Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes And Other Taxes [Abstract]

Income Taxes

22. INCOME TAXES

Income Tax Expense

Components of Income Tax Expense

		Year Ended December 31, 2013
(in millions)		Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Current income taxes
Federal		$	(123)		$	49		$	(221)		$	(70)		$	(143)		$	(21)		$	(88)
State			(37)			11			(37)			(10)			(13)			(2)			7
Foreign			151			―			―			―			―			―			―
Total current income taxes			(9)			60			(258)			(80)			(156)			(23)			(81)
Deferred income taxes
Federal			1,129			464			555			316			326			93			276
State			142			75			84			59			44			5			29
Foreign			14			―			―			―			―			―			―
Total deferred income taxes(a)			1,285			539			639			375			370			98			305
Investment tax credit amortization			(15)			(5)			(8)			(7)			(1)			―			(1)
Income tax expense from continuing operations			1,261			594			373			288			213			75			223
Tax benefit from discontinued operations			(27)			―			(26)			―			―			―			―
Total income tax expense included in Consolidated Statements of Operations		$	1,234		$	594		$	347		$	288		$	213		$	75		$	223
(a)	Includes benefits of net operating loss (NOL) carryforwards of $837 million at Duke Energy, $458 million at Progress Energy, $64 million at Duke Energy Progress, $301 million at Duke Energy Florida, $29 million at Duke Energy Ohio and $179 million at Duke Energy Indiana.

		Year Ended December 31, 2012
(in millions)		Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Current income taxes
Federal		$	(46)		$	(1)		$	(88)		$	(48)		$	6		$	26		$	(27)
State			35			(25)			2			(6)			―			11			27
Foreign			133			―			―			―			―			―			―
Total current income taxes			122			(26)			(86)			(54)			6			37			―
Deferred income taxes
Federal			513			408			226			162			121			72			(47)
State			64			77			40			9			21			(9)			(25)
Foreign			20			―			―			―			―			―			―
Total deferred income taxes(a)			597			485			266			171			142			63			(72)
Investment tax credit amortization			(14)			(6)			(8)			(7)			(1)			(2)			(1)
Income tax expense (benefit) from continuing operations			705			453			172			110			147			98			(73)
Tax expense from discontinued operations			24			―			29			―			―			―			―
Total income tax expense (benefit) included in Consolidated Statements of Operations		$	729		$	453		$	201		$	110		$	147		$	98		$	(73)
(a)	Includes benefits of NOL carryforwards of $1,127 million at Duke Energy, $245 million at Duke Energy Carolinas, $357 million at Progress Energy, $257 million at Duke Energy Progress, $25 million at Duke Energy Florida, $99 million at Duke Energy Ohio and $205 million at Duke Energy Indiana.

		Year Ended December 31, 2011
(in millions)		Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Current income taxes
Federal		$	(37)		$	(122)		$	(91)		$	(27)		$	(60)		$	(95)		$	95
State			21			30			29			21			5			1			42
Foreign			164			―			―			―			―			―			―
Total current income taxes			148			(92)			(62)			(6)			(55)			(94)			137
Deferred income taxes
Federal			526			531			365			262			214			194			(38)
State			56			40			27			6			22			(2)			(23)
Foreign			32			―			―			―			―			―			―
Total deferred income taxes(a)			614			571			392			268			236			192			(61)
Investment tax credit amortization			(10)			(7)			(7)			(6)			(1)			(2)			(2)
Income tax expense from continuing operations			752			472			323			256			180			96			74
Tax benefit from discontinued operations			―			―			(3)			―			―			―			―
Total income tax expense included in Consolidated Statements of Operations		$	752		$	472		$	320		$	256		$	180		$	96		$	74
(a)	Includes benefits of NOL carryforwards of $274 million at Duke Energy, $79 million at Duke Energy Carolinas, $213 million at Progress Energy, $54 million at Duke Energy Progress, $41 million at Duke Energy Florida and $47 million at Duke Energy Ohio.

