Progress Energy 10Q 2020 Q3 Quarterly report

0001326160 duk:September2020DebtIssuance2.450CouponDue2030Member us-gaap:UnsecuredDebtMember 2020-09-30 0001326160 duk:ProgressEnergyMember duk:GeneralMember us-gaap:ElectricityUsRegulatedMember duk:ElectricUtilitiesandInfrastructureMember 2019-07-01 2019-09-30

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended September 30, 2020



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

For the transition period from _________to_________



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

1-32853	DUKE ENERGY CORPORATION	20-2777218

(a Delaware corporation)

550 South Tryon Street

Charlotte, North Carolina 28202-1803

704-382-3853



1-4928	DUKE ENERGY CAROLINAS, LLC	56-0205520

(a North Carolina limited liability company)

526 South Church Street

Charlotte, North Carolina 28202-1803

704-382-3853



1-15929	PROGRESS ENERGY, INC.	56-2155481

(a North Carolina corporation)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853



1-3382	DUKE ENERGY PROGRESS, LLC	56-0165465

(a North Carolina limited liability company)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853



1-3274	DUKE ENERGY FLORIDA, LLC	59-0247770

(a Florida limited liability company)

299 First Avenue North

St. Petersburg, Florida 33701

704-382-3853



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

(an Ohio corporation)

139 East Fourth Street

Cincinnati, Ohio 45202

704-382-3853



1-3543	DUKE ENERGY INDIANA, LLC	35-0594457

(an Indiana limited liability company)

1000 East Main Street

Plainfield, Indiana 46168

704-382-3853



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

(a North Carolina corporation)

4720 Piedmont Row Drive

Charlotte, North Carolina 28210

704-364-3120

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

Name of each exchange on


Registrant	Title of each class Trading symbols which registered


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


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

January 15, 2073


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

September 15, 2078


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

interest in a share of 5.75% Series A Cumulative

Redeemable Perpetual Preferred Stock, par value

$0.001 per share

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



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

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



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

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



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

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

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



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

Number of shares of common stock outstanding at October 31, 2020:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	735,958,560

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	46
	Note 3 – Regulatory Matters	48
	Note 4 – Commitments and Contingencies	60
	Note 5 – Debt and Credit Facilities	64
	Note 6 – Asset Retirement Obligations	65
	Note 7 – Goodwill	66
	Note 8 – Related Party Transactions	67
	Note 9 – Derivatives and Hedging	68
	Note 10 – Investments in Debt and Equity Securities	74
	Note 11 – Fair Value Measurements	79
	Note 12 – Variable Interest Entities	85
	Note 13 – Revenue	89
	Note 14 – Stockholders' Equity	95
	Note 15 – Employee Benefit Plans	96
	Note 16 – Income Taxes	97
	Note 17 – Subsequent Events	98

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	99

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	119

Item 4.	Controls and Procedures	119

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	120

Item 1A.	Risk Factors	120

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	120

Item 6.	Exhibits	121

	Signatures	124



FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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


◦	The impact of the COVID-19 pandemic;


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


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


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


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


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


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


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


◦	Advancements in technology;


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


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


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


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


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


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


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


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


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


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


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


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

◦

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


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


◦	The ability to control operation and maintenance costs;


◦	The level of creditworthiness of counterparties to transactions;


◦	The ability to obtain adequate insurance at acceptable costs;


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



FORWARD-LOOKING STATEMENTS


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


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


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


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


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


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

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



GLOSSARY OF TERMS

Glossary of Terms

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



Term or Acronym	Definition

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

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

AMT	Alternative Minimum Tax

ARO	Asset retirement obligations

Bison	Bison Insurance Company Limited

CC	Combined Cycle

CCR	Coal Combustion Residuals

CARES Act	Coronavirus Aid, Relief and Economic Security Act

Coal Ash Act	North Carolina Coal Ash Management Act of 2014

the company	Duke Energy Corporation and its subsidiaries

Constitution	Constitution Pipeline Company, LLC

COVID-19	Coronavirus Disease 2019

CRC	Cinergy Receivables Company, LLC

Crystal River Unit 3	Crystal River Unit 3 Nuclear Plant

DEFPF	Duke Energy Florida Project Finance, LLC

DEFR	Duke Energy Florida Receivables, LLC

DEPR	Duke Energy Progress Receivables, LLC

DERF	Duke Energy Receivables Finance Company, LLC

Duke Energy	Duke Energy Corporation (collectively with its subsidiaries)

Duke Energy Ohio	Duke Energy Ohio, Inc.

Duke Energy Progress	Duke Energy Progress, LLC

Duke Energy Carolinas	Duke Energy Carolinas, LLC

Duke Energy Florida	Duke Energy Florida, LLC

Duke Energy Indiana	Duke Energy Indiana, LLC

Duke Energy Kentucky	Duke Energy Kentucky, Inc.

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

EDIT	Excess deferred income tax

EPA	U.S. Environmental Protection Agency

EPS	Earnings Per Share

ESP	Electric Security Plan

ETR	Effective tax rate

Exchange Act	Securities Exchange Act of 1934



GLOSSARY OF TERMS



FERC	Federal Energy Regulatory Commission

FPSC	Florida Public Service Commission

FTR	Financial transmission rights

GAAP	Generally accepted accounting principles in the U.S.

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

GAAP Reported EPS	Basic Earnings Per Share Available to Duke Energy Corporation common stockholders

GWh	Gigawatt-hours

IGCC	Integrated Gasification Combined Cycle

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

MMBtu	Million British Thermal Unit

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

ORS	South Carolina Office of Regulatory Staff

OVEC	Ohio Valley Electric Corporation

Piedmont	Piedmont Natural Gas Company, Inc.

PPA	Purchase Power Agreement

Progress Energy	Progress Energy, Inc.

PSCSC	Public Service Commission of South Carolina

PUCO	Public Utilities Commission of Ohio

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						Nine Months Ended
	September 30,						September 30,
(in millions, except per share amounts)	2020			2019			2020			2019
Operating Revenues
Regulated electric	$	6,315		$	6,515		$	16,402		$	17,223
Regulated natural gas	214			223			1,115			1,231
Nonregulated electric and other	192			202			574			522
Total operating revenues	6,721			6,940			18,091			18,976
Operating Expenses
Fuel used in electric generation and purchased power	1,849			1,978			4,645			5,228
Cost of natural gas	41			48			299			451
Operation, maintenance and other	1,450			1,484			4,142			4,337
Depreciation and amortization	1,217			1,186			3,497			3,364
Property and other taxes	324			335			1,003			1,012
Impairment charges	28			(20		)	36			(16		)
Total operating expenses	4,909			5,011			13,622			14,376
Gains on Sales of Other Assets and Other, net	2			—			10			—
Operating Income	1,814			1,929			4,479			4,600
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates	(80		)	50			(2,004		)	137
Other income and expenses, net	127			104			310			308
Total other income and expenses	47			154			(1,694		)	445
Interest Expense	522			572			1,627			1,657
Income Before Income Taxes	1,339			1,511			1,158			3,388
Income Tax Expense (Benefit)	105			188			(74		)	424
Net Income	1,234			1,323			1,232			2,964
Add: Net Loss Attributable to Noncontrolling Interests	70			19			208			110
Net Income Attributable to Duke Energy Corporation	1,304			1,342			1,440			3,074
Less: Preferred Dividends	39			15			93			27
Net Income Available to Duke Energy Corporation Common Stockholders	$	1,265		$	1,327		$	1,347		$	3,047

Earnings Per Share – Basic and Diluted
Basic and Diluted	$	1.74		$	1.82		$	1.85		$	4.18
Weighted Average Shares Outstanding
Basic and Diluted	735			729			735			728

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2020			2019			2020			2019
Net Income	$	1,234		$	1,323		$	1,232		$	2,964
Other Comprehensive Loss, net of tax^(a)
Pension and OPEB adjustments	1			(2		)	1			1
Net unrealized losses on cash flow hedges	(83		)	(16		)	(159		)	(62		)
Reclassification into earnings from cash flow hedges	4			1			8			4
Unrealized (losses) gains on available-for-sale securities	(2		)	2			5			10
Other Comprehensive Loss, net of tax	(80		)	(15		)	(145		)	(47		)
Comprehensive Income	1,154			1,308			1,087			2,917
Add: Comprehensive Loss Attributable to Noncontrolling Interests	70			19			220			110
Comprehensive Income Attributable to Duke Energy	1,224			1,327			1,307			3,027
Less: Preferred Dividends	39			15			93			27
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	1,185		$	1,312		$	1,214		$	3,000


(a)	Net of income tax impacts of approximately $24 million for the three months ended September 30, 2020, and $43 million and $14 million for the nine months ended September 30, 2020, and 2019, respectively. All other periods presented include immaterial income tax impacts.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	308		$	311
Receivables (net of allowance for doubtful accounts of $27 at 2020 and $22 at 2019)	719			1,066
Receivables of VIEs (net of allowance for doubtful accounts of $106 at 2020 and $54 at 2019)	2,320			1,994
Inventory	3,190			3,232
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)	1,637			1,796
Other (includes $335 at 2020 and $242 at 2019 related to VIEs)	505			764
Total current assets	8,679			9,163
Property, Plant and Equipment
Cost	153,916			147,654
Accumulated depreciation and amortization	(48,185		)	(45,773		)
Generation facilities to be retired, net	29			246
Net property, plant and equipment	105,760			102,127
Other Noncurrent Assets
Goodwill	19,303			19,303
Regulatory assets (includes $951 at 2020 and $989 at 2019 related to VIEs)	13,264			13,222
Nuclear decommissioning trust funds	8,363			8,140
Operating lease right-of-use assets, net	1,577			1,658
Investments in equity method unconsolidated affiliates	924			1,936
Other (includes $90 at 2020 and $110 at 2019 related to VIEs)	3,539			3,289
Total other noncurrent assets	46,970			47,548
Total Assets	$	161,409		$	158,838
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,486		$	3,487
Notes payable and commercial paper	3,425			3,135
Taxes accrued	768			392
Interest accrued	556			565
Current maturities of long-term debt (includes $466 at 2020 and $216 at 2019 related to VIEs)	4,669			3,141
Asset retirement obligations	742			881
Regulatory liabilities	1,218			784
Other	2,829			2,367
Total current liabilities	16,693			14,752
Long-Term Debt (includes $3,628 at 2020 and $3,997 at 2019 related to VIEs)	56,049			54,985
Other Noncurrent Liabilities
Deferred income taxes	9,170			8,878
Asset retirement obligations	12,912			12,437
Regulatory liabilities	14,546			15,264
Operating lease liabilities	1,379			1,432
Accrued pension and other post-retirement benefit costs	903			934
Investment tax credits	689			624
Other (includes $342 at 2020 and $228 at 2019 related to VIEs)	1,773			1,581
Total other noncurrent liabilities	41,372			41,150
Commitments and Contingencies
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019	973			973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019	989			989
Common stock, $0.001 par value, 2 billion shares authorized; 736 million shares outstanding at 2020 and 733 million shares outstanding at 2019	1			1
Additional paid-in capital	41,046			40,881
Retained earnings	3,260			4,108
Accumulated other comprehensive loss	(263		)	(130		)
Total Duke Energy Corporation stockholders' equity	46,006			46,822
Noncontrolling interests	1,289			1,129
Total equity	47,295			47,951
Total Liabilities and Equity	$	161,409		$	158,838

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	1,232		$	2,964
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	4,081			3,831
Equity in losses (earnings) of unconsolidated affiliates	2,004			(137		)
Equity component of AFUDC	(112		)	(99		)
Gains on sales of other assets	(10		)	—
Impairment charges	36			(16		)
Deferred income taxes	210			736
Contributions to qualified pension plans	—			(77		)
Payments for asset retirement obligations	(463		)	(582		)
Provision for rate refunds	(15		)	61
Refund of AMT credit carryforwards	572			—
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	87			(4		)
Receivables	58			62
Inventory	43			(3		)
Other current assets	199			(134		)
Increase (decrease) in
Accounts payable	(563		)	(538		)
Taxes accrued	386			125
Other current liabilities	(284		)	(198		)
Other assets	(328		)	(279		)
Other liabilities	(367		)	(75		)
Net cash provided by operating activities	6,766			5,637
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(7,408		)	(8,084		)
Contributions to equity method investments	(276		)	(264		)
Purchases of debt and equity securities	(6,160		)	(3,105		)
Proceeds from sales and maturities of debt and equity securities	6,087			3,092
Other	(207		)	(272		)
Net cash used in investing activities	(7,964		)	(8,633		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	6,162			6,131
Issuance of preferred stock	—			1,963
Issuance of common stock	75			41
Payments for the redemption of long-term debt	(3,468		)	(2,737		)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	2,372			339
Payments for the redemption of short-term debt with original maturities greater than 90 days	(1,143		)	(479		)
Notes payable and commercial paper	(969		)	(879		)
Contributions from noncontrolling interests	402			615
Dividends paid	(2,113		)	(1,990		)
Other	(93		)	(17		)
Net cash provided by financing activities	1,225			2,987
Net increase (decrease) in cash, cash equivalents and restricted cash	27			(9		)
Cash, cash equivalents and restricted cash at beginning of period	573			591
Cash, cash equivalents and restricted cash at end of period	$	600		$	582
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	992		$	1,073
Non-cash dividends	82			81

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended September 30, 2019 and 2020
												Accumulated Other Comprehensive
												(Loss) Income
															Net Unrealized						Total
												Net Gains			(Losses) Gains						Duke Energy
			Common			Additional						(Losses) on			on Available-			Pension and			Corporation
	Preferred		Stock	Common		Paid-in			Retained			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Stock		Shares	Stock		Capital			Earnings			Hedges			Securities			Adjustments			Equity			Interests			Equity
Balance at June 30, 2019	$	973	728	$	1	$	40,885		$	3,502		$	(63	)	$	4		$	(89	)	$	45,213		$	119		$	45,332
Net income (loss)	—		—	—		—			1,327			—			—			—			1,327			(19		)	1,308
Other comprehensive (loss) income	—		—	—		—			—			(15		)	2			(2		)	(15		)	—			(15		)
Preferred stock, Series B, issuances, net of issuance costs^(a)	990		—	—		—			—			—			—			—			990			—			990
Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		69			—			—			—			—			69			—			69
Common stock dividends	—		—	—		—			(690		)	—			—			—			(690		)	—			(690		)
Sale of noncontrolling interest^(b)	—		—	—		(465		)	—			10			—			—			(455		)	863			408
Contribution from noncontrolling interests, net of transaction costs	—		—	—		—			—			—			—			—			—			7			7
Other	—		—	—		(1		)	—			—			—			—			(1		)	(1		)	(2		)
Balance at September 30, 2019	$	1,963	729	$	1	$	40,488		$	4,139		$	(68	)	$	6		$	(91	)	$	46,438		$	969		$	47,407

Balance at June 30, 2020	$	1,962	735	$	1	$	40,997		$	2,707		$	(111	)	$	10		$	(82	)	$	45,484		$	1,127		$	46,611
Net income (loss)	—		—	—		—			1,265			—			—			—			1,265			(70		)	1,195
Other comprehensive (loss) income	—		—	—		—			—			(79		)	(2		)	1			(80		)	—			(80		)
Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		65			—			—			—			—			65			—			65
Common stock dividends	—		—	—		—			(712		)	—			—			—			(712		)	—			(712		)
Contribution from noncontrolling interests, net of transaction costs^(d)	—		—	—		(17		)	—			—			—			—			(17		)	239			222
Distributions to noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			(8		)	(8		)
Other	—		—	—		1			—			—			—			—			1			1			2
Balance at September 30, 2020	$	1,962	736	$	1	$	41,046		$	3,260		$	(190	)	$	8		$	(81	)	$	46,006		$	1,289		$	47,295

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS



	Nine Months Ended September 30, 2019 and 2020
												Accumulated Other Comprehensive
												(Loss) Income
															Net Unrealized						Total
												Net			(Losses) Gains						Duke Energy
			Common			Additional						Losses on			on Available-			Pension and			Corporation
	Preferred		Stock	Common		Paid-in			Retained			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Stock		Shares	Stock		Capital			Earnings			Hedges			Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2018	$	—	727	$	1	$	40,795		$	3,113		$	(14	)	$	(3	)	$	(75	)	$	43,817		$	17		$	43,834
Net income (loss)	—		—	—		—			3,047			—			—			—			3,047			(110		)	2,937
Other comprehensive (loss) income	—		—	—		—			—			(58		)	10			1			(47		)	—			(47		)
Preferred stock, Series A, issuances, net of issuance costs^(c)	973		—	—		—			—			—			—			—			973			—			973
Preferred stock, Series B, issuances, net of issuance costs^(a)	990		—	—		—			—			—			—			—			990			—			990
Common stock issuances, including dividend reinvestment and employee benefits	—		2	—		158			—			—			—			—			158			—			158
Common stock dividends	—		—	—		—			(2,044		)	—			—			—			(2,044		)	—			(2,044		)
Sale of noncontrolling interest^(b)	—		—	—		(465		)	—			10			—			—			(455		)	863			408
Contributions from noncontrolling interests, net of transaction costs^(d)	—		—	—		—			—			—			—			—			—			200			200
Distributions to noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			(1		)	(1		)
Other^(e)	—		—	—		—			23			(6		)	(1		)	(17		)	(1		)	—			(1		)
Balance at September 30, 2019	$	1,963	729	$	1	$	40,488		$	4,139		$	(68	)	$	6		$	(91	)	$	46,438		$	969		$	47,407

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)	—		—	—		—			1,347			—			—			—			1,347			(208		)	1,139
Other comprehensive (loss) income	—		—	—		—			—			(139		)	5			1			(133		)	(12		)	(145		)
Common stock issuances, including dividend reinvestment and employee benefits	—		3	—		181			—			—			—			—			181			—			181
Common stock dividends	—		—	—		—			(2,103		)	—			—			—			(2,103		)	—			(2,103		)
Contributions from noncontrolling interests, net of transaction costs^(d)	—		—	—		(17		)	—			—			—			—			(17		)	402			385
Distributions to noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			(22		)	(22		)
Other^(f)	—		—	—		1			(92		)	—			—			—			(91		)	—			(91		)
Balance at September 30, 2020	$	1,962	736	$	1	$	41,046		$	3,260		$	(190	)	$	8		$	(81	)	$	46,006		$	1,289		$	47,295


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


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


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


(d)	Relates to tax equity financing activity in the Commercial Renewables segment.


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


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

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2020		2019		2020		2019
Operating Revenues	$	2,058	$	2,162	$	5,416	$	5,619
Operating Expenses
Fuel used in electric generation and purchased power	497		504		1,326		1,371
Operation, maintenance and other	402		443		1,218		1,324
Depreciation and amortization	372		350		1,090		1,013
Property and other taxes	57		66		213		221
Impairment charges	20		6		22		11
Total operating expenses	1,348		1,369		3,869		3,940
Gains on Sales of Other Assets and Other, net	1		—		1		—
Operating Income	711		793		1,548		1,679
Other Income and Expenses, net	42		34		128		106
Interest Expense	122		119		370		346
Income Before Income Taxes	631		708		1,306		1,439
Income Tax Expense	76		118		178		255
Net Income and Comprehensive Income	$	555	$	590	$	1,128	$	1,184

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	23		$	18
Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019)	177			324
Receivables of VIEs (net of allowance for doubtful accounts of $21 at 2020 and $7 at 2019)	770			642
Receivables from affiliated companies	64			114
Notes receivable from affiliated companies	65			—
Inventory	992			996
Regulatory assets	495			550
Other	44			21
Total current assets	2,630			2,665
Property, Plant and Equipment
Cost	50,622			48,922
Accumulated depreciation and amortization	(17,406		)	(16,525		)
Net property, plant and equipment	33,216			32,397
Other Noncurrent Assets
Regulatory assets	3,400			3,360
Nuclear decommissioning trust funds	4,506			4,359
Operating lease right-of-use assets, net	117			123
Other	1,179			1,149
Total other noncurrent assets	9,202			8,991
Total Assets	$	45,048		$	44,053
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	583		$	954
Accounts payable to affiliated companies	155			210
Notes payable to affiliated companies	—			29
Taxes accrued	398			46
Interest accrued	130			115
Current maturities of long-term debt	751			458
Asset retirement obligations	267			206
Regulatory liabilities	430			255
Other	487			611
Total current liabilities	3,201			2,884
Long-Term Debt	11,497			11,142
Long-Term Debt Payable to Affiliated Companies	300			300
Other Noncurrent Liabilities
Deferred income taxes	3,915			3,921
Asset retirement obligations	5,507			5,528
Regulatory liabilities	6,243			6,423
Operating lease liabilities	102			102
Accrued pension and other post-retirement benefit costs	76			84
Investment tax credits	237			231
Other	644			627
Total other noncurrent liabilities	16,724			16,916
Commitments and Contingencies
Equity
Member's equity	13,333			12,818
Accumulated other comprehensive loss	(7		)	(7		)
Total equity	13,326			12,811
Total Liabilities and Equity	$	45,048		$	44,053

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,128		$	1,184
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,295			1,227
Equity component of AFUDC	(46		)	(29		)
Gains on sales of other assets	(1		)	—
Impairment charges	22			11
Deferred income taxes	(103		)	96
Contributions to qualified pension plans	—			(7		)
Payments for asset retirement obligations	(127		)	(234		)
Provision for rate refunds	(1		)	34
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—			(7		)
Receivables	41			(80		)
Receivables from affiliated companies	50			74
Inventory	4			5
Other current assets	197			(117		)
Increase (decrease) in
Accounts payable	(313		)	(284		)
Accounts payable to affiliated companies	(55		)	(56		)
Taxes accrued	352			91
Other current liabilities	(121		)	44
Other assets	(71		)	(2		)
Other liabilities	(23		)	(44		)
Net cash provided by operating activities	2,228			1,906
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,931		)	(1,984		)
Purchases of debt and equity securities	(1,313		)	(1,658		)
Proceeds from sales and maturities of debt and equity securities	1,313			1,658
Notes receivable from affiliated companies	(65		)	—
Other	(105		)	(80		)
Net cash used in investing activities	(2,101		)	(2,064		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	965			819
Payments for the redemption of long-term debt	(457		)	(5		)
Notes payable to affiliated companies	(29		)	(390		)
Distributions to parent	(600		)	(275		)
Other	(1		)	(1		)
Net cash (used in) provided by financing activities	(122		)	148
Net increase (decrease) in cash and cash equivalents	5			(10		)
Cash and cash equivalents at beginning of period	18			33
Cash and cash equivalents at end of period	$	23		$	23
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	295		$	261

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended September 30, 2019 and 2020
				Accumulated Other
				Comprehensive
				Loss
	Member's			Net Losses on			Total
(in millions)	Equity			Cash Flow Hedges			Equity
Balance at June 30, 2019	$	12,283		$	(7	)	$	12,276
Net income	590			—			590
Distributions to parent	(275		)	—			(275		)
Balance at September 30, 2019	$	12,598		$	(7	)	$	12,591

Balance at June 30, 2020	$	13,079		$	(7	)	$	13,072
Net income	555			—			555
Distributions to parent	(300		)	—			(300		)
Other	(1		)	—			(1		)
Balance at September 30, 2020	$	13,333		$	(7	)	$	13,326

	Nine Months Ended September 30, 2019 and 2020
				Accumulated Other
				Comprehensive
				Loss
	Member's			Net Losses on			Total
(in millions)	Equity			Cash Flow Hedges			Equity
Balance at December 31, 2018	$	11,689		$	(6	)	$	11,683
Net income	1,184			—			1,184
Distributions to parent	(275		)	—			(275		)
Other	—			(1		)	(1		)
Balance at September 30, 2019	$	12,598		$	(7	)	$	12,591

Balance at December 31, 2019	$	12,818		$	(7	)	$	12,811
Net income	1,128			—			1,128
Distributions to parent	(600		)	—			(600		)
Other^(a)	(13		)	—			(13		)
Balance at September 30, 2020	$	13,333		$	(7	)	$	13,326


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

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in millions)	2020		2019			2020		2019
Operating Revenues	$	3,197	$	3,242		$	8,117	$	8,558
Operating Expenses
Fuel used in electric generation and purchased power	1,088		1,187			2,628		3,100
Operation, maintenance and other	646		640			1,789		1,813
Depreciation and amortization	472		496			1,356		1,377
Property and other taxes	147		159			419		439
Impairment charges	1		(25		)	1		(25		)
Total operating expenses	2,354		2,457			6,193		6,704
Gains on Sales of Other Assets and Other, net	3		1			9		—
Operating Income	846		786			1,933		1,854
Other Income and Expenses, net	24		41			89		106
Interest Expense	194		212			599		650
Income Before Income Taxes	676		615			1,423		1,310
Income Tax Expense	70		94			190		212
Net Income	606		521			1,233		1,098
Less: Net Income Attributable to Noncontrolling Interests	1		0			1		0
Net Income Attributable to Parent	$	605	$	521		$	1,232	$	1,098

Net Income	$	606	$	521		$	1,233	$	1,098
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	—		—			1		2
Net unrealized gains on cash flow hedges	1		1			3		4
Unrealized gains on available-for-sale securities	1		1			1		2
Other Comprehensive Income, net of tax	2		2			5		8
Comprehensive Income	608		523			1,238		1,106
Less: Comprehensive Income Attributable to Noncontrolling Interests	1		—			1		0
Comprehensive Income Attributable to Parent	$	607	$	523		$	1,237	$	1,106

