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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal period ended December 31, 2020 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to________
Commission
file number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number
IRS Employer
Identification No.
duk-20201231_g1.jpg
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 Corporation    Common Stock, $0.001 par value         DUK    New York Stock Exchange LLC
(Duke Energy)
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

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Duke EnergyYesNoDuke Energy Florida, LLC (Duke Energy Florida)YesNo
Duke Energy Carolinas, LLC (Duke Energy Carolinas)YesNoDuke Energy Ohio, Inc. (Duke Energy Ohio)YesNo
Progress Energy, Inc. (Progress Energy)YesNoDuke Energy Indiana, LLC (Duke Energy Indiana)YesNo
Duke Energy Progress, LLC (Duke Energy Progress)YesNoPiedmont Natural Gas Company, Inc. (Piedmont)YesNo
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No (Response applicable to all registrants.)
Indicate by check mark whether the registrants (1) have 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. Yes No
Indicate by check mark whether the registrants have 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). Yes No ¨
Indicate by check mark whether Duke Energy 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.:
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 each of Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company, or 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.:
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7252(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether each of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2020.$58,688,204,289 
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, 2021.768,663,580 
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Duke Energy definitive proxy statement for the 2021 Annual Meeting of the Shareholders or an amendment to this Annual Report are incorporated by reference into PART III, Items 10, 11 and 13 hereof.
This combined Form 10-K 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 I(1)(a) and (b) of Form 10-K and are, therefore, filing this Form 10-K with the reduced disclosure format specified in General Instructions I(2) of Form 10-K. 





TABLE OF CONTENTS
TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED December 31, 2020
 Item 
Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 
GLOSSARY OF TERMS 
PART I. 
1.
PIEDMONT
1A.
1B.
2.
3.
4.
PART II. 
5.
6.
7.
7A.
8.
9.
9A.
PART III. 
10.
11.
12.
13.
14.
PART IV. 
15.
 EXHIBIT INDEX
 
E-2





FORWARD LOOKING STATEMENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:
The impact of the COVID-19 pandemic;
State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;
Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;
Advancements in technology;
Additional competition in electric and natural gas markets and continued industry consolidation;
The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
Changing customer expectations and demands including heightened emphasis on environmental, social and governance concerns;
The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the United States electric grid or generating resources;
Operational interruptions to our natural gas distribution and transmission activities;
The availability of adequate interstate pipeline transportation capacity and natural gas supply;
The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions and general market and economic conditions;
Credit ratings of the Duke Energy Registrants may be different from what is expected;
Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
The ability to control operation and maintenance costs;
The level of creditworthiness of counterparties to transactions;
The ability to obtain adequate insurance at acceptable costs;





FORWARD LOOKING STATEMENTS
Employee workforce factors, including the potential inability to attract and retain key personnel;
The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
The 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-K are defined below:
Term or AcronymDefinition
2013 SettlementRevised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida Office of Public Counsel and other customer advocates
2017 Settlement
Second Revised and Restated Settlement Agreement in 2017 among Duke Energy Florida, the Florida Office of Public Counsel and other customer advocates, which replaces and supplants the 2013 Settlement
ACEAffordable Clean Energy
ACPAtlantic Coast Pipeline, LLC, a limited liability company owned by Dominion, Duke Energy and Southern Company Gas
ACP pipelineThe approximately 600-mile canceled interstate natural gas pipeline
AFUDCAllowance for funds used during construction
AFSAvailable for Sale
AMIAdvanced Metering Infrastructure
AMTAlternative Minimum Tax
AOCIAccumulated Other Comprehensive Income (Loss)
AROAsset Retirement Obligation
ATMAt-the-market
Audit CommitteeAudit Committee of the Board of Directors
BeckjordBeckjord Generating Station
Belews CreekBelews Creek Steam Station
BisonBison Insurance Company Limited
Board of DirectorsDuke Energy Board of Directors
BrunswickBrunswick Nuclear Plant
CardinalCardinal Pipeline Company, LLC
CatawbaCatawba Nuclear Station
CCCombined Cycle
CCRCoal Combustion Residuals
CinergyCinergy Corp. (collectively with its subsidiaries)
Citrus County CCCitrus County Combined Cycle Facility
CO2
Carbon Dioxide
Coal Ash Act
North Carolina Coal Ash Management Act of 2014
the CompanyDuke Energy Corporation and its subsidiaries
ConstitutionConstitution Pipeline Company, LLC
CPCNCertificate of Public Convenience and Necessity
CRCCinergy Receivables Company LLC
Crystal River Unit 3Crystal River Unit 3 Nuclear Plant
CTCombustion Turbine
CWAClean Water Act
DATCDuke-American Transmission Company, LLC
D.C. Circuit CourtU.S. Court of Appeals for the District of Columbia



GLOSSARY OF TERMS
DEFR
Duke Energy Florida Receivables, LLC
DeloitteDeloitte & Touche LLP, and the member firms of Deloitte Touche Tohmatsu and their respective affiliates
DEPRDuke Energy Progress Receivables, LLC
DERFDuke Energy Receivables Finance Company, LLC
DOEU.S. Department of Energy
DominionDominion Energy, Inc.
DthDekatherms
Duke EnergyDuke Energy Corporation (collectively with its subsidiaries)
Duke Energy CarolinasDuke Energy Carolinas, LLC
Duke Energy FloridaDuke Energy Florida, LLC
Duke Energy IndianaDuke Energy Indiana, LLC
Duke Energy KentuckyDuke Energy Kentucky, Inc.
Duke Energy OhioDuke Energy Ohio, Inc.
Duke Energy ProgressDuke Energy Progress, LLC
Duke Energy RegistrantsDuke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
East BendEast Bend Generating Station
EEEnergy efficiency
EPAU.S. Environmental Protection Agency
EPCEngineering, Procurement and Construction agreement
EPSEarnings Per Share
ETREffective tax rate
Exchange ActSecurities Exchange Act of 1934
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
FESFirstEnergy Solutions Corp.
Form S-3
Registration statement
FPSCFlorida Public Service Commission
FTRFinancial transmission rights
FV-NIFair value through net income
GAAPGenerally Accepted Accounting Principles in the United States
GAAP Reported EPS
Basic EPS Available to Duke Energy Corporation common stockholders
GHGGreenhouse Gas
GICGIC Private Limited
GWhGigawatt-hour
Hardy StorageHardy Storage Company, LLC
HarrisShearon Harris Nuclear Plant
HLBV
Hypothetical Liquidation at Book Value
IGCCIntegrated Gasification Combined Cycle



GLOSSARY OF TERMS
IMPA
Indiana Municipal Power Agency
IMR
Integrity Management Rider
IRPIntegrated Resource Plans
IRSInternal Revenue Service
ISOIndependent System Operator
ITCInvestment Tax Credit
IURCIndiana Utility Regulatory Commission
Investment TrustsGrantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana
KO TransmissionKO Transmission Company
KPSCKentucky Public Service Commission
LIBORLondon Interbank Offered Rate
LLCLimited Liability Company
McGuireMcGuire Nuclear Station
MGPManufactured gas plant
MISOMidcontinent Independent System Operator, Inc.
MMBtuMillion British Thermal Unit
MTBEMethyl tertiary butyl ether
MWMegawatt
MWhMegawatt-hour
NCDEQ
North Carolina Department of Environmental Quality
NCEMCNorth Carolina Electric Membership Corporation
NCEMPA
North Carolina Eastern Municipal Power Agency
NCUCNorth Carolina Utilities Commission
NDTFNuclear decommissioning trust funds
New Source ReviewClean Air Act program that requires industrial facilities to install modern pollution control equipment when they are built or when making a change that increases emissions significantly
NMCNational Methanol Company
NOLNet operating loss
NPNSNormal purchase/normal sale
NRCU.S. Nuclear Regulatory Commission
NYSENew York Stock Exchange
OconeeOconee Nuclear Station
OPEBOther Post-Retirement Benefit Obligations
ORS
Office of Regulatory Staff
OTTIOther-than-temporary impairment
OVECOhio Valley Electric Corporation
the ParentDuke Energy Corporation holding company
PGAPurchased Gas Adjustments
PHMSAPipeline and Hazardous Materials Safety Administration



GLOSSARY OF TERMS
PiedmontPiedmont Natural Gas Company, Inc.
Pine NeedlePine Needle LNG Company, LLC
PioneerPioneer Transmission, LLC
PJMPJM Interconnection, LLC
PMPAPiedmont Municipal Power Agency
PISCCPost-in-service carrying costs
PPAPurchase Power Agreement
Progress EnergyProgress Energy, Inc.
PSCSCPublic Service Commission of South Carolina
PTCProduction Tax Credits
PUCOPublic Utilities Commission of Ohio
PURPAPublic Utility Regulatory Policies Act of 1978
QFQualifying Facility
RECRenewable Energy Certificate
Relative TSRTSR of Duke Energy stock relative to a predefined peer group
RobinsonRobinson Nuclear Plant
ROURight-of-use
RSURestricted Stock Unit
RTORegional Transmission Organization
Sabal Trail
Sabal Trail Transmission, LLC
SAFSTORA method of decommissioning in which a nuclear facility is placed and maintained in a condition that allows the facility to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use
SECSecurities and Exchange Commission
SELC
Southern Environmental Law Center
Spectra CapitalSpectra Energy Capital, LLC
S&PStandard & Poor’s Rating Services
State utility commissionsNCUC, PSCSC, FPSC, PUCO, IURC, KPSC and TPUC (Collectively)
State electric utility commissionsNCUC, PSCSC, FPSC, PUCO, IURC and KPSC (Collectively)
State gas utility commissionsNCUC, PSCSC, PUCO, TPUC and KPSC (Collectively)
Subsidiary RegistrantsDuke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
SuttonL.V. Sutton Combined Cycle Plant
the Tax ActTax Cuts and Jobs Act
TPUCTennessee Public Utility Commission
TSRTotal shareholder return
U.S.United States
VIEVariable Interest Entity
WACCWeighted Average Cost of Capital
W.S. Lee CCWilliam States Lee Combined Cycle Facility
WVPAWabash Valley Power Association, Inc.





BUSINESS
ITEM 1. BUSINESS
DUKE ENERGY
General
Duke Energy was incorporated on May 3, 2005, and is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also Subsidiary Registrants, including Duke Energy Carolinas, Progress Energy, 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 its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
The Duke Energy Registrants electronically file reports with the SEC, including Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to such reports.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at sec.gov. Additionally, information about the Duke Energy Registrants, including reports filed with the SEC, is available through Duke Energy’s website at duke-energy.com. Such reports are accessible at no charge and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC.
Business Segments
Duke Energy's segment structure includes three reportable business segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. Duke Energy's chief operating decision-maker routinely reviews financial information about each of these business segments in deciding how to allocate resources and evaluate the performance of the business. For additional information on each of these business segments, including financial and geographic information, see Note 2 to the Consolidated Financial Statements, “Business Segments.” The following sections describe the business and operations of each of Duke Energy’s business segments, as well as Other.
ELECTRIC UTILITIES AND INFRASTRUCTURE
Electric Utilities and Infrastructure conducts operations primarily through the regulated public utilities of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana and Duke Energy Ohio. Electric Utilities and Infrastructure provides retail electric service through the generation, transmission, distribution and sale of electricity to approximately 7.9 million customers within the Southeast and Midwest regions of the U.S. The service territory is approximately 91,000 square miles across six states with a total estimated population of 25 million people. The operations include electricity sold wholesale to municipalities, electric cooperative utilities and other load-serving entities. Electric Utilities and Infrastructure is also a joint owner in certain electric transmission projects. Electric Utilities and Infrastructure has a 50% ownership interest in DATC, a partnership with American Transmission Company, formed to design, build and operate transmission infrastructure. DATC owns 72% of the transmission service rights to Path 15, an 84-mile transmission line in central California. Electric Utilities and Infrastructure also has a 50% ownership interest in Pioneer, which builds, owns and operates electric transmission facilities in North America. The following map shows the service territory for Electric Utilities and Infrastructure as of December 31, 2020.
9




BUSINESS
duk-20201231_g2.jpg
The electric operations and investments in projects are subject to the rules and regulations of the FERC, the NRC, the NCUC, the PSCSC, the FPSC, the IURC, the PUCO and the KPSC.
The following table represents the distribution of GWh billed sales by customer class for the year ended December 31, 2020.
DukeDukeDukeDukeDuke
EnergyEnergyEnergyEnergyEnergy
CarolinasProgressFloridaOhioIndiana
Residential33 %27 %51 %38 %30 %
General service33 %22 %35 %37 %25 %
Industrial23 %16 %7 %23 %31 %
Total retail sales89 %65 %93 %98 %86 %
Wholesale and other sales11 %35 %7 %2 %14 %
Total sales100 %100 %100 %100 %100 %
The number of residential and general service customers within the Electric Utilities and Infrastructure service territory is expected to increase over time. Sales growth is expected within the service territory but continues to be influenced by adoption of energy efficiencies and self-generation. Residential sales increased in 2020 compared to 2019 due to customer growth and the stay-at-home orders as a result of the COVID-19 pandemic. Meanwhile, sales for general service and industrial customers decreased in 2020 due to the impacts of the COVID-19 pandemic. These trends in residential, general service and industrial sales may continue in the short term but are not expected to be permanent. It is still expected that the continued adoption of more efficient housing and appliances will have a negative impact on average usage per residential customer over time.
Seasonality and the Impact of Weather
Revenues and costs are influenced by seasonal weather patterns. Peak sales of electricity occur during the summer and winter months, which results in higher revenue and cash flows during these periods. By contrast, lower sales of electricity occur during the spring and fall, allowing for scheduled plant maintenance. Residential and general service customers are more impacted by weather than industrial customers. Estimated weather impacts are based on actual current period weather compared to normal weather conditions. Normal weather conditions are defined as the long-term average of actual historical weather conditions.
10




BUSINESS
The estimated impact of weather on earnings is based on the temperature variances from a normal condition and customers’ historic usage patterns. The methodology used to estimate the impact of weather does not consider all variables that may impact customer response to weather conditions such as humidity in the summer or wind chill in the winter. The precision of this estimate may also be impacted by applying long-term weather trends to shorter-term periods.
Heating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling degree days measure the variation in weather based on the extent the average daily temperature rises above the base temperature. Each degree of temperature below the base temperature counts as one heating degree day and each degree of temperature above the base temperature counts as one cooling degree day.
Competition
Retail
Electric Utilities and Infrastructure’s businesses operate as the sole supplier of electricity within their service territories, with the exception of Ohio, which has a competitive electricity supply market for generation service. Electric Utilities and Infrastructure owns and operates facilities necessary to generate, transmit, distribute and sell electricity. Services are priced by state commission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable electricity at fair prices.
In Ohio, Electric Utilities and Infrastructure conducts competitive auctions for electricity supply. The cost of energy purchased through these auctions is recovered from retail customers. Electric Utilities and Infrastructure earns retail margin in Ohio on the transmission and distribution of electricity, but not on the cost of the underlying energy.
Competition in the regulated electric distribution business is primarily from the development and deployment of alternative energy sources including on-site generation from industrial customers and distributed generation, such as private solar, at residential, general service and/or industrial customer sites.
Wholesale
Duke Energy competes with other utilities and merchant generators for bulk power sales, sales to municipalities and cooperatives and wholesale transactions under primarily cost-based contracts approved by FERC. The principal factors in competing for these sales are availability of capacity and power, reliability of service and price. Prices are influenced primarily by market conditions and fuel costs.
Increased competition in the wholesale electric utility industry and the availability of transmission access could affect Electric Utilities and Infrastructure’s load forecasts, plans for power supply and wholesale energy sales and related revenues. Wholesale energy sales will be impacted by the extent to which additional generation is available to sell to the wholesale market and the ability of Electric Utilities and Infrastructure to attract new customers and to retain existing customers.
Energy Capacity and Resources
Electric Utilities and Infrastructure owns approximately 50,807 MW of generation capacity. For additional information on owned generation facilities, see Item 2, “Properties.”
Energy and capacity are also supplied through contracts with other generators and purchased on the open market. Factors that could cause Electric Utilities and Infrastructure to purchase power for its customers may include, but are not limited to, generating plant outages, extreme weather conditions, generation reliability, demand growth and price. Electric Utilities and Infrastructure has interconnections and arrangements with its neighboring utilities to facilitate planning, emergency assistance, sale and purchase of capacity and energy and reliability of power supply.
Electric Utilities and Infrastructure’s generation portfolio is a balanced mix of energy resources having different operating characteristics and fuel sources designed to provide energy at the lowest possible cost to meet its obligation to serve retail customers. All options, including owned generation resources and purchased power opportunities, are continually evaluated on a real-time basis to select and dispatch the lowest-cost resources available to meet system load requirements.
11




BUSINESS
Sources of Electricity
Electric Utilities and Infrastructure relies principally on natural gas, nuclear fuel and coal for its generation of electricity. The following table lists sources of electricity and fuel costs for the three years ended December 31, 2020.
Cost of Delivered Fuel per Net
Generation by SourceKilowatt-hour Generated (Cents)
202020192018202020192018
Natural gas and oil(a)
31.3 %29.2 %26.2 %2.55 2.96 3.57 
Nuclear(a)
29.6 %28.6 %26.0 %0.58 0.60 0.50 
Coal(a)
18.1 %21.6 %24.4 %2.99 3.08 2.82 
All fuels (cost-based on weighted average)(a)
79.0 %79.4 %76.6 %1.91 2.14 2.29 
Hydroelectric and solar(b)
1.9 %1.2 %1.3 %
Total generation80.9 %80.6 %77.9 %
Purchased power and net interchange19.1 %19.4 %22.1 %
Total sources of energy100.0 %100.0 %100.0 %
(a)    Statistics related to all fuels reflect Electric Utilities and Infrastructure's ownership interest in jointly owned generation facilities.
(b)    Generating figures are net of output required to replenish pumped storage facilities during off-peak periods. 
Natural Gas and Fuel Oil
Natural gas and fuel oil supply, transportation and storage for Electric Utilities and Infrastructure’s generation fleet is purchased under standard industry agreements from various suppliers, including Piedmont. Natural gas supply agreements typically provide for a percentage of forecasted burns being procured over time, with varied expiration dates. Electric Utilities and Infrastructure believes it has access to an adequate supply of natural gas and fuel oil for the reasonably foreseeable future.
Electric Utilities and Infrastructure has certain dual-fuel generating facilities that can operate utilizing both natural gas and fuel oil. The cost of Electric Utilities and Infrastructure’s natural gas and fuel oil is fixed price or determined by published market prices as reported in certain industry publications, plus any transportation and freight costs. Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana use derivative instruments to manage a portion of their exposure to price fluctuations for natural gas. For Duke Energy Florida, there is currently an agreed to moratorium with the FPSC on future hedging of natural gas prices.
Electric Utilities and Infrastructure has firm interstate and intrastate natural gas transportation agreements and storage agreements in place to support generation needed for load requirements. Electric Utilities and Infrastructure may purchase additional shorter-term natural gas transportation and utilize natural gas interruptible transportation agreements to support generation needed for load requirements. The Electric Utilities and Infrastructure natural gas plants are served by various supply zones and multiple pipelines.
Nuclear
The industrial processes for producing nuclear generating fuel generally involve the mining and milling of uranium ore to produce uranium concentrates and services to convert, enrich and fabricate fuel assemblies.
Electric Utilities and Infrastructure has contracted for uranium materials and services to fuel its nuclear reactors. Uranium concentrates, conversion services and enrichment services are primarily met through a diversified portfolio of long-term supply contracts. The contracts are diversified by supplier, country of origin and pricing. Electric Utilities and Infrastructure staggers its contracting so that its portfolio of long-term contracts covers the majority of its fuel requirements in the near term and decreasing portions of its fuel requirements over time thereafter. Near-term requirements not met by long-term supply contracts have been and are expected to be fulfilled with spot market purchases. Due to the technical complexities of changing suppliers of fuel fabrication services, Electric Utilities and Infrastructure generally source these services to a single domestic supplier on a plant-by-plant basis using multiyear contracts.
Electric Utilities and Infrastructure has entered into fuel contracts that cover 100% of its uranium concentrates and conversion services through at least 2021, 100% of its enrichment services through at least 2022, and 100% of its fabrication services requirements for these plants through at least 2027. For future requirements not already covered under long-term contracts, Electric Utilities and Infrastructure believes it will be able to renew contracts as they expire or enter into similar contractual arrangements with other suppliers of nuclear fuel materials and services.
Coal
Electric Utilities and Infrastructure meets its coal demand through a portfolio of long-term purchase contracts and short-term spot market purchase agreements. Large amounts of coal are purchased under long-term contracts with mining operators who mine both underground and at the surface. Electric Utilities and Infrastructure uses spot market purchases to meet coal requirements not met by long-term contracts. Expiration dates for its long-term contracts, which may have various price adjustment provisions and market reopeners, range from 2021 to 2023 for Duke Energy Carolinas and Duke Energy Progress and 2021 to 2025 for Duke Energy Indiana. Expiration dates for Duke Energy Florida and Duke Energy Ohio are in 2021. Electric Utilities and Infrastructure expects to renew these contracts or enter into similar contracts with other suppliers as existing contracts expire, though prices will fluctuate over time as coal markets change. Electric Utilities and Infrastructure has an adequate supply of coal under contract to meet its risk management guidelines regarding projected future consumption. As a result of volatility in natural gas prices and the associated impacts on coal-fired dispatch within the generation fleet, coal inventories will continue to fluctuate. Electric Utilities and Infrastructure continues to actively manage its portfolio and has worked with suppliers to obtain increased flexibility in its coal contracts.
12




BUSINESS
Coal purchased for the Carolinas is primarily produced from mines in Central Appalachia, Northern Appalachia and the Illinois Basin. Coal purchased for Florida is primarily produced from mines in the Illinois Basin. Coal purchased for Kentucky is produced from mines along the Ohio River in Illinois, Ohio, West Virginia and Pennsylvania. Coal purchased for Indiana is primarily produced in Indiana and Illinois. There are adequate domestic coal reserves to serve Electric Utilities and Infrastructure's coal generation needs through end of life. The current average sulfur content of coal purchased by Electric Utilities and Infrastructure is between 1.5% and 2% for Duke Energy Carolinas and Duke Energy Progress, and between 2.5% and 3% for Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana. Electric Utilities and Infrastructure's environmental controls, in combination with the use of sulfur dioxide (SO2) emission allowances, enable Electric Utilities and Infrastructure to satisfy current SO2 emission limitations for its existing facilities.
Purchased Power
Electric Utilities and Infrastructure purchases a portion of its capacity and system requirements through purchase obligations, leases and purchase capacity contracts. Electric Utilities and Infrastructure believes it can obtain adequate purchased power capacity to meet future system load needs. However, during periods of high demand, the price and availability of purchased power may be significantly affected.
The following table summarizes purchased power for the previous three years:
202020192018
Purchase obligations and leases (in millions of MWh)(a)
32.7 34.8 21.3 
Purchase capacity under contract (in MW)(b)
4,716 4,238 4,025 
(a)    Represents approximately 13% of total system requirements for 2020, 14% for 2019 and 7% for 2018.
(b)    For 2020, 2019 and 2018, these agreements include approximately 412 MW of firm capacity under contract by Duke Energy Florida with QFs.
Inventory
Electric Utilities and Infrastructure must maintain an adequate stock of fuel and materials and supplies in order to ensure continuous operation of generating facilities and reliable delivery to customers. As of December 31, 2020, the inventory balance for Electric Utilities and Infrastructure was approximately $3 billion. For additional information on inventory, see Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”
Ash Basin Management
During 2015, EPA issued regulations related to the management of CCR from power plants. These regulations classify CCR as nonhazardous waste under the Resource Conservation and Recovery Act (RCRA) and apply to electric generating sites with new and existing landfills and new and existing surface impoundments and establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments (ash basins or impoundments) will continue to be regulated by existing state laws, regulations and permits, such as the Coal Ash Management Act in North Carolina.
Electric Utilities and Infrastructure has and will periodically submit to applicable authorities required site-specific coal ash impoundment remediation or closure plans. Closure plans and all associated permits will receive necessary approvals before any work can begin. Closure activities have begun in all of Duke Energy's jurisdictions. Excavation began in 2015 at the four sites specified as high priority by the NC Coal Ash Management Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of CCR materials to off-site locations for use as structural fill, to appropriate engineered off-site or on-site lined landfills or for reuse in an approved beneficial application. Duke Energy has completed excavation of coal ash at three of the four high-priority NC sites. At other sites where CCR management is required, planning and closure methods have been studied and factored into the estimated retirement and management costs, and closure activities have commenced.
The EPA CCR rule and the NC Coal Ash Management Act leave the decision on cost recovery determinations related to closure of coal ash surface impoundments to the normal ratemaking processes before utility regulatory commissions. Duke Energy's electric utilities have included compliance costs associated with federal and state requirements in their respective rate proceedings. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs, which is subject to review and approval of the NCUC. During 2017, Duke Energy Carolinas' and Duke Energy Progress’ wholesale contracts were amended to include the recovery of expenditures related to AROs for the closure of coal ash basins. The amended contracts have retail disallowance parity or provisions limiting challenges to CCR cost recovery actions at FERC. FERC approved the amended wholesale rate schedules in 2017. For additional information on the ash basins and recovery, see Item 7, "Other Matters" and Notes 3, 4 and 9 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations," respectively.
Nuclear Matters
Duke Energy owns, wholly or partially, 11 operating nuclear reactors located at six operating stations. The Crystal River Unit 3 permanently ceased operation in February 2013. Nuclear insurance includes: nuclear liability coverage; property damage coverage; nuclear accident decontamination and premature decommissioning coverage; and accidental outage coverage for losses in the event of a major accidental outage. Joint owners reimburse Duke Energy for certain expenses associated with nuclear insurance in accordance with joint owner agreements. The Price-Anderson Act requires plant owners to provide for public nuclear liability claims resulting from nuclear incidents to the maximum total financial protection liability, which is approximately $13.8 billion. For additional information on nuclear insurance, see Note 4 to the Consolidated Financial Statements, “Commitments and Contingencies.”
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Duke Energy has a significant future financial commitment to dispose of spent nuclear fuel and decommission and decontaminate each plant safely. The NCUC, PSCSC and FPSC require Duke Energy to update their cost estimates for decommissioning their nuclear plants every five years.
The following table summarizes the fair value of NDTF investments and the most recent site-specific nuclear decommissioning cost studies. Decommissioning costs are stated in 2018 or 2019 dollars, depending on the year of the cost study, and include costs to decommission plant components not subject to radioactive contamination.
NDTF(a)
Decommissioning
(in millions)December 31, 2020December 31, 2019
Costs(a)
Year of Cost Study
Duke Energy$9,114 $8,140 $9,105 2018 or 2019
Duke Energy Carolinas(b)(c)
4,977 4,359 4,365 2018
Duke Energy Progress(d)
3,500 3,047 4,181 2019
Duke Energy Florida(e)
637 734 559 N/A
(a)    Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.
(b)    Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.
(c)    Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2018 was filed with the NCUC and PSCSC in 2019. A new funding study was also completed and filed with the NCUC and PSCSC in 2019.
(d)    Duke Energy Progress' site-specific nuclear decommissioning cost study completed in 2019 was filed with the NCUC and PSCSC in March 2020. Duke Energy Progress also completed a funding study, which was filed with the NCUC and PSCSC in July 2020.
(e)    During 2019, Duke Energy Florida reached an agreement to transfer decommissioning work for Crystal River Unit 3 to a third party and decommissioning costs are based on the agreement with this third party rather than a cost study. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 3 for more information.
The NCUC, PSCSC, FPSC and FERC have allowed Electric Utilities and Infrastructure to recover estimated decommissioning costs through retail and wholesale rates over the expected remaining service periods of their nuclear stations. Electric Utilities and Infrastructure believes the decommissioning costs being recovered through rates, when coupled with the existing fund balances and expected fund earnings, will be sufficient to provide for the cost of future decommissioning. For additional information, see Note 9 to the Consolidated Financial Statements, “Asset Retirement Obligations.”
The Nuclear Waste Policy Act of 1982 (as amended) provides the framework for development by the federal government of interim storage and permanent disposal facilities for high-level radioactive waste materials. The government has not yet developed a storage facility or disposal capacity, so Electric Utilities and Infrastructure will continue to store spent fuel on its reactor sites.
Under federal law, the DOE is responsible for the selection and construction of a facility for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE terminated the project to license and develop a geologic repository at Yucca Mountain, Nevada in 2010, and is currently taking no action to fulfill its responsibilities to dispose of spent fuel.
Until the DOE begins to accept the spent nuclear fuel, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida will continue to safely manage their spent nuclear fuel. Under current regulatory guidelines, Harris has sufficient storage capacity in its spent fuel pools through the expiration of its renewed operating license. With certain modifications and approvals by the NRC to expand the on-site dry cask storage facilities, spent nuclear fuel dry storage facilities will be sufficient to provide storage space of spent fuel through the expiration of the operating licenses, including any license renewals, for Brunswick, Catawba, McGuire, Oconee and Robinson. Crystal River Unit 3 ceased operation in 2013 and was placed in a SAFSTOR condition in January 2018. As of January 2018, all spent fuel at Crystal River Unit 3 has been transferred from the spent fuel pool to dry storage at an on-site independent spent fuel storage installation. During 2020, the NRC and the FPSC approved an agreement to transfer ownership of spent fuel for Crystal River Unit 3 to a third party. See Note 3 for more information.
The nuclear power industry faces uncertainties with respect to the cost and long-term availability of disposal sites for spent nuclear fuel and other radioactive waste, compliance with changing regulatory requirements, capital outlays for modifications and new plant construction.
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Electric Utilities and Infrastructure is subject to the jurisdiction of the NRC for the design, construction and operation of its nuclear generating facilities. The following table includes the current year of expiration of nuclear operating licenses for nuclear stations in operation. During 2019, Duke Energy announced its intention to seek 20-year operating license renewals for each of the reactors it operates in Duke Energy Carolinas and Duke Energy Progress.
UnitYear of Expiration
Duke Energy Carolinas
Catawba Units 1 and 22043
McGuire Unit 12041
McGuire Unit 22043
Oconee Units 1 and 22033
Oconee Unit 32034
Duke Energy Progress
Brunswick Unit 12036
Brunswick Unit 22034
Harris2046
Robinson2030
The NRC has acknowledged permanent cessation of operation and permanent removal of fuel from the reactor vessel at Crystal River Unit 3. Therefore, the license no longer authorizes operation of the reactor. For additional information on nuclear decommissioning activity, see Notes 3 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations," respectively.
Regulation
State
The state electric utility commissions approve rates for Duke Energy's retail electric service within their respective states. The state electric utility commissions, to varying degrees, have authority over the construction and operation of Electric Utilities and Infrastructure’s generating facilities. CPCNs issued by the state electric utility commissions, as applicable, authorize Electric Utilities and Infrastructure to construct and operate its electric facilities and to sell electricity to retail and wholesale customers. Prior approval from the relevant state electric utility commission is required for the entities within Electric Utilities and Infrastructure to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus earn a reasonable rate of return on its invested capital, including equity.
In addition to rates approved in base rate cases, each of the state electric utility commissions allow recovery of certain costs through various cost-recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over or under-recovered costs, are prudent.
Fuel, fuel-related costs and certain purchased power costs are eligible for recovery by Electric Utilities and Infrastructure. Electric Utilities and Infrastructure uses coal, hydroelectric, natural gas, oil, renewable generation and nuclear fuel to generate electricity, thereby maintaining a diverse fuel mix that helps mitigate the impact of cost increases in any one fuel. Due to the associated regulatory treatment and the method allowed for recovery, changes in fuel costs from year to year have no material impact on operating results of Electric Utilities and Infrastructure, unless a commission finds a portion of such costs to have been imprudent. However, delays between the expenditure for fuel costs and recovery from customers can adversely impact the timing of cash flows of Electric Utilities and Infrastructure.
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The table below reflects significant electric rate case applications approved and effective in the past three years or applications currently pending approval.
Regulatory
Body
Annual
Increase
(Decrease)
(in millions)
Return
on
Equity
Equity
Component of
Capital Structure
Effective
Date
Approved Rate Cases:
Duke Energy Indiana 2019 Indiana Rate Case(a)
IURC$146 9.7 %53 %7/30/2020
Duke Energy Kentucky 2019 Kentucky Electric Rate CaseKPSC24 9.25 %48.23 %5/1/2020
Duke Energy Carolinas 2018 South Carolina Rate CasePSCSC45 9.5 %53 %6/1/2019
Duke Energy Progress 2018 South Carolina Rate CasePSCSC29 9.5 %53 %6/1/2019
Duke Energy Ohio 2017 Ohio Electric Rate CasePUCO(19)9.84 %50.75 %1/2/2019
Duke Energy Carolinas 2017 North Carolina Rate CaseNCUC(73)9.9 %52 %8/1/2018
Duke Energy Kentucky 2017 Kentucky Electric Rate CaseKPSC9.725 %49 %5/1/2018
Duke Energy Progress 2017 North Carolina Rate CaseNCUC151 9.9 %52 %3/16/2018
Pending Rate Cases:
Duke Energy Carolinas 2019 North Carolina Rate Case(b)
NCUC$291 10.3 %53 %8/1/2020
Duke Energy Progress 2019 North Carolina Rate Case(b)
NCUC464 10.3 %53 %9/1/2020
(a)    Step 1 rates are approximately 75% of the total and became effective July 30, 2020. Step 2 rates are approximately 25% of the total rate case increase and will be implemented in mid-2021. Amounts exclude the Utility Receipt Tax amounts.
(b)    Partial Settlements were reached on July 31, 2020, which are subject to approval by the NCUC. Components of the partial settlements included a return of equity of 9.6% and a capital structure of 52% equity. These temporary rates went into effect August 24, 2020, for Duke Energy Carolinas and September 1, 2020, for Duke Energy Progress. A settlement was also reached, subject to approval by the NCUC, on coal ash cost recovery in January of 2021.

Additionally, in January 2021, Duke Energy Florida filed a settlement agreement with the FPSC that, if approved, will allow annual increases to its base rates at an agreed upon return on equity (“ROE”) band and includes a base rate stay-out provision through 2024, among other provisions. For more information on rate matters and other regulatory proceedings, see Note 3 to the Consolidated Financial Statements, “Regulatory Matters.”
Federal
The FERC approves Electric Utilities and Infrastructure’s cost-based rates for electric sales to certain power and transmission wholesale customers. Regulations of FERC and the state electric utility commissions govern access to regulated electric and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with Electric Utilities and Infrastructure.
RTOs
PJM and MISO are the ISOs and FERC-approved RTOs for the regions in which Duke Energy Ohio and Duke Energy Indiana operate. PJM and MISO operate energy, capacity and other markets, and control the day-to-day operations of bulk power systems through central dispatch.
Duke Energy Ohio is a member of PJM and Duke Energy Indiana is a member of MISO. Transmission owners in these RTOs have turned over control of their transmission facilities and their transmission systems are currently under the dispatch control of the RTOs. Transmission service is provided on a regionwide, open-access basis using the transmission facilities of the RTO members at rates based on the costs of transmission service.
Environmental
Electric Utilities and Infrastructure is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See the “Other Matters” section of Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.
GAS UTILITIES AND INFRASTRUCTURE
Gas Utilities and Infrastructure conducts natural gas operations primarily through the regulated public utilities of Piedmont, Duke Energy Ohio and Duke Energy Kentucky. The natural gas operations are subject to the rules and regulations of the NCUC, PSCSC, PUCO, KPSC, TPUC, PHMSA and the FERC. Gas Utilities and Infrastructure serves residential, commercial, industrial and power generation natural gas customers, including customers served by municipalities who are wholesale customers. Gas Utilities and Infrastructure has over 1.6 million customers, including 1.1 million customers located in North Carolina, South Carolina and Tennessee, and an additional 541,000 customers located within southwestern Ohio and northern Kentucky. In the Carolinas, Ohio and Kentucky, the service areas are comprised of numerous cities, towns and communities. In Tennessee, the service area is the metropolitan area of Nashville. The following map shows the service territory and investments in operating pipelines for Gas Utilities and Infrastructure as of December 31, 2020.
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The number of residential, commercial and industrial customers within the Gas Utilities and Infrastructure service territory is expected to increase over time. Average usage per residential customer is expected to remain flat or decline for the foreseeable future; however, decoupled rates in North Carolina and various rate design mechanisms in other jurisdictions partially mitigate the impact of the declining usage per customer on overall profitability.
Gas Utilities and Infrastructure also owns, operates and has investments in various pipeline transmission and natural gas storage facilities.
Natural Gas for Retail Distribution
Gas Utilities and Infrastructure is responsible for the distribution of natural gas to retail customers in its North Carolina, South Carolina, Tennessee, Ohio and Kentucky service territories. Gas Utilities and Infrastructure’s natural gas procurement strategy is to contract primarily with major and independent producers and marketers for natural gas supply. It also purchases a diverse portfolio of transportation and storage service from interstate pipelines. This strategy allows Gas Utilities and Infrastructure to assure reliable natural gas supply and transportation for its firm customers during peak winter conditions. When firm pipeline services or contracted natural gas supplies are temporarily not needed due to market demand fluctuations, Gas Utilities and Infrastructure may release these services and supplies in the secondary market under FERC-approved capacity release provisions or make wholesale secondary market sales. In 2020, firm supply purchase commitment agreements provided 100% of the natural gas supply for both Piedmont and Duke Energy Ohio.
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Impact of Weather
Gas Utilities and Infrastructure revenues are generally protected from the impact of weather fluctuations due to the regulatory mechanisms that are available in most service territories. In North Carolina, margin decoupling provides protection from both weather and other usage variations like conservation for residential and commercial customer classes. Margin decoupling provides a set revenue per customer independent of actual usage. In South Carolina, Tennessee and Kentucky, weather normalization adjusts revenues either up or down depending on how much warmer or colder than normal a given month has been. Weather normalization adjustments occur from November through March in South Carolina, from October through April in Tennessee and from November through April in Kentucky. Duke Energy Ohio collects most of its non-fuel revenue through a fixed monthly charge that is not impacted by usage fluctuations that result from weather changes or conservation.
Competition
Gas Utilities and Infrastructure’s businesses operate as the sole provider of natural gas service within their retail service territories. Gas Utilities and Infrastructure owns and operates facilities necessary to transport and distribute natural gas. Gas Utilities and Infrastructure earns retail margin on the transmission and distribution of natural gas and not on the cost of the underlying commodity. Services are priced by state commission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable natural gas service at fair prices.
In residential, commercial and industrial customer markets, natural gas distribution operations compete with other companies that supply energy, primarily electric companies, propane and fuel oil dealers, renewable energy providers and coal companies in relation to sources of energy for electric power plants, as well as nuclear energy. A significant competitive factor is price. Gas Utilities and Infrastructure's primary product competition is with electricity for heating, water heating and cooking. Increases in the price of natural gas or decreases in the price of other energy sources could negatively impact competitive position by decreasing the price benefits of natural gas to the consumer. In the case of industrial customers, such as manufacturing plants, adverse economic or market conditions, including higher natural gas costs, could cause these customers to suspend business operations or to use alternative sources of energy in favor of energy sources with lower per-unit costs.
Higher natural gas costs or decreases in the price of other energy sources may allow competition from alternative energy sources for applications that have traditionally used natural gas, encouraging some customers to move away from natural gas-fired equipment to equipment fueled by other energy sources. Competition between natural gas and other forms of energy is also based on efficiency, performance, reliability, safety and other non-price factors. Technological improvements in other energy sources and events that impair the public perception of the non-price attributes of natural gas could erode our competitive advantage. These factors in turn could decrease the demand for natural gas, impair our ability to attract new customers and cause existing customers to switch to other forms of energy or to bypass our systems in favor of alternative competitive sources. This could result in slow or no customer growth and could cause customers to reduce or cease using our product, thereby reducing our ability to make capital expenditures and otherwise grow our business, adversely affecting our earnings.
Pipeline and Storage Investments
Duke Energy, through its Gas Utilities and Infrastructure segment, has a 7.5% equity ownership interest in Sabal Trail. Sabal Trail is a joint venture that owns the Sabal Trail Natural Gas Pipeline (Sabal Trail pipeline) to transport natural gas to Florida, regulated by FERC. The Sabal Trail Phase I mainline was placed into service in July 2017 and traverses Alabama, Georgia and Florida. The remaining lateral line to the Duke Energy Florida's Citrus County CC was placed into service in March 2018. Phase II of Sabal Trail went into service in May 2020, adding approximately 200,000 Dth of capacity to the Sabal Trail pipeline.
Gas Utilities and Infrastructure has a 47% equity ownership interest in ACP, which planned to build the ACP pipeline, an approximately 600-mile interstate natural gas pipeline. The ACP pipeline was intended to transport diverse natural gas supplies into southeastern markets and would be regulated by FERC. Dominion Energy owns 53% of ACP and was contracted to construct and operate the ACP pipeline upon completion. On July 5, 2020, Dominion announced a sale of substantially all of its gas transmission and storage segment assets, which were critical to the ACP pipeline. Further, permitting delays and legal challenges had materially affected the timing and cost of the pipeline. As a result, Duke Energy determined that they would no longer invest in the construction of the ACP pipeline. For the year ended December 31, 2020, Duke Energy recorded $2.1 billion of costs related to ACP.
Gas Utilities and Infrastructure has a 24% equity ownership interest in Constitution, an interstate pipeline development company formed to develop, construct, own and operate a 124-mile natural gas pipeline and related facilities, regulated by FERC. Constitution was slated to transport natural gas supplies from the Marcellus supply region in northern Pennsylvania to major northeastern markets. As of February 5, 2020, the Constitution partners formally resolved to initiate the dissolution of Constitution, and to terminate the Constitution Pipeline project.
Duke Energy, through its Gas Utilities and Infrastructure segment, has a 21.49% equity ownership interest in Cardinal, an intrastate pipeline located in North Carolina regulated by the NCUC, a 45% equity ownership in Pine Needle, an interstate liquefied natural gas storage facility located in North Carolina and a 50% equity ownership interest in Hardy Storage, an underground interstate natural gas storage facility located in Hardy and Hampshire counties in West Virginia. Pine Needle and Hardy Storage are regulated by FERC.
KO Transmission Company (KO Transmission), a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities is co-owned by Columbia Gas Transmission Corporation.
See Notes 3, 12 and 17 to the Consolidated Financial Statements, "Regulatory Matters," "Investments in Unconsolidated Affiliates" and "Variable Interest Entities," respectively, for further information on Duke Energy's pipeline investments.
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Inventory
Gas Utilities and Infrastructure must maintain adequate natural gas inventory in order to provide reliable delivery to customers. As of December 31, 2020, the inventory balance for Gas Utilities and Infrastructure was $82 million. For more information on inventory, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."
Regulation
State
The state gas utility commissions approve rates for Duke Energy's retail natural gas service within their respective states. The state gas utility commissions, to varying degrees, have authority over the construction and operation of Gas Utilities and Infrastructure’s natural gas distribution facilities. CPCNs issued by the state gas utility commissions or other government agencies, as applicable, authorize Gas Utilities and Infrastructure to construct and operate its natural gas distribution facilities and to sell natural gas to retail and wholesale customers. Prior approval from the relevant state gas utility commission is required for Gas Utilities and Infrastructure to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus a reasonable rate of return on its invested capital, including equity.
In addition to amounts collected from customers through approved base rates, each of the state gas utility commissions allow recovery of certain costs through various cost-recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over- or under-recovered costs, are prudent.
Natural gas costs are eligible for recovery by Gas Utilities and Infrastructure. Due to the associated regulatory treatment and the method allowed for recovery, changes in natural gas costs from year to year have no material impact on operating results of Gas Utilities and Infrastructure, unless a commission finds a portion of such costs to have been imprudent. However, delays between the expenditure for natural gas and recovery from customers can adversely impact the timing of cash flows of Gas Utilities and Infrastructure.
The following table summarizes certain components underlying recently approved and effective base rates or rate stabilization filings in the last three years.
Annual
Increase
(Decrease)
(in millions)
Return
on
Equity
Equity
Component of
Capital Structure
Effective Date
Approved Rate Cases:
Piedmont 2017 South Carolina Rate Stabilization Adjustment Filing$10.2 %53.0 %November 2017
Piedmont 2018 South Carolina Rate Stabilization Adjustment Filing(14)10.2 %53.0 %November 2018
Piedmont 2019 South Carolina Rate Stabilization Adjustment Filing9.9 %55.4 %November 2019
Piedmont 2020 South Carolina Rate Stabilization Adjustment Filing9.8 %52.3 %November 2020
Duke Energy Kentucky 2018 Natural Gas Base Rate Case9.7 %50.8 %April 2019
Piedmont 2019 North Carolina Natural Gas Base Rate Case 109 9.7 %52.0 %November 2019
Piedmont 2020 Tennessee Natural Gas Base Rate Case 16 9.8 %50.5 %January 2021
Gas Utilities and Infrastructure has IMR mechanisms in North Carolina and Tennessee designed to separately track and recover certain costs associated with capital investments incurred to comply with federal pipeline safety and integrity programs. The following table summarizes information related to the recently approved IMR filing.
CumulativeAnnualEffective
(in millions)InvestmentRevenuesDate
Piedmont 2020 IMR Filing – North Carolina$307 $30 December 2020
In Piedmont's Tennessee rate case settled in February 2021, the Company included projected IMR investment through December 31, 2021, in its rate base. The recovery of integrity investment was requested in the rate case and not through the Tennessee IMR mechanism.
For more information on rate matters and other regulatory proceedings, see Note 3 to the Consolidated Financial Statements, “Regulatory Matters.”
Federal
Gas Utilities and Infrastructure is subject to various federal regulations, including regulations that are particular to the natural gas industry. These federal regulations include but are not limited to the following:
Regulations of the FERC affect the certification and siting of new interstate natural gas pipeline projects, the purchase and sale of, the prices paid for, and the terms and conditions of service for the interstate transportation and storage of natural gas.
Regulations of the PHMSA affect the design, construction, operation, maintenance, integrity, safety and security of natural gas distribution and transmission systems.
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Regulations of the EPA relate to the environment including proposed air emissions regulations that would expand to include emissions of methane.
Regulations of the FERC and the state gas utility commissions govern access to regulated natural gas and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with Gas Utilities and Infrastructure.
Environmental
Gas Utilities and Infrastructure is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See “Other Matters” section of Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.
COMMERCIAL RENEWABLES
Commercial Renewables primarily acquires, develops, builds, operates and owns wind and solar renewable generation throughout the continental U.S. The portfolio includes nonregulated renewable energy and energy storage businesses.
Commercial Renewables' renewable energy includes utility-scale wind and solar generation assets, distributed solar generation assets, distributed fuel cell assets and battery storage projects, which total 2,763 MW across 21 states from 21 wind facilities, 150 solar projects, 70 fuel cell locations and two battery storage facilities. Revenues are primarily generated by selling the power produced from renewable generation through long-term contracts to utilities, electric cooperatives, municipalities and corporate customers. In most instances, these customers have obligations under state-mandated renewable energy portfolio standards or similar state or local renewable energy goals. Energy and renewable energy credits generated by wind and solar projects are generally sold at contractual prices. The following map shows the locations of renewable generation facilities of which Commercial Renewables has an ownership interest as of December 31, 2020.
duk-20201231_g4.jpg
As eligible projects are placed in service, Commercial Renewables recognizes either PTCs as power is generated by wind projects over 10 years or ITCs when the renewable solar or fuel cell project achieves commercial availability. ITCs are recognized over the useful life of the asset as a reduction to depreciation expense. Benefits of the tax basis adjustment due to the ITC are recognized in income in the year of commercial availability. The ITC for solar and fuel cells is being phased down from a rate of 30% for projects that began construction before 2020 to a permanent 10% rate for solar and no ITC available for fuel cells if construction begins after 2023. The PTC is being phased out and wind turbines will earn 10 years of PTCs at phased-out rates if construction begins in 2017 through 2021.
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Commercial Renewables has entered into agreements for certain of its generating assets that are held by LLCs whose members include a noncontrolling tax equity investor. The allocation of tax attributes and cash flows to the tax equity investor are governed by the provisions of the LLC agreements. The GAAP earnings allocations to the tax equity investors can result in variability in earnings to Duke Energy as a result of the application of the HLBV method in allocating income or loss to the owners. As part of its growth strategy, Commercial Renewables expects to enter into these arrangements for future generating assets.
For additional information on Commercial Renewables' generation facilities, see Item 2, “Properties.”
Market Environment and Competition
Commercial Renewables primarily competes for wholesale contracts for the generation and sale of electricity from generation assets it either develops or acquires and owns. The market price of commodities and services, along with the quality and reliability of services provided, drive competition in the wholesale energy business. The number and type of competitors may vary based on location, generation type and project size. Commercial Renewables' main competitors include other nonregulated generators and wholesale power providers.
Sources of Electricity
Commercial Renewables relies on wind, solar, fuel cells and battery resources for its generation of electric energy.
Regulation
Commercial Renewables is subject to regulation at the federal level, primarily from the FERC. Regulations of the FERC govern access to regulated market information by nonregulated entities and services provided between regulated and nonregulated utilities.
OTHER
The remainder of Duke Energy’s operations is presented as Other. While it is not a business segment, Other primarily includes interest expense on holding company debt, unallocated corporate costs including costs to achieve strategic acquisitions, amounts related to certain companywide initiatives and contributions made to the Duke Energy Foundation. Other also includes Bison and an investment in NMC.
The Duke Energy Foundation is a nonprofit organization funded by Duke Energy shareholders that makes charitable contributions to selected nonprofits and government subdivisions.
Bison, a wholly owned subsidiary of Duke Energy, is a captive insurance company with the principal activity of providing Duke Energy subsidiaries with indemnification for financial losses primarily related to property, workers’ compensation and general liability.
Duke Energy owns a 17.5% equity interest in NMC. The joint venture company has production facilities in Jubail, Saudi Arabia, where it manufactures certain petrochemicals and plastics. The company annually produces approximately 1 million metric tons each of MTBE and methanol and has the capacity to produce 50,000 metric tons of polyacetal. The main feedstocks to produce these products are natural gas and butane. Duke Energy records the investment activity of NMC using the equity method of accounting and retains 25% of NMC's board of directors' representation and voting rights.
Human Capital Management
Governance
Our employees are critical to the success of our company. Our Human Resources organization is responsible for our human capital management strategy, which includes recruiting and hiring, onboarding and training, diversity and inclusion, workforce planning, talent and succession planning, performance management and employee development. Key areas of focus include fostering a high-performance and inclusive culture built on strong leadership and highly engaged and diverse employees, building a pipeline of skilled workers and ensuring knowledge transfer as employees retire.
Our Board of Directors provides oversight on certain human capital management matters, primarily through the Compensation and People Development Committee, which is responsible for reviewing strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, employee engagement and talent development. The Compensation and People Development Committee also receives updates on employee engagement surveys and action plans.
Employees
On December 31, 2020, Duke Energy had a total of 27,535 full-time, part-time and temporary employees, the overwhelming majority of which were full-time employees. The total includes 5,165 employees who are represented by labor unions under various collective bargaining agreements that generally cover wages, benefits, working practices, and other terms and conditions of employment.
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Compensation
The company seeks to attract and retain an appropriately qualified workforce and leverages Duke Energy’s leadership imperatives to foster a culture focused on customers, innovation, and highly engaged employees. Our compensation program is designed to link pay to performance with the goal of attracting and retaining talented employees, rewarding individual performance, encouraging long-term commitment to our business, and aligning the interests of our management team with those of key stakeholders, including shareholders and customers. In addition to competitive base pay, we provide eligible employees with compensation and benefits under a variety of plans and programs, including with respect to health care benefits, retirement savings, pension, health savings and flexible spending accounts, wellness, family leaves, employee assistance, as well as other benefits including a charitable matching program. We supplement our pay for performance program with a number of compensation policies that are aligned with the long-term interests of Duke Energy and our shareholders, including a short-term incentive plan and a long-term incentive plan for eligible employees.
Diversity and Inclusion
Duke Energy is committed to continuing to build a diverse workforce that reflects the communities we serve while strengthening a culture of inclusion where employees and customers feel respected and valued. Our Enterprise Diversity and Inclusion Advisory Council, which is chaired by our Chief Operating Officer, is responsible for reviewing our diversity and inclusion initiatives for continuous improvement, as well as helping to develop actionable outcomes and results. We have established aspirational goals with respect to diversity and inclusion, and we regularly report our progress toward achieving those goals. Our aspirational goals include achieving a workforce representation of at least 25% female and 20% racial and ethnic diversity. As of December 31, 2020, our workforce consisted of approximately 23% female and 18% racial and ethnic diversity.
The company also has a number of Employee Resource Groups (ERGs), which are networks of employees formed around a common dimension of diversity whose goals and objectives align with the company's goals and objectives. These groups focus on employee professional development and networking, community outreach, cultural awareness, recruiting and retention. They also serve as a resource to the company for advocacy and community outreach and improving customer service through innovation. ERG-sponsored forums include networking events, mentoring, scholarship banquets for aspiring college students, and workshops on topics such as time management, stress reduction, career planning and work-life balance. Our ERGs are open to all employees.
Among other efforts, the company has developed partnerships with community organizations, community colleges and historically black colleges and universities to support our strategy of building a diverse and highly skilled talent pipeline.
Operational Excellence
The foundation for our growth and success is our continued focus on operational excellence, the leading indicator of which is safety. As such, the safety of our workforce remains our top priority. The company closely monitors the Total Incident Case Rate (TICR), which is a metric based on strict OSHA definitions that measures the number of occupational injuries and illnesses per 100 employees. This objective emphasizes our focus on achieving an event-free and injury-free workplace. As an indication of our commitment to safety, we include safety metrics in both the short-term and long-term incentive plans based on the TICR for employees. Our employees delivered strong safety results in 2020, consistent with our industry-leading performance levels from 2016 through 2019.