Duke Energy Income from Continuing Operations before Income Taxes
	Years Ended December 31,
(in millions)	2013			2012			2011
Domestic		$	3,320		$	1,827		$	1,780
Foreign			600			624			685
Income from continuing operations before income taxes		$	3,920		$	2,451		$	2,465

Statutory Rate Reconciliation
The following tables present a reconciliation of income tax expense at the U.S. federal statutory tax rate to the actual tax expense from continuing operations.
	Year Ended December 31, 2013
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Income tax expense, computed at the statutory rate of 35 percent	$	1,372		$	549		$	361		$	276		$	188		$	62		$	203
State income tax, net of federal income tax effect		67			56			31			31			20			2			23
Tax differential on foreign earnings		(45)			―			―			―			―			―			―
AFUDC equity income		(55)			(32)			(18)			(15)			(3)			―			(5)
Renewable energy production tax credits		(59)			―			―			―			―			―			―
Other items, net		(19)			21			(1)			(4)			8			11			2
Income tax expense from continuing operations	$	1,261		$	594		$	373		$	288		$	213		$	75		$	223
Effective tax rate		32.2	%		37.8	%		36.2	%		36.5	%		39.6	%		42.2	%		38.4	%

	Year Ended December 31, 2012
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Income tax expense, computed at the statutory rate of 35 percent	$	858		$	461		$	185		$	134		$	145		$	96		$	(43)
State income tax, net of federal income tax effect		64			34			33			1			14			1			1
Tax differential on foreign earnings		(66)			―			―			―			―			―			―
AFUDC equity income		(101)			(54)			(37)			(24)			(13)			(2)			(26)
Renewable energy production tax credits		(25)			―			―			―			―			―			―
Other items, net		(25)			12			(9)			(1)			1			3			(5)
Income tax expense (benefit) from continuing operations	$	705		$	453		$	172		$	110		$	147		$	98		$	(73)
Effective tax rate		28.8	%		34.3	%		32.7	%		28.7	%		35.7	%		36.0	%		59.5	%

	Year Ended December 31, 2011
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Income tax expense, computed at the statutory rate of 35 percent	$	863		$	457		$	319		$	270		$	173		$	102		$	85
State income tax, net of federal income tax effect		50			46			39			18			17			(1)			13
Tax differential on foreign earnings		(44)			―			―			―			―			―			―
AFUDC equity income		(91)			(59)			(36)			(25)			(11)			(2)			(31)
Renewable energy production tax credits		(21)			―			―			―			―			―			―
Other items, net		(5)			28			1			(7)			1			(3)			7
Income tax expense from continuing operations	$	752		$	472		$	323		$	256		$	180		$	96		$	74
Effective tax rate		30.5	%		36.1	%		35.6	%		33.2	%		36.3	%		33.1	%		30.6	%

Valuation allowances have been established for certain foreign and state NOL carryforwards and state income tax credits that reduce deferred tax assets to an amount that will be realized on a more-likely-than-not basis. The net change in the total valuation allowance is included in Tax differential on foreign earnings and State income tax, net of federal income tax effect in the above tables.

DEFERRED TAXES
Net Deferred Income Tax Liability Components
		December 31, 2013
(in millions)		Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Deferred credits and other liabilities		$	245		$	56		$	136		$	9		$	96		$	(13)		$	9
Capital lease obligations			59			11			―			―			―			―			(2)
Pension, postretirement and other employee benefits			649			18			341			119			145			23			54
Progress Energy merger purchase accounting adjustments(a)			1,184			―			―			―			―			―			―
Tax credits and NOL carryforwards			4,307			488			1,965			396			365			165			521
Other			265			15			116			39			43			20			14
Valuation allowance			(192)			―			(40)			(1)			―			―			―
Total deferred income tax assets			6,517			588			2,518			562			649			195			596
Investments and other assets			(1,396)			(999)			(209)			(160)			(49)			(17)			(7)
Accelerated depreciation rates			(12,615)			(4,400)			(3,663)			(2,528)			(1,160)			(1,937)			(1,591)
Regulatory assets and deferred debits			(3,185)			(609)			(1,389)			(202)			(1,159)			(168)			(117)
Total deferred income tax liabilities			(17,196)			(6,008)			(5,261)			(2,890)			(2,368)			(2,122)			(1,715)
Net deferred income tax liabilities		$	(10,679)		$	(5,420)		$	(2,743)		$	(2,328)		$	(1,719)		$	(1,927)		$	(1,119)
(a)	Primarily related to capital lease obligations and debt fair value adjustments.

On July 23, 2013, 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 recorded a net reduction of approximately $145 million to its North Carolina deferred tax liability in the third quarter of 2013. The significant majority of this deferred tax liability reduction was offset by recording a regulatory liability pending NCUC determination of the disposition of the amounts related to Duke Energy Carolinas and Duke Energy Progress. The impact of HB 998 did not have a significant impact on the financial position, results of operation, or cash flows of Duke Energy, Duke Energy Carolinas, Progress Energy or Duke Energy Progress.

