DUKE ENERGY CORP
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-Q
(Mark One)
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended
September 30, 2022
OR
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from _________to_________
| Commission file number |
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices and Telephone Number |
IRS Employer Identification Number | |||||||||
|
|||||||||||
|
|
|
|
|||||||||
(a
Delaware
corporation)
|
|
|
|
|||||||||
(a
North Carolina
limited liability company)
|
|
|
|
|||||||||
(a
North Carolina
corporation)
|
|
|
|
|||||||||
(a
North Carolina
limited liability company)
|
|
|
|
|||||||||
(a
Florida
limited liability company)
|
|
|
|
|||||||||
(an
Ohio
corporation)
|
|
|
|
|||||||||
(an
Indiana
limited liability company)
|
|
|
|
|||||||||
(a
North Carolina
corporation)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Registrant
Title of each class
Trading symbols
which registered
Duke Energy
Common Stock, $0.001 par value
DUK
New York Stock Exchange LLC
Duke Energy
5.625% Junior Subordinated Debentures
due
DUKB
New York Stock Exchange LLC
September 15, 2078
Duke Energy
Depositary Shares
, each representing a 1/1,000th
DUK PR A
New York Stock Exchange LLC
interest in a share of 5.75% Series A Cumulative
Redeemable Perpetual Preferred Stock, par value
$0.001 per share
Duke Energy
3.10% Senior Notes
due 2028
DUK 28A
New York Stock Exchange LLC
Duke Energy
3.85% Senior Notes
due 2034
DUK 34
New York Stock Exchange LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Duke Energy Corporation (Duke Energy) |
|
☒ | No | ☐ | Duke Energy Florida, LLC (Duke Energy Florida) |
|
☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Carolinas, LLC (Duke Energy Carolinas) |
|
☒ | No | ☐ | Duke Energy Ohio, Inc. (Duke Energy Ohio) |
|
☒ | No | ☐ | |||||||||||||||||||||||
| Progress Energy, Inc. (Progress Energy) |
|
☒ | No | ☐ | Duke Energy Indiana, LLC (Duke Energy Indiana) |
|
☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Progress, LLC (Duke Energy Progress) |
|
☒ | No | ☐ | Piedmont Natural Gas Company, Inc. (Piedmont) |
|
☒ | No | ☐ | |||||||||||||||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
| Duke Energy |
|
☒ | No | ☐ | Duke Energy Florida |
|
☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Carolinas |
|
☒ | No | ☐ | Duke Energy Ohio |
|
☒ | No | ☐ | |||||||||||||||||||||||
| Progress Energy |
|
☒ | No | ☐ | Duke Energy Indiana |
|
☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Progress |
|
☒ | No | ☐ | Piedmont |
|
☒ | No | ☐ | |||||||||||||||||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Duke Energy |
|
☒ | Accelerated filer | ☐ | Non-accelerated Filer | ☐ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
| Duke Energy Carolinas | Large Accelerated Filer | ☐ | Accelerated filer | ☐ |
|
☒ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
| Progress Energy | Large Accelerated Filer | ☐ | Accelerated filer | ☐ |
|
☒ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
| Duke Energy Progress | Large Accelerated Filer | ☐ | Accelerated filer | ☐ |
|
☒ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
| Duke Energy Florida | Large Accelerated Filer | ☐ | Accelerated filer | ☐ |
|
☒ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
| Duke Energy Ohio | Large Accelerated Filer | ☐ | Accelerated filer | ☐ |
|
☒ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
| Duke Energy Indiana | Large Accelerated Filer | ☐ | Accelerated filer | ☐ |
|
☒ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
| Piedmont | Large Accelerated Filer | ☐ | Accelerated filer | ☐ |
|
☒ | Smaller reporting company |
|
Emerging growth company |
|
||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Duke Energy | Yes |
|
No | ☒ | Duke Energy Florida | Yes |
|
No | ☒ | |||||||||||||||||||||||
| Duke Energy Carolinas | Yes |
|
No | ☒ | Duke Energy Ohio | Yes |
|
No | ☒ | |||||||||||||||||||||||
| Progress Energy | Yes |
|
No | ☒ | Duke Energy Indiana | Yes |
|
No | ☒ | |||||||||||||||||||||||
| Duke Energy Progress | Yes |
|
No | ☒ | Piedmont | Yes |
|
No | ☒ | |||||||||||||||||||||||
Number of shares of common stock outstanding at October 31, 2022:
| Registrant | Description | Shares | ||||||
| Duke Energy | Common stock, $0.001 par value |
|
||||||
This combined Form 10-Q is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | ||||||||
| Piedmont Natural Gas Company, Inc. Financial Statements | ||||||||
| Note 1 – Organization and Basis of Presentation | ||||||||
| Note 2 – Business Segments | ||||||||
| Note 3 – Regulatory Matters | ||||||||
| Note 4 – Commitments and Contingencies | ||||||||
| Note 5 – Debt and Credit Facilities | ||||||||
| Note 6 – Asset Retirement Obligations | ||||||||
| Note 7 – Goodwill | ||||||||
| Note 8 – Related Party Transactions | ||||||||
| Note 9 – Derivatives and Hedging | ||||||||
| Note 10 – Investments in Debt and Equity Securities | ||||||||
| Note 11 – Fair Value Measurements | ||||||||
| Note 12 – Variable Interest Entities | ||||||||
| Note 13 – Revenue | ||||||||
| Note 14 – Stockholders' Equity | ||||||||
| Note 15 – Employee Benefit Plans | ||||||||
| Note 16 – Income Taxes | ||||||||
| Note 17 – Subsequent Events | ||||||||
| PART II. OTHER INFORMATION | ||||||||
| GLOSSARY OF TERMS | |||||
Glossary of Terms
The following terms or acronyms used in this Form 10-Q are defined below:
| Term or Acronym | Definition | ||||
| 2021 Settlement | Settlement Agreement in 2021 among Duke Energy Florida, the Florida Office of Public Counsel, the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PSC Phosphate and NUCOR Steel Florida, Inc. | ||||
| ACP | Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Inc. and Duke Energy | ||||
| AFUDC | Allowance for funds used during construction | ||||
| ARO | Asset retirement obligations | ||||
| Bison | Bison Insurance Company Limited | ||||
| Board of Directors | Duke Energy Board of Directors | ||||
| CCR | Coal Combustion Residuals | ||||
| the company | Duke Energy Corporation and its subsidiaries | ||||
| COVID-19 | Coronavirus Disease 2019 | ||||
| CRC | Cinergy Receivables Company, LLC | ||||
| Crystal River Unit 3 | Crystal River Unit 3 Nuclear Plant | ||||
| DEFPF | Duke Energy Florida Project Finance, LLC | ||||
| DEFR | Duke Energy Florida Receivables, LLC | ||||
| DEPR | Duke Energy Progress Receivables, LLC | ||||
| DERF | Duke Energy Receivables Finance Company, LLC | ||||
| DOE | Department of Energy | ||||
| Duke Energy | Duke Energy Corporation (collectively with its subsidiaries) | ||||
| Duke Energy Ohio | Duke Energy Ohio, Inc. | ||||
| Duke Energy Progress | Duke Energy Progress, LLC | ||||
| Duke Energy Carolinas | Duke Energy Carolinas, LLC | ||||
| Duke Energy Florida | Duke Energy Florida, LLC | ||||
| Duke Energy Indiana | Duke Energy Indiana, LLC | ||||
| Duke Energy Registrants | Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont | ||||
| EDIT | Excess deferred income tax | ||||
| EPS | Earnings Per Share | ||||
| ERCOT | Electric Reliability Council of Texas | ||||
| ETR | Effective tax rate | ||||
| Exchange Act | Securities Exchange Act of 1934 | ||||
| FERC | Federal Energy Regulatory Commission | ||||
| FPSC | Florida Public Service Commission | ||||
| FTR | Financial transmission rights | ||||
| GAAP | Generally accepted accounting principles in the U.S. | ||||
| GAAP Reported Earnings | Net Income Available to Duke Energy Corporation Common Stockholders | ||||
| GAAP Reported EPS | Basic Earnings Per Share Available to Duke Energy Corporation common stockholders | ||||
| GIC | GIC Private Limited, Singapore's sovereign wealth fund and an experienced investor in U.S. infrastructure | ||||
| GWh | Gigawatt-hours | ||||
| IRA | Inflation Reduction Act | ||||
| IRS | Internal Revenue Service | ||||
| IURC | Indiana Utility Regulatory Commission | ||||
| GLOSSARY OF TERMS | |||||
| KPSC | Kentucky Public Service Commission | ||||
| LLC | Limited Liability Company | ||||
| 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 | ||||
| MW | Megawatt | ||||
| MWh | Megawatt-hour | ||||
| NCUC | North Carolina Utilities Commission | ||||
| NDTF | Nuclear decommissioning trust funds | ||||
| NPNS | Normal purchase/normal sale | ||||
| OPEB | Other Post-Retirement Benefit Obligations | ||||
| OVEC | Ohio Valley Electric Corporation | ||||
| Piedmont | Piedmont Natural Gas Company, Inc. | ||||
| PJM | Pennsylvania-New Jersey-Maryland Interconnection | ||||
| PPA | Purchase Power Agreement | ||||
| Progress Energy | Progress Energy, Inc. | ||||
| PSCSC | Public Service Commission of South Carolina | ||||
| PUCO | Public Utilities Commission of Ohio | ||||
| RTO | Regional Transmission Organization | ||||
| Subsidiary Registrants | Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont | ||||
| TPUC | Tennessee Public Utility Commission | ||||
| U.S. | United States | ||||
| VIE | Variable Interest Entity | ||||
| FORWARD-LOOKING STATEMENTS | |||||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:
◦
The impact of the COVID-19 pandemic;
◦
State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
◦
The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
◦
The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations, asset retirement and construction costs related to carbon emissions reductions, and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
◦
The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
◦
Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
◦
Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy, 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;
◦
The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources;
◦
Operational interruptions to our natural gas distribution and transmission activities;
◦
The availability of adequate interstate pipeline transportation capacity and natural gas supply;
◦
The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
◦
The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
◦
The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
◦
The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions, 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, 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;
| FORWARD-LOOKING STATEMENTS | |||||
◦
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;
◦
The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;
◦
The impact of U.S. tax legislation to our financial condition, results of operations or cash flows and our credit ratings;
◦
The impacts from potential impairments of goodwill or equity method investment carrying values;
◦
Asset or business acquisitions and dispositions, including our ability to successfully consummate the second closing of the minority investment in Duke Energy Indiana, may not yield the anticipated benefits;
◦
The actions of activist shareholders could disrupt our operations, impact our ability to execute on our business strategy, or cause fluctuations in the trading price of our common stock; and
◦
The ability to implement our business strategy, including its carbon emission reduction goals.
Additional risks and uncertainties are identified and discussed in the 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.
| FINANCIAL STATEMENTS | |||||
ITEM 1. FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 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 From Continuing Operations |
|
|
|
|
|||||||||||||||||||
| Income From Continuing Operations |
|
|
|
|
|||||||||||||||||||
| Income 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 |
|
|
|
|
|||||||||||||||||||
| Net Income Available to Duke Energy Corporation Common Stockholders | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Earnings Per Share – Basic and Diluted | |||||||||||||||||||||||
| 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 | |||||||||||||||||||||||
| Basic and Diluted | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Weighted Average Shares Outstanding | |||||||||||||||||||||||
| Basic and Diluted |
|
|
|
|
|||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements
9
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 gains (losses) 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 |
|
|
|
|
|||||||||||||||||||
| Less: Preferred Dividends |
|
|
|
|
|||||||||||||||||||
| Comprehensive Income Available to Duke Energy Corporation Common Stockholders | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
(a)
Net of income tax expense of approximately $
72
million for the nine months ended September, 30, 2022 and income tax benefit of $
16
million for the nine months ended September 30, 2021. All other periods presented include immaterial income tax impacts.
See Notes to Condensed Consolidated Financial Statements
10
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
|
Receivables of VIEs (net of allowance for doubtful accounts of $
|
|
|
|||||||||
| Inventory |
|
|
|||||||||
|
Regulatory assets (includes $
|
|
|
|||||||||
|
Other (includes $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| Nuclear decommissioning trust funds |
|
|
|||||||||
| Operating lease right-of-use assets, net |
|
|
|||||||||
| Investments in equity method unconsolidated affiliates |
|
|
|||||||||
|
Other (includes $
|
|
|
|||||||||
| Total other noncurrent assets |
|
|
|||||||||
| Total Assets | $ |
|
$ |
|
|||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ |
|
$ |
|
|||||||
| Notes payable and commercial paper |
|
|
|||||||||
| Taxes accrued |
|
|
|||||||||
| Interest accrued |
|
|
|||||||||
|
Current maturities of long-term debt (includes $
|
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total current liabilities |
|
|
|||||||||
|
Long-Term Debt (includes $
|
|
|
|||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes |
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Operating lease liabilities |
|
|
|||||||||
| Accrued pension and other post-retirement benefit costs |
|
|
|||||||||
| Investment tax credits |
|
|
|||||||||
|
Other (includes $
|
|
|
|||||||||
| Total other noncurrent liabilities |
|
|
|||||||||
| Commitments and Contingencies |
|
|
|||||||||
| Equity | |||||||||||
|
Preferred stock, Series A, $
|
|
|
|||||||||
|
Preferred stock, Series B, $
|
|
|
|||||||||
|
Common stock, $
|
|
|
|||||||||
| 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 Condensed Consolidated Financial Statements
11
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| 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 |
|
|
|||||||||
| Equity in earnings of unconsolidated affiliates |
(
|
(
|
|||||||||
| 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 |
(
|
(
|
|||||||||
| Inventory |
(
|
|
|||||||||
|
Other current assets
(a)
|
(
|
(
|
|||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable |
|
(
|
|||||||||
| Taxes accrued |
|
|
|||||||||
| Other current liabilities |
|
|
|||||||||
| Other assets |
(
|
|
|||||||||
| Other liabilities |
|
|
|||||||||
| Net cash provided by operating activities |
|
|
|||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures |
(
|
(
|
|||||||||
| Contributions to equity method investments |
(
|
(
|
|||||||||
| 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 |
(
|
(
|
|||||||||
| 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 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: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
(a)
Includes approximately $
2.2
billion of under-collected deferred fuel regulatory assets for the nine months ended September 30, 2022
See Notes to Condensed Consolidated Financial Statements
12
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2021 and 2022 | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive | |||||||||||||||||||||||||||||||||||
| (Loss) Income | |||||||||||||||||||||||||||||||||||
| Net | Net Unrealized | Total | |||||||||||||||||||||||||||||||||
| Gains | (Losses) Gains | Duke Energy | |||||||||||||||||||||||||||||||||
| Common | Additional | (Losses) | on Available- | Pension and | Corporation | Non- | |||||||||||||||||||||||||||||
| Preferred | Stock | Common | Paid-in | Retained | on | for-Sale- | OPEB | Stockholders' | controlling | Total | |||||||||||||||||||||||||
| (in millions) | Stock | Shares | Stock | Capital | Earnings |
Hedges
(c)
|
Securities | Adjustments | Equity | Interests | Equity | ||||||||||||||||||||||||
| Balance at June 30, 2021 | $ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||
| Net income (loss) | — | — | — | — |
|
— | — | — |
|
(
|
|
||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — |
|
(
|
|
|
|
|
||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | — | — |
|
— | — | — | — |
|
— |
|
||||||||||||||||||||||||
| Common stock dividends | — | — | — | — |
(
|
— | — | — |
(
|
— |
(
|
||||||||||||||||||||||||
|
Sale of noncontrolling interest
(a)
|
— | — | — |
|
— | — | — | — |
|
|
|
||||||||||||||||||||||||
|
Contribution from noncontrolling interests, net of transaction costs
(b)
|
— | — | — |
(
|
— | — | — | — |
(
|
|
|
||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — |
(
|
(
|
||||||||||||||||||||||||
| Other | — | — | — |
(
|
— | — | — | — |
(
|
|
|
||||||||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ | — | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||
| Balance at June 30, 2022 | $ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||
| Net income (loss) | — | — | — | — |
|
— | — | — |
|
(
|
|
||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — |
|
|
(
|
(
|
|
|
||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | — | — |
|
— | — | — | — |
|
— |
|
||||||||||||||||||||||||
| Common stock dividends | — | — | — | — |
(
|
— | — | — |
(
|
— |
(
|
||||||||||||||||||||||||
|
Contribution from noncontrolling interests, net of transaction costs
(b)
|
— | — | — |
|
— | — | — | — |
|
|
|
||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — |
(
|
(
|
||||||||||||||||||||||||
| Other | — | — | — |
|
(
|
— | — | — |
|
— |
|
||||||||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||
See Notes to Condensed Consolidated Financial Statements
13
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Nine Months Ended September 30, 2021 and 2022 | |||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive | |||||||||||||||||||||||||||||||||||
| (Loss) Income | |||||||||||||||||||||||||||||||||||
| Net | Net Unrealized | Total | |||||||||||||||||||||||||||||||||
| Gains | Gains (Losses) | Duke Energy | |||||||||||||||||||||||||||||||||
| Common | Additional | (Losses) | on Available- | Pension and | Corporation | Non- | |||||||||||||||||||||||||||||
| Preferred | Stock | Common | Paid-in | Retained | on | for-Sale- | OPEB | Stockholders' | controlling | Total | |||||||||||||||||||||||||
| (in millions) | Stock | Shares | Stock | Capital | Earnings |
Hedges
(c)
|
Securities | Adjustments | Equity | Interests | Equity | ||||||||||||||||||||||||
| Balance at December 31, 2020 | $ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||
| Net income (loss) | — | — | — | — |
|
— | — | — |
|
(
|
|
||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — |
(
|
(
|
|
(
|
|
(
|
||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | — | — |
|
— | — | — | — |
|
— |
|
||||||||||||||||||||||||
| Common stock dividends | — | — | — | — |
(
|
— | — | — |
(
|
— |
(
|
||||||||||||||||||||||||
|
Sale of noncontrolling interest
(a)
|
— | — | — |
|
— |
|
— | — |
|
|
|
||||||||||||||||||||||||
|
Contributions from noncontrolling interests, net of transaction costs
(b)
|
— | — | — |
(
|
— | — | — | — |
(
|
|
|
||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — |
(
|
(
|
||||||||||||||||||||||||
| Other | — | — | — |
(
|
|
— | — | — |
(
|
|
|
||||||||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ | — | $ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||
| Balance at December 31, 2021 | $ |
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||
| Net income (loss) | — | — | — | — |
|
— | — | — |
|
(
|
|
||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — |
|
(
|
(
|
|
|
|
||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — |
|
— |
|
— | — | — | — |
|
— |
|
||||||||||||||||||||||||
| Common stock dividends | — | — | — | — |
(
|
— | — | — |
(
|
— |
(
|
||||||||||||||||||||||||
| Sale of noncontrolling interest | — | — | — |
(
|
— | — | — | — |
(
|
|
|
||||||||||||||||||||||||
|
Contributions from noncontrolling interests, net of transaction costs
(b)
|
— | — | — | — | — | — | — | — | — |
|
|
||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — |
(
|
(
|
||||||||||||||||||||||||
| Other | — | — | — |
|
|
— | — | — |
|
— |
|
||||||||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
||||||||||||||
(a)
Relates to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.
(b)
Relates primarily to tax equity financing activity in the Commercial Renewables segment.
(c)
See Duke Energy Condensed Consolidated Statements of Comprehensive Income for detailed activity related to Cash Flow and Fair Value hedges.
