Duke Energy (DUK) 10-Q 2021 Q2 Quarterly report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2021

OR

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

For the transition period from _________to_________

Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number	IRS Employer Identification Number
1-32853	DUKE ENERGY CORPORATION	20-2777218

(a Delaware corporation)

550 South Tryon Street

Charlotte, North Carolina 28202-1803

704-382-3853

1-4928 DUKE ENERGY CAROLINAS, LLC 56-0205520

(a North Carolina limited liability company)

526 South Church Street

Charlotte, North Carolina 28202-1803

704-382-3853

1-15929 PROGRESS ENERGY, INC. 56-2155481

(a North Carolina corporation)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853

1-3382 DUKE ENERGY PROGRESS, LLC 56-0165465

(a North Carolina limited liability company)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853

1-3274 DUKE ENERGY FLORIDA, LLC 59-0247770

(a Florida limited liability company)

299 First Avenue North

St. Petersburg, Florida 33701

704-382-3853

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

(an Ohio corporation)

139 East Fourth Street

Cincinnati, Ohio 45202

704-382-3853

1-3543 DUKE ENERGY INDIANA, LLC 35-0594457

(an Indiana limited liability company)

1000 East Main Street

Plainfield, Indiana 46168

704-382-3853

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

(a North Carolina corporation)

4720 Piedmont Row Drive

Charlotte, North Carolina 28210

704-364-3120

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

Name of each exchange on

Registrant    Title of each class    Trading symbols        which registered

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

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

January 15, 2073

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

September 15, 2078

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

interest in a share of 5.75% Series A Cumulative

Redeemable Perpetual Preferred Stock, par value

$0.001 per share

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

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

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

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

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

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

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

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

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

Number of shares of common stock outstanding at July 31, 2021:

Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	769,337,598

This combined Form 10-Q is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.

Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.

TABLE OF CONTENTS

	Cautionary Statement Regarding Forward-Looking Information
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Duke Energy Corporation Financial Statements	9
	Duke Energy Carolinas, LLC Financial Statements	15
	Progress Energy, Inc. Financial Statements	19
	Duke Energy Progress, LLC Financial Statements	23
	Duke Energy Florida, LLC Financial Statements	27
	Duke Energy Ohio, Inc. Financial Statements	31
	Duke Energy Indiana, LLC Financial Statements	35
	Piedmont Natural Gas Company, Inc. Financial Statements	39
	Combined Notes to Condensed Consolidated Financial Statements
	Note 1 – Organization and Basis of Presentation	43
	Note 2 – Business Segments	45
	Note 3 – Regulatory Matters	48
	Note 4 – Commitments and Contingencies	56
	Note 5 – Debt and Credit Facilities	60
	Note 6 – Goodwill	61
	Note 7 – Related Party Transactions	62
	Note 8 – Derivatives and Hedging	63
	Note 9 – Investments in Debt and Equity Securities	68
	Note 10 – Fair Value Measurements	72
	Note 11 – Variable Interest Entities	77
	Note 12 – Revenue	81
	Note 13 – Stockholders' Equity	87
	Note 14 – Employee Benefit Plans	88
	Note 15 – Income Taxes	89
	Note 16 – Subsequent Events	89
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	90
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	107
Item 4.	Controls and Procedures	107
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	108
Item 1A.	Risk Factors	108
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	108
Item 6.	Exhibits	109
	Signatures	112

FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

◦The impact of the COVID-19 pandemic;

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

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

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

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

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

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

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

◦Advancements in technology;

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

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

◦Changing customer 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 and general market and economic conditions;

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

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

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

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

◦The ability to control operation and maintenance costs;

◦The level of creditworthiness of counterparties to transactions;

◦The ability to obtain adequate insurance at acceptable costs;

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

FORWARD-LOOKING STATEMENTS

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

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

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

◦The impact of 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;

◦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.

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

GLOSSARY OF TERMS

Glossary of Terms 

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

Term or Acronym	Definition
2013 Settlement	Revised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida Office of Public Counsel and other customer representatives
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
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.
ACP	Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Inc. and Duke Energy
ACP pipeline	The approximately 600-mile canceled interstate natural gas pipeline
AFS	Available for Sale
AFUDC	Allowance for funds used during construction
ARO	Asset retirement obligations
Bison	Bison Insurance Company Limited
Board	Duke Energy Board of Directors
CCR	Coal Combustion Residuals
Coal Ash Act	North Carolina Coal Ash Management Act of 2014
the company	Duke Energy Corporation and its subsidiaries
COVID-19	Coronavirus Disease 2019
CRC	Cinergy Receivables Company, LLC
Crystal River Unit 3	Crystal River Unit 3 Nuclear Plant
DEFPF	Duke Energy Florida Project Finance, LLC
DEFR	Duke Energy Florida Receivables, LLC
DEPR	Duke Energy Progress Receivables, LLC
DERF	Duke Energy Receivables Finance Company, LLC
Duke Energy	Duke Energy Corporation (collectively with its subsidiaries)
Duke Energy Ohio	Duke Energy Ohio, Inc.
Duke Energy Progress	Duke Energy Progress, LLC
Duke Energy Carolinas	Duke Energy Carolinas, LLC
Duke Energy Florida	Duke Energy Florida, LLC
Duke Energy Indiana	Duke Energy Indiana, LLC
Duke Energy Kentucky	Duke Energy Kentucky, Inc.
Duke Energy Registrants	Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
EDIT	Excess deferred income tax
Elliott	Elliott Investment Management, L.P.
EPS	Earnings Per Share
ETR	Effective tax rate
Exchange Act	Securities Exchange Act of 1934
FERC	Federal Energy Regulatory Commission
FPSC	Florida Public Service Commission
FTR	Financial transmission rights
GAAP	Generally accepted accounting principles in the U.S.

GLOSSARY OF TERMS

GAAP Reported Earnings	Net Income Available to Duke Energy Corporation Common Stockholders
GAAP Reported EPS	Basic Earnings Per Share Available to Duke Energy Corporation common stockholders
GIC	GIC Private Limited
GWh	Gigawatt-hours
IMR	Integrity Management Rider
IRS	Internal Revenue Service
Investment Trusts	NDTF investments and grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana
IURC	Indiana Utility Regulatory Commission
KPSC	Kentucky Public Service Commission
LLC	Limited Liability Company
MGP	Manufactured gas plant
MW	Megawatt
MWh	Megawatt-hour
NCUC	North Carolina Utilities Commission
NDTF	Nuclear decommissioning trust funds
NPNS	Normal purchase/normal sale
OPEB	Other Post-Retirement Benefit Obligations
OVEC	Ohio Valley Electric Corporation
Piedmont	Piedmont Natural Gas Company, Inc.
PJM	Pennsylvania-New Jersey-Maryland Interconnection
PPA	Purchase Power Agreement
Progress Energy	Progress Energy, Inc.
PSCSC	Public Service Commission of South Carolina
PUCO	Public Utilities Commission of Ohio
RTO	Regional Transmission Organization
Subsidiary Registrants	Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
the Tax Act	Tax Cuts and Jobs Act
TPUC	Tennessee Public Utility Commission
U.S.	United States
VIE	Variable Interest Entity
WACC	Weighted Average Cost of Capital

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share amounts)	2021		2020		2021		2020
Operating Revenues
Regulated electric	$	5,258	$	4,963	$	10,477	$	10,087
Regulated natural gas	302		263		1,051		901
Nonregulated electric and other	198		195		380		382
Total operating revenues	5,758		5,421		11,908		11,370
Operating Expenses
Fuel used in electric generation and purchased power	1,415		1,349		2,858		2,796
Cost of natural gas	79		59		355		258
Operation, maintenance and other	1,410		1,353		2,812		2,692
Depreciation and amortization	1,207		1,150		2,433		2,280
Property and other taxes	349		334		702		679
Impairment of assets and other charges	131		6		131		8
Total operating expenses	4,591		4,251		9,291		8,713
Gains on Sales of Other Assets and Other, net	2		7		2		8
Operating Income	1,169		1,177		2,619		2,665
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates	9		(1,968)		(8)		(1,924)
Other income and expenses, net	128		137		255		183
Total other income and expenses	137		(1,831)		247		(1,741)
Interest Expense	572		554		1,107		1,105
Income (Loss) Before Income Taxes	734		(1,208)		1,759		(181)
Income Tax Expense (Benefit)	36		(316)		120		(179)
Net Income (Loss)	698		(892)		1,639		(2)
Add: Net Loss Attributable to Noncontrolling Interests	67		90		118		138
Net Income (Loss) Attributable to Duke Energy Corporation	765		(802)		1,757		136
Less: Preferred Dividends	14		15		53		54
Net Income (Loss) Available to Duke Energy Corporation Common Stockholders	$	751	$	(817)	$	1,704	$	82
Earnings (Loss) Per Share – Basic and Diluted
Net income (loss) available to Duke Energy Corporation common stockholders
Basic and Diluted	$	0.96	$	(1.13)	$	2.21	$	0.11
Weighted Average Shares Outstanding
Basic	769		735		769		734
Diluted	769		735		769		735

