2 0 2 1 A N N U A L R E P O R T A N D F O R M 1 0 - K
POWERING
the Clean Energy Transformation
LYNN J. GOOD
Chair, President and
Chief Executive Officer
Dear Shareholder:
In 2021, Duke Energy set a new pace for progress.
More than 27,000 teammates rallied behind our
mission to achieve net-zero emissions by 2050.
Together, we delivered for our customers and
communities, executed our strategy, removed
obstacles to growth, and achieved industry-
leading results, while never losing sight of safety
and operational excellence.
The talented people of Duke Energy are the reason
for our success. With momentum behind us and
clarity ahead, we are poised to make even further
progress in the coming years.
1 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Clearing the Path Forward
Last year, we laid a solid foundation of
growth, reaffirming our ability to meet our
commitments and allowing us to accelerate
our clean energy vision.
We received approval of a comprehensive
settlement agreement with the North
Carolina Attorney General, North Carolina
Public Staff and Sierra Club, which resolved
all remaining major coal ash management
issues in North Carolina and clarified
recovery treatment of coal ash costs for
the next decade.
In October, House Bill 951: Energy
Solutions for North Carolina was enacted
with bipartisan support, making it perhaps
the most comprehensive energy legislation
in the state’s history. This law positions
North Carolina at the forefront of states with
carbon reduction goals while continuing
to prioritize affordability and reliability for
customers. It includes regulatory reforms,
such as performance-based regulation
and multiyear rate planning – all designed
to better align utility investments with
customer needs and improve rate certainty.
We raised equity at a premium
valuation through a strategic transaction
that others in the industry are now
replicating by selling a 19.9% minority
interest in Duke Energy Indiana to GIC –
a leading global investment firm run by the
government of Singapore – for $2.05 billion.
In September, we completed the first of
the two-phase sale transaction; the second
phase will be completed by January 2023.
And after months of constructive
dialogue, we entered into a cooperation
agreement with Elliott Management. The
agreement provided for the appointment
of two new independent directors to
our Board of Directors, bringing great
expertise and diverse perspectives,
which is consistent with our focus
on enhancing shareholder value.
2 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Delivering Results
Thanks to these milestone accomplishments and the actions
outlined on the following pages, we produced strong financial
results and delivered value for those who placed their trust in us.
Our adjusted earnings per share (EPS) were $5.24 – above the
midpoint of our revised guidance range. Last year’s performance
was largely driven by growth in our electric and gas utilities, which
saw favorable impacts from base rate increases in the Carolinas
and Indiana, and our Piedmont Natural Gas business. We also
benefited from a strengthening economy, including a 2% increase
in electric volumes and robust residential customer growth.
We focused on cost management, finding opportunities to
increase productivity and flexibility, and prioritized spending based
on risk and strategic value to our customers and investors. Since
2016, we have absorbed inflation and removed approximately
$400 million of net regulated Electric and Gas O&M. These
savings have created headroom for approximately $3 billion
worth of capital projects with no incremental bill impacts.
2021 was also the 95th consecutive year we paid quarterly
cash dividends on our common stock.
And our stock price increased 14.6% for the year, outpacing the
Philadelphia Utility Index (UTY) and the average for our regulated
peers. On a Total Shareholder Return basis, we delivered 19.1%,
compared to 18.2% for the UTY and 11.3% for our regulated peers.
Our results in 2021 show that the fundamentals of our business
are solid. We expect to see growth this year due to a combination
of customer growth, rate cases and riders across our jurisdictions,
including our multiyear rate plan in Florida, and the full-year impact
of the Piedmont North Carolina and Kentucky natural gas rate cases.
We will also continue our disciplined approach to managing
costs, enhancing productivity while maintaining our focus
on reliability and affordability for our customers.
3 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Progress on the Path to Net-Zero
As a result of our drive to achieve net-zero emissions, we are leading the
industry’s largest clean energy transformation. Our path to 2050 is supported
by three pillars – collaborating with stakeholders, transforming and readying the
system, and creating value. In 2021, we made significant progress in each area.
Collaborating with stakeholders
The clean energy transition requires an
active conversation among our customers,
policymakers, investors, and communities.
This transition will play out over decades
and will need ongoing engagement with
a broad range of stakeholders to get it
right by balancing our climate goals with
reliability and affordability.
We believe this process will lead to the
best outcomes for our business and our
customers, as evidenced by our progress in
2021. Equitable solutions also remain a top
priority as we strengthen our commitment
to environmental justice and a just transition
to cleaner energy.
In Indiana, we submitted our 2021
Integrated Resource Plan (IRP) to the
Indiana Utility Regulatory Commission
(IURC) in December. Benefiting from a
yearlong stakeholder engagement effort, the
IRP accelerates coal retirements and adds
renewables and natural gas generation.
In early 2022, we issued a request for
proposals for new generation in the state
and remain engaged with stakeholders and
policymakers on the best path forward.
4 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Indiana
Ohio
Kentucky
Tennessee
We also continue our resource planning in the Carolinas.
As part of House Bill 951, we look forward to delivering a
proposed carbon plan to the North Carolina Utilities Commission
(NCUC) by May 16, including robust stakeholder input. A final
plan will be adopted by the NCUC by the end of 2022.
We achieved positive settlements in our natural gas local
distribution companies in Kentucky, North Carolina and
Tennessee, along with approval of new electric rates in North
Carolina following similarly effective agreements. Our ability to
reach agreements on these cases underscores the constructive
environment in our jurisdictions and allows us to make investments
that bring value to our customers and communities.
In Ohio, we asked the Public Utilities Commission to review the
electric distribution rates and approve a rate adjustment to recover
our ongoing investments to improve southwest Ohio’s electricity
infrastructure and enhance value to customers. We expect a
decision this summer.
North
Carolina
South
Carolina
In North Carolina, we also reached a net metering settlement with
solar developers and advocates, similar to the Solar Choice program
in place in South Carolina. Our approach shares the benefits of
rooftop solar with adopters and non-solar customers alike. We
will continue to work through the regulatory process to support
a full complement of rooftop solar programs in the Carolinas.
Florida
Thanks to North Carolina legislation passed in 2019, Duke Energy
successfully issued storm securitization bonds in 2021, saving our
customers $300 million in restoration costs from a series of historic
storms in 2018 and 2019. South Carolina policymakers are
considering similar legislation.
At the federal level, the Federal Energy Regulatory Commission
(FERC) accepted the application filed by our company and fellow
members of the Southeast Energy Exchange Market (SEEM).
The approvals allow SEEM to proceed with a trading platform to
facilitate a bilateral trading market, which will provide customer
benefits through a shared market structure later this year while
supporting increased renewables integration in the Southeast.
And we’re engaging on a wide range of issues, including
infrastructure, tax, and climate policy. We commend
Congress and the Administration for coming together in a
bipartisan way last year to pass infrastructure legislation.
5 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
The infrastructure law provides significant opportunities for our
company and our peers to partner with the Department of Energy (DOE)
and other key agencies to implement our clean energy transformation,
including $62 billion for the DOE to develop and deploy new clean
energy technologies needed to close the gap to net-zero, such as
advanced nuclear, hydrogen, energy storage and carbon capture.
This law is an excellent example of the public-private partnerships
we need to meet our clean energy goals. We look forward
to putting these federal dollars to work.
Transforming and readying the system
Transforming and readying the system speaks to the hard work our
employees do every day – retiring assets as part of the industry’s largest
planned coal retirement, building infrastructure for the country’s largest
grid, maintaining the nation’s largest regulated nuclear fleet and running
a top 10 renewables company. Our system is complex, and we are
preparing it to ensure it’s ready to meet our ambitious climate goals.
As of 2021, we reduced our carbon emissions by 44% since 2005,
the equivalent of taking over 13 million vehicles off the road.
We retired five additional coal units in North Carolina and Indiana.
Since 2010, we’ve retired 56 units – totaling 7,500 megawatts.
We surpassed 10,000 megawatts of owned, operated or purchased
renewables and remain on track to reach 16,000 megawatts by 2025
and 24,000 megawatts by 2030. By 2050, we project renewables
will be the largest source of energy in our regulated utilities.
In our regulated utilities, we brought multiple solar projects online
in North Carolina and Florida, keeping the two states in the top
five nationally for installed solar capacity. We connected more than
300 megawatts of solar in North Carolina. In Florida, we remain on
track to meet our $1 billion commitment to bring 700 megawatts
of solar online by the end of 2022 and are executing our $1 billion
Clean Energy Connection community solar program, which will
add another 750 megawatts of solar by the end of 2024.
To complement these resources, we are increasing our investments in
energy storage. Our 18-megawatt Lake Placid battery storage facility began
serving Florida customers in December. We also added more than 80
megawatts of storage capacity to our Bad Creek pumped-storage hydro
station in South Carolina and will add another 170 megawatts by 2023.
To ensure cost flexibility while moving to cleaner resources, we enabled
three of our Marshall Steam Station units and one Belews Creek unit in
North Carolina to burn natural gas. And we successfully placed the
Robeson liquefied natural gas facility in service for Piedmont Carolinas
customers last year.
6 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
To get us even closer to our net-zero methane emissions goal by
2030, we announced a partnership with Accenture and Microsoft in
our natural gas distribution business on a first-of-its-kind methane
emissions monitoring platform. The new technology uses satellites to
identify and track emissions, allowing us to more quickly repair leaks.
But we can’t achieve our goals without the workhorse of our system –
nuclear power. It provides more than 80% of the carbon-free power on our
system. Last year, we filed the first subsequent license renewal application
for our largest nuclear asset – Oconee Nuclear Station – and intend to file
for all 11 units to keep these valuable assets operating for up to 80 years.
We are expanding our infrastructure to meet rising demand from electric
vehicles (EVs). With commission approvals in the Carolinas and Florida,
we’re investing $100 million over the next three years to implement pilot
programs that support the decarbonization of the transportation sector. We
also joined the Electric Highway Coalition, along with many peer utilities,
demonstrating our support of charging infrastructure expansion across
the nation’s highways. And we launched eTransEnergy – a new subsidiary
that helps companies and cities transition commercial fleets to EVs.
We are always improving the grid to meet today’s customer needs. We have
over $30 billion of transmission and distribution investments as part of
our five-year capital plan. Work continues to further our grid improvement
plan in North Carolina and South Carolina. In Florida, we will increase
investment under the Storm Protection Plan clause this year, and in Indiana
we’ll be working with the IURC and stakeholders to gain approval of our
six-year transmission and distribution infrastructure investment plan.
Last year, we completed the multiyear installation of more than 8 million
smart meters throughout our jurisdictions. And we’re expanding our self-
optimizing grid capabilities. In 2021, smart, self-healing technologies
helped to avoid more than 700,000 extended customer outages,
saving customers nearly 1.2 million hours of total outage time.
But we cannot overstate the need for emerging technologies. Although we
have line of sight to 2030, we still need new, zero-carbon technologies
to meet our net-zero goals. We have several partnerships in flight to
accelerate these technologies and are evaluating opportunities to build
on this work with the Infrastructure Investment and Jobs Act funding.
In the nuclear space, we see exciting progress with several advanced
reactor designs in development. We are actively involved with the
TerraPower and GE/Hitachi Natrium reactor, which has been selected
for the DOE’s Advanced Reactor Demonstration Program and
includes a molten salt energy storage system. We also participate
in several developer advisory boards, including the Holtec executive
advisory committee and NuScale industry advisory board.
7 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
We remain on track to deploy a flow battery, which could potentially
store energy for longer periods than current commercial batteries,
at our Mount Holly innovation center in early 2023. We are also
teaming up with Malta Inc. to study the potential benefits of
converting retired coal units into long-duration storage systems.
We see promise in hydrogen. We are working with Siemens Energy
and Clemson University to perform studies and evaluate hydrogen
integration into our generation facility that serves the university.
In collaboration with the Energy Futures Initiative and regional
stakeholders, we’re looking to advance a Southeast green hydrogen
hub centered in the Carolinas.
We recognize robust and sustained government support is vital to
commercialize these advanced technologies and are advocating
for policies to continue to move them forward.
Creating sustainable value for customers and shareholders
We understand that everything we do must deliver value for our
customers and shareholders.
For our customers, this means providing affordable, reliable energy
but also innovating and transforming the way we do business
to better serve them.
We began implementing our new billing and technology system
– Customer Connect – in 2021 for customers in Duke Energy
Carolinas, Duke Energy Progress and Duke Energy Florida. This
platform provides an improved digital experience, new billing and
payment options, and more insights to help customers better
understand their energy use. These investments have also enabled
us to offer new rate designs to our customers. We look forward to
delivering this solution to customers in the Midwest this year.
To help vulnerable customers, we offered flexibility, including
extended payment arrangements and increased efforts to make
them aware of payment assistance.
We established a dedicated agency team of customer advocates
to partner with nonprofit organizations. Through this model, we
helped customers receive more than $100 million in financial
support to help pay their energy bills. We also assisted low-
income customers with utility bills, providing $3.2 million
through the Share the Light Fund and other donations.
8 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
We improved our J.D. Power results year over year and exceeded our
internal customer satisfaction benchmark due to a strong focus on
improving the customer experience and delivering on customer needs.
For our shareholders, the good news is that our ambitious clean
energy transformation is driving growth for the business.
In February of this year, we announced that our five-year enterprise
capital plan through 2026 will increase to $63 billion – 80% of
which represents investments in our grid and fleet transition.
We also set our 2022 adjusted earnings guidance range of $5.30
to $5.60 – with a midpoint of $5.45 – and extended our long-
term EPS growth rate of 5% to 7% through 2026, off the midpoint
of our original 2021 guidance range. We see the potential to earn
in the top half of the range as our five-year plan progresses.
But value is more than just financial results. We are committed
to governance excellence and delivering results the right way. We
refreshed our Board of Directors with the recent appointments of
five new members, maintaining a focus on diversity of background,
experience and perspectives, as well as race and gender.
Last year, we conducted a review of our political expenditures and
our lobbying policies and processes. We added additional oversight
and released the industry’s first Trade Association Climate Report,
which disclosed our relationships with trade associations and
their positions on climate change. We also updated our Political
Expenditures Policy in the fall to incorporate additional disclosures
in connection with 501(c)(4) and 501(c)(6) organizations.
In November, we announced a new Sustainable Financing
Framework to help fund investments in eligible green and social
projects, while providing greater transparency around our investments
and our priorities.
These efforts helped us earn Labrador Transparency Awards.
We were named one of the top three proxy statements nationwide,
top utility for overall transparency and seventh among companies
for overall transparency.
9 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
A Strong Foundation of Safety and Operational Excellence
Our strategic achievements were possible
thanks to our teammates’ focus on safety
and operational excellence.
We continue to be an industry leader in
safety performance based on metrics from
EEI. Our environmental performance was
the strongest it’s ever been.
Our generation fleet continues its exemplary
reliability and safety performance. In 2021,
our nuclear fleet matched its record capacity
factor of 95.72%, marking the 23rd year
above 90%. Our Regulated & Renewable
Energy organization also maintained
strong reliability.
Our service territories saw minimal impacts
from the Atlantic hurricane season this year,
but our teammates quickly responded
to customer outages.
In February, Winter Storm Uri impacted
our Sustainable Solutions operations
in Texas, which include over 2,000
megawatts of renewables. Some assets
were unable to operate because of the
weather conditions while others operated
at a reduced capacity during the event.
Despite the conditions, our dedicated
teammates were able to safely get our
facilities up and running in a timely manner.
With storms projected to increase in
frequency and severity, we are taking steps
to protect the grid and our assets. We will
continue to engineer a climate-resistant
grid, hardened against extreme weather
and optimized for a lower-carbon future.
10 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Improving the Lives of Our Customers, Communities and Employees
Our success isn’t measured only by strategic
outcomes, but by corporate citizenship.
Duke Energy and its Foundation committed
more than $44 million in 2021 to help
address the greatest needs in our
communities, including $6 million for
social justice and racial equity efforts and
more than $3 million for pandemic relief.
Our teammates and alumni volunteered more
than 70,000 hours with nonprofits in our
local communities. And our employee-based
Power of Giving campaign raised over $5.2
million. Combined with matching funds,
this provided nearly $10 million to support
over 4,700 area organizations in 2021.
We take pride in economic development,
helping to recruit new companies to invest
and create jobs in collaboration with state
and local economic development partners
In 2021, we helped attract $6.2 billion
in capital investment and created more
than 12,500 jobs.
Our clean energy transformation will require
a highly skilled, agile and diverse workforce,
and we are focused on building it, whether
that’s creating pipelines of local talent,
expanding recruiting outreach or continuing
development and agility within
our own workforce.
Internally, we launched a talent
marketplace to help employees pursue
short-term opportunities to develop new
skills and expand their network, while
also helping fill resource needs. Already,
over 400 positions have been filled.
In 2021, we improved leadership and
workforce diversity, expanded training,
and built awareness around key diversity
and inclusion priorities. Over 6,000
employees and leaders engaged in “Let’s
Talk About It” conversations. We are
transparent about our diversity journey
and are one of just a few in our industry
that disclosed Form EEO-1 demographic
data last year. Since 2020, our Foundation
has committed more than $5 million to
promote diverse workforce initiatives.
These efforts were recognized externally.
We were named one of Fortune Magazine’s
“World’s Most Admired Companies” for the
fifth year in a row and to the Dow Jones
Sustainability Index for North America for
the 16th consecutive year. We received a
perfect score on Human Rights Campaign’s
2022 Corporate Equality Index and were
named a Best Place to Work for LGBTQ
Equality. Forbes also named us one of
the “2021 Best Employers for Diversity”
and “2021 Best Employers for Women.”
11 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Looking Ahead to 2022
2021 was an extraordinary year for
Duke Energy – one of action. And the
path forward is as clear as it’s ever been.
Already this year, we expanded our
net-zero emissions goal to include Scope
2 and certain Scope 3 emissions. We are
taking important steps to measure and reduce
greenhouse gas emissions across the value
chain and will collaborate with key stakeholders
to further refine our net-zero efforts.
We also announced we’re targeting energy
from coal to represent less than 5% of our
total generation by 2030 and a full exit by
2035, subject to regulatory approvals. We
will share more details at our ESG Day on
October 4 and in our Climate Report.
The clean energy future is bright. We will
build on this momentum, taking steps to
ensure Duke Energy is well-positioned
to lead the clean energy transformation,
all while delivering sustainable value
to you, our shareholders, and those
we are fortunate to serve.
Lynn J. Good
Chair, President and Chief Executive Officer
12 | 2021 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Our Financial Highlightsa
(In millions, except per share amounts)
Operating Results
Total operating revenues
Income from continuing operations
Net income
Net income available to Duke Energy Corporation
common stockholders
Cash Flow Data
2021
2020
2019
$25,097
$23,868
$25,079
$3,572
$3,579
$3,802
$1,075
$1,082
$1,270
$3,578
$3,571
$3,707
Net cash provided by operating activities
$8,290
$8,856
$8,209
Common Stock Data
Shares of common stock outstanding
Year-end
Weighted average – basic
Weighted average – diluted
Reported basic and diluted earnings per share (GAAP)
Adjusted basic and diluted earnings per share (non-GAAP)
Dividends declared per share
Dividends declared on Series A preferred stock per depositary share
769
769
769
$4.94
$5.24
$3.90
$1.44
769
737
738
$1.72
$5.12
$3.82
$1.44
733
729
729
$5.06
$5.06
$3.75
$1.03
Dividends declared on Series B preferred stock per share
$48.750
$49.292
__
Balance Sheet Data
Total assets
$169,587
$162,388
$158,838
Long-term debt including finance leases, less current maturities
$60,448
$55,625
$54,985
Total Duke Energy Corporation stockholders’ equity
$49,296
$47,964
$46,822
Earnings per share
(in dollars)
Reported Diluted
Adjusted Diluted
Dividends declared
per share (in dollars)
Capital and investment
expenditures (dollars in billions)
4.94
5.24
5.12
5.06
5.06
3.90
3.82
3.75
9.8
10.3
11.4
1.72
2021
2020
2019
2021
2020
2019
2021
2020
2019
aSignificant transactions reflected in the results above include: (i) favorable rate case outcomes, workplace and workforce realignment costs and regulatory charges related to the South Carolina Supreme Court
decision on coal ash in 2021, (ii) the cancellation of the Atlantic Coast Pipeline in 2020, (iii) regulatory charges related to the Duke Energy Carolinas and Duke Energy Progress North Carolina coal ash settlement
in 2020, (iv) the reversal of 2018 severance costs due to the partial settlement of the Duke Energy Carolinas and Duke Energy Progress 2019 North Carolina rate cases in 2020, (v) growth in Commercial
Renewables from tax equity projects placed in service in 2020 and 2019 and (vi) regulatory and legislative charges related to Duke Energy Progress and Duke Energy Carolinas North Carolina rate case orders in
2020. For further information, refer to Notes 3, 10 and 12 to the Consolidated Financial Statements, “Regulatory Matters,” “Property, Plant and Equipment” and “Investments in Unconsolidated Affiliates.”
13 | 2021 DUKE ENERGY ANNUAL REPORT
42
33
17
8
39
37
22
2
Duke Energy at a Glance
Electric Utilities and Infrastructure
Generation Diversity (percent owned capacity)1
Natural Gas Customer Diversity
Gas Utilities and Infrastructure conducts natural gas
distribution operations primarily through the regulated public
utilities of Piedmont Natural Gas and Duke Energy Ohio.
Natural Gas Operations (throughput)2
51
18
15
9
7
52
46
3
¡ Regulated natural gas transmission and distribution services
to approximately 1.6 million customers in the Carolinas,
Tennessee, southwestern Ohio and Northern Kentucky
¡ Maintains more than 34,800 miles of natural gas transmission
and distribution pipelines and 27,700 miles of natural gas
service pipelines
Commercial Renewables
Generation Diversity (percent owned capacity)1,3
Commercial Renewables primarily acquires, develops, builds
and operates wind and solar renewable generation throughout
the continental U.S. The portfolio includes nonregulated renewable
energy and energy storage businesses. Commercial Renewables
also enters into strategic partnerships including minority ownership
and tax equity structures in wind and solar generation.
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 3,554 MW across 22 states from 23 wind facilities,
178 solar projects, 71 fuel cell locations and two battery storage
facilities. The power produced from renewable generation is
primarily sold through long-term contracts to utilities, electric
cooperatives, municipalities and corporate customers.
Generated (net output gigawatt-hours (GWh))2
Customer Diversity (in billed GWh sales)2
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,
Duke Energy Ohio and Duke Energy Kentucky.
Electric Operations
¡ Owns approximately 50,259 megawatts (MW) of
generating capacity
¡ Service area covers about 91,000 square miles with an
estimated population of 26 million
¡ Service to approximately 8.2 million residential, commercial
and industrial customers
¡ 283,200 miles of distribution lines and a
31,300-mile transmission system
¡ 22% of coal generation capacity has dual-fuel capability
1 As of December 31, 2021. | 2 For the year ended December 31, 2021.
3 Contains projects included in tax equity structures where investors have differing
interests in the projects’ economic attributes (100% of the tax equity projects’
capacity is included).
14 | 2021 DUKE ENERGY ANNUAL REPORT
42% Natural Gas/Fuel Oil 32% Coal 18% Nuclear 8% Hydro and Renewable 39% Natural Gas/Fuel Oil 37% Nuclear 22% Coal 2% Hydro and Renewable 35% Residential 30% General Services 19% Industrial 17% Wholesale/Other 53% Power Gen 17% General Services 14% Residential 9% Industrial 7% Other55% Wind 43% Solar 2% Fuel Cell/Storage Annual Meeting of Shareholders
Duke Energy’s 2022 Annual Meeting of
Shareholders will be:
Date: May 5, 2022
Time:
1 p.m. Eastern time
Visit:
duke-energy.onlineshareholdermeeting.com
Audio broadcast: 800.289.0720
confirmation code: 6176182
To participate in the online Annual Meeting, shareholders
will need the 16-digit control number included in their
Notice Regarding the Availability of Proxy Materials, on
their proxy card, and on the instructions that accompanied
their proxy materials.
Shareholder Services
Shareholders may call toll-free at 800.488.3853
or 704.382.3853 with questions about their stock
accounts, legal transfer requirements, address
changes, or replacement dividend checks. Additionally,
registered shareholders can view their account
online through DUK-Online, available at duke-
energy.com/investors. Send written requests to:
Investor Relations
Duke Energy
P.O. Box 1005
Charlotte, NC 28201
For electronic correspondence, visit
duke-energy.com/investors.
Stock Exchange Listing
Duke Energy’s common stock is listed on the
New York Stock Exchange. The Corporation’s
common stock trading symbol is DUK.
Website Addresses
Corporate homepage: duke-energy.com
Investor Relations: duke-energy.com/investors
InvestorDirect Choice Plan
The InvestorDirect Choice Plan provides a simple and
convenient way to purchase common stock directly
through the Corporation, without incurring brokerage
fees. Purchases may be made weekly. Bank drafts for
monthly purchases, as well as a safekeeping option for
depositing certificates into the plan, are available.
The plan also provides for full reinvestment, direct
deposit, or cash payment of a portion of the dividends.
Additionally, participants may register for DUK-
Online, our online account management service.
10 | 2021 DUKE ENERGY ANNUAL REPORT
Financial Publications
Duke Energy’s Annual Report and related financial
publications can be found on our website at
duke-energy.com/investors. Printed copies are
also available free of charge upon request.
Duplicate Mailings
If your shares are registered in different accounts,
you may receive duplicate mailings of annual reports,
proxy statements, and other shareholder information.
Call Investor Relations for instructions on eliminating
duplications or combining your accounts.
Transfer Agent and Registrar
Duke Energy maintains shareholder records and acts
as transfer agent and registrar for the Corporation’s
common stock.
Dividend Payment
Duke Energy has paid quarterly cash dividends on its
common stock for 95 consecutive years. For the remainder
of 2022, dividends on common stock are expected to be
paid, subject to declaration by the Board of Directors,
on June 16, September 16, and December 16.
Bond Trustee
If you have questions regarding your bond account,
call 800.254.2826, or write to:
The Bank of New York Mellon
Global Trust Services
101 Barclay Street – 21st Floor
New York, NY 10286
Send Us Feedback
We welcome your opinion on this annual report.
Please visit duke-energy.com/investors, where you
can view and provide feedback on both the print
and online versions of this report, or contact Investor
Relations directly. Duke Energy is an equal opportunity
employer. This report is published solely to inform
shareholders and is not to be considered an offer, or
the solicitation of an offer, to buy or sell securities.
Products with a Mixed Sources label support the development of responsible
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with energy generated from renewable sources.
DUKE ENERGY
CORPORATION
Cautionary Statement
Regarding Forward-Looking
Information
Non-GAAP Financial
Measures
2021
Form 10-K
(Mark One)
Commission
file number
1-32853
1-4928
1-15929
1-3382
1-3274
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Registrant, State of Incorporation or Organization, Address of
Principal Executive Offices and Telephone Number
DUKE ENERGY CORPORATION
(a Delaware corporation) 526 South Church Street
Charlotte, North Carolina 28202-1803 704-382-3853
IRS Employer
Identification No.
20-2777218
DUKE ENERGY CAROLINAS, LLC
(a North Carolina limited liability company)
526 South Church Street
Charlotte, North Carolina 28202-1803
704-382-3853
56-0205520
PROGRESS ENERGY, INC.
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-2155481
DUKE ENERGY PROGRESS, LLC
(a North Carolina limited liability company)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-0165465
DUKE ENERGY FLORIDA, LLC
(a Florida limited liability company)
299 First Avenue North
St. Petersburg, Florida 33701
704-382-3853
59-0247770
1-1232
1-3543
1-6196
DUKE ENERGY OHIO, INC.
(an Ohio corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
704-382-3853
31-0240030
DUKE ENERGY INDIANA, LLC
(an Indiana limited liability company)
1000 East Main Street
Plainfield, Indiana 46168
704-382-3853
35-0594457
PIEDMONT NATURAL GAS COMPANY, INC.
(a North Carolina corporation)
4720 Piedmont Row Drive
Charlotte, North Carolina 28210
704-364-3120
56-0556998
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Registrant
Title of each class
Duke Energy Corporation (Duke Energy)
Duke Energy
Duke Energy
Common Stock, $0.001 par value
5.625% Junior Subordinated Debentures due September 15, 2078
Depositary Shares, each representing a 1/1,000th
interest in a share of 5.75% Series A Cumulative
Redeemable Perpetual Preferred Stock, par value
$0.001 per share
Trading symbols
DUK
DUKB
DUK PR A
Name of each exchange on which registered
New York Stock Exchange LLC
New York Stock Exchange LLC
New York Stock Exchange LLC
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Duke Energy
Duke Energy Carolinas, LLC (Duke Energy Carolinas)
Progress Energy, Inc. (Progress Energy)
Duke Energy Progress, LLC (Duke Energy Progress)
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.)
Duke Energy Florida, LLC (Duke Energy Florida)
Duke Energy Ohio, Inc. (Duke Energy Ohio)
Duke Energy Indiana, LLC (Duke Energy Indiana)
Piedmont Natural Gas Company, Inc. (Piedmont)
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
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
Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2021.
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, 2022.
$75,871,309,901
769,358,344
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.
Auditor Firm ID: 34
Auditor Name: Deloitte & Touche LLP
Auditor Location: Charlotte, NC
CAUTIONARY NOTE 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. For details on the uncertainties that may cause our
actual future results to be materially different than those expressed in our forward-looking statements,
see our Form 10-K for the year ended December 31, 2021, and Quarterly Reports on Form 10-Q 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. Duke Energy expressly disclaims an obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events, or otherwise.
NON-GAAP MEASURES
Adjusted Earnings Per Share (EPS)
Duke Energy’s 2021 Annual Report references adjusted EPS for the year-to-date periods ended
December 31, 2021, 2020 and 2019 of $5.24, $5.12 and $5.06, respectively.
The non-GAAP financial measure, adjusted EPS, represents basic EPS available to Duke
Energy Corporation common stockholders (GAAP reported EPS), adjusted for the per share impact
of special items. As discussed below, special items represent certain charges and credits, which
management believes are not indicative of Duke Energy’s ongoing performance. Management believes
The following is a reconciliation of reported EPS to adjusted EPS for 2021, 2020 and 2019:
(per share)
Reported EPS
Adjustments to Reported:
Workplace and Workforce realignment
Gas Pipeline Investments
Regulatory Settlements
Severance
Impairment Charges
Discontinued Operations
Adjusted EPS
Adjusted EPS Guidance
Duke Energy’s 2021 Annual Report references Duke Energy’s forecasted 2022 adjusted EPS
guidance range of $5.30 to $5.60 per share. The materials also reference a preliminary estimate of the
2022 adjusted EPS midpoint of approximately $5.45. In addition, the materials reference the long-term
range of annual growth of 5% - 7% through 2026 off the midpoint of original 2021 adjusted EPS
guidance range of $5.15. The forecasted adjusted EPS is a non-GAAP financial measure as it represents
basic EPS available to Duke Energy Corporation common stockholders (GAAP reported EPS), adjusted
for the per share impact of special items (as discussed under Adjusted EPS). Due to the forward-looking
nature of this non-GAAP financial measure for future periods, information to reconcile it to the most
directly comparable GAAP financial measure is not available at this time, as management is unable to
project all special items for future periods, such as legal settlements, the impact of regulatory orders or
asset impairments.
Net Regulated Electric and Gas O&M
Duke Energy’s 2021 Annual Report includes a discussion of the reduction in Duke Energy’s net
regulated Electric and Gas operating, maintenance and other expenses (O&M) from the year-to-date
period ended December 31, 2016 through the year-to-date period ended December 31, 2021.
Net regulated Electric and Gas O&M is a non-GAAP financial measure, as it represents
the presentation of 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 this
non-GAAP financial measure for planning and forecasting and for reporting financial results to the Duke
Energy 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 measure for adjusted
EPS is reported basic EPS available to Duke Energy Corporation common stockholders.
Special items included in the periods presented include the following items, which management
believes do not reflect ongoing costs:
• Workplace and Workforce Realignment represents costs attributable to business
transformation, including long-term real estate strategy changes and workforce
realignment.
• Regulatory Settlements represents an impairment charge related to the South Carolina
Supreme Court decision on coal ash, insurance proceeds and Duke Energy Carolinas and
Duke Energy Progress coal ash settlement and the partial settlements in the 2019 North
Carolina rate cases.
• Gas Pipeline Investments represents costs related to the cancellation of the ACP investment
and additional exit obligations.
• Severance represents the reversal of 2018 Severance charges, which were deferred as a
result of a partial settlement in the Duke Energy Carolinas and Duke Energy Progress 2019
North Carolina rate cases.
• Impairment Charges represents a reduction of a prior year impairment at Citrus County CC
and an other-than-temporary impairment on the remaining investment in Constitution.
Duke Energy’s adjusted EPS may not be comparable to a similarly titled measure of another
company because other entities may not calculate the measure in the same manner.
Years Ended December 31,
2021
4.94
$
2020
$
1.72
2019
$
5.06
0.20
0.02
0.09
—
—
(0.01)
$
5.24
—
2.32
1.19
(0.10)
—
(0.01)
$
5.12
—
—
—
—
(0.01)
0.01
5.06
$
reported O&M expenses adjusted for special items and expenses recovered through riders and
excludes O&M expenses for Duke Energy’s Commercial businesses and non-regulated electric
products and services supporting regulated operations.
Net regulated Electric and Gas O&M expense for the year-to-date-period includes Piedmont
Natural Gas Company, Inc. (Piedmont) Net regulated Gas O&M for the year ended December 31,
2016. Piedmont O&M is a non-GAAP finance measure, as it represents reported O&M expense as of
December 31, 2016, adjusted for special items.
Management believes the presentation of net regulated Electric and Gas O&M and
Piedmont Net regulated Gas O&M provides useful information to investors, as it provides a
meaningful comparison of financial performance across periods. The most directly comparable
GAAP financial measure for net regulated Electric and Gas O&M and Piedmont Net regulated Gas
O&M is reported operating, maintenance and other expenses.
The following is a reconciliation of net regulated Electric and Gas O&M for the year-to-date
periods ended December 31, 2021 and 2016, as well as a reconciliation of Piedmont O&M for the
year-to-date period ended October 31, 2016, to the most directly comparable GAAP measure:
Duke Energy Operations, Maintenance and Other Expense
Operation, maintenance and other(a)
Adjustments:
Costs to Achieve, Mergers(b)
Severance(b)
Regulatory settlement(b)
Workplace and Workforce Realignment(b)
Reagents Recoverable(d)(j)
Energy Efficiency Recoverable(c)
Other Deferrals(e) and Recoverable(d)(h)(i)
Margin based O&M for Commercial Businesses(f)
Short-term incentive payments for (over)/under budget
Non-margin based O&M for Commercial Business(f)
Non-regulated Products and Services(g)
Net Regulated Electric and Gas, operation, maintenance and other
Piedmont O&M, for the period from October 3, 2016 through December 31, 2016
Net Regulated Electric and Gas, operation, maintenance and other(k)
Piedmont Operations, Maintenance and Other Expense
Operation, maintenance and other(l) – Piedmont Natural Gas Company, Inc. 10-K
Less:
Operation, maintenance and other(m) – Piedmont Natural Gas, Inc 2015 November and December Activity
Add:
Operation, maintenance and other(m) – Piedmont Natural Gas, Inc 2016 November and December Activity
Operation, maintenance and other – Piedmont Natural Gas Company, Inc. for the year ending December 31, 2016
Adjustments:
Costs to Achieve, Mergers(n)
Piedmont, Net Regulated Gas O&M for the year ending December 31, 2016
Years Ended December 31,
2021
6,042
$
2016
6,223
$
—
—
(12)
(42)
(83)
(343)
(320)
(75)
(113)
(266)
(202)
(238)
(92)
—
—
(93)
(417)
(95)
(185)
(90)
(166)
(83)
$
4,586
$
4,764
—
(69)
$
4,586
$
4,695
Years Ended December 31,
2016
353
$
53
52
$
352
(63)
$
289
(a) As reported in the Consolidated Statements of Operations.
(b) Presented as a special item for the purpose of calculating adjusted earnings and adjusted diluted earnings per share.
(c) Primarily represents expenses to be deferred or recovered through rate riders.
(d) The Duke Energy Indiana Rate Case was effective in mid-year 2020. This Rate Case permitted recovery within base rates of certain costs that had previously been recovered through riders. Accordingly, all prior periods have been
recast as if these costs were always included within base rates.
(e) Prior periods have been recast to reflect a change in methodology to present certain deferrals which will be recovered through future rate cases as if they were included in base rates.
(f) Primarily represents expenses from the Commercial Renewables segment.
(g) Primarily represents non-regulated products and services expenses in support of regulated electric and gas utilities.
(h) Florida Vegetation Management has been reclassified to recoverable in the rate case effective in 2022. Accordingly, all prior periods have been recast for comparability.
(i)
(j) Duke Energy Indiana Reagents have been reclassified to Recoverable effective in 2022. Accordingly, all prior periods have been recast for comparability.
(k) Net regulated electric and gas, operating maintenance and other, excluding Piedmont presents Net regulated electric and gas O&M for the year ended December 31, 2016, without the operations of Piedmont Natural Gas, which was
The Duke Energy Florida Rate Case effective 2022 permits within base rates the recovery of environmental costs (ECRC) which were previously recovered in riders. Accordingly, all prior periods have been recast for comparability.
acquired on October 3, 2016.
As reported in the 2016 Form 10-K Piedmont Natural Gas Condensed Consolidated Statements of Operations and Comprehensive Income as of October 31, 2016.
(l)
(m) As reported in the 2016 Form 10-QT Piedmont Natural Gas Condensed Consolidated Statements of Operations and Comprehensive Income.
(n) Primarily represents expenses for acquisition consummation costs, integration, and other related costs in connection with Duke Energy Corporation’s acquisition October 3, 2016.
TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2021
Item
Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
GLOSSARY OF TERMS
PART I.
1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DUKE ENERGY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS SEGMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DUKE ENERGY CAROLINAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROGRESS ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DUKE ENERGY PROGRESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DUKE ENERGY FLORIDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DUKE ENERGY OHIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DUKE ENERGY INDIANA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PIEDMONT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1A. RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1B. UNRESOLVED STAFF COMMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
3.
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5
5
5
5
14
15
15
16
16
16
16
16
17
17
17
24
25
29
29
PART II.
5.
6.
7.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . .
SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . .
8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
9.
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
31
56
57
30
31
PART III.
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . 214
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
12.
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . 214
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
13.
PART IV.
15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . 218
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-28
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are based on management’s beliefs and assumptions and can often be identified by
terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,”
“should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,”
“guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be
materially different than the suggested outcomes within forward-looking statements; accordingly,
there is no assurance that such results will be realized. These factors include, but are not limited to:
• The impact of the COVID-19 pandemic;
• State, federal and foreign legislative and regulatory initiatives, including costs of
compliance with existing and future environmental requirements, including those related
to climate change, as well as rulings that affect cost and investment recovery or have an
impact on rate structures or market prices;
• The extent and timing of costs and liabilities to comply with federal and state laws,
regulations and legal requirements related to coal ash remediation, including amounts
for required closure of certain ash impoundments, are uncertain and difficult to estimate;
• The ability to recover eligible costs, including amounts associated with coal ash
impoundment retirement obligations, asset retirement and construction costs related to
carbon emissions reductions, and costs related to significant weather events, and to earn an
adequate return on investment through rate case proceedings and the regulatory process;
• The costs of decommissioning nuclear facilities could prove to be more extensive than
amounts estimated and all costs may not be fully recoverable through the regulatory process;
• Costs and effects of legal and administrative proceedings, settlements, investigations
and claims;
• Industrial, commercial and residential growth or decline in service territories or customer
bases resulting from sustained downturns of the economy and the economic health of our
service territories or variations in customer usage patterns, including energy efficiency
efforts, natural gas building and appliance electrification, and use of alternative energy
sources, such as self-generation and distributed generation technologies;
• Federal and state regulations, laws and other efforts designed to promote and expand
the use of energy efficiency measures, natural gas electrification, and distributed
generation technologies, such as private solar and battery storage, in Duke Energy
service territories could result in a reduced number of customers, excess generation
resources as well as stranded costs;
• Advancements in technology;
• Additional competition in electric and natural gas markets and continued industry consolidation;
• The influence of weather and other natural phenomena on operations, including the
economic, operational and other effects of severe storms, hurricanes, droughts,
earthquakes and tornadoes, including extreme weather associated with climate change;
• Changing investor, customer and other stakeholder expectations and demands including
heightened emphasis on environmental, social and governance concerns;
• The ability to successfully operate electric generating facilities and deliver electricity to
customers including direct or indirect effects to the company resulting from an incident
that affects the 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, an individual utility’s generation mix, and
general market and economic conditions;
• Credit ratings 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 capital
investment projects, including risks related to financing, obtaining and complying with
terms of permits, meeting construction budgets and schedules and satisfying operating
and environmental performance standards, as well as the ability to recover costs from
customers in a timely manner, or at all;
• Changes in rules for regional transmission organizations, including changes in rate
designs and new and evolving capacity markets, and risks related to obligations created
by the default of other participants;
• The ability to control operation and maintenance costs;
• The level of creditworthiness of counterparties to transactions;
• The ability to obtain adequate insurance at acceptable costs;
• Employee workforce factors, including the potential inability to attract and retain key personnel;
• The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation
holding company;
• 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;
• Asset or business acquisitions and dispositions, including our ability to successfully
consummate the second closing of the minority investment in Duke Energy Indiana, may
not yield the anticipated benefits;
• The actions of activist shareholders could disrupt our operations, impact our ability
to execute on our business strategy, or cause fluctuations in the trading price of our
common stock; and
• The ability to implement our business strategy, including its carbon emission reduction goals.
Additional risks and uncertainties are identified and discussed in the company’s
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 expressly
disclaims an obligation to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
Glossary of Terms
The following terms or acronyms used in this Form 10-K are defined below:
Term or Acronym
Definition
Term or Acronym
Definition
2017 Settlement . . . . . . . . . . . . . . Second Revised and Restated Settlement
DEFR . . . . . . . . . . . . . . . . . . . . . . . Duke Energy Florida Receivables, LLC
Agreement in 2017 among Duke Energy Florida,
the Florida Office of Public Counsel and other
customer advocates, which replaces and
supplants the 2013
2021 Settlement . . . . . . . . . . . . . . Settlement Agreement in 2021 among Duke
Energy Florida, the Florida Office of Public
Counsel, the Florida Industrial Power Users
Group, White Springs Agricultural Chemicals,
Inc. d/b/a PSC Phosphate and NUCOR Steel
Florida, Inc.
ACP . . . . . . . . . . . . . . . . . . . . . . . . Atlantic Coast Pipeline, LLC, a limited liability
company owned by Dominion and Duke Energy
ACP pipeline . . . . . . . . . . . . . . . . . The approximately 600-mile canceled
Deloitte . . . . . . . . . . . . . . . . . . . . . Deloitte & Touche LLP, and the member
firms of Deloitte Touche Tohmatsu and their
respective affiliates
DEPR. . . . . . . . . . . . . . . . . . . . . . . Duke Energy Progress Receivables, LLC
DERF . . . . . . . . . . . . . . . . . . . . . . . Duke Energy Receivables Finance Company,
LLC
DOE . . . . . . . . . . . . . . . . . . . . . . . . U.S. Department of Energy
Dominion. . . . . . . . . . . . . . . . . . . . Dominion Energy, Inc.
Dth . . . . . . . . . . . . . . . . . . . . . . . . Dekatherms
Duke Energy. . . . . . . . . . . . . . . . . . Duke Energy Corporation (collectively with its
subsidiaries)
interstate natural gas pipeline
Duke Energy Carolinas. . . . . . . . . . Duke Energy Carolinas, LLC
AFS . . . . . . . . . . . . . . . . . . . . . . . . Available for Sale
Duke Energy Florida . . . . . . . . . . . . Duke Energy Florida, LLC
AFUDC. . . . . . . . . . . . . . . . . . . . . . Allowance for funds used during construction
Duke Energy Indiana . . . . . . . . . . . Duke Energy Indiana, LLC
AMI . . . . . . . . . . . . . . . . . . . . . . . . Advanced Metering Infrastructure
Duke Energy Kentucky . . . . . . . . . . Duke Energy Kentucky, Inc.
AMT. . . . . . . . . . . . . . . . . . . . . . . . Alternative Minimum Tax
AOCI . . . . . . . . . . . . . . . . . . . . . . . Accumulated Other Comprehensive Income
(Loss)
ARO. . . . . . . . . . . . . . . . . . . . . . . . Asset Retirement Obligation
Audit Committee . . . . . . . . . . . . . . Audit Committee of the Board of Directors
Belews Creek. . . . . . . . . . . . . . . . . Belews Creek Steam Station
Bison. . . . . . . . . . . . . . . . . . . . . . . Bison Insurance Company Limited
Board of Directors . . . . . . . . . . . . . Duke Energy Board of Directors
Brunswick . . . . . . . . . . . . . . . . . . . Brunswick Nuclear Plant
Cardinal. . . . . . . . . . . . . . . . . . . . . Cardinal Pipeline Company, LLC
Catawba . . . . . . . . . . . . . . . . . . . . Catawba Nuclear Station
CC . . . . . . . . . . . . . . . . . . . . . . . . . Combined Cycle
CCR. . . . . . . . . . . . . . . . . . . . . . . . Coal Combustion Residuals
Cinergy . . . . . . . . . . . . . . . . . . . . . Cinergy Corp. (collectively with its subsidiaries)
Citrus County CC . . . . . . . . . . . . . . Citrus County Combined Cycle Facility
CO2 . . . . . . . . . . . . . . . . . . . . . . . . Carbon Dioxide
Coal Ash Act . . . . . . . . . . . . . . . . . North Carolina Coal Ash Management Act of
2014
the company . . . . . . . . . . . . . . . . . Duke Energy Corporation and its subsidiaries
Constitution. . . . . . . . . . . . . . . . . . Constitution Pipeline Company, LLC
COVID-19 . . . . . . . . . . . . . . . . . . . Coronavirus Disease 2019
CPCN. . . . . . . . . . . . . . . . . . . . . . . Certificate of Public Convenience and Necessity
CRC. . . . . . . . . . . . . . . . . . . . . . . . Cinergy Receivables Company LLC
Crystal River Unit 3 . . . . . . . . . . . . Crystal River Unit 3 Nuclear Plant
CT . . . . . . . . . . . . . . . . . . . . . . . . . Combustion Turbine
DATC . . . . . . . . . . . . . . . . . . . . . . . Duke-American Transmission Company, LLC
DECON . . . . . . . . . . . . . . . . . . . . . A method of decommissioning in which
structures, systems, and components that
contain radioactive contamination are
removed from a site and safely disposed at
a commercially operated low-level waste
disposal facility, or decontaminated to a
level that permits the site to be released
for unrestricted use shortly after it ceases
operation
Duke Energy Ohio. . . . . . . . . . . . . . Duke Energy Ohio, Inc.
Duke Energy Progress . . . . . . . . . . Duke Energy Progress, LLC
Duke Energy Registrants . . . . . . . . Duke Energy, Duke Energy Carolinas, Progress
Energy, Duke Energy Progress, Duke Energy
Florida, Duke Energy Ohio, Duke Energy
Indiana and Piedmont
East Bend . . . . . . . . . . . . . . . . . . . East Bend Generating Station
EDIT. . . . . . . . . . . . . . . . . . . . . . . . Excess deferred income tax
EE . . . . . . . . . . . . . . . . . . . . . . . . . Energy efficiency
EPA . . . . . . . . . . . . . . . . . . . . . . . . U.S. Environmental Protection Agency
EPC . . . . . . . . . . . . . . . . . . . . . . . . Engineering, Procurement and Construction
agreement
EPS . . . . . . . . . . . . . . . . . . . . . . . . Earnings Per Share
ETR . . . . . . . . . . . . . . . . . . . . . . . . Effective tax rate
Exchange Act. . . . . . . . . . . . . . . . . Securities Exchange Act of 1934
FASB . . . . . . . . . . . . . . . . . . . . . . . Financial Accounting Standards Board
FERC . . . . . . . . . . . . . . . . . . . . . . . Federal Energy Regulatory Commission
Form S-3. . . . . . . . . . . . . . . . . . . . Registration statement
FPSC . . . . . . . . . . . . . . . . . . . . . . . Florida Public Service Commission
FTR . . . . . . . . . . . . . . . . . . . . . . . . Financial transmission rights
FV-NI . . . . . . . . . . . . . . . . . . . . . . . Fair value through net income
GAAP . . . . . . . . . . . . . . . . . . . . . . . Generally Accepted Accounting Principles in
the United States
GAAP Reported Earnings . . . . . . . . Net Income Available to Duke Energy
Corporation common stockholders
GAAP Reported EPS . . . . . . . . . . . . Basic EPS Available to Duke Energy
Corporation common stockholders
GHG. . . . . . . . . . . . . . . . . . . . . . . . Greenhouse Gas
GIC . . . . . . . . . . . . . . . . . . . . . . . . GIC Private Limited, Singapore’s sovereign
wealth fund and an experienced investor in
U.S. infrastructure
GWh . . . . . . . . . . . . . . . . . . . . . . . Gigawatt-hour
Hardy Storage . . . . . . . . . . . . . . . . Hardy Storage Company, LLC
Harris . . . . . . . . . . . . . . . . . . . . . . Shearon Harris Nuclear Plant
Term or Acronym
Definition
Term or Acronym
Definition
HLBV . . . . . . . . . . . . . . . . . . . . . . . Hypothetical Liquidation at Book Value
Pioneer . . . . . . . . . . . . . . . . . . . . . Pioneer Transmission, LLC
IMPA . . . . . . . . . . . . . . . . . . . . . . . Indiana Municipal Power Agency
PJM . . . . . . . . . . . . . . . . . . . . . . . . PJM Interconnection, LLC
IMR . . . . . . . . . . . . . . . . . . . . . . . . Integrity Management Rider
PMPA. . . . . . . . . . . . . . . . . . . . . . . Piedmont Municipal Power Agency
IRP . . . . . . . . . . . . . . . . . . . . . . . . Integrated Resource Plans
PISCC . . . . . . . . . . . . . . . . . . . . . . Post-in-service carrying costs
IRS . . . . . . . . . . . . . . . . . . . . . . . . Internal Revenue Service
PPA . . . . . . . . . . . . . . . . . . . . . . . . Purchase Power Agreement
ISO . . . . . . . . . . . . . . . . . . . . . . . . Independent System Operator
Progress Energy. . . . . . . . . . . . . . . Progress Energy, Inc.
ITC. . . . . . . . . . . . . . . . . . . . . . . . . Investment Tax Credit
PSCSC. . . . . . . . . . . . . . . . . . . . . . Public Service Commission of South Carolina
IURC . . . . . . . . . . . . . . . . . . . . . . . Indiana Utility Regulatory Commission
PTC . . . . . . . . . . . . . . . . . . . . . . . . Production Tax Credits
Investment Trusts . . . . . . . . . . . . . Grantor trusts of Duke Energy Progress, Duke
PUCO. . . . . . . . . . . . . . . . . . . . . . . Public Utilities Commission of Ohio
Energy Florida and Duke Energy Indiana
KO Transmission . . . . . . . . . . . . . . KO Transmission Company
KPSC . . . . . . . . . . . . . . . . . . . . . . . Kentucky Public Service Commission
LIBOR . . . . . . . . . . . . . . . . . . . . . . London Interbank Offered Rate
LLC . . . . . . . . . . . . . . . . . . . . . . . . Limited Liability Company
PURPA. . . . . . . . . . . . . . . . . . . . . . Public Utility Regulatory Policies Act of 1978
QF . . . . . . . . . . . . . . . . . . . . . . . . . Qualifying Facility
REC . . . . . . . . . . . . . . . . . . . . . . . . Renewable Energy Certificate
Relative TSR . . . . . . . . . . . . . . . . . TSR of Duke Energy stock relative to a
predefined peer group
McGuire. . . . . . . . . . . . . . . . . . . . . McGuire Nuclear Station
Robinson . . . . . . . . . . . . . . . . . . . . Robinson Nuclear Plant
MGP . . . . . . . . . . . . . . . . . . . . . . . Manufactured gas plant
ROU. . . . . . . . . . . . . . . . . . . . . . . . Right-of-use
MISO . . . . . . . . . . . . . . . . . . . . . . . Midcontinent Independent System Operator, Inc.
RSU. . . . . . . . . . . . . . . . . . . . . . . . Restricted Stock Unit
MTBE. . . . . . . . . . . . . . . . . . . . . . . Methyl tertiary butyl ether
RTO . . . . . . . . . . . . . . . . . . . . . . . . Regional Transmission Organization
MW . . . . . . . . . . . . . . . . . . . . . . . . Megawatt
MWh . . . . . . . . . . . . . . . . . . . . . . . Megawatt-hour
Sabal Trail . . . . . . . . . . . . . . . . . . . Sabal Trail Transmission, LLC
SAFSTOR . . . . . . . . . . . . . . . . . . . . A method of decommissioning in which a
NCDEQ . . . . . . . . . . . . . . . . . . . . . North Carolina Department of Environmental
Quality
NCUC . . . . . . . . . . . . . . . . . . . . . . North Carolina Utilities Commission
NDTF . . . . . . . . . . . . . . . . . . . . . . . Nuclear decommissioning trust funds
New Source Review . . . . . . . . . . . . Clean 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
NMC . . . . . . . . . . . . . . . . . . . . . . . National Methanol Company
NOL . . . . . . . . . . . . . . . . . . . . . . . . Net operating loss
NPNS. . . . . . . . . . . . . . . . . . . . . . . Normal purchase/normal sale
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
SEC . . . . . . . . . . . . . . . . . . . . . . . . Securities and Exchange Commission
S&P . . . . . . . . . . . . . . . . . . . . . . . . Standard & Poor’s Rating Services
State utility commissions. . . . . . . . NCUC, PSCSC, FPSC, PUCO, IURC, KPSC and
TPUC (Collectively)
State electric utility commissions. . . NCUC, PSCSC, FPSC, PUCO, IURC and KPSC
(Collectively)
State gas utility commissions . . . . NCUC, PSCSC, PUCO, TPUC and KPSC
(Collectively)
NRC. . . . . . . . . . . . . . . . . . . . . . . . U.S. Nuclear Regulatory Commission
Subsidiary Registrants. . . . . . . . . . Duke Energy Carolinas, Progress Energy, Duke
NYSE . . . . . . . . . . . . . . . . . . . . . . . New York Stock Exchange
Oconee . . . . . . . . . . . . . . . . . . . . . Oconee Nuclear Station
OPEB. . . . . . . . . . . . . . . . . . . . . . . Other Post-Retirement Benefit Obligations
OTTI. . . . . . . . . . . . . . . . . . . . . . . . Other-than-temporary impairment
OVEC . . . . . . . . . . . . . . . . . . . . . . . Ohio Valley Electric Corporation
the Parent . . . . . . . . . . . . . . . . . . . Duke Energy Corporation holding company
PGA . . . . . . . . . . . . . . . . . . . . . . . . Purchased Gas Adjustments
PHMSA . . . . . . . . . . . . . . . . . . . . . Pipeline and Hazardous Materials Safety
Administration
Piedmont . . . . . . . . . . . . . . . . . . . . Piedmont Natural Gas Company, Inc.
Pine Needle . . . . . . . . . . . . . . . . . . Pine Needle LNG Company, LLC
Energy Progress, Duke Energy Florida, Duke
Energy Ohio, Duke Energy Indiana and Piedmont
Sutton . . . . . . . . . . . . . . . . . . . . . . L.V. Sutton Combined Cycle Plant
the Tax Act. . . . . . . . . . . . . . . . . . . Tax Cuts and Jobs Act
TPUC . . . . . . . . . . . . . . . . . . . . . . . Tennessee Public Utility Commission
TSR . . . . . . . . . . . . . . . . . . . . . . . . Total shareholder return
U.S. . . . . . . . . . . . . . . . . . . . . . . . . United States
VIE. . . . . . . . . . . . . . . . . . . . . . . . . Variable Interest Entity
WACC . . . . . . . . . . . . . . . . . . . . . . Weighted Average Cost of Capital
W.S. Lee CC . . . . . . . . . . . . . . . . . . William States Lee Combined Cycle Facility
WVPA. . . . . . . . . . . . . . . . . . . . . . . Wabash Valley Power Association, Inc.
During 2021, Duke Energy executed an agreement providing for an
investment by an affiliate of GIC in Duke Energy Indiana in exchange for a
19.9% minority interest issued by Duke Energy Holdco, LLC, the holding
company for Duke Energy Indiana. The transaction will be completed following
two closings. The first closing occurred on September 8, 2021, and resulted in
Duke Energy Indiana Holdco, LLC issuing 11.05% of its membership interest
to the affiliate of GIC. The second closing is expected to occur no later than
January 2023. See Note 1 to the Consolidated Financial Statements, “Summary
of Significant Accounting Policies,” for additional information. 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, 2021.
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 8.2 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 26 million. The operations include electricity sold
wholesale to municipalities, electric cooperative utilities and other load-serving
entities.
5
PART I 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, 2021.
Residential
General service
Industrial
Total retail sales
Wholesale and other sales
Total sales
Duke
Energy
Carolinas
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
33%
32%
24%
89%
11%
28%
22%
14%
64%
36%
49%
35%
8%
92%
8%
38%
37%
23%
98%
2%
30%
25%
31%
86%
14%
100%
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
impacted by adoption of energy efficiencies and self-generation. Residential
sales increased in 2021 compared to 2020 due to customer growth and the
introduction of a hybrid work environment in response to multiple waves of
COVID-19 during 2021. Meanwhile, sales for general service and industrial
customers recovered in 2021 from temporary closings and ramp backs
experienced in 2020 due to the COVID-19 pandemic. Over the longer time
frame, 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.
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 50,259 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.
6
PART I 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, 2021.
Natural gas and fuel oil(a)
Nuclear(a)
Coal(a)
All fuels (cost based on weighted average)(a)
Hydroelectric and solar(b)
Total generation
Purchased power and net interchange
Total sources of energy
Cost of Delivered Fuel per Net
Kilowatt-hour Generated (Cents)
2021
3.89
0.58
2.84
2.42
2020
2.55
0.58
2.99
1.91
2019
2.96
0.60
3.08
2.14
Generation by Source
2021
31.8%
29.8%
18.2%
79.8%
1.5%
81.3%
18.7%
2020
31.3%
29.6%
18.1%
79.0%
1.9%
80.9%
19.1%
2019
29.2 %
28.6 %
21.6 %
79.4 %
1.2 %
80.6 %
19.4 %
100.0%
100.0%
100.0 %
(a) Statistics related to all fuels reflect Electric Utilities and Infrastructure’s public utility 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-upon 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 2022, 100% of its enrichment services through at least 2023, 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 2022 to 2026 for Duke Energy Carolinas and Duke
Energy Progress and 2022 to 2025 for Duke Energy Florida, Duke Energy Ohio
and Duke Energy Indiana. 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.
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, between 2.5% and 3% for Duke Energy Florida and Duke
Energy Indiana, and between 3% and 3.5% for Duke Energy Ohio. 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.
7
PART I 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
The following table summarizes purchased power for the previous three years:
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.
Purchase obligations and leases (in millions of MWh)(a)
Purchase capacity under contract (in MW)(b)
(a) Represents approximately 14% of total system requirements for 2021, 13% for 2020 and 14% for 2019.
(b) For 2021, 2020 and 2019, these agreements include approximately 412 MW of firm capacity under contract by Duke Energy Florida with QFs.
2021
36
4,259
2020
32.7
4,716
2019
34.8
4,238
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, 2021,
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 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 (ash basins or
impoundments) will continue to be regulated by existing state laws, regulations
and permits, such as the North Carolina Coal Ash Management Act of 2014
(Coal Ash Act).
Electric Utilities and Infrastructure has and will periodically submit to
applicable authorities required site-specific coal ash impoundment remediation
or closure plans. Closure plans must be approved and all associated permits
issued 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 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 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 North Carolina
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 Coal Ash 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. 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 $13.5 billion.
For additional information on nuclear insurance, see Note 4 to the Consolidated
Financial Statements, “Commitments and Contingencies.”
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.
(in millions)
Duke Energy
Duke Energy Carolinas(b)(c)
Duke Energy Progress(d)
Duke Energy Florida(e)
NDTF(a)
$
December 31, 2021
10,401
5,759
4,089
553
$
December 31, 2020
9,114
4,977
3,500
637
$
Decommissioning
Costs(a)
9,105
4,365
4,181
559
Year of
Cost Study
2018 or 2019
2018
2019
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 to the Consolidated Financial Statements, “Regulatory Matters,” for more information.
8
PART I 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.
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 to the Consolidated Financial Statements, “Regulatory
Matters,” 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.
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. On June 7, 2021, Duke Energy
Carolinas filed a subsequent license renewal application for the Oconee Nuclear
Station (ONS) with the U.S. Nuclear Regulatory Commission to renew ONS’s
operating license for an additional 20 years. Duke Energy has 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. See Note 3 to
the Consolidated Financial Statements, “Regulatory Matters,” for additional
information.
Unit
Duke Energy Carolinas
Catawba Units 1 and 2
McGuire Unit 1
McGuire Unit 2
Oconee Units 1 and 2
Oconee Unit 3
Duke Energy Progress
Brunswick Unit 1
Brunswick Unit 2
Harris
Robinson
Year of Expiration
2043
2041
2043
2033
2034
2036
2034
2046
2030
9
PART I The table below reflects significant electric rate case applications approved and effective in the past three years or applications currently pending approval.
Approved Rate Cases:
Duke Energy Progress 2019 North Carolina Rate Case
Duke Energy Carolinas 2019 North Carolina Rate Case
Duke Energy Indiana 2019 Indiana Rate Case(a)
Duke Energy Kentucky 2019 Kentucky Electric Rate Case
Duke Energy Carolinas 2018 South Carolina Rate Case
Duke Energy Progress 2018 South Carolina Rate Case
Duke Energy Ohio 2017 Ohio Electric Rate Case
Pending Rate Cases:
Duke Energy Ohio 2021 Ohio Electric Rate Case
Annual
Increase
(Decrease)
(in millions)
Regulatory
Body
Return on
Equity
Equity
Component of
Capital Structure
Effective Date
NCUC
NCUC
IURC
KPSC
PSCSC
PSCSC
PUCO
$
178
33
146
24
45
29
(19)
9.6%
9.6%
9.7%
9.25%
9.5%
9.5%
9.84%
52%
52%
54%
48.23%
53%
53%
50.75%
6/1/2021
6/1/2021
7/30/2020
5/1/2020
6/1/2019
6/1/2019
1/2/2019
PUCO
$
55
10.3%
50.5%
7/1/2022
(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. They were approved on July 28, 2021, and implemented in
August 2021.
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
total customers, including 1.1 million customers located in North Carolina, South
Carolina and Tennessee, and an additional 550,000 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, 2021.
Additionally, in January 2021, Duke Energy Florida filed a settlement
agreement with the FPSC that will allow annual increases to its base rates,
an agreed upon return on equity (“ROE”) and includes a base rate stay-out
provision through 2024, among other provisions. The FPSC approved the 2021
Settlement on May 4, 2021, issuing an order on June 4, 2021. Revised customer
rates became effective January 1, 2022, with subsequent base rate increases
effective January 1, 2023, and January 1, 2024. 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 Item 7 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
10
PART I 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 2021, firm supply purchase commitment agreements provided
100% of the natural gas supply for both Piedmont and Duke Energy Ohio.
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 small and medium general service customers.
Margin decoupling provides a set margin 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.