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	70		$	48
Receivables (net of allowance for doubtful accounts of $9 at 2020 and $7 at 2019)	196			220
Receivables of VIEs (net of allowance for doubtful accounts of $28 at 2020 and $9 at 2019)	1,071			830
Receivables from affiliated companies	44			76
Notes receivable from affiliated companies	—			164
Inventory	1,378			1,423
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)	775			946
Other (includes $16 at 2020 and $39 at 2019 related to VIEs)	81			210
Total current assets	3,615			3,917
Property, Plant and Equipment
Cost	57,152			55,070
Accumulated depreciation and amortization	(18,008		)	(17,159		)
Generation facilities to be retired, net	29			246
Net property, plant and equipment	39,173			38,157
Other Noncurrent Assets
Goodwill	3,655			3,655
Regulatory assets (includes $951 at 2020 and $989 at 2019 related to VIEs)	6,270			6,346
Nuclear decommissioning trust funds	3,857			3,782
Operating lease right-of-use assets, net	710			788
Other	1,212			1,049
Total other noncurrent assets	15,704			15,620
Total Assets	$	58,492		$	57,694
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	795		$	1,104
Accounts payable to affiliated companies	208			310
Notes payable to affiliated companies	2,159			1,821
Taxes accrued	310			46
Interest accrued	199			228
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)	1,726			1,577
Asset retirement obligations	297			485
Regulatory liabilities	545			330
Other	756			902
Total current liabilities	6,995			6,803
Long-Term Debt (includes $1,351 at 2020 and $1,632 at 2019 related to VIEs)	17,989			17,907
Long-Term Debt Payable to Affiliated Companies	150			150
Other Noncurrent Liabilities
Deferred income taxes	4,508			4,462
Asset retirement obligations	6,058			5,986
Regulatory liabilities	4,809			5,225
Operating lease liabilities	637			697
Accrued pension and other post-retirement benefit costs	474			488
Other	443			383
Total other noncurrent liabilities	16,929			17,241
Commitments and Contingencies
Equity
Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019	—			—
Additional paid-in capital	9,143			9,143
Retained earnings	7,296			6,465
Accumulated other comprehensive loss	(13		)	(18		)
Total Progress Energy, Inc. stockholders' equity	16,426			15,590
Noncontrolling interests	3			3
Total equity	16,429			15,593
Total Liabilities and Equity	$	58,492		$	57,694

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,233		$	1,098
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	1,734			1,649
Equity component of AFUDC	(30		)	(48		)
(Gains) Losses on sales of other assets	(9		)	—
Impairment charges	1			(25		)
Deferred income taxes	(3		)	342
Contributions to qualified pension plans	—			(57		)
Payments for asset retirement obligations	(287		)	(309		)
Provision for rate refunds	4			13
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(13		)	9
Receivables	(207		)	(128		)
Receivables from affiliated companies	32			135
Inventory	46			45
Other current assets	214			79
Increase (decrease) in
Accounts payable	(124		)	(64		)
Accounts payable to affiliated companies	(102		)	(6		)
Taxes accrued	263			150
Other current liabilities	(41		)	(96		)
Other assets	(145		)	(282		)
Other liabilities	(102		)	(75		)
Net cash provided by operating activities	2,464			2,430
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,602		)	(2,866		)
Purchases of debt and equity securities	(4,554		)	(1,304		)
Proceeds from sales and maturities of debt and equity securities	4,543			1,300
Notes receivable from affiliated companies	164			—
Other	(114		)	(130		)
Net cash used in investing activities	(2,563		)	(3,000		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,791			1,295
Payments for the redemption of long-term debt	(1,555		)	(1,263		)
Notes payable to affiliated companies	338			554
Dividends to parent	(400		)	—
Other	(13		)	8
Net cash provided by financing activities	161			594
Net increase in cash, cash equivalents and restricted cash	62			24
Cash, cash equivalents and restricted cash at beginning of period	126			112
Cash, cash equivalents and restricted cash at end of period	$	188		$	136
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	311		$	400

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended September 30, 2019 and 2020
						Accumulated Other Comprehensive Loss
						Net Gains			Net Unrealized						Total Progress
	Additional					(Losses) on			Gains (Losses) on			Pension and			Energy, Inc.
	Paid-in		Retained			Cash Flow			Available-for-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Capital		Earnings			Hedges			Sale Securities			Adjustments			Equity			Interests			Equity
Balance at June 30, 2019	$	9,143	$	5,715		$	(13	)	$	—		$	(8	)	$	14,837		$	2		$	14,839
Net income	—		521			—			—			—			521			—			521
Other comprehensive income	—		—			1			1			—			2			—			2
Other	—		—			—			(1		)	1			—			1			1
Balance at September 30, 2019	$	9,143	$	6,236		$	(12	)	$	—		$	(7	)	$	15,360		$	3		$	15,363

Balance at June 30, 2020	$	9,143	$	7,090		$	(8	)	$	(1	)	$	(6	)	$	16,218		$	3		$	16,221
Net income	—		605			—			—			—			605			1			606
Other comprehensive income	—		—			1			1			—			2			—			2
Dividends to parent	—		(400		)	—			—			—			(400		)	—			(400		)
Other	—		1			—			—			—			1			(1		)	—
Balance at September 30, 2020	$	9,143	$	7,296		$	(7	)	$	—		$	(6	)	$	16,426		$	3		$	16,429

	Nine Months Ended September 30, 2019 and 2020
						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, 2018	$	9,143	$	5,131		$	(12	)	$	(1	)	$	(7	)	$	14,254		$	3		$	14,257
Net income	—		1,098			—			—			—			1,098			—			1,098
Other comprehensive income	—		—			4			2			2			8			—			8
Other^(a)	—		7			(4		)	(1		)	(2		)	—			—			—
Balance at September 30, 2019	$	9,143	$	6,236		$	(12	)	$	—		$	(7	)	$	15,360		$	3		$	15,363

Balance at December 31, 2019	$	9,143	$	6,465		$	(10	)	$	(1	)	$	(7	)	$	15,590		$	3		$	15,593
Net income	—		1,232			—			—			—			1,232			1			1,233
Other comprehensive income	—		—			3			1			1			5			—			5
Distributions to noncontrolling interests	—		—			—			—			—			—			(1		)	(1		)
Dividends to parent	—		(400		)	—			—			—			(400		)	—			(400		)
Other	—		(1		)	—			—			—			(1		)	—			(1		)
Balance at September 30, 2020	$	9,143	$	7,296		$	(7	)	$	—		$	(6	)	$	16,426		$	3		$	16,429


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

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2020		2019		2020		2019
Operating Revenues	$	1,626	$	1,688	$	4,207	$	4,559
Operating Expenses
Fuel used in electric generation and purchased power	537		577		1,337		1,571
Operation, maintenance and other	348		378		970		1,070
Depreciation and amortization	289		314		833		855
Property and other taxes	38		46		129		131
Impairment charges	5		—		5		—
Total operating expenses	1,217		1,315		3,274		3,627
Gains on Sales of Other Assets and Other, net	3		—		8		—
Operating Income	412		373		941		932
Other Income and Expenses, net	11		27		52		75
Interest Expense	66		74		203		232
Income Before Income Taxes	357		326		790		775
Income Tax Expense	11		48		79		125
Net Income and Comprehensive Income	$	346	$	278	$	711	$	650

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	43		$	22
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)	103			123
Receivables of VIEs (net of allowance for doubtful accounts of $17 at 2020 and $5 at 2019)	559			489
Receivables from affiliated companies	45			52
Inventory	910			934
Regulatory assets	472			526
Other	54			60
Total current assets	2,186			2,206
Property, Plant and Equipment
Cost	35,479			34,603
Accumulated depreciation and amortization	(12,548		)	(11,915		)
Generation facilities to be retired, net	29			246
Net property, plant and equipment	22,960			22,934
Other Noncurrent Assets
Regulatory assets	4,449			4,152
Nuclear decommissioning trust funds	3,189			3,047
Operating lease right-of-use assets, net	357			387
Other	720			651
Total other noncurrent assets	8,715			8,237
Total Assets	$	33,861		$	33,377
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	372		$	629
Accounts payable to affiliated companies	144			203
Notes payable to affiliated companies	167			66
Taxes accrued	207			17
Interest accrued	80			110
Current maturities of long-term debt	603			1,006
Asset retirement obligations	297			485
Regulatory liabilities	436			236
Other	389			478
Total current liabilities	2,695			3,230
Long-Term Debt	8,605			7,902
Long-Term Debt Payable to Affiliated Companies	150			150
Other Noncurrent Liabilities
Deferred income taxes	2,426			2,388
Asset retirement obligations	5,503			5,408
Regulatory liabilities	4,140			4,232
Operating lease liabilities	329			354
Accrued pension and other post-retirement benefit costs	236			238
Investment tax credits	133			137
Other	88			92
Total other noncurrent liabilities	12,855			12,849
Commitments and Contingencies
Equity
Member's Equity	9,556			9,246
Total Liabilities and Equity	$	33,861		$	33,377

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	711		$	650
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	972			996
Equity component of AFUDC	(22		)	(44		)
Gains on sales of other assets	(8		)	—
Impairment charges	5			—
Deferred income taxes	(33		)	144
Contributions to qualified pension plans	—			(4		)
Payments for asset retirement obligations	(249		)	(288		)
Provision for rate refunds	4			13
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—			(4		)
Receivables	(34		)	(9		)
Receivables from affiliated companies	7			(11		)
Inventory	24			15
Other current assets	82			65
Increase (decrease) in
Accounts payable	(185		)	(54		)
Accounts payable to affiliated companies	(59		)	(80		)
Taxes accrued	190			37
Other current liabilities	(24		)	(17		)
Other assets	(177		)	(201		)
Other liabilities	21			39
Net cash provided by operating activities	1,225			1,247
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,142		)	(1,592		)
Purchases of debt and equity securities	(1,269		)	(656		)
Proceeds from sales and maturities of debt and equity securities	1,238			632
Other	(31		)	(56		)
Net cash used in investing activities	(1,204		)	(1,672		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,296			1,270
Payments for the redemption of long-term debt	(985		)	(603		)
Notes payable to affiliated companies	101			(215		)
Distributions to parent	(400		)	—
Other	(12		)	(1		)
Net cash provided by financing activities	—			451
Net increase in cash and cash equivalents	21			26
Cash and cash equivalents at beginning of period	22			23
Cash and cash equivalents at end of period	$	43		$	49
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	124		$	182

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended
	September 30, 2019 and 2020
	Member's
(in millions)	Equity
Balance at June 30, 2019	$	8,813
Net income	278
Balance at September 30, 2019	$	9,091

Balance at June 30, 2020	$	9,610
Net income	346
Distributions to parent	(400		)
Balance at September 30, 2020	$	9,556

	Nine Months Ended
	September 30, 2019 and 2020
	Member's
(in millions)	Equity
Balance at December 31, 2018	$	8,441
Net income	650
Balance at September 30, 2019	$	9,091

Balance at December 31, 2019	$	9,246
Net income	711
Distributions to parent	(400		)
Other	(1		)
Balance at September 30, 2020	$	9,556

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2020			2019			2020			2019
Operating Revenues	$	1,567		$	1,548		$	3,897		$	3,987
Operating Expenses
Fuel used in electric generation and purchased power	551			610			1,291			1,529
Operation, maintenance and other	292			256			806			730
Depreciation and amortization	183			182			523			522
Property and other taxes	110			113			290			309
Impairment charges	(4		)	(25		)	(4		)	(25		)
Total operating expenses	1,132			1,136			2,906			3,065
Gains on Sales of Other Assets and Other, net	—			1			—			—
Operating Income	435			413			991			922
Other Income and Expenses, net	11			14			36			39
Interest Expense	81			81			245			246
Income Before Income Taxes	365			346			782			715
Income Tax Expense	78			57			159			129
Net Income	$	287		$	289		$	623		$	586
Other Comprehensive Income, net of tax
Unrealized gains on available-for-sale securities	1			1			1			2
Comprehensive Income	$	288		$	290		$	624		$	588

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	19		$	17
Receivables (net of allowance for doubtful accounts of $5 at 2020 and $3 at 2019)	91			96
Receivables of VIEs (net of allowance for doubtful accounts of $11 at 2020 and $4 at 2019)	512			341
Receivables from affiliated companies	3			—
Notes receivable from affiliated companies	—			173
Inventory	468			489
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)	303			419
Other (includes $16 at 2020 and $39 at 2019 related to VIEs)	25			58
Total current assets	1,421			1,593
Property, Plant and Equipment
Cost	21,662			20,457
Accumulated depreciation and amortization	(5,452		)	(5,236		)
Net property, plant and equipment	16,210			15,221
Other Noncurrent Assets
Regulatory assets (includes $951 at 2020 and $989 at 2019 related to VIEs)	1,821			2,194
Nuclear decommissioning trust funds	668			734
Operating lease right-of-use assets, net	354			401
Other	341			311
Total other noncurrent assets	3,184			3,640
Total Assets	$	20,815		$	20,454
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	424		$	474
Accounts payable to affiliated companies	77			131
Notes payable to affiliated companies	66			—
Taxes accrued	260			43
Interest accrued	73			75
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)	623			571
Regulatory liabilities	109			94
Other	359			415
Total current liabilities	1,991			1,803
Long-Term Debt (includes $1,001 at 2020 and $1,307 at 2019 related to VIEs)	7,294			7,416
Other Noncurrent Liabilities
Deferred income taxes	2,175			2,179
Asset retirement obligations	555			578
Regulatory liabilities	669			993
Operating lease liabilities	308			343
Accrued pension and other post-retirement benefit costs	207			218
Other	205			136
Total other noncurrent liabilities	4,119			4,447
Commitments and Contingencies
Equity
Member's equity	7,411			6,789
Accumulated other comprehensive loss	—			(1		)
Total equity	7,411			6,788
Total Liabilities and Equity	$	20,815		$	20,454

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	623		$	586
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	755			647
Equity component of AFUDC	(8		)	(4		)
Impairment charges	(4		)	(25		)
Deferred income taxes	19			164
Contributions to qualified pension plans	—			(53		)
Payments for asset retirement obligations	(38		)	(21		)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(17		)	9
Receivables	(172		)	(119		)
Receivables from affiliated companies	(3		)	27
Inventory	22			29
Other current assets	41			100
Increase (decrease) in
Accounts payable	63			(11		)
Accounts payable to affiliated companies	(54		)	67
Taxes accrued	217			101
Other current liabilities	(20		)	(77		)
Other assets	48			(77		)
Other liabilities	(136		)	(123		)
Net cash provided by operating activities	1,336			1,220
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,460		)	(1,274		)
Purchases of debt and equity securities	(3,284		)	(648		)
Proceeds from sales and maturities of debt and equity securities	3,305			668
Notes receivable from affiliated companies	173			—
Other	(82		)	(73		)
Net cash used in investing activities	(1,348		)	(1,327		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	495			25
Payments for the redemption of long-term debt	(570		)	(210		)
Notes payable to affiliated companies	66			248
Other	—			9
Net cash (used in) provided by financing activities	(9		)	72
Net decrease in cash, cash equivalents and restricted cash	(21		)	(35		)
Cash, cash equivalents and restricted cash at beginning of period	56			75
Cash, cash equivalents and restricted cash at end of period	$	35		$	40
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	187		$	218

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended September 30, 2019 and 2020
				Accumulated
				Other
				Comprehensive
				Income (Loss)
				Net Unrealized
				Gains on
	Member's			Available-for-Sale			Total
(in millions)	Equity			Securities			Equity
Balance at June 30, 2019	$	6,394		$	(1	)	$	6,393
Net income	289			—			289
Other comprehensive income	—			1			1
Balance at September 30, 2019	$	6,683		$	—		$	6,683

Balance at June 30, 2020	$	7,125		$	(1	)	$	7,124
Net income	287			—			287
Other comprehensive income	—			1			1
Other	(1		)	—			(1		)
Balance at September 30, 2020	$	7,411		$	—		$	7,411

	Nine Months Ended September 30, 2019 and 2020
				Accumulated
				Other
				Comprehensive
				Income (Loss)
				Net Unrealized
				Gains on
	Member's			Available-for-Sale			Total
(in millions)	Equity			Securities			Equity
Balance at December 31, 2018	$	6,097		$	(2	)	$	6,095
Net income	586			—			586
Other comprehensive income	—			2			2
Balance at September 30, 2019	$	6,683		$	—		$	6,683

Balance at December 31, 2019	$	6,789		$	(1	)	$	6,788
Net income	623			—			623
Other comprehensive income	—			1			1
Other	(1		)	—			(1		)
Balance at September 30, 2020	$	7,411		$	—		$	7,411

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2020		2019		2020		2019
Operating Revenues
Regulated electric	$	394	$	408	$	1,070	$	1,099
Regulated natural gas	79		81		324		354
Total operating revenues	473		489		1,394		1,453
Operating Expenses
Fuel used in electric generation and purchased power	94		114		258		293
Cost of natural gas	3		4		46		68
Operation, maintenance and other	115		123		333		378
Depreciation and amortization	72		69		208		199
Property and other taxes	83		71		244		229
Total operating expenses	367		381		1,089		1,167
Operating Income	106		108		305		286
Other Income and Expenses, net	4		4		11		19
Interest Expense	26		27		75		81
Income Before Income Taxes	84		85		241		224
Income Tax Expense	14		11		40		34
Net Income and Comprehensive Income	$	70	$	74	$	201	$	190

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	10		$	17
Receivables (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019)	90			84
Receivables from affiliated companies	57			92
Inventory	130			135
Regulatory assets	35			49
Other	13			21
Total current assets	335			398
Property, Plant and Equipment
Cost	10,804			10,241
Accumulated depreciation and amortization	(2,989		)	(2,843		)
Net property, plant and equipment	7,815			7,398
Other Noncurrent Assets
Goodwill	920			920
Regulatory assets	597			549
Operating lease right-of-use assets, net	20			21
Other	62			52
Total other noncurrent assets	1,599			1,542
Total Assets	$	9,749		$	9,338
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	240		$	288
Accounts payable to affiliated companies	54			68
Notes payable to affiliated companies	85			312
Taxes accrued	193			219
Interest accrued	32			30
Asset retirement obligations	7			1
Regulatory liabilities	66			64
Other	73			75
Total current liabilities	750			1,057
Long-Term Debt	3,064			2,594
Long-Term Debt Payable to Affiliated Companies	25			25
Other Noncurrent Liabilities
Deferred income taxes	965			922
Asset retirement obligations	84			79
Regulatory liabilities	753			763
Operating lease liabilities	20			21
Accrued pension and other post-retirement benefit costs	104			100
Other	100			94
Total other noncurrent liabilities	2,026			1,979
Commitments and Contingencies
Equity
Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019	762			762
Additional paid-in capital	2,776			2,776
Retained earnings	346			145
Total equity	3,884			3,683
Total Liabilities and Equity	$	9,749		$	9,338

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	201		$	190
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	211			202
Equity component of AFUDC	(4		)	(9		)
Deferred income taxes	31			68
Contributions to qualified pension plans	—			(2		)
Payments for asset retirement obligations	(1		)	(7		)
Provision for rate refunds	10			5
(Increase) decrease in
Receivables	(5		)	24
Receivables from affiliated companies	35			51
Inventory	5			(2		)
Other current assets	5			(15		)
Increase (decrease) in
Accounts payable	(28		)	(40		)
Accounts payable to affiliated companies	(14		)	(9		)
Taxes accrued	(23		)	(40		)
Other current liabilities	6			(4		)
Other assets	(24		)	(12		)
Other liabilities	(7		)	(22		)
Net cash provided by operating activities	398			378
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(611		)	(714		)
Notes receivable from affiliated companies	—			(74		)
Other	(34		)	(45		)
Net cash used in investing activities	(645		)	(833		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	467			1,003
Payments for the redemption of long-term debt	—			(451		)
Notes payable to affiliated companies	(227		)	(107		)
Net cash provided by financing activities	240			445
Net decrease in cash and cash equivalents	(7		)	(10		)
Cash and cash equivalents at beginning of period	17			21
Cash and cash equivalents at end of period	$	10		$	11
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	92		$	100

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended September 30, 2019 and 2020
			Additional		Retained
	Common		Paid-in		Earnings			Total
(in millions)	Stock		Capital		(Deficit)			Equity
Balance at June 30, 2019	$	762	$	2,776	$	23		$	3,561
Net income	—		—		74			74
Balance at September 30, 2019	$	762	$	2,776	$	97		$	3,635

Balance at June 30, 2020	$	762	$	2,776	$	276		$	3,814
Net income	—		—		70			70
Balance at September 30, 2020	$	762	$	2,776	$	346		$	3,884

	Nine Months Ended September 30, 2019 and 2020
			Additional		Retained
	Common		Paid-in		Earnings			Total
(in millions)	Stock		Capital		(Deficit)			Equity
Balance at December 31, 2018	$	762	$	2,776	$	(93	)	$	3,445
Net income	—		—		190			190
Balance at September 30, 2019	$	762	$	2,776	$	97		$	3,635

Balance at December 31, 2019	$	762	$	2,776	$	145		$	3,683
Net income	—		—		201			201
Balance at September 30, 2020	$	762	$	2,776	$	346		$	3,884

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2020		2019		2020		2019
Operating Revenues	$	761	$	807	$	2,070	$	2,289
Operating Expenses
Fuel used in electric generation and purchased power	222		234		577		720
Operation, maintenance and other	207		192		564		569
Depreciation and amortization	149		130		415		393
Property and other taxes	15		16		57		55
Total operating expenses	593		572		1,613		1,737
Operating Income	168		235		457		552
Other Income and Expenses, net	9		8		28		35
Interest Expense	29		40		114		111
Income Before Income Taxes	148		203		371		476
Income Tax Expense	29		47		72		113
Net Income and Comprehensive Income	$	119	$	156	$	299	$	363

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	15		$	25
Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019)	48			60
Receivables from affiliated companies	84			79
Inventory	507			517
Regulatory assets	119			90
Other	30			60
Total current assets	803			831
Property, Plant and Equipment
Cost	17,223			16,305
Accumulated depreciation and amortization	(5,579		)	(5,233		)
Net property, plant and equipment	11,644			11,072
Other Noncurrent Assets
Regulatory assets	1,184			1,082
Operating lease right-of-use assets, net	55			57
Other	228			234
Total other noncurrent assets	1,467			1,373
Total Assets	$	13,914		$	13,276
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	172		$	201
Accounts payable to affiliated companies	65			87
Notes payable to affiliated companies	83			30
Taxes accrued	110			49
Interest accrued	63			58
Current maturities of long-term debt	13			503
Asset retirement obligations	170			189
Regulatory liabilities	76			55
Other	98			112
Total current liabilities	850			1,284
Long-Term Debt	3,941			3,404
Long-Term Debt Payable to Affiliated Companies	150			150
Other Noncurrent Liabilities
Deferred income taxes	1,179			1,150
Asset retirement obligations	1,044			643
Regulatory liabilities	1,648			1,685
Operating lease liabilities	53			55
Accrued pension and other post-retirement benefit costs	151			148
Investment tax credits	168			164
Other	56			18
Total other noncurrent liabilities	4,299			3,863
Commitments and Contingencies
Equity
Member's Equity	4,674			4,575
Total Liabilities and Equity	$	13,914		$	13,276

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	299		$	363
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	416			395
Equity component of AFUDC	(18		)	(13		)
Deferred income taxes	11			108
Contributions to qualified pension plans	—			(2		)
Payments for asset retirement obligations	(48		)	(31		)
(Increase) decrease in
Receivables	15			1
Receivables from affiliated companies	(5		)	37
Inventory	10			(56		)
Other current assets	12			91
Increase (decrease) in
Accounts payable	(1		)	1
Accounts payable to affiliated companies	(22		)	(9		)
Taxes accrued	65			(14		)
Other current liabilities	(2		)	(12		)
Other assets	(41		)	(75		)
Other liabilities	104			67
Net cash provided by operating activities	795			851
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(669		)	(663		)
Purchases of debt and equity securities	(24		)	(19		)
Proceeds from sales and maturities of debt and equity securities	15			15
Notes receivable from affiliated companies	—			(213		)
Other	(24		)	(33		)
Net cash used in investing activities	(702		)	(913		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	544			485
Payments for the redemption of long-term debt	(500		)	(60		)
Notes payable to affiliated companies	53			(167		)
Distributions to parent	(200		)	(200		)
Net cash provided by (used in) financing activities	(103		)	58
Net decrease in cash and cash equivalents	(10		)	(4		)
Cash and cash equivalents at beginning of period	25			24
Cash and cash equivalents at end of period	$	15		$	20
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	73		$	82

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended
	September 30, 2019 and 2020
	Member's
(in millions)	Equity
Balance at June 30, 2019	$	4,546
Net income	156
Distributions to parent	(200		)
Balance at September 30, 2019	$	4,502

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

	Nine Months Ended
	September 30, 2019 and 2020
	Member's
(in millions)	Equity
Balance at December 31, 2018	$	4,339
Net income	363
Distributions to parent	(200		)
Balance at September 30, 2019	$	4,502

Balance at December 31, 2019	$	4,575
Net income	299
Distributions to parent	(200		)
Balance at September 30, 2020	$	4,674

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2020			2019			2020		2019
Operating Revenues	$	162		$	168		$	871	$	956
Operating Expenses
Cost of natural gas	39			46			254		384
Operation, maintenance and other	75			78			234		241
Depreciation and amortization	45			43			133		127
Property and other taxes	13			14			37		39
Impairment charges	7			—			7		—
Total operating expenses	179			181			665		791
Operating (Loss) Income	(17		)	(13		)	206		165
Other Income and Expenses, net	16			7			44		19
Interest Expense	29			22			89		65
(Loss) Income Before Income Taxes	(30		)	(28		)	161		119
Income Tax (Benefit) Expense	(5		)	(10		)	6		22
Net (Loss) Income and Comprehensive (Loss) Income	$	(25	)	$	(18	)	$	155	$	97

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	September 30, 2020			December 31, 2019
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $9 at 2020 and $6 at 2019)	$	93		$	241
Receivables from affiliated companies	11			10
Inventory	47			72
Regulatory assets	119			73
Other	51			28
Total current assets	321			424
Property, Plant and Equipment
Cost	8,882			8,446
Accumulated depreciation and amortization	(1,713		)	(1,681		)
Net property, plant and equipment	7,169			6,765
Other Noncurrent Assets
Goodwill	49			49
Regulatory assets	287			290
Operating lease right-of-use assets, net	21			24
Investments in equity method unconsolidated affiliates	86			83
Other	279			121
Total other noncurrent assets	722			567
Total Assets	$	8,212		$	7,756
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	177		$	215
Accounts payable to affiliated companies	63			3
Notes payable to affiliated companies	327			476
Taxes accrued	36			24
Interest accrued	37			33
Current maturities of long-term debt	160			—
Regulatory liabilities	101			81
Other	59			67
Total current liabilities	960			899
Long-Term Debt	2,620			2,384
Other Noncurrent Liabilities
Deferred income taxes	775			708
Asset retirement obligations	17			17
Regulatory liabilities	1,070			1,131
Operating lease liabilities	20			23
Accrued pension and other post-retirement benefit costs	7			3
Other	146			148
Total other noncurrent liabilities	2,035			2,030
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2020 and 2019	1,310			1,310
Retained earnings	1,287			1,133
Total equity	2,597			2,443
Total Liabilities and Equity	$	8,212		$	7,756

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended
	September 30,
(in millions)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	155		$	97
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	135			129
Equity component of AFUDC	(14		)	—
Impairment charges	7			—
Deferred income taxes	24			110
Equity in earnings from unconsolidated affiliates	(7		)	(6		)
Contributions to qualified pension plans	—			(1		)
Provision for rate refunds	(27		)	9
(Increase) decrease in
Receivables	164			192
Receivables from affiliated companies	(1		)	12
Inventory	25			23
Other current assets	(59		)	(95		)
Increase (decrease) in
Accounts payable	(53		)	(93		)
Accounts payable to affiliated companies	60			12
Taxes accrued	16			(51		)
Other current liabilities	(4		)	(6		)
Other assets	(14		)	(10		)
Other liabilities	7			(5		)
Net cash provided by operating activities	414			317
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(641		)	(751		)
Contributions to equity method investments	—			(16		)
Other	(18		)	(10		)
Net cash used in investing activities	(659		)	(777		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	394			596
Payments for the redemption of long-term debt	—			(350		)
Notes payable to affiliated companies	(149		)	64
Capital contributions from parent	—			150
Net cash provided by financing activities	245			460
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	$	123		$	121

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Three Months Ended September 30, 2019 and 2020
	Common		Retained			Total
(in millions)	Stock		Earnings			Equity
Balance at June 30, 2019	$	1,310	$	1,046		$	2,356
Net loss	—		(18		)	(18		)
Balance at September 30, 2019	$	1,310	$	1,028		$	2,338

Balance at June 30, 2020	$	1,310	$	1,312		$	2,622
Net loss	—		(25		)	(25		)
Balance at September 30, 2020	$	1,310	$	1,287		$	2,597

	Nine Months Ended September 30, 2019 and 2020
	Common		Retained			Total
(in millions)	Stock		Earnings			Equity
Balance at December 31, 2018	$	1,160	$	931		$	2,091
Net income	—		97			97
Contribution from parent	150		—			150
Balance at September 30, 2019	$	1,310	$	1,028		$	2,338

Balance at December 31, 2019	$	1,310	$	1,133		$	2,443
Net income	—		155			155
Other	—		(1		)	(1		)
Balance at September 30, 2020	$	1,310	$	1,287		$	2,597

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Index to Combined Notes to Condensed Consolidated Financial Statements

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

Applicable Notes

Registrant

Duke Energy

•

Duke Energy Carolinas

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Indiana

•

Piedmont

•

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

1. ORGANIZATION AND BASIS OF PRESENTATION

BASIS OF PRESENTATION

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

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

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

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

BASIS OF CONSOLIDATION

These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 12 for additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities.