COVID-19 Response
Safety continued to be of paramount importance during the COVID-19 pandemic and included executing on robust business continuity plans that helped ensure critical functions continued to operate under a broad range of circumstances while maintaining a safe work environment. Actions included the following:
Engaged our environmental, health and safety experts to develop new safety protocols for thousands of essential workers
Quickly transitioned thousands of employees to virtual status
Added bandwidth for our information technology systems, reviewed inventory in supply chain, implemented a series of surveys to get employee input, and provided ongoing communications to keep them informed as conditions evolved
Created a cross-functional COVID-19 case management team to track and disposition positive cases, ensure appropriate contact tracing and compliance with quarantine and safe return to work requirements
Ensured power plants and electricity and natural gas delivery facilities were staffed, helping safeguard dependable service to customers
Implemented stringent preventive measures in alignment with the Centers for Disease Control and Prevention’s (CDC) guidance to help keep employees and customers safe and help ensure we had adequate resources to maintain reliability
The company also provided additional benefits to support our workforce throughout the pandemic, including:
60 hours of additional personal time off to employees who experienced a disruption in dependent care due to school, daycare or other dependent care issues
A $1,500 stipend to assist with unplanned expenses resulting from costs related to COVID-19 to employees at a certain pay threshold
Donated more than $550,000 to the Relief4Employees program, which is a fund that employees can draw upon for short-term financial help during times of personal need
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Information about Our Executive Officers
The following table sets forth the individuals who currently serve as executive officers. Executive officers serve until their successors are duly elected or appointed.
Name
Age(a)
Current and Recent Positions Held
Lynn J. Good61 
Chair, President and Chief Executive Officer. Ms. Good has served as Chair, President and Chief Executive Officer of Duke Energy since January 1, 2016, and was Vice Chairman, President and Chief Executive Officer of Duke Energy from July 2013 through December 2015. Prior to that, she served as Executive Vice President and Chief Financial Officer since 2009.
Steven K. Young62 
Executive Vice President and Chief Financial Officer. Mr. Young assumed his current position in August 2013. Prior to that, he served as Vice President, Chief Accounting Officer and Controller, assuming the role of Chief Accounting Officer in July 2012 and the role of Controller in December 2006.
Douglas F Esamann63 
Executive Vice President, Energy Solutions and President, Midwest/Florida Regions and Natural Gas Business. Mr. Esamann assumed his current position in October 2019, was Executive Vice President, Energy Solutions and President, Midwest and Florida Regions since September 2016 and was Executive Vice President and President, Midwest and Florida Regions since June 2015. Prior to that, he served as President, Duke Energy Indiana since November 2010.
Kodwo Ghartey-Tagoe57 
Executive Vice President, Chief Legal Officer and Corporate Secretary. Mr. Ghartey-Tagoe assumed the position of Executive Vice President, Chief Legal Officer and Corporate Secretary in May 2020. He was appointed Executive Vice President and Chief Legal Officer in October 2019, after serving as President, South Carolina since 2017. Mr. Ghartey-Tagoe joined Duke Energy in 2002 and has held numerous management positions in Duke Energy’s Legal Department, including Duke Energy's Senior Vice President of State and Federal Regulatory Legal Support.
Dwight L. Jacobs55 
Senior Vice President, Chief Accounting Officer, Tax and Controller. Mr. Jacobs has served as Senior Vice President, Chief Accounting Officer, Tax and Controller since January 1, 2019. Prior to that, he served as Senior Vice President, Chief Accounting Officer and Controller since June 1, 2018. Prior to that, he served as Senior Vice President, Financial Planning & Analysis since February 2016 and as Chief Risk Officer since July 2014. Prior to his role as Chief Risk Officer, Mr. Jacobs served as Vice President, Rates & Regulatory Strategy since May 2010.
Dhiaa M. Jamil64 
Executive Vice President and Chief Operating Officer. Mr. Jamil assumed the role of Chief Operating Officer in May 2016. Prior to his current position, he held the title Executive Vice President and President, Regulated Generation and Transmission since June 2015. Prior to that, he served as Executive Vice President and President, Regulated Generation since August 2014. He served as Executive Vice President and President of Duke Energy Nuclear from March 2013 to August 2014, and was Chief Nuclear Officer from February 2008 to February 2013.
Julia S. Janson56 
Executive Vice President, External Affairs and President, Carolinas Region. Ms. Janson has held the position of Executive Vice President, External Affairs and President, Carolinas Region since October 2019. Prior to that, she held the position of Executive Vice President, External Affairs and Chief Legal Officer since November 2018. She originally assumed the position of Executive Vice President, Chief Legal Officer and Corporate Secretary in December 2012, and then assumed the responsibilities for External Affairs in February 2016.
Brian D. Savoy45 
Senior Vice President, Chief Transformation and Administrative Officer. Mr. Savoy assumed his current position in October 2019. Prior to that, he served as Senior Vice President, Business Transformation and Technology since May 2016; Senior Vice President, Controller and Chief Accounting Officer from September 2013 to May 2016; Director, Forecasting and Analysis from 2009 to September 2013; and Vice President and Controller of the Commercial Power segment from 2006 to 2009.
Harry K. Sideris50 
Senior Vice President, Customer Experience and Services. Mr. Sideris assumed his current position in October 2019. Prior to that, he served as Senior Vice President and Chief Distribution Officer since June 2018; State President, Florida from January 2017 to June 2018; Senior Vice President of Environmental Health and Safety from August 2014 to January 2017; and Vice President of Power Generations for the Company's Fossil/Hydro Operations in the western portions of North Carolina and South Carolina from July 2012 to August 2014.
(a)    The ages of the officers provided are as of January 31, 2021.
There are no family relationships between any of the executive officers, nor any arrangement or understanding between any executive officer and any other person involved in officer selection.
Environmental Matters
The Duke Energy Registrants are subject to federal, state and local laws and regulations with regard to air and water quality, hazardous and solid waste disposal and other environmental matters. Environmental laws and regulations affecting the Duke Energy Registrants include, but are not limited to:
The Clean Air Act, as well as state laws and regulations impacting air emissions, including State Implementation Plans related to existing and new national ambient air quality standards for ozone and particulate matter. Owners and/or operators of air emission sources are responsible for obtaining permits and for annual compliance and reporting.
The CWA, which requires permits for facilities that discharge wastewaters into navigable waters.
The Comprehensive Environmental Response, Compensation and Liability Act, which can require any individual or entity that currently owns or in the past owned or operated a disposal site, as well as transporters or generators of hazardous substances sent to a disposal site, to share in remediation costs.
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The National Environmental Policy Act, which requires federal agencies to consider potential environmental impacts in their permitting and licensing decisions, including siting approvals.
Coal Ash Act, as amended, which establishes requirements regarding the use and closure of existing ash basins, the disposal of ash at active coal plants and the handling of surface water and groundwater impacts from ash basins in North Carolina.
The Solid Waste Disposal Act, as amended by RCRA, which creates a framework for the proper management of hazardous and nonhazardous solid waste; classifies CCR as nonhazardous waste; and establishes standards for landfill and surface impoundment placement, design, operation and closure, groundwater monitoring, corrective action, and post-closure care.
The Toxic Substances Control Act, which gives EPA the authority to require reporting, recordkeeping and testing requirements, and to place restrictions relating to chemical substances and/or mixtures, including polychlorinated biphenyls.
For more information on environmental matters, see Notes 4 and 9 to the Consolidated Financial Statements, “Commitments and Contingencies – Environmental” and "Asset Retirement Obligations," respectively, and the “Other Matters” section of Management's Discussion and Analysis. Except as otherwise described in these sections, costs to comply with current federal, state and local provisions regulating the discharge of materials into the environment or other potential costs related to protecting the environment are incorporated into the routine cost structure of our various business segments and are not expected to have a material adverse effect on the competitive position, consolidated results of operations, cash flows or financial position of the Duke Energy Registrants.
The "Other Matters" section of Management's Discussion and Analysis includes more information on certain environmental regulations and a discussion of Global Climate Change including the potential impact of current and future legislation related to GHG emissions on the Duke Energy Registrants' operations. Recently passed and potential future environmental statutes and regulations could have a significant impact on the Duke Energy Registrants’ results of operations, cash flows or financial position. However, if and when such statutes and regulations become effective, the Duke Energy Registrants will seek appropriate regulatory recovery of costs to comply within its regulated operations.
DUKE ENERGY CAROLINAS
Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas’ service area covers approximately 24,000 square miles and supplies electric service to 2.7 million residential, commercial and industrial customers. For information about Duke Energy Carolinas’ generating facilities, see Item 2, “Properties.” Duke Energy Carolinas is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Substantially all of Duke Energy Carolinas' operations are regulated and qualify for regulatory accounting. Duke Energy Carolinas operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 2 to the Consolidated Financial Statements, “Business Segments.”
PROGRESS ENERGY
Progress Energy is a public utility holding company primarily engaged in the regulated electric utility business and is subject to regulation by the FERC. Progress Energy conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. When discussing Progress Energy’s financial information, it necessarily includes the results of Duke Energy Progress and Duke Energy Florida.
Substantially all of Progress Energy’s operations are regulated and qualify for regulatory accounting. Progress Energy operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 2 to the Consolidated Financial Statements, “Business Segments.”
DUKE ENERGY PROGRESS
Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress’ service area covers approximately 29,000 square miles and supplies electric service to approximately 1.6 million residential, commercial and industrial customers. For information about Duke Energy Progress’ generating facilities, see Item 2, “Properties.” Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Substantially all of Duke Energy Progress’ operations are regulated and qualify for regulatory accounting. Duke Energy Progress operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 2 to the Consolidated Financial Statements, “Business Segments.”
DUKE ENERGY FLORIDA
Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida’s service area covers approximately 13,000 square miles and supplies electric service to approximately 1.9 million residential, commercial and industrial customers. For information about Duke Energy Florida’s generating facilities, see Item 2, “Properties.” Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.
Substantially all of Duke Energy Florida’s operations are regulated and qualify for regulatory accounting. Duke Energy Florida operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 2 to the Consolidated Financial Statements, “Business Segments.”
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DUKE ENERGY OHIO
Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, in the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio also conducts competitive auctions for retail electricity supply in Ohio whereby recovery of the energy price is from retail customers. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC, PHMSA and FERC.
Duke Energy Ohio’s service area covers approximately 3,000 square miles and supplies electric service to approximately 880,000 residential, commercial and industrial customers and provides transmission and distribution services for natural gas to approximately 545,000 customers. For information about Duke Energy Ohio's generating facilities, see Item 2, “Properties.”
KO Transmission, a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities is co-owned by Columbia Gas Transmission Corporation.
Substantially all of Duke Energy Ohio's operations are regulated and qualify for regulatory accounting. Duke Energy Ohio has two reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. For additional information on these business segments, including financial information, see Note 2 to the Consolidated Financial Statements, “Business Segments.”
DUKE ENERGY INDIANA
Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana’s service area covers 23,000 square miles and supplies electric service to 850,000 residential, commercial and industrial customers. For information about Duke Energy Indiana's generating facilities, see Item 2, “Properties.” Duke Energy Indiana is subject to the regulatory provisions of the IURC and FERC.
Substantially all of Duke Energy Indiana’s operations are regulated and qualify for regulatory accounting. Duke Energy Indiana operates one reportable business segment, Electric Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 2 to the Consolidated Financial Statements, “Business Segments.”
PIEDMONT
Piedmont is a regulated public utility primarily engaged in the distribution of natural gas to over 1.1 million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including customers served by municipalities who are wholesale customers. For information about Piedmont's natural gas distribution facilities, see Item 2, "Properties." Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC, PHMSA and FERC.
Substantially all of Piedmont’s operations are regulated and qualify for regulatory accounting. Piedmont operates one reportable business segment, Gas Utilities and Infrastructure. For additional information regarding this business segment, including financial information, see Note 2 to the Consolidated Financial Statements, “Business Segments.”
ITEM 1A. RISK FACTORS
In addition to other disclosures within this Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations – Matters Impacting Future Results" for each registrant in Item 7, and other documents filed with the SEC from time to time, the following factors should be considered in evaluating Duke Energy and its subsidiaries. Such factors could affect actual results of operations and cause results to differ substantially from those currently expected or sought. Unless otherwise indicated, risk factors discussed below generally relate to risks associated with all of the Duke Energy Registrants. Risks identified at the Subsidiary Registrant level are generally applicable to Duke Energy.
BUSINESS STRATEGY RISKS
Duke Energy’s future results could be adversely affected if it is unable to implement its business strategy.
Duke Energy’s results of operations depend, in significant part, on the extent to which it can implement its business strategy successfully. Duke Energy's strategy, which includes transforming the customer experience, achieving net-zero carbon emissions by 2050, modernizing the regulatory construct and digital transformation, is subject to business, regulatory, economic and competitive uncertainties and contingencies, and required advancements in technology to achieve net-zero carbon emissions by 2050, many of which are beyond its control. As a consequence, Duke Energy may not be able to fully implement or realize the anticipated results of its strategy.
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RISK FACTORS
REGULATORY, LEGISLATIVE AND LEGAL RISKS
The Duke Energy Registrants’ regulated utility revenues, earnings and results are dependent on state legislation and regulation that affect electric generation, electric and natural gas transmission, distribution and related activities, which may limit their ability to recover costs.
The Duke Energy Registrants’ regulated electric and natural gas utility businesses are regulated on a cost-of-service/rate-of-return basis subject to statutes and regulatory commission rules and procedures of North Carolina, South Carolina, Florida, Ohio, Tennessee, Indiana and Kentucky. If the Duke Energy Registrants’ regulated utility earnings exceed the returns established by the state utility commissions, retail electric and natural gas rates may be subject to review and possible reduction by the Commissions, which may decrease the Duke Energy Registrants’ earnings. Additionally, if regulatory bodies do not allow recovery of costs incurred in providing service, or do not do so on a timely basis, the Duke Energy Registrants’ earnings could be negatively impacted.
If legislative and regulatory structures were to evolve in such a way that the Duke Energy Registrants’ exclusive rights to serve their regulated customers were eroded, their earnings could be negatively impacted. Federal and state regulations, laws and other efforts designed to promote and expand the use of EE 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 and an increase in customer net energy metering, which allows customers with private solar to receive bill credits for surplus power at the full retail amount. Over time, customer adoption of these technologies and increased EE could result in excess generation resources as well as stranded costs if Duke Energy is not able to fully recover the costs and investment in generation.
State regulators have approved various mechanisms to stabilize natural gas utility margins, including margin decoupling in North Carolina and rate stabilization in South Carolina. State regulators have approved other margin stabilizing mechanisms that, for example, allow for recovery of margin losses associated with negotiated transactions designed to retain large volume customers that could use alternative fuels or that may otherwise directly access natural gas supply through their own connection to an interstate pipeline. If regulators decided to discontinue the Duke Energy Registrants' use of tariff mechanisms, it would negatively impact results of operations, financial position and cash flows. In addition, regulatory authorities also review whether natural gas costs are prudently incurred and can disallow the recovery of a portion of natural gas costs that the Duke Energy Registrants seek to recover from customers, which would adversely impact earnings.
The rates that the Duke Energy Registrants’ regulated utility businesses are allowed to charge are established by state utility commissions in rate case proceedings, which may limit their ability to recover costs and earn an appropriate return on investment.
The rates that the Duke Energy Registrants’ regulated utility business are allowed to charge significantly influences the results of operations, financial position and cash flows of the Duke Energy Registrants. The regulation of the rates that the regulated utility businesses charge customers is determined, in large part, by state utility commissions in rate case proceedings. Negative decisions made by these regulators, or by any court on appeal of a rate case proceeding, could have a material adverse effect on the Duke Energy Registrants’ results of operations, financial position or cash flows and affect the ability of the Duke Energy Registrants to recover costs and an appropriate return on the significant infrastructure investments being made.
Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs that could adversely affect the Duke Energy Registrants’ results of operations, financial position or cash flows and their utility businesses.
Increased competition resulting from deregulation or restructuring legislation could have a significant adverse impact on the Duke Energy Registrants’ results of operations, financial position or cash flows. If the retail jurisdictions served by the Duke Energy Registrants become subject to deregulation, the impairment of assets, loss of retail customers, lower profit margins or increased costs of capital, and recovery of stranded costs could have a significant adverse financial impact on the Duke Energy Registrants. Stranded costs primarily include the generation assets of the Duke Energy Registrants whose value in a competitive marketplace may be less than their current book value, as well as above-market purchased power commitments from QFs from whom the Duke Energy Registrants are legally obligated to purchase energy at an avoided cost rate under PURPA. The Duke Energy Registrants cannot predict the extent and timing of entry by additional competitors into the electric markets. The Duke Energy Registrants cannot predict if or when they will be subject to changes in legislation or regulation, nor can they predict the impact of these changes on their results of operations, financial position or cash flows.
The Duke Energy Registrants’ businesses are subject to extensive federal regulation and a wide variety of laws and governmental policies, including taxes, that may change over time in ways that affect operations and costs.
The Duke Energy Registrants are subject to regulations under a wide variety of U.S. federal and state regulations and policies, including by FERC, NRC, EPA and various other federal agencies as well as the North American Electric Reliability Corporation. Regulation affects almost every aspect of the Duke Energy Registrants’ businesses, including, among other things, their ability to: take fundamental business management actions; determine the terms and rates of transmission and distribution services; make acquisitions; issue equity or debt securities; engage in transactions with other subsidiaries and affiliates; and pay dividends upstream to the Duke Energy Registrants. Changes to federal regulations are continuous and ongoing. There can be no assurance that laws, regulations and policies will not be changed in ways that result in material modifications of business models and objectives or affect returns on investment by restricting activities and products, subjecting them to escalating costs, causing delays, or prohibiting them outright.
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The Duke Energy Registrants are subject to numerous environmental laws and regulations requiring significant capital expenditures that can increase the cost of operations, and which may impact or limit business plans, or cause exposure to environmental liabilities.
The Duke Energy Registrants are subject to numerous environmental laws and regulations affecting many aspects of their present and future operations, including CCRs, air emissions, water quality, wastewater discharges, solid waste and hazardous waste. These laws and regulations can result in increased capital, operating and other costs. These laws and regulations generally require the Duke Energy Registrants to obtain and comply with a wide variety of environmental licenses, permits, inspections and other approvals. Compliance with environmental laws and regulations can require significant expenditures, including expenditures for cleanup costs and damages arising from contaminated properties. Failure to comply with environmental regulations may result in the imposition of fines, penalties and injunctive measures affecting operating assets. The steps the Duke Energy Registrants could be required to take to ensure their facilities are in compliance could be prohibitively expensive. As a result, the Duke Energy Registrants may be required to shut down or alter the operation of their facilities, which may cause the Duke Energy Registrants to incur losses. Further, the Duke Energy Registrants may not be successful in recovering capital and operating costs incurred to comply with new environmental regulations through existing regulatory rate structures and their contracts with customers. Also, the Duke Energy Registrants may not be able to obtain or maintain from time to time all required environmental regulatory approvals for their operating assets or development projects. Delays in obtaining any required environmental regulatory approvals, failure to obtain and comply with them or changes in environmental laws or regulations to more stringent compliance levels could result in additional costs of operation for existing facilities or development of new facilities being prevented, delayed or subject to additional costs. Although it is not expected that the costs to comply with current environmental regulations will have a material adverse effect on the Duke Energy Registrants’ results of operations, financial position and cash flows due to regulatory cost recovery, the Duke Energy Registrants are at risk that the costs of complying with environmental regulations in the future will have such an effect.
The EPA has enacted or proposed federal regulations governing the management of cooling water intake structures, wastewater and CO2 emissions. New state legislation, including the North Carolina Clean Energy Plan, could impose carbon reduction goals that are more aggressive than the company's plans. These regulations may require the Duke Energy Registrants to make additional capital expenditures and increase operating and maintenance costs.
The Duke Energy Registrants' operations, capital expenditures and financial results may be affected by regulatory changes related to the impacts of global climate change.
There is continued concern, and increasing activism, both nationally and internationally, about climate change. The EPA and state regulators may adopt and implement regulations to restrict emissions of GHGs to address global climate change. Increased regulation of GHG emissions could impose significant additional costs on the Duke Energy Registrants' electric and natural gas operations, their suppliers and customers. Regulatory changes could result in generation facilities to be retired early and result in stranded costs if Duke Energy is not able to fully recover the costs and investment in generation, and could also affect demand for energy conservation and renewable products, which could impact our electric and natural gas businesses.
OPERATIONAL RISKS
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 impacted 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;
An inability to obtain labor or equipment necessary for the construction of generation projects or pipeline expansion;
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, 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 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.
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RISK FACTORS
The Duke Energy Registrants’ results of operations may be negatively affected by overall market, economic and other conditions that are beyond their control.
Sustained downturns or sluggishness in the economy generally affect the markets in which the Duke Energy Registrants operate and negatively influence operations. Declines in demand for electricity or natural gas as a result of economic downturns in the Duke Energy Registrants’ regulated service territories will reduce overall sales and lessen cash flows, especially as industrial customers reduce production and, therefore, consumption of electricity and the use of natural gas. Although the Duke Energy Registrants’ regulated electric and natural gas businesses are subject to regulated allowable rates of return and recovery of certain costs, such as fuel and purchased natural gas costs, under periodic adjustment clauses, overall declines in electricity or natural gas sold as a result of economic downturn or recession could reduce revenues and cash flows, thereby diminishing results of operations. Additionally, prolonged economic downturns that negatively impact the Duke Energy Registrants’ results of operations and cash flows could result in future material impairment charges to write-down the carrying value of certain assets, including goodwill, to their respective fair values.
The Duke Energy Registrants also sell electricity into the spot market or other competitive power markets on a contractual basis. With respect to such transactions, the Duke Energy Registrants are not guaranteed any rate of return on their capital investments through mandated rates, and revenues and results of operations are likely to depend, in large part, upon prevailing market prices. These market prices may fluctuate substantially over relatively short periods of time and could reduce the Duke Energy Registrants’ revenues and margins, thereby diminishing results of operations.
Factors that could impact sales volumes, generation of electricity and market prices at which the Duke Energy Registrants are able to sell electricity and natural gas are as follows:
weather conditions, including abnormally mild winter or summer weather that cause lower energy or natural gas usage for heating or cooling purposes, as applicable, and periods of low rainfall that decrease the ability to operate facilities in an economical manner;
supply of and demand for energy commodities;
transmission or transportation constraints or inefficiencies that impact nonregulated energy operations;
availability of competitively priced alternative energy sources, which are preferred by some customers over electricity produced from coal, nuclear or natural gas plants, and customer usage of energy-efficient equipment that reduces energy demand;
natural gas, crude oil and refined products production levels and prices;
ability to procure satisfactory levels of inventory, such as coal, natural gas and uranium; and
capacity and transmission service into, or out of, the Duke Energy Registrants’ markets.
Natural disasters or operational accidents may adversely affect the Duke Energy Registrants’ operating results.
Natural disasters or other operational accidents within the company or industry (such as forest fires, earthquakes, hurricanes or natural gas transmission pipeline explosions) could have direct or indirect impacts to the Duke Energy Registrants or to key contractors and suppliers. Further, the generation of electricity and the transportation and storage of natural gas involve inherent operating risks that may result in accidents involving serious injury or loss of life, environmental damage or property damage. Such events could impact the Duke Energy Registrants through changes to policies, laws and regulations whose compliance costs have a significant impact on the Duke Energy Registrants’ results of operations, financial position and cash flows. In addition, if a serious operational accident were to occur, existing insurance policies may not cover all of the potential exposures or the actual amount of loss incurred. Any losses not covered by insurance, or any increases in the cost of applicable insurance as a result of such accident, could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.
The reputation and financial condition of the Duke Energy Registrants could be negatively impacted due to their obligations to comply with federal and state regulations, laws, and other legal requirements that govern the operations, assessments, storage, closure, remediation, disposal and monitoring relating to CCR, the high costs and new rate impacts associated with implementing these new CCR-related requirements and the strategies and methods necessary to implement these requirements in compliance with these legal obligations.
As a result of electricity produced for decades at coal-fired power plants, the Duke Energy Registrants manage large amounts of CCR that are primarily stored in dry storage within landfills or combined with water in other surface impoundments, all in compliance with applicable regulatory requirements. A CCR-related operational incident could have a material adverse impact on the reputation and results of operations, financial position and cash flows of the Duke Energy Registrants.
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RISK FACTORS
During 2015, EPA regulations were enacted related to the management of CCR from power plants. These regulations classify CCR as nonhazardous waste under the RCRA and apply to electric generating sites with new and existing landfills and, new and existing surface impoundments, and establish requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments will continue to be regulated by existing state laws, regulations and permits, as well as additional legal requirements that may be imposed in the future, such as the settlement reached with the NCDEQ to excavate seven of the nine remaining coal ash basins in North Carolina, and partially excavate the remaining two. These federal and state laws, regulations and other legal requirements may require or result in additional expenditures, including increased operating and maintenance costs, which could affect the results of operations, financial position and cash flows of the Duke Energy Registrants. The Duke Energy Registrants will continue to seek full cost recovery for expenditures through the normal ratemaking process with state and federal utility commissions, who permit recovery in rates of necessary and prudently incurred costs associated with the Duke Energy Registrants’ regulated operations, and through other wholesale contracts with terms that contemplate recovery of such costs, although there is no guarantee of full cost recovery. In addition, the timing for and amount of recovery of such costs could have a material adverse impact on Duke Energy's cash flows.
The Duke Energy Registrants have recognized significant AROs related to these CCR-related requirements. Closure activities began in 2015 at the four sites specified as priority by the Coal Ash Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of CCR materials to off-site locations for use as structural fill, to appropriate engineered off-site or on-site lined landfills or conversion of the ash for beneficial use. Duke Energy has completed excavation of coal ash at three of the four high priority sites. At other sites, planning and closure methods have been studied and factored into the estimated retirement and management costs, and closure activities have commenced. As the closure and CCR management work progresses and final closure plans and corrective action measures are developed and approved at each site, the scope and complexity of work and the amount of CCR material could be greater than estimates and could, therefore, materially increase compliance expenditures and rate impacts.
The Duke Energy Registrants’ results of operations, financial position and cash flows may be negatively affected by a lack of growth or slower growth in the number of customers, or decline in customer demand or number of customers.
Growth in customer accounts and growth of customer usage each directly influence demand for electricity and natural gas and the need for additional power generation and delivery facilities. Customer growth and customer usage are affected by several factors outside the control of the Duke Energy Registrants, such as mandated EE measures, demand-side management goals, distributed generation resources and economic and demographic conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.
Certain regulatory and legislative bodies have introduced or are considering requirements and/or incentives to reduce energy consumption by certain dates. Additionally, technological advances driven by federal laws mandating new levels of EE in end-use electric devices or other improvements in or applications of technology could lead to declines in per capita energy consumption.
Advances in distributed generation technologies that produce power, including fuel cells, microturbines, wind turbines and solar cells, may reduce the cost of alternative methods of producing power to a level competitive with central power station electric production utilized by the Duke Energy Registrants.
Some or all of these factors could result in a lack of growth or decline in customer demand for electricity or number of customers and may cause the failure of the Duke Energy Registrants to fully realize anticipated benefits from significant capital investments and expenditures, which could have a material adverse effect on their results of operations, financial position and cash flows.
Furthermore, the Duke Energy Registrants currently have EE riders in place to recover the cost of EE programs in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky. Should the Duke Energy Registrants be required to invest in conservation measures that result in reduced sales from effective conservation, regulatory lag in adjusting rates for the impact of these measures could have a negative financial impact.
The Duke Energy Registrants future results may be impacted by changing customer expectations and demands including heightened emphasis on environmental, social and governance concerns.
Duke Energy’s outcomes are influenced by the expectations of our customers and stakeholders. Those expectations are based on the core fundamentals of reliability and affordability but are also increasingly focused on our ability to meet rapidly changing demands for new and varied products, services and offerings. Additionally, the risks of global climate change continues to shape our customers’ sustainability goals and energy needs. Failure to meet those expectations or to adequately address the risks and external pressures from regulators, investors and other stakeholders may impact favorable outcomes in future rate cases and the results of operations for the Duke Energy Registrants.
The Duke Energy Registrants’ operating results may fluctuate on a seasonal and quarterly basis and can be negatively affected by changes in weather conditions and severe weather, including extreme weather conditions associated with climate change.
Electric power generation and natural gas distribution are generally seasonal businesses. In most parts of the U.S., the demand for power peaks during the warmer summer months, with market prices also typically peaking at that time. In other areas, demand for power peaks during the winter. Demand for natural gas peaks during the winter months. Further, extreme weather conditions such as hurricanes, droughts, heat waves, winter storms and severe weather associated with climate change could cause these seasonal fluctuations to be more pronounced. As a result, the overall operating results of the Duke Energy Registrants’ businesses may fluctuate substantially on a seasonal and quarterly basis and thus make period-to-period comparison less relevant.
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RISK FACTORS
Sustained severe drought conditions could impact generation by hydroelectric plants, as well as fossil and nuclear plant operations, as these facilities use water for cooling purposes and for the operation of environmental compliance equipment. Furthermore, destruction caused by severe weather events, such as hurricanes, flooding, tornadoes, severe thunderstorms, snow and ice storms, can result in lost operating revenues due to outages, property damage, including downed transmission and distribution lines, and additional and unexpected expenses to mitigate storm damage. The cost of storm restoration efforts may not be fully recoverable through the regulatory process.
The Duke Energy Registrants’ sales may decrease if they are unable to gain adequate, reliable and affordable access to transmission assets.
The Duke Energy Registrants depend on transmission and distribution facilities owned and operated by utilities and other energy companies to deliver electricity sold to the wholesale market. The FERC’s power transmission regulations require wholesale electric transmission services to be offered on an open-access, non-discriminatory basis. If transmission is disrupted, or if transmission capacity is inadequate, the Duke Energy Registrants’ ability to sell and deliver products may be hindered.
The different regional power markets have changing regulatory structures, which could affect growth and performance in these regions. In addition, the ISOs who oversee the transmission systems in regional power markets have imposed in the past, and may impose in the future, price limitations and other mechanisms to address volatility in the power markets. These types of price limitations and other mechanisms may adversely impact the profitability of the Duke Energy Registrants’ wholesale power marketing business.
The availability of adequate interstate pipeline transportation capacity and natural gas supply may decrease.
The Duke Energy Registrants purchase almost all of their natural gas supply from interstate sources that must be transported to the applicable service territories. Interstate pipeline companies transport the natural gas to the Duke Energy Registrants' systems under firm service agreements that are designed to meet the requirements of their core markets. A significant disruption to interstate pipelines capacity or reduction in natural gas supply due to events including, but not limited to, operational failures or disruptions, hurricanes, tornadoes, floods, freeze off of natural gas wells, terrorist or cyberattacks or other acts of war or legislative or regulatory actions or requirements, including remediation related to integrity inspections, could reduce the normal interstate supply of natural gas and thereby reduce earnings. Moreover, if additional natural gas infrastructure, including, but not limited to, exploration and drilling rigs and platforms, processing and gathering systems, offshore pipelines, interstate pipelines and storage, cannot be built at a pace that meets demand, then growth opportunities could be limited.
Fluctuations in commodity prices or availability may adversely affect various aspects of the Duke Energy Registrants’ operations as well as their results of operations, financial position and cash flows.
The Duke Energy Registrants are exposed to the effects of market fluctuations in the price of natural gas, coal, fuel oil, nuclear fuel, electricity and other energy-related commodities as a result of their ownership of energy-related assets. Fuel costs are recovered primarily through cost-recovery clauses, subject to the approval of state utility commissions.
Additionally, the Duke Energy Registrants are exposed to risk that counterparties will not be able to fulfill their obligations. Disruption in the delivery of fuel, including disruptions as a result of, among other things, bankruptcies, transportation delays, weather, labor relations, force majeure events or environmental regulations affecting any of these fuel suppliers, could limit the Duke Energy Registrants' ability to operate their facilities. Should counterparties fail to perform, the Duke Energy Registrants might be forced to replace the underlying commitment at prevailing market prices possibly resulting in losses in addition to the amounts, if any, already paid to the counterparties.
Certain of the Duke Energy Registrants’ hedge agreements may result in the receipt of, or posting of, collateral with counterparties, depending on the daily market-based calculation of financial exposure of the derivative positions. Fluctuations in commodity prices that lead to the return of collateral received and/or the posting of collateral with counterparties could negatively impact liquidity. Downgrades in the Duke Energy Registrants’ credit ratings could lead to additional collateral posting requirements. The Duke Energy Registrants continually monitor derivative positions in relation to market price activity.
Cyberattacks and data security breaches could adversely affect the Duke Energy Registrants' businesses.
Cybersecurity risks have increased in recent years as a result of the proliferation of new technologies and the increased sophistication, magnitude and frequency of cyberattacks and data security breaches. Duke Energy relies on the continued operation of sophisticated digital information technology systems and network infrastructure, which are part of an interconnected regional grid. Additionally, connectivity to the internet continues to increase through grid modernization and other operational excellence initiatives. Because of the critical nature of the infrastructure, increased connectivity to the internet and technology systems’ inherent vulnerability to disability or failures due to hacking, viruses, acts of war or terrorism or other types of data security breaches, the Duke Energy Registrants face a heightened risk of cyberattack from foreign or domestic sources and have been subject, and will likely continue to be subject, to attempts to gain unauthorized access to information and/or information systems or to disrupt utility operations through computer viruses and phishing attempts either directly or indirectly through its material vendors or related third parties. In the event of a significant cybersecurity breach on either the Duke Energy Registrants or with one of our material vendors or related third parties, the Duke Energy Registrants could (i) have business operations disrupted, including the disruption of the operation of our assets and the power grid, theft of confidential company, employee, retiree, shareholder, vendor or customer information, and general business systems and process interruption or compromise, including preventing the Duke Energy Registrants from servicing customers, collecting revenues or the recording, processing and/or reporting financial information correctly, (ii) experience substantial loss of revenues, repair and restoration costs, penalties and costs for lack of compliance with relevant regulations, implementation costs for additional security measures to avert future cyberattacks and other financial loss and (iii) be subject to increased regulation, litigation and reputational damage. While Duke Energy maintains insurance relating to cybersecurity events, such insurance is subject to a number of exclusions and may be insufficient to offset any losses, costs or damage experienced. Also, the market for cybersecurity insurance is relatively new and coverage available for cybersecurity events is evolving as the industry matures.
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RISK FACTORS
The Duke Energy Registrants are subject to standards enacted by the North American Electric Reliability Corporation and enforced by FERC regarding protection of the physical and cyber security of critical infrastructure assets required for operating North America's bulk electric system. The Duke Energy Registrants are also subject to regulations set by the Nuclear Regulatory Commission regarding the protection of digital computer and communication systems and networks required for the operation of nuclear power plants. While the Duke Energy Registrants believe they are in compliance with such standards and regulations, the Duke Energy Registrants have from time to time been, and may in the future be, found to be in violation of such standards and regulations. In addition, compliance with or changes in the applicable standards and regulations may subject the Duke Energy Registrants to higher operating costs and/or increased capital expenditures as well as substantial fines for non-compliance.
Duke Energy Ohio’s and Duke Energy Indiana’s membership in an RTO presents risks that could have a material adverse effect on their results of operations, financial position and cash flows.
The rules governing the various regional power markets may change, which could affect Duke Energy Ohio’s and Duke Energy Indiana’s costs and/or revenues. To the degree Duke Energy Ohio and Duke Energy Indiana incur significant additional fees and increased costs to participate in an RTO, their results of operations may be impacted. Duke Energy Ohio and Duke Energy Indiana may be allocated a portion of the cost of transmission facilities built by others due to changes in RTO transmission rate design. Duke Energy Ohio and Duke Energy Indiana may be required to expand their transmission system according to decisions made by an RTO rather than their own internal planning process. In addition, RTOs have been developing rules associated with the allocation and methodology of assigning costs associated with improved transmission reliability, reduced transmission congestion and firm transmission rights that may have a financial impact on the results of operations, financial position and cash flows of Duke Energy Ohio and Duke Energy Indiana.
As members of an RTO, Duke Energy Ohio and Duke Energy Indiana are subject to certain additional risks, including those associated with the allocation among RTO members, of losses caused by unreimbursed defaults of other participants in the RTO markets and those associated with complaint cases filed against an RTO that may seek refunds of revenues previously earned by RTO members.
The Duke Energy Registrants may not recover costs incurred to begin construction on projects that are canceled.
Duke Energy’s long-term strategy requires the construction of new projects, either wholly owned or partially owned, which involve a number of risks, including construction delays, nonperformance by equipment and other third-party suppliers, and increases in equipment and labor costs. To limit the risks of these construction projects, the Duke Energy Registrants enter into equipment purchase orders and construction contracts and incur engineering and design service costs in advance of receiving necessary regulatory approvals and/or siting or environmental permits. If any of these projects are canceled for any reason, including failure to receive necessary regulatory approvals and/or siting or environmental permits, significant cancellation penalties under the equipment purchase orders and construction contracts could occur. In addition, if any construction work or investments have been recorded as an asset, an impairment may need to be recorded in the event the project is canceled.
The Duke Energy Registrants are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.
The financial condition of some insurance companies, actual or threatened physical or cyberattacks, and natural disasters, among other things, could have disruptive effects on insurance markets. The availability of insurance covering risks that the Duke Energy Registrants and their respective competitors typically insure against may decrease, and the insurance that the Duke Energy Registrants are able to obtain may have higher deductibles, higher premiums, and more restrictive policy terms. Further, the insurance policies may not cover all of the potential exposures or the actual amount of loss incurred. Any losses not covered by insurance, or any increases in the cost of applicable insurance, could adversely affect the results of operations, financial position or cash flows of the affected Duke Energy Registrant.
NUCLEAR GENERATION RISKS
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida may incur substantial costs and liabilities due to their ownership and operation of nuclear generating facilities.
Ownership interests in and operation of nuclear stations by Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida subject them to various risks. These risks include, among other things: the potential harmful effects on the environment and human health resulting from the current or past operation of nuclear facilities and the storage, handling and disposal of radioactive materials; limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations; and uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives.
Ownership and operation of nuclear generation facilities requires compliance with licensing and safety-related requirements imposed by the NRC. In the event of non-compliance, the NRC may increase regulatory oversight, impose fines or shut down a unit depending upon its assessment of the severity of the situation. Revised security and safety requirements promulgated by the NRC, which could be prompted by, among other things, events within or outside of the control of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, such as a serious nuclear incident at a facility owned by a third party, could necessitate substantial capital and other expenditures, as well as assessments to cover third-party losses. In addition, if a serious nuclear incident were to occur, it could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.
31




RISK FACTORS
LIQUIDITY, CAPITAL REQUIREMENTS AND COMMON STOCK RISKS
The Duke Energy Registrants rely on access to short-term borrowings and longer-term debt and equity markets to finance their capital requirements and support their liquidity needs. Access to those markets can be adversely affected by a number of conditions, many of which are beyond the Duke Energy Registrants’ control.
The Duke Energy Registrants’ businesses are significantly financed through issuances of debt and equity. The maturity and repayment profile of debt used to finance investments often does not correlate to cash flows from their assets. Accordingly, as a source of liquidity for capital requirements not satisfied by the cash flows from their operations and to fund investments originally financed through debt instruments with disparate maturities, the Duke Energy Registrants rely on access to short-term money markets as well as longer-term capital markets. The Subsidiary Registrants also rely on access to short-term intercompany borrowings. If the Duke Energy Registrants are not able to access debt or equity at competitive rates or at all, the ability to finance their operations and implement their strategy and business plan as scheduled could be adversely affected. An inability to access debt and equity may limit the Duke Energy Registrants’ ability to pursue improvements or acquisitions that they may otherwise rely on for future growth.
Market disruptions may increase the cost of borrowing or adversely affect the ability to access one or more financial markets. Such disruptions could include: economic downturns, the bankruptcy of an unrelated energy company, unfavorable capital market conditions, market prices for electricity and natural gas, actual or threatened terrorist attacks, or the overall health of the energy industry. The availability of credit under Duke Energy’s Master Credit Facility depends upon the ability of the banks providing commitments under the facility to provide funds when their obligations to do so arise. Systematic risk of the banking system and the financial markets could prevent a bank from meeting its obligations under the facility agreement.
Duke Energy maintains a revolving credit facility to provide backup for its commercial paper program and letters of credit to support variable rate demand tax-exempt bonds that may be put to the Duke Energy Registrant issuer at the option of the holder. The facility includes borrowing sublimits for the Duke Energy Registrants, each of whom is a party to the credit facility, and financial covenants that limit the amount of debt that can be outstanding as a percentage of the total capital for the specific entity. Failure to maintain these covenants at a particular entity could preclude Duke Energy from issuing commercial paper or the Duke Energy Registrants from issuing letters of credit or borrowing under the Master Credit Facility.
The Duke Energy Registrants must meet credit quality standards and there is no assurance they will maintain investment grade credit ratings. If the Duke Energy Registrants are unable to maintain investment grade credit ratings, they would be required under credit agreements to provide collateral in the form of letters of credit or cash, which may materially adversely affect their liquidity.
Each of the Duke Energy Registrants’ senior long-term debt issuances is currently rated investment grade by various rating agencies. The Duke Energy Registrants cannot ensure their senior long-term debt will be rated investment grade in the future.
If the rating agencies were to rate the Duke Energy Registrants below investment grade, borrowing costs would increase, perhaps significantly. In addition, the potential pool of investors and funding sources would likely decrease. Further, if the short-term debt rating were to fall, access to the commercial paper market could be significantly limited.
A downgrade below investment grade could also require the posting of additional collateral in the form of letters of credit or cash under various credit, commodity and capacity agreements and trigger termination clauses in some interest rate derivative agreements, which would require cash payments. All of these events would likely reduce the Duke Energy Registrants’ liquidity and profitability and could have a material effect on their results of operations, financial position and cash flows.
Non-compliance with debt covenants or conditions could adversely affect the Duke Energy Registrants’ ability to execute future borrowings.
The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements.
Market performance and other changes may decrease the value of the NDTF investments of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, which then could require significant additional funding.
Ownership and operation of nuclear generation facilities also requires the maintenance of funded trusts that are intended to pay for the decommissioning costs of the respective nuclear power plants. The performance of the capital markets affects the values of the assets held in trust to satisfy these future obligations. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have significant obligations in this area and hold significant assets in these trusts. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below projected rates of return. Although a number of factors impact funding requirements, a decline in the market value of the assets may increase the funding requirements of the obligations for decommissioning nuclear plants. If Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are unable to successfully manage their NDTF assets, their results of operations, financial position and cash flows could be negatively affected.
32




RISK FACTORS
Poor investment performance of the Duke Energy pension plan holdings and other factors impacting pension plan costs could unfavorably impact the Duke Energy Registrants’ liquidity and results of operations.
The costs of providing non-contributory defined benefit pension plans are dependent upon a number of factors, such as the rates of return on plan assets, discount rates, the level of interest rates used to measure the required minimum funding levels of the plans, future government regulation and required or voluntary contributions made to the plans. The Subsidiary Registrants are allocated their proportionate share of the cost and obligations related to these plans. Without sustained growth in the pension investments over time to increase the value of plan assets and, depending upon the other factors impacting costs as listed above, Duke Energy could be required to fund its plans with significant amounts of cash. Such cash funding obligations, and the Subsidiary Registrants’ proportionate share of such cash funding obligations, could have a material impact on the Duke Energy Registrants’ results of operations, financial position and cash flows.
Duke Energy is a holding company and depends on the cash flows from its subsidiaries to meet its financial obligations.
Because Duke Energy is a holding company with no operations or cash flows of its own, its ability to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on its common stock, is primarily dependent on the net income and cash flows of its subsidiaries and the ability of those subsidiaries to pay upstream dividends or to repay borrowed funds. Prior to funding Duke Energy, its subsidiaries have regulatory restrictions and financial obligations that must be satisfied. These subsidiaries are separate legal entities and have no obligation to provide Duke Energy with funds. In addition, Duke Energy may provide capital contributions or debt financing to its subsidiaries under certain circumstances, which would reduce the funds available to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on Duke Energy’s common stock.
GENERAL RISKS
The failure of Duke Energy information technology systems, or the failure to enhance existing information technology systems and implement new technology, could adversely affect the Duke Energy Registrants’ businesses.
Duke Energy’s operations are dependent upon the proper functioning of its internal systems, including the information technology systems that support our underlying business processes. Any significant failure or malfunction of such information technology systems may result in disruptions of our operations. In the ordinary course of business, we rely on information technology systems, including the internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data, including (i) intellectual property, (ii) proprietary business information, (iii) personally identifiable information of our customers, employees, retirees and shareholders and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain activities. Our information technology systems are dependent upon global communications and cloud service providers, as well as their respective vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such failures and outages in the future. These providers’ systems are susceptible to cybersecurity and data breaches, outages from fire, floods, power loss, telecommunications failures, break-ins and similar events. Failure to prevent or mitigate data loss from system failures or outages could materially affect the results of operations, financial position and cash flows of the Duke Energy Registrants.
In addition to maintaining our current information technology systems, Duke Energy believes the digital transformation of its business is key to driving internal efficiencies as well as providing additional capabilities to customers. Duke Energy’s information technology systems are critical to cost-effective, reliable daily operations and our ability to effectively serve our customers. We expect our customers to continue to demand more sophisticated technology-driven solutions and we must enhance or replace our information technology systems in response. This involves significant development and implementation costs to keep pace with changing technologies and customer demand. If we fail to successfully implement critical technology, or if it does not provide the anticipated benefits or meet customer demands, such failure could materially adversely affect our business strategy as well as impact the results of operations, financial position and cash flows of the Duke Energy Registrants.
Potential terrorist activities, or military or other actions, could adversely affect the Duke Energy Registrants’ businesses.
The continued threat of terrorism and the impact of retaliatory military and other action by the U.S. and its allies may lead to increased political, economic and financial market instability and volatility in prices for natural gas and oil, which may have material adverse effects in ways the Duke Energy Registrants cannot predict at this time. In addition, future acts of terrorism and possible reprisals as a consequence of action by the U.S. and its allies could be directed against companies operating in the U.S. Information technology systems, transmission and distribution and generation facilities such as nuclear plants could be potential targets of terrorist activities or harmful activities by individuals or groups that could have a material adverse effect on Duke Energy Registrants' businesses. In particular, the Duke Energy Registrants may experience increased capital and operating costs to implement increased security for their information technology systems, transmission and distribution and generation facilities, including nuclear power plants under the NRC’s design basis threat requirements. These increased costs could include additional physical plant security and security personnel or additional capability following a terrorist incident.
Failure to attract and retain an appropriately qualified workforce could unfavorably impact the Duke Energy Registrants’ results of operations.
Certain events, such as an aging workforce, mismatch of skill set or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge base and the lengthy time required for skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may increase. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or future availability and cost of contract labor may adversely affect the ability to manage and operate the business, especially considering the workforce needs associated with nuclear generation facilities and new skills required to operate a modernized, technology-enabled power grid. If the Duke Energy Registrants are unable to successfully attract and retain an appropriately qualified workforce, their results of operations, financial position and cash flows could be negatively affected.
33




UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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PROPERTIES
ITEM 2. PROPERTIES
ELECTRIC UTILITIES AND INFRASTRUCTURE
The following table provides information related to the Electric Utilities and Infrastructure's generation stations as of December 31, 2020. The MW displayed in the table below are based on summer capacity. Ownership interest in all facilities is 100% unless otherwise indicated.
Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Carolinas
OconeeNuclearUraniumSC2,554 
McGuireNuclearUraniumNC2,316 
Catawba(a)
NuclearUraniumSC445 
Belews CreekFossilCoal/GasNC2,220 
MarshallFossilCoal/GasNC2,058 
J.E. Rogers FossilCoal/GasNC1,388 
Lincoln Combustion Turbine (CT)FossilGas/OilNC1,193 
AllenFossilCoalNC1,098 
Rockingham CTFossilGas/OilNC825 
W.S. Lee Combined Cycle (CC)(b)
FossilGasSC686 
Buck CCFossilGasNC668 
Dan River CCFossilGasNC662 
Mill Creek CTFossilGas/OilSC563 
W.S. LeeFossilGasSC170 
W.S. Lee CTFossilGas/OilSC84 
Clemson CHPFossilGasSC13 
Bad CreekHydroWaterSC1,440 
JocasseeHydroWaterSC780 
Cowans FordHydroWaterNC324 
KeoweeHydroWaterSC152 
Other small facilities (19 plants)HydroWaterNC/SC603 
Distributed generation RenewableSolarNC38 
Total Duke Energy Carolinas20,280 
35



PROPERTIES
Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Progress
BrunswickNuclearUraniumNC1,870 
HarrisNuclearUraniumNC964 
RobinsonNuclearUraniumSC759 
RoxboroFossilCoalNC2,439 
Smith CCFossilGas/OilNC1,085 
H.F. Lee CCFossilGas/OilNC888 
Wayne County CTFossilGas/OilNC857 
Smith CTFossilGas/OilNC772 
MayoFossilCoalNC727 
L.V. Sutton CCFossilGas/OilNC607 
Asheville CCFossilGas/OilNC474 
Asheville CTFossilGas/OilNC320 
Darlington CTFossilGas/OilSC234 
Weatherspoon CTFossilGas/OilNC124 
L.V. Sutton CT (Black Start)FossilGas/OilNC78 
Blewett CTFossilOilNC52 
WaltersHydroWaterNC112 
Other small facilities (3)HydroWaterNC115 
Distributed generationRenewableSolarNC49 
Asheville – Rock Hill BatteryRenewableStorageNC
Total Duke Energy Progress12,533 
Owned MW
FacilityPlant TypePrimary FuelLocation
Capacity
Duke Energy Florida
Hines CCFossilGas/OilFL2,054 
Citrus County CCFossilGasFL1,610 
Crystal RiverFossilCoalFL1,422 
Bartow CCFossilGas/OilFL1,169 
AncloteFossilGasFL1,013 
Intercession City CTFossilGas/OilFL951 
Osprey CCFossilGas/OilFL583 
DeBary CTFossilGas/OilFL559 
Tiger Bay CCFossilGas/OilFL200 
Bayboro CTFossilOilFL171 
Bartow CTFossilGas/OilFL168 
Suwannee River CTFossilGasFL149 
University of Florida CoGen CTFossilGasFL43 
Distributed generationRenewableSolarFL195 
Total Duke Energy Florida10,287 
Owned MW
FacilityPlant TypePrimary FuelLocationCapacity
Duke Energy Ohio
East BendFossilCoalKY600 
Woodsdale CTFossilGas/PropaneOH476 
Total Duke Energy Ohio1,076 
36



PROPERTIES
Owned MW
FacilityPlant TypePrimary FuelLocation
Capacity
Duke Energy Indiana
Gibson(c)
FossilCoalIN2,822 
Cayuga(d)
FossilCoal/OilIN1,005 
EdwardsportFossilCoalIN595 
Madison CTFossilGasOH566 
Wheatland CTFossilGasIN450 
Vermillion CT(e)
FossilGasIN360 
GallagherFossilCoalIN280 
Noblesville CCFossilGas/OilIN264 
Henry County CTFossilGas/OilIN129 
Cayuga CTFossilGas/OilIN86 
MarklandHydroWaterIN51 
Distributed generation RenewableSolarIN11 
Camp Atterbury BatteryRenewableStorageIN
Nabb BatteryRenewableStorageIN
Crane BatteryRenewableStorageIN
Total Duke Energy Indiana6,631 
Owned MW
Totals by TypeCapacity
Total Electric Utilities50,807 
Totals by Plant Type
Nuclear8,908 
Fossil 38,010 
Hydro3,577 
Renewable312 
Total Electric Utilities50,807 
(a)Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA. Duke Energy Carolinas' ownership is 19.25% of the facility.
(b)Jointly owned with NCEMC. Duke Energy Carolinas' ownership is 87.27% of the facility.
(c)Duke Energy Indiana owns and operates Gibson Station Units 1 through 4 and is a joint owner of unit 5 with WVPA and IMPA. Duke Energy Indiana operates unit 5 and owns 50.05%.
(d)Includes Cayuga Internal Combustion.
(e)Jointly owned with WVPA. Duke Energy Indiana's ownership is 62.5% of the facility.
The following table provides information related to Electric Utilities and Infrastructure's electric transmission and distribution properties as of December 31, 2020.
DukeDukeDukeDukeDuke
DukeEnergyEnergyEnergyEnergyEnergy
EnergyCarolinasProgressFloridaOhioIndiana
Electric Transmission Lines
Miles of 500 to 525 kilovolt (kV)1,100 600 300 200 — — 
Miles of 345 kV1,100 — — — 400 700 
Miles of 230 kV8,400 2,700 3,400 1,600 — 700 
Miles of 100 to 161 kV12,400 6,800 2,600 900 700 1,400 
Miles of 13 to 69 kV8,300 3,000 — 2,200 600 2,500 
Total conductor miles of electric transmission lines31,300 13,100 6,300 4,900 1,700 5,300 
Electric Distribution Lines
Miles of overhead lines173,500 66,600 46,400 25,100 13,300 22,100 
Miles of underground line108,900 40,400 31,800 21,100 6,200 9,400 
Total conductor miles of electric distribution lines282,400 107,000 78,200 46,200 19,500 31,500 
Number of electric transmission and distribution substations3,200 1,400 500 500 300 500 
Substantially all of Electric Utilities and Infrastructure's electric plant in service is mortgaged under indentures relating to Duke Energy Carolinas’, Duke Energy Progress', Duke Energy Florida's, Duke Energy Ohio’s and Duke Energy Indiana’s various series of First Mortgage Bonds.
37



PROPERTIES
GAS UTILITIES AND INFRASTRUCTURE
Gas Utilities and Infrastructure owns transmission pipelines and distribution mains that are generally underground, located near public streets and highways, or on property owned by others for which Duke Energy Ohio and Piedmont have obtained the necessary legal rights to place and operate facilities on such property located within the Gas Utilities and Infrastructure service territories. The following table provides information related to Gas Utilities and Infrastructure's natural gas distribution.
Duke
DukeEnergy
EnergyOhioPiedmont
Miles of natural gas distribution and transmission pipelines34,200 7,400 26,800 
Miles of natural gas service lines27,200 6,300 20,900 
COMMERCIAL RENEWABLES
The following table provides information related to Commercial Renewables' electric generation facilities as of December 31, 2020. The MW displayed in the table below are based on nameplate capacity.
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Wind
Los Vientos (five sites)RenewableWindTX465 51 %
Mesteno(a)
RenewableWindTX202 100 %
Sweetwater IVRenewableWindTX113 47 %
FrontierRenewableWindOK103 51 %
Top of the WorldRenewableWindWY102 51 %
Notrees RenewableWindTX78 51 %
Mesquite CreekRenewableWindTX54 26 %
Campbell HillRenewableWindWY50 51 %
Ironwood RenewableWindKS44 26 %
Sweetwater VRenewableWindTX38 47 %
North AlleghenyRenewableWindPA36 51 %
Laurel Hill RenewableWindPA35 51 %
Cimarron IIRenewableWindKS34 26 %
Kit CarsonRenewableWindCO26 51 %
Silver SageRenewableWindWY21 51 %
Happy JackRenewableWindWY15 51 %
ShirleyRenewableWindWI10 51 %
Total Renewables – Wind1,426 
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PROPERTIES
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Solar
Holstein(a)
RenewableSolarTX200 100 %
Rambler(a)
RenewableSolarTX200 100 %
North Rosamond(a)
RenewableSolarCA150 100 %
Lapetus(a)
RenewableSolarTX100 100 %
Conetoe IIRenewableSolarNC80 100 %
Palmer(a)
RenewableSolarCO60 100 %
Seville I & IIRenewableSolarCA34 67 %
Rio Bravo I & IIRenewableSolarCA27 67 %
Wildwood I & IIRenewableSolarCA23 67 %
KelfordRenewableSolarNC22 100 %
Dogwood RenewableSolarNC20 100 %
Halifax AirportRenewableSolarNC20 100 %
PasquotankRenewableSolarNC20 100 %
ShawboroRenewableSolarNC20 100 %
CaprockRenewableSolarNM17 67 %
Creswell AlligoodRenewableSolarNC14 100 %
PumpjackRenewableSolarCA13 67 %
LongboatRenewableSolarCA13 67 %
Shoreham(a)
RenewableSolarNY13 51 %
Washington White PostRenewableSolarNC12 100 %
WhitakersRenewableSolarNC12 100 %
Highlander I & IIRenewableSolarCA11 51 %
Other small solar(a)
RenewableSolarVarious193 Various
Total Renewables – Solar1,274 
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Fuel Cells(a)
RenewableFuel CellVarious43 100 %
Total Renewables – Fuel Cells43 
Owned MWOwnership
FacilityPlant TypePrimary FuelLocationCapacityInterest (%)
Commercial Renewables – Energy Storage
Notrees Battery StorageRenewableStorageTX18 51 %
Beckjord Battery StorageRenewableStorageOH100 %
Total Renewables – Energy Storage20 
Owned MW
Totals by TypeCapacity
Wind1,426 
Solar1,274 
Fuel Cells43 
Energy Storage20 
Total Commercial Renewables(b)
2,763 
(a)     Certain projects, including projects within Other small solar, are in tax-equity structures where investors have differing interests in the project's economic attributes. 100% of the tax-equity project's capacity is included in the table above.
(b)    Net proportion of MW capacity in operation is 3,937, which represents the amount managed or owned by Duke Energy.
OTHER
Duke Energy owns approximately 8 million square feet and leases approximately 2 million square feet of corporate, regional and district office space spread throughout its service territories.
39




LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES
ITEM 3. LEGAL PROCEEDINGS
For information regarding legal proceedings, including regulatory and environmental matters, see Note 3, “Regulatory Matters,” and Note 4, “Commitments and Contingencies,” to the Consolidated Financial Statements.
MTBE Litigation
On December 15, 2017, the state of Maryland filed suit in Baltimore City Circuit Court against Duke Energy Merchants and other defendants alleging contamination of state waters by MTBE leaking from gasoline storage tanks. MTBE is a gasoline additive intended to increase the oxygen levels in gasoline and make it burn cleaner. The case was removed from Baltimore City Circuit Court to federal District Court. Initial motions to dismiss filed by the defendants were denied by the court on September 4, 2019, and the matter is now in discovery. On December 18, 2020, the plaintiff and defendants selected 50 focus sites, none of which have any ties to Duke Energy Merchants, and discovery is likely to be specific to those sites. Duke Energy cannot predict the outcome of this matter.
ITEM 4. MINE SAFETY DISCLOSURES
This is not applicable for any of the Duke Energy Registrants.
40




SECURITIES INFORMATION
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The common stock of Duke Energy is listed and traded on the NYSE (ticker symbol DUK). As of January 31, 2021, there were 136,857 Duke Energy common stockholders of record. For information on dividends, see the "Dividend Payments" section of Management's Discussion and Analysis.
There is no market for the common equity securities of the Subsidiary Registrants, all of which are directly or indirectly owned by Duke Energy. See Note 1, "Summary of Significant Accounting Policies," to the Consolidated Financial Statements for information on the 2021 sale of a minority interest in Duke Energy Indiana.
Securities Authorized for Issuance Under Equity Compensation Plans
See Item 12 of Part III within this Annual Report for information regarding Securities Authorized for Issuance Under Equity Compensation Plans.
Issuer Purchases of Equity Securities for Fourth Quarter 2020
There were no repurchases of equity securities during the fourth quarter of 2020.
Stock Performance Graph
The following performance graph compares the cumulative TSR from Duke Energy Corporation common stock, as compared with the Standard & Poor's 500 Stock Index (S&P 500) and the Philadelphia Utility Index for the past five years. The graph assumes an initial investment of $100 on December 31, 2015, in Duke Energy common stock, in the S&P 500 and in the Philadelphia Utility Index and that all dividends were reinvested. The stockholder return shown below for the five-year historical period may not be indicative of future performance.
duk-20201231_g5.jpg
NYSE CEO Certification
Duke Energy has filed the certification of its Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to this Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 6. SELECTED FINANCIAL DATA
This is not applicable for any of the Duke Energy Registrants.
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MD&ADUKE ENERGY
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. The 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 as presented herein may not be comparable to similarly titled measures used by other companies.
The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy Corporation and its subsidiaries. Duke Energy Carolinas, LLC, Progress Energy, Inc., Duke Energy Progress, LLC, Duke Energy Florida, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC and Piedmont Natural Gas Company, Inc. 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.
Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the years ended December 31, 2020, 2019 and 2018.
See "Item 7. 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, filed with the SEC on February 20, 2020, for a discussion of variance drivers for the year ended December 31, 2019, as compared to December 31, 2018.
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.
Executive Overview
At Duke Energy the fundamentals of our business are strong and allow us to deliver growth in earnings and dividends in a low-risk, predictable and transparent way. In 2020, we met our near-term financial commitments and continued to provide safe and reliable service while managing the impacts of the COVID-19 pandemic.
In early 2021, we continued to position the company for sustainable long-term growth, executing an important coal ash settlement agreement in North Carolina and announcing the $2 billion sale of a minority interest in Duke Energy Indiana, providing a source of efficient capital at an attractive valuation. We remain focused on a business portfolio that will deliver a reliable and growing dividend with 2020 representing the 94th consecutive year Duke Energy paid a cash dividend on its common stock. With these recent announcements, we also increased our long-term adjusted EPS growth rate to 5% to 7% through 2025. This growth is supported by our $59 billion capital plan from 2021 to 2025, clean energy investments that benefit our customers, timely cost-recovery mechanisms in most jurisdictions and our ability to effectively manage our cost structure.
Financial Results
duk-20201231_g6.jpgduk-20201231_g7.jpg
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MD&ADUKE ENERGY
(a)See Results of Operations below for Duke Energy’s definition of adjusted earnings and adjusted EPS as well as a reconciliation of this non-GAAP financial measure to net income available to Duke Energy and net income available to Duke Energy per basic share.
Duke Energy's 2020 Net Income Available to Duke Energy Corporation (GAAP Reported Earnings) were impacted by: regulatory settlements related to coal ash cost recovery in Electric Utilities and Infrastructure; the cancellation of the ACP pipeline in Gas Utilities and Infrastructure; and growth in project investments in Commercial Renewables. See “Results of Operations” below for a detailed discussion of the consolidated results of operations and a detailed discussion of financial results for each of Duke Energy’s reportable business segments, as well as Other.
2020 Areas of Focus and Accomplishments
Clean Energy Transformation. Our industry has been undergoing an incredible transformation and 2020 was a milestone year for our company where we articulated a clear vision for the future and outlined investments to achieve a clean energy future for our customers. We continue to transform the customer experience by generating cleaner energy, modernizing the energy grid, and expanding natural gas infrastructure.
Generating Cleaner Energy
In October 2020, we held our first-ever Environmental, Social, and Governance (ESG) Day for investors, successfully outlining our climate strategy and highlighting our strong progress to date in reducing carbon (a greater than 40% reduction from 2005) and our commitment to do more (at least 50% reduction by 2030 and net-zero by 2050). In the Carolinas, we participated in extensive stakeholder processes focused on carbon reduction and regulatory reform and filed comprehensive IRP consistent with that strategy. Our planned coal retirements and transition to cleaner energy sources in the Carolinas are some of the largest in the industry. We also committed to an all-electric light-duty fleet and 50% of all medium- and heavy-duty vehicles by 2030 – a pledge that also leads our industry. Our commitment for 2030 includes retiring plants, operating our existing carbon-free resources and investing in renewables, our energy delivery system, and natural gas infrastructure. As we look beyond 2030, we will need additional tools to continue our progress. We will work actively to advocate for research and development of carbon-free, dispatchable resources. That includes longer-duration energy storage, advanced nuclear technologies, carbon capture and zero-carbon fuels.
Modernizing the Power Grid
Our grid improvement programs continue to be a key component of our growth strategy. Modernization of the electric grid, including smart meters, storm hardening, self-healing and targeted undergrounding, helps to ensure the system is better prepared for severe weather, improves the system's reliability and flexibility, and provides better information and services for customers. In 2020, 98% of our jurisdictions were equipped with smart meters and we remain on track to be fully deployed across all regions by the end of this year. We continue to expand our self-optimizing grid capabilities, and in 2020, smart, self-healing technologies helped to avoid more than 800,000 extended customer outages across our six-state electric service area, saving customers more than 1.8 million hours of lost outage time. Duke Energy also has a demonstrated track record of driving efficiencies and productivity into the business and we continue to leverage new technology, digital tools and data analytics across the business in response to a transforming landscape.
Expanding Natural Gas Infrastructure
In July 2020, Duke Energy and Dominion announced the cancellation of the ACP pipeline. Litigation risks and delays presented too much uncertainty on our ability to economically complete the project on schedule to meet our customers’ needs. Additionally, Dominion reached a decision to exit their natural gas transmission business, further impeding our ability to consider ongoing investment in the project. The Company remains committed to pursuing natural gas infrastructure investments and continues to explore additional resources in eastern North Carolina for the Piedmont system and securing more transport capacity to support power generation. Construction is expected to be completed this year on a liquefied natural gas facility in Robeson County, North Carolina, on property Piedmont owns. This investment will help Piedmont provide a reliable gas supply to customers during peak usage periods and protect customers from price volatility when there is a higher-than-normal demand for natural gas. In the fall of 2020, recognizing the continued importance of natural gas to our plans, we announced a net-zero methane emission goal by 2030 related to our gas distribution business, as well as our commitment to lead on reduction of upstream methane emissions through work with our natural gas supply chain.
Constructive Regulatory and Legislative Outcomes. One of our long-term strategic goals is to achieve modernized regulatory constructs in our jurisdictions. Modernized constructs provide benefits, which include improved earnings and cash flows through more timely recovery of investments, as well as stable pricing for customers.
In 2020, we conducted the bulk of proceedings related to our North Carolina rate cases for both Duke Energy Carolinas and Duke Energy Progress and achieved a partial settlement with the North Carolina Public Staff and ten other intervening parties. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached an important settlement agreement, which subject to NCUC approval, resolves historical coal ash prudence and cost recovery issues and provides clarity on coal ash cost recovery for the next decade. In 2020, we also achieved constructive rate case outcomes in Indiana (our first rate base request in 15 years) and Kentucky (electric). We have a multiyear rate plan in Florida and in January 2021 reached a constructive settlement agreement with key consumer groups, subject to FPSC approval, to bring additional certainty to rates through 2024, In addition, grid investment riders in the Midwest enable more timely cost recovery and earnings growth.
Customer Satisfaction. Duke Energy continues to transform the customer experience through our use of customer data to better inform operational priorities and performance levels. This data-driven approach allows us to identify the investments that are the most important to the customer experience. Our work has been recognized by our customers with external measures showing Duke Energy is improving customer satisfaction at a rate greater than the utility industry. Additionally, in 2020, we surpassed our internal target that measures customer satisfaction by approximately 14%.
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MD&ADUKE ENERGY
Operational Excellence, Safety and Reliability. The reliable and safe operation of our power plants, electric distribution system and natural gas infrastructure in our communities is foundational to our customers, our financial results and our credibility with stakeholders. Our regulated generation fleet and nuclear sites had strong performance throughout the year and our electric distribution system performed well. The safety of our workforce is a core value. Our employees delivered strong safety results in 2020, and we are at or near the top of our industry. Additionally, the 2020 Atlantic hurricane season was incredibly active and marked the fifth consecutive year of above-average damaging storms. Our ability to effectively handle all facets of the 2020 storm response efforts, including navigating COVID-19 protocols, is a testament to our team’s extensive preparation and coordination, applying lessons learned from previous storms, and to on-the-ground management throughout the restoration efforts.
Leading Through COVID-19. COVID-19 impacted all that we accomplished in 2020 and demonstrated our resiliency and agility:
As the pandemic spread, stay-at-home orders coupled with recessionary economic conditions caused overall retail electric sales to decline by approximately 2%. To offset this challenge, as well as mild weather and other COVID-related costs, we successfully achieved the high end of our goal of $400 million to $450 million of broad-based O&M reductions and other mitigating actions. The Company’s results were within its adjusted EPS guidance range and we expect to sustain approximately $200 million of the 2020 O&M cost mitigation into 2021 forward.
Duke Energy kept electricity and gas flowing while voluntarily making significant accommodations for our customers. We led the way in our sector nationally, suspending all nonpay disconnects in all jurisdictions and waiving late payment fees and other fees until the national state of emergency was lifted. In the fall, we began returning to normal business practices, ensuring diligent communication with our customers and providing flexible payment arrangements.
We ensured the physical safety of our workers and provided support for our employees. As cases spiked nationally, we deployed COVID-19 safety protocols for our front-line essential workers and moved 18,000 colleagues to remote work. Our COVID-19 Case Management Team managed exposures of our workforce and IT ensured our networks could handle the remote work while strengthening cyber protection. Under our COVID-19 protocols, our front-line employees completed 150 fossil and nuclear outages, executed large major projects, restored service from storms and hurricanes, and managed high-water events. Overall, our operations continued, and our team completed their work with excellence.
Duke Energy Objectives – 2021 and Beyond
Duke Energy will continue to deliver exceptional value to customers, be an integral part of the communities in which we do business and provide attractive returns to investors. We have an achievable, long-term strategy in place, and it is producing tangible results, yet the industry in which we operate is becoming more and more dynamic. We are adjusting, where necessary, and accelerating our focus in key areas to ensure the company is well positioned to be successful for many decades into the future. As we look ahead to 2021, our plans include:
Continuing to place the customer at the center of all that we do, which includes providing customized products and solutions
Strengthening our relationships with all our vast stakeholders in the communities in which we operate and invest
Generating cleaner energy and working to achieve net-zero carbon emissions by 2050 and net zero methane emissions by 2030
Modernizing and strengthening a green-enabled energy grid
Expanding our natural gas infrastructure
Maintaining the safety of our communities and employees
Deploying digital tools across our business
Matters Impacting Future Results
The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.
Regulatory Matters
Coal Ash Costs
As a result of the NCDEQ settlement on December 31, 2019, Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to lined landfills. The majority of spend is expected to occur over the next 15-20 years. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters," which is subject to review and approval of the NCUC. The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Carolinas and Duke Energy Progress took a charge of approximately $500 million each.
In 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC 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. An order from regulatory or judicial authorities that rejects our proposed settlement or disallows recovery of costs related to closure of these ash basins could have an adverse impact on future results.
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MD&ADUKE ENERGY
Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's partial approval of Duke Energy Indiana’s ash pond closure plans. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash.
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. In 2020, Duke Energy Carolinas and Duke Energy Progress reached partial settlements in the 2019 North Carolina rates cases by filing a petition to securitize deferred storm costs, which is subject to review and approval of the NCUC. In January 2021, Duke Energy Florida filed a settlement agreement with the FPSC, which if approved, allows recovery of the remaining storm cost balance for hurricanes Michael and Dorian. 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. Partial settlements filed with the NCUC in July 2020 included the allowance for deferral for certain grid projects placed in service from June 2020 through December 2022. There could be adverse impacts 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. Several partial settlement agreements have been filed with the NCUC and are awaiting approval. 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 Consolidated Financial Statements, “Regulatory Matters.”
Sale of Minority Interest in Duke Energy Indiana
In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund. The sale is subject to the satisfaction of certain customary conditions described in the investment agreement, including receipt of the approval of the FERC and completion of review by the Committee on Foreign Investments in the United States. Failure to obtain related approvals or satisfy the conditions in the investment agreement could result in the termination of the transaction and could result in an adverse impact. For additional information, see Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”
Commercial Renewables
Duke Energy continues to monitor recoverability of renewable merchant plants located in the Electric Reliability Council of Texas West market and PJM, 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, the carrying value approximated the aggregate estimated future undiscounted cash flows for the assets under review. A continued decline in energy market pricing would likely result in a future impairment. Impairment of these assets could result in adverse impacts. For additional information, see Note 10 to the Consolidated Financial Statements, "Property, Plant and Equipment."
In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. Both lost revenues and higher than expected purchased power costs are expected to negatively impact the operating results of these generating units. The estimated financial impact of the storm is expected to have a material impact on the Commercial Renewables segment's 2021 operating results. See Note 25 to the Consolidated Financial Statements, "Subsequent Events."
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MD&ADUKE ENERGY
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 continues to cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy has mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results.The Company is in the process of reviewing the long-term real estate strategy due to a potential change of in-office work policies after the COVID-19 pandemic. The plan may result in a reduction of physical work space which could create accounting impacts starting in 2021. Accounting impacts may include reassessments of lease terms and lease modifications which could result in termination penalties, as well as, asset impairments on property, plant and equipment. 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.

