2022 ANNUAL REPORT AND FORM 10-K
4,000+ crew members respond to
Hurricane Ian. September 2022.
LYNN J. GOOD
Chair, President and
Chief Executive Offi cer
MEETING THE
MOMENT
DEAR SHAREHOLDER:
2022 was a remarkable year in many respects.
We made signifi cant progress on our strategy, seizing
opportunities at every turn to better serve our customers and
communities and grow our business. It was also a year full of
twists – mounting supply chain constraints, increasing extreme
weather events, and rapidly rising interest rates, infl ation and
fuel costs – that we managed through with great agility.
I’m proud of how Duke Energy employees met the moment
time and again – opportunity and challenge alike.
1 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
OUR COMMITMENT TO DELIVER
Adhering to a clear vision and an unwavering purpose is never so
important as during tumultuous times like these. Our core principles
guide us to make good decisions in the moment and keep our
focus on the larger goals.
For us, that means executing the industry’s largest clean energy
transition while preserving affordability and reliability. The result
is value for our customers, communities and investors.
For the year, our adjusted earnings per share (EPS) were $5.27
– solidly within our revised guidance range. Our performance was
driven by strong results in our electric and gas utilities, including
positive contributions from base rate increases and riders and higher
electric volumes supported by significant customer growth.
We delivered a total shareholder return that outperformed the
Philadelphia Utility Index by 1.4% and the S&P 500 by 20%.
Investors recognized core strengths from customer growth, constructive
jurisdictions, investment opportunities, and cost management.
2022 marked the 96th consecutive year we paid quarterly cash
dividends, which we increased by 2.1%, on our common stock.
Our performance in 2022 positions us well. We took proactive steps
for the long term, advancing our regulatory and policy strategy across
our footprint, including important milestones with the Carolinas Carbon
Plan and Indiana Integrated Resource Plan (IRP), and increasing our
capital plan. Given the significant investment opportunity in our regulated
operations, we also made the decision to sell our Commercial Renewables
business. We intend to close on the sale in the second half of 2023.
Our regulated utilities remain strong and the future is bright.
Constructive recovery mechanisms, an active regulatory calendar,
and a continued focus on cost management give us confidence
in achieving our adjusted 2023 EPS guidance range of $5.55
to $5.75 and our 5% to 7% long-term growth rate.
And although economic uncertainty continues, we will closely monitor
and respond to the dynamic environment, leveraging our business
agility to deliver the results you’ve come to expect from us.
2 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
EXECUTING OUR STRATEGY
Our value as a company has always rested on providing safe, reliable and affordable power,
day in and day out. That commitment is unwavering; but how we deliver on it is changing.
Our path to net-zero strategy continues to deliver consistent and lasting benefits to our
customers, communities and investors. We believe in a responsible pace of change that
is grounded in collaborating with stakeholders to achieve policy progress, transforming
and readying our system, and creating value for customers and shareholders.
Collaborating with Our Stakeholders
Our vision for an affordable, reliable clean energy future is clear and it is
informed by our engagement with stakeholders. We made strong progress in
2022, working with legislators, policymakers and other interested parties to
advance the transition and ensure the best outcomes for those we serve.
3 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
At the federal level, President Biden signed historic climate
legislation into law. The Inflation Reduction Act (IRA) lowers
the cost of the energy transformation and incentivizes future
investment in clean energy technologies. We expect to
qualify for a variety of nuclear, solar and other renewable
tax credits that will generate billions in savings over the next
decade and help maintain affordability for our customers.
We also made progress with the U.S. Department of Energy
(DOE) and other agencies to identify opportunities under the
bipartisan Infrastructure Investment and Jobs Act (IIJA) signed
into law in 2021. The DOE received more than $62 billion to
help develop and deploy zero-emitting load-following resources.
In 2022, we submitted two funding applications – one to
expand our methane emissions reduction work and another
for an integrated carbon capture and storage design study at
our Edwardsport Combined Cycle Plant. Already this year, we
are pursuing funding to enhance grid resiliency and progress
the development of hydrogen and long-duration storage.
Across our service territories, we worked to advance
our jurisdictional priorities.
Foremost among them is the North Carolina Carbon
Plan, which is designed to meet carbon reduction
targets under North Carolina’s House Bill 951 (HB
951) – 70% carbon reduction by 2030 and net-zero
by 2050 – while balancing affordability and reliability.
We spent months gathering feedback to inform our
proposed plan, including engaging over 500 stakeholders
from diverse community, customer and consumer groups.
In May, we filed a plan that outlined several portfolios to
achieve these goals. Each presented a road map to lower
emissions through an orderly retirement of coal, replacing
it with a diverse set of carbon-free and dispatchable
resources. We also requested the approval of near-
term activities needed for replacement generation.
In late December, we received a constructive order from the
North Carolina Utilities Commission (NCUC) recognizing
the value of an all-of-the-above approach. The near-
term activities approved include 3,100 megawatts
of solar and 1,600 megawatts of storage, as well as
transmission upgrades to support these resources.
4 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
The NCUC also approved development activities for
longer-lead investments, including small modular nuclear reactors
(SMRs), pumped hydro storage and transmission related to
offshore wind. And the NCUC supported planning for approximately
2,000 megawatts of new, hydrogen-capable natural gas
generation to maintain reliability. We look forward to continuing
our progress through our updated Carbon Plan filing in North
Carolina and the next IRP filing in South Carolina later this year.
Enabled by HB 951, we also initiated our first requests in North
Carolina to implement modern regulatory mechanisms, including
performance-based ratemaking and multiyear rate plans, in Duke
Energy Progress (DEP) and Duke Energy Carolinas (DEC).
The proposed, three-year multiyear rate plan will help
smooth customer rate volatility while maintaining upside
from customer growth. Investments are focused on grid
resiliency, enhanced reliability and lower operating costs.
We expect interim rates to be implemented as early
as midyear for DEP and September for DEC.
In South Carolina, storm securitization legislation
was signed into law in June. This tool allows
utilities to issue bonds to finance storm restoration
costs, lowering the impact for customers. We
filed an initial application with the Public Service
Commission of South Carolina in August to begin
securitizing deferred storm costs in DEP and expect to
issue more than $170 million in bonds by early 2024.
And in the Midwest, we continued to advance our Indiana
transition. We held multiple public information sessions
with stakeholders, conducted requests for proposals
for non-intermittent and renewable resources, and
anticipate filing for certificates of public convenience and
necessity for new generation in the coming months.
We reached positive settlements in our Ohio and DEP South
Carolina electric rate cases, which were approved by the
respective state commissions. These agreements underscore the
constructive environment in our jurisdictions, allowing us to make
critical investments and bring greater value to stakeholders.
5 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Transforming and Readying the System
We operate one of the most diverse systems in the industry and are
preparing it for our low-carbon future. We are on track to exceed our 50%
carbon emissions reduction target by 2030 and committed to an additional
interim target this past year – 80% by 2040 – on our path to net-zero by 2050.
We also became one of the first in the industry to expand our
net-zero goals to include Scope 2 and certain Scope 3 emissions.
Ninety-five percent of our emissions are now tied to a net-zero target.
Reducing emissions
In 2022, we established a goal for coal to represent less than 5% of total
generation by 2030 and a full exit by 2035, subject to regulatory approval.
We announced plans to add regulated renewables at a record rate. By 2035,
we anticipate 30,000 megawatts on our system – five times what we operate today.
This past year, we completed our initial $1 billion, 700-megawatt solar commitment in Florida.
We continue executing our $1 billion Clean Energy Connection program to add another 750
megawatts by the end of 2024.
6 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
To support our renewables portfolio, we are increasing energy storage, adding
nearly 20 megawatts of battery storage in Florida alone last year. By 2024,
we will finish upgrades to our Bad Creek hydro station in South Carolina,
bringing capacity to more than 1,600 megawatts. We also continue to
evaluate the potential for a second powerhouse to double capacity.
Nuclear, which accounts for 80% of the carbon-free energy we generate,
remains critical. Put simply, we can’t achieve our clean energy goals without
it. We continue to advance our first subsequent license renewal application,
which would extend the life of Oconee Nuclear Station for an additional
20 years. We will pursue similar renewals for the remainder of our 11 units
to operate these valuable assets and support our energy transition.
In our natural gas local distribution companies, we are making great
progress reducing methane emissions through our partnership with
Accenture, Microsoft and Avanade to use satellites, sensors
and other technologies to monitor and detect leaks in real
time. And we’re investing $300 million over the next five
years in renewable natural gas, including two North
Carolina projects that will be completed this year.
Grid investments
The grid is the backbone of our transition.
We continue to modernize it to ensure it’s
ready to meet the needs of tomorrow.
This includes preparing for more renewable energy
and extreme weather. In Indiana, we completed our
initial Transmission, Distribution and Storage System
Improvement Charge (TDSIC) plan, investing $1.4 billion
over seven years to make infrastructure upgrades that improve
service to customers. The Indiana Utility Regulatory Commission
approved our subsequent $2 billion, six-year TDSIC 2.0 plan,
which will increase grid reliability and resiliency, enable renewables and
distributed generation, and enhance economic development opportunities.
In Florida, we received approval of our Storm Protection Plan from the Public
Service Commission. Over the next decade, we anticipate investing more than
$7 billion in capital investments to harden the grid and improve resiliency.
7 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
We’re transforming our infrastructure to enable the two-way flow of electricity,
which will support grid edge technologies, including rooftop solar, battery storage
and electric vehicles. We’re collaborating with manufacturers to test vehicle-
to-grid integration capabilities during periods of high energy demand.
To prepare for electric vehicle growth, we also have charging pilots across all our
service territories and are investing $100 million in charging infrastructure by 2025.
Emerging technologies
This decade is essential for researching and developing emerging
technologies that are needed to close the gap to net-zero. The
IIJA plays an important role in bringing the public and private
sectors together to help test and deploy these innovations.
Offshore wind is one such option. In May,
we were awarded one of the Carolina Long Bay
leases near Wilmington, North Carolina. The
Carbon Plan supports limited project development
activities common to all Carolina wind energy areas,
such as onshore transmission infrastructure.
We continue to see exciting developments with
hydrogen. We served as a driving force to launch the
Southeast Hydrogen Hub coalition, which includes
Southern Company, Dominion Energy and Tennessee Valley
Authority, among others, to meet the growing demand for
hydrogen in the transportation, industrial and power sectors.
The coalition was encouraged by the DOE to submit a full
funding application under the IIJA, which we will do this April.
Advanced nuclear and SMR designs continue to develop.
We remain technology agnostic on development activities but are
engaged with TerraPower’s Natrium and GE Hitachi’s BWRX-300 reactors.
We also participate in several developer advisory boards, including
the Holtec executive advisory committee and NuScale industry advisory board.
This past year, we announced a partnership with Purdue University to evaluate the
possibilities of SMR technologies to meet campus needs and provide excess power to the grid.
Long-duration energy storage coupled with these new technologies could be a significant
contributor to our goals. By 2050, we plan to have 30 gigawatts of storage on our system.
Currently, we’re exploring more than a dozen different types of storage – from fuel
cells to pumped hydro to long-duration batteries. We are testing an Eos Gen 3 zinc
battery and a Honeywell flow battery solution at innovation centers. We also recently
submitted a DOE application for a CO2 energy storage installation at our Mayo Plant.
8 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Creating Sustainable Value for Customers and Shareholders
We believe deeply that our transition must deliver value to those we serve,
and 2022 is proof of our commitment.
Delivering for our customers means providing reliable power
at an affordable price and meeting their evolving needs.
In today’s environment, affordability and energy equity
are front and center. During the pandemic, we created a
specialized team to partner with thousands of agencies across
our service territories. Since 2021, our specialists helped
customers access nearly $300 million in assistance funds.
We also began tailoring programs in our states to help customers
with utility bills. Through our Share the Light Fund, our company,
Foundation, employees, and customers invested more than $9
million to provide low-income customers bill pay assistance.
9 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
We’re leveraging IRA benefits and have started to incorporate them into
resource plans and rate adjustments across jurisdictions. In Florida, we’re
already passing along $56 million of corporate tax savings annually.
The Southeast Energy Exchange Market (SEEM) furthered customer savings.
Beginning operations in November, SEEM is a sub-hourly, bilateral trading
market of more than 20 Southeast and Midwest energy companies that
allows utilities to more efficiently buy and sell power and enable renewables.
And we introduced creative new programs. In South Carolina,
for example, we filed for the creation of new renewable energy programs
such as Renewable Choice, which would allow customers to purchase
renewable energy certificates to match up to 100% of their demand.
The proposal also includes one of the first 24/7 renewable offerings
to align use with the hourly production of renewable energy.
We continue to offer customers the control, convenience and options
they want, and this focus shows in our metrics. Piedmont Natural Gas
was named No. 1 in customer satisfaction by J.D. Power for residential
natural gas service in the South for the first time in company history.
Our Carolinas electric utilities also remain top quartile.
For our investors, we’re focused on driving sustainable growth.
We announced an increased capital plan of more than $145 billion in
our regulated businesses over the next decade. It’s one of the largest
in the industry, with 85% funding investments in the grid and our
clean energy transition.
Ninety percent of electric capital investments are eligible for modern
recovery mechanisms, minimizing regulatory lag and strengthening
the balance sheet.
And we are committed to delivering results the right way, which
starts with transparency.
We published a Climate Report, ESG Report and Trade Associations
Climate Review – each outlining various aspects of our transition,
including our progress on decarbonization, diversity and inclusion,
pay equity, environmental justice, just transition, and policy engagement.
This focus earned us a Labrador Transparency Award.
10 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
EXERCISING AGILITY AND NAVIGATING HEADWINDS
Even as we pursued our strategic goals, we acted swiftly and decisively as challenges arose in
this volatile environment.
In response to rising interest rates and inflation, we built on our strong track record on cost management
by identifying $300 million in savings opportunities for 2023. Many of these savings were realized
through organization simplification, work reduction, automation and digitization, and ongoing cost
reductions in supply chain. We believe approximately 75% of the savings will be sustainable.
We minimized high fuel costs for our customers by hedging price exposure, where possible,
and engaging in long-term supply and transportation contracts. We took advantage of our fleet
diversity to dispatch generation to create cost savings and fuel security. We also worked with
regulators in our states to mitigate bill impacts and informed customers of resources to help.
Our service territories also experienced a series of extreme weather events this year. More than
19,000 restoration workers responded to 1 million customer outages across a series of winter storms
– the most we’ve seen in eight years. And in September, Hurricane Ian made landfall in Florida as
the fifth-strongest hurricane on record. We saw significant impacts in Florida and the Carolinas, but
we had 20,000 resources at the ready and restored nearly 2 million outages within 72 hours.
11 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Our team was once again tested in late
December. Historic cold weather and
extremely high customer demand led
to a unique chain of events that forced
us to implement rotating outages in
the Carolinas for the first time in our
history. The rotating outages were
conducted to avoid potentially larger
and longer outages across the system.
We are deeply sorry for what our
customers experienced and are pursuing
every possible lesson. But I am proud of
how our employees responded to restore
power and kept it on for customers
during the remainder of the cold spell.
We are taking steps to ensure that if
faced with similar challenges, we will
see a different outcome and provide
a better customer experience.
Regrettably, weather wasn’t the
only threat to the grid. In early
December, two of our substations
in Moore County, North Carolina,
were attacked. Our crews worked
around-the-clock, pursuing
multiple repair paths and replacing
large and vital pieces of equipment
over several days to restore service
to all 45,000 impacted customers.
As the largest grid operator in the
country, protecting our grid is paramount.
We work every day to secure millions
of essential components across our
grid. And we continue to collaborate
with our industry and government
partners to integrate learnings from this
incident and others around the country
to enhance our protection programs.
12 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
BUILDING ON A STRONG FOUNDATION
We recognize safety, operational excellence and community engagement are foundational to our success.
And we continue to find ways to mature our programs because we recognize our job is never done.
Safety and Operational Excellence
We remain an industry leader in safety performance based on Edison Electric Institute metrics through
our focus on continuous improvement and reinforcement of our safety principles. Importantly,
our environmental performance remains exemplary.
In operational excellence, our generation fleet continued its impressive reliability and safety record.
In 2022, our nuclear fleet attained a capacity factor of 93.7% – the 24th year above 90%.
And our Regulated & Renewable Energy team maintained strong reliability.
As mentioned above, our employees responded quickly to a series of significant storms this year
and grid investments also improved restoration times. In 2022, self-healing technology helped to
avoid more than 1.4 million customer outages, saving more than 7.2 million hours of outage time.
13 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
Investing in Our Communities
We are privileged to be a part of the communities that we serve for
more than a century. Part of our purpose is ensuring their vitality.
We introduced just transition principles that focus on our workforce, communities,
customers, and economic development. This framework will guide our efforts on the
path to net-zero, identifying opportunities and needs that arise from the transition.
In 2022, we helped attract over $23 billion in capital investment
and created more than 29,000 jobs in collaboration with
state and local economic development partners.
Our company and Foundation also donated more than
$49 million to support our local communities, focusing on
nonprofits that help create vibrant economies and advance
justice, equity and inclusion, and climate resiliency.
Our employees volunteered nearly 100,000
hours to support nonprofits across our jurisdictions.
And the employee-led Power of Giving campaign
raised more than $5.6 million this past year.
Combined with matching funds from our company,
we donated nearly $11 million, supporting
more than 4,700 organizations.
And we continue our important work to ensure
our company reflects the communities we serve,
including implementing action plans that foster
a culture of inclusion and drive diversity in our
workforce, leadership team, and supply chain.
In the area of inclusion, we saw high scores in our
employee engagement survey, and more than 8,000 employees
engaged in our “Let’s Talk About It” series of open discussions.
We are partnering with and recruiting from more diverse sources, including historically
Black colleges and universities and diverse community and professional organizations.
We’re also building a diverse pipeline of future applicants through new curricula
and programs, including a new lineworker program at Central Piedmont Community
College and other clean energy educational and workforce training programs.
Looking to the future, an economic impact study conducted by EY found that
our 10-year, $145 billion capital investment plan will support $250 billion
in economic output throughout the U.S. economy. The plan will also add
$5 billion in property taxes over the next 10 years and lead to the creation of
20,000 additional jobs annually. This includes workers who directly build clean
energy infrastructure and indirect jobs in other sectors of the economy.
14 | 2022 DUKE ENERGY ANNUAL REPORT / LETTER FROM LYNN GOOD
These critical efforts continue to be recognized. We achieved MSCI’s “AA” ranking and were
named a top 100 Most “JUST” company by JUST Capital. We made consecutive appearances
on several national rankings, including Fortune Magazine’s “World’s Most Admired Companies”
for the sixth year and the Human Rights Campaign Foundation’s Corporate Equality Index,
receiving a perfect score for the fifth year. Forbes listed Duke Energy as one of the
“2022 Best Employers for Diversity” and “2022 Best Employers for Women.”
CONTINUING THE MOMENTUM
I’m incredibly proud of the more than 27,000 employees at Duke Energy who met the
moment time after time. Whether it was restoring service after a historic hurricane, leading
the way on decarbonization or finding ways to mitigate costs for customers, we rose to
the occasion and found a way to deliver on our purpose and advance our priorities.
We are excited for the opportunities that come with the nation’s largest clean energy transition.
We thank you for your investment in Duke Energy and look forward to building on our success
for many years to come.
Lynn J. Good
Chair, President and Chief Executive Officer
15 | 2022 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
2022
2021
$28,768
$24,621
$3,778
$2,455
$2,444
$3,723
$3,579
$3,802
Net cash provided by operating activities
$5,927
$8,290
Common Stock Data
Shares of common stock outstanding
Year-end
Weighted average – basic and diluted
Reported basic and diluted earnings per share (GAAP)
Adjusted basic and diluted earnings per share (non-GAAP)
Common stock dividends declared per share
Balance Sheet Data
Total assets
Long-term debt including finance leases, less current maturities
Total Duke Energy Corporation stockholders’ equity
770
770
$3.17
$5.27
$3.98
769
769
$4.94
$4.99
$3.90
$178,086
$169,587
$67,061
$49,322
$60,448
$49,296
Earnings per share (in dollars)
Common stock dividends
declared per share (in dollars)
Capital and investment
expenditures (dollars in billions)
5.27
4.94 4.99
3.98
3.90
11.4
9.8
3.17
2022
2021
2022
2021
2022
2021
Reported basic and diluted
Adjusted basic and diluted
earnings per share (GAAP)
earnings per share (Non-GAAP)
(a) Significant transactions reflected in the results above include: (i) the net impact of charges related to the Indiana court rulings on coal ash and other unrelated ongoing litigation in the current year, (ii) costs
attributable to business transformation, including long-term real estate strategy changes and workforce reduction, (iii) 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 in the prior year, (iv) additional exit obligations related to ACP in the prior year and (v) the estimated impairment on
the sale of the Commercial Renewables business in the current year.
16 | 2022 DUKE ENERGY ANNUAL REPORT
Duke Energy at a Glance
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 49,870 megawatts (MW) of
generating capacity
Service area covers about 92,000 square miles with
an estimated population of 26 million
Service to approximately 8.2 million residential,
commercial and industrial customers
289,700 miles of distribution lines and
a 31,500-mile transmission system
20% of coal generation capacity has dual fuel capability
42
33
17
8
39
37
22
2
Electric Utilities and Infrastructure
Generation Diversity (percent owned capacity)
42% Natural Gas/Fuel Oil
31% Coal
18% Nuclear
9% Hydro and Renewable
Generated (net output gigawatt-hours (GWh))
45% Natural Gas/Fuel Oil
35% Nuclear
18% Coal
2% Hydro and Renewable
Customer Diversity (in billed GWh sales)
33% Residential
29% General Services
19% Industrial
19% Wholesale/Other
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
58% Power Gen
16% General Services
14% Residential
7% Industrial
5% Other
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 35,200 miles of natural gas
transmission and distribution pipelines and 28,300
miles of natural gas service pipelines
December 31, 2022.
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). Commercial Renewables was excluded this year because it has been moved to discontinued operations.
17 | 2022 DUKE ENERGY ANNUAL REPORT
Annual Meeting of Shareholders
Duke Energy’s 2023 Annual Meeting of
Shareholders will be:
Date: May 4, 2023
Time:
1 p.m. Eastern time
Visit: www.virtualshareholdermeeting.com/DUK2023
Audio broadcast: 877.328.2502
To participate in the online Annual Meeting, shareholders
will need the 16-digit control number included on 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 Company’s
common stock trading symbol is DUK.
Website Addresses
Company 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 Company, 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 | 2022 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 Company’s
common stock.
Dividend Payment
Duke Energy has paid quarterly cash dividends on
its common stock for 96 consecutive years. For the
remainder of 2023, 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.
FPO
printer to place FSC
Products with a Mixed Sources label support the development of responsible
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DUKE ENERGY
CORPORATION
Cautionary Statement
Regarding Forward-Looking
Information
Non-GAAP Financial
Measures
2022
Form 10-K
Intentionally Left Blank
(Mark One)
Commission
file number
1-32853
1-4928
1-15929
1-3382
1-3274
1-1232
1-3543
1-6196
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, 2022 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, Zip Code and Telephone Number
DUKE ENERGY CORPORATION
(a Delaware corporation) 526 South Church Street
Charlotte, North Carolina 28202-1803 704-382-3853
DUKE ENERGY CAROLINAS, LLC
(a North Carolina limited liability company) 526 South Church Street
Charlotte, North Carolina 28202-1803 704-382-3853
PROGRESS ENERGY, INC.
(a North Carolina corporation) 410 South Wilmington Street
Raleigh, North Carolina 27601-1748 704-382-3853
DUKE ENERGY PROGRESS, LLC
(a North Carolina limited liability company) 410 South Wilmington Street
Raleigh, North Carolina 27601-1748 704-382-3853
DUKE ENERGY FLORIDA, LLC
(a Florida limited liability company) 299 First Avenue North
St. Petersburg, Florida 33701 704-382-3853
DUKE ENERGY OHIO, INC.
(an Ohio corporation) 139 East Fourth Street
Cincinnati, Ohio 45202 704-382-3853
DUKE ENERGY INDIANA, LLC
(an Indiana limited liability company) 1000 East Main Street
Plainfield, Indiana 46168 704-382-3853
PIEDMONT NATURAL GAS COMPANY, INC.
(a North Carolina corporation) 4720 Piedmont Row Drive
Charlotte, North Carolina 28210 704-364-3120
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
IRS Employer
Identification No.
20-2777218
56-0205520
56-2155481
56-0165465
59-0247770
31-0240030
35-0594457
56-0556998
Registrant
Title of each class
Trading symbols
Duke Energy Corporation (Duke Energy)
Duke Energy
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
3.10% Senior Notes due 2028
3.85% Senior Notes due 2034
DUK
DUKB
DUK PR A
DUK 28A
DUK 34
Name of each exchange on which registered
New York Stock Exchange LLC
New York Stock Exchange LLC
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)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
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. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
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, 2022.
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, 2023.
$82,471,565
770,080,285
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Duke Energy definitive proxy statement for the 2023 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, 2022, 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)
and credits, which management believes are not indicative of Duke Energy’s ongoing performance.
Management believes 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 reduction.
• Regulatory matters and litigation represents the net impact of charges related to Indiana
court rulings on coal ash and other unrelated ongoing litigation.
• 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.
• Gas pipeline investments represents additional exit obligations related to ACP.
Discontinued operations primarily includes results from Duke Energy’s Commercial Renewables
Disposal Groups, including an estimated impairment on the sale of the business in 2022.
Duke Energy’s 2022 Annual Report references adjusted EPS for the year-to-date periods ended
December 31, 2022 and 2021 of $5.27 and $4.99, respectively.
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.
The non-GAAP financial measure, adjusted EPS, represents basic EPS from continuing
operations 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
The following is a reconciliation of reported EPS to adjusted EPS for 2022 and 2021:
(per share)
Reported EPS
Adjustments to Reported EPS:
Workplace and Workforce realignment
Regulatory Matters and Litigation
Regulatory Settlements
Gas Pipeline Investments
Discontinued Operations
Adjusted EPS
Adjusted EPS Guidance
Duke Energy’s 2022 Annual Report references Duke Energy’s revised forecasted 2022 adjusted
earnings guidance and the 2023 adjusted EPS guidance range of $5.55 to $5.75 per share. In addition,
the materials reference the long-term range of annual growth of 5% - 7%.
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
Years Ended December 31,
2022
3.17
$
0.14
0.39
—
—
1.57
5.27
$
2021
$
4.94
0.20
—
0.09
0.02
(0.26)
$
4.99
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.
TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2022
Item
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
GLOSSARY OF TERMS
PART I.
1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DUKE ENERGY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS SEGMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HUMAN CAPITAL MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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.
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5
5
5
5
13
14
15
15
15
15
15
16
16
16
16
23
24
27
27
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
29
53
54
28
29
PART III.
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . 209
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
12.
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . 209
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
13.
PART IV.
15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . 211
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-30
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 ability to implement our business strategy, including our carbon emission reduction goals;
• State, federal and foreign legislative and regulatory initiatives, including costs of
Page
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;
• The impact of extraordinary external events, such as the pandemic health event resulting
from COVID-19, and their collateral consequences, including the disruption of global
supply chains or the economic activity in our service territories;
• 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, reduced customer usage due
to cost pressures from inflation or fuel costs, 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 and costs
related thereto;
• 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 or other attack, war, vandalism,
cybersecurity threats, data security breaches, operational events, information technology
failures or other catastrophic events, such as fires, explosions, pandemic health events or
other similar occurrences;
• The inherent risks associated with the operation of nuclear facilities, including
environmental, health, safety, regulatory and financial risks, including the financial
stability of third-party service providers;
• The timing and extent of changes in commodity prices and interest rates and the ability to
recover such costs through the regulatory process, where appropriate, and their impact on
liquidity positions and the value of underlying assets;
• The results of financing efforts, including the ability to obtain financing on favorable
terms, which can be affected by various factors, including credit ratings, interest rate
fluctuations, compliance with debt covenants and conditions, an individual utility’s
generation mix, and general market and economic conditions;
• Credit ratings of the Duke Energy Registrants may be different from what is expected;
• Declines in the market prices of equity and fixed-income securities and resultant cash
funding requirements for defined benefit pension plans, other post-retirement benefit
plans and nuclear decommissioning trust funds;
• Construction and development risks associated with the completion of the Duke Energy
Registrants’ capital investment projects, including risks related to financing, timing and
receipt of necessary regulatory approvals, 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 Parent);
• The performance of projects undertaken by our nonregulated businesses and the success
of efforts to invest in and develop new opportunities, as well as the successful sale of the
Commercial Renewables Disposal Groups;
• The effect of accounting and reporting pronouncements issued periodically by accounting
standard-setting bodies and the SEC;
• 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 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
Additional risks and uncertainties are identified and discussed in the Duke Energy
Registrants’ reports filed with the SEC and available at the SEC’s website at sec.gov. In light
of these risks, uncertainties and assumptions, the events described in the forward-looking
statements might not occur or might occur to a different extent or at a different time than
described. Forward-looking statements speak only as of the date they are made and the
Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.
Glossary of Terms
The following terms or acronyms used in this Form 10-K are defined below:
Term or Acronym
Definition
Term or Acronym
Definition
2017 Settlement .............................. Second Revised and Restated Settlement
CT .................................................... Combustion Turbine
Agreement in 2017 among Duke Energy
Florida, the Florida Office of Public Counsel
and other customer advocates, which
replaces and supplants the 2013 Settlement
2021 Settlement .............................. Settlement Agreement in 2021 among Duke
Energy Florida, the Florida Office of Public
Counsel, the Florida Industrial Power Users
Group, White Springs Agricultural Chemicals,
Inc. d/b/a PSC Phosphate and NUCOR Steel
Florida, Inc.
ACP ................................................. Atlantic Coast Pipeline, LLC, a limited liability
company owned by Dominion and Duke Energy
ACP pipeline .................................... The approximately 600-mile canceled
interstate natural gas pipeline
AFS .................................................. Available for Sale
AFUDC ............................................. Allowance for funds used during construction
AMI .................................................. Advanced Metering Infrastructure
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
CEP Rider ........................................ Duke Energy Ohio’s Capital Expenditure
Program Rider
Cinergy ............................................ Cinergy Corp. (collectively with its
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
DEFR ............................................... Duke Energy Florida Receivables, LLC
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)
Duke Energy Carolinas ..................... Duke Energy Carolinas, LLC
Duke Energy Florida ......................... Duke Energy Florida, LLC
Duke Energy Indiana ........................ Duke Energy Indiana, LLC
Duke Energy Kentucky ...................... Duke Energy Kentucky, Inc.
Duke Energy 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
subsidiaries)
EE .................................................... Energy efficiency
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
Commercial Renewables
Disposal Groups .............................. Commercial Renewables business segment,
excluding the offshore wind contract for
Carolina Long Bay, marketed as two separate
disposal groups, the utility-scale solar and
wind group and the distributed generation
group
EPA .................................................. U.S. Environmental Protection Agency
EPS ................................................. Earnings Per Share
ETR .................................................. Effective tax rate
EU&I ................................................ Electric Utilities and Infrastructure
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
COVID-19 ........................................ Coronavirus Disease 2019
GAAP ............................................... Generally Accepted Accounting Principles in
CPCN ............................................... Certificate of Public Convenience and
Necessity
CRC ................................................. Cinergy Receivables Company LLC
Crystal River Unit 3 .......................... Crystal River Unit 3 Nuclear Plant
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
Term or Acronym
Definition
Term or Acronym
Definition
GHG ................................................. Greenhouse Gas
PBR ................................................. Performance-based regulation
GIC .................................................. GIC Private Limited, Singapore’s sovereign
wealth fund and an experienced investor in
U.S. infrastructure
PGA ................................................. Purchased Gas Adjustments
PHMSA ............................................ Pipeline and Hazardous Materials Safety
Administration
GU&I ................................................ Gas Utilities and Infrastructure
GWh ................................................ Gigawatt-hour
Hardy Storage .................................. Hardy Storage Company, LLC
Harris .............................................. Shearon Harris Nuclear Plant
HB 951 ............................................ The Energy Solutions for North Carolina, or
House Bill 951, passed in October 2021
IMPA ................................................ Indiana Municipal Power Agency
IMR ................................................. Integrity Management Rider
IRP .................................................. Integrated Resource Plans
IRS .................................................. Internal Revenue Service
ISO .................................................. Independent System Operator
ITC ................................................... Investment Tax Credit
IURC ................................................ Indiana Utility Regulatory Commission
Investment Trusts ............................ Grantor trusts of Duke Energy Progress, Duke
Energy Florida and Duke Energy Indiana
KO Transmission .............................. KO Transmission Company
KPSC ............................................... Kentucky Public Service Commission
LLC .................................................. Limited Liability Company
McGuire ........................................... McGuire Nuclear Station
MGP ................................................ Manufactured gas plant
MGP Settlement ............................... Stipulation and Recommendation filed jointly
by Duke Energy Ohio the staff of the PUCO, the
Office of the Ohio Consumers’ Counsel and the
Ohio Energy Group on August 31, 2021
MISO ............................................... Midcontinent Independent System Operator, Inc.
MTBE ............................................... Methyl tertiary butyl ether
MW .................................................. Megawatt
MWh ................................................ Megawatt-hour
MYRP ............................................... Multiyear rate plans
NCDEQ............................................. North Carolina Department of Environmental
Quality
NCUC............................................... North Carolina Utilities Commission
NDTF ............................................... Nuclear decommissioning trust funds
Piedmont ......................................... Piedmont Natural Gas Company, Inc.
Pine Needle ..................................... Pine Needle LNG Company, LLC
Pioneer ............................................ Pioneer Transmission, LLC
PJM ................................................. PJM Interconnection, LLC
PMPA ............................................... Piedmont Municipal Power Agency
PISCC .............................................. Post-in-service carrying costs
PPA.................................................. Purchase Power Agreement
Progress Energy ............................... Progress Energy, Inc.
PSCSC ............................................. Public Service Commission of South Carolina
PTC .................................................. Production Tax Credits
PUCO ............................................... Public Utilities Commission of Ohio
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
Robinson ......................................... Robinson Nuclear Plant
ROE ................................................. Return of equity
ROU ................................................. Right-of-use
RSU ................................................. Restricted Stock Unit
RTO ................................................. Regional Transmission Organization
Sabal Trail........................................ Sabal Trail Transmission, LLC
SAFSTOR ......................................... A method of decommissioning in which a
nuclear facility is placed and maintained in a
condition that allows the facility to be safely
stored and subsequently decontaminated to
levels that permit release for unrestricted use
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)
New Source Review ......................... Clean Air Act program that requires industrial
State gas utility commissions .......... NCUC, PSCSC, PUCO, TPUC and KPSC
facilities to install modern pollution control
equipment when they are built or when
making a change that increases emissions
significantly
NMC ................................................ National Methanol Company
Subsidiary Registrants ..................... Duke Energy Carolinas, Progress Energy,
(Collectively)
Duke Energy Progress, Duke Energy Florida,
Duke Energy Ohio, Duke Energy Indiana and
Piedmont
NOL ................................................. Net operating loss
Sutton .............................................. L.V. Sutton Combined Cycle Plant
NPNS ............................................... Normal purchase/normal sale
the Tax Act ....................................... Tax Cuts and Jobs Act
NRC ................................................. U.S. Nuclear Regulatory Commission
TPUC ............................................... Tennessee Public Utility Commission
NYSE ............................................... New York Stock Exchange
TSR.................................................. Total shareholder return
Oconee ............................................ Oconee Nuclear Station
U.S. ................................................. United States
OPEB ............................................... Other Post-Retirement Benefit Obligations
VIE ................................................... Variable Interest Entity
OVEC ............................................... Ohio Valley Electric Corporation
W.S. Lee CC ..................................... William States Lee Combined Cycle Facility
the Parent ........................................ Duke Energy Corporation holding company
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 Indiana Holdco, LLC, the holding
company for Duke Energy Indiana. The transaction was completed following two
closings. Additionally, in November 2022, Duke Energy committed to a plan to
sell the Commercial Renewables business segment, excluding the offshore wind
contract for Carolina Long Bay, which was moved to EU&I. See Note 2 to the
Consolidated Financial Statements, “Dispositions,” for additional information.
EU&I is also a joint owner in certain electric transmission projects. EU&I
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. EU&I 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
EU&I as of December 31, 2022.
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 two reportable business
segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and
Infrastructure (GU&I). The remainder of Duke Energy’s operations is presented
as Other. Commercial Renewables is reported as discontinued operations and
is no longer a reportable segment beginning in the fourth quarter of 2022.
See Note 2 for further details. 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 3 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
EU&I 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. EU&I 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 92,000 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, 2022.
Duke
Energy
Carolinas
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
33%
33%
23%
89%
11%
26%
22%
16%
64%
36%
47%
34%
8%
89%
11%
38%
38%
22%
98%
2%
30%
27%
28%
85%
15%
100%
100%
100%
100%
100%
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, EU&I conducts competitive auctions for electricity supply.
The cost of energy purchased through these auctions is recovered from
retail customers. EU&I 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 EU&I’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 EU&I to attract new
customers and to retain existing customers.
Energy Capacity and Resources
EU&I owns approximately 49,870 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 EU&I 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. EU&I 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.
EU&I’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.
Residential
General service
Industrial
Total retail sales
Wholesale and other sales
Total sales
The number of residential and general service customers within the EU&I
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. Migration into EU&I’s service territories and
continued remote work contributed to higher residential sales volumes in 2022
while higher data center usage contributed to growth in commercial sales
volumes. This was partially offset by lower industrial sales volumes impacted
by certain automotive customers experiencing supply chain constraints along
with reduced volumes in the steel sector. The impact on customer’s usage from
these factors and other potential economic dynamics continues to be monitored.
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
EU&I’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. EU&I owns and operates
6
PART I Sources of Electricity
EU&I 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, 2022.
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)
2022
6.35
0.58
3.43
3.75
2021
3.89
0.58
2.84
2.42
2020
2.55
0.58
2.99
1.91
Generation by Source
2022
34.2%
26.6%
13.5%
74.3%
1.5%
75.8%
24.2%
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%
100.0%
100.0%
100.0%
(a) Statistics related to all fuels reflect EU&I’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 EU&I’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.
EU&I has certain dual-fuel generating facilities that can operate utilizing
both natural gas and fuel oil. The cost of EU&I’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. Duke Energy Florida has temporarily agreed to not
hedge natural gas prices, but retains an ability to propose hedging again in
annual fuel docket filings.
EU&I has firm interstate and intrastate natural gas transportation
agreements and storage agreements in place to support generation needed for
load requirements. EU&I may purchase additional shorter-term natural gas
transportation and utilize natural gas interruptible transportation agreements to
support generation needed for load requirements. The EU&I 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.
EU&I 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. EU&I
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, EU&I generally source these services to a single
domestic supplier on a plant-by-plant basis using multiyear contracts.
EU&I has entered into fuel contracts that cover 100% of its uranium
concentrates through at least 2024, 100% of its conversion services through at
least 2026, 100% of its enrichment services through at least 2026, and 100% of
its fabrication services requirements for these plants through at least 2027. For
future requirements not already covered under long-term contracts, EU&I 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
EU&I 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. EU&I 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 2023 to 2027 for Duke Energy Carolinas and Duke Energy
Indiana, 2023 to 2024 for Duke Energy Progress and 2023 to 2025 for Duke
Energy Florida and Duke Energy Ohio. EU&I 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. EU&I 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. EU&I 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 EU&I’s
coal generation needs through end of life. The current average sulfur content
of coal purchased by Electric Utilities and Infrastructure is between 0.5%
and 3.5% for Duke Energy Carolinas and Duke Energy Progress, and between
0.5% and 4% for Duke Energy Florida, Duke Energy Ohio and Duke Energy
Indiana. EU&I’s environmental controls, in combination with the use of sulfur
dioxide (SO2) emission allowances, enable EU&I to satisfy current SO2 emission
limitations for its existing facilities.
7
PART I Purchased Power
EU&I purchases a portion of its capacity and system requirements through
purchase obligations, leases and purchase capacity contracts. EU&I believes
The following table summarizes purchased power for the previous three years:
it can obtain adequate purchased power capacity to meet future system load
needs. However, during periods of high demand, the price and availability of
purchased power may be significantly affected.
Purchase obligations and leases (in millions of MWh)(a)
Purchase capacity under contract (in MW)(b)
(a) Represents approximately 16% of total system requirements for 2022, 14% for 2021 and 13% for 2020.
(b) For 2022, 2021 and 2020, these agreements include approximately 412 MW of firm capacity under contract by Duke Energy Florida with QFs.
2022
41.2
4,028
2021
36.0
4,259
2020
32.7
4,716
Inventory
EU&I 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, 2022, the inventory balance for EU&I was
approximately $3.4 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).
EU&I 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 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 4, 5 and 10 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 $13.7 billion.
For additional information on nuclear insurance, see Note 5 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, 2022
8,637
4,783
3,430
424
$
December 31, 2021
10,401
5,759
4,089
553
$
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. In October 2021, Duke Energy Progress filed the 2019 nuclear decommissioning cost study with the FERC, as well as a revised date 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. See Note 4 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 4 and
10 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 EU&I’s generating facilities. CPCNs issued by the state electric
utility commissions, as applicable, authorize EU&I 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 EU&I 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 EU&I. EU&I 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 EU&I, 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 EU&I.
The NCUC, PSCSC, FPSC and FERC have allowed EU&I to recover
estimated decommissioning costs through retail and wholesale rates over the
expected remaining service periods of their nuclear stations. EU&I 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 10
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
EU&I 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 4 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.
EU&I 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. In June 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 4 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 and applications currently pending approval.
Approved Rate Cases:
Duke Energy Progress 2022 South Carolina Rate Case
Duke Energy Ohio 2021 Ohio Electric Rate Case
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
Pending Rate Cases:
Duke Energy Carolinas 2023 North Carolina Rate Case(b)
Duke Energy Kentucky 2022 Kentucky Electric Rate Case
Duke Energy Progress 2022 North Carolina Rate Case(c)
Annual
Increase
(Decrease)
(in millions)
Regulatory
Body
Return on
Equity
Equity
Component of
Capital Structure
Effective Date
PSCSC
PUCO
NCUC
NCUC
IURC
KPSC
NCUC
KPSC
NCUC
$
$
52
23
178
33
146
24
823
75
615
9.6%
9.5%
9.6%
9.6%
9.7%
9.25%
10.4%
10.35%
10.4%
52.43%
50.5%
52%
52%
54%
48.23%
53%
52.5%
53%
4/1/2023
1/3/2023
6/1/2021
6/1/2021
7/30/2020
5/1/2020
1/1/2024
7/15/2023
10/1/2023
(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.
(b) Year 1 rates are approximately 61% of the total. Year 2 rates are approximately 21% of the total rate case increase. Year 3 rates are approximately 18% of the total rate increase.
(c) Year 1 rates are approximately 53% of the total. Year 2 rates are approximately 25% of the total rate case increase. Year 3 rates are approximately 22% of the total rate increase. Implementation of interim rates is planned for
June 1, 2023.
GAS UTILITIES AND INFRASTRUCTURE
GU&I conducts natural gas operations primarily through the regulated
public utilities of Piedmont, Duke Energy Ohio and Duke Energy Kentucky. The
natural gas operations are subject to the rules and regulations of the NCUC,
PSCSC, PUCO, KPSC, TPUC, PHMSA and the FERC. GU&I serves residential,
commercial, industrial and power generation natural gas customers, including
customers served by municipalities who are wholesale customers. GU&I 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 GU&I as of December 31, 2022.
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 4 to the Consolidated
Financial Statements, “Regulatory Matters.”
Federal
The FERC approves EU&I’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 EU&I.
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
EU&I 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.
10
PART I The number of residential, commercial and industrial customers within
the GU&I 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.
GU&I also has investments in various pipeline transmission projects,
renewable natural gas projects and natural gas storage facilities.
Natural Gas for Retail Distribution
GU&I is responsible for the distribution of natural gas to retail customers
in its North Carolina, South Carolina, Tennessee, Ohio and Kentucky service
territories. GU&I’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 GU&I 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, GU&I may release these
services and supplies in the secondary market under FERC-approved capacity
release provisions or make wholesale secondary market sales. In 2022, firm
supply purchase commitment agreements provided 100% of the natural
gas supply for both Piedmont and Duke Energy Ohio. Approximately 90% of
forecasted demand was under contract prior to the winter heating season, with
firm daily spot purchases making up the balance.
Impact of Weather
GU&I 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
GU&I’s businesses operate as the sole provider of natural gas service
within their retail service territories. GU&I owns and operates facilities
necessary to transport and distribute natural gas. GU&I 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.
GU&I’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.
Natural Gas Investments
Duke Energy, through its GU&I 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.
Duke Energy, through its GU&I segment, 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 natural 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.
Duke Energy, also through its GU&I segment, has investments in various
renewable natural gas joint ventures.
GU&I 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, LLC. KO Transmission
sold all of its pipeline facilities and related real property to Columbia Gas
Transmission, LLC on February 1, 2023, for approximately book value.