COVID-19

The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The Duke Energy Registrants are monitoring developments closely and responding appropriately. The company incurred approximately $39 million and $91 million of incremental COVID-19 costs before deferral for the three and nine months ended September 30, 2020, respectively, included in Operation, maintenance and other on the Condensed Consolidated Statements of Operations. For the nine months ended September 30, 2020, the company has deferred approximately $56 million of these incremental costs, which were primarily bad debt expense, personal protective equipment and cleaning supplies. Further, the company waived approximately $29 million and $54 million of late payment fees for the three and nine months ended September 30, 2020, respectively. See Notes 3, 5, 12, 13 and 16 for additional information as well as steps taken to mitigate the impacts to our business and customers from the COVID-19 pandemic.

OTHER CURRENT ASSETS

Included in Other within Current Assets on the Piedmont Condensed Consolidated Balance Sheets are prepaid assets of $23 million and $3 million as of September 30, 2020, and December 31, 2019, respectively. The prepaid assets relate to natural gas storage injections and inventory transfers classified as prepaid assets until winter season when the natural gas is moved to Inventory on the Piedmont Condensed Consolidated Balance Sheets under certain agreements.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

OTHER CURRENT LIABILITIES

Included in Other within Current Liabilities on the Duke Energy Condensed Consolidated Balance Sheet is a current liability of $935 million and $0 as of September 30, 2020, and December 31, 2019, respectively. The current liability, initially recorded in the second quarter and increased during the third quarter, primarily represents Duke Energy's share of ACP's obligations of outstanding debt and to satisfy ARO requirements to restore construction sites. See Notes 3, 4 and 12 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.

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 nine months ended September 30, 2020, and 2019.



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2020		2019		2020		2019
Noncontrolling Interest Capital Contributions
Cash received for the sale of noncontrolling interest to tax equity members	$	239	$	7	$	402	$	200
Cash received for the sale of noncontrolling interest to pro rata share members	0		0		0		415
Total Noncontrolling Interest Capital Contributions	239		7		402		615
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method	59		15		187		105
Allocated losses to noncontrolling members based on pro rata shares of ownership	11		4		21		5
Total Noncontrolling Interest Allocated Losses	$	70	$	19	$	208	$	110

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 10 and 12 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Condensed Consolidated Balance Sheets.



	September 30, 2020						December 31, 2019
					Duke						Duke
	Duke		Progress		Energy		Duke		Progress		Energy
	Energy		Energy		Florida		Energy		Energy		Florida
Current Assets
Cash and cash equivalents	$	308	$	70	$	19	$	311	$	48	$	17
Other	187		16		16		222		39		39
Other Noncurrent Assets
Other	105		102		—		40		39		—
Total cash, cash equivalents and restricted cash	$	600	$	188	$	35	$	573	$	126	$	56



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

INVENTORY

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



	September 30, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,341	$	779	$	1,021	$	682	$	340	$	79	$	314	$	13
Coal	546		173		168		120		48		12		192		—
Natural gas, oil and other fuel	303		40		189		108		80		39		1		34
Total inventory	$	3,190	$	992	$	1,378	$	910	$	468	$	130	$	507	$	47



	December 31, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,297	$	768	$	1,038	$	686	$	351	$	79	$	318	$	5
Coal	586		187		186		138		48		15		198		—
Natural gas, oil and other fuel	349		41		199		110		90		41		1		67
Total inventory	$	3,232	$	996	$	1,423	$	934	$	489	$	135	$	517	$	72

NEW ACCOUNTING STANDARDS

The following new accounting standard was adopted by the Duke Energy Registrants in 2020.

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

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

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

Duke Energy recorded cumulative effects of changes in accounting principles related to the adoption of new credit loss standard, for allowances for credit losses of trade and other receivables, insurance receivables and financial guarantees. These amounts are included in the Condensed Consolidated Balance Sheets in Receivables, Receivables of VIEs, Other Noncurrent Assets and Other Noncurrent Liabilities. See Notes 4 and 13 for more information.

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



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

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

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



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

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

2. BUSINESS SEGMENTS

Duke Energy

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

The Commercial Renewables segment is primarily comprised of nonregulated utility-scale wind and solar generation assets located throughout the U.S. In 2020, Duke Energy continues to evaluate recoverability of a renewable merchant plant located in the Electric Reliability Council of Texas West market due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Duke Energy determined that the asset was not impaired as of September 30, 2020, because the carrying value of approximately $150 million approximates the aggregate estimated future undiscounted cash flows. A continued decline in energy market pricing would likely result in a future impairment. Duke Energy retained 51% ownership interest in this facility following the 2019 transaction to sell a minority interest in certain renewable assets.

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

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



	Three Months Ended September 30, 2020
	Electric		Gas					Total
	Utilities and		Utilities and			Commercial		Reportable
(in millions)	Infrastructure		Infrastructure			Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	6,371	$	217		$	126	$	6,714	$	7		$	—		$	6,721
Intersegment revenues	8		24			—		32		17			(49		)	—
Total revenues	$	6,379	$	241		$	126	$	6,746	$	24		$	(49	)	$	6,721
Segment income (loss)^(a)(b)	$	1,381	$	(73	)	$	60	$	1,368	$	(103	)	$	—		$	1,265
Less: Noncontrolling interests																70
Add: Preferred stock dividend																39
Net Income																$	1,234
Segment assets	$	138,142	$	13,343		$	6,541	$	158,026	$	3,387		$	(4	)	$	161,409



	Three Months Ended September 30, 2019
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	6,569	$	225	$	138	$	6,932	$	8		$	—		$	6,940
Intersegment revenues	8		24		—		32		17			(49		)	—
Total revenues	$	6,577	$	249	$	138	$	6,964	$	25		$	(49	)	$	6,940
Segment income (loss)^(c)	$	1,385	$	26	$	40	$	1,451	$	(124	)	$	—		$	1,327
Less: Noncontrolling interests															19
Add: Preferred stock dividend															15
Net Income															$	1,323



FINANCIAL STATEMENTS	BUSINESS SEGMENTS

(a)

Electric Utilities and Infrastructure includes $19 million recorded within Impairment charges and $8 million recorded within Operations, maintenance and other on the Duke Energy Carolinas' Condensed Consolidated Statements of Operations related to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case and $8 million recorded within Operations, maintenance and other on Duke Energy Progress' Condensed Consolidated Statements of Operation related to a partial settlement in the Duke Energy Progress' 2019 North Carolina rate case. See Note 3 for more information. Additionally, Electric Utilities and Infrastructure includes $5 million of Impairment charges related to gas pipeline assets recorded on Duke Energy Progress' Condensed Consolidated Statements of Operations.


(b)	Gas Utilities and Infrastructure includes $78 million recorded within Equity in (losses) earnings of unconsolidated affiliates on the Condensed Consolidated Statements of Operations and $7 million in Impairment charges recorded on the Piedmont Condensed Consolidated Statements of Operations related to gas pipeline investments.


(c)	Electric Utilities and Infrastructure includes a $25 million reduction of a prior year impairment recorded at Citrus County CC related to the plant's cost cap and is recorded within Impairment charges on Duke Energy Florida's Condensed Consolidated Statements of Operations.



	Nine Months Ended September 30, 2020
	Electric		Gas					Total
	Utilities and		Utilities and			Commercial		Reportable
(in millions)	Infrastructure		Infrastructure			Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	16,571	$	1,122		$	378	$	18,071	$	20		$	—		$	18,091
Intersegment revenues	25		72			—		97		53			(150		)	—
Total revenues	$	16,596	$	1,194		$	378	$	18,168	$	73		$	(150	)	$	18,091
Segment income (loss)^(a)(b)(c)	$	2,839	$	(1,400	)	$	207	$	1,646	$	(299	)	$	—		$	1,347
Less: Noncontrolling interests																208
Add: Preferred stock dividend																93
Net Income																$	1,232



	Nine Months Ended September 30, 2019
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	17,357	$	1,239	$	362	$	18,958	$	18		$	—		$	18,976
Intersegment revenues	24		72		—		96		53			(149		)	—
Total revenues	$	17,381	$	1,311	$	362	$	19,054	$	71		$	(149	)	$	18,976
Segment income (loss)^(d)	$	2,944	$	292	$	139	$	3,375	$	(328	)	$	—		$	3,047
Less: Noncontrolling interests															110
Add: Preferred stock dividend															27
Net Income															$	2,964

(a)


(b)	Gas Utilities and Infrastructure includes $2.1 billion recorded within Equity in (losses) earnings of unconsolidated affiliates on the Condensed Consolidated Statements of Operations and $7 million of Impairment charges recorded on the Piedmont Condensed Consolidated Statements of Operations related to gas pipeline investments. See Notes 3 and 12 for additional information.


(c)	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.


(d)	Electric Utilities and Infrastructure includes a $25 million reduction of a prior year impairment recorded at Citrus County CC related to the plant's costs cap and is recorded within Impairment charges on Duke Energy Florida's Condensed Consolidated Statements of Operations.



FINANCIAL STATEMENTS	BUSINESS SEGMENTS

Duke Energy Ohio

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



	Three Months Ended September 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	394	$	79	$	473	$	—		$	—		$	473
Segment income/Net income	$	63	$	9	$	72	$	(2	)	$	—		$	70
Segment assets	$	6,448	$	3,297	$	9,745	$	27		$	(23	)	$	9,749



	Three Months Ended September 30, 2019
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	408	$	81	$	489	$	—		$	489
Segment income/Net income	$	62	$	13	$	75	$	(1	)	$	74



	Nine Months Ended September 30, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	1,070	$	324	$	1,394	$	—		$	1,394
Segment income/Net (loss) income	$	137	$	68	$	205	$	(4	)	$	201



	Nine Months Ended September 30, 2019
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	1,099	$	354	$	1,453	$	—		$	1,453
Segment income/Net (loss) income	$	129	$	65	$	194	$	(4	)	$	190

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

COVID-19 Filings

North Carolina

On March 10, 2020, Governor Roy Cooper declared a state of emergency due to the COVID-19 pandemic. On March 19, 2020, the NCUC issued an order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, Duke Energy Carolinas and Duke Energy Progress filed a request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted the companies’ request on March 20, 2020.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to Special Repayment Plans. The order contained the following: (1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; (2) the late fee moratorium will continue through the end of the state of emergency or until further order of the commission; (3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and (4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions. Duke Energy Carolinas and Duke Energy Progress resumed normal billing practices as of October 1, 2020, with the exception of the billing of late payment charges. Customers were notified of the resumption of normal billing practices, the option of deferred payment arrangements and where to find assistance, if necessary. Service disconnections for nonpayment for residential customers resumed on November 2, 2020.

Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. On October 30, 2020, the NCUC issued an order extending deadlines to file comments on the joint petition to November 5, 2020, and reply comments to November 30, 2020. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

South Carolina

On March 13, 2020, Governor Henry McMaster declared a state of emergency due to the COVID-19 pandemic. The governor also issued a letter on March 14, 2020, to the ORS Executive Director regarding the suspension of disconnection of essential utility services for nonpayment. On March 18, 2020, the PSCSC issued an order approving such waivers, and also approved waivers for regulations related to late fees and reconnect fees. The PSCSC's order also required utilities to track the financial impacts of actions taken pursuant to such waivers for possible reporting to the PSCSC.

On May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Duke Energy Carolinas and Duke Energy Progress filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. 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. The deferral request did not include lost revenues. Updates on cost impacts were filed on September 30, 2020, and included financial impacts through the end of August 2020. On October 16, 2020, the ORS requested the PSCSC delay taking formal action on the deferral request until the ORS and any intervenors complete discovery. The PSCSC issued an order on October 21, 2020, to grant additional time to complete discovery until January 20, 2021, and to establish a procedural schedule.

On August 17, 2020, Duke Energy Carolinas and Duke Energy Progress filed an update on their planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed in South Carolina as of October 1, 2020, and service disconnections for nonpayment resumed on October 12, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

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 each utilities’ 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. The total revenue requirement over the proposed 15-year bond period for the storm recovery charges is approximately $262 million for Duke Energy Carolinas and $842 million for Duke Energy Progress. The NCUC has until March 10, 2021, to issue financing orders. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Carolinas

2017 North Carolina Rate Case

On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. On February 28, 2018, Duke Energy Carolinas and the North Carolina Public Staff (Public Staff) filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9% and a capital structure of 52% equity and 48% debt. On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction.

The North Carolina Attorney General and other parties separately filed Notices of Appeal to the North Carolina Supreme Court. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Carolinas and Duke Energy Progress appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. On November 29, 2018, the North Carolina Supreme Court adopted a schedule for briefing set forth in the motion to consolidate the Duke Energy Carolinas and Duke Energy Progress appeals. Appellant briefs were filed on April 26, 2019. The Appellee response briefs were filed on September 25, 2019. Oral arguments before the North Carolina Supreme Court were held on March 11, 2020. Duke Energy Carolinas cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

2019 North Carolina Rate Case

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

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


•	Removal of deferred storm costs from the rate case;


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


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


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

On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: (1) a hearing on issues common to both rate cases conducted remotely; (2) a hearing on Duke Energy Carolinas specific rate case issues, followed immediately by; (3) a hearing on Duke Energy Progress specific rate case issues. 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), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:


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


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


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


•	Settlement to allow the deferral of costs for certain grid projects placed in service between June 1, 2020, and December 31, 2022, totaling $0.8 billion.

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 is based on and consistent with the base rate component of the Second Partial Settlement with the Public Staff and excludes the items to be litigated noted above. Duke Energy Carolinas will not begin the amortization or implementation of these items until a final order is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Carolinas also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Carolinas on a permanent basis. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, 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 filed with the NCUC from all parties by November 4, 2020. Duke Energy Carolinas expects the NCUC to issue an order on its net rate increase before the end of the first quarter of 2021. Duke Energy Carolinas cannot predict the outcome of this matter.

2018 South Carolina Rate Case

On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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


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


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


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


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


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

•

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


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

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, return on equity and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled by the Supreme Court of South Carolina. Based on legal analysis and the filing of the appeal, Duke Energy Carolinas has not recorded an adjustment for its deferred coal ash costs. Duke Energy Carolinas cannot predict the outcome of this matter.

Duke Energy Progress

2017 North Carolina Rate Case

On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which was subsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.

On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Progress and Duke Energy Carolinas appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. Appellant briefs were filed on April 26, 2019. The Appellee response briefs were filed on September 25, 2019. Oral arguments before the North Carolina Supreme Court were held on March 11, 2020. Duke Energy Progress cannot predict the outcome of this matter.

2019 North Carolina Rate Case

On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress seeks to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requests rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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


•	Removal of deferred storm costs from the rate case;


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


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


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


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

On May 6, 2020, Duke Energy Progress, Duke Energy Carolinas and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: (1) a hearing on issues common to both rate cases conducted remotely; (2) a hearing on Duke Energy Carolinas specific rate case issues, followed immediately by; (3) a hearing on Duke Energy Progress specific rate case issues. 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 (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:


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


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


•	Agreement on the inclusion of plant in service and other revenue requirement updates through May 31, 2020, subject to Public Staff review. Annual revenue requirement associated with the May 31 update is estimated at $25 million; and


•	Settlement to allow the deferral of costs for certain grid projects placed in service between June 1, 2020, and December 31, 2022, of $0.5 billion.

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 is based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excludes items to be litigated noted above. Duke Energy Progress will not begin the amortization or implementation of these items until a final determination is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Progress also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Progress on a permanent basis. 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 are due to be filed with the NCUC from all parties by December 4, 2020. Duke Energy Progress expects the NCUC to issue an order on its net rate increase by the end of the first quarter of 2021. Duke Energy Progress cannot predict the outcome of this matter.

Hurricane Dorian

Hurricane Dorian reached the Carolinas in September 2019 as a Category 2 hurricane making landfall within Duke Energy Progress’ service territory. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $168 million with an additional $4 million in capital investments made for restoration efforts. Approximately $145 million and $179 million of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of September 30, 2020, and December 31, 2019, respectively. A request for an accounting order to defer incremental storm costs associated with Hurricane Dorian was included in Duke Energy Progress' October 30, 2019, general rate case filing with the NCUC. Terms of the June 2, 2020, Agreement and Stipulation of Partial Settlement removed incremental storm costs from the general rate case. A petition seeking to securitize these costs, along with costs from Hurricane Florence, Hurricane Michael and Winter Storm Diego, was filed on October 26, 2020, with the NCUC. The NCUC has until March 10, 2021, to issue financing orders. Duke Energy Progress cannot predict the outcome of this matter.

On February 7, 2020, a petition was filed with the PSCSC in the 2019 storm deferrals docket requesting deferral of approximately $22 million in operation and maintenance expenses to an existing storm deferral balance previously approved by the PSCSC. The PSCSC voted to approve the request on March 4, 2020, and issued a final order on April 7, 2020. On July 1, 2020, Duke Energy Progress filed a supplemental true up reducing the actual costs to $17 million.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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 a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:


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


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


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

•

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


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

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, return on equity and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled by the Supreme Court of South Carolina. Based on legal analysis and the filing of the appeal, Duke Energy Progress has not recorded an adjustment for its deferred coal ash costs. Duke Energy Progress cannot predict the outcome of this matter.

Western Carolinas Modernization Plan

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

On December 27, 2019, Asheville Combined Cycle Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator and the common systems that serve combined cycle units went into commercial operation. Duke Energy Progress placed the Unit 7 Combustion Turbine into commercial operation in simple-cycle mode on January 15, 2020. The Unit 8 Steam Turbine Generator went into commercial operation on April 5, 2020. On June 2, 2020, Duke Energy Progress filed a request with the PSCSC for an accounting order for the deferral of post-in-service costs incurred in connection with the addition of the Asheville combined-cycle generating plant. The petition requested the PSCSC issue an accounting order authorizing Duke Energy Progress to defer post-in-service costs including the Asheville combined-cycle’s depreciation expense, property taxes, incremental O&M and carrying costs at WACC of approximately $8 million annually. On June 17, 2020, the PSCSC voted to approve the petition and issued its final order on July 6, 2020.

On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility, which was approved with certain conditions on May 10, 2019. A hearing to update the NCUC on the status of the project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in 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 is scheduled for November 18, 2020.

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). Duke Energy Progress provides NCEMPA with service under the Full Requirements Power Purchase Agreement (FRPPA). The complaint alleges that the 11% stated return on equity (ROE) component contained in the FRPPA’s demand formula rate is unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for variation to the base transmission-related ROE methodology developed in Order No. 569-A, through the introduction of “specific facts and circumstances” involving the parties to this case. The parties to this case are currently in FERC settlement procedures. It is Duke Energy Progress’ view that, in consideration of the specific facts and circumstances of risks under the provisions of the FRPPA, the stated 11% ROE applied to NCEMPA’s metered billing demand is just and reasonable. Duke Energy Progress cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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. The complaint alleges that the ROE component in the formula rate contained within the Power Supply and Coordination Agreement (PSCA) between NCEMC and Duke Energy Progress is unjust and unreasonable. The PSCA's return on equity is 11% as applied to the Production Capacity Rate for the requirements service provided by Duke Energy Progress. 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 will respond to the complaint and believes the 11% ROE is just and reasonable for the service provided under the contract. Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Florida

COVID-19 Filings

In March 2020, Governor Ron DeSantis directed the State Health Officer of Florida to declare a public health emergency in Florida related to the COVID-19 pandemic. The governor also issued an Executive Order on March 9, 2020, in which he declared a state of emergency in Florida and directed the Director of the Division of Emergency Management to implement the state’s Comprehensive Emergency Management Plan. On March 19, 2020, Duke Energy Florida filed a request to modify its tariff to allow it to waive late fees for customers, and on April 6, 2020, the FPSC issued an order approving the request. Duke Energy Florida had already voluntarily waived reconnect fees and credit card fees, and ceased disconnecting customers for nonpayment. On April 2, 2020, Duke Energy Florida filed a petition with the FPSC to accelerate a $78 million fuel cost refund to customers in the month of May 2020. Typically, the refund would be made over the course of 2021. The FPSC approved the petition on April 28, 2020. Duke Energy Florida resumed normal billing practices as of August 24, 2020, with the exception of the billing of late payment charges. Customers were notified of the resumption of normal billing practices, the option of deferred payment arrangements and where to find assistance, if necessary. Service disconnections for nonpayment for residential customers resumed on October 5, 2020.

Storm Restoration Cost Recovery

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by approximately year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately $3 million, resulting in a total request to recover $188 million actual retail recoverable storm restoration costs, plus interest. An Order Establishing Procedure was issued on January 30, 2020, and hearings are scheduled to begin December 8, 2020. Approximately $119 million and $204 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of September 30, 2020, and December 31, 2019, respectively. Duke Energy Florida cannot predict the outcome of this matter.

Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. Approved storm costs are being recovered over a 12-month period with rates effective in March 2020 and subject to true up. The final actual amount of $145 million was filed on September 30, 2020, and the FPSC will hold a hearing to determine the final amount of incremental costs. Approximately $38 million and $167 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of September 30, 2020, and December 31, 2019, respectively, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates. Duke Energy Florida cannot predict the outcome of this matter.

Clean Energy Connection

On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost-effective solar development in Florida 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 hearing on the petition is scheduled to begin on November 17, 2020. Duke Energy Florida cannot predict the outcome of this matter.

Crystal River Unit 3 Accelerated Decommissioning Filing

On May 29, 2019, Duke Energy Florida entered into a Decommissioning Services Agreement for the accelerated decommissioning of Crystal River Unit 3 located in Citrus County, Florida, with ADP CR3, LLC and ADP SF1, LLC, each of which is a wholly owned subsidiary of Accelerated Decommissioning Partners, LLC (ADP), a joint venture between NorthStar Group Services, Inc. and Orano USA LLC. The agreement will allow for completion of the decommissioning of Crystal River Unit 3 by 2027, rather than 2074 as originally planned. Duke Energy Florida will also sell and assign the spent nuclear fuel, storage canisters, high-level waste and existing dry spent fuel storage installation and certain related assets, together with certain associated liabilities and obligations to ADP SF1, LLC. Duke Energy Florida expects that the assets of the Nuclear Decommissioning Trust Fund as of September 30, 2020, will be sufficient to cover the contract price. The U.S. Nuclear Regulatory Commission approved the transaction on April 1, 2020, and the FPSC issued an order approving the transaction on August 27, 2020. The agreement closed on October 1, 2020.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Storm Protection Plan

On April 10, 2020, Duke Energy Florida filed its initial Storm Protection Plan (SPP) with the FPSC. The SPP outlines storm protection programs over a 10-year planning period intended to enhance the existing infrastructure for the purpose of reducing restoration costs and reducing outage times associated with extreme weather conditions therefore improving overall service reliability. On July 31, 2020, Duke Energy Florida entered into a settlement with certain intervenors in support of this filing. On August 28, 2020, the FPSC unanimously approved the settlement agreement, which effectively approves the 2020-2029 SPP as-filed, without modification.

Duke Energy Ohio

Duke Energy Ohio COVID-19 Filings

In response to the COVID-19 pandemic, on March 9, 2020, Governor Mike DeWine declared a state of emergency in the state of Ohio. The PUCO issued an order directing utilities to cease disconnections for nonpayment and waive late payment and reconnection fees and to minimize direct customer contact. The PUCO also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response, Duke Energy Ohio ceased all disconnections except for safety-related concerns and waived late payment and reconnection fees. On March 19, 2020, Duke Energy Ohio filed its compliance plan with the PUCO and sought waiver of several regulations to minimize direct customer contact. On May 4, 2020, Duke Energy Ohio filed a motion to suspend payment rules to enable proactive outreach to residential customers offering additional options for managing their utility bills. PUCO found the proposal to address the state of emergency and the accompanying waivers reasonable and directed Duke Energy Ohio to work with the PUCO Staff on a comprehensive plan for resumption of activities and operations, to be filed 45 days before resumption of activities. The transition plan to resume normal operations to pre-COVID-19 levels was filed on June 26, 2020, and approved by the PUCO on July 29, 2020. It included resuming suspended work and activities beginning August 10, 2020, and resuming disconnections in September 2020.