The following table presents the expiration of tax credits and NOL carryforwards.
		December 31, 2013
(in millions)		Amount		Expiration Year
Investment Tax Credits		$	498	2029	-	2033
Alternative Minimum Tax Credits			1,028	Indefinite
Federal NOL carryforwards			2,471	2030	-	2033
State NOL carryforwards and credits(a)			189	2014	-	2033
Foreign NOL carryforwards(b)			121	2015	-	2033
Total tax credits and NOL carryforwards		$	4,307
(a)	A valuation allowance of $83 million has been recorded on the state NOL carryforwards, state tax credits and state capital loss carryforwards, as presented in the Net Deferred Income Tax Liability Components table.
(b)	A valuation allowance of $109 million has been recorded on the foreign NOL carryforwards, as presented in the Net Deferred Income Tax Liability Components table. Certain foreign NOL carryforwards have an indefinite expiration period.

		December 31, 2012
(in millions)		Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Deferred credits and other liabilities		$	256		$	64		$	110		$	24		$	76		$	(10)		$	22
Capital lease obligations			60			13			―			―			―			―			(1)
Pension, postretirement and other employee benefits			1,320			117			712			318			257			62			94
Progress Energy merger purchase accounting adjustments(a)			1,312			―			―			―			―			―			―
Tax credits and NOL carryforwards			3,311			447			1,536			309			91			152			340
Other			408			22			230			82			126			10			27
Valuation allowance			(226)			―			(77)			―			―			(1)			―
Total deferred income tax assets			6,441			663			2,511			733			550			213			482
Investments and other assets			(1,093)			(838)			(112)			(108)			(6)			(25)			(18)
Accelerated depreciation rates			(11,208)			(4,289)			(2,803)			(2,178)			(592)			(1,823)			(1,131)
Regulatory assets and deferred debits			(3,819)			(627)			(1,775)			(465)			(1,318)			(197)			(185)
Total deferred income tax liabilities			(16,120)			(5,754)			(4,690)			(2,751)			(1,916)			(2,045)			(1,334)
Net deferred income tax liabilities		$	(9,679)		$	(5,091)		$	(2,179)		$	(2,018)		$	(1,366)		$	(1,832)		$	(852)
(a)	Primarily related to capital lease obligations and debt fair value adjustments.

Classification of Deferred Tax Assets (Liabilities) in the Consolidated Balance Sheets
	December 31, 2013
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Current Assets: Other	$	1,373		$	286		$	540		$	229		$	110		$	85		$	52
Investments and Other Assets: Other		45			―			―			―			―			―			―
Deferred Credits and Other Liabilities: Other		(12,097)			(5,706)			(3,283)			(2,557)			(1,829)			(2,012)			(1,171)
Net deferred income tax liabilities	$	(10,679)		$	(5,420)		$	(2,743)		$	(2,328)		$	(1,719)		$	(1,927)		$	(1,119)

	December 31, 2012
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Current Assets: Other	$	732		$	90		$	359		$	144		$	152		$	21		$	1
Investments and Other Assets: Other		85			―			20			―			―			―			―
Current Liabilities: Other		(6)			―			―			―			―			―			―
Deferred Credits and Other Liabilities: Other		(10,490)			(5,181)			(2,558)			(2,162)			(1,518)			(1,853)			(853)
Net deferred income tax liabilities	$	(9,679)		$	(5,091)		$	(2,179)		$	(2,018)		$	(1,366)		$	(1,832)		$	(852)

Deferred income taxes and foreign withholding taxes have not been provided on undistributed earnings of Duke Energy's foreign subsidiaries when such amounts are deemed to be indefinitely reinvested. The cumulative undistributed earnings as of December 31, 2013 on which Duke Energy has not provided deferred income taxes and foreign withholding taxes is approximately $2.4 billion. The amount of unrecognized deferred tax liability related to these undistributed earnings is estimated at between $300 million and $375 million.

UNRECOGNIZED TAX BENEFITS
The following tables present changes to unrecognized tax benefits.
	Year Ended December 31, 2013
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Unrecognized tax benefits — January 1	$	540		$	271		$	131		$	67		$	44		$	36		$	32
Unrecognized tax benefits increases (decreases)
Gross decreases — tax positions in prior periods		(231)			(100)			(86)			(45)			(37)			(36)			(31)
Decreases due to settlements		(66)			―			―			―			―			―			―
Reduction due to lapse of statute of limitations		(13)			―			(13)			―			1			―			―
Total changes		(310)			(100)			(99)			(45)			(36)			(36)			(31)
Unrecognized tax benefits — December 31	$	230		$	171		$	32		$	22		$	8		$	―		$	1

