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Investments In Debt And Equity Securities
 3 Months Ended
Mar. 31, 2013
Investments In Debt And Equity Securities [Abstract]  
Investments In Debt And Equity Securities

10. Investments in Debt and Equity Securities

The Duke Energy Registrants classify their investments in debt and equity securities into two categories – trading and available-for-sale.

TRADING SECURITIES

Investments in debt and equity securities held in grantor trusts associated with certain deferred compensation plans and certain other investments are classified as trading securities and are reported at fair value in the Condensed Consolidated Balance Sheets with net realized and unrealized gains and losses included in earnings each period. At March 31, 2013 and December 31, 2012, the fair value of these investments was $25 million and $33 million, respectively.

AVAILABLE FOR SALE SECURITIES

All other investments in debt and equity securities are classified as available-for-sale securities, which are also reported at fair value on the Condensed Consolidated Balance Sheets with unrealized gains and losses excluded from earnings and reported either as a regulatory asset or liability, as discussed further below, or as a component of other comprehensive income (OCI) until realized.

Duke Energy's available-for-sale securities are primarily comprised of investments held in the (i) NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) investments in grantor trusts at both Duke Energy Indiana and Duke Energy Florida related to OPEB plans as required by the IURC and FERC, respectively, and at Duke Energy Progress, (iii) Duke Energy captive insurance investment portfolio, (iv) Duke Energy's foreign operations investment portfolio and (v) investments of Duke Energy and Duke Energy Carolinas in auction rate debt securities.

NDTF and Grantor Trust

The investments within the NDTF at Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida and the Duke Energy Indiana, Duke Energy Progress and Duke Energy Florida grantor trusts (Investment Trusts) are managed by independent investment managers with discretion to buy, sell and invest pursuant to the objectives set forth by the trust agreements. Therefore, the Duke Energy Registrants have limited oversight of the day-to-day management of these investments. Since day-to-day investment decisions, including buy and sell decisions, are made by the investment manager, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized gains and losses associated with debt and equity securities within the Investment Trusts are considered other-than-temporary and are recognized immediately when the fair value of individual investments is less than the cost basis of the investment. Pursuant to regulatory accounting, substantially all unrealized gains and losses associated with investments in debt and equity securities within the Investment Trusts are deferred as a regulatory asset or liability. As a result, there is no immediate impact on the earnings of the Duke Energy Registrants.

Other Available for Sale Securities

For investments in debt and equity securities held in the captive insurance investment portfolio, the foreign operations investment portfolio and investments in auction rate debt securities, unrealized gains and losses are included in other comprehensive income until realized, unless it is determined that the carrying value of an investment is other-than-temporarily impaired. If so, the write-down to fair value may be included in earnings based on the criteria discussed below.

For available-for-sale securities for which other-than-temporary-impairments are required, the Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value should be considered other-than-temporary. Criteria used to evaluate whether an impairment associated with equity securities is other-than-temporary includes, but is not limited to, the length of time over which the market value has been lower than the cost basis of the investment, the percentage decline compared to the cost of the investment and management's intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value. If a decline in fair value is determined to be other-than-temporary, the investment is written down to its fair value through a charge to earnings.

With respect to investments in debt securities, under the accounting guidance for other-than-temporary impairment, if the entity does not have an intent to sell the security and it is not more likely than not that management will be required to sell the debt security before the recovery of its cost basis, the impairment write-down to fair value would be recorded as a component of other comprehensive income, except for when it is determined that a credit loss exists. In determining whether a credit loss exists, management considers, among other things, the length of time and the extent to which the fair value has been less than the amortized cost basis, changes in the financial condition of the issuer of the security, or in the case of an asset backed security, the financial condition of the underlying loan obligors, consideration of underlying collateral and guarantees of amounts by government entities, ability of the issuer of the security to make scheduled interest or principal payments and any changes to the rating of the security by rating agencies. If it is determined that a credit loss exists, the amount of impairment write-down to fair value would be split between the credit loss, which would be recognized in earnings, and the amount attributable to all other factors, which would be recognized in other comprehensive income. Management believes, based on consideration of the criteria above, that no credit loss exists as of March 31, 2013 and December 31, 2012. Management does not have the intent to sell such investments in auction rate debt securities and the investments in debt securities within its captive insurance investment portfolio and foreign operations investment portfolio, and it is not more likely than not that management will be required to sell these securities before the anticipated recovery of their cost basis. Management has concluded that there were no other-than-temporary impairments for debt or equity securities necessary as of March 31, 2013 and December 31, 2012. Accordingly, all changes in the market value of investments other than those held in the Investment Trusts, which receive regulatory accounting as discussed above, were reflected as a component of other comprehensive income in 2013 and 2012.