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

On May 11, 2020, Duke Energy Ohio filed with the PUCO a request seeking deferral of incremental costs incurred, as well as specific miscellaneous lost revenues using existing bad debts and uncollectible riders already in place for both electric and natural gas operations. Duke Energy Ohio would subsequently file for rider recovery at a later date. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application. The commission denied the accrual of carrying costs and ordered Duke Energy Ohio to also track potential savings experienced as a result of COVID-19.

Duke Energy Kentucky COVID-19

In response to the COVID-19 pandemic, on March 6, 2020, Governor Andy Beshear declared a state of emergency in the commonwealth of Kentucky. The KPSC issued an order directing utilities to cease disconnections for nonpayment and waive late payment fees. The KPSC also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response, Duke Energy Kentucky ceased all disconnections except for safety-related concerns and waived late payment and reconnection fees. On September 21, 2020, the KPSC issued an order ending the disconnection moratorium for residential and nonresidential customers effective no earlier than October 20, 2020. Utilities are required to offer residential customers a default payment plan for any arrearages accumulated through the October 2020 billing cycle. Utilities are permitted to resume assessment of late payment charges for nonresidential customers beginning October 20, 2020, and for residential customers after December 31, 2020. Duke Energy Kentucky will follow the order, as clarified on September 30, 2020, by the KPSC.

2017 Electric Security Plan Filing

On June 1, 2017, Duke Energy Ohio filed with the PUCO a request for a standard service offer in the form of an ESP. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving that the term of the ESP would be from June 1, 2018, to May 31, 2025, and included continuation of market-based customer rates through competitive procurement processes for generation, continuation and expansion of existing rider mechanisms and approved new rider mechanisms relating to costs incurred to enhance the customer experience and transform the grid and a service reliability rider for vegetation management. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the Ohio Consumers' Counsel (OCC), respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Electric Base Rate Case

Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio requested an estimated annual increase of approximately $15 million and a return on equity of 10.4%. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the Stipulation with the PUCO including a $19 million decrease in annual base distribution revenue with a return on equity unchanged from the current rate of 9.84% based upon a capital structure of 50.75% equity and 49.25% debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation ended as these costs would be recovered through base rates. The Stipulation also renewed 14 existing riders, some of which were included in Duke Energy Ohio's ESP, and added two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10 million per year (operation and maintenance only) and the Power Future Initiatives Rider (formerly PowerForward Rider) to recover costs incurred to enhance the customer experience and further transform the grid (operation and maintenance and capital). In addition to the changes in revenue attributable to the Stipulation, Duke Energy Ohio’s capital-related riders, including the Distribution Capital Investments Rider, began to reflect the lower federal income tax rate associated with the Tax Act with updates to customers’ bills beginning April 1, 2018. This change reduced electric revenue by approximately $20 million on an annualized basis. On December 19, 2018, the PUCO approved the Stipulation without material modification. New base rates were implemented effective January 2, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC, respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.

Ohio Valley Electric Corporation

On March 31, 2017, Duke Energy Ohio filed for approval to adjust its existing Rider PSR to pass through net costs related to its contractual entitlement to capacity and energy from the generating assets owned by OVEC. Duke Energy Ohio sought deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR were put into effect. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation with the PUCO resolving numerous issues including those related to Rider PSR. The Stipulation activated Rider PSR for recovery of net costs incurred from January 1, 2018, through May 2025. On December 19, 2018, the PUCO approved the Stipulation without material modification. The PSR rider became effective April 1, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.

On July 23, 2019, House Bill 6 (HB 6) was signed into law that became effective January 1, 2020. Among other things, the bill allows for funding of two nuclear generating facilities located in Northern Ohio through a charge on utility bills owned by Energy Harbor (f/k/a FirstEnergy Solutions), repeal of energy efficiency mandates, and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery shall be through a non-bypassable rider that is to replace any existing recovery mechanism approved by the PUCO and will remain in place through 2030. The amounts recoverable from customers will be subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 12 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. In July 2020, legislation to repeal HB 6 was proposed in both the Ohio House and Senate, with subsequent hearings to receive witness testimony. Duke Energy Ohio cannot predict the outcome of this matter.

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 April 22, 2020, the PUCO granted rehearing for further consideration.

On June 8, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposes a mechanism for recovery of program costs, lost margins and a shared savings incentive mechanism similar to those previously approved by the PUCO. On June 17, 2020, the PUCO, on its own motion, struck Duke Energy Ohio’s proposal to include a shared savings mechanism in its plan finding such incentives are not permissible or supportable under Ohio law. On June 26, 2020, Duke Energy Ohio withdrew its application. On October 9, 2020, Duke Energy Ohio filed an application to implement a voluntary 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. Duke Energy Ohio cannot predict the outcome of this matter.

Natural Gas Pipeline Extension

Duke Energy Ohio is proposing to install a new natural gas pipeline (the Central Corridor Project) in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. Duke Energy Ohio currently estimates the pipeline development costs and construction activities will range from $163 million to $245 million in direct costs (excluding overheads and AFUDC) and that construction of the pipeline extension is expected to be completed before the 2021/2022 winter season. An evidentiary hearing for a Certificate of Environmental Compatibility and Public Need concluded on April 11, 2019. Briefs were filed on May 13, 2019, and reply briefs were filed on June 10, 2019. On November 21, 2019, the 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, Joint Appellants filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor application. On June 4, 2020, the OPSB filed a motion to dismiss claims raised by one of the Joint Appellants and on August 5, 2020, the Supreme Court of Ohio dismissed one of the Joint Appellants from the appeal. Joint Appellants filed their merit briefs on August 26, 2020. Appellee briefs were filed October 15, 2020. On September 22, 2020, Duke Energy Ohio filed an application with OPSB for approval to amend the certificated pipeline route. Duke Energy Ohio cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

MGP Cost Recovery

As part of its 2012 natural gas base rate case, Duke Energy Ohio has approval to defer and recover costs related to environmental remediation at 2 sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has made annual applications for recovery of these deferred costs. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs between 2009 through 2012 through Rider MGP, which is currently suspended. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2017. On September 28, 2018, the staff of the PUCO issued a report recommending a disallowance of approximately $12 million of the $26 million in MGP remediation costs incurred between 2013 through 2017 that staff believes are not eligible for recovery. Staff interprets the PUCO’s 2012 Order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the staff’s recommendations and explaining, among other things, the obligation Duke Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2018 seeking recovery of approximately $20 million in remediation costs. On July 12, 2019, the staff recommended a disallowance of approximately $11 million for work that staff believes occurred in areas not authorized for recovery. Additionally, staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.

On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. On July 23, 2020, the staff recommended a disallowance of approximately $4 million for work the staff believes occurred in areas not authorized for recovery. Additionally, the staff recommended insurance proceeds, net of litigation costs and attorney fees, should be reimbursed to customers and not be held by Duke Energy Ohio until all investigation and remediation is complete. Duke Energy Ohio filed comments in response to the staff report on August 21, 2020. Duke Energy Ohio cannot predict the outcome of this matter.

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

Duke Energy Kentucky Electric Base Rate Case

On September 3, 2019, Duke Energy Kentucky filed a rate case with the KPSC requesting an increase in electric base rates of approximately $46 million. On January 31, 2020, Duke Energy Kentucky filed rebuttal testimony updating its rate increase calculations to approximately $44 million. Hearings concluded on February 20, 2020, and briefing was completed March 20, 2020. On April 27, 2020, the KPSC issued its decision approving a $24 million increase for Duke Energy Kentucky with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky filed its motion for rehearing and on June 4, 2020, the motion was granted in part and denied in part by the KPSC. On October 16, 2020, the KPSC issued an Order on Rehearing authorizing an additional $4 million increase in revenue requirement bringing the total authorized revenue requirement increase to $28 million. Revised customer rates will take effect in November 2020.

Duke Energy Indiana

COVID-19 Filing

In response to the COVID-19 pandemic, on March 6, 2020, Governor Eric Holcomb declared a public health disaster emergency in the state of Indiana, which is currently extended through December 1, 2020. Duke Energy Indiana had already voluntarily suspended all disconnections and waived late payment fees and check return fees. The utility also waived credit card fees for residential customers. The Executive Order requiring utilities in the state to suspend disconnection of utility service expired July 1, 2020.

On May 8, 2020, Duke Energy Indiana, along with other Indiana utilities, filed a request with the IURC for approval of deferral treatment for costs and revenue reductions associated with the COVID-19 pandemic. The utilities requested initial deferral approval in July 2020, with individual subdockets for each utility to be established for consideration of utility-specific cost and revenue impacts, cost recovery timing and customer payment plans. On June 29, 2020, the IURC issued an order in Phase 1 wherein it extended the disconnection moratorium for jurisdictional utilities until August 14, 2020, along with requiring six-month payment arrangements, waiver of late fees, reconnection fees, convenience fees and deposits. The IURC permitted jurisdictional utilities to use regulatory accounting for any impacts associated with the prohibition on utility disconnections, waiver or exclusion of certain utility fees (i.e., late fees, convenience fees, deposits, and reconnection fees), the use of expanded payment arrangements to aid customers, and for COVID-19 related uncollectible and incremental bad debt expense. The IURC did not permit recovery of lost revenues due to load reduction or carrying costs. In Phase 2 filings, individual utilities may choose to request regulatory accounting for other COVID-19 related operation and maintenance costs wherein evidence of the impact of any costs or offsetting savings can be presented and considered in an evidentiary hearing. On August 12, 2020, the IURC issued a supplemental order extending the requirement for six-month payment arrangements and waiver of certain customer fees for another 60 days, but did not extend the disconnect moratorium. As such, Duke Energy Indiana resumed service disconnections for nonpayment in mid-September 2020. Normal billing practices resumed in mid-October 2020, except that Duke Energy Indiana has committed to provide extended payment arrangements and waive credit card and pay station fees for residential customers through the end of 2020. Customers were notified of the resumption of normal billing practices, the option of deferred payment arrangements and where to find assistance, if necessary. Duke Energy Indiana cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

2019 Indiana Rate Case

On July 2, 2019, Duke Energy Indiana filed a general rate case with the IURC for a rate increase for retail customers of approximately $395 million. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued the order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order provided for an overall cost of capital of 5.7% based on a 9.7% return on equity and a 53% equity component of the capital structure, and approved Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of December 31, 2020, including the Edwardsport IGCC Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction is due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% is due to the approved 9.7% return on equity versus requested 10.4% and approximately 20% is related to miscellaneous earnings neutral adjustments. Step one rates are 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 and will be effective in the first quarter of 2021. Several groups filed notices of appeal of the IURC order on July 29, 2020. 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 case will be fully briefed by year-end, with a decision expected in the first quarter of 2021. Duke Energy Indiana cannot predict the outcome of this matter.

2020 Indiana Coal Ash Recovery Case

In Duke Energy Indiana’s rate case, the IURC approved coal ash basin closure costs expended through 2018 including financing costs as a regulatory asset and included in rate base. The IURC opened a subdocket to deal with the post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020, and the parties have agreed on a delayed briefing schedule that allows for the Indiana Rate Case appeal to proceed. Briefing will be completed by mid-May 2021. Duke Energy Indiana cannot predict the outcome of this matter.

Piedmont

COVID-19 Filings

North Carolina

On March 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring a state of emergency due to the COVID-19 pandemic. On March 19, 2020, the NCUC issued on order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency (as defined by Executive Order No. 116) and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, Piedmont filed a request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted Piedmont’s request on March 20, 2020.

Normal billing practices resumed as of October 1, 2020, with the exception of billing of late payment charges. Service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary. The NCUC's moratorium for the billing of late payment charges is still in effect until further order from the NCUC. Piedmont cannot predict the outcome of this matter.

South Carolina

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



FINANCIAL STATEMENTS	REGULATORY MATTERS

On September 30, 2020, Piedmont filed an update on their planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed as of October 1, 2020, and service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary.

Tennessee

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

The TPUC held its regularly scheduled Commission Conference electronically on August 10, 2020, and on September 16, 2020, issued an Order Lifting Suspension of Disconnections of Service for Lack of Payment with Conditions, effective August 29, 2020. The conditions relate to required customer communications, payment plan options for past-due amounts and ongoing reporting to the TPUC. Potential recovery of costs related to the COVID-19 pandemic may be considered in future, individual docketed proceedings.

On October 15, 2020, Piedmont filed a report on their planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed as of October 1, 2020, and service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary.

2020 Tennessee Rate Case

On July 2, 2020, Piedmont filed an application with the TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately $30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since its previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. On August 25, 2020, the TPUC issued the procedural schedule for this case, targeting the hearing to begin on January 11, 2021. The TPUC is required to render a decision on this matter on or before April 1, 2021. Piedmont cannot predict the outcome of this matter.

OTHER REGULATORY MATTERS

Atlantic Coast Pipeline, LLC

Atlantic Coast Pipeline (ACP pipeline) is 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.

On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (USACE) (Northern Plains), vacating USACE’s Nationwide Permit 12 (NWP 12) and remanding it to USACE for consultation under the Endangered Species Act (ESA) of 1973. In Northern Plains, the court ruled that NWP 12 was unlawful because USACE did not consult under the ESA with the U.S. Fish and Wildlife Service and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its application enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the situation.

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

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

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



FINANCIAL STATEMENTS	REGULATORY MATTERS

As a result, Duke Energy recorded pretax charges to earnings of approximately $2.1 billion for the nine months ended September 30, 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Condensed Consolidated Statements of Operations. The tax benefit associated with this cancellation was $389 million and is recorded in Income Tax Expense (Benefit) on the Duke Energy Condensed Consolidated Statements of Operations. Additional charges of less than $50 million are expected to be recorded within the next 12 months as ACP incurs obligations to exit operations.

As part of the pretax charges to earnings of approximately $2.1 billion, Duke Energy established liabilities related to the cancellation of the ACP pipeline project of $927 million and $19 million within Other Current Liabilities and Other Noncurrent Liabilities, respectively, in the Gas Utilities and Infrastructure segment. The liability represents Duke Energy's obligation of approximately $860 million to fund ACP's outstanding debt and approximately $86 million to satisfy ARO requirements to restore construction sites.

See Notes 1, 4 and 12 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 September 30, 2020, and exclude capitalized asset retirement costs.



		Remaining Net
	Capacity	Book Value
	(in MW)	(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3^(a)	582	$	141
Allen Steam Station Units 4-5^(b)	516	321
Cliffside Unit 5^(b)	544	355
Duke Energy Progress
Mayo Unit 1^(b)	727	673
Roxboro Units 3-4^(b)	1,392	486
Duke Energy Indiana
Gallagher Units 2 and 4^(c)	280	112
Gibson Units 1-5^(d)	3,132	1,683
Cayuga Units 1-2^(d)	1,005	935
Total Duke Energy	8,178	$	4,706


(a)	As part of the 2015 resolution of a lawsuit involving alleged New Source Review violations, Duke Energy Carolinas must retire Allen Steam Station Units 1 through 3 by December 31, 2024. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives.

(b)

These units are included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. In 2019, Duke Energy Carolinas and Duke Energy Progress filed North Carolina rate cases that included depreciation studies that accelerate end of life dates for these plants. A decision by NCUC is expected by the end of the first quarter 2021.


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

(d)

On July 1, 2019, Duke Energy Indiana filed its 2018 IRP with the IURC. The 2018 IRP included scenarios evaluating the potential retirement of coal-fired generating units at Gibson and Cayuga. The rate case filed July 2, 2019, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. The depreciation rates reflecting these updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.

4. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL

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



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Remediation Activities

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

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



(in millions)	September 30, 2020		December 31, 2019
Reserves for Environmental Remediation
Duke Energy	$	66	$	58
Duke Energy Carolinas	16		11
Progress Energy	15		16
Duke Energy Progress	5		4
Duke Energy Florida	8		9
Duke Energy Ohio	22		19
Duke Energy Indiana	5		4
Piedmont	8		8

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



(in millions)
Duke Energy	$	56
Duke Energy Carolinas	12
Duke Energy Ohio	38

LITIGATION

Duke Energy Carolinas and Duke Energy Progress

Coal Ash Insurance Coverage Litigation

In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in North Carolina Business Court against various insurance providers. The lawsuit seeks payment for coal ash-related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. Due to COVID-19, the court has issued a new scheduling order and the trial is now scheduled for January 2022. Fact and expert discovery is scheduled to be completed by mid-November 2020. The parties are required to file all dispositive pre-trial motions by December 4, 2020. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Carolinas

NTE Carolinas II, LLC Litigation

In November 2017, Duke Energy Carolinas entered into a standard FERC interconnection agreement with NTE Carolinas II, LLC (NTE), a company that intended to build a combined-cycle natural gas plant in Rockingham County, North Carolina. On September 6, 2019, Duke Energy Carolinas filed a lawsuit in Mecklenburg County Superior Court against NTE for breach of contract and alleging that NTE's failure to pay benchmark payments for Duke Energy Carolinas' transmission system upgrades required under the interconnection agreement constituted a termination of the interconnection agreement. Duke Energy Carolinas is seeking a monetary judgment against NTE because NTE failed to make multiple milestone payments. The lawsuit was moved to federal court in North Carolina. NTE filed a motion to dismiss Duke Energy Carolinas’ complaint and brought counterclaims alleging anti-competitive conduct and violations of state and federal statutes. Duke Energy Carolinas filed a motion to dismiss NTE's counterclaims.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

On May 21, 2020, FERC issued a decision, in response to an NTE petition, ruling (i) that it has exclusive jurisdiction to determine whether a transmission provider may terminate a Large Generator Interconnection Agreement (LGIA), (ii) FERC approval is required to terminate a conforming LGIA if objected to by the interconnection customer, and (iii) Duke Energy may not announce the termination of a conforming LGIA unless FERC has approved the termination. On May 27, 2020, NTE filed FERC's May 21, 2020, Order as a notice of supplemental authority with the federal district court where its Motion to Dismiss is pending. On June 1, 2020, Duke Energy Carolinas filed a response to NTE’s notice of supplemental authority noting that FERC declined to address the merits of any breach of contract claim relating to the LGIA and that the federal court then necessarily retains exclusive authority to award damages for NTE’s breach.

On August 17, 2020, the court denied both NTE’s and Duke Energy Carolinas’ Motion to Dismiss. The parties are now preparing to commence discovery. Duke Energy Carolinas cannot predict the outcome of this matter.

Asbestos-related Injuries and Damages Claims

Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of September 30, 2020, there were 159 asserted claims for non-malignant cases with cumulative relief sought of up to $41 million, and 68 asserted claims for malignant cases with cumulative relief sought of up to $23 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.

Duke Energy Carolinas has recognized asbestos-related reserves of $578 million at September 30, 2020, and $604 million at December 31, 2019. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Condensed Consolidated Balance Sheets. These reserves are based upon Duke Energy Carolinas' best estimate for current and future asbestos claims through 2040 and are recorded on an undiscounted basis. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after 2040 related to such potential claims. It is possible Duke Energy Carolinas may incur asbestos liabilities in excess of the recorded reserves.

Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. Duke Energy Carolinas’ cumulative payments began to exceed the self-insured retention in 2008. Future payments up to the policy limit will be reimbursed by the third-party insurance carrier. The insurance policy limit for potential future insurance recoveries indemnification and medical cost claim payments is $714 million in excess of the self-insured retention. Receivables for insurance recoveries were $704 million at September 30, 2020, and $742 million at December 31, 2019. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the Condensed Consolidated Balance Sheets. Duke Energy Carolinas is not aware of any uncertainties regarding the legal sufficiency of insurance claims. Duke Energy Carolinas believes the insurance recovery asset is probable of recovery as the insurance carrier continues to have a strong financial strength rating.

Duke Energy Progress and Duke Energy Florida

Spent Nuclear Fuel Matters

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

Duke Energy Florida

Power Purchase Dispute Arbitration

Duke Energy Florida, on behalf of its customers, entered into a PPA for the purchase of firm capacity and energy from a qualifying facility under the Public Utilities Regulatory Policies Act of 1978. Duke Energy Florida determined the qualifying facility did not perform in accordance with the PPA, and Duke Energy Florida terminated the PPA. The qualifying facility counterparty filed a confidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the PPA and seeking damages. Duke Energy Florida denies liability and is vigorously defending the arbitration claim. The final arbitration hearing is scheduled for December 2020. Duke Energy Florida cannot predict the outcome of this matter.

Duke Energy Indiana

Coal Ash Basin Closure Plan Appeal

On January 27, 2020, Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication (the court) challenging the Indiana Department of Environmental Management’s December 10, 2019, partial approval of Duke Energy Indiana’s ash pond closure plan. On March 11, 2020, Duke Energy Indiana filed a Motion to Dismiss. On May 5, 2020, the court denied the motion. The parties are completing discovery and have until December 22, 2020, to file dispositive motions. If these claims survive dispositive motions, a hearing is scheduled for April 2021. Duke Energy Indiana cannot predict the outcome of this matter. See Note 6 for additional information.

Other Litigation and Legal Proceedings

The Duke Energy Registrants are involved in other legal, tax and regulatory proceedings arising in the ordinary course of business, some of which involve significant amounts. The Duke Energy Registrants believe the final disposition of these proceedings will not have a material effect on their results of operations, cash flows or financial position.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

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



(in millions)	September 30, 2020		December 31, 2019
Reserves for Legal Matters
Duke Energy	$	60	$	62
Duke Energy Carolinas	2		2
Progress Energy	52		55
Duke Energy Progress	9		12
Duke Energy Florida	23		22
Piedmont	1		1

OTHER COMMITMENTS AND CONTINGENCIES

General

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

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

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

Duke Energy has recognized $860 million related to the guarantees of its portion of ACP's outstanding debt of which $95 million was previously recognized due the adoption of new guidance for credit losses effective January 1, 2020. This reserve is included within Other current liabilities on the Condensed Consolidated Balance Sheets at September 30, 2020. See Notes 1, 3 and 12 for more information. The remaining reserve for credit losses for financial guarantees of $4 million at September 30, 2020, is included within Other noncurrent liabilities on the Duke Energy's Condensed Consolidated Balance Sheets. Management considers financial guarantees for evaluation under this standard based on the anticipated amount outstanding at the time of default. The reserve for credit losses is based on the evaluation of the contingent components of financial guarantees. Management evaluates the risk of default, exposure and length of time remaining in the period for each contract.



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

5. DEBT AND CREDIT FACILITIES

SUMMARY OF SIGNIFICANT DEBT ISSUANCES

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



					Nine Months Ended September 30, 2020
							Duke		Duke		Duke		Duke		Duke		Duke
	Maturity	Interest			Duke		Energy		Energy		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate			Energy		(Parent)		Carolinas		Progress		Florida		Ohio		Indiana		Piedmont
Unsecured Debt
May 2020^(a)	Jun 2030	2.450	%		$	500	$	500	$	—	$	—	$	—	$	—	$	—	$	—
May 2020^(b)	Jun 2050	3.350	%		400		—		—				—		—		—		400
August 2020^(c)	Feb 2022	0.430	%	^(d)	700		—		—		700		—		—		—		—
September 2020^(e)	Sep 2025	0.900	%		650		650		—		—		—		—		—		—
September 2020^(e)	Jun 2030	2.450	%		350		350		—		—		—		—		—		—
First Mortgage Bonds
January 2020^(f)	Feb 2030	2.450	%		500		—		500		—		—		—		—		—
January 2020^(f)	Aug 2049	3.200	%		400		—		400		—		—		—		—		—
March 2020^(g)	Apr 2050	2.750	%		550		—		—		—		—		—		550		—
May 2020^(b)	Jun 2030	2.125	%		400		—		—		—		—		400		—		—
June 2020^(b)	Jun 2030	1.750	%		500		—		—		—		500		—		—		—
August 2020^(h)	Aug 2050	2.500	%		600		—		—		600		—		—		—		—
Total issuances					$	5,550	$	1,500	$	900	$	1,300	$	500	$	400	$	550	$	400


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


(b)	Debt issued to repay short-term debt and for general corporate purposes.


(c)	Debt issued to repay $700 million two-year term loan facility expiring in December 2020.


(d)	Debt issuance has a floating interest rate.


(e)	Debt issued to repay a portion of outstanding commercial paper, to repay a portion of Duke Energy (Parent)'s outstanding $1.7 billion term loan due March 2021 and for general corporate purposes.


(f)	Debt issued to repay at maturity $450 million first mortgage bonds due June 2020 and for general corporate purposes.


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


(h)	Debt issued to repay at maturity $300 million first mortgage bonds due September 2020 and for general corporate purposes.

CURRENT MATURITIES OF LONG-TERM DEBT

The following table shows the significant components of Current maturities of long-term debt on the Condensed Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.



(in millions)	Maturity Date	Interest Rate			September 30, 2020
Unsecured Debt
Progress Energy, Inc	January 2021	4.400	%		$	500
Duke Energy (Parent)	May 2021	0.765	%	^(a)	500
Piedmont	June 2021	4.240	%		160
Duke Energy (Parent)	September 2021	3.550	%		500
Duke Energy (Parent)	September 2021	1.800	%		750
Secured Debt
Duke Energy Florida	April 2021	1.035	%	^(a)	250
First Mortgage Bonds
Duke Energy Carolinas	June 2021	3.900	%		500
Duke Energy Florida	August 2021	3.100	%		300
Duke Energy Progress	September 2021	3.000	%		500
Duke Energy Progress	September 2021	8.625	%		100
Other^(b)					609
Current maturities of long-term debt					$	4,669

(a) Debt has a floating interest rate.

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



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

AVAILABLE CREDIT FACILITIES

Master Credit Facility

In March 2020, Duke Energy amended its existing $8 billion Master Credit Facility to extend the termination date to March 2025. The Duke Energy Registrants, excluding Progress Energy, have borrowing capacity under the Master Credit Facility up to a specified sublimit for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder.

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



	September 30, 2020
				Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana			Piedmont
Facility size^(a)	$	8,000		$	2,650		$	1,475		$	1,250		$	800		$	625		$	600		$	600
Reduction to backstop issuances
Commercial paper^(b)	(2,007		)	(693		)	(300		)	(308		)	(62		)	(106		)	(229		)	(309		)
Outstanding letters of credit	(40		)	(34		)	(4		)	(2		)	—			—			—			—
Tax-exempt bonds	(81		)	—			—			—			—			—			(81		)	—
Available capacity under the Master Credit Facility	$	5,872		$	1,923		$	1,171		$	940		$	738		$	519		$	290		$	291


(a)	Represents the sublimit of each borrower.


