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 $10 million at March 31, 2015 and $7 million at December 31, 2014.

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 Nuclear Decommissioning Trust Fund (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 other post-retirement benefit obligations (OPEB) plans, (iii) Duke Energy’s captive insurance investment portfolio and (iv) Duke Energy’s foreign operations investment portfolio.

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, substantially all 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 March 31, 2015 and December 31, 2014. There were no other-than-temporary impairments for debt or equity securities as of March 31, 2015 and December 31, 2014.

DUKE ENERGY

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



	March 31, 2015						December 31, 2014
(in millions)	Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value_(c)		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	106	$	—	$	—	$	136
Equity securities	1,916		28		3,643		1,926		29		3,650
Corporate debt securities	19		1		482		14		2		454
Municipal bonds	7		2		227		5		—		184
U.S. government bonds	24		1		864		19		2		978
Other debt securities	2		2		148		1		2		147
Total NDTF^(d)	$	1,968	$	34	$	5,470	$	1,965	$	35	$	5,549
Other Investments
Cash and cash equivalents	$	—	$	—	$	29	$	—	$	—	$	15
Equity securities	36		—		98		34		—		96
Corporate debt securities	3		—		81		1		1		58
Municipal bonds	3		1		75		3		1		76
U.S. government bonds	—		—		45		—		—		27
Other debt securities	1		2		83		1		1		80
Total Other Investments^(a)	$	43	$	3	$	411	$	39	$	3	$	352
Total Investments	$	2,011	$	37	$	5,881	$	2,004	$	38	$	5,901

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


(b)	Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset.


(c)	These amounts exclude net pending trade receivables of $107 million as of March 31, 2015.


(d)	The decrease in the estimated fair value of the NDTF for the three months ended March 31, 2015 is primarily due to reimbursement from the NDTF for Duke Energy Florida's costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Station.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2015
Due in one year or less	$	110
Due after one through five years	603
Due after five through 10 years	488
Due after 10 years	804
Total	$	2,005

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



	Three Months Ended March 31,
(in millions)	2015		2014
Realized gains	$	102	$	31
Realized losses	14		4

DUKE ENERGY CAROLINAS

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



	March 31, 2015						December 31, 2014
(in millions)	Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value_(c)		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	42	$	—	$	—	$	51
Equity securities	1,076		16		2,127		1,102		17		2,162
Corporate debt securities	11		1		329		8		2		316
Municipal bonds	2		1		90		1		—		62
U.S. government bonds	8		1		296		7		1		308
Other debt securities	2		2		128		1		2		133
Total NDTF	$	1,099	$	21	$	3,012	$	1,119	$	22	$	3,032
Other Investments
Other debt securities	$	—	$	1	$	3	$	—	$	1	$	3
Total Other Investments^(a)	$	—	$	1	$	3	$	—	$	1	$	3
Total Investments	$	1,099	$	22	$	3,015	$	1,119	$	23	$	3,035


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


(b)	Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset.


(c)	These amounts exclude net pending trade receivables of $107 million as of March 31, 2015.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2015
Due in one year or less	$	5
Due after one through five years	177
Due after five through 10 years	257
Due after 10 years	407
Total	$	846

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



	Three Months Ended March 31,
(in millions)	2015		2014
Realized gains	$	90	$	23
Realized losses	12		1

PROGRESS ENERGY

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



	March 31, 2015						December 31, 2014
(in millions)	Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	64	$	—	$	—	$	85
Equity securities	840		12		1,516		824		12		1,488
Corporate debt securities	8		—		153		6		—		138
Municipal bonds	5		1		137		4		—		122
U.S. government bonds	16		—		568		12		1		670
Other debt securities	—		—		20		—		—		14
Total NDTF^(c)	$	869	$	13	$	2,458	$	846	$	13	$	2,517
Other Investments
Cash and cash equivalents	$	—	$	—	$	18	$	—	$	—	$	15
Municipal bonds	3		—		42		3		—		43
Total Other Investments^(a)	$	3	$	—	$	60	$	3	$	—	$	58
Total Investments	$	872	$	13	$	2,518	$	849	$	13	$	2,575

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


(b)	Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset.


(c)	The decrease in the estimated fair value of the NDTF for the three months ended March 31, 2015 is primarily due to reimbursement from the NDTF for Duke Energy Florida's costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Station.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2015
Due in one year or less	$	84
Due after one through five years	350
Due after five through 10 years	160
Due after 10 years	326
Total	$	920

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



	Three Months Ended March 31,
(in millions)	2015		2014
Realized gains	$	12	$	7
Realized losses	1		2

DUKE ENERGY PROGRESS

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



	March 31, 2015						December 31, 2014
(in millions)	Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	40	$	—	$	—	$	50
Equity securities	626		10		1,194		612		10		1,171
Corporate debt securities	6		—		107		5		—		97
Municipal bonds	5		1		135		4		—		120
U.S. government bonds	10		—		251		9		1		265
Other debt securities	—		—		12		—		—		8
Total NDTF	$	647	$	11	$	1,739	$	630	$	11	$	1,711
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	—
Total Other Investments^(a)	$	—	$	—	$	1	$	—	$	—	$	—
Total Investments	$	647	$	11	$	1,740	$	630	$	11	$	1,711

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


(b)	Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2015
Due in one year or less	$	12
Due after one through five years	147
Due after five through 10 years	113
Due after 10 years	233
Total	$	505

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



	Three Months Ended March 31,
(in millions)	2015		2014
Realized gains	$	9	$	6
Realized losses	1		2

DUKE ENERGY FLORIDA

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



	March 31, 2015						December 31, 2014
(in millions)	Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	24	$	—	$	—	$	35
Equity securities	214		2		322		212		2		317
Corporate debt securities	2		—		46		1		—		41
Municipal bonds	—		—		2		—		—		2
U.S. government bonds	6		—		317		3		—		405
Other debt securities	—		—		8		—		—		6
Total NDTF	$	222	$	2	$	719	$	216	$	2	$	806
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	1
Municipal bonds	3		—		42		3		—		43
Total Other Investments^(a)	$	3	$	—	$	44	$	3	$	—	$	44
Total Investments	$	225	$	2	$	763	$	219	$	2	$	850

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


(b)	Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset.


(c)	The decrease in the estimated fair value of the NDTF for the three months ended March 31, 2015 is primarily due to reimbursement from the NDTF for Duke Energy Florida's costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Station.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2015
Due in one year or less	$	72
Due after one through five years	203
Due after five through 10 years	47
Due after 10 years	93
Total	$	415

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



	Three Months Ended March 31,
(in millions)	2015		2014
Realized gains	$	3	$	1
Realized losses	—		1

DUKE ENERGY INDIANA

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



	March 31, 2015						December 31, 2014
(in millions)	Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses_(b)		Estimated Fair Value
Other Investments
Equity securities	$	30	$	—	$	73	$	28	$	—	$	71
Municipal bonds	—		1		30		—		1		30
Total Other Investments^(a)	$	30	$	1	$	103	$	28	$	1	$	101
Total Investments	$	30	$	1	$	103	$	28	$	1	$	101

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


(b)	Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2015
Due in one year or less	$	2
Due after one through five years	17
Due after five through 10 years	8
Due after 10 years	3
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 three months ended March 31, 2015 and 2014.