11
PART I See Notes 4, 13 and 18 to the Consolidated Financial Statements,
“Regulatory Matters,” “Investments in Unconsolidated Affiliates” and “Variable
Interest Entities,” respectively, for further information on Duke Energy’s and
GU&I’s natural gas investments.
Inventory
GU&I must maintain adequate natural gas inventory in order to provide
reliable delivery to customers. As of December 31, 2022, the inventory balance
for GU&I was $185 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 GU&I’s natural gas distribution facilities. CPCNs issued by the state
gas utility commissions or other government agencies, as applicable, authorize
GU&I 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 GU&I 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 GU&I. 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 GU&I, 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 GU&I.
The following table summarizes certain components underlying recently approved and effective base rates or rate stabilization filings in the last three years and
applications currently pending approval.
Approved Rate Cases:
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)
Piedmont 2022 South Carolina Natural Gas Base Rate Case(b)
Pending Rate Cases:
Duke Energy Ohio 2022 Natural Gas Base Rate Case
Annual
Increase
(Decrease)
(in millions)
$
16
67
7
9
2
49
Return
on
Equity
Equity
Component of
Capital Structure
Effective Date
January 2021
November 2021
November 2021
January 2022
November 2022
50.5%
51.6%
52.2%
51.3%
52.2%
52.3%
April 2023
9.8%
9.6%
9.8%
9.38%
9.3%
10.3%
(a) An ROE of 9.375% for natural gas base rates and 9.3% for natural gas riders was approved.
(b) Under the rate stabilization adjustment (RSA) mechanism, Piedmont resets rates in South Carolina based on updated costs and revenues on an annual basis. The SC RSA filing for 2022 did not reset the rates since Piedmont
filed a General Rate Case in 2022.
GU&I has an IMR mechanism in North Carolina designed to separately track and recover certain costs associated with capital investments incurred to comply
with federal pipeline safety and integrity programs. Piedmont has withdrawn from the Tennessee IMR mechanism subsequent to the authorization of the Tennessee
Annual Review Mechanism effective January 2022. The following table summarizes information related to the recently approved IMR filing.
(in millions)
Piedmont 2022 IMR Filing – North Carolina
Cumulative
Investment
$
213
Annual
Revenues
Effective
Date
$
20
December 2022
In Ohio, GU&I has a Capital Expenditure Program Rider (CEP Rider)
designed to recover costs between rate cases on PUCO approved capital
expenditures. Duke Energy Ohio submits a filing each year for incremental
investments to increase the revenue requirement up to the cap of approximately
$7 million. The cumulative investment under the CEP Rider is $359 million with
total annual revenue requirement of $70 million.
For more information on rate matters and other regulatory proceedings,
see Note 4 to the Consolidated Financial Statements, “Regulatory Matters.”
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.
• Regulations of the EPA relate to the environment including proposed air
emissions regulations that would expand to include emissions of methane.
Federal
GU&I 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,
12
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.
PART I Environmental
GU&I 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.
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, 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.
Employees
On December 31, 2022, Duke Energy had a total of 27,859 full-time,
part-time and temporary employees, the majority of which were full-time
employees. The total includes 5,081 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 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 in 2022,
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
voluntary diversity and inclusion training programs and facilitated conversations
on insightful 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 strive
toward reaching these aspirational goals and as of December 31, 2022, our
workforce consisted of approximately 23.9% female and 20.4% racial and
ethnic diversity.
The company also has 10 Employee Resource Groups (ERGs), with
37 chapters and more than 6,500 employees participating. ERGs 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 2022, consistent with our industry-leading performance levels from 2017
through 2021.
13
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
Brian D. Savoy
Kodwo Ghartey-Tagoe
T. Preston Gillespie
R. Alexander Glenn
Dhiaa M. Jamil
Julia S. Janson
Cynthia S. Lee
Ronald R. Reising
Louis E. Renjel
Harry K. Sideris
Steven K. Young
Age(a)
Current and Recent Positions Held
63
47
59
60
57
66
58
56
62
49
52
64
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. Savoy assumed the position of Executive Vice President and Chief Financial
Officer in September 2022. Prior to that, he held the position of Executive Vice President, Chief Strategy and Commercial Officer from
May 2021 through August 2022; 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, 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.
Executive Vice President, Chief Generation Officer and Enterprise Operational Excellence. Mr. Gillespie assumed the position of
Executive Vice President, Chief Generation Officer and Enterprise Operational Excellence in January 2023. Prior to that, Mr. Gillespie
served as the Chief Generation Officer since 2020.
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 assumed 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, 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.
Executive Vice President, Chief Strategy and Commercial Officer. Mr. Young assumed the position of Executive Vice President, Chief
Strategy and Commercial Officer in September 2022. Prior to that, he held the position of Executive Vice President and Chief Financial
Officer from August 2013 through August 2022; 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.
(a) The ages of the officers provided are as of January 31, 2023.
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.
14
PART I Environmental Matters
DUKE ENERGY CAROLINAS
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.
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, EU&I. For additional information regarding this business
segment, including financial information, see Note 3 to the Consolidated
Financial Statements, “Business Segments.”
• The Comprehensive Environmental Response, Compensation and
PROGRESS ENERGY
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.
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
• 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.
for regulatory accounting. Progress Energy operates one reportable business
segment, EU&I. For additional information regarding this business segment,
including financial information, see Note 3 to the Consolidated Financial
Statements, “Business Segments.”
• The Solid Waste Disposal Act, as amended by RCRA, which creates a
framework for the proper management of hazardous and nonhazardous
solid waste; classifies CCR as nonhazardous waste; and establishes
standards for landfill and surface impoundment placement, design,
operation and closure, groundwater monitoring, corrective action, and
post-closure care.
• The Toxic Substances Control Act, which gives EPA the authority to
require reporting, recordkeeping and testing requirements, and to place
restrictions relating to chemical substances and/or mixtures, including
polychlorinated biphenyls.
For more information on environmental matters, see Notes 5 and 10 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
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, EU&I. For additional information regarding this business
segment, including financial information, see Note 3 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, EU&I. For additional information regarding this business
segment, including financial information, see Note 3 to the Consolidated
Financial Statements, “Business Segments.”
15
PART I DUKE ENERGY OHIO
financial information, see Note 3 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 900,000 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, LLC. KO Transmission sold all of its
pipeline facilities and related real property to Columbia Gas Transmission, LLC
on February 1, 2023, for approximately book value.
Substantially all of Duke Energy Ohio’s operations are regulated and
qualify for regulatory accounting. Duke Energy Ohio has two reportable
segments, EU&I and GU&I. For additional information on these business
segments, including financial information, see Note 3 to the Consolidated
Financial Statements, “Business Segments.”
DUKE ENERGY INDIANA
Duke Energy Indiana is a regulated public utility primarily engaged in
the generation, transmission, distribution and sale of electricity in portions of
Indiana. Duke Energy Indiana’s service area covers 23,000 square miles and
supplies electric service to 890,000 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 executed an agreement providing for an investment
in Duke Energy Indiana by GIC. The transaction was completed following two
closings. For additional information, see Note 2 to the Consolidated Financial
Statements, “Dispositions.”
Substantially all of Duke Energy Indiana’s operations are regulated and
qualify for regulatory accounting. Duke Energy Indiana operates one reportable
business segment, EU&I. For additional information regarding this business
segment, including financial information, see Note 3 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,
GU&I. For additional information regarding this business segment, including
16
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 transition, 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 likely be needed including new resources capable of
following electric load over long durations such as advanced nuclear, hydrogen
and long-duration storage, 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 energy transition strategy, which may have
an adverse effect on its financial condition.
PART I REGULATORY, LEGISLATIVE AND LEGAL RISKS
The Duke Energy Registrants’ regulated utility revenues, earnings and results
of operations 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 or
legislative 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.
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 businesses
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, have, and in the future 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 and
their utility businesses. 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.
The Duke Energy Registrants are subject to regulations under a wide
variety of U.S. federal and state regulations and policies, including by FERC,
NRC, EPA and various other federal agencies as well as the North American
Electric Reliability Corporation. Regulation affects almost every aspect of the
Duke Energy Registrants’ businesses, including, among other things, their ability
to: take fundamental business management actions; determine the terms and
rates of transmission and distribution services; make acquisitions; issue equity
or debt securities; engage in transactions with other subsidiaries and affiliates;
and pay dividends upstream to the Duke Energy Registrants. Changes to federal
regulations are continuous and ongoing. There can be no assurance that laws,
regulations and policies will not be changed in ways that result in material
modifications of business models and objectives or affect returns on investment
by restricting activities and products, subjecting them to escalating costs,
causing delays, or prohibiting them outright.
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
17
PART I 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.
There is continued concern, and increasing activism, both nationally and
internationally, about climate change. The EPA and state regulators have, and
may adopt and implement, additional regulations to restrict emissions of GHGs
to address global climate change. Certain local and state jurisdictions have also
enacted laws to restrict or prevent new natural 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 delay in or
failure to fully recover such costs and investment in generation.
OPERATIONAL RISKS
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.
A continuation of adverse economic conditions including economic
downturn or high commodity prices could also negatively impact the financial
stability of certain of our customers and result in their inability to pay for electric
and natural gas services. This could lead to increased bad debt expense and
higher allowance for doubtful account reserves for the Duke Energy Registrants
and result in delayed or unrecovered operating costs and lower financial results.
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 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.
The Duke Energy Registrants 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 negatively impact the company’s ability to accurately forecast
the financial impact or 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 purchased power;
• 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,
18
PART I 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 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.
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
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 the 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 appropriately 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 the four high-priority North Carolina 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.
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 inflation
and interest rate volatility, population changes, job and income growth, housing
starts, new business formation and the overall level of economic activity.
In addition, certain regulatory and legislative bodies have passed
legislation implementing the extension of certain tax credits to be used toward
the costs of residential solar installation or 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.
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 of operations 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
19
PART I 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, activism, and
legislation from groups both in support of and opposed to various environmental,
social and governance initiatives, which could cause delays and increase the
costs of our clean energy transition.
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
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,
20
PART I 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 cybersecurity 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 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.
The Duke Energy Registrants’ operations have been and may be affected
by pandemic health events, including COVID-19, in ways listed below and
in ways the Duke Energy Registrants cannot predict at this time.
The COVID-19 pandemic and efforts to respond to it have resulted in
widespread adverse consequences on the global economy and on the Duke
Energy Registrants’ customers, third-party vendors, and other parties with
whom we do business. If the COVID-19 pandemic or other health epidemics
and outbreaks that may occur are significantly prolonged, it 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.
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, delays in or failure to receive required
regulatory approvals and/or sitting or environmental permits, 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.
21
PART I 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.
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, unfavorable capital market conditions,
market prices for natural gas and coal, geopolitical risks, actual or threatened
terrorist attacks, or the overall health of the energy industry. Additionally, rapidly
rising interest rates could impact the ability to affordably finance the capital
plan or increase rates to customers and could have an impact on our ability
to execute on our clean energy transition. 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.
Non-compliance with debt covenants or conditions could adversely affect
the Duke Energy Registrants’ ability to execute future borrowings.
The Duke Energy Registrants’ debt and credit agreements contain
various financial and other covenants. Failure to meet those covenants
beyond applicable grace periods could result in accelerated due dates and/or
termination of the agreements.
Market performance and other changes may decrease the value of the NDTF
investments of Duke Energy Carolinas, Duke Energy Progress and Duke
Energy Florida, which then could require significant additional funding.
Ownership and operation of nuclear generation facilities also requires the
maintenance of funded trusts that are intended to pay for the decommissioning
costs of the respective nuclear power plants. The performance of the capital
markets affects the values of the assets held in trust to satisfy these future
obligations. Duke Energy Carolinas, Duke Energy Progress and Duke Energy
Florida have significant obligations in this area and hold significant assets in
these trusts. These assets are subject to market fluctuations and will yield
uncertain returns, which may fall below projected rates of return. Although
a number of factors impact funding requirements, a decline in the market
value of the assets may increase the funding requirements of the obligations
for decommissioning nuclear plants. If Duke Energy Carolinas, Duke Energy
Progress and Duke Energy Florida are unable to successfully manage their NDTF
assets, their results of operations, financial position and cash flows could be
negatively affected.
22
PART I 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 adverse impact on the Duke Energy Registrants’ results of
operations, financial position and cash flows.
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.
Duke Energy is a holding company and depends on the cash flows from its
subsidiaries to meet its financial obligations.
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.
Because Duke Energy is a holding company with no operations or cash
flows of its own, its ability to meet its financial obligations, including making
interest and principal payments on outstanding indebtedness and to pay
dividends on its common stock, is primarily dependent on the net income
and cash flows of its subsidiaries and the ability of those subsidiaries to pay
upstream dividends or to repay borrowed funds. Prior to funding Duke Energy, its
subsidiaries have regulatory restrictions and financial obligations that must be
satisfied. These subsidiaries are separate legal entities and have no obligation
to provide Duke Energy with funds. In addition, Duke Energy may provide capital
contributions or debt financing to its subsidiaries under certain circumstances,
which would reduce the funds available to meet its financial obligations,
including making interest and principal payments on outstanding indebtedness
and to pay dividends on Duke Energy’s common stock.
GENERAL RISKS
The failure of Duke Energy information technology systems, or the failure
to enhance existing information technology systems and implement
new technology, could adversely affect the Duke Energy Registrants’
businesses.
Duke Energy’s operations are dependent upon the proper functioning of its
internal systems, including the information technology systems that support our
underlying business processes. Any significant failure or malfunction of such
information technology systems may result in disruptions of our operations. In
the ordinary course of business, we rely on information technology systems,
including the internet and third-party hosted services, to support a variety
of business processes and activities and to store sensitive data, including
(i) intellectual property, (ii) proprietary business information, (iii) personally
identifiable information of our customers, employees, retirees and shareholders
and (iv) data with respect to invoicing and the collection of payments,
accounting, procurement, and supply chain activities. Our information
technology systems are dependent upon global communications and cloud
service providers, as well as their respective vendors, many of whom have at
some point experienced significant system failures and outages in the past
and may experience such failures and outages in the future. These providers’
systems are susceptible to cybersecurity and data breaches, outages from fire,
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
23
PART I ITEM 2. PROPERTIES
ELECTRIC UTILITIES AND INFRASTRUCTURE
The following table provides information related to the EU&I’s generation stations as of December 31, 2022. 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 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
Blewett CT
Walters
Other small facilities (3)
Distributed generation
Asheville – Rock Hill Battery
Hot Springs Microgrid
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/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
Storage
SC
NC
SC
NC
NC
NC
NC
NC
NC
SC
NC
NC
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
NC
2,554
2,316
445
2,220
2,058
1,388
1,161
421
825
686
668
662
563
84
13
1,520
780
324
152
581
71
19,492
1,870
964
759
2,439
1,083
888
822
772
704
607
476
320
234
124
84
52
112
116
35
2
1
12,464
Nuclear
Nuclear
Nuclear
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
Renewable
24
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
Trenton Battery
Micanopy Energy Storage
Jennings Battery
Cape San Blas Battery
Total Duke Energy Florida
Duke Energy Ohio
East Bend
Woodsdale CT
Beckjord Battery Storage
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
Purdue CHP
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
Renewable
Renewable
Renewable
Renewable
Fossil
Fossil
Renewable
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Fossil
Hydro
Renewable
Renewable
Renewable
Renewable
Gas/Oil
Gas
Coal
Gas/Oil
Gas
Gas/Oil
Gas/Oil
Gas/Oil
Gas/Oil
Oil
Gas/Oil
Gas
Gas
Solar
Storage
Storage
Storage
Storage
Coal
Gas/Propane
Storage
Coal
Coal/Oil
Coal
Gas
Gas
Gas
Gas/Oil
Gas/Oil
Gas/Oil
Gas
Water
Solar
Storage
Storage
Storage
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
KY
OH
OH
IN
IN
IN
OH
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
2,061
1,610
1,410
1,112
1,013
940
576
524
199
171
168
145
44
485
11
8
5.5
5.5
10,488
600
476
4
1,080
2,822
1,005
595
566
444
360
264
126
84
12
54
11
1
1
1
6,346
49,870
8,908
36,681
3,639
642
49,870
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.
25
PART I
The following table provides information related to EU&I’s electric transmission and distribution properties as of December 31, 2022.
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
12,500
8,300
31,500
600
—
2,700
6,800
2,900
300
—
3,400
2,600
200
—
1,700
1,000
— 2,200
—
400
—
700
700
13,000
6,300
5,100
1,800
173,600
116,100
66,600
41,900
46,300
35,200
25,300
22,700
13,300
6,500
289,700
108,500
81,500
48,000
19,800
3,000
1,200
500
500
300
—
700
700
1,400
2,500
5,300
22,100
9,800
31,900
500
Substantially all of EU&I’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
GU&I 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 GU&I
service territories. The following table provides information related to GU&I’s natural gas distribution.
Miles of natural gas distribution and transmission pipelines
Miles of natural gas service lines
Duke
Energy
Ohio Piedmont
7,600
6,600
27,600
21,700
Duke
Energy
35,200
28,300
26
PART I
OTHER
Duke Energy owns approximately 7.1 million square feet and leases approximately 2.7 million square feet of corporate, regional and district office space spread
throughout its service territories. See Note 11, “Property, Plant and Equipment,” for further information.
ITEM 3. LEGAL PROCEEDINGS
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 and is seeking an unspecified amount of monetary damages. 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.
In addition, the Duke Energy Registrants are, from time to time, parties to various lawsuits and regulatory proceedings in the ordinary course of their business.
For information regarding legal proceedings, including regulatory and environmental matters, see Note 4, “Regulatory Matters,” and Note 5, “Commitments and
Contingencies,” to the Consolidated Financial Statements.
ITEM 4. MINE SAFETY DISCLOSURES
This is not applicable for any of the Duke Energy Registrants.
27
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, 2023, there were 127,329 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 2,
“Dispositions,” to the Consolidated Financial Statements for information on the 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 2022
There were no repurchases of equity securities during the fourth quarter of 2022.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
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, 2017, 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
2017
2018
2019
2020
2021
2022
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.
28
PART I 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, 2022, 2021 and 2020.
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, 2021, filed with the SEC on February 24,
2022, for a discussion of variance drivers for the year ended December 31,
2021, as compared to December 31, 2020.
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, we remain focused on continuing to advance our clean
energy transition while maintaining affordability and reliability for our customers
and delivering on our commitments to our communities, employees, investors,
and other stakeholders. 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 2022, we continued to make progress, navigating rising
interest rates, volatile commodity prices and other macroeconomic headwinds
while meeting our near-term financial commitments, executing on our strategic
priorities, responding to severe weather and external events, and continuing to
provide the safe and reliable service that our communities depend on.
In 2022, we announced the sale of our commercial renewables business,
filed the Carbon Plan with the NCUC, and continued to engage with the
communities in our jurisdictions. We also continue to make the investments
necessary to support our ongoing clean energy transition and a business portfolio
that delivers a reliable and growing dividend, with 2022 representing the 96th
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)
$3,802
$3,837
$4,060
$4.94
$4.99
$5.27
$2,444
$3.17
2021
2022
2021
2022
(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.
On February 9, 2023, Duke Energy announced 2022 full year reported
earnings of $2,563 million, or $3.33 per share and adjusted earnings of
$4,060 million, or $5.27 per share. On February 21, 2023, Duke Energy Indiana
received an opinion from the Indiana Court of Appeals disallowing recovery
of certain coal ash costs. As a result of this opinion, Duke Energy Indiana
29
recognized a pretax charge of approximately $175 million to Impairment of
assets and other charges for the year ended December 31, 2022. The 2022 full
year reported earnings changed to $2,444 million, or $3.17 per share. There was
no change to adjusted earnings or adjusted earnings per share.
PART II Duke Energy’s 2022 Net Income Available to Duke Energy Corporation
(GAAP Reported Earnings) was impacted primarily by the estimated impairment
on the sale of the Commercial Renewables business in the current year. 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.
2022 Areas of Focus and Accomplishments
Clean Energy Transition. Our industry continues to experience an
unprecedented level of change and 2022 was a dynamic year for our company
as we navigated macroeconomic headwinds and continued to execute on our
strategic priorities and deliver on our vision.
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). In October 2022, we announced an
additional interim target to reduce carbon emissions from electric generation by
80% by 2040. We also adopted a goal of reducing Scope 2 and certain Scope
3 emissions, including emissions from upstream purchased power and fossil
fuel purchases, as well as downstream customer use of natural gas, by 50% by
2035, on the way to net-zero by 2050.
Duke Energy is one of the first utilities to address the totality of its
impact – approximately 95% of the company’s greenhouse gas emissions
are now tied to a measurable net-zero goal. Over the next decade, we expect
to deploy over $145 billion of capital into our regulated businesses, driven by
clean energy transition investments. These investments will drive substantial
economic benefits for the communities we serve and reduce our customer’s
exposure to fuel volatility. We’ve filed and refined comprehensive IRPs
consistent with this strategy in multiple jurisdictions, allowing us to accelerate
coal plant retirements, make needed grid investments to enable renewables and
energy storage, and increase resiliency. To partially fund this plan, in December
2022, we closed on the second and final tranche of the approximate $2 billion
investment in Duke Energy Indiana by GIC.
In 2022, we were awarded one of two North Carolina offshore wind
sites held by the Bureau of Ocean Energy Management. The approximately
55,000-acre site in the Atlantic Ocean east of Wilmington could support up to
1.6 gigawatts of potential offshore wind energy, enough to power nearly 375,000
homes. Securing this contract creates optionality for future offshore wind if the
NCUC determines it’s part of the least cost path to achieve North Carolina’s
interim and long-term carbon reduction goals.
As we look beyond 2030, we will need additional tools to continue our
progress. We will actively work to advocate for research and development and
deployment of carbon-free, dispatchable resources. This includes longer-
duration energy storage, advanced nuclear technologies, carbon capture and
zero-carbon fuels.
Sale of Commercial Renewables
In November 2022, the Board approved pursuing the sale of our
Commercial Renewables business, excluding the offshore wind contract for
Carolina Long Bay. Since 2007, we have built a portfolio of approximately
5,000 megawatts of commercial wind, solar and battery projects across the
U.S., and established a robust development pipeline. As we look forward to
the remainder of this decade and beyond, we have line of sight to significant
renewable, grid and other investment opportunities within our faster-growing
regulated operations.
Carbon Plan
North Carolina House Bill 951 (HB 951) was passed in 2021 and reflects
new state policy that accelerates 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. The legislation established a framework overseen
by the NCUC to advance state CO2 emission reductions through the use of
least cost planning, including stakeholder involvement, and also introduced
modernized recovery mechanisms, including multiyear rate plans (MYRP),
that promote more efficient recovery of investments and performance-based
regulation (PBR), that align incentives between the company and the state’s
energy policy objectives.
In May 2022, we filed a proposed Carbon Plan with the NCUC that
outlined potential pathways toward achieving the HB 951 carbon reduction
targets while balancing affordability and reliability for our customers. We
presented four “portfolios” – a base portfolio of what it would take to achieve
70% carbon reduction by 2030 and other portfolios demonstrating the impact
of an extension to the 2030 compliance deadline to allow the introduction of
new technologies at a more affordable price. In December 2022, the NCUC
issued an order adopting its initial Carbon Plan, which included a set of
near-term actions to support meeting the state’s carbon reduction goals.
This is a constructive outcome that advances our clean energy transition,
supporting a diverse, all-of-the-above approach that is essential for long-term
resource planning.
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 continue
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 2022, smart, self-healing technologies helped to avoid more than 1.4 million
customer interruptions across our six-state electric service area, saving
customers more than 443 million minutes of lost outage time.
Duke Energy has a demonstrated track record of driving efficiencies and
productivity in the business and we continue to leverage new technology, digital
tools and data analytics across the business in response to a transforming
landscape. In 2022, we filed for approval of a new demand response pilot
program expected to launch in 2023 for customers in the Duke Energy Carolinas
service area. Pilot incentives will reduce vehicle lease payments for program
participants who lease an eligible electric vehicle, including Ford F-150
Lightning trucks. In exchange, customers will allow their electric vehicles to
feed energy back to the grid – helping to balance it during peak demand. Also,
in August 2022, Duke Energy Florida announced a research and development
pilot program to test and evaluate the viability of the new Ford F-150 Lightning
all-electric truck’s high-capacity batteries as a grid edge resource.
Recognizing the 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 our LDC business, we are making great progress
reducing methane emissions through our partnership with Accenture, Microsoft
and Avanade to use satellites and build an emissions platform, the addition of
other sensors and technologies to find and fix leaks in near real time, and the
use of cross compression to avoid releasing natural gas into the atmosphere
during certain operational activities. Investments in integrity management of our
natural gas infrastructure continue to be of importance to ensure reliable, safe,
and increasingly clean delivery of natural gas to our customers.
30
PART II Response to Macroeconomic Headwinds. In addition to achieving
financial results in the upper half of our revised guidance, we continued our
cost-management journey with a focus on driving productivity, increasing
flexibility and prioritizing spend based on risk and strategic value to our
customers and investors. In 2022, to address rising interest rates, increased
commodity prices, labor and material inflation, and supply chain constraints, we
launched the Workload Reduction Initiative, building on our culture of continuous
improvement to identify more ways to reduce operating costs. Including cost
reductions from supply chain, we identified approximately $300 million of
savings opportunities focused on organization simplification, elimination of
work, automation, reducing service levels provided to internal customers,
and outsourcing.
Commodity prices have impacted the price of electricity in all of our
jurisdictions. We actively worked to manage and maintain prices at lower levels
than they otherwise would be in light of increased commodity prices, working
with our regulators to extend recovery periods in certain jurisdictions in a way
that is manageable for our customers. We also continued our work with our
vulnerable customers through increased communications, securing state and
federal funding, and providing access to philanthropic support. Additionally,
we’ve created a specialized team that’s partnered with agencies across our
service territories and has helped connect customers to nearly $300 million in
energy assistance funding since 2021.
We successfully navigated supply chain challenges including inflation,
longer lead times, and shortages of solar panels and other equipment. We’ve
executed longer supply agreements and proactively secured equipment in early
2022 for hurricane season while placing orders for key needs for our customer
delivery organization for 2023. Our procurement teams continue to execute
on action plans to enhance planning, augment supply, amend operations and
leverage our scale to continue to mitigate these risks to the extent possible.
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. Grid investment riders in the Midwest and
Florida enable more timely cost recovery and earnings growth and we have
a MYRP in Florida through 2024. Additionally, as highlighted above, HB 951
provides the framework for many of the benefits of modernized regulatory
constructs in North Carolina under the direction of the NCUC. Duke Energy
Progress filed its first rate case utilizing these benefits, including both PBR and
MYRP, in North Carolina in October 2022. In January 2023, we also filed a Duke
Energy Carolinas rate case in North Carolina, which incorporates elements of
PBR and MYRP.
In addition to the Duke Energy Progress and Duke Energy Carolinas rate
cases in North Carolina, we continued to move a variety of other regulatory
initiatives forward during 2022. Base rate cases were filed for both Duke Energy
Progress and Piedmont in South Carolina, for Duke Energy Ohio’s natural gas
business, and for Duke Energy Kentucky’s electric business. Constructive partial
settlements were approved by the NCUC in January 2022 related to Piedmont’s
2021 North Carolina rate case and by the PUCO in December 2022 related to
Duke Energy Ohio’s 2021 electric rate case. We also reached a constructive
comprehensive settlement with all parties in the Duke Energy Progress South
Carolina rate case in January 2023, which the PSCSC approved in February
2023. Duke Energy Indiana’s TDSIC 2.0 was approved in June 2022 and Duke
Energy Florida’s 10 year storm protection plan was approved in October 2022,
both of which provide for significant investments to improve the reliability and
integrity of the grid in their respective jurisdictions. Overall, this was a very active
year as it relates to regulatory filings, which reflects the important investments
and ongoing clean energy transition across all our service territories.
In November 2022, the Southeast Energy Exchange Market (SEEM)
announced it had initiated operations. The new SEEM platform facilitates
sub-hourly, bilateral trading, allowing participants to buy and sell power
close to the time the energy is consumed, utilizing available unreserved
transmission and providing southeastern electricity customers cost, reliability
and environmental benefits. Also in 2022, storm securitization legislation was
passed in South Carolina, providing the opportunity to securitize deferred storm
costs and lower the bill impacts for our customers. We also continue to evaluate
the impacts of the Inflation Reduction Act, which is expected to have significant
benefits to customers and lower the cost of the clean energy transition.
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 most important to the customer
experience. In 2022, we successfully implemented the last of eight 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. While customer satisfaction across
our industry continues to be impacted by the macroeconomic environment
and the impacts of higher fuel prices on customer bills, our work continues to
be recognized by our customers, with incremental improvements in customer
satisfaction scores at certain jurisdictions including Piedmont, which was
ranked number one in customer satisfaction by J.D. Power for residential natural
gas service in the south.
Operational Excellence, Safety and Reliability. The reliable and safe
operation of our power plants, electric distribution system and natural gas
infrastructure in our communities continues to be foundational to serving our
customers, our financial results, and our credibility with stakeholders. This
year presented unique challenges to the grid in our service territories, including
attacks on two substations in Moore County, North Carolina and extreme winter
weather that forced us to take unprecedented measures to ensure the integrity
of our systems in North Carolina. Despite these recent challenges, 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. While our TICR was slightly above target, our employees
continued to deliver strong safety results in 2022 and we remain an industry
leader in personal safety. In addition, we continued our strong environmental
performance, with no reportable environmental events.
Storm activity was severe in our service territories in 2022. Hurricane
Ian, the fifth-strongest hurricane on record, impacted our service territories in
Florida and the Carolinas with heavy rainfall, strong winds, and life-threatening
storm surge and flooding. Across our service territories, we assembled more
than 20,000 power line technicians, damage assessors, and vegetation workers
to prepare and begin to restore power as soon as it was safe to do so. In total,
we experienced 2 million outages, and thanks to their efforts, more than 97% of
our Florida customers were restored within three days of the storm moving out
of our Florida territories, and over 99% of our Carolinas customers within two
days of the storm exiting the Carolinas. In November, Hurricane Nicole made
landfall in Florida as a Category 1 hurricane causing nearly 300,000 customer
outages. Our crews were able to restore more than 98% of those outages
within 12 hours.
In December, high winds and extreme cold from Winter Storm Elliott,
customer demand that was higher than forecasted, and inability to import
additional power from out of state, resulted in the need to temporarily interrupt
service to about 500,000 customers to maintain overall grid reliability and
prevent further potential disruptions in the Carolinas. We will continue to further
evaluate lessons learned to improve our strategy and communications, and
incorporate any identified improvements to address this matter to better serve
our customers now and in the future.
Our ability to effectively handle all facets of the 2022 storm response
efforts, including navigating ongoing macroeconomic challenges and supply
chain constraints, 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
31
PART II storm response in 1998 (including nine for assisting other utilities). We received
EEI’s Emergency Assistance Award for our support to other electric companies
following Hurricane Ian, as well as EEI’s Emergency Recovery Award for multiple
events that include our own recovery from Hurricane Ian, Winter Storm Izzy, and
the July storms in the Midwest.
increased borrowings to temporarily finance related expenditures until recovery.
The Duke Energy Registrants are working with various state commissions on the
timing of recovery of these amounts. See Note 4 to the Consolidated Financial
Statements, “Regulatory Matters” for more information.
Duke Energy Objectives – 2023 and Beyond
At Duke Energy, our climate strategy is our business strategy – to safely
transform and ready our system by investing in new and existing carbon-free
technology, modernizing our gas and electric infrastructure, and expanding and
integrating efficiency and demand management programs. As we transition our
business to cleaner sources of energy, we are focused on delivering sustainable
value for our customers and shareholders by maintaining affordability
and leveraging business transformation to exceed customer expectations,
optimizing investments to drive attractive shareholder returns, and providing
new product offerings and solutions that deliver growth and customer
value. To achieve these major milestones, we are shaping the landscape
by partnering with stakeholders, championing public policy that advances
innovation, and advancing regulatory models that support carbon and methane
emission reductions.
Matters Impacting Future Results
The matters discussed herein could materially impact the future operating
results, financial condition and cash flows of the Duke Energy Registrants and
Business Segments.
Regulatory Matters
Coal Ash Costs
Duke Energy Carolinas and Duke Energy Progress both have approximately
$1.4 billion, in regulatory assets related to coal ash retirement obligations
as of December 31, 2022. Future spending, including amounts recorded for
depreciation and liability accretion, is expected to continue to be deferred and
recovered in future rate cases or rider filings. The majority of spend is expected
to occur over the next 10 to 15 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. 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. In January 2022, Duke Energy
Indiana received a letter from the EPA regarding interpretation of the CCR rule.
Duke Energy Indiana has approximately $385 million in regulatory assets related
to coal ash asset retirement obligations as of December 31, 2022. See Note 5 to
the Consolidated Financial Statements, “Commitments and Contingencies” for
more information.
Fuel Cost Recovery
As a result of rapidly rising commodity costs, including natural gas, fuel
and purchased power prices in excess of amounts included in fuel-related
revenues has led to an increase in the undercollection of fuel costs from
customers at certain jurisdictions including Duke Energy Carolinas, Duke
Energy Progress and Duke Energy Florida. These amounts have been deferred in
regulatory assets and have impacted the cash flows of the registrants, including
Commercial Renewables
In November 2022, Duke Energy committed to a plan to sell the
Commercial Renewables Disposal Groups. The bid process for the utility-scale
solar and wind group is ongoing. Initial indicative bids were received for the
distributed generation group in January 2023. Duke Energy expects to dispose of
both groups in the second half of 2023. The Commercial Renewables Disposal
Groups were classified as held for sale and as discontinued operations in the
fourth quarter of 2022. Duke Energy recorded an impairment loss in the fourth
quarter of 2022. If necessary, the loss on the sale of the assets will be updated
based on market changes or the final sales price, after any adjustments at
closing for working capital and capital expenditures and could be materially
different than the estimated loss. Additionally, certain other costs resulting
from the transactions may be recognized in the period incurred, including Duke
Energy’s share of debt extinguishment costs and costs incurred to modify or
terminate PPAs. Proceeds from the sales are expected to be used for debt
avoidance. For more information, see Note 2 to the Consolidated Financial
Statements, “Dispositions.”
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. Duke Energy has been named in multiple
lawsuits arising out of this winter storm. The legal actions related to these
lawsuits will remain with Duke Energy and any future activity related to the
matters will be presented in discontinued operations. For more information,
see Note 5 to the Consolidated Financial Statements, “Commitments
and Contingencies.”
Supply Chain
Duke Energy is monitoring supply chain disruptions, which could impact the
timing of in-service dates and may result in adverse impacts on operating results.
The company is also monitoring the potential impacts on future financial results
and clean energy goals due to supply chain challenges regarding the availability
of transformers and renewable components like solar panels and batteries.
Other
Duke Energy is monitoring general market conditions, including rising
interest rates, and evaluating the impact to its results of operations, financial
position and cash flows in the future.
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.
32
PART II 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:
• Regulatory matters and litigation represents the net impact of charges
related to the Indiana court rulings on coal ash and other unrelated
ongoing litigation.
• Workplace and workforce realignment represents costs attributable
to business transformation, including long-term real estate strategy
changes and workforce reduction.
Reconciliation of GAAP Reported Amounts to Adjusted Amounts
• 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.
• Gas pipeline investments represents additional exit obligations
related to ACP.
Discontinued operations primarily includes results from Duke Energy’s
Commercial Renewables Disposal Groups, including an estimated impairment
on the sale of the business in 2022.
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.
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:
Regulatory Matters and Litigation(a)
Workplace and Workforce Realignment(b)
Regulatory Settlements(c)
Gas Pipeline Investments(d)
Discontinued Operations(e)
Adjusted Earnings/Adjusted EPS
Years Ended December 31,
2022
2021
Earnings
$ 2,444
295
105
—
—
1,216
$ 4,060
EPS
$ 3.17
0.39
0.14
—
—
1.57
$ 5.27
Earnings
$ 3,802
—
148
69
15
(197)
$ 3,837
EPS
$ 4.94
—
0.20
0.09
0.02
(0.26)
$ 4.99
(a) Net of tax benefit of $128 million. $386 million recorded within Impairment of assets and other charges, $46 million within Regulated electric (Operating Revenues) and $34 million within Net Loss Attributable to
Noncontrolling Interests. $25 million recorded within Operations, maintenance and other.
(b) Net of tax benefit of $31 million and tax benefit of $44 million for the years ended December 31, 2022, and 2021, respectively. $72 million recorded within Impairment of assets and other charges, $71 million recorded within
Operations, maintenance and other and a $7 million gain recorded in Gains on sales of other assets and other for the year ended December 31, 2022. $133 million recorded within Impairment of assets and other charges,
$42 million within Operations, maintenance and other, and $17 million within Depreciation and amortization for the year ended December 31, 2021.
(c) Net of tax benefit of $21 million. $202 million of expense recorded within Impairment of assets and other charges, $111 million of income within Other income and expenses, $12 million of expense within Operations,
maintenance and other, $28 million of income within Regulated electric operating revenues, $8 million of expense within Interest expense and $7 million of expense within Depreciation and amortization.
(d) Net of tax benefit of $5 million. $20 million loss recorded within Equity in earnings (losses) of unconsolidated affiliates.
(e) Recorded in Loss from Discontinued Operations, net of tax, and Net Loss Attributable to Noncontrolling Interests.
Year Ended December 31, 2022, as compared to 2021
SEGMENT RESULTS
GAAP Reported EPS was $3.17 for the year ended December 31,
2022, compared to $4.94 for the year ended December 31, 2021. The
decrease in GAAP Reported Earnings/EPS was primarily due to the estimated
impairment on the sale of the Commercial Renewables Disposal Groups 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
$5.27 for the year ended December 31, 2022, compared to $4.99 for the year
ended December 31, 2021. The increase in Adjusted Earnings/Adjusted EPS was
primarily due to higher volumes, favorable weather and rate case contributions,
partially offset by higher financing costs, higher depreciation and property taxes
on a growing asset base, storm costs and unfavorable market impacts.
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 Electric Utilities and
Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I). The
remainder of Duke Energy’s operations is presented as Other. See Note 3 to
the Consolidated Financial Statements, “Business Segments,” for additional
information on Duke Energy’s segment structure.
33
PART II 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,
2022
$ 26,024
8,862
5,354
4,550
1,315
374
20,455
7
5,576
467
1,565
4,478
536
13
$ 3,929
90,915
70,435
46,214
24,269
31,979
263,812
49,539
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
Variance
$3,421
2,530
14
299
82
170
3,095
(6)
320
(67)
133
120
42
(1)
79
$
3,119
3,638
3,792
140
591
11,280
(332)
Year Ended December 31, 2022, as compared to 2021
EU&I’s higher segment income is due to higher retail sales volumes and
favorable weather, partially offset by higher depreciation and higher interest
expense. The following is a detailed discussion of the variance drivers by
line item.
Operating Revenues. The variance was driven primarily by:
• a $2,332 million increase in fuel revenues primarily due to higher fuel
prices and retail sales volumes;
• a $456 million increase in weather-normal retail sales volumes;
• a $293 million increase in retail base rate pricing due to general rate
cases in North Carolina, net of rider impacts as well as multiyear rate
adjustments in Florida;
• a $145 million increase in retail sales due to favorable weather
compared to prior year;
• a $141 million increase in wholesale revenues primarily due to higher
capacity volumes; and
• a $137 million increase in rider revenues primarily due to higher sales
volumes and storm securitization in North Carolina.
Partially offset by:
• an $86 million decrease in capacity revenue primarily due to
accelerated recovery of the retired coal units Crystal River 1 and 2 in
2021; and
• a $67 million decrease due to the Indiana Supreme Court ruling on
recovery of certain coal ash costs.
34
Operating Expenses. The variance was driven primarily by:
• a $2,530 million increase in fuel used in electric generation and
purchased power due to higher fuel prices and volumes from
customer demand;
• a $299 million increase in depreciation and amortization primarily
due to higher plant in service and resolution of prior year rate cases,
partially offset by lower depreciation related to the extension of the lives
of nuclear facilities;
• a $170 million increase in impairment of assets and other charges
due to the Indiana court rulings on recovery of certain coal ash
costs; and
• an $82 million increase in property and other taxes primarily due to
higher property taxes as well as higher revenue related taxes.
Other Income and Expenses, net. The variance is primarily due to coal
ash insurance litigation proceeds received in the prior year, partially offset by an
increase in AFUDC equity due to higher capital expenditures.
Interest Expense. The variance was primarily driven by higher interest
rates and outstanding debt balances.
Income Tax Expense. The increase in tax expense was primarily due
to an increase in pretax income and a decrease in the amortization of excess
deferred taxes. The ETRs for the years ended December 31, 2022, and 2021,
were 12.0% and 11.3%, respectively. The increase in the ETR was primarily due
to a decrease in the amortization of excess deferred taxes.
PART II 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
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
Segment Income
Years Ended December 31,
2022
2,840
1,276
532
327
138
(12)
2,261
1
580
78
182
476
8
468
$
$
2021
2,112
705
442
303
120
19
1,589
—
523
70
142
451
55
396
$
$
Variance
$
728
571
90
24
18
(31)
672
1
57
8
40
25
(47)
72
$
Piedmont Local Distribution Company (LDC) throughput (Dth)
Duke Energy Midwest LDC throughput (MCF)
Year Ended December 31, 2022, as compared to 2021
GU&I’s results were impacted primarily by margin growth, partially offset
by higher operation and maintenance costs and higher interest expense. The
following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
• a $383 million increase due to higher natural gas costs passed through
to customers and higher volumes;
• a $213 million increase due to increased secondary marketing activity
including higher off-system sales natural gas costs;
• a $64 million increase due to base rate increases;
• a $48 million increase due to rider revenues related to Ohio Capital
Expenditure Program (CEP); and
• a $4 million increase due to customer growth.
Partially offset by:
• a $15 million decrease due to the MGP Settlement.
Operating Expenses. The variance was driven primarily by:
• a $383 million increase in cost of natural gas due to higher natural gas
costs passed through to customers and higher volumes;
628,035,471
90,010,669
542,759,891
85,787,624
85,275,580
4,223,045
• a $188 million increase in cost of natural gas due to increased
secondary marketing activity including higher off-system sales natural
gas costs;
• a $90 million increase in operations, maintenance and other primarily
due to the MGP settlement, higher spend on internal and contract labor
costs, locates, fleet, and materials;
• a $24 million increase in depreciation and amortization due to
additional plant in service and lower CEP deferrals; and
• an $18 million increase in property and other taxes due to lower
CEP deferrals.
Partially offset by:
• a $31 million decrease in impairment of assets and other charges due
to an impairment of propane caverns in 2021, which was partially
reversed in 2022.
Interest Expense. The variance was primarily due to higher interest rates
and outstanding debt balances and lower CEP Rider deferrals.
Income Tax Expense. The decrease in tax expense was primarily due
to an increase in the amortization of excess deferred taxes related to the Ohio
MGP Settlement, partially offset by an increase in pretax income. The ETRs
for the years ended December 31, 2022, and 2021, were 1.7% and 12.2%,
respectively. The decrease in the ETR was primarily due to an increase in the
amortization of excess deferred taxes related to the Ohio MGP Settlement.
35
PART II Other
(in millions)
Operating Revenues
Operating Expenses
Gains (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
Less: Net Income Attributable to Noncontrolling Interests
Less: Preferred Dividends
Net Loss
Years Ended December 31,
2022
122
298
14
(162)
65
778
(875)
(244)
—
106
(737)
$
$
2021
113
409
(1)
(297)
125
643
(815)
(281)
1
106
(641)
$
$
Variance
$
$
9
(111)
15
135
(60)
135
(60)
37
(1)
—
(96)
Year Ended December 31, 2022, as compared to 2021
The higher net loss was driven by higher interest expense and lower
return on investments, partially offset by higher equity earnings from the NMC
investment and prior year obligations to the Duke Energy Foundation.
Operating Expenses. The decrease was primarily driven by prior year
obligations to the Duke Energy Foundation, lower expense on certain employee
benefit obligations and lower asset impairments to optimize the company’s real
estate portfolio and reduce office space.
Other Income and Expenses, net. The variance was primarily due to
lower return on investments that fund certain employee benefit obligations,
partially offset by higher equity earnings from the NMC investment.
Interest Expense. The variance was primarily due to higher interest rates
and outstanding debt balances.
Income Tax Benefit. The decrease in the tax benefit was primarily due to
a reduction of a valuation allowance relating to a capital loss carryforward in the
prior year, partially offset by lower state tax benefit in the prior year. The ETRs
for the years ended December 31, 2022, and 2021, were 27.9% and 34.5%,
respectively. The decrease in the ETR was primarily due to a reduction of a
valuation allowance relating to a capital loss carryforward in the prior year.
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
(in millions)
Loss From Discontinued Operations, net of tax
Years Ended December 31,
2022
$ (1,323)
2021
$
(144)
Variance
$ (1,179)
Year Ended December 31, 2022, as compared to December 31, 2021
The variance was primarily driven by the estimated impairment on the sale of the Commercial Renewables Disposal Groups in the current 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.