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

Term Loan Facility

In response to market volatility and ongoing liquidity impacts from COVID-19, in March 2020, Duke Energy (Parent) entered into a $1.5 billion, 364-day Term Loan Credit Agreement, borrowing the full $1.5 billion available on March 19, 2020. The term loan contains a provision for increasing the amount available for borrowing by up to $500 million. Duke Energy (Parent) exercised this provision on March 27, 2020, borrowing an additional $188 million. Proceeds were used to reduce outstanding commercial paper and for general corporate purposes. In the third quarter of 2020, Duke Energy (Parent) repaid $844 million of the loan. Refer to Note 1 for additional information on the COVID-19 pandemic.

Other Credit Facilities



	September 30, 2020
(in millions)	Facility size		Amount drawn
Duke Energy (Parent) Three-Year Revolving Credit Facility	$	1,000	$	500

In August 2020, Duke Energy Progress repaid its $700 million two-year term loan facility.

6. ASSET RETIREMENT OBLIGATIONS

The Duke Energy Registrants record AROs when there is a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. Actual costs incurred could be materially different from current estimates that form the basis of the recorded AROs.



FINANCIAL STATEMENTS	ASSET RETIREMENT OBLIGATIONS

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



	September 30, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Decommissioning of nuclear power facilities^(a)	$	6,815	$	2,658	$	4,107	$	3,606	$	501	$	—	$	—	$	—
Closure of ash impoundments	6,458		3,049		2,172		2,150		22		51		1,186		—
Other	381		67		76		44		32		40		28		17
Total ARO	$	13,654	$	5,774	$	6,355	$	5,800	$	555	$	91	$	1,214	$	17
Less: Current portion	742		267		297		297		—		7		170		—
Total noncurrent ARO	$	12,912	$	5,507	$	6,058	$	5,503	$	555	$	84	$	1,044	$	17

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

ARO Liability Rollforward

The following table presents the change in liability associated with AROs for the Duke Energy Registrants.



				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Balance at December 31, 2019^(a)	$	13,318		$	5,734		$	6,471		$	5,893		$	578		$	80		$	832		$	17
Accretion expense^(b)	408			195			187			171			16			3			22			—
Liabilities settled^(c)	(540		)	(151		)	(333		)	(293		)	(40		)	(1		)	(56		)	—
Liabilities incurred in the current year	17			—			—			—			—			—			—			—
Revisions in estimates of cash flows^(d)	451			(4		)	30			29			1			9			416			—
Balance at September 30, 2020	$	13,654		$	5,774		$	6,355		$	5,800		$	555		$	91		$	1,214		$	17


(a)	Primarily relates to decommissioning nuclear power facilities, closure of ash impoundments, asbestos removal, closure of landfills at fossil generation facilities, retirement of natural gas mains and removal of renewable energy generation assets.


(b)	For the nine months ended September 30, 2020, substantially all accretion expense relates to Duke Energy's regulated operations and has been deferred in accordance with regulatory accounting treatment.


(c)	Primarily relates to ash impoundment closures.

(d)

Primarily relates to increases in closure estimates for certain ash impoundments as a result of certain changes in estimates and the impact of Hoosier Environmental Council’s petition filed with the court challenging the Indiana Department of Environmental Management’s partial approval of Duke Energy Indiana’s ash pond closure plan, new closure plan approvals, as well as increased post closure maintenance, landfill and beneficiation costs. See Note 4 for more information on Hoosier Environmental Council's petition. The incremental amount recorded represents the discounted cash flows for estimated closure costs based upon the probability weightings of the potential closure methods as evaluated on a site-by-site basis.

Asset retirement costs associated with the AROs for operating plants and retired plants are included in Net property, plant and equipment and Regulatory assets within Other Noncurrent Assets, respectively, on the Condensed Consolidated Balance Sheets.

7. GOODWILL

Duke Energy

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



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

Duke Energy Ohio

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



FINANCIAL STATEMENTS	GOODWILL

Progress Energy

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

Piedmont

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

Impairment Testing

Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. As the fair value for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis, no goodwill impairment charges were recorded in the third quarter of 2020.

8. RELATED PARTY TRANSACTIONS

The Subsidiary Registrants engage in related party transactions in accordance with applicable state and federal commission regulations. Refer to the Condensed Consolidated Balance Sheets of the Subsidiary Registrants for balances due to or due from related parties. Material amounts related to transactions with related parties included on the Condensed Consolidated Statements of Operations and Comprehensive Income are presented in the following table.



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2020		2019		2020		2019
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	198	$	197	$	528	$	606
Indemnification coverages^(b)	5		5		15		15
Joint Dispatch Agreement (JDA) revenue^(c)	6		12		16		52
JDA expense^(c)	28		32		72		145
Intercompany natural gas purchases^(d)	10		0		26		7
Progress Energy
Corporate governance and shared service expenses^(a)	$	185	$	194	$	520	$	553
Indemnification coverages^(b)	9		8		27		27
JDA revenue^(c)	28		32		72		145
JDA expense^(c)	6		12		16		52
Intercompany natural gas purchases^(d)	18		19		56		57
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	113	$	114	$	301	$	328
Indemnification coverages^(b)	4		3		13		11
JDA revenue^(c)	28		32		72		145
JDA expense^(c)	6		12		16		52
Intercompany natural gas purchases^(d)	18		19		56		57
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	72	$	80	$	219	$	225
Indemnification coverages^(b)	5		5		14		16
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	80	$	90	$	241	$	258
Indemnification coverages^(b)	1		1		3		3
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	102	$	109	$	300	$	299
Indemnification coverages^(b)	2		2		6		5
Piedmont
Corporate governance and shared service expenses^(a)	$	31	$	33	$	102	$	102
Indemnification coverages^(b)	1		1		2		2
Intercompany natural gas sales^(d)	28		19		82		64
Natural gas storage and transportation costs^(e)	6		6		17		17



FINANCIAL STATEMENTS	RELATED PARTY TRANSACTIONS

(a)

The Subsidiary Registrants are charged their proportionate share of corporate governance and other shared services costs, primarily related to human resources, employee benefits, information technology, legal and accounting fees, as well as other third-party costs. These amounts are primarily recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.


(b)	The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison, Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.

(c)

Duke Energy Carolinas and Duke Energy Progress participate in a JDA, which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power and expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues and Fuel used in electric generation and purchased power, respectively, on the Condensed Consolidated Statements of Operations and Comprehensive Income.

(d)

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


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

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

As discussed in Note 12, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.

Intercompany Income Taxes

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



	Duke				Duke		Duke		Duke		Duke
	Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
September 30, 2020
Intercompany income tax receivable	$	—	$	—	$	—	$	—	$	—	$	—	$	14
Intercompany income tax payable	206		49		104		98		6		56		—

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

9. DERIVATIVES AND HEDGING

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

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

INTEREST RATE RISK

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Cash Flow Hedges

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

Undesignated Contracts

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

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

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



	September 30, 2020
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges	$	653	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,177		400		750		750		—		27
Total notional amount^(a)	$	1,830	$	400	$	750	$	750	$	—	$	27



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


(a)	Duke Energy includes amounts related to consolidated VIEs of $653 million in cash flow hedges as of September 30, 2020, and $693 million in cash flow hedges as of December 31, 2019.

COMMODITY PRICE RISK

The Duke Energy Registrants are exposed to the impact of changes in the prices of electricity purchased and sold in bulk power markets and natural gas purchases, including Piedmont's natural gas supply contracts. Exposure to commodity price risk is influenced by a number of factors including the term of contracts, the liquidity of markets and delivery locations. To manage risk associated with commodity prices, the Duke Energy Registrants may enter into long-term power purchase or sales contracts and long-term natural gas supply agreements.

Cash Flow Hedges

For derivatives designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Gains and losses reclassified out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2020, and 2019, were not material. Duke Energy’s commodity derivatives designated as hedges include long-term electricity sales in the Commercial Renewables segment.

Undesignated Contracts

For the Subsidiary Registrants, bulk power electricity and natural gas purchases flow through fuel adjustment clauses, formula-based contracts or other cost-sharing mechanisms. Differences between the costs included in rates and the incurred costs, including undesignated derivative contracts, are largely deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for the use of financial instruments to hedge commodity price risks. The strategy and objective of these hedging programs are to use the financial instruments to reduce natural gas costs volatility for customers.



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Volumes

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



	September 30, 2020
		Duke		Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Ohio	Indiana	Piedmont
Electricity (GWh)^(a)	32,314	—	—	—	4,126	17,072	—
Natural gas (millions of dekatherms)	683	143	156	156	—	2	382



	December 31, 2019
		Duke		Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Ohio	Indiana	Piedmont
Electricity (GWh)	15,858	—	—	—	1,887	13,971	—
Natural gas (millions of dekatherms)	704	130	160	160	—	3	411


(a)	Duke Energy includes 11,116 GWh that relates to cash flow hedges.

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

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



Derivative Assets	September 30, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	57	$	24	$	18	$	18	$	—	$	2	$	8	$	6
Noncurrent	26		14		12		12		—		—		—		—
Total Derivative Assets – Commodity Contracts	$	83	$	38	$	30	$	30	$	—	$	2	$	8	$	6
Interest Rate Contracts
Not Designated as Hedging Instruments
Current	$	3	$	—	$	3	$	3	$	—	$	—	$	—	$	—
Noncurrent	—		—		—		—		—		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	3	$	—	$	3	$	3	$	—	$	—	$	—	$	—
Total Derivative Assets	$	86	$	38	$	33	$	33	$	—	$	2	$	8	$	6



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



Derivative Liabilities	September 30, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Designated as Hedging Instruments
Current	$	17	$	—	$	—	$	—	$	—	$	—	$	—	—
Noncurrent	85		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	$	26	$	12	$	—	$	—	$	—	$	1	$	—	$	13
Noncurrent	129		4		27		11		—		—		—		98
Total Derivative Liabilities – Commodity Contracts	$	257	$	16	$	27	$	11	$	—	$	1	$	—	$	111
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	14	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	56		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	27		17		9		9		—		1		—		—
Noncurrent	5		—		—		—		—		5		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	102	$	17	$	9	$	9	$	—	$	6	$	—	$	—
Total Derivative Liabilities	$	359	$	33	$	36	$	20	$	—	$	7	$	—	$	111



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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



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

OFFSETTING ASSETS AND LIABILITIES

The following tables present the line items on the Condensed Consolidated Balance Sheets where derivatives are reported. Substantially all of Duke Energy's outstanding derivative contracts are subject to enforceable master netting arrangements. The gross amounts offset in the tables below show the effect of these netting arrangements on financial position, and include collateral posted to offset the net position. The amounts shown are calculated by counterparty. Accounts receivable or accounts payable may also be available to offset exposures in the event of bankruptcy. These amounts are not included in the tables below.



Derivative Assets	September 30, 2020
				Duke					Duke			Duke		Duke		Duke
	Duke			Energy		Progress			Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas		Energy			Progress			Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	60		$	24	$	21		$	21		$	—	$	2	$	8	$	6
Gross amounts offset	(1		)	—		—			—			—		—		—		—
Net amounts presented in Current Assets: Other	$	59		$	24	$	21		$	21		$	—	$	2	$	8	$	6
Noncurrent
Gross amounts recognized	$	26		$	14	$	12		$	12		$	—	$	—	$	—	$	—
Gross amounts offset	(8		)	—		(8		)	(8		)	—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	18		$	14	$	4		$	4		$	—	$	—	$	—	$	—



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



Derivative Liabilities	September 30, 2020
				Duke					Duke			Duke		Duke		Duke
	Duke			Energy		Progress			Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas		Energy			Progress			Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	84		$	29	$	9		$	9		$	—	$	2	$	—	$	13
Gross amounts offset	(1		)	—		—			—			—		—		—		—
Net amounts presented in Current Liabilities: Other	$	83		$	29	$	9		$	9		$	—	$	2	$	—	$	13
Noncurrent
Gross amounts recognized	$	275		$	4	$	27		$	11		$	—	$	5	$	—	$	98
Gross amounts offset	(8		)	—		(8		)	(8		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	267		$	4	$	19		$	3		$	—	$	5	$	—	$	98



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



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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

OBJECTIVE CREDIT CONTINGENT FEATURES

Certain derivative contracts contain objective credit contingent features. These features include the requirement to post cash collateral or letters of credit if specific events occur, such as a credit rating downgrade below investment grade. The following tables show information with respect to derivative contracts that are in a net liability position and contain objective credit-risk-related payment provisions.



	September 30, 2020
			Duke				Duke
	Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	20	$	9	$	11	$	11
Fair value of collateral already posted	0		0		0		0
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	20		9		11		11



	December 31, 2019
			Duke				Duke
	Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	79	$	35	$	44	$	44
Fair value of collateral already posted	0		0		0		0
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	79		35		44		44

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

10. INVESTMENTS IN DEBT AND EQUITY SECURITIES

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

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

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

Investment Trusts

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

Other AFS Securities

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

Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY

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



	September 30, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	687	$	—	$	—	$	101
Equity securities	3,436		103		5,459		3,523		55		5,661
Corporate debt securities	65		1		789		37		1		603
Municipal bonds	19		1		407		13		—		368
U.S. government bonds	58		—		843		33		1		1,256
Other debt securities	9		—		185		3		—		141
Total NDTF Investments	$	3,587	$	105	$	8,370	$	3,609	$	57	$	8,130
Other Investments
Cash and cash equivalents	$	—	$	—	$	110	$	—	$	—	$	52
Equity securities	60		—		126		57		—		122
Corporate debt securities	8		—		129		3		—		67
Municipal bonds	6		1		114		4		—		94
U.S. government bonds	1		—		21		2		—		41
Other debt securities	—		—		44		—		—		56
Total Other Investments	$	75	$	1	$	544	$	66	$	—	$	432
Total Investments	$	3,662	$	106	$	8,914	$	3,675	$	57	$	8,562

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



	Three Months Ended				Nine Months Ended
(in millions)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
FV-NI:
Realized gains	$	13	$	60	$	338	$	161
Realized losses	16		43		148		136
AFS:
Realized gains	26		53		73		110
Realized losses	19		36		38		83



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY CAROLINAS

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



	September 30, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	42	$	—	$	—	$	21
Equity securities	2,027		52		3,229		1,914		8		3,154
Corporate debt securities	42		1		507		21		1		361
Municipal bonds	5		—		118		3		—		96
U.S. government bonds	28		—		428		16		1		578
Other debt securities	7		—		179		3		—		137
Total NDTF Investments	$	2,109	$	53	$	4,503	$	1,957	$	10	$	4,347



	Three Months Ended				Nine Months Ended
(in millions)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
FV-NI:
Realized gains	$	10	$	34	$	46	$	101
Realized losses	12		26		82		95
AFS:
Realized gains	20		21		50		46
Realized losses	17		13		30		34

PROGRESS ENERGY

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



	September 30, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	645	$	—	$	—	$	80
Equity securities	1,409		51		2,230		1,609		47		2,507
Corporate debt securities	23		—		282		16		—		242
Municipal bonds	14		1		289		10		—		272
U.S. government bonds	30		—		415		17		—		678
Other debt securities	2		—		6		—		—		4
Total NDTF Investments	$	1,478	$	52	$	3,867	$	1,652	$	47	$	3,783
Other Investments
Cash and cash equivalents	$	—	$	—	$	107	$	—	$	—	$	49
Municipal bonds	4		—		53		3		—		51
Total Other Investments	$	4	$	—	$	160	$	3	$	—	$	100
Total Investments	$	1,482	$	52	$	4,027	$	1,655	$	47	$	3,883



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Three Months Ended				Nine Months Ended
(in millions)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
FV-NI:
Realized gains	$	3	$	26	$	292	$	60
Realized losses	4		17		66		41
AFS:
Realized gains	6		31		17		62
Realized losses	2		23		7		49

DUKE ENERGY PROGRESS

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



	September 30, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	57	$	—	$	—	$	53
Equity securities	1,340		51		2,150		1,258		21		2,077
Corporate debt securities	23		—		282		16		—		242
Municipal bonds	14		1		289		10		—		272
U.S. government bonds	30		—		415		16		—		403
Other debt securities	2		—		6		—		—		4
Total NDTF Investments	$	1,409	$	52	$	3,199	$	1,300	$	21	$	3,051
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	2
Total Other Investments	$	—	$	—	$	1	$	—	$	—	$	2
Total Investments	$	1,409	$	52	$	3,200	$	1,300	$	21	$	3,053



	Three Months Ended				Nine Months Ended
(in millions)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
FV-NI:
Realized gains	$	3	$	10	$	43	$	27
Realized losses	4		9		51		24
AFS:
Realized gains	6		2		17		4
Realized losses	2		—		7		2



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY FLORIDA

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



	September 30, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	588	$	—	$	—	$	27
Equity securities	69		—		80		351		26		430
U.S. government bonds	—		—		—		1		—		275
Total NDTF Investments^(a)	$	69	$	—	$	668	$	352	$	26	$	732
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	4
Municipal bonds	4		—		53		3		—		51
Total Other Investments	$	4	$	—	$	55	$	3	$	—	$	55
Total Investments	$	73	$	—	$	723	$	355	$	26	$	787


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



	Three Months Ended				Nine Months Ended
(in millions)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
FV-NI:
Realized gains	$	—	$	16	$	249	$	33
Realized losses	—		8		15		17
AFS:
Realized gains	—		29		—		58
Realized losses	—		23		—		47

DUKE ENERGY INDIANA

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



	September 30, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	—
Equity securities	45		—		84		43		—		81
Corporate debt securities	—		—		3		—		—		6
Municipal bonds	1		1		39		1		—		36
U.S. government bonds	—		—		3		—		—		2
Total Investments	$	46	$	1	$	130	$	44	$	—	$	125



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DEBT SECURITY MATURITIES

The table below summarizes the maturity date for debt securities.



	September 30, 2020
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Indiana
Due in one year or less	$	53	$	13	$	15	$	14	$	1	$	4
Due after one through five years	558		247		256		246		10		16
Due after five through 10 years	608		278		232		224		8		9
Due after 10 years	1,313		694		542		508		34		16
Total	$	2,532	$	1,232	$	1,045	$	992	$	53	$	45

11. FAIR VALUE MEASUREMENTS

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

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

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

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

Investments in equity securities

The majority of investments in equity securities are valued using Level 1 measurements. Investments in equity securities are typically valued at the closing price in the principal active market as of the last business day of the quarter. Principal active markets for equity prices include published exchanges such as the New York Stock Exchange and Nasdaq Stock Market. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. There was no after-hours market activity that was required to be reflected in the reported fair value measurements.

Investments in debt securities

Most investments in debt securities are valued using Level 2 measurements because the valuations use interest rate curves and credit spreads applied to the terms of the debt instrument (maturity and coupon interest rate) and consider the counterparty credit rating. If the market for a particular fixed-income security is relatively inactive or illiquid, the measurement is Level 3.

Commodity derivatives

Commodity derivatives with clearinghouses are classified as Level 1. If forward price curves are not observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.

Interest rate derivatives

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

Other fair value considerations

See Note 12 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2019, for a discussion of the valuation of goodwill and intangible assets.



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note 9. See Note 10 for additional information related to investments by major security type for the Duke Energy Registrants.



	September 30, 2020
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF cash and cash equivalents	$	687		$	687		$	—		$	—		$	—
NDTF equity securities	5,459			5,413			—			—			46
NDTF debt securities	2,224			363			1,861			—			—
Other equity securities	126			126			—			—			—
Other debt securities	308			18			290			—			—
Other cash and cash equivalents	110			110			—			—			—
Derivative assets	86			5			71			10			—
Total assets	9,000			6,722			2,222			10			46
Derivative liabilities	(359		)	(1		)	(145		)	(213		)	—
Net assets (liabilities)	$	8,641		$	6,721		$	2,077		$	(203	)	$	46



	December 31, 2019
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF cash and cash equivalents	$	101		$	101		$	—		$	—		$	—
NDTF equity securities	5,684			5,633			—			—			51
NDTF debt securities	2,368			725			1,643			—			—
Other equity securities	122			122			—			—			—
Other debt securities	258			39			219			—			—
Other cash and cash equivalents	52			52			—			—			—
Derivative assets	25			3			7			15			—
Total assets	8,610			6,675			1,869			15			51
NDTF equity security contracts	(23		)	—			(23		)	—			—
Derivative liabilities	(277		)	(15		)	(145		)	(117		)	—
Net assets (liabilities)	$	8,310		$	6,660		$	1,701		$	(102	)	$	51

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



	Derivatives (net)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2020			2019			2020			2019
Balance at beginning of period	$	(92	)	$	(79	)	$	(102	)	$	(113	)
Total pretax realized or unrealized gains included in comprehensive income	(102		)	—			(102		)	—
Purchases, sales, issuances and settlements:
Purchases	—			—			14			38
Settlements	(3		)	(9		)	(18		)	(32		)
Total (losses) gains included on the Condensed Consolidated Balance Sheet	(6		)	(2		)	5			17
Balance at end of period	$	(203	)	$	(90	)	$	(203	)	$	(90	)



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY CAROLINAS

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



	September 30, 2020
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized
NDTF cash and cash equivalents	$	42		$	42	$	—		$	—
NDTF equity securities	3,229			3,183		—			46
NDTF debt securities	1,232			131		1,101			—
Derivative assets	38			—		38			—
Total assets	4,541			3,356		1,139			46
Derivative liabilities	(33		)	—		(33		)	—
Net assets	$	4,508		$	3,356	$	1,106		$	46



	December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized
NDTF cash and cash equivalents	$	21		$	21	$	—		$	—
NDTF equity securities	3,154			3,103		—			51
NDTF debt securities	1,172			206		966			—
Total assets	4,347			3,330		966			51
Derivative liabilities	(49		)	—		(49		)	—
Net assets	$	4,298		$	3,330	$	917		$	51

PROGRESS ENERGY

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



	September 30, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF cash and cash equivalents	$	645		$	645	$	—		$	80		$	80	$	—
NDTF equity securities	2,230			2,230		—			2,530			2,530		—
NDTF debt securities	992			232		760			1,196			519		677
Other debt securities	53			—		53			51			—		51
Other cash and cash equivalents	107			107		—			49			49		—
Derivative assets	33			—		33			7			—		7
Total assets	4,060			3,214		846			3,913			3,178		735
NDTF equity security contracts	—			—		—			(23		)	—		(23		)
Derivative liabilities	(36		)	—		(36		)	(65		)	—		(65		)
Net assets	$	4,024		$	3,214	$	810		$	3,825		$	3,178	$	647



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY PROGRESS

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



	September 30, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NTDF cash and cash equivalents	$	57		$	57	$	—		$	53		$	53	$	—
NDTF equity securities	2,150			2,150		—			2,077			2,077		—
NDTF debt securities	992			232		760			921			244		677
Other cash and cash equivalents	1			1		—			2			2		—
Derivative assets	33			—		33			—			—		—
Total assets	3,233			2,440		793			3,053			2,376		677
Derivative liabilities	(20		)	—		(20		)	(49		)	—		(49		)
Net assets	$	3,213		$	2,440	$	773		$	3,004		$	2,376	$	628

DUKE ENERGY FLORIDA

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



	September 30, 2020						December 31, 2019
(in millions)	Total Fair Value		Level 1		Level 2		Total Fair Value			Level 1		Level 2
NDTF cash and cash equivalents	$	588	$	588	$	0	$	27		$	27	$	—
NDTF equity securities	80		80		—		453			453		—
NDTF debt securities	—		—		—		275			275		—
Other debt securities	53		—		53		51			—		51
Other cash and cash equivalents	2		2		—		4			4		—
Derivative assets	—		—		—		7			—		7
Total assets	723		670		53		817			759		58
NDTF equity security contracts	—		—		—		(23		)	—		(23		)
Derivative liabilities	—		—		—		(1		)	—		(1		)
Net assets	$	723	$	670	$	53	$	793		$	759	$	34

DUKE ENERGY OHIO

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

DUKE ENERGY INDIANA

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



	September 30, 2020								December 31, 2019
(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value			Level 1			Level 2		Level 3
Other equity securities	$	84	$	84	$	—	$	—	$	81		$	81		$	—	$	—
Other debt securities	45		—		45		—		44			—			44		—
Other cash and cash equivalents	1		1		—		—		—			—			—		—
Derivative assets	8		—		—		8		13			2			—		11
Total assets	$	138	$	85	$	45	$	8	$	138		$	83		$	44	$	11
Derivative liabilities	—		0		—		—		(1		)	(1		)	—		—
Net assets	$	138	$	85	$	45	$	8	$	137		$	82		$	44	$	11



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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



	Derivatives (net)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2020			2019			2020			2019
Balance at beginning of period	$	10		$	28		$	11		$	22
Purchases, sales, issuances and settlements:
Purchases	—			—			10			29
Settlements	(3		)	(7		)	(13		)	(26		)
Total gains (losses) included on the Condensed Consolidated Balance Sheet	1			(5		)	0			(9		)
Balance at end of period	$	8		$	16		$	8		$	16

PIEDMONT

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



	September 30, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3
Derivative assets	$	6		$	6	$	—		$	1		$	1	$	—
Derivative liabilities	(111		)	—		(111		)	(117		)	—		(117		)
Net (liabilities) assets	$	(105	)	$	6	$	(111	)	$	(116	)	$	1	$	(117	)

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



	Derivatives (net)
	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2020			2019			2020			2019
Balance at beginning of period	$	(105	)	$	(114	)	$	(117	)	$	(141	)
Total (losses) gains and settlements	(6		)	3			6			30
Balance at end of period	$	(111	)	$	(111	)	$	(111	)	$	(111	)



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

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



	September 30, 2020
												Weighted
	Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy
Electricity contracts	$	(102	)	RTO forward pricing	Forward electricity curves – price per MWh	$	14.92		-	$	151.18	$	29.63
Duke Energy Ohio
FTRs	2			RTO auction pricing	FTR price – per MWh	0			-	1.90		0.64
Duke Energy Indiana
FTRs	8			RTO auction pricing	FTR price – per MWh	(1.03		)	-	6.10		0.74
Piedmont
Natural gas contracts	(111		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.81			-	2.50		2.11
Duke Energy
Total Level 3 derivatives	$	(203	)



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

OTHER FAIR VALUE DISCLOSURES

The fair value and book value of long-term debt, including current maturities, is summarized in the following table. Estimates determined are not necessarily indicative of amounts that could have been settled in current markets. Fair value of long-term debt uses Level 2 measurements.