See Notes to Condensed Consolidated Financial Statements

9

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Net Income (Loss)	$	698	$	(892)	$	1,639	$	(2)
Other Comprehensive Income (Loss), net of tax(a)
Pension and OPEB adjustments	—		(1)		2		—
Net unrealized (losses) gains on cash flow hedges	(97)		5		(68)		(76)
Reclassification into earnings from cash flow hedges	4		2		7		4
Unrealized gains (losses) on available-for-sale securities	4		6		(4)		7
Other Comprehensive (Loss) Income, net of tax	(89)		12		(63)		(65)
Comprehensive Income (Loss)	609		(880)		1,576		(67)
Add: Comprehensive Loss Attributable to Noncontrolling Interests	68		88		112		150
Comprehensive Income (Loss) Attributable to Duke Energy	677		(792)		1,688		83
Less: Preferred Dividends	14		15		53		54
Comprehensive Income (Loss) Available to Duke Energy Corporation Common Stockholders	$	663	$	(807)	$	1,635	$	29

(a)Net of income tax impacts of approximately $27 million for the three months ended June 30, 2021, and $19 million and $20 million for the six months ended June 30, 2021, and 2020, respectively. All other periods presented include immaterial income tax impacts.

See Notes to Condensed Consolidated Financial Statements

10

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	367	$	259
Receivables (net of allowance for doubtful accounts of $45 at 2021 and $29 at 2020)	868		1,009
Receivables of VIEs (net of allowance for doubtful accounts of $78 at 2021 and $117 at 2020)	2,220		2,144
Inventory	3,015		3,167
Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs)	1,793		1,641
Other (includes $356 at 2021 and $296 at 2020 related to VIEs)	722		462
Total current assets	8,985		8,682
Property, Plant and Equipment
Cost	158,272		155,580
Accumulated depreciation and amortization	(49,752)		(48,827)
Facilities to be retired, net	121		29
Net property, plant and equipment	108,641		106,782
Other Noncurrent Assets
Goodwill	19,303		19,303
Regulatory assets (includes $914 at 2021 and $937 at 2020 related to VIEs)	12,485		12,421
Nuclear decommissioning trust funds	9,886		9,114
Operating lease right-of-use assets, net	1,495		1,524
Investments in equity method unconsolidated affiliates	938		961
Other (includes $89 at 2021 and $81 at 2020 related to VIEs)	3,652		3,601
Total other noncurrent assets	47,759		46,924
Total Assets	$	165,385	$	162,388
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,716	$	3,144
Notes payable and commercial paper	3,296		2,873
Taxes accrued	692		482
Interest accrued	537		537
Current maturities of long-term debt (includes $219 at 2021 and $472 at 2020 related to VIEs)	4,976		4,238
Asset retirement obligations	691		718
Regulatory liabilities	1,309		1,377
Other	1,994		2,936
Total current liabilities	16,211		16,305
Long-Term Debt (includes $3,796 at 2021 and $3,535 at 2020 related to VIEs)	57,410		55,625
Other Noncurrent Liabilities
Deferred income taxes	9,644		9,244
Asset retirement obligations	12,272		12,286
Regulatory liabilities	15,414		15,029
Operating lease liabilities	1,315		1,340
Accrued pension and other post-retirement benefit costs	995		969
Investment tax credits	770		687
Other (includes $352 at 2021 and $316 at 2020 related to VIEs)	1,809		1,719
Total other noncurrent liabilities	42,219		41,274
Commitments and Contingencies	0		0
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
Additional paid-in capital	43,788		43,767
Retained earnings	2,687		2,471
Accumulated other comprehensive loss	(306)		(237)
Total Duke Energy Corporation stockholders' equity	48,132		47,964
Noncontrolling interests	1,413		1,220
Total equity	49,545		49,184
Total Liabilities and Equity	$	165,385	$	162,388

See Notes to Condensed Consolidated Financial Statements

11

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,639	$	(2)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	2,753		2,651
Equity in losses of unconsolidated affiliates	8		1,924
Equity component of AFUDC	(83)		(76)
Impairment of assets and other charges	131		8
Deferred income taxes	119		105
Payments for asset retirement obligations	(263)		(287)
Provision for rate refunds	(13)		(12)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	15		(24)
Receivables	85		281
Inventory	153		(56)
Other current assets	(297)		(124)
Increase (decrease) in
Accounts payable	(297)		(638)
Taxes accrued	219		273
Other current liabilities	(326)		(344)
Other assets	77		(201)
Other liabilities	(47)		(121)
Net cash provided by operating activities	3,873		3,357
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(4,636)		(5,103)
Contributions to equity method investments	(21)		(164)
Purchases of debt and equity securities	(3,182)		(3,818)
Proceeds from sales and maturities of debt and equity securities	3,217		3,755
Disbursements to canceled equity method investments	(855)		—
Other	(137)		(141)
Net cash used in investing activities	(5,614)		(5,471)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	4,627		3,788
Issuance of common stock	5		57
Payments for the redemption of long-term debt	(2,002)		(1,951)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	75		1,866
Payments for the redemption of short-term debt with original maturities greater than 90 days	(959)		(113)
Notes payable and commercial paper	1,299		(129)
Contributions from noncontrolling interests	318		163
Dividends paid	(1,541)		(1,391)
Other	(72)		(108)
Net cash provided by financing activities	1,750		2,182
Net increase in cash, cash equivalents and restricted cash	9		68
Cash, cash equivalents and restricted cash at beginning of period	556		573
Cash, cash equivalents and restricted cash at end of period	$	565	$	641
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	990	$	945
Non-cash dividends	—		54

See Notes to Condensed Consolidated Financial Statements

12

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended June 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 March 31, 2020	$	1,962	735		$	1	$	40,930	$	4,221	$	(116)	$	4	$	(81)	$	46,921	$	1,162	$	48,083
Net income (loss)	—		—		—		—		(817)		—		—		—		(817)		(90)		(907)
Other comprehensive income (loss)	—		—		—		—		—		5		6		(1)		10		2		12
Common stock issuances, including dividend reinvestment and employee benefits	—		—		—		66		—		—		—		—		66		—		66
Common stock dividends	—		—		—		—		(696)		—		—		—		(696)		—		(696)
Contribution from noncontrolling interests, net of transaction costs(a)	—		—		—		—		—		—		—		—		—		60		60
Distributions to noncontrolling interest in subsidiaries	—		—		—		—		—		—		—		—		—		(7)		(7)
Other	—		—		—		1		(1)		—		—		—		—		—		—
Balance at June 30, 2020	$	1,962	$	735	$	1	$	40,997	$	2,707	$	(111)	$	10	$	(82)	$	45,484	$	1,127	$	46,611
Balance at March 31, 2021	$	1,962	769		$	1	$	43,761	$	2,680	$	(142)	$	(2)	$	(74)	$	48,186	$	1,472	$	49,658
Net income (loss)	—		—		—		—		751		—		—		—		751		(67)		684
Other comprehensive (loss) income	—		—		—		—		—		(92)		4		—		(88)		(1)		(89)
Common stock issuances, including dividend reinvestment and employee benefits	—		—		—		26		—		—		—		—		26		—		26
Common stock dividends	—		—		—		—		(744)		—		—		—		(744)		—		(744)
Contribution from noncontrolling interests, net of transaction costs(a)	—		—		—		—		—		—		—		—		—		15		15
Distributions to noncontrolling interest in subsidiaries	—		—		—		—		—		—		—		—		—		(5)		(5)
Other	—		—		—		1		—		—		—		—		1		(1)		—
Balance at June 30, 2021	$	1,962	$	769	$	1	$	43,788	$	2,687	$	(234)	$	2	$	(74)	$	48,132	$	1,413	$	49,545

