Income Taxes and Other Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes And Other Taxes [Abstract]

Income Taxes And Other Taxes

16. INCOME TAXES AND OTHER TAXES

INCOME TAXES

Duke Energy and its subsidiaries file income tax returns in the U.S. with federal and various state governmental authorities, and in certain foreign jurisdictions. The taxable income of Duke Energy and its subsidiaries is reflected in Duke Energy's U.S. federal and state income tax returns. These subsidiaries have a tax sharing agreement with Duke Energy where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting for income taxes essentially represents the income taxes that each of these subsidiaries would incur if it were a separate company filing its own tax return as a C-Corporation.

The effective tax rates for each of the Duke Energy Registrants are included in the following table.

	Three Months Ended June 30,					Six Months Ended June 30,
		2013		2012			2013		2012
Duke Energy		32.5	%	32.2	%		33.6	%	29.8	%
Duke Energy Carolinas		37.4	%	37.2	%		37.2	%	36.7	%
Progress Energy		59.9	%	38.2	%		36.7	%	36.1	%
Duke Energy Progress		39.6	%	30.3	%		38.7	%	31.4	%
Duke Energy Florida		38.0	%	38.8	%		39.8	%	37.5	%
Duke Energy Ohio		36.3	%	39.9	%		35.9	%	38.1	%
Duke Energy Indiana		37.5	%	34.4	%		37.5	%	45.7	%

The increase in the effective tax rate for Duke Energy for the six months ended June 30, 2013, is primarily due to lower pretax income in 2012 due to the Edwardsport IGCC project impairment, Progress Energy results of operations included in 2013, impact of lower AFUDC equity in 2013, and a reduction of foreign deferred taxes in 2012 due to changes in foreign tax rates.

The increase in the effective tax rate for Progress Energy for the three months ended June 30, 2013, is primarily due to the pretax loss in 2013 related to the 2013 FPSC settlement agreement, the impact of lower AFUDC equity and the Employee Stock Ownership Plan (ESOP) dividend deduction being recorded at Duke Energy in 2013.

The increase in the effective tax rate for Duke Energy Progressfor the three and six months ended June 30, 2013,is primarily due to the favorable prior-year tax benefit related to the manufacturing deduction and the impact of lower AFUDC equity in 2013.

The increase in the effective tax rate for Duke Energy Florida for the six months ended June 30, 2013, was primarily due to charges related to the 2013 FPSC settlement agreement, the favorable prior-year tax benefit related to the manufacturing deduction and the impact of lower AFUDC equity in 2013.

The decrease in the effective tax rate for Duke Energy Ohio for the three months ended June 30, 2013, is primarily due to a one time true up of accumulated deferred income taxes in 2012.

The increase in the effective tax rate for Duke Energy Indiana for the threemonths ended June 30, 2013, is primarily due to the impact of lower AFUDC equity in 2013. The decrease in the effective tax rate for Duke Energy Indiana for the six months ended June 30, 2013, is primarily due to pretax income in 2013 compared to pretax loss in 2012 related to the Edwardsport IGCC project impairment and the impact of AFUDC equity in 2013 that reduced the tax expense compared to higher AFUDC equity in 2012, which increased the tax benefit.

On July 23, 2013, North Carolina House Bill 998 (HB 998) was signed into law. HB 998 reduces the North Carolina corporate income tax rate from a statutory 6.9 percent to 6.0 percent in January 2014 with a further reduction to 5.0 percent in January 2015. Duke Energy anticipates a net reduction of approximately $150 million to its North Carolina deferred tax liability based on a preliminary analysis. The significant majority of this deferred tax liability relates to Duke Energy Carolinas and Duke Energy Progress. Therefore, it is expected that the offsetting impact will be recorded as a regulatory liability reflecting a future benefit to Duke Energy Carolinas' and Duke Energy Progress' customers. The impact of HB 998 is not expected to have a significant impact to the financial position, results of operation, or cash flows of Duke Energy, Duke Energy Carolinas, Progress Energy or Duke Energy Progress.

EXCISE TAXES

Certain excise taxes levied by state or local governments are collected by the Duke Energy Registrants from their customers. These taxes, which are required to be paid regardless of the Duke Energy Registrants' ability to collect from the customer, are accounted for on a gross basis. When the Duke Energy Registrants act as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis. The Duke Energy Registrants' excise taxes accounted for on a gross basis and recorded as operating revenues in the Condensed Consolidated Statements of Operations are included in the following table.

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)			2013		2012			2013		2012
Duke Energy		$	142	$	70		$	291	$	147
Duke Energy Carolinas			37		39			78		78
Progress Energy			73		77			141		146
Duke Energy Progress			27		26			55		52
Duke Energy Florida			46		51			86		94
Duke Energy Ohio			24		23			55		53
Duke Energy Indiana			8		8			17		16