $ | 7,125 | | | $ | 7 | | | $ | — | | | $ | 7,132 | |
| Intersegment revenues | Intersegment revenues | 9 | | | 23 | | | — | | | 32 | | | 20 | | | (52) | | | — | | Intersegment revenues | 7 | | | 23 | | | — | | | 30 | | | 23 | | | (53) | | | — | |
| Total revenues | Total revenues | $ | 6,569 | | | $ | 289 | | | $ | 117 | | | $ | 6,975 | | | $ | 28 | | | $ | (52) | | | $ | 6,951 | | Total revenues | $ | 6,002 | | | $ | 1,032 | | | $ | 121 | | | $ | 7,155 | | | $ | 30 | | | $ | (53) | | | $ | 7,132 | |
Segment income (loss)(a) | Segment income (loss)(a) | $ | 1,425 | | | $ | (3) | | | $ | 78 | | | $ | 1,500 | | | $ | (134) | | | $ | — | | | $ | 1,366 | | Segment income (loss)(a) | $ | 723 | | | $ | 254 | | | $ | 11 | | | $ | 988 | | | $ | (170) | | | $ | — | | | $ | 818 | |
| Less: Noncontrolling interests | Less: Noncontrolling interests | | 129 | | Less: Noncontrolling interests | | 37 | |
| Add: Preferred stock dividend | Add: Preferred stock dividend | | 39 | | Add: Preferred stock dividend | | 39 | |
| | Net Income | Net Income | | $ | 1,276 | | Net Income | | $ | 820 | |
| Segment assets | Segment assets | $ | 141,565 | | | $ | 14,692 | | | $ | 7,037 | | | $ | 163,294 | | | $ | 3,717 | | | $ | (4) | | | $ | 167,007 | | Segment assets | $ | 144,790 | | | $ | 15,170 | | | $ | 7,021 | | | $ | 166,981 | | | $ | 4,251 | | | $ | (12) | | | $ | 171,220 | |
| | | Three Months Ended September 30, 2020 | | Three Months Ended March 31, 2021 |
| | Electric | | Gas | | Total | | | Electric | | Gas | | Total | |
| | Utilities and | | Utilities and | | Commercial | | Reportable | | | Utilities and | | Utilities and | | Commercial | | Reportable | |
| (in millions) | (in millions) | Infrastructure | | Infrastructure | | Renewables | | Segments | | Other | | Eliminations | | Total | (in millions) | Infrastructure | | Infrastructure | | Renewables | | Segments | | Other | | Eliminations | | Total |
| Unaffiliated revenues | Unaffiliated revenues | $ | 6,371 | | | $ | 217 | | | $ | 126 | | | $ | 6,714 | | | $ | 7 | | | $ | — | | | $ | 6,721 | | Unaffiliated revenues | $ | 5,273 | | | $ | 752 | | | $ | 119 | | | $ | 6,144 | | | $ | 6 | | | $ | — | | | $ | 6,150 | |
| Intersegment revenues | Intersegment revenues | 8 | | | 24 | | | — | | | 32 | | | 17 | | | (49) | | | — | | Intersegment revenues | 8 | | | 23 | | | — | | | 31 | | | 20 | | | (51) | | | — | |
| Total revenues | Total revenues | $ | 6,379 | | | $ | 241 | | | $ | 126 | | | $ | 6,746 | | | $ | 24 | | | $ | (49) | | | $ | 6,721 | | Total revenues | $ | 5,281 | | | $ | 775 | | | $ | 119 | | | $ | 6,175 | | | $ | 26 | | | $ | (51) | | | $ | 6,150 | |
Segment income (loss)(b) | Segment income (loss)(b) | $ | 1,381 | | | $ | (73) | | | $ | 60 | | | $ | 1,368 | | | $ | (103) | | | $ | — | | | $ | 1,265 | | Segment income (loss)(b) | $ | 820 | | | $ | 245 | | | $ | 27 | | | $ | 1,092 | | | $ | (139) | | | $ | — | | | $ | 953 | |
| Less: Noncontrolling interests | Less: Noncontrolling interests | | 70 | | Less: Noncontrolling interests | | 51 | |
| Add: Preferred stock dividend | Add: Preferred stock dividend | | 39 | | Add: Preferred stock dividend | | 39 | |
| | Net Income | Net Income | | $ | 1,234 | | Net Income | | $ | 941 | |
(a)Electric Utilities and Infrastructure includes $211 million recorded within Impairment of assets and other charges, $46 million within Operating revenues and $22 million within Noncontrolling Interests related to the Duke Energy Supreme Court ruling on the Condensed Consolidated Statements of Operations. See Note 3 for additional information.
(b)Commercial Renewables includes a $35 million loss related to Texas Storm Uri, of which $8 million is recorded within Nonregulated electric and other revenues, $2 million within Operation, maintenance and other, $29 million within Equity in earnings (losses) of unconsolidated affiliates and $12 million within Net Loss Attributable to Noncontrolling Interests on the Condensed Consolidated Statements of Operations. See Note 4 for additional information. Gas Utilities and Infrastructure includes $6 million, recorded within Equity in earnings (losses) of unconsolidated affiliates on the Condensed Consolidated Statements of Operations, related to gas pipeline investments.
| | | | | |
| FINANCIAL STATEMENTS | BUSINESS SEGMENTS |
(a)Gas Utilities and Infrastructure includes $3 million, recorded within Equity in earnings (losses) of unconsolidated affiliates on the Condensed Consolidated Statements of Operations, related to gas pipeline investments. See Note 3 for additional information. Other includes $8 million recorded within Impairment of assets and other charges, $1 million within Operations, maintenance and other on the Condensed Consolidated Statements of Operations, related to the workplace and workforce realignment. See Note 1 for additional information. Electric Utilities and Infrastructure includes $160 million recorded within Impairment of assets and other charges, $77 million within Other Income and expenses, $5 million within Operations, maintenance and other, $13 million within Regulated electric operating revenues and $3 million within Interest expense on the Duke Energy Carolinas' Condensed Consolidated Statement of Operations related to the 2018 South Carolina rate cases and the CCR settlement and insurance proceeds distributed in accordance with that agreement; it also includes $42 million recorded within Impairment of assets and other charges, $34 million within Other Income and expenses, $7 million within Operations, maintenance, and other, $15 million within Regulated electric operating revenues and $5 million within Interest expense on the Duke Energy Progress' Condensed Consolidated Statement of Operations. See Notes 3 and 4 for more information.
(b)Electric Utilities and Infrastructure includes $19 million recorded within Impairment charges and $8 million recorded within Operations, maintenance and other on the Duke Energy Carolinas' Condensed Consolidated Statements of Operations related to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case and $8 million recorded within Operations, maintenance and other on Duke Energy Progress' Condensed Consolidated Statements of Operation related to a partial settlement in the Duke Energy Progress' 2019 North Carolina rate case. See Note 3 for more information. Additionally, Electric Utilities and Infrastructure includes $5 million of Impairment charges related to gas pipeline assets recorded on Duke Energy Progress' Condensed Consolidated Statement of Operations. Gas Utilities and Infrastructure includes $78 million recorded within Equity in earnings (losses) of unconsolidated affiliates on the Condensed Consolidated Statements of Operations and $7 million in Impairment charges recorded on the Piedmont Condensed Consolidated Statements of Operations related to gas pipeline investments.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2021 |
| Electric | | Gas | | | | Total | | | | | | |
| Utilities and | | Utilities and | | Commercial | | Reportable | | | | | | |
| (in millions) | Infrastructure | | Infrastructure | | Renewables | | Segments | | Other | | Eliminations | | Total |
| Unaffiliated revenues | $ | 17,161 | | | $ | 1,323 | | | $ | 355 | | | $ | 18,839 | | | $ | 20 | | | $ | — | | | $ | 18,859 | |
| Intersegment revenues | 24 | | | 68 | | | — | | | 92 | | | 61 | | | (153) | | | — | |
| Total revenues | $ | 17,185 | | | $ | 1,391 | | | $ | 355 | | | $ | 18,931 | | | $ | 81 | | | $ | (153) | | | $ | 18,859 | |
Segment income (loss)(a) | $ | 3,180 | | | $ | 259 | | | $ | 152 | | | $ | 3,591 | | | $ | (521) | | | $ | — | | | $ | 3,070 | |
| Less: Noncontrolling interests | | | | | | | | | | | | | 247 | |
| Add: Preferred stock dividend | | | | | | | | | | | | | 92 | |
| | | | | | | | | | | | | |
| Net Income | | | | | | | | | | | | | $ | 2,915 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2020 |
| Electric | | Gas | | | | Total | | | | | | |
| Utilities and | | Utilities and | | Commercial | | Reportable | | | | | | |
| (in millions) | Infrastructure | | Infrastructure | | Renewables | | Segments | | Other | | Eliminations | | Total |
| Unaffiliated revenues | $ | 16,571 | | | $ | 1,122 | | | $ | 378 | | | $ | 18,071 | | | $ | 20 | | | $ | — | | | $ | 18,091 | |
| Intersegment revenues | 25 | | | 72 | | | — | | | 97 | | | 53 | | | (150) | | | — | |
| Total revenues | $ | 16,596 | | | $ | 1,194 | | | $ | 378 | | | $ | 18,168 | | | $ | 73 | | | $ | (150) | | | $ | 18,091 | |
Segment income (loss)(b) | $ | 2,839 | | | $ | (1,400) | | | $ | 207 | | | $ | 1,646 | | | $ | (299) | | | $ | — | | | $ | 1,347 | |
| Less: Noncontrolling interests | | | | | | | | | | | | | 208 | |
| Add: Preferred stock dividend | | | | | | | | | | | | | 93 | |
| | | | | | | | | | | | | |
| Net Income | | | | | | | | | | | | | $ | 1,232 | |
| | | | | | | | | | | | | |
| | | | | |
FINANCIAL STATEMENTS | BUSINESS SEGMENTS |
(a)Gas Utilities and Infrastructure includes $19 million, recorded within Equity in earnings (losses) of unconsolidated affiliates on the Condensed Consolidated Statements of Operations, related to gas pipeline investments. See Note 3 for additional information. Commercial Renewables includes a $35 million loss related to Texas Storm Uri, of which ($8 million) is recorded within Nonregulated electric and other revenues, $2 million within Operations, maintenance and other, $29 million within Equity in earnings (losses) of unconsolidated affiliates and $12 million within Loss Attributable to Noncontrolling Interests on the Condensed Consolidated Statements of Operations. See Note 4 for additional information. Other includes $139 million recorded within Impairment of assets and other charges, $28 million within Operations, maintenance and other, and $17 million within Depreciation and amortization on the Condensed Consolidated Statements of Operations, related to the workplace and workplace realignment. See Note 1 for additional information. Electric Utilities and Infrastructure includes $160 million recorded within Impairment of assets and other charges, $77 million within Other Income and expenses, $5 million within Operations, maintenance and other, $13 million within regulated operating revenues and $3 million within interest expense on the Duke Energy Carolinas' Condensed Consolidated Statement of Operations related to the 2018 South Carolina rate cases and the CCR settlement and insurance proceeds distributed in accordance with that agreement; it also includes $42 million recorded within Impairment of assets and other charges, $34 million within Other Income and expenses, $7 million within Operations, maintenance, and other, $15 million within Regulated electric operating revenues and $5 million within interest expense on the Duke Energy Progress' Condensed Consolidated Statement of Operations. See Notes 3 and 4 for more information.
(b)Gas Utilities and Infrastructure includes $2 billion recorded within Equity in earnings (losses) of unconsolidated affiliates on the Condensed Consolidated Statements of Operations, related to gas pipeline investments. See Note 3 for additional information. 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 a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case. See Note 3 for additional information. Electric Utilities and Infrastructure includes $19 million recorded within Impairment charges and $8 million recorded within Operations, maintenance and other on the Duke Energy Carolinas' Condensed Consolidated Statements of Operations related to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case and $8 million recorded within Operations, maintenance and other on Duke Energy Progress' Condensed Consolidated Statements of Operation related to a partial settlement in the Duke Energy Progress' 2019 North Carolina rate case. See Note 3 for more information. Additionally, Electric Utilities and Infrastructure includes $5 million of Impairment charges related to gas pipeline assets recorded on Duke Energy Progress' Condensed Consolidated Statement of Operations in the prior year.
Duke Energy Ohio
Duke Energy Ohio has 2 reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. The remainder of Duke Energy Ohio's operations is presented as Other.
| | | Three Months Ended September 30, 2021 | | Three Months Ended March 31, 2022 |
| | Electric | | Gas | | Total | | | Electric | | Gas | | Total | |
| | Utilities and | | Utilities and | | Reportable | | | Utilities and | | Utilities and | | Reportable | |
| (in millions) | (in millions) | Infrastructure | | Infrastructure | | Segments | | Other | | Eliminations | | Total | (in millions) | Infrastructure | | Infrastructure | | Segments | | Other | | Eliminations | | Total |
| | Total revenues | Total revenues | $ | 413 | | | $ | 93 | | | $ | 506 | | | $ | — | | | $ | — | | | $ | 506 | | Total revenues | $ | 412 | | | $ | 226 | | | $ | 638 | | | $ | — | | | $ | — | | | $ | 638 | |
| Segment income/Net (loss) income | Segment income/Net (loss) income | $ | 48 | | | $ | 11 | | | $ | 59 | | | $ | (1) | | | $ | — | | | $ | 58 | | Segment income/Net (loss) income | $ | 41 | | | $ | 38 | | | $ | 79 | | | $ | (2) | | | $ | — | | | $ | 77 | |
| | Segment assets | Segment assets | $ | 6,716 | | | $ | 3,783 | | | $ | 10,499 | | | $ | 27 | | | $ | (21) | | | $ | 10,505 | | Segment assets | $ | 7,101 | | | $ | 3,784 | | | $ | 10,885 | | | $ | 14 | | | $ | (168) | | | $ | 10,731 | |
| | | Three Months Ended September 30, 2020 | | Three Months Ended March 31, 2021 |
| | Electric | | Gas | | Total | | | | | Electric | | Gas | | Total | | | |
| | Utilities and | | Utilities and | | Reportable | | | | | Utilities and | | Utilities and | | Reportable | | | |
| (in millions) | (in millions) | Infrastructure | | Infrastructure | | Segments | | Other | | | Total | (in millions) | Infrastructure | | Infrastructure | | Segments | | Other | | | Total |
| | Total revenues | Total revenues | $ | 394 | | | $ | 79 | | | $ | 473 | | | $ | — | | | | $ | 473 | | Total revenues | $ | 363 | | | $ | 169 | | | $ | 532 | | | $ | — | | | | $ | 532 | |
| Segment income/Net (loss) income | Segment income/Net (loss) income | $ | 63 | | | $ | 9 | | | $ | 72 | | | $ | (2) | | | | $ | 70 | | Segment income/Net (loss) income | $ | 50 | | | $ | 43 | | | $ | 93 | | | $ | (2) | | | | $ | 91 | |
|
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| Nine Months Ended September 30, 2021 |
| Electric | | Gas | | Total | | | | | | |
| Utilities and | | Utilities and | | Reportable | | | | | | |
| (in millions) | Infrastructure | | Infrastructure | | Segments | | Other | | | | Total |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total revenues | $ | 1,119 | | | $ | 375 | | | $ | 1,494 | | | $ | — | | | | | $ | 1,494 | |
| Segment income/Net (loss) income | $ | 122 | | | $ | 77 | | | $ | 199 | | | $ | (11) | | | | | $ | 188 | |
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| Nine Months Ended September 30, 2020 |
| Electric | | Gas | | Total | | | | | | |
| Utilities and | | Utilities and | | Reportable | | | | | | |
| (in millions) | Infrastructure | | Infrastructure | | Segments | | Other | | | | Total |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total revenues | $ | 1,070 | | | $ | 324 | | | $ | 1,394 | | | $ | — | | | | | $ | 1,394 | |
| Segment income/Net (loss) income | $ | 137 | | | $ | 68 | | | $ | 205 | | | $ | (4) | | | | | $ | 201 | |
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FINANCIAL STATEMENTS | REGULATORY MATTERS |
3. REGULATORY MATTERS
RATE-RELATED INFORMATION
The NCUC, PSCSC, FPSC, IURC, PUCO, TPUC and KPSC approve rates for retail electric and natural gas services within their states. The FERC approves rates for electric sales to wholesale customers served under cost-based rates (excluding Ohio and Indiana), as well as sales of transmission service. The FERC also regulates certification and siting of new interstate natural gas pipeline projects.
Duke Energy Carolinas and Duke Energy Progress
2021 Coal Ash SettlementHB 951
On January 22, 2021,The NCUC is required by North Carolina House Bill 951 (HB 951) to adopt an initial Carbon Plan on or before December 31, 2022. The NCUC has directed Duke Energy Carolinas and Duke Energy Progress entered into the Coal Combustion Residuals Settlement Agreement (the “CCR Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the North Carolina Attorney General’s Office and the Sierra Club (collectively, the "Settling Parties"), which was filed with the NCUC on January 25, 2021. The CCR Settlement Agreement resolves all coal ash prudence and cost recovery issues in connection with 2019 rate cases filed by Duke Energy Carolinas and Duke Energy Progress with the NCUC, as well as the equitable sharing issue on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases as a result of the December 11, 2020 North Carolina Supreme Court opinion. The settlement also provides clarity on coal ash cost recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress through January 2030 and February 2030 (the "Term"), respectively.
Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery of approximately $1 billion of systemwide deferred coal ash expenditures, but will retain the ability to earn a debt and equity return during the amortization period, which shall be five years under the 2019 North Carolina rate cases and will be set by the NCUC in future rate case proceedings. The equity return and the amortization period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases will remain unaffected. The equity return on deferred coal ash costs under the 2019 North Carolina rate cases and future rate cases in North Carolina will be set at 150 basis points lower than the authorized return on equity (ROE) then in effect, with a capital structure composed of 48% debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the ability to earn a full WACC return during the deferral period, which is the period from when costs are incurred until they are recovered in rates.
The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.
The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers. For more information, see Note 4 "Commitments and Contingencies."
As a result of the CCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.
The Coal Ash Settlement was approved without modification in the NCUC Orders in the 2019 rate cases on March 31, 2021, and April 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties in the 2017 rate cases on June 25, 2021.
2020 North Carolina Storm Securitization Filings
On October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC, as agreed to in partial settlements reached in the 2019 North Carolina Rate Cases for Duke Energy Carolinas and Duke Energy Progress, seeking authorization for the financing of the costs of each utility's storm recovery activities required as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically, Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find that their storm recovery costs and related financing costs are appropriately financed by debt secured by storm recovery property, and that the commission issue financing orders by which each utility may accomplish such financing using a securitization structure. On January 27, 2021, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain accounting issues, including agreement to support an 18- to 20-year bond period. The total revenue requirement overfile a proposed 20-year bond period for the storm recovery charges is approximately $287 million for Duke Energy Carolinas and $920 million for Duke Energy Progress and will be finalized upon issuance of the bonds. A remote evidentiary hearing endedCarbon Plan on January 29, 2021. In the NCUC Orders in the 2019 rate cases issued on March 31, 2021, and Aprilor before May 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively, the reasonableness and prudence of the deferred storm costs was approved. On May 10, 2021, the NCUC issued financing orders authorizing the companies to issue storm recovery bonds, subject to the terms of the financing orders, and approving the Agreement and Stipulation of Partial Settlement in its entirety. Duke Energy Carolinas and Duke Energy Progress are currently in the process of structuring and marketing the bonds that will be presented to the market.2022. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
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COVID-19 Filings
North Carolina
Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, withOn February 10, 2022, the NCUC adopted rules to govern the application and review process for deferral treatment of incremental costs and the cost of waived customer fees due to the COVID-19 pandemic. Comments on the joint petition were filed on NovemberPBR authorized under HB 951. On April 5, 2020, and reply comments were filed on November 30, 2020. A summary of incremental COVID-19 costs incurred as of June 30, 2021, was filed with2022, the NCUC by Duke Energy Carolinas and Duke Energy Progress on August 6, 2021. Duke Energy Carolinas and Duke Energy Progress cannot predictadopted rules to govern the outcomesecuritization of this matter.
South Carolina
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. On August 14, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the PSCSC for approval50% of an accounting order to defer incremental COVID-19 related costs incurred through June 30, 2020, and for the ongoing months during the duration of the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress withdrew their joint petition on May 17, 2021.
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 Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE 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. The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the costretail portion of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on March 31, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
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.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement. On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.
On August 4, 2020, Duke Energy Carolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates was based on and consistent with the base rate component of the Second Partial Settlement and excluded the items to be litigated noted above. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On March 31, 2021, the NCUC issued an order approving the March 25, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $800 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of $213 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Carolinas filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of certain Duke Energy Carolinas coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an integrated resource planning (IRP) proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset accountretiring coal plants pursuant to be amortized over an appropriate period to be determined in a future rate case.HB 951. The rules are constructive and consistent with the policy objectives of HB 951.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $33 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
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 an ROE 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.
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 PSCSC 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, ROE 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 with the Supreme Court of South Carolina. 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 were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses;
•Disallow a return on certain deferred expenses; and
•Allow recovery of Lee Nuclear Project preconstruction costs.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Carolinas recognized a pretax charge of approximately $160 million to Impairment of assets and other charges, and a $31 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Carolinas is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
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Oconee Nuclear Station Subsequent License Renewal
On June 7, 2021, Duke Energy Carolinas filed a subsequent license renewal (SLR) application for the Oconee Nuclear Station (ONS) with the U.S. Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an additional 20 years. The subsequent license renewalSLR would extend operations of the facility from 60 to 80 years. The current licenselicenses for units 1 and 2 expire in 2033 and the license for unit 3 expires in 2034. By a Federal Register Notice dated July 28, 2021, the NRC provided a 60-day comment period for persons whose interest may be affected by the issuance of a subsequent renewed license for ONS to file a request for a hearing and a petition for leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club (Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request) and a Petition for Waiver. The Hearing Request proposesproposed 3 contentions purporting to challenge Duke Energy Carolinas’ environmental report (ER). In general, the proposed contentions claimclaimed that the ER doesdid not consider certain information regarding the environmental aspects of Severe Accidentssevere accidents caused by a hypothetical failure of the Jocassee Dam, and therefore doesdid not satisfy the National Environmental Policy Act (NEPA) of 1969, as amended, (NEPA), or the NRC’s NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the proposed contentions on October 22, 2021, and the Petitioners have until November 5, 2021, to respondfiled their reply to Duke Energy Carolina’s answer.Carolinas’ answer on November 5, 2021. On February 11, 2022, the Atomic Safety and Licensing Board (ASLB) issued its decision on the Hearing Request and found that the Petitioners failed to establish that the proposed contentions are litigable. The ASLB also denied the Petitioners' Petition for Waiver and terminated the proceeding.
On February 24, 2022, the NRC issued a decision in the Turkey Point SLR appeal and ruled that the NRC’s license renewal Generic Environmental Impact Statement (GEIS) does not apply to SLR because the GEIS does not address SLR.The decision overturned a 2020 NRC decision that found the GEIS applies to SLR. While Turkey Point is not owned or operated by a Duke Energy Registrant, the NRC’s order applies to all SLR applicants, including ONS. The NRC order also indicated no subsequent renewed licenses will be issued until the NRC staff has completed an adequate NEPA review for each application. On April 5, 2022, the NRC approved a 24-month rulemaking plan that will enable the NRC staff to complete an adequate NEPA review. Although an SLR applicant may wait until the rulemaking is completed, the NRC also noted that an applicant may submit a revised environmental report providing information on environmental impacts during the SLR period prior to the rulemaking being completed. Duke Energy Carolinas is evaluating the two options to determine which is preferable for ONS.Although the NRC’s decision will delay completion of the SLR proceeding, Duke Energy Carolinas does not believe it changes the probability that the ONS subsequent renewed licenses will ultimately be issued, though Duke Energy Carolinas cannot guaranty the outcome of the license application process.
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Duke Energy Carolinas and Duke Energy Progress intend to seek renewal of operating licenses and 20-year license extensions for all of their nuclear stations. New depreciation rates were implemented for all of the nuclear facilities during the second quarter of 2021. Duke Energy Carolinas and Duke Energy Progress 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 an ROE 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 notices of appeal to the North Carolina Supreme Court.
The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on April 16, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
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 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 Progress sought to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requested 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 June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates was based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excluded items to be litigated noted above. In addition, Duke Energy Progress also sought authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.
The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On April 16, 2021, the NCUC issued an order approving the June 2, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $400 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of approximately $714 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Progress filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Progress' proposal to shorten the remaining depreciable lives of certain Duke Energy Progress coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an IRP proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $178 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included an ROE 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%.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE 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. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses; and
•Disallow a return on certain deferred expenses.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Progress recognized a pretax charge of approximately $42 million to Impairment of assets and other charges, and a $6 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Progress is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
Western Carolinas Modernization Plan
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 2021.
On July 27, 2020, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Woodfin Solar Facility, a 5-MW solar generating facility to be constructed on a closed landfill in Buncombe County. The expert hearing was held on November 18, 2020. The application was approved and a CPCN was granted by order of the NCUC on April 20, 2021. Construction began in April 2021 with an expected in-service date in March 2022.
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FERC Return on Equity Complaints
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), alleging that the 11% stated ROE component contained in the demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress 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 the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. The parties reached a settlement in principle at a settlement conference on January 7, 2021, and filed a settlement package on March 10, 2021. The FERC Trial Staff filed comments in support of the settlement. On April 19, 2021, the Settlement Judge certified the settlement to the FERC as an uncontested settlement. The FERC approved the settlement on May 25, 2021, and Duke Energy Progress filed compliance documents on June 10, 2021. The FERC accepted the compliance filing on October 8, 2021.Complaint
On October 16, 2020, North Carolina Electric Membership Corporation (NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA,Federal Power Act (FPA), alleging that the 11% stated ROEreturn on equity (ROE) component in the demand formula rate in the Power Supply and Coordination Agreement between NCEMC and Duke Energy Progress is unjust and unreasonable. Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress responded to theA series of responses and answers were filed at FERC. The complaint proceeding is currently held in abeyance until June 1, 2022, based on November 20, 2020, seeking dismissal, demonstratingrepresentations that the 11% ROE is justparties have reached an agreement in principle and reasonable forneed additional time to finalize the service provided. The parties filed responsive pleadings and are awaiting an order from the FERC.filing. Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Florida
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “2021 Settlement”) with the FPSC. The parties to the 2021 Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
Pursuant to the 2021 Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to an ROE band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the retail portion of the DOE award of approximately $173 million for spent nuclear fuel, which is expected to be received in 2022, in order to mitigate customer rates over the term of the 2021 Settlement. In return, Duke Energy Florida will be able to recognize the $173 million into earnings from 2022 through 2024.
In addition to these terms, the 2021 Settlement containscontained provisions related to the accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new cost-effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and resiliency projects, among other things. The 2021 Settlement also resolvesresolved remaining unrecovered storm costs for Hurricane DorianMichael and Hurricane Michael.Dorian.
The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order on June 4, 2021. Revised customer rates will bebecame effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024.
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 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. Approximately $80 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of December 31, 2020.
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. The final actual amount of $145 million was filed on September 30, 2020. The 2021 Settlement resolved all matters regarding storm cost recovery relating to Hurricane Michael and Hurricane Dorian.
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 by paying a subscription fee based on per kilowatt-subscriptions and receiving a credit on their bill based on the actual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next fourthree 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. A remote hearing was held on November 17, 2020, and post-hearing briefs were filed with the FPSC from all parties by December 9, 2020. The FPSC voted to approveapproved the program onin January 5, 2021, and issued its written order on January 26, 2021.
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FINANCIAL STATEMENTS | REGULATORY MATTERS |
On February 24, 2021, the League of United Latin American Citizens (LULAC) filed a notice of appeal of the FPSC’s order approving the Clean Energy Connection to the Supreme Court of Florida. LULAC's initial brief was filed on May 26, 2021, and Appellees' response briefs were filed on July 26, 2021. LULAC's reply brief was filed on September 24, 2021, and its request for oral argument was filed on September 28, 2021. The Supreme Court of Florida heard the oral argument on February 9, 2022. The FPSC approval order remains in effect pending the outcome of the appeal. Duke Energy Florida cannot predict the outcome of this matter.
Storm Protection Plan
On April 11, 2022, Duke Energy Florida filed a Storm Protection Plan for approval with the FPSC. The plan, which covers investments for the 2023-2032 time frame, reflects approximately $7 billion of capital investment in transmission and distribution meant to strengthen its infrastructure, reduce outage times associated with extreme weather events, reduce restoration costs and improve overall service reliability. The FPSC has scheduled a hearing to begin on August 2, 2022. Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Ohio
Duke Energy Ohio Electric Base Rate Case
Duke Energy Ohio filed with the PUCO an electric distribution base rate case application on October 1, 2021, with supporting testimony filed on October 15, 2021, requesting an increase in electric distribution base rates of approximately $55 million and an ROE of 10.3%. This is an approximate 3.3% average increase in the customer's total bill across all customer classes. The drivers for this case are capital invested since Duke Energy Ohio's last electric distribution base rate case in 2017. Duke Energy Ohio is also seeking to adjust the caps on its Distribution Capital Investment Rider (DCI Rider). Duke Energy Ohio anticipates the PUCO will rule on the request by the summer ofin 2022. Duke Energy Ohio cannot predict the outcome of this matter.
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On July 23, 2019, House Bill 6 was signed into law and became effective January 1, 2020. Among other things, the bill allows for funding, through a rider mechanism referred to as the Clean Air Fund (Rider CAF), of 2 nuclear generating facilities located in Northern Ohio owned by Energy Harbor (f/k/a FirstEnergy Solutions) and certain renewable resources, 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 OVEC recovery is through a non-bypassable rider that replaced any existing recovery mechanism approved by the PUCO and will remain in place through 2030. As such, Duke Energy Ohio created the Legacy Generation Rider (Rider LGR) that replaced Rider PSR effective January 1, 2020. The amounts recoverable from customers are subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 11 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. House Bill 128 was signed into law on March 31, 2021, and became effective June 30, 2021. The bill removes nuclear plant funding included in HB 6, eliminates Rider CAF and establishes the Solar Generation Fund Rider (Rider SGF) to recover the renewable investments originally included in HB 6. HB 128 does not impact OVEC cost recovery or any transmission or distribution rider.
Energy Efficiency Cost Recovery
On February 26, 2020,In response to changes in Ohio law that eliminated Ohio's energy efficiency mandates, the PUCO issued an order on February 26, 2020, 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 in2020. Duke Energy Ohio law that eliminated Ohio's energy efficiency mandates. took the following actions:
•On March 27, 2020, Duke Energy Ohio filed an Applicationapplication for Rehearingrehearing seeking clarification on the final true up and reconciliation process after 2020. On November 18, 2020, the PUCO issued 2 orders on the application for rehearing. The firstan order was a Third Entry on Rehearing on the Duke Energy Ohio portfolio holdingreplacing the cost cap previously imposed was unlawful,upon Duke Energy Ohio with a cap on shared savings cap of $8 million pretax should be imposed and lost distribution revenues could not be recovered after December 31, 2020. The second order directs all utilities set the rider to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020.recovery. On December 18, 2020, Duke Energy Ohio filed an additional application for rehearing.rehearing challenging, among other things, the imposition of the cap on shared savings. On January 13, 2021, the application for rehearing was granted for further consideration. Duke Energy Ohio cannot predict the outcome of this matter.
•On October 9, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposesproposed a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review.
•On November 18, 2020, the PUCO issued an order directing all utilities to set their energy efficiency riders to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020. Effective January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs due to changes in Ohio law. programs.
•On June 14, 2021, the PUCO issued an entry for each utility to file by July 15, 2021, a proposal to reestablish low-income programs through December 31, 2021. Duke Energy Ohio filed its application on July 14, 2021.
•On February 23, 2022, the PUCO issued its Fifth Entry on Rehearing that 1) affirmed its reduction in Duke Energy Ohio's shared savings cap; 2) denied rehearing/clarification regarding lost distribution revenues and shared savings recovery for periods after December 31, 2020; and 3) directed Duke Energy Ohio to submit an updated application with exhibits.
•On March 25, 2022, Duke Energy Ohio filed its Amended Application consistent with the PUCO's order.
Duke Energy Ohio cannot predict the outcome of this matter.
Natural Gas Pipeline Extension
Duke Energy Ohio is installinginstalled 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. Construction of the pipeline extension was completed and placed in service on March 14, 2022. Duke Energy Ohio currently estimatesexpects the final cost for the pipeline development costs and construction activities will range fromto be approximately $185 million to $205 million in direct costs (excluding overheads and AFUDC) and that construction of the pipeline extension will be completed in time for use during the 2021/2022 winter season. An evidentiary hearing on Duke Energy Ohio's application for a Certificate of Environmental Compatibility and Public Need concluded on April 11, 2019. On November 21, 2019, the Ohio Power Siting Board (OPSB) approved Duke Energy Ohio's application subject to 41 conditions on construction. Applications for rehearing were filed by several stakeholders on December 23, 2019, arguing that the OPSB approval was incorrect. On February 20, 2020, the OPSB denied the rehearing requests. On April 15, 2020, those stakeholders filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor project application. The Ohio Supreme Court affirmed the OPSB order on September 22, 2021.
On September 22, 2020, Duke Energy Ohio filed an application with the OPSB for approval to amend the certificated pipeline route due to changes in the route negotiated with property owners and municipalities. On January 21, 2021, the OPSB approved the amended filing with recommended conditions that reaffirm previous conditions and provide guidance regarding local permitting and construction supervision.
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FINANCIAL STATEMENTS | REGULATORY MATTERS |
.MGP Cost Recovery
In an order issued in 2013, the PUCO approved Duke Energy Ohio's deferral and recovery of costs related to environmental remediation at 2 sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs incurred between 2008 through 2012 through Rider MGP, which is currently suspended. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas base rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2019. On September 28, 2018, theThe Staff of the PUCO (Staff) issued a reportreports recommending a disallowance of approximately $12 million of the $26 million in MGP remediation costs incurred between 2013 through 2017 that the Staff believes are not eligible for recovery. The Staff interprets the PUCO’s 2013 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 the Staff believes occurred in areas not authorized for recovery. Additionally, the 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.
On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental MGP remediation expense, 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 paid to customers and not be held by Duke Energy Ohio until all investigation and remediation is complete. Duke Energy Ohio filed comments in response to the Staff report on August 21, 2020, and intervenor comments were filed on November 9, 2020.
The 2013 PUCO order also contained conditional deadlines for completing the MGP environmental remediation and the deferral of related remediation costs. 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 that must occur after December 31, 2019. On July 12, 2019, the Staff recommended the commission deny the deferral authority request. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on October 2, 2019, Duke Energy Ohio filed reply comments.
A Stipulation and Recommendation was filed jointly by Duke Energy Ohio, the Staff, the Office of the Ohio Consumers' Counsel and the Ohio Energy Group on August 31, 2021, which is subject to review and approvalwas approved without modification by the PUCO. IPUCO on April 20, 2022. f approved, theThe Stipulation and Recommendation would, among other things, resolveresolved all open issues regarding MGP remediation costs incurred between 2013 and 2019, including Duke Energy Ohio’s request for additional deferral authority beyond 2019 and the pending issues related to the Tax Act described below as it relatesrelated to Duke Energy Ohio’s natural gas operations. These impacts are not expected to haveAs a material impact onresult of the approval of the Stipulation and Recommendation, Duke Energy Ohio financial statements. recognized pretax charges of approximately $15 million to Operating revenues, regulated natural gas and $58 million to Operation, maintenance and other and a tax benefit of $72 million to Income Tax (Benefit) Expense in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022. The Stipulation and Recommendation further acknowledgesacknowledged Duke Energy Ohio’s ability to file a request for additional deferral authority in the future related to environmental remediation of any MGP impacts in the Ohio River if necessary, subject to specific conditions. On October 15, 2021, the PUCO granted motionsIntervenors have 30 days to intervene filed in September 2021 by Interstate Gas Supply, Inc. and Retail Energy Supply Association on a limited basis. An evidentiary hearing is scheduledfile for November 22, 2021.rehearing. Duke Energy Ohio cannot predict the outcome of this matter.
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Tax Act – Ohio
On December 21, 2018, Duke Energy Ohio filed an application to change its base rate tariffs and establish a new rider to implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio requested commission approval to implement the tariff changes and rider effective April 1, 2019. The new rider willwould flow through to customers the benefit of the reduction in the statutory federal tax rate from 35% to 21% since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules willwould be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO established a procedural schedule and testimony was filed on July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. The Stipulation and Recommendation filed on August 31, 2021, and approved on April 20, 2022, disclosed in the MGP Cost Recovery matter above, also resolves the outstanding issues in this proceeding. On October 15, 2021, proceeding by providing customers a one-time bill credit for the PUCO granted motionsreduction in the statutory federal tax rate from 35% to intervene filed in September 2021 by Interstate Gas Supply, Inc.21% since January 1, 2018, through June 1, 2022, and Retail Energy Supply Association onreducing base rates going forward. Deferred income taxes subject to normalization rules will be refunded consistent with federal law through a limited basis. An evidentiary hearing is schedulednew rider. Deferred income taxes not subject to normalization rules were written off. Intervenors have 30 days to file for November 22, 2021.rehearing. Duke Energy Ohio cannot predict the outcome of this matter.
Duke Energy Kentucky Natural Gas Base Rate Case
On June 1, 2021, Duke Energy Kentucky filed an application with the KPSC requesting an increase in natural gas base rates of approximately $15 million, an approximate 13% average increase across all customer classes. The drivers for this case are capital invested since Duke Energy Kentucky's last natural gas base rate case in 2018. Duke Energy Kentucky is also seeking implementation of a Governmental Mandate Adjustment mechanism (Rider GMA) in order to recover from or pay to customers the financial impact of governmental directives and mandates, including changes in federal or state tax rates and regulations issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA). On October 8, 2021, Duke Energy Kentucky filed a Stipulation and Recommendation jointly with the Kentucky Attorney General, subject to review and approval by the KPSC, which if approved, would resolve the case. The Stipulation and Recommendation includes a $9 million increase in base revenues, an ROE of 9.375% for natural gas base rates and 9.3% for natural gas riders, a rider for PHMSA-required capital investments with an annual 5% rate increase cap and a four-year natural gas base rate case stay-out. The hearing was held on October 18, 2021. Duke Energy Kentucky anticipates the KPSC will rule on the request by the end of 2021. Duke Energy Kentucky cannot predict the outcome of this matter.
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FINANCIAL STATEMENTS | REGULATORY MATTERS |
Midwest Propane Caverns
Duke Energy Ohio usesused propane stored in caverns to meet peak demand during winter. OnceBecause the Central Corridor Project is complete and placed in service, the propane peaking facilities will no longer be necessary and will behave been retired. On October 7, 2021, Duke Energy Ohio requested deferral treatment of the property, plant and equipment as well as costs related to propane inventory and decommissioning costs. There is approximately $27On January 6, 2022, the Staff issued a report recommending deferral authority for costs related to propane inventory and decommissioning costs, but not for the net book value of the remaining plant assets. As a result of the Staff's report, Duke Energy Ohio recorded a $19 million in Property, Plantcharge to Impairment of assets and Equipmentother charges on the Condensed Consolidated Balance Sheets asStatements of September 30,Operations and Comprehensive Income in the fourth quarter of 2021. A Stipulation and Recommendation was filed jointly by Duke Energy Ohio and the Staff on April 27, 2022, recommending, among other things, approval of deferral treatment of a portion of the net book value of the property, plant and equipment prior to the 2021 impairment at the time of the next natural gas base rate case, excluding operations and December 31, 2020,maintenance savings, decommissioning costs not to exceed $7 million and costs related to propane inventory. The Stipulation and Recommendation states that Duke Energy Ohio will seek recovery of the propane caverns.deferral through its next gas base rate case proceeding with a proposed amortization period of at least ten years and include an independent engineering study analyzing the necessity and prudency of the incremental investments made at the facilities since March 31, 2012. Duke Energy Ohio will not seek a return on the deferred amounts. Duke Energy Ohio cannot predict the outcome of this matter.
