Duke Energy CORP [DUK] Filings

10-K 1 duk-20231231.htm 10-K duk-20231231

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended December 31, 2023 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, Zip Code and Telephone Number	IRS Employer Identification No.

1-32853	DUKE ENERGY CORPORATION	20-2777218

(a Delaware corporation)

525 South Tryon Street

Charlotte, North Carolina 28202

800-488-3853


1-4928			DUKE ENERGY CAROLINAS, LLC						56-0205520

(a North Carolina limited liability company)

525 South Tryon Street

Charlotte, North Carolina 28202

800-488-3853


1-15929			PROGRESS ENERGY, INC.						56-2155481

(a North Carolina corporation)

411 Fayetteville Street

Raleigh, North Carolina 27601

800-488-3853


1-3382			DUKE ENERGY PROGRESS, LLC						56-0165465

(a North Carolina limited liability company)

411 Fayetteville Street

Raleigh, North Carolina 27601

800-488-3853


1-3274			DUKE ENERGY FLORIDA, LLC						59-0247770

(a Florida limited liability company)

299 First Avenue North

St. Petersburg, Florida 33701

800-488-3853


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

(an Ohio corporation)

139 East Fourth Street

Cincinnati, Ohio 45202

800-488-3853


1-3543			DUKE ENERGY INDIANA, LLC						35-0594457

(an Indiana limited liability company)

1000 East Main Street

Plainfield, Indiana 46168

800-488-3853


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

(a North Carolina corporation)

525 South Tryon Street

Charlotte, North Carolina 28202

800-488-3853

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

Name of each exchange on

Registrant Title of each class Trading symbols which registered

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

(Duke Energy)

Duke Energy 5.625% 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

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Duke Energy

Yes

☒

☐

Duke Energy Florida, LLC (Duke Energy Florida)

Yes

☒

☐

Duke Energy Carolinas, LLC (Duke Energy Carolinas)

Yes

☒

☐

Duke Energy Ohio, Inc. (Duke Energy Ohio)

Yes

☒

☐

Progress Energy, Inc. (Progress Energy)

Yes

☐

☒

Duke Energy Indiana, LLC (Duke Energy Indiana)

Yes

☒

☐

Duke Energy Progress, LLC (Duke Energy Progress)

Yes

☒

☐

Piedmont Natural Gas Company, Inc. (Piedmont)

Yes

☒

☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ (Response applicable to all registrants.)

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

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

Large Accelerated Filer ☒ Accelerated Filer ¨ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

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

Indicate by check mark whether each of Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-accelerated Filer ☒ Smaller Reporting Company ☐ Emerging Growth Company ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨

Indicate by check mark whether each of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x


Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2023.		$	69,080,869,078
Number of Shares of Common Stock Outstanding at January 31, 2024
Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	770,811,446
Duke Energy Carolinas	All of the registrant's limited liability company member interests are directly owned by Duke Energy.	N/A
Progress Energy	All of the registrant's common stock is directly owned by Duke Energy.	100
Duke Energy Progress	All of the registrant's limited liability company member interests are indirectly owned by Duke Energy.	N/A
Duke Energy Florida	All of the registrant's limited liability company member interests are indirectly owned by Duke Energy.	N/A
Duke Energy Ohio	All of the registrant's common stock is indirectly owned by Duke Energy.	89,663,086
Duke Energy Indiana	All of the registrant's limited liability company member interests are owned by a Duke Energy subsidiary that is 80.1% indirectly owned by Duke Energy.	N/A
Piedmont	All of the registrant's common stock is directly owned by Duke Energy.	100

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Duke Energy definitive proxy statement for the 2024 Annual Meeting of the Shareholders or an amendment to this Annual Report are incorporated by reference into PART III, Items 10, 11 and 13 hereof.

This combined Form 10-K is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.

Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K and are, therefore, filing this Form 10-K with the reduced disclosure format specified in General Instructions I(2) of Form 10-K.

Auditor Firm ID: 34 Auditor Name: Deloitte & Touche LLP Auditor Location: Charlotte, NC


TABLE OF CONTENTS

TABLE OF CONTENTS

FORM 10-K FOR THE YEAR ENDED December 31, 2023


Item		Page

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

GLOSSARY OF TERMS

PART I.
1.	BUSINESS	9
	DUKE ENERGY	9
	GENERAL	9
	BUSINESS SEGMENTS	9
	HUMAN CAPITAL MANAGEMENT	19
	EXECUTIVE OFFICERS	21
	ENVIRONMENTAL MATTERS	22
	DUKE ENERGY CAROLINAS	22
	PROGRESS ENERGY	22
	DUKE ENERGY PROGRESS	22
	DUKE ENERGY FLORIDA	23
	DUKE ENERGY OHIO	23
	DUKE ENERGY INDIANA	23
	PIEDMONT	23

1A.	RISK FACTORS	23

1B.	UNRESOLVED STAFF COMMENTS	32

1C.	CYBERSECUR ITY	32

2.	PROPERTIES	35

3.	LEGAL PROCEEDINGS	38

4.	MINE SAFETY DISCLOSURES	38

PART II.
5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	39

6.	SELECTED FINANCIAL DATA	39

7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	40

7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	71

8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	72

9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	228

9A.	CONTROLS AND PROCEDURES	228

9B.	O THER INFORMATION	230
PART III.
10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	230

11.	EXECUTIVE COMPENSATION	230

12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	230

13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	231

14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	231

PART IV.
15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	232
	EXHIBIT INDEX	E-1
	SIGNATURES	E-2


FORWARD LOOKING STATEMENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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

◦The ability to implement our business strategy, including our carbon emission reduction goals;

◦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;

◦The impact of extraordinary external events, such as the pandemic health event resulting from COVID-19, and their collateral consequences, including the disruption of global supply chains or the economic activity in our service territories;

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

◦Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy, reduced customer usage due to cost pressures from inflation or fuel costs, and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts, natural gas building and appliance electrification, and use of alternative energy sources, such as self-generation and distributed generation technologies;

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

◦Advancements in technology;

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

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

◦Changing investor, customer and other stakeholder expectations and demands including heightened emphasis on environmental, social and governance concerns and costs related thereto;

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

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

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

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

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

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

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

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

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


FORWARD LOOKING STATEMENTS

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

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

◦The ability to control operation and maintenance costs;

◦The level of creditworthiness of counterparties to transactions;

◦The ability to obtain adequate insurance at acceptable costs;

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

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

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

◦The effect of accounting and reporting pronouncements issued periodically by accounting standard-setting bodies and the SEC;

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

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

◦Asset or business acquisitions and dispositions may not yield the anticipated benefits; and

◦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.

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


GLOSSARY OF TERMS

Glossary of Terms

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


Term or 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 and Duke Energy

AFS			Available for Sale

AFUDC			Allowance for funds used during construction

AOCI			Accumulated Other Comprehensive Income (Loss)

ArcLight			ArcLight Capital Partners, LLC

ARO			Asset Retirement Obligation

ARM			Annual Review Mechanism

ATM			At-the-market

Audit Committee			Audit Committee of the Board of Directors

Bison			Bison Insurance Company Limited

Board of Directors			Duke Energy Board of Directors

Brookfield			Brookfield Renewable Partners L.P.

Brunswick			Brunswick Nuclear Plant

Cardinal			Cardinal Pipeline Company, LLC

Catawba			Catawba Nuclear Station

CC			Combined Cycle

CCR			Coal Combustion Residuals

CCR Rule			A 2015 EPA rule establishing national regulations to provide a comprehensive set of requirements for the management and disposal of CCR from coal-fired power plants

CEP			Capital Expenditure Program

Cinergy			Cinergy Corp. (collectively with its subsidiaries)

Citrus County CC			Citrus County Combined Cycle Facility

CO2			Carbon Dioxide

Coal Ash Act			North Carolina Coal Ash Management Act of 2014

the Company			Duke Energy Corporation and its subsidiaries

Commercial Renewables Disposal Groups			Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay, separated into the utility-scale solar and wind group, the distributed generation group and the remaining assets

COR			Costs of Removal

COVID-19			Coronavirus Disease 2019

CPCN			Certificate of Public Convenience and Necessity

CRC			Cinergy Receivables Company LLC

Crystal River Unit 3			Crystal River Unit 3 Nuclear Plant

CT			Combustion Turbine

DATC			Duke-American Transmission Company, LLC

DECON			A method of decommissioning in which structures, systems, and components that contain radioactive contamination are removed from a site and safely disposed at a commercially operated low-level waste disposal facility, or decontaminated to a level that permits the site to be released for unrestricted use shortly after it ceases operation

DEFR			Duke Energy Florida Receivables, LLC

Deloitte			Deloitte & Touche LLP, and the member firms of Deloitte Touche Tohmatsu and their respective affiliates

DEPR			Duke Energy Progress Receivables, LLC


GLOSSARY OF TERMS


DERF			Duke Energy Receivables Finance Company, LLC

DOE			U.S. Department of Energy

Dominion			Dominion Energy, Inc.

Dth			Dekatherms

Duke Energy			Duke Energy Corporation (collectively with its subsidiaries)

Duke Energy Carolinas			Duke Energy Carolinas, LLC

Duke Energy Florida			Duke Energy Florida, LLC

Duke Energy Indiana			Duke Energy Indiana, LLC

Duke Energy Kentucky			Duke Energy Kentucky, Inc.

Duke Energy Ohio			Duke Energy Ohio, Inc.

Duke Energy Progress			Duke Energy Progress, LLC

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

East Bend			East Bend Generating Station

EDIT			Excess deferred income tax

EE			Energy efficiency

EPA			U.S. Environmental Protection Agency

EPS			Earnings Per Share

ETR			Effective tax rate

EU&I			Electric Utilities and Infrastructure

Exchange Act			Securities Exchange Act of 1934

FERC			Federal Energy Regulatory Commission

Form S-3			Registration statement

FPSC			Florida Public Service Commission

FTR			Financial transmission rights

FV-NI			Fair Value Through Net Income

GAAP			Generally Accepted Accounting Principles in the United States

GAAP Reported Earnings			Net Income Available to Duke Energy Corporation common stockholders

GAAP Reported EPS			Basic EPS Available to Duke Energy Corporation common stockholders

GHG			Greenhouse Gas

GIC			GIC Private Limited

GU&I			Gas Utilities and Infrastructure

GWh			Gigawatt-hour

Hardy Storage			Hardy Storage Company, LLC

Harris			Shearon Harris Nuclear Plant

HB 951			The Energy Solutions for North Carolina, or House Bill 951, passed in October 2021

IDEM			the Indiana Department of Environmental Management

IMPA			Indiana Municipal Power Agency

IMR			Integrity Management Rider

IRA			Inflation Reduction Act

IRP			Integrated Resource Plans

IRS			Internal Revenue Service

ISO			Independent System Operator

ITC			Investment Tax Credit

IURC			Indiana Utility Regulatory Commission


GLOSSARY OF TERMS


Investment Trusts			Grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana

JDA			Joint Dispatch Agreement

KO Transmission			KO Transmission Company

KPSC			Kentucky Public Service Commission

LLC			Limited Liability Company

McGuire			McGuire Nuclear Station

MGP			Manufactured gas plant

MGP Settlement			Stipulation and Recommendation filed jointly by Duke Energy Ohio the staff of the PUCO, the Office of the Ohio Consumers' Counsel and the Ohio Energy Group on August 31, 2021

MISO			Midcontinent Independent System Operator, Inc.

MTBE			Methyl tertiary butyl ether

MW			Megawatt

MWh			Megawatt-hour

MYRP			Multiyear rate plans

NCDEQ			North Carolina Department of Environmental Quality

NCEMC			North Carolina Electric Membership Corporation

NCUC			North Carolina Utilities Commission

NDTF			Nuclear decommissioning trust funds


NMC			National Methanol Company

NOL			Net operating loss

NPNS			Normal purchase/normal sale

NRC			U.S. Nuclear Regulatory Commission

NYSE			New York Stock Exchange

OCC			Ohio Consumers' Counsel

Oconee			Oconee Nuclear Station

OPEB			Other Post-Retirement Benefit Obligations

OVEC			Ohio Valley Electric Corporation

the Parent			Duke Energy Corporation holding company

PBR			Performance-based regulation

PGA			Purchased Gas Adjustments

PHMSA			Pipeline and Hazardous Materials Safety Administration

Piedmont			Piedmont Natural Gas Company, Inc.


Pine Needle			Pine Needle LNG Company, LLC

Pioneer			Pioneer Transmission, LLC

PJM			PJM Interconnection, LLC

PMPA			Piedmont Municipal Power Agency

PISCC			Post-in-service carrying costs

PPA			Purchase Power Agreement

Progress Energy			Progress Energy, Inc.

PSCSC			Public Service Commission of South Carolina

PTC			Production Tax Credit

PUCO			Public Utilities Commission of Ohio

PURPA			Public Utility Regulatory Policies Act of 1978

QF			Qualifying Facility


Relative TSR			TSR of Duke Energy stock relative to a predefined peer group


GLOSSARY OF TERMS


Robinson			Robinson Nuclear Plant

ROE			Return of equity

ROU			Right-of-use

RSU			Restricted Stock Unit

RTO			Regional Transmission Organization

Sabal Trail			Sabal Trail Transmission, LLC

SAFSTOR			A method of decommissioning in which a nuclear facility is placed and maintained in a condition that allows the facility to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use

SEC			Securities and Exchange Commission

S&P			Standard & Poor’s Rating Services

State utility commissions			NCUC, PSCSC, FPSC, PUCO, IURC, KPSC and TPUC (Collectively)

State electric utility commissions			NCUC, PSCSC, FPSC, PUCO, IURC and KPSC (Collectively)

State gas utility commissions			NCUC, PSCSC, PUCO, TPUC and KPSC (Collectively)

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

Sutton			L.V. Sutton Combined Cycle Plant

the Tax Act			Tax Cuts and Jobs Act

TPUC			Tennessee Public Utility Commission

TSR			Total shareholder return

U.S.			United States


W.S. Lee CC			William States Lee Combined Cycle Facility

WVPA			Wabash Valley Power Association, Inc.


BUSINESS

ITEM 1. BUSINESS

DUKE ENERGY

General

Duke Energy was incorporated on May 3, 2005, and is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also Subsidiary Registrants, including Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. Operations in Kentucky are conducted through Duke Energy Ohio's wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio include Duke Energy Ohio and its subsidiaries, unless otherwise noted. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.

The Duke Energy Registrants electronically file reports with the SEC, including Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to such reports.

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at sec.gov. Additionally, information about the Duke Energy Registrants, including reports filed with the SEC, is available through Duke Energy’s website at duke-energy.com. Such reports are accessible at no charge and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC.

Business Segments

Duke Energy's segment structure includes two reportable business segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I). The remainder of Duke Energy’s operations is presented as Other. Commercial Renewables is reported as discontinued operations and is no longer a reportable segment beginning in the fourth quarter of 2022. See Note 2 to the Consolidated Financial Statements, “Dispositions," for further details. Duke Energy's chief operating decision-maker routinely reviews financial information about each of these business segments in deciding how to allocate resources and evaluate the performance of the business. For additional information on each of these business segments, including financial and geographic information, see Note 3 to the Consolidated Financial Statements, “Business Segments.” The following sections describe the business and operations of each of Duke Energy’s business segments, as well as Other.

ELECTRIC UTILITIES AND INFRASTRUCTURE

EU&I conducts operations primarily through the regulated public utilities of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana and Duke Energy Ohio. EU&I provides retail electric service through the generation, transmission, distribution and sale of electricity to approximately 8.4 million customers within the Southeast and Midwest regions of the U.S. The service territory is approximately 90,000 square miles across six states with a total estimated population of 27 million. The operations include electricity sold wholesale to municipalities, electric cooperative utilities and other load-serving entities.

During 2021, Duke Energy executed an agreement providing for an investment by an affiliate of GIC in Duke Energy Indiana in exchange for a 19.9% minority interest issued by Duke Energy Indiana Holdco, LLC, the holding company for Duke Energy Indiana. The transaction was completed following two closings. Additionally, in November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay, which was moved to EU&I. Duke Energy entered into purchase and sale agreements with affiliates of Brookfield for the sale of the utility-scale solar and wind group in June 2023 and with affiliates of ArcLight for the distributed generation group in July 2023. Both transactions closed in October 2023. See Note 2 to the Consolidated Financial Statements, “Dispositions," for additional information.

EU&I is also a joint owner in certain electric transmission projects. EU&I has a 50% ownership interest in DATC, a partnership with American Transmission Company, formed to design, build and operate transmission infrastructure. DATC owns 72% of the transmission service rights to Path 15, an 84-mile transmission line in central California. EU&I also has a 50% ownership interest in Pioneer, which builds, owns and operates electric transmission facilities in North America. The following map shows the service territory for EU&I as of December 31, 2023.


BUSINESS

The electric operations and investments in projects are subject to the rules and regulations of the FERC, the NRC, the NCUC, the PSCSC, the FPSC, the IURC, the PUCO and the KPSC.

The following table represents the distribution of GWh billed sales by customer class for the year ended December 31, 2023.


	Duke		Duke		Duke		Duke		Duke
	Energy		Energy		Energy		Energy		Energy
	Carolinas		Progress		Florida		Ohio		Indiana
Residential	32	%	26	%	50	%	37	%	28	%
General service	34	%	22	%	36	%	38	%	26	%
Industrial	23	%	15	%	8	%	23	%	31	%
Total retail sales	89	%	63	%	94	%	98	%	85	%
Wholesale and other sales	11	%	37	%	6	%	2	%	15	%
Total sales	100	%	100	%	100	%	100	%	100	%

The number of residential and general service customers within the EU&I service territory is expected to increase over time. Growth in weather-normal sales volumes, however, was lower in 2023 compared to 2022 due primarily to the continuation of energy efficiency adoption, rooftop solar and broad weakness across industrial sectors. While migration to EU&I's service territory remained strong, residential sales decreased due primarily to the return to more normal post-pandemic activities and economic conditions throughout the year. Lower industrial sales continued due to overall industrial weakness, including some manufacturing plant closings across certain jurisdictions, continuation of supply chain constraints and higher inventory levels, as well as higher interest rates. This was partially offset by higher data center usage, which contributed to growth in commercial sales volumes. The impact on customer's usage from these factors and other potential economic dynamics continues to be monitored. Over the longer time frame, it is still expected that the continued adoption of more efficient housing and appliances will have a negative impact on average usage per residential customer over time.

Seasonality and the Impact of Weather

Revenues and costs are influenced by seasonal weather patterns. Peak sales of electricity occur during the summer and winter months, which results in higher revenue and cash flows during these periods. By contrast, lower sales of electricity occur during the spring and fall, allowing for scheduled plant maintenance. Although decoupling mechanisms may mitigate some weather impacts, residential and general service customers are typically more impacted by weather than industrial customers. Estimated weather impacts are based on actual current period weather compared to normal weather conditions. Normal weather conditions are defined as the long-term average of actual historical weather conditions.


BUSINESS

The estimated impact of weather on earnings is based on the temperature variances from a normal condition and customers’ historic usage patterns. The methodology used to estimate the impact of weather does not consider all variables that may impact customer response to weather conditions such as humidity in the summer or wind chill in the winter. The precision of this estimate may also be impacted by applying long-term weather trends to shorter-term periods. Estimates of weather impacts may be more difficult to determine during periods of extreme or more volatile weather.

Heating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling degree days measure the variation in weather based on the extent the average daily temperature rises above the base temperature. Each degree of temperature below the base temperature counts as one heating degree day and each degree of temperature above the base temperature counts as one cooling degree day.

Competition

Retail

EU&I’s businesses operate as the sole supplier of electricity within their service territories, with the exception of Ohio, which has a competitive electricity supply market for generation service. EU&I owns and operates facilities necessary to generate, transmit, distribute and sell electricity. Services are priced by state commission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable electricity at fair prices.

In Ohio, EU&I conducts competitive auctions for electricity supply. The cost of energy purchased through these auctions is recovered from retail customers. EU&I earns retail margin in Ohio on the transmission and distribution of electricity, but not on the cost of the underlying energy.

Competition in the regulated electric distribution business is primarily from the development and deployment of alternative energy sources including on-site generation from industrial customers and distributed generation, such as private solar, at residential, general service and/or industrial customer sites.

Wholesale

Duke Energy competes with other utilities and merchant generators for bulk power sales, sales to municipalities and cooperatives and wholesale transactions under primarily cost-based contracts approved by FERC. The principal factors in competing for these sales are availability of capacity and power, reliability of service and price. Prices are influenced primarily by market conditions and fuel costs.

Increased competition in the wholesale electric utility industry and the availability of transmission access could affect EU&I’s load forecasts, plans for power supply and wholesale energy sales and related revenues. Wholesale energy sales will be impacted by the extent to which additional generation is available to sell to the wholesale market and the ability of EU&I to attract new customers and to retain existing customers.

Energy Capacity and Resources

EU&I owns approximately 54,772 MW of generation capacity. For additional information on owned generation facilities, see Item 2, “Properties.”

Energy and capacity are also supplied through contracts with other generators and purchased on the open market. Factors that could cause EU&I to purchase power for its customers may include, but are not limited to, generating plant outages, extreme weather conditions, generation reliability, demand growth and price. EU&I has interconnections and arrangements with its neighboring utilities to facilitate planning, emergency assistance, sale and purchase of capacity and energy and reliability of power supply.

EU&I’s generation portfolio is a balanced mix of energy resources having different operating characteristics and fuel sources designed to provide energy at the lowest possible cost to meet its obligation to serve retail customers. All options, including owned generation resources and purchased power opportunities, are continually evaluated on a real-time basis to select and dispatch the lowest-cost resources available to meet system load requirements.

Sources of Electricity

EU&I relies principally on natural gas, nuclear fuel and coal for its generation of electricity. The following table lists sources of electricity and fuel costs for the three years ended December 31, 2023.


							Cost of Delivered Fuel per Net
	Generation by Source						Kilowatt-hour Generated (Cents)
	2023		2022		2021		2023	2022	2021
Natural gas and fuel oil(a)	33.3	%	34.2	%	31.8	%	3.81	6.35	3.89
Nuclear(a)	28.4	%	26.6	%	29.8	%	0.58	0.58	0.58
Coal(a)	12.8	%	13.5	%	18.2	%	4.07	3.43	2.84
All fuels (cost based on weighted average)(a)	74.5	%	74.3	%	79.8	%	2.63	3.75	2.42
Hydroelectric and solar(b)	1.8	%	1.5	%	1.5	%
Total generation	76.3	%	75.8	%	81.3	%
Purchased power and net interchange	23.7	%	24.2	%	18.7	%
Total sources of energy	100.0	%	100.0	%	100.0	%

(a) Statistics related to all fuels reflect EU&I's public utility ownership interest in jointly owned generation facilities.

(b) Generating figures are net of output required to replenish pumped-storage facilities during off-peak periods.


BUSINESS

Natural Gas and Fuel Oil

Natural gas and fuel oil supply, transportation and storage for EU&I’s generation fleet is purchased under standard industry agreements from various suppliers, including Piedmont. Natural gas supply agreements typically provide for a percentage of forecasted burns being procured over time, with varied expiration dates. EU&I believes it has access to an adequate supply of natural gas and fuel oil for the reasonably foreseeable future.

EU&I has certain dual-fuel generating facilities that can operate utilizing both natural gas and fuel oil. The cost of EU&I’s natural gas and fuel oil is fixed price or determined by published market prices as reported in certain industry publications, plus any transportation and freight costs. Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana use derivative instruments to manage a portion of their exposure to price fluctuations for natural gas. Duke Energy Florida has temporarily agreed to not hedge natural gas prices, but retains an ability to propose hedging again in annual fuel docket filings.

EU&I has firm interstate and intrastate natural gas transportation agreements and storage agreements in place to support generation needed for load requirements. EU&I may purchase additional shorter-term natural gas transportation and utilize natural gas interruptible transportation agreements to support generation needed for load requirements. The EU&I natural gas plants are served by various supply zones and multiple pipelines.

Nuclear

The industrial processes for producing nuclear generating fuel generally involve the mining and milling of uranium ore to produce uranium concentrates and services to convert, enrich and fabricate fuel assemblies.

EU&I has contracted for uranium materials and services to fuel its nuclear reactors. Uranium concentrates, conversion services and enrichment services are primarily met through a diversified portfolio of long-term supply contracts. The contracts are diversified by supplier, country of origin and pricing. EU&I staggers its contracting so that its portfolio of long-term contracts covers the majority of its fuel requirements in the near term and decreasing portions of its fuel requirements over time thereafter. Near-term requirements not met by long-term supply contracts have been and are expected to be fulfilled with spot market purchases. Due to the technical complexities of changing suppliers of fuel fabrication services, EU&I generally source these services to a single domestic supplier on a plant-by-plant basis using multiyear contracts.

EU&I has entered into fuel contracts that cover 100% of its uranium concentrates through at least 2027, 100% of its conversion services through at least 2029, 100% of its enrichment services through at least 2027, and 100% of its fabrication services requirements for these plants through at least 2027. For future requirements not already covered under long-term contracts, EU&I believes it will be able to renew contracts as they expire or enter into similar contractual arrangements with other suppliers of nuclear fuel materials and services.

Coal

EU&I meets its coal demand through a portfolio of long-term purchase contracts and short-term spot market purchase agreements. Large amounts of coal are purchased under long-term contracts with mining operators who mine both underground and at the surface. EU&I uses spot market purchases to meet coal requirements not met by long-term contracts. Expiration dates for its long-term contracts, which may have various price adjustment provisions and market reopeners, range from 2024 to 2027 for Duke Energy Carolinas, Duke Energy Progress and Duke Energy Indiana, 2024 to 2026 for Duke Energy Florida and 2024 to 2025 for Duke Energy Ohio. EU&I expects to renew these contracts or enter into similar contracts with other suppliers as existing contracts expire, though prices will fluctuate over time as coal markets change. EU&I has an adequate supply of coal under contract to meet its risk management guidelines regarding projected future consumption. Coal inventory levels may fluctuate as a result of volatility in natural gas prices and the associated impacts on coal-fired dispatch within the generation fleet. EU&I continues to actively manage its portfolio and has worked with suppliers to obtain increased flexibility in its coal contracts.

Coal purchased for the Carolinas is primarily produced from mines in Central Appalachia, Northern Appalachia and the Illinois Basin. Coal purchased for Florida is primarily produced from mines in the Illinois Basin. Coal purchased for Kentucky is primarily produced from mines along the Ohio River in Illinois, Kentucky, Ohio, West Virginia and Pennsylvania. Coal purchased for Indiana is primarily produced in Indiana and Illinois. There are adequate domestic coal reserves to serve EU&I's coal generation needs through end of life. The current average sulfur content of coal purchased by EU&I is between 0.5% and 3.5% for Duke Energy Carolinas and Duke Energy Progress, between 1% and 3.5% for Duke Energy Florida, and between 0.5% and 4.0% for Duke Energy Ohio and Duke Energy Indiana. EU&I's environmental controls, in combination with the use of sulfur dioxide (SO2) emission allowances, enable EU&I to satisfy current SO2 emission limitations for its existing facilities.

Purchased Power

EU&I purchases a portion of its capacity and system requirements through purchase obligations, leases and purchase capacity contracts. EU&I believes it can obtain adequate purchased power capacity to meet future system load needs. However, during periods of high demand, the price and availability of purchased power may be significantly affected.

The following table summarizes purchased power for the previous three years:


	2023	2022	2021
Purchase obligations and leases (in millions of MWh)(a)	37.6	41.2	36.0
Purchase capacity under contract (in MW)(b)	3,997	4,028	4,259

(a) Represents approximately 15% of total system requirements for 2023, 16% for 2022 and 14% for 2021.

(b) For 2023, 2022 and 2021, these agreements include approximately 412 MW of firm capacity under contract by Duke Energy Florida with QFs.


BUSINESS

Inventory

EU&I must maintain an adequate stock of fuel and materials and supplies in order to ensure continuous operation of generating facilities and reliable delivery to customers. As of December 31, 2023, the inventory balance for EU&I was approximately $4.1 billion. For additional information on inventory, see Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”

Ash Basin Management

The EPA has issued regulations related to the management of CCR from power plants including the CCR Rule. These regulations classify CCR as nonhazardous waste under the Resource Conservation and Recovery Act (RCRA) and apply to electric generating sites with new and existing landfills and new and existing surface impoundments and establish requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments (ash basins or impoundments) will continue to be regulated by existing state laws, regulations and permits, such as the North Carolina Coal Ash Management Act of 2014 (Coal Ash Act).

EU&I has and will periodically submit to applicable authorities required site-specific coal ash impoundment remediation or closure plans. Closure plans must be approved and all associated permits issued before any work can begin. Closure activities have begun in all of Duke Energy's jurisdictions. Excavation began in 2015 at the four sites specified as high priority by the Coal Ash Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of CCR materials to appropriate engineered off-site or on-site lined landfills or for reuse in an approved beneficial application. Duke Energy has completed excavation of coal ash at the four high-priority North Carolina sites. At other sites where CCR management is required, planning and closure methods have been studied and factored into the estimated retirement and management costs, and closure activities have commenced.

The EPA CCR rule and the Coal Ash Act leave the decision on cost recovery determinations related to closure of coal ash surface impoundments to the normal ratemaking processes before utility regulatory commissions. Duke Energy's electric utilities have included compliance costs associated with federal and state requirements in their respective rate proceedings. During 2017, Duke Energy Carolinas' and Duke Energy Progress’ wholesale contracts were amended to include the recovery of expenditures related to AROs for the closure of coal ash basins. The amended contracts have retail disallowance parity or provisions limiting challenges to CCR cost recovery actions at FERC. FERC approved the amended wholesale rate schedules in 2017. For additional information on the ash basins and recovery, see Item 7, "Other Matters" and Notes 4, 5 and 10 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations," respectively.

Nuclear Matters

Duke Energy owns, wholly or partially, 11 operating nuclear reactors located at six operating stations. The Crystal River Unit 3 permanently ceased operation in February 2013. Nuclear insurance includes: nuclear liability coverage; property damage coverage; nuclear accident decontamination and premature decommissioning coverage; and accidental outage coverage for losses in the event of a major accidental outage. Joint owners reimburse Duke Energy for certain expenses associated with nuclear insurance in accordance with joint owner agreements. The Price-Anderson Act requires plant owners to provide for public nuclear liability claims resulting from nuclear incidents to the maximum total financial protection liability, which is approximately $16.2 billion. For additional information on nuclear insurance, see Note 5 to the Consolidated Financial Statements, “Commitments and Contingencies.”

Duke Energy has a significant future financial commitment to dispose of spent nuclear fuel and decommission and decontaminate each plant safely. The NCUC and the PSCSC require Duke Energy Carolinas and Duke Energy Progress update cost estimates for decommissioning their nuclear plants every five years. The nuclear decommissioning liabilities are assessed and updated based on changes in cash flows provided in new studies as well as annual assessments to evaluate whether any indicators suggest a change in the estimate of the ARO is necessary.

The following table summarizes the fair value of NDTF investments and the most recent site-specific nuclear decommissioning cost studies. Decommissioning costs are stated in 2023 or 2019 dollars, depending on the year of the cost study, and include costs to decommission plant components not subject to radioactive contamination.


	NDTF(a)				Decommissioning
(in millions)	December 31, 2023		December 31, 2022		Costs(a)		Year of Cost Study
Duke Energy	$	10,143	$	8,637	$	8,814	2023 or 2019
Duke Energy Carolinas(b)(c)	5,686		4,783		4,439		2023
Duke Energy Progress(d)	4,075		3,430		4,181		2019
Duke Energy Florida(e)	382		424		194		N/A

(a) Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.

(b) Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.

(c) Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2023 was filed with the NCUC and PSCSC in 2024. A funding study was last completed and filed in 2019. An updated funding study will be completed and filed with the NCUC and PSCSC in 2024.


BUSINESS

(d) Duke Energy Progress' site-specific nuclear decommissioning cost study completed in 2019 was filed with the NCUC and PSCSC in March 2020. Duke Energy Progress also completed a funding study, which was filed with the NCUC and PSCSC in July 2020. In October 2021, Duke Energy Progress filed the 2019 nuclear decommissioning cost study with the FERC, as well as a revised date schedule for decommissioning expense to be collected from wholesale customers. The FERC accepted the filing, as filed on December 9, 2021.

(e) During 2019, Duke Energy Florida reached an agreement to transfer decommissioning work for Crystal River Unit 3 to a third party and decommissioning costs are based on the agreement with this third party rather than a cost study. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. Duke Energy Florida provides the FPSC periodic reports on the status and progress of decommissioning activities.

The NCUC, PSCSC, FPSC and FERC have allowed EU&I to recover estimated decommissioning costs through retail and wholesale rates over the expected remaining service periods of their nuclear stations. EU&I believes the decommissioning costs being recovered through rates, when coupled with the existing fund balances and expected fund earnings, will be sufficient to provide for the cost of future decommissioning. For additional information, see Note 10 to the Consolidated Financial Statements, “Asset Retirement Obligations.”