	September 30, 2020				December 31, 2019
(in millions)	Book Value		Fair Value		Book Value		Fair Value
Duke Energy^(a)	$	60,718	$	69,503	$	58,126	$	63,062
Duke Energy Carolinas	12,548		15,165		11,900		13,516
Progress Energy	19,865		23,825		19,634		22,291
Duke Energy Progress	9,358		10,808		9,058		9,934
Duke Energy Florida	7,917		9,684		7,987		9,131
Duke Energy Ohio	3,089		3,619		2,619		2,964
Duke Energy Indiana	4,104		5,140		4,057		4,800
Piedmont	2,780		3,276		2,384		2,642


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

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



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

12. VARIABLE INTEREST ENTITIES

CONSOLIDATED VIEs

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

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

Receivables Financing – DERF/DEPR/DEFR

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

DERF, DEPR and DEFR borrow amounts under credit facilities to buy these receivables. Borrowing availability from the credit facilities is limited to the amount of qualified receivables purchased, which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities for DERF and DEPR are reflected on the Condensed Consolidated Balance Sheets as Long-Term Debt. Amounts borrowed under the credit facilities for DEFR are reflected on the Condensed Consolidated Balance Sheets as Current maturities of long-term debt.

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

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

Receivables Financing – CRC

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

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

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

CRC is considered a VIE because (i) equity capitalization is insufficient to support its operations, (ii) power to direct the activities that most significantly impact the economic performance of the entity is not held by the equity holder and (iii) deficiencies in net worth of CRC are funded by Duke Energy. The most significant activities that impact the economic performance of CRC are decisions made to manage delinquent receivables. Duke Energy is considered the primary beneficiary and consolidates CRC as it makes these decisions. Neither Duke Energy Ohio nor Duke Energy Indiana consolidate CRC.



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

Receivables Financing – Credit Facilities

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



	Duke Energy
			Duke Energy		Duke Energy		Duke Energy
			Carolinas		Progress		Florida
(in millions)	CRC		DERF		DEPR		DEFR
Expiration date	February 2023		December 2022		April 2023		April 2021
Credit facility amount	$	350	$	475	$	350	$	250
Amounts borrowed at September 30, 2020	350		475		350		250
Amounts borrowed at December 31, 2019	350		474		325		250
Restricted Receivables at September 30, 2020	479		770		559		506
Restricted Receivables at December 31, 2019	522		642		489		336

Nuclear Asset-Recovery Bonds – DEFPF

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

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

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

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



(in millions)	September 30, 2020		December 31, 2019
Receivables of VIEs	$	6	$	5
Regulatory Assets: Current	53		52
Current Assets: Other	16		39
Other Noncurrent Assets: Regulatory assets	951		989
Current Liabilities: Other	2		10
Current maturities of long-term debt	55		54
Long-Term Debt	1,001		1,057

Commercial Renewables

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

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



(in millions)	September 30, 2020			December 31, 2019
Current Assets: Other	$	319		$	203
Property, Plant and Equipment: Cost	6,239			5,747
Accumulated depreciation and amortization	(1,200		)	(1,041		)
Other Noncurrent Assets: Other	79			106
Current maturities of long-term debt	161			162
Long-Term Debt	1,452			1,541
Other Noncurrent Liabilities: AROs	150			127
Other Noncurrent Liabilities: Other	342			228



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

NON-CONSOLIDATED VIEs

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



	September 30, 2020
	Duke Energy												Duke		Duke
	Pipeline			Commercial			Other						Energy		Energy
(in millions)	Investments			Renewables			VIEs			Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	(1	)	$	—		$	(1	)	$	45	$	74
Other current assets	413			—			—			413			—		$	—
Investments in equity method unconsolidated affiliates	—			487			1			488			—		—
Deferred tax asset	26			—			—			26			—		—
Total assets	$	439		$	486		$	1		$	926		$	45	$	74
Other current liabilities	927			—			3			930			—		—
Other noncurrent liabilities	19			—			10			29			—		—
Total liabilities	$	946		$	—		$	13		$	959		$	—	$	—
Net (liabilities) assets	$	(507	)	$	486		$	(12	)	$	(33	)	$	45	$	74



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

The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the PPA with OVEC, which is discussed below, and future exit costs associated with the cancellation of the ACP pipeline, as discussed below.

Pipeline Investments

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

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

For the three and nine months ended September 30, 2020, the ACP investment is considered a significant subsidiary because its income (loss) exceeds 10% of Duke Energy’s income (loss). The table below presents unaudited summarized financial information for ACP.



	Three Months Ended September 30,					Nine Months Ended September 30,
(in millions)	2020			2019		2020			2019
Net (Loss) Income	$	(163	)	$	65	$	(4,505	)	$	178



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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



			VIE Investment Amount (in millions)
	Ownership		September 30,			December 31,
Entity Name	Interest		2020			2019
ACP^(a)	47	%	$	(927	)	$	1,179
Constitution^(b)	24	%	—			—
Total			$	(927	)	$	1,179


(a)	During the quarter ended June 30, 2020, Duke Energy determined that it would no longer continue its investment in ACP as described above. The current liability related to the cancellation of the ACP pipeline project represents Duke Energy's continuing obligation to fund its share of ACP's obligations. See Notes 1, 3 and 4 for more information.


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

Commercial Renewables

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

Other

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

OVEC

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

As a counterparty to an Inter-Company Power Agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business. On March 31, 2018, FirstEnergy Solutions Corp (FES), a subsidiary of FirstEnergy Corp. and an ICPA counterparty with a power participation ratio of 4.85%, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. In addition, certain proposed environmental rulemaking could result in future increased OVEC cost allocations. In July 2020, legislation was proposed to repeal HB 6. Duke Energy cannot predict the outcome in this matter. See Note 3 for additional information.

CRC

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

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

The following table shows the gross and net receivables sold.



	Duke Energy Ohio				Duke Energy Indiana
(in millions)	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Receivables sold	$	226	$	253	$	310	$	307
Less: Retained interests	45		64		74		77
Net receivables sold	$	181	$	189	$	236	$	230



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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



	Duke Energy Ohio								Duke Energy Indiana
	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in millions)	2020		2019		2020		2019		2020		2019		2020		2019
Sales
Receivables sold	$	462	$	479	$	1,428	$	1,483	$	717	$	762	$	1,947	$	2,172
Loss recognized on sale	2		4		8		11		3		4		9		13
Cash flows
Cash proceeds from receivables sold	$	449	$	471	$	1,439	$	1,516	$	689	$	762	$	1,941	$	2,200
Collection fees received	1		—		1		1		—		—		1		1
Return received on retained interests	1		1		3		5		1		2		4		7

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

13. REVENUE

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

Electric Utilities and Infrastructure

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

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



	Remaining Performance Obligations
(in millions)	2020		2021		2022		2023		2024		Thereafter		Total
Progress Energy	$	30	$	92	$	94	$	44	$	45	$	58	$	363
Duke Energy Progress	2		8		8		8		8		—		34
Duke Energy Florida	28		84		86		36		37		58		329
Duke Energy Indiana	2		5		—		7		12		36		62

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

Gas Utilities and Infrastructure

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

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



	Remaining Performance Obligations
(in millions)	2020		2021		2022		2023		2024		Thereafter		Total
Piedmont	$	17	$	65	$	64	$	61	$	58	$	377	$	642

Commercial Renewables

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



FINANCIAL STATEMENTS	REVENUE

Other

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

Disaggregated Revenues

Disaggregated revenues are presented as follows:



	Three Months Ended September 30, 2020
			Duke					Duke		Duke		Duke			Duke
(in millions)	Duke		Energy			Progress		Energy		Energy		Energy			Energy
By market or type of customer	Energy		Carolinas			Energy		Progress		Florida		Ohio			Indiana			Piedmont
Electric Utilities and Infrastructure
Residential	$	2,936	$	883		$	1,550	$	616	$	934	$	213		$	289		$	—
General	1,804		664			805		384		421		119			212			—
Industrial	797		342			245		179		66		35			175			—
Wholesale	603		117			412		358		54		10			64			—
Other revenues	238		62			167		75		92		23			22			—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	6,378	$	2,068		$	3,179	$	1,612	$	1,567	$	400		$	762		$	—

Gas Utilities and Infrastructure
Residential	$	112	$	—		$	—	$	—	$	—	$	55		$	—		$	57
Commercial	64		—			—		—		—		20			—			44
Industrial	24		—			—		—		—		3			—			22
Power Generation	—		—			—		—		—		—			—			10
Other revenues	16		—			—		—		—		3			—			11
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	216	$	—		$	—	$	—	$	—	$	81		$	—		$	144

Commercial Renewables
Revenue from contracts with customers	$	57	$	—		$	—	$	—	$	—	$	—		$	—		$	—

Other
Revenue from contracts with customers	$	7	$	—		$	—	$	—	$	—	$	—		$	—		$	—
Total revenue from contracts with customers	$	6,658	$	2,068		$	3,179	$	1,612	$	1,567	$	481		$	762		$	144

Other revenue sources^(a)	$	63	$	(10	)	$	18	$	14	$	—	$	(8	)	$	(1	)	$	18
Total revenues	$	6,721	$	2,058		$	3,197	$	1,626	$	1,567	$	473		$	761		$	162


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



FINANCIAL STATEMENTS	REVENUE



	Three Months Ended September 30, 2019
			Duke				Duke		Duke		Duke			Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy			Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio			Indiana			Piedmont
Electric Utilities and Infrastructure
Residential	$	2,923	$	892	$	1,522	$	625	$	897	$	215		$	294		$	—
General	1,885		687		843		399		444		127			225			—
Industrial	869		372		255		189		66		40			204			—
Wholesale	617		113		429		368		61		13			63			—
Other revenues	198		76		118		70		48		18			22			—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	6,492	$	2,140	$	3,167	$	1,651	$	1,516	$	413		$	808		$	—

Gas Utilities and Infrastructure
Residential	$	113	$	—	$	—	$	—	$	—	$	53		$	—		$	59
Commercial	68		—		—		—		—		21			—			47
Industrial	26		—		—		—		—		4			—			25
Power Generation	—		—		—		—		—		—			—			13
Other revenues	16		—		—		—		—		3			—			13
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	223	$	—	$	—	$	—	$	—	$	81		$	—		$	157

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

Other
Revenue from contracts with customers	$	8	$	—	$	—	$	—	$	—	$	—		$	—		$	—
Total revenue from contracts with customers	$	6,792	$	2,140	$	3,167	$	1,651	$	1,516	$	494		$	808		$	157

Other revenue sources^(a)	$	148	$	22	$	75	$	37	$	32	$	(5	)	$	(1	)	$	11
Total revenues	$	6,940	$	2,162	$	3,242	$	1,688	$	1,548	$	489		$	807		$	168


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



FINANCIAL STATEMENTS	REVENUE



	Nine Months Ended September 30, 2020
			Duke					Duke		Duke		Duke			Duke
(in millions)	Duke		Energy			Progress		Energy		Energy		Energy			Energy
By market or type of customer	Energy		Carolinas			Energy		Progress		Florida		Ohio			Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	7,451	$	2,316		$	3,792	$	1,578	$	2,214	$	558		$	785	$	—
General	4,691		1,720			2,080		1,001		1,079		336			554		—
Industrial	2,148		871			673		487		186		103			502		—
Wholesale	1,535		332			1,018		877		141		22			163		—
Other revenues	713		184			476		208		268		62			63		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	16,538	$	5,423		$	8,039	$	4,151	$	3,888	$	1,081		$	2,067	$	—

Gas Utilities and Infrastructure
Residential	$	631	$	—		$	—	$	—	$	—	$	214		$	—	$	417
Commercial	308		—			—		—		—		86			—		222
Industrial	92		—			—		—		—		12			—		80
Power Generation	—		—			—		—		—		—			—		27
Other revenues	58		—			—		—		—		12			—		46
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,089	$	—		$	—	$	—	$	—	$	324		$	—	$	792

Commercial Renewables
Revenue from contracts with customers	$	170	$	—		$	—	$	—	$	—	$	—		$	—	$	—

Other
Revenue from contracts with customers	$	20	$	—		$	—	$	—	$	—	$	—		$	—	$	—
Total Revenue from contracts with customers	$	17,817	$	5,423		$	8,039	$	4,151	$	3,888	$	1,405		$	2,067	$	792

Other revenue sources^(a)	$	274	$	(7	)	$	78	$	56	$	9	$	(11	)	$	3	$	79
Total revenues	$	18,091	$	5,416		$	8,117	$	4,207	$	3,897	$	1,394		$	2,070	$	871


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



FINANCIAL STATEMENTS	REVENUE



	Nine Months Ended September 30, 2019
			Duke				Duke		Duke		Duke			Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy			Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio			Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	7,597	$	2,331	$	3,879	$	1,657	$	2,222	$	563		$	825	$	—
General	4,896		1,714		2,225		1,044		1,181		335			619		—
Industrial	2,339		927		708		514		194		109			595		—
Wholesale	1,685		341		1,133		992		141		36			176		—
Other revenues	557		222		389		239		150		59			66		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	17,074	$	5,535	$	8,334	$	4,446	$	3,888	$	1,102		$	2,281	$	—

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

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

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

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


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



	Three Months Ended September 30, 2020
				Duke						Duke			Duke		Duke		Duke
	Duke			Energy			Progress			Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont
Balance at June 30, 2020	$	102		$	14		$	29		$	14		$	14	$	5	$	3	$	6
Write-Offs	12			(2		)	15			13			2		—		—		—
Credit Loss Expense	(9		)	—			(16		)	(15		)	—		—		—		3
Other Adjustments	28			10			9			9			—		—		—		—
Balance at September 30, 2020	$	133		$	22		$	37		$	21		$	16	$	5	$	3	$	9



FINANCIAL STATEMENTS	REVENUE



	Nine Months Ended September 30, 2020
				Duke					Duke			Duke		Duke		Duke
	Duke			Energy			Progress		Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas			Energy		Progress			Florida		Ohio		Indiana		Piedmont
Balance at December 31, 2019	$	76		$	10		$	16	$	8		$	7	$	4	$	3	$	6
Cumulative Change in Accounting Principle	5			1			2		1			1		—		—		1
Write-Offs	(7		)	(8		)	8		8			—		—		—		(5		)
Credit Loss Expense	24			9			2		(5		)	8		1		—		7
Other Adjustments	35			10			9		9			—		—		—		—
Balance at September 30, 2020	$	133		$	22		$	37	$	21		$	16	$	5	$	3	$	9

Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions, including the impacts of COVID-19, as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss periodically for trade and other receivables. Due to the COVID-19 pandemic, as described in Note 1, certain jurisdictions have resumed standard billing and credit practices, disconnections for nonpayment and late payment charges, all of which were previously suspended in the first quarter of 2020. The specific actions taken by each Duke Energy Registrant are described in Note 3. The impact of COVID-19 and Duke Energy’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates.

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



	September 30, 2020
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Unbilled Receivables	$	788	$	284	$	274	$	139	$	135	$	1	$	16	$	5
0-30 days	1,800		475		847		439		406		44		23		66
30-60 days	227		86		84		48		36		7		2		8
60-90 days	94		39		31		20		11		3		1		3
90+ days	263		85		68		37		31		40		9		20
Trade and Other Receivables	$	3,172	$	969	$	1,304	$	683	$	619	$	95	$	51	$	102

UNBILLED REVENUE

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

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



(in millions)	September 30, 2020		December 31, 2019
Duke Energy	$	788	$	843
Duke Energy Carolinas	284		298
Progress Energy	274		217
Duke Energy Progress	139		122
Duke Energy Florida	135		95
Duke Energy Ohio	1		1
Duke Energy Indiana	16		16
Piedmont	5		78



FINANCIAL STATEMENTS	REVENUE

Additionally, Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC, and account for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Condensed Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 12 for further information. These receivables for unbilled revenues are shown in the table below.



(in millions)	September 30, 2020		December 31, 2019
Duke Energy Ohio	$	66	$	82
Duke Energy Indiana	106		115

14. STOCKHOLDERS' EQUITY

Basic EPS is computed by dividing net income available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options and equity forward sale agreements, were exercised or settled. Duke Energy’s participating securities are restricted stock units that are entitled to dividends declared on Duke Energy common stock during the restricted stock unit’s vesting periods. Dividends declared on preferred stock are recorded on the Condensed Consolidated Statements of Operations as a reduction of net income to arrive at net income available to Duke Energy common stockholders. Dividends accumulated on preferred stock are an adjustment to net income used in the calculation of basic and diluted EPS.

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



	Three Months Ended September 30,					Nine Months Ended September 30,
(in millions, except per share amounts)	2020		2019			2020		2019
Net income available to Duke Energy common stockholders	$	1,265	$	1,327		$	1,347	$	3,047
Accumulated preferred stock dividends adjustment	12		(2		)	13		(2		)
Less: Impact of participating securities	1		1			2		4
Income from continuing operations available to Duke Energy common stockholders	$	1,276	$	1,324		$	1,358	$	3,041

Weighted average common shares outstanding – basic	735		729			735		728
Equity forwards	—		—			—		—
Weighted average common shares outstanding – diluted	735		729			735		728
EPS available to Duke Energy common stockholders
Basic and diluted	$	1.74	$	1.82		$	1.85	$	4.18
Potentially dilutive items excluded from the calculation^(a)	2		2			2		2
Dividends declared per common share	$	0.965	$	0.945		$	2.855	$	2.800
Dividends declared on Series A preferred stock per depositary share^(b)	$	0.359	$	0.359		$	1.078	$	0.667
Dividends declared on Series B preferred stock per share^(c)	$	24.375	$	—		$	49.292	$	—


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


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


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

Common Stock

In November 2019, Duke Energy filed a prospectus supplement and executed an Equity Distribution Agreement (EDA) under which it may sell up to $1.5 billion of its common stock through an at-the-market (ATM) offering program, including an equity forward sales component. Under the terms of the EDA, Duke Energy may issue and sell shares of common stock through September 2022. In March 2020, Duke Energy marketed approximately 940,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $89.76 per share. In May 2020, Duke Energy marketed approximately 903,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $82.44 per share. In August 2020, Duke Energy marketed approximately 936,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $79.52 per share.

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



FINANCIAL STATEMENTS	STOCKHOLDERS' EQUITY

The equity forward sales agreements require Duke Energy to either physically settle the transaction by issuing shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement, or net settle in whole or in part through the delivery or receipt of cash or shares. The initial forward sale price will be subject to adjustment based on a floating interest rate factor and other fixed amounts specified in the relevant forward sale agreements. The settlement alternatives are at Duke Energy's election and settlement of the forward sales agreements are expected to occur on or prior to December 31, 2020. If Duke Energy had elected to net share settle these contracts as of September 30, 2020, Duke Energy would have been required to deliver 1.9 million shares. No amounts have or will be recorded in Duke Energy's Condensed Consolidated Financial Statements with respect to these ATM offerings until settlements of the equity forwards occur. Until settlement of the equity forwards, EPS dilution resulting from the agreements, if any, will be determined under the treasury stock method.

15. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT RETIREMENT PLANS

Duke Energy and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified and non-qualified, non-contributory defined benefit retirement plans. Duke Energy's policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants.

QUALIFIED PENSION PLANS

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



	Three Months Ended September 30, 2020
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	41		$	12		$	12		$	6		$	5		$	1		$	2		$	1
Interest cost on projected benefit obligation	67			16			21			10			12			4			6			2
Expected return on plan assets	(143		)	(36		)	(48		)	(22		)	(25		)	(7		)	(11		)	(5		)
Amortization of actuarial loss	32			7			10			4			6			2			3			2
Amortization of prior service credit	(8		)	(2		)	—			—			—			—			—			(2		)
Amortization of settlement charges	11			6			5			5			1			—			1			1
Net periodic pension costs	$	—		$	3		$	—		$	3		$	(1	)	$	—		$	1		$	(1	)



	Three Months Ended September 30, 2019
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	42		$	13		$	13		$	7		$	5		$	1		$	2		$	1
Interest cost on projected benefit obligation	77			17			24			10			14			5			6			2
Expected return on plan assets	(140		)	(36		)	(45		)	(22		)	(22		)	(7		)	(11		)	(5		)
Amortization of actuarial loss	28			6			10			4			6			2			3			2
Amortization of prior service credit	(8		)	(2		)	(1		)	—			—			—			—			(2		)
Net periodic pension costs	$	(1	)	$	(2	)	$	1		$	(1	)	$	3		$	1		$	—		$	(2	)



	Nine Months Ended September 30, 2020
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	124		$	38		$	36		$	20		$	16		$	3		$	6		$	4
Interest cost on projected benefit obligation	202			47			64			29			35			12			17			7
Expected return on plan assets	(429		)	(108		)	(143		)	(66		)	(76		)	(21		)	(32		)	(16		)
Amortization of actuarial loss	96			21			30			13			17			5			9			7
Amortization of prior service credit	(24		)	(6		)	(2		)	(1		)	(1		)	—			(1		)	(7		)
Amortization of settlement charges	16			8			6			6			1			—			1			1
Net periodic pension costs	$	(15	)	$	—		$	(9	)	$	1		$	(8	)	$	(1	)	$	—		$	(4	)



FINANCIAL STATEMENTS	EMPLOYEE BENEFIT PLANS



	Nine Months Ended September 30, 2019
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	116		$	37		$	34		$	19		$	15		$	3		$	6		$	4
Interest cost on projected benefit obligation	242			58			76			34			41			14			19			8
Expected return on plan assets	(426		)	(111		)	(134		)	(66		)	(66		)	(21		)	(32		)	(16		)
Amortization of actuarial loss	77			17			28			10			18			3			6			5
Amortization of prior service credit	(24		)	(6		)	(2		)	(1		)	(1		)	—			(1		)	(7		)
Net periodic pension costs	$	(15	)	$	(5	)	$	2		$	(4	)	$	7		$	(1	)	$	(2	)	$	(6	)

NON-QUALIFIED PENSION PLANS

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

OTHER POST-RETIREMENT BENEFIT PLANS

Net periodic costs for OPEB plans were not material for the three and nine months ended September 30, 2020, and 2019.

16. INCOME TAXES

EFFECTIVE TAX RATES

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



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Duke Energy	7.8	%	12.4	%	(6.4	)%	12.5	%
Duke Energy Carolinas	12.0	%	16.7	%	13.6	%	17.7	%
Progress Energy	10.4	%	15.3	%	13.4	%	16.2	%
Duke Energy Progress	3.1	%	14.7	%	10.0	%	16.1	%
Duke Energy Florida	21.4	%	16.5	%	20.3	%	18.0	%
Duke Energy Ohio	16.7	%	12.9	%	16.6	%	15.2	%
Duke Energy Indiana	19.6	%	23.2	%	19.4	%	23.7	%
Piedmont	16.7	%	35.7	%	3.7	%	18.5	%

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

The decrease in the ETR for Duke Energy for the nine months ended September 30, 2020, was primarily due to the impact of the cancellation of the ACP pipeline project recorded in the second quarter of 2020 and an increase in the amortization of excess deferred taxes.

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

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

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

The increase in the ETR for Duke Energy Florida for the three and nine months ended September 30, 2020, was primarily due to favorable tax adjustments in the prior year.

The increase in the ETR for Duke Energy Ohio for the three and nine months ended September 30, 2020, was primarily due to favorable tax adjustments in the prior year.

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

The decrease in the ETR for Piedmont for the three months ended September 30, 2020, was primarily due to a decrease in the amortization of excess deferred taxes, in relation to pretax losses.



FINANCIAL STATEMENTS	INCOME TAXES

The decrease in the ETR for Piedmont for the nine months ended September 30, 2020, was primarily due to an increase in the amortization of excess deferred taxes and an increase in AFUDC equity.

OTHER TAX MATTERS

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

17. SUBSEQUENT EVENTS

For information on subsequent events related to regulatory matters, see Note 3.

On October 29, 2020, Tropical Storm Zeta impacted Duke Energy Carolinas territory causing nearly 1 million customer power outages. The estimated cost of this storm has not been determined, but is expected to be less than $100 million.



MD&A	DUKE ENERGY

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy and Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. However, none of the registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.

DUKE ENERGY

Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the U.S. primarily through its wholly owned subsidiaries, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of the Subsidiary Registrants, which, along with Duke Energy, are collectively referred to as the Duke Energy Registrants.

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2020, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2019.

Executive Overview

Road to Net-Zero Carbon

Duke Energy has committed to net-zero carbon emissions from electric generation by 2050 in a reliable and cost-effective manner. Our commitment to address our climate is integrated into everything we do as we seek to reduce our greenhouse gas emissions and mitigate risk. We have already lowered our carbon emissions by 39% since 2005, retired over 50 coal units since 2010 and expanded our renewables portfolio by adding 8,000 MW of wind and solar onto our system through 2019.

To further support our climate strategy, Duke Energy has announced plans to convert most of its 10,000-vehicle fleet to electric by 2030. In October 2020, Duke Energy also announced its commitment to achieve net-zero methane emissions across our local gas distribution companies by 2030.

On September 1, 2020, Duke Energy Carolinas and Duke Energy Progress filed integrated resource plans with the utility commissions in North Carolina and South Carolina, presenting six potential pathways to transition the energy system to further accelerate carbon reduction over the next 15 years. These pathways were designed with extensive input from more than 200 diverse groups and will continue to be developed with engagement from policymakers and stakeholders. Each potential pathway keeps the company on a trajectory to meet carbon goals while exploring accelerated coal retirement options, increasing renewables, including offshore wind, and further developing new technologies. We expect that execution of some combination of pathways will reduce carbon emissions between approximately 55%-75% through the 2035 planning horizon and will require total incremental investment capital of between $20 billion to $50 billion.

Duke Energy Florida is investing to bring 700 MW of solar online by 2022 and has filed a $1 billion shared solar program called Clean Energy Connection, which will add another 750 MW of solar by the end of 2024. Duke Energy Indiana continues to focus on accelerating closure of coal plants, planning to add to the 1,100 MW of coal that has been retired since 2010.

We will closely monitor the impacts of these plans as they accelerate coal plant retirements and may cause us to seek specific regulatory recovery.

COVID-19

The COVID-19 pandemic is having a significant impact on global health and economic environments. Retail electric sales are down approximately 3% for the year compared to the prior year due to the pandemic. This reduction however is not as steep as expected in our revised March 2020 forecast. The company incurred approximately $39 million and $91 million of incremental COVID-19 costs before deferral for the three and nine months ended September 30, 2020, respectively. These costs are primarily bad debt expense, personal protective equipment and cleaning supplies. For the nine months ended September 30, 2020, the company has deferred approximately $56 million. Further, the company waived approximately $29 million and $54 million of late payment fees for the three and nine months ended September 30, 2020, respectively. The Duke Energy Registrants are monitoring developments closely, have taken steps to mitigate the impacts to our business, and have a pandemic response plan in place to protect our employees, customers and communities.

