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 credit loss is included in earnings. There were no material credit losses as of September 30, 2016 and December 31, 2015.

DUKE ENERGY

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



	September 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	$	—	$	—	$	151	$	—	$	—	$	179
Equity securities	1,968		55		3,949		1,823		58		3,590
Corporate debt securities	25		2		551		7		8		432
Municipal bonds	9		1		341		5		1		185
U.S. government bonds	31		—		994		11		5		1,254
Other debt securities	—		3		132		—		4		177
Total NDTF	$	2,033	$	61	$	6,118	$	1,846	$	76	$	5,817
Other Investments
Cash and cash equivalents	$	—	$	—	$	24	$	—	$	—	$	29
Equity securities	38		—		104		32		1		95
Corporate debt securities	2		1		91		1		3		92
Municipal bonds	5		1		78		3		1		74
U.S. government bonds	1		—		49		—		—		45
Other debt securities	—		1		55		—		2		62
Total Other Investments^(a)	$	46	$	3	$	401	$	36	$	7	$	397
Total Investments	$	2,079	$	64	$	6,519	$	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)	September 30, 2016
Due in one year or less	$	92
Due after one through five years	655
Due after five through 10 years	529
Due after 10 years	1,015
Total	$	2,291

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)	2016		2015		2016		2015
Realized gains	$	82	$	30	$	200	$	160
Realized losses	42		28		134		59

DUKE ENERGY CAROLINAS

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



	September 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	$	—	$	—	$	43	$	—	$	—	$	34
Equity securities	1,091		29		2,170		1,021		27		2,094
Corporate debt securities	14		2		374		3		5		292
Municipal bonds	2		—		66		1		—		33
U.S. government bonds	12		—		454		3		3		438
Other debt securities	—		3		123		—		4		147
Total NDTF	$	1,119	$	34	$	3,230	$	1,028	$	39	$	3,038
Other Investments
Other debt securities	$	—	$	1	$	3	$	—	$	1	$	3
Total Other Investments^(a)	$	—	$	1	$	3	$	—	$	1	$	3
Total Investments	$	1,119	$	35	$	3,233	$	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)	September 30, 2016
Due in one year or less	$	3
Due after one through five years	206
Due after five through 10 years	268
Due after 10 years	543
Total	$	1,020

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)	2016		2015		2016		2015
Realized gains	$	58	$	25	$	125	$	132
Realized losses	28		24		84		47

PROGRESS ENERGY

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



	September 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	$	—	$	—	$	108	$	—	$	—	$	145
Equity securities	877		26		1,779		802		31		1,496
Corporate debt securities	11		—		177		4		3		140
Municipal bonds	7		1		275		4		1		152
U.S. government bonds	19		—		540		8		2		816
Other debt securities	—		—		9		—		—		30
Total NDTF	$	914	$	27	$	2,888	$	818	$	37	$	2,779
Other Investments
Cash and cash equivalents	$	—	$	—	$	20	$	—	$	—	$	18
Municipal bonds	4		—		47		3		—		45
Total Other Investments^(a)	$	4	$	—	$	67	$	3	$	—	$	63
Total Investments	$	918	$	27	$	2,955	$	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)	September 30, 2016
Due in one year or less	$	67
Due after one through five years	372
Due after five through 10 years	187
Due after 10 years	422
Total	$	1,048

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)	2016		2015		2016		2015
Realized gains	$	21	$	5	$	71	$	26
Realized losses	13		4		49		10

DUKE ENERGY PROGRESS

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



	September 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	$	—	$	—	$	56	$	—	$	—	$	110
Equity securities	657		21		1,438		596		25		1,178
Corporate debt securities	8		—		123		3		2		96
Municipal bonds	7		1		275		4		1		150
U.S. government bonds	12		—		279		6		2		486
Other debt securities	—		—		6		—		—		18
Total NDTF	$	684	$	22	$	2,177	$	609	$	30	$	2,038
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	1
Total Other Investments^(a)	$	—	$	—	$	1	$	—	$	—	$	1
Total Investments	$	684	$	22	$	2,178	$	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)	September 30, 2016
Due in one year or less	$	21
Due after one through five years	200
Due after five through 10 years	142
Due after 10 years	320
Total	$	683

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)	2016		2015		2016		2015
Realized gains	$	18	$	4	$	60	$	21
Realized losses	11		3		42		8

DUKE ENERGY FLORIDA

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



	September 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	$	—	$	—	$	52	$	—	$	—	$	35
Equity securities	220		5		341		206		6		318
Corporate debt securities	3		—		54		1		1		44
Municipal bonds	—		—		—		—		—		2
U.S. government bonds	7		—		261		2		—		330
Other debt securities	—		—		3		—		—		12
Total NDTF ^(c)	$	230	$	5	$	711	$	209	$	7	$	741
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	6
Municipal bonds	4		—		47		3		—		45
Total Other Investments^(a)	$	4	$	—	$	49	$	3	$	—	$	51
Total Investments	$	234	$	5	$	760	$	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.


(c)	The decrease in estimated fair value of the NDTF as of September 30, 2016, is due to reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal Unit 3 Nuclear Plant.

The table below summarizes the maturity date for debt securities.



(in millions)	September 30, 2016
Due in one year or less	$	46
Due after one through five years	172
Due after five through 10 years	45
Due after 10 years	102
Total	$	365

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)	2016		2015		2016		2015
Realized gains	$	3	$	1	$	11	$	5
Realized losses	2		1		7		2

DUKE ENERGY INDIANA

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



	September 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	31		—		77		27		—		71
Corporate debt securities	—		—		2		—		—		2
Municipal bonds	1		1		28		—		1		26
Total Other Investments^(a)	$	32	$	1	$	107	$	27	$	1	$	101
Total Investments	$	32	$	1	$	107	$	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)	September 30, 2016
Due in one year or less	$	3
Due after one through five years	9
Due after five through 10 years	13
Due after 10 years	5
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, 2016 and 2015.