The Nuclear Waste Policy Act of 1982 (as amended) provides the framework for development by the federal government of interim storage and permanent disposal facilities for high-level radioactive waste materials. The government has not yet developed a storage facility or disposal capacity, so EU&I will continue to store spent fuel on its reactor sites.

Under federal law, the DOE is responsible for the selection and construction of a facility for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE terminated the project to license and develop a geologic repository at Yucca Mountain, Nevada in 2010, and is currently taking no action to fulfill its responsibilities to dispose of spent fuel.

Until the DOE begins to accept the spent nuclear fuel, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida will continue to safely manage their spent nuclear fuel. Under current regulatory guidelines, Harris has sufficient storage capacity in its spent fuel pools through the expiration of its renewed operating license. With certain modifications and approvals by the NRC to expand the on-site dry cask storage facilities, spent nuclear fuel dry storage facilities will be sufficient to provide storage space of spent fuel through the expiration of the operating licenses, including any license renewals, for Brunswick, Catawba, McGuire, Oconee and Robinson. Crystal River Unit 3 ceased operation in 2013 and was placed in a SAFSTOR condition in January 2018. As of January 2018, all spent fuel at Crystal River Unit 3 has been transferred from the spent fuel pool to dry storage at an on-site independent spent fuel storage installation.

The nuclear power industry faces uncertainties with respect to the cost and long-term availability of disposal sites for spent nuclear fuel and other radioactive waste, compliance with changing regulatory requirements, capital outlays for modifications and new plant construction.

EU&I is subject to the jurisdiction of the NRC for the design, construction and operation of its nuclear generating facilities. The following table includes the current year of expiration of nuclear operating licenses for nuclear stations in operation. In June 2021, Duke Energy Carolinas filed a subsequent license renewal application for Oconee with the U.S. Nuclear Regulatory Commission to renew Oconee's operating license for an additional 20 years. Duke Energy has announced its intention to seek 20-year operating license renewals for each of the reactors it operates in Duke Energy Carolinas and Duke Energy Progress. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters,” for additional information.


Unit			Year of Expiration
Duke Energy Carolinas
Catawba Units 1 and 2			2043
McGuire Unit 1			2041
McGuire Unit 2			2043
Oconee Units 1 and 2			2033
Oconee Unit 3			2034
Duke Energy Progress
Brunswick Unit 1			2036
Brunswick Unit 2			2034
Harris			2046
Robinson			2030

The NRC has acknowledged permanent cessation of operation and permanent removal of fuel from the reactor vessel at Crystal River Unit 3. Therefore, the license no longer authorizes operation of the reactor. For additional information on nuclear decommissioning activity, see Note 10 to the Consolidated Financial Statements, "Asset Retirement Obligations."

Regulation

State

The state electric utility commissions approve rates for Duke Energy's retail electric service within their respective states. The state electric utility commissions, to varying degrees, have authority over the construction and operation of EU&I’s generating facilities. CPCNs issued by the state electric utility commissions, as applicable, authorize EU&I to construct and operate its electric facilities and to sell electricity to retail and wholesale customers. Prior approval from the relevant state electric utility commission is required for the entities within EU&I to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus earn a reasonable rate of return on its invested capital, including equity.


BUSINESS

In addition to rates approved in base rate cases, each of the state electric utility commissions allow recovery of certain costs through various cost recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over or under-recovered costs, are prudent.

Fuel, fuel-related costs and certain purchased power costs are eligible for recovery by EU&I. EU&I uses coal, hydroelectric, natural gas, oil, renewable generation and nuclear fuel to generate electricity, thereby maintaining a diverse fuel mix that helps mitigate the impact of cost increases in any one fuel. Due to the associated regulatory treatment and the method allowed for recovery, changes in fuel costs from year to year have no material impact on operating results of EU&I, unless a commission finds a portion of such costs to have been imprudent. However, delays between the expenditure for fuel costs and recovery from customers can adversely impact the timing of cash flows of EU&I.

The table below reflects significant electric rate case applications approved and effective in the past three years and applications currently pending approval.


	Regulatory Body	Annual Increase (Decrease) (in millions)		Return on Equity		Equity Component of Capital Structure		Effective Date
Approved Rate Cases:
Duke Energy Carolinas 2023 North Carolina Rate Case(a)	NCUC	$	768	10.1	%	53	%	January 2024
Duke Energy Kentucky 2022 Kentucky Electric Rate Case(b)	KPSC	48		9.75	%	52.145	%	October 2023
Duke Energy Progress 2022 North Carolina Rate Case(c)	NCUC	494		9.8	%	53	%	October 2023
Duke Energy Progress 2022 South Carolina Rate Case	PSCSC	52		9.6	%	52.43	%	April 2023
Duke Energy Ohio 2021 Ohio Electric Rate Case	PUCO	23		9.5	%	50.5	%	January 2023
Duke Energy Progress 2019 North Carolina Rate Case	NCUC	178		9.6	%	52	%	June 2021
Duke Energy Carolinas 2019 North Carolina Rate Case	NCUC	33		9.6	%	52	%	June 2021



Pending Rate Cases:
Duke Energy Carolinas 2024 South Carolina Rate Case	PSCSC	239		10.5	%	53	%	August 2024

(a) Of the total rate case increase, Year 1, 2 and 3 rates are approximately 57%, 22% and 21%, respectively.

(b) An ROE of 9.65% for electric riders was approved.

Additionally, in January 2021, Duke Energy Florida filed the 2021 Settlement with the FPSC that will allow annual increases to its base rates, an agreed upon return on equity (ROE) and includes a base rate stay-out provision through 2024, among other provisions. The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order on June 4, 2021. Revised customer rates became effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024. In January 2024, Duke Energy Florida notified the FPSC that it expects to file a formal request for new base rates in April 2024. For more information on rate matters and other regulatory proceedings, see Note 4 to the Consolidated Financial Statements, “Regulatory Matters.”

Federal

The FERC approves EU&I’s cost-based rates for electric sales to certain power and transmission wholesale customers. Regulations of FERC and the state electric utility commissions govern access to regulated electric and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with EU&I.

RTOs

PJM and MISO are the ISOs and FERC-approved RTOs for the regions in which Duke Energy Ohio and Duke Energy Indiana operate. PJM and MISO operate energy, capacity and other markets, and control the day-to-day operations of bulk power systems through central dispatch.

Duke Energy Ohio is a member of PJM and Duke Energy Indiana is a member of MISO. Transmission owners in these RTOs have turned over control of their transmission facilities and their transmission systems are currently under the dispatch control of the RTOs. Transmission service is provided on a regionwide, open-access basis using the transmission facilities of the RTO members at rates based on the costs of transmission service.

Environmental

EU&I is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See the “Other Matters” section of Item 7 Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.


BUSINESS

GAS UTILITIES AND INFRASTRUCTURE

GU&I conducts natural gas operations primarily through the regulated public utilities of Piedmont, Duke Energy Ohio and Duke Energy Kentucky. The natural gas operations are subject to the rules and regulations of the NCUC, PSCSC, PUCO, KPSC, TPUC, PHMSA and the FERC. GU&I serves residential, commercial, industrial and power generation natural gas customers, including customers served by municipalities who are wholesale customers. GU&I has over 1.7 million total customers, including approximately 1.2 million customers located in North Carolina, South Carolina and Tennessee, and an additional 560,000 customers located within southwestern Ohio and northern Kentucky. In the Carolinas, Ohio and Kentucky, the service areas are comprised of numerous cities, towns and communities. In Tennessee, the service area is the metropolitan area of Nashville. The following map shows the service territory and investments in operating pipelines for GU&I as of December 31, 2023.

200477-A%20Gas%20Service%20Map%20with%20pipelines-final.jpg

The number of residential, commercial and industrial customers within the GU&I service territory is expected to increase over time. Average usage per residential customer is expected to remain flat or decline for the foreseeable future; however, decoupled rates in North Carolina and various rate design mechanisms in other jurisdictions partially mitigate the impact of the declining usage per customer on overall profitability.

GU&I also has investments in various pipeline transmission projects, renewable natural gas projects and natural gas storage facilities.


BUSINESS

Natural Gas for Retail Distribution

GU&I is responsible for the distribution of natural gas to retail customers in its North Carolina, South Carolina, Tennessee, Ohio and Kentucky service territories. GU&I’s natural gas procurement strategy is to contract primarily with major and independent producers and marketers for natural gas supply. It also purchases a diverse portfolio of transportation and storage service from interstate pipelines. This strategy allows GU&I to assure reliable natural gas supply and transportation for its firm customers during peak winter conditions. When firm pipeline services or contracted natural gas supplies are temporarily not needed due to market demand fluctuations, GU&I may release these services and supplies in the secondary market under FERC-approved capacity release provisions and/or make wholesale secondary market sales. In 2023, firm supply purchase commitment agreements provided for approximately 96% of the natural gas supply for both Piedmont and Duke Energy Ohio during the winter months and 100% of forecasted demand was under contract prior to the winter heating season.

Impact of Weather

GU&I revenues are generally protected from the impact of weather fluctuations due to the regulatory mechanisms that are available in most service territories. In North Carolina, margin decoupling provides protection from both weather and other usage variations like conservation for residential and small and medium general service customers. Margin decoupling provides a set margin per customer independent of actual usage. In South Carolina, Tennessee and Kentucky, weather normalization adjusts revenues either up or down depending on how much warmer or colder than normal a given month has been. Weather normalization adjustments occur from November through March in South Carolina, from October through April in Tennessee and from November through April in Kentucky. Duke Energy Ohio collects most of its non-fuel revenue through a fixed monthly charge that is not impacted by usage fluctuations that result from weather changes or conservation.

Competition

GU&I’s businesses operate as the sole provider of natural gas service within their retail service territories. GU&I owns and operates facilities necessary to transport and distribute natural gas. GU&I earns retail margin on the transmission and distribution of natural gas and not on the cost of the underlying commodity. Services are priced by state commission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable natural gas service at fair prices.

In residential, commercial and industrial customer markets, natural gas distribution operations compete with other companies that supply energy, primarily electric companies, propane and fuel oil dealers, renewable energy providers and coal companies in relation to sources of energy for electric power plants, as well as nuclear energy. A significant competitive factor is price. GU&I's primary product competition is with electricity for space heating, water heating and cooking. Increases in the price of natural gas or decreases in the price of other energy sources could negatively impact competitive position by decreasing the price benefits of natural gas to the consumer. In the case of industrial customers, such as manufacturing plants, adverse economic or market conditions, including higher natural gas costs, could cause these customers to suspend business operations or to use alternative sources of energy in favor of energy sources with lower per-unit costs.

Higher natural gas costs or decreases in the price of other energy sources may allow competition from alternative energy sources for applications that have traditionally used natural gas, encouraging some customers to move away from natural gas-fired equipment to equipment fueled by other energy sources. Competition between natural gas and other forms of energy is also based on efficiency, performance, reliability, safety and other non-price factors. Technological improvements in other energy sources and events that impair the public perception of the non-price attributes of natural gas could erode our competitive advantage. These factors in turn could decrease the demand for natural gas, impair our ability to attract new customers and cause existing customers to switch to other forms of energy or to bypass our systems in favor of alternative competitive sources. This could result in slow or no customer growth and could cause customers to reduce or cease using our product, thereby reducing our ability to make capital expenditures and otherwise grow our business, adversely affecting our earnings.

Natural Gas Investments

Duke Energy, through its GU&I segment, has a 7.5% equity ownership interest in Sabal Trail. Sabal Trail is a joint venture that owns the Sabal Trail Natural Gas Pipeline (Sabal Trail pipeline) to transport natural gas to Florida, regulated by FERC. The Sabal Trail Phase I mainline was placed into service in July 2017 and traverses Alabama, Georgia and Florida. The remaining lateral line to the Duke Energy Florida's Citrus County CC was placed into service in March 2018. Phase II of Sabal Trail went into service in May 2020, adding approximately 200,000 Dth of capacity to the Sabal Trail pipeline.

Duke Energy, through its GU&I segment, has a 47% equity ownership interest in ACP, which planned to build the ACP pipeline, an approximately 600-mile interstate natural gas pipeline. The ACP pipeline was intended to transport diverse natural gas supplies into southeastern markets and would be regulated by FERC. Dominion Energy owns 53% of ACP and was contracted to construct and operate the ACP pipeline upon completion. On July 5, 2020, Dominion announced a sale of substantially all of its natural gas transmission and storage segment assets, which were critical to the ACP pipeline. Further, permitting delays and legal challenges had materially affected the timing and cost of the pipeline. As a result, Duke Energy determined that they would no longer invest in the construction of the ACP pipeline.

Duke Energy, also through its GU&I segment, has investments in various renewable natural gas joint ventures.

GU&I has a 21.49% equity ownership interest in Cardinal, an intrastate pipeline located in North Carolina regulated by the NCUC, a 45% equity ownership in Pine Needle, an interstate liquefied natural gas storage facility located in North Carolina and a 50% equity ownership interest in Hardy Storage, an underground interstate natural gas storage facility located in Hardy and Hampshire counties in West Virginia. Pine Needle and Hardy Storage are regulated by FERC.

KO Transmission Company (KO Transmission), a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities was co-owned by Columbia Gas Transmission, LLC. KO Transmission sold all of its pipeline facilities and related real property to Columbia Gas Transmission, LLC on February 1, 2023, for approximately book value.

See Notes 4, 13 and 18 to the Consolidated Financial Statements, "Regulatory Matters," "Investments in Unconsolidated Affiliates" and "Variable Interest Entities," respectively, for further information on Duke Energy's and GU&I's natural gas investments.


BUSINESS

Inventory

GU&I must maintain adequate natural gas inventory in order to provide reliable delivery to customers. As of December 31, 2023, the inventory balance for GU&I was $129 million. For more information on inventory, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."

Regulation

State

The state gas utility commissions approve rates for Duke Energy's retail natural gas service within their respective states. The state gas utility commissions, to varying degrees, have authority over the construction and operation of GU&I’s natural gas distribution facilities. CPCNs issued by the state gas utility commissions or other government agencies, as applicable, authorize GU&I to construct and operate its natural gas distribution facilities and to sell natural gas to retail and wholesale customers. Prior approval from the relevant state gas utility commission is required for GU&I to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus a reasonable rate of return on its invested capital, including equity.

In addition to amounts collected from customers through approved base rates, each of the state gas utility commissions allow recovery of certain costs through various cost recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over- or under-recovered costs, are prudent.

Natural gas costs are eligible for recovery by GU&I. Due to the associated regulatory treatment and the method allowed for recovery, changes in natural gas costs from year to year have no material impact on operating results of GU&I, unless a commission finds a portion of such costs to have been imprudent. However, delays between the expenditure for natural gas and recovery from customers can adversely impact the timing of cash flows of GU&I.

The following table summarizes certain components underlying significant recently approved and effective base rates or ARM filings in the last three years.


	Regulatory Body	Annual Increase (Decrease) (in millions)		Return on Equity		Equity Component of Capital Structure		Effective Date
Approved Rate Cases:
Duke Energy Ohio 2022 Natural Gas Base Rate Case	PUCO	$	32	9.6	%	52.32	%	November 2023

Piedmont 2023 Tennessee Annual Review Mechanism	TPUC	40		9.8	%	48.67	%	October 2023

Duke Energy Kentucky 2021 Natural Gas Base Rate Case(a)	KPSC	9		9.375	%	51.344	%	January 2022

Piedmont 2021 North Carolina Natural Gas Base Rate Case	NCUC	67		9.6	%	51.60	%	November 2021
Piedmont 2020 Tennessee Natural Gas Base Rate Case	TPUC	16		9.8	%	50.50	%	January 2021

(a) An ROE of 9.3% for natural gas riders was approved.

GU&I has an IMR mechanism in North Carolina designed to separately track and recover certain costs associated with capital investments incurred to comply with federal pipeline safety and integrity programs. Piedmont has withdrawn from the Tennessee IMR mechanism subsequent to the authorization of the Tennessee Annual Review Mechanism effective January 2022. The following table summarizes information related to the recently approved IMR filing.

Cumulative

Annual

Effective

(in millions)

Investment

Revenues

Date

Piedmont 2022 IMR Filing – North Carolina

213

December 2022

In Ohio, GU&I has a CEP Rider designed to recover costs between rate cases on PUCO approved capital expenditures. Duke Energy Ohio submits a filing each year for incremental investments to increase the revenue requirement up to the approved annual residential rate cap increase. The cumulative investment under the CEP Rider is $164 million with total annual revenue requirement of $17 million with rates effective November 1, 2023.

For more information on rate matters and other regulatory proceedings, see Note 4 to the Consolidated Financial Statements, “Regulatory Matters.”


BUSINESS

Federal

GU&I is subject to various federal regulations, including regulations that are particular to the natural gas industry. These federal regulations include but are not limited to the following:

•Regulations of the FERC affect the certification and siting of new interstate natural gas pipeline projects, the purchase and sale of, the prices paid for, and the terms and conditions of service for the interstate transportation and storage of natural gas.

•Regulations of the PHMSA affect the design, construction, operation, maintenance, integrity, safety and security of natural gas distribution and transmission systems.

•Regulations of the EPA relate to the environment including proposed air emissions regulations that would expand to include emissions of methane.

Regulations of the FERC and the state gas utility commissions govern access to regulated natural gas and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with GU&I.

Environmental

GU&I is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See “Other Matters” section of Item 7 Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.

OTHER

The remainder of Duke Energy’s operations is presented as Other. While it is not a business segment, Other primarily includes interest expense on holding company debt, unallocated corporate costs, certain income tax amounts, amounts related to certain companywide initiatives and contributions made to the Duke Energy Foundation. Other also includes Bison and an investment in NMC.

The Duke Energy Foundation is a nonprofit organization funded by Duke Energy shareholders that makes charitable contributions to selected nonprofits and government subdivisions.

Bison, a wholly owned subsidiary of Duke Energy, is a captive insurance company with the principal activity of providing Duke Energy subsidiaries with indemnification for financial losses primarily related to property, workers’ compensation and general liability.

Duke Energy owns a 17.5% equity interest in NMC. The joint venture company has production facilities in Jubail, Saudi Arabia, where it manufactures certain petrochemicals and plastics. NMC annually produces approximately 1 million metric tons each of MTBE and methanol and has the capacity to produce 50,000 metric tons of polyacetal. The main feedstocks to produce these products are natural gas and butane. Duke Energy records the investment activity of NMC using the equity method of accounting and retains 25% of NMC's board of directors' representation and voting rights.

Human Capital Management

Governance

Our employees are critical to the success of our company. Our Human Resources organization is responsible for our human capital management strategy, which includes recruiting and hiring, onboarding and training, diversity and inclusion, workforce planning, talent and succession planning, performance management and employee development. Key areas of focus include fostering a high-performance and inclusive culture built on strong leadership and highly engaged and diverse employees, building a pipeline of skilled workers and ensuring knowledge transfer as employees retire.

Our Board of Directors provides oversight on certain human capital management matters, primarily through the Compensation and People Development Committee, which is responsible for reviewing strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, employee engagement and talent development.

Employees

On December 31, 2023, Duke Energy had a total of 27,037 full-time, part-time and temporary employees, the majority of which were full-time employees. The total includes 5,054 employees who are represented by labor unions under various collective bargaining agreements that generally cover wages, benefits, working practices, and other terms and conditions of employment.

Compensation

The Company seeks to attract and retain an appropriately qualified workforce and leverages Duke Energy’s leadership imperatives to foster a culture focused on customers, innovation, and highly engaged employees. Our compensation program is market driven and designed to link pay to performance with the goal of attracting and retaining talented employees, rewarding individual performance, and encouraging long-term commitment to our business. Our market competitive pay program includes short-term and long-term variable pay components that help to align the interests of Duke Energy to our customers and shareholders. In addition to competitive base pay, we provide eligible employees with compensation and benefits under a variety of plans and programs, including health care benefits, retirement savings, pension, health savings and flexible spending accounts, wellness, family leaves, employee assistance, as well as other benefits including a charitable matching program. The Company is committed to providing market competitive, fair, and equitable compensation and regularly conducts internal pay equity reviews, and benchmarking against peer companies to ensure our pay is competitive.


BUSINESS

Diversity and Inclusion

Duke Energy is committed to continuing to build a diverse workforce that reflects the communities we serve while strengthening a culture of inclusion where all employees and customers feel respected and valued. Our goals include attracting and retaining the talent needed and rewarding performance to enable us to reach our strategic objectives. The Enterprise Diversity and Inclusion Council, chaired by our Executive Vice President and Chief Executive Officer, Duke Energy Florida and Midwest in 2023, monitors the effectiveness and execution of our diversity and inclusion strategy and programs. Employee-led councils are also embedded across the Company in our business units and focus on the specific diversity and inclusion needs of the business and help drive inclusion deeper into the employee experience. Leaders and individual contributors also have the opportunity to participate in voluntary diversity and inclusion training and facilitated conversations on insightful topics offered to further our commitment to building and enabling an inclusive work environment.

In 2022, our aspirational goals included achieving workforce representation of at least 25% for women and 20% for people of color. In 2023, we established new aspirational goals of 28% for women and 23% for people of color. We continue to strive toward reaching these aspirational goals and as of December 31, 2023, our workforce consisted of approximately 23.6% women and 20.5% people of color.

The Company also has 10 Employee Resource Groups (ERGs), with 38 chapters and more than 6,700 employees participating. ERGs are networks of employees formed around a common dimension of diversity whose goals and objectives align with the Company's goals and objectives. These groups focus on employee professional development and networking, community outreach, cultural awareness, recruiting and retention. They also serve as a resource to the Company for advocacy and community outreach and improving customer service through innovation. ERG-sponsored forums include networking events, mentoring, scholarship banquets for aspiring college students, and workshops on topics such as time management, stress reduction, career planning and work-life balance. Our ERGs are open to all employees.

Among other efforts, the Company has developed partnerships with community organizations, community colleges and historically Black colleges and universities (HBCUs) to support our strategy of building a diverse and highly skilled talent pipeline.

Operational Excellence

The foundation for our growth and success is our continued focus on operational excellence, the leading indicator of which is safety. As such, the safety of our workforce remains our top priority. The Company closely monitors the total incident case rate (TICR), which is a metric based on strict OSHA definitions that measures the number of occupational injuries and illnesses per 100 employees. This objective emphasizes our focus on achieving an event-free and injury-free workplace. As an indication of our commitment to safety, we include safety metrics in both the short-term and long-term incentive plans based on the TICR for employees. Our employees delivered strong safety results in 2023, consistent with our industry-leading performance levels since 2018.


BUSINESS

Information about Our Executive Officers

The following table sets forth the individuals who currently serve as executive officers. Executive officers serve until their successors are duly elected or appointed.

Name

Age(a)

Current and Recent Positions Held

Lynn J. Good

Chair, President and Chief Executive Officer. Ms. Good has served as Chair, President and Chief Executive Officer of Duke Energy since January 1, 2016, and was Vice Chairman, President and Chief Executive Officer of Duke Energy from July 2013 through December 2015. Prior to that, she served as Executive Vice President and Chief Financial Officer since 2009.

Brian D. Savoy

Executive Vice President and Chief Financial Officer. Mr. Savoy assumed his current position in September 2022. Prior to that, he served as Executive Vice President, Chief Strategy and Commercial Officer from May 2021 through August 2022; Senior Vice President, Chief Transformation and Administrative Officer from October 2019 through April 2021; Senior Vice President, Business Transformation and Technology from May 2016 through September 2019; Senior Vice President, Controller and Chief Accounting Officer from September 2013 to May 2016; Director, Forecasting and Analysis from 2009 to September 2013; and Vice President and Controller of the Commercial Power segment from 2006 to 2009.

Kodwo Ghartey-Tagoe

Executive Vice President, Chief Legal Officer and Corporate Secretary. Mr. Ghartey-Tagoe assumed his current position in May 2020. He was appointed Executive Vice President and Chief Legal Officer in October 2019 after serving as President, South Carolina since 2017. Mr. Ghartey-Tagoe joined Duke Energy in 2002 and has held numerous leadership positions in Duke Energy’s Legal Department, including Duke Energy's Senior Vice President of State and Federal Regulatory Legal Support.

T. Preston Gillespie

Executive Vice President, Chief Generation Officer and Enterprise Operational Excellence. Mr. Gillespie assumed his current position in January 2023. Prior to that, he served as the Chief Generation Officer since 2020.

R. Alexander Glenn

Executive Vice President and Chief Executive Officer, Duke Energy Florida and Midwest. Mr. Glenn assumed his current position in March 2023. Prior to that, he served as Senior Vice President and Chief Executive Officer, Duke Energy Florida and Midwest from May 2021 to March 2023; Senior Vice President, State and Federal Regulatory Legal Support from 2017 to May 2021; and State President of Duke Energy Florida's operations from 2012 to 2017.

Julia S. Janson

Executive Vice President and Chief Executive Officer, Duke Energy Carolinas. Ms. Janson assumed her current position in May 2021. Prior to that, she served as Executive Vice President, External Affairs and President, Carolinas Region since October 2019 and the position of Executive Vice President, External Affairs and Chief Legal Officer since November 2018. She originally assumed the position of Executive Vice President, Chief Legal Officer and Corporate Secretary in December 2012 and then assumed the responsibilities for External Affairs in February 2016.

Cynthia S. Lee

Vice President, Chief Accounting Officer and Controller. Ms. Lee assumed her current position in May 2021. Prior to that, she served as Director, Investor Relations since June 2019 and in various roles within the Corporate Controller's organization after joining the Corporation and its affiliates in 2002.

Ronald R. Reising

Adviser to the Chair, President, and Chief Executive Officer. Mr. Reising assumed his current position in January 2024. Prior to that, he served as Executive Vice President and Chief Human Resources Officer from April 2023 to December 2023; Senior Vice President and Chief Human Resource Officer from July 2020 to March 2023; Senior Vice President of Operations Support from 2014 to July 2020; and Chief Procurement Officer from 2006 to 2014.

Louis E. Renjel

Executive Vice President, External Affairs and Communications. Mr. Renjel assumed his current position in March 2023. Prior to that, he served as Senior Vice President, External Affairs and Communications from May 2021 to March 2023; Senior Vice President of Federal Government and Corporate Affairs from 2019 to May 2021; and Vice President, Federal Government Affairs and Strategic Policy from March 2017 to 2019. Prior to joining Duke Energy, Mr. Renjel served as Vice President of Strategic Infrastructure from 2009 to March 2017 for CSX Corp and as their Director of Environmental and Government Affairs from 2006 to 2008.

Harry K. Sideris

Executive Vice President, Customer Experience, Solutions and Services. Mr. Sideris assumed his current position in October 2019. Prior to that, he served as Senior Vice President and Chief Distribution Officer from June 2018 to October 2019; State President, Florida from January 2017 to June 2018; Senior Vice President of Environmental Health and Safety from August 2014 to January 2017; and Vice President of Power Generations for the Company's Fossil/Hydro Operations in the western portions of North Carolina and South Carolina from July 2012 to August 2014.

Steven K. Young

Executive Vice President and Chief Commercial Officer. Mr. Young assumed his current position in September 2022. Prior to that, he held the position of Executive Vice President and Chief Financial Officer from August 2013 through August 2022; Vice President, Chief Accounting Officer and Controller, assuming the role of Chief Accounting Officer in July 2012 and the role of Controller in December 2006.

(a) The ages of the officers provided are as of January 31, 2024.

There are no family relationships between any of the executive officers, nor any arrangement or understanding between any executive officer and any other person involved in officer selection.


BUSINESS

Environmental Matters

The Duke Energy Registrants are subject to federal, state and local laws and regulations with regard to air and water quality, hazardous and solid waste disposal and other environmental matters. Environmental laws and regulations affecting the Duke Energy Registrants include, but are not limited to:

•The Clean Air Act, as well as state laws and regulations impacting air emissions, including State Implementation Plans related to existing and new national ambient air quality standards for ozone and particulate matter. Owners and/or operators of air emission sources are responsible for obtaining permits and for annual compliance and reporting.

•The Clean Water Act, which requires permits for facilities that discharge wastewaters into navigable waters.

•The Comprehensive Environmental Response, Compensation and Liability Act, which can require any individual or entity that currently owns or in the past owned or operated a disposal site, as well as transporters or generators of hazardous substances sent to a disposal site, to share in remediation costs.

•The National Environmental Policy Act, which requires federal agencies to consider potential environmental impacts in their permitting and licensing decisions, including siting approvals.

•The CCR Rule, a 2015 EPA rule establishing national regulations to provide a comprehensive set of requirements for the management and disposal of CCR from coal-fired power plants.

•Coal Ash Act, as amended, which establishes requirements regarding the use and closure of existing ash basins, the disposal of ash at active coal plants and the handling of surface water and groundwater impacts from ash basins in North Carolina.

•The Solid Waste Disposal Act, as amended by RCRA, which creates a framework for the proper management of hazardous and nonhazardous solid waste; classifies CCR as nonhazardous waste; and establishes standards for landfill and surface impoundment placement, design, operation and closure, groundwater monitoring, corrective action, and post-closure care.

•The Toxic Substances Control Act, which gives EPA the authority to require reporting, recordkeeping and testing requirements, and to place restrictions relating to chemical substances and/or mixtures, including polychlorinated biphenyls.

For more information on environmental matters, see Notes 5 and 10 to the Consolidated Financial Statements, “Commitments and Contingencies – Environmental” and "Asset Retirement Obligations," respectively, and the “Other Matters” section of Item 7 Management's Discussion and Analysis. Except as otherwise described in these sections, costs to comply with current federal, state and local provisions regulating the discharge of materials into the environment or other potential costs related to protecting the environment are incorporated into the routine cost structure of our various business segments and are not expected to have a material adverse effect on the competitive position, consolidated results of operations, cash flows or financial position of the Duke Energy Registrants.

The "Other Matters" section of Item 7 Management's Discussion and Analysis includes more information on certain environmental regulations and a discussion of Global Climate Change including the potential impact of current and future legislation related to GHG emissions on the Duke Energy Registrants' operations. Recently passed and potential future environmental statutes and regulations could have a significant impact on the Duke Energy Registrants’ results of operations, cash flows or financial position. However, if and when such statutes and regulations become effective, the Duke Energy Registrants will seek appropriate regulatory recovery of costs to comply within its regulated operations.

DUKE ENERGY CAROLINAS

Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas’ service area covers approximately 24,000 square miles and supplies electric service to approximately 2.9 million residential, commercial and industrial customers. For information about Duke Energy Carolinas’ generating facilities, see Item 2, “Properties.” Duke Energy Carolinas is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.

Substantially all of Duke Energy Carolinas' operations are regulated and qualify for regulatory accounting. Duke Energy Carolinas operates one reportable business segment, EU&I. For additional information regarding this business segment, including financial information, see Note 3 to the Consolidated Financial Statements, “Business Segments.”

PROGRESS ENERGY

Progress Energy is a public utility holding company primarily engaged in the regulated electric utility business and is subject to regulation by the FERC. Progress Energy conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. When discussing Progress Energy’s financial information, it necessarily includes the results of Duke Energy Progress and Duke Energy Florida.

Substantially all of Progress Energy’s operations are regulated and qualify for regulatory accounting. Progress Energy operates one reportable business segment, EU&I. For additional information regarding this business segment, including financial information, see Note 3 to the Consolidated Financial Statements, “Business Segments.”

DUKE ENERGY PROGRESS

Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress’ service area covers approximately 28,000 square miles and supplies electric service to approximately 1.7 million residential, commercial and industrial customers.

For information about Duke Energy Progress’ generating facilities, see Item 2, “Properties.” Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC. Substantially all of Duke Energy Progress’ operations are regulated and qualify for regulatory accounting. Duke Energy Progress operates one reportable business segment, EU&I. For additional information regarding this business segment, including financial information, see Note 3 to the Consolidated Financial Statements, “Business Segments.”

PART I

DUKE ENERGY FLORIDA

Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida’s service area covers approximately 13,000 square miles and supplies electric service to approximately 2 million residential, commercial and industrial customers. For information about Duke Energy Florida’s generating facilities, see Item 2, “Properties.” Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.

Substantially all of Duke Energy Florida’s operations are regulated and qualify for regulatory accounting. Duke Energy Florida operates one reportable business segment, EU&I. For additional information regarding this business segment, including financial information, see Note 3 to the Consolidated Financial Statements, “Business Segments.”

DUKE ENERGY OHIO

Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, in the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio also conducts competitive auctions for retail electricity supply in Ohio whereby recovery of the energy price is from retail customers. Operations in Kentucky are conducted through Duke Energy Ohio's wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC, PHMSA and FERC.