See Notes to Condensed Consolidated Financial Statements
14
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 (Losses) 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 and Comprehensive Income | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
See Notes to Condensed Consolidated Financial Statements
15
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
|
Receivables of VIEs (net of allowance for doubtful accounts of $
|
|
|
|||||||||
| Receivables from affiliated companies |
|
|
|||||||||
| Inventory |
|
|
|||||||||
|
Regulatory assets (includes $
|
|
|
|||||||||
|
Other (includes $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total current liabilities |
|
|
|||||||||
|
Long-Term Debt (includes $
|
|
|
|||||||||
| 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 Condensed Consolidated Financial Statements
16
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| 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 |
(
|
(
|
|||||||||
| Gains on sales of other assets | — |
(
|
|||||||||
| 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 |
|
|
|||||||||
| 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: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
(a)
Includes approximately $
1.1
billion of under-collected deferred fuel regulatory assets for the nine months ended September 30, 2022
See Notes to Condensed Consolidated Financial Statements
17
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2021 and 2022 | |||||||||||||||||
| Accumulated Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Loss | |||||||||||||||||
| Member's | Net Losses on | Total | |||||||||||||||
| (in millions) | Equity | Cash Flow Hedges | Equity | ||||||||||||||
| Balance at June 30, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Distributions to parent |
(
|
— |
(
|
||||||||||||||
| Other |
(
|
— |
(
|
||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Balance at June 30, 2022 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Nine Months Ended September 30, 2021 and 2022 | |||||||||||||||||
| Accumulated Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Loss | |||||||||||||||||
| Member's | Net Losses on | Total | |||||||||||||||
| (in millions) | Equity | Cash Flow Hedges | Equity | ||||||||||||||
| Balance at December 31, 2020 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Distributions to parent |
(
|
— |
(
|
||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Balance at December 31, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Distributions to parent |
(
|
— |
(
|
||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
(
|
$ |
|
|||||||||||
See Notes to Condensed Consolidated Financial Statements
18
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 gains on cash flow hedges | — |
|
|
|
|||||||||||||||||||
| Unrealized losses on available-for-sale securities |
(
|
— |
(
|
— | |||||||||||||||||||
| Other Comprehensive (Loss) Income, net of tax |
(
|
|
(
|
|
|||||||||||||||||||
| Comprehensive Income | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Less: Comprehensive Income Attributable to Noncontrolling Interests | — |
|
|
|
|||||||||||||||||||
| Comprehensive Income Attributable to Parent | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
See Notes to Condensed Consolidated Financial Statements
19
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
|
Receivables of VIEs (net of allowance for doubtful accounts of $
|
|
|
|||||||||
| Receivables from affiliated companies |
|
|
|||||||||
| Notes receivable from affiliated companies |
|
— | |||||||||
| Inventory |
|
|
|||||||||
|
Regulatory assets (includes $
|
|
|
|||||||||
|
Other (includes $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total current liabilities |
|
|
|||||||||
|
Long-Term Debt (includes $
|
|
|
|||||||||
| 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, $
|
— | — | |||||||||
| Additional paid-in capital |
|
|
|||||||||
| Retained earnings |
|
|
|||||||||
| Accumulated other comprehensive loss |
(
|
(
|
|||||||||
| Total Progress Energy, Inc. stockholders' equity |
|
|
|||||||||
| Noncontrolling interests |
(
|
|
|||||||||
| Total equity |
|
|
|||||||||
| Total Liabilities and Equity | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
20
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| 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 |
(
|
(
|
|||||||||
| 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 (used in) 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: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
(a)
Includes approximately $
1
billion of under-collected deferred fuel regulatory assets for the nine months ended September 30, 2022
See Notes to Condensed Consolidated Financial Statements
21
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2021 and 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Gains | Net Unrealized | Total Progress | |||||||||||||||||||||||||||||||||||||||||||||
| Additional | (Losses) on | Losses on | Pension and | Energy, Inc. | |||||||||||||||||||||||||||||||||||||||||||
| Paid-in | Retained | Cash Flow | Available-for- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | Capital | Earnings | Hedges | Sale Securities | Adjustments | Equity | Interests | Equity | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Net income | — |
|
— | — | — |
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — |
|
— |
(
|
— | — | — | |||||||||||||||||||||||||||||||||||||||
| Dividends to parent | — |
(
|
— | — | — |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
| Other |
|
|
— | — | — |
|
(
|
|
|||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Net income | — |
|
— | — | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — |
(
|
— |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
| Equitization of certain notes payable to affiliates |
|
— | — | — | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
| Other |
|
— | — | — | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2021 and 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Gains | Net Unrealized | Total Progress | |||||||||||||||||||||||||||||||||||||||||||||
| Additional | (Losses) on | Gains (Losses) on | Pension and | Energy, Inc. | |||||||||||||||||||||||||||||||||||||||||||
| Paid-in | Retained | Cash Flow | Available-for- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||||||
| Capital | Earnings | Hedges | Sale Securities | Adjustments | Equity | Interests | Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Net income | — |
|
— | — | — |
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — |
|
— | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
| Dividends to parent | — |
(
|
— | — | — |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
| Other |
|
|
— | — | — |
|
(
|
|
|||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Net income | — |
|
— | — | — |
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — |
|
(
|
— |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
| Dividends to parent | — |
(
|
— | — | — |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
| Equitization of certain notes payable to affiliates |
|
|
— | — | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
| Other |
|
|
— | — | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements
22
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 and Comprehensive Income | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
See Notes to Condensed Consolidated Financial Statements
23
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
|
Receivables of VIEs (net of allowance for doubtful accounts of $
|
|
|
|||||||||
| Receivables from affiliated companies |
|
|
|||||||||
| Notes receivable from affiliated companies |
|
— | |||||||||
| Inventory |
|
|
|||||||||
|
Regulatory assets (includes $
|
|
|
|||||||||
|
Other (includes $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total current liabilities |
|
|
|||||||||
|
Long-Term Debt (includes $
|
|
|
|||||||||
| 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 Condensed Consolidated Financial Statements
24
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| 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 |
(
|
(
|
|||||||||
| 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 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: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
25
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended | |||||
| September 30, 2021 and 2022 | |||||
| (in millions) | Member's Equity | ||||
| Balance at June 30, 2021 | $ |
|
|||
| Net income |
|
||||
| Distributions to parent |
(
|
||||
| Balance at September 30, 2021 | $ |
|
|||
| Balance at June 30, 2022 | $ |
|
|||
| Net income |
|
||||
| Balance at September 30, 2022 | $ |
|
|||
| Nine Months Ended | |||||
| September 30, 2021 and 2022 | |||||
| (in millions) | Member's Equity | ||||
| Balance at December 31, 2020 | $ |
|
|||
| Net income |
|
||||
| Distributions to parent |
(
|
||||
| Balance at September 30, 2021 | $ |
|
|||
| Balance at December 31, 2021 | $ |
|
|||
| Net income |
|
||||
| Distributions to parent |
(
|
||||
| Balance at September 30, 2022 | $ |
|
|||
See Notes to Condensed Consolidated Financial Statements
26
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 |
(
|
|
(
|
|
|||||||||||||||||||
| Comprehensive Income | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
See Notes to Condensed Consolidated Financial Statements
27
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
|
Receivables of VIEs (net of allowance for doubtful accounts of $
|
|
|
|||||||||
| Receivables from affiliated companies |
|
|
|||||||||
| Inventory |
|
|
|||||||||
|
Regulatory assets (includes $
|
|
|
|||||||||
|
Other (includes $
|
|
|
|||||||||
| Total current assets |
|
|
|||||||||
| Property, Plant and Equipment | |||||||||||
| Cost |
|
|
|||||||||
| Accumulated depreciation and amortization |
(
|
(
|
|||||||||
| Net property, plant and equipment |
|
|
|||||||||
| Other Noncurrent Assets | |||||||||||
|
Regulatory assets (includes $
|
|
|
|||||||||
| 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 $
|
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total current liabilities |
|
|
|||||||||
|
Long-Term Debt (includes $
|
|
|
|||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes |
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Operating lease liabilities |
|
|
|||||||||
| Accrued pension and other post-retirement benefit costs |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total other noncurrent liabilities |
|
|
|||||||||
| Commitments and Contingencies |
|
|
|||||||||
| Equity | |||||||||||
| Member's equity |
|
|
|||||||||
| Accumulated other comprehensive loss |
(
|
(
|
|||||||||
| Total equity |
|
|
|||||||||
| Total Liabilities and Equity | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
28
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| 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 |
(
|
(
|
|||||||||
| 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 |
|
|
|||||||||
| Other |
(
|
— | |||||||||
| Net cash provided by financing activities |
|
|
|||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash |
(
|
|
|||||||||
| Cash, cash equivalents and restricted cash at beginning of period |
|
|
|||||||||
| Cash, cash equivalents and restricted cash at end of period | $ |
|
$ |
|
|||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
(a)
Includes approximately $
746
million of under-collected deferred fuel regulatory assets for the nine months ended September 30, 2022
See Notes to Condensed Consolidated Financial Statements
29
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2021 and 2022 | |||||||||||||||||
| Accumulated | |||||||||||||||||
| Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Loss | |||||||||||||||||
| Net Unrealized | |||||||||||||||||
| Losses on | |||||||||||||||||
| Member's | Available-for-Sale | Total | |||||||||||||||
| (in millions) | Equity | Securities | Equity | ||||||||||||||
| Balance at June 30, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Balance at June 30, 2022 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Other comprehensive loss | — |
(
|
(
|
||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Nine Months Ended September 30, 2021 and 2022 | |||||||||||||||||
| Accumulated | |||||||||||||||||
| Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Loss | |||||||||||||||||
| Net Unrealized | |||||||||||||||||
| Losses on | |||||||||||||||||
| Member's | Available-for-Sale | Total | |||||||||||||||
| (in millions) | Equity | Securities | Equity | ||||||||||||||
| Balance at December 31, 2020 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Other |
(
|
— |
(
|
||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Balance at December 31, 2021 | $ |
|
$ |
(
|
$ |
|
|||||||||||
| Net income |
|
— |
|
||||||||||||||
| Other comprehensive loss | — |
(
|
(
|
||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
(
|
$ |
|
|||||||||||
See Notes to Condensed Consolidated Financial Statements
30
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 |
|
|
|
|
|||||||||||||||||||
| Losses 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 Condensed Consolidated Financial Statements
31
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY OHIO, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
| 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 |
(
|
(
|
|||||||||
| Generation 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, $
|
|
|
|||||||||
| Additional paid-in capital |
|
|
|||||||||
| Retained earnings |
|
|
|||||||||
| Total equity |
|
|
|||||||||
| Total Liabilities and Equity | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
32
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ |
|
$ |
|
|||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization |
|
|
|||||||||
| Equity component of AFUDC |
(
|
(
|
|||||||||
| Impairment of assets and other charges |
(
|
|
|||||||||
| Deferred income taxes |
(
|
|
|||||||||
| 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 |
|
— | |||||||||
| Notes payable to affiliated companies |
|
|
|||||||||
| Other |
(
|
— | |||||||||
| Net cash provided by financing activities |
|
|
|||||||||
| Net (decrease) increase in cash and cash equivalents |
(
|
|
|||||||||
| Cash and cash equivalents at beginning of period |
|
|
|||||||||
| Cash and cash equivalents at end of period | $ |
|
$ |
|
|||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
33
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2021 and 2022 | |||||||||||||||||||||||
| Additional | |||||||||||||||||||||||
| Common | Paid-in | Retained | Total | ||||||||||||||||||||
| (in millions) | Stock | Capital | Earnings | Equity | |||||||||||||||||||
| Balance at June 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Net income | — | — |
|
|
|||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Balance at June 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Net income | — | — |
|
|
|||||||||||||||||||
| Other | — | — |
|
|
|||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Nine Months Ended September 30, 2021 and 2022 | |||||||||||||||||||||||
| Additional | |||||||||||||||||||||||
| Common | Paid-in | Retained | Total | ||||||||||||||||||||
| (in millions) | Stock | Capital | Earnings | Equity | |||||||||||||||||||
| Balance at December 31, 2020 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Net income | — | — |
|
|
|||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Balance at December 31, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Net income | — | — |
|
|
|||||||||||||||||||
| Other | — | — |
|
|
|||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
See Notes to Condensed Consolidated Financial Statements
34
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 and Comprehensive Income | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
See Notes to Condensed Consolidated Financial Statements
35
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
|||||||
|
Receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
| Receivables from affiliated companies |
|
|
|||||||||
| Notes receivable from affiliated companies | — |
|
|||||||||
| Inventory |
|
|
|||||||||
| Regulatory assets |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total current assets |
|
|
|||||||||
| Property, Plant and Equipment | |||||||||||
| Cost |
|
|
|||||||||
| Accumulated depreciation and amortization |
(
|
(
|
|||||||||
| Net property, plant and equipment |
|
|
|||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets |
|
|
|||||||||
| Operating lease right-of-use assets, net |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total other noncurrent assets |
|
|
|||||||||
| Total Assets | $ |
|
$ |
|
|||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ |
|
$ |
|
|||||||
| Accounts payable to affiliated companies |
|
|
|||||||||
| Notes payable to affiliated companies |
|
— | |||||||||
| Taxes accrued |
|
|
|||||||||
| Interest accrued |
|
|
|||||||||
| Current maturities of long-term debt |
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total current liabilities |
|
|
|||||||||
| Long-Term Debt |
|
|
|||||||||
| Long-Term Debt Payable to Affiliated Companies |
|
|
|||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes |
|
|
|||||||||
| Asset retirement obligations |
|
|
|||||||||
| Regulatory liabilities |
|
|
|||||||||
| Operating lease liabilities |
|
|
|||||||||
| Accrued pension and other post-retirement benefit costs |
|
|
|||||||||
| Investment tax credits |
|
|
|||||||||
| Other |
|
|
|||||||||
| Total other noncurrent liabilities |
|
|
|||||||||
| Commitments and Contingencies |
|
|
|||||||||
| Equity | |||||||||||
| Member's Equity |
|
|
|||||||||
| Total Liabilities and Equity | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
36
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| 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 provided by (used in) financing activities |
|
(
|
|||||||||
| Net increase in cash and cash equivalents |
|
|
|||||||||
| Cash and cash equivalents at beginning of period |
|
|
|||||||||
| Cash and cash equivalents at end of period | $ |
|
$ |
|
|||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
37
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended | ||||||||
| September 30, 2021 and 2022 | ||||||||
| (in millions) | Member's Equity | |||||||
| Balance at June 30, 2021 | $ |
|
||||||
| Net income |
|
|||||||
| Distributions to parent |
(
|
|||||||
| Balance at September 30, 2021 | $ |
|
||||||
| Balance at June 30, 2022 | $ |
|
||||||
| Net income |
|
|||||||
| Other | $ |
(
|
||||||
| Balance at September 30, 2022 | $ |
|
||||||
| Nine Months Ended | ||||||||
| September 30, 2021 and 2022 | ||||||||
| (in millions) | Member's Equity | |||||||
| Balance at December 31, 2020 | $ |
|
||||||
| Net income |
|
|||||||
| Distributions to parent |
(
|
|||||||
| Other |
|
|||||||
| Balance at September 30, 2021 | $ |
|
||||||
| Balance at December 31, 2021 | $ |
|
||||||
| Net income |
|
|||||||
| Distributions to parent |
(
|
|||||||
| Balance at September 30, 2022 | $ |
|
||||||
See Notes to Condensed Consolidated Financial Statements
38
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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 (Loss) Income |
(
|
(
|
|
|
|||||||||||||||||||
| Other Income and Expenses, net |
|
|
|
|
|||||||||||||||||||
| Interest Expense |
|
|
|
|
|||||||||||||||||||
| (Loss) Income Before Income Taxes |
(
|
(
|
|
|
|||||||||||||||||||
| Income Tax (Benefit) Expense |
(
|
(
|
|
|
|||||||||||||||||||
| Net (Loss) Income and Comprehensive (Loss) Income | $ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
See Notes to Condensed Consolidated Financial Statements
39
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
|
Receivables (net of allowance for doubtful accounts of $
|
$ |
|
$ |
|
|||||||
| 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 |
|
|
|||||||||
| 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:
|
|
|
|||||||||
| Retained earnings |
|
|
|||||||||
| Total equity |
|
|
|||||||||
| Total Liabilities and Equity | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
40
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2022 | 2021 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ |
|
$ |
|
|||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization |
|
|
|||||||||
| Equity component of AFUDC |
(
|
(
|
|||||||||
| Impairment of assets and other charges |
|
|
|||||||||
| Deferred income taxes |
|
|
|||||||||
| Equity in earnings from unconsolidated affiliates |
(
|
(
|
|||||||||
| Contributions to qualified pension plans |
(
|
— | |||||||||
| 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 |
(
|
(
|
|||||||||
| Return of investment capital | — |
|
|||||||||
| 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 contributions from parent | — |
|
|||||||||
| Other |
(
|
— | |||||||||
| Net cash provided by financing activities |
|
|
|||||||||
| Net increase in cash and cash equivalents | — | — | |||||||||
| Cash and cash equivalents at beginning of period | — | — | |||||||||
| Cash and cash equivalents at end of period | $ | — | $ | — | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ |
|
$ |
|
|||||||
See Notes to Condensed Consolidated Financial Statements
41
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2021 and 2022 | |||||||||||||||||
| Common | Retained | Total | |||||||||||||||
| (in millions) | Stock | Earnings | Equity | ||||||||||||||
| Balance at June 30, 2021 | $ |
|
$ |
|
$ |
|
|||||||||||
| Net loss | — |
(
|
(
|
||||||||||||||
| Other | — |
(
|
(
|
||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
|
|||||||||||
| Balance at June 30, 2022 | $ |
|
$ |
|
$ |
|
|||||||||||
| Net loss | — |
(
|
(
|
||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
|||||||||||
| Nine Months Ended September 30, 2021 and 2022 | |||||||||||||||||
| Common | Retained | Total | |||||||||||||||
| (in millions) | Stock | Earnings | Equity | ||||||||||||||
| Balance at December 31, 2020 | $ |
|
$ |
|
$ |
|
|||||||||||
| Net income | — |
|
|
||||||||||||||
| Contribution from parent |
|
— |
|
||||||||||||||
| Other | — |
(
|
(
|
||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
|
|||||||||||
| Balance at December 31, 2021 | $ |
|
$ |
|
$ |
|
|||||||||||
| Net income | — |
|
|
||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
|||||||||||
See Notes to Condensed Consolidated Financial Statements
42
| FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION | ||||
Index to Combined Notes to Condensed Consolidated Financial Statements
The unaudited notes to the Condensed Consolidated Financial Statements that follow are a combined presentation. The following list indicates the registrants to which the footnotes apply.
| Applicable Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Registrant | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Carolinas | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Progress Energy | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Progress | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Florida | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Ohio | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Indiana | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Piedmont | • | • | • | • | • | • | • | • | • | • | • | • | • | • | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.
1.
ORGANIZATION AND BASIS OF PRESENTATION
BASIS OF PRESENTATION
These Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all information and notes required by GAAP for annual financial statements and should be read in conjunction with the Consolidated Financial Statements in the Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2021.
The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Condensed Consolidated Financial Statements. However, none of the registrants make any representations as to information related solely to Duke Energy or the subsidiaries of Duke Energy other than itself.
These Condensed Consolidated Financial Statements, in the opinion of the respective companies’ management, reflect all normal recurring adjustments necessary to fairly present the financial position and results of operations of each of the Duke Energy Registrants. Amounts reported in Duke Energy’s interim Condensed Consolidated Statements of Operations and each of the Subsidiary Registrants’ interim Condensed Consolidated Statements of Operations and Comprehensive Income are not necessarily indicative of amounts expected for the respective annual periods due to effects of seasonal temperature variations on energy consumption, regulatory rulings, timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices and other factors.
In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
BASIS OF CONSOLIDATION
These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 12 for additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities.
COMMERCIAL RENEWABLES STRATEGIC REVIEW
On November 1, 2022, the Board of Directors committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind lease for Carolina Long Bay. Duke Energy is actively marketing the business as two separate disposal units, the utility scale solar and wind unit and the distributed generation unit. Non-binding offers were received for the utility scale solar and wind unit in late October 2022. We are evaluating the initial offers and expect to receive final offers from select bidders in early 2023. Non-binding offers for the distributed generation unit are also expected in early 2023. Duke Energy expects to dispose of both units in mid-2023. In the fourth quarter of 2022, Duke Energy will reclassify the Commercial Renewables business segment to assets held for sale and report it as a discontinued operation. Duke Energy could record a material impairment loss in the fourth quarter of 2022 if the carrying value of one or both of the units is not expected to be recovered. If the proceeds exceed the carrying value of one or both of the units, a gain would be recognized at the closing of the transaction in mid-2023. Proceeds from a successful sale are expected to be used for debt reduction and avoidance.
NONCONTROLLING INTEREST
Duke Energy maintains a controlling financial interest in certain less than wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Condensed Consolidated Balance Sheets.
43
| FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION | ||||
Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of earnings, tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the Hypothetical Liquidation at Book Value (HLBV) method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of income or loss allocated to each owner for the reporting period.
During September 2021, Duke Energy completed the initial minority interest investment in a portion of Duke Energy Indiana to an affiliate of GIC. GIC's ownership interest in Duke Energy Indiana represents a noncontrolling interest. See Note 2 for additional information on the sale.
The following table presents allocated losses to noncontrolling interest for the three and nine months ended September 30, 2022, and 2021.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Noncontrolling Interest Allocation of Income | |||||||||||||||||||||||
| Allocated losses to noncontrolling tax equity members utilizing the HLBV method | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Allocated (income) losses to noncontrolling members based on pro rata shares of ownership |
(
|
|
(
|
|
|||||||||||||||||||
| Total Noncontrolling Interest Allocated Losses | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Duke | Energy | Progress | Energy | Energy | ||||||||||||||||||||||||||
| Energy | Carolinas | Energy | Progress | Florida | Energy | Carolinas | Energy | Progress | Florida | ||||||||||||||||||||||||||
| Current Assets | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Other |
|
|
|
|
|
|
— |
|
— |
|
|||||||||||||||||||||||||
| Other Noncurrent Assets | |||||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
— |
|
|
|
|
— | |||||||||||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
INVENTORY
Provisions for inventory write-offs were not material at September 30, 2022, and December 31, 2021.
The components of inventory are presented in the tables below.
| September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
| Materials and supplies | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Coal |
|
|
|
|
|
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Natural gas, oil and other fuel |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total inventory | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
44
| FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION | ||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
| Materials and supplies | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Coal |
|
|
|
|
|
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Natural gas, oil and other fuel |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total inventory | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
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 arrangement in Other within Other noncurrent assets.
NEW ACCOUNTING STANDARDS
No new accounting standards were adopted by the Duke Energy Registrants in 2022.
2.
BUSINESS SEGMENTS
Duke Energy
Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.
The Electric Utilities and Infrastructure segment primarily includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. On January 28, 2021, Duke Energy executed an agreement providing for an investment by an affiliate of GIC in Duke Energy Indiana in exchange for a
19.9
% minority interest issued by Duke Energy Indiana Holdco, LLC, the holding company for Duke Energy Indiana. The transaction will be completed following
two
closings for an aggregate purchase price of approximately $
2
billion. The first closing, which occurred on September 8, 2021, resulted in Duke Energy Indiana Holdco, LLC issuing
11.05
% of its membership interests in exchange for approximately $
1,025
million or
50
% of the purchase price. Duke Energy retained indirect control of these assets, and, therefore, no gain or loss was recognized on the Condensed Consolidated Statements of Operations. Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023. At the second closing, Duke Energy will issue and sell additional membership interests such that GIC will own
19.9
% of the membership interests for the remaining
50
% of the purchase price.
The Gas Utilities and Infrastructure segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky and Duke Energy's natural gas storage, midstream pipeline and renewable natural gas investments.
The Commercial Renewables segment is primarily comprised of nonregulated utility-scale wind and solar generation assets located throughout the U.S. See Note 1 for information on the strategic review of the Commercial Renewables business segment. Duke Energy continued to monitor recoverability of its renewable merchant plants located in the ERCOT West market and in the PJM West market during the third quarter of 2022 due to fluctuating market pricing and long-term forecasted energy prices. The assets were not impaired as of September 30, 2022, because the carrying value of approximately $
192
million continued to be supported by the expected cash flows. Duke Energy has a
51
% ownership interest in these assets.
The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of interest expense on holding company debt, unallocated corporate costs, Duke Energy’s wholly owned captive insurance company, Bison, and Duke Energy's ownership interest in National Methanol Company.
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Intersegment revenues |
|
|
|
|
|
(
|
— | ||||||||||||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||
|
Segment income (loss)
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Less: Noncontrolling interests |
|
||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend |
|
||||||||||||||||||||||||||||||||||||||||
|
Income from discontinued operations, net of tax
(b)
|
|
||||||||||||||||||||||||||||||||||||||||
| Net Income | $ |
|
|||||||||||||||||||||||||||||||||||||||
| Segment assets | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||
45
| FINANCIAL STATEMENTS | BUSINESS SEGMENTS | ||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Intersegment revenues |
|
|
— |
|
|
(
|
— | ||||||||||||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||
|
Segment income (loss)
(c)(d)
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Less: Noncontrolling interests |
|
||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend |
|
||||||||||||||||||||||||||||||||||||||||
| Net Income | $ |
|
|||||||||||||||||||||||||||||||||||||||
(a)
Commercial Renewables includes a $
6
million gain recorded within Nonregulated electric and other revenues related to mark-to-market derivative contracts on the Condensed Consolidated Statements of Operations.
(b)
Discontinued operations includes a reduction to a previously accrued liability as a result of the expiration of tax statutes related to the International Disposal Group.
(c)
Electric Utilities and Infrastructure includes $
160
million recorded within Impairment of assets and other charges, $
77
million within Other Income and expenses, $
5
million within Operations, maintenance and other, $
13
million within Regulated electric operating revenues and $
3
million within Interest expense on the Duke Energy Carolinas' Condensed Consolidated Statement of Operations related to the 2018 South Carolina rate cases and the CCR settlement and insurance proceeds distributed in accordance with that agreement; it also includes $
42
million recorded within Impairment of assets and other charges, $
34
million within Other Income and expenses
, $
7
million within Operations, maintenance, and other, $
15
million within Regulated electric operating revenues and $
5
million within Interest expense on the Duke Energy Progress' Condensed Consolidated Statement of Operations.