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Employees. The health of our employees is of paramount importance. Power plants and electricity and natural gas delivery facilities are staffed. Employees who are not involved with power generation, power delivery, customer service or certain other functions have been performing their work duties remotely from home. Employees who need to interact with customers in person are following the Centers for Disease Control and Prevention’s safety guidelines, including social distancing and use of face masks. Operating procedure changes include additional cleaning and disinfection procedures at our facilities.

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Customers. The Duke Energy Subsidiary Registrants have resumed certain standard billing and credit practices, disconnections for nonpayment and late payment charges, all of which were previously suspended in the first quarter of 2020 in order to give customers experiencing financial hardship extra time to make payments. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information. The COVID-19 pandemic and stay-at-home orders caused many commercial and industrial customers to reduce or suspend operations beginning in late March and April, which has impacted the Duke Energy Registrants’ volumes during the nine months ended September 30, 2020. Many of these customers have begun to restart their businesses.


•	Communities. The Duke Energy Foundation announced approximately $6.5 million in donations and grants during the nine months ended September 30, 2020, to support hunger relief, local health and human services nonprofits, and education initiatives across the Duke Energy Registrants’ service territories.



MD&A	DUKE ENERGY

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Policymaker actions. The CARES Act was signed by President Trump on March 27, 2020. Duke Energy Registrants are benefiting from certain provisions such as the accelerated refund of AMT credits, which resulted in receipt of a $572 million refund and $19 million of interest income in September 2020, and deferral of certain payroll taxes through December 31, 2020. See Note 16 to the Condensed Consolidated Financial Statements, “Income Taxes,” for additional information.


•	Cost mitigation. Duke Energy has developed and executed a significant cost containment plan during 2020 to offset a portion of the revenue decline experienced as a result of the COVID-19 pandemic. This plan includes a variety of cost efficiency measures, including managing plant costs due to lower production, lower employee expenses and lower financing costs due to favorable market conditions.

Regulatory Activity. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

•

On July 31, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain remaining issues in the 2019 base rate proceeding. The Duke Energy Carolinas hearing concluded on September 18, 2020 and the Duke Energy Progress hearing concluded on October 6, 2020. Duke Energy Carolinas and Duke Energy Progress expect the NCUC to issue an order on each net rate increase in early 2021. On August 4, 2020, and August 7, 2020, respectively, Duke Energy Carolinas and Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund. The NCUC approved these requests and rates were effective on August 24, 2020, and September 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively.

•

On October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC seeking authorization for the financing of each utilities' storm recovery activities as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. The total revenue requirement over the proposed 15-year bond period for the storm recovery charges is approximately $262 million for Duke Energy Carolinas and $842 million for Duke Energy Progress. The utilities estimate that securitization of the respective storm recovery costs will result in expected customer savings of 32% for Duke Energy Carolinas customers and 33% for Duke Energy Progress customers.

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Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019. The IURC issued its order June 29, 2020, approving a revenue increase of approximately $146 million, before utility receipt taxes. Step one rates are 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 and will be effective in the first quarter of 2021. Several groups filed notices of appeal of the IURC order on July 29, 2020.


•	COVID-19 deferral requests


◦	Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic on August 7, 2020. Duke Energy Carolinas and Duke Energy Progress filed a similar request with the PSCSC on August 14, 2020.

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Duke Energy Ohio on May 11, 2020, filed with the PUCO a request seeking deferral of incremental costs incurred due to the COVID-19 pandemic, as well as specific miscellaneous lost revenues. The request seeks to use existing bad debts and uncollectible riders already in place for both electric and natural gas operations. Duke Energy Ohio would subsequently file for rider recovery at a later date. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application.

◦

On May 8, 2020, Duke Energy Indiana, along with other Indiana utilities, filed a request with the IURC for approval of deferral treatment for costs associated with the COVID-19 pandemic. On June 29, 2020, the IURC issued its order permitting jurisdictional utilities to use regulatory accounting for any impacts associated with the prohibition on utility disconnections, waiver or exclusion of certain utility fees, the use of expanded payment arrangements to aid customers, and for COVID-19 related uncollectible and incremental bad debt expense.

Matters Impacting Future Results

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

COVID-19

Duke Energy cannot predict the extent to which the COVID-19 pandemic will impact its results of operations, financial position and cash flows in the future. Duke Energy will continue to actively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown will adversely affect the company’s customers, suppliers and partners and could cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. It could also cause delays in construction for Commercial Renewables and availability of financing. The company also has various pending rate case proceedings that have been delayed. Duke Energy has cost mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.

ACP

On July 5, 2020, Duke Energy and Dominion Energy determined that they would no longer invest in the construction of the Atlantic Coast Pipeline. Duke Energy has recorded approximately $2.1 billion of pretax charges and expects additional charges of less than $50 million to be recorded when certain exit costs related to the project are incurred by ACP. Estimates used to calculate the loss could be revised and exit obligations, which have not yet been incurred or recorded could have an adverse impact on future results. Furthermore, the loss of earnings from this project, including AFUDC, will lower Duke Energy's future expected results. See Notes 1, 3, 4 and 11 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation," "Regulatory Matters," "Commitments and Contingencies," and "Variable Interest Entities," respectively, for additional information.

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MD&A	MATTERS IMPACTING FUTURE RESULTS

Regulatory Matters

Coal Ash Costs

On December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with North Carolina Department of Environmental Quality and certain community groups under which Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to lined landfills. Duke Energy Carolinas and Duke Energy Progress have also received orders from the PSCSC granting the companies’ requests for retail rate increases but denying recovery of certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress have appealed these decisions to the South Carolina Supreme Court and those appeals are pending. Appeals of the 2017 North Carolina approved rate cases for Duke Energy Carolinas and Duke Energy Progress are still pending at the North Carolina Supreme Court. The North Carolina Attorney General and various intervenors primarily dispute the allowance of recovery of coal ash costs from customers, which was approved by the NCUC. An order from regulatory or judicial authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on future results.

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

Storm Costs

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress and Duke Energy Florida's service territories. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact.

Grid Improvement Costs

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

Rate Cases

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

MGP

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

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

Commercial Renewables

Duke Energy continues to monitor recoverability of a renewable merchant plant located in the Electric Reliability Council of Texas West market, due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Based on the most recent recoverability test performed this quarter, the carrying value approximated the aggregate estimated future undiscounted cash flows for this plant. A continued decline in energy market pricing would likely result in a future impairment. Impairment of this asset could result in adverse impacts. For additional information, see Note 2 to the Condensed Consolidated Financial Statements, "Business Segments."

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

Results of Operations

Non-GAAP Measures

Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures such as adjusted earnings and adjusted EPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures presented may not be comparable to similarly titled measures used by other companies because other companies may not calculate the measures in the same manner.

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Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. Adjusted earnings and adjusted EPS represent income from continuing operations available to Duke Energy Corporation common stockholders in dollar and per share amounts, adjusted for the dollar and per share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and GAAP Reported EPS, respectively.

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


•	Gas Pipeline Investments represents costs related to the cancellation of the ACP pipeline and additional exit costs related to Constitution.


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


•	Regulatory Settlements represents charges related to Duke Energy Carolinas' and Duke Energy Progress' partial settlements in the 2019 North Carolina rate cases.


•	Impairment Charges represents a reduction of a prior year impairment at Citrus County CC.

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

GAAP reported EPS was $1.74 for the third quarter of 2020 compared to $1.82 in the third quarter of 2019. GAAP reported earnings decreased primarily due to unfavorable weather, additional charges related to the gas pipeline investments and higher depreciation expense, partially offset by positive rate case impacts and lower operations and maintenance expense.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s third quarter 2020 adjusted EPS was $1.87 compared to $1.79 for the third quarter of 2019. The increase in adjusted earnings was primarily due to positive rate case impacts and lower operations and maintenance expense, partially offset by unfavorable weather.

The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.



	Three Months Ended September 30,
	2020				2019
(in millions, except per share amounts)	Earnings		EPS		Earnings			EPS
GAAP Reported Earnings/GAAP Reported EPS	$	1,265	$	1.74	$	1,327		$	1.82
Adjustments:
Gas Pipeline Investments^(a)	69		0.09		—			—
Regulatory Settlements^(b)	27		0.04		—			—
Impairment Charges^(c)	—		—		(19		)	(0.03		)
Adjusted Earnings/Adjusted EPS	$	1,361	$	1.87	$	1,308		$	1.79


(a)	Net of tax benefit of $21 million.


(b)	Net of tax benefit of $8 million.


(c)	Net of $6 million tax expense.

Nine Months Ended September 30, 2020, as compared to September 30, 2019

GAAP Reported EPS was $1.85 for the nine months ended September 30, 2020, compared to $4.18 for the nine months ended September 30, 2019. GAAP reported earnings decreased primarily due to the cancellation of the ACP pipeline.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $4.09 for the nine months ended September 30, 2020, compared to $4.15 for the nine months ended September 30, 2019. The decrease in adjusted earnings was primarily due to unfavorable weather, higher depreciation expense, a prior year adjustment related to income tax recognition for equity method investments and preferred stock dividends. This was partially offset by positive rate case impacts, growth in Commercial Renewables and lower operations and maintenance expense.

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The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.



	Nine Months Ended September 30,
	2020						2019
(in millions, except per-share amounts)	Earnings			EPS			Earnings			EPS
GAAP Reported Earnings/GAAP Reported EPS	$	1,347		$	1.85		$	3,047		$	4.18
Adjustments:
Gas Pipeline Investments^(a)	1,695			2.30			—			—
Severance^(b)	(75		)	(0.10		)	—			—
Regulatory Settlements^(c)	27			0.04			—			—
Impairment Charges^(d)	—			—			(19		)	(0.03		)
Adjusted Earnings/Adjusted EPS	$	2,994		$	4.09		$	3,028		$	4.15


(a)	Net of tax benefit of $395 million.


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


(c)	Net of tax benefit of $8 million.


(d)	Net of tax expense of $6 million.

SEGMENT RESULTS

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

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

Electric Utilities and Infrastructure



	Three Months Ended September 30,								Nine Months Ended September 30,
(in millions)	2020		2019			Variance			2020		2019			Variance
Operating Revenues	$	6,379	$	6,577		$	(198	)	$	16,596	$	17,381		$	(785	)
Operating Expenses
Fuel used in electric generation and purchased power	1,869		1,994			(125		)	4,703		5,286			(583		)
Operation, maintenance and other	1,326		1,357			(31		)	3,891		3,957			(66		)
Depreciation and amortization	1,053		1,026			27			3,023		2,924			99
Property and other taxes	286		301			(15		)	885		899			(14		)
Impairment charges	20		(20		)	40			23		(16		)	39
Total operating expenses	4,554		4,658			(104		)	12,525		13,050			(525		)
Gains on Sales of Other Assets and Other, net	3		—			3			11		—			11
Operating Income	1,828		1,919			(91		)	4,082		4,331			(249		)
Other Income and Expenses, net	67		87			(20		)	241		267			(26		)
Interest Expense	308		336			(28		)	991		1,004			(13		)
Income Before Income Taxes	1,587		1,670			(83		)	3,332		3,594			(262		)
Income Tax Expense	206		285			(79		)	493		650			(157		)
Segment Income	$	1,381	$	1,385		$	(4	)	$	2,839	$	2,944		$	(105	)

Duke Energy Carolinas GWh sales	23,726		25,587			(1,861		)	64,045		69,019			(4,974		)
Duke Energy Progress GWh sales	19,035		19,502			(467		)	49,512		52,072			(2,560		)
Duke Energy Florida GWh sales	12,973		12,996			(23		)	32,390		32,618			(228		)
Duke Energy Ohio GWh sales	6,678		7,135			(457		)	17,763		18,959			(1,196		)
Duke Energy Indiana GWh sales	8,463		8,711			(248		)	22,842		24,181			(1,339		)
Total Electric Utilities and Infrastructure GWh sales	70,875		73,931			(3,056		)	186,552		196,849			(10,297		)
Net proportional MW capacity in operation									50,371		49,711			660

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

Electric Utilities and Infrastructure’s variance is due to lower fuel revenues and unfavorable weather partially offset by higher revenues resulting from the Indiana retail rate case and Duke Energy Florida base and solar rate adjustments. The following is a detailed discussion of the variance drivers by line item.

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MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

Operating Revenues. The variance was driven primarily by:


•	a $168 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic;


•	a $75 million decrease in retail sales, net of fuel revenues, due to unfavorable weather compared to prior year; and


•	a $62 million decrease in rider revenues primarily due to energy efficiency programs.

Partially offset by:


•	a $75 million increase due to higher pricing from the Indiana retail rate case, net of rider revenues; and


•	a $28 million increase in retail pricing due to Duke Energy Florida's base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment.

Operating Expenses. The variance was driven primarily by:


•	a $125 million decrease in fuel used in electric generation and purchased power primarily due to lower generation demand and lower fuel costs;


•	a $31 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case; and


•	a $15 million decrease in property and other taxes primarily due to prior year property tax reassessments.

Partially offset by:


•	a $40 million increase in impairment charges primarily due to an impairment of Duke Energy Carolina's Clemson assets and a prior year reduction of an impairment at Duke Energy Florida's Citrus County CC; and


•	a $27 million increase in depreciation and amortization expense primarily due to additional plant in service and change in depreciation rates due to the Indiana retail rate case.

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

Interest Expense. The variance was primarily due to lower interest rates on outstanding debt.

Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes. The ETRs for the three months ended September 30, 2020, and 2019 were 13.0% and 17.1%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Electric Utilities and Infrastructure’s variance is due to unfavorable weather, lower weather-normal retail sale volumes driven by impacts from the COVID-19 pandemic and lower wholesale revenues, partially offset by higher revenues resulting from the Indiana and South Carolina retail rate cases and Duke Energy Florida base and solar rate adjustments. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:


•	a $642 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic;


•	a $199 million decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year;


•	a $58 million decrease in wholesale revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year and lower capacity volumes at Duke Energy Progress;


•	a $40 million decrease in rider revenues from energy efficiency programs; and


•	a $24 million decrease in weather-normal retail sale volumes due to lower nonresidential customer demand driven by impacts from the COVID-19 pandemic.

Partially offset by:


•	a $75 million increase due to higher pricing from the Indiana retail rate case, net of rider revenues;


•	a $67 million increase in retail pricing due to Duke Energy Florida's base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment; and


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

Operating Expenses. The variance was driven primarily by:


•	a $583 million decrease in fuel used in electric generation and purchased power primarily due to lower generation demand and lower fuel, coal, and natural gas costs;

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MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE


•	a $66 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case; and


•	a $14 million decrease in property and other taxes primarily due to prior year property tax reassessments.

Partially offset by:


•	a $99 million increase in depreciation and amortization expense primarily due to additional plant in service and a change in depreciation rates from the Indiana and South Carolina retail rate cases; and


•	a $39 million increase in impairment charges primarily due to an impairment of Duke Energy Carolina's Clemson assets and a prior year reduction of an impairment at Duke Energy Florida's Citrus County CC.

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

Interest Expense. The variance was primarily due to lower interest rates on outstanding debt.

Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes. The ETRs for the nine months ended September 30, 2020, and 2019, were 14.8% and 18.1%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.

Gas Utilities and Infrastructure



	Three Months Ended September 30,									Nine Months Ended September 30,
(in millions)	2020			2019			Variance			2020			2019		Variance
Operating Revenues	$	241		$	249		$	(8	)	$	1,194		$	1,311	$	(117	)
Operating Expenses
Cost of natural gas	41			48			(7		)	300			451		(151		)
Operation, maintenance and other	103			108			(5		)	312			325		(13		)
Depreciation and amortization	65			64			1			193			192		1
Property and other taxes	26			24			2			82			84		(2		)
Impairment charges	7						7			7			—		7
Total operating expenses	242			244			(2		)	894			1,052		(158		)
Operating (Loss) Income	(1		)	5			(6		)	300			259		41
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates	(71		)	37			(108		)	(2,004		)	101		(2,105		)
Other income and expenses, net	16			5			11			42			18		24
Total other income and expenses	(55		)	42			(97		)	(1,962		)	119		(2,081		)
Interest Expense	35			29			6			103			86		17
(Loss) Income Before Income Taxes	(91		)	18			(109		)	(1,765		)	292		(2,057		)
Income Tax Benefit	(18		)	(8		)	(10		)	(365		)	—		(365		)
Segment (Loss) Income	$	(73	)	$	26		$	(99	)	$	(1,400	)	$	292	$	(1,692	)

Piedmont LDC throughput (dekatherms)	115,549,371			121,378,484			(5,829,113		)	360,861,306			377,729,141		(16,867,835		)
Duke Energy Midwest LDC throughput (Mcf)	9,678,342			9,997,444			(319,102		)	58,570,583			62,278,623		(3,708,040		)

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

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

Operating Revenues. The variance was driven primarily by:


•	an $8 million decrease due to lower natural gas costs passed through to customers and decreased off-system sales natural gas costs; and


•	a $4 million decrease due to return of EDIT to customers.

Partially offset by:


•	a $5 million increase due to North Carolina base rate case increases.

Operating Expenses. The variance was driven primarily by:


•	a $7 million decrease in cost of natural gas primarily due to lower natural gas prices and decreased off-system sales natural gas costs.

105



MD&A	SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE

Partially offset by:


•	a $7 million increase in impairment charges due to Piedmont ACP project materials write-off.

Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by additional charges related to the cancellation of the ACP pipeline.

Income Tax Benefit. The increase in the tax benefit was primarily due to a decrease in pretax income, partially offset by a decrease in AFUDC Equity.

Nine Months Ended September 30, 2020, as compared to September 30, 2019

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

Operating Revenues. The variance was driven primarily by:


•	a $151 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs; and


•	a $31 million decrease due to return of EDIT to customers.

Partially offset by:


•	a $65 million increase due to North Carolina base rate case increases.

Operating Expenses. The variance was driven primarily by:


•	a $151 million decrease in cost of natural gas due to lower natural gas prices, lower volumes and decreased off-system sales natural gas costs; and


•	a $13 million decrease in operation, maintenance and other due to deferral of previously expensed IT project costs and employee labor and benefits costs.

Partially offset by:


•	a $7 million increase in impairment charges due to Piedmont ACP project materials write-off.

Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by the cancellation of the ACP pipeline.

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

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

Income Tax Benefit. The increase in tax benefit was primarily due to a decrease in pretax income driven by the impact of the cancellation of the ACP pipeline project recorded in the second quarter of 2020. The ETRs for the nine months ended September 30, 2020, and 2019, were 20.7% and 0.0%, respectively. The increase in the ETR was primarily due to an adjustment, recorded in the first quarter of 2019, related to the income tax recognition for equity method investments. The equity method investment adjustment was immaterial and relates to prior years.

106



MD&A	SEGMENT RESULTS — COMMERCIAL RENEWABLES

Commercial Renewables



	Three Months Ended September 30,									Nine Months Ended September 30,
(in millions)	2020			2019			Variance			2020			2019			Variance
Operating Revenues	$	126		$	138		$	(12	)	$	378		$	362		$	16
Operating Expenses
Operation, maintenance and other	72			81			(9		)	204			211			(7		)
Depreciation and amortization	52			43			9			148			123			25
Property and other taxes	8			6			2			24			18			6
Impairment charges	—			—			—			6			—			6
Total operating expenses	132			130			2			382			352			30
Operating (Loss) Income	(6		)	8			(14		)	(4		)	10			(14		)
Other Income and Expenses, net	(1		)	13			(14		)	—			3			(3		)
Interest Expense	18			35			(17		)	49			78			(29		)
Loss Before Income Taxes	(25		)	(14		)	(11		)	(53		)	(65		)	12
Income Tax Benefit	(15		)	(35		)	20			(52		)	(94		)	42
Add: Loss Attributable to Noncontrolling Interests	70			19			51			208			110			98
Segment Income	$	60		$	40		$	20		$	207		$	139		$	68

Renewable plant production, GWh	2,563			2,146			417			7,660			6,528			1,132
Net proportional MW capacity in operation^(a)										3,984			3,162			822


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

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

Commercial Renewables' results were favorable primarily due to the growth of new tax equity investments, which includes over 200 MW of capacity installed during the third quarter 2020. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was primarily driven by a $10 million decrease resulting from lower wind resource and solar irradiance and a $13 million decrease within the distributed energy portfolios for lower engineering and construction costs related to project delays from COVID-19. This was partially offset by a $12 million increase from growth of new projects placed in service.

Operating Expenses. The variance was due to an $18 million increase in operating expenses driven by the growth of new projects placed in service. This was partially offset by $12 million decrease within the distributed energy portfolios for lower engineering and construction costs related to project delays from COVID-19 and $4 million of continued cost saving measures.

Other Income and Expenses, net. The decrease in other income was primarily due to a $12 million reclassification to Interest Expense in the prior year of non-qualifying hedge activity.

Interest Expense. The decrease was primarily due to a $12 million reclassification from Other Income and Expenses, net and a $3 million reclassification from Operating Expenses in the prior year of non-qualifying hedge activity as well as higher capitalized interest of $2 million in the current year for solar and wind projects in development.

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

Loss Attributable to Noncontrolling Interests. The increase was driven by the growth of new tax equity investments.

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Commercial Renewables' results were favorable primarily due to growth of new tax equity investments. Since the third quarter of 2019, Commercial Renewables has placed in service approximately 800 MW of capacity.

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

Operating Revenues. The variance was primarily driven by a $32 million increase associated with the growth of new projects placed in service. This was partially offset by an $18 million decrease within the distributed energy portfolios for lower engineering and construction costs related to delays from COVID-19.

Operating Expenses. The variance was primarily driven by a $45 million increase in operating expenses due to the growth of new projects placed in service and a $6 million impairment charge related to a non-contracted wind project located within the Electric Reliability Council of Texas west market. This was partially offset by a $22 million decrease within the distributed energy portfolios for lower engineering and construction costs related to delays from COVID-19.

Interest Expense. The decrease was primarily driven by $15 million of non-qualifying hedge activity in the prior year and higher capitalized interest of $11 million in the current year for solar and wind projects in development.

107

PART I

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

Loss Attributable to Noncontrolling Interests. The increase was driven primarily by the growth of new tax equity investments.

Other



	Three Months Ended September 30,									Nine Months Ended September 30,
(in millions)	2020			2019			Variance			2020			2019			Variance
Operating Revenues	$	24		$	25		$	(1	)	$	73		$	71		$	2
Operating Expenses	37			27			10			(15		)	66			(81		)
Operating (Loss) Income	(13		)	(2		)	(11		)	88			5			83
Other Income and Expenses, net	43			24			19			55			98			(43		)
Interest Expense	160			185			(25		)	498			536			(38		)
Loss Before Income Taxes	(130		)	(163		)	33			(355		)	(433		)	78
Income Tax Benefit	(66		)	(54		)	(12		)	(149		)	(132		)	(17		)
Less: Preferred Dividends	39			15			24			93			27			66
Net Loss	$	(103	)	$	(124	)	$	21		$	(299	)	$	(328	)	$	29

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

The variance was primarily driven by higher returns on investments that fund certain employee benefit obligations, lower state income tax expense and higher Bison investment income. The following is a detailed discussion of the variance drivers by line item.

Operating Expenses. The increase was primarily driven by higher administrative expenses and higher expenses associated with certain employee benefit obligations.

Other Income and Expenses, net. The variance was primarily due to higher returns on investments that fund certain employee benefit obligations and higher Bison investment income.

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

Income Tax Benefit. The increase in the tax benefit was primarily driven by the issuance of guidance impacting taxes previously recorded, partially offset by a decrease in pretax losses. The ETRs for the three months ended September 30, 2020, and 2019 were 50.8% and 33.1%, respectively. The increase in the ETR was primarily due to the issuance of guidance impacting taxes previously recorded.

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

Nine Months Ended September 30, 2020, as compared to September 30, 2019

The variance was primarily driven by a reversal of corporate allocated severance costs and lower state income tax expense, partially offset by lower returns on investments, higher loss experience related to non-property captive insurance claims and the declaration of preferred stock dividends. The following is a detailed discussion of the variance drivers by line item.

Operating Expenses. The decrease was primarily due to the deferral of 2018 corporate allocated severance costs due to the partial settlement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, partially offset by higher loss experience related to non-property captive insurance claims.

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

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

Income Tax Benefit. The increase in the tax benefit was primarily driven by lower state income tax expense, partially offset by a decrease in pretax losses. The ETRs for the nine months ended September 30, 2020, and 2019 were 42.0% and 30.5%, respectively. The increase in the ETR was primarily due to lower state income tax expense.

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

108



MD&A	DUKE ENERGY CAROLINAS

DUKE ENERGY CAROLINAS

Results of Operations



	Nine Months Ended September 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	5,416	$	5,619	$	(203	)
Operating Expenses
Fuel used in electric generation and purchased power	1,326		1,371		(45		)
Operation, maintenance and other	1,218		1,324		(106		)
Depreciation and amortization	1,090		1,013		77
Property and other taxes	213		221		(8		)
Impairment charges	22		11		11
Total operating expenses	3,869		3,940		(71		)
Gains on Sales of Other Assets and Other, net	1		—		1
Operating Income	1,548		1,679		(131		)
Other Income and Expenses, net	128		106		22
Interest Expense	370		346		24
Income Before Income Taxes	1,306		1,439		(133		)
Income Tax Expense	178		255		(77		)
Net Income	$	1,128	$	1,184	$	(56	)

The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.



Increase (Decrease) over prior year	2020
Residential sales	(2.2	)%
General service sales	(6.5	)%
Industrial sales	(9.4	)%
Wholesale power sales	(3.0	)%
Joint dispatch sales	(56.0	)%
Total sales	(7.2	)%
Average number of customers	1.9	%

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Operating Revenues. The variance was driven primarily by:


•	a $131 million decrease in retail sales due to unfavorable weather in the current year;


•	an $86 million decrease in fuel revenues due to lower prices and retail sales volumes; and


•	a $22 million decrease in rider revenues primarily due to energy efficiency programs.

Partially offset by:


•	a $19 million increase in weather-normal retail sales volumes; and


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

Operating Expenses. The variance was driven primarily by:


•	a $106 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, partially offset by higher storm restoration costs; and


•	a $45 million decrease in fuel used in electric generation and purchased power primarily due to lower retail sales volumes, net of a prior period true up.