36
PART II 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,
2022
$ 7,857
2021
$ 7,102
Variance
$
755
2,015
1,892
1,526
340
26
5,799
4
2,062
221
557
1,726
126
1,601
1,833
1,468
320
227
5,449
2
1,655
270
538
1,387
51
414
59
58
20
(201)
350
2
407
(49)
19
339
75
$ 1,600
$ 1,336
$
264
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
2022
0.5%
4.0%
1.0%
1.3%
0.9%
3.6%
1.8%
Year Ended December 31, 2022, as compared to 2021
Operating Revenues. The variance was driven primarily by:
• a $396 million increase in fuel revenues driven by higher fuel prices
and higher volumes;
• a $156 million increase in weather-normal retail sales volumes;
• a $78 million increase in retail sales due to favorable weather
compared to prior year;
• a $63 million increase due to higher pricing from the North Carolina
retail rate case, net of a return of EDIT to customers; and
• a $52 million increase in rider revenues primarily due to energy
efficiency, storm securitization, and competitive procurement of
renewable energy programs.
Operating Expenses. The variance was driven primarily by:
• a $414 million increase in fuel used in electric generation and purchased
power primarily due to higher coal and natural gas prices and changes in
the generation mix, partially offset by the recovery of fuel expenses;
• a $58 million increase in depreciation and amortization primarily
due to new depreciation rates associated with the North Carolina
rate case and a higher depreciable base, partially offset by
lower depreciation related to the extension of the lives of nuclear
facilities; and
• a $20 million increase in property and other taxes due to higher
franchise and property taxes and a prior year sales and use
tax refund.
Partially offset by:
• a $201 million decrease in impairment of assets and other charges
primarily due to the prior year South Carolina Supreme Court decision
on coal ash.
Other Income and Expenses. The variance was driven by the coal ash
insurance litigation proceeds received in the prior year, partially offset by an
increase in AFUDC equity due to higher capital expenditures.
Interest Expense. The variance was driven by higher interest rates and
outstanding debt balances.
Income Tax Expense. The increase in tax expense was primarily due to
• a $59 million increase in operation, maintenance and other expense
an increase in pretax income.
primarily due to higher storm restoration costs, higher bad debt expense
and higher nuclear outage and maintenance costs;
37
PART II 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
Year Ended December 31, 2022, as compared to 2021
Operating Revenues. The variance was driven primarily by:
• a $1,481 million increase in fuel revenues driven by higher fuel prices
and higher volumes;
• a $249 million increase in weather-normal retail sales volumes;
• a $230 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 2021 Settlement Agreement and the solar
base rate adjustment;
• an $85 million increase in rider revenues due to higher revenues
from the Storm Protection Plan at Duke Energy Florida and storm
securitization and energy efficiency riders at Duke Energy Progress;
• a $53 million increase in wholesale revenues, net of fuel, due to higher
capacity volumes; and
• a $43 million increase in retail sales due to favorable weather.
Partially offset by:
• an $86 million decrease in capacity revenue primarily due to
accelerated recovery of retired Crystal River coal units in 2021.
Operating Expenses. The variance was driven primarily by:
• a $1,494 million increase in fuel used in electric generation and
purchased power primarily due to higher demand and higher natural
gas prices;
38
Years Ended December 31,
2022
$ 13,125
2021
$ 11,057
Variance
$ 2,068
5,078
2,458
2,142
607
12
10,297
11
2,839
181
844
2,176
348
1,828
—
3,584
2,529
1,929
542
82
8,666
14
2,405
215
794
1,826
227
1,599
1
1,494
(71)
213
65
(70)
1,631
(3)
434
(34)
50
350
121
229
(1)
$ 1,828
$ 1,598
$
230
• a $213 million increase in depreciation and amortization primarily due
to increased rates at Duke Energy Florida and higher amortization of
deferred coal ash and storm costs at Duke Energy Progress, partially
offset by the extension of the lives at nuclear facilities at Duke Energy
Progress; and
• a $65 million increase in property and other taxes primarily due to
an increase in gross receipts taxes at Duke Energy Florida and higher
franchise and property taxes at Duke Energy Progress.
Partially offset by:
• a $71 million decrease in operation, maintenance and other expense
primarily due to reduced storm amortization at Duke Energy Florida; and
• a $70 million decrease in impairment of assets and other charges due
to the prior year South Carolina Supreme Court decision on coal ash
and optimization of the company’s real estate portfolio and reduction of
office space.
Other Income and Expenses, net. The variance is primarily due
to coal ash insurance litigation proceeds received in the prior year at
Duke Energy Progress.
Interest Expense. The variance was driven primarily by higher
interest expense and outstanding debt balances at Duke Energy Progress and
Duke Energy Florida.
Income Tax Expense. The increase in tax expense was primarily due
to an increase in pretax income and a decrease in the amortization of excess
deferred taxes.
PART II 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
Net Income
Years Ended December 31,
2022
$ 6,753
2021
$ 5,780
Variance
$
973
2,492
1,475
1,187
190
7
5,351
4
1,406
114
354
1,166
158
$ 1,008
$
1,778
1,467
1,097
159
63
4,564
13
1,229
143
306
1,066
75
991
714
8
90
31
(56)
787
(9)
177
(29)
48
100
83
17
$
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
2022
(0.8)%
7.5%
18.1%
2.5%
27.5%
5.4%
1.9%
Year Ended December 31, 2022, as compared to 2021
Operating Revenues. The variance was driven primarily by:
• a $699 million increase in fuel revenues driven by higher fuel prices
and higher volumes;
• a $128 million increase due to higher pricing from the North Carolina
retail rate case, net of a return of EDIT to customers;
• a $58 million increase in weather-normal retail sales volumes;
• a $39 million increase in rider revenues primarily due to storm
securitization and energy efficiency riders, partially offset by the
Renewable Energy Portfolio Standards rider;
• a $27 million increase in retail sales due to favorable weather
compared to the prior year; and
• a $20 million increase in wholesale revenues, net of fuel, due to higher
capacity volumes.
Operating Expenses. The variance was driven primarily by:
• a $714 million increase in fuel used in electric generation and
purchased power primarily due to higher natural gas prices and
changes in the generation mix, partially offset by the recovery of fuel
expenses and lower coal expense;
39
• a $90 million increase in depreciation and amortization due to higher
amortization of deferred coal ash costs and amortization related to
deferred storm costs, partially offset by lower depreciation related to
the extension of the lives of nuclear facilities; and
• a $31 million increase in property and other taxes due to higher
franchise and property taxes and a prior year sales and use tax refund.
Partially offset by:
• a $56 million decrease in impairment of assets and other charges
primarily due to the prior year South Carolina Supreme Court decision
on coal ash and optimization of the company’s real estate portfolio and
reduction of office space.
Other Income and Expenses, net. The variance was primarily due to
coal ash insurance litigation proceeds received in the prior year.
Interest Expense. The variance was driven primarily by higher
outstanding debt balances.
Income Tax Expense. The increase in tax expense was primarily due
to an increase in pretax income and a decrease in the amortization of excess
deferred taxes.
PART II 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,
2022
$ 6,353
2021
$ 5,259
Variance
$ 1,094
2,586
967
955
421
4
4,933
2
1,422
74
362
1,134
225
909
$
1,806
1,048
831
383
19
4,087
1
1,173
71
319
925
187
738
$
780
(81)
124
38
(15)
846
1
249
3
43
209
38
171
$
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
2022
1.5%
3.5%
6.6%
38.7%
8.9%
1.7%
Year Ended December 31, 2022, as compared to 2021
Operating Revenues. The variance was driven primarily by:
• a $782 million increase in fuel revenues driven by higher fuel prices
and higher volumes;
• a $191 million increase in weather-normal retail sales volumes;
• a $102 million increase in retail pricing due to base rate adjustments
related to annual increases from the 2021 Settlement agreement and
the solar base rate adjustment;
• a $46 million increase in rider revenues primarily due to increased
Storm Protection Plan rider revenue driven by higher debt and equity
returns from increased capital expenditures in the current year;
• a $33 million increase in wholesale power revenues, net of fuel,
primarily due to higher capacity revenues and bulk power sales; and
• a $16 million increase in retail sales due to favorable weather in the
current year.
Partially offset by:
• an $86 million decrease in capacity revenue primarily due to
accelerated recovery of the retired coal units Crystal River 1 and 2
in 2021.
Operating Expenses. The variance was driven primarily by:
• a $780 million increase in fuel used in electric generation and
purchased power primarily due to higher natural gas prices;
• a $124 million increase in depreciation and amortization primarily due
to an increase in depreciation rates starting in January 2022; and
• a $38 million increase in property and other taxes primarily due to an
increase in gross receipt taxes driven by higher revenues.
Partially offset by:
• an $81 million decrease in operation, maintenance and other primarily
due to reduced storm amortization and reduced vegetation management
costs, partially offset by higher bad debt expense; and
• a $15 million decrease in impairment of assets and other charges due
to the prior year optimization of the company’s real estate portfolio and
reduction of office space.
Interest Expense. The variance was driven by higher interest rates and
outstanding debt balances.
Income Tax Expense. The increase in tax expense was primarily due to
higher pretax income.
40
PART II 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 (Benefit) Expense
Net Income
2022
$ 1,798
716
2,514
657
261
523
324
369
(10)
2,124
1
391
19
129
281
(21)
302
$
Years Ended December 31,
2021
Variance
$ 1,493
544
2,037
409
136
479
307
355
25
1,711
1
327
18
111
234
30
204
$
$
$
305
172
477
248
125
44
17
14
(35)
413
—
64
1
18
47
(51)
98
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
2022
(0.5)%
(2.1)%
(6.8)%
(11.0)%
n/a
0.6%
1.3%
Natural Gas
2022
13.7%
1.3%
0.7%
n/a
(3.6)%
4.9%
0.6%
Year Ended December 31, 2022, as compared to 2021
Operating Revenues. The variance was driven primarily by:
• a $372 million increase in fuel related revenues primarily due to
higher retail sales volumes and higher fuel rates in the current year
in response to an increase in natural gas prices and purchased
power expense;
• a $55 million increase in retail revenue riders primarily due to the Ohio
CEP and Distribution Capital Investment Rider (DCI);
• a $39 million increase in other electric revenues primarily due to
Distribution Decoupling rider adjustments recorded in 2021;
• a $10 million increase in bulk power marketing sales; and
• a $10 million increase due to favorable weather in the current year.
Partially offset by:
• a $15 million decrease due to the MGP Settlement.
Operating Expenses. The variance was driven primarily by:
• a $373 million increase in fuel expense primarily driven by
higher retail prices and increased volumes for natural gas and
purchased power;
• a $44 million increase in operation, maintenance and other expense
primarily due to the MGP Settlement, partially offset by employee
related costs;
• a $17 million increase in depreciation and amortization primarily driven
by increases in distribution plant in service and lower CEP deferrals,
partially offset by rate case adjustments for the over amortization of
meter assets in 2022; and
• a $14 million increase in property and other taxes primarily due to
higher property taxes, higher kilowatt and natural gas distribution taxes
and a lower Network Integration Transmission Services tax deferral.
Partially offset by:
• a $35 million decrease in impairment of assets and other charges
primarily due to the prior year impairments related to the propane
caverns in Ohio and the optimization of the company’s real estate
portfolio and reduction of office space, partially offset by the partial
reversal of the propane cavern impairment in the current year.
Interest Expense. The variance was primarily due to higher interest
rates, outstanding debt balances and post in-service carrying costs, partially
offset by AFUDC debt.
Income Tax (Benefit) Expense. The decrease in tax expense was
primarily due to an increase in the amortization of excess deferred taxes related
to the MGP Settlement.
41
PART II 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 (Benefit) Expense
Net Income
Years Ended December 31,
2022
$ 3,922
2021
$ 3,174
Variance
$
748
1,819
729
645
75
388
3,656
266
36
189
113
(24)
137
$
985
750
615
73
9
2,432
742
42
196
588
107
481
$
834
(21)
30
2
379
1,224
(476)
(6)
(7)
(475)
(131)
$ (344)
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
2022
(0.4)%
1.8%
(12.1)%
5.4%
1.9%
1.4%
Year Ended December 31, 2022, as compared to 2021
Operating Revenues. The variance was driven primarily by:
• a $700 million increase in retail fuel revenues primarily due to higher
fuel cost recovery driven by higher retail sales volumes and fuel prices;
• a $74 million increase primarily due to wholesale revenues, including
fuel revenues, driven by higher rates and the bulk power marketing
sharing provision;
• a $46 million increase in weather-normal retail sales volumes primarily
due to higher nonresidential customer demand; and
• a $20 million increase in retail sales due to favorable weather.
Partially offset by:
• a $67 million decrease due to the Indiana Supreme Court ruling on
recovery of certain coal ash costs;
• a $13 million decrease primarily due to the Utility Receipts Tax
repeal; and
• a $12 million decrease primarily due to fixed bill plans and other
electric revenues.
Operating Expenses. The variance was driven primarily by:
• an $834 million increase in fuel used in electric generation and
purchased power primarily due to higher purchased power expense and
higher natural gas and coal costs;
• a $379 million increase in impairment of assets and other charges
primarily due to the Indiana court rulings on recovery of certain coal ash
costs; and
• a $30 million increase in depreciation and amortization primarily
due to additional plant in service, Step 2 rates true-up adjustment to
depreciation expense and coal ash depreciation.
Partially offset by:
• a $21 million decrease in operation, maintenance and other
primarily due to lower outage, base maintenance work and employee
related costs.
Income Tax (Benefit) Expense. The decrease in tax expense was
primarily due to a decrease in pretax income and an increase in the amortization
of excess deferred income taxes.
42
PART II 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
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,
2022
$ 2,124
2021
$ 1,569
Variance
$
555
1,015
368
222
57
18
1,680
4
448
54
140
362
39
323
$
569
327
213
55
10
1,174
—
395
64
119
340
30
310
$
446
41
9
2
8
506
4
53
(10)
21
22
9
13
$
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
2022
5.0%
8.5%
1.2%
23.3%
(4.3)%
15.7%
18.9%
1.4%
The margin decoupling mechanism adjusts for variations in residential
and commercial use per customer, including those due to weather and
conservation. The weather normalization adjustment mechanisms mostly offset
the impact of weather on bills rendered, but do not ensure full recovery of
approved margin during periods when winter weather is significantly warmer or
colder than normal.
Year Ended December 31, 2022, as compared to 2021
Operating Revenues. The variance was driven primarily by:
• a $257 million increase due to higher natural gas costs passed through
to customers and higher volumes;
• a $213 million increase due to increased secondary marketing activity
including higher off-system sales natural gas costs; and
• a $64 million increase due to base rate increases.
Operating Expenses. The variance was driven primarily by:
• a $257 million increase in cost of natural gas due to higher natural gas
costs passed through to customers and higher volumes;
• a $189 million increase in cost of natural gas due to increased
secondary marketing activity including higher off-system sales higher
natural gas costs; and
• a $41 million increase in operation, maintenance and other due to
higher spend on internal and contract labor costs, locates, fleet,
materials and other.
Other Income and Expenses, net. The variance was driven primarily by
a decrease in AFUDC equity base.
Interest Expense. The variance was primarily due to higher debt
outstanding and interest rates.
Income Tax Expense. The increase in tax expense was primarily due
to an increase in pretax income and a decrease in the amortization of excess
deferred taxes.
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.
43
PART II Management discusses these policies, estimates and assumptions with
senior members of management on a regular basis and provides periodic
updates on management decisions to the Audit Committee. Management
believes the areas described below require significant judgment in the
application of accounting policy or in making estimates and assumptions that
are inherently uncertain and that may change in subsequent periods.
For further information, see Note 1 to the Consolidated Financial
Statements, “Summary of Significant Accounting Policies.”
Regulated Operations Accounting
Substantially all of Duke Energy’s regulated operations meet the criteria
for application of regulated operations accounting treatment. As a result, Duke
Energy is required to record assets and liabilities that would not be recorded
for nonregulated entities. Regulatory assets generally represent incurred costs
that have been deferred because such costs are probable of future recovery in
customer rates. Regulatory liabilities are recorded when it is probable that a
regulator will require Duke Energy to make refunds to customers or reduce rates
to customers for previous collections or deferred revenue for costs that have yet
to be incurred.
Management continually assesses whether recorded regulatory assets are
probable of future recovery by considering factors such as:
• applicable regulatory environment changes;
• historical regulatory treatment for similar costs in Duke Energy’s
jurisdictions;
• litigation of rate orders;
• recent rate orders to other regulated entities;
• 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 4 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, 2022. 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, 2022, all of
the reporting units’ estimated fair value of equity substantially exceeded the
carrying value of equity. The fair values of the reporting units were calculated
using a weighted combination of the income approach, which estimates fair
value based on discounted cash flows, and the market approach, which
estimates fair value based on market comparables within the utility and
energy industries.
Estimated future cash flows under the income approach are based on
Duke Energy’s internal business plan. Significant assumptions used are growth
rates, future rates of return expected to result from ongoing rate regulation and
discount rates. Management determines the appropriate discount rate for each
of its reporting units based on the Weighted Average Cost of Capital (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 2022 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, 2022, for each of Duke Energy’s reporting units ranged from
6.6% to 6.9%. 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, 2022, for each of Duke Energy’s
reporting units ranged from 10.3 to 13.6.
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 $19.3 billion in Goodwill at both December 31, 2022,
and 2021. For further information, see Note 12 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 $12.7 billion and $12.6 billion of AROs as of
December 31, 2022, and 2021, respectively. See Note 10, “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.
44
PART II Obligations for closure of ash basins are based upon discounted cash
flows of estimated costs for site-specific plans. In prior years, 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 4, 5 and 10 to the Consolidated
Financial Statements, “Regulatory Matters,” “Commitments and Contingencies”
and “Asset Retirement Obligations.”
Discontinued Operations
Duke Energy calculated an estimated impairment on the disposition of
its Commercial Renewables Disposal Groups as of December 31, 2022. The
impairment was recorded to write-down the carrying amount to fair value,
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
less cost to sell. The fair value was primarily determined from the income
approach using discounted cash flows, but also considered market information
obtained through the bidding process. Estimated future cash flows under the
income approach were based on Duke Energy’s forecast, which was informed
by existing power purchase agreements with offtakers and forward merchant
curves. Significant assumptions used in the income approach include forward
merchant curves and discount rates. The discount rates take into account both
the after-tax cost of debt and cost of equity.
The actual loss will be recorded based on final sales agreements and
could be materially different than the estimated loss.
For further information, See Note 2 to the Consolidated Financial
Statements, “Dispositions.”
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 and
projected tax credits to be generated relating to the IRA, 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)
Electric Generation(a)
Electric Transmission
Electric Distribution
Environmental and Other
EU&I Growth Capital
Maintenance
Total EU&I
GU&I
Other
Total projected capital and investment expenditures
(a)
Includes nuclear fuel of approximately $1.9 billion in 2023-2025.
Debt
2023
2024
2025
$ 1,650
$ 1,950
$ 3,150
1,550
3,750
675
7,625
2,800
1,925
3,750
500
8,125
2,625
1,850
4,100
475
9,575
2,425
10,425
1,375
10,750
1,150
400
$ 12,200
375
$ 12,275
12,000
975
425
$13,400
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 7 to the Consolidated Financial Statements, “Debt and Credit
Facilities,” for information regarding the Duke Energy Registrants’ long-term
debt at December 31, 2022, 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
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, 2022, are as follows:
(in millions)
Fuel and purchased power
Payments Due by Period
Less than
1 year
(2023)
5,840
$
2-3 years
(2024 &
2025)
7,277
$
4-5 years
(2026 &
2027)
3,674
$
Total
23,255
$
More than
5 years
(2028 &
beyond)
6,464
$
45
PART II Other Purchase Obligations
Dividend Payments
Other purchase obligations includes contracts for software, telephone,
data and consulting or advisory services, contractual obligations for Engineering,
Procurement, and Construction agreement costs for new generation plants,
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 $12,095 million, with $11,118 million
expected to be paid in the next 12 months.
See Note 6 to the Consolidated Financial Statements, “Leases” for a
schedule of both finance lease and operating lease payments over the next five
years. See Note 10 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 8 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 8 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 18 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 7 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.
As of December 31, 2022, Duke Energy had approximately $409 million of
cash on hand, $5.2 billion available under its $9 billion Master Credit Facility.
Duke Energy expects to have sufficient liquidity in the form of cash on hand,
cash from operations and available credit capacity to support its funding needs.
Refer to Notes 7 and 20 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 7 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.
In 2022, Duke Energy paid quarterly cash dividends for the 96th
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 2022 and 2021, and the company remains committed to
continued growth of the dividend.
Dividend and Other Funding Restrictions of Duke Energy Subsidiaries
As discussed in Note 4 to the Consolidated Financial Statements,
“Regulatory Matters,” Duke Energy’s 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, 2022, the
amount of restricted net assets of subsidiaries of Duke Energy that may not be
distributed to Duke Energy in the form of a loan or dividend does not exceed a
material amount of Duke Energy’s net assets. Duke Energy does not have any
legal or other restrictions on paying common stock dividends to shareholders
out of its consolidated equity accounts. Although these restrictions cap the
amount of funding the various operating subsidiaries can provide to Duke
Energy, management does not believe these restrictions will have a significant
impact on Duke Energy’s ability to access cash to meet its payment of dividends
on common stock and other future funding obligations.
Cash Flows From Operating Activities
Cash flows from operations of EU&I and GU&I 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.
46
PART II 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 2023, Duke Energy anticipates issuing additional securities of $6.7
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 7 to
the Consolidated Financial Statements, “Debt and Credit Facilities,” for further
information regarding significant debt issuances.
Duke Energy’s capitalization is balanced between debt and equity as
shown in the table below.
Equity
Debt
Projected 2023
Actual 2022
Actual 2021
41%
59%
41%
59%
43%
57%
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,
2022, Duke Energy presented approximately $131 million of long-term debt as
current on the Consolidated Balance Sheet as a result of a technical default due
to the bankruptcy filing of a Duke Energy customer. The Duke Energy Registrants
were in compliance with all other covenants related to their debt agreements
as of December 31, 2022. 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
Cash Flow Information
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 2023.
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
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.
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 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
47
Years Ended December 31,
2022
2021
$
5,927
$
8,290
(11,973)
6,129
83
520
603
$
(10,935)
2,609
(36)
556
520
$
PART II OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows for the two most recently completed fiscal years.
(in millions)
Net income
Non-cash adjustments to net income
Contributions to qualified pension plans
Payments for AROs
Working capital
Other assets and Other liabilities
Net cash provided by operating activities
$
Years Ended December 31,
$
2022
2,455
7,385
(58)
(584)
(2,081)
(1,190)
2021
3,579
5,941
—
(540)
(897)
207
Variance
$
(1,124)
1,444
(58)
(44)
(1,184)
(1,397)
$
5,927
$
8,290
$
(2,363)
The variance was driven primarily by:
Partially offset by:
• a $1,184 million increase in cash outflows from working capital and a
$1,397 million increase in cash outflows from Other assets and Other
liabilities primarily due to an increase in under-collected fuel used in
generation due to higher commodity costs.
• a $320 million increase in net income after adjustment for non-cash
items primarily due to higher revenues from rate cases in various
jurisdictions, favorable weather and volumes, partially offset by an
estimated impairment on the Commercial Renewables Disposal Groups.
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)
Capital, investment and acquisition expenditures, net of return of investment capital
Debt and equity securities, net
Disbursements to canceled equity method investments
Other investing items
Net cash used in investing activities
Years Ended December 31,
2022
2021
Variance
$ (11,419)
$
(9,752)
$
(1,667)
90
—
(644)
5
(855)
(333)
85
855
(311)
$ (11,973)
$ (10,935)
$
(1,038)
The variance relates primarily to an increase in capital expenditures due to higher investments in EU&I, partially offset by a payment made in 2021 to fund
ACP’s outstanding debt. 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
Other
Total capital, investment and acquisition expenditures, net of return of investment capital
Years Ended December 31,
2022
2021
Variance
$
8,985
$
7,653
$
1,332
1,295
1,139
1,271
828
24
311
$ 11,419
$
9,752
$
1,667
FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows for the two most recently completed fiscal years.
(in millions)
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
48
Years Ended December 31,
2022
$
7,478
$
574
(3,179)
1,377
(121)
2021
3,758
479
(3,114)
1,575
(89)
Variance
$
3,720
95
(65)
(198)
(32)
$
6,129
$
2,609
$
3,520
PART II The variance was driven primarily by:
Partially offset by:
• a $3,720 million net increase in proceeds from issuances of long-term
debt, primarily due to timing of issuances and redemptions of
long-term debt.
• a $198 million decrease in contributions from noncontrolling interests,
primarily due to fewer project investments financed by tax equity being
placed into service in the current year.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management Policies
Hedging Strategies
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.
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.
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 MISO), 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.
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.
Commodity Price Risk
Interest Rate 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,
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.
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 15 to the Consolidated Financial Statements,
“Derivatives and Hedging.”
Generation Portfolio Risks
For the EU&I 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.
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, 7, 15 and 17
to the Consolidated Financial Statements, “Summary of Significant Accounting
Policies,” “Debt and Credit Facilities,” “Derivatives and Hedging,” and “Fair
Value Measurements.”
Duke Energy had $9.2 billion of unhedged long- and short-term floating
interest rate exposure at December 31, 2022. The impact of a 100-basis point
change in interest rates on pretax income is approximately $92 million at
December 31, 2022. 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, 2022.
Foreign Currency Exchange Risk
Duke Energy is exposed to risk resulting from changes in the foreign
currency exchange rates as a result of its issuances of long-term debt
denominated in a foreign currency. Duke Energy manages foreign currency
exchange risk exposure by entering into cross-currency swaps, a type of
financial derivative instrument, which mitigate foreign currency exchange
exposure. See Notes 7, 15 and 17 to the Consolidated Financial Statements,
“Debt and Credit Facilities,” “Derivatives and Hedging” and “Fair Value
Measurements,” respectively.
49
PART II 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 15 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 that began in March 2020,
the Duke Energy Registrants announced a suspension of disconnections
for nonpayment to assist customers during 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 monitoring the effects of the
resultant economic slowdown on counterparties’ abilities to perform under
their contractual obligations. The Duke Energy Registrants experienced higher
charge-offs during 2022, and higher utility account balances in arrears as of
December 31, 2022. There is an expectation for the increase in charge-offs to
continue in the near term. The Duke Energy Registrants have reserved for these
estimated losses in the allowance for doubtful account balance. See Notes 4
and 19 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 18 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 Carolinas has third-party insurance to cover certain
losses related to asbestos-related injuries and damages above an aggregate
self-insured retention. See Note 5 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 8 to
the Consolidated Financial Statements, “Guarantees and Indemnifications,” for
further information on guarantees issued by the Duke Energy Registrants.
Duke Energy is subject to credit risk from transactions with counterparties
to cross-currency swaps related to future interest and principal payments. The
credit exposure to such counterparties may take the form of higher costs to
meet Duke Energy’s future euro-denominated interest and principal payments
in the event of counterparty default. Duke Energy selects highly rated banks
as counterparties and allocates the hedge for each debt issuance across
multiple counterparties. The master agreements with the counterparties impose
collateral requirements on the parties in certain circumstances indicative of
material deterioration in a party’s creditworthiness.
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 16 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
50
PART II 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 23 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, 2022, 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 10 to the Consolidated Financial Statements, “Asset Retirement
Obligations,” for additional information regarding nuclear decommissioning
costs. See Note 16 to the Consolidated Financial Statements, “Investments in
Debt and Equity Securities,” for additional information regarding NDTF assets.
OTHER MATTERS
Environmental Regulations
The Duke Energy Registrants are subject to federal, state and local
regulations regarding air and water quality, hazardous and solid waste disposal,
coal ash and other environmental matters. These regulations can be changed
from time to time and result in new obligations of the Duke Energy Registrants.
The following sections outline various proposed and recently enacted
legislation and regulations that may impact the Duke Energy Registrants. Refer
to Note 4 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.
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 4 and 10 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, 2022, and December 31, 2021,
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
51
agreements. The Coal Ash Act includes a variance procedure for compliance
deadlines and other issues surrounding the management of CCR and CCR
surface impoundments and prohibits cost recovery in customer rates for
unlawful discharge of ash impoundment waters occurring after January 1, 2014.
The Coal Ash Act leaves the decision on cost recovery determinations related to
closure of ash impoundments to the normal ratemaking processes before utility
regulatory commissions.
Consistent with the requirements of the Coal Ash Act, Duke Energy
previously submitted comprehensive site assessments and groundwater
corrective action plans to NCDEQ. On December 31, 2019, Duke Energy
submitted updated groundwater corrective action plans for six sites in North
Carolina and site-specific coal ash impoundment closure plans for all 14
North Carolina sites to NCDEQ. In addition, from 2020 through 2022, Duke
Energy submitted updated comprehensive site assessments and groundwater
corrective action plans for the remaining North Carolina sites, except for Buck
Steam Station, which Duke Energy expects to submit in June 2023.
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 lowered 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
PART II close all ash basins in North Carolina and South Carolina was estimated to be
approximately $8 billion to $9 billion, of which approximately $3.5 billion has
been spent through 2022. The majority of the remaining spend is expected to
occur over the next 10 to 15 years.
Duke Energy has completed excavation of all coal ash at the Riverbend,
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 clean energy
transition.
Dan River, Asheville and Sutton plants.
For further information on ash basins and recovery, see Notes 4 and 10
to the Consolidated Financial Statements, “Regulatory Matters” and “Asset
Retirement Obligations,” respectively.
North Carolina House Bill 951
On October 13, 2021, North Carolina House Bill 951 (HB 951) was signed
into law (the “Legislation”). This Legislation establishes a framework overseen
by the NCUC to advance state CO2 emission reductions from electric generating
facilities in the state 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
PBR that includes MYRP with a maximum three-year term, performance
incentive mechanisms to track 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.
In October 2022 and January 2023, Duke Energy Progress and Duke
Energy Carolinas, respectively, filed applications with the NCUC, which proposed
implementation of the Legislation’s provisions around PBR, including MYRP,
residential decoupling and performance incentive mechanisms. Additionally, on
December 30, 2022, the NCUC issued an order adopting the first Carbon Plan as
directed by the Legislation.
See Note 4, “Regulatory Matters” to the Consolidated Financial
Statements for more information.
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.
Global Climate Change and Regulation of GHG Emissions
In 2021, President Biden recommitted the United States to the Paris
Agreement and announced a new target for the United States of 50% to 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
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. In 2019,
Duke Energy announced an updated climate strategy with new goals of at least
50% reduction in carbon emissions from 2005 levels from electric generation
by 2030 and net-zero carbon emissions from electric generation by 2050. In
February 2022, we added Scope 2 and certain Scope 3 emissions, including
emissions from upstream purchased power and fossil fuel purchases, as well as
downstream customer use of natural gas, to our 2050 net-zero goal. In October
2022, we announced an additional interim target to reduce carbon emissions
from electric generation by 80% from 2005 levels by 2040. Duke Energy also
adopted an interim goal of reducing Scope 2 and Scope 3 emissions mentioned
above by 50% below 2021 levels by 2035.
The Duke Energy Registrants have taken actions that have resulted in a
reduction of CO2 emissions over time. Between 2005 and 2022, 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, and updated
in 2022, 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,
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.
52
PART II Generation Mix Planning Process
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
approved its initial carbon reduction plan in December 2022, which considered
feedback from extensive stakeholder engagement and was informed by Duke
Energy’s initial proposed carbon plan, filed with the NCUC on May 16, 2022,
and built on the IRPs that were filed in 2020 by Duke Energy Carolinas and
Duke Energy Progress.
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. In October 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 4 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.”
53
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...........................................................
55
57
58
59
61
63
64
66
67
68
69
70
72
73
74
75
76
78
79
80
81
82
84
85
86
87
88
90
91
92
93
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 – Dispositions ................................................................................................
Note 3 – Business Segments .....................................................................................
Note 4 – Regulatory Matters ......................................................................................
Note 5 – Commitments and Contingencies ................................................................
Note 6 – Leases ........................................................................................................
Note 7 – Debt and Credit Facilities ............................................................................
Note 8 – Guarantees and Indemnifications ................................................................
Note 9 – Joint Ownership of Generating and Transmission Facilities...........................
Note 10 – Asset Retirement Obligations .....................................................................
Note 11 – Property, Plant and Equipment ..................................................................
Note 12 – Goodwill and Intangible Assets ..................................................................
Note 13 – Investments in Unconsolidated Affiliates ...................................................
Note 14 – Related Party Transactions ........................................................................
Note 15 – Derivatives and Hedging ............................................................................
Note 16 – Investments in Debt and Equity Securities .................................................
Note 17 – Fair Value Measurements ..........................................................................
Note 18 – Variable Interest Entities ............................................................................
Note 19 – Revenue ....................................................................................................
Note 20 – Stockholders' Equity ..................................................................................
Note 21 – Severance .................................................................................................
Note 22 – Stock-Based Compensation.......................................................................
Note 23 – Employee Benefit Plans .............................................................................
Note 24 – Income Taxes.............................................................................................
Note 25 – Other Income and Expenses, Net ...............................................................
Note 26 – Subsequent Events ....................................................................................
Note 27 – Quarterly Financial Data (Unaudited).........................................................
94
96
97
98
99
100
102
103
104
105
106
113
116
120
136
141
145
151
152
152
155
157
158
159
160
165
169
175
178
183
184
186
187
198
205
206
206
54
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, 2022, and
2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2022, 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, 2022, 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 27, 2023, 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 a separate opinion on the critical audit matters or on the
accounts or disclosures to which they relate.
Dispositions – Assessment of Held for Sale and Discontinued Operations Classification and Impairment Charge – Refer to Note 2 to the financial statements.
Critical Audit Matter Description
In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina
Long Bay (“Commercial Renewables business segment”). As a result, the Commercial Renewables business segment was classified as held for sale and reported as
discontinued operations and pretax impairment charges of approximately $1.7 billion were recorded to reduce the carrying amount of the assets to their estimated fair
value, based on the expected selling price less cost to sell.
We identified the assessment of held for sale and discontinued operations classification and associated impairment charges as a critical audit matter because
of the extensive effort required to audit the subjective and complex judgments associated with those matters, including:
• The assessment of whether the sale is probable and the transfer of assets will be completed within one year from period-end;
• The assessment of whether the sale of the segment represents a discontinued operation;
• The determination of the impairment charges; and
• The assessment of the fair value of the Commercial Renewables business segment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the classification of the Commercial Renewables business segment as held for sale and the associated impairment charges
included the following, among others:
• We tested the effectiveness of management’s controls over (1) the evaluation and disclosure of the held for sale and discontinued operations classification and
(2) the determination of the impairment charges, including controls over the reasonableness of the inputs and assumptions used in management’s estimates.
55
PART II • We evaluated management’s assessment of held for sale and discontinued operations classification as follows:
◦ Inquired of executive officers, key members of management and members of the Board of Directors to obtain an understanding of plans to sell the
Commercial Renewables business segment.
◦ Assessed management’s judgments in determining whether the Commercial Renewables business segment meets the held for sale and discontinued
operations classification criteria through procedures performed, including, but not limited to, reviewing minutes from meetings of the Board of Directors,
reviewing communications regarding the progression of the selling process, and assessing the Commercial Renewables business segment relative to the
Company’s operations and financial results.
◦ Compared management’s conclusions against relevant guidance and tested the completeness and accuracy of information used in the Company’s evaluation.
• We evaluated the reasonableness of the determination of the fair value of the long-lived assets by using an internal fair value specialist to assess the
reasonableness of the overall methodology and discount rates. Additionally, we evaluated the mathematical accuracy of the underlying calculations. Further,
we tested forecasted information used to determine fair value.
• We evaluated the accuracy and completeness of the Company’s reclassification of balances and activity and related disclosures.
• We obtained representation from management asserting to the appropriate presentation, measurement and timing of the Commercial Renewables
business segment.
Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 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 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset
retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of
December 31, 2022, the Company has approximately $18.1 billion of recorded 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 Matters Were 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 interveners,
and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar
costs under similar circumstances. We 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.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
February 27, 2023
We have served as the Company’s auditor since 1947.
56
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 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
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,
2022
2021
2020
$ 25,759
2,724
285
$ 22,319
2,008
294
$ 21,461
1,642
263
28,768
24,621
23,366
8,782
1,276
5,734
5,086
1,466
434
6,255
705
5,703
4,762
1,355
353
6,051
460
5,502
4,504
1,311
978
22,778
19,133
18,806
22
6,012
113
392
505
2,439
4,078
300
3,778
(1,323)
2,455
95
2,550
106
12
5,500
62
636
698
2,207
3,991
268
3,723
(144)
3,579
329
3,908
106
11
4,571
(2,005)
451
(1,554)
2,097
920
(169)
1,089
(7)
1,082
295
1,377
107
Net Income Available to Duke Energy Corporation Common Stockholders
$ 2,444
$ 3,802
$ 1,270
Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted
(Loss) Income 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
$
4.74
$ (1.57)
$
3.17
$
$
$
770
770
4.68
0.26
4.94
769
769
$
$
$
1.33
0.39
1.72
737
738
57
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 gains (losses) on cash flow hedges
Reclassification into earnings from cash flow hedges
Net unrealized losses on fair value hedges
Unrealized (losses) gains on available-for-sale securities
Other Comprehensive Income (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,
2022
2021
2020
$2,455
$3,579
$1,082
(19)
285
(38)
(33)
(21)
174
2,629
84
2,713
106
7
(68)
13
—
(8)
(56)
3,523
319
3,842
106
6
(138)
11
—
3
(118)
964
306
1,270
107
Comprehensive Income Available to Duke Energy Corporation Common Stockholders
$2,607
$3,736
$1,163
(a) Net of income tax expense of approximately $52 million for the year ended December 31, 2022, and income tax benefit of approximately $17 million and $35 million for the years ended December 31, 2021, and 2020,
respectively.
See Notes to Consolidated Financial Statements
58
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 $40 at 2022 and $45 at 2021)
Receivables of VIEs (net of allowance for doubtful accounts of $176 at 2022 and $76 at 2021)
Inventory
Regulatory assets (includes $106 at 2022 and $105 at 2021 related to VIEs)
Assets held for sale
Other (includes $116 at 2022 and $41 at 2021 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 $1,715 at 2022 and $1,824 at 2021 related to VIEs)
Nuclear decommissioning trust funds
Operating lease right-of-use assets, net
Investments in equity method unconsolidated affiliates
Assets held for sale
Other (includes $52 at 2022 and $30 at 2021 related to VIEs)
Total other noncurrent assets
Total Assets
See Notes to Consolidated Financial Statements
December 31,
2022
2021
$
409
1,309
3,106
3,584
3,485
262
1,067
13,222
$
341
1,085
2,437
3,111
2,150
232
584
9,940
163,839
(52,100)
9
154,496
(49,104)
144
111,748
105,536
19,303
14,645
8,637
1,042
455
5,634
3,400
53,116
19,303
12,487
10,401
1,136
457
6,695
3,632
54,111
$178,086
$ 169,587
59
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 $350 at 2022 and $76 at 2021 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Liabilities associated with assets held for sale
Other
Total current liabilities
Long-Term Debt (includes $3,108 at 2022 and $3,379 at 2021 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
Liabilities associated with assets held for sale
Other
Total other noncurrent liabilities
Commitments and Contingencies
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021
Common stock, $0.001 par value, 2 billion shares authorized; 770 million and 769 million shares outstanding at 2022 and 2021
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,
2022
2021
$
4,754
3,952
722
626
4,154
773
1,466
259
2,167
18,873
67,061
9,964
11,955
13,582
876
832
849
739
1,502
40,299
973
989
1
44,862
2,637
(140)
49,322
2,531
51,853
$
3,531
3,304
731
530
3,387
647
1,211
167
2,423
15,931
60,448
9,379
11,953
16,152
940
855
833
612
1,348
42,072
973
989
1
44,371
3,265
(303)
49,296
1,840
51,136
$178,086
$ 169,587
60
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
Contributions to qualified pension plans
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(a)
Increase (decrease) in
Accounts payable
Taxes accrued
Other current liabilities
Other assets(a)
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
(a)
Includes approximately $2.6 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.
See Notes to Consolidated Financial Statements
Years Ended December 31,
2022
2021
2020
$ 2,455
$ 3,579
$ 1,082
5,843
(114)
(197)
2,183
(200)
(58)
(584)
(130)
—
19
(788)
(476)
(1,498)
805
10
(153)
(1,600)
410
5,927
(11,367)
(58)
6
(4,243)
4,333
—
(644)
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)
8,290
8,856
(9,715)
(81)
44
(6,098)
6,103
(855)
(333)
(9,907)
(370)
133
(8,011)
7,949
—
(398)
(11,973)
(10,935)
(10,604)
61
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 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 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 income taxes
Significant non-cash transactions:
Accrued capital expenditures
Non-cash dividends
(a)
Includes approximately $2.6 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.
See Notes to Consolidated Financial Statements
Years Ended December 31,
2022
2021
2020
$ 11,874
9
(4,396)
80
(287)
781
1,377
(3,179)
(130)
$ 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)
6,129
2,609
1,731
83
520
603
$
(36)
556
(17)
573
$
520
$
556
$ 2,361
(6)
$ 2,248
(3)
$ 2,186
(585)
1,766
—
1,325
—
1,116
110
62
PART II DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Preferred
Stock
Common
Stock
Shares
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Net Gains
(Losses) on
Hedges(d)
Net Unrealized
Gains (Losses)
on Available-
for-Sale-
Securities
Total
Duke Energy
Corporation
Stockholders’
Equity
Pension and
OPEB
Adjustments
Noncontrolling
Interests
Total
Equity
Duke Energy Corporation Stockholders’
Accumulated Other Comprehensive
Income (Loss)
Balance at December 31, 2019
$ 1,962
733 $
1
$ 40,881 $ 4,108
$ (51)
$
Net income (loss)
Other comprehensive (loss) income
Common stock issuances,
including dividend
reinvestment and employee
Common stock dividends
Contribution from noncontrolling
interest(a)
Distributions to noncontrolling
interest in subsidiaries
Other(b)
—
—
—
—
—
—
—
—
—
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 (loss)
Other comprehensive (loss) income
Common stock issuances,
including dividend reinvestment
and employee
Common stock dividends
Sale of noncontrolling interest(c)
Contribution from noncontrolling
interest, net of transaction
costs(a)
Distributions to noncontrolling
interest in subsidiaries
Other
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 3,802
—
—
—
(65)
—
68
— (3,008)
—
545
—
—
(9)
—
—
—
—
—
—
—
—
—
3
—
3
—
—
—
—
—
6
—
(8)
—
—
—
—
—
—
Balance at December 31, 2021
$ 1,962
769 $
1
$ 44,371 $ 3,265
$ (232)
$
(2)
$
Net income (loss)
Other comprehensive income (loss)
Common stock issuances,
including dividend reinvestment
and employee benefits
Common stock dividends
Sale of noncontrolling interest(c)
Purchase of noncontrolling interest
Contribution from noncontrolling
interest, net of transaction
costs(a)
Distributions to noncontrolling
interests in subsidiaries
Other
—
—
—
—
—
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 2,444
—
—
—
203
76
—
— (3,073)
—
465
—
(51)
—
—
1
—
—
1
—
—
—
—
—
—
—
—
(21)
—
—
—
—
—
—
—
$
(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
—
—
—
—
—
—
(69)
—
(19)
—
—
—
—
—
—
—
3,802
(66)
68
(3,008)
545
—
—
(9)
(329)
10
3,473
(56)
68
—
— (3,008)
999
454
550
550
(66)
1
(66)
(8)
$ 49,296
$ 1,840
$ 51,136
2,444
163
76
(3,073)
465
(51)
—
—
2
(95)
11
2,349
174
—
76
— (3,073)
1,034
569
(20)
31
314
314
(140)
1
(140)
3
Balance at December 31, 2022
$ 1,962
770 $
1
$ 44,862 $ 2,637
$ (29)
$ (23)
$
(88)
$ 49,322
$ 2,531 $ 51,853
(a) Relates to tax equity financing activity in the Commercial Renewables Disposal Groups.
(b) Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.
(c) Relates primarily to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.
(d) See Duke Energy Consolidated Statements of Comprehensive Income for detailed activity related to Cash Flow and Fair Value Hedges.
See Notes to Consolidated Financial Statements
63
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, 2022,
and 2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022, 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, 4 and 10 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 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel
costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management
judgment. As of December 31, 2022, the Company has approximately $5.4 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.
64
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 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 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 27, 2023
We have served as the Company’s auditor since 1947.