Duke Energy Ohio’s service area covers approximately 3,000 square miles and supplies electric service to approximately 910,000 residential, commercial and industrial customers and provides transmission and distribution services for natural gas to approximately 560,000 customers. For information about Duke Energy Ohio's generating facilities and natural gas distribution facilities, see Item 2, “Properties.”

KO Transmission, a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities was co-owned by Columbia Gas Transmission, LLC. KO Transmission sold all of its pipeline facilities and related real property to Columbia Gas Transmission, LLC on February 1, 2023, for approximately book value.

Substantially all of Duke Energy Ohio's operations are regulated and qualify for regulatory accounting. Duke Energy Ohio has two reportable segments, EU&I and GU&I. For additional information on these business segments, including financial information, see Note 3 to the Consolidated Financial Statements, “Business Segments.”

DUKE ENERGY INDIANA

Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana’s service area covers approximately 23,000 square miles and supplies electric service to approximately 900,000 residential, commercial and industrial customers. For information about Duke Energy Indiana's generating facilities, see Item 2, “Properties.” Duke Energy Indiana is subject to the regulatory provisions of the IURC and FERC.

In 2021, Duke Energy executed an agreement providing for an investment in Duke Energy Indiana by GIC. The transaction was completed following two closings. For additional information, see Note 2 to the Consolidated Financial Statements, "Dispositions."

Substantially all of Duke Energy Indiana’s operations are regulated and qualify for regulatory accounting. Duke Energy Indiana operates one reportable business segment, EU&I. For additional information regarding this business segment, including financial information, see Note 3 to the Consolidated Financial Statements, “Business Segments.”

PIEDMONT

Piedmont is a regulated public utility primarily engaged in the distribution of natural gas to approximately 1.2 million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including customers served by municipalities who are wholesale customers. For information about Piedmont's natural gas distribution facilities, see Item 2, "Properties." Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC, PHMSA and FERC.

Substantially all of Piedmont’s operations are regulated and qualify for regulatory accounting. Piedmont operates one reportable business segment, GU&I. For additional information regarding this business segment, including financial information, see Note 3 to the Consolidated Financial Statements, “Business Segments.”

ITEM 1A. RISK FACTORS

In addition to other disclosures within this Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations – Matters Impacting Future Results" for each registrant in Item 7, and other documents filed with the SEC from time to time, the following factors should be considered in evaluating Duke Energy and its subsidiaries. Such factors could affect actual results of operations and cause results to differ substantially from those currently expected or sought. Unless otherwise indicated, risk factors discussed below generally relate to risks associated with all of the Duke Energy Registrants. Risks identified at the Subsidiary Registrant level are generally applicable to Duke Energy.


RISK FACTORS

BUSINESS STRATEGY RISKS

Duke Energy’s future results could be adversely affected if it is unable to implement its business strategy including achieving its carbon emissions reduction goals.

Duke Energy’s results of operations depend, in significant part, on the extent to which it can implement its business strategy successfully. Duke Energy's clean energy transition, which includes achieving net-zero carbon emissions from electricity generation by 2050, modernizing the regulatory construct, transforming the customer experience, and digital transformation, is subject to business, policy, regulatory, technology, economic and competitive uncertainties and contingencies, many of which are beyond its control and may make those goals difficult to achieve.

Federal or state policies could be enacted that restrict the availability of fuels or generation technologies, such as natural gas or nuclear power, that enable Duke Energy to reduce its carbon emissions. Supportive policies may be needed to facilitate the siting and cost recovery of transmission and distribution upgrades needed to accommodate the build out of large volumes of renewables and energy storage. Further, the approval of our state regulators will be necessary for the Company to continue to retire existing carbon emitting assets or make investments in new generating capacity. The Company may be constrained by the ability to procure resources or labor needed to build new generation at a reasonable price as well as to construct projects on time. In addition, new technologies that are not yet commercially available or are unproven at utility scale will likely be needed including new resources capable of following electric load over long durations such as advanced nuclear, hydrogen and long-duration storage. If these technologies are not developed or are not available at reasonable prices, or if we invest in early stage technologies that are then supplanted by technological breakthroughs, Duke Energy’s ability to achieve a net-zero target by 2050 at a cost-effective price could be at risk.

Achieving our carbon reduction goals will require continued operation of our existing carbon-free technologies including nuclear and renewables. The rapid transition to and expansion of certain low-carbon resources, such as renewables without cost-effective storage, may challenge our ability to meet customer expectations of reliability in a carbon constrained environment. Our nuclear fleet is central to our ability to meet these objectives and customer expectations. We are continuing to seek to renew the operating licenses of the 11 reactors we operate at six nuclear stations for an additional 20 years, extending their operating lives to and beyond midcentury. Failure to receive approval from the NRC for the relicensing of any of these reactors could affect our ability to achieve a net-zero target by 2050.

As a consequence, Duke Energy may not be able to fully implement or realize the anticipated results of its energy transition strategy, which may have an adverse effect on its financial condition.

REGULATORY, LEGISLATIVE AND LEGAL RISKS

The Duke Energy Registrants’ regulated utility revenues, earnings and results of operations are dependent on state legislation and regulation that affect electric generation, electric and natural gas transmission, distribution and related activities, which may limit their ability to recover costs.

The Duke Energy Registrants’ regulated electric and natural gas utility businesses are regulated on a cost-of-service/rate-of-return basis subject to statutes and regulatory commission rules and procedures of North Carolina, South Carolina, Florida, Ohio, Tennessee, Indiana and Kentucky. If the Duke Energy Registrants’ regulated utility earnings exceed the returns established by the state utility commissions, retail electric and natural gas rates may be subject to review and possible reduction by the commissions, which may decrease the Duke Energy Registrants’ earnings. Additionally, if regulatory or legislative bodies do not allow recovery of costs incurred in providing service, or do not do so on a timely basis, the Duke Energy Registrants’ earnings could be negatively impacted. Differences in regulation between jurisdictions with concurrent operations, such as North Carolina and South Carolina in Duke Energy Carolinas' and Duke Energy Progress' service territory, may also result in failure to recover costs.

If legislative and regulatory structures were to evolve in such a way that the Duke Energy Registrants’ exclusive rights to serve their regulated customers were eroded, their earnings could be negatively impacted. Federal and state regulations, laws, commercialization and reduction of costs and other efforts designed to promote and expand the use of EE measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could reduce recovery of fixed costs in Duke Energy service territories or result in customers leaving the electric distribution system and an increase in customer net energy metering, which allows customers with private solar to receive bill credits for surplus power up to the full retail credit amount. Over time, customer adoption of these technologies could result in Duke Energy not being able to fully recover the costs and investment in generation.

State regulators have approved various mechanisms to stabilize natural gas utility margins, including margin decoupling in North Carolina and rate stabilization in South Carolina. Additionally, certain jurisdictions have established performance incentive mechanisms and revenue decoupling mechanisms for EU&I. Performance incentive mechanisms condition some portion of the respective utility's earnings on its performance on established measurable consumer, utility system, or public policy outcomes. Revenue decoupling mechanisms provide periodic rate adjustments to ensure actual revenues match allowed revenues for certain customer classes. State regulators have also approved other margin stabilizing mechanisms that, for example, allow for recovery of margin losses associated with negotiated transactions designed to retain large volume customers that could use alternative fuels or that may otherwise directly access natural gas supply through their own connection to an interstate pipeline. If regulators decided to discontinue the Duke Energy Registrants' use of tariff mechanisms or other mechanisms intended to stabilize utility margins, it would negatively impact results of operations, financial position and cash flows. In addition, regulatory authorities also review whether natural gas costs are prudently incurred and can disallow the recovery of a portion of natural gas costs that the Duke Energy Registrants seek to recover from customers, which would adversely impact earnings.

The rates that the Duke Energy Registrants’ regulated utility businesses are allowed to charge are established by state utility commissions in rate case proceedings, which may limit their ability to recover costs and earn an appropriate return on investment.

The rates that the Duke Energy Registrants’ regulated utility businesses are allowed to charge significantly influences the results of operations, financial position and cash flows of the Duke Energy Registrants. The regulation of the rates that the regulated utility businesses charge customers is determined, in large part, by state utility commissions in rate case proceedings. Negative decisions made by these regulators, or by any court on appeal of a rate case proceeding, have, and in the future could have, a material adverse effect on the Duke Energy Registrants’ results of operations, financial position or cash flows and affect the ability of the Duke Energy Registrants to adequately recover costs on a timely basis, including an appropriate return on the significant infrastructure investments being made.


RISK FACTORS

Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs that could adversely affect the Duke Energy Registrants’ results of operations, financial position or cash flows and their utility businesses.

Increased competition resulting from deregulation or restructuring legislation could have a significant adverse impact on the Duke Energy Registrants’ results of operations, financial position or cash flows and their utility businesses. If the retail jurisdictions served by the Duke Energy Registrants become subject to deregulation, the impairment of assets, loss of retail customers, lower profit margins or increased costs of capital, and recovery of stranded costs could have a significant adverse financial impact on the Duke Energy Registrants. Stranded costs primarily include the generation assets of the Duke Energy Registrants whose value in a competitive marketplace may be less than their current book value, as well as above-market purchased power commitments from QFs from whom the Duke Energy Registrants are legally obligated to purchase energy at an avoided cost rate under PURPA. The Duke Energy Registrants cannot predict the extent and timing of entry by additional competitors into the electric markets. The Duke Energy Registrants cannot predict if or when they will be subject to changes in legislation or regulation, nor can they predict the impact of these changes on their results of operations, financial position or cash flows.

The Duke Energy Registrants’ businesses are subject to extensive federal regulation and a wide variety of laws and governmental policies, including taxes and environmental regulations, that may change over time in ways that affect operations and costs.

The Duke Energy Registrants are subject to regulations under a wide variety of U.S. federal and state regulations and policies, including by FERC, NRC, EPA and various other federal agencies as well as the North American Electric Reliability Corporation. Regulation affects almost every aspect of the Duke Energy Registrants’ businesses, including, among other things, their ability to: take fundamental business management actions; determine the terms and rates of transmission and distribution services; make acquisitions; issue equity or debt securities; engage in transactions with other subsidiaries and affiliates; and pay dividends upstream to the Duke Energy Registrants. Changes to federal regulations are continuous and ongoing. There can be no assurance that laws, regulations and policies will not be changed in ways that result in material modifications of business models and objectives or affect returns on investment by restricting activities and products, subjecting them to escalating costs, causing delays, or prohibiting them outright.

The Duke Energy Registrants are subject to numerous environmental laws and regulations requiring significant capital expenditures that can increase the cost of operations, and which may impact or limit business plans, or cause exposure to environmental liabilities.

The Duke Energy Registrants are subject to numerous environmental laws and regulations affecting many aspects of their present and future operations, including CCRs, air emissions, water quality, wastewater discharges, solid waste and hazardous waste. These laws and regulations can result in increased capital, operating and other costs. These laws and regulations generally require the Duke Energy Registrants to obtain and comply with a wide variety of environmental licenses, permits, inspections and other approvals. Compliance with environmental laws and regulations can require significant expenditures, including expenditures for cleanup costs and damages arising from contaminated properties. Failure to comply with environmental regulations may result in the imposition of fines, penalties and injunctive measures affecting operating assets, as well as reputational damage. The steps the Duke Energy Registrants could be required to take to ensure their facilities are in compliance could be prohibitively expensive. As a result, the Duke Energy Registrants may be required to shut down or alter the operation of their facilities, which may cause the Duke Energy Registrants to incur losses. Further, the Duke Energy Registrants may not be successful in recovering capital and operating costs incurred to comply with new environmental regulations through existing regulatory rate structures and their contracts with customers. Also, the Duke Energy Registrants may not be able to obtain or maintain from time to time all required environmental regulatory approvals for their operating assets or development projects. Delays in obtaining any required environmental regulatory approvals, failure to obtain and comply with them or changes in environmental laws or regulations to more stringent compliance levels could result in additional costs of operation for existing facilities or development of new facilities being prevented, delayed or subject to additional costs. Although it is not expected that the costs to comply with current environmental regulations will have a material adverse effect on the Duke Energy Registrants’ results of operations, financial position and cash flows due to regulatory cost recovery, the Duke Energy Registrants are at risk that the costs of complying with environmental regulations in the future will have such an effect.

The EPA has issued or proposed federal regulations governing the management of cooling water intake structures, wastewater, CCR management units, and CO2 emissions. New state legislation could impose carbon reduction goals that are more aggressive than the Company's plans. These regulations may require the Duke Energy Registrants to make additional capital expenditures and increase operating and maintenance costs.

The Duke Energy Registrants' operations, capital expenditures and financial results may be affected by regulatory changes related to the impacts of global climate change.

There is continued concern, and increasing activism, both nationally and internationally, about climate change. The EPA and state regulators have, and may adopt and implement, additional regulations to restrict emissions of GHGs to address global climate change, as well as reporting requirements regarding such emissions and related climate-goal claims. Certain local and state jurisdictions have also enacted laws to restrict or prevent new natural gas infrastructure. Increased regulation of GHG emissions and reporting requirements could impose significant additional costs on the Duke Energy Registrants' electric and natural gas operations, their suppliers and customers and affect demand for energy conservation and renewable products, which could impact both our electric and natural gas businesses. Regulatory changes could also result in generation facilities to be retired earlier than planned to meet our net-zero 2050 goal. Though we would plan to seek cost recovery for investments related to GHG emissions reductions through regulatory rate structures, changes in the regulatory climate could result in the delay in or failure to fully recover such costs and investment in generation.


RISK FACTORS

OPERATIONAL RISKS

The Duke Energy Registrants’ results of operations may be negatively affected by overall market, economic and other conditions that are beyond their control.

Sustained downturns or sluggishness in the economy generally affect the markets in which the Duke Energy Registrants operate and negatively influence operations. Declines in demand for electricity or natural gas as a result of economic downturns in the Duke Energy Registrants’ regulated service territories will reduce overall sales and lessen cash flows, especially as industrial customers reduce production and, therefore, consumption of electricity and the use of natural gas. Although the Duke Energy Registrants’ regulated electric and natural gas businesses are subject to regulated allowable rates of return and recovery of certain costs, such as fuel and purchased natural gas costs, under periodic adjustment clauses, overall declines in electricity or natural gas sold as a result of economic downturn or recession could reduce revenues and cash flows, thereby diminishing results of operations.

A continuation of adverse economic conditions including economic downturn or high commodity prices could also negatively impact the financial stability of certain of our customers and result in their inability to pay for electric and natural gas services. This could lead to increased bad debt expense and higher allowance for doubtful account reserves for the Duke Energy Registrants and result in delayed or unrecovered operating costs and lower financial results. Additionally, prolonged economic downturns that negatively impact the Duke Energy Registrants’ results of operations and cash flows could result in future material impairment charges to write-down the carrying value of certain assets, including goodwill, to their respective fair values. The Duke Energy Registrants also monitor the impacts of inflation on the procurement of goods and services and seek to minimize its effects in future periods through pricing strategies, productivity improvements, and cost reductions. Rapidly rising prices as a result of inflation or other factors may impact the ability of the Company to recover costs timely or execute on its business strategy including the achievement of growth objectives.

The Duke Energy Registrants sell electricity into the spot market or other competitive power markets on a contractual basis. With respect to such transactions, the Duke Energy Registrants are not guaranteed any rate of return on their capital investments through mandated rates, and revenues and results of operations are likely to depend, in large part, upon prevailing market prices. These market prices may fluctuate substantially over relatively short periods of time and could negatively impact the Company's ability to accurately forecast the financial impact or reduce the Duke Energy Registrants’ revenues and margins, thereby diminishing results of operations.

Factors that could impact sales volumes, generation of electricity and market prices at which the Duke Energy Registrants are able to sell electricity and natural gas are as follows:

•weather conditions, including abnormally mild winter or summer weather that cause lower energy or natural gas usage for heating or cooling purposes, as applicable, and periods of low rainfall that decrease the ability to operate facilities in an economical manner;

•supply of and demand for energy commodities;

•transmission or transportation constraints or inefficiencies;

•availability of purchased power;

•availability of competitively priced alternative energy sources, which are preferred by some customers over electricity produced from coal, nuclear or natural gas plants, and customer usage of energy-efficient equipment that reduces energy demand;

•natural gas, crude oil and refined products production levels and prices;

•ability to procure satisfactory levels of inventory, including materials, supplies, and fuel such as coal, natural gas and uranium; and

•capacity and transmission service into, or out of, the Duke Energy Registrants’ markets.

Natural disasters or operational accidents may adversely affect the Duke Energy Registrants’ operating results.

Natural disasters or operational accidents within the Company or industry (such as forest fires, earthquakes, hurricanes or natural gas transmission pipeline explosions) could have direct or indirect impacts to the Duke Energy Registrants or to key contractors and suppliers. Further, the generation of electricity and the transportation and storage of natural gas involve inherent operating risks that may result in accidents involving serious injury or loss of life, environmental damage or property damage. Such events could impact the Duke Energy Registrants through civil or criminal legal proceedings or changes to policies, laws and regulations whose compliance costs have a significant impact on the Duke Energy Registrants’ results of operations, financial position and cash flows. In addition, if a serious operational accident were to occur, existing insurance policies may not cover all of the potential exposures or the actual amount of loss incurred, including potential litigation awards. Any losses not covered by insurance, or any increases in the cost of applicable insurance as a result of such accident, could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.

The reputation and financial condition of the Duke Energy Registrants could be negatively impacted due to their obligations to comply with federal and state regulations, laws, and other legal requirements that govern the operations, assessments, storage, closure, remediation, disposal and monitoring relating to CCR, the high costs and new rate impacts associated with implementing these new CCR-related requirements and the strategies and methods necessary to implement these requirements in compliance with these legal obligations.

As a result of electricity produced for decades at coal-fired power plants, the Duke Energy Registrants manage large amounts of CCR that are primarily stored in dry storage within landfills or combined with water in surface impoundments, all in compliance with applicable regulatory requirements. A CCR-related operational incident could have a material adverse impact on the reputation and results of operations, financial position and cash flows of the Duke Energy Registrants.


RISK FACTORS

During 2015, EPA regulations were enacted related to the management of CCR from power plants. These regulations classify CCR as nonhazardous waste under the RCRA and apply to electric generating sites with new and existing landfills and, new and existing surface impoundments, and establish requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments will continue to be regulated by existing state laws, regulations and permits, as well as additional legal requirements that may be imposed in the future, such as the settlement reached with the NCDEQ to excavate seven of the nine remaining coal ash basins in North Carolina, and partially excavate the remaining two, and the EPA's January 11, 2022, issuance of a letter interpreting the CCR Rule, including its applicability and closure provisions. These federal and state laws, regulations and other legal requirements may require or result in additional expenditures, including increased operating and maintenance costs, which could affect the results of operations, financial position and cash flows of the Duke Energy Registrants. The Duke Energy Registrants will continue to seek full cost recovery for expenditures through the normal ratemaking process with state and federal utility commissions, who permit recovery in rates of necessary and prudently incurred costs associated with the Duke Energy Registrants’ regulated operations, and through other wholesale contracts with terms that contemplate recovery of such costs, although there is no guarantee of full cost recovery. In addition, the timing for and amount of recovery of such costs could have a material adverse impact on Duke Energy's cash flows.

The Duke Energy Registrants have recognized significant AROs related to these CCR-related requirements. Closure activities began in 2015 at the four sites specified as high priority by the Coal Ash Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of CCR materials to off-site locations for use as structural fill, to appropriately engineered off-site or on-site lined landfills or conversion of the ash for beneficial use. Duke Energy has completed excavation of coal ash at the four high-priority North Carolina sites. At other sites, planning and closure methods have been studied and factored into the estimated retirement and management costs, and closure activities have commenced. As the closure and CCR management work progresses and final closure plans and corrective action measures are developed and approved at each site, the scope and complexity of work and the amount of CCR material could be greater than estimates and could, therefore, materially increase compliance expenditures and rate impacts.

The Duke Energy Registrants’ results of operations, financial position and cash flows may be negatively affected by a lack of growth or slower growth in the number of customers, or decline in customer demand or number of customers.

Growth in customer accounts and growth of customer usage each directly influence demand for electricity and natural gas and the need for additional power generation and delivery facilities. Customer growth and customer usage are affected by several factors outside the control of the Duke Energy Registrants, such as mandated EE measures, demand-side management goals, distributed generation resources and economic and demographic conditions, such as inflation and interest rate volatility, population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.

In addition, certain regulatory and legislative bodies have passed legislation implementing the extension of certain tax credits to be used toward the costs of residential solar installation or have introduced or are considering requirements and/or incentives to reduce energy consumption by certain dates in response to concerns related to climate change. Additionally, technological advances driven by federal laws mandating new levels of EE in end-use electric and natural gas devices or other improvements in or applications of technology could lead to declines in per capita energy consumption.

Advances in distributed generation technologies that produce power, including fuel cells, microturbines, wind turbines and solar cells, may reduce the cost of alternative methods of producing power to a level competitive with central power station electric production utilized by the Duke Energy Registrants. In addition, the electrification of buildings and appliances currently relying on natural gas could reduce the number of customers in our natural gas distribution business.

Some or all of these factors could result in a lack of growth or decline in customer demand for electricity or number of customers and may cause the failure of the Duke Energy Registrants to fully realize anticipated benefits from significant capital investments and expenditures, which could have a material adverse effect on their results of operations, financial position and cash flows.

Furthermore, the Duke Energy Registrants currently have EE riders in place to recover the cost of EE programs in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky. Should the Duke Energy Registrants be required to invest in conservation measures that result in reduced sales from effective conservation, regulatory lag in adjusting rates for the impact of these measures could have a negative financial impact.

The Duke Energy Registrants future results of operations may be impacted by changing expectations and demands including heightened emphasis on environmental, social and governance concerns.

Duke Energy’s ability to execute its strategy and achieve anticipated financial outcomes are influenced by the expectations of our customers, regulators, investors, and stakeholders. Those expectations are based in part on the core fundamentals of reliability and affordability but are also increasingly focused on our ability to meet rapidly changing demands for new and varied products, services and offerings. Additionally, the risks of global climate change continues to shape our customers’ sustainability goals and energy needs as well as the investment and financing criteria of investors. Failure to meet these increasing expectations or to adequately address the risks and external pressures from regulators, customers, investors and other stakeholders may impact Duke Energy’s reputation and affect its ability to achieve favorable outcomes in future rate cases and the results of operations for the Duke Energy Registrants. Furthermore, the increasing use of social media may accelerate and increase the potential scope of negative publicity we might receive and could increase the negative impact on our reputation, business, results of operations, and financial condition.

As it relates to electric generation, a diversified fleet with increasingly clean generation resources may facilitate more efficient financing and lower costs. Conversely, jurisdictions utilizing more carbon-intensive generation such as coal may experience difficulty attracting certain investors and obtaining the most economical financing terms available. Furthermore, with this heightened emphasis on environmental, social, and governance concerns, and climate change in particular, there is an increased risk of litigation, activism, and legislation from groups both in support of and opposed to various environmental, social and governance initiatives, which could cause delays and increase the costs of our clean energy transition.


RISK FACTORS

The Duke Energy Registrants’ operating results may fluctuate on a seasonal and quarterly basis and can be negatively affected by changes in weather conditions and severe weather, including extreme weather conditions and changes in weather patterns from climate change.

Electric power generation and natural gas distribution are generally seasonal businesses. In most parts of the U.S., the demand for power peaks during the warmer summer months, with market prices also typically peaking at that time. In other areas, demand for power peaks during the winter. Demand for natural gas peaks during the winter months. Further, changing frequency or magnitude of extreme weather conditions such as hurricanes, droughts, heat waves, winter storms and severe weather, including from climate change, could cause these seasonal fluctuations to be more pronounced. As a result, the overall operating results of the Duke Energy Registrants’ businesses may fluctuate substantially on a seasonal and quarterly basis and thus make period-to-period comparison less relevant.

Sustained severe drought conditions could impact generation by hydroelectric plants, as well as fossil and nuclear plant operations, as these facilities use water for cooling purposes and for the operation of environmental compliance equipment. Furthermore, destruction caused by severe weather events, such as hurricanes, flooding, tornadoes, severe thunderstorms, snow and ice storms, including from climate change, can result in lost operating revenues due to outages, property damage, including downed transmission and distribution lines, reputational harm, and additional and unexpected expenses to mitigate storm damage. The cost of storm restoration efforts may not be fully recoverable through the regulatory process.

The Duke Energy Registrants’ sales may decrease if they are unable to gain adequate, reliable and affordable access to transmission assets.

The Duke Energy Registrants depend on transmission and distribution facilities owned and operated by utilities and other energy companies to deliver electricity sold to the wholesale market. In addition, the growth of renewables and energy storage will put strains on existing transmission assets and require transmission and distribution upgrades. The FERC’s power transmission regulations require wholesale electric transmission services to be offered on an open-access, non-discriminatory basis. If transmission is disrupted, or if transmission capacity is inadequate, the Duke Energy Registrants’ ability to sell and deliver products may be hindered.

The different regional power markets have changing regulatory structures, which could affect growth and performance in these regions. In addition, the ISOs who oversee the transmission systems in regional power markets have imposed in the past, and may impose in the future, price limitations and other mechanisms to address volatility in the power markets. These types of price limitations and other mechanisms may adversely impact the profitability of the Duke Energy Registrants’ wholesale power marketing business.

The availability of adequate interstate pipeline transportation capacity and natural gas supply may decrease.

The Duke Energy Registrants purchase almost all of their natural gas supply from interstate sources that must be transported to the applicable service territories. Interstate pipeline companies transport the natural gas to the Duke Energy Registrants' systems under firm service agreements that are designed to meet the requirements of their core markets. A significant disruption to interstate pipelines capacity or reduction in natural gas supply due to events including, but not limited to, operational failures or disruptions, hurricanes, tornadoes, floods, freeze off of natural gas wells, terrorist or cyberattacks or other acts of war or legislative or regulatory actions or requirements, including remediation related to integrity inspections or regulations and laws enacted to address climate change, could reduce the normal interstate supply of natural gas and thereby reduce earnings. Moreover, if additional natural gas infrastructure, including, but not limited to, exploration and drilling rigs and platforms, processing and gathering systems, offshore pipelines, interstate pipelines and storage, cannot be built at a pace that meets demand, then growth opportunities could be limited.

Fluctuations in commodity prices or availability may adversely affect various aspects of the Duke Energy Registrants’ operations as well as their results of operations, financial position and cash flows.

The Duke Energy Registrants are exposed to the effects of market fluctuations in the price of natural gas, coal, fuel oil, nuclear fuel, electricity and other energy-related commodities as a result of their ownership of energy-related assets. Fuel costs are recovered primarily through cost recovery clauses, subject to the approval of state utility commissions.

Additionally, the Duke Energy Registrants are exposed to risk that counterparties will not be able to fulfill their obligations. Disruption in the delivery of fuel, including disruptions as a result of, among other things, bankruptcies, transportation delays, weather, labor relations, force majeure events or environmental regulations affecting any of these fuel suppliers, could limit the Duke Energy Registrants' ability to operate their facilities. Should counterparties fail to perform, the Duke Energy Registrants might be forced to replace the underlying commitment at prevailing market prices possibly resulting in losses in addition to the amounts, if any, already paid to the counterparties.

Certain of the Duke Energy Registrants’ hedge agreements may result in the receipt of, or posting of, collateral with counterparties, depending on the daily market-based calculation of financial exposure of the derivative positions. Fluctuations in commodity prices that lead to the return of collateral received and/or the posting of collateral with counterparties could negatively impact liquidity. Downgrades in the Duke Energy Registrants’ credit ratings could lead to additional collateral posting requirements. The Duke Energy Registrants continually monitor derivative positions in relation to market price activity.


RISK FACTORS

Cyberattacks and data security breaches could adversely affect the Duke Energy Registrants' businesses.

Cybersecurity risks have increased in recent years as a result of the proliferation of new technologies and the increased sophistication, magnitude and frequency of cyberattacks and data security breaches. Duke Energy relies on the continued operation of sophisticated digital information technology systems and network infrastructure, which are part of an interconnected regional grid. Additionally, connectivity to the internet continues to increase through grid modernization and other operational excellence initiatives. Because of the critical nature of the infrastructure, increased connectivity to the internet and technology systems’ inherent vulnerability to disability or failures due to hacking, viruses, acts of war or terrorism or other types of data security breaches, the Duke Energy Registrants face a heightened risk of cyberattacks from foreign or domestic sources and have been subject, and will likely continue to be subject, to cyberattacks designed to gain unauthorized access to information and/or information systems or to disrupt utility operations through computer viruses and phishing attempts either directly or indirectly through its material vendors or related third parties. In the event of a significant cybersecurity breach on either the Duke Energy Registrants or with one of our material vendors or related third parties, the Duke Energy Registrants could (i) have business operations disrupted, including the disruption of the operation of our natural gas and electric assets and the power grid, theft of confidential company, employee, retiree, shareholder, vendor or customer information, and general business systems and process interruption or compromise, including preventing the Duke Energy Registrants from servicing customers, collecting revenues or the recording, processing and/or reporting financial information correctly, (ii) experience substantial loss of revenues, repair and restoration costs, penalties and costs for lack of compliance with relevant regulations, implementation costs for additional security measures to avert future cyberattacks and other financial loss and (iii) be subject to increased regulation, litigation and reputational damage. While Duke Energy maintains insurance relating to cybersecurity events, such insurance does not protect Duke Energy from such cyberattacks occurring, and while it does provide some potential mitigation of the financial impacts resulting from such cyberattacks, it is subject to a number of exclusions and may be insufficient to offset any losses, costs or damage experienced. Also, the market for cybersecurity insurance is relatively new and coverage available for cybersecurity events is evolving as the industry matures.

The Duke Energy Registrants are subject to standards enacted by the North American Electric Reliability Corporation and enforced by FERC regarding protection of the physical and cybersecurity of critical infrastructure assets required for operating North America's bulk electric system. The Duke Energy Registrants are also subject to regulations set by the Nuclear Regulatory Commission regarding the protection of digital computer and communication systems and networks required for the operation of nuclear power plants. The Duke Energy Registrants that operate designated critical pipelines that transport natural gas are also subject to security directives issued by the Department of Homeland Security's Transportation Security Administration (TSA) requiring such registrants to implement specific cybersecurity mitigation measures. While the Duke Energy Registrants believe they are in compliance with, or, in the case of recent TSA security directives, are in the process of implementing such standards and regulations, the Duke Energy Registrants have from time to time been, and may in the future be, found to be in violation of such standards and regulations. In addition, compliance with or changes in the applicable standards and regulations may subject the Duke Energy Registrants to higher operating costs and/or increased capital expenditures as well as substantial fines for non-compliance.

The Duke Energy Registrants’ operations have been and may be affected by pandemic health events, including COVID-19, in ways listed below and in ways the Duke Energy Registrants cannot predict at this time.

The COVID-19 pandemic and efforts to respond to it have resulted in widespread adverse consequences on the global economy and on the Duke Energy Registrants’ customers, third-party vendors, and other parties with whom we do business. If the COVID-19 pandemic or other health epidemics and outbreaks that may occur are significantly prolonged, it could impact the Duke Energy Registrants' business strategy, results of operations, financial position and cash flows in the future as a result of delays in rate cases or other legal proceedings, an inability to obtain labor or equipment necessary for the construction of large capital projects, an inability to procure satisfactory levels of fuels or other necessary equipment for the continued production of electricity and delivery of natural gas, volatility in global equity securities markets, and the health and availability of our critical personnel and their ability to perform business functions.

Duke Energy Ohio’s and Duke Energy Indiana’s membership in an RTO presents risks that could have a material adverse effect on their results of operations, financial position and cash flows.

The rules governing the various regional power markets may change, which could affect Duke Energy Ohio’s and Duke Energy Indiana’s costs and/or revenues. Both Duke Energy Ohio and Duke Energy Indiana have trackers to recover approved RTO costs, but to the degree Duke Energy Ohio and Duke Energy Indiana incur significant additional fees and increased costs to participate in an RTO that are not approved for recovery, their results of operations may be impacted. Duke Energy Ohio and Duke Energy Indiana may be allocated a portion of the cost of transmission facilities built by others due to changes in RTO transmission rate design, while being able to allocate costs of projects built by Duke Energy Ohio and Duke Energy Indiana to others. Duke Energy Ohio and Duke Energy Indiana may be required to expand their transmission system according to decisions made by an RTO rather than their own internal planning process. In addition, RTOs have been developing rules associated with the allocation and methodology of assigning costs associated with improved transmission reliability, reduced transmission congestion and firm transmission rights that may have a financial impact on the results of operations, financial position and cash flows of Duke Energy Ohio and Duke Energy Indiana.

As members of an RTO, Duke Energy Ohio and Duke Energy Indiana are subject to certain additional risks, including those associated with the allocation among RTO members, of losses caused by unreimbursed defaults of other participants in the RTO markets not covered by collateral requirements and those associated with complaint cases filed against an RTO that may seek refunds of revenues previously earned by RTO members.