	Year Ended December 31, 2012
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Unrecognized tax benefits — January 1	$	385		$	260		$	173		$	73		$	80		$	32		$	24
Acquisitions		128			―			―			―			―			―			―
Unrecognized tax benefits increases (decreases)
Gross increases — tax positions in prior periods		29			12			23			10			12			2			6
Gross decreases — tax positions in prior periods		(4)			―			(72)			(19)			(52)			―			―
Gross increases — current period tax positions		28			15			8			4			4			4			4
Gross decreases — current period tax positions		(9)			(5)			(1)			(1)			―			(2)			(2)
Decreases due to settlements		(13)			(11)			―			―			―			―			―
Reduction due to lapse of statute of limitations		(4)			―			―			―			―			―			―
Total changes		155			11			(42)			(6)			(36)			4			8
Unrecognized tax benefits — December 31	$	540		$	271		$	131		$	67		$	44		$	36		$	32

	Year Ended December 31, 2011
(in millions)	Duke Energy		Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Ohio			Duke Energy Indiana
Unrecognized tax benefits — January 1	$	342		$	217		$	176		$	74		$	99		$	29		$	21
Unrecognized tax benefits increases (decreases)
Gross increases — tax positions in prior periods		49			42			88			19			66			4			3
Gross decreases — tax positions in prior periods		(18)			(8)			(24)			(14)			(21)			(5)			(3)
Gross increases — current period tax positions		16			9			9			8			1			4			3
Gross decreases — current period tax positions		―			―			(8)			(4)			(4)			―			―
Decreases due to settlements		(4)			―			(68)			(10)			(61)			―			―
Total changes		43			43			(3)			(1)			(19)			3			3
Unrecognized tax benefits — December 31	$	385		$	260		$	173		$	73		$	80		$	32		$	24

The following table includes additional information regarding the Duke Energy Registrants' unrecognized tax benefits. It is reasonably possible that Duke Energy and Duke Energy Carolinas will reflect an approximate $4 million reduction in unrecognized tax benefits within the next 12 months due to expected settlements. All other Duke Energy Registrants do not anticipate a material increase or decrease in unrecognized tax benefits within the next 12 months.
		December 31, 2013
(in millions)		Duke Energy			Duke Energy Carolinas			Progress Energy			Duke Energy Progress			Duke Energy Florida			Duke Energy Indiana
Amount that if recognized, would affect the effective tax rate or regulatory liability(a)			$	128		$	116		$	2		$	1		$	1		$	1
Amount that if recognized, would be recorded as a component of discontinued operations				8			―			―			―			―			―
(a)	Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana are unable to estimate the specific amounts that would affect the effective tax rate versus the regulatory liability.

OTHER TAX MATTERS
The following tables include interest recognized in the Consolidated Statements of Operations and the Consolidated Balance Sheets.
	Year Ended December 31, 2013
(in millions)	Duke Energy		Duke Energy Carolinas		Progress Energy		Duke Energy Progress		Duke Energy Florida		Duke Energy Ohio		Duke Energy Indiana
Net interest income recognized related to income taxes	$	2	$	2	$	6	$	7	$	―	$	4	$	1
Interest payable related to income taxes		27		8		10		2		7		―		―

Year Ended December 31, 2012

(in millions)

Duke Energy

Duke Energy Carolinas

Progress Energy

Duke Energy Progress

Duke Energy Florida

Duke Energy Ohio

Duke Energy Indiana

Net interest income recognized related to income taxes

$

10

$

9

$

―

$

―

$

―

$

―

$

2

Net interest expense recognized related to income taxes

―

―

2

―

2

―

―

Interest receivable related to income taxes

―

7

―

―

―

―

―

Interest payable related to income taxes

7

―

17

8

9

3

1

	Year Ended December 31, 2011
(in millions)	Duke Energy		Duke Energy Carolinas		Progress Energy		Duke Energy Progress		Duke Energy Florida		Duke Energy Ohio		Duke Energy Indiana
Net interest income recognized related to income taxes	$	12	$	5	$	24	$	6	$	22	$	―	$	―
Net interest expense recognized related to income taxes		―		―		―		―		―		1		1
Interest receivable related to income taxes		8		5		―		―		―		―		―
Interest payable related to income taxes		―		―		21		8		7		3		3

Duke Energy and its subsidiariesare no longer subject to U.S. federal examination for years before 2006. The years 2006 and 2007 are in Appeals. The IRS is currently auditing the federal income tax returns for years 2008 through 2011. With few exceptions, Duke Energy and its subsidiaries are no longer subject to state, local or non-U.S. income tax examinations by tax authorities for years before 2004.