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.
Gas Utilities and Infrastructure 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.
11
PART I 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.
Inventory
Gas Utilities and Infrastructure must maintain adequate natural gas
inventory in order to provide reliable delivery to customers. As of December 31,
2021, the inventory balance for Gas Utilities and Infrastructure was
$125 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.
Approved Rate Cases:
Duke Energy Kentucky 2018 Natural Gas Base Rate Case
Piedmont 2019 North Carolina Natural Gas Base Rate Case
Piedmont 2019 South Carolina Rate Stabilization Adjustment Filing
Piedmont 2020 South Carolina Rate Stabilization Adjustment Filing
Piedmont 2020 Tennessee Natural Gas Base Rate Case
Piedmont 2021 North Carolina Natural Gas Base Rate Case
Piedmont 2021 South Carolina Rate Stabilization Adjustment Filing
Duke Energy Kentucky 2021 Natural Gas Base Rate Case(a)
(a) An ROE of 9.375% for natural gas base rates and 9.3% for natural gas riders was approved.
Annual
Increase
(Decrease)
(in millions)
$
7
109
6
7
16
67
7
9
Return
on
Equity
Equity
Component of
Capital Structure
9.7%
9.7%
9.9%
9.8%
9.8%
9.6%
9.8%
9.38%
50.8%
52.0%
55.4%
52.3%
50.5%
51.6%
52.2%
51.3%
Effective Date
April 2019
November 2019
November 2019
November 2020
January 2021
November 2021
November 2021
January 2022
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.
(in millions)
Piedmont 2021 IMR Filing – North Carolina
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.
12
Cumulative
Investment
$
61
Annual
Revenues
Effective
Date
$
4
December 2021
• 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 Item 7 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.
PART I COMMERCIAL RENEWABLES
Commercial Renewables primarily acquires, develops, builds, operates
and owns wind and solar renewable generation throughout the continental
U.S. Commercial Renewables also enters into strategic transactions including
minority ownership and tax equity structures in wind and solar generation.
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 3,554 MW across
22 states from 23 wind facilities, 178 solar projects, 71 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, 2021.
As eligible projects are placed in service, Commercial Renewables
generally recognizes either PTCs as power is generated by wind projects over
10 years or ITCs over the useful life of solar or fuel cell projects. Benefits of the
tax basis adjustment due to the ITC are recognized as a reduction to income tax
expense in the year in which the project is placed in service. Under the current
law, 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 is available for fuel cells if construction begins after 2023. The
PTC for onshore wind is currently phased out for projects beginning construction
after 2021, but remains available for projects that began construction in 2021
or earlier.
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.
13
PART I 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, 2021, Duke Energy had a total of 27,605 full-time,
part-time and temporary employees, the overwhelming majority of which were
full-time employees. The total includes 5,064 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.
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 market driven and designed to link pay to
performance with the goal of attracting and retaining talented employees,
rewarding individual performance, and encouraging long-term commitment to
our business. Our market competitive pay program includes short-term and
long-term variable pay components that help to align the interests of Duke
Energy to our customers and shareholders. 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. The company is committed to providing market
competitive, fair, and equitable compensation and regularly conducts internal
pay equity reviews, and benchmarking against peer companies to ensure our
pay is competitive.
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 Council, chaired by our Chief Operating Officer, monitors
the effectiveness and execution of our diversity and inclusion strategy and
programs. Employee-led councils are also embedded across the company in our
business units and focus on the specific diversity and inclusion needs of the
business and help drive inclusion deeper into the employee experience. Leaders
and individual contributors also have the opportunity to participate in diversity
and inclusion training programs and facilitated conversations on thought
provoking topics offered to further our commitment to building and enabling an
inclusive work environment.
Our aspirational goals include achieving workforce representation of at
least 25% female and 20% racial and ethnic diversity. We continue to make
strides toward reaching these aspirational goals and as of December 31, 2021,
our workforce consisted of approximately 23.9% female and 19.6% 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 2021, consistent with our industry-leading performance levels from 2016
through 2020.
14
PART I 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
Lynn J. Good
Steven K. Young
Melody Birmingham
Kodwo Ghartey-Tagoe
R. Alexander Glenn
Dhiaa M. Jamil
Julia S. Janson
Cynthia S. Lee
Ronald R. Reising
Louis E. Renjel
Brian D. Savoy
Harry K. Sideris
Age(a)
Current and Recent Positions Held
62
63
50
58
56
65
57
55
61
48
46
51
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.
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.
Senior Vice President and Chief Administrative Officer. Ms. Birmingham assumed her current position in May 2021, Prior to that,
Ms. Birmingham served as Senior Vice President, Supply Chain and Chief Procurement Officer since 2018; State President of Duke Energy
Indiana’s operations from 2015 to 2018, and Senior Vice President, Midwest Delivery from 2012 to 2015.
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.
Senior Vice President and Chief Executive Officer, Duke Energy Florida and Midwest. Mr. Glenn assumed his current position in May 2021.
Prior to that, Mr. Glenn served as Senior Vice President, State and Federal Regulatory Legal Support since 2017 and as State President of Duke
Energy Florida's operations from 2012 to 2017.
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.
Executive Vice President and Chief Executive Officer, Duke Energy Carolinas. Ms. Janson assumed her current position in May 2021. Prior
to that she held the position of Executive Vice President, External Affairs and President, Carolinas Region since October 2019 and 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.
Vice President, Chief Accounting Officer and Controller. Ms. Lee assumed her role as Vice President, Chief Accounting Officer and Controller
in May 2021. Prior to that, she served as Director, Investor Relations since June 2019 and in various roles within the Corporate Controller's
organization after joining the Corporation and its affiliates in 2002.
Senior Vice President and Chief Human Resources Officer. Mr. Reising assumed his current position in July 2020. Prior to that, he served as
Senior Vice President of Operations Support since 2014. Prior to that he served as Chief Procurement Officer since 2006.
Senior Vice President, External Affairs and Communications. Mr. Renjel his current position in May 2021. Prior to that he served as Senior
Vice President of Federal Government and Corporate Affairs since 2019, and as Vice President, Federal Government Affairs and Strategic
Policy since he joined Duke Energy in March 2017 until 2019. Prior to joining Duke Energy, Mr. Renjel served as Vice President of Strategic
Infrastructure since 2009 for CSX Corp and as their Director of Environmental and Government Affairs from 2006 to 2008.
Executive Vice President, Chief Strategy and Commercial Officer. Mr. Savoy assumed the position of Executive Vice President, Chief Strategy
and Commercial Officer in May 2021. Prior to that he held the position of Senior Vice President, Chief Transformation and Administrative Officer
from October 2019 through April 2021; Senior Vice President, Business Transformation and Technology from May 2016 through September 2019;
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.
Executive Vice President, Customer Experience, Solutions 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, 2022.
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 Clean Water Act, 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.
• 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.
15
PART I • The Solid Waste Disposal Act, as amended by RCRA, which creates a
DUKE ENERGY PROGRESS
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 Item 7 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 Item 7 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 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 1.7 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.”
DUKE ENERGY CAROLINAS
DUKE ENERGY OHIO
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 2.8 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 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 550,000 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.”
16
PART I 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 870,000 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.
In 2021, Duke Energy completed the first phase of the investment in
Duke Energy Indiana by GIC. For additional information, see Note 1 to the
Consolidated Financial Statements, “Summary of Significant Accounting
Policies.”
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 including achieving its carbon emissions
reduction goals.
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 clean energy strategy, which includes achieving net-zero carbon
emissions from electricity generation by 2050, modernizing the regulatory
construct, transforming the customer experience, and digital transformation, is
subject to business, policy, regulatory, technology, economic and competitive
uncertainties and contingencies, many of which are beyond its control and may
make those goals difficult to achieve.
Federal or state policies could be enacted that restrict the availability
of fuels or generation technologies, such as natural gas or nuclear power, that
enable Duke Energy to reduce its carbon emissions. Supportive policies may be
needed to facilitate the siting and cost recovery of transmission and distribution
upgrades needed to accommodate the build out of large volumes of renewables
and energy storage. Further, the approval of our state regulators will be
necessary for the company to continue to retire existing carbon emitting assets or
make investments in new generating capacity. The company may be constrained
by the ability to procure resources or labor needed to build new generation at
a reasonable price as well as to construct projects on time. In addition, new
technologies that are not yet commercially available or are unproven at utility
scale will be needed. If these technologies are not developed or are not available
at reasonable prices, or if we invest in early-stage technologies that are then
supplanted by technological breakthroughs, Duke Energy’s ability to achieve a
net-zero target by 2050 at a cost-effective price could be at risk.
Achieving our carbon reduction goals will require continued operation of
our existing carbon-free technologies including nuclear and renewables. The
rapid transition to and expansion of certain low-carbon resources, such as
renewables without cost-effective storage, may challenge our ability to meet
customer expectations of reliability in a carbon constrained environment, Our
nuclear fleet is central to our ability to meet these objectives and customer
expectations. We are continuing to seek to renew the operating licenses of
the 11 reactors we operate at six nuclear stations for an additional 20 years,
extending their operating lives to and beyond midcentury. Failure to receive
approval from the NRC for the relicensing of any of these reactors could affect
our ability to achieve a net-zero target by 2050.
As a consequence, Duke Energy may not be able to fully implement or
realize the anticipated results of its strategy, which may have an adverse effect
on its financial condition.
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.
Differences in regulation between jurisdictions with concurrent operations, such
as North Carolina and South Carolina in Duke Energy Carolinas’ and Duke Energy
Progress’ service territory, may also result in failure to recover costs.
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, commercialization and reduction of costs 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 reduce recovery of fixed costs in Duke Energy
service territories or 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 could result in Duke Energy
not being able to fully recover the costs and investment in generation.
17
PART I 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 and environmental regulations, that may change over time in ways
that affect operations and costs.
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.
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 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.
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
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. Certain local and state jurisdictions have also enacted laws to
18
PART I restrict or prevent new gas infrastructure. Increased regulation of GHG emissions
could impose significant additional costs on the Duke Energy Registrants’ electric
and natural gas operations, their suppliers and customers and affect demand
for energy conservation and renewable products, which could impact both
our electric and natural gas businesses. Regulatory changes could also result
in generation facilities to be retired earlier than planned to meet our net-zero
2050 goal. Though we would plan to seek cost recovery for investments related
to GHG emissions reductions through regulatory rate structures, changes in
the regulatory climate could result in the failure to fully recover such costs and
investment in generation.
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 immaterially impacted and could impact
the Duke Energy Registrants’ business strategy, results of operations, financial
position and cash flows in the future as a result of delays in rate cases or other
legal proceedings, an inability to obtain labor or equipment necessary for the
construction of large capital projects, an inability to procure satisfactory levels
of fuels or other necessary equipment for the continued production of electricity
and delivery of natural gas, and the health and availability of our critical
personnel and their ability to perform business functions.
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. The Duke Energy Registrants
also monitor the impacts of inflation on the procurement of goods and services
and seek to minimize its effects in future periods through pricing strategies,
productivity improvements, and cost reductions. Rapidly rising prices as a result
of inflation or other factors may impact the ability of the company to recover
costs timely or execute on its business strategy including the achievement of
growth objectives. 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, including materials,
supplies, and fuel 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 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,
including potential litigation awards. 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 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.
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
19
PART I 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, and EPA’s
January 11, 2022, issuance of a letter interpreting the CCR Rule, including its
applicability and closure provisions. 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 high 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 in response to concerns related to climate change. Additionally,
technological advances driven by federal laws mandating new levels of
EE in end-use electric and natural gas 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. In addition, the electrification of buildings and appliances currently
relying on natural gas could reduce the number of customers in our natural gas
distribution business.
20
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 expectations and demands including heightened emphasis on
environmental, social and governance concerns.
Duke Energy’s ability to execute its strategy and achieve anticipated
financial outcomes are influenced by the expectations of our customers,
regulators, investors, and stakeholders. Those expectations are based in part
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 as
well as the investment and financing criteria of investors. Failure to meet
these increasing expectations or to adequately address the risks and external
pressures from regulators, customers, investors and other stakeholders may
impact Duke Energy’s reputation and affect its ability to achieve favorable
outcomes in future rate cases and the results of operations for the Duke Energy
Registrants. Furthermore, the increasing use of social media may accelerate and
increase the potential scope of negative publicity we might receive and could
increase the negative impact on our reputation, business, results of operations,
and financial condition.
As it relates to electric generation, a diversified fleet with increasingly
clean generation resources may facilitate more efficient financing and lower
costs. Conversely, jurisdictions utilizing more carbon-intensive generation such
as coal may experience difficulty attracting certain investors and obtaining the
most economical financing terms available. Furthermore, with this heightened
emphasis on environmental, social, and governance concerns, and climate
change in particular, there is an increased risk of litigation by activists.
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 and changes in weather patterns from 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, changing frequency
or magnitude of extreme weather conditions such as hurricanes, droughts,
heat waves, winter storms and severe weather, including from 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.
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, including from climate change, can result in lost operating
revenues due to outages, property damage, including downed transmission and
PART I 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. In addition, the growth of renewables
and energy storage will put strains on existing transmission assets and require
transmission and distribution upgrades. 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 or regulations and laws enacted
to address climate change, 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 natural gas and electric 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.
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. The
Duke Energy Registrants that operate designated critical pipelines that transport
natural gas are also subject to security directives issued by the Department
of Homeland Security’s Transportation Security Administration (TSA) requiring
such registrants to implement specific cybersecurity mitigation measures. While
the Duke Energy Registrants believe they are in compliance with, or, in the case
of the recent TSA security directives, are in the process of implementing 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.
21
PART I 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.
Our business could be negatively affected as a result of actions of activist
shareholders.
While we strive to maintain constructive communications with our
shareholders, activist shareholders may, from time to time, engage in proxy
solicitations or advance shareholder proposals, or otherwise attempt to affect
changes and assert influence on our Board and management. Perceived
uncertainties as to the future direction or governance of the company may cause
concern to our current or potential regulators, vendors or strategic partners, or
make it more difficult to execute on our strategy or to attract and retain qualified
personnel, which may have a material impact on our business and operating
results.
In addition, actions such as those described above could cause
fluctuations in the trading price of our common stock, based on temporary or
speculative market perceptions or other factors that do not necessarily reflect
the underlying fundamentals and prospects of our business.
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.
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.
22
PART I 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, the generation mix of individual utilities, 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. Systemic 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.
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.
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.
Non-compliance with debt covenants or conditions could adversely affect
the Duke Energy Registrants’ ability to execute future borrowings.
GENERAL RISKS
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.
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.
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
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
23
PART I 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,
transportation systems for our fuel sources including natural gas pipelines,
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
24
PART I 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, 2021. The MW displayed in
the table below are based on summer capacity. Ownership interest in all facilities is 100% unless otherwise indicated.
Facility
Duke Energy Carolinas
Oconee
McGuire
Catawba(a)
Belews Creek
Marshall
J.E. Rogers
Lincoln Combustion Turbine (CT)
Allen
Rockingham CT
W.S. Lee Combined Cycle (CC)(b)
Buck CC
Dan River CC
Mill Creek CT
W.S. Lee
W.S. Lee CT
Clemson CHP
Bad Creek
Jocassee
Cowans Ford
Keowee
Other small facilities (19 plants)
Distributed generation
Total Duke Energy Carolinas
Duke Energy Progress
Brunswick
Harris
Robinson
Roxboro
Smith CC
H.F. Lee CC
Wayne County CT
Smith CT
Mayo
L.V. Sutton CC
Asheville CC
Asheville CT
Darlington CT
Weatherspoon CT
L.V. Sutton CT (Black Start)
Blewett CT
Walters
Other small facilities (3)
Distributed generation
Asheville – Rock Hill Battery
Total Duke Energy Progress
Plant Type
Primary Fuel
Location
Owned MW
Capacity
Uranium
Uranium
Uranium
Coal/Gas
Coal/Gas
Coal/Gas
Gas/Oil
Coal
Gas/Oil
Gas
Gas
Gas
Gas/Oil
Gas
Gas/Oil
Gas
Water
Water
Water
Water
Water
Solar
Uranium
Uranium
Uranium
Coal
Gas/Oil
Gas/Oil
Gas/Oil
Gas/Oil
Coal
Gas/Oil
Gas/Oil
Gas/Oil
Gas/Oil
Gas/Oil
Gas/Oil
Oil
Water
Water
Solar
Storage
SC
NC
SC
NC
NC
NC
NC
NC
NC
SC
NC
NC
SC
SC
SC
SC
SC
SC
NC
SC
NC/SC
NC
NC
NC
SC
NC
NC
NC
NC
NC
NC
NC
NC
NC
SC
NC
NC
NC
NC
NC
NC
NC
2,554
2,316
445
2,220
2,058
1,388
1,161
840
825
686
668
662
563
170
84
13
1,520
780
324
152
581
71
20,081
1,870
964
759
2,439
1,083
888
822
772
704
607
476
320
234
124
84
52
112
116
35
7
12,468
Nuclear
Nuclear
Nuclear
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Hydro
Hydro
Hydro
Hydro
Hydro
Renewable
Nuclear
Nuclear
Nuclear
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Hydro
Hydro
Renewable
Renewable
25
PART I
Facility
Duke Energy Florida
Hines CC
Citrus County CC
Crystal River
Bartow CC
Anclote
Intercession City CT
Osprey CC
DeBary CT
Tiger Bay CC
Bayboro CT
Bartow CT
Suwannee River CT
University of Florida CoGen CT
Distributed generation
Total Duke Energy Florida
Duke Energy Ohio
East Bend
Woodsdale CT
Total Duke Energy Ohio
Duke Energy Indiana
Gibson(c)
Cayuga(d)
Edwardsport
Madison CT
Wheatland CT
Vermillion CT(e)
Noblesville CC
Henry County CT
Cayuga CT
Markland
Distributed generation
Camp Atterbury Battery
Nabb Battery
Crane Battery
Total Duke Energy Indiana
Totals by Type
Total Electric Utilities
Totals by Plant Type
Nuclear
Fossil
Hydro
Renewable
Total Electric Utilities
Plant Type
Primary Fuel
Location
Owned MW
Capacity
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Renewable
Gas/Oil
Gas
Coal
Gas/Oil
Gas
Gas/Oil
Gas/Oil
Gas/Oil
Gas/Oil
Oil
Gas/Oil
Gas
Gas
Solar
Fossil
Fossil
Coal
Gas/Propane
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Hydro
Renewable
Renewable
Renewable
Renewable
Coal
Coal/Oil
Coal
Gas
Gas
Gas
Gas/Oil
Gas/Oil
Gas/Oil
Water
Solar
Storage
Storage
Storage
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
KY
OH
IN
IN
IN
OH
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
2,061
1,610
1,410
1,112
1,013
931
583
524
193
171
168
145
44
323
10,288
600
476
1,076
2,822
1,005
595
566
444
360
264
129
84
54
11
4
4
4
6,346
50,259
8,908
37,252
3,639
460
50,259
Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA. Duke Energy Carolinas’ ownership is 19.25% of the facility.
Jointly owned with NCEMC. Duke Energy Carolinas’ ownership is 87.27% of the facility.
(a)
(b)
(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)
(e)
Includes Cayuga Internal Combustion.
Jointly owned with WVPA. Duke Energy Indiana’s ownership is 62.5% of the facility.
26
PART I
The following table provides information related to Electric Utilities and Infrastructure’s electric transmission and distribution properties as of December 31, 2021.
Electric Transmission Lines
Miles of 500 to 525 kilovolt (kV)
Miles of 345 kV
Miles of 230 kV
Miles of 100 to 161 kV
Miles of 13 to 69 kV
Total conductor miles of electric transmission lines
Electric Distribution Lines
Miles of overhead lines
Miles of underground line
Total conductor miles of electric distribution lines
Number of electric transmission and distribution substations
Duke
Energy
Carolinas
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Duke
Energy
1,100
1,100
8,500
12,400
8,200
31,300
600
—
2,700
6,800
2,900
300
—
3,400
2,600
200
—
1,700
900
— 2,200
—
400
—
700
600
13,000
6,300
5,000
1,700
173,400
109,800
66,600
40,000
46,400
32,600
25,200
21,500
13,300
6,300
283,200
106,600
79,000
46,700
19,600
3,000
1,200
500
500
500
—
700
700
1,400
2,500
5,300
21,900
9,400
31,300
300
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.
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.
Miles of natural gas distribution and transmission pipelines
Miles of natural gas service lines
Duke
Energy
Ohio Piedmont
7,500
6,500
27,300
21,200
Duke
Energy
34,800
27,700
27
PART I
COMMERCIAL RENEWABLES
The following table provides information related to Commercial Renewables’ electric generation facilities as of December 31, 2021. The MW displayed in the
table below are based on nameplate capacity.
Plant Type
Primary Fuel
Location
Owned MW
Capacity
Ownership
Interest (%)
Facility
Commercial Renewables – Wind
Los Vientos (five sites)
Frontier Windpower II(a)
Mesteno(a)
Maryneal(a)
Sweetwater IV
Frontier Windpower
Top of the World
Notrees
Mesquite Creek
Campbell Hill
Ironwood
Sweetwater V
North Allegheny
Laurel Hill
Cimarron II
Kit Carson
Silver Sage
Happy Jack
Shirley
Total Renewables – Wind
Commercial Renewables – Solar
Holstein(a)
Rambler(a)
North Rosamond(a)
Pflugerville(a)
Lapetus(a)
Conetoe II
Palmer(a)
Broad River(a)
Seville I & II
Rio Bravo I & II
Wildwood I & II
Speedway(a)
Kelford
Dogwood
Halifax Airport
Pasquotank
Shawboro
Caprock
Creswell Alligood
Pumpjack
Longboat
Shoreham(a)
Washington White Post
Whitakers
Highlander I & II
Other small solar(a)
Total Renewables – Solar
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Renewable
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
Solar
TX
OK
TX
TX
TX
OK
WY
TX
TX
WY
KS
TX
PA
PA
KS
CO
WY
WY
WI
TX
TX
CA
TX
TX
NC
CO
NC
CA
CA
CA
NC
NC
NC
NC
NC
NC
NM
NC
CA
CA
NY
NC
NC
CA
Various
Various
TX
OH
465
352
202
182
113
103
102
78
54
50
43
38
36
35
34
26
21
15
10
1,959
200
200
150
144
100
80
60
50
34
27
23
23
22
20
20
20
20
17
14
13
13
13
12
12
11
233
1,531
44
44
18
2
20
51%
100%
100%
100%
47%
51%
51%
51%
26%
51%
26%
47%
51%
51%
26%
51%
51%
51%
51%
100%
100%
100%
100%
100%
100%
100%
100%
67%
67%
67%
100%
100%
100%
100%
100%
100%
67%
100%
67%
67%
51%
100%
100%
51%
Various
100%
51%
100%
Commercial Renewables – Fuel Cells(a)
Total Renewables – Fuel Cells
Commercial Renewables – Energy Storage
Notrees Battery Storage
Beckjord Battery Storage
Total Renewables – Energy Storage
Renewable
Fuel Cell
Renewable
Renewable
Storage
Storage
28
PART I Totals by Type
Wind
Solar
Fuel Cells
Energy Storage
Total Commercial Renewables(b)
Owned MW
Capacity
1,959
1,531
44
20
3,554
(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 4,729, which represents the amount managed or owned by Duke Energy.
OTHER
Duke Energy owns approximately 8 million square feet and, after exiting the Duke Energy Center in 2021, leases approximately 1.5 million square feet of
corporate, regional and district office space spread throughout its service territories. See Note 10, “Property, Plant and Equipment,” for further information.
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. Discovery will be specific to those sites. At this time, Duke Energy Merchants has not engaged in settlement negotiations with the
plaintiff and the plaintiff has not reached a settlement agreement with any defendant. 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.
29
PART I
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, 2022, there were 131,590 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 investment 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 2021
There were no repurchases of equity securities during the fourth quarter of 2021.
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, 2016, 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.
$250
$200
$150
$100
$50
$0
2016
2017
2018
2019
2020
2021
Duke Energy Corporation
Philadelphia Utility Index
S&P 500
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, 2021.
30
PART II ITEM 6. SELECTED FINANCIAL DATA
This is not applicable for any of the Duke Energy Registrants.
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, 2021, 2020 and 2019.
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, 2020, filed with the SEC on February 25,
2021, for a discussion of variance drivers for the year ended December 31,
2020, as compared to December 31, 2019.
Financial Results
DUKE ENERGY
Duke Energy is an energy company headquartered in Charlotte, North
Carolina. Duke Energy operates in the U.S. primarily through its direct and
indirect 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 2021, we continued to make progress, meeting our
near-term financial commitments, executing on strategic priorities, and
continuing to provide safe and reliable service while managing the ongoing
impacts of the COVID-19 pandemic.
In 2021, we continued to position the company for sustainable long-term
growth, working with stakeholders to achieve comprehensive bipartisan energy
legislation in North Carolina, executing an important North Carolina coal ash
settlement agreement, and closing the first phase of the $2 billion investment
of a minority interest in Duke Energy Indiana. We remain focused on executing
on our clean energy transformation and a business portfolio that will deliver a
reliable and growing dividend with 2021 representing the 95th consecutive year
Duke Energy paid a cash dividend on its common stock.
Annual Earnings (in millions)
Annual Earnings Per Share
Net Income Available to Duke Energy Corporation
common stockholders (GAAP)
Net Income Available to Duke Energy Corporation common
stockholders per basic share (GAAP)
Adjusted Earnings (a)
Adjusted Earnings Per Share (a)
$3,771
$3,802
$4,027
$5.12
$4.94
$5.24
$1,270
$1.72
2020
2021
2020
2021
(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 2021 Net Income Available to Duke Energy Corporation
(GAAP Reported Earnings) were impacted by favorable rate case outcomes
and improved volumes offset by charges which management believes are
not indicative of ongoing performance, including impairments related to
workplace and workforce realignment and regulatory settlements. 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.
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PART II 2021 Areas of Focus and Accomplishments
Clean Energy Transformation. Our industry has been undergoing an
incredible transformation and 2021 was a watershed year for our company
where we executed on strategic priorities and delivered on our vision.
Coal Ash Settlement
In January 2021, we reached an agreement with the North Carolina
Attorney General, the North Carolina Public Staff, and the Sierra Club on
costs related to coal ash management and safe basin closure, resolving the
last remaining major issues on coal ash management in North Carolina. This
settlement is significant as it resolves pending issues in the multiyear coal
ash basin closure debate in North Carolina, which is critical for paving the
way toward our clean energy future. The agreement brought financial clarity
to approximately $9 billion of mitigation costs, supporting coal ash cost
recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress
with a rate of return for the company. We agreed to reduce North Carolina
customers’ costs by approximately $1 billion, while maintaining our ability to
achieve our long-term financial goals and our transition to cleaner energy. The
settlement agreement resolved all coal ash prudence and cost recovery issues
in connection with the 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.
Minority Interest Investment in Duke Energy Indiana
In a significant move to support the company’s path to net-zero strategy,
in September 2021 we completed the first phase of the investment of a 19.9%
minority interest in Duke Energy Indiana by an affiliate of GIC, transferring
11.05% ownership interest in exchange for approximately $1.025 billion. The
proceeds from the two-phase $2.05 billion investment are expected to partially
fund the company’s $63 billion capital and investment expenditure plan. This
plan includes grid improvement, investments in clean energy and an improved
customer experience – keys to our strategy to reduce carbon emissions from
electricity generation to net-zero by 2050.
North Carolina Energy Legislation
In October 2021, North Carolina House Bill 951 was signed into law
after legislative leaders announced bipartisan support for and the General
Assembly passed this new legislation. House Bill 951 reflects new state
policy that would accelerate a clean energy transition for generation serving
customers in the Carolinas, including providing a framework for a goal of 70%
carbon reduction in electric generation in the state from 2005 levels by 2030
and carbon neutrality by 2050 while continuing to prioritize affordability and
reliability for our customers, who are located in North Carolina and South
Carolina. The legislation establishes a framework overseen by the NCUC to
advance state CO2 emission reductions through the use of least cost planning,
including stakeholder involvement, and also introduces modernized recovery
mechanisms, including multiyear rate plans, that promote more efficient
recovery of investments and align incentives between the company and the
state’s energy policy objectives.
Generating Cleaner Energy
We’re targeting energy generated from coal to represent less than
5% by 2030 and a full exit by 2035, subject to regulatory approvals. We’ve
made strong progress to date in reducing carbon emissions from electricity
generation (a 44% reduction from 2005) and have committed to do more
(at least 50% reduction by 2030 and net-zero by 2050). We’ve filed and refined
comprehensive IRPs consistent with this strategy in multiple jurisdictions
and updated the enterprise capital plan through 2026 to increase planned
investments to $63 billion with over 80% of this capital plan funding
investments in the grid and clean energy transition. The increased capital plan
will allow us to accelerate coal plant retirements, make needed grid investments
to enable renewables and energy storage, increase resiliency, and allow for
dynamic power flows.
Our commitment for 2030 includes retiring higher-emitting plants,
operating our existing carbon-free resources and investing in renewables, our
energy delivery system, and natural gas infrastructure. In 2021, we passed
the milestone of 10,000 MW of solar and wind resources and plan to own or
purchase 16,000 MW of renewables by 2025 and 24,000 MW by 2030. In
June, we filed an application with the NRC to renew Oconee Nuclear Station’s
operating licenses for an additional 20 years and we intend to seek 20-year
extensions and renewal of operating licenses for all 11 reactors. As we look
beyond 2030, we will need additional tools to continue our progress. We will
work actively to advocate for research and development and deployment of
carbon-free, dispatchable resources. That includes longer-duration energy
storage, advanced nuclear technologies, carbon capture and zero-carbon fuels.
Modernizing the Power Grid and Natural Gas Infrastructure
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.
We continue to expand our self-optimizing grid capabilities, and in 2021,
smart, self-healing technologies helped to avoid more than 700,000 extended
customer outages across our six-state electric service area, saving customers
more than 1.2 million hours of lost outage time. We added 60 new self-healing
networks in 2021 across our six-state service area and upgraded many
existing systems to improve their smart capabilities and self-healing efficiency.
Additionally, we expect to invest $100 million in electric vehicle charging over
the next three years. Duke Energy 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.
Recognizing the continued importance of natural gas to our plans, we
continue to work toward a net-zero methane emission goal by 2030 related
to our natural gas distribution business. In August 2021, we announced a
partnership with Accenture and Microsoft to develop a novel technology platform
with the intent of measuring baseline methane emissions from natural gas
distribution systems with a high level of accuracy in near real time. Once
deployed, we expect the use of satellite technology and the new platform will
increase the speed of a field response team’s ability to identify and repair
methane leaks along distribution lines and systems.
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. As highlighted above, House Bill 951 provides
the framework for many of these benefits in North Carolina under the direction
of the NCUC. Also, in October 2021, the Southeast Energy Exchange Market
(SEEM) received clearance from the FERC. The new SEEM platform will facilitate
sub-hourly, bilateral trading, allowing participants to buy and sell power close
to the time the energy is consumed, utilizing available unreserved transmission.
Southeastern electricity customers are expected to see cost, reliability and
environmental benefits.
In 2021, we received constructive rate case orders related to our 2019
North Carolina rate cases for both Duke Energy Carolinas and Duke Energy
Progress and also reached constructive settlement agreements in our natural
gas businesses in Kentucky, North Carolina, and Tennessee. In October 2021,
Duke Energy Ohio filed a request to review the company’s electric distribution
32
PART II rates. We have a multiyear rate plan in Florida and in January 2021, we reached
a constructive settlement agreement with key consumer groups to bring
additional certainty to rates through 2024. In addition, grid investment riders in
the Midwest and Florida 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. We successfully implemented the first three jurisdictional releases
of Customer Connect, a new system that consolidates four legacy billing
systems into one customer-service platform, allowing us to deliver the universal
experience customers expect. Our work has been recognized by our customers
and we have maintained our above-target performance throughout the year,
despite the resumption of standard billing and payment practices in most
jurisdictions.
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 2021, and we are at or near the
top of our industry.
Storm activity was limited in our regulated service territories in 2021,
but we supported Entergy Louisiana, sending approximately 500 workers
to aid in restoring power after Hurricane Ida. The February winter storm in
Texas adversely impacted Duke Energy Renewables’ operations. In addition to
operating at reduced capacity, we were required to purchase power at scarcity
pricing levels to meet fixed volume commitments. Enterprisewide lessons
learned were formed immediately following the Texas weather event to identify
opportunities to ensure readiness for extreme weather. Our ability to effectively
handle all facets of the 2021 storm response efforts, including navigating
ongoing 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. Duke Energy
has received over 20 Emergency Response Awards since EEI began recognizing
storm response in 1998 (including eight for assisting other utilities, and eight in
our service territories over the last decade).
Leading Through COVID-19. COVID-19 continued to impact all that we
accomplished in 2021 and demonstrated our resiliency and agility:
• In addition to achieving financial results in the upper half of our original
guidance, we have continued our cost-management journey – focused
on driving productivity, increasing flexibility and prioritizing spend based
on risk and strategic value to our customers and investors. In 2021,
we maintained approximately $200 million of O&M savings identified
during the earliest days of the pandemic. We also have successfully
navigated supply chain challenges and the impacts of inflation. Our
procurement teams have created action plans to enhance planning,
augment supply, amend operations and leverage our scale to mitigate
these risks to the extent possible.
• Duke Energy kept electricity and natural gas flowing while continuing
to voluntarily make significant accommodations for our customers.
To continue to support our customers, we extended the COVID-19
payment flexibility policies we developed in 2020 without compromising
our financial performance. We extended payment arrangements for
new arrearages, modified reconnection policies and increased the time
customers had to restructure agreements. We analyzed each state’s
regulatory environment to identify additional state-specific solutions.
To better connect customers to federal and state assistance dollars:
a dedicated Agency team was created to help local customer assistance
agencies in making pledges for Duke Energy customers; a small team
was established to work directly with state and federal agencies; and
a team of “payment navigators” was piloted to work directly with
customers to connect them with available assistance dollars in their
local communities.
• We implemented safety procedures designed to provide physical safety
for our workers and provided support for our employees. Throughout
the year, we aligned with local, state, and federal policies on COVID-19
protocols.
• In May, we announced that the Duke Energy Plaza, a 40-floor office
tower currently under construction in Uptown Charlotte, will become the
company’s new corporate headquarters, allowing us to reduce occupied
space in the Charlotte area by approximately 60% to optimize our
real estate footprint. We’ve rolled out our new hybrid workplace model
(WorkSmart) with about 85% of our office-based workforce working in
the WorkSmart model. The WorkSmart team has prepared our buildings
to ensure employees return to work safely and have put in place the
tools and technologies needed to ensure the most effective transition.
Duke Energy Objectives – 2022 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 2022, 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 our 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 and our
natural gas infrastructure
• Maintaining the safety of our communities and employees
• Deploying digital tools across our business
• Working to encourage greenhouse gas emission reductions in our supply
chain as we implement the update to our goals to include Scope 2
and certain Scope 3 emissions in our 2050 net-zero goal. The Scope 3
emissions included in our goal include emissions from upstream
fossil fuel procurement, production of power purchased for resale, and
from downstream use of sold products in our natural gas distribution
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.
33
PART II Regulatory Matters
Coal Ash Costs
Duke Energy Carolinas and Duke Energy Progress have approximately
$1.2 billion and $1.4 billion, respectively, in regulatory assets related to coal
ash retirement obligations as of December 31, 2021. Future spending, including
amounts recorded for depreciation and liability accretion, is expected to
continue to be deferred. The majority of spend is expected to occur over the next
15-20 years.
Duke Energy Indiana has interpreted the CCR rule to identify the coal
ash basin sites impacted and has assessed the amounts of coal ash subject
to the rule and a method of compliance. In 2020, the Hoosier Environmental
Council filed a petition challenging the Indiana Department of Environmental
Management’s (IDEM) partial approval of five of Duke Energy Indiana’s ash
pond site closure plans at Gallagher Station. The petition does not challenge the
other basin closures approved by IDEM at other Indiana stations. Interpretation
of the requirements of the CCR rule is subject to further legal challenges
and regulatory approvals, which could result in additional ash basin closure
requirements, higher costs of compliance and greater AROs. Additionally, Duke
Energy Indiana has retired facilities that are not subject to the CCR rule. Duke
Energy Indiana may incur costs at these facilities to comply with environmental
regulations or to mitigate risks associated with on-site storage of coal ash.
Duke Energy Indiana has approximately $749 million in regulatory assets
related to coal ash asset retirement obligations as of December 31, 2021.
In January 2022, Duke Energy Indiana received a letter from the EPA regarding
interpretation of the CCR rule. See Note 4 to the Consolidated Financial
Statements, “Commitments and Contingencies” for more information.
MGP
Duke Energy Ohio and other parties have filed with the PUCO a
Stipulation and Recommendation that would resolve all open issues regarding
manufactured gas plant remediation costs incurred between 2013 and 2019,
including Duke Energy Ohio’s request for additional deferral authority beyond
2019, and the pending issues related to the Tax Act as it relates to Duke Energy
Ohio’s natural gas operations. These impacts, if approved by the PUCO, are not
expected to have a material impact on Duke Energy Ohio’s financial statements.
Duke Energy Ohio has approximately $104 million in regulatory assets related
to MGP as of December 31, 2021. Failure to approve the Stipulation and
Recommendation, 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.”
Commercial Renewables
Duke Energy continues to monitor recoverability of renewable merchant
plants located in the Electric Reliability Council of Texas West market and in the
PJM West market, due to fluctuating market pricing and long-term forecasted
energy prices. Based on the most recent recoverability test, the carrying value
approximated the aggregate estimated future undiscounted cash flows for the
assets under review. A continued decline in energy market pricing or other
factors unfavorably impacting the economics would likely result in a future
impairment. Duke Energy has approximately $200 million in property, plant
and equipment related to these assets as of December 31, 2021. 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. Lost revenues and higher than expected
purchased power costs have negatively impacted the operating results of these
generating units. In addition, Duke Energy has been named in multiple lawsuits
arising out of this winter storm. For more information, see Notes 2 and 4 to the
Consolidated Financial Statements, “Business Segments” and “Commitments
and Contingencies,” respectively.
Duke Energy is also monitoring supply chain disruptions, including the
cost and availability of key components of planned generating facilities, which
could impact the timing of in-service or economics of commercial renewables
projects and may result in adverse impacts on operating results.
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:
• Workplace and Workforce Realignment represents costs attributable
to business transformation, including long-term real estate strategy
changes and workforce realignment.
• Regulatory Settlements represents an impairment charge related to
the South Carolina Supreme Court decision on coal ash, insurance
proceeds, the Duke Energy Carolinas and Duke Energy Progress coal
ash settlement and the partial settlements in the 2019 North Carolina
rate cases.
• Gas Pipeline Investments represents costs related to the cancellation of
the ACP investment and additional exit obligations.
• Severance represents the reversal of 2018 Severance charges, which
were deferred as a result of a partial settlement in the Duke Energy
Carolinas and Duke Energy Progress 2019 North Carolina rate cases.
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.
34
PART II 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.
(in millions, except per share amounts)
GAAP Reported Earnings/EPS
Adjustments to Reported:
Workplace and Workforce Realignment(a)
Regulatory Settlements(b)
Gas Pipeline Investments(c)
Severance(d)
Discontinued Operations
Adjusted Earnings/Adjusted EPS
Years Ended December 31,
2021
2020
Earnings
$ 3,802
148
69
15
—
(7)
$ 4,027
EPS
$ 4.94
0.20
0.09
0.02
—
(0.01)
$ 5.24
Earnings
$ 1,270
—
872
1,711
(75)
(7)
$ 3,771
EPS
$ 1.72
—
1.19
2.32
(0.10)
(0.01)
$ 5.12
(a) Net of tax benefit of $44 million.
(b) Net of tax benefit of $21 million and tax benefit of $263 million for the years ended December 31, 2021, and 2020, respectively.
(c) Net of tax benefit of $5 million and tax benefit of $399 million for the years ended December 31, 2021, and 2020, respectively.
(d) Net of tax expense of $23 million.
Year Ended December 31, 2021, as compared to 2020
SEGMENT RESULTS
GAAP Reported EPS was $4.94 for the year ended December 31, 2021,
compared to $1.72 for the year ended December 31, 2020. The increase in
GAAP Reported Earnings/EPS was primarily due to prior year charges related
to the cancellation of the ACP pipeline and the CCR Settlement Agreement filed
with the NCUC, partially offset by workplace and workforce realignment costs in
the current year.
As discussed and shown in the table above, management also evaluates
financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was
$5.24 for the year ended December 31, 2021, compared to $5.12 for the year
ended December 31, 2020. The increase in Adjusted Earnings/Adjusted EPS was
primarily due to positive rate case contributions and higher volumes, partially
offset by higher operation and maintenance expenses, lower Commercial
Renewables earnings and share dilution from equity issuances.
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
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operations, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Less: Income Attributable to Noncontrolling Interest
Segment Income
Duke Energy Carolinas GWh sales
Duke Energy Progress GWh sales
Duke Energy Florida GWh sales
Duke Energy Ohio GWh sales
Duke Energy Indiana GWh sales
Total Electric Utilities and Infrastructure GWh sales
Net proportional MW capacity in operation
Years Ended December 31,
2021
$ 22,603
6,332
5,340
4,251
1,233
204
17,360
13
5,256
534
1,432
4,358
494
14
$ 3,850
87,796
66,797
42,422
24,129
31,388
252,532
49,871
2020
$ 21,720
6,128
5,391
4,068
1,188
971
17,746
11
3,985
344
1,320
3,009
340
—
$ 2,669
84,574
65,240
42,490
23,484
30,528
246,316
50,419
Variance
$ 883
204
(51)
183
45
(767)
(386)
2
1,271
190
112
1,349
154
14
$1,181
3,222
1,557
(68)
645
860
6,216
(548)
35
PART II Year Ended December 31, 2021, as compared to 2020
Electric Utilities and Infrastructure’s variance is due to higher revenues
from rate cases in various jurisdictions, higher retail sales volumes and the
prior year coal ash settlement agreement filed with the NCUC, partially offset
by an impairment charge related to the South Carolina Supreme Court decision
on coal ash, higher depreciation and amortization and interest expense. The
following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
• a $420 million increase in retail base rate pricing due to general rate
cases in Indiana and North Carolina net of rider impacts as well as
annual increases from the multiyear settlement rate adjustments in
Florida;
• a $192 million increase in weather-normal retail sales volumes;
• a $172 million increase in fuel revenues primarily driven by higher
sales volumes; and
• a $145 million increase in wholesale revenues primarily due to a prior
year coal ash settlement agreement filed with the NCUC.
Partially offset by:
• a $140 million decrease in storm revenues due to full recovery of
Hurricane Dorian costs in the prior year.
Operating Expenses. The variance was driven primarily by:
• a $767 million decrease in impairment of assets and other charges
primarily due to the prior year CCR Settlement Agreement filed with the
NCUC in January 2021, partially offset by the South Carolina Supreme
Court decision on coal ash at Duke Energy Carolinas and Duke Energy
Progress in the current year; and
• a $51 million decrease in operations, maintenance and other driven
by decreased storm amortization at Duke Energy Florida and lower
COVID-19 costs, partially offset by higher employee-related expenses.
Partially offset by:
• a $204 million increase in fuel used in electric generation and
purchased power primarily due to higher sales volumes;
• a $183 million increase in depreciation and amortization primarily due
to resolution of rate cases and higher plant in service, partially offset
by lower depreciation related to the extension of the lives of nuclear
facilities at Duke Energy Carolinas and Duke Energy Progress; and
• a $45 million increase in property and other taxes primarily due to
higher property taxes at Duke Energy Carolinas and Duke Energy Ohio
and a prior year sales and use tax refund at Duke Energy Carolinas.
Other Income and Expenses, net. The increase is primarily due to coal
ash insurance litigation proceeds at Duke Energy Carolinas and Duke Energy
Progress and lower non-service pension costs.
Interest Expense. The variance was primarily driven by interest expense
on excess deferred tax liabilities removed from rate base as a result of the
North Carolina rate cases, debt returns on a lower coal ash regulatory asset
balance resulting from the CCR Settlement Agreement as well lower debt returns
resulting from the Indiana rate case.
Income Tax Expense. The increase in tax expense was primarily due to
an increase in pretax income, partially offset by an increase in the amortization
of excess deferred taxes.
Gas Utilities and Infrastructure
(in millions)
Operating Revenues
Operating Expenses
Cost of natural gas
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Operating Income
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates
Other Income and Expenses, net
Total other income and expenses
Interest Expense
Income (Loss) Before Income Taxes
Income Tax Expense (Benefit)
Segment Income (Loss)
Years Ended December 31,
2021
2,112
705
442
303
120
19
1,589
523
8
62
70
142
451
55
396
$
$
2020
1,748
460
430
258
112
7
1,267
481
(2,017)
56
(1,961)
135
(1,615)
(349)
(1,266)
$
$
Variance
364
245
12
45
8
12
322
42
2,025
6
2,031
7
2,066
404
1,662
$
$
Piedmont Local Distribution Company (LDC) throughput (Dth)
Duke Energy Midwest LDC throughput (MCF)
542,759,891
85,787,624
490,071,039
84,160,162
52,688,852
1,627,462
36
PART II Year Ended December 31, 2021, as compared to 2020
Gas Utilities and Infrastructure’s results were impacted primarily by the
cancellation of the ACP pipeline in the prior year and margin growth, partially
offset by higher depreciation expense. The following is a detailed discussion of
the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
• a $245 million increase due to higher natural gas costs passed through to
customers, higher volumes and increased off-system sales natural gas costs;
• a $52 million increase due to base rate increases;
• a $22 million increase due to rider revenues related to the Ohio Capital
Expenditure Program (CEP);
• a $12 million increase due to customer growth; and
• an $11 million increase due to North Carolina IMR.
Operating Expenses. The variance was driven primarily by:
• a $245 million increase in cost of natural gas due to higher natural gas
prices, higher volumes and increased off-system sales natural gas costs;
• a $45 million increase in depreciation due to additional plant in service
and depreciation adjustments; and
• a $12 million increase in impairment of assets and other charges
related to the propane caverns in Ohio and Kentucky, partially offset by
an impairment of ACP redelivery projects in the prior year.
Equity in earnings (losses) of unconsolidated affiliates. The variance
was driven primarily by the cancellation of the ACP pipeline in the prior year.
Income Tax Expense. The increase in tax expense was primarily due to the
cancellation of the ACP pipeline project recorded in the prior year.
Commercial Renewables
(in millions)
Operating Revenues
Operating Expenses
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Losses on Sales of Other Assets and Other, net
Operating Loss
Other Income and Expenses, net
Interest Expense
Loss Before Income Taxes
Income Tax Benefit
Add: Loss Attributable to Noncontrolling Interests
Segment Income
Renewable plant production, GWh
Net proportional MW capacity in operation(a)
Years Ended December 31,
2021
$
476
2020
$
502
Variance
$
(26)
342
225
34
—
601
—
(125)
(24)
72
(221)
(78)
344
201
$
285
199
27
6
517
(1)
(16)
7
66
(75)
(65)
296
286
$
10,701
4,729
10,204
3,937
57
26
7
(6)
84
1
(109)
(31)
6
(146)
(13)
48
(85 )
497
792
$
(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, 2021, as compared to 2020
Commercial Renewables’ results were unfavorable to prior year primarily
driven by the impacts from Texas Storm Uri, which resulted in a $35 million
pretax loss, as well as lower earnings from unfavorable wind resource and fewer
projects financed with tax equity being placed in service in the current year.
Operating Revenues. The variance was primarily driven by a $19 million
decrease due to lower wind resource and operating downtime, a $15 million
decrease for lower market prices in the current year impacting the wind
portfolio, and a $4 million decrease due to fewer distributed energy projects
placed into service. This was partially offset by an $8 million increase for
market sales in excess of market purchases during Texas Storm Uri and a
$6 million increase due to growth of new projects.
Operating Expenses. The variance was primarily due to $49 million
for higher operating expenses, depreciation expense and property tax expense
as a result of the growth in new projects placed in service since prior year,
$31 million increase for higher operating expenses attributed to maintenance at
several wind and solar facilities, an $8 million increase for higher engineering
and construction costs within the distributed energy portfolio, and a $2 million
increase associated with Texas Storm Uri. This was partially offset by a
$6 million decrease related to an impairment charge in the prior year for a
non-contracted wind project.
Other Income and Expenses, net. The variance was primarily driven
by a $29 million loss in equity earnings due to the impacts of Texas Storm Uri.
Income Tax Benefit. The increase in the tax benefit was primarily
driven by an increase in pretax losses partially offset by an increase in taxes
associated with tax equity investments and a decrease in PTCs generated.
Loss Attributable to Noncontrolling Interests. The variance was
primarily driven by the net increase of losses allocated to tax equity members
of $60 million from existing and new projects financed with tax equity, partially
offset by a $12 million loss resulting from Texas Storm Uri.
37
PART II Other
(in millions)
Operating Revenues
Operating Expenses
Losses on Sales of Other Assets and Other, net
Operating (Loss) Income
Other Income and Expenses, net
Interest Expense
Loss Before Income Taxes
Income Tax Benefit
Less: Net Income Attributable to Noncontrolling Interests
Less: Preferred Dividends
Net Loss
Years Ended December 31,
2021
111
412
(1)
(302)
121
643
(824)
(279)
1
106
(652)
$
$
2020
97
12
—
85
92
657
(480)
(162)
1
107
(426)
$
$
Variance
$
$
14
400
(1)
(387)
29
(14)
(344)
(117)
—
(1)
(226)
Year Ended December 31, 2021, as compared to 2020
The higher net loss was driven by asset impairments to optimize the
company’s real estate portfolio and reduce office space as parts of the business
move to a hybrid and remote workforce strategy as well as a reversal of
severance costs in the prior year.
Operating Expenses. The increase in operations, maintenance and other
of $248 million was primarily due to a reversal of severance costs in the prior
year and higher obligations to the Duke Energy Foundation in the current year.
The increase in impairment of assets and other charges of $132 million was
due to asset impairments taken in order to optimize the company’s real estate
portfolio and reduce office space as parts of the business move to a hybrid and
remote workforce strategy.
Other Income and Expenses, net. The variance was primarily due to
higher equity earnings from the NMC investment.
Income Tax Benefit. The increase in the tax benefit was primarily driven
by an increase in pretax losses and a reduction of a valuation allowance relating
to a capital loss carryforward, partially offset by lower state tax expense in the
prior year.
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
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Years Ended December 31,
2021
$ 7,102
2020
$ 7,015
Variance
$
87
1,601
1,833
1,468
320
227
5,449
2
1,655
270
538
1,387
51
$ 1,336
$
1,682
1,743
1,462
299
476
5,662
1
1,354
177
487
1,044
88
956
(81)
90
6
21
(249)
(213)
1
301
93
51
343
(37)
$
380
38
PART II 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
Residential sales
General service sales
Industrial sales
Wholesale power sales
Joint dispatch sales
Total sales
Average number of customers
2021
4.6 %
2.7 %
5.2 %
4.5 %
2.8 %
3.8 %
2.3 %
Year Ended December 31, 2021, as compared to 2020
Operating Revenues. The variance was driven primarily by:
• a $98 million increase in weather-normal retail sales volumes;
• a $53 million increase in wholesale revenue primarily driven by the CCR
Settlement Agreement filed with the NCUC in January 2021;
• a $51 million increase due to higher pricing from the North Carolina
retail rate case, net of a return of EDIT to customer; and
• a $13 million increase in retail sales due to more favorable weather.
Partially offset by:
• an $81 million decrease in fuel used in electric generation and purchased
power primarily associated with the recovery of fuel expenses, partially
offset by higher natural gas prices and changes in the generation mix.
Partially offset by:
• a $90 million increase in operation, maintenance and other expense
primarily due to higher employee-related expenses; and
• a $21 million increase in property and other taxes primarily due to
property tax valuation adjustments and a prior year sales and use tax
refund, partially offset by sales and use tax refunds in the current year
and lower payroll tax due to the CARES Act employee retention credits.
• an $87 million decrease in fuel revenues due to lower prices, partially
Other Income and Expense, net. The variance was primarily due to coal
offset by higher retail sales volumes; and
ash insurance litigation proceeds and lower non-service pension costs.
• a $26 million decrease in rider revenues primarily due to energy
efficiency programs.
Operating Expenses. The variance was driven primarily by:
• a $249 million decrease in impairment of assets and other charges
due to the prior year CCR Settlement Agreement filed with the NCUC
in January 2021, partially offset by the South Carolina Supreme Court
decision on coal ash and optimization of the company’s real estate
portfolio and reduction of office space as parts of the business move to
a hybrid and remote workforce strategy; and
Interest Expense. The variance was driven by interest expense on excess
deferred tax liabilities removed from rate base as a result of the North Carolina
rate case and debt returns on a lower coal ash regulatory asset balance
resulting from the CCR Settlement Agreement.
Income Tax Expense. The decrease in tax expense was primarily due to
an increase in the amortization of excess deferred taxes, partially offset by an
increase in pretax income.
PROGRESS ENERGY
Results of Operations
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Less: Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Parent
Years Ended December 31,
2021
$ 11,057
2020
$ 10,627
Variance
430
$
3,584
2,529
1,929
542
82
8,666
14
2,405
215
794
1,826
227
1,599
1
1,598
$
3,479
2,479
1,818
545
495
8,816
9
1,820
129
790
1,159
113
1,046
1
1,045
$
105
50
111
(3)
(413)
(150)
5
585
86
4
667
114
553
—
$
553
39
PART II Year Ended December 31, 2021, as compared to 2020
Operating Revenues. The variance was driven primarily by:
• a $223 million increase in retail pricing due to the North Carolina rate
case and base rate adjustments at Duke Energy Florida related to
annual increases from the 2017 Settlement Agreement and the solar
base rate adjustment;
• a $176 million increase in fuel cost recovery driven by higher volumes
in the current year and accelerated recovery of retired Crystal River coal
units;
• a $70 million increase in weather-normal retail sales volumes;
• a $58 million increase in wholesale revenues, net of fuel, primarily
driven by a prior year coal ash settlement and higher capacity volumes
at Duke Energy Progress, partially offset by a restructured capacity
contract at Duke Energy Florida;
• a $25 million increase in other revenues at Duke Energy Florida
primarily due to higher transmission revenues and higher customer
charges that were waived due to COVID-19 in the prior year; and
• a $20 million increase in rider revenues at Duke Energy Florida
primarily due to increased retail sales volumes.
Partially offset by:
• a $140 million decrease in storm revenues at Duke Energy Florida due
to full recovery of Hurricane Dorian costs in the prior year.
Operating Expenses. The variance was driven primarily by:
• a $413 million decrease in impairment of assets and other charges
primarily due to the prior year CCR Settlement Agreement filed with
the NCUC in January 2021, partially offset by the current year South
Carolina Supreme Court decision on coal ash at Duke Energy Progress
and optimization of the company’s real estate portfolio and reduction
of office space as parts of the business move to a hybrid and remote
workforce strategy.
Partially offset by:
• a $111 million increase in depreciation and amortization primarily due
to accelerated depreciation of retired Crystal River coal units and an
increase in plant base at Duke Energy Florida, partially offset by the
extension of the lives at nuclear facilities at Duke Energy Progress;
• a $105 million increase in fuel used in electric generation and
purchased power primarily due to higher demand, changes in
generation mix and recognition of RECs used for compliance at Duke
Energy Progress and outside fuel purchases during a major plant
outage; and
• a $50 million increase in operation, maintenance and other expense
driven by higher employee-related costs, a prior year severance cost
adjustment related to the 2019 North Carolina retail rate case and
outage costs, partially offset by reduced storm amortization at Duke
Energy Florida.
Other Income and Expenses, net. The increase is primarily due to coal
ash insurance litigation proceeds at Duke Energy Progress, lower non-service
pension costs and unrealized gains on the nuclear decommissioning trust fund
at Duke Energy Florida.
Income Tax Expense. The increase in tax expense was primarily due to
an increase in pretax income, partially offset by an increase in the amortization
of excess deferred taxes.
DUKE ENERGY PROGRESS
Results of Operations
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense (Benefit)
Net Income
Years Ended December 31,
2021
$ 5,780
2020
$ 5,422
Variance
$
358
1,778
1,467
1,097
159
63
4,564
13
1,229
143
306
1,066
75
$
991
$
1,743
1,332
1,116
167
499
4,857
8
573
75
269
379
(36)
415
35
135
(19)
(8)
(436)
(293)
5
656
68
37
687
111
576
$
40
PART II 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
Residential sales
General service sales
Industrial sales
Wholesale power sales
Joint dispatch sales
Total sales
Average number of customers
2021
6.0%
(0.4)%
(7.7)%
4.0 %
(2.2)%
2.4%
1.5 %
Year Ended December 31, 2021, as compared to 2020
Operating Revenues. The variance was driven primarily by:
• a $140 million increase due to higher pricing from the North Carolina
retail rate case, net of a return of EDIT to customers;
• an $80 million increase in wholesale revenues, net of fuel, primarily due
to a coal ash settlement in the prior year, and higher capacity volumes,
partially offset by lower recovery of coal ash costs;
• a $58 million increase in weather-normal retail sales volumes in the
current year;
• a $44 million increase in retail sales due to more favorable weather; and
• a $14 million increase in fuel cost recovery driven by higher fuel prices
and volumes in the current year.
Operating Expenses. The variance was driven primarily by:
• a $436 million decrease in impairment of assets and other charges
primarily due to the prior year CCR Settlement Agreement filed with the
NCUC in January 2021; and
• a $19 million decrease in depreciation and amortization expense,
primarily driven by the extension of the lives of nuclear facilities.
Partially Offset by:
• a $135 million increase in operation, maintenance and other expense
primarily due to higher employee-related costs and a prior year
severance cost adjustment related to the 2019 North Carolina retail rate
case, increased outage costs and energy efficiency program costs; and
• a $35 million increase in fuel used in electric generation and purchased
power primarily due to higher demand and changes in generation mix
as well as recognition of RECs used for compliance.
Other Income and Expense, net. The increase is primarily due to coal
ash insurance litigation proceeds and lower non-service pension costs.
Interest Expense. The variance was driven by interest expense on excess
deferred tax liabilities removed from rate base as a result of the North Carolina
rate case and debt returns on a lower coal ash regulatory asset balance
resulting from the CCR Settlement Agreement.
Income Tax Expense. The increase in tax expense was primarily due to
an increase in in pretax income, partially offset by the amortization of excess
deferred taxes.
DUKE ENERGY FLORIDA
Results of Operations
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Years Ended December 31,
2021
$ 5,259
2020
$ 5,188
Variance
$
71
1,806
1,048
831
383
19
4,087
1
1,173
71
319
925
187
738
$
1,737
1,131
702
381
(4)
3,947
1
1,242
53
326
969
198
771
$
69
(83)
129
2
23
140
—
(69)
18
(7)
(44)
(11)
(33)
$
41
PART II 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
Residential sales
General service sales
Industrial sales
Wholesale power sales
Total sales
Average number of customers
Year Ended December 31, 2021, as compared to 2020
Operating Revenues. The variance was driven primarily by:
• a $162 million increase in fuel and capacity revenues primarily due to
higher retail sales volumes and accelerated recovery of the retired coal
units Crystal River 1 and 2;
• an $83 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 $25 million increase in other revenues primarily due to lower
revenues in the prior year due to the moratorium on customer late
payments and service charges in response to the COVID-19 pandemic,
lower outdoor lighting equipment rentals in the prior year, and higher
transmission revenues due to prior year customer settlement and the
increased network billing rates;
• a $20 million increase in rider revenues primarily due to increased
volumes; and
• a $12 million increase in weather-normal retail sales volumes.
Partially offset by:
• a $140 million decrease in storm revenues due to full recovery of
Hurricane Dorian costs in the prior year;
• a $63 million decrease in retail sales, net of fuel revenues, due to
unfavorable weather in the current year; and
2021
(1.2)%
2.3%
4.6%
22.6%
(0.2)%
1.5%
• a $22 million decrease in wholesale power revenues, net of fuel,
primarily due to a restructured capacity contract.
Operating Expenses. The variance was driven primarily by:
• a $129 million increase in depreciation and amortization primarily due
to accelerated depreciation of retired coal units Crystal River 1 and 2
and an increase in plant base;
• a $69 million increase in fuel used in electric generation and purchased
power primarily due to higher natural gas prices, and outside fuel
purchases during a major plant outage at the Hines facility; and
• a $23 million increase in impairment of assets and other charges to
optimize the company’s real estate portfolio and reduce office space as
parts of the business move to a hybrid and remote workforce strategy.
Partially offset by:
• an $83 million decrease in operation, maintenance and other expense
primarily due to decreased storm amortization costs, partially offset by
outage maintenance costs at Hines and the timing of Customer Connect
costs including training and labor.
Other Income and Expense, net. The increase is primarily due to lower
non-service pension costs and gains on the nuclear decommissioning trust fund.
Income Tax Expense. The decrease in tax expense was primarily due to a
decrease in pretax income.
DUKE ENERGY OHIO
Results of Operations
(in millions)
Operating Revenues
Regulated electric
Regulated natural gas
Total operating revenues
Operating Expenses
Fuel used in electric generation and purchased power
Cost of natural gas
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
2021
$ 1,493
544
2,037
409
136
479
307
355
25
1,711
1
327
18
111
234
30
204
$
Years Ended December 31,
2020
Variance
$ 1,405
453
1,858
339
73
463
278
324
—
1,477
—
381
16
102
295
43
252
$
$
$
88
91
179
70
63
16
29
31
25
234
1
(54)
2
9
(61)
(13)
(48)
42
PART II 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.
Increase (Decrease) over prior year
Residential sales
General service sales
Industrial sales
Wholesale electric power sales
Other natural gas sales
Total sales
Average number of customers
Electric
2021
2.7%
3.0%
4.0%
45.8%
n/a
2.7%
0.6%
Natural Gas
2021
—%
4.8%
3.2%
n/a
1.6%
1.9%
0.8%
Year Ended December 31, 2021, as compared to 2020
Operating Revenues. The variance was driven primarily by:
• an $88 million increase in fuel-related revenues primarily due to higher
natural gas prices and increased volumes;
• a $35 million increase in revenues related to OVEC collections and
OVEC sales into PJM;
• a $22 million increase due to revenues related the Ohio CEP;
• an $18 million increase in PJM transmission revenues as a result of
increased capital spend;
• a $12 million increase in retail pricing primarily due to the Duke Energy
Kentucky electric general rate case; and
• a $5 million increase in revenues due to favorable weather.
Operating Expenses. The variance was driven primarily by:
• a $133 million increase in fuel expense primarily driven by higher retail
prices and increased volumes for natural gas and purchased power;
• a $31 million increase in property and other taxes primarily due
to increased plant in service, and higher kilowatt and natural gas
distribution taxes due to increased usage;
• a $28 million increase in depreciation and amortization primarily driven
by an increase in distribution plant in service and decreased Ohio CEP
deferrals; and
• a $25 million increase in impairment of assets and other charges related
to the propane caverns in Ohio and Kentucky and other charges to
optimize the company’s real estate portfolio and reduce office space as
parts of the business move to a hybrid and remote workforce strategy.
Income Tax Expense. The decrease in tax expense was primarily due to a
decrease in pretax income.