The Duke Energy Registrants may not recover costs incurred to begin construction on projects that are canceled.

Duke Energy’s long-term strategy requires the construction of new projects, either wholly owned or partially owned, which involve a number of risks, including construction delays, delays in or failure to receive required regulatory approvals and/or sitting or environmental permits, nonperformance by equipment and other third-party suppliers, and increases in equipment and labor costs. To limit the risks of these construction projects, the Duke Energy Registrants enter into equipment purchase orders and construction contracts and incur engineering and design service costs in advance of receiving necessary regulatory approvals and/or siting or environmental permits. If any of these projects are canceled for any reason, including failure to receive necessary regulatory approvals and/or siting or environmental permits, significant cancellation penalties under the equipment purchase orders and construction contracts could occur. In addition, if any construction work or investments have been recorded as an asset, an impairment may need to be recorded in the event the project is canceled.


RISK FACTORS

The Duke Energy Registrants are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.

The financial condition of some insurance companies, actual or threatened physical or cyberattacks, and natural disasters, among other things, could have disruptive effects on insurance markets. The availability of insurance covering risks that the Duke Energy Registrants and their respective competitors typically insure against may decrease, and the insurance that the Duke Energy Registrants are able to obtain may have higher deductibles, higher premiums, and more restrictive policy terms. Further, the insurance policies may not cover all of the potential exposures or the actual amount of loss incurred. Any losses not covered by insurance, or any increases in the cost of applicable insurance, could adversely affect the results of operations, financial position or cash flows of the affected Duke Energy Registrant.

Our business could be negatively affected as a result of actions of activist shareholders.

While we strive to maintain constructive communications with our shareholders, activist shareholders may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to affect changes and assert influence on our Board and management. Perceived uncertainties as to the future direction or governance of the Company may cause concern to our current or potential regulators, vendors or strategic partners, or make it more difficult to execute on our strategy or to attract and retain qualified personnel, which may have a material impact on our business and operating results.

In addition, actions such as those described above could cause fluctuations in the trading price of our common stock, based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

NUCLEAR GENERATION RISKS

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida may incur substantial costs and liabilities due to their ownership and operation of nuclear generating facilities.

Ownership interests in and operation of nuclear stations by Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida subject them to various risks. These risks include, among other things: the potential harmful effects on the environment and human health resulting from the current or past operation of nuclear facilities and the storage, handling and disposal of radioactive materials; limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations; uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives; and the threat of a terrorist attack or cyber incident and other potential liabilities arising out of the ownership or operation of nuclear facilities.

Ownership and operation of nuclear generation facilities requires compliance with licensing and safety-related requirements imposed by the NRC. In the event of non-compliance, the NRC may increase regulatory oversight, impose fines or shut down a unit depending upon its assessment of the severity of the situation. Revised security and safety requirements promulgated by the NRC, which could be prompted by, among other things, events within or outside of the control of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, such as a serious nuclear incident at a facility owned by a third party, could necessitate substantial capital and other expenditures, as well as assessments to cover third-party losses. In addition, if a serious nuclear incident were to occur, it could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.

LIQUIDITY, CAPITAL REQUIREMENTS AND COMMON STOCK RISKS

The Duke Energy Registrants rely on access to short-term borrowings and longer-term debt and equity markets to finance their capital requirements and support their liquidity needs. Access to those markets can be adversely affected by a number of conditions, many of which are beyond the Duke Energy Registrants’ control.

The Duke Energy Registrants’ businesses are significantly financed through issuances of debt and equity. The maturity and repayment profile of debt used to finance investments often does not correlate to cash flows from their assets. Accordingly, as a source of liquidity for capital requirements not satisfied by the cash flows from their operations and to fund investments originally financed through debt instruments with disparate maturities, the Duke Energy Registrants rely on access to short-term money markets as well as longer-term capital markets. The Subsidiary Registrants also rely on access to short-term intercompany borrowings. If the Duke Energy Registrants are not able to access debt or equity at competitive rates or at all, the ability to finance their operations and implement their strategy and business plan as scheduled could be adversely affected. An inability to access debt and equity may limit the Duke Energy Registrants’ ability to pursue improvements or acquisitions that they may otherwise rely on for future growth.

Market disruptions may increase the cost of borrowing or adversely affect the ability to access one or more financial markets. Such disruptions could include: economic downturns, unfavorable capital market conditions, market prices for natural gas and coal, geopolitical risks, actual or threatened terrorist attacks, or the overall health of the energy industry. Additionally, rapidly rising interest rates could impact the ability to affordably finance the capital plan or increase rates to customers and could have an impact on our ability to execute on our clean energy transition. The availability of credit under Duke Energy’s Master Credit Facility depends upon the ability of the banks providing commitments under the facility to provide funds when their obligations to do so arise. Systemic risk of the banking system and the financial markets could prevent a bank from meeting its obligations under the facility agreement.

Duke Energy maintains a revolving credit facility to provide backup for its commercial paper program and letters of credit to support variable rate demand tax-exempt bonds that may be put to the Duke Energy Registrant issuer at the option of the holder. The facility includes borrowing sublimits for the Duke Energy Registrants, each of whom is a party to the credit facility, and financial covenants that limit the amount of debt that can be outstanding as a percentage of the total capital for the specific entity. Failure to maintain these covenants at a particular entity could preclude Duke Energy from issuing commercial paper or the Duke Energy Registrants from issuing letters of credit or borrowing under the Master Credit Facility.


RISK FACTORS

The Duke Energy Registrants must meet credit quality standards and there is no assurance they will maintain investment grade credit ratings. If the Duke Energy Registrants are unable to maintain investment grade credit ratings, they would be required under credit agreements to provide collateral in the form of letters of credit or cash, which may materially adversely affect their liquidity.

Each of the Duke Energy Registrants’ senior long-term debt issuances is currently rated investment grade by various rating agencies. The Duke Energy Registrants cannot ensure their senior long-term debt will be rated investment grade in the future.

If the rating agencies were to rate the Duke Energy Registrants below investment grade, borrowing costs would increase, perhaps significantly. In addition, the potential pool of investors and funding sources would likely decrease. Further, if the short-term debt rating were to fall, access to the commercial paper market could be significantly limited.

A downgrade below investment grade could also require the posting of additional collateral in the form of letters of credit or cash under various credit, commodity and capacity agreements and trigger termination clauses in some interest rate derivative agreements, which would require cash payments. All of these events would likely reduce the Duke Energy Registrants’ liquidity and profitability and could have a material effect on their results of operations, financial position and cash flows.

Non-compliance with debt covenants or conditions could adversely affect the Duke Energy Registrants’ ability to execute future borrowings.

The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements.

Market performance and other changes may decrease the value of the NDTF investments of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, which then could require significant additional funding.

Ownership and operation of nuclear generation facilities also requires the maintenance of funded trusts that are intended to pay for the decommissioning costs of the respective nuclear power plants. The performance of the capital markets affects the values of the assets held in trust to satisfy these future obligations. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have significant obligations in this area and hold significant assets in these trusts. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below projected rates of return. Although a number of factors impact funding requirements, a decline in the market value of the assets may increase the funding requirements of the obligations for decommissioning nuclear plants. If Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are unable to successfully manage their NDTF assets or if the cost of decommissioning nuclear generation facilities exceeds the amount available in decommissioning funds and such costs cannot be recovered through insurance or regulatory mechanisms, their results of operations, financial position and cash flows could be negatively affected.

Poor investment performance of the Duke Energy pension plan holdings and other factors impacting pension plan costs could unfavorably impact the Duke Energy Registrants’ liquidity and results of operations.

The costs of providing non-contributory defined benefit pension plans are dependent upon a number of factors, such as the rates of return on plan assets, discount rates, the level of interest rates used to measure the required minimum funding levels of the plans, future government regulation and required or voluntary contributions made to the plans. The Subsidiary Registrants are allocated their proportionate share of the cost and obligations related to these plans. Without sustained growth in the pension investments over time to increase the value of plan assets and, depending upon the other factors impacting costs as listed above, Duke Energy could be required to fund its plans with significant amounts of cash. Such cash funding obligations, and the Subsidiary Registrants’ proportionate share of such cash funding obligations, could have a material adverse impact on the Duke Energy Registrants’ results of operations, financial position and cash flows.

Duke Energy is a holding company and depends on the cash flows from its subsidiaries to meet its financial obligations.

Because Duke Energy is a holding company with no operations or cash flows of its own, its ability to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on its common stock, is primarily dependent on the net income and cash flows of its subsidiaries and the ability of those subsidiaries to pay upstream dividends or to repay borrowed funds. Prior to funding Duke Energy, its subsidiaries have regulatory restrictions and financial obligations that must be satisfied. These subsidiaries are separate legal entities and have no obligation to provide Duke Energy with funds. In addition, Duke Energy may provide capital contributions or debt financing to its subsidiaries under certain circumstances, which would reduce the funds available to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on Duke Energy’s common stock.

GENERAL RISKS

The failure of Duke Energy information technology systems, or the failure to enhance existing information technology systems and implement new technology, could adversely affect the Duke Energy Registrants’ businesses.

Duke Energy’s operations are dependent upon the proper functioning of its internal systems, including the information technology systems that support our underlying business processes. Any significant failure or malfunction of such information technology systems may result in disruptions of our operations. In the ordinary course of business, we rely on information technology systems, including the internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data, including (i) intellectual property, (ii) proprietary business information, (iii) personally identifiable information of our customers, employees, retirees and shareholders and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain activities. Our information technology systems are dependent upon global communications and cloud service providers, as well as their respective vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such failures and outages in the future. These providers’ systems are susceptible to cybersecurity and data breaches, outages from fire, floods, power loss, telecommunications failures, break-ins and similar events. Failure to prevent or mitigate data loss from system failures or outages could materially affect the results of operations, financial position and cash flows of the Duke Energy Registrants.


RISK FACTORS

In addition to maintaining our current information technology systems, Duke Energy believes the digital transformation of its business is key to driving internal efficiencies as well as providing additional capabilities to customers. Duke Energy’s information technology systems are critical to cost-effective, reliable daily operations and our ability to effectively serve our customers. We expect our customers to continue to demand more sophisticated technology-driven solutions and we must enhance or replace our information technology systems in response. This involves significant development and implementation costs to keep pace with changing technologies and customer demand. If we fail to successfully implement critical technology, or if it does not provide the anticipated benefits or meet customer demands, such failure could materially adversely affect our business strategy as well as impact the results of operations, financial position and cash flows of the Duke Energy Registrants.

Potential terrorist activities, or military or other actions, could adversely affect the Duke Energy Registrants’ businesses.

The continued threat of terrorism and the impact of retaliatory military and other action by the U.S. and its allies may lead to increased political, economic and financial market instability and volatility in prices for natural gas and oil, which may have material adverse effects in ways the Duke Energy Registrants cannot predict at this time. In addition, future acts of terrorism and possible reprisals as a consequence of action by the U.S. and its allies could be directed against companies operating in the U.S. Information technology systems, transportation systems for our fuel sources including natural gas pipelines, transmission and distribution and generation facilities such as nuclear plants could be potential targets of terrorist activities or harmful activities by individuals or groups that could have a material adverse effect on Duke Energy Registrants' businesses. In particular, the Duke Energy Registrants may experience increased capital and operating costs to implement increased security for their information technology systems, transmission and distribution and generation facilities, including nuclear power plants under the NRC’s design basis threat requirements. These increased costs could include additional physical plant security and security personnel or additional capability following a terrorist incident.

Failure to attract and retain an appropriately qualified workforce could unfavorably impact the Duke Energy Registrants’ results of operations.

Certain events, such as an aging workforce, mismatch of skill set or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge base and the lengthy time required for skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may increase. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or future availability and cost of contract labor may adversely affect the ability to manage and operate the business, especially considering the workforce needs associated with nuclear generation facilities and new skills required to operate a modernized, technology-enabled power grid. If the Duke Energy Registrants are unable to successfully attract and retain an appropriately qualified workforce, their results of operations, financial position and cash flows could be negatively affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

Risk Management

Ensuring the security of Duke Energy’s assets, information and teammates is vital for delivering the essential service on which Duke Energy’s customers and communities depend. In light of the ever-evolving threat landscape and increasing sophistication of threat actor tactics, techniques and procedures, steadfast and sophisticated cybersecurity and security operations are integral parts of Duke Energy’s enterprise risk management framework. Duke Energy's enterprise risk management framework is used across the enterprise by subject matter experts to identify, assess, monitor and communicate enterprise level risks to the Chief Risk Officer. Duke Energy’s technology and cybersecurity risk management program is integrated into the Company’s overall Enterprise Risk Management program and is composed of three primary lines of defense: (1) the Cybersecurity Incident Response Team (CIRT); (2) the Duke Energy Enterprise Security Team (EST); and (3) internal and external cybersecurity audits.

Duke Energy’s first line of defense is the CIRT under the Office of the Chief Information Officer. The CIRT reports up to leaders in the Chief Security and Information Security Office, including the Chief Security and Information Security Officer (CSISO), Managing Director of Cybersecurity and Network Defense, and Director of Cybersecurity Operations, whose cybersecurity backgrounds include many years serving in operational cyber roles, leading incident response, participating in industry engagement, collaborating with federal and local cyber programs, and time analyzing security breaches across the industry. The CIRT oversees an enterprisewide process that identifies, assesses, responds to and resolves cyber incidents, both internal and those associated with the Company’s use of third-party service providers, by defining roles, responsibilities and the process for problem source identification, mitigation, and eradication triggered by a suspected cyber incident. Duke Energy manages cybersecurity threats through its 24/7 Duke Energy Cybersecurity Operations Center (CSOC), which serves as the Company’s central command center for monitoring and coordinating responses to cyberthreats. The CSOC engages in daily information sharing within the utilities industry and with government partners and monitors incoming intelligence and cyber incident impacts. The CSOC assesses the relevant information by assigning a CIRT Heat Map score, which results in CIRT activation if a certain threat level is met. It also results in the assignment of additional roles and responsibilities to enable the cybersecurity leadership and technical teams to collectively and regularly review incident information, score the impact, communicate to leadership, and respond appropriately. Another key component of Duke Energy’s first line of defense against cybersecurity threats is its Third-Party Risk Management (TPRM) process, whereby third parties providing services that meet certain criteria such as storing or transmitting Duke Energy data, hosting an application, or connecting to the Duke Energy network are required to undergo a cybersecurity assessment primarily to ascertain the risk of a third party’s proposed services to Duke Energy.


CYBERSECURITY

Duke Energy’s second line of defense against cybersecurity threats is the EST, which is led by the CSISO, and actively evaluates, anticipates and tests Duke Energy’s cybersecurity risk level and preventive and risk mitigation controls relative to the enterprisewide risk level and controls. The EST is responsible for infrastructure defense and security controls, performing vulnerability assessments and third-party information security assessments, employee awareness and training programs and security incident management, including oversight of the remediation of cybersecurity incidents. The EST monitors cyber activity and also reports on the status of the Company’s cybersecurity performance and any ongoing remediation efforts to the Company’s Chief Information Officer (CIO) and CSISO. The CIO and CSISO report these cybersecurity metrics, which use a vulnerability management scoring system and closely align with the National Institute of Standards and Technology Cybersecurity Framework, to the Audit Committee at each regularly scheduled Audit Committee meeting. The EST also employs tools and oversees and challenges Duke Energy’s cybersecurity and technology metrics under its Enterprise Security Risk Register to track, identify and manage risk. To this end, the EST engages outside expert firms to perform a comprehensive external penetration test each year, performs system and application penetration testing several times throughout the year, and conducts annual exercises simulating the tactics, techniques, and procedures of advanced threat actor groups to test the Company’s ability to prevent penetration, detect suspicious activity and respond to these threats in a timely manner. Lessons learned inform the ongoing improvement of security preventive and mitigating controls and procedures and the results of such testing and threat actor simulations are shared with senior management and the Board of Directors. Duke Energy also has a senior management committee, the Executive Cybersecurity Oversight Governance Committee (ECOG), which governs enterprise-level cybersecurity risk tolerance.

Internal and external cybersecurity audits provide a third line of defense and independently provide assurance on how effectively the Company, as a whole, manages cybersecurity risk. Each year, Duke Energy Corporate Audit Services (CAS) performs various audits of key Duke Energy security systems and functions, such as third-party risk management programs, to assess whether appropriate security controls are in place and operating effectively. In addition to these internal audits, the Company is subject to a variety of external audits, performed periodically as required by the auditing entity, including external audits performed by the North American Electric Reliability Corporation under the Critical Infrastructure Protection framework (NERC CIP), Transportation & Security Administration Pipeline Security Directive and Federal Energy Regulatory Commission Dam Security.

Duke Energy is not currently aware of any potential cybersecurity threats, including as a result of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition, however, Duke Energy cannot provide assurance that it will not be materially affected in the future by cybersecurity risks or any future material incidents.

Governance

The Audit Committee has primary oversight of management’s efforts to mitigate cybersecurity and technology risk and respond to cyber incidents. The Audit Committee receives updates throughout the year from the CIO and CSISO on cybersecurity and grid security issues, including compliance with regulations, employee training, and drills, at every regularly scheduled Audit Committee meeting, and engages in discussions throughout the year with management on the effectiveness of Duke Energy’s overall cybersecurity program and progress for addressing any identified risks. In 2023, the Audit Committee received four updates on cybersecurity. The Audit Committee also receives periodic updates on Duke Energy’s digital transformation and the operation of, and enhancements to, the Company’s financial systems and business and operational technical systems. The reviews presented to the Audit Committee are followed with an update to the full Board of Directors by the Chair of the Audit Committee.

In addition, the Operations and Nuclear Oversight Committee (ONOC) of the Board of Directors provides oversight of the nuclear safety and cybersecurity of Duke Energy’s nuclear power program, which is integrated with the companywide cyber protocols, and the Chair of the ONOC reports out to the Board of Directors on such oversight activities. Duke Energy’s nuclear cybersecurity program and associated cybersecurity plan (CSP) were fully implemented in 2017 in accordance with NRC regulation 10 CFR 73.54, “Protection of digital computer and communication systems and networks” and leverage monitoring, testing, drills, audits, assessments, and NRC inspections to continue to validate the effectiveness of the program to protect plant assets from cybersecurity threats.

Moreover, Duke Energy’s processes ensure that the Board of Directors receive contemporaneous reporting on potentially significant cyber events including response, legal obligations, and outreach and notification to regulators and customers when needed, as well as an opportunity to provide guidance to management as appropriate.

In addition, the Company’s Executive Cybersecurity Oversight Governance Committee (ECOG), comprised of the Company's Chair, President, and Chief Executive Officer (CEO), Executive Vice President (EVP) and Chief Financial Officer, EVP and Chief Commercial Officer, EVP Customer Experience, Solutions and Services, and EVP, Chief Generation Officer and Enterprise Operational Excellence, receives monthly updates from the CIO and CSISO and provides senior management throughout the Company informational technology and operational technology perspectives, oversight and governance on investments and priorities for the broader cybersecurity organization, in addition to providing final decision oversight on recommendations and response to the ever challenging cybersecurity threat landscape. The ECOG also is leveraged to supply information and bring transparency to senior management throughout the company on the increasing threat landscape and the actions, response and road map to combat the threats.

The relevant cybersecurity risk expertise of Duke Energy’s management who serve on the ECOG and/or senior management who lead the CIRT and EST is described below.

•The CEO of Duke Energy has over 20 years of experience in the utilities industry, and has gained cybersecurity experience as CEO of one of America’s largest utility companies, and through service on the board of the Edison Electric Institute, the Institute of Nuclear Power Operations, the World Association of Nuclear Operators, and past service on the Department of Homeland Security Advisory Council.

•The EVP and Chief Financial Officer of Duke Energy (CFO) previously served as the Company’s Chief Transformation and Administrative Officer and led the Company’s business transformation through digital innovation, new ways of working and process redesign. In this role, the CFO gained an in-depth understanding of the Company's cybersecurity procedures and key threats, and was responsible for the enterprise business services and technology team, including the information and technology organization.

•The EVP, Chief Generation Officer and Enterprise Operational Excellence of Duke Energy has gained cybersecurity experience through being responsible for the safe, efficient and reliable operation of Duke Energy's fleet of nuclear, natural gas, hydro, solar and coal units.


CYBERSECURITY

•The EVP, Customer Experience, Solutions and Services of Duke Energy has gained cybersecurity experience through focusing on transmission and the development of long-term grid strategies and solutions and through a prior role as Chief Distribution Officer, overseeing the safe, reliable, and efficient operation of Duke Energy’s electric distribution systems, and through serving on the board of the Association of Edison Illuminating Companies.

•The EVP and Chief Commercial Officer of Duke Energy has cybersecurity experience gained through responsibility for enterprise technology and security, among other areas.

•The CSISO of Duke Energy has over 25 years of experience building and leading security teams within multiple industries. The CSISO holds a Secret Security clearance and is committed to strengthening U.S. critical infrastructure through active collaboration with federal partners at the Federal Bureau of Investigation, Department of Energy, Department of Homeland Security, and state partners including the national guard, law enforcement and universities.

•The CIO of Duke Energy has over 25 years of experience in delivering secure information technology solutions across multiple industries, leading technology delivery for all core business functions. The CIO holds a Secret Security clearance and has active interactions and partnership with the Federal Bureau of Investigation, Edison Electric Institute and State Fusion Centers in the jurisdictions that Duke Energy serves.


PROPERTIES

ITEM 2. PROPERTIES

ELECTRIC UTILITIES AND INFRASTRUCTURE

The following table provides information related to the EU&I's generation stations as of December 31, 2023. The MW displayed in the table below are based on winter capacity for Fossil, Nuclear and Hydro generation stations, and nameplate capacity for Renewable generation stations. Ownership interest in all facilities is 100% unless otherwise indicated.

Prior to December 31, 2023, summer capacity was displayed for all EU&I generation stations in the table below. Certain registrants' IRPs, including those filed in North Carolina and South Carolina in 2023, currently use winter capacity for Fossil, Nuclear and Hydro stations as winter capacity is generally a more accurate representation of that stations' ability to support peak capacity requirements due to a higher risk of reliability challenges during the winter months in those jurisdictions. Additionally, analysis of resource adequacy across all jurisdictions demonstrates that as solar adoption increases, there is a higher risk of reliability challenges in the winter. As such, most of Duke Energy's IRPs are expected to shift toward winter planning. See Item 7, "Other Matters" for additional information on IRPs. Nameplate capacity is generally viewed as a transparent representation of the Renewable stations since their output varies by day, month, and real-time weather conditions, particularly with solar facilities, which may or may not be paired with battery storage depending on the location. The Owned MW Capacity based on summer capacity as of December 31, 2023, is 50,302 MW for all of EU&I.

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Carolinas

Oconee

Nuclear

Uranium

2,618

McGuire

Nuclear

Uranium

2,386

Catawba(a)

Nuclear

Uranium

588

Belews Creek

Fossil

Coal/Gas

2,220

Marshall

Fossil

Coal/Gas

2,078

Lincoln Combustion Turbine (CT)

Fossil

Gas/Oil

1,507

J.E. Rogers

Fossil

Coal/Gas

1,395

Rockingham CT

Fossil

Gas/Oil

895

Mill Creek CT

Fossil

Gas/Oil

751

Buck CC

Fossil

Gas

718

Dan River CC

Fossil

Gas

718

W.S. Lee Combined Cycle (CC)(b)

Fossil

Gas

706

Allen

Fossil

Coal

426

W.S. Lee CT

Fossil

Gas/Oil

Clemson CHP

Fossil

Gas

Bad Creek

Hydro

Water

1,600

Jocassee

Hydro

Water

780

Cowans Ford

Hydro

Water

324

Keowee

Hydro

Water

152

Other small facilities (18 plants)

Hydro

Water

NC/SC

584

Distributed generation

Renewable

Solar

178

Total Duke Energy Carolinas

20,736


PROPERTIES

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Progress

Brunswick

Nuclear

Uranium

1,928

Harris

Nuclear

Uranium

1,009

Robinson

Nuclear

Uranium

793

Roxboro

Fossil

Coal

2,462

Smith CC

Fossil

Gas/Oil

1,250

H.F. Lee CC

Fossil

Gas/Oil

1,054

Wayne County CT

Fossil

Gas/Oil

975

Smith CT

Fossil

Gas/Oil

960

L.V. Sutton CC

Fossil

Gas/Oil

719

Mayo

Fossil

Coal

713

Asheville CC

Fossil

Gas/Oil

560

Asheville CT

Fossil

Gas/Oil

370

Darlington CT

Fossil

Gas/Oil

264

Weatherspoon CT

Fossil

Gas/Oil

164

L.V. Sutton CT

Fossil

Gas/Oil

Blewett CT

Fossil

Oil

Walters

Hydro

Water

112

Other small facilities (3 plants)

Hydro

Water

116

Distributed generation

Renewable

Solar

141

Asheville – Rock Hill Battery

Renewable

Storage

Hot Springs Microgrid

Renewable

Storage

Total Duke Energy Progress

13,770

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Florida

Hines CC

Fossil

Gas/Oil

2,149

Citrus County CC

Fossil

Gas

1,854

Crystal River

Fossil

Coal

1,442

Bartow CC

Fossil

Gas/Oil

1,259

Intercession City CT

Fossil

Gas/Oil

1,146

Anclote

Fossil

Gas

1,035

DeBary CT

Fossil

Gas/Oil

661

Osprey CC

Fossil

Gas/Oil

611

Tiger Bay CC

Fossil

Gas/Oil

230

Bayboro CT

Fossil

Oil

226

Bartow CT

Fossil

Gas/Oil

212

Suwannee River CT

Fossil

Gas

194

University of Florida CoGen CT

Fossil

Gas

Lake Placid Battery (microgrid)

Renewable

Storage

Trenton Battery

Renewable

Storage

Micanopy Battery

Renewable

Storage

Jennings Battery

Renewable

Storage

Cape San Blas Battery

Renewable

Storage

Distributed generation

Renewable

Solar

1,186

Total Duke Energy Florida

12,303

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Ohio

East Bend

Fossil

Coal

600

Woodsdale CT

Fossil

Gas/Propane

564

Distributed generation

Renewable

Solar

Total Duke Energy Ohio

1,173


PROPERTIES

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Indiana

Gibson(c)

Fossil

Coal

2,845

Cayuga(d)

Fossil

Coal/Oil

1,015

Madison CT

Fossil

Gas

704

Edwardsport

Fossil

Coal/Gas

578

Wheatland CT

Fossil

Gas

508

Vermillion CT(e)

Fossil

Gas

477

Noblesville CC

Fossil

Gas/Oil

310

Henry County CT(f)

Fossil

Gas/Oil

134

Cayuga CT

Fossil

Gas/Oil

105

Purdue CHP

Fossil

Gas

Markland

Hydro

Water

Distributed generation

Renewable

Solar

Camp Atterbury Battery

Renewable

Storage

Nabb Battery

Renewable

Storage

Crane Battery

Renewable

Storage

Total Duke Energy Indiana

6,790

Owned MW

Totals by Type

Capacity

Total Electric Utilities

54,772

Totals by Plant Type

Nuclear

9,322

Fossil

40,107

Hydro

3,722

Renewable

1,621

Total Electric Utilities

54,772

(a)Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA. Duke Energy Carolinas' ownership is 19.25% of the facility.

(b)Jointly owned with NCEMC. Duke Energy Carolinas' ownership is 87.27% of the facility.

(c)Duke Energy Indiana owns and operates Gibson Station Units 1 through 4 and is a joint owner of unit 5 with WVPA and IMPA. Duke Energy Indiana operates unit 5 and owns 50.05%.

(d)Includes Cayuga Internal Combustion.

(e)Jointly owned with WVPA. Duke Energy Indiana's ownership is 62.5% of the facility.

(f)Includes 50 MW, which are contracted to WVPA.

The following table provides information related to EU&I's electric transmission and distribution properties as of December 31, 2023.


		Duke	Duke	Duke	Duke	Duke
	Duke	Energy	Energy	Energy	Energy	Energy
	Energy	Carolinas	Progress	Florida	Ohio	Indiana
Electric Transmission Lines
Miles of 500 to 525 kilovolt (kV)	1,100	600	300	200	—	—
Miles of 345 kV	1,100	—	—	—	400	700
Miles of 230 kV	8,500	2,700	3,400	1,700	—	700
Miles of 100 to 161 kV	12,600	6,900	2,600	1,000	700	1,400
Miles of 13 to 69 kV	8,100	2,800	—	2,200	600	2,500
Total conductor miles of electric transmission lines	31,400	13,000	6,300	5,100	1,700	5,300
Electric Distribution Lines
Miles of overhead lines	171,100	66,600	44,300	25,000	13,300	21,900
Miles of underground line	111,800	43,600	28,900	22,900	6,500	9,900
Total conductor miles of electric distribution lines	282,900	110,200	73,200	47,900	19,800	31,800
Number of electric transmission and distribution substations	3,000	1,200	500	500	300	500

Substantially all of EU&I's electric plant in service is mortgaged under indentures relating to Duke Energy Carolinas’, Duke Energy Progress', Duke Energy Florida's, Duke Energy Ohio’s and Duke Energy Indiana’s various series of First Mortgage Bonds.


PROPERTIES

GAS UTILITIES AND INFRASTRUCTURE

GU&I owns transmission pipelines and distribution mains that are generally underground, located near public streets and highways, or on property owned by others for which Duke Energy Ohio and Piedmont have obtained the necessary legal rights to place and operate facilities on such property located within the GU&I service territories. The following table provides information related to GU&I's natural gas distribution as of December 31, 2023.


		Duke
	Duke	Energy
	Energy	Ohio	Piedmont
Miles of natural gas distribution and transmission pipelines	35,700	7,700	28,000
Miles of natural gas service lines	28,800	6,700	22,100

OTHER

Duke Energy owns approximately 7.1 million square feet and leases approximately 2.5 million square feet of corporate, regional and district office space spread throughout its service territories. See Note 11, "Property, Plant and Equipment," for further information.

ITEM 3. LEGAL PROCEEDINGS

MTBE Litigation

On December 15, 2017, the state of Maryland filed suit in Baltimore City Circuit Court against Duke Energy Merchants and other defendants alleging contamination of state waters by MTBE leaking from gasoline storage tanks and is seeking an unspecified amount of monetary damages. MTBE is a gasoline additive intended to increase the oxygen levels in gasoline and make it burn cleaner. The case was removed from Baltimore City Circuit Court to federal District Court. Initial motions to dismiss filed by the defendants were denied by the court on September 4, 2019, and the matter is now in discovery. On December 18, 2020, the plaintiff and defendants selected 50 focus sites, none of which have any ties to Duke Energy Merchants. Discovery will be specific to those sites. At this time, Duke Energy Merchants has not engaged in settlement negotiations with the plaintiff and the plaintiff has not reached a settlement agreement with any defendant. Duke Energy cannot predict the outcome of this matter.

In addition, the Duke Energy Registrants are, from time to time, parties to various lawsuits and regulatory proceedings in the ordinary course of their business. For information regarding legal proceedings, including regulatory and environmental matters, see Note 4, “Regulatory Matters,” and Note 5, “Commitments and Contingencies,” to the Consolidated Financial Statements.

ITEM 4. MINE SAFETY DISCLOSURES

This is not applicable for any of the Duke Energy Registrants.


SECURITIES INFORMATION

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The common stock of Duke Energy is listed and traded on the NYSE (ticker symbol DUK). As of January 31, 2024, there were 121,476 Duke Energy common stockholders of record. For information on dividends, see the "Dividend Payments" section of Management's Discussion and Analysis.

There is no market for the common equity securities of the Subsidiary Registrants, all of which are directly or indirectly owned by Duke Energy. See Note 2, "Dispositions," to the Consolidated Financial Statements for information on the investment of a minority interest in Duke Energy Indiana.

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12 of Part III within this Annual Report for information regarding Securities Authorized for Issuance Under Equity Compensation Plans.

Issuer Purchases of Equity Securities for Fourth Quarter 2023

There were no repurchases of equity securities during the fourth quarter of 2023.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Stock Performance Graph

The following performance graph compares the cumulative TSR from Duke Energy Corporation common stock, as compared with the Standard & Poor's 500 Stock Index (S&P 500) and the Philadelphia Utility Index for the past five years. The graph assumes an initial investment of $100 on December 31, 2018, in Duke Energy common stock, in the S&P 500 and in the Philadelphia Utility Index and that all dividends were reinvested. The stockholder return shown below for the five-year historical period may not be indicative of future performance.

NYSE CEO Certification

Duke Energy has filed the certification of its Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to this Annual Report.

ITEM 6. SELECTED FINANCIAL DATA

This is not applicable for any of the Duke Energy Registrants.


MD&A			DUKE ENERGY

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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

Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the years ended December 31, 2023, 2022 and 2021.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 27, 2023, for a discussion of variance drivers for the year ended December 31, 2022, as compared to December 31, 2021.