See Note 9 for additional information related to fair value measurements for investments in auction rate debt securities.

Short-term and Long-term Investments

Investments in debt and equity securities are classified as either short-term investments or long-term investments based on management's intent and ability to sell these securities, taking into consideration illiquidity factors in the current markets.

Duke Energy holds corporate debt securities which were purchased using excess cash from its foreign operations. These investments are classified as Short-term investments on the Condensed Consolidated Balance Sheet and are available for current operations of Duke Energy's foreign business. The fair value of these investments was $288 million as of March 31, 2013 and $333 million as of December 31, 2012.

Duke Energy classifies its investments in debt and equity securities held in the Investment Trusts and the captive insurance investment portfolio as long-term. Additionally, Duke Energy has classified $28 million carrying value ($34 million par value) and $29 million carrying value ($34 million par value) of investments in auction rate debt securities as long-term at March 31, 2013 and December 31, 2012, respectively, due to market illiquidity factors as a result of continued failed auctions, and since management does not intend to use these investments in current operations. All of these investments are classified as available-for-sale and, therefore, are reflected on the Condensed Consolidated Balance Sheets at estimated fair value based on either quoted market prices or management's best estimate of fair value based on expected future cash flow using appropriate risk-adjusted discount rates.

DUKE ENERGY                 
                   
The following table presents the estimated fair value of short-term and long-term investments for Duke Energy. For investments held within the NDTF, and investments within Grantor Trusts which are classified as Other Investments below, unrealized holding gains and losses are recognized immediately and recorded as Regulatory assets or Regulatory liabilities on the Condensed Consolidated Balance Sheets.
                   
  March 31, 2013 December 31, 2012
(in millions)Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value
NDTF                 
Cash and cash equivalents$ ― $ ― $ 91 $ ― $ ― $ 105
Equity securities  1,380   19   3,104   1,132   19   2,837
Corporate debt securities  17   2   333   21   1   338
Municipal bonds  10   1   189   12   1   194
U.S. government bonds  20   2   666   24   1   625
Other debt securities  12   2   163   10   1   164
Total NDTF$ 1,439 $ 26 $ 4,546 $ 1,199 $ 23 $ 4,263
Other Investments                 
Cash and cash equivalents$ ― $ ― $ 21 $ ― $ ― $ 17
Equity securities  16   ―   84   10   ―   63
Corporate debt securities  1   ―   347   2   ―   381
Municipal bonds  4   1   75   4   1   70
U.S. government bonds  ―   ―   73   ―   ―   23
Other debt securities  1   ―   103   1   ―   86
Auction rate securities  ―   6   28   ―   6   29
Total Other Investments(a)$ 22 $ 7 $ 731 $ 17 $ 7 $ 669
Total Investments$ 1,461 $ 33 $ 5,277 $ 1,216 $ 30 $ 4,932
                   
(a)These amounts are recorded in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
                   

The table below summarizes the maturity date for debt securities held by Duke Energy. The table below excludes auction rate securities based on the stated maturity date. See Note 9 for information about fair value measurements related to investments in auction rate debt securities.
     
(in millions)March 31, 2013
Due in one year or less $ 328
Due after one through five years   435
Due after five through 10 years   398
Due after 10 years   788
Total $ 1,949
     

The following table presents realized gains and losses, which were determined on a specific basis, from sales of Duke Energy's available-for-sale securities.
 
   Three Months Ended March 31,
(in millions) 2013 2012
Realized gains $ 31 $ 21
Realized losses   7   2
        

DUKE ENERGY CAROLINAS
                   
The following table presents the estimated fair value of short-term and long-term investments for Duke Energy Carolinas. For investments held within the NDTF, unrealized holding gains and losses are recognized immediately and recorded as Regulatory assets or Regulatory liabilities on the Condensed Consolidated Balance Sheets.
                   