DUKE ENERGY INDIANA
Results of Operations
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
2021
$ 3,174
985
750
615
73
9
2,432
742
42
196
588
107
481
$
Years Ended December 31,
2020
$ 2,795
Variance
$
379
767
762
569
81
—
2,179
616
37
161
492
84
$
408
$
218
(12)
46
(8)
9
253
126
5
35
96
23
73
43
PART II 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
Residential sales
General service sales
Industrial sales
Wholesale power sales
Total sales
Average number of customers
2021
3.0%
4.3%
2.9%
5.8%
2.8%
1.1%
Year Ended December 31, 2021, as compared to 2020
Operating Revenues. The variance was driven primarily by:
• a $175 million increase in fuel revenues primarily due to higher fuel
cost recovery driven by customer demand and fuel prices;
• a $134 million increase primarily due to higher base rate pricing from
the Indiana retail rate case, net of lower rider revenues;
• a $34 million increase in wholesale revenues primarily related to higher
rates in the current year;
• a $22 million increase in weather-normal retail sales volumes driven by
higher nonresidential customer demand; and
• a $14 million increase in retail sales due to favorable weather in the
current year.
Operating Expenses. The variance was driven primarily by:
• a $218 million increase in fuel used in electric generation and
purchased power expense primarily due to higher natural gas prices
and increased purchased power;
• a $46 million increase in depreciation and amortization primarily due
to a change in depreciation rates from the Indiana retail rate case,
amortization of deferred coal ash pond ARO and additional plant in
service; and
• a $9 million increase in impairment of assets and other charges to
optimize the company’s real estate portfolio and reduce office space as
parts of the business move to a hybrid workforce strategy.
Partially offset by:
• a $12 million decrease in operation, maintenance and other primarily
due to major outage costs incurred in the prior year and outage delays
in the current year; and
• an $8 million decrease in property and other taxes attributable to
property tax true ups for prior periods, utility receipts tax refunds and
lower payroll tax due to the CARES Act employee retention credits.
Interest Expense. The variance is primarily driven by lower post-in-
service carrying costs and higher debt returns in the prior year on ash basin
closure costs resulting from the Indiana retail rate case.
Income Tax Expense. The increase in tax expense was primarily due to
an increase in pretax income.
PIEDMONT
Results of Operations
(in millions)
Operating Revenues
Operating Expenses
Cost of natural gas
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Operating Income
Equity in earnings of unconsolidated affiliates
Other income and expenses, net
Total other income and expenses
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Years Ended December 31,
2021
$ 1,569
2020
$ 1,297
Variance
$
272
569
327
213
55
10
1,174
395
9
55
64
119
340
30
310
$
386
322
180
53
7
948
349
9
51
60
118
291
18
273
$
183
5
33
2
3
226
46
—
4
4
1
49
12
37
$
44
PART II 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 year
Residential deliveries
Commercial deliveries
Industrial deliveries
Power generation deliveries
For resale
Total throughput deliveries
Secondary market volumes
Average number of customers
2021
7.0%
6.9%
4.1%
14.0%
13.2%
10.8%
37.2%
1.9%
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.
Year Ended December 31, 2021, as compared to 2020
Operating Revenues. The variance was driven primarily by:
• a $183 million increase due to higher natural gas costs passed through
to customers, higher volumes, and increased off-system sales natural
gas costs;
• a $52 million increase due to base rate increases;
• a $12 million increase due to customer growth; and
• an $11 million increase due to North Carolina IMR.
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;
Operating Expenses. The variance was driven primarily by:
• recent rate orders to other regulated entities;
• a $183 million increase due to higher natural gas costs passed through to
customers, higher volumes, and increased off-system sales natural gas
costs; and
• a $33 million increase in depreciation expense due to additional plant in
service and depreciation adjustments.
Income Tax Expense. The increase in tax expense was primarily due to
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.”
• 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.
For further information, see Note 3 to the Consolidated Financial
Statements, “Regulatory Matters.”
Goodwill Impairment Assessments
Duke Energy performed its annual goodwill impairment tests for all
reporting units as of August 31, 2021. 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, 2021, all of the reporting
45
PART II 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 2021 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, 2021, for each of
Duke Energy’s reporting units ranged from 5.4% to 5.8%. 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. The implied market multiples used
for calculating the fair values as of August 31, 2021, for each of Duke Energy’s
reporting units ranged from 9.7 to 12.7.
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
or implied market multiples over a prolonged period may have a material impact
on the fair value of equity.
Duke Energy has approximately $19.3 billion in Goodwill at both
December 31, 2021, and 2020. 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. Duke Energy has approximately $12.8 billion and $13 billion of AROs as
of December 31, 2021, and 2020, respectively. See Note 9, “Asset Retirement
Obligations,” for further details including a rollforward of related liabilities.
The present value of the initial obligation and subsequent updates are
based on discounted cash flows, which include estimates regarding the amount
and timing of future cash flows, regulatory, legal, and legislative decisions,
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. Certain ash basins have had
probability weightings applied to them based on different potential closure
methods and the probabilities surrounding pending legal changes.
For further information, see Notes 3, 4 and 9 to the Consolidated Financial
Statements, “Regulatory Matters,” “Commitments and Contingencies” and “Asset
Retirement Obligations.”
Long-Lived Asset Impairment Assessments, Excluding Regulated
Operations
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.
During 2021, Duke Energy evaluated recoverability of certain renewable
merchant plants due to changing market pricing and declining long-term
forecasted energy prices, primarily driven by lower long-term forecasted
natural gas prices, capital cost of new renewables and increased renewable
penetration. It was determined the assets were all recoverable as the carrying
value of the assets approximated or were less than the aggregate estimated
future cash flows. Duke Energy has approximately $200 million and $210 million
in Property, plant and equipment related to these assets as of December 31,
2021, and 2020, respectively.
Workplace and workforce realignment has been a focus for the company
and costs have been incurred attributable to business transformation, including
long-term real estate strategy changes and workforce realignment. For further
information, see Notes 2 and 10 to the Consolidated Financial Statements,
“Business Segments” and “Property, Plant and Equipment.”
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.
46
PART II 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, 2021, 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 2.90% as of December 31, 2021. 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,
2021, 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.
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 2022 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.
(in millions)
Effect on 2022 pretax pension and other post-retirement expense:
Expected long-term rate of return
Discount rate
Effect on pension and other post-retirement benefit obligation at December 31, 2022:
Discount rate
Qualified and Non-
Qualified Pension Plans
Other Post-Retirement Plans
0.25%
(0.25)%
0.25%
(0.25)%
$ (21)
(6)
$ 21
6
(189)
193
$ —
1
(11)
$ —
(1)
12
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. Additionally, due to its existing tax attributes, Duke Energy does not
expect to be a significant federal cash taxpayer until around 2030.
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)
New generation
Regulated renewables
Environmental
Nuclear fuel
Major nuclear
Customer additions
Grid modernization and other transmission and distribution projects
Maintenance and other
Total Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Commercial Renewables and Other
Total projected capital and investment expenditures
47
2022
2023
2024
$
14
$
156
$
445
742
780
453
252
596
4,154
2,959
9,950
1,350
1,194
1,346
580
366
186
591
4,377
3,050
10,500
1,375
461
385
48
605
4,526
2,609
10,425
1,150
1,050
$ 12,350
1,100
$ 12,975
650
$12,225
PART II Debt
Fuel and Purchased Power
Long-term debt maturities and the interest payable on long-term debt
each represent a significant cash requirement for the Duke Energy Registrants.
See Note 6 to the Consolidated Financial Statements, “Debt and Credit
Facilities,” for information regarding the Duke Energy Registrants’ long-term
debt at December 31, 2021, the weighted average interest rate applicable to
each long-term debt category and a schedule of long-term debt maturities over
the next five years.
Fuel and purchased power 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. Duke Energy’s contractual cash obligations for
fuel and purchased power as of December 31, 2021, are as follows:
(in millions)
Fuel and purchased power
Other Purchase Obligations
Other purchase obligations includes contracts for software, telephone,
data and consulting or advisory services, 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.
Total cash commitments for related other purchase obligation expenditures are
$7,941 million, with $7,526 million expected to be paid in the next 12 months.
See Note 5 to the Consolidated Financial Statements, “Leases” for a
schedule of both finance lease and operating lease payments over the next
five years. See Note 9 to the Consolidated Financial Statements, “Asset
Retirement Obligations” for information on nuclear decommissioning trust
funding obligations and the closure of ash impoundments.
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 in Note 7 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.”
Cash and Liquidity
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.
Payments Due By Period
Less than
1 year
(2022)
4,594
$
2-3 years
(2023 &
2024)
6,071
$
4-5 years
(2025 &
2026)
3,618
$
Total
19,976
$
More than
5 years
(2027 &
beyond)
5,693
$
As of December 31, 2021, Duke Energy had approximately $343 million
of cash on hand, $5.0 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. Additionally, by January 2023, Duke Energy is expecting another
$1,025 million from GIC for the second closing of the investment in Duke Energy
Indiana. Proceeds from the minority interest investment are expected to partially
fund Duke Energy’s $63 billion capital and investment expenditure plan. 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.
Dividend Payments
In 2021, Duke Energy paid quarterly cash dividends for the 95th
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. Duke Energy increased the dividend by approximately
2% annually in both 2021 and 2020, 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, 2021, 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
48
PART II 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.
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 2022, Duke Energy anticipates issuing additional securities of
$9.5 billion through debt capital markets. In certain instances Duke Energy may
utilize instruments other than senior notes, including equity-content securities
such as subordinated debt or 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 2021.
Duke Energy’s capitalization is balanced between debt and equity as
shown in the table below.
Equity
Debt
Projected 2022
Actual 2021
Actual 2020
42 %
58 %
43%
57%
44 %
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,
2021, 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.
Credit Ratings
Moody’s Investors Service, Inc. and S&P provide credit ratings for various
Duke Energy Registrants. The following table includes Duke Energy and certain
subsidiaries’ credit ratings and ratings outlook as of February 2022.
Duke Energy Corporation
Issuer Credit Rating
Senior Unsecured Debt
Junior Subordinated Debt/Preferred Stock
Commercial Paper
Duke Energy Carolinas
Senior Secured Debt
Senior Unsecured Debt
Progress Energy
Senior Unsecured Debt
Duke Energy Progress
Senior Secured Debt
Duke Energy Florida
Senior Secured Debt
Senior Unsecured Debt
Duke Energy Ohio
Senior Secured Debt
Senior Unsecured Debt
Duke Energy Indiana
Senior Secured Debt
Senior Unsecured Debt
Duke Energy Kentucky
Senior Unsecured Debt
Piedmont Natural Gas
Senior Unsecured
Moody’s
Stable
Baa2
Baa2
Baa3/Ba1
P-2
Stable
Aa3
A2
Stable
Baa1
Stable
Aa3
Stable
A1
A3
Stable
A2
Baa1
Stable
Aa3
A2
Stable
Baa1
Stable
A3
S&P
Stable
BBB+
BBB
BBB-
A-2
Stable
A
BBB+
Stable
BBB
Stable
A
Stable
A
BBB+
Stable
A
BBB+
Stable
A
BBB+
Stable
BBB+
Stable
BBB+
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.
49
PART II Cash Flow Information
The following table summarizes Duke Energy’s cash flows for the two most recently completed fiscal years.
(in millions)
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
Net decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
OPERATING CASH FLOWS
Years Ended December 31,
2021
2020
$
8,290
$
8,856
(10,935)
2,609
(36)
556
520
$
(10,604)
1,731
(17)
573
556
$
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)
Net income
Non-cash adjustments to net income
Payments for AROs
Refund of AMT credit carryforwards
Working capital
Net cash provided by operating activities
$
$
2021
3,579
5,941
(540)
—
(690)
2020
1,082
8,353
(610)
572
(541)
$
8,290
$
8,856
$
Variance
$
2,497
(2,412)
70
(572)
(149)
(566)
The variance was driven primarily by:
Partially offset by:
• a $572 million refund of AMT credit carryforwards in the prior year; and
• a $149 million increase in cash outflows from working capital primarily
due to an increase in under collected fuel used in generation due to
higher pricing, partially offset by coal ash insurance litigation proceeds,
fluctuations in accounts payable levels and timing of property tax
accruals and payments in the current year.
• an $85 million increase in net income after adjustment for non-cash
items primarily due to higher revenues from rate cases in various
jurisdictions, higher retail sales volumes and the prior year coal
ash settlement agreement filed with the NCUC, partially offset by
an impairment charge related to the South Carolina Supreme Court
Decision on coal ash, higher depreciation, amortization and accretion
and interest expense; and
• a $70 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.
(in millions)
Years Ended December 31,
2021
2020
Variance
Capital, investment and acquisition expenditures, net of return of investment capital
$
(9,752)
$ (10,144)
$
Debt and equity securities, net
Disbursements to canceled equity method investments
Other investing items
Net cash used in investing activities
5
(855)
(333)
(62)
—
(398)
392
67
(855)
65
$ (10,935)
$ (10,604)
$
(331)
The variance relates primarily to a payment made to fund ACP’s outstanding debt, partially offset by a decrease in capital expenditures due to lower overall
investments in the Commercial Renewables segment. The primary use of cash related to investing activities is typically capital, investment and acquisition
expenditures, net of return of investment capital detailed by reportable business segment in the following table.
(in millions)
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Commercial Renewables
Other
Years Ended December 31,
2021
2020
Variance
$
7,653
$
7,612
$
1,271
543
285
1,303
965
264
41
(32)
(422)
21
Total capital, investment and acquisition expenditures, net of return of investment capital
$
9,752
$
10,144
$
(392)
50
PART II 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)
Issuance of common stock
Issuances of long-term debt, net
Notes payable and commercial paper
Dividends paid
Contributions from noncontrolling interests
Other financing items
Net cash provided by financing activities
The variance was driven primarily by:
Partially offset by:
2021
$
5
$
3,758
479
(3,114)
1,575
(94)
2020
2,745
1,824
(319)
(2,812)
426
(133)
$
2,609
$
1,731
$
Variance
$
(2,740)
1,934
798
(302)
1,149
39
878
• a $1,934 million net increase in proceeds from issuances of long-term
debt, primarily due to timing of issuances and redemptions of long-term
debt;
• a $1,149 million increase in contributions from noncontrolling interests,
primarily due to a $1,025 million receipt from GIC to make an indirect
minority interest investment of 11.05% in Duke Energy Indiana; and
• a $798 million increase in net borrowings from notes payable and
commercial paper.
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
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
the effects of regulation, commodity contract size and length, market liquidity,
market conditions, location and unique or specific contract terms. Duke Energy
is exposed to the impact of market fluctuations in the prices of electricity, coal,
• a $2,740 million decrease in proceeds from the issuance of common
stock.
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 through its regulated utility
operations is limited since these operations are subject to cost-based regulation
and 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
exposure to market price fluctuations in prices of electricity or other energy-
related products as a result of its ownership of renewable assets, although
its exposure to the market price of power is generally limited by entering into
contracts with third parties to sell the production of these assets, usually for a
term of 10 to 15 years from commercial operation.
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.”
Generation Portfolio Risks
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 limited due to mechanisms in these regulated
jurisdictions that result in the sharing of most of the net profits from these
activities with retail customers.
The majority of the energy assets in Duke Energy’s Commercial
Renewables segment operate in regions managed by RTOs and are therefore
governed and dispatched under the rules of the applicable RTO. Depending on
51
PART II the structure of power sale agreements with third parties, these assets may be
exposed to basis risk associated with different locational marginal prices based
on the specific delivery locations and requirements specified in the agreements.
Additionally, these assets may be subject to operational constraints under the
RTO rules and may be exposed to market price risk.
Hedging Strategies
Duke Energy 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 hedging 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 to the extent such output is not under contract to third parties.
Duke Energy also manages its exposure to basis risk through the use of
congestion hedge products in RTOs such as financial transmission rights (PJM)
and congestion revenue rights (ERCOT), which result in payments based on
differentials in locational marginal prices. 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.
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 $7.5 billion of unhedged long- and short-term floating
interest rate exposure at December 31, 2021. The impact of a 100-basis point
change in interest rates on pretax income is approximately $75 million at
December 31, 2021. 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, 2021.
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 fully phased out in 2023. 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. Impacted financial arrangements
extending beyond the phaseout of LIBOR 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 the phaseout
of LIBOR. 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.
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 as
52
PART II a result of the national emergency. While disconnections have resumed, the
company continued to offer flexible options to customers struggling with the
pandemic and the economic fallout, including extended payment arrangements
to satisfy delinquent balances through June 2021. Since then, the company
has resumed standard payment arrangement options. The Duke Energy
Registrants are still 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 as of December 31, 2021. There is an expectation of an increase in
charge-offs in the future and the Duke Energy Registrants have reserved for
these losses in the allowance for doubtful account balance. See Notes 3 and 18
to the Consolidated Financial Statements, “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.
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, 2021, 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.
53
PART II 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.
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.
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 Act
AROs recorded on the Duke Energy Carolinas and Duke Energy Progress
Consolidated Balance Sheets at December 31, 2021, and December 31, 2020,
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
54
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 action 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.
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 $3.1 billion has been spent through 2021.
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.
North Carolina House Bill 951
On October 13, 2021, North Carolina Governor Roy Cooper signed into law
legislation passed by the North Carolina House of Representatives and Senate
(the “Legislation”). This Legislation establishes a framework overseen by the
NCUC to advance state CO2 emissions reductions through the use of least
cost planning while providing for continued reliability and affordable rates for
customers served by such generation. It also authorizes the use of performance-
based regulation in North Carolina. Among other things, the Legislation requires
the NCUC to:
• develop an initial carbon plan that would target a 70% reduction in CO2
emissions from public utilities’ electric generation in the state by 2030
and carbon neutrality by 2050, considering all resource options and the
latest technology;
• adopt rules to implement the requirements of the Legislation authorizing
performance-based regulation that includes multiyear rate plans with a
maximum three-year term, performance incentive mechanisms to track
PART II utility performance, and revenue decoupling for the residential customer
class;
• establish rules to securitize costs associated with the early retirement
of subcritical coal-fired electric generating facilities necessary to
achieve the authorized carbon reduction goals at 50% of remaining
net book value, with the remaining net book value recovered through
normal cost of service basis; and
• initiate a process for updating rates and terms of certain existing solar
power purchase agreements executed under PURPA.
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. 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.
long-duration storage and advanced nuclear, in its efforts to achieve its net-zero
goal as well as to comply with any future regulations. Duke Energy plans to
adjust to and incorporate evolving and innovative technologies in a way that
balances the reliability and affordability while meeting 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. Future levels of
GHG emissions by the Duke Energy Registrants will be influenced by variables
that include capacity needs in the jurisdictions in which they operate, public
policy, tax incentives, economic conditions that affect electricity demand, fuel
prices, market prices, availability of resources and labor, compliance with new
or existing regulations, the ability to make enhancements to transmission and
distribution systems to support increased renewables, and the existence of new
technologies that can be deployed to generate the electricity necessary to meet
customer demand.
Currently, the Duke Energy Registrants do not purchase carbon credits
or offsets for use in connection with the company’s net-zero emissions goals.
Though they may purchase carbon credits or offsets for such uses in the future ,
the amount or cost of which is not expected to be material at this time.
Global Climate Change and Regulation of GHG Emissions
Generation Mix Planning Process
In 2021, President Biden recommitted the United States to the Paris
Agreement and announced a new target for the United States of 50% - 52%
reduction in economywide net GHG emissions from 2005 levels by 2030. The
U.S. submittal to support this Paris target includes a goal for 100% carbon-free
electricity by 2035. These actions have been supplemented by a number of
executive orders by President Biden and an indication by a number of regulatory
agencies, including the EPA, that they would impose additional regulations
on CO2 and methane emissions to which Duke Energy will be subject. The
Duke Energy Registrants are monitoring these matters and cannot predict the
outcome, however, there could be a material impact on our climate strategy.
CO2 Emissions Reductions
The Duke Energy Registrants’ direct GHG emissions consist primarily
of CO2 that results primarily from operating a fleet of coal-fired and natural
gas-fired power plants to serve its customers reliably and affordably. 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. The Duke Energy Registrants have taken actions that have resulted in a
reduction of CO2 emissions over time. Between 2005 and 2021, the Duke Energy
Registrants have collectively lowered the CO2 emissions from their electricity
generation by 44%. Timelines and initiatives, as well as implementation of new
technologies, for future reductions of GHG emissions will vary in each state
in which the company operates and will involve collaboration with regulators,
customers and other stakeholders. The goals announced in 2019, as well as
the actions taken to reduce CO2 emissions, potentially lower the exposure to
any future mandatory CO2 emission reduction requirements, whether as a result
of federal legislation, EPA regulation, state regulation or other as yet unknown
emission reduction requirement.
Actions to reduce CO2 emissions have included the retirement of 56 coal-
fired electric generating units with a combined generating capacity of 7,500
MW, while investing in renewables and state-of-the-art highly efficient natural
gas-fired generation that produces far fewer CO2 emissions per unit of electricity
generated than coal. Duke Energy also has made investments to 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.
Duke Energy will continue to explore the use of currently available and
commercially demonstrated technology to reduce CO2 emissions, including EE,
wind, solar and storage, as well as evolving technologies like carbon capture,
utilization and storage, the use of hydrogen and other low-carbon fuels,
55
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 generation
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.
In September 2020, Duke Energy Carolinas and Duke Energy Progress
filed their IRPs in North Carolina and South Carolina, and, in December 2021,
Duke Energy Indiana filed its IRP, outlining an accelerated energy transition
which aligns with the company’s 2030 CO2 emissions goal. In December 2021
the PSCSC rejected Duke Energy Carolinas and Duke Energy Progress’ preferred
accelerated coal retirements IRP scenario and instead found that the base case
without a price on CO2 emissions was the most reasonable IRP scenario.
In 2021, the State of North Carolina passed HB 951, which among other
things, directs the NCUC to develop and approve a carbon reduction plan by
the end of 2022 that would target a 70% reduction in CO2 emissions from Duke
Energy Progress’ and Duke Energy Carolinas’ electric generation in the state
by 2030 and carbon neutrality by 2050, considering all resource options and
the latest technology. In light of this legislation, in November 2021, the NCUC
declined to make a determination on the portfolios presented in the 2020 IRP
noting that the legislation may impact the schedule for coal plant retirements
and new resources and limited its order to short term actions for use on an
interim basis pending preparation of the carbon plan. The NCUC’s carbon
reduction plan will be informed by Duke Energy’s initial carbon plan, which will
be filed with the NCUC by May 16, 2022, building on the IRPs that were filed
in 2020 by Duke Energy Carolinas and Duke Energy Progress and incorporating
feedback from extensive stakeholder engagement.
PART II CO2 and Methane Emissions Reductions from the Natural Gas
Distribution Business
In addition to CO2 emissions resulting primarily from our operations of
coal-fired and natural gas-fired power plants, the Duke Energy Registrants are
also responsible for certain methane emissions from the distribution of natural
gas to customers. On October 9, 2020, Duke Energy announced a new goal to
achieve net-zero methane emissions from its natural gas distribution business
by 2030. The Duke Energy Registrants have taken actions that have resulted in
methane emission reductions, including the replacement of cast iron and bare
steel pipelines and associated services with plastic or coated steel, advanced
methane leak detection efforts, reducing time to repair nonhazardous leaks and
operational releases of methane, and investment in renewable natural gas.
Timelines and initiatives, as well as implementation of new technologies,
for future reductions of upstream methane emissions will vary in each state in
which the company’s natural gas distribution business operates and will involve
collaboration with regulators, customers and other stakeholders. EPA has
also proposed regulations that would require reduction of methane emissions
upstream of the Duke Energy Registrants’ natural gas distribution business.
The impact of these regulations on natural gas fuel prices is not currently
quantifiable.
In addition to possible EPA regulation of methane emissions, certain
local governments, none within the jurisdictions in which the Duke Energy
Registrants operate, have enacted or are considering initiatives to eliminate
natural gas use in new buildings and focus on electrification. Enactment of
similar regulations in the areas in which the Duke Energy Registrants’ natural
gas distribution operates could have a significant impact on the natural gas
distribution business and its operations. At this time, such impacts are not able
to be quantified; however, the net-zero methane goals announced in 2020 for
the natural gas distribution business, as well as the actions taken to reduce
these GHG emissions, potentially lowers the exposure to any future mandatory
GHG emission reduction requirements. The Duke Energy Registrants would plan
to seek recovery of their compliance costs with any new regulations through the
regulatory process.
Physical Impacts of Climate Change
The Duke Energy Registrants recognize that scientists associate severe
weather events with increasing levels of GHGs in the atmosphere. It is possible
that 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. Additionally, the Duke Energy Registrants would plan to
continue to seek recovery of storm costs through the appropriate regulatory
mechanisms. For more information on storm securitization in North Carolina
and storm cost recovery in Florida, see Note 3 to the Consolidated Financial
Statements, “Regulatory Matters.”
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 systems 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.
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.”
56
PART II 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...........................................................
58
60
61
62
64
66
67
69
70
71
72
73
75
76
77
78
79
81
82
83
84
85
87
88
89
90
91
93
94
95
96
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...........................................................
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 ....................................................................................
97
99
100
101
102
103
105
106
107
108
109
117
121
139
144
148
154
155
155
158
160
161
163
164
169
173
179
183
188
189
190
191
205
210
211
57
PART II 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, 2021 and
2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2021, 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, 2021, 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 24, 2022, 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 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, 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 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. As of December 31, 2021, the Company has approximately $14.6 billion recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
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 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.
58
PART II • We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors,
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 also evaluated the external information and compared it to management’s recorded 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 in the financial statements are probable of recovery.
Noncontrolling Interests - Minority Interest Investment in Duke Energy Indiana – Refer to Note 1 to the financial statements
Critical Audit Matter Description
On January 28, 2021, the Company executed an agreement providing for an investment by an affiliate of GIC Private Limited in Duke Energy Indiana in exchange
for a 19.9% minority interest issued by Duke Energy Indiana Holdco, LLC, the holding company for Duke Energy Indiana. The transaction will be completed following
two closings for an aggregate purchase price of approximately $2 billion. The first closing occurred on September 8, 2021 and resulted in Duke Energy Indiana Holdco,
LLC issuing 11.05% of its membership interests in exchange for 50% of the purchase price. The Company retained indirect control of these assets, and, therefore, no
gain or loss was recognized on the Consolidated Statements of Operations. The difference between the net cash consideration received and the carrying value of the
noncontrolling interest was recorded as an increase to equity. The Company has the discretion to determine the timing of the second closing, but the closing will occur
no later than January 2023.
We identified the minority interest investment in Duke Energy Indiana as a critical audit matter because of the extensive audit effort required to audit the
transaction, including the need to involve professionals in our firm with the appropriate expertise to assist us in evaluating management’s conclusions that there
should be no gain or loss associated with this transaction recognized on the Consolidated Statements of Operations for the year ended December 31, 2021.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the minority interest investment in Duke Energy Indiana included the following, among others:
• We tested the effectiveness of controls over the accounting assessment of significant and non- routine transactions, including the controls over the income
tax treatment of such transactions.
• We evaluated management’s conclusions related to accounting for the transaction by:
◦ Obtaining and reading the agreement providing for the minority investment,
◦ Involving professionals in our firm with the appropriate expertise to evaluate the work performed by management’s expert related to the tax treatment of
the transaction,
◦ Assessing management’s documentation for accounting for the transaction.
• We evaluated the appropriateness of the Company’s disclosures related to the minority interest investment.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 1947.
59
PART II DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
Operating Revenues
Regulated electric
Regulated natural gas
Nonregulated electric and other
Total operating revenues
Operating Expenses
Fuel used in electric generation and purchased power
Cost of natural gas
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains (Losses) on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates
Other income and expenses, net
Total other income and expenses
Interest Expense
Income From Continuing Operations Before Income Taxes
Income Tax Expense (Benefit) From Continuing Operations
Income From Continuing Operations
Income (Loss) From Discontinued Operations, net of tax
Net Income
Add: Net Loss Attributable to Noncontrolling Interests
Net Income Attributable to Duke Energy Corporation
Less: Preferred Dividends
Years Ended December 31,
2021
2020
2019
$ 22,319
2,008
770
$ 21,461
1,642
765
$ 22,615
1,759
705
25,097
23,868
25,079
6,255
705
6,042
4,990
1,389
356
6,051
460
5,788
4,705
1,337
984
6,826
627
6,066
4,548
1,307
(8)
19,737
19,325
19,366
13
5,373
28
643
671
2,280
3,764
192
3,572
7
3,579
329
3,908
106
10
4,553
(2,005)
453
(1,552)
2,162
839
(236)
1,075
7
1,082
295
1,377
107
(4)
5,709
162
430
592
2,204
4,097
519
3,578
(7)
3,571
177
3,748
41
Net Income Available to Duke Energy Corporation Common Stockholders
$ 3,802
$ 1,270
$ 3,707
Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted
Net income available to Duke Energy Corporation common stockholders
Basic and Diluted
Weighted average shares outstanding
Basic
Diluted
See Notes to Consolidated Financial Statements
$
$
$
4.93
0.01
4.94
769
769
$
$
$
1.71
$
5.07
0.01
$ (0.01)
1.72
$
5.06
737
738
729
729
60
PART II DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Net Income
Other Comprehensive Income (Loss), net of tax(a)
Pension and OPEB adjustments
Net unrealized losses on cash flow hedges
Reclassification into earnings from cash flow hedges
Unrealized (losses) gains on available-for-sale securities
Other Comprehensive Loss, net of tax
Comprehensive Income
Add: Comprehensive Loss Attributable to Noncontrolling Interests
Comprehensive Income Attributable to Duke Energy Corporation
Less: Preferred Dividends
Years Ended December 31,
2021
2020
2019
$3,579
$1,082
$3,571
7
(68)
13
(8)
(56)
3,523
319
3,842
106
6
(138)
11
3
(118)
964
306
1,270
107
9
(47)
6
8
(24)
3,547
177
3,724
41
Comprehensive Income Available to Duke Energy Corporation Common Stockholders
$3,736
$1,163
$3,683
(a) Net of income tax impacts of approximately $17 million and $35 million for the years ended December 31, 2021, and 2020, respectively. Tax impacts are immaterial for other periods presented.
See Notes to Consolidated Financial Statements
61
PART II DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Cash and cash equivalents
Receivables (net of allowance for doubtful accounts of $46 at 2021 and $29 at 2020)
Receivables of VIEs (net of allowance for doubtful accounts of $76 at 2021 and $117 at 2020)
Inventory
Regulatory assets (includes $105 at 2021 and $53 at 2020 related to VIEs)
Other (includes $256 at 2021 and $296 at 2020 related to VIEs)
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Facilities to be retired, net
Net property, plant and equipment
Other Noncurrent Assets
Goodwill
Regulatory assets (includes $1,823 at 2021 and $937 at 2020 related to VIEs)
Nuclear decommissioning trust funds
Operating lease right-of-use assets, net
Investments in equity method unconsolidated affiliates
Other (includes $92 at 2021 and $81 at 2020 related to VIEs)
Total other noncurrent assets
Total Assets
See Notes to Consolidated Financial Statements
December 31,
2021
2020
$
343
1,173
2,437
3,199
2,150
638
9,940
$
259
1,009
2,144
3,167
1,641
462
8,682
161,819
(50,555)
144
155,580
(48,827)
29
111,408
106,782
19,303
12,487
10,401
1,266
970
3,812
48,239
19,303
12,421
9,114
1,524
961
3,601
46,924
$169,587
$ 162,388
62
PART II DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS – (Continued)
(in millions)
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Notes payable and commercial paper
Taxes accrued
Interest accrued
Current maturities of long-term debt (includes $243 at 2021 and $472 at 2020 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $4,854 at 2021 and $3,535 at 2020 related to VIEs)
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Investment tax credits
Other (includes $319 at 2021 and $316 at 2020 related to VIEs)
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2021 and 2020
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2021 and 2020
Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2021 and 2020
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Duke Energy Corporation stockholders' equity
Noncontrolling interests
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
December 31,
2021
2020
$
3,629
3,304
749
533
3,387
647
1,211
2,471
15,931
60,448
9,379
12,129
16,152
1,074
855
833
1,650
42,072
973
989
1
44,371
3,265
(303)
49,296
1,840
51,136
$
3,144
2,873
482
537
4,238
718
1,377
2,936
16,305
55,625
9,244
12,286
15,029
1,340
969
687
1,719
41,274
973
989
1
43,767
2,471
(237)
47,964
1,220
49,184
$169,587
$ 162,388
63
PART II DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)
Equity in (earnings) losses of unconsolidated affiliates
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Payments for asset retirement obligations
Provision for rate refunds
Refund of AMT credit carryforwards
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions
Receivables
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Contributions to equity method investments
Return of investment capital
Purchases of debt and equity securities
Proceeds from sales and maturities of debt and equity securities
Disbursements to canceled equity method investments
Other
Net cash used in investing activities
Years Ended December 31,
2021
2020
2019
$ 3,579
$ 1,082
$ 3,571
5,663
(28)
(171)
356
191
(540)
(70)
—
50
(297)
(34)
(1,136)
249
284
(13)
112
95
5,486
2,005
(154)
984
54
(610)
(22)
572
63
(56)
66
205
(21)
117
(65)
(408)
(442)
5,176
(162)
(139)
(8)
806
(746)
60
573
(48)
78
(122)
10
(164)
(224)
172
(555)
(69)
8,290
8,856
8,209
(9,715)
(81)
44
(6,098)
6,103
(855)
(333)
(9,907)
(370)
133
(8,011)
7,949
—
(398)
(11,122)
(324)
11
(3,348)
3,343
—
(517)
(10,935)
(10,604)
(11,957)
See Notes to Consolidated Financial Statements
64
PART II DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)
(in millions)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt
Issuance of preferred stock
Issuance of common stock
Payments for the redemption of long-term debt
Proceeds from the issuance of short-term debt with original maturities greater than 90 days
Payments for the redemption of short-term debt with original maturities greater than 90 days
Notes payable and commercial paper
Contributions from noncontrolling interests
Dividends paid
Other
Net cash provided by financing activities
Net decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash received from income taxes
Significant non-cash transactions:
Accrued capital expenditures
Non-cash dividends
See Notes to Consolidated Financial Statements
Years Ended December 31,
2021
2020
2019
$ 9,052
—
5
(5,294)
332
(997)
1,144
1,575
(3,114)
(94)
$ 6,330
—
2,745
(4,506)
3,009
(2,147)
(1,181)
426
(2,812)
(133)
$ 7,091
1,962
384
(3,476)
397
(479)
(298)
843
(2,668)
(26)
2,609
1,731
3,730
(36)
556
(17)
573
(18)
591
$
520
$
556
$
573
$ 2,248
(3)
$ 2,186
(585)
$ 2,195
(651)
1,325
—
1,116
110
1,356
108
65
PART II DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Duke Energy Corporation Stockholders’
Accumulated Other Comprehensive
Income (Loss)
(in millions)
Preferred
Stock
Common
Stock
Shares
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Net Gains
(Losses) on
Cash Flow
Hedges
Net Unrealized
Gains (Losses)
on Available-
for-Sale-
Securities
Total
Duke Energy
Corporation
Stockholders’
Equity
Pension and
OPEB
Adjustments
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2018
$ —
727 $
1
$ 40,795 $ 3,113
$ (14)
$
(3)
$
(75)
$ 43,817
$
17
$ 43,834
Net income (loss)
Other comprehensive (loss)
income
Preferred stock, Series A,
issuances, net of issuance
costs(a)
Preferred stock, Series B,
issuances, net of issuance
costs(a)
Common stock issuances,
including dividend reinvestment
and employee benefits
Common stock dividends
Sale of noncontrolling interest(b)
Contribution from noncontrolling
interest(f)
Distributions to noncontrolling
interest in subsidiaries
Other(c)
—
—
—
—
—
—
— 3,707
—
—
973
—
—
—
—
989
—
—
—
—
—
—
—
—
—
—
6
—
—
—
—
—
—
—
—
—
—
—
552
—
— (2,735)
—
(466)
—
—
—
—
—
23
—
(41)
—
—
—
—
10
—
—
(6)
Balance at December 31, 2019
$ 1,962
733 $
1
$ 40,881 $ 4,108
$ (51)
$
Net income
Other comprehensive (loss) Income
Common stock issuances,
including dividend reinvestment
and employee benefits
Common stock dividends
Contribution from noncontrolling
interest(f)
Distributions to noncontrolling
interest in subsidiaries
Other(d)
—
—
—
—
—
—
—
—
—
36
—
—
—
—
—
—
—
—
—
—
—
— 1,270
—
—
—
(116)
2,902
—
— (2,815)
(17)
—
—
1
—
(92)
—
—
—
—
—
Balance at December 31, 2020
$ 1,962
769 $
1
$ 43,767 $ 2,471
$ (167)
$
Net income
Other comprehensive (loss) income
Common stock issuances,
including dividend reinvestment
and employee benefits
Common stock dividends
Sale of noncontrolling interest(e)
Contribution from noncontrolling
interest, net of transaction
costs(f)
Distributions to noncontrolling
interests in subsidiaries
Other
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 3,802
—
—
—
(65)
—
68
— (3,008)
—
545
—
—
(9)
—
—
—
—
—
—
—
—
—
—
8
—
—
—
—
—
—
—
(2)
3
—
3
—
—
—
—
—
6
—
(8)
—
—
—
—
—
—
—
9
—
—
—
—
—
—
—
(16)
3,707
(24)
973
989
552
(2,735)
(456)
—
—
(1)
(177)
3,530
—
(24)
—
973
—
989
—
552
— (2,735)
407
863
428
428
(4)
2
(4)
1
$
(82)
$ 46,822
$ 1,129
$ 47,951
—
6
—
—
—
—
—
1,270
(107)
2,902
(2,815)
(17)
—
(91)
(295)
(11)
975
(118)
— 2,902
— (2,815)
426
409
(30)
1
(30)
(90)
$
(76)
$ 47,964
$ 1,220
$ 49,184
—
7
—
—
—
—
—
—
3,802
(66)
68
(3,008)
545
—
—
(9)
(329)
10
3,473
(56)
68
—
— (3,008)
999
454
550
550
(66)
1
(66)
(8)
Balance at December 31, 2021
$ 1,962
769 $
1
$ 44,371 $ 3,265
$ (232)
$
(2)
$
(69)
$ 49,296
$ 1,840 $ 51,136
(a) 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.
(b) Relates to the sale of a noncontrolling interest in the Commercial Renewables segment. See Note 1 for additional discussion of the transaction.
(c) 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.
(d) Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.
(e) Relates to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 1 for additional discussion.
(f) Relates to tax equity financing activity in the Commercial Renewables segment.
See Notes to Consolidated Financial Statements
66
PART II 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, 2021
and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2021, 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 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. As of December 31, 2021, the Company has approximately $3.5 billion recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
67
PART II 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 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 intervenors,
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 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 in the financial statements are probable of recovery.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 1947.
68
PART II DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Other Comprehensive Income, net of tax
Net unrealized gain on cash flow hedges
Other Comprehensive Income, net of tax
Comprehensive Income
Years Ended December 31,
2021
2020
2019
$ 7,102
$ 7,015
$ 7,395
1,601
1,833
1,468
320
227
5,449
2
1,655
270
538
1,387
51
1,682
1,743
1,462
299
476
5,662
1
1,354
177
487
1,044
88
1,804
1,868
1,388
292
17
5,369
—
2,026
151
463
1,714
311
$ 1,336
$
956
$ 1,403
1
1
—
—
—
—
$ 1,337
$
956
$ 1,403
See Notes to Consolidated Financial Statements
69
PART II
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Cash and cash equivalents
Receivables (net of allowance for doubtful accounts of $1 at 2021 and 2020)
Receivables of VIEs (net of allowance for doubtful accounts of $41 at 2021 and $22 at 2020)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $12 at 2021 related to VIEs)
Other
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Facilities to be retired, net
Net property, plant and equipment
Other Noncurrent Assets
Regulatory assets (includes $220 at 2021 related to VIEs)
Nuclear decommissioning trust funds
Operating lease right-of-use assets, net
Other
Total other noncurrent assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Accounts payable to affiliated companies
Notes payable to affiliated companies
Taxes accrued
Interest accrued
Current maturities of long-term debt (includes $5 at 2021 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $703 at 2021 related to VIEs)
Long-Term Debt Payable to Affiliated Companies
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Investment tax credits
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Member's equity
Accumulated other comprehensive loss
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
70
December 31,
2021
2020
$
7
300
844
190
1,026
544
95
3,006
$
21
247
696
124
1,010
473
20
2,591
51,874
(17,854)
102
50,640
(17,453)
—
34,122
33,187
2,935
5,759
92
1,248
10,034
2,996
4,977
110
1,187
9,270
$ 47,162
$ 45,048
$
988
266
226
274
125
362
249
487
546
3,523
12,595
318
3,634
5,052
7,198
78
50
287
536
$ 1,000
199
506
76
117
506
264
473
546
3,687
11,412
300
3,842
5,086
6,535
97
73
236
626
16,835
16,495
13,897
(6)
13,891
13,161
(7)
13,154
$ 47,162
$ 45,048
PART II
DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Payments for asset retirement obligations
Provision for rate refunds
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions
Receivables
Receivables from affiliated companies
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Purchases of debt and equity securities
Proceeds from sales and maturities of debt and equity securities
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt
Payments for the redemption of long-term debt
Notes payable to affiliated companies
Distributions to parent
Other
Net cash provided by financing activities
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash paid for income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
71
Years Ended December 31,
2021
2020
2019
$ 1,336
$
956
$ 1,403
1,743
(65)
227
(213)
(182)
(46)
—
(99)
(66)
(16)
(309)
5
85
206
(39)
21
116
1,731
(62)
476
(260)
(162)
(5)
(4)
52
(10)
(14)
209
55
(11)
30
(56)
(102)
(47)
1,671
(42)
17
133
(278)
36
(8)
(21)
68
(48)
(73)
(50)
(20)
(127)
127
(42)
(37)
2,704
2,776
2,709
(2,693)
(3,425)
3,425
(177)
(2,870)
1,651
(617)
(280)
(600)
(1)
153
(13)
21
8
508
233
359
$
$
(2,669)
(1,602)
1,602
(164)
(2,833)
(2,714)
(1,658)
1,658
(204)
(2,918)
998
(813)
477
(600)
(2)
60
3
18
21
481
321
365
$
$
886
(6)
(410)
(275)
(1)
194
(15)
33
18
433
122
347
$
$
PART II DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2018
Net income
Distributions to parent
Other
Balance at December 31, 2019
Net income
Distributions to parent
Other(a)
Balance at December 31, 2020
Net income
Other comprehensive income
Distributions to parent
Balance at December 31, 2021
Accumulated Other
Comprehensive
Income (Loss)
Net Gains
(Losses) on
Cash Flow
Hedges
$
$
$
$
(6)
—
—
(1)
(7)
—
—
—
(7)
—
1
—
(6 )
Member’s
Equity
$ 11,689
1,403
(275)
1
$ 12,818
956
(600)
(13)
$ 13,161
1,336
—
(600)
$ 13,897
Total
Equity
$
11,683
1,403
(275)
—
$
12,811
956
(600)
(13)
$
13,154
1,336
1
(600)
$
13,891
(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
72
PART II 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, 2021 and 2020,
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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2021, 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 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. As of December 31, 2021, the Company has approximately $6.9 billion
recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
73
PART II 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 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 intervenors,
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 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 in the financial statements are probable of recovery.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 1930.
74
PART II PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Less: Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Parent
Net Income
Other Comprehensive Income, net of tax
Pension and OPEB adjustments
Net unrealized gain on cash flow hedges
Unrealized (losses) gains on available-for-sale securities
Other Comprehensive Income, net of tax
Comprehensive Income
Less: Comprehensive Income Attributable to Noncontrolling Interests
Comprehensive Income Attributable to Parent
See Notes to Consolidated Financial Statements
Years Ended December 31,
2021
2020
2019
$11,057
$10,627
$11,202
3,584
2,529
1,929
542
82
8,666
14
2,405
215
794
1,826
227
1,599
1
3,479
2,479
1,818
545
495
8,816
9
1,820
129
790
1,159
113
1,046
1
4,024
2,495
1,845
561
(24)
8,901
—
2,301
141
862
1,580
253
1,327
—
$ 1,598
$ 1,045
$ 1,327
$ 1,599
$ 1,046
$ 1,327
1
3
—
4
1,603
1
(1)
5
(1)
3
2
5
1
8
1,049
1
1,335
—
$ 1,602
$ 1,048
$ 1,335
75
PART II
PROGRESS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Cash and cash equivalents
Receivables (net of allowance for doubtful accounts of $11 at 2021 and $8 at 2020)
Receivables of VIEs (net of allowance for doubtful accounts of $25 at 2021 and $29 at 2020)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $93 at 2021 and $53 at 2020 related to VIEs)
Other (includes $39 at 2021 and 2020 related to VIEs)
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Facilities to be retired, net
Net property, plant and equipment
Other Noncurrent Assets
Goodwill
Regulatory assets (includes $1,603 at 2021 and $937 at 2020 related to VIEs)
Nuclear decommissioning trust funds
Operating lease right-of-use assets, net
Other
Total other noncurrent assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Accounts payable to affiliated companies
Notes payable to affiliated companies
Taxes accrued
Interest accrued
Current maturities of long-term debt (includes $71 at 2021 and $305 at 2020 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $2,293 at 2021 and $1,252 at 2020 related to VIEs)
Long-Term Debt Payable to Affiliated Companies
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2021 and 2020
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Progress Energy, Inc. stockholder’s equity
Noncontrolling interests
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
76
December 31,
2021
2020
$
70
247
1,006
121
1,398
1,030
125
3,997
60,894
(19,214)
26
41,706
3,655
5,909
4,642
691
1,242
$
59
228
901
157
1,375
758
109
3,587
57,892
(18,368)
29
39,553
3,655
5,775
4,137
690
1,227
16,139
15,484
$ 61,842
$ 58,624
$ 1,099
506
2,809
128
192
1,082
275
478
868
7,437
19,591
150
4,564
5,837
5,566
606
417
526
$
919
289
2,969
121
202
1,426
283
640
793
7,642
17,688
150
4,396
5,866
5,051
623
505
462
17,516
16,903
—
9,149
8,007
(11)
—
9,143
7,109
(15)
17,145
16,237
3
4
17,148
16,241
$ 61,842
$ 58,624
PART II
PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Payments for asset retirement obligations
Provision for rate refunds
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions
Receivables
Receivables from affiliated companies
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Purchases of debt and equity securities
Proceeds from sales and maturities of debt and equity securities
Notes receivable from affiliated companies
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt
Payments for the redemption of long-term debt
Notes payable to affiliated companies
Dividends to parent
Other
Net cash provided by financing activities
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash paid for (received from) income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
77
Years Ended December 31,
2021
2020
2019
$ 1,599
$ 1,046
$ 1,327
2,302
(51)
82
247
(288)
(36)
51
(97)
18
(26)
(551)
59
217
13
(32)
(110)
(99)
2,327
(42)
495
(197)
(384)
2
(9)
(69)
(81)
49
223
(62)
(21)
75
139
(137)
(177)
2,207
(66)
(24)
433
(412)
15
(34)
47
81
62
184
(4)
(50)
(74)
25
(341)
(167)
3,298
3,177
3,209
(3,668)
(2,233)
2,322
—
(156)
(3,735)
3,095
(1,883)
(160)
(700)
(2)
350
(87)
200
113
813
14
501
$
$
(3,488)
(5,998)
6,010
164
(160)
(3,472)
1,791
(2,157)
1,148
(400)
(13)
369
74
126
200
819
149
363
$
$
(3,952)
(1,511)
1,504
(164)
(190)
(4,313)
2,187
(1,667)
586
—
12
1,118
$
$
14
112
126
892
(79)
447
PART II PROGRESS ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Accumulated Other Comprehensive Income (Loss)
Additional
Paid-in
Capital
Retained
Earnings
Net Gains
(Losses) on
Cash Flow
Hedges
Net Unrealized
Gains (Losses)
on Available-for-
Sale Securities
Pension and
OPEB
Adjustments
Total Progress
Energy, Inc.
Stockholder’s
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2018
$ 9,143
$ 5,131
$
(12)
$ (1)
$
(7)
$ 14,254
$
3
$ 14,257
Net income
Other comprehensive income
Other(a)
—
—
—
1,327
—
7
—
5
(3)
—
1
(1)
—
2
(2)
1,327
8
1
Balance at December 31, 2019
$ 9,143
$ 6,465
$
(10)
$ (1)
$
(7)
$ 15,590
$
Net income
Other comprehensive income (loss)
Dividends to parent
Other
—
—
—
—
1,045
—
(400)
(1)
—
5
—
—
—
(1)
—
—
—
(1)
—
—
1,045
3
(400)
(1)
—
—
—
3
1
—
—
—
1,327
8
1
$ 15,593
1,046
3
(400)
(1)
Balance at December 31, 2020
$ 9,143
$ 7,109
$
(5)
$ (2)
$
(8)
$ 16,237
$
4
$ 16,241
Net income
Other comprehensive income
Distributions to noncontrolling interests
Dividends to parent
Other
—
—
—
—
6
1,598
—
—
(700)
—
—
3
—
—
—
—
—
—
—
—
—
1
—
—
—
1,598
4
—
(700)
6
1
—
(1)
—
(1)
1,599
4
(1)
(700)
5
Balance at December 31, 2021
$ 9,149
$ 8,007
$
(2)
$ (2)
$
(7)
$ 17,145
$
3
$ 17,148
(a) 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
78
PART II 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, 2021
and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021, 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 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. As of December 31, 2021, the Company has approximately $4.7 billion recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
79
PART II 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 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 intervenors,
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 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 in the financial statements are probable of recovery.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 1930.
80
PART II DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense (Benefit)
Net Income and Comprehensive Income
See Notes to Consolidated Financial Statements
Years Ended December 31,
2021
2020
2019
$ 5,780
$ 5,422
$5,957
1,778
1,467
1,097
159
63
4,564
13
1,229
143
306
1,066
75
1,743
1,332
1,116
167
499
4,857
8
573
75
269
379
(36)
2,012
1,446
1,143
176
12
4,789
—
1,168
100
306
962
157
$ 991
$
415
$ 805
81
PART II
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Cash and cash equivalents
Receivables (net of allowance for doubtful accounts of $4 at 2021 and $4 at 2020)
Receivables of VIEs (net of allowance for doubtful accounts of $17 at 2021 and $19 at 2020)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $39 at 2021 related to VIEs)
Other
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Facilities to be retired, net
Net property, plant and equipment
Other Noncurrent Assets
Regulatory assets (includes $720 at 2021 related to VIEs)
Nuclear decommissioning trust funds
Operating lease right-of-use assets, net
Other
Total other noncurrent assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Accounts payable to affiliated companies
Notes payable to affiliated companies
Taxes accrued
Interest accrued
Current maturities of long-term debt (includes $15 at 2021 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $1,097 at 2021 related to VIEs)
Long-Term Debt Payable to Affiliated Companies
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Investment tax credits
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Member's Equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
82
December 31,
2021
2020
$
35
127
574
65
921
533
83
$
39
132
500
50
911
492
60
2,338
2,184
37,018
(13,387)
26
35,759
(12,801)
29
23,657
22,987
4,118
4,089
389
792
9,388
3,976
3,500
346
740
8,562
$35,383
$33,733
$
476
310
172
163
96
556
274
381
448
2,876
9,543
150
2,208
5,401
4,868
350
221
128
87
$
454
215
295
85
99
603
283
530
411
2,975
8,505
150
2,298
5,352
4,394
323
242
132
102
13,263
12,843
9,551
9,260
$35,383
$33,733
PART II DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Payments for asset retirement obligations
Provisions for rate refunds
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions
Receivables
Receivables from affiliated companies
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Purchases of debt and equity securities
Proceeds from sales and maturities of debt and equity securities
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt
Payments for the redemption of long-term debt
Notes payable to affiliated companies
Distributions to parent
Other
Net cash (used in) provided by financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash paid for (received from) income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
83
Years Ended December 31,
2021
2020
2019
$
991
$
415
$
805
1,286
(34)
63
(46)
(187)
(36)
48
(52)
(33)
(11)
(147)
12
95
83
(23)
(37)
(16)
1,299
(29)
499
(234)
(304)
2
1
(4)
2
23
98
(127)
12
68
157
(215)
3
1,329
(60)
12
197
(390)
12
(6)
21
(29)
20
101
32
(75)
(46)
68
(205)
37
1,956
1,666
1,823
(1,746)
(1,931)
1,914
(20)
(1,783)
1,959
(1,308)
(123)
(700)
(1)
(173)
—
39
39
335
83
163
$
$
(1,581)
(1,555)
1,516
(57)
(1,677)
1,296
(1,085)
229
(400)
(12)
28
17
22
39
301
123
149
$
$
(2,108)
(842)
810
(119)
(2,259)
1,269
(605)
(228)
—
(1)
435
(1)
23
22
331
(30)
175
$
$
PART II
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2018
Net income
Balance at December 31, 2019
Net income
Distribution to parent
Other
Balance at December 31, 2020
Net income
Distribution to parent
Balance at December 31, 2021
See Notes to Consolidated Financial Statements
Member’s
Equity
$ 8,441
805
$ 9,246
415
(400)
(1)
$ 9,260
991
(700)
$ 9,551
84
PART II 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, 2021 and
2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021, 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, 2021, the Company
has approximately $2.3 billion recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
85
PART II 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 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 intervenors,
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 balances for completeness.
• 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 in the financial statements are probable of recovery.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 2001.
86
PART II DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income
Other Comprehensive Income (Loss), net of tax
Unrealized (losses) gains on available-for-sale securities
Other Comprehensive (Loss) Income, net of tax
Comprehensive Income
Years Ended December 31,
2021
2020
2019
$ 5,259
$ 5,188
$ 5,231
1,806
1,048
831
383
19
4,087
1
1,173
71
319
925
187
1,737
1,131
702
381
(4)
2,012
1,034
702
392
(36)
3,947
4,104
1
1,242
53
326
969
198
—
1,127
48
328
847
155
$
738
$
771
$
692
(1)
(1)
(1)
(1)
1
1
$
737
$
770
$
693
See Notes to Consolidated Financial Statements
87
PART II
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Cash and cash equivalents
Receivables (net of allowance for doubtful accounts of $8 at 2021 and $4 at 2020)
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2021 and $10 at 2020)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs)
Other (includes $39 at 2021 and 2020 related to VIEs)
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Net property, plant and equipment
Other Noncurrent Assets
Regulatory assets (includes $883 at 2021 and $937 at 2020 related to VIEs)
Nuclear decommissioning trust funds
Operating lease right-of-use assets, net
Other
Total other noncurrent assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Accounts payable to affiliated companies
Notes payable to affiliated companies
Taxes accrued
Interest accrued
Current maturities of long-term debt (includes $56 at 2021 and $305 at 2020 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $1,196 at 2021 and $1,002 at 2020 related to VIEs)
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Member's equity
Accumulated other comprehensive loss
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
88
December 31,
2021
2020
$
23
117
432
16
477
497
80
$
11
94
401
3
464
265
41
1,642
1,279
23,865
(5,819)
18,046
22,123
(5,560)
16,563
1,791
553
302
399
3,045
1,799
637
344
335
3,115
$ 22,733
$ 20,957
$
623
209
199
51
68
76
1
98
408
1,733
8,406
2,434
436
698
256
166
309
4,299
$
465
85
196
82
69
823
—
110
374
2,204
7,092
2,191
514
658
300
231
209
4,103
8,298
(3)
8,295
7,560
(2)
7,558
$ 22,733
$ 20,957
PART II
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Payments for asset retirement obligations
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions
Receivables
Receivables from affiliated companies
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Purchases of debt and equity securities
Proceeds from sales and maturities of debt and equity securities
Notes receivable from affiliated companies
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt
Payments for the redemption of long-term debt
Notes payable to affiliated companies
Other
Net cash provided by financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash (received from) paid for income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
89
Years Ended December 31,
2021
2020
2019
$
738
$
771
$
692
1,011
(16)
19
279
(101)
—
(45)
(13)
(15)
(451)
47
124
(30)
(7)
(69)
(69)
1,019
(12)
(4)
27
(80)
(14)
(64)
(3)
26
40
66
(46)
39
(7)
84
(181)
869
(6)
(36)
180
(22)
(33)
26
17
42
156
(36)
40
(31)
(36)
(131)
(213)
1,402
1,661
1,478
(1,923)
(302)
408
—
(136)
(1,953)
1,135
(575)
3
—
563
12
50
62
308
(15 )
337
$
$
(1,907)
(4,443)
4,495
173
(103)
(1,785)
495
(572)
196
(1)
118
(6)
56
50
321
138
214
$
$
(1,844)
(669)
695
(173)
(67)
(2,058)
918
(262)
(108)
13
561
(19)
75
56
332
1
272
$
$
PART II
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2018
Net income
Other comprehensive income
Balance at December 31, 2019
Net income
Other comprehensive loss
Balance at December 31, 2020
Net income
Other comprehensive loss
Balance at December 31, 2021
See Notes to Consolidated Financial Statements
Accumulated Other
Comprehensive
Income (Loss)
Net Unrealized
Gains (Losses) on
Available-for-
Sale Securities
Total
Equity
$
(2)
$ 6,095
—
1
692
1
(1)
$ 6,788
—
(1)
771
(1 )
(2)
$ 7,558
—
(1)
(3)
738
(1)
$ 8,295
$
$
$
Member’s
Equity
$
$
$
$
6,097
692
—
6,789
771
—
7,560
738
—
8,298
90
PART II 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, 2021 and
2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021, 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, 2021, the Company has approximately $707 million recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
91
PART II 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 recovery in future rates 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 intervenors,
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 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 representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 2002.
92
PART II DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions)
Operating Revenues
Regulated electric
Regulated natural gas
Total operating revenues
Operating Expenses
Fuel used in electric generation and purchased power
Cost of natural gas
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Gains on Sales of Other Assets and Other, net
Operating Income
Other Income and Expenses, net
Interest Expense
Income From Continuing Operations Before Income Taxes
Income Tax Expense From Continuing Operations
Income From Continuing Operations
Loss From Discontinued Operations, net of tax
Net Income and Comprehensive Income
Years Ended December 31,
2021
2020
2019
$ 1,493
544
2,037
$1,405
453
1,858
$1,456
484
1,940
409
136
479
307
355
25
339
73
463
278
324
—
388
95
520
265
308
—
1,711
1,477
1,576
1
327
18
111
234
30
204
—
—
381
16
102
295
43
252
—
—
364
24
109
279
40
239
(1)
$ 204
$ 252
$ 238
See Notes to Consolidated Financial Statements
93
PART II
DUKE ENERGY OHIO, INC.
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Cash and cash equivalents
Receivables (net of allowance for doubtful accounts of $4 at 2021 and 2020)
Receivables from affiliated companies
Notes receivable from affiliated companies
Inventory
Regulatory assets
Other
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Facilities to be retired, net
Net property, plant and equipment
Other Noncurrent Assets
Goodwill
Regulatory assets
Operating lease right-of-use assets, net
Other
Total other noncurrent assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Accounts payable to affiliated companies
Notes payable to affiliated companies
Taxes accrued
Interest accrued
Current maturities of long-term debt
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt
Long-Term Debt Payable to Affiliated Companies
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2021 and 2020
Additional paid-in capital
Retained earnings
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
94
December 31,
2021
2020
$
13
96
122
15
116
72
57
491
$
14
98
102
—
110
39
31
394
11,725
(3,106)
6
8,625
11,022
(3,013)
—
8,009
920
635
19
84
920
610
20
72
1,658
1,622
$ 10,774
$10,025
$
348
64
103
275
30
—
13
62
82
977
3,168
25
1,050
123
739
18
109
101
2,140
762
3,100
602
4,464
$
279
68
169
247
31
50
3
65
70
982
3,014
25
981
108
748
20
113
99
2,069
762
2,776
397
3,935
$ 10,774
$10,025
PART II
Years Ended December 31,
2021
2020
2019
$
204
$
252
$
238
311
(7)
25
42
(2)
16
6
(25)
(6)
(60)
38
(4)
26
11
(43)
27
559
(848)
(10)
(60)
(918)
150
(50)
(67)
325
358
(1)
14
13
107
9
135
$
$
283
(7)
—
31
(2 )
14
(13)
9
25
(18 )
2
—
30
3
(32)
(2)
575
(834)
(19)
(48)
(901)
467
—
(144)
—
323
(3)
17
14
97
—
104
$
$
269
(13)
—
81
(8)
7
20
22
(9)
(5 )
(17)
(10)
17
1
(26 )
(41)
526
(952)
—
(68)
(1,020)
1,003
(551)
38
—
490
(4)
21
17
97
(37)
109
$
$
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Payments for asset retirement obligations
Provision for rate refunds
(Increase) decrease in
Receivables
Receivables from affiliated companies
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Notes receivable from affiliated companies
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt
Payments for the redemption of long-term debt
Notes payable to affiliated companies
Capital contribution from parent
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash paid for (received from) income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
95
PART II
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2018
Net income
Balance at December 31, 2019
Net income
Balance at December 31, 2020
Net income
Contribution from parent
Other
Balance at December 31, 2021
See Notes to Consolidated Financial Statements
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
(Deficit)
Total
Equity
$
$
$
762 $
2,776
$
(93)
$ 3,445
—
—
762 $
2,776
—
—
762 $
2,776
$
$
—
—
—
—
325
(1)
238
145
252
397
204
—
1
238
$ 3,683
252
$ 3,935
204
325
—
$
762 $
3,100
$
602
$ 4,464
96
PART II 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 subsidiary (the “Company”) as of December 31, 2021 and
2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021, 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, 2021, the
Company has approximately $1.6 billion recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
97
PART II 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 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 intervenors,
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 balances for completeness.
• 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 in the financial statements are probable of recovery.
Duke Energy Indiana Coal Ash Asset Retirement Obligations – Refer to Notes 1, 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 methods to close each site since Duke Energy
Indiana does not have approved closure plans for certain sites. Management has applied probability weightings for the cash flows for certain sites based the
likelihood of implementing potential closure methods. 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 $949 million at December 31, 2021.
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 the different potential closure methods and the probability weightings as a result of pending legal challenges. The
audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the 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 probability weightings for the cash flows associated with the different potential closure methods 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 probability weightings.
• 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.
• With the assistance of professionals in our firm with the appropriate expertise, 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 probability weightings.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 2002.