DUKE ENERGY

Duke Energy, an energy company headquartered in Charlotte, North Carolina, 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.

Executive Overview

At Duke Energy, we remain focused on continuing to advance our clean energy transition while maintaining affordability and reliability for our customers and delivering on our commitments to our communities, employees, investors, and other stakeholders. The fundamentals of our business are strong and allow us to deliver growth in earnings and dividends in a low-risk, predictable and transparent way. In 2023, we continued to make progress, generating positive strategic and regulatory outcomes, navigating rising interest rates, lower volumes due to mild temperatures and other macroeconomic headwinds, while meeting our near-term financial commitments and continuing to provide the safe and reliable service that our communities depend on.

In 2023, we furthered our transition to a fully regulated utility by closing on the sale of our commercial utility-scale solar and wind group and our distributed generation operations. We advanced a variety of regulatory priorities resulting in positive outcomes and modern recovery mechanisms, and continued to engage with our customers and the communities in our jurisdictions. We also continue to make the investments necessary to support our ongoing clean energy transition and a business portfolio that delivers a reliable and growing dividend, with 2023 representing the 97th consecutive year Duke Energy paid a cash dividend on its common stock.


MD&A			DUKE ENERGY

Financial Results

(a)See Results of Operations below for Duke Energy’s definition of adjusted earnings and adjusted EPS as well as a reconciliation of this non-GAAP financial measure to net income available to Duke Energy and net income available to Duke Energy per basic share.

Duke Energy's 2023 Net Income Available to Duke Energy Corporation (GAAP Reported Earnings) was impacted by higher regulatory charges in the prior year. Additional drivers primarily include growth from riders and other retail margin, favorable rate case impacts, lower operations and maintenance expense and lower tax expense. These items were partially offset by higher interest and depreciation expense, unfavorable weather and lower volumes. See “Results of Operations” below for a detailed discussion of the consolidated results of operations and a detailed discussion of financial results for each of Duke Energy’s reportable business segments, as well as Other.

2023 Areas of Focus and Accomplishments

Clean Energy Transition. Our industry continues to experience an unprecedented level of change and 2023 was a dynamic year for our company as we navigated ongoing macroeconomic headwinds and continued to execute on our strategic priorities and deliver on our vision.

Generating Cleaner Energy

We are targeting energy generated from coal to represent less than 5% of total generation by 2030 and a full exit by 2035, subject to regulatory approvals, as part of the largest planned coal fleet retirement in the industry. We have made strong progress to date in reducing carbon emissions from electricity generation (a 48% reduction from 2005) and have established goals to do more (at least 50% reduction by 2030, 80% by 2040, and net zero by 2050). We are also working to reduce Scope 2 and certain Scope 3 emissions, including emissions from upstream purchased power and fossil fuel purchases, as well as downstream customer use of natural gas, by 50% by 2035, on the way to net zero by 2050.

Duke Energy was one of the first utilities to address the totality of its impact – approximately 95% of the Company's greenhouse gas emissions are tied to a measurable net zero goal. Over the next decade, we expect to deploy between approximately $170 and $180 billion of capital into our regulated businesses, driven by clean energy transition investments. These investments will drive substantial economic benefits for the communities we serve and reduce our customers' exposure to fuel volatility. We have filed and refined comprehensive IRPs consistent with this strategy in multiple jurisdictions, allowing us to make needed investments to increase grid resiliency and enable coal plant retirements, renewables and energy storage.

As we look beyond 2030, we will need additional tools to continue our progress. We will actively work to advocate for research and development and deployment of carbon-free, dispatchable resources. This includes longer-duration energy storage, advanced nuclear technologies, carbon capture and zero-carbon fuels.

Sale of Commercial Renewables

In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business, excluding the offshore wind contract for Carolina Long Bay. 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. We closed on the sales of the commercial utility-scale solar and wind group and the distributed generation group in October 2023, facilitating our transition to a fully regulated utility.


MD&A			DUKE ENERGY

Carolinas Integrated Resource Plan

HB 951 was passed in 2021 reflecting North Carolina policy accelerating a clean energy transition for generation while continuing to prioritize affordability and reliability for our customers. The legislation established a framework overseen by the NCUC to advance state CO2 emission reductions in North Carolina through the use of least cost planning, including stakeholder involvement, and also introduced modernized recovery mechanisms under PBR, which consists of MYRP, PIMS, and residential decoupling, and promotes more efficient recovery of investments and aligns incentives between the Company and the state’s energy policy objectives.

In May 2022, we filed a proposed Carbon Plan with the NCUC that outlined potential pathways toward achieving the HB 951 carbon reduction targets while balancing affordability and reliability for our customers and in December 2022, the NCUC issued an order adopting its initial Carbon Plan, which included a set of near-term actions to support meeting the state's carbon reduction goals. In August 2023, Duke Energy Carolinas and Duke Energy Progress filed an updated combined systemwide Carolinas IRP with the NCUC and the PSCSC, setting the course for the next 15 years of our clean energy transition. The plan outlined the diverse resources required to serve customers reliably and to achieve our clean energy transition in both states. In January 2024, we filed supplemental modeling and analysis with the NCUC and PSCSC due to substantially increased load forecasts resulting from continued economic development successes in the Carolinas occurring since the system-wide plan was prepared.

Modernizing the Power Grid and Natural Gas Infrastructure

We are leveraging new technology, digital tools and data analytics across the business in response to a transforming landscape and our grid improvement programs continue to be a key component of our growth strategy. Modernization of the electric grid, including smart meters, storm hardening, self-healing and targeted undergrounding, helps to ensure the system is better prepared for severe weather, improves the system's reliability and flexibility, and provides better information and services for our customers. We continue to enhance our customers' experience with the Self-Optimizing Grid (SOG), our flagship grid improvement program spanning all of Duke Energy’s regulated utilities. In 2023, our SOG investments helped to avoid approximately 330,000 customer interruptions across our six-state electric service area, preventing customers from having more than 1.4 million hours of lost outage time during major events.

Investments in integrity management of our natural gas infrastructure continue to be of importance to ensure reliable, safe, and increasingly clean delivery of natural gas to our customers. Recognizing the importance of natural gas, we continue to work toward a net-zero methane emission goal by 2030 related to our natural gas distribution business. In our LDC business, we remain focused on reducing methane emissions, leveraging our partnerships, emissions platform, sensors and other technologies to find and fix leaks in near real time. We also use cross compression to avoid releasing natural gas into the atmosphere during certain operational activities.

In October, we announced plans to build and operate our first system capable of producing, storing and combusting 100% green hydrogen. The one-of-its-kind, end-to-end system will use solar energy at Duke Energy Florida's 74.5-MW DeBary solar plant to produce green hydrogen for an upgraded on-site CT designed to operate on a blend of natural gas and hydrogen or up to 100% hydrogen. We anticipate the system will be installed and fully functioning in 2024, providing access to on-demand, dispatchable, increasingly clean energy for our Duke Energy Florida customers.

Response to Macroeconomic Headwinds. While 2023 presented unique macroeconomic challenges, Duke Energy has a demonstrated track record of executing on our business plans while driving efficiencies and productivity in the business. Despite rising interest rates and near-record mild weather across all of our service territories, we achieved financial results within our adjusted EPS guidance and continued our cost-management journey with a focus on driving productivity, increasing flexibility and prioritizing spend based on risk and strategic value to our customers and investors. We executed on our Workload Reduction Initiative launched in late 2022 while building on our culture of continuous improvement to continue to identify ways to reduce operating costs. We remain focused on organization simplification, automation, reducing service levels provided to internal customers as appropriate, outsourcing, and continued operational excellence.

Volatile commodity prices led to rapid fuel cost increases in 2022, impacting the price of electricity in all of our jurisdictions. We actively worked to manage and maintain prices at lower levels than they otherwise would have been in light of increased commodity prices, working with our regulators to extend recovery periods in certain jurisdictions in a way that was manageable for our customers. In 2023, we made substantial progress, recovering $1.5 billion in deferred fuel costs this year. With these actions, lower fuel prices, and increased stability in these markets during 2023, we anticipate to be in line with our historical average balance of deferred fuel costs by the end of 2024.

While inflation has moderated to a degree, we continue to successfully navigate supply chain challenges including longer lead times and shortages of solar panels and other equipment. We execute longer supply agreements and proactively secure equipment in advance of hurricane season. Our procurement teams continue to execute on action plans to enhance planning, augment supply, amend operations and leverage our scale to continue to mitigate these risks to the extent possible.

Recent macroeconomic headwinds aside, the level of economic development success and growth experienced in our service territories is significantly above what we have experienced over the last two decades. In 2023, Site Selection magazine recognized Duke Energy as a “Top Utility in Economic Development," recognizing our critical role and successful efforts working with our state partners to win 67 projects this year alone, representing approximately $22 billion in new capital investment and 15,000 new jobs within our service territories. These projects include transformational electric vehicle and battery manufacturing facilities as well as data centers. Supporting the increasing generation load demands expected from projects like these in the coming years is an immense opportunity for our Company and the communities we proudly serve.

Constructive Regulatory and Legislative Outcomes. One of our long-term strategic goals is to achieve modernized regulatory constructs across all of our jurisdictions. Modernized constructs provide benefits, which include improved earnings and cash flows through more timely recovery of investments, as well as stable pricing for customers. Grid investment riders in the Midwest and Florida enable more timely cost recovery and earnings growth and we have a MYRP in Florida through 2024.

In North Carolina, as highlighted above, HB 951 authorizes the use of modernized regulatory constructs under the direction of the NCUC. In October 2022, Duke Energy Progress filed its first North Carolina rate case utilizing PBR and reached partial settlements on key matters in April and May 2023. In August 2023, the NCUC issued a constructive order approving these partial settlements and Duke Energy Progress' PBR Application with certain modifications, marking the first implementation of an MYRP under the performance-based regulations authorized by HB 951. Duke Energy Progress implemented revised Year 1 rates on October 1, 2023. In January 2023, we also filed a Duke Energy Carolinas rate case in North Carolina, which incorporated elements of PBR. In August 2023, we reached partial settlements on key matters with the Public Staff and received a constructive order from the NCUC in December 2023, with new rates effective January 2024. After more than a decade of work, these rate cases mark a significant milestone in securing regulatory approval of modern ratemaking structures in North Carolina.


MD&A			DUKE ENERGY

In addition to the Duke Energy Progress and Duke Energy Carolinas rate cases in North Carolina, we continued to move a variety of other regulatory initiatives forward during 2023. In February 2023, the PSCSC approved a constructive comprehensive settlement with all parties in the Duke Energy Progress South Carolina rate case and we implemented new customer rates effective April 1, 2023. In the Midwest, we received a constructive order on our Duke Energy Kentucky electric rate case in October 2023. As it relates to our natural gas businesses, in Duke Energy Ohio, we filed a stipulation on key matters in our base rate case with all parties except the OCC in April 2023. We received an order approving the stipulation in November 2023. In September 2023, the TPUC approved a settlement related to our Annual Review Mechanism in Tennessee, with adjusted rates effective October 1, 2023. Overall, this was a very active year as it relates to regulatory filings, which reflects the important investments and ongoing clean energy transition across all our service territories.

In 2022, storm securitization legislation was passed in South Carolina, providing the opportunity to securitize deferred storm costs and lower the bill impacts for our customers. In 2023, we made progress on our South Carolina storm securitization filings. The PSCSC approved a comprehensive settlement in September 2023 and issued its financing order in October 2023. Also in South Carolina, we filed a Duke Energy Carolinas rate case with the PSCSC in January 2024.

We also continued to evaluate the impacts of the Inflation Reduction Act, which is expected to have significant benefits to customers and lower the cost of the clean energy transition. In 2023, we worked to advocate successfully for the best interests of our customers, communities, and Company in important areas, including the preservation and application of nuclear PTCs in the regulated utility business model.

Customer Satisfaction. Duke Energy continues to transform the customer experience through our use of customer data to better inform operational priorities and performance levels. This data-driven approach allows us to identify the investments that are most important to the customer experience. While customer satisfaction across our industry continues to be impacted by the macroeconomic environment and the impacts of inflationary pressures including higher fuel prices on customer bills, our work continues to be recognized by our customers, with strong customer satisfaction scores in our jurisdictions including Piedmont, which was ranked number one in customer satisfaction by J.D. Power for residential natural gas service in the south for the second year in a row.

Operational Excellence, Safety and Reliability. The reliable and safe operation of our power plants, electric distribution system and natural gas infrastructure in our communities continues to be foundational to serving our customers, our financial results, and our credibility with stakeholders. Late 2022 presented unique challenges to the grid in our service territories, including attacks on two substations in Moore County, North Carolina, and extreme winter weather that forced us to take unprecedented measures to ensure the integrity of our systems in North Carolina.

Following the Moore County Substation attack, we reassessed the criticality of every substation, evaluated new security tools and technology, and conducted benchmarking with peer utilities. We created a plan to enhance physical security and resiliency at sites that are critical to the Bulk Electric System and those with the greatest impact to customers. We will work to implement these enhancements across all jurisdictions, representing an investment of approximately $500 million over the next three years. In North Carolina, recovery has been approved through the MYRP. Cost recovery requests in South Carolina, Florida and the Midwest are expected to be included in future rate cases.

In December 2022, high winds and extreme cold from Winter Storm Elliott, customer demand that was higher than forecasted, and the inability to import additional power from out of state, resulted in the need to temporarily interrupt service to about 500,000 customers to maintain overall grid reliability and prevent further potential disruptions in the Carolinas. In 2023, we established the Bulk Electric System Oversight Board to provide executive oversight of programs and policies designed to ensure energy adequacy for our customers. We practiced our forecasting, grid assessment, oversight, and governance processes throughout the summer, as hot weather challenged operations from time to time. We will continue to work to ensure that our grid and fleet can withstand the stress of extreme weather on our system, evaluate lessons learned and enhance our strategy and communications to effectively serve our customers now and in the future.

Despite these recent challenges, our regulated generation fleet and nuclear sites had strong performance throughout the year and our electric distribution system performed well. The safety of our workforce is a core value and we remain an industry leader in personal safety. In 2023, we achieved one of the best safety records in our company’s history with our TICR significantly above target. For the eighth consecutive year, we ranked first among North American combined gas and electric companies in Edison Electric Institute’s (EEI) annual safety survey, and our gas operations organization finished in the top 10% for the third year in a row, according to the American Gas Association. And, for the first time since our merger with Progress Energy in 2012, we finished the year with less than 100 Occupational Safety and Health Administration recordable incidents. In addition, we continued our strong environmental performance, with no reportable environmental events.

Our workforce and our contract partners worked hard to prepare for this year’s storm season, through drills, material planning, call center readiness, contingency planning, and customer communications. This summer, we experienced extreme weather across our regions, including a July 4 series of major storms in the Midwest, numerous storms in July and August in the Carolinas, and Hurricane Idalia in August, impacting Florida and the east coast of the Carolinas. We safely restored power to 95% of affected customers within 48 hours. Our preparation and robust communications to our customers and communities enhanced our reputation and built stakeholder loyalty and support.

Our ability to effectively handle all facets of the 2023 storm response efforts while making ongoing investments to enhance the reliability and physical security of the grid, mitigate ongoing macroeconomic challenges, and navigate supply chain constraints, is a testament to our team’s extensive preparation and coordination, applying lessons learned from previous storms, and to on-the-ground management throughout the restoration efforts. Duke Energy has received 20 Emergency Response Awards since EEI began recognizing storm response in 1998 (including 11 for assisting other utilities).

Duke Energy Objectives – 2024 and Beyond

At Duke Energy, our business strategy centers on delivering reliable, affordable and cleaner energy to our customers and communities, safely transforming and readying our system by investing in innovative technologies, modernizing our gas and electric infrastructure and expanding and integrating efficiency and demand management programs. As we transition our business to cleaner sources of energy, we are focused on delivering sustainable value for our customers and shareholders by leveraging business transformation to exceed customer expectations, optimizing investments to drive attractive shareholder returns, and by providing new product offerings and solutions that deliver growth and customer value. To achieve these major milestones, we are shaping the landscape by partnering with stakeholders, championing public policy that advances innovation, and advancing regulatory models that support carbon and methane emission reductions.


MD&A			DUKE ENERGY

Matters Impacting Future Results

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

Regulatory Matters

Coal Ash Costs

Duke Energy Carolinas and Duke Energy Progress have approximately $1.6 billion and $1.2 billion, respectively, in regulatory assets related to coal ash retirement obligations as of December 31, 2023. Future spending, including amounts recorded for depreciation and liability accretion, is expected to continue to be deferred and recovered in future rate cases or rider filings. The majority of spend is primarily expected to occur over the next 10 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 established methods of compliance. Interpretation of the requirements of the CCR Rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR Rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash. Duke Energy Indiana has approximately $408 million in regulatory assets related to coal ash asset retirement obligations as of December 31, 2023. See “Other Matters” and Note 4 to the Consolidated Financial Statements, "Regulatory Matters" for more information.

Fuel Cost Recovery

As a result of rapidly rising commodity costs during 2022, including natural gas, fuel and purchased power prices in excess of amounts included in fuel-related revenues led to an increase in the undercollection of fuel costs from customers in jurisdictions including Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida. These amounts were deferred in regulatory assets and impacted the cash flows of the registrants, including increased borrowings to temporarily finance related expenditures until recovery. Natural gas costs stabilized in 2023 and the Duke Energy Registrants are making progress collecting deferred fuel balances. Regulatory filings have been made and approved for recovery of all remaining uncollected 2022 fuel costs. Across all jurisdictions, Duke Energy recovered $1.5 billion of deferred fuel costs in 2023, and expects deferred fuel cost balances to be back in line with historical norms by the end of 2024. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters" for more information.

Commercial Renewables

In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables Disposal Groups. The Commercial Renewables Disposal Groups were classified as held for sale and as discontinued operations in the fourth quarter of 2022. Duke Energy entered into purchase and sale agreements with affiliates of Brookfield in June 2023 for the sale of the utility-scale solar and wind group and with affiliates of ArcLight in July 2023 for the distributed generation group. Both transactions closed in October 2023 and proceeds from the sales were used for debt avoidance. Duke Energy expects to complete the disposition of the remaining assets in the first half of 2024. For more information, see Note 2 to the Consolidated Financial Statements, "Dispositions."

In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the market. Originally, Duke Energy (Parent) was named in multiple lawsuits arising out of this winter storm, but the plaintiffs have dismissed Duke Energy (parent) from these lawsuits. The legal actions related to all but one of the project companies in this matter transferred to affiliates of Brookfield in conjunction with the transaction closing in October 2023. For more information, see Note 5 to the Consolidated Financial Statements, "Commitments and Contingencies."

Supply Chain

In 2023, Duke Energy has experienced modest improvement in the stability of the markets for key materials purchased and used by the Company. The Company continues to monitor developments, including proposed federal regulations, that could disrupt or impact the Company's supply chain and, as a result, may impact Duke Energy's execution of its capital plan, future financial results, or the achievement of its clean energy goals.

Goodwill

The Duke Energy Registrants performed their annual goodwill impairment tests as of August 31, 2023, as described in Note 12 to the Consolidated Financial Statements, "Goodwill and Intangible Assets." As of August 31, 2023, all of Duke Energy Registrants' reporting units' estimated fair values materially exceeded the carrying values except for the GU&I reporting unit of Duke Energy Ohio. While no goodwill impairment charges were recorded in 2023, the potential for continued interest rate pressures, and the related impact on the weighted average cost of capital, without timely or adequate updates to the regulated allowed return on equity or deteriorating economic conditions impacting GU&I's future cash flows or equity valuations of peer companies could impact the estimated fair value of GU&I, and goodwill impairment charges could be recorded in the future. The carrying value of goodwill within GU&I for Duke Energy Ohio was approximately $324 million as of December 31, 2023.

Other

Duke Energy continues to monitor general market conditions, including the potential for continued interest rate pressures on the Company's cost of capital, which may impact Duke Energy's execution of its capital plan, future financial results, or the achievement of its clean energy goals.


MD&A			DUKE ENERGY

Results of Operations

Non-GAAP Measures

Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. These items represent income from continuing operations available to Duke Energy common stockholders in dollar and per share amounts, adjusted for the dollar and per share impact of special items. As discussed below, special items include certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. Management believes the presentation of adjusted earnings and adjusted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.

Management uses these non-GAAP financial measures for planning and forecasting, and for reporting financial results to the Board of Directors, employees, stockholders, analysts and investors. Adjusted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and EPS Available to Duke Energy Corporation common stockholders (GAAP Reported EPS), respectively.

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

•Regulatory matters primarily represents net impairment charges related to Duke Energy Carolinas' and Duke Energy Progress' North Carolina rate case orders.

•Organizational optimization costs represent amounts associated with strategic repositioning to a fully regulated utility, and primarily consist of severance costs, consultant fees and impairment charges for certain nonregulated assets.

•Regulatory matters and litigation primarily represents the net impact of charges related to the Indiana court rulings on coal ash and other unrelated ongoing litigation.

•Workplace and workforce realignment represents costs attributable to business transformation, including long-term real estate strategy changes and workforce reduction.

Discontinued operations primarily includes impairments on the sale of the Commercial Renewables business and results from Duke Energy's Commercial Renewables Disposal Groups.

Duke Energy’s adjusted earnings and adjusted EPS may not be comparable to similarly titled measures of another company because other companies may not calculate the measures in the same manner.

Reconciliation of GAAP Reported Amounts to Adjusted Amounts

The following table presents a reconciliation of adjusted earnings and adjusted EPS to the most directly comparable GAAP measures.


	Years Ended December 31,
	2023				2022
(in millions, except per share amounts)	Earnings		EPS		Earnings		EPS
GAAP Reported Earnings/EPS	$	2,735	$	3.54	$	2,444	$	3.17
Adjustments to Reported:
Organizational Optimization(a)	95		0.13		—		—
Regulatory Matters(b)	64		0.08		—		—
Regulatory Matters and Litigation(c)	—		—		295		0.39
Workplace and Workforce Realignment(d)	—		—		105		0.14



Discontinued Operations(e)	1,391		1.81		1,216		1.57
Adjusted Earnings/Adjusted EPS	$	4,285	$	5.56	$	4,060	$	5.27

(a) Net of tax benefit of $29 million. $110 million recorded within Operations, maintenance and other and $14 million within Impairment of assets and other charges.

(b) Net of $20 million tax benefit. $68 million within Impairment of assets and other charges and $16 million within Operations, maintenance and other.

(c) Net of tax benefit of $128 million. $386 million recorded within Impairment of assets and other charges, $46 million within Regulated electric (Operating Revenues) and $34 million within Net (Income) Loss Attributable to Noncontrolling Interests. $25 million recorded within Operations, maintenance and other.

(d) Net of tax benefit of $31 million. $72 million recorded within Impairment of assets and other charges, $71 million recorded within Operations, maintenance and other and a $7 million gain recorded in Gains on sales of other assets and other.

(e) Recorded in Loss from Discontinued Operations, net of tax, and Net (Income) Loss Attributable to Noncontrolling Interests.

Year Ended December 31, 2023, as compared to 2022

GAAP Reported EPS was $3.54 for the year ended December 31, 2023, compared to $3.17 for the year ended December 31, 2022. In addition to the drivers below, the increase in GAAP Reported Earnings/EPS was also due to higher regulatory charges in the prior year.


MD&A			DUKE ENERGY

As discussed and shown in the table above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $5.56 for the year ended December 31, 2023, compared to $5.27 for the year ended December 31, 2022. The increase in Adjusted Earnings/Adjusted EPS was primarily due to growth from riders and other retail margin, favorable rate case impacts, lower operations and maintenance expense and lower tax expense. These items were partially offset by higher interest and depreciation expense, unfavorable weather and lower volumes.

SEGMENT RESULTS

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

Duke Energy's segment structure includes Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I). The remainder of Duke Energy’s operations is presented as Other. See Note 3 to the Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.

Electric Utilities and Infrastructure


	Years Ended December 31,


(in millions)	2023		2022		Variance
Operating Revenues	$	26,921	$	26,024	$	897
Operating Expenses
Fuel used in electric generation and purchased power	9,164		8,862		302
Operations, maintenance and other	5,309		5,354		(45)
Depreciation and amortization	4,684		4,550		134
Property and other taxes	1,320		1,315		5
Impairment of assets and other charges	75		374		(299)
Total operating expenses	20,552		20,455		97
Gains on Sales of Other Assets and Other, net	28		7		21
Operating Income	6,397		5,576		821
Other Income and Expenses, net	517		467		50
Interest Expense	1,850		1,565		285
Income Before Income Taxes	5,064		4,478		586
Income Tax Expense	742		536		206
Less: Income Attributable to Noncontrolling Interest	99		13		86
Segment Income	$	4,223	$	3,929	$	294

Duke Energy Carolinas GWh sales	87,635		90,915		(3,280)
Duke Energy Progress GWh sales	66,717		70,435		(3,718)
Duke Energy Florida GWh sales	43,384		46,214		(2,830)
Duke Energy Ohio GWh sales	23,307		24,269		(962)
Duke Energy Indiana GWh sales	30,219		31,979		(1,760)
Total Electric Utilities and Infrastructure GWh sales	251,262		263,812		(12,550)
Net proportional MW capacity in operation(a)	54,404		54,347		57

(a) Net proportional MW capacity in operation reflects winter/nameplate capacity as of December 31, 2023, and 2022. See Item 2, "Properties" for further details.

Year Ended December 31, 2023, as compared to 2022

EU&I’s higher segment income was due to higher revenues from rate cases across multiple jurisdictions and the prior year Indiana court rulings on recovery of certain coal ash costs, partially offset by unfavorable weather, lower weather-normal retail sales volumes and higher interest expense. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

•a $902 million increase in fuel revenues primarily due to higher fuel cost recovery in the current year;

•a $363 million increase in storm revenues at Duke Energy Florida due to hurricanes Ian and Nicole collections;

•a $276 million increase due to higher pricing at Duke Energy Progress from the South Carolina rate case and interim rates from the North Carolina rate case, the Duke Energy Ohio electric rate case, the Duke Energy Kentucky electric rate case and Ohio tax reform deferrals in prior year, and base rate adjustments related to annual increases from the 2021 Settlement Agreement at Duke Energy Florida;


MD&A			SEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE

•a $115 million increase in rider revenues primarily due to a decrease in the return of EDIT to customers compared to the prior year at Duke Energy Carolinas and increased Storm Protection Plan rider revenue at Duke Energy Florida; and

•a $67 million increase due to the provision for rate refund recognized in the prior year related to the Indiana Supreme Court ruling on recovery of certain coal ash costs.

Partially offset by:

•a $341 million decrease in retail sales due to unfavorable weather compared to prior year;

•a $323 million decrease in wholesale revenues primarily due to lower demand at Duke Energy Florida and lower prices at Duke Energy Indiana; and

•a $173 million decrease in weather-normal retail sales volumes.

Operating Expenses. The variance was driven primarily by:

•a $302 million increase in fuel used in electric generation and purchased power due to changes in the generation mix at Duke Energy Carolinas and recovery of fuel expense at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida; and

•a $134 million increase in depreciation and amortization primarily due to higher plant in service, partially offset by the amortization of the DOE settlement regulatory liability at Duke Energy Florida.

Partially offset by:

•a $299 million decrease in impairment of assets and other charges primarily due to the Indiana court rulings on recovery of certain coal ash costs in the prior year, partially offset by rate case impacts at Duke Energy Carolinas and Duke Energy Progress in the current year; and

•a $45 million decrease in operation, maintenance and other expense primarily due to decrease in spend on outside services and lower project costs at Duke Energy Carolinas and Duke Energy Progress, partially offset by an increase in storm amortization at Duke Energy Florida.

Gains on Sales of Other Assets and Other, net. The increase was primarily due to the sale of the Mint Street parking deck.

Other Income and Expenses, net. The variance was primarily due to non-service pension expense.

Interest Expense. The variance was primarily driven by higher interest rates and outstanding debt balances.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of EDIT. The ETRs for the years ended December 31, 2023, and 2022, were 14.7% and 12.0%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of EDIT.

Income Attributable to Noncontrolling Interest. The increase was due to the second and final tranche of the GIC minority interest sale.


MD&A			SEGMENT RESULTS - GAS UTILITIES AND INFRASTRUCTURE

Gas Utilities and Infrastructure


	Years Ended December 31,


(in millions)	2023		2022		Variance
Operating Revenues	$	2,266	$	2,840	$	(574)
Operating Expenses
Cost of natural gas	593		1,276		(683)
Operation, maintenance and other	455		532		(77)
Depreciation and amortization	349		327		22
Property and other taxes	129		138		(9)
Impairment of assets and other charges	(4)		(12)		8
Total operating expenses	1,522		2,261		(739)
Gains on Sales of Other Assets and Other, net	—		1		(1)
Operating Income	744		580		164



Other income and expenses, net	106		78		28
Interest Expense	217		182		35
Income Before Income Taxes	633		476		157
Income Tax Expense	116		8		108
Add: Loss Attributable to Noncontrolling Interest	2		—		2
Segment Income	$	519	$	468	$	51

Piedmont Local Distribution Company (LDC) throughput (Dth)	569,752,712		628,035,471		(58,282,759)
Duke Energy Midwest LDC throughput (MCF)	80,252,769		90,010,669		(9,757,900)

Year Ended December 31, 2023, as compared to 2022

GU&I's results were impacted primarily by margin growth partially offset by higher interest expense. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

•a $683 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs.

Partially offset by:

•a $26 million increase due to customer growth;

•a $19 million increase due to North Carolina IMR;

•a $15 million increase due to the MGP Settlement in prior year;

•an $11 million increase due to Tennessee ARM revenue recognition;

•a $9 million increase due to due to secondary marketing sales;

•a $6 million increase in Ohio tax reform deferrals; and

•a $4 million increase due to rider revenues.

Operating Expenses. The variance was driven primarily by:

•a $683 million decrease in cost of natural gas due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs; and

•a $77 million decrease in operations, maintenance and other due to the MGP Settlement in prior year, lower labor costs, retirement of propane facilities and pipeline safety and integrity work.

Partially offset by:

•a $22 million increase in depreciation and amortization due to additional plant in service and lower CEP deferrals.

Other Income and Expenses, net. The variance was primarily due to revisions in estimated ACP ARO closure costs and higher AFUDC equity income.

Interest Expense. The variance was primarily due to higher outstanding debt balances and interest rates.

Income Tax Expense. The increase in tax expense was primarily due to a decrease in the amortization of EDIT related to the MGP Settlement recorded in the prior year and an increase in pretax income. The ETRs for the years ended December 31, 2023, and 2022, were 18.3% and 1.7%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of EDIT related to the MGP Settlement recorded in the prior year.


MD&A			SEGMENT RESULTS - OTHER

Other


	Years Ended December 31,


(in millions)	2023		2022		Variance
Operating Revenues	$	134	$	122	$	12






Operating Expenses	249		298		(49)
Gains on Sales of Other Assets and Other, net	24		14		10
Operating Loss	(91)		(162)		71
Other Income and Expenses, net	258		65		193
Interest Expense	1,097		778		319
Loss Before Income Taxes	(930)		(875)		(55)
Income Tax Benefit	(420)		(244)		(176)

Less: Preferred Dividends	106		106		—
Net Loss	$	(616)	$	(737)	$	121

Year Ended December 31, 2023, as compared to 2022

The lower net loss was driven by an increase in the tax benefit due to a favorable adjustment related to certain allowable tax deductions, a franchise tax benefit and higher returns on investments, partially offset by higher interest expense.

Operating Expenses. The decrease was primarily driven by franchise tax refunds in the current year and higher asset impairments in the prior year, partially offset by higher severance costs associated with strategic repositioning as the Company transitions to a fully regulated utility.

Other Income and Expenses, net. The variance was primarily due to higher return on investments that fund certain employee benefit obligations and higher yields on captive insurance investments.

Interest Expense. The variance was primarily due to higher interest rates on long-term debt and commercial paper, and higher outstanding long-term debt balances.

Income Tax Benefit. The increase in the tax benefit was primarily due to benefits associated with ongoing tax efficiency efforts and an increase in pretax losses. The ETRs for the year ended December 31, 2023, and 2022, were 45.2% and 27.9%, respectively. The increase in the ETR was primarily due to benefits associated with ongoing tax efficiency efforts. In 2023, the Company evaluated the deductibility of certain items spanning periods currently open under federal statute, including items related to interest on company-owned life insurance. As a result of this analysis, the Company recorded a favorable adjustment of approximately $120 million.

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX


	Years Ended December 31,
(in millions)	2023		2022		Variance
Loss From Discontinued Operations, net of tax	$	(1,455)	$	(1,323)	$	(132)

Year Ended December 31, 2023, as compared to 2022

The variance was primarily driven by lower results from Duke Energy's Commercial Renewables Disposal Groups in the current year.