Duke Energy Indiana
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 an order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order approved Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of December 31, 2020, including the Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction was due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% wasis due to the approved ROE of 9.7% versus the requested ROE of 10.4% and approximately 20% was related to miscellaneous earnings neutral adjustments. Step one rates were estimated to be approximately 75% of the total and became effective on July 30, 2020. Step two rates are estimated to be the remaining 25% of the total rate increase. Step two rates were approved on July 28, 2021, and implemented in August 2021. Step two rates are based on a return on equityan ROE of 9.7% and actual December 31, 2020 capital structure with a 54% equity component. Step two rates will bewere reconciled to January 1, 2021.
Several groups appealed the IURC order to the Indiana Court of Appeals. Appellate briefs were filed on October 14, 2020, focusing on three issues: wholesale sales allocations, coal ash basin cost recovery and the Edwardsport IGCC operating and maintenance expense level approved. The appeal was fully briefed in January 2021 and an oral argument was held on April 8, 2021. The Indiana Court of Appeals affirmed the IURC decision on May 13, 2021. The Indiana Office of Utility Consumer Counselor (OUCC) and the Duke Industrial Group filed a joint petition to transfer the rate case appeal to the Indiana Supreme Court on June 28, 2021. Response briefs were filed July 19, 2021. The Indiana Supreme Court grantedissued its opinion on March 10, 2022, finding that the IURC erred in allowing Duke Energy Indiana to recover coal ash costs incurred before the IURC’s rate case order in June 2020. The Indiana Supreme Court found that allowing Duke Energy Indiana to recover coal ash costs incurred between rate cases that exceeded the amount built into base rates violated the prohibition against retroactive ratemaking. The IURC’s order has been remanded to the IURC for additional proceedings consistent with the Indiana Supreme Court’s opinion. As a result of the court's opinion, Duke Energy Indiana recognized pretax charges of approximately $211 million to Impairment of assets and other charges and $46 million to Operating revenues in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022. Duke Energy Indiana filed a request for rehearing with the Supreme Court on April 11, 2022. Until the Indiana Supreme Court acts on the petition to transferfor rehearing, the IURC may not act on September 16, 2021, and scheduled oral argument for November 16, 2021.the Supreme Court's initial remedy. Duke Energy Indiana cannot predict the outcome of this matter.
2020 Indiana Coal Ash Recovery Case
In Duke Energy Indiana’s 2019 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 also opened a subdocket for 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 (IDEM) as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020. Briefing was completed by mid-September 2021. On November 3, 2021, the IURC issued an order allowing recovery for post-2018 coal ash basin closure costs for the plans that have been approved by IDEM, as well as continuing deferral, with carrying costs, on the balance. The IURC order is subjectOUCC filed a notice of appeal to appeal within 30 days to the IURC or the Indiana Court of Appeals.Appeals on December 3, 2021. Duke Energy Indiana cannot predict the outcome of this matter.
Piedmont
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 Piedmont's previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. Piedmont amended its requested increase to approximately $26 million in December 2020. As authorized under Tennessee law, Piedmont implemented interim rates on January 2, 2021, at the level requested in its adjusted request. A settlement reached with the Tennessee Consumer Advocate in mid-January was filed with the TPUC on February 2, 2021. The settlement results in an increase of revenues of approximately $16 million and an ROE of 9.8%. On May 6, 2021, the TPUC issued an order approving the settlement. Revised customer rates became effective January 2, 2021. Piedmont refunded customers the difference between bills previously rendered under interim rates and such bills if rendered under approved rates, plus interest, in April 2021.
2021 North Carolina Rate Case
On March 22, 2021, Piedmont filed an application with the NCUC for a rate increase for retail customers of approximately $109 million, which represents an approximate 10% increase in retail revenues. The rate increase is driven by customer growth and significant infrastructure upgrade investments (plant additions) since the last general rate case. Approximately 70% of the plant additions being rolled into rate base are categories of plant investment not covered under the IMR mechanism, which was originally approved as part of the 2013 North Carolina Rate Case. On July 28, 2021, Piedmont amended its requested increase to approximately $97 million.
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Piedmont
2022 South Carolina Rate Case
On September 7,April 1, 2022, Piedmont filed an application with the PSCSC for a rate increase for retail customers of approximately $7 million, which represents an approximate 3.4% increase in retail revenues. The rate increase is driven by customer growth and infrastructure upgrade investments (plant additions) since Piedmont’s last proceeding in 2021 under South Carolina’s Rate Stabilization Act. In addition, Piedmont agreed with the South Carolina Office of Regulatory Staff in 2019 to file a general rate case no later than April 1, 2022, to conduct a more comprehensive review of rates including the allocation of costs to residential, commercial and the Public Staff, the Carolina Utility Customers Association, Inc. and the Carolina Industrial Group for Fair Utility Rates IV filed a Stipulation of Partial Settlement (Stipulation), which is subject to review and approval by the NCUC, resolving most issues between these parties. Major components of the Stipulation include:
•A return on equity of 9.6% and a capital structure of 51.6% equity and 48.4% debt;
•Continuation of the IMR mechanism and margin decoupling; and
•A revenue increase of $67 million, subject to completion of the Robeson County LNG facility and the Pender Onslow County expansion project.
Anindustrial customers. The PSCSC has scheduled an evidentiary hearing to reviewfor the Stipulation and other issues concluded on September 9, 2021. On October 12, 2021, Piedmont notified the NCUCweek of its intent to implement the stipulated rates effective November 1, 2021, on a temporary basis and subject to refund. On October 18, 2021, Piedmont and the Public Staff filed supplemental testimony attesting to the completion of the Robeson County LNG facility and the Pender Onslow County expansion project and to the propriety of including the capital investment for these two projects in this proceeding.August 15, 2022. Piedmont cannot predict the outcome of this matter.
OTHER REGULATORY MATTERS
Atlantic Coast Pipeline, LLC
Atlantic Coast Pipeline (ACP pipeline) was planned to be an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. Duke Energy indirectly owns a 47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment.
As a result of the uncertainty created by various legal 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 project.
As part of the pretax charges to earnings of approximately $2.1 billion recorded in June 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Condensed Consolidated Statements of Operations, Duke Energy established liabilities related to the cancellation of the ACP pipeline project. In February 2021, Duke Energy paid approximately $855 million to fund ACP's outstanding debt, relieving Duke Energy of its guarantee. At September 30, 2021, there is $36 million and $63 million within Other Current Liabilities and Other Noncurrent Liabilities, respectively, in the Gas Utilities and Infrastructure segment. The liabilities represent Duke Energy's obligation of approximately $99 million to satisfy remaining ARO requirements to restore construction sites.
See Notes 1 and 11 for additional information regarding this transaction.
Potential Coal Plant Retirements
The Subsidiary Registrants periodically file IRPs with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful lives. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives and plans to seek regulatory recovery for amounts that would not be otherwise recovered when any of these assets are retired.
The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of September 30, 2021,March 31, 2022, and exclude capitalized asset retirement costs.
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| Capacity | | | | | | | | Book Value | | | | |
| (in MW) | | | | | | | | (in millions) | | | | |
| Duke Energy Carolinas | | | | | | | | | | | | | |
Allen Steam Station Units 1-2(a) | 324 | | | | | | | | | $ | 19 | | | | | |
Allen Steam Station Units 4-5(b) | 516 | | | | | | | | | 362 | | | | | |
Cliffside Unit 5(b) | 544 | | | | | | | | | 367 | | | | | |
| Duke Energy Progress | | | | | | | | | | | | | |
Mayo Unit 1(b) | 704 | | | | | | | | | 640 | | | | | |
Roxboro Units 3-4(b) | 1,392 | | | | | | | | | 465 | | | | | |
| Duke Energy Florida | | | | | | | | | | | | | |
Crystal River Units 4-5(c) | 1,410 | | | | | | | | | 1,658 | | | | | |
Duke Energy Indiana (d) | | | | | | | | | | | | | |
Gibson Units 1-5(e) | 2,822 | | | | | | | | | 1,814 | | | | | |
Cayuga Units 1-2(e) | 995 | | | | | | | | | 713 | | | | | |
| Total Duke Energy | 8,707 | | | | | | | | | $ | 6,038 | | | | | |
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| Capacity | | | | | | | | Book Value | | | | |
| (in MW) | | | | | | | | (in millions) | | | | |
| Duke Energy Carolinas | | | | | | | | | | | | | |
Allen Steam Station Units 1(a) | 167 | | | | | | | | | $ | 12 | | | | | |
Allen Steam Station Units 5(b) | 259 | | | | | | | | | 265 | | | | | |
Cliffside Unit 5(b) | 546 | | | | | | | | | 358 | | | | | |
| Duke Energy Progress | | | | | | | | | | | | | |
Mayo Unit 1(b) | 713 | | | | | | | | | 621 | | | | | |
Roxboro Units 3-4(b) | 1,409 | | | | | | | | | 450 | | | | | |
| Duke Energy Florida | | | | | | | | | | | | | |
Crystal River Units 4-5(c) | 1,442 | | | | | | | | | 1,636 | | | | | |
| Duke Energy Indiana | | | | | | | | | | | | | |
Gibson Units 1-5(d) | 2,845 | | | | | | | | | 2,076 | | | | | |
Cayuga Units 1-2(d) | 1,005 | | | | | | | | | 676 | | | | | |
| Total Duke Energy | 8,386 | | | | | | | | | $ | 6,094 | | | | | |
(a)As part of the 2015 resolution of a lawsuit involving alleged New Source Review violations, Duke Energy Carolinas must retire Allen Steam Station UnitsUnit 1 through 3 by December 31, 2024. The long-term energy options considered in the IRP could result in retirement of these unitsthis unit earlier than theirits current estimated useful lives. Unit 3 with a capacity of 270 MW and a net book value of $26 million at December 31, 2020, was retired in March 2021.live.
(b)These units were included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. In 2019, Duke Energy Carolinas and Duke Energy Progress filed North Carolina rate cases that included depreciation studies that accelerate end-of-life dates for these plants. The NCUC issued orders in the 2019 rate cases of Duke Energy Carolinas and Duke Energy Progress on March 31, 2021, and April 16, 2021, respectively, in which the proposals to shorten the remaining depreciable lives of these units were denied, while indicating the IRP proceeding was the appropriate proceeding for the review of generating plant retirements.
(c)On January 14, 2021, Duke Energy Florida filed a settlementthe 2021 Settlement agreement with the FPSC, which proposed depreciation rates reflecting retirement dates for Duke Energy Florida's last 2 coal-fired generating facilities, Crystal River Units 4-5, eight years ahead of schedule in 2034 rather than in 2042. The settlement wasFPSC approved by the FPSC2021 Settlement on May 4, 2021.
(d)Gallagher Units 2 and 4 with a total capacity of 280 MW and a total net book value of $102 million at December 31, 2020, were retired on June 1, 2021.
(e)The rate case filed July 2, 2019, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. The depreciation rates reflecting these updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.
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.
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| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES |
Remediation Activities
In addition to AROs recorded as a result of various environmental regulations, the Duke Energy Registrants are responsible for environmental remediation at various sites. These include certain properties that are part of ongoing operations and sites formerly owned or used by Duke Energy entities. These sites are in various stages of investigation, remediation and monitoring. Managed in conjunction with relevant federal, state and local agencies, remediation activities vary based upon site conditions and location, remediation requirements, complexity and sharing of responsibility. If remediation activities involve joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Duke Energy Registrants could potentially be held responsible for environmental impacts caused by other potentially responsible parties and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. Liabilities are recorded when losses become probable and are reasonably estimable. The total costs that may be incurred cannot be estimated because the extent of environmental impact, allocation among potentially responsible parties, remediation alternatives and/or regulatory decisions have not yet been determined at all sites. Additional costs associated with remediation activities are likely to be incurred in the future and could be significant. Costs are typically expensed as Operation, maintenance and other on the Condensed Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.
The following table contains information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Other within Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.
| | (in millions) | (in millions) | September 30, 2021 | | December 31, 2020 | | (in millions) | March 31, 2022 | | December 31, 2021 | |
| Reserves for Environmental Remediation | Reserves for Environmental Remediation | | | | | Reserves for Environmental Remediation | | | | |
| Duke Energy | Duke Energy | $ | 74 | | | $ | 75 | | | Duke Energy | $ | 87 | | | $ | 88 | | |
| Duke Energy Carolinas | Duke Energy Carolinas | 19 | | | 19 | | | Duke Energy Carolinas | 19 | | | 19 | | |
| Progress Energy | Progress Energy | 17 | | | 19 | | | Progress Energy | 23 | | | 23 | | |
| Duke Energy Progress | Duke Energy Progress | 6 | | | 6 | | | Duke Energy Progress | 11 | | | 11 | | |
| Duke Energy Florida | Duke Energy Florida | 11 | | | 12 | | | Duke Energy Florida | 11 | | | 11 | | |
| Duke Energy Ohio | Duke Energy Ohio | 21 | | | 22 | | | Duke Energy Ohio | 33 | | | 34 | | |
| Duke Energy Indiana | Duke Energy Indiana | 5 | | | 6 | | | Duke Energy Indiana | 4 | | | 4 | | |
| Piedmont | Piedmont | 12 | | | 10 | | | Piedmont | 8 | | | 9 | | |
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.
LITIGATION
Duke Energy
Michael Johnson et al. v. Duke Energy Corporation et al.
On September 23, 2020, plaintiff Michael Johnson, a former Duke Energy employee and participant in the Duke Energy Retirement Savings Plan (Plan) brought suit on his own behalf and on behalf of other participants and beneficiaries similarly situated against Duke Energy Corporation, the Duke Energy Benefits Committee, and other unnamed individual defendants. The complaint, which was subsequently amended to add a current participant as a plaintiff on November 23, 2020, alleges that the defendants breached their fiduciary duties with respect to certain fees associated with the Plan in violation of the Employee Retirement Income Security Act of 1974 and seeks certification of a class of all individuals who were participants or beneficiaries of the Plan at any time on or after September 23, 2014. The defendants filed a motion to dismiss the plaintiffs’ amended complaint on December 18, 2020. On January 31, 2022, the court denied the defendants' motion to dismiss. On February 28, 2022, Duke Energy responded to the amended complaint. Discovery commenced and the parties exchanged preliminary disclosures. After review of these disclosures, the parties filed a joint stipulation of dismissal with prejudice on April 28, 2022. If approved by the Court, this matter will be fully resolved. Duke Energy cannot predict the outcome of this matter.
Texas Storm Uri Tort Litigation
Duke Energy and severalSeveral Duke Energy renewables project companies, have beenlocated in the ERCOT market, were named in multiple lawsuits arising out of Texas Storm Uri in mid-February 2021, and particularly,2021. Duke Energy Corporation, which had originally been named in several suits, was dismissed from the deregulated market managed bylawsuits. The lawsuits against the Electric Reliability Council of Texas. There are 30 state court actions pending. These lawsuitsDuke Energy renewables project companies seek recovery for property damages, personal injury and for wrongful death allegedly incurredcaused by the plaintiffs as a result of power outages, which the plaintiffs claim was the result of the defendants' failures.collective failures of generators, transmission and distribution operators, retail energy providers and others, including ERCOT. The cases pending in state court have been consolidated into a Texas state court multidistrict litigation (MDL) proceeding before a single judgefor discovery and pre-litigation purposes. NaN MDL cases have been designated for motions to handledismiss while all pretrial coordination.other cases are stayed. Duke Energy renewables projects are named as defendants in 3 of these 5 cases. The parties' briefing on omnibus motions to dismiss should be completed by July 2022 and will focus on lack of duty, tariff defenses and sovereign immunity. Decisions on these motions will be applicable to all of the stayed cases. Duke Energy cannot predict the outcomes of these matters.
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| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES |
Duke Energy Carolinas and Duke Energy Progress
Coal Ash Insurance Coverage Litigation
In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in the North Carolina 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 U.S. Environmental Protection Agency CCR rule at 15 coal-fired plants in North Carolina and South Carolina.
Duke Energy Carolinas and Duke Energy Progress have resolved claims against all, but two of the insurers, sued in this litigation and are dismissing their claims against the settling insurers. Duke Energy Carolinas and Duke Energy Progress have received approximately $418 million of coal ash insurance litigation proceeds from settlements with insurer-defendants and these proceeds will be distributed in accordance with the terms of the CCR settlement agreement. The companies are assessing their options with regard to the two remaining foreign insurers that have defaulted. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Carolinas
Ruben Villano, et al. v. Duke Energy Carolinas, LLC
On June 16, 2021, a group of 9 individuals went over a low head dam adjacent to the Dan River Steam Station in Eden, North Carolina, while water tubing. Emergency personnel rescued 4 people and 5 others were confirmed deceased. On August 11, 2021, Duke Energy Carolinas was served with the complaint filed in Durham County Superior Court on behalf of 4 survivors, which was later amended to include all the decedents along with the survivors.survivors, except for one minor. The lawsuit alleges that Duke Energy Carolinas knew that the river was used for recreational purposes and that Duke Energy did not adequately warn about the dam, and that Duke Energy Carolinas created a dangerous and hidden hazard on the Dan River in building and maintaining the low head dam. On September 30, 2021, Duke Energy Carolinas filed its Motionmotion to Dismissdismiss and Motionmotion for Transfertransfer of Venuevenue from Durham County to Rockingham County. A hearingCounty, both of which were denied on these motions is set forNovember 15, 2021. On November 15, 2021, Duke Energy Carolinas was also served with Plaintiffs Second Amended Complaint, which added the final minor plaintiff and discoveryconsolidated all the actions into 1 lawsuit. Duke Energy Carolinas has commenced.filed its Answer and Affirmative Defenses to the Second Amended Complaint. Mediation is scheduled for December 2022. Discovery has commenced and is scheduled to be completed on or before February 28, 2023. The case is scheduled to be trial-ready by April 24, 2023. Duke Energy Carolinas cannot predict the outcome of this matter.
NTE Carolinas II, LLC Litigation
In November 2017, Duke Energy Carolinas entered into a standard FERC large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC (NTE), a company that proposed to build a combined-cycle natural gas plant in Rockingham County, North Carolina. On September 6, 2019, Duke Energy Carolinas filed a lawsuit in Mecklenburg County Superior Court against NTE for breach of contract, alleging that NTE's failure to pay benchmark payments for Duke Energy Carolinas' transmission system upgrades required under the interconnection agreement constituted a termination of the interconnection agreement. Duke Energy Carolinas is seeking a monetary judgment against NTE because NTE failed to make multiple milestone payments. The lawsuit was moved to federal court in North Carolina. NTE filed a motion to dismiss Duke Energy Carolinas’ complaint and brought counterclaims alleging anti-competitive conduct and violations of state and federal statutes. Duke Energy Carolinas filed a motion to dismiss NTE's counterclaims.
On May 21, 2020, in response to a NTE petition challenging Duke Energy Carolinas' termination of the LGIA, FERC issued a ruling that 1) it has exclusive jurisdiction to determine whether a transmission provider may terminate a LGIA; 2) FERC approval is required to terminate a conforming LGIA if objected to by the interconnection customer; and 3) Duke Energy may not announce the termination of a conforming LGIA unless FERC has approved the termination. FERC's Office of Enforcement also initiated an investigation of Duke Energy Carolinas into matters pertaining to the LGIA. Duke Energy Carolinas is cooperating with the Office of Enforcement but cannot predict the outcome of this investigation.
On August 17, 2020, the court denied both NTE’s and Duke Energy Carolinas’ Motionmotions to Dismiss.dismiss. In October 2021, NTE filed a Second Amended Counterclaim and Complaint, and in January 2022, NTE filed a Third Amended Counterclaim and Complaint. Duke Energy Carolinas has responded to these pleadings. On December 6, 2021, Duke Energy Carolinas filed an Amended Complaint. On March 1, 2022, the parties participated in mediation, which ended in an impasse. On April 4, 2022, Duke Energy Carolinas filed a motion for summary judgment seeking a ruling in its favor as to some of its affirmative claims against NTE and to all of NTE’s counterclaims. Duke Energy Carolinas' motion will be fully briefed on May 10, 2022. The parties are in active discovery and trialcase is scheduled for June 20,to be trial-ready by August 1, 2022. Duke Energy Carolinas cannot predict the outcome of this matter.
Asbestos-related Injuries and Damages Claims
Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of September 30, 2021, there were 74 asserted claims for non-malignant cases with cumulative relief sought of up to $15 million, and 58 asserted claims for malignant cases with cumulative relief sought of up to $21 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.
Duke Energy Carolinas has recognized asbestos-related reserves of $508$495 million at September 30, 2021,March 31, 2022, and $572$501 million at December 31, 2020.2021. 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 2041 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 2041 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 $697 million in excess of the self-insured retention. Receivables for insurance recoveries were $644 million at September 30, 2021,March 31, 2022, and $704$644 million at December 31, 2020.2021. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the Condensed Consolidated Balance Sheets. Any future payments up to the policy limit will be reimbursed by the third-party insurance carrier. 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.
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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$12 million for Duke Energy and Duke Energy Carolinas as of September 30, 2021,March 31, 2022, and December 31, 2020.2021. The insurance receivable is evaluated based on the risk of default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the risk of default from credit agencies.
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 EnergyDOE 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 $200 million for Duke Energy Progress and Duke Energy Florida, respectively. Discovery is now complete,
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| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES |
On March 30, 2022, the DOE and trial is anticipated to be scheduled in 2022. Duke Energy Progress executed a settlement agreement, pursuant to which Duke Energy Progress will receive damages for costs incurred between 2014 and 2018, and will be able to submit future costs on a defined schedule. In April 2022, Duke Energy Progress received $87 million in proceeds that related to damages incurred in 2014 through 2018.
On May 2, 2022, the DOE and Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Florida
Power Purchase Dispute Arbitration
executed a settlement agreement, pursuant to which Duke Energy Florida on behalf of its customers, entered into a PPAwill receive approximately $180 million for the purchase of firm capacitycosts incurred between 2014 and energy from a qualifying facility under the Public Utilities Regulatory Policies Act of 1978. Duke Energy Florida determined the qualifying facility did not perform2018, and will be able to submit costs incurred in accordance with the PPA,2019 and Duke Energy Florida terminated the PPA. The qualifying facility counterparty filed a confidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the PPA and seeking damages.
The final arbitration hearing occurred during the week of December 7, 2020. An interim arbitral award was issued in March 2021, upholding Duke Energy Florida's positions on all issues and awarding the company termination costs. In May 2021, the final arbitral award was issued awarding Duke Energy Florida its claimed fees and costs. On August 18, 2021, Duke Energy Florida filed a motion in Florida state court2020 pursuant to confirm the arbitral award.an audit process.
Duke Energy Indiana
Coal Ash Basin Closure Plan Appeal
On January 27, 2020, Hoosier Environmental Council (HEC) filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication challenging the Indiana Department of Environmental Management’s (IDEM's) December 10, 2019, partial approval of Duke Energy Indiana’s ash pond closure plan.plan at Duke Energy's Gallagher power station. After hearing oral arguments in early April 2021 on Duke Energy Indiana's and HEC's competing Motions for Summary Judgment, on May 4, 2021, the administrative court rejected all of HEC’s claims and issued a ruling in favor of Duke Energy Indiana. On June 3, 2021, HEC filed an appeal in Superior Court to seek judicial review of the order. On June 25, 2021, Duke Energy Indiana filed its response to the Petition to Review. On August 30, 2021, HEC served Duke Energy Indiana with its Brief in Support of Petition for Judicial Review. On October 29, 2021, Duke Energy Indiana and IDEM filed their response briefs. HEC'sOn December 13, 2021, HEC filed and served its Reply BriefBrief.
On January 11, 2022, Duke Energy Indiana received a compliance obligation letter from the EPA notifying the company that the two basins at issue in the litigation are subject to requirements of the CCR Rule. The letter does not provide a deadline for compliance. Duke Energy Indiana is dueevaluating the EPA letter, its potential impacts on or before Novemberthe litigation and the extent to which this letter could apply to CCR surface impoundments at its other Indiana sites.
Following the January 11, 2022 EPA notice of compliance letter, the parties filed a joint motion to stay the litigation for 45 days, which was approved by the court. As a result, the oral argument scheduled for February 1, 2022, was postponed. Duke Energy Indiana and HEC engaged in settlement discussions, but the parties were unable to reach resolution. On April 21, 2022, HEC filed a Motion to Lift Stay and Motion for Judicial Notice. HEC also requested that the court hold a hearing within 45 days and also take judicial notice of the EPA's January 11, 2022 letter. On April 22, 2021. Oral argument will be heard2022, Duke Energy Indiana sent IDEM a letter withdrawing the closure plans for the Gallagher North Ash Pond and Primary Pond Ash Fill. After acknowledgment by IDEM of withdrawal of these closure plans, Duke Energy Indiana filed a Motion to Dismiss the litigation as moot on April 28, 2022, and IDEM filed a separate brief on May 2, 2022, in December 2021, in Marion County Superior Court. Dukesupport of this motion. Briefing is ongoing. 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. Reserves are classified on the Condensed Consolidated Balance Sheets in Other within Other Noncurrent Liabilities and Other within Current Liabilities.
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.
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.
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| FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES |
5. DEBT AND CREDIT FACILITIES
SUMMARY OF SIGNIFICANT DEBT ISSUANCES
The following table summarizes significant debt issuances (in millions).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Nine Months Ended September 30, 2021 |
| | | | | | | Duke | | Duke | | Duke | | | | | | | | |
| Maturity | | Interest | | Duke | | Energy | | Energy | | Energy | | | | | | | | |
| Issuance Date | Date | | Rate | | Energy | | (Parent) | | Carolinas | | Progress | | | | | | | | Piedmont |
| Unsecured Debt | | | | | | | | | | | | | | | | | | | |
March 2021(a) | March 2031 | | 2.500 | % | | $ | 350 | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | $ | 350 | |
June 2021(b)(c) | June 2023 | | 2.500 | % | | 500 | | | 500 | | | — | | | — | | | | | | | | | — | |
June 2021(c) | June 2031 | | 2.550 | % | | 1,000 | | | 1,000 | | | — | | | — | | | | | | | | | — | |
June 2021(c) | June 2041 | | 3.300 | % | | 750 | | | 750 | | | — | | | — | | | | | | | | | — | |
June 2021(c) | June 2051 | | 3.500 | % | | 750 | | | 750 | | | — | | | — | | | | | | | | | — | |
September 2021(d) | January 2082 | | 3.250 | % | | 500 | | | 500 | | | — | | | — | | | | | | | | | — | |
| | | | | | | | | | | | | | | | | | | |
| First Mortgage Bonds | | | | | | | | | | | | | | | | | | |
April 2021(e) | April 2031 | | 2.550 | % | | 550 | | | — | | | 550 | | | — | | | | | | | | | — | |
April 2021(e) | April 2051 | | 3.450 | % | | 450 | | | — | | | 450 | | | — | | | | | | | | | — | |
August 2021(f) | August 2031 | | 2.000 | % | | 650 | | | — | | | — | | | 650 | | | | | | | | | — | |
August 2021(f) | August 2051 | | 2.900 | % | | 450 | | | — | | | — | | | 450 | | | | | | | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total issuances | | | | | $ | 5,950 | | | $ | 3,500 | | | $ | 1,000 | | | $ | 1,100 | | | | | | | | | $ | 350 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended March 31, 2022 |
| | | | | | | | | Duke | | Duke | | | | | | | | |
| Maturity | | Interest | | Duke | | | | Energy | | Energy | | | | | | | | |
| Issuance Date | Date | | Rate | | Energy | | | | Carolinas | | Progress | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| First Mortgage Bonds | | | | | | | | | | | | | | | | | | |
March 2022(a) | March 2032 | | 2.850 | % | | $ | 500 | | | | | $ | 500 | | | $ | — | | | | | | | | | |
March 2022(a) | March 2052 | | 3.550 | % | | 650 | | | | | 650 | | | — | | | | | | | | | |
March 2022(a) | April 2032 | | 3.400 | % | | 500 | | | | | — | | | 500 | | | | | | | | | |
March 2022(a) | April 2052 | | 4.000 | % | | 400 | | | | | — | | | 400 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Total issuances | | | | | $ | 2,050 | | | | | $ | 1,150 | | | $ | 900 | | | | | | | | | |
(a)Debt issuedProceeds will be used to repay at maturity $160 million senior unsecured notes due June 2021, pay down short-term debt and for general corporate purposes.finance or refinance, in whole or in part, existing or new eligible projects under the sustainable financing framework.
(b)Debt issuance has a floating interest rate.
(c)Debt issued to repay $1.75 billion of Duke Energy (Parent) 2021 debt maturities, to repay a portion of short-term debt and for general corporate purposes.
(d)Debt issued to repay in October 2021 $500 million of Duke Energy (Parent) unsecured notes. The interest rate resets every five years.
(e)Debt issued to repay at maturity $500 million first mortgage bonds due June 2021, pay down short-term debt and for general company purposes.
(f)Debt issued to repay at maturity a total of $600 million first mortgage bonds due September 2021, pay down short-term debt and for general company purposes.
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) | (in millions) | Maturity Date | | Interest Rate | | September 30, 2021 | (in millions) | Maturity Date | | Interest Rate | | March 31, 2022 |
| Unsecured Debt | Unsecured Debt | | Unsecured Debt | |
Duke Energy (Parent)(a) | October 2021 | | 5.125 | % | | 500 | | |
Duke Energy Florida(b) | November 2021 | | 0.372 | % | | 200 | | |
Duke Energy Progress(b) | February 2022 | | 0.305 | % | | 700 | | |
| Duke Energy (Parent) | March 2022 | | 3.227 | % | | 300 | | |
Duke Energy (Parent)(b) | March 2022 | | 0.764 | % | | 300 | | |
| Progress Energy | Progress Energy | April 2022 | | 3.150 | % | | 450 | | Progress Energy | April 2022 | | 3.150 | % | | $ | 450 | |
| Duke Energy (Parent) | Duke Energy (Parent) | August 2022 | | 3.050 | % | | 500 | | Duke Energy (Parent) | August 2022 | | 3.050 | % | | 500 | |
| Duke Energy (Parent) | Duke Energy (Parent) | August 2022 | | 2.400 | % | | 500 | | Duke Energy (Parent) | August 2022 | | 2.400 | % | | 500 | |
| | First Mortgage Bonds | First Mortgage Bonds | | First Mortgage Bonds | |
| Duke Energy Indiana | January 2022 | | 8.850 | % | | 53 | | |
| Duke Energy Carolinas | Duke Energy Carolinas | May 2022 | | 3.350 | % | | 350 | | Duke Energy Carolinas | May 2022 | | 3.350 | % | | 350 | |
| Duke Energy Progress | Duke Energy Progress | May 2022 | | 2.800 | % | | 500 | | Duke Energy Progress | May 2022 | | 2.800 | % | | 500 | |
Other(c) | | 520 | | |
| Duke Energy Carolinas | | Duke Energy Carolinas | March 2023 | | 2.500 | % | | 500 | |
| Duke Energy Carolinas | | Duke Energy Carolinas | March 2023 | | 3.050 | % | | 500 | |
Other(a) | | Other(a) | | 584 | |
| Current maturities of long-term debt | Current maturities of long-term debt | | $ | 4,873 | | Current maturities of long-term debt | | $ | 3,884 | |
(a)Junior unsecured notes due January 2073 were redeemed on October 7, 2021.
(b)Debt has a floating interest rate.
(c)Includes finance lease obligations, amortizing debt, tax-exempt bonds with mandatory put options and small bullet maturities.
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FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES |
AVAILABLE CREDIT FACILITIES
Master Credit Facility
In March 2021,2022, Duke Energy amended its existing $8 billion Master Credit Facility to increase the amount of the facility from $8 billion to $9 billion and to extend the termination date to March 2026.2027. 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.
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| FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES |
The table below includes the current borrowing sublimits and available capacity under these credit facilities.
| | | September 30, 2021 | | March 31, 2022 |
| | | 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) | (in millions) | Energy | | (Parent) | | Carolinas | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | Energy | | (Parent) | | Carolinas | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
Facility size(a) | Facility size(a) | $ | 8,000 | | | $ | 2,650 | | | $ | 1,275 | | | $ | 1,150 | | | $ | 850 | | | $ | 775 | | | $ | 600 | | | $ | 700 | | Facility size(a) | $ | 9,000 | | | $ | 3,300 | | | $ | 1,225 | | | $ | 1,400 | | | $ | 900 | | | $ | 775 | | | $ | 600 | | | $ | 800 | |
| Reduction to backstop issuances | Reduction to backstop issuances | | Reduction to backstop issuances | |
Commercial paper(b) | Commercial paper(b) | (1,611) | | | 389 | | | (375) | | | (253) | | | (527) | | | (419) | | | (150) | | | (276) | | Commercial paper(b) | (2,819) | | | (1,715) | | | (300) | | | (150) | | | (236) | | | (86) | | | (150) | | | (182) | |
| Outstanding letters of credit | Outstanding letters of credit | (31) | | | (25) | | | (4) | | | (2) | | | — | | | — | | | — | | | — | | Outstanding letters of credit | (38) | | | (25) | | | (4) | | | (2) | | | (7) | | | — | | | — | | | — | |
| Tax-exempt bonds | Tax-exempt bonds | (81) | | | — | | | — | | | — | | | — | | | — | | | (81) | | | — | | Tax-exempt bonds | (81) | | | — | | | — | | | — | | | — | | | — | | | (81) | | | — | |
| | Available capacity under the Master Credit Facility | Available capacity under the Master Credit Facility | $ | 6,277 | | | $ | 3,014 | | | $ | 896 | | | $ | 895 | | | $ | 323 | | | $ | 356 | | | $ | 369 | | | $ | 424 | | Available capacity under the Master Credit Facility | $ | 6,062 | | | $ | 1,560 | | | $ | 921 | | | $ | 1,248 | | | $ | 657 | | | $ | 689 | | | $ | 369 | | | $ | 618 | |
(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.
Other Credit Facilities
| | | | | | | | | | | |
| September 30, 2021 |
| (in millions) | Facility size | | Amount drawn |
Duke Energy (Parent) Three-Year Revolving Credit Facility(a) | $ | 1,000 | | | $ | 500 | |
(a)During March 2021, Duke Energy extended the(Parent) Term Loan Facility
On March 9, 2022, Duke Energy (Parent) entered into a Term Loan Credit Agreement (Credit Agreement) with commitments totaling $1.4 billion maturing March 9, 2024. The maturity date of the Credit Agreement may be extended for up to two years by request of Duke Energy (Parent), upon satisfaction of certain conditions contained in the Credit Agreement. Borrowings under the facility were used to repay amounts drawn under the Three-Year Revolving Credit Facility from May 2022 to May 2024.
Duke Energy Ohio Term Loan Facility
In October 2021, Duke Energy Ohio entered into a two-year term loan facility with commitments totaling $100 million. Borrowings under the facility will be used to pay down short-term debt and for general corporate purposes. The term loan was fully drawn at the timepurposes, including repayment of closing in October.a portion of Duke Energy's outstanding commercial paper. The balance will beis classified as Long-Term Debt on Duke Energy Ohio’sEnergy's Condensed Consolidated Balance Sheets. The Three-Year Revolving Credit Facility was terminated in March 2022.
Intercompany Credit Agreements
In March 2022, Progress Energy closed a revolving credit agreement with Duke Energy Kentucky Term Loan Facility
In October 2021, Duke Energy Kentucky entered into a two-year term loan facility with commitments totaling $50 million. Borrowings under the facility will be used(Parent), which allowed up to pay down short-term debt and for general corporate purposes. The term loan was fully drawn at the time of closing$2.5 billion in October. The balance will be classified as Long-Term Debt on Duke Energy Ohio's Condensed Consolidated Balance Sheet.
Duke Energy Indiana Term Loan Facility
In October 2021, Duke Energy Indiana entered into a two-year term loan facility with commitments totaling $300 million. Borrowings under the facility will be used to pay down short-term debt and for general corporate purposes. The term loan was fully drawn at the time of closing in October. The balance will be classified as Long-Term Debt on Duke Energy Indiana’s Condensed Consolidated Balance Sheet.intercompany borrowings.
6. GOODWILL
Duke Energy
The following table presents the goodwill by reportable segment included on Duke Energy's Condensed Consolidated Balance Sheets at September 30, 2021,March 31, 2022, and December 31, 2020.2021.
| | | | | | | | | | | | | | | | | | | | | | | |
| 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 | |
| | | | | |
FINANCIAL STATEMENTS | GOODWILL |
Duke Energy Ohio
Duke Energy Ohio's Goodwill balance of $920 million, allocated $596 million to Electric Utilities and Infrastructure and $324 million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $216 million on the Condensed Consolidated Balance Sheets at September 30, 2021,March 31, 2022, and December 31, 2020.2021.
Progress Energy
Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure segment and there are no accumulated impairment charges.
Piedmont
Piedmont's Goodwill is included in the Gas Utilities and Infrastructure segment and there are no accumulated impairment charges.
