INVESTMENTS IN DEBT AND EQUITY SECURITIES

The Duke Energy Registrants classify their investments in debt and equity securities as either trading or 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. The fair value of these investments was $7 million as of December 31, 2014 and $18 million as of December 31, 2013.

AVAILABLE-FOR-SALE SECURITIES

All other investments in debt and equity securities are classified as available-for-sale securities.

Duke Energy’s available-for-sale securities are primarily comprised of investments held in (i) the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to OPEB plans, (iii) Duke Energy’s captive insurance investment portfolio, and (iv) Duke Energy’s foreign operations investment portfolio.

Duke Energy holds corporate debt securities that were purchased using excess cash from its foreign operations. These investments are either classified as Cash and cash equivalents or Short-term investments on the Consolidated Balance Sheets based on maturity date and are available for current operations of Duke Energy’s foreign business. The fair value of these investments classified as Short-term investments was $44 million as of December 31, 2013.

Duke Energy classifies all other investments in debt and equity securities as long-term, unless otherwise noted.

Investment Trusts

The investments within the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida and the Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana 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. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt and equity securities within the Investment Trusts are considered other-than-temporary impairments and are recognized immediately. Pursuant to regulatory accounting, realized and unrealized gains and losses associated with investments within the Investment Trusts are deferred as a regulatory asset or liability. As a result, there is no immediate impact on earnings of the Duke Energy Registrants.

Other Available-for-Sale Securities

Unrealized gains and losses on all other available-for-sale securities are included in other comprehensive income until realized, unless it is determined the carrying value of an investment is other-than-temporarily impaired. If an other-than-temporary impairment exists, the unrealized loss is included in earnings based on the criteria discussed below.

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, (i) the length of time over which the market value has been lower than the cost basis of the investment, (ii) the percentage decline compared to the cost of the investment, and (iii) management’s intent and ability to retain its investment 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.

If the entity does not have an intent to sell a debt security and it is not more likely than not 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 a credit loss exists. In determining whether a credit loss exists, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than the amortized cost basis, (ii) 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, (iii) consideration of underlying collateral and guarantees of amounts by government entities, (iv) ability of the issuer of the security to make scheduled interest or principal payments, and (v) any changes to the rating of the security by rating agencies. If a credit loss exists, the amount of impairment write-down to fair value is split between credit loss and other factors. The amount related to credit loss is recognized in earnings. The amount related to other factors is recognized in other comprehensive income. There were no credit losses as of December 31, 2014 and 2013. There were no other-than-temporary impairments for debt or equity securities as of December 31, 2014 and 2013.

DUKE ENERGY

The following table presents the estimated fair value of investments in available-for-sale securities.



	December 31, 2014						December 31, 2013
(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	$	—	$	—	$	136	$	—	$	—	$	110
Equity securities	1,926		29		3,650		1,813		10		3,579
Corporate debt securities	14		2		454		8		6		400
Municipal bonds	5		—		184		2		6		160
U.S. government bonds	19		2		978		7		12		730
Other debt securities	1		2		147		22		2		154
Total NDTF	1,965		35		5,549		1,852		36		5,133
Other Investments
Cash and cash equivalents	—		—		15		—		—		21
Equity securities	34		—		96		29		—		91
Corporate debt securities	1		1		58		1		1		99
Municipal bonds	3		1		76		2		2		79
U.S. government bonds	—		—		27		—		—		17
Other debt securities	1		1		80		—		8		111
Total Other Investments^(a)	39		3		352		32		11		418
Total Investments	$	2,004	$	38	$	5,901	$	1,884	$	47	$	5,551


(a)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2014
Due in one year or less	178
Due after one through five years	571
Due after five through 10 years	464
Due after 10 years	791
Total	2,004

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2014		2013		2012
Realized gains	$	271	$	209	$	117
Realized losses	105		65		19

DUKE ENERGY CAROLINAS

The following table presents the estimated fair value of investments in available-for-sale securities.