MD&A			DUKE ENERGY CAROLINAS

SUBSIDIARY REGISTRANTS

Basis of Presentation

The results of operations and variance discussion for the Subsidiary Registrants is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.

DUKE ENERGY CAROLINAS

Results of Operations


	Years Ended December 31,
(in millions)	2023		2022		Variance
Operating Revenues	$	8,288	$	7,857	$	431
Operating Expenses
Fuel used in electric generation and purchased power	2,524		2,015		509
Operation, maintenance and other	1,774		1,892		(118)
Depreciation and amortization	1,593		1,526		67
Property and other taxes	320		340		(20)
Impairment of assets and other charges	44		26		18
Total operating expenses	6,255		5,799		456
Gains on Sales of Other Assets and Other, net	26		4		22
Operating Income	2,059		2,062		(3)
Other Income and Expenses, net	238		221		17
Interest Expense	686		557		129
Income Before Income Taxes	1,611		1,726		(115)
Income Tax Expense	141		126		15
Net Income	$	1,470	$	1,600	$	(130)

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


Increase (Decrease) over prior year	2023
Residential sales	(3.5)	%
General service sales	1.0	%
Industrial sales	(5.2)	%
Wholesale power sales	5.0	%
Joint dispatch sales	(10.9)	%
Total sales	(3.6)	%
Average number of customers	1.8	%

Year Ended December 31, 2023, as compared to 2022

Operating Revenues. The variance was driven primarily by:

•a $528 million increase in fuel revenues due to higher fuel cost recovery;

•a $71 million increase in rider revenues primarily due to the decrease in the return of EDIT to customers compared to the prior year;

•a $28 million increase in wholesale revenues primarily due to higher contractual demand and sales; and

•a $15 million increase in retail pricing due to interim rates from the North Carolina rate case.

Partially offset by:

•a $193 million decrease in retail sales due to unfavorable weather compared to prior year; and

•a $47 million decrease in weather-normal retail sales volumes.


MD&A			DUKE ENERGY CAROLINAS

Operating Expenses. The variance was driven primarily by:

•a $509 million increase in fuel used in electric generation and purchased power primarily due to changes in the generation mix and the recovery of fuel expenses, partially offset by lower JDA purchased volumes and prices;

•a $67 million increase in depreciation and amortization primarily due to a higher depreciable base, partially offset by a decrease due to lower coal ash amortization from the North Carolina rate case and higher Grid Improvement Plan deferrals in the current year; and

•an $18 million increase in impairment of assets and other charges primarily due to the order in the North Carolina rate case, partially offset by prior year adjustments to optimize the Company's real estate portfolio and the South Carolina Supreme Court decision on coal ash.

Partially offset by:

•a $118 million decrease in operation, maintenance and other primarily due to a decrease in spend on outside services and lower project costs; and

•a $20 million decrease in property and other taxes primarily due to lower franchise taxes.

Gains on Sales of Other Assets and Other, net. The increase was primarily due to the sale of the Mint Street parking deck.

Other Income and Expenses. The variance was driven primarily by non-service pension expense and interest income.

Interest Expense. The variance was driven by higher interest rates and outstanding debt balances.

Income Tax Expense. The increase in tax expense was primarily due to a decrease in the amortization of EDIT, partially offset by a decrease in pretax income.

PROGRESS ENERGY

Results of Operations


	Years Ended December 31,
(in millions)	2023		2022		Variance
Operating Revenues	$	13,544	$	13,125	$	419
Operating Expenses
Fuel used in electric generation and purchased power	5,026		5,078		(52)
Operation, maintenance and other	2,636		2,458		178
Depreciation and amortization	2,151		2,142		9
Property and other taxes	644		607		37
Impairment of assets and other charges	28		12		16
Total operating expenses	10,485		10,297		188
Gains on Sales of Other Assets and Other, net	27		11		16
Operating Income	3,086		2,839		247
Other Income and Expenses, net	201		181		20
Interest Expense	954		844		110
Income Before Income Taxes	2,333		2,176		157
Income Tax Expense	377		348		29


Net Income	1,956		1,828		128

Year Ended December 31, 2023, as compared to 2022

Operating Revenues. The variance was driven primarily by:

•a $363 million increase in storm revenues at Duke Energy Florida due to hurricanes Ian and Nicole collections;

•a $254 million increase in fuel cost recovery from retail customers at Duke Energy Florida, partially offset by a decrease at Duke Energy Progress driven by lower JDA sales volumes at lower prices in the current year, partially offset by higher fuel cost recovery;

•a $144 million increase due to higher pricing from the North Carolina and the South Carolina rate cases at Duke Energy Progress, and retail pricing due to base rate adjustments related to annual increases from the 2021 Settlement Agreement at Duke Energy Florida;

•a $66 million increase in rider revenues at Duke Energy Florida primarily due to increased Storm Protection Plan rider and a decrease in the return of EDIT to customers compared to the prior year at Duke Energy Progress; and

•a $23 million increase in franchise tax revenue primarily due to increased revenues over prior year at Duke Energy Florida.


MD&A			PROGRESS ENERGY

Partially offset by:

•a $274 million decrease in wholesale revenues net of fuel due to decreased demand at Duke Energy Florida, partially offset by higher capacity rates net of lower volumes at Duke Energy Progress;

•a $99 million decrease in weather-normal retail sales volumes at Duke Energy Progress and Duke Energy Florida; and

•a $74 million decrease in retail sales due to unfavorable weather compared to prior year at Duke Energy Progress, partially offset by favorable weather in the current year at Duke Energy Florida.

Operating Expenses. The variance was driven primarily by:

•a $178 million increase in operation, maintenance and other primarily due to storm amortization costs at Duke Energy Florida, partially offset by lower storm costs, a decrease in spend on outside services and lower project costs at Duke Energy Progress;

•a $37 million increase in property and other taxes primarily due to higher franchise taxes and gross receipts taxes driven by higher revenues and higher property taxes due to property tax valuation adjustments at Duke Energy Florida, partially offset by lower franchise taxes at Duke Energy Progress; and

•a $16 million increase in impairment of assets and other charges primarily due to rate case impacts, partially offset by prior year adjustments from the South Carolina Supreme Court decision on coal ash and optimization of the Company's real estate portfolio at Duke Energy Progress.

Partially offset by:

•a $52 million decrease in fuel used in electric generation and purchased power primarily due to lower volumes and prices at Duke Energy Progress, partially offset by the recovery of fuel expenses at Duke Energy Progress and Duke Energy Florida.

Gains on Sales of Other Assets and Other, net. The increase was primarily due to sales of cell tower leases.

Other Income and Expenses, net. The variance was driven primarily by non-service pension expense and interest income.

Interest Expense. The variance was driven primarily by higher outstanding debt balances and interest rates at Duke Energy Progress and Duke Energy Florida.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of EDIT, partially offset by an increase in PTCs.

DUKE ENERGY PROGRESS

Results of Operations


	Years Ended December 31,
(in millions)	2023		2022		Variance
Operating Revenues	$	6,488	$	6,753	$	(265)
Operating Expenses
Fuel used in electric generation and purchased power	2,203		2,492		(289)
Operation, maintenance and other	1,379		1,475		(96)
Depreciation and amortization	1,266		1,187		79
Property and other taxes	164		190		(26)
Impairment of assets and other charges	29		7		22
Total operating expenses	5,041		5,351		(310)
Gains on Sales of Other Assets and Other, net	3		4		(1)
Operating Income	1,450		1,406		44
Other Income and Expenses, net	124		114		10
Interest Expense	427		354		73
Income Before Income Taxes	1,147		1,166		(19)
Income Tax Expense	149		158		(9)
Net Income	$	998	$	1,008	$	(10)


MD&A			DUKE ENERGY PROGRESS

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


Increase (Decrease) over prior year	2023
Residential sales	(4.1)	%
General service sales	(4.0)	%
Industrial sales	(12.2)	%
Wholesale power sales	(3.7)	%
Joint dispatch sales	(1.1)	%
Total sales	(5.3)	%
Average number of customers	1.7	%

Year Ended December 31, 2023, as compared to 2022

Operating Revenues. The variance was driven primarily by:

•a $259 million decrease in fuel revenues due to lower JDA sales volumes at lower prices in the current year, partially offset by higher fuel cost recovery;

•a $103 million decrease in retail sales due to unfavorable weather compared to prior year; and

•a $70 million decrease in weather-normal retail sales volumes.

Partially offset by:

•a $127 million increase due to higher pricing from the North Carolina and the South Carolina rate cases;

•a $21 million increase in rider revenues primarily due to the decrease in the return of EDIT to customers compared to the prior year; and

•a $17 million increase in wholesale revenues, net of fuel, due to higher capacity rates, partially offset by lower volumes.

Operating Expenses. The variance was driven primarily by:

•a $289 million decrease in fuel used in electric generation and purchased power primarily due to changes in the generation mix, partially offset by the recovery of fuel expenses;

•a $96 million decrease in operation, maintenance and other primarily due to lower storm costs, lower outside services and lower project costs; and

•a $26 million decrease in property and other taxes due to lower franchise taxes.

Partially offset by:

•a $79 million increase in depreciation and amortization due to higher depreciable base and rate case impacts; and

•a $22 million increase in impairment of assets and other charges primarily due to rate case impacts offset by prior year adjustments from the South Carolina Supreme Court decision on coal ash and the optimization of the Company's real estate portfolio.

Other Income and Expenses, net. The variance was driven primarily by interest income.

Interest Expense. The variance was driven primarily by higher interest rates and outstanding debt balances.

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


MD&A			DUKE ENERGY FLORIDA

DUKE ENERGY FLORIDA

Results of Operations


	Years Ended December 31,
(in millions)	2023		2022		Variance
Operating Revenues	$	7,036	$	6,353	$	683
Operating Expenses
Fuel used in electric generation and purchased power	2,823		2,586		237
Operation, maintenance and other	1,239		967		272
Depreciation and amortization	885		955		(70)
Property and other taxes	480		421		59
Impairment of assets and other charges	(1)		4		(5)
Total operating expenses	5,426		4,933		493
Gains on Sales of Other Assets and Other, net	2		2		—
Operating Income	1,612		1,422		190
Other Income and Expenses, net	78		74		4
Interest Expense	413		362		51
Income Before Income Taxes	1,277		1,134		143
Income Tax Expense	261		225		36
Net Income	$	1,016	$	909	$	107

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


Increase (Decrease) over prior year	2023
Residential sales	1.1	%
General service sales	1.2	%
Industrial sales	(3.2)	%
Wholesale power sales	(49.3)	%
Total sales	(6.1)	%
Average number of customers	1.8	%

Year Ended December 31, 2023, as compared to 2022

Operating Revenues. The variance was driven primarily by:

•a $513 million increase in fuel and capacity revenues primarily due to an increase in fuel and capacity rates billed to retail customers;

•a $363 million increase in storm revenues due to hurricanes Ian and Nicole collections;

•a $45 million increase in rider revenues primarily due to higher rates for the Storm Protection Plan rider;

•a $29 million increase in retail sales due to favorable weather in the current year;

•a $23 million increase in franchise taxes revenue primarily due to increased revenues over prior year; and

•a $17 million increase in retail pricing due to base rate adjustments related to annual increases from the 2021 Settlement Agreement.

Partially offset by:

•a $291 million decrease in wholesale power revenues, net of fuel, primarily due to decreased demand; and

•a $29 million decrease in weather-normal retail sales volumes.

Operating Expenses. The variance was driven primarily by:

•a $272 million increase in operation, maintenance and other primarily due to storm amortization;

•a $237 million increase in fuel used in electric generation and purchased power primarily due to the recovery of fuel expenses, partially offset by a decrease in purchased power costs due to lower natural gas prices; and

•a $59 million increase in property and other taxes primarily due to higher franchise taxes and gross receipts taxes driven by higher revenues and higher property taxes due to property tax valuation adjustments.


MD&A			DUKE ENERGY FLORIDA

Partially offset by:

•a $70 million decrease in depreciation and amortization primarily due to the amortization of the DOE settlement regulatory liability, partially offset by higher depreciable base.

Interest Expense. The variance was primarily due to higher interest rates and outstanding debt balances.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of EDIT, partially offset by an increase in PTCs.

DUKE ENERGY OHIO

Results of Operations


	Years Ended December 31,
(in millions)	2023		2022		Variance
Operating Revenues
Regulated electric	$	1,868	$	1,798	$	70
Regulated natural gas	639		716		(77)

Total operating revenues	2,507		2,514		(7)
Operating Expenses
Fuel used in electric generation and purchased power	608		657		(49)

Cost of natural gas	163		261		(98)
Operation, maintenance and other	478		523		(45)
Depreciation and amortization	367		324		43
Property and other taxes	364		369		(5)
Impairment of assets and other charges	3		(10)		13
Total operating expenses	1,983		2,124		(141)
Gains on Sales of Other Assets and Other, net	1		1		—
Operating Income	525		391		134
Other Income and Expenses, net	41		19		22
Interest Expense	169		129		40
Income Before Income Taxes	397		281		116
Income Tax Expense (Benefit)	63		(21)		84


Net Income	$	334	$	302	$	32

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


	Electric		Natural Gas
Increase (Decrease) over prior year	2023			2023
Residential sales	(4.8)	%		(13.5)	%
General service sales	1.5	%		(19.7)	%
Industrial sales	4.9	%		3.8	%
Wholesale electric power sales	(19.3)	%		n/a
Other natural gas sales	n/a			(0.7)	%
Total sales	(4.0)	%		(10.8)	%
Average number of customers	0.9	%		0.6	%

Year Ended December 31, 2023, as compared to 2022

Operating Revenues. The variance was driven primarily by:

•a $77 million decrease in fuel-related revenues primarily due to lower retail sales volumes and lower fuel cost recovery in the current year;

•a $59 million decrease in revenues related to lower OVEC rider collections and OVEC sales into PJM;

•a $35 million decrease due to unfavorable weather compared to prior year; and

•an $18 million decrease in retail revenue riders primarily due to the decrease in Distribution Capital Investment Rider, partially offset by increases in the Ohio CEP rider and Energy Efficiency Rider.


MD&A			DUKE ENERGY OHIO

Partially offset by:

•a $145 million increase in price due to the Duke Energy Ohio and Duke Energy Kentucky electric rate cases and Ohio tax reform deferrals in prior year;

•a $15 million increase due to the MGP Settlement in the prior year; and

•an $11 million increase in weather-normal retail sales volumes.

Operating Expenses. The variance was driven primarily by:

•a $147 million decrease in fuel expense primarily driven by lower retail prices for natural gas and purchased power and a decrease in purchased power volumes; and

•a $45 million decrease in operation, maintenance and other expense primarily due to the MGP Settlement in the prior year.

Partially offset by:

•a $43 million increase in depreciation and amortization primarily driven by an increase in distribution plant in service and depreciation rates resulting from the Duke Energy Ohio and Duke Energy Kentucky electric retail rate cases implemented in 2023; and

•a $13 million increase in impairment of assets and other charges primarily due to the reversal in the prior year of the impairment related to the propane caverns in Ohio.

Other Income and Expenses. The variance was primarily due to interest income.

Interest Expense. The variance was primarily due to higher outstanding debt balances and interest rates.

Income Tax Expense (Benefit). The increase in tax expense was primarily due to a decrease in the amortization of EDIT related to the MGP Settlement recorded in the prior year and an increase in pretax income.

DUKE ENERGY INDIANA

Results of Operations


	Years Ended December 31,
(in millions)	2023		2022		Variance
Operating Revenues	$	3,399	$	3,922	$	(523)
Operating Expenses
Fuel used in electric generation and purchased power	1,217		1,819		(602)
Operation, maintenance and other	713		729		(16)
Depreciation and amortization	666		645		21
Property and other taxes	59		75		(16)
Impairment of assets and other charges	—		388		(388)
Total operating expenses	2,655		3,656		(1,001)

Operating Income	744		266		478
Other Income and Expenses, net	76		36		40
Interest Expense	213		189		24
Income Before Income Taxes	607		113		494
Income Tax Expense (Benefit)	110		(24)		134
Net Income	$	497	$	137	$	360

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


Increase (Decrease) over prior year	2023
Residential sales	(6.3)	%
General service sales	(3.6)	%
Industrial sales	9.0	%
Wholesale power sales	(1.9)	%
Total sales	(5.5)	%
Average number of customers	1.2	%


MD&A			DUKE ENERGY INDIANA

Year Ended December 31, 2023, as compared to 2022

Operating Revenues. The variance was driven primarily by:

•a $401 million decrease in retail fuel revenues primarily due to lower fuel cost recovery driven by lower retail sales volumes and fuel prices;

•a $75 million decrease in wholesale revenues, including fuel revenues, driven by lower fuel prices;

•a $51 million decrease in weather-normal retail sales volumes primarily due to lower customer demand; and

•a $44 million decrease in retail sales due to unfavorable weather compared to the prior year.

Partially offset by:

•a $67 million increase primarily due to the provision for rate refund related to the Indiana Supreme Court ruling on recovery of certain coal ash costs in the prior year.

Operating Expenses. The variance was driven primarily by:

•a $602 million decrease in fuel used in electric generation and purchased power primarily due to lower purchased power expense, natural gas and coal costs, partially offset by higher deferred fuel amortization;

•a $388 million decrease in impairment of assets and other charges primarily due to the Indiana court rulings on recovery of certain coal ash costs in the prior year;

•a $16 million decrease in operation, maintenance and other primarily due to lower employee-related expenses and storm contingency costs; and

•a $16 million decrease in property and other taxes primarily due to property tax true-ups and lower franchise taxes.

Partially offset by:

•a $21 million increase in depreciation and amortization primarily due to higher depreciable base.

Other Income and Expenses, net. The variance was primarily due to coal ash insurance proceeds, non-service pension expense and interest income.

Interest Expense. The variance was primarily due to higher outstanding debt balances and interest rates.

Income Tax Expense (Benefit). The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of EDIT related to the coal ash impairment recorded in the prior year.

PIEDMONT

Results of Operations


	Years Ended December 31,
(in millions)	2023		2022		Variance



Operating Revenues	$	1,628	$	2,124	$	(496)
Operating Expenses
Cost of natural gas	430		1,015		(585)
Operation, maintenance and other	344		368		(24)
Depreciation and amortization	237		222		15
Property and other taxes	59		57		2
Impairment of assets and other charges	(4)		18		(22)
Total operating expenses	1,066		1,680		(614)
Gains on Sales of Other Assets and Other, net	—		4		(4)
Operating Income	562		448		114



Other Income and Expenses, net	66		54		12
Interest Expense	165		140		25
Income Before Income Taxes	463		362		101
Income Tax Expense	84		39		45
Net Income	$	379	$	323	$	56


MD&A			PIEDMONT

The following table shows the percent changes in Dth delivered and average number of customers. The percentages for all throughput deliveries represent billed and unbilled sales. Amounts are not weather-normalized.


Increase (Decrease) over prior year	2023
Residential deliveries	(14.3)	%
Commercial deliveries	(9.4)	%
Industrial deliveries	(2.4)	%
Power generation deliveries	(10.0)	%
For resale	(14.9)	%
Total throughput deliveries	(9.3)	%
Secondary market volumes	(26.6)	%
Average number of customers	1.5	%

The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The weather normalization adjustment mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

Year Ended December 31, 2023, as compared to 2022

Operating Revenues. The variance was driven primarily by:

•a $585 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs.

Partially offset by:

•a $26 million increase due to customer growth;

•a $19 million increase due to North Carolina IMR;

•an $11 million increase due to Tennessee ARM revenue recognition; and

•a $9 million increase due to secondary marketing sales.

Operating Expenses. The variance was driven primarily by:

•a $585 million decrease in the cost of natural gas due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs;

•a $24 million decrease in operations, maintenance and other primarily due to lower labor costs, gas pipeline and integrity work and a decrease in bad debt reserves; and

•a $22 million decrease in impairment of assets and other charges due to the optimization of the Company's real estate portfolio in the prior year.

Partially offset by:

•a $15 million increase in depreciation and amortization due to additional plant in service.

Other Income and Expenses, net. The increase was primarily due to higher AFUDC equity income.

Interest Expense. The increase was primarily due to higher outstanding debt balances and interest rates.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Preparation of financial statements requires the application of accounting policies, judgments, assumptions and estimates that can significantly affect the reported results of operations, cash flows or the amounts of assets and liabilities recognized in the financial statements. Judgments made include the likelihood of success of particular projects, possible legal and regulatory challenges, earnings assumptions on pension and other benefit fund investments and anticipated recovery of costs, especially through regulated operations.

Management discusses these policies, estimates and assumptions with senior members of management on a regular basis and provides periodic updates on management decisions to the Audit Committee. Management believes the areas described below require significant judgment in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods.

For further information, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."


MD&A			CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Regulated Operations Accounting

Substantially all of Duke Energy’s regulated operations meet the criteria for application of regulated operations accounting treatment. As a result, Duke Energy is required to record assets and liabilities that would not be recorded for nonregulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities are recorded when it is probable that a regulator will require Duke Energy to make refunds to customers or reduce rates to customers for previous collections or deferred revenue for costs that have yet to be incurred.

Management continually assesses whether recorded regulatory assets are probable of future recovery by considering factors such as:

•applicable regulatory environment changes;

•historical regulatory treatment for similar costs in Duke Energy’s jurisdictions;

•litigation of rate orders;

•recent rate orders to other regulated entities;

•levels of actual return on equity compared to approved rates of return on equity; and

•the status of any pending or potential deregulation legislation.

If future recovery of costs ceases to be probable, asset write-offs would be recognized in operating income. Additionally, regulatory agencies can provide flexibility in the manner and timing of the depreciation of property, plant and equipment, recognition of asset retirement costs and amortization of regulatory assets, or may disallow recovery of all or a portion of certain assets.

As required by regulated operations accounting rules, significant judgment can be required to determine if an otherwise recognizable incurred cost qualifies to be deferred for future recovery as a regulatory asset. Significant judgment can also be required to determine if revenues previously recognized are for entity-specific costs that are no longer expected to be incurred or have not yet been incurred and are therefore a regulatory liability.

For further information, see Note 4 to the Consolidated Financial Statements, "Regulatory Matters."

Goodwill Impairment Assessments

Duke Energy performed its annual goodwill impairment tests for all reporting units as of August 31, 2023. Additionally, Duke Energy monitors all relevant events and circumstances during the year to determine if an interim impairment test is required. Such events and circumstances include an adverse regulatory outcome, declining financial performance and deterioration of industry or market conditions. As of August 31, 2023, all of the reporting units' estimated fair value of equity exceeded the carrying value of equity. The fair values of the reporting units were calculated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries.

Estimated future cash flows under the income approach are based on Duke Energy’s internal business plan. Significant assumptions used are growth rates, future rates of return expected to result from ongoing rate regulation and discount rates. Management determines the appropriate discount rate for each of its reporting units based on the Weighted Average Cost of Capital (WACC) for each individual reporting unit. The WACC takes into account both the after-tax cost of debt and cost of equity. A major component of the cost of equity is the current risk-free rate on 20-year U.S. Treasury bonds. In the 2023 impairment tests, Duke Energy considered implied WACCs for certain peer companies in determining the appropriate WACC rates to use in its analysis. As each reporting unit has a different risk profile based on the nature of its operations, including factors such as regulation, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company-specific risk premiums. The discount rates used for calculating the fair values as of August 31, 2023, for each of Duke Energy’s reporting units ranged from 6.3% to 6.6%. The underlying assumptions and estimates are made as of a point in time. Subsequent changes, particularly changes in the discount rates, authorized regulated rates of return or growth rates inherent in management’s estimates of future cash flows, could result in future impairment charges.

One of the most significant assumptions utilized in determining the fair value of reporting units under the market approach is implied market multiples for certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of August 31. The implied market multiples used for calculating the fair values as of August 31, 2023, for each of Duke Energy's reporting units ranged from 9.3 to 11.2.

Duke Energy primarily operates in environments that are rate-regulated. In such environments, revenue requirements are adjusted periodically by regulators based on factors including levels of costs, sales volumes and costs of capital. Accordingly, Duke Energy’s regulated utilities operate to some degree with a buffer from the direct effects, positive or negative, of significant swings in market or economic conditions. However, significant changes in discount rates or implied market multiples over a prolonged period may have a material impact on the fair value of equity.

Duke Energy has $19.3 billion in Goodwill at both December 31, 2023, and 2022. For further information, see Note 12 to the Consolidated Financial Statements, "Goodwill and Intangible Assets."

Asset Retirement Obligations

AROs are recognized for legal obligations associated with the retirement of property, plant and equipment at the present value of the projected liability in the period in which it is incurred, if a reasonable estimate of fair value can be made. Duke Energy has $9.2 billion and $12.7 billion of AROs as of December 31, 2023, and 2022, respectively. See Note 10, "Asset Retirement Obligations," for further details including a rollforward of related liabilities.


MD&A			CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding the amount and timing of future cash flows, regulatory, legal, and legislative decisions, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change.

Obligations for nuclear decommissioning are based on site-specific cost studies. Duke Energy Carolinas and Duke Energy Progress assume prompt dismantlement of the nuclear facilities after operations are ceased. During 2020, Duke Energy Florida, closed an agreement for the accelerated decommissioning of the Crystal River Unit 3 nuclear power station after receiving approval from the NRC and FPSC. The retirement obligations for the decommissioning of Crystal River Unit 3 nuclear power station are measured based on accelerated decommissioning from 2020 continuing through 2027. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida also assume that spent fuel will be stored on-site until such time that it can be transferred to a yet-to-be-built DOE facility.

Obligations for closure of ash basins are based upon discounted cash flows of estimated costs for site-specific plans.

For further information, see Notes 4, 5 and 10 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations."

Discontinued Operations

Duke Energy calculated an estimated impairment on the disposition of its Commercial Renewables Disposal Groups as of December 31, 2022. The impairment was recorded to write-down the carrying amount to fair value, less cost to sell. The fair value was primarily determined from the income approach using discounted cash flows, but also considered market information obtained through the bidding process. Estimated future cash flows under the income approach were based on Duke Energy's forecast, which was informed by existing power purchase agreements with offtakers and forward merchant curves. Significant assumptions used in the income approach include forward merchant curves and discount rates. The discount rates take into account both the after-tax cost of debt and cost of equity. Duke Energy continued to monitor the sales of the Commercial Renewables Disposal Groups throughout 2023 and recorded adjustments to the impairments as warranted by progression in the disposition process and changes in market information.

The actual loss for each of the Commercial Renewables Disposal Groups is being recorded based on final sales agreements and could differ from the estimated losses recorded as of December 31, 2023.

For further information, See Note 2 to the Consolidated Financial Statements, "Dispositions."

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. See Note 24 to the Consolidated Financial Statements, "Income Taxes," for more information.

Capital Expenditures

Duke Energy continues to focus on reducing risk and positioning its business for future success and will invest principally in its strongest business sectors. Duke Energy’s projected capital and investment expenditures, including AFUDC debt and capitalized interest, for the next three fiscal years are included in the table below.


(in millions)	2024		2025		2026
Electric Generation(a)	$	3,200	$	4,100	$	5,225
Electric Transmission	2,325		2,550		2,625
Electric Distribution	4,625		5,150		4,825
Environmental and Other	725		875		700





Total EU&I	10,875		12,675		13,375
GU&I	1,150		1,150		1,125
Other	325		375		275


Total projected capital and investment expenditures	$	12,350	$	14,200	$	14,775

(a) Includes nuclear fuel of approximately $2.1 billion in 2024-2026.

Debt

Long-term debt maturities and the interest payable on long-term debt each represent a significant cash requirement for the Duke Energy Registrants. See Note 7 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for information regarding the Duke Energy Registrants' long-term debt at December 31, 2023, the weighted average interest rate applicable to each long-term debt category and a schedule of long-term debt maturities over the next five years. See Note 2 to the Consolidated Financial Statements, "Dispositions," for the timing and use of proceeds from the sale of certain Commercial Renewables assets to affiliates of Brookfield and ArcLight.


MD&A			LIQUIDITY AND CAPITAL RESOURCES

Fuel and Purchased Power

Fuel and purchased power includes firm capacity payments that provide Duke Energy with uninterrupted firm access to electricity transmission capacity and natural gas transportation contracts, as well as undesignated contracts and contracts that qualify as NPNS. Duke Energy’s contractual cash obligations for fuel and purchased power as of December 31, 2023, are as follows:


	Payments Due by Period
(in millions)	Total		Less than 1 year (2024)		2-3 years (2025 & 2026)		4-5 years (2027 & 2028)		More than 5 years (2029 & beyond)
Fuel and purchased power	$	19,726	$	4,831	$	6,116	$	2,991	$	5,788

Other Purchase Obligations

Other purchase obligations includes contracts for software, telephone, data and consulting or advisory services, contractual obligations for Engineering, Procurement, and Construction agreement costs for new generation plants, solar facilities, plant refurbishments, maintenance and day-to-day contract work and commitments to buy certain products. Amount excludes certain open purchase orders for services that are provided on demand for which the timing of the purchase cannot be determined. Total cash commitments for related other purchase obligation expenditures are $12,286 million, with $11,744 million expected to be paid in the next 12 months.

See Note 6 to the Consolidated Financial Statements, “Leases” for a schedule of both finance lease and operating lease payments over the next five years. See Note 10 to the Consolidated Financial Statements, “Asset Retirement Obligations” for information on nuclear decommissioning trust funding obligations and the closure of ash impoundments.

Duke Energy performs ongoing assessments of its respective guarantee obligations to determine whether any liabilities have been incurred as a result of potential increased nonperformance risk by third parties for which Duke Energy has issued guarantees. See Note 8 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further details of the guarantee arrangements. Issuance of these guarantee arrangements is not required for the majority of Duke Energy’s operations. Thus, if Duke Energy discontinued issuing these guarantees, there would not be a material impact to the consolidated results of operations, cash flows or financial position. Other than the guarantee arrangements discussed in Note 8 and off-balance sheet debt related to non-consolidated VIEs, Duke Energy does not have any material off-balance sheet financing entities or structures. For additional information, see Note 18 to the Consolidated Financial Statements, "Variable Interest Entities."

Cash and Liquidity

The Subsidiary Registrants generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Subsidiary Registrants, excluding Progress Energy, support their short-term borrowing needs through participation with Duke Energy and certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loans to affiliates participating under this arrangement. See Note 7 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for additional information on the money pool arrangement.

Duke Energy and the Subsidiary Registrants, excluding Progress Energy, may also use short-term debt, including commercial paper and the money pool, as a bridge to long-term debt financings. The levels of borrowing may vary significantly over the course of the year due to the timing of long-term debt financings and the impact of fluctuations in cash flows from operations. From time to time, Duke Energy’s current liabilities exceed current assets resulting from the use of short-term debt as a funding source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its businesses.

As of December 31, 2023, Duke Energy had approximately $253 million of cash on hand, $4.9 billion available under its $9 billion Master Credit Facility. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Refer to Notes 7 and 20 to the Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders' Equity," respectively, for information regarding Duke Energy's debt and equity issuances, debt maturities and available credit facilities including the Master Credit Facility.

Credit Facilities and Registration Statements

See Note 7 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding credit facilities and shelf registration statements available to Duke Energy and the Duke Energy Registrants.

Dividend Payments

In 2023, Duke Energy paid quarterly cash dividends for the 97th consecutive year and expects to continue its policy of paying regular cash dividends in the future. There is no assurance as to the amount of future dividends because they depend on future earnings, capital requirements, financial condition and are subject to the discretion of the Board of Directors.

Duke Energy targets a dividend payout ratio of between 60% and 70%, based upon adjusted EPS. Duke Energy increased the dividend by approximately 2% annually in both 2023 and 2022, and the Company remains committed to continued growth of the dividend.


MD&A			LIQUIDITY AND CAPITAL RESOURCES

Dividend and Other Funding Restrictions of Duke Energy Subsidiaries

As discussed in Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” Duke Energy’s public utility operating companies have restrictions on the amount of funds that can be transferred to Duke Energy through dividends, advances or loans as a result of conditions imposed by various regulators in conjunction with merger transactions. Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures and Articles of Incorporation, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Additionally, certain other Duke Energy subsidiaries have other restrictions, such as minimum working capital and tangible net worth requirements pursuant to debt and other agreements that limit the amount of funds that can be transferred to Duke Energy. At December 31, 2023, the amount of restricted net assets of subsidiaries of Duke Energy that may not be distributed to Duke Energy in the form of a loan or dividend does not exceed a material amount of Duke Energy’s net assets. Duke Energy does not have any legal or other restrictions on paying common stock dividends to shareholders out of its consolidated equity accounts. Although these restrictions cap the amount of funding the various operating subsidiaries can provide to Duke Energy, management does not believe these restrictions will have a significant impact on Duke Energy’s ability to access cash to meet its payment of dividends on common stock and other future funding obligations.