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. As the fair value for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis, no goodwill impairment charges were recorded in the third quarter of 2021.
| | | | | |
| 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 September 30, | | Nine Months Ended September 30, |
| (in millions) | 2021 | | 2020 | | 2021 | | 2020 |
| Duke Energy Carolinas | | | | | | | |
Corporate governance and shared service expenses(a) | $ | 207 | | | $ | 198 | | | $ | 653 | | | $ | 528 | |
Indemnification coverages(b) | 6 | | | 5 | | | 18 | | | 15 | |
Joint Dispatch Agreement (JDA) revenue(c) | 6 | | | 6 | | | 32 | | | 16 | |
JDA expense(c) | 68 | | | 28 | | | 133 | | | 72 | |
Intercompany natural gas purchases(d) | 14 | | | 10 | | | 43 | | | 26 | |
| Progress Energy | | | | | | | |
Corporate governance and shared service expenses(a) | $ | 201 | | | $ | 185 | | | $ | 615 | | | $ | 520 | |
Indemnification coverages(b) | 10 | | | 9 | | | 31 | | | 27 | |
JDA revenue(c) | 68 | | | 28 | | | 133 | | | 72 | |
JDA expense(c) | 6 | | | 6 | | | 32 | | | 16 | |
Intercompany natural gas purchases(d) | 19 | | | 18 | | | 56 | | | 56 | |
| Duke Energy Progress | | | | | | | |
Corporate governance and shared service expenses(a) | $ | 121 | | | $ | 113 | | | $ | 367 | | | $ | 301 | |
Indemnification coverages(b) | 4 | | | 4 | | | 14 | | | 13 | |
JDA revenue(c) | 68 | | | 28 | | | 133 | | | 72 | |
JDA expense(c) | 6 | | | 6 | | | 32 | | | 16 | |
Intercompany natural gas purchases(d) | 19 | | | 18 | | | 56 | | | 56 | |
| Duke Energy Florida | | | | | | | |
Corporate governance and shared service expenses(a) | $ | 80 | | | $ | 72 | | | $ | 248 | | | $ | 219 | |
Indemnification coverages(b) | 6 | | | 5 | | | 17 | | | 14 | |
| Duke Energy Ohio | | | | | | | |
Corporate governance and shared service expenses(a) | $ | 79 | | | $ | 80 | | | $ | 237 | | | $ | 241 | |
Indemnification coverages(b) | 1 | | | 1 | | | 3 | | | 3 | |
| Duke Energy Indiana | | | | | | | |
Corporate governance and shared service expenses(a) | $ | 96 | | | $ | 102 | | | $ | 302 | | | $ | 300 | |
Indemnification coverages(b) | 2 | | | 2 | | | 6 | | | 6 | |
| Piedmont | | | | | | | |
Corporate governance and shared service expenses(a) | $ | 32 | | | $ | 31 | | | $ | 101 | | | $ | 102 | |
Indemnification coverages(b) | 1 | | | 1 | | | 3 | | | 2 | |
Intercompany natural gas sales(d) | 33 | | | 28 | | | 99 | | | 82 | |
Natural gas storage and transportation costs(e) | 6 | | | 6 | | | 17 | | | 17 | |
| | | | | |
FINANCIAL STATEMENTS | RELATED PARTY TRANSACTIONS |
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| (in millions) | | | | | 2022 | | 2021 |
| Duke Energy Carolinas | | | | | | | |
Corporate governance and shared service expenses(a) | | | | | $ | 206 | | | $ | 203 | |
Indemnification coverages(b) | | | | | 7 | | | 6 | |
Joint Dispatch Agreement (JDA) revenue(c) | | | | | 26 | | | 13 | |
JDA expense(c) | | | | | 94 | | | 40 | |
Intercompany natural gas purchases(d) | | | | | 13 | | | 14 | |
| Progress Energy | | | | | | | |
Corporate governance and shared service expenses(a) | | | | | $ | 196 | | | $ | 181 | |
Indemnification coverages(b) | | | | | 11 | | | 10 | |
JDA revenue(c) | | | | | 94 | | | 40 | |
JDA expense(c) | | | | | 26 | | | 13 | |
Intercompany natural gas purchases(d) | | | | | 19 | | | 19 | |
| Duke Energy Progress | | | | | | | |
Corporate governance and shared service expenses(a) | | | | | $ | 119 | | | $ | 105 | |
Indemnification coverages(b) | | | | | 5 | | | 5 | |
JDA revenue(c) | | | | | 94 | | | 40 | |
JDA expense(c) | | | | | 26 | | | 13 | |
Intercompany natural gas purchases(d) | | | | | 19 | | | 19 | |
| Duke Energy Florida | | | | | | | |
Corporate governance and shared service expenses(a) | | | | | $ | 77 | | | $ | 76 | |
Indemnification coverages(b) | | | | | 6 | | | 5 | |
| Duke Energy Ohio | | | | | | | |
Corporate governance and shared service expenses(a) | | | | | $ | 82 | | | $ | 79 | |
Indemnification coverages(b) | | | | | 1 | | | 1 | |
| Duke Energy Indiana | | | | | | | |
Corporate governance and shared service expenses(a) | | | | | $ | 124 | | | $ | 113 | |
Indemnification coverages(b) | | | | | 2 | | | 2 | |
| Piedmont | | | | | | | |
Corporate governance and shared service expenses(a) | | | | | $ | 35 | | | $ | 33 | |
Indemnification coverages(b) | | | | | 1 | | | 1 | |
Intercompany natural gas sales(d) | | | | | 32 | | | 33 | |
Natural gas storage and transportation costs(e) | | | | | 6 | | | 6 | |
(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 and Impairment of assets and other charges 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 | |
| | Energy | Progress | Energy | | | Energy | Progress | Energy | |
| (in millions) | (in millions) | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | (in millions) | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont |
| September 30, 2021 | | |
| March 31, 2022 | | March 31, 2022 | |
| Intercompany income tax receivable | Intercompany income tax receivable | $ | — | | $ | 36 | | $ | — | | $ | 8 | | $ | 1 | | $ | — | | $ | 14 | | Intercompany income tax receivable | $ | 20 | | $ | 49 | | $ | — | | $ | 9 | | $ | 5 | | $ | — | | $ | — | |
| Intercompany income tax payable | Intercompany income tax payable | 133 | | — | | 51 | | — | | — | | 17 | | — | | Intercompany income tax payable | — | | — | | 15 | | — | | — | | 44 | | 45 | |
| | December 31, 2020 | | |
| December 31, 2021 | | December 31, 2021 | |
| Intercompany income tax receivable | Intercompany income tax receivable | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 9 | | $ | 10 | | Intercompany income tax receivable | $ | — | | $ | — | | $ | — | | $ | 40 | | $ | 19 | | $ | — | | $ | — | |
| Intercompany income tax payable | Intercompany income tax payable | 31 | | 33 | | 46 | | 35 | | 2 | | — | | — | | Intercompany income tax payable | 62 | | — | | 84 | | — | | — | | 10 | | 27 | |
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 loss for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, 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 segment and forward-starting interest rate swaps not accounted for under regulatory accounting.
Undesignated Contracts
Undesignated contracts primarily include contracts not designated as a hedge because they are accounted for under regulatory accounting or contracts that do not qualify for hedge accounting.
Duke Energy’s interest rate swaps for its regulated operations employ regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the swaps are deferred as regulatory liabilities or regulatory assets, respectively. Regulatory assets and liabilities are amortized consistent with the treatment of the related costs in the ratemaking process. The accrual of interest on the swaps is recorded as Interest Expense on the Duke Energy Registrant's Condensed Consolidated Statements of Operations and Comprehensive Income.
| | | | | |
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING |
The following table shows notional amounts of outstanding derivatives related to interest rate risk.
| | | September 30, 2021 | | March 31, 2022 |
| | | Duke | | Duke | | Duke | | Duke | | | Duke | | | Duke | | Duke |
| | Duke | | Energy | | Progress | | Energy | | Energy | | Energy | | Duke | | Energy | | | Energy | | Energy |
| (in millions) | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | (in millions) | Energy | | Carolinas | | | Indiana | | Ohio |
| Cash flow hedges | Cash flow hedges | $ | 2,094 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Cash flow hedges | $ | 2,913 | | | $ | — | | | | $ | — | | | $ | — | |
| Undesignated contracts | Undesignated contracts | 1,371 | | | 350 | | | 900 | | | 400 | | | 500 | | | 27 | | Undesignated contracts | 577 | | | 250 | | | | 300 | | | 27 | |
Total notional amount(a) | Total notional amount(a) | $ | 3,465 | | | $ | 350 | | | $ | 900 | | | $ | 400 | | | $ | 500 | | | $ | 27 | | Total notional amount(a) | $ | 3,490 | | | $ | 250 | | | | $ | 300 | | | $ | 27 | |
| | | December 31, 2020 | | December 31, 2021 |
| | | Duke | | Duke | | Duke | | Duke | | | Duke | | Duke | | Duke | | Duke |
| | Duke | | Energy | | Progress | | Energy | | Energy | | Energy | | Duke | | Energy | | Progress | | Energy | | Energy | | Energy |
| (in millions) | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Indiana | | Ohio |
| Cash flow hedges | Cash flow hedges | $ | 632 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Cash flow hedges | $ | 2,415 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Undesignated contracts | Undesignated contracts | 1,177 | | | 400 | | | 750 | | | 750 | | | — | | | 27 | | Undesignated contracts | 1,177 | | | 350 | | | 500 | | | 500 | | | 300 | | | 27 | |
Total notional amount(a) | Total notional amount(a) | $ | 1,809 | | | $ | 400 | | | $ | 750 | | | $ | 750 | | | $ | — | | | $ | 27 | | Total notional amount(a) | $ | 3,592 | | | $ | 350 | | | $ | 500 | | | $ | 500 | | | $ | 300 | | | $ | 27 | |
(a)Duke Energy includes amounts related to consolidated VIEs of $594$663 million in cash flow hedges and $94 million in undesignated contracts as of September 30, 2021, and $632$665 million in cash flow hedges as of March 31, 2022 and December 31, 2020.2021, respectively.
COMMODITY PRICE RISK
The Duke Energy Registrants are exposed to the impact of changes in the prices of electricity purchased and sold in bulk power markets and natural gas purchases, including Piedmont's natural gas supply contracts. Exposure to commodity price risk is influenced by a number of factors including the term of contracts, the liquidity of markets and delivery locations. To manage risk associated with commodity prices, the Duke Energy Registrants may enter into long-term power purchase or sales contracts and long-term natural gas supply agreements.
Cash Flow Hedges
For derivatives designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Gains and losses reclassified out of accumulated other comprehensive loss for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, were not material. Duke Energy’s commodity derivatives designated as hedges include long-term electricity sales in the Commercial Renewables segment.
Undesignated Contracts
For the Subsidiary Registrants, bulk power electricity and natural gas purchases flow through fuel adjustment clauses, formula-based contracts or other cost-sharing mechanisms. Differences between the costs included in rates and the incurred costs, including undesignated derivative contracts, are largely deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for the use of financial instruments to hedge commodity price risks. The strategy and objective of these hedging programs are to use the financial instruments to reduce natural gas costs volatility for customers.
| | | | | |
FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING |
Volumes
The tables below include volumes of outstanding commodity derivatives. Amounts disclosed represent the absolute value of notional volumes of commodity contracts excluding NPNS. The Duke Energy Registrants have netted contractual amounts where offsetting purchase and sale contracts exist with identical delivery locations and times of delivery. Where all commodity positions are perfectly offset, no quantities are shown.
| | | September 30, 2021 | | March 31, 2022 |
| | | Duke | | Duke | | | Duke | | Duke | | | | Duke | | Duke | | | Duke | | Duke | |
| | Duke | | Energy | | Progress | | Energy | | | Energy | | Energy | | | Duke | | Energy | | Progress | | Energy | | | Energy | | Energy | |
| | Energy | | Carolinas | | Energy | | Progress | | | Ohio | | Indiana | | Piedmont | | Energy | | Carolinas | | Energy | | Progress | | | Ohio | | Indiana | | Piedmont |
Electricity (GWh)(a) | Electricity (GWh)(a) | 29,044 | | | — | | | — | | | — | | | | 3,004 | | | 15,881 | | | — | | Electricity (GWh)(a) | 16,176 | | | — | | | — | | | — | | | | 791 | | | 4,501 | | | — | |
| Natural gas (millions of dekatherms) | Natural gas (millions of dekatherms) | 772 | | | 230 | | | 190 | | | 190 | | | | — | | | 7 | | | 345 | | Natural gas (millions of dekatherms) | 860 | | | 284 | | | 243 | | | 243 | | | | — | | | 7 | | | 326 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| | | Duke | | | | Duke | | | | Duke | | Duke | | |
| Duke | | Energy | | Progress | | Energy | | | | Energy | | Energy | | |
| Energy | | Carolinas | | Energy | | Progress | | | | Ohio | | Indiana | | Piedmont |
Electricity (GWh)(a) | 35,409 | | | — | | | — | | | — | | | | | 2,559 | | | 10,802 | | | — | |
| Natural gas (millions of dekatherms) | 678 | | | 145 | | | 158 | | | 158 | | | | | — | | | 2 | | | 373 | |
| | | | | |
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| | | Duke | | | | Duke | | | | Duke | | Duke | | |
| Duke | | Energy | | Progress | | Energy | | | | Energy | | Energy | | |
| Energy | | Carolinas | | Energy | | Progress | | | | Ohio | | Indiana | | Piedmont |
Electricity (GWh)(a) | 22,344 | | | — | | | — | | | — | | | | | 1,681 | | | 10,688 | | | — | |
| Natural gas (millions of dekatherms) | 823 | | | 264 | | | 215 | | | 215 | | | | | — | | | 8 | | | 336 | |
(a)Duke Energy includes 10,1599,763 GWh and 22,0489,975 GWh related to cash flow hedges as of September 30, 2021,March 31, 2022, and December 31, 2020,2021, respectively.
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 | Derivative Assets | | September 30, 2021 | Derivative Assets | | March 31, 2022 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Commodity Contracts | Commodity Contracts | | Commodity Contracts | |
| | Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | Current | | $ | 359 | | | $ | 171 | | | $ | 135 | | | $ | 135 | | | $ | — | | | $ | 4 | | | $ | 36 | | | $ | 12 | | Current | | $ | 673 | | | $ | 335 | | | $ | 295 | | | $ | 255 | | | $ | 40 | | | $ | — | | | $ | 28 | | | $ | 7 | |
| Noncurrent | Noncurrent | | 177 | | | 100 | | | 78 | | | 78 | | | — | | | — | | | — | | | — | | Noncurrent | | 280 | | | 151 | | | 130 | | | 130 | | | — | | | — | | | — | | | — | |
| Total Derivative Assets – Commodity Contracts | Total Derivative Assets – Commodity Contracts | | $ | 536 | | | $ | 271 | | | $ | 213 | | | $ | 213 | | | $ | — | | | $ | 4 | | | $ | 36 | | | $ | 12 | | Total Derivative Assets – Commodity Contracts | | $ | 953 | | | $ | 486 | | | $ | 425 | | | $ | 385 | | | $ | 40 | | | $ | — | | | $ | 28 | | | $ | 7 | |
| Interest Rate Contracts | Interest Rate Contracts | | Interest Rate Contracts | |
| Designated as Hedging Instruments | Designated as Hedging Instruments | | Designated as Hedging Instruments | |
| Current | Current | | $ | 2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Current | | $ | 94 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Noncurrent | Noncurrent | | 3 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Noncurrent | | 37 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | | $ | 2 | | | $ | — | | | $ | 2 | | | $ | 2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | |
| | Noncurrent | | Noncurrent | | 24 | | | 7 | | | — | | | — | | | — | | | — | | | 17 | | | — | |
| Total Derivative Assets – Interest Rate Contracts | Total Derivative Assets – Interest Rate Contracts | | $ | 7 | | | $ | — | | | $ | 2 | | | $ | 2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Total Derivative Assets – Interest Rate Contracts | | $ | 155 | | | $ | 7 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 17 | | | $ | — | |
| | Total Derivative Assets | Total Derivative Assets | | $ | 543 | | | $ | 271 | | | $ | 215 | | | $ | 215 | | | $ | — | | | $ | 4 | | | $ | 36 | | | $ | 12 | | Total Derivative Assets | | $ | 1,108 | | | $ | 493 | | | $ | 425 | | | $ | 385 | | | $ | 40 | | | $ | — | | | $ | 45 | | | $ | 7 | |
| | | | | |
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING |
| | Derivative Liabilities | Derivative Liabilities | | September 30, 2021 | Derivative Liabilities | | March 31, 2022 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Commodity Contracts | Commodity Contracts | | Commodity Contracts | |
| Designated as Hedging Instruments | Designated as Hedging Instruments | | Designated as Hedging Instruments | |
| Current | Current | | $ | 37 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | — | | Current | | $ | 49 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | — | |
| Noncurrent | Noncurrent | | 120 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Noncurrent | | 160 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | Current | | $ | 33 | | | $ | 12 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2 | | | $ | 20 | | Current | | 61 | | | 36 | | | — | | | — | | | — | | | — | | | — | | | 24 | |
| Noncurrent | Noncurrent | | 128 | | | — | | | — | | | — | | | — | | | — | | | — | | | 128 | | Noncurrent | | 149 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | 149 | |
| Total Derivative Liabilities – Commodity Contracts | Total Derivative Liabilities – Commodity Contracts | | $ | 318 | | | $ | 12 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2 | | | $ | 148 | | Total Derivative Liabilities – Commodity Contracts | | $ | 419 | | | $ | 37 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 173 | |
| Interest Rate Contracts | Interest Rate Contracts | | Interest Rate Contracts | |
| Designated as Hedging Instruments | Designated as Hedging Instruments | | Designated as Hedging Instruments | |
| Current | Current | | $ | 45 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Current | | $ | 4 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Noncurrent | Noncurrent | | 29 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Noncurrent | | 7 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | Current | | 19 | | | 6 | | | 12 | | | — | | | 12 | | | 1 | | | — | | | — | | Current | | 1 | | | — | | | — | | | — | | | — | | | 1 | | | — | | | — | |
| Noncurrent | Noncurrent | | 4 | | | — | | | — | | | — | | | — | | | 4 | | | — | | | — | | Noncurrent | | 2 | | | — | | | — | | | — | | | — | | | 2 | | | — | | | — | |
| Total Derivative Liabilities – Interest Rate Contracts | Total Derivative Liabilities – Interest Rate Contracts | | $ | 97 | | | $ | 6 | | | $ | 12 | | | $ | — | | | $ | 12 | | | $ | 5 | | | $ | — | | | $ | — | | Total Derivative Liabilities – Interest Rate Contracts | | $ | 14 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 3 | | | $ | — | | | $ | — | |
| | Total Derivative Liabilities | Total Derivative Liabilities | | $ | 415 | | | $ | 18 | | | $ | 12 | | | $ | — | | | $ | 12 | | | $ | 5 | | | $ | 2 | | | $ | 148 | | Total Derivative Liabilities | | $ | 433 | | | $ | 37 | | | $ | — | | | $ | — | | | $ | — | | | $ | 3 | | | $ | — | | | $ | 173 | |
| | Derivative Assets | Derivative Assets | | December 31, 2020 | Derivative Assets | | December 31, 2021 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Commodity Contracts | Commodity Contracts | | Commodity Contracts | |
| | Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | Current | | $ | 30 | | | $ | 14 | | | $ | 9 | | | $ | 9 | | | $ | — | | | $ | 1 | | | $ | 6 | | | $ | 1 | | Current | | $ | 199 | | | $ | 99 | | | $ | 72 | | | $ | 72 | | | $ | — | | | $ | 2 | | | $ | 23 | | | $ | 3 | |
| Noncurrent | Noncurrent | | 13 | | | 6 | | | 6 | | | 6 | | | — | | | — | | | — | | | — | | Noncurrent | | 113 | | | 63 | | | 50 | | | 50 | | | — | | | — | | | — | | | — | |
| Total Derivative Assets – Commodity Contracts | Total Derivative Assets – Commodity Contracts | | $ | 43 | | | $ | 20 | | | $ | 15 | | | $ | 15 | | | $ | — | | | $ | 1 | | | $ | 6 | | | $ | 1 | | Total Derivative Assets – Commodity Contracts | | $ | 312 | | | $ | 162 | | | $ | 122 | | | $ | 122 | | | $ | — | | | $ | 2 | | | $ | 23 | | | $ | 3 | |
| Interest Rate Contracts | Interest Rate Contracts | | Interest Rate Contracts | |
| | Designated as Hedging Instruments | | Designated as Hedging Instruments | |
| Current | | Current | | $ | 3 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Noncurrent | | Noncurrent | | 3 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | Current | | $ | 18 | | | $ | — | | | $ | 18 | | | $ | 18 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Current | | 2 | | | — | | | 2 | | | 2 | | | — | | | — | | | — | | | — | |
| | Total Derivative Assets – Interest Rate Contracts | Total Derivative Assets – Interest Rate Contracts | | $ | 18 | | | $ | — | | | $ | 18 | | | $ | 18 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Total Derivative Assets – Interest Rate Contracts | | $ | 8 | | | $ | — | | | $ | 2 | | | $ | 2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | Total Derivative Assets | Total Derivative Assets | | $ | 61 | | | $ | 20 | | | $ | 33 | | | $ | 33 | | | $ | — | | | $ | 1 | | | $ | 6 | | | $ | 1 | | Total Derivative Assets | | $ | 320 | | | $ | 162 | | | $ | 124 | | | $ | 124 | | | $ | — | | | $ | 2 | | | $ | 23 | | | $ | 3 | |
| | | | | |
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING |
| | Derivative Liabilities | Derivative Liabilities | | December 31, 2020 | Derivative Liabilities | | December 31, 2021 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Commodity Contracts | Commodity Contracts | | Commodity Contracts | |
| Designated as Hedging Instruments | Designated as Hedging Instruments | | Designated as Hedging Instruments | |
| Current | Current | | $ | 14 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Current | | $ | 27 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Noncurrent | Noncurrent | | 70 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Noncurrent | | 117 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | Current | | $ | 30 | | | $ | 13 | | | $ | 2 | | | $ | 2 | | | $ | — | | | $ | — | | | $ | 1 | | | $ | 15 | | Current | | 72 | | | 18 | | | 19 | | | 5 | | | 14 | | | — | | | 13 | | | 21 | |
| Noncurrent | Noncurrent | | 137 | | | 3 | | | 27 | | | 12 | | | — | | | — | | | — | | | 107 | | Noncurrent | | 132 | | | 9 | | | 5 | | | 5 | | | — | | | — | | | — | | | 118 | |
| Total Derivative Liabilities – Commodity Contracts | Total Derivative Liabilities – Commodity Contracts | | $ | 251 | | | $ | 16 | | | $ | 29 | | | $ | 14 | | | $ | — | | | $ | — | | | $ | 1 | | | $ | 122 | | Total Derivative Liabilities – Commodity Contracts | | $ | 348 | | | $ | 27 | | | $ | 24 | | | $ | 10 | | | $ | 14 | | | $ | — | | | $ | 13 | | | $ | 139 | |
| Interest Rate Contracts | Interest Rate Contracts | | Interest Rate Contracts | |
| Designated as Hedging Instruments | Designated as Hedging Instruments | | Designated as Hedging Instruments | |
| Current | Current | | $ | 15 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Current | | $ | 75 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Noncurrent | Noncurrent | | 48 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Noncurrent | | 21 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | | Not Designated as Hedging Instruments | |
| Current | Current | | 5 | | | 4 | | | — | | | — | | | — | | | 1 | | | — | | | — | | Current | | 10 | | | 8 | | | — | | | — | | | — | | | 1 | | | — | | | — | |
| Noncurrent | Noncurrent | | 5 | | | — | | | — | | | — | | | — | | | 5 | | | — | | | — | | Noncurrent | | 18 | | | — | | | — | | | — | | | — | | | 4 | | | 14 | | | — | |
| Total Derivative Liabilities – Interest Rate Contracts | Total Derivative Liabilities – Interest Rate Contracts | | $ | 73 | | | $ | 4 | | | $ | — | | | $ | — | | | $ | — | | | $ | 6 | | | $ | — | | | $ | — | | Total Derivative Liabilities – Interest Rate Contracts | | $ | 124 | | | $ | 8 | | | $ | — | | | $ | — | | | $ | — | | | $ | 5 | | | $ | 14 | | | $ | — | |
| | Total Derivative Liabilities | Total Derivative Liabilities | | $ | 324 | | | $ | 20 | | | $ | 29 | | | $ | 14 | | | $ | — | | | $ | 6 | | | $ | 1 | | | $ | 122 | | Total Derivative Liabilities | | $ | 472 | | | $ | 35 | | | $ | 24 | | | $ | 10 | | | $ | 14 | | | $ | 5 | | | $ | 27 | | | $ | 139 | |
OFFSETTING ASSETS AND LIABILITIES
The following tables present the line items on the Condensed Consolidated Balance Sheets where derivatives are reported. Substantially all of Duke Energy's outstanding derivative contracts are subject to enforceable master netting arrangements. The gross amounts offset in the tables below show the effect of these netting arrangements on financial position, and include collateral posted to offset the net position. The amounts shown are calculated by counterparty. Accounts receivable or accounts payable may also be available to offset exposures in the event of bankruptcy. These amounts are not included in the tables below.
| | Derivative Assets | Derivative Assets | | September 30, 2021 | Derivative Assets | | March 31, 2022 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Current | Current | | Current | |
| Gross amounts recognized | Gross amounts recognized | | $ | 363 | | | $ | 171 | | | $ | 137 | | | $ | 137 | | | $ | — | | | $ | 4 | | | $ | 36 | | | $ | 12 | | Gross amounts recognized | | $ | 767 | | | $ | 335 | | | $ | 295 | | | $ | 255 | | | $ | 40 | | | $ | — | | | $ | 28 | | | $ | 7 | |
| Gross amounts offset | Gross amounts offset | | (143) | | | (87) | | | (56) | | | (56) | | | — | | | — | | | — | | | — | | Gross amounts offset | | (255) | | | (149) | | | (106) | | | (106) | | | — | | | — | | | — | | | — | |
| Net amounts presented in Current Assets: Other | Net amounts presented in Current Assets: Other | | $ | 220 | | | $ | 84 | | | $ | 81 | | | $ | 81 | | | $ | — | | | $ | 4 | | | $ | 36 | | | $ | 12 | | Net amounts presented in Current Assets: Other | | $ | 512 | | | $ | 186 | | | $ | 189 | | | $ | 149 | | | $ | 40 | | | $ | — | | | $ | 28 | | | $ | 7 | |
| Noncurrent | Noncurrent | | Noncurrent | |
| Gross amounts recognized | Gross amounts recognized | | $ | 180 | | | $ | 100 | | | $ | 78 | | | $ | 78 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Gross amounts recognized | | $ | 341 | | | $ | 158 | | | $ | 130 | | | $ | 130 | | | $ | — | | | $ | — | | | $ | 17 | | | $ | — | |
| Gross amounts offset | Gross amounts offset | | (71) | | | (45) | | | (26) | | | (26) | | | — | | | — | | | — | | | — | | Gross amounts offset | | (115) | | | (64) | | | (51) | | | (51) | | | — | | | — | | | — | | | — | |
| Net amounts presented in Other Noncurrent Assets: Other | Net amounts presented in Other Noncurrent Assets: Other | | $ | 109 | | | $ | 55 | | | $ | 52 | | | $ | 52 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Net amounts presented in Other Noncurrent Assets: Other | | $ | 226 | | | $ | 94 | | | $ | 79 | | | $ | 79 | | | $ | — | | | $ | — | | | $ | 17 | | | $ | — | |
|
| | | | | |
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING |
| | Derivative Liabilities | Derivative Liabilities | | September 30, 2021 | Derivative Liabilities | | March 31, 2022 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Current | Current | | Current | |
| Gross amounts recognized | Gross amounts recognized | | $ | 134 | | | $ | 18 | | | $ | 12 | | | $ | — | | | $ | 12 | | | $ | 1 | | | $ | 2 | | | $ | 20 | | Gross amounts recognized | | $ | 115 | | | $ | 36 | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | 24 | |
| Gross amounts offset | Gross amounts offset | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Gross amounts offset | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Net amounts presented in Current Liabilities: Other | Net amounts presented in Current Liabilities: Other | | $ | 134 | | | $ | 18 | | | $ | 12 | | | $ | — | | | $ | 12 | | | $ | 1 | | | $ | 2 | | | $ | 20 | | Net amounts presented in Current Liabilities: Other | | $ | 115 | | | $ | 36 | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | 24 | |
| Noncurrent | Noncurrent | | Noncurrent | |
| Gross amounts recognized | Gross amounts recognized | | $ | 281 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 4 | | | $ | — | | | $ | 128 | | Gross amounts recognized | | $ | 318 | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | 2 | | | $ | — | | | $ | 149 | |
| Gross amounts offset | Gross amounts offset | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Gross amounts offset | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Net amounts presented in Other Noncurrent Liabilities: Other | Net amounts presented in Other Noncurrent Liabilities: Other | | $ | 281 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 4 | | | $ | — | | | $ | 128 | | Net amounts presented in Other Noncurrent Liabilities: Other | | $ | 318 | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | 2 | | | $ | — | | | $ | 149 | |
| | Derivative Assets | Derivative Assets | | December 31, 2020 | Derivative Assets | | December 31, 2021 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Current | Current | | Current | |
| Gross amounts recognized | Gross amounts recognized | | $ | 48 | | | $ | 14 | | | $ | 27 | | | $ | 27 | | | $ | — | | | $ | 1 | | | $ | 6 | | | $ | 1 | | Gross amounts recognized | | $ | 204 | | | $ | 99 | | | $ | 74 | | | $ | 74 | | | $ | — | | | $ | 2 | | | $ | 23 | | | $ | 3 | |
| Gross amounts offset | Gross amounts offset | | (3) | | | (2) | | | (2) | | | (2) | | | — | | | — | | | — | | | — | | Gross amounts offset | | (25) | | | (16) | | | (9) | | | (9) | | | — | | | — | | | — | | | — | |
| Net amounts presented in Current Assets: Other | Net amounts presented in Current Assets: Other | | $ | 45 | | | $ | 12 | | | $ | 25 | | | $ | 25 | | | $ | — | | | $ | 1 | | | $ | 6 | | | $ | 1 | | Net amounts presented in Current Assets: Other | | $ | 179 | | | $ | 83 | | | $ | 65 | | | $ | 65 | | | $ | — | | | $ | 2 | | | $ | 23 | | | $ | 3 | |
| Noncurrent | Noncurrent | | Noncurrent | |
| Gross amounts recognized | Gross amounts recognized | | $ | 13 | | | $ | 6 | | | $ | 6 | | | $ | 6 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Gross amounts recognized | | $ | 116 | | | $ | 63 | | | $ | 50 | | | $ | 50 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Gross amounts offset | Gross amounts offset | | (5) | | | (1) | | | (4) | | | (4) | | | — | | | — | | | — | | | — | | Gross amounts offset | | (23) | | | (15) | | | (8) | | | (8) | | | — | | | — | | | — | | | — | |
| Net amounts presented in Other Noncurrent Assets: Other | Net amounts presented in Other Noncurrent Assets: Other | | $ | 8 | | | $ | 5 | | | $ | 2 | | | $ | 2 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Net amounts presented in Other Noncurrent Assets: Other | | $ | 93 | | | $ | 48 | | | $ | 42 | | | $ | 42 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | Derivative Liabilities | Derivative Liabilities | | December 31, 2020 | Derivative Liabilities | | December 31, 2021 |
| | 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) | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Current | Current | | Current | |
| Gross amounts recognized | Gross amounts recognized | | $ | 64 | | | $ | 17 | | | $ | 2 | | | $ | 2 | | | $ | — | | | $ | 1 | | | $ | 1 | | | $ | 15 | | Gross amounts recognized | | $ | 184 | | | $ | 26 | | | $ | 19 | | | $ | 5 | | | $ | 14 | | | $ | 1 | | | $ | 13 | | | $ | 21 | |
| Gross amounts offset | Gross amounts offset | | (3) | | | (2) | | | (2) | | | (2) | | | — | | | — | | | — | | | — | | Gross amounts offset | | (11) | | | (6) | | | (5) | | | (5) | | | — | | | — | | | — | | | — | |
| Net amounts presented in Current Liabilities: Other | Net amounts presented in Current Liabilities: Other | | $ | 61 | | | $ | 15 | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | $ | 1 | | | $ | 15 | | Net amounts presented in Current Liabilities: Other | | $ | 173 | | | $ | 20 | | | $ | 14 | | | $ | — | | | $ | 14 | | | $ | 1 | | | $ | 13 | | | $ | 21 | |
| Noncurrent | Noncurrent | | Noncurrent | |
| Gross amounts recognized | Gross amounts recognized | | $ | 260 | | | $ | 3 | | | $ | 27 | | | $ | 12 | | | $ | — | | | $ | 5 | | | $ | — | | | $ | 107 | | Gross amounts recognized | | $ | 288 | | | $ | 9 | | | $ | 5 | | | $ | 5 | | | $ | — | | | $ | 4 | | | $ | 14 | | | $ | 118 | |
| Gross amounts offset | Gross amounts offset | | (5) | | | (1) | | | (4) | | | (4) | | | — | | | — | | | — | | | — | | Gross amounts offset | | (12) | | | (8) | | | (5) | | | (5) | | | — | | | — | | | — | | | — | |
| Net amounts presented in Other Noncurrent Liabilities: Other | Net amounts presented in Other Noncurrent Liabilities: Other | | $ | 255 | | | $ | 2 | | | $ | 23 | | | $ | 8 | | | $ | — | | | $ | 5 | | | $ | — | | | $ | 107 | | Net amounts presented in Other Noncurrent Liabilities: Other | | $ | 276 | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | 4 | | | $ | 14 | | | $ | 118 | |
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.
| | | | | |
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES |
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.
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 a credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of September 30, 2021,March 31, 2022, and December 31, 2020.2021.
Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
DUKE ENERGY
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | 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) | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value |
| NDTF | NDTF | | NDTF | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 164 | | | $ | — | | | $ | — | | | $ | 177 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 128 | | | $ | — | | | $ | — | | | $ | 160 | |
| Equity securities | Equity securities | 4,700 | | | 35 | | | 6,754 | | | 4,138 | | | 54 | | | 6,235 | | Equity securities | 4,486 | | | 62 | | | 6,853 | | | 4,905 | | | 43 | | | 7,350 | |
| Corporate debt securities | Corporate debt securities | 44 | | | 5 | | | 847 | | | 76 | | | 1 | | | 806 | | Corporate debt securities | 9 | | | 43 | | | 786 | | | 39 | | | 6 | | | 829 | |
| Municipal bonds | Municipal bonds | 13 | | | 1 | | | 296 | | | 22 | | | — | | | 370 | | Municipal bonds | 2 | | | 16 | | | 321 | | | 14 | | | 1 | | | 314 | |
| U.S. government bonds | U.S. government bonds | 34 | | | 8 | | | 1,605 | | | 51 | | | — | | | 1,361 | | U.S. government bonds | 10 | | | 57 | | | 1,561 | | | 31 | | | 12 | | | 1,568 | |
| | Other debt securities | Other debt securities | 4 | | | 1 | | | 195 | | | 8 | | | — | | | 180 | | Other debt securities | — | | | 7 | | | 177 | | | 3 | | | 1 | | | 180 | |
| Total NDTF Investments | Total NDTF Investments | $ | 4,795 | | | $ | 50 | | | $ | 9,861 | | | $ | 4,295 | | | $ | 55 | | | $ | 9,129 | | Total NDTF Investments | $ | 4,507 | | | $ | 185 | | | $ | 9,826 | | | $ | 4,992 | | | $ | 63 | | | $ | 10,401 | |
| Other Investments | Other Investments | | Other Investments | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 87 | | | $ | — | | | $ | — | | | $ | 127 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 110 | | | $ | — | | | $ | — | | | $ | 36 | |
| Equity securities | Equity securities | 83 | | | — | | | 145 | | | 79 | | | — | | | 146 | | Equity securities | 31 | | | 4 | | | 147 | | | 36 | | | — | | | 156 | |
| Corporate debt securities | Corporate debt securities | 4 | | | 1 | | | 130 | | | 8 | | | — | | | 110 | | Corporate debt securities | — | | | 7 | | | 124 | | | 2 | | | 1 | | | 119 | |
| Municipal bonds | Municipal bonds | 3 | | | 1 | | | 69 | | | 5 | | | — | | | 86 | | Municipal bonds | 1 | | | 2 | | | 83 | | | 3 | | | 1 | | | 80 | |
| U.S. government bonds | U.S. government bonds | — | | | — | | | 50 | | | — | | | — | | | 42 | | U.S. government bonds | — | | | 2 | | | 45 | | | — | | | — | | | 56 | |
| Other debt securities | Other debt securities | — | | | — | | | 34 | | | — | | | — | | | 47 | | Other debt securities | — | | | 2 | | | 36 | | | — | | | 1 | | | 45 | |
| Total Other Investments | Total Other Investments | $ | 90 | | | $ | 2 | | | $ | 515 | | | $ | 92 | | | $ | — | | | $ | 558 | | Total Other Investments | $ | 32 | | | $ | 17 | | | $ | 545 | | | $ | 41 | | | $ | 3 | | | $ | 492 | |
| Total Investments | Total Investments | $ | 4,885 | | | $ | 52 | | | $ | 10,376 | | | $ | 4,387 | | | $ | 55 | | | $ | 9,687 | | Total Investments | $ | 4,539 | | | $ | 202 | | | $ | 10,371 | | | $ | 5,033 | | | $ | 66 | | | $ | 10,893 | |
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, were as follows.
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (in millions) | (in millions) | September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 | (in millions) | | | March 31, 2022 | | March 31, 2021 |
| FV-NI: | FV-NI: | | FV-NI: | | |
| Realized gains | Realized gains | $ | 34 | | | $ | 13 | | | $ | 320 | | | $ | 338 | | Realized gains | | | $ | 111 | | | $ | 140 | |
| Realized losses | Realized losses | 40 | | | 16 | | | 100 | | | 148 | | Realized losses | | | 85 | | | 23 | |
| AFS: | AFS: | | AFS: | | |
| Realized gains | Realized gains | 17 | | | 26 | | | 51 | | | 73 | | Realized gains | | | 4 | | | 18 | |
| Realized losses | Realized losses | 15 | | | 19 | | | 46 | | | 38 | | Realized losses | | | 23 | | | 13 | |
| | | | | |
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES |
DUKE ENERGY CAROLINAS
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | 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) | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value |
| NDTF | NDTF | | NDTF | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 60 | | | $ | — | | | $ | — | | | $ | 30 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 60 | | | $ | — | | | $ | — | | | $ | 53 | |
| Equity securities | Equity securities | 2,725 | | | 14 | | | 3,912 | | | 2,442 | | | 23 | | | 3,685 | | Equity securities | 2,632 | | | 30 | | | 3,962 | | | 2,887 | | | 19 | | | 4,265 | |
| Corporate debt securities | Corporate debt securities | 27 | | | 3 | | | 495 | | | 49 | | | 1 | | | 510 | | Corporate debt securities | 6 | | | 30 | | | 503 | | | 24 | | | 4 | | | 506 | |
| Municipal bonds | Municipal bonds | 1 | | | — | | | 24 | | | 6 | | | — | | | 91 | | Municipal bonds | — | | | 5 | | | 52 | | | 2 | | | — | | | 48 | |
| U.S. government bonds | U.S. government bonds | 18 | | | 2 | | | 752 | | | 25 | | | — | | | 475 | | U.S. government bonds | 4 | | | 21 | | | 692 | | | 16 | | | 3 | | | 712 | |
| Other debt securities | Other debt securities | 4 | | | 1 | | | 190 | | | 7 | | | — | | | 174 | | Other debt securities | — | | | 7 | | | 172 | | | 3 | | | 1 | | | 175 | |
| Total NDTF Investments | Total NDTF Investments | $ | 2,775 | | | $ | 20 | | | $ | 5,433 | | | $ | 2,529 | | | $ | 24 | | | $ | 4,965 | | Total NDTF Investments | $ | 2,642 | | | $ | 93 | | | $ | 5,441 | | | $ | 2,932 | | | $ | 27 | | | $ | 5,759 | |
|
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, were as follows.