	December 31, 2014						December 31, 2013
(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	$	—	$	—	$	51	$	—	$	—	$	42
Equity securities	1,102		17		2,162		974		6		1,964
Corporate debt securities	8		2		316		5		5		274
Municipal bonds	1		—		62		—		2		54
U.S. government bonds	7		1		308		3		7		354
Other debt securities	1		2		133		22		2		146
Total NDTF	1,119		22		3,032		1,004		22		2,834
Other Investments
Other debt securities	—		1		3		—		1		3
Total Other Investments^(a)	—		1		3		—		1		3
Total Investments	$	1,119	$	23	$	3,035	$	1,004	$	23	$	2,837


(a)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2014
Due in one year or less	$	1
Due after one through five years	155
Due after five through 10 years	257
Due after 10 years	409
Total	$	822

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2014		2013		2012
Realized gains	$	109	$	115	$	89
Realized losses	93		12		6

PROGRESS ENERGY

The following table presents the estimated fair value of investments in available-for-sale securities.



	December 31, 2014						December 31, 2013
(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	$	—	$	—	$	85	$	—	$	—	$	68
Equity securities	824		12		1,488		839		4		1,615
Corporate debt securities	6		—		138		3		1		126
Municipal bonds	4		—		122		2		4		106
U.S. government bonds	12		1		670		4		5		376
Other debt securities	—		—		14		—		—		8
Total NDTF	846		13		2,517		848		14		2,299
Other Investments
Cash and cash equivalents	—		—		15		—		—		20
Municipal bonds	3		—		43		1		—		39
Total Other Investments^(a)	3		—		58		1		—		59
Total Investments	$	849	$	13	$	2,575	$	849	$	14	$	2,358


(a)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2014
Due in one year or less	$	161
Due after one through five years	350
Due after five through 10 years	157
Due after 10 years	319
Total	$	987

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2014		2013		2012
Realized gains	$	157	$	90	$	34
Realized losses	11		46		18

DUKE ENERGY PROGRESS

The following table presents the estimated fair value of investments in available-for-sale securities.



	December 31, 2014						December 31, 2013
(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	$	—	$	—	$	48
Equity securities	612		10		1,171		535		3		1,069
Corporate debt securities	5		—		97		3		1		80
Municipal bonds	4		—		120		2		4		104
U.S. government bonds	9		1		265		4		3		232
Other debt securities	—		—		8		—		—		5
Total NDTF	630		11		1,711		544		11		1,538
Other Investments
Cash and cash equivalents	—		—		—		—		—		2
Total Other Investments^(a)	—		—		—		—		—		2
Total Investments	$	630	$	11	$	1,711	$	544	$	11	$	1,540


(a)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2014
Due in one year or less	$	14
Due after one through five years	140
Due after five through 10 years	109
Due after 10 years	227
Total	$	490

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2014		2013		2012
Realized gains	$	19	$	58	$	21
Realized losses	5		26		8

DUKE ENERGY FLORIDA

The following table presents the estimated fair value of investments in available-for-sale securities.



	December 31, 2014						December 31, 2013
(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	$	—	$	—	$	35	$	—	$	—	$	20
Equity securities	212		2		317		304		1		546
Corporate debt securities	1		—		41		—		—		46
Municipal bonds	—		—		2		—		—		2
U.S. government bonds	3		—		405		—		2		144
Other debt securities	—		—		6		—		—		3
Total NDTF	216		2		806		304		3		761
Other Investments
Cash and cash equivalents	—		—		1		—		—		3
Municipal bonds	3		—		43		1		—		39
Total Other Investments^(a)	3		—		44		1		—		42
Total Investments	$	219	$	2	$	850	$	305	$	3	$	803


(a)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2014
Due in one year or less	$	147
Due after one through five years	210
Due after five through 10 years	48
Due after 10 years	92
Total	$	497

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2014		2013		2012
Realized gains	$	138	$	32	$	13
Realized losses	5		20		9

DUKE ENERGY INDIANA

The following table presents the estimated fair value of investments in available-for-sale securities.



	December 31, 2014						December 31, 2013
(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
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—	$	1
Equity securities	28		—		71		24		—		65
Municipal bonds	—		1		30		—		1		28
Total Other Investments^(a)	28		1		101		24		1		94
Total Investments	$	28	$	1	$	101	$	24	$	1	$	94


(a)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2014
Due in one year or less	$	1
Due after one through five years	17
Due after five through 10 years	8
Due after 10 years	4
Total	$	30

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were insignificant for the years ended December 31, 2014, 2013 and 2012.