98
PART II DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions)
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Operating Income
Other Income and Expenses, net
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income and Comprehensive Income
See Notes to Consolidated Financial Statements
Years Ended December 31,
2021
2020
2019
$ 3,174
$ 2,795
$ 3,004
985
750
615
73
9
767
762
569
81
—
935
790
525
69
—
2,432
2,179
2,319
742
42
196
588
107
616
37
161
492
84
685
41
156
570
134
$ 481
$
408
$
436
99
PART II
DUKE ENERGY INDIANA, LLC
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Cash and cash equivalents
Receivables (net of allowance for doubtful accounts of $3 at 2021 and 2020)
Receivables from affiliated companies
Notes receivable from affiliated companies
Inventory
Regulatory assets
Other
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Net property, plant and equipment
Other Noncurrent Assets
Regulatory assets
Operating lease right-of-use assets, net
Other
Total other noncurrent assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Accounts payable to affiliated companies
Notes payable to affiliated companies
Taxes accrued
Interest accrued
Current maturities of long-term debt
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt
Long-Term Debt Payable to Affiliated Companies
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Investment tax credits
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Member's Equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
100
December 31,
2021
2020
$
6
100
98
134
418
277
68
1,101
17,343
(5,583)
11,760
1,278
53
296
1,627
$
7
55
112
—
473
125
37
809
17,382
(5,661)
11,721
1,203
55
253
1,511
$ 14,488
$14,041
$
282
221
—
73
49
84
110
127
105
1,051
4,089
150
1,303
877
1,565
50
167
177
44
4,183
$
188
88
131
62
51
70
168
111
83
952
3,871
150
1,228
1,008
1,627
53
171
168
30
4,285
5,015
4,783
$ 14,488
$14,041
PART II
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Payments for asset retirement obligations
(Increase) decrease in
Receivables
Receivables from affiliated companies
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Purchases of debt and equity securities
Proceeds from sales and maturities of debt and equity securities
Notes receivable from affiliated companies
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt
Payments for the redemption of long-term debt
Notes payable to affiliated companies
Distributions to parent
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash paid for (received from) income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
101
Years Ended December 31,
2021
2020
2019
$
481
$
408
$
436
619
(27)
9
34
(67)
(33)
—
55
(181)
76
8
12
13
20
(15)
1,004
(818)
(142)
65
(120)
36
(979)
300
(70)
(131)
(125)
(26)
(1)
7
6
194
56
118
$
$
572
(23)
—
29
(63)
8
—
44
(3)
(12)
1
13
6
(68)
26
938
(888)
(37)
22
(33)
48
(888)
544
(513)
101
(200)
(68)
(18)
25
7
164
36
101
$
$
531
(18)
—
156
(48)
(8)
41
(95)
76
(10)
4
(25)
15
(74)
16
997
(876)
(26)
20
—
(49)
(931)
485
(213)
(137)
(200)
(65)
1
24
25
150
(6)
102
$
$
PART II
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2018
Net income
Distributions to parent
Balance at December 31, 2019
Net income
Distributions to parent
Balance at December 31, 2020
Net income
Distributions to parent
Other
Balance at December 31, 2021
See Notes to Consolidated Financial Statements
Member’s
Equity
$
4,339
436
(200)
$
4,575
408
(200)
$
4,783
481
(250)
1
$
5,015
102
PART II 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,
2021 and 2020, 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, 2021, 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, 2021 and 2020 and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021, 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, 2021, the Company has approximately $456.8 million recorded as regulatory assets.
We identified the impact of rate regulation related to regulatory assets 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 as it relates to regulatory assets.
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 recovery in future rates 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.
103
PART II • We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors,
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 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 representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 24, 2022
We have served as the Company’s auditor since 1951.
104
PART II PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions)
Operating Revenues
Regulated natural gas
Nonregulated natural gas and other
Total operating revenues
Operating Expenses
Cost of natural gas
Operation, maintenance and other
Depreciation and amortization
Property and other taxes
Impairment of assets and other charges
Total operating expenses
Operating Income
Equity in earnings of unconsolidated affiliates
Other income and expense, net
Total other income and expenses
Interest Expense
Income Before Income Taxes
Income Tax Expense
Net Income and Comprehensive Income
Years Ended December 31,
2021
2020
2019
$ 1,555
14
$ 1,286
11
$ 1,369
12
1,569
1,297
1,381
569
327
213
55
10
1,174
395
9
55
64
119
340
30
310
$
386
322
180
53
7
948
349
9
51
60
118
291
18
273
$
532
328
172
45
—
1,077
304
8
20
28
87
245
43
202
$
See Notes to Consolidated Financial Statements
105
PART II PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $15 at 2021 and $12 at 2020)
Receivables from affiliated companies
Inventory
Regulatory assets
Other
Total current assets
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Facilities to be retired, net
Net property, plant and equipment
Other Noncurrent Assets
Goodwill
Regulatory assets
Operating lease right-of-use assets, net
Investments in equity method unconsolidated affiliates
Other
Total other noncurrent assets
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
Accounts payable to affiliated companies
Notes payable to affiliated companies
Taxes accrued
Interest accrued
Current maturities of long-term debt
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt
Other Noncurrent Liabilities
Deferred income taxes
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Accrued pension and other post-retirement benefit costs
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2021 and 2020
Retained earnings
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
106
December 31,
2021
2020
$
318
11
109
141
9
588
9,918
(1,899)
11
8,030
49
316
16
95
288
764
$
250
10
68
153
20
501
9,134
(1,749)
—
7,385
49
302
20
88
270
729
$ 9,382
$ 8,615
$
196
40
518
63
37
—
56
81
991
2,968
815
22
1,058
14
7
158
2,074
1,635
1,714
3,349
$
230
79
530
23
34
160
88
69
1,213
2,620
821
20
1,044
19
8
155
2,067
1,310
1,405
2,715
$ 9,382
$ 8,615
PART II
Years Ended December 31,
2021
2020
2019
$ 310
$ 273
$
202
216
(20)
10
4
(9)
(4)
(77)
(1)
(40)
33
(25)
(39)
37
(26)
26
(4)
182
(19)
7
53
(9)
(33)
10
—
3
(66)
16
76
3
(11)
(11)
7
174
—
—
136
(8)
2
28
12
(2)
(25)
(7)
(35)
(60)
1
1
(10)
391
481
409
(850)
(9)
(31)
(890)
347
(160)
(13)
325
499
—
—
(901)
—
(28)
(929)
394
—
54
—
448
—
—
(1,053)
(16)
(14)
(1,083)
596
(350)
278
150
674
—
—
$ —
$ —
$ —
$ 114
(13)
$ 115
(36)
$
97
106
84
(31)
109
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Equity component of AFUDC
Impairment of assets and other charges
Deferred income taxes
Equity in (earnings) losses from unconsolidated affiliates
Provision for rate refunds
(Increase) decrease in
Receivables
Receivables from affiliated companies
Inventory
Other current assets
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Contributions to equity method investments
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt
Payments for the redemption of long-term debt
Notes payable to affiliated companies
Capital contribution from parent
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized
Cash received from income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
107
PART II
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2018
Net income
Contribution from parent
Balance at December 31, 2019
Net income
Other
Balance at December 31, 2020
Net income
Contribution from parent
Other
Balance at December 31, 2021
See Notes to Consolidated Financial Statements
Common
Stock
Retained
Earnings
Total
Equity
$1,160
$ 931
$ 2,091
—
150
202
—
202
150
$1,310
$ 1,133
$ 2,443
—
—
273
(1)
273
(1)
$1,310
$ 1,405
$ 2,715
—
325
—
310
—
(1)
310
325
(1)
$1,635
$ 1,714
$3,349
108
PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC •
DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.
Combined Notes to Consolidated Financial Statements
For the Years Ended December 31, 2021, 2020 and 2019
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.
Registrant
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
Applicable Notes
1
•
•
•
•
•
•
•
•
2
•
•
•
•
•
•
•
•
3
•
•
•
•
•
•
•
•
4
•
•
•
•
•
•
•
•
5
•
•
•
•
•
•
•
•
6
•
•
•
•
•
•
•
•
7
•
8
•
•
•
9
•
•
•
•
•
•
•
•
10
11
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
12
•
•
13
14
15
16
17
18
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
19
•
20
21
22
23
24
25
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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.
109
PART II
Other Current Assets and Liabilities
Noncontrolling Interest
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, 2021, or 2020.
(in millions)
Location
Duke Energy
Accrued compensation
Other accrued liabilities
Duke Energy Carolinas
Accrued compensation
Duke Energy Progress
Customer deposits
Other accrued liabilities
Duke Energy Florida
Customer deposits
Other accrued liabilities
Duke Energy Ohio
Gas Storage
Collateral liabilities
Current Liabilities
Current Liabilities
Current Liabilities
Current Liabilities
Current Liabilities
Current Liabilities
Current Liabilities
Current Assets
Current Liabilities
Discontinued Operations
December 31,
2021
$
$
$
$
$
915
649
277
144
163
200
89
25
57
$
$
$
$
$
2020
662
1,455
213
144
132
203
81
21
41
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, 2021, 2020 and 2019, the Income (Loss) From Discontinued
Operations, net of tax on Duke Energy’s Consolidated Statements of Operations
is entirely attributable to controlling 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.
In 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 was $466 million, net of tax benefit
of $8 million, and was recorded to equity.
The following table presents allocated losses to noncontrolling interest for the years ended December 31, 2021, 2020 and 2019.
(in millions)
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method
Allocated losses to noncontrolling members based on pro rata shares of ownership
Total Noncontrolling Interest Allocated Losses
2021
298
31
329
$
$
December 31,
2020
2019
$
$
271
24
295
$
$
165
12
177
2021 Sale of Minority Interest in Duke Energy Indiana
On January 28, 2021, Duke Energy executed an agreement providing
for an investment by an affiliate of GIC in Duke Energy Indiana in exchange
for a 19.9% minority interest issued by Duke Energy Indiana Holdco, LLC, the
holding company for Duke Energy Indiana. The transaction will be completed
following two closings for an aggregate purchase price of approximately
$2 billion. The first closing, which occurred on September 8, 2021, resulted in
Duke Energy Indiana Holdco, LLC issuing 11.05% of its membership interests
in exchange for approximately $1,025 million or 50% of the purchase price.
Duke Energy retained indirect control of these assets, and, therefore, no gain
or loss was recognized on the Consolidated Statements of Operations. The
difference between the cash consideration received, net of transaction costs of
approximately $27 million, and the carrying value of the noncontrolling interest
is $545 million and was recorded as an increase to equity. 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.
110
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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.
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. Duke Energy Carolinas and Duke Energy Progress
have restricted cash balances related to VIEs from storm recovery bonds issued in
2021. 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.
Current Assets
Cash and cash equivalents
Other
Other Noncurrent Assets
Other
Total cash, cash equivalents and restricted cash
Current Assets
Cash and cash equivalents
Other
Other Noncurrent Assets
Other
Total cash, cash equivalents and restricted cash
December 31, 2021
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
$
7
—
1
8
$
70
39
4
$
35
—
4
$ 113
$
39
December 31, 2020
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
$
21
—
—
21
$
59
39
102
$
39
—
—
$ 200
$
39
Duke
Energy
Florida
$ 23
39
—
$ 62
Duke
Energy
Florida
$ 11
39
—
$ 50
Duke
Energy
$
343
170
7
$
520
Duke
Energy
$
259
194
103
$
556
111
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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, 2021, and 2020, respectively. The components of inventory are presented in the
tables below.
(in millions)
Materials and supplies
Coal
Natural gas, oil and other
Total inventory
(in millions)
Materials and supplies
Coal
Natural gas, oil and other
Total inventory
December 31, 2021
Duke
Energy
$ 2,397
486
316
$ 3,199
Duke
Energy
Carolinas
$ 793
195
38
$ 1,026
Progress
Energy
$ 1,067
167
164
$ 1,398
Duke
Energy
Progress
$
729
94
98
$
921
Duke
Energy
Florida
$ 338
73
66
$ 477
December 31, 2020
Duke
Energy
$ 2,312
561
294
Duke
Energy
Carolinas
$
785
186
39
Progress
Energy
$
999
193
183
Duke
Energy
Progress
$
673
131
107
$ 3,167
$ 1,010
$ 1,375
$
911
Duke
Energy
Florida
$ 325
63
76
$ 464
Duke
Energy
Ohio
$ 80
19
17
$ 116
Duke
Energy
Ohio
$
78
16
16
$ 110
Duke
Energy
Indiana
$ 311
105
2
$ 418
Duke
Energy
Indiana
$ 307
165
1
$ 473
Piedmont
$ 14
—
95
$ 109
Piedmont
$ 12
—
56
$ 68
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.
112
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
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” section below 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.
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
Years Ended December 31,
2021
2.9 %
2.7 %
3.1 %
3.0 %
3.3 %
2.9 %
3.6 %
2.1 %
2020
3.0 %
2.8 %
3.2 %
3.1 %
3.3 %
2.9 %
3.5 %
2.3 %
2019
3.1 %
2.8 %
3.1 %
3.1 %
3.1 %
2.6 %
3.3 %
2.4 %
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 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
113
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.
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.
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Asset Retirement Obligations
Accounts Payable
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.
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.
The following table presents the outstanding accounts payable balance
sold to the financial institution by our suppliers and the supplier invoices sold
to the financial institution under the program included within Net cash provided
by operating activities on the Consolidated Statements of Cash Flows as of
December 31, 2021, and December 31, 2020.
December 31, 2021
December 30, 2020
Duke
Energy
$
19
122
Progress
Energy
$
9
10
Duke
Energy
Florida
$
9
10
Duke
Energy
Ohio
$
6
12
Piedmont
$
4
100
Duke
Energy
$
15
45
Duke
Energy
Ohio
$
1
9
Piedmont
$ 14
36
(in millions)
Outstanding Accounts Payable Balance Sold
Suppliers Invoices Settled Through The Program
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.
114
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.
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
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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 are 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 the loss 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.
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.
115
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Duke Energy receives PTCs on wind facilities that are recognized as electricity
New Accounting Standards
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.
(in millions)
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
Years Ended December 31,
2021
2020
2019
$ 420
44
250
22
228
102
23
1
$ 415
43
249
26
223
96
25
2
$ 421
39
256
21
235
101
23
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, 2021, and 2020, an
insignificant amount of Duke Energy’s consolidated Retained earnings balance
represents undistributed earnings of equity method investments.
The following new accounting standard was adopted by the Duke Energy
Registrants in 2021.
Leases with Variable Lease Payments. In July 2021, the FASB issued
new accounting guidance requiring lessors to classify a lease with variable
lease payments that do not depend on a reference index or rate as an operating
lease if both of the following are met: (1) the lease would have to be classified
as a sales-type or direct financing lease under prior guidance, and (2) the
lessor would have recognized a day-one loss. Duke Energy elected to adopt the
guidance immediately upon issuance of the new standard and will be applying
the new standard prospectively to new lease arrangements meeting the criteria.
Duke Energy did not have any lease arrangements that this new accounting
guidance materially impacted.
The following new accounting standard was adopted by Duke Energy
Registrants in 2020.
Current Expected Credit Losses. In June 2016, the FASB issued new
accounting guidance for credit losses. Duke Energy adopted the new accounting
guidance for credit losses effective January 1, 2020, using the modified
retrospective method of adoption, which does not require restatement of prior
year results. Duke Energy did not adopt any practical expedients.
Duke Energy recognizes allowances for credit losses based on
management’s estimate of losses expected to be incurred over the lives of
certain assets or guarantees. Management monitors credit quality, changes
in expected credit losses and the appropriateness of the allowance for credit
losses on a forward-looking basis. Management reviews the risk of loss
periodically as part of the existing assessment of collectability of receivables.
Duke Energy reviews the credit quality of its counterparties as part of its
regular risk management process and requires credit enhancements, such as
deposits or letters of credit, as appropriate and as allowed by regulators.
Duke Energy recorded cumulative effects of changes in accounting
principles related to the adoption of the new credit loss standard for allowances
and credit losses of trade and other receivables, insurance receivables and
financial guarantees. These amounts are included in the 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:
January 1, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida Piedmont
$
120
$
16
$
2
$
1
$
1
$
1
indexed to LIBOR. Impacted financial arrangements extending beyond the
phase out of the applicable LIBOR rate 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 the phase out of the applicable LIBOR rate. 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.
(in millions)
Total pretax impact to Retained Earnings
The following new accounting standard has been issued but not yet
adopted by the Duke Energy Registrants as of December 31, 2021.
Reference Rate Reform. In March 2020, the FASB issued new accounting
guidance for reference rate reform. This guidance is elective and provides
expedients to facilitate financial reporting for the anticipated transition away
from the London Inter-bank Offered Rate (LIBOR) and other interbank reference
rates starting in 2021 with all rates expected to be fully phased out in 2023. 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
116
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
Year Ended December 31, 2021
(in millions)
Unaffiliated Revenues
Intersegment Revenues
Total Revenues
Interest Expense
Depreciation and amortization
Equity in earnings (losses) of unconsolidated affiliates
Income tax expense (benefit)
Segment income (loss)(a)(b)(c)(d)
Less noncontrolling interest
Add back preferred stock dividend
Income from discontinued operations, net of tax
Net income
Capital investments expenditures and acquisitions
Segment assets
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
Commercial
Renewables
$ 22,570
33
$ 22,603
$
1,432
4,251
7
494
3,850
$ 2,022
90
$ 2,112
$
142
303
8
55
396
$
$
$
476
—
476
72
225
(34)
(78)
201
Total
Reportable
Segments
$ 25,068
123
Other
Eliminations
Total
$
29
82
$ — $ 25,097
—
(205)
$ 25,191
$ 111
$ (205) $ 25,097
$
1,646
4,779
(19)
471
4,447
$ 643
237
47
(279)
(652)
$
(9) $
(26)
—
—
—
$
$ — $
2,280
4,990
28
192
3,795
329
106
7
3,579
9,752
—
169,587
$
7,653
143,841
$ 1,271
15,179
$
543
6,977
$
9,467
$ 285
165,997
3,590
(a) Electric Utilities and Infrastructure includes $160 million of expense recorded within Impairment of assets and other charges, $77 million of income within Other Income and expenses, $5 million of expense within Operations,
maintenance and other, $13 million of income within regulated operating revenues, $3 million of expense within interest expense and $6 million of expense within Depreciation and amortization on the Duke Energy Carolinas’
Consolidated Statement of Operations related to the South Carolina Supreme Court decision on coal ash and insurance proceeds; it also includes $42 million of expense recorded within Impairment of assets and other
charges, $34 million of income within Other Income and expenses, $7 million of expense within Operations, maintenance, and other, $15 million of income within Regulated electric operating revenues, $5 million of expense
within interest expense and $1 million of expense within Depreciation and amortization on the Duke Energy Progress’ Consolidated Statement of Operations. See Notes 3 and 4 for more information.
(b) Gas Utilities and Infrastructure includes $20 million, recorded within Equity in earnings (losses) of unconsolidated affiliates on the Consolidated Statements of Operations, related to natural gas pipeline investments. See
Note 3 for additional information.
(c) Commercial Renewables includes a $35 million loss related to Texas Storm Uri of which ($8 million) is recorded within Nonregulated electric and other revenues, $2 million within Operations, maintenance and other,
$29 million within Equity in earnings (losses) of unconsolidated affiliates and $12 million within Loss Attributable to Noncontrolling Interests on the Consolidated Statements of Operations. See Note 4 for additional
information.
(d) Other includes $133 million recorded within Impairment of assets and other charges, $42 million within Operations, maintenance and other, and $17 million within Depreciation and amortization on the Consolidated
Statements of Operations, related to the workplace and workplace realignment. See Note 10 for additional information.
117
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Year Ended December 31, 2020
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
Commercial
Renewables
$ 21,687
33
$ 21,720
$
1,320
4,068
(1)
340
2,669
$ 1,653
95
$ 1,748
$
135
258
(2,017)
(349)
(1,266)
$
$
$
502
—
502
66
199
—
(65)
286
Total
Reportable
Segments
$ 23,842
128
$ 23,970
$
1,521
4,525
(2,018)
(74)
1,689
$
$
$
26
71
97
657
209
13
(162)
(426)
Other
Eliminations
Total
(in millions)
Unaffiliated Revenues
Intersegment Revenues
Total Revenues
Interest Expense
Depreciation and amortization
Equity in earnings (losses) of unconsolidated affiliates
Income tax expense (benefit)
Segment income (loss)(a)(b)(c)
Less noncontrolling interest
Add back preferred stock dividend
Income from discontinued operations, net of tax
Net income
Capital investments expenditures and acquisitions
Segment assets
(in millions)
Unaffiliated Revenues
Intersegment Revenues
Total Revenues
Interest Expense
Depreciation and amortization
Equity in earnings (losses) of unconsolidated affiliates
Income tax expense (benefit)
Segment income (loss)(a)(b)
Less noncontrolling interest
Add back preferred stock dividend
Loss from discontinued operations, net of tax
Net income
Capital investments expenditures and acquisitions
Segment assets
$
7,629
138,225
$ 1,309
13,849
$ 1,219
6,716
$ 10,157
$
264
158,790
3,598
(a) Electric Utilities and Infrastructure includes $948 million of Impairment of assets and other 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 of assets and other charges related to the Clemson University Combined Heat and Power Plant, $5 million of Impairment
charges related to the natural 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 of assets and other charges related to natural 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 20 for additional information.
Year Ended December 31, 2019
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
Commercial
Renewables
$ 22,798
33
$ 22,831
$
1,345
3,951
9
785
3,536
$ 1,770
96
$ 1,866
$
117
256
114
22
432
$
$
$
487
—
487
95
168
(4)
(115)
198
Total
Reportable
Segments
$ 25,055
129
$ 25,184
$
1,557
4,375
119
692
4,166
$
$
$
24
71
95
705
178
43
(173)
(452)
Other
Eliminations
Total
$
8,263
135,561
$ 1,539
13,921
$ 1,423
6,020
$ 11,225
155,502
$
221
3,148
(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.
(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.
118
$ — $ 23,868
—
(199)
$ (199) $ 23,868
$
(16) $
(29)
—
—
—
2,162
4,705
(2,005)
(236)
1,263
295
107
7
1,082
$
$ — $ 10,421
—
162,388
$ — $ 25,079
—
(200)
$ (200) $ 25,079
$
(58) $
(5)
—
—
—
2,204
4,548
162
519
3,714
177
41
(7)
3,571
$
$ — $ 11,446
158,838
188
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Geographical Information
Substantially all assets and revenues from continuing operations are within the U.S.
Major Customers
For the year ended December 31, 2021, revenues from one customer of Duke Energy Progress are $586 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.
Products and Services
The following table summarizes revenues of the reportable segments by type.
(in millions)
2021
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Commercial Renewables
Total Reportable Segments
2020
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Commercial Renewables
Total Reportable Segments
2019
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Commercial Renewables
Total Reportable Segments
Duke Energy Ohio
Retail
Electric
Wholesale
Electric
Retail
Natural Gas
Other
Total
Revenues
$ 19,410
—
—
$ 19,410
$ 18,898
—
—
$ 18,898
$ 19,745
—
—
$ 19,745
$
$
$
$
$
$
2,216
—
411
2,627
1,878
—
434
2,312
2,231
—
389
2,620
$
$
$
$
$
$
—
2,025
—
2,025
—
1,691
—
1,691
—
1,782
—
1,782
$
977
87
65
$ 1,129
$
944
57
68
$ 1,069
$
855
84
98
$ 1,037
$ 22,603
2,112
476
$ 25,191
$ 21,720
1,748
502
$ 23,970
$ 22,831
1,866
487
$ 25,184
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.
119
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) All Duke Energy Ohio assets and revenues from continuing operations are within the U.S.
(in millions)
Total revenues
Interest expense
Depreciation and amortization
Income tax expense (benefit)
Segment income (loss)/Net income
Capital expenditures
Segment assets
(in millions)
Total revenues
Interest expense
Depreciation and amortization
Income tax expense (benefit)
Segment income (loss)/Net income
Capital expenditures
Segment assets
(in millions)
Total revenues
Interest expense
Depreciation and amortization
Income tax expense (benefit)
Segment income (loss)
Loss from discontinued operations, net of tax
Net income
Capital expenditures
Segment assets
Year Ended December 31, 2021
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
$ 1,493
$
$
87
217
15
141
486
6,882
$
$
$
544
24
90
19
78
362
3,892
Total
Reportable
Segments
$
$
$
2,037
111
307
34
219
848
10,774
Other
$ —
$ —
—
(4)
(15)
$ —
29
Eliminations
Total
$ —
$ 2,037
$ —
—
—
—
$ —
(29)
$
111
307
30
204
$
848
10,774
Year Ended December 31, 2020
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
Total
Reportable
Segments
$ 1,405
$
$
85
200
19
162
548
6,615
$
$
$
453
17
78
26
96
286
3,380
$
$
$
1,858
102
278
45
258
834
9,995
Other
$ —
$ —
—
(2)
(6)
$ —
32
Eliminations
Total
$ —
$ 1,858
$ —
—
—
—
$ —
(2)
$
102
278
43
252
$
834
10,025
Year Ended December 31, 2019
Gas
Utilities and
Infrastructure
Total
Reportable
Segments
$
$
484
29
83
21
85
$
272
3,116
$
$
$
Other
$ —
$ —
—
(1)
(5)
1,940
109
265
41
244
952
9,304
$ —
34
Eliminations
Total
$ — $ 1,940
$ — $
—
—
—
109
265
40
239
(1)
238
952
— 9,338
$
$ — $
Electric
Utilities and
Infrastructure
$ 1,456
$
80
182
20
159
$
680
6,188
120
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
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.
(in millions)
Regulatory Assets
AROs – coal ash
AROs – nuclear and other
Accrued pension and OPEB
Deferred fuel and purchased power
Storm cost securitized balance, net
Nuclear asset securitized balance, net
Debt fair value adjustment
Retired generation facilities
Post-in-service carrying costs (PISCC) and deferred operating expenses
Hedge costs deferrals
Deferred asset – Lee and Harris COLA
Advanced metering infrastructure (AMI)
Customer connect project
Demand side management (DSM)/Energy efficiency (EE)
Vacation accrual
Storm cost deferrals
NCEMPA deferrals
CEP deferral
Derivatives – natural gas supply contracts
COR settlement
Nuclear deferral
Deferred pipeline integrity costs
Costs of removal regulatory asset
Manufactured gas plant (MGP)
Qualifying facility contract buyouts
ABSAT, coal ash basin closure
Incremental COVID-19 expenses
Amounts due from customers
Deferred severance charges
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities
Net regulatory liability related to income taxes
Costs of removal
AROs – nuclear and other
Provision for rate refunds
Hedge cost deferrals
Accrued pension and OPEB
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
121
Duke Energy
Progress Energy
December 31,
December 31,
2021
2020
2021
2020
$ 3,408
684
2,017
1,253
991
937
884
357
356
348
317
311
242
235
221
213
165
161
139
123
120
108
107
104
94
90
87
85
54
426
14,637
2,150
$ 3,408
754
2,317
213
—
991
950
417
397
351
356
311
136
242
221
1,102
124
117
122
128
123
92
—
104
107
98
76
110
86
609
14,062
1,641
$1,399
620
725
718
759
937
—
265
47
137
21
130
124
230
42
189
165
—
—
32
42
—
107
—
94
23
28
—
18
87
6,939
1,030
$ 1,357
685
875
162
—
991
—
363
51
148
32
102
55
241
42
893
124
—
—
33
35
—
—
—
107
27
23
—
29
158
6,533
758
$12,487
$12,421
$5,909
$ 5,775
$ 7,199
6,150
2,053
274
271
213
1,203
17,363
1,211
$ 7,368
5,883
1,512
344
24
177
1,098
16,406
1,377
$2,394
2,955
—
87
117
—
491
6,044
478
$ 2,411
2,666
—
123
8
—
483
5,691
640
$16,152
$15,029
$5,566
$ 5,051
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
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.
Deferred fuel and purchased power. Represents certain energy-related
costs that are recoverable or refundable as approved by the applicable
regulatory body.
Customer connect project. Represents incremental operating expenses
and carrying costs on deferred amounts related to the deployment of the new
customer information system.
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.
Storm cost deferrals. Represents deferred incremental costs incurred
related to major weather-related events.
NCEMPA deferrals. Represents retail allocated cost deferrals and returns
associated with the additional ownership interest in assets acquired from
NCEMPA in 2015.
CEP deferral. Represents deferred depreciation, PISCC and deferred
property tax for Duke Energy Ohio Gas capital assets for the Capital Expenditure
Program (CEP).
Derivatives – natural gas supply contracts. Represents costs for
certain long-dated, fixed quantity forward natural gas supply contracts, which
are recoverable through PGA clauses.
COR settlement. Represents approved COR settlements that are being
amortized over the average remaining lives, at the time of approval, of the
associated assets.
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.
Deferred pipeline integrity costs. Represents pipeline integrity
Storm cost securitized balance, net. Represents the North Carolina
management costs in compliance with federal regulations.
portion of storm restoration expenditures related to Hurricane Florence,
Hurricane Michael, Hurricane Dorian and Winter Storm Diego (2018 and 2019
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.
Costs of removal regulatory asset. Represents the excess of spend
over funds received from customers to cover the future removal of property,
plant and equipment from retired or abandoned sites as property is retired, net
of certain deferred gains on NDTF investments.
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.
Qualifying facility contract buyouts. Represents termination payments
Debt fair value adjustment. Purchase accounting adjustments recorded
for regulatory recovery through the capacity clause.
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.
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.
Deferred asset – Lee and Harris COLA. Represents deferred costs
incurred for the canceled Lee and Harris nuclear projects.
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.
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.
Incremental COVID-19 expenses. Represents incremental costs
related to ensuring continuity and quality of service in a safe manner during the
COVID-19 pandemic.
Amounts due from customers. Relates primarily to margin decoupling
and IMR recovery mechanisms.
Deferred severance charges. Represents costs incurred for employees
separation from Duke Energy.
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.
Provision for rate refunds. Represents estimated amounts due to
customers based on recording interim rates subject to refund.
122
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Amounts to be refunded to customers. Represents required rate
Duke Energy Indiana
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, 2021.
Duke Energy Indiana has certain dividend restrictions as a result of the
minority interest investment agreement entered in January 2021 with GIC.
Duke Energy Indiana will declare dividends before the second closing, which is
required to be completed no later than January 2023, in accordance with the
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, 2021.
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 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.
RATE-RELATED INFORMATION
The NCUC, PSCSC, FPSC, IURC, PUCO, TPUC and KPSC approve rates for
retail electric and natural gas services within their states. The FERC approves
rates for electric sales to wholesale customers served under cost-based
rates (excluding Ohio and Indiana), as well as sales of transmission service.
The FERC also regulates certification and siting of new interstate natural gas
pipeline projects.
Duke Energy Carolinas and Duke Energy Progress
2021 Coal Ash Settlement
On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress
entered into the Coal Combustion Residuals Settlement Agreement (the “CCR
Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the
North Carolina Attorney General’s Office and the Sierra Club (collectively, the
“Settling Parties”), which was filed with the NCUC on January 25, 2021. The
CCR Settlement Agreement resolves all coal ash prudence and cost recovery
issues in connection with 2019 rate cases filed by Duke Energy Carolinas and
Duke Energy Progress with the NCUC, as well as the equitable sharing issue
on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress
North Carolina rate cases as a result of the December 11, 2020 North Carolina
Supreme Court opinion. The settlement also provides clarity on coal ash cost
recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress
through January 2030 and February 2030 (the “Term”), respectively.
Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery
of approximately $1 billion of systemwide deferred coal ash expenditures, but will
retain the ability to earn a debt and equity return during the amortization period,
which shall be five years under the 2019 North Carolina rate cases and will be set
by the NCUC in future rate case proceedings. The equity return and the amortization
period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke
Energy Progress North Carolina rate cases will remain unaffected. The equity return
on deferred coal ash costs under the 2019 North Carolina rate cases and future rate
cases in North Carolina will be set at 150 basis points lower than the authorized
return on equity (ROE) then in effect, with a capital structure composed of 48%
debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the
ability to earn a full WACC return during the deferral period, which is the period from
when costs are incurred until they are recovered in rates.
The Settling Parties agreed that execution by Duke Energy Carolinas and
Duke Energy Progress of a settlement agreement between themselves and
the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal
ash management plans included therein or subsequently approved by DEQ
123
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) are reasonable and prudent. The Settling Parties retain the right to challenge
the reasonableness and prudence of actions taken by Duke Energy Carolinas
and Duke Energy Progress and costs incurred to implement the scope of work
agreed upon in the DEQ Settlement, after February 1, 2020, and March 1,
2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The
Settling Parties further agreed to waive rights through the Term to challenge
the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy
Progress’ historical coal ash management practices, and to waive the right to
assert any arguments that future coal ash costs, including financing costs, shall
be shared between either company and customers through equitable sharing or
any other rate base or return adjustment that shares the revenue requirement
burden of coal ash costs not otherwise disallowed due to imprudence.
The Settling Parties agreed to a sharing arrangement for future coal ash
insurance litigation proceeds between Duke Energy Carolinas and Duke Energy
Progress and North Carolina customers. For more information, see Note 4
“Commitments and Contingencies.”
As a result of the CCR Settlement Agreement, Duke Energy Carolinas and
Duke Energy Progress recorded a pretax charge of approximately $454 million
and $494 million, respectively, in the fourth quarter of 2020 to Impairment
of assets and other charges and a reversal of approximately $50 million and
$102 million, respectively, to Regulated electric operating revenues on the
respective Consolidated Statements of Operations.
The Coal Ash Settlement was approved without modification in the NCUC
Orders in the 2019 rate cases on March 31, 2021, and April 16, 2021, for Duke
Energy Carolinas and Duke Energy Progress, respectively. The NCUC issued
an Order on Remand Accepting CCR Settlement and Affirming Previous Orders
Settling Rates and Imposing Penalties in the 2017 rate cases on June 25, 2021.
Carbon Plan
The NCUC is required by North Carolina House Bill 951 (HB 951) to adopt
an initial Carbon Plan on or before December 31, 2022. The NCUC has directed
Duke Energy Carolinas and Duke Energy Progress to file a proposed Carbon Plan
on or before May 16, 2022. Duke Energy Carolinas and Duke Energy Progress
cannot predict the outcome of this matter.
Performance-Based Regulation Rules
On February 10, 2022, the NCUC adopted rules to govern the application
and review process for the Performance-Based Regulation (PBR) authorized
under HB 951. The PBR rules are constructive and consistent with the policy
objectives of HB 951.
2020 North Carolina Storm Securitization Filings
On October 26, 2020, Duke Energy Carolinas and Duke Energy Progress
filed a joint petition with the NCUC, as agreed to in partial settlements reached
in the 2019 North Carolina Rate Cases for Duke Energy Carolinas and Duke
Energy Progress, seeking authorization for the financing of the costs of each
utility’s storm recovery activities required as a result of Hurricane Florence,
Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically,
Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find
that their storm recovery costs and related financing costs are appropriately
financed by debt secured by storm recovery property, and that the commission
issue financing orders by which each utility may accomplish such financing
using a securitization structure. On January 27, 2021, Duke Energy Carolinas,
Duke Energy Progress and the Public Staff filed an Agreement and Stipulation
of Partial Settlement, subject to review and approval of the NCUC, resolving
certain accounting issues, including agreement to support an 18- to 20-year
bond period. In the NCUC Orders in the 2019 rate cases issued on March 31,
2021, and April 16, 2021, for Duke Energy Carolinas and Duke Energy Progress,
respectively, the reasonableness and prudence of the deferred storm costs was
approved. On May 20, 2021, the NCUC issued financing orders authorizing the
companies to issue storm recovery bonds, subject to the terms of the financing
orders, and approving the Agreement and Stipulation of Partial Settlement in its
entirety. The storm recovery bonds were issued by Duke Energy Carolinas and
Duke Energy Progress on November 24, 2021.
COVID-19 Filings
North Carolina
Duke Energy Carolinas and Duke Energy Progress filed a joint petition
on August 7, 2020, with the NCUC for deferral treatment of incremental costs
and the cost of waived customer fees due to the COVID-19 pandemic. On
December 29, 2021, the NCUC approved Duke Energy Carolinas’ and Duke
Energy Progress’ joint petition to defer estimated incremental pandemic-related
costs, without prejudice, to the NCUC’s future determination of the appropriate
ratemaking treatment ultimately to be accorded such costs in future rate case
proceedings.
124
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Duke Energy Carolinas
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Carolinas’ Consolidated Balance Sheets.
(in millions)
Regulatory Assets(a)
AROs – coal ash
Accrued pension and OPEB(c)
Deferred fuel and purchased power
Storm cost securitized balance, net
Retired generation facilities(c)
PISCC(c)
Hedge costs deferrals(c)
Deferred asset – Lee COLA
AMI
Customer connect project
Vacation accrual
Storm cost deferrals
COR settlement
Nuclear deferral
ABSAT, coal ash basin closure
Incremental COVID-19 expenses
Deferred severance charges
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(d)
Costs of removal(c)
AROs – nuclear and other
Provision for rate refunds(c)
Hedge cost deferrals
Accrued pension and OPEB(c)
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2020
2021
$ 1,227
365
339
232
54
31
171
296
140
66
83
22
91
78
67
51
36
130
3,479
544
$ 1,414
427
42
—
11
32
174
324
154
50
84
205
95
88
71
31
57
210
3,469
473
$ 2,935
$ 2,996
$ 2,785
2,009
2,053
124
154
44
516
7,685
$ 2,874
1,975
1,512
170
16
32
429
7,008
487
473
$ 7,198
$ 6,535
(h)
Yes
(e)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
(b)
(i)
2023
2041
2023
(b)
(b)
(b)
(b)
(b)
2022
(b)
(b)
2023
(b)
(b)
2023
(b)
(b)
(f)
(b)
(b)
(i)
(b)
Included in rate base.
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.
(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)
(d)
(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)
(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.
Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the
NCUC for a rate increase for retail customers of approximately $647 million.
On February 28, 2018, Duke Energy Carolinas and the Public Staff filed an
Agreement and Stipulation of Partial Settlement resolving certain portions of
the proceeding. Terms of the settlement included an ROE of 9.9% and a capital
structure of 52% equity and 48% debt. On June 22, 2018, the NCUC issued an
order approving the Stipulation of Partial Settlement and requiring a revenue
reduction.
The North Carolina Attorney General and other parties separately filed
Notices of Appeal to the North Carolina Supreme Court. The North Carolina
125
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Supreme Court consolidated the Duke Energy Carolinas and Duke Energy
Progress appeals. On December 11, 2020, the North Carolina Supreme Court
issued an opinion, which affirmed, in part, and reversed and remanded,
in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC’s
decision to include coal ash costs in the cost of service, as well as the NCUC’s
discretion to allow a return on the unamortized balance of coal ash costs. The
court also remanded to the NCUC a single issue to consider the assessment
of support for the Public Staff’s equitable sharing argument. On January 22,
2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR
Settlement Agreement with the Settling Parties, which was filed with the NCUC
on January 25, 2021, and approved by the NCUC on March 31, 2021. The NCUC
issued an Order on Remand Accepting CCR Settlement and Affirming Previous
Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On September 30, 2019, Duke Energy Carolinas filed an application
with the NCUC for a net rate increase for retail customers of approximately
$291 million, which represented an approximate 6% increase in annual base
revenues. The gross rate case revenue increase request was $445 million,
which was offset by an EDIT rider of $154 million to return to customers North
Carolina and federal EDIT resulting from recent reductions in corporate tax
rates. The request for a rate increase was driven by major capital investments
subsequent to the previous base rate case, coal ash pond closure costs,
accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy
Carolinas requested rates be effective no later than August 1, 2020.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed
an Agreement and Stipulation of Partial Settlement, subject to review and
approval of the NCUC, resolving certain issues in the base rate proceeding. On
July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice
to customers required to implement temporary rates. On July 27, 2020, Duke
Energy Carolinas filed a joint motion with Duke Energy Progress and the Public
Staff notifying the commission that the parties reached a joint partial settlement
with the Public Staff. Also, on July 27, 2020, Duke Energy Carolinas filed a letter
stating that it intended to update its temporary rates calculation to reflect the
terms of the partial settlement. On July 31, 2020, Duke Energy Carolinas and
the Public Staff filed a Second Agreement and Stipulation of Partial Settlement
(Second Partial Settlement), subject to review and approval of the NCUC,
resolving certain remaining issues in the base rate proceeding. The remaining
items litigated at hearing included recovery of deferred coal ash compliance
costs that are subject to asset retirement obligation accounting, implementation
of new depreciation rates and the amortization period of the loss on the hydro
station sale.
On August 4, 2020, Duke Energy Carolinas filed an amended motion for
approval of its amended notice to customers, seeking to exercise its statutory
right to implement temporary rates subject to refund on or after August 24,
2020. The revenue requirement to be recovered, subject to refund, through the
temporary rates was based on and consistent with the base rate component
of the Second Partial Settlement and excluded the items to be litigated noted
above. The NCUC approved the August 4, 2020 amended temporary rates motion
on August 6, 2020, and temporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on
September 18, 2020, and post-hearing filings were made with the NCUC from
all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas
and Duke Energy Progress entered into the CCR Settlement Agreement with the
Settling Parties, which was filed with the NCUC on January 25, 2021.
On March 31, 2021, the NCUC issued an order approving the March 25,
2020, and July 31, 2020, partial settlements. The order includes approval of 1)
an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2)
deferral treatment of approximately $800 million of grid improvement projects
with a return; 3) a flow back period of five years for unprotected federal EDIT;
and 4) the reasonableness and prudence of $213 million of deferred storm
costs, which were removed from the rate case and for which Duke Energy
Carolinas filed a petition seeking securitization in October 2020. Additionally, the
order approved without modification the CCR Settlement Agreement.
The order denied Duke Energy Carolinas’ proposal to shorten the
remaining depreciable lives of certain Duke Energy Carolinas coal-fired
generating units, indicating the NCUC has not had the chance to fully examine
the issue within the context of an integrated resource planning (IRP) proceeding,
and upon retirement the remaining net book value of these units should be
placed in a regulatory asset account to be amortized over an appropriate period
to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules,
which resulted in a net increase of approximately $33 million. Revised customer
rates became effective on June 1, 2021.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Carolinas filed an application with the
PSCSC for a rate increase for retail customers of approximately $168 million.
After hearings in March 2019, the PSCSC issued an order on May 21,
2019, which included an ROE of 9.5% and a capital structure of 53% equity and
47% debt. The order also included the following material components:
• Approval of cancellation of the Lee Nuclear Project, with Duke
Energy Carolinas maintaining the combined operating license;
• Approval of recovery of $125 million (South Carolina retail portion)
of Lee Nuclear Project development costs (including AFUDC through
December 2017) over a 12-year period, but denial of a return on
the deferred balance of costs;
• Approval of recovery of $96 million of coal ash costs over a
five-year period with a return at Duke Energy Carolinas’ WACC;
• Denial of recovery of $115 million of certain coal ash costs deemed
to be related to the Coal Ash Act and incremental to the federal
CCR rule;
• Approval of a $66 million decrease to base rates to reflect the
change in ongoing tax expense, primarily the reduction in the
federal income tax rate from 35% to 21%;
• Approval of a $45 million decrease through the EDIT Rider to
return EDIT resulting from the federal tax rate change and deferred
revenues since January 2018 related to the change, to be returned
in accordance with the Average Rate Assumption Method (ARAM)
for protected EDIT, over a 20-year period for unprotected EDIT
associated with Property, Plant and Equipment, over a five-year
period for unprotected EDIT not associated with Property, Plant
and Equipment and over a five-year period for the deferred
revenues; and
• Approval of a $17 million decrease through the EDIT Rider related to
reductions in the North Carolina state income tax rate from 6.9% to
2.5% to be returned over a five-year period.
126
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) As a result of the order, revised customer rates were effective June 1,
2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing
or Reconsideration of that order contending substantial rights of Duke Energy
Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by
the PSCSC on certain issues presented in the proceeding. On June 19, 2019,
the PSCSC issued a directive denying Duke Energy Carolinas’ request to
rehear or reconsider the commission’s rulings on certain issues presented
in the proceeding including coal ash remediation and disposal costs,
ROE and the recovery of a return on deferred operation and maintenance
expenses. An order detailing the commission’s decision in the directive
was issued on October 18, 2019. Duke Energy Carolinas filed a notice of
appeal on November 15, 2019, with the Supreme Court of South Carolina.
On November 20, 2019, the South Carolina Energy Users Committee filed
a Notice of Appeal with the Supreme Court of South Carolina. Initial briefs
were filed on April 21, 2020, which included the South Carolina Energy
User’s Committee brief arguing that the PSCSC erred in allowing Duke Energy
Carolinas’ recovery of costs related to the Lee Nuclear Station. Response
briefs were filed on July 6, 2020, and reply briefs were filed on August 11,
2020. Oral arguments were heard before the Supreme Court of South
Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed
the PSCSC’s May 2019 order to:
• Disallow cost recovery on certain CCR compliance costs the PSCSC
deemed to be incremental to the federal CCR rules;
• Disallow recovery of certain coal ash insurance litigation expenses;
• Disallow a return on certain deferred expenses; and
• Allow recovery of Lee Nuclear Project preconstruction costs.
The Supreme Court of South Carolinas’ decision notes the prior
determination made by the PSCSC that Duke Energy could submit coal ash
costs for recovery that were not initially approved in the rate case order
if such costs can be attributed to the CCR rules. As a result of the court’s
opinion, Duke Energy Carolinas recognized a pretax charge of approximately
$160 million to Impairment of assets and other charges, and a $31 million
increase in Other income and expenses, net in the Consolidated Statements
of Operations for the year ended December 31, 2021, principally related to
coal ash remediation at retired coal ash basin sites. On November 29, 2021,
Duke Energy Carolinas filed a petition for rehearing on several grounds,
including the Supreme Court of South Carolinas’ decision on coal ash cost
recovery and certain deferred expenses. On February 1, 2022, the Supreme
Court of South Carolina denied the petition for rehearing.
Oconee Nuclear Station Subsequent License Renewal
On June 7, 2021, Duke Energy Carolinas filed a subsequent license
renewal application for the Oconee Nuclear Station (ONS) with the U.S.
Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an
additional 20 years. The subsequent license renewal would extend operations
of the facility from 60 to 80 years. The current license for units 1 and 2 expire
in 2033 and the license for unit 3 expires in 2034. By a Federal Register
Notice dated July 28, 2021, the NRC provided a 60-day comment period for
persons whose interest may be affected by the issuance of a subsequent
renewed license for ONS to file a request for a hearing and a petition for
leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club
(Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request)
and a Petition for Waiver. The Hearing Request proposed three contentions
purporting to challenge Duke Energy Carolinas’ environmental report (ER). In
general, the proposed contentions claimed that the ER did not consider certain
information regarding the environmental aspects of severe accidents caused
by a hypothetical failure of the Jocassee Dam, and therefore did not satisfy the
National Environmental Policy Act (NEPA) of 1969, as amended, or the NRC’s
NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the
proposed contentions on October 22, 2021, and the Petitioners filed their reply
to Duke Energy Carolinas’ answer on November 5, 2021. On February 11, 2022,
the Atomic Safety and Licensing Board (ASLB) issued its decision on the Hearing
Request and found that the Petitioners failed to establish that the proposed
contentions are litigable. The ASLB also denied the Petitioners’ Petition for
Waiver and terminated the proceeding.
Duke Energy Carolinas and Duke Energy Progress intend to seek renewal
of operating licenses and 20-year license extensions for all of their nuclear
stations. New depreciation rates were implemented for all of the nuclear
facilities during the second quarter of 2021. Duke Energy Carolinas and Duke
Energy Progress cannot predict the outcome of this matter.
127
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Duke Energy Progress
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Duke Energy Progress’ Consolidated Balance Sheets.
(in millions)
Regulatory Assets(a)
AROs – coal ash
AROs – nuclear and other
Accrued pension and OPEB
Deferred fuel and purchased power
Storm cost securitized balance, net
Retired generation facilities
PISCC and deferred operating expenses
Hedge costs deferrals
Deferred asset – Harris COLA
AMI
Customer connect project
DSM/EE(e)
Vacation accrual
Storm cost deferrals(d)
NCEMPA deferrals
COR settlement
Nuclear deferral
ABSAT, coal ash basin closure
Incremental COVID-19 expenses
Deferred severance charges
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(l)
Costs of removal
Provision for rate refunds
Hedge cost deferrals
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2020
2021
$ 1,389
613
351
303
759
171
47
60
21
92
57
218
42
170
165
32
42
23
28
18
50
4,651
$ 1,347
683
393
158
—
189
51
89
32
57
25
224
42
785
124
33
35
27
23
29
122
4,468
533
492
$ 4,118
$ 3,976
$ 1,695
2,955
87
117
395
5,249
$ 1,662
2,666
123
8
465
4,924
381
530
$ 4,868
$ 4,394
(h)
(f)
Yes
Yes
Yes
Yes
(i)
Yes
(g)
Yes
Yes
Yes
Yes
Yes
(b)
(c)
(k)
2023
2041
(b)
2054
(b)
(b)
(b)
(b)
(i)
2022
(b)
2042
(b)
2023
(b)
(b)
2023
(b)
(b)
(j)
(b)
(b)
Included in rate base.
(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)
(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)
(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 incentives on DSM/EE investments and is recovered through an annual rider mechanism.
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.
128
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 2017 North Carolina Rate Case
On June 1, 2017, Duke Energy Progress filed an application with the NCUC
for a rate increase for retail customers of approximately $477 million, which was
subsequently adjusted to $420 million. On November 22, 2017, Duke Energy
Progress and the Public Staff filed an Agreement and Stipulation of Partial
Settlement resolving certain portions of the proceeding. Terms of the settlement
included an ROE of 9.9% and a capital structure of 52% equity and 48% debt.
On February 23, 2018, the NCUC issued an order approving the stipulation. The
Public Staff, the North Carolina Attorney General and the Sierra Club filed notices
of appeal to the North Carolina Supreme Court.
The North Carolina Supreme Court consolidated the Duke Energy Carolinas
and Duke Energy Progress appeals. On December 11, 2020, the North Carolina
Supreme Court issued an opinion, which affirmed, in part, and reversed and
remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the
NCUC’s decision to include coal ash costs in the cost of service, as well as
the NCUC’s discretion to allow a return on the unamortized balance of coal
ash costs. The court also remanded to the NCUC a single issue to consider the
assessment of support for the Public Staff’s equitable sharing argument. On
January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into
the CCR Settlement Agreement with the Settling Parties, which was filed with
the NCUC on January 25, 2021, and approved by the NCUC on April 16, 2021.
The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming
Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On October 30, 2019, Duke Energy Progress filed an application with the
NCUC for a net rate increase for retail customers of approximately $464 million,
which represented an approximate 12.3% increase in annual base revenues.
The gross rate case revenue increase request was $586 million, which was
offset by riders of $122 million, primarily an EDIT rider of $120 million to return
to customers North Carolina and federal EDIT resulting from recent reductions in
corporate tax rates. The request for a rate increase was driven by major capital
investments subsequent to the previous base rate case, coal ash pond closure
costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke
Energy Progress sought to defer and recover incremental Hurricane Dorian
storm costs in this proceeding and requested rates be effective no later than
September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020,
the NCUC suspended the procedural schedule and postponed the previously
scheduled evidentiary hearing on this matter indefinitely.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an
Agreement and Stipulation of Partial Settlement, subject to review and approval
of the NCUC, resolving certain issues in the base rate proceeding. On July 27,
2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and
the Public Staff notifying the commission that the parties reached a joint partial
settlement with the Public Staff. On July 31, 2020, Duke Energy Progress and
the Public Staff filed a Second Agreement and Stipulation of Partial Settlement,
subject to review and approval of the NCUC, resolving certain remaining issues
in the base rate proceeding. The remaining items litigated at hearing included
recovery of deferred coal ash compliance costs that are subject to asset
retirement obligation accounting and implementation of new depreciation rates.
On August 7, 2020, Duke Energy Progress filed a motion for approval of
notice required to implement temporary rates, seeking to exercise its statutory
right to implement temporary rates subject to refund on or after September 1,
2020. The revenue requirement to be recovered subject to refund through the
temporary rates was based on and consistent with the terms of the base rate
component of the settlement agreements with the Public Staff and excluded
items to be litigated noted above. In addition, Duke Energy Progress also sought
authorization to place a temporary decrement EDIT Rider into effect, concurrent
with the temporary base rate change. The NCUC approved the August 7, 2020
temporary rates motion on August 11, 2020, and temporary rates went into
effect on September 1, 2020.
On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas
entered into the CCR Settlement Agreement with the Settling Parties, which was
filed with the NCUC on January 25, 2021.
On April 16, 2021, the NCUC issued an order approving the June 2, 2020,
and July 31, 2020, partial settlements. The order includes approval of 1) an
ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2)
deferral treatment of approximately $400 million of grid improvement projects
with a return; 3) a flow back period of five years for unprotected federal EDIT;
and 4) the reasonableness and prudence of approximately $714 million of
deferred storm costs, which were removed from the rate case and for which
Duke Energy Progress filed a petition seeking securitization in October 2020.
Additionally, the order approved without modification the CCR Settlement
Agreement.
The order denied Duke Energy Progress’ proposal to shorten the remaining
depreciable lives of certain Duke Energy Progress coal-fired generating units,
indicating the NCUC has not had the chance to fully examine the issue within
the context of an IRP proceeding, and upon retirement the remaining net book
value of these units should be placed in a regulatory asset account to be
amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules,
which resulted in a net increase of approximately $178 million. Revised
customer rates became effective on June 1, 2021.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the
PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019,
which included an ROE of 9.5% and a capital structure of 53% equity and 47%
debt. The order also included the following material components:
• Approval of recovery of $4 million of coal ash costs over a five-year
period with a return at Duke Energy Progress’ WACC;
• Denial of recovery of $65 million of certain coal ash costs deemed to be
related to the Coal Ash Act and incremental to the federal CCR rule;
• Approval of a $17 million decrease to base rates to reflect the change
in ongoing tax expense, primarily the reduction in the federal income tax
rate from 35% to 21%;
• Approval of a $12 million decrease through the EDIT Tax Savings Rider
resulting from the federal tax rate change and deferred revenues since
January 2018 related to the change, to be returned in accordance with
ARAM for protected EDIT, over a 20-year period for unprotected EDIT
associated with Property, Plant and Equipment, over a five-year period
for unprotected EDIT not associated with Property, Plant and Equipment
and over a three-year period for the deferred revenues; and
• Approval of a $12 million increase due to the expiration of EDIT related
to reductions in the North Carolina state income tax rate from 6.9%
to 2.5%.
As a result of the order, revised customer rates were effective June 1,
2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing
or Reconsideration of that order contending substantial rights of Duke Energy
129
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Progress were prejudiced by unlawful, arbitrary and capricious rulings by the
PSCSC on certain issues presented in the proceeding. On June 19, 2019, the
PSCSC issued a directive denying Duke Energy Progress’ request to rehear
or reconsider the commission’s rulings on certain issues presented in the
proceeding including coal ash remediation and disposal costs, ROE and the
recovery of a return on deferred operation and maintenance expenses, but
allowing additional litigation-related costs. As a result of the directive allowing
litigation-related costs, customer rates were revised effective July 1, 2019.
An order detailing the commission’s decision in the directive was issued on
October 18, 2019. In November 2019, Duke Energy Progress appealed the
decision to the Supreme Court of South Carolina.
On October 27, 2021, the Supreme Court of South Carolina affirmed the
PSCSC’s May 2019 order to:
• Disallow cost recovery on certain CCR compliance costs the PSCSC
deemed to be incremental to the federal CCR rules;
• Disallow recovery of certain coal ash insurance litigation expenses; and
• Disallow a return on certain deferred expenses.
The Supreme Court of South Carolinas’ decision notes the prior
determination made by the PSCSC that Duke Energy could submit coal ash
costs for recovery that were not initially approved in the rate case order if such
costs can be attributed to the CCR rules. As a result of the court’s opinion,
Duke Energy Progress recognized a pretax charge of approximately $42 million
to Impairment of assets and other charges, and a $6 million increase in Other
income and expenses, net, in the Consolidated Statements of Operations for
the year ended December 31, 2021, principally related to coal ash remediation
at retired coal ash basin sites. On November 29, 2021, Duke Energy Progress
filed a petition for rehearing on several grounds, including the Supreme Court
of South Carolinas’ decision on coal ash cost recovery and certain deferred
expenses. On February 1, 2022, the Supreme Court of South Carolina denied the
petition for rehearing.
FERC Return on Equity Complaints
On October 11, 2019, North Carolina Eastern Municipal Power Agency
(NCEMPA) filed a complaint at the FERC against Duke Energy Progress pursuant
to Section 206 of the Federal Power Act (FPA), alleging that the 11% stated
ROE component contained in the demand formula rate in the Full Requirements
Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy
Progress is unjust and unreasonable. On July 16, 2020, the FERC set this matter
for hearing and settlement judge procedures and established a refund effective
date of October 11, 2019. In its order setting the matter for settlement, the FERC
allowed for the consideration of variations to the base transmission-related
ROE methodology developed in its Order No. 569-A, through the introduction
of “specific facts and circumstances” involving issues specific to the case.
The parties reached a settlement in principle at a settlement conference on
January 7, 2021, and filed a settlement package on March 10, 2021. The FERC
Trial Staff filed comments in support of the settlement. On April 19, 2021,
the Settlement Judge certified the settlement to the FERC as an uncontested
settlement. The FERC approved the settlement on May 25, 2021, and Duke
Energy Progress filed compliance documents on June 10, 2021. The FERC
accepted the compliance filing on October 8, 2021.
On October 16, 2020, North Carolina Electric Membership Corporation
(NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant
to Section 206 of the FPA, alleging that the 11% stated ROE component in
the demand formula rate in the Power Supply and Coordination Agreement
between NCEMC and Duke Energy Progress is unjust and unreasonable. Under
FPA Section 206, the earliest refund effective date that the FERC can establish
is the date of the filing of the complaint. Duke Energy Progress responded to
the complaint on November 20, 2020, seeking dismissal, demonstrating that
the 11% ROE is just and reasonable for the service provided. The parties filed
responsive pleadings and are awaiting an order from the FERC. Duke Energy
Progress cannot predict the outcome of this matter.
130
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
Regulatory Assets(a)
AROs – coal ash
AROs – nuclear and other
Accrued pension and OPEB(c)
Deferred fuel and purchased power
Nuclear asset securitized balance, net
Retired generation facilities(c)
Hedge costs deferrals(c)
AMI(c)
Customer connect project
DSM/EE(c)
Storm cost deferrals(c)
Costs of removal regulatory asset(c)
Qualifying facility contract buyouts(c)
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(c)
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2020
$
2021
10
7
374
415
937
94
77
38
67
12
19
107
94
37
2,288
497
$
10
2
482
4
991
174
59
45
30
17
108
—
107
35
2,064
265
$ 1,791
$ 1,799
$
699
97
796
98
$
698
$
$
749
19
768
110
658
(b)
(b)
(g)
2022
2036
2044
2038
2032
2037
2025
(b)
(b)
2034
(b)
(b)
(b)
Yes
(f)
Yes
Yes
Yes
Yes
(e)
(d)
Yes
(d)
(d)
Included in rate base.
(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)
(d) Certain costs earn/pay a return.
(e) Earns a debt return/interest once collections begin.
(f)
(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.
Earns commercial paper rate.
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement
(the “2021 Settlement”) with the FPSC. The parties to the 2021 Settlement
include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida
Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a
PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
Pursuant to the 2021 Settlement, the Parties agreed to a base rate
stay-out provision that expires year-end 2024; however, Duke Energy Florida
is allowed an increase to its base rates of an incremental $67 million in 2022,
$49 million in 2023 and $79 million in 2024, subject to adjustment in the event
of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to
an ROE band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital
structure of 53% equity and 47% debt. The ROE band can be increased by 25
basis points if the average 30-year U.S. Treasury rate increases 50 basis points
or more over a six-month period in which case the midpoint ROE would rise
from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the retail
portion of the DOE award of approximately $173 million for spent nuclear fuel,
which is expected to be received in 2022, in order to mitigate customer rates
over the term of the 2021 Settlement. In return, Duke Energy Florida will be able
to recognize the $173 million into earnings from 2022 through 2024.
In addition to these terms, the 2021 Settlement contained provisions
related to the accelerated depreciation of Crystal River Units 4-5, the approval
of approximately $1 billion in future investments in new cost-effective solar
power, the implementation of a new Electric Vehicle Charging Station Program
and the deferral and recovery of costs in connection with the implementation of
Duke Energy Florida’s Vision Florida program, which explores various emerging
non-carbon emitting generation technology, distributed technologies and
resiliency projects, among other things. The 2021 Settlement also resolved
remaining unrecovered storm costs for Hurricane Michael and Hurricane Dorian.
The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order
on June 4, 2021. Revised customer rates became effective January 1, 2022, with
subsequent base rate increases effective January 1, 2023, and January 1, 2024.
131
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Storm Restoration Cost Recovery
Clean Energy Connection
Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to
On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a
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 were fully recovered by year-end 2021. On November 22, 2019, Duke Energy
Florida filed a petition for approval of actual retail recoverable storm restoration
costs related to Hurricane Michael in the amount of $191 million plus interest.
On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the
actual retail recoverable storm restoration costs related to Hurricane Michael by
approximately $3 million, resulting in a total request to recover $188 million actual
retail recoverable storm restoration costs, plus interest. Approximately $80 million
of these costs are included in Regulatory assets within Current Assets and Other
Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2020.
Duke Energy Florida filed a petition with the FPSC on December 19, 2019,
to recover $169 million of estimated retail incremental storm restoration costs for
Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the
FPSC approved the petition on February 24, 2020. The final actual amount of
$145 million was filed on September 30, 2020. The 2021 Settlement resolved
all matters regarding storm cost recovery relating to Hurricane Michael and
Hurricane Dorian.
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 three 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. The FPSC approved the program in January 2021.
On February 24, 2021, the League of United Latin American Citizens (LULAC)
filed a notice of appeal of the FPSC’s order approving the Clean Energy Connection
to the Supreme Court of Florida. LULAC’s initial brief was filed on May 26, 2021,
and Appellees’ response briefs were filed on July 26, 2021. LULAC’s reply brief
was filed on September 24, 2021, and its request for oral argument was filed on
September 28, 2021. The Supreme Court of Florida heard the oral argument on
February 9, 2022. The FPSC approval order remains in effect pending the outcome
of the appeal. Duke Energy Florida cannot predict the outcome of this matter.
132
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
Regulatory Assets(a)
AROs – coal ash
Accrued pension and OPEB
Deferred fuel and purchased power
PISCC and deferred operating expenses(c)
Hedge costs deferrals
AMI
Customer connect project
DSM/EE
Vacation accrual
Storm cost deferrals
CEP deferral
Deferred pipeline integrity costs
MGP
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes
Costs of removal
Provision for rate refunds
Accrued pension and OPEB
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
2021
Earns/Pays
a Return
Recovery/Refund
Period Ends
2020
(b)
(g)
2022
2083
(b)
(b)
(b)
(e)
2022
2023
(b)
(b)
(b)
(b)
(b)
(d)
(b)
(g)
(b)
Yes
Yes
(f)
Yes
Yes
$
$
$
33
133
38
16
5
24
41
5
6
2
161
24
104
115
707
72
635
602
39
61
21
78
801
62
$
$
$
22
149
—
16
7
36
26
1
6
4
117
21
104
140
649
39
610
628
68
45
17
55
813
65
$
739
$
748
Included in rate base.
(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)
(d) Recovery over the life of the associated assets.
(e) Recovered via a rider mechanism.
(f)
(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.
Includes incentives on DSM/EE investments.
Duke Energy Ohio Electric Base Rate Case
Ohio House Bill 6 and House Bill 128
Duke Energy Ohio filed with the PUCO an electric distribution base
rate case application on October 1, 2021, with supporting testimony filed on
October 15, 2021, requesting an increase in electric distribution base rates of
approximately $55 million and an ROE of 10.3%. This is an approximate 3.3%
average increase in the customer’s total bill across all customer classes. The
drivers for this case are capital invested since Duke Energy Ohio’s last electric
distribution base rate case in 2017. Duke Energy Ohio is also seeking to adjust
the caps on its Distribution Capital Investment (DCI) Rider. Duke Energy Ohio
anticipates the PUCO will rule on the request by the summer of 2022. Duke
Energy Ohio cannot predict the outcome of this matter.