65
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,
2022
2021
2020
$ 7,857
$ 7,102
$ 7,015
2,015
1,892
1,526
340
26
5,799
4
2,062
221
557
1,726
126
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
$ 1,600
$ 1,336
$
956
—
—
1
1
—
—
$ 1,600
$ 1,337
$
956
See Notes to Consolidated Financial Statements
66
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 $3 at 2022 and $1 at 2021)
Receivables of VIEs (net of allowance for doubtful accounts of $65 at 2022 and $41 at 2021)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $12 at 2022 and 2021 related to VIEs)
Other (includes $8 at 2022 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
Regulatory assets (includes $208 at 2022 and $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 $10 at 2022 and $5 at 2021 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $689 at 2022 and $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
67
December 31,
2022
2021
$
44
338
928
390
1,164
1,095
216
4,175
$
7
300
844
190
1,026
544
95
3,006
54,650
(18,669)
—
51,874
(17,854)
102
35,981
34,122
4,293
4,783
78
1,036
2,935
5,759
92
1,248
10,190
10,034
$ 50,346
$ 47,162
$ 1,472
209
1,233
228
120
1,018
261
530
580
5,651
12,948
300
4,153
5,121
5,783
83
38
300
527
$
988
266
226
274
125
362
249
487
546
3,523
12,595
318
3,634
5,052
7,198
78
50
287
536
16,005
16,835
15,448
(6)
15,442
13,897
(6)
13,891
$ 50,346
$ 47,162
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
Contributions to qualified pension plans
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(a)
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets(a)
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 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
(a)
Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.
See Notes to Consolidated Financial Statements
68
Years Ended December 31,
2022
2021
2020
$ 1,600
$ 1,336
$
956
1,787
(98)
26
210
(15)
(200)
(74)
—
(102)
(200)
(138)
(592)
377
(75)
(46)
(91)
(764)
(36)
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)
1,569
2,704
2,776
(3,304)
(2,633)
2,633
(181)
(3,485)
1,441
(436)
1,007
(50)
(1)
1,961
45
8
53
546
(60)
475
$
$
(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)
998
(813)
477
(600)
(2)
60
3
18
21
481
321
365
$
$
PART II DUKE ENERGY CAROLINAS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
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
Net income
Distributions to parent
Other
Balance at December 31, 2022
Accumulated Other
Comprehensive
Income (Loss)
Net Gains
(Losses) on
Cash Flow
Hedges
$
$
$
$
(7)
—
—
—
(7)
—
1
—
(6)
—
—
—
(6 )
Member’s
Equity
$ 12,818
956
(600)
(13)
$ 13,161
1,336
—
(600)
$ 13,897
1,600
(50)
1
$ 15,448
Total
Equity
$
12,811
956
(600)
(13)
$
13,154
1,336
1
(600)
$
13,891
1,600
(50)
1
$
15,442
(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
69
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, 2022, and
2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022, 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, 4 and 10 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 4, regulatory proceedings in recent years have focused on the
recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders
requires significant management judgment. As of December 31, 2022, the Company has approximately $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.
70
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 interveners,
and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar
costs under similar circumstances. We evaluated the external information and compared it to management’s recorded 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 27, 2023
We have served as the Company’s auditor since 1930.
71
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,
2022
2021
2020
$13,125
$11,057
$10,627
5,078
2,458
2,142
607
12
10,297
11
2,839
181
844
2,176
348
1,828
—
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
$ 1,828
$ 1,598
$ 1,045
$ 1,828
$ 1,599
$ 1,046
5
1
(6)
—
1,828
—
1
3
—
4
1,603
1
(1)
5
(1)
3
1,049
1
$ 1,828
$ 1,602
$ 1,048
72
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 $13 at 2022 and $11 at 2021)
Receivables of VIEs (net of allowance for doubtful accounts of $68 at 2022 and $25 at 2021)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $94 at 2022 and $93 at 2021 related to VIEs)
Other (includes $88 at 2022 and $39 at 2021 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 $1,507 at 2022 and $1,603 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 $340 at 2022 and $71 at 2021 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $2,003 at 2022 and $2,293 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
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2022 and 2021
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
73
December 31,
2022
2021
$
108
318
1,289
22
1,579
1,833
342
5,491
64,822
(20,584)
—
44,238
3,655
7,146
3,855
628
1,066
$
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
16,350
16,139
$ 66,079
$ 61,842
$ 1,481
712
843
135
206
697
289
576
782
5,721
21,592
150
5,147
5,892
4,753
546
292
358
222
$ 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
364
162
17,210
17,516
—
11,832
9,585
(11)
21,406
—
21,406
—
9,149
8,007
(11)
17,145
3
17,148
$ 66,079
$ 61,842
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
Contributions to qualified pension plans
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(a)
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets(a)
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 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 income taxes
Significant non-cash transactions:
Accrued capital expenditures
(a)
Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.
See Notes to Consolidated Financial Statements
74
Years Ended December 31,
2022
2021
2020
$ 1,828
$ 1,599
$ 1,046
2,405
(68)
12
364
(13)
(291)
(58)
—
(322)
117
(183)
(937)
222
206
8
96
(1,116)
573
2,843
(4,317)
(1,341)
1,417
—
(137)
(4,378)
2,775
(1,173)
465
(425)
(36)
1,606
$
$
71
113
184
854
79
663
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)
3,298
3,177
(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
$
$
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, 2019
$ 9,143
$ 6,465
$
(10)
$ (1)
$
(7)
$ 15,590
$
3
$ 15,593
Net income
Other comprehensive income (loss)
Dividends to parent
Other
—
—
—
—
1,045
—
(400)
(1)
—
5
—
—
—
(1)
—
—
—
(1)
—
—
Balance at December 31, 2020
$ 9,143
$ 7,109
$
(5)
$ (2)
$
(8)
Net income
Other comprehensive income
Distributions to noncontrolling interests
Dividends to parent
Other
—
—
—
—
6
1,598
—
—
(700)
—
—
3
—
—
—
—
—
—
—
—
—
1
—
—
—
1,045
3
(400)
(1)
$ 16,237
1,598
4
—
(700)
6
$
1
—
—
—
4
1
—
(1)
—
(1)
1,046
3
(400)
(1)
$ 16,241
1,599
4
(1)
(700)
5
Balance at December 31, 2021
$ 9,149
$ 8,007
$
(2)
$ (2)
$
(7)
$ 17,145
$
3
$ 17,148
Net income
Other comprehensive income (loss)
Distributions to noncontrolling interests
Dividends to parent
Equitization of certain notes payable to affiliates
Purchase of a noncontrolling interest
Other
—
—
—
(175)
2,907
(51)
2
1,828
—
—
(250)
—
—
—
—
1
—
—
—
—
—
—
(6)
—
—
—
—
—
—
5
—
—
—
—
—
1,828
—
—
(425)
2,907
(51)
2
—
—
(34)
—
—
31
—
1,828
—
(34)
(425)
2,907
(20)
2
Balance at December 31, 2022
$ 11,832
$ 9,585
$
(1)
$ (8)
$
(2)
$ 21,406
$ — $ 21,406
See Notes to Consolidated Financial Statements
75
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, 2022,
and 2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022, 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, 4 and 10 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 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel
costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management
judgment. As of December 31, 2022, the Company has approximately $5.4 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.
76
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 interveners,
and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar
costs under similar circumstances. We evaluated the external information and compared it to management’s recorded 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 27, 2023
We have served as the Company’s auditor since 1930.
77
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,
2022
2021
2020
$ 6,753
$ 5,780
$5,422
2,492
1,475
1,187
190
7
5,351
4
1,406
114
354
1,166
158
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)
$ 1,008
$
991
$ 415
78
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 2022 and 2021)
Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2022 and $17 at 2021)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $39 at 2022 and 2021 related to VIEs)
Other (includes $42 at 2022 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
Regulatory assets (includes $681 at 2022 and $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 $34 at 2022 and $15 at 2021 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $1,114 at 2022 and $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
79
December 31,
2022
2021
$
49
167
793
25
1,006
690
174
2,904
38,875
(14,201)
—
$
35
127
574
65
921
533
83
2,338
37,018
(13,387)
26
24,674
23,657
4,724
3,430
370
650
9,174
4,118
4,089
389
792
9,388
$36,752
$35,383
$
601
508
238
77
101
369
288
332
384
2,898
10,568
150
2,477
5,535
4,120
335
160
124
76
$
476
310
172
163
96
556
274
381
448
2,876
9,543
150
2,208
5,401
4,868
350
221
128
87
12,827
13,263
10,309
9,551
$36,752
$35,383
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
Contributions to qualified pension plans
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(a)
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets(a)
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 (used in) financing activities
Net 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
(a)
Includes approximately $402 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.
See Notes to Consolidated Financial Statements
80
Years Ended December 31,
2022
2021
2020
$ 1,008
$
991
$
415
1,371
(52)
7
121
(8)
(193)
(58)
—
(228)
58
(85)
(207)
20
198
(86)
13
(416)
38
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
1,501
1,956
1,666
(2,070)
(1,148)
1,138
(29)
(1,746)
(1,931)
1,914
(20)
(2,109)
(1,783)
1,477
(645)
67
(250)
(1)
648
40
39
79
386
157
269
$
$
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
$
$
PART II
DUKE ENERGY PROGRESS, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
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
Net income
Distribution to parent
Balance at December 31, 2022
See Notes to Consolidated Financial Statements
Member’s
Equity
$ 9,246
415
(400)
(1)
$ 9,260
991
(700)
$ 9,551
1,008
(250)
$10,309
81
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, 2022,
and 2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022, 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 4 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 discussed in Note 4, regulatory
proceedings in recent years have focused on the recoverability of storm and fuel costs. As a result, assessing the potential outcomes of future regulatory orders in
Florida requires significant management judgment. As of December 31, 2022, the Company has approximately $3.6 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.
82
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 interveners,
and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar
costs under similar circumstances. We evaluated the external information and compared it to management’s recorded 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 27, 2023
We have served as the Company’s auditor since 2001.
83
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 Loss, net of tax
Unrealized losses on available-for-sale securities
Other Comprehensive Loss, net of tax
Comprehensive Income
Years Ended December 31,
2022
2021
2020
$ 6,353
$ 5,259
$ 5,188
2,586
967
955
421
4
1,806
1,048
831
383
19
1,737
1,131
702
381
(4)
4,933
4,087
3,947
2
1
1
1,422
74
362
1,134
225
1,173
71
319
925
187
1,242
53
326
969
198
$
909
$
738
$
771
(5)
(5)
(1)
(1)
(1)
(1)
$
904
$
737
$
770
See Notes to Consolidated Financial Statements
84
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 2022 and 2021)
Receivables of VIEs (net of allowance for doubtful accounts of $28 at 2022 and $8 at 2021)
Receivables from affiliated companies
Inventory
Regulatory assets (includes $55 at 2022 and $54 at 2021 related to VIEs)
Other (includes $46 at 2022 and $39 at 2021 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 $826 at 2022 and $883 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 $306 at 2022 and $56 at 2021 related to VIEs)
Asset retirement obligations
Regulatory liabilities
Other
Total current liabilities
Long-Term Debt (includes $890 at 2022 and $1,196 at 2021 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
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
85
December 31,
2022
2021
$
45
148
496
2
573
1,143
108
2,515
$
23
117
432
16
477
497
80
1,642
25,940
(6,377)
23,865
(5,819)
19,563
18,046
2,422
424
258
372
3,476
1,791
553
302
399
3,045
$ 25,554
$ 22,733
$
880
177
605
53
80
328
1
244
363
2,731
9,381
2,789
357
633
211
111
234
84
4,419
$
623
209
199
51
68
76
1
98
408
1,733
8,406
2,434
436
698
256
166
236
73
4,299
9,031
(8)
9,023
8,298
(3)
8,295
$ 25,554
$ 22,733
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
Contributions to qualified pension plans
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(a)
Increase (decrease) in
Accounts payable
Accounts payable to affiliated companies
Taxes accrued
Other current liabilities
Other assets(a)
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
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
(a)
Includes approximately $942 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.
See Notes to Consolidated Financial Statements
86
Years Ended December 31,
2022
2021
2020
$
909
$
738
$
771
1,032
(16)
4
285
(5)
(98)
—
(93)
14
(98)
(640)
202
(32)
2
62
(704)
18
842
(2,247)
(193)
279
—
(108)
(2,269)
1,298
(77)
406
(175)
(1)
1,451
24
62
86
339
(83)
$
$
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)
1,402
1,661
(1,923)
(302)
408
—
(136)
(1,953)
1,135
(575)
3
—
—
563
12
50
62
308
(15)
$
$
(1,907)
(4,443)
4,495
173
(103)
(1,785)
495
(572)
196
—
(1)
118
(6)
56
50
321
138
214
$
$
394
337
PART II
DUKE ENERGY FLORIDA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
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
Net income
Other comprehensive loss
Distribution to parent
Other
Balance at December 31, 2022
See Notes to Consolidated Financial Statements
Accumulated Other
Comprehensive
Income (Loss)
Net Unrealized
Gains (Losses) on
Available-for-
Sale Securities
Total
Equity
$
(1)
$ 6,788
$
$
—
(1)
771
(1)
(2)
$ 7,558
—
(1)
738
(1)
(3)
$ 8,295
—
(5)
—
—
909
(5)
(175)
(1)
$
(8)
$ 9,023
Member’s
Equity
6,789
771
—
7,560
738
—
8,298
909
—
(175)
(1)
9,031
$
$
$
$
87
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, 2022, and
2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022, 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 4 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 natural 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, 2022, the Company has approximately $684 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.
88
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 interveners,
and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar
costs under similar circumstances. We evaluated the external information and compared it to management’s recorded 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 27, 2023
We have served as the Company’s auditor since 2002.
89
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 Before Income Taxes
Income Tax (Benefit) Expense
Net Income and Comprehensive Income
Years Ended December 31,
2022
2021
2020
$ 1,798
716
2,514
$1,493
544
2,037
$1,405
453
1,858
657
261
523
324
369
(10)
409
136
479
307
355
25
339
73
463
278
324
—
2,124
1,711
1,477
1
391
19
129
281
(21)
1
327
18
111
234
30
—
381
16
102
295
43
$ 302
$ 204
$ 252
See Notes to Consolidated Financial Statements
90
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 $6 at 2022 and $4 at 2021)
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 2022 and 2021
Additional paid-in capital
Retained earnings
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
91
December 31,
2022
2021
$
16
73
247
—
144
103
86
669
$
13
96
122
15
116
72
57
491
12,497
(3,250)
—
9,247
11,725
(3,106)
6
8,625
920
581
18
71
920
635
19
84
1,590
1,658
$ 11,506
$ 10,774
$
380
72
497
317
29
475
17
99
74
1,960
2,745
25
1,136
137
534
17
90
96
2,010
762
3,100
904
4,766
$
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
$ 11,506
$ 10,774
PART II
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
Contributions to qualified pension plans
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
Other
Net cash provided by financing activities
Net increase (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) paid for income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
92
Years Ended December 31,
2022
2021
2020
$
302
$
204
$
252
328
(7)
(10)
(22)
(3)
(12)
5
23
(5)
(28)
(55)
44
8
42
(63)
(29)
64
582
(850)
(105)
(67)
(1,022)
50
—
395
—
(2)
443
3
13
16
126
(35)
123
$
$
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
$
$
PART II
DUKE ENERGY OHIO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2019
Net income
Balance at December 31, 2020
Net income
Contribution from parent
Other
Balance at December 31, 2021
Net income
Balance at December 31, 2022
See Notes to Consolidated Financial Statements
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Equity
762 $
2,776
$
145
$ 3,683
—
—
762 $
2,776
$
—
—
—
—
325
(1)
762 $
3,100
—
—
762 $
3,100
$
$
252
397
204
—
1
602
302
904
252
$ 3,935
204
325
—
$ 4,464
302
$ 4,766
$
$
$
$
93
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, 2022, and
2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022, 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, 4 and 10 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 discussed in Note 4, regulatory
proceedings in recent years in Indiana have focused on the recoverability of fuel costs and asset retirement obligations specific to coal ash. As a result, assessing
the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $1.1 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.
94
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 interveners,
and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar
costs under similar circumstances. We evaluated the external information and compared it to management’s recorded 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 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 27, 2023
We have served as the Company’s auditor since 2002.
95
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 (Benefit) Expense
Net Income and Comprehensive Income
See Notes to Consolidated Financial Statements
Years Ended December 31,
2022
2021
2020
$ 3,922
$ 3,174
$ 2,795
1,819
729
645
75
388
3,656
266
36
189
113
(24)
985
750
615
73
9
767
762
569
81
—
2,432
2,179
742
42
196
588
107
616
37
161
492
84
$ 137
$
481
$
408
96
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 $4 at 2022 and $3 at 2021)
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
Accumulated other comprehensive income
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
97
December 31,
2022
2021
$
31
112
298
—
489
249
197
$
6
100
98
134
418
277
68
1,376
1,101
18,121
(6,021)
12,100
875
49
254
1,178
17,343
(5,583)
11,760
1,278
53
296
1,627
$ 14,654
$ 14,488
$
391
206
435
92
48
303
207
187
161
2,030
3,854
150
1,299
744
1,454
47
122
186
65
3,917
4,702
1
4,703
$
282
221
—
73
49
84
110
127
105
1,051
4,089
150
1,303
877
1,565
50
167
177
44
4,183
5,015
—
5,015
$ 14,654
$ 14,488
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
Contributions to qualified pension plans
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
Other
Net cash used in financing activities
Net increase (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 income taxes
Significant non-cash transactions:
Accrued capital expenditures
See Notes to Consolidated Financial Statements
98
Years Ended December 31,
2022
2021
2020
$
137
$
481
$
408
648
(13)
388
(64)
(5)
(82)
(3)
20
(70)
(3)
105
(3)
34
9
(10)
13
619
(27)
9
34
—
(67)
(33)
—
55
(181)
76
8
12
13
20
(15)
1,101
1,004
(877)
(61)
48
(86)
(55)
(1,031)
67
(84)
435
(462)
(1)
(45)
25
6
31
186
35
122
$
$
(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
$
$
PART II
DUKE ENERGY INDIANA, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
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
Net income
Distributions to parent
Other
Balance at December 31, 2022
See Notes to Consolidated Financial Statements
Accumulated Other
Comprehensive
Income
Pension
and OPEB
Adjustments
$
—
—
—
Total
Equity
$ 4,575
408
(200)
$
— $ 4,783
—
—
—
481
(250)
1
— $ 5,015
—
—
1
1
137
(450)
1
$ 4,703
$
$
$
$
Member’s
Equity
4,575
408
(200)
4,783
481
(250)
1
$
5,015
137
(450)
—
$
4,702
99
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,
2022, and 2021, 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, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2022, 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 4 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, 2022, the Company has approximately $511 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.
100
PART II • We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners,
and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the 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 27, 2023
We have served as the Company’s auditor since 1951.
101
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
Gains on Sales of Other Assets and Other, net
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,
2022
2021
2020
$ 2,100
24
$ 1,555
14
$ 1,286
11
2,124
1,569
1,297
1,015
368
222
57
18
1,680
4
448
8
46
54
140
362
39
323
$
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
$
See Notes to Consolidated Financial Statements
102
PART II
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $14 at 2022 and $15 at 2021)
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 2022 and 2021
Retained earnings
Total Piedmont Natural Gas Company, Inc. stockholder’s equity
Noncontrolling interests
Total equity
Total Liabilities and Equity
See Notes to Consolidated Financial Statements
103
December 31,
2022
2021
$
436
11
172
119
4
742
10,869
(2,081)
9
8,797
49
392
4
79
272
796
$
318
11
109
141
9
588
9,918
(1,899)
11
8,030
49
316
16
95
288
764
$10,335
$ 9,382
$
345
51
514
74
40
45
74
81
1,224
3,318
870
26
1,024
13
7
180
2,120
1,635
2,037
3,672
1
3,673
$
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
—
3,349
$10,335
$ 9,382
PART II
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
Gains on sales of other assets
Impairment of assets and other charges
Deferred income taxes
Contributions to qualified pension plans
Equity in earnings 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
Other
Net cash provided by financing activities
Net increase (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
104
Years Ended December 31,
2022
2021
2020
$ 323
$ 310
$
273
225
(11)
(4)
18
5
(2)
(8)
(3)
(111)
—
(63)
32
40
11
11
36
9
(1)
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
507
391
481
(862)
(8)
(26)
(896)
394
—
(4)
—
(1)
389
—
—
(850)
(9)
(31)
(890)
347
(160)
(13)
325
—
499
—
—
(901)
—
(28)
(929)
394
—
54
—
—
448
—
—
$ —
$ —
$ —
$ 135
23
$ 114
(13)
$
207
97
115
(36)
106
PART II
PIEDMONT NATURAL GAS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
Balance at December 31, 2019
Net income
Other
Balance at December 31, 2020
Net income
Contribution from parent
Other
Balance at December 31, 2021
Net income
Other
Balance at December 31, 2022
Total
Piedmont
Natural Gas
Company,
Inc.
Equity
Common
Stock
Retained
Earnings
Noncontrolling
Interests
Total
Equity
$
1,310
$ 1,133
$
2,443
$
— $ 2,443
—
—
273
(1)
273
(1)
—
—
273
(1)
$
1,310
$ 1,405
$
2,715
$
— $ 2,715
—
325
—
310
—
(1)
310
325
(1)
—
—
—
310
325
(1)
$
1,635
$ 1,714
$
3,349
$
— $ 3,349
—
—
323
—
323
—
$
1,635
$ 2,037
$
3,672
$
—
1
1
323
1
$ 3,673
See Notes to Consolidated Financial Statements
105
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, 2022, 2021 and 2020
Index to Combined Notes To Consolidated Financial Statements
The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.
Applicable Notes
Registrant
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
8
•
1
•
•
•
•
•
•
•
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•
•
3
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20
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24
25
26
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27
•
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 18 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 9 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.
106
PART II Other Current Assets and Liabilities
SIGNIFICANT ACCOUNTING POLICIES
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, 2022, or 2021.
(in millions)
Location
2022
2021
December 31,
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 4 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.
Current Liabilities
Current Liabilities
Current Liabilities
Current Liabilities
Duke Energy
Accrued compensation
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
Duke Energy Indiana
Mark-to-market transactions Current Assets
Current Liabilities
Current Liabilities
Current Assets
Current Liabilities
$
$
$
$
$
$
778
247
106
124
200
61
57
53
110
$
$
$
$
$
$
915
277
144
163
200
89
25
57
23
Discontinued Operations
Duke Energy has elected to present cash flows of discontinued operations
combined with cash flows of continuing operations. Unless otherwise noted, the
notes to these consolidated financial statements exclude amounts related to
discontinued operations for all periods presented. For the years ended December
31, 2022, 2021 and 2020, the Loss From Discontinued Operations, net of tax
on Duke Energy’s Consolidated Statements of Operations includes amounts
related to noncontrolling interests. A portion of Noncontrolling interests on Duke
Energy’s Consolidated Balance Sheets relates to discontinued operations for the
periods presented. See Note 2 for discussion of discontinued operations related
to the Commercial Renewables Disposal Groups.
Noncontrolling Interest
Duke Energy maintains a controlling financial interest in certain less
than wholly owned regulated and 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. 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.
107
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, 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. See Note 18 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, 2022
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
$
44
8
1
53
$ 108
74
2
$
49
28
2
$ 184
$
79
December 31, 2021
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
$
7
—
1
8
$
70
39
4
$
35
—
4
$ 113
$
39
Duke
Energy
Florida
$ 45
41
—
$ 86
Duke
Energy
Florida
$ 23
39
—
$ 62
Duke
Energy
$
409
173
11
$
593
Duke
Energy
$
341
170
6
$
517
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, 2022, and 2021, respectively. The
components of inventory are presented in the tables below.
(in millions)
Materials and supplies
Coal
Natural gas, oil and other
Total inventory
December 31, 2022
Duke
Energy
$ 2,604
620
360
$ 3,584
Duke
Energy
Carolinas
$ 876
253
35
$ 1,164
Progress
Energy
$ 1,232
190
157
$ 1,579
Duke
Energy
Progress
$
819
99
88
$ 1,006
Duke
Energy
Florida
$ 413
91
69
$ 573
Duke
Energy
Ohio
$ 105
34
5
$ 144
Duke
Energy
Indiana
$ 342
144
3
$ 489
Piedmont
$ 12
—
160
$ 172
108
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)
Materials and supplies
Coal
Natural gas, oil and other
Total inventory
December 31, 2021
Duke
Energy
$ 2,309
486
316
$ 3,111
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
Duke
Energy
Ohio
$ 80
19
17
$ 116
Duke
Energy
Indiana
$ 311
105
2
$ 418
Piedmont
$ 14
—
95
$ 109
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 16
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 12 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 12 for further information.
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 that
are held and used 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.
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,
2022
3.0 %
2.7 %
3.2 %
3.0 %
3.5 %
2.9 %
3.6 %
2.1 %
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%
Long-Lived Asset Impairments
The Duke Energy Registrants evaluate long-lived assets that are held
and used, 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
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
109
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 Facilities to be retired, net on the Consolidated Balance Sheets. If the
asset is no longer operating, the net amount is classified in Regulatory assets
on the Consolidated Balance Sheets if deemed recoverable (see discussion
of long-lived asset impairments above). The carrying value of the asset is
based on historical cost if the Duke Energy Registrants are allowed to recover
the remaining net book value and a return equal to at least the incremental
borrowing rate. If not, an impairment is recognized to the extent the net book
value of the asset exceeds the present value of future revenues discounted at
the incremental borrowing rate.
When the Duke Energy Registrants sell entire regulated operating units,
or retire or sell nonregulated properties, the original cost and accumulated
depreciation and amortization balances are removed from Property, Plant and
Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded
in earnings, unless otherwise required by the applicable regulatory body. See
Note 11 for additional information.
Other Noncurrent Assets
Duke Energy, through a nonregulated subsidiary, was the winner of the
Carolina Long Bay offshore wind auction in May 2022 and recorded an asset
of $150 million related to the contract in Other within Other noncurrent assets.
In November 2022, Duke Energy committed to a plan to sell the Commercial
Renewables business segment, excluding the offshore wind contract for Carolina
Long Bay, which was moved to the Electric Utilities and Infrastructure (EU&I)
segment. See Notes 2 and 3 for further 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 24 for additional information.
Asset Retirement Obligations
AROs are recognized for legal obligations associated with the retirement
of property, plant and equipment. Substantially all AROs are related to regulated
operations. When recording an ARO, the present value of the projected liability
is recognized in the period in which it is incurred, if a reasonable estimate of
fair value can be made. The liability is accreted over time. For operating plants,
the present value of the liability is added to the cost of the associated asset and
depreciated over the remaining life of the asset. For retired plants, the present
value of the liability is recorded as a regulatory asset unless determined not to
be probable of recovery.
The present value of the initial obligation and subsequent updates are
based on discounted cash flows, which include estimates regarding timing of
future cash flows, selection of discount rates and cost escalation rates, among
other factors. These estimates are subject to change. Depreciation expense is
adjusted prospectively for any changes to the carrying amount of the associated
asset. The Duke Energy Registrants receive amounts to fund the cost of the
ARO for regulated operations through a combination of regulated revenues and
earnings on the NDTF. As a result, amounts recovered in regulated revenues,
earnings on the NDTF, accretion expense and depreciation of the associated
asset are netted and deferred as a regulatory asset or liability.
Accounts Payable
During 2020, Duke Energy established a supply chain finance program
(the “program”) with a global financial institution. The program is voluntary and
allows Duke Energy suppliers, at their sole discretion, to sell their receivables
from Duke Energy to the financial institution at a rate that leverages Duke
Energy’s credit rating and, which may result in favorable terms compared to the
rate available to the supplier on their own credit rating. Suppliers participating
in the program, determine at their sole discretion which invoices they will sell
to the financial institution. Suppliers’ decisions on which invoices are sold do
not impact Duke Energy’s payment terms, which are based on commercial
terms negotiated between Duke Energy and the supplier regardless of program
participation. The commercial terms negotiated between Duke Energy and its
suppliers are consistent regardless of whether the supplier elects to participate
in the program. Duke Energy does not issue any guarantees with respect to the
program and does not participate in negotiations between suppliers and the
financial institution. Duke Energy does not have an economic interest in the
supplier’s decision to participate in the program and receives no interest, fees
or other benefit from the financial institution based on supplier participation in
the program.
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) 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, 2022, and December 31, 2021.
(in millions)
Outstanding Accounts Payable Balance Sold
Suppliers Invoices Settled Through The Program
(in millions)
Outstanding Accounts Payable Balance Sold
Suppliers Invoices Settled Through The Program
Revenue Recognition
December 31, 2022
Duke
Energy
$
87
301
Duke
Energy
Carolinas
$
6
29
Progress
Energy
$
19
85
Duke
Energy
Progress
$
8
26
Duke
Energy
Florida
$
11
59
Duke
Energy
Ohio
$
5
38
December 30, 2021
Duke
Energy
$
19
122
Progress
Energy
$
9
10
Duke
Energy
Florida
$
9
10
Duke
Energy
Indiana
$ —
2
Duke
Energy
Ohio
$
6
12
Piedmont
$ 57
147
Piedmont
$
4
100
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 19 for further information.
Derivatives and Hedging
Derivative and non-derivative instruments may be used in connection
with commodity price and interest rate activities, including swaps, futures,
forwards and options. All derivative instruments, except those that qualify for
the NPNS exception, are recorded on the Consolidated Balance Sheets at fair
value. Qualifying derivative instruments may be designated as either cash
flow hedges or fair value hedges. Other derivative instruments (undesignated
contracts) either have not been designated or do not qualify as hedges. The
effective portion of the change in the fair value of cash flow hedges is recorded
in AOCI. The effective portion of the change in the fair value of a fair value hedge
is offset in net income by changes in the hedged item. For activity subject to
regulatory accounting, gains and losses on derivative contracts are reflected as
regulatory assets or liabilities and not as other comprehensive income or current
period income. As a result, changes in fair value of these derivatives have no
immediate earnings impact.
Formal documentation, including transaction type and risk management
strategy, is maintained for all contracts accounted for as a hedge. At inception
and at least every three months thereafter, the hedge contract is assessed to
see if it is highly effective in offsetting changes in cash flows or fair values of
hedged items.
See Note 15 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,
111
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.
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 20 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 4 and 5 for further information.
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) Severance and Special Termination Benefits
Excise Taxes
Duke Energy maintains severance plans for the general employee
population under which, in general, the longer a terminated employee worked
prior to termination the greater the amount of severance benefits provided. 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 21 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 8 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.
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 24 for further information.
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,
2022
2021
2020
$ 449
47
290
25
265
104
7
1
$ 420
44
250
22
228
102
23
1
$ 415
43
249
26
223
96
25
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 20 for
more information. Additionally, as further described in Note 4, 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, 2022, and 2021, an
insignificant amount of Duke Energy’s consolidated Retained earnings balance
represents undistributed earnings of equity method investments.
New Accounting Standards
The following 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 accounting standard was adopted by the Duke Energy
Registrants in 2020.
Current Expected Credit Losses. In June 2016, the FASB issued new
accounting guidance for credit losses. Duke Energy adopted the new accounting
guidance for credit losses effective January 1, 2020, using the modified
retrospective method of adoption, which does not require restatement of prior
year results. Duke Energy did not adopt any practical expedients.
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) 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 8 and 19 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:
(in millions)
Total pretax impact to Retained Earnings
2. DISPOSITIONS
January 1, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida Piedmont
$
120
$
16
$
2
$
1
$
1
$
1
The following table summarizes the Loss from Discontinued Operations, net of tax recorded on Duke Energy’s Consolidated Statements of Operations:
(in millions)
Commercial Renewables Disposal Groups
Other(a)
Loss from Discontinued Operations, net of tax
Years Ended December 31,
2022
(1,349)
26
(1,323)
$
$
2021
(151)
7
(144)
$
$
2020
(14)
7
(7)
$
$
(a) Amount represents an income tax benefit resulting from tax adjustments for previously sold businesses not related to the Commercial Renewables Disposal Groups.
Sale of Commercial Renewables Segment
In August 2022, Duke Energy announced a strategic review of its
commercial renewables business. Since 2007, Duke Energy has built a
portfolio of commercial wind, solar and battery projects across the U.S., and
established a development pipeline. Duke Energy has developed a strategy
to focus on renewables, grid and other investment opportunities within its
regulated operations. In November 2022, Duke Energy committed to a plan to
sell the Commercial Renewables business segment, excluding the offshore wind
contract for Carolina Long Bay, which was moved to the Electric Utilities and
Infrastructure (EU&I) segment. Duke Energy is actively marketing the business
as two separate disposal groups, the utility-scale solar and wind group and the
distributed generation group (collectively, Commercial Renewables Disposal
Groups). The sales processes for both Disposal Groups are ongoing and Duke
Energy expects to dispose of these groups in the second half of 2023.
Assets Held For Sale and Discontinued Operations
The Commercial Renewables Disposal Groups were classified as held
for sale and as discontinued operations in the fourth quarter of 2022. No
adjustments were made to the historical activity within the Consolidated
Statements of Comprehensive Income, Consolidated Statements of Cash Flows
or the Consolidated Statements of Changes in Equity. Unless otherwise noted,
the notes to these consolidated financial statements exclude amounts related to
discontinued operations for all periods presented.
113
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 carrying values of the major classes of Assets held for sale and Liabilities associated with assets held for sale included in Duke
Energy’s Consolidated Balance Sheets.
(in millions)
Current Assets Held for Sale
Cash and cash equivalents
Receivables, net
Inventory
Other
Total current assets held for sale
Noncurrent Assets Held for Sale
Property, Plant and Equipment
Cost
Accumulated depreciation and amortization
Net property, plant and equipment
Operating lease right-of-use assets, net
Investments in equity method unconsolidated affiliates
Other
Total other noncurrent assets held for sale
Total Assets Held for Sale
Current Liabilities Associated with Assets Held for Sale
Accounts payable
Taxes accrued
Other
Total current liabilities associated with assets held for sale
Noncurrent Liabilities Associated with Assets Held for Sale
Operating lease liabilities
Asset retirement obligations
Other
Total other noncurrent liabilities associated with assets held for sale
Total Liabilities Associated with Assets Held for Sale
December 31,
2022
2021
$
10
107
88
57
262
$
3
87
86
56
232
6,444
(1,651)
4,793
140
522
179
841
7,323
(1,452)
5,871
130
513
181
824
$ 5,896
$ 6,927
$
$
122
17
120
259
150
190
399
739
$
998
$
98
18
51
167
134
175
303
612
779
As of December 31, 2022, the noncontrolling interest balance is $1.6 billion.
The following table presents the results of the Commercial Renewables Disposal Groups, which are included in Loss from Discontinued Operations, net of tax in
Duke Energy’s Consolidated Statements of Operations.
(in millions)
Operating revenues
Operation, maintenance and other
Depreciation and amortization(a)
Property and other taxes
Other income and expenses, net
Interest expense
Loss on disposal
Loss before income taxes
Income tax benefit
Loss from discontinued operations
Add: Net loss attributable to noncontrolling interest included in discontinued operations
Net income from discontinued operations attributable to Duke Energy Corporation
(a) Upon meeting the criteria for assets held for sale, beginning in November 2022 depreciation and amortization expense were ceased.
114
Years Ended December 31,
2022
2021
2020
$
465
337
201
36
2
10
1,748
(1,865)
(516)
$ (1,349)
108
$ (1,241)
$
$
$
476
343
227
34
(27)
72
—
(227)
(76)
(151)
344
193
$
$
$
502
292
200
26
1
66
—
(81)
(67)
(14)
296
282
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 Commercial Renewables Disposal Groups’ held for sale assets
included pretax impairments of approximately $1.7 billion for the year ended
December 31, 2022. The impairment was recorded to write-down the carrying
amount of the property, plant and equipment assets to the estimated fair value
of the business, based on the expected selling price less estimated cost to sell.
These losses were included in Loss from Discontinued Operations, net of tax
in Duke Energy’s Consolidated Statements of Operations and Comprehensive
Income. The fair value was primarily determined from the income approach
using discounted cash flows but also considered market information obtained
through the bidding process. The discounted cash flow model utilized Level
2 and Level 3 inputs. The fair value hierarchy levels are further discussed
in Note 17. The impairment will be updated, if necessary, based on the
final sales price, after any adjustments at closing for working capital and
capital expenditures.
Duke Energy has elected not to separately disclose discontinued
operations on Duke Energy’s Consolidated Statements of Cash Flows. The
following table summarizes Duke Energy’s cash flows from discontinued
operations related to the Commercial Renewables Disposal Groups.
(in millions)
Cash flows provided by (used in):
Operating activities
Investing activities
Other Sale Related Matters
Several Duke Energy renewables project companies, located in the Electric
Reliability Council of Texas (ERCOT) market, were named in several lawsuits
arising out of Texas Storm Uri, which occurred in February 2021. The legal
actions related to these lawsuits will remain with Duke Energy and any future
activity related to the matters will be presented in discontinued operations. See
Note 5 for more information.
The Commercial Renewables Disposal Groups’ debt and related interest
rate swaps have not been classified as held for sale as they are not currently
expected transfer to the buyer, but would be required to be extinguished as
a result of the disposition. As of December 31, 2022, the balance of long-
term debt including current maturities is $1.5 billion. If the debt and related
interest rate swaps do not transfer to the buyer and are terminated early,
the expected total loss on extinguishment is approximately $100 million, of
which approximately $55 million is expected to be attributable to Duke Energy.
The loss would be recorded in discontinued operations when the debt and
swaps are terminated. Hedge accounting was discontinued on the related
interest rate swaps when the Commercial Renewables Disposal Groups were
classified as held for sale as the forecasted transactions being hedged are no
longer probable. As a result, a gain of $72 million was recorded in Loss from
Discontinued Operations, net of tax in Duke Energy’s Consolidated Statements
of Operations as of December 31, 2022, of which $54 million is attributable to
Duke Energy.
Interest expense and debt issuance costs directly associated with the
Commercial Renewables Disposal Groups was allocated to discontinued
operations. No interest from corporate level debt was allocated to discontinued
operations.
Years Ended December 31,
2022
2021
2020
$
213
$
62
$
466
(802)
(542)
(1,102)
The Commercial Renewables Disposal Groups have entered into
negotiations to modify or terminate certain PPAs under which the Commercial
Renewables Disposal Groups sell power and RECs from renewable projects to
offtakers. Duke Energy expects to pay offtakers approximately $95 million to
modify the agreements. Charges related to the modifications will be reflected
within Loss From Discontinued Operations in Duke Energy’s Consolidated
Statements of Operations.
Sale of Minority Interest in Duke Energy Indiana Holdco, LLC
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 was completed
following two closings for an aggregate purchase price of approximately
$2.05 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 $1.03 billion or 50% of the purchase price. 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. The second closing
was completed in December 2022 and resulted in Duke Energy Indiana Holdco,
LLC issuing an additional 8.85% of its membership interests in exchange for
approximately $1.03 billion. The difference between the cash consideration
received, net of transaction costs of approximately $6 million, and the carrying
value of the noncontrolling interest is $492 million and was recorded as an
increase to equity. Duke Energy retained indirect control of these assets, and,
therefore, no gain or loss was recognized on the Consolidated Statements of
Operations for either transaction.
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) 3. 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
Due to Duke Energy’s commitment in the fourth quarter of 2022 to
sell the Commercial Renewables business segment, Duke Energy’s segment
structure now includes the following two segments: EU&I and GU&I. Prior period
information has been recast to conform to the current segment structure. See
Note 2 for further information on the Commercial Renewables Disposal Groups.
The EU&I 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. EU&I also includes
Duke Energy’s electric transmission infrastructure investments and the offshore
wind contract for Carolina Long Bay. Refer to Note 2 for further information.
The GU&I segment includes Piedmont, Duke Energy’s natural gas local
distribution companies in Ohio and Kentucky, and Duke Energy’s natural gas
storage, midstream pipeline, and renewable natural gas investments. GU&I’s
operations are substantially all regulated and, accordingly, qualify for regulatory
accounting treatment.
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 13 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, 2022
(in millions)
Unaffiliated Revenues
Intersegment Revenues
Total Revenues
Interest Expense
Depreciation and amortization
Equity in earnings of unconsolidated affiliates
Income tax expense (benefit)
Segment income (loss)(a)(b)
Less noncontrolling interest
Add back preferred stock dividend
Discontinued operations
Net income
Capital investments expenditures and acquisitions(c)
Segment assets(d)
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
$ 25,990
34
$ 26,024
$
1,565
4,550
7
536
3,929
$ 2,748
92
$ 2,840
$
182
327
20
8
468
Total
Reportable
Segments
$ 28,738
126
Other
Eliminations
Total
$
30
92
$ — $ 28,768
—
(218)
$ 28,864
$ 122
$ (218) $ 28,768
$
1,747
4,877
27
544
4,397
$ 778
236
86
(244)
(737)
$
(86) $
(27)
—
—
(1)
2,439
5,086
113
300
3,659
95
106
(1,215)
2,455
$
$ — $ 11,419
— 178,086
$
8,985
152,104
$ 1,295
16,411
$ 10,280
$ 1,139
168,515
9,571
(a) EU&I includes $386 million recorded within Impairment of assets and other charges, $46 million within Regulated electric revenues and $34 million within Noncontrolling Interests related to the Duke Energy Indiana court
rulings on coal ash on the Consolidated Statements of Operations. See Note 4 for additional information.
(b) Other includes $72 million recorded within Impairment of assets and other charges, $71 million within Operations, maintenance and other and a $7 million gain within Gains on sales of other assets related to costs
attributable to business transformation, including long-term real estate strategy changes and workforce realignment on the Consolidated Statements of Operations; it also includes $25 million recorded within Operations,
maintenance and other related to litigation on the Consolidated Statements of Operations.
(c) Other includes capital investments expenditures and acquisitions related to the Commercial Renewables Disposal Groups.
(d) Other includes Assets Held for Sale balances related to the Commercial Renewables Disposal Groups. Refer to Note 2 for further information.
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) (in millions)
Unaffiliated Revenues
Intersegment Revenues
Total Revenues
Interest Expense
Depreciation and amortization
Equity in earnings of unconsolidated affiliates
Income tax expense (benefit)
Segment income (loss)(a)(b)(c)
Less noncontrolling interest
Add back preferred stock dividend
Discontinued operations
Net income
Capital investments expenditures and acquisitions(d)
Segment assets(e)
Year Ended December 31, 2021
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
$ 22,570
33
$ 22,603
$
1,432
4,251
7
494
3,850
$ 2,022
90
$ 2,112
$
142
303
8
55
396
Total
Reportable
Segments
$ 24,592
123
$ 24,715
$
1,574
4,554
15
549
4,246
$
$
$
29
84
113
643
236
47
(281)
(641)
$
7,653
143,841
$ 1,271
15,179
$
8,924
159,020
$
828
10,567
Other
Eliminations
Total
$ — $ 24,621
—
(207)
$ (207) $ 24,621
$
(10) $
(28)
—
—
(3)
$
$ — $
2,207
4,762
62
268
3,602
329
106
200
3,579
9,752
— 169,587
(a) EU&I 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 4 and 5 for more information.
(b) GU &I 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 4 for additional information.
(c) 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 workforce realignment. See Note 11 for additional information.
(d) Other includes capital investments expenditures and acquisitions related to the Commercial Renewables Disposal Groups.
(e) Other includes Assets Held for Sale balances related to the Commercial Renewables Disposal Groups. Refer to Note 2 for further information.
Year Ended December 31, 2020
(in millions)
Unaffiliated Revenues
Intersegment Revenues
Total Revenues
Interest Expense
Depreciation and amortization
Equity in (losses) earnings of unconsolidated affiliates
Income tax expense (benefit)
Segment income (loss)(a)(b)(c)
Less noncontrolling interest
Add back preferred stock dividend
Discontinued operations
Net income
Capital investments expenditures and acquisitions(d)
Segment assets(e)
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
$ 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)
Total
Reportable
Segments
$ 23,340
128
$ 23,468
$
1,455
4,326
(2,018)
(9)
1,403
$
$
$
26
73
99
657
207
13
(160)
(418)
$
7,629
138,225
$ 1,309
13,849
$
8,938
152,074
$ 1,483
10,314
Other
Eliminations
Total
$ — $ 23,366
—
(201)
$ (201) $ 23,366
$
(15) $
(29)
—
—
(4)
2,097
4,504
(2,005)
(169)
981
295
107
289
1,082
$
$ — $ 10,421
— 162,388
(a) EU&I 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,
EU&I 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 4 for additional information.
(b) GU&I 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 4 and 13 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 21 for additional information.
(d) Other includes capital investments expenditures and acquisitions related to the Commercial Renewables Disposal Groups.
(e) Other includes Assets Held for Sale balances related to the Commercial Renewables Disposal Groups. Refer to Note 2 for further 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) Geographical Information
Substantially all assets and revenues from continuing operations are within the U.S.
Major Customers
For the year ended December 31, 2022, revenues from one customer of Duke Energy Progress are $684 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 for the year
ended December 31, 2022.
Products and Services
The following table summarizes revenues of the reportable segments by type.