(d)
Other includes $
8
million recorded within Impairment of assets and other charges, $
1
million within Operations, maintenance and other on the Condensed Consolidated Statements of Operations, related to the workplace and workforce realignment.
| Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Intersegment revenues |
|
|
|
|
|
(
|
— | ||||||||||||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||
|
Segment income (loss)
(a)(b)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Less: Noncontrolling interests |
|
||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend |
|
||||||||||||||||||||||||||||||||||||||||
|
Income from discontinued operations, net of tax
(c)
|
|
||||||||||||||||||||||||||||||||||||||||
| Net Income | $ |
|
|||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Intersegment revenues |
|
|
— |
|
|
(
|
— | ||||||||||||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||||||
|
Segment income (loss)
(d)(e)(f)(g)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ | — | $ |
|
|||||||||||||||||||||||||||
| Less: Noncontrolling interests |
|
||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend |
|
||||||||||||||||||||||||||||||||||||||||
| Net Income | $ |
|
|||||||||||||||||||||||||||||||||||||||
46
| FINANCIAL STATEMENTS | BUSINESS SEGMENTS | ||||
(a)
Electric Utilities and Infrastructure includes $
211
million recorded within Impairment of assets and other charges, $
46
million within Regulated electric revenues and $
20
million within Noncontrolling Interests related to the Duke Energy Indiana Supreme Court ruling on the Condensed Consolidated Statements of Operations. See Note 3 for additional information.
(b)
Commercial Renewables includes a $
15
million loss recorded within Nonregulated electric and other revenues related to mark-to-market derivative contracts on the Condensed Consolidated Statements of Operations.
(c)
Discontinued operations includes a reduction to a previously accrued liability as a result of the expiration of tax statutes related to the International Disposal Group.
(d)
Electric Utilities and Infrastructure includes $
160
million recorded within Impairment of assets and other charges, $
77
million
within Other Income and expenses, $
5
million within Operations, maintenance and other, $
13
million within regulated operating revenues and $
3
million within interest expense on the Duke Energy Carolinas' Condensed Consolidated Statement of Operations related to the 2018 South Carolina rate cases and the CCR settlement and insurance proceeds distributed in accordance with that agreement; it also includes $
42
million recorded within Impairment of assets and other charges, $
34
million within Other Income and expenses, $
7
million within Operations, maintenance, and other, $
15
million within Regulated electric operating revenues and $
5
million wit
hin interest expense on the Duke Energy Progress' Condensed Consolidated Statement of Operations.
(e)
Gas Utilities and Infrastructure includes $
19
million, recorded within Equity in earnings of unconsolidated affiliates on the Condensed Consolidated Statements of Operations, related to gas pipeline investments.
(f)
Commercial Renewables includes a $
35
million loss related to Texas Storm Uri, of which ($
8
million) is recorded within Nonregulated electric and other revenues, $
2
million within Operations, maintenance and other, $
29
million within Equity in earnings of unconsolidated affiliates and $
12
million within Loss Attributable to Noncontrolling Interests on the Condensed Consolidated Statements of Operations.
(g)
Other includes $
139
million recorded within Impairment of assets and other charges, $
28
million within Operations, maintenance and other, and $
17
million within Depreciation and amortization on the Condensed Consolidated Statements of Operations, related to the workplace and workplace realignment.
Duke Energy Ohio
Duke Energy Ohio has
two
reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. The remainder of Duke Energy Ohio's operations is presented as Other.
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Eliminations | Total | |||||||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ | — | $ | — | $ |
|
|||||||||||||||||||||||
| Segment income (loss)/Net income | $ |
|
$ |
|
$ |
|
$ |
(
|
$ | — | $ |
|
|||||||||||||||||||||||
| Segment assets | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||
| Segment income (loss)/Net income | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||
| Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||
| Segment income (loss)/Net income | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||
| Segment income (loss)/Net income | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||
3.
REGULATORY MATTERS
RATE-RELATED INFORMATION
The NCUC, PSCSC, FPSC, IURC, PUCO, TPUC and KPSC approve rates for retail electric and natural gas services within their states. The FERC approves rates for electric sales to wholesale customers served under cost-based rates (excluding Ohio and Indiana), as well as sales of transmission service. The FERC also regulates certification and siting of new interstate natural gas pipeline projects.
47
| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
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 storm restoration costs, including capital, are currently expected to be in the range of
$
100
million to $
125
million
and most of the costs were incurred in October 2022. Duke Energy Carolinas and Duke Energy Progress have regulatory tools to recover storm costs including deferral and securitization. Duke Energy Carolinas and Duke Energy Progress are estimating recovery of the majority of the incremental operation and maintenance costs through one or more of these mechanisms. These estimates will change as Duke Energy Carolinas and Duke Energy Progress receive additional information on actual costs.
Car
bon Plan Proceeding
The NCUC is required by North Carolina Session Law 2021-165 (HB 951) to adopt an initial Carbon Plan on or before December 31, 2022. Duke Energy Carolinas and Duke Energy Progress filed their proposed Carbon Plan on May 16, 2022. The NCUC Public Staff and other parties filed their reply comments on July 15, 2022, including alternative Carbon Plans filed by some of the other parties
.
The NCUC conducted public hearings across North Carolina in July 2022 and August 2022 and held an evidentiary hearing in September 2022. Proposed orders and briefs were filed on October 24, 2022, and a final order is expected by the end of 2022. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
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. On September 1, 2022, the PSCSC approved a procedural schedule and scheduled an evidentiary hearing for February 1, 2023. Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Carolinas
2023 North Carolina Rate Case
On September 8, 2022, Duke Energy Carolinas requested initiation of the process necessary to file a performance-based regulation application (PBR Application). The request notified the NCUC that such PBR Application would be targeted for filing no earlier than January 6, 2023. In addition, the NCUC held a technical conference on November 2, 2022, in which Duke Energy Carolinas presented information on approximately $
4
billion of planned transmission and distribution capital spending projects that it intends to include in the Multiyear Rate Plan (MYRP) portion of its PBR Application.
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 purporting to challenge Duke Energy Carolinas’ environmental report (ER). In general, the proposed contentions claimed that the ER did not consider certain information regarding the environmental aspects of severe accidents caused by a hypothetical failure of the Jocassee Dam in South Carolina and, therefore, did not satisfy the National Environmental Policy Act (NEPA) of 1969, as amended, or the NRC’s NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the proposed contentions on October 22, 2021, and the Petitioners filed their reply to Duke Energy Carolinas’ answer on November 5, 2021. On February 11, 2022, the Atomic Safety and Licensing Board (ASLB) issued its decision on the Hearing Request and found that the Petitioners failed to establish that the proposed contentions are litigable. The ASLB also denied the Petitioners' Petition for Waiver and terminated the proceeding.
On February 24, 2022, the NRC issued a decision in the SLR appeal related to the Turkey Point nuclear generating station in Florida and 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. While 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 ER providing information on environmental impacts during the SLR period prior to the rulemaking being completed. Duke Energy is evaluating the two options to determine which is preferable for ONS.
Although the NRC’s 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.
48
| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
Duke Energy Progress
2022 North Carolina Rate Case
On October 6, 2022, Duke Energy Progress filed an application with the NCUC to request an increase in base rate retail revenues. The rate request before the NCUC includes a PBR Application, which includes a MYRP and proposes rates for
three years
within the 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 filing.
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. Duke Energy Progress cannot predict the outcome of this matter.
2022 South Carolina Rate Case
On September 1, 2022, D
uke Energy Progress filed an application with the PSCSC to request an increase in base rate retail revenues. Duke Energy Progress' rate request proposes a step in of the proposed rate increase over
two years
. If approved, the overall retail revenue increase in Year 1 would be approximately $
53
million or
8.6
%. In Year 2, the remaining portion of the request would take effect for a net cumulative increase in retail revenues of approximately $
68
million or
11
%. The rate increase is driven by major capital investments, including grid improvements and advanced metering infrastructure, the addition of two new combined-cycle units located in Asheville, North Carolina, and environmental compliance costs, including recovery over a
seven-year
period of $
108
million of deferred coal ash related compliance costs. Duke Energy Progress is proposing to accelerate flow back of the remaining portion of the federal unprotected EDIT associated with Property, Plant and Equipment over
26
months compared to the amortization over
20
years that was approved in the last base rate case. Duke Energy Progress also requested approval to establish a storm reserve for future incremental storm costs. Hearings are scheduled to begin in January 2023, and Duke Energy Progress has requested to implement new customer rates by April 1, 2023. Duke Energy Progress cannot predict the outcome of this matter.
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 return on equity (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 July 5, 2022, NCEMC filed comments in support of the Settlement Agreement. The parties are awaiting FERC approval of the Settlement Agreement
. The final disposition of these proceedings is not expected to have a material effect on the results of operations, cash flows or financial position of Duke Energy Progress.
Duke Energy Florida
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “2021 Settlement”) with the FPSC. The parties to the 2021 Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
Pursuant to the 2021 Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $
67
million in 2022, $
49
million in 2023 and $
79
million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to an ROE band of
8.85
% to
10.85
% with a midpoint of
9.85
% based on a capital structure of
53
% equity and
47
% debt. The ROE band can be increased by
25
basis points if the average 30-year U.S. Treasury rate increases
50
basis points or more over a six-month period in which case the midpoint ROE would rise from
9.85
% to
10.10
%. 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 will be able to recognize the $
173
million into earnings from 2022 through 2024. 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 production tax credits associated with solar facilities placed in 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 production tax credits and to flow back the expected 2022 production tax credits via an adjustment to the capacity cost recovery clause. Duke Energy Florida cannot predict the outcome of this matter. See Note 16 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.
49
| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
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 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 approxim
ately $
7
billion of capital inv
estment in transmission and distribution meant to strengthen its infrastructure, reduce outage times associated with extreme weather events, reduce restoration costs and improve ove
rall 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.
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
September 30, 2022
Condensed Consolidated Balance Sheets included an estimate of approximately $
162
million related to deferred Hurricane Ian storm costs incurred through September 30, 2022, consistent with the FPSC's storm rule, in Regulatory assets within Other Noncurrent Assets. Total storm restoration costs, including capital, are estimated to be in the range of $
325
million to $
375
million by the end of the year. The estimate will change as Duke Energy Florida receives additional information on actual costs. 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 plans to make this petition in late 2022 or early 2023.
Duke Energy Ohio
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 four-day hearing ended on October 11, 2022. Initial briefs were filed
on October 31, 2022, and reply briefs are due November 14, 2022. 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 an additional application for rehearing challenging, among other things, the imposition of the cap on shared savings. On January 13, 2021, the application for rehearing was granted for further consideration.
•
On October 9, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposed a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review.
•
On November 18, 2020, the PUCO issued an order directing all utilities to set their energy efficiency riders to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020. Effective January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs.
•
On June 14, 2021, the PUCO 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.
50
| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
•
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). 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. The Staff issued reports recommending a disallowance of MGP remediation costs incurred that the Staff believes are not eligible for recovery. The Staff interprets the PUCO’s 2013 order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and West End sites. Duke Energy Ohio filed reply comments objecting to the Staff’s recommendations and explaining, among other things, the obligation Duke Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. Additionally, the Staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020.
The 2013 PUCO order also contained conditional deadlines for completing the MGP environmental remediation and the deferral of related remediation costs. Subsequent to the order, the deadline was extended to December 31, 2019. On May 10, 2019, Duke Energy Ohio filed an application requesting a continuation of its existing deferral authority for MGP remediation that must occur after December 31, 2019. On July 12, 2019, the Staff recommended the commission deny the deferral authority request. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on October 2, 2019, Duke Energy Ohio filed reply comments.
A Stipulation and Recommendation was filed jointly by Duke Energy Ohio, the Staff, the Office of the Ohio Consumers' Counsel and the Ohio Energy Group on August 31, 2021, which 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 Cuts and Jobs Act (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 Condensed Consolidated Statements of Operations for the nine months ended September 30, 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 sub
ject 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.
51
| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
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 Condensed Consolidated Statements of Operations and Comprehensive Income in the fourth quarter of 2021. A Stipulation and Recommendation was filed jointly 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 Condensed Consolidated Statements of Operations and Comprehensive Income for the three months and nine months ended September 30, 2022.
Duke Energy Indiana
2019 Indiana Rate Case
On July 2, 2019, Duke Energy Indiana filed a general rate case with the IURC for a rate increase for retail customers of approximately $
395
million. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a
15.6
% or $
396
million average retail rate increase, including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued an order in the rate case approving a revenue increase of $
146
million before certain adjustments and ratemaking refinements. The order approved Duke Energy Indiana’s requested forecasted rate base of $
10.2
billion as of December 31, 2020, including the Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $
200
million, when accounting for the utility receipts tax and other adjustments. Approximately
50
% of the reduction was due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately
20
% was due to the approved ROE of
9.7
% versus the requested ROE of
10.4
% and approximately
20
% was related to miscellaneous earnings neutral adjustments. Step one rates were estimated to be approximately
75
% of the total and became effective on July 30, 2020. Step two rates 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. Appellate briefs were filed on October 14, 2020, focusing on three issues: wholesale sales allocations, coal ash basin cost recovery and the Edwardsport IGCC operating and maintenance expense level approved. The Indiana Court of Appeals affirmed the IURC decision on May 13, 2021. The Indiana Office of Utility Consumer Counselor (OUCC) and the Duke Industrial Group filed a joint petition to transfer the rate case appeal to the Indiana Supreme Court on June 28, 2021. The Indiana Supreme Court issued its opinion on March 10, 2022, finding 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 Condensed Consolidated Statements of Operations for the
nine months ended September 30, 2022. D
uke 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 January 20, 2023. Duke Energy Indiana cannot predict the outcome of this matter.
2020 Indiana Coal Ash Recovery Case
In Duke Energy Indiana’s 2019 rate case, the IURC also opened a subdocket for post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management (IDEM) as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020. Briefing was completed by mid-September 2021. On November 3, 2021, the IURC issued an order allowing recovery for post-2018 coal ash basin closure costs for the plans that have been approved by IDEM, as well as continuing deferral, with carrying costs, on the balance. The OUCC filed a notice of appeal to the Indiana Court of Appeals on December 3, 2021. The OUCC's opening brief was filed on October 12, 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 reliability to our customers, 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. Duke Energy Indiana cannot predict the outcome of this matter.
52
| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
Piedmont
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. The rate increase is driven by customer growth and infrastructure upgrade investments (plant additions) since Piedmont’s last proceeding in 2021 under South Carolina’s Rate Stabilization Act. In addition, Piedmont agreed with the South Carolina Office of Regulatory Staff (ORS) in 2019 to file a general rate case no later than April 1, 2022, to conduct a more comprehensive review of rates including the allocation of costs to residential, commercial and industrial customers. In addition to the ORS, the South Carolina Department of Consumer Affairs (DCA) and the South Carolina Energy Users Committee (SCEUC) intervened in the case and filed testimony on July 12, 2022, each recommending downward adjustments relating to several issues, including ROE, capital structure, depreciation and employee compensation. Prior to hearing, Piedmont entered into a comprehensive settlement with the ORS and the SCEUC, which included a stipulated ROE of
9.49
% and capital structure of
53.5
% equity. The DCA stipulated to all terms with the exception of ROE and capital structure. 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
Potential Coal Plant Retirements
The Subsidiary Registrants periodically file integrated resource plans (IRPs) with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful lives. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives and plans to seek regulatory recovery for amounts that would not be otherwise recovered when any of these assets are retired.
The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of September 30, 2022, and exclude capitalized asset retirement costs.
| Remaining Net | |||||||||||
| Capacity | Book Value | ||||||||||
| (in MW) | (in millions) | ||||||||||
| Duke Energy Carolinas | |||||||||||
|
Allen Steam Station Unit 1
(a)
|
|
$ |
|
||||||||
|
Allen Steam Station Unit 5
(b)
|
|
|
|||||||||
|
Cliffside Unit 5
(b)
|
|
|
|||||||||
| Duke Energy Progress | |||||||||||
|
Mayo Unit 1
(b)
|
|
|
|||||||||
|
Roxboro Units 3-4
(b)
|
|
|
|||||||||
| Duke Energy Florida | |||||||||||
|
Crystal River Units 4-5
(c)
|
|
|
|||||||||
| Duke Energy Indiana | |||||||||||
|
Gibson Units 1-5
(d)
|
|
|
|||||||||
|
Cayuga Units 1-2
(d)
|
|
|
|||||||||
| Total Duke Energy |
|
$ |
|
||||||||
(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. The long-term energy options considered in the IRP could result in retirement of this unit earlier than its current estimated useful life.
(b)
These units were inc
luded in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020.
The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives.
(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.
53
| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES | ||||
4.
COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL
The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all Duke Energy Registrants.
Remediation Activities
In addition to AROs recorded as a result of various environmental regulations, the Duke Energy Registrants are responsible for environmental remediation at various sites. These include certain properties that are part of ongoing operations and sites formerly owned or used by Duke Energy entities. These sites are in various stages of investigation, remediation and monitoring. Managed in conjunction with relevant federal, state and local agencies, remediation activities vary based upon site conditions and location, remediation requirements, complexity and sharing of responsibility. If remediation activities involve joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Duke Energy Registrants could potentially be held responsible for environmental impacts caused by other potentially responsible parties and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs.
Liabilities are recorded when losses become probable and are reasonably estimable.
The total costs that may be incurred cannot be estimated because the extent of environmental impact, allocation among potentially responsible parties, remediation alternatives and/or regulatory decisions have not yet been determined at all sites. Additional costs associated with remediation activities are likely to be incurred in the future and could be significant.
Costs are typically expensed as Operation, maintenance and other on the Condensed Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.
The following table contains information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Other within Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.
| (in millions) | September 30, 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 |
|
|
||||||
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
D
uke 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 plaintiff agreed to voluntarily dismiss its 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
Several Duke Energy renewables project companies, located in the ERCOT market, were named in lawsuits arising out of Texas Storm Uri in mid-February 2021. Duke Energy Corporation, which had originally been named in several suits, was dismissed from the lawsuits. The lawsuits against the Duke Energy renewables project companies seek recovery for property damages, personal injury and for wrongful death allegedly caused by the power outages, which the plaintiffs claim was the result of collective failures of generators, transmission and distribution operators, retail energy providers and others, including ERCOT. The cases have been consolidated into a Texas state court multidistrict litigation (MDL) proceeding for discovery and pre-litigation purposes.
Five
MDL cases have been designated for motions to dismiss while all other cases are stayed. Duke Energy renewables projects are named as defendants in
three
of these
five
cases. Plaintiffs in these
five
cases have filed amended petitions, which are subject to renewed omnibus motions to dismiss focusing on lack of duty, tariff defenses and sovereign immunity. The motions were heard by the court on October 11 and 12, 2022. The court is expected to make a decision on all motions within two months. Thereafter, the parties expect an appeal which may have the effect of staying all or some of the litigation. Duke Energy cannot predict the outcomes of these matters.
54
| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES | ||||
Duke Energy Carolinas
Ruben Villano, et al. v. Duke Energy Carolinas, LLC
On June 16, 2021, a group of
nine
individuals went over a low head dam adjacent to the Dan River Steam Station in Eden, North Carolina, while water tubing. Emergency personnel rescued
four
people and
five
others were confirmed deceased. On August 11, 2021, Duke Energy Carolinas was served with the complaint filed in Durham County Superior Court on behalf of
four
survivors, which was later amended to include all the decedents along with the survivors, except for one minor. The lawsuit alleges that Duke Energy Carolinas knew that the river was used for recreational purposes and that Duke Energy did not adequately warn about the dam, and that Duke Energy Carolinas created a dangerous and hidden hazard on the Dan River in building and maintaining the low head dam. On September 30, 2021, Duke Energy Carolinas filed its motion to dismiss and motion for transfer of venue from Durham County to Rockingham County, both of which were denied on November 15, 2021. On November 15, 2021, Duke Energy Carolinas was also served with Plaintiffs Second Amended Complaint, which added the final minor plaintiff and consolidated all the actions into
one
lawsuit. Duke Energy Carolinas has filed its Answer and Affirmative Defenses to the Second Amended Complaint. Discovery has commenced and is scheduled to be completed on or before April 28, 2023. The parties are preparing for mediation in December 2022. If the case is not resolved, dispositive motions are due to be filed by September 6, 2023. 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 (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.
On May 21, 2020, in response to a 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.
On August 17, 2020, the court denied both NTE’s and Duke Energy Carolinas’ motions to dismiss. In October 2021, NTE filed a Second Amended Counterclaim and Complaint, and in January 2022, NTE filed a Third Amended Counterclaim and Complaint. Duke Energy Carolinas has responded to these pleadings. On December 6, 2021, Duke Energy Carolinas filed an Amended Complaint. 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 that violated various federal and state antitrust and deceptive trade practices 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. NTE has until November 14, 2022 to appeal the District Court's summary judgment ruling in Duke Energy Carolinas' favor on NTE's antitrust and unfair competition claims. 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 Caroli
nas has recognized asbestos-related reserves of $
467
million at September 30, 2022, and $
501
million at December 31, 2021. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Condensed Consolidated Balance Sheets. These reserves are based upon Duke Energy Carolinas' best estimate for current and future asbestos claims through 2041 and are recorded on an undiscounted basis. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after 2041 related to such potential claims. It is possible Duke Energy Carolinas may incur asbestos liabilities in excess of the recorded reserves.
Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. Receivables for insurance recoveries were $
595
million at
September 30, 2022, and $
644
million at December 31, 2021. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the Condensed 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 is $
12
million for Duke Energy and Duke Energy Carolinas as of September 30, 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.
55
| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES | ||||
Duke Energy Progress and Duke Energy Florida
Spent Nuclear Fuel Matters
On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims for damages incurred for the period 2014 through 2018. The lawsuit claimed the 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 will receive damages for costs incurred between 2014 and 2018, and will 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 will receive damages for costs incurred between 2014 and 2018, and will 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
.
On June 25, 2021, Duke Energy Indiana filed its response to the Petition to Review. On August 30, 2021, HEC served Duke Energy Indiana with its Brief in Support of Petition for Judicial Review. On October 29, 2021, Duke Energy Indiana and IDEM filed their response briefs. On December 13, 2021, HEC filed and served its Reply Brief.
On January 11, 2022, Duke Energy Indiana received a compliance obligation letter from the Environmental Protection Agency (EPA) notifying the company that the two basins at issue in the litigation are subject to requirements of the CCR Rule. The letter does not provide a deadline for compliance. Duke Energy Indiana is evaluating the EPA letter, its potential impacts on the litigation and the extent to which this letter could apply to CCR surface impoundments at its other Indiana sites.
Following the January 11, 2022 EPA notice of compliance letter, the parties filed a joint motion to stay the litigation for 45 days, which was approved by the court. As a result, the oral argument scheduled for February 1, 2022, was postponed. Duke Energy Indiana and HEC engaged in settlement discussions, but the parties were unable to reach resolution. On April 21, 2022, HEC filed a Motion to Lift Stay and Motion for Judicial Notice. HEC also requested 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 case schedule 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. Reserves are classified on the Condensed 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 Condensed Consolidated Balance Sheets and have uncapped maximum potential payments. However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position.