On July 23, 2019, House Bill 6 was signed into law and became
effective January 1, 2020. Among other things, the bill allowed for funding
through a rider mechanism referred to as the Clean Air Fund (CAF) Rider, of
two nuclear generating facilities located in Northern Ohio owned by Energy
Harbor (f/k/a FirstEnergy Solutions) and certain renewable resources, repeal
of energy efficiency mandates and recovery of prudently incurred costs, net
of any revenues, for Ohio investor-owned utilities that are participants under
the OVEC power agreement. The OVEC recovery is through a non-bypassable
rider that replaced any existing recovery mechanism approved by the PUCO
and will remain in place through 2030. As such, Duke Energy Ohio created the
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PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Legacy Generation Rider that replaced the Price Stabilization Rider 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. House Bill 128 (HB 128) was
signed into law on March 31, 2021, and became effective June 30, 2021. The
bill removes nuclear plant funding included in HB 6, eliminates the CAF Rider
and establishes the Solar Generation Fund Rider to recover the renewable
investments originally included in HB 6. HB 128 does not impact OVEC cost
recovery or any transmission or distribution rider.
Energy Efficiency Cost Recovery
In response to changes in Ohio law that eliminated Ohio’s energy
efficiency mandates, the PUCO issued an order on February 26, 2020, directing
utilities to wind down their demand-side management programs by September
30, 2020, and to terminate the programs by December 31, 2020. Duke Energy
Ohio took the following actions:
• On March 27, 2020, Duke Energy Ohio filed an application for rehearing
seeking clarification on the final true up and reconciliation process
after 2020. On November 18, 2020, the PUCO issued an order replacing
the cost cap previously imposed upon Duke Energy Ohio with a cap on
shared savings recovery. On December 18, 2020, Duke Energy Ohio filed
an additional application for rehearing challenging, among other things,
the imposition of the cap on shared savings. On January 13, 2021, the
application for rehearing was granted for further consideration.
• On October 9, 2020, Duke Energy Ohio filed an application to implement
a voluntary energy efficiency program portfolio to commence on
January 1, 2021. The application proposed a mechanism for recovery of
program costs and a benefit associated with avoided transmission and
distribution costs. The application remains under review.
• On November 18, 2020, the PUCO issued an order directing all utilities
to set their energy efficiency riders to zero effective January 1, 2021,
and to file a separate application for final reconciliation of all energy
efficiency costs prior to December 31, 2020.
• Effective January 1, 2021, Duke Energy Ohio suspended its energy
efficiency programs.
• On June 14, 2021, the PUCO issued an entry for each utility to file
by July 15, 2021, a proposal to reestablish low-income programs
through December 31, 2021. Duke Energy Oho filed its application on
July 14, 2021.
Duke Energy Ohio cannot predict the outcome of this matter.
Natural Gas Pipeline Extension
Duke Energy Ohio is installing a new natural gas pipeline (the Central
Corridor Project) in its Ohio service territory to increase system reliability
and enable the retirement of older infrastructure. Duke Energy Ohio currently
estimates the pipeline development costs and construction activities will
range from $185 million to $195 million in direct costs (excluding overheads
and AFUDC) and that construction of the pipeline extension will be completed
in February 2022. An evidentiary hearing on Duke Energy Ohio’s application
for a Certificate of Environmental Compatibility and Public Need concluded
on April 11, 2019. On November 21, 2019, the Ohio Power Siting Board
(OPSB) approved Duke Energy Ohio’s application subject to 41 conditions on
construction. Applications for rehearing were filed by several stakeholders on
December 23, 2019, arguing that the OPSB approval was incorrect. On February
20, 2020, the OPSB denied the rehearing requests. On April 15, 2020, those
stakeholders filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s
decision approving Duke Energy Ohio’s Central Corridor Project application. The
Supreme Court of Ohio affirmed the OPSB order on September 22, 2021.
On September 22, 2020, Duke Energy Ohio filed an application with the
OPSB for approval to amend the certificated pipeline route due to changes in
the route negotiated with property owners and municipalities. On January 21,
2021, the OPSB approved the amended filing with recommended conditions that
reaffirm previous conditions and provide guidance regarding local permitting
and construction supervision.
MGP Cost Recovery
In an order issued in 2013, the PUCO approved Duke Energy Ohio’s deferral
and recovery of costs related to environmental remediation at 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 2008 through 2012 through Rider MGP, which is currently suspended.
Duke Energy Ohio has made annual applications with the PUCO to recover its
incremental remediation costs consistent with the PUCO’s directive in Duke
Energy Ohio’s 2012 natural gas base rate case. To date, the PUCO has not ruled
on Duke Energy Ohio’s annual applications for the calendar years 2013 through
2019. On September 28, 2018, the Staff of the PUCO (Staff) issued a report
recommending a disallowance of approximately $12 million of the $26 million
in MGP remediation costs incurred between 2013 through 2017 that the Staff
believes are not eligible for recovery. The Staff interprets the PUCO’s 2013 order
granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery
to work directly on the East End and West End sites. On October 30, 2018, Duke
Energy Ohio filed reply comments objecting to the Staff’s recommendations and
explaining, among other things, the obligation Duke Energy Ohio has under Ohio
law to remediate all areas impacted by the former MGPs and not just physical
property that housed the former plants and equipment. On March 29, 2019,
Duke Energy Ohio filed its annual application to recover incremental remediation
expense for the calendar year 2018 seeking recovery of approximately $20 million
in remediation costs. On July 12, 2019, the Staff recommended a disallowance of
approximately $11 million for work that the Staff believes occurred in areas not
authorized for recovery. Additionally, the Staff recommended that any discussion
pertaining to Duke Energy Ohio’s recovery of ongoing MGP costs should be directly
tied to or netted against insurance proceeds collected by Duke Energy Ohio. An
evidentiary hearing concluded on November 21, 2019. Initial briefs were filed on
January 17, 2020, and reply briefs were filed on February 14, 2020.
On March 31, 2020, Duke Energy Ohio filed its annual application to
recover incremental MGP remediation expense seeking recovery of approximately
$39 million in remediation costs incurred during 2019. On July 23, 2020, the
Staff recommended a disallowance of approximately $4 million for work the Staff
believes occurred in areas not authorized for recovery. Additionally, the Staff
recommended insurance proceeds, net of litigation costs and attorney fees, should
be paid to customers and not be held by Duke Energy Ohio until all investigation
and remediation is complete. Duke Energy Ohio filed comments in response to
the Staff’s report on August 21, 2020, and intervenor comments were filed on
November 9, 2020.
The 2013 PUCO order also contained conditional deadlines for completing
the MGP environmental remediation and the deferral of related remediation costs.
Subsequent to the order, the deadline was extended to December 31, 2019. On
May 10, 2019, Duke Energy Ohio filed an application requesting a continuation
134
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) of its existing deferral authority for MGP remediation that must occur after
December 31, 2019. On July 12, 2019, the Staff recommended the commission
deny the deferral authority request. On September 13, 2019, intervenor comments
were filed opposing Duke Energy Ohio’s request for continuation of existing
deferral authority and on October 2, 2019, Duke Energy Ohio filed reply comments.
A Stipulation and Recommendation was filed jointly by Duke Energy Ohio,
the Staff, the Office of the Ohio Consumers’ Counsel and the Ohio Energy Group
on August 31, 2021, which is subject to review and approval by the PUCO. If
approved, the Stipulation and Recommendation would, among other things,
resolve all open issues regarding MGP remediation costs incurred between
2013 and 2019, Duke Energy Ohio’s request for additional deferral authority
beyond 2019 and the pending issues related to the Tax Act as it relates to Duke
Energy Ohio’s natural gas operations. These impacts are not expected to have a
material impact on Duke Energy Ohio’s financial statements. The Stipulation and
Recommendation further acknowledges Duke Energy Ohio’s ability to file a request
for additional deferral authority in the future related to environmental remediation
of any MGP impacts in the Ohio River if necessary, subject to specific conditions.
On October 15, 2021, the PUCO granted motions to intervene filed in September
2021 by Interstate Gas Supply, Inc. and Retail Energy Supply Association on
a limited basis. An evidentiary hearing was held on November 18, 2021, and
briefing was concluded on December 23, 2021. Duke Energy Ohio cannot predict
the outcome of this matter.
Tax Act – Ohio
On December 21, 2018, Duke Energy Ohio filed an application to change
its base rate tariffs and establish a new rider to implement the benefits of the
Tax Act for natural gas customers. Duke Energy Ohio requested commission
approval to implement the tariff changes and rider effective April 1, 2019.
The new rider will flow through to customers the benefit of the reduction in
the statutory federal tax rate from 35% to 21% since January 1, 2018, all
future benefits of the lower tax rates and a full refund of deferred income taxes
collected at the higher tax rates in prior years. Deferred income taxes subject
to normalization rules will be refunded consistent with federal law and deferred
income taxes not subject to normalization rules will be refunded over a 10-year
period. The PUCO established a procedural schedule and testimony was filed on
July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs
were filed on September 11, 2019. Reply briefs were filed on September 25,
2019. The Stipulation and Recommendation filed on August 31, 2021, disclosed
in the MGP Cost Recovery matter above, also resolves the outstanding issues in
this proceeding. On October 15, 2021, the PUCO granted motions to intervene
filed in September 2021 by Interstate Gas Supply, Inc. and Retail Energy
Supply Association on a limited basis. An evidentiary hearing was held on
November 18, 2021, and briefing was concluded on December 23, 2021. Duke
Energy Ohio cannot predict the outcome of this matter.
Duke Energy Kentucky Natural Gas Base Rate Case
On June 1, 2021, Duke Energy Kentucky filed an application with the KPSC
requesting an increase in natural gas base rates of approximately $15 million,
an approximate 13% average increase across all customer classes. The drivers
for this case are capital invested since Duke Energy Kentucky’s last natural
gas base rate case in 2018. Duke Energy Kentucky also sought implementation
of a rider in order to recover from or pay to customers the financial impact of
governmental directives and mandates, including changes in federal or state
tax rates and regulations issued by the Pipeline and Hazardous Materials
Safety Administration (PHMSA). On October 8, 2021, Duke Energy Kentucky
filed a Stipulation and Recommendation jointly with the Kentucky Attorney
General, subject to review and approval by the KPSC, which if approved, would
resolve the case. The Stipulation and Recommendation included a $9 million
increase in base revenues, an ROE of 9.375% for natural gas base rates and
9.3% for natural gas riders, a rider for PHMSA-required capital investments
with an annual 5% rate increase cap and a four-year natural gas base rate
case stay out. The evidentiary hearing was held on October 18, 2021. On
December 28, 2021, the KPSC approved the Stipulation and Recommendation
with minor modifications, authorizing a $9 million increase. Rates were effective
January 4, 2022.
Midwest Propane Caverns
Duke Energy Ohio uses propane stored in caverns to meet peak demand
during winter. Once the Central Corridor Project is complete, the propane
peaking facilities will no longer be necessary and will be retired. On October 7,
2021, Duke Energy Ohio requested deferral treatment of the property, plant and
equipment as well as costs related to propane inventory and decommissioning
costs. On January 6, 2022, the Staff issued a report recommending deferral
authority for costs related to propane inventory and decommissioning but not
for the net book value of the remaining assets. As a result of the Staff’s report,
Duke Energy Ohio recorded a $19 million charge to Impairment of assets and
other charges on the Consolidated Statements of Operations and Comprehensive
Income in the fourth quarter of 2021. There is approximately $6 million and
$27 million in Net, property, plant and equipment on the Consolidated Balance
Sheets as of December 31, 2021, and December 31, 2020, respectively, related
to the propane caverns. The PUCO established a procedural schedule for the
submission of comments by March 7, 2022. Duke Energy Ohio cannot predict
the outcome of this matter.
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.
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, 2021, and 2020, $33 million and $37 million, respectively, are recorded in
Regulatory assets on Duke Energy Ohio’s Consolidated Balance Sheets.
(in millions)
Duke Energy Ohio
December 31, 2020
Provisions/
Adjustments
Cash
Reductions
December 31, 2021
$ 50
$ —
$ (4)
$ 46
135
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
Regulatory Assets(a)
AROs – coal ash
Accrued pension and OPEB
Deferred fuel and purchased power
Retired generation facilities(c)
PISCC and deferred operating expenses(c)
Hedge costs deferrals
AMI
Customer connect project
Vacation accrual
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes
Costs of removal
Accrued pension and OPEB
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2020
$
2021
749
222
158
38
262
35
17
11
13
50
1,555
277
Yes
Yes
Yes
$
615
245
9
43
298
22
19
5
12
60
1,328
125
$ 1,278
$ 1,203
$
908
575
113
96
1,692
127
$
956
599
100
83
1,738
111
$ 1,565
$ 1,627
(b)
(e)
2022
2030
(b)
(b)
2031
(b)
2022
(b)
(b)
(d)
(e)
(b)
(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)
(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.
Included in rate base.
2019 Indiana Rate Case
On July 2, 2019, Duke Energy Indiana filed a general rate case with the
IURC for a rate increase for retail customers of approximately $395 million.
The rebuttal case, filed on December 4, 2019, updated the requested revenue
requirement to result in a 15.6% or $396 million average retail rate increase,
including the impacts of the Utility Receipts Tax. Hearings concluded on
February 7, 2020. On June 29, 2020, the IURC issued an order in the rate case
approving a revenue increase of $146 million before certain adjustments and
ratemaking refinements. The order approved Duke Energy Indiana’s requested
forecasted rate base of $10.2 billion as of December 31, 2020, including the
Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC
reduced Duke Energy Indiana’s request by slightly more than $200 million, when
accounting for the utility receipts tax and other adjustments. Approximately
50% of the reduction was due to a prospective change in depreciation and use
of regulatory asset for the end-of-life inventory at retired generating plants,
approximately 20% is due to the approved ROE of 9.7% versus the requested
ROE of 10.4% and approximately 20% was related to miscellaneous earnings
neutral adjustments. Step one rates were estimated to be approximately 75% of
the total and became effective on July 30, 2020. Step two rates are estimated to
be the remaining 25% of the total rate increase. Step two rates were approved
on July 28, 2021, and implemented in August 2021. Step two rates are based
on a return on equity of 9.7% and actual December 31, 2020 capital structure
with a 54% equity component. Step two rates will be reconciled to January 1,
2021. Several groups appealed the IURC order to the Indiana Court of Appeals.
Appellate briefs were filed on October 14, 2020, focusing on three issues:
wholesale sales allocations, coal ash basin cost recovery and the Edwardsport
IGCC operating and maintenance expense level approved. The appeal was fully
briefed in January 2021, and an oral argument was held on April 8, 2021. The
Indiana Court of Appeals affirmed the IURC decision on May 13, 2021. The
Indiana Office of Utility Consumer Counselor (OUCC) and the Duke Industrial
Group filed a joint petition to transfer the rate case appeal to the Indiana
Supreme Court on June 28, 2021. Response briefs were filed July 19, 2021. The
Indiana Supreme Court granted the petition to transfer on September 16, 2021,
and oral arguments were heard on November 16, 2021. Duke Energy Indiana
cannot predict the outcome of this matter.
136
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 2020 Indiana Coal Ash Recovery Case
In Duke Energy Indiana’s 2019 rate case, the IURC approved coal ash
basin closure costs expended through 2018 including financing costs as a
regulatory asset and included in rate base. The IURC also opened a subdocket
for post-2018 coal ash related expenditures. Duke Energy Indiana filed
testimony on April 15, 2020, in the coal ash subdocket requesting recovery for
the post-2018 coal ash basin closure costs for plans that have been approved
by the Indiana Department of Environmental Management (IDEM) as well as
continuing deferral, with carrying costs, on the balance. An evidentiary hearing
was held on September 14, 2020. Briefing was completed by mid-September
2021. On November 3, 2021, the IURC issued an order allowing recovery for
post-2018 coal ash basin closure costs for the plans that have been approved
by IDEM, as well as continuing deferral, with carrying costs, on the balance. The
OUCC filed a notice of appeal to the Indiana Court of Appeals on December 3,
2021. Duke Energy Indiana cannot predict the outcome of this matter.
Piedmont
Regulatory Assets and Liabilities
The following tables present the regulatory assets and liabilities recorded on Piedmont’s Consolidated Balance Sheets.
(in millions)
Regulatory Assets(a)
AROs – nuclear and other
Accrued pension and OPEB(c)
Vacation accrual
Derivatives – natural gas supply contracts(f)
Deferred pipeline integrity costs(c)
Amounts due from customers
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes
Costs of removal(c)
Provision for rate refunds
Accrued pension and OPEB(c)
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
2021
Earns/Pays
a Return
Recovery/Refund
Period Ends
2020
(d)
(g)
2022
2025
(b)
(b)
(b)
(d)
(g)
(b)
$
$
$
22
82
12
139
84
85
33
457
141
316
510
572
2
5
25
1,114
56
$
$
$
20
88
12
122
71
110
32
455
153
302
499
575
6
3
49
1,132
88
$ 1,058
$ 1,044
(e)
(e)
Included in rate base.
(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)
(d) Recovery over the life of the associated assets.
(e) Certain costs earn/pay a return.
(f) Balance will fluctuate with changes in the market. Current contracts extend into 2031.
(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.
2020 Tennessee Rate Case
On July 2, 2020, Piedmont filed an application with the TPUC, its first
general rate case in Tennessee in nine years, for a rate increase for retail
customers of approximately $30 million, which represents an approximate
15% increase in annual revenues. The rate increase is driven by significant
infrastructure upgrade investments since Piedmont’s previous rate case.
Approximately half of the plant additions being added to rate base are categories
of capital investment not covered under the IMR mechanism, which was
approved in 2013. Piedmont amended its requested increase to approximately
$26 million in December 2020. As authorized under Tennessee law, Piedmont
implemented interim rates on January 2, 2021, at the level requested in
its adjusted request. A settlement reached with the Tennessee Consumer
Advocate in mid-January was approved by the TPUC on February 16, 2021. The
settlement results in an increase of revenues of approximately $16 million and
an ROE of 9.8%. Revised customer rates became effective on January 2, 2021.
Piedmont refunded customers the difference between bills previously rendered
under interim rates and such bills if rendered under approved rates, plus
interest in April 2021.
137
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 2021 North Carolina Rate Case
On March 22, 2021, Piedmont filed an application with the NCUC for
a rate increase for retail customers of approximately $109 million, which
represents an approximate 10% increase in retail revenues. The rate increase
is driven by customer growth and significant infrastructure upgrade investments
(plant additions) since the last general rate case. Approximately 70% of the
plant additions being rolled into rate base are categories of plant investment
not covered under the IMR mechanism, which was originally approved as part
of the 2013 North Carolina Rate Case. On July 28, 2021, Piedmont amended its
requested increase to approximately $97 million.
On September 7, 2021, Piedmont and the Public Staff, the Carolina Utility
Customers Association, Inc. and the Carolina Industrial Group for Fair Utility
Rates IV filed a Stipulation of Partial Settlement (Stipulation), which is subject to
review and approval by the NCUC, resolving most issues between these parties.
Major components of the Stipulation include:
• A return on equity of 9.6% and a capital structure of 51.6% equity and
48.4% debt;
• Continuation of the IMR mechanism and margin decoupling; and
• A base rate increase of approximately $67 million, subject to
completion of the Robeson County LNG facility and the Pender Onslow
County expansion project.
An evidentiary hearing to review the Stipulation and other issues
concluded on September 9, 2021. On October 12, 2021, Piedmont notified the
NCUC of its intent to implement the stipulated rates effective November 1,
2021, on a temporary basis and subject to refund. On October 18, 2021,
Piedmont and the Public Staff filed supplemental testimony attesting to the
completion of the Robeson County LNG facility and the Pender Onslow County
expansion project and to the propriety of including the capital investment for
these two projects in this proceeding. On January 6, 2022, the NCUC issued an
order approving the Stipulation. No refunds need to be rendered to customers
arising from Piedmont’s implementation of interim rates.
OTHER REGULATORY MATTERS
Atlantic Coast Pipeline, LLC
Atlantic Coast Pipeline (ACP pipeline) was planned to be an approximately
600-mile interstate natural gas pipeline running from West Virginia to North
Carolina. Duke Energy indirectly owns a 47% interest, which is accounted for as
an equity method investment through its Gas Utilities and Infrastructure segment.
As a result of the uncertainty created by various legal rulings, the potential
impact on the cost and schedule for the project, the ongoing legal challenges and
the risk of additional legal challenges and delays through the construction period
and Dominion’s decision to sell substantially all of its gas transmission and storage
segment assets, Duke Energy’s Board of Directors and management decided that
it was not prudent to continue to invest in the project. On July 5, 2020, Duke Energy
and Dominion announced the cancellation of the ACP pipeline project.
As part of the pretax charges to earnings of approximately $2.1 billion
recorded in June 2020, within Equity in earnings (losses) of unconsolidated
affiliates on the Duke Energy Consolidated Statements of Operations, Duke
Energy established liabilities related to the cancellation of the ACP pipeline
project. In February 2021, Duke Energy paid approximately $855 million to fund
ACP’s outstanding debt, relieving Duke Energy of its guarantee. At December 31,
2021, there is $47 million and $53 million within Other Current Liabilities and
Other Noncurrent Liabilities, respectively, in the Gas Utilities and Infrastructure
segment. The liabilities represent Duke Energy’s obligation of approximately
$100 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.
138
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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, 2021, and exclude
capitalized asset retirement costs.
Duke Energy Carolinas
Allen Steam Station Unit 1(a)
Allen Steam Station Unit 5(b)
Cliffside Unit 5(b)
Duke Energy Progress
Mayo Unit 1(b)
Roxboro Units 3-4(b)
Duke Energy Florida
Crystal River Units 4-5(c)
Duke Energy Indiana(d)
Gibson Units 1-5(e)
Cayuga Units 1-2(e)
Total Duke Energy
Capacity
(in MW)
Remaining Net
Book Value
(in millions)
167
259
546
713
1,409
1,442
2,845
1,005
8,386
$
12
277
365
631
457
1,650
1,829
696
$ 5,917
(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, was retired in March
2021, and unit 2 with a capacity of 167 MW and a net book value of $44 million at December 31, 2020, was retired in December 2021.
(b) These units were included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020. The long-term energy options considered in the IRP could result in
retirement of these units earlier than their current estimated useful lives. In 2019, Duke Energy Carolinas and Duke Energy Progress filed North Carolina rate cases that included depreciation studies that accelerate end-of-life
dates for these plants. The NCUC issued orders in the 2019 rate cases of Duke Energy Carolinas and Duke Energy Progress on March 31, 2021, and April 16, 2021, respectively, in which the proposals to shorten the remaining
depreciable lives of these units were denied, while indicating the IRP proceeding was the appropriate proceeding for the review of generating plant retirements. Allen Unit 4 with a capacity of 267 MW and a net book value of
$170 million at December 31, 2020, was retired in December 2021.
(c) On January 14, 2021, Duke Energy Florida filed the 2021 Settlement 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. The FPSC approved the 2021 Settlement on May 4, 2021.
(d) Gallagher Units 2 and 4 with a total capacity of 280 MW and a total net book value of $102 million at December 31, 2020, were retired on June 1, 2021.
(e) The rate case filed July 2, 2019, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. The depreciation rates reflecting these updated retirement dates were approved by the IURC as part of the
rate case order issued on June 29, 2020.
4. COMMITMENTS AND CONTINGENCIES
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.
139
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.
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 achieved a SAFSTOR condition in July 2019. On
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) October 1, 2020, Crystal River Unit 3 changed decommissioning strategies from
SAFSTOR to DECON.
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 $13.5 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 $13.1 billion of coverage per incident through
the Price-Anderson Act’s mandatory industrywide 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 95 licensed commercial nuclear reactors in the U.S. Under this
program, operating unit 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
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.
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 Catawba, $434 million for McGuire, $364 million for Harris, $336 million
for Brunswick, $322 million for Oconee and $280 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
$140 million, $88 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.
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida
ENVIRONMENTAL
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.
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
140
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
the plaintiffs’ amended complaint on December 18, 2020. On January 31, 2022,
the court denied the defendants’ motion to dismiss. Duke Energy will be filing its
answer to the amended complaint, following which discovery will commence.
Duke Energy cannot predict the outcome of this matter.
Texas Storm Uri Tort Litigation
Several Duke Energy renewables project companies, located in the Electric
Reliability Council of Texas (ERCOT) market, were named in lawsuits arising out
of Texas Storm Uri in mid-February 2021. Several additional suits, where Duke
Energy Corporation had been named, were dismissed The current lawsuits seek
recovery for property damages, personal injury and for wrongful death allegedly
caused by the power outages, which the plaintiffs claim was the result of
collective failures of generators, transmission and distribution operators, retail
energy providers and others including ERCOT. The cases have been consolidated
into a Texas state court multidistrict litigation (MDL) proceeding for discovery
purposes. With the exception of a few bellwether cases which are still being
decided, all the lawsuits in the MDL will be stayed until motions to dismiss are
filed and considered by the court in mid-2022. The bellwether cases will include
those in which the Duke Energy entities are named. Duke Energy cannot predict
the outcomes of these matters.
Duke Energy Carolinas and Duke Energy Progress
(in millions)
December 31, 2021 December 31, 2020
Coal Ash Insurance Coverage Litigation
Reserves for Environmental Remediation
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
$
88
19
23
11
11
34
4
9
$
75
19
19
6
12
22
6
10
Additional losses in excess of recorded reserves that could be incurred for
the stages of investigation, remediation and monitoring for environmental sites
that have been evaluated at this time are not material.
LITIGATION
Duke Energy
Michael Johnson et al. v. Duke Energy Corporation et al.
On September 23, 2020, plaintiff Michael Johnson, a former Duke
Energy employee and participant in the Duke Energy Retirement Savings Plan
(Plan) brought suit on his own behalf and on behalf of other participants and
beneficiaries similarly situated against Duke Energy Corporation, the Duke Energy
Benefits Committee, and other unnamed individual defendants. The complaint,
which was subsequently amended to add a current participant as a plaintiff
on November 23, 2020, alleges that the defendants breached their fiduciary
duties with respect to certain fees associated with the Plan in violation of the
Employee Retirement Income Security Act of 1974 and seeks certification of a
class of all individuals who were participants or beneficiaries of the Plan at any
time on or after September 23, 2014. The defendants filed a motion to dismiss
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 sought 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 sought 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.
Duke Energy Carolinas and Duke Energy Progress have now resolved
claims against all of the insurers sued in this litigation and have dismissed
their claims against all of the insurers. Duke Energy Carolinas and Duke Energy
Progress have received approximately $418 million of coal ash insurance
litigation proceeds from settlements with insurer-defendants and the proceeds
will be distributed in accordance with the terms of the CCR settlement
agreement.
Duke Energy Carolinas
Ruben Villano, et al. v. Duke Energy Carolinas, LLC
On June 16, 2021, a group of nine individuals went over a low head dam
adjacent to the Dan River Steam Station in Eden, North Carolina, while water
tubing. Emergency personnel rescued four people and five others were confirmed
deceased. On August 11, 2021, Duke Energy Carolinas was served with the
complaint filed in Durham County Superior Court on behalf of four survivors, which
was later amended to include all the decedents along with the survivors, except
for one minor. The lawsuit alleges that Duke Energy Carolinas knew that the river
was used for recreational purposes and that Duke Energy did not adequately warn
about the dam. On September 30, 2021, Duke Energy Carolinas filed its motion
to dismiss and motion for transfer of venue from Durham County to Rockingham
141
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) County, both of which were denied on November 15, 2021. On November 15,
2021, Duke Energy Carolinas was also served with Plaintiffs Second Amended
Complaint, which added the final minor plaintiff and consolidated all the actions
into one lawsuit. Duke Energy Carolinas has filed its Answer and Affirmative
Defenses to the Second Amended Complaint. Discovery has now commenced.
Duke Energy Carolinas cannot predict the outcome of this matter.
NTE Carolinas II, LLC Litigation
In November 2017, Duke Energy Carolinas entered into a standard FERC
large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC
(NTE), a company that proposed to build a combined-cycle natural gas plant
in Rockingham County, North Carolina. On September 6, 2019, Duke Energy
Carolinas filed a lawsuit in Mecklenburg County Superior Court against NTE
for breach of contract, alleging that NTE’s failure to pay benchmark payments
for Duke Energy Carolinas’ transmission system upgrades required under the
interconnection agreement constituted a termination of the interconnection
agreement. Duke Energy Carolinas is seeking a monetary judgment against
NTE because NTE failed to make multiple milestone payments. The lawsuit
was moved to federal court in North Carolina. NTE filed a motion to dismiss
Duke Energy Carolinas’ complaint and brought counterclaims alleging anti-
competitive conduct and violations of state and federal statutes. Duke Energy
Carolinas filed a motion to dismiss NTE’s counterclaims.
On May 21, 2020, in response to a NTE petition challenging Duke Energy
Carolinas’ termination of the LGIA, FERC issued a ruling that 1) FERC has exclusive
jurisdiction to determine whether a transmission provider may terminate a LGIA; 2)
FERC approval is required to terminate a conforming LGIA if objected to by the
interconnection customer; and 3) Duke Energy may not announce the termination
of a conforming LGIA unless FERC has approved the termination. FERC’s Office of
Enforcement also initiated an investigation of Duke Energy Carolinas into matters
pertaining to the LGIA. Duke Energy Carolinas is cooperating with the Office of
Enforcement and cannot predict the outcome of this investigation.
On August 17, 2020, the court denied both NTE’s and Duke Energy
Carolinas’ motions to dismiss. In October 2021, NTE filed a Second Amended
Counterclaim and Complaint, and in January 2022, NTE filed a Third Amended
Counterclaim and Complaint. Duke Energy Carolinas has responded to these
pleadings. On December 6, 2021, Duke Energy Carolinas filed an Amended
Complaint. Discovery is scheduled to end by April 2022, after which the parties
will file dispositive motions for the court’s consideration. The case is scheduled
to be trial ready by August 1, 2022. Duke Energy Carolinas cannot predict the
outcome of this matter.
Asbestos-related Injuries and Damages Claims
Duke Energy Carolinas has experienced numerous claims for
indemnification and medical cost reimbursement related to asbestos exposure.
These claims relate to damages for bodily injuries alleged to have arisen from
exposure to or use of asbestos in connection with construction and maintenance
activities conducted on its electric generation plants prior to 1985.
Duke Energy Carolinas has recognized asbestos-related reserves of $501
million and $572 million at December 31, 2021, and 2020, respectively. These
reserves are classified in Other within Other Noncurrent Liabilities and Other
within Current Liabilities on the Consolidated Balance Sheets. The change in
the reserves is a result of a third-party study completed in 2021 as well as
settlements made throughout the year. These reserves are based upon Duke
Energy Carolinas’ best estimate for current and future asbestos claims through
2041 and are recorded on an undiscounted basis. In light of the uncertainties
inherent in a longer-term forecast, management does not believe they can
reasonably estimate the indemnity and medical costs that might be incurred
after 2041 related to such potential claims. It is possible Duke Energy Carolinas
may incur asbestos liabilities in excess of the recorded reserves.
Duke Energy Carolinas has third-party insurance to cover certain losses
related to asbestos-related injuries and damages above an aggregate self-
insured retention. Receivables for insurance recoveries were $644 million and
$704 million at December 31, 2021, and 2020, respectively. These amounts
are classified in Other within Other Noncurrent Assets and Receivables within
Current Assets on the Consolidated Balance Sheets. Any future payments
up to the policy limit will be reimbursed by the third-party insurance carrier.
Duke Energy Carolinas is not aware of any uncertainties regarding the legal
sufficiency of insurance claims. Duke Energy Carolinas believes the insurance
recovery asset is probable of recovery as the insurance carrier continues to
have a strong financial strength rating.
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 $12 million
and $15 million for Duke Energy and Duke Energy Carolinas as of December 31,
2021, and December 31, 2020, respectively. The insurance receivable is
evaluated based on the risk of default and the historical losses, current
conditions and expected conditions around collectability. Management evaluates
the risk of default annually based on payment history, credit rating and changes
in the risk of default from credit agencies.
Duke Energy Progress and Duke Energy Florida
Spent Nuclear Fuel Matters
On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued
the U.S. in the U.S. Court of Federal Claims for damages incurred for the period
2014 through 2018. The lawsuit claimed the Department of 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. The Department of Energy filed a motion for
partial summary judgment relating to approximately $60 million of Duke Energy
Florida’s claimed damages. A hearing on the motion was held on February 9,
2022. Trial is scheduled for April 2022. Duke Energy Progress and Duke Energy
Florida cannot predict the outcome of this matter.
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.
The final arbitration hearing occurred during the week of December 7,
2020. An interim arbitral award was issued in March 2021, upholding Duke
Energy Florida’s positions on all issues and awarding the company termination
costs. In May 2021, the final arbitral award was issued awarding Duke Energy
Florida its claimed fees and costs. On August 18, 2021, Duke Energy Florida
filed a motion in Florida state court to confirm the arbitral award. On December
13, 2021, the court entered a final judgment confirming the arbitration award.
142
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Duke Energy Indiana
Other Litigation and Legal Proceedings
Coal Ash Basin Closure Plan Appeal
On January 27, 2020, Hoosier Environmental Council (HEC) filed a Petition
for Administrative Review with the Indiana Office of Environmental Adjudication
challenging the Indiana Department of Environmental Management’s (IDEM’s)
December 10, 2019 partial approval of Duke Energy Indiana’s ash pond closure
plan at Gallagher. After hearing oral arguments in early April 2021 on Duke
Energy Indiana’s and HEC’s competing Motions for Summary Judgment, on
May 4, 2021, the administrative court rejected all of HEC’s claims and issued
a ruling in favor of Duke Energy Indiana. On June 3, 2021, HEC filed an appeal
in Superior Court to seek judicial review of the order. On June 25, 2021, Duke
Energy Indiana filed its response to the Petition to Review. On August 30,
2021, HEC served Duke Energy Indiana with its Brief in Support of Petition for
Judicial Review. On October 29, 2021, Duke Energy Indiana and IDEM filed their
response briefs. On December 13, 2021, HEC filed and served its Reply Brief.
On January 11, 2022, Duke Energy Indiana received a compliance
obligation letter from the EPA notifying the company that the two basins at issue
in the litigation are subject to requirements of the CCR Rule. The letter does not
provide a deadline for compliance. Duke Energy Indiana is evaluating the EPA
letter, its potential impacts on the litigation and the extent to which this letter
could apply to CCR surface impoundments at its other Indiana sites.
Following the January 11, 2022 EPA notice of compliance letter, the
parties filed a joint motion to stay the litigation for 45 days, which was approved
by the court. As a result, the oral argument scheduled for February 1, 2022, was
postponed until the end of the 45-day stay. Duke Energy Indiana cannot predict
the outcome of this matter.
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 for the years presented. Reserves are classified
on the Consolidated Balance Sheets in Other within Other Noncurrent Liabilities
and Other within Current Liabilities.
OTHER COMMITMENTS AND CONTINGENCIES
General
As part of their normal business, the Duke Energy Registrants are party
to various financial guarantees, performance guarantees and other contractual
commitments to extend guarantees of credit and other assistance to various
subsidiaries, investees and other third parties. These guarantees involve
elements of performance and credit risk, which are not fully recognized on the
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.
The following table presents executory purchased power contracts with terms exceeding one year, excluding contracts classified as leases.
(in millions)
Duke Energy Progress(a)
Duke Energy Florida(b)
Duke Energy Ohio(c)(d)
Minimum Purchase Amount at December 31, 2021
Contract
Expiration
2028-2032
2023-2025
2023
$
2022
22
354
53
$
2023
22
374
34
$
2024
21
262
—
$
2025
22
91
—
2026
Thereafter
$
18
—
—
$
45
—
—
$
Total
150
1,081
87
(a) Contracts represent between 18% and 100% of net plant output.
(b) Contracts represent 100% of net plant output.
(c) Contracts represent 15% 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
143
Adjustment Clause in Kentucky. The time periods for fixed payments under pipeline
and storage capacity contracts are up to 14 years. The time periods for fixed
payments under natural gas supply contracts are up to five years. The time period
for the natural gas supply purchase commitments is up to 10 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.
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, 2021.
(in millions)
Duke Energy Ohio
Piedmont
5. LEASES
2022
62
324
$
2023
37
272
$
2024
25
225
$
2025
16
134
$
2026
13
122
$
Thereafter
$
47
503
Total
$
200
1,580
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, the failed sale-leaseback obligation is reported 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.
The following tables present the components of lease expense.
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 $259 million, $275 million and $264
million for the years ended December 31, 2021, 2020, and 2019, respectively.
Renewable energy projects owned by Duke Energy and accounted for as
operating leases had a cost basis of $3,339 million and $3,335 million and
accumulated depreciation of $966 million and $848 million at December 31,
2021, and 2020, 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 as of December 31, 2021, and
2020, and a long-term net investment basis of $203 million and $205 million
as of December 31, 2021, and 2020, 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.
(in millions)
Operating lease expense(a)
Short-term lease expense(a)
Variable lease expense(a)
Finance lease expense
Amortization of leased assets(b)
Interest on lease liabilities(c)
Total finance lease expense
Total lease expense
Year Ended December 31, 2021
Duke
Energy
$ 250
5
41
219
55
274
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$ 43
—
17
5
33
38
$
155
2
22
37
48
85
$ 83
1
10
18
42
60
Duke
Energy
Florida
$ 72
1
12
19
6
25
Duke
Energy
Ohio
$ 11
—
—
—
—
—
Duke
Energy
Indiana
$ 18
2
—
1
—
1
Piedmont
$ 7
—
1
—
—
—
$ 570
$ 98
$
264
$154
$110
$ 11
$ 21
$ 8
(a)
(b)
(c)
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.
Included in Depreciation and amortization on the Consolidated Statements of Operations.
Included in Interest Expense on the Consolidated Statements of Operations.
144
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
(in millions)
Operating lease expense(a)
Short-term lease expense(a)
Variable lease expense(a)
Finance lease expense
Amortization of leased assets(b)
Interest on lease liabilities(c)
Total finance lease expense
Total lease expense
Year Ended December 31, 2020
Duke
Energy
$ 283
4
30
119
61
180
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$ 53
—
13
8
30
38
$
162
2
13
24
44
68
$ 72
1
5
6
37
43
Duke
Energy
Florida
$ 90
1
8
18
7
25
Duke
Energy
Ohio
$ 11
—
—
—
—
—
Duke
Energy
Indiana
$ 19
1
1
1
—
1
Piedmont
$ 7
—
1
—
—
—
$ 497
$ 104
$
245
$121
$124
$ 11
$ 22
$ 8
(a)
(b)
(c)
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.
Included in Depreciation and amortization on the Consolidated Statements of Operations.
Included in Interest Expense on the Consolidated Statements of Operations.
The following table presents operating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.
(in millions)
2022
2023
2024
2025
2026
Thereafter
Total operating lease payments
Less: present value discount
Total operating lease liabilities(a)
December 31, 2021
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$ 24
21
14
10
10
42
121
(21)
$ 118
118
110
96
92
290
824
(124)
$ 63
64
56
42
38
220
483
(83)
Duke
Energy
Florida
$ 55
54
54
54
54
70
341
(41)
Duke
Energy
$
225
212
185
156
136
594
1,508
(247)
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 2
2
2
2
2
16
26
(7)
$
6
6
4
4
4
50
74
(20)
$ 5
5
5
5
—
—
20
(1)
$ 1,261
$ 100
$ 700
$ 400
$ 300
$ 19
$ 54
$ 19
(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.
(in millions)
2022
2023
2024
2025
2026
Thereafter
Total finance lease payments
Less: amounts representing interest
Total finance lease liabilities
December 31, 2021
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$ 38
38
38
38
38
464
654
(365)
$ 111
103
88
85
86
637
1,110
(420)
$
86
78
79
80
81
636
1,040
(411)
Duke
Energy
$
201
198
143
76
77
658
1,353
(438)
Duke
Energy
Florida
$ 25
25
9
5
5
1
70
(9)
Duke
Energy
Indiana
$
1
1
1
1
1
24
29
(19)
$
915
$ 289
$ 690
$ 629
$ 61
$ 10
145
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
The following tables contain additional information related to leases.
Classification
Operating lease ROU assets, net
Net property, plant and equipment
Duke
Energy
$ 1,266
950
$ 2,216
Duke
Energy
Carolinas
$ 92
302
$ 394
Progress
Energy
$
691
729
$ 1,420
$ 389
627
$1,016
Other current liabilities
Current maturities of long-term debt
$
187
151
$ 22
6
$
94
61
$
50
41
Operating lease liabilities
Long-Term Debt
1,074
764
78
283
606
629
350
588
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$ 302
102
$ 404
$ 44
20
256
41
$ 19
—
$ 19
$
1
—
18
—
$ 53
7
$ 60
$ 16
—
$ 16
$
4
—
$ 5
—
50
10
14
—
$ 2,176
$ 389
$ 1,390
$1,029
$ 361
$ 19
$ 64
$ 19
Classification
Operating lease ROU assets, net
Net property, plant and equipment
Other current liabilities
Current maturities of long-term debt
Operating lease liabilities
Long-Term Debt
Duke
Energy
$ 1,524
797
$ 2,321
$ 177
129
1,340
716
Duke
Energy
Carolinas
Progress
Energy
December 31, 2020
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$ 110
312
$ 422
$ 20
5
97
289
$ 690
416
$ 1,106
$
73
26
623
351
$ 346
297
$ 643
$ 31
7
323
289
$ 344
119
$ 463
$ 42
19
300
62
$ 20
—
$ 20
$
1
—
20
—
$ 55
7
$ 62
$ 3
—
53
10
$ 20
—
$ 20
$ 4
—
19
—
(in millions)
Assets
Operating
Finance
Total lease assets
Liabilities
Current
Operating
Finance
Noncurrent
Operating
Finance
Total lease liabilities
(in millions)
Assets
Operating
Finance
Total lease assets
Liabilities
Current
Operating
Finance
Noncurrent
Operating
Finance
Total lease liabilities
$ 2,362
$ 411
$ 1,073
$ 650
$ 423
$ 21
$ 66
$ 23
Year Ended December 31, 2021
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$
$
245
55
219
182
322
$ 25
33
5
$
4
—
$
$
117
48
37
99
322
$ 62
42
18
$ 99
322
$ 55
6
19
$ —
—
$
2
—
—
$ 6
—
1
$
5
—
—
$ —
—
$ —
—
$ —
—
(in millions)
Cash paid for amounts included in the measurement
of lease liabilities(a)
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Lease assets obtained in exchange for new lease
liabilities (non-cash)
Operating(b)
Finance
(a) No amounts were classified as investing cash flows from operating leases for the year ended December 31, 2021.
(b) Does not include ROU assets recorded as a result of the adoption of the new lease standard.
146
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) (in millions)
Cash paid for amounts included in the measurement
of lease liabilities(a)
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Lease assets obtained in exchange for new lease
liabilities (non-cash)
Operating(b)
Finance
Year Ended December 31, 2020
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$
$
271
61
119
116
125
$ 31
30
8
$
124
44
24
$ 17
125
$ —
—
$ 52
37
6
$ —
—
$ 72
7
18
$
2
—
—
$ 6
—
1
$
5
—
—
$ —
—
$ —
—
$ 1
—
$ —
—
(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.
Weighted average remaining lease term (years)
Operating leases
Finance leases
Weighted average discount rate(a)
Operating leases
Finance leases
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
9
10
9
18
3.6%
7.3 %
3.5%
11.6 %
8
13
3.6 %
9.0 %
10
13
3.4%
9.0%
7
11
3.8%
8.2%
16
—
4.2%
— %
16
24
4.1 %
11.9 %
4
—
3.6 %
— %
(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.
Weighted average remaining lease term (years)
Operating leases
Finance leases
Weighted average discount rate(a)
Operating leases
Finance leases
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
December 31, 2020
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
10
13
9
19
10
15
12
17
3.8%
8.4 %
3.4 %
11.6 %
3.8 %
11.9 %
3.9%
12.4%
8
11
3.8 %
8.2 %
17
—
4.2 %
— %
18
25
4.2 %
11.9 %
5
—
3.6 %
— %
(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.
147
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 6. DEBT AND CREDIT FACILITIES
Summary of Debt and Related Terms
The following tables summarize outstanding debt.
(in millions)
Unsecured debt, maturing 2022-2082
Secured debt, maturing 2022-2052
First mortgage bonds, maturing 2022-2051(a)
Finance leases, maturing 2022-2051(b)
Tax-exempt bonds, maturing 2027-2041(c)
Notes payable and commercial paper(d)
Money pool/intercompany borrowings
Fair value hedge carrying value adjustment
Unamortized debt discount and premium, net(e)
Unamortized debt issuance costs(f)
Weighted
Average
Interest Rate
3.71%
2.50%
3.87%
5.81%
0.65%
0.35%
Duke
Energy
$ 24,564
5,584
31,026
915
360
3,929
—
4
1,119
(362)
Total debt
3.50%
$ 67,139
Short-term notes payable and commercial paper
Short-term money pool/intercompany borrowings
Current maturities of long-term debt(g)
Total long-term debt(g)
(3,304)
—
(3,387)
$ 60,448
Duke
Energy
Carolinas
$ 1,150
1,094
10,507
289
—
—
526
4
(21)
(67)
$13,482
—
(226)
(362)
$12,894
December 31, 2021
Progress
Energy
$ 2,250
2,397
15,450
690
48
—
2,959
—
(34)
(128)
$ 23,632
—
(2,809)
(1,082)
$ 19,741
Duke
Energy
Progress
$ —
1,120
8,375
629
48
—
322
—
(19)
(54)
$ 10,421
—
(172)
(556)
$ 9,693
Duke
Energy
Florida
$
150
1,278
7,075
61
—
—
199
—
(14)
(68)
Duke
Energy
Ohio
$ 1,330
—
1,850
—
27
—
128
—
(27)
(13)
Duke
Energy
Indiana
$ 700
—
3,219
10
285
—
150
—
(18)
(23)
Piedmont
$ 2,990
—
—
—
—
—
518
—
(6)
(16)
$ 8,681
$ 3,295
$ 4,323
$ 3,486
—
(199)
(76)
$ 8,406
—
(103)
—
$ 3,192
—
—
(84)
$ 4,239
—
(518)
—
$ 2,968
(a) Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b) Duke Energy includes $256 million of finance lease purchase accounting adjustments related to Duke Energy Florida 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 15 days.
(e) Duke Energy includes $1,121 million and $100 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.
(f) Duke Energy includes $29 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.
148
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
(in millions)
Unsecured debt, maturing 2021-2078
Secured debt, maturing 2021-2052
First mortgage bonds, maturing 2021-2050(a)
Finance leases, maturing 2022-2051(b)
Tax-exempt bonds, maturing 2027-2041(c)
Notes payable and commercial paper(d)
Money pool/intercompany borrowings
Fair value hedge carrying value adjustment
Unamortized debt discount and premium, net(e)
Unamortized debt issuance costs(f)
Weighted
Average
Interest Rate
3.71%
2.67%
4.00%
6.96%
0.75%
0.51%
Duke
Energy
$ 23,669
4,270
29,177
845
477
3,407
—
4
1,217
(330)
Total debt
3.62%
$ 62,736
Short-term notes payable and commercial paper
Short-term money pool/intercompany borrowings
Current maturities of long-term debt(g)
Total long-term debt(g)
(2,873)
—
(4,238)
$ 55,625
Duke
Energy
Carolinas
$ 1,150
543
10,008
294
—
—
806
4
(20)
(62)
$ 12,723
—
(506)
(506)
$ 11,711
December 31, 2020
Progress
Energy
$ 3,150
1,584
14,100
377
48
—
3,119
—
(31)
(113)
$22,234
—
(2,969)
(1,426)
$17,839
Duke
Energy
Progress
$ 700
252
7,875
296
48
—
445
—
(19)
(44)
$ 9,553
—
(295)
(603)
$ 8,655
Duke
Energy
Florida
$ 350
1,332
6,225
81
—
—
196
—
(11)
(62)
Duke
Energy
Ohio
$ 1,180
—
1,850
—
77
—
194
—
(29)
(14)
Duke
Energy
Indiana Piedmont
$ 403
—
3,219
10
352
—
281
—
(18)
(25)
$ 2,800
—
—
—
—
—
530
—
(5)
(15)
$ 8,111
$ 3,258
$ 4,222
$ 3,310
—
(196)
(823)
$ 7,092
—
(169)
(50)
$ 3,039
—
(131)
(70)
$ 4,021
—
(530)
(160)
$ 2,620
(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 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 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.
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)
Unsecured Debt(a)
Duke Energy (Parent)
Duke Energy (Parent)(b)
Progress Energy
Duke Energy (Parent)
Duke Energy (Parent)
First Mortgage Bonds
Duke Energy Indiana
Duke Energy Carolinas
Duke Energy Progress
Other(c)
Current maturities of long-term debt
Maturity Date
Interest Rate
December 31, 2021
March 2022
March 2022
April 2022
August 2022
August 2022
January 2022
May 2022
May 2022
3.227%
0.851%
3.150%
3.050%
2.400%
8.850%
3.350%
2.800%
300
300
450
500
500
53
350
500
434
$ 3,387
In December 2021, Duke Energy Progress early retired $700 million of unsecured debt with an original maturity date of February 2022.
(a)
(b) Debt has a floating interest rate.
(c)
Includes finance lease obligations, amortizing debt and small bullet maturities.
149
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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.
(in millions)
2022
2023
2024
2025
2026
Thereafter
Total long-term debt, including current maturities
December 31, 2021
Duke
Energy(a)
$ 3,387
4,725
1,917
3,078
3,125
46,844
$ 63,076
Duke
Energy
Carolinas
$
362
1,018
19
496
921
10,528
Progress
Energy
$ 1,082
1,046
138
639
310
17,766
Duke
Energy
Progress
$
556
719
72
575
229
8,168
Duke
Energy
Florida
$
76
327
66
64
81
7,949
Duke
Energy
Ohio
Duke
Energy
Indiana
$ — $
475
—
245
70
2,442
84
303
4
4
154
3,814
$13,344
$ 20,981
$10,319
$ 8,563
$ 3,232
$ 4,363
Piedmont
$ —
45
40
205
40
2,660
$ 2,990
(a) Excludes $1,250 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.
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.
(in millions)
Tax-exempt bonds
Commercial paper(a)
Total
(in millions)
Tax-exempt bonds
Commercial paper(a)
Total
(a) Progress Energy amounts are equal to Duke Energy Progress amounts.
Duke
Energy
$ 312
625
$ 937
Duke
Energy
$ 312
625
$ 937
Duke
Energy
Carolinas
$ —
300
$ 300
Duke
Energy
Carolinas
$ —
300
$ 300
December 31, 2021
Duke
Energy
Progress
$ —
150
$ 150
December 31, 2020
Duke
Energy
Progress
$ —
150
$ 150
Duke
Energy
Ohio
$ 27
25
$ 52
Duke
Energy
Ohio
$ 27
25
$ 52
Duke
Energy
Indiana
$ 285
150
$ 435
Duke
Energy
Indiana
$ 285
150
$ 435
150
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Summary of Significant Debt Issuances
The following tables summarize significant debt issuances (in millions).
Issuance Date
Unsecured Debt
March 2021a)
June 2021(b)(c)
June 2021(c)
June 2021(c)
June 2021(c)
September 2021(d)
Secured Debt
November 2021(e)
November 2021(e)
November 2021(e)
November 2021(e)
November 2021(e)
First Mortgage Bonds
April 2021(f)
April 2021(f)
August 2021(g)
August 2021(g)
December 2021(h)
December 2021(h)
Total issuances
Maturity Date
Interest Rate
March 2031
June 2023
June 2031
June 2041
June 2051
January 2082
July 2031
July 2041
July 2028
July 2037
July 2041
April 2031
April 2051
August 2031
August 2051
December 2031
December 2051
2.500%
0.299%
2.550%
3.300%
3.500%
3.250%
1.679%
2.617%
1.295%
2.387%
2.799%
2.550%
3.450%
2.000%
2.900%
2.400%
3.000%
Year Ended December 31, 2021
Duke
Energy
(Parent)
Duke
Energy
Carolinas
Duke
Energy
Progress
$ —
500
1,000
750
750
500
—
—
—
—
—
—
—
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
100
137
—
—
—
550
450
—
—
—
—
—
—
221
352
197
—
—
650
450
—
—
Duke
Energy
Florida
$ —
—
—
—
—
—
—
—
—
—
—
—
—
—
650
500
Piedmont
$ 350
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Duke
Energy
$ 350
500
1,000
750
750
500
100
137
221
352
197
550
450
650
450
650
500
$ 8,107
$ 3,500
$ 1,237
$1,870
$1,150
$ 350
(a) Debt issued to repay at maturity $160 million senior unsecured notes due June 2021, pay down short-term debt and for general corporate purposes.
(b) Debt has a floating interest rate.
(c) Debt issued to repay $1.75 billion of Duke Energy (Parent) debt maturities, to repay a portion of short-term debt and for general corporate purposes.
(d) Debt issued to repay in October 2021 $500 million of Duke Energy (Parent) unsecured notes. The interest rate resets every five years.
(e) Debt issued to finance the North Carolina portion of storm restoration expenditures related to Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego.
(f) Debt issued to repay at maturity $500 million first mortgage bonds due June 2021, pay down short-term debt and for general company purposes.
(g) Debt issued to repay at maturity a total of $600 million first mortgage bonds due September 2021, pay down short-term debt and for general company purposes.
(h) Proceeds will be used to finance or refinance, in whole or in part, existing or new eligible projects under the sustainable financing framework.
151
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Issuance Date
Maturity Date
Interest Rate
Unsecured Debt
May 2020(a)
May 2020(b)
August 2020(c)(d)
September 2020(e)
September 2020(e)
First Mortgage Bonds
January 2020(f)
January 2020(f)
March 2020(g)
May 2020(b)
June 2020(b)
August 2020(h)
Total issuances
June 2030
June 2050
February 2022
September 2025
June 2030
February 2030
August 2049
April 2050
June 2030
June 2030
August 2050
2.450%
3.350%
0.400%
0.900%
2.450%
2.450%
3.200%
2.750%
2.125%
1.750%
2.500%
Year Ended December 31, 2020
Duke
Energy
(Parent)
Duke
Energy
Carolinas
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
500
—
—
650
350
—
—
—
—
—
—
$ —
—
—
—
—
500
400
—
—
—
—
$ —
—
700
—
—
—
—
—
—
—
600
$ — $ —
—
—
—
—
—
—
—
—
—
—
—
—
500
—
—
—
—
400
—
—
$ —
—
—
—
—
—
—
550
—
—
—
$ —
400
—
—
—
—
—
—
—
—
—
Duke
Energy
$ 500
400
700
650
350
500
400
550
400
500
600
$ 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.
152
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) AVAILABLE CREDIT FACILITIES
Master Credit Facility
In March 2021, Duke Energy amended its existing $8 billion Master
Credit Facility to extend the termination date to March 2026. The Duke Energy
Registrants, excluding Progress Energy, have borrowing capacity under the
Master Credit Facility up to a specified sublimit for each borrower. Duke Energy
has the unilateral ability at any time to increase or decrease the borrowing
sublimits of each borrower, subject to a maximum sublimit for each borrower.
The amount available under the Master Credit Facility has been reduced to
backstop issuances of commercial paper, certain letters of credit and variable-
rate demand tax-exempt bonds that may be put to the Duke Energy Registrants
at the option of the holder.
The table below includes the current borrowing sublimits and available capacity under these credit facilities.
(in millions)
Facility size(a)
Reduction to backstop issuances
Commercial paper(b)
Outstanding letters of credit
Tax-exempt bonds
Available capacity
Duke
Energy
$ 8,000
(2,863)
(38)
(81)
$ 5,018
Duke
Energy
(Parent)
$ 2,650
(1,128)
(25)
—
$ 1,497
Duke
Energy
Carolinas
$ 1,225
(506)
(4)
—
715
$
December 31, 2021
Duke
Energy
Progress
$ 1,150
(307)
(2)
—
841
$
Duke
Energy
Florida
$ 900
(181)
(7)
—
$ 712
Duke
Energy
Ohio
$ 775
(119)
—
—
$ 656
Duke
Energy
Indiana
$ 600
(150)
—
(81)
$ 369
Piedmont
$ 700
(472)
—
—
$ 228
(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.
Three-Year Revolving Credit Facility
Duke Energy Kentucky Term Loan Facility
Duke Energy (Parent) has a $1 billion revolving credit facility. In March 2021,
In October 2021, Duke Energy Kentucky entered into a two-year term loan
Duke Energy extended the termination date of the facility from May 2022 to May
2024. Borrowings under this facility will be used for general corporate purposes.
As of December 31, 2021, $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 Ohio Term Loan Facility
In October 2021, Duke Energy Ohio entered into a two-year term loan
facility with commitments totaling $100 million. Borrowings under the facility
will be used to pay down short-term debt and for general corporate purposes.
The term loan was fully drawn at the time of closing in October. The balance
is classified as Long-Term Debt on Duke Energy Ohio’s Consolidated Balance
Sheets.
Duke Energy Indiana Term Loan Facility
In October 2021, Duke Energy Indiana entered into a two-year term loan
facility with commitments totaling $300 million. Borrowings under the facility
will be used to pay down short-term debt and for general corporate purposes.
The term loan was fully drawn at the time of closing in October. The balance is
classified as Long-Term Debt on Duke Energy Indiana’s Consolidated Balance
Sheets.
facility with commitments totaling $50 million. Borrowings under the facility
will be used to pay down short-term debt and for general corporate purposes.
The term loan was fully drawn at the time of closing in October. The balance
is classified as Long-Term Debt on Duke Energy Ohio’s Consolidated Balance
Sheets.
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, 2021, and 2020, was
$1,066 million and $1,168 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.
153
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
Money Pool and Intercompany Credit Agreements
Restrictive Debt Covenants
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.
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.
Progress Energy has a revolving credit agreement with Duke Energy
(Parent) which allows up to $2.5 billion in intercompany borrowings. The
balance is reflected within Notes payable to affiliated companies on the
Progress Energy Consolidated Balance Sheets.
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, 2021, 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, 2021, and 2020, Duke Energy had loans outstanding
of $819 million, including $34 million at Duke Energy Progress and $817 million,
including $35 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, 2021, Duke Energy does not believe conditions are
likely for significant performance under these guarantees. 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 Energy Capital, LLC (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, 2021, the maximum potential
amount of future payments associated with these guarantees were $48 million,
the majority of which expire 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 was $860 million
as of December 31, 2020. This amount represented 47% of the outstanding
borrowings under the credit facility and was recognized 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. In February 2021, Duke Energy paid
approximately $855 million to fund ACP’s outstanding debt, relieving Duke
Energy of its guarantee. See Notes 3 and 12 for more information.
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, 2021, was $53 million of which all expire between 2022
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, 2021, Duke
Energy had issued a total of $586 million in letters of credit, which expire
between 2022 and 2023. The unused amount under these letters of credit was
$54 million.
Duke Energy recognized $3 million and $11 million as of December 31,
2021, and 2020, 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.
154
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions except for ownership interest)
Duke Energy Carolinas
Catawba (units 1 and 2)(a)
W.S. Lee CC(b)
Duke Energy Indiana
Gibson (unit 5)(c)
Vermillion(d)
Transmission and local facilities(c)
(a)
(b)
(c)
(d)
Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA.
Jointly owned with NCEMC.
Jointly owned with WVPA and IMPA.
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.
December 31, 2021
Ownership
Interest
Property, Plant
and Equipment
Accumulated
Depreciation
Construction Work in
Progress
19.25 %
87.27 %
50.05 %
62.50 %
Various
$ 1,044
632
440
175
6,164
$ 525
67
221
108
1,477
$ 20
3
3
5
190
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.
(in millions)
Decommissioning of nuclear power facilities(a)
Closure of ash impoundments
Other
Total asset retirement obligation
Less: Current portion
Total noncurrent asset retirement obligation
Duke
Energy
$ 7,046
5,293
437
$ 12,776
647
$ 12,129
Duke
Energy
Carolinas
$ 2,847
2,390
64
$ 5,301
249
$ 5,052
Progress
Energy
$ 4,156
1,872
84
$ 6,112
275
$ 5,837
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
$ 3,792
1,839
44
$ 5,675
274
$ 5,401
$ 364
33
40
$ 437
1
$ 436
$ —
82
54
$136
13
$123
Duke
Energy
Indiana
$ —
949
38
$ 987
110
$ 877
Piedmont
$ —
—
22
$ 22
—
$ 22
(a) Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.
155
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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.
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.
(in millions)
Duke Energy
Duke Energy Carolinas(b)(c)
Duke Energy Progress(d)
Duke Energy Florida(e)
Annual Funding
Requirement(a)
Decommissioning
Costs(a)
$ 15
—
15
—
$
9,105
4,365
4,181
559
Year of Cost
Study
2018 or 2019
2018
2019
N/A
(a) Amount represents annual funding requirement for the current fiscal year. Amounts for Progress Energy
equal the sum of Duke Energy Progress and Duke Energy Florida.
(b) Decommissioning costs 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. In October 2021, Duke Energy Progress filed
the 2019 nuclear decommissioning cost study with the FERC, as well as a revised rate schedule for
decommissioning expense to be collected from wholesale customers. The FERC accepted the filing, as
filed on December 9, 2021.
(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.
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.
(in millions)
Duke Energy
Duke Energy Carolinas
Duke Energy Progress
Nuclear Operating Licenses
December 31,
2021
$ 8,933
5,068
3,865
2020
$ 7,726
4,381
3,345
As described in Note 3, Duke Energy Carolinas and Duke Energy Progress
intend to seek renewal of operating licenses and 20-year license extensions for
all of their nuclear stations. The following table includes the current expiration of
nuclear operating licenses.
Unit
Duke Energy Carolinas
Catawba Units 1 and 2
McGuire Unit 1
McGuire Unit 2
Oconee Units 1 and 2
Oconee Unit 3
Duke Energy Progress
Brunswick Unit 1
Brunswick Unit 2
Harris
Robinson
Year of Expiration
2043
2041
2043
2033
2034
2036
2034
2046
2030
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.
156
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) See ARO Liability Rollforward section below for information on revisions made to
the coal ash liability during 2021 and 2020.
3 for additional information on Regulatory assets related to AROs and Note 4 for
additional information on commitments and contingencies.
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
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.
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Balance at December 31, 2019
$ 13,318
$ 5,734
$ 6,471
$ 5,893
$
578
$
80
$
832
$
17
Accretion expense(a)
Liabilities settled(b)
Liabilities incurred in the current year
Revisions in estimates of cash flows(c)
Balance at December 31, 2020
Accretion expense(a)
Liabilities settled(b)
Liabilities incurred in the current year
Revisions in estimates of cash flows(c)
Balance at December 31, 2021
542
(724)
22
(154)
258
(198)
—
(444)
13,004
5,350
512
(613)
32
(159)
242
(210)
8
(89)
246
(451)
5
(122)
6,149
229
(324)
6
52
225
(358)
—
(125)
5,635
212
(214)
—
42
21
(93)
5
3
514
17
(110)
6
10
4
(2)
—
29
111
4
(3)
—
24
33
(74)
—
385
1,176
35
(77)
—
(147)
$ 12,776
$ 5,301
$ 6,112
$ 5,675
$
437
$
136
$
987
$
1
—
—
2
20
1
—
—
1
22
(a) Substantially all accretion expense for the years ended December 31, 2021, and 2020, 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) 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 amounts recorded represent 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.
157
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 10. PROPERTY, PLANT AND EQUIPMENT
The following tables summarize the property, plant and equipment for Duke Energy and its subsidiary registrants.