Within this Item 7, see Liquidity and Capital Resources for a discussion on risks associated with the Tax Act.
Results of Operations
Non-GAAP Measures
Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. These items represent income from continuing operations available to Duke Energy common stockholders in dollar and per-share amounts, adjusted for the dollar and per-share impact of special items. As discussed below, special items include certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. Management believes the presentation of adjusted earnings and adjusted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.
Management uses these non-GAAP financial measures for planning and forecasting, and for reporting financial results to the Board of Directors, employees, stockholders, analysts and investors. Adjusted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and EPS Available to Duke Energy Corporation common stockholders (GAAP Reported EPS), respectively.
Special items included in the periods presented 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.
Regulatory Settlements represents charges related to Duke Energy Carolinas' and Duke Energy Progress' CCR Settlement Agreement and the partial settlements in the 2019 North Carolina rate cases.
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.
Impairment Charges represents a reduction of a prior year impairment at Citrus County CC and an OTTI on the remaining investment in Constitution.
Duke Energy’s adjusted earnings and adjusted EPS may not be comparable to similarly titled measures of another company because other companies may not calculate the measures in the same manner.
Reconciliation of GAAP Reported Amounts to Adjusted Amounts
The following table presents a reconciliation of adjusted earnings and adjusted EPS to the most directly comparable GAAP measures.
 Years Ended December 31,
20202019
(in millions, except per share amounts)EarningsEPSEarningsEPS
GAAP Reported Earnings/EPS$1,270 $1.72 $3,707 $5.06 
Adjustments to Reported:
Gas Pipeline Investments(a)
1,711 2.32 — — 
Regulatory Settlements(b)
872 1.19 — — 
Severance(c)
(75)(0.10)— — 
Impairment Charges(d)
  (8)(0.01)
Discontinued Operations(7)(0.01)0.01 
Adjusted Earnings/Adjusted EPS$3,771 $5.12 $3,706 $5.06 
(a)    Net of tax benefit of $399 million.
(b)    Net of tax benefit of $263 million.
(c)    Net of tax expense of $23 million.
(d)    Net of tax expense of $3 million.
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MD&ADUKE ENERGY
Year Ended December 31, 2020, as compared to 2019
GAAP Reported EPS was $1.72 for the year ended December 31, 2020, compared to $5.06 for the year ended December 31, 2019. The decrease in GAAP Reported Earnings/EPS was primarily due to the cancellation of the ACP pipeline and the CCR Settlement Agreement filed with the NCUC.
As discussed and shown in the table above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $5.12 for the year ended December 31, 2020, compared to $5.06 for the year ended December 31, 2019. The increase in Adjusted Earnings/Adjusted EPS was primarily due to positive rate case contributions, growth in wholesale, lower operations and maintenance expense in response to the pandemic and growth in Commercial Renewables, partially offset by higher depreciation expense from a growing asset base, impacts of the pandemic, mild weather and the loss of ACP earnings.
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 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 Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.
Electric Utilities and Infrastructure
 Years Ended December 31,
(in millions) 20202019
Variance
Operating Revenues $21,720 $22,831 $(1,111)
Operating Expenses
Fuel used in electric generation and purchased power6,128 6,904 (776)
Operations, maintenance and other5,391 5,497 (106)
Depreciation and amortization4,068 3,951 117 
Property and other taxes1,188 1,175 13 
Impairment charges971 (8)979 
Total operating expenses17,746 17,519 227 
Gains on Sales of Other Assets and Other, net 11 10 
Operating Income 3,985 5,313 (1,328)
Other Income and Expenses, net344 353 (9)
Interest Expense 1,320 1,345 (25)
Income Before Income Taxes 3,009 4,321 (1,312)
Income Tax Expense 340 785 (445)
Segment Income $2,669 $3,536 $(867)
Duke Energy Carolinas GWh sales84,574 89,920 (5,346)
Duke Energy Progress GWh sales65,240 68,356 (3,116)
Duke Energy Florida GWh sales42,490 42,173 317 
Duke Energy Ohio GWh sales 23,484 24,729 (1,245)
Duke Energy Indiana GWh sales 30,528 31,886 (1,358)
Total Electric Utilities and Infrastructure GWh sales 246,316 257,064 (10,748)
Net proportional MW capacity in operation 50,419 50,070 349 
Year Ended December 31, 2020, as compared to 2019
Electric Utilities and Infrastructure’s variance is primarily due to impairment charges and revenue reductions related to the CCR settlement agreement filed with the NCUC to resolve coal ash cost recovery issues, unfavorable weather and lower volumes driven by impacts from the COVID-19 pandemic, partially offset by base rate adjustments in various jurisdictions. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
an $826 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 $237 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021 and decreased volumes;
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MD&ASEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE
a $207 million decrease in retail sales, net of fuel revenues, due to unfavorable weather;
a $130 million decrease in rider revenues from EE programs;
a $44 million decrease in nuclear cost recovery rider revenue due to recovery of the Crystal River 3 uprate regulatory asset in 2019 at Duke Energy Florida; and
a $17 million decrease in weather-normal retail sale volumes driven by lower nonresidential customer demand due to impacts from the COVID-19 pandemic.
Partially offset by:
a $214 million increase due to higher pricing from the Indiana retail rate case, net of rider revenues;
a $92 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 cases, net of a return of EDIT to customers.
Operating Expenses. The variance was driven primarily by:
a $979 million increase in impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021;
a $117 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates from the Indiana retail rate cases; and
a $13 million increase in property and other taxes primarily due to prior year property tax reassessments.
Partially offset by:
a $776 million decrease in fuel used in electric generation and purchased power primarily due to lower generation demand and lower fuel and natural gas costs; and
a $106 million decrease in operation, maintenance and other expense primarily driven by cost mitigation efforts.
Interest Expense. The variance was primarily due to lower interest rates on outstanding debt.
Income Tax Expense. The ETRs for the years ended December 31, 2020, and 2019, were 11.3% and 18.2%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.
48




MD&ASEGMENT RESULTS - GAS UTILITIES AND INFRASTRUCTURE
Gas Utilities and Infrastructure
 Years Ended December 31,
(in millions) 20202019
Variance
Operating Revenues $1,748 $1,866 $(118)
Operating Expenses
Cost of natural gas460 627 (167)
Operation, maintenance and other430 446 (16)
Depreciation and amortization258 256 
Property and other taxes112 106 
Impairment charges7 — 
Total operating expenses1,267 1,435 (168)
Operating Income 481 431 50 
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates(2,017)114 (2,131)
Other Income and Expenses, net56 26 30 
Total other income and expenses(1,961)140 (2,101)
Interest Expense 135 117 18 
(Loss) Income Before Income Taxes (1,615)454 (2,069)
Income Tax (Benefit) Expense (349)22 (371)
Segment (Loss) Income$(1,266)$432 $(1,698)
Piedmont Local Distribution Company (LDC) throughput (Dth)490,071,039 511,243,774 (21,172,735)
Duke Energy Midwest LDC throughput (MCF)84,160,162 89,025,972 (4,865,810)
Year Ended December 31, 2020, as compared to 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 $167 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs; and
a $47 million decrease due to return of EDIT to customers.
Partially offset by:
an $87 million increase due to North Carolina base rate case increases.
Operating Expenses. The variance was driven primarily by:
a $167 million decrease in cost of natural gas due to lower natural gas prices, lower volumes and decreased off-system sales natural gas costs.
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 other income related to Belews Creek and Marshall Power Generation contracts.
Income Tax (Benefit) Expense. 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. The ETRs for the years ended December 31, 2020, and 2019, were 21.6% and 4.8%, 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.
49




MD&ASEGMENT RESULTS - COMMERCIAL RENEWABLES
Commercial Renewables
 Years Ended December 31,
(in millions) 20202019
Variance
Operating Revenues $502 $487 $15 
Operating Expenses
Operation, maintenance and other285 297 (12)
Depreciation and amortization199 168 31 
Property and other taxes27 23 
Impairment charges6 — 
Total operating expenses517 488 29 
Losses on Sales of Other Assets and Other, net (1)(3)
Operating Loss(16)(4)(12)
Other Income and Expenses, net7 
Interest Expense 66 95 (29)
Loss Before Income Taxes (75)(94)19 
Income Tax Benefit (65)(115)50 
Add: Loss Attributable to Noncontrolling Interests 296 177 119 
Segment Income$286 $198 $88 
Renewable plant production, GWh 10,204 8,574 1,630 
Net proportional MW capacity in operation(a)
3,937 3,485 452 
(a)    Certain projects are included in tax-equity structures where investors have differing interests in the project's economic attributes. Amounts shown represent 100% of the tax-equity project's capacity.
Year Ended December 31, 2020, as compared to 2019
Commercial Renewables' results were favorable primarily due to growth of new project investments. Since December 31, 2019, Commercial Renewables has placed in service approximately 500 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 $39 million increase associated with the growth of new projects placed in service, partially offset by a $24 million decrease primarily within the distributed energy portfolios for lower engineering and construction activities related to delays from COVID-19.
Operating Expenses. The variance was primarily driven by a $52 million increase in operating expenses due to the growth of new projects placed in service. This was partially offset by a $24 million decrease in operating expenses 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 non-qualifying hedge activity in the prior year, higher capitalized interest in the current year for solar and wind projects in development and lower outstanding debt balances.
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 PTCs generated.
Loss Attributable to Noncontrolling Interests. The increase was driven primarily by the growth of new projects financed by tax equity.
50




MD&ASEGMENT RESULTS - OTHER
Other
 Years Ended December 31,
(in millions) 20202019
Variance
Operating Revenues $97 $95 $
Operating Expenses12 117 (105)
Losses on Sales of Other Assets and Other, net  (2)
Operating Income (Loss)85 (24)109 
Other Income and Expenses, net92 145 (53)
Interest Expense 657 705 (48)
Loss Before Income Taxes (480)(584)104 
Income Tax Benefit(162)(173)11 
Less: Net Income Attributable to Noncontrolling Interests 1 — 
Less: Preferred Dividends107 4166 
Net Loss $(426)$(452)$26 
Year Ended December 31, 2020, as compared to 2019
The variance was primarily driven by a reversal of corporate allocated severance costs, obligations to the Duke Energy Foundation in 2019, and lower state income tax expense, partially offset by lower returns on investments, higher loss experience related to captive insurance claims, the declaration of preferred stock dividends, and lower earnings on the NMC investment. 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 Duke Energy Carolinas and Duke Energy Progress partial settlements in the 2019 North Carolina retail rate case and obligations to the Duke Energy Foundation in 2019, partially offset by higher loss experience related to captive insurance claims and higher franchise tax expense.
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 primarily due to lower pricing.
Interest Expense. The variance was primarily due to lower outstanding short-term debt and lower interest rates.
Income Tax Benefit. The decrease in the tax benefit was primarily driven by a decrease in pretax losses, partially offset by an increase in state income tax benefits. The ETRs for the years ended December 31, 2020, and 2019, were 33.8% and 29.6%, respectively. The increase in the ETR was primarily due to an increase in state income tax benefits in 2020, in relation to pretax losses.
Preferred Dividends. The variance was driven by the declaration of preferred stock dividends on preferred stock issued in late 2019.
51




MD&ADUKE ENERGY CAROLINAS
SUBSIDIARY REGISTRANTS
Basis of Presentation
The results of operations and variance discussion for the Subsidiary Registrants is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.
DUKE ENERGY CAROLINAS
Results of Operations
 Years Ended December 31,
(in millions) 20202019Variance
Operating Revenues $7,015 $7,395 $(380)
Operating Expenses
Fuel used in electric generation and purchased power1,682 1,804 (122)
Operation, maintenance and other1,743 1,868 (125)
Depreciation and amortization1,462 1,388 74 
Property and other taxes299 292 
Impairment charges476 17 459 
Total operating expenses
5,662 5,369 293 
Gains on Sales of Other Assets and Other, net 1 — 
Operating Income 1,354 2,026 (672)
Other Income and Expenses, net177 151 26 
Interest Expense 487 463 24 
Income Before Income Taxes 1,044 1,714 (670)
Income Tax Expense 88 311 (223)
Net Income $956 $1,403 $(447)
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Carolinas. The below 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 20202019
Residential sales (3.1)%(2.9)%
General service sales (6.7)%(0.1)%
Industrial sales (8.0)%(1.9)%
Wholesale power sales(2.0)%(13.6)%
Joint dispatch sales(46.0)%4.7 %
Total sales(5.9)%(2.6)%
Average number of customers 1.9 %2.1 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
a $151 million decrease in fuel revenues due to lower prices and retail sales volumes;
a $149 million decrease in retail sales due to unfavorable weather in the current year;
a $73 million decrease in rider revenues primarily due to EE programs; and
a $50 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021.
Partially offset by:
a $25 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers; and
a $22 million increase in weather-normal retail sales volumes.
52




MD&ADUKE ENERGY CAROLINAS
Operating Expenses. The variance was driven primarily by:
a $459 million increase in impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021; and
a $74 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.
Partially offset by:
a $125 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 cost mitigation efforts, partially offset by higher storm restoration costs; and
a $122 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.
Other Income and Expenses, net. The variance was primarily due to higher AFUDC equity in the current year.
Interest Expense. The variance was primarily due to higher debt outstanding in the current year.
Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes.
PROGRESS ENERGY
Results of Operations
 Years Ended December 31,
(in millions) 20202019Variance
Operating Revenues $10,627 $11,202 $(575)
Operating Expenses
Fuel used in electric generation and purchased power3,479 4,024 (545)
Operation, maintenance and other2,479 2,495 (16)
Depreciation and amortization1,818 1,845 (27)
Property and other taxes545 561 (16)
Impairment charges495 (24)519 
Total operating expenses
8,816 8,901 (85)
Gains on Sales of Other Assets and Other, net 9 — 
Operating Income 1,820 2,301 (481)
Other Income and Expenses, net129 141 (12)
Interest Expense 790 862 (72)
Income Before Income Taxes1,159 1,580 (421)
Income Tax Expense113 253 (140)
Net Income 1,046 1,327 (281)
Less: Net Income Attributable to Noncontrolling Interests 1 — 
Net Income Attributable to Parent $1,045 $1,327 $(282)
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
a $567 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 $169 million decrease in wholesale revenue primarily driven by the Duke Energy Progress' CCR Settlement Agreement filed with the NCUC in January 2021 and decreased volumes at Duke Energy Progress, partially offset by increased demand at Duke Energy Florida;
a $55 million decrease in rider revenues primarily due to the Crystal River 3 uprate regulatory asset being fully recovered in 2019 at Duke Energy Florida;
a $31 million decrease in retail sales, net of fuel revenues, due to unfavorable weather at Duke Energy Progress, partially offset by favorable weather in the current year at Duke Energy Florida; and
a $17 million decrease in weather-normal retail sales volumes.
53




MD&APROGRESS ENERGY
Partially offset by:
a $147 million increase in storm revenues due to Hurricane Dorian collections at Duke Energy Florida;
a $92 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; and
a $16 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers at Duke Energy Progress.
Operating Expenses. The variance was driven primarily by:
a $545 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 demand and fuel costs at Duke Energy Florida;
a $27 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;
a $16 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 Progress and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and other cost mitigation efforts, partially offset by storm cost amortizations at Duke Energy Florida; and
a $16 million decrease in property and other taxes driven primarily by lower gross receipts taxes due to decreased fuel revenues at Duke Energy Florida.
Partially offset by:
a $519 million increase in impairment charges primarily driven by the Duke Energy Progress' CCR Settlement Agreement filed with the NCUC in January 2021, and the prior year's impairment reduction related to Citrus County CC at Duke Energy Florida.
Interest Expense. The variance was driven primarily by lower interest rates on outstanding debt at Duke Energy Progress.
Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes at Duke Energy Progress, partially offset by an increase in pretax income and a decrease in the amortization of excess deferred taxes at Duke Energy Florida.
DUKE ENERGY PROGRESS
Results of Operations
 Years Ended December 31,
(in millions) 20202019Variance
Operating Revenues $5,422 $5,957 $(535)
Operating Expenses
Fuel used in electric generation and purchased power1,743 2,012 (269)
Operation, maintenance and other1,332 1,446 (114)
Depreciation and amortization1,116 1,143 (27)
Property and other taxes167 176 (9)
Impairment charges499 12 487 
Total operating expenses
4,857 4,789 68 
Gains on Sales of Other Assets and Other, net 8 — 
Operating Income 573 1,168 (595)
Other Income and Expenses, net75 100 (25)
Interest Expense 269 306 (37)
Income Before Income Taxes 379 962 (583)
Income Tax (Benefit) Expense (36)157 (193)
Net Income $415 $805 $(390)
54




MD&ADUKE ENERGY PROGRESS
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Progress. The below 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 20202019
Residential sales (3.2)%(4.0)%
General service sales (7.4)%(1.6)%
Industrial sales (3.9)%0.6 %
Wholesale power sales(9.1)%(1.5)%
Joint dispatch sales9.9 %(0.8)%
Total sales (4.6)%(1.4)%
Average number of customers 1.8 %1.3 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
a $272 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 $180 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021, and decreased volumes, partially offset by increased capacity rates;
a $77 million decrease in retail sales due to unfavorable weather; and
a $10 million decrease in weather-normal retail sales volumes.
Partially Offset by:
a $16 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers.
Operating Expenses. The variance was driven primarily by:
a $487 million increase in impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021.
Partially Offset by:
a $269 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix;
a $114 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 Progress and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and other costs mitigation efforts; and
a $27 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 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 (Benefit) 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.
55




MD&ADUKE ENERGY FLORIDA
DUKE ENERGY FLORIDA
Results of Operations
 Years Ended December 31,
(in millions) 20202019Variance
Operating Revenues $5,188 $5,231 $(43)
Operating Expenses
Fuel used in electric generation and purchased power 1,737 2,012 (275)
Operation, maintenance and other 1,131 1,034 97 
Depreciation and amortization 702 702 — 
Property and other taxes 381 392 (11)
Impairment charges (4)(36)32 
Total operating expenses
3,947 4,104 (157)
Gains on Sales of Other Assets and Other, net 1 — 
Operating Income 1,242 1,127 115 
Other Income and Expenses, net53 48 
Interest Expense 326 328 (2)
Income Before Income Taxes 969 847 122 
Income Tax Expense 198 155 43 
Net Income $771 $692 $79 
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Florida. The below 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 year 20202019
Residential sales 3.3 %0.7 %
General service sales (5.3)%0.3 %
Industrial sales 6.2 %(4.6)%
Wholesale power sales(1.7)%28.8 %
Total sales 0.8 %1.5 %
Average number of customers 1.8 %1.6 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
a $295 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs to customers in response to the COVID-19 pandemic;
a $55 million decrease in rider revenues primarily due to full recovery of the Crystal River 3 uprate regulatory asset in 2019; and
a $7 million decrease in weather-normal retail sales volumes.
Partially offset by:
a $147 million increase in storm revenues due to recovery of Hurricane Dorian costs;
a $92 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 $46 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;
an $18 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; and
an $11 million increase in wholesale power revenues, net of fuel, primarily due to increased capacity charges.
Operating Expenses. The variance was driven primarily by:
a $275 million decrease in fuel used in electric generation and purchased power primarily due to lower fuel costs; and
an $11 million decrease in property and other taxes driven by lower gross receipts taxes due to decreased fuel revenues.
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MD&ADUKE ENERGY FLORIDA
Partially offset by:
a $97 million increase in operation, maintenance and other expense primarily due to storm cost amortizations; and
a $32 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 a decrease in the amortization of excess deferred taxes.
DUKE ENERGY OHIO
Results of Operations
 Years Ended December 31,
(in millions) 20202019Variance
Operating Revenues
Regulated electric$1,405 $1,456 $(51)
Regulated natural gas453 484 (31)
Total operating revenues1,858 1,940 (82)
Operating Expenses
Fuel used in electric generation and purchased power – regulated 339 388 (49)
Cost of natural gas 73 95 (22)
Operation, maintenance and other 463 520 (57)
Depreciation and amortization 278 265 13 
Property and other taxes 324 308 16 
Total operating expenses
1,477 1,576 (99)
Operating Income 381 364 17 
Other Income and Expenses, net16 24 (8)
Interest Expense 102 109 (7)
Income from Continuing Operations Before Income Taxes 295 279 16 
Income Tax Expense from Continuing Operations43 40 
Income from Continuing Operations252 239 13 
Loss from Discontinued Operations, net of tax (1)
Net Income$252 $238 $14 
The following table shows the percent changes in GWh sales of electricity, MCF of natural gas delivered and average number of electric and natural gas customers for Duke Energy Ohio. The below 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.
ElectricNatural Gas
Increase (Decrease) over prior year 2020201920202019
Residential sales (1.9)%(3.9)%(5.7)%(3.7)%
General service sales (7.7)%(1.9)%(8.4)%(1.2)%
Industrial sales (6.6)%(2.1)%(4.1)%(0.4)%
Wholesale electric power sales (21.3)%(4.9)%n/an/a
Other natural gas salesn/an/a(2.2)%0.7 %
Total sales (5.0)%(2.4)%(5.5)%(1.7)%
Average number of customers 1.3 %0.7 %1.1 %0.7 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
a $61 million decrease in fuel related revenues primarily due to lower prices and decreased volumes;
a $22 million decrease in retail revenue riders, primarily due to lower EE program revenues, volume impacts of the Distribution Decoupling rider, suspension of the MGP rider and higher taxes returned to customers via the Tax Cuts and Job Acts rider, partially offset by an increase in the Distribution Capital Investment rider due to increased capital investment;
a $15 million decrease in revenues due to unfavorable weather in the current year;
an $11 million decrease in other revenues due to lower OVEC sales into PJM;
57




MD&ADUKE ENERGY OHIO
a $5 million decrease in bulk power marketing sales, and
a $4 million decrease in weather-normal sales volumes.
Partially offset by:
a $23 million increase in retail pricing primarily due to rate case impacts in Kentucky; and
an $18 million increase in PJM transmission revenues as a result of increased capital spend.
Operating Expenses. The variance was driven primarily by:
a $71 million decrease in fuel expense, primarily driven by lower fuel prices, decreased volumes and lower OVEC costs; and
a $57 million decrease in operations, maintenance and other expense primarily due to a new customer program and other deferrals, the timing of EE programs and outage costs, lower employee benefit expenses and lower vegetation and pole maintenance costs.
Partially offset by:
a $16 million increase in property and other taxes primarily due to higher property taxes due to increased plant in service, partially offset by lower franchise and other taxes; and
a $13 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.
DUKE ENERGY INDIANA
Results of Operations
 Years Ended December 31,
(in millions) 20202019Variance
Operating Revenues $2,795 $3,004 $(209)
Operating Expenses
Fuel used in electric generation and purchased power767 935 (168)
Operation, maintenance and other762 790 (28)
Depreciation and amortization569 525 44 
Property and other taxes81 69 12 
Total operating expenses
2,179 2,319 (140)
Operating Income616 685 (69)
Other Income and Expenses, net37 41 (4)
Interest Expense 161 156 
Income Before Income Taxes 492 570 (78)
Income Tax Expense 84 134 (50)
Net Income $408 $436 $(28)
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Indiana. The below 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 20202019
Residential sales (2.7)%(3.9)%
General service sales (7.0)%(2.2)%
Industrial sales (7.6)%(2.6)%
Wholesale power sales 3.8 %(27.7)%
Total sales (4.3)%(6.8)%
Average number of customers 1.4 %1.2 %
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
a $193 million decrease in rider revenues primarily due to lower sales volumes and credit adjustment rider refunds;
a $179 million decrease in fuel revenues primarily due to lower fuel cost recovery driven by customer demand and fuel prices;
a $20 million decrease in weather-normal retail sales volumes driven by lower nonresidential customer demand;
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MD&ADUKE ENERGY INDIANA
a $16 million decrease in retail sales due to unfavorable weather in the current year; and
a $10 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 $214 million increase primarily due to higher pricing from the Indiana retail rate case, net of certain rider revenues.
Operating Expenses. The variance was driven primarily by:
a $168 million decrease in fuel used in electric generation and purchased power expense primarily due to lower purchased power expense, lower amortization of deferred fuel costs and lower coal and natural gas costs; and
a $28 million decrease in operation, maintenance and other primarily due to lower storm restoration costs, training costs, employee related costs and a new customer program deferral.
Partially offset by:
a $44 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; and
a $12 million increase in property and other taxes primarily due to additional plant in service and property tax true ups for prior periods.
Income Tax Expense. The decrease in income tax expense was primarily due to an increase in the amortization of excess deferred taxes and a decrease in pretax income.
PIEDMONT
Results of Operations
Years Ended December 31,
(in millions)20202019Variance
Operating Revenues$1,297 $1,381 $(84)
Operating Expenses
Cost of natural gas386 532 (146)
Operation, maintenance and other322 328 (6)
Depreciation and amortization180 172 
Property and other taxes53 45 
Impairment charges7 — 
Total operating expenses948 1,077 (129)
Operating Income349 304 45 
Equity in earnings of unconsolidated affiliates9 
Other income and expenses, net51 20 31 
Total other income and expenses60 28 32 
Interest Expense118 87 31 
Income Before Income Taxes291 245 46 
Income Tax Expense18 43 (25)
Net Income$273 $202 $71 
The following table shows the percent changes in Dth 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 year20202019
Residential deliveries(3.5)%(8.0)%
Commercial deliveries(9.1)%(4.6)%
Industrial deliveries(2.9)%1.7 %
Power generation deliveries(3.7)%(11.8)%
For resale(9.7)%4.8 %
Total throughput deliveries(4.1)%(8.2)%
Secondary market volumes(9.1)%(0.5)%
Average number of customers2.3 %1.4 %
The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The weather normalization adjustment mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.
59




MD&APIEDMONT
Year Ended December 31, 2020, as compared to 2019
Operating Revenues. The variance was driven primarily by:
a $146 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs;
a $47 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:
an $87 million increase due to North Carolina base rate case increases;
a $20 million increase due to North Carolina IMR increases; and
an $18 million increase due to addition of Belews Creek and Marshall Power Generation capacity contracts.
Operating Expenses. The variance was driven primarily by:
a $146 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:
an $8 million increase in depreciation and amortization due to additional plant in service and higher depreciation rates, partially offset by Belews Creek and Marshall Power Generation contracts and amortization of EDIT interest expense; and
an $8 million increase in property and other taxes due to prior year property tax true ups.
Other Income and Expenses, net. The variance was driven primarily by AFUDC equity and other income related to Belews Creek and Marshall Power Generation contracts.
Interest Expense. The variance was driven primarily by interest on tax reform related deferrals being returned to customers and higher debt outstanding in the current year.
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.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Preparation of financial statements requires the application of accounting policies, judgments, assumptions and estimates that can significantly affect the reported results of operations, cash flows or the amounts of assets and liabilities recognized in the financial statements. Judgments made include the likelihood of success of particular projects, possible legal and regulatory challenges, earnings assumptions on pension and other benefit fund investments and anticipated recovery of costs, especially through regulated operations. 
Management discusses these policies, estimates and assumptions with senior members of management on a regular basis and provides periodic updates on management decisions to the Audit Committee. Management believes the areas described below require significant judgment in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods.
For further information, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."
Regulated Operations Accounting
Substantially all of Duke Energy’s regulated operations meet the criteria for application of regulated operations accounting treatment. As a result, Duke Energy is required to record assets and liabilities that would not be recorded for nonregulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities are recorded when it is probable that a regulator will require Duke Energy to make refunds to customers or reduce rates to customers for previous collections or deferred revenue for costs that have yet to be incurred.
Management continually assesses whether recorded regulatory assets are probable of future recovery by considering factors such as:
applicable regulatory environment changes;
historical regulatory treatment for similar costs in Duke Energy’s jurisdictions;
litigation of rate orders;
recent rate orders to other regulated entities;
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levels of actual return on equity compared to approved rates of return on equity; and
the status of any pending or potential deregulation legislation.
If future recovery of costs ceases to be probable, asset write-offs would be recognized in operating income. Additionally, regulatory agencies can provide flexibility in the manner and timing of the depreciation of property, plant and equipment, recognition of asset retirement costs and amortization of regulatory assets, or may disallow recovery of all or a portion of certain assets.
As required by regulated operations accounting rules, significant judgment can be required to determine if an otherwise recognizable incurred cost qualifies to be deferred for future recovery as a regulatory asset. Significant judgment can also be required to determine if revenues previously recognized are for entity specific costs that are no longer expected to be incurred or have not yet been incurred and are therefore a regulatory liability.
Goodwill Impairment Assessments
Duke Energy performed its annual goodwill impairment tests for all reporting units as of August 31, 2020. Additionally, Duke Energy monitors all relevant events and circumstances during the year to determine if an interim impairment test is required. Such events and circumstances include an adverse regulatory outcome, declining financial performance and deterioration of industry or market conditions. As of August 31, 2020, all of the reporting units' estimated fair value of equity substantially exceeded the carrying value of equity. The fair values of the reporting units were calculated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries.
Estimated future cash flows under the income approach are based on Duke Energy’s internal business plan. Significant assumptions used are growth rates, future rates of return expected to result from ongoing rate regulation and discount rates. Management determines the appropriate discount rate for each of its reporting units based on the WACC for each individual reporting unit. The WACC takes into account both the after-tax cost of debt and cost of equity. A major component of the cost of equity is the current risk-free rate on 20-year U.S. Treasury bonds. In the 2020 impairment tests, Duke Energy considered implied WACCs for certain peer companies in determining the appropriate WACC rates to use in its analysis. As each reporting unit has a different risk profile based on the nature of its operations, including factors such as regulation, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company specific risk premiums. The discount rates used for calculating the fair values as of August 31, 2020, for each of Duke Energy’s reporting units ranged from 5.2% to 5.7%. The underlying assumptions and estimates are made as of a point in time. Subsequent changes, particularly changes in the discount rates, authorized regulated rates of return or growth rates inherent in management’s estimates of future cash flows, could result in future impairment charges.
One of the most significant assumptions utilized in determining the fair value of reporting units under the market approach is implied market multiples for certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of August 31.
Duke Energy primarily operates in environments that are rate-regulated. In such environments, revenue requirements are adjusted periodically by regulators based on factors including levels of costs, sales volumes and costs of capital. Accordingly, Duke Energy’s regulated utilities operate to some degree with a buffer from the direct effects, positive or negative, of significant swings in market or economic conditions. However, significant changes in discount rates over a prolonged period may have a material impact on the fair value of equity.
For further information, see Note 11 to the Consolidated Financial Statements, "Goodwill and Intangible Assets."
Asset Retirement Obligations
AROs are recognized for legal obligations associated with the retirement of property, plant and equipment at the present value of the projected liability in the period in which it is incurred, if a reasonable estimate of fair value can be made.
The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding timing of future cash flows, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change.
Obligations for nuclear decommissioning are based on site-specific cost studies. Duke Energy Carolinas and Duke Energy Progress assume prompt dismantlement of the nuclear facilities after operations are ceased. During 2020, Duke Energy Florida, closed an agreement for the accelerated decommissioning of the Crystal River Unit 3 nuclear power station after receiving approval from the NRC and FPSC. The retirement obligations for the decommissioning of Crystal River Unit 3 nuclear power station are measured based on accelerated decommissioning from 2020 continuing through 2027. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida also assume that spent fuel will be stored on-site until such time that it can be transferred to a yet to be built DOE facility.
Obligations for closure of ash basins are based upon discounted cash flows of estimated costs for site-specific plans. During 2020, the Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication challenging the Indiana Department of Environmental Management's partial approval of Duke Energy Indiana's ash pond closure plan. Due to these challenges, in 2020, Duke Energy Indiana remeasured and increased the closure estimates for certain coal ash impoundments.
For further information, see Notes 3, 4 and 9 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations."
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MD&ACRITICAL ACCOUNTING POLICIES AND ESTIMATES
Long-Lived Asset Impairment Assessments, Excluding Regulated Operations, and Equity Method Investments
Duke Energy evaluates property, plant and equipment for impairment when events or changes in circumstances (such as a significant change in cash flow projections or the determination that it is more likely than not that an asset or asset group will be sold) indicate the carrying value of such assets may not be recoverable. The determination of whether an impairment has occurred is based on an estimate of undiscounted future cash flows attributable to the assets, as compared with their carrying value.
Performing an impairment evaluation involves a significant degree of estimation and judgment in areas such as identifying circumstances that indicate an impairment may exist, identifying and grouping affected assets and developing the undiscounted future cash flows. If an impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value and recording a loss if the carrying value is greater than the fair value. Additionally, determining fair value requires probability weighting future cash flows to reflect expectations about possible variations in their amounts or timing and the selection of an appropriate discount rate. Although cash flow estimates are based on relevant information available at the time the estimates are made, estimates of future cash flows are, by nature, highly uncertain and may vary significantly from actual results.
When determining whether an asset or asset group has been impaired, management groups assets at the lowest level that has discrete cash flows. Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method. Equity method investments are assessed for impairment when conditions exist that indicate that the fair value of the investment is less than book value. It the decline in value is considered to be other than temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment.
During 2020, Duke Energy evaluated recoverability of certain renewable merchant plants due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices, capital cost of new renewables and increase renewable penetration. It was determined the assets were all recoverable as the carrying value of the assets approximated or exceeded the aggregate estimated future cash flows.
For further information, see Notes 2, 10 and 12 to the Consolidated Financial Statements, "Business Segments," "Property, Plant and Equipment" and "Investments in Unconsolidated Affiliates."
Pension and Other Post-Retirement Benefits
The calculation of pension expense, other post-retirement benefit expense and net pension and other post-retirement assets or liabilities require the use of assumptions and election of permissible accounting alternatives. Changes in assumptions can result in different expense and reported asset or liability amounts and future actual experience can differ from the assumptions. Duke Energy believes the most critical assumptions for pension and other post-retirement benefits are the expected long-term rate of return on plan assets and the assumed discount rate applied to future projected benefit payments.
Duke Energy elects to amortize net actuarial gain or loss amounts that are in excess of 10% of the greater of the market-related value of plan assets or the plan's projected benefit obligation, into net pension or other post-retirement benefit expense over the average remaining service period of active participants expected to benefit under the plan. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants is used instead of average remaining service period. Prior service cost or credit, which represents an increase or decrease in a plan's pension benefit obligation resulting from plan amendment, is amortized on a straight-line basis over the average expected remaining service period of active participants expected to benefit under the plan. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants is used instead of average remaining service period.
As of December 31, 2020, Duke Energy assumes pension and other post-retirement plan assets will generate a long-term rate of return of 6.50%. The expected long-term rate of return was developed using a weighted average calculation of expected returns based primarily on future expected returns across asset classes considering the use of active asset managers, where applicable. The asset allocation targets were set after considering the investment objective and the risk profile. Equity securities are held for their higher expected returns. Debt securities are primarily held to hedge the qualified pension liability. Real assets, return-seeking fixed income, hedge funds and other global securities are held for diversification. Investments within asset classes are diversified to achieve broad market participation and reduce the impact of individual managers on investments. 
Duke Energy discounted its future U.S. pension and other post-retirement obligations using a rate of 2.60% as of December 31, 2020. Discount rates used to measure benefit plan obligations for financial reporting purposes reflect rates at which pension benefits could be effectively settled. As of December 31, 2020, Duke Energy determined its discount rate for U.S. pension and other post-retirement obligations using a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high-quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.
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Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in Duke Energy’s pension and post-retirement plans will impact future pension expense and liabilities. Duke Energy cannot predict with certainty what these factors will be in the future. The following table presents the approximate effect on Duke Energy’s 2020 pretax pension expense, pretax other post-retirement expense, pension obligation and other post-retirement benefit obligation if a 0.25% change in rates were to occur.
Qualified and Non-Other Post-Retirement
 Qualified Pension PlansPlans
(in millions)0.25 %(0.25)%0.25 %(0.25)%
Effect on 2020 pretax pension and other post-retirement expense:   
Expected long-term rate of return$(21)$21 $(1)$
Discount rate(9)— (1)
Effect on pension and other post-retirement benefit obligation at December 31, 2020:
Discount rate(208)213 (13)14 
Duke Energy’s other post-retirement plan uses a health care cost trend rate covering both pre- and post-age 65 retired plan participants, which is comprised of a medical care cost trend rate, which reflects the near- and long-term expectation of increases in medical costs, and a prescription drug cost trend rate, which reflects the near- and long-term expectation of increases in prescription drug costs. As of December 31, 2020, the health care cost trend rate was 6.25%, trending down to 4.75% by 2028. These plans are closed to new employees.
For further information, see Note 22 to the Consolidated Financial Statements, “Employee Benefit Plans.”

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.
Among other provisions, the Tax Act lowered the corporate federal income tax rate from 35% to 21% and eliminated bonus depreciation for regulated utilities. For Duke Energy’s regulated operations, the reduction in federal income taxes will result in lower regulated customer rates. However, due to its existing NOL position and other tax credits, Duke Energy does not expect to be a significant federal cash taxpayer through at least 2029. As a result, any reduction in customer rates could cause a material reduction in consolidated cash flows from operations in the short term. Over time, the reduction in deferred tax liabilities resulting from the Tax Act will increase Duke Energy’s regulated rate base investments and customer rates. Impacts of the Tax Act to Duke Energy’s cash flows and credit metrics are subject to the regulatory actions of its state commissions and the FERC. See Note 3 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.
The Subsidiary Registrants generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Subsidiary Registrants, excluding Progress Energy, support their short-term borrowing needs through participation with Duke Energy and certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loans to affiliates participating under this arrangement. See Note 6 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for additional discussion of the money pool arrangement.
Duke Energy and the Subsidiary Registrants, excluding Progress Energy, may also use short-term debt, including commercial paper and the money pool, as a bridge to long-term debt financings. The levels of borrowing may vary significantly over the course of the year due to the timing of long-term debt financings and the impact of fluctuations in cash flows from operations. From time to time, Duke Energy’s current liabilities exceed current assets resulting from the use of short-term debt as a funding source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its businesses.
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. By November 2020, Duke Energy repaid the entire borrowing under the 364-day Term Loan.
Following March 2020, access to credit and equity markets has normalized. In addition to the March 2020 financings to address the company's liquidity position, for the year ended December 31, 2020, Duke Energy issued approximately $5.6 billion in debt and raised approximately $2.9 billion of common equity through equity forward agreements and the company's dividend reinvestment and ATM programs. A portion of the proceeds from the equity forward settlements will be used to fully repay Duke Energy's portion of the ACP construction loan of approximately $860 million. 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.
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In addition to actions taken by the company, the CARES Act, enacted in March 2020, as an emergency economic stimulus package in response to the COVID-19 pandemic, included provisions providing relief to entities with remaining AMT credit refund allowances. Through the CARES Act, Duke Energy accelerated remaining AMT credit refund allowances and claimed a refund in full for any AMT credit carryforwards. As a result, in the third quarter of 2020, Duke Energy received $572 million related to AMT credit carryforwards and $19 million of interest income. See Note 23 to the Consolidated Financial Statements, "Income Taxes," for additional information.
As of December 31, 2020, Duke Energy had approximately $259 million of cash on hand, $5.6 billion available under its $8 billion Master Credit Facility and $500 million available under the $1 billion Three-Year Revolving Credit Facility. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Refer to Notes 6 and 19 to the 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.
Credit Facilities and Registration Statements
See Note 6 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding credit facilities and shelf registration statements available to Duke Energy and the Duke Energy Registrants.
CAPITAL EXPENDITURES
Duke Energy continues to focus on reducing risk and positioning its business for future success and will invest principally in its strongest business sectors. Duke Energy’s projected capital and investment expenditures, including AFUDC debt and capitalized interest, for the next three fiscal years are included in the table below.
(in millions) 202120222023
New generation $60 $20 $85 
Regulated renewables665 710 755 
Environmental795 820 600 
Nuclear fuel425 400 380 
Major nuclear280 270 205 
Customer additions565 555 560 
Grid modernization and other transmission and distribution projects3,460 5,025 4,840 
Maintenance and other2,200 2,650 2,750 
Total Electric Utilities and Infrastructure8,450 10,450 10,175 
Gas Utilities and Infrastructure1,250 1,275 1,150 
Commercial Renewables and Other 775 1,075 750 
Total projected capital and investment expenditures $10,475 $12,800 $12,075 
DEBT MATURITIES
See Note 6 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant components of Current Maturities of Long-Term Debt on the Consolidated Balance Sheets.
DIVIDEND PAYMENTS
In 2020, Duke Energy paid quarterly cash dividends for the 94th consecutive year and expects to continue its policy of paying regular cash dividends in the future. There is no assurance as to the amount of future dividends because they depend on future earnings, capital requirements, financial condition and are subject to the discretion of the Board of Directors.
Duke Energy targets a dividend payout ratio of between 65% and 75%, based upon adjusted EPS, and expects this trend to continue through 2025. Duke Energy increased the dividend by approximately 2% annually in both 2020 and 2019, and the company remains committed to continued growth of the dividend.
Dividend and Other Funding Restrictions of Duke Energy Subsidiaries
As discussed in Note 3 to the Consolidated Financial Statements, “Regulatory Matters,” Duke Energy’s wholly owned public utility operating companies have restrictions on the amount of funds that can be transferred to Duke Energy through dividends, advances or loans as a result of conditions imposed by various regulators in conjunction with merger transactions. Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures and Articles of Incorporation, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Additionally, certain other Duke Energy subsidiaries have other restrictions, such as minimum working capital and tangible net worth requirements pursuant to debt and other agreements that limit the amount of funds that can be transferred to Duke Energy. At December 31, 2020, the amount of restricted net assets of wholly owned subsidiaries of Duke Energy that may not be distributed to Duke Energy in the form of a loan or dividend does not exceed a material amount of Duke Energy’s net assets. Duke Energy does not have any legal or other restrictions on paying common stock dividends to shareholders out of its consolidated equity accounts. Although these restrictions cap the amount of funding the various operating subsidiaries can provide to Duke Energy, management does not believe these restrictions will have a significant impact on Duke Energy’s ability to access cash to meet its payment of dividends on common stock and other future funding obligations.
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CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operations of Electric Utilities and Infrastructure and Gas Utilities and Infrastructure are primarily driven by sales of electricity and natural gas, respectively, and costs of operations. These cash flows from operations are relatively stable and comprise a substantial portion of Duke Energy’s operating cash flows. Weather conditions, working capital and commodity price fluctuations and unanticipated expenses including unplanned plant outages, storms, legal costs and related settlements can affect the timing and level of cash flows from operations.
As part of Duke Energy’s continued effort to improve its cash flows from operations and liquidity, Duke Energy works with vendors to improve terms and conditions, including the extension of payment terms. To support this effort, Duke Energy established a supply chain finance program (the “program”) in 2020, under which suppliers, at their sole discretion, may sell their receivables from Duke Energy to the participating financial institution. The financial institution administers the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. A significant deterioration in the credit quality of Duke Energy, economic downturn or changes in the financial markets could limit the financial institutions willingness to participate in the program. Duke Energy does not believe such risk would have a material impact on our cash flows from operations or liquidity, as substantially all our payments are made outside the program.
Duke Energy believes it has sufficient liquidity resources through the commercial paper markets, and ultimately, the Master Credit Facility, to support these operations. Cash flows from operations are subject to a number of other factors, including, but not limited to, regulatory constraints, economic trends and market volatility (see Item 1A, “Risk Factors,” for additional information).
DEBT ISSUANCES
Depending on availability based on the issuing entity, the credit rating of the issuing entity, and market conditions, the Subsidiary Registrants prefer to issue first mortgage bonds and secured debt, followed by unsecured debt. This preference is the result of generally higher credit ratings for first mortgage bonds and secured debt, which typically result in lower interest costs. Duke Energy Corporation primarily issues unsecured debt.
In 2021, Duke Energy anticipates issuing additional securities of $8 billion through debt capital markets. Additionally, Duke Energy may utilize other instruments, including equity-content securities, such as preferred stock. Proceeds will primarily be for the purpose of funding capital expenditures and debt maturities. See to Note 6 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt issuances in 2020.
Duke Energy’s capitalization is balanced between debt and equity as shown in the table below.
 Projected 2021Actual 2020Actual 2019
Equity 44 %44 %44 %
Debt 56 %56 %56 %
Restrictive Debt Covenants
Duke Energy’s debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio to not exceed 65% for each borrower, excluding Piedmont, and 70% for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements or sublimits thereto. As of December 31, 2020, each of the Duke Energy Registrants was in compliance with all covenants related to their debt agreements. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.
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Credit Ratings
Moody’s Investors Service, Inc. and S&P provide credit ratings for various Duke Energy Registrants. During January 2021, S&P downgraded the issuer credit rating for Duke Energy (Parent) and all of its subsidiaries senior unsecured debt, excluding Progress Energy, from A- to BBB+. Additionally, S&P downgraded the credit rating for Duke Energy (Parent) and Progress Energy senior unsecured debt from BBB+ to BBB. As part of the credit rating report, S&P affirmed their credit rating on senior secured debt for Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana, while also affirming the short-term and commercial paper credit ratings. These actions followed a December 2020, report by S&P to revise the credit rating outlook from stable to negative for Duke Energy and all its subsidiaries. As a result of the downgrade, credit rating outlooks returned to stable. Additionally, during October 2020, Moody's revised their credit rating outlook for Duke Energy (Parent), Duke Energy Carolinas and Duke Energy Progress from stable to negative and in February 2021, revised the credit rating outlook for these same registrants to review for downgrade. The following table includes Duke Energy and certain subsidiaries’ credit ratings and ratings outlook as of February 2021.
 Moody'sS&P
Duke Energy CorporationReview for DowngradeStable
Issuer Credit RatingBaa1 BBB+
Senior Unsecured DebtBaa1 BBB
Commercial PaperP-2A-2
Duke Energy Carolinas Review for Downgrade Stable
Senior Secured DebtAa2 A
Senior Unsecured DebtA1 BBB+
Progress Energy Stable Stable
Senior Unsecured DebtBaa1 BBB
Duke Energy ProgressReview for Downgrade Stable
Senior Secured DebtAa3 A
Senior Unsecured DebtA2BBB+
Duke Energy Florida Stable Stable
Senior Secured DebtA1 A
Senior Unsecured DebtA3 BBB+
Duke Energy Ohio Stable Stable
Senior Secured DebtA2 A
Senior Unsecured DebtBaa1 BBB+
Duke Energy Indiana Stable Stable
Senior Secured DebtAa3 A
Senior Unsecured DebtA2 BBB+
Duke Energy KentuckyStableStable
Senior Unsecured DebtBaa1BBB+
Piedmont Natural GasStableStable
Senior UnsecuredA3BBB+
Credit ratings are intended to provide credit lenders a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold. The Duke Energy Registrants’ credit ratings are dependent on the rating agencies’ assessments of their ability to meet their debt principal and interest obligations when they come due. If, as a result of market conditions or other factors, the Duke Energy Registrants are unable to maintain current balance sheet strength, or if earnings and cash flow outlook materially deteriorates, credit ratings could be negatively impacted.
Cash Flow Information
The following table summarizes Duke Energy’s cash flows for the two most recently completed fiscal years.
 Years Ended December 31,
(in millions) 20202019
Cash flows provided by (used in):
Operating activities $8,856 $8,209 
Investing activities (10,604)(11,957)
Financing activities 1,731 3,730 
Net decrease in cash, cash equivalents and restricted cash(17)(18)
Cash, cash equivalents and restricted cash at beginning of period 573 591 
Cash, cash equivalents and restricted cash at end of period $556 $573 
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OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows for the two most recently completed fiscal years.
 Years Ended December 31,
(in millions) 20202019Variance
Net income $1,082 $3,571 $(2,489)
Non-cash adjustments to net income 8,343 5,737 2,606 
Payments for AROs(610)(746)136 
Refund of AMT credit carryforwards572 573 (1)
Working capital (531)(926)395 
Net cash provided by operating activities $8,856 $8,209 $647 
The variance was driven primarily by:
a $117 million increase in net income after adjustment for non-cash items primarily due to increases in current year non-cash adjustments, partially offset by decreases in revenues due to lower sales volumes, accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic and lower wholesale revenue driven by the CCR Settlement Agreement;
a $395 million decrease in cash outflows from working capital primarily due to fluctuations in inventory levels, accounts payable levels and lower income taxes paid in the current year; and
a $136 million decrease in payments for AROs.
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows for the two most recently completed fiscal years.
 Years Ended December 31,
(in millions) 20202019Variance
Capital, investment and acquisition expenditures, net of return of investment capital$(10,144)$(11,435)$1,291 
Debt and equity securities, net (62)(5)(57)
Other investing items (398)(517)119 
Net cash used in investing activities $(10,604)$(11,957)$1,353 
The primary use of cash related to investing activities is capital, investment and acquisition expenditures, net of return of investment capital detailed by reportable business segment in the following table. The decrease 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.
 Years Ended December 31,
(in millions) 20202019Variance
Electric Utilities and Infrastructure$7,629 $8,258 $(629)
Gas Utilities and Infrastructure1,309 1,533 (224)
Commercial Renewables1,075 1,423 (348)
Other 264 221 43 
Total capital, investment and acquisition expenditures, net of return of investment capital$10,277 $11,435 $(1,158)
FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows for the two most recently completed fiscal years.
 Years Ended December 31,
(in millions) 20202019Variance
Issuance of common stock $2,745 $384 $2,361 
Issuance of preferred stock 1,962 (1,962)
Issuances of long-term debt, net 1,824 3,615 (1,791)
Notes payable and commercial paper (319)(380)61 
Dividends paid (2,812)(2,668)(144)
Contributions from noncontrolling interests426 843 (417)
Other financing items (133)(26)(107)
Net cash provided by financing activities $1,731 $3,730 $(1,999)
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The variance was driven primarily by:
a $1,962 million decrease in proceeds from the issuance of preferred stock;
a $1,791 million net decrease in proceeds from issuances of long-term debt primarily due to timing of issuances and redemptions of long-term debt; and
a $417 million decrease in contributions from noncontrolling interests, primarily due to $415 million related to the sale of a noncontrolling interest in the Commercial Renewables segment in 2019.
Partially offset by:
a $2,361 million increase in proceeds from the issuance of common stock, primarily from the settlement of equity forwards.
Off-Balance Sheet Arrangements
Duke Energy and certain of its subsidiaries enter into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties. These arrangements include performance guarantees, standby letters of credit, debt guarantees, surety bonds and indemnifications.
Most of the guarantee arrangements entered into by Duke Energy enhance the credit standing of certain subsidiaries, non-consolidated entities or less than wholly owned entities, enabling them to conduct business. As such, these guarantee arrangements involve elements of performance and credit risk, which are not always included on the Consolidated Balance Sheets. The possibility of Duke Energy, either on its own or on behalf of Spectra Capital through indemnification agreements entered into as part of the January 2, 2007, spin-off of Spectra Energy Corp, having to honor its contingencies is largely dependent upon the future operations of the subsidiaries, investees and other third parties, or the occurrence of certain future events.
Duke Energy performs ongoing assessments of its respective guarantee obligations to determine whether any liabilities have been incurred as a result of potential increased nonperformance risk by third parties for which Duke Energy has issued guarantees. See Note 7 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further details of the guarantee arrangements. Issuance of these guarantee arrangements is not required for the majority of Duke Energy’s operations. Thus, if Duke Energy discontinued issuing these guarantees, there would not be a material impact to the consolidated results of operations, cash flows or financial position.
Other than the guarantee arrangements discussed above and off-balance sheet debt related to non-consolidated VIEs, Duke Energy does not have any material off-balance sheet financing entities or structures. For additional information, see Note 17 to the Consolidated Financial Statements, "Variable Interest Entities."
Contractual Obligations
Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. The following table summarizes Duke Energy’s contractual cash obligations as of December 31, 2020.
 Payments Due By Period
More than
Less than2-3 years4-5 years5 years
1 year(2022 &(2024 &(2026 &
(in millions) Total(2021)2023)2025)beyond)
Long-term debt(a)
$58,134 $4,110 $8,011 $4,408 $41,605 
Interest payments on long-term debt(b)
33,858 2,099 3,898 3,577 24,284 
Finance leases(c)
1,465 186 347 170 762 
Operating leases(c)
1,861 229 414 348 870 
Purchase obligations:(d)
     
Fuel and purchased power(e)(f)
16,591 3,489 4,248 2,998 5,856 
Other purchase obligations(g)
9,916 8,850 974 52 40 
Nuclear decommissioning trust annual funding(h)
363 20 40 40 263 
Land easements(i)
400 12 24 24 340 
Total contractual cash obligations(j)(k)
$122,588 $18,995 $17,956 $11,617 $74,020 
(a)See Note 6 to the Consolidated Financial Statements, “Debt and Credit Facilities.”
(b)Interest payments on variable rate debt instruments were calculated using December 31, 2020, interest rates and holding them constant for the life of the instruments.
(c)See Note 5 to the Consolidated Financial Statements, “Leases.” Amounts in the table above include the interest component of finance leases based on the interest rates stated in the lease agreements and exclude certain related executory costs. Amounts exclude contingent lease obligations.
(d)Current liabilities, except for current maturities of long-term debt, and purchase obligations reflected on the Consolidated Balance Sheets have been excluded from the above table.
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(e)Includes firm capacity payments that provide Duke Energy with uninterrupted firm access to electricity transmission capacity and natural gas transportation contracts, as well as undesignated contracts and contracts that qualify as NPNS. For contracts where the price paid is based on an index, the amount is based on market prices at December 31, 2020, or the best projections of the index. For certain of these amounts, Duke Energy may settle on a net cash basis since Duke Energy has entered into payment netting arrangements with counterparties that permit Duke Energy to offset receivables and payables with such counterparties.
(f)Amounts exclude obligations under the OVEC PPA. See Note 17 to the Consolidated Financial Statements, "Variable Interest Entities," for additional information.
(g)Includes contracts for software, telephone, data and consulting or advisory services. Amount also includes contractual obligations for EPC costs for new generation plants, wind and solar facilities, plant refurbishments, maintenance and day-to-day contract work and commitments to buy certain products. Amount excludes certain open purchase orders for services that are provided on demand for which the timing of the purchase cannot be determined.
(h)Related to future annual funding obligations to NDTF through nuclear power stations' relicensing dates. See Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations."
(i)Related to Commercial Renewables wind facilities.
(j)Unrecognized tax benefits of $125 million are not reflected in this table as Duke Energy cannot predict when open income tax years will close with completed examinations. See Note 23 to the Consolidated Financial Statements, "Income Taxes."
(k)The table above excludes reserves for litigation, environmental remediation, asbestos-related injuries and damages claims and self-insurance claims (see Note 4 to the Consolidated Financial Statements, “Commitments and Contingencies”) because Duke Energy is uncertain as to the timing and amount of cash payments that will be required. Additionally, the table above excludes annual insurance premiums that are necessary to operate the business, including nuclear insurance (see Note 4 to the Consolidated Financial Statements, “Commitments and Contingencies”), funding of pension and other post-retirement benefit plans (see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans"), AROs, including ash management expenditures (see Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations") and regulatory liabilities (see Note 3 to the Consolidated Financial Statements, “Regulatory Matters”) because the amount and timing of the cash payments are uncertain. Also excluded are Deferred Income Taxes and ITCs recorded on the Consolidated Balance Sheets since cash payments for income taxes are determined based primarily on taxable income for each discrete fiscal year.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management Policies
The Enterprise Risk Management policy framework at Duke Energy includes strategy, operational, project execution and financial or transaction related risks. Enterprise Risk Management includes market risk as part of the financial and transaction related risks in its framework.
Duke Energy is exposed to market risks associated with commodity prices, interest rates and equity prices. Duke Energy has established comprehensive risk management policies to monitor and manage these market risks. Duke Energy’s Chief Executive Officer and Chief Financial Officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The Finance and Risk Management Committee of the Board of Directors receives periodic updates from the Chief Risk Officer and other members of management on market risk positions, corporate exposures and overall risk management activities. The Chief Risk Officer is responsible for the overall governance of managing commodity price risk, including monitoring exposure limits.
The following disclosures about market risk contain forward-looking statements that involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. See Item 1A, “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Information” for a discussion of the factors that may impact any such forward-looking statements made herein.
Commodity Price Risk
Duke Energy is exposed to the impact of market fluctuations in the prices of electricity, coal, natural gas and other energy-related products marketed and purchased as a result of its ownership of energy-related assets. Duke Energy’s exposure to these fluctuations is primarily limited by the cost-based regulation of its regulated operations as these operations are typically allowed to recover substantially all of these costs through various cost-recovery clauses, including fuel clauses, formula-based contracts, or other cost-sharing mechanisms. While there may be a delay in timing between when these costs are incurred and when they are recovered through rates, changes from year to year generally do not have a material impact on operating results of these regulated operations. Within Duke Energy’s Commercial Renewables segment, the company has limited exposure to market price fluctuations in prices of energy-related products as a result of its ownership of renewable assets.
Price risk represents the potential risk of loss from adverse changes in the market price of electricity or other energy commodities. Duke Energy’s exposure to commodity price risk is influenced by a number of factors, including contract size, length, market liquidity, market conditions, location and unique or specific contract terms. Duke Energy employs established policies and procedures to manage risks associated with these market fluctuations, which may include using various commodity derivatives, such as swaps, futures, forwards and options. For additional information, see Note 14 to the Consolidated Financial Statements, “Derivatives and Hedging.”
Hedging Strategies
Duke Energy closely monitors risks associated with commodity price changes on its future operations and, where appropriate, uses various commodity instruments such as electricity, coal and natural gas forward contracts and options to mitigate the effect of such fluctuations on operations. Duke Energy’s primary use of energy commodity derivatives is to hedge against exposure to the prices of power, fuel for generation and natural gas for customers. Additionally, Duke Energy’s Commercial Renewables business may enter into short-term or long-term hedge agreements to manage price risk associated with project output.
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MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The majority of instruments used to manage Duke Energy’s commodity price exposure are either not designated as hedges or do not qualify for hedge accounting. These instruments are referred to as undesignated contracts. Mark-to-market changes for undesignated contracts entered into by regulated businesses are reflected as regulatory assets or liabilities on the Consolidated Balance Sheets. Undesignated contracts entered into by nonregulated businesses are marked-to-market each period, with changes in the fair value of the derivative instruments reflected in earnings.
Duke Energy may also enter into other contracts that qualify for the NPNS exception. When a contract meets the criteria to qualify as NPNS, Duke Energy applies such exception. Income recognition and realization related to NPNS contracts generally coincide with the physical delivery of the commodity. For contracts qualifying for the NPNS exception, no recognition of the contract’s fair value in the Consolidated Financial Statements is required until settlement of the contract as long as the transaction remains probable of occurring.
Generation Portfolio Risks 
The Duke Energy Registrants optimize the value of their generation portfolios, which include generation assets, fuel and emission allowances. Modeled forecasts of future generation output and fuel requirements are based on forward power and fuel markets. The component pieces of the portfolio are bought and sold based on models and forecasts of generation in order to manage the economic value of the portfolio in accordance with the strategies of the business units.
For the Electric Utilities and Infrastructure segment, the generation portfolio not utilized to serve retail operations or committed load is subject to commodity price fluctuations. However, the impact on the Consolidated Statements of Operations is partially offset by mechanisms in these regulated jurisdictions that result in the sharing of net profits from these activities with retail customers.
Interest Rate Risk
Duke Energy is exposed to risk resulting from changes in interest rates as a result of its issuance or anticipated issuance of variable and fixed-rate debt and commercial paper. Duke Energy manages interest rate exposure by limiting variable-rate exposures to a percentage of total debt and by monitoring the effects of market changes in interest rates. Duke Energy also enters into financial derivative instruments, which may include instruments such as, but not limited to, interest rate swaps, swaptions and U.S. Treasury lock agreements to manage and mitigate interest rate risk exposure. See Notes 1, 6, 14 and 16 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” “Debt and Credit Facilities,” “Derivatives and Hedging,” and “Fair Value Measurements.”
Duke Energy had $7.6 billion of unhedged long- and short-term floating interest rate exposure at December 31, 2020. The impact of a 100-basis point change in interest rates on pretax income is approximately $76 million at December 31, 2020. This amount was estimated by considering the impact of the hypothetical interest rates on variable-rate securities outstanding, adjusted for interest rate hedges as of December 31, 2020.
Certain Duke Energy Registrants have variable-rate debt and manage interest rate risk by entering into financial contracts including interest rate swaps. See Notes 6 and 14 to the Consolidated Financial Statements, "Debt and Credit Facilities" and "Derivatives and Hedging." Such financial arrangements generally are indexed based upon LIBOR, which is expected to be phased out by the end of 2021. The Secured Overnight Financing Rate (SOFR) has been identified by regulators and industry participants as the preferred successor rate for U.S. dollar-based LIBOR at that time. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination and renegotiation to fully adapt to a post-LIBOR environment, and there may be uncertainty regarding the effectiveness of any such alternative index methodologies. Alternative index provisions are being assessed and incorporated into new financial arrangements that extend beyond 2021. Additionally, the progress of the phaseout is being monitored, including proposed transition relief from the FASB.
Credit Risk
Credit risk represents the loss that the Duke Energy Registrants would incur if a counterparty fails to perform under its contractual obligations. Where exposed to credit risk, the Duke Energy Registrants analyze the counterparty's financial condition prior to entering into an agreement and monitor exposure on an ongoing basis. The Duke Energy Registrants establish credit limits where appropriate in the context of contractual arrangements and monitor such limits.
To reduce credit exposure, the Duke Energy Registrants seek to include netting provisions with counterparties, which permit the offset of receivables and payables with such counterparties. The Duke Energy Registrants also frequently use master agreements with credit support annexes to further mitigate certain credit exposures. The master agreements provide for a counterparty to post cash or letters of credit to the exposed party for exposure in excess of an established threshold. The threshold amount represents a negotiated unsecured credit limit for each party to the agreement, determined in accordance with the Duke Energy Registrants’ internal corporate credit practices and standards. Collateral agreements generally also provide that the failure to post collateral when required is sufficient cause to terminate transactions and liquidate all positions.
The Duke Energy Registrants also obtain cash, letters of credit, or surety bonds from certain counterparties to provide credit support outside of collateral agreements, where appropriate, based on a financial analysis of the counterparty and the regulatory or contractual terms and conditions applicable to each transaction. See Note 14 to the Consolidated Financial Statements, “Derivatives and Hedging,” for additional information regarding credit risk related to derivative instruments.
The Duke Energy Registrants’ principal counterparties for its electric and natural gas businesses are RTOs, distribution companies, municipalities, electric cooperatives and utilities located throughout the U.S. Exposure to these entities consists primarily of amounts due to Duke Energy Registrants for delivered electricity. Additionally, there may be potential risks associated with remarketing of energy and capacity in the event of default by wholesale power customers. The Duke Energy Registrants have concentrations of receivables from certain of such entities that may affect the Duke Energy Registrants’ credit risk.
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MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Duke Energy Registrants are also subject to credit risk from transactions with their suppliers that involve prepayments or milestone payments in conjunction with outsourcing arrangements, major construction projects and certain commodity purchases. The Duke Energy Registrants’ credit exposure to such suppliers may take the form of increased costs or project delays in the event of nonperformance. The Duke Energy Registrants' frequently require guarantees or letters of credit from suppliers to mitigate this credit risk.
Credit risk associated with the Duke Energy Registrants’ service to residential, commercial and industrial customers is generally limited to outstanding accounts receivable. The Duke Energy Registrants mitigate this credit risk by requiring tariff customers to provide a cash deposit, letter of credit or surety bond until a satisfactory payment history is established, subject to the rules and regulations in effect in each retail jurisdiction at which time the deposit is typically refunded. Charge-offs for retail customers have historically been insignificant to the operations of the Duke Energy Registrants and are typically recovered through retail rates. Management continually monitors customer charge-offs, payment patterns and the impact of current economic conditions on customers' ability to pay their outstanding balance to ensure the adequacy of bad debt reserves.
In response to the COVID-19 pandemic, in March 2020, the Duke Energy Registrants announced a suspension of disconnections for nonpayment to be effective throughout the national emergency. While disconnections have resumed, the company continues to offer flexible options to customers struggling with the pandemic and the economic fallout, including extended payment arrangements to satisfy delinquent balances. In addition, the Duke Energy Registrants are monitoring the effects of the resultant economic slowdown on counterparties’ abilities to perform under their contractual obligations. The Duke Energy Registrants have observed a significant increase in utility account arrears, which were roughly double historical levels as of December 31, 2020. There is an expectation of an increase in charge-offs in the future. See Notes 1, 3 and 18 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies," "Regulatory Matters" and "Revenue," respectively, for more information. Duke Energy Ohio and Duke Energy Indiana sell certain of their accounts receivable and related collections through CRC, a Duke Energy consolidated VIE. Losses on collection are first absorbed by the equity of CRC and next by the subordinated retained interests held by Duke Energy Ohio, Duke Energy Kentucky and Duke Energy Indiana. See Note 17 to the Consolidated Financial Statements, “Variable Interest Entities.”
The Duke Energy Registrants provide certain non-tariff services, primarily to large commercial and industrial customers in which incurred costs, including invested capital, are intended to be recovered from the individual customer and therefore are not subject to rate recovery in the event of customer default. Customer creditworthiness is assessed prior to entering into these transactions. Credit concentration related to these transactions exists for certain of these customers.
Duke Energy’s Commercial Renewables segment enters into long-term agreements with certain creditworthy buyers that may not include the right to call for collateral in the event of a credit rating downgrade. Credit concentration exists to certain counterparties on these agreements, including entities that could be subject to wildfire liability. Additionally, Commercial Renewables may invest in projects for which buyers are below investment grade, although such buyers are required to post negotiated amounts of credit support. Also, power sales agreements and/or hedges of project output are generally for an initial term that does not cover the entire life of the asset. As a result, Commercial Renewables is exposed to market price risk and credit risk related to these agreements.
Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. See Note 4 to the Consolidated Financial Statements, "Commitments and Contingencies" for information on asbestos-related injuries and damages claims.
The Duke Energy Registrants also have credit risk exposure through issuance of performance and financial guarantees, letters of credit and surety bonds on behalf of less than wholly owned entities and third parties. Where the Duke Energy Registrants have issued these guarantees, it is possible that they could be required to perform under these guarantee obligations in the event the obligor under the guarantee fails to perform. Where the Duke Energy Registrants have issued guarantees related to assets or operations that have been disposed of via sale, they attempt to secure indemnification from the buyer against all future performance obligations under the guarantees. See Note 7 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further information on guarantees issued by the Duke Energy Registrants.
Based on the Duke Energy Registrants’ policies for managing credit risk, their exposures and their credit and other reserves, the Duke Energy Registrants do not currently anticipate a materially adverse effect on their consolidated financial position or results of operations as a result of nonperformance by any counterparty.
Marketable Securities Price Risk
As described further in Note 15 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” Duke Energy invests in debt and equity securities as part of various investment portfolios to fund certain obligations. The vast majority of investments in equity securities are within the NDTF and assets of the various pension and other post-retirement benefit plans.
Pension Plan Assets
Duke Energy maintains investments to facilitate funding the costs of providing non-contributory defined benefit retirement and other post-retirement benefit plans. These investments are exposed to price fluctuations in equity markets and changes in interest rates. The equity securities held in these pension plans are diversified to achieve broad market participation and reduce the impact of any single investment, sector or geographic region. Duke Energy has established asset allocation targets for its pension plan holdings, which take into consideration the investment objectives and the risk profile with respect to the trust in which the assets are held. See Note 22 to the Consolidated Financial Statements, “Employee Benefit Plans,” for additional information regarding investment strategy of pension plan assets.
A significant decline in the value of plan asset holdings could require Duke Energy to increase funding of its pension plans in future periods, which could adversely affect cash flows in those periods. Additionally, a decline in the fair value of plan assets, absent additional cash contributions to the plan, could increase the amount of pension cost required to be recorded in future periods, which could adversely affect Duke Energy’s results of operations in those periods.
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MD&AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Nuclear Decommissioning Trust Funds
As required by the NRC, NCUC, PSCSC and FPSC, subsidiaries of Duke Energy maintain trust funds to fund the costs of nuclear decommissioning. As of December 31, 2020, these funds were invested primarily in domestic and international equity securities, debt securities, cash and cash equivalents and short-term investments. Per the NRC, Internal Revenue Code, NCUC, PSCSC and FPSC requirements, these funds may be used only for activities related to nuclear decommissioning. These investments are exposed to price fluctuations in equity markets and changes in interest rates. Duke Energy actively monitors its portfolios by benchmarking the performance of its investments against certain indices and by maintaining, and periodically reviewing, target allocation percentages for various asset classes.
Accounting for nuclear decommissioning recognizes that costs are recovered through retail and wholesale rates; therefore, fluctuations in investment prices do not materially affect the Consolidated Statements of Operations, as changes in the fair value of these investments are primarily deferred as regulatory assets or regulatory liabilities pursuant to Orders by the NCUC, PSCSC, FPSC and FERC. Earnings or losses of the funds will ultimately impact the amount of costs recovered through retail and wholesale rates. See Note 9 to the Consolidated Financial Statements, “Asset Retirement Obligations,” for additional information regarding nuclear decommissioning costs. See Note 15 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” for additional information regarding NDTF assets.
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.
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.
The following sections outline various proposed and recently enacted legislation and regulations that may impact the Duke Energy Registrants. Refer to Note 3 to the Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.
Coal Combustion Residuals
In April 2015, EPA published a rule to regulate the disposal of CCR from electric utilities as solid waste. The federal regulation classifies CCR as nonhazardous waste and allows for beneficial use of CCR with some restrictions. The regulation applies to all new and existing landfills, new and existing surface impoundments receiving CCR and existing surface impoundments located at stations generating electricity (regardless of fuel source), which were no longer receiving CCR but contained liquids as of the effective date of the rule. The rule establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures to ensure the safe disposal and management of CCR.
On July 17, 2018, EPA issued a final rule (Phase 1, Part 1) revising certain closure deadlines and groundwater protection standards in the CCR rule. The rule does not change the primary requirements for groundwater monitoring, corrective action, inspections and maintenance, and closure, and thus does not materially affect Duke Energy’s coal ash basin closure plans or compliance obligations under the CCR rule. On October 22, 2018, a coalition of environmental groups filed a petition for review in the U.S. Court of Appeals for the District of Columbia (D.C. Circuit Court) challenging EPA's final Phase 1, Part 1 revisions to the CCR rule. On March 13, 2019, the D.C. Circuit Court issued an order in the Phase 1, Part 1 litigation granting EPA’s motion to remand the rule without vacatur. To date, EPA has finalized two notice-and-comment rulemakings to implement the court’s decision on remand. The “Part A” rule, which was promulgated on August 28, 2020, establishes an April 11, 2021 deadline to cease placement of CCR and non-CCR waste streams into unlined ash basins and initiate closure, and the “Part B” rule, which was promulgated on November 12, 2020, establishes procedures to allow facilities to request approval to operate an existing CCR surface impoundment with an alternate liner. A future rulemaking is expected to address legacy impoundments. Duke Energy does not expect these rulemakings to have a material impact in light of its progress in closing CCR units across the enterprise.
In addition to the requirements of the federal CCR rule, CCR landfills and surface impoundments will continue to be regulated by the states. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions and via wholesale contracts, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. For more information, see Notes 3 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations," respectively.
Coal Ash Management Act of 2014
AROs recorded on the Duke Energy Carolinas and Duke Energy Progress Consolidated Balance Sheets at December 31, 2020, and December 31, 2019, include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of the Coal Ash Act, the EPA CCR rule and other agreements. The Coal Ash Act includes a variance procedure for compliance deadlines and other issues surrounding the management of CCR and CCR surface impoundments and prohibits cost recovery in customer rates for unlawful discharge of ash impoundment waters occurring after January 1, 2014. The Coal Ash Act leaves the decision on cost recovery determinations related to closure of ash impoundments to the normal ratemaking processes before utility regulatory commissions.
Consistent with the requirements of the Coal Ash Act, Duke Energy previously submitted comprehensive site assessments and groundwater corrective plans to NCDEQ. In addition, on December 31, 2019, Duke Energy submitted updated groundwater corrective action plans and site-specific coal ash impoundment closure plans to NCDEQ.
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On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments at the Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro facilities in North Carolina. On April 26, 2019, Duke Energy Carolinas and Duke Energy Progress filed Petitions for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's April 1 Order. On December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins at these sites with ash moved to on-site lined landfills, including two at Allen, one at Belews Creek, one at Mayo, one at Roxboro, and two at Rogers. At the two remaining basins at Marshall and Roxboro, uncapped basin ash will be excavated and moved to lined landfills. Those portions of the basins at Marshall and Roxboro, which were previously filled with ash and on which permitted facilities were constructed, will not be disturbed and will be closed pursuant to other state regulations.
Following NCDEQ's April 1 Order, Duke Energy estimated the incremental undiscounted cost to close the nine remaining impoundments by excavation would be approximately $4 billion to $5 billion, potentially increasing the total estimated costs to permanently close all ash basins in North Carolina and South Carolina to $9.5 billion to $10.5 billion. The settlement lowers the estimated total undiscounted cost to close the nine remaining basins by excavation by approximately $1.5 billion as compared to Duke Energy’s original estimate that followed the order. As a result, the estimated total cost to permanently close all ash basins in North Carolina and South Carolina is approximately $8 billion to $9 billion of which approximately $2.8 billion has been spent through 2020. The majority of the remaining spend is expected to occur over the next 15 to 20 years.
Duke Energy has completed excavation of all coal ash at the Riverbend, Dan River and Sutton plants
For further information on ash basins and recovery, see Notes 3 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and “Asset Retirement Obligations,” respectively.
Other Environmental Regulations
The Duke Energy Registrants are also subject to various federal, state and local laws regarding air and water quality, hazardous and solid waste disposal and other environmental matters, including the following:
CWA
Steam Effluent Limitation Guidelines
Cross-State Air Pollution Rule
Duke Energy continues to comply with enacted environmental statutes and regulations even as certain of these regulations are in various stages of clarification, revision or legal challenge. The Duke Energy Registrants cannot predict the outcome of these 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 impose more stringent nitrogen oxide 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.
North Carolina Clean Energy Plan (NCCEP)
On October 29, 2018, Governor Roy Cooper signed an executive order calling for a 40% reduction in statewide greenhouse gas emissions by 2025. The order tasked the NCDEQ with developing a clean energy plan for North Carolina. In October 2019, the NCDEQ published its plan, which includes the reduction of electric power sector greenhouse gas emissions by 70% below 2005 levels by 2030 and attainment of carbon neutrality by 2050, fostering long-term energy affordability and price stability for North Carolina’s residents and businesses by modernizing regulatory and planning processes, and acceleration of clean energy innovation to create economic opportunities for both rural and urban areas. Duke Energy Carolinas and Duke Energy Progress are significant stakeholders in this process. The magnitude and timing of investment in response to the NCCEP will depend on the speed of adoption and consensus developed by other stakeholders on how best to successfully transition to this clean energy future while establishing a regulatory model that incentivizes business decisions that benefit both the utilities and the public. The Duke Energy Registrants cannot predict the outcome of this matter.
Global Climate Change
On September 17, 2019, Duke Energy announced an updated climate strategy with new goals of at least 50% reduction in carbon emissions from electric generation by 2030 and net-zero carbon emissions from electric generation by 2050. On October 9, 2020, Duke Energy announced a new goal to achieve net-zero methane emissions from its natural gas distribution system by 2030. Timelines and initiatives, as well as implementation of new technologies, will vary in each state in which the company operates and will involve collaboration with regulators, customers and other stakeholders.
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The Duke Energy Registrants’ GHG emissions consist primarily of CO2 and result primarily from operating a fleet of coal-fired and natural gas-fired power plants. Future levels of CO2 emissions will be influenced by variables that include economic conditions that affect electricity demand, fuel prices, market prices, compliance with new or existing regulations and the technologies deployed to generate the electricity necessary to meet customer demand.
The Duke Energy Registrants have taken actions that have resulted in a reduction of CO2 emissions over time. Actions have included the retirement of 51 coal-fired electric generating units with a combined generating capacity of 6,539 MW. Much of that capacity has been replaced with state-of-the-art highly efficient natural gas-fired generation that produces far fewer CO2 emissions per unit of electricity generated. Duke Energy also has made investments to expand its portfolio of wind and solar projects, increase EE offerings and ensure continued operations of its zero-CO2 emissions hydropower and nuclear plants. These efforts have diversified its system and significantly reduced CO2 emissions. Between 2005 and 2020, the Duke Energy Registrants have collectively lowered the CO2 emissions from their electricity generation by more than 40%, which potentially lowers the exposure to any future mandatory CO2 emission reduction requirements or carbon tax, whether as a result of federal legislation, EPA regulation, state regulation or other as yet unknown emission reduction requirement. Duke Energy will continue to explore the use of currently available and commercially demonstrated technology to reduce CO2 emissions, including EE, wind, solar, storage, carbon capture, utilization and sequestration, the use of hydrogen and other low-carbon fuels and advanced nuclear. Duke Energy will adjust to evolving and innovative technologies in a way that balances the reliability and affordability that meet regulatory requirements and customer demands. Under any future scenario involving mandatory CO2 limitations, the Duke Energy Registrants would plan to seek recovery of their compliance costs through appropriate regulatory mechanisms.
The Duke Energy Registrants recognize that scientists associate severe weather events with increasing levels of GHGs in the atmosphere and forecast the possibility these weather events could have a material impact on future results of operations should they occur more frequently and with greater severity. However, the uncertain nature of potential changes in extreme weather events (such as increased frequency, duration and severity), the long period of time over which any potential changes might take place and the inability to predict potential changes with any degree of accuracy, make estimating with any certainty any potential future financial risk to the Duke Energy Registrants’ operations difficult.
The Duke Energy Registrants annually, biennially or triennially prepare lengthy, forward-looking IRPs. These detailed, highly technical plans are based on the company’s thorough analysis of numerous factors that can impact the cost of producing and delivering electricity that influence long-term resource planning decisions. The IRP process helps to evaluate a range of options, taking into account stakeholder input as well as forecasts of future electricity demand, fuel prices, transmission improvements, new generating capacity, integration of renewables, energy storage, EE and demand response initiatives. The IRP process also helps evaluate potential environmental and regulatory scenarios to better mitigate policy and economic risks. The IRPs we file with regulators look out 10 to 20 years depending on the jurisdiction.
For a number of years, the Duke Energy Registrants have included a price on CO2 emissions in their IRP planning process to account for the potential regulation of CO2 emissions. Incorporating a price on CO2 emissions in the IRPs allows for the evaluation of existing and future resource needs against potential climate change policy risk in the absence of policy certainty. One of the challenges with using a CO2 price, especially in the absence of a clear and certain policy, is determining the appropriate price to use. To address this uncertainty and ensure the company remains agile, the Duke Energy Registrants typically use a range of potential CO2 prices to reflect a range of potential policy outcomes.
The Duke Energy Registrants routinely take steps to reduce the potential impact of severe weather events on their electric transmission and distribution systems and natural gas facilities. The steps include modernizing the electric grid through smart meters, storm hardening, self-healing and targeted undergrounding and applying lessons learned from previous storms to restoration efforts. The Duke Energy Registrants’ electric generating facilities and natural gas facilities are designed to withstand extreme weather events without significant damage. The Duke Energy Registrants maintain inventories of coal, oil and liquified natural gas to mitigate the effects of any potential short-term disruption in fuel supply so they can continue to provide customers with an uninterrupted supply of electricity and/or natural gas.
State Legislation
In 2017, the North Carolina General Assembly passed House Bill 589, and it was subsequently signed into law by the governor. The law includes, among other things, overall reform of the application of PURPA for new solar projects in the state, a requirement for the utility to procure renewable energy through a competitive bidding process administered by an independent third party and recovery of costs related to the competitive bidding process through a competitive procurement rider. The process used was approved by the NCUC to select projects that would deliver the lowest cost of renewable energy for customers.
In accordance with the provisions of House Bill 589, Duke Energy estimates the total competitive procurement will be approximately 1,185 to 1,385 MW. Duke Energy will own or purchase at least 1,185 MW of energy from renewable energy projects under the North Carolina’s CPRE program. Two tranches of the CPRE process have been completed with contracts executed for winning proposals. Five Duke Energy projects, totaling about 190 MW, were selected during the first tranche and none were selected during the second tranche. Two of the Duke Energy winning projects achieved commercial operation in December 2020 and the remaining three will be online by the third quarter 2021. The need for a third tranche of CPRE will be determined prior to November 2021.
In various states, legislation is being considered to allow third-party sales of electricity. Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs. The Duke Energy Registrants cannot predict the outcome of these initiatives.
New Accounting Standards
See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Quantitative and Qualitative Disclosures About Market Risk.”
74




FINANCIAL STATEMENTS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Duke Energy 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows 
Consolidated Statements of Changes in Equity
Duke Energy Carolinas 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Progress Energy 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Duke Energy Progress 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Duke Energy Florida 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Duke Energy Ohio 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Duke Energy Indiana 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Piedmont 
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
75




FINANCIAL STATEMENTS
Combined Notes to Consolidated Financial Statements 
Note 1 – Summary of Significant Accounting Policies
Note 2 – Business Segments
Note 3 – Regulatory Matters
Note 4 – Commitments and Contingencies
Note 5 – Leases
Note 6 – Debt and Credit Facilities
Note 7 – Guarantees and Indemnifications
Note 8 – Joint Ownership of Generating and Transmission Facilities
Note 9 – Asset Retirement Obligations
Note 10 – Property, Plant and Equipment
Note 11 – Goodwill and Intangible Assets
Note 12 – Investments in Unconsolidated Affiliates
Note 13 – Related Party Transactions
Note 14 – Derivatives and Hedging
Note 15 – Investments in Debt and Equity Securities
Note 16 – Fair Value Measurements
Note 17 – Variable Interest Entities
Note 18 – Revenue
Note 19 – Stockholders' Equity
Note 20 – Severance
Note 21 – Stock-Based Compensation
Note 22 – Employee Benefit Plans
Note 23 – Income Taxes
Note 24 – Other Income and Expenses, Net
Note 25 – Subsequent Events

76




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to regulation by federal and state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric and natural gas distribution companies. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $14 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

77




REPORTS
We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP

Charlotte, North Carolina
February 25, 2021 

We have served as the Company's auditor since 1947.