Cash Flows From Operating Activities

Cash flows from operations of EU&I and GU&I are primarily driven by sales of electricity and natural gas, respectively, and costs of operations. These cash flows from operations are relatively stable and comprise a substantial portion of Duke Energy’s operating cash flows. Weather conditions, working capital and commodity price fluctuations and unanticipated expenses including unplanned plant outages, storms, legal costs and related settlements can affect the timing and level of cash flows from operations.

As part of Duke Energy’s continued effort to improve its cash flows from operations and liquidity, Duke Energy works with vendors to improve terms and conditions, including the extension of payment terms. To support this effort, Duke Energy has a voluntary supply chain finance program (the “program”) under which suppliers, at their sole discretion, may sell their receivables from Duke Energy to the participating financial institution. The financial institution administers the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. A significant deterioration in the credit quality of Duke Energy, economic downturn or changes in the financial markets could limit the financial institutions willingness to participate in the program. Duke Energy does not believe such risk would have a material impact on our cash flows from operations or liquidity, as substantially all our payments are made outside the program.

Duke Energy believes it has sufficient liquidity resources through the commercial paper markets, and ultimately, the Master Credit Facility, to support these operations. Cash flows from operations are subject to a number of other factors, including, but not limited to, regulatory constraints, economic trends and market volatility (see Item 1A, “Risk Factors,” for additional information).

Debt and Equity Issuances

Depending on availability based on the issuing entity, the credit rating of the issuing entity, and market conditions, the Subsidiary Registrants prefer to issue first mortgage bonds and secured debt, followed by unsecured debt. This preference is the result of generally higher credit ratings for first mortgage bonds and secured debt, which typically result in lower interest costs. Duke Energy Corporation primarily issues unsecured debt.

In 2024, Duke Energy anticipates issuing additional securities of $6.9 billion through debt capital markets. In certain instances, Duke Energy may utilize instruments other than senior notes, including equity-content securities such as subordinated debt or preferred stock. Proceeds will primarily be for the purpose of funding capital expenditures and debt maturities. See to Note 7 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt issuances. In addition, in order to fund incremental growth capital, Duke Energy plans to issue $500 million of common stock equity per year through 2028 through the dividend reinvestment and ATM programs.

Duke Energy’s capitalization is balanced between debt and equity as shown in the table below.


	Projected 2024		Actual 2023		Actual 2022
Equity	38	%	39	%	41	%
Debt	62	%	61	%	59	%

Restrictive Debt Covenants

Duke Energy’s debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio to not exceed 65% for each borrower, excluding Piedmont, and 70% for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements or sublimits thereto. The Duke Energy Registrants were in compliance with all other covenants related to their debt agreements as of December 31, 2023. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.


MD&A			LIQUIDITY AND CAPITAL RESOURCES

Credit Ratings

Moody’s Investors Service, Inc. and S&P provide credit ratings for various Duke Energy Registrants. The following table includes Duke Energy and certain subsidiaries’ credit ratings and ratings outlook as of February 2024.

Moody's

S&P

Duke Energy Corporation

Stable

Issuer Credit Rating

Baa2

BBB+

Senior Unsecured Debt

Baa2

BBB

Junior Subordinated Debt/Preferred Stock

Baa3

BBB-

Commercial Paper

P-2

A-2

Duke Energy Carolinas

Stable

Senior Secured Debt

Aa3

Senior Unsecured Debt

BBB+

Progress Energy

Stable

Senior Unsecured Debt

Baa1

BBB

Duke Energy Progress

Stable

Senior Secured Debt

Aa3

Duke Energy Florida

Stable

Senior Secured Debt

Senior Unsecured Debt

BBB+

Duke Energy Ohio

Stable

Senior Secured Debt

Senior Unsecured Debt

Baa1

BBB+

Duke Energy Indiana

Stable

Senior Secured Debt

Aa3

Senior Unsecured Debt

BBB+

Duke Energy Kentucky

Negative

Stable

Senior Unsecured Debt

Baa1

BBB+

Piedmont Natural Gas

Stable

Senior Unsecured

BBB+

Credit ratings are intended to provide credit lenders a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold. The Duke Energy Registrants’ credit ratings are dependent on the rating agencies’ assessments of their ability to meet their debt principal and interest obligations when they come due. If, as a result of market conditions or other factors, the Duke Energy Registrants are unable to maintain current balance sheet strength, or if earnings and cash flow outlook materially deteriorates, credit ratings could be negatively impacted.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows for the two most recently completed fiscal years.


	Years Ended December 31,


(in millions)	2023		2022
Cash flows provided by (used in):
Operating activities	$	9,878	$	5,927
Investing activities	(12,475)		(11,973)
Financing activities	2,351		6,129

Net (decrease) increase in cash, cash equivalents and restricted cash	(246)		83
Cash, cash equivalents and restricted cash at beginning of period	603		520
Cash, cash equivalents and restricted cash at end of period	$	357	$	603


MD&A			LIQUIDITY AND CAPITAL RESOURCES

OPERATING CASH FLOWS

The following table summarizes key components of Duke Energy’s operating cash flows for the two most recently completed fiscal years.


	Years Ended December 31,


(in millions)	2023		2022		Variance
Net income	$	2,874	$	2,455	$	419
Non-cash adjustments to net income	7,486		7,362		124
Contributions to qualified pension plans	(100)		(58)		(42)
Payments for AROs	(632)		(584)		(48)


Working capital	(1,248)		(2,081)		833
Other assets and Other liabilities	1,498		(1,167)		2,665
Net cash provided by operating activities	$	9,878	$	5,927	$	3,951

The variance was driven primarily by:

•a $2,665 million increase in cash inflows from Other assets and Other liabilities and an $833 million decrease in cash outflows from Working capital, both of which are primarily due to the recovery of deferred fuel costs and the timing of accruals and payments in other working capital accounts; and

•a $543 million increase in net income, after adjustment for non-cash items, primarily due to growth from riders and other retail margin, favorable rate case impacts, lower operations and maintenance expense and lower tax expense; partially offset by higher interest expense, unfavorable weather and lower volumes.

INVESTING CASH FLOWS

The following table summarizes key components of Duke Energy’s investing cash flows for the two most recently completed fiscal years.


	Years Ended December 31,


(in millions)	2023		2022		Variance
Capital, investment and acquisition expenditures, net of return of investment capital	$	(12,622)	$	(11,419)	$	(1,203)
Debt and equity securities, net	63		90		(27)
Proceeds from the sales of Commercial Renewables Disposal Groups and other assets, net of cash divested	883		83		800

Other investing items	(799)		(727)		(72)
Net cash used in investing activities	$	(12,475)	$	(11,973)	$	(502)

The variance relates primarily to an increase in capital expenditures due to higher investments in EU&I, partially offset by the net proceeds received from the sales of Commercial Renewable Disposal Groups and other assets. The primary use of cash related to investing activities is typically capital, investment and acquisition expenditures, net of return of investment capital, detailed by reportable business segment in the following table.


	Years Ended December 31,


(in millions)	2023		2022		Variance
Electric Utilities and Infrastructure	$	10,135	$	8,985	$	1,150
Gas Utilities and Infrastructure	1,492		1,295		197

Other	995		1,139		(144)
Total capital, investment and acquisition expenditures, net of return of investment capital	$	12,622	$	11,419	$	1,203

FINANCING CASH FLOWS

The following table summarizes key components of Duke Energy’s financing cash flows for the two most recently completed fiscal years.


	Years Ended December 31,


(in millions)	2023		2022		Variance


Issuances of long-term debt, net	$	5,291	$	7,478	$	(2,187)
Notes payable and commercial paper	142		574		(432)
Dividends paid	(3,244)		(3,179)		(65)

Contributions from noncontrolling interests	278		1,377		(1,099)
Other financing items	(116)		(121)		5
Net cash provided by financing activities	$	2,351	$	6,129	$	(3,778)


MD&A			LIQUIDITY AND CAPITAL RESOURCES

The variance was driven primarily by:

•a $2,187 million decrease in proceeds from net issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term debt;

•a $1,099 million decrease in contributions from noncontrolling interests, primarily due to a $1.03 billion receipt from an affiliate of GIC in 2022 related to an additional indirect minority interest investment in Duke Energy Indiana; and

•a $432 million decrease in net borrowings of notes payable and commercial paper.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management Policies

The Enterprise Risk Management policy framework at Duke Energy includes strategic, operational, project execution and financial or transaction related risks. Enterprise Risk Management includes market risk as part of the financial and transaction related risks in its framework.

Duke Energy is exposed to market risks associated with commodity prices, interest rates and equity prices. Duke Energy has established comprehensive risk management policies to monitor and manage these market risks. Duke Energy’s Chief Executive Officer and Chief Financial Officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The Finance and Risk Management Committee of the Board of Directors receives periodic updates from the Chief Risk Officer and other members of management on market risk positions, corporate exposures and overall risk management activities. The Chief Risk Officer is responsible for the overall governance of managing commodity price risk, including monitoring exposure limits.

The following disclosures about market risk contain forward-looking statements that involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. See Item 1A, “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Information” for a discussion of the factors that may impact any such forward-looking statements made herein.

Commodity Price Risk

Price risk represents the potential risk of loss from adverse changes in the market price of electricity or other energy commodities. Duke Energy’s exposure to commodity price risk is influenced by a number of factors, including the effects of regulation, commodity contract size and length, market liquidity, market conditions, location and unique or specific contract terms. Duke Energy is exposed to the impact of market fluctuations in the prices of electricity, coal, natural gas and other energy-related products marketed and purchased as a result of its ownership of energy-related assets.

Duke Energy’s exposure to these fluctuations through its regulated utility operations is limited since these operations are subject to cost-based regulation and are typically allowed to recover substantially all of these costs through various cost recovery clauses, including fuel clauses, formula-based contracts, or other cost-sharing mechanisms. While there may be a delay in timing between when these costs are incurred and when they are recovered through rates, changes from year to year generally do not have a material impact on operating results of these regulated operations.

Duke Energy employs established policies and procedures to manage risks associated with these market fluctuations, which may include using various commodity derivatives, such as swaps, futures, forwards and options. For additional information, see Note 15 to the Consolidated Financial Statements, “Derivatives and Hedging.”

Generation Portfolio Risks

For the EU&I segment, the generation portfolio not utilized to serve retail operations or committed load is subject to commodity price fluctuations. However, the impact on the Consolidated Statements of Operations is limited due to mechanisms in these regulated jurisdictions that result in the sharing of most of the net profits from these activities with retail customers.

Hedging Strategies

Duke Energy monitors risks associated with commodity price changes on its future operations and, where appropriate, uses various commodity instruments such as electricity, coal and natural gas hedging contracts and options to mitigate the effect of such fluctuations on operations. Duke Energy’s primary use of energy commodity derivatives is to hedge against exposure to the prices of power, fuel for generation and natural gas for customers.

Duke Energy also manages its exposure to basis risk through the use of congestion hedge products in RTOs such as financial transmission rights (PJM and MISO), which result in payments based on differentials in locational marginal prices. The majority of instruments used to manage Duke Energy’s commodity price exposure are either not designated as hedges or do not qualify for hedge accounting. These instruments are referred to as undesignated contracts. Mark-to-market changes for undesignated contracts entered into by regulated businesses are reflected as regulatory assets or liabilities on the Consolidated Balance Sheets.

Duke Energy may also enter into other contracts that qualify for the NPNS exception. When a contract meets the criteria to qualify as NPNS, Duke Energy applies such exception. Income recognition and realization related to NPNS contracts generally coincide with the physical delivery of the commodity. For contracts qualifying for the NPNS exception, no recognition of the contract’s fair value in the Consolidated Financial Statements is required until settlement of the contract as long as the transaction remains probable of occurring.


MD&A			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Duke Energy is exposed to risk resulting from changes in interest rates as a result of its issuance or anticipated issuance of variable and fixed-rate debt and commercial paper. Duke Energy manages interest rate exposure by limiting variable-rate exposures to a percentage of total debt and by monitoring the effects of market changes in interest rates. Duke Energy also enters into financial derivative instruments, which may include instruments such as, but not limited to, interest rate swaps, swaptions and U.S. Treasury lock agreements to manage and mitigate interest rate risk exposure. See Notes 1, 7, 15 and 17 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” “Debt and Credit Facilities,” “Derivatives and Hedging,” and “Fair Value Measurements.”

Duke Energy had $8.0 billion of unhedged long- and short-term floating interest rate exposure at December 31, 2023. The impact of a 100-basis point change in interest rates on pretax income is approximately $80 million at December 31, 2023. This amount was estimated by considering the impact of the hypothetical interest rates on variable-rate securities outstanding, adjusted for interest rate hedges as of December 31, 2023.

Foreign Currency Exchange Risk

Duke Energy is exposed to risk resulting from changes in the foreign currency exchange rates as a result of its issuances of long-term debt denominated in a foreign currency. Duke Energy manages foreign currency exchange risk exposure by entering into cross-currency swaps, a type of financial derivative instrument, which mitigate foreign currency exchange exposure. See Notes 7, 15 and 17 to the Consolidated Financial Statements, “Debt and Credit Facilities,” “Derivatives and Hedging” and “Fair Value Measurements," respectively.

Credit Risk

Credit risk represents the loss that the Duke Energy Registrants would incur if a counterparty fails to perform under its contractual obligations. Where exposed to credit risk, the Duke Energy Registrants analyze the counterparty's financial condition prior to entering into an agreement and monitor exposure on an ongoing basis. The Duke Energy Registrants establish credit limits where appropriate in the context of contractual arrangements and monitor such limits.

To reduce credit exposure, the Duke Energy Registrants seek to include netting provisions with counterparties, which permit the offset of receivables and payables with such counterparties. The Duke Energy Registrants also frequently use master agreements with credit support annexes to further mitigate certain credit exposures. The master agreements provide for a counterparty to post cash or letters of credit to the exposed party for exposure in excess of an established threshold. The threshold amount represents a negotiated unsecured credit limit for each party to the agreement, determined in accordance with the Duke Energy Registrants’ internal corporate credit practices and standards. Collateral agreements generally also provide that the failure to post collateral when required is sufficient cause to terminate transactions and liquidate all positions.

The Duke Energy Registrants also obtain cash, letters of credit, or surety bonds from certain counterparties to provide credit support outside of collateral agreements, where appropriate, based on a financial analysis of the counterparty and the regulatory or contractual terms and conditions applicable to each transaction. See Note 15 to the Consolidated Financial Statements, “Derivatives and Hedging,” for additional information regarding credit risk related to derivative instruments.

The Duke Energy Registrants’ principal counterparties for its electric and natural gas businesses are RTOs, distribution companies, municipalities, electric cooperatives and utilities located throughout the U.S. Exposure to these entities consists primarily of amounts due to Duke Energy Registrants for delivered electricity. Additionally, there may be potential risks associated with remarketing of energy and capacity in the event of default by wholesale power customers. The Duke Energy Registrants have concentrations of receivables from certain of such entities that may affect the Duke Energy Registrants’ credit risk.

The Duke Energy Registrants are also subject to credit risk from transactions with their suppliers that involve prepayments or milestone payments in conjunction with outsourcing arrangements, major construction projects and certain commodity purchases. The Duke Energy Registrants’ credit exposure to such suppliers may take the form of increased costs or project delays in the event of nonperformance. The Duke Energy Registrants' frequently require guarantees or letters of credit from suppliers to mitigate this credit risk.

Credit risk associated with the Duke Energy Registrants’ service to residential, commercial and industrial customers is generally limited to outstanding accounts receivable. The Duke Energy Registrants mitigate this credit risk by requiring tariff customers to provide a cash deposit, letter of credit or surety bond until a satisfactory payment history is established, subject to the rules and regulations in effect in each retail jurisdiction at which time the deposit is typically refunded. Charge-offs for retail customers have historically been insignificant to the operations of the Duke Energy Registrants and are typically recovered through retail rates. Management continually monitors customer charge-offs, payment patterns and the impact of current economic conditions on customers' ability to pay their outstanding balance to ensure the adequacy of bad debt reserves.

In response to the COVID-19 pandemic that began in March 2020, the Duke Energy Registrants announced a suspension of disconnections for nonpayment to assist customers during the national emergency. While disconnections have resumed, the Company continued to offer flexible options to customers struggling with the pandemic and the economic fallout, including extended payment arrangements to satisfy delinquent balances through June 2021. Since then, the Company has resumed standard payment arrangement options. As a result, the Duke Energy Registrants experienced higher charge-offs during 2023, but lower utility account balances in arrears as of December 31, 2023. There is an expectation for the higher levels of charge-offs to continue. The Duke Energy Registrants have reserved for these estimated losses in the allowance for doubtful account balance. See Notes 4 and 19 to the Consolidated Financial Statements, "Regulatory Matters" and "Revenue," respectively, for more information. Duke Energy Ohio and Duke Energy Indiana sell certain of their accounts receivable and related collections through CRC, a Duke Energy consolidated VIE. Losses on collection are first absorbed by the equity of CRC and next by the subordinated retained interests held by Duke Energy Ohio, Duke Energy Kentucky and Duke Energy Indiana. See Note 18 to the Consolidated Financial Statements, “Variable Interest Entities.”

The Duke Energy Registrants provide certain non-tariff services, primarily to large commercial and industrial customers in which incurred costs, including invested capital, are intended to be recovered from the individual customer and therefore are not subject to rate recovery in the event of customer default. Customer creditworthiness is assessed prior to entering into these transactions. Credit concentration related to these transactions exists for certain of these customers.


MD&A			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. See Note 5 to the Consolidated Financial Statements, "Commitments and Contingencies" for information on asbestos-related injuries and damages claims.

The Duke Energy Registrants also have credit risk exposure through issuance of performance and financial guarantees, letters of credit and surety bonds on behalf of less than wholly owned entities and third parties. Where the Duke Energy Registrants have issued these guarantees, it is possible that they could be required to perform under these guarantee obligations in the event the obligor under the guarantee fails to perform. Where the Duke Energy Registrants have issued guarantees related to assets or operations that have been disposed of via sale, they attempt to secure indemnification from the buyer against all future performance obligations under the guarantees. See Note 8 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further information on guarantees issued by the Duke Energy Registrants.

Duke Energy is subject to credit risk from transactions with counterparties to cross-currency swaps related to future interest and principal payments. The credit exposure to such counterparties may take the form of higher costs to meet Duke Energy's future euro-denominated interest and principal payments in the event of counterparty default. Duke Energy selects highly rated banks as counterparties and allocates the hedge for each debt issuance across multiple counterparties. The master agreements with the counterparties impose collateral requirements on the parties in certain circumstances indicative of material deterioration in a party's creditworthiness.

Based on the Duke Energy Registrants’ policies for managing credit risk, their exposures and their credit and other reserves, the Duke Energy Registrants do not currently anticipate a materially adverse effect on their consolidated financial position or results of operations as a result of nonperformance by any counterparty.

Marketable Securities Price Risk

As described further in Note 16 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” Duke Energy invests in debt and equity securities as part of various investment portfolios to fund certain obligations. The vast majority of investments in equity securities are within the NDTF and assets of the various pension and other post-retirement benefit plans.

Pension Plan Assets

Duke Energy maintains investments to facilitate funding the costs of providing non-contributory defined benefit retirement and other post-retirement benefit plans. These investments are exposed to price fluctuations in equity markets and changes in interest rates. The equity securities held in these pension plans are diversified to achieve broad market participation and reduce the impact of any single investment, sector or geographic region. Duke Energy has established asset allocation targets for its pension plan holdings, which take into consideration the investment objectives and the risk profile with respect to the trust in which the assets are held. See Note 23 to the Consolidated Financial Statements, “Employee Benefit Plans,” for additional information regarding investment strategy of pension plan assets.

A significant decline in the value of plan asset holdings could require Duke Energy to increase funding of its pension plans in future periods, which could adversely affect cash flows in those periods. Additionally, a decline in the fair value of plan assets, absent additional cash contributions to the plan, could increase the amount of pension cost required to be recorded in future periods, which could adversely affect Duke Energy’s results of operations in those periods.

Nuclear Decommissioning Trust Funds

As required by the NRC, NCUC, PSCSC and FPSC, subsidiaries of Duke Energy maintain trust funds to fund the costs of nuclear decommissioning. As of December 31, 2023, these funds were invested primarily in domestic and international equity securities, debt securities, cash and cash equivalents and short-term investments. Per the NRC, Internal Revenue Code, NCUC, PSCSC and FPSC requirements, these funds may be used only for activities related to nuclear decommissioning. These investments are exposed to price fluctuations in equity markets and changes in interest rates. Duke Energy actively monitors its portfolios by benchmarking the performance of its investments against certain indices and by maintaining, and periodically reviewing, target allocation percentages for various asset classes.

Accounting for nuclear decommissioning recognizes that costs are recovered through retail and wholesale rates; therefore, fluctuations in investment prices do not materially affect the Consolidated Statements of Operations, as changes in the fair value of these investments are primarily deferred as regulatory assets or regulatory liabilities pursuant to Orders by the NCUC, PSCSC, FPSC and FERC. Earnings or losses of the funds will ultimately impact the amount of costs recovered through retail and wholesale rates. See Note 10 to the Consolidated Financial Statements, “Asset Retirement Obligations,” for additional information regarding nuclear decommissioning costs. See Note 16 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” for additional information regarding NDTF assets.

OTHER MATTERS

Environmental Regulations

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

The following sections outline various proposed and recently enacted legislation and regulations that may impact the Duke Energy Registrants. Refer to Note 4 to the Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.


MD&A			OTHER MATTERS

Greenhouse Gas Standards and Guidelines

On May 23, 2023, the EPA published in the Federal Register proposed new source performance standards under Clean Air Act (CAA) section 111(b) that would establish standards of performance for emissions of greenhouse gases (expressed as carbon dioxide (CO2)) for newly constructed, modified, and reconstructed fossil fuel-fired electric utility steam generating units and fossil fuel-fired stationary combustion turbines. On that same day, in a separate rulemaking under CAA section 111(d), the EPA published proposed emission guidelines for states to use in developing plans to limit CO2 emissions from existing fossil fuel-fired electric generating units and certain large existing stationary combustion turbines. Duke Energy is reviewing the proposed rules and analyzing the potential impacts they could have on the Company, which could be material. A final rule is anticipated in the second quarter of 2024.

Coal Combustion Residuals

In April 2015, EPA published a rule to regulate the disposal of CCR from electric utilities as solid waste. The federal regulation classifies CCR as nonhazardous waste and allows for beneficial use of CCR with some restrictions. The regulation applies to all new and existing landfills, new and existing surface impoundments receiving CCR and existing surface impoundments located at stations generating electricity (regardless of fuel source), which were no longer receiving CCR but contained liquids as of the effective date of the rule. The rule establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures to ensure the safe disposal and management of CCR.

On May 18, 2023, the EPA published in the Federal Register a proposed rule under the Resource Conservation and Recovery Act, which would establish regulatory requirements for inactive surface impoundments at inactive generating facilities (Legacy CCR Surface Impoundments) and establish groundwater monitoring, corrective action, closure and post-closure care requirements for all CCR management units at facilities otherwise subject to the CCR rule. Duke Energy is reviewing the proposed rule and analyzing the potential impacts it could have on the Company, which could be material. A final rule is anticipated in the second quarter of 2024.

In addition to the requirements of the federal CCR rule, CCR landfills and surface impoundments will continue to be regulated by the states. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions and via wholesale contracts, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. For more information, see Notes 4 and 10 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations," respectively.

Coal Ash Act

AROs recorded on the Duke Energy Carolinas and Duke Energy Progress Consolidated Balance Sheets at December 31, 2023, and December 31, 2022, include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of the Coal Ash Act, the EPA CCR rule and other agreements. The Coal Ash Act includes a variance procedure for compliance deadlines and other issues surrounding the management of CCR and CCR surface impoundments and prohibits cost recovery in customer rates for unlawful discharge of ash impoundment waters occurring after January 1, 2014. The Coal Ash Act leaves the decision on cost recovery determinations related to closure of ash impoundments to the normal ratemaking processes before utility regulatory commissions.

Consistent with the requirements of the Coal Ash Act, Duke Energy previously submitted comprehensive site assessments and groundwater corrective action plans to NCDEQ. On December 31, 2019, Duke Energy submitted updated groundwater corrective action plans for six sites in North Carolina and site-specific coal ash impoundment closure plans for all 14 North Carolina sites to NCDEQ. In addition, from 2020 through 2023, Duke Energy submitted updated comprehensive site assessments and groundwater corrective action plans for the remaining North Carolina sites.

On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments at the Allen, Belews Creek, J.E. Rogers, Marshall, Mayo and Roxboro facilities in North Carolina. On April 26, 2019, Duke Energy Carolinas and Duke Energy Progress filed Petitions for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's April 1 Order. On December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas and Duke Energy Progress agreed to excavate six of the nine remaining coal ash basins at these sites with ash moved to on-site lined landfills, including two at Allen, one at Mayo, one at Roxboro, and two at Rogers. At the three remaining basins at Belews Creek, Marshall and Roxboro, uncapped basin ash will be excavated and moved to lined landfills. Those portions of the basins at Belews Creek, Marshall and Roxboro, which were previously filled with ash and on which permitted facilities were constructed, will not be disturbed and will be closed pursuant to other state regulations.

The estimated total cost to permanently close all coal ash basins in North Carolina and South Carolina is estimated to be approximately $7 billion to $8 billion of which approximately $4 billion has been spent through 2023. The majority of the remaining spend is primarily expected to occur over the next 10 years. Duke Energy has completed excavation of all coal ash at the Riverbend, Dan River, Asheville and Sutton plants.

For further information on coal ash basins and recovery, see Notes 4 and 10 to the Consolidated Financial Statements, "Regulatory Matters" and “Asset Retirement Obligations,” respectively.

North Carolina House Bill 951

On October 13, 2021, HB 951 was signed into law, establishing a framework overseen by the NCUC to advance state CO2 emission reductions from electric generating facilities in the state through the use of least cost planning while providing for continued reliability and affordable rates for customers served by such generation. It also authorized the use of PBR in North Carolina. Among other things, HB 951 required the NCUC to:

•develop a carbon plan that would target a 70% interim reduction in CO2 emissions from public utilities' electric generation in the state on the least cost path to carbon neutrality by 2050, considering all resource options and the latest technology;

•adopt rules to implement the requirements of the Legislation authorizing PBR that includes MYRP with a maximum three-year term, performance incentive mechanisms to track utility performance, and revenue decoupling for the residential customer class;


MD&A			OTHER MATTERS

•establish rules to securitize costs associated with the early retirement of subcritical coal-fired electric generating facilities necessary to achieve the authorized carbon reduction goals at 50% of remaining net book value, with the remaining net book value recovered through normal cost-of-service basis; and

•initiate a process for updating rates and terms of certain existing solar PPAs executed under PURPA.

In October 2022 and January 2023, Duke Energy Progress and Duke Energy Carolinas, respectively, filed applications with the NCUC, which proposed implementation of HB 951’s provisions around PBR, including MYRP, residential decoupling and performance incentive mechanisms. Additionally, on December 30, 2022, the NCUC issued an order adopting the first Carbon Plan as directed by the Legislation with the Carbon Plan to be updated every two years thereafter. With this order, the NCUC recognized the value of an “all of the above” approach to achieving CO2 emission reductions and established a set of near-term procurement and development activities needed to continue progress towards the targeted CO2 reductions, along with the schedule for the future biennial updates to the Carbon Plan. The NCUC approved a near-term action plan including stakeholder engagement activities for onshore wind generation and certain procurement and development activities to strengthen the grid, improve resilience for customers and interconnect new generation and storage (in all cases, subject to any further applicable regulatory processes). The NCUC also approved early development activities for long lead-time resources, affirmed the ownership structure required in HB 951, and provided an orderly transition out of coal generation by 2035.

In August 2023 and December 2023, the NCUC issued orders approving Duke Energy Progress' and Duke Energy Carolinas' PBR Applications, respectively, as modified by the partial settlements and the orders. See Note 4, "Regulatory Matters" to the Consolidated Financial Statements for more information.

Other Environmental Regulations

The Duke Energy Registrants are also subject to various federal, state and local laws regarding air and water quality, hazardous and solid waste disposal and other environmental matters. Duke Energy continues to comply with enacted environmental statutes and regulations even as certain of these regulations are in various stages of clarification, revision or legal challenge. The Duke Energy Registrants cannot predict the outcome of these matters.

Global Climate Change and Regulation of GHG Emissions

In 2021, President Biden recommitted the United States to the Paris Agreement and announced a new target for the United States of 50% to 52% reduction in economywide net GHG emissions from 2005 levels by 2030. The U.S. submittal to support this Paris target includes a goal for 100% carbon-free electricity by 2035. These actions have been supplemented by a number of executive orders by President Biden and a number of proposed and final rules from federal regulatory agencies, including the EPA, that would impose additional regulations on CO2 and methane emissions to which Duke Energy will be subject. The Duke Energy Registrants are monitoring these matters and cannot predict the outcome, however, there could be a material impact on our clean energy transition.

EU&I CO2 Emissions Reductions

The Duke Energy Registrants’ direct GHG emissions consist primarily of CO2 that results primarily from operating a fleet of coal-fired and natural gas-fired power plants to serve its customers reliably and affordably. In 2019, Duke Energy announced an updated climate strategy with new goals of at least a 50% reduction in carbon emissions from 2005 levels from electric generation by 2030 and net-zero carbon emissions from electric generation by 2050. In February 2022, we added Scope 2 and certain Scope 3 emissions, including emissions from upstream purchased power and fossil fuel purchases, as well as downstream customer use of natural gas, to our 2050 net-zero goal. In October 2022, we announced an additional interim target to reduce carbon emissions from electric generation by 80% from 2005 levels by 2040. Duke Energy also adopted an interim goal of reducing Scope 2 and Scope 3 emissions mentioned above by 50% below 2021 levels by 2035.

The Duke Energy Registrants have taken actions that have resulted in a reduction of CO2 emissions over time. Between 2005 and 2023, the Duke Energy Registrants have collectively lowered the CO2 emissions from their electricity generation by 48%. Timelines and initiatives, as well as implementation of new technologies, for future reductions of GHG emissions will vary in each state in which the Company operates and will involve collaboration with regulators, customers and other stakeholders. The goals announced in 2019, and updated in 2022, as well as the actions taken to reduce CO2 emissions, potentially lower the exposure to any future mandatory CO2 emission reduction requirements, whether as a result of federal legislation, EPA regulation, state regulation or other as yet unknown emission reduction requirement.

Actions to reduce CO2 emissions have included the retirement of 56 coal-fired electric generating units with a combined generating capacity of 7,500 MW, while investing in renewables and state-of-the-art highly efficient natural gas-fired generation that produces far fewer CO2 emissions per unit of electricity generated than coal. Duke Energy also has made investments to increase EE offerings and ensure continued operations of its zero-CO2 emissions hydropower and nuclear plants. These efforts have diversified its system and significantly reduced CO2 emissions.

Duke Energy will continue to explore the use of currently available and commercially demonstrated technology to reduce CO2 emissions, including EE, wind, solar and storage, as well as evolving technologies like carbon capture, utilization and storage, the use of hydrogen and other low-carbon fuels, long-duration energy storage and advanced nuclear, in its efforts to achieve its net-zero goal as well as to comply with any future regulations. Duke Energy plans to adjust to and incorporate evolving and innovative technologies in a way that balances the reliability and affordability of energy while meeting regulatory requirements and customer demands. Under any future scenario involving mandatory CO2 limitations, the Duke Energy Registrants would plan to seek recovery of their compliance costs through appropriate regulatory mechanisms. Future levels of GHG emissions by the Duke Energy Registrants will be influenced by variables that include customer growth and capacity needs in the jurisdictions in which they operate, public policy, tax incentives, economic conditions that affect electricity demand, fuel prices, market prices, availability of resources and labor, compliance with new or existing regulations, the ability to make enhancements to transmission and distribution systems to support increased renewables, and the existence of new technologies that can be deployed to generate the electricity necessary to meet customer demand.

Currently, the Duke Energy Registrants do not purchase carbon credits or offsets for use in connection with the Company's net-zero CO2 emissions goals. Though they may purchase carbon credits or offsets for such uses in the future, the amount or cost of which is not expected to be material at this time.


MD&A			OTHER MATTERS

Generation Mix Planning Process

The Duke Energy Registrants annually, biennially or triennially prepare lengthy, forward-looking IRPs. These detailed, highly technical plans are based on the Company’s thorough analysis of numerous factors that can impact the cost of producing and delivering electricity that influence long-term generation resource planning decisions. The IRP process helps to evaluate a range of options, taking into account stakeholder input as well as forecasts of future electricity demand, fuel prices, transmission improvements, new generating capacity, integration of renewables, energy storage, EE and demand response initiatives. The IRP process also helps evaluate potential environmental and regulatory scenarios to better mitigate policy and economic risks. The IRPs we file with regulators look out 10 to 20 years depending on the jurisdiction.