Partially offset by:


•	a $77 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the South Carolina rate case.

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

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

109



MD&A	DUKE ENERGY CAROLINAS

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

PROGRESS ENERGY

Results of Operations



	Nine Months Ended September 30,
(in millions)	2020		2019			Variance
Operating Revenues	$	8,117	$	8,558		$	(441	)
Operating Expenses
Fuel used in electric generation and purchased power	2,628		3,100			(472		)
Operation, maintenance and other	1,789		1,813			(24		)
Depreciation and amortization	1,356		1,377			(21		)
Property and other taxes	419		439			(20		)
Impairment charges	1		(25		)	26
Total operating expenses	6,193		6,704			(511		)
Gains on Sales of Other Assets and Other, net	9		—			9
Operating Income	1,933		1,854			79
Other Income and Expenses, net	89		106			(17		)
Interest Expense	599		650			(51		)
Income Before Income Taxes	1,423		1,310			113
Income Tax Expense	190		212			(22		)
Net Income	1,233		1,098			135

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Operating Revenues. The variance was driven primarily by:


•	a $485 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the COVID-19 pandemic at Duke Energy Florida and lower fuel prices, volumes and native load transfer sales in the current year at Duke Energy Progress;


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


•	a $47 million decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year at Duke Energy Progress, partially offset by favorable weather in the current year at Duke Energy Florida;


•	a $44 million decrease in rider revenues primarily due to the Crystal River 3 uprate regulatory asset being fully recovered in 2019 at Duke Energy Florida; and


•	a $24 million decrease in weather-normal retail sales volume.

Partially offset by:


•	a $107 million increase in storm revenues due to Hurricane Dorian collections at Duke Energy Florida;


•	a $67 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment at Duke Energy Florida;


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


•	an $8 million increase in other revenues primarily due to increased transmission and lighting equipment revenues at Duke Energy Florida.

Operating Expenses. The variance was driven primarily by:


•	a $472 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix at Duke Energy Progress and lower fuel costs at Duke Energy Florida;

•

a $24 million decrease in operation, maintenance and other expense at Duke Energy Progress primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and energy efficiency program costs, partially offset by storm cost amortizations at Duke Energy Florida;

110



MD&A	PROGRESS ENERGY


•	a $21 million decrease in depreciation and amortization expense primarily driven by a decrease in coal ash amortization, partially offset by a higher depreciable base and impacts from North Carolina and the South Carolina rate cases at Duke Energy Progress; and


•	a $20 million decrease in property and other taxes driven by lower gross receipts taxes due to decreased fuel revenues and lower accrued property taxes at Duke Energy Florida.

Partially offset by:


•	a $26 million increase in impairment charges primarily due to the prior year's impairment reduction related to Citrus County CC at Duke Energy Florida.

Other Income and Expenses, net. The variance was primarily due to lower AFUDC equity in the current year at Duke Energy Progress.

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

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

DUKE ENERGY PROGRESS

Results of Operations



	Nine Months Ended September 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	4,207	$	4,559	$	(352	)
Operating Expenses
Fuel used in electric generation and purchased power	1,337		1,571		(234		)
Operation, maintenance and other	970		1,070		(100		)
Depreciation and amortization	833		855		(22		)
Property and other taxes	129		131		(2		)
Impairment charges	5		—		5
Total operating expenses	3,274		3,627		(353		)
Gains on Sales of Other Assets and Other, net	8		—		8
Operating Income	941		932		9
Other Income and Expenses, net	52		75		(23		)
Interest Expense	203		232		(29		)
Income Before Income Taxes	790		775		15
Income Tax Expense	79		125		(46		)
Net Income	$	711	$	650	$	61



Increase (Decrease) over prior period	2020
Residential sales	(2.8	)%
General service sales	(7.7	)%
Industrial sales	(5.4	)%
Wholesale power sales	(9.5	)%
Joint dispatch sales	19.9	%
Total sales	(4.9	)%
Average number of customers	1.7	%

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Operating Revenues. The variance was driven primarily by:


•	a $230 million decrease in fuel cost recovery driven by lower fuel prices and volumes as well as less native load transfer sales in the current year;


•	a $73 million decrease in retail sales due to unfavorable weather in the current year;


•	a $58 million decrease in wholesale power revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year and decreased volumes, partially offset by increased capacity rates; and


•	a $14 million decrease in weather-normal retail sales volumes in the current year.

111



MD&A	DUKE ENERGY PROGRESS

Partially Offset by:


•	a $15 million increase due to higher pricing from the South Carolina and North Carolina retail rate cases, net of a return of EDIT to customers.

Operating Expenses. The variance was driven primarily by:


•	a $234 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix; and


•	a $100 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and energy efficiency program costs; and


•	a $22 million decrease in depreciation and amortization expense primarily driven by a decrease in coal ash amortization, partially offset by a higher depreciable base and impacts from North Carolina and the South Carolina rate cases.

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

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

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

DUKE ENERGY FLORIDA

Results of Operations



	Nine Months Ended September 30,
(in millions)	2020			2019			Variance
Operating Revenues	$	3,897		$	3,987		$	(90	)
Operating Expenses
Fuel used in electric generation and purchased power	1,291			1,529			(238		)
Operation, maintenance and other	806			730			76
Depreciation and amortization	523			522			1
Property and other taxes	290			309			(19		)
Impairment charges	(4		)	(25		)	21
Total operating expenses	2,906			3,065			(159		)
Operating Income	991			922			69
Other Income and Expenses, net	36			39			(3		)
Interest Expense	245			246			(1		)
Income Before Income Taxes	782			715			67
Income Tax Expense	159			129			30
Net Income	$	623		$	586		$	37

The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.



Increase (Decrease) over prior period	2020
Residential sales	2.9	%
General service sales	(6.0	)%
Industrial sales	6.9	%
Wholesale and other	(6.8	)%
Total sales	(0.7	)%
Average number of customers	1.7	%

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Operating Revenues. The variance was driven primarily by:


•	a $255 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the COVID-19 pandemic;


•	a $44 million decrease in rider revenues primarily due to full recovery of the Crystal River 3 uprate regulatory asset in 2019; and


•	a $10 million decrease in weather-normal retail sales volumes.

112



MD&A	DUKE ENERGY FLORIDA

Partially offset by:


•	a $107 million increase in storm revenues due to Hurricane Dorian collections;


•	a $67 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment;


•	a $26 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;


•	an $11 million increase in wholesale power revenues, net of fuel, primarily due to increased demand; and


•	an $8 million increase in other revenues primarily due to increased transmission revenues and lighting equipment rentals, partially offset by lower late payment and service charge revenues due to a moratorium during the COVID-19 pandemic.

Operating Expenses. The variance was driven primarily by:


•	a $238 million decrease in fuel used in electric generation and purchased power primarily due to lower fuel costs; and


•	a $19 million decrease in property and other taxes driven by lower gross receipts taxes due to decreased fuel revenues and lower accrued property taxes.

Partially offset by:


•	a $76 million increase in operation, maintenance and other expense primarily due to storm cost amortizations; and


•	a $21 million increase in impairment charges primarily due to the prior year's impairment reduction related to Citrus County CC.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and favorable tax adjustments in the prior year.

DUKE ENERGY OHIO

Results of Operations



	Nine Months Ended September 30,
(in millions)	2020		2019		Variance
Operating Revenues
Regulated electric	$	1,070	$	1,099	$	(29	)
Regulated natural gas	324		354		(30		)
Total operating revenues	1,394		1,453		(59		)
Operating Expenses
Fuel used in electric generation and purchased power	258		293		(35		)
Cost of natural gas	46		68		(22		)
Operation, maintenance and other	333		378		(45		)
Depreciation and amortization	208		199		9
Property and other taxes	244		229		15
Total operating expenses	1,089		1,167		(78		)
Operating Income	305		286		19
Other Income and Expenses, net	11		19		(8		)
Interest Expense	75		81		(6		)
Income Before Income Taxes	241		224		17
Income Tax Expense	40		34		6
Net Income	$	201	$	190	$	11

The following table shows the percent changes in GWh sales of electricity, dekatherms of natural gas delivered and average number of electric and natural gas customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.



	Electric		Natural Gas
Increase (Decrease) over prior year	2020		2020
Residential sales	(0.1	)%	(6.6	)%
General service sales	(7.8	)%	(9.4	)%
Industrial sales	(7.9	)%	(3.9	)%
Wholesale electric power sales	(37.3	)%	n/a
Other natural gas sales	n/a		(1.8	)%
Total sales	(6.3	)%	(6.0	)%
Average number of customers	1.4	%	1.1	%

113



MD&A	DUKE ENERGY OHIO

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Operating Revenues. The variance was driven primarily by:


•	a $46 million decrease in fuel related revenues primarily due to lower prices and decreased volumes;


•	a $13 million decrease in revenues due to unfavorable weather in the current year;


•	a $10 million decrease in other revenues due to lower OVEC sales into PJM;


•	a $7 million decrease in revenues primarily due to the suspension of the Manufactured Gas Plant rider and lower energy efficiency riders, partially offset by the Distribution Capital Investment rider; and


•	a $7 million decrease in bulk power marketing sales.

Partially offset by:


•	a $17 million increase in retail pricing primarily due to rate case impacts in Kentucky; and


•	an $11 million increase in PJM transmission revenues as a result of increased capital spend.

Operating Expenses. The variance was driven primarily by:


•	a $57 million decrease in fuel expense, primarily driven by lower retail prices, decreased volumes and lower OVEC costs; and


•	a $45 million decrease in operations, maintenance and other expense primarily due to Customer Connect and Network Integration Transmission Services deferrals, the timing of energy efficiency programs and outage costs, lower employee benefit expenses and lower vegetation and pole maintenance costs.

Partially offset by:


•	a $15 million increase in property and other taxes primarily due to higher property taxes primarily due to increased plant in service, partially offset by lower kilowatt taxes and franchise taxes; and


•	a $9 million increase in depreciation and amortization primarily driven by an increase in distribution plant, partially offset by lower amortization due to the suspension of the MGP rider in Ohio and environmental surcharge mechanism amortization of deferred coal ash pond ARO.

Other Income and Expenses, net. The decrease was primarily due to lower AFUDC equity and lower intercompany interest income, partially offset by a decrease in write-offs associated with certified supplier uncollectible amounts.

DUKE ENERGY INDIANA

Results of Operations



	Nine Months Ended September 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	2,070	$	2,289	$	(219	)
Operating Expenses
Fuel used in electric generation and purchased power	577		720		(143		)
Operation, maintenance and other	564		569		(5		)
Depreciation and amortization	415		393		22
Property and other taxes	57		55		2
Total operating expenses	1,613		1,737		(124		)
Operating Income	457		552		(95		)
Other Income and Expenses, net	28		35		(7		)
Interest Expense	114		111		3
Income Before Income Taxes	371		476		(105		)
Income Tax Expense	72		113		(41		)
Net Income	$	299	$	363	$	(64	)

114



MD&A	DUKE ENERGY INDIANA



Increase (Decrease) over prior year	2020
Residential sales	(1.1	)%
General service sales	(7.1	)%
Industrial sales	(9.8	)%
Wholesale power sales	3.8	%
Total sales	(5.5	)%
Average number of customers	1.5	%

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Operating Revenues. The variance was driven primarily by:


•	a $157 million decrease in fuel revenues primarily due to lower fuel cost recovery driven by customer demand and fuel prices;


•	a $91 million decrease primarily due to IGCC rider revenues as a result of lower Edwardsport sales volumes and credit adjustment rider refunds related to IGCC Settlements;


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


•	an $11 million decrease in retail sales due to unfavorable weather in the current year; and


•	an $11 million decrease in wholesale revenues primarily related to the true up of wholesale transmission revenues and lower rates in the current year.

Partially offset by:


•	a $75 million increase primarily due to higher pricing from the Indiana retail rate case, net of certain rider revenues moving to base.

Operating Expenses. The variance was driven primarily by:


•	a $143 million decrease in fuel used in electric generation and purchased power expense primarily due to lower coal and natural gas costs, lower amortization of deferred fuel costs and lower purchased power expense.

Partially offset by:


•	a $22 million increase in depreciation and amortization primarily due to a change in depreciation rates from the Indiana retail rate case and additional plant in service.

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

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

PIEDMONT

Results of Operations



	Nine Months Ended September 30,
(in millions)	2020		2019		Variance
Operating Revenues	$	871	$	956	$	(85	)
Operating Expenses
Cost of natural gas	254		384		(130		)
Operation, maintenance and other	234		241		(7		)
Depreciation and amortization	133		127		6
Property and other taxes	37		39		(2		)
Impairment charges	7		—		7
Total operating expenses	665		791		(126		)
Operating Income	206		165		41
Other Income and Expenses, net	44		19		25
Interest Expense	89		65		24
Income Before Income Taxes	161		119		42
Income Tax Expense	6		22		(16		)
Net Income	$	155	$	97	$	58

115



MD&A	PIEDMONT

The following table shows the percent changes in dekatherms delivered and average number of customers. The percentages for all throughput deliveries represent billed and unbilled sales. Amounts are not weather-normalized.



Increase (Decrease) over prior year	2020
Residential deliveries	(3.7	)%
Commercial deliveries	(10.3	)%
Industrial deliveries	(3.6	)%
Power generation deliveries	(3.9	)%
For resale	(11.3	)%
Total throughput deliveries	(4.5	)%
Secondary market volumes	(10.1	)%
Average number of customers	2.1	%

Due to the margin decoupling mechanism in North Carolina and the weather normalization adjustment (WNA) mechanisms in South Carolina and Tennessee and fixed-price contracts with most power generation customers, changes in throughput deliveries do not have a material impact on Piedmont's revenues or earnings. The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The WNA mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

Nine Months Ended September 30, 2020, as compared to September 30, 2019

Operating Revenues. The variance was driven primarily by:


•	a $130 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs;


•	a $31 million decrease due to return of EDIT to customers; and


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

Partially offset by:


•	a $65 million increase due to North Carolina base rate case increases; and


•	a $16 million increase due to North Carolina IMR increases.

Operating Expenses. The variance was driven primarily by:


•	a $130 million decrease in cost of natural gas due to lower natural gas prices, lower volumes, and decreased off-system sales natural gas costs.

Partially offset by:


•	a $7 million increase in impairment charges due to Piedmont ACP project materials write-off.

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

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

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


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

•

Duke Energy entered into and borrowed the full amount under a $1.5 billion, 364-day Term Loan Credit Agreement. The Term Loan Credit Agreement contained a provision for additional borrowing capacity of $500 million. Duke Energy exercised the provision and borrowed an additional $188 million, for a total borrowing of approximately $1.7 billion. In the third quarter of 2020, Duke Energy repaid $844 million of the 364-day Term Loan.

116



MD&A	LIQUIDITY AND CAPITAL RESOURCES

Following March 2020, access to credit and equity markets has normalized. In addition to the financings to address the company's liquidity position, for the nine months ended September 30, 2020, Duke Energy issued approximately $5.6 billion in debt, raised $157 million of common equity through its dividend reinvestment program and paid down $500 million on the Three-Year Revolving Credit Facility. Despite the recovery in capital markets, Duke Energy continues to monitor access to credit and equity markets amid the ongoing economic uncertainty related to COVID-19.

As of September 30, 2020, Duke Energy had approximately $308 million of cash on hand, $5.9 billion available under its $8 billion Master Credit Facility and $500 million available under the $1 billion Three-Year Revolving Credit Facility. Duke Energy has additional liquidity available totaling approximately $2.6 billion under outstanding equity forward agreements. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Duke Energy continues to monitor access to credit and equity markets. Refer to Notes 5 and 14 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders' Equity," respectively, for information regarding Duke Energy's debt and equity issuances, debt maturities and available credit facilities including the Master Credit Facility.

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

Credit Ratings

In October 2020, Moody's Investors Services, Inc. revised the credit rating outlook for Duke Energy Corporation, Duke Energy Carolinas and Duke Energy Progress from stable to negative. The change in outlook is principally due to the company's capital and investment expenditure program and potentially adverse regulatory decisions in Duke Energy's two largest subsidiaries, specifically regarding the recovery of and return on coal ash remediation expenditures and higher costs due to severe storms. There have been no changes by any of the rating agencies to the credit ratings of any of the Duke Energy Registrants during 2020. Standard & Poors Rating Services continues to maintain a stable outlook on Duke Energy Corporation and its subsidiaries.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.



	Nine Months Ended
	September 30,
(in millions)	2020			2019
Cash flows provided by (used in):
Operating activities	$	6,766		$	5,637
Investing activities	(7,964		)	(8,633		)
Financing activities	1,225			2,987
Net increase (decrease) in cash, cash equivalents and restricted cash	27			(9		)
Cash, cash equivalents and restricted cash at beginning of period	573			591
Cash, cash equivalents and restricted cash at end of period	$	600		$	582

OPERATING CASH FLOWS

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



	Nine Months Ended
	September 30,
(in millions)	2020			2019			Variance
Net income	$	1,232		$	2,964		$	(1,732	)
Non-cash adjustments to net income	6,194			4,376			1,818
Contributions to qualified pension plans	—			(77		)	77
Payments for asset retirement obligations	(463		)	(582		)	119
Refund of AMT credit carryforwards	572			—			572
Working capital	(769		)	(1,044		)	275
Net cash provided by operating activities	$	6,766		$	5,637		$	1,129

The variance was primarily due to:


•	a $572 million refund of AMT credit carryforwards;


•	a $119 million decrease in payments for asset retirement obligations;


•	a $77 million decrease in contributions to qualified pension plans; and


•	timing of payments of property taxes and higher Nuclear Electric Insurance Limited (NEIL) refunds in the current year.

117



MD&A	LIQUIDITY AND CAPITAL RESOURCES

INVESTING CASH FLOWS

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



	Nine Months Ended
	September 30,
(in millions)	2020			2019			Variance
Capital, investment and acquisition expenditures	$	(7,684	)	$	(8,348	)	$	664
Other investing items	(280		)	(285		)	5
Net cash used in investing activities	$	(7,964	)	$	(8,633	)	$	669

The variance relates primarily to decreases in capital expenditures due to lower overall investments in the Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables segments.

FINANCING CASH FLOWS

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



	Nine Months Ended
	September 30,
(in millions)	2020			2019			Variance
Issuances of long-term debt, net	$	2,694		$	3,394		$	(700	)
Issuances of common stock	75			41			34
Issuances of preferred stock	—			1,963			(1,963		)
Notes payable, commercial paper and other short-term borrowings	260			(1,019		)	1,279
Dividends paid	(2,113		)	(1,990		)	(123		)
Contributions from noncontrolling interests	402			615			(213		)
Other financing items	(93		)	(17		)	(76		)
Net cash provided by financing activities	$	1,225		$	2,987		$	(1,762	)

The variance was primarily due to:


•	a $1,963 million decrease in proceeds from the issuance of preferred stock;


•	a $700 million decrease in proceeds from net issuances of long-term debt primarily due to the timing of issuances and redemptions of long-term debt; and


•	a $415 million decrease related to the sale of a noncontrolling interest in the Commercial Renewables segment.

Partially offset by:


•	a $1,279 million increase in net proceeds from issuances of notes payable and commercial paper including borrowings of $844 million under the 364-day Term Loan Credit Agreement; and


•	a $200 million increase related to contributions from noncontrolling interests for tax equity financing activity in the Commercial Renewables segment.

OTHER MATTERS

Environmental Regulations

The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants. Refer to Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.

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

118



MD&A	OTHER MATTERS

Section 126 Petitions

On November 16, 2016, the state of Maryland filed a petition with EPA under Section 126 of the Clean Air Act alleging that 19 power plants, including two plants (three units) that Duke Energy Registrants own and operate, contribute to violations of EPA’s National Ambient Air Quality Standards (NAAQS) for ozone in the state of Maryland. On March 12, 2018, the state of New York filed a petition with EPA, also under Section 126 of the Clean Air Act alleging that over 60 power plants, including five that Duke Energy Registrants own and operate, contribute to violations of EPA’s ozone NAAQS in the state of New York. Both Maryland and New York sought EPA orders requiring the states in which the named power plants operate to impose more stringent NOx emission limitations on the plants. On October 5, 2018, EPA denied the Maryland petition. That same day, Maryland appealed EPA's denial. On October 18, 2019, EPA denied the New York petition, and New York appealed that decision on October 29, 2019. On May 19, 2020, the U.S. Court of Appeals for the D.C. Circuit issued its decision, finding, with one exception, that EPA reasonably denied the Maryland petition. The court remanded one issue to EPA regarding target sources lacking catalytic controls. All of the Duke Energy units targeted have selective catalytic reduction so the decision is favorable for these units.

A different panel of the same court heard oral argument in New York’s appeal of EPA’s denial of its Section 126 Petition on May 7, 2020, and on July 14, 2020, the panel issued its decision remanding the Petition to EPA for further review. The Duke Energy Registrants cannot predict the outcome of this matter.

Off-Balance Sheet Arrangements

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

Contractual Obligations

Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. During the three and nine months ended September 30, 2020, there were no material changes in Duke Energy's contractual obligations. For an in-depth discussion of Duke Energy’s contractual obligations, see “Contractual Obligations” and “Quantitative and Qualitative Disclosures about Market Risk” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For an in-depth discussion of the Duke Energy Registrants' market risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7 of the Annual Report on Form 10-K for the Duke Energy Registrants. During the three and nine months ended September 30, 2020, there were no material changes to the Duke Energy Registrants' disclosures about market risk, other than as described below.

Credit Risk

In response to the COVID-19 pandemic, in March 2020, the Duke Energy Subsidiary Registrants announced a suspension of disconnections for nonpayment to be effective throughout the national emergency. Disconnections have resumed and there is an expectation of an increase in charge-offs in the future. In addition, the Registrants are monitoring the effects of the resultant economic slowdown on counterparties’ abilities to perform under their contractual obligations.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated the effectiveness of their disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2020, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.

Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated changes in internal control over financial reporting (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2020, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

119



OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding material legal proceedings, including regulatory and environmental matters, see Note 3, "Regulatory Matters," and Note 4, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements. For additional information, see Item 3, "Legal Proceedings," in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2019.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in the Duke Energy Registrants' Annual Report on Form 10-K for the year ended December 31, 2019, which could materially affect the Duke Energy Registrants’ financial condition or future results. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019.

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

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


•	Decreased demand for electricity and natural gas;


•	Delays in rate cases and other legal proceedings;


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


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

Furthermore, due to the unpredictability of the COVID-19 pandemic’s ongoing impact on global health and economic stability as of this filing date, the Duke Energy Registrants expect that the activities listed below could negatively impact their business strategy, results of operations, financial position and cash flows:


•	An inability to procure satisfactory levels of fuels or other necessary equipment to continue production of electricity and delivery of natural gas;


•	An inability to obtain labor or equipment necessary for the construction of generation projects or pipeline expansion;


•	An inability to maintain information technology systems and protections from cyberattack;


•	An inability to obtain financing in volatile financial markets;


•	Additional federal regulation tied to stimulus and other aid packages; and


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

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

None.

120



EXHIBITS

ITEM 6. EXHIBITS

Exhibits filed herein are designated by an asterisk (*). All exhibits not so designated are incorporated by reference to a prior filing, as indicated. Items constituting management contracts or compensatory plans or arrangements are designated by a double asterisk (**). The company agrees to furnish upon request to the commission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***).

Duke

Exhibit

Duke

Energy

Progress

Energy

Number

Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

4.1

Ninetieth Supplemental Indenture, dated as of August 1, 2020 (incorporated by reference to Exhibit 4.1 to Registrant's Current Report on Form 8-K filed on August 20, 2020, File No. 1-3382).

4.2

First Supplemental Indenture, dated as of August 1, 2020 (incorporated by reference to Exhibit 4.2 to Registrant's Form 8-K filed on August 20, 2020, File No. 1-3382).

4.3

Twenty-fourth Supplemental Indenture, dated as of September 11, 2020 (incorporated by reference to Exhibit 4.2 to Registrant's Current Report on Form 8-K filed on September 11, 2020, File No. 1-32853).

10.1

Amended and Restated Duke Energy Corporation Executive Cash Balance Plan, dated as of September 30, 2020 (incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on September 25, 2020, File No. 1-32853).

10.2

Amended and Restated Duke Energy Corporation Executive Savings Plan, dated as of October 1, 2020 (incorporated by reference to Exhibit 10.2 to Registrant's Current Report on Form 8-K filed on September 25, 2020, File No. 1-32853).

*31.1.1

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

*31.1.2

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

*31.1.3

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

*31.1.4

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

*31.1.5

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

*31.1.6

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

*31.1.7

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

*31.1.8

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

*31.2.1

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

*31.2.2

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

121



EXHIBITS

*31.2.3

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

*31.2.4

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

*31.2.5

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

*31.2.6

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

*31.2.7

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

*31.2.8

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

*32.1.1

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

*32.1.2

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

*32.1.3

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

*32.1.4

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

*32.1.5

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

*32.1.6

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

*32.1.7

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

*32.1.8

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

*32.2.1

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

*32.2.2

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

*32.2.3

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

*32.2.4

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

*32.2.5

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

*32.2.6

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

122



EXHIBITS

*32.2.7

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

*32.2.8

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

*101.INS

XBRL Instance Document (this does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

*101.SCH

XBRL Taxonomy Extension Schema Document.

*101.CAL

XBRL Taxonomy Calculation Linkbase Document.

*101.LAB

XBRL Taxonomy Label Linkbase Document.

*101.PRE

XBRL Taxonomy Presentation Linkbase Document.

*101.DEF

XBRL Taxonomy Definition Linkbase Document.

*104

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

The total amount of securities of the registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees, upon request of the SEC, to furnish copies of any or all of such instruments to it.

123



SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.



		DUKE ENERGY CORPORATION DUKE ENERGY CAROLINAS, LLC PROGRESS ENERGY, INC. DUKE ENERGY PROGRESS, LLC DUKE ENERGY FLORIDA, LLC DUKE ENERGY OHIO, INC. DUKE ENERGY INDIANA, LLC PIEDMONT NATURAL GAS COMPANY, INC.

Date:	November 5, 2020	/s/ STEVEN K. YOUNG
		Steven K. Young Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date:	November 5, 2020	/s/ DWIGHT L. JACOBS
		Dwight L. Jacobs Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)

124

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

Progress Energy (PREX) 10-Q2020 Q3 Quarterly report

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