In addition, the Duke Energy Registrants enter into various fixed-price, noncancelable commitments to purchase or sell power or natural gas, take-or-pay arrangements, transportation, or throughput agreements and other contracts that may or may not be recognized on their respective Condensed Consolidated Balance Sheets. Some of these arrangements may be recognized at fair value on their respective Condensed Consolidated Balance Sheets if such contracts meet the definition of a derivative and the NPNS exception does not apply. In most cases, the Duke Energy Registrants’ purchase obligation contracts contain provisions for price adjustments, minimum purchase levels and other financial commitments.
56
| FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES | ||||
5.
DEBT AND CREDIT FACILITIES
SUMMARY OF SIGNIFICANT DEBT ISSUANCES
The following table summarizes significant debt issuances (in millions).
| Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||
| Maturity | Interest | Duke | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||
| Issuance Date | Date | Rate | Energy | (Parent) | Carolinas | Progress | Piedmont | ||||||||||||||||||||||||||||||||||
| Unsecured Debt | |||||||||||||||||||||||||||||||||||||||||
|
May 2022
(a)
|
May 2052 |
|
% | $ |
|
$ | — | $ | — | $ | — | $ |
|
||||||||||||||||||||||||||||
|
June 2022
(b)
|
June 2028 |
|
% |
|
|
— | — | — | |||||||||||||||||||||||||||||||||
|
June 2022
(b)
|
June 2034 |
|
% |
|
|
— | — | — | |||||||||||||||||||||||||||||||||
|
August 2022
(c)
|
March 2028 |
|
% |
|
|
— | — | — | |||||||||||||||||||||||||||||||||
|
August 2022
(c)
|
August 2032 |
|
% |
|
|
— | — | — | |||||||||||||||||||||||||||||||||
|
August 2022
(c)
|
August 2052 |
|
% |
|
|
— | — | — | |||||||||||||||||||||||||||||||||
| First Mortgage Bonds | |||||||||||||||||||||||||||||||||||||||||
|
March 2022
(d)
|
March 2032 |
|
% |
|
— |
|
— | — | |||||||||||||||||||||||||||||||||
|
March 2022
(d)
|
March 2052 |
|
% |
|
— |
|
— | — | |||||||||||||||||||||||||||||||||
|
March 2022
(d)
|
April 2032 |
|
% |
|
— | — |
|
— | |||||||||||||||||||||||||||||||||
|
March 2022
(d)
|
April 2052 |
|
% |
|
— | — |
|
— | |||||||||||||||||||||||||||||||||
| Tax-exempt Bonds | |||||||||||||||||||||||||||||||||||||||||
|
June 2022
(e)
|
September 2030 |
|
% |
|
|
— | — | — | |||||||||||||||||||||||||||||||||
|
June 2022
(e)
|
November 2039 |
|
% |
|
|
— | — | — | |||||||||||||||||||||||||||||||||
|
September 2022
(f)
|
October 2046 |
|
% |
|
— | — |
|
— | |||||||||||||||||||||||||||||||||
|
September 2022
(g)
|
October 2046 |
|
% |
|
— | — |
|
— | |||||||||||||||||||||||||||||||||
|
September 2022
(g)
|
October 2046 |
|
% |
|
— | — |
|
— | |||||||||||||||||||||||||||||||||
| Total issuances | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
(a)
Proceeds were used to pay down 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. Proceeds were used 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 9 for additional information.
(c)
Proceeds will be used to repay a portion of short-term debt and for general corporate purposes.
(d)
Proceeds were used to finance or refinance, in whole or in part, existing or new eligible projects under the sustainable financing framework.
(e)
Proceeds were used to provide funds to refund the prior bonds, 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.
(f)
Proceeds were used 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.
(g)
Proceeds were used 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.
57
| FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES | ||||
CURRENT MATURITIES OF LONG-TERM DEBT
The following table shows the significant components of Current maturities of long-term debt on the Condensed Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.
| (in millions) | Maturity Date | Interest Rate | September 30, 2022 | ||||||||||||||
|
Unsecured Debt
(a)
|
|||||||||||||||||
| Duke Energy (Parent) | April 2023 |
|
% | $ |
|
||||||||||||
|
Duke Energy (Parent)
(b)
|
June 2023 |
|
% |
|
|||||||||||||
| First Mortgage Bonds | |||||||||||||||||
| Duke Energy Carolinas | March 2023 |
|
% |
|
|||||||||||||
| Duke Energy Carolinas | March 2023 |
|
% |
|
|||||||||||||
| Duke Energy Progress | September 2023 |
|
% |
|
|||||||||||||
| Duke Energy Ohio | September 2023 |
|
% |
|
|||||||||||||
|
Other
(c)
|
|
||||||||||||||||
| Current maturities of long-term debt | $ |
|
|||||||||||||||
(a)
In May 2022, Duke Energy (Parent) early retired $
500
million of unsecured debt with an original maturity date of August 2022.
(b)
Debt has a floating interest rate.
(c)
Includes finance lease obligations, amortizing debt, tax-exempt bonds with mandatory put options and small bullet maturities.
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.
| September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Energy | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | (Parent) | Carolinas | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
|
Facility size
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Reduction to backstop issuances | |||||||||||||||||||||||||||||||||||||||||||||||
|
Commercial paper
(b)
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
| Outstanding letters of credit |
(
|
(
|
(
|
(
|
(
|
— | — | — | |||||||||||||||||||||||||||||||||||||||
| Tax-exempt bonds |
(
|
— | — | — | — | — |
(
|
— | |||||||||||||||||||||||||||||||||||||||
| Available capacity under the Master Credit Facility | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
(a)
Represents the sublimit of each borrower.
Other Credit Facilities
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 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. The balance is classified as Long-Term Debt on Duke Energy's Condensed 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 will be classified as Long-Term Debt on Duke Energy Florida's Consolidated Balance Sheet.
58
| FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES | ||||
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, Duke Energy filed a Form S-3 that allows Duke Energy 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.
Intercompany Credit Agreements
In March 2022, Progress Energy closed a revolving credit agreement with Duke Energy (Parent), which allowed up to $
2.5
billion in intercompany borrowings.
6.
ASSET RETIREMENT OBLIGATIONS
The Duke Energy Registrants record AROs when there is a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. Actual costs incurred could be materially different from current estimates that form the basis of the recorded AROs.
The following table presents the AROs recorded on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
|
Decommissioning of nuclear power facilities
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Closure of ash impoundments |
|
|
|
|
|
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Other |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
| Total ARO | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
| Less: Current portion |
|
|
|
|
|
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Total noncurrent ARO | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
(a)
Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.
ARO Liability Rollforward
The following table presents the change in liability associated with AROs for the Duke Energy Registrants.
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
|
Balance at December 31, 2021
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
|
Accretion expense
(b)
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Liabilities settled
(c)
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
— | |||||||||||||||||||||||||||||||||||||||
|
Revisions in estimates of cash flows
(d)
|
|
|
|
|
(
|
|
|
— | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
(a)
Primarily relates to decommissioning nuclear power facilities, closure of ash impoundments, asbestos removal, closure of landfills at fossil generation facilities, retirement of natural gas mains and removal of renewable energy generation assets.
(b)
For the nine months ended September 30, 2022, substantially all accretion expense relates to Duke Energy's regulated operations and has been deferred in accordance with regulatory accounting treatment.
(c)
Primarily relates to ash impoundment closures and nuclear decommissioning.
(d)
The amounts recorded represent the discounted cash flows for estimated closure costs as evaluated on a site-by-site basis. The increases primarily relate to higher unit costs associated with basin closure, routine maintenance and beneficiation activities, partially offset by lower post closure maintenance costs, a reduction in monitoring wells needed, and higher discount rates applied to future cash flows.
59
| FINANCIAL STATEMENTS | GOODWILL | ||||
7.
GOODWILL
Duke Energy
The following table presents the goodwill by reportable segment included on Duke Energy's Condensed Consolidated Balance Sheets at September 30, 2022, and December 31, 2021.
| Electric Utilities | Gas Utilities | Commercial | |||||||||||||||||||||
| (in millions) | and Infrastructure | and Infrastructure | Renewables | Total | |||||||||||||||||||
| Goodwill balance | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Accumulated impairment charges | — | — |
(
|
(
|
|||||||||||||||||||
| Goodwill, adjusted for accumulated impairment charges | $ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||
Duke Energy Ohio
Duke Energy Ohio's Goodwill balance of $
920
million, allocated $
596
million to Electric Utilities and Infrastructure and $
324
million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $
216
million on the Condensed Consolidated Balance Sheets at September 30, 2022, and December 31, 2021.
Progress Energy
Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure segment and there are
no
accumulated impairment charges.
Piedmont
Piedmont's Goodwill is included in the Gas Utilities and Infrastructure segment and there are
no
accumulated impairment charges.
Impairment Testing
Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. As the fair value for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis, no goodwill impairment charges were recorded in the third quarter of 2022.
60
| FINANCIAL STATEMENTS | RELATED PARTY TRANSACTIONS | ||||
8.
RELATED PARTY TRANSACTIONS
The Subsidiary Registrants engage in related party transactions in accordance with applicable state and federal commission regulations. Refer to the Condensed Consolidated Balance Sheets of the Subsidiary Registrants for balances due to or due from related parties.
Material amounts related to transactions with related parties included on the Condensed Consolidated Statements of Operations and Comprehensive Income are presented in the following table.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| 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)
|
|
|
|
|
|||||||||||||||||||
| 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 and Impairment of assets and other charges on the Condensed Consolidated Statements of Operations and Comprehensive Income.
(b)
The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison, Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.
(c)
Duke Energy Carolinas and Duke Energy Progress participate in a JDA, which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power and expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues and Fuel used in electric generation and purchased power, respectively, on the Condensed Consolidated Statements of Operations and Comprehensive Income.
(d)
Piedmont provides long-term natural gas delivery service to certain Duke Energy Carolinas and Duke Energy Progress natural gas-fired generation facilities. Piedmont records the sales in Operating Revenues, and Duke Energy Carolinas and Duke Energy Progress record the related purchases as a component of Fuel used in electric generation and purchased power on their respective Condensed Consolidated Statements of Operations and Comprehensive Income.
61
| FINANCIAL STATEMENTS | RELATED PARTY TRANSACTIONS | ||||
In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions, such as pipeline lease arrangements, and their proportionate share of certain charged expenses. These transactions of the Subsidiary Registrants are incurred in the ordinary course of business and are eliminated in consolidation.
As discussed in Note 12, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.
Intercompany Income Taxes
Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations.
The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||
| Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||
| (in millions) | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||
| September 30, 2022 | |||||||||||||||||||||||
| Intercompany income tax receivable | $ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| Intercompany income tax payable | — | — |
|
— | — | — | — | ||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||
| Intercompany income tax receivable | $ | — | $ | — | $ | — | $ |
|
$ |
|
$ | — | $ | — | |||||||||
| Intercompany income tax payable |
|
— |
|
— | — |
|
|
||||||||||||||||
9.
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.
All derivative instruments not identified as NPNS are recorded at fair value as assets or liabilities on the Condensed Consolidated Balance Sheets. Cash collateral related to derivative instruments ex
ecuted under master netting arrangements is offset against the collateralized derivatives on the Condensed Consolidated Balance Sheets. The cash impacts of settled derivatives are recorded as operating activities or financing activities on the Condensed Consolidated Statements of Cash Flows consistent with the classification of the hedged transaction.
INTEREST RATE RISK
The Duke Energy Registrants are exposed to changes in interest rates as a result of their issuance or anticipated issuance of variable-rate and fixed-rate debt and commercial paper. Interest rate risk is managed by limiting variable-rate exposures to a percentage of total debt and by monitoring changes in interest rates. To manage risk associated with changes in interest rates, the Duke Energy Registrants may enter into interest rate swaps, U.S. Treasury lock agreements and other financial contracts. In anticipation of certain fixed-rate debt issuances, a series of forward-starting interest rate swaps or Treasury locks may be executed to lock in components of current market interest rates. These instruments are later terminated prior to or upon the issuance of the corresponding debt.
Cash Flow Hedges
For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. Gains and losses reclassified out of accumulated other comprehensive loss for the three and nine months ended September 30, 2022, and 2021, were not material. Duke Energy's interest rate derivatives designated as hedges include interest rate swaps used to hedge existing debt within the Commercial Renewables segment and forward-starting interest rate swaps not accounted for under regulatory accounting.
Undesignated Contracts
Undesignated contracts primarily include contracts not designated as a hedge because they are accounted for under regulatory accounting or contracts that do not qualify for hedge accounting.
62
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
The following table shows notional amounts of outstanding derivatives related to interest rate risk.
| September 30, 2022 | |||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Indiana | Ohio | |||||||||||||||||||||||||||||
| Cash flow hedges | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| Undesignated contracts |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Total notional amount
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Indiana | Ohio | |||||||||||||||||||||||||||||
| Cash flow hedges | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| Undesignated contracts |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Total notional amount
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
(a)
Duke Energy includes amounts related to consolidated VIEs of $
625
million and $
665
million in cash flow hedges as of September 30, 2022, and December 31, 2021, respectively.
COMMODITY PRICE RISK
The Duke Energy Registrants are exposed to the impact of changes in the prices of electricity purchased and sold in bulk power markets and natural gas purchases, including Piedmont's natural gas supply contracts. Exposure to commodity price risk is influenced by a number of factors including the term of contracts, the liquidity of markets and delivery locations. To manage risk associated with commodity prices, the Duke Energy Registrants may enter into long-term power purchase or sales contracts and long-term natural gas supply agreements.
Cash Flow Hedges
For derivatives designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Gains and losses reclassified out of accumulated other comprehensive loss for the three and nine months ended September 30, 2022, and 2021, were not material. Duke Energy’s commodity derivatives designated as hedges include long-term electricity sales in the Commercial Renewables segment.
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.
For the Subsidiary Registrants, bulk power electricity and natural gas purchases flow through fuel adjustment clauses, formula-based contracts or other cost-sharing mechanisms. Differences between the costs included in rates and the incurred costs, including undesignated derivative contracts, are largely deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for the use of financial instruments to hedge commodity price risks. The strategy and objective of these hedging programs are to use the financial instruments to reduce natural gas costs volatility for customers.
Duke Energy’s undesignated contracts include long-term electricity sales in the Commercial Renewables segment.
Volumes
The tables below include volumes of outstanding commodity derivatives. Amounts disclosed represent the absolute value of notional volumes of commodity contracts excluding NPNS. The Duke Energy Registrants have netted contractual amounts where offsetting purchase and sale contracts exist with identical delivery locations and times of delivery. Where all commodity positions are perfectly offset, no quantities are shown.
| September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||
| Energy | Carolinas | Energy | Progress | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||
|
Electricity (GWh)
(a)
|
|
— | — | — |
|
|
— | ||||||||||||||||||||||||||||||||||
| Natural gas (millions of dekatherms) |
|
|
|
|
— |
|
|
||||||||||||||||||||||||||||||||||
63
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||
| Energy | Carolinas | Energy | Progress | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||
|
Electricity (GWh)
(a)
|
|
— | — | — |
|
|
— | ||||||||||||||||||||||||||||||||||
| Natural gas (millions of dekatherms) |
|
|
|
|
— |
|
|
||||||||||||||||||||||||||||||||||
(a)
Duke Energy includes
4,335
GWh and
9,975
GWh related to cash flow hedges as of September 30, 2022, and December 31, 2021, respectively.
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.
| September 30, 2022 | ||||||||||||||||||||||||||||||||||||||
| Receive | Fair Value | |||||||||||||||||||||||||||||||||||||
| Pay Notional | Notional | Receive | Hedge |
Gain (Loss)
(a)
|
||||||||||||||||||||||||||||||||||
| (in millions) | Pay Rate | (in millions) | Rate | Maturity Date | (in millions) | |||||||||||||||||||||||||||||||||
| Fair value hedges | ||||||||||||||||||||||||||||||||||||||
| $ |
|
|
% |
|
euros |
|
% | June 2028 | $ |
(
|
||||||||||||||||||||||||||||
|
|
|
% |
|
euros |
|
% | June 2034 |
(
|
||||||||||||||||||||||||||||||
| Total notional amount | $ |
|
|
euros | $ |
(
|
||||||||||||||||||||||||||||||||
64
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
LOCATION AND FAIR VALUE OF DERIVATIVE ASSETS AND LIABILITIES RECOGNIZED ON THE CONDENSED CONSOLIDATED BALANCE SHEETS
The following tables show the fair value and balance sheet location of derivative instruments. Although derivatives subject to master netting arrangements are netted on the Condensed Consolidated Balance Sheets, the fair values presented below are shown gross and cash collateral on the derivatives has not been netted against the fair values shown.
| Derivative Assets | September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||||||||||||||||||||||||||
| Noncurrent |
|
|
|
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Assets – Commodity Contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||||||||||||||||||||||||||
| Interest Rate Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Noncurrent |
|
— | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current |
|
— |
|
|
— | — |
|
— | ||||||||||||||||||||||||||||||||||||||||||
| Noncurrent |
|
|
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Assets – Interest Rate Contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ | — | $ |
|
$ | — | ||||||||||||||||||||||||||||||||||
| Total Derivative Assets | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||||||||||||||||||||||||||
| Derivative Liabilities | September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | — | |||||||||||||||||||||||||||||||||||
| Noncurrent |
|
— | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current |
|
|
— | — | — | — |
|
|
||||||||||||||||||||||||||||||||||||||||||
| Noncurrent |
|
|
|
|
— | — | — |
|
||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Liabilities – Commodity Contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ | — | $ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Interest Rate Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current |
|
— | — | — | — |
|
— | — | ||||||||||||||||||||||||||||||||||||||||||
| 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 | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
65
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
| Derivative Assets | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| 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 | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Derivative Liabilities | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Noncurrent |
|
— | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current |
|
|
|
|
|
— |
|
|
||||||||||||||||||||||||||||||||||||||||||
| Noncurrent |
|
|
|
|
— | — | — |
|
||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Liabilities – Commodity Contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Interest Rate Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Noncurrent |
|
— | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current |
|
|
— | — | — |
|
— | — | ||||||||||||||||||||||||||||||||||||||||||
| Noncurrent |
|
— | — | — | — |
|
|
— | ||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Liabilities – Interest Rate Contracts | $ |
|
$ |
|
$ | — | $ | — | $ | — | $ |
|
$ |
|
$ | — | ||||||||||||||||||||||||||||||||||
| Total Derivative Liabilities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
66
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
OFFSETTING ASSETS AND LIABILITIES
The following tables present the line items on the Condensed Consolidated Balance Sheets where derivatives are reported. Substantially all of Duke Energy's outstanding derivative contracts are subject to enforceable master netting arrangements. The gross amounts offset in the tables below show the effect of these netting arrangements on financial position, and include cash collateral posted to offset the net position. The amounts shown are calculated by counterparty. Accounts receivable or accounts payable and letters of credit may also be available to offset exposures in the event of bankruptcy. These amounts are not included in the tables below.
| Derivative Assets | September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
(
|
(
|
(
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | |||||||||||||||||||||||||||||||||||
| Noncurrent | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
(
|
(
|
(
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||
| Derivative Liabilities | September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ | — | $ | — | $ | — | $ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
— | — | — | — | — |
(
|
— | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||||||||||
| Noncurrent | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ | — | $ |
|
||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
(
|
(
|
(
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
|||||||||||||||||||||||||||||||||||
| Derivative Assets | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
(
|
(
|
(
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Noncurrent | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
(
|
(
|
(
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||
67
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
| Derivative Liabilities | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
(
|
(
|
(
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Noncurrent | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross amounts recognized | $ |
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Gross amounts offset |
(
|
(
|
(
|
(
|
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ |
|
$ |
|
$ | — | $ | — | $ | — | $ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
10.
INVESTMENTS IN DEBT AND EQUITY SECURITIES
Duke Energy’s investments in debt and equity securities are primarily comprised of investments held in (i) the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) the grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to OPEB plans and (iii) Bison. The Duke Energy Registrants classify investments in debt securities as Available for Sale (AFS) and investments in equity securities as fair value through net income (FV-NI).
For investments in debt securities classified as AFS, the unrealized gains and losses are included in other comprehensive income until realized, at which time they are reported through net income. For investments in equity securities classified as FV-NI, both realized and unrealized gains and losses are reported through net income. Substantially all of Duke Energy’s investments in debt and equity securities qualify for regulatory accounting, and accordingly, all associated realized and unrealized gains and losses on these investments are deferred as a regulatory asset or liability.
Duke Energy classifies the majority of investments in debt and equity securities as long term, unless otherwise noted.
Investment Trusts
The investments within the Investment Trusts are managed by independent investment managers with discretion to buy, sell and invest pursuant to the guidelines set forth by the investment manager agreements and trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments.
As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt securities within the Investment Trusts are recognized immediately and deferred to regulatory accounts where appropriate.
Other AFS Securities
Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
68
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES | ||||
DUKE ENERGY
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||||
| Unrealized | Unrealized | Estimated | Unrealized | Unrealized | Estimated | ||||||||||||||||||||||||||||||
| Holding | Holding | Fair | Holding | Holding | Fair | ||||||||||||||||||||||||||||||
| (in millions) | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||||||||||||||||
| NDTF | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ |
|
$ | — | $ | — | $ |
|
|||||||||||||||||||||||
| 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 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30, 2022, and 2021, were as follows.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions) | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||
| FV-NI: | |||||||||||||||||||||||
| Realized gains | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
| AFS: | |||||||||||||||||||||||
| Realized gains |
|
|
|
|
|||||||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
DUKE ENERGY CAROLINAS
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||||
| Unrealized | Unrealized | Estimated | Unrealized | Unrealized | Estimated | ||||||||||||||||||||||||||||||
| Holding | Holding | Fair | Holding | Holding | Fair | ||||||||||||||||||||||||||||||
| (in millions) | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||||||||||||||||
| NDTF | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ |
|
$ | — | $ | — | $ |
|
|||||||||||||||||||||||
| Equity securities |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Corporate debt securities | — |
|
|
|
|
|
|||||||||||||||||||||||||||||
| Municipal bonds | — |
|
|
|
— |
|
|||||||||||||||||||||||||||||
| U.S. government bonds | — |
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other debt securities | — |
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total NDTF Investments | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
69
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES | ||||
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30, 2022, and 2021, were as follows.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions) | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||
| FV-NI: | |||||||||||||||||||||||
| Realized gains | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
| AFS: | |||||||||||||||||||||||
| Realized gains |
|
|
|
|
|||||||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
PROGRESS ENERGY
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||||
| Unrealized | Unrealized | Estimated | Unrealized | Unrealized | Estimated | ||||||||||||||||||||||||||||||
| Holding | Holding | Fair | Holding | Holding | Fair | ||||||||||||||||||||||||||||||
| (in millions) | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||||||||||||||||
| NDTF | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ |
|
$ | — | $ | — | $ |
|
|||||||||||||||||||||||
| 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 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30, 2022, and 2021, were as follows.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions) | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||
| FV-NI: | |||||||||||||||||||||||
| Realized gains | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
| AFS: | |||||||||||||||||||||||
| Realized gains | — |
|
|
|
|||||||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
70
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES | ||||
DUKE ENERGY PROGRESS
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||||
| Unrealized | Unrealized | Estimated | Unrealized | Unrealized | Estimated | ||||||||||||||||||||||||||||||
| Holding | Holding | Fair | Holding | Holding | Fair | ||||||||||||||||||||||||||||||
| (in millions) | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||||||||||||||||
| NDTF | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ |
|
$ | — | $ | — | $ |
|
|||||||||||||||||||||||
| 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 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30, 2022, and 2021, were as follows.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (in millions) | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||
| FV-NI: | |||||||||||||||||||||||
| Realized gains | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
| AFS: | |||||||||||||||||||||||
| Realized gains | — |
|
|
|
|||||||||||||||||||
| Realized losses |
|
|
|
|
|||||||||||||||||||
DUKE ENERGY FLORIDA
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||||
| Unrealized | Unrealized | Estimated | Unrealized | Unrealized | Estimated | ||||||||||||||||||||||||||||||
| Holding | Holding | Fair | Holding | Holding | Fair | ||||||||||||||||||||||||||||||
| (in millions) | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||||||||||||||||
| NDTF | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ |
|
$ | — | $ | — | $ |
|
|||||||||||||||||||||||
| Equity securities |
|
— |
|
|
|
|
|||||||||||||||||||||||||||||
| Corporate debt securities | — |
|
|
— | — |
|
|||||||||||||||||||||||||||||
| U.S. government bonds | — |
|
|
— |
|
|
|||||||||||||||||||||||||||||
|
Total NDTF Investments
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Other Investments | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ |
|
$ | — | $ | — | $ |
|
|||||||||||||||||||||||
| Municipal bonds | — | — |
|
|
— |
|
|||||||||||||||||||||||||||||
| Total Other Investments | $ | — | $ | — | $ |
|
$ |
|
$ | — | $ |
|
|||||||||||||||||||||||
| Total Investments | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
(a)
During the nine months ended September 30, 2022, and the year ended December 31, 2021, Duke Energy Florida received reimbursements from the NDTF for costs related to ongoing decommissioning activity of Crystal River Unit 3.