(in millions)
2022
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Total Reportable Segments
2021
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Total Reportable Segments
2020
Electric Utilities and Infrastructure
Gas Utilities and Infrastructure
Total Reportable Segments
Duke Energy Ohio
Retail
Electric
Wholesale
Electric
Retail
Natural Gas
Other
Total
Revenues
$ 22,036
—
$ 22,036
$ 19,410
—
$ 19,410
$ 18,898
—
$ 18,898
$
$
$
$
$
$
2,882
—
2,882
2,216
—
2,216
1,878
—
1,878
$
$
$
$
$
$
—
2,535
2,535
—
2,025
2,025
—
1,691
1,691
$ 1,106
305
$ 1,411
$
977
87
$ 1,064
$
944
57
$ 1,001
$ 26,024
2,840
$ 28,864
$ 22,603
2,112
$ 24,715
$ 21,720
1,748
$ 23,468
Duke Energy Ohio has two reportable segments, EU&I and GU&I.
EU&I transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. GU&I 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.
118
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)
Capital expenditures
Segment assets
Year Ended December 31, 2022
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
$ 1,798
$
$
86
221
24
189
488
7,504
$
$
$
716
43
103
(43)
121
362
4,164
Total
Reportable
Segments
$
$
$
2,514
129
324
(19)
310
850
11,668
Other
$ —
$ —
—
(2)
(8)
$ —
14
Eliminations
Total
$ — $ 2,514
$ — $
—
—
—
$ — $
(176)
129
324
(21)
302
850
11,506
Year Ended December 31, 2021
Electric
Utilities and
Infrastructure
Gas
Utilities and
Infrastructure
Total
Reportable
Segments
$ 1,493
$
$
87
217
15
141
486
6,882
$
$
$
544
24
90
19
78
362
3,892
$
$
$
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
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) 4. 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
Deferred fuel and purchased power
Accrued pension and OPEB
Storm cost securitized balance, net
Nuclear asset securitized balance, net
Debt fair value adjustment
Storm cost deferrals
Hedge costs deferrals
Post-in-service carrying costs (PISCC) and deferred operating expenses
Retired generation facilities
Deferred asset – Lee and Harris COLA
Advanced metering infrastructure (AMI)
Customer connect project
Costs of removal regulatory asset
Vacation accrual
Incremental COVID-19 expenses
CEP deferral
Demand side management (DSM)/Energy efficiency (EE)
Derivatives – natural gas supply contracts
NCEMPA deferrals
Nuclear deferral
Deferred pipeline integrity costs
COR settlement
Deferred coal ash handling system costs
Qualifying facility contract buyouts
Amounts due from customers
Propane caverns
Deferred severance charges
Manufactured gas plant (MGP)
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
Hedge cost deferrals
Accrued pension and OPEB
DOE Settlement
Provision for rate refunds
Amounts to be refunded to customers
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
120
Duke Energy
Progress Energy
December 31,
December 31,
2022
2021
2022
2021
$ 3,205
945
3,866
2,336
940
881
829
666
378
342
316
288
283
271
221
222
210
190
189
168
157
154
121
120
92
81
57
26
21
—
555
18,130
3,485
$ 3,408
684
1,253
2,017
991
937
884
213
348
356
357
317
311
242
107
221
87
161
235
139
165
120
108
123
90
94
85
—
54
104
426
14,637
$1,429
884
2,060
759
720
881
—
559
128
42
243
21
111
136
221
43
78
—
188
—
157
64
—
32
25
81
—
—
7
—
110
8,979
$ 1,399
620
718
725
759
937
—
189
137
47
265
21
130
124
107
42
28
—
230
—
165
42
—
32
23
94
—
—
18
—
87
6,939
2,150
1,833
1,030
$14,645
$12,487
$7,146
$ 5,909
$ 6,462
5,151
1,038
683
211
154
78
45
1,226
15,048
1,466
$ 7,199
6,150
2,053
364
213
—
274
—
1,110
17,363
1,211
$2,192
2,269
—
252
—
154
28
—
434
5,329
576
$ 2,394
2,955
—
155
—
—
87
—
453
6,044
478
$13,582
$16,152
$4,753
$ 5,566
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 10 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 10 for
additional information.
Deferred fuel and purchased power. Represents certain energy-related
costs that are recoverable or refundable as approved by the applicable
regulatory body.
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 23 for additional detail.
Storm cost securitized balance, net. Represents the North Carolina
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.
Debt fair value adjustment. Purchase accounting adjustments recorded
to state the carrying value of Progress Energy and Piedmont at fair value in
connection with the 2012 and 2016 mergers, respectively. Amount is amortized
over the life of the related debt.
Storm cost deferrals. Represents deferred incremental costs incurred
related to major weather-related events.
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.
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.
Retired generation facilities. Represents amounts to be recovered for
facilities that have been retired and are probable of recovery.
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.
Customer connect project. Represents incremental operating expenses
and carrying costs on deferred amounts related to the deployment of the new
customer information system.
Vacation accrual. Represents vacation entitlement, which is generally
recovered in the following year.
Incremental COVID-19 expenses. Represents incremental costs
related to ensuring continuity and quality of service in a safe manner during the
COVID-19 pandemic.
CEP deferral. Represents deferred depreciation, PISCC and deferred
property tax for Duke Energy Ohio Gas capital assets for the Capital Expenditure
Program (CEP).
DSM/EE. Deferred costs related to various DSM and EE programs
recoverable through various mechanisms.
Derivatives – natural gas supply contracts. Represents costs for
certain long-dated, fixed quantity forward natural gas supply contracts, which
are recoverable through PGA clauses.
NCEMPA deferrals. Represents retail allocated cost deferrals and returns
associated with the additional ownership interest in assets acquired from
NCEMPA in 2015.
Nuclear deferral. Includes amounts related to levelizing nuclear plant
outage costs, which allows for the recognition of nuclear outage expenses over
the refueling cycle rather than when the outage occurs, resulting in the deferral
of operations and maintenance costs associated with refueling.
Deferred pipeline integrity costs. Represents pipeline integrity
management costs in compliance with federal regulations.
COR settlement. Represents approved COR settlements that are being
amortized over the average remaining lives, at the time of approval, of the
associated assets.
Deferred coal ash handling system costs. Represents deferred
depreciation and returns associated with capital assets related to converting the
ash handling system from wet to dry.
Qualifying facility contract buyouts. Represents termination payments
for regulatory recovery through the capacity clause.
Amounts due from customers. Relates primarily to margin decoupling
and IMR recovery mechanisms.
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.
Propane Caverns. Represents amounts for costs related to propane
inventory, the net book value of remaining assets and decommissioning costs at
Duke Energy Ohio.
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.
Net regulatory liability related to income taxes. Amounts for all
registrants include regulatory liabilities related primarily to impacts from the Tax
Act. See Note 24 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.
DOE Settlement. Represents litigation settlement funds received
resulting from the DOE’s failure to accept spent nuclear fuel and other
radioactive waste from the Crystal River Unit 3 during 2014-2018 as required
under the Nuclear Waste Policy Act.
121
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) Provision for rate refunds. Represents estimated amounts due to
Piedmont
customers based on recording interim rates subject to refund.
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, 2022.
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, 2022.
Duke Energy Carolinas
Duke Energy Carolinas must limit cumulative distributions subsequent to
mergers to (i) the amount of retained earnings on the day prior to the closing of
the mergers, plus (ii) any future earnings recorded.
Duke Energy Progress
Duke Energy Progress must limit cumulative distributions subsequent to
the mergers between Duke Energy and Progress Energy and Duke Energy and
Piedmont to (i) the amount of retained earnings on the day prior to the closing of
the respective mergers, plus (ii) any future earnings recorded.
Duke Energy Ohio
Duke Energy Ohio will not declare and pay dividends out of capital or
unearned surplus without the prior authorization of the PUCO. Duke Energy Ohio
received FERC and PUCO approval to pay dividends from its equity accounts
that are reflective of the amount that it would have in its retained earnings
account had push-down accounting for the Cinergy merger not been applied to
Duke Energy Ohio’s balance sheet. The conditions include a commitment from
Duke Energy Ohio that equity, adjusted to remove the impacts of push-down
accounting, will not fall below 30% of total capital.
Duke Energy Kentucky is required to pay dividends solely out of retained
earnings and to maintain a minimum of 35% equity in its capital structure.
Duke Energy Indiana
Duke Energy Indiana must limit cumulative distributions subsequent to the
merger between Duke Energy and Cinergy to (i) the amount of retained earnings
on the day prior to the closing of the merger, plus (ii) any future earnings
recorded. In addition, Duke Energy Indiana will not declare and pay dividends out
of capital or unearned surplus without prior authorization of the IURC.
Piedmont 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
Hurricane Ian
In late September and early October 2022, Hurricane Ian inflicted severe
damage to the Duke Energy Carolinas and Duke Energy Progress territories in
North Carolina and South Carolina. Approximately 950,000 customers were
impacted. Total estimated operation and maintenance expenses incurred for
restoration efforts for the year ended December 31, 2022, were approximately
$100 million, with an additional $9 million in capital investments. Approximately
$83 million of the operation and maintenance expenses are deferred in
Regulatory assets within Other Noncurrent Assets on the Consolidated Balance
Sheets as of December 31, 2022 ($40 million and $43 million for Duke Energy
Carolinas and Duke Energy Progress, respectively). Duke Energy Carolinas and
Duke Energy Progress have regulatory tools to recover storm costs including
deferral and securitization. These estimates could change as Duke Energy
Carolinas and Duke Energy Progress receive additional information on actual
costs.
Carbon Plan Proceeding
On October 13, 2021, North Carolina enacted legislation (Energy Solutions
for North Carolina or HB 951) that established a framework overseen by
the NCUC to advance North Carolina CO2 emission reductions from electric
generating facilities in the state through the use of least cost planning while
providing for continued reliability and affordable rates for customers. Among
other things, HB 951 directed that the NCUC approve an initial carbon plan
(Carbon Plan) by December 31, 2022, taking all reasonable steps to achieve
a 70% reduction in CO2 emissions from public utilities’ electric generating
facilities in the state by 2030 (from 2005 levels) and achieve carbon neutrality
from electric generating facilities by 2050 while maintaining affordability and
reliability for customers. On May 16, 2022, Duke Energy Carolinas and Duke
Energy Progress filed their proposed Carolinas Carbon Plan (Proposed Plan) with
the NCUC.
The NCUC issued an order on December 30, 2022, adopting the first
Carbon Plan. The order recognizes the value of an “all-of-the-above” approach
to achieving CO2 emission reductions and established a set of near-term
procurement and development activities needed to continue progress towards
the targeted CO2 reductions, along with the schedule for the future biennial
updates to the Carbon Plan. The approved near-term action plan includes
procurement and development of solar, storage and hydrogen-capable natural
gas generation at levels consistent with the Proposed Plan, along with upgrading
key transmission facilities to strengthen the grid, improve resilience for
customers and interconnect new solar generation and stakeholder engagement
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) activities for onshore wind generation (in all cases, subject to any further
applicable regulatory processes). The order also approved early development
activities for long lead-time resources, including new nuclear, pumped-hydro
storage and offshore wind transmission development. The NCUC affirmed the
utility ownership structure required in HB 951; all new generation facilities or
other resources selected by the NCUC to achieve the CO2 emission reductions
shall be owned and recovered on a cost-of-service basis by the utilities, with
a carveout for 45% of solar and solar plus storage generation to be procured
through long-term purchase power agreements with third parties. The order
approves continued utilization of the remaining coal-fired generation assets,
ensuring that appropriate replacement generating units and associated
transmission infrastructure are in service before existing generating units are
retired and providing an orderly transition out of coal generation by 2035.
Storm Cost Securitization Legislation
On June 15, 2022, the South Carolina General Assembly unanimously
adopted S. 1077 (Act 227) in both the House and Senate and the bill was signed
into law on June 17, 2022. The legislation enables the PSCSC to permit the
issuance of bonds for the payment of storm costs and the creation of a storm
charge for repayment.
On August 5, 2022, Duke Energy Progress filed a petition with the
PSCSC for review and approval of deferred storm costs to be securitized of
approximately $223 million. The evidentiary hearing is scheduled to begin on or
after March 1, 2023. On February 7, 2023, a stipulation was reached with all
parties in the proceeding regarding certain items identified through the Office of
Regulatory Staff (ORS) audit of storm costs. The final amount for securitization
will depend on the outcome of the hearing. Duke Energy Progress cannot predict
the outcome of this matter.
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) 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
Deferred fuel and purchased power(i)
Accrued pension and OPEB(c)
Storm cost securitized balance, net
Storm cost deferrals
Hedge costs deferrals(c)
PISCC and deferred operating expenses(c)
Retired generation facilities(c)
Deferred asset – Lee COLA
AMI
Customer connect project
Vacation accrual
Incremental COVID-19 expenses
Nuclear deferral
COR settlement
Deferred coal ash handling system costs
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
Hedge cost deferrals
Accrued pension and OPEB(c)
Provision for rate refunds
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2021
2022
$ 1,391
1,614
614
220
93
228
30
39
267
139
62
84
127
90
88
67
235
5,388
1,095
$ 1,227
339
365
232
22
171
31
54
296
140
66
83
51
78
91
67
166
3,479
544
$ 4,293
$ 2,935
$ 2,475
1,769
1,038
350
44
50
587
6,313
$ 2,785
2,009
2,053
209
44
124
461
7,685
530
487
$ 5,783
$ 7,198
(g)
(e)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
(b)
2024
(h)
2041
(b)
(b)
(b)
(b)
(b)
(b)
(b)
2023
(b)
2024
(b)
(b)
(b)
(b)
(f)
(b)
(b)
(h)
(b)
(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 24. 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) Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(h) Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 23 for additional detail.
(i) Duke Energy Carolinas submitted a fuel filing to the NCUC in May 2022 for recovery of $327 million, which included deferrals through January 2022. This amount is expected to be recovered through August 2023. The next
filing will be made in the first quarter of 2023. Duke Energy Carolinas submitted a fuel filing to the PSCSC in July 2022 for recovery of $79 million, which included deferrals through May 2022. The amount is expected to be
recovered through September 2023. The next filing will be made in the third quarter of 2023.
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) 2023 North Carolina Rate Case
On January 19, 2023, Duke Energy Carolinas filed a PBR application
with the NCUC to request an increase in base rate retail revenues. The PBR
Application includes an MYRP to recover projected capital investments during
the three year MYRP period. In addition to the MYRP, the PBR Application
includes an Earnings Sharing Mechanism, Residential Decoupling Mechanism
and Performance Incentive Mechanisms as required by HB 951. If approved, the
overall retail revenue increase would be $501 million in Year 1, $172 million in
Year 2 and $150 million in Year 3, for a combined total of $823 million or 15.7%
by early 2026. The rate increase is driven primarily by major transmission and
distribution investments since the last rate case and projected in the MYRP, as
well as investments in energy storage and solar assets included in the MYRP
consistent with the Carbon Plan. Duke Energy Carolinas plans to implement
temporary rates, subject to refund, on September 1, 2023, and has requested
permanent rates be effective by January 1, 2024. Duke Energy Carolinas cannot
predict the outcome of this matter.
Oconee Nuclear Station Subsequent License Renewal
On June 7, 2021, Duke Energy Carolinas filed a subsequent license
renewal (SLR) application for the Oconee Nuclear Station (ONS) with the U.S.
Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an
additional 20 years. The SLR would extend operations of the facility from 60 to
80 years. The current licenses 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 and claimed that Duke Energy Carolinas
did not satisfy the National Environmental Policy Act (NEPA) of 1969, as
amended, or the NRC’s NEPA-implementing regulations. Following Duke Energy
Carolinas’ answer and the Petitioners’ reply, on February 11, 2022, the Atomic
Safety and Licensing Board (ASLB) issued its decision on the Hearing Request
and found that the Petitioners failed to establish that the proposed contentions
are litigable. The ASLB also denied the Petitioners’ Petition for Waiver and
terminated the proceeding.
On February 24, 2022, the NRC issued a decision in the SLR appeal
related to Florida Power and Light’s Turkey Point nuclear generating station in
Florida. The NRC ruled that the NRC’s license renewal Generic Environmental
Impact Statement (GEIS) does not apply to SLR because the GEIS does not
address SLR. The decision overturned a 2020 NRC decision that found the
GEIS applies to SLR. Although Turkey Point is not owned or operated by a Duke
Energy Registrant, the NRC’s order applies to all SLR applicants, including
ONS. The NRC order also indicated no subsequent renewed licenses will be
issued until the NRC staff has completed an adequate NEPA review for each
application. On April 5, 2022, the NRC approved a 24-month rulemaking plan
that will enable the NRC staff to complete an adequate NEPA review. Although
an SLR applicant may wait until the rulemaking is completed, the NRC also
noted that an applicant may submit a supplement to its environmental report
providing information on environmental impacts during the SLR period prior to
the rulemaking being completed. On November 7, 2022, Duke Energy Carolinas
submitted a supplement to its environmental report addressing environmental
impacts during the SLR period. On December 19, 2022, the NRC published
a notice in the Federal Register that the NRC will conduct a limited scoping
process to gather additional information necessary to prepare an environmental
impact statement (EIS) to evaluate the environmental impacts at ONS during the
SLR period. The NRC received comments from the EPA and the Petitioners and
these comments identify eighteen potential impacts that should be considered
by the NRC in the EIS, which include, but are not limited to, climate change and
flooding, environmental justice, severe accidents, and external events. Currently,
the NRC expects to publish a draft EIS in October 2023.
On December 19, 2022, the NRC issued the Safety Evaluation Report
(SER) for the safety portion of the SLR application. The NRC determined Duke
Energy Carolinas met the requirements of the applicable regulations and
identified actions that have been taken or will be taken to manage the effects of
aging and address time-limited analyses. Duke Energy Carolinas and the NRC
met with the Advisory Committee on Reactor Safeguards (ACRS) on February 2,
2023, to discuss issues regarding the SER and SLR application, after which the
ACRS will issue a report discussing the result of its review.
Although the NRC’s GEIS applicability decision will delay completion of
the SLR proceeding, Duke Energy Carolinas does not believe it changes the
probability that the ONS subsequent renewed licenses will ultimately be issued,
although Duke Energy Carolinas cannot guarantee the outcome of the license
application process.
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 these additional
relicensing proceedings.
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) 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
Deferred fuel and purchased power(l)
Accrued pension and OPEB(d)
Storm cost securitized balance, net
Storm cost deferrals
Hedge costs deferrals
PISCC and deferred operating expenses
Retired generation facilities
Deferred asset – Harris COLA
AMI
Customer connect project
Vacation accrual
Incremental COVID-19 expenses
DSM/EE(d)
NCEMPA deferrals
Nuclear deferral
COR settlement
Deferred coal ash handling system costs
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes(k)
Costs of removal(d)
Hedge cost deferrals
Provision for rate refunds
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2021
2022
$ 1,418
869
705
417
720
234
55
42
149
21
81
54
43
78
180
157
64
32
25
70
5,414
$ 1,389
613
303
351
759
170
60
47
171
21
92
57
42
28
218
165
42
32
23
68
4,651
690
533
$ 4,724
$ 4,118
$ 1,559
2,269
252
28
344
4,452
$ 1,695
2,955
155
87
357
5,249
332
381
$ 4,120
$ 4,868
(g)
(e)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
(h)
(f)
Yes
Yes
Yes
Yes
(b)
(c)
2024
(j)
2041
(b)
(b)
2054
(b)
(b)
(b)
(b)
2023
(b)
(h)
2042
2024
(b)
(b)
(b)
(b)
(i)
(b)
(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)
(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) South Carolina retail allocated costs are earning a return.
(g) Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.
(h)
(i) Recovered over the life of the associated assets.
(j) Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 23 for additional detail.
(k)
(l) Duke Energy Progress submitted a fuel filing to the NCUC in August 2022 for recovery of $251 million, which included deferrals through June 2022. This amount is expected to be recovered through November 2023. The next
filing will be made in the second quarter of 2023. Duke Energy Progress submitted a fuel filing to the PSCSC in April 2022 for recovery of $44 million, which included deferrals through February 2022. This amount is expected
to be recovered through June 2023. The next filing will be made in the second quarter of 2023.
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 24. Portions are included in rate base.
Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.
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) 2022 North Carolina Rate Case
On October 6, 2022, Duke Energy Progress filed a PBR application with
the NCUC to request an increase in base rate retail revenues. The rate request
before the NCUC includes an MYRP to recover projected capital investments
during the three year MYRP period. In addition to the MYRP, the PBR Application
includes an Earnings Sharing Mechanism, Residential Decoupling Mechanism
and Performance Incentive Mechanisms as required by HB 951. If approved, the
overall retail revenue increase would be $326 million in Year 1, $151 million in
Year 2 and $138 million in Year 3, for a combined total of $615 million or 16%
by late 2025. The rate increase is driven primarily by major transmission and
distribution investments since the last rate case and projected in the MYRP, as
well as investments in energy storage and solar assets included in the MYRP
consistent with the Carbon Plan. Duke Energy Progress plans to implement
temporary rates, subject to refund, on June 1, 2023, and has requested
permanent rates be effective by October 1, 2023. The evidentiary hearing has
been scheduled to begin on May 1, 2023. Duke Energy Progress cannot predict
the outcome of this matter.
2022 South Carolina Rate Case
On September 1, 2022, Duke Energy Progress filed an application with the
PSCSC to request an increase in base rate retail revenues. On January 12, 2023,
Duke Energy Progress and the ORS, as well as other consumer, environmental,
and industrial intervening parties, filed a comprehensive Agreement and
Stipulation of Settlement resolving all issues in the base rate proceeding. The
major components of the stipulation include:
• A $52 million annual customer rate increase prior to the reduction from
the accelerated return to customers of federal unprotected Property,
Plant and Equipment related EDIT. After extending the remaining EDIT
giveback to customers to 33 months, the net annual retail rate increase
is approximately $36 million.
• ROE of 9.6% based upon a capital structure of 52.43% equity and
47.57% debt.
• Continuation of deferral treatment of coal ash basin closure costs.
Supports an amortization period for remaining coal ash closure costs
in this rate case of seven years. Duke Energy Progress agreed not
to seek recovery of approximately $50 million of deferred coal ash
expenditures related to retired sites in this rate case (South Carolina
retail allocation).
• Accepts the 2021 Depreciation Study as proposed in this
case, as adjusted for certain recommendations from ORS and
includes accelerated retirement dates for certain coal units as
originally proposed.
• Establishment of a storm reserve to help offset the costs of
major storms.
The PSCSC held a hearing on January 17, 2023, to consider evidence
supporting the stipulation and unanimously voted to approve the comprehensive
agreement on February 9, 2023. The PSCSC voted to allow Duke Energy Progress
to implement new customer rates by April 1, 2023. A final written order is due
from the PSCSC by March 1, 2023.
FERC Return on Equity Complaint
On October 16, 2020, North Carolina Electric Membership Corporation
(NCEMC) filed a complaint at the FERC against Duke Energy Progress
pursuant to Section 206 of the Federal Power Act (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. On June 16, 2022, Duke Energy Progress submitted to the
FERC an Offer of Settlement and Settlement Agreement (Settlement Agreement)
between NCEMC and Duke Energy Progress. The Settlement Agreement
provides for an ROE of 10%, effective January 1, 2022, among other contract
modifications. On November 7, 2022, the FERC approved the Settlement
Agreement.
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 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
Deferred fuel and purchased power(h)
Accrued pension and OPEB(c)
Nuclear asset securitized balance, net
Storm cost deferrals(c)
Hedge costs deferrals(c)
Retired generation facilities(c)
AMI(c)
Customer connect project(c)
Costs of removal regulatory asset(c)
Qualifying facility contract buyouts(c)
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Net regulatory liability related to income taxes(c)
DOE Settlement
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2021
$
2022
11
15
1,355
342
881
325
73
94
30
82
221
81
55
3,565
1,143
$
10
7
415
374
937
19
77
94
38
67
107
94
49
2,288
497
$ 2,422
$ 1,791
$
$
633
154
90
877
244
633
$
699
—
97
796
98
$
698
(b)
(b)
2024
(g)
2036
(b)
2038
2044
2032
2037
(b)
2034
(b)
(b)
(b)
(f)
Yes
(f)
Yes
Yes
Yes
Yes
(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 23 for additional detail.
(h) Duke Energy Florida submitted a fuel filing to the FPSC in January 2023 for recovery of $795 million, which included the 2022 actual under-recovery of $1.2 billion, offset by projected declining fuel costs in 2023 due to lower
Earns commercial paper rate.
natural gas prices. The expected recovery period is April 2023 through March 2024.
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%. On July 25, 2022, this provision was triggered. Duke Energy Florida
filed a petition with the FPSC on August 12, 2022, to increase the ROE effective
August 2022 with a base rate increase effective January 1, 2023. The FPSC
approved this request on October 4, 2022. The 2021 Settlement Agreement also
provided that Duke Energy Florida will be able to retain the $173 million retail
portion of the expected DOE award from its lawsuit to recover spent nuclear fuel
to mitigate customer rates over the term of the 2021 Settlement. In return, Duke
Energy Florida is permitted to recognize the $173 million into earnings through the
approved settlement period. The full amount of the $173 million is expected to be
recognized between the years of 2023 and 2024, while also remaining within the
approved ROE band. Duke Energy Florida settled the DOE lawsuit and received
payment of approximately $180 million on June 15, 2022, of which the retail
portion was approximately $154 million. The 2021 Settlement authorizes Duke
Energy Florida to collect the difference between $173 million and the $154 million
retail portion of the amount received through the capacity cost recovery clause.
The 2021 Settlement also contained a provision to recover or flow-back the
effects of tax law changes. As a result of the IRA enacted on August 16, 2022,
Duke Energy Florida is eligible for PTCs associated with solar facilities placed in
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) service beginning in January 2022. Duke Energy Florida filed a petition with the
FPSC on October 17, 2022, to reduce base rates effective January 1, 2023, by $56
million to flow back the expected 2023 PTCs and to flow back the expected 2022
PTCs via an adjustment to the capacity cost recovery clause. On December 14,
2022, the FPSC issued an order approving Duke Energy Florida’s petition. See Note
24 for additional information on the IRA.
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.
Clean Energy Connection
On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of
a voluntary solar program. The program consists of 10 new solar generating
facilities with combined capacity of approximately 750 MW. The program allows
participants to support cost-effective solar development in Florida by paying
a subscription fee based on per kilowatt subscriptions and receiving a credit
on their bill based on the actual generation associated with their portion of the
solar portfolio. The estimated cost of the 10 new solar generation facilities is
approximately $1 billion and the projects are expected to be completed by the end
of 2024. This investment will be included in base rates offset by the revenue from
the subscription fees and 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. The Supreme Court of Florida heard
the oral argument on February 9, 2022. On May 27, 2022, the Supreme Court of
Florida issued an order remanding the case back to the FPSC so that the FPSC
can amend its order to better address some of the arguments raised by LULAC.
On September 23, 2022, the FPSC issued a revised order and submitted it on
September 26, 2022, to the Supreme Court of Florida. The Supreme Court of
Florida requested that the parties file supplemental briefs regarding the revised
order, which were filed February 6, 2023. The FPSC approval order remains in
effect pending the outcome of the appeal. Duke Energy Florida cannot predict the
outcome of this matter.
Storm Protection Plan
On April 11, 2022, Duke Energy Florida filed a Storm Protection Plan for
approval with the FPSC. The plan, which covers investments for the 2023-2032
time frame, reflects approximately $7 billion of capital investment in transmission
and distribution meant to strengthen its infrastructure, reduce outage times
associated with extreme weather events, reduce restoration costs and improve
overall service reliability. The evidentiary hearing began on August 2, 2022. On
October 4, 2022, the FPSC voted to approve Duke Energy Florida’s plan with one
modification to remove the transmission loop radially fed program, representing a
reduction of approximately $80 million over the 10-year period starting in 2025. On
December 9, 2022, the Office of Public Counsel filed a notice of appeal of this order
to the Florida Supreme Court. Duke Energy Florida cannot predict the outcome of
this matter.
Hurricane Ian
On September 28, 2022, much of Duke Energy Florida’s service territory was
impacted by Hurricane Ian, which caused significant damage resulting in more
than 1.1 million outages. Duke Energy Florida’s December 31, 2022 Consolidated
Balance Sheets include an estimate of approximately $353 million related to
deferred Hurricane Ian storm costs, consistent with the FPSC’s storm rule, in
Regulatory assets within Other Noncurrent Assets. After depleting any existing storm
reserves, which were approximately $107 million before Hurricane Ian, Duke Energy
Florida is permitted to petition the FPSC for recovery of additional incremental
operation and maintenance costs resulting from the storm and to replenish the
retail customer storm reserve to approximately $132 million. Duke Energy Florida
filed its petition for cost recovery of various storms, including Hurricane Ian, and
replenishment of the storm reserve on January 23, 2023, seeking recovery of
$442 million, for recovery over 12 months beginning with the first billing cycle in
April 2023. Duke Energy Florida cannot predict the outcome of this matter.
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) 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
Deferred fuel and purchased power
Accrued pension and OPEB
Storm cost deferrals
Hedge costs deferrals
PISCC and deferred operating expenses(c)
AMI
Customer connect project
CEP deferral
Deferred pipeline integrity costs
Propane caverns
Manufactured gas plant (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
Accrued pension and OPEB
Provision for rate refunds
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
Earns/Pays
a Return
Recovery/Refund
Period Ends
2021
2022
$ —
54
129
14
2
15
18
54
190
28
26
—
154
684
103
$
$
581
496
9
21
—
107
633
99
(b)
2023
(e)
2023
(b)
2083
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(d)
(e)
(b)
Yes
Yes
Yes
Yes
$
$
$
33
38
133
2
5
16
24
41
161
24
—
104
126
707
72
635
602
39
21
61
78
801
62
$
534
$
739
(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 primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 23 for additional detail.
Included in rate base.
Duke Energy Ohio Electric Base Rate Case
Duke Energy Ohio filed with the PUCO an electric distribution base
rate case application on October 1, 2021, with supporting testimony filed on
October 15, 2021, requesting an increase in electric distribution base rates of
approximately $55 million and an ROE of 10.3%. This is an approximate 3.3%
average increase in the customer’s total bill across all customer classes. The
drivers for this case are capital invested since Duke Energy Ohio’s last electric
distribution base rate case in 2017. Duke Energy Ohio is also seeking to adjust
the caps on its Distribution Capital Investment Rider (DCI Rider). The Staff
of the PUCO (Staff) report was issued on May 19, 2022, recommending an
increase in electric distribution base rates of $2 million to $15 million with an
ROE range of 8.84% to 9.85%. On September 19, 2022, Duke Energy Ohio filed
a Stipulation and Recommendation with the PUCO, which includes an increase
in overall electric distribution base rates of approximately $23 million and an
ROE of 9.5%. The stipulation is among all but one party to the proceeding.
The PUCO issued an order on December 14, 2022, approving the Stipulation
without material modification. Rates went into effect on January 3, 2023. The
Ohio Consumers’ Counsel (OCC) filed an application for rehearing on January
13, 2023. On February 8, 2023, the Commission granted the OCC’s application
for rehearing for further consideration. Duke Energy Ohio cannot predict the
outcome of this matter.
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
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) 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. This 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 requested each utility to file by July 15,
2021, a proposal to reestablish low-income programs through December
31, 2021. Duke Energy Ohio filed its application on July 14, 2021.
• On February 23, 2022, the PUCO issued its Fifth Entry on Rehearing
that 1) affirmed its reduction in Duke Energy Ohio’s shared savings cap;
2) denied rehearing/clarification regarding lost distribution revenues
and shared savings recovery for periods after December 31, 2020; and
3) directed Duke Energy Ohio to submit an updated application with
exhibits.
• On March 25, 2022, Duke Energy Ohio filed its Amended Application
consistent with the PUCO’s order.
Duke Energy Ohio cannot predict the outcome of this matter.
Duke Energy Ohio Natural Gas Base Rate Case
Duke Energy Ohio filed with the PUCO a natural gas base rate case
application on June 30, 2022, with supporting testimony filed on July 14, 2022,
requesting an increase in natural gas base rates of approximately $49 million
and an ROE of 10.3%. This is an approximate 5.6% 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 natural gas base rate case
in 2012. Duke Energy Ohio is also seeking to adjust the caps on its Capital
Expenditure Program Rider (CEP Rider). The Staff of the PUCO (Staff) report
was issued on December 21, 2022, recommending an increase in natural gas
base rates of $24 million to $36 million, with an equity ratio of 52% and an ROE
range of 9.03% to 10.04%. A procedural schedule was issued on December
22, 2022, scheduling the evidentiary hearing to commence on March 28, 2023.
Duke Energy Ohio cannot predict the outcome of this matter.
Natural Gas Pipeline Extension
Duke Energy Ohio installed a new natural gas pipeline (the Central
Corridor Project) in its Ohio service territory to increase system reliability
and enable the retirement of older infrastructure. Construction of the pipeline
extension was completed and placed in service on March 14, 2022, with a total
cost of approximately $170 million (excluding overheads and AFUDC).
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 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.
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 was approved without modification by the PUCO on
April 20, 2022. The Stipulation and Recommendation resolved 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 described below as it related to Duke Energy
Ohio’s natural gas operations. As a result of the approval of the Stipulation and
Recommendation, Duke Energy Ohio recognized pretax charges of approximately
$15 million to Operating revenues, regulated natural gas and $58 million to
Operation, maintenance and other and a tax benefit of $72 million to Income Tax
(Benefit) Expense in the Consolidated Statements of Operations for the year ended
December 31, 2022. The Stipulation and Recommendation further acknowledged
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 June 15, 2022, the PUCO
granted the rehearing requests of Interstate Gas Supply, Inc. (IGS) and The Retail
Energy Supply Association (RESA), which were filed on May 20, 2022, for further
consideration. 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. The new rider would 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 would be
refunded consistent with federal law and deferred income taxes not subject
to normalization rules will be refunded over a 10-year period. An evidentiary
hearing occurred on August 7, 2019. The Stipulation and Recommendation filed
on August 31, 2021, and approved on April 20, 2022, disclosed in the MGP
Cost Recovery matter above, resolves the outstanding issues in this proceeding
by providing customers a one-time bill credit for the reduction in the statutory
federal tax rate from 35% to 21% since January 1, 2018, through June 1,
2022, and reducing base rates going forward. Deferred income taxes subject to
normalization rules will be refunded consistent with federal law through a new
rider. Deferred income taxes not subject to normalization rules were written off.
The commission granted the rehearing requests of IGS and RESA for further
consideration. Duke Energy Ohio cannot predict the outcome of this matter.
Midwest Propane Caverns
Duke Energy Ohio used propane stored in caverns to meet peak demand
during winter for several decades. Once the Central Corridor Project was
complete and placed in service, the propane peaking facilities were no longer
necessary and were 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 costs, but not for the net book value of the
remaining plant assets. As a result of the Staff’s report, Duke Energy Ohio
recorded a $19 million charge to Impairment of assets and other charges on the
Consolidated Statements of Operations and Comprehensive Income for the year
ended December 31, 2021. A Stipulation and Recommendation was filed jointly
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) by Duke Energy Ohio and the Staff on April 27, 2022, recommending, among
other things, approval of deferral treatment of a portion of the net book value
of the property, plant and equipment prior to the 2021 impairment at the time
of the next natural gas base rate case, excluding operations and maintenance
savings, decommissioning costs not to exceed $7 million and costs related
to propane inventory. The Stipulation and Recommendation states that Duke
Energy Ohio will seek recovery of the deferral through its next natural gas base
rate case proceeding with a proposed amortization period of at least 10 years
and include an independent engineering study analyzing the necessity and
prudency of the incremental investments made at the facilities since March
31, 2012. Duke Energy Ohio will not seek a return on the deferred amounts. An
evidentiary hearing was held on September 8, 2022. On October 5, 2022, the
PUCO issued an order approving the Stipulation and Recommendation as filed.
As a result of the order, Duke Energy Ohio recorded a reversal of $12 million
to Impairment of assets and other charges on the Consolidated Statements of
Operations and Comprehensive Income for the year ended December 31, 2022.
Duke Energy Kentucky Electric Base Rate Case
On December 1, 2022, Duke Energy Kentucky filed a rate case with the
KPSC requesting an annualized increase in electric base rates of approximately
$75 million and an ROE of 10.35%. This is an overall increase in rates of
approximately 17.8%. The request for rate increase is driven by capital
investments to strengthen the electricity generation and delivery systems
along with adjusted depreciation rates for the East Bend and Woodsdale
generation stations to support the energy transition. Duke Energy Kentucky
is also requesting new programs and tariff updates, including a voluntary
community-based renewable subscription program and two EV charging
programs. A procedural schedule was issued on December 19, 2022, scheduling
the evidentiary hearing for May 9, 2023. New rates are anticipated to go into
effect around July 15, 2023. Duke Energy Kentucky 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 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
Deferred fuel and purchased power
Accrued pension and OPEB
Hedge costs deferrals
PISCC and deferred operating expenses(c)
Retired generation facilities(c)
AMI
Customer connect project
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Regulatory Liabilities(a)
Net regulatory liability related to income taxes
Costs of removal
Hedge cost deferrals
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
2021
$
$
$
2022
385
138
214
20
255
34
15
19
44
1,124
249
875
840
531
81
104
85
1,641
187
(b)
2023
(e)
(b)
(b)
2030
2031
(b)
(b)
(b)
(d)
(b)
(e)
(b)
Yes
Yes
Yes
$
749
158
222
35
262
38
17
11
63
1,555
277
$ 1,278
$
908
575
—
113
96
1,692
127
$ 1,454
$ 1,565
(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 23 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. On June 29, 2020, the IURC
issued an order in the rate case approving a revenue increase of $146 million
before certain adjustments and ratemaking refinements. The order approved
Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of
December 31, 2020, including the Edwardsport Integrated Gasification Combined
Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana’s request by slightly
more than $200 million, when accounting for the utility receipts tax and other
adjustments. Approximately 50% of the reduction was due to a prospective
change in depreciation and use of regulatory asset for the end-of-life inventory
at retired generating plants, approximately 20% was due to the approved ROE of
9.7% versus the requested ROE of 10.4% and approximately 20% was related to
miscellaneous earnings neutral adjustments. Step one rates were estimated to be
approximately 75% of the total and became effective on July 30, 2020. Step two
rates estimated to be the remaining 25% of the total rate increase were approved
on July 28, 2021, and implemented in August 2021.
Several groups appealed the IURC order to the Indiana Court of Appeals.
The Indiana Court of Appeals affirmed the IURC decision on May 13, 2021.
However, upon appeal by the Indiana Office of Utility Consumer Counselor
(OUCC) and the Duke Industrial Group on March 10, 2022, the Indiana Supreme
Court found that the IURC erred in allowing Duke Energy Indiana to recover coal
ash costs incurred before the IURC’s rate case order in June 2020. The Indiana
Supreme Court found that allowing Duke Energy Indiana to recover coal ash
costs incurred between rate cases that exceeded the amount built into base
rates violated the prohibition against retroactive ratemaking. The IURC’s order
has been remanded to the IURC for additional proceedings consistent with the
Indiana Supreme Court’s opinion. As a result of the court’s opinion, Duke Energy
Indiana recognized pretax charges of approximately $211 million to Impairment
of assets and other charges and $46 million to Operating revenues in the
Consolidated Statements of Operations for the year ended December 31, 2022.
Duke Energy Indiana filed a request for rehearing with the Supreme Court on
April 11, 2022, which the court denied on May 26, 2022. Duke Energy Indiana
filed its testimony in the remand proceeding on August 18, 2022. An evidentiary
hearing is scheduled to begin March 3, 2023. Duke Energy Indiana cannot
predict the outcome of this matter.
133
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 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 and the Duke Industrial Group appealed. The
Indiana Court of Appeals issued its opinion on February 21, 2023, reversing
the IURC’s order to the extent that it allowed Duke Energy Indiana to recover
federally mandated costs incurred prior to the IURC’s November 3, 2021 order.
In addition, the court found that any costs incurred pre-petition to determine
federally mandated compliance options were not specifically authorized by the
statute and should also be disallowed. Duke Energy Indiana is assessing its
appellate options and must file a petition to transfer to the Indiana Supreme
Court by April 7, 2023. As a result of the court’s opinion, Duke Energy Indiana
recognized a pretax charge of approximately $175 million to Impairment of
Piedmont
Regulatory Assets and Liabilities
assets and other charges for the year ended December 31, 2022. Duke Energy
Indiana cannot predict the outcome of this matter.
TDSIC 2.0
On November 23, 2021, Duke Energy Indiana filed for approval of the
Transmission, Distribution, Storage Improvement Charge 2.0 investment plan
for 2023-2028 (TDSIC 2.0). On June 15, 2022, the IURC approved, without
modification, TDSIC 2.0, which includes approximately $2 billion in transmission
and distribution investments selected to improve customer reliability, harden
and improve resiliency of the grid, enable expansion of renewable and
distributed energy projects and encourage economic development. In addition,
the IURC set up a subdocket to consider the targeted economic development
project, which the IURC approved on March 2, 2022. On July 15, 2022, the
OUCC filed a notice of appeal to the Indiana Court of Appeals in Duke Energy
Indiana’s TDSIC 2.0 proceeding. An appellant brief was filed on October 28,
2022, and Duke Energy Indiana filed its responsive brief on December 28, 2022.
Duke Energy Indiana cannot predict the outcome of this matter.
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)
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
December 31,
2022
Earns/Pays
a Return
Recovery/Refund
Period Ends
2021
$
$
27
119
12
168
93
57
35
511
119
392
$
459
573
66
1,098
74
$ 1,024
$
$
22
82
12
139
84
85
33
457
141
316
$
510
572
32
1,114
56
$ 1,058
(e)
(e)
(d)
(g)
2023
2025
(b)
(b)
(b)
(d)
(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)
(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 23 for additional detail.
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)
2022 South Carolina Rate Case
On April 1, 2022, Piedmont filed an application with the PSCSC for a rate
increase for retail customers of approximately $7 million, which represents an
approximate 3.4% increase in retail revenues. An evidentiary hearing was held
on August 15, 2022. On September 15, 2022, the PSCSC delivered its decision,
which included an ROE of 9.3% and a capital structure of 52.2% equity and
47.8% debt and issued its final order on October 6, 2022. Revised customer
rates became effective in October 2022 and resulted in a rate decrease for retail
customers of approximately $1 million.
Tennessee Annual Review Mechanism
On October 10, 2022, the TPUC approved Piedmont’s petition to adopt
an Annual Review Mechanism (ARM) as allowed by Tennessee law. Under the
ARM, Piedmont will adjust rates annually to achieve its allowed 9.80% ROE over
the upcoming year and to true up any variance between its allowed ROE and
actual ROE from the prior calendar year. The initial year subject to the true up is
2022, and the initial rate adjustments request will be filed in May 2023 for rates
effective October 1, 2023.
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 for the year ended December 31, 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, 2022, there is $59 million and $47 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 $106 million to satisfy remaining ARO requirements to restore
construction sites.
See Notes 8 and 13 for additional information regarding this transaction.
Potential Coal Plant Retirements
The Subsidiary Registrants periodically file IRPs with their state regulatory
commissions. The IRPs provide a view of forecasted energy needs over a long
term (10 to 20 years) and options being considered to meet those needs.
IRPs filed by the Subsidiary Registrants included planning assumptions to
potentially retire certain coal-fired generating facilities in North Carolina and
Indiana earlier than their current estimated useful lives. The NCUC concluded
in its Carbon Plan order that the projected retirements dates presented by Duke
Energy Carolinas and Duke Energy Progress in their Carbon Plan for coal-fired
generating facilities were reasonable for planning purposes and further directed
that appropriate steps be taken to optimally retire the coal fleet according to
such schedule. 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.
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) The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs or Carbon Plan 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,
2022, 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)
Marshall Units 1-2(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
Gibson Units 1-5(d)
Cayuga Units 1-2(d)
Total Duke Energy
Capacity
(in MW)
Remaining Net
Book Value
(in millions)
167
259
546
760
713
1,409
1,442
2,845
1,005
9,146
$
10
233
344
428
639
425
1,549
2,043
622
$ 6,293
(a) As part of the 2015 resolution of a lawsuit involving alleged New Source Review violations, Duke Energy Carolinas must retire Allen Steam Station Unit 1 by December 31, 2024.
(b) These units were included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in South Carolina on September 1, 2020, and in the Carbon Plan adopted by the NCUC in December 2022. The long-term energy
options considered could result in retirement of these units earlier than their current estimated useful lives.
(c) On January 14, 2021, Duke Energy Florida filed the 2021 Settlement agreement with the FPSC, which proposed depreciation rates reflecting retirement dates for Duke Energy Florida’s last two coal-fired generating facilities,
Crystal River Units 4-5, eight years ahead of schedule in 2034 rather than in 2042. The FPSC approved the 2021 Settlement on May 4, 2021. The remaining net book value reflected in the table above excludes $200 million of
accelerated deprecation collected from retail customers pursuant to Duke Energy Florida’s 2017 Settlement.
(d) 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.
5. 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 4, Duke Energy Florida maintains a
storm damage reserve and has a regulatory mechanism to recover the cost of
named storms on an expedited basis.
The cost of the Duke Energy Registrants’ coverage can fluctuate from year
to year reflecting claims history and conditions of the insurance and reinsurance
markets.