For a number of years, the Duke Energy Registrants have included a price on CO2 emissions in their IRP planning process to account for the potential regulation of CO2 emissions. Incorporating a price on CO2 emissions in the IRPs allows for the evaluation of existing and future resource needs against potential climate change policy risk in the absence of policy certainty. One of the challenges with using a CO2 price, especially in the absence of a clear and certain policy, is determining the appropriate price to use. To address this uncertainty and ensure the Company remains agile, the Duke Energy Registrants typically use a range of potential CO2 prices to reflect a range of potential policy outcomes.

In September 2020, Duke Energy Carolinas and Duke Energy Progress filed their IRPs in North Carolina and South Carolina, and, in December 2021, Duke Energy Indiana filed its IRP, outlining an accelerated energy transition, which aligns with the Company's 2030 CO2 emissions goal. In December 2021, the PSCSC rejected Duke Energy Carolinas and Duke Energy Progress’ preferred accelerated coal retirements IRP scenario and instead found that the base case without a price on CO2 emissions was the most reasonable IRP scenario.

In 2021, the state of North Carolina passed HB 951, which among other things, directed the NCUC to develop and approve a carbon reduction plan by the end of 2022 that would target a 70% reduction in CO2 emissions from Duke Energy Progress' and Duke Energy Carolinas' electric generation in the state by 2030 and carbon neutrality by 2050, considering all resource options and the latest technology. In light of this legislation, in November 2021, the NCUC declined to make a determination on the portfolios presented in the 2020 IRP noting that the legislation may impact the schedule for coal plant retirements and new resources and limited its order to short-term actions for use on an interim basis pending preparation of the carbon plan. The NCUC approved its initial carbon reduction plan in December 2022, which considered feedback from extensive stakeholder engagement and was informed by Duke Energy's initial proposed carbon plan, filed with the NCUC on May 16, 2022, and built on the IRPs that were filed in 2020 by Duke Energy Carolinas and Duke Energy Progress.

In August 2023, Duke Energy Carolinas and Duke Energy Progress filed their 2023 systemwide Carolinas Resource Plan (the Plan) with the NCUC and PSCSC. The Plan provided a range of generation options, including three core portfolios, reflecting an “all of the above” approach to powering the energy needs of our growing region. In the Plan, Duke Energy Carolinas and Duke Energy Progress recommended Portfolio 3 as the most prudent path forward to comply with applicable state laws, providing a reliable and orderly energy transition that was proposed as the most reasonable and lowest-cost plan for the Carolinas. Portfolio 3 proposes a diverse and reliable set of generation and energy storage solutions and shrinks the challenges of growth and the transition from coal by expanding industry-leading EE and demand response options, laying out a path to reliably exit coal by 2035. Portfolio 3 also makes the most of existing system resources by extending the lives of Duke Energy’s nuclear plants and extending the license and doubling the peak hourly capacity of the Bad Creek pumped-hydro storage facility. Near-term actions consistent with Portfolio 3 were also proposed that will be executed between now and 2026 to advance the orderly energy transition. In November 2023, Duke Energy Carolinas and Duke Energy Progress provided notice to the NCUC and PSCSC of a substantially increased load forecast resulting from increased economic development in the Carolinas occurring since the system-wide Plan was prepared. The companies filed supplemental modeling and analysis with the NCUC and PSCSC in January 2024, demonstrating the need for additional resources beyond the initial set of resources identified by the companies in their initial plan. The NCUC has scheduled an evidentiary hearing for July 2024, with an order expected by the end of 2024. The PSCSC will hold its hearing in September 2024 with a decision expected in late November 2024.

GU&I CO2 and Methane Emissions Reductions

In addition to CO2 emissions resulting primarily from our operations of coal-fired and natural gas-fired power plants, the Duke Energy Registrants are also responsible for certain methane emissions from the distribution of natural gas to customers. In October 2020, Duke Energy announced a new goal to achieve net-zero methane emissions from its natural gas distribution business by 2030. The Duke Energy Registrants have taken actions that have resulted in methane emission reductions, including the replacement of cast iron and bare steel pipelines and associated services with plastic or coated steel, advanced methane leak detection efforts, reducing time to repair nonhazardous leaks and operational releases of methane, and investment in renewable natural gas.

Timelines and initiatives, as well as implementation of new technologies, for future reductions of upstream methane emissions will vary in each state in which the Company’s natural gas distribution business operates and will involve collaboration with regulators, customers and other stakeholders. EPA has also proposed regulations that would require reduction of methane emissions upstream of the Duke Energy Registrants' natural gas distribution business. The impact of these regulations on natural gas fuel prices is not currently quantifiable.

In addition to possible EPA regulation of methane emissions, certain local governments, none within the jurisdictions in which the Duke Energy Registrants operate, have enacted or are considering initiatives to eliminate natural gas use in new buildings and focus on electrification. Enactment of similar regulations in the areas in which the Duke Energy Registrants' natural gas distribution operates could have a significant impact on the natural gas distribution business and its operations. At this time, such impacts are not able to be quantified; however, the net-zero methane goals announced in 2020 for the natural gas distribution business, as well as the actions taken to reduce these GHG emissions, potentially lowers the exposure to any future mandatory GHG emission reduction requirements. The Duke Energy Registrants would plan to seek recovery of their compliance costs with any new regulations through the regulatory process.


MD&A			OTHER MATTERS

Physical Impacts of Climate Change

The Duke Energy Registrants recognize that scientists associate severe weather events with increasing levels of GHGs in the atmosphere. It is possible that these weather events could have a material impact on future results of operations should they occur more frequently and with greater severity. However, the uncertain nature of potential changes in extreme weather events (such as increased frequency, duration and severity), the long period of time over which any potential changes might take place and the inability to predict potential changes with any degree of accuracy, make estimating with any certainty any potential future financial risk to the Duke Energy Registrants’ operations difficult. Additionally, the Duke Energy Registrants would plan to continue to seek recovery of storm costs through the appropriate regulatory mechanisms. For more information on storm securitization and storm cost recovery, see Note 4 to the Consolidated Financial Statements, "Regulatory Matters."

The Duke Energy Registrants routinely take steps to reduce the potential impact of severe weather events on their electric transmission and distribution systems and natural gas facilities. The steps include modernizing the electric grid through smart meters, storm hardening, self-healing systems and targeted undergrounding and applying lessons learned from previous storms to restoration efforts. The Duke Energy Registrants’ electric generating facilities and natural gas facilities are designed to withstand extreme weather events without significant damage. The Duke Energy Registrants maintain inventories of coal, oil and liquified natural gas to mitigate the effects of any potential short-term disruption in fuel supply so they can continue to provide customers with an uninterrupted supply of electricity and/or natural gas.

New Accounting Standards

See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Quantitative and Qualitative Disclosures About Market Risk.”


FINANCIAL STATEMENTS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Duke Energy
Report of Independent Registered Public Accounting Firm			74
Consolidated Statements of Operations			77
Consolidated Statements of Comprehensive Income			78
Consolidated Balance Sheets			79
Consolidated Statements of Cash Flows			80
Consolidated Statements of Changes in Equity			81

Duke Energy Carolinas
Report of Independent Registered Public Accounting Firm			82
Consolidated Statements of Operations and Comprehensive Income			84
Consolidated Balance Sheets			85
Consolidated Statements of Cash Flows			86
Consolidated Statements of Changes in Equity			87

Progress Energy
Report of Independent Registered Public Accounting Firm			88
Consolidated Statements of Operations and Comprehensive Income			90
Consolidated Balance Sheets			91
Consolidated Statements of Cash Flows			92
Consolidated Statements of Changes in Equity			93

Duke Energy Progress
Report of Independent Registered Public Accounting Firm			94
Consolidated Statements of Operations and Comprehensive Income			96
Consolidated Balance Sheets			97
Consolidated Statements of Cash Flows			98
Consolidated Statements of Changes in Equity			99

Duke Energy Florida
Report of Independent Registered Public Accounting Firm			100
Consolidated Statements of Operations and Comprehensive Income			102
Consolidated Balance Sheets			103
Consolidated Statements of Cash Flows			104
Consolidated Statements of Changes in Equity			105

Duke Energy Ohio
Report of Independent Registered Public Accounting Firm			106
Consolidated Statements of Operations and Comprehensive Income			108
Consolidated Balance Sheets			109
Consolidated Statements of Cash Flows			110
Consolidated Statements of Changes in Equity			111

Duke Energy Indiana
Report of Independent Registered Public Accounting Firm			112
Consolidated Statements of Operations and Comprehensive Income			114
Consolidated Balance Sheets			115
Consolidated Statements of Cash Flows			116
Consolidated Statements of Changes in Equity			117

Piedmont
Report of Independent Registered Public Accounting Firm			118
Consolidated Statements of Operations and Comprehensive Income			120
Consolidated Balance Sheets			121
Consolidated Statements of Cash Flows			122
Consolidated Statements of Changes in Equity			123


FINANCIAL STATEMENTS



Combined Notes to Consolidated Financial Statements
Note 1 – Summary of Significant Accounting Policies			124
Note 2 – Dispositions			131
Note 3 – Business Segments			134
Note 4 – Regulatory Matters			137
Note 5 – Commitments and Contingencies			153
Note 6 – Leases			157
Note 7 – Debt and Credit Facilities			162
Note 8 – Guarantees and Indemnifications			168
Note 9 – Joint Ownership of Generating and Transmission Facilities			169
Note 10 – Asset Retirement Obligations			169
Note 11 – Property, Plant and Equipment			172
Note 12 – Goodwill and Intangible Assets			174
Note 13 – Investments in Unconsolidated Affiliates			174
Note 14 – Related Party Transactions			176
Note 15 – Derivatives and Hedging			177
Note 16 – Investments in Debt and Equity Securities			183
Note 17 – Fair Value Measurements			187
Note 18 – Variable Interest Entities			192
Note 19 – Revenue			196
Note 20 – Stockholders' Equity			201
Note 21 – Severance			203
Note 22 – Stock-Based Compensation			204
Note 23 – Employee Benefit Plans			206
Note 24 – Income Taxes			219
Note 25 – Other Income and Expenses, Net			226
Note 26 – Subsequent Events			226
Note 27 – Quarterly Financial Data (Unaudited)			226


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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

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

Critical Audit Matters

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

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4, and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to regulation by federal and state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric and natural gas distribution companies. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires management judgment.

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

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

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


REPORTS

•We evaluated management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We performed audit procedures on the incurred asset retirement obligations requested for recovery to confirm their completeness and accuracy.

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

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

•We performed substantive analytical procedures on the recoverability of deferred fuel costs and detail testing procedures on the recoverability of deferred storm costs.

Asset Retirement Obligations – Nuclear Decommissioning Cash Flow Revisions – Refer to Notes 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company owns and operates nuclear facilities and records asset retirement obligations for their eventual decommissioning. On an annual basis, management performs an assessment for any indicators that would suggest a change in decommissioning cost estimates may be necessary. Judgment is required to calculate decommissioning estimates, which are determined through site-specific, third-party cost studies and are based on discounted cash flows, regulatory, legal, and legislative decisions, selection of discount rates and cost escalation rates, among other factors.

We identified the revisions in estimates of cash flows associated with nuclear asset retirement obligations as a critical audit matter because of the estimates and assumptions made by management and management’s specialist in determining the recorded asset retirement obligations. This required a high degree of auditor judgment, and for certain assumptions, the need to involve our environmental and fair value specialists, when performing audit procedures related to the revisions in estimates of cash flows associated with nuclear asset retirement obligations.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the revisions in estimates of cash flows associated with nuclear asset retirement obligations included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of nuclear asset retirement obligations, including those over management’s assessment of the results of the site-specific cost study, as well as the evaluation of economic inputs.

•We tested the mathematical accuracy of management’s nuclear asset retirement obligation calculations.

•We made inquiries and inspected opinions of internal counsel regarding the status of relevant assumptions.

•With the assistance of professionals in our firm with the appropriate expertise, we inspected and evaluated the reasonableness of the results of the decommissioning study, as well as the impacts of any economic inputs on the calculation of revisions to cash flow estimates.

•We evaluated the Company’s disclosures related to the impacts of the nuclear asset retirement obligation.

•We obtained representation from management asserting that the asset retirement obligations recorded in the financial statements represent management’s best estimates.

Dispositions - Disclosures related to Discontinued Operations and Accounting for the Associated Impairment Charges — Refer to Note 2 to the financial statements.

Critical Audit Matter Description

In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment. As a result, the utility-scale solar and wind group, the distributed generation group and the remaining assets (collectively, Commercial Renewables Disposal Groups) were classified as discontinued operations in the fourth quarter of 2022. During October 2023, Duke Energy completed the divestiture of the utility-scale solar and wind group and the distributed generation group. Pretax impairment charges of approximately $1.7 billion were recorded as of December 31, 2023 on the Commercial Renewables Disposal Groups.

We identified the disclosures related to discontinued operations and accounting for the associated impairment charges as a critical audit matter because of the extensive effort required to audit the subjective and complex judgments associated with the determination of the impairment charges.


REPORTS

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures for the disclosures related to discontinued operations and accounting for the associated impairment charges included the following, among others:

•We tested the effectiveness of management’s controls over (1) the evaluation and disclosure of discontinued operations and (2) the determination of the impairment charges.

•We evaluated management’s assessment of discontinued operations classification and disclosure.

•We assessed the terms of the purchase and sale agreements of the utility-scale solar and wind group and the distributed generation group to evaluate management's calculations of the impairment charges including the completeness and accuracy of amounts included in such calculations and the mathematical accuracy of the calculations.

•With the assistance of our tax specialists, we evaluated the reasonableness of the methods, assumptions, and judgments used by management to determine the income tax benefit associated with the divestitures.

•We evaluated the reasonableness of the determination of the fair value of the remaining assets which are not yet divested.

•We evaluated the accuracy and completeness of the related disclosures.

•We obtained representation from management asserting to the appropriate presentation, measurement and timing of the Commercial Renewables Disposal Groups.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 23, 2024

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


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS


	Years Ended December 31,
(in millions, except per share amounts)	2023		2022		2021
Operating Revenues
Regulated electric	$	26,617	$	25,759	$	22,319
Regulated natural gas	2,152		2,724		2,008
Nonregulated electric and other	291		285		294
Total operating revenues	29,060		28,768		24,621
Operating Expenses
Fuel used in electric generation and purchased power	9,086		8,782		6,255
Cost of natural gas	593		1,276		705
Operation, maintenance and other	5,625		5,734		5,703
Depreciation and amortization	5,253		5,086		4,762
Property and other taxes	1,400		1,466		1,355
Impairment of assets and other charges	85		434		353
Total operating expenses	22,042		22,778		19,133
Gains on Sales of Other Assets and Other, net	52		22		12
Operating Income	7,070		6,012		5,500
Other Income and Expenses
Equity in earnings of unconsolidated affiliates	113		113		62

Other income and expenses, net	598		392		636
Total other income and expenses	711		505		698
Interest Expense	3,014		2,439		2,207
Income From Continuing Operations Before Income Taxes	4,767		4,078		3,991
Income Tax Expense From Continuing Operations	438		300		268
Income From Continuing Operations	4,329		3,778		3,723
Loss From Discontinued Operations, net of tax	(1,455)		(1,323)		(144)
Net Income	2,874		2,455		3,579
Add: Net (Income) Loss Attributable to Noncontrolling Interests	(33)		95		329
Net Income Attributable to Duke Energy Corporation	2,841		2,550		3,908
Less: Preferred Dividends	106		106		106
Net Income Available to Duke Energy Corporation Common Stockholders	$	2,735	$	2,444	$	3,802

Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted	$	5.35	$	4.74	$	4.68

(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted	$	(1.81)	$	(1.57)	$	0.26

Net income available to Duke Energy Corporation common stockholders
Basic and Diluted	$	3.54	$	3.17	$	4.94

Weighted average shares outstanding
Basic and Diluted	771		770		769

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2023		2022		2021
Net Income	$	2,874	$	2,455	$	3,579
Other Comprehensive Income (Loss), net of tax(a)

Pension and OPEB adjustments	(1)		(19)		7
Net unrealized gains (losses) on cash flow hedges	63		285		(68)
Reclassification into earnings from cash flow hedges	27		(38)		13
Net unrealized gains (losses) on fair value hedges	37		(33)		—
Unrealized gains (losses) on available-for-sale securities	8		(21)		(8)

Other Comprehensive Income (Loss), net of tax	134		174		(56)
Comprehensive Income	3,008		2,629		3,523
Add: Comprehensive (Income) Loss Attributable to Noncontrolling Interests	(33)		84		319
Comprehensive Income Attributable to Duke Energy Corporation	2,975		2,713		3,842
Less: Preferred Dividends	106		106		106
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	2,869	$	2,607	$	3,736

(a) Net of income tax expense of approximately $40 million and $52 million for the years ended December 31, 2023, and 2022, respectively, and income tax benefit of $17 million for the year ended December 31, 2021.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2023		2022
ASSETS
Current Assets
Cash and cash equivalents	$	253	$	409

Receivables (net of allowance for doubtful accounts of $55 at 2023 and $40 at 2022)	1,112		1,309
Receivables of VIEs (net of allowance for doubtful accounts of $150 at 2023 and $176 at 2022)	3,019		3,106
Inventory (includes $462 at 2023 related to VIEs)	4,292		3,584
Regulatory assets (includes $110 at 2023 and $106 at 2022 related to VIEs)	3,648		3,485
Assets held for sale	14		356
Other (includes $90 at 2023 and $116 at 2022 related to VIEs)	431		973
Total current assets	12,769		13,222
Property, Plant and Equipment
Cost	171,351		163,839
Accumulated depreciation and amortization	(56,038)		(52,100)
Facilities to be retired, net	2		9
Net property, plant and equipment	115,315		111,748
Other Noncurrent Assets
Goodwill	19,303		19,303
Regulatory assets (includes $1,642 at 2023 and $1,715 at 2022 related to VIEs)	13,618		14,645
Nuclear decommissioning trust funds	10,143		8,637
Operating lease right-of-use assets, net	1,092		1,042
Investments in equity method unconsolidated affiliates	492		455
Assets held for sale	197		5,634
Other (includes $49 at 2023 and $52 at 2022 related to VIEs)	3,964		3,400
Total other noncurrent assets	48,809		53,116
Total Assets	$	176,893	$	178,086
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable (includes $188 at 2023 related to VIEs)	$	4,228	$	4,754
Notes payable and commercial paper	4,288		3,952
Taxes accrued	816		722
Interest accrued	745		626
Current maturities of long-term debt (includes $428 at 2023 and $350 at 2022 related to VIEs)	2,800		3,878
Asset retirement obligations	596		773
Regulatory liabilities	1,369		1,466
Liabilities associated with assets held for sale	122		535
Other	2,319		2,167
Total current liabilities	17,283		18,873
Long-Term Debt (includes $3,000 at 2023 and $3,108 at 2022 related to VIEs)	72,452		65,873
Other Noncurrent Liabilities
Deferred income taxes	10,556		9,964
Asset retirement obligations	8,560		11,955
Regulatory liabilities	14,039		13,582
Operating lease liabilities	917		876
Accrued pension and other post-retirement benefit costs	485		832
Investment tax credits	864		849
Liabilities associated with assets held for sale	157		1,927
Other (includes $35 at 2023 related to VIEs)	1,393		1,502
Total other noncurrent liabilities	36,971		41,487
Commitments and Contingencies

Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2023 and 2022	973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2023 and 2022	989		989
Common stock, $0.001 par value, 2 billion shares authorized; 771 million and 770 million shares outstanding at 2023 and 2022	1		1
Additional paid-in capital	44,920		44,862
Retained earnings	2,235		2,637
Accumulated other comprehensive loss	(6)		(140)
Total Duke Energy Corporation stockholders' equity	49,112		49,322
Noncontrolling interests	1,075		2,531
Total equity	50,187		51,853
Total Liabilities and Equity	$	176,893	$	178,086

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2023		2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,874	$	2,455	$	3,579
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	6,084		5,843		5,663
Equity in (earnings) losses of unconsolidated affiliates	(98)		(114)		(28)
Equity component of AFUDC	(198)		(197)		(171)
Losses on sales of Commercial Renewables Disposal Groups	1,725		1,748		—
Gains on sales of other assets	(52)		(22)		(13)
Impairment of assets and other charges	85		434		356
Deferred income taxes	3		(200)		191
Contributions to qualified pension plans	(100)		(58)		—
Payments for asset retirement obligations	(632)		(584)		(540)
Provision for rate refunds	(63)		(130)		(70)

(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(18)		19		50
Receivables	443		(788)		(297)
Inventory	(706)		(476)		(34)
Other current assets	(267)		(1,498)		(1,136)
Increase (decrease) in
Accounts payable	(800)		805		249
Taxes accrued	126		10		284
Other current liabilities	(26)		(153)		(13)
Other assets	914		(1,577)		125
Other liabilities	584		410		95
Net cash provided by operating activities	9,878		5,927		8,290
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(12,604)		(11,367)		(9,715)
Contributions to equity method investments	(34)		(58)		(81)

Return of investment capital	16		6		44
Purchases of debt and equity securities	(3,761)		(4,243)		(6,098)
Proceeds from sales and maturities of debt and equity securities	3,824		4,333		6,103
Proceeds from the sales of other assets	149		83		—
Proceeds from the sales of Commercial Renewables Disposal Groups, net of cash divested	734		—		—
Disbursements to canceled equity method investments	—		—		(855)
Other	(799)		(727)		(333)
Net cash used in investing activities	(12,475)		(11,973)		(10,935)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	10,028		11,874		9,052

Issuance of common stock	8		9		5
Payments for the redemption of long-term debt	(4,737)		(4,396)		(5,294)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	610		80		332
Payments for the redemption of short-term debt with original maturities greater than 90 days	(125)		(287)		(997)
Notes payable and commercial paper	(343)		781		1,144

Contributions from noncontrolling interests	278		1,377		1,575
Dividends paid	(3,244)		(3,179)		(3,114)

Other	(124)		(130)		(94)
Net cash provided by financing activities	2,351		6,129		2,609

Net (decrease) increase in cash, cash equivalents and restricted cash	(246)		83		(36)
Cash, cash equivalents and restricted cash at beginning of period	603		520		556
Cash, cash equivalents and restricted cash at end of period	$	357	$	603	$	520
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	2,883	$	2,361	$	2,248
Cash paid for (received from) income taxes	1		(6)		(3)
Significant non-cash transactions:
Accrued capital expenditures	1,908		1,766		1,325

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


										Duke Energy Corporation Stockholders' Accumulated Other Comprehensive Income (Loss)
												Net Unrealized				Total
										Net Gains		Gains (Losses)				Duke Energy
			Common			Additional				(Losses)		on Available-		Pension and		Corporation
	Preferred		Stock	Common		Paid-in		Retained		on		for-Sale-		OPEB		Stockholders'		Noncontrolling		Total
(in millions)	Stock		Shares	Stock		Capital		Earnings		Hedges(d)		Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2020	$	1,962	769	$	1	$	43,767	$	2,471	$	(167)	$	6	$	(76)	$	47,964	$	1,220	$	49,184
Net income (loss)	—		—	—		—		3,802		—		—		—		3,802		(329)		3,473
Other comprehensive (loss) income	—		—	—		—		—		(65)		(8)		7		(66)		10		(56)


Common stock issuances, including dividend reinvestment and employee benefits	—		—	—		68		—		—		—		—		68		—		68

Common stock dividends	—		—	—		—		(3,008)		—		—		—		(3,008)		—		(3,008)
Sale of noncontrolling interest(b)	—		—	—		545		—		—		—		—		545		454		999
Contribution from noncontrolling interest(a)	—		—	—		—		—		—		—		—		—		550		550
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(66)		(66)
Other	—		—	—		(9)		—		—		—		—		(9)		1		(8)
Balance at December 31, 2021	$	1,962	769	$	1	$	44,371	$	3,265	$	(232)	$	(2)	$	(69)	$	49,296	$	1,840	$	51,136
Net income (loss)	—		—	—		—		2,444		—		—		—		2,444		(95)		2,349
Other comprehensive income (loss)	—		—	—		—		—		203		(21)		(19)		163		11		174


Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		76		—		—		—		—		76		—		76

Common stock dividends	—		—	—		—		(3,073)		—		—		—		(3,073)		—		(3,073)
Sale of noncontrolling interest(b)	—		—	—		465		—		—		—		—		465		569		1,034
Purchase of noncontrolling interest	—		—	—		(51)		—		—		—		—		(51)		31		(20)
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		314		314
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(140)		(140)
Other	—		—	—		1		1		—		—		—		2		1		3
Balance at December 31, 2022	$	1,962	770	$	1	$	44,862	$	2,637	$	(29)	$	(23)	$	(88)	$	49,322	$	2,531	$	51,853
Net income	—		—	—		—		2,735		—		—		—		2,735		33		2,768
Other comprehensive income (loss)	—		—	—		—		—		127		8		(1)		134		—		134


Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		78		—		—		—		—		78		—		78

Common stock dividends	—		—	—		—		(3,138)		—		—		—		(3,138)		—		(3,138)
Sale of noncontrolling interest	—		—	—		(13)		—		—		—		—		(13)		10		(3)

Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		278		278
Distributions to noncontrolling interests in subsidiaries	—		—	—		—		—		—		—		—		—		(59)		(59)
Sale of Commercial Renewables Disposal Groups(c)	—		—	—		—		—				—		—		—		(1,722)		(1,722)
Other	—		—	—		(7)		1		—		—		—		(6)		4		(2)
Balance at December 31, 2023	$	1,962	771	$	1	$	44,920	$	2,235	$	98	$	(15)	$	(89)	$	49,112	$	1,075	$	50,187

(a) Relates to tax equity financing activity in the Commercial Renewables Disposal Groups.

(b) Relates primarily to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional information.

(d) See Duke Energy Consolidated Statements of Comprehensive Income for detailed activity related to Cash Flow and Fair Value Hedges.

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

Critical Audit Matters

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of fuel costs and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires management judgment.

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

•We evaluated management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.


REPORTS

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We performed audit procedures on the incurred asset retirement obligations requested for recovery to confirm their completeness and accuracy.

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

•We performed substantive analytical procedures on the recoverability of deferred fuel costs.

Asset Retirement Obligations – Nuclear Decommissioning Cash Flow Revisions – Refer to Notes 4 and 10 to the financial statements.

Critical Audit Matter Description

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the revisions in estimates of cash flows associated with nuclear asset retirement obligations included the following, among others:

•We tested the mathematical accuracy of management’s nuclear asset retirement obligation calculations.

•We made inquiries and inspected opinions of internal counsel regarding the status of relevant assumptions.

•We evaluated the Company’s disclosures related to the impacts of the nuclear asset retirement obligation.

•We obtained representation from management asserting that the asset retirement obligations recorded in the financial statements represent management’s best estimate.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 23, 2024

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


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2023		2022		2021
Operating Revenues	$	8,288	$	7,857	$	7,102
Operating Expenses
Fuel used in electric generation and purchased power	2,524		2,015		1,601
Operation, maintenance and other	1,774		1,892		1,833
Depreciation and amortization	1,593		1,526		1,468
Property and other taxes	320		340		320
Impairment of assets and other charges	44		26		227
Total operating expenses	6,255		5,799		5,449
Gains on Sales of Other Assets and Other, net	26		4		2
Operating Income	2,059		2,062		1,655
Other Income and Expenses, net	238		221		270
Interest Expense	686		557		538
Income Before Income Taxes	1,611		1,726		1,387
Income Tax Expense	141		126		51
Net Income	$	1,470	$	1,600	$	1,336
Other Comprehensive Income, net of tax


Net unrealized gain on cash flow hedges	—		—		1
Other Comprehensive Income, net of tax	—		—		1
Comprehensive Income	$	1,470	$	1,600	$	1,337

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2023		2022
ASSETS
Current Assets
Cash and cash equivalents	$	9	$	44
Receivables (net of allowance for doubtful accounts of $11 at 2023 and $3 at 2022)	265		338
Receivables of VIEs (net of allowance for doubtful accounts of $45 at 2023 and $65 at 2022)	991		928
Receivables from affiliated companies	203		390

Inventory	1,484		1,164
Regulatory assets (includes $12 at 2023 and 2022 related to VIEs)	1,564		1,095
Other (includes $9 at 2023 and $8 at 2022 related to VIEs)	31		216
Total current assets	4,547		4,175
Property, Plant and Equipment
Cost	56,670		54,650
Accumulated depreciation and amortization	(19,896)		(18,669)

Net property, plant and equipment	36,774		35,981
Other Noncurrent Assets

Regulatory assets (includes $196 at 2023 and $208 at 2022 related to VIEs)	3,916		4,293
Nuclear decommissioning trust funds	5,686		4,783
Operating lease right-of-use assets, net	78		78
Other	1,109		1,036
Total other noncurrent assets	10,789		10,190
Total Assets	$	52,110	$	50,346
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,183	$	1,472
Accounts payable to affiliated companies	195		209
Notes payable to affiliated companies	668		1,233
Taxes accrued	281		228
Interest accrued	179		120
Current maturities of long-term debt (includes $10 at 2023 and 2022 related to VIEs)	19		1,018
Asset retirement obligations	224		261
Regulatory liabilities	587		530
Other	702		580
Total current liabilities	4,038		5,651
Long-Term Debt (includes $708 at 2023 and $689 at 2022 related to VIEs)	15,693		12,948
Long-Term Debt Payable to Affiliated Companies	300		300
Other Noncurrent Liabilities
Deferred income taxes	4,379		4,153
Asset retirement obligations	3,789		5,121
Regulatory liabilities	5,990		5,783
Operating lease liabilities	75		83
Accrued pension and other post-retirement benefit costs	57		38
Investment tax credits	301		300
Other	581		527
Total other noncurrent liabilities	15,172		16,005
Commitments and Contingencies
Equity
Member's equity	16,913		15,448
Accumulated other comprehensive loss	(6)		(6)
Total equity	16,907		15,442
Total Liabilities and Equity	$	52,110	$	50,346

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2023		2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,470	$	1,600	$	1,336
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,845		1,787		1,743
Equity component of AFUDC	(91)		(98)		(65)
Gains on sales of other assets	(26)		(4)		(2)
Impairment of assets and other charges	44		26		227
Deferred income taxes	(53)		210		(213)
Contributions to qualified pension plans	(26)		(15)		—
Payments for asset retirement obligations	(210)		(200)		(182)
Provision for rate refunds	(39)		(74)		(46)
(Increase) decrease in

Receivables	22		(102)		(99)
Receivables from affiliated companies	187		(200)		(66)
Inventory	(320)		(138)		(16)
Other current assets	(495)		(592)		(309)
Increase (decrease) in
Accounts payable	(447)		377		5
Accounts payable to affiliated companies	(14)		(75)		85
Taxes accrued	64		(46)		206
Other current liabilities	63		(91)		(39)
Other assets	703		(760)		23
Other liabilities	108		(36)		116
Net cash provided by operating activities	2,785		1,569		2,704
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(3,733)		(3,304)		(2,693)

Purchases of debt and equity securities	(2,025)		(2,633)		(3,425)
Proceeds from sales and maturities of debt and equity securities	2,025		2,633		3,425
Net proceeds from the sales of other assets	30		62		—

Other	(288)		(243)		(177)
Net cash used in investing activities	(3,991)		(3,485)		(2,870)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	2,780		1,441		1,651
Payments for the redemption of long-term debt	(1,042)		(436)		(617)
Notes payable to affiliated companies	(565)		1,007		(280)
Distributions to parent	—		(50)		(600)
Other	(1)		(1)		(1)
Net cash provided by financing activities	1,172		1,961		153
Net (decrease) increase in cash, cash equivalents and restricted cash	(34)		45		(13)
Cash, cash equivalents and restricted cash at beginning of period	53		8		21
Cash, cash equivalents and restricted cash at end of period	$	19	$	53	$	8
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	528	$	546	$	508
Cash paid for (received from) income taxes	151		(60)		233
Significant non-cash transactions:
Accrued capital expenditures	613		475		359

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated Other
			Comprehensive
			Income (Loss)
			Net Gains
			(Losses) on
	Member's		Cash Flow		Total
(in millions)	Equity		Hedges		Equity
Balance at December 31, 2020	$	13,161	$	(7)	$	13,154
Net income	1,336		—		1,336
Other comprehensive income	—		1		1
Distributions to parent	(600)		—		(600)

Balance at December 31, 2021	$	13,897	$	(6)	$	13,891
Net income	1,600		—		1,600

Distributions to parent	(50)		—		(50)
Other	1		—		1
Balance at December 31, 2022	$	15,448	$	(6)	$	15,442
Net income	1,470		—		1,470


Other	(5)		—		(5)
Balance at December 31, 2023	$	16,913	$	(6)	$	16,907

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Progress Energy, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

Critical Audit Matters

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires management judgment.

How the Critical Audit Matter Was Addressed in the Audit

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

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

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


REPORTS