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| (in millions) | (in millions) | September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 | (in millions) | | | March 31, 2022 | | March 31, 2021 |
| FV-NI: | FV-NI: | | FV-NI: | | |
| Realized gains | Realized gains | $ | 25 | | | $ | 10 | | | $ | 243 | | | $ | 46 | | Realized gains | | | $ | 75 | | | $ | 128 | |
| Realized losses | Realized losses | 29 | | | 12 | | | 68 | | | 82 | | Realized losses | | | 49 | | | 16 | |
| AFS: | AFS: | | AFS: | | |
| Realized gains | Realized gains | 10 | | | 20 | | | 35 | | | 50 | | Realized gains | | | 3 | | | 13 | |
| Realized losses | Realized losses | 10 | | | 17 | | | 32 | | | 30 | | Realized losses | | | 16 | | | 9 | |
PROGRESS ENERGY
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | 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) | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value |
| NDTF | NDTF | | NDTF | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 104 | | | $ | — | | | $ | — | | | $ | 147 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 68 | | | $ | — | | | $ | — | | | $ | 107 | |
| Equity securities | Equity securities | 1,975 | | | 21 | | | 2,842 | | | 1,696 | | | 31 | | | 2,550 | | Equity securities | 1,854 | | | 32 | | | 2,891 | | | 2,018 | | | 24 | | | 3,085 | |
| Corporate debt securities | Corporate debt securities | 17 | | | 2 | | | 352 | | | 27 | | | — | | | 296 | | Corporate debt securities | 3 | | | 13 | | | 283 | | | 15 | | | 2 | | | 323 | |
| Municipal bonds | Municipal bonds | 12 | | | 1 | | | 272 | | | 16 | | | — | | | 279 | | Municipal bonds | 2 | | | 11 | | | 269 | | | 12 | | | 1 | | | 266 | |
| U.S. government bonds | U.S. government bonds | 16 | | | 6 | | | 853 | | | 26 | | | — | | | 886 | | U.S. government bonds | 6 | | | 36 | | | 869 | | | 15 | | | 9 | | | 856 | |
| | Other debt securities | Other debt securities | — | | | — | | | 5 | | | 1 | | | — | | | 6 | | Other debt securities | — | | | — | | | 5 | | | — | | | — | | | 5 | |
| Total NDTF Investments | Total NDTF Investments | $ | 2,020 | | | $ | 30 | | | $ | 4,428 | | | $ | 1,766 | | | $ | 31 | | | $ | 4,164 | | Total NDTF Investments | $ | 1,865 | | | $ | 92 | | | $ | 4,385 | | | $ | 2,060 | | | $ | 36 | | | $ | 4,642 | |
| Other Investments | Other Investments | | Other Investments | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 18 | | | $ | — | | | $ | — | | | $ | 106 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 17 | | | $ | — | | | $ | — | | | $ | 20 | |
| | Municipal bonds | Municipal bonds | 2 | | | — | | | 26 | | | 3 | | | — | | | 26 | | Municipal bonds | 1 | | | — | | | 26 | | | 2 | | | — | | | 26 | |
| Total Other Investments | Total Other Investments | $ | 2 | | | $ | — | | | $ | 44 | | | $ | 3 | | | $ | — | | | $ | 132 | | Total Other Investments | $ | 1 | | | $ | — | | | $ | 43 | | | $ | 2 | | | $ | — | | | $ | 46 | |
| Total Investments | Total Investments | $ | 2,022 | | | $ | 30 | | | $ | 4,472 | | | $ | 1,769 | | | $ | 31 | | | $ | 4,296 | | Total Investments | $ | 1,866 | | | $ | 92 | | | $ | 4,428 | | | $ | 2,062 | | | $ | 36 | | | $ | 4,688 | |
| | | | | |
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES |
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, were as follows.
| | | Three Months Ended | Nine Months Ended | | | Three Months Ended |
| (in millions) | (in millions) | September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 | (in millions) | | March 31, 2022 | | March 31, 2021 |
| FV-NI: | FV-NI: | | FV-NI: | | |
| Realized gains | Realized gains | $ | 9 | | | $ | 3 | | | $ | 77 | | | $ | 292 | | Realized gains | | $ | 36 | | | $ | 12 | |
| Realized losses | Realized losses | 11 | | | 4 | | | 32 | | | 66 | | Realized losses | | 36 | | | 7 | |
| AFS: | AFS: | | AFS: | | |
| Realized gains | Realized gains | 7 | | | 6 | | | 14 | | | 17 | | Realized gains | | 1 | | | 4 | |
| Realized losses | Realized losses | 6 | | | 2 | | | 12 | | | 7 | | Realized losses | | 6 | | | 3 | |
DUKE ENERGY PROGRESS
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | 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) | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value |
| NDTF | NDTF | | NDTF | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 92 | | | $ | — | | | $ | — | | | $ | 76 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 58 | | | $ | — | | | $ | — | | | $ | 94 | |
| Equity securities | Equity securities | 1,882 | | | 21 | | | 2,736 | | | 1,617 | | | 31 | | | 2,459 | | Equity securities | 1,757 | | | 32 | | | 2,782 | | | 1,915 | | | 23 | | | 2,970 | |
| Corporate debt securities | Corporate debt securities | 17 | | | 2 | | | 287 | | | 27 | | | — | | | 296 | | Corporate debt securities | 3 | | | 12 | | | 255 | | | 15 | | | 2 | | | 282 | |
| Municipal bonds | Municipal bonds | 12 | | | 1 | | | 272 | | | 16 | | | — | | | 279 | | Municipal bonds | 2 | | | 11 | | | 269 | | | 12 | | | 1 | | | 266 | |
| U.S. government bonds | U.S. government bonds | 16 | | | 2 | | | 466 | | | 26 | | | — | | | 412 | | U.S. government bonds | 6 | | | 19 | | | 502 | | | 15 | | | 3 | | | 472 | |
| Other debt securities | Other debt securities | — | | | — | | | 5 | | | 1 | | | — | | | 6 | | Other debt securities | — | | | — | | | 5 | | | — | | | — | | | 5 | |
| Total NDTF Investments | Total NDTF Investments | $ | 1,927 | | | $ | 26 | | | $ | 3,858 | | | $ | 1,687 | | | $ | 31 | | | $ | 3,528 | | Total NDTF Investments | $ | 1,768 | | | $ | 74 | | | $ | 3,871 | | | $ | 1,957 | | | $ | 29 | | | $ | 4,089 | |
| Other Investments | Other Investments | | Other Investments | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 16 | | | $ | — | | | $ | — | | | $ | 1 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 14 | | | $ | — | | | $ | — | | | $ | 16 | |
| Total Other Investments | Total Other Investments | $ | — | | | $ | — | | | $ | 16 | | | $ | — | | | $ | — | | | $ | 1 | | Total Other Investments | $ | — | | | $ | — | | | $ | 14 | | | $ | — | | | $ | — | | | $ | 16 | |
| Total Investments | Total Investments | $ | 1,927 | | | $ | 26 | | | $ | 3,874 | | | $ | 1,687 | | | $ | 31 | | | $ | 3,529 | | Total Investments | $ | 1,768 | | | $ | 74 | | | $ | 3,885 | | | $ | 1,957 | | | $ | 29 | | | $ | 4,105 | |
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, were as follows.
| | | Three Months Ended | Nine Months Ended | | | Three Months Ended |
| (in millions) | (in millions) | September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 | (in millions) | | March 31, 2022 | | March 31, 2021 |
| FV-NI: | FV-NI: | | FV-NI: | | |
| Realized gains | Realized gains | $ | 9 | | | $ | 3 | | | $ | 76 | | | $ | 43 | | Realized gains | | $ | 36 | | | $ | 12 | |
| Realized losses | Realized losses | 11 | | | 4 | | | 31 | | | 51 | | Realized losses | | 35 | | | 7 | |
| AFS: | AFS: | | AFS: | | |
| Realized gains | Realized gains | 6 | | | 6 | | | 13 | | | 17 | | Realized gains | | 1 | | | 4 | |
| Realized losses | Realized losses | 5 | | | 2 | | | 11 | | | 7 | | Realized losses | | 5 | | | 3 | |
| | | | | |
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES |
DUKE ENERGY FLORIDA
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | 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) | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value |
| NDTF | NDTF | | NDTF | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 12 | | | $ | — | | | $ | — | | | $ | 71 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 10 | | | $ | — | | | $ | — | | | $ | 13 | |
| Equity securities | Equity securities | 93 | | | — | | | 106 | | | 79 | | | — | | | 91 | | Equity securities | 97 | | | — | | | 109 | | | 103 | | | 1 | | | 115 | |
| Corporate debt securities | Corporate debt securities | — | | | — | | | 65 | | | — | | | — | | | — | | Corporate debt securities | — | | | 1 | | | 28 | | | — | | | — | | | 41 | |
| | U.S. government bonds | U.S. government bonds | — | | | 4 | | | 387 | | | — | | | — | | | 474 | | U.S. government bonds | — | | | 17 | | | 367 | | | — | | | 6 | | | 384 | |
| Total NDTF Investments(a) | Total NDTF Investments(a) | $ | 93 | | | $ | 4 | | | $ | 570 | | | $ | 79 | | | $ | — | | | $ | 636 | | Total NDTF Investments(a) | $ | 97 | | | $ | 18 | | | $ | 514 | | | $ | 103 | | | $ | 7 | | | $ | 553 | |
| Other Investments | Other Investments | | Other Investments | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | 1 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 2 | | | $ | — | | | $ | — | | | $ | 3 | |
| | Municipal bonds | Municipal bonds | 2 | | | — | | | 26 | | | 3 | | | — | | | 26 | | Municipal bonds | 1 | | | — | | | 26 | | | 2 | | | — | | | 26 | |
| Total Other Investments | Total Other Investments | $ | 2 | | | $ | — | | | $ | 27 | | | $ | 3 | | | $ | — | | | $ | 27 | | Total Other Investments | $ | 1 | | | $ | — | | | $ | 28 | | | $ | 2 | | | $ | — | | | $ | 29 | |
| Total Investments | Total Investments | $ | 95 | | | $ | 4 | | | $ | 597 | | | $ | 82 | | | $ | — | | | $ | 663 | | Total Investments | $ | 98 | | | $ | 18 | | | $ | 542 | | | $ | 105 | | | $ | 7 | | | $ | 582 | |
(a)During the ninethree months ended September 30, 2021,March 31, 2022, and the year ended December 31, 2020,2021, Duke Energy Florida received reimbursements from the NDTF for costs related to ongoing decommissioning activity of Crystal River Unit 3.
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, were as follows:immaterial.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Nine Months Ended |
| (in millions) | September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 |
| FV-NI: | | | | | | | |
| Realized gains | $ | — | | | $ | — | | | $ | 1 | | | $ | 249 | |
| Realized losses | — | | | — | | | 1 | | | 15 | |
| AFS: | | | | | | | |
| Realized gains | 1 | | | — | | | 1 | | | — | |
| Realized losses | 1 | | | — | | | 1 | | | — | |
DUKE ENERGY INDIANA
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are measured at FV-NI and debt investments are classified as AFS.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| | 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) | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value | (in millions) | Gains | | Losses | | Value | | Gains | | Losses | | Value |
| Investments | Investments | | Investments | |
| Cash and cash equivalents | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 19 | | | $ | — | | | $ | — | | | $ | 1 | | Cash and cash equivalents | $ | — | | | $ | — | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | |
| Equity securities | Equity securities | 56 | | | — | | | 90 | | | 58 | | | — | | | 97 | | Equity securities | 4 | | | 4 | | | 91 | | | 6 | | | — | | | 97 | |
| Corporate debt securities | Corporate debt securities | — | | | — | | | 5 | | | — | | | — | | | 3 | | Corporate debt securities | — | | | — | | | 8 | | | — | | | — | | | 6 | |
| Municipal bonds | Municipal bonds | 1 | | | 1 | | | 36 | | | 1 | | | — | | | 38 | | Municipal bonds | — | | | 2 | | | 49 | | | 1 | | | 1 | | | 46 | |
| U.S. government bonds | U.S. government bonds | — | | | — | | | 5 | | | — | | | — | | | 4 | | U.S. government bonds | — | | | — | | | 6 | | | — | | | — | | | 12 | |
| | Total Investments | Total Investments | $ | 57 | | | $ | 1 | | | $ | 155 | | | $ | 59 | | | $ | — | | | $ | 143 | | Total Investments | $ | 4 | | | $ | 6 | | | $ | 155 | | | $ | 7 | | | $ | 1 | | | $ | 161 | |
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30,March 31, 2022, and 2021, and 2020, were immaterial.
| | | | | |
FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES |
DEBT SECURITY MATURITIES
The table below summarizes the maturity date for debt securities.
| | | September 30, 2021 | | March 31, 2022 |
| | Duke | | Duke | | Duke | | Duke | | | Duke | | Duke | | Duke | | Duke |
| | Duke | | Energy | | Progress | | Energy | | Energy | | Energy | | Duke | | Energy | | Progress | | Energy | | Energy | | Energy |
| (in millions) | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Indiana | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Indiana |
| Due in one year or less | Due in one year or less | $ | 151 | | | $ | 3 | | | $ | 121 | | | $ | 22 | | | $ | 99 | | | $ | 5 | | Due in one year or less | $ | 162 | | | $ | 7 | | | $ | 139 | | | $ | 32 | | | $ | 107 | | | $ | 8 | |
| Due after one through five years | Due after one through five years | 954 | | | 343 | | | 548 | | | 244 | | | 304 | | | 18 | | Due after one through five years | 969 | | | 367 | | | 528 | | | 270 | | | 258 | | | 24 | |
| Due after five through 10 years | Due after five through 10 years | 639 | | | 268 | | | 286 | | | 247 | | | 39 | | | 8 | | Due after five through 10 years | 536 | | | 235 | | | 228 | | | 212 | | | 16 | | | 6 | |
| Due after 10 years | Due after 10 years | 1,482 | | | 847 | | | 553 | | | 517 | | | 36 | | | 15 | | Due after 10 years | 1,466 | | | 810 | | | 557 | | | 517 | | | 40 | | | 25 | |
| Total | Total | $ | 3,226 | | | $ | 1,461 | | | $ | 1,508 | | | $ | 1,030 | | | $ | 478 | | | $ | 46 | | Total | $ | 3,133 | | | $ | 1,419 | | | $ | 1,452 | | | $ | 1,031 | | | $ | 421 | | | $ | 63 | |
| | | | | |
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS |
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. Commodity derivatives with observable forward curves are classified as Level 2. If forward price curves are not observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.
Interest rate derivatives
Most over-the-counter interest rate contract derivatives are valued using financial models that utilize observable inputs for similar instruments and are classified as Level 2. Inputs include forward interest rate curves, notional amounts, interest rates and credit quality of the counterparties.
Other fair value considerations
See Note 11 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2020,2021, 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.
| | | September 30, 2021 | | March 31, 2022 |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | Not Categorized | (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | Not Categorized |
| NDTF cash and cash equivalents | NDTF cash and cash equivalents | $ | 164 | | $ | 164 | | $ | — | | $ | — | | $ | — | | NDTF cash and cash equivalents | $ | 128 | | $ | 128 | | $ | — | | $ | — | | $ | — | |
| NDTF equity securities | NDTF equity securities | 6,754 | | 6,705 | | — | | — | | 49 | | NDTF equity securities | 6,853 | | 6,806 | | — | | — | | 47 | |
| NDTF debt securities | NDTF debt securities | 2,943 | | 998 | | 1,945 | | — | | — | | NDTF debt securities | 2,845 | | 947 | | 1,898 | | — | | — | |
| Other equity securities | Other equity securities | 145 | | 145 | | — | | — | | — | | Other equity securities | 147 | | 147 | | — | | — | | — | |
| Other debt securities | Other debt securities | 283 | | 45 | | 238 | | — | | — | | Other debt securities | 288 | | 39 | | 249 | | — | | — | |
| Other cash and cash equivalents | Other cash and cash equivalents | 87 | | 87 | | — | | — | | — | | Other cash and cash equivalents | 110 | | 110 | | — | | — | | — | |
| | Derivative assets | Derivative assets | 543 | | 27 | | 490 | | 26 | | — | | Derivative assets | 1,108 | | 27 | | 1,071 | | 10 | | — | |
| Total assets | Total assets | 10,919 | | 8,171 | | 2,673 | | 26 | | 49 | | Total assets | 11,479 | | 8,204 | | 3,218 | | 10 | | 47 | |
| | Derivative liabilities | Derivative liabilities | (415) | | (2) | | (256) | | (157) | | — | | Derivative liabilities | (433) | | — | | (224) | | (209) | | — | |
| Net assets (liabilities) | Net assets (liabilities) | $ | 10,504 | | $ | 8,169 | | $ | 2,417 | | $ | (131) | | $ | 49 | | Net assets (liabilities) | $ | 11,046 | | $ | 8,204 | | $ | 2,994 | | $ | (199) | | $ | 47 | |
| | | December 31, 2020 | | December 31, 2021 |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | Not Categorized | (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | Not Categorized |
| NDTF cash and cash equivalents | NDTF cash and cash equivalents | $ | 177 | | $ | 177 | | $ | — | | $ | — | | $ | — | | NDTF cash and cash equivalents | $ | 160 | | $ | 160 | | $ | — | | $ | — | | $ | — | |
| NDTF equity securities | NDTF equity securities | 6,235 | | 6,189 | | — | | — | | 46 | | NDTF equity securities | 7,350 | | 7,300 | | — | | — | | 50 | |
| NDTF debt securities | NDTF debt securities | 2,717 | | 874 | | 1,843 | | — | | — | | NDTF debt securities | 2,891 | | 967 | | 1,924 | | — | | — | |
| Other equity securities | Other equity securities | 146 | | 146 | | — | | — | | — | | Other equity securities | 156 | | 156 | | — | | — | | — | |
| Other debt securities | Other debt securities | 285 | | 37 | | 248 | | — | | — | | Other debt securities | 300 | | 45 | | 255 | | — | | — | |
| Other cash and cash equivalents | Other cash and cash equivalents | 127 | | 127 | | — | | — | | — | | Other cash and cash equivalents | 36 | | 36 | | — | | — | | — | |
| Derivative assets | Derivative assets | 61 | | 1 | | 53 | | 7 | | — | | Derivative assets | 320 | | 3 | | 293 | | 24 | | — | |
| Total assets | Total assets | 9,748 | | 7,551 | | 2,144 | | 7 | | 46 | | Total assets | 11,213 | | 8,667 | | 2,472 | | 24 | | 50 | |
| | Derivative liabilities | Derivative liabilities | (324) | | — | | (240) | | (84) | | — | | Derivative liabilities | (472) | | (13) | | (314) | | (145) | | — | |
| Net assets (liabilities) | Net assets (liabilities) | $ | 9,424 | | $ | 7,551 | | $ | 1,904 | | $ | (77) | | $ | 46 | | Net assets (liabilities) | $ | 10,741 | | $ | 8,654 | | $ | 2,158 | | $ | (121) | | $ | 50 | |
The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
| | | Derivatives (net) | | | Derivatives (net) |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | 2022 | | 2021 |
| Balance at beginning of period | Balance at beginning of period | $ | (131) | | | $ | (92) | | | $ | (77) | | | $ | (102) | | Balance at beginning of period | | $ | (121) | | | $ | (77) | |
| | Total pretax realized or unrealized losses included in comprehensive income | Total pretax realized or unrealized losses included in comprehensive income | (11) | | | (102) | | | (86) | | | (102) | | Total pretax realized or unrealized losses included in comprehensive income | | (68) | | | (44) | |
| Purchases, sales, issuances and settlements: | Purchases, sales, issuances and settlements: | | Purchases, sales, issuances and settlements: | | |
| Purchases | — | | | — | | | 21 | | | 14 | | |
| | | Settlements | Settlements | 4 | | | (3) | | | (4) | | | (18) | | Settlements | | (3) | | | (7) | |
| | Total gains (losses) included on the Condensed Consolidated Balance Sheet | 7 | | | (6) | | | 15 | | | 5 | | |
| Total (losses) gains included on the Condensed Consolidated Balance Sheet | | Total (losses) gains included on the Condensed Consolidated Balance Sheet | | (7) | | | 2 | |
| Balance at end of period | Balance at end of period | $ | (131) | | | $ | (203) | | | $ | (131) | | | $ | (203) | | Balance at end of period | | $ | (199) | | | $ | (126) | |
| | | | | |
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS |
DUKE ENERGY CAROLINAS
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| | | September 30, 2021 | | March 31, 2022 |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | | Not Categorized | (in millions) | Total Fair Value | Level 1 | Level 2 | | Not Categorized |
| NDTF cash and cash equivalents | NDTF cash and cash equivalents | $ | 60 | | $ | 60 | | $ | — | | | $ | — | | NDTF cash and cash equivalents | $ | 60 | | $ | 60 | | $ | — | | | $ | — | |
| NDTF equity securities | NDTF equity securities | 3,912 | | 3,863 | | — | | | 49 | | NDTF equity securities | 3,962 | | 3,915 | | — | | | 47 | |
| NDTF debt securities | NDTF debt securities | 1,461 | | 359 | | 1,102 | | | — | | NDTF debt securities | 1,419 | | 349 | | 1,070 | | | — | |
| | Derivative assets | Derivative assets | 271 | | — | | 271 | | | — | | Derivative assets | 493 | | — | | 493 | | | — | |
| Total assets | Total assets | 5,704 | | 4,282 | | 1,373 | | | 49 | | Total assets | 5,934 | | 4,324 | | 1,563 | | | 47 | |
| Derivative liabilities | Derivative liabilities | (18) | | — | | (18) | | | — | | Derivative liabilities | (37) | | — | | (37) | | | — | |
| Net assets | Net assets | $ | 5,686 | | $ | 4,282 | | $ | 1,355 | | | $ | 49 | | Net assets | $ | 5,897 | | $ | 4,324 | | $ | 1,526 | | | $ | 47 | |
| | | December 31, 2020 | | December 31, 2021 |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | | Not Categorized | (in millions) | Total Fair Value | Level 1 | Level 2 | | Not Categorized |
| NDTF cash and cash equivalents | NDTF cash and cash equivalents | $ | 30 | | $ | 30 | | $ | — | | | $ | — | | NDTF cash and cash equivalents | $ | 53 | | $ | 53 | | $ | — | | | $ | — | |
| NDTF equity securities | NDTF equity securities | 3,685 | | 3,639 | | — | | | 46 | | NDTF equity securities | 4,265 | | 4,215 | | — | | | 50 | |
| NDTF debt securities | NDTF debt securities | 1,250 | | 192 | | 1,058 | | | — | | NDTF debt securities | 1,441 | | 339 | | 1,102 | | | — | |
| | Derivative assets | Derivative assets | 20 | | — | | 20 | | | — | | Derivative assets | 162 | | — | | 162 | | | — | |
| Total assets | Total assets | 4,985 | | 3,861 | | 1,078 | | | 46 | | Total assets | 5,921 | | 4,607 | | 1,264 | | | 50 | |
| Derivative liabilities | Derivative liabilities | (20) | | — | | (20) | | | — | | Derivative liabilities | (35) | | — | | (35) | | | — | |
| Net assets | Net assets | $ | 4,965 | | $ | 3,861 | | $ | 1,058 | | | $ | 46 | | Net assets | $ | 5,886 | | $ | 4,607 | | $ | 1,229 | | | $ | 50 | |
PROGRESS ENERGY
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| | | September 30, 2021 | | December 31, 2020 | | | March 31, 2022 | | December 31, 2021 | |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | | Total Fair Value | Level 1 | Level 2 | | (in millions) | Total Fair Value | Level 1 | Level 2 | | Total Fair Value | Level 1 | Level 2 | |
| NDTF cash and cash equivalents | NDTF cash and cash equivalents | $ | 104 | | $ | 104 | | $ | — | | | $ | 147 | | $ | 147 | | $ | — | | | NDTF cash and cash equivalents | $ | 68 | | $ | 68 | | $ | — | | | $ | 107 | | $ | 107 | | $ | — | | |
| NDTF equity securities | NDTF equity securities | 2,842 | | 2,842 | | — | | | 2,550 | | 2,550 | | — | | | NDTF equity securities | 2,891 | | 2,891 | | — | | | 3,085 | | 3,085 | | — | | |
| NDTF debt securities | NDTF debt securities | 1,482 | | 639 | | 843 | | | 1,467 | | 682 | | 785 | | | NDTF debt securities | 1,426 | | 598 | | 828 | | | 1,450 | | 628 | | 822 | | |
| Other debt securities | Other debt securities | 26 | | — | | 26 | | | 26 | | — | | 26 | | | Other debt securities | 26 | | — | | 26 | | | 26 | | — | | 26 | | |
| Other cash and cash equivalents | Other cash and cash equivalents | 18 | | 18 | | — | | | 106 | | 106 | | — | | | Other cash and cash equivalents | 17 | | 17 | | — | | | 20 | | 20 | | — | | |
| | Derivative assets | Derivative assets | 215 | | — | | 215 | | | 33 | | — | | 33 | | | Derivative assets | 425 | | 2 | | 423 | | | 124 | | — | | 124 | | |
| Total assets | Total assets | 4,687 | | 3,603 | | 1,084 | | | 4,329 | | 3,485 | | 844 | | | Total assets | 4,853 | | 3,576 | | 1,277 | | | 4,812 | | 3,840 | | 972 | | |
| | Derivative liabilities | Derivative liabilities | (12) | | — | | (12) | | | (29) | | — | | (29) | | | Derivative liabilities | — | | — | | — | | | (24) | | — | | (24) | | |
| Net assets | Net assets | $ | 4,675 | | $ | 3,603 | | $ | 1,072 | | | $ | 4,300 | | $ | 3,485 | | $ | 815 | | | Net assets | $ | 4,853 | | $ | 3,576 | | $ | 1,277 | | | $ | 4,788 | | $ | 3,840 | | $ | 948 | | |
DUKE ENERGY PROGRESS
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| | | September 30, 2021 | | December 31, 2020 | | | March 31, 2022 | | December 31, 2021 | |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | | Total Fair Value | Level 1 | Level 2 | | (in millions) | Total Fair Value | Level 1 | Level 2 | | Total Fair Value | Level 1 | Level 2 | |
| NDTF cash and cash equivalents | NDTF cash and cash equivalents | $ | 92 | | $ | 92 | | $ | — | | | $ | 76 | | $ | 76 | | $ | — | | | NDTF cash and cash equivalents | $ | 58 | | $ | 58 | | $ | — | | | $ | 94 | | $ | 94 | | $ | — | | |
| NDTF equity securities | NDTF equity securities | 2,736 | | 2,736 | | — | | | 2,459 | | 2,459 | | — | | | NDTF equity securities | 2,782 | | 2,782 | | — | | | 2,970 | | 2,970 | | — | | |
| NDTF debt securities | NDTF debt securities | 1,030 | | 278 | | 752 | | | 993 | | 237 | | 756 | | | NDTF debt securities | 1,031 | | 279 | | 752 | | | 1,025 | | 289 | | 736 | | |
| | Other cash and cash equivalents | Other cash and cash equivalents | 16 | | 16 | | — | | | 1 | | 1 | | — | | | Other cash and cash equivalents | 14 | | 14 | | — | | | 16 | | 16 | | — | | |
| Derivative assets | Derivative assets | 215 | | — | | 215 | | | 33 | | — | | 33 | | | Derivative assets | 385 | | 2 | | 383 | | | 124 | | — | | 124 | | |
| Total assets | Total assets | 4,089 | | 3,122 | | 967 | | | 3,562 | | 2,773 | | 789 | | | Total assets | 4,270 | | 3,135 | | 1,135 | | | 4,229 | | 3,369 | | 860 | | |
| Derivative liabilities | Derivative liabilities | — | | — | | — | | | (14) | | — | | (14) | | | Derivative liabilities | — | | — | | — | | | (10) | | — | | (10) | | |
| Net assets | Net assets | $ | 4,089 | | $ | 3,122 | | $ | 967 | | | $ | 3,548 | | $ | 2,773 | | $ | 775 | | | Net assets | $ | 4,270 | | $ | 3,135 | | $ | 1,135 | | | $ | 4,219 | | $ | 3,369 | | $ | 850 | | |
| | | | | |
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS |
DUKE ENERGY FLORIDA
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| | | September 30, 2021 | | December 31, 2020 | | | March 31, 2022 | | December 31, 2021 | |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | | Total Fair Value | Level 1 | Level 2 | | (in millions) | Total Fair Value | Level 1 | Level 2 | | Total Fair Value | Level 1 | Level 2 | |
| NDTF cash and cash equivalents | NDTF cash and cash equivalents | $ | 12 | | $ | 12 | | $ | — | | | $ | 71 | | $ | 71 | | $ | — | | | NDTF cash and cash equivalents | $ | 10 | | $ | 10 | | $ | — | | | $ | 13 | | $ | 13 | | $ | — | | |
| NDTF equity securities | NDTF equity securities | 106 | | 106 | | — | | | 91 | | 91 | | — | | | NDTF equity securities | 109 | | 109 | | — | | | 115 | | 115 | | — | | |
| NDTF debt securities | NDTF debt securities | 452 | | 361 | | 91 | | | 474 | | 445 | | 29 | | | NDTF debt securities | 395 | | 319 | | 76 | | | 425 | | 339 | | 86 | | |
| Other debt securities | Other debt securities | 26 | | — | | 26 | | | 26 | | — | | 26 | | | Other debt securities | 26 | | — | | 26 | | | 26 | | — | | 26 | | |
| Other cash and cash equivalents | Other cash and cash equivalents | 1 | | 1 | | — | | | 1 | | 1 | | — | | | Other cash and cash equivalents | 2 | | 2 | | — | | | 3 | | 3 | | — | | |
| | Derivative assets | | Derivative assets | 40 | | — | | 40 | | | — | | — | | — | | |
| Total assets | Total assets | 597 | | 480 | | 117 | | | 663 | | 608 | | 55 | | | Total assets | 582 | | 440 | | 142 | | | 582 | | 470 | | 112 | | |
| | Derivative liabilities | Derivative liabilities | (12) | | — | | (12) | | | — | | — | | — | | | Derivative liabilities | — | | — | | — | | | (14) | | — | | (14) | | |
| Net assets | Net assets | $ | 585 | | $ | 480 | | $ | 105 | | | $ | 663 | | $ | 608 | | $ | 55 | | | Net assets | $ | 582 | | $ | 440 | | $ | 142 | | | $ | 568 | | $ | 470 | | $ | 98 | | |
DUKE ENERGY OHIO
The recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets were not material at September 30, 2021,March 31, 2022, and December 31, 2020.2021.
DUKE ENERGY INDIANA
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| | | September 30, 2021 | | December 31, 2020 | | | March 31, 2022 | | December 31, 2021 | |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | | Total Fair Value | Level 1 | Level 2 | Level 3 | | (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | | Total Fair Value | Level 1 | Level 2 | Level 3 | |
| Other equity securities | Other equity securities | $ | 90 | | $ | 90 | | $ | — | | $ | — | | | $ | 97 | | $ | 97 | | $ | — | | $ | — | | | Other equity securities | $ | 91 | | $ | 91 | | $ | — | | $ | — | | | $ | 97 | | $ | 97 | | $ | — | | $ | — | | |
| Other debt securities | Other debt securities | 46 | | — | | 46 | | — | | | 45 | | — | | 45 | | — | | | Other debt securities | 63 | | — | | 63 | | — | | | 64 | | — | | 64 | | — | | |
| Other cash and cash equivalents | Other cash and cash equivalents | 19 | | 19 | | — | | — | | | 1 | | 1 | | — | | — | | | Other cash and cash equivalents | 1 | | 1 | | — | | — | | | — | | — | | — | | — | | |
| Derivative assets | Derivative assets | 36 | | 12 | | — | | 24 | | | 6 | | — | | — | | 6 | | | Derivative assets | 45 | | 18 | | 17 | | 10 | | | 23 | | 1 | | — | | 22 | | |
| Total assets | Total assets | 191 | | 121 | | 46 | | 24 | | | 149 | | 98 | | 45 | | 6 | | | Total assets | 200 | | 110 | | 80 | | 10 | | | 184 | | 98 | | 64 | | 22 | | |
| Derivative liabilities | Derivative liabilities | (2) | | (2) | | — | | — | | | (1) | | (1) | | — | | — | | | Derivative liabilities | — | | — | | — | | — | | | (27) | | (13) | | (14) | | — | | |
| Net assets | Net assets | $ | 189 | | $ | 119 | | $ | 46 | | $ | 24 | | | $ | 148 | | $ | 97 | | $ | 45 | | $ | 6 | | | Net assets | $ | 200 | | $ | 110 | | $ | 80 | | $ | 10 | | | $ | 157 | | $ | 85 | | $ | 50 | | $ | 22 | | |
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
| | | Derivatives (net) | | | Derivatives (net) |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | 2022 | | 2021 |
| Balance at beginning of period | Balance at beginning of period | $ | 22 | | | $ | 10 | | | $ | 6 | | | $ | 11 | | Balance at beginning of period | | $ | 22 | | | $ | 6 | |
| | Purchases, sales, issuances and settlements: | Purchases, sales, issuances and settlements: | | Purchases, sales, issuances and settlements: | | |
| Purchases | — | | | — | | | 18 | | | 10 | | |
| | | Settlements | Settlements | (3) | | | (3) | | | (12) | | | (13) | | Settlements | | (6) | | | (6) | |
| | Total gains included on the Condensed Consolidated Balance Sheet | 5 | | | 1 | | | 12 | | | — | | |
| Total (losses) gains included on the Condensed Consolidated Balance Sheet | | Total (losses) gains included on the Condensed Consolidated Balance Sheet | | (6) | | | 2 | |
| Balance at end of period | Balance at end of period | $ | 24 | | | $ | 8 | | | $ | 24 | | | $ | 8 | | Balance at end of period | | $ | 10 | | | $ | 2 | |
PIEDMONT
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| (in millions) | (in millions) | Total Fair Value | Level 1 | Level 2 | | | Total Fair Value | Level 1 | Level 2 | | (in millions) | Total Fair Value | Level 1 | Level 2 | | | Total Fair Value | Level 1 | Level 2 | |
| | Derivative assets | Derivative assets | $ | 12 | | $ | 12 | | $ | — | | | | $ | 1 | | $ | 1 | | $ | — | | | Derivative assets | $ | 7 | | $ | 7 | | $ | — | | | | $ | 3 | | $ | 3 | | $ | — | | |
| | Derivative liabilities | Derivative liabilities | (148) | | — | | (148) | | | | (122) | | — | | (122) | | | Derivative liabilities | (173) | | — | | (173) | | | | (139) | | — | | (139) | | |
| Net (liabilities) assets | Net (liabilities) assets | $ | (136) | | $ | 12 | | $ | (148) | | | | $ | (121) | | $ | 1 | | $ | (122) | | | Net (liabilities) assets | $ | (166) | | $ | 7 | | $ | (173) | | | | $ | (136) | | $ | 3 | | $ | (139) | | |
| | | | | |
| 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 September 30, | | Nine Months Ended September 30, |
| (in millions) | 2021 | | 2020 | | 2021 | | 2020 |
| Balance at beginning of period | $ | — | | | $ | (105) | | | $ | — | | | $ | (117) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Total (losses) gains and settlements | — | | | (6) | | | — | | | 6 | |
| Balance at end of period | $ | — | | | $ | (111) | | | $ | — | | | $ | (111) | |
QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS
The following tables include quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.
| | | September 30, 2021 | | March 31, 2022 |
| | | Weighted | | | Weighted |
| | Fair Value | | Average | | Fair Value | | Average |
| Investment Type | Investment Type | (in millions) | Valuation Technique | Unobservable Input | Range | Range | Investment Type | (in millions) | Valuation Technique | Unobservable Input | Range | Range |
| Duke Energy | Duke Energy | | | | Duke Energy | | | |
| | Electricity contracts | Electricity contracts | $ | (157) | | RTO forward pricing | Forward electricity curves – price per MWh | $ | 18.02 | | - | $ | 143.85 | | $ | 38.43 | | Electricity contracts | $ | (210) | | RTO forward pricing | Forward electricity curves – price per MWh | $ | 20.33 | | - | $ | 187.82 | | $ | 46.51 | |
| | Duke Energy Ohio | Duke Energy Ohio | | | Duke Energy Ohio | | |
| | FTRs | FTRs | 2 | | RTO auction pricing | FTR price – per MWh | 0.06 | | - | 1.27 | | 0.71 | | FTRs | 1 | | RTO auction pricing | FTR price – per MWh | 0.16 | | - | 1.26 | | 0.63 | |
| | Duke Energy Indiana | Duke Energy Indiana | | | Duke Energy Indiana | | |
| FTRs | FTRs | 24 | | RTO auction pricing | FTR price – per MWh | (1.11) | | - | 8.55 | | 1.61 | | FTRs | 10 | | RTO auction pricing | FTR price – per MWh | (0.46) | | - | 17.24 | | 2.32 | |
| | Duke Energy | Duke Energy | | Duke Energy | |
| Total Level 3 derivatives | Total Level 3 derivatives | $ | (131) | | | Total Level 3 derivatives | $ | (199) | | |
|
| | | December 31, 2020 | | December 31, 2021 |
| | | Weighted | | | Weighted |
| | Fair Value | | Average | | Fair Value | | Average |
| Investment Type | Investment Type | (in millions) | Valuation Technique | Unobservable Input | Range | Range | Investment Type | (in millions) | Valuation Technique | Unobservable Input | Range | Range |
| Duke Energy | Duke Energy | | | | Duke Energy | | | |
| | Electricity contracts | Electricity contracts | $ | (84) | | Discounted cash flow | Forward electricity curves – price per MWh | $ | 14.68 | | - | $151.84 | $28.84 | Electricity contracts | $ | (145) | | RTO forward pricing | Forward electricity curves – price per MWh | $ | 19.04 | | - | $139.11 | $37.57 |
| | Duke Energy Ohio | Duke Energy Ohio | | | | | | Duke Energy Ohio | | | | | |
| | FTRs | FTRs | 1 | | RTO auction pricing | FTR price – per MWh | 0.25 | | - | 1.68 | | 0.79 | | FTRs | 2 | | RTO auction pricing | FTR price – per MWh | 0.06 | | - | 1.79 | | 0.96 | |
| | Duke Energy Indiana | Duke Energy Indiana | | | | | | Duke Energy Indiana | | | | | |
| FTRs | FTRs | 6 | | RTO auction pricing | FTR price – per MWh | (2.40) | | - | 7.41 | | 1.05 | | FTRs | 22 | | RTO auction pricing | FTR price – per MWh | (1.18) | | - | 13.11 | | 2.68 | |
| | Duke Energy | Duke Energy | | Duke Energy | |
| Total Level 3 derivatives | Total Level 3 derivatives | $ | (77) | | | Total Level 3 derivatives | $ | (121) | | |
OTHER FAIR VALUE DISCLOSURES
The fair value and book value of long-term debt, including current maturities, is summarized in the following table. Estimates determined are not necessarily indicative of amounts that could have been settled in current markets. Fair value of long-term debt uses Level 2 measurements.
| | | September 30, 2021 | | December 31, 2020 | | March 31, 2022 | | December 31, 2021 |
| (in millions) | (in millions) | Book Value | | Fair Value | | Book Value | | Fair Value | (in millions) | Book Value | | Fair Value | | Book Value | | Fair Value |
Duke Energy(a) | Duke Energy(a) | $ | 62,802 | | | $ | 69,381 | | | $ | 59,863 | | | $ | 69,292 | | Duke Energy(a) | $ | 66,080 | | | $ | 66,633 | | | $ | 63,835 | | | $ | 69,683 | |
| Duke Energy Carolinas | Duke Energy Carolinas | 12,975 | | | 14,964 | | | 12,218 | | | 14,917 | | Duke Energy Carolinas | 14,470 | | | 15,117 | | | 13,275 | | | 15,101 | |
| Progress Energy | Progress Energy | 19,488 | | | 22,593 | | | 19,264 | | | 23,470 | | Progress Energy | 21,657 | | | 22,669 | | | 20,823 | | | 23,751 | |
| Duke Energy Progress | Duke Energy Progress | 9,848 | | | 10,915 | | | 9,258 | | | 10,862 | | Duke Energy Progress | 11,114 | | | 11,260 | | | 10,249 | | | 11,252 | |
| Duke Energy Florida | Duke Energy Florida | 7,549 | | | 8,932 | | | 7,915 | | | 9,756 | | Duke Energy Florida | 8,451 | | | 8,911 | | | 8,482 | | | 9,772 | |
| Duke Energy Ohio | Duke Energy Ohio | 3,092 | | | 3,517 | | | 3,089 | | | 3,650 | | Duke Energy Ohio | 3,193 | | | 3,278 | | | 3,193 | | | 3,570 | |
| Duke Energy Indiana | Duke Energy Indiana | 4,092 | | | 4,883 | | | 4,091 | | | 5,204 | | Duke Energy Indiana | 4,270 | | | 4,554 | | | 4,323 | | | 5,067 | |
| Piedmont | Piedmont | 2,968 | | | 3,320 | | | 2,780 | | | 3,306 | | Piedmont | 2,969 | | | 2,984 | | | 2,968 | | | 3,278 | |
(a)Book value of long-term debt includes $1.3$1.2 billion and $1.25 billion at September 30, 2021,March 31, 2022, and December 31, 2020,2021, respectively, of net unamortized debt discount and premium of purchase accounting adjustments related to the mergers with Progress Energy and Piedmont that are excluded from fair value of long-term debt.
| | | | | |
FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS |
At both September 30, 2021,March 31, 2022, and December 31, 2020,2021, 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.