(in millions)
Land
Plant – Regulated
Electric generation, distribution and transmission
Natural gas transmission and distribution
Other buildings and improvements
Plant – Nonregulated
Electric generation, distribution and transmission
Other buildings and improvements
Nuclear fuel
Equipment
Construction in process
Other
Total property, plant and equipment(a)(e)
Total accumulated depreciation – regulated(b)(c)
Total accumulated depreciation – nonregulated(d)(e)
Facilities to be retired, net
December 31, 2021
Average
Remaining
Useful Life
(Years)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
2,162
$
543 $
957
$
482
$
475
$
219
$
122
$
279
40
54
37
28
11
13
14
120,855
12,079
1,921
7,104
401
3,181
2,659
6,168
5,289
161,819
(47,611)
(2,944)
144
44,910
—
550
53,447
—
514
—
—
1,856
614
2,078
1,323
51,874
(17,854)
—
102
—
—
1,325
791
2,297
1,563
60,894
(19,214)
—
26
32,417
—
228
—
—
1,325
497
954
1,115
37,018
(13,387)
—
26
21,030
—
286
—
—
—
294
1,343
437
23,865
(5,819)
—
—
6,573
3,347
381
—
—
—
403
515
287
11,725
(3,106)
—
6
15,925
—
321
—
—
—
262
460
253
17,343
(5,583)
—
—
—
8,732
155
—
—
—
122
262
368
9,918
(1,899)
—
11
Total net property, plant and equipment
$111,408
$ 34,122
$ 41,706
$
23,657
$18,046
$ 8,625
$11,760
$ 8,030
(a)
(b)
(c)
(d)
(e)
Includes finance leases of $958 million, $335 million, $729 million, $627 million, $102 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 $178 million, $45 million and $133 million, respectively, of accumulated
amortization of finance leases.
Includes $1,799 million, $1,064 million, $735 million and $735 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
Includes accumulated amortization of finance leases of $9 million, $33 million and $3 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.
Includes accumulated amortization of finance leases of ($1 million) at Duke Energy.
Includes gross property, plant and equipment cost of consolidated VIEs of $7,339 million and accumulated depreciation of consolidated VIEs of $1,474 million at Duke Energy.
Duke Energy continues to execute on its business transformation strategy,
including the evaluation of in-office work policies considering the experience
with the COVID-19 pandemic and also workforce realignment of roles and
responsibilities. In May 2021, Duke Energy management approved the sale of
certain properties and entered into an agreement to exit certain leased space
on December 31, 2021. The sale of the properties is subject to abandonment
accounting and resulted in an impairment charge. Additionally, the exit of
the leased space resulted in the impairment of related furniture, fixtures and
equipment. During the 12 months ended December 31, 2021, Duke Energy
recorded a pretax charge to earnings of $192 million on the Consolidated
Statements of Operations, which includes $133 million within Impairment of
assets and other charges, $42 million within Operations, maintenance and other
and $17 million within Depreciation and amortization.
In 2021, Duke Energy continued to monitor recoverability of its renewable
merchant plants located in the Electric Reliability Council of Texas West market
and in the PJM West market due to fluctuating market pricing and long-term
forecasted energy prices. The assets were not impaired as of December 31,
2021, because the carrying value of approximately $200 million continues
to approximate the aggregate estimated future undiscounted cash flows.
A continued decline in energy market pricing or other factors unfavorably
impacting the economics 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.
158
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
(in millions)
Land
Plant – Regulated
Electric generation, distribution and transmission
Natural gas transmission and distribution
Other buildings and improvements
Plant – Nonregulated
Electric generation, distribution and transmission
Other buildings and improvements
Nuclear fuel
Equipment
Construction in process
Other
Total property, plant and equipment(a)(e)
Total accumulated depreciation – regulated(b)(c)
Total accumulated depreciation – nonregulated(d)(e)
Facilities to be retired, net
December 31, 2020
Average
Remaining
Useful Life
(Years)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
2,046
$
536 $
908
$
463
$
445
$
171
$
118
$
279
39
54
36
27
10
15
14
117,107
10,799
2,038
5,444
519
3,284
2,608
6,645
5,090
155,580
(46,216)
(2,611)
29
44,059
—
740
50,785
—
459
—
—
1,837
620
1,645
1,203
50,640
(17,453)
—
—
—
—
1,447
759
2,013
1,521
57,892
(18,368)
—
29
31,375
—
197
—
—
1,447
498
709
1,070
35,759
(12,801)
—
29
19,410
—
262
—
—
—
261
1,304
441
22,123
(5,560)
—
—
6,255
3,136
374
—
—
—
385
407
294
11,022
(3,013)
—
—
16,008
—
300
—
—
—
238
409
309
17,382
(5,661)
—
—
—
7,663
165
—
—
—
122
581
324
9,134
(1,749)
—
—
Total net property, plant and equipment
$ 106,782
$ 33,187
$ 39,553
$
22,987
$16,563
$ 8,009
$11,721
$ 7,385
(a)
(b)
(c)
(d)
(e)
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.
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.
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.
Includes accumulated amortization of finance leases of $23 million at Duke Energy.
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.
The following table presents capitalized interest, which includes the debt component of AFUDC.
(in millions)
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana(a)
Piedmont
(a) Duke Energy Indiana is primarily compromised of ($24 million) of PISCC amortization, which is partially offset by $7 million of the debt component of AFUDC.
Years Ended December 31,
2021
$ 72
29
20
14
6
20
(17)
9
2020
$112
28
17
12
5
26
10
8
2019
$159
30
31
28
3
22
26
26
159
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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, 2021, and 2020.
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
Commercial
Renewables
Total
Progress Energy
Progress Energy’s Goodwill is included in the Electric Utilities and
Infrastructure segment and there are no accumulated impairment charges.
$
17,379 $
1,924 $
122
$ 19,425
Piedmont
—
—
(122)
(122)
Piedmont’s Goodwill is included in the Gas Utilities and Infrastructure
segment and there are no accumulated impairment charges.
$
$
17,379 $
1,924 $ — $ 19,303
17,379 $
1,924 $
122
$ 19,425
—
—
(122)
(122)
$
17,379 $
1,924 $ — $ 19,303
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 2021.
(in millions)
Goodwill Balance at
December 31, 2020
Accumulated impairment
charges
Goodwill balance at
December 31, 2020, adjusted
for accumulated impairment
charges
Goodwill Balance at
December 31, 2021
Accumulated impairment
charges
Goodwill balance at
December 31, 2021,
adjusted for accumulated
impairment charges
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, 2021, and 2020.
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, 2021, and 2020.
(in millions)
Emission allowances
Renewable energy certificates
Natural gas, coal and power contracts
Renewable operating and development projects
Other
Total gross carrying amounts
Accumulated amortization – natural gas, coal and power contracts
Accumulated amortization – renewable operating and development projects
Accumulated amortization – other
Total accumulated amortization
Total intangible assets, net
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
$ —
—
—
—
—
—
—
—
—
—
Duke
Energy
Indiana
Piedmont
$
2
—
24
—
—
26
(24)
—
—
(24)
$ —
—
—
—
—
—
—
—
—
—
$
5
131
—
—
—
136
—
—
—
—
$
2
131
—
—
—
133
—
—
—
—
$ 3
—
—
—
—
3
—
—
—
—
$136
$ 133
$ 3
$ —
$
2
$ —
$
8
204
24
106
28
370
(24)
(38)
(4)
(66)
$ —
73
—
—
—
73
—
—
—
—
73
$
304
$
160
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) (in millions)
Emission allowances
Renewable energy certificates
Natural gas, coal and power contracts
Renewable operating and development projects
Other
Total gross carrying amounts
Accumulated amortization – natural gas, coal and power contracts
Accumulated amortization – renewable operating and development projects
Accumulated amortization – other
Total accumulated amortization
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
December 31, 2020
Duke
Energy
Progress
Duke
Energy
Florida
$
8
196
24
107
20
355
(23)
(34)
(3)
(60)
$ —
65
—
—
—
65
—
—
—
—
65
$
5
130
—
—
—
135
—
—
—
—
$
2
130
—
—
—
132
—
—
—
—
$ 3
—
—
—
—
3
—
—
—
—
Duke
Energy
Ohio
$ —
1
—
—
—
1
—
—
—
—
1
Duke
Energy
Indiana
Piedmont
$
2
—
24
—
—
26
(23)
—
—
(23)
$ —
—
—
—
—
—
—
—
—
—
$
3
$ —
Total intangible assets, net
$
295
$
$135
$ 132
$ 3
$
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, 2021, 2020 and 2019, and are expected to be immaterial for the next five years as of December 31, 2021.
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.
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, for periods presented in this filing.
(in millions)
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Commercial Renewables
Other
Total
Years Ended December 31,
2021
2020
2019
Investments
Equity in earnings
(losses)
Investments
Equity in earnings
(losses)
Equity in earnings
(losses)
$ 104
231
513
122
$ 970
$
$
7
8
(34)
47
28
$
$
105
215
534
107
961
$
(1)
(2,017)
—
13
$ (2,005)
$
9
114
(4)
43
$ 162
During the years ended December 31, 2021, 2020 and 2019, Duke Energy
received distributions from equity investments of $80 million, $37 million and
$55 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, 2021, 2020 and 2019, Duke Energy received distributions
from equity investments of $44 million, $133 million and $11 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, 2021, 2020 and 2019, Piedmont
received distributions from equity investments of $8 million, $2 million and
$1 million, respectively, which are included in Other assets within Cash Flows
from Operating Activities and $2 million, $2 million and $4 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.
161
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Gas Utilities and Infrastructure
Pipeline Investments
Piedmont owns a 21.49% investment in Cardinal, an intrastate pipeline
located in North Carolina.
Duke Energy owns a 7.5% interest in Sabal Trail, a 517-mile interstate
natural gas pipeline, which provides natural gas to Duke Energy Florida and
Florida Power and Light.
Duke Energy recorded OTTIs of $25 million within Equity in earnings
(losses) of unconsolidated affiliates on Duke Energy’s Consolidated Statements
of Operations for the year ended December 31, 2019, to completely impair its
24% ownership interest in Constitution.
Duke Energy owns a 47% interest in the ACP pipeline. 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.
Storage Facilities
Piedmont owns a 45% interest in Pine Needle, an interstate LNG storage
facility located in North Carolina, and a 50% interest in Hardy Storage, an
underground interstate natural gas storage facility located in West Virginia.
Renewable Natural Gas Investments
Duke Energy owns a 29.68% investment in SustainRNG, a developer
of renewable natural gas projects, and a 70% interest in Sustain T&W,
SustainRNG’s renewable natural gas project located in Georgia.
Commercial Renewables
In 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.
Other
Duke Energy has a 17.5% indirect economic ownership interest and a
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 period of significance and
comparative prior year periods in Duke Energy’s consolidated balance sheets
and consolidated statements of operations. For the year ended December 31,
2021, there were no investments that met the significance requirements.
(in millions)
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Membership interests
$
December 31, 2020
43
93
1,965
167
(1,996
)
Years Ended December 31,
2020
$ — $
(4,612)
(4,512)
$ (2,121) $
2019
—
(5)
246
116
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. Subsequent to the sale, Duke Energy has
a 26% interest in the investment.
Net revenues
Operating loss
Net (loss) income
Net (loss) income attributable to Duke Energy
162
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
Duke Energy Carolinas
Corporate governance and shared service expenses(a)
Indemnification coverages(b)
Joint Dispatch Agreement (JDA) revenue(c)
JDA expense(c)
Intercompany natural gas purchases(d)
Progress Energy
Corporate governance and shared service expenses(a)
Indemnification coverages(b)
JDA revenue(c)
JDA expense(c)
Intercompany natural gas purchases(d)
Duke Energy Progress
Corporate governance and shared service expenses(a)
Indemnification coverages(b)
JDA revenue(c)
JDA expense(c)
Intercompany natural gas purchases(d)
Duke Energy Florida
Corporate governance and shared service expenses(a)
Indemnification coverages(b)
Duke Energy Ohio
Corporate governance and shared service expenses(a)
Indemnification coverages(b)
Duke Energy Indiana
Corporate governance and shared service expenses(a)
Indemnification coverages(b)
Intercompany Income Taxes
Years Ended December 31,
2021
2020
2019
$ 894 $ 753 $ 841
20
60
186
15
24
41
207
11
20
25
114
15
$ 856 $ 715 $ 778
37
186
60
76
41
207
41
75
36
114
25
75
$ 504 $ 420 $ 462
15
186
60
76
19
207
41
75
17
114
25
75
$ 352 $ 295 $ 316
22
22
19
$ 329 $ 326 $ 354
4
4
4
$ 409 $ 401 $ 412
7
8
8
(in millions)
Piedmont
Corporate governance and shared service expenses(a)
Indemnification coverages(b)
Intercompany natural gas sales(d)
Natural gas storage and transportation costs(e)
Years Ended December 31,
2021
2020
2019
$ 139 $ 140 $ 138
3
91
23
3
86
22
3
90
23
(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.
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.
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.
(in millions)
December 31, 2021
Intercompany income tax receivable
Intercompany income tax payable
December 31, 2020
Intercompany income tax receivable
Intercompany income tax payable
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ —
62
$ —
31
$ —
—
$ —
33
$ —
84
$ 40
—
$ 19
—
$ —
46
$ —
35
$ —
2
$ —
10
$
9
—
$ —
27
$ 10
—
163
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
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,
2021, 2020 and 2019, were not material. Duke Energy’s interest rate derivatives
designated as hedges include interest rate swaps used to hedge existing debt
within the Commercial Renewables segment and forward-starting interest rate
swaps not accounted for under regulatory accounting.
INTEREST RATE RISK
Undesignated Contracts
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.
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.
The following tables show notional amounts of outstanding derivatives related to interest rate risk.
(in millions)
Cash flow hedges
Undesignated contracts
Total notional amount(a)
(in millions)
Cash flow hedges
Undesignated contracts
Total notional amount(a)
Duke
Energy
2,415
1,177
3,592
$
$
December 31, 2021
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Indiana
Duke Energy
Ohio
$
$
$
$
—
350
350
$
$
—
500
500
$
$
—
500
500
$
$
—
300
300
$ —
27
$
27
December 31, 2020
Duke
Energy
632
1,177
1,809
Duke Energy
Carolinas
$
$
—
400
400
Progress
Energy
Duke Energy
Progress
Duke Energy
Ohio
$
$
—
750
750
$
$
—
750
750
$ —
27
$
27
(a) Duke Energy includes amounts related to consolidated VIEs of $665 million in cash flow hedges as of December 31, 2021, and $632 million in cash flow hedges as of December 31, 2020.
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
164
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.
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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, 2021, 2020 and 2019, were not
material. Duke Energy’s commodity derivatives designated as hedges include
long-term electricity sales in the Commercial Renewables segment.
Undesignated Contracts
For the Subsidiary Registrants, bulk power electricity and natural gas
purchases flow through fuel adjustment clauses, formula-based contracts or
other cost sharing mechanisms. Differences between the costs included in rates
and the incurred costs, including undesignated derivative contracts, are largely
deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for
the use of financial instruments to hedge commodity price risks. The strategy
and objective of these hedging programs are to use the financial instruments to
reduce natural gas 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.
Electricity (GWh)(a)
Natural gas (millions of Dth)
Electricity (GWh)(a)
Natural gas (millions of Dth)
December 31, 2021
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Ohio
Duke Energy
Indiana
—
264
—
215
—
215
1,681
—
10,688
8
December 31, 2020
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Ohio
Duke Energy
Indiana
—
145
—
158
—
158
2,559
—
10,802
2
Duke
Energy
22,344
823
Duke
Energy
35,409
678
Piedmont
—
336
Piedmont
—
373
(a) Duke Energy includes 9,975 GWh and 22,048 GWh related to cash flow hedges as of December 31, 2021, and 2020, respectively.
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 Assets
(in millions)
Commodity Contracts
Not Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Assets – Commodity Contracts
Interest Rate Contracts
Designated as Hedging Instruments
Current
Noncurrent
Not Designated as Hedging Instruments
Current
Total Derivative Assets – Interest Rate Contracts
Total Derivative Assets
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
December 31, 2021
$ 72
50
$122
$ —
—
$
2
$
2
$124
$ 72
50
$122
$ —
—
$
2
$
2
$124
$ —
—
$ —
$ —
—
$ —
$ —
$ —
$
$
2
—
2
$ —
—
$ —
$ —
2
$
$
$
23
—
23
$ —
—
$ —
$ —
23
$
$
$
3
—
3
$ —
—
$ —
$ —
3
$
$ 199
113
$ 312
$
$
3
3
2
$
8
$ 320
$
99
63
$ 162
$ —
—
$ —
$ —
$ 162
165
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Derivative Liabilities
(in millions)
Commodity Contracts
Designated as Hedging Instruments
Current
Noncurrent
Not Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Liabilities – Commodity Contracts
Interest Rate Contracts
Designated as Hedging Instruments
Current
Noncurrent
Not Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Liabilities – Interest Rate Contracts
Total Derivative Liabilities
Derivative Assets
(in millions)
Commodity Contracts
Not Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Assets – Commodity Contracts
Interest Rate Contracts
Not Designated as Hedging Instruments
Current
Total Derivative Assets – Interest Rate Contracts
Total Derivative Assets
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
December 31, 2021
Duke Energy
Florida
Duke Energy
Progress
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$ 27
117
$ 72
132
$ 348
$ 75
21
10
18
$ 124
$ 472
$ —
—
$
$
18
9
27
$ —
—
8
—
8
35
$
$
$ —
—
$ 19
5
$ 24
$ —
—
—
—
$ —
$ 24
$ —
—
$
5
5
$ 10
$ —
—
—
—
$ —
$ 10
$ —
—
$ 14
—
$ 14
$ —
—
—
—
$ —
$ 14
$ —
—
$ —
—
$ —
$ —
—
1
4
5
5
$
$
$ —
—
$
$
13
—
13
$ —
—
—
14
14
27
$
$
$ —
—
$ 21
118
$ 139
$ —
—
—
—
$ —
$ 139
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
December 31, 2020
Duke Energy
Florida
Duke Energy
Progress
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$ 30
13
$ 43
$ 18
$ 18
$ 61
$
$
14
6
20
$ —
$ —
20
$
$
9
6
$ 15
$ 18
$ 18
$ 33
$
9
6
$ 15
$ 18
$ 18
$ 33
$ —
—
$ —
$ —
$ —
$ —
$
$
1
—
1
$ —
$ —
1
$
$
$
6
—
6
$ —
$ —
6
$
$
$
1
—
1
$ —
$ —
1
$
166
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Derivative Liabilities
December 31, 2020
(in millions)
Commodity Contracts
Designated as Hedging Instruments
Current
Noncurrent
Not Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Liabilities – Commodity Contracts
Interest Rate Contracts
Designated as Hedging Instruments
Current
Noncurrent
Not Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Liabilities – Interest Rate Contracts
Total Derivative Liabilities
OFFSETTING ASSETS AND LIABILITIES
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$
14
70
$
30
137
$ 251
$
15
48
5
5
$
73
$ 324
$ —
—
$
$
13
3
16
$ —
—
4
—
4
20
$
$
$ —
—
$
$
2
27
29
$ —
—
—
—
$ —
29
$
$ —
—
$
$
2
12
14
$ —
—
—
—
$ —
14
$
$ —
—
$ —
—
$ —
$ —
—
—
—
$ —
$ —
$ —
—
$ —
—
$ —
$ —
—
1
5
6
6
$
$
$ —
—
$
$
1
—
1
$ —
—
—
—
$ —
1
$
$ —
—
$
15
107
$ 122
$ —
—
—
—
$ —
$ 122
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 Assets
(in millions)
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
December 31, 2021
Current
Gross amounts recognized
Gross amounts offset
Net amounts presented in Current Assets: Other
Noncurrent
Gross amounts recognized
Gross amounts offset
Net amounts presented in Other Noncurrent Assets: Other
$ 204
(25)
$ 179
$ 116
(23)
$
93
$
$
$
$
99
(16)
83
63
(15)
48
$
$
$
$
74
(9)
65
50
(8)
42
$
$
$
$
74
(9)
65
50
(8)
42
$ —
—
$ —
$ —
—
$ —
$
$
2
—
2
$ —
—
$ —
$
$
23
—
23
$ —
—
$ —
$
$
3
—
3
$ —
—
$ —
Derivative Liabilities
(in millions)
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
December 31, 2021
Current
Gross amounts recognized
Gross amounts offset
Net amounts presented in Current Liabilities: Other
Noncurrent
Gross amounts recognized
Gross amounts offset
$ 184
(11)
$ 173
$ 288
(12)
Net amounts presented in Other Noncurrent Liabilities: Other
$ 276
$
$
$
$
26
(6)
20
9
(8)
1
$
$
$
19
(5)
14
5
(5)
$ —
$
5
(5)
$ —
$
5
(5)
$ —
$
$
14
—
14
$ —
—
$ —
$
$
$
$
1
—
1
4
—
4
$
$
$
$
13
—
13
14
—
14
$
$
21
—
21
$ 118
—
$ 118
167
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Derivative Assets
(in millions)
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
December 31, 2020
Current
Gross amounts recognized
Gross amounts offset
Net amounts presented in Current Assets: Other
Noncurrent
Gross amounts recognized
Gross amounts offset
Net amounts presented in Other Noncurrent Assets: Other
$
$
$
$
48
(3)
45
13
(5)
8
$
$
$
$
14
(2)
12
6
(1)
5
$
$
$
$
27
(2)
25
6
(4)
2
$
$
$
$
27
(2)
25
6
(4)
2
$ —
—
$ —
$ —
—
$ —
$
$
1
—
1
$ —
—
$ —
$
$
6
—
6
$ —
—
$ —
$
$
1
—
1
$ —
—
$ —
Derivative Liabilities
(in millions)
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
December 31, 2020
Current
Gross amounts recognized
Gross amounts offset
Net amounts presented in Current Liabilities: Other
Noncurrent
Gross amounts recognized
Gross amounts offset
$
$
64
(3)
61
$ 260
(5)
Net amounts presented in Other Noncurrent Liabilities: Other
$ 255
$
$
$
$
17
(2)
15
3
(1)
2
$
2
(2)
$ —
$
$
27
(4)
23
$
2
(2)
$ —
$
$
12
(4)
8
$ —
—
$ —
$ —
—
$ —
$
$
$
$
1
—
1
5
—
5
$
$
1
—
1
$ —
—
$ —
$
$
15
—
15
$ 107
—
$ 107
168
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
Investment Trusts
Other AFS Securities
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.
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,
2021, and 2020.
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.
(in millions)
NDTF
Cash and cash equivalents
Equity securities
Corporate debt securities
Municipal bonds
U.S. government bonds
Other debt securities
Total NDTF Investments
Other Investments
Cash and cash equivalents
Equity securities
Corporate debt securities
Municipal bonds
U.S. government bonds
Other debt securities
Total Other Investments
Total Investments
December 31, 2021
December 31, 2020
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
160
7,350
829
314
1,568
180
$ 10,401
$
$
36
156
119
80
56
45
492
$ 10,893
$ —
4,138
76
22
51
8
$ 4,295
$ —
79
8
5
—
—
$
92
$ 4,387
$ —
54
1
—
—
—
$ 55
$ —
—
—
—
—
—
$ —
$ 55
$
177
6,235
806
370
1,361
180
$ 9,129
$
$
127
146
110
86
42
47
558
$ 9,687
$ —
4,905
39
14
31
3
$
4,992
$ —
36
2
3
—
—
$
$
41
5,033
$ —
43
6
1
12
1
$
63
$ —
—
1
1
—
1
$
$
3
66
169
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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,
2021, 2020 and 2019, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
DUKE ENERGY CAROLINAS
Years Ended December 31,
2021
2020
2019
$
724
141
56
54
$
366
174
96
51
$ 172
151
94
67
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.
(in millions)
NDTF
Cash and cash equivalents
Equity securities
Corporate debt securities
Municipal bonds
U.S. government bonds
Other debt securities
Total NDTF Investments
December 31, 2021
December 31, 2020
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
—
2,887
24
2
16
3
2,932
$
$
—
19
4
—
3
1
27
$
$
53
4,265
506
48
712
175
5,759
$
$
—
2,442
49
6
25
7
2,529
$
$
— $
23
1
—
—
—
24
$
30
3,685
510
91
475
174
4,965
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,
2021, 2020 and 2019, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
Years Ended December 31,
2021
2020
2019
$
440
96
38
37
$
64
99
60
37
$ 113
107
55
38
170
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
NDTF
Cash and cash equivalents
Equity securities
Corporate debt securities
Municipal bonds
U.S. government bonds
Other debt securities
Total NDTF Investments
Other Investments
Cash and cash equivalents
Municipal bonds
Total Other Investments
Total Investments
December 31, 2021
December 31, 2020
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
$
$
$
—
2,018
15
12
15
—
2,060
—
2
2
2,062
$ —
24
2
1
9
—
$
36
$ —
—
$ —
$
36
$
$
$
$
$
107
3,085
323
266
856
5
4,642
20
26
46
4,688
$
$
$
$
$
—
1,696
27
16
26
1
1,766
—
3
3
1,769
$ —
31
—
—
—
—
$
31
$ —
—
$ —
$
31
$
$
$
$
$
147
2,550
296
279
886
6
4,164
106
26
132
4,296
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,
2021, 2020 and 2019, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
DUKE ENERGY PROGRESS
Years Ended December 31,
2021
2020
2019
$
284
45
16
14
$
302
75
24
13
$
59
44
36
29
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.
(in millions)
NDTF
Cash and cash equivalents
Equity securities
Corporate debt securities
Municipal bonds
U.S. government bonds
Other debt securities
Total NDTF Investments
Other Investments
Cash and cash equivalents
Total Other Investments
Total Investments
December 31, 2021
December 31, 2020
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
$
$
$
—
1,915
15
12
15
—
1,957
—
—
1,957
$
$
$
$
$
$
$
$
$
$
—
23
2
1
3
—
29
—
—
29
171
94
2,970
282
266
472
5
4,089
16
16
4,105
$
$
$
$
$
—
1,617
27
16
26
1
1,687
—
—
1,687
$
$
$
$
$
— $
31
—
—
—
—
31
$
— $
— $
31
$
76
2,459
296
279
412
6
3,528
1
1
3,529
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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, 2021,
2020 and 2019, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
DUKE ENERGY FLORIDA
Years Ended December 31,
2021
2020
2019
$
283
44
15
13
$
52
59
24
13
$
38
33
7
5
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.
(in millions)
NDTF
Cash and cash equivalents
Equity securities
Corporate debt securities
U.S. government bonds
Total NDTF Investments(a)
Other Investments
Cash and cash equivalents
Municipal bonds
Total Other Investments
Total Investments
December 31, 2021
December 31, 2020
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
$
$
$
—
103
—
—
103
—
2
2
105
$ —
1
—
6
$
7
$ —
—
$ —
$
7
$
$
$
$
$
13
115
41
384
553
3
26
29
582
$
$
$
$
$
—
79
—
—
79
—
3
3
82
$ —
—
—
—
$ —
$ —
—
$ —
$ —
$
$
$
$
$
71
91
—
474
636
1
26
27
663
(a) During the years ended December 31, 2021, and 2020, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3.
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2021,
2020 and 2019, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
Years Ended December 31,
2021
2020
2019
$
1
1
1
1
$
250
16
—
—
$
21
11
29
24
172
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
Investments
Cash and cash equivalents
Equity securities
Corporate debt securities
Municipal bonds
U.S. government bonds
Total Investments
December 31, 2021
December 31, 2020
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
—
6
—
1
—
7
$ —
—
—
1
—
$
1
$
$
—
97
6
46
12
161
$
$
—
58
—
1
—
59
$ —
—
—
—
—
$ —
$
$
1
97
3
38
4
143
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,
2021, 2020 and 2019, were immaterial.
DEBT SECURITY MATURITIES
The table below summarizes the maturity date for debt securities.
(in millions)
Due in one year or less
Due after one through five years
Due after five through 10 years
Due after 10 years
Total
December 31, 2021
Duke
Energy
159
957
550
1,525
3,191
$
$
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Indiana
$
3
337
226
875
$
138
546
248
544
$
31
256
231
507
$
1,441
$
1,476
$
1,025
$
$
107
290
17
37
451
$
$
7
25
10
22
64
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 the
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.
173
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.
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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.
(in millions)
NDTF cash and cash equivalents
NDTF equity securities
NDTF debt securities
Other equity securities
Other debt securities
Other cash and cash equivalents
Derivative assets
Total assets
Derivative liabilities
Net assets (liabilities)
(in millions)
NDTF cash and cash equivalents
NDTF equity securities
NDTF debt securities
Other equity securities
Other debt securities
Other cash and cash equivalents
Derivative assets
Total assets
Derivative liabilities
Net assets (liabilities)
December 31, 2021
Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
$
160
7,350
2,891
156
300
36
320
11,213
(472)
$
160
7,300
967
156
45
36
3
8,667
(13)
$ —
—
1,924
—
255
—
293
2,472
(314)
$ —
—
—
—
—
—
24
24
(145)
$ 10,741
$ 8,654
$ 2,158
$ (121)
$ —
50
—
—
—
—
—
50
—
$ 50
December 31, 2020
Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
$
177
6,235
2,717
146
285
127
61
9,748
(324)
$
177
6,189
874
146
37
127
1
7,551
—
$ —
—
1,843
—
248
—
53
2,144
(240)
$ —
—
—
—
—
—
7
7
(84)
$ 9,424
$ 7,551
$ 1,904
$ (77)
$ —
46
—
—
—
—
—
46
—
$
46
174
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) The following table provides reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
(in millions)
Balance at beginning of period
Total pretax realized or unrealized losses included in comprehensive income
Purchases, sales, issuances and settlements:
Purchases
Settlements
Net transfers Out of Level 3(a)
Total gains (losses) included on the Consolidated Balance Sheet
Balance at end of period
(a) Transferred from Level 3 to Level 2 because observable market data became available.
DUKE ENERGY CAROLINAS
Derivatives (net)
Years Ended December 31,
2021
$
(77)
(75)
21
(5)
—
15
2020
$ (102)
(84)
14
(19)
117
(3)
$ (121)
$
(77)
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
(in millions)
NDTF cash and cash equivalents
NDTF equity securities
NDTF debt securities
Derivative assets
Total assets
Derivative liabilities
Net assets
(in millions)
NDTF cash and cash equivalents
NDTF equity securities
NDTF debt securities
Derivative assets
Total assets
Derivative liabilities
Net assets
December 31, 2021
Total Fair Value
Level 1
Level 2
Not Categorized
$
53
$
53
$ —
$ —
4,265
1,441
162
5,921
(35)
4,215
339
—
4,607
—
—
1,102
162
1,264
(35)
$ 5,886
$ 4,607
$1,229
$
50
—
—
50
—
50
December 31, 2020
Total Fair Value
Level 1
Level 2
Not Categorized
$
30
3,685
1,250
20
4,985
(20)
$
30
3,639
192
—
3,861
—
$ —
—
1,058
20
1,078
(20)
$ —
46
—
—
46
—
46
$ 4,965
$ 3,861
$ 1,058
$
175
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
NDTF cash and cash equivalents
NDTF equity securities
NDTF debt securities
Other debt securities
Other cash and cash equivalents
Derivative assets
Total assets
Derivative liabilities
Net assets
DUKE ENERGY PROGRESS
December 31, 2021
December 31, 2020
Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
$
107
3,085
1,450
26
20
124
4,812
(24)
$
107
3,085
628
—
20
—
3,840
—
$ —
—
822
26
—
124
972
(24)
$
147
2,550
1,467
26
106
33
4,329
(29)
$
147
2,550
682
—
106
—
3,485
—
$ —
—
785
26
33
844
(29)
$ 4,788
$ 3,840
$ 948
$ 4,300
$ 3,485
$ 815
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
(in millions)
NDTF cash and cash equivalents
NDTF equity securities
NDTF debt securities
Other cash and cash equivalents
Derivative assets
Total assets
Derivative liabilities
Net assets
DUKE ENERGY FLORIDA
December 31, 2021
December 31, 2020
Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
$
94
2,970
1,025
16
124
4,229
(10)
$
94
2,970
289
16
—
3,369
—
$ —
—
736
—
124
860
(10)
$
76
2,459
993
1
33
3,562
(14)
$
76
2,459
237
1
—
2,773
—
$ —
—
756
—
33
789
(14)
$ 4,219
$ 3,369
$ 850
$ 3,548
$ 2,773
$ 775
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
(in millions)
NDTF cash and cash equivalents
NDTF equity securities
NDTF debt securities
Other debt securities
Other cash and cash equivalents
Total assets
Derivative liabilities
Net assets
December 31, 2021
December 31, 2020
Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
$
71
91
445
—
1
608
—
$ —
—
29
26
—
55
—
55
$
608
$
$
$
13
115
425
26
3
582
(14)
$
568
$
13
115
339
—
3
470
—
470
$ —
$
—
86
26
—
112
(14)
$
98
$
71
91
474
26
1
663
—
663
176
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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, 2021, and 2020.
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.
(in millions)
Other equity securities
Other debt securities
Other cash equivalents
Derivative assets
Total assets
Derivative liabilities
Net assets
December 31, 2021
December 31, 2020
Total Fair Value
Level 1 Level 2 Level 3
Total Fair Value
Level 1 Level 2 Level 3
$ 97
$ 97
$ — $ —
$ 97
$ 97
$ — $ —
64
—
23
184
(27)
—
—
1
98
(13)
64
—
—
—
22
—
64
22
(14) —
45
1
6
149
(1)
—
45
—
1
—
—
98
45
(1) —
—
—
6
6
—
$ 157
$ 85
$ 50
$ 22
$ 148
$ 97
$ 45
$
6
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
(in millions)
Balance at beginning of period
Purchases, sales, issuances and settlements:
Purchases
Settlements
Total gains (losses) included on the Consolidated Balance Sheet
Balance at end of period
PIEDMONT
Derivatives (net)
Years Ended December 31,
2021
$ 6
18
(16)
14
2020
$ 11
10
(13)
(2)
$ 22
$ 6
The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.
(in millions)
Derivative assets
Derivative liabilities
Net (liabilities) assets
December 31, 2021
December 31, 2020
Total Fair Value Level 1 Level 2
Total Fair Value
Level 1
Level 2
$
3
(139)
$ (136)
$
$
3 $ —
— (139)
3 $ (139)
$
1
(122)
$ (121)
$
$
1
—
$ —
(122)
1
$ (122)
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
(in millions)
Balance at beginning of period
Net transfers Out of Level 3(a)
Balance at end of period
(a) Transferred from Level 3 to Level 2 because observable market data became available.
177
Derivatives (net)
Year Ended December 31,
2020
$ (117)
117
$ —
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS
The following tables include quantitative information about the Duke Energy Registrants’ derivatives classified as Level 3.
Fair Value
(in millions)
Valuation Technique
Unobservable Input
Range
Weighted
Average
Range
December 31, 2021
$ (145)
RTO forward pricing
Forward electricity curves – price per MWh
$ 19.04 — $139.11 $
37.57
2
RTO auction pricing
FTR price – per MWh
0.06 — 1.79
0.96
22
RTO auction pricing
FTR price – per MWh
(1.18) — 13.11
2.68
Investment Type
Duke Energy
Electricity contracts
Duke Energy Ohio
FTRs
Duke Energy Indiana
FTRs
Duke Energy
Total Level 3 derivatives
$ (121)
December 31, 2020
Fair Value
(in millions)
Valuation Technique
Unobservable Input
Range
Weighted
Average
Range
$ (84)
Discounted cash flow
Forward electricity curves – price per MWh
$ 14.68 — $151.84 $
28.84
1
6
RTO auction pricing
FTR price – per MWh
0.25 — 1.68
0.79
RTO auction pricing
FTR price – per MWh
(2.40) — 7.41
1.05
Investment Type
Duke Energy
Electricity contracts
Duke Energy Ohio
FTRs
Duke Energy Indiana
FTRs
Duke Energy
Total Level 3 derivatives
$ (77)
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.
(in millions)
Duke Energy(a)
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
December 31, 2021
December 31, 2020
Book Value
Fair Value
Book Value
Fair Value
$ 63,835
13,275
20,823
10,249
8,482
3,193
4,323
2,968
$ 69,683
15,101
23,751
11,252
9,772
3,570
5,067
3,278
$ 59,863
12,218
19,264
9,258
7,915
3,089
4,091
2,780
$ 69,292
14,917
23,470
10,862
9,756
3,650
5,204
3,306
(a) Book value of long-term debt includes $1.25 billion as of December 31, 2021, and $1.3 billion as of December 31, 2020, 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, 2021, and December 31, 2020, 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.
178
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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, 2021, 2020 and 2019, or is expected to be
provided in the future, that was not previously contractually required.
Receivables Financing – DERF/DEPR/DEFR
DERF, DEPR and DEFR are bankruptcy remote, special purpose
subsidiaries of Duke Energy Carolinas, Duke Energy Progress and Duke Energy
Florida, respectively. DERF, DEPR and DEFR are wholly owned LLCs with
separate legal existence from their parent companies, and their assets are not
generally available to creditors of their parent companies. On a revolving basis,
DERF, DEPR and DEFR buy certain accounts receivable arising from the sale of
electricity and related services from their parent companies.
DERF, DEPR and DEFR borrow amounts under credit facilities to buy
these receivables. Borrowing availability from the credit facilities is limited
to the amount of qualified receivables purchased, which generally exclude
receivables past due more than a predetermined number of days and reserves
Receivables Financing – Credit Facilities
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 are reflected on the Consolidated Balance Sheets as
Long-Term Debt.
The most significant activity that impacts the economic performance
of DERF, DEPR and DEFR are the decisions made to manage delinquent
receivables. Duke Energy Carolinas, Duke Energy Progress and Duke Energy
Florida are considered the primary beneficiaries and consolidate DERF, DEPR
and DEFR, respectively, as they make those decisions.
Receivables Financing – CRC
CRC is a bankruptcy remote, special purpose entity indirectly owned
by Duke Energy. On a revolving basis, CRC buys certain accounts receivable
arising from the sale of electricity, natural gas and related services from Duke
Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit
facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana.
Borrowing availability from the credit facility is limited to the amount of qualified
receivables sold to CRC, which generally exclude receivables past due more than
a predetermined number of days and reserves for expected past-due balances.
The sole source of funds to satisfy the related debt obligation is cash collections
from the receivables. Amounts borrowed under the credit facility are reflected on
Duke Energy’s Consolidated Balance Sheets as Long-Term Debt.
The proceeds Duke Energy Ohio and Duke Energy Indiana receive from the
sale of receivables to CRC are approximately 75% cash and 25% in the form of
a subordinated note from CRC. The subordinated note is a retained interest in the
receivables sold. Depending on collection experience, additional equity infusions
to CRC may be required by Duke Energy to maintain a minimum equity balance
of $3 million.
CRC is considered a VIE because (i) equity capitalization is insufficient to
support its operations, (ii) power to direct the activities that most significantly
impact the economic performance of the entity is not held by the equity holder
and (iii) deficiencies in net worth of CRC are funded by Duke Energy. The most
significant activities that impact the economic performance of CRC are decisions
made to manage delinquent receivables. Duke Energy is considered the primary
beneficiary and consolidates CRC as it makes these decisions. Neither Duke
Energy Ohio nor Duke Energy Indiana consolidate CRC.
The following table summarizes the amounts and expiration dates of the credit facilities and associated restricted receivables described above.
(in millions)
Expiration date
Credit facility amount
Amounts borrowed at December 31, 2021
Amounts borrowed at December 31, 2020
Restricted Receivables at December 31, 2021
Restricted Receivables at December 31, 2020
Duke Energy
Duke Energy
Carolinas
Duke Energy
Progress
Duke Energy
Florida
CRC
DERF
February 2023
$ 350
350
350
587
547
January 2025
$ 475
475
364
844
696
DEPR
April 2023
$ 350
350
250
574
500
DEFR
April 2023
$ 250
250
250
427
397
179
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
Receivables of VIEs
Regulatory Assets: Current
Current Assets: Other
Other Noncurrent Assets: Regulatory assets
Current Liabilities: Other
Current maturities of long-term debt
Long-Term Debt
December 31,
$
2021
5
54
39
883
9
56
946
$
2020
4
53
39
937
10
55
1,002
Storm Recovery Bonds – Duke Energy Carolinas NC Storm Funding and Duke Energy Progress NC Storm Funding
Duke Energy Carolinas NC Storm Funding, LLC. (DECNCSF) and Duke Energy Progress NC Storm Funding, LLC. (DEPNCSF) are bankruptcy remote, wholly owned
special purpose subsidiaries of Duke Energy Carolinas and Duke Energy Progress, respectively. These entities were formed in 2021 for the sole purpose of issuing
storm recovery bonds to finance certain of Duke Energy Carolinas’ and Duke Energy Progress’ unrecovered regulatory assets related to storm costs.
In November 2021, DECNCSF and DEPNCSF issued $237 million and $770 million of senior secured bonds, respectively and used the proceeds to acquire storm
recovery property from Duke Energy Carolinas and Duke Energy Progress. The storm recovery property was created by state legislation and NCUC financing orders
for the purpose of financing storm costs incurred in 2018 and 2019. The storm recovery property acquired includes the right to impose, bill, collect and adjust a
non-bypassable charge from all Duke Energy Carolinas’ and Duke Energy Progress’ retail customers until the bonds are paid in full and all financing costs have been
recovered. The storm recovery bonds are secured by the storm recovery property and cash collections from the storm recovery charges are the sole source of funds to
satisfy the debt obligation. The bondholders have no recourse to Duke Energy Carolinas or Duke Energy Progress. For additional information, see Notes 3 and 6.
DECNCSF and DEPNCSF are considered VIEs primarily because the equity capitalization is insufficient to support their operations. Duke Energy Carolinas and
Duke Energy Progress have the power to direct the significant activities of the VIEs as described above and therefore Duke Energy Carolinas and Duke Energy Progress
are considered the primary beneficiaries and consolidate DECNCSF and DEPNCSF, respectively.
The following table summarizes the impact of these VIEs on Duke Energy Carolinas’ and Duke Energy Progress’ Consolidated Balance Sheets.
(in millions)
Regulatory Assets: Current
Other Noncurrent Assets: Regulatory assets
Other Noncurrent Assets: Other
Interest Accrued
Current maturities of long-term debt
Long-Term Debt
Commercial Renewables
December 31, 2021
Duke Energy
Carolinas
Duke Energy
Progress
$
12
220
1
1
5
228
$
39
720
4
2
15
747
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.
180
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) The table below presents material balances reported on Duke Energy’s Consolidated Balance Sheets related to Commercial Renewables VIEs.
(in millions)
Current Assets: Other
Property, Plant and Equipment: Cost
Accumulated depreciation and amortization
Other Noncurrent Assets: Other
Current maturities of long-term debt
Long-Term Debt
Other Noncurrent Liabilities: AROs
Other Noncurrent Liabilities: Other
NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Consolidated Balance Sheets.
December 31,
$
2021
215
7,339
(1,474)
62
167
1,475
173
319
$
2020
257
6,394
(1,242)
67
167
1,569
148
316
(in millions)
Receivables from affiliated companies
Investments in equity method unconsolidated affiliates
Other noncurrent assets
Total assets
Other current liabilities
Other noncurrent liabilities
Total liabilities
Net (liabilities) assets
(in millions)
Receivables from affiliated companies
Investments in equity method unconsolidated affiliates
Other noncurrent assets
Total assets
Other current liabilities
Other noncurrent liabilities
Total liabilities
Net (liabilities) assets
December 31, 2021
Duke Energy
Pipeline
Investments
Commercial
Renewables
Total
$ —
$ — $ —
$
15
61
76
47
54
$ 101
$ (25)
508
—
$ 508
4
3
7
$
$ 501
523
61
584
51
57
108
476
$
$
$
December 31, 2020
Duke
Energy
Ohio
$ 79
—
—
$ 79
—
—
Duke
Energy
Indiana
$
$
97
—
—
97
—
—
$ — $ —
$ 79
$
97
Duke Energy
Pipeline
Investments
Commercial
Renewables
Total
Duke
Energy
Ohio
Duke
Energy
Indiana
$ —
$ — $ —
$ 83
$
110
$
—
31
31
928
8
$ 936
$ (905)
530
—
$ 530
$
5
10
15
$
$ 515
$
$
530
31
561
933
18
951
—
—
—
—
$ 83
$
110
—
—
—
—
$ — $ —
(390)
$ 83
$
110
The Duke Energy Registrants are not aware of any situations where the
maximum exposure to loss significantly exceeds the carrying values shown above
except for certain renewable energy project entities guarantees for debt services
and operations and maintenance, as discussed below.
Pipeline Investments
Duke Energy has investments in various joint ventures to construct and
operate pipeline projects. These entities are considered VIEs due to having
insufficient equity to finance their own activities without subordinated financial
support. Duke Energy does not have the power to direct the activities that most
181
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
In February 2021, Duke Energy paid approximately $855 million to fund ACP’s
outstanding debt, relieving Duke Energy of its guarantee. See Notes 3, 7 and 12
for further information regarding this transaction.
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. See Note 3
for additional information.
Commercial Renewables
CRC
See discussion under Consolidated VIEs for additional information related
Duke Energy has investments in various renewable energy project entities.
to CRC.
Duke Energy has a 50% ownership in a VIE, which owns a portfolio of wind
projects. This entity is a VIE as a result of Duke Energy issuing guarantees
for debt service and operations and maintenance reserves in support of debt
financings. Duke Energy does not consolidate this VIE because power to direct
and control key activities is shared jointly by Duke Energy and the other owner.
Duke Energy also has equity ownership in an entity, which owns a portfolio of
fuel cell projects. Duke Energy does not consolidate the fuel cell portfolio as it
does not have the power to direct the activities that most significantly impact
the economic performance of the entity.
OVEC
Duke Energy Ohio’s 9% ownership interest in OVEC is considered a
non-consolidated VIE due to OVEC having insufficient equity to finance its
activities without subordinated financial support. The activities that most
significantly impact OVEC’s economic performance include fuel strategy
and supply activities and decisions associated with ongoing operations and
maintenance-related activities. Duke Energy Ohio does not have the unilateral
power to direct these activities, and therefore, does not consolidate OVEC.
As a counterparty to an Inter-Company Power Agreement (ICPA), Duke
Energy Ohio has a contractual arrangement to receive entitlements to capacity
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.
Anticipated credit loss ratio
Discount rate
Receivable turnover rate
The following table shows the gross and net receivables sold.
(in millions)
Receivables sold
Less: Retained interests
Net receivables sold
Duke Energy Ohio
Duke Energy Indiana
2021
0.5%
1.1%
13.5%
2020
0.5%
1.6%
13.4%
2021
0.3%
1.1%
11.3%
2020
0.3%
1.6%
11.3%
Duke Energy Ohio
Duke Energy Indiana
December 31,
December 31,
2021
$ 269
79
$ 190
2020
$ 270
83
$ 187
2021
$ 328
97
$ 231
2020
344
110
234
$
$
182
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) The following table shows sales and cash flows related to receivables sold.
(in millions)
Sales
Receivables sold
Loss recognized on sale
Cash flows
Cash proceeds from receivables sold
Collection fees received
Return received on retained interests
Duke Energy Ohio
Duke Energy Indiana
Years Ended December 31,
Years Ended December 31,
2021
2020
2019
2021
2020
2019
$2,023
10
2,018
1
4
$1,905
10
1,875
1
4
$1,979
14
1,993
1
6
$2,909
13
$ 2,631
12
$ 2,837
17
2,909
1
6
2,586
1
5
2,860
1
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).
183
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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:
(in millions)
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Indiana
Remaining Performance Obligations
2022
$ 109
8
101
1
2023
2024
2025
2026
Thereafter
$
53
8
45
9
$
45
8
37
14
$
7
—
7
14
$
7
—
7
14
$
43
—
43
12
Total
$ 264
24
240
64
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:
(in millions)
Piedmont
Remaining Performance Obligations
2022
$
71
2023
$
64
2024
$
61
2025
$
60
2026
Thereafter
$
50
$
286
Total
$ 592
184
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
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:
(in millions)
By market or type of customer
Electric Utilities and Infrastructure
Residential
General
Industrial
Wholesale
Other revenues
Total Electric Utilities and Infrastructure revenue from
contracts with customers
Gas Utilities and Infrastructure
Residential
Commercial
Industrial
Power Generation
Other revenues
Total Gas Utilities and Infrastructure revenue from contracts
with customers
Commercial Renewables
Revenue from contracts with customers
Other
Revenue from contracts with customers
Total revenue from contracts with customers
Other revenue sources(a)
Total revenues
Year Ended December 31, 2021
Duke
Energy
$ 10,097
6,375
2,924
2,199
879
Duke
Energy
Carolinas
$ 3,054
2,210
1,145
472
264
Progress
Energy
$ 5,084
2,883
894
1,385
716
Duke
Energy
Progress
$2,156
1,378
634
1,164
387
Duke
Energy
Florida
$ 2,928
1,505
260
221
329
Duke
Energy
Ohio
$ 767
440
135
56
83
Duke
Energy
Indiana
$1,188
825
750
285
86
Piedmont
$ —
—
—
—
—
$ 22,474
$ 7,145
$ 10,962
$5,719
$ 5,243
$ 1,481
$3,134
$ —
$ 1,131
561
158
—
133
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$ 354
143
20
—
28
$ —
—
—
—
—
$ 777
418
137
92
45
$ 1,983
$ —
$ —
$ —
$ —
$ 545
$ —
$1,469
$
217
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$
29
$ 24,703
394
$
$ 25,097
$ —
$ 7,145
(43)
$
$ 7,102
$ —
$ 10,962
95
$
$ 11,057
$ —
$5,719
61
$
$5,780
$ —
$ 5,243
16
$
$ 5,259
$ —
$ 2,026
11
$
$ 2,037
$ —
$3,134
40
$
$3,174
$ —
$1,469
$ 100
$1,569
(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.
185
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) (in millions)
By market or type of customer
Electric Utilities and Infrastructure
Residential
General
Industrial
Wholesale
Other revenues
Total Electric Utilities and Infrastructure revenue from
contracts with customers
Gas Utilities and Infrastructure
Residential
Commercial
Industrial
Power Generation
Other revenues
Total Gas Utilities and Infrastructure revenue from
contracts with customers
Commercial Renewables
Revenue from contracts with customers
Other
Revenue from contracts with customers
Total revenue from contracts with customers
Other revenue sources(a)
Total revenues
Year Ended December 31, 2020
Duke
Energy
$ 9,806
6,194
2,859
1,864
914
Duke
Energy
Carolinas
$ 2,997
2,233
1,137
380
281
Progress
Energy
$ 5,017
2,779
901
1,228
596
Duke
Energy
Progress
$2,059
1,312
649
1,034
294
Duke
Energy
Florida
$ 2,958
1,467
252
194
302
Duke
Energy
Ohio
$
726
442
137
32
82
Duke
Energy
Indiana
$1,064
740
683
224
72
Piedmont
$ —
—
—
—
—
$ 21,637
$ 7,028
$ 10,521
$5,348
$ 5,173
$ 1,419
$2,783
$ —
$
930
446
127
—
87
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$
300
117
17
—
17
$ —
—
—
—
—
$ 630
329
110
34
70
$ 1,590
$ —
$ —
$ —
$ —
$
451
$ —
$1,173
$
227
$ —
$ —
$ —
$ —
$ —
$ —
$ —
26
$
$ 23,480
388
$
$ 23,868
$ —
$ 7,028
(13)
$
$ 7,015
$ —
$ 10,521
106
$
$ 10,627
$ —
$5,348
74
$
$5,422
$ —
$ 5,173
15
$
$ 5,188
$ —
$ 1,870
(12)
$
$ 1,858
$ —
$2,783
12
$
$2,795
$ —
$1,173
$ 124
$1,297
(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.
(in millions)
By market or type of customer
Electric Utilities and Infrastructure
Residential
General
Industrial
Wholesale
Other revenues
Total Electric Utilities and Infrastructure revenue from
contracts with customers
Gas Utilities and Infrastructure
Residential
Commercial
Industrial
Power Generation
Other revenues
Total Gas Utilities and Infrastructure revenue from
contracts with customers
Commercial Renewables
Revenue from contracts with customers
Other
Revenue from contracts with customers
Total revenue from contracts with customers
Other revenue sources(a)
Total revenues
Year Ended December 31, 2019
Duke
Energy
$ 9,863
6,431
3,071
2,212
770
Duke
Energy
Carolinas
$ 3,044
2,244
1,215
462
276
Progress
Energy
$ 4,998
2,935
934
1,468
548
Duke
Energy
Progress
$2,144
1,368
675
1,281
317
Duke
Energy
Florida
$ 2,854
1,567
259
187
231
Duke
Energy
Ohio
$
733
451
147
46
80
Duke
Energy
Indiana
$1,087
802
774
235
89
Piedmont
$ —
—
—
—
—
$ 22,347
$ 7,241
$ 10,883
$5,785
$ 5,098
$ 1,457
$2,987
$ —
$
976
508
141
—
129
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$
315
130
19
—
19
$ —
—
—
—
—
$ 661
378
122
51
110
$ 1,754
$ —
$ —
$ —
$ —
$
483
$ —
$1,322
$
223
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$
24
$ 24,348
731
$
$ 25,079
$ —
$ 7,241
$ 154
$ 7,395
$ —
$ 10,883
319
$
$ 11,202
$ —
$5,785
$ 172
$5,957
$ —
$ 5,098
133
$
$ 5,231
$ —
$ 1,940
$ —
$ 1,940
$ —
$2,987
17
$
$3,004
$ —
$1,322
59
$
$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.
186
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions)
Balance at December 31, 2019
Cumulative Change in Accounting Principle
Write-Offs
Credit Loss Expense
Other Adjustments
$
Duke
Energy
76
5
(58)
75
48
Duke
Energy
Carolinas
$
10
1
(13)
13
12
Balance at December 31, 2020
$
146
$
23
Write-Offs
Credit Loss Expense
Other Adjustments
(58)
54
(20)
Balance at December 31, 2021
$
122
$
(21)
27
13
42
Years Ended December 31, 2020 and 2021
Progress
Energy
Duke
Energy
Progress
$
$
$
16
2
(23)
29
13
37
(25)
25
(1)
36
$
$
$
8
1
(8)
9
13
23
(12)
11
(1)
21
Duke
Energy
Florida
$
7
1
(14)
20
—
$
14
(13)
14
1
16
$
Duke
Energy
Ohio
Duke
Energy
Indiana
$
$
$
4
—
—
—
—
4
—
—
—
4
$
$
$
3
—
—
—
—
3
—
—
—
3
Piedmont
$
$
6
1
(6)
11
—
12
(9)
7
5
$
15
Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using
supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over
a specified period. Historical loss rates are adjusted due to the impact of current conditions, as well as forecasted conditions over a reasonable time period. The
calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and
risk of loss periodically for trade and other receivables.
The aging of trade receivables is presented in the table below. Duke Energy considers receivables greater than 30 days outstanding past due.
(in millions)
Unbilled Receivables(a)(b)
0-30 days
30-60 days
60-90 days
90+ days
Deferred Payment Arrangements(c)
Trade and Other Receivables
(in millions)
Unbilled Receivables(a)(b)
0-30 days
30-60 days
60-90 days
90+ days
Deferred Payment Arrangements(c)
Trade and Other Receivables
$
Duke
Energy
964
2,104
212
88
249
115
$ 3,732
$
Duke
Energy
969
1,789
185
22
119
215
$ 3,299
Duke
Energy
Carolinas
$ 316
595
77
37
106
55
$ 1,186
Duke
Energy
Carolinas
$ 328
445
80
1
16
96
$
966
December 31, 2021
Duke
Energy
Progress
$ 193
405
44
21
37
22
$ 722
Duke
Energy
Florida
$
73
393
28
20
28
23
Duke
Energy
Ohio
Duke
Energy
Indiana
$
4
42
4
1
47
2
$
27
51
13
1
11
—
$ 565
$ 100
$ 103
December 31, 2020
Duke
Energy
Progress
$ 167
398
25
4
9
52
$ 655
Duke
Energy
Florida
$
$
116
307
29
6
23
28
509
Duke
Energy
Ohio
Duke
Energy
Indiana
$
$
2
60
8
2
30
—
$
102
$
16
26
3
1
12
—
58
Progress
Energy
$
266
800
72
41
65
45
$ 1,289
Progress
Energy
$
283
707
54
10
32
80
$ 1,166
Piedmont
$ 106
202
12
2
7
4
$ 333
Piedmont
$
86
149
8
3
9
7
$ 262
(a) Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed and are included within Receivables and Receivables of VIEs on the
Consolidated Balance Sheets.
(b) Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC, and account for the transfers of receivables as sales.
Accordingly, the receivables sold are not reflected on the Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 17 for further information. These receivables for unbilled revenues are $82 million and
$121 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2021, and $87 million and $134 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2020.
(c) Due to certain customer financial hardships created by the COVID-19 pandemic and resulting stay-at-home orders, Duke Energy permitted customers to defer payment of past-due amounts through an installment payment
plan over a period of several months.
187
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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.
(in millions, except per share amounts)
Net Income available to Duke Energy common stockholders
Less: Income (Loss) from discontinued operations
Accumulated preferred stock dividends adjustment
Less: Impact of participating securities
Income from continuing operations available to Duke Energy common stockholders
Weighted average common shares outstanding – basic
Equity forwards
Weighted average common shares outstanding – diluted
EPS from continuing operations available to Duke Energy common stockholders
Basic and Diluted
Potentially dilutive items excluded from the calculation(a)
Dividends declared per common share
Dividends declared on Series A preferred stock per depositary share
Dividends declared on Series B preferred stock per share
Years Ended December 31,
2021
$ 3,802
7
—
4
$ 3,791
769
—
769
$
4.93
2
$
3.90
$ 1.437
$ 48.750
2020
$ 1,270
7
1
2
$ 1,262
737
1
738
$
1.71
2
$
3.82
$ 1.437
$49.292
2019
$ 3,707
(7)
(15)
5
$ 3,694
729
—
729
$ 5.07
2
$ 3.75
$ 1.03
$ —
(a) Performance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.
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 at-the-market (ATM) offering
program, including an equity forward sales component. Under the terms of
the EDA, Duke Energy may issue and sell shares of common stock through
September 2022.
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.
188
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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:
20. SEVERANCE
• 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.
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.
During 2021, Duke Energy reviewed its operations and identified
opportunities for improvement to better serve its customers. This operational
review included workforce realignment to ensure the company is staffed with
the right skill sets and number of teammates to execute the long-term vision
for Duke Energy. As such, Duke Energy extended involuntary severance benefits
to certain employees in specific areas as a part of these workforce realignment
efforts.
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.
The following table presents the direct and allocated severance and
related charges accrued for approximately 290 employees in 2021, 30
employees in 2020 and 140 employees in 2019, by the Duke Energy Registrants
within Operation, maintenance and other on the Consolidated Statements of
Operations.
189
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) (in millions)
Year Ended December 31, 2021(a)(b)
Year Ended December 31, 2020(c)(d)
Year Ended December 31, 2019
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
$ 69
$ 33
$
26
$
20
$ 6
$ 2
$
3
(85)
16
(58)
8
(28)
6
(31)
3
3
3
—
—
—
1
Piedmont
$ 2
—
1
(a)
(b)
(c)
(d)
Includes amortization of deferred severance charges of approximately $33 million, $22 million, $11 million and $11 million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.
Includes adjustments associated with 2018 severance charges of approximately $(3) million, $(2) million and $(1) million for Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.
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.
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.
(in millions)
Balance at December 31, 2020
Provision/Adjustments
Cash Reductions
Balance at December 31, 2021
21. STOCK-BASED COMPENSATION
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 11
36
(8)
$ 39
$ 2
$
1
(1)
3
1
(2)
$ 1
1
(1)
$ 2
$
2
$ 1
$ 2
—
(1)
$ 1
$—
—
—
$—
$ 1
—
(1)
$—
$ —
—
—
$ —
The Duke Energy Corporation 2015 Long-Term Incentive Plan (the 2015
Duke Energy’s pretax stock-based compensation costs, the tax benefit
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.
The following table summarizes the total expense recognized by the Duke
Energy Registrants, net of tax, for stock-based compensation.
(in millions)
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
Years Ended December 31,
2021
$ 64
23
24
15
9
5
6
3
2020
$ 61
22
23
15
9
4
6
3
$
2019
65
24
24
15
9
5
6
3
associated with stock-based compensation expense and stock-based
compensation costs capitalized are included in the following table.
(in millions)
Years Ended December 31,
2021
2020
2019
RSU awards
Performance awards
Pretax stock-based compensation cost
Stock-based compensation costs capitalized
Stock-based compensation expense
Tax benefit associated with stock-based compensation expense
$49
39
$88
5
$83
$19
$ 46
38
$ 84
5
$ 79
$ 18
$ 44
45
$ 89
5
$ 84
$ 19
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.
Shares granted (in thousands)
Fair value (in millions)
Years Ended December 31,
2021
673
$ 59
2020
498
$ 50
2019
571
$ 51
190
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
The following table summarizes information about RSU awards outstanding.
Outstanding at December 31, 2020
Granted
Vested
Forfeited
Outstanding at December 31, 2021
RSU awards expected to vest
Shares
(in thousands)
Weighted Average
Grant Date Fair Value
(per share)
939
673
(502)
(67)
1,043
996
$
93
88
89
92
92
92
The total grant date fair value of shares vested during the years ended
December 31, 2021, 2020 and 2019, was $45 million, $43 million and $49
million, respectively. At December 31, 2021, Duke Energy had $35 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.
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
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-,
four-, or five-year average earnings, (ii) highest three-, four-, 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
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 2021, the model used a risk-free
interest rate of 0.24%, which reflects the yield on three-year Treasury bonds as
of the grant date, and an expected volatility of 26.9% 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.
Shares granted assuming target performance (in thousands)
Fair value (in millions)
Years Ended December 31,
2021
380
$ 33
2020
2019
319
320
$ 34
$ 27
The following table summarizes information about stock-based
performance awards outstanding and assumes payout at the target level.
Shares
(in thousands)
Weighted Average
Grant Date Fair Value
(per share)
Outstanding at December 31, 2020
Granted
Vested
Forfeited
Outstanding at December 31, 2021
Stock-based performance awards expected to vest
962
380
(346)
(44)
952
927
$
87
88
73
92
93
93
The total grant date fair value of shares vested during the years ended
December 31, 2021, and 2020, was $25 million and $36 million, respectively. At
December 31, 2021, Duke Energy had $20 million of unrecognized compensation cost,
which is expected to be recognized over a weighted average period of 22 months.
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 losses experienced
by the defined benefit retirement plans in remeasuring plan assets as
of December 31, 2021, were primarily attributable to actual investment
performance that was less than expected investment performance. Actuarial
gains experienced by the defined benefit retirement plans in remeasuring
plan obligations as of December 31, 2021, were primarily attributable to the
increase in the discount rate used to measure plan obligations. Actuarial gains
experienced by the defined benefit retirement plans in remeasuring plan assets
as of December 31, 2020, 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, were primarily attributable to the decrease in the discount
rate used to measure plan obligations.
191
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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 2022. The following table
includes information related to the Duke Energy Registrants’ contributions to its
qualified defined benefit pension plans.