71
| FINANCIAL STATEMENTS | INVESTMENTS IN DEBT AND EQUITY SECURITIES | ||||
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30, 2022, and 2021, were immaterial.
DUKE ENERGY INDIANA
The following table presents the estimated fair value of investments in debt and equity securities; equity investments are measured at FV-NI and debt investments are classified as AFS.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Gross | Gross | Gross | Gross | ||||||||||||||||||||||||||||||||
| Unrealized | Unrealized | Estimated | Unrealized | Unrealized | Estimated | ||||||||||||||||||||||||||||||
| Holding | Holding | Fair | Holding | Holding | Fair | ||||||||||||||||||||||||||||||
| (in millions) | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||||||||||||||||
| Investments | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ |
|
$ | — | $ | — | $ | — | |||||||||||||||||||||||
| Equity securities | — |
|
|
|
— |
|
|||||||||||||||||||||||||||||
| Corporate debt securities | — |
|
|
— | — |
|
|||||||||||||||||||||||||||||
| Municipal bonds | — |
|
|
|
|
|
|||||||||||||||||||||||||||||
| U.S. government bonds | — | — |
|
— | — |
|
|||||||||||||||||||||||||||||
| Total Investments | $ | — | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and nine months ended September 30, 2022, and 2021, were immaterial.
DEBT SECURITY MATURITIES
The table below summarizes the maturity date for debt securities.
| September 30, 2022 | |||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Indiana | |||||||||||||||||||||||||||||
| Due in one year or less | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Due after one through five years |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Due after five through 10 years |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Due after 10 years |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
11.
FAIR VALUE MEASUREMENTS
Fair value is the exchange price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value definition focuses on an exit price versus the acquisition cost. Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data or generally unobservable. Valuation techniques maximize the use of observable inputs and minimize use of unobservable inputs. A midmarket pricing convention (the midpoint price between bid and ask prices) is permitted for use as a practical expedient.
Fair value measurements are classified in three levels based on the fair value hierarchy as defined by GAAP. Certain investments are not categorized within the fair value hierarchy. These investments are measured at fair value using the net asset value (NAV) per share practical expedient. The NAV is derived based on the investment cost, less any impairment, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.
Fair value accounting guidance permits entities to elect to measure certain financial instruments that are not required to be accounted for at fair value, such as equity method investments or the company’s own debt, at fair value. The Duke Energy Registrants have not elected to record any of these items at fair value.
Valuation methods of the primary fair value measurements disclosed below are as follows.
Investments in equity securities
The majority of investments in equity securities are valued using Level 1 measurements. Investments in equity securities are typically valued at the closing price in the principal active market as of the last business day of the quarter. Principal active markets for equity prices include published exchanges such as the New York Stock Exchange and Nasdaq Stock Market. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. There was no after-hours market activity that was required to be reflected in the reported fair value measurements.
72
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS | ||||
Investments in debt securities
Most investments in debt securities are valued using Level 2 measurements because the valuations use interest rate curves and credit spreads applied to the terms of the debt instrument (maturity and coupon interest rate) and consider the counterparty credit rating. If the market for a particular fixed-income security is relatively inactive or illiquid, the measurement is Level 3.
Commodity derivatives
Commodity derivatives with clearinghouses are classified as Level 1. 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.
Foreign currency derivatives
Most over-the-counter foreign currency derivatives are valued using financial models that utilize observable inputs for similar instruments and are classified as Level 2. Inputs include forward foreign currency rate curves, notional amounts, rates and credit quality of the counterparties.
Other fair value considerations
See Note 11 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2021, for a discussion of the valuation of goodwill and intangible assets.
DUKE ENERGY
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note 9. See Note 10 for additional information related to investments by major security type for the Duke Energy Registrants.
| September 30, 2022 | |||||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | Not Categorized | ||||||||||||
| 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 | |||||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | Not Categorized | ||||||||||||
| 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) | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||
73
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS | ||||
The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
| Derivatives (net) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Balance at beginning of period | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Total pretax realized or unrealized gains included in earnings |
|
— |
|
— | |||||||||||||||||||
| Total pretax realized or unrealized losses included in comprehensive income |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Purchases, sales, issuances and settlements: | |||||||||||||||||||||||
| Purchases | — | — |
|
|
|||||||||||||||||||
| Settlements |
(
|
|
|
(
|
|||||||||||||||||||
| Total (losses) gains included on the Condensed Consolidated Balance Sheet |
(
|
|
(
|
|
|||||||||||||||||||
| Balance at end of period | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
DUKE ENERGY CAROLINAS
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | ||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Not Categorized | ||||||||||
| NDTF cash and cash equivalents | $ |
|
$ |
|
$ | — | $ | — | ||||||
| NDTF equity securities |
|
|
— |
|
||||||||||
| NDTF debt securities |
|
|
|
— | ||||||||||
| Derivative assets |
|
— |
|
— | ||||||||||
| Total assets |
|
|
|
|
||||||||||
| Derivative liabilities |
(
|
— |
(
|
— | ||||||||||
| Net assets | $ |
|
$ |
|
$ |
|
$ |
|
||||||
| December 31, 2021 | ||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Not Categorized | ||||||||||
| NDTF cash and cash equivalents | $ |
|
$ |
|
$ | — | $ | — | ||||||
| NDTF equity securities |
|
|
— |
|
||||||||||
| NDTF debt securities |
|
|
|
— | ||||||||||
| Derivative assets |
|
— |
|
— | ||||||||||
| Total assets |
|
|
|
|
||||||||||
| Derivative liabilities |
(
|
— |
(
|
— | ||||||||||
| Net assets | $ |
|
$ |
|
$ |
|
$ |
|
||||||
PROGRESS ENERGY
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Total Fair Value | Level 1 | Level 2 | |||||||||||||||||
| 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 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||
74
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS | ||||
DUKE ENERGY PROGRESS
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Total Fair Value | Level 1 | Level 2 | |||||||||||||||||
| 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
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Total Fair Value | Level 1 | Level 2 | |||||||||||||||||
| 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 OHIO
The recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets were not material at September 30, 2022, and December 31, 2021.
DUKE ENERGY INDIANA
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Level 3 | Total Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||
| Other equity securities | $ |
|
$ |
|
$ | — | $ | — | $ |
|
$ |
|
$ | — | $ | — | |||||||||||||
| Other debt securities |
|
— |
|
— |
|
— |
|
— | |||||||||||||||||||||
| Other cash and cash equivalents |
|
|
— | — | — | — | — | — | |||||||||||||||||||||
| Derivative assets |
|
|
|
|
|
|
— |
|
|||||||||||||||||||||
| Total assets |
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Derivative liabilities |
(
|
(
|
— | — |
(
|
(
|
(
|
— | |||||||||||||||||||||
| Net assets | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||
75
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS | ||||
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
| Derivatives (net) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Balance at beginning of period | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Purchases, sales, issuances and settlements: | |||||||||||||||||||||||
| Purchases | — | — |
|
|
|||||||||||||||||||
| Settlements |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Total (losses) gains included on the Condensed Consolidated Balance Sheet |
(
|
|
(
|
|
|||||||||||||||||||
| Balance at end of period | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
PIEDMONT
The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
| (in millions) | Total Fair Value | Level 1 | Level 2 | Total Fair Value | Level 1 | Level 2 | |||||||||||||||||
| Derivative assets | $ | — | $ | — | $ | — | $ |
|
$ |
|
$ | — | |||||||||||
| Derivative liabilities |
(
|
— |
(
|
(
|
— |
(
|
|||||||||||||||||
| Net (liabilities) assets | $ |
(
|
$ | — | $ |
(
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||
QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS
The following tables include quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.
| September 30, 2022 | |||||||||||||||||||||||
| Weighted | |||||||||||||||||||||||
| Fair Value | Average | ||||||||||||||||||||||
| Investment Type | (in millions) | Valuation Technique | Unobservable Input | Range | Range | ||||||||||||||||||
| Duke Energy | |||||||||||||||||||||||
| Electricity contracts | $ |
(
|
RTO forward pricing | Forward electricity curves – price per MWh | $ |
|
- | $ |
|
$ |
|
||||||||||||
| Duke Energy Ohio | |||||||||||||||||||||||
| FTRs |
|
RTO auction pricing | FTR price – per MWh |
|
- |
|
|
||||||||||||||||
| Duke Energy Indiana | |||||||||||||||||||||||
| FTRs |
|
RTO auction pricing | FTR price – per MWh |
(
|
- |
|
|
||||||||||||||||
| Duke Energy | |||||||||||||||||||||||
| Total Level 3 derivatives | $ |
(
|
|||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||
| Weighted | |||||||||||||||||||||||
| Fair Value | Average | ||||||||||||||||||||||
| Investment Type | (in millions) | Valuation Technique | Unobservable Input | Range | Range | ||||||||||||||||||
| Duke Energy | |||||||||||||||||||||||
| Electricity contracts | $ |
(
|
RTO forward pricing | Forward electricity curves – price per MWh | $ |
|
- |
$
|
$
|
||||||||||||||
| Duke Energy Ohio | |||||||||||||||||||||||
| FTRs |
|
RTO auction pricing | FTR price – per MWh |
|
- |
|
|
||||||||||||||||
| Duke Energy Indiana | |||||||||||||||||||||||
| FTRs |
|
RTO auction pricing | FTR price – per MWh |
(
|
- |
|
|
||||||||||||||||
| Duke Energy | |||||||||||||||||||||||
| Total Level 3 derivatives | $ |
(
|
|||||||||||||||||||||
76
| FINANCIAL STATEMENTS | FAIR VALUE MEASUREMENTS | ||||
OTHER FAIR VALUE DISCLOSURES
The fair value and book value of long-term debt, including current maturities, is summarized in the following table. Estimates determined are not necessarily indicative of amounts that could have been settled in current markets. Fair value of long-term debt uses Level 2 measurements.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
| (in millions) | Book Value | Fair Value | Book Value | Fair Value | |||||||||||||||||||
|
Duke Energy
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Duke Energy Carolinas |
|
|
|
|
|||||||||||||||||||
| Progress Energy |
|
|
|
|
|||||||||||||||||||
| Duke Energy Progress |
|
|
|
|
|||||||||||||||||||
| Duke Energy Florida |
|
|
|
|
|||||||||||||||||||
| Duke Energy Ohio |
|
|
|
|
|||||||||||||||||||
| Duke Energy Indiana |
|
|
|
|
|||||||||||||||||||
| Piedmont |
|
|
|
|
|||||||||||||||||||
At both September 30, 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.
12.
VARIABLE INTEREST ENTITIES
CONSOLIDATED VIEs
The obligations of the consolidated VIEs discussed in the following paragraphs are nonrecourse to the Duke Energy Registrants. The registrants have no requirement to provide liquidity to, purchase assets of or guarantee performance of these VIEs unless noted in the following paragraphs.
Receivables Financing – DERF/DEPR/DEFR
DERF, DEPR and DEFR are bankruptcy remote, special purpose subsidiaries of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, respectively. DERF, DEPR and DEFR are wholly owned LLCs with separate legal existence from their parent companies, and their assets are not generally available to creditors of their parent companies. On a revolving basis, DERF, DEPR and DEFR buy certain accounts receivable arising from the sale of electricity and related services from their parent companies.
DERF, DEPR and DEFR borrow amounts under credit facilities to buy these receivables. Borrowing availability from the credit facilities is limited to the amount of qualified receivables purchased, which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities are reflected on the Condensed 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 Condensed Consolidated Balance Sheets as Long-Term Debt.
The proceeds Duke Energy Ohio and Duke Energy Indiana receive from the sale of receivables to CRC are approximately
75
% cash and
25
% in the form of a subordinated note from CRC. The subordinated note is a retained interest in the receivables sold. Depending on collection experience, additional equity infusions to CRC may be required by Duke Energy to maintain a minimum equity balance of $
3
million.
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.
77
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES | ||||
Receivables Financing – Credit Facilities
The following table summarizes the amounts and expiration dates of the credit facilities and associated restricted receivables described above.
| Duke Energy | |||||||||||||||||||||||
| Duke Energy | Duke Energy | Duke Energy | |||||||||||||||||||||
| Carolinas | Progress | Florida | |||||||||||||||||||||
| (in millions) | CRC | DERF | DEPR | DEFR | |||||||||||||||||||
| Expiration date | February 2025 | January 2025 | April 2025 | April 2023 | |||||||||||||||||||
| Credit facility amount | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Amounts borrowed at September 30, 2022 |
|
|
|
|
|||||||||||||||||||
| Amounts borrowed at December 31, 2021 |
|
|
|
|
|||||||||||||||||||
| Restricted Receivables at September 30, 2022 |
|
|
|
|
|||||||||||||||||||
| Restricted Receivables at December 31, 2021 |
|
|
|
|
|||||||||||||||||||
Nuclear Asset-Recovery Bonds – DEFPF
DEFPF is a bankruptcy remote, wholly owned special purpose subsidiary of Duke Energy Florida. DEFPF was formed in 2016 for the sole purpose of issuing nuclear asset-recovery bonds to finance Duke Energy Florida's unrecovered regulatory asset related to Crystal River Unit 3.
In 2016, DEFPF issued senior secured bonds and used the proceeds to acquire nuclear asset-recovery property from Duke Energy Florida. The nuclear asset-recovery property acquired includes the right to impose, bill, collect and adjust a non-bypassable nuclear asset-recovery charge from all Duke Energy Florida retail customers until the bonds are paid in full and all financing costs have been recovered. The nuclear asset-recovery bonds are secured by the nuclear asset-recovery property and cash collections from the nuclear asset-recovery charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to Duke Energy Florida.
DEFPF is considered a VIE primarily because the equity capitalization is insufficient to support its operations. Duke Energy Florida has the power to direct the significant activities of the VIE as described above and therefore Duke Energy Florida is considered the primary beneficiary and consolidates DEFPF.
The following table summarizes the impact of DEFPF on Duke Energy Florida's Condensed Consolidated Balance Sheets.
| (in millions) | September 30, 2022 | December 31, 2021 | ||||||
| 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 |
|
|
||||||
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.
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.
78
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES | ||||
The following table summarizes the impact of these VIEs on Duke Energy Carolinas’ and Duke Energy Progress’ Consolidated Balance Sheets.
| September 30, 2022 | December 31, 2021 | ||||||||||||||||
| Duke Energy | Duke Energy | Duke Energy | Duke Energy | ||||||||||||||
| (in millions) | Carolinas | Progress | Carolinas | Progress | |||||||||||||
| Regulatory Assets: Current | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| Current Assets: Other |
|
|
— | — | |||||||||||||
| Other Noncurrent Assets: Regulatory assets |
|
|
|
|
|||||||||||||
| Other Noncurrent Assets: Other |
|
|
|
|
|||||||||||||
| Current Liabilities: Other |
|
|
|
|
|||||||||||||
| Current maturities of long-term debt |
|
|
|
|
|||||||||||||
| Long-Term Debt |
|
|
|
|
|||||||||||||
Commercial Renewables
Certain of Duke Energy’s renewable energy facilities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Assets are restricted and cannot be pledged as collateral or sold to third parties without prior approval of debt holders. Additionally, Duke Energy has VIEs associated with tax equity arrangements entered into with third-party investors in order to finance the cost of renewable assets eligible for tax credits. The activities that most significantly impacted the economic performance of these renewable energy facilities were decisions associated with siting, negotiating PPAs and Engineering, Procurement and Construction agreements, and decisions associated with ongoing operations and maintenance-related activities. Duke Energy is considered the primary beneficiary and consolidates the entities as it is responsible for all of these decisions.
The table below presents material balances reported on Duke Energy's Condensed Consolidated Balance Sheets related to Commercial Renewables VIEs.
| (in millions) | September 30, 2022 | December 31, 2021 | ||||||
| Current Assets: Other | $ |
|
$ |
|
||||
| Property, Plant and Equipment: Cost |
|
|
||||||
| Accumulated depreciation and amortization |
(
|
(
|
||||||
| Other Noncurrent Assets: Other |
|
|
||||||
| Current maturities of long-term debt |
|
|
||||||
| Long-Term Debt |
|
|
||||||
| Other Noncurrent Liabilities: AROs |
|
|
||||||
| Other Noncurrent Liabilities: Other |
|
|
||||||
NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Condensed Consolidated Balance Sheets.
| September 30, 2022 | |||||||||||||||||||||||||||||
| Duke Energy | Duke | Duke | |||||||||||||||||||||||||||
| Natural Gas | Commercial | Energy | Energy | ||||||||||||||||||||||||||
| (in millions) | Investments | Renewables | Total | Ohio | Indiana | ||||||||||||||||||||||||
| 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 | $ |
(
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
79
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES | ||||
| December 31, 2021 | |||||||||||||||||||||||||||||
| Duke Energy | Duke | Duke | |||||||||||||||||||||||||||
| Natural Gas | Commercial | Energy | Energy | ||||||||||||||||||||||||||
| (in millions) | Investments | Renewables | Total | Ohio | Indiana | ||||||||||||||||||||||||
| 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 | $ |
(
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
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 to construct and operate 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.
Commercial Renewables
Duke Energy has investments in various renewable energy project entities. Duke Energy has a
50
% ownership in a VIE, which owns a portfolio of wind projects. This entity is a VIE as a result of Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Duke Energy does not consolidate this VIE because power to direct and control key activities is shared jointly by Duke Energy and the other owner. Duke Energy also has equity ownership in an entity, which owns a portfolio of fuel cell projects. Duke Energy does not consolidate the fuel cell portfolio as it does not have the power to direct the activities that most significantly impact the economic performance of the entity.
OVEC
Duke Energy Ohio’s
9
% ownership interest in OVEC is considered a non-consolidated VIE due to OVEC having insufficient equity to finance its activities without subordinated financial support. The activities that most significantly impact OVEC's economic performance include fuel strategy and supply activities and decisions associated with ongoing operations and maintenance-related activities. Duke Energy Ohio does not have the unilateral power to direct these activities, and therefore, does not consolidate OVEC.
As a counterparty to an Inter-Company Power Agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business.
CRC
See discussion under Consolidated VIEs for additional information related to CRC.
Amounts included in Receivables from affiliated companies in the above table for Duke Energy Ohio and Duke Energy Indiana reflect their retained interest in receivables sold to CRC. These subordinated notes held by Duke Energy Ohio and Duke Energy Indiana are stated at fair value.
The following table shows the gross and net receivables sold.
| Duke Energy Ohio | Duke Energy Indiana | ||||||||||||||||||||||
| (in millions) | September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | |||||||||||||||||||
| Receivables sold | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Less: Retained interests |
|
|
|
|
|||||||||||||||||||
| Net receivables sold | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
80
| FINANCIAL STATEMENTS | VARIABLE INTEREST ENTITIES | ||||
The following table shows sales and cash flows related to receivables sold.
| Duke Energy Ohio | Duke Energy Indiana | ||||||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
| Sales | |||||||||||||||||||||||||||||
| Receivables sold | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||
| Loss recognized on sale |
|
|
|
|
|||||||||||||||||||||||||
| Cash flows | |||||||||||||||||||||||||||||
| Cash proceeds from receivables sold | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||
| Collection fees received |
|
|
|
|
|||||||||||||||||||||||||
| Return received on retained interests |
|
|
|
|
|||||||||||||||||||||||||
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 Condensed Consolidated Statements of Cash Flows.
13.
REVENUE
Electric Utilities and Infrastructure
Electric Utilities and Infrastructure earns the majority of its revenues through retail and wholesale electric service through the generation, transmission, distribution and sale of electricity. Duke Energy generally provides retail and wholesale electric service customers with their full electric load requirements or with supplemental load requirements when the customer has other sources of electricity.
The majority of wholesale revenues are full requirements contracts where the customers purchase the substantial majority of their energy needs and do not have a fixed quantity of contractually required energy or capacity. As such, related forecasted revenues are considered optional purchases.
Supplemental requirements contracts that include contracted blocks of energy and capacity at contractually fixed prices have the following estimated remaining performance obligations:
| Remaining Performance Obligations | |||||||||||||||||||||||
| (in millions) | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total | ||||||||||||||||
| Progress Energy | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| Duke Energy Progress |
|
|
|
— | — | — |
|
||||||||||||||||
| Duke Energy Florida |
|
|
|
|
|
|
|
||||||||||||||||
| Duke Energy Indiana |
|
|
|
|
|
|
|
||||||||||||||||
Revenues for block sales are recognized monthly as energy is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates.
Gas Utilities and Infrastructure
Gas Utilities and Infrastructure earns its revenue through retail and wholesale natural gas service through the transportation, distribution and sale of natural gas. Duke Energy generally provides retail and wholesale natural gas service customers with all natural gas load requirements. Additionally, while natural gas can be stored, substantially all natural gas provided by Duke Energy is consumed by customers simultaneously with receipt of delivery.
Fixed-capacity payments under long-term contracts for the Gas Utilities and Infrastructure segment include minimum margin contracts and supply arrangements with municipalities and power generation facilities. Revenues for related sales are recognized monthly as natural gas is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates.