See Notes to Condensed Consolidated Financial Statements

13

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Six Months Ended June 30, 2020 and 2021
										Accumulated Other Comprehensive
										(Loss) Income
												Net Unrealized				Total
										Net Gains		Gains (Losses)				Duke Energy
			Common			Additional				(Losses) on		on Available-		Pension and		Corporation
	Preferred		Stock	Common		Paid-in		Retained		Cash Flow		for-Sale-		OPEB		Stockholders'		Noncontrolling		Total
(in millions)	Stock		Shares	Stock		Capital		Earnings		Hedges		Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	1,962	733	$	1	$	40,881	$	4,108	$	(51)	$	3	$	(82)	$	46,822	$	1,129	$	47,951
Net income (loss)	—		—	—		—		82		—		—		—		82		(138)		(56)
Other comprehensive (loss) income	—		—	—		—		—		(60)		7		—		(53)		(12)		(65)
Common stock issuances, including dividend reinvestment and employee benefits	—		2	—		116		—		—		—		—		116		—		116
Common stock dividends	—		—	—		—		(1,391)		—		—		—		(1,391)		—		(1,391)
Contributions from noncontrolling interests, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		163		163
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(14)		(14)
Other(b)	—		—	—		—		(92)		—		—		—		(92)		(1)		(93)
Balance at June 30, 2020	$	1,962	735	$	1	$	40,997	$	2,707	$	(111)	$	10	$	(82)	$	45,484	$	1,127	$	46,611
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)	—		—	—		—		1,704		—		—		—		1,704		(118)		1,586
Other comprehensive (loss) income	—		—	—		—		—		(67)		(4)		2		(69)		6		(63)
Common stock issuances, including dividend reinvestment and employee benefits	—		—	—		23		—		—		—		—		23		—		23
Common stock dividends	—		—	—		—		(1,488)		—		—		—		(1,488)		—		(1,488)
Contributions from noncontrolling interests, net of transaction costs(a)	—		—	—		(3)		—		—		—		—		(3)		318		315
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(12)		(12)
Other	—		—	—		1		—		—		—		—		1		(1)		—
Balance at June 30, 2021	$	1,962	769	$	1	$	43,788	$	2,687	$	(234)	$	2	$	(74)	$	48,132	$	1,413	$	49,545

(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.

See Notes to Condensed Consolidated Financial Statements

14

FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Operating Revenues	$	1,610	$	1,610	$	3,326	$	3,358
Operating Expenses
Fuel used in electric generation and purchased power	344		376		766		829
Operation, maintenance and other	435		430		876		816
Depreciation and amortization	363		375		722		718
Property and other taxes	74		75		157		156
Impairment of assets and other charges	75		—		75		2
Total operating expenses	1,291		1,256		2,596		2,521
Gains (Losses) on Sales of Other Assets and Other, net	2		(1)		2		—
Operating Income	321		353		732		837
Other Income and Expenses, net	44		43		92		86
Interest Expense	139		125		263		248
Income Before Income Taxes	226		271		561		675
Income Tax Expense	1		37		24		102
Net Income and Comprehensive Income	$	225	$	234	$	537	$	573

See Notes to Condensed Consolidated Financial Statements

15

FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	36	$	21
Receivables (net of allowance for doubtful accounts of $2 at 2021 and $1 at 2020)	180		247
Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2021 and $22 at 2020)	769		696
Receivables from affiliated companies	111		124
Inventory	1,013		1,010
Regulatory assets	458		473
Other	88		20
Total current assets	2,655		2,591
Property, Plant and Equipment
Cost	51,220		50,640
Accumulated depreciation and amortization	(17,709)		(17,453)
Facilities to be retired, net	93		—
Net property, plant and equipment	33,604		33,187
Other Noncurrent Assets
Regulatory assets	2,970		2,996
Nuclear decommissioning trust funds	5,446		4,977
Operating lease right-of-use assets, net	100		110
Other	1,238		1,187
Total other noncurrent assets	9,754		9,270
Total Assets	$	46,013	$	45,048
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	675	$	1,000
Accounts payable to affiliated companies	195		199
Notes payable to affiliated companies	471		506
Taxes accrued	203		76
Interest accrued	125		117
Current maturities of long-term debt	356		506
Asset retirement obligations	251		264
Regulatory liabilities	489		473
Other	425		546
Total current liabilities	3,190		3,687
Long-Term Debt	12,250		11,412
Long-Term Debt Payable to Affiliated Companies	300		300
Other Noncurrent Liabilities
Deferred income taxes	3,937		3,842
Asset retirement obligations	5,116		5,086
Regulatory liabilities	6,810		6,535
Operating lease liabilities	87		97
Accrued pension and other post-retirement benefit costs	67		73
Investment tax credits	259		236
Other	605		626
Total other noncurrent liabilities	16,881		16,495
Commitments and Contingencies	0		0
Equity
Member's equity	13,399		13,161
Accumulated other comprehensive loss	(7)		(7)
Total equity	13,392		13,154
Total Liabilities and Equity	$	46,013	$	45,048

See Notes to Condensed Consolidated Financial Statements

16

FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	537	$	573
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	861		854
Equity component of AFUDC	(30)		(29)
Impairment of assets and other charges	75		2
Deferred income taxes	(41)		31
Payments for asset retirement obligations	(93)		(86)
Provision for rate refunds	(11)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	4		—
Receivables	—		40
Receivables from affiliated companies	13		36
Inventory	(3)		(84)
Other current assets	(45)		170
Increase (decrease) in
Accounts payable	(266)		(249)
Accounts payable to affiliated companies	(4)		(63)
Taxes accrued	127		120
Other current liabilities	(152)		(134)
Other assets	8		(83)
Other liabilities	18		(35)
Net cash provided by operating activities	998		1,065
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,251)		(1,271)
Purchases of debt and equity securities	(1,847)		(1,017)
Proceeds from sales and maturities of debt and equity securities	1,847		1,017
Other	(80)		(73)
Net cash used in investing activities	(1,331)		(1,344)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,298		938
Payments for the redemption of long-term debt	(614)		(454)
Notes payable to affiliated companies	(35)		102
Distributions to parent	(300)		(300)
Other	(1)		(1)
Net cash provided by financing activities	348		285
Net increase in cash and cash equivalents	15		6
Cash and cash equivalents at beginning of period	21		18
Cash and cash equivalents at end of period	$	36	$	24
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	315	$	256

See Notes to Condensed Consolidated Financial Statements

17

FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended June 30, 2020 and 2021
			Accumulated Other
			Comprehensive
			Loss
	Member's		Net Losses on		Total
(in millions)	Equity		Cash Flow Hedges		Equity
Balance at March 31, 2020	$	12,844	$	(7)	$	12,837
Net income	234		—		234
Other	1		—		1
Balance at June 30, 2020	$	13,079	$	(7)	$	13,072
Balance at March 31, 2021	$	13,473	$	(7)	$	13,466
Net income	225		—		225
Distributions to parent	(300)		—		(300)
Other	1		—		1
Balance at June 30, 2021	$	13,399	$	(7)	$	13,392
	Six Months Ended June 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	573		—		573
Distributions to parent	(300)		—		(300)
Other(a)	(12)		—		(12)
Balance at June 30, 2020	$	13,079	$	(7)	$	13,072
Balance at December 31, 2020	$	13,161	$	(7)	$	13,154
Net income	537		—		537
Distributions to parent	(300)		—		(300)
Other	1		—		1
Balance at June 30, 2021	$	13,399	$	(7)	$	13,392