78




FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
(in millions, except per share amounts)202020192018
Operating Revenues
Regulated electric$21,461 $22,615 $22,097 
Regulated natural gas1,642 1,759 1,773 
Nonregulated electric and other765 705 651 
Total operating revenues23,868 25,079 24,521 
Operating Expenses
Fuel used in electric generation and purchased power6,051 6,826 6,831 
Cost of natural gas460 627 697 
Operation, maintenance and other5,788 6,066 6,463 
Depreciation and amortization4,705 4,548 4,074 
Property and other taxes1,337 1,307 1,280 
Impairment charges984 (8)402 
Total operating expenses19,325 19,366 19,747 
Gains (Losses) on Sales of Other Assets and Other, net10 (4)(89)
Operating Income4,553 5,709 4,685 
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates(2,005)162 83 
Other income and expenses, net453 430 399 
Total other income and expenses(1,552)592 482 
Interest Expense2,162 2,204 2,094 
Income From Continuing Operations Before Income Taxes839 4,097 3,073 
Income Tax (Benefit) Expense From Continuing Operations(236)519 448 
Income From Continuing Operations1,075 3,578 2,625 
Income (Loss) From Discontinued Operations, net of tax7 (7)19 
Net Income1,082 3,571 2,644 
Add: Net Loss Attributable to Noncontrolling Interests295 177 22 
Net Income Attributable to Duke Energy Corporation
1,377 3,748 2,666 
Less: Preferred Dividends
107 41 — 
Net Income Available to Duke Energy Corporation Common Stockholders
$1,270 $3,707 $2,666 
Earnings Per Share Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted$1.71 $5.07 $3.73 
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted$0.01 $(0.01)$0.03 
Net income available to Duke Energy Corporation common stockholders
Basic and Diluted$1.72 $5.06 $3.76 
Weighted average shares outstanding
Basic737 729 708 
Diluted738 729 708 
See Notes to Consolidated Financial Statements
79




FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,
(in millions)202020192018
Net Income $1,082 $3,571 $2,644 
Other Comprehensive (Loss) Income, net of tax(a)
Pension and OPEB adjustments6 9 (6)
Net unrealized losses on cash flow hedges(138)(47)(10)
Reclassification into earnings from cash flow hedges 11 6 6 
Unrealized gains (losses) on available-for-sale securities 3 8 (3)
Other Comprehensive Loss, net of tax(118)(24)(13)
Comprehensive Income964 3,547 2,631 
Add: Comprehensive Loss Attributable to Noncontrolling Interests306 177 22 
Comprehensive Income Attributable to Duke Energy Corporation
1,270 3,724 2,653 
Less: Preferred Dividends
107 41 — 
Comprehensive Income Available to Duke Energy Corporation Common Stockholders
$1,163 $3,683 $2,653 
(a)     Net of income tax impacts of approximately $35 million for the year ended December 31, 2020. Tax impacts are immaterial for other periods presented.
See Notes to Consolidated Financial Statements
80

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
(in millions)20202019
ASSETS
Current Assets
Cash and cash equivalents$259 $311 
Receivables (net of allowance for doubtful accounts of $29 at 2020 and $22 at 2019)
1,009 1,066 
Receivables of VIEs (net of allowance for doubtful accounts of $117 at 2020 and $54 at 2019)
2,144 1,994 
Inventory3,167 3,232 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)
1,641 1,796 
Other (includes $296 at 2020 and $242 at 2019 related to VIEs)
462 764 
Total current assets8,682 9,163 
Property, Plant and Equipment
Cost155,580 147,654 
Accumulated depreciation and amortization(48,827)(45,773)
Generation facilities to be retired, net29 246 
Net property, plant and equipment106,782 102,127 
Other Noncurrent Assets
Goodwill19,303 19,303 
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)
12,421 13,222 
Nuclear decommissioning trust funds9,114 8,140 
Operating lease right-of-use assets, net1,524 1,658 
Investments in equity method unconsolidated affiliates961 1,936 
Other (includes $81 at 2020 and $110 at 2019 related to VIEs)
3,601 3,289 
Total other noncurrent assets46,924 47,548 
Total Assets$162,388 $158,838 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$3,144 $3,487 
Notes payable and commercial paper2,873 3,135 
Taxes accrued482 392 
Interest accrued537 565 
Current maturities of long-term debt (includes $472 at 2020 and $216 at 2019 related to VIEs)
4,238 3,141 
Asset retirement obligations718 881 
Regulatory liabilities1,377 784 
Other2,936 2,367 
Total current liabilities16,305 14,752 
Long-Term Debt (includes $3,535 at 2020 and $3,997 at 2019 related to VIEs)
55,625 54,985 
Other Noncurrent Liabilities
Deferred income taxes9,244 8,878 
Asset retirement obligations12,286 12,437 
Regulatory liabilities15,029 15,264 
Operating lease liabilities1,340 1,432 
Accrued pension and other post-retirement benefit costs969 934 
Investment tax credits687 624 
Other (includes $316 at 2020 and $228 at 2019 related to VIEs)
1,719 1,581 
Total other noncurrent liabilities41,274 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; 769 million shares outstanding at 2020 and 733 million shares outstanding at 2019
1 1 
Additional paid-in capital43,767 40,881 
Retained earnings2,471 4,108 
Accumulated other comprehensive loss(237)(130)
Total Duke Energy Corporation stockholders' equity
47,964 46,822 
Noncontrolling interests1,220 1,129 
Total equity
49,184 47,951 
Total Liabilities and Equity$162,388 $158,838 
See Notes to Consolidated Financial Statements
81

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$1,082 $3,571 $2,644 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)5,486 5,176 4,696 
Equity in losses (earnings) of unconsolidated affiliates2,005 (162)(83)
Equity component of AFUDC(154)(139)(221)
(Gains) Losses on sales of other assets(10)4 88 
Impairment charges984 (8)402 
Deferred income taxes54 806 1,079 
Payments for asset retirement obligations(610)(746)(533)
Payment for the disposal of other assets — (105)
Provision for rate refunds(22)60 425 
Refund of AMT credit carryforwards572 573 — 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions63 (48)22 
Receivables(56)78 (345)
Inventory66 (122)156 
Other current assets205 10 (721)
Increase (decrease) in
Accounts payable(21)(164)479 
Taxes accrued117 (224)23 
Other current liabilities(65)172 270 
Other assets(398)(559)(1,062)
Other liabilities(442)(69)(28)
Net cash provided by operating activities8,856 8,209 7,186 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(9,907)(11,122)(9,389)
Contributions to equity method investments(370)(324)(416)
Return of investment capital133 11 137 
Purchases of debt and equity securities(8,011)(3,348)(3,762)
Proceeds from sales and maturities of debt and equity securities7,949 3,343 3,747 
Other(398)(517)(377)
Net cash used in investing activities(10,604)(11,957)(10,060)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt6,330 7,091 5,299 
Issuance of preferred stock 1,962 — 
Issuance of common stock 2,745 384 1,838 
Payments for the redemption of long-term debt(4,506)(3,476)(2,906)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days3,009 397 472 
Payments for the redemption of short-term debt with original maturities greater than 90 days(2,147)(479)(282)
Notes payable and commercial paper(1,181)(298)981 
Contributions from noncontrolling interests426 843 41 
Dividends paid(2,812)(2,668)(2,471)
Other(133)(26)(12)
Net cash provided by financing activities1,731 3,730 2,960 
Net (decrease) increase in cash, cash equivalents, and restricted cash(17)(18)86 
Cash, cash equivalents, and restricted cash at beginning of period
573 591 505 
Cash, cash equivalents, and restricted cash at end of period
$556 $573 $591 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$2,186 $2,195 $2,086 
Cash received from income taxes(585)(651)(266)
Significant non-cash transactions:
Accrued capital expenditures1,116 1,356 1,112 
Non-cash dividends110 108 107 
See Notes to Consolidated Financial Statements
82

FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Duke Energy Corporation Stockholders'
Accumulated Other Comprehensive
Income (Loss)
Net UnrealizedTotal
NetGains (Losses)Duke Energy
CommonAdditionalLosses onon Available-Pension andCorporation
PreferredStockCommonPaid-inRetainedCash Flowfor-Sale-OPEB Stockholders'NoncontrollingTotal
(in millions) StockSharesStockCapitalEarningsHedgesSecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2017$— 700 $1 $38,792 $3,013 $(10)$12 $(69)$41,739 $(2)$41,737 
Net income— — — — 2,666 — — — 2,666 (22)2,644 
Other comprehensive loss— — — — — (4)(3)(6)(13)— (13)
Common stock issuances, including dividend reinvestment and employee benefits — 27 — 2,003 — — — — 2,003 — 2,003 
Common stock dividends — — — — (2,578)— — — (2,578)— (2,578)
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (1)(1)
Other(a)
— — — — 12 — (12)— — 42 42 
Balance at December 31, 2018$— 727 $1 $40,795 $3,113 $(14)$(3)$(75)$43,817 $17 $43,834 
Net income— — — — 3,707 — — — 3,707 (177)3,530 
Other comprehensive (loss) Income— — — — — (41)8 9 (24)— (24)
Preferred stock, Series A, issuances, net of issuance costs(b)
973 — — — — — — — 973 — 973 
Preferred stock, Series B, issuances, net of issuance costs(b)
989 — — — — — — — 989 — 989 
Common stock issuances, including dividend reinvestment and employee benefits — 6 — 552 — — — — 552 — 552 
Common stock dividends — — — — (2,735)— — — (2,735)— (2,735)
Sale of noncontrolling interest(c)
— — — (466)— 10 — — (456)863 407 
Contribution from noncontrolling interest (f)
— — — — — — — — — 428 428 
Distributions to noncontrolling interest in subsidiaries— — — — — — — — — (4)(4)
Other(d)
— — — — 23 (6)(2)(16)(1)2 1 
Balance at December 31, 2019$1,962 733 $1 $40,881 $4,108 $(51)$3 $(82)$46,822 $1,129 $47,951 
Net income     1,270    1,270 (295)975 
Other comprehensive (loss) income     (116)3 6 (107)(11)(118)
Common stock issuances, including dividend reinvestment and employee benefits  36  2,902     2,902  2,902 
Common stock dividends     (2,815)   (2,815) (2,815)
Contribution from noncontrolling interest, net of transaction costs(f)
   (17)    (17)426 409 
Distributions to noncontrolling interests in subsidiaries         (30)(30)
Other(e)
   1 (92)   (91)1 (90)
Balance at December 31, 2020$1,962 769 $1 $43,767 $2,471 $(167)$6 $(76)$47,964 $1,220 $49,184 
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information. Amount in Noncontrolling Interests primarily relates to tax equity financing activity in the Commercial Renewables segment.
(b)     Duke Energy issued 40 million depositary shares of preferred stock, Series A, in the first quarter of 2019 and 1 million shares of preferred stock, Series B, in the third quarter of 2019.
(c)    See Note 1 for additional discussion of the transaction.
(d)    Amounts in Retained Earnings and AOCI 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.
(e)     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.
(f)    Relates to tax equity financing activity in the Commercial Renewables segment.
See Notes to Consolidated Financial Statements
83




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $3.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
84




REPORTS

We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1947.

85



FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$7,015 $7,395 $7,300 
Operating Expenses   
Fuel used in electric generation and purchased power1,682 1,804 1,821 
Operation, maintenance and other1,743 1,868 2,130 
Depreciation and amortization1,462 1,388 1,201 
Property and other taxes299 292 295 
Impairment charges476 17 192 
Total operating expenses5,662 5,369 5,639 
Gains (Losses) on Sales of Other Assets and Other, net1 — (1)
Operating Income1,354 2,026 1,660 
Other Income and Expenses, net177 151 153 
Interest Expense487 463 439 
Income Before Income Taxes1,044 1,714 1,374 
Income Tax Expense88 311 303 
Net Income$956 $1,403 $1,071 
Other Comprehensive Income, net of tax   
Reclassification into earnings from cash flow hedges — 1 
Other Comprehensive Income, net of tax — 1 
Comprehensive Income$956 $1,403 $1,072 
See Notes to Consolidated Financial Statements
86



FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$21 $18 
Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019)
247 324 
Receivables of VIEs (net of allowance for doubtful accounts of $22 at 2020 and $7 at 2019)
696 642 
Receivables from affiliated companies124 114 
Inventory1,010 996 
Regulatory assets473 550 
Other20 21 
Total current assets2,591 2,665 
Property, Plant and Equipment  
Cost50,640 48,922 
Accumulated depreciation and amortization(17,453)(16,525)
Net property, plant and equipment33,187 32,397 
Other Noncurrent Assets
Regulatory assets2,996 3,360 
Nuclear decommissioning trust funds4,977 4,359 
Operating lease right-of-use assets, net110 123 
Other1,187 1,149 
Total other noncurrent assets9,270 8,991 
Total Assets$45,048 $44,053 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$1,000 $954 
Accounts payable to affiliated companies199 210 
Notes payable to affiliated companies506 29 
Taxes accrued76 46 
Interest accrued117 115 
Current maturities of long-term debt506 458 
Asset retirement obligations264 206 
Regulatory liabilities473 255 
Other546 611 
Total current liabilities3,687 2,884 
Long-Term Debt11,412 11,142 
Long-Term Debt Payable to Affiliated Companies300 300 
Other Noncurrent Liabilities  
Deferred income taxes3,842 3,921 
Asset retirement obligations5,086 5,528 
Regulatory liabilities6,535 6,423 
Operating lease liabilities97 102 
Accrued pension and other post-retirement benefit costs73 84 
Investment tax credits236 231 
Other626 627 
Total other noncurrent liabilities16,495 16,916 
Commitments and Contingencies
Equity  
Member's equity13,161 12,818 
Accumulated other comprehensive loss(7)(7)
Total equity13,154 12,811 
Total Liabilities and Equity$45,048 $44,053 
See Notes to Consolidated Financial Statements
87



FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$956 $1,403 $1,071 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)1,731 1,671 1,487 
Equity component of AFUDC(62)(42)(73)
(Gains) Losses on sales of other assets (1)— 1 
Impairment charges476 17 192 
Deferred income taxes(260)133 305 
Payments for asset retirement obligations(162)(278)(230)
Provision for rate refunds(5)36 182 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(4)(8)2 
Receivables52 (21)(86)
Receivables from affiliated companies(10)68 (87)
Inventory(14)(48)25 
Other current assets209 (73)(161)
Increase (decrease) in
Accounts payable55 (50)168 
Accounts payable to affiliated companies(11)(20)21 
Taxes accrued30 (127)(65)
Other current liabilities(56)127 89 
Other assets(101)(42)(221)
Other liabilities(47)(37)(90)
Net cash provided by operating activities2,776 2,709 2,530 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(2,669)(2,714)(2,706)
Purchases of debt and equity securities(1,602)(1,658)(1,810)
Proceeds from sales and maturities of debt and equity securities1,602 1,658 1,810 
Other(164)(204)(147)
Net cash used in investing activities(2,833)(2,918)(2,853)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt998 886 1,983 
Payments for the redemption of long-term debt(813)(6)(1,205)
Notes payable to affiliated companies477 (410)335 
Distributions to parent(600)(275)(750)
Other(2)(1)(23)
Net cash provided by financing activities60 194 340 
Net increase (decrease) in cash and cash equivalents3 (15)17 
Cash and cash equivalents at beginning of period
18 33 16 
Cash and cash equivalents at end of period
$21 $18 $33 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$481 $433 $452 
Cash paid for income taxes321 122 89 
Significant non-cash transactions:
Accrued capital expenditures365 347 302 
See Notes to Consolidated Financial Statements
88



FINANCIAL STATEMENTS
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated Other
  Comprehensive 
Loss
Net Gains
(Losses) on
Member'sCash FlowTotal
(in millions) EquityHedgesEquity
Balance at December 31, 2017$11,368 $(7)$11,361 
Net income 1,071 — 1,071 
Other comprehensive income — 1 1 
Distributions to parent (750)— (750)
Balance at December 31, 2018$11,689 $(6)$11,683 
Net income 1,403 — 1,403 
Distributions to parent (275)— (275)
Other1 (1) 
Balance at December 31, 2019$12,818 $(7)$12,811 
Net income956  956 
Distributions to parent(600) (600)
Other(a)
(13) (13)
Balance at December 31, 2020$13,161 $(7)$13,154 
(a)     Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.
See Notes to Consolidated Financial Statements
89




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Progress Energy, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $6.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
90




REPORTS

We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.


/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1930.

91




FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions) 202020192018
Operating Revenues $10,627 $11,202 $10,728 
Operating Expenses    
Fuel used in electric generation and purchased power 3,479 4,024 3,976 
Operation, maintenance and other 2,479 2,495 2,613 
Depreciation and amortization 1,818 1,845 1,619 
Property and other taxes 545 561 529 
Impairment charges 495 (24)87 
Total operating expenses8,816 8,901 8,824 
Gains on Sales of Other Assets and Other, net
9 — 24 
Operating Income 1,820 2,301 1,928 
Other Income and Expenses, net 129 141 165 
Interest Expense 790 862 842 
Income Before Income Taxes
1,159 1,580 1,251 
Income Tax Expense
113 253 218 
Net Income 1,046 1,327 1,033 
Less: Net Income Attributable to Noncontrolling Interests 1 — 6 
Net Income Attributable to Parent $1,045 $1,327 $1,027 
Net Income$1,046 $1,327 $1,033 
Other Comprehensive Income, net of tax   
Pension and OPEB adjustments(1)2 5 
Net unrealized gain on cash flow hedges5 5 6 
Unrealized (losses) gains on available-for-sale securities (1)1 (1)
Other Comprehensive Income, net of tax3 8 10 
Comprehensive Income1,049 1,335 1,043 
Less: Comprehensive Income Attributable to Noncontrolling Interests1 — 6 
Comprehensive Income Attributable to Parent$1,048 $1,335 $1,037 
See Notes to Consolidated Financial Statements
92

FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$59 $48 
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)
228 220 
Receivables of VIEs (net of allowance for doubtful accounts of $29 at 2020 and $9 at 2019)
901 830 
Receivables from affiliated companies157 76 
Notes receivable from affiliated companies 164 
Inventory1,375 1,423 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)
758 946 
Other (includes $39 at 2020 and 2019 related to VIEs)
109 210 
Total current assets3,587 3,917 
Property, Plant and Equipment  
Cost57,892 55,070 
Accumulated depreciation and amortization(18,368)(17,159)
Generation facilities to be retired, net29 246 
Net property, plant and equipment39,553 38,157 
Other Noncurrent Assets  
Goodwill3,655 3,655 
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)
5,775 6,346 
Nuclear decommissioning trust funds4,137 3,782 
Operating lease right-of-use assets, net690 788 
Other1,227 1,049 
Total other noncurrent assets15,484 15,620 
Total Assets$58,624 $57,694 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$919 $1,104 
Accounts payable to affiliated companies289 310 
Notes payable to affiliated companies2,969 1,821 
Taxes accrued121 46 
Interest accrued202 228 
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)
1,426 1,577 
Asset retirement obligations283 485 
Regulatory liabilities640 330 
Other793 902 
Total current liabilities7,642 6,803 
Long-Term Debt (includes $1,252 at 2020 and $1,632 at 2019 related to VIEs)
17,688 17,907 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities  
Deferred income taxes4,396 4,462 
Asset retirement obligations5,866 5,986 
Regulatory liabilities5,051 5,225 
Operating lease liabilities623 697 
Accrued pension and other post-retirement benefit costs505 488 
Other462 383 
Total other noncurrent liabilities16,903 17,241 
Commitments and Contingencies
Equity  
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019
 — 
Additional paid-in capital9,143 9,143 
Retained earnings7,109 6,465 
Accumulated other comprehensive loss(15)(18)
Total Progress Energy, Inc. stockholder's equity16,237 15,590 
Noncontrolling interests4 3 
Total equity16,241 15,593 
Total Liabilities and Equity$58,624 $57,694 
See Notes to Consolidated Financial Statements
93




FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$1,046 $1,327 $1,033 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)2,327 2,207 1,987 
Equity component of AFUDC(42)(66)(104)
Gains on sales of other assets (9)— (24)
Impairment charges495 (24)87 
Deferred income taxes(197)433 358 
Payments for asset retirement obligations(384)(412)(230)
Provision for rate refunds2 15 122 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(9)(34)18 
Receivables(69)47 (207)
Receivables from affiliated companies(81)81 (137)
Inventory49 62 121 
Other current assets223 184 (12)
Increase (decrease) in
Accounts payable(62)(4)217 
Accounts payable to affiliated companies(21)(50)109 
Taxes accrued75 (74)8 
Other current liabilities139 25 129 
Other assets(128)(341)(896)
Other liabilities(177)(167)(35)
Net cash provided by operating activities3,177 3,209 2,544 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(3,488)(3,952)(3,854)
Purchases of debt and equity securities(5,998)(1,511)(1,753)
Proceeds from sales and maturities of debt and equity securities6,010 1,504 1,769 
Notes receivable from affiliated companies164 (164)240 
Other(160)(190)(162)
Net cash used in investing activities(3,472)(4,313)(3,760)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt1,791 2,187 1,833 
Payments for the redemption of long-term debt(2,157)(1,667)(771)
Notes payable to affiliated companies1,148 586 430 
Dividends to parent(400)— (250)
Other(13)12 (1)
Net cash provided by financing activities369 1,118 1,241 
Net increase in cash, cash equivalents, and restricted cash74 14 25 
Cash, cash equivalents, and restricted cash at beginning of period
126 112 87 
Cash, cash equivalents, and restricted cash at end of period
$200 $126 $112 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$819 $892 $798 
Cash paid for (received from) income taxes149 (79)(348)
Significant non-cash transactions:
Accrued capital expenditures363 447 478 
See Notes to Consolidated Financial Statements
94




FINANCIAL STATEMENTS
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
   Accumulated Other Comprehensive Income (Loss)   
Net GainsNet UnrealizedTotal Progress
Additional(Losses) onGains (Losses)Pension andEnergy, Inc.
Paid-inRetainedCash Flowon Available-for-OPEBStockholder'sNoncontrollingTotal
(in millions) CapitalEarningsHedgesSale SecuritiesAdjustmentsEquityInterestsEquity
Balance at December 31, 2017$9,143 $4,350 $(18)$5 $(12)$13,468 $(3)$13,465 
Net income— 1,027 — — — 1,027 6 1,033 
Other comprehensive income (loss)— — 6 (1)5 10 — 10 
Distributions to noncontrolling interests— — — — — — (1)(1)
Dividends to parent— (250)— — — (250)— (250)
Other(a)
— 4 — (5)— (1)1  
Balance at December 31, 2018$9,143 $5,131 $(12)$(1)$(7)$14,254 $3 $14,257 
Net income— 1,327 — — — 1,327 — 1,327 
Other comprehensive income— — 5 1 2 8 — 8 
Other(b)
— 7 (3)(1)(2)1 — 1 
Balance at December 31, 2019$9,143 $6,465 $(10)$(1)$(7)$15,590 $3 $15,593 
Net income  1,045    1,045 1 1,046 
Other comprehensive income (loss)  5 (1)(1)3  3 
Dividends to parent (400)   (400) (400)
Other (1)   (1) (1)
Balance at December 31, 2020$9,143 $7,109 $(5)$(2)$(8)$16,237 $4 $16,241 
(a)    Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
(b)    Amounts in Retained Earnings and AOCI 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 Consolidated Financial Statements
95




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Progress, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Progress, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $4.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
96




REPORTS

We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1930.

97




FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions) 202020192018
Operating Revenues $5,422 $5,957 $5,699 
Operating Expenses    
Fuel used in electric generation and purchased power 1,743 2,012 1,892 
Operation, maintenance and other 1,332 1,446 1,578 
Depreciation and amortization 1,116 1,143 991 
Property and other taxes 167 176 155 
Impairment charges 499 12 33 
Total operating expenses4,857 4,789 4,649 
Gains on Sales of Other Assets and Other, net
8 — 9 
Operating Income 573 1,168 1,059 
Other Income and Expenses, net 75 100 87 
Interest Expense 269 306 319 
Income Before Income Taxes 379 962 827 
Income Tax (Benefit) Expense (36)157 160 
Net Income and Comprehensive Income$415 $805 $667 
See Notes to Consolidated Financial Statements
98


FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$39 $22 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)
132 123 
Receivables of VIEs (net of allowance for doubtful accounts of $19 at 2020 and $5 at 2019)
500 489 
Receivables from affiliated companies50 52 
Inventory911 934 
Regulatory assets492 526 
Other60 60 
Total current assets2,184 2,206 
Property, Plant and Equipment
Cost35,759 34,603 
Accumulated depreciation and amortization(12,801)(11,915)
Generation facilities to be retired, net29 246 
Net property, plant and equipment22,987 22,934 
Other Noncurrent Assets
Regulatory assets3,976 4,152 
Nuclear decommissioning trust funds3,500 3,047 
Operating lease right-of-use assets, net346 387 
Other740 651 
Total other noncurrent assets8,562 8,237 
Total Assets$33,733 $33,377 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$454 $629 
Accounts payable to affiliated companies215 203 
Notes payable to affiliated companies295 66 
Taxes accrued85 17 
Interest accrued99 110 
Current maturities of long-term debt603 1,006 
Asset retirement obligations283 485 
Regulatory liabilities530 236 
Other411 478 
Total current liabilities2,975 3,230 
Long-Term Debt8,505 7,902 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities
Deferred income taxes2,298 2,388 
Asset retirement obligations5,352 5,408 
Regulatory liabilities4,394 4,232 
Operating lease liabilities323 354 
Accrued pension and other post-retirement benefit costs242 238 
Investment tax credits132 137 
Other102 92 
Total other noncurrent liabilities12,843 12,849 
Commitments and Contingencies
Equity
Member's Equity9,260 9,246 
Total Liabilities and Equity$33,733 $33,377 
See Notes to Consolidated Financial Statements
99


FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$415 $805 $667 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of nuclear fuel)1,299 1,329 1,183 
Equity component of AFUDC(29)(60)(57)
Gains on sales of other assets(8)— (9)
Impairment charges499 12 33 
Deferred income taxes(234)197 236 
Payments for asset retirement obligations(304)(390)(195)
Provisions for rate refunds2 12 122 
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions1 (6)5 
Receivables(4)21 (107)
Receivables from affiliated companies2 (29)(20)
Inventory23 20 63 
Other current assets98 101 (201)
Increase (decrease) in
Accounts payable(127)32 219 
Accounts payable to affiliated companies12 (75)99 
Taxes accrued68 (46)(11)
Other current liabilities157 68 46 
Other assets(207)(205)(465)
Other liabilities3 37 20 
Net cash provided by operating activities1,666 1,823 1,628 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(1,581)(2,108)(2,220)
Purchases of debt and equity securities(1,555)(842)(1,236)
Proceeds from sales and maturities of debt and equity securities1,516 810 1,206 
Other(57)(119)(95)
Net cash used in investing activities(1,677)(2,259)(2,345)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt1,296 1,269 845 
Payments for the redemption of long-term debt(1,085)(605)(3)
Notes payable to affiliated companies229 (228)54 
Distributions to parent(400)— (175)
Other(12)(1)(1)
Net cash provided by financing activities28 435 720 
Net increase (decrease) in cash and cash equivalents17 (1)3 
Cash and cash equivalents at beginning of period22 23 20 
Cash and cash equivalents at end of period$39 $22 $23 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$301 $331 $303 
Cash paid for (received from) income taxes123 (30)(112)
Significant non-cash transactions:
Accrued capital expenditures149 175 220 
See Notes to Consolidated Financial Statements
100




FINANCIAL STATEMENTS
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 Member's
(in millions) Equity
Balance at December 31, 2017$7,949 
Net income 667 
Distribution to parent(175)
Balance at December 31, 2018$8,441 
Net income 805 
Balance at December 31, 2019$9,246 
Net income 415 
Distribution to parent(400)
Other(1)
Balance at December 31, 2020$9,260 
See Notes to Consolidated Financial Statements
101




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Florida, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Florida, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $2.1 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

102




REPORTS
For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, including the settlement agreement filed with the Commission subsequent to December 31, 2020, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.



/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2001.

103



FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions) 202020192018
Operating Revenues $5,188 $5,231 $5,021 
Operating Expenses    
Fuel used in electric generation and purchased power 1,737 2,012 2,085 
Operation, maintenance and other 1,131 1,034 1,025 
Depreciation and amortization 702 702 628 
Property and other taxes 381 392 374 
Impairment charges (4)(36)54 
Total operating expenses3,947 4,104 4,166 
Gains on Sales of Other Assets and Other, net 1 — 1 
Operating Income 1,242 1,127 856 
Other Income and Expenses, net 53 48 86 
Interest Expense 326 328 287 
Income Before Income Taxes 969 847 655 
Income Tax Expense 198 155 101 
Net Income $771 $692 $554 
Other Comprehensive Income (Loss), net of tax    
Unrealized (losses) gains on available-for-sale securities(1)1 (1)
Other Comprehensive (Loss) Income, net of tax (1)1 (1)
Comprehensive Income $770 $693 $553 
See Notes to Consolidated Financial Statements
104



FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions) 20202019
ASSETS   
Current Assets   
Cash and cash equivalents $11 $17 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019)
94 96 
Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $4 at 2019)
401 341 
Receivables from affiliated companies 3 — 
Notes receivable from affiliated companies  173 
Inventory 464 489 
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)
265 419 
Other (includes $39 at 2020 and 2019 related to VIEs)
41 58 
Total current assets 1,279 1,593 
Property, Plant and Equipment   
Cost 22,123 20,457 
Accumulated depreciation and amortization (5,560)(5,236)
Net property, plant and equipment 16,563 15,221 
Other Noncurrent Assets  
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)
1,799 2,194 
Nuclear decommissioning trust funds 637 734 
Operating lease right-of-use assets, net344 401 
Other 335 311 
Total other noncurrent assets3,115 3,640 
Total Assets $20,957 $20,454 
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable $465 $474 
Accounts payable to affiliated companies 85 131 
Notes payable to affiliated companies 196 — 
Taxes accrued 82 43 
Interest accrued 69 75 
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs)
823 571 
Regulatory liabilities 110 94 
Other 374 415 
Total current liabilities 2,204 1,803 
Long-Term Debt (includes $1,002 at 2020 and $1,307 at 2019 related to VIEs)
7,092 7,416 
Other Noncurrent Liabilities  
Deferred income taxes 2,191 2,179 
Asset retirement obligations 514 578 
Regulatory liabilities 658 993 
Operating lease liabilities300 343 
Accrued pension and other post-retirement benefit costs 231 218 
Other 209 136 
Total other noncurrent liabilities 4,103 4,447 
Commitments and Contingencies
Equity   
Member's equity7,560 6,789 
Accumulated other comprehensive loss(2)(1)
Total equity 7,558 6,788 
Total Liabilities and Equity $20,957 $20,454 
See Notes to Consolidated Financial Statements
105



FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$771 $692 $554 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion1,019 869 793 
Equity component of AFUDC(12)(6)(47)
Gains on sales of other assets(1)— (1)
Impairment charges(4)(36)54 
Deferred income taxes27 180 159 
Payments for asset retirement obligations(80)(22)(35)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions(14)(33)7 
Receivables(64)26 (100)
Receivables from affiliated companies(3)17 (26)
Inventory26 42 58 
Other current assets40 156 59 
Increase (decrease) in
Accounts payable66 (36)(1)
Accounts payable to affiliated companies(46)40 17 
Taxes accrued39 (31)40 
Other current liabilities(7)(36)82 
Other assets85 (131)(429)
Other liabilities(181)(213)(75)
Net cash provided by operating activities1,661 1,478 1,109 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(1,907)(1,844)(1,634)
Purchases of debt and equity securities(4,443)(669)(517)
Proceeds from sales and maturities of debt and equity securities4,495 695 563 
Notes receivable from affiliated companies173 (173)313 
Other(103)(67)(65)
Net cash used in investing activities(1,785)(2,058)(1,340)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt495 918 988 
Payments for the redemption of long-term debt(572)(262)(769)
Notes payable to affiliated companies196 (108)108 
Distribution to parent — (75)
Other(1)13 1 
Net cash provided by financing activities118 561 253 
Net (decrease) increase in cash, cash equivalents, and restricted cash(6)(19)22 
Cash, cash equivalents, and restricted cash at beginning of period
56 75 53 
Cash, cash equivalents, and restricted cash at end of period
$50 $56 $75 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$321 $332 $270 
Cash paid for (received from) income taxes138 1 (120)
Significant non-cash transactions:
Accrued capital expenditures214 272 258 
See Notes to Consolidated Financial Statements
106



FINANCIAL STATEMENTS
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated
Other
Comprehensive
Income (Loss)
Net Unrealized
Gains (Losses) on
 Member'sAvailable-for-Total
(in millions) EquitySale SecuritiesEquity
Balance at December 31, 2017$5,614 $4 $5,618 
Net income554 — 554 
Other comprehensive loss— (1)(1)
Distribution to parent(75)— (75)
Other(a)
4 (5)(1)
Balance at December 31, 2018$6,097 $(2)$6,095 
Net income692 — 692 
Other comprehensive income— 1 1 
Balance at December 31, 2019$6,789 $(1)$6,788 
Net income 771  771 
Other comprehensive loss (1)(1)
Balance at December 31, 2020$7,560 $(2)$7,558 
(a)    Amounts represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.
See Notes to Consolidated Financial Statements
107




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Ohio, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $650 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:
We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
108




REPORTS

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2002.

109



FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues    
Regulated electric $1,405 $1,456 $1,450 
Regulated natural gas 453 484 506 
Nonregulated electric and other  — 1 
Total operating revenues 1,858 1,940 1,957 
Operating Expenses   
Fuel used in electric generation and purchased power – regulated 339 388 412 
Cost of natural gas73 95 113 
Operation, maintenance and other 463 520 480 
Depreciation and amortization 278 265 268 
Property and other taxes 324 308 290 
Total operating expenses 1,477 1,576 1,563 
Losses on Sales of Other Assets and Other, net  — (106)
Operating Income 381 364 288 
Other Income and Expenses, net 16 24 23 
Interest Expense 102 109 92 
Income From Continuing Operations Before Income Taxes295 279 219 
Income Tax Expense From Continuing Operations
43 40 43 
Income From Continuing Operations252 239 176 
Loss From Discontinued Operations, net of tax
 (1)— 
Net Income and Comprehensive Income$252 $238 $176 
See Notes to Consolidated Financial Statements
110



FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$14 $17 
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $4 at 2019)
98 84 
Receivables from affiliated companies102 92 
Inventory110 135 
Regulatory assets39 49 
Other31 21 
Total current assets394 398 
Property, Plant and Equipment  
Cost11,022 10,241 
Accumulated depreciation and amortization(3,013)(2,843)
Net property, plant and equipment8,009 7,398 
Other Noncurrent Assets  
Goodwill920 920 
Regulatory assets610 549 
Operating lease right-of-use assets, net20 21 
Other72 52 
Total other noncurrent assets1,622 1,542 
Total Assets$10,025 $9,338 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$279 $288 
Accounts payable to affiliated companies68 68 
Notes payable to affiliated companies169 312 
Taxes accrued247 219 
Interest accrued31 30 
Current maturities of long-term debt50 — 
Asset retirement obligations3 1 
Regulatory liabilities65 64 
Other70 75 
Total current liabilities982 1,057 
Long-Term Debt3,014 2,594 
Long-Term Debt Payable to Affiliated Companies25 25 
Other Noncurrent Liabilities  
Deferred income taxes981 922 
Asset retirement obligations108 79 
Regulatory liabilities748 763 
Operating lease liabilities20 21 
Accrued pension and other post-retirement benefit costs113 100 
Other99 94 
Total other noncurrent liabilities2,069 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 capital2,776 2,776 
Retained earnings397 145 
Total equity3,935 3,683 
Total Liabilities and Equity$10,025 $9,338 
See Notes to Consolidated Financial Statements
111



FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$252 $238 $176 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion283 269 271 
Equity component of AFUDC(7)(13)(11)
Losses on sales of other assets  106 
Deferred income taxes31 81 25 
Payments for asset retirement obligations(2)(8)(3)
Provision for rate refunds14 7 24 
(Increase) decrease in   
Receivables(13)20 (33)
Receivables from affiliated companies9 22 19 
Inventory25 (9)7 
Other current assets(18)(5)16 
Increase (decrease) in   
Accounts payable2 (17)(19)
Accounts payable to affiliated companies (10)16 
Taxes accrued30 17 12 
Other current liabilities3 1 14 
Other assets(32)(26)(24)
Other liabilities(2)(41)(26)
Net cash provided by operating activities575 526 570 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(834)(952)(827)
Notes receivable from affiliated companies(19)— 14 
Other(48)(68)(89)
Net cash used in investing activities(901)(1,020)(902)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt467 1,003 99 
Payments for the redemption of long-term debt (551)(3)
Notes payable to affiliated companies(144)38 245 
Net cash provided by financing activities323 490 341 
Net (decrease) increase in cash and cash equivalents(3)(4)9 
Cash and cash equivalents at beginning of period17 21 12 
Cash and cash equivalents at end of period$14 $17 $21 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$97 $97 $87 
Cash received from income taxes (37)(6)
Significant non-cash transactions:
Accrued capital expenditures104 109 95 
Non-cash equity contribution from parent — 106 
See Notes to Consolidated Financial Statements
112



FINANCIAL STATEMENTS
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
AdditionalRetained
CommonPaid-inEarningsTotal
(in millions) StockCapital(Deficit)Equity
Balance at December 31, 2017$762 $2,670 $(269)$3,163 
Net income— — 176 176 
Contribution from parent— 106 — 106 
Balance at December 31, 2018$762 $2,776 $(93)$3,445 
Net income— — 238 238 
Balance at December 31, 2019$762 $2,776 $145 $3,683 
Net income  252 252 
Balance at December 31, 2020$762 $2,776 $397 $3,935 
See Notes to Consolidated Financial Statements
113




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Duke Energy Indiana, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Indiana, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Indiana Utility Regulatory Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $1.3 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

114




REPORTS
For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.
We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.

Duke Energy Indiana Coal Ash Asset Retirement Obligations – Refer to Notes 3, 4, and 9 to the financial statements

Critical Audit Matter Description

Duke Energy Indiana has asset retirement obligations associated with coal ash impoundments at operating and retired coal generation facilities. These legal obligations are the result of Indiana state and federal regulations. There is significant judgment in determining the assumptions used in estimating the closure costs for each site since Duke Energy Indiana does not have approved closure plans for certain sites. Potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods (“probability weightings”) creates estimation uncertainty. The liability for coal ash asset retirement obligations at Duke Energy Indiana was $1,140 million at December 31, 2020.

We identified the asset retirement obligations associated with coal ash impoundments at Duke Energy Indiana as a critical audit matter because of the significant management estimates and assumptions, including projected closure costs as well as the different potential closure methods. The audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods required a high degree of auditor judgment and an increased extent of effort, including the need to involve our environmental specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the underlying estimated closure costs for coal ash asset retirement obligations at Duke Energy Indiana included the following, among others:

We tested the effectiveness of controls over management’s coal ash asset retirement obligation estimate, including those over management’s determination of the estimated closure costs and probability weightings.

We evaluated management’s ability to accurately estimate future closure costs by comparing actual closure costs to management’s historical estimates.

We tested the mathematical accuracy of management’s coal ash asset retirement obligation calculations, including the application of probability weightings.

We made inquiries of internal and external legal counsel regarding the status of the legal matters associated with the probability weightings.

We inspected the opinions from internal and external legal counsel supporting the probability weightings.

We inspected the Company’s filings with and orders from the Indiana Department of Environmental Management, for evidence that might contradict management’s assertions regarding the estimated closure costs and probability weightings.

With the assistance of our environmental specialists, we evaluated the reasonableness of management’s estimated closure costs by comparing the costs to actual costs incurred at comparable coal ash impoundments, underlying contracts, and publicly available industry cost data, as applicable.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 2002.

115




FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Years Ended December 31,
(in millions)202020192018
Operating Revenues$2,795 $3,004 $3,059 
Operating Expenses   
Fuel used in electric generation and purchased power767 935 1,000 
Operation, maintenance and other762 790 788 
Depreciation and amortization569 525 520 
Property and other taxes81 69 78 
Impairment charges — 30 
Total operating expenses2,179 2,319 2,416 
Operating Income 616 685 643 
Other Income and Expenses, net37 41 45 
Interest Expense161 156 167 
Income Before Income Taxes492 570 521 
Income Tax Expense 84 134 128 
Net Income and Comprehensive Income
$408 $436 $393 
See Notes to Consolidated Financial Statements
116




FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED BALANCE SHEETS
 December 31,
(in millions)20202019
ASSETS  
Current Assets  
Cash and cash equivalents$7 $25 
Receivables (net of allowance for doubtful accounts of $3 at 2020 and $3 at 2019)
55 60 
Receivables from affiliated companies112 79 
Inventory473 517 
Regulatory assets125 90 
Other37 60 
Total current assets809 831 
Property, Plant and Equipment  
Cost17,382 16,305 
Accumulated depreciation and amortization(5,661)(5,233)
Net property, plant and equipment11,721 11,072 
Other Noncurrent Assets
 
Regulatory assets1,203 1,082 
Operating lease right-of-use assets, net55 57 
Other253 234 
Total other noncurrent assets1,511 1,373 
Total Assets$14,041 $13,276 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$188 $201 
Accounts payable to affiliated companies88 87 
Notes payable to affiliated companies131 30 
Taxes accrued62 49 
Interest accrued51 58 
Current maturities of long-term debt70 503 
Asset retirement obligations168 189 
Regulatory liabilities111 55 
Other83 112 
Total current liabilities952 1,284 
Long-Term Debt3,871 3,404 
Long-Term Debt Payable to Affiliated Companies150 150 
Other Noncurrent Liabilities  
Deferred income taxes1,228 1,150 
Asset retirement obligations1,008 643 
Regulatory liabilities1,627 1,685 
Operating lease liabilities53 55 
Accrued pension and other post-retirement benefit costs171 148 
Investment tax credits168 164 
Other30 18 
Total other noncurrent liabilities4,285 3,863 
Commitments and Contingencies
Equity  
Member's Equity4,783 4,575 
Total Liabilities and Equity$14,041 $13,276 
See Notes to Consolidated Financial Statements
117




FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$408 $436 $393 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization, and accretion572 531 524 
Equity component of AFUDC(23)(18)(32)
Impairment charges — 30 
Deferred income taxes29 156 95 
Payments for asset retirement obligations(63)(48)(69)
Provision for rate refunds — 53 
(Increase) decrease in   
Receivables8 (8)7 
Receivables from affiliated companies 41 3 
Inventory44 (95)28 
Other current assets(3)76 (25)
Increase (decrease) in   
Accounts payable(12)(10)37 
Accounts payable to affiliated companies1 4 5 
Taxes accrued13 (25)(52)
Other current liabilities6 15 14 
Other assets(68)(74)26 
Other liabilities26 16 (31)
Net cash provided by operating activities938 997 1,006 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures(888)(876)(832)
Purchases of debt and equity securities(37)(26)(48)
Proceeds from sales and maturities of debt and equity securities22 20 44 
Notes receivable from affiliated companies(33)— — 
Other48 (49)18 
Net cash used in investing activities(888)(931)(818)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from the issuance of long-term debt544 485 — 
Payments for the redemption of long-term debt(513)(213)(3)
Notes payable to affiliated companies101 (137)6 
Distributions to parent(200)(200)(175)
Other — (1)
Net cash used in financing activities(68)(65)(173)
Net (decrease) increase in cash and cash equivalents(18)1 15 
Cash and cash equivalents at beginning of period25 24 9 
Cash and cash equivalents at end of period$7 $25 $24 
Supplemental Disclosures:   
Cash paid for interest, net of amount capitalized$164 $150 $162 
Cash paid for (received from) income taxes36 (6)75 
Significant non-cash transactions:
Accrued capital expenditures101 102 88 
See Notes to Consolidated Financial Statements
118




FINANCIAL STATEMENTS
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Member's
(in millions) Equity
Balance at December 31, 2017$4,121 
Net income393 
Distributions to parent(175)
Balance at December 31, 2018$4,339 
Net income436 
Distributions to parent (200)
Balance at December 31, 2019$4,575 
Net income 408 
Distributions to parent (200)
Balance at December 31, 2020$4,783 
See Notes to Consolidated Financial Statements 
119




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and the Board of Directors of Piedmont Natural Gas Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Piedmont Natural Gas Company, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, the Public Service Commission of South Carolina, and the Tennessee Public Utility Commission (collectively the “Commissions”), which have jurisdiction with respect to the gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $450 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

120




REPORTS
For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:
We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.
We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.
We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.
We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.




/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
We have served as the Company's auditor since 1951.

121




FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31,
(in millions)202020192018
Operating Revenues
Regulated natural gas$1,286 $1,369 $1,365 
Nonregulated natural gas and other11 12 10 
Total operating revenues
1,297 1,381 1,375 
Operating Expenses 
Cost of natural gas386 532 584 
Operation, maintenance and other322 328 357 
Depreciation and amortization180 172 159 
Property and other taxes53 45 49 
Impairment charges7 — — 
Total operating expenses948 1,077 1,149 
Operating Income349 304 226 
Equity in earnings of unconsolidated affiliates9 8 7 
Other income and expense, net51 20 14 
Total other income and expenses
60 28 21 
Interest Expense118 87 81 
Income Before Income Taxes291 245 166 
Income Tax Expense18 43 37 
Net Income and Comprehensive Income
$273 $202 $129 
See Notes to Consolidated Financial Statements
122




FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
(in millions)20202019
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $12 at 2020 and $6 at 2019)
$250 $241 
Receivables from affiliated companies10 10 
Inventory68 72 
Regulatory assets153 73 
Other20 28 
Total current assets501 424 
Property, Plant and Equipment
Cost9,134 8,446 
Accumulated depreciation and amortization(1,749)(1,681)
Net property, plant and equipment7,385 6,765 
Other Noncurrent Assets
Goodwill49 49 
Regulatory assets302 290 
Operating lease right-of-use assets, net20 24 
Investments in equity method unconsolidated affiliates88 83 
Other270 121 
Total other noncurrent assets729 567 
Total Assets$8,615 $7,756 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$230 $215 
Accounts payable to affiliated companies79 3 
Notes payable to affiliated companies530 476 
Taxes accrued23 24 
Interest accrued34 33 
Current maturities of long-term debt160  
Regulatory liabilities88 81 
Other69 67 
Total current liabilities1,213 899 
Long-Term Debt2,620 2,384 
Other Noncurrent Liabilities
Deferred income taxes821 708 
Asset retirement obligations20 17 
Regulatory liabilities1,044 1,131 
Operating lease liabilities19 23 
Accrued pension and other post-retirement benefit costs8 3 
Other155 148 
Total other noncurrent liabilities2,067 2,030 
Commitments and Contingencies
Equity
Common stock, 0 par value: 100 shares authorized and outstanding at 2020 and 2019
1,310 1,310 
Retained earnings1,405 1,133 
Total equity2,715 2,443 
Total Liabilities and Equity$8,615 $7,756 
See Notes to Consolidated Financial Statements
123




FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202020192018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$273 $202 $129 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization182 174 161 
Equity component of AFUDC(19)— — 
Impairment charges7 — — 
Deferred income taxes53 136 (31)
Equity in (earnings) losses from unconsolidated affiliates(9)(8)(7)
Provision for rate refunds(33)2 43 
(Increase) decrease in
Receivables10 28 7 
Receivables from affiliated companies 12 (15)
Inventory3 (2)(4)
Other current assets(66)(25)71 
Increase (decrease) in
Accounts payable16 (7)15 
Accounts payable to affiliated companies76 (35)25 
Taxes accrued3 (60)65 
Other current liabilities(11)1 21 
Other assets(11)1 3 
Other liabilities7 (10)(5)
Net cash provided by operating activities481 409 478 
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures(901)(1,053)(721)
Contributions to equity method investments (16)— 
Other(28)(14)(10)
Net cash used in investing activities(929)(1,083)(731)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt394 596 100 
Payments for the redemption of long-term debt (350)— 
Notes payable to affiliated companies54 278 (166)
Capital contribution from parent 150 300 
Net cash provided by financing activities448 674 234 
Net decrease in cash and cash equivalents — (19)
Cash and cash equivalents at beginning of period — 19 
Cash and cash equivalents at end of period$ $— $— 
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized$115 $84 $79 
Cash received from income taxes(36)(31)(16)
Significant non-cash transactions:
Accrued capital expenditures106 109 96 
See Notes to Consolidated Financial Statements
124




FINANCIAL STATEMENTS
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
CommonRetainedTotal
(in millions) StockEarningsEquity
Balance at December 31, 2017$860 $802 $1,662 
Net income— 129 129 
Contribution from parent300 — 300 
Balance at December 31, 2018$1,160 $931 $2,091 
Net income — 202 202 
Contribution from parent150 — 150 
Balance at December 31, 2019$1,310 $1,133 $2,443 
Net income 273 273 
Other (1)(1)
Balance at December 31, 2020$1,310 $1,405 $2,715 
See Notes to Consolidated Financial Statements
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Index to Combined Notes To Consolidated Financial Statements
The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.
 Applicable Notes
Registrant12345678910111213141516171819202122232425
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. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Consolidation
Duke Energy is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants, including Duke Energy Carolinas; Progress Energy; 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 its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Consolidated Financial Statements. However, none of the Subsidiary Registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.
These 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 17 for additional information on VIEs. These Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. See Note 8 for additional information on joint ownership. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.
Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Progress Energy is a public utility holding company, which conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. Progress Energy is subject to regulation by FERC and other regulatory agencies listed below.
Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.
Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.
Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the energy price is recovered from retail customers and recorded in Operating Revenues on the Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC and FERC.
Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana is subject to the regulatory provisions of the IURC and FERC.
Piedmont is a regulated public utility primarily engaged in the distribution of natural gas in portions of North Carolina, South Carolina and Tennessee. Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC and FERC.
Certain prior year amounts have been reclassified to conform to the current year presentation.
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 the federal government 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 $112 million of incremental COVID-19 costs before deferral for the year ended December 31, 2020, included in Operation, maintenance and other on the Consolidated Statements of Operations. Further, the company waived approximately $64 million of late payment fees for the year ended December 31, 2020. The company has deferred approximately $76 million of the incremental costs, which were primarily bad debt expense, personal protective equipment and cleaning supplies, and a cost component of late payment fees. See Notes 3, 6, 17, 18 and 23 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 and Liabilities
The following table provides a description of amounts included in Other within Current Assets or Current Liabilities that exceed 5% of total Current Assets or Current Liabilities on the Duke Energy Registrants' Consolidated Balance Sheets at either December 31, 2020, or 2019.
December 31,
(in millions)Location20202019
Duke Energy
Other accrued liabilitiesCurrent Liabilities$1,455 $604 
Accrued compensationCurrent Liabilities662 862 
Duke Energy Carolinas
Accrued compensation Current Liabilities$213 $271 
Other accrued liabilitiesCurrent Liabilities178 147 
Progress Energy    
Customer deposits Current Liabilities$347 $354 
Duke Energy Florida    
Customer deposits Current Liabilities$203 $209 
Duke Energy Ohio    
Gas StorageCurrent Assets$21 $ 
Duke Energy Indiana    
Income taxes receivableCurrent Assets$9 $44 
Discontinued Operations
Duke Energy has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these consolidated financial statements exclude amounts related to discontinued operations for all periods presented. For the years ended December 31, 2020, 2019 and 2018, the Income (Loss) From Discontinued Operations, net of tax on Duke Energy's Consolidated Statements of Operations is entirely attributable to controlling interest.
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 Consolidated Balance Sheet.
Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the HLBV 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, most of which is 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.
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
During the third quarter of 2019, Duke Energy completed a sale of minority interest in a portion of certain renewable assets within the Commercial Renewables Segment for pretax proceeds to Duke Energy of $415 million. The portion of Duke Energy's commercial renewables energy portfolio sold includes 49% of 37 operating wind, solar and battery storage assets and 33% of 11 operating solar assets across the U.S. Duke Energy retained control of these assets, and, therefore, no gain or loss was recognized on the Consolidated Statements of Operations. The difference between the consideration received and the carrying value of the noncontrolling interest claim on net assets is $466 million, net of tax benefit of $8 million, and was recorded to equity.
The following table presents cash received for the sale of noncontrolling interest and allocated losses to noncontrolling interest for the years ended December 31, 2020, and 2019.
December 31,
(in millions)20202019
Noncontrolling Interest Capital Contributions
Cash received for the sale of noncontrolling interest to tax equity members$426 $428 
Cash received for the sale of noncontrolling interest to pro rata share members 415 
Total Noncontrolling Interest Capital Contributions$426 $843 
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method$271 $165 
Allocated losses to noncontrolling members based on pro rata shares of ownership24 12 
Total Noncontrolling Interest Allocated Losses$295 $177 
2021 Sale of Minority Interest in Duke Energy Indiana
In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund and an experienced investor in U.S. infrastructure. To facilitate the transaction, Duke Energy will issue and sell membership interests in Duke Energy Indiana Holdco, LLC. a newly created holding company that will own 100% of the issued and outstanding membership interests in Duke Energy Indiana. The transaction will be completed following two closings for an aggregate purchase price of approximately $2 billion. The first closing is expected to be completed in the second quarter of 2021 and Duke Energy will issue and sell 11.1% of the membership interests in exchange for 50% of the purchase price. Under the terms of the agreement, Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023. At the second closing, Duke Energy will issue and sell additional membership interests such that GIC will own 19.9% of the membership interests for the remaining 50% of the purchase price. Duke Energy will continue to operate and retain control of Duke Energy Indiana and, therefore, no gain or loss is expected to be recognized in the Consolidated Statements of Operations. Additionally, the transaction will be reflected within Duke Energy Corporations' stockholders' equity as a sale of a noncontrolling interest.
Acquisitions
The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.
Significant Accounting Policies
Use of Estimates
In preparing financial statements that conform to GAAP, the Duke Energy Registrants 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.
Regulatory Accounting
The majority of the Duke Energy Registrants’ operations are subject to price regulation for the sale of electricity and natural gas by state utility commissions or FERC. When prices are set on the basis of specific costs of the regulated operations and an effective franchise is in place such that sufficient natural gas or electric services can be sold to recover those costs, the Duke Energy Registrants apply regulatory accounting. Regulatory accounting changes the timing of the recognition of costs or revenues relative to a company that does not apply regulatory accounting. As a result, regulatory assets and regulatory liabilities are recognized on the Consolidated Balance Sheets. Regulatory assets and liabilities are amortized consistent with the treatment of the related cost in the ratemaking process. Regulatory assets are reviewed for recoverability each reporting period. If a regulatory asset is no longer deemed probable of recovery, the deferred cost is charged to earnings. See Note 3 for further information.
Regulatory accounting rules also require recognition of a disallowance (also called "impairment") loss if it becomes probable that part of the cost of a plant under construction (or a recently completed plant or an abandoned plant) will be disallowed for ratemaking purposes and a reasonable estimate of the amount of the disallowance can be made. For example, if a cost cap is set for a plant still under construction, the amount of the disallowance is a result of a judgment as to the ultimate cost of the plant. These disallowances can require judgments on allowed future rate recovery.
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
When it becomes probable that regulated generation, transmission or distribution assets will be abandoned, the cost of the asset is removed from plant in service. The value that may be retained as a regulatory asset on the balance sheet for the abandoned property is dependent upon amounts that may be recovered through regulated rates, including any return. As such, an impairment charge could be partially or fully offset by the establishment of a regulatory asset if rate recovery is probable. The impairment charge for a disallowance of costs for regulated plants under construction, recently completed or abandoned is based on discounted cash flows.
The Duke Energy Registrants utilize cost-tracking mechanisms, commonly referred to as fuel adjustment clauses or PGA clauses. These clauses allow for the recovery of fuel and fuel-related costs, portions of purchased power, natural gas costs and hedging costs through surcharges on customer rates. The difference between the costs incurred and the surcharge revenues is recorded either as an adjustment to Operating Revenues, Operating Expenses – Fuel used in electric generation or Operating Expenses – Cost of natural gas on the Consolidated Statements of Operations, with an off-setting impact on regulatory assets or liabilities.
Cash, Cash Equivalents and Restricted Cash
All highly liquid investments with maturities of three months or less at the date of acquisition are considered cash equivalents. Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See Note 17 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Consolidated Balance Sheets.
December 31, 2020December 31, 2019
DukeDuke
DukeProgressEnergyDukeProgressEnergy
EnergyEnergyFloridaEnergyEnergyFlorida
Current Assets
Cash and cash equivalents$259 $59 $11 $311 $48 $17 
Other194 39 39 222 39 39 
Other Noncurrent Assets
Other103 102  40 39 — 
Total cash, cash equivalents and restricted cash$556 $200 $50 $573 $126 $56 
Inventory
Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Inventory is charged to expense or capitalized to property, plant and equipment when issued, primarily using the average cost method. Excess or obsolete inventory is written down to the lower of cost or net realizable value. Once inventory has been written down, it creates a new cost basis for the inventory that is not subsequently written up. Provisions for inventory write-offs were not material at December 31, 2020, and 2019, respectively. The components of inventory are presented in the tables below.
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies $2,312 $785 $999 $673 $325 $78 $307 $12 
Coal 561 186 193 131 63 16 165  
Natural gas, oil and other 294 39 183 107 76 16 1 56 
Total inventory $3,167 $1,010 $1,375 $911 $464 $110 $473 $68 
 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Materials and supplies $2,297 $768 $1,038 $686 $351 $79 $318 $5 
Coal586 187 186 138 48 15 198 — 
Natural gas, oil and other349 41 199 110 90 41 1 67 
Total inventory $3,232 $996 $1,423 $934 $489 $135 $517 $72 
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in Debt and Equity Securities
The Duke Energy Registrants classify investments in equity securities as FV-NI and investments in debt securities as AFS. Both categories are recorded at fair value on the Consolidated Balance Sheets. Realized and unrealized gains and losses on securities classified as FV-NI are reported through net income. Unrealized gains and losses for debt securities classified as AFS are included in AOCI until realized, unless it is determined the carrying value of an investment has a credit loss. For certain investments of regulated operations, such as substantially all of the NDTF, realized and unrealized gains and losses (including any credit losses) on debt securities are recorded as a regulatory asset or liability. The credit loss portion of debt securities of nonregulated operations are included in earnings. Investments in debt and equity securities are classified as either current or noncurrent based on management’s intent and ability to sell these securities, taking into consideration current market liquidity. See Note 15 for further information.
Goodwill
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont perform annual goodwill impairment tests as of August 31 each year at the reporting unit level, which is determined to be a business segment or one level below. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update these tests 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. See Note 11 for further information.
Intangible Assets
Intangible assets are included in Other in Other Noncurrent Assets on the Consolidated Balance Sheets. Generally, intangible assets are amortized using an amortization method that reflects the pattern in which the economic benefits of the intangible asset are consumed or on a straight-line basis if that pattern is not readily determinable. Amortization of intangibles is reflected in Depreciation and amortization on the Consolidated Statements of Operations. Intangible assets are subject to impairment testing and if impaired, the carrying value is accordingly reduced.
RECs are used to measure compliance with renewable energy standards and are held primarily for consumption. See Note 11 for further information.
Long-Lived Asset Impairments
The Duke Energy Registrants evaluate long-lived assets, excluding goodwill, for impairment when circumstances indicate the carrying value of those assets may not be recoverable. An impairment exists when a long-lived asset’s carrying value exceeds the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the carrying value of the asset is written down to its then current estimated fair value and an impairment charge is recognized.
The Duke Energy Registrants assess fair value of long-lived assets using various methods, including recent comparable third-party sales, internally developed discounted cash flow analysis and analysis from outside advisors. Triggering events to reassess cash flows may include, but are not limited to, significant changes in commodity prices, the condition of an asset or management’s interest in selling the asset.
Equity Method Investment Impairments
Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method. Equity method investments are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the decline in value is considered to be other than temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment.
Impairment assessments use a discounted cash flow income approach and include consideration of the severity and duration of any decline in the fair value of the investments. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. Key inputs that involve estimates and significant management judgment include cash flow projections, selection of a discount rate, probability weighting of potential outcomes, and whether any decline in value is considered temporary.
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property, Plant and Equipment
Property, plant and equipment are stated at the lower of depreciated historical cost net of any disallowances or fair value, if impaired. The Duke Energy Registrants capitalize all construction-related direct labor and material costs, as well as indirect construction costs such as general engineering, taxes and financing costs. See “Allowance for Funds Used During Construction and Interest Capitalized” for information on capitalized financing costs. Costs of renewals and betterments that extend the useful life of property, plant and equipment are also capitalized. The cost of repairs, replacements and major maintenance projects, which do not extend the useful life or increase the expected output of the asset, are expensed as incurred. Depreciation is generally computed over the estimated useful life of the asset using the composite straight-line method. Depreciation studies are conducted periodically to update composite rates and are approved by state utility commissions and/or the FERC when required. The composite weighted average depreciation rates, excluding nuclear fuel, are included in the table that follows.
 Years Ended December 31,
 202020192018
Duke Energy 3.0 %3.1 %3.0 %
Duke Energy Carolinas 2.8 %2.8 %2.8 %
Progress Energy 3.2 %3.1 %2.9 %
Duke Energy Progress 3.1 %3.1 %2.9 %
Duke Energy Florida 3.3 %3.1 %3.0 %
Duke Energy Ohio 2.9 %2.6 %2.8 %
Duke Energy Indiana 3.5 %3.3 %3.3 %
Piedmont2.3 %2.4 %2.5 %
In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value and any depreciation already recognized, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as Generation facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory assets on the Consolidated Balance Sheets if deemed recoverable (see discussion of long-lived asset impairments above). The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.
When the Duke Energy Registrants sell entire regulated operating units, or retire or sell nonregulated properties, the original cost and accumulated depreciation and amortization balances are removed from Property, Plant and Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded in earnings, unless otherwise required by the applicable regulatory body. See Note 10 for additional information.
Leases
Duke Energy determines if an arrangement is a lease at contract inception based on whether the arrangement involves the use of a physically distinct identified asset and whether Duke Energy has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period as well as the right to direct the use of the asset. As a policy election, Duke Energy does not evaluate arrangements with initial contract terms of less than one year as leases.
Operating leases are included in Operating lease ROU assets, net, Other current liabilities and Operating lease liabilities on the Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, Current maturities of long-term debt and Long-Term Debt on the Consolidated Balance Sheets.
For lessee and lessor arrangements, Duke Energy has elected a policy to not separate lease and non-lease components for all asset classes. For lessor arrangements, lease and non-lease components are only combined under one arrangement and accounted for under the lease accounting framework if the non-lease components are not the predominant component of the arrangement and the lease component would be classified as an operating lease.
Nuclear Fuel
Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets.
Nuclear fuel in the front-end fuel processing phase is considered work in progress and not amortized until placed in service. Amortization of nuclear fuel is included within Fuel used in electric generation and purchased power on the Consolidated Statements of Operations. Amortization is recorded using the units-of-production method.
Allowance for Funds Used During Construction and Interest Capitalized
For regulated operations, the debt and equity costs of financing the construction of property, plant and equipment are reflected as AFUDC and capitalized as a component of the cost of property, plant and equipment. AFUDC equity is reported on the Consolidated Statements of Operations as non-cash income in Other income and expenses, net. AFUDC debt is reported as a non-cash offset to Interest Expense. After construction is completed, the Duke Energy Registrants are permitted to recover these costs through their inclusion in rate base and the corresponding subsequent depreciation or amortization of those regulated assets.
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AFUDC equity, a permanent difference for income taxes, reduces the ETR when capitalized and increases the ETR when depreciated or amortized. See Note 23 for additional information.
For nonregulated operations, interest is capitalized during the construction phase with an offsetting non-cash credit to Interest Expense on the Consolidated Statements of Operations.
Asset Retirement Obligations
AROs are recognized for legal obligations associated with the retirement of property, plant and equipment. Substantially all AROs are related to regulated operations. When recording an ARO, the present value of the projected liability is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted over time. For operating plants, the present value of the liability is added to the cost of the associated asset and depreciated over the remaining life of the asset. For retired plants, the present value of the liability is recorded as a regulatory asset unless determined not to be probable of recovery.
The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding timing of future cash flows, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change. Depreciation expense is adjusted prospectively for any changes to the carrying amount of the associated asset. The Duke Energy Registrants receive amounts to fund the cost of the ARO for regulated operations through a combination of regulated revenues and earnings on the NDTF. As a result, amounts recovered in regulated revenues, earnings on the NDTF, accretion expense and depreciation of the associated asset are netted and deferred as a regulatory asset or liability.
Accounts Payable
During 2020, Duke Energy established a supply chain finance program (the “program”) with a global financial institution. The program is voluntary and allows Duke Energy suppliers, at their sole discretion, to sell their receivables from Duke Energy to the financial institution at a rate that leverages Duke Energy’s credit rating and, which may result in favorable terms compared to the rate available to the supplier on their own credit rating. Suppliers participating in the program, determine at their sole discretion which invoices they will sell to the financial institution. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. The commercial terms negotiated between Duke Energy and its suppliers are consistent regardless of whether the supplier elects to participate in the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program.
At December 31, 2020, $15 million, $1 million and $14 million of the outstanding Accounts payable balance for Duke Energy, Duke Energy Ohio and Piedmont, respectively, was sold to the financial institution by our suppliers. Suppliers invoices sold to the financial institution under the program totaled $45 million, $9 million and $36 million for the year ended December 31, 2020, for Duke Energy, Duke Energy Ohio and Piedmont, respectively. All activity related to amounts due to suppliers who elected to participate in the program are included within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
Revenue Recognition
Duke Energy recognizes revenue as customers obtain control of promised goods and services in an amount that reflects consideration expected in exchange for those goods or services. Generally, the delivery of electricity and natural gas results in the transfer of control to customers at the time the commodity is delivered and the amount of revenue recognized is equal to the amount billed to each customer, including estimated volumes delivered when billings have not yet occurred. See Note 18 for further information.
Derivatives and Hedging
Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the NPNS exception, are recorded on the Consolidated Balance Sheets at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The effective portion of the change in the fair value of cash flow hedges is recorded in AOCI. The effective portion of the change in the fair value of a fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As a result, changes in fair value of these derivatives have no immediate earnings impact.
Formal documentation, including transaction type and risk management strategy, is maintained for all contracts accounted for as a hedge. At inception and at least every three months thereafter, the hedge contract is assessed to see if it is highly effective in offsetting changes in cash flows or fair values of hedged items.
See Note 14 for further information.
Captive Insurance Reserves
Duke Energy has captive insurance subsidiaries that provide coverage, on an indemnity basis, to the Subsidiary Registrants as well as certain third parties, on a limited basis, for financial losses, primarily related to property, workers’ compensation and general liability. Liabilities include provisions for estimated losses incurred but not reported (IBNR), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from experience.
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FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Duke Energy, through its captive insurance entities, also has reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable.
Unamortized Debt Premium, Discount and Expense
Premiums, discounts and expenses incurred with the issuance of outstanding long-term debt are amortized over the term of the debt issue. The gain or loss on extinguishment associated with refinancing higher-cost debt obligations in the regulated operations is amortized over the remaining life of the original instrument. Amortization expense is recorded as Interest Expense in the Consolidated Statements of Operations and is reflected as Depreciation, amortization and accretion within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
Premiums, discounts and expenses are presented as an adjustment to the carrying value of the debt amount and included in Long-Term Debt on the Consolidated Balance Sheets presented.
Preferred Stock
Preferred stock is reviewed to determine the appropriate balance sheet classification and embedded features, such as call options, are evaluated to determine if they should be bifurcated and accounted for separately. Costs directly related to the issuance of preferred stock is recorded as a reduction of the proceeds received. The liability for the dividend is recognized when declared. The accumulated dividends on the cumulative preferred stock is recognized to net income available to Duke Energy Corporation in the EPS calculation. See Note 19 for further information.
Loss Contingencies and Environmental Liabilities
Contingent losses are recorded when it is probable a loss has occurred and can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. Unless otherwise required by GAAP, legal fees are expensed as incurred.
Environmental liabilities are recorded on an undiscounted basis when environmental remediation or other liabilities become probable and can be reasonably estimated. Environmental expenditures related to past operations that do not generate current or future revenues are expensed. Environmental expenditures related to operations that generate current or future revenues are expensed or capitalized, as appropriate. Certain environmental expenditures receive regulatory accounting treatment and are recorded as regulatory assets.
See Notes 3 and 4 for further information.
Pension and Other Post-Retirement Benefit Plans
Duke Energy maintains qualified, non-qualified and other post-retirement benefit plans. Eligible employees of the Subsidiary Registrants participate in the respective qualified, non-qualified and other post-retirement benefit plans and the Subsidiary Registrants are allocated their proportionate share of benefit costs. See Note 22 for further information, including significant accounting policies associated with these plans.
Severance and Special Termination Benefits
Duke Energy has severance plans under which in general, the longer a terminated employee worked prior to termination the greater the amount of severance benefits. A liability for involuntary severance is recorded once an involuntary severance plan is committed to by management if involuntary severances are probable and can be reasonably estimated. For involuntary severance benefits incremental to its ongoing severance plan benefits, the fair value of the obligation is expensed at the communication date if there are no future service requirements or over the required future service period. Duke Energy also offers special termination benefits under voluntary severance programs. Special termination benefits are recorded immediately upon employee acceptance absent a significant retention period. Otherwise, the cost is recorded over the remaining service period. Employee acceptance of voluntary severance benefits is determined by management based on the facts and circumstances of the benefits being offered. See Note 20 for further information.
Guarantees
If necessary, liabilities are recognized at the time of issuance or material modification of a guarantee for the estimated fair value of the obligation it assumes. Fair value is estimated using a probability weighted approach. The obligation is reduced over the term of the guarantee or related contract in a systematic and rational method as risk is reduced. Duke Energy recognizes a liability for the best estimate of its loss due to the nonperformance of the guaranteed party. This liability is recognized at the inception of a guarantee and is updated periodically. See Note 7 for further information.
Stock-Based Compensation
Stock-based compensation represents costs related to stock-based awards granted to employees and Board of Directors members. Duke Energy recognizes stock-based compensation based upon the estimated fair value of awards, net of estimated forfeitures at the date of issuance. The recognition period for these costs begins at either the applicable service inception date or grant date and continues throughout the requisite service period. Compensation cost is recognized as expense or capitalized as a component of property, plant and equipment. See Note 21 for further information.
133




FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes
Duke Energy and its subsidiaries file a consolidated federal income tax return and other state and foreign jurisdictional returns. The Subsidiary Registrants are parties to a tax-sharing agreement with Duke Energy. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. Deferred income taxes have been provided for temporary differences between GAAP and tax bases of assets and liabilities because the differences create taxable or tax-deductible amounts for future periods. ITCs associated with regulated operations are deferred and amortized as a reduction of income tax expense over the estimated useful lives of the related properties. For ITCs associated with nonregulated operations see “Accounting for Renewable Energy Tax Credits.”
Accumulated deferred income taxes are valued using the enacted tax rate expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be settled or realized. In the event of a change in tax rates, deferred tax assets and liabilities are remeasured as of the enactment date of the new rate. To the extent that the change in the value of the deferred tax represents an obligation to customers, the impact of the remeasurement is deferred to a regulatory liability. Remaining impacts are recorded in income from continuing operations. Duke Energy's results of operations could be impacted if the estimate of the tax effect of reversing temporary differences is not reflective of actual outcomes, is modified to reflect new developments or interpretations of the tax law, revised to incorporate new accounting principles, or changes in the expected timing or manner of a reversal.
Tax-related interest and penalties are recorded in Interest Expense and Other Income and Expenses, net in the Consolidated Statements of Operations.
See Note 23 for further information.
Accounting for Renewable Energy Tax Credits
When Duke Energy receives ITCs on wind or solar facilities associated with its nonregulated operations, it reduces the basis of the property recorded on the Consolidated Balance Sheets by the amount of the ITC and, therefore, the ITC benefit is ultimately recognized in the statement of operations through reduced depreciation expense. Additionally, certain tax credits and government grants result in an initial tax depreciable base in excess of the book carrying value by an amount equal to one half of the ITC. Deferred tax benefits are recorded as a reduction to income tax expense in the period that the basis difference is created.
When Duke Energy receives ITCs on wind or solar facilities associated with its regulated operations, the ITC is deferred and amortized as a reduction of income tax expense over the estimated useful lives of the related properties.
Duke Energy receives PTCs on wind facilities that are recognized as electricity is produced and records related amounts as a reduction of income tax expense.
Excise Taxes
Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Taxes for which Duke Energy operates merely as a collection agent for the state and local government are accounted for on a net basis. Excise taxes accounted for on a gross basis within both Operating Revenues and Property and other taxes in the Consolidated Statements of Operations were as follows.
Years Ended December 31,
(in millions) 202020192018
Duke Energy $415 $421 $405 
Duke Energy Carolinas 43 39 35 
Progress Energy 249 256 241 
Duke Energy Progress 26 21 19 
Duke Energy Florida 223 235 222 
Duke Energy Ohio 96 101 105 
Duke Energy Indiana 25 23 22 
Piedmont2 2 2 
Dividend Restrictions and Unappropriated Retained Earnings
Duke Energy does not have any current legal, regulatory or other restrictions on paying common stock dividends to shareholders. However, if Duke Energy were to defer dividend payments on the preferred stock, the declaration of common stock dividends would be prohibited. See Note 19 for more information. Additionally, as further described in Note 3, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Indiana and Piedmont have restrictions on paying dividends or otherwise advancing funds to Duke Energy due to conditions established by regulators in conjunction with merger transaction approvals. At December 31, 2020, and 2019, an insignificant amount of Duke Energy’s consolidated Retained earnings balance represents undistributed earnings of equity method investments.
New Accounting Standards
The following new accounting standard was adopted by Duke Energy Registrants in 2020.
Credit Losses. In June 2016, the FASB issued new accounting guidance for credit losses. Duke Energy adopted the new accounting guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year results. Duke Energy did not adopt any practical expedients.
134




FINANCIAL STATEMENTSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 and 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 7 and 18 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:
 December 31, 2020
DukeDukeDuke
DukeEnergyProgressEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaPiedmont
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 December 31, 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.
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
Reportable segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business. Duke Energy 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, as discussed below, includes intercompany revenues and expenses that are eliminated on the Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.
Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost. Segment assets as presented in the tables that follow exclude all intercompany assets.
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 includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The regulated electric utilities conduct operations through the Subsidiary Registrants that are substantially all regulated and, accordingly, qualify for regulatory accounting treatment. Electric Utilities and Infrastructure also includes Duke Energy's electric transmission infrastructure investments.
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. Gas Utilities and Infrastructure's operations are substantially all regulated and, accordingly, qualify for regulatory accounting treatment.
The Commercial Renewables segment is primarily comprised of nonregulated utility-scale wind and solar generation assets located throughout the U.S.
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 and Duke Energy’s wholly owned captive insurance company, Bison. Other also includes Duke Energy's interest in NMC. See Note 12 for additional information on the investment in NMC.
135




FINANCIAL STATEMENTSBUSINESS SEGMENTS
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
Year Ended December 31, 2020
ElectricGasTotal
Utilities andUtilities andCommercialReportable
(in millions)InfrastructureInfrastructureRenewablesSegmentsOtherEliminationsTotal
Unaffiliated Revenues$21,687 $1,653 $502 $23,842 $26 $ $23,868 
Intersegment Revenues33 95  128 71 (199) 
Total Revenues$21,720 $1,748 $502 $23,970 $97 $(199)$23,868 
Interest Expense$1,320 $135 $66 $1,521 $657 $(16)$2,162 
Depreciation and amortization4,068 258 199 4,525 209 (29)4,705 
Equity in earnings (losses) of unconsolidated affiliates(1)(2,017) (2,018)13  (2,005)
Income tax expense (benefit)340 (349)(65)(74)(162) (236)
Segment income (loss)(a)(b)(c)
2,669 (1,266)286 1,689 (426) 1,263 
Less noncontrolling interest295 
Add back preferred stock dividend107 
Income from discontinued operations, net of tax7 
Net income$1,082 
Capital investments expenditures and acquisitions$7,629 $1,309 $1,219 $10,157 $264 $ $10,421 
Segment assets138,225 13,849 6,716 158,790 3,598  162,388 
(a)    Electric Utilities and Infrastructure includes $948 million of Impairment charges and a reversal of $152 million included in Regulated electric operating revenue related to the CCR Settlement Agreement filed with the NCUC. Additionally, Electric Utilities and Infrastructure includes $19 million of Impairment charges related to the Clemson University Combined Heat and Power Plant, $5 million of Impairment charges related to the gas pipeline assets and $16 million of shareholder contributions within Operations, maintenance and other related to Duke Energy Carolinas' and Duke Energy Progress' 2019 North Carolina rate cases. See Note 3 for additional information.
(b)    Gas Utilities and Infrastructure includes $2.1 billion recorded within Equity in (losses) earnings of unconsolidated affiliates and $7 million of Impairment charges related to gas pipeline investments. See Notes 3 and 12 for additional information.
(c)    Other includes a $98 million reversal of 2018 severance costs due to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case. See Note 3 and 20 for additional information.
Year Ended December 31, 2019
ElectricGasTotal
Utilities andUtilities andCommercialReportable
(in millions)InfrastructureInfrastructureRenewablesSegmentsOtherEliminationsTotal
Unaffiliated Revenues$22,798 $1,770 $487 $25,055 $24 $— $25,079 
Intersegment Revenues33 96 — 129 71 (200)— 
Total Revenues$22,831 $1,866 $487 $25,184 $95 $(200)$25,079 
Interest Expense$1,345 $117 $95 $1,557 $705 $(58)$2,204 
Depreciation and amortization3,951 256 168 4,375 178 (5)4,548 
Equity in earnings (losses) of unconsolidated affiliates9 114 (4)119 43 — 162 
Income tax expense (benefit)785 22 (115)692 (173)— 519 
Segment income (loss)(a)(b)
3,536 432 198 4,166 (452)— 3,714 
Less noncontrolling interest177 
Add back preferred stock dividend41 
Loss from discontinued operations, net of tax(7)
Net income$3,571 
Capital investments expenditures and acquisitions$8,263 $1,539 $1,423 $11,225 $221 $— $11,446 
Segment assets135,561 13,921 6,020 155,502 3,148 188 158,838 
(a)    Electric Utilities and Infrastructure includes a $27 million reduction of a prior year impairment at Citrus County CC related to the plant's cost cap. See Note 3 for additional information.
(b)    Gas Utilities and Infrastructure includes an after-tax impairment charge of $19 million for the remaining investment in Constitution. See Note 12 for additional information.
136




FINANCIAL STATEMENTSBUSINESS SEGMENTS
Year Ended December 31, 2018
ElectricGasTotal
Utilities andUtilities andCommercialReportable
(in millions)InfrastructureInfrastructureRenewablesSegmentsOtherEliminationsTotal
Unaffiliated Revenues$22,242 $1,783 $477 $24,502 $19 $— $24,521 
Intersegment Revenues31 98 — 129 70 (199)— 
Total Revenues$22,273 $1,881 $477 $24,631 $89 $(199)$24,521 
Interest Expense$1,288 $106 $88 $1,482 $657 $(45)$2,094 
Depreciation and amortization3,523 245 155 3,923 152 (1)4,074 
Equity in earnings (losses) of unconsolidated affiliates5 27 (1)31 52 — 83 
Income tax expense (benefit)(a)
799 78 (147)730 (282)— 448 
Segment income (loss)(b)(c)(d)(e)
3,058 274 9 3,341 (694)— 2,647 
Less noncontrolling interest22 
Income from discontinued operations, net of tax19 
Net income$2,644 
Capital investments expenditures and acquisitions$8,086 $1,133 $193 $9,412 $256 $— $9,668 
Segment assets125,364 12,361 4,204 141,929 3,275 188 145,392 
(a)    All segments include adjustments to the December 31, 2017, estimate of the income tax effects of the Tax Act. Electric Utilities and Infrastructure includes a $24 million expense, Gas Utilities and Infrastructure includes a $1 million expense, Commercial Renewables includes a $3 million benefit and Other includes a $2 million benefit. See Note 23 for additional information.
(b)    Electric Utilities and Infrastructure includes after-tax regulatory and legislative impairment charges of $202 million related to rate case orders, settlements or other actions of regulators or legislative bodies and an after-tax impairment charge of $46 million related to the Citrus County CC at Duke Energy Florida. See Note 3 for additional information.
(c)    Gas Utilities and Infrastructure includes an after-tax impairment charge of $42 million for the investment in Constitution. See Note 12 for additional information.
(d)    Commercial Renewables includes an impairment charge of $91 million, net of $2 million Noncontrolling interests, related to goodwill. See Note 11 for additional information.
(e)    Other includes $65 million of after-tax costs to achieve the Piedmont merger, $144 million of after-tax severance charges related to a companywide initiative and an $82 million after-tax loss on the sale of Beckjord described below. For additional information, see Note 1 for the Piedmont merger and Note 20 for severance charges.
In February 2018, Duke Energy sold Beckjord, a nonregulated facility retired during 2014, and recorded a pretax loss of $106 million within Gains (Losses) on Sales of Other Assets and Other, net and $1 million within Operation, maintenance and other on Duke Energy's Consolidated Statements of Operations for the year ended December 31, 2018. The sale included the transfer of coal ash basins and other real property and indemnification from any and all potential future claims related to the property, whether arising under environmental laws or otherwise.
Geographical Information
Substantially all assets and revenues from continuing operations are within the U.S.
Major Customers
For the year ended December 31, 2020, revenues from one customer of Duke Energy Progress are $553 million. Duke Energy Progress has one reportable segment, Electric Utilities and Infrastructure. No other Subsidiary Registrant has an individual customer representing more than 10% of its revenues.
137




FINANCIAL STATEMENTSBUSINESS SEGMENTS
Products and Services
The following table summarizes revenues of the reportable segments by type.
RetailWholesaleRetailTotal
(in millions)ElectricElectricNatural GasOther Revenues
2020
Electric Utilities and Infrastructure$18,898 $1,878 $ $944 $21,720 
Gas Utilities and Infrastructure  1,691 57 1,748 
Commercial Renewables 434  68 502 
Total Reportable Segments$18,898 $2,312 $1,691 $1,069 $23,970 
2019
Electric Utilities and Infrastructure$19,745 $2,231 $— $855 $22,831 
Gas Utilities and Infrastructure— — 1,782 84 1,866 
Commercial Renewables— 389 — 98 487 
Total Reportable Segments$19,745 $2,620 $1,782 $1,037 $25,184 
2018
Electric Utilities and Infrastructure$19,013 $2,345 $— $915 $22,273 
Gas Utilities and Infrastructure— — 1,817 64 1,881 
Commercial Renewables— 375 — 102 477 
Total Reportable Segments$19,013 $2,720 $1,817 $1,081 $24,631 
Duke Energy Ohio
Duke Energy Ohio has two reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure.
Electric Utilities and Infrastructure transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. Gas Utilities and Infrastructure transports and sells natural gas in portions of Ohio and Northern Kentucky. Both reportable segments conduct operations primarily through Duke Energy Ohio and its wholly owned subsidiary, Duke Energy Kentucky. The remainder of Duke Energy Ohio's operations is presented as Other.
All Duke Energy Ohio assets and revenues from continuing operations are within the U.S.
Year Ended December 31, 2020
ElectricGasTotal
Utilities andUtilities andReportable
(in millions)InfrastructureInfrastructureSegmentsOtherEliminationsTotal
Total revenues$1,405 $453 $1,858 $ $ $1,858 
Interest expense$85 $17 $102 $ $ $102 
Depreciation and amortization200 78 278   278 
Income tax expense (benefit)19 26 45 (2) 43 
Segment income (loss)/Net income162 96 258 (6) 252 
Capital expenditures$548 $286 $834 $ $ $834 
Segment assets6,615 3,380 9,995 32 (2)10,025 
138




FINANCIAL STATEMENTSBUSINESS SEGMENTS
Year Ended December 31, 2019
ElectricGasTotal
Utilities andUtilities andReportable
(in millions)InfrastructureInfrastructureSegmentsOtherEliminationsTotal
Total revenues$1,456 $484 $1,940 $— $— $1,940 
Interest expense$80 $29 $109 $— $— $109 
Depreciation and amortization182 83 265 — — 265 
Income tax expense (benefit)20 21 41 (1)— 40 
Segment income (loss)159 85 244 (5)— 239 
Loss from discontinued operations, net of tax(1)
Net income$238 
Capital expenditures$680 $272 $952 $— $— $952 
Segment assets6,188 3,116 9,304 34 — 9,338 
Year Ended December 31, 2018
ElectricGasTotal
Utilities andUtilities andReportable
(in millions)InfrastructureInfrastructureSegmentsOtherEliminationsTotal
Total revenues$1,450 $506 $1,956 $1 $— $1,957 
Interest expense$67 $24 $91 $1 $— $92 
Depreciation and amortization183 85 268 — — 268 
Income tax expense (benefit)47 24 71 (28)— 43 
Segment income (loss)/Net Income(a)
186 93 279 (103)— 176 
Capital expenditures$655 $172 $827 $— $— $827 
Segment assets5,643 2,874 8,517 38 — 8,555 
(a)    Other includes the loss on the sale of Beckjord, see discussion above.
3. REGULATORY MATTERS
REGULATORY ASSETS AND LIABILITIES
The Duke Energy Registrants record regulatory assets and liabilities that result from the ratemaking process. See Note 1 for further information.
139




FINANCIAL STATEMENTSREGULATORY MATTERS
The following tables present the regulatory assets and liabilities recorded on the Consolidated Balance Sheets of Duke Energy and Progress Energy. See separate tables below for balances by individual registrant.
Duke EnergyProgress Energy
December 31,December 31,
(in millions)2020201920202019
Regulatory Assets
AROs – coal ash$3,408 $4,084 $1,357 $1,843 
AROs – nuclear and other754 739 685 668 
Accrued pension and OPEB2,317 2,391 875 897 
Storm cost deferrals1,102 1,399 893 1,214 
Nuclear asset securitized balance, net991 1,042 991 1,042 
Debt fair value adjustment950 1,019  — 
Retired generation facilities417 331 363 266 
Post-in-service carrying costs (PISCC) and deferred operating expenses402 329 51 33 
Deferred asset – Lee and Harris COLA356 388 32 38 
Hedge costs deferrals351 356 148 129 
Advanced metering infrastructure (AMI)311 338 102 114 
Demand side management (DSM)/Energy Efficiency (EE)288 343 241 241 
Vacation accrual221 214 42 41 
Deferred fuel and purchased power213 528 162 305 
COR settlement128 133 33 35 
NCEMPA deferrals124 72 124 72 
Nuclear deferral123 107 35 40 
Derivatives – natural gas supply contracts122 117  — 
CEP deferral117 76  — 
Amounts due from customers110 36  — 
Qualifying facility contract buyouts107 121 107 121 
Customer connect project105 65 55 37 
Manufactured gas plant (MGP)104 102  — 
ABSAT, coal ash basin closure98 65 27 15 
Deferred pipeline integrity costs92 79  — 
Deferred severance charges86 — 29 — 
Incremental COVID-19 expenses76 — 23 — 
Other589 544 158 141 
Total regulatory assets14,062 15,018 6,533 7,292 
Less: current portion1,641 1,796 758 946 
Total noncurrent regulatory assets$12,421 $13,222 $5,775 $6,346 
Regulatory Liabilities
Net regulatory liability related to income taxes$7,368 $7,872 $2,411 $2,595 
Costs of removal5,883 5,756 2,666 2,561 
AROs – nuclear and other1,512 1,100  — 
Provision for rate refunds344 370 123 123 
Accrued pension and OPEB177 176  — 
Amounts to be refunded to customers51 34  — 
Deferred fuel and purchased power18 1  1 
Other 1,053 739 491 275 
Total regulatory liabilities 16,406 16,048 5,691 5,555 
Less: current portion 1,377 784 640 330 
Total noncurrent regulatory liabilities $15,029 $15,264 $5,051 $5,225 
Descriptions of regulatory assets and liabilities summarized in the tables above and below follow. See tables below for recovery and amortization periods at the separate registrants.
140




FINANCIAL STATEMENTSREGULATORY MATTERS
AROs coal ash. Represents deferred depreciation and accretion related to the legal obligation to close ash basins. The costs are deferred until recovery treatment has been determined. See Notes 1 and 9 for additional information.
AROs nuclear and other. Represents regulatory assets or liabilities, including deferred depreciation and accretion, related to legal obligations associated with the future retirement of property, plant and equipment, excluding amounts related to coal ash. The AROs relate primarily to decommissioning nuclear power facilities. The amounts also include certain deferred gains and losses on NDTF investments. See Notes 1 and 9 for additional information.
Accrued pension and OPEB. Accrued pension and OPEB represent regulatory assets and liabilities related to each of the Duke Energy Registrants’ respective shares of unrecognized actuarial gains and losses and unrecognized prior service cost and credit attributable to Duke Energy’s pension plans and OPEB plans. The regulatory asset or liability is amortized with the recognition of actuarial gains and losses and prior service cost and credit to net periodic benefit costs for pension and OPEB plans. The accrued pension and OPEB regulatory assets are expected to be recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
Storm cost deferrals. Represents deferred incremental costs incurred related to major weather-related events.
Nuclear asset securitized balance, net. Represents the balance associated with Crystal River Unit 3 retirement approved for recovery by the FPSC on September 15, 2015, and the upfront financing costs securitized in 2016 with issuance of the associated bonds. The regulatory asset balance is net of the AFUDC equity portion.
Debt fair value adjustment. Purchase accounting adjustments recorded to state the carrying value of Progress Energy and Piedmont at fair value in connection with the 2012 and 2016 mergers, respectively. Amount is amortized over the life of the related debt.
Retired generation facilities. Represents amounts to be recovered for facilities that have been retired and are probable of recovery.
Post-in-service carrying costs (PISCC) and deferred operating expenses. Represents deferred depreciation and operating expenses as well as carrying costs on the portion of capital expenditures placed in service but not yet reflected in retail rates as plant in service.
Deferred asset – Lee and Harris COLA. Represents deferred costs incurred for the canceled Lee and Harris nuclear projects.
Hedge costs deferrals. Amounts relate to unrealized gains and losses on derivatives recorded as a regulatory asset or liability, respectively, until the contracts are settled.
AMI. Represents deferred costs related to the installation of AMI meters and remaining net book value of non-AMI meters to be replaced at Duke Energy Carolinas, net book value of existing meters at Duke Energy Florida, Duke Energy Progress and Duke Energy Ohio and future recovery of net book value of electromechanical meters that have been replaced with AMI meters at Duke Energy Indiana.
DSM/EE. Deferred costs related to various DSM and EE programs recoverable through various mechanisms.
Vacation accrual. Represents vacation entitlement, which is generally recovered in the following year.
Deferred fuel and purchased power. Represents certain energy-related costs that are recoverable or refundable as approved by the applicable regulatory body.
COR settlement. Represents approved COR settlements that are being amortized over the average remaining lives, at the time of approval, of the associated assets.
NCEMPA deferrals. Represents retail allocated cost deferrals and returns associated with the additional ownership interest in assets acquired from NCEMPA in 2015.
Nuclear deferral. Includes amounts related to levelizing nuclear plant outage costs, which allows for the recognition of nuclear outage expenses over the refueling cycle rather than when the outage occurs, resulting in the deferral of operations and maintenance costs associated with refueling.
Derivatives – natural gas supply contracts. Represents costs for certain long-dated, fixed quantity forward gas supply contracts, which are recoverable through PGA clauses.
CEP deferral. Represents deferred depreciation, PISCC and deferred property tax for Duke Energy Ohio Gas capital assets for the Capital Expenditure Program (CEP).
Amounts due from customers. Relates primarily to margin decoupling and IMR recovery mechanisms.
Qualifying facility contract buyouts. Represents termination payments for regulatory recovery through the capacity clause.
Customer connect project. Represents incremental operating expenses and carrying costs on deferred amounts related to the deployment of the new customer information system known as the Customer Connect Project.
MGP. Represents remediation costs incurred at former MGP sites and the deferral of costs to be incurred at Duke Energy Ohio's East End and West End sites.
ABSAT, coal ash basin closure. Represents deferred depreciation and returns associated with Ash Basin Strategic Action Team (ABSAT) capital assets related to converting the ash handling system from wet to dry.
141




FINANCIAL STATEMENTSREGULATORY MATTERS
Deferred pipeline integrity costs. Represents pipeline integrity management costs in compliance with federal regulations recovered through a rider mechanism.
Deferred severance charges. Represents costs incurred for employees separation from Duke Energy.
Incremental COVID-19 expenses. Represents incremental costs related to ensuring continuity and quality of service in a safe manner during the COVID-19 pandemic.
Net regulatory liability related to income taxes. Amounts for all registrants include regulatory liabilities related primarily to impacts from the Tax Act. See Note 23 for additional information. Amounts have no immediate impact on rate base as regulatory assets are offset by deferred tax liabilities.
Costs of removal. Represents funds received from customers to cover the future removal of property, plant and equipment from retired or abandoned sites as property is retired. Also includes certain deferred gains on NDTF investments.
Provisions for rate refunds. Represents estimated amounts due to customers based on recording interim rates subject to refund.
Amounts to be refunded to customers. Represents required rate reductions to retail customers by the applicable regulatory body.
RESTRICTIONS ON THE ABILITY OF CERTAIN SUBSIDIARIES TO MAKE DIVIDENDS, ADVANCES AND LOANS TO DUKE ENERGY
As a condition to the approval of merger transactions, the NCUC, PSCSC, PUCO, KPSC and IURC imposed conditions on the ability of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Kentucky, Duke Energy Indiana and Piedmont to transfer funds to Duke Energy through loans or advances, as well as restricted amounts available to pay dividends to Duke Energy. Certain subsidiaries may transfer funds to the Parent by obtaining approval of the respective state regulatory commissions. These conditions imposed restrictions on the ability of the public utility subsidiaries to pay cash dividends as discussed below.
Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Amounts restricted as a result of these provisions were not material at December 31, 2020.
Duke Energy Indiana has certain dividend restrictions as a result of the agreement entered in January 2021 to sell a minority interest to GIC. Duke Energy Indiana will not declare a dividend prior to the first closing, which is expected to be completed in the second quarter of 2021, and will declare dividends between the first closing and the second closing, which is required to be completed no later than January 2023, in accordance with the sale agreement. See additional information in Note 1.
Additionally, certain other subsidiaries of Duke Energy have restrictions on their ability to dividend, loan or advance funds to Duke Energy due to specific legal or regulatory restrictions, including, but not limited to, minimum working capital and tangible net worth requirements.
The restrictions discussed below were not a material amount of Duke Energy's and Progress Energy's net assets at December 31, 2020.
Duke Energy Carolinas
Duke Energy Carolinas must limit cumulative distributions subsequent to mergers to (i) the amount of retained earnings on the day prior to the closing of the mergers, plus (ii) any future earnings recorded.
Duke Energy Progress
Duke Energy Progress must limit cumulative distributions subsequent to the mergers between Duke Energy and Progress Energy and Duke Energy and Piedmont to (i) the amount of retained earnings on the day prior to the closing of the respective mergers, plus (ii) any future earnings recorded.
Duke Energy Ohio
Duke Energy Ohio will not declare and pay dividends out of capital or unearned surplus without the prior authorization of the PUCO. Duke Energy Ohio received FERC and PUCO approval to pay dividends from its equity accounts that are reflective of the amount that it would have in its retained earnings account had push-down accounting for the Cinergy merger not been applied to Duke Energy Ohio’s balance sheet. The conditions include a commitment from Duke Energy Ohio that equity, adjusted to remove the impacts of push-down accounting, will not fall below 30% of total capital.
Duke Energy Kentucky is required to pay dividends solely out of retained earnings and to maintain a minimum of 35% equity in its capital structure.
Duke Energy Indiana
Duke Energy Indiana must limit cumulative distributions subsequent to the merger between Duke Energy and Cinergy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded. In addition, Duke Energy Indiana will not declare and pay dividends out of capital or unearned surplus without prior authorization of the IURC.
Piedmont
Piedmont must limit cumulative distributions subsequent to the acquisition of Piedmont by Duke Energy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded.
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FINANCIAL STATEMENTSREGULATORY MATTERS
RATE-RELATED INFORMATION
The NCUC, PSCSC, FPSC, IURC, PUCO, TPUC and KPSC approve rates for retail electric and natural gas services within their states. The FERC approves rates for electric sales to wholesale customers served under cost-based rates (excluding Ohio and Indiana), as well as sales of transmission service. The FERC also regulates certification and siting of new interstate natural gas pipeline projects.
Duke Energy Carolinas and Duke Energy Progress
2021 Coal Ash Settlement
On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the Coal Combustion Residuals Settlement Agreement (the “CCR Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the North Carolina Attorney General’s Office and the Sierra Club (collectively, the "Settling Parties"), which was filed with the NCUC on January 25, 2021. The CCR Settlement Agreement resolves all coal ash prudence and cost recovery issues in connection with 2019 rate cases filed by Duke Energy Carolinas and Duke Energy Progress with the NCUC, as well as the equitable sharing issue on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases as a result of the December 11, 2020, North Carolina Supreme Court opinion. The settlement also provides clarity on coal ash cost recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress through January 2030 and February 2030 (the "Term"), respectively.
Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery of approximately $1 billion of systemwide deferred coal ash expenditures, but will retain the ability to earn a debt and equity return during the amortization period, which shall be five years in the pending 2019 North Carolina rate cases and will be set by the NCUC in future rate case proceedings. The equity return and the amortization period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases will remain unaffected. The equity return on deferred coal ash costs under the 2019 North Carolina rate cases and future rate cases in North Carolina will be set at 150 basis points lower than the authorized return on equity then in effect, with a capital structure composed of 48% debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the ability to earn a full WACC return during the deferral period, which is the period from when costs are incurred until they are recovered in rates.
The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.
The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers, if achieved.
The settlement is subject to the review and approval of the NCUC. The Settling Parties requested an expedited review by the NCUC and anticipate an order on the pending 2019 North Carolina rate cases for Duke Energy Carolinas and Duke Energy Progress by the second quarter of 2021. On January 29, 2021, Duke Energy Carolinas and Duke Energy Progress filed joint motions with the Settling Parties seeking approval of the CCR Settlement Agreement, along with supporting testimony and exhibits from Duke Energy Carolinas and Duke Energy Progress. On February 5, 2021, the Public Staff filed testimony and exhibits supporting the CCR Settlement Agreement.
As a result of the CCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.
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.
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FINANCIAL STATEMENTSREGULATORY 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. Comments on the joint petition were filed on November 5, 2020, and reply comments were filed on November 30, 2020. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
South Carolina
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. Updates on cost impacts were filed on December 30, 2020, and included financial impacts through November 30, 2020. On January 15, 2021, ORS requested the PSCSC suspend the dates for the ORS report and public hearing. The ORS conferred with the companies regarding the status of the docket, and the parties mutually agreed that recently enacted federal laws addressing COVID-19 aid and recovery should be studied before further action is taken in this docket. On January 27, 2021, the PSCSC voted to grant the ORS request to suspend the virtual public hearing. ORS is to file its report on or before March 29, 2021.
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 the costs of each utility's storm recovery activities required as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically, Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find that their storm recovery costs and related financing costs are appropriately financed by debt secured by storm recovery property, and that the Commission issue financing orders by which each utility may accomplish such financing using a securitization structure. On January 27, 2021, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain accounting issues, including agreement to support an 18- to 20-year bond period. The total revenue requirement over a proposed 20-year bond period for the storm recovery charges is approximately $287 million for Duke Energy Carolinas and $920 million for Duke Energy Progress. A remote evidentiary hearing ended on January 29, 2021, and on February 1, 2021, the NCUC granted a motion by Duke Energy Carolinas and Duke Energy Progress for a temporary 30-day waiver of the 135-day time frame for the NCUC to issue orders on the joint petition, extending the deadline for the NCUC to issue an order to no later than April 9, 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
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FINANCIAL STATEMENTSREGULATORY MATTERS
Duke Energy Carolinas
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Carolinas' Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash$1,414 $1,696  (h)  (b)
Accrued pension and OPEB(c)
427 477 Yes (i)
Storm cost deferrals205 178  Yes  (b)
Retired generation facilities(c)
11 16  Yes 2023
PISCC(c)
32 33  Yes  (b)
Deferred asset – Lee COLA324 350    (b)
Hedge costs deferrals(c)
174 198  Yes  2041
AMI154 166  Yes  (b)
DSM/EE46 100  (g)  (g)
Vacation accrual84 80  2021
Deferred fuel and purchased power42 222 (e) 2022
COR settlement95 98 Yes(b)
Nuclear deferral88 67   2022
Customer connect project50 28  Yes (b)
ABSAT, coal ash basin closure71 50 Yes(b)
Deferred severance charges57 —   2022
Incremental COVID-19 expenses31 —  Yes  (b)
Other164 151    (b)
Total regulatory assets3,469 3,910 
Less: current portion473 550 
Total noncurrent regulatory assets$2,996 $3,360 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(d)
$2,874 $3,060 (b)
Costs of removal(c)
1,975 1,936 Yes(f)
AROs – nuclear and other1,512 1,100 (b)
Provision for rate refunds(c)
170 175 Yes
Accrued pension and OPEB(c)
32 39 Yes(i)
Deferred fuel and purchased power18 — (e)2020
Other 427 368 (b)
Total regulatory liabilities7,008 6,678 
Less: current portion473 255 
Total noncurrent regulatory liabilities$6,535 $6,423 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)     Included in rate base.
(d)    Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note 23. Portions are included in rate base.
(e)    Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.
(f)    Recovered over the life of the associated assets.
(g)    Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
(h)    Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(i)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
145




FINANCIAL STATEMENTSREGULATORY MATTERS
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. On February 28, 2018, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included 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. As a result of the June 22, 2018, order, Duke Energy Carolinas recorded a pretax charge of approximately $150 million to Impairment charges and Operation, maintenance and other on the Consolidated Statements of Operations. The charge was primarily related to the denial of a return on the Lee Nuclear Project and the assessment of a $70 million cost of service penalty by reducing the annual recovery of deferred coal ash costs by $14 million per year over a five-year recovery period.
The North Carolina Attorney General and other parties separately filed Notices of Appeal to the North Carolina Supreme Court. The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion on the consolidated appeals of the 2018 Duke Energy Carolinas and Duke Energy Progress rate case orders which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases, or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Carolinas cannot predict the outcome of this matter.
2019 North Carolina Rate Case
On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the Commission.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
Removal of deferred storm costs from the rate case;
Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;
Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing; and
Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.
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.
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FINANCIAL STATEMENTSREGULATORY MATTERS
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 made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. Duke Energy Carolinas expects the NCUC to issue an order on its net rate increase by the second quarter of 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Carolinas cannot predict the outcome of this matter.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million.
After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The 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 in this matter. Duke Energy Carolinas cannot predict the outcome of this matter.
147




FINANCIAL STATEMENTSREGULATORY MATTERS
Duke Energy Progress
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Progress' Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash$1,347 $1,834  (h)  (b)
AROs – nuclear and other683 509    (c)
Accrued pension and OPEB393 423    (k)
Storm cost deferrals(d)
785 801  Yes  (b)
Retired generation facilities189 83  Yes  (b)
PISCC and deferred operating expenses51 33  Yes 2054
Deferred asset – Harris COLA32 38     (b)
Hedge costs deferrals89 85    (b)
AMI57 61 Yes (b)
DSM/EE(e)
224 216  (i)  (i)
Vacation accrual42 41   2021
Deferred fuel and purchased power158 266  (f) 2022
COR settlement33 35 Yes (e)
NCEMPA deferrals124 72  (g) 2042
Nuclear deferral35 40   2022
Customer connect project25 17  Yes (b)
ABSAT, coal ash basin closure27 15 Yes(b)
Deferred severance charges29 —   2022
Incremental COVID-19 expenses23 — Yes (b)
Other122 109    (b)
Total regulatory assets4,468 4,678 
Less: current portion492 526 
Total noncurrent regulatory assets$3,976 $4,152 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(l)
$1,662 $1,802 (b)
Costs of removal2,666 2,294 Yes(j)
Provision for rate refunds123 123 Yes
Other 473 249 (b)
Total regulatory liabilities4,924 4,468 
Less: current portion530 236 
Total noncurrent regulatory liabilities$4,394 $4,232 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Recovery period for costs related to nuclear facilities runs through the decommissioning period of each unit.
(d)    South Carolina storm costs are included in rate base.
(e)    Included in rate base.
(f)    Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.
(g)    South Carolina retail allocated costs are earning a return.
(h)    Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(i)    Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
(j)    Recovered over the life of the associated assets.
(k)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
(l)    Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note 23. Portions are included in rate base.
148




FINANCIAL STATEMENTSREGULATORY MATTERS
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 order also impacted certain amounts that were similarly recorded on Duke Energy Carolinas' Consolidated Balance Sheets. As a result of the order, Duke Energy Progress and Duke Energy Carolinas recorded pretax charges of $68 million and $14 million, respectively, in the first quarter of 2018 to Impairment charges, Operation, maintenance and other and Interest Expense on the Consolidated Statements of Operations. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.
The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion on the consolidated appeals of the 2018 Duke Energy Carolinas and Duke Energy Progress rate case orders which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. For information on the proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Progress cannot predict the outcome of this matter.
2019 North Carolina Rate Case
On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress seeks to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requests rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
Removal of deferred storm costs from the rate case;
Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;
Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing;
Agreement that the Asheville CC project is complete and in service and agreement on the amount to be included in rate base; and
Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.
On May 6, 2020, Duke Energy Progress, Duke Energy Carolinas and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. 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.
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FINANCIAL STATEMENTSREGULATORY MATTERS
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 were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. Duke Energy Progress expects the NCUC to issue an order on its net rate increase by the second quarter of 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." 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 Consolidated Balance Sheets as of December 31, 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. For information on the securitization filing, see "2020 North Carolina Storm Securitization Filings." Duke Energy Progress cannot predict the outcome of this matter.
On February 7, 2020, a petition was filed with the PSCSC in the 2019 storm deferrals docket requesting deferral of approximately $22 million in operation and maintenance expenses to an existing storm deferral balance previously approved by the PSCSC. The PSCSC voted to approve the request on March 4, 2020, and issued a final order on April 7, 2020. On July 1, 2020, Duke Energy Progress filed a supplemental true up reducing the actual costs to $17 million.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
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%.
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FINANCIAL STATEMENTSREGULATORY MATTERS
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the 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 in this matter. 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 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 operations and maintenance expenses 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 was held on November 18, 2020. Duke Energy Progress cannot predict the outcome of this matter.
FERC Return on Equity Complaints
On October 11, 2019, NCEMPA filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA), alleging that the 11% stated return on equity (ROE) component contained in the demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress is unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. 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 is just and reasonable. The parties are currently in FERC settlement procedures. Duke Energy Progress cannot predict the outcome of this matter.
On October 16, 2020, NCEMC filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA, alleging that the 11% stated ROE component in the demand formula rate in the Power Supply and Coordination Agreement between NCEMC and Duke Energy Progress is unjust and unreasonable. Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress responded to the complaint on November 20, 2020, demonstrating that the 11% ROE is just and reasonable for the service provided. The parties have filed additional pleadings. The FERC has not issued an order, and there is no deadline for the FERC to act. Duke Energy Progress cannot predict the outcome of this matter.
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FINANCIAL STATEMENTSREGULATORY MATTERS
Duke Energy Florida
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Florida's Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash(c)
$10 $9    (b)
AROs – nuclear and other(c)
2 159  Yes  (b)
Accrued pension and OPEB(c)
482 474  Yes  (g)
Storm cost deferrals(c)
108 413  (e)  (b)
Nuclear asset securitized balance, net991 1,042    2036
Retired generation facilities(c)
174 183  Yes  (b)
Hedge costs deferrals59 44  Yes  2038
AMI(c)
45 53  Yes  2032
DSM/EE(c)
17 25  Yes  2025
Deferred fuel and purchased power4 39  (f) 2022
Qualifying facility contract buyouts107 121  Yes 2034
Customer connect project30 20   2037
Other35 31  (d)  (b)
Total regulatory assets2,064 2,613 
Less: current portion265 419 
Total noncurrent regulatory assets$1,799 $2,194 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(c)
$749 $793 (b)
Costs of removal(c)
 267 (d)(b)
Deferred fuel and purchased power(c)
 1 (f)
Other 19 26 (d)(b)
Total regulatory liabilities768 1,087 
Less: current portion110 94 
Total noncurrent regulatory liabilities$658 $993 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Certain costs earn/pay a return.
(e)    Earns a debt return/interest once collections begin.
(f)    Earns commercial paper rate.
(g)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
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.
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “Settlement”) with the FPSC. The parties to the Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
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FINANCIAL STATEMENTSREGULATORY MATTERS
Pursuant to the Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to a return on equity (“ROE”) band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the DOE award of $173 million for spent nuclear fuel, which is expected to be received in 2022, in order to mitigate customer rates over the term of the Settlement. In return, Duke Energy Florida will be able to recognize the $173 million into earnings from 2022 through 2024.
In addition to these terms, the Settlement contains provisions related to the accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new cost effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and resiliency projects, among other things. The Settlement also resolves remaining unrecovered storm costs for hurricanes Dorian and Michael.
The Settlement is subject to the review and approval of the FPSC, which may occur in the second quarter of 2021. If the FPSC approves the Settlement, the new rates will be effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024. Duke Energy Florida cannot predict the outcome of this matter.
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. On November 12, 2020, Duke Energy Florida and OPC requested a 90 day abatement to engage in discussions to narrow the issues being litigated. The Prehearing Officer approved this request on November 16, 2020, and ordered Duke Energy Florida and OPC to update the commission on their discussions by February 12, 2021. Approximately $80 million and $204 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2020, and December 31, 2019, respectively.
Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. Approximately $167 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2019, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates. The amount at December 31, 2020 was immaterial. The final actual amount of $145 million was filed on September 30, 2020. Pursuant to the 2021 Settlement Agreement filed for FPSC approval on January 14, 2021, all matters regarding storm cost recovery relating to hurricanes Michael and Dorian have been resolved.
Clean Energy Connection
On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost-effective solar development in Florida by paying a subscription fee based on per kilowatt-subscriptions and receiving a credit on their bill based on the actual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next four years, and this investment will be included in base rates offset by the revenue from the subscription fees. The credits will be included for recovery in the fuel cost recovery clause. A remote hearing was held on November 17, 2020, and post-hearing briefs were filed with the FPSC from all parties by December 9, 2020. The FPSC voted to approve the program on January 5, 2021, and issued its written order on January 26, 2021.
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 December 31, 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 transaction closed on October 1, 2020.
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FINANCIAL STATEMENTSREGULATORY MATTERS
Citrus County CC
Construction of the 1,640-MW combined-cycle natural gas plant in Citrus County, Florida, began in October 2015 with an estimated cost of $1.5 billion, including AFUDC. Both units came online in the fourth quarter of 2018. The ultimate cost of the facility was estimated to be $1.6 billion, and Duke Energy Florida recorded Impairment charges on Duke Energy’s Consolidated Statements of Operations of $60 million in the fourth quarter of 2018 for the overrun. In the year ended December 31, 2019, Duke Energy Florida recorded a $36 million reduction to the prior year impairment due to a decrease in the cost estimate of the Citrus County CC, primarily related to the settlement agreement with Fluor, the EPC contractor. This adjustment reduced the estimated cost of the facility to $1.5 billion.
Duke Energy Ohio
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Ohio's Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash$22 $16  Yes  (b)
Accrued pension and OPEB149 155    (g)
Storm cost deferrals4 7   2023
PISCC and deferred operating expenses(c)
16 17  Yes 2083
Hedge costs deferrals7 6   (b)
AMI36 40   (b)
DSM/EE1 2  (f) (e)
Vacation accrual6 5   2021
Deferred fuel and purchased power 1   2021
CEP deferral117 76  Yes  (b)
MGP104 102    (b)
Deferred pipeline integrity costs21 17  Yes  (b)
Other166 154    (b)
Total regulatory assets649 598 
Less: current portion39 49 
Total noncurrent regulatory assets$610 $549 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes$628 $654 (b)
Costs of removal68 86 (d)
Provision for rate refunds45 31 (b)
Accrued pension and OPEB17 16 (g)
Other 55 40 (b)
Total regulatory liabilities813 827 
Less: current portion65 64 
Total noncurrent regulatory liabilities$748 $763 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Recovery over the life of the associated assets.
(e)    Recovered via a rider mechanism.
(f)    Includes incentives on DSM/EE investments.
(g)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
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FINANCIAL STATEMENTSREGULATORY MATTERS
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. Pursuant to the transition plan, suspended work and activities resumed beginning August 10, 2020, and disconnections resumed on September 8, 2020, for nonresidential customers and October 5, 2020, for residential customers.
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 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. Assessment of late payment charges for nonresidential customers resumed beginning October 20, 2020, and resumed for residential customers after December 31, 2020. Duke Energy Kentucky is following 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.
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 the 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.
155




FINANCIAL STATEMENTSREGULATORY MATTERS
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 through a rider mechanism referred to as the Clean Air Fund (Rider CAF), of two nuclear generating facilities located in Northern Ohio owned by Energy Harbor (f/k/a FirstEnergy Solutions), repeal of energy efficiency mandates and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery is through a non-bypassable rider that replaced any existing recovery mechanism approved by the PUCO and will remain in place through 2030. As such, Duke Energy Ohio created the Legacy Generation Rider (Rider LGR) that replaced Rider PSR effective January 1, 2020. The amounts recoverable from customers are subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 17 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. On December 21, 2020, the Franklin County Circuit Court issued an injunction against the PUCO’s Order that approved the nuclear plant funding through Rider CAF set to become effective on January 1, 2021. On December 28, 2020, in a separate proceeding, the Ohio Supreme Court, ordered a temporary stay on the implementation of Rider CAF. Duke Energy Ohio is not impacted by any changes in Rider CAF. The General Assembly’s session ended without addressing HB 6. Duke Energy Ohio cannot predict the outcome of this matter.
Tax Act – Ohio
On December 21, 2018, Duke Energy Ohio filed an application to change its base rate tariffs and establish a new rider to implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio requested commission approval to implement the changes and rider effective April 1, 2019. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from 35% to 21% since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO established a procedural schedule and testimony was filed on July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. Duke Energy Ohio cannot predict the outcome of this matter.
Energy Efficiency Cost Recovery
On 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. The PUCO issued two orders on November 18, 2020, on the application for rehearing. The first order was a Third Entry on Rehearing on the Duke Energy Ohio portfolio holding the cost cap previously imposed was unlawful, a shared savings cap of $8 million pretax should be imposed and lost distribution revenues could not be recovered after December 31, 2020. The second order directs all utilities set the rider to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020. On December 18, 2020, Duke Energy Ohio filed an application for rehearing. On January 13, 2021, the application for rehearing was granted for further consideration. Duke Energy Ohio cannot predict the outcome of this matter.
On October 9, 2020, Duke Energy Ohio filed an application to implement a voluntary efficiency program portfolio to commence on January 1, 2021. The application proposes a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review. As of January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs due to changes in Ohio law. Duke Energy Ohio cannot predict the outcome of this matter.
156




FINANCIAL STATEMENTSREGULATORY MATTERS
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. 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. Appellants' briefs were filed on November 24, 2020. On September 22, 2020, Duke Energy Ohio filed an application with the OPSB for approval to amend the certificated pipeline route due to changes in the route negotiated with property owners and municipalities. The staff report was filed on December 21, 2020, recommending approval subject to three conditions that reaffirm previous conditions, and provide guidance regarding local permitting and construction supervision.. On December 23, 2020, Duke Energy Ohio filed a letter indicating its acceptance of these conditions if required by the OPSB. On January 21, 2021, the OPSB approved the amended filing with the recommended conditions. On January 27, 2021, the Ohio Supreme Court set oral argument for March 31, 2021. Duke Energy Ohio cannot predict the outcome of this matter.
MGP Cost Recovery
As part of its 2012 natural gas base rate case, Duke Energy Ohio has approval to defer and recover costs related to environmental remediation at two sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs incurred between 2009 through 2012 through Rider MGP, which is currently suspended. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas base rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2019. On September 28, 2018, the staff of the PUCO issued a report recommending a disallowance of approximately $12 million of the $26 million in MGP remediation costs incurred between 2013 through 2017 that staff believes are not eligible for recovery. Staff interprets the PUCO’s 2012 Order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the staff’s recommendations and explaining, among other things, the obligation Duke Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2018 seeking recovery of approximately $20 million in remediation costs. On July 12, 2019, the staff recommended a disallowance of approximately $11 million for work that staff believes occurred in areas not authorized for recovery. Additionally, staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.
On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental 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, and intervenor comments were filed on November 9, 2020. Duke Energy Ohio cannot predict the outcome of this matter.
The 2012 PUCO order also contained conditional deadlines for completing the MGP environmental remediation and the deferral of 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 that must occur after December 31, 2019. On July 12, 2019, staff recommended the Commission deny the deferral authority request. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on October 2, 2019, Duke Energy Ohio filed reply comments. Duke Energy Ohio cannot predict the outcome of this matter.
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 request 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 took effect in November 2020. The case has been resolved.
Regional Transmission Organization Realignment
Duke Energy Ohio, including Duke Energy Kentucky, transferred control of its transmission assets from MISO to PJM, effective December 31, 2011. The PUCO approved a settlement related to Duke Energy Ohio’s recovery of certain costs of the RTO realignment via a non-bypassable rider. Duke Energy Ohio is allowed to recover all MISO Transmission Expansion Planning (MTEP) costs directly or indirectly charged to Ohio customers. The KPSC also approved a request to effect the RTO realignment, subject to a commitment not to seek double recovery in a future rate case of the transmission expansion fees that may be charged by MISO and PJM in the same period or overlapping periods.
157




FINANCIAL STATEMENTSREGULATORY MATTERS
The following table provides a reconciliation of the beginning and ending balance of Duke Energy Ohio’s recorded liability for its exit obligation and share of MTEP costs recorded in Other within Current Liabilities and Other Noncurrent Liabilities on the Consolidated Balance Sheets. The retail portions of MTEP costs billed by MISO are recovered by Duke Energy Ohio through a non-bypassable rider. As of December 31, 2020, and 2019, $37 million and $40 million, respectively, are recorded in Regulatory assets on Duke Energy Ohio's Consolidated Balance Sheets.
Provisions/
Cash
(in millions)
December 31, 2019
Adjustments
Reductions
December 31, 2020
Duke Energy Ohio
$54 $(1)$(3)$50 
Duke Energy Indiana
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Indiana's Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – coal ash$615 $529 Yes(b)
Accrued pension and OPEB245 243 (e)
Retired generation facilities(c)
43 49 Yes2030
PISCC and deferred operating expenses(c)
303 246 Yes(b)
Hedge costs deferrals22 23 (b)
AMI19 18 2031
Vacation accrual12 12 2021
Deferred fuel and purchased power9 — 2021
Other60 52 (b)
Total regulatory assets1,328 1,172 
Less: current portion125 90 
Total noncurrent regulatory assets$1,203 $1,082 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes$956 $1,008 (b)
Costs of removal599 599 (d)
Accrued pension and OPEB100 90 (e)
Amounts to be refunded to customers17 — (b)
Other 66 43 (b)
Total regulatory liabilities1,738 1,740 
Less: current portion111 55 
Total noncurrent regulatory liabilities$1,627 $1,685 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Refunded over the life of the associated assets.
(e)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
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 still in effect. At that time, 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.
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FINANCIAL STATEMENTSREGULATORY MATTERS
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 into 2021 and to 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.
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 Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana's request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction 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 implemented in mid-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 appeal was fully briefed in January 2021, and a decision is expected in the first or second 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.
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FINANCIAL STATEMENTSREGULATORY MATTERS
Piedmont
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Piedmont's Consolidated Balance Sheets.
December 31,Earns/PaysRecovery/Refund
(in millions)20202019a ReturnPeriod Ends
Regulatory Assets(a)
AROs – nuclear and other$20 $16 (d)
Accrued pension and OPEB(c)
88 90 (f)
Vacation accrual12 12 2021
Derivatives – natural gas supply contracts(e)
122 117 
Amounts due from customers110 36 Yes(b)
Deferred pipeline integrity costs(c)
71 62 2023
Other32 30 (b)
Total regulatory assets455 363 
Less: current portion153 73 
Total noncurrent regulatory assets$302 $290 
Regulatory Liabilities(a)
Net regulatory liability related to income taxes$499 $555 (b)
Costs of removal575 574 (d)
Provision for rate refunds6 41 Yes
Accrued pension and OPEB(c)
3 3 (f)
Amounts to be refunded to customers34 34 Yes(b)
Other 15 5 (b)
Total regulatory liabilities1,132 1,212 
Less: current portion88 81 
Total noncurrent regulatory liabilities$1,044 $1,131 
(a)    Regulatory assets and liabilities are excluded from rate base unless otherwise noted.
(b)    The expected recovery or refund period varies or has not been determined.
(c)    Included in rate base.
(d)    Recovery over the life of the associated assets.
(e)    Balance will fluctuate with changes in the market. Current contracts extend into 2031.
(f)    Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 22 for additional detail.
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 on 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, Piedmont filed a request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted Piedmont’s request on March 20, 2020.
On 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.
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.
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FINANCIAL STATEMENTSREGULATORY MATTERS
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. Piedmont filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. Updates on cost impacts were filed on September 30, 2020, and on December 31, 2020, and included financial impacts through the end of August 2020, and the end of November 2020, respectively.
On September 30, 2020, Piedmont filed an update on its 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 declared 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 its 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. Piedmont amended its requested increase to approximately $26 million in December 2020. As authorized under Tennessee law, Piedmont implemented interim rates on January 2, 2021, at the level requested in its adjusted request. A settlement reached with the Tennessee Consumer Advocate in mid-January was filed with the TPUC on February 2, 2021. The settlement results in an increase of revenues of approximately $16 million and a ROE of 9.8%. At a hearing on February 16, 2021, the TPUC voted to accept the settlement, with new rates effective January 2, 2021. Piedmont must refund customers the difference between bills previously rendered under interim rates and such bills if rendered under approved rates, plus interest.
2021 North Carolina Rate Case
On February 19, 2021, Piedmont filed notice with the NCUC of its intent to file a general rate case on or about March 22, 2021. Piedmont’s last general rate case in North Carolina was filed in April 2019, with rates effective November 2019.
2019 North Carolina Rate Case
On April 1, 2019, Piedmont filed an application with the NCUC, its first general rate case in North Carolina in six years. On August 13, 2019, Piedmont, the Public Staff, and two groups representing industrial customers filed an Agreement and Stipulation Settlement resolving issues in the base rate proceeding, which included a return on equity of 9.7% and a capital structure of 52% equity and 48% debt. Other major components of the Stipulation included:
An annual increase in revenues of $109 million before consideration of riders associated with federal and state tax reform;
A decrease through a rider mechanism of $23 million per year to return unprotected federal EDIT over a five-year period and deferred revenues related to the federal rate reduction of $37 million to be returned over one year;
A decrease through a rider mechanism of $21 million per year related to reductions in the North Carolina state income tax rate to be returned over a three-year period;
An overall cap on net revenue increase of $83 million. This will impact Piedmont beginning November 1, 2022, only if the company does not file another general rate case in the interim;
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FINANCIAL STATEMENTSREGULATORY MATTERS
Continuation of the IMR mechanism; and
Establishment of a new deferral mechanism for certain Distribution Integrity Management Program (DIMP) operations and maintenance expenses incurred effective November 1, 2019, and thereafter.
On October 31, 2019, the NCUC approved the Stipulation and the revised customer rates were effective November 1, 2019.
OTHER REGULATORY MATTERS
Atlantic Coast Pipeline, LLC
Atlantic Coast Pipeline (ACP pipeline) was planned to be an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. Duke Energy indirectly owns a 47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment.
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.
As a result, Duke Energy recorded pretax charges to earnings of approximately $2.1 billion for the year ended December 31, 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Consolidated Statements of Operations. The tax benefit associated with this cancellation was $393 million and is recorded in Income Tax Expense (Benefit) Expense on the Duke Energy Consolidated Statements of Operations. Additional charges of less than $20 million are expected to be recorded within the next three years as ACP incurs obligations to exit operations.
As part of the pretax charges to earnings of approximately $2.1 billion, Duke Energy has liabilities related to the cancellation of the ACP pipeline project of $928 million and $8 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 $76 million to satisfy remaining ARO requirements to restore construction sites.
See Notes 7 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.
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FINANCIAL STATEMENTSREGULATORY MATTERS
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 Consolidated Balance Sheets as of December 31, 2020, and exclude capitalized asset retirement costs.
Remaining Net
CapacityBook Value
(in MW)(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3(a)
604 $113 
Allen Steam Station Units 4-5(b)
526 338 
Cliffside Unit 5(b)
546 350 
Duke Energy Progress
Mayo Unit 1(b)
746 676 
Roxboro Units 3-4(b)
1,409 484 
Duke Energy Florida
Crystal River Units 4-5(c)
1,430 1,696 
Duke Energy Indiana
Gallagher Units 2 and 4(d)
280 102 
Gibson Units 1-5(e)
2,845 1,866 
Cayuga Units 1-2(e)
1,005 777 
Total Duke Energy9,391 $6,402 
(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. Unit 3 with a capacity of 270 MW and a net book value of $26 million at December 31, 2020, is expected to be retired in March 2021.
(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)    On January 14, 2021, Duke Energy Florida filed a settlement agreement with the FPSC, which proposed depreciation rates reflecting retirement dates for Duke Energy Florida's last two coal-fired generating facilities, Crystal River Units 4-5, eight years ahead of schedule in 2034 rather than in 2042, in support of Duke Energy's carbon reduction goals. A request for the FPSC to hold a hearing has been made and a decision by the FPSC is expected in the second quarter 2021.
(d)    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. In February 2021, upon approval by MISO of a new retirement date, Duke Energy Indiana determined it would modify the retirement date to June 1, 2021.
(e)    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
INSURANCE
General Insurance
The Duke Energy Registrants have insurance and reinsurance coverage either directly or through indemnification from Duke Energy’s captive insurance company, Bison, and its affiliates, consistent with companies engaged in similar commercial operations with similar type properties. The Duke Energy Registrants’ coverage includes (i) commercial general liability coverage for liabilities arising to third parties for bodily injury and property damage; (ii) workers’ compensation; (iii) automobile liability coverage; and (iv) property coverage for all real and personal property damage. Real and personal property damage coverage excludes electric transmission and distribution lines, but includes damages arising from boiler and machinery breakdowns, earthquakes, flood damage and extra expense, but not outage or replacement power coverage. All coverage is subject to certain deductibles or retentions, sublimits, exclusions, terms and conditions common for companies with similar types of operations. The Duke Energy Registrants self-insure their electric transmission and distribution lines against loss due to storm damage and other natural disasters. As discussed further in Note 3, Duke Energy Florida maintains a storm damage reserve and has a regulatory mechanism to recover the cost of named storms on an expedited basis.
The cost of the Duke Energy Registrants’ coverage can fluctuate from year to year reflecting claims history and conditions of the insurance and reinsurance markets.
163




FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
In the event of a loss, terms and amounts of insurance and reinsurance available might not be adequate to cover claims and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered by other sources, could have a material effect on the Duke Energy Registrants’ results of operations, cash flows or financial position. Each company is responsible to the extent losses may be excluded or exceed limits of the coverage available.
Nuclear Insurance
Duke Energy Carolinas owns and operates McGuire and Oconee and operates and has a partial ownership interest in Catawba. McGuire and Catawba each have two reactors. Oconee has three reactors. The other joint owners of Catawba reimburse Duke Energy Carolinas for certain expenses associated with nuclear insurance per the Catawba joint owner agreements.
Duke Energy Progress owns and operates Robinson, Brunswick and Harris. Robinson and Harris each have one reactor. Brunswick has two reactors.
Duke Energy Florida owns Crystal River Unit 3, which permanently ceased operation in 2013 and reached a SAFSTOR condition in January 2018 after the successful transfer of all used nuclear fuel assemblies to an on-site dry cask storage facility.
In the event of a loss, terms and amounts of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered by other sources, could have a material effect on Duke Energy Carolinas’, Duke Energy Progress’ and Duke Energy Florida’s results of operations, cash flows or financial position. Each company is responsible to the extent losses may be excluded or exceed limits of the coverage available.
Nuclear Liability Coverage
The Price-Anderson Act requires owners of nuclear reactors to provide for public nuclear liability protection per nuclear incident up to a maximum total financial protection liability. The maximum total financial protection liability, which is approximately $13.8 billion, is subject to change every five years for inflation and for the number of licensed reactors. Total nuclear liability coverage consists of a combination of private primary nuclear liability insurance coverage and a mandatory industry risk-sharing program to provide for excess nuclear liability coverage above the maximum reasonably available private primary coverage. The U.S. Congress could impose revenue-raising measures on the nuclear industry to pay claims.
Primary Liability Insurance
Duke Energy Carolinas and Duke Energy Progress have purchased the maximum reasonably available private primary nuclear liability insurance as required by law, which is $450 million per station. Duke Energy Florida has purchased $100 million primary nuclear liability insurance in compliance with the law.
Excess Liability Program
This program provides $13.3 billion of coverage per incident through the Price-Anderson Act’s mandatory industry-wide excess secondary financial protection program of risk pooling. This amount is the product of potential cumulative retrospective premium assessments of $138 million times the current 97 licensed commercial nuclear reactors in the U.S. Under this program, licensees could be assessed retrospective premiums to compensate for public nuclear liability damages in the event of a nuclear incident at any licensed facility in the U.S. Retrospective premiums may be assessed at a rate not to exceed $20.5 million per year per licensed reactor for each incident. The assessment may be subject to state premium taxes.
Nuclear Property and Accidental Outage Coverage
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are members of Nuclear Electric Insurance Limited (NEIL), an industry mutual insurance company, which provides property damage, nuclear accident decontamination and premature decommissioning insurance for each station for losses resulting from damage to its nuclear plants, either due to accidents or acts of terrorism. Additionally, NEIL provides accidental outage coverage for losses in the event of a major accidental outage at an insured nuclear station.
Pursuant to regulations of the NRC, each company’s property damage insurance policies provide that all proceeds from such insurance be applied, first, to place the plant in a safe and stable condition after a qualifying accident and second, to decontaminate the plant before any proceeds can be used for decommissioning, plant repair or restoration.
Losses resulting from acts of terrorism are covered as common occurrences, such that if terrorist acts occur against one or more commercial nuclear power plants insured by NEIL within a 12-month period, they would be treated as one event and the owners of the plants where the act occurred would share one full limit of liability. The full limit of liability is currently $3.2 billion. NEIL sublimits the total aggregate for all of their policies for non-nuclear terrorist events to approximately $1.8 billion.
Each nuclear facility has accident property damage, nuclear accident decontamination and premature decommissioning liability insurance from NEIL with limits of $1.5 billion, except for Crystal River Unit 3. Crystal River Unit 3’s limit is $50 million and is on an actual cash value basis. All nuclear facilities except for Catawba and Crystal River Unit 3 also share an additional $1.25 billion nuclear accident insurance limit above their dedicated underlying limit. This shared additional excess limit is not subject to reinstatement in the event of a loss. Catawba has a dedicated $1.25 billion of additional nuclear accident insurance limit above its dedicated underlying limit. Catawba and Oconee also have an additional $750 million of non-nuclear accident property damage limit. All coverages are subject to sublimits and significant deductibles.
164




FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
NEIL’s Accidental Outage policy provides some coverage, similar to business interruption, for losses in the event of a major accident property damage outage of a nuclear unit. Coverage is provided on a weekly limit basis after a significant waiting period deductible and at 100% of the applicable weekly limits for 52 weeks and 80% of the applicable weekly limits for up to the next 110 weeks. Coverage is provided until these applicable weekly periods are met, where the accidental outage policy limit will not exceed $490 million for McGuire and Catawba, $434 million for Harris, $420 million for Brunswick, $392 million for Oconee and $336 million for Robinson. NEIL sublimits the accidental outage recovery up to the first 104 weeks of coverage not to exceed $328 million from non-nuclear accidental property damage. Coverage amounts decrease in the event more than one unit at a station is out of service due to a common accident. All coverages are subject to sublimits and significant deductibles.
Potential Retroactive Premium Assessments
In the event of NEIL losses, NEIL’s board of directors may assess member companies' retroactive premiums of amounts up to 10 times their annual premiums for up to six years after a loss. NEIL has never exercised this assessment. The maximum aggregate annual retrospective premium obligations for Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are $156 million, $93 million and $1 million, respectively. Duke Energy Carolinas' maximum assessment amount includes 100% of potential obligations to NEIL for jointly owned reactors. Duke Energy Carolinas would seek reimbursement from the joint owners for their portion of these assessment amounts.
ENVIRONMENTAL
The Duke Energy Registrants are subject to federal, state and local laws regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These laws can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all of the Duke Energy Registrants.
Remediation Activities
In addition to the ARO recorded as a result of various environmental regulations, discussed in Note 9, 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 in the Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.
The following tables contain information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Other within Other Noncurrent Liabilities on the Consolidated Balance Sheets.
(in millions)December 31, 2020December 31, 2019
Reserves for Environmental Remediation
Duke Energy$75 $58 
Duke Energy Carolinas19 11 
Progress Energy19 16 
Duke Energy Progress6 4 
Duke Energy Florida12 9 
Duke Energy Ohio22 19 
Duke Energy Indiana6 4 
Piedmont10 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$25 
Duke Energy Carolinas12 
Duke Energy Ohio4 
Piedmont2 
165




FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
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 the North Carolina Business Court against various insurance providers. The lawsuit seeks payment for coal ash related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. Fact discovery has been completed. The parties filed dispositive pretrial motions relating to key legal issues on December 4, 2020. Hearings on these motions are scheduled to begin on February 24, 2021, and trial is scheduled for January 24, 2022. 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 large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC (NTE), a company that proposed to build a combined-cycle natural gas plant in Rockingham County, North Carolina. On September 6, 2019, Duke Energy Carolinas filed a lawsuit in Mecklenburg County Superior Court against NTE for breach of contract 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.
On May 21, 2020, in response to a NTE petition challenging Duke Energy Carolina's termination of the LGIA, FERC issued a ruling (i) that it has exclusive jurisdiction to determine whether a transmission provider may terminate a 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 August 17, 2020, the court denied both NTE’s and Duke Energy Carolinas’ Motion to Dismiss. The parties are in active discovery and trial is scheduled for June 20, 2022. Duke Energy Carolinas cannot predict the outcome of this matter.
Asbestos-related Injuries and Damages Claims
Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of December 31, 2020, there were 145 asserted claims for non-malignant cases with the cumulative relief sought of up to $39 million and 56 asserted claims for malignant cases with the cumulative relief sought of up to $20 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.
Duke Energy Carolinas has recognized asbestos-related reserves of $572 million and $604 million at December 31, 2020, and 2019, respectively. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the 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-insurance 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 and $742 million at December 31, 2020, and 2019, respectively. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the 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.
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 for the asbestos-related injuries and damages based on adoption of the new standard is $15 million for Duke Energy and Duke Energy Carolinas as of December 31, 2020. The insurance receivable is evaluated based on the risk of default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the risk of default from credit agencies.
166




FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
Duke Energy Progress and Duke Energy Florida
Spent Nuclear Fuel Matters
On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims for damages incurred for the period 2014 through 2018. The lawsuit claimed the Department of Energy breached a contract in failing to accept spent nuclear fuel under the Nuclear Waste Policy Act of 1982 and asserted damages for the cost of on-site storage in the amount of $100 million and $200 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 occurred during the week of December 7, 2020. An arbitral award has not yet been issued. 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 have completed discovery and will now prepare to file dispositive motions. Summary judgment briefing will be completed by March 30, 2021. If these claims survive dispositive motions, a hearing is scheduled for April 26, 2021. Duke Energy Indiana cannot predict the outcome of this matter. See Note 9 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.
The table below presents recorded reserves based on management’s best estimate of probable loss for legal matters, excluding asbestos-related reserves. Reserves are classified on the 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.
 December 31,
(in millions)20202019
Reserves for Legal Matters  
Duke Energy$68 $62 
Duke Energy Carolinas2 2 
Progress Energy 61 55 
Duke Energy Progress 13 12 
Duke Energy Florida28 22 
Piedmont1 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 Consolidated Balance Sheets and have uncapped maximum potential payments. See Note 7 for more information.
Purchase Obligations
Purchased Power
Duke Energy Progress, Duke Energy Florida and Duke Energy Ohio have ongoing purchased power contracts, including renewable energy contracts, with other utilities, wholesale marketers, co-generators and qualified facilities. These purchased power contracts generally provide for capacity and energy payments. In addition, Duke Energy Progress and Duke Energy Florida have various contracts to secure transmission rights.
167




FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES
The following table presents executory purchased power contracts with terms exceeding one year, excluding contracts classified as leases.
  Minimum Purchase Amount at December 31, 2020
Contract
(in millions) Expiration20212022202320242025ThereafterTotal
Duke Energy Progress(a)
2025-2032$66 $73 $66 $67 $69 $69 $410 
Duke Energy Florida(b)
2023-2025335 354 374 262 91 — 1,416 
Duke Energy Ohio(c)(d)
2022130 55 — — — — 185 
(a)    Contracts represent either 100% of net plant output or vary.
(b)    Contracts represent 100% of net plant output.
(c)    Contracts represent between 1% and 11% of net plant output.
(d)    Excludes PPA with OVEC. See Note 17 for additional information.
Gas Supply and Capacity Contracts
Duke Energy Ohio and Piedmont routinely enter into long-term natural gas supply commodity and capacity commitments and other agreements that commit future cash flows to acquire services needed in their businesses. These commitments include pipeline and storage capacity contracts and natural gas supply contracts to provide service to customers. Costs arising from the natural gas supply commodity and capacity commitments, while significant, are pass-through costs to customers and are generally fully recoverable through the fuel adjustment or PGA procedures and prudence reviews in North Carolina and South Carolina and under the Tennessee Incentive Plan in Tennessee. In the Midwest, these costs are recovered via the Gas Cost Recovery Rate in Ohio or the Gas Cost Adjustment Clause in Kentucky. The time periods for fixed payments under pipeline and storage capacity contracts are up to 15 years. The time periods for fixed payments under natural gas supply contracts are up to six years. The time period for the natural gas supply purchase commitments is up to 11 years.
Certain storage and pipeline capacity contracts require the payment of demand charges that are based on rates approved by the FERC in order to maintain rights to access the natural gas storage or pipeline capacity on a firm basis during the contract term. The demand charges that are incurred in each period are recognized in the Consolidated Statements of Operations and Comprehensive Income as part of natural gas purchases and are included in Cost of natural gas.
The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, 2020.
(in millions)Duke EnergyDuke Energy OhioPiedmont
2021$311 $41 $270 
2022270 28 242 
2023197 20 177 
2024139 17 122 
2025125 14 111 
Thereafter662 60 602 
Total$1,704 $180 $1,524 
5. LEASES
As part of its operations, Duke Energy leases certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (barges and railcars), land and office space under various terms and expiration dates. Additionally, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Indiana have finance leases related to firm natural gas pipeline transportation capacity. Duke Energy Progress and Duke Energy Florida have entered into certain PPAs, which are classified as finance and operating leases.
Duke Energy has certain lease agreements, which include variable lease payments that are based on the usage of an asset. These variable lease payments are not included in the measurement of the ROU assets or operating lease liabilities on the Consolidated Financial Statements.
Certain Duke Energy lease agreements include options for renewal and early termination. The intent to renew a lease varies depending on the lease type and asset. Renewal options that are reasonably certain to be exercised are included in the lease measurements. The decision to terminate a lease early is dependent on various economic factors. No termination options have been included in any of the lease measurements.
Duke Energy Carolinas entered into a sale-leaseback arrangement in December 2019, to construct and occupy an office tower. The lease agreement was evaluated as a sale-leaseback of real estate and it was determined that the transaction did not qualify for sale-leaseback accounting. As a result, the transaction is being accounted for as a financing. For this transaction, Duke Energy Carolinas will continue to record the real estate on the Consolidated Balance Sheets within Property, Plant and Equipment as if it were the legal owner and will continue to recognize depreciation expense over the estimated useful life. In addition, a liability will be recorded for the failed sale-leaseback obligation within Long-Term Debt on the Consolidated Balance Sheets, with the monthly lease payments commencing after the construction phase being split between interest expense and principal pay down of the debt.
168




FINANCIAL STATEMENTSLEASES
Duke Energy operates various renewable energy projects and sells the generated output to utilities, electric cooperatives, municipalities and commercial and industrial customers through long-term PPAs. In certain situations, these PPAs and the associated renewable energy projects qualify as operating leases. Rental income from these leases is accounted for as Nonregulated electric and other revenues in the Consolidated Statements of Operations. There are no minimum lease payments as all payments are contingent based on actual electricity generated by the renewable energy projects. Contingent lease payments were $275 million, $264 million and $268 million for the years ended December 31, 2020, 2019, and 2018, respectively. Renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,335 million and $3,349 million and accumulated depreciation of $848 million and $721 million at December 31, 2020, and 2019, respectively. These assets are principally classified as nonregulated electric generation and transmission assets.
Piedmont has certain agreements with Duke Energy Carolinas for the construction and transportation of natural gas pipelines to supply its natural gas plant needs. Piedmont accounts for these pipeline lateral contracts as sales-type leases since the present value of the sum of the lease payments equals the fair value of the assets. These pipeline lateral assets owned by Piedmont had a current net investment basis of $2 million and $4 million as of December 31, 2020, and 2019, respectively, and a long-term net investment basis of $205 million and $70 million as of December 31, 2020, and 2019, respectively. These assets are classified in Other, within Current Assets and Other Noncurrent Assets, respectively, on Piedmont's Consolidated Balance Sheets. Duke Energy Carolinas accounts for the contracts as finance leases. The activity for these contracts is eliminated in consolidation at Duke Energy.
The following tables present the components of lease expense.
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Operating lease expense(a)
$283 $53 $162 $72 $90 $11 $19 $7 
Short-term lease expense(a)
4  2 1 1  1  
Variable lease expense(a)
30 13 13 5 8  1 1 
Finance lease expense
Amortization of leased assets(b)
119 8 24 6 18  1  
Interest on lease liabilities(c)
61 30 44 37 7    
Total finance lease expense180 38 68 43 25  1  
Total lease expense$497 $104 $245 $121 $124 $11 $22 $8 
(a)    Included in Operations, maintenance and other or, for barges and railcars, Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.
(b)    Included in Depreciation and amortization on the Consolidated Statements of Operations.
(c)    Included in Interest Expense on the Consolidated Statements of Operations.
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Operating lease expense(a)
$292 $47 $161 $69 $92 $11 $20 $5 
Short-term lease expense(a)
16 5 9 4 5 1 2 — 
Variable lease expense(a)
47 22 22 16 6 — 1 1 
Finance lease expense
Amortization of leased assets(b)
111 6 21 5 16 1  — 
Interest on lease liabilities(c)
61 15 42 33 9  1  
Total finance lease expense172 21 63 38 25 1 1  
Total lease expense$527 $95 $255 $127 $128 $13 $24 $6 
(a)    Included in Operations, maintenance and other or, for barges and railcars, Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.
(b)    Included in Depreciation and amortization on the Consolidated Statements of Operations.
(c)    Included in Interest Expense on the Consolidated Statements of Operations.
169




FINANCIAL STATEMENTSLEASES
The following table presents rental expense for operating leases, as reported under the former lease standard. These amounts are included in Operation, maintenance and other and Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.
Year Ended
(in millions) December 31, 2018
Duke Energy $268 
Duke Energy Carolinas 49 
Progress Energy 143 
Duke Energy Progress 75 
Duke Energy Florida 68 
Duke Energy Ohio 13 
Duke Energy Indiana 21 
Piedmont11 
The following table presents operating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
2021$229 $24 $99 $44 $55 $2 $5 $5 
2022212 22 95 40 55 2 4 5 
2023202 20 95 41 54 2 4 5 
2024186 14 95 41 54 2 4 5 
2025162 10 85 31 54 2 4 5 
Thereafter870 51 376 252 124 20 59  
Total operating lease payments1,861 141 845 449 396 30 80 25 
Less: present value discount(344)(24)(149)(95)(54)(9)(24)(2)
Total operating lease liabilities(a)
$1,517 $117 $696 $354 $342 $21 $56 $23 
(a)    Certain operating lease payments include renewal options that are reasonably certain to be exercised.
The following table presents finance lease maturities and a reconciliation of the undiscounted cash flows to finance lease liabilities.
December 31, 2020
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaIndiana
2021$186 $38 $68 $43 $25 $1 
2022173 38 68 43 25 1 
2023174 38 68 43 25 1 
2024119 38 52 43 9 1 
202551 38 48 43 5 1 
Thereafter762 502 481 475 6 26 
Total finance lease payments1,465 692 785 690 95 31 
Less: amounts representing interest(620)(398)(408)(394)(14)(21)
Total finance lease liabilities$845 $294 $377 $296 $81 $10 
170




FINANCIAL STATEMENTSLEASES
The following tables contain additional information related to leases.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)ClassificationEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Assets
OperatingOperating lease ROU assets, net$1,524 $110 $690 $346 $344 $20 $55 $20 
FinanceNet property, plant and equipment797 312 416 297 119  7  
Total lease assets$2,321 $422 $1,106 $643 $463 $20 $62 $20 
Liabilities
Current
OperatingOther current liabilities$177 $20 $73 $31 $42 $1 $3 $4 
FinanceCurrent maturities of long-term debt129 5 26 7 19    
Noncurrent
OperatingOperating lease liabilities1,340 97 623 323 300 20 53 19 
FinanceLong-Term Debt716 289 351 289 62  10  
Total lease liabilities$2,362 $411 $1,073 $650 $423 $21 $66 $23 
December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)ClassificationEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Assets
OperatingOperating lease ROU assets, net$1,658 $123 $788 $387 $401 $21 $57 $24 
FinanceNet property, plant and equipment926 198 443 308 135 — 7 — 
Total lease assets$2,584 $321 $1,231 $695 $536 $21 $64 $24 
Liabilities
Current
OperatingOther current liabilities$208 $27 $95 $37 $58 $1 $3 $4 
FinanceCurrent maturities of long-term debt119 7 24 6 18 — — — 
Noncurrent
OperatingOperating lease liabilities1,432 102 697 354 343 21 55 23 
FinanceLong-Term Debt850 172 381 301 80 — 10 — 
Total lease liabilities$2,609 $308 $1,197 $698 $499 $22 $68 $27 
171




FINANCIAL STATEMENTSLEASES
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Cash paid for amounts included in the measurement of lease liabilities(a)
Operating cash flows from operating leases$271 $31 $124 $52 $72 $2 $6 $5 
Operating cash flows from finance leases61 30 44 37 7    
Financing cash flows from finance leases119 8 24 6 18  1  
Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating(b)
$116 $17 $ $ $ $ $1 $ 
Finance125 125       
(a)    No amounts were classified as investing cash flows from operating leases for the year ended December 31, 2020.
(b)    Does not include ROU assets recorded as a result of the adoption of the new lease standard.
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Cash paid for amounts included in the measurement of lease liabilities(a)
Operating cash flows from operating leases$285 $34 $131 $53 $78 $2 $7 $7 
Operating cash flows from finance leases61 15 42 33 9 — 1 — 
Financing cash flows from finance leases111 6 21 5 16 1 — — 
Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating(b)
$194 $44 $30 $30 $— $— $— $1 
Finance251 76 175 175 — — — — 
(a)    No amounts were classified as investing cash flows from operating leases for the year ended December 31, 2019.
(b)    Does not include ROU assets recorded as a result of the adoption of the new lease standard.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Weighted average remaining lease term (years)
Operating leases1091012817185
Finance leases1319151711 25 
Weighted average discount rate(a)
Operating leases3.8 %3.4 %3.8 %3.9 %3.8 %4.2 %4.2 %3.6 %
Finance leases8.4 %11.6 %11.9 %12.4 %8.2 % %11.9 % %
(a)    The discount rate is calculated using the rate implicit in a lease if it is readily determinable. Generally, the rate used by the lessor is not provided to Duke Energy and in these cases the incremental borrowing rate is used. Duke Energy will typically use its fully collateralized incremental borrowing rate as of the commencement date to calculate and record the lease. The incremental borrowing rate is influenced by the lessee’s credit rating and lease term and as such may differ for individual leases, embedded leases or portfolios of leased assets.
172




FINANCIAL STATEMENTSLEASES
December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Weighted average remaining lease term (years)
Operating leases1191012817186
Finance leases1319161811— 26— 
Weighted average discount rate(a)
Operating leases3.9 %3.5 %3.8 %3.9 %3.8 %4.2 %4.1 %3.6 %
Finance leases8.1 %11.8 %11.9 %12.4 %8.3 % %11.9 % %
(a)    The discount rate is calculated using the rate implicit in a lease if it is readily determinable. Generally, the rate used by the lessor is not provided to Duke Energy and in these cases the incremental borrowing rate is used. Duke Energy will typically use its fully collateralized incremental borrowing rate as of the commencement date to calculate and record the lease. The incremental borrowing rate is influenced by the lessee’s credit rating and lease term and as such may differ for individual leases, embedded leases or portfolios of leased assets.
6. DEBT AND CREDIT FACILITIES
Summary of Debt and Related Terms
The following tables summarize outstanding debt.
 December 31, 2020
Weighted
AverageDukeDukeDukeDukeDuke
InterestDukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Rate EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unsecured debt, maturing 2021-20783.71 %$23,669 $1,150 $3,150 $700 $350 $1,180 $403 $2,800 
Secured debt, maturing 2021-20522.67 %4,270 543 1,584 252 1,332    
First mortgage bonds, maturing 2021-2050(a)
4.00 %29,177 10,008 14,100 7,875 6,225 1,850 3,219  
Finance leases, maturing 2022-2051(b)
6.96 %845 294 377 296 81  10  
Tax-exempt bonds, maturing 2027-2041(c)
0.75 %477  48 48  77 352  
Notes payable and commercial paper(d)
0.51 %3,407        
Money pool/intercompany borrowings  806 3,119 445 196 194 281 530 
Fair value hedge carrying value adjustment  4 4       
Unamortized debt discount and premium, net(e)
 1,217 (20)(31)(19)(11)(29)(18)(5)
Unamortized debt issuance costs(f)
(330)(62)(113)(44)(62)(14)(25)(15)
Total debt 3.62 %$62,736 $12,723 $22,234 $9,553 $8,111 $3,258 $4,222 $3,310 
Short-term notes payable and commercial paper  (2,873)       
Short-term money pool/intercompany borrowings  (506)(2,969)(295)(196)(169)(131)(530)
Current maturities of long-term debt(g)
 (4,238)(506)(1,426)(603)(823)(50)(70)(160)
Total long-term debt(g)
$55,625 $11,711 $17,839 $8,655 $7,092 $3,039 $4,021 $2,620 
173




FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
(a)Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b)Duke Energy includes $24 million and $341 million of finance lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to PPAs that are not accounted for as finance leases in their respective financial statements because of grandfathering provisions in GAAP.
(c)Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.
(d)Includes $625 million classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper program was 23 days.
(e)Duke Energy includes $1,196 million and $117 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.
(f)Duke Energy includes $33 million in purchase accounting adjustments primarily related to the merger with Progress Energy.
(g)Refer to Note 17 for additional information on amounts from consolidated VIEs.
 December 31, 2019
Weighted
AverageDukeDukeDukeDukeDuke
InterestDukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) Rate EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unsecured debt, maturing 2020-20784.02 %$22,477 $1,150 $3,650 $700 $350 $1,110 $405 $2,399 
Secured debt, maturing 2020-20523.30 %4,537 544 1,722 335 1,387 — — — 
First mortgage bonds, maturing 2020-2049(a)
4.13 %27,977 9,557 13,800 7,575 6,225 1,449 3,169 — 
Finance leases, maturing 2022-2051(b)
6.60 %969 179 405 307 98 — 10 — 
Tax-exempt bonds, maturing 2022-2041(c)
2.90 %730 243 48 48 — 77 362 — 
Notes payable and commercial paper(d)
1.98 %3,588 — — — — — — — 
Money pool/intercompany borrowings — 329 1,970 216 — 337 180 476 
Fair value hedge carrying value adjustment  5 5 — — — — — — 
Unamortized debt discount and premium, net(e)
 1,294 (23)(29)(17)(11)(30)(19)(2)
Unamortized debt issuance costs(f)
(316)(55)(111)(40)(62)(12)(20)(13)
Total debt 3.92 %$61,261 $11,929 $21,455 $9,124 $7,987 $2,931 $4,087 $2,860 
Short-term notes payable and commercial paper  (3,135)— — — — — — — 
Short-term money pool/intercompany borrowings — (29)(1,821)(66)— (312)(30)(476)
Current maturities of long-term debt(g)
 (3,141)(458)(1,577)(1,006)(571)— (503)— 
Total long-term debt(g)
$54,985 $11,442 $18,057 $8,052 $7,416 $2,619 $3,554 $2,384 
(a)    Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b)    Duke Energy includes $44 million and $419 million of finance lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to PPAs that are not accounted for as finance leases in their respective financial statements because of grandfathering provisions in GAAP.
(c)    Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.
(d)    Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper programs was 14 days.
(e)    Duke Energy includes $1,275 million and $137 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.
(f)    Duke Energy includes $37 million in purchase accounting adjustments primarily related to the merger with Progress Energy.
(g)     Refer to Note 17 for additional information on amounts from consolidated VIEs.
174




FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
Current Maturities of Long-Term Debt
The following table shows the significant components of Current maturities of Long-Term Debt on the Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.
(in millions)Maturity DateInterest RateDecember 31, 2020
Unsecured Debt(a)
Duke Energy (Parent)May 20210.721 %
(b)
$500 
PiedmontJune 20214.240 %160 
Duke Energy (Parent)September 20213.550 %500 
Duke Energy (Parent)September 20211.800 %750 
Duke Energy FloridaNovember 20210.482 %
(b)
200 
Secured Debt
Duke Energy FloridaApril 20210.972 %
(b)
250 
First Mortgage Bonds
Duke Energy CarolinasJune 20213.900 %500 
Duke Energy FloridaAugust 20213.100 %300 
Duke Energy ProgressSeptember 20213.000 %500 
Duke Energy ProgressSeptember 20218.625 %100 
Other(c)
478 
Current maturities of long-term debt$4,238 
(a)    During October 2020, Progress Energy early retired $500 million of unsecured debt with an original maturity of January 15, 2021.
(b)    Debt has a floating interest rate.
(c)    Includes finance lease obligations, amortizing debt and small bullet maturities.
Maturities and Call Options
The following table shows the annual maturities of long-term debt for the next five years and thereafter. Amounts presented exclude short-term notes payable, commercial paper and money pool borrowings and debt issuance costs for the Subsidiary Registrants.
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)
Energy(a)
CarolinasEnergyProgressFloridaOhioIndianaPiedmont
2021$4,238 $506 $1,426 $603 $823 $50 $70 $160 
20224,905 721 1,736 1,208 78  84  
20233,356 1,008 638 561 77 325 3 45 
20241,344 9 76 10 66  4 40 
20253,153 310 725 661 64 270 154 205 
Thereafter41,983 9,745 14,802 6,274 6,878 2,486 3,818 2,350 
Total long-term debt, including current maturities$58,979 $12,299 $19,403 $9,317 $7,986 $3,131 $4,133 $2,800 
(a)    Excludes $1,346 million in purchase accounting adjustments related to the Progress Energy merger and the Piedmont acquisition.
The Duke Energy Registrants have the ability under certain debt facilities to call and repay the obligation prior to its scheduled maturity. Therefore, the actual timing of future cash repayments could be materially different than as presented above.
175




FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
Short-Term Obligations Classified as Long-Term Debt
Tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder and certain commercial paper issuances and money pool borrowings are classified as Long-Term Debt on the Consolidated Balance Sheets. These tax-exempt bonds, commercial paper issuances and money pool borrowings, which are short-term obligations by nature, are classified as long-term due to Duke Energy’s intent and ability to utilize such borrowings as long-term financing. As Duke Energy’s Master Credit Facility and other bilateral letter of credit agreements have non-cancelable terms in excess of one year as of the balance sheet date, Duke Energy has the ability to refinance these short-term obligations on a long-term basis. The following tables show short-term obligations classified as long-term debt.
 December 31, 2020
DukeDukeDukeDuke
DukeEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasProgressOhioIndiana
Tax-exempt bonds $312 $ $ $27 $285 
Commercial paper(a)
625 300 150 25 150 
Total $937 $300 $150 $52 $435 
 December 31, 2019
DukeDukeDukeDuke
DukeEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasProgressOhioIndiana
Tax-exempt bonds $312 $— $— $27 $285 
Commercial paper(a)
625 300 150 25 150 
Total $937 $300 $150 $52 $435 
(a)    Progress Energy amounts are equal to Duke Energy Progress amounts.
Summary of Significant Debt Issuances
The following tables summarize significant debt issuances (in millions).
Year Ended December 31, 2020
DukeDukeDukeDukeDukeDuke
MaturityInterestDukeEnergyEnergyEnergyEnergyEnergyEnergy
Issuance DateDateRateEnergy(Parent)CarolinasProgressFloridaOhioIndianaPiedmont
Unsecured Debt
May 2020(a)
Jun 20302.450 %$500 $500 $ $ $ $ $ $ 
May 2020(b)
Jun 20503.350 %400       400 
August 2020(c)
Feb 20220.400 %
(d)
700   700     
September 2020(e)
Sep 20250.900 %650 650       
September 2020(e)
Jun 20302.450 %350 350       
First Mortgage Bonds
January 2020(f)
Feb 20302.450 %500  500      
January 2020(f)
Aug 20493.200 %400  400      
March 2020(g)
Apr 20502.750 %550      550  
May 2020(b)
Jun 20302.125 %

400     400   
June 2020(b)
Jun 20301.750 %500    500    
August 2020(h)
Aug 20502.500 %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 term loan due 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.
176




FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
Year Ended December 31, 2019
DukeDukeDukeDukeDukeDuke
MaturityInterestDukeEnergyEnergyEnergyEnergyEnergyEnergy
Issuance DateDateRateEnergy(Parent)CarolinasProgressFloridaOhioIndianaPiedmont
Unsecured Debt
March 2019(a)
Mar 20222.538 %
(b)
$300 $300 $— $— $— $— $— $— 
March 2019(a)
Mar 20223.227 %300 300 — — — — — — 
May 2019(e)
Jun 20293.500 %600 — — — — — — 600 
June 2019(a)
Jun 20293.400 %600 600 — — — — — — 
June 2019(a)
Jun 20494.200 %600 600 — — — — — — 
July 2019(g)
Jul 20494.320 %40 — — — — 40 — — 
September 2019(g)
Oct 20253.230 %95 — — — — 95 — — 
September 2019(g)
Oct 20293.560 %75 — — — — 75 — — 
November 2019(h)
Nov 20212.167 %
(b)
200 — — — 200 — — — 
First Mortgage Bonds
January 2019(c)
Feb 20293.650 %400 — — — — 400 — — 
January 2019(c)
Feb 20494.300 %400 — — — — 400 — — 
March 2019(d)
Mar 20293.450 %600 — — 600 — — — — 
August 2019(a)
Aug 20292.450 %450 — 450 — — — — — 
August 2019(a)
Aug 20493.200 %350 — 350 — — — — — 
September 2019(f)
Oct 20493.250 %500 — — — — — 500 — 
November 2019(i)
Dec 20292.500 %700 — — — 700 — — — 
Total issuances$6,210 $1,800 $800 $600 $900 $1,010 $500 $600 
(a)Debt issued to pay down short-term debt and for general corporate purposes.
(b)Debt issuance has a floating interest rate.
(c)Debt issued to repay at maturity $450 million first mortgage bonds due April 2019, pay down short-term debt and for general corporate purposes.
(d)Debt issued to fund eligible green energy projects in the Carolinas.
(e)Debt issued to repay in full the outstanding $350 million Piedmont unsecured term loan due September 2019, pay down short-term debt and for general corporate purposes.
(f)Debt issued to retire $150 million of pollution control bonds, pay down short-term debt and for general corporate purposes.
(g)Debt issued to repay at maturity $100 million debentures due October 2019, pay down short-term debt and for general corporate purposes.
(h)Debt issued to fund storm restoration costs and for general corporate purposes.
(i)Debt issued to reimburse the payment of existing and new Eligible Green Expenditures in Florida.
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.
177




FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
The table below includes the current borrowing sublimits and available capacity under these credit facilities.
 December 31, 2020
DukeDukeDukeDukeDukeDuke
DukeEnergyEnergyEnergyEnergyEnergyEnergy
(in millions) Energy(Parent)CarolinasProgressFloridaOhioIndianaPiedmont
Facility size(a)
$8,000 $2,650 $1,475 $1,250 $800 $625 $600 $600 
Reduction to backstop issuances
Commercial paper(b)
(2,239) (736)(407)(179)(176)(257)(484)
Outstanding letters of credit (40)(34)(4)(2)    
Tax-exempt bonds (81)     (81) 
Available capacity $5,640 $2,616 $735 $841 $621 $449 $262 $116 
(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 in the 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 contained 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. The loan was repaid by Duke Energy (Parent) as of December 31, 2020. Refer to Note 1 for additional information on the COVID-19 pandemic.
Three-Year Revolving Credit Facility
Duke Energy (Parent) has a $1 billion revolving credit facility. The facility had an initial termination date of June 2020, but in May 2019, Duke Energy extended the termination date of the facility to May 2022. Borrowings under this facility will be used for general corporate purposes. As of December 31, 2020, $500 million has been drawn under this facility. This balance is classified as Long-term debt on Duke Energy's Consolidated Balance Sheets. Any undrawn commitments can be drawn, and borrowings can be prepaid, at any time throughout the term of the facility. During the first quarter of 2020, an additional $500 million was drawn under this facility to manage liquidity impacts from COVID-19. The additional $500 million was paid down during the second quarter of 2020. The terms and conditions of the facility are generally consistent with those governing Duke Energy's Master Credit Facility.
Duke Energy Progress Term Loan Facility
In December 2018, Duke Energy Progress entered into a two-year term loan facility with commitments totaling $700 million. Borrowings under the facility were used to pay storm-related costs, pay down commercial paper and to partially finance an upcoming bond maturity. As of December 31, 2019, the entire $700 million had been drawn under the term loan and was classified as Current maturities of long-term debt on Duke Energy Progress' Consolidated Balance Sheets. In August 2020, Duke Energy Progress repaid its $700 million two-year term loan facility.
Other Debt Matters
In September 2019, Duke Energy filed a Form S-3 with the SEC. Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy, may issue debt and other securities, including preferred stock, in the future at amounts, prices and with terms to be determined at the time of future offerings. The registration statement was filed to replace a similar prior filing upon expiration of its three-year term and also allows for the issuance of common and preferred stock by Duke Energy.
Duke Energy has an effective Form S-3 with the SEC to sell up to $3 billion of variable denomination floating-rate demand notes, called PremierNotes. The Form S-3 states that no more than $1.5 billion of the notes will be outstanding at any particular time. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Duke Energy PremierNotes Committee, or its designee, on a weekly basis. The interest rate payable on notes held by an investor may vary based on the principal amount of the investment. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Duke Energy or at the investor’s option at any time. The balance as of December 31, 2020, and 2019, was $1,168 million and $1,049 million, respectively. The notes are short-term debt obligations of Duke Energy and are reflected as Notes payable and commercial paper on Duke Energy’s Consolidated Balance Sheets.
Money Pool
The Subsidiary Registrants, excluding Progress Energy, are eligible to receive support for their short-term borrowing needs through participation with Duke Energy and certain of its subsidiaries in a money pool arrangement. Under this arrangement, those companies with short-term funds may provide short-term loans to affiliates participating in this arrangement. The money pool is structured such that the Subsidiary Registrants, excluding Progress Energy, separately manage their cash needs and working capital requirements. Accordingly, there is no net settlement of receivables and payables between money pool participants. Duke Energy (Parent), may loan funds to its participating subsidiaries, but may not borrow funds through the money pool. Accordingly, as the money pool activity is between Duke Energy and its wholly owned subsidiaries, all money pool balances are eliminated within Duke Energy’s Consolidated Balance Sheets.
178




FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
Money pool receivable balances are reflected within Notes receivable from affiliated companies on the Subsidiary Registrants’ Consolidated Balance Sheets. Money pool payable balances are reflected within either Notes payable to affiliated companies or Long-Term Debt Payable to Affiliated Companies on the Subsidiary Registrants’ Consolidated Balance Sheets.
Restrictive Debt Covenants
The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio not to exceed 65% for each borrower, excluding Piedmont, and 70% for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements. As of December 31, 2020, each of the Duke Energy Registrants was in compliance with all covenants related to their debt agreements. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.
Other Loans
As of December 31, 2020, and 2019, Duke Energy had loans outstanding of $817 million, including $35 million at Duke Energy Progress and $777 million, including $36 million at Duke Energy Progress, respectively, against the cash surrender value of life insurance policies it owns on the lives of its executives. The amounts outstanding were carried as a reduction of the related cash surrender value that is included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.
7. GUARANTEES AND INDEMNIFICATIONS
Duke Energy has various financial and performance guarantees and indemnifications with non-consolidated entities, which are issued in the normal course of business. As discussed below, these contracts include performance guarantees, standby letters of credit, debt guarantees and indemnifications. Duke Energy enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. At December 31, 2020, Duke Energy does not believe conditions are likely for significant performance under these guarantees, except for ACP as described below. To the extent liabilities are incurred as a result of the activities covered by the guarantees, such liabilities are included on the accompanying Consolidated Balance Sheets.
On January 2, 2007, Duke Energy completed the spin-off of its previously wholly owned natural gas businesses to shareholders. Guarantees issued by Duke Energy or its affiliates, or assigned to Duke Energy prior to the spin-off, remained with Duke Energy subsequent to the spin-off. Guarantees issued by Spectra Capital or its affiliates prior to the spin-off remained with Spectra Capital subsequent to the spin-off, except for guarantees that were later assigned to Duke Energy. Duke Energy has indemnified Spectra Capital against any losses incurred under certain of the guarantee obligations that remain with Spectra Capital. At December 31, 2020, the maximum potential amount of future payments associated with these guarantees were $56 million, the majority of which expires by 2028.
In October 2017, ACP executed a $3.4 billion revolving credit facility with a stated maturity date of October 2021. Duke Energy entered into a guarantee agreement to support its share of the ACP revolving credit facility. In July 2020, ACP reduced the size of the credit facility to $1.9 billion. Duke Energy's maximum exposure to loss under the terms of the guarantee is $860 million as of December 31, 2020. This amount represents 47% of the outstanding borrowings under the credit facility.
Duke Energy recognized the $860 million within Other Current Liabilities on the Consolidated Balance Sheets at December 31, 2020, of which $95 million was previously recognized due the adoption of new guidance for credit losses effective January 1, 2020. See Notes 3 and 12 for more information. The remaining reserve for credit losses for financial guarantees of $4 million at December 31, 2020, is included within Other Noncurrent Liabilities on the Duke Energy's 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.
In addition to the Spectra Capital and ACP revolving credit facility guarantees above, Duke Energy has issued performance guarantees to customers and other third parties that guarantee the payment and performance of other parties, including certain non-wholly owned entities, as well as guarantees of debt of certain non-consolidated entities. If such entities were to default on payments or performance, Duke Energy would be required under the guarantees to make payments on the obligations of these entities. The maximum potential amount of future payments required under these guarantees as of December 31, 2020, was $56 million of which $53 million expire between 2021 and 2030, with the remaining performance guarantees having no contractual expiration. Additionally, certain guarantees have uncapped maximum potential payments; however, Duke Energy does not believe these guarantees will have a material effect on its results of operations, cash flows or financial position.
Duke Energy uses bank-issued standby letters of credit to secure the performance of wholly owned and non-wholly owned entities to a third party or customer. Under these arrangements, Duke Energy has payment obligations to the issuing bank that are triggered by a draw by the third party or customer due to the failure of the wholly owned or non-wholly owned entity to perform according to the terms of its underlying contract. At December 31, 2020, Duke Energy had issued a total of $566 million in letters of credit, which expire between 2021 and 2023. The unused amount under these letters of credit was $76 million.
Duke Energy recognized $11 million and $23 million as of December 31, 2020, and 2019, respectively, primarily in Other within Other Noncurrent Liabilities on the Consolidated Balance Sheets, for the guarantees discussed above. As current estimates change, additional losses related to guarantees and indemnifications to third parties, which could be material, may be recorded by the Duke Energy Registrants in the future.
179




FINANCIAL STATEMENTSJOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES
8. JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES
The Duke Energy Registrants maintain ownership interests in certain jointly owned generating and transmission facilities. The Duke Energy Registrants are entitled to a share of the generating capacity and output of each unit equal to their respective ownership interests. The Duke Energy Registrants pay their ownership share of additional construction costs, fuel inventory purchases and operating expenses. The Duke Energy Registrants share of revenues and operating costs of the jointly owned facilities is included within the corresponding line in the Consolidated Statements of Operations. Each participant in the jointly owned facilities must provide its own financing.
The following table presents the Duke Energy Registrants' interest of jointly owned plant or facilities and amounts included on the Consolidated Balance Sheets. All facilities are operated by the Duke Energy Registrants and are included in the Electric Utilities and Infrastructure segment.
 December 31, 2020
Construction
OwnershipProperty, PlantAccumulatedWork in
(in millions except for ownership interest)Interestand EquipmentDepreciationProgress
Duke Energy Carolinas     
Catawba (units 1 and 2)(a)
19.25 %$1,017 $518 $23 
W.S. Lee CC(b)
87.27 %632 49 1 
Duke Energy Indiana     
Gibson (unit 5)(c)
50.05 %447 199 4 
Vermillion(d)
62.50 %174 101 1 
Transmission and local facilities(c)
Various5,817 1,508 150 
(a)    Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA.
(b)    Jointly owned with NCEMC.
(c)    Jointly owned with WVPA and IMPA.
(d)    Jointly owned with WVPA.
9. ASSET RETIREMENT OBLIGATIONS
Duke Energy records an ARO when it has a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. Certain assets of the Duke Energy Registrants have an indeterminate life, such as transmission and distribution facilities, and thus the fair value of the retirement obligation is not reasonably estimable. A liability for these AROs will be recorded when a fair value is determinable.
The Duke Energy Registrants’ regulated operations accrue costs of removal for property that does not have an associated legal retirement obligation based on regulatory orders from state commissions. These costs of removal are recorded as a regulatory liability in accordance with regulatory accounting treatment. The Duke Energy Registrants do not accrue the estimated cost of removal for any nonregulated assets. See Note 3 for the estimated cost of removal for assets without an associated legal retirement obligation, which are included in Regulatory liabilities on the Consolidated Balance Sheets.
The following table presents the AROs recorded on the Consolidated Balance Sheets.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Decommissioning of nuclear power facilities(a)
$6,845 $2,695 $4,101 $3,642 $459 $ $ $ 
Closure of ash impoundments5,778 2,597 1,973 1,950 23 67 1,140  
Other381 58 75 43 32 44 36 20 
Total asset retirement obligation$13,004 $5,350 $6,149 $5,635 $514 $111 $1,176 $20 
Less: Current portion718 264 283 283  3 168  
Total noncurrent asset retirement obligation$12,286 $5,086 $5,866 $5,352 $514 $108 $1,008 $20 
(a)    Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.
Nuclear Decommissioning Liability
AROs related to nuclear decommissioning are based on site-specific cost studies. The NCUC, PSCSC and FPSC require updated cost estimates for decommissioning nuclear plants every five years.
180




FINANCIAL STATEMENTSASSET RETIREMENT OBLIGATIONS
The following table summarizes information about the most recent site-specific nuclear decommissioning cost studies. Decommissioning costs are stated in 2018 or 2019 dollars, depending on the year of the cost study, and include costs to decommission plant components not subject to radioactive contamination.
Annual FundingDecommissioning
(in millions)
Requirement(a)
Costs(a)
Year of Cost Study
Duke Energy$27 $9,105 2018 or 2019
Duke Energy Carolinas(b)(c)
 4,365 2018
Duke Energy Progress(d)
27 4,181 2019
Duke Energy Florida(e)
 559 N/A
(a)    Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.
(b)    Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.
(c)    Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2018 was filed with the NCUC and PSCSC in 2019. A new funding study was also completed and filed with the NCUC and PSCSC in 2019.
(d)    Duke Energy Progress' site-specific nuclear decommissioning cost study completed in 2019 was filed with the NCUC and PSCSC in March 2020. Duke Energy Progress also completed a funding study, which was filed with the NCUC and PSCSC in July 2020.
(e)    During 2019, Duke Energy Florida reached an agreement to transfer decommissioning work for Crystal River Unit 3 to a third party and decommissioning costs are based on the agreement with this third party rather than a cost study. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 3 for more information.
Nuclear Decommissioning Trust Funds
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida each maintain NDTFs that are intended to pay for the decommissioning costs of their respective nuclear power plants. The NDTF investments are managed and invested in accordance with applicable requirements of various regulatory bodies including the NRC, FERC, NCUC, PSCSC, FPSC and the IRS.
Use of the NDTF investments is restricted to nuclear decommissioning activities including license termination, spent fuel and site restoration. The license termination and spent fuel obligations relate to contaminated decommissioning and are recorded as AROs. The site restoration obligation relates to non-contaminated decommissioning and is recorded to cost of removal within Regulatory liabilities on the Consolidated Balance Sheets.
The following table presents the fair value of NDTF assets legally restricted for purposes of settling AROs associated with nuclear decommissioning. Duke Energy Florida entered into an agreement with a third party to decommission Crystal River Unit 3 and was granted an exemption from the NRC, which allows for use of the NDTF for all aspects of nuclear decommissioning. The entire balance of Duke Energy Florida's NDTF may be applied toward license termination, spent fuel and site restoration costs incurred to decommission Crystal River Unit 3 and is excluded from the table below. See Note 16 for additional information related to the fair value of the Duke Energy Registrants' NDTFs.
December 31,
(in millions)20202019
Duke Energy$7,726 $6,766 
Duke Energy Carolinas4,381 3,837 
Duke Energy Progress3,345 2,929 
Nuclear Operating Licenses
Operating licenses for nuclear units are potentially subject to extension. The following table includes the current expiration of nuclear operating licenses.
UnitYear of Expiration
Duke Energy Carolinas
Catawba Units 1 and 22043
McGuire Unit 12041
McGuire Unit 22043
Oconee Units 1 and 22033
Oconee Unit 32034
Duke Energy Progress
Brunswick Unit 12036
Brunswick Unit 22034
Harris2046
Robinson2030
181




FINANCIAL STATEMENTSASSET RETIREMENT OBLIGATIONS
The NRC has acknowledged permanent cessation of operation and permanent removal of fuel from the reactor vessel at Crystal River Unit 3. Therefore, the license no longer authorizes operation of the reactor. During 2019, Duke Energy Florida entered into an agreement for the accelerated decommissioning of Crystal River Unit 3. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 3 for more information.
Closure of Ash Impoundments
The Duke Energy Registrants are subject to state and federal regulations covering the closure of coal ash impoundments, including the EPA CCR rule and the Coal Ash Act, and other agreements. AROs recorded on the Duke Energy Registrants' Consolidated Balance Sheets include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of these regulations and agreements.
The ARO amount recorded on the Consolidated Balance Sheets is based upon estimated closure costs for impacted ash impoundments. The amount recorded represents the discounted cash flows for estimated closure costs based upon specific closure plans. Actual costs to be incurred will be dependent upon factors that vary from site to site. The most significant factors are the method and time frame of closure at the individual sites. Closure methods considered include removing the water from ash basins, consolidating material as necessary and capping the ash with a synthetic barrier, excavating and relocating the ash to a lined structural fill or lined landfill or recycling the ash for concrete or some other beneficial use. The ultimate method and timetable for closure will be in compliance with standards set by federal and state regulations and other agreements. The ARO amount will be adjusted as additional information is gained through the closure and post-closure process, including acceptance and approval of compliance approaches, which may change management assumptions, and may result in a material change to the balance. See ARO Liability Rollforward section below for information on revisions made to the coal ash liability during 2020 and 2019.
Asset retirement costs associated with the AROs for operating plants and retired plants are included in Net property, plant and equipment and Regulatory assets, respectively, on the Consolidated Balance Sheets. See Note 3 for additional information on Regulatory assets related to AROs.
Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. See Note 3 for additional information on recovery of coal ash costs.
ARO Liability Rollforward
The following tables present changes in the liability associated with AROs.
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Balance at December 31, 2018$10,467 $3,949 $5,411 $4,820 $591 $93 $722 $19 
Accretion expense(a)
508 235 252 227 25 3 28 1 
Liabilities settled(b)
(895)(329)(499)(460)(39)(12)(54)— 
Liabilities incurred in the current year25 18 7 — 7 — — — 
Revisions in estimates of cash flows(c)
3,213 1,861 1,300 1,306 (6)(4)136 (3)
Balance at December 31, 201913,318 5,734 6,471 5,893 578 80 832 17 
Accretion expense(a)
542 258 246 225 21 4 33 1 
Liabilities settled(b)
(724)(198)(451)(358)(93)(2)(74) 
Liabilities incurred in the current year22  5  5    
Revisions in estimates of cash flows(d)
(154)(444)(122)(125)3 29 385 2 
Balance at December 31, 2020$13,004 $5,350 $6,149 $5,635 $514 $111 $1,176 $20 
(a)    Substantially all accretion expense for the years ended December 31, 2020, and 2019, relates to Duke Energy’s regulated operations and has been deferred in accordance with regulatory accounting treatment.
(b)    Amounts primarily relate to ash impoundment closures and nuclear decommissioning.
(c)    Amounts primarily relate to increases in closure estimates for certain ash impoundments as a result of the NCDEQ's April 1, 2019, Order and the related settlement agreement dated December 31, 2019.
(d)    Primarily relates to decreases due to revised basin closure cost estimates, partially offset by increases related to new closure plan approvals, post closure maintenance and beneficiation costs. Duke Energy Indiana estimates also include the impacts of closure estimates for certain ash impoundments due to 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. 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.
182




FINANCIAL STATEMENTSPROPERTY, PLANT AND EQUIPMENT
10. PROPERTY, PLANT AND EQUIPMENT
The following tables summarize the property, plant and equipment for Duke Energy and its subsidiary registrants.
December 31, 2020
Average
RemainingDukeDukeDukeDukeDuke
Useful LifeDukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)(Years)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Land $2,046 $536 $908 $463 $445 $171 $118 $279 
Plant – Regulated
Electric generation, distribution and transmission 39117,107 44,059 50,785 31,375 19,410 6,255 16,008  
Natural gas transmission and distribution 5410,799     3,136  7,663 
Other buildings and improvements 362,038 740 459 197 262 374 300 165 
Plant – Nonregulated  
Electric generation, distribution and transmission275,444        
Other buildings and improvements 10519        
Nuclear fuel 3,284 1,837 1,447 1,447     
Equipment 152,608 620 759 498 261 385 238 122 
Construction in process 6,645 1,645 2,013 709 1,304 407 409 581 
Other145,090 1,203 1,521 1,070 441 294 309 324 
Total property, plant and equipment(a)(e)
155,580 50,640 57,892 35,759 22,123 11,022 17,382 9,134 
Total accumulated depreciation – regulated(b)(c)
(46,216)(17,453)(18,368)(12,801)(5,560)(3,013)(5,661)(1,749)
Total accumulated depreciation – nonregulated(d)(e)
(2,611)       
Generation facilities to be retired, net29  29 29     
Total net property, plant and equipment $106,782 $33,187 $39,553 $22,987 $16,563 $8,009 $11,721 $7,385 
(a)    Includes finance leases of $832 million, $335 million, $416 million, $297 million, $119 million and $10 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $141 million, $24 million and $117 million, respectively, of accumulated amortization of finance leases.
(b)    Includes $1,832 million, $1,010 million, $822 million and $822 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(c)    Includes accumulated amortization of finance leases of $12 million, $23 million and $3 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.
(d)    Includes accumulated amortization of finance leases of $23 million at Duke Energy.
(e)    Includes gross property, plant and equipment cost of consolidated VIEs of $6,394 million and accumulated depreciation of consolidated VIEs of $1,242 million at Duke Energy.
In 2020, Duke Energy evaluated recoverability of its renewable merchant plants principally located in the Electric Reliability Council of Texas West market and in the PJM West market due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Duke Energy determined that the assets were not impaired because the carrying value of $210 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 these facilities following the 2019 transaction to sell a minority interest in certain renewable assets. See Note 1 for further information.
183




FINANCIAL STATEMENTSPROPERTY, PLANT AND EQUIPMENT
December 31, 2019
Average
RemainingDukeDukeDukeDukeDuke
Useful LifeDukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)(Years)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Land $2,091 $520 $884 $449 $435 $150 $117 $388 
Plant – Regulated
Electric generation, distribution and transmission 39111,739 42,723 48,142 30,018 18,124 5,838 15,032 — 
Natural gas transmission and distribution 549,839 — — — — 2,892 — 6,947 
Other buildings and improvements 321,810 714 401 162 239 269 278 148 
Plant – Nonregulated  
Electric generation, distribution and transmission285,103 — — — — — — — 
Other buildings and improvements 9488 — — — — — — — 
Nuclear fuel 3,253 1,891 1,362 1,362 — — — — 
Equipment 132,313 546 665 452 213 319 205 128 
Construction in process 6,102 1,389 2,149 1,114 1,035 504 381 531 
Other134,916 1,139 1,467 1,046 411 269 292 304 
Total property, plant and equipment(a)(e)
147,654 48,922 55,070 34,603 20,457 10,241 16,305 8,446 
Total accumulated depreciation – regulated(b)(c)
(43,419)(16,525)(17,159)(11,915)(5,236)(2,843)(5,233)(1,681)
Total accumulated depreciation – nonregulated(d)(e)
(2,354)— — — — — — — 
Generation facilities to be retired, net246 — 246 246 — — — — 
Total net property, plant and equipment $102,127 $32,397 $38,157 $22,934 $15,221 $7,398 $11,072 $6,765 
(a)    Includes finance leases of $952 million, $211 million, $443 million, $308 million, $135 million, and $10 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $143 million, $17 million and $126 million, respectively, of accumulated amortization of finance leases.
(b)    Includes $1,807 million, $1,082 million, $725 million and $725 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(c)    Includes accumulated amortization of finance leases of $6 million, $13 million, and $3 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.
(d)    Includes accumulated amortization of finance leases of $20 million at Duke Energy.
(e)    Includes gross property, plant and equipment cost of consolidated VIEs of $5,747 million and accumulated depreciation of consolidated VIEs of $1,041 million at Duke Energy.
The following tables present capitalized interest, which includes the debt component of AFUDC.
Years Ended December 31,
(in millions)202020192018
Duke Energy$112 $159 $161 
Duke Energy Carolinas28 30 35 
Progress Energy17 31 51 
Duke Energy Progress12 28 26 
Duke Energy Florida5 3 25 
Duke Energy Ohio26 22 17 
Duke Energy Indiana10 26 27 
Piedmont8 26 17 
184




FINANCIAL STATEMENTSGOODWILL AND INTANGIBLE ASSETS
11. GOODWILL AND INTANGIBLE ASSETS
GOODWILL
Duke Energy
The following table presents goodwill by reportable segment for Duke Energy included on Duke Energy's Consolidated Balance Sheets at December 31, 2020, and 2019.
Electric UtilitiesGas UtilitiesCommercial
(in millions)
and Infrastructureand InfrastructureRenewablesTotal
Goodwill Balance at December 31, 2019$17,379 $1,924 $122 $19,425 
Accumulated impairment charges  (122)(122)
Goodwill balance at December 31, 2019, adjusted for accumulated impairment charges$17,379 $1,924 $ $19,303 
Goodwill Balance at December 31, 2020$17,379 $1,924 $122 $19,425 
Accumulated impairment charges  (122)(122)
Goodwill balance at December 31, 2020, adjusted for accumulated impairment charges$17,379 $1,924 $ $19,303 
(a)    Duke Energy evaluated the recoverability of goodwill during 2018 and 2017 and recorded impairment charges of $93 million and $29 million, respectively, related to the Commercial Renewables reporting unit included in Impairment charges on Duke Energy's Consolidated Statements of Operations. The fair value of the reporting unit was determined based on the income approach and market approach in 2018 and 2017, respectively. See "Goodwill Impairment Testing" below for the results of the 2020 goodwill impairment test.
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 Consolidated Balance Sheets at December 31, 2020, and 2019.
Progress Energy
Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure segment and there are no accumulated impairment charges.
Piedmont
Piedmont's Goodwill is included in the Gas Utilities and Infrastructure segment and there are no accumulated impairment charges.
Goodwill 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 2020.
185




FINANCIAL STATEMENTSGOODWILL AND INTANGIBLE ASSETS
INTANGIBLE ASSETS
The following tables show the carrying amount and accumulated amortization of intangible assets included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets of the Duke Energy Registrants at December 31, 2020, and 2019.
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Emission allowances $8 $ $5 $2 $3 $ $2 $ 
Renewable energy certificates 196 65 130 130  1   
Natural gas, coal and power contracts 24      24  
Renewable operating and development projects107        
Other 20        
Total gross carrying amounts 355 65 135 132 3 1 26  
Accumulated amortization – natural gas, coal and power contracts (23)     (23) 
Accumulated amortization – renewable operating and development projects(34)       
Accumulated amortization – other (3)       
Total accumulated amortization (60)     (23) 
Total intangible assets, net $295 $65 $135 $132 $3 $1 $3 $ 
 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Emission allowances $18 $— $5 $2 $3 $— $12 $— 
Renewable energy certificates 172 53 118 118 — 1 — — 
Natural gas, coal and power contracts 24 — — — — — 24 — 
Renewable operating and development projects89 — — — — — — — 
Other 2 — — — — — — — 
Total gross carrying amounts 305 53 123 120 3 1 36 — 
Accumulated amortization – natural gas, coal and power contracts (21)— — — — — (21)— 
Accumulated amortization – renewable operating and development projects(34)— — — — — — — 
Accumulated amortization – other (1)— — — — — — — 
Total accumulated amortization (56)— — — — — (21)— 
Total intangible assets, net $249 $53 $123 $120 $3 $1 $15 $— 
Amortization Expense
Amortization expense amounts for natural gas, coal and power contracts, renewable operating projects and other intangible assets are immaterial for the years ended December 31, 2020, 2019 and 2018, and are expected to be immaterial for the next five years as of December 31, 2020.
12. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
EQUITY METHOD INVESTMENTS
Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method.
186




FINANCIAL STATEMENTSINVESTMENTS IN UNCONSOLIDATED AFFILIATES
The following table presents Duke Energy’s investments in unconsolidated affiliates accounted for under the equity method, as well as the respective equity in earnings, by segment.
 Years Ended December 31,
 202020192018
Equity inEquity inEquity in
(in millions)InvestmentsearningsInvestmentsearningsInvestmentsearnings
Electric Utilities and Infrastructure$105 $(1)$122 $9 $97 $6 
Gas Utilities and Infrastructure215 (2,017)1,388 114 1,003 27 
Commercial Renewables534  314 (4)201 (1)
Other107 13 112 43 108 51 
Total$961 $(2,005)$1,936 $162 $1,409 $83 
During the years ended December 31, 2020, 2019 and 2018, Duke Energy received distributions from equity investments of $37 million, $55 million and $108 million, respectively, which are included in Other assets within Cash Flows from Operating Activities on the Consolidated Statements of Cash Flows. During the years ended December 31, 2020, 2019 and 2018, Duke Energy received distributions from equity investments of $133 million, $11 million and $137 million, respectively, which are included in Return of investment capital within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows.
During the years ended December 31, 2020, 2019 and 2018, Piedmont received distributions from equity investments of $2 million, $1 million and $1 million, respectively, which are included in Other assets within Cash Flows from Operating Activities and $2 million, $4 million and $3 million, respectively, which are included within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows.
Significant investments in affiliates accounted for under the equity method are discussed below.
Electric Utilities and Infrastructure
Duke Energy owns 50% interests in both DATC and Pioneer, which build, own and operate electric transmission facilities in North America.
Gas Utilities and Infrastructure
The table below outlines Duke Energy's ownership interests in natural gas pipeline companies and natural gas storage facilities.
Investment Amount (in millions)
OwnershipDecember 31,
Entity NameInterest20202019
Pipeline Investments(a)
ACP(b)
47 %$ $1,179 
Sabal Trail 7.5 %120 121 
Cardinal(c)
21.49 %9 9 
Storage Facilities
Pine Needle(c)
45 %27 28 
Hardy Storage(c)
50 %56 51 
Other29.68 %3 — 
Total Investments(d)
$215 $1,388 
(a)    Duke Energy recorded OTTIs of $25 million and $55 million within Equity in (losses) earnings of unconsolidated affiliates on Duke Energy's Consolidated Statements of Operations for the years ended December 31, 2019, and 2018, respectively, to completely impair its 24% ownership interest in Constitution.
(b)    In 2020, Duke Energy determined it would no longer continue its investment in the construction of the ACP pipeline. See Notes 3 and 7 for further information.
(c)    Piedmont owns the Cardinal, Pine Needle and Hardy Storage investments.
(d)    Duke Energy includes purchase accounting adjustments related to Piedmont.
Commercial Renewables
DS Cornerstone, LLC, which owns wind farm projects in the U.S. was part of a sale of minority interest in a certain portion of renewable assets in 2019. See Note 1 for more information on the sale. Prior to the sale, Duke Energy had a 50% interest in DS Cornerstone, LLC. After the sale, Duke Energy has a 26% interest in the investment.
As of December 31, 2020, Duke Energy completed its acquisition of 70 distributed fuel cell projects from Bloom Energy Corporation, which approximates 43 MW of capacity serving commercial and industrial customers across the U.S. Duke Energy is not the primary beneficiary of the distributed fuel cell portfolio and does not consolidate these assets.
187




FINANCIAL STATEMENTSINVESTMENTS IN UNCONSOLIDATED AFFILIATES
Other
Duke Energy has a 17.5% indirect economic ownership interest and 25% board representation and voting rights interest in NMC, which owns and operates a methanol and MTBE business in Jubail, Saudi Arabia.
Significant Subsidiaries
For the year ended December 31, 2020, Duke Energy's investment in ACP met the requirements of S-X Rule 4-08(g) to provide summarized financial information. The following table provides summary information for ACP as required under S-X Rule 1-02(bb) for the comparative periods in Duke Energy's consolidated balance sheets and consolidated statements of operations.
December 31,
(in millions)20202019
Current assets$43 $17 
Noncurrent assets93 4,091 
Current liabilities1,965 37 
Noncurrent liabilities167 1,760 
Membership interests(1,996)2,311 
Years Ended December 31,
202020192018
Net revenues$ $— $— 
Operating loss(4,612)(5)(6)
Net (loss) income(4,512)246 138 
Net (loss) income attributable to Duke Energy$(2,121)$116 $65 
188




FINANCIAL STATEMENTSRELATED PARTY TRANSACTIONS
13. RELATED PARTY TRANSACTIONS
The Subsidiary Registrants engage in related party transactions in accordance with the applicable state and federal commission regulations. Refer to the 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 in the Consolidated Statements of Operations and Comprehensive Income are presented in the following table.
 Years Ended December 31,
(in millions) 202020192018
Duke Energy Carolinas   
Corporate governance and shared service expenses(a)
$753 $841 $985 
Indemnification coverages(b)
20 20 22 
Joint Dispatch Agreement (JDA) revenue(c)
25 60 84 
JDA expense(c)
114 186 207 
Intercompany natural gas purchases(d)
15 15 15 
Progress Energy   
Corporate governance and shared service expenses(a)
$715 $778 $906 
Indemnification coverages(b)
36 37 34 
JDA revenue(c)
114 186 207 
JDA expense(c)
25 60 84 
Intercompany natural gas purchases(d)
75 76 78 
Duke Energy Progress   
Corporate governance and shared service expenses(a)
$420 $462 $577 
Indemnification coverages(b)
17 15 13 
JDA revenue(c)
114 186 207 
JDA expense(c)
25 60 84 
Intercompany natural gas purchases(d)
75 76 78 
Duke Energy Florida   
Corporate governance and shared service expenses(a)
$295 $316 $329 
Indemnification coverages(b)
19 22 21 
Duke Energy Ohio   
Corporate governance and shared service expenses(a)
$326 $354 $374 
Indemnification coverages(b)
4 4 5 
Duke Energy Indiana   
Corporate governance and shared service expenses(a)
$401 $412 $405 
Indemnification coverages(b)
8 7 7 
Piedmont
Corporate governance and shared service expenses(a)
$140 $138 $170 
Indemnification coverages(b)
3 3 2 
Intercompany natural gas sales(d)
90 91 93 
Natural gas storage and transportation costs(e)
23 23 25 
(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 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 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 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 Consolidated Statements of Operations and Comprehensive Income. These intercompany revenues and expenses are eliminated in consolidation.
(e)Piedmont has related party transactions as a customer of its equity method investments in Pine Needle, Hardy Storage, and Cardinal natural gas storage and transportation facilities. These expenses are included in Cost of natural gas on Piedmont's Consolidated Statements of Operations and Comprehensive Income.
189




FINANCIAL STATEMENTSRELATED PARTY TRANSACTIONS
In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions and their proportionate share of certain charged expenses. See Note 6 for more information regarding money pool. These transactions of the Subsidiary Registrants are incurred in the ordinary course of business and are eliminated in consolidation.
As discussed in Note 17, 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.
DukeDukeDukeDukeDuke
EnergyProgressEnergyEnergyEnergyEnergy
(in millions)CarolinasEnergyProgressFloridaOhioIndianaPiedmont
December 31, 2020
Intercompany income tax receivable$ $ $ $ $ $9 $10 
Intercompany income tax payable31 33 46 35 2   
December 31, 2019
Intercompany income tax receivable$— $125 $28 $— $9 $28 $13 
Intercompany income tax payable5 — — 2 — — — 
14. 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 Consolidated Balance Sheets. Cash collateral related to derivative instruments executed under master netting arrangements is offset against the collateralized derivatives on the Consolidated Balance Sheets. The cash impacts of settled derivatives are recorded as operating activities on the Consolidated Statements of Cash Flows.
INTEREST RATE RISK
The Duke Energy Registrants are exposed to changes in interest rates as a result of their issuance or anticipated issuance of variable-rate and fixed-rate debt and commercial paper. Interest rate risk is managed by limiting variable-rate exposures to a percentage of total debt and by monitoring changes in interest rates. To manage risk associated with changes in interest rates, the Duke Energy Registrants may enter into interest rate swaps, U.S. Treasury lock agreements and other financial contracts. In anticipation of certain fixed-rate debt issuances, a series of forward-starting interest rate swaps or Treasury locks may be executed to lock in components of current market interest rates. These instruments are later terminated prior to or upon the issuance of the corresponding debt.
Cash Flow Hedges
For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. Gains and losses reclassified out of AOCI for the years ended December 31, 2020, 2019 and 2018, 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 Consolidated Statements of Operations and Comprehensive Income.
190




FINANCIAL STATEMENTSDERIVATIVES AND HEDGING
The following tables show notional amounts of outstanding derivatives related to interest rate risk.
December 31, 2020
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhio
Cash flow hedges$632 $ $ $ $ $ 
Undesignated contracts1,177 400 750 750  27 
Total notional amount(a)
$1,809 $400 $750 $750 $ $27 
December 31, 2019
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhio
Cash flow hedges$993 $— $— $— $— $— 
Undesignated contracts1,277 450 800 250 550 27 
Total notional amount(a)
$2,270 $450 $800 $250 $550 $27 
(a)    Duke Energy includes amounts related to consolidated VIEs of $632 million in cash flow hedges as of December 31, 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 year ended December 31, 2020, 2019 and 2018, 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 gas cost volatility for customers.
Volumes
The tables below include volumes of outstanding commodity derivatives. Amounts disclosed represent the absolute value of notional volumes of commodity contracts excluding NPNS. The Duke Energy Registrants have netted contractual amounts where offsetting purchase and sale contracts exist with identical delivery locations and times of delivery. Where all commodity positions are perfectly offset, no quantities are shown.
December 31, 2020
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
EnergyCarolinasEnergyProgressOhioIndianaPiedmont
Electricity (GWh)(a)
35,409    2,559 10,802  
Natural gas (millions of Dth)678 145 158 158  2 373 
191




FINANCIAL STATEMENTSDERIVATIVES AND HEDGING
December 31, 2019
DukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergy
EnergyCarolinasEnergyProgressOhioIndianaPiedmont
Electricity (GWh)15,858 — — — 1,887 13,971 — 
Natural gas (millions of Dth)704 130 160 160 — 3 411 
(a)    Duke Energy includes 22,048 GWh that relates to cash flow hedges.
LOCATION AND FAIR VALUE OF DERIVATIVE ASSETS AND LIABILITIES RECOGNIZED IN THE 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 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 AssetsDecember 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current$30 $14 $9 $9 $ $1 $6 $1 
Noncurrent13 6 6 6     
Total Derivative Assets – Commodity Contracts$43 $20 $15 $15 $ $1 $6 $1 
Interest Rate Contracts
Not Designated as Hedging Instruments
Current$18 $ $18 $18 $ $ $ $ 
Total Derivative Assets – Interest Rate Contracts$18 $ $18 $18 $ $ $ $ 
Total Derivative Assets$61 $20 $33 $33 $ $1 $6 $1 
Derivative LiabilitiesDecember 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts
Designated as Hedging Instruments
Current$14 $ $ $ $ $ $ $ 
Noncurrent70        
Not Designated as Hedging Instruments
Current$30 $13 $2 $2 $ $ $1 $15 
Noncurrent137 3 27 12    107 
Total Derivative Liabilities – Commodity Contracts$251 $16 $29 $14 $ $ $1 $122 
Interest Rate Contracts
Designated as Hedging Instruments
Current$15 $ $ $ $ $ $ $ 
Noncurrent48        
Not Designated as Hedging Instruments
Current5 4    1   
Noncurrent5     5   
Total Derivative Liabilities – Interest Rate Contracts$73 $4 $ $ $ $6 $ $ 
Total Derivative Liabilities$324 $20 $29 $14 $ $6 $1 $122 
192




FINANCIAL STATEMENTSDERIVATIVES AND HEDGING
Derivative AssetsDecember 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current$17 $— $— $— $— $3 $13 $1 
Noncurrent1 — — — — 1 — — 
Total Derivative Assets – Commodity Contracts$18 $— $— $— $— $4 $13 $1 
Interest Rate Contracts
Not Designated as Hedging Instruments
Current6 — 6 — 6 — — — 
Total Derivative Assets – Interest Rate Contracts$6 $— $6 $— $6 $— $— $— 
Equity Securities Contracts
Not Designated as Hedging Instruments
Current$1 $— $1 $— $1 $— $— $— 
Total Derivative Assets – Equity Securities Contracts$1 $— $1 $— $1 $— $— $— 
Total Derivative Assets$25 $— $7 $— $7 $4 $13 $1 
Derivative LiabilitiesDecember 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current$67 $33 $26 $26 $— $— $1 $7 
Noncurrent156 10 37 22 — — — 110 
Total Derivative Liabilities – Commodity Contracts$223 $43 $63 $48 $— $— $1 $117 
Interest Rate Contracts
Designated as Hedging Instruments
Current$19 $— $— $— $— $— $— $— 
Noncurrent21 — — — — — — — 
Not Designated as Hedging Instruments
Current8 6 1 1 — 1 — — 
Noncurrent5 — — — — 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 
193