Estimated remaining performance obligations are as follows:
| Remaining Performance Obligations | |||||||||||||||||||||||
| (in millions) | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total | ||||||||||||||||
| Piedmont | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||
Commercial Renewables
Commercial Renewables earns the majority of its revenues through long-term PPAs and generally sells all of its wind and solar facility output, electricity and Renewable Energy Certificates (RECs) to customers. Some of these PPAs have been accounted for as leases. For PPAs that are not accounted for as leases, the delivery of electricity and the delivery of RECs are considered separate performance obligations.
Other
The remainder of Duke Energy’s operations is presented as Other, which does not include material revenues from contracts with customers.
81
| FINANCIAL STATEMENTS | REVENUE | ||||
Disaggregated Revenues
Disaggregated revenues are presented as follows:
| Three Months Ended September 30, 2022 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| (in millions) | Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||
| By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
| Electric Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| General |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Industrial |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Wholesale |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Other revenues |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Total Electric Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| Gas Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
| Commercial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Industrial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Power Generation | — | — | — | — | — | — | — |
|
||||||||||||||||||
| Other revenues |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Total Gas Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
|
Commercial Renewables
|
||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
|
Other
|
||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Total revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
|
Other revenue sources
(a)
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
(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.
82
| FINANCIAL STATEMENTS | REVENUE | ||||
| Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| (in millions) | Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||
| By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
| Electric Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| General |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Industrial |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Wholesale |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Other revenues |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Total Electric Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| Gas Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
| Commercial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Industrial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Power Generation | — | — | — | — | — | — | — |
|
||||||||||||||||||
| Other revenues |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Total Gas Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
|
Commercial Renewables
|
||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
|
Other
|
||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Total revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
|
Other revenue sources
(a)
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
$ | — | $ |
|
$ |
|
||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
(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.
83
| FINANCIAL STATEMENTS | REVENUE | ||||
| Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| (in millions) | Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||
| By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
| Electric Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| General |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Industrial |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Wholesale |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Other revenues |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Total Electric Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| Gas Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
| Commercial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Industrial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Power Generation | — | — | — | — | — | — | — |
|
||||||||||||||||||
| Other revenues |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Total Gas Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
| Commercial Renewables | ||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Other | ||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Total Revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
|
Other revenue sources
(a)
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
(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.
84
| FINANCIAL STATEMENTS | REVENUE | ||||
| Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| (in millions) | Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||
| By market or type of customer | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
| Electric Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| General |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Industrial |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Wholesale |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Other revenues |
|
|
|
|
|
|
|
— | ||||||||||||||||||
| Total Electric Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ | — | ||||||||||
| Gas Utilities and Infrastructure | ||||||||||||||||||||||||||
| Residential | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
| Commercial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Industrial |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Power Generation | — | — | — | — | — | — | — |
|
||||||||||||||||||
| Other revenues |
|
— | — | — | — |
|
— |
|
||||||||||||||||||
| Total Gas Utilities and Infrastructure revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ |
|
$ | — | $ |
|
||||||||||
| Commercial Renewables | ||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Other | ||||||||||||||||||||||||||
| Revenue from contracts with customers | $ |
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Total Revenue from contracts with customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
|
Other revenue sources
(a)
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
||||||||||
| Total revenues | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
(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.
85
| FINANCIAL STATEMENTS | REVENUE | ||||
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.
| Three Months Ended September 30, 2021 and 2022 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
| Balance at June 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Write-Offs |
(
|
(
|
(
|
(
|
(
|
— | — |
(
|
||||||||||||||||||
| Credit Loss Expense |
|
|
|
|
|
— | — |
|
||||||||||||||||||
| Other Adjustments |
|
(
|
— | — | — | — | — |
|
||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Balance at June 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Write-Offs |
(
|
(
|
(
|
(
|
(
|
— | — |
(
|
||||||||||||||||||
| Credit Loss Expense |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Other Adjustments |
|
|
|
|
|
— | — | — | ||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Nine Months Ended September 30, 2021 and 2022 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
| Balance at December 31, 2020 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Write-Offs |
(
|
(
|
(
|
(
|
(
|
— | — |
(
|
||||||||||||||||||
| Credit Loss Expense |
|
|
|
|
|
— | — |
|
||||||||||||||||||
| Other Adjustments |
(
|
|
— | — |
|
— | — |
|
||||||||||||||||||
| Balance at September 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Balance at December 31, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Write-Offs |
(
|
(
|
(
|
(
|
(
|
— | — |
(
|
||||||||||||||||||
| Credit Loss Expense |
|
|
|
|
|
|
|
|
||||||||||||||||||
| Other Adjustments |
|
|
|
|
|
— | — | — | ||||||||||||||||||
| Balance at September 30, 2022 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions, as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss periodically for trade and other receivables.
The aging of trade receivables is presented in the table below. Duke Energy considers receivables greater than 30 days outstanding past due.
| September 30, 2022 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
|
Unbilled Revenue
(a)(b)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| 0-30 days |
|
|
|
|
|
|
|
|
||||||||||||||||||
| 30-60 days |
|
|
|
|
|
|
|
|
||||||||||||||||||
| 60-90 days |
|
|
|
|
|
|
|
|
||||||||||||||||||
| 90+ days |
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Deferred Payment Arrangements
(c)
|
|
|
|
|
|
|
— | — | ||||||||||||||||||
| Trade and Other Receivables | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
86
| FINANCIAL STATEMENTS | REVENUE | ||||
| December 31, 2021 | ||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||
|
Unbilled Revenue
(a)(b)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| 0-30 days |
|
|
|
|
|
|
|
|
||||||||||||||||||
| 30-60 days |
|
|
|
|
|
|
|
|
||||||||||||||||||
| 60-90 days |
|
|
|
|
|
|
|
|
||||||||||||||||||
| 90+ days |
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Deferred Payment Arrangements
(c)
|
|
|
|
|
|
|
— |
|
||||||||||||||||||
| Trade and Other Receivables | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
(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 Condensed 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 Condensed Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 12 for further information. These receivables for unbilled revenues are $
100
million and $
168
million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of September 30, 2022, and $
82
million and $
121
million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2021.
(c)
Due to certain customer financial hardships created by the COVID-19 pandemic and resulting stay-at-home orders, Duke Energy permitted customers to defer payment of past-due amounts through an installment payment plan over a period of several months.
14.
STOCKHOLDERS' EQUITY
The following table presents Duke Energy’s basic and diluted EPS calculations, the weighted average number of common shares outstanding and common and preferred share dividends declared.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Net income available to Duke Energy common stockholders | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Less: Income from discontinued operations |
|
|
|
|
|||||||||||||||||||
| Accumulated preferred stock dividends adjustment |
|
|
|
|
|||||||||||||||||||
| Less: Impact of participating securities |
|
|
|
|
|||||||||||||||||||
| Income from continuing operations available to Duke Energy common stockholders | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Weighted average common shares outstanding – basic and diluted |
|
|
|
|
|||||||||||||||||||
| EPS available to Duke Energy common stockholders | |||||||||||||||||||||||
| Basic and diluted | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
|
Potentially dilutive items excluded from the calculation
(a)
|
|
|
|
|
|||||||||||||||||||
| Dividends declared per common share | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
|
Dividends declared on Series A preferred stock per depositary share
(b)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
|
Dividends declared on Series B preferred stock per share
(c)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
(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.
87
| FINANCIAL STATEMENTS | EMPLOYEE BENEFIT PLANS | ||||
15.
EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT RETIREMENT PLANS
Duke Energy and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified and non-qualified, non-contributory defined benefit retirement plans. Duke Energy's policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants.
The following table includes information related to the Duke Energy Registrants' contributions to its qualified defined benefit pension plans.
| Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||
| Contributions made | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||
Duke Energy uses a December 31 measurement date for its qualified non-contributory defined benefit retirement plan assets and obligations. However, because Duke Energy believes it is probable in 2022 that total lump-sum benefit payments will exceed the settlement threshold, which is defined as the sum of the service cost and interest cost on projected benefit obligation components of net periodic pension costs, Duke Energy remeasured the plan assets and plan obligations associated with one of its qualified pension plans as of September 30, 2022. The discount rate used for the remeasurement was
5.7
% as of September 30, 2022. The cash balance interest crediting rate was
4.5
% as of September 30, 2022. The interest rate for lump sum and annuity conversions was updated to reflect current market conditions. All other assumptions used for the September 30, 2022, remeasurement were consistent with the measurement as of December 31, 2021.
As a result of the remeasurement, Duke Energy recognized a remeasurement loss of $
276
million, of which $
266
million was recorded in Regulatory Assets within Other Noncurrent Assets and $
10
million was recorded in Accumulated Other Comprehensive Loss within the Condensed Consolidated Balance Sheets as of September 30, 2022. The remeasurement loss, which represents a decrease in funded status, reflects a decrease of $
1,198
million in the fair value of plan assets and a decrease of $
922
million in the projected benefit obligation.
As the result of settlement accounting, Duke Energy recognized settlement charges of $
66
million, of which $
55
million was recorded to Regulatory Assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets and $
11
million was recorded to Other Income and Expenses, net, within the Condensed Consolidated Statement of Operations as of September 30, 2022. Settlement charges recognized by the Subsidiary Registrants as of September 30, 2022, were $
28
million for Duke Energy Carolinas, $
16
million for Duke Energy Progress, $
5
million for Duke Energy Florida, $
4
million for Duke Energy Indiana, $
2
million for Duke Energy Ohio and $
11
million for Piedmont.
QUALIFIED PENSION PLANS
The following tables include the components of net periodic pension costs for qualified pension plans.
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
| 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 | $ |
(
|
$ |
(
|
$ |
(
|
$ | — | $ |
(
|
$ |
|
$ |
|
$ |
(
|
|||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
| 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 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ | — | $ | — | |||||||||||||||||||||||||||||||
88
| FINANCIAL STATEMENTS | EMPLOYEE BENEFIT PLANS | ||||
| Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
| 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 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
|||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
| 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 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ | — | $ |
(
|
|||||||||||||||||||||||||||||||
NON-QUALIFIED PENSION PLANS
Net periodic pension costs for non-qualified pension plans were not material for the three and nine months ended September 30, 2022, and 2021.
OTHER POST-RETIREMENT BENEFIT PLANS
Net periodic costs for OPEB plans were not material for the three and nine months ended September 30, 2022, and 2021.
16.
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 production tax credits 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 production tax credit and a clean hydrogen production tax credit.
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 defer and expect to pass along the net financial impact associated with the IRA to customers over time. See Note 3 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.
89
| FINANCIAL STATEMENTS | INCOME TAXES | ||||
EFFECTIVE TAX RATES
The ETRs from continuing operations for each of the Duke Energy Registrants are included in the following table.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Duke Energy |
|
% |
|
% |
|
% |
|
% | |||||||||||||||
| Duke Energy Carolinas |
|
% |
|
% |
|
% |
|
% | |||||||||||||||
| Progress Energy |
|
% |
|
% |
|
% |
|
% | |||||||||||||||
| Duke Energy Progress |
|
% |
|
% |
|
% |
|
% | |||||||||||||||
| Duke Energy Florida |
|
% |
|
% |
|
% |
|
% | |||||||||||||||
| Duke Energy Ohio |
|
% |
|
% |
(
|
% |
|
% | |||||||||||||||
| Duke Energy Indiana |
|
% |
|
% |
|
% |
|
% | |||||||||||||||
| Piedmont |
|
% |
|
% |
|
% |
|
% | |||||||||||||||
The increase in the ETR for Duke Energy for the three months ended September 30, 2022, was primarily due to a decrease in the amortization of excess deferred taxes.
The increase in the ETR for Duke Energy Carolinas for the three and nine months ended September 30, 2022, was primarily due to the amortization of excess deferred taxes in relation to higher pretax income.
The increase in the ETR for Progress Energy for the three and nine months ended September 30, 2022, was primarily due to a decrease in the amortization of excess deferred taxes.
The increase in the ETR for Duke Energy Progress for the three and nine months ended September 30, 2022, was primarily due to a decrease in the amortization of excess deferred taxes.
The decrease in the ETR for Duke Energy Ohio for the nine months ended September 30, 2022, was primarily due to an increase in the amortization of excess deferred taxes related to the MGP Settlement.
The decrease in the ETR for Duke Energy Indiana for the nine months ended September 30, 2022, was primarily due to the coal ash impairment based on the Indiana Supreme Court Opinion recorded and an increase in the amortization of excess deferred taxes.
The decrease in the ETR for Piedmont for the three months ended September 30, 2022, was primarily due to a decrease in research tax credits.
17.
SUBSEQUENT EVENTS
90
| MD&A | DUKE ENERGY | ||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy and Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. However, none of the registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.
DUKE ENERGY
Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the U.S. primarily through its subsidiaries, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of the Subsidiary Registrants, which along with Duke Energy are collectively referred to as the Duke Energy Registrants.
Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2022, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2021.
Executive Overview
Advancing Our Clean Energy Transformation
During the third quarter of 2022, we continued to execute on our clean energy transformation, delivering strong, sustainable value for shareholders, customers, communities and employees.
•
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. Duke Energy is one of the first utilities to address the totality of its impact – 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 approximately $145 billion of capital into our regulated businesses, driven by clean energy transition investments.
•
In August 2022, we announced a strategic review of our commercial renewables business, which has been an integral part of Duke Energy's renewable energy platform over the past 15 years. 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. In November 2022, the Board of Directors committed to a plan to sell the Commercial Renewables business segment, excluding the Offshore Wind lease for Carolina Long Bay. See Note 1 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation," for additional information.
•
In August 2022, Duke Energy launched the utility industry’s first sustainable commercial paper notes focused on socioeconomic advancement. The company plans to disburse or allocate an amount equal to the net proceeds from the sustainable commercial paper notes to fund expenditures and programs related to enabling opportunities for diverse businesses.
•
In August 2022, Duke Energy Carolinas filed for approval of a new demand response pilot program expected to launch in 2023 for customers in the Duke Energy Carolinas (DEC) 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.
Regulatory Activity.
During the third quarter of 2022, we continued to monitor developments while moving our regulatory strategy forward. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.
•
In October 2022, Duke Energy Florida received approval from the FPSC for its proposed ten year storm protection plan, with minor modifications. This plan will continue to provide for investments to enhance the integrity and reliability of the state's electric grid. Also in October 2022, as a result of rising interest rates and as allowed under the 2021 Settlement, the FPSC approved an increase in Duke Energy Florida's ROE band, increasing the ROE midpoint effective in January 1, 2023 base rates from 9.85% to 10.1%.
•
In October 2022, Duke Energy Progress filed a rate case in North Carolina to request an increase in base rate retail revenues. This proposal is the first by Duke Energy Progress in North Carolina to increase base rates since 2019 and is our first rate case filing in North Carolina to include a Performance Based Regulation Application and a Multiyear Rate Plan as allowed under HB 951. Duke Energy Progress’ rate request before the NCUC proposes a gradual rate increase over three years as the company continues to strengthen the electricity grid, reducing power outages for customers and facilitating the clean energy transition in a manner that supports economic development across the state.
•
In September 2022, Duke Energy Progress filed a rate case in South Carolina to request an increase in base rate retail revenues. This proposal is the first by Duke Energy Progress in South Carolina to increase base rates since 2018 and is driven by ongoing investments to improve resiliency, work toward an orderly transition to a secure energy future and improve the customer experience. Duke Energy Progress’ rate request before the PSCSC proposes a step in of the proposed rate increase over two years.
•
In September 2022, Duke Energy Ohio reached an electric distribution base rate settlement with the PUCO's technical staff and other parties, subject to review and approval of the PUCO.
91
| MD&A | MATTERS IMPACTING FUTURE RESULTS | ||||
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
Future spending of coal ash costs, 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 15-20 years.
Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional coal 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. See Note 4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies" for more information.
Commercial Renewables
On November 1, 2022, the Board of Directors committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind lease for Carolina Long Bay. Duke Energy is actively marketing the business as two separate disposal units, the utility scale solar and wind unit and the distributed generation unit. Non-binding offers were received for the utility scale solar and wind unit in late October 2022. We are evaluating the initial offers and expect to receive final offers from select bidders in early 2023. Non-binding offers for the distributed generation unit are also expected in early 2023. Duke Energy expects to dispose of both units in mid-2023. In the fourth quarter of 2022, Duke Energy will reclassify the Commercial Renewables business segment to assets held for sale and report it as a discontinued operation. Duke Energy could record a material impairment loss in the fourth quarter of 2022 if the carrying value of one or both of the units is not expected to be recovered. If the proceeds exceed the carrying value of one or both of the units, a gain would be recognized at the closing of the transaction in mid-2023. Proceeds from a successful sale are expected to be used for debt reduction and avoidance.
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 ERCOT market. Duke Energy has been named in multiple lawsuits arising out of this winter storm. For more information, see Note 4 to the Condensed 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. Duke Energy is developing mitigation plans to partially offset the impacts of these general market conditions. These mitigation plans could result in charges related to a reduction in workforce, primarily in corporate and operational support roles as work is reassessed, real estate modifications to leased office space or asset impairments on property, plant and equipment.
Results of Operations
Non-GAAP Measures
Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures such as adjusted earnings and adjusted EPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures presented may not be comparable to similarly titled measures used by other companies because other companies may not calculate the measures in the same manner.
Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. Adjusted earnings and adjusted EPS represent income from continuing operations available to Duke Energy Corporation common stockholders in dollar and per share amounts, adjusted for the dollar and per share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings (Loss) and GAAP Reported Earnings (Loss) Per Share, respectively.
Special items included in the periods presented below include the following, which management believes do not reflect ongoing costs:
•
Regulatory Matters represents the net impact of
charges related to the 2022 Indiana Supreme Court ruling on coal ash.
•
Mark-to-Market represents the income statement impact of derivative instruments that do not qualify for hedge accounting or regulatory accounting.
92
| MD&A | DUKE ENERGY | ||||
•
Workplace and Workforce Realignment represents costs attributable to business transformation, including long-term real estate strategy changes and workforce realignment.
•
Regulatory Settlements represents an impairment charge related to the South Carolina Supreme Court decision on coal ash, insurance proceeds and the Duke Energy Carolinas and Duke Energy Progress coal ash settlement.
•
Gas Pipeline Investments represents additional exit obligations related to ACP.
Three Months Ended September 30, 2022, as compared to September 30, 2021
GAAP reported EPS was $1.81 for the third quarter of 2022 compared to $1.79 in the third quarter of 2021. GAAP reported EPS increased primarily due to
regulatory settlements in the prior year and higher volumes and lower operations and maintenance expense in the current year, partially offset by
lower Commercial Renewables earnings, higher depreciation and interest expense an
d lower returns on investments.
.
As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s third quarter 2022 adjusted EPS was $1.78 compared to $1.88 for the third quarter of 2021. The decrease in adjusted EPS was primarily due to lower Commercial Renewables earnings, higher depreciation and interest expense
and lower returns on investments, partially offset by higher volumes and lower operation and maintenance expense.
The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| (in millions, except per share amounts) | Earnings | EPS | Earnings | EPS | |||||||||||||||||||
| GAAP Reported Earnings/GAAP Reported EPS | $ | 1,383 | $ | 1.81 | $ | 1,366 | $ | 1.79 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
|
Mark-to-Market
(a)
|
(4) | — | — | — | |||||||||||||||||||
|
Workplace and Workforce Realignment
(b)
|
— | — | 7 | — | |||||||||||||||||||
|
Regulatory Settlements
(c)
|
— | — | 64 | 0.09 | |||||||||||||||||||
|
Gas Pipeline Investments
(d)
|
— | — | (2) | — | |||||||||||||||||||
|
Discontinued Operations
(e)
|
(23) | (0.03) | — | — | |||||||||||||||||||
| Adjusted Earnings/Adjusted EPS | $ | 1,356 | $ | 1.78 | $ | 1,435 | $ | 1.88 | |||||||||||||||
(a)
Net of tax expense of $2 million.
(b)
Net of tax benefit of $2 million.
(c)
Net of tax benefit of $19 million.
(d)
Net of tax expense of $1 million.
(e)
Represents the net impact of the expiration of statutes related to the International Disposal Group.
Nine Months Ended September 30, 2022, as compared to September 30, 2021
GAAP Reported EPS was $4.03 for the nine months ended September 30, 2022, compared to $4.00 for the nine months ended September 30, 2021. In addition to the drivers below, GAAP reported EPS increased due to higher volumes, favorable weather and workplace and workforce realignment costs in the prior year, partially offset by
the net impact of
charges related to the 2022 Indiana Supreme Court ruling on coal ash, higher operations and maintenance expense, including storm costs, the impact of GIC minority interest sale and lower returns on investments.
As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $4.22 for the nine months ended September 30, 2022, compared to $4.30 for the nine months ended September 30, 2021. The decrease in adjusted EPS was primarily due to lower Commercial Renewables earnings and higher operations and maintenance expense, including storm costs,, the impact of the GIC minority interest sale and lower returns on investments, partially offset by higher volumes and favorable weather in the current year.
93
| MD&A | DUKE ENERGY | ||||
The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| (in millions, except per share amounts) | Earnings | EPS | Earnings | EPS | |||||||||||||||||||
| GAAP Reported Earnings/GAAP Reported EPS | $ | 3,094 | $ | 4.03 | $ | 3,070 | $ | 4.00 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
|
Regulatory Matters
(a)
|
157 | 0.20 | — | — | |||||||||||||||||||
|
Mark-to-Market
(b)
|
12 | 0.02 | — | — | |||||||||||||||||||
|
Workplace and Workforce Realignment
(c)
|
— | — | 142 | 0.19 | |||||||||||||||||||
|
Regulatory Settlements
(d)
|
— | — | 64 | 0.09 | |||||||||||||||||||
|
Gas Pipeline Investments
(e)
|
— | — | 15 | 0.02 | |||||||||||||||||||
|
Discontinued Operations
(f)
|
(23) | (0.03) | — | — | |||||||||||||||||||
| Adjusted Earnings/Adjusted EPS | $ | 3,240 | $ | 4.22 | $ | 3,291 | $ | 4.30 | |||||||||||||||
(a)
Net of tax benefit of $80 million and $20 million in noncontrolling interests.
(b)
Net of tax benefit of $3 million.
(c)
Net of tax benefit of $42 million.
(d)
Net of tax benefit of $19 million.
(e)
Net of tax benefit of $4 million.
(f)
Represents the net impact of the expiration of statutes related to the International Disposal Group.
SEGMENT RESULTS
The remaining information presented in this discussion of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements.
Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 2 to the Condensed Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.