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.
| | | | | |
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES |
No financial support was provided to any of the consolidated VIEs during the ninethree months ended September 30, 2021,March 31, 2022, and the year ended December 31, 2020,2021, 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, 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.
The most significant activity that impacts the economic performance of DERF, DEPR and DEFR are the decisions made to manage delinquent receivables. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are considered the primary beneficiaries and consolidate DERF, DEPR and DEFR, respectively, as they make those decisions.
Receivables Financing – CRC
CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to CRC, 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.
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.
Receivables Financing – Credit Facilities
The following table summarizes the amounts and expiration dates of the credit facilities and associated restricted receivables described above.
| | | | | | | | | | | | | | | | | | | | | | | |
| Duke Energy |
| | | Duke Energy | | Duke Energy | | Duke Energy |
| | | Carolinas | | Progress | | Florida |
| (in millions) | CRC | | DERF | | DEPR | | DEFR |
| Expiration date | February 2023 | | December 2022 | | April 2023 | | April 2023 |
| Credit facility amount | $ | 350 | | | $ | 475 | | | $ | 350 | | | $ | 250 | |
| Amounts borrowed at September 30, 2021 | 350 | | | 475 | | | 350 | | | 250 | |
| Amounts borrowed at December 31, 2020 | 350 | | | 364 | | | 250 | | | 250 | |
| Restricted Receivables at September 30, 2021 | 535 | | | 915 | | | 532 | | | 443 | |
| Restricted Receivables at December 31, 2020 | 547 | | | 696 | | | 500 | | | 397 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Duke Energy |
| | | Duke Energy | | Duke Energy | | Duke Energy |
| | | Carolinas | | Progress | | Florida |
| (in millions) | CRC | | DERF | | DEPR | | DEFR |
| Expiration date | February 2025 | | January 2025 | | April 2023 | | April 2023 |
| Credit facility amount | $ | 350 | | | $ | 475 | | | $ | 350 | | | $ | 250 | |
| Amounts borrowed at March 31, 2022 | 350 | | | 499 | | | 350 | | | 250 | |
| Amounts borrowed at December 31, 2021 | 350 | | | 475 | | | 350 | | | 250 | |
| Restricted Receivables at March 31, 2022 | 566 | | | 858 | | | 658 | | | 503 | |
| Restricted Receivables at December 31, 2021 | 587 | | | 844 | | | 574 | | | 427 | |
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.
| | | | | |
FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES |
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.
| | | | | |
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES |
The following table summarizes the impact of DEFPF on Duke Energy Florida's Condensed Consolidated Balance Sheets.
| | (in millions) | (in millions) | September 30, 2021 | December 31, 2020 | (in millions) | March 31, 2022 | December 31, 2021 |
| Receivables of VIEs | Receivables of VIEs | $ | 6 | | $ | 4 | | Receivables of VIEs | $ | 5 | | $ | 5 | |
| Regulatory Assets: Current | Regulatory Assets: Current | 54 | | 53 | | Regulatory Assets: Current | 54 | | 54 | |
| Current Assets: Other | Current Assets: Other | 17 | | 39 | | Current Assets: Other | 13 | | 39 | |
| Other Noncurrent Assets: Regulatory assets | Other Noncurrent Assets: Regulatory assets | 896 | | 937 | | Other Noncurrent Assets: Regulatory assets | 872 | | 883 | |
| Current Liabilities: Other | Current Liabilities: Other | 2 | | 10 | | Current Liabilities: Other | 2 | | 9 | |
| Current maturities of long-term debt | Current maturities of long-term debt | 56 | | 55 | | Current maturities of long-term debt | 56 | | 56 | |
| Long-Term Debt | Long-Term Debt | 946 | | 1,002 | | Long-Term Debt | 916 | | 946 | |
Storm Recovery Bonds – Duke Energy Carolinas NC Storm Funding and Duke Energy Progress NC Storm Funding
Duke Energy Carolinas NC Storm Funding, LLC. (DECNCSF) and Duke Energy Progress NC Storm Funding, LLC. (DEPNCSF) are bankruptcy remote, wholly owned special purpose subsidiaries of Duke Energy Carolinas and Duke Energy Progress, respectively. These entities were formed in 2021 for the sole purpose of issuing storm recovery bonds to finance certain of Duke Energy Carolinas’ and Duke Energy Progress’ unrecovered regulatory assets related to storm costs.
In November 2021, DECNCSF and DEPNCSF issued $237 million and $770 million of senior secured bonds, respectively and used the proceeds to acquire storm recovery property from Duke Energy Carolinas and Duke Energy Progress. The storm recovery property was created by state legislation and NCUC financing orders for the purpose of financing storm costs incurred in 2018 and 2019. The storm recovery property acquired includes the right to impose, bill, collect and adjust a non-bypassable charge from all Duke Energy Carolinas’ and Duke Energy Progress’ retail customers until the bonds are paid in full and all financing costs have been recovered. The storm recovery bonds are secured by the storm recovery property and cash collections from the storm recovery charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to Duke Energy Carolinas or Duke Energy Progress.
DECNCSF and DEPNCSF are considered VIEs primarily because the equity capitalization is insufficient to support their operations. Duke Energy Carolinas and Duke Energy Progress have the power to direct the significant activities of the VIEs as described above and therefore Duke Energy Carolinas and Duke Energy Progress are considered the primary beneficiaries and consolidate DECNCSF and DEPNCSF, respectively.
The following table summarizes the impact of these VIEs on Duke Energy Carolinas’ and Duke Energy Progress’ Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
| Duke Energy | Duke Energy | | Duke Energy | Duke Energy |
| (in millions) | Carolinas | Progress | | Carolinas | Progress |
| Regulatory Assets: Current | $ | 12 | | $ | 39 | | | $ | 12 | | $ | 39 | |
| Current Assets: Other | 4 | | 14 | | | — | | — | |
| Other Noncurrent Assets: Regulatory assets | 217 | | 711 | | | 220 | | 720 | |
| Other Noncurrent Assets: Other | 1 | | 4 | | | 1 | | 4 | |
| | | | | |
| Current Liabilities: Other | 2 | | 6 | | | — | | — | |
| Current maturities of long-term debt | 10 | | 32 | | | 5 | | 15 | |
| Long-Term Debt | 223 | | 730 | | | 228 | | 747 | |
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) | September 30, 2021 | December 31, 2020 |
| Current Assets: Other | $ | 330 | | $ | 257 | |
| Property, Plant and Equipment: Cost | 7,315 | | 6,394 | |
| Accumulated depreciation and amortization | (1,414) | | (1,242) | |
| Other Noncurrent Assets: Other | 110 | | 67 | |
| Current maturities of long-term debt | 165 | | 167 | |
| Long-Term Debt | 1,552 | | 1,569 | |
| Other Noncurrent Liabilities: AROs | 167 | | 148 | |
| Other Noncurrent Liabilities: Other | 341 | | 316 | |
NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Condensed Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2021 |
| Duke Energy | | Duke | | Duke |
| Pipeline | | Commercial | | | | | | Energy | | Energy |
| (in millions) | Investments | | Renewables | | | | Total | | Ohio | | Indiana |
| Receivables from affiliated companies | $ | — | | | $ | — | | | | | $ | — | | | $ | 47 | | | $ | 77 | |
| | | | | | | | | | | |
| Investments in equity method unconsolidated affiliates | 15 | | | 465 | | | | | 480 | | | — | | | — | |
| Deferred tax asset | 58 | | | — | | | | | 58 | | | — | | | — | |
| Total assets | $ | 73 | | | $ | 465 | | | | | $ | 538 | | | $ | 47 | | | $ | 77 | |
| | | | | | | | | | | |
| Other current liabilities | 61 | | | 3 | | | | | 64 | | | — | | | — | |
| | | | | | | | | | | |
| Other noncurrent liabilities | 63 | | | 3 | | | | | 66 | | | — | | | — | |
| Total liabilities | $ | 124 | | | $ | 6 | | | | | $ | 130 | | | $ | — | | | $ | — | |
| Net (liabilities) assets | $ | (51) | | | $ | 459 | | | | | $ | 408 | | | $ | 47 | | | $ | 77 | |
| | | | | | | | |
| (in millions) | March 31, 2022 | December 31, 2021 |
| Current Assets: Other | $ | 215 | | $ | 215 | |
| Property, Plant and Equipment: Cost | 7,337 | | 7,339 | |
| Accumulated depreciation and amortization | (1,534) | | (1,474) | |
| Other Noncurrent Assets: Other | 70 | | 62 | |
| Current maturities of long-term debt | 297 | | 167 | |
| Long-Term Debt | 1,325 | | 1,475 | |
| Other Noncurrent Liabilities: AROs | 173 | | 173 | |
| Other Noncurrent Liabilities: Other | 360 | | 319 | |
| | | | | |
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| Duke Energy | | Duke | | Duke |
| Pipeline | | Commercial | | | | | | Energy | | Energy |
| (in millions) | Investments | | Renewables | | | | Total | | Ohio | | Indiana |
| Receivables from affiliated companies | $ | — | | | $ | — | | | | | $ | — | | | $ | 83 | | | $ | 110 | |
| | | | | | | | | | | |
| Investments in equity method unconsolidated affiliates | — | | | 530 | | | | | 530 | | | — | | | — | |
| Other noncurrent assets | 31 | | | — | | | | | 31 | | | — | | | — | |
| Total assets | $ | 31 | | | $ | 530 | | | | | $ | 561 | | | $ | 83 | | | $ | 110 | |
| | | | | | | | | | | |
| Other current liabilities | 928 | | | 5 | | | | | 933 | | | — | | | — | |
| | | | | | | | | | | |
| Other noncurrent liabilities | 8 | | | 10 | | | | | 18 | | | — | | | — | |
| Total liabilities | $ | 936 | | | $ | 15 | | | | | $ | 951 | | | $ | — | | | $ | — | |
| Net assets (liabilities) | $ | (905) | | | $ | 515 | | | | | $ | (390) | | | $ | 83 | | | $ | 110 | |
The following tables summarize the impact of non-consolidated VIEs on the Condensed Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2022 |
| Duke Energy | | Duke | | Duke |
| Pipeline | | Commercial | | | | | | Energy | | Energy |
| (in millions) | Investments | | Renewables | | | | Total | | Ohio | | Indiana |
| Receivables from affiliated companies | $ | — | | | $ | — | | | | | $ | — | | | $ | 65 | | | $ | 80 | |
| | | | | | | | | | | |
| Investments in equity method unconsolidated affiliates | 29 | | | 504 | | | | | 533 | | | — | | | — | |
| Deferred tax asset | 61 | | | — | | | | | 61 | | | — | | | — | |
| Total assets | $ | 90 | | | $ | 504 | | | | | $ | 594 | | | $ | 65 | | | $ | 80 | |
| | | | | | | | | | | |
| Other current liabilities | 50 | | | 3 | | | | | 53 | | | — | | | — | |
| | | | | | | | | | | |
| Other noncurrent liabilities | 52 | | | 3 | | | | | 55 | | | — | | | — | |
| Total liabilities | $ | 102 | | | $ | 6 | | | | | $ | 108 | | | $ | — | | | $ | — | |
| Net (liabilities) assets | $ | (12) | | | $ | 498 | | | | | $ | 486 | | | $ | 65 | | | $ | 80 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| Duke Energy | | Duke | | Duke |
| Pipeline | | Commercial | | | | | | Energy | | Energy |
| (in millions) | Investments | | Renewables | | | | Total | | Ohio | | Indiana |
| Receivables from affiliated companies | $ | — | | | $ | — | | | | | $ | — | | | $ | 79 | | | $ | 97 | |
| | | | | | | | | | | |
| Investments in equity method unconsolidated affiliates | 15 | | | 508 | | | | | 523 | | | — | | | — | |
| Other noncurrent assets | 61 | | | — | | | | | 61 | | | — | | | — | |
| Total assets | $ | 76 | | | $ | 508 | | | | | $ | 584 | | | $ | 79 | | | $ | 97 | |
| | | | | | | | | | | |
| Other current liabilities | 47 | | | 4 | | | | | 51 | | | — | | | — | |
| | | | | | | | | | | |
| Other noncurrent liabilities | 54 | | | 3 | | | | | 57 | | | — | | | — | |
| Total liabilities | $ | 101 | | | $ | 7 | | | | | $ | 108 | | | $ | — | | | $ | — | |
| Net (liabilities) assets | $ | (25) | | | $ | 501 | | | | | $ | 476 | | | $ | 79 | | | $ | 97 | |
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 certain renewable energy project entities guarantees for debt services and operations and maintenance, as discussed below.
Pipeline Investments
Duke Energy has investments in various joint ventures to construct and operate pipeline projects. These entities are considered VIEs due to having insufficient equity to finance their own activities without subordinated financial support. Duke Energy does not have the power to direct the activities that most significantly impact the economic performance, the obligation to absorb losses or the right to receive benefits of these VIEs and therefore does not consolidate these entities.
Duke Energy has a 47% ownership interest in ACP. For the three and nine months ended September 30, 2020, the ACP investment was considered a significant subsidiary because its loss exceeded 10% of Duke Energy’s income. ACP's net loss for the three and nine months ended September 30, 2020, was $163 million and $4,505 million, respectively.
In 2020, Duke Energy determined that it would no longer invest in the construction of the ACP pipeline. In February 2021, Duke Energy paid approximately $855 million to fund ACP's outstanding debt, relieving Duke Energy of its guarantee. See Notes 1 and 3 for further information regarding this transaction.
Commercial Renewables
Duke Energy has investments in various renewable energy project entities. Duke Energy has a 50% ownership in a VIE, which owns a portfolio of wind projects. This entity is a VIE as a result of Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Duke Energy does not consolidate this VIE because power to direct and control key activities is shared jointly by Duke Energy and the other owner. Duke Energy also has equity ownership in an entity, which owns a portfolio of fuel cell projects. Duke Energy does not consolidate the fuel cell portfolio as it does not have the power to direct the activities that most significantly impact the economic performance of the entity.
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. 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.
| | | | | |
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES |
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 |
| (in millions) | September 30, 2021 | | December 31, 2020 | | September 30, 2021 | | December 31, 2020 |
| Receivables sold | $ | 218 | | | $ | 270 | | | $ | 328 | | | $ | 344 | |
| Less: Retained interests | 47 | | | 83 | | | 77 | | | 110 | |
| Net receivables sold | $ | 171 | | | $ | 187 | | | $ | 251 | | | $ | 234 | |
| | | | | |
FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES |
| | | | | | | | | | | | | | | | | | | | | | | |
| Duke Energy Ohio | | Duke Energy Indiana |
| (in millions) | March 31, 2022 | | December 31, 2021 | | March 31, 2022 | | December 31, 2021 |
| Receivables sold | $ | 263 | | | $ | 269 | | | $ | 305 | | | $ | 328 | |
| Less: Retained interests | 65 | | | 79 | | | 80 | | | 97 | |
| Net receivables sold | $ | 198 | | | $ | 190 | | | $ | 225 | | | $ | 231 | |
The following table shows sales and cash flows related to receivables sold.
| | | Duke Energy Ohio | | Duke Energy Indiana | | | Duke Energy Ohio | | | Duke Energy Indiana |
| | Three Months Ended | | Nine Months Ended | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended | | | | Three Months Ended |
| | September 30, | | September 30, | | September 30, | | September 30, | | | | March 31, | | | | March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | (in millions) | | | 2022 | | 2021 | | | | 2022 | | 2021 |
| Sales | Sales | | Sales | | | | |
| Receivables sold | Receivables sold | $ | 486 | | | $ | 462 | | | $ | 1,490 | | | $ | 1,428 | | | $ | 794 | | | $ | 717 | | | $ | 2,176 | | | $ | 1,947 | | Receivables sold | | | $ | 663 | | | $ | 561 | | | | | $ | 782 | | | $ | 698 | |
| Loss recognized on sale | Loss recognized on sale | 2 | | | 2 | | | 7 | | | 8 | | | 4 | | | 3 | | | 10 | | | 9 | | Loss recognized on sale | | | 3 | | | 3 | | | | | 4 | | | 3 | |
| Cash flows | Cash flows | | Cash flows | | | | |
| Cash proceeds from receivables sold | Cash proceeds from receivables sold | $ | 490 | | | $ | 449 | | | $ | 1,519 | | | $ | 1,439 | | | $ | 798 | | | $ | 689 | | | $ | 2,199 | | | $ | 1,941 | | Cash proceeds from receivables sold | | | $ | 674 | | | $ | 596 | | | | | $ | 795 | | | $ | 746 | |
| Collection fees received | Collection fees received | — | | | 1 | | | 1 | | | 1 | | | — | | | — | | | 1 | | | 1 | | Collection fees received | | | — | | | — | | | | | — | | | — | |
| Return received on retained interests | Return received on retained interests | 1 | | | 1 | | | 3 | | | 3 | | | 1 | | | 1 | | | 4 | | | 4 | | Return received on retained interests | | | 1 | | | 1 | | | | | 2 | | | 2 | |
Cash flows from sales of receivables are reflected within Cash Flows From Operating Activities and Cash Flows from Investing Activities on Duke Energy Ohio’s and Duke Energy Indiana’s 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) | (in millions) | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | (in millions) | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total |
| | Progress Energy | Progress Energy | $ | 24 | | $ | 107 | | $ | 44 | | $ | 45 | | $ | 7 | | $ | 51 | | $ | 278 | | Progress Energy | $ | 80 | | $ | 53 | | $ | 45 | | $ | 7 | | $ | 7 | | $ | 43 | | $ | 235 | |
| Duke Energy Progress | Duke Energy Progress | 2 | | 8 | | 8 | | 8 | | — | | — | | 26 | | Duke Energy Progress | 6 | | 8 | | 8 | | — | | — | | — | | 22 | |
| Duke Energy Florida | Duke Energy Florida | 22 | | 99 | | 36 | | 37 | | 7 | | 51 | | 252 | | Duke Energy Florida | 74 | | 45 | | 37 | | 7 | | 7 | | 43 | | 213 | |
| | Duke Energy Indiana | Duke Energy Indiana | — | | 1 | | 9 | | 14 | | 15 | | 25 | | 64 | | Duke Energy Indiana | 2 | | 11 | | 16 | | 17 | | 15 | | 12 | | 73 | |
Revenues for block sales are recognized monthly as energy is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates.
Gas Utilities and Infrastructure
Gas Utilities and Infrastructure earns its revenue through retail and wholesale natural gas service through the transportation, distribution and sale of natural gas. Duke Energy generally provides retail and wholesale natural gas service customers with all natural gas load requirements. Additionally, while natural gas can be stored, substantially all natural gas provided by Duke Energy is consumed by customers simultaneously with receipt of delivery.
| | | | | |
| FINANCIAL STATEMENTS | REVENUE |
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) | (in millions) | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | (in millions) | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total |
| | Piedmont | Piedmont | $ | 17 | | $ | 67 | | $ | 64 | | $ | 61 | | $ | 60 | | $ | 336 | | $ | 605 | | Piedmont | $ | 48 | | $ | 64 | | $ | 61 | | $ | 60 | | $ | 50 | | $ | 286 | | $ | 569 | |
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. Some of these PPAs have been accounted for as leases. For PPAs that are not accounted for as leases, the delivery of electricity and the delivery of RECs are considered separate performance obligations.
Other
The remainder of Duke Energy’s operations is presented as Other, which does not include material revenues from contracts with customers.
| | | | | |
FINANCIAL STATEMENTS | REVENUE |
Disaggregated Revenues
Disaggregated revenues are presented as follows:
| | | Three Months Ended September 30, 2021 | | Three Months Ended March 31, 2022 |
| | | Duke | | Duke | | | | Duke | | Duke | |
| (in millions) | (in millions) | Duke | Energy | Progress | Energy | | (in millions) | Duke | Energy | Progress | Energy | |
| By market or type of customer | By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont |
| Electric Utilities and Infrastructure | Electric Utilities and Infrastructure | | Electric Utilities and Infrastructure | |
| Residential | Residential | $ | 2,955 | | $ | 892 | | $ | 1,525 | | $ | 619 | | $ | 906 | | $ | 223 | | $ | 316 | | $ | — | | Residential | $ | 2,767 | | $ | 831 | | $ | 1,368 | | $ | 624 | | $ | 744 | | $ | 211 | | $ | 354 | | $ | — | |
| General | General | 1,873 | | 685 | | 826 | | 400 | | 426 | | 119 | | 240 | | — | | General | 1,604 | | 544 | | 726 | | 325 | | 401 | | 116 | | 218 | | — | |
| Industrial | Industrial | 861 | | 360 | | 264 | | 195 | | 69 | | 35 | | 202 | | — | | Industrial | 772 | | 276 | | 270 | | 194 | | 76 | | 35 | | 192 | | — | |
| Wholesale | Wholesale | 619 | | 111 | | 399 | | 324 | | 75 | | 19 | | 89 | | — | | Wholesale | 626 | | 113 | | 411 | | 349 | | 62 | | 23 | | 79 | | — | |
| Other revenues | Other revenues | 252 | | 72 | | 198 | | 118 | | 80 | | 17 | | 23 | | — | | Other revenues | 202 | | 111 | | 211 | | 139 | | 72 | | 21 | | (36) | | — | |
| Total Electric Utilities and Infrastructure revenue from contracts with customers | Total Electric Utilities and Infrastructure revenue from contracts with customers | $ | 6,560 | | $ | 2,120 | | $ | 3,212 | | $ | 1,656 | | $ | 1,556 | | $ | 413 | | $ | 870 | | $ | — | | Total Electric Utilities and Infrastructure revenue from contracts with customers | $ | 5,971 | | $ | 1,875 | | $ | 2,986 | | $ | 1,631 | | $ | 1,355 | | $ | 406 | | $ | 807 | | $ | — | |
| | Gas Utilities and Infrastructure | Gas Utilities and Infrastructure | | Gas Utilities and Infrastructure | |
| Residential | Residential | $ | 129 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 62 | | $ | — | | $ | 66 | | Residential | $ | 572 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 149 | | $ | — | | $ | 423 | |
| Commercial | Commercial | 78 | | — | | — | | — | | — | | 24 | | — | | 58 | | Commercial | 269 | | — | | — | | — | | — | | 64 | | — | | 204 | |
| Industrial | Industrial | 30 | | — | | — | | — | | — | | 3 | | — | | 26 | | Industrial | 57 | | — | | — | | — | | — | | 7 | | — | | 50 | |
| Power Generation | Power Generation | — | | — | | — | | — | | — | | — | | — | | 23 | | Power Generation | — | | — | | — | | — | | — | | — | | — | | 24 | |
| Other revenues | Other revenues | 33 | | — | | — | | — | | — | | 4 | | — | | 9 | | Other revenues | 115 | | — | | — | | — | | — | | 6 | | — | | 93 | |
| Total Gas Utilities and Infrastructure revenue from contracts with customers | Total Gas Utilities and Infrastructure revenue from contracts with customers | $ | 270 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 93 | | $ | — | | $ | 182 | | Total Gas Utilities and Infrastructure revenue from contracts with customers | $ | 1,013 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 226 | | $ | — | | $ | 794 | |
| | Commercial Renewables | Commercial Renewables | | Commercial Renewables | |
| Revenue from contracts with customers | Revenue from contracts with customers | $ | 56 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | Revenue from contracts with customers | $ | 51 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | Other | Other | | Other | |
| Revenue from contracts with customers | Revenue from contracts with customers | $ | 8 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | Revenue from contracts with customers | $ | 7 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| Total revenue from contracts with customers | Total revenue from contracts with customers | $ | 6,894 | | $ | 2,120 | | $ | 3,212 | | $ | 1,656 | | $ | 1,556 | | $ | 506 | | $ | 870 | | $ | 182 | | Total revenue from contracts with customers | $ | 7,042 | | $ | 1,875 | | $ | 2,986 | | $ | 1,631 | | $ | 1,355 | | $ | 632 | | $ | 807 | | $ | 794 | |
| Other revenue sources(a) | Other revenue sources(a) | $ | 57 | | $ | (16) | | $ | 21 | | $ | 11 | | $ | 5 | | $ | — | | $ | 16 | | $ | 13 | | Other revenue sources(a) | $ | 90 | | $ | 13 | | $ | 6 | | $ | 1 | | $ | — | | $ | 6 | | $ | 15 | | $ | 11 | |
| Total revenues | Total revenues | $ | 6,951 | | $ | 2,104 | | $ | 3,233 | | $ | 1,667 | | $ | 1,561 | | $ | 506 | | $ | 886 | | $ | 195 | | Total revenues | $ | 7,132 | | $ | 1,888 | | $ | 2,992 | | $ | 1,632 | | $ | 1,355 | | $ | 638 | | $ | 822 | | $ | 805 | |
(a)Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.
| | | | | |
| FINANCIAL STATEMENTS | REVENUE |
| | | Three Months Ended September 30, 2020 | | Three Months Ended March 31, 2021 |
| | | Duke | | Duke | | | | Duke | | Duke | |
| (in millions) | (in millions) | Duke | Energy | Progress | Energy | | (in millions) | Duke | Energy | Progress | Energy | |
| By market or type of customer | By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont |
| Electric Utilities and Infrastructure | Electric Utilities and Infrastructure | | Electric Utilities and Infrastructure | |
| Residential | Residential | $ | 2,936 | | $ | 883 | | $ | 1,550 | | $ | 616 | | $ | 934 | | $ | 213 | | $ | 289 | | $ | — | | Residential | $ | 2,462 | | $ | 793 | | $ | 1,162 | | $ | 560 | | $ | 602 | | $ | 195 | | $ | 313 | | $ | — | |
| General | General | 1,804 | | 664 | | 805 | | 384 | | 421 | | 119 | | 212 | | — | | General | 1,419 | | 502 | | 624 | | 306 | | 318 | | 104 | | 189 | | — | |
| Industrial | Industrial | 797 | | 342 | | 245 | | 179 | | 66 | | 35 | | 175 | | — | | Industrial | 662 | | 256 | | 207 | | 145 | | 62 | | 31 | | 167 | | — | |
| Wholesale | Wholesale | 603 | | 117 | | 412 | | 358 | | 54 | | 10 | | 64 | | — | | Wholesale | 504 | | 114 | | 326 | | 292 | | 34 | | 13 | | 50 | | — | |
| Other revenues | Other revenues | 238 | | 62 | | 167 | | 75 | | 92 | | 23 | | 22 | | — | | Other revenues | 226 | | 74 | | 160 | | 83 | | 77 | | 22 | | 18 | | — | |
| Total Electric Utilities and Infrastructure revenue from contracts with customers | Total Electric Utilities and Infrastructure revenue from contracts with customers | $ | 6,378 | | $ | 2,068 | | $ | 3,179 | | $ | 1,612 | | $ | 1,567 | | $ | 400 | | $ | 762 | | $ | — | | Total Electric Utilities and Infrastructure revenue from contracts with customers | $ | 5,273 | | $ | 1,739 | | $ | 2,479 | | $ | 1,386 | | $ | 1,093 | | $ | 365 | | $ | 737 | | $ | — | |
| | Gas Utilities and Infrastructure | Gas Utilities and Infrastructure | | Gas Utilities and Infrastructure | |
| Residential | Residential | $ | 112 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 55 | | $ | — | | $ | 57 | | Residential | $ | 460 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 110 | | $ | — | | $ | 351 | |
| Commercial | Commercial | 64 | | — | | — | | — | | — | | 20 | | — | | 44 | | Commercial | 204 | | — | | — | | — | | — | | 48 | | — | | 156 | |
| Industrial | Industrial | 24 | | — | | — | | — | | — | | 3 | | — | | 22 | | Industrial | 50 | | — | | — | | — | | — | | 7 | | — | | 43 | |
| Power Generation | Power Generation | — | | — | | — | | — | | — | | — | | — | | 10 | | Power Generation | — | | — | | — | | — | | — | | — | | — | | 22 | |
| Other revenues | Other revenues | 16 | | — | | — | | — | | — | | 3 | | — | | 11 | | Other revenues | 47 | | — | | — | | — | | — | | 5 | | — | | 26 | |
| Total Gas Utilities and Infrastructure revenue from contracts with customers | Total Gas Utilities and Infrastructure revenue from contracts with customers | $ | 216 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 81 | | $ | — | | $ | 144 | | Total Gas Utilities and Infrastructure revenue from contracts with customers | $ | 761 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 170 | | $ | — | | $ | 598 | |
| | Commercial Renewables | Commercial Renewables | | Commercial Renewables | |
| Revenue from contracts with customers | Revenue from contracts with customers | $ | 57 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | Revenue from contracts with customers | $ | 54 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | Other | Other | | Other | |
| Revenue from contracts with customers | Revenue from contracts with customers | $ | 7 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | Revenue from contracts with customers | $ | 6 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| Total revenue from contracts with customers | Total revenue from contracts with customers | $ | 6,658 | | $ | 2,068 | | $ | 3,179 | | $ | 1,612 | | $ | 1,567 | | $ | 481 | | $ | 762 | | $ | 144 | | Total revenue from contracts with customers | $ | 6,094 | | $ | 1,739 | | $ | 2,479 | | $ | 1,386 | | $ | 1,093 | | $ | 535 | | $ | 737 | | $ | 598 | |
| Other revenue sources(a) | Other revenue sources(a) | $ | 63 | | $ | (10) | | $ | 18 | | $ | 14 | | $ | — | | $ | (8) | | $ | (1) | | $ | 18 | | Other revenue sources(a) | $ | 56 | | $ | (23) | | $ | 26 | | $ | 15 | | $ | 8 | | $ | (3) | | $ | 8 | | $ | 8 | |
| Total revenues | Total revenues | $ | 6,721 | | $ | 2,058 | | $ | 3,197 | | $ | 1,626 | | $ | 1,567 | | $ | 473 | | $ | 761 | | $ | 162 | | Total revenues | $ | 6,150 | | $ | 1,716 | | $ | 2,505 | | $ | 1,401 | | $ | 1,101 | | $ | 532 | | $ | 745 | | $ | 606 | |
(a)Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.
| | | | | |
FINANCIAL STATEMENTS | REVENUE |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2021 |
| | Duke | | Duke | Duke | Duke | Duke | |
| (in millions) | Duke | Energy | Progress | Energy | Energy | Energy | Energy | |
| By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont |
| Electric Utilities and Infrastructure | | | | | | | | |
| Residential | $ | 7,753 | | $ | 2,368 | | $ | 3,903 | | $ | 1,657 | | $ | 2,246 | | $ | 589 | | $ | 894 | | $ | — | |
| General | 4,805 | | 1,685 | | 2,170 | | 1,036 | | 1,134 | | 329 | | 619 | | — | |
| Industrial | 2,228 | | 872 | | 700 | | 500 | | 200 | | 99 | | 558 | | — | |
| Wholesale | 1,644 | | 341 | | 1,056 | | 901 | | 155 | | 45 | | 202 | | — | |
| Other revenues | 712 | | 208 | | 509 | | 272 | | 237 | | 61 | | 64 | | — | |
| Total Electric Utilities and Infrastructure revenue from contracts with customers | $ | 17,142 | | $ | 5,474 | | $ | 8,338 | | $ | 4,366 | | $ | 3,972 | | $ | 1,123 | | $ | 2,337 | | $ | — | |
| | | | | | | | |
| Gas Utilities and Infrastructure | | | | | | | | |
| Residential | $ | 747 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 241 | | $ | — | | $ | 505 | |
| Commercial | 373 | | — | | — | | — | | — | | 99 | | — | | 273 | |
| Industrial | 110 | | — | | — | | — | | — | | 14 | | — | | 96 | |
| Power Generation | — | | — | | — | | — | | — | | — | | — | | 69 | |
| Other revenues | 100 | | — | | — | | — | | — | | 21 | | — | | 34 | |
| Total Gas Utilities and Infrastructure revenue from contracts with customers | $ | 1,330 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 375 | | $ | — | | $ | 977 | |
| | | | | | | | |
| Commercial Renewables | | | | | | | | |
| Revenue from contracts with customers | $ | 163 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | |
| Other | | | | | | | | |
| Revenue from contracts with customers | $ | 20 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | |
| Total Revenue from contracts with customers | $ | 18,655 | | $ | 5,474 | | $ | 8,338 | | $ | 4,366 | | $ | 3,972 | | $ | 1,498 | | $ | 2,337 | | $ | 977 | |
| | | | | | | | |
Other revenue sources(a) | $ | 204 | | $ | (44) | | $ | 79 | | $ | 51 | | $ | 15 | | $ | (4) | | $ | 29 | | $ | 39 | |
| Total revenues | $ | 18,859 | | $ | 5,430 | | $ | 8,417 | | $ | 4,417 | | $ | 3,987 | | $ | 1,494 | | $ | 2,366 | | $ | 1,016 | |
(a)Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.
| | | | | |
FINANCIAL STATEMENTS | REVENUE |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 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 | $ | 7,451 | | $ | 2,316 | | $ | 3,792 | | $ | 1,578 | | $ | 2,214 | | $ | 558 | | $ | 785 | | $ | — | |
| General | 4,691 | | 1,720 | | 2,080 | | 1,001 | | 1,079 | | 336 | | 554 | | — | |
| Industrial | 2,148 | | 871 | | 673 | | 487 | | 186 | | 103 | | 502 | | — | |
| Wholesale | 1,535 | | 332 | | 1,018 | | 877 | | 141 | | 22 | | 163 | | — | |
| Other revenues | 713 | | 184 | | 476 | | 208 | | 268 | | 62 | | 63 | | — | |
| Total Electric Utilities and Infrastructure revenue from contracts with customers | $ | 16,538 | | $ | 5,423 | | $ | 8,039 | | $ | 4,151 | | $ | 3,888 | | $ | 1,081 | | $ | 2,067 | | $ | — | |
| | | | | | | | |
| Gas Utilities and Infrastructure | | | | | | | | |
| Residential | $ | 631 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 214 | | $ | — | | $ | 417 | |
| Commercial | 308 | | — | | — | | — | | — | | 86 | | — | | 222 | |
| Industrial | 92 | | — | | — | | — | | — | | 12 | | — | | 80 | |
| Power Generation | — | | — | | — | | — | | — | | — | | — | | 27 | |
| Other revenues | 58 | | — | | — | | — | | — | | 12 | | — | | 46 | |
| Total Gas Utilities and Infrastructure revenue from contracts with customers | $ | 1,089 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 324 | | $ | — | | $ | 792 | |
| | | | | | | | |
| Commercial Renewables | | | | | | | | |
| Revenue from contracts with customers | $ | 170 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | |
| Other | | | | | | | | |
| Revenue from contracts with customers | $ | 20 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | |
| Total Revenue from contracts with customers | $ | 17,817 | | $ | 5,423 | | $ | 8,039 | | $ | 4,151 | | $ | 3,888 | | $ | 1,405 | | $ | 2,067 | | $ | 792 | |
| | | | | | | | |
Other revenue sources(a) | $ | 274 | | $ | (7) | | $ | 78 | | $ | 56 | | $ | 9 | | $ | (11) | | $ | 3 | | $ | 79 | |
| Total revenues | $ | 18,091 | | $ | 5,416 | | $ | 8,117 | | $ | 4,207 | | $ | 3,897 | | $ | 1,394 | | $ | 2,070 | | $ | 871 | |
(a)Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.
| | | | | |
FINANCIAL STATEMENTS | REVENUE |
As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The following table presents the reserve for credit losses for trade and other receivables based on adoption of the new standard.
| | | | | | Three Months Ended September 30, 2020 and 2021 | | Three Months Ended March 31, 2021 and 2022 |
| | Duke | | Duke | | | | Duke | | Duke | |
| | Duke | Energy | Progress | Energy | | | Duke | Energy | Progress | Energy | |
| (in millions) | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont |
| Balance at June 30, 2020 | $ | 102 | | $ | 14 | | $ | 29 | | $ | 14 | | $ | 14 | | $ | 5 | | $ | 3 | | $ | 6 | | |
| Balance at December 31, 2020 | | Balance at December 31, 2020 | $ | 146 | | $ | 23 | | $ | 37 | | $ | 23 | | $ | 14 | | $ | 4 | | $ | 3 | | $ | 12 | |
| | Write-Offs | Write-Offs | 12 | | (2) | | 15 | | 13 | | 2 | | — | | — | | — | | Write-Offs | (21) | | (8) | | (10) | | (5) | | (5) | | — | | — | | (1) | |
| Credit Loss Expense | Credit Loss Expense | (9) | | — | | (16) | | (15) | | — | | — | | — | | 3 | | Credit Loss Expense | 17 | | 10 | | 7 | | 2 | | 5 | | — | | — | | 3 | |
| Other Adjustments | Other Adjustments | 28 | | 10 | | 9 | | 9 | | — | | — | | — | | — | | Other Adjustments | 5 | | 9 | | 3 | | 3 | | 1 | | — | | — | | — | |
| Balance at September 30, 2020 | $ | 133 | | $ | 22 | | $ | 37 | | $ | 21 | | $ | 16 | | $ | 5 | | $ | 3 | | $ | 9 | | |
| Balance at March 31, 2021 | | Balance at March 31, 2021 | $ | 147 | | $ | 34 | | $ | 37 | | $ | 23 | | $ | 15 | | $ | 4 | | $ | 3 | | $ | 14 | |
| | Balance at June 30, 2021 | $ | 123 | | $ | 42 | | $ | 36 | | $ | 21 | | $ | 16 | | $ | 4 | | $ | 3 | | $ | 13 | | |
| Balance at December 31, 2021 | | Balance at December 31, 2021 | $ | 122 | | $ | 42 | | $ | 36 | | $ | 21 | | $ | 16 | | $ | 4 | | $ | 3 | | $ | 15 | |
| Write-Offs | Write-Offs | (13) | | (3) | | (6) | | (3) | | (3) | | — | | — | | (4) | | Write-Offs | (23) | | (9) | | (10) | | (2) | | (8) | | — | | — | | (1) | |
| Credit Loss Expense | Credit Loss Expense | 11 | | 4 | | 6 | | 3 | | 3 | | — | | — | | 2 | | Credit Loss Expense | 24 | | 5 | | 12 | | 4 | | 8 | | — | | — | | 3 | |
| Other Adjustments | Other Adjustments | 2 | | (1) | | — | | — | | — | | — | | — | | 4 | | Other Adjustments | 17 | | 14 | | 13 | | 8 | | 5 | | — | | — | | — | |
| Balance at September 30, 2021 | $ | 123 | | $ | 42 | | $ | 36 | | $ | 21 | | $ | 16 | | $ | 4 | | $ | 3 | | $ | 15 | | |
| | Nine Months Ended September 30, 2020 and 2021 | |
| | Duke | | Duke | | |
| Duke | Energy | Progress | 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 | (7) | | (8) | | 8 | | 8 | | — | | — | | — | | (5) | | |
| Credit Loss Expense | 24 | | 9 | | 2 | | (5) | | 8 | | 1 | | — | | 7 | | |
| Other Adjustments | 35 | | 10 | | 9 | | 9 | | — | | — | | — | | — | | |
| Balance at September 30, 2020 | $ | 133 | | $ | 22 | | $ | 37 | | $ | 21 | | $ | 16 | | $ | 5 | | $ | 3 | | $ | 9 | | |
| | Balance at December 31, 2020 | $ | 146 | | $ | 23 | | $ | 37 | | $ | 23 | | $ | 14 | | $ | 4 | | $ | 3 | | $ | 12 | | |
| Write-Offs | (39) | | (10) | | (20) | | (11) | | (9) | | — | | — | | (7) | | |
| Credit Loss Expense | 40 | | 20 | | 19 | | 9 | | 10 | | — | | — | | 6 | | |
| Other Adjustments | (24) | | 9 | | — | | — | | 1 | | — | | — | | 4 | | |
| Balance at September 30, 2021 | $ | 123 | | $ | 42 | | $ | 36 | | $ | 21 | | $ | 16 | | $ | 4 | | $ | 3 | | $ | 15 | | |
| Balance at March 31, 2022 | | Balance at March 31, 2022 | $ | 140 | | $ | 52 | | $ | 51 | | $ | 31 | | $ | 21 | | $ | 4 | | $ | 3 | | $ | 17 | |
| | | | | |
| FINANCIAL STATEMENTS | REVENUE |
Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions, as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss periodically for trade and other receivables.