FINANCIAL STATEMENTSDERIVATIVES AND HEDGING
OFFSETTING ASSETS AND LIABILITIES
The following tables present the line items on the 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 AssetsDecember 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current
Gross amounts recognized$48 $14 $27 $27 $ $1 $6 $1 
Gross amounts offset(3)(2)(2)(2)    
Net amounts presented in Current Assets: Other$45 $12 $25 $25 $ $1 $6 $1 
Noncurrent
Gross amounts recognized$13 $6 $6 $6 $ $ $ $ 
Gross amounts offset(5)(1)(4)(4)    
Net amounts presented in Other Noncurrent Assets: Other$8 $5 $2 $2 $ $ $ $ 
Derivative LiabilitiesDecember 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current
Gross amounts recognized$64 $17 $2 $2 $ $1 $1 $15 
Gross amounts offset(3)(2)(2)(2)    
Net amounts presented in Current Liabilities: Other$61 $15 $ $ $ $1 $1 $15 
Noncurrent
Gross amounts recognized$260 $3 $27 $12 $ $5 $ $107 
Gross amounts offset(5)(1)(4)(4)    
Net amounts presented in Other Noncurrent Liabilities: Other$255 $2 $23 $8 $ $5 $ $107 
Derivative AssetsDecember 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
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 $— $— 
194




FINANCIAL STATEMENTSDERIVATIVES AND HEDGING
Derivative LiabilitiesDecember 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current
Gross amounts recognized$118 $39 $51 $27 $24 $1 $1 $7 
Gross amounts offset(24)— (24)— (24)— — — 
Net amounts presented in Current Liabilities: Other$94 $39 $27 $27 $— $1 $1 $7 
Noncurrent
Gross amounts recognized$182 $10 $37 $22 $— $5 $— $110 
Gross amounts offset— — — — — — — — 
Net amounts presented in Other Noncurrent Liabilities: Other$182 $10 $37 $22 $— $5 $— $110 
OBJECTIVE CREDIT CONTINGENT FEATURES
Certain derivative contracts contain objective credit contingent features. These features include the requirement to post cash collateral or letters of credit if specific events occur, such as a credit rating downgrade below investment grade. The following tables show information with respect to derivative contracts that are in a net liability position and contain objective credit-risk-related payment provisions.
December 31, 2020
DukeDuke
DukeEnergyProgressEnergy
(in millions)EnergyCarolinasEnergyProgress
Aggregate fair value of derivatives in a net liability position$24 $9 $14 $14 
Fair value of collateral already posted    
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered24 9 14 14 
December 31, 2019
DukeDuke
DukeEnergyProgressEnergy
(in millions)EnergyCarolinasEnergyProgress
Aggregate fair value of derivatives in a net liability position$79 $35 $44 $44 
Fair value of collateral already posted    
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered79 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.
15. INVESTMENTS IN DEBT AND EQUITY SECURITIES
Duke Energy’s investments in debt and equity securities are primarily comprised of investments held in (i) the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) the grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to OPEB plans and (iii) Bison. The Duke Energy Registrants classify investments in debt securities as AFS and investments in equity securities as FV-NI.
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.
195




FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
Investment Trusts
The investments within the Investment Trusts are managed by independent investment managers with discretion to buy, sell and invest pursuant to the objectives set forth by the investment manager agreements and trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt securities within the Investment Trusts are recognized immediately and deferred to regulatory accounts where appropriate.
Other AFS Securities
Unrealized gains and losses on all other AFS securities are included in other comprehensive income until realized, unless it is determined the carrying value of an investment has a credit loss. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value is related to a credit loss. If a credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of December 31, 2020, and 2019.
Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.
DUKE ENERGY
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
December 31, 2020December 31, 2019
GrossGrossGrossGross
UnrealizedUnrealizedUnrealizedUnrealized
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions) GainsLossesFair ValueGainsLossesFair Value
NDTF       
Cash and cash equivalents $ $ $177 $— $— $101 
Equity securities 4,138 54 6,235 3,523 55 5,661 
Corporate debt securities 76 1 806 37 1 603 
Municipal bonds 22  370 13  368 
U.S. government bonds 51  1,361 33 1 1,256 
Other debt securities 8  180 3  141 
Total NDTF Investments$4,295 $55 $9,129 $3,609 $57 $8,130 
Other Investments       
Cash and cash equivalents $ $ $127 $— $— $52 
Equity securities 79  146 57  122 
Corporate debt securities 8  110 3  67 
Municipal bonds 5  86 4  94 
U.S. government bonds   42 2  41 
Other debt securities   47   56 
Total Other Investments$92 $ $558 $66 $ $432 
Total Investments $4,387 $55 $9,687 $3,675 $57 $8,562 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2020
Due in one year or less$149 
Due after one through five years922 
Due after five through 10 years671 
Due after 10 years1,260 
Total$3,002 
196




FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2020, 2019 and 2018, were as follows.
Years Ended December 31,
(in millions)202020192018
FV-NI:
Realized gains$366 $172 $168 
Realized losses174 151 126 
AFS:
Realized gains96 94 22 
Realized losses51 67 51 
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.
 December 31, 2020 December 31, 2019
GrossGrossGrossGross
UnrealizedUnrealizedUnrealizedUnrealized
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions) GainsLossesFair ValueGainsLossesFair Value
NDTF       
Cash and cash equivalents $ $ $30 $— $— $21 
Equity securities 2,442 23 3,685 1,914 8 3,154 
Corporate debt securities 49 1 510 21 1 361 
Municipal bonds 6  91 3 — 96 
U.S. government bonds 25  475 16 1 578 
Other debt securities 7  174 3 — 137 
Total NDTF Investments$2,529 $24 $4,965 $1,957 $10 $4,347 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2020
Due in one year or less$14 
Due after one through five years299 
Due after five through 10 years279 
Due after 10 years658 
Total$1,250 
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2020, 2019 and 2018, were as follows.
Years Ended December 31,
(in millions)202020192018
FV-NI:
Realized gains$64 $113 $89 
Realized losses99 107 73 
AFS:
Realized gains60 55 19 
Realized losses37 38 35 
197




FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
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.
December 31, 2020December 31, 2019
GrossGrossGrossGross
UnrealizedUnrealizedUnrealizedUnrealized
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions) GainsLossesFair ValueGainsLossesFair Value
NDTF       
Cash and cash equivalents $ $ $147 $— $— $80 
Equity securities 1,696 31 2,550 1,609 47 2,507 
Corporate debt securities 27  296 16 — 242 
Municipal bonds 16  279 10 — 272 
U.S. government bonds 26  886 17 — 678 
Other debt securities 1  6   4 
Total NDTF Investments$1,766 $31 $4,164 $1,652 $47 $3,783 
Other Investments       
Cash and cash equivalents $ $ $106 $— $— $49 
Municipal bonds 3  26 3  51 
Total Other Investments$3 $ $132 $3 $ $100 
Total Investments $1,769 $31 $4,296 $1,655 $47 $3,883 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2020
Due in one year or less$109 
Due after one through five years567 
Due after five through 10 years298 
Due after 10 years519 
Total$1,493 
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2020, 2019 and 2018, were as follows.
Years Ended December 31,
(in millions)202020192018
FV-NI:
Realized gains$302 $59 $79 
Realized losses75 44 53 
AFS:
Realized gains24 36 3 
Realized losses13 29 15 
198




FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
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.
 December 31, 2020December 31, 2019
GrossGrossGrossGross
UnrealizedUnrealizedUnrealizedUnrealized
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions) GainsLossesFair ValueGainsLossesFair Value
NDTF       
Cash and cash equivalents $ $ $76 $— $— $53 
Equity securities 1,617 31 2,459 1,258 21 2,077 
Corporate debt securities 27  296 16 — 242 
Municipal bonds 16  279 10 — 272 
U.S. government bonds 26  412 16 — 403 
Other debt securities 1  6   4 
Total NDTF Investments$1,687 $31 $3,528 $1,300 $21 $3,051 
Other Investments       
Cash and cash equivalents $ $ $1 $— $— $2 
Total Other Investments$ $ $1 $ $ $2 
Total Investments $1,687 $31 $3,529 $1,300 $21 $3,053 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2020
Due in one year or less$21 
Due after one through five years259 
Due after five through 10 years210 
Due after 10 years503 
Total$993 
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2020, 2019 and 2018, were as follows.
Years Ended December 31,
(in millions)202020192018
FV-NI:
Realized gains$52 $38 $68 
Realized losses59 33 48 
AFS:
Realized gains24 7 2 
Realized losses13 5 10 
199




FINANCIAL STATEMENTSINVESTMENTS 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.
 December 31, 2020December 31, 2019
GrossGrossGrossGross
UnrealizedUnrealizedUnrealizedUnrealized
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions) GainsLossesFair ValueGainsLossesFair Value
NDTF        
Cash and cash equivalents $ $ $71 $— $— $27 
Equity securities 79  91 351 26 430 
U.S. government bonds   474 1 — 275 
Total NDTF Investments(a)
$79 $ $636 $352 $26 $732 
Other Investments       
Cash and cash equivalents $ $ $1 $— $— $4 
Municipal bonds 3  26 3  51 
Total Other Investments$3 $ $27 $3 $ $55 
Total Investments $82 $ $663 $355 $26 $787 
(a)    During the years ended December 31, 2020, and 2019, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3.
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2020
Due in one year or less$88 
Due after one through five years308 
Due after five through 10 years88 
Due after 10 years16 
Total$500 
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2020, 2019 and 2018, were as follows.
Years Ended December 31,
(in millions)202020192018
FV-NI:
Realized gains$250 $21 $11 
Realized losses16 11 5 
AFS:
Realized gains 29 1 
Realized losses 24 5 
200




FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES
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.
 December 31, 2020December 31, 2019
GrossGrossGrossGross
UnrealizedUnrealizedUnrealizedUnrealized
HoldingHoldingEstimatedHoldingHoldingEstimated
(in millions) GainsLossesFair ValueGainsLossesFair Value
Investments       
Cash and cash equivalents$ $ $1 $— $— $— 
Equity securities 58  97 43  81 
Corporate debt securities   3   6 
Municipal bonds 1  38 1  36 
U.S. government bonds   4  — 2 
Total Investments $59 $ $143 $44 $ $125 
The table below summarizes the maturity date for debt securities.
(in millions)December 31, 2020
Due in one year or less$3 
Due after one through five years17 
Due after five through 10 years10 
Due after 10 years15 
Total$45 
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2020, 2019 and 2018, were immaterial.
16. 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 per share practical expedient. The net asset value 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 NYSE 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.
201




FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
Commodity derivatives
Commodity derivatives with clearinghouses are classified as Level 1. Commodity derivatives with observable forward curves are classified as Level 2. If forward price curves are not observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.
Interest rate derivatives
Most over-the-counter interest rate contract derivatives are valued using financial models that utilize observable inputs for similar instruments and are classified as Level 2. Inputs include forward interest rate curves, notional amounts, interest rates and credit quality of the counterparties.
Other fair value considerations
See Note 11 for a discussion of the valuation of goodwill and intangible assets.
DUKE ENERGY
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets. Derivative amounts in the tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note 14. See Note 15 for additional information related to investments by major security type for the Duke Energy Registrants.
 December 31, 2020
(in millions)Total Fair ValueLevel 1Level 2Level 3Not Categorized
NDTF cash and cash equivalents$177 $177 $ $ $ 
NDTF equity securities6,235 6,189   46 
NDTF debt securities2,717 874 1,843   
Other equity securities146 146    
Other debt securities285 37 248   
Other cash and cash equivalents127 127    
Derivative assets61 1 53 7  
Total assets9,748 7,551 2,144 7 46 
Derivative liabilities(324) (240)(84) 
Net assets (liabilities)$9,424 $7,551 $1,904 $(77)$46 
 December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Level 3Not Categorized
NDTF cash and cash equivalents$101 $101 $ $ $ 
NDTF equity securities5,684 5,633 — — 51 
NDTF debt securities2,368 725 1,643 — — 
Other equity securities122 122 — — — 
Other debt securities258 39 219 — — 
Other cash and cash equivalents52 52    
Derivative assets25 3 7 15 — 
Total assets8,610 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 
202




FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
The following table provides reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
Derivatives (net)
 Years Ended December 31,
(in millions) 20202019
Balance at beginning of period$(102)$(113)
Total pretax realized or unrealized losses included in comprehensive income(84) 
Purchases, sales, issuances and settlements:
Purchases14 37 
Settlements(19)(44)
Net transfers Out of Level 3(a)
117  
Total (losses) gains included on the Consolidated Balance Sheet(3)18 
Balance at end of period$(77)$(102)
(a)    Transferred from Level 3 to Level 2 because observable market data became available.
DUKE ENERGY CAROLINAS
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
 December 31, 2020
(in millions)Total Fair ValueLevel 1Level 2Not Categorized
NDTF cash and cash equivalents$30 $30 $ $ 
NDTF equity securities3,685 3,639  46 
NDTF debt securities1,250 192 1,058  
Derivative assets20  20  
Total assets4,985 3,861 1,078 46 
Derivative liabilities(20) (20) 
Net assets$4,965 $3,861 $1,058 $46 
 December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Not Categorized
NDTF cash and cash equivalents$21 $21 $ $ 
NDTF equity securities3,154 3,103 — 51 
NDTF debt securities1,172 206 966 — 
Total assets4,347 3,330 966 51 
Derivative liabilities(49)— (49)— 
Net assets$4,298 $3,330 $917 $51 
203




FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
PROGRESS ENERGY
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
 December 31, 2020December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 2
NDTF cash and cash equivalents$147 $147 $ $80 $80 $ 
NDTF equity securities2,550 2,550  2,530 2,530 — 
NDTF debt securities1,467 682 785 1,196 519 677 
Other debt securities26  26 51 — 51 
Other cash and cash equivalents106 106 49 49  
Derivative assets33  33 7 — 7 
Total assets4,329 3,485 844 3,913 3,178 735 
NDTF equity security contracts   (23)— (23)
Derivative liabilities(29) (29)(65)— (65)
Net assets$4,300 $3,485 $815 $3,825 $3,178 $647 
DUKE ENERGY PROGRESS
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
 December 31, 2020December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 2
NDTF cash and cash equivalents$76 $76 $ $53 $53 $ 
NDTF equity securities2,459 2,459  2,077 2,077 — 
NDTF debt securities993 237 756 921 244 677 
Other cash and cash equivalents1 1  2 2  
Derivative assets33  33 — —  
Total assets3,562 2,773 789 3,053 2,376 677 
Derivative liabilities(14) (14)(49)— (49)
Net assets$3,548 $2,773 $775 $3,004 $2,376 $628 
DUKE ENERGY FLORIDA
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
 December 31, 2020December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 2
NDTF cash and cash equivalents$71 $71 $ $27 $27 $ 
NDTF equity securities91 91  453 453 — 
NDTF debt securities474 445 29 275 275 — 
Other debt securities26  26 51 — 51 
Other cash and cash equivalents1 1  4 4  
Derivative assets   7 — 7 
Total assets663 608 55 817 759 58 
NDTF equity security contracts   (23)— (23)
Derivative liabilities   (1)— (1)
Net assets$663 $608 $55 $793 $759 $34 
DUKE ENERGY OHIO
The recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets were not material at December 31, 2020, and 2019.
204




FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
DUKE ENERGY INDIANA
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
 December 31, 2020December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Level 3Total Fair ValueLevel 1Level 2Level 3
Other equity securities$97 $97 $ $ $81 $81 $— $— 
Other debt securities45  45  44 — 44 — 
Other cash equivalents1 1       
Derivative assets6   6 13 2 — 11 
Total assets149 98 45 6 138 83 44 11 
Derivative liabilities(1)(1)  (1)(1)— — 
Total assets$148 $97 $45 $6 $137 $82 $44 $11 
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)
 Years Ended December 31,
(in millions)20202019
Balance at beginning of period$11 $22 
Purchases, sales, issuances and settlements:
Purchases10 28 
Settlements(13)(36)
Total losses included on the Consolidated Balance Sheet(2)(3)
Balance at end of period$6 $11 
PIEDMONT
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
 December 31, 2020December 31, 2019
(in millions)Total Fair ValueLevel 1Level 2Total Fair ValueLevel 1Level 3
Derivative assets$1 $1 $ $1 $1 $— 
Derivative liabilities(122) (122)(117)— (117)
Net (liabilities) assets$(121)$1 $(122)$(116)$1 $(117)
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 Derivatives (net)
 Years Ended December 31,
(in millions)20202019
Balance at beginning of period$(117)$(141)
Net transfers Out of Level 3(a)
117  
Total gains and settlements 24 
Balance at end of period$ $(117)
(a)    Transferred from Level 3 to Level 2 because observable market data became available.
205




FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS
The following tables include quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.
December 31, 2020
Weighted
Fair ValueAverage
Investment Type(in millions)Valuation TechniqueUnobservable InputRangeRange
Duke Energy
Electricity contracts$(84)Discounted cash flowForward electricity curves – price per MWh$14.68 $151.84 $28.84 
Duke Energy Ohio
FTRs1 RTO auction pricingFTR price – per MWh0.25 1.68 0.79 
Duke Energy Indiana
FTRs6 RTO auction pricingFTR price – per MWh(2.40)7.41 1.05 
Duke Energy
Total Level 3 derivatives$(77)
December 31, 2019
Weighted
Fair ValueAverage
Investment Type(in millions)Valuation TechniqueUnobservable InputRangeRange
Duke Energy Ohio
FTRs$4 RTO auction pricingFTR price – per MWh$0.59 
$3.47 $2.07 
Duke Energy Indiana
FTRs11 RTO auction pricingFTR price – per MWh(0.66)
9.24 1.15 
Piedmont
Natural gas contracts(117)Discounted cash flowForward natural gas curves – price per MMBtu1.59 2.46 1.91 
Duke Energy
Total Level 3 derivatives$(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.
 December 31, 2020December 31, 2019
(in millions)Book ValueFair ValueBook ValueFair Value
Duke Energy(a)
$59,863 $69,292 $58,126 $63,062 
Duke Energy Carolinas12,218 14,917 11,900 13,516 
Progress Energy19,264 23,470 19,634 22,291 
Duke Energy Progress9,258 10,862 9,058 9,934 
Duke Energy Florida7,915 9,756 7,987 9,131 
Duke Energy Ohio3,089 3,650 2,619 2,964 
Duke Energy Indiana4,091 5,204 4,057 4,800 
Piedmont2,780 3,306 2,384 2,642 
(a)    Book value of long-term debt includes $1.3 billion as of December 31, 2020, and $1.5 billion as of December 31, 2019, of unamortized debt discount and premium, net in purchase accounting adjustments related to the mergers with Progress Energy and Piedmont that are excluded from fair value of long-term debt.
At both December 31, 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.
206




FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES
17. VARIABLE INTEREST ENTITIES
A VIE is an entity that is evaluated for consolidation using more than a simple analysis of voting control. The analysis to determine whether an entity is a VIE considers contracts with an entity, credit support for an entity, the adequacy of the equity investment of an entity and the relationship of voting power to the amount of equity invested in an entity. This analysis is performed either upon the creation of a legal entity or upon the occurrence of an event requiring reevaluation, such as a significant change in an entity’s assets or activities. A qualitative analysis of control determines the party that consolidates a VIE. This assessment is based on (i) what party has the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) what party has rights to receive benefits or is obligated to absorb losses that could potentially be significant to the VIE. The analysis of the party that consolidates a VIE is a continual reassessment.
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.
No financial support was provided to any of the consolidated VIEs during the years ended December 31, 2020, 2019 and 2018, 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 Consolidated Balance Sheets as Long-Term Debt. Amounts borrowed under the credit facilities for DEFR are reflected on the 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 2020, DERF, DEPR and DEFR executed amendments to their credit facilities to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.
The most significant activity that impacts the economic performance of DERF, DEPR and DEFR are the decisions made to manage delinquent receivables. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are considered the primary beneficiaries and consolidate DERF, DEPR and DEFR, respectively, as they make those decisions.
Receivables Financing – CRC
CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to CRC, 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 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.
207




FINANCIAL STATEMENTSVARIABLE 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 EnergyDuke EnergyDuke Energy
CarolinasProgressFlorida
(in millions)CRCDERFDEPRDEFR
Expiration dateFebruary 2023December 2022April 2023April 2021
Credit facility amount$350 $475 $350 $250 
Amounts borrowed at December 31, 2020350 364 250 250 
Amounts borrowed at December 31, 2019350 474 325 250 
Restricted Receivables at December 31, 2020547 696 500 397 
Restricted Receivables at December 31, 2019522 642 489 336 
Nuclear Asset-Recovery Bonds – Duke Energy Florida Project Finance, LLC (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 Consolidated Balance Sheets.
December 31,
(in millions)20202019
Receivables of VIEs$4 $5 
Regulatory Assets: Current53 52 
Current Assets: Other39 39 
Other Noncurrent Assets: Regulatory assets937 989 
Current Liabilities: Other10 10 
Current maturities of long-term debt55 54 
Long-Term Debt1,002 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 EPC 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.
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FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES
The table below presents material balances reported on Duke Energy's Consolidated Balance Sheets related to Commercial Renewables VIEs.
December 31,
(in millions)20202019
Current Assets: Other$257 $203 
Property, Plant and Equipment: Cost6,394 5,747 
Accumulated depreciation and amortization(1,242)(1,041)
Other Noncurrent Assets: Other67 106 
Current maturities of long-term debt167 162 
Long-Term Debt1,569 1,541 
Other Noncurrent Liabilities: AROs148 127 
Other Noncurrent Liabilities: Other316 228 
NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Consolidated Balance Sheets.
 December 31, 2020
 Duke EnergyDukeDuke
PipelineCommercialEnergyEnergy
(in millions)InvestmentsRenewablesTotalOhioIndiana
Receivables from affiliated companies$ $ $ $83 $110 
Investments in equity method unconsolidated affiliates 530 530   
Other noncurrent assets31  31   
Total assets$31 $530 $561 $83 $110 
Other current liabilities928 5 933   
Other noncurrent liabilities8 10 18   
Total liabilities$936 $15 $951 $ $ 
Net assets (liabilities)$(905)$515 $(390)$83 $110 
 December 31, 2019
 Duke EnergyDukeDuke
PipelineCommercialEnergyEnergy
(in millions)InvestmentsRenewablesTotalOhioIndiana
Receivables from affiliated companies$— $(1)$(1)$64 $77 
Investments in equity method unconsolidated affiliates1,179 300 1,479 — — 
Total assets$1,179 $299 $1,478 $64 $77 
Taxes accrued(1)— (1)— — 
Other current liabilities— 4 4 — — 
Deferred income taxes59 — 59 — — 
Other noncurrent liabilities— 11 11 — — 
Total liabilities$58 $15 $73 $— $— 
Net assets$1,121 $284 $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.
Duke Energy has a 47% ownership interest in ACP. In 2020, Duke Energy determined that it would no longer invest in the construction of the ACP pipeline. The current liability related to the cancellation of the ACP pipeline represents Duke Energy's continuing obligation to fund its share of ACP's obligations. See Notes 3, 7 and 12 for further information regarding this transaction.
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FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES
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.
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, FES, a subsidiary of FirstEnergy Corp. and an ICPA counterparty with a power participation ratio of 4.85%, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. Duke Energy Ohio cannot predict the impact of the bankruptcy filing on its OVEC interests. In addition, certain proposed environmental rulemaking could result in future increased OVEC cost allocations. In July 2020, legislation was proposed to repeal HB 6. Duke Energy cannot predict the outcome of 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. Carrying values of retained interests are determined by allocating carrying value of the receivables between assets sold and interests retained based on relative fair value. The allocated bases of the subordinated notes are not materially different than their face value because (i) the receivables generally turnover in less than two months, (ii) credit losses are reasonably predictable due to the broad customer base and lack of significant concentration and (iii) the equity in CRC is subordinate to all retained interests and thus would absorb losses first. The hypothetical effect on fair value of the retained interests assuming both a 10% and a 20% unfavorable variation in credit losses or discount rates is not material due to the short turnover of receivables and historically low credit loss history. Interest accrues to Duke Energy Ohio and Duke Energy Indiana on the retained interests using the acceptable yield method. This method generally approximates the stated rate on the notes since the allocated basis and the face value are nearly equivalent. An impairment charge is recorded against the carrying value of both retained interests and purchased beneficial interest whenever it is determined that an OTTI has occurred.
Key assumptions used in estimating fair value are detailed in the following table.
 Duke Energy OhioDuke Energy Indiana
 2020201920202019
Anticipated credit loss ratio0.5 %0.6 %0.3 %0.3 %
Discount rate1.6 %3.3 %1.6 %3.3 %
Receivable turnover rate13.4 %13.4 %11.3 %11.5 %
The following table shows the gross and net receivables sold.
 Duke Energy OhioDuke Energy Indiana
December 31,December 31,
(in millions)2020201920202019
Receivables sold$270 $253 $344 $307 
Less: Retained interests83 64 110 77 
Net receivables sold$187 $189 $234 $230 
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FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES
The following table shows sales and cash flows related to receivables sold.
 Duke Energy OhioDuke Energy Indiana
 Years Ended December 31,Years Ended December 31,
(in millions)202020192018202020192018
Sales      
Receivables sold$1,905 $1,979 $1,987 $2,631 $2,837 $2,842 
Loss recognized on sale10 14 13 12 17 16 
Cash flows    
Cash proceeds from receivables sold1,875 1,993 1,967 2,586 2,860 2,815 
Collection fees received1 1 1 1 1 1 
Return received on retained interests4 6 6 5 9 9 
Cash flows from sales of receivables are reflected within Cash Flows From Operating Activities and Cash Flows from Investing Activities on Duke Energy Ohio’s and Duke Energy Indiana’s Consolidated Statements of Cash Flows.
Collection fees received in connection with servicing transferred accounts receivable are included in Operation, maintenance and other on Duke Energy Ohio’s and Duke Energy Indiana’s Consolidated Statements of Operations and Comprehensive Income. The loss recognized on sales of receivables is calculated monthly by multiplying receivables sold during the month by the required discount. The required discount is derived monthly utilizing a three-year weighted average formula that considers charge-off history, late charge history and turnover history on the sold receivables, as well as a component for the time value of money. The discount rate, or component for the time value of money, is the prior month-end LIBOR plus a fixed rate of 1%.
18. REVENUE
Duke Energy recognizes revenue consistent with amounts billed under tariff offerings or at contractually agreed upon rates based on actual physical delivery of electric or natural gas service, including estimated volumes delivered when billings have not yet occurred. As such, the majority of Duke Energy’s revenues have fixed pricing based on the contractual terms of the published tariffs, with variability in expected cash flows attributable to the customer’s volumetric demand and ultimate quantities of energy or natural gas supplied and used during the billing period. The stand-alone selling price of related sales are designed to support recovery of prudently incurred costs and an appropriate return on invested assets and are primarily governed by published tariff rates or contractual agreements approved by relevant regulatory bodies. As described in Note 1, certain excise taxes and franchise fees levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis as part of revenues. Duke Energy elects to account for all other taxes net of revenues.
Performance obligations are satisfied over time as energy or natural gas is delivered and consumed with billings generally occurring monthly and related payments due within 30 days, depending on regulatory requirements. In no event does the timing between payment and delivery of the goods and services exceed one year. Using this output method for revenue recognition provides a faithful depiction of the transfer of electric and natural gas service as customers obtain control of the commodity and benefit from its use at delivery. Additionally, Duke Energy has an enforceable right to consideration for energy or natural gas delivered at any discrete point in time and will recognize revenue at an amount that reflects the consideration to which Duke Energy is entitled for the energy or natural gas delivered.
As described above, the majority of Duke Energy’s tariff revenues are at-will and, as such, related contracts with customers have an expected duration of one year or less and will not have future performance obligations for disclosure. Additionally, other long-term revenue streams, including wholesale contracts, generally provide services that are part of a single performance obligation, the delivery of electricity or natural gas. As such, other than material fixed consideration under long-term contracts, related disclosures for future performance obligations are also not applicable.
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.
Retail electric service is generally marketed throughout Duke Energy's electric service territory through standard service offers. The standard service offers are through tariffs determined by regulators in Duke Energy's regulated service territory. Each tariff, which is assigned to customers based on customer class, has multiple components such as an energy charge, a demand charge, a basic facilities charge and applicable riders. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing electric service, or in the case of distribution only customers in Duke Energy Ohio, for delivering electricity. Electricity is considered a single performance obligation satisfied over time consistent with the series guidance and is provided and consumed over the billing period, generally one month. Retail electric service is typically provided to at-will customers who can cancel service at any time, without a substantive penalty. Additionally, Duke Energy adheres to applicable regulatory requirements in each jurisdiction to ensure the collectability of amounts billed and appropriate mitigating procedures are followed when necessary. As such, revenue from contracts with customers for such contracts is equivalent to the electricity supplied and billed in that period (including unbilled estimates).
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FINANCIAL STATEMENTSREVENUE
Wholesale electric service is generally provided under long-term contracts using cost-based pricing. FERC regulates costs that may be recovered from customers and the amount of return companies are permitted to earn. Wholesale contracts include both energy and demand charges. For full requirements contracts, Duke Energy considers both charges as a single performance obligation for providing integrated electric service. For contracts where energy and demand charges are considered separate performance obligations, energy and demand are each a distinct performance obligation under the series guidance and are satisfied as energy is delivered and stand-ready service is provided on a monthly basis. This service represents consumption over the billing period and revenue is recognized consistent with billings and unbilled estimates, which generally occur monthly. Contractual amounts owed are typically trued up annually based upon incurred costs in accordance with FERC published filings and the specific customer’s actual peak demand. Estimates of variable consideration related to potential additional billings or refunds owed are updated quarterly.
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)20212022202320242025ThereafterTotal
Progress Energy$93 $107 $44 $45 $7 $51 $347 
Duke Energy Progress8 8 8 8 — — 32 
Duke Energy Florida85 99 36 37 7 51 315 
Duke Energy Indiana5 — 7 12 12 24 60 
Revenues for block sales are recognized monthly as energy is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates.
Gas Utilities and Infrastructure
Gas Utilities and Infrastructure earns its revenue through retail and wholesale natural gas service through the transportation, distribution and sale of natural gas. Duke Energy generally provides retail and wholesale natural gas service customers with all natural gas load requirements. Additionally, while natural gas can be stored, substantially all natural gas provided by Duke Energy is consumed by customers simultaneously with receipt of delivery.
Retail natural gas service is marketed throughout Duke Energy's natural gas service territory using published tariff rates. The tariff rates are established by regulators in Duke Energy's service territories. Each tariff, which is assigned to customers based on customer class, have multiple components, such as a commodity charge, demand charge, customer or monthly charge and transportation costs. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing natural gas service. For contracts where Duke Energy provides all of the customer’s natural gas needs, the delivery of natural gas is considered a single performance obligation satisfied over time, and revenue is recognized monthly based on billings and unbilled estimates as service is provided and the commodity is consumed over the billing period. Additionally, natural gas service is typically at-will and customers can cancel service at any time, without a substantive penalty. Duke Energy also adheres to applicable regulatory requirements to ensure the collectability of amounts billed and receivable and appropriate mitigating procedures are followed when necessary.
Certain long-term individually negotiated contracts exist to provide natural gas service. These contracts are regulated and approved by state commissions. The negotiated contracts have multiple components, including a natural gas and a demand charge, similar to retail natural gas contracts. Duke Energy considers each of these components to be a single performance obligation for providing natural gas service. This service represents consumption over the billing period, generally one month.
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)20212022202320242025ThereafterTotal
Piedmont$65 $64 $61 $59 $58 $319 $626 
Commercial Renewables
Commercial Renewables earns the majority of its revenues through long-term PPAs and generally sells all of its wind and solar facility output, electricity and RECs 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.
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FINANCIAL STATEMENTSREVENUE
The delivery of electricity is a performance obligation satisfied over time and represents generation and consumption of the electricity over the billing period, generally one month. The delivery of RECs is a performance obligation satisfied at a point in time and represents delivery of each REC generated by the wind or solar facility. The majority of self-generated RECs are bundled with energy in Duke Energy’s contracts and, as such, related revenues are recognized as energy is generated and delivered as that pattern is consistent with Duke Energy’s performance. Commercial Renewables recognizes revenue based on the energy generated and billed for the period, generally one month, at contractual rates (including unbilled estimates) according to the invoice practical expedient. Amounts are typically due within 30 days of invoice.
Commercial Renewables also earns revenues from installation of distributed solar generation resources, which is primarily composed of EPC projects to deliver functioning solar power systems, generally completed within two to 12 months from commencement of construction. The installation of distributed solar generation resources is a performance obligation that is satisfied over time. Revenue from fixed-price EPC contracts is recognized using the input method as work is performed based on the estimated ratio of incurred costs to estimated total costs.
Other
The remainder of Duke Energy’s operations is presented as Other, which does not include material revenues from contracts with customers.
Disaggregated Revenues
For the Electric and Gas Utility and Infrastructure segments, revenue by customer class is most meaningful to Duke Energy as each respective customer class collectively represents unique customer expectations of service, generally has different energy and demand requirements, and operates under tailored, regulatory approved pricing structures. Additionally, each customer class is impacted differently by weather and a variety of economic factors including the level of population growth, economic investment, employment levels, and regulatory activities in each of Duke Energy’s jurisdictions. As such, analyzing revenues disaggregated by customer class allows Duke Energy to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. For the Commercial Renewables segment, the majority of revenues from contracts with customers are from selling all of the unit-contingent output at contractually defined pricing under long-term PPAs with consistent expectations regarding the timing and certainty of cash flows. Disaggregated revenues are presented as follows:
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
(in millions)DukeEnergyProgressEnergyEnergyEnergyEnergy
By market or type of customerEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Electric Utilities and Infrastructure
Residential$9,806 $2,997 $5,017 $2,059 $2,958 $726 $1,064 $ 
General6,194 2,233 2,779 1,312 1,467 442 740  
Industrial2,859 1,137 901 649 252 137 683  
Wholesale1,864 380 1,228 1,034 194 32 224  
Other revenues914 281 596 294 302 82 72  
Total Electric Utilities and Infrastructure revenue from contracts with customers$21,637 $7,028 $10,521 $5,348 $5,173 $1,419 $2,783 $ 
Gas Utilities and Infrastructure
Residential$930 $ $ $ $ $300 $ $630 
Commercial446     117  329 
Industrial127     17  110 
Power Generation       34 
Other revenues87     17  70 
Total Gas Utilities and Infrastructure revenue from contracts with customers$1,590 $ $ $ $ $451 $ $1,173 
Commercial Renewables
Revenue from contracts with customers$227 $ $ $ $ $ $ $ 
Other
Revenue from contracts with customers$26 $ $ $ $ $ $ $ 
Total revenue from contracts with customers$23,480 $7,028 $10,521 $5,348 $5,173 $1,870 $2,783 $1,173 
Other revenue sources(a)
$388 $(13)$106 $74 $15 $(12)$12 $124 
Total revenues$23,868 $7,015 $10,627 $5,422 $5,188 $1,858 $2,795 $1,297 
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FINANCIAL STATEMENTSREVENUE
(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.
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
(in millions)DukeEnergyProgressEnergyEnergyEnergyEnergy
By market or type of customerEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Electric Utilities and Infrastructure
Residential$9,863 $3,044 $4,998 $2,144 $2,854 $733 $1,087 $— 
General6,431 2,244 2,935 1,368 1,567 451 802 — 
Industrial3,071 1,215 934 675 259 147 774 — 
Wholesale2,212 462 1,468 1,281 187 46 235 — 
Other revenues770 276 548 317 231 80 89 — 
Total Electric Utilities and Infrastructure revenue from contracts with customers$22,347 $7,241 $10,883 $5,785 $5,098 $1,457 $2,987 $— 
Gas Utilities and Infrastructure
Residential$976 $— $— $— $— $315 $— $661 
Commercial508 — — — — 130 — 378 
Industrial141 — — — — 19 — 122 
Power Generation— — — — — — — 51 
Other revenues129 — — — — 19 — 110 
Total Gas Utilities and Infrastructure revenue from contracts with customers$1,754 $— $— $— $— $483 $— $1,322 
Commercial Renewables
Revenue from contracts with customers$223 $— $— $— $— $— $— $— 
Other
Revenue from contracts with customers$24 $— $— $— $— $— $— $— 
Total revenue from contracts with customers$24,348 $7,241 $10,883 $5,785 $5,098 $1,940 $2,987 $1,322 
Other revenue sources(a)
$731 $154 $319 $172 $133 $— $17 $59 
Total revenues$25,079 $7,395 $11,202 $5,957 $5,231 $1,940 $3,004 $1,381 
(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.
214




FINANCIAL STATEMENTSREVENUE
Year Ended December 31, 2018
DukeDukeDukeDukeDuke
(in millions)DukeEnergyProgressEnergyEnergyEnergyEnergy
By market or type of customerEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Electric Utilities and Infrastructure
Residential$9,587 $2,981 $4,785 $2,019 $2,766 $743 $1,076 $— 
General6,127 2,119 2,809 1,280 1,529 422 778 — 
Industrial2,974 1,180 904 642 262 131 760 — 
Wholesale2,324 508 1,462 1,303 159 57 298 — 
Other revenues717 320 502 320 182 73 91 — 
Total Electric Utilities and Infrastructure revenue from contracts with customers$21,729 $7,108 $10,462 $5,564 $4,898 $1,426 $3,003 $— 
Gas Utilities and Infrastructure
Residential$1,000 $— $— $— $— $331 $— $669 
Commercial514 — — — — 135 — 378 
Industrial147 — — — — 18 — 128 
Power Generation— — — — — — — 54 
Other revenues139 — — — — 19 — 120 
Total Gas Utilities and Infrastructure revenue from contracts with customers$1,800 $— $— $— $— $503 $— $1,349 
Commercial Renewables
Revenue from contracts with customers$209 $— $— $— $— $— $— $— 
Other
Revenue from contracts with customers$19 $— $— $— $— $1 $— $— 
Total revenue from contracts with customers$23,757 $7,108 $10,462 $5,564 $4,898 $1,930 $3,003 $1,349 
Other revenue sources(a)
$764 $192 $266 $135 $123 $27 $56 $26 
Total revenues$24,521 $7,300 $10,728 $5,699 $5,021 $1,957 $3,059 $1,375 
(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.
As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The following table presents the reserve for credit losses for trade and other receivables based on adoption of the new standard.
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Balance at December 31, 2019$76 $10 $16 $8 $7 $4 $3 $6 
Cumulative Change in Accounting Principle5 1 2 1 1 — — 1 
Write-Offs(58)(13)(23)(8)(14)— — (6)
Credit Loss Expense75 13 29 9 20 — — 11 
Other Adjustments48 12 13 13 — — — — 
Balance at December 31, 2020$146 $23 $37 $23 $14 $4 $3 $12 
215




FINANCIAL STATEMENTSREVENUE
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 and the impact of COVID-19 on certain receivables financing entities are described in Note 17. 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.
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unbilled Receivables$969 $328 $283 $167 $116 $2 $16 $86 
0-30 days1,789 445 707 398 307 60 26 149 
30-60 days185 80 54 25 29 8 3 8 
60-90 days22 1 10 4 6 2 1 3 
90+ days119 16 32 9 23 30 12 9 
Deferred Payment Arrangements(a)
215 96 80 52 28 — — 7 
Trade and Other Receivables$3,299 $966 $1,166 $655 $509 $102 $58 $262 
(a)    Due to certain customer financial hardships created by the COVID-19 pandemic and resulting stay-at-home orders, Duke Energy permitted customers to defer payment of past-due amounts through an installment payment plan over a period of several months.
IMPACT OF WEATHER AND THE TIMING OF BILLING PERIODS
Revenues and costs are influenced by seasonal weather patterns. Peak sales of electricity occur during the summer and winter months, which results in higher revenue and cash flows during these periods. By contrast, lower sales of electricity occur during the spring and fall, allowing for scheduled plant maintenance. Residential and general service customers are more impacted by weather than industrial customers. Estimated weather impacts are based on actual current period weather compared to normal weather conditions. Normal weather conditions are defined as the long-term average of actual historical weather conditions. Heating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling degree days measure the variation in weather based on the extent the average daily temperature rises above the base temperature. Each degree of temperature below the base temperature counts as one heating degree day and each degree of temperature above the base temperature counts as one cooling degree day.
The estimated impact of weather on earnings for Electric Utilities and Infrastructure is based on the temperature variances from a normal condition and customers' historic usage patterns. The methodology used to estimate the impact of weather does not consider all variables that may impact customer response to weather conditions, such as humidity in the summer or wind chill in the winter. The precision of this estimate may also be impacted by applying long-term weather trends to shorter-term periods.
Gas Utilities and Infrastructure's costs and revenues are influenced by seasonal patterns due to peak natural gas sales occurring during the winter months as a result of space heating requirements. Residential customers are the most impacted by weather. There are certain regulatory mechanisms for the North Carolina, South Carolina, Tennessee, Ohio and Kentucky service territories that normalize the margins collected from certain customer classes during the winter. In North Carolina, rate design provides protection from both weather and other usage variations such as conservation, while South Carolina, Tennessee and Kentucky revenues are adjusted solely based on weather. Ohio primarily employs a fixed charge each month regardless of the season and usage.
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.
216




FINANCIAL STATEMENTSREVENUE
Unbilled revenues are included within Receivables and Receivables of VIEs on the Consolidated Balance Sheets as shown in the following table.
December 31,
(in millions)20202019
Duke Energy$969 $843 
Duke Energy Carolinas328 298 
Progress Energy283 217 
Duke Energy Progress167 122 
Duke Energy Florida116 95 
Duke Energy Ohio2 1 
Duke Energy Indiana16 16 
Piedmont86 78 
Additionally, Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC and account for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 17 for further information. These receivables for unbilled revenues are shown in the table below.
December 31,
(in millions)20202019
Duke Energy Ohio$87 $82 
Duke Energy Indiana134 115 
19. STOCKHOLDERS' EQUITY
Basic EPS is computed by dividing net income available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as equity forward sale agreements, were exercised or settled. Duke Energy’s participating securities are RSUs that are entitled to dividends declared on Duke Energy common stock during the RSUs vesting periods. Dividends declared on preferred stock are recorded on the 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.
Years Ended December 31,
(in millions, except per share amounts)202020192018
Net Income available to Duke Energy common stockholders$1,270 $3,707 $2,666 
Less: Income (Loss) from discontinued operations7 (7)19 
Accumulated preferred stock dividends adjustment1 (15) 
Less: Impact of participating securities2 5 5 
Income from continuing operations available to Duke Energy common stockholders$1,262 $3,694 $2,642 
Weighted average common shares outstanding – basic737 729 708 
Equity forwards1   
Weighted average common shares outstanding – diluted738 729 708 
EPS from continuing operations available to Duke Energy common stockholders
Basic and Diluted$1.71 $5.07 $3.73 
Potentially dilutive items excluded from the calculation(a)
2 2 2 
Dividends declared per common share$3.82 $3.75 $3.64 
Dividends declared on Series A preferred stock per depositary share$1.437 $1.03 $— 
Dividends declared on Series B preferred stock per share$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.
217




FINANCIAL STATEMENTSSTOCKHOLDERS' EQUITY
Common Stock
In November 2019, Duke Energy filed a prospectus supplement and executed an Equity Distribution Agreement (EDA) under which it may sell up to $1.5 billion of its common stock through a new 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.
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 equity forward sales agreements with an initial forward price of $85.99 per share. 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.
In December 2020, Duke Energy physically settled the equity forwards by delivering 32 million shares of common stock in exchange for net cash proceeds of approximately $2.6 billion.
Preferred Stock
On March 29, 2019, Duke Energy completed the issuance of 40 million depositary shares, each representing 1/1,000th share of its Series A Cumulative Redeemable Perpetual Preferred Stock, at a price of $25 per depositary share. The transaction resulted in net proceeds of $973 million after issuance costs with proceeds used for general corporate purposes and to reduce short-term debt. The preferred stock has a $25 liquidation preference per depositary share and earns dividends on a cumulative basis at a rate of 5.75% per annum. Dividends are payable quarterly in arrears on the 16th day of March, June, September and December, and began on June 16, 2019.
The Series A Preferred Stock has no maturity or mandatory redemption date, is not redeemable at the option of the holders and includes separate call options. The first call option allows Duke Energy to call the Series A Preferred Stock at a redemption price of $25.50 per depositary share prior to June 15, 2024, in whole but not in part, at any time within 120 days after a ratings event where a rating agency amends, clarifies or changes the criteria it uses to assign equity credit for securities such as the preferred stock. The second call option allows Duke Energy to call the preferred stock, in whole or in part, at any time, on or after June 15, 2024, at a redemption price of $25 per depositary share. Duke Energy is also required to redeem all accumulated and unpaid dividends if either call option is exercised.
On September 12, 2019, Duke Energy completed the issuance of 1 million shares of its Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, at a price of $1,000 per share. The transaction resulted in net proceeds of $989 million after issuance costs with proceeds being used to pay down short-term debt, repay at maturity $500 million senior notes due September 2019, and for general corporate purposes. The preferred stock has a $1,000 liquidation preference per share and earns dividends on a cumulative basis at an initial rate of 4.875% per annum. Dividends are payable semiannually in arrears on the 16th day of March and September, and began on March 16, 2020. On September 16, 2024, the First Call Date, and any fifth anniversary of the First Call Date (each a Reset Date), the dividend rate will reset based on the then current five-year U.S. Treasury rate plus a spread of 3.388%.
The Series B Preferred Stock has no maturity or mandatory redemption date, is not redeemable at the option of the holders and includes separate call options. The first call option allows Duke Energy to call the Series B Preferred Stock at a redemption price of $1,020 per share, in whole but not in part, at any time within 120 days after a ratings event. The second call option allows Duke Energy to call the preferred stock, in whole or in part, on the First Call Date or any subsequent Reset Date at a redemption price in cash equal to $1,000 per share. Duke Energy is also required to redeem all accumulated and unpaid dividends if either call option is exercised.
Dividends issued on its Series A and Series B Preferred Stock are subject to approval by the Board of Directors. However, the deferral of dividend payments on the preferred stock prohibits the declaration of common stock dividends.
The Series A and Series B Preferred Stock rank, with respect to dividends and distributions upon liquidation or dissolution:
senior to Common Stock and to each other class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is expressly made subordinated to the Series A and Series B Preferred Stock;
on a parity with any class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is not expressly made senior or subordinated to the Series A or Series B Preferred Stock;
junior to any class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is expressly made senior to the Series A or Series B Preferred Stock;
junior to all existing and future indebtedness (including indebtedness outstanding under Duke Energy's credit facilities, unsecured senior notes, junior subordinated debentures and commercial paper) and other liabilities with respect to assets available to satisfy claims against Duke Energy; and
structurally subordinated to existing and future indebtedness and other liabilities of Duke Energy's subsidiaries and future preferred stock of subsidiaries.
218




FINANCIAL STATEMENTSSTOCKHOLDERS' EQUITY
Holders of Series A and Series B Preferred Stock have no voting rights with respect to matters that generally require the approval of voting stockholders. The limited voting rights of holders of Series A and Series B Preferred Stock include the right to vote as a single class, respectively, on certain matters that may affect the preference or special rights of the preferred stock, except in the instance that Duke Energy elects to defer the payment of dividends for a total of six quarterly full dividend periods for Series A Preferred Stock or three semiannual full dividend periods for Series B Preferred Stock. If dividends are deferred for a cumulative total of six quarterly full dividend periods for Series A Preferred Stock or three semiannual full dividend periods for Series B Preferred Stock, whether or not for consecutive dividend periods, holders of the respective preferred stock have the right to elect two additional Board members to the Board of Directors.
20. SEVERANCE
During 2020, as a result of partial settlements between Duke Energy Carolinas, Duke Energy Progress and the Public Staff, Duke Energy Carolinas and Duke Energy Progress deferred as Regulatory assets on the Consolidated Balance Sheets, approximately $65 million and $33 million, respectively, of previously recorded severance charges within Operation, maintenance and other on the Consolidated Statements of Operations. These severance charges were previously recorded during 2018, as Duke Energy reviewed its operations and identified opportunities for improvement to better serve its customers. This operational review included the company's workforce strategy and staffing levels to ensure the company was staffed with the right skill sets and number of teammates to execute the long-term vision for Duke Energy. As such, Duke Energy extended voluntary and involuntary severance benefits to certain employees in specific areas as a part of workforce planning and digital transformation efforts. See Note 3 for more information.
The following table presents the direct and allocated severance and related charges accrued for approximately 30 employees in 2020, 140 employees in 2019, and 1,900 employees in 2018, by the Duke Energy Registrants within Operation, maintenance and other on the Consolidated Statements of Operations.
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Year Ended December 31, 2020(a)(b)
$(85)$(58)$(28)$(31)$3 $ $ $ 
Year Ended December 31, 201916 8 6 3 3 — 1 1 
Year Ended December 31, 2018187 102 69 52 17 6 7 2 
(a)    Includes unamortized deferred severance charges of approximately $(86) million, $(57) million, $(29) million and $(29) million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
(b)    Includes adjustments associated with 2018 severance charges of approximately $(6) million, $(2) million, $(3) million and $(2) million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
The table below presents the severance liability for past and ongoing severance plans including the plans described above.
DukeDukeDuke
Duke
Duke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)Energy
Carolinas
EnergyProgressFloridaOhioIndianaPiedmont
Balance at December 31, 2019$41 $11 $13 $6 $7 $1 $2 $— 
Provision/Adjustments1   (2)2 (1)  
Cash Reductions(31)(9)(10)(3)(7) (1) 
Balance at December 31, 2020$11 $2 $3 $1 $2 $ $1 $ 
21. STOCK-BASED COMPENSATION
The Duke Energy Corporation 2015 Long-Term Incentive Plan (the 2015 Plan) provides for the grant of stock-based compensation awards to employees and outside directors. The 2015 Plan reserves 10 million shares of common stock for issuance. Duke Energy has historically issued new shares upon exercising or vesting of share-based awards. However, Duke Energy may use a combination of new share issuances and open market repurchases for share-based awards that are exercised or vest in the future. Duke Energy has not determined with certainty the amount of such new share issuances or open market repurchases.
219




FINANCIAL STATEMENTSSTOCK-BASED COMPENSATION
The following table summarizes the total expense recognized by the Duke Energy Registrants, net of tax, for stock-based compensation.
 Years Ended December 31,
(in millions)202020192018
Duke Energy$61 $65 $56 
Duke Energy Carolinas22 24 20 
Progress Energy23 24 21 
Duke Energy Progress15 15 13 
Duke Energy Florida9 9 8 
Duke Energy Ohio4 5 4 
Duke Energy Indiana6 6 5 
Piedmont3 3 3 
Duke Energy's pretax stock-based compensation costs, the tax benefit associated with stock-based compensation expense and stock-based compensation costs capitalized are included in the following table.
 Years Ended December 31,
(in millions)202020192018
RSU awards$46 $44 $43 
Performance awards38 45 35 
Pretax stock-based compensation cost$84 $89 $78 
Stock-based compensation costs capitalized5 5 5 
Stock-based compensation expense$79 $84 $73 
Tax benefit associated with stock-based compensation expense$18 $19 $17 
RESTRICTED STOCK UNIT AWARDS
RSU awards generally vest over periods from immediate to three years. Fair value amounts are based on the market price of Duke Energy's common stock on the grant date. The following table includes information related to RSU awards.
 Years Ended December 31,
 202020192018
Shares granted (in thousands) 498 571 649 
Fair value (in millions)$50 $51 $49 
The following table summarizes information about RSU awards outstanding.
Weighted Average
SharesGrant Date Fair Value
 (in thousands)(per share)
Outstanding at December 31, 20191,010 $83 
Granted498 100 
Vested(532)82 
Forfeited(37)92 
Outstanding at December 31, 2020939 93 
RSU awards expected to vest898 93 
The total grant date fair value of shares vested during the years ended December 31, 2020, 2019 and 2018, was $43 million, $49 million and $43 million, respectively. At December 31, 2020, Duke Energy had $31 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 23 months.
PERFORMANCE AWARDS
Stock-based performance awards generally vest after three years if performance targets are met. The actual number of shares issued will range from zero to 200% of target shares, depending on the level of performance achieved.
Performance awards contain performance conditions and a market condition. The performance conditions are based on Duke Energy's cumulative adjusted EPS and total incident case rate (total incident case rate is one of our key employee safety metrics). The market condition is based on TSR of Duke Energy relative to a predefined peer group.
220




FINANCIAL STATEMENTSSTOCK-BASED COMPENSATION
Relative TSR is valued using a path-dependent model that incorporates expected relative TSR into the fair value determination of Duke Energy’s performance-based share awards. The model uses three-year historical volatilities and correlations for all companies in the predefined peer group, including Duke Energy, to simulate Duke Energy’s relative TSR as of the end of the performance period. For each simulation, Duke Energy’s relative TSR associated with the simulated stock price at the end of the performance period plus expected dividends within the period results in a value per share for the award portfolio. The average of these simulations is the expected portfolio value per share. Actual life to date results of Duke Energy’s relative TSR for each grant are incorporated within the model. For performance awards granted in 2020, the model used a risk-free interest rate of 1.4%, which reflects the yield on three-year Treasury bonds as of the grant date, and an expected volatility of 13.6% based on Duke Energy's historical volatility over three years using daily stock prices.
The following table includes information related to stock-based performance awards.
 Years Ended December 31,
 202020192018
Shares granted assuming target performance (in thousands)319 320 372 
Fair value (in millions)$34 $27 $27 
The following table summarizes information about stock-based performance awards outstanding and assumes payout at the target level.
Weighted Average
SharesGrant Date Fair Value
 (in thousands)(per share)
Outstanding at December 31, 20191,109 $80 
Granted319 105 
Vested(448)81 
Forfeited(18)88 
Outstanding at December 31, 2020962 87 
Stock-based performance awards expected to vest937 87 
The total grant date fair value of shares vested during the years ended December 31, 2020, and 2019, was $36 million and $23 million, respectively. At December 31, 2020, Duke Energy had $23 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 21 months.
22. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT RETIREMENT PLANS
Duke Energy and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified, non-contributory defined benefit retirement plans. The Duke Energy plans cover most employees using a cash balance formula. Under a cash balance formula, a plan participant accumulates a retirement benefit consisting of pay credits based upon a percentage of current eligible earnings, age or age and years of service and interest credits. Certain employees are eligible for benefits that use a final average earnings formula. Under these final average earnings formulas, a plan participant accumulates a retirement benefit equal to the sum of percentages of their (i) highest three-year, four-year, or five-year average earnings, (ii) highest three-year, four-year, or five-year average earnings in excess of covered compensation per year of participation (maximum of 35 years) or (iii) highest three-year average earnings times years of participation in excess of 35 years. Duke Energy also maintains, and the Subsidiary Registrants participate in, non-qualified, non-contributory defined benefit retirement plans that cover certain executives. The qualified and non-qualified, non-contributory defined benefit plans are closed to new participants.
Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations. Actuarial gains experienced by the defined benefit retirement plans in remeasuring plan assets as of December 31, 2020, and 2019, were attributable to actual investment performance that exceeded expected investment performance. Actuarial losses experienced by the defined benefit retirement plans in remeasuring plan obligations as of December 31, 2020, and 2019, were primarily attributable to the decrease in the discount rate used to measure plan obligations.
As a result of the application of settlement accounting due to total lump-sum benefit payments exceeding the settlement threshold (defined as the sum of the service cost and interest cost on projected benefit obligation components of net periodic pension costs) for one of its qualified pension plans, Duke Energy recognized settlement charges of $94 million, primarily as a regulatory asset within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2019 (an immaterial amount was recorded in Other income and expenses, net within the Consolidated Statement of Operations).
Settlement charges recognized by the Subsidiary Registrants as of December 31, 2019, which represent amounts allocated by Duke Energy for employees of the Subsidiary Registrants and allocated charges for their proportionate share of settlement charges for employees of Duke Energy’s shared services affiliate, were $53 million for Duke Energy Carolinas, $26 million for Progress Energy, $20 million for Duke Energy Progress, $6 million for Duke Energy Florida, $4 million for Duke Energy Indiana, $2 million for Duke Energy Ohio and $8 million for Piedmont.
221




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
The settlement charges reflect the recognition of a pro-rata portion of previously unrecognized actuarial losses, equal to the percentage of reduction in the projected benefit obligation resulting from total lump-sum benefit payments as of December 31, 2019. Settlement charges recognized as a regulatory asset within Other Noncurrent Assets on the Consolidated Balance Sheets are amortized over the average remaining service period for participants in the plan. Amortization of settlement charges is disclosed in the tables below as a component of net periodic pension costs.
Net periodic benefit costs disclosed in the tables below represent the cost of the respective benefit plan for the periods presented prior to capitalization of amounts reflected as Net property, plant and equipment, on the Consolidated Balance Sheets. Only the service cost component of net periodic benefit costs is eligible to be capitalized. The remaining non-capitalized portions of net periodic benefit costs are classified as either: (1) service cost, which is recorded in Operations, maintenance and other on the Consolidated Statements of Operations; or as (2) components of non-service cost, which is recorded in Other income and expenses, net, on the Consolidated Statements of Operations. Amounts presented in the tables below for the Subsidiary Registrants represent the amounts of pension and other post-retirement benefit cost allocated by Duke Energy for employees of the Subsidiary Registrants. Additionally, the Consolidated Statements of Operations of the Subsidiary Registrants also include allocated net periodic benefit costs for their proportionate share of pension and post-retirement benefit cost for employees of Duke Energy’s shared services affiliate that provide support to the Subsidiary Registrants. However, in the tables below, these amounts are only presented within the Duke Energy column (except for amortization of settlement charges). These allocated amounts are included in the governance and shared service costs discussed in Note 13.
Duke Energy’s policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants. Duke Energy does not anticipate making any contributions in 2021. The following table includes information related to the Duke Energy Registrants’ contributions to its qualified defined benefit pension plans.
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Contributions Made:
2020$ $ $ $ $ $ $ $ 
201977 7 57 4 53 2 2 1 
2018141 46 45 25 20  8  
QUALIFIED PENSION PLANS
Components of Net Periodic Pension Costs
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$165 $51 $48 $27 $21 $5 $9 $6 
Interest cost on projected benefit obligation269 62 85 38 46 15 22 9 
Expected return on plan assets(572)(145)(190)(87)(101)(28)(42)(21)
Amortization of actuarial loss128 28 41 18 23 6 12 9 
Amortization of prior service credit(32)(8)(3)(2)(1) (2)(9)
Amortization of settlement charges18 9 7 6 1  1 1 
Net periodic pension costs(a)(b)
$(24)$(3)$(12)$ $(11)$(2)$ $(5)
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$158 $49 $46 $26 $20 $4 $9 $5 
Interest cost on projected benefit obligation317 75 100 45 54 18 26 10 
Expected return on plan assets(567)(147)(178)(88)(89)(28)(43)(22)
Amortization of actuarial loss108 24 39 15 24 4 8 8 
Amortization of prior service credit(32)(8)(3)(2)(1) (2)(9)
Amortization of settlement charges6 2 1 1  2   
Net periodic pension costs(a)(b)
$(10)$(5)$5 $(3)$8 $ $(2)$(8)
222




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$182 $58 $51 $29 $22 $5 $11 $7 
Interest cost on projected benefit obligation299 72 94 43 50 17 23 11 
Expected return on plan assets(559)(147)(178)(85)(91)(28)(42)(22)
Amortization of actuarial loss132 29 44 21 23 5 10 11 
Amortization of prior service credit(32)(8)(3)(2)(1) (2)(10)
Net periodic pension costs(a)(b)
$22 $4 $8 $6 $3 $(1)$ $(3)
(a)    Duke Energy amounts exclude $4 million, $4 million and $5 million for the years ended December 2020, 2019 and 2018, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
(b)     Duke Energy Ohio amounts exclude $2 million, $2 million and $2 million for the years ended December 2020, 2019 and 2018, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net increase (decrease)$(62)$(39)$(26)$(30)$4 $(2)$5 $(1)
Accumulated other comprehensive loss (income)
Deferred income tax expense (benefit)$2 $ $1 $ $1 $ $ $ 
Amortization of prior year service credit1        
Amortization of prior year actuarial losses(11) (1) (3)   
Net amount recognized in accumulated other comprehensive income$(8)$ $ $ $(2)$ $ $ 
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net (decrease) increase$(212)$(156)$(79)$(59)$(20)$12 $22 $ 
Accumulated other comprehensive (income) loss
Deferred income tax expense (benefit)$20 $ $1 $ $(1)$ $ $ 
Amortization of prior year service credit1        
Amortization of prior year actuarial losses(15) (2) 3    
Net amount recognized in accumulated other comprehensive income$6 $ $(1)$ $2 $ $ $ 
223




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Reconciliation of Funded Status to Net Amount Recognized
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
Obligation at prior measurement date $8,321 $1,923 $2,608 $1,170 $1,424 $481 $693 $292 
Service cost157 49 46 26 20 4 8 5 
Interest cost269 62 85 38 46 15 22 9 
Actuarial loss433 83 144 50 93 21 46 14 
Transfers 8 (8)(8) 15   
Benefits paid(541)(137)(160)(83)(76)(34)(49)(27)
Benefits paid – settlements(5)     (5) 
Obligation at measurement date$8,634 $1,988 $2,715 $1,193 $1,507 $502 $715 $293 
Accumulated Benefit Obligation at measurement date$8,577 $1,989 $2,684 $1,194 $1,476 $493 $709 $294 
Change in Fair Value of Plan Assets
Plan assets at prior measurement date$8,910 $2,263 $2,898 $1,364 $1,515 $443 $667 $335 
Actual return on plan assets973 247 319 149 166 48 71 35 
Benefits paid(541)(137)(160)(83)(76)(34)(49)(27)
Benefits paid – settlements(5)     (5) 
Transfers 8 (8)(8) 15   
Plan assets at measurement date$9,337 $2,381 $3,049 $1,422 $1,605 $472 $684 $343 
Funded status of plan$703 $393 $334 $229 $98 $(30)$(31)$50 
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
Obligation at prior measurement date $7,869 $1,954 $2,433 $1,125 $1,295 $435 $618 $264 
Service cost150 47 43 25 18 4 8 5 
Interest cost317 75 100 45 54 18 26 10 
Actuarial loss716 101 223 87 135 54 87 33 
Transfers 11       
Benefits paid(731)(265)(191)(112)(78)(30)(46)(20)
Obligation at measurement date$8,321 $1,923 $2,608 $1,170 $1,424 $481 $693 $292 
Accumulated Benefit Obligation at measurement date$8,262 $1,923 $2,578 $1,170 $1,392 $471 $686 $292 
Change in Fair Value of Plan Assets
Plan assets at prior measurement date$8,233 $2,168 $2,606 $1,268 $1,322 $405 $611 $305 
Employer contributions77 7 57 4 53 2 2 1 
Actual return on plan assets1,331 342 426 204 218 66 100 49 
Benefits paid(731)(265)(191)(112)(78)(30)(46)(20)
Transfers 11       
Plan assets at measurement date$8,910 $2,263 $2,898 $1,364 $1,515 $443 $667 $335 
Funded status of plan$589 $340 $290 $194 $91 $(38)$(26)$43 
224




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Amounts Recognized in the Consolidated Balance Sheets
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Prefunded pension(a)
$780 $393 $379 $229 $143 $58 $79 $50 
Noncurrent pension liability(b)
$77 $ $45 $ $45 $88 $110 $ 
Net asset (liability) recognized$703 $393 $334 $229 $98 $(30)$(31)$50 
Regulatory assets$1,910 $381 $691 $283 $408 $110 $209 $80 
Accumulated other comprehensive (income) loss 
Deferred income tax benefit$(21)$ $ $ $ $ $ $ 
Prior service credit(2)       
Net actuarial loss100  2      
Net amounts recognized in accumulated other comprehensive loss$77 $ $2 $ $ $ $ $ 
December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Prefunded pension(a)
$621 $340 $322 $194 $123 $38 $57 $43 
Noncurrent pension liability(b)
$32 $ $32 $ $32 $76 $83 $ 
Net asset recognized$589 $340 $290 $194 $91 $(38)$(26)$43 
Regulatory assets$1,972 $420 $717 $313 $404 $112 $204 $81 
Accumulated other comprehensive (income) loss
Deferred income tax benefit$(23)$ $(1)$ $(1)$ $ $ 
Prior service credit(3)       
Net actuarial loss111  3  3    
Net amounts recognized in accumulated other comprehensive loss$85 $ $2 $ $2 $ $ $ 
Amounts to be recognized in net periodic pension costs in the next year
Unrecognized net actuarial loss$135 $29 $43 $19 $24 $7 $10 $9 
Unrecognized prior service credit(32)(8)(3)(2)(1)(1)(2)(9)
(a)    Included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.
(b)    Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.
Information for Plans with Accumulated Benefit Obligation in Excess of Plan Assets
December 31, 2020
DukeDukeDuke
DukeProgressEnergyEnergyEnergy
(in millions)EnergyEnergyFloridaOhioIndiana
Projected benefit obligation$4,914 $828 $828 $184 $293 
Accumulated benefit obligation4,856 796 796 176 285 
Fair value of plan assets4,837 783 783 96 183 
225




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
December 31, 2019
DukeDuke
EnergyEnergy
(in millions)OhioIndiana
Projected benefit obligation$155 $260 
Accumulated benefit obligation146 252 
Fair value of plan assets79 177 
Assumptions Used for Pension Benefits Accounting
The discount rate used to determine the current year pension obligation and following year’s pension expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high-quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.
The average remaining service period for participants in active plans and life expectancy of participants in inactive plans is 13 years for Duke Energy, Duke Energy Indiana and Duke Energy Ohio, 14 years for Progress Energy, Duke Energy Progress and Duke Energy Florida, 12 years for Duke Energy Carolinas and nine years for Piedmont.
The following tables present the assumptions or range of assumptions used for pension benefit accounting.
December 31,
202020192018
Benefit Obligations
Discount rate2.60%3.30%4.30%
Interest crediting rate4.00%4.00%4.00%
Salary increase 3.50 %4.00%3.50 %4.00%3.50 %4.00%
Net Periodic Benefit Cost
Discount rate3.30%4.30%3.60%
Interest crediting rate4.00%4.00%4.00%
Salary increase3.50 %4.00%3.50 %4.00%3.50 %4.00%
Expected long-term rate of return on plan assets6.85%6.85%6.50%
Expected Benefit Payments
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Years ending December 31,
2021$667 $169 $177 $94 $82 $40 $53 $29 
2022650 170 176 92 83 39 51 25 
2023655 174 181 95 85 38 49 22 
2024644 168 184 96 87 37 49 21 
2025617 163 181 93 88 35 47 19 
2025-20292,745 677 846 399 443 154 217 83 
NON-QUALIFIED PENSION PLANS
The accumulated benefit obligation, which equals the projected benefit obligation for non-qualified pension plans, was $320 million for Duke Energy, $13 million for Duke Energy Carolinas, $111 million for Progress Energy, $33 million for Duke Energy Progress, $45 million for Duke Energy Florida, $4 million for Duke Energy Ohio, $2 million for Duke Energy Indiana and $4 million for Piedmont as of December 31, 2020.
Employer contributions, which equal benefits paid for non-qualified pension plans, were $23 million for Duke Energy, $2 million for Duke Energy Carolinas, $8 million for Progress Energy, $3 million for Duke Energy Progress and $3 million for Duke Energy Florida for the year ended December 31, 2020. Employer contributions were not material for Duke Energy Ohio, Duke Energy Indiana or Piedmont for the year ended December 31, 2020.
Net periodic pension costs for non-qualified pension plans were not material for the years ended December 31, 2020, 2019 or 2018.
226




