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. These investments were sold prior to September 30, 2015. The fair value of these investments was $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 and deferred compensation 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 September 30, 2015 and December 31, 2014.

DUKE ENERGY

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



	September 30, 2015						December 31, 2014
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses_(b)		Value		Gains		Losses_(b)		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	156	$	—	$	—	$	136
Equity securities	1,655		71		3,396		1,926		29		3,650
Corporate debt securities	9		7		500		14		2		454
Municipal bonds	4		2		207		5		—		184
U.S. government bonds	23		1		1,131		19		2		978
Other debt securities	1		3		172		1		2		147
Total NDTF^(c)	$	1,692	$	84	$	5,562	$	1,965	$	35	$	5,549
Other Investments
Cash and cash equivalents	$	—	$	—	$	32	$	—	$	—	$	15
Equity securities	27		1		90		34		—		96
Corporate debt securities	1		2		98		1		1		58
Municipal bonds	3		1		73		3		1		76
U.S. government bonds	1		—		52		—		—		27
Other debt securities	—		1		69		1		1		80
Total Other Investments^(a)	$	32	$	5	$	414	$	39	$	3	$	352
Total Investments	$	1,724	$	89	$	5,976	$	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 are considered other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset.

(c)

As of September 30, 2015, the estimated fair value of the NDTF includes NDTF assets acquired with the purchase of NCEMPA's ownership interest in certain generating assets. Refer to Note 2 for further information. This increase in estimated fair value compared to December 31, 2014, is partially offset due to reimbursements from the NDTF for Duke Energy Florida's costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Plant.

The table below summarizes the maturity date for debt securities.



(in millions)	September 30, 2015
Due in one year or less	$	74
Due after one through five years	781
Due after five through 10 years	635
Due after 10 years	812
Total	$	2,302

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				Nine Months Ended
	September 30,				September 30,
(in millions)	2015		2014		2015		2014
Realized gains	$	30	$	28	$	160	$	90
Realized losses	28		51		59		57

DUKE ENERGY CAROLINAS

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



	September 30, 2015						December 31, 2014
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses_(b)		Value		Gains		Losses_(b)		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	25	$	—	$	—	$	51
Equity securities	930		42		1,990		1,102		17		2,162
Corporate debt securities	5		6		342		8		2		316
Municipal bonds	1		1		69		1		—		62
U.S. government bonds	6		1		383		7		1		308
Other debt securities	1		3		141		1		2		133
Total NDTF	$	943	$	53	$	2,950	$	1,119	$	22	$	3,032
Other Investments
Other debt securities	$	—	$	1	$	3	$	—	$	1	$	3
Total Other Investments^(a)	$	—	$	1	$	3	$	—	$	1	$	3
Total Investments	$	943	$	54	$	2,953	$	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.

The table below summarizes the maturity date for debt securities.



(in millions)	September 30, 2015
Due in one year or less	$	13
Due after one through five years	209
Due after five through 10 years	293
Due after 10 years	423
Total	$	938

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				Nine Months Ended
	September 30,				September 30,
(in millions)	2015		2014		2015		2014
Realized gains	$	25	$	20	$	132	$	72
Realized losses	24		48		47		50

PROGRESS ENERGY

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



	September 30, 2015						December 31, 2014
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses_(b)		Value		Gains		Losses_(b)		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	131	$	—	$	—	$	85
Equity securities	725		29		1,406		824		12		1,488
Corporate debt securities	4		1		158		6		—		138
Municipal bonds	3		1		138		4		—		122
U.S. government bonds	17		—		748		12		1		670
Other debt securities	—		—		31		—		—		14
Total NDTF^(c)	$	749	$	31	$	2,612	$	846	$	13	$	2,517
Other Investments
Cash and cash equivalents	$	—	$	—	$	23	$	—	$	—	$	15
Municipal bonds	3		—		43		3		—		43
Total Other Investments^(a)	$	3	$	—	$	66	$	3	$	—	$	58
Total Investments	$	752	$	31	$	2,678	$	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 table below summarizes the maturity date for debt securities.



(in millions)	September 30, 2015
Due in one year or less	$	38
Due after one through five years	476
Due after five through 10 years	271
Due after 10 years	333
Total	$	1,118

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				Nine Months Ended
	September 30,				September 30,
(in millions)	2015		2014		2015		2014
Realized gains	$	5	$	8	$	26	$	17
Realized losses	4		3		10		6

DUKE ENERGY PROGRESS

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



	September 30, 2015						December 31, 2014
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses_(b)		Value		Gains		Losses_(b)		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	87	$	—	$	—	$	50
Equity securities	535		23		1,107		612		10		1,171
Corporate debt securities	3		1		109		5		—		97
Municipal bonds	3		1		136		4		—		120
U.S. government bonds	12		—		485		9		1		265
Other debt securities	—		—		19		—		—		8
Total NDTF ^(c)	$	553	$	25	$	1,943	$	630	$	11	$	1,711
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	—
Total Other Investments^(a)	$	—	$	—	$	1	$	—	$	—	$	—
Total Investments	$	553	$	25	$	1,944	$	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.


(c)	As of September 30, 2015, the estimated fair value of the NDTF includes NDTF assets acquired with the purchase of NCEMPA's ownership interest in certain generating assets. Refer to Note 2 for further information.

The table below summarizes the maturity date for debt securities.



(in millions)	September 30, 2015
Due in one year or less	$	12
Due after one through five years	278
Due after five through 10 years	219
Due after 10 years	240
Total	$	749

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				Nine Months Ended
	September 30,				September 30,
(in millions)	2015		2014		2015		2014
Realized gains	$	4	$	4	$	21	$	11
Realized losses	3		2		8		4

DUKE ENERGY FLORIDA

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



	September 30, 2015						December 31, 2014
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses_(b)		Value		Gains		Losses_(b)		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	44	$	—	$	—	$	35
Equity securities	190		6		299		212		2		317
Corporate debt securities	1		—		49		1		—		41
Municipal bonds	—		—		2		—		—		2
U.S. government bonds	5		—		263		3		—		405
Other debt securities	—		—		12		—		—		6
Total NDTF^(c)	$	196	$	6	$	669	$	216	$	2	$	806
Other Investments
Cash and cash equivalents	$	—	$	—	$	11	$	—	$	—	$	1
Municipal bonds	3		—		43		3		—		43
Total Other Investments^(a)	$	3	$	—	$	54	$	3	$	—	$	44
Total Investments	$	199	$	6	$	723	$	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 estimated fair value at September 30, 2015, compared to the balance at December 31, 2014, is lower due to current year reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Plant.

The table below summarizes the maturity date for debt securities.



(in millions)	September 30, 2015
Due in one year or less	$	26
Due after one through five years	198
Due after five through 10 years	52
Due after 10 years	93
Total	$	369

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				Nine Months Ended
	September 30,				September 30,
(in millions)	2015		2014		2015		2014
Realized gains	$	1	$	3	$	5	$	5
Realized losses	1		1		2		2

DUKE ENERGY INDIANA

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



	September 30, 2015						December 31, 2014
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses_(b)		Value		Gains		Losses_(b)		Value
Other Investments
Equity securities	$	23	$	—	$	67	$	28	$	—	$	71
Corporate debt securities	—		—		3		—		—		—
Municipal bonds	—		1		27		—		1		30
Total Other Investments^(a)	$	23	$	1	$	97	$	28	$	1	$	101
Total Investments	$	23	$	1	$	97	$	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)	September 30, 2015
Due in one year or less	$	2
Due after one through five years	16
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 three and nine months ended September 30, 2015 and 2014.