(in millions)
Contributions Made:
2021
2020
2019
QUALIFIED PENSION PLANS
Components of Net Periodic Pension Costs
(in millions)
Service cost
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service credit
Amortization of settlement charges
Net periodic pension costs(a)(b)
(in millions)
Service cost
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service credit
Amortization of settlement charges
Net periodic pension costs(a)(b)
$
$
$
$
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
$ —
—
77
$—
—
7
$ —
—
57
$—
—
4
$ —
—
53
$—
—
2
Year Ended December 31, 2021
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
176
220
(558)
133
(29)
9
(49)
$
$
56
51
(141)
29
(8)
5
(8)
$
$
50
70
(187)
38
(2)
2
(29)
$
$
29
30
(84)
18
(1)
2
(6)
$
$
21
39
(102)
20
(1)
1
(22)
$
$
5
13
(28)
7
(1)
—
(4)
Duke
Energy
Indiana
$—
—
2
Duke
Energy
Indiana
$
$
10
18
(40)
13
(2)
—
(1)
Piedmont
$—
—
1
Piedmont
$
$
6
7
(20)
10
(9)
1
(5)
Year Ended December 31, 2020
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
165
269
(572)
128
(32)
18
(24)
$
$
51
62
(145)
28
(8)
9
(3)
$
$
48
85
(190)
41
(3)
7
(12)
$
27
38
(87)
18
(2)
6
$ —
$
21
46
(101)
23
(1)
1
$ (11)
$
$
5
15
(28)
6
—
—
(2)
$
9
22
(42)
12
(2)
1
$ —
$
$
6
9
(21)
9
(9)
1
(5)
192
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Year Ended December 31, 2019
(in millions)
Service cost
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service credit
Amortization of settlement charge
Net periodic pension costs(a)(b)
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$
$
158
317
(567 )
108
(32)
6
(10)
$
$
49
75
(147)
24
(8)
2
(5)
$
$
46
100
(178)
39
(3)
1
5
$
$
26
45
(88)
15
(2)
1
(3)
$
$
20
54
(89)
24
(1)
—
8
$
4
18
(28)
4
—
2
$ —
$
$
9
26
(43)
8
(2)
—
(2)
$
$
5
10
(22)
8
(9)
—
(8)
(a) Duke Energy amounts exclude $3 million, $4 million and $4 million for the years ended December 2021, 2020 and 2019, 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 2021, 2020 and 2019, 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
(in millions)
Regulatory assets, net decrease
Accumulated other comprehensive loss (income)
Deferred income tax expense
Amortization of prior year service credit
Amortization of prior year actuarial losses
Net amount recognized in accumulated other
comprehensive income
(in millions)
Regulatory assets, net (decrease) increase
Accumulated other comprehensive loss (income)
Deferred income tax expense
Amortization of prior year service credit
Amortization of prior year actuarial losses
Net amount recognized in accumulated other
comprehensive income
Year Ended December 31, 2021
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$(261)
$ (57)
$(128)
$ (31)
$ (97)
$ (17)
$ (19)
$ (5)
$
1
1
(8)
$ —
—
—
$ —
—
(1)
$ —
—
—
$
(6)
$ —
$
(1)
$ —
$ —
—
—
$ —
$ —
—
—
$ —
$ —
—
—
$ —
$ —
—
—
$ —
Year Ended December 31, 2020
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
$ (62)
$
(39)
$ (26)
$ (30)
$
2
1
(11)
$ —
—
—
$
1
—
(1)
$
(8)
$ —
$ —
$ —
—
—
$ —
$
$
4
1
—
(3)
$
(2)
$ (2)
$ —
—
—
$ —
$
5
$ —
—
—
$ —
Piedmont
$ (1)
$ —
—
—
$ —
193
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Reconciliation of Funded Status to Net Amount Recognized
(in millions)
Change in Projected Benefit Obligation
Obligation at prior measurement date
Service cost
Interest cost
Actuarial gain
Benefits paid
Transfers
Obligation at measurement date
Accumulated Benefit Obligation at measurement date
Change in Fair Value of Plan Assets
Plan assets at prior measurement date
Actual return on plan assets
Benefits paid
Transfers
Plan assets at measurement date
Funded status of plan
Year Ended December 31, 2021
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 1,988
54
51
(42)
(148)
—
$ 1,903
$ 1,904
$ 2,381
132
(148)
—
$ 2,365
462
$
$ 2,715
48
70
(108)
(161)
(4)
$ 2,560
$ 2,529
$ 3,049
169
(161)
(4)
$ 3,053
493
$
$ 1,193
28
30
(18)
(80)
—
$ 1,153
$ 1,154
$ 1,422
79
(80)
—
$ 1,421
268
$
$ 1,507
20
39
(89)
(81)
(4)
$ 1,392
$ 1,361
$ 1,605
90
(81)
(4)
$ 1,610
218
$
$ 502
5
13
(10)
(50)
(10)
$ 450
$ 439
$ 472
26
(50)
(10)
$ 438
$ (12)
$ 715
9
18
(10)
(52)
—
$ 680
$ 672
$ 684
37
(52)
—
$ 669
$ (11)
$ 293
6
7
(5)
(28)
—
$ 273
$ 274
$ 343
19
(28)
—
$ 334
61
$
Duke
Energy
$ 8,634
168
220
(200)
(615)
—
$ 8,207
$ 8,144
$ 9,337
513
(615)
—
$ 9,235
$ 1,028
(in millions)
Change in Projected Benefit Obligation
Obligation at prior measurement date
Service cost
Interest cost
Actuarial loss
Benefits paid
Benefits paid – settlements
Transfers
Obligation at measurement date
Accumulated Benefit Obligation at
measurement date
Change in Fair Value of Plan Assets
Plan assets at prior measurement date
Actual return on plan assets
Benefits paid
Benefits paid – settlements
Transfers
Plan assets at measurement date
Funded status of plan
Year Ended December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
8,321
157
269
433
(541)
(5)
—
8,634
$ 1,923
49
62
83
(137)
—
8
$ 1,988
Progress
Energy
$ 2,608
46
85
144
(160)
—
(8)
$ 2,715
Duke
Energy
Progress
$ 1,170
26
38
50
(83)
—
(8)
$ 1,193
Duke
Energy
Florida
$ 1,424
20
46
93
(76)
—
—
$ 1,507
8,577
$ 1,989
$ 2,684
$ 1,194
$ 1,476
8,910
973
(541)
(5)
—
9,337
703
$ 2,263
247
(137)
—
8
$ 2,381
$
393
$ 2,898
319
(160)
—
(8)
$ 3,049
$
334
$ 1,364
149
(83)
—
(8)
$ 1,422
$
229
$ 1,515
166
(76)
—
—
$ 1,605
$
98
$
$
$
$
$
$
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
$
$
$
$
$
481
4
15
21
(34)
—
15
502
493
443
48
(34)
—
15
472
(30)
$ 693
8
22
46
(49)
(5)
—
$ 715
$ 292
5
9
14
(27)
—
—
$ 293
$ 709
$ 294
$ 667
71
(49)
(5)
—
$ 684
$
(31)
$ 335
35
(27)
—
—
$ 343
$
50
194
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Amounts Recognized in the Consolidated Balance Sheets
(in millions)
Prefunded pension(a)
Noncurrent pension liability(b)
Net asset (liability) recognized
Regulatory assets
Accumulated other comprehensive (income) loss
Deferred income tax benefit
Prior service credit
Net actuarial loss
Net amounts recognized in accumulated other comprehensive loss
(in millions)
Prefunded pension(a)
Noncurrent pension liability(b)
Net asset (liability) recognized
Regulatory assets
Accumulated other comprehensive (income) loss
Deferred income tax benefit
Prior service credit
Net actuarial loss
Net amounts recognized in accumulated other comprehensive loss
Duke
Energy
Carolinas
Progress
Energy
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
$ 462
$ —
$ 462
$ 324
$ —
—
—
$ —
$ 494
1
$
$ 493
$ 563
$ —
—
1
1
$
$ 268
$ —
$ 268
$ 252
$ —
—
—
$ —
$ 219
1
$
$ 218
$ 311
$ —
—
—
$ —
Duke
Energy
Carolinas
Progress
Energy
December 31, 2020
Duke
Energy
Progress
Duke
Energy
Florida
$ 393
$ —
$ 393
$ 381
$ —
—
—
$ —
$ 379
$ 45
$ 334
$ 691
$ —
—
2
2
$
$ 229
$ —
$ 229
$ 283
$ —
—
—
$ —
$ 143
$ 45
$ 98
$ 408
$ —
—
—
$ —
Duke
Energy
$ 1,071
43
$
$ 1,028
$ 1,649
$
$
(20)
(1)
92
71
Duke
Energy
780
$
77
$
$
703
$ 1,910
$
$
(21 )
(2)
100
77
Duke
Energy
Ohio
$ 74
$ 86
$ (12)
$ 93
$ —
—
—
$ —
Duke
Energy
Ohio
$ 58
$ 88
$ (30)
$ 110
$ —
—
—
$ —
Duke
Energy
Indiana
$ 100
$ 111
$ (11)
$ 190
$ —
—
—
$ —
Duke
Energy
Indiana
$
79
$ 110
$ (31)
$ 209
$ —
—
—
$ —
Piedmont
$ 61
$ —
$ 61
$ 75
$ —
—
—
$ —
Piedmont
$ 50
$ —
$ 50
$ 80
$ —
—
—
$ —
(a)
(b)
Included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.
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
(in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
(in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
December 31, 2021
Duke
Energy
Ohio
$ 153
143
67
Duke
Energy
Indiana
$ 284
275
173
December 31, 2020
Duke
Energy
Progress
Energy
$ 4,914
4,856
4,837
$ 828
796
783
Duke
Energy
Florida
$ 828
796
783
Duke
Energy
Ohio
$ 184
176
96
Duke
Energy
Indiana
$ 293
285
183
195
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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 14 years for Duke Energy, Duke
Energy Progress and Duke Energy Ohio, 15 years for Progress Energy and Duke Energy Florida, 13 years for Duke Energy Carolinas and Duke Energy Indiana and nine
years for Piedmont.
The following tables present the assumptions or range of assumptions used for pension benefit accounting.
Benefit Obligations
Discount rate
Interest crediting rate
Salary increase
Net Periodic Benefit Cost
Discount rate
Interest crediting rate
Salary increase
Expected long-term rate of return on plan assets
Expected Benefit Payments
(in millions)
Years ending December 31,
2022
2023
2024
2025
2026
2027-2031
NON-QUALIFIED PENSION PLANS
2021
2.90%
4.00%
3.50% – 4.00%
2.60%
4.00%
3.50% – 4.00%
6.50%
December 31,
2020
2.60%
4.00%
3.50% – 4.00%
3.30%
4.00%
3.50% – 4.00%
6.85%
2019
3.30%
4.00%
3.50% – 4.00%
4.30%
4.00%
3.50% – 4.00%
6.85%
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 652
$ 174
$ 177
$
653
645
632
605
2,705
173
171
168
155
655
180
181
180
176
818
95
97
96
94
90
389
$ 81
$ 37
$ 48
$ 27
82
84
85
86
426
36
35
34
33
149
48
47
47
45
218
24
23
20
21
85
The accumulated benefit obligation, which equals the projected benefit obligation for non-qualified pension plans, was $300 million for Duke Energy, $12 million
for Duke Energy Carolinas, $104 million for Progress Energy, $31 million for Duke Energy Progress, $41 million for Duke Energy Florida, $3 million for Duke Energy
Ohio, $2 million for Duke Energy Indiana and $3 million for Piedmont as of December 31, 2021.
Employer contributions, which equal benefits paid for non-qualified pension plans, were $24 million for Duke Energy, $1 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, 2021. Employer contributions
were not material for Duke Energy Ohio, Duke Energy Indiana or Piedmont for the year ended December 31, 2021.
Net periodic pension costs for non-qualified pension plans were not material for the years ended December 31, 2021, 2020 or 2019.
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, vision 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, 2021, 2020 or 2019.
196
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Components of Net Periodic Other Post-Retirement Benefit Costs
(in millions)
Service cost
Interest cost on accumulated post-retirement benefit
obligation
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service credit
Net periodic post-retirement benefit costs (a)(b)
(in millions)
Service cost
Interest cost on accumulated post-retirement benefit
obligation
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service credit
Net periodic post-retirement benefit costs(a)(b)
(in millions)
Service cost
Interest cost on accumulated post-retirement benefit
obligation
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service credit
Net periodic post-retirement benefit costs(a)(b)
Year Ended December 31, 2021
Duke
Energy
Carolinas
Progress
Energy
$
1
$
1
Duke
Energy
Progress
$ —
4
(7)
—
(4)
(6)
$
7
—
1
(2)
7
$
4
—
—
(1)
3
$
Duke
Energy
Florida
$ —
3
—
1
(1)
3
$
Year Ended December 31, 2020
Duke
Energy
Carolinas
Progress
Energy
$
1
$
1
Duke
Energy
Progress
$ —
5
(8)
—
(4)
(6)
$
10
—
1
(3)
9
$
5
—
—
(1)
4
$
Duke
Energy
Florida
$ —
4
—
1
(2)
3
$
Year Ended December 31, 2019
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
1
$
1
$ —
7
(7)
2
(5)
(2)
$
12
—
1
(8)
6
$
7
—
—
(1)
6
$
Duke
Energy
Florida
$
1
5
—
1
(7)
$ —
Duke
Energy
$
4
18
(11)
2
(13)
$ —
Duke
Energy
$
4
23
(13)
2
(14)
2
$
Duke
Energy
$
4
30
(12)
4
(19)
7
$
Duke
Energy
Ohio
$ —
1
—
—
(1)
$ —
Duke
Energy
Ohio
$ —
1
—
—
(1)
$ —
Duke
Energy
Ohio
$ —
1
—
—
(1)
$ —
Duke
Energy
Indiana
$
1
1
—
4
(1)
5
$
Duke
Energy
Indiana
$
1
2
—
4
(1)
6
$
Duke
Energy
Indiana
$
1
3
—
4
(1)
7
$
Piedmont
$ —
1
(2)
—
(2)
$ (3)
Piedmont
$ —
1
(2)
—
(2)
$ (3)
Piedmont
$ —
1
(1)
—
(2)
$ (2)
(a) Duke Energy amounts exclude $5 million, $6 million and $6 million for the years ended December 2021, 2020 and 2019, 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, $1 million and $2 million for the years ended December 2021, 2020 and 2019, respectively, of regulatory asset amortization resulting from purchase accounting adjustments
associated with Duke Energy’s merger with Cinergy in April 2006.
197
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets and Liabilities
(in millions)
Regulatory assets, net (decrease) increase
Regulatory liabilities, net increase
Accumulated other comprehensive (income) loss
Amortization of prior year actuarial gain
Net amount recognized in accumulated other
comprehensive income
(in millions)
Regulatory assets, net increase (decrease)
Regulatory liabilities, net decrease
Accumulated other comprehensive (income) loss
Amortization of prior year service credit
Net amount recognized in accumulated other
comprehensive income
Duke
Energy
Carolinas
$ —
$ 12
$ —
Year Ended December 31, 2021
Duke
Energy
Progress
$
(9)
$ —
Duke
Energy
Florida
$ (9)
$ —
Progress
Energy
$ (18)
$ —
Duke
Energy
Ohio
$
$
4
4
Duke
Energy
Indiana
$
$
(4)
1
Piedmont
$ —
2
$
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Duke
Energy
Carolinas
$ —
$ (7)
Year Ended December 31, 2020
Duke
Energy
Progress
$
6
$ —
Duke
Energy
Florida
$
3
$ —
Progress
Energy
$
9
$ —
Duke
Energy
Ohio
$ —
$ —
Duke
Energy
Indiana
$
$
(4)
(1)
$ —
$ —
$ —
$ —
$ —
$ —
Piedmont
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Duke
Energy
$ (15)
23
$
$
$
(1)
(1)
Duke
Energy
$
$
$
$
9
(10)
1
1
198
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Reconciliation of Funded Status to Accrued Other Post-Retirement Benefit Costs
(in millions)
Change in Projected Benefit Obligation
Accumulated post-retirement benefit obligation
at prior measurement date
Service cost
Interest cost
Plan participants’ contributions
Actuarial gains
Benefits paid
Accumulated post-retirement benefit
obligation at measurement date
Change in Fair Value of Plan Assets
Plan assets at prior measurement date
Actual return on plan assets
Benefits paid
Employer contributions
Plan participants’ contributions
Plan assets at measurement date
Funded status of plan
(in millions)
Change in Projected Benefit Obligation
Accumulated post-retirement benefit obligation at
prior measurement date
Service cost
Interest cost
Plan participants' contributions
Actuarial losses
Benefits paid
Accumulated post-retirement benefit
obligation at measurement date
Change in Fair Value of Plan Assets
Plan assets at prior measurement date
Actual return on plan assets
Benefits paid
Employer contributions
Plan participants’ contributions
Plan assets at measurement date
Funded status of plan
Year Ended December 31, 2021
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 709
4
18
14
(47)
(73)
$ 174
1
4
3
(14)
(19)
$ 299
1
7
5
(20)
(29)
$ 166
—
4
3
(10)
(16)
$
130
—
3
2
(10)
(13)
$ 27
—
1
1
(1)
(3)
$
61
1
1
2
(2)
(9)
$ 30
—
1
—
(2)
(2)
$ 625
$ 149
$ 263
$ 147
$
112
$ 25
$
54
$ 27
$ 237
15
(73)
18
14
$ 211
$ (414)
$ 139
9
(19)
3
3
$ 135
$ (14)
$
(1)
—
(29)
24
5
(1)
$
$ (264)
$
(2)
—
(16)
13
3
(2)
$
$ (149)
$
(1)
—
(13)
10
2
(2)
$
$ (114)
$
9
1
(3)
1
1
9
$
$ (16)
$
7
—
(9)
6
2
6
$
$ (48)
$ 37
3
(2)
1
—
$ 39
$ 12
Year Ended December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
$
$
723
4
23
15
19
(75)
709
220
24
(75)
53
15
$
237
$ (472)
$
$
$
$
$
175
1
5
3
8
(18)
174
130
14
(18)
10
3
139
(35)
$
$
$
$
$
303
1
10
5
8
(28)
299
(1)
—
(28)
23
5
(1)
(300)
$
$
$
$
$
168
—
5
3
5
(15)
166
(1)
—
(15)
11
3
(2)
(168)
$
$
$
$
$
$
135
—
4
2
2
(13)
130
$
— $
—
(13)
10
2
(1)
(131)
$
$
29
—
1
1
—
(4)
27
9
—
(4)
3
1
9
(18)
$
$
$
$
$
64
1
2
2
1
(9)
61
5
1
(9)
8
2
7
(54)
$
$
$
$
$
30
—
1
—
1
(2)
30
34
4
(2)
1
—
37
7
199
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Amounts Recognized in the Consolidated Balance Sheets
(in millions)
Prefunded post-retirement benefit
Current post-retirement liability(a)
Noncurrent post-retirement liability(b)
Net liability (asset) recognized
Regulatory assets
Regulatory liabilities
Accumulated other comprehensive (income) loss
Deferred income tax expense
Prior service credit
Net actuarial gain
Net amounts recognized in accumulated
other comprehensive income
(in millions)
Prefunded post-retirement benefit
Current post-retirement liability(a)
Noncurrent post-retirement liability(b)
Net liability (asset) recognized
Regulatory assets
Regulatory liabilities
Accumulated other comprehensive (income) loss
Deferred income tax expense
Prior service credit
Net actuarial gain
Net amounts recognized in accumulated
other comprehensive income
December 31, 2021
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
$
$
$
$
12
9
417
414
129
162
3
(1)
(14)
$ —
—
14
$
14
$ —
44
$
$ —
—
—
$ —
5
259
$ 264
$ 126
$ —
$ —
—
—
$ —
3
146
149
$
$
79
$ —
$ —
—
—
Duke
Energy
Florida
$ —
2
112
$ 114
$
47
$ —
$ —
—
—
Duke
Energy
Ohio
$
$
$
$
1
1
16
16
4
21
$ —
—
—
Duke
Energy
Indiana
$ —
—
48
48
28
63
$
$
$
$ —
—
—
Piedmont
$
12
—
—
$
(12)
$ —
5
$
$ —
—
—
$
(12)
$ —
$ —
$ —
$ —
$ —
$ —
$ —
December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
$
$
$
$
8
9
471
472
144
139
3
(1)
(13)
$ —
—
35
$
35
$ —
32
$
$ —
—
—
$ —
6
294
$ 300
$ 144
$ —
$ —
—
—
$ —
4
164
$
168
88
$
$ —
$ —
—
—
Duke
Energy
Florida
$ —
2
129
$ 131
56
$
$ —
$ —
—
—
Duke
Energy
Ohio
$
1
2
17
$
18
$ —
17
$
$ —
—
—
Duke
Energy
Indiana
$ —
—
54
54
32
62
$
$
$
$ —
—
—
Piedmont
$
7
—
—
$
(7)
$ —
3
$
$ —
—
—
$
(11)
$ —
$ —
$ —
$ —
$ —
$ —
$ —
(a)
(b)
Included in Other within Current Liabilities on the Consolidated Balance Sheets.
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 four years for Duke Energy, seven years for Duke Energy Florida, six years for Duke Energy
Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Indiana and Piedmont and five years for Duke Energy Ohio.
The following tables present the assumptions used for other post-retirement benefits accounting.
Benefit Obligations
Discount rate
Net Periodic Benefit Cost
Discount rate
Expected long-term rate of return on plan assets
200
December 31,
2021
2020
2019
2.90 %
2.60%
3.30%
2.60 %
6.50 %
3.30%
6.85%
4.30%
6.85%
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Assumed Health Care Cost Trend Rate
Health care cost trend rate assumed for next year
Rate to which the cost trend is assumed to decline (the ultimate trend rate)
Year that rate reaches ultimate trend
Expected Benefit Payments
December 31,
2021
6.25%
4.75%
2028
2020
6.25%
4.75%
2028
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 70
$ 17
$ 26
$ 15
$ 12
$ 3
$ 7
$ 2
62
58
54
50
207
15
14
13
12
50
25
23
22
21
87
14
13
12
12
49
11
11
10
9
38
3
3
2
2
8
6
6
5
5
19
2
2
2
2
10
(in millions)
Years ending December 31,
2022
2023
2024
2025
2026
2027-2031
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, 2021, and 2020. 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, 2021, 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, 2022, the target asset allocation for the Duke Energy
Retirement Master Trust is 60% liability hedging assets and 40% 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.
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 $542
million and $482 million at December 31, 2021, and 2020, respectively. Cash
and securities obtained as collateral exceeded the fair value of the securities
loaned at December 31, 2021, and 2020, respectively. Securities lending income
earned by the Duke Energy Master Retirement Trust was immaterial for the years
ended December 31, 2021, 2020 and 2019, 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.
201
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) The following table includes the target asset allocations by asset class at December 31, 2021, and the actual asset allocations for the Duke Energy Master
Retirement Trust.
Global equity securities
Global private equity securities
Debt securities
Return seeking debt securities
Hedge funds
Real estate and cash
Total
Other post-retirement assets
Target
Allocation
27%
1%
62%
4%
2%
4%
100%
Actual Allocation at December 31,
2021
24%
1%
62%
4%
3%
6%
100%
2020
30%
1%
55%
5%
3%
6%
100%
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, 2021.
U.S. equity securities
Non-U.S. equity securities
Real estate
Debt securities
Cash
Total
Target
Allocation
30%
5%
2%
45%
18%
100%
Actual Allocation at December 31,
2021
19%
5%
3%
18%
55%
100%
2020
36%
6%
2%
42%
14%
100%
Fair Value Measurements
Investments in corporate debt securities and U.S. government securities
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.
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.
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.
202
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 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, 2021
(in millions)
Equity securities
Corporate debt securities
Short-term investment funds
Partnership interests
Hedge funds
U.S. government securities
Governments bonds – foreign
Cash
Government and commercial mortgage backed securities
Net pending transactions and other investments
Total assets(a)
Level 2
Level 3
Not
Categorized(b)
Total Fair Value
$ 2,575
4,189
382
95
216
1,618
78
144
2
53
Level 1
$ 2,547
—
272
—
—
—
—
144
—
12
$ —
4,189
110
—
—
1,618
78
—
2
41
$ 9,352
$ 2,975
$6,038
$ —
—
—
95
—
—
—
—
—
—
$ 95
$ 28
—
—
—
216
—
—
—
—
—
$ 244
(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, 2021. 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.
(in millions)
Equity securities
Corporate debt securities
Short-term investment funds
Partnership interests
Hedge funds
U.S. government securities
Governments bonds – foreign
Cash
Net pending transactions and other investments
Total assets(a)
December 31, 2020
Total Fair Value
Level 1
$3,202
4,162
397
97
198
1,164
73
98
88
$ 3,162
—
247
—
—
—
—
98
34
Level 2
$ —
4,162
150
—
—
1,164
73
—
54
$9,479
$ 3,541
$ 5,603
Not
Categorized(b)
Level 3
$ —
—
—
—
—
—
—
—
—
$ —
$ 40
—
—
97
198
—
—
—
—
$ 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.
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)
Balance at January 1
Sales
Total gains and other, net
Transfer of Level 3 assets from other classifications
Balance at December 31
2021
$ —
—
—
95
$ 95
2020
$ 11
(12)
1
—
$ —
203
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) Other post-retirement assets
The following tables provide the fair value measurement amounts for VEBA trust assets.
(in millions)
Cash and cash equivalents
Real estate
Equity securities
Debt securities
Total assets
(in millions)
Cash and cash equivalents
Real estate
Equity securities
Debt securities
Total assets
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
December 31, 2021
Total Fair Value
$14
2
18
11
Level 2
$ 14
2
18
11
$45
$ 45
December 31, 2020
Total Fair Value
$ 5
1
23
19
Level 2
$ 5
1
23
19
$48
$48
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.
(in millions)
Years ended December 31,
2021
2020
2019
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
$229
213
214
$70
67
66
$60
57
58
$39
38
38
$21
19
20
$5
5
5
$12
11
11
Piedmont
$11
13
13
204
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) 23. INCOME TAXES
North Carolina’s 2021 Appropriations Act
On November 18, 2021, North Carolina Senate Bill 105 (SB 105) was signed
into law by Governor Roy Cooper. Starting with tax year 2025, SB 105 begins phasing
out the North Carolina corporate income tax rate over five years, from a statutory rate
of 2.5% to zero. Duke Energy recorded a net reduction of approximately $490 million
to its North Carolina deferred tax liability in the fourth quarter of 2021. The majority
of this deferred tax liability reduction was offset by recording a regulatory liability
pending NCUC determination of the disposition of the amounts related to Duke Energy
Carolinas, Duke Energy Progress and Piedmont. In addition, Duke Energy recorded
a net reduction of North Carolina consolidating deferred tax assets of approximately
$25 million to deferred state income tax expense in the fourth quarter of 2021. North
Carolina SB 105 did not have a significant impact on the financial position, results
of operation, or cash flows of Duke Energy, Duke Energy Carolinas, Progress Energy,
Duke Energy Progress or Piedmont.
Consolidated Appropriations Act
On December 27, 2020, the Consolidated Appropriations Act (CAA)
was signed into law. In addition to the CAA providing funding for government
Income Tax Expense
Components of Income Tax Expense
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 are no material impacts on the 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 deferred approximately $117 million of payroll taxes, of
which, 50% were paid by December 31, 2021, with 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.
(in millions)
Current income taxes
Federal
State
Foreign
Total current income taxes
Deferred income taxes
Federal
State
Total deferred income taxes(a)
ITC amortization
Total income tax expense included in Consolidated Statements
of Operations
Year Ended December 31, 2021
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
(2)
2
2
2
199
(1)
198
(8)
$
$
241
23
—
264
(130)
(79)
(209)
(4)
(15)
(4)
—
(19)
203
47
250
(4)
$
113
8
—
121
(16)
(26)
(42)
(4)
$
(75)
(17)
—
(92)
202
77
279
—
$
(8)
(2)
—
(10)
35
5
40
—
$
65
7
—
72
19
16
35
—
$
23
3
—
26
17
(13)
4
—
$
192
$
51
$
227
$
75
$
187
$
30
$
107
$
30
(a) Total deferred income taxes includes the generation of NOL carryforwards and tax credit carryforwards of $32 million at Duke Energy Carolinas, $8 million at Duke Energy Indiana, and $3 million at Piedmont. In addition, total deferred
income taxes includes utilization of NOL carryforwards and tax credit carryforwards of $150 million at Duke Energy, $95 million at Progress Energy, $14 million at Duke Energy Progress, $64 million at Duke Energy Florida, and
$2 million at Duke Energy Ohio.
205
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
(in millions)
Current income taxes
Federal
State
Foreign
Total current income taxes
Deferred income taxes
Federal
State
Total deferred income taxes(a)
ITC amortization
Income tax (benefit) expense from continuing operations
Tax expense from discontinued operations
Total income tax (benefit) expense included in Consolidated
Statements of Operations
Year Ended December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
(281)
(9)
1
(289)
155
(92)
63
(10)
(236)
2
$
$
314
35
—
349
(171)
(86)
(257)
(4)
88
—
280
29
—
309
(167)
(24)
(191)
(5)
113
—
$
181
17
—
198
(180)
(49)
(229)
(5)
(36)
—
$
148
24
—
172
1
25
26
—
198
—
$
10
1
—
11
30
2
32
—
43
—
$
48
7
—
55
12
17
29
—
84
—
$
(27)
(8)
—
(35)
60
(7)
53
—
18
—
$
(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.
(in millions)
Current income taxes
Federal
State
Foreign
Total current income taxes
Deferred income taxes
Federal
State
Total deferred income taxes(a)
ITC amortization
Income tax expense from continuing operations
Tax benefit from discontinued operations
Total income tax expense included in Consolidated
Statements of Operations
Year Ended December 31, 2019
Duke
Energy
Duke
Energy
Carolinas
$
(299)
10
2
(287)
855
(38)
817
(11)
519
(2)
$ 164
13
—
177
175
(37)
138
(4)
311
—
Progress
Energy
$ (173)
(7)
—
(180)
422
17
439
(6)
253
—
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
(36)
(3)
—
(39)
220
(18)
202
(6)
157
—
$
(43)
18
—
(25)
153
27
180
—
155
—
$
$ (41)
(1)
—
(42)
77
5
82
—
40
—
(23)
1
—
(22)
128
28
156
—
134
—
$
(92)
(1)
—
(93)
133
3
136
—
43
—
$
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.
Duke Energy Income from Continuing Operations before Income Taxes
(in millions)
Domestic
Foreign
Income from continuing operations before income taxes
Years Ended December 31,
2021
$ 3,720
44
$ 3,764
2020
$ 826
13
$ 839
2019
$4,053
44
$4,097
206
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
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.
(in millions)
Income tax expense, computed at the statutory rate of 21%
State income tax, net of federal income tax effect
Amortization of excess deferred income tax
AFUDC equity income
AFUDC equity depreciation
Noncontrolling Interests
Renewable energy PTCs
Other tax credits
Valuation Allowance(a)
Other items, net
Income tax expense from continuing operations
Year Ended December 31, 2021
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
$
790
1
(438)
(34)
35
72
(100)
(30)
(85)
(19)
192
$
$
291
(44)
(184)
(14)
18
—
—
(12)
—
(4)
51
$ 384
34
(174)
(11)
10
—
—
(11)
—
(5)
$ 227
$ 224
(14)
(120)
(7)
5
—
—
(8)
—
(5)
75
$
$ 194
47
(54)
(3)
5
—
—
(3)
—
1
$ 187
$
$
49
2
(22)
(2)
2
—
—
(1)
—
2
30
$ 123
18
(34)
(4)
5
—
—
(2)
—
1
$ 107
$
$
71
(8)
(25)
(4)
—
—
—
(4)
—
—
30
Effective tax rate
5.1%
3.7%
12.4%
7.0%
20.2%
12.8%
18.2%
8.8%
(a)
In the fourth quarter of 2021, the company recognized a federal capital gain in the amount of $426 million. As a result, a valuation allowance of $85 million related to a federal capital loss carryforward was released. This
valuation allowance was originally recorded as a result of the 2019 sale of minority interest of certain renewable assets within the Commercial Renewables segment.
(in millions)
Income tax expense, computed at the statutory rate of 21%
State income tax, net of federal income tax effect
Amortization of excess deferred income tax
AFUDC equity income
AFUDC equity depreciation
Noncontrolling Interests
Renewable energy PTCs
Other tax credits
Tax true up
Other items, net
Income tax (benefit) expense from continuing operations
Year Ended December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
176
(80)
(276)
(48)
103
62
(110)
(37)
(12)
(14)
$ (236)
$
$
219
(40)
(82)
(13)
19
—
—
(13)
(3)
1
88
$ 243
4
(118)
(9)
10
—
—
(16)
1
(2)
$ 113
$
80
(25)
(68)
(6)
5
—
—
(14)
(5)
(3)
$ (36)
$ 204
39
(49)
(3)
5
—
—
(2)
5
(1)
$ 198
$
$
62
2
(20)
(2)
1
—
—
(1)
—
1
43
$ 103
19
(36)
(4)
4
—
—
(3)
(1)
2
84
$
$
$
61
(12)
(21)
(10)
—
—
—
(2)
1
1
18
Effective tax rate
(28.1)%
8.4%
9.7%
(9.5)%
20.4%
14.6%
17.1%
6.2%
207
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) (in millions)
Income tax expense, computed at the statutory rate of 21%
State income tax, net of federal income tax effect
Amortization of excess deferred income tax
AFUDC equity income
AFUDC equity depreciation
Renewable energy PTCs
Other tax credits
Tax true up
Other items, net
Income tax expense from continuing operations
Year Ended December 31, 2019
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 860
(22)
(121)
(52)
34
(120)
(23)
(64)
27
$ 519
$ 360
(19)
(29)
(9)
19
—
(11)
(9)
9
$ 311
$ 332
8
(64)
(14)
10
—
(9)
(8)
(2)
$ 253
$ 202
(17)
(10)
(13)
5
—
(7)
(3)
—
$ 157
$ 178
35
(54)
(1)
5
—
(2)
(5)
(1)
$ 155
$ 59
3
(12)
(3)
1
—
(1)
(7)
—
$ 40
$ 120
22
(6)
(3)
4
—
(1)
(1)
(1)
$ 134
$ 51
2
(10)
—
—
—
(1)
—
1
$ 43
Effective tax rate
12.7%
18.1%
16.0%
16.3%
18.3%
14.3%
23.5%
17.6%
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.
DEFERRED TAXES
Net Deferred Income Tax Liability Components
(in millions)
Deferred credits and other liabilities
Lease obligations
Pension, post-retirement and other employee benefits
Progress Energy merger purchase accounting adjustments(a)
Tax credits and NOL carryforwards
Regulatory liabilities and deferred credits
Investments and other assets
Other
Valuation allowance
Total deferred income tax assets
Investments and other assets
Accelerated depreciation rates
Regulatory assets and deferred debits, net
Total deferred income tax liabilities
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
347
346
207
340
3,784
—
—
85
(518)
4,591
(2,428)
(10,391)
(1,151)
(13,970)
$
121
91
(36)
—
349
11
—
12
—
548
$
101
197
30
—
497
—
—
12
—
837
$
60
121
17
—
160
—
—
7
—
365
$
40
76
7
—
306
—
—
4
—
433
$
19
4
11
—
13
16
5
7
—
75
$
7
16
20
—
195
—
6
2
—
246
(1,205)
(2,977)
—
(4,182)
(742)
(3,891)
(768)
(5,401)
(610)
(1,546)
(417)
(2,573)
(135)
(2,382)
(350)
(2,867)
—
(1,125)
—
(1,125)
—
(1,496)
(53)
(1,549)
$
18
4
(8)
—
29
6
—
8
—
57
(39)
(833)
—
(872)
Net deferred income tax liabilities
$
(9,379)
$(3,634)
$(4,564)
$(2,208)
$(2,434)
$ (1,050)
$(1,303)
$ (815)
(a) Primarily related to lease obligations and debt fair value adjustments.
208
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued) The following table presents the expiration of tax credits and NOL carryforwards.
(in millions)
General Business Credits
Federal NOL carryforwards(a)
State carryforwards and credits(b)(e)
Foreign NOL carryforwards(c)
Foreign Tax Credits(d)
Total tax credits and NOL carryforwards
December 31, 2021
Amount
$ 2,312
4
328
12
1,128
$ 3,784
Expiration Year
2024 — 2041
2024 — 2026
2022 — Indefinite
2027 — 2037
2024 — 2027
(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 $112 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 $390 million has been recorded on the foreign tax credits, as presented in the Net Deferred Income Tax Liability Components table.
(e)
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.
(in millions)
Deferred credits and other liabilities
Lease obligations
Pension, post-retirement and other employee benefits
Progress Energy merger purchase accounting adjustments(a)
Tax credits and NOL carryforwards
Regulatory liabilities and deferred credits
Investments and other assets
Other
Valuation allowance
Total deferred income tax assets
Investments and other assets
Accelerated depreciation rates
Regulatory assets and deferred debits, net
Total deferred income tax liabilities
Net deferred income tax liabilities
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
December 31, 2020
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
286
515
236
441
3,909
—
—
93
(586)
4,894
(2,267)
(10,729)
(1,142)
(14,138)
$
85
96
(30)
—
285
11
—
8
—
455
$
87
208
68
—
508
—
—
14
—
885
$
67
120
24
—
179
—
—
9
—
399
$
18
87
38
—
282
—
—
4
—
429
$
21
5
16
—
16
18
7
7
—
90
$
7
16
26
—
183
—
1
—
233
(1,127)
(3,170)
—
(4,297)
(669)
(3,868)
(744)
(5,281)
(507)
(1,778)
(412)
(2,697)
(164)
(2,124)
(332)
(2,620)
—
(1,071)
—
(1,071)
(14)
(1,433)
(14)
(1,461)
$
38
5
(5)
—
29
—
—
8
—
75
(48)
(844)
(4)
(896)
$
(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.
UNRECOGNIZED TAX BENEFITS
The following tables present changes to unrecognized tax benefits.
(in millions)
Unrecognized tax benefits – January 1
Gross decreases – tax positions in prior periods(a)
Gross increases – current period tax positions
Total changes
Unrecognized tax benefits – December 31
Year Ended December 31, 2021
Duke
Energy
125
$
(86)
12
(74)
$
51
Duke
Energy
Carolinas
10
$
—
3
3
Progress
Energy
10
$
—
5
5
Duke
Energy
Progress
6
$
—
4
4
$
13
$
15
$
10
Duke
Energy
Florida
3
$
—
1
1
$
4
$
Duke
Energy
Ohio
1
—
—
—
$
1
Duke
Energy
Indiana
1
$
—
1
1
$
2
Piedmont
1
$
—
3
3
$
4
(a)
In the fourth quarter of 2021, the company recognized a federal capital gain in the amount of $426 million. As a result of the capital gain, a previously recorded unrecognized tax benefit related to the character of a taxable
loss has been reversed. See note (a) under the Statutory Rate Reconciliation table for more details.
209
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
(in millions)
Unrecognized tax benefits – January 1
Gross decreases – tax positions in prior periods
Gross increases – current period tax positions
Reduction due to lapse of statute of limitations
Total changes
Unrecognized tax benefits – December 31
(in millions)
Unrecognized tax benefits – January 1
Unrecognized tax benefits increases
Gross decreases – tax positions in prior periods
Total changes
Unrecognized tax benefits – December 31
Year Ended December 31, 2020
Duke
Energy
126
$
(2)
4
(3)
(1)
$
125
Duke
Energy
Carolinas
8
$
—
2
—
2
Progress
Energy
9
$
—
1
—
1
Duke
Energy
Progress
6
$
—
—
—
—
$
10
$
10
$
6
Duke
Energy
Florida
3
$
—
—
—
—
$
3
Year Ended December 31, 2019
Duke
Energy
24
$
105
(3)
102
$ 126
Duke
Energy
Carolinas
6
$
2
—
2
Progress
Energy
9
$
1
(1)
—
Duke
Energy
Progress
6
$
1
(1)
—
$
8
$
9
$
6
Duke
Energy
Florida
3
$
—
—
—
$
3
$
Duke
Energy
Ohio
1
—
—
—
—
$
1
$
Duke
Energy
Ohio
1
—
—
—
$
1
Duke
Energy
Indiana
1
$
—
—
—
—
$
1
Duke
Energy
Indiana
1
$
—
—
—
$
1
Piedmont
4
$
—
—
(3)
(3)
$
1
Piedmont
4
$
—
—
—
$
4
The following table includes additional information regarding the Duke Energy Registrants’ unrecognized tax benefits at December 31, 2021. Duke Energy
Registrants do not anticipate a material increase or decrease in unrecognized tax benefits within the next 12 months.
(in millions)
Amount that if recognized, would affect the
effective tax rate or regulatory liability(a)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
47
$ 13
$ 14
$ 10
$
4
$
1
$
2
$
4
(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 federal, state, local or non-U.S. income tax examinations by tax authorities for years before 2016,
aside from certain state tax attributes carried forward for utilization in future years.
24. OTHER INCOME AND EXPENSES, NET
The components of Other income and expenses, net on the Consolidated Statements of Operations are as follows.
(in millions)
Interest income
AFUDC equity
Post in-service equity returns
Nonoperating income, other
Other income and expense, net
Year Ended December 31, 2021
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy Ohio
Duke
Energy
Indiana
$ 16
171
39
417
$643
$
4
65
21
180
$270
$
8
51
16
140
$ 215
$
6
34
16
87
$
2
16
—
53
$
4
7
1
6
$
6
27
1
8
$ 143
$ 71
$ 18
$ 42
Piedmont
$ 19
20
—
16
$ 55
210
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
Year Ended December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy Ohio
Duke
Energy
Indiana
Piedmont
$ 32
154
27
240
$453
$
4
62
17
94
$
8
42
8
71
$
2
29
8
36
$
6
12
—
35
$
4
7
1
4
$
6
23
1
7
$177
$ 129
$ 75
$ 53
$ 16
$ 37
$ 17
19
—
15
$ 51
Year Ended December 31, 2019
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy Ohio
Duke
Energy
Indiana
$ 31
139
29
231
$430
$
1
42
20
88
$ 151
$ 11
66
7
57
$ 141
$ —
60
7
33
$ 100
$ 11
6
—
31
$ 48
$ 10
13
1
—
$ 24
$ 10
18
—
13
$ 41
Piedmont
$
1
—
—
19
$ 20
(in millions)
Interest income
AFUDC equity
Post in-service equity returns
Nonoperating income, other
Other income and expense, net
(in millions)
Interest income
AFUDC equity
Post in-service equity returns
Nonoperating income, other
Other income and expense, net
25. SUBSEQUENT EVENTS
For information on subsequent events related to regulatory matters and commitments and contingencies, see Notes 3 and 4, respectively.
211
PART IIDUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, LLC • PIEDMONT NATURAL GAS COMPANY, INC.Combined Notes to Consolidated Financial Statements – (Continued)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
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,
2021, 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, 2021.
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.
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, 2021, 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
During the fourth quarter of 2021, Duke Energy Progress and Duke Energy
Florida implemented Customer Connect, an SAP based customer engagement
and billing solution. Customer Connect was previously implemented at Duke
Energy Carolinas during the second quarter of 2021. As a result of this
implementation, we modified certain existing internal controls and implemented
new controls and procedures related to Customer Connect. We evaluated the
design and operating effectiveness of these internal controls and do not believe
this implementation had an adverse effect on our 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 year ended December 31, 2021, and other than
with respect to the Customer Connect SAP implementation, there were no other
changes in our internal control over financial reporting during the year ended
December 31, 2021, that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.
212
PART II 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, 2021, 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, 2021, 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, 2021, of the Company and our report dated February 24, 2022, 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 24, 2022
213
PART IIPART III 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, 2021, 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
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
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)
3,277,358(2)
113,176(4)
3,390,534
n/a
n/a
n/a
3,470,774(3)
n/a(5)
3,470,774
(1) As of December 31, 2021, 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.
Includes shares remaining available for issuance pursuant to stock awards under the Duke Energy Corporation 2015 Long-Term Incentive Plan.
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.
(3)
(4)
(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.
214
PART IIPART III 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 2021 and 2020.
(in millions)
Types of Fees
Audit Fees(a)
Audit-Related Fees(b)
Total Fees
(in millions)
Types of Fees
Audit Fees(a)
Audit-Related Fees(b)
Tax Fees(c)
Total Fees
Year Ended December 31, 2021
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$13.2
1.5
$14.7
$3.1
0.1
$3.2
$ 4.7
0.2
$ 4.9
$ 2.4
0.1
$ 2.5
$ 2.3
0.1
$ 2.4
$ 1.9
0.2
$ 2.1
$
$
1.7
—
1.7
$
$
1.3
—
1.3
Year Ended December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$ 12.9
1.7
0.1
$ 14.7
$3.0
0.2
—
$3.2
$ 4.5
0.3
—
$ 4.8
$ 2.3
0.1
—
$ 2.4
$ 2.2
0.2
—
$ 2.4
$ 1.9
0.3
—
$ 2.2
$
$
1.7
0.1
—
1.8
$
$
1.3
—
—
1.3
(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 2021 and 2020 by the independent accountant were approved by the Audit Committee pursuant to the
preapproval policy.
215
PART IIPART III
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, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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.
216
PART IV Duke Energy Indiana, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019
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.
217
PART IV 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 (***).
Duke
Energy
Carolinas
Duke
Energy
X
X
X
X
X
X
Exhibit
Number
2.1
2.2
3.1
3.2
3.3
3.3.1
3.4
3.4.1
3.5
3.5.1
3.5.2
3.5.3
3.5.4
Agreement and Plan of Merger between Duke Energy Corporation, Diamond
Acquisition Corporation and Progress Energy, Inc., dated as of January 8, 2011
(incorporated by reference to Exhibit 2.1 to Duke Energy Corporation’s Current
Report on Form 8-K filed on January 11, 2011, File No. 1-32853).
Agreement and Plan of Merger between Piedmont Natural Gas Company, Duke
Energy Corporation and Forest Subsidiary, Inc. (incorporated by reference to
Exhibit 2.1 to Duke Energy Corporation’s Current Report on Form 8-K filed on
October 26, 2015, File No. 1-32853).
Amended and Restated Certificate of Incorporation (incorporated by reference
to Exhibit 3.1 to Duke Energy Corporation’s Current Report on Form 8-K filed
on May 20, 2014, File No. 1-32853).
Amended and Restated By-Laws of Duke Energy Corporation (incorporated
by reference to Exhibit 3.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on January 4, 2016, File No. 1-32853).
Articles of Organization including Articles of Conversion (incorporated by
reference to Exhibit 3.1 to Duke Energy Carolinas, LLC’s Current Report on
Form 8-K filed on April 7, 2006, File No. 1-4928).
Amended Articles of Organization, effective October 1, 2006 (incorporated by
reference to Exhibit 3.1 to Duke Energy Carolinas, LLC’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2006, filed on November 13,
2006, File No. 1-4928).
Amended Articles of Incorporation of Duke Energy Ohio, Inc. (formerly The
Cincinnati Gas & Electric Company), effective October 23, 1996, (incorporated
by reference to Exhibit 3(a) to registrant’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, filed on November 13, 1996,
File No. 1-1232).
Amended Articles of Incorporation, effective September 19, 2006
(incorporated by reference to Exhibit 3.1 to Duke Energy Ohio, Inc.’s (formerly
The Cincinnati Gas & Electric Company) Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006, filed on November 17, 2006,
File No. 1-1232).
Certificate of Conversion of Duke Energy Indiana, LLC (incorporated by
reference to Exhibit 3.1 to registrant’s Current Report on Form 8-K filed on
January 4, 2016, File No. 1-3543).
Articles of Entity Conversion of Duke Energy Indiana, LLC (incorporated by
reference to Exhibit 3.2 to registrant’s Current Report on Form 8-K filed on
January 4, 2016, File No. 1-3543).
Plan of Entity Conversion of Duke Energy Indiana, LLC (incorporated by
reference to Exhibit 3.3 to registrant’s Current Report on Form 8-K filed on
January 4, 2016, File No. 1-3543).
Articles of Organization of Duke Energy Indiana, LLC (incorporated by
reference to Exhibit 3.4 to registrant’s Current Report on Form 8-K filed on
January 4, 2016, File No. 1-3543).
Amended and Restated Limited Liability Company Operating Agreement of
Duke Energy Indiana, LLC, dated August 25, 2021 (incorporated by reference
to Exhibit 3.1 to registrant’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2021, filed on November 4, 2021, File No. 1-3543).
E-1
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Progress
Energy
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
3.6
3.7
3.8
3.8.1
3.8.2
3.9
3.9.1
3.9.2
3.9.3
3.10
3.10.1
3.10.2
3.10.3
3.11
3.11.1
Limited Liability Company Operating Agreement of Duke Energy Carolinas,
LLC (incorporated by reference to Exhibit 3.2 to registrant’s Current Report on
Form 8-K filed on April 7, 2006, File No. 1-4928).
Regulations of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric
Company), effective July 23, 2003 (incorporated by reference to Exhibit 3.2
to registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2003, filed on August 13, 2003, File No. 1-1232).
Articles of Organization including Articles of Conversion for Duke Energy
Progress, LLC (incorporated by reference to Exhibit 3.1 to registrant’s Current
Report on Form 8-K filed on August 4, 2015, File No. 1-3382).
Plan of Conversion of Duke Energy Progress, Inc. (incorporated by reference to
Exhibit 3.2 to registrant’s Current Report on Form 8-K filed on August 4, 2015,
File No. 1-3382).
Limited Liability Company Operating Agreement of Duke Energy Progress, LLC
(incorporated by reference to Exhibit 3.3 to registrant’s Current Report on
Form 8-K filed on August 4, 2015, File No. 1-3382).
Amended and Restated Articles of Incorporation of Progress Energy, Inc.
(formerly CP&L Energy, Inc.), effective June 15, 2000 (incorporated by
reference to Exhibit 3(a)(1) to registrant’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000, filed on August 14, 2000, File No. 1-3382).
Articles of Amendment to the Amended and Restated Articles of Incorporation
of Progress Energy, Inc. (formerly CP&L Energy, Inc.), effective December 4,
2000 (incorporated by reference to Exhibit 3(b)(1) to registrant’s Annual
Report on Form 10-K for the year ended December 31, 2001, filed on
March 28, 2002, File No. 1-3382).
Articles of Amendment to the Amended and Restated Articles of Incorporation
of Progress Energy, Inc. (formerly CP&L Energy, Inc.), effective May 10, 2006
(incorporated by reference to Exhibit 3(a) to registrant’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006, filed on August 9, 2006,
File No. 1-15929).
By-Laws of Progress Energy, Inc. (formerly CP&L Energy, Inc.), effective
May 10, 2006 (incorporated by reference to Exhibit 3(b) to registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed on
August 9, 2006, File No. 1-15929).
Articles of Conversion for Duke Energy Florida, LLC (incorporated by reference
to Exhibit 3.4 to registrant’s Current Report on Form 8-K filed on August 4,
2015, File No. 1-3274).
Articles of Organization for Duke Energy Florida, LLC (incorporated by
reference to Exhibit 3.5 to registrant’s Current Report on Form 8-K filed on
August 4, 2015, File No. 1-3274).
Plan of Conversion of Duke Energy Florida, Inc. (incorporated by reference to
Exhibit 3.6 to registrant’s Current Report on Form 8-K filed on August 4, 2015,
File No. 1-3274).
Limited Liability Company Operating Agreement of Duke Energy Florida, LLC
(incorporated by reference to Exhibit 3.7 to registrant’s Current Report on
Form 8-K filed on August 4, 2015, File No. 1-3274).
Amended and Restated Articles of Incorporation of Piedmont Natural Gas
Company, Inc., dated as of October 3, 2016 (incorporated by reference to
Exhibit 3.1 to registrant’s Annual Report on Form 10-K for the fiscal year
ended October 31, 2016, filed on December 22, 2016, File No. 001-06196).
Bylaws of Piedmont Natural Gas Company, Inc., as amended and restated
effective October 3, 2016 (incorporated by reference to Exhibit 3.2
to registrant’s Current Report on Form 8-K filed on October 3, 2016,
File No. 1-06196).
E-2
Duke
Energy
Duke
Energy
Carolinas
X
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
4.1
4.1.1
4.1.2
4.1.3
4.1.4
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
Certificate of Designations with respect to Series A Preferred Stock, dated
March 28, 2019 (incorporated by reference to Exhibit 3.1 to registrant’s
Current Report on Form 8-K filed on March 29, 2019, File No. 1-32853).
Certificate of Designation with respect to the Series B Preferred Stock, dated
September 11, 2019 (incorporated by reference to Exhibit 3.1 to registrant’s
Current Report on Form 8-K filed on September 12, 2019, File No. 1-32853).
Description of Registered Securities (incorporated by reference from the
registrant’s prospectus contained in Form S-3 filed on September 23,
2019, File No. 333-233896,under the headings “Description of Common
Stock,” “Description of Preferred Stock,” “Description of Depositary Shares,”
“Description of Stock Purchase Contracts and Stock Purchase Units,” and
“Description of Debt Securities”).
Description of Registered Securities (incorporated by reference from the
registrant’s prospectus contained in Form S-3 filed on September 23, 2019,
File No. 333-233896-01, under the heading “Description of Debt Securities”).
Description of Registered Securities (incorporated by reference from the
registrant’s prospectus contained in Form S-3 filed on September 23, 2019,
File No. 333-233896-02, under the headings “Description of First Mortgage
Bonds” and “Description of Debt Securities”).
Description of Registered Securities (incorporated by reference from the
registrant’s prospectus contained in Form S-3 filed on September 23, 2019,
File No. 333-233896-03, under the headings “Description of First Mortgage
Bonds” and “Description of Unsecured Debt Securities”).
Description of Registered Securities (incorporated by reference from the
registrant’s prospectus contained in Form S-3 filed on September 23, 2019,
File No. 333-233896-04, under the headings “Description of First Mortgage
Bonds” and “Description of Unsecured Debt Securities”).
Description of Registered Securities (incorporated by reference from the
registrant’s prospectus contained in Form S-3 filed on September 23, 2019,
File No. 333-233896-05, under the headings “Description of First Mortgage
Bonds” and “Description of Debt Securities”).
Description of Registered Securities (incorporated by reference from the
registrant’s prospectus contained in Form S-3 filed on September 23, 2019,
File No. 333-233896-06, under the headings “Description of First and
Refunding Mortgage Bonds,” “Description of Senior Notes,” and “Description
of Subordinate Notes”).
Indenture between Duke Energy Corporation and The Bank of New York Mellon
Trust Company, N.A., as Trustee, dated as of June 3, 2008 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on June 16, 2008, File No. 1-32853).
First Supplemental Indenture, dated as of June 16, 2008 (incorporated by
reference to Exhibit 4.2 to Duke Energy Corporation’s Current Report on
Form 8-K filed on June 16, 2008, File No. 1-32853).
Second Supplemental Indenture, dated as of January 26, 2009 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on January 26, 2009, File No. 1-32853).
Third Supplemental Indenture, dated as of August 28, 2009 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on August 28, 2009, File No. 1-32853).
Fourth Supplemental Indenture, dated as of March 25, 2010 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on March 25, 2010, File No. 1-32853).
X
X
X
X
X
X
X
X
E-3
X
PART IV
Exhibit
Number
4.1.5
4.1.6
4.1.7
4.1.8
4.1.9
4.1.10
4.1.11
4.1.12
4.1.13
4.1.14
4.1.15
4.1.16
4.1.17
4.1.18
4.1.19
4.1.20
4.1.21
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Fifth Supplemental Indenture, dated as of August 25, 2011 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on August 25, 2011, File No. 1-32853).
Sixth Supplemental Indenture, dated as of November 17, 2011 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on November 17, 2011, File No. 1-32853).
Seventh Supplemental Indenture, dated as of August 16, 2012 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on August 16, 2012, File No. 1-32853).
Eighth Supplemental Indenture, dated as of January 14, 2013 (incorporated
by reference to Exhibit 2 to the Registration Statement of Form 8-A of Duke
Energy Corporation filed on January 14, 2013, File No. 1-32853).
Ninth Supplemental Indenture, dated as of June 13, 2013 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on June 13, 2013, File No. 1-32853).
Tenth Supplemental Indenture, dated as of October 11, 2013 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on October 11, 2013, File No. 1-32853).
Eleventh Supplemental Indenture, dated as of April 4, 2014 (incorporated
by reference to Exhibit 4.1 to Duke Energy Corporation’s Current Report on
Form 8-K filed on April 4, 2014, File No. 1-32853).
Twelfth Supplemental Indenture, dated as of November 19, 2015
(incorporated by reference to Exhibit 4.2 to Duke Energy Corporation’s Current
Report on Form 8-K filed on November 19, 2015, File No. 1-32853).
Thirteenth Supplemental Indenture, dated as of April 18, 2016, to the indenture
dated as of June 3, 2008, between Duke Energy Corporation and The Bank of
New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to
Exhibit 4.1 to Duke Energy Corporation’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2016, filed on May 5, 2016, File No. 1-32853).
Fourteenth Supplemental Indenture, dated as of August 12, 2016
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on August 12, 2016, File No. 1-32853).
Fifteenth Supplemental Indenture, dated as of April 11, 2017 (incorporated by
reference to Exhibit 4.2 to registrant’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2017, filed on May 9, 2017, File No. 1-32853).
Sixteenth Supplemental Indenture, dated as of June 13, 2017 (incorporated by
reference to Exhibit 4.1 to registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2017, filed on August 3, 2017, File No. 1-32853).
Seventeenth Supplemental Indenture, dated as of August 10, 2017
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on August 10, 2017, File No. 1-32853).
Eighteenth Supplemental Indenture, dated as of March 29, 2018 (incorporated
by reference to Exhibit 4.2 to registrant’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2018, filed on May 10, 2018, File No. 1-32853).
Nineteenth Supplemental Indenture, dated as of May 16, 2018 (incorporated
by reference to Exhibit 4.1 to registrant’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2018, filed on August 2, 2018, File No. 1-32853).
Twentieth Supplemental Indenture (incorporated by reference to Exhibit 4.2 to
registrant’s Registration Statement on Form 8-A filed on September 17, 2018,
File No. 1-32853).
Twenty-first Supplemental Indenture (incorporated by reference to Exhibit
4.1 to registrant’s Current Report on Form 8-K filed on March 11, 2019,
File no. 1-32853).
E-4
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.1.22
4.1.23
4.1.24
4.1.25
4.1.26
4.2
4.2.1
4.2.2
4.3
4.3.1
4.3.2
4.3.3
4.3.4
4.3.5
4.3.6
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
Twenty-second Supplemental Indenture, dated as of June 7, 2019
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on June 7, 2019, File No. 1-32853).
Twenty-third Supplemental Indenture, dated as of May 15, 2020 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
May 15, 2020, File No. 1-32853).
Twenty-fourth Supplemental Indenture, dated as of September 11, 2020
(incorporated by reference to Exhibit 4.2 to registrant’s Current Report on
Form 8-K filed on September 11, 2020, File No. 1-32853).
Twenty-fifth Supplemental Indenture, dated as of June 10, 2021 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
June 10, 2021, File No. 1-32853).
Twenty-sixth Supplemental Indenture, dated as of September 28, 2021
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on September 28, 2021, File No. 1-32853).
Senior Indenture between Duke Energy Carolinas, LLC and The Bank of
New York Mellon Trust Company, N.A., as successor trustee to JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank), dated as of
September 1, 1998 (incorporated by reference to Exhibit 4-D-1 to registrant’s
Post-Effective Amendment No. 2 to Registration Statement on Form S-3 filed
on April 7, 1999, File No. 333-14209).
Fifteenth Supplemental Indenture, dated as of April 3, 2006 (incorporated by
reference to Exhibit 4.4.1 to registrant’s Registration Statement on Form S-3
filed on October 3, 2007, File No. 333-146483-03).
Sixteenth Supplemental Indenture, dated as of June 5, 2007 (incorporated
by reference to Exhibit 4.1 registrant’s Current Report on Form 8-K filed on
June 6, 2007, File No. 1-4928).
First 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).
Instrument of Resignation, Appointment and Acceptance among Duke
Energy Carolinas, LLC, JPMorgan Chase Bank, N.A., as Trustee, and The
Bank of New York Mellon Trust Company, N.A., as Successor Trustee, dated
as of September 24, 2007, (incorporated by reference to Exhibit 4.6.1 to
registrant’s Registration Statement on Form S-3 filed on October 3, 2007,
File No. 333-146483).
Ninth 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).
Twentieth 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).
Twenty-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).
Sixtieth 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).
Sixty-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).
E-5
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.3.7
4.3.8
4.3.9
4.3.10
4.3.11
4.3.12
4.3.13
4.3.14
4.3.15
4.3.16
4.3.17
4.3.18
4.3.19
4.3.20
4.3.21
4.3.22
4.3.23
Eighty-fourth Supplemental Indenture, dated as of March 20, 2006
(incorporated by reference to Exhibit 4.6.9 to registrant’s Registration
Statement on Form S-3 filed on October 3, 2007, File No. 333-146483-03).
Eighty-fifth Supplemental Indenture, dated as of January 10, 2008
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on January 11, 2008, File No.1-4928).
Eighty-seventh Supplemental Indenture, dated as of April 14, 2008
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on April 15, 2008, File No.1-4928).
Eighty-eighth Supplemental Indenture, dated as of November 17, 2008
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on November 20, 2008, File No.1-4928).
Ninetieth Supplemental Indenture, dated as of November 19, 2009
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on November 19, 2009, File No.1-4928).
Ninety-first Supplemental Indenture, dated as of June 7, 2010 (incorporated
by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on
Form 8-K filed on June 7, 2010, File No.1-4928).
Ninety-third Supplemental Indenture, dated as of May 19, 2011 (incorporated
by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on
Form 8-K filed on May 19, 2011, File No.1-4928).
Ninety-fourth Supplemental Indenture, dated as of December 8, 2011
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on December 8, 2011, File No.1-4928).
Ninety-fifth Supplemental Indenture, dated as of September 21, 2012
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on September 21, 2012, File No.1-4928).
Ninety-sixth Supplemental Indenture, dated as of March 12, 2015, between
Duke Energy Carolinas, LLC and The Bank of New York Mellon Trust Company,
N.A., as Trustee (incorporated by reference to Exhibit 4.1 to Duke Energy
Carolinas, LLC’s Current Report on Form 8-K filed on March 12, 2015,
File No. 1-4928).
Ninety-seventh Supplemental Indenture, dated as of March 11, 2016
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on March 11, 2016, File No. 1-4928).
Ninety-eighth Supplemental Indenture, dated as of November 17, 2016
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s
Current Report on Form 8-K filed on November 17, 2016, File No. 1-4928).
Ninety-ninth Supplemental Indenture, dated as of November 14, 2017
(incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC
Current Report on Form 8-K filed on November 14, 2017, File No. 1-4928).
One Hundredth Supplemental Indenture, dated as of March 1, 2018
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on March 1, 2018, File No. 1-4928).
One-Hundred and Second Supplemental Indenture, dated as of August 14,
2019 (incorporated by reference to Exhibit 4.1 to registrant’s Current Report
on Form 8-K filed on August 14, 2019, File No. 1-4928).
One-Hundred and Third Supplemental Indenture, dated as of January 8, 2020
(incorporated by reference to Exhibit 4.2 to registrant’s Current Report on
Form 8-K filed on January 8, 2020, File No. 1-4928).
One-Hundred and Fourth Supplemental Indenture, dated as of January 8,
2020 (incorporated by reference to Exhibit 4.3 to registrant’s Current Report
on Form 8-K filed on January 8, 2020, File No. 1-4928).
E-6
Duke
Energy
Duke
Energy
Carolinas
X
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.3.24
4.4
4.4.1
4.4.2
4.4.3
4.4.4
4.4.5
4.4.6
4.4.7
4.4.8
4.4.9
4.4.10
4.4.11
4.4.12
4.4.13
4.4.14
4.4.15
4.4.16
4.4.17
4.4.18
4.4.19
4.4.20
4.4.21
One-Hundred and Fifth Supplemental Indenture, dated as of April 1, 2021
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on April 1, 2021, File No. 1-4928).
Mortgage 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.