The aging of trade receivables is presented in the table below. Duke Energy considers receivables greater than 30 days outstanding past due.
| | | September 30, 2021 | | March 31, 2022 |
| | | Duke | | Duke | | | | Duke | | Duke | |
| | Duke | Energy | Progress | Energy | | | Duke | Energy | Progress | Energy | |
| (in millions) | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont |
Unbilled Revenue(a)(b) | Unbilled Revenue(a)(b) | $ | 826 | | $ | 308 | | $ | 242 | | $ | 125 | | $ | 117 | | $ | 5 | | $ | 27 | | $ | 7 | | Unbilled Revenue(a)(b) | $ | 945 | | $ | 339 | | $ | 270 | | $ | 161 | | $ | 109 | | $ | 7 | | $ | 44 | | $ | 64 | |
| 0-30 days | 0-30 days | 2,201 | | 689 | | 910 | | 521 | | 388 | | 65 | | 41 | | 80 | | 0-30 days | 2,133 | | 518 | | 944 | | 558 | | 386 | | 40 | | 26 | | 215 | |
| 30-60 days | 30-60 days | 194 | | 74 | | 63 | | 37 | | 26 | | 7 | | 5 | | 6 | | 30-60 days | 288 | | 75 | | 111 | | 64 | | 47 | | 8 | | 4 | | 23 | |
| 60-90 days | 60-90 days | 57 | | 30 | | 14 | | 6 | | 8 | | 1 | | 1 | | 3 | | 60-90 days | 102 | | 33 | | 40 | | 22 | | 18 | | 2 | | 3 | | 7 | |
| 90+ days | 90+ days | 161 | | 68 | | 27 | | 5 | | 22 | | 31 | | 10 | | 9 | | 90+ days | 274 | | 119 | | 77 | | 39 | | 38 | | 46 | | 9 | | 7 | |
Deferred Payment Arrangements(c) | Deferred Payment Arrangements(c) | 113 | | 66 | | 29 | | 21 | | 8 | | 2 | | — | | 6 | | Deferred Payment Arrangements(c) | 136 | | 60 | | 61 | | 33 | | 28 | | 2 | | — | | 4 | |
| Trade and Other Receivables | Trade and Other Receivables | $ | 3,552 | | $ | 1,235 | | $ | 1,285 | | $ | 715 | | $ | 569 | | $ | 111 | | $ | 84 | | $ | 111 | | Trade and Other Receivables | $ | 3,878 | | $ | 1,144 | | $ | 1,503 | | $ | 877 | | $ | 626 | | $ | 105 | | $ | 86 | | $ | 320 | |
| | | | | |
FINANCIAL STATEMENTS | REVENUE |
| | | December 31, 2020 | | December 31, 2021 |
| | | Duke | | Duke | | | | Duke | | Duke | |
| | Duke | Energy | Progress | Energy | | | Duke | Energy | Progress | Energy | |
| (in millions) | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont |
Unbilled Revenue(a)(b) | Unbilled Revenue(a)(b) | $ | 969 | | $ | 328 | | $ | 283 | | $ | 167 | | $ | 116 | | $ | 2 | | $ | 16 | | $ | 86 | | Unbilled Revenue(a)(b) | $ | 964 | | $ | 316 | | $ | 266 | | $ | 193 | | $ | 73 | | $ | 4 | | $ | 27 | | $ | 106 | |
| 0-30 days | 0-30 days | 1,789 | | 445 | | 707 | | 398 | | 307 | | 60 | | 26 | | 149 | | 0-30 days | 2,104 | | 595 | | 800 | | 405 | | 393 | | 42 | | 51 | | 202 | |
| 30-60 days | 30-60 days | 185 | | 80 | | 54 | | 25 | | 29 | | 8 | | 3 | | 8 | | 30-60 days | 212 | | 77 | | 72 | | 44 | | 28 | | 4 | | 13 | | 12 | |
| 60-90 days | 60-90 days | 22 | | 1 | | 10 | | 4 | | 6 | | 2 | | 1 | | 3 | | 60-90 days | 88 | | 37 | | 41 | | 21 | | 20 | | 1 | | 1 | | 2 | |
| 90+ days | 90+ days | 119 | | 16 | | 32 | | 9 | | 23 | | 30 | | 12 | | 9 | | 90+ days | 249 | | 106 | | 65 | | 37 | | 28 | | 47 | | 11 | | 7 | |
Deferred Payment Arrangements(c) | Deferred Payment Arrangements(c) | 215 | | 96 | | 80 | | 52 | | 28 | | — | | — | | 7 | | Deferred Payment Arrangements(c) | 115 | | 55 | | 45 | | 22 | | 23 | | 2 | | — | | 4 | |
| Trade and Other Receivables | Trade and Other Receivables | $ | 3,299 | | $ | 966 | | $ | 1,166 | | $ | 655 | | $ | 509 | | $ | 102 | | $ | 58 | | $ | 262 | | Trade and Other Receivables | $ | 3,732 | | $ | 1,186 | | $ | 1,289 | | $ | 722 | | $ | 565 | | $ | 100 | | $ | 103 | | $ | 333 | |
(a)Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed and are included within Receivables and Receivables of VIEs on the Condensed Consolidated Balance Sheets.
(b)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 $64$63 million and $115$100 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of September 30, 2021,March 31, 2022, and $87$82 million and $134$121 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2020.2021.
(c)Due to certain customer financial hardships created by the COVID-19 pandemic and resulting stay-at-home orders, Duke Energy permitted customers to defer payment of past-due amounts through an installment payment plan over a period of several months.
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 and accumulated preferred dividends, 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 and accumulated preferred dividends, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as 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 September 30, | | Nine Months Ended September 30, | | | Three Months Ended March 31, |
| (in millions, except per share amounts) | (in millions, except per share amounts) | 2021 | | 2020 | | 2021 | | 2020 | (in millions, except per share amounts) | | 2022 | | 2021 |
| Net income available to Duke Energy common stockholders | Net income available to Duke Energy common stockholders | $ | 1,366 | | | $ | 1,265 | | | $ | 3,070 | | | $ | 1,347 | | Net income available to Duke Energy common stockholders | | $ | 818 | | | $ | 953 | |
| Accumulated preferred stock dividends adjustment | Accumulated preferred stock dividends adjustment | 12 | | | 12 | | | 12 | | | 13 | | Accumulated preferred stock dividends adjustment | | 12 | | | 12 | |
| Less: Impact of participating securities | Less: Impact of participating securities | 1 | | | 1 | | | 3 | | | 2 | | Less: Impact of participating securities | | 1 | | | 1 | |
| Income from continuing operations available to Duke Energy common stockholders | Income from continuing operations available to Duke Energy common stockholders | $ | 1,377 | | | $ | 1,276 | | | $ | 3,079 | | | $ | 1,358 | | Income from continuing operations available to Duke Energy common stockholders | | $ | 829 | | | $ | 964 | |
| | Weighted average common shares outstanding – basic and diluted | Weighted average common shares outstanding – basic and diluted | 769 | | | 735 | | | 769 | | | 735 | | Weighted average common shares outstanding – basic and diluted | | 770 | | | 769 | |
| | EPS available to Duke Energy common stockholders | EPS available to Duke Energy common stockholders | | EPS available to Duke Energy common stockholders | | |
| Basic and diluted | Basic and diluted | $ | 1.79 | | | $ | 1.74 | | | $ | 4.00 | | | $ | 1.85 | | Basic and diluted | | $ | 1.08 | | | $ | 1.25 | |
| Potentially dilutive items excluded from the calculation(a) | Potentially dilutive items excluded from the calculation(a) | 2 | | | 2 | | | 2 | | | 2 | | Potentially dilutive items excluded from the calculation(a) | | 2 | | | 2 | |
| Dividends declared per common share | Dividends declared per common share | $ | 0.985 | | | $ | 0.965 | | | $ | 2.915 | | | $ | 2.855 | | Dividends declared per common share | | $ | 0.985 | | | $ | 0.965 | |
Dividends declared on Series A preferred stock per depositary share(b) | Dividends declared on Series A preferred stock per depositary share(b) | $ | 0.359 | | | $ | 0.359 | | | $ | 1.078 | | | $ | 1.078 | | Dividends declared on Series A preferred stock per depositary share(b) | | $ | 0.359 | | | $ | 0.359 | |
Dividends declared on Series B preferred stock per share(c) | Dividends declared on Series B preferred stock per share(c) | $ | 24.375 | | | $ | 24.375 | | | $ | 48.750 | | | $ | 49.292 | | Dividends declared on Series B preferred stock per share(c) | | $ | 24.375 | | | $ | 24.375 | |
(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 | EMPLOYEE BENEFIT PLANS |
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.
Duke Energy monitors lump-sum benefit payment activity associated with its defined benefit retirement plans. Duke Energy does not believe it is probable that total lump-sum benefit payments will exceed the settlement threshold, defined as the sum of service cost and interest cost on projected benefit obligation components of net periodic pension costs, for any of its defined benefit retirement plans in 2021. If Duke Energy believed it were probable that total lump-sum benefit payments would exceed the settlement threshold in 2021, then a settlement charge reflecting the recognition of a pro-rata portion of previously unrecognized actuarial losses, equal to the percentage of reduction in the projected benefit obligation resulting from total lump-sum benefit payments, would be recognized.
QUALIFIED PENSION PLANS
The following tables include the components of net periodic pension costs for qualified pension plans.
| | | Three Months Ended September 30, 2021 | | Three Months Ended March 31, 2022 |
| | | 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) | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Service cost | Service cost | $ | 43 | | | $ | 14 | | | $ | 13 | | | $ | 7 | | | $ | 5 | | | $ | 2 | | | $ | 2 | | | $ | 1 | | Service cost | $ | 40 | | | $ | 12 | | | $ | 12 | | | $ | 7 | | | $ | 4 | | | $ | 1 | | | $ | 2 | | | $ | 1 | |
| Interest cost on projected benefit obligation | Interest cost on projected benefit obligation | 55 | | | 13 | | | 17 | | | 8 | | | 10 | | | 2 | | | 5 | | | 2 | | Interest cost on projected benefit obligation | 58 | | | 14 | | | 18 | | | 8 | | | 10 | | | 3 | | | 5 | | | 2 | |
| Expected return on plan assets | Expected return on plan assets | (139) | | | (36) | | | (47) | | | (21) | | | (25) | | | (7) | | | (10) | | | (5) | | Expected return on plan assets | (140) | | | (38) | | | (46) | | | (22) | | | (24) | | | (5) | | | (9) | | | (6) | |
| Amortization of actuarial loss | Amortization of actuarial loss | 33 | | | 7 | | | 10 | | | 5 | | | 5 | | | 2 | | | 3 | | | 2 | | Amortization of actuarial loss | 24 | | | 5 | | | 6 | | | 3 | | | 3 | | | 1 | | | 2 | | | 2 | |
| Amortization of prior service credit | Amortization of prior service credit | (7) | | | (2) | | | (1) | | | — | | | (1) | | | — | | | — | | | (1) | | Amortization of prior service credit | (5) | | | (1) | | | — | | | — | | | — | | | — | | | — | | | (2) | |
| Amortization of settlement charges | Amortization of settlement charges | 2 | | | 1 | | | 1 | | | — | | | — | | | — | | | — | | | 1 | | Amortization of settlement charges | 2 | | | 1 | | | 1 | | | — | | | — | | | — | | | — | | | — | |
| Net periodic pension costs | Net periodic pension costs | $ | (13) | | | $ | (3) | | | $ | (7) | | | $ | (1) | | | $ | (6) | | | $ | (1) | | | $ | — | | | $ | — | | Net periodic pension costs | $ | (21) | | | $ | (7) | | | $ | (9) | | | $ | (4) | | | $ | (7) | | | $ | — | | | $ | — | | | $ | (3) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 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 | $ | 41 | | | $ | 12 | | | $ | 12 | | | $ | 6 | | | $ | 5 | | | $ | 1 | | | $ | 2 | | | $ | 1 | |
| Interest cost on projected benefit obligation | 67 | | | 16 | | | 21 | | | 10 | | | 12 | | | 4 | | | 6 | | | 2 | |
| Expected return on plan assets | (143) | | | (36) | | | (48) | | | (22) | | | (25) | | | (7) | | | (11) | | | (5) | |
| Amortization of actuarial loss | 32 | | | 7 | | | 10 | | | 4 | | | 6 | | | 2 | | | 3 | | | 2 | |
| Amortization of prior service credit | (8) | | | (2) | | | — | | | — | | | — | | | — | | | — | | | (2) | |
| Amortization of settlement charges | 11 | | | 6 | | | 5 | | | 5 | | | 1 | | | — | | | 1 | | | 1 | |
| Net periodic pension costs | $ | — | | | $ | 3 | | | $ | — | | | $ | 3 | | | $ | (1) | | | $ | — | | | $ | 1 | | | $ | (1) | |
| | | Nine Months Ended September 30, 2021 | | Three Months Ended March 31, 2021 |
| | | 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) | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont | (in millions) | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
| Service cost | Service cost | $ | 131 | | | $ | 42 | | | $ | 38 | | | $ | 22 | | | $ | 16 | | | $ | 4 | | | $ | 7 | | | $ | 4 | | Service cost | $ | 44 | | | $ | 14 | | | $ | 13 | | | $ | 7 | | | $ | 5 | | | $ | 1 | | | $ | 2 | | | $ | 1 | |
| Interest cost on projected benefit obligation | Interest cost on projected benefit obligation | 165 | | | 38 | | | 52 | | | 23 | | | 29 | | | 9 | | | 14 | | | 6 | | Interest cost on projected benefit obligation | 55 | | | 13 | | | 17 | | | 7 | | | 10 | | | 3 | | | 5 | | | 2 | |
| Expected return on plan assets | Expected return on plan assets | (418) | | | (106) | | | (141) | | | (63) | | | (76) | | | (21) | | | (30) | | | (15) | | Expected return on plan assets | (139) | | | (35) | | | (47) | | | (21) | | | (26) | | | (7) | | | (10) | | | (5) | |
| Amortization of actuarial loss | Amortization of actuarial loss | 100 | | | 22 | | | 29 | | | 14 | | | 15 | | | 5 | | | 10 | | | 7 | | Amortization of actuarial loss | 33 | | | 7 | | | 10 | | | 5 | | | 5 | | | 2 | | | 3 | | | 2 | |
| Amortization of prior service credit | Amortization of prior service credit | (22) | | | (6) | | | (2) | | | (1) | | | (1) | | | — | | | (1) | | | (6) | | Amortization of prior service credit | (7) | | | (2) | | | (1) | | | — | | | — | | | — | | | — | | | (1) | |
| Amortization of settlement charges | Amortization of settlement charges | 6 | | | 4 | | | 2 | | | 1 | | | — | | | — | | | — | | | 1 | | Amortization of settlement charges | 2 | | | 1 | | | 1 | | | — | | | — | | | — | | | — | | | — | |
| Net periodic pension costs | Net periodic pension costs | $ | (38) | | | $ | (6) | | | $ | (22) | | | $ | (4) | | | $ | (17) | | | $ | (3) | | | $ | — | | | $ | (3) | | Net periodic pension costs | $ | (12) | | | $ | (2) | | | $ | (7) | | | $ | (2) | | | $ | (6) | | | $ | (1) | | | $ | — | | | $ | (1) | |
| | | | | |
| FINANCIAL STATEMENTS | EMPLOYEE BENEFIT PLANS |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 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 | $ | 124 | | | $ | 38 | | | $ | 36 | | | $ | 20 | | | $ | 16 | | | $ | 3 | | | $ | 6 | | | $ | 4 | |
| Interest cost on projected benefit obligation | 202 | | | 47 | | | 64 | | | 29 | | | 35 | | | 12 | | | 17 | | | 7 | |
| Expected return on plan assets | (429) | | | (108) | | | (143) | | | (66) | | | (76) | | | (21) | | | (32) | | | (16) | |
| Amortization of actuarial loss | 96 | | | 21 | | | 30 | | | 13 | | | 17 | | | 5 | | | 9 | | | 7 | |
| Amortization of prior service credit | (24) | | | (6) | | | (2) | | | (1) | | | (1) | | | — | | | (1) | | | (7) | |
| Amortization of settlement charges | 16 | | | 8 | | | 6 | | | 6 | | | 1 | | | — | | | 1 | | | 1 | |
| Net periodic pension costs | $ | (15) | | | $ | — | | | $ | (9) | | | $ | 1 | | | $ | (8) | | | $ | (1) | | | $ | — | | | $ | (4) | |
NON-QUALIFIED PENSION PLANS
Net periodic pension costs for non-qualified pension plans were not material for the three and nine months ended September 30, 2021,March 31, 2022, and 2020.2021.
OTHER POST-RETIREMENT BENEFIT PLANS
Net periodic costs for OPEB plans were not material for the three and nine months ended September 30, 2021,March 31, 2022, and 2020.2021.
15. INCOME TAXES
EFFECTIVE TAX RATES
The ETRs from continuing operations for each of the Duke Energy Registrants are included in the following table.
| | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended |
| | September 30, | | September 30, | | | | March 31, |
| | 2021 | | 2020 | | 2021 | | 2020 | | | | 2022 | | 2021 |
| Duke Energy | Duke Energy | 6.6 | % | | 7.8 | % | | 6.7 | % | | (6.4) | % | Duke Energy | | | (1.7) | % | | 8.2 | % |
| Duke Energy Carolinas | Duke Energy Carolinas | 2.9 | % | | 12.0 | % | | 3.6 | % | | 13.6 | % | Duke Energy Carolinas | | | 7.4 | % | | 6.9 | % |
| Progress Energy | Progress Energy | 12.9 | % | | 10.4 | % | | 11.5 | % | | 13.4 | % | Progress Energy | | | 15.9 | % | | 12.9 | % |
| Duke Energy Progress | Duke Energy Progress | 6.3 | % | | 3.1 | % | | 5.9 | % | | 10.0 | % | Duke Energy Progress | | | 14.0 | % | | 8.3 | % |
| Duke Energy Florida | Duke Energy Florida | 19.1 | % | | 21.4 | % | | 19.1 | % | | 20.3 | % | Duke Energy Florida | | | 20.1 | % | | 19.3 | % |
| Duke Energy Ohio | Duke Energy Ohio | 13.4 | % | | 16.7 | % | | 15.3 | % | | 16.6 | % | Duke Energy Ohio | | | (266.7) | % | | 13.3 | % |
| Duke Energy Indiana | Duke Energy Indiana | 15.8 | % | | 19.6 | % | | 16.3 | % | | 19.4 | % | Duke Energy Indiana | | | 31.9 | % | | 17.6 | % |
| Piedmont | Piedmont | 25.0 | % | | 16.7 | % | | 8.4 | % | | 3.7 | % | Piedmont | | | 13.4 | % | | 11.4 | % |
The decrease in the ETR for Duke Energy for the three months ended September 30, 2021,March 31, 2022, was primarily due to an increase in the amortization of excess deferred taxes.
The increase intaxes related to the ETR for Duke Energy for the nine months ended September 30, 2021, was primarily due to the cancellation of the ACP pipeline project recorded in the prior year, partially offset by an increase in the amortization of excess deferred taxes.
The decrease in the ETR for Duke Energy Carolinas for the three and nine months ended September 30, 2021, was primarily due to an increase in the amortization of excess deferred taxes.Ohio MGP Settlement.
The increase in the ETR for Progress Energy for the three months ended September 30, 2021,March 31, 2022, was primarily due to a decrease in the amortization of excess deferred taxes.
The decrease in the ETR for Progress Energy for the nine months ended September 30, 2021, was primarily due to an increase in the amortization of excess deferred taxes.
The increase in the ETR for Duke Energy Progress for the three months ended September 30, 2021,March 31, 2022, was primarily due to a decrease in the amortization of excess deferred taxes.
The decrease in the ETR for Duke Energy ProgressOhio for the ninethree months ended September 30, 2021,March 31, 2022, was primarily due to an increase in the amortization of excess deferred taxes.taxes related to the MGP Settlement.
The decrease in the ETR for Duke Energy Florida for the three and nine months ended September 30, 2021, was primarily due to unfavorable tax adjustments in the prior year.
The decrease in the ETR for Duke Energy Ohio for the three and nine months ended September 30, 2021, 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 nine months ended September 30, 2021,March 31, 2022, was primarily due to an increase in the amortization of excess deferred taxes.
| | | | | |
FINANCIAL STATEMENTS | INCOME TAXES |
coal ash impairment based on the Indiana Supreme Court Opinion.The increase in the ETR for Piedmont for the three months ended September 30, 2021, was primarily due to a certain favorable tax credits.
The increase in the ETR for Piedmont for the nine months ended September 30, 2021,March 31, 2022, was primarily due to a decrease in AFUDC equity.the amortization of excess deferred taxes.
16. SUBSEQUENT EVENTS
For information on subsequent events related to regulatory matters, and commitments and contingencies, and debt and credit facilities, see Notes 3 4 and 5.4.
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 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 ninethree months ended September 30, 2021,March 31, 2022, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2020.2021.
Executive Overview
Advancing Our Clean Energy Transformation
During the thirdfirst quarter, we continued to execute on our clean energy transformation, delivering strong, sustainable value for shareholders, customers, communities and employees.
•In October 2021, North Carolina House Bill 951 was signed into law after legislative leaders announced bipartisan support for new state policy that would accelerate a cleanWe’re targeting energy transition for generation serving customers in the Carolinas, including providing a framework for a goal of 70% carbon reduction in electric generationgenerated from 2005 levelscoal to represent less than 5% by 2030 and carbon neutralitya full exit by 2050 while continuing2035, subject to prioritize affordability and reliability for our customers, who are locatedregulatory approvals. We’ve made strong progress in both North and South Carolina. The legislation establishes a framework overseen by the NCUC to advance state CO2 emission reductions through the use of least cost planning, including stakeholder involvement, and also introduces modernized recovery mechanisms, including multi-year rate plans, that promote more efficient recovery of investments and align incentives between the company and the state’s energy policy objectives. The goals for a clean energy transition are generally consistent with Duke Energy Carolinas' and Duke Energy Progress' resource planning filings with the PSCSC.
•Also in October 2021, the Southeast Energy Exchange Market (SEEM) received clearance from the FERC. The new SEEM platform will facilitate sub-hourly, bilateral trading, allowing participants to buy and sell power close to the time the energy is consumed, utilizing available unreserved transmission. Southeastern electricity customers are expected to see cost, reliability and environmental benefits.
•In a significant move to support the company’s path to net-zero strategy, in September 2021 we completed the first phase of the investment of a 19.9% minority interest in Duke Energy Indiana by an affiliate of GIC, transferring 11.05% interest in exchange for approximately $1.025 billion. The proceeds from the $2.05 billion investment are expected to address common equity needs through 2025 to partially fund the company’s $59 billion capital and investment expenditure plan. This plan includes grid improvement, investments in clean energy and an improved customer experience – keys to our strategy to reducereducing carbon emissions from electricity generation (a 44% reduction from 2005) and have committed to do more (at least 50% reduction by 2030 and net-zero by 2050.2050).
•In September 2021, we announced Ledyard Windpower, a 207-MW projectWe continued to execute financings under our Sustainable Financing Framework, raising approximately $2 billion during the quarter under the structure, with proceeds being allocated to eligible projects such as electric grid investments that support the deployment of renewables, new solar generation and our first wind farm in Iowa. Once in operation next year, this project will increase the company’s U.S. wind capacity to over 3,100 MW.
•In August 2021, we announced a partnership with Accenturebattery storage, storm hardening and Microsoft to develop a novel technology platform with the intent of measuring baseline methane emissions from natural gas distribution systems with a high level of accuracy in near real time. Once deployed, we expect the use of satellite technologyelectric vehicle infrastructure, as well as expenditures that enable opportunities for diverse and the new platform will increase the speed of a field response team’s ability to identify and repair methane leaks along distribution lines and systems.small businesses.
Regulatory Activity. During the thirdfirst quarter of 2021,2022, we continued to movemonitor developments while moving our regulatory strategy forward. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.
•In October 2021,April 2022, the MGP Settlement was approved without modification by the PUCO. The MGP Settlement resolved certain issues related to MGP remediation costs and the Tax Act as it related to Duke Energy Ohio filed a request to review the company’s electric distribution rates, seeking approval to increase current electric distribution rates by approximately $55 million. Duke Energy Ohio has invested more than $800 million in a variety of capital projects across southwest Ohio since it last requested a regulatory review of its electric distribution rates in 2017. Also, in October 2021, Duke Energy Kentucky reached a constructiveOhio’s natural gas rate case settlement with the Attorney General, subject to review and approval of the KPSC.operations.
•In September 2021,April 2022, Piedmont Natural Gas the Public Staff of the NCUC, the Carolina Utility Customers Association, Inc., and the Carolina Industrial Group for Fair Utility Rates IV, filed a stipulation resolving all issues between these parties relatedrequest with the South Carolina Public Service Commission to Piedmont’srecover recent capital investments and update its operating costs and billing rates through a general rate case filed in March 2021. This constructive outcome provided for a return on equity of 9.60% and 51.60% equity component of the capital structure resulting in an overall rate of return of 6.90%, with an increase in pretax income (base rates) of approximately $67 million. The Stipulation is subject to the review and approval of the NCUC.proceeding.
•We received approximately $418In March 2022, the Indiana Supreme Court issued an opinion, which absent IURC preapproval of deferred accounting treatment determined DEI could not recover coal ash closure costs incurred between base rate cases. In connection with the rate case application filed in Indiana in 2019 by Duke Energy Indiana, the IURC issued an order in June 2020, which among other things provided for recovery of approximately $211 million of certain coal ash insurance litigation proceeds from our settlements with insurer-defendants. Proceeds will be distributed in accordanceclosure costs incurred by DEI prior to the IURC Order. The Court remanded the matter back to the IURC for proceedings consistent with the termsopinion. Duke Energy Indiana filed a request for rehearing with the Supreme Court on April 11, 2022.
•In February 2022, the NCUC adopted rules to govern the application and review process for the PBR authorized under HB 951. In April 2022, the NCUC adopted rules to govern the securitization of 50% of the CCRNorth Carolina retail portion of the remaining net book value of retiring coal plants pursuant to HB 951. The rules are constructive and consistent with the policy objectives of HB 951. We remain engaged in next steps including developing an initial carbon reduction plan.
•In January 2022, the NCUC issued an order approving the stipulation of partial settlement agreement.related to the 2021 Piedmont North Carolina Rate Case, which included a base rate increase of $67 million, subject to completion of the Robeson County LNG facility and the Pender Onslow County expansion project.
Matters Impacting Future Results
The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.
Regulatory Matters
Coal Ash Costs
Future spending of coal ash costs, including amounts recorded for depreciation and liability accretion, is expected to continue to be deferred and recovered in future rate cases or rider filings. The majority of spend is expected to occur over the next 15-20 years.
| | | | | |
| MD&A | MATTERS IMPACTING FUTURE RESULTS |
Regulatory Matters
Coal Ash Costs
As a result of the NCDEQ settlement on December 31, 2019, Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to off-site lined landfills. The majority of spend is expected to occur over the next 15-20 years. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters." The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Carolinas and Duke Energy Progress took a charge of approximately $500 million each in 2020. On March 31, 2021, and April 16, 2021, the NCUC approved the coal ash settlement for Duke Energy Carolinas and Duke Energy Progress, respectively.
Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's (IDEM) partial approval of five of Duke Energy Indiana’s ash pond site closure plans at Gallagher Station. The petition does not challenge the other 13 basin closures approved by IDEM at other Indiana stations. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash.
MGP
In January 2022, Duke Energy Ohio and other parties have filed with the PUCOIndiana received a Stipulation and Recommendation that would resolve all open issues regarding manufactured gas plant remediation costs incurred between 2013 and 2019, including Duke Energy Ohio's request for additional deferral authority beyond 2019, and the pending issues related to the Tax Act as it relates to Duke Energy Ohio's natural gas operations. These impacts, if approved by the PUCO, are not expected to have a material impact on Duke Energy Ohio's financial statements. Failure to approve the Stipulation and Recommendation, disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extensionletter from the PUCO could result in an adverse impact.
For additional information, see Notes 3 andEPA regarding interpretation of the CCR rule. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and "Commitments and Contingencies," respectively.Contingencies" for more information.
Commercial Renewables
Duke Energy continues to monitor recoverability of renewable merchant plants located in the Electric Reliability Council of TexasERCOT West market and in the PJM West market, due to fluctuating market pricing and long-term forecasted energy prices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future undiscounted cash flows for the assets under review. A continued decline in energy market pricing or other factors unfavorably impacting the economics would likely result in a future impairment. Impairment of these assets could result in adverse impacts. For additional information, see Note 2 to the Condensed Consolidated Financial Statements, "Business Segments."
In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of TexasERCOT market. Lost revenues and higher than expected purchased power costs have negatively impacted the operating results of these generating units. The financial impact of the storm is expected to be material to the Commercial Renewables segment's 2021 operating results. In addition, Duke Energy has been named in multiple lawsuits arising out of this winter storm. For more information, see Notes 2 andNote 4 to the Condensed Consolidated Financial Statements, "Business Segments" and "Commitments and Contingencies,Contingencies." respectively.
COVID-19Supply Chain
Duke Energy continues to monitoris monitoring supply chain disruptions, including the cost and availability of key components of planned generating facilities, which could impact the timing of in-service or economics of renewable projects and may result in adverse impacts on operating results. The Company is also monitoring the impacts on future financial results and clean energy goals due to the availability of the COVID-19 pandemic on its results of operations, financial position and cash flowssolar panels as a result of the economic slowdown causedU.S. Department of Commerce investigation into the potential circumvention of anti-dumping and countervailing duties by reduced operations of businesses and governmental agencies and the corresponding reduction in the demand for energy. Duke Energy has experienced improvement in energy sales, aging of receivables and operating results in recent periods and continues efforts to partially offset these impacts. Additionally, in light of learnings from COVID-19 regarding workforce deployment and technology capabilities, the company has reviewed the long-term real estate and future workforce strategy. The review has resulted in an initiative that will reduce physical workspace and includes reassessments of lease terms and lease modifications, termination penalties, as well as, asset impairments on property, plant and equipment and a change in workforce roles and responsibilities. For more information, see Notes 1 and 3 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation" and "Regulatory Matters," respectively.certain Chinese companies.
Activist Investor
On May 17, 2021, Elliott, who has indicated it holds an economic interest in outstanding Duke Energy common stock, publicly released a letter it had sent to the Board, which advocated for consideration of certain governance and strategic proposals. On May 17, 2021, management issued a response to Elliott. On July 19, 2021, Elliott publicly released a second letter to the Board and Duke Energy issued a response. Duke Energy is unable to predict the outcome of this matter.
Other Matters
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, 2020, for discussion of risks associated with the Tax Act.
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 Earnings (Loss) Per Share, respectively.
Special items included in the periods presented below include the following, which management believes do not reflect ongoing costs:
•Workplace and workforce realignmentRegulatory Matters represents costs attributable to business transformation, including long-term real estate strategy changes and workforce realignment.
•the net impact of Regulatory Settlements represents an impairment charge related to the 2018 South Carolina rate cases, charges related to the CCR settlement and insurance proceeds distributed in accordance with that agreement and Duke Energy Carolinas and Duke Energy Progress partial settlements in the 2019 North Carolina rate cases.2022 Indiana Supreme Court ruling on coal ash.
•Gas Pipeline Investments represents costsadditional exit obligations related to the cancellation of the ACP pipeline and additional exit obligations.
•Severance represents the reversal of 2018 severance charges, which were deferred as a result of partial settlements in the Duke Energy Carolinas and the Duke Energy Progress 2019 North Carolina rate cases.ACP.
Three Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
GAAP reported EPS was $1.79$1.08 for the thirdfirst quarter of 20212022 compared to a $1.74$1.25 in the thirdfirst quarter of 2020.2021. In addition to the drivers below, GAAP reported EPS increaseddecreased primarily due to the cancellation of the ACP pipeline in the prior year and partial settlements in the 2019 North Carolina rate cases in the prior year. This was partially offset by an impairment charge related to the 2018 South Carolina rate cases and charges related to the CCR settlement and insurance proceeds distributed in accordance with that agreement.Indiana Supreme Court ruling on coal ash.
As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s thirdfirst quarter 20212022 adjusted EPS was $1.88$1.30 compared to $1.87$1.26 for the thirdfirst quarter of 2020.2021. The increase in adjusted EPS was primarily due to positive rate case contributions and higher volumes. This wasvolumes, partially offset by higher operation and maintenance expenses, higher income tax expense, including storm costs, and share dilution from equity issuances.
The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, |
| 2021 | | 2020 |
| (in millions, except per share amounts) | Earnings | | EPS | | Earnings | | EPS |
| | | | | | | |
| GAAP Reported Earnings/GAAP Reported EPS | $ | 1,366 | | | $ | 1.79 | | | $ | 1,265 | | | $ | 1.74 | |
| Adjustments: | | | | | | | |
Workplace and Workforce Realignment(a) | 7 | | | — | | | — | | | — | |
Regulatory Settlements(b) | 64 | | | 0.09 | | | 27 | | | 0.04 | |
Gas Pipeline Investments(c) | (2) | | | — | | | 69 | | | 0.09 | |
| Adjusted Earnings/Adjusted EPS | $ | 1,435 | | | $ | 1.88 | | | $ | 1,361 | | | $ | 1.87 | |
(a)lower returns on beNet of tax benefit of $2 million.nefit trusts.
(b)Net of tax benefit of $19 million and $8 million for the three months ended September 30, 2021, and 2020, respectively.
(c)Net of tax expense of $1 million and tax benefit of $21 million for the three months ended September 30, 2021, and 2020, respectively.
Nine Months Ended September 30, 2021, as compared to September 30, 2020
GAAP Reported EPS was $4.00 for the nine months ended September 30, 2021, compared to $1.85 for the nine months ended September 30, 2020. In addition to the drivers below, GAAP reported EPS increased due to the cancellation of the ACP pipeline in the prior year, partially offset by workplace and workforce realignment costs.
As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $4.30 for the nine months ended September 30, 2021, compared to $4.09 for the nine months ended September 30, 2020. The increase in adjusted EPS was primarily due to positive rate case contributions and higher volumes, partially offset by higher income tax expense and share dilution from equity issuances.
The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.
| | | | Nine Months Ended September 30, | | Three Months Ended March 31, |
| | 2021 | | 2020 | | 2022 | | 2021 |
| (in millions, except per share amounts) | (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 | GAAP Reported Earnings/GAAP Reported EPS | $ | 3,070 | | | $ | 4.00 | | | $ | 1,347 | | | $ | 1.85 | | GAAP Reported Earnings/GAAP Reported EPS | $ | 818 | | | $ | 1.08 | | | $ | 953 | | | $ | 1.25 | |
| Adjustments: | Adjustments: | | Adjustments: | |
Workplace and Workforce Realignment(a) | 142 | | | 0.19 | | | — | | | — | | |
Regulatory Settlements(b) | 64 | | | 0.09 | | | 27 | | | 0.04 | | |
Gas Pipeline Investments(c) | 15 | | | 0.02 | | | 1,695 | | | 2.30 | | |
Severance(d) | — | | | — | | | (75) | | | (0.10) | | |
| Regulatory Matters(a) | | Regulatory Matters(a) | 173 | | | 0.22 | | | — | | | — | |
Gas Pipeline Investments(b) | | Gas Pipeline Investments(b) | — | | | — | | | 5 | | | 0.01 | |
| Adjusted Earnings/Adjusted EPS | Adjusted Earnings/Adjusted EPS | $ | 3,291 | | | $ | 4.30 | | | $ | 2,994 | | | $ | 4.09 | | Adjusted Earnings/Adjusted EPS | $ | 991 | | | $ | 1.30 | | | $ | 958 | | | $ | 1.26 | |
(a)Net of tax benefit of $42 million.$62 million and $22 million in noncontrolling interests.
(b)Net of tax benefit of $19 million and $8 million for the nine months ended September 30, 2021, and 2020, respectively.
(c)Net of tax benefit of $4 million and $395 million for the nine months ended September 30, 2021, and 2020, respectively.
(d)Net of tax expense of $23$1 million.
SEGMENT RESULTS
The remaining information presented in this discussion of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements.
Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 2 to the Condensed Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.