(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

FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Operating Revenues	$	2,679	$	2,498	$	5,184	$	4,920
Operating Expenses
Fuel used in electric generation and purchased power	833		777		1,628		1,540
Operation, maintenance and other	626		589		1,227		1,143
Depreciation and amortization	441		432		926		884
Property and other taxes	133		137		275		272
Impairment of assets and other charges	37		—		37		—
Total operating expenses	2,070		1,935		4,093		3,839
Gains on Sales of Other Assets and Other, net	1		7		1		6
Operating Income	610		570		1,092		1,087
Other Income and Expenses, net	38		33		81		65
Interest Expense	200		199		392		405
Income Before Income Taxes	448		404		781		747
Income Tax Expense	37		60		80		120
Net Income	411		344		$	701	$	627
Net Income	$	411	$	344	$	701	$	627
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	1		1		1		1
Net unrealized gains on cash flow hedges	—		1		1		2
Unrealized gains (losses) on available-for-sale securities	1		(1)		—		—
Other Comprehensive Income, net of tax	2		1		2		3
Comprehensive Income	413		345		$	703	$	630

See Notes to Condensed Consolidated Financial Statements

19

FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	75	$	59
Receivables (net of allowance for doubtful accounts of $11 at 2021 and $8 at 2020)	223		228
Receivables of VIEs (net of allowance for doubtful accounts of $25 at 2021 and $29 at 2020)	924		901
Receivables from affiliated companies	69		157
Inventory	1,299		1,375
Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs)	909		758
Other (includes $33 at 2021 and $39 at 2020 related to VIEs)	270		109
Total current assets	3,769		3,587
Property, Plant and Equipment
Cost	59,234		57,892
Accumulated depreciation and amortization	(18,887)		(18,368)
Facilities to be retired, net	28		29
Net property, plant and equipment	40,375		39,553
Other Noncurrent Assets
Goodwill	3,655		3,655
Regulatory assets (includes $914 at 2021 and $937 at 2020 related to VIEs)	5,757		5,775
Nuclear decommissioning trust funds	4,440		4,137
Operating lease right-of-use assets, net	700		690
Other	1,115		1,227
Total other noncurrent assets	15,667		15,484
Total Assets	$	59,811	$	58,624
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	903	$	919
Accounts payable to affiliated companies	331		289
Notes payable to affiliated companies	3,003		2,969
Taxes accrued	217		121
Interest accrued	191		202
Current maturities of long-term debt (includes $55 at 2021 and $305 at 2020 related to VIEs)	2,831		1,426
Asset retirement obligations	251		283
Regulatory liabilities	558		640
Other	814		793
Total current liabilities	9,099		7,642
Long-Term Debt (includes $1,492 at 2021 and $1,252 at 2020 related to VIEs)	16,269		17,688
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	4,655		4,396
Asset retirement obligations	5,853		5,866
Regulatory liabilities	5,244		5,051
Operating lease liabilities	634		623
Accrued pension and other post-retirement benefit costs	496		505
Other	469		462
Total other noncurrent liabilities	17,351		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	9,143		9,143
Retained earnings	7,809		7,109
Accumulated other comprehensive loss	(13)		(15)
Total Progress Energy, Inc. stockholders' equity	16,939		16,237
Noncontrolling interests	3		4
Total equity	16,942		16,241
Total Liabilities and Equity	$	59,811	$	58,624

See Notes to Condensed Consolidated Financial Statements

20

FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	701	$	627
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	1,104		1,118
Equity component of AFUDC	(23)		(24)
Impairment of assets and other charges	37		—
Deferred income taxes	163		94
Payments for asset retirement obligations	(139)		(173)
Provision for rate refunds	(7)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	16		(22)
Receivables	(12)		(15)
Receivables from affiliated companies	88		34
Inventory	76		(42)
Other current assets	(247)		102
Increase (decrease) in
Accounts payable	44		(238)
Accounts payable to affiliated companies	42		(88)
Taxes accrued	97		155
Other current liabilities	(79)		(64)
Other assets	(33)		(57)
Other liabilities	(156)		(97)
Net cash provided by operating activities	1,672		1,312
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,745)		(1,812)
Purchases of debt and equity securities	(1,160)		(2,602)
Proceeds from sales and maturities of debt and equity securities	1,201		2,588
Notes receivable from affiliated companies	—		164
Other	(69)		(81)
Net cash used in investing activities	(1,773)		(1,743)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	19		514
Payments for the redemption of long-term debt	(41)		(550)
Notes payable to affiliated companies	34		552
Other	(3)		—
Net cash provided by financing activities	9		516
Net (decrease) increase in cash, cash equivalents and restricted cash	(92)		85
Cash, cash equivalents and restricted cash at beginning of period	200		126
Cash, cash equivalents and restricted cash at end of period	$	108	$	211
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	329	$	287

See Notes to Condensed Consolidated Financial Statements

21

FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended June 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 March 31, 2020	$	9,143	$	6,747	$	(9)	$	—	$	(7)	$	15,874	$	3	$	15,877
Net income	—		344		—		—		—		344		—		344
Other comprehensive income (loss)	—		—		1		(1)		1		1		—		1
Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)
Other	—		(1)		—		—		—		(1)		1		—
Balance at June 30, 2020	$	9,143	$	7,090	$	(8)	$	(1)	$	(6)	$	16,218	$	3	$	16,221
Balance at March 31, 2021	$	9,143	$	7,400	$	(4)	$	(3)	$	(8)	$	16,528	$	2	$	16,530
Net income	—		411		—		—		—		411		—		411
Other comprehensive income	—		—		—		1		1		2		—		2
Other	—		(2)		—		—		—		(2)		1		(1)
Balance at June 30, 2021	$	9,143	$	7,809	$	(4)	$	(2)	$	(7)	$	16,939	$	3	$	16,942
	Six Months Ended June 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
Net income	—		627		—		—		—		627		—		627
Other comprehensive income	—		—		2		—		1		3		—		3
Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)
Other	—		(2)		—		—		—		(2)		1		(1)
Balance at June 30, 2020	$	9,143	$	7,090	$	(8)	$	(1)	$	(6)	$	16,218	$	3	$	16,221
Balance at December 31, 2020	$	9,143	$	7,109	$	(5)	$	(2)	$	(8)	$	16,237	$	4	$	16,241
Net income	—		701		—		—		—		701		—		701
Other comprehensive income	—		—		1		—		1		2		—		2
Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)
Other	—		(1)		—		—		—		(1)		—		(1)
Balance at June 30, 2021	$	9,143	$	7,809	$	(4)	$	(2)	$	(7)	$	16,939	$	3	$	16,942

See Notes to Condensed Consolidated Financial Statements

22

FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Operating Revenues	$	1,349	$	1,243	$	2,750	$	2,581
Operating Expenses
Fuel used in electric generation and purchased power	409		395		845		800
Operation, maintenance and other	367		317		724		622
Depreciation and amortization	236		257		521		544
Property and other taxes	41		44		90		91
Impairment of assets and other charges	18		—		18		—
Total operating expenses	1,071		1,013		2,198		2,057
Gains on Sales of Other Assets and Other, net	1		6		1		5
Operating Income	279		236		553		529
Other Income and Expenses, net	20		19		44		41
Interest Expense	78		68		147		137
Income Before Income Taxes	221		187		450		433
Income Tax Expense	6		26		25		68
Net Income and Comprehensive Income	$	215	$	161	$	425	$	365

See Notes to Condensed Consolidated Financial Statements

23

FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	46	$	39
Receivables (net of allowance for doubtful accounts of $4 at 2021 and 2020)	129		132
Receivables of VIEs (net of allowance for doubtful accounts of $17 at 2021 and $19 at 2020)	473		500
Receivables from affiliated companies	63		50
Inventory	858		911
Regulatory assets	502		492
Other	141		60
Total current assets	2,212		2,184
Property, Plant and Equipment
Cost	36,291		35,759
Accumulated depreciation and amortization	(13,134)		(12,801)
Facilities to be retired, net	28		29
Net property, plant and equipment	23,185		22,987
Other Noncurrent Assets
Regulatory assets	4,056		3,976
Nuclear decommissioning trust funds	3,842		3,500
Operating lease right-of-use assets, net	377		346
Other	722		740
Total other noncurrent assets	8,997		8,562
Total Assets	$	34,394	$	33,733
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	416	$	454
Accounts payable to affiliated companies	214		215
Notes payable to affiliated companies	270		295
Taxes accrued	87		85
Interest accrued	90		99
Current maturities of long-term debt	1,806		603
Asset retirement obligations	250		283
Regulatory liabilities	472		530
Other	413		411
Total current liabilities	4,018		2,975
Long-Term Debt	7,321		8,505
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	2,455		2,298
Asset retirement obligations	5,387		5,352
Regulatory liabilities	4,578		4,394
Operating lease liabilities	354		323
Accrued pension and other post-retirement benefit costs	237		242
Investment tax credits	130		132
Other	79		102
Total other noncurrent liabilities	13,220		12,843
Commitments and Contingencies	0		0
Equity
Member's Equity	9,685		9,260
Total Liabilities and Equity	$	34,394	$	33,733