First through Fifth Supplemental Indentures thereto (incorporated by reference
to Exhibit 2(b), File No. 2-64189).
Sixth Supplemental Indenture dated April 1, 1960 (incorporated by reference
to Exhibit 2(b)-5, File No. 2-16210).
Seventh Supplemental Indenture dated November 1, 1961 (incorporated by
reference to Exhibit 2(b)-6, File No. 2-16210).
Eighth Supplemental Indenture dated July 1, 1964 (incorporated by reference
to Exhibit 4(b)-8, File No. 2-19118).
Ninth Supplemental Indenture dated April 1, 1966 (incorporated by reference
to Exhibit 4(b)-2, File No. 2-22439).
Tenth Supplemental Indenture dated October 1, 1967 (incorporated by
reference to Exhibit 4(b)-2, File No. 2-24624).
Eleventh Supplemental Indenture dated October 1, 1968 (incorporated by
reference to Exhibit 2(c), File No. 2-27297).
Twelfth Supplemental Indenture dated January 1, 1970 (incorporated by
reference to Exhibit 2(c), File No. 2-30172).
Thirteenth Supplemental Indenture dated August 1, 1970 (incorporated by
reference to Exhibit 2(c), File No. 2-35694).
Fourteenth Supplemental Indenture dated January 1, 1971 (incorporated by
reference to Exhibit 2(c), File No. 2-37505).
Fifteenth Supplemental Indenture dated October 1, 1971 (incorporated by
reference to Exhibit 2(c), File No. 2-39002).
Sixteenth Supplemental Indenture dated May 1, 1972 (incorporated by
reference to Exhibit 2(c), File No. 2-41738).
Seventeenth Supplemental Indenture dated November 1, 1973 (incorporated
by reference to Exhibit 2(c), File No. 2-43439).
Eighteenth Supplemental Indenture dated (incorporated by reference to
Exhibit 2(c), File No. 2-47751).
Nineteenth Supplemental Indenture dated May 1, 1974 (incorporated by
reference to Exhibit 2(c), File No. 2-49347).
Twentieth Supplemental Indenture dated December 1, 1974 (incorporated by
reference to Exhibit 2(c), File No. 2-53113).
Twenty-first Supplemental Indenture dated April 15, 1975 (incorporated by
reference to Exhibit 2(d), File No. 2-53113).
Twenty-second Supplemental Indenture dated October 1, 1977 (incorporated
by reference to Exhibit 2(c), File No. 2-59511).
Twenty-third Supplemental Indenture dated June 1, 1978 (incorporated by
reference to Exhibit 2(c), File No. 2-61611).
Twenty-fourth Supplemental Indenture dated May 15, 1979 (incorporated by
reference to Exhibit 2(d), File No. 2-64189).
Twenty-fifth Supplemental Indenture dated November 1, 1979 (incorporated
by reference to Exhibit 2(c), File No. 2-65514).
E-7
Duke
Energy
Duke
Energy
Carolinas
X
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.4.22
4.4.23
4.4.24
4.4.25
4.4.26
4.4.27
4.4.28
4.4.29
4.4.30
4.4.31
4.4.32
4.4.33
4.4.34
4.4.35
4.4.36
4.4.37
4.4.38
4.4.39
4.4.40
4.4.41
4.4.42
4.4.43
4.4.44
4.4.45
Twenty-sixth Supplemental Indenture dated November 1, 1979 (incorporated
by reference to Exhibit 2(c), File No. 2-66851).
Twenty-seventh Supplemental Indenture dated April 1, 1980 (incorporated by
reference to Exhibit 2 (d), File No. 2-66851).
Twenty-eighth Supplemental Indenture dated October 1, 1980 (incorporated
by reference to Exhibit 4(b)-1, File No. 2-81299).
Twenty-ninth Supplemental Indenture dated October 1, 1980 (incorporated by
reference to Exhibit 4(b)-2, File No. 2-81299).
Thirtieth Supplemental Indenture dated December 1, 1982 (incorporated by
reference to Exhibit 4(b)- 3, File No. 2-81299).
Thirty-first Supplemental Indenture dated March 15, 1983 (incorporated by
reference to Exhibit 4(c)-1, File No. 2-95505).
Thirty-second Supplemental Indenture dated March 15, 1983 (incorporated by
reference to Exhibit 4(c)-2, File No. 2-95505).
Thirty-third Supplemental Indenture dated December 1, 1983 (incorporated by
reference to Exhibit 4(c)-3, File No. 2-95505).
Thirty-fourth Supplemental Indenture dated December 15, 1983 (incorporated
by reference to Exhibit 4(c)-4, File No. 2-95505).
Thirty-fifth Supplemental Indenture dated April 1, 1984 (incorporated by
reference to Exhibit 4(c)-5, File No. 2-95505).
Thirty-sixth Supplemental Indenture dated June 1, 1984 (incorporated by
reference to Exhibit 4(c)-6, File No. 2-95505).
Thirty-seventh Supplemental Indenture dated June 1, 1984 (incorporated by
reference to Exhibit 4(c)-7, File No. 2-95505).
Thirty-eighth Supplemental Indenture dated June 1, 1984 (incorporated by
reference to Exhibit 4(c)- 8, File No. 2-95505).
Thirty-ninth Supplemental Indenture dated April 1, 1985 (incorporated by
reference to Exhibit 4(b), File No. 33-25560).
Fortieth Supplemental Indenture dated October 1, 1985 (incorporated by
reference to Exhibit 4(c), File No. 33-25560).
Forty-first Supplemental Indenture dated March 1, 1986 (incorporated by
reference to Exhibit 4(d), File No. 33-25560).
Forty-second Supplemental Indenture dated July 1, 1986 (incorporated by
reference to Exhibit 4(e), File No. 33-25560).
Forty-third Supplemental Indenture dated January 1, 1987 (incorporated by
reference to Exhibit 4(f), File No. 33-25560).
Forty-fourth Supplemental Indenture dated December 1, 1987 (incorporated
by reference to Exhibit 4(g), File No. 33-25560).
Forty-fifth Supplemental Indenture dated September 1, 1988 (incorporated by
reference to Exhibit 4(h), File No. 33-25560).
Forty-sixth Supplemental Indenture dated April 1, 1989 (incorporated by
reference to Exhibit 4(b), File No. 33-33431).
Forty-seventh Supplemental Indenture dated August 1, 1989 (incorporated by
reference to Exhibit 4(c), File No. 33-33431).
Forty-eighth Supplemental Indenture dated November 15, 1990 (incorporated
by reference to Exhibit 4(b), File No. 33-38298).
Forty-ninth Supplemental Indenture dated November 15, 1990 (incorporated
by reference to Exhibit 4(c), File No. 33-38298).
E-8
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
4.4.46
4.4.47
4.4.48
4.4.49
4.4.50
4.4.51
4.4.52
4.4.53
4.4.54
4.4.55
4.4.56
4.4.57
4.4.58
4.4.59
4.4.60
4.4.61
4.4.62
4.4.63
4.4.64
4.4.65
Fiftieth Supplemental Indenture dated February 15, 1991 (incorporated by
reference to Exhibit 4(h), File No. 33-42869).
Fifty-first Supplemental Indenture dated April 1, 1991 (incorporated by
reference to Exhibit 4(i), File No. 33-42869).
Fifty-second Supplemental Indenture dated September 15, 1991(incorporated
by reference to Exhibit 4(e), File No. 33-48607).
Fifty-third Supplemental Indenture dated January 1, 1992 (incorporated by
reference to Exhibit 4(f), File No. 33-48607).
Fifty-fourth Supplemental Indenture dated April 15, 1992 (incorporated by
reference to Exhibit 4 (g), File No. 33-48607).
Fifty-fifth Supplemental Indenture dated July 1, 1992 (incorporated by
reference to Exhibit 4(e), File No. 33-55060).
Fifty-sixth Supplemental Indenture dated October 1, 1992 (incorporated by
reference to Exhibit 4(f), File No. 33-55060).
Fifty-seventh Supplemental Indenture dated February 1, 1993 (incorporated
by reference to Exhibit 4(e), File No. 33-60014).
Fifty-eighth Supplemental Indenture dated March 1, 1993 (incorporated by
reference to Exhibit 4(f), File No. 33-60014).
Fifty-ninth Supplemental Indenture dated July 1, 1993 (incorporated
by reference to Exhibit 4(a) to Post-Effective Amendment No. 1,
File No. 33-38349).
Sixtieth Supplemental Indenture dated July 1, 1993 (incorporated by reference
to Exhibit 4(b) to Post-Effective Amendment No. 1, File No. 33-38349).
Sixty-first Supplemental Indenture dated August 15, 1993 (incorporated by
reference to Exhibit 4(e), File No. 33-50597).
Sixty-second Supplemental Indenture dated January 15, 1994 (incorporated
by reference to Exhibit 4 to Duke Energy Progress’ Current Report on Form 8-K
dated January 19, 1994, File No. 1-3382).
Sixty-third Supplemental Indenture dated May 1, 1994 (incorporated
by reference to Exhibit 4(f) for Duke Energy Progress’ Form S-3,
File No. 033-57835).
Sixty-fourth Supplemental Indenture dated August 15, 1997 (incorporated
by reference to Exhibit to Duke Energy Progress’ Current Report on Form 8-K
dated August 26, 1997, File No. 1-3382).
Sixty-fifth Supplemental Indenture dated April 1, 1998 (incorporated by
reference to Exhibit 4(b) for Duke Energy Progress’ Registration Statement on
Form S-3 filed December 18, 1998, File No. 333-69237).
Sixty-sixth Supplemental Indenture dated March 1, 1999 (incorporated by
reference to Exhibit 4(c) to Duke Energy Progress’ Current Report on Form 8-K
filed on March 19, 1999, File No. 1-3382).
Form of Carolina Power & Light Company First Mortgage Bond, 6.80%
Series Due August 15, 2007 (incorporated by reference to Exhibit 4 to Duke
Energy Progress’ Form 10-Q for the period ended September 30, 1998,
File No. 1-3382).
Sixty-eighth Supplemental Indenture dated April 1, 2000 (incorporated by
reference to Exhibit No. 4(b) to Duke Energy Progress’ Current Report on
Form 8-K filed on April 20, 2000, File No. 1-3382).
Sixty-ninth Supplemental Indenture dated June 1, 2000 (incorporated by
reference to Exhibit No. 4b(2) to Duke Energy Progress’ Annual Report on
Form 10-K for the year ended December 31, 2000, filed on March 29, 2001,
File No. 1-3382).
E-9
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
4.4.66
4.4.67
4.4.68
4.4.69
4.4.70
4.4.71
4.4.72
4.4.73
4.4.74
4.4.75
4.4.76
4.4.77
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Seventieth Supplemental Indenture dated July 1, 2000 (incorporated by
reference to Exhibit 4b(3) to Duke Energy Progress’ Annual Report on Form
10-K for the year ended December 31, 2000, filed on March 29, 2001,
File No. 1-3382).
Seventy-first Supplemental Indenture dated February 1, 2002 (incorporated
by reference to Exhibit 4b(2) to Duke Energy Progress’ Annual Report on
Form 10-K for the year ended December 31, 2001, filed on March 28, 2002,
File No. 1-3382 and 1-15929).
Seventy-second Supplemental Indenture, dated as of September 1,
2003 (incorporated by reference to Exhibit 4 to Duke Energy Progress,
Inc.’s (formerly Carolina Power & Light Company (d/b/a Progress Energy
Carolinas, Inc.)) Current Report on Form 8-K filed on September 12, 2003,
File No. 1-3382).
Seventy-third Supplemental Indenture, dated as of March 1, 2005
(incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.’s
(formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas,
Inc.)) Current Report on Form 8-K filed on March 22, 2005, File No. 1-3382).
Seventy-fourth Supplemental Indenture, dated as of November 1, 2005
(incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.’s
(formerly Carolina Power & Light Company (d/b/a Progress Energy
Carolinas, Inc.)) Current Report on Form 8-K filed on November 30, 2005,
File No. 1-3382).
Seventy-fifth Supplemental Indenture, dated as of March 1, 2008
(incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.’s
(formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas,
Inc.)) Current Report on Form 8-K filed on March 13, 2008, File No. 1-3382).
Seventy-sixth Supplemental Indenture, dated as of January 1, 2009
(incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.’s
(formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas,
Inc.)) Current Report on Form 8-K filed on January 15, 2009, File No. 1-3382).
Seventy-seventh Supplemental Indenture, dated as of June 18, 2009
(incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.’s
(formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas,
Inc.)) Current Report on Form 8-K filed on June 23, 2009, File No. 1-3382).
Seventy-eighth Supplemental Indenture, dated as of September 1,
2011 (incorporated by reference to Exhibit 4 to Duke Energy Progress,
Inc.’s (formerly Carolina Power & Light Company (d/b/a Progress Energy
Carolinas, Inc.)) Current Report on Form 8-K filed on September 15, 2011,
File No. 1-3382).
Seventy-ninth Supplemental Indenture, dated as of May 1, 2012 (incorporated
by reference to Exhibit 4 to Duke Energy Progress, Inc.’s (formerly Carolina
Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current
Report on Form 8-K filed on May 18, 2012, File No. 1-3382).
Eightieth Supplemental Indenture, dated as of March 1, 2013 (incorporated
by reference to Exhibit 4.1 to Duke Energy Progress, Inc.’s (formerly Carolina
Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current
Report on Form 8-K filed on March 12, 2013, File No. 1-3382).
Eighty-second Supplemental Indenture, dated as of March 1, 2014, between
Duke Energy Progress, Inc. and The Bank of New York Mellon (formerly Irving
Trust Company) and Tina D. Gonzalez (successor to Frederick G. Herbst)
and forms of global notes (incorporated by reference to Exhibit 4.1 to Duke
Energy Progress, Inc.’s Current Report on Form 8-K filed on March 6, 2014,
File No. 1-3382).
E-10
X
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.4.78
4.4.79
4.4.80
4.4.81
4.4.82
4.4.83
4.4.84
4.4.85
4.5
4.6
4.7
4.7.1
4.7.2
4.7.3
4.7.4
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Eighty-third Supplemental Indenture, dated as of November 1, 2014, between
Duke Energy Progress, Inc. and The Bank of New York Mellon (formerly Irving
Trust Company) and Tina D. Gonzalez (successor to Frederick G. Herbst) and
forms of global notes (incorporated by reference to Exhibit 4.1 to Duke Energy
Progress, Inc.’s Current Report on Form 8-K filed on November 20, 2014,
File No. 1-3382).
Eighty-fifth Supplemental Indenture, dated as of August 1, 2015 (incorporated
by reference to Exhibit 4.1 to Duke Energy Progress, LLC’s Current Report on
Form 8-K filed on August 13, 2015, File No. 1-3382).
Eighty-sixth Supplemental Indenture, dated as of September 1, 2016
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on September 16, 2016, File No. 1-15929).
Eighty-seventh Supplemental Indenture, dated as of September 1, 2017
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on September 8, 2017, File No. 1-3382).
Eighty-ninth Supplemental Indenture (incorporated by reference to Exhibit 4.1
to registrant’s Current Report on Form 8-K filed on March 7, 2019, File no.
1-3382).
Ninetieth Supplemental Indenture, dated as of August 1, 2020 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
August 20, 2020, File No. 1-3382).
Ninety-first Supplemental Indenture, dated as of August 1, 2021 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
August 12, 2021, File No. 1-3382).
First Supplemental Indenture, dated as of August 1, 2020 (incorporated by
reference to Exhibit 4.2 to registrant’s Current Report on Form 8-K filed on
August 20, 2020, File No. 1-3382).
Indenture (for Debt Securities) between Duke Energy Progress, Inc.
(formerly Carolina Power & Light Company) and The Bank of New York
Mellon (successor in interest to The Chase Manhattan Bank), as Trustee
(incorporated by reference to Exhibit 4(a) to registrant’s Current Report on
Form 8-K filed on November 5, 1999, File No. 1-3382).
Indenture (for [Subordinated] Debt Securities) (open ended) (incorporated by
reference to Exhibit 4(a)(2) to Duke Energy Progress, Inc.’s (formerly Carolina
Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Registration
Statement on Form S-3 filed on November 18, 2008, File No. 333-155418).
Indenture (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).
Seventh 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).
Eighth 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).
Sixteenth 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).
Twenty-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).
E-11
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.7.5
4.7.6
4.7.7
4.7.8
4.7.9
4.7.10
4.7.11
4.7.12
4.7.13
4.7.14
4.7.15
4.7.16
4.7.17
4.7.18
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Thirty-eighth Supplemental Indenture, dated as of July 25, 1994 (incorporated
by reference to exhibit 4(f) to Duke Energy Florida, Inc.’s (formerly Florida
Power Corporation) Registration Statement on Form S-3 filed on August 29,
1994, File No. 33-55273).
Forty-first Supplemental Indenture, dated as of February 1, 2003
(incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly
Duke Energy Florida Power Corporation (d/b/a Progress Energy Florida, Inc.))
Current Report on Form 8-K filed on February 21, 2003, File No. 1-3274).
Forty-second Supplemental Indenture, dated as of April 1, 2003 (incorporated
by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly Florida
Power Corporation (d/b/a Progress Energy Florida, Inc.)) Quarterly Report on
Form 10-Q for the quarter ended June 30, 2003, filed on August 11, 2003,
File No. 1-3274).
Forty-third Supplemental Indenture, dated as of November 1, 2003
(incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly
Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current
Report on Form 8-K filed on November 21, 2003, File No. 1-3274).
Forty-fourth Supplemental Indenture, dated as of August 1, 2004
(incorporated by reference to Exhibit 4(m) to Duke Energy Florida, Inc.’s
(formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.))
Annual Report on Form 10-K for the year ended December 31, 2004, filed on
March 16, 2005, File No. 1-3274).
Forty-sixth Supplemental Indenture, dated as of September 1, 2007
(incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly
Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current
Report on Form 8-K filed on September 19, 2007, File No. 1-3274).
Forty-seventh Supplemental Indenture, dated as of December 1, 2007
(incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly
Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current
Report on Form 8-K filed on December 13, 2007, File No. 1-3274).
Forty-eighth Supplemental Indenture, dated as of June 1, 2008 (incorporated
by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly Florida Power
Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K
filed on June 18, 2008, File No. 1-3274).
Forty-ninth Supplemental Indenture, dated as of March 1, 2010 (incorporated
by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly Florida Power
Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K
filed on March 25, 2010, File No. 1-3274).
Fiftieth Supplemental Indenture, dated as of August 11, 2011 (incorporated
by reference to Exhibit 4 to Duke Energy Florida, Inc.’s (formerly Florida Power
Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K
filed on August 18, 2011, File No. 1-3274).
Fifty-first Supplemental Indenture, dated as of November 1, 2012
(incorporated by reference to Exhibit 4.1 to Duke Energy Florida, Inc.’s
(formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.))
Current Report on Form 8-K filed on November 20, 2012, File No. 1-3274).
Fifty-third Supplemental Indenture, dated as of September 1, 2016
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on September 9, 2016, File No. 1-03274).
Fifty-fifth Supplemental Indenture, dated as of June 1, 2018 (incorporated by
reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
June 21, 2018, File No. 1-3274).
Fifty-sixth Supplemental Indenture, dated as of November 1, 2019
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on November 26, 2019, File No. 1-3274).
E-12
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.7.19
4.7.20
4.8
4.8.1
4.8.2
4.9
4.10
4.10.1
4.10.2
4.11
4.11.1
4.11.2
4.11.3
4.11.4
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Fifty-seventh Supplemental Indenture, dated as of June 1, 2020 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
June 11, 2020, File No. 1-3274).
Fifty-eighth Supplemental Indenture, dated as of November 1, 2021
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on December 2, 2021, File No. 1-3274).
Indenture (for Debt Securities) between Duke Energy Florida, Inc. (formerly
Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) and The Bank
of New York Mellon Trust Company, National Association (successor in interest
to J.P. Morgan Trust Company, National Association), as Trustee, dated as of
December 7, 2005 (incorporated by reference to Exhibit 4(a) to registrant’s
Current Report on Form 8-K filed on December 13, 2005, File No. 1-3274).
First Supplemental Indenture, dated as of December 12, 2017 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
December 12, 2017, File No. 1-03274).
Second Supplemental Indenture, dated as of November 26, 2019
(incorporated by reference to Exhibit 4.2 to registrant’s Current Report on
Form 8-K filed on November 26, 2019, File No. 1-3274).
Indenture (for [Subordinated] Debt Securities) (open ended) (incorporated by
reference to Exhibit 4(a)(2) Duke Energy Florida, Inc.’s (formerly Florida Power
Corporation (d/b/a Progress Energy Florida, Inc.)) Registration Statement on
Form S-3 filed on November 18, 2008, File No. 333-155418).
Original Indenture (Unsecured Debt Securities) 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 May 15,
1995 (incorporated by reference to Exhibit 3 to registrant’s Form 8-A filed on
July 27, 1995, File No. 1-1232).
First Supplemental Indenture, dated as of June 1, 1995 (incorporated by
reference to Exhibit 4 B to Duke Energy Ohio, Inc.’s (formerly The Cincinnati
Gas & Electric Company) Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, filed on August 11, 1995, File No. 1-1232).
Seventh Supplemental Indenture, dated as of June 15, 2003 (incorporated by
reference to Exhibit 4.1 to Duke Energy Ohio, Inc.’s (formerly The Cincinnati
Gas & Electric Company) Quarterly Report on Form 10-Q for the quarter ended
June 30, 2003, filed on August 13, 2003, File No. 1-1232).
Original 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).
Fortieth Supplemental Indenture, dated as of March 23, 2009 (incorporated
by reference to Exhibit 4.1 to Duke Energy Ohio, Inc.’s (formerly The Cincinnati
Gas & Electric Company) Current Report on Form 8-K filed on March 24,
2009, File No. 1-1232).
Forty-second Supplemental Indenture, dated as of September 6, 2013
(incorporated by reference to Exhibit 4.1 to Duke Energy Ohio, Inc.’s (formerly
The Cincinnati Gas & Electric Company) Current Report on Form 8-K filed on
September 6, 2013, File No. 1-1232).
Forty-fourth Supplemental Indenture, dated as of June 23, 2016 (incorporated
by reference to Exhibit 4.1 registrant’s Current Report on Form 8-K filed on
June 23, 2016, File No. 1-1232).
Forty-fifth Supplemental Indenture, dated as of March 27, 2017 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
March 27,2017, File No. 1-01232).
E-13
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
4.11.5
4.11.6
4.12
4.12.1
4.12.2
4.12.3
4.12.4
4.13
4.13.1
4.13.2
4.13.3
4.13.4
4.13.5
4.13.6
4.13.7
4.13.8
4.13.9
Forty-sixth Supplemental Indenture, dated as of January 8, 2019
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on January 8, 2019, File No. 1-1232).
Forty-seventh Supplemental Indenture, dated as of May 21, 2020
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on May 21, 2020, File No. 1-1232).
Indenture between Duke Energy Indiana, LLC (formerly PSI Energy, Inc.) and
The Bank of New York Mellon Trust Company, N.A., as Successor Trustee,
dated as of November 15, 1996 (incorporated by reference to Exhibit 4(v) to
the Cinergy Corp. Form 10-K for the year ended December 31, 1996, filed on
March 27, 1997, File No. 1-11377).
Third Supplemental Indenture, dated as of March 15, 1998 (incorporated by
reference to Exhibit 4-w to Cinergy Corp.’s Annual Report on Form 10-K for the
year ended December 31, 1997, filed on March 27, 1998, File No. 1-11377).
Eighth Supplemental Indenture, dated as of September 23, 2003 (incorporated
by reference to Exhibit 4.2 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Quarterly Report on Form 10-Q for the quarter ended September 30,
2003, filed on November 13, 2003, File No. 1-3543).
Ninth Supplemental Indenture, dated as of October 21, 2005 (incorporated by
reference to Exhibit 4.7.3 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Registration Statement on Form S-3 filed on September 29, 2010,
File No. 333-169633).
Tenth Supplemental Indenture, dated as of June 9, 2006 (incorporated by
reference to Exhibit 4.1 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Current Report on Form 8-K filed on June 15, 2006, File No. 1-3543).
Original 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).
Tenth Supplemental Indenture, dated as of July 1, 1952, (filed as an exhibit in
File No. 2-9687).
Twenty-third Supplemental Indenture, dated as of January 1, 1977, (filed as
an exhibit in File No. 2-57828).
Twenty-fifth Supplemental Indenture, dated as of September 1, 1978, (filed as
an exhibit in File No. 2-62543).
Twenty-sixth Supplemental Indenture, dated as of September 1, 1978, (filed
as an exhibit in File No. 2-62543).
Thirtieth Supplemental Indenture, dated as of August 1, 1980, (filed as an
exhibit in File No. 2-68562).
Thirty-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).
Forty-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).
Forty-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).
Forty-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).
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
E-14
PART IV Exhibit
Number
4.13.10
4.13.11
4.13.12
4.13.13
4.13.14
4.13.15
4.13.16
4.13.17
4.13.18
4.13.19
4.13.20
4.13.21
4.13.22
4.13.23
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Fifty-second Supplemental Indenture, dated as of April 30, 1999 (incorporated
by reference to Exhibit 4 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Quarterly Report on Form 10-Q for the quarter ended March 31, 1999,
filed on May 13, 1999, File No. 1-3543).
Fifty-seventh Supplemental Indenture, dated as of August 21, 2008
(incorporated by reference to Exhibit 4.1 to Duke Energy Indiana, LLC’s
(formerly PSI Energy, Inc.) Current Report Form 8-K filed on August 21, 2008,
File No. 1-3543).
Fifty-eighth Supplemental Indenture, dated as of December 19, 2008
(incorporated by reference to Exhibit 4.8.12 to Duke Energy Indiana, LLC’s
(formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on
September 29, 2010, File No. 333-169633-02).
Fifty-ninth Supplemental Indenture, dated as of March 23, 2009 (incorporated
by reference to Exhibit 4.1 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Current Report on Form 8-K filed on March 24, 2009, File No. 1-3543).
Sixtieth Supplemental Indenture, dated as of June 1, 2009 (incorporated by
reference to Exhibit 4.8.14 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Registration Statement on Form S-3 filed on September 29, 2010,
File No. 333-169633-02).
Sixty-first Supplemental Indenture, dated as of October 1, 2009 (incorporated
by reference to Exhibit 4.8.15 to Duke Energy Indiana, LLC’s (formerly PSI
Energy, Inc.) Registration Statement on Form S-3 filed on September 29,
2010, File No. 333-169633-02).
Sixty-second Supplemental Indenture, dated as of July 9, 2010 (incorporated
by reference to Exhibit 4.1 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Current Report on Form 8-K filed on July 9, 2010, File No. 1-3543).
Sixty-third Supplemental Indenture, dated as of September 23, 2010
(incorporated by reference to Exhibit 4.8.17 to Duke Energy Indiana, LLC’s
(formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on
September 29, 2010, File No. 333-169633-02).
Sixty-fourth Supplemental Indenture, dated as of December 1, 2011
(incorporated by reference to Exhibit 4(d)(2)(xviii) to Duke Energy Indiana,
LLC’s (formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on
September 30, 2013, File No. 333-191462-03).
Sixty-fifth Supplemental Indenture, dated as of March 15, 2012 (incorporated
by reference to Exhibit 4.1 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Current Report on Form 8-K filed on March 15, 2012, File No. 1-3543).
Sixty-sixth Supplemental Indenture, dated as of July 11, 2013 (incorporated
by reference to Exhibit 4.1 to Duke Energy Indiana, LLC’s (formerly PSI Energy,
Inc.) Current Report on Form 8-K filed on July 11, 2013, File No. 1-3543).
Sixty-seventh Supplemental Indenture, dated as of January 1, 2016, between
Duke Energy Indiana, Inc. and Deutsche Bank National Trust Company, as
Trustee, supplementing and amending the Indenture of Mortgage or Deed
of Trust, dated September 1, 1939, between Duke Energy Indiana, Inc. and
Deutsche Bank National Trust Company, as Trustee (incorporated by reference
to Exhibit 4.2 to Duke Energy Indiana, LLC’s (formerly PSI Energy, Inc.)
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed on
May 5, 2016, File No. 1-3543).
Sixty-eighth Supplemental Indenture, dated as of May 12, 2016 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
May 12, 2016, File No. 1-3543).
Sixty-ninth Supplemental Indenture, dated as of September 27, 2019
(incorporated by reference to Exhibit 4.1 to registrant’s Current Report on
Form 8-K filed on September 27, 2019, File No. 1-3543).
E-15
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
4.13.24
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
Seventieth Supplemental Indenture, dated as of March 12, 2020 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
March 12, 2020, File No. 1-3543).
Repayment 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).
Unsecured Promissory Note between Duke Energy Indiana, LLC (formerly
PSI Energy, Inc.) and the Rural Utilities Service, dated as of October 14,
1998 (incorporated by reference to Exhibit 4 to registrant’s Annual Report on
Form 10-K for the year ended December 31, 1998, filed on March 8, 1999,
File No. 1-3543).
6.302% Subordinated Note between Duke Energy Indiana, LLC (formerly PSI
Energy, Inc.) and Cinergy Corp., dated as of February 5, 2003 (incorporated by
reference to Exhibit 4(yyy) to registrant’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2003, filed on May 12,2003, File No. 1-3543).
6.403% Subordinated Note between Duke Energy Indiana, LLC (formerly PSI
Energy, Inc.) and Cinergy Corp., dated as of February 5, 2003 (incorporated by
reference to Exhibit 4(zzz) to registrant’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2003, filed on May 12, 2003, File No. 1-3543).
Contingent Value Obligation Agreement between Progress Energy, Inc.
(formerly CP&L Energy, Inc.) and The Chase Manhattan Bank, as Trustee,
dated as of November 30, 2000 (incorporated by reference to Exhibit 4.1
to registrant’s Current Report on Form 8-K filed on December 1, 2000,
File No. 1-3382).
Form of 3.47% Series A Senior Notes due July 16, 2027 (incorporated by
reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
March 29, 2012, File No. 1-06196).
Form of 3.57% Series B Senior Notes due July 16, 2027 (incorporated by
reference to Exhibit 4.2 to registrant’s Current Report on Form 8-K filed on
March 29, 2012, File No. 1-06196).
Form of 4.65% Senior Notes due 2043 (incorporated by reference to Exhibit
4.2 to registrant’s Current Report on Form 8-K filed on August 1, 2013, File
No. 1-06196).
Form of 4.10% Senior Notes due 2034 (incorporated by reference to Exhibit
4.2 to registrant’s Current Report on Form 8-K filed on September 18, 2014,
File No. 1-06196).
Form of 3.60% Senior Notes due 2025 (incorporated by reference to Exhibit
4.2 to registrant’s Current Report on Form 8-K filed on September 14, 2015,
File No. 1-06196).
Form of 3.64% Senior Notes due 2046 (incorporated by reference to
Exhibit 4.2 to registrant’s Current Report on Form 8-K filed on July 28, 2016,
File No. 1-06196).
Form of 4.24% Series B Senior Notes due June 6, 2021 (incorporated by
reference to Exhibit 4.2 to registrant’s Current Report on Form 8-K filed on
May 12, 2011, File No. 1-06196).
Indenture, dated as of April 1, 1993, between Piedmont and The Bank of
New York Mellon Trust Company, N.A. (as successor to Citibank, N.A.), Trustee
(incorporated by reference to Exhibit 4.1 to registrant’s Registration Statement
on Form S-3 filed on May 16, 1995, File No. 33-59369).
4.26.1
Second Supplemental Indenture, dated as of June 15, 2003, between
Piedmont and Citibank, N.A., Trustee (incorporated by reference to Exhibit 4.3
to registrant’s Registration Statement on Form S-3 filed on June 19, 2003,
File No. 333-106268).
E-16
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
4.26.2
4.26.3
4.26.4
4.26.5
4.26.6
4.26.7
4.26.8
4.26.9
4.27
4.28
4.29
4.30
4.31
4.32
4.33
Fourth Supplemental Indenture, dated as of May 6, 2011, between
Piedmont Natural Gas Company, Inc. and The Bank of New York Mellon
Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to
registrant’s Registration Statement on Form S-3-ASR filed on July 7, 2011,
File No. 333-175386).
Fifth Supplemental Indenture, dated August 1, 2013, between the Company
and The Bank of New York Mellon Trust Company, N.A. (incorporated by
reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
August 1, 2013, File No. 1-06196).
Sixth Supplemental Indenture, dated September 18, 2014, between the
Company and The Bank of New York Mellon Trust Company, N.A. (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
September 18, 2014, File No. 1-06196).
Seventh Supplemental Indenture, dated September 14, 2015, between the
Company and The Bank of New York Mellon Trust Company, N.A. (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
September 14, 2015, File No. 1-06196).
Eighth Supplemental Indenture, dated July 28, 2016, between the Company
and The Bank of New York Mellon Trust Company, N.A. (incorporated by
reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
July 28, 2016, File No. 1-06196).
Ninth Supplemental Indenture, dated as of May 24, 2019 (incorporated by
reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
May 24, 2019, File No. 1-6196).
Tenth Supplemental Indenture, dated as of May 21, 2020 (incorporated by
reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
May 21, 2020, File No. 1-6196).
Eleventh Supplemental Indenture, dated as of March 11, 2021 (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
March 11, 2021, File No. 1-6196).
Medium-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).
Medium-Term Note, Series A, dated as of September 19, 1994 (incorporated
by reference to Exhibit 4.9 to registrant’s Annual Report on Form 10-K for the
year ended October 31, 1994, File No. 1-06196).
Form of 6% Medium-Term Note, Series E, dated as of December 19, 2003
(incorporated by reference to Exhibit 99.2 to registrant’s Current Report on
Form 8-K filed on December 23, 2003, File No. 1-06196).
Form of Master Global Note (incorporated by reference to Exhibit 4.4 to
registrant’s Registration Statement on Form S-3 filed on April 30, 1997,
File No. 333-26161).
Pricing Supplement of Medium-Term Notes, Series B, dated October 3, 1995
(incorporated by reference to Exhibit 4.10 to registrant’s Annual Report on
Form 10-K for the year ended October 31, 1995, File No. 1-06196).
Pricing Supplement of Medium-Term Notes, Series B, dated October 4, 1996
(incorporated by reference to Exhibit 4.11 to registrant’s Annual Report on
Form 10-K for the year ended October 31, 1996, File No. 1-06196).
Pricing Supplement of Medium-Term Notes, Series C, dated September 15,
1999 (incorporated by reference to Rule 424(b)(3) Pricing Supplement to
Form S-3 Registration Statement Nos. 33-59369 and 333-26161).
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
E-17
PART IV Exhibit
Number
4.34
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
Agreement of Resignation, Appointment and Acceptance dated as of March
29, 2007, by and among Piedmont Natural Gas Company, Inc., Citibank, N.A.,
and The Bank of New York Trust Company, N.A. (incorporated by reference
to Exhibit 4.1 to registrant’s Quarterly Report on Form 10-Q for the quarter
ended April 30, 2007, filed on June 8, 2007, File No. 1-06196).
Agreements with Piedmont Electric Membership Corporation, Rutherford
Electric Membership Corporation and Blue Ridge Electric Membership
Corporation (incorporated by reference to Exhibit 10.15 to Duke Energy
Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2006, filed on August 9, 2006, File No. 1-32853).
Asset Purchase Agreement between Saluda River Electric Cooperative,
Inc., as Seller, and Duke Energy Carolinas, LLC, as Purchaser, dated as of
December 20, 2006 (incorporated by reference to Exhibit 10.1 to registrant’s
Current Report on Form 8-K filed on December 27, 2006, File No. 1-4928).
Settlement between Duke Energy Corporation, Duke Energy Carolinas, LLC
and the U.S. Department of Justice resolving Duke Energy’s used nuclear fuel
litigation against the U.S. Department of Energy, dated as of March 6, 2007
(incorporated by reference to Item 8.01 to registrant’s Current Report on
Form 8-K filed on March 12, 2007, File No. 1-4928).
Letter Agreement between Georgia Natural Gas Company and Piedmont
Energy Company dated February 12, 2016 (incorporated by reference to
Exhibit 10.1 to registrant’s Current Report on Form 8-K filed on February 18,
2016, File No. 1-06196).
Assignment of Membership Interests dated as of October 3, 2016 between
Piedmont ACP Company, LLC and Dominion Atlantic Coast Pipeline, LLC,
(incorporated by reference to Exhibit 10.1 to registrant’s Current Report on
Form 8-K filed on October 7, 2016, File No. 1-06196).
Agreements between Piedmont Electric Membership Corporation, Rutherford
Electric Membership Corporation and Blue Ridge Electric Membership
Corporation (incorporated by reference to Exhibit 10.15 to Duke Energy
Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2006, filed on August 9, 2006, File No. 1-32853).
Conveyance and Assignment Agreement, dated as of October 3, 2016, by
and between Piedmont Energy Company and Georgia Natural Gas Company
(incorporated by reference to Exhibit 10.1 to registrant’s Current Report on
Form 8-K filed on October 3, 2016, File No. 1-06196).
Engineering, Procurement and Construction Management Agreement between
Duke Energy Indiana, LLC (formerly PSI Energy, Inc.) and Bechtel Power
Corporation, dated as of December 15, 2008 (incorporated by reference to
Exhibit 10.16 to registrant’s Annual Report on Form 10-K for the year ended
December 31, 2008, filed on March 13, 2009, File No. 1-3543). (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.)
Formation and Sale Agreement between Duke Ventures, LLC, Crescent
Resources, LLC, Morgan Stanley Real Estate Fund V U.S. L.P., Morgan Stanley
Real Estate Fund V Special U.S., L.P., Morgan Stanley Real Estate Investors
V U.S., L.P., MSP Real Estate Fund V, L.P., and Morgan Stanley Strategic
Investments, Inc., dated as of September 7, 2006 (incorporated by reference
to Exhibit 10.3 to Duke Energy Corporation’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006, filed on November 9, 2006,
File No. 1-32853).
X
E-18
PART IV Exhibit
Number
10.10
10.11**
Operating Agreement of Pioneer Transmission, LLC (incorporated by reference
to Exhibit 10.1 to Duke Energy Corporation’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2008, filed on November 7, 2008,
File No. 1-32853).
Amended and Restated Duke Energy Corporation Directors’ Saving Plan,
dated as of January 1, 2014 (incorporated by reference to Exhibit 10.32 to
Duke Energy Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2013, filed on February 28, 2014, File No. 1-32853).
*10.12**
Amendment to Duke Energy Corporation Directors’ Savings Plan, effective as
of December 16, 2021.
10.13
10.14**
10.15
10.15.1
10.15.2
10.15.3
Engineering, Procurement and Construction Management Agreement between
Duke Energy Indiana, LLC (formerly PSI Energy, Inc.) and Bechtel Power
Corporation, dated as of December 15, 2008 (incorporated by reference to
Item 1.01 to registrant’s Current Report on Form 8-K filed on December 19,
2008, File Nos. 1-32853 and 1-3543). (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.)
Duke Energy Corporation Executive Severance Plan (incorporated by reference
to Exhibit 10.1 to registrant’s Current Report on Form 8-K filed on January 13,
2011, File No. 1-32853).
$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).
Amendment No. 1 and Consent between Duke Energy Corporation, Duke
Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC,
Duke Energy Kentucky, Inc., Duke Energy Progress, Inc., Duke Energy Florida,
Inc., and Wells Fargo Bank, National Association, dated as of December
18, 2013 (incorporated by reference to Exhibit 10.1 to registrant’s Current
Report on Form 8-K filed on December 23, 2013, File Nos. 1-32853, 1-4928,
1-3382, 1-3274, 1-1232 and 1-3543).
Amendment No. 2 and Consent between Duke Energy Corporation, Duke
Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC,
Duke Energy Kentucky, Inc., Duke Energy Progress, Inc., and Duke Energy
Florida, Inc., the Lenders party hereto, the issuing Lenders party hereto, Wells
Fargo Bank, National Association, as Administrative Agent and Swingline
Lender, dated as of January 30, 2015 (incorporated by reference to Exhibit
10.1 of registrant’s Current Report on Form 8-K filed on February 5, 2015,
File Nos. 1-32853, 1-4928, 1-1232, 1-3543, 1-3382 and 1-3274).
Amendment No. 3 and Consent, dated as of March 16, 2017, among the
registrants, the Lenders party thereto, the issuing Lenders party thereto,
and Wells Fargo Bank, National Association, as Administrative Agent and
Swingline Lender (incorporated by reference to Exhibit 10.1 to registrants’
Current Report on Form 8-K filed on March 17, 2017, File Nos. 1-32853,
1-04928, 1-03382, 1-03274, 1-01232, 1-03543, 1-06196).
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
E-19
PART IV Exhibit
Number
10.15.4
10.15.5
10.16**
10.16.1**
10.17**
10.18**
10.19**
10.20**
10.21**
10.22
10.23
10.24
10.25
Amendment No.4 and Consent, dated as of March 18, 2019, among Duke
Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc.,
Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Duke Energy Progress,
LLC, Duke Energy Florida, LLC, and Piedmont Natural Gas Company, Inc.,
the Lenders party thereto, the Issuing Lenders party thereto, and Wells Fargo
Bank, National Association, as Administrative Agent and Swingline Lender
(incorporated by reference to Exhibit 10.1 to registrants’ Current Report on
Form 8-K filed on March 21, 2019, File Nos. 1-32853. 1-4928, 1-3382,
1-3274, 1-1232, 1-3543, 1-6196).
Amendment No. 5 and Consent, dated as of March 16, 2020, among
registrants’, the Lenders party thereto, the Issuing Lenders party thereto,
and Wells Fargo Bank, N.A., as Administrative Agent, and Swingline Lender
(incorporated by reference to Exhibit 10.1 to registrants’ Current Report on
Form 8-K filed on March 17, 2020, File Nos. 1-32853, 1-4928, 1-3382,
1-3274, 1-1232, 1-3543, 1-6196).
Duke Energy Corporation 2015 Long-Term Incentive Plan (incorporated by
reference to Appendix C to registrant’s DEF 14A filed on March 26, 2015,
File No. 1-32853).
Amendment to Duke Energy Corporation 2015 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.16.1 to Duke Energy Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2018, filed on
February 28, 2019, File No. 1-32853).
Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.4 to registrant’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2017 filed on May 9, 2017, File No. 1-32853).
Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.24 to Duke Energy Corporation’s Annual Report on Form 10-K for the year
ended December 31, 2017, filed on February 21, 2018, File No. 1-32853).
Performance Share Award Agreement (incorporated by reference to Exhibit
10.2 to Duke Energy Corporation’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019, filed on May 9, 2019, File No. 1-32853).
Performance Award Agreement (incorporated by reference to Exhibit 10.4
to Duke Energy Corporation’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2020, filed on May 12, 2020, File No. 1-32853).
Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.3 to Duke Energy Corporation’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019, filed on May 9, 2019, File No. 1-32853).
Settlement Agreement between Duke Energy Corporation, the North Carolina
Utilities Commission Staff and the North Carolina Public Staff, dated as of
November 28, 2012 (incorporated by reference to Exhibit 10.1 to registrant’s
Current Report on Form 8-K filed on November 29, 2012, File No. 1-32853).
Settlement Agreement between Duke Energy Corporation and the North
Carolina Attorney General, dated as of December 3, 2012 (incorporated
by reference Item 7.01 to registrant’s Current Report on Form 8-K filed on
December 3, 2012, File No. 1-32853).
Settlement Agreement between Duke Energy Carolinas, LLC, Duke Energy
Progress, LLC, and The North Carolina Department of Environmental Quality,
dated as of December 31, 2019 (incorporated by reference to Exhibit
10.1 to registrants’ Current Report on Form 8-K filed on January 2, 2020,
File Nos. 1-4928, 1-3382).
Duke Energy Carolinas Summary of Partial Settlement in North Carolina Rate
Case (incorporated by reference to Exhibit 99.1 to registrant’s Current Report
on Form 8-K filed on March 26, 2020, File Nos. 1-32853, 1-4928, 1-3382).
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
E-20
PART IV Duke
Energy
Carolinas
X
Duke
Energy
X
X
X
X
X
X
Exhibit
Number
10.26
10.27
10.28
10.29**
10.30**
10.30.1**
10.31
10.32
10.33
10.34
Coal Combustion Residuals Settlement Agreement between registrants and
the Public Staff-North Carolina Utilities Commission, the North Carolina
Attorney General’s Office, and the Sierra Club, dated as of January 22, 2021
(incorporated by reference to Exhibit 10.1 to registrants’ Quarterly Report on
Form 10-Q for the quarter ended March 31, 2021, filed on May 10, 2021,
File Nos. 1-32853, 1-4928, 1-3382).
Investment Agreement by and among Cinergy Corp., Duke Energy Indiana
HoldCo, LLC, Duke Energy Corporation, and Epson Investment PTE. LTD,.
dated as of January 28, 2021 (incorporated by reference to Exhibit 10.2 to
registrants’ Quarterly Report on Form 10-Q for the quarter ended March 31,
2021, filed on May 10, 2021, File Nos. 1-32853, 1-3543).
Cooperation Agreement, dated as of November 13, 2021, by and among
Duke Energy Corporation, Elliott Investment Management L.P., and Elliott
International, L.P.(incorporated by reference to registrant’s Current Report on
Form 8-K filed on November 15, 2021, File No. 1-32853).
Form of Change-in-Control Agreement (incorporated by reference to Exhibit
10.58 to Duke Energy Corporation’s Annual Report on Form 10-K for the year
ended December 31, 2012, filed on March 1, 2013, File No. 1-32853).
Amended and Restated Duke Energy Corporation Executive Cash Balance
Plan, dated as of January 1, 2014 (incorporated by reference to Exhibit 10.52
to Duke Energy Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2013, filed on February 28, 2014, File No. 1-32852).
Amended and Restated Duke Energy Corporation Executive Cash Balance
Plan, dated as of September 30, 2020 (incorporated by reference to Exhibit
10.1 to registrant’s Current Report on Form 8-K filed on September 25, 2020,
File No. 1-32853).
Purchase, 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).
Operating 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).
Power 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).
Amendment, 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).
E-21
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
PART IV Exhibit
Number
10.35
10.36
10.37**
10.37.1**
10.38**
10.39**
10.40**
10.40.1**
10.40.2**
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.)
Engineering, Procurement and Construction Agreement between Duke Energy
Florida, Inc. (formerly Florida Power Corporation d/b/a/ Progress Energy
Florida, Inc.), as owner, and a consortium consisting of Westinghouse Electric
Company LLC and Stone & Webster, Inc., as contractor, for a two-unit
AP1000 Nuclear Power Plant, dated as of December 31, 2008 (incorporated
by reference to Exhibit 10.1 to registrant’s Current Report on Form 8-K filed
on March 2, 2009, 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.)
Employment Agreement between Duke Energy Corporation and Lynn J. Good,
dated as of June 17, 2013 (incorporated by reference to Exhibit 10.1 to Duke
Energy Corporation’s Current Report on Form 8-K filed on June 18, 2013,
File No. 1-32853).
Amendment to Employment Agreement between Duke Energy Corporation
and Lynn J. Good, dated as of June 25, 2015 (incorporated by reference to
Exhibit 10.1 to Duke Energy Corporation’s Current Report on Form 8-K filed on
June 29, 2015, File No. 1-32853).
Duke Energy Corporation Executive Short-Term Incentive Plan, dated as
of February 25, 2013 (incorporated by reference to Exhibit 10.1 to Duke
Energy Corporation’s Current Report on Form 8-K filed on May 7, 2013,
File No. 1-32853).
Duke Energy Corporation 2017 Director Compensation Program Summary
(incorporated by reference to Exhibit 10.3 to Duke Energy Corporation’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed on
August 3, 2017, File No. 1-32853).
Amended and Restated Duke Energy Corporation Executive Savings Plan,
dated as of January 1, 2014 (incorporated by reference to Exhibit 10.82 to
Duke Energy Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2013, filed on February 28, 2014, File No. 1-32853).
Amendment to Duke Energy Corporation Executive Savings Plan, dated
as of January 1, 2014 (incorporated by reference to Exhibit 10.1 to Duke
Energy Corporation’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017, filed on November 3, 2017, File No. 1-32853).
Amendment to Duke Energy Corporation Executive Savings Plan, dated as of
October 1, 2020 (incorporated by reference to Exhibit 10.2 to Duke Energy
Corporation’s Current Report on Form 8-K filed on September 25, 2020,
File No. 1-32853).
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
X
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
E-22
PART IV Exhibit
Number
10.41**
Consulting Agreement, dated as of September 22, 2021, between Duke Energy
Business Services, LLC and Douglas F Esamann (incorporated by reference to
Exhibit 10.1 to registrant’s Current Report on Form 8-K filed on September 27,
2021, File No. 1-32853).
*10.42**
Retention Award Agreement
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
Agreement between Duke Energy SAM, LLC, Duke Energy Ohio, Inc., Duke
Energy Commercial Enterprise, Inc. and Dynegy Resource I, LLC, dated as of
August 21, 2014 (incorporated by reference to Exhibit 10.61 to Duke Energy
Corporation’s Annual Report on Form 10-K for the year ended December 31,
2014, filed on March 2, 2015, File No. 1-32853).
Asset Purchase Agreement between Duke Energy Progress, Inc. and North
Carolina Eastern Municipal Power Agency, dated as of September 5, 2014
(incorporated by reference to Exhibit 10.62 to Duke Energy Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2014, filed on
March 2, 2015, File No. 1-32853).
Accelerated Stock Repurchase Program executed by Goldman, Sachs & Co.,
and JPMorgan Chase Bank, N.A. on April 6, 2015, under an agreement with
Duke Energy Corporation (incorporated by reference to Exhibit 10.1 to Duke
Energy Corporation’s Current Report on Form 8-K filed on April 6, 2015,
File No. 1-32853).
Plea Agreement between Duke Energy Corporation and the Court of the
Eastern District of North Carolina in connection with the May 14, 2015, Dan
River Grand Jury Settlement (incorporated by reference to Exhibit 10.3 to Duke
Energy Corporation’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2015, filed on August 7, 2015, File No. 1-32853).
Plea Agreement between Duke Energy Corporation and the Court of the
Eastern District of North Carolina in connection with the May 14, 2015, Dan
River Grand Jury Settlement (incorporated by reference to Exhibit 10.4 to Duke
Energy Corporation’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2015, filed on August 7, 2015, File No. 1-32853).
Purchase and Sale Agreement by and among Duke Energy International
Group S.à.r.l., Duke Energy International Brazil Holdings S.à.r.l. and China
Three Gorges (Luxembourg) Energy S.à.r.l., dated as of October 10, 2016
(incorporated by reference to Exhibit 2.1 to registrant’s Current Report on
Form 8-K filed on October 13, 2016, File No. 1-32853).
Purchase and Sale Agreement by and among Duke Energy Brazil Holdings
II, C.V., Duke Energy International Uruguay Investments SRL, Duke Energy
International Group S.à.r.l., Duke Energy International España Holdings SL,
Duke Energy International Investments No. 2 Ltd., ISQ Enerlam Aggregator,
L.P., and Enerlam (UK) Holdings Ltd., dated as of October 10, 2016
(incorporated by reference to Exhibit 2.2. to registrant’s Current Report on
Form 8-K filed on October 13, 2016, File No. 1-32853).
$1,000,000,000 Credit Agreement, dated as of June 14, 2017, among
Duke Energy Corporation, the Lenders listed therein, The Bank of Nova
Scotia, as Administrative Agent, PNC Bank, N.A., Sumitomo Mitsui Banking
Corporation, and TD Bank, N.A., as C0-Syndication Agents, and Bank of
China, New York Branch, BNP Paribas, Santander Bank, N.A. and U.S. Bank
N.A., as Co-Documentation Agents (incorporated by reference to Exhibit
10.1 to registrant’s Current Report on Form 8-K filed on June 14, 2017,
File No. 1-32853).
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
E-23
PART IV Exhibit
Number
10.51
10.51.1
10.52
10.52.1
10.53
10.54
10.54.1
10.54.2
10.55
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
$1,000,000,000 Credit Agreement, dated as of May 15, 2019, among
Duke Energy Corporation, the Lenders party thereto, The Bank of Nova
Scotia, as Administrative Agent, PNC Bank, N.A., Sumitomo Mitsui Banking
Corporation, and TD Bank, N.A., as Co-Syndication Agents, and Bank of
China, New York Branch, BNP Paribas, Santander Bank, N.A., and U.S. Bank,
N.A., as Co-Documentation Agents (incorporated by reference to Exhibit
10.1 to registrant’s Current Report on Form 8-K filed on May 16, 2019,
File No. 1-32853).
First Amendment to $1,000,000,000 Credit Agreement, dated as of May 15,
2019, among Duke Energy Corporation, the Lenders party therein, The Bank
of Nova Scotia, as Administrative Agent, PNC Bank, N.A., Sumitomo Mitsui
Banking Corporation, and TD Bank, N.A., as Co-Syndication Agents, and Bank
of China, New York Branch, BNP Paribas, Santander Bank, N.A., and U.S>
Bank, N.A., as Co-Documentation Agents (incorporated by reference to Exhibit
10.3 to registrant’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2021, filed on May 10, 2021, File No. 1-32853).
$1.5 billion 364-Day Term Loan Credit Agreement, dated as of March 19,
2020, among the registrant, as Borrower, certain Lenders from time to time
parties thereto, and PNC Bank, N.A., as Administrative Agent, and registrant’s
borrowing of the remaining $500 million under registrant’s existing $1 billion
revolving credit facility on March 17, 2020 (incorporated by reference to
Exhibit 10.1 to registrant’s Current Report on Form 8-K filed on March 19,
2020, File No. 1-32853).
Joinder Agreement, dated as of March 27, 2020, by and among, the
registrant, each of the Incremental Lenders listed therein, and PNC Bank,
N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2.1 to
registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2020, filed on May 12, 2020, File No. 1-32853).
Note Purchase Agreement, dated as of May 6, 2011, among Piedmont
Natural Gas Company, Inc. and the Purchasers party thereto (incorporated
by reference to Exhibit 10 to registrant’s Current Report on Form 8-K filed on
May 12, 2011, File No. 1-06196).
Amended and Restated Limited Liability Company Agreement of Constitution
Pipeline Company, LLC dated April 9, 2012, by and among Williams Partners
Operating LLC and Cabot Pipeline Holdings LLC (incorporated by reference
to Exhibit 10.1 to registrant’s Quarterly Report on Form 10-Q for the quarter
ended January 31, 2013, filed on March 6, 2013, File No. 1-06196).
First Amendment to Amended and Restated Limited Liability Company
Agreement of Constitution Pipeline Company, LLC, dated as of November 9,
2012, by and among Constitution Pipeline Company, LLC, Williams Partners
Operating LLC, Cabot Pipeline Holdings LLC, and Piedmont Constitution
Pipeline Company, LLC (incorporated by reference to Exhibit 10.2 to
registrant’s Quarterly Report on Form 10-Q for the quarter ended January 31,
2013, filed on March 6, 2013, File No. 1-06196).
Second Amendment to Amended and Restated Limited Liability Company
Agreement of Constitution Pipeline Company, LLC, dated as of May 29,
2013, by and among Constitution Pipeline Company, LLC, Williams Partners
Operating LLC, Cabot Pipeline Holdings LLC, Piedmont Constitution
Pipeline Company, LLC, and Capitol Energy Ventures Corp. (incorporated by
reference to Exhibit 99.1 to registrant’s Current Report on Form 8-K filed on
September 4, 2013, File No. 1-06196).
Second Amended and Restated Limited Liability Company Agreement of
SouthStar Energy Services LLC, dated as of September 1, 2013, by and
between Georgia Natural Gas Company and Piedmont Energy Company
(incorporated by reference to Exhibit 10.39 to registrant’s Annual Report on
Form 10-K for the year ended October 31, 2013, filed on December 23, 2013,
File No. 1-06196).
E-24
X
X
X
X
X
PART IV Exhibit
Number
10.56
10.57
10.58
10.59
10.60
10.61
10.62
Limited Liability Company Agreement of Atlantic Coast Pipeline, LLC, dated as
of September 2, 2014, by and between Dominion Atlantic Coast Pipeline, LLC,
Duke Energy ACP, LLC, Piedmont ACP Company, LLC, and Maple Enterprise
Holdings, Inc. (incorporated by reference to Exhibit 10.35 to registrant’s
Annual Report on Form 10-K for the year ended October 31, 2014, filed on
December 23, 2014, File No. 1-06196).
Amended and Restated Limited Liability Company Operating Agreement of
Duke Energy Indiana Holdco, LLC (incorporated by reference to Exhibit 10.1
to registrants’ Current Report on Form 8-K filed on September 8, 2021,
File Nos. 1-32853, 1-03543).
Engineering, Procurement and Construction Agreement between Duke
Energy Business Services, LLC, as agent for and on behalf of Piedmont
Natural Gas Company Inc. and Matrix Service, Inc., dated as of April 30,
2019 (incorporated by reference to Exhibit 10.1 to registrant’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2019, filed on August
6, 2019, File No. 1-06196). (Portions of the exhibit have been omitted for
confidentiality.)
Decommissioning Services Agreement between Duke Energy Florida, LLC, and
ADP CR3, LLC, and ADP SF1, LLC (incorporated by reference to Exhibit 10.3
to registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2019, filed on August 6, 2019, File No. 2-5293). (Portions of the exhibit have
been omitted for confidentiality.)
Form of Forward Sale Agreement (incorporated by reference to Exhibit 10.1
to registrant’s Current Report on Form 8-K filed on November 8, 2019,
File No. 1-32853).
Lease Agreement dated as of December 23, 2019, between the registrant and
CGA 525 South Tryon TIC 1, LLC, a Delaware limited liability company, CGA
525 South Tryon TIC 2, LLC, a Delaware limited liability company, and CK 525
South Tryon TIC, LLC, a Delaware limited liability company (incorporated by
reference to Exhibit 10.64 to registrant’s Annual Report on Form 10-K for the
year ended December 31, 2019, filed on February 20, 2020, File No. 1-4928).
Construction Agency Agreement dated as of December 23, 2019, between
the registrant and CGA 525 South Tryon TIC 1, LLC, a Delaware limited
liability company, CGA 525 South Tryon TIC 2, LLC, a Delaware limited
liability company, and CK 525 South Tryon TIC, LLC, a Delaware limited
liability company (incorporated by reference to Exhibit 10.65 to registrant’s
Annual Report on Form 10-K for the year ended December 31, 2019, filed on
February 20, 2020, File No. 1-4928).
*21
List of Subsidiaries
*23.1.1
Consent of Independent Registered Public Accounting Firm.
*23.1.2
Consent of Independent Registered Public Accounting Firm.
*23.1.3
Consent of Independent Registered Public Accounting Firm.
*23.1.4
Consent of Independent Registered Public Accounting Firm.
*23.1.5
Consent of Independent Registered Public Accounting Firm.
*23.1.6
Consent of Independent Registered Public Accounting Firm.
*23.1.7
Consent of Independent Registered Public Accounting Firm.
*24.1
*24.2
Power of attorney authorizing Lynn J. Good and others to sign the Annual
Report on behalf of the registrant and certain of its directors and officers.
Certified copy of resolution of the Board of Directors of the registrant
authorizing power of attorney.
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
E-25
PART IV
Exhibit
Number
*31.1.1
*31.1.2
*31.1.3
*31.1.4
*31.1.5
*31.1.6
*31.1.7
*31.1.8
*31.2.1
*31.2.2
*31.2.3
*31.2.4
*31.2.5
*31.2.6
*31.2.7
*31.2.8
*32.1.1
*32.1.2
*32.1.3
*32.1.4
*32.1.5
*32.1.6
*32.1.7
*32.1.8
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
X
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
X
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
E-26
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Duke
Energy
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
*32.2.1
*32.2.2
*32.2.3
*32.2.4
*32.2.5
*32.2.6
*32.2.7
*32.2.8
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
*101.INS
XBRL Instance Document (this does not appear in the Interactive Data File
because it’s XBRL tags are embedded within the Inline XBRL document).
*101.SCH
XBRL Taxonomy Extension Schema Document
*101.CAL
XBRL Taxonomy Calculation Linkbase Document
*101.LAB
XBRL Taxonomy Label Linkbase Document
*101.PRE
XBRL Taxonomy Presentation Linkbase Document
*101.DEF
XBRL Taxonomy Definition Linkbase Document
*104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in
Exhibit 101).
X
X
X
X
X
X
X
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Duke
Energy
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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-27
PART IV 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 24, 2022
DUKE ENERGY CORPORATION
(Registrant)
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.
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chair, President and Chief Executive Officer
(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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
(iv) Directors:
Michael G. Browning*
Annette K. Clayton*
Theodore F. Craver, Jr.*
Robert M. Davis*
Caroline D. Dorsa*
W. Roy Dunbar*
Lynn J. Good*
John T. Herron*
Idalene F. Kesner*
E. Marie McKee*
Michael J. Pacilio*
Thomas E. Skains*
Nicholas C. Fanandakis*
William E. Webster, Jr.*
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 24, 2022
E-28
PART IV
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 24, 2022
DUKE ENERGY CAROLINAS, LLC
(Registrant)
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
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer 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 24, 2022
E-29
PART IV
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 24, 2022
PROGRESS ENERGY, INC.
(Registrant)
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
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
(iv) Directors:
/s/ KODWO GHARTEY-TAGOE
Kodwo Ghartey-Tagoe
/s/ LYNN J. GOOD
Lynn J. Good
Date: February 24, 2022
E-30
PART IV
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 24, 2022
DUKE ENERGY PROGRESS, LLC
(Registrant)
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
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
(iv) Directors:
/s/ KODWO GHARTEY-TAGOE
Kodwo Ghartey-Tagoe
/s/ R. ALEXANDER GLENN
R. Alexander Glenn
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
/s/ JULIA S. JANSON
Julia S. Janson
Date: February 24, 2022
E-31
PART IV
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 24, 2022
DUKE ENERGY FLORIDA, LLC
(Registrant)
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
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
(iv) Directors:
/s/ KODWO GHARTEY-TAGOE
Kodwo Ghartey-Tagoe
/s/ R. ALEXANDER GLENN
R. Alexander Glenn
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
/s/ JULIA S. JANSON
Julia S. Janson
Date: February 24, 2022
E-32
PART IV
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 24, 2022
DUKE ENERGY OHIO, INC.
(Registrant)
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
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
(iv) Directors:
/s/ R. ALEXANDER GLENN
R. Alexander Glenn
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
Date: February 24, 2022
E-33
PART IV
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 24, 2022
DUKE ENERGY INDIANA, LLC
(Registrant)
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
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
(iv) Directors:
/s/ R. ALEXANDER GLENN
R. Alexander Glenn
/s/ KELLEY A. KARN
Kelley A. Karn
/s/ STAN PINEGAR
Stan Pinegar
Date: February 24, 2022
E-34
PART IV
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 24, 2022
PIEDMONT NATURAL GAS COMPANY, INC.
(Registrant)
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
By:
/s/ LYNN J. GOOD
Lynn J. Good
Chief Executive Officer
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/ CYNTHIA S. LEE
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
(iv) Directors:
/s/ LYNN J. GOOD
Lynn J. Good
/s/ DHIAA M. JAMIL
Dhiaa M. Jamil
/s/ BRIAN D. SAVOY
Brian D. Savoy
Date: February 24, 2022
E-35
PART IV
2 0 2 1 A N N U A L R E P O R T A N D F O R M 1 0 - K
D
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R
G
Y
C
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P
O
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A
T
I
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N
2
0
2
1
A
N
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U
A
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E
P
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A
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F
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1
0
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K
POWERING
the Clean Energy Transformation