INVESTMENTS IN DEBT AND EQUITY SECURITIES

The Duke Energy Registrants classify their investments in debt and equity securities as available-for-sale.

Duke Energy’s available-for-sale securities are primarily comprised of investments held in (i) the nuclear decommissioning 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 (iii) Bison.

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

Investment Trusts

The investments within the NDTF investments 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.

Investments within the Investment Trusts generally qualify for regulatory accounting, and accordingly realized and unrealized gains and losses are deferred as a regulatory asset or liability. However, certain investments held in Duke Energy Florida's NDTF, which were acquired in a settlement with Florida Municipal Joint Owners (FMJO), do not qualify for regulatory accounting. Except for other than temporary impairments of unrealized losses, unrealized gains and losses on these assets are included in other comprehensive income until realized. The other than temporary impairments of realized amounts and unrealized losses are included within Other income and expense, net on the Condensed Consolidated Statements of Operations. The value of these assets has not materially changed since the assets were acquired from FMJO. As a result, there is no material 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. 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. If an other than temporary impairment exists, the unrealized loss is included in earnings. There were no material credit losses as of June 30, 2016 and December 31, 2015.

DUKE ENERGY

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



	June 30, 2016						December 31, 2015
	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	$	—	$	—	$	189	$	—	$	—	$	179
Equity securities	1,869		78		3,834		1,823		58		3,590
Corporate debt securities	22		1		480		7		8		432
Municipal bonds	12		1		307		5		1		185
U.S. government bonds	38		—		1,038		11		5		1,254
Other debt securities	1		3		144		—		4		177
Total NDTF	$	1,942	$	83	$	5,992	$	1,846	$	76	$	5,817
Other Investments
Cash and cash equivalents	$	—	$	—	$	27	$	—	$	—	$	29
Equity securities	34		1		98		32		1		95
Corporate debt securities	2		1		97		1		3		92
Municipal bonds	6		1		80		3		1		74
U.S. government bonds	2		—		47		—		—		45
Other debt securities	—		1		57		—		2		62
Total Other Investments^(a)	$	44	$	4	$	406	$	36	$	7	$	397
Total Investments	$	1,986	$	87	$	6,398	$	1,882	$	83	$	6,214

(a) These amounts are recorded in Other within 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.

The table below summarizes the maturity date for debt securities.



(in millions)	June 30, 2016
Due in one year or less	$	88
Due after one through five years	660
Due after five through 10 years	511
Due after 10 years	991
Total	$	2,250

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				Six Months Ended
	June 30,				June 30,
(in millions)	2016		2015		2016		2015
Realized gains	$	64	$	28	$	118	$	130
Realized losses	42		17		92		31

DUKE ENERGY CAROLINAS

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



	June 30, 2016						December 31, 2015
	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	$	—	$	—	$	66	$	—	$	—	$	34
Equity securities	1,045		44		2,128		1,021		27		2,094
Corporate debt securities	13		1		309		3		5		292
Municipal bonds	2		—		42		1		—		33
U.S. government bonds	16		—		482		3		3		438
Other debt securities	1		3		136		—		4		147
Total NDTF	$	1,077	$	48	$	3,163	$	1,028	$	39	$	3,038
Other Investments
Other debt securities	$	—	$	1	$	3	$	—	$	1	$	3
Total Other Investments^(a)	$	—	$	1	$	3	$	—	$	1	$	3
Total Investments	$	1,077	$	49	$	3,166	$	1,028	$	40	$	3,041


(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)	June 30, 2016
Due in one year or less	$	6
Due after one through five years	198
Due after five through 10 years	235
Due after 10 years	533
Total	$	972

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				Six Months Ended
	June 30,				June 30,
(in millions)	2016		2015		2016		2015
Realized gains	$	33	$	17	$	67	$	107
Realized losses	19		11		56		23

PROGRESS ENERGY

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



	June 30, 2016						December 31, 2015
	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	$	—	$	—	$	123	$	—	$	—	$	145
Equity securities	824		34		1,706		802		31		1,496
Corporate debt securities	9		—		171		4		3		140
Municipal bonds	10		1		265		4		1		152
U.S. government bonds	22		—		556		8		2		816
Other debt securities	—		—		8		—		—		30
Total NDTF	$	865	$	35	$	2,829	$	818	$	37	$	2,779
Other Investments
Cash and cash equivalents	$	—	$	—	$	21	$	—	$	—	$	18
Municipal bonds	4		—		47		3		—		45
Total Other Investments^(a)	$	4	$	—	$	68	$	3	$	—	$	63
Total Investments	$	869	$	35	$	2,897	$	821	$	37	$	2,842

(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)	June 30, 2016
Due in one year or less	$	65
Due after one through five years	375
Due after five through 10 years	200
Due after 10 years	407
Total	$	1,047

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				Six Months Ended
	June 30,				June 30,
(in millions)	2016		2015		2016		2015
Realized gains	$	31	$	9	$	50	$	21
Realized losses	23		5		36		6

DUKE ENERGY PROGRESS

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



	June 30, 2016						December 31, 2015
	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	$	—	$	—	$	58	$	—	$	—	$	110
Equity securities	614		28		1,379		596		25		1,178
Corporate debt securities	7		—		118		3		2		96
Municipal bonds	10		1		265		4		1		150
U.S. government bonds	14		—		281		6		2		486
Other debt securities	—		—		5		—		—		18
Total NDTF	$	645	$	29	$	2,106	$	609	$	30	$	2,038
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	1
Total Other Investments^(a)	$	—	$	—	$	1	$	—	$	—	$	1
Total Investments	$	645	$	29	$	2,107	$	609	$	30	$	2,039

(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)	June 30, 2016
Due in one year or less	$	14
Due after one through five years	191
Due after five through 10 years	154
Due after 10 years	310
Total	$	669

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				Six Months Ended
	June 30,				June 30,
(in millions)	2016		2015		2016		2015
Realized gains	$	27	$	8	$	42	$	17
Realized losses	20		4		31		5

DUKE ENERGY FLORIDA

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



	June 30, 2016						December 31, 2015
	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	$	—	$	—	$	65	$	—	$	—	$	35
Equity securities	210		6		327		206		6		318
Corporate debt securities	2		—		53		1		1		44
Municipal bonds	—		—		—		—		—		2
U.S. government bonds	8		—		275		2		—		330
Other debt securities	—		—		3		—		—		12
Total NDTF	$	220	$	6	$	723	$	209	$	7	$	741
Other Investments
Cash and cash equivalents	$	—	$	—	$	4	$	—	$	—	$	6
Municipal bonds	4		—		47		3		—		45
Total Other Investments^(a)	$	4	$	—	$	51	$	3	$	—	$	51
Total Investments	$	224	$	6	$	774	$	212	$	7	$	792

(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)	June 30, 2016
Due in one year or less	$	51
Due after one through five years	184
Due after five through 10 years	46
Due after 10 years	97
Total	$	378

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				Six Months Ended
	June 30,				June 30,
(in millions)	2016		2015		2016		2015
Realized gains	$	4	$	1	$	8	$	4
Realized losses	3		1		5		1

DUKE ENERGY INDIANA

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



	June 30, 2016						December 31, 2015
	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
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—	$	2
Equity securities	28		—		73		27		—		71
Corporate debt securities	—		—		2		—		—		2
Municipal bonds	1		1		29		—		1		26
Total Other Investments^(a)	$	29	$	1	$	104	$	27	$	1	$	101
Total Investments	$	29	$	1	$	104	$	27	$	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)	June 30, 2016
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	5
Total	$	31

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 six months ended June 30, 2016 and 2015.