BUSINESS SEGMENTS

Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income, as discussed below, includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.

Operating segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business.

Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost. Segment assets presented in the following tables exclude all intercompany assets.

DUKE ENERGY

Duke Energy has the following reportable operating segments: Regulated Utilities, International Energy and Commercial Portfolio.

Regulated Utilities conducts electric and natural gas operations that are substantially all regulated and, accordingly, qualify for regulatory accounting treatment. These operations are primarily conducted through the Subsidiary Registrants and are subject to the rules and regulations of the FERC, NRC, NCUC, PSCSC, FPSC, PUCO, IURC and KPSC.

International Energy principally operates and manages power generation facilities and engages in sales and marketing of electric power, natural gas and natural gas liquids outside the U.S. Its activities principally relate to power generation in Latin America. Additionally, International Energy owns a 25 percent interest in National Methanol Company (NMC), a large regional producer of methyl tertiary butyl ether (MTBE) located in Saudi Arabia. The investment in NMC is accounted for under the equity method of accounting.

Commercial Portfolio builds, develops and operates wind and solar renewable generation and energy transmission projects throughout the continental U.S. The segment was renamed as a result of the sale of the nonregulated Midwest generation business, as discussed in Note 2. For periods subsequent to the sale, beginning in the second quarter of 2015, certain immaterial results of operations and related assets previously presented in the Commercial Portfolio segment are presented in Regulated Utilities and Other.

The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of unallocated corporate interest expense, unallocated corporate costs, contributions to The Duke Energy Foundation, and the operations of Duke Energy’s wholly owned captive insurance subsidiary, Bison Insurance Company Limited (Bison).



	Three Months Ended June 30, 2015
(in millions)	Regulated Utilities		International Energy		Commercial Portfolio			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	5,211	$	287	$	75		$	5,573	$	16		$	—		$	5,589
Intersegment revenues	9		—		—			9		18			(27		)	—
Total revenues	$	5,220	$	287	$	75		$	5,582	$	34		$	(27	)	$	5,589
Segment income (loss)^(a)(b)	$	632	$	52	$	(33	)	$	651	$	(48	)	$	(3	)	$	600
Add back noncontrolling interests component																4
Loss from discontinued operations, net of tax ^(c)																(57		)
Net income																$	547
Segment assets	$	108,139	$	3,913	$	3,462		$	115,514	$	2,880		$	181		$	118,575

(a) Other includes after-tax costs to achieve the Progress Energy merger of $14 million.


(b)	Commercial Portfolio includes state tax expense of $41 million, resulting from changes to state apportionment factors due to the sale of the Disposal Group, that does not qualify for discontinued operations. Refer to Note 2 for further information related to the sale.


(c)	Includes the after-tax impact of $46 million for the agreement in principle reached in a lawsuit related to the Disposal Group. Refer to Note 5 for further information related to the lawsuit.



	Three Months Ended June 30, 2014
(in millions)	Regulated Utilities		International Energy		Commercial Portfolio			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	5,272	$	364	$	64		$	5,700	$	8		$	—		$	5,708
Intersegment revenues	11		—		—			11		21			(32		)	—
Total revenues	$	5,283	$	364	$	64		$	5,711	$	29		$	(32	)	$	5,708
Segment income (loss)^(a)	$	689	$	146	$	(21	)	$	814	$	(90	)	$	(2	)	$	722
Add back noncontrolling interests component																4
Loss from discontinued operations, net of tax																(113		)
Net income																$	613

(a) Other includes after-tax costs to achieve the Progress Energy merger of $38 million.



	Six Months Ended June 30, 2015
(in millions)	Regulated Utilities		International Energy		Commercial Portfolio			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	10,924	$	560	$	148		$	11,632	$	22		$	—		$	11,654
Intersegment revenues	19		—		—			19		39			(58		)	—
Total revenues	$	10,943	$	560	$	148		$	11,651	$	61		$	(58	)	$	11,654
Segment income (loss)^(a)(b)	$	1,406	$	88	$	(32	)	$	1,462	$	(85	)	$	(4	)	$	1,373
Add back noncontrolling interests component																7
Income from discontinued operations, net of tax ^(c)																34
Net income																$	1,414

(a) Other includes after-tax costs to achieve the Progress Energy merger of $27 million.


(b)	Commercial Portfolio includes state tax expense of $41 million, resulting from changes to state apportionment factors due to the sale of the Disposal Group, that does not qualify for discontinued operations. Refer to Note 2 for further information related to the sale.


(c)	Includes after-tax impact of $53 million for the agreement in principle reached in a lawsuit related to the Disposal Group. Refer to Note 5 for further information related to the lawsuit.