See Notes to Condensed Consolidated Financial Statements

24

FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	425	$	365
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	610		635
Equity component of AFUDC	(15)		(19)
Impairment of assets and other charges	18		—
Deferred income taxes	28		60
Payments for asset retirement obligations	(88)		(164)
Provision for rate refunds	(7)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	9		(5)
Receivables	31		96
Receivables from affiliated companies	(13)		10
Inventory	52		(46)
Other current assets	(52)		87
Increase (decrease) in
Accounts payable	28		(260)
Accounts payable to affiliated companies	(1)		(50)
Taxes accrued	2		71
Other current liabilities	(45)		(16)
Other assets	(40)		(92)
Other liabilities	(43)		(5)
Net cash provided by operating activities	899		669
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(869)		(795)
Purchases of debt and equity securities	(926)		(569)
Proceeds from sales and maturities of debt and equity securities	915		548
Other	(2)		(21)
Net cash used in investing activities	(882)		(837)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	19		20
Payments for the redemption of long-term debt	(3)		(13)
Notes payable to affiliated companies	(25)		191
Other	(1)		(1)
Net cash (used in) provided by financing activities	(10)		197
Net increase in cash and cash equivalents	7		29
Cash and cash equivalents at beginning of period	39		22
Cash and cash equivalents at end of period	$	46	$	51
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	97	$	95

See Notes to Condensed Consolidated Financial Statements

25

FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended
	June 30, 2020 and 2021
	Member's
(in millions)	Equity
Balance at March 31, 2020	$	9,450
Net income	161
Other	(1)
Balance at June 30, 2020	$	9,610
Balance at March 31, 2021	$	9,470
Net income	215
Balance at June 30, 2021	$	9,685
	Six Months Ended
	June 30, 2020 and 2021
	Member's
(in millions)	Equity
Balance at December 31, 2019	$	9,246
Net income	365
Other	(1)
Balance at June 30, 2020	$	9,610
Balance at December 31, 2020	$	9,260
Net income	425
Balance at June 30, 2021	$	9,685

See Notes to Condensed Consolidated Financial Statements

26

FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Operating Revenues	$	1,325	$	1,250	$	2,426	$	2,330
Operating Expenses
Fuel used in electric generation and purchased power	424		382		783		740
Operation, maintenance and other	255		269		497		514
Depreciation and amortization	205		175		405		340
Property and other taxes	92		92		185		180
Impairment of assets and other charges	19		—		19		—
Total operating expenses	995		918		1,889		1,774
Operating Income	330		332		537		556
Other Income and Expenses, net	18		15		36		25
Interest Expense	80		80		160		164
Income Before Income Taxes	268		267		413		417
Income Tax Expense	51		51		79		81
Net Income	$	217	$	216	$	334	$	336
Other Comprehensive Income, net of tax
Unrealized gains (losses) on available-for-sale securities	1		(1)		—		—
Comprehensive Income	$	218	$	215	$	334	$	336

See Notes to Condensed Consolidated Financial Statements

27

FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	22	$	11
Receivables (net of allowance for doubtful accounts of $8 at 2021 and $4 at 2020)	91		94
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2021 and $10 at 2020)	451		401
Receivables from affiliated companies	8		3
Inventory	440		464
Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs)	407		265
Other (includes $33 at 2021 and $39 at 2020 related to VIEs)	59		41
Total current assets	1,478		1,279
Property, Plant and Equipment
Cost	22,933		22,123
Accumulated depreciation and amortization	(5,746)		(5,560)
Net property, plant and equipment	17,187		16,563
Other Noncurrent Assets
Regulatory assets (includes $914 at 2021 and $937 at 2020 related to VIEs)	1,701		1,799
Nuclear decommissioning trust funds	598		637
Operating lease right-of-use assets, net	323		344
Other	342		335
Total other noncurrent assets	2,964		3,115
Total Assets	$	21,629	$	20,957
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	487	$	465
Accounts payable to affiliated companies	129		85
Notes payable to affiliated companies	363		196
Taxes accrued	144		82
Interest accrued	67		69
Current maturities of long-term debt (includes $55 at 2021 and $305 at 2020 related to VIEs)	575		823
Regulatory liabilities	85		110
Other	395		374
Total current liabilities	2,245		2,204
Long-Term Debt (includes $1,223 at 2021 and $1,002 at 2020 related to VIEs)	7,306		7,092
Other Noncurrent Liabilities
Deferred income taxes	2,286		2,191
Asset retirement obligations	467		514
Regulatory liabilities	665		658
Operating lease liabilities	280		300
Accrued pension and other post-retirement benefit costs	227		231
Other	262		209
Total other noncurrent liabilities	4,187		4,103
Commitments and Contingencies	0		0
Equity
Member's equity	7,893		7,560
Accumulated other comprehensive loss	(2)		(2)
Total equity	7,891		7,558
Total Liabilities and Equity	$	21,629	$	20,957

See Notes to Condensed Consolidated Financial Statements

28

FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	334	$	336
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	491		478
Equity component of AFUDC	(8)		(6)
Impairment of assets and other charges	19		—
Deferred income taxes	130		37
Payments for asset retirement obligations	(52)		(9)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	5		(20)
Receivables	(42)		(110)
Receivables from affiliated companies	(5)		(2)
Inventory	24		4
Other current assets	(132)		(11)
Increase (decrease) in
Accounts payable	15		23
Accounts payable to affiliated companies	44		(51)
Taxes accrued	62		134
Other current liabilities	(35)		(50)
Other assets	11		37
Other liabilities	(94)		(91)
Net cash provided by operating activities	767		699
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(876)		(1,016)
Purchases of debt and equity securities	(234)		(2,033)
Proceeds from sales and maturities of debt and equity securities	286		2,040
Notes receivable from affiliated companies	—		173
Other	(67)		(60)
Net cash used in investing activities	(891)		(896)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—		495
Payments for the redemption of long-term debt	(38)		(537)
Notes payable to affiliated companies	167		232
Other	—		2
Net cash provided by financing activities	129		192
Net increase (decrease) in cash, cash equivalents and restricted cash	5		(5)
Cash, cash equivalents and restricted cash at beginning of period	50		56
Cash, cash equivalents and restricted cash at end of period	$	55	$	51
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	232	$	192

See Notes to Condensed Consolidated Financial Statements

29

FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended June 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 March 31, 2020	$	6,909	$	—	$	6,909
Net income	216		—		216
Other comprehensive loss	—		(1)		(1)
Balance at June 30, 2020	$	7,125	$	(1)	$	7,124
Balance at March 31, 2021	$	7,677	$	(3)	$	7,674
Net income	217		—		217
Other comprehensive income	—		1		1
Other	(1)		—		(1)
Balance at June 30, 2021	$	7,893	$	(2)	$	7,891
	Six Months Ended June 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	336		—		336
Balance at June 30, 2020	$	7,125	$	(1)	$	7,124
Balance at December 31, 2020	$	7,560	$	(2)	$	7,558
Net income	334		—		334
Other	(1)		—		(1)
Balance at June 30, 2021	$	7,893	$	(2)	$	7,891

See Notes to Condensed Consolidated Financial Statements

30

FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Operating Revenues
Regulated electric	$	343	$	330	$	706	$	676
Regulated natural gas	113		93		282		245
Total operating revenues	456		423		988		921
Operating Expenses
Fuel used in electric generation and purchased power	93		77		175		164
Cost of natural gas	16		6		67		43
Operation, maintenance and other	111		95		219		218
Depreciation and amortization	75		68		149		136
Property and other taxes	83		78		175		161
Impairment of assets and other charges	5		—		5		—
Total operating expenses	383		324		790		722
Operating Income	73		99		198		199
Other Income and Expenses, net	5		4		10		7
Interest Expense	28		25		53		49
Income Before Income Taxes	50		78		155		157
Income Tax Expense	11		12		25		26
Net Income and Comprehensive Income	$	39	$	66	$	130	$	131