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
October 1, 2020, Crystal River Unit 3 changed decommissioning strategies from
SAFSTOR to DECON.
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) 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 $13.7 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 for Crystal River in
compliance with the law.
Excess Liability Program
This program provides $13.2 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 96 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
Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida
are members of Nuclear Electric Insurance Limited (NEIL), an industry mutual
insurance company, which provides property damage, nuclear accident
decontamination and premature decommissioning insurance for each station
for losses resulting from damage to its nuclear plants, either due to accidents
or acts of terrorism. Additionally, NEIL provides accidental outage coverage for
losses in the event of a major accidental outage at an insured nuclear station.
Pursuant to regulations of the NRC, each company’s property damage
insurance policies provide that all proceeds from such insurance be applied,
first, to place the plant in a safe and stable condition after a qualifying accident
and second, to decontaminate the plant before any proceeds can be used for
decommissioning, plant repair or restoration.
Losses resulting from acts of terrorism are covered as common
occurrences, such that if terrorist acts occur against one or more commercial
nuclear power plants insured by NEIL within a 12-month period, they would be
treated as one event and the owners of the plants where the act occurred would
share one full limit of liability. The full limit of liability is currently $3.2 billion.
NEIL sublimits the total aggregate for all of their policies for non-nuclear
terrorist events to approximately $1.8 billion.
Each nuclear facility has accident property damage, nuclear accident
decontamination and premature decommissioning liability insurance from
NEIL with limits of $1.5 billion, except for Crystal River Unit 3. Crystal River
Unit 3’s limit is $50 million and is on an actual cash value basis. All nuclear
facilities except for Catawba and Crystal River Unit 3 also share an additional
$1.25 billion nuclear accident insurance limit above their dedicated underlying
limit. This shared additional excess limit is not subject to reinstatement in the
event of a loss. Catawba has a dedicated $1.25 billion of additional nuclear
accident insurance limit above its dedicated underlying limit. Catawba and
Oconee also have an additional $750 million of non-nuclear accident property
damage limit. All coverages are subject to sublimits and significant deductibles.
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, McGuire, Harris, Brunswick, Oconee and 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
$151 million, $93 million and $1 million, respectively. Duke Energy Carolinas’
maximum assessment amount includes 100% of potential obligations to NEIL
for jointly owned reactors. Duke Energy Carolinas would seek reimbursement
from the joint owners for their portion of these assessment amounts.
ENVIRONMENTAL
The Duke Energy Registrants are subject to federal, state and local
regulations regarding air and water quality, hazardous and solid waste disposal,
coal ash and other environmental matters. These regulations can be changed
from time to time, imposing new obligations on the Duke Energy Registrants. The
following environmental matters impact all of the Duke Energy Registrants.
Remediation Activities
In addition to AROs recorded as a result of various environmental
regulations, discussed in Note 10, the Duke Energy Registrants are responsible
for environmental remediation at various sites. These include certain properties
that are part of ongoing operations and sites formerly owned or used by Duke
Energy entities. These sites are in various stages of investigation, remediation
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) 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 table contains information regarding reserves for probable
and estimable costs related to the various environmental sites. These reserves
are recorded in Other within Other Noncurrent Liabilities on the Consolidated
Balance Sheets.
(in millions)
December 31, 2022 December 31, 2021
Reserves for Environmental Remediation
Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Piedmont
$
84
22
19
8
11
33
3
7
$
88
19
23
11
11
34
4
9
Additional losses in excess of recorded reserves that could be incurred for
the stages of investigation, remediation and monitoring for environmental sites
that have been evaluated at this time are not material.
LITIGATION
Duke Energy
Michael Johnson et al. v. Duke Energy Corporation et al.
On September 23, 2020, plaintiff Michael Johnson, a former Duke
Energy employee and participant in the Duke Energy Retirement Savings Plan
(Plan) brought suit on his own behalf and on behalf of other participants and
beneficiaries similarly situated against Duke Energy Corporation, the Duke Energy
Benefits Committee, and other unnamed individual defendants. The complaint,
which was subsequently amended to add a current participant as a plaintiff
on November 23, 2020, alleges that the defendants breached their fiduciary
duties with respect to certain fees associated with the Plan in violation of the
Employee Retirement Income Security Act of 1974 and seeks certification of a
class of all individuals who were participants or beneficiaries of the Plan at any
time on or after September 23, 2014. The defendants filed a motion to dismiss
the plaintiffs’ amended complaint on December 18, 2020. On January 31, 2022,
the court denied the defendants’ motion to dismiss. On February 28, 2022, Duke
Energy responded to the amended complaint. Discovery commenced and the
parties exchanged preliminary disclosures. After review of these disclosures, the
plaintiffs agreed to voluntarily dismiss the suit and the parties subsequently filed
a joint stipulation of voluntary dismissal with prejudice on April 29, 2022, ending
this litigation.
Texas Storm Uri Tort Litigation
Duke Energy Corporation and several Duke Energy renewables project
companies in the ERCOT market were named in more than thirty lawsuits
arising out of Texas Storm Uri, which occurred in February 2021. Duke
Energy Corporation was dismissed from the suits, leaving two suits in which
individual wind and solar projects are named. These lawsuits seek recovery
for property damages, personal injury and wrongful death allegedly caused by
the power outages that plaintiffs claim were the collective failure of generators,
transmission and distribution utilities (“TDUs”), retail energy providers, natural
gas providers, co-ops and municipalities that generate power and ERCOT, all
of which were originally sued by all plaintiffs. The cases were consolidated into
a Texas state court multidistrict litigation (MDL) proceeding for discovery and
pre-trial motions. Five cases were designated for motions to dismiss and all
other cases were stayed. On January 28, 2023, the Court denied the generators’
and TDUs’ motions to dismiss the negligence claims but dismissed the tortious
interference and conspiracy claims. The motions to dismiss ERCOT and the
natural gas defendants were also granted. The generator and TDU defendants
filed a petition for mandamus in each of the five cases seeking to overturn the
denials on February 10, 2023. If the Texas Court of Appeals accepts the appeals,
it will set a briefing schedule. The remaining cases that are part of the MDL are
currently stayed, except that plaintiffs have been given leave to amend their
pleadings. Plaintiffs began amending existing lawsuits and filing new lawsuits
on behalf of hundreds of plaintiffs against hundreds of defendants, including in
some cases, by again naming Duke Energy Corporation and naming, for the first
time, Duke Energy Renewables, LLC. Plaintiffs have also re-named ERCOT as a
defendant. As new cases are served, they are being brought into the MDL and
are subject to the stay in the MDL proceeding. Duke Energy cannot predict the
outcomes of these matters. See Note 2 for more information related to the sale
of the Commercial Renewables Disposal Groups.
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.
The lawsuit alleges that Duke Energy Carolinas knew that the river was used for
recreational purposes and that Duke Energy did not adequately warn about the
dam and that Duke Energy Carolinas created a dangerous and hidden hazard
on the Dan River in building and maintaining the low head dam. Discovery has
commenced and is scheduled to be completed on or before August 23, 2023.
The parties are preparing for mediation, which is scheduled for March 22, 2023.
Dispositive motions are due to be filed by September 6, 2023, and the case is
scheduled to be trial-ready by October 2, 2023. Duke Energy Carolinas cannot
predict the outcome of this matter.
NTE Carolinas II, LLC Litigation
In November 2017, Duke Energy Carolinas entered into a standard FERC
large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC
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) (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 sought 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. Both NTE’s and Duke Energy Carolinas’ motions to dismiss were
subsequently denied by the court.
On May 21, 2020, in response to an NTE petition challenging Duke
Energy Carolinas’ termination of the LGIA, FERC issued a ruling that 1) it
has exclusive jurisdiction to determine whether a transmission provider may
terminate a LGIA; 2) FERC approval is required to terminate a conforming LGIA
if objected to by the interconnection customer; and 3) Duke Energy may not
announce the termination of a conforming LGIA unless FERC has approved the
termination. FERC’s Office of Enforcement also initiated an investigation of Duke
Energy Carolinas into matters pertaining to the LGIA. Duke Energy Carolinas is
cooperating with the Office of Enforcement but cannot predict the outcome of
this investigation.
Following completion of discovery, Duke Energy Carolinas filed a motion
for summary judgment seeking a ruling in its favor as to some of its affirmative
claims against NTE and to all of NTE’s counterclaims. On June 24, 2022,
the court issued an order partially granting Duke Energy Carolinas’ motion
by dismissing NTE’s counterclaims that Duke Energy Carolinas engaged in
anti-competitive behavior in violation of state and federal statutes. On October
12, 2022, the parties executed a settlement agreement with respect to the
remaining breach of contract claims in the litigation and a Stipulation of
Dismissal was filed with the court on October 13, 2022. On November 11, 2022,
NTE filed its Notice of Appeal to the U.S. Court of Appeals for the Fourth Circuit
as to the District Court’s summary judgment ruling in Duke Energy Carolinas’
favor on NTE’s antitrust and unfair competition claims. Briefing on NTE’s appeal
will be completed on May 3, 2023. 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
$457 million and $501 million at December 31, 2022, and 2021, 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
2042 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 2042 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 $595 million
and $644 million at December 31, 2022, and 2021, 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.
The reserve for credit losses for insurance receivables for the
asbestos-related injuries and damages is $12 million for Duke Energy and
Duke Energy Carolinas as of December 31, 2022, and December 31, 2021. The
insurance receivable is evaluated based on the risk of default and the historical
losses, current conditions and expected conditions around collectability.
Management evaluates the risk of default annually based on payment history,
credit rating and changes in the risk of default from credit agencies.
Duke Energy Progress and Duke Energy Florida
Spent Nuclear Fuel Matters
On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued
the U.S. in the U.S. Court of Federal Claims for damages incurred for the period
2014 through 2018. The lawsuit claimed the DOE 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.
On March 30, 2022, the DOE and Duke Energy Progress executed a
settlement agreement, pursuant to which Duke Energy Progress would receive
damages for costs incurred between 2014 and 2018 and would be able to
submit future costs on a defined schedule. In April 2022, Duke Energy Progress
received $87 million in proceeds that related to damages incurred in 2014
through 2018.
On May 2, 2022, the DOE and Duke Energy Florida executed a settlement
agreement, pursuant to which Duke Energy Florida would receive damages
for costs incurred between 2014 and 2018 and would be able to submit costs
incurred in 2019 and 2020 pursuant to an audit process. In June 2022, Duke
Energy Florida received $180 million in proceeds that related to damages
incurred in 2014 through 2018.
Duke Energy Indiana
Coal Ash Basin Closure Plan Appeal
On January 27, 2020, Hoosier Environmental Council (HEC) filed a Petition
for Administrative Review with the Indiana Office of Environmental Adjudication
challenging the Indiana Department of Environmental Management’s (IDEM’s)
December 10, 2019 partial approval of Duke Energy Indiana’s ash pond closure
plan at Duke Energy’s Gallagher power station. After hearing oral arguments
in early April 2021 on Duke Energy Indiana’s and HEC’s competing Motions for
Summary Judgment, on May 4, 2021, the administrative court rejected all of
HEC’s claims and issued a ruling in favor of Duke Energy Indiana. On June 3,
2021, HEC filed an appeal in Superior Court to seek judicial review of the order.
Briefing on the appeal was completed on December 13, 2021.
139
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) 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 proceeding
with surface impoundment closure at its Indiana sites consistent with EPA’s
guidance, the federal CCR rule, and Indiana law, as applicable.
On April 21, 2022, HEC filed a motion requesting that the court hold
a hearing within 45 days and also take judicial notice of the EPA’s January
11, 2022 letter. On April 22, 2022, Duke Energy Indiana sent IDEM a letter
withdrawing the closure plans for the Gallagher North Ash Pond and Primary
Pond Ash Fill. After acknowledgment by IDEM of withdrawal of these closure
plans, Duke Energy Indiana filed a Motion to Dismiss the litigation as moot on
April 28, 2022, which IDEM supported, and the court granted the Motion to
Dismiss on July 8, 2022.
Coal Ash Insurance Coverage Litigation
In June 2022, Duke Energy Indiana filed a civil action in Indiana Superior
Court against various insurance companies seeking declaratory relief with
respect to insurance coverage for coal combustion residuals-related expenses
and liabilities covered by third-party liability insurance policies. The insurance
policies cover the 1969-1972 and 1984-1985 periods and provide third-party
liability insurance for claims and suits alleging property damage, bodily injury
and personal injury (or a combination thereof). A trial date has not yet been set.
Duke Energy Indiana cannot predict the outcome of this matter.
Other Litigation and Legal Proceedings
The Duke Energy Registrants are involved in other legal, tax and regulatory
proceedings arising in the ordinary course of business, some of which involve
significant amounts. The Duke Energy Registrants believe the final disposition of
these proceedings will not have a material effect on their results of operations,
cash flows or financial position 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.
However, the Duke Energy Registrants do not believe these guarantees will have
a material effect on their results of operations, cash flows or financial position.
See Note 8 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)
Minimum Purchase Amount at December 31, 2022
Contract
Expiration
2028-2032
2024-2025
2024
$
2023
22
300
55
$
2024
21
267
36
$
2025
22
91
—
$
2026
18
—
—
2027
Thereafter
$
19
—
—
$
27
—
—
$
Total
129
658
91
(a) Contracts represent between 18% and 100% of net plant output.
(b) Contracts represent 100% of net plant output.
(c) Share of net plant output varies. Excludes PPA with OVEC.
Gas Supply and Capacity Contracts
Duke Energy Ohio and Piedmont routinely enter into long-term natural
gas supply commodity and capacity commitments and other agreements that
commit future cash flows to acquire services needed in their businesses. These
commitments include pipeline and storage capacity contracts and natural gas
supply contracts to provide service to customers. Costs arising from the natural
gas supply commodity and capacity commitments, while significant, are pass-
through costs to customers and are generally fully recoverable through the fuel
adjustment or PGA procedures and prudence reviews in North Carolina and South
Carolina and under the Tennessee Incentive Plan in Tennessee. In the Midwest,
these costs are recovered via the Gas Cost Recovery Rate in Ohio or the Gas Cost
Adjustment Clause in Kentucky. The time periods for fixed payments under pipeline
and storage capacity contracts are up to 20 years. The time periods for fixed
payments under natural gas supply contracts are up to four years. The time period
for the natural gas supply purchase commitments is up to nine 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.
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) The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, 2022.
(in millions)
Duke Energy Ohio
Piedmont
6. LEASES
2023
85
319
$
2024
101
313
$
2025
85
267
$
2026
56
213
$
2027
52
203
$
Thereafter
$
616
587
Total
$
995
1,902
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
The following tables present the components of lease expense.
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.
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, 2022, and 2021, and a long-term net investment basis of $201 million
and $203 million as of December 31, 2022, and 2021, 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.
Year Ended December 31, 2022
(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
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
$ 229
4
61
151
50
201
$
$ 39
—
(1)
6
32
38
153
1
60
61
49
110
324
Duke
Energy
Florida
$ 70
1
23
20
4
24
Duke
Energy
Ohio
$ 10
—
—
—
—
—
Duke
Energy
Indiana
$ 19
2
—
—
1
1
Piedmont
$ 6
—
1
—
—
—
$ 83
—
37
41
45
86
$ 495
$ 76
$
$206
$118
$ 10
$ 22
$ 7
(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.
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)
(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
$ 245
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
—
—
—
$ 565
$ 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.
The following table presents operating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.
(in millions)
2023
2024
2025
2026
2027
Thereafter
Total operating lease payments
Less: present value discount
Total operating lease liabilities(a)
December 31, 2022
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$ 23
21
14
13
9
37
117
(20)
$ 118
110
96
99
73
253
749
(107)
$ 64
56
42
45
46
209
462
(76)
Duke
Energy
Florida
$ 54
54
54
54
27
44
287
(31)
Duke
Energy
$
225
207
175
161
134
322
1,224
(169)
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 2
2
2
2
2
15
25
(7)
$
6
5
5
4
4
45
69
(18)
$ 4
4
4
—
—
1
13
—
$ 1,055
$ 97
$ 642
$ 386
$ 256
$ 18
$ 51
$ 13
(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)
2023
2024
2025
2026
2027
Thereafter
Total finance lease payments
Less: amounts representing interest
Total finance lease liabilities
December 31, 2022
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$ 38
38
38
38
38
427
617
(333)
$ 103
88
85
86
82
555
999
(371)
$
78
79
80
81
81
555
954
(367)
Duke
Energy
$
198
143
76
77
74
584
1,152
(388)
Duke
Energy
Florida
$ 25
9
5
5
1
—
45
(4)
Duke
Energy
Indiana
$
1
1
1
1
1
23
28
(19)
$
764
$ 284
$ 628
$ 587
$ 41
$
9
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)
The following tables contain additional information related to leases.
Classification
Operating lease ROU assets, net
Net property, plant and equipment
Duke
Energy
$ 1,042
810
$ 1,852
Duke
Energy
Carolinas
$ 78
284
$ 362
Progress
Energy
$
628
674
$ 1,302
$ 370
590
$ 960
Other current liabilities
Current maturities of long-term debt
$
Operating lease liabilities
Long-Term Debt
179
153
876
611
$ 14
7
$
96
57
$
51
35
83
277
546
571
335
552
December 31, 2022
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$ 258
84
$ 342
$ 45
22
211
19
$ 18
—
$ 18
$
1
—
17
—
$ 49
6
$ 55
$ 4
—
$ 4
$
4
—
$ —
—
47
9
13
—
$ 1,819
$ 381
$ 1,270
$ 973
$ 297
$ 18
$ 60
$ 13
Classification
Operating lease ROU assets, net
Net property, plant and equipment
Duke
Energy
$ 1,136
950
$ 2,086
Other current liabilities
Current maturities of long-term debt
$
Operating lease liabilities
Long-Term Debt
184
151
940
764
Duke
Energy
Carolinas
$ 92
302
$ 394
$ 22
6
78
283
Progress
Energy
$
691
729
$ 1,420
$
94
61
606
629
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$ 389
627
$ 1,016
$
50
41
350
588
$ 302
102
$ 404
$ 44
20
256
41
$ 19
—
$ 19
$
1
—
18
—
$ 53
7
$ 60
$
4
—
50
10
$ 16
—
$ 16
$ 5
—
14
—
$ 2,039
$ 389
$ 1,390
$ 1,029
$ 361
$ 19
$ 64
$ 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
(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)
Year Ended December 31, 2022
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$
230
50
151
$ 24
32
6
$
118
49
61
$ 63
45
41
$ 55
4
20
$
2
—
—
$ 6
1
—
$
4
—
—
$
111
$ 10
$ —
$ —
$ —
$ —
$ — $ —
(a) No amounts were classified as investing cash flows from operating leases.
(b) Does not include ROU assets recorded as a result of the adoption of the new lease standard.
143
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, 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
—
—
$ —
—
$ —
—
$ —
—
(a) No amounts were classified as investing cash flows from operating leases.
(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, 2022
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
8
10
10
17
3.4%
7.7%
3.8%
11.5%
8
12
3.6 %
9.1 %
9
12
3.5%
9.1%
6
12
3.8%
8.0%
15
—
15
23
1
—
4.2%
—%
4.0%
11.9%
3.3%
—%
(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, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
8
10
9
18
3.5%
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.
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) 7. DEBT AND CREDIT FACILITIES
Summary of Debt and Related Terms
The following tables summarize outstanding debt and includes debt attributable to the Commercial Renewables Disposal Groups. See Note 2 for further details.
(in millions)
Unsecured debt, maturing 2023-2082
Secured debt, maturing 2023-2052
First mortgage bonds, maturing 2023-2052(a)
Finance leases, maturing 2023-2051(b)
Tax-exempt bonds, maturing 2027-2046(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
4.20%
4.11%
3.89%
7.90%
3.84%
4.50%
Duke
Energy
$ 29,585
5,632
32,645
764
1,331
4,582
—
(5)
1,016
(383)
Total debt
4.09%
$ 75,167
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)
(3,952)
—
(4,154)
$ 67,061
Duke
Energy
Carolinas
$ 1,150
1,317
11,306
284
—
—
1,533
—
(21)
(70)
$15,499
—
(1,233)
(1,018)
$13,248
December 31, 2022
Progress
Energy
$ 2,600
2,383
16,350
628
500
—
993
—
(40)
(132)
$ 23,282
—
(843)
(697)
$ 21,742
Duke
Energy
Progress
$ —
1,155
8,776
587
500
—
389
—
(23)
(59)
$ 11,325
—
(238)
(369)
$ 10,718
$
Duke
Energy
Florida
950
1,228
7,576
41
—
—
605
—
(16)
(70)
Duke
Energy
Ohio
$ 1,330
—
1,850
—
77
—
522
—
(25)
(12)
Duke
Energy
Indiana
$ 697
—
3,138
9
352
—
585
—
(17)
(22)
Piedmont
$ 3,390
—
—
—
—
—
514
—
(9)
(18)
$ 10,314
$ 3,742
$ 4,742
$ 3,877
—
(605)
(328)
$ 9,381
—
(497)
(475)
$ 2,770
—
(435)
(303)
$ 4,004
—
(514)
(45)
$ 3,318
(a) Substantially all electric utility property is mortgaged under mortgage bond indentures.
(b) Duke Energy includes $164 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 $1,057 million and $85 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.
(f) Duke Energy includes $27 million in purchase accounting adjustments primarily related to the merger with Progress Energy.
(g) Refer to Note 18 for additional information on amounts from consolidated VIEs.
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)
(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
December 31, 2021
Duke
Energy
Carolinas
$ 1,150
1,094
10,507
289
—
—
526
4
(21)
(67)
$ 13,482
—
(226)
(362)
$ 12,894
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 Piedmont
$ 700
—
3,219
10
285
—
150
—
(18)
(23)
$ 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 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 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 18 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.
Maturity Date
Interest Rate
December 31, 2022
April 2023
June 2023
October 2023
October 2023
October 2023
March 2023
March 2023
September 2023
September 2023
2.875%
3.469%
3.950%
4.272%
4.118%
2.500%
3.050%
3.375%
3.800%
$
350
500
400
150
300
500
500
300
300
854
$ 4,154
(in millions)
Unsecured Debt
Duke Energy (Parent)
Duke Energy (Parent)(a)
Duke Energy (Parent)
Duke Energy Ohio(a)
Duke Energy Indiana(a)
First Mortgage Bonds
Duke Energy Carolinas
Duke Energy Carolinas
Duke Energy Progress
Duke Energy Ohio
Other(b)
Current maturities of long-term debt
(a) Debt has a floating interest rate.
(b)
Includes finance lease obligations, amortizing debt, tax-exempt bonds with mandatory put options and small bullet maturities.
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)
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)
2023
2024
2025
2026
2027
Thereafter
Total long-term debt, including current maturities
December 31, 2022
Duke
Energy(a)
$ 4,154
3,216
4,322
2,682
3,203
52,999
$ 70,576
Duke
Energy
Carolinas
$ 1,018
19
491
621
323
11,884
$14,356
Progress
Energy
$
697
939
1,040
345
947
18,642
Duke
Energy
Progress
$
369
72
975
279
233
9,238
Duke
Energy
Florida
$
328
867
65
66
714
7,753
Duke
Energy
Ohio
$
475
—
245
45
102
2,415
Duke
Energy
Indiana
$
303
4
4
4
177
3,853
Piedmont
$
45
40
205
40
300
2,760
$ 22,610
$11,166
$ 9,793
$ 3,282
$ 4,345
$ 3,390
(a) Excludes $1,169 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
(a) Progress Energy amounts are equal to Duke Energy Progress amounts.
December 31, 2022 and 2021
Duke
Energy
$ 312
625
$ 937
Duke
Energy
Carolinas
$ —
300
$ 300
Duke
Energy
Progress
$ —
150
$ 150
Duke
Energy
Ohio
$ 27
25
$ 52
Duke
Energy
Indiana
$ 285
150
$ 435
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) Summary of Significant Debt Issuances
In January 2023, Duke Energy Carolinas issued $1.8 billion of first mortgage bonds. The issuance was split between a $900 million, 10-year tranche at 4.95%
and a $900 million, 30-year tranche at 5.35%. The net proceeds will be used to refinance $1 billion of Duke Energy Carolinas bonds maturing in March 2023, to pay
down short-term debt and for general company purposes.
The following tables summarize significant debt issuances (in millions).
Issuance Date
Unsecured Debt
May 2022(a)
June 2022(b)
June 2022(b)
August 2022(c)
August 2022(c)
August 2022(c)
December 2022(d)
December 2022(d)
First Mortgage Bonds
March 2022(e)
March 2022(e)
March 2022(e)
March 2022(e)
November 2022(f)
Tax-exempt Bonds
June 2022(g)
June 2022(g)
September 2022(h)
September 2022(i)
September 2022(i)
Total issuances
Maturity Date
Interest Rate
May 2052
June 2028
June 2034
March 2028
August 2032
August 2052
December 2025
December 2027
March 2032
March 2052
April 2032
April 2052
November 2052
September 2030
November 2039
October 2046
October 2046
October 2046
5.050 %
4.750 %
5.306 %
4.300 %
4.500 %
5.000 %
5.000 %
5.000 %
2.850 %
3.550 %
3.400 %
4.000 %
5.950 %
4.000 %
4.250 %
3.300 %
3.700 %
4.000 %
Year Ended December 31, 2022
Duke
Energy
(Parent)
Duke
Energy
Carolinas
Duke
Energy
Progress
$ —
645
537
900
1,150
1,150
500
500
—
—
—
—
—
168
234
—
—
—
$ —
—
—
—
—
—
—
—
500
650
—
—
—
—
—
—
—
—
$ —
—
—
—
—
—
—
—
—
—
500
400
—
—
—
200
210
42
Duke
Energy
Florida
$ —
—
—
—
—
—
—
—
—
—
—
—
500
—
—
—
—
—
Piedmont
$ 400
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Duke
Energy
$ 400
645
537
900
1,150
1,150
500
500
500
650
500
400
500
168
234
200
210
42
$ 9,186
$ 5,784
$ 1,150
$1,352
$ 500
$ 400
(a) Debt issued to repay a portion of outstanding intercompany short-term debt and for general corporate purposes.
(b) Duke Energy (Parent) issued 600 million euros aggregate principal amount of 3.10% senior notes due June 2028 and 500 million euros aggregate principal amount of 3.85% senior notes due June 2034. Debt issued to
repay a $500 million debt maturity, pay down short-term debt and for general corporate purposes. Duke Energy’s obligations under its euro-denominated fixed-rate notes were effectively converted to fixed-rate U.S. dollars
at issuance through cross-currency swaps, mitigating foreign currency exchange risk associated with the interest and principal payments. See Note 15 for additional information.
(c) Debt issued to repay a portion of short-term debt and for general corporate purposes.
(d) Proceeds will be used to repay a portion of commercial paper and for general corporate purposes.
(e) Debt issued to finance or refinance, in whole or in part, existing or new eligible projects under the sustainable financing framework.
(f) Debt issued to repay a portion of outstanding intercompany short-term debt and for general company purposes.
(g) Debt issued to refund the Ohio Air Quality Development Revenue Refunding bonds, previously held in treasury, which were used to finance or refinance portions of certain solid waste disposal facilities. The mandatory
purchase date of these bonds is June 1, 2027.
(h) Debt issued to provide funds to refund the prior bonds, which were used to finance or refinance portions of certain air and water pollution control equipment and solid waste disposal equipment. The mandatory purchase date
of these bonds is October 1, 2026.
(i) Debt issued to provide funds to refund the prior bonds, which were used to finance or refinance portions of certain air and water pollution control equipment and solid waste disposal equipment. The mandatory purchase date
of these bonds is October 1, 2030.
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) Issuance Date
Unsecured Debt
March 2021(a)
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 %
Duke
Energy
$ 350
500
1,000
750
750
500
100
137
221
352
197
550
450
650
450
650
500
Duke
Energy
(Parent)
$ —
500
1,000
750
750
500
—
—
—
—
—
—
—
—
—
—
—
Year Ended December 31, 2021
Duke
Energy
Carolinas
Duke
Energy
Progress
$ —
—
—
—
—
—
100
137
—
—
—
550
450
—
—
—
—
$ —
—
—
—
—
—
—
—
221
352
197
—
—
650
450
—
—
Duke
Energy
Florida
$ —
—
—
—
—
—
Piedmont
$ 350
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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 were used to finance or refinance, in whole or in part, existing or new eligible projects under the sustainable financing framework.
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) AVAILABLE CREDIT FACILITIES
Master Credit Facility
In March 2022, Duke Energy amended its existing Master Credit Facility
to increase the amount of the facility from $8 billion to $9 billion and to extend
the termination date to March 2027. The Duke Energy Registrants, excluding
Progress Energy, have borrowing capacity under the Master Credit Facility up
to a specified sublimit for each borrower. Duke Energy has the unilateral ability
at any time to increase or decrease the borrowing sublimits of each borrower,
subject to a maximum sublimit for each borrower. The amount available
under the Master Credit Facility has been reduced to backstop issuances of
commercial paper, certain letters of credit and variable-rate demand tax-exempt
bonds that may be put to the Duke Energy Registrants at the option of the holder.
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
December 31, 2022
Duke
Energy
$ 9,000
(3,685)
(40)
(81)
$ 5,194
Duke
Energy
(Parent)
$ 2,375
463
(27)
—
$ 2,811
Duke
Energy
Carolinas
$ 1,925
(1,533)
(4)
—
388
$
Duke
Energy
Progress
$
800
(389)
(2)
—
409
$
Duke
Energy
Florida
$1,150
(605)
(7)
—
$ 538
Duke
Energy
Ohio
$ 900
(522)
—
—
$ 378
Duke
Energy
Indiana
$ 1,050
(585)
—
(81)
384
$
Piedmont
$ 800
(514)
—
—
$ 286
(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.
Duke Energy (Parent) Term Loan Facility
On March 9, 2022, Duke Energy (Parent) entered into a Term Loan Credit
Agreement (Credit Agreement) with commitments totaling $1.4 billion maturing
on March 9, 2024. The maturity date of the Credit Agreement may be extended for
up to two years by request of Duke Energy (Parent), upon satisfaction of certain
conditions contained in the Credit Agreement. Borrowings under the facility were
used to repay amounts drawn under the Three-Year Revolving Credit Facility and
for general corporate purposes, including repayment of a portion of Duke Energy’s
outstanding commercial paper. In December 2022, Duke Energy (Parent) repaid
$400 million of the term loan. The balance is classified as Long-Term Debt on Duke
Energy’s Consolidated Balance Sheets. The Three-Year Revolving Credit Facility
was terminated in March 2022.
Duke Energy Florida Term Loan Facility
In October 2022, Duke Energy Florida entered into a term loan facility
with commitments totaling $800 million expiring in April 2024. The term loan
was fully drawn at the time of closing In October and borrowings were used for
storm costs, under-collected fuel and general company purposes. The balance
is classified as Long-Term Debt on Duke Energy Florida’s Consolidated Balance
Sheet.
Other Debt Matters
In September 2022, 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.
Also in September 2022, to replace another similar prior filing, Duke
Energy filed an effective Form S-3 with the SEC to sell up to $4 billion of
variable denomination floating-rate demand notes, called PremierNotes. The
Form S-3 states that no more than $2 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, 2022, and 2021, was
$897 million and $1,066 million, respectively. The notes are short-term debt
obligations of Duke Energy and are reflected as Notes payable and commercial
paper on Duke Energy’s Consolidated Balance Sheets.
Money Pool and Intercompany Credit Agreements
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
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
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)
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.
In March 2022, Progress Energy closed a revolving credit agreement
with Duke Energy (Parent), which allowed up to $2.5 billion in intercompany
borrowings.
Restrictive Debt Covenants
The Duke Energy Registrants’ debt and credit agreements contain various
financial and other covenants. Duke Energy’s Master Credit Facility contains
a covenant requiring the debt-to-total capitalization ratio not to exceed 65%
for each borrower, excluding Piedmont, and 70% for Piedmont. Failure to meet
those covenants beyond applicable grace periods could result in accelerated
due dates and/or termination of the agreements. As of December 31, 2022,
Duke Energy presented approximately $131 million of long-term debt as current
on the Consolidated Balance Sheet as a result of a technical default due to
the bankruptcy filing of a Duke Energy customer. The Duke Energy Registrants
were in compliance with all other covenants related to their debt agreements
as of December 31, 2022. 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, 2022, and 2021, Duke Energy had loans outstanding
of $852 million, including $33 million at Duke Energy Progress and $819 million,
including $34 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.
8. 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 and
include guarantees and indemnifications related to Commercial Renewables
Disposal Groups. 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, 2022, 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, 2022, the maximum potential
amount of future payments associated with these guarantees were $40 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 4 and 13 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, 2022, was $33 million of which all expire between 2024
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, 2022, Duke
Energy had issued a total of $667 million in letters of credit, which expire
between 2023 and 2028. The unused amount under these letters of credit was
$35 million.
Duke Energy recognized $2 million and $3 million as of December 31,
2022, and 2021, 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.
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) 9. 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.
10. 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, 2022
Ownership
Interest
Property, Plant
and Equipment
Accumulated
Depreciation
Construction Work in
Progress
19.25 %
87.27 %
50.05 %
62.50 %
Various
$ 1,047
613
450
182
6,718
$ 546
86
241
113
1,510
$ 32
48
2
1
157
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 4 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
$ 7,261
5,176
291
$ 12,728
773
$ 11,955
Duke
Energy
Carolinas
$ 3,009
2,309
64
$ 5,382
261
$ 5,121
Progress
Energy
$ 4,217
1,862
102
$ 6,181
289
$ 5,892
December 31, 2022
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
$ 3,948
1,833
42
$ 5,823
288
$ 5,535
$ 270
29
59
$ 358
1
$ 357
$ —
95
59
$154
17
$137
Duke
Energy
Indiana
$ —
911
40
$ 951
207
$ 744
Piedmont
$ —
—
26
$ 26
—
$ 26
(a) Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.
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) 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)
$ 10
—
10
—
$
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 17 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,
2022
$ 7,466
4,208
3,258
2021
$ 8,933
5,068
3,865
As described in Note 4, 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 4 for more information.
Closure of Ash Impoundments
The Duke Energy Registrants are subject to state and federal regulations
covering the closure of coal ash impoundments, including the EPA CCR rule and
the Coal Ash Act, and other agreements. AROs recorded on the Duke Energy
Registrants’ Consolidated Balance Sheets include the legal obligation for closure of
coal ash basins and the disposal of related ash as a result of these regulations and
agreements.
The ARO amount recorded on the Consolidated Balance Sheets is based upon
estimated closure costs for impacted ash impoundments. The amount recorded
represents the discounted cash flows for estimated closure costs based upon
specific closure plans. Actual costs to be incurred will be dependent upon factors that
vary from site to site. The most significant factors are the method and time frame
of closure at the individual sites. Closure methods considered include removing the
water from ash basins, consolidating material as necessary and capping the ash with
a synthetic barrier, excavating and relocating the ash to a lined structural fill or lined
landfill or recycling the ash for concrete or some other beneficial use. The ultimate
method and timetable for closure will be in compliance with standards set by federal
and state regulations and other agreements. The ARO amount will be adjusted as
additional information is gained through the closure and post-closure process,
including acceptance and approval of compliance approaches, which may change
management assumptions, and may result in a material change to the balance. See
ARO Liability Rollforward section below for information on revisions made to the coal
ash liability during 2022 and 2021.
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) 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 4 for additional
information on Regulatory assets related to AROs and Note 5 for additional
information on commitments and contingencies.
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 4 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, 2020
$ 12,854
$ 5,350
$ 6,149
$ 5,635
$
514
$
111
$ 1,176
$
20
Accretion expense(a)
Liabilities settled(b)
Liabilities incurred in the current year
Revisions in estimates of cash flows(c)
Balance at December 31, 2021
Accretion expense(a)
Liabilities settled(b)
Liabilities incurred in the current year
Revisions in estimates of cash flows(c)
Balance at December 31, 2022
504
(613)
14
(159)
242
(210)
8
(89)
229
(324)
6
52
212
(214)
—
42
12,600
5,301
6,112
5,675
501
(680)
22
285
242
(234)
—
73
229
(334)
18
156
215
(228)
—
161
17
(110)
6
10
437
14
(106)
18
(5)
4
(3)
—
24
136
6
(13)
—
25
35
(77)
—
(147)
987
30
(98)
5
27
$ 12,728
$ 5,382
$ 6,181
$ 5,823
$
358
$
154
$
951
$
1
—
—
1
22
1
—
—
3
26
(a) Substantially all accretion expense for the years ended December 31, 2022, and 2021, 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) The amounts recorded represent the discounted cash flows for estimated closure costs as evaluated on a site-by-site basis. The increases in 2022 primarily relate to higher unit costs associated with basin closure and
routine maintenance. The decreases in 2021 primarily relate to revised basin closure cost estimates, partially offset by increases related to new closure plan approvals, post closure maintenance and beneficiation costs.
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) 11. 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
Other buildings and improvements
Nuclear fuel
Equipment
Construction in process
Other
Total property, plant and equipment(a)
Total accumulated depreciation – regulated(b)(c)
Total accumulated depreciation – nonregulated(d)
Facilities to be retired, net
December 31, 2022
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
$
2,232
$
565
$
993
$
496
$
497
$
230
$
124
$
295
39
56
40
10
13
15
126,016
13,174
2,537
369
3,081
2,959
7,381
6,090
163,839
(50,544)
(1,556)
9
46,640
—
973
55,872
—
647
—
1,723
710
2,671
1,368
54,650
(18,669)
—
—
—
1,358
936
3,073
1,943
64,822
(20,584)
—
—
33,336
—
341
—
1,358
567
1,317
1,460
38,875
(14,201)
—
—
22,536
—
306
—
—
369
1,756
476
25,940
(6,377)
—
—
6,900
3,773
398
—
—
441
375
380
12,497
(3,250)
—
—
16,604
—
336
—
—
356
381
320
18,121
(6,021)
—
—
—
9,401
183
—
—
125
478
387
10,869
(2,081)
—
9
Total net property, plant and equipment
$111,748
$ 35,981
$ 44,238
$
24,674
$19,563
$ 9,247
$12,100
$ 8,797
(a)
(b)
(c)
(d)
Includes finance leases of $816 million, $335 million, $674 million, $590 million, $84 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 $233 million, $81 million and $152 million, respectively, of accumulated
amortization of finance leases.
Includes $1,683 million, $934 million, $749 million and $749 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 $7 million, $51 million and $4 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.
Includes accumulated amortization of finance leases of ($1 million) at Duke 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)
(in millions)
Land
Plant – Regulated
Electric generation, distribution and transmission
Natural gas transmission and distribution
Other buildings and improvements
Plant – Nonregulated
Other buildings and improvements
Nuclear fuel
Equipment
Construction in process
Other
Total property, plant and equipment(a)
Total accumulated depreciation – regulated(b)(c)
Total accumulated depreciation – nonregulated(d)
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
$
2,145
$
543
$
957
$
482
$
475
$
219
40
54
37
11
13
14
120,855
12,079
1,921
401
3,181
2,659
5,979
5,276
154,496
(47,611)
(1,493)
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
Duke
Energy
Indiana
$
122
15,925
—
321
—
—
262
460
253
17,343
(5,583)
—
—
Piedmont
$
279
—
8,732
155
—
—
122
262
368
9,918
(1,899)
—
11
Total net property, plant and equipment
$ 105,536
$ 34,122
$ 41,706
$
23,657
$18,046
$ 8,625
$11,760
$ 8,030
(a)
(b)
(c)
(d)
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.
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 year 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.
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)
In 2021, 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,
2022
$118
50
26
19
7
14
3
4
2021
$ 66
29
20
14
6
20
(17)
9
2020
$ 96
28
17
12
5
26
10
8
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) 12. GOODWILL AND INTANGIBLE ASSETS
GOODWILL
Duke Energy
Duke Energy’s Goodwill balance of $19.3 billion is allocated $17.4 billion to
EU&I and $1.9 billion to GU&I on Duke Energy’s Consolidated Balance Sheets at
December 31, 2022, and 2021. There are no accumulated impairment charges.
Duke Energy Ohio
Duke Energy Ohio’s Goodwill balance of $920 million, allocated $596 million
to EU&I and $324 million to GU&I, is presented net of accumulated impairment
charges of $216 million on the Consolidated Balance Sheets at December 31, 2022,
and 2021.
Progress Energy
Progress Energy’s Goodwill is included in the EU&I segment and there are
no accumulated impairment charges.
Piedmont
Piedmont’s Goodwill is included in the GU&I segment and there are no
accumulated impairment charges.
Goodwill Impairment Testing
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required
to perform an annual goodwill impairment test as of the same date each year and,
accordingly, perform their annual impairment testing of goodwill as of August 31.
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test
between annual tests if events or circumstances occur that would more likely
than not reduce the fair value of a reporting unit below its carrying value. As the
fair value for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont
exceeded their respective carrying values at the date of the annual impairment
analysis, no goodwill impairment charges were recorded in 2022.
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, 2022, and 2021.
(in millions)
Emission allowances
Renewable energy certificates
Other
Total gross carrying amounts
Accumulated amortization – other
Total accumulated amortization
Total intangible assets, net
(in millions)
Emission allowances
Renewable energy certificates
Natural gas, coal and power contracts
Other
Total gross carrying amounts
Accumulated amortization – natural gas, coal and power contracts
Accumulated amortization – other
Total accumulated amortization
$
265
$
$132
$ 127
$
5
$
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
$
8
210
55
273
(8)
(8)
$ —
84
—
84
—
—
84
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
$
8
204
24
28
264
(24)
(4)
(28)
$ —
73
—
—
73
—
—
—
73
December 31, 2022
Duke
Energy
Progress
Duke
Energy
Florida
$
2
124
1
127
—
—
$
3
—
3
6
(1)
(1)
Duke
Energy
Ohio
$ —
2
—
2
—
—
2
Duke
Energy
Indiana
$
2
—
—
2
—
—
Piedmont
$ —
—
22
22
(2)
(2)
$
2
$ 20
December 31, 2022
Duke
Energy
Progress
Duke
Energy
Florida
$
2
131
—
—
133
—
—
—
$ 3
—
—
—
3
—
—
—
Duke
Energy
Ohio
$ —
—
—
—
—
—
—
—
Duke
Energy
Indiana
Piedmont
$
2
—
24
—
26
(24)
—
(24)
$ —
—
—
—
—
—
—
—
$
5
124
4
133
(1)
(1)
$
5
131
—
—
136
—
—
—
$136
$ 133
$ 3
$ —
$
2
$ —
Total intangible assets, net
$
236
$
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) Amortization Expense
Amortization expense amounts for other intangible assets are immaterial for the years ended December 31, 2022, 2021 and 2020, and are expected to be
immaterial for the next five years as of December 31, 2022.
13. 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
Other
Total
Years Ended December 31,
2022
Investments
Equity in earnings
(losses)
$
99
240
116
$ 455
$
$
7
21
85
113
Investments
$
$
104
231
122
457
2021
2020
Equity in earnings
(losses)
Equity in earnings
(losses)
$
$
7
8
47
62
$
(1)
(2,017)
13
$ (2,005)
During the years ended December 31, 2022, 2021 and 2020, Duke Energy
received distributions from equity investments of $111 million, $56 million and
$34 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, 2022, 2021 and 2020, Duke Energy received distributions
from equity investments of $6 million, $14 million and $23 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, 2022, 2021 and 2020, Piedmont
received distributions from equity investments of $31 million, $8 million and
$2 million, respectively, which are included in Other assets within Cash Flows
from Operating Activities. During the years ended December 31, 2021, and 2020,
Piedmont received distributions from equity investments of $2 million and
$2 million, respectively, which are included within Cash Flows from Investing
Activities on the Consolidated Statements of Cash Flows. Amounts received
during the year ended December 31, 2022, included in Cash Flows from Investing
Activities on the Consolidated Statements of Cash Flows were immaterial.
Significant investments in affiliates accounted for under the equity method
are discussed below.
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 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 4 and 8 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, a 70% interest in Sustain T&W, SustainRNG’s
renewable natural gas project located in Georgia, and a 70% interest in Sustain
Liberty, SustainRNG’s renewable natural gas project located in North Carolina.
Electric Utilities and Infrastructure
Other
Duke Energy owns 50% interests in both DATC and Pioneer, which build,
own and operate electric transmission facilities in North America.
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.
Gas Utilities and Infrastructure
Pipeline Investments
Piedmont owns a 21.49% investment in Cardinal, an intrastate pipeline
located in North Carolina.
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) 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 in Duke Energy’s
consolidated statements of operations. For the years ended December 31, 2022,
and 2021, there were no investments that met the significance requirements.
Net revenues
Operating loss
Net loss
Net loss attributable to Duke Energy
14. 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)
Years Ended December 31,
2022
2021
2020
$ 838 $ 894 $ 753
20
25
114
15
28
109
600
12
24
41
207
11
$ 818 $ 856 $ 715
36
114
25
75
43
600
109
76
41
207
41
75
$ 469 $ 504 $ 420
17
114
25
75
20
600
109
76
19
207
41
75
$ 349 $ 352 $ 295
19
23
22
$ 334 $ 329 $ 326
4
5
4
$ 447 $ 409 $ 401
8
8
8
Year Ended
December 31, 2020
$
$
—
(4,612)
(4,512)
(2,121)
Years Ended December 31,
2022
2021
2020
$ 155 $ 139 $ 140
3
90
23
3
88
23
3
86
22
(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)
(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 7 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 18, 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.