  March 31, 2013 December 31, 2012
(in millions)Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value
NDTF                 
Cash and cash equivalents$ ― $ ― $ 41 $ ― $ ― $ 40
Equity securities  736   4   1,735   600   5   1,592
Corporate debt securities  9   2   239   11   1   250
Municipal bonds  ―   ―   21   2   ―   40
U.S. government bonds  8   1   345   10   ―   304
Other debt securities  11   2   136   9   2   135
Total NDTF$ 764 $ 9 $ 2,517 $ 632 $ 8 $ 2,361
Other Investments                 
Auction rate securities$ ― $ 1 $ 3 $ ― $ 1 $ 3
Total Other Investments(a)$ ― $ 1 $ 3 $ ― $ 1 $ 3
Total Investments$ 764 $ 10 $ 2,520 $ 632 $ 9 $ 2,364
                   
(a)These amounts are recorded in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
  

The table below summarizes the maturity date for debt securities held by Duke Energy Carolinas. The table below excludes auction rate securities based on the stated maturity date. See Note 9 for information about fair value measurements related to investments in auction rate debt securities.
     
(in millions)March 31, 2013
Due in one year or less $ 18
Due after one through five years   173
Due after five through 10 years   185
Due after 10 years   365
Total $ 741
     

The following table presents realized gains and losses, which were determined on a specific basis, from sales of Duke Energy Carolinas' available-for-sale securities.
        
   Three Months Ended March 31,
(in millions) 2013 2012
Realized gains $ 25 $ 20
Realized losses   4   2
        

PROGRESS ENERGY                 
                   
The following table presents the estimated fair value of short-term and long-term investments for Progress Energy. For investments held within the NDTF, and investments within Grantor Trusts which are classified as Other Investments below, unrealized holding gains and losses are recognized immediately and recorded as Regulatory assets or Regulatory liabilities on the Condensed Consolidated Balance Sheets.
                   
  March 31, 2013 December 31, 2012
(in millions)Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value
NDTF                 
Cash and cash equivalents$ ― $ ― $ 50 $ ― $ ― $ 65
Equity securities  644   15   1,369   532   14   1,245
Corporate debt securities  8   ―   94   9   ―   89
Municipal bonds  10   1   168   11   1   154
U.S. government bonds  12   1   321   14   ―   321
Other debt securities  1   ―   27   1   ―   28
Total NDTF$ 675 $ 17 $ 2,029 $ 567 $ 15 $ 1,902
Other Investments                 
Cash and cash equivalents$ ― $ ― $ 21 $ ― $ ― $ 17
Municipal bonds  3   ―   40   3   ―   40
Total Other Investments(a)$ 3 $ ― $ 61 $ 3 $ ― $ 57
Total Investments$ 678 $ 17 $ 2,090 $ 570 $ 15 $ 1,959
                   
(a)These amounts are recorded in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
                   

The table below summarizes the maturity date for debt securities held by Progress Energy.
     
(in millions)March 31, 2013
Due in one year or less $ 26
Due after one through five years   145
Due after five through 10 years   164
Due after 10 years   315
Total $ 650
     

The following table presents realized gains and losses, which were determined on a specific basis, from sales of Progress Energy's available-for-sale securities.
 
   Three Months Ended March 31,
(in millions) 2013 2012
Realized gains $ 5 $ 7
Realized losses   2   3
        

DUKE ENERGY PROGRESS                 
                   
The following table presents the estimated fair value of short-term and long-term investments for Duke Energy Progress. For investments held within the NDTF, and investments within Grantor Trusts which are classified as Other Investments below, unrealized holding gains and losses are recognized immediately and recorded as Regulatory assets or Regulatory liabilities on the Consolidated Balance Sheets.
                   