Electric Utilities and Infrastructure
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| (in millions) | 2021 | | 2020 | | Variance | | 2021 | | 2020 | | Variance |
| Operating Revenues | $ | 6,569 | | | $ | 6,379 | | | $ | 190 | | | $ | 17,185 | | | $ | 16,596 | | | $ | 589 | |
| Operating Expenses | | | | | | | | | | | |
| Fuel used in electric generation and purchased power | 1,864 | | | 1,869 | | | (5) | | | 4,760 | | | 4,703 | | | 57 | |
| Operation, maintenance and other | 1,363 | | | 1,326 | | | 37 | | | 3,907 | | | 3,891 | | | 16 | |
| Depreciation and amortization | 1,084 | | | 1,053 | | | 31 | | | 3,154 | | | 3,023 | | | 131 | |
| Property and other taxes | 330 | | | 286 | | | 44 | | | 949 | | | 885 | | | 64 | |
| Impairment of assets and other charges | 202 | | | 20 | | | 182 | | | 203 | | | 23 | | | 180 | |
| Total operating expenses | 4,843 | | | 4,554 | | | 289 | | | 12,973 | | | 12,525 | | | 448 | |
| Gains on Sales of Other Assets and Other, net | 9 | | | 3 | | | 6 | | | 11 | | | 11 | | | — | |
| Operating Income | 1,735 | | | 1,828 | | | (93) | | | 4,223 | | | 4,082 | | | 141 | |
| Other Income and Expenses, net | 220 | | | 67 | | | 153 | | | 421 | | | 241 | | | 180 | |
| Interest Expense | 365 | | | 308 | | | 57 | | | 1,066 | | | 991 | | | 75 | |
| Income Before Income Taxes | 1,590 | | | 1,587 | | | 3 | | | 3,578 | | | 3,332 | | | 246 | |
| Income Tax Expense | 160 | | | 206 | | | (46) | | | 393 | | | 493 | | | (100) | |
| Less: Income Attributable to Noncontrolling Interest | 5 | | | — | | | 5 | | | 5 | | | — | | | 5 | |
| Segment Income | $ | 1,425 | | | $ | 1,381 | | | $ | 44 | | | $ | 3,180 | | | $ | 2,839 | | | $ | 341 | |
| | | | | | | | | | | |
| Duke Energy Carolinas GWh sales | 25,033 | | | 23,726 | | | 1,307 | | | 67,357 | | | 64,045 | | | 3,312 | |
| Duke Energy Progress GWh sales | 19,219 | | | 19,035 | | | 184 | | | 51,555 | | | 49,512 | | | 2,043 | |
| Duke Energy Florida GWh sales | 12,983 | | | 12,973 | | | 10 | | | 32,731 | | | 32,390 | | | 341 | |
| Duke Energy Ohio GWh sales | 6,844 | | | 6,678 | | | 166 | | | 18,586 | | | 17,763 | | | 823 | |
| Duke Energy Indiana GWh sales | 8,788 | | | 8,463 | | | 325 | | | 23,880 | | | 22,842 | | | 1,038 | |
| Total Electric Utilities and Infrastructure GWh sales | 72,867 | | | 70,875 | | | 1,992 | | | 194,109 | | | 186,552 | | | 7,557 | |
| Net proportional MW capacity in operation | | | | | | | 49,749 | | | 50,371 | | | (622) | |
| | | | | |
MD&A | SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| (in millions) | | | | | | | 2022 | | 2021 | | Variance |
| Operating Revenues | | | | | | | $ | 6,002 | | | $ | 5,281 | | | $ | 721 | |
| Operating Expenses | | | | | | | | | | | |
| Fuel used in electric generation and purchased power | | | | | | | 1,837 | | | 1,462 | | | 375 | |
| Operation, maintenance and other | | | | | | | 1,426 | | | 1,282 | | | 144 | |
| Depreciation and amortization | | | | | | | 1,131 | | | 1,057 | | | 74 | |
| Property and other taxes | | | | | | | 337 | | | 311 | | | 26 | |
| Impairment of assets and other charges | | | | | | | 214 | | | — | | | 214 | |
| Total operating expenses | | | | | | | 4,945 | | | 4,112 | | | 833 | |
| Gains on Sales of Other Assets and Other, net | | | | | | | 2 | | | — | | | 2 | |
| Operating Income | | | | | | | 1,059 | | | 1,169 | | | (110) | |
| Other Income and Expenses, net | | | | | | | 114 | | | 104 | | | 10 | |
| Interest Expense | | | | | | | 376 | | | 340 | | | 36 | |
| Income Before Income Taxes | | | | | | | 797 | | | 933 | | | (136) | |
| Income Tax Expense | | | | | | | 83 | | | 113 | | | (30) | |
| Add: Loss Attributable to Noncontrolling Interest | | | | | | | 9 | | | — | | | 9 | |
| Segment Income | | | | | | | $ | 723 | | | $ | 820 | | | $ | (97) | |
| | | | | | | | | | | |
| Duke Energy Carolinas GWh sales | | | | | | | 22,549 | | | 21,962 | | | 587 | |
| Duke Energy Progress GWh sales | | | | | | | 17,969 | | | 16,537 | | | 1,432 | |
| Duke Energy Florida GWh sales | | | | | | | 9,902 | | | 8,554 | | | 1,348 | |
| Duke Energy Ohio GWh sales | | | | | | | 5,997 | | | 6,004 | | | (7) | |
| Duke Energy Indiana GWh sales | | | | | | | 7,950 | | | 7,726 | | | 224 | |
| Total Electric Utilities and Infrastructure GWh sales | | | | | | | 64,367 | | | 60,783 | | | 3,584 | |
| Net proportional MW capacity in operation | | | | | | | 49,340 | | | 50,026 | | | (686) | |
Three Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
Electric Utilities and Infrastructure’s higherlower segment income is due to higher revenues from rate cases in various jurisdictions, weather-normal sales volumes, andthe Indiana Supreme Court ruling on recovery of certain coal ash insurance litigation proceedscosts and higher storm costs, partially offset by an impairment charge related to the South Carolina rate cases and higher operating expenses.retail sales volumes. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
•a $144 million increase in retail base rate pricing due to general rate cases in North Carolina and Indiana net of rider impacts as well as multiyear rate adjustments in Florida; and
•a $114 million increase in weather-normal retail sales volumes.
Partially offset by
•a $48 million decrease in storm revenues at Duke Energy Florida due to full recovery of Hurricane Dorian costs in the prior year; and
•a $17 million decrease in retail sales due to less favorable weather in the current year.
Operating Expenses. The variance was driven primarily by:
•a $182 million increase in impairment of assets and other charges primarily due to the 2018 South Carolina rate case settlements at Duke Energy Carolinas and Duke Energy Progress, partially offset by a prior year impairment of Duke Energy Carolina's Clemson assets;
•a $44 million increase in property and other taxes primarily due to higher property taxes at Duke Energy Carolinas and Duke Energy Ohio and a prior year sales and use tax refund at Duke Energy Carolinas;
•a $37 million increase in operation, maintenance and other primarily driven by higher employee-related costs, partially offset by lower storm and outage costs; and
•a $31 million increase in depreciation and amortization primarily due to resolution of rate cases and higher plant in service, partially offset by lower depreciation related to the extension of the lives of nuclear facilities.
Other Income and Expense, net. The increase is primarily due to coal ash insurance litigation proceeds at Duke Energy Carolinas and Duke Energy Progress and lower non-service pension costs.
Interest Expense. The variance was primarily due to lower debt return on coal ash at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Indiana.
Income Tax Expense.The decrease in tax expense was primarily due to an increase in the amortization of excess deferred taxes. The ETRs for the three months ended September 30, 2021, and 2020, were 10.1% and 13.0%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.
Nine Months Ended September 30, 2021, as compared to September 30, 2020
Electric Utilities and Infrastructure’s variance is due to higher revenues from rate cases in various jurisdictions, higher retail sales volumes, and coal ash insurance litigation proceeds, partially offset by an impairment charge related to the South Carolina rate cases, higher depreciation and amortization and interest expense. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
•a $297 million increase in retail base rate pricing due to general rate cases in Indiana and North Carolina net of rider impacts as well as multiyear settlement rate adjustments in Florida;
•a $188 million increase in weather-normal retail sales volumes;
•an $86 million increase in retail sales, net of fuel revenues, due to favorable weather;
•a $61 million increase in fuel revenues primarily driven by higher sales volumes; and
•a $21 million increase in wholesale revenues primarily due to higher rates at Duke Energy Indiana and higher volumes at Duke Energy Progress, partially offset by a restructured capacity contract at Duke Energy Florida.
Partially offset by:
•a $103 million decrease in storm revenues due to full recovery of Hurricane Dorian costs in the prior year.
| | | | | |
| MD&A | SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE |
Operating Revenues. The variance was driven primarily by:
•a $266 million increase in fuel revenues primarily due to higher fuel prices and retail sales volumes;
•a $243 million increase in weather-normal retail sales volumes;
•a $126 million increase in retail base rate pricing due to general rate cases in North Carolina, net of rider impacts as well as multiyear rate adjustments in Florida; and
•a $46 million increase in wholesale revenues primarily due to higher capacity volumes.
Partially offset by
•a $46 million decrease due to the Indiana Supreme Court ruling on recovery of certain coal ash costs.
Operating Expenses. The variance was driven primarily by:
•a $180$375 million increase in fuel used in electric generation and purchased power due to higher fuel prices and volumes from customer demand;
•a $214 million increase in impairment of assets and other charges primarily due to the 2018 South Carolina rate case settlements at Duke Energy Carolinas and Duke Energy Progress, partially offset by a prior year impairmentIndiana Supreme Court ruling on recovery of Duke Energy Carolinas' Clemson assets;certain coal ash costs;
•a $131$144 million increase in operation, maintenance and other primarily driven by higher storm costs and higher outage and maintenance costs;
•a $74 million increase in depreciation and amortization primarily due to resolution of rate cases and higher plant in service and resolution of prior year rate cases, partially offset by lower depreciation related to the extension of the lives of nuclear facilities; and
•a $64$26 million increase in property and other taxes primarily due to higher propertypayroll taxes at Duke Energy Carolinas and Duke Energy Ohio, and adue to CARES Act employee retention credits in the prior year, sales and useincreased property tax refund at Duke Energy Carolinas;
•a $57 million increase in fuel used in electric generation and purchased power primarily due toas well as higher sales volumes; and
•a $16 million increase in operations, maintenance and other driven by higher employee-related expenses, partially offset by decreased storm amortization at Duke Energy Florida and lower COVID-19 costs.
Other Income and Expenses, net. The increase is primarily due to coal ash insurance litigation proceeds at Duke Energy Carolinas and Duke Energy Progress and lower non-service pension costs.revenue related taxes.
Interest Expense.The variance was primarily due to lower debt returndriven by interest expense on coal ash at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Indiana.excess deferred tax liabilities.
Income Tax Expense. TheThe decrease in tax expense was primarilyprimarily due to an increase in the amortization of excess deferred taxes, partially offset by an increasea decrease in pretax income. The ETRs for the ninethree months ended September 30,March 31, 2022, and 2021, were 10.4% and 2020, were 11.0% and 14.8%12.1%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.taxes in relation to lower pretax income.
Gas Utilities and Infrastructure
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | Variance | | 2021 | | 2020 | | Variance | (in millions) | | | 2022 | | 2021 | | Variance |
| Operating Revenues | Operating Revenues | $ | 289 | | | $ | 241 | | | $ | 48 | | | $ | 1,391 | | | $ | 1,194 | | | $ | 197 | | Operating Revenues | | | $ | 1,032 | | | $ | 775 | | | $ | 257 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Cost of natural gas | Cost of natural gas | 75 | | | 41 | | | 34 | | | 430 | | | 300 | | | 130 | | Cost of natural gas | | | 481 | | | 276 | | | 205 | |
| Operation, maintenance and other | Operation, maintenance and other | 102 | | | 103 | | | (1) | | | 302 | | | 312 | | | (10) | | Operation, maintenance and other | | | 182 | | | 102 | | | 80 | |
| Depreciation and amortization | Depreciation and amortization | 74 | | | 65 | | | 9 | | | 216 | | | 193 | | | 23 | | Depreciation and amortization | | | 79 | | | 68 | | | 11 | |
| Property and other taxes | Property and other taxes | 30 | | | 26 | | | 4 | | | 92 | | | 82 | | | 10 | | Property and other taxes | | | 41 | | | 35 | | | 6 | |
| Impairment of assets and other charges | — | | | 7 | | | (7) | | | — | | | 7 | | | (7) | | |
| | Total operating expenses | Total operating expenses | 281 | | | 242 | | | 39 | | | 1,040 | | | 894 | | | 146 | | Total operating expenses | | | 783 | | | 481 | | | 302 | |
| | Operating Income (Loss) | 8 | | | (1) | | | 9 | | | 351 | | | 300 | | | 51 | | |
| Other Income and Expenses | | |
| Equity in earnings (losses) of unconsolidated affiliates | 10 | | | (71) | | | 81 | | | 2 | | | (2,004) | | | 2,006 | | |
| Other income and expenses, net | 15 | | | 16 | | | (1) | | | 50 | | | 42 | | | 8 | | |
| Total other income and expenses | 25 | | | (55) | | | 80 | | | 52 | | | (1,962) | | | 2,014 | | |
| Operating Income | | Operating Income | | | 249 | | | 294 | | | (45) | |
| | Other Income and Expenses, Net | | Other Income and Expenses, Net | | | 17 | | | 17 | | | — | |
| Interest Expense | Interest Expense | 37 | | | 35 | | | 2 | | | 105 | | | 103 | | | 2 | | Interest Expense | | | 40 | | | 33 | | | 7 | |
| (Loss) Income Before Income Taxes | (4) | | | (91) | | | 87 | | | 298 | | | (1,765) | | | 2,063 | | |
| Income Before Income Taxes | | Income Before Income Taxes | | | 226 | | | 278 | | | (52) | |
| Income Tax (Benefit) Expense | Income Tax (Benefit) Expense | (1) | | | (18) | | | 17 | | | 39 | | | (365) | | | 404 | | Income Tax (Benefit) Expense | | | (28) | | | 33 | | | (61) | |
| | Segment (Loss) Income | $ | (3) | | | $ | (73) | | | $ | 70 | | | $ | 259 | | | $ | (1,400) | | | $ | 1,659 | | |
| Segment Income | | Segment Income | | | $ | 254 | | | $ | 245 | | | $ | 9 | |
| | Piedmont LDC throughput (dekatherms) | Piedmont LDC throughput (dekatherms) | 134,549,588 | | | 115,549,371 | | | 19,000,217 | | | 390,210,785 | | | 360,861,306 | | | 29,349,479 | | Piedmont LDC throughput (dekatherms) | | | 180,187,101 | | | 149,626,582 | | | 30,560,519 | |
| Duke Energy Midwest LDC throughput (Mcf) | Duke Energy Midwest LDC throughput (Mcf) | 10,268,918 | | | 9,678,342 | | | 590,576 | | | 62,220,827 | | | 58,570,583 | | | 3,650,244 | | Duke Energy Midwest LDC throughput (Mcf) | | | 37,246,072 | | | 37,109,003 | | | 137,069 | |
Three Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
Gas Utilities and Infrastructure’s results were impacted primarily by the cancellation of the ACP pipeline in the prior year.margin growth. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues.The variance was driven primarily by:
•a $34 million increase due to higher natural gas costs passed through to customers, higher volumes, and higher off-system sales natural gas costs; and
•a $12 million increase due to growth in base rates and riders at Piedmont and growth in riders in the Midwest.
| | | | | |
| MD&A | SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE |
Operating Expenses.The variance was driven primarily by:
•a $34 million increase in cost of natural gas due to higher natural gas prices, higher volumes, and increased off-system sales natural gas costs; and
•a $9 million increase in depreciation due to additional plant in service.
Equity in earnings (losses) of unconsolidated affiliates. The variance was primarily driven by the cancellation of the ACP pipeline in the prior year.
Income Tax Benefit. The decrease in tax benefit was primarily due to a decrease in pretax losses.The ETRs for the three months ended September 30, 2021, and 2020, were 25.0% and 19.8%, respectively. The increase in the ETR was primarily due to certain favorable tax credits.
Nine Months Ended September 30, 2021, as compared to September 30, 2020
Gas Utilities and Infrastructure’s results were impacted primarily by the cancellation of the ACP pipeline in the prior year and margin growth. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
•a $130$205 million increase due to higher natural gas costs passed through to customers higher volumes, and increased off-system sales natural gas costs;costs, partially offset by lower residential volumes;
•a $35 million increase due to base rate increases;
•a $7 million increase due to rider revenues related to Ohio Capital Expenditure Program (CEP); and
•a $6 million increase due to customer growth.
Partially offset by:
•a $15 million increasedecrease due to Tennessee base rate case increases;
•an $11 million increase due to North Carolina IMR; and
•a $10 million increase due to revenue from the Capital Expenditure Program (CEP) rider related to 2019 and 2020 activity.MGP settlement.
Operating Expenses. The variance was driven primarily by:
•a $130$205 million increase in cost of natural gas due to higher natural gas prices, higher volumes,costs passed through to customers and increased off-system sales natural gas costs;costs, partially offset by lower residential volumes;
•an $80 million increase in operation, maintenance and other primarily due to the MGP settlement; and
•a $23an $11 million increase in depreciation and amortization due to additional plant in service.
Equity in earnings (losses) of unconsolidated affiliates. The variance was driven primarily by the cancellation of the ACP pipeline in the prior year.service and lower CEP deferrals.
Income Tax Expense.Benefit. The increasedecrease in tax expense was primarily due to the cancellation of the ACP pipeline project recordedan increase in the prior year.amortization of excess deferred taxes related to the Ohio MGP Settlement and a decrease in pretax income. The ETRs for the ninethree months ended September 30,March 31, 2022, and 2021, were -12.4% and 2020, were 13.1% and 20.7%11.9%, respectively. The decrease in the ETR was primarily due to the cancellation of the ACP pipeline project recordedan increase in the prior year.amortization of excess deferred taxes related to the Ohio MGP Settlement.
Commercial Renewables
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | Variance | | 2021 | | 2020 | | Variance | (in millions) | | 2022 | | 2021 | | Variance |
| Operating Revenues | Operating Revenues | $ | 117 | | | $ | 126 | | | $ | (9) | | | $ | 355 | | | $ | 378 | | | $ | (23) | | Operating Revenues | | $ | 121 | | | $ | 119 | | | $ | 2 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | | |
| Operation, maintenance and other | Operation, maintenance and other | 90 | | | 72 | | | 18 | | | 240 | | | 204 | | | 36 | | Operation, maintenance and other | | 82 | | | 72 | | | 10 | |
| Depreciation and amortization | Depreciation and amortization | 58 | | | 52 | | | 6 | | | 167 | | | 148 | | | 19 | | Depreciation and amortization | | 60 | | | 53 | | | 7 | |
| Property and other taxes | Property and other taxes | 10 | | | 8 | | | 2 | | | 28 | | | 24 | | | 4 | | Property and other taxes | | 10 | | | 9 | | | 1 | |
| Impairment of assets and other charges | — | | | — | | | — | | | — | | | 6 | | | (6) | | |
| | Total operating expenses | Total operating expenses | 158 | | | 132 | | | 26 | | | 435 | | | 382 | | | 53 | | Total operating expenses | | 152 | | | 134 | | | 18 | |
| | Losses on Sales of Other Assets and Other, net | | Losses on Sales of Other Assets and Other, net | | (1) | | | — | | | (1) | |
| Operating Loss | Operating Loss | (41) | | | (6) | | | (35) | | | (80) | | | (4) | | | (76) | | Operating Loss | | (32) | | | (15) | | | (17) | |
| Other Income and Expenses, net | Other Income and Expenses, net | (2) | | | (1) | | | (1) | | | (24) | | | — | | | (24) | | Other Income and Expenses, net | | — | | | (25) | | | 25 | |
| Interest Expense | Interest Expense | 20 | | | 18 | | | 2 | | | 53 | | | 49 | | | 4 | | Interest Expense | | 18 | | | 13 | | | 5 | |
| Loss Before Income Taxes | Loss Before Income Taxes | (63) | | | (25) | | | (38) | | | (157) | | | (53) | | | (104) | | Loss Before Income Taxes | | (50) | | | (53) | | | 3 | |
| Income Tax Benefit | Income Tax Benefit | (6) | | | (15) | | | 9 | | | (56) | | | (52) | | | (4) | | Income Tax Benefit | | (33) | | | (29) | | | (4) | |
| Add: Loss Attributable to Noncontrolling Interests | Add: Loss Attributable to Noncontrolling Interests | 135 | | | 70 | | | 65 | | | 253 | | | 208 | | | 45 | | Add: Loss Attributable to Noncontrolling Interests | | 28 | | | 51 | | | (23) | |
| Segment Income | Segment Income | $ | 78 | | | $ | 60 | | | $ | 18 | | | $ | 152 | | | $ | 207 | | | $ | (55) | | Segment Income | | $ | 11 | | | $ | 27 | | | $ | (16) | |
| | Renewable plant production, GWh | Renewable plant production, GWh | 2,567 | | | 2,563 | | | 4 | | | 7,942 | | | 7,660 | | | 282 | | Renewable plant production, GWh | | 2,988 | | | 2,588 | | | 400 | |
Net proportional MW capacity in operation(a) | Net proportional MW capacity in operation(a) | | 4,630 | | | 3,984 | | | 646 | | Net proportional MW capacity in operation(a) | | 4,753 | | | 4,294 | | | 459 | |
(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, 2022, as compared to March 31, 2021
Commercial Renewables' results were unfavorable primarily driven by fewer project investments financed by tax equity being placed into service in the current year and higher operating expenses for projects placed in service since the prior year, offset by the impacts for losses experienced in the prior year from Texas Storm Uri.
Operating Expenses.The variance was primarily driven by a $14 million increase for higher operating expenses, depreciation, property tax expense, and other development costs from the growth of new projects and a $4 million increase for higher operating expenses attributed to maintenance and other operating expenses.
Other Income and Expenses, net. The increase was primarily due to $29 million of losses experienced in the prior year from Texas Storm Uri offset by approximately $5 million decrease in equity earnings.
Interest Expense. The increase is primarily due to a $4 million gain recorded in the prior year for an interest rate swap that did not qualify for hedge accounting.
| | | | | |
| MD&A | SEGMENT RESULTS — COMMERCIAL RENEWABLES |
Three Months Ended September 30, 2021, as compared to September 30, 2020
Commercial Renewables' results were favorable to prior year primarily driven by the growth of new project investments. Since the prior year period, Commercial Renewables has placed in service approximately 650 MW.
Operating Revenues. The variance was primarily driven by an $8 million decrease due to lower wind resource and operating downtime.
Operating Expenses. The variance was primarily driven by a $12 million increase in operating expenses, depreciation expense and property tax expense associated with the growth of new project investments placed in service, $8 million increase for higher engineering and construction costs within the distributed energy portfolio and $3 million increase attributed to maintenance at several facilities.
Income Tax Benefit. The decrease in the tax benefit was primarily driven by an increase in taxes associated with tax equity investments and a decrease in production tax credits generated partially offset by an increase in pretax losses.
Loss Attributable to Noncontrolling Interests. The increase was primarily driven by the growth of new wind and solar project investments financed with tax equity.
Nine Months Ended September 30, 2021, as compared to September 30, 2020
Commercial Renewables' results were unfavorable to prior year primarily driven by the impacts from Texas Storm Uri, which resulted in a $35 million pretax loss, as well as unfavorable wind resource and fewer projects being placed in service in the current year.
Operating Revenues. The variance was primarily driven by a $20 million decrease due to lower wind resource and operating downtime and a $15 million decrease for lower market prices in the current year impacting the wind portfolio. This was partially offset by an $8 million increase for market sales in excess of market purchases during Texas Storm Uri and a $4 million increase due to growth of new projects.
Operating Expenses. The increase was primarily due to $33 million for higher operating expenses, depreciation expense and property tax expense as a result of the growth in new projects placed in service since prior year, $11 million increase for higher operating expenses attributed to maintenance at several wind and solar facilities, an $11 million increase for higher engineering and construction costs within the distributed energy portfolio and a $2 million increase associated with Texas Storm Uri. This was partially offset by a $6 million decrease related to an impairment charge in the prior year for a non-contracted wind project.
Other Income and Expenses, net. The variance was primarily driven by a $29 million loss in equity earnings due to the impacts of Texas Storm Uri, partially offset by $4 million in equity earnings from the wind and distributed asset portfolios.
Income Tax Benefit.The increase in the tax benefit was primarily driven by an increase in pretax losses partially offset by an increasedue to a decrease in taxes associated with tax equity investments and a decrease in production tax credits generated.investments.
Loss Attributable to Noncontrolling Interests. The variance was primarily driven by a $57$23 million net increase from the growth of new project investmentsdecrease for fewer projects placed in service financed with tax equity partiallyin the current year and a $12 million net decrease in losses allocated to tax equity members from existing tax equity structures offset by a $12 million loss resultingincrease for losses experienced in the prior year from Texas Storm Uri.
Other
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | Variance | | 2021 | | 2020 | | Variance | (in millions) | | 2022 | | 2021 | | Variance |
| Operating Revenues | Operating Revenues | $ | 28 | | | $ | 24 | | | $ | 4 | | | $ | 81 | | | $ | 73 | | | $ | 8 | | Operating Revenues | | $ | 30 | | | $ | 26 | | | $ | 4 | |
| | Operating Expenses | Operating Expenses | 46 | | | 37 | | | 9 | | | 282 | | | (15) | | | 297 | | Operating Expenses | | 33 | | | 28 | | | 5 | |
| Losses on Sales of Other Assets and Other, net | (1) | | | — | | | (1) | | | (1) | | | — | | | (1) | | |
| Operating (Loss) Income | (19) | | | (13) | | | (6) | | | (202) | | | 88 | | | (290) | | |
| Gains on Sales of Other Assets and Other, net | | Gains on Sales of Other Assets and Other, net | | 1 | | | — | | | 1 | |
| Operating Loss | | Operating Loss | | (2) | | | (2) | | | — | |
| Other Income and Expenses, net | Other Income and Expenses, net | 25 | | | 43 | | | (18) | | | 78 | | | 55 | | | 23 | | Other Income and Expenses, net | | (6) | | | 21 | | | (27) | |
| Interest Expense | Interest Expense | 163 | | | 160 | | | 3 | | | 470 | | | 498 | | | (28) | | Interest Expense | | 159 | | | 151 | | | 8 | |
| Loss Before Income Taxes | Loss Before Income Taxes | (157) | | | (130) | | | (27) | | | (594) | | | (355) | | | (239) | | Loss Before Income Taxes | | (167) | | | (132) | | | (35) | |
| Income Tax Benefit | Income Tax Benefit | (63) | | | (66) | | | 3 | | | (166) | | | (149) | | | (17) | | Income Tax Benefit | | (36) | | | (32) | | | (4) | |
| Less: Income Attributable to Noncontrolling Interests | 1 | | | — | | | 1 | | | 1 | | | — | | | 1 | | |
| | Less: Preferred Dividends | Less: Preferred Dividends | 39 | | | 39 | | | — | | | 92 | | | 93 | | | (1) | | Less: Preferred Dividends | | 39 | | | 39 | | | — | |
| Net Loss | Net Loss | $ | (134) | | | $ | (103) | | | $ | (31) | | | $ | (521) | | | $ | (299) | | | $ | (222) | | Net Loss | | $ | (170) | | | $ | (139) | | | $ | (31) | |
Three Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
The higher net loss was driven by lower return on investments and higher interest income related to a tax refund recorded in the prior year, impairments to optimize the company’s real estate portfolio and reduce office space as parts of the business move to a hybrid and remote workforce strategy and a lower income tax benefit due to higher tax optimization achieved in the prior yearexpense partially offset by higher pretax loss.
Operating Expenses. The increase was primarily driven by asset impairments to optimizeequity earnings from the company's real estate portfolio and reduce office space as parts of the business move to a hybrid and remote workforce strategy.NMC investment.
Other Income and Expenses, net. The variance was primarily due to lower return on investments that fund certain employee benefit obligations partially offset by higher interest income inequity earnings from the prior year related to a tax refund of AMT credit carryforwards.NMC investment.
Interest Expense. The variance was primarily due to higher outstanding long-term debt.
Income Tax Benefit. The increase in the tax benefit was primarily due to an increase in pretax losses, partially offset by unfavorable tax impacts related to lower investment returns on certain employee benefit obligations. The ETRs for the three months ended March 31, 2022, and 2021, were 21.6% and 24.2%, respectively. The decrease in the ETR was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations.
DUKE ENERGY CAROLINAS
Results of Operations
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, |
| (in millions) | 2022 | | 2021 | | Variance |
| Operating Revenues | $ | 1,888 | | | $ | 1,716 | | | $ | 172 | |
| Operating Expenses | | | | | |
| Fuel used in electric generation and purchased power | 448 | | | 422 | | | 26 | |
| Operation, maintenance and other | 512 | | | 441 | | | 71 | |
| Depreciation and amortization | 379 | | | 359 | | | 20 | |
| Property and other taxes | 93 | | | 83 | | | 10 | |
| Impairment of assets and other charges | 3 | | | — | | | 3 | |
| Total operating expenses | 1,435 | | | 1,305 | | | 130 | |
| | | | | |
| Operating Income | 453 | | | 411 | | | 42 | |
| Other Income and Expenses, net | 55 | | | 48 | | | 7 | |
| Interest Expense | 141 | | | 124 | | | 17 | |
| Income Before Income Taxes | 367 | | | 335 | | | 32 | |
| Income Tax Expense | 27 | | | 23 | | | 4 | |
| Net Income | $ | 340 | | | $ | 312 | | | $ | 28 | |
| | | | | |
| MD&A | SEGMENT RESULTS - OTHERDUKE ENERGY CAROLINAS |
Nine Months Ended September 30, 2021, as compared to September 30, 2020
The higher net loss was driven by asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business move to a hybrid and remote workforce strategy as well as a reversal of severance costs in the prior year.
Operating Expenses. The increase was primarily due to asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business move to a hybrid and remote workforce strategy as well as a reversal of severance costs in the prior year.
Other Income and Expenses, net. The variance was primarily due to higher equity earnings from the NMC investment and market returns on investments that fund certain employee benefit obligations, partially offset by lower interest income in the prior year related to a tax refund of AMT credit carryforwards.
Interest Expense. The variance was primarily due to lower interest rates.
Income Tax Benefit. The increase in the tax benefit was primarily driven by an increase in pretax losses, partially offset by lower state tax expense in the prior year. The ETRs for the nine months ended September 30, 2021, and 2020, were 27.9% and 42.0%, respectively. The decrease in the ETR was primarily due to lower state tax expense in the prior year.
DUKE ENERGY CAROLINAS
Results of Operations
| | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| (in millions) | 2021 | | 2020 | | Variance |
| Operating Revenues | $ | 5,430 | | | $ | 5,416 | | | $ | 14 | |
| Operating Expenses | | | | | |
| Fuel used in electric generation and purchased power | 1,218 | | | 1,326 | | | (108) | |
| Operation, maintenance and other | 1,347 | | | 1,218 | | | 129 | |
| Depreciation and amortization | 1,088 | | | 1,090 | | | (2) | |
| Property and other taxes | 248 | | | 213 | | | 35 | |
| Impairment of assets and other charges | 238 | | | 22 | | | 216 | |
| Total operating expenses | 4,139 | | | 3,869 | | | 270 | |
| Gains on Sales of Other Assets and Other, net | 1 | | | 1 | | | — | |
| Operating Income | 1,292 | | | 1,548 | | | (256) | |
| Other Income and Expenses, net | 218 | | | 128 | | | 90 | |
| Interest Expense | 400 | | | 370 | | | 30 | |
| Income Before Income Taxes | 1,110 | | | 1,306 | | | (196) | |
| Income Tax Expense | 40 | | | 178 | | | (138) | |
| Net Income | $ | 1,070 | | | $ | 1,128 | | | $ | (58) | |
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 | 20212022 |
| Residential sales | 4.9(3.6) | % |
| General service sales | 2.04.2 | % |
| Industrial sales | 5.84.7 | % |
| Wholesale power sales | 6.0(4.6) | % |
| Joint dispatch sales | 23.0(30.0) | % |
| Total sales | 5.22.7 | % |
| Average number of customers | 2.42.0 | % |
NineThree Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
Operating Revenues. The variance was driven primarily by:
•an $88a $99 million increase in weather-normal retail sales volumes;
•a $57$31 million increase in retail salesfuel revenues due to more favorable weather;higher prices and volumes in the current year; and
•a $22$20 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers.
Partially offsetOperating Expenses. The variance was driven primarily by:
•a $115$71 million decreaseincrease in operation, maintenance and other expense primarily due to higher storm restoration costs and higher outage and maintenance costs;
•a $26 million increase in fuel revenuesused in electric generation and purchased power primarily due to lowerhigher natural gas prices and changes in the generation mix, partially offset by higher retail sales volumes;the recovery of fuel expenses and lower coal prices; and
•a $40$20 million decreaseincrease in rider revenuesdepreciation and amortization primarily due to energy efficiency programs.an increase in assets placed into service, and new depreciation rates associated with the North Carolina rate case, partially offset by the extension of the lives of nuclear facilities.
Interest Expense. The variance was driven by interest expense on excess deferred tax liabilities.
Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income, partially offset by amortization of excess deferred taxes.
PROGRESS ENERGY
Results of Operations
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, |
| (in millions) | 2022 | | 2021 | | Variance |
| Operating Revenues | $ | 2,992 | | | $ | 2,505 | | | $ | 487 | |
| Operating Expenses | | | | | |
| Fuel used in electric generation and purchased power | 1,064 | | | 795 | | | 269 | |
| Operation, maintenance and other | 645 | | | 601 | | | 44 | |
| Depreciation and amortization | 536 | | | 485 | | | 51 | |
| Property and other taxes | 152 | | | 142 | | | 10 | |
| | | | | |
| Total operating expenses | 2,397 | | | 2,023 | | | 374 | |
| Gains on Sales of Other Assets and Other, net | 2 | | | — | | | 2 | |
| Operating Income | 597 | | | 482 | | | 115 | |
| Other Income and Expenses, net | 35 | | | 43 | | | (8) | |
| Interest Expense | 211 | | | 192 | | | 19 | |
| Income Before Income Taxes | 421 | | | 333 | | | 88 | |
| Income Tax Expense | 67 | | | 43 | | | 24 | |
| Net Income | 354 | | | 290 | | | 64 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Three Months Ended March 31, 2022, as compared to March 31, 2021
Operating Revenues. The variance was driven primarily by:
•a $237 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year;
•a $124 million increase in weather-normal retail sales volumes;
| | | | | |
| MD&A | DUKEPROGRESS ENERGY CAROLINAS |
Operating Expenses. The variance was driven primarily by:
•a $216 million increase in impairment of assets and other charges due to the 2018 South Carolina rate case settlement and optimization of the company's real estate portfolio and reduction of office space as parts of the business move to a hybrid and remote workforce strategy, partially offset by a prior year Clemson University Combined Heat and Power Plant impairment;
•a $129 million increase in operation, maintenance and other expense primarily due to higher employee-related expenses and a severance cost adjustment in the prior year related to the 2019 North Carolina retail rate case, and higher costs associated with the implementation of Customer Connect; and
•a $35 million increase in property and other taxes primarily due to property tax valuation adjustments and a prior year sales and use tax refund.
Partially offset by:
•a $108 million decrease in fuel used in electric generation and purchased power primarily associated with the recovery of fuel expenses, partially offset by higher natural gas prices and changes in the generation mix.
Other Income and Expense, net. The variance was primarily due to coal ash insurance proceeds and lower non-service pension costs.
Interest Expense. The variance was driven by amortization of carrying costs related to excess deferred taxes, and lower debt return on coal ash projects.
Income Tax Expense.The decrease in tax expense was primarily due to an increase in the amortization of excess deferred taxes and a decrease in pretax income.
PROGRESS ENERGY
Results of Operations
| | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| (in millions) | 2021 | | 2020 | | Variance |
| Operating Revenues | $ | 8,417 | | | $ | 8,117 | | | $ | 300 | |
| Operating Expenses | | | | | |
| Fuel used in electric generation and purchased power | 2,702 | | | 2,628 | | | 74 | |
| Operation, maintenance and other | 1,863 | | | 1,789 | | | 74 | |
| Depreciation and amortization | 1,430 | | | 1,356 | | | 74 | |
| Property and other taxes | 419 | | | 419 | | | — | |
| Impairment of assets and other charges | 79 | | | 1 | | | 78 | |
| Total operating expenses | 6,493 | | | 6,193 | | | 300 | |
| Gains on Sales of Other Assets and Other, net | 9 | | | 9 | | | — | |
| Operating Income | 1,933 | | | 1,933 | | | — | |
| Other Income and Expenses, net | 167 | | | 89 | | | 78 | |
| Interest Expense | 592 | | | 599 | | | (7) | |
| Income Before Income Taxes | 1,508 | | | 1,423 | | | 85 | |
| Income Tax Expense | 174 | | | 190 | | | (16) | |
| Net Income | 1,334 | | | 1,233 | | | 101 | |
| | | | | |
| | | | | |
| Less: Net Income Attributable to Noncontrolling Interests | 1 | | | 1 | | | — | |
| Net Income Attributable to Parent | $ | 1,333 | | | $ | 1,232 | | | $ | 101 | |
Nine Months Ended September 30, 2021, as compared to September 30, 2020
Operating Revenues. The variance was driven primarily by:
•a $146 million increase in fuel cost recovery driven by higher fuel prices, higher volumes in the current year and accelerated recovery of retired Crystal River coal units;
•a $136$106 million increase in retail pricing due to the North Carolina rate case and base rate adjustments at Duke Energy Florida related to annual increases from the 20172021 Settlement Agreement and the solar base rate adjustment;
•a $73 million increase in weather-normal retail sales volumes; and
•a $32 million increase in otherwholesale revenues, at Duke Energy Florida primarilynet of fuel, due to higher transmission revenues and higher customer charges that were waived due to COVID-19 in the prior year; and
•a $19 million increase in rider revenues at Duke Energy Florida primarily due to increased retail salescapacity volumes.
Partially offset by:
•a $103$22 million decrease in storm revenues at Duke Energy Floridacapacity revenue primarily due to fullaccelerated recovery of Hurricane Dorian costsretired Crystal River coal units in the prior year.2021.
Operating Expenses. The variance was driven primarily by:
•a $78 million increase in impairment of assets and other charges primarily due to the 2018 South Carolina rate case settlement at Duke Energy Progress and optimization of the company's real estate portfolio and reduction of office space as parts of the business move to a hybrid and remote workforce strategy;
•a $74$269 million increase in fuel used in electric generation and purchased power primarily due to higher demand changes in generation mix and recognition of RECs used for compliance at Duke Energy Progress, and outside fuel purchases during a major plant outage;higher natural gas prices;
•a $74 million increase in operation, maintenance and other expense driven by a prior year severance cost adjustment related to the 2019 North Carolina retail rate case, outage costs and other employee-related costs, partially offset by reduced storm amortization at Duke Energy Florida; and
•a $74$51 million increase in depreciation and amortization primarily due to accelerated depreciation of retired Crystal River coal units and an increase in plant baseincreased rates at Duke Energy Florida and higher amortization of deferred coal ash and storm costs at Duke Energy Progress, partially offset by the extension of the lives at nuclear facilities at Duke Energy Progress.Progress; and
Other Income•a $44 million increase in operation, maintenance and Expenses, net. The increase isother expense primarily due to coal ash insurance litigation proceedshigher storm costs at Duke Energy Progress, lower non-service pension costsProgress.
Interest Expense. The variance was driven primarily by interest expense on excess deferred tax liabilities and unrealized gains on the nuclear decommissioning trust fundhigher outstanding debt at Duke Energy Florida.Progress.
Income Tax Expense. The decreaseincrease in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes, partially offset by an increase in pretax income.taxes.