Electric Utilities and Infrastructure
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||||||||||||||||
| Operating Revenues | $ | 7,439 | $ | 6,569 | $ | 870 | $ | 19,576 | $ | 17,185 | $ | 2,391 | |||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 2,653 | 1,864 | 789 | 6,481 | 4,760 | 1,721 | |||||||||||||||||||||||||||||
| Operation, maintenance and other | 1,257 | 1,363 | (106) | 4,011 | 3,907 | 104 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 1,170 | 1,084 | 86 | 3,411 | 3,154 | 257 | |||||||||||||||||||||||||||||
| Property and other taxes | 336 | 330 | 6 | 1,004 | 949 | 55 | |||||||||||||||||||||||||||||
| Impairment of assets and other charges | 8 | 202 | (194) | 214 | 203 | 11 | |||||||||||||||||||||||||||||
| Total operating expenses | 5,424 | 4,843 | 581 | 15,121 | 12,973 | 2,148 | |||||||||||||||||||||||||||||
| Gains on Sales of Other Assets and Other, net | 7 | 9 | (2) | 12 | 11 | 1 | |||||||||||||||||||||||||||||
| Operating Income | 2,022 | 1,735 | 287 | 4,467 | 4,223 | 244 | |||||||||||||||||||||||||||||
| Other Income and Expenses, net | 114 | 220 | (106) | 381 | 421 | (40) | |||||||||||||||||||||||||||||
| Interest Expense | 377 | 365 | 12 | 1,144 | 1,066 | 78 | |||||||||||||||||||||||||||||
| Income Before Income Taxes | 1,759 | 1,590 | 169 | 3,704 | 3,578 | 126 | |||||||||||||||||||||||||||||
| Income Tax Expense | 207 | 160 | 47 | 448 | 393 | 55 | |||||||||||||||||||||||||||||
| Less: Income Attributable to Noncontrolling Interest | 12 | 5 | 7 | 19 | 5 | 14 | |||||||||||||||||||||||||||||
| Segment Income | $ | 1,540 | $ | 1,425 | $ | 115 | $ | 3,237 | $ | 3,180 | $ | 57 | |||||||||||||||||||||||
| Duke Energy Carolinas GWh sales | 24,554 | 25,033 | (479) | 69,125 | 67,357 | 1,768 | |||||||||||||||||||||||||||||
| Duke Energy Progress GWh sales | 19,608 | 19,219 | 389 | 54,492 | 51,555 | 2,937 | |||||||||||||||||||||||||||||
| Duke Energy Florida GWh sales | 13,555 | 12,983 | 572 | 35,797 | 32,731 | 3,066 | |||||||||||||||||||||||||||||
| Duke Energy Ohio GWh sales | 7,074 | 6,844 | 230 | 18,635 | 18,586 | 49 | |||||||||||||||||||||||||||||
| Duke Energy Indiana GWh sales | 8,934 | 8,788 | 146 | 24,528 | 23,880 | 648 | |||||||||||||||||||||||||||||
| Total Electric Utilities and Infrastructure GWh sales | 73,725 | 72,867 | 858 | 202,577 | 194,109 | 8,468 | |||||||||||||||||||||||||||||
| Net proportional MW capacity in operation | 49,520 | 49,749 | (229) | ||||||||||||||||||||||||||||||||
94
| MD&A | SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE | ||||
Three Months Ended September 30, 2022, as compared to September 30, 2021
Electric Utilities and Infrastructure’s higher segment income is due to favorable retail sales volumes, lower operations and maintenance expense, and a prior year impairment charge related to the South Carolina Supreme Court decision on coal ash, partially offset by higher depreciation. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues.
The variance was driven primarily by:
•
a $732 million increase in fuel revenues primarily due to higher fuel prices and retail sales volumes;
•
an $85 million increase in weather-normal retail sales volumes;
•
a $72 million increase in wholesale revenues primarily due to higher capacity volumes; and
•
a $48 million increase in rider revenues primarily due to storm securitization in North Carolina and energy efficiency programs.
Operating Expenses.
The variance was driven primarily by:
•
a $789 million increase in fuel used in electric generation and purchased power due to higher fuel prices and volumes from customer demand; and
•
an $86 million increase in depreciation and amortization primarily due to higher plant in service and resolution of prior year rate cases.
Partially offset by:
•
a $194 million decrease in impairment of assets and other charges due to a prior year impairment charge related to the South Carolina Supreme Court decision on coal ash; and
•
a $106 million decrease in operation, maintenance and other primarily driven by lower employee benefits.
Other Income and Expenses, net.
The decrease is primarily due to coal ash insurance litigation proceeds received in the prior year.
Interest Expense.
The variance was primarily driven by interest expense on excess deferred tax liabilities and higher outstanding debt.
Income Tax Expense.
The increase in tax expense was prima
rily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes. The ETRs for the three months ended September 30, 2022, and 2021, were 11.8% and 10.1
%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of excess deferred taxes.
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Electric Utilities and Infrastructure’s higher segment income is due to higher retail sales volumes and favorable weather, partially offset by higher depreciation and higher storm costs. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues.
The variance was driven primarily by:
•
a $1,526 million increase in fuel revenues primarily due to higher fuel prices and retail sales volumes;
•
a $356 million increase in weather-normal retail sales volumes;
•
a $238 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 $149 million increase in wholesale revenues primarily due to higher capacity volumes
•
a $117 million increase in rider revenues primarily due to higher sales volumes and storm securitization in North Carolina; and
•
a $71 million increase in retail sales due to favorable weather compared to prior year.
Partially offset by
•
a $60 million decrease due to the Indiana Supreme Court ruling on recovery of certain coal ash costs.
Operating Expenses.
The variance was driven primarily by:
•
a $1,721 million increase in fuel used in electric generation and purchased power due to higher fuel prices and volumes from customer demand;
•
a $257 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 $104 million increase in operation, maintenance and other primarily driven by higher storm costs and higher outage and maintenance costs;
•
a $55 million increase in property and other taxes primarily due to higher property taxes as well as higher revenue related taxes; and
•
an $11 million increase in impairment of assets and other charges primarily due
to the Indiana Supreme Court ruling on recovery of certain coal ash costs, partially offset by a prior year impairment charge related to the South Carolina Supreme Court decision on coal ash.
95
| MD&A | SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE | ||||
Other Income and Expenses, net.
The decrease is primarily due to coal ash insurance litigation proceeds received in the prior year, partially offset by a 2022 settlement with the Department of Energy over spent nuclear fuel storage and higher AFUDC equity.
Interest Expense.
The variance was primarily driven by interest expense on excess deferred tax liabilities and higher outstanding debt.
Income Tax Expense.
T
he 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 nine months ended September 30, 2022, and 2021, were 12.1% and 11.0%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of excess deferred taxes.
Gas Utilities and Infrastructure
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||||||||||||||||
| Operating Revenues | $ | 427 | $ | 289 | $ | 138 | $ | 1,912 | $ | 1,391 | $ | 521 | |||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Cost of natural gas | 189 | 75 | 114 | 859 | 430 | 429 | |||||||||||||||||||||||||||||
| Operation, maintenance and other | 115 | 102 | 13 | 410 | 302 | 108 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 80 | 74 | 6 | 241 | 216 | 25 | |||||||||||||||||||||||||||||
| Property and other taxes | 29 | 30 | (1) | 103 | 92 | 11 | |||||||||||||||||||||||||||||
| Impairment of assets and other charges | (12) | — | (12) | (12) | — | (12) | |||||||||||||||||||||||||||||
| Total operating expenses | 401 | 281 | 120 | 1,601 | 1,040 | 561 | |||||||||||||||||||||||||||||
| Gains on Sales of Other Assets and Other, net | — | — | — | 4 | — | 4 | |||||||||||||||||||||||||||||
| Operating Income | 26 | 8 | 18 | 315 | 351 | (36) | |||||||||||||||||||||||||||||
| Other Income and Expenses, Net | 25 | 25 | — | 61 | 52 | 9 | |||||||||||||||||||||||||||||
| Interest Expense | 45 | 37 | 8 | 127 | 105 | 22 | |||||||||||||||||||||||||||||
| Income (Loss) Before Income Taxes | 6 | (4) | 10 | 249 | 298 | (49) | |||||||||||||||||||||||||||||
| Income Tax Expense (Benefit) | 2 | (1) | 3 | (28) | 39 | (67) | |||||||||||||||||||||||||||||
| Segment Income (Loss) | $ | 4 | $ | (3) | $ | 7 | $ | 277 | $ | 259 | $ | 18 | |||||||||||||||||||||||
| Piedmont LDC throughput (dekatherms) | 157,145,659 | 134,549,588 | 22,596,071 | 463,863,034 | 390,210,785 | 73,652,249 | |||||||||||||||||||||||||||||
| Duke Energy Midwest LDC throughput (Mcf) | 9,559,214 | 10,268,918 | (709,704) | 63,346,715 | 62,220,827 | 1,125,888 | |||||||||||||||||||||||||||||
Three Months Ended September 30, 2022, as compared to September 30, 2021
Gas Utilities and Infrastructure’s results were impacted primarily by margin growth and the partial reversal of the prior year impairment related to the propane caverns in Ohio, partially offset by higher operation and maintenance costs. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues.
The variance was driven primarily by:
•
a $114 million increase due to increased off-system sales natural gas costs and higher natural gas costs passed through to customers;
•
a $17 million increase due to rider revenues related to Ohio Capital Expenditure Program (CEP); and
•
a $5 million increase due to base rate increases.
Operating Expenses.
The variance was driven primarily by:
•
a $114 million increase due to increased off-system sales natural gas costs and higher natural gas costs passed through to customers;
•
a $13 million increase in operations, maintenance and other primarily due to higher spend on internal and contract labor costs and materials; and
•
a $6 million increase in depreciation and amortization due to additional plant in service.
Partially offset by:
•
a $12 million decrease in impairment of assets and other charges due to the partial reversal of the prior year impairment related to the propane caverns in Ohio.
Interest Expense.
The increase was primarily due to higher debt outstanding.
Income Tax Expense (Benefit).
The increase in tax expense was primarily due to an increase in pretax income. The ETRs for the three months ended September 30, 2022, and 2021, were 33.3% and 25.0%, respectively. The increase in the ETR was primarily due to the amortization of excess deferred taxes in relation to higher pretax income.
96
| MD&A | SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE | ||||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Gas Utilities and Infrastructure’s results were impacted primarily by margin growth, partially offset by higher operation and maintenance costs. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues.
The variance was driven primarily by:
•
a $429 million increase due to higher natural gas costs passed through to customers, increased off-system sales activity and higher volumes;
•
a $50 million increase due to base rate increases;
•
a $32 million increase due to rider revenues related to Ohio CEP; and
•
a $5 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 $429 million increase due to higher natural gas costs passed through to customers, increased off-system sales activity and higher volumes;
•
a $108 million increase in operations, maintenance and other primarily due to the MGP settlement and higher spend on internal and contract labor costs, fleet and materials;
•
a $25 million increase in depreciation and amortization due to additional plant in service and lower CEP deferrals; and
•
an $11 million increase in property and other taxes due to lower CEP deferrals.
Partially offset by:
•
a $12 million decrease in impairment of assets and other charges due to the partial reversal of the prior year impairment related to the propane caverns in Ohio.
Interest Expense
.
The increase was primarily due to lower AFUDC debt income and higher debt outstanding.
Income Tax Expense (Benefit).
The decrease in tax expense was primarily due to an increase in the amortization of excess deferred taxes related to the Ohio MGP Settlement and a decrease in pretax income. The ETRs for the nine months ended September 30, 2022, and 2021, were (11.2)% and 13.1%, 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.
Commercial Renewables
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||||||||||||||||
| Operating Revenues | $ | 130 | $ | 117 | $ | 13 | $ | 372 | $ | 355 | $ | 17 | |||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Operation, maintenance and other | 87 | 90 | (3) | 251 | 240 | 11 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 61 | 58 | 3 | 181 | 167 | 14 | |||||||||||||||||||||||||||||
| Property and other taxes | 11 | 10 | 1 | 31 | 28 | 3 | |||||||||||||||||||||||||||||
| Total operating expenses | 159 | 158 | 1 | 463 | 435 | 28 | |||||||||||||||||||||||||||||
| Losses on Sales of Other Assets and Other, net | — | — | — | (1) | — | (1) | |||||||||||||||||||||||||||||
| Operating Loss | (29) | (41) | 12 | (92) | (80) | (12) | |||||||||||||||||||||||||||||
| Other Income and Expenses, net | — | (2) | 2 | — | (24) | 24 | |||||||||||||||||||||||||||||
| Interest Expense | 18 | 20 | (2) | 55 | 53 | 2 | |||||||||||||||||||||||||||||
| Loss Before Income Taxes | (47) | (63) | 16 | (147) | (157) | 10 | |||||||||||||||||||||||||||||
| Income Tax Benefit | (29) | (6) | (23) | (98) | (56) | (42) | |||||||||||||||||||||||||||||
| Add: Loss Attributable to Noncontrolling Interests | 20 | 135 | (115) | 92 | 253 | (161) | |||||||||||||||||||||||||||||
| Segment Income | $ | 2 | $ | 78 | $ | (76) | $ | 43 | $ | 152 | $ | (109) | |||||||||||||||||||||||
| Renewable plant production, GWh | 2,742 | 2,567 | 175 | 9,160 | 7,942 | 1,218 | |||||||||||||||||||||||||||||
|
Net proportional MW capacity in operation
(a)
|
4,759 | 4,630 | 129 | ||||||||||||||||||||||||||||||||
(a)
Certain projects are included in tax equity structures where investors have differing interests in the project's economic attributes. One hundred percent of the tax equity project's capacity is included in the table above.
97
| MD&A | SEGMENT RESULTS — COMMERCIAL RENEWABLES | ||||
Three Months Ended September 30, 2022, as compared to September 30, 2021
Commercial Renewables' results were unfavorable to prior year primarily driven by fewer project investments financed by tax equity being placed into service in the current year.
Operating Revenues.
The variance was primarily driven by a $10 million increase due to higher wind resource and higher market prices impacting the wind portfolio and a $6 million gain related to derivative contracts that do not qualify for hedge accounting, partially offset by a $4 million decrease in the distributed energy portfolio primarily due to fewer projects placed in service.
Income Tax Benefit.
The increase in the tax benefit was primarily due to
fewer project investments financed by tax equity being placed into service in the current year.
Loss Attributable to Noncontrolling Interests.
The variance was primarily driven by a $100 million decrease for fewer projects placed in service financed with tax equity in the current year and a $15 million net decrease in losses allocated to tax equity members from existing tax equity structures.
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Commercial Renewables' results were unfavorable primarily driven by fewer project investments financed by tax equity being placed into service in the current year and higher expenses from projects placed in service since the prior year, partially offset by the impacts for losses experienced in the prior year from Texas Storm Uri.
Operating Revenues.
The variance was primarily driven by a $41 million increase due to higher wind resource and market prices impacting the wind portfolio, partially offset by a $15 million loss related to derivative contracts that do not qualify for hedge accounting and an $8 million decrease for market sales in excess of market purchases experienced during Texas Storm Uri in the prior year.
Operating Expenses.
The variance was primarily driven by a $33 million increase due to higher operating expenses, depreciation, property tax expense and other development costs from the growth of new projects, partially offset by a $5 million decrease for lower operating expenses attributed to maintenance and other operating expenses.
Other Income and Expenses, net.
The increase was primarily due to $29 million of losses experienced in the prior year from Texas Storm Uri.
Income Tax Benefit.
The increase in the tax benefit was primarily due to a decrease in taxes associated with tax equity investments and an increase in production tax credits generated.
Loss Attributable to Noncontrolling Interests.
The variance was primarily driven by a $133 million decrease for fewer projects placed in service financed with tax equity in the current year and a $40 million net decrease in losses allocated to tax equity members from existing tax equity structures, partially offset by a $12 million increase for losses experienced in the prior year from Texas Storm Uri.
Other
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||||||||||||||||
| Operating Revenues | $ | 29 | $ | 28 | $ | 1 | $ | 89 | $ | 81 | $ | 8 | |||||||||||||||||||||||
| Operating Expenses | 29 | 46 | (17) | 78 | 282 | (204) | |||||||||||||||||||||||||||||
| Gains (Losses) on Sales of Other Assets and Other, net | — | (1) | 1 | 1 | (1) | 2 | |||||||||||||||||||||||||||||
| Operating Income (Loss) | — | (19) | 19 | 12 | (202) | 214 | |||||||||||||||||||||||||||||
| Other Income and Expenses, net | 5 | 25 | (20) | (8) | 78 | (86) | |||||||||||||||||||||||||||||
| Interest Expense | 205 | 163 | 42 | 529 | 470 | 59 | |||||||||||||||||||||||||||||
| Loss Before Income Taxes | (200) | (157) | (43) | (525) | (594) | 69 | |||||||||||||||||||||||||||||
| Income Tax Benefit | (52) | (63) | 11 | (131) | (166) | 35 | |||||||||||||||||||||||||||||
| Less: Net (Loss) Income Attributable to Noncontrolling Interests | (1) | 1 | (2) | — | 1 | (1) | |||||||||||||||||||||||||||||
| Less: Preferred Dividends | 39 | 39 | — | 92 | 92 | — | |||||||||||||||||||||||||||||
| Net Loss | $ | (186) | $ | (134) | $ | (52) | $ | (486) | $ | (521) | $ | 35 | |||||||||||||||||||||||
Three Months Ended September 30, 2022, as compared to September 30, 2021
The higher net loss was driven by current year higher interest rates on commercial paper, higher outstanding long-term debt and lower return on investments that fund certain employee benefit obligations.
Operating Expenses.
The decrease was primarily driven by prior year asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business moved to a hybrid and remote workforce strategy and lower return on investments on certain employee benefit obligations in the current year.
Other Income and Expenses, net.
The variance was primarily due to lower return on investments that fund certain employee benefit obligations.
Interest Expense.
The variance was primarily due to higher interest rates on commercial paper and higher outstanding long-term debt.
98
PART I
Income Tax Benefit.
The decrease in the tax benefit was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations, partially offset by an increase in pretax losses. The ETRs for the three months ended September 30, 2022, and 2021, were 26.0% and 40.1%, respectively. The decrease in the ETR was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations.
Nine Months Ended September 30, 2022, as compared to September 30, 2021
The lower net loss was driven by prior year asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business moved to a hybrid and remote workforce strategy, partially offset by lower return on investments that fund certain employee benefit obligations, higher outstanding long-term debt and higher interest rates on commercial paper in the current year.
Operating Expenses.
The decrease was primarily driven by prior year asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business moved to a hybrid and remote workforce strategy and lower return on investments on certain employee benefit obligations in the current year.
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 outstanding long-term debt and higher interest rates on commercial paper.
Income Tax Benefit.
The decrease in the tax benefit was primarily due to a decrease in pretax losses and unfavorable tax impacts related to lower investment returns on certain employee benefit obligations. The ETRs for the nine months ended September 30, 2022, and 2021, were 25% and 27.9%, respectively. The decrease in the ETR was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations.
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | 2022 | 2021 | Variance | |||||||||||||||||||||||||||||
| Income From Discontinued Operations, net of tax | $ | 23 | $ | — | $ | 23 | $ | 23 | $ | — | $ | 23 | |||||||||||||||||||||||
Three Months Ended September 30, 2022, as compared to September 30, 2021
The variance was primarily driven by a reduction to a previously accrued liability as a result of the expiration of tax statutes related to the International Disposal Group.
Nine Months Ended September 30, 2022, as compared to September 30, 2021
The variance was primarily driven by a reduction to a previously accrued liability as a result of the expiration of tax statutes related to the International Disposal Group.
DUKE ENERGY CAROLINAS
Results of Operations
| Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | ||||||||||||||
| Operating Revenues | $ | 5,844 | $ | 5,430 | $ | 414 | |||||||||||
| Operating Expenses | |||||||||||||||||
| Fuel used in electric generation and purchased power | 1,423 | 1,218 | 205 | ||||||||||||||
| Operation, maintenance and other | 1,410 | 1,347 | 63 | ||||||||||||||
| Depreciation and amortization | 1,138 | 1,088 | 50 | ||||||||||||||
| Property and other taxes | 258 | 248 | 10 | ||||||||||||||
| Impairment of assets and other charges | (3) | 238 | (241) | ||||||||||||||
| Total operating expenses | 4,226 | 4,139 | 87 | ||||||||||||||
| Gains on Sales of Other Assets and Other, net | 4 | 1 | 3 | ||||||||||||||
| Operating Income | 1,622 | 1,292 | 330 | ||||||||||||||
| Other Income and Expenses, net | 172 | 218 | (46) | ||||||||||||||
| Interest Expense | 415 | 400 | 15 | ||||||||||||||
| Income Before Income Taxes | 1,379 | 1,110 | 269 | ||||||||||||||
| Income Tax Expense | 87 | 40 | 47 | ||||||||||||||
| Net Income | $ | 1,292 | $ | 1,070 | $ | 222 | |||||||||||
99
| MD&A | DUKE ENERGY CAROLINAS | ||||
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
| Increase (Decrease) over prior year | 2022 | ||||
| Residential sales | 0.6 | % | |||
| General service sales | 5.4 | % | |||
| Industrial sales | 2.7 | % | |||
| Wholesale power sales | (1.2) | % | |||
| Joint dispatch sales | (35.6) | % | |||
| Total sales | 2.6 | % | |||
| Average number of customers | 1.8 | % | |||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Operating Revenues.
The variance was driven primarily by:
•
a $173 million increase in fuel revenues due to higher fuel prices and weather-normal retail sales volumes in the current year;
•
a $121 million increase in weather-normal retail sales volumes;
•
a $45 million increase in rider revenues primarily due to energy efficiency, storm securitization, and competitive procurement of renewable energy programs; and
•
a $36 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers.
Operating Expenses
.
The variance was driven primarily by:
•
a $205 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 prices;
•
a $63 million increase in operation, maintenance and other expense primarily due to higher storm restoration costs and higher outage and maintenance costs; and
•
a $50 million increase in depreciation and amortization primarily due to an increase in assets placed into service, new depreciation rates associated with the North Carolina rate case and a higher depreciable base, partially offset by the extension of the lives of nuclear facilities.
Partially offset by:
•
a $241
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 as parts of the business moved to a hybrid and remote workforce strategy and an adjustment to the 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 AFUDC base.
Interest Expense.
The variance was driven by interest expense on excess deferred tax liabilities.
Income Tax Expense.
The increase in tax expense was primarily due to an increase in pretax income, partially offset by an increase in the amortization of excess deferred taxes.
100
| MD&A | PROGRESS ENERGY | ||||
PROGRESS ENERGY
Results of Operations
| Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | ||||||||||||||
| Operating Revenues | $ | 10,087 | $ | 8,417 | $ | 1,670 | |||||||||||
| Operating Expenses | |||||||||||||||||
| Fuel used in electric generation and purchased power | 3,927 | 2,702 | 1,225 | ||||||||||||||
| Operation, maintenance and other | 1,829 | 1,863 | (34) | ||||||||||||||
| Depreciation and amortization | 1,607 | 1,430 | 177 | ||||||||||||||
| Property and other taxes | 472 | 419 | 53 | ||||||||||||||
| Impairment of assets and other charges | 4 | 79 | (75) | ||||||||||||||
| Total operating expenses | 7,839 | 6,493 | 1,346 | ||||||||||||||
| Gains on Sales of Other Assets and Other, net | 6 | 9 | (3) | ||||||||||||||
| Operating Income | 2,254 | 1,933 | 321 | ||||||||||||||
| Other Income and Expenses, net | 150 | 167 | (17) | ||||||||||||||
| Interest Expense | 616 | 592 | 24 | ||||||||||||||
| Income Before Income Taxes | 1,788 | 1,508 | 280 | ||||||||||||||
| Income Tax Expense | 289 | 174 | 115 | ||||||||||||||
| Net Income | 1,499 | 1,334 | 165 | ||||||||||||||
| Less: Net Income Attributable to Noncontrolling Interests | 1 | 1 | — | ||||||||||||||
| Net Income Attributable to Parent | $ | 1,498 | $ | 1,333 | $ | 165 | |||||||||||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Operating Revenues.