See Notes to Condensed Consolidated Financial Statements

31

FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	12	$	14
Receivables (net of allowance for doubtful accounts of $4 at 2021 and 2020)	96		98
Receivables from affiliated companies	83		102
Inventory	111		110
Regulatory assets	56		39
Other	26		31
Total current assets	384		394
Property, Plant and Equipment
Cost	11,351		11,022
Accumulated depreciation and amortization	(3,068)		(3,013)
Net property, plant and equipment	8,283		8,009
Other Noncurrent Assets
Goodwill	920		920
Regulatory assets	636		610
Operating lease right-of-use assets, net	20		20
Other	79		72
Total other noncurrent assets	1,655		1,622
Total Assets	$	10,322	$	10,025
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	255	$	279
Accounts payable to affiliated companies	72		68
Notes payable to affiliated companies	390		169
Taxes accrued	189		247
Interest accrued	31		31
Current maturities of long-term debt	50		50
Asset retirement obligations	12		3
Regulatory liabilities	65		65
Other	70		70
Total current liabilities	1,134		982
Long-Term Debt	3,016		3,014
Long-Term Debt Payable to Affiliated Companies	25		25
Other Noncurrent Liabilities
Deferred income taxes	1,014		981
Asset retirement obligations	99		108
Regulatory liabilities	741		748
Operating lease liabilities	19		20
Accrued pension and other post-retirement benefit costs	113		113
Other	96		99
Total other noncurrent liabilities	2,082		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	527		397
Total equity	4,065		3,935
Total Liabilities and Equity	$	10,322	$	10,025

See Notes to Condensed Consolidated Financial Statements

32

FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	130	$	131
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	151		138
Equity component of AFUDC	(4)		(2)
Impairment of assets and other charges	5		—
Deferred income taxes	17		24
Payments for asset retirement obligations	(1)		—
Provision for rate refunds	8		6
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(1)		—
Receivables	2		2
Receivables from affiliated companies	(11)		45
Inventory	(1)		6
Other current assets	(12)		8
Increase (decrease) in
Accounts payable	(8)		(22)
Accounts payable to affiliated companies	4		(10)
Taxes accrued	(58)		(9)
Other current liabilities	(7)		2
Other assets	(33)		(24)
Other liabilities	4		(3)
Net cash provided by operating activities	185		292
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(415)		(403)
Notes receivable from affiliated companies	30		(35)
Other	(23)		(27)
Net cash used in investing activities	(408)		(465)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—		397
Payments for the redemption of long-term debt	—		(233)
Notes payable to affiliated companies	221		—
Net cash provided by financing activities	221		164
Net decrease in cash and cash equivalents	(2)		(9)
Cash and cash equivalents at beginning of period	14		17
Cash and cash equivalents at end of period	$	12	$	8
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	88	$	94

See Notes to Condensed Consolidated Financial Statements

33

FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended June 30, 2020 and 2021
			Additional
	Common		Paid-in		Retained		Total
(in millions)	Stock		Capital		Earnings		Equity
Balance at March 31, 2020	$	762	$	2,776	$	210	$	3,748
Net income	—		—		66		66
Balance at June 30, 2020	$	762	$	2,776	$	276	$	3,814
Balance at March 31, 2021	$	762	$	2,776	$	488	$	4,026
Net income	—		—		39		39
Balance at June 30, 2021	$	762	$	2,776	$	527	$	4,065
	Six Months Ended June 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	—		—		131		131
Balance at June 30, 2020	$	762	$	2,776	$	276	$	3,814
Balance at December 31, 2020	$	762	$	2,776	$	397	$	3,935
Net income	—		—		130		130
Balance at June 30, 2021	$	762	$	2,776	$	527	$	4,065

See Notes to Condensed Consolidated Financial Statements

34

FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Operating Revenues	$	735	$	617	$	1,480	$	1,309
Operating Expenses
Fuel used in electric generation and purchased power	201		161		418		355
Operation, maintenance and other	192		171		370		357
Depreciation and amortization	152		134		304		266
Property and other taxes	20		20		41		42
Impairment of assets and other charges	8		—		8		—
Total operating expenses	573		486		1,141		1,020
Losses on Sales of Other Assets and Other, net	(1)		—		(1)		—
Operating Income	161		131		338		289
Other Income and Expenses, net	10		9		19		19
Interest Expense	49		42		99		85
Income Before Income Taxes	122		98		258		223
Income Tax Expense	19		17		43		43
Net Income and Comprehensive Income	$	103	$	81	$	215	$	180

See Notes to Condensed Consolidated Financial Statements

35

FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	12	$	7
Receivables (net of allowance for doubtful accounts of $3 at 2021 and 2020)	69		55
Receivables from affiliated companies	95		112
Notes receivable from affiliated companies	18		—
Inventory	412		473
Regulatory assets	173		125
Other	46		37
Total current assets	825		809
Property, Plant and Equipment
Cost	17,213		17,382
Accumulated depreciation and amortization	(5,514)		(5,661)
Net property, plant and equipment	11,699		11,721
Other Noncurrent Assets
Regulatory assets	1,310		1,203
Operating lease right-of-use assets, net	53		55
Other	268		253
Total other noncurrent assets	1,631		1,511
Total Assets	$	14,155	$	14,041
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	209	$	188
Accounts payable to affiliated companies	59		88
Notes payable to affiliated companies	—		131
Taxes accrued	64		62
Interest accrued	52		51
Current maturities of long-term debt	123		70
Asset retirement obligations	176		168
Regulatory liabilities	141		111
Other	104		83
Total current liabilities	928		952
Long-Term Debt	3,819		3,871
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	1,262		1,228
Asset retirement obligations	980		1,008
Regulatory liabilities	1,593		1,627
Operating lease liabilities	52		53
Accrued pension and other post-retirement benefit costs	172		171
Investment tax credits	168		168
Other	32		30
Total other noncurrent liabilities	4,259		4,285
Commitments and Contingencies	0		0
Equity
Member's Equity	4,999		4,783
Total Liabilities and Equity	$	14,155	$	14,041

See Notes to Condensed Consolidated Financial Statements

36

FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	215	$	180
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	306		267
Equity component of AFUDC	(12)		(12)
Impairment of assets and other charges	8		—
Deferred income taxes	1		38
Payments for asset retirement obligations	(30)		(28)
(Increase) decrease in
Receivables	(15)		19
Receivables from affiliated companies	(8)		20
Inventory	61		28
Other current assets	(31)		13
Increase (decrease) in
Accounts payable	35		22
Accounts payable to affiliated companies	(29)		(13)
Taxes accrued	10		4
Other current liabilities	20		(22)
Other assets	(3)		(29)
Other liabilities	6		(6)
Net cash provided by operating activities	534		481
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(394)		(456)
Purchases of debt and equity securities	(9)		(14)
Proceeds from sales and maturities of debt and equity securities	6		7
Notes receivable from affiliated companies	7		(425)
Other	(8)		(16)
Net cash used in investing activities	(398)		(904)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—		544
Notes payable to affiliated companies	(131)		(30)
Distributions to parent	—		(100)
Net cash (used in) provided by financing activities	(131)		414
Net increase (decrease) in cash and cash equivalents	5		(9)
Cash and cash equivalents at beginning of period	7		25
Cash and cash equivalents at end of period	$	12	$	16
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	85	$	83

See Notes to Condensed Consolidated Financial Statements

37

FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended
	June 30, 2020 and 2021
	Member's
(in millions)	Equity
Balance at March 31, 2020	$	4,674
Net income	81
Distributions to parent	(100)
Balance at June 30, 2020	$	4,655
Balance at March 31, 2021	$	4,896
Net income	103
Balance at June 30, 2021	$	4,999
	Six Months Ended
	June 30, 2020 and 2021
	Member's
(in millions)	Equity
Balance at December 31, 2019	$	4,575
Net income	180
Distributions to parent	(100)
Balance at June 30, 2020	$	4,655
Balance at December 31, 2020	$	4,783
Net income	215
Other	1
Balance at June 30, 2021	$	4,999