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) Intercompany Income Taxes
Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a
tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants
would incur as separate C-Corporations. The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.
(in millions)
December 31, 2022
Intercompany income tax receivable
Intercompany income tax payable
December 31, 2021
Intercompany income tax receivable
Intercompany income tax payable
15. DERIVATIVES AND HEDGING
The Duke Energy Registrants use commodity, interest rate and foreign
currency contracts to manage commodity price risk, interest rate risk and
foreign currency exchange 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. Foreign currency derivatives are used to manage risk related to
foreign currency exchange rates on certain issuances of debt. Derivatives
related to interest rate risk for the Commercial Renewables Disposal Groups are
included in the following disclosures. See Note 2 for further information.
All derivative instruments not identified as NPNS are recorded at fair
value as assets or liabilities on the Consolidated Balance Sheets. Cash
collateral related to derivative instruments executed under master netting
arrangements is offset against the collateralized derivatives on the Consolidated
Balance Sheets. The cash impacts of settled derivatives are recorded as
operating activities on the Consolidated Statements of Cash Flows.
INTEREST RATE RISK
The Duke Energy Registrants are exposed to changes in interest rates as
a result of their issuance or anticipated issuance of variable-rate and fixed-rate
debt and commercial paper. Interest rate risk is managed by limiting variable-
rate exposures to a percentage of total debt and by monitoring changes in
interest rates. To manage risk associated with changes in interest rates, the
Duke Energy Registrants may enter into interest rate swaps, U.S. Treasury lock
agreements and other financial contracts. In anticipation of certain fixed-rate
debt issuances, a series of forward-starting interest rate swaps or Treasury
locks may be executed to lock in components of current market interest rates.
These instruments are later terminated prior to or upon the issuance of the
corresponding debt.
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ —
37
$ —
62
$ 95
—
$ —
—
$ 36
—
$ 17
—
$ —
17
$ —
84
$ 40
—
$ 19
—
$ —
18
$ —
10
$ —
38
$ —
27
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. See
Note 2 for information on the de-designation of interest rate swaps and related
gain reclassified out of AOCI for the year ended December 31, 2022, related to
the Commercial Renewables Disposal Groups. Gains and losses reclassified out
of AOCI for the years ended December 31, 2021, and 2020, were not material.
Duke Energy’s interest rate derivatives designated as hedges include forward-
starting interest rate swaps not accounted for under regulatory accounting.
Undesignated Contracts
Undesignated contracts primarily include contracts not designated as a
hedge because they are accounted for under regulatory accounting or contracts
that do not qualify for hedge accounting.
Duke Energy’s interest rate swaps for its regulated operations employ
regulatory accounting. With regulatory accounting, the mark-to-market gains or
losses on the swaps are deferred as regulatory liabilities or regulatory assets,
respectively. Regulatory assets and liabilities are amortized consistent with the
treatment of the related costs in the ratemaking process. The accrual of interest
on the swaps is recorded as Interest Expense on the Duke Energy Registrant’s
Consolidated Statements of Operations and Comprehensive Income.
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) The following tables show notional amounts of outstanding derivatives related to interest rate risk.
December 31, 2022
Duke
Energy
500
2,979
3,479
$
$
Duke Energy
Carolinas
$
$
—
1,250
1,250
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Indiana
Duke Energy
Ohio
$
$
—
800
800
$
$
—
500
500
$
$
—
300
300
$
$
—
300
300
$ —
27
$
27
Duke
Energy
2,415
1,177
3,592
$
$
Duke Energy
Carolinas
$
$
—
350
350
December 31, 2021
Progress
Energy
$
$
—
500
500
Duke Energy
Progress
$
$
—
500
500
Duke Energy
Indiana
Duke Energy
Ohio
$
$
—
300
300
$ —
27
$
27
(in millions)
Cash flow hedges
Undesignated contracts
Total notional amount
(in millions)
Cash flow hedges
Undesignated contracts
Total notional amount
COMMODITY PRICE RISK
The Duke Energy Registrants are exposed to the impact of changes in
the prices of electricity purchased and sold in bulk power markets and natural
gas purchases, including Piedmont’s natural gas supply contracts. Exposure
to commodity price risk is influenced by a number of factors including the term
of contracts, the liquidity of markets and delivery locations. To manage risk
associated with commodity prices, the Duke Energy Registrants may enter into
long-term power purchase or sales contracts and long-term natural gas supply
agreements.
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)
Natural gas (millions of Dth)
Electricity (GWh)
Natural gas (millions of Dth)
December 31, 2022
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Ohio
Duke Energy
Indiana
—
307
—
292
—
292
1,820
—
12,266
11
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
Duke
Energy
14,086
909
Duke
Energy
12,369
823
Piedmont
—
299
Piedmont
—
336
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)
FOREIGN CURRENCY RISK
Duke Energy may enter into foreign currency derivatives to hedge exposure
to changes in foreign currency exchange rates, such as that arising from the
issuance of debt denominated in a currency other than U.S. dollars.
Fair Value Hedges
Derivatives related to existing fixed rate securities are accounted for as
fair value hedges, where the derivatives’ fair value gains or losses and hedged
items’ fair value gains or losses are both recorded directly to earnings on the
same income statement line item, including foreign currency gains or losses
arising from changes in the U.S. currency exchange rates. Duke Energy has
elected to exclude the cross-currency basis spread from the assessment of
effectiveness in the fair value hedges of its foreign currency risk and record any
difference between the change in the fair value of the excluded components and
the amounts recognized in earnings as a component of other comprehensive
income or loss.
The following table shows Duke Energy’s outstanding derivatives related
to foreign currency risk. There were no fair value hedges in 2021.
December 31, 2022
Fair value hedges
Total notional amount
Pay Notional
(in millions)
$
$
645
537
1,182
Pay Rate
4.75 %
5.31 %
Receive
Notional
(in millions)
600 euros
500 euros
1,100 euros
Receive
Rate
3.10 %
3.85 %
Hedge
Maturity Date
June 2028
June 2034
Fair Value
Gain (Loss)(a)
(in millions)
$
$
(3)
(2)
(5)
(a) Amounts are recorded in Other Income and expenses, net on the Consolidated Statement of Operations, which offsets an equal translation adjustment of the foreign denominated debt. See the Consolidated Statements of
Comprehensive Income for amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded.
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
Not Designated as Hedging Instruments
Current
Noncurrent
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, 2022
$ 265
213
$ 478
$ 132
104
$ 236
$ 99
108
$207
$ 99
108
$207
$ —
—
$ —
$
$
5
—
5
$
$
29
—
29
$ —
—
$ —
$ 101
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ 228
29
$ 358
$ 836
$
94
—
$
94
$ 330
$ 41
—
$ 41
$248
$ 23
—
$ 23
$230
$ 17
—
$ 17
$ 17
$ —
—
$ —
5
$
$
81
—
$
81
$ 110
$ —
—
$ —
$ —
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)
Derivative Liabilities
(in millions)
Commodity Contracts
Not Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Liabilities – Commodity Contracts
Interest Rate Contracts
Not Designated as Hedging Instruments
Noncurrent
Total Derivative Liabilities – Interest Rate Contracts
Foreign Currency Contracts
Designated as Hedging Instruments
Current
Noncurrent
Total Derivative Liabilities – Foreign Currency 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
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
December 31, 2022
Duke Energy
Florida
Duke Energy
Progress
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$ 175
202
$ 377
2
2
$
$ 18
40
$ 58
$ 437
$
96
31
$ 127
—
$ —
$ —
—
$ —
$ 127
$ 36
30
$ 66
—
$ —
$ —
—
$ —
$ 66
$ 18
30
$ 48
—
$ —
$ —
—
$ —
$ 48
$ 19
—
$ 19
—
$ —
$ —
—
$ —
$ 19
$ —
—
$ —
2
2
$
$ —
—
$ —
2
$
$
$
16
—
16
—
$ —
$ —
—
$ —
16
$
$ 27
141
$ 168
—
$ —
$ —
—
$ —
$ 168
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
December 31, 2021
Duke Energy
Florida
Duke Energy
Progress
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$ 199
113
$ 312
$
3
3
2
$
$
8
$ 320
$
99
63
$ 162
$ —
—
$ —
$ —
$ 162
$ 72
50
$122
$ —
—
2
$
$
2
$124
$ 72
50
$122
$ —
—
2
$
$
2
$124
$ —
—
$ —
$ —
—
$ —
$ —
$ —
$
$
2
—
2
$ —
—
$ —
$ —
2
$
$
$
23
—
23
$ —
—
$ —
$ —
23
$
$
$
3
—
3
$ —
—
$ —
$ —
3
$
Derivative Liabilities
December 31, 2021
(in millions)
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
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$
72
132
$ 204
$
75
21
10
18
$ 124
$ 328
$
$
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
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) OFFSETTING ASSETS AND LIABILITIES
The following tables present the line items on the Consolidated Balance Sheets where derivatives are reported. Substantially all of Duke Energy’s outstanding
derivative contracts are subject to enforceable master netting arrangements. The gross amounts offset in the tables below show the effect of these netting
arrangements on financial position and include collateral posted to offset the net position. The amounts shown are calculated by counterparty. Accounts receivable or
accounts payable may also be available to offset exposures in the event of bankruptcy. These amounts are not included in the tables below.
Derivative Assets
(in millions)
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
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
December 31, 2022
$ 594
(64)
$ 530
$ 242
(97)
$ 145
$ 226
(33)
$ 193
$ 104
(40)
$ 64
$ 140
(30)
$ 110
$ 108
(57)
$ 51
$ 122
(30)
$ 92
$ 108
(57)
$ 51
$ 17
—
$ 17
$ —
—
$ —
$
$
5
—
5
$ —
—
$ —
$ 110
—
$ 110
$ —
—
$ —
$ —
—
$ —
$ —
—
$ —
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, 2022
Derivative Assets
(in millions)
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
Current
Gross amounts recognized
Gross amounts offset
Net amounts presented in Current Liabilities: Other
Noncurrent
Gross amounts recognized
Gross amounts offset
$ 193
(49)
$ 144
$ 244
(59)
Net amounts presented in Other Noncurrent Liabilities: Other
$ 185
$ 96
(15)
$ 81
$ 31
(29)
$
2
$ 36
(18)
$ 18
$ 30
(30)
$ —
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
$ 18
(18)
$ —
$ 30
(30)
$ —
$ 19
—
$ 19
$ —
—
$ —
December 31, 2021
$ —
—
$ —
$
$
2
—
2
$ 16
(16)
$ —
$ —
—
$ —
$ 27
—
$ 27
$ 141
—
$ 141
$
$
$
$
74
(9)
65
50
(8)
42
$ —
—
$ —
$ —
—
$ —
December 31, 2021
$
$
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
Current
Gross amounts recognized
Gross amounts offset
Net amounts presented in Current Liabilities: Other
Noncurrent
Gross amounts recognized
Gross amounts offset
$ 157
(11)
$ 146
$ 171
(12)
Net amounts presented in Other Noncurrent Liabilities: Other
$ 159
$
$
$
$
26
(6)
20
9
(8)
1
$
$
$
19
(5)
14
5
(5)
$ —
164
$
5
(5)
$ —
$
5
(5)
$ —
$
$
14
—
14
$ —
—
$ —
$
$
$
$
1
—
1
4
—
4
$
$
$
$
13
—
13
14
—
14
$
$
21
—
21
$ 118
—
$ 118
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) OBJECTIVE CREDIT CONTINGENT FEATURES
Certain derivative contracts contain objective credit contingent features. These features include the requirement to post cash collateral or letters of credit if
specific events occur, such as a credit rating downgrade below investment grade. The following tables show information with respect to derivative contracts that are
in a net liability position and contain objective credit risk-related payment provisions.
(in millions)
Aggregate fair value of derivatives in a net liability position
Fair value of collateral already posted
Additional cash collateral or letters of credit in the event credit
risk-related contingent features were triggered
(in millions)
Aggregate fair value of derivatives in a net liability position
Fair value of collateral already posted
Additional cash collateral or letters of credit in the event credit
risk-related contingent features were triggered
$
$
Duke
Energy
141
—
141
Duke
Energy
32
—
32
December 31, 2022
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
$
86
—
86
$
55
—
55
$
48
—
48
$
7
—
7
December 31, 2021
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
$
18
—
18
$
14
—
14
$
10
—
10
$
4
—
4
The Duke Energy Registrants have elected to offset cash collateral and fair values of derivatives. For amounts to be netted, the derivative and cash collateral
must be executed with the same counterparty under the same master netting arrangement.
16.
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, 2022, and 2021.
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.
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)
(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, 2022
December 31, 2021
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$ —
3,658
1
—
2
—
$
3,661
$ —
21
—
—
—
—
$
$
21
3,682
$ —
105
85
39
112
18
$ 359
$ —
16
12
3
2
3
$
36
$ 395
$
215
5,871
641
330
1,423
156
$ 8,636
$
$
22
128
84
78
62
41
415
$ 9,051
$ —
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
$
160
7,350
829
314
1,568
180
$ 10,401
$
$
36
156
119
80
56
45
492
$ 10,893
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,
2022, 2021 and 2020, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
DUKE ENERGY CAROLINAS
Years Ended December 31,
2022
2021
2020
$
201
316
28
151
$
724
141
56
54
$ 366
174
96
51
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, 2022
December 31, 2021
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
—
2,147
1
—
1
—
2,149
$
$
—
51
62
10
51
18
$
192
$
117
3,367
401
64
685
148
4,782
$
$
—
2,887
24
2
16
3
2,932
$
$
— $
19
4
—
3
1
27
$
53
4,265
506
48
712
175
5,759
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) 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,
2022, 2021 and 2020, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
PROGRESS ENERGY
Years Ended December 31,
2022
2021
2020
$
124
177
22
86
$
440
96
38
37
$
64
99
60
37
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, 2022
December 31, 2021
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
$
$
$
—
1,511
—
—
1
—
1,512
—
—
—
1,512
$ —
54
23
29
61
—
$
167
$ —
—
$ —
$
167
$
$
$
$
$
98
2,504
240
266
738
8
3,854
11
25
36
3,890
$
$
$
$
$
—
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
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,
2022, 2021 and 2020, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
Years Ended December 31,
2022
2021
2020
$
77
139
6
48
$
284
45
16
14
$ 302
75
24
13
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) DUKE ENERGY PROGRESS
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt
investments are classified as AFS.
(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, 2022
December 31, 2021
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
$
$
$
—
1,431
—
—
1
—
1,432
—
—
1,432
$
$
$
$
$
—
54
22
29
37
—
142
—
—
142
$
$
$
$
$
56
2,411
230
266
460
7
3,430
9
9
3,439
$
$
$
$
$
—
1,915
15
12
15
—
1,957
—
—
1,957
$
$
$
$
$
— $
23
2
1
3
—
29
$
— $
— $
29
$
94
2,970
282
266
472
5
4,089
16
16
4,105
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, 2022,
2021 and 2020, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
DUKE ENERGY FLORIDA
Years Ended December 31,
2022
2021
2020
$
76
136
6
44
$
283
44
15
13
$
52
59
24
13
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
Other debt securities
Total NDTF Investments(a)
Other Investments
Cash and cash equivalents
Municipal bonds
Total Other Investments
Total Investments
December 31, 2022
December 31, 2021
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
$
$
$
—
80
—
—
—
80
—
—
—
80
$ —
—
1
24
—
$
25
$ —
—
$ —
$
25
$
$
$
$
$
42
93
10
278
1
424
1
25
26
450
$
$
$
$
$
—
103
—
—
—
103
—
2
2
105
$ —
1
—
6
—
$
7
$ —
—
$ —
$
7
$
$
$
$
$
13
115
41
384
—
553
3
26
29
582
(a) During the years ended December 31, 2022, and 2021, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3.
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) 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, 2022,
2021 and 2020, were as follows.
(in millions)
FV-NI:
Realized gains
Realized losses
AFS:
Realized gains
Realized losses
DUKE ENERGY INDIANA
Years Ended December 31,
2022
2021
2020
$
1
3
—
4
$
1
1
1
1
$ 250
16
—
—
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, 2022
December 31, 2021
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
Gross Unrealized
Holding Gains
Gross Unrealized
Holding Losses
Estimated
Fair Value
$
$
—
2
—
—
—
2
$ —
16
1
3
—
$
20
$
$
1
79
8
45
7
140
$
$
—
6
—
1
—
7
$ —
—
—
1
—
$
1
$
$
—
97
6
46
12
161
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,
2022, 2021 and 2020, 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
17. FAIR VALUE MEASUREMENTS
December 31, 2022
Duke
Energy
137
807
469
1,402
2,815
$
$
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Indiana
$
7
287
230
774
$
89
443
193
552
$
1,298
$
1,277
$
$
24
244
178
517
963
$
$
65
199
15
35
314
$
$
8
22
6
24
60
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
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)
within the fair value hierarchy. These investments are measured at fair value
using the net asset value per share practical expedient. The net asset value
is derived based on the investment cost, less any impairment, plus or minus
changes resulting from observable price changes for an identical or similar
investment of the same issuer.
Fair value accounting guidance permits entities to elect to measure
certain financial instruments that are not required to be accounted for at fair
value, such as equity method investments or the company’s own debt, at fair
value. The Duke Energy Registrants have not elected to record any of these
items at fair value.
Valuation methods of the primary fair value measurements disclosed
below are as follows.
Investments in equity securities
The majority of investments in equity securities are valued using Level 1
measurements. Investments in equity securities are typically valued at the
closing price in the principal active market as of the last business day of the
quarter. Principal active markets for equity prices include published exchanges
such as the NYSE and Nasdaq Stock Market. Foreign equity prices are translated
from their trading currency using the currency exchange rate in effect at the
close of the principal active market. There was no after-hours market activity
that was required to be reflected in the reported fair value measurements.
Investments in debt securities
Most investments in debt securities are valued using Level 2 measurements
because the valuations use interest rate curves and credit spreads applied to the
terms of the debt instrument (maturity and coupon interest rate) and consider the
counterparty credit rating. If the market for a particular fixed-income security is
relatively inactive or illiquid, the measurement is Level 3.
DUKE ENERGY
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. Derivatives
related to interest rate risk for the Commercial Renewables Disposal Groups are
included in the following disclosures. See Note 2 for further information.
Other fair value considerations
See Note 2 for further information on the valuation of the Commercial
Renewables Disposal Groups. See Note 12 for a discussion of the valuation of
goodwill and intangible assets.
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 15. See Note 16 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)
December 31, 2022
Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
$ —
42
—
—
—
—
—
42
—
$ 42
$
215
5,871
2,550
128
265
22
836
9,887
(437)
$
215
5,829
780
128
55
22
1
7,030
(16)
$ —
—
1,770
—
210
—
801
2,781
(421)
$ —
—
—
—
—
—
34
34
—
34
$ 9,450
$ 7,014
$ 2,360
$
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) (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
(327)
$
160
7,300
967
156
45
36
3
8,667
(13)
$ —
—
1,924
—
255
—
293
2,472
(314)
$10,886
$ 8,654
$ 2,158
$
$ —
—
—
—
—
—
24
24
—
24
$ —
50
—
—
—
—
—
50
—
$
50
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
Purchases, sales, issuances and settlements:
Purchases
Settlements
Total gains (losses) included on the Consolidated Balance Sheet
Balance at end of period
DUKE ENERGY CAROLINAS
Derivatives (net)
Years Ended December 31,
2022
$
24
78
(36)
(32)
$
34
$
2021
$
8
21
(20)
15
24
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, 2022
Total Fair Value
Level 1
Level 2
Not Categorized
$
117
$
117
$ —
$ —
3,367
1,298
330
5,112
(127)
3,325
323
—
3,765
—
—
975
330
1,305
(127)
$ 4,985
$ 3,765
$1,178
$
42
—
—
42
—
42
December 31, 2021
Total Fair Value
Level 1
Level 2
Not Categorized
$
53
4,265
1,441
162
5,921
(35)
$
53
4,215
339
—
4,607
—
$ —
—
1,102
162
1,264
(35)
$ —
50
—
—
50
—
50
$ 5,886
$ 4,607
$ 1,229
$
171
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, 2022
December 31, 2021
Total Fair Value
Level 1
Level 2 Total Fair Value
Level 1
Level 2
$
98
2,504
1,252
25
11
248
4,138
(66)
$
98
2,504
457
—
11
—
3,070
—
$ —
—
795
25
—
248
1,068
$
107
3,085
1,450
26
20
124
4,812
(66)
(24)
$
107
3,085
628
—
20
—
3,840
—
$ —
—
822
26
—
124
972
(24)
$ 4,072
$ 3,070
$ 1,002
$ 4,788
$ 3,840
$ 948
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, 2022
December 31, 2021
Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
$
56
2,411
963
9
230
3,669
(48)
$
56
2,411
225
9
—
2,701
—
$ —
—
738
—
230
968
(48)
$
94
2,970
1,025
16
124
4,229
(10)
$
94
2,970
289
16
—
3,369
—
$ —
—
736
—
124
860
(10)
$ 3,621
$ 2,701
$ 920
$ 4,219
$ 3,369
$ 850
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
December 31, 2022
December 31, 2021
Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
$ —
$
—
57
25
—
17
99
(19)
$
80
13
115
425
26
3
—
582
(14)
$
13
115
339
—
3
—
470
—
$ —
—
86
26
—
—
112
(14)
$
568
$
470
$
98
$
$
42
93
289
25
1
17
467
(19)
$
448
$
42
93
232
—
1
—
368
—
368
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 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, 2022, and 2021.
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, 2022
December 31, 2021
Total Fair Value
Level 1
Level 2 Level 3 Total Fair Value
Level 1
Level 2 Level 3
$ 79
$ 79
$ — $ —
$ 97
$ 97
$ — $ —
60
1
110
250
(16)
—
1
—
80
(16)
60
—
81
141
—
—
—
29
29
—
64
—
23
184
(27)
—
—
1
98
(13)
64
—
—
—
22
—
64
22
(14) —
$ 234
$ 64
$ 141
$ 29
$ 157
$ 85
$
50
$ 22
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
(in millions)
Balance at beginning of period
Purchases, sales, issuances and settlements:
Purchases
Settlements
Total (losses) gains included on the Consolidated Balance Sheet
Balance at end of period
PIEDMONT
Derivatives (net)
Years Ended December 31,
2022
$ 22
74
(32)
(35)
2021
$ 6
18
(16)
14
$ 29
$ 22
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, 2022
December 31, 2021
Total Fair Value Level 1 Level 2
Total Fair Value
Level 1
Level 2
$ — $ — $ —
— (168)
(168)
$ (168)
$ — $ (168)
$
3
(139)
$ (136)
$
$
3
—
$ —
(139)
3
$ (139)
173
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, 2022
$
5
RTO auction pricing
FTR price – per MWh
$ 0.89 — $
6.25
$
3.35
29
RTO auction pricing
FTR price – per MWh
0.09 — 21.79
2.74
Investment Type
Duke Energy Ohio
FTRs
Duke Energy Indiana
FTRs
Duke Energy
Total Level 3 derivatives
$
34
December 31, 2021
Fair Value
(in millions)
Valuation Technique
Unobservable Input
Range
Weighted
Average
Range
$
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 Ohio
FTRs
Duke Energy Indiana
FTRs
Duke Energy
Total Level 3 derivatives
$ 24
OTHER FAIR VALUE DISCLOSURES
The fair value and book value of long-term debt, including current maturities, is summarized in the following table. The following disclosures include debt
attributable to the Commercial Renewables Disposal Groups. See Note 2 for further details. 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, 2022
December 31, 2021
Book Value
Fair Value
Book Value
Fair Value
$ 71,215
14,266
22,439
11,087
9,709
3,245
4,307
3,363
$ 63,454
12,943
20,467
9,689
8,991
2,927
3,913
2,940
$ 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
(a) Book value of long-term debt includes $1.17 billion as of December 31, 2022, and $1.25 billion as of December 31, 2021, 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, 2022, and December 31, 2021, fair value of cash and cash equivalents, accounts and notes receivable, accounts payable, notes payable
and commercial paper, and nonrecourse notes payable of VIEs are not materially different from their carrying amounts because of the short-term nature of these
instruments and/or because the stated rates approximate market rates.
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) 18. 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, 2022, 2021 and 2020, 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, 2022
Amounts borrowed at December 31, 2021
Restricted Receivables at December 31, 2022
Restricted Receivables at December 31, 2021
Duke Energy
Duke Energy
Carolinas
Duke Energy
Progress
Duke Energy
Florida
CRC
DERF
February 2025
$ 350
350
350
917
587
January 2025
$ 500
471
475
928
844
DEPR
April 2025
$ 400
400
350
793
574
DEFR
April 2023
$ 250
250
250
490
427
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) 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,
$
2022
6
55
41
826
9
56
890
$
2021
5
54
39
883
9
56
946
Storm Recovery Bonds – Duke Energy Carolinas NC Storm Funding and Duke Energy Progress NC Storm Funding
Duke Energy Carolinas NC Storm Funding, LLC. (DECNCSF) and Duke Energy Progress NC Storm Funding, LLC. (DEPNCSF) are bankruptcy remote, wholly owned
special purpose subsidiaries of Duke Energy Carolinas and Duke Energy Progress, respectively. These entities were formed in 2021 for the sole purpose of issuing
storm recovery bonds to finance certain of Duke Energy Carolinas’ and Duke Energy Progress’ unrecovered regulatory assets related to storm costs.
In November 2021, DECNCSF and DEPNCSF issued $237 million and $770 million of senior secured bonds, respectively and used the proceeds to acquire storm
recovery property from Duke Energy Carolinas and Duke Energy Progress. The storm recovery property was created by state legislation and NCUC financing orders
for the purpose of financing storm costs incurred in 2018 and 2019. The storm recovery property acquired includes the right to impose, bill, collect and adjust a
non-bypassable charge from all Duke Energy Carolinas’ and Duke Energy Progress’ retail customers until the bonds are paid in full and all financing costs have been
recovered. The storm recovery bonds are secured by the storm recovery property and cash collections from the storm recovery charges are the sole source of funds to
satisfy the debt obligation. The bondholders have no recourse to Duke Energy Carolinas or Duke Energy Progress. For additional information, see Notes 4 and 7.
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
Current Assets: Other
Other Noncurrent Assets: Regulatory assets
Other Noncurrent Assets: Other
Current maturities of long-term debt
Current Liabilities: Other
Long-Term Debt
Duke Energy Carolinas
Duke Energy Progress
December 31,
December 31,
2022
2021
$
12
8
208
1
10
3
$ 219
$
12
—
220
1
5
1
$ 228
$
2022
39
29
681
2
34
8
$ 714
2021
39
—
720
4
15
2
747
$
$
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) NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Consolidated Balance Sheets.
(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, 2022
Duke Energy
Natural Gas
Investments
$ —
43
45
$ 88
59
47
$ 106
$ (18)
Duke
Energy
Ohio
$ 198
—
—
$ 198
—
—
$ —
$ 198
December 31, 2021
Duke Energy
Natural Gas
Investments
$ —
15
61
$ 76
47
54
$ 101
$ (25)
Duke
Energy
Ohio
$ 79
—
—
$ 79
—
—
$ —
$ 79
Duke
Energy
Indiana
$ 317
—
—
$ 317
—
—
$ —
$ 317
Duke
Energy
Indiana
$ 97
—
—
$ 97
—
—
$ —
$ 97
The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above.
Natural Gas Investments
Duke Energy has investments in various joint ventures including pipeline
and renewable natural gas projects. These entities are considered VIEs due to
having insufficient equity to finance their own activities without subordinated
financial support. Duke Energy does not have the power to direct the activities
that most significantly impact the economic performance, the obligation to
absorb losses or the right to receive benefits of these VIEs and therefore does
not consolidate these entities.
CRC
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 4, 8 and 13
for further information regarding this transaction.
See discussion under Consolidated VIEs for additional information related
to CRC.
Amounts included in Receivables from affiliated companies in the above
table for Duke Energy Ohio and Duke Energy Indiana reflect their retained
interest in receivables sold to CRC. These subordinated notes held by Duke
Energy Ohio and Duke Energy Indiana are stated at fair value. Carrying values of
retained interests are determined by allocating carrying value of the receivables
between assets sold and interests retained based on relative fair value. The
allocated bases of the subordinated notes are not materially different than
their face value because (i) the receivables generally turnover in less than
two months, (ii) credit losses are reasonably predictable due to the broad
customer base and lack of significant concentration and (iii) the equity in CRC
is subordinate to all retained interests and thus would absorb losses first.
The hypothetical effect on fair value of the retained interests assuming both
a 10% and a 20% unfavorable variation in credit losses or discount rates is
not material due to the short turnover of receivables and historically low credit
loss history. Interest accrues to Duke Energy Ohio and Duke Energy Indiana
on the retained interests using the acceptable yield method. This method
generally approximates the stated rate on the notes since the allocated basis
and the face value are nearly equivalent. An impairment charge is recorded
against the carrying value of both retained interests and purchased beneficial
interest whenever it is determined that an other-than-temporary impairment
has occurred.
177
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) 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
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
2022
0.5%
2.7%
13.5%
2021
0.5%
1.1%
13.5%
2022
0.3%
2.7%
11.3%
2021
0.3%
1.1%
11.3%
Duke Energy Ohio
Duke Energy Indiana
December 31,
December 31,
2022
$ 423
198
$ 225
2021
$ 269
79
$ 190
2022
$ 508
317
$ 191
2021
328
97
231
$
$
Duke Energy Ohio
Duke Energy Indiana
Years Ended December 31,
Years Ended December 31,
2022
2021
2020
2022
2021
2020
$2,562
18
2,424
1
10
$2,023
10
2,018
1
4
$1,905
10
1,875
1
4
$3,744
26
$ 2,909
13
$ 2,631
12
3,498
2
15
2,909
1
6
2,586
1
5
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 Daily Simple SOFR plus a fixed rate of 1%.
19. 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
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) 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, EU&I and GU&I.
Electric Utilities and Infrastructure
EU&I 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).
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
2023
2024
2025
2026
2027
Thereafter
$
61
8
53
11
$
66
8
58
16
$
7
—
7
17
$
7
—
7
15
$
7
—
7
7
$
36
—
36
5
Total
$ 184
16
168
71
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
GU&I 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.
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) (in millions)
Piedmont
Other
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 GU&I segment
include minimum margin contracts and supply arrangements with municipalities
and power generation facilities. Revenues for related sales are recognized
monthly as natural gas is delivered and stand-ready service is provided,
consistent with invoiced amounts and unbilled estimates. Estimated remaining
performance obligations are as follows:
Remaining Performance Obligations
2023
$
68
2024
$
62
2025
$
61
2026
$
51
2027
Thereafter
$
49
$
241
Total
$ 532
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 EU&I and GU&I 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. 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
Other
Revenue from contracts with customers
Total revenue from contracts with customers
Other revenue sources(a)
Total revenues
Year Ended December 31, 2022
Duke
Energy
$ 11,377
7,356
3,504
2,856
795
Duke
Energy
Carolinas
$ 3,275
2,396
1,251
561
372
Progress
Energy
$ 5,812
3,396
1,095
1,785
994
Duke
Energy
Progress
$2,378
1,480
770
1,346
768
Duke
Energy
Florida
$ 3,434
1,916
325
439
226
Duke
Energy
Ohio
$ 862
517
202
127
61
Duke
Energy
Indiana
$1,430
1,049
956
383
19
Piedmont
$ —
—
—
—
—
$ 25,888
$ 7,855
$ 13,082
$6,742
$ 6,340
$ 1,769
$3,837
$ —
$ 1,462
765
170
—
360
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$ —
—
—
—
—
$ 488
180
24
—
25
$ —
—
—
—
—
$ 974
585
144
94
271
$ 2,757
$ —
$ —
$ —
$ —
$ 717
$ —
$2,068
$
30
$ 28,675
93
$
$ 28,768
$ —
$ 7,855
2
$
$ 7,857
$ —
$ 13,082
43
$
$ 13,125
$ —
$6,742
$
11
$6,753
$ —
$ 6,340
13
$
$ 6,353
$ —
$ 2,486
28
$
$ 2,514
$ —
$3,837
85
$
$3,922
$ —
$2,068
56
$
$2,124
(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.
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) (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
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
$
29
$ 24,486
135
$
$ 24,621
$ —
$ 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.
(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
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
$
26
$ 23,253
113
$
$ 23,366
$ —
$ 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.
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) 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
Balance at December 31, 2021
Write-Offs
Credit Loss Expense
Other Adjustments
Balance at December 31, 2022
(58)
53
(20)
$
121
(158)
160
93
216
$
(21)
27
13
42
(73)
40
59
68
$
$
Progress
Energy
Duke
Energy
Progress
$
$
$
$
16
2
(23)
29
13
37
(25)
25
(1)
36
(70)
72
43
81
$
$
$
$
8
1
(8)
9
13
23
(12)
11
(1)
21
(36)
17
42
44
Duke
Energy
Florida
$
7
1
(14)
20
—
$
14
(13)
14
1
16
(34)
55
(1)
36
$
$
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
$
$
$
4
—
—
—
—
4
—
—
—
4
—
2
—
6
$
$
$
$
3
—
—
—
—
3
—
—
—
3
—
1
—
4
$
$
6
1
(6)
11
—
12
(9)
7
5
$
15
(12)
11
—
14
$
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.
(in millions)
Unbilled Receivables(a)(b)
Current
1-30 days past due
31-60 days past due
61-90 days past due
91+ days past due
Deferred Payment Arrangements(c)
Trade and Other Receivables
Duke
Energy
$ 1,457
2,347
261
123
74
209
160
$ 4,631
Duke
Energy
Carolinas
$ 486
577
96
23
25
70
57
$ 1,334
December 31, 2022
Progress
Energy
$
355
1,059
60
61
18
74
62
$ 1,689
Duke
Energy
Progress
$ 232
637
15
49
9
27
35
$1,004
Duke
Energy
Florida
$ 123
417
45
12
9
47
27
$ 680
Duke
Energy
Ohio
Duke
Energy
Indiana
$
$
20
15
5
6
3
26
4
79
$
28
52
17
2
11
6
—
$ 116
Piedmont
$ 160
265
15
3
2
4
1
$ 450
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) (in millions)
Unbilled Receivables(a)(b)
Current
1-30 days past due
31-60 days past due
61-90 days past due
91+ days past due
Deferred Payment Arrangements(c)
Trade and Other Receivables
$
Duke
Energy
922
1,941
288
98
118
161
115
$ 3,643
Duke
Energy
Carolinas
$ 316
592
77
30
32
84
55
$ 1,186
December 31, 2021
Progress
Energy
$
266
716
128
49
48
37
45
$ 1,289
Duke
Energy
Progress
$ 193
405
44
21
28
9
22
$ 722
Duke
Energy
Florida
$
$
73
311
82
28
20
28
23
565
Duke
Energy
Ohio
Duke
Energy
Indiana
$
4
42
4
1
23
24
2
$
27
50
5
10
5
6
—
$
100
$ 103
Piedmont
$ 106
202
12
2
4
3
4
$ 333
(a) Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed and are included within Receivables and Receivables of VIEs on the
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 18 for further information. These receivables for unbilled revenues are $148 million and
$260 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2022, and $82 million and $121 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2021.
(c) Due to ongoing financial hardships impacting customers, Duke Energy has permitted customers to defer payment of past-due amounts through installment payment plans.
20. 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.
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) (in millions, except per share amounts)
Net Income available to Duke Energy common stockholders
Less: (Loss) Income from discontinued operations attributable to Duke Energy common stockholders
Accumulated preferred stock dividends adjustment
Less: Impact of participating securities
Income from continuing operations available to Duke Energy common stockholders
Loss from discontinued operations, net of tax
Add: Loss attributable to NCI
(Loss) Income from discontinued operations attributable 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
(Loss) Earnings Per Share from discontinued operations attributable 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(b)
Dividends declared on Series B preferred stock per share(c)
Years Ended December 31,
2022
2021
2020
$ 2,444
(1,215)
—
2
$ 3,657
$ (1,323)
108
$ (1,215)
770
—
770
$ 3,802
200
—
3
$ 3,599
$ (144)
344
200
769
—
769
$
$
$
$ 1,270
289
1
2
980
(7)
296
289
737
1
738
$
$
4.74
$
4.68
$
1.33
$ (1.57)
2
$
3.98
$ 1.437
$ 48.750
$
0.26
2
$
3.90
$ 1.437
$48.750
$
0.39
2
$
3.82
$ 1.437
$49.292
(a) Performance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.
(b) 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock dividends are payable quarterly in arrears on the 16th day of March, June, September and December. The preferred stock has a $25 liquidation preference per depositary share.
(c) 4.875% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock dividends are payable semiannually in arrears on the 16th day of March and September. The preferred stock has a $1,000 liquidation
preference per share. On September 16, 2024, the First Call Date, and any fifth anniversary of the First Call Date, the dividend rate will reset based on the then current five-year U.S. Treasury rate plus a spread of 3.388%.
Common Stock
In November 2022, Duke Energy filed a prospectus supplement and
executed an EDA under which it may sell up to $1.5 billion of its common
stock through a new ATM offering program, including an equity forward sales
component. Under the terms of the EDA, Duke Energy may issue and sell shares
of common stock through September 2025.
Preferred Stock
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.
The Series B Preferred Stock has no maturity or mandatory redemption
date, is not redeemable at the option of the holders and includes separate call
options. The first call option allows Duke Energy to call the Series B Preferred
Stock at a redemption price of $1,020 per share, in whole but not in part, at any
time within 120 days after a ratings event. The second call option allows Duke
Energy to call the preferred stock, in whole or in part, on the First Call Date or any
subsequent Reset Date at a redemption price in cash equal to $1,000 per share.
Duke Energy is also required to redeem all accumulated and unpaid dividends if
either call option is exercised.
Dividends issued on its Series A and Series B Preferred Stock are
subject to approval by the Board of Directors. However, the deferral of
dividend payments on the preferred stock prohibits the declaration of common
stock dividends.
The Series A and Series B Preferred Stock rank, with respect to dividends
and distributions upon liquidation or dissolution:
• senior to Common Stock and to each other class or series of capital stock
established after the original issue date of the Series A and Series B
Preferred Stock that is expressly made subordinated to the Series A and
Series B Preferred Stock;
• on a parity with any class or series of capital stock established after the
original issue date of the Series A and Series B Preferred Stock that is
not expressly made senior or subordinated to the Series A or Series B
Preferred Stock;
• junior to any class or series of capital stock established after the
original issue date of the Series A and Series B Preferred Stock that is
expressly made senior to the Series A or Series B Preferred Stock;
• junior to all existing and future indebtedness (including indebtedness
outstanding under Duke Energy’s credit facilities, unsecured senior
notes, junior subordinated debentures and commercial paper) and other
liabilities with respect to assets available to satisfy claims against Duke
Energy; and
• structurally subordinated to existing and future indebtedness and other
liabilities of Duke Energy’s subsidiaries and future preferred stock
of subsidiaries.
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.
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) 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.
21. SEVERANCE
During 2022, Duke Energy identified opportunities to eliminate work and
create sustainable savings through a workload reduction initiative with a focus
on process improvement through digital technology, governance simplification
and elimination of low-value work. As a result, Duke Energy extended
involuntary severance benefits to certain employees in specific areas as a part
of this initiative.
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 233 employees in 2022, 290 employees in 2021
and 30 employees in 2020, by the Duke Energy Registrants within Operation, maintenance and other on the Consolidated Statements of Operations.
(in millions)
Year Ended December 31, 2022(a)(b)
Year Ended December 31, 2021(c)(d)
Year Ended December 31, 2020(e)(f)
Duke
Energy
$ 65
69
(85)
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
$ 40
$
33
(58)
20
26
(28)
$
17
20
(31)
$ 3
$ 1
$
6
3
2
—
2
3
—
Piedmont
$ 2
2
—
(a)
(b)
(c)
(d)
(e)
(f)
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 2021 severance charges of approximately $(19) million, $(6) million, $(8) million, $(4) million, $(4) million, $(1) million, $(2) million and $(1) million for Duke Energy, Duke Energy
Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont, respectively.
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
Provision/Adjustments
Cash Reductions
Balance at December 31, 2022
Duke
Energy
$ 11
36
(8)
$ 39
33
(8)
$ 64
Duke
Energy
Carolinas
Progress
Energy
$
$
3
1
(2)
2
4
—
$
6
$ 2
1
(1)
$ 2
14
(1)
$ 15
185
Duke
Energy
Progress
$ 1
1
(1)
$ 1
3
—
$ 4
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 2
—
(1)
$ 1
1
—
$ 2
$—
—
—
$—
—
—
$—
$ 1
—
(1)
$—
—
—
$—
$ —
—
—
$ —
1
—
$ 1
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) 22. STOCK-BASED COMPENSATION
The Duke Energy Corporation 2015 Long-Term Incentive Plan (the 2015
The total grant date fair value of shares vested during the years ended
Plan) provides for the grant of stock-based compensation awards to employees
and outside directors. The 2015 Plan reserved 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,
2022
$ 74
27
27
17
10
5
7
4
2021
$ 64
23
24
15
9
5
6
3
$
2020
61
22
23
15
9
4
6
3
Duke Energy’s pretax stock-based compensation costs, the tax benefit
associated with stock-based compensation expense and stock-based
compensation costs capitalized are included in the following table.
(in millions)
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
Years Ended December 31,
2022
$ 58
42
$100
5
$ 95
$ 21
2021
2020
$ 49
39
$ 88
5
$ 83
$ 19
$ 46
38
$ 84
5
$ 79
$ 18
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,
2022
654
$ 64
2021
673
$ 59
2020
498
$ 50
The following table summarizes information about RSU awards outstanding.
Shares
(in thousands)
Weighted Average
Grant Date Fair Value
(per share)
Outstanding at December 31, 2021
Granted
Vested
Forfeited
Outstanding at December 31, 2022
RSU awards expected to vest
1,043
654
(527)
(73)
1,097
1,056
$
92
98
93
94
95
95
186
December 31, 2022, 2021 and 2020, was $49 million, $45 million and
$43 million, respectively. At December 31, 2022, Duke Energy had $34 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 to
the extent 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
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 2022, the model used a risk-free
interest rate of 1.78%, which reflects the yield on three-year Treasury bonds as
of the grant date, and an expected volatility of 26.8% 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,
2022
408
$ 40
2021
2020
380
319
$ 33
$ 34
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, 2021
Granted
Vested
Forfeited
Outstanding at December 31, 2022
Stock-based performance awards expected to vest
952
408
(297)
(30)
1,033
1,006
$
93
99
86
96
97
97
The total grant date fair value of shares vested during the years ended
December 31, 2022, and 2021, was $25 million and $25 million, respectively. At
December 31, 2022, Duke Energy had $22 million of unrecognized compensation cost,
which is expected to be recognized over a weighted average period of 22 months.
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. 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, which consist of the Duke Energy Retirement Cash Balance Plan (RCBP),
which is an active plan, and the Duke Energy Legacy Pension Plan (DELPP),
which is an inactive plan. These 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
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 on
December 31, 2022, 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, 2022, were primarily attributable to the
increase in the discount rate used to measure plan 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.
As a result of the application of settlement accounting due to total
lump-sum benefit payments exceeding the settlement threshold (defined as the
sum of service cost and interest cost on projected benefit obligation components
of net periodic benefit costs) for one of its qualified pension plans, Duke Energy
recognized settlement charges of $117 million, of which $95 million was
recorded to Regulatory Assets within Other Noncurrent Assets on the Condensed
Consolidated Balance Sheets and $22 million was recorded to Other Income and
Expenses, net, within the Condensed Consolidated Statement of Operations as
of December 31, 2022.
Settlement charges recognized by the Subsidiary Registrants as of
December 31, 2022, which represent amounts allocated by Duke Energy
for employees of the Subsidiary Registrants and allocated charges for their
proportionate share of settlement charges for employees of Duke Energy’s
shared services affiliate, and recorded to Regulatory Assets within Other
Noncurrent Assets on the Condensed Consolidated Balance Sheets were
$35 million for Duke Energy Carolinas, $23 million for Progress Energy,
$16 million for Duke Energy Progress, $7 million for Duke Energy Florida,
$8 million for Duke Energy Indiana and $29 million for Piedmont. Settlement
charges recognized by the Subsidiary Registrants as of December 31, 2022,
recorded to Other Income and Expenses, net, within the Condensed Consolidated
Statement of Operations were $3 million for Duke Energy Carolinas, $5 million
for Progress Energy, $5 million for Duke Energy Progress, $1 million for Duke
Energy Florida, $5 million for Duke Energy Ohio and $6 million for Piedmont.