  March 31, 2013 December 31, 2012
(in millions)Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value
NDTF                 
Cash and cash equivalents$ ― $ ― $ 39 $ ― $ ― $ 55
Equity securities  413   11   894   337   11   811
Corporate debt securities  6   ―   84   8   ―   78
Municipal bonds  4   ―   95   4   ―   80
U.S. government bonds  11   1   233   13   ―   241
Other debt securities  1   ―   11   1   ―   10
Total NDTF$ 435 $ 12 $ 1,356 $ 363 $ 11 $ 1,275
Other Investments                 
Cash and cash equivalents$ ― $ ― $ 4 $ ― $ ― $ 3
Total Other Investments(a)$ ― $ ― $ 4 $ ― $ ― $ 3
Total Investments$ 435 $ 12 $ 1,360 $ 363 $ 11 $ 1,278
                   
(a)These amounts are recorded in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
                   

The table below summarizes the maturity date for debt securities held by Duke Energy Progress.
     
(in millions)March 31, 2013
Due in one year or less $ 11
Due after one through five years   128
Due after five through 10 years   76
Due after 10 years   208
Total $ 423
     

The following table presents realized gains and losses, which were determined on a specific basis, from sales of Duke Energy Progress' available-for-sale securities.
 
   Three Months Ended March 31,
(in millions) 2013 2012
Realized gains $ 2 $ 5
Realized losses   1   2
        

DUKE ENERGY FLORIDA                 
                   
The following table presents the estimated fair value of short-term and long-term investments for Duke Energy Florida. For investments held within the NDTF, and investments within Grantor Trusts which are classified as Other Investments below, unrealized holding gains and losses are recognized immediately and recorded as Regulatory assets or Regulatory liabilities on the Condensed Balance Sheets.
                   
  March 31, 2013 December 31, 2012
(in millions)Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value
NDTF                 
Cash and cash equivalents$ ― $ ― $ 11 $ ― $ ― $ 10
Equity securities  231   4   475   194   4   434
Corporate debt securities  2   ―   10   1   ―   11
Municipal bonds  6   1   73   7   ―   74
U.S. government bonds  1   ―   88   1   ―   80
Other debt securities  ―   ―   16   1   ―   18
Total NDTF$ 240 $ 5 $ 673 $ 204 $ 4 $ 627
Other Investments                 
Cash and cash equivalents$ ― $ ― $ 3 $ ― $ ― $ 1
Municipal bonds  3   ―   40   3   ―   40
Total Other Investments(a)$ 3 $ ― $ 43 $ 3 $ ― $ 41
Total Investments$ 243 $ 5 $ 716 $ 207 $ 4 $ 668
                   
(a)These amounts are recorded in Other within Investments and Other Assets on the Condensed Balance sheets.
                   

The table below summarizes the maturity date for debt securities held by Duke Energy Florida.
     
(in millions)March 31, 2013
Due in one year or less $ 15
Due after one through five years   17
Due after five through 10 years   88
Due after 10 years   107
Total $ 227
     

The following table presents realized gains and losses, which were determined on a specific basis, from sales of Duke Energy Florida's available-for-sale securities.
 
   Three Months Ended March 31,
(in millions) 2013 2012
Realized gains $ 3 $ 2
Realized losses   1   1
        

DUKE ENERGY INDIANA                 
                   
The following table presents the estimated fair value of short-term and long-term investments for Duke Energy Indiana. Unrealized holding gains and losses on these investments are recognized immediately and recorded as Regulatory assets or Regulatory liabilities on the Condensed Consolidated Balance Sheets.
                   
  March 31, 2013 December 31, 2012
(in millions)Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value
Other Investments                 
Equity securities$ 14 $ ― $ 54 $ 9 $ ― $ 50
Municipal bonds  1   ―   29   1   ―   28
Total Other Investments(a)$ 15 $ ― $ 83 $ 10 $ ― $ 78
Total Investments$ 15 $ ― $ 83 $ 10 $ ― $ 78
                   
(a)These amounts are recorded in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
                   

The table below summarizes the maturity date for debt securities held by Duke Energy Indiana.
     
(in millions)March 31, 2013
Due in one year or less $ 1
Due after one through five years   21
Due after five through 10 years   4
Due after 10 years   3
Total $ 29
     

Realized gains and losses, which were determined on a specific basis, from sales of Duke Energy Indiana's available-for-sale securities were insignificant for each of the three months ended March 31, 2013, and March 31, 2012.