The variance was driven primarily by:
•
a $1,182 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year;
•
a $202 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;
•
a $171 million increase in weather-normal retail sales volumes;
•
a $63 million increase in wholesale revenues, net of fuel, due to higher capacity volumes; and
•
a $30 million increase in retail sales due to favorable weather.
Partially offset by:
•
a $62 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 $1,225 million increase in fuel used in electric generation and purchased power primarily due to higher demand and higher natural gas prices;
•
a $177 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 $53 million increase in property and other taxes primarily due to an increase in gross receipts taxes at Duke Energy Florida.
Partially offset by:
•
a $75 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 as parts of the business moved to hybrid and remote workforce strategy; and
•
a $34 million decrease in operation, maintenance and other expense primarily due to reduced storm amortization at Duke Energy Florida, partially offset by higher storm costs at Duke Energy Progress.
Other Income and Expenses, net.
The decrease is primarily due to coal ash insurance litigation proceeds received in the prior year at Duke Energy Progress, partially offset by a 2022 settlement with the Department of Energy over spent nuclear fuel storage at Duke Energy Florida.
Interest Expense.
The variance was driven primarily by interest expense on excess deferred tax liabilities at Duke Energy Progress and higher outstanding debt.
101
| MD&A | PROGRESS ENERGY | ||||
Income Tax Expense
.
The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes.
DUKE ENERGY PROGRESS
Results of Operations
| Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | ||||||||||||||
| Operating Revenues | $ | 5,182 | $ | 4,417 | $ | 765 | |||||||||||
| Operating Expenses | |||||||||||||||||
| Fuel used in electric generation and purchased power | 1,916 | 1,368 | 548 | ||||||||||||||
| Operation, maintenance and other | 1,101 | 1,092 | 9 | ||||||||||||||
| Depreciation and amortization | 890 | 811 | 79 | ||||||||||||||
| Property and other taxes | 136 | 129 | 7 | ||||||||||||||
| Impairment of assets and other charges | 4 | 60 | (56) | ||||||||||||||
| Total operating expenses | 4,047 | 3,460 | 587 | ||||||||||||||
| Gains on Sales of Other Assets and Other, net | 2 | 8 | (6) | ||||||||||||||
| Operating Income | 1,137 | 965 | 172 | ||||||||||||||
| Other Income and Expenses, net | 83 | 111 | (28) | ||||||||||||||
| Interest Expense | 260 | 226 | 34 | ||||||||||||||
| Income Before Income Taxes | 960 | 850 | 110 | ||||||||||||||
| Income Tax Expense | 129 | 50 | 79 | ||||||||||||||
|
Net Income
|
$ | 831 | $ | 800 | $ | 31 | |||||||||||
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
| Increase (Decrease) over prior period | 2022 | ||||
| Residential sales | — | % | |||
| General service sales | 3.1 | % | |||
| Industrial sales | 10.0 | % | |||
| Wholesale power sales | 2.1 | % | |||
| Joint dispatch sales | 43.2 | % | |||
| Total sales | 5.7 | % | |||
| Average number of customers | 1.9 | % | |||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Operating Revenues.
The variance was driven primarily by:
•
a $514 million increase in fuel revenues due to higher fuel prices and retail sales volumes in the current year;
•
a $111 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers;
•
a $48 million increase in weather-normal retail sales volumes;
•
a $34 million increase in wholesale revenues, net of fuel, due to higher capacity volumes;
•
a $29 million increase in rider revenues primarily due to storm securitization and energy efficiency, partially offset by renewable energy and energy efficiency portfolio standard programs; and
•
a $19 million increase in retail sales due to favorable weather compared to prior year.
Operating Expenses
. The variance was driven primarily by:
•
a $548 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; and
•
a $79 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.
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 as parts of the business moved to a hybrid and remote workforce strategy.
102
| MD&A | DUKE ENERGY PROGRESS | ||||
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 interest expense on excess deferred tax liabilities and higher outstanding debt.
Income Tax Expense.
The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes.
DUKE ENERGY FLORIDA
Results of Operations
| Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | ||||||||||||||
| Operating Revenues | $ | 4,890 | $ | 3,987 | $ | 903 | |||||||||||
| Operating Expenses | |||||||||||||||||
| Fuel used in electric generation and purchased power | 2,011 | 1,335 | 676 | ||||||||||||||
| Operation, maintenance and other | 716 | 760 | (44) | ||||||||||||||
| Depreciation and amortization | 717 | 619 | 98 | ||||||||||||||
| Property and other taxes | 335 | 290 | 45 | ||||||||||||||
| Impairment of assets and other charges | — | 19 | (19) | ||||||||||||||
| Total operating expenses | 3,779 | 3,023 | 756 | ||||||||||||||
| Gains on Sales of Other Assets and Other, net | 5 | 1 | 4 | ||||||||||||||
| Operating Income | 1,116 | 965 | 151 | ||||||||||||||
| Other Income and Expenses, net | 74 | 54 | 20 | ||||||||||||||
| Interest Expense | 258 | 239 | 19 | ||||||||||||||
| Income Before Income Taxes | 932 | 780 | 152 | ||||||||||||||
| Income Tax Expense | 181 | 149 | 32 | ||||||||||||||
| Net Income | $ | 751 | $ | 631 | $ | 120 | |||||||||||
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
| Increase (Decrease) over prior period | 2022 | ||||
| Residential sales | 3.9 | % | |||
| General service sales | 5.1 | % | |||
| Industrial sales | 6.4 | % | |||
| Wholesale and other | 48.7 | % | |||
| Total sales | 9.4 | % | |||
| Average number of customers | 1.7 | % | |||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Operating Revenues.
The variance was driven primarily by:
•
a $668 million increase in fuel revenue primarily due to higher retail and wholesale sales volumes and a higher fuel rate in the current year in response to an increase in natural gas prices;
•
a $123 million increase in weather-normal retail sales volumes;
•
a $91 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 $43 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 $29 million increase in wholesale power revenues, net of fuel, primarily due to higher capacity revenues and bulk power sales; and
•
an $11 million increase in retail sales due to favorable weather in the current year.
Partially offset by:
•
a $62 million decrease in capacity revenue primarily due to accelerated recovery of the retired coal units Crystal River 1 and 2 in 2021.
103
| MD&A | DUKE ENERGY FLORIDA | ||||
Operating Expenses.
The variance was driven primarily by:
•
a $676 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices;
•
a $98 million increase in depreciation and amortization primarily due to an increase in depreciation rates starting in January 2022; and
•
a $45 million increase in property and other taxes primarily due to an increase in gross receipt taxes driven by higher revenues and franchise and property taxes.
Partially offset by:
•
a $44 million decrease in operation, maintenance and other primarily due to reduced storm amortization and reduced vegetation management costs, partially offset by increased charge-offs; and
•
a $19 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 as parts of the business moved to hybrid and remote workforce strategy.
Other Income and Expenses, net.
The increase is primarily due to a 2022 settlement with the Department of Energy over spent nuclear fuel storage.
Interest Expense.
The increase in interest expense was primarily due to higher outstanding debt.
Income Tax Expense.
The increase in tax expense was primarily due to an increase in pretax income.
DUKE ENERGY OHIO
Results of Operations
| Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | ||||||||||||||
| Operating Revenues | |||||||||||||||||
| Regulated electric | $ | 1,320 | $ | 1,119 | $ | 201 | |||||||||||
| Regulated natural gas | 491 | 375 | 116 | ||||||||||||||
| Total operating revenues | 1,811 | 1,494 | 317 | ||||||||||||||
| Operating Expenses | |||||||||||||||||
| Fuel used in electric generation and purchased power | 439 | 294 | 145 | ||||||||||||||
| Cost of natural gas | 174 | 76 | 98 | ||||||||||||||
| Operation, maintenance and other | 408 | 335 | 73 | ||||||||||||||
| Depreciation and amortization | 247 | 228 | 19 | ||||||||||||||
| Property and other taxes | 272 | 266 | 6 | ||||||||||||||
| Impairment of assets and other charges | (11) | 5 | (16) | ||||||||||||||
| Total operating expenses | 1,529 | 1,204 | 325 | ||||||||||||||
| Operating Income | 282 | 290 | (8) | ||||||||||||||
| Other Income and Expenses, net | 16 | 14 | 2 | ||||||||||||||
| Interest Expense | 92 | 82 | 10 | ||||||||||||||
| Income Before Income Taxes | 206 | 222 | (16) | ||||||||||||||
| Income Tax (Benefit) Expense | (30) | 34 | (64) | ||||||||||||||
| Net Income | $ | 236 | $ | 188 | $ | 48 | |||||||||||
The following table shows the percent changes in GWh sales of electricity, dekatherms of natural gas delivered and average number of electric and natural gas customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
| Electric | Natural Gas | |||||||
| Increase (Decrease) over prior year | 2022 | 2022 | ||||||
| Residential sales | 0.6 | % | 6.1 | % | ||||
| General service sales | (2.2) | % | 1.7 | % | ||||
| Industrial sales | (8.5) | % | 2.6 | % | ||||
| Wholesale electric power sales | (25.0) | % | n/a | |||||
| Other natural gas sales | n/a | (4.8) | % | |||||
| Total sales | 0.3 | % | 1.8 | % | ||||
| Average number of customers | 1.3 | % | 0.5 | % | ||||
104
| MD&A | DUKE ENERGY OHIO | ||||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Operating Revenues
. The variance was driven primarily by:
•
a $227 million increase in fuel related revenues primarily due to higher retail sales volumes and a higher fuel rates in the current year in response to an increase in natural gas prices and purchased power expense;
•
a $36 million increase in retail revenue riders primarily due to the Ohio CEP and Distribution Capital Investment Rider (DCI);
•
a $30 million increase in other electric revenues primarily due to Distribution Decoupling rider adjustments recorded in 2021; and
•
an $11 million increase in revenues related to OVEC collections and OVEC sales into PJM.
Partially offset by:
•
a $15 million decrease due to the MGP settlement.
Operating Expenses.
The variance was driven primarily by:
•
a $243 million increase in fuel expense primarily driven by higher retail prices and increased volumes for natural gas and purchased power;
•
a $73 million increase in operation, maintenance and other expense primarily due to the MGP settlement and higher storm costs; and
•
a $19 million increase in depreciation and amortization primarily driven by lower CEP deferrals and an increase in distribution plant in service.
Partially offset by:
•
a $16 million decrease in impairment of assets and other charges primarily due to the partial reversal of the prior year impairment related to the propane caverns in Ohio.
Interest Expense.
The increase was primarily due to interest costs on long term 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 and a decrease in pretax income.
DUKE ENERGY INDIANA
Results of Operations
| Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | ||||||||||||||
| Operating Revenues | $ | 2,835 | $ | 2,366 | $ | 469 | |||||||||||
| Operating Expenses | |||||||||||||||||
| Fuel used in electric generation and purchased power | 1,234 | 710 | 524 | ||||||||||||||
| Operation, maintenance and other | 551 | 543 | 8 | ||||||||||||||
| Depreciation and amortization | 478 | 458 | 20 | ||||||||||||||
| Property and other taxes | 60 | 57 | 3 | ||||||||||||||
| Impairment of assets and other charges | 211 | 8 | 203 | ||||||||||||||
| Total operating expenses | 2,534 | 1,776 | 758 | ||||||||||||||
| Operating Income | 301 | 590 | (289) | ||||||||||||||
| Other Income and Expenses, net | 27 | 31 | (4) | ||||||||||||||
| Interest Expense | 138 | 148 | (10) | ||||||||||||||
| Income Before Income Taxes | 190 | 473 | (283) | ||||||||||||||
| Income Tax Expense | 1 | 77 | (76) | ||||||||||||||
| Net Income | $ | 189 | $ | 396 | $ | (207) | |||||||||||
The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
| Increase (Decrease) over prior year | 2022 | ||||
| Residential sales | 0.6 | % | |||
| General service sales | 2.1 | % | |||
| Industrial sales | (9.2) | % | |||
| Wholesale power sales | 11.2 | % | |||
| Total sales | 2.7 | % | |||
| Average number of customers | 1.4 | % | |||
105
| MD&A | DUKE ENERGY INDIANA | ||||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Operating Revenues.
The variance was driven primarily by:
•
a $406 million increase in retail fuel revenues primarily due to higher fuel cost recovery driven by retail sales volumes and fuel prices;
•
an $86 million increase primarily due to wholesale revenues, including fuel revenues, driven by higher rates and BPM sharing provision; and
•
a $37 million increase in weather-normal retail sales volumes driven by higher nonresidential customer demand.
Partially offset by:
•
a $60 million decrease due to the Indiana Supreme Court ruling on recovery of certain coal ash costs.
Operating Expenses.
The variance was driven primarily by:
•
a $524 million increase in fuel used in electric generation and purchased power expense primarily due to higher purchased power expense and higher coal and natural gas costs;
•
a $203 million increase in impairment of assets and other charges primarily due to the Indiana Supreme Court ruling on recovery of certain coal ash costs; and
•
a $20 million increase in depreciation and amortization primarily due to additional plant in service and the Step 2 rates true-up adjustment to depreciation expense.
Income Tax Expense.
The decrease in tax expense was primarily due the change in pretax income from the coal ash impairment and an increase in the amortization of excess deferred income taxes.
PIEDMONT
Results of Operations
| Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | ||||||||||||||
| Operating Revenues | $ | 1,421 | $ | 1,016 | $ | 405 | |||||||||||
| Operating Expenses | |||||||||||||||||
| Cost of natural gas | 685 | 354 | 331 | ||||||||||||||
| Operation, maintenance and other | 270 | 231 | 39 | ||||||||||||||
| Depreciation and amortization | 166 | 150 | 16 | ||||||||||||||
| Property and other taxes | 44 | 44 | — | ||||||||||||||
| Impairment of assets and other charges | 1 | 9 | (8) | ||||||||||||||
| Total operating expenses | 1,166 | 788 | 378 | ||||||||||||||
| Gains on Sales of Other Assets and Other, net | 4 | — | 4 | ||||||||||||||
| Operating Income | 259 | 228 | 31 | ||||||||||||||
| Other Income and Expenses, net | 41 | 51 | (10) | ||||||||||||||
| Interest Expense | 102 | 88 | 14 | ||||||||||||||
| Income Before Income Taxes | 198 | 191 | 7 | ||||||||||||||
| Income Tax Expense | 18 | 16 | 2 | ||||||||||||||
| Net Income | $ | 180 | $ | 175 | $ | 5 | |||||||||||
The following table shows the percent changes in dekatherms delivered and average number of customers. The percentages for all throughput deliveries represent billed and unbilled sales. Amounts are not weather-normalized.
| Increase (Decrease) over prior year | 2022 | ||||
| Residential deliveries | (4.6) | % | |||
| Commercial deliveries | 0.9 | % | |||
| Industrial deliveries | 0.8 | % | |||
| Power generation deliveries | 31.3 | % | |||
| For resale | (5.1) | % | |||
| Total throughput deliveries | 18.9 | % | |||
| Secondary market volumes | 31.8 | % | |||
| Average number of customers | 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.
106
| MD&A | PIEDMONT | ||||
Nine Months Ended September 30, 2022, as compared to September 30, 2021
Operating Revenues.
The variance was driven primarily by:
•
a $331 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs;
•
a $50 million increase due to base rate increases; and
•
a $5 million increase due to customer growth.
Operating Expenses.
The variance was driven primarily by:
•
a $331 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas;
•
a $39 million increase in operation, maintenance and other due to higher spend on internal and contract labor costs, fleet, materials and other; and
•
a $16 million increase in depreciation and amortization due to additional plant in service.
Other Income and Expenses, net.
The decrease was primarily due to lower AFUDC equity income.
Interest Expense.
The increase was primarily due to higher debt outstanding and lower AFUDC debt income.
Income Tax Expense.
The increase in tax expense was primarily due to an increase in pretax income.
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
Duke Energy relies primarily upon cash flows from operations, debt and equity issuances and its existing cash and cash equivalents to fund its liquidity and capital requirements. Duke Energy’s capital requirements arise primarily from capital and investment expenditures, repaying long-term debt and paying dividends to shareholders. 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. Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2021, included a summary and detailed discussion of projected primary sources and uses of cash for 2022 to 2024.
As of September 30, 2022, Duke Energy had approximately $453 million of cash on hand and $5.5 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 Note 5 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for information regarding Duke Energy's debt issuances and maturities, and available credit facilities including the Master Credit Facility.
Cash Flow Information
The following table summarizes Duke Energy’s cash flows.
| Nine Months Ended | ||||||||||||||
| September 30, | ||||||||||||||
| (in millions) | 2022 | 2021 | ||||||||||||
| Cash flows provided by (used in): | ||||||||||||||
| Operating activities | $ | 5,188 | $ | 7,227 | ||||||||||
| Investing activities | (8,630) | (8,200) | ||||||||||||
| Financing activities | 3,551 | 1,160 | ||||||||||||
| Net increase in cash, cash equivalents and restricted cash | 109 | 187 | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 520 | 556 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 629 | $ | 743 | ||||||||||
107
| MD&A | LIQUIDITY AND CAPITAL RESOURCES | ||||
OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows.
| Nine Months Ended | ||||||||||||||||||||
| September 30, | ||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | |||||||||||||||||
| Net income | $ | 3,113 | $ | 2,915 | $ | 198 | ||||||||||||||
| Non-cash adjustments to net income | 4,490 | 4,556 | (66) | |||||||||||||||||
| Contributions to qualified pension plans | (58) | — | (58) | |||||||||||||||||
| Payments for asset retirement obligations | (418) | (389) | (29) | |||||||||||||||||
| Working capital | (1,939) | 145 | (2,084) | |||||||||||||||||
| Net cash provided by operating activities | $ | 5,188 | $ | 7,227 | $ | (2,039) | ||||||||||||||
The variance is primarily due to the timing of accruals and payments in working capital accounts, including fuel purchases.
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows.
| Nine Months Ended | ||||||||||||||||||||
| September 30, | ||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | |||||||||||||||||
| Capital, investment and acquisition expenditures | $ | (8,185) | $ | (7,119) | $ | (1,066) | ||||||||||||||
| Other investing items | (445) | (1,081) | 636 | |||||||||||||||||
| Net cash used in investing activities | $ | (8,630) | $ | (8,200) | $ | (430) | ||||||||||||||
The variance is primarily due to higher overall investments in the Electric Utilities and Infrastructure segment, partially offset by a payment made in 2021 to fund ACP's outstanding debt.
FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows.
| Nine Months Ended | ||||||||||||||||||||
| September 30, | ||||||||||||||||||||
| (in millions) | 2022 | 2021 | Variance | |||||||||||||||||
| Issuances of long-term debt, net | $ | 5,663 | $ | 2,683 | $ | 2,980 | ||||||||||||||
| Issuances of common stock | — | 5 | (5) | |||||||||||||||||
| Notes payable, commercial paper and other short-term borrowings | 269 | (723) | 992 | |||||||||||||||||
| Dividends paid | (2,389) | (2,340) | (49) | |||||||||||||||||
| Contributions from noncontrolling interests | 132 | 1,556 | (1,424) | |||||||||||||||||
| Other financing items | (124) | (21) | (103) | |||||||||||||||||
| Net cash provided by financing activities | $ | 3,551 | $ | 1,160 | $ | 2,391 | ||||||||||||||
The variance was primarily due to:
•
a $3 billion increase in net proceeds from issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term debt; and
•
a $992 million increase in net borrowings from notes payable and commercial paper.
Partially offset by:
•
a $1.4 billion decrease in contributions from noncontrolling interests due to fewer project investments financed by tax equity being placed into service in the current year.
OTHER MATTERS
Environmental Regulations
The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants. Refer to Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.
108
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For an in-depth discussion of the Duke Energy Registrants' market risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7 of Duke Energ
y's Annual Report on Form 10-K for the year ended December 31, 2021.
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 5, 9 and 11 to the Condensed Consolidated Financial Statements, “Debt and Credit Facilities,” “Derivatives and Hedging” and “Fair Value Measurements," respectively.
Credit Risk
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.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated the effectiveness of their disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 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 September 30, 2022, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
109
| OTHER INFORMATION | |||||
ITEM 1. LEGAL PROCEEDINGS
For information regarding material legal proceedings, including regulatory and environmental matters, see Note 3, "Regulatory Matters," and Note 4, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements. For additional information, see Item 3, "Legal Proceedings," in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2021.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in the Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect the Duke Energy Registrants’ financial condition or future results. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2021.
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 strategy. 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
110
| EXHIBITS | |||||
ITEM 6. EXHIBITS
Exhibits filed herein are designated by an asterisk (*). All exhibits not so designated are incorporated by reference to a prior filing, as indicated. Items constituting management contracts or compensatory plans or arrangements are designated by a double asterisk (**). The company agrees to furnish upon request to the commission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***).
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exhibit | Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||||
| Number | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||||||||
| 3.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.2 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.3 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.4 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.5 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.6 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.7 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.1.8 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.2.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.2.2 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.2.3 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.2.4 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.2.5 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.2.6 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
111
| EXHIBITS | |||||
| *31.2.7 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *31.2.8 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.2 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.3 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.4 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.5 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.6 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.7 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.1.8 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.1 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.2 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.3 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.4 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.5 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.6 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.7 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *32.2.8 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *101.INS | XBRL Instance Document (this does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||
112
| EXHIBITS | |||||
| *101.SCH | XBRL Taxonomy Extension Schema Document. | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||
| *101.CAL | XBRL Taxonomy Calculation Linkbase Document. | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||
| *101.LAB | XBRL Taxonomy Label Linkbase Document. | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||
| *101.PRE | XBRL Taxonomy Presentation Linkbase Document. | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||
| *101.DEF | XBRL Taxonomy Definition Linkbase Document. | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||
| *104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||
The total amount of securities of the registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees, upon request of the SEC, to furnish copies of any or all of such instruments to it.
113
| SIGNATURES | |||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
|
DUKE ENERGY CORPORATION
DUKE ENERGY CAROLINAS, LLC
PROGRESS ENERGY, INC.
DUKE ENERGY PROGRESS, LLC
DUKE ENERGY FLORIDA, LLC
DUKE ENERGY OHIO, INC.
DUKE ENERGY INDIANA, LLC
PIEDMONT NATURAL GAS COMPANY, INC.
|
||||||||
| Date: | November 4, 2022 | /s/ BRIAN D. SAVOY | ||||||
|
Brian D. Savoy
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
||||||||
| Date: | November 4, 2022 | /s/ CYNTHIA S. LEE | ||||||
|
Cynthia S. Lee
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer) |
||||||||
114
TABLE OF CONTENTS
Part IItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 6. Exhibits