DUKE ENERGY PROGRESS
Results of Operations
| | | Nine Months Ended September 30, | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | Variance | (in millions) | 2022 | | 2021 | | Variance |
| Operating Revenues | Operating Revenues | $ | 4,417 | | | $ | 4,207 | | | $ | 210 | | Operating Revenues | $ | 1,632 | | | $ | 1,401 | | | $ | 231 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 1,368 | | | 1,337 | | | 31 | | Fuel used in electric generation and purchased power | 574 | | | 436 | | | 138 | |
| Operation, maintenance and other | Operation, maintenance and other | 1,092 | | | 970 | | | 122 | | Operation, maintenance and other | 391 | | | 357 | | | 34 | |
| Depreciation and amortization | Depreciation and amortization | 811 | | | 833 | | | (22) | | Depreciation and amortization | 306 | | | 285 | | | 21 | |
| Property and other taxes | Property and other taxes | 129 | | | 129 | | | — | | Property and other taxes | 49 | | | 49 | | | — | |
| Impairment of assets and other charges | 60 | | | 5 | | | 55 | | |
| | Total operating expenses | Total operating expenses | 3,460 | | | 3,274 | | | 186 | | Total operating expenses | 1,320 | | | 1,127 | | | 193 | |
| Gains on Sales of Other Assets and Other, net | Gains on Sales of Other Assets and Other, net | 8 | | | 8 | | | — | | Gains on Sales of Other Assets and Other, net | 1 | | | — | | | 1 | |
| Operating Income | Operating Income | 965 | | | 941 | | | 24 | | Operating Income | 313 | | | 274 | | | 39 | |
| Other Income and Expenses, net | Other Income and Expenses, net | 111 | | | 52 | | | 59 | | Other Income and Expenses, net | 22 | | | 24 | | | (2) | |
| Interest Expense | Interest Expense | 226 | | | 203 | | | 23 | | Interest Expense | 85 | | | 69 | | | 16 | |
| Income Before Income Taxes | Income Before Income Taxes | 850 | | | 790 | | | 60 | | Income Before Income Taxes | 250 | | | 229 | | | 21 | |
| Income Tax Expense | Income Tax Expense | 50 | | | 79 | | | (29) | | Income Tax Expense | 35 | | | 19 | | | 16 | |
| Net Income | Net Income | $ | 800 | | | $ | 711 | | | $ | 89 | | Net Income | $ | 215 | | | $ | 210 | | | $ | 5 | |
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 period | 20212022 |
| Residential sales | 6.5(4.5) | % |
| General service sales | 3.910.3 | % |
| Industrial sales | 2.727.8 | % |
| Wholesale power sales | 5.21.0 | % |
| Joint dispatch sales | (2.6)51.4 | % |
| Total sales | 4.18.7 | % |
| Average number of customers | 0.42.0 | % |
Three Months Ended March 31, 2022, as compared to March 31, 2021
Operating Revenues. The variance was driven primarily by:
•a $120 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year;
•a $56 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers;
Nine Months Ended September 30, 2021, as compared to September 30, 2020
Operating Revenues. The variance was driven primarily by:
•a $72 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers;
•a $54$33 million increase in weather-normal retail sales volumes in the current year;
•a $46 million increase in retail sales due to more favorable weather;
•a $24 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year; and
•a $15$16 million increase in wholesale revenues, net of fuel, due to higher capacity volumes, partially offset by lower recovery of coal ash costs.volumes.
Operating Expenses. Expenses. The variance was driven primarily by:
•a $122$138 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices and changes in the generation mix, partially offset by the recovery of fuel expenses and lower coal prices;
•a $34 million increase in operation, maintenance and other expense primarily due to higher employee-related costs and a severance cost adjustment in the prior year related to the 2019 North Carolina retail rate case, increased outage costs and energy efficiency programstorm costs;
•a $55 million increase in impairment of assets and other charges primarily due to the 2018 South Carolina rate case settlement at Duke Energy Progress and optimization of the company's real estate portfolio and reduction of office space as parts of the business move to a hybrid and remote workforce strategy; and
•a $31$21 million increase in fuel used in electric generation and purchased power primarily due to higher demand and changes in generation mix as well as recognition of RECs used for compliance.
Partially offset by:
•a $22 million decrease in depreciation and amortization expense, primarily drivendue to higher amortization of deferred coal ash costs and amortization related to deferred storm costs, partially offset by lower depreciation related to the extension of the lives of nuclear facilities.
Other Income and Expense, net.Interest Expense. The increase is primarily due to coal ash insurance litigation proceeds and lower non-service pension costs.
Interest Expense. The variance was driven primarily by lower debt returninterest expense on coal ash projects.excess deferred tax liabilities and higher outstanding debt.
Income Tax Expense. The decreaseincrease in tax expense was primarily due to an increase in pretax income and the amortization of excess deferred taxes, partially offset by an increase in pretax income.taxes.
DUKE ENERGY FLORIDA
Results of Operations
| | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| (in millions) | 2021 | | 2020 | | Variance |
| Operating Revenues | $ | 3,987 | | | $ | 3,897 | | | $ | 90 | |
| Operating Expenses | | | | | |
| Fuel used in electric generation and purchased power | 1,335 | | | 1,291 | | | 44 | |
| Operation, maintenance and other | 760 | | | 806 | | | (46) | |
| Depreciation and amortization | 619 | | | 523 | | | 96 | |
| Property and other taxes | 290 | | | 290 | | | — | |
| Impairment of assets and other charges | 19 | | | (4) | | | 23 | |
| Total operating expenses | 3,023 | | | 2,906 | | | 117 | |
| Gains on Sales of Other Assets and Other, net | 1 | | | — | | | 1 | |
| Operating Income | 965 | | | 991 | | | (26) | |
| Other Income and Expenses, net | 54 | | | 36 | | | 18 | |
| Interest Expense | 239 | | | 245 | | | (6) | |
| Income Before Income Taxes | 780 | | | 782 | | | (2) | |
| Income Tax Expense | 149 | | | 159 | | | (10) | |
| Net Income | $ | 631 | | | $ | 623 | | | $ | 8 | |
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, |
| (in millions) | 2022 | | 2021 | | Variance |
| Operating Revenues | $ | 1,355 | | | $ | 1,101 | | | $ | 254 | |
| Operating Expenses | | | | | |
| Fuel used in electric generation and purchased power | 490 | | | 359 | | | 131 | |
| Operation, maintenance and other | 249 | | | 242 | | | 7 | |
| Depreciation and amortization | 231 | | | 200 | | | 31 | |
| Property and other taxes | 103 | | | 93 | | | 10 | |
| | | | | |
| Total operating expenses | 1,073 | | | 894 | | | 179 | |
| Gains on Sales of Other Assets and Other, net | 1 | | | — | | | 1 | |
| Operating Income | 283 | | | 207 | | | 76 | |
| Other Income and Expenses, net | 15 | | | 18 | | | (3) | |
| Interest Expense | 84 | | | 80 | | | 4 | |
| Income Before Income Taxes | 214 | | | 145 | | | 69 | |
| Income Tax Expense | 43 | | | 28 | | | 15 | |
| Net Income | $ | 171 | | | $ | 117 | | | $ | 54 | |
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 | 20212022 |
| Residential sales | (0.5)0.9 | % |
| General service sales | 3.14.0 | % |
| Industrial sales | 8.1(0.9) | % |
| Wholesale and other | 20.177.4 | % |
| Total sales | 1.115.8 | % |
| Average number of customers | 1.9 | % |
NineThree Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
Operating Revenues. The variance was driven primarily by:
•a $122$117 million increase in fuel and capacity revenuesrevenue primarily due to higher retail sales volumes and accelerated recovery of the retired coal units Crystal River 1 and 2;higher fuel rate in current year in response to an increase in natural gas prices;
•a $64$91 million increase in weather-normal retail sales volumes;
•a $50 million increase in retail pricing due to base rate adjustments related to annual increases from the 20172021 Settlement Agreement and the solar base rate adjustment;
•a $32 million increase in other revenues primarily due to lower revenues in the prior year due to the moratorium on customer late payments and service charges in response to the COVID-19 pandemic, lower outdoor lighting equipment rentals in the prior year, and higher transmission revenues due to prior year customer settlement and the increased network billing rates;
•a $19 million increase in rider revenues primarily due to increased volumes; and
•a $16 million increase in weather-normal retail sales volumes.
Partially offset by:
•a $103 million decrease in storm revenues due to full recovery of Hurricane Dorian costs in the prior year;
•a $37 million decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year; and
•an $18 million decrease in wholesale power revenues, net of fuel, primarily due to higher capacity revenues and bulk power sales.
Partially offset by:
•a restructured$22 million decrease in capacity contract.revenue primarily due to accelerated recovery of the retired coal units Crystal River 1 and 2 in 2021.
Operating Expenses. The variance was driven primarily by:
•a $96 million increase in depreciation and amortization primarily due to accelerated depreciation of retired coal units Crystal River 1 and 2 and an increase in plant base;
•a $44$131 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices,prices;
•a $31 million increase in depreciation and outside fuel purchases during a major plant outage at the Hines facility;amortization primarily due to an increase in depreciation rates starting in January 2022; and
•a $23$10 million increase in impairment of assetsproperty and other charges to optimize the company's real estate portfolio and reduce office space as parts of the business move to a hybrid and remote workforce strategy.
Partially offset by:
•a $46 million decrease in operation, maintenance and other expensetaxes primarily due to decreased storm amortization costs, partially offset by outage maintenance costs at Hines.
Other Income and Expense, net. Thean increase is primarily due to lower non-service pension costs and gains on the nuclear decommissioning trust fund.in gross receipts taxes.
Income Tax Expense. The decreaseincrease in tax expense was primarily due to unfavorable tax adjustmentsan increase in the prior year.pretax income.
DUKE ENERGY OHIO
Results of Operations
| | | Nine Months Ended September 30, | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | Variance | (in millions) | 2022 | | 2021 | | Variance |
| Operating Revenues | Operating Revenues | | Operating Revenues | |
| Regulated electric | Regulated electric | $ | 1,119 | | | $ | 1,070 | | | $ | 49 | | Regulated electric | $ | 412 | | | $ | 363 | | | $ | 49 | |
| Regulated natural gas | Regulated natural gas | 375 | | | 324 | | | 51 | | Regulated natural gas | 226 | | | 169 | | | 57 | |
| | Total operating revenues | Total operating revenues | 1,494 | | | 1,394 | | | 100 | | Total operating revenues | 638 | | | 532 | | | 106 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 294 | | | 258 | | | 36 | | Fuel used in electric generation and purchased power | 127 | | | 82 | | | 45 | |
| | Cost of natural gas | Cost of natural gas | 76 | | | 46 | | | 30 | | Cost of natural gas | 107 | | | 51 | | | 56 | |
| Operation, maintenance and other | Operation, maintenance and other | 335 | | | 333 | | | 2 | | Operation, maintenance and other | 178 | | | 108 | | | 70 | |
| Depreciation and amortization | Depreciation and amortization | 228 | | | 208 | | | 20 | | Depreciation and amortization | 80 | | | 74 | | | 6 | |
| Property and other taxes | Property and other taxes | 266 | | | 244 | | | 22 | | Property and other taxes | 101 | | | 92 | | | 9 | |
| Impairment of assets and other charges | 5 | | | — | | | 5 | | |
| | Total operating expenses | Total operating expenses | 1,204 | | | 1,089 | | | 115 | | Total operating expenses | 593 | | | 407 | | | 186 | |
| | Operating Income | Operating Income | 290 | | | 305 | | | (15) | | Operating Income | 45 | | | 125 | | | (80) | |
| Other Income and Expenses, net | Other Income and Expenses, net | 14 | | | 11 | | | 3 | | Other Income and Expenses, net | 6 | | | 5 | | | 1 | |
| Interest Expense | Interest Expense | 82 | | | 75 | | | 7 | | Interest Expense | 30 | | | 25 | | | 5 | |
| Income Before Income Taxes | Income Before Income Taxes | 222 | | | 241 | | | (19) | | Income Before Income Taxes | 21 | | | 105 | | | (84) | |
| Income Tax Expense | 34 | | | 40 | | | (6) | | |
| Income Tax (Benefit) Expense | | Income Tax (Benefit) Expense | (56) | | | 14 | | | (70) | |
| | Net Income | Net Income | $ | 188 | | | $ | 201 | | | $ | (13) | | Net Income | $ | 77 | | | $ | 91 | | | $ | (14) | |
The following table shows the percent changes in GWh sales of electricity, dekatherms of natural gas delivered and average number of electric and natural gas customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
| | | Electric | Natural Gas | | Electric | Natural Gas |
| Increase (Decrease) over prior year | Increase (Decrease) over prior year | 2021 | Increase (Decrease) over prior year | 2022 |
| Residential sales | Residential sales | 2.6 | % | 6.8 | % | Residential sales | (4.9) | % | 1.5 | % |
| General service sales | General service sales | 3.8 | % | 9.8 | % | General service sales | (1.0) | % | 1.0 | % |
| Industrial sales | Industrial sales | 5.5 | % | 4.2 | % | Industrial sales | (2.9) | % | (2.3) | % |
| Wholesale electric power sales | Wholesale electric power sales | 104.7 | % | n/a | Wholesale electric power sales | (19.0) | % | n/a |
| Other natural gas sales | Other natural gas sales | n/a | 2.5 | % | Other natural gas sales | n/a | (2.8) | % |
| Total sales | Total sales | 4.6 | % | 6.2 | % | Total sales | (0.1) | % | 0.4 | % |
| Average number of customers | Average number of customers | 0.5 | % | 0.8 | % | Average number of customers | 1.0 | % | 0.8 | % |
NineThree Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
Operating Revenues. The variance was driven primarily by:
•a $31$93 million increase in fuel related revenues primarily due to higher natural gas prices and increased volumes;
•a $27$10 million increase in retail revenue riders, primarily due to the Ohio Capital Expenditure Program (CEP), Distribution Capital Investment Rider (DCI), excise tax riders as a result of increased revenue and Kentucky Gas Weather Normalization rider, partially offset by decreases in Kentucky Environmental Surcharge Mechanism and the Ohio Tax Cuts and Jobs Act rider;
•a $9 million increase in weather-normal retail sales volumes;
•a $6 million increase in revenues related to OVEC collections and OVEC sales into PJM; and
•a $16$5 million increase in PJM transmission revenues as a result of increased capital spend;spend.
•an $11 million increase in retail pricing primarily due to the Duke Energy Kentucky general rate case; andPartially offset by:
•a $6$15 million increase in revenuesdecrease due to favorable weather.the MGP settlement.
Operating Expenses. The variance was driven primarily by:
•a $66$101 million increase in fuel expense primarily driven by higher retail prices and increased volumes for natural gas and purchased power;
•a $22$70 million increase in operation, maintenance and other expense primarily due to the MGP settlement and higher storm costs;
•a $9 million increase in property and other taxes primarily due to increased plant in service, higher kilowatt and natural gas distribution taxes due to increased usage and a lower Network Integration Transmission Service tax deferral; and
•a $20$6 million increase in depreciation and amortization primarily driven by lower CEP deferrals and an increase in distribution plant in service; and
•a $5 million increase in impairment of assets and other charges to optimize the company's real estate portfolio and reduce office space as parts of the business moves to a hybrid and remote workforce strategy.service.
Income Tax Expense.Benefit. The decrease in tax expense was primarily due to an increase in the amortization of excess deferred taxes related to the MGP Settlement and a decrease in pretax income.
DUKE ENERGY INDIANA
Results of Operations
| | | Nine Months Ended September 30, | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | Variance | (in millions) | 2022 | | 2021 | | Variance |
| Operating Revenues | Operating Revenues | $ | 2,366 | | | $ | 2,070 | | | $ | 296 | | Operating Revenues | $ | 822 | | | $ | 745 | | | $ | 77 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | |
| Fuel used in electric generation and purchased power | Fuel used in electric generation and purchased power | 710 | | | 577 | | | 133 | | Fuel used in electric generation and purchased power | 319 | | | 217 | | | 102 | |
| Operation, maintenance and other | Operation, maintenance and other | 543 | | | 564 | | | (21) | | Operation, maintenance and other | 192 | | | 178 | | | 14 | |
| Depreciation and amortization | Depreciation and amortization | 458 | | | 415 | | | 43 | | Depreciation and amortization | 156 | | | 152 | | | 4 | |
| Property and other taxes | Property and other taxes | 57 | | | 57 | | | — | | Property and other taxes | 25 | | | 21 | | | 4 | |
| Impairment of assets and other charges | Impairment of assets and other charges | 8 | | | — | | | 8 | | Impairment of assets and other charges | 211 | | | — | | | 211 | |
| Total operating expenses | Total operating expenses | 1,776 | | | 1,613 | | | 163 | | Total operating expenses | 903 | | | 568 | | | 335 | |
| | Operating Income | 590 | | | 457 | | | 133 | | |
| Operating (Loss) Income | | Operating (Loss) Income | (81) | | | 177 | | | (258) | |
| Other Income and Expenses, net | Other Income and Expenses, net | 31 | | | 28 | | | 3 | | Other Income and Expenses, net | 10 | | | 9 | | | 1 | |
| Interest Expense | Interest Expense | 148 | | | 114 | | | 34 | | Interest Expense | 45 | | | 50 | | | (5) | |
| Income Before Income Taxes | 473 | | | 371 | | | 102 | | |
| Income Tax Expense | 77 | | | 72 | | | 5 | | |
| Net Income | $ | 396 | | | $ | 299 | | | $ | 97 | | |
| (Loss) Income Before Income Taxes | | (Loss) Income Before Income Taxes | (116) | | | 136 | | | (252) | |
| Income Tax (Benefit) Expense | | Income Tax (Benefit) Expense | (37) | | | 24 | | | (61) | |
| Net (Loss) Income | | Net (Loss) Income | $ | (79) | | | $ | 112 | | | $ | (191) | |
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 | 20212022 |
| Residential sales | 3.0(3.8) | % |
| General service sales | 4.60.3 | % |
| Industrial sales | 5.5(5.3) | % |
| Wholesale power sales | 7.811.9 | % |
| Total sales | 4.52.9 | % |
| Average number of customers | 1.01.3 | % |
NineThree Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
Operating Revenues. The variance was driven primarily by:
•a $128 million increase primarily due to higher base rate pricing from the Indiana retail rate case, net of lower rider revenues;
•a $109$77 million increase in fuel revenues primarily due to higher fuel cost recovery driven by customer demand and fuel prices;
•a $29$16 million increase in weather-normal retail sales volumes driven by higher nonresidential customer demand; and
•a $24$14 million increase in wholesale revenues primarily relateddue to the true up of wholesale transmission revenuesan increase in BPM sharing provision; and higher rates in the current year.
Operating Expenses.The variance was driven primarily by:
•a $133$9 million increase in fuel used in electric generation and purchased power expense primarilyretail sales due to higher purchased power expense, higher coal and natural gas costs and higher amortization of deferred fuel costs;
•a $43 million increasefavorable weather in depreciation and amortization primarily due to a change in depreciation rates from the Indiana retail rate case, amortization of deferred coal ash pond ARO and additional plant in service; and
•an $8 million increase in impairment of assets and other charges to optimize the company’s real estate portfolio and reduce office space as parts of the business move to a hybrid workforce strategy.current year.
Partially offset by:
•a $21$46 million decrease in operation, maintenance and other primarily due to major outage costs incurred in the prior year and outage delays in the current year.
Interest Expense. The variance is primarily due to higher post-in-service carrying costs interest resulting from the Indiana retail rate case and higher prior yearSupreme Court ruling on recovery of certain coal ash spend debt returns on the Indiana Department of Environmental Management's approved ash basin closure projects.costs.
Operating Expenses.The variance was driven primarily by:
•a $211 million increase in impairment of assets and other charges primarily due to the Indiana Supreme Court ruling on recovery of certain coal ash costs;
•a $102 million increase in fuel used in electric generation and purchased power expense primarily due to higher purchased power expense and higher natural gas costs; and
•a $14 million increase in operation, maintenance and other primarily due to higher storm costs and employee benefits.
Income Tax Expense. Benefit.The increasedecrease in tax expense was primarily due to an increasethe change in pretax income partially offset by an increase infrom the amortization of excess deferred taxes.coal ash impairment based on the Indiana Supreme Court Opinion.
PIEDMONT
Results of Operations
| | | Nine Months Ended September 30, | | Three Months Ended March 31, |
| (in millions) | (in millions) | 2021 | | 2020 | | Variance | (in millions) | 2022 | | 2021 | | Variance |
| | Operating Revenues | Operating Revenues | $ | 1,016 | | | $ | 871 | | | $ | 145 | | Operating Revenues | $ | 805 | | | $ | 606 | | | $ | 199 | |
| Operating Expenses | Operating Expenses | | Operating Expenses | |
| Cost of natural gas | Cost of natural gas | 354 | | | 254 | | | 100 | | Cost of natural gas | 374 | | | 225 | | | 149 | |
| Operation, maintenance and other | Operation, maintenance and other | 231 | | | 234 | | | (3) | | Operation, maintenance and other | 95 | | | 78 | | | 17 | |
| Depreciation and amortization | Depreciation and amortization | 150 | | | 133 | | | 17 | | Depreciation and amortization | 54 | | | 48 | | | 6 | |
| Property and other taxes | Property and other taxes | 44 | | | 37 | | | 7 | | Property and other taxes | 16 | | | 14 | | | 2 | |
| Impairment of assets and other charges | 9 | | | 7 | | | 2 | | |
| | Total operating expenses | Total operating expenses | 788 | | | 665 | | | 123 | | Total operating expenses | 539 | | | 365 | | | 174 | |
| | Operating Income | Operating Income | 228 | | | 206 | | | 22 | | Operating Income | 266 | | | 241 | | | 25 | |
| Other Income and Expenses, net | Other Income and Expenses, net | 51 | | | 44 | | | 7 | | Other Income and Expenses, net | 13 | | | 17 | | | (4) | |
| Interest Expense | Interest Expense | 88 | | | 89 | | | (1) | | Interest Expense | 32 | | | 29 | | | 3 | |
| Income Before Income Taxes | Income Before Income Taxes | 191 | | | 161 | | | 30 | | Income Before Income Taxes | 247 | | | 229 | | | 18 | |
| Income Tax Expense | Income Tax Expense | 16 | | | 6 | | | 10 | | Income Tax Expense | 33 | | | 26 | | | 7 | |
| Net Income | Net Income | $ | 175 | | | $ | 155 | | | $ | 20 | | Net Income | $ | 214 | | | $ | 203 | | | $ | 11 | |
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 | 20212022 |
| Residential deliveries | 16.0(4.7) | % |
| Commercial deliveries | 14.32.9 | % |
| Industrial deliveries | 5.41.1 | % |
| Power generation deliveries | 6.745.8 | % |
| For resale | 20.0(3.9) | % |
| Total throughput deliveries | 8.120.4 | % |
| Secondary market volumes | (0.9)18.8 | % |
| Average number of customers | 2.01.6 | % |
The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The weather normalization adjustment mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.
NineThree Months Ended September 30, 2021,March 31, 2022, as compared to September 30, 2020March 31, 2021
Operating Revenues. The variance was driven primarily by:
•a $100$149 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs;costs, partially offset by lower residential volumes;
•a $15$35 million increase due to Tennessee base rate case increases; and
•an $11a $6 million increase due to North Carolina IMR.customer growth.
Operating Expenses. The variance was driven primarily by:
•a $100$149 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs;
•a $17 million increase in depreciation expense due to additional plant in service and software projects in service; and
•a $7 million increase in property and other taxes due to higher current year property taxes in North Carolina and South Carolina.
Other Income and Expense, net. The variance is primarily drivencosts, partially offset by favorable AFUDC equity and intercompany interest income.lower residential volumes.
Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income.income and a decrease in the amortization of excess deferred taxes.
| | | | | |
| MD&A | LIQUIDITY AND CAPITAL RESOURCES |
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. Additionally, due to its existing tax attributes, Duke Energy does not expect to be a significant federal cash taxpayer until around 2030. Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2020,2021, included a summary and detailed discussion of projected primary sources and uses of cash for 20212022 to 2023.2024.
In January 2021, Duke Energy entered into a definitive agreement with an affiliate of GIC, for GIC to make an indirect minority interest investment of 19.9% in Duke Energy Indiana. The investment will be completed following two closings for an aggregate purchase price of approximately $2 billion. The first closing occurred on September 8, 2021, and Duke Energy Indiana Holdco, LLC, the holding company for Duke Energy Indiana, issued 11.05% of its membership interests in exchange for 50% of the total investment amount. Duke Energy has the discretion to determine the timing of the second closing, but the closing will occur no later than January 2023. At the second closing, Duke Energy Indiana Holdco, LLC will issue additional membership interests for the remaining 50% of the total investment amount, and GIC's minority interest ownership in Duke Energy Indiana Holdco, LLC will be 19.9%. Proceeds from the minority interest investment are expected to address common equity needs through 2025 to partially fund Duke Energy's $59 billion capital and investment expenditure plan.
As of September 30, 2021,March 31, 2022, Duke Energy had approximately $548$853 million of cash on hand $6.3and $6.1 billion available under its $8$9 billion Master Credit Facility and $500 million available under the $1 billion Three-Year Revolving Credit Facility. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Refer to Note 5 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for information regarding Duke Energy's debt issuances and maturities, and available credit facilities including the Master Credit Facility.
Credit Ratings
In March 2021, Moody's Investors Services, Inc. (Moody's) downgraded by one notch the long-term credit ratings for Duke Energy (Parent) and Duke Energy Carolinas. The downgrade reflects Duke Energy's balance sheet objectives. The downgrade for Duke Energy (Parent) and Duke Energy Carolinas also considers the impact for Duke Energy Carolinas and Duke Energy Progress as a result of the 2019 rate case orders and approval of the CCR Settlement Agreement. While these agreements are indicative of a regulatory environment that remains broadly supportive of utility credit quality, their financial terms resulted in current impairment charges and lowered the amount of future cash flow Duke Energy Carolinas and Duke Energy Progress will receive in conjunction with their coal ash remediation spending. As part of the credit rating action, Moody's affirmed Duke Energy's (Parent) short-term and commercial paper credit ratings and confirmed the credit ratings for Duke Energy Progress. Following a January 2021, credit rating downgrade of Duke Energy (Parent) and its subsidiaries, Standard & Poor's Rating Services continues to maintain a stable outlook on Duke Energy Corporation and its subsidiaries as of September 30, 2021.
Cash Flow Information
The following table summarizes Duke Energy’s cash flows.
| | | Nine Months Ended | | Three Months Ended |
| | September 30, | | March 31, |
| (in millions) | (in millions) | | 2021 | | 2020 | (in millions) | | 2022 | | 2021 |
| Cash flows provided by (used in): | Cash flows provided by (used in): | | Cash flows provided by (used in): | |
| Operating activities | Operating activities | | $ | 7,227 | | | $ | 6,766 | | Operating activities | | $ | 1,795 | | | $ | 2,088 | |
| Investing activities | Investing activities | | (8,200) | | | (7,964) | | Investing activities | | (2,699) | | | (3,137) | |
| Financing activities | Financing activities | | 1,160 | | | 1,225 | | Financing activities | | 1,404 | | | 1,185 | |
| | Net increase in cash, cash equivalents and restricted cash | Net increase in cash, cash equivalents and restricted cash | | 187 | | | 27 | | Net increase in cash, cash equivalents and restricted cash | | 500 | | | 136 | |
| Cash, cash equivalents and restricted cash at beginning of period | Cash, cash equivalents and restricted cash at beginning of period | | 556 | | | 573 | | Cash, cash equivalents and restricted cash at beginning of period | | 520 | | | 556 | |
| Cash, cash equivalents and restricted cash at end of period | Cash, cash equivalents and restricted cash at end of period | | $ | 743 | | | $ | 600 | | Cash, cash equivalents and restricted cash at end of period | | $ | 1,020 | | | $ | 692 | |
OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows.
| | | Nine Months Ended | | | Three Months Ended | |
| | September 30, | | | March 31, | |
| (in millions) | (in millions) | | 2021 | | 2020 | | Variance | | (in millions) | | 2022 | | 2021 | | Variance | |
| Net income | Net income | | $ | 2,915 | | | $ | 1,232 | | | $ | 1,683 | | | Net income | | $ | 820 | | | $ | 941 | | | $ | (121) | | |
| Non-cash adjustments to net income | Non-cash adjustments to net income | | 4,556 | | | 6,204 | | | (1,648) | | | Non-cash adjustments to net income | | 1,582 | | | 1,446 | | | 136 | | |
| | Payments for asset retirement obligations | Payments for asset retirement obligations | | (389) | | | (463) | | | 74 | | | Payments for asset retirement obligations | | (119) | | | (114) | | | (5) | | |
| Refund of AMT credit carryforwards | | — | | | 572 | | | (572) | | | |
| | Working capital | Working capital | | 145 | | | (779) | | | 924 | | | Working capital | | (488) | | | (185) | | | (303) | | |
| Net cash provided by operating activities | Net cash provided by operating activities | | $ | 7,227 | | | $ | 6,766 | | | $ | 461 | | | Net cash provided by operating activities | | $ | 1,795 | | | $ | 2,088 | | | $ | (293) | | |
The variance was primarily due to timing of accruals and payments in working capital accounts,accounts.
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows.
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | March 31, |
| (in millions) | | 2022 | | 2021 | | Variance |
| Capital, investment and acquisition expenditures | | $ | (2,568) | | | $ | (2,215) | | | $ | (353) | |
| | | | | | |
| Other investing items | | (131) | | | (922) | | | 791 | |
| Net cash used in investing activities | | $ | (2,699) | | | $ | (3,137) | | | $ | 438 | |
The variance relates primarily to payment made in 2021 to fund ACP's outstanding debt and lower overall investments in the Commercial Renewables segment, partially offset by prior year $572 million refund of AMT credit carryforwards.increases in capital expenditures due to higher overall investments in the Electric Utilities and Infrastructure and Gas Utilities and Infrastructure segments.
| | | | | |
| MD&A | LIQUIDITY AND CAPITAL RESOURCES |
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows.
| | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended |
| | September 30, |
| (in millions) | | 2021 | | 2020 | | Variance |
| Capital, investment and acquisition expenditures | | $ | (7,119) | | | $ | (7,684) | | | $ | 565 | |
| | | | | | |
| Other investing items | | (1,081) | | | (280) | | | (801) | |
| Net cash used in investing activities | | $ | (8,200) | | | $ | (7,964) | | | $ | (236) | |
The variance relates primarily to payment made to fund ACP's outstanding debt, partially offset by decreases in capital expenditures due to lower overall investments in the Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables segments.
FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows.
| | | Nine Months Ended | | Three Months Ended |
| | September 30, | | March 31, |
| (in millions) | (in millions) | | 2021 | | 2020 | | Variance | (in millions) | | 2022 | | 2021 | | Variance |
| Issuances of long-term debt, net | Issuances of long-term debt, net | | $ | 2,683 | | | $ | 2,694 | | | $ | (11) | | Issuances of long-term debt, net | | $ | 2,291 | | | $ | 532 | | | $ | 1,759 | |
| Issuances of common stock | Issuances of common stock | | 5 | | | 75 | | | (70) | | Issuances of common stock | | — | | | 5 | | | (5) | |
| | Notes payable, commercial paper and other short-term borrowings | Notes payable, commercial paper and other short-term borrowings | | (723) | | | 260 | | | (983) | | Notes payable, commercial paper and other short-term borrowings | | (44) | | | 1,187 | | | (1,231) | |
| Dividends paid | Dividends paid | | (2,340) | | | (2,113) | | | (227) | | Dividends paid | | (799) | | | (783) | | | (16) | |
| Contributions from noncontrolling interests | Contributions from noncontrolling interests | | 1,556 | | | 402 | | | 1,154 | | Contributions from noncontrolling interests | | 23 | | | 303 | | | (280) | |
| | Other financing items | Other financing items | | (21) | | | (93) | | | 72 | | Other financing items | | (67) | | | (59) | | | (8) | |
| Net cash provided by financing activities | Net cash provided by financing activities | | $ | 1,160 | | | $ | 1,225 | | | $ | (65) | | Net cash provided by financing activities | | $ | 1,404 | | | $ | 1,185 | | | $ | 219 | |
The variance was primarily due to:
•a $983 million decrease$1.8 billion increase in net proceeds from issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term debt.
Partially offset by:
•a $1.2 billion decrease in net borrowings from notes payable and commercial paper; and
•a $227$280 million increase in dividends paid.
Partially offset by:
•a $1.154 billion increasedecrease in contributions from noncontrolling interests, primarily due to the $1 billion receipt from GIC to make an indirect minority interest investment of 11.05% in Duke Energy Indiana.interests.
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.
Off-Balance Sheet Arrangements
During the three and nine months ended September 30, 2021, there were no material changes to Duke Energy’s off-balance sheet arrangements. 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, 2020.
Contractual Obligations
Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. During the three and nine months ended September 30, 2021, 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, 2020.
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 nine months ended September 30, 2021,March 31, 2022, there were no material changes to the Duke Energy Registrants' disclosures about market risk.
| | | | | |
ITEM 4. | CONTROLS AND PROCEDURES |
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.
Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated the effectiveness of their disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2021,March 31, 2022, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.
Changes in Internal Control over Financial Reporting
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated changes in internal control over financial reporting (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2021,March 31, 2022, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
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, 2020.2021.
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, 2020,2021, which could materially affect the Duke Energy Registrants’ financial condition or future results. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020.
Our business could be negatively affected as a result of actions of activist shareholders.
On May 17, 2021, Elliott who has indicated it holds an economic interest in our outstanding common stock, publicly released a letter it had sent to our Board. On July 19, 2021, Elliott issued a follow-up letter to our Board.
While we strive to maintain constructive communications with our shareholders, activist shareholders may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to affect changes and assert influence on our Board and management. Perceived uncertainties as to the future direction or governance of the company may cause concern to our current or potential regulators, vendors or strategic partners, or make it more difficult to execute on our strategy or to attract and retain qualified personnel, which may have a material impact on our business and operating results.
In addition, actions such as those described above could cause fluctuations in the trading price of our common stock, based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
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 (***).
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| | | | | Duke | | | | Duke | | Duke | | Duke | | Duke | | |
| Exhibit | | Duke | | Energy | | Progress | | Energy | | Energy | | Energy | | Energy | | |
| Number | | Energy | | Carolinas | | Energy | | Progress | | Florida | | Ohio | | Indiana | | Piedmont |
*3.14.1 | | | | | X | | | | | | | | | | | | |
| 4.2 | | | | | | | | | | | | | | | | | X | | |
4.14.3 | | | | | | | | | X | | | | | | | | |
4.210.1 | | | X | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 10.2 | Amended and Restated Credit Agreement, dated as of March 18, 2022, among Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Duke Energy Progress, LLC, Duke Energy Florida, LLC, and Piedmont Natural Gas Company, Inc., the Lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent and Swingline Lender and Wells Fargo Securities, LLC, as Joint Lead Arranger, Joint Bookrunner and Sustainability Structuring Agent. that increases the amount of the credit facility from $8B to $9B (incorporated by reference to Exhibit 10.1 to registrants' Current Report on Form 8-K filed on March 21, 2022, File Nos. 1-32853, 1-4928, 1-3382, 1-3274, 1-1232, 1-3543, 1-6196). | X | | X | | | | X | | X | | X | | X | | X |
| 10.3 | $1,400,000,000 21,Term Loan Credit Facility, dated as of March 9, 2022, among the registrant, as Borrower, certain Lenders from time to time parties thereto, and The Bank of Nova Scotia as Administrative Agent and Coordinating Lead Arranger (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on March 22, 2022, File No. 1-32853). | X | | | | | | | | | | | | | | |
10.1*10.4 | | | X | | | | | | | | | | | | X | | |
10.2*10.5 | | | X | | | | | | | | | | | | | | |
| *31.1.1 | | X | | | | | | | | | | | | | | |
| *31.1.2 | | | | X | | | | | | | | | | | | |
| *31.1.3 | | | | | | X | | | | | | | | | | |
| *31.1.4 | | | | | | | | X | | | | | | | | |
| *31.1.5 | | | | | | | | | | X | | | | | | |
| *31.1.6 | | | | | | | | | | | | X | | | | |
| *31.1.7 | | | | | | | | | | | | | | X | | |
| *31.1.8 | | | | | | | | | | | | | | | | X |
| *31.2.1 | | X | | | | | | | | | | | | | | |
| *31.2.2 | | | | X | | | | | | | | | | | | |
| *31.2.3 | | | | | | X | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
*31.2.3 | | | | | | X | | | | | | | | | | |
| *31.2.4 | | | | | | | | X | | | | | | | | |
| *31.2.5 | | | | | | | | | | X | | | | | | |
| *31.2.6 | | | | | | | | | | | | X | | | | |
| *31.2.7 | | | | | | | | | | | | | | X | | |
| *31.2.8 | | | | | | | | | | | | | | | | X |
| *32.1.1 | | X | | | | | | | | | | | | | | |
| *32.1.2 | | | | X | | | | | | | | | | | | |
| *32.1.3 | | | | | | X | | | | | | | | | | |
| *32.1.4 | | | | | | | | X | | | | | | | | |
| *32.1.5 | | | | | | | | | | X | | | | | | |
| *32.1.6 | | | | | | | | | | | | X | | | | |
| *32.1.7 | | | | | | | | | | | | | | X | | |
| *32.1.8 | | | | | | | | | | | | | | | | X |
| *32.2.1 | | X | | | | | | | | | | | | | | |
| *32.2.2 | | | | X | | | | | | | | | | | | |
| *32.2.3 | | | | | | X | | | | | | | | | | |
| *32.2.4 | | | | | | | | X | | | | | | | | |
| *32.2.5 | | | | | | | | | | X | | | | | | |
| *32.2.6 | | | | | | | | | | | | X | | | | |
| *32.2.7 | | | | | | | | | | | | | | X | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
*32.2.7 | | | | | | | | | | | | | | X | | |
| *32.2.8 | | | | | | | | | | | | | | | | X |
| *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). | X | | X | | X | | X | | X | | X | | X | | X |
| *101.SCH | XBRL Taxonomy Extension Schema Document. | X | | X | | X | | X | | X | | X | | X | | X |
| *101.CAL | XBRL Taxonomy Calculation Linkbase Document. | X | | X | | X | | X | | X | | X | | X | | X |
| *101.LAB | XBRL Taxonomy Label Linkbase Document. | X | | X | | X | | X | | X | | X | | X | | X |
| *101.PRE | XBRL Taxonomy Presentation Linkbase Document. | X | | X | | X | | X | | X | | X | | X | | X |
| *101.DEF | XBRL Taxonomy Definition Linkbase Document. | X | | X | | X | | X | | X | | X | | X | | X |
| *104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). | X | | X | | X | | X | | X | | X | | X | | X |
The total amount of securities of the registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed 10% 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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. | | | | | | | | |
| |
DUKE ENERGY CORPORATION DUKE ENERGY CAROLINAS, LLC PROGRESS ENERGY, INC. DUKE ENERGY PROGRESS, LLC DUKE ENERGY FLORIDA, LLC DUKE ENERGY OHIO, INC. DUKE ENERGY INDIANA, LLC PIEDMONT NATURAL GAS COMPANY, INC.
|
| | |
| Date: | November 4, 2021May 9, 2022 | /s/ STEVEN K. YOUNG |
| | Steven K. Young
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
| | |
| Date: | November 4, 2021May 9, 2022 | /s/ CYNTHIA S. LEE |
| | Cynthia S. Lee
Vice President, Chief Accounting Officer
and Controller
(Principal Accounting Officer) |