See Notes to Condensed Consolidated Financial Statements

38

FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Operating Revenues	$	215	$	197	$	821	$	709
Operating Expenses
Cost of natural gas	63		53		288		215
Operation, maintenance and other	76		79		154		159
Depreciation and amortization	51		43		99		88
Property and other taxes	14		12		28		24
Impairment of assets and other charges	5		—		5		—
Total operating expenses	209		187		574		486
Operating Income	6		10		247		223
Other Income and Expenses, net	18		16		35		28
Interest Expense	30		33		59		60
(Loss) Income Before Income Taxes	(6)		(7)		223		191
Income Tax (Benefit) Expense	(2)		(9)		24		11
Net (Loss) Income and Comprehensive (Loss) Income	$	(4)	$	2	$	199	$	180

See Notes to Condensed Consolidated Financial Statements

39

FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $13 at 2021 and $12 at 2020)	106		250
Receivables from affiliated companies	10		10
Inventory	43		68
Regulatory assets	108		153
Other	48		20
Total current assets	315		501
Property, Plant and Equipment
Cost	9,556		9,134
Accumulated depreciation and amortization	(1,838)		(1,749)
Net property, plant and equipment	7,718		7,385
Other Noncurrent Assets
Goodwill	49		49
Regulatory assets	337		302
Operating lease right-of-use assets, net	18		20
Investments in equity method unconsolidated affiliates	89		88
Other	277		270
Total other noncurrent assets	770		729
Total Assets	$	8,803	$	8,615
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	165	$	230
Accounts payable to affiliated companies	44		79
Notes payable to affiliated companies	93		530
Taxes accrued	27		23
Interest accrued	36		34
Current maturities of long-term debt	—		160
Regulatory liabilities	57		88
Other	80		69
Total current liabilities	502		1,213
Long-Term Debt	2,967		2,620
Other Noncurrent Liabilities
Deferred income taxes	861		821
Asset retirement obligations	20		20
Regulatory liabilities	1,007		1,044
Operating lease liabilities	16		19
Accrued pension and other post-retirement benefit costs	6		8
Other	185		155
Total other noncurrent liabilities	2,095		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	1,604		1,405
Total equity	3,239		2,715
Total Liabilities and Equity	$	8,803	$	8,615

See Notes to Condensed Consolidated Financial Statements

40

FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	199	$	180
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	101		89
Equity component of AFUDC	(14)		(9)
Impairment of assets and other charges	5		—
Deferred income taxes	3		17
Equity in earnings from unconsolidated affiliates	(4)		(4)
Provision for rate refunds	(3)		(24)
(Increase) decrease in
Receivables	137		154
Receivables from affiliated companies	—		(4)
Inventory	26		42
Other current assets	30		(69)
Increase (decrease) in
Accounts payable	(70)		(68)
Accounts payable to affiliated companies	(35)		33
Taxes accrued	3		5
Other current liabilities	(30)		(4)
Other assets	6		(13)
Other liabilities	(2)		7
Net cash provided by operating activities	352		332
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(411)		(438)
Return of investment capital	1		1
Other	(17)		(12)
Net cash used in investing activities	(427)		(449)
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	(437)		(277)
Capital contributions from parent	325		—
Net cash provided by financing activities	75		117
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	$	111	$	98

See Notes to Condensed Consolidated Financial Statements

41

FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended June 30, 2020 and 2021
	Common		Retained		Total
(in millions)	Stock		Earnings		Equity
Balance at March 31, 2020	$	1,310	$	1,310	$	2,620
Net income	—		2		2
Balance at June 30, 2020	$	1,310	$	1,312	$	2,622
Balance at March 31, 2021	$	1,635	$	1,608	$	3,243
Net loss	—		(4)		(4)
Balance at June 30, 2021	$	1,635	$	1,604	$	3,239
	Six Months Ended June 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	—		180		180
Other	—		(1)		(1)
Balance at June 30, 2020	$	1,310	$	1,312	$	2,622
Balance at December 31, 2020	$	1,310	$	1,405	$	2,715
Net income	—		199		199
Contribution from parent	325		—		325
Balance at June 30, 2021	$	1,635	$	1,604	$	3,239

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

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3

4

5

6

7

8

9

10

11

12

13

14

15

16

Duke Energy

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Duke Energy Carolinas

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Progress Energy

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Duke Energy Progress

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Duke Energy Florida

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Duke Energy Ohio

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Duke Energy Indiana

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Piedmont

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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.

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 $41 million and $936 million as of June 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.

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.

43

FINANCIAL STATEMENTS ORGANIZATION AND BASIS OF PRESENTATION

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

The following table presents cash received for the sale of noncontrolling interest and allocated losses to noncontrolling interest for the three and six months ended June 30, 2021, and 2020.

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020
Noncontrolling Interest Capital Contributions
Cash received for the sale of noncontrolling interest to tax equity members	$	15	$	60	$	318	$	163
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method	55		79		98		128
Allocated losses to noncontrolling members based on pro rata shares of ownership	12		11		20		10
Total Noncontrolling Interest Allocated Losses	$	67	$	90	$	118	$	138

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See 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.

	June 30, 2021						December 31, 2020
					Duke						Duke
	Duke		Progress		Energy		Duke		Progress		Energy
	Energy		Energy		Florida		Energy		Energy		Florida
Current Assets
Cash and cash equivalents	$	367	$	75	$	22	$	259	$	59	$	11
Other	197		33		33		194		39		39
Other Noncurrent Assets
Other	1		—		—		103		102		—
Total cash, cash equivalents and restricted cash	$	565	$	108	$	55	$	556	$	200	$	50

INVENTORY

Provisions for inventory write-offs were not material at June 30, 2021, and December 31, 2020. The components of inventory are presented in the tables below.

	June 30, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,368	$	820	$	1,014	$	680	$	334	$	82	$	305	$	11
Coal	397		158		123		78		44		10		106		—
Natural gas, oil and other fuel	250		35		162		100		62		19		1		32
Total inventory	$	3,015	$	1,013	$	1,299	$	858	$	440	$	111	$	412	$	43

	December 31, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,312	$	785	$	999	$	673	$	325	$	78	$	307	$	12
Coal	561		186		193		131		63		16		165		—
Natural gas, oil and other fuel	294		39		183		107		76		16		1		56
Total inventory	$	3,167	$	1,010	$	1,375	$	911	$	464	$	110	$	473	$	68

44

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 June 30, 2021, Duke Energy recorded a pretax charge to earnings of $175 million on the Condensed Consolidated Statements of Operations, which includes $131 million within Impairment of assets and other charges, $27 million within Operations, maintenance and other and $17 million within Depreciation and amortization.

NEW ACCOUNTING STANDARDS

The following new accounting standard was 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 June 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. The Electric Utilities and Infrastructure segment primarily includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The Gas Utilities and Infrastructure segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky and Duke Energy's natural gas storage, midstream pipeline and renewable natural gas investments.

45

FINANCIAL STATEMENTS BUSINESS SEGMENTS

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 Texas West market and in the PJM West market due to declining market pricing and declining long-term forecasted energy prices. The assets were not impaired as of June 30, 2021, because the carrying value of approximately $208 million continues to approximate the aggregate estimated future undiscounted cash flows. Duke Energy has a 50% ownership interest in these assets. A continued decline in energy market pricing would likely result in a future impairment.

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

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

	Three Months Ended June 30, 2021
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other		Eliminations		Total
Unaffiliated revenues	$	5,328	$	305	$	119	$	5,752	$	6	$	—	$	5,758
Intersegment revenues	7		22		—		29		21		(50)		—
Total revenues	$	5,335	$	327	$	119	$	5,781	$	27	$	(50)	$	5,758
Segment income (loss)(a)	$	935	$	17	$	47	$	999	$	(248)	$	—	$	751
Less: Noncontrolling interests													67
Add: Preferred stock dividend													14
Net Income													$	698
Segment assets	$	140,591	$	14,321	$	6,956	$	161,868	$	3,524	$	(7)	$	165,385

	Three Months Ended June 30, 2020
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other		Eliminations		Total
Unaffiliated revenues	$	5,026	$	265	$	123	$	5,414	$	7	$	—	$	5,421
Intersegment revenues	8		24		—		32		19		(51)		—
Total revenues	$	5,034	$	289	$	123	$	5,446	$	26	$	(51)	$	5,421
Segment income (loss)(b)	$	753	$	(1,576)	$	90	$	(733)	$	(84)	$	—	$	(817)
Less: Noncontrolling interests													90
Add: Preferred stock dividend													15
Net Income													$	(892)

(a)    Gas Utilities and Infrastructure includes $16 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 $131 million recorded within Impairment of assets and other charges, $27 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 workforce realignment. See Note 1 for additional 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.