	Six Months Ended June 30, 2014
(in millions)	Regulated Utilities		International Energy		Commercial Portfolio			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	11,067	$	746	$	145		$	11,958	$	13		$	—		$	11,971
Intersegment revenues	21		—		—			21		41			(62		)	—
Total revenues	$	11,088	$	746	$	145		$	11,979	$	54		$	(62	)	$	11,971
Segment income (loss)^(a)(b)	$	1,426	$	276	$	(53	)	$	1,649	$	(177	)	$	(4	)	$	1,468
Add back noncontrolling interest																8
Loss from discontinued operations, net of tax																(956		)
Net income																$	520


(a)	Commercial Portfolio includes a pretax impairment charge of $94 million related to OVEC. See Note 13 for additional information.

(b) Other includes after-tax costs to achieve the Progress Energy merger of $72 million.

DUKE ENERGY OHIO

All of Duke Energy Ohio’s revenues are generated domestically and its long-lived assets are all in the U.S.

Duke Energy Ohio had two reportable operating segments until the sale of the nonregulated Midwest generation business, Regulated Utilities and Commercial Portfolio. Commercial Portfolio no longer qualifies as a Duke Energy Ohio reportable operating segment as a result of the sale. Refer to Note 2 for further information about the sale. Therefore, for periods subsequent to the sale, beginning in the second quarter of 2015, all of the remaining assets and related results of operations previously presented in Commercial Portfolio are presented in Regulated Utilities and Other.

Regulated Utilities transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Kentucky. Regulated Utilities also transports and sells natural gas in portions of Ohio and northern Kentucky. It conducts operations primarily through Duke Energy Ohio and its wholly owned subsidiary, Duke Energy Kentucky.

Other is primarily comprised of governance costs allocated by its parent, Duke Energy, and revenues and expenses related to Duke Energy Ohio's contractual arrangement to buy power from OVEC's power plants. Duke Energy Ohio had no intersegment revenues for the six months ended June 30, 2015 or 2014. For additional information on related party transactions refer to Note 9.



	Three Months Ended June 30, 2015
(in millions)	Regulated Utilities		Other			Eliminations			Consolidated
Total revenues	$	396	$	9		$	—		$	405
Segment income (loss)	$	19	$	(6	)	$	—		$	13
Loss from discontinued operations, net of tax ^(a)									(65		)
Net loss									$	(52	)
Segment assets	$	6,941	$	106		$	(25	)	$	7,022


(a)	Includes the after-tax impact of $46 million for the agreement in principle reached in a lawsuit related to the Disposal Group. Refer to Note 5 for further information related to the lawsuit.



	Three Months Ended June 30, 2014
(in millions)	Regulated Utilities		Commercial Portfolio			Total Reportable Segments		Other			Consolidated
Total revenues	$	415	$	(3	)	$	412	$	—		$	412
Segment income (loss)	$	47	$	(14	)	$	33	$	(5	)	$	28
Loss from discontinued operations, net of tax											(135		)
Net loss											$	(107	)



	Six Months Ended June 30, 2015
(in millions)	Regulated Utilities		Commercial Portfolio			Total Reportable Segments		Other			Consolidated
Total revenues	$	968	$	14		$	982	$	9		$	991
Segment income (loss)	$	89	$	(9	)	$	80	$	(8	)	$	72
Income from discontinued operations, net of tax ^(a)											25
Net income											$	97


(a)	Includes after-tax impact of $53 million for the agreement in principle reached in a lawsuit related to the Disposal Group. Refer to Note 5 for further information related to the lawsuit.



	Six Months Ended June 30, 2014
(in millions)	Regulated Utilities		Commercial Portfolio			Total Reportable Segments		Other			Consolidated
Total revenues	$	977	$	10		$	987	$	—		$	987
Segment income (loss)^(a)	$	108	$	(88	)	$	20	$	(7	)	$	13
Loss from discontinued operations, net of tax											(1,010		)
Net loss											$	(997	)

(a) Commercial Portfolio includes a pretax impairment charge of $94 million related to OVEC. See Note 13 for additional information.

DUKE ENERGY CAROLINAS, PROGRESS ENERGY, DUKE ENERGY PROGRESS, DUKE ENERGY FLORIDA AND DUKE ENERGY INDIANA

The remaining Subsidiary Registrants each have one reportable operating segment, Regulated Utilities, which generates, transmits, distributes and sells electricity. The remainder of each company’s operations is classified as Other. While not considered a reportable segment for any of these companies, Other consists of certain unallocated corporate costs. The following table summarizes the net loss for Other at each of these registrants.



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2015			2014			2015			2014
Duke Energy Carolinas	$	(10	)	$	(27	)	$	(18	)	$	(48	)
Progress Energy^(a)	(42		)	(45		)	(84		)	(97		)
Duke Energy Progress	(4		)	(3		)	(8		)	(13		)
Duke Energy Florida	(3		)	(7		)	(6		)	(11		)
Duke Energy Indiana	(2		)	(4		)	(4		)	(7		)


(a)	Other for Progress Energy also includes interest expense on corporate debt instruments of $59 million and $119 million for the three and six months ended June 30, 2015, respectively, and $60 million and $123 million for the three and six months ended June 30, 2014, respectively.

The assets of Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana are substantially all included within the Regulated Utilities segment at June 30, 2015 and 2014.