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
OTHER POST-RETIREMENT BENEFIT PLANS
Duke Energy provides, and the Subsidiary Registrants participate in, some health care and life insurance benefits for retired employees on a contributory and non-contributory basis. Employees are eligible for these benefits if they have met age and service requirements at retirement, as defined in the plans. The health care benefits include medical, dental and prescription drug coverage and are subject to certain limitations, such as deductibles and copayments.
Duke Energy did not make any pre-funding contributions to its other post-retirement benefit plans during the years ended December 31, 2020, 2019 or 2018.
Components of Net Periodic Other Post-Retirement Benefit Costs
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$4 $1 $1 $ $ $ $1 $ 
Interest cost on accumulated post-retirement benefit obligation23 5 10 5 4 1 2 1 
Expected return on plan assets(13)(8)     (2)
Amortization of actuarial loss2  1  1  4  
Amortization of prior service credit(14)(4)(3)(1)(2)(1)(1)(2)
Net periodic post-retirement benefit costs (a)(b)
$2 $(6)$9 $4 $3 $ $6 $(3)
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$4 $1 $1 $ $1 $ $1 $ 
Interest cost on accumulated post-retirement benefit obligation30 7 12 7 5 1 3 1 
Expected return on plan assets(12)(7)     (1)
Amortization of actuarial loss4 2 1  1  4  
Amortization of prior service credit(19)(5)(8)(1)(7)(1)(1)(2)
Net periodic post-retirement benefit costs(a)(b)
$7 $(2)$6 $6 $ $ $7 $(2)
Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Service cost$6 $1 $1 $ $1 $1 $1 $1 
Interest cost on accumulated post-retirement benefit obligation28 7 12 6 6 1 3 1 
Expected return on plan assets(13)(8)     (2)
Amortization of actuarial loss6 3 1 1   4  
Amortization of prior service credit(19)(5)(8)(1)(7)(1)(1)(2)
Net periodic post-retirement benefit costs(a)(b)
$8 $(2)$6 $6 $ $1 $7 $(2)
(a)    Duke Energy amounts exclude $6 million, $6 million and $7 million for the years ended December 2020, 2019 and 2018, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
(b)    Duke Energy Ohio amounts exclude $1 million, $2 million and $2 million for the years ended December 2020, 2019 and 2018, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
227




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets and Liabilities
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net increase (decrease)$9 $ $9 $6 $3 $ $(4)$ 
Regulatory liabilities, net increase (decrease)$(10)$(7)$ $ $ $ $(1)$ 
Accumulated other comprehensive (income) loss
Deferred income tax benefit$ $ $ $ $ $ $ $ 
Amortization of prior year service credit1        
Net amount recognized in accumulated other comprehensive income$1 $ $ $ $ $ $ $ 
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Regulatory assets, net increase (decrease)$(127)$ $(127)$(82)$(45)$ $(5)$ 
Regulatory liabilities, net increase (decrease)$(152)$1 $(149)$(93)$(56)$(1)$(4)$3 
Accumulated other comprehensive (income) loss
Deferred income tax benefit$ $ $ $ $ $ $ $ 
Amortization of prior year actuarial gain(4)       
Net amount recognized in accumulated other comprehensive income$(4)$ $ $ $ $ $ $ 
228




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Reconciliation of Funded Status to Accrued Other Post-Retirement Benefit Costs
Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
Accumulated post-retirement benefit obligation at prior measurement date$723 $175 $303 $168 $135 $29 $64 $30 
Service cost4 1 1    1  
Interest cost23 5 10 5 4 1 2 1 
Plan participants' contributions15 3 5 3 2 1 2  
Actuarial losses19 8 8 5 2  1 1 
Benefits paid(75)(18)(28)(15)(13)(4)(9)(2)
Accumulated post-retirement benefit obligation at measurement date$709 $174 $299 $166 $130 $27 $61 $30 
Change in Fair Value of Plan Assets
Plan assets at prior measurement date$220 $130 $(1)$(1)$ $9 $5 $34 
Actual return on plan assets24 14     1 4 
Benefits paid(75)(18)(28)(15)(13)(4)(9)(2)
Employer contributions53 10 23 11 10 3 8 1 
Plan participants' contributions15 3 5 3 2 1 2  
Plan assets at measurement date$237 $139 $(1)$(2)$(1)$9 $7 $37 
Funded status of plan$(472)$(35)$(300)$(168)$(131)$(18)$(54)$7 
Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Change in Projected Benefit Obligation
Accumulated post-retirement benefit obligation at prior measurement date$728 $174 $303 $166 $137 $29 $67 $30 
Service cost4 1 1  1  1  
Interest cost30 7 12 7 5 1 3 1 
Plan participants' contributions16 3 6 3 2 1 2  
Actuarial losses28 9 13 9 5 1 2  
Benefits paid(83)(19)(32)(17)(15)(3)(11)(1)
Accumulated post-retirement benefit obligation at measurement date$723 $175 $303 $168 $135 $29 $64 $30 
Change in Fair Value of Plan Assets
Plan assets at prior measurement date$195 $115 $ $ $ $8 $5 $29 
Actual return on plan assets32 20 (1)  1  6 
Benefits paid(83)(19)(32)(17)(15)(3)(11)(1)
Employer contributions60 11 26 13 13 2 9  
Plan participants' contributions16 3 6 3 2 1 2  
Plan assets at measurement date$220 $130 $(1)$(1)$ $9 $5 $34 
Funded status of plan$(503)$(45)$(304)$(169)$(135)$(20)$(59)$4 
229




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Amounts Recognized in the Consolidated Balance Sheets
December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Prefunded post-retirement benefit$8 $ $ $ $ $1 $ $7 
Current post-retirement liability(a)
9  6 4 2 2   
Noncurrent post-retirement liability(b)
471 35 294 164 129 17 54  
Net liability (asset) recognized$472 $35 $300 $168 $131 $18 $54 $(7)
Regulatory assets$144 $ $144 $88 $56 $ $32 $ 
Regulatory liabilities$139 $32 $ $ $ $17 $62 $3 
Accumulated other comprehensive (income) loss
Deferred income tax expense$3 $ $ $ $ $ $ $ 
Prior service credit(1)       
Net actuarial gain(13)       
Net amounts recognized in accumulated other comprehensive income$(11)$ $ $ $ $ $ $ 
December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current post-retirement liability(a)
$9 $ $5 $3 $2 $1 $ $ 
Noncurrent post-retirement liability(b)
494 45 299 163 133 19 59 (4)
Total accrued post-retirement liability$503 $45 $304 $166 $135 $20 $59 $(4)
Regulatory assets$135 $ $135 $82 $53 $ $36 $ 
Regulatory liabilities$149 $39 $ $ $ $17 $63 $3 
Accumulated other comprehensive (income) loss
Deferred income tax expense$3 $ $ $ $ $ $ $ 
Prior service credit(2)       
Net actuarial gain(13)       
Net amounts recognized in accumulated other comprehensive income$(12)$ $ $ $ $ $ $ 
Amounts to be recognized in net periodic pension expense in the next year
Unrecognized net actuarial loss$5 $3 $1 $ $1 $ $ $ 
Unrecognized prior service credit(14)(4)(3)(1)(2)(1)(1)(2)
(a)    Included in Other within Current Liabilities on the Consolidated Balance Sheets. 
(b)    Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.
Assumptions Used for Other Post-Retirement Benefits Accounting
The discount rate used to determine the current year other post-retirement benefits obligation and following year’s other post-retirement benefits expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high-quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.
The average remaining service period of active covered employees is eight years for Duke Energy, seven years for Progress Energy, Duke Energy Florida and Duke Energy Ohio and six years for Duke Energy Carolinas, Duke Energy Progress, Duke Energy Indiana and Piedmont.
230




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
The following tables present the assumptions used for other post-retirement benefits accounting.
December 31,
202020192018
Benefit Obligations
Discount rate2.60 %3.30 %4.30 %
Net Periodic Benefit Cost
Discount rate3.30 %4.30 %3.60 %
Expected long-term rate of return on plan assets6.85 %6.85 %6.50 %
Assumed tax rate23 %23 %35 %
Assumed Health Care Cost Trend Rate
December 31,
20202019
Health care cost trend rate assumed for next year6.25 %6.00 %
Rate to which the cost trend is assumed to decline (the ultimate trend rate)4.75 %4.75 %
Year that rate reaches ultimate trend20282026
Expected Benefit Payments
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Years ending December 31,
2021$73 $17 $28 $15 $12 $3 $8 $2 
202266 16 26 14 12 3 7 2 
202362 15 25 14 11 3 6 2 
202458 14 24 13 11 2 6 2 
202554 13 22 12 10 2 5 2 
2026-2030223 54 94 52 41 9 21 11 
PLAN ASSETS
Description and Allocations
Duke Energy Master Retirement Trust
Assets for both the qualified pension and other post-retirement benefits are maintained in the Duke Energy Master Retirement Trust. Approximately 98% of the Duke Energy Master Retirement Trust assets were allocated to qualified pension plans and approximately 2% were allocated to other post-retirement plans (comprised of 401(h) accounts), as of December 31, 2020, and 2019. The investment objective of the Duke Energy Master Retirement Trust is to invest in a diverse portfolio of assets that is expected to generate positive surplus return over time (i.e., asset growth greater than liability growth) subject to a prudent level of portfolio risk, for the purpose of enhancing the security of benefits for plan participants.
As of December 31, 2020, Duke Energy assumes pension and other post-retirement plan assets will generate a long-term rate of return of 6.5%. The expected long-term rate of return was developed using a weighted average calculation of expected returns based primarily on future expected returns across asset classes considering the use of active asset managers, where applicable. The asset allocation targets were set after considering the investment objective and the risk profile. Equity securities are held for their higher expected returns. Debt securities are primarily held to hedge the qualified pension plan. Return seeking debt securities, hedge funds and other global securities are held for diversification. Investments within asset classes are diversified to achieve broad market participation and reduce the impact of individual managers or investments.
Effective January 1, 2020, the target asset allocation for the Duke Energy Retirement Master Trust is 58% liability hedging assets and 42% return-seeking assets. Duke Energy periodically reviews its asset allocation targets, and over time, as the funded status of the benefit plans increase, the level of asset risk relative to plan liabilities may be reduced to better manage Duke Energy's benefit plan liabilities and reduce funded status volatility.
231




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
The Duke Energy Master Retirement Trust is authorized to engage in the lending of certain plan assets. Securities lending is an investment management enhancement that utilizes certain existing securities of the Duke Energy Master Retirement Trust to earn additional income. Securities lending involves the loaning of securities to approved parties. In return for the loaned securities, the Duke Energy Master Retirement Trust receives collateral in the form of cash and securities as a safeguard against possible default of any borrower on the return of the loan under terms that permit the Duke Energy Master Retirement Trust to sell the securities. The Duke Energy Master Retirement Trust mitigates credit risk associated with securities lending arrangements by monitoring the fair value of the securities loaned, with additional collateral obtained or refunded as necessary. The fair value of securities on loan was approximately $482 million and $351 million at December 31, 2020, and 2019, respectively. Cash and securities obtained as collateral exceeded the fair value of the securities loaned at December 31, 2020, and 2019, respectively. Securities lending income earned by the Duke Energy Master Retirement Trust was immaterial for the years ended December 31, 2020, 2019 and 2018, respectively.
Qualified pension and other post-retirement benefits for the Subsidiary Registrants are derived from the Duke Energy Master Retirement Trust, as such, each are allocated their proportionate share of the assets discussed below.
The following table includes the target asset allocations by asset class at December 31, 2020, and the actual asset allocations for the Duke Energy Master Retirement Trust.
Actual Allocation at
TargetDecember 31,
Allocation20202019
Global equity securities28 %30 %27 %
Global private equity securities1 %1 %1 %
Debt securities58 %55 %57 %
Return seeking debt securities4 %5 %5 %
Hedge funds3 %3 %3 %
Real estate and cash6 %6 %7 %
Total100 %100 %100 %
Other post-retirement assets
Duke Energy's other post-retirement assets are comprised of Voluntary Employees' Beneficiary Association (VEBA) trusts and 401(h) accounts held within the Duke Energy Master Retirement Trust. Duke Energy's investment objective is to achieve sufficient returns, subject to a prudent level of portfolio risk, for the purpose of promoting the security of plan benefits for participants.
The following table presents target and actual asset allocations for the VEBA trusts at December 31, 2020.
Actual Allocation at
TargetDecember 31,
Allocation20202019
U.S. equity securities30 %36 %35 %
Non-U.S. equity securities6 %6 %9 %
Real estate2 %2 %2 %
Debt securities45 %42 %37 %
Cash17 %14 %17 %
Total100 %100 %100 %
Fair Value Measurements
Duke Energy classifies recurring and non-recurring fair value measurements based on the fair value hierarchy as discussed in Note 16.
Valuation methods of the primary fair value measurements disclosed below are as follows:
Investments in equity securities
Investments in equity securities are typically valued at the closing price in the principal active market as of the last business day of the reporting period. Principal active markets for equity prices include published exchanges such as NASDAQ and NYSE. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. Prices have not been adjusted to reflect after-hours market activity. The majority of investments in equity securities are valued using Level 1 measurements. When the price of an institutional commingled fund is unpublished, it is not categorized in the fair value hierarchy, even though the funds are readily available at the fair value.
Investments in corporate debt securities and U.S. government securities
Most debt investments are valued based on a calculation using 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. Most debt valuations are Level 2 measurements. If the market for a particular fixed-income security is relatively inactive or illiquid, the measurement is Level 3. U.S. Treasury debt is typically Level 2.
232




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
Investments in short-term investment funds
Investments in short-term investment funds are valued at the net asset value of units held at year end and are readily redeemable at the measurement date. Investments in short-term investment funds with published prices are valued as Level 1. Investments in short-term investment funds with unpublished prices are valued as Level 2.
Duke Energy Master Retirement Trust
The following tables provide the fair value measurement amounts for the Duke Energy Master Retirement Trust qualified pension and other post-retirement assets.
December 31, 2020
Total FairNot
(in millions)ValueLevel 1Level 2Level 3
Categorized(b)
Equity securities$3,202 $3,162 $ $ $40 
Corporate debt securities4,162  4,162   
Short-term investment funds397 247 150   
Partnership interests97    97 
Hedge funds198    198 
U.S. government securities1,164  1,164   
Governments bonds – foreign73  73   
Cash98 98    
Net pending transactions and other investments88 34 54   
Total assets(a)
$9,479 $3,541 $5,603 $ $335 
(a)    Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont were allocated approximately 26%, 32%, 15%, 17%, 5%, 7% and 4%, respectively, of the Duke Energy Master Retirement Trust at December 31, 2020. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)    Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.
December 31, 2019
Total FairNot
(in millions)ValueLevel 1Level 2Level 3
Categorized(b)
Equity securities$2,730 $2,712 $ $ $18 
Corporate debt securities3,999  3,999   
Short-term investment funds545 455 90   
Partnership interests104    104 
Hedge funds206    206 
U.S. government securities1,231  1,231   
Guaranteed investment contracts11   11  
Governments bonds – foreign78  78   
Cash75 75    
Net pending transactions and other investments46 (43)89   
Total assets(a)
$9,025 $3,199 $5,487 $11 $328 
(a)    Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont were allocated approximately 26%, 31%, 15%, 17%, 5%, 7% and 4%, respectively, of the Duke Energy Master Retirement Trust at December 31, 2019. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)    Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.
233




FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS
The following table provides a reconciliation of beginning and ending balances of Duke Energy Master Retirement Trust qualified pension and other post-retirement assets at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3).
(in millions)20202019
Balance at January 1$11 $27 
Sales(12)(18)
Total gains and other, net1 2 
Transfer of Level 3 assets to other classifications  
Balance at December 31$ $11 
Other post-retirement assets
The following tables provide the fair value measurement amounts for VEBA trust assets.
December 31, 2020
Total Fair
(in millions)ValueLevel 2
Cash and cash equivalents$5 $5 
Real estate1 1 
Equity securities23 23 
Debt securities19 19 
Total assets$48 $48 
December 31, 2019
Total Fair
(in millions)ValueLevel 2
Cash and cash equivalents$9 $9 
Real estate1 1 
Equity securities22 22 
Debt securities18 18 
Total assets$50 $50 
EMPLOYEE SAVINGS PLANS
Retirement Savings Plan
Duke Energy or its affiliates sponsor, and the Subsidiary Registrants participate in, employee savings plans that cover substantially all U.S. employees. Most employees participate in a matching contribution formula where Duke Energy provides a matching contribution generally equal to 100% of employee before-tax and Roth 401(k) contributions of up to 6% of eligible pay per pay period. Dividends on Duke Energy shares held by the savings plans are charged to retained earnings when declared and shares held in the plans are considered outstanding in the calculation of basic and diluted EPS.
For new and rehired employees who are not eligible to participate in Duke Energy’s defined benefit plans, an additional employer contribution of 4% of eligible pay per pay period, which is subject to a three-year vesting schedule, is provided to the employee’s savings plan account. Certain Piedmont employees whose participation in a prior Piedmont defined benefit plan (that was frozen as of December 31, 2017) are eligible for employer transition credit contributions of 3% to 5% of eligible pay per period, for each pay period during the three-year period ending December 31, 2020.
The following table includes pretax employer matching contributions made by Duke Energy and expensed by the Subsidiary Registrants.
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Years ended December 31,
2020$213 $67 $57 $38 $19 $5 $11 $13 
2019214 66 58 38 20 5 11 13 
2018213 68 58 40 19 4 10 12 
234




FINANCIAL STATEMENTSINCOME TAXES
23. INCOME TAXES
Consolidated Appropriations Act
On December 27, 2020, President Trump signed the Consolidated Appropriations Act (CAA) into law. In addition to the CAA providing funding for government operations, it also provided tax provisions to assist with COVID-19 relief, including extending certain expiring tax provisions. The Company has reviewed the provisions of the CAA and has determined that there is no material impact on the 2020 financial statements as a result of the CAA being signed into law.
CARES Act
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 and deferral of certain 2020 payroll taxes. In the third quarter of 2020, Duke Energy received $572 million related to these AMT credit carryforwards and $19 million of interest income. In addition, the Company has deferred approximately $117 million of payroll taxes, with 50% payable by December 31, 2021, and the remaining 50% payable by December 31, 2022. 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.
Tax Act
On December 22, 2017, President Trump signed the Tax Act into law. Among other provisions, the Tax Act lowered the corporate federal income tax rate from 35% to 21%, limits interest deductions outside of regulated utility operations, requires the normalization of excess deferred taxes associated with property under the average rate assumption method as a prerequisite to qualifying for accelerated depreciation and repealed the federal manufacturing deduction. The Tax Act also repealed the corporate AMT and stipulates a refund of 50% of remaining AMT credit carryforwards (to the extent the credits exceed regular tax for the year) for tax years 2018, 2019, and 2020, with all remaining AMT credits to be refunded in tax year 2021.
On December 22, 2017, the SEC staff issued Staff Accounting Bulletin (SAB) 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company acting in good faith may complete the accounting for the impacts of the Tax Act under ASC Topic 740. In accordance with SAB 118, a company must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC Topic 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, a company can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the first reporting period in which a reasonable estimate can be determined.
As of December 31, 2018, the accounting for the effects of the Tax Act was complete. During the year ended December 31, 2018, Duke Energy recorded the following measurement period adjustments in accordance with SAB 118:
Additional tax expense of $23 million related to the completion of the analysis of Duke Energy’s existing regulatory liability related to deferred taxes;
A $10 million tax benefit for the remeasurement of deferred tax assets and deferred tax liabilities primarily related to the guidance on bonus depreciation issued by the IRS in August 2018, affecting the computation of the Company's 2017 Federal income tax liability;
Additional tax expense of $7 million related to the portion of the deferred tax asset as of December 31, 2017, that represents nondeductible long-term incentives under the Tax Act’s limitation on the deductibility of executive compensation; and
During the fourth quarter of 2018, the Company released the $76 million valuation allowance that it recorded in the first quarter of 2018 as a result of additional guidance published by the IRS that stated refundable AMT credits would not be subject to sequestration.
The majority of Duke Energy’s operations are regulated and it is expected that the Subsidiary Registrants will ultimately pass on the savings associated with the amount representing the remeasurement of deferred tax balances related to regulated operations to customers. For Duke Energy's regulated operations, where the reduction is expected to be returned to customers in future rates, the remeasurement has been deferred as a regulatory liability. During 2018, Duke Energy recorded an additional regulatory liability of $83 million, representing the revaluation of those deferred tax balances. The Subsidiary Registrants continue to respond to requests from regulators in various jurisdictions to determine the timing and magnitude of savings they will pass on to customers.
In addition, during 2018, Duke Energy reclassified $573 million of AMT credit carryforwards from noncurrent deferred tax liabilities to a current federal income tax receivable. In 2019, Duke Energy received a refund of $573 million related to AMT credit carryforwards based on the filing of Duke Energy's 2018 income tax return in 2019 and reclassified $286 million of AMT credits from noncurrent deferred tax liabilities to a current federal income tax receivable.
235




FINANCIAL STATEMENTSINCOME TAXES
Income Tax Expense
Components of Income Tax Expense
 Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current income taxes
Federal $(281)$314 $280 $181 $148 $10 $48 $(27)
State (9)35 29 17 24 1 7 (8)
Foreign 1        
Total current income taxes (289)349 309 198 172 11 55 (35)
Deferred income taxes       
Federal 155 (171)(167)(180)1 30 12 60 
State (92)(86)(24)(49)25 2 17 (7)
Total deferred income taxes(a)
63 (257)(191)(229)26 32 29 53 
ITC amortization (10)(4)(5)(5)    
Income tax (benefit) expense from continuing operations (236)88 113 (36)198 43 84 18 
Tax expense from discontinued operations 2        
Total income tax (benefit) expense included in Consolidated Statements of Operations $(234)$88 $113 $(36)$198 $43 $84 $18 
(a)     Total deferred income taxes includes the generation of NOL carryforwards and tax credit carryforwards of $20 million at Duke Energy Carolinas, $3 million at Duke Energy Progress, $8 million at Duke Energy Indiana, and $11 million at Piedmont. In addition, total deferred income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $39 million at Progress Energy, $30 million at Duke Energy Florida and $79 million at Duke Energy.
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions) EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current income taxes        
Federal $(299)$164 $(173)$(36)$(43)$(41)$(23)$(92)
State 10 13 (7)(3)18 (1)1 (1)
Foreign 2        
Total current income taxes (287)177 (180)(39)(25)(42)(22)(93)
Deferred income taxes       
Federal 855 175 422 220 153 77 128 133 
State (38)(37)17 (18)27 5 28 3 
Total deferred income taxes(a)
817 138 439 202 180 82 156 136 
ITC amortization (11)(4)(6)(6)    
Income tax expense from continuing operations 519 311 253 157 155 40 134 43 
Tax benefit from discontinued operations (2)— — — — — — — 
Total income tax expense included in Consolidated Statements of Operations $517 $311 $253 $157 $155 $40 $134 $43 
(a)    Total deferred income taxes includes the generation of tax credit carryforwards of $8 million at Duke Energy Carolinas. In addition, total deferred income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $243 million at Progress Energy, $35 million at Duke Energy Progress, $152 million at Duke Energy Florida, $25 million at Duke Energy Ohio, $60 million at Duke Energy Indiana, $90 million at Piedmont and $775 million at Duke Energy.
236




FINANCIAL STATEMENTSINCOME TAXES
 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Current income taxes        
Federal $(647)$(8)$(135)$(71)$(49)$20 $29 $67 
State (11)6 (5)(5)(10)(1)3 1 
Foreign 3        
Total current income taxes (655)(2)(140)(76)(59)19 32 68 
Deferred income taxes        
Federal 1,064 299 341 256 115 21 74 (36)
State 49 11 20 (17)45 3 22 5 
Total deferred income taxes(a)(b)
1,113 310 361 239 160 24 96 (31)
ITC amortization (10)(5)(3)(3)    
Income tax expense from continuing operations 448 303 218 160 101 43 128 37 
Tax benefit from discontinued operations (26)— — — — — — — 
Total income tax expense included in Consolidated Statements of Operations $422 $303 $218 $160 $101 $43 $128 $37 
(a)    Includes benefits of NOL carryforwards and tax credit carryforwards of $22 million at Duke Energy Carolinas, $293 million at Progress Energy, $59 million at Duke Energy Progress, $219 million at Duke Energy Florida, $17 million at Duke Energy Ohio, $21 million at Duke Energy Indiana and $39 million at Piedmont. In addition, total deferred income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $18 million at Duke Energy.
(b)    For the year ended December 31, 2018, the Company has revised the December 31, 2017, estimates of the income tax effects of the Tax Act, in accordance with SAB 118. See the Statutory Rate Reconciliation section below for additional information on the Tax Act's impact on income tax expense    .
Duke Energy Income from Continuing Operations before Income Taxes
 Years Ended December 31,
(in millions)202020192018
Domestic$826 $4,053 $3,018 
Foreign13 44 55 
Income from continuing operations before income taxes$839 $4,097 $3,073 
237




FINANCIAL STATEMENTSINCOME TAXES
Statutory Rate Reconciliation
The following tables present a reconciliation of income tax expense at the U.S. federal statutory tax rate to the actual tax expense from continuing operations.
 Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Income tax expense, computed at the statutory rate of 21%$176 $219 $243 $80 $204 $62 $103 $61 
State income tax, net of federal income tax effect(80)(40)4 (25)39 2 19 (12)
Amortization of excess deferred income tax(276)(82)(118)(68)(49)(20)(36)(21)
AFUDC equity income(48)(13)(9)(6)(3)(2)(4)(10)
AFUDC equity depreciation103 19 10 5 5 1 4  
Noncontrolling Interests62        
Renewable energy PTCs(110)       
Other tax credits(37)(13)(16)(14)(2)(1)(3)(2)
Tax true up(12)(3)1 (5)5  (1)1 
Other items, net(14)1 (2)(3)(1)1 2 1 
Income tax (benefit) expense from continuing operations$(236)$88 $113 $(36)$198 $43 $84 $18 
Effective tax rate(28.1)%8.4 %9.7 %(9.5)%20.4 %14.6 %17.1 %6.2 %
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Income tax expense, computed at the statutory rate of 21%$860 $360 $332 $202 $178 $59 $120 $51 
State income tax, net of federal income tax effect(22)(19)8 (17)35 3 22 2 
Amortization of excess deferred income tax(121)(29)(64)(10)(54)(12)(6)(10)
AFUDC equity income(52)(9)(14)(13)(1)(3)(3)— 
AFUDC equity depreciation34 19 10 5 5 1 4 — 
Renewable energy PTCs(120)— — — — — — — 
Other tax credits(23)(11)(9)(7)(2)(1)(1)(1)
Tax true up(64)(9)(8)(3)(5)(7)(1) 
Other items, net27 9 (2) (1) (1)1 
Income tax expense from continuing operations$519 $311 $253 $157 $155 $40 $134 $43 
Effective tax rate12.7 %18.1 %16.0 %16.3 %18.3 %14.3 %23.5 %17.6 %
238




FINANCIAL STATEMENTSINCOME TAXES
 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Income tax expense, computed at the statutory rate of 21%$645 $288 $263 $174 $137 $46 $109 $35 
State income tax, net of federal income tax effect30 14 13 (17)28 2 20 4 
Amortization of excess deferred income tax(61)— (55)(1)(54)(3)(2)— 
AFUDC equity income(42)(15)(22)(12)(10)(2)(2)— 
AFUDC equity depreciation31 18 9 5 4 1 4 — 
Renewable energy PTCs(129)— — — — — — — 
Other tax credits(28)(7)(13)(5)(8)(1)(1)(3)
Tax Act(a)
20 1 25 19  2 — — 
Other items, net(18)4 (2)(3)4 (2)— 1 
Income tax expense from continuing operations$448 $303 $218 $160 $101 $43 $128 $37 
Effective tax rate14.6 %22.1 %17.4 %19.3 %15.4 %19.6 %24.6 %22.3 %
(a)     For the year ended December 31, 2018, the Company revised the December 31, 2017, estimates of the income tax effects of the Tax Act, in accordance with SAB 118. Amounts primarily include but are not limited to items that are excluded for ratemaking purposes related certain wholesale fixed-rate contracts, remeasurement of nonregulated net deferred tax liabilities, Federal NOLs, and valuation allowance on foreign tax credits.
Valuation allowances have been established for certain state NOL carryforwards and state income tax credits that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in State income tax, net of federal income tax effect, in the above tables.
Valuation allowances have been established for foreign tax credits that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in Tax Act in the above tables.
DEFERRED TAXES
Net Deferred Income Tax Liability Components
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Deferred credits and other liabilities $286 $85 $87 $67 $18 $21 $7 $38 
Lease obligations 515 96 208 120 87 5 16 5 
Pension, post-retirement and other employee benefits 236 (30)68 24 38 16 26 (5)
Progress Energy merger purchase accounting adjustments(a)
441        
Tax credits and NOL carryforwards 3,909 285 508 179 282 16 183 29 
Regulatory liabilities and deferred credits 11    18   
Investments and other assets     7  
Other 93 8 14 9 4 7 1 8 
Valuation allowance (586)       
Total deferred income tax assets 4,894 455 885 399 429 90 233 75 
Investments and other assets (2,267)(1,127)(669)(507)(164) (14)(48)
Accelerated depreciation rates (10,729)(3,170)(3,868)(1,778)(2,124)(1,071)(1,433)(844)
Regulatory assets and deferred debits, net (1,142) (744)(412)(332) (14)(4)
Total deferred income tax liabilities (14,138)(4,297)(5,281)(2,697)(2,620)(1,071)(1,461)(896)
Net deferred income tax liabilities$(9,244)$(3,842)$(4,396)$(2,298)$(2,191)$(981)$(1,228)$(821)
(a)    Primarily related to lease obligations and debt fair value adjustments.
239




FINANCIAL STATEMENTSINCOME TAXES
The following table presents the expiration of tax credits and NOL carryforwards.
 December 31, 2020
(in millions)AmountExpiration Year
General Business Credits$2,033 20242040
Federal NOL carryforwards(a) (f)
154 2024Indefinite
Capital loss carryforward(e)
85 2024
State carryforwards and credits(b) (f)
340 2021Indefinite
Foreign NOL carryforwards(c)
12 20272037
Foreign Tax Credits(d)
1,272 20242027
Charitable contribution carryforwards13 2025
Total tax credits and NOL carryforwards $3,909    
(a)    A valuation allowance of $4 million has been recorded on the Federal NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(b)    A valuation allowance of $97 million has been recorded on the state NOL and attribute carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(c)    A valuation allowance of $12 million has been recorded on the foreign NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(d)    A valuation allowance of $388 million has been recorded on the foreign tax credits, as presented in the Net Deferred Income Tax Liability Components table.
(e)    A valuation allowance of $85 million has been recorded on the Federal capital loss carryforward, as presented in the Net Deferred Income Tax Liability Components table.
(f)    Indefinite carryforward for Federal NOLs, and NOLs for states that have adopted the Tax Act's NOL provisions, generated in tax years beginning after December 31, 2017.
 December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Deferred credits and other liabilities $125 $24 $25 $49 $— $14 $5 $22 
Lease obligations 462 72 193 92 102 5 17 6 
Pension, post-retirement and other employee benefits 303 (5)88 38 44 17 27 (3)
Progress Energy merger purchase accounting adjustments(a)
389 — — — — — — — 
Tax credits and NOL carryforwards 3,925 262 486 176 253 16 176 19 
Regulatory liabilities and deferred credits— — — — — 36 52 42 
Investments and other assets— — — — — 10 — 2 
Other 97 5 8 3 2 8 1 6 
Valuation allowance (587)— — — — — — — 
Total deferred income tax assets 4,714 358 800 358 401 106 278 94 
Investments and other assets (1,664)(981)(577)(390)(190)— (12)— 
Accelerated depreciation rates (10,813)(3,254)(3,798)(1,918)(1,913)(1,028)(1,416)(802)
Regulatory assets and deferred debits, net (1,115)(44)(887)(438)(477)— — — 
Total deferred income tax liabilities (13,592)(4,279)(5,262)(2,746)(2,580)(1,028)(1,428)(802)
Net deferred income tax liabilities $(8,878)$(3,921)$(4,462)$(2,388)$(2,179)$(922)$(1,150)$(708)
(a)    Primarily related to finance lease obligations and debt fair value adjustments.
240




FINANCIAL STATEMENTSINCOME TAXES
UNRECOGNIZED TAX BENEFITS
The following tables present changes to unrecognized tax benefits.
 Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unrecognized tax benefits – January 1$126 $8 $9 $6 $3 $1 $1 $4 
Gross decreases – tax positions in prior periods(2)       
Gross increases – current period tax positions4 2 1      
Reduction due to lapse of statute of limitations(3)      (3)
Total changes(1)2 1     (3)
Unrecognized tax benefits – December 31$125 $10 $10 $6 $3 $1 $1 $1 
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unrecognized tax benefits – January 1$24 $6 $9 $6 $3 $1 $1 $4 
Unrecognized tax benefits increases105 2 1 1 — — — — 
Gross decreases – tax positions in prior periods(3)— (1)(1)— — — — 
Total changes102 2    — — — 
Unrecognized tax benefits – December 31$126 $8 $9 $6 $3 $1 $1 $4 
 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Unrecognized tax benefits – January 1$25 $5 $5 $5 $5 $1 $1 $3 
Unrecognized tax benefits increases (decreases)
Gross decreases – tax positions in prior periods(2)(1)— — (4)— — — 
Gross increases – tax positions in prior periods7 2 4 1 2 — — 1 
Decreases due to settlements(6)— — — — — — — 
Total changes(1)1 4 1 (2)  1 
Unrecognized tax benefits – December 31$24 $6 $9 $6 $3 $1 $1 $4 
The following table includes additional information regarding the Duke Energy Registrants' unrecognized tax benefits at December 31, 2020. Duke Energy Registrants do not anticipate a material increase or decrease in unrecognized tax benefits within the next 12 months.
 December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Amount that if recognized, would affect the
effective tax rate or regulatory liability(a)
$122 $10 $10 $6 $3 $1 $1 $1 
(a)    The Duke Energy Registrants are unable to estimate the specific amounts that would affect the ETR versus the regulatory liability.
Duke Energy and its subsidiaries are no longer subject to U.S. federal examination for years before 2016. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 2016.
241




FINANCIAL STATEMENTSOTHER INCOME AND EXPENSES, NET
24. OTHER INCOME AND EXPENSES, NET
The components of Other income and expenses, net on the Consolidated Statements of Operations are as follows.
 Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)
Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Interest income$32 $4 $8 $2 $6 $4 $6 $17 
AFUDC equity 154 62 42 29 12 7 23 19 
Post in-service equity returns 27 17 8 8  1 1  
Nonoperating income, other 240 94 71 36 35 4 7 15 
Other income and expense, net $453 $177 $129 $75 $53 $16 $37 $51 
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)
Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Interest income $31 $1 $11 $ $11 $10 $10 $1 
AFUDC equity 139 42 66 60 6 13 18 — 
Post in-service equity returns 29 20 7 7 — 1 — — 
Nonoperating income, other231 88 57 33 31  13 19 
Other income and expense, net $430 $151 $141 $100 $48 $24 $41 $20 
 Year Ended December 31, 2018
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)
Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Interest income $20 $1 $18 $1 $18 $7 $9 $1 
AFUDC equity 221 73 104 57 47 11 32 — 
Post in-service equity returns 15 9 5 5 — 1 — — 
Nonoperating income, other143 70 38 24 21 4 4 13 
Other income and expense, net$399 $153 $165 $87 $86 $23 $45 $14 
25. SUBSEQUENT EVENTS
For information on subsequent events related to the sale of a minority interest in Duke Energy Indiana and regulatory matters, see Notes 1 and 3, respectively.
In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. The financial impact of the storm is estimated to be between approximately $75 million and $100 million on a pre-tax basis.
242




INDEPENDENT ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. 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 December 31, 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 December 31, 2020, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
The Duke Energy Registrants’ management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Duke Energy Registrants’ internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with GAAP. Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
The Duke Energy Registrants’ management, including their Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of their internal control over financial reporting as of December 31, 2020, based on the framework in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management concluded that its internal controls over financial reporting were effective as of December 31, 2020.
Deloitte & Touche LLP, Duke Energy’s independent registered public accounting firm, has issued an attestation report on the effectiveness of Duke Energy’s internal control over financial reporting, which is included herein. This report is not applicable to the Subsidiary Registrants as these companies are not accelerated or large accelerated filers.
243




REPORTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Duke Energy Corporation and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 25, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 25, 2021
244




OTHER INFORMATION
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding Duke Energy's Executive Officers is set forth in Part I, Item 1, "Business – Information about Our Executive Officers," in this Annual Report on Form 10-K. Duke Energy will provide information that is responsive to the remainder of this Item 10 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 10 by reference.
ITEM 11. EXECUTIVE COMPENSATION
Duke Energy will provide information that is responsive to this Item 11 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 11 by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table shows information as of December 31, 2020, about securities to be issued upon exercise of outstanding options, warrants and rights under Duke Energy's equity compensation plans, along with the weighted average exercise price of the outstanding options, warrants and rights and the number of securities remaining available for future issuance under the plans.
Plan Category
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)(1)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
Equity compensation plans approved by security holders
3,256,542 (2)n/a4,450,675(3)
Equity compensation plans not approved by security holders
143,272 (4)n/an/a(5)
Total
3,399,814 n/a4,450,675
(1)    As of December 31, 2020, no options were outstanding under equity compensation plans.
(2)    Includes RSUs and performance shares (assuming the maximum payout level) granted under the Duke Energy Corporation 2015 Long-Term Incentive Plan, as well as shares that could be payable with respect to certain compensation deferred under the Duke Energy Corporation Executive Savings Plan (Executive Savings Plan) or the Directors’ Savings Plan.
(3)    Includes shares remaining available for issuance pursuant to stock awards under the Duke Energy Corporation 2015 Long-Term Incentive Plan.
(4)    Includes shares that could be payable with respect to certain compensation deferred under the Executive Savings Plan or the Duke Energy Corporation Directors' Savings Plan (Directors' Savings Plan), each of which is a non-qualified deferred compensation plan described in more detail below.
(5)    The number of shares remaining available for future issuance under equity compensation plans not approved by security holders cannot be determined because it is based on the amount of future voluntary deferrals, if any, under the Executive Savings Plan and the Directors' Savings Plan.
Under the Executive Savings Plan, participants can elect to defer a portion of their base salary and short‑term incentive compensation. Participants also receive a company matching contribution in excess of the contribution limits prescribed by the Internal Revenue Code under the Duke Energy Retirement Savings Plan, which is the 401(k) plan in which employees are generally eligible to participate. Eligible participants may also earn pay credits based on age and length of service on eligible earnings that exceed limited prescribed by the Internal Revenue Code.
In general, payments are made following termination of employment or death in the form of a lump sum or installments, as selected by the participant. Participants may direct the deemed investment of their accounts (with certain exceptions) among investment options available under the Duke Energy Retirement Savings Plan, including the Duke Energy Common Stock Fund. Participants may change their investment elections on a daily basis. Deferrals of equity awards are credited with earnings and losses based on the performance of the Duke Energy Common Stock Fund. The benefits payable under the plan are unfunded and subject to the claims of Duke Energy’s creditors.
Under the Directors’ Savings Plan, outside directors may elect to defer all or a portion of their annual compensation, generally consisting of retainers. Deferred amounts are credited to an unfunded account, the balance of which is adjusted for the performance of phantom investment options, including the Duke Energy Common Stock Fund, as elected by the director, and generally are paid when the director terminates his or her service from the Board of Directors.
Duke Energy will provide additional information that is responsive to this Item 12 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 12 by reference.
245




OTHER INFORMATION
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Duke Energy will provide information that is responsive to this Item 13 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report. That information is incorporated in this Item 13 by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Deloitte provided professional services to the Duke Energy Registrants. The following tables present the Deloitte fees for services rendered to the Duke Energy Registrants during 2020 and 2019.
 Year Ended December 31, 2020
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Types of Fees       
Audit Fees(a)
$12.9 $3.0 $4.5 $2.3 $2.2 $1.9 $1.7 $1.3 
Audit-Related Fees(b)
1.7 0.2 0.3 0.1 0.2 0.3 0.1  
Tax Fees(c)
0.1        
Total Fees $14.7 $3.2 $4.8 $2.4 $2.4 $2.2 $1.8 $1.3 
 Year Ended December 31, 2019
DukeDukeDukeDukeDuke
DukeEnergyProgressEnergyEnergyEnergyEnergy
(in millions)EnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
Types of Fees       
Audit Fees(a)
$13.5 $4.6 $5.3 $3.1 $2.2 $0.9 $1.4 $0.8 
Audit-Related Fees(b)
0.6 0.1 0.2 0.1 0.1 0.2 — — 
Tax Fees(c)
0.2 0.1 0.1 — — — — — 
Total Fees $14.3 $4.8 $5.6 $3.2 $2.3 $1.1 $1.4 $0.8 
(a)    Audit Fees are fees billed, or expected to be billed, by Deloitte for professional services for the financial statement audits, audit of the Duke Energy Registrants’ financial statements included in the Annual Report on Form 10-K, reviews of financial statements included in Quarterly Reports on Form 10‑Q, and services associated with securities filings such as comfort letters and consents.
(b)    Audit-Related Fees are fees billed, or expected to be billed, by Deloitte for assurance and related services that are reasonably related to the performance of an audit or review of financial statements, including statutory reporting requirements.
(c)    Tax Fees are fees billed by Deloitte for tax return assistance and preparation, tax examination assistance and professional services related to tax planning and tax strategy.
To safeguard the continued independence of the independent auditor, the Audit Committee of Duke Energy adopted a policy that all services provided by the independent auditor require preapproval by the Audit Committee. Pursuant to the policy, certain audit services, audit-related services, tax services and other services have been specifically preapproved up to fee limits. In the event the cost of any of these services may exceed the fee limits, the Audit Committee must specifically approve the service. All services performed in 2020 and 2019 by the independent accountant were approved by the Audit Committee pursuant to the preapproval policy.
246

EXHIBITS

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)     Consolidated Financial Statements and Supplemental Schedules included in Part II of this Annual Report are as follows:
Duke Energy Corporation
Consolidated Financial Statements
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Carolinas, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Progress Energy, Inc.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Progress, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Florida, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Duke Energy Ohio, Inc.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
247

EXHIBITS
Duke Energy Indiana, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
Piedmont Natural Gas Company, Inc.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets as of December 31, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018
Notes to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
All other schedules are omitted because they are not required, or because the required information is included in the Consolidated Financial Statements or Notes.
248




EXHIBITS
EXHIBIT INDEX
Exhibits filed herewith 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 (***).
DukeDukeDukeDukeDuke
ExhibitDukeEnergyProgressEnergyEnergyEnergyEnergy
NumberEnergyCarolinasEnergyProgressFloridaOhioIndianaPiedmont
2.1X   X         
2.2XX
3.1X
3.2X
3.3  X          
3.3.1  X          
3.4          X  
3.4.1          X  
3.5            X
3.5.1            X
3.5.2            X
3.5.3X
3.5.4X
3.6  X          
3.7          X  
3.8      X      
3.8.1X
3.8.2X
3.9    X        
3.9.1    X        
3.9.2    X        
3.9.3X
3.10        X    
3.10.1       
X
    
3.10.2        X    
3.10.3X
3.11X
3.11.1X
3.12

X
3.13

X
3.14X
3.15X
3.16X
3.17

X
3.18

X
3.19X
3.20X
4.1X            
4.1.1X            
4.1.2X            
4.1.3X            
4.1.4X            
4.1.5X            
4.1.6X            
4.1.7X            
4.1.8X            
4.1.9X            
4.1.10X            
4.1.11X
4.1.12X
4.1.13X
4.1.14X
4.1.15X
4.1.16X
4.1.17X
4.1.18X
4.1.19

X
4.1.20X
4.1.21

X
4.1.22

X
4.1.23X
4.1.24X
4.2  X          
4.2.1 X          
4.2.2  X          
4.3First and Refunding Mortgage from Duke Energy Carolinas, LLC to The Bank of New York Mellon Trust Company, N.A., successor trustee to Guaranty Trust Company of New York, dated as of December 1, 1927 (incorporated by reference to Exhibit 7(a) to registrant's Form S-1, effective October 15, 1947, File No. 2-7224).  X          
4.3.1  X          
4.3.2Ninth Supplemental Indenture, dated as of February 1, 1949 (incorporated by reference to Exhibit 7(j) to registrant's Form S-1 filed on February 3, 1949, File No. 2-7808).  X          
4.3.3Twentieth Supplemental Indenture, dated as of June 15, 1964 (incorporated by reference to Exhibit 4-B-20 to registrant's Form S-1 filed on August 23, 1966, File No. 2-25367).  X          
4.3.4Twenty-third Supplemental Indenture, dated as of February 1, 1968 (incorporated by reference to Exhibit 2-B-26 to registrant's Form S-9 filed on January 21, 1969, File No. 2-31304).  X          
4.3.5Sixtieth Supplemental Indenture, dated as of March 1, 1990 (incorporated by reference to Exhibit 4-B-61 to registrant's Annual Report on Form 10-K for the year ended December 31, 1990, File No.1-4928).  X          
4.3.6Sixty-third Supplemental Indenture, dated as of July 1, 1991 (incorporated by reference to Exhibit 4-B-64 to registrant's Registration Statement on Form S-3 filed on February 13, 1992, File No. 33-45501).  X          
4.3.7 X           
4.3.8  X          
4.3.9  X          
4.3.10  X          
4.3.11  X          
4.3.12  X          
4.3.13  X          
4.3.14  X          
4.3.15  X          
4.3.16X
4.3.17X
4.3.18X
4.3.19X
4.3.20X
4.3.21X
4.3.22X
4.3.23X
4.4Mortgage and Deed of Trust between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and The Bank of New York Mellon (formerly Irving Trust Company) and Frederick G. Herbst (Tina D. Gonzalez, successor), as Trustees, dated as of May 1, 1940.      X      
4.4.1First through Fifth Supplemental Indentures thereto (incorporated by reference to Exhibit 2(b), File No. 2-64189). X
4.4.2Sixth Supplemental Indenture dated April 1, 1960 (incorporated by reference to Exhibit 2(b)-5, File No. 2-16210).X
4.4.3Seventh Supplemental Indenture dated November 1, 1961 (incorporated by reference to Exhibit 2(b)-6, File No. 2-16210).X
4.4.4Eighth Supplemental Indenture dated July 1, 1964 (incorporated by reference to Exhibit 4(b)-8, File No. 2-19118).X
4.4.5Ninth Supplemental Indenture dated April 1, 1966 (incorporated by reference to Exhibit 4(b)-2, File No. 2-22439).X
4.4.6Tenth Supplemental Indenture dated October 1, 1967 (incorporated by reference to Exhibit 4(b)-2, File No. 2-24624).X
4.4.7Eleventh Supplemental Indenture dated October 1, 1968 (incorporated by reference to Exhibit 2(c), File No. 2-27297).X
4.4.8Twelfth Supplemental Indenture dated January 1, 1970 (incorporated by reference to Exhibit 2(c), File No. 2-30172).X
4.4.9Thirteenth Supplemental Indenture dated August 1, 1970 (incorporated by reference to Exhibit 2(c), File No. 2-35694).X
4.4.10Fourteenth Supplemental Indenture dated January 1, 1971 (incorporated by reference to Exhibit 2(c), File No. 2-37505).X
4.4.11Fifteenth Supplemental Indenture dated October 1, 1971 (incorporated by reference to Exhibit 2(c), File No. 2-39002).X
4.4.12Sixteenth Supplemental Indenture dated May 1, 1972 (incorporated by reference to Exhibit 2(c), File No. 2-41738).X
4.4.13Seventeenth Supplemental Indenture dated November 1, 1973 (incorporated by reference to Exhibit 2(c), File No. 2-43439).X
4.4.14Eighteenth Supplemental Indenture dated (incorporated by reference to Exhibit 2(c), File No. 2-47751).X
4.4.15Nineteenth Supplemental Indenture dated May 1, 1974 (incorporated by reference to Exhibit 2(c), File No. 2-49347).X
4.4.16Twentieth Supplemental Indenture dated December 1, 1974 (incorporated by reference to Exhibit 2(c), File No. 2-53113).X
4.4.17Twenty-first Supplemental Indenture dated April 15, 1975 (incorporated by reference to Exhibit 2(d), File No. 2-53113).X
4.4.18Twenty-second Supplemental Indenture dated October 1, 1977 (incorporated by reference to Exhibit 2(c), File No. 2-59511).X
4.4.19Twenty-third Supplemental Indenture dated June 1, 1978 (incorporated by reference to Exhibit 2(c), File No. 2-61611).X
4.4.20Twenty-fourth Supplemental Indenture dated May 15, 1979 (incorporated by reference to Exhibit 2(d), File No. 2-64189).X
4.4.21Twenty-fifth Supplemental Indenture dated November 1, 1979 (incorporated by reference to Exhibit 2(c), File No. 2-65514).X
4.4.22Twenty-sixth Supplemental Indenture dated November 1, 1979 (incorporated by reference to Exhibit 2(c), File No. 2-66851).X
4.4.23Twenty-seventh Supplemental Indenture dated April 1, 1980 (incorporated by reference to Exhibit 2 (d), File No. 2-66851).X
4.4.24Twenty-eighth Supplemental Indenture dated October 1, 1980 (incorporated by reference to Exhibit 4(b)-1, File No. 2-81299).X
4.4.25Twenty-ninth Supplemental Indenture dated October 1, 1980 (incorporated by reference to Exhibit 4(b)-2, File No. 2-81299).X
4.4.26Thirtieth Supplemental Indenture dated December 1, 1982 (incorporated by reference to Exhibit 4(b)- 3, File No. 2-81299).X
4.4.27Thirty-first Supplemental Indenture dated March 15, 1983 (incorporated by reference to Exhibit 4(c)-1, File No. 2-95505).X
4.4.28Thirty-second Supplemental Indenture dated March 15, 1983 (incorporated by reference to Exhibit 4(c)-2, File No. 2-95505).X
4.4.29Thirty-third Supplemental Indenture dated December 1, 1983 (incorporated by reference to Exhibit 4(c)-3, File No. 2-95505).X
4.4.30Thirty-fourth Supplemental Indenture dated December 15, 1983 (incorporated by reference to Exhibit 4(c)-4, File No. 2-95505).X
4.4.31Thirty-fifth Supplemental Indenture dated April 1, 1984 (incorporated by reference to Exhibit 4(c)-5, File No. 2-95505).X
4.4.32Thirty-sixth Supplemental Indenture dated June 1, 1984 (incorporated by reference to Exhibit 4(c)-6, File No. 2-95505).X
4.4.33Thirty-seventh Supplemental Indenture dated June 1, 1984 (incorporated by reference to Exhibit 4(c)-7, File No. 2-95505).X
4.4.34Thirty-eighth Supplemental Indenture dated June 1, 1984 (incorporated by reference to Exhibit 4(c)- 8, File No. 2-95505).X
4.4.35Thirty-ninth Supplemental Indenture dated April 1, 1985 (incorporated by reference to Exhibit 4(b), File No. 33-25560).X
4.4.36Fortieth Supplemental Indenture dated October 1, 1985 (incorporated by reference to Exhibit 4(c), File No. 33-25560).X
4.4.37Forty-first Supplemental Indenture dated March 1, 1986 (incorporated by reference to Exhibit 4(d), File No. 33-25560).X
4.4.38Forty-second Supplemental Indenture dated July 1, 1986 (incorporated by reference to Exhibit 4(e), File No. 33-25560).X
4.4.39Forty-third Supplemental Indenture dated January 1, 1987 (incorporated by reference to Exhibit 4(f), File No. 33-25560).X
4.4.40Forty-fourth Supplemental Indenture dated December 1, 1987 (incorporated by reference to Exhibit 4(g), File No. 33-25560).X
4.4.41Forty-fifth Supplemental Indenture dated September 1, 1988 (incorporated by reference to Exhibit 4(h), File No. 33-25560).X
4.4.42Forty-sixth Supplemental Indenture dated April 1, 1989 (incorporated by reference to Exhibit 4(b), File No. 33-33431).X
4.4.43Forty-seventh Supplemental Indenture dated August 1, 1989 (incorporated by reference to Exhibit 4(c), File No. 33-33431).X
4.4.44Forty-eighth Supplemental Indenture dated November 15, 1990 (incorporated by reference to Exhibit 4(b), File No. 33-38298).X
4.4.45Forty-ninth Supplemental Indenture dated November 15, 1990 (incorporated by reference to Exhibit 4(c), File No. 33-38298).X
4.4.46Fiftieth Supplemental Indenture dated February 15, 1991 (incorporated by reference to Exhibit 4(h), File No. 33-42869).X
4.4.47Fifty-first Supplemental Indenture dated April 1, 1991 (incorporated by reference to Exhibit 4(i), File No. 33-42869).X
4.4.48Fifty-second Supplemental Indenture dated September 15, 1991(incorporated by reference to Exhibit 4(e), File No. 33-48607).X
4.4.49Fifty-third Supplemental Indenture dated January 1, 1992 (incorporated by reference to Exhibit 4(f), File No. 33-48607).X
4.4.50Fifty-fourth Supplemental Indenture dated April 15, 1992 (incorporated by reference to Exhibit 4 (g), File No. 33-48607).X
4.4.51Fifty-fifth Supplemental Indenture dated July 1, 1992 (incorporated by reference to Exhibit 4(e), File No. 33-55060).X
4.4.52Fifty-sixth Supplemental Indenture dated October 1, 1992 (incorporated by reference to Exhibit 4(f), File No. 33-55060).X
4.4.53Fifty-seventh Supplemental Indenture dated February 1, 1993 (incorporated by reference to Exhibit 4(e), File No. 33-60014).X
4.4.54Fifty-eighth Supplemental Indenture dated March 1, 1993 (incorporated by reference to Exhibit 4(f), File No. 33-60014).X
4.4.55Fifty-ninth Supplemental Indenture dated July 1, 1993 (incorporated by reference to Exhibit 4(a) to Post-Effective Amendment No. 1, File No. 33-38349).X
4.4.56Sixtieth Supplemental Indenture dated July 1, 1993 (incorporated by reference to Exhibit 4(b) to Post-Effective Amendment No. 1, File No. 33-38349).X
4.4.57Sixty-first Supplemental Indenture dated August 15, 1993 (incorporated by reference to Exhibit 4(e), File No. 33-50597).X
4.4.58X
4.4.59X
4.4.60X
4.4.61X
4.4.62X
4.4.63X
4.4.64X
4.4.65X
4.4.66X
4.4.67X
4.4.68      X      
4.4.69      X      
4.4.70      X      
4.4.71      X      
4.4.72      X      
4.4.73      X      
4.4.74      X      
4.4.75      X      
4.4.76      X      
4.4.77X
4.4.78X
4.4.79X
4.4.80X
4.4.81X
4.4.82

X
4.4.83X
4.4.84X
4.5      X      
4.6      X      
4.7Indenture (for First Mortgage Bonds) between Duke Energy Florida, Inc. (formerly Florida Power Corporation) and The Bank of New York Mellon (as successor to Guaranty Trust Company of New York and The Florida National Bank of Jacksonville), as Trustee, dated as of January 1, 1944, (incorporated by reference to Exhibit B-18 to registrant's Form A-2, File No. 2-5293).        X    
4.7.1Seventh Supplemental Indenture (incorporated by reference to Exhibit 4(b) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).        X    
4.7.2Eighth Supplemental Indenture (incorporated by reference to Exhibit 4(c) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).        X    
4.7.3Sixteenth Supplemental Indenture (incorporated by reference to Exhibit 4(d) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).        X    
4.7.4Twenty-ninth Supplemental Indenture (incorporated by reference to Exhibit 4(c) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 17, 1982, File No. 2-79832).        X    
4.7.5        X    
4.7.6        X    
4.7.7 X
4.7.8X
4.7.9X
4.7.10X
4.7.11X
4.7.12X
4.7.13X
4.7.14X
4.7.15X
4.7.16X
4.7.17X
4.7.18X
4.7.19X
4.8X
4.8.1X
4.8.2X
4.9X
4.10X
4.10.1X
4.10.2X
4.11Original Indenture (First Mortgage Bonds) between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Bank of New York Mellon Trust Company, N.A., as Successor Trustee, dated as of August 1, 1936 (incorporated by reference to an exhibit to registrant's Registration Statement No. 2-2374).X
4.11.1X
4.11.2X
4.11.3X
4.11.4X
4.11.5X
4.11.6X
4.12X
4.12.1X
4.12.2X
4.12.3X
4.12.4X
4.13Original Indenture (First Mortgage Bonds) between Duke Energy Indiana, LLC (formerly PSI Energy, Inc.) and Deutsche Bank National Trust Company, as Successor Trustee, dated as of September 1, 1939, (filed as an exhibit in File No. 70-258).X
4.13.1Tenth Supplemental Indenture, dated as of July 1, 1952, (filed as an exhibit in File No. 2-9687).X
4.13.2Twenty-third Supplemental Indenture, dated as of January 1, 1977, (filed as an exhibit in File No. 2-57828).X
4.13.3Twenty-fifth Supplemental Indenture, dated as of September 1, 1978, (filed as an exhibit in File No. 2-62543).X
4.13.4Twenty-sixth Supplemental Indenture, dated as of September 1, 1978, (filed as an exhibit in File No. 2-62543).X
4.13.5Thirtieth Supplemental Indenture, dated as of August 1, 1980, (filed as an exhibit in File No. 2-68562).X
4.13.6Thirty-fifth Supplemental Indenture, dated as of March 30, 1984, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1984, File No. 1-3543).X
4.13.7Forty-sixth Supplemental Indenture, dated as of June 1, 1990, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 1-3543).X
4.13.8Forty-seventh Supplemental Indenture, dated as of July 15, 1991, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 1-3543).X
4.13.9Forty-eighth Supplemental Indenture, dated as of July 15, 1992, (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-3543).X
4.13.10X
4.13.11X
4.13.12X
4.13.13X
4.13.14X
4.13.15X
4.13.16X
4.13.17X
4.13.18X
4.13.19X
4.13.20X
4.13.21X
4.13.22X
4.13.23X
4.13.24X
4.14Repayment Agreement between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Dayton Power and Light Company, dated as of December 23, 1992, (filed with registrant's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-1232).X
4.15X
4.16X
4.17X
4.18X
4.19X
4.20X
4.21X
4.22X
4.23X
4.24X
4.25X
4.26X
4.26.1X
4.26.2X
4.26.3X
4.26.4X
4.26.5X
4.26.6X
4.26.7

X
4.26.8X
4.27Medium-Term Note, Series A, dated as of October 6, 1993 (incorporated by reference to Exhibit 4.8 to registrant's Annual Report on Form 10-K for the year ended October 31, 1993, File No. 1-06196).X
4.28X
4.29X
4.30X
4.31X
4.32X
4.33X
4.34X
10.1X
10.2X
10.3X
10.4X
10.5X
10.6X
10.7X
10.8X
10.9X
10.10X
10.11**X
10.12XX
10.13**X
10.14
$6,000,000,000 Five-Year Credit Agreement between Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Carolina Power and Light Company d/b/a Duke Energy Progress, Inc. and Florida Power Corporation, d/b/a Duke Energy Florida, Inc., as Borrowers, the lenders listed therein, Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A. and The Royal Bank of Scotland plc, as Co-Syndication Agents and Bank of China, New York Branch, Barclays Bank PLC, Citibank, N.A., Credit Suisse AG, Cayman Islands Branch, Industrial and Commercial Bank of China Limited, New York Branch, JPMorgan Chase Bank, N.A. and UBS Securities LLC, as Co-Documentation Agents, dated as of November 18, 2011 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on November 25, 2011, File Nos. 1-32853, 1-4928, 1-1232 and 1-3543).
XXXX
10.14.1XXXXXX
10.14.2XXXXXX
10.14.3XXXXXXX
10.14.4XXXXXXX
10.14.5XXXXXXX
10.15**X
10.15.1**X
10.16**X
10.16.1**X
10.17**X
10.18**X
10.19**X
10.20**X
10.21**X
10.22**X
10.23**X
10.24**X
10.25X
10.26X
10.27XX
10.28XXX
10.29**X
10.30**X
10.30.1**X
10.31Purchase, Construction and Ownership Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency, amending letter, dated as of February 18, 1982, and amendment, dated as of February 24, 1982 (incorporated by reference to Exhibit 10(a) to registrant's File No. 33-25560).X
10.32Operating and Fuel Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency, amending letters, dated as of August 21, 1981, and December 15, 1981, and amendment, dated as of February 24, 1982 (incorporated by reference to Exhibit 10(b) to registrant's File No. 33-25560).X
10.33Power Coordination Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency and amending letter, dated as of January 29, 1982 (incorporated by reference to Exhibit 10(c) to registrant's File No. 33-25560).X
10.34Amendment, dated as of December 16, 1982, to Purchase, Construction and Ownership Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Eastern Municipal Power Agency (incorporated by reference to Exhibit 10(d) to registrant's File No. 33-25560).X
10.35**X
10.36
Precedent and Related Agreements between Duke Energy Florida, Inc. (formerly Florida Power Corporation d/b/a Progress Energy Florida, Inc. (“PEF”)), Southern Natural Gas Company, Florida Gas Transmission Company (“FGT”), and BG LNG Services, LLC (“BG”), including: a) Precedent Agreement between Southern Natural Gas Company and PEF, dated as of December 2, 2004; b) Gas Sale and Purchase Contract between BG and PEF, dated as of December 1, 2004; c) Interim Firm Transportation Service Agreement by and between FGT and PEF, dated as of December 2, 2004; d) Letter Agreement between FGT and PEF, dated as of December 2, 2004, and Firm Transportation Service Agreement between FGT and PEF to be entered into upon satisfaction of certain conditions precedent; e) Discount Agreement between FGT and PEF, dated as of December 2, 2004; f) Amendment to Gas Sale and Purchase Contract between BG and PEF, dated as of January 28, 2005; and g) Letter Agreement between FGT and PEF, dated as of January 31, 2005 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K/A filed on March 15, 2005, File Nos. 1-15929 and 1-3274). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.)
XX
10.37XX
10.38**X
10.38.1**X
10.39**X
10.40**X
10.41**X
10.41.1**X
10.41.2**X
10.42XX
10.43XX
10.44X
10.45X
10.46X
10.47X
10.48X
10.49**X
10.50**X
10.51**X
10.51.1**X
10.52**X
10.53**X
10.54**X
10.55**X
10.56X
10.57

X
10.58X
10.58.1X
10.59X
10.60X
10.60.1X
10.60.2X
10.61X
10.62X
10.63X
10.64

X
10.65X
10.66X
10.67X
*21X 
*23.1.1X 
*23.1.2 X 
*23.1.3  X 
*23.1.4   X 
*23.1.5   X 
*23.1.6   X
*23.1.7X
*24.1X
*24.2X
*31.1.1X
*31.1.2X
*31.1.3X
*31.1.4X
*31.1.5X
*31.1.6X
*31.1.7X
*31.1.8X
*31.2.1X
*31.2.2X
*31.2.3X
*31.2.4X
*31.2.5X
*31.2.6X
*31.2.7X
*31.2.8X
*32.1.1X
*32.1.2X
*32.1.3X
*32.1.4X
*32.1.5X
*32.1.6X
*32.1.7X
*32.1.8X
*32.2.1X
*32.2.2X
*32.2.3X
*32.2.4X
*32.2.5X
*32.2.6X
*32.2.7X
*32.2.8X
*101.INSXBRL Instance Document (this does not appear in the Interactive Data File because it's XBRL tags are embedded within the Inline XBRL document).XXXXXXXX
*101.SCHXBRL Taxonomy Extension Schema DocumentXXXXXXXX
*101.CALXBRL Taxonomy Calculation Linkbase DocumentXXXXXXXX
*101.LABXBRL Taxonomy Label Linkbase DocumentXXXXXXXX
*101.PREXBRL Taxonomy Presentation Linkbase DocumentXXXXXXXX
*101.DEFXBRL Taxonomy Definition Linkbase DocumentXXXXXXXX
*104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).XXXXXXXX
The total amount of securities of each respective 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 such registrant and its subsidiaries on a consolidated basis. Each registrant agrees, upon request of the SEC, to furnish copies of any or all of such instruments to it.
E-1




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: February 25, 2021
DUKE ENERGY CORPORATION
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chair, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
 Lynn J. Good
 Chair, President and Chief Executive Officer (Principal Executive Officer and Director)
  
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
  
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
   
(iv)Directors: 
 Michael G. Browning*John T. Herron*
Annette K. Clayton*William E. Kennard*
 Theodore F. Craver, Jr.*E. Marie McKee*
 Robert M. Davis*Marya M. Rose*
 Daniel R. DiMicco*Thomas E. Skains*
Nicholas C. Fanandakis*William E. Webster, Jr.*
 Lynn J. Good*
 
Steven K. Young, by signing his name hereto, does hereby sign this document on behalf of the registrant and on behalf of each of the above-named persons previously indicated by asterisk (*) pursuant to a power of attorney duly executed by the registrant and such persons, filed with the Securities and Exchange Commission as an exhibit hereto.
   
 By:/s/ STEVEN K. YOUNG
 Attorney-In-Fact
    
 Date: February 25, 2021
E-2




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2021
DUKE ENERGY CAROLINAS, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
   
(i)/s/ LYNN J. GOOD
 Lynn J. Good
 Chief Executive Officer (Principal Executive Officer)
   
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
   
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
   
(iv)Directors: 
   
 /s/ LYNN J. GOOD 
 Lynn J. Good 
   
 /s/ DHIAA M. JAMIL 
 Dhiaa M. Jamil 
   
 /s/ JULIA S. JANSON 
 Julia S. Janson 
Date: February 25, 2021
E-3




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2021
PROGRESS ENERGY, INC.
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
   
(i)/s/ LYNN J. GOOD 
 Lynn J. Good 
 Chief Executive Officer (Principal Executive Officer)
   
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
   
(iv)Directors: 
   
 /s/ KODWO GHARTEY-TAGOE 
 Kodwo Ghartey-Tagoe 
   
 /s/ LYNN J. GOOD 
 Lynn J. Good 
Date: February 25, 2021
E-4




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2021
DUKE ENERGY PROGRESS, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(i)/s/ LYNN J. GOOD
 Lynn J. Good
 Chief Executive Officer (Principal Executive Officer)
  
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
  
(iv)Directors:
  
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
  
 /s/ KODWO GHARTEY-TAGOE
 Kodwo Ghartey-Tagoe
  
 /s/ LYNN J. GOOD
 Lynn J. Good
  
 /s/ DHIAA M. JAMIL
 Dhiaa M. Jamil
  
 /s/ JULIA S. JANSON
 Julia S. Janson
Date: February 25, 2021
E-5




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2021
DUKE ENERGY FLORIDA, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
   
(i)/s/ LYNN J. GOOD
 Lynn J. Good
 Chief Executive Officer (Principal Executive Officer)
   
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
   
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
   
(iv)Directors: 
/s/ DOUGLAS F ESAMANN
 Douglas F Esamann 
 /s/ KODWO GHARTEY-TAGOE 
 Kodwo Ghartey-Tagoe 
   
 /s/ LYNN J. GOOD 
Lynn J. Good
   
 /s/ DHIAA M. JAMIL 
Dhiaa M. Jamil
   
 /s/ JULIA S. JANSON 
 Julia S. Janson 
Date: February 25, 2021
E-6




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2021
DUKE ENERGY OHIO, INC.
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
   
(i)/s/ LYNN J. GOOD
 Lynn J. Good
 Chief Executive Officer (Principal Executive Officer)
 
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
   
(iv)Directors: 
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
   
 /s/ LYNN J. GOOD 
 Lynn J. Good 
   
 /s/ DHIAA M. JAMIL 
 Dhiaa M. Jamil 
Date: February 25, 2021
E-7




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2021
DUKE ENERGY INDIANA, LLC
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
   
(i)/s/ LYNN J. GOOD
 Lynn J. Good
 Chief Executive Officer (Principal Executive Officer)
 
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
   
(iv)Directors: 
   
 /s/ DOUGLAS F ESAMANN
Douglas F Esamann
   
 /s/ KELLEY A. KARN
Kelley A. Karn
/s/ STAN PINEGAR
Stan Pinegar
Date: February 25, 2021
E-8




SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2021
PIEDMONT NATURAL GAS COMPANY, INC.
(Registrant)
By:/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
   
(i)/s/ LYNN J. GOOD
 Lynn J. Good
 Chief Executive Officer (Principal Executive Officer)
 
(ii)/s/ STEVEN K. YOUNG
 Steven K. Young
 Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
(iii)/s/ DWIGHT L. JACOBS
 Dwight L. Jacobs
 Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)
   
(iv)Directors: 
/s/ DOUGLAS F ESAMANN
Douglas F Esamann
   
 /s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
Date: February 25, 2021

E-9