	Six Months Ended June 30, 2021
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other		Eliminations		Total
Unaffiliated revenues	$	10,601	$	1,057	$	238	$	11,896	$	12	$	—	$	11,908
Intersegment revenues	15		45		—		60		41		(101)		—
Total revenues	$	10,616	$	1,102	$	238	$	11,956	$	53	$	(101)	$	11,908
Segment income (loss)(a)	$	1,755	$	262	$	74	$	2,091	$	(387)	$	—	$	1,704
Less: Noncontrolling interests													118
Add: Preferred stock dividend													53
Net Income													$	1,639

46

FINANCIAL STATEMENTS BUSINESS SEGMENTS

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

(a)    Gas Utilities and Infrastructure includes $22 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 $131 million recorded within Impairment of assets and other charges, $27 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.

(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.

Duke Energy Ohio

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

	Three Months Ended June 30, 2021
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total
Total revenues	$	343	$	113	$	456	$	—	$	—	$	456
Segment income/Net income	$	24	$	23	$	47	$	(8)	$	—	$	39
Segment assets	$	6,645	$	3,668	$	10,313	$	28	$	(19)	$	10,322

	Three Months Ended June 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Total
Total revenues	$	330	$	93	$	423	$	—	$	423
Segment income/Net income	$	44	$	23	$	67	$	(1)	$	66

	Six Months Ended June 30, 2021
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Total
Total revenues	$	706	$	282	$	988	$	—	$	988
Segment income/Net (loss) income	$	74	$	66	$	140	$	(10)	$	130

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

47

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 Settlement

On January 22, 2021, 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, if achieved.

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 over 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 ended on January 29, 2021. In the NCUC Orders in the 2019 rate cases issued on March 31, 2021, and April 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.

48

FINANCIAL STATEMENTS REGULATORY MATTERS

COVID-19 Filings

North Carolina

Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and the cost of waived customer fees due to the COVID-19 pandemic. Comments on the joint petition were filed on November 5, 2020, and reply comments were filed on November 30, 2020. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome 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 approval 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 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. In response to an NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases, or in the alternative, the records in the 2019 North Carolina rate cases, in deciding the issue on remand. 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. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the commission.

On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, 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.

49

FINANCIAL STATEMENTS REGULATORY MATTERS

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.

The order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of certain Duke Energy Carolinas coal-fired generating units, indicating the appropriate proceeding for the review of generating plant retirements is Duke Energy Carolinas' integrated resource planning (IRP) proceeding.

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. Based on legal analysis and the filing of the appeal, Duke Energy Carolinas has not recorded an adjustment for its deferred coal ash costs in this matter. Duke Energy Carolinas cannot predict the outcome of this matter.

Duke Energy Progress

2017 North Carolina Rate Case

On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which 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.

50

FINANCIAL STATEMENTS REGULATORY MATTERS

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. In response to an NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. 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 April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020.

On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, 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.

The order denied Duke Energy Progress' proposal to shorten the remaining depreciable lives of certain Duke Energy Progress coal-fired generating units, indicating the appropriate proceeding for the review of generating plant retirements is Duke Energy Progress' IRP proceeding.

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%;

51

FINANCIAL STATEMENTS REGULATORY MATTERS

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

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

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the 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. Based on legal analysis and the filing of the appeal, Duke Energy Progress has not recorded an adjustment for its deferred coal ash costs in this matter. Duke Energy Progress cannot predict the outcome of this matter.

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 October 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.

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.

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, alleging that the 11% stated 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 the complaint on November 20, 2020, seeking dismissal, demonstrating that the 11% ROE is just and reasonable for the service provided. The parties filed responsive pleadings and are awaiting an order from the FERC. 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 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 contains 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 resolves remaining unrecovered storm costs for Hurricane Dorian and Hurricane Michael.

The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order on June 4, 2021. Revised customer rates will be effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024.

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FINANCIAL STATEMENTS REGULATORY MATTERS

Storm Restoration Cost Recovery

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by 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 $3 million and $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 June 30, 2021, and December 31, 2020, respectively.

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 four years, and this investment will be included in base rates offset by the revenue from the subscription fees. The credits will be included for recovery in the fuel cost recovery clause. 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 approve the program on January 5, 2021, and issued its written order on January 26, 2021.

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. The FPSC approval order remains in effect pending the outcome of the appeal. Duke Energy Florida cannot predict the outcome of this matter.

Duke Energy Ohio

Ohio House Bill 6

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), repeal of energy efficiency mandates and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery 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 from Rider CAF and does not impact OVEC cost recovery.

Energy Efficiency Cost Recovery

On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio filed an Application for Rehearing seeking clarification on the final true up and reconciliation process after 2020. On November 18, 2020, the PUCO issued 2 orders on the application for rehearing. The first order was a Third Entry on Rehearing on the Duke Energy Ohio portfolio holding the cost cap previously imposed was unlawful, a 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. On December 18, 2020, Duke Energy Ohio filed an application for rehearing. 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 proposes a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review. Effective January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs due to changes in Ohio law. 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. Duke Energy Ohio cannot predict the outcome of this matter.

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FINANCIAL STATEMENTS REGULATORY MATTERS

Natural Gas Pipeline Extension

Duke Energy Ohio is installing a new natural gas pipeline (the Central Corridor Project) in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. Duke Energy Ohio currently estimates the pipeline development costs and construction activities will range from $163 million to $245 million in direct costs (excluding overheads and AFUDC) and that construction of the pipeline extension will be completed before 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 appeal was fully briefed and the Ohio Supreme Court oral argument was held on March 31, 2021.er.

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. Duke Energy Ohio cannot predict the outcome of this matter.

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

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 of the PUCO 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. Duke Energy Ohio cannot predict the outcome of this matter.

The 2012 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, 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. Duke Energy Ohio cannot predict the outcome of this matter.

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 will 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 will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO established a procedural schedule and testimony was filed on July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. Duke Energy Ohio cannot predict the outcome of this matter.

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. The KPSC accepted Duke Energy Kentucky’s filing as of June 3, 2021, as meeting all filing requirements and issued its first round of discovery. A procedural schedule was set with a hearing scheduled for October 18, 2021. Duke Energy Kentucky cannot predict the outcome of this matter.

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FINANCIAL STATEMENTS REGULATORY MATTERS

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% was 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 July 28, 2021, and implemented in August 2021. Step two rates are based on a return on equity of 9.7% and actual December 31, 2020 capital structure with a 54% equity component. Step two rates will be 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. 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 to deal with the post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020, and the parties agreed on a delayed briefing schedule that allows for the Indiana Rate Case appeal to proceed. Briefing will be completed by mid-September 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 30% of the plant additions being rolled into rate base are categories of plant investment that are 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. The NCUC has established a procedural schedule with an evidentiary hearing to commence on September 7, 2021. 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.

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FINANCIAL STATEMENTS REGULATORY MATTERS

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 June 30, 2021, there is $33 million and $69 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 $102 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 integrated resource plans (IRPs) with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful lives. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives and plans to seek regulatory recovery for amounts that would not be otherwise recovered when any of these assets are retired.

The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of June 30, 2021, and exclude capitalized asset retirement costs.

		Remaining Net
	Capacity	Book Value
	(in MW)	(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-2(a)	324	$	20
Allen Steam Station Units 4-5(b)	516	376
Cliffside Unit 5(b)	544	337
Duke Energy Progress
Mayo Unit 1(b)	704	650
Roxboro Units 3-4(b)	1,392	474
Duke Energy Florida
Crystal River Units 4-5(c)	1,410	1,670