The settlement charges reflect the recognition of a pro-rata portion of
previously unrecognized actuarial losses, equal to the percentage of reduction in
the projected benefit obligation resulting from total lump-sum benefit payments
as of December 31, 2022. Settlement charges recognized as a regulatory
asset within Other Noncurrent Assets on the Consolidated Balance Sheets are
amortized over the average remaining service period for participants in the
plan. Amortization of settlement charges is disclosed in the tables below as a
component of net periodic pension costs.
Effective December 31, 2022, Duke Energy Florida changed its method
for calculating the market related value of plan assets (MRVA) from the fair
value method to a method that recognizes changes in fair value of its plan
assets over a five-year period. This represents a change in regulatory treatment
that will serve to mitigate the impact of market volatility on retail customer
rates, resulting in the timing of net periodic pension cost recognition that is
more consistent with treatment of the related cost in the ratemaking process.
The three-year retrospective impact of this method change of $24 million
was recognized by Duke Energy, Progress Energy and Duke Energy Florida,
respectively, and was recorded to Other Income and Expenses, net, within the
Condensed Consolidated Statement of Operations and has been disclosed in the
tables below as a component of net periodic pension costs.
Net periodic benefit costs disclosed in the tables below represent the cost
of the respective benefit plan for the periods presented prior to capitalization of
amounts reflected as Net property, plant and equipment, on the Consolidated
Balance Sheets. Only the service cost component of net periodic benefit
costs is eligible to be capitalized. The remaining non-capitalized portions of
net periodic benefit costs are classified as either: (1) service cost, which is
recorded in Operations, maintenance and other on the Consolidated Statements
of Operations; or as (2) components of non-service cost, which is recorded in
Other income and expenses, net on the Consolidated Statements of Operations.
Amounts presented in the tables below for the Subsidiary Registrants represent
the amounts of pension and other post-retirement benefit cost allocated by
Duke Energy for employees of the Subsidiary Registrants. Additionally, the
Consolidated Statements of Operations of the Subsidiary Registrants also include
allocated net periodic benefit costs for their proportionate share of pension and
post-retirement benefit cost for employees of Duke Energy’s shared services
affiliate that provide support to the Subsidiary Registrants. However, in the tables
below, these amounts are only presented within the Duke Energy column (except
for amortization of settlement charges). These allocated amounts are included in
the governance and shared service costs discussed in Note 14.
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) 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. The
following table includes information related to the Duke Energy Registrants’
contributions to its qualified defined benefit pension plans. There were no
contributions made in the years ended December 31, 2021 and 2020.
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 58
$ 15
$ 13
$ 8
$ 5
$ 3
$ 5
$ 2
(in millions)
Contributions Made:
2022
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(c)
MRVA method change
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)
$
$
$
$
Year Ended December 31, 2022
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
152
249
(558)
81
(18)
32
24
(38)
$
$
48
59
(152)
16
(3)
9
—
(23)
$
$
43
77
(183)
23
—
8
24
(8)
$
$
25
35
(88)
12
—
7
—
(9)
$
$
17
41
(94)
12
—
1
24
1
$
$
4
13
(23)
4
—
5
—
3
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
$
9
20
(37)
9
(2)
1
—
$ —
Duke
Energy
Indiana
$
$
10
18
(40)
13
(2)
—
(1)
Piedmont
$
$
5
8
(24)
5
(7)
7
—
(6)
Piedmont
$
$
6
7
(20)
10
(9)
1
(5)
Year Ended December 31, 2020
(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(c)
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
$
$
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)
(a) Duke Energy amounts exclude $3 million, $3 million and $4 million for the years ended December 2022, 2021 and 2020, 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 2022, 2021 and 2020, respectively, of regulatory asset amortization resulting from purchase accounting adjustments
associated with Duke Energy’s merger with Cinergy in April 2006.
Includes settlement charges not deferred as a regulatory asset.
(c)
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) Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets
(in millions)
Regulatory assets, net increase (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
Year Ended December 31, 2022
Duke
Energy
Duke Energy
Carolinas
Progress
Energy
Duke Energy
Progress
Duke Energy
Florida
Duke Energy
Ohio
Duke Energy
Indiana
Piedmont
$ 367
$
(7)
—
37
$ 30
$ 221
$ —
—
—
$ —
$ 107
$ 101
$
(1)
—
2
$
1
$ —
—
—
$ —
$
5
$ —
—
—
$ —
$
(1)
$ (12)
$ —
—
—
$ —
$ —
—
—
$ —
$
9
$ —
—
—
$ —
(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
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)
$ —
$ —
—
—
$ —
$ —
—
—
$ —
$ —
—
—
$ —
$ —
—
—
$ —
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
Employer contributions
Actual return on plan assets
Benefits paid
Transfers
Plan assets at measurement date
Funded status of plan
Year Ended December 31, 2022
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 1,903
47
59
(301)
(159)
5
$ 1,554
$ 1,556
$ 2,365
15
(411)
(159)
5
$ 1,815
261
$
$ 2,560
40
77
(513)
(184)
(5)
$ 1,975
$ 1,959
$ 3,053
13
(506)
(184)
(5)
$ 2,371
396
$
$ 1,153
24
35
(197)
(101)
(5)
909
910
$
$
$ 1,421
8
(240)
(101)
(5)
$ 1,083
174
$
$ 1,392
16
41
(312)
(82)
—
$ 1,055
$ 1,038
$ 1,610
5
(262)
(82)
—
$ 1,271
216
$
$ 450
4
13
(84)
(50)
—
$ 333
$ 327
$ 438
3
(68)
(50)
—
$ 323
$ (10)
$ 680
8
20
(143)
(66)
—
$ 499
$ 495
$ 669
5
(107)
(66)
—
$ 501
2
$
$ 273
5
8
(47)
(69)
—
$ 170
$ 170
$ 334
2
(64)
(69)
—
$ 203
33
$
Duke
Energy
$ 8,207
145
249
(1,490)
(753)
—
$ 6,358
$ 6,324
$ 9,235
58
(1,547)
(753)
—
$ 6,993
635
$
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) 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 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
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, 2022
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 261
$ —
$ 261
$ 545
$ —
—
—
$ —
$ 396
$ —
$ 396
$ 670
$
$
(1)
—
3
2
$ 174
$ —
$ 174
$ 353
$ —
—
—
$ —
$ 216
$ —
$ 216
$ 316
$ —
—
—
$ —
$ 62
$ 72
$ (10)
$ 92
$ —
—
—
$ —
90
$
88
$
2
$
$ 178
$ —
—
—
$ —
$ 33
$ —
$ 33
$ 84
$ —
—
—
$ —
Duke
Energy
Carolinas
Progress
Energy
December 31, 2021
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 462
$ —
$ 462
$ 324
$ —
—
—
$ —
$ 494
$
1
$ 493
$ 563
$ —
—
1
1
$
$ 268
$ —
$ 268
$ 252
$ —
—
—
$ —
$ 219
$
1
$ 218
$ 311
$ —
—
—
$ —
$ 74
$ 86
$ (12)
$ 93
$ —
—
—
$ —
$ 100
$ 111
$ (11)
$ 190
$ —
—
—
$ —
$ 61
$ —
$ 61
$ 75
$ —
—
—
$ —
Duke
Energy
885
$
250
$
635
$
$ 2,016
$
$
(27)
(1)
129
101
Duke
Energy
$ 1,071
$
43
$ 1,028
$ 1,649
$
$
(20)
(1)
92
71
(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.
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) 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, 2022
Duke
Energy
$ 3,323
3,288
3,073
Duke
Energy
Ohio
$ 103
99
31
Duke
Energy
Indiana
$ 198
193
110
December 31, 2021
Duke
Energy
Ohio
$ 153
143
67
Duke
Energy
Indiana
$ 284
275
173
Assumptions Used for Pension Benefits Accounting
The discount rate used to determine the current year pension obligation and following year’s pension expense is based on a bond selection-settlement portfolio
approach. This approach develops a discount rate by selecting a portfolio of high-quality corporate bonds that generate sufficient cash flow to provide for projected
benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio
is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value
of the bonds selected.
The average remaining service period for participants in active plans and life expectancy of participants in inactive plans is 13 years for Duke Energy and Duke
Energy Progress, 15 years for Duke Energy Florida and Duke Energy Ohio, 14 years for Progress Energy and Duke Energy Indiana, 12 years for Duke Energy Carolinas
and nine years for Piedmont.
The following tables present the assumptions or range of assumptions used for pension benefit accounting.
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
2022
2021
2020
December 31,
5.60%
4.35%
3.50% – 4.00%
2.90% – 5.70%
4.00%
3.50% – 4.00%
6.50%
2.90%
4.00%
3.50% – 4.00%
2.60%
4.00%
3.50% – 4.00%
6.50%
2.60%
4.00%
3.50% – 4.00%
3.30%
4.00%
3.50% – 4.00%
6.85%
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) Expected Benefit Payments
(in millions)
Years ending December 31,
2023
2024
2025
2026
2027
2028-2032
NON-QUALIFIED PENSION PLANS
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 661
$ 186
$ 183
$
635
629
607
592
2,581
176
174
164
156
628
180
183
180
177
804
99
95
97
91
89
372
$ 83
$ 32
$ 45
$ 19
84
85
87
87
427
31
31
30
29
135
45
44
44
43
205
18
16
16
15
71
The accumulated benefit obligation, which equals the projected benefit obligation for non-qualified pension plans, was $232 million for Duke Energy, $10 million
for Duke Energy Carolinas, $78 million for Progress Energy, $24 million for Duke Energy Progress, $32 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, 2022.
Employer contributions, which equal benefits paid for non-qualified pension plans, were $24 million for Duke Energy, $1 million for Duke Energy Carolinas,
$10 million for Progress Energy, $3 million for Duke Energy Progress and $4 million for Duke Energy Florida for the year ended December 31, 2022. Employer
contributions were not material for Duke Energy Ohio, Duke Energy Indiana or Piedmont for the year ended December 31, 2022.
Net periodic pension costs for non-qualified pension plans were not material for the years ended December 31, 2022, 2021 or 2020.
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, 2022, 2021 or 2020.
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)
Duke
Energy
$
3
17
(10)
2
(8)
4
$
Duke
Energy
$
4
18
(11)
2
(13)
$ —
Year Ended December 31, 2022
Duke
Energy
Carolinas
Progress
Energy
$
1
$ —
Duke
Energy
Progress
$ —
4
(6)
—
(3)
(4)
$
7
—
1
(2)
6
$
4
—
1
(1)
4
$
Duke
Energy
Florida
$ —
3
—
1
(1)
3
$
Year Ended December 31, 2021
Duke
Energy
Carolinas
Progress
Energy
$
1
$
1
Duke
Energy
Progress
$ —
4
(7)
—
(4)
(6)
$
7
—
1
(2)
7
$
192
4
—
—
(1)
3
$
Duke
Energy
Florida
$ —
3
—
1
(1)
3
$
Duke
Energy
Ohio
$ —
1
—
—
—
1
$
Duke
Energy
Ohio
$ —
1
—
—
(1)
$ —
Duke
Energy
Indiana
$ —
1
—
—
—
1
$
Duke
Energy
Indiana
$
1
1
—
4
(1)
5
$
Piedmont
$ —
1
(2)
—
(2)
$ (3)
Piedmont
$ —
1
(2)
—
(2)
$ (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) (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, 2020
Duke
Energy
$
4
23
(13)
2
(14)
2
$
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
$
Duke
Energy
Ohio
$ —
1
—
—
(1)
$ —
Duke
Energy
Indiana
$
1
2
—
4
(1)
6
$
Piedmont
$ —
1
(2)
—
(2)
$ (3)
(a) Duke Energy amounts exclude $4 million, $5 million and $6 million for the years ended December 2022, 2021 and 2020, 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 $1 million for the years ended December 2022, 2021 and 2020, 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 and Liabilities
(in millions)
Regulatory assets, net (decrease) increase
Regulatory liabilities, net increase (decrease)
Accumulated other comprehensive (income) loss
Amortization of prior year actuarial gain
Net amount recognized in accumulated other
comprehensive income
(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
Duke
Energy
Carolinas
$ —
$ —
$ —
Year Ended December 31, 2022
Duke
Energy
Progress
$ (45)
$ —
Duke
Energy
Florida
$ (36)
$ —
Progress
Energy
$ (80)
$ —
Duke
Energy
Ohio
$ —
$ —
Duke
Energy
Indiana
$
$
(3)
19
Piedmont
$ —
(5)
$
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
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
$ (79)
27
$
$
$
1
1
Duke
Energy
$ (15)
23
$
$
$
(1)
(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 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
Plan amendments
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 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
Year Ended December 31, 2022
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 625
3
17
11
(80)
(71)
(68)
$ 149
1
4
2
(17)
(11)
(16)
$ 263
—
7
4
(43)
(37)
(26)
$ 437
$ 112
$ 168
$ 211
(31)
(68)
39
11
$ 162
$ (275)
$ 135
(19)
(16)
3
2
$ 105
(7)
$
$
(1)
—
(26)
23
4
$ —
$ (168)
$ 147
—
4
2
(27)
(18)
(13)
$
$
$
$
95
(2)
—
(13)
11
2
(2)
(97)
$
$
$
$
$
112
—
3
2
(16)
(19)
(13)
69
(2)
—
(13)
11
2
(2)
(71)
$ 25
—
1
1
(3)
—
(4)
$
54
—
1
1
(1)
(17)
(8)
$ 27
—
1
—
(5)
—
(2)
$ 20
$
30
$ 21
$
9
(2)
(4)
3
1
$
7
$ (13)
$
6
—
(8)
4
1
$
3
$ (27)
$ 39
(7)
(2)
1
—
$ 31
$ 10
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)
625
237
15
(73)
18
14
$
211
$ (414)
$
$
$
$
$
174
1
4
3
(14)
(19)
149
139
9
(19)
3
3
135
(14)
$
$
$
$
$
299
1
7
5
(20)
(29)
263
(1)
—
(29)
24
5
(1)
(264)
$
$
$
$
$
166
—
4
3
(10)
(16)
147
(2)
—
(16)
13
3
(2)
(149)
$
$
$
$
$
130
—
3
2
(10)
(13)
112
(1)
—
(13)
10
2
(2)
(114)
$
$
$
$
$
27
—
1
1
(1)
(3)
25
9
1
(3)
1
1
9
(16)
$
$
$
$
$
61
1
1
2
(2)
(9)
54
7
—
(9)
6
2
6
(48)
$
$
$
$
$
30
—
1
—
(2)
(2)
27
37
3
(2)
1
—
39
12
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 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, 2022
Duke
Energy
$ —
9
266
275
50
189
$
$
$
$
3
(1)
(13)
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$ —
—
7
$
7
$ —
44
$
$ —
—
—
$ —
5
163
$ 168
$
46
$ —
$ —
—
—
$ —
3
94
97
$
$
34
$ —
$ —
—
—
Duke
Energy
Florida
$ —
2
69
71
$
$
11
$ —
$ —
—
—
Duke
Energy
Ohio
$
$
$
$
1
2
12
13
4
21
$ —
—
—
Duke
Energy
Indiana
$ —
—
27
27
25
82
$
$
$
$ —
—
—
Piedmont
$
10
—
—
$
(10)
$ —
$ —
$ —
—
—
$
(11)
$ —
$ —
$ —
$ —
$ —
$ —
$ —
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)
$ —
$ —
$ —
$ —
$ —
$ —
$ —
(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 seven years for Duke Energy and Duke Energy Florida, six years for Duke Energy Carolinas,
Duke Energy Ohio, Duke Energy Indiana and Piedmont and five years for Progress Energy and Duke Energy Progress.
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
195
December 31,
2022
2021
2020
5.60 %
2.90%
2.60%
2.90 %
6.50 %
2.60%
6.50%
3.30%
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
December 31,
2022
6.50%
4.75%
2030-2032
2021
6.25%
4.75%
2028
Expected Benefit Payments
(in millions)
Years ending December 31,
2023
2024
2025
2026
2027
2028-2032
PLAN ASSETS
Description and Allocations
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 68
$ 16
$ 25
49
45
41
38
158
13
12
11
10
41
18
16
15
14
61
$ 14
10
9
9
8
36
$ 11
$ 3
$ 7
$ 2
7
7
6
6
25
3
2
2
2
8
4
3
3
3
9
2
2
2
2
9
Duke Energy Corporation Master Retirement Trust
Assets for both the qualified pension and other post-retirement benefits
are maintained in the Duke Energy Corporation Master Retirement Trust.
Approximately 98% of the Duke Energy Corporation 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, 2022, and 2021. The investment objective of the Duke Energy
Corporation 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, 2022, Duke Energy assumes qualified pension and
other post-retirement plan assets will generate a long-term rate of return of
8.25% for the RCBP pension and RCBP 401(h) account assets and 6.5%
for the DELPP pension and DELPP 401(h) account assets. 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, 2023, the target asset allocation for the RCBP
assets is 35% liability hedging and 65% return-seeking assets and the target
asset allocation for the DELPP assets is 80% liability hedging assets and
20% 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 Corporation 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 Corporation 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 Corporation 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 Corporation Master Retirement Trust to sell the
securities. The Duke Energy Corporation 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 $390
million and $542 million at December 31, 2022, and 2021, respectively. Cash
and securities obtained as collateral exceeded the fair value of the securities
loaned at December 31, 2022, and 2021, respectively. Securities lending income
earned by the Duke Energy Corporation Master Retirement Trust was immaterial
for the years ended December 31, 2022, 2021 and 2020, respectively.
Qualified pension and other post-retirement benefits for the Subsidiary
Registrants are derived from the Duke Energy Corporation Master Retirement
Trust, as such, each are allocated their proportionate share of the assets
discussed below.
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) The following table includes the target asset allocations by asset class at December 31, 2022, and the actual asset allocations for the RCBP assets.
Global equity securities
Global private equity securities
Debt securities
Return seeking debt securities
Hedge funds
Real estate and cash
Total
Target
Allocation
45%
2%
35%
7%
4%
7%
100%
Actual Allocation at December 31,
2022
49%
2%
30%
7%
6%
6%
100%
2021
24%
1%
62%
4%
3%
6%
100%
The following table includes the target asset allocations by asset class at December 31, 2022, and the actual asset allocations for the DELPP assets.
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
14%
1%
80%
2%
1%
2%
100%
Actual Allocation at December 31,
2022
14%
—%
80%
2%
2%
2%
100%
2021
24%
1%
62%
4%
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 Corporation 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, 2022.
U.S. equity securities
Non-U.S. equity securities
Real estate
Debt securities
Cash
Total
Target
Allocation
30%
5%
1%
45%
19%
100%
Actual Allocation at December 31,
2022
12%
5%
3%
11%
69%
100%
2021
19%
5%
3%
18%
55%
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 17.
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.
197
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.
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 Corporation Master Retirement Trust
The following tables provide the fair value measurement amounts for the Duke Energy Corporation Master Retirement Trust qualified pension and other
post-retirement assets.
December 31, 2022
(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
$ 2,234
2,944
193
62
209
1,254
112
45
6
14
Level 1
$ 2,014
—
1
—
—
—
—
45
—
5
$ 194
2,944
192
—
—
1,254
112
—
6
9
$ 7,073
$ 2,065
$4,711
$ —
—
—
62
—
—
—
—
—
—
$ 62
$ 26
—
—
—
209
—
—
—
—
—
$ 235
(a) Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont were allocated approximately 27%, 33%, 15%, 18%, 5%, 7% and 3%, respectively,
of the Duke Energy Corporation Master Retirement Trust at December 31, 2022. 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
Government and commercial mortgage backed securities
Net pending transactions and other investments
Total assets(a)
December 31, 2021
Total Fair Value
Level 1
$2,575
4,189
382
95
216
1,618
78
144
2
53
$ 2,547
—
272
—
—
—
—
144
—
12
Level 2
$ —
4,189
110
—
—
1,618
78
—
2
41
$9,352
$ 2,975
$ 6,038
Not
Categorized(b)
Level 3
$ —
—
—
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 Corporation 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.
The following table provides a reconciliation of beginning and ending balances of Duke Energy Corporation 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
2022
$ 95
(18)
(8)
(7)
$ 62
2021
$ —
—
—
95
$ 95
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) 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 Corporation sponsors, 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, 2022
Total Fair Value
$11
2
12
8
Level 2
$ 11
2
12
8
$33
$ 33
December 31, 2021
Total Fair Value
$14
2
18
11
Level 2
$14
2
18
11
$45
$45
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.
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
$246
229
213
$76
70
67
$65
60
57
$43
39
38
$22
21
19
$6
5
5
$12
12
11
Piedmont
$13
11
13
(in millions)
Years ended December 31,
2022
2021
2020
24. INCOME TAXES
Inflation Reduction Act
On August 16, 2022, the IRA was signed into law. Among other provisions, the
IRA implemented a new 15% corporate alternative minimum tax based on GAAP net
income, with certain adjustments as defined by the IRA, and clean energy-related
provisions. The IRA’s clean energy provisions include, among other provisions, the
extension and modification of existing investment and PTCs for projects placed in
service through 2024 and introduces new technology-neutral clean energy related
credits beginning in 2025. In addition, the IRA created a new, zero-emission nuclear
power PTC and a clean hydrogen PTC.
Duke Energy has preliminarily reviewed the provisions of the IRA and has
determined there were no material impacts on the results of operations, financial
position, or cash flows in the periods presented for the Duke Energy Registrants
as a result of the IRA being signed into law. Based on the preliminary review of
the IRA provisions, future annual cash flow impacts related to the energy credits
could be material to the Duke Energy Registrants. However, the majority of Duke
Energy’s operations are regulated and the FERC and state utility commissions will
determine the regulatory treatment. We anticipate the Subsidiary Registrants will
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) defer and expect to pass along the net financial impact associated with the IRA to
customers over time. See Note 4 for further details on the IRA as it relates to Duke
Energy Florida. Duke Energy will continue to assess the IRA as new information and
anticipated guidance from the U.S. Department of the Treasury becomes available.
North Carolina’s 2021 Appropriations Act
On November 18, 2021, North Carolina Senate Bill 105 (SB 105) was signed
into law. 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 was an
emergency economic stimulus package in response to the COVID-19 pandemic.
Among other provisions, the CARES Act accelerated the remaining AMT credit
refund allowances resulting in taxpayers being able to immediately claim a
refund in full for any AMT credit carryforwards and provided for the 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 did not materially impact Duke Energy’s income tax accounting.
Tax benefit from discontinued operations, in the following tables, includes income tax benefits related to the Commercial Renewables Disposal Groups. See Note 2 for
further details.
(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 (benefit) expense included in Consolidated
Statements of Operations
Year Ended December 31, 2022
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
1
(8)
4
(3)
328
(14)
314
(11)
300
(503)
$
$
(71)
(13)
—
(84)
230
(16)
214
(4)
126
—
(13)
(3)
—
(16)
310
59
369
(5)
348
—
$
37
—
—
37
118
7
125
(4)
158
—
$
(37)
(23)
—
(60)
201
84
285
—
225
—
$
(2)
1
—
(1)
(22)
3
(19)
(1)
(21)
—
$
38
2
—
40
(63)
—
(63)
(1)
(24)
—
$
32
2
—
34
12
(7)
5
—
39
—
$
(203)
$
126
$
348
$
158
$
225
$
(21)
$
(24)
$
39
(a) Total deferred income taxes includes the generation of NOL carryforwards and tax credit carryforwards of $550 million at Duke Energy, $97 million at Duke Energy Carolinas, $128 million at Progress Energy, $9 million at Duke Energy
Progress, $111 million at Duke Energy Florida, $7 million at Duke Energy Ohio, $13 million at Duke Energy Indiana, and $12 million at Piedmont.
200
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 expense from continuing operations
Tax benefit from discontinued operations
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)
1
2
1
275
—
275
(8)
268
(76)
$
$
241
23
—
264
(130)
(79)
(209)
(4)
51
—
(15)
(4)
—
(19)
203
47
250
(4)
227
—
$
113
8
—
121
(16)
(26)
(42)
(4)
75
—
$
(75)
(17)
—
(92)
202
77
279
—
187
—
$
(8)
(2)
—
(10)
35
5
40
—
30
—
$
65
7
—
72
19
16
35
—
107
—
$
23
3
—
26
17
(13)
4
—
30
—
$
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 $250 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.
(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 benefit 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)
(3)
1
(283)
222
(98)
124
(10)
(169)
(65)
$ 314
35
—
349
(171)
(86)
(257)
(4)
88
—
$
280
29
—
309
(167)
(24)
(191)
(5)
113
—
$ 181
17
—
198
$ 148
24
—
172
(180)
(49)
(229)
(5)
(36)
—
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 $189 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,
2022
$ 3,991
87
$ 4,078
2021
$ 3,947
44
$ 3,991
2020
$ 907
13
$ 920
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)
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
Other tax credits
Other items, net
Income tax expense from continuing operations
Year Ended December 31, 2022
Duke
Energy
Duke
Energy
Carolinas
$
$
856
(17)
(481)
(41)
36
(43)
(10)
300
$
$
362
(23)
(195)
(20)
18
(12)
(4)
126
Progress
Energy
$ 457
44
(133)
(14)
12
(16)
(2)
$ 348
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
$ 245
6
(74)
(11)
6
(9)
(5)
$ 158
$ 238
48
(59)
(3)
6
(7)
2
$ 225
$
59
3
(79)
(1)
1
(2)
(2)
$ (21)
$
24
2
(48)
(2)
4
(3)
(1)
$ (24)
Piedmont
$
$
76
(4)
(23)
(2)
—
(8)
—
39
Effective tax rate
7.4%
7.3%
16.0%
13.6%
19.8%
(7.5)%
(21.2)%
10.8%
(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
Other tax credits
Valuation allowance(a)
Other items, net
Income tax expense from continuing operations
Duke
Energy
Duke
Energy
Carolinas
$
$
838
1
(438)
(34)
35
(30)
(85)
(19)
268
$
$
291
(44)
(184)
(14)
18
(12)
—
(4)
51
Year Ended December 31, 2021
Progress
Energy
$ 384
34
(174)
(11)
10
(11)
—
(5)
$ 227
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
$ 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
Piedmont
$
$
71
(8)
(25)
(4)
—
(4)
—
—
30
Effective tax rate
6.7%
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 Disposal Groups.
(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
Other tax credits
Tax true up
Other items, net
Income tax (benefit) expense from continuing operations
Year Ended December 31, 2020
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$ 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
Duke
Energy
$ 193
(80)
(276)
(48)
103
(37)
(12)
(12)
$ (169)
Effective tax rate
(18.4)%
8.4%
9.7%
(9.5)%
20.4%
14.6%
17.1%
6.2%
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.
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) DEFERRED TAXES
Net Deferred Income Tax Liability Components
The following tables include deferred income tax assets and liabilities related to the Commercial Renewables Disposal Groups. See Note 2 for further details.
(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, 2022
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
348
405
192
301
4,426
—
—
106
(519)
5,259
(1,671)
(11,478)
(2,074)
(15,223)
$
170
89
(1)
—
444
—
—
18
—
720
(983)
(3,410)
(480)
(4,873)
$
117
263
12
—
618
—
—
22
—
1,032
(521)
(4,358)
(1,300)
(6,179)
$
33
197
18
—
167
—
—
12
—
427
$
83
65
(10)
—
412
—
—
10
—
560
$
12
4
9
—
20
3
3
5
—
56
$
23
15
10
—
208
61
—
2
—
319
(432)
(1,844)
(628)
(2,904)
(102)
(2,576)
(671)
(3,349)
—
(1,192)
—
(1,192)
(12)
(1,606)
—
(1,618)
$
24
3
(2)
—
37
—
—
9
—
71
(28)
(892)
(21)
(941)
Net deferred income tax liabilities
$
(9,964)
$(4,153)
$(5,147)
$(2,477)
$(2,789)
$ (1,136)
$(1,299)
$ (870)
(a) Primarily related to lease obligations and debt fair value adjustments.
The following table presents the expiration of tax credits and NOL carryforwards.
(in millions)
General Business Credits
Federal NOL carryforwards(a) (e)
Charitable contribution carryforwards
State carryforwards and credits(b) (e)
Foreign NOL carryforwards(c)
Foreign Tax Credits(d)
Total tax credits and NOL carryforwards
December 31, 2022
Amount
$ 2,473
306
18
394
12
1,223
$ 4,426
Expiration Year
2027 — 2042
2024 — Indefinite
2024 — 2027
2023 — Indefinite
2027 — 2037
2024 — 2028
(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 $109 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 $391 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.
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)
(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, 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)
$
(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.
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
Gross increases – current period tax positions
Total changes
Unrecognized tax benefits – December 31
(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, 2022
Duke
Energy
Carolinas
13
$
—
4
4
Progress
Energy
15
$
—
4
4
Duke
Energy
Progress
10
$
—
3
3
$
17
$
19
$
13
Duke
Energy
Florida
4
$
—
1
1
$
5
Year Ended December 31, 2021
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
51
$
—
14
14
$
65
Duke
Energy
125
$
(86)
12
(74)
$
51
$
Duke
Energy
Ohio
1
—
—
—
$
1
$
Duke
Energy
Ohio
1
—
—
—
$
1
Duke
Energy
Indiana
2
$
—
—
—
$
2
Duke
Energy
Indiana
1
$
—
1
1
$
2
Piedmont
4
$
—
5
5
$
9
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.
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)
(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
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
$
Duke
Energy
Ohio
1
—
—
—
—
$
1
Duke
Energy
Indiana
1
$
—
—
—
—
$
1
Piedmont
4
$
—
—
(3)
(3)
$
1
The following table includes additional information regarding the Duke Energy Registrants’ unrecognized tax benefits at December 31, 2022. None of Duke
Energy Registrants anticipates 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, 2022
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
$
59
$ 17
$ 18
$ 13
$
5
$
1
$
2
$
8
(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.
25. 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
(in millions)
Interest income
AFUDC equity
Post in-service equity returns
Nonoperating income, other
Other income and expense, net
Year Ended December 31, 2022
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy Ohio
Duke
Energy
Indiana
$ 27
197
34
134
$392
$
2
98
14
107
$221
$ 24
68
18
71
$ 181
$
4
52
18
40
$ 114
$ 20
16
—
38
$ 74
$ 11
7
1
—
$ 19
$ 15
13
1
7
$ 36
Piedmont
$ 19
11
—
16
$ 46
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
171
39
413
$636
$
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
$ 19
20
—
16
$ 55
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)
Year Ended December 31, 2020
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
$
4
62
17
94
$
8
42
8
71
$
2
29
8
36
$ 30
154
27
240
$451
Duke
Energy
Florida
$
6
12
—
35
Duke
Energy Ohio
$
4
7
1
4
Duke
Energy
Indiana
$
6
23
1
7
Piedmont
$ 17
19
—
15
$ 51
$ 177
$ 129
$ 75
$ 53
$ 16
$ 37
(in millions)
Interest income
AFUDC equity
Post in-service equity returns
Nonoperating income, other
Other income and expense, net
26. SUBSEQUENT EVENTS
For information on subsequent events related to dispositions, regulatory matters, commitments and contingencies, and debt and credit facilities see Notes 2, 4,
5 and 7, respectively.
27. QUARTERLY FINANCIAL DATA (UNAUDITED)
DUKE ENERGY
Quarterly EPS amounts may not sum to the full-year total due to changes in the weighted average number of common shares outstanding and rounding.
(in millions, except per share data)
2022
Operating revenues
Operating income
Income from continuing operations
(Loss) Income from discontinued operations, net of tax
Net income (loss)
Net income (loss) available to Duke Energy Corporation common stockholders
Earnings per share:
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 (loss) available to Duke Energy Corporation common stockholders
Basic and diluted
2021
Operating revenues
Operating income
Income from continuing operations
Loss from discontinued operations, net of tax
Net income
Net income available to Duke Energy Corporation common stockholders
Earnings per share:
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and diluted
Income from discontinued operations attributable to Duke Energy
Corporation common stockholders
Basic and diluted
Net income available to Duke Energy Corporation common stockholders
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 7,011
1,314
835
(15)
820
818
$ 6,564
1,448
898
(18)
880
893
$ 7,842
2,056
1,410
3
1,413
1,383
$ 7,351
1,194
635
(1,293)
(658)
(650)
Total
$ 28,768
6,012
3,778
(1,323)
2,455
2,444
$ 1.06
$ 1.11
$ 1.78
$ 0.80
$
4.74
$ 0.02
$ 0.03
$ 0.03
$ (1.66)
$ (1.57)
$ 1.08
$ 1.14
$ 1.81
$ (0.86)
$
3.17
$ 6,032
1,466
967
(26)
941
953
$ 5,638
1,198
723
(25)
698
751
$ 6,834
1,726
1,333
(57)
1,276
1,366
$ 6,117
1,110
700
(36)
664
732
$ 24,621
5,500
3,723
(144)
3,579
3,802
$ 1.22
$ 0.90
$ 1.69
$ 0.86
$
4.68
$ 0.03
$ 0.06
$ 0.10
$ 0.07
$
$
0.26
4.94
Basic and diluted
$ 1.25
$ 0.96
$ 1.79
$ 0.93
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)
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
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, 2022, and, based upon this evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that these
controls and procedures are effective in providing reasonable assurance of
compliance.
Changes in Internal Control Over Financial Reporting
Under the supervision and with the participation of management,
including the Chief Executive Officer and Chief Financial Officer, the Duke Energy
Registrants have evaluated changes in internal control over financial reporting
(as such term is defined in Rules 13a-15 and 15d-15 under the Exchange
Act) that occurred during the fiscal quarter ended December 31, 2022, and
have concluded no change has materially affected, or is reasonably likely to
materially affect, internal controls 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, 2022, 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, 2022.
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.
207
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, 2022, 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, 2022, 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, 2022, of the Company and our report dated February 27, 2023, 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 and Touche LLP
Charlotte, North Carolina
February 27, 2023
208
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. 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, 2022, 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)
3,385,638(2)
109,690(4)
3,495,328
n/a
n/a
n/a
2,410,473(3)
n/a(5)
2,410,473
(1) As of December 31, 2022, 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 limits 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.
209
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 2022 and 2021.
(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)
Total Fees
Year Ended December 31, 2022
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana Piedmont
$13.7
1.7
$15.4
$3.2
0.1
$3.3
$ 4.9
0.2
$ 5.1
$ 2.5
0.1
$ 2.6
$ 2.4
0.1
$ 2.5
$ 2.0
0.2
$ 2.2
$
$
1.8
—
1.8
$
$
1.3
—
1.3
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
(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 Duke Energy’s 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.
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 2022 and 2021 by the independent accountant were approved by the Audit Committee pursuant to the
preapproval policy.
210
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, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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.
211
PART IV Duke Energy Indiana, LLC
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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, 2022, 2021 and 2020
Consolidated Balance Sheets as of December 31, 2022, and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
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.
212
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
X
Exhibit
Number
2.1
2.2
3.1
3.2
3.2.1
3.3
3.3.1
3.4
3.4.1
3.5
3.5.1
3.5.2
3.5.3
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).
Amended and Restated By-Laws of Duke Energy Corporation, effective as
of September 22, 2022, (incorporated by reference to Exhibit 3.1 to Duke
Energy Corporation’s Current Report on Form 8-K filed on September 28,
2022, 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).
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
PART IV Exhibit
Number
3.5.4
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
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
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).
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).
X
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).
E-2
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
3.11.1
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
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).
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).
E-3
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
PART IV Exhibit
Number
4.1.4
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
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
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).
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 on 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).
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
E-4
PART IV Exhibit
Number
4.1.20
4.1.21
4.1.22
4.1.23
4.1.24
4.1.25
4.1.26
4.1.27
4.1.28
4.1.29
4.2
4.2.1
4.2.2
4.3
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
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).
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).
Twenty-seventh Supplemental Indenture, dated as of June 15, 2022, 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 registrant’s Current Report on Form 8-K filed on
June 15, 2022, File No. 1-32853).
Twenty-eighth Supplemental Indenture, dated as of August 11, 2022, 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, and forms of
global notes included therein (incorporated by reference to Exhibit 4.1
to registrant’s Current Report on Form 8-K filed on August 11, 2022,
File No. 1-32853).
Twenty-ninth Supplemental Indenture, dated as of December 8, 2022, 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, and forms
of global notes included therein (incorporated by reference to Exhibit 4.1 to
registrant’s Current Report on Form 8-K filed on December 8, 2022,
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).
E-5
X
X
X
X
PART IV
Exhibit
Number
4.3.1
4.3.2
4.3.3
4.3.4
4.3.5
4.3.6
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
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).
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).
E-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
X
X
X
X
X
X
X
X
X
X
X
PART IV
Exhibit
Number
4.3.17
4.3.18
4.3.19
4.3.20
4.3.21
4.3.22
4.3.23
4.3.24
4.3.25
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
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).
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).
One-Hundred and Sixth Supplemental Indenture, dated as of March 4, 2022
between the registrant and The Bank of New York Mellon Trust Company,
N.A., as Trustee, and forms of global bonds representing the First and
Refunding Mortgage Bonds, 2.85% Series due 2032 and First and Refunding
Mortgage Bonds, 3.55% Series due 2052 (incorporated by reference to
Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on March 4,
2022, File No. 1-32853).
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).
E-7
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
PART IV
Exhibit
Number
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
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
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).
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).
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
4.4.33
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
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
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).
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).
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
X
X
X
PART IV Exhibit
Number
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
4.4.66
4.4.67
4.4.68
4.4.69
4.4.70
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
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).
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).
E-10
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
4.4.71
4.4.72
4.4.73
4.4.74
4.4.75
4.4.76
4.4.77
4.4.78
4.4.79
4.4.80
4.4.81
4.4.82
4.4.83
4.4.84
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
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).
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).
E-11
X
X
X
X
X
X
X
X
X
X
X
X
X
X
PART IV Exhibit
Number
4.4.85
Ninety-second Supplemental Indenture, dated as of March 1, 2022, among
the registrant, The Bank of New York Mellon (formerly Irving Trust Company)
and Christie Leppert (successor to Frederick G. Herbst) and forms of global
bonds (incorporated by reference to Exhibit 4.1 to registrant’s Current Report
on Form 8-K filed on March 17, 2022, File No. 1-3382).
4.4.86
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).
4.5
4.6
4.7
4.7.1
4.7.2
4.7.3
4.7.4
4.7.5
4.7.6
4.7.7
4.7.8
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).
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).
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
E-12
PART IV
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Exhibit
Number
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
4.7.19
4.7.20
4.8
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).
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).
4.8.1
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).
E-13
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X
X
X
X
X
X
X
X
PART IV Exhibit
Number
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
4.11.5
4.11.6
4.12
4.12.1
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).
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).
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
E-14
PART IV Exhibit
Number
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
4.13.10
4.13.11
4.13.12
4.13.13
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Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
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).
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).
E-15
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X
PART IV Exhibit
Number
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
4.13.24
4.14
4.15
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).
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).
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
E-16
PART IV Exhibit
Number
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.26.1
4.26.2
4.26.3
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).
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).
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).
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
E-17
PART IV Exhibit
Number
4.26.4
4.26.5
4.26.6
4.26.7
4.26.8
4.26.9
4.26.10
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
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).
Twelfth Supplemental Indenture dated as of May 13, 2022 between Piedmont
Natural Gas Company, Inc. and The Bank of New York Mellon Trust Company,
N.A., as successor to Citibank, N.A. and form of global notes (incorporated
by reference to Exhibit 4.1 to registrant’s Current Report on Form 8-K filed on
May 13, 2022, 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).
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).
E-18
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X
PART IV Exhibit
Number
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11**
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
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).
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).
X
X
X
E-19
X
X
X
X
PART IV Exhibit
Number
10.12**
10.13
10.14**
10.15
10.15.1
10.15.2
10.15.3
10.15.4
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
X
X
X
Amendment to Duke Energy Corporation Directors’ Savings Plan, effective
as of December 16, 2021 (incorporated by reference to Exhibit 10.12 to
Duke Energy Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2021, filed on February 24, 2022, File No. 1-32853).
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).
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).
E-20
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
PART IV 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
Exhibit
Number
10.15.5
10.16**
10.16.1**
10.17**
10.18**
10.19**
10.20**
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).
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).
Restricted Stock Unit 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, 2022, filed on May 9, 2022, File No. 1-32853).
*10.21**
Restricted Stock Unit Award Agreement
10.22**
10.23**
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 Share 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).
*10.24**
Performance Share Award Agreement
10.25
10.26
10.27
10.28
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
X
X
X
X
X
X
X
X
X
X
X
X
X
X
E-21
PART IV Duke
Energy
Carolinas
X
Duke
Energy
X
X
X
X
X
X
Exhibit
Number
10.29
10.30
10.31
10.32**
10.33**
10.33.1**
10.34
10.35
10.36
10.37
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-22
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
X
X
X
PART IV Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
X
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
X
Exhibit
Number
10.38
10.39
10.40**
10.40.1**
10.41**
10.42**
10.43**
10.44**
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).
Amended and Restated Duke Energy Corporation Executive Short-Term
Incentive Plan, effective February 23, 2022 (incorporated by reference to
Exhibit 10.1 to registrant’s Current Report on Form 8-K filed on February 24,
2022, 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).
Duke Energy Corporation 2022 Director Compensation Program Summary
(incorporated by reference to Exhibit 10.5 to Duke Energy Corporation’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed on
May 9, 2022, 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).
10.44.1**
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).
E-23
X
X
X
X
X
X
X
PART IV Exhibit
Number
10.44.2**
10.45**
10.46**
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
X
X
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).
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).
Retention Award Agreement (incorporated by reference to Exhibit 10.42 to
Duke Energy Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2021, filed on February 24, 2022, File No. 1-32853).
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).
X
X
X
X
X
X
X
X
X
X
X
E-24
PART IV Exhibit
Number
10.55
10.55.1
10.56
10.57
10.58
10.59
10.60
10.61
$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).
Amended and Restated Credit Agreement, dated as of March 18, 2022, among
Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio,
Inc., Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Duke Energy
Progress, LLC, Duke Energy Florida, LLC, and Piedmont Natural Gas Company,
Inc., the Lenders party thereto, Wells Fargo Bank, National Association, as
Administrative Agent and Swingline Lender and Wells Fargo Securities, LLC,
as Joint Lead Arranger, Joint Bookrunner and Sustainability Structuring Agent.
that increases the amount of the credit facility from $8B to $9B (incorporated
by reference to Exhibit 10.1 to registrants’ Current Report on Form 8-K filed
on March 21, 2022, File Nos. 1-32853, 1-4928, 1-3382, 1-3274, 1-1232,
1-3543, 1-6196).
$800 million Credit Agreement, dated as of October 21, 2022, among Duke
Energy Florida, LLC, as Borrower, the lenders listed therein, Truist Bank, as
Administrative Agent, Truist Securities, Inc., Mizuho Bank Ltd., and TD Bank,
N.A., as Joint Lead Arrangers, and Truist Securities, Inc., as Sole Bookrunner
(incorporated by reference to Exhibit 10.1 to registrant’s Current Report on
Form 8-K filed on October 21, 2022, File No. 1-3274
$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).
$1,400,000,000 Term Loan Credit Facility, dated as of March 9, 2022, among
the registrant, as Borrower, certain Lenders from time to time parties thereto,
and The Bank of Nova Scotia as Administrative Agent and Coordinating Lead
Arranger (incorporated by reference to Exhibit 10.1 to registrant’s Current
Report on Form 8-K filed on March 22, 2022, File No. 1-32853).
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).
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
E-25
PART IV Exhibit
Number
10.62
10.62.1
10.62.2
10.63
10.64
10.65
10.66
10.67
10.68
10.69
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
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).
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).
E-26
X
X
X
PART IV X
X
X
X
X
X
Exhibit
Number
10.70
10.71
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).
Equity Distribution Agreement, dated November 10, 2022, among Duke
Energy Corporation and Barclays Capital, Inc., BofA Securities, Inc., Credit
Suisse Securities (USA) LLC, Mizuho Securities USA LLC, Scotia Capital
(USA) Inc. and SMBC Nikko Securities America, Inc., acting as sales agents,
and Barclays Capital Inc., BofA Securities Inc., Credit Suisse Securities
(USA) LLC, Mizuho Markets Americas LLC and Scotia Capital (USA) Inc. or
their respective affiliates, acting as forward purchasers (incorporated by
reference to Exhibit 10.1 to registrant’s Current Report on Form 8-K, filed on
November 10, 2022, File No. 1-32853
*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
*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
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.
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.
E-27
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 Duke
Energy
Carolinas
Duke
Energy
Progress
Energy
X
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Piedmont
Exhibit
Number
*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
*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 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.
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.
*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
X
X
E-28
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
PART IV Exhibit
Number
*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).
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
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-29
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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:
Derrick Burks*
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.*
Brian D. Savoy, 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/ BRIAN D. SAVOY
Attorney-In-Fact
Date: February 27, 2023
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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 27, 2023
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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 27, 2023
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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 27, 2023
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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 27, 2023
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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 27, 2023
E-35
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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 27, 2023
E-36
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 27, 2023
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/ BRIAN D. SAVOY
Brian D. Savoy
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 27, 2023
E-37
PART IV
Intentionally Left Blank