DEBT AND CREDIT FACILITIES

Summary of Debt and Related Terms

The following tables summarize outstanding debt.



	December 31, 2016
	Weighted
	Average					Duke						Duke			Duke			Duke			Duke
	Interest		Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Rate		Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Unsecured debt, maturing 2017 - 2073	4.30	%	$	17,812		$	1,150		$	3,551		$	—		$	150		$	810		$	415
Secured debt, maturing 2017 - 2037	2.60	%	3,909			425			1,819			300			1,519			—			—
First mortgage bonds, maturing 2017 - 2046^(a)	4.61	%	21,879			7,410			10,800			6,425			4,375			1,000			2,669
Capital leases, maturing 2018 - 2051^(b)	4.48	%	1,100			22			285			142			143			7			11
Tax-exempt bonds, maturing 2017 - 2041^(c)	2.84	%	1,053			355			48			48			—			77			572
Notes payable and commercial paper^(d)	1.01	%	3,112			—			—			—			—			—			—
Money pool/intercompany borrowings^(e)			—			300			1,902			150			297			41			150
Fair value hedge carrying value adjustment			6			6			—			—			—			—			—
Unamortized debt discount and premium, net^(f)			1,753			(20		)	(31		)	(16		)	(10		)	(28		)	(9		)
Unamortized debt issuance costs^(g)			(242		)	(45		)	(104		)	(38		)	(52		)	(7		)	(22		)
Total debt	4.07	%	$	50,382		$	9,603		$	18,270		$	7,011		$	6,422		$	1,900		$	3,786
Short-term notes payable and commercial paper			(2,487		)	—			—			—			—			—			—
Short-term money pool/intercompany borrowings			—			—			(729		)	—			(297		)	(16		)	—
Current maturities of long-term debt^(h)			(2,319		)	(116		)	(778		)	(452		)	(326		)	(1		)	(3		)
Total long-term debt^(h)			$	45,576		$	9,487		$	16,763		$	6,559		$	5,799		$	1,883		$	3,783


(a)	Substantially all electric utility property is mortgaged under mortgage bond indentures.


(b)	Duke Energy includes $98 million and $670 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.


(c)	Substantially all tax-exempt bonds are secured by first mortgage bonds or letters of credit.

(d)

Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy and Piedmont's commercial paper programs were 14 days and eight days, respectively.


(e)	Progress Energy amount includes a $1 billion intercompany loan related to the sale of the International Disposal Group. See Note 2 for further discussion of the sale.


(f)	Duke Energy includes $1,653 million and $197 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.


(g)	Duke Energy includes $53 million in purchase accounting adjustments primarily related to the merger with Progress Energy.


(h)	Refer to Note 17 for additional information on amounts from consolidated VIEs.



	December 31, 2015
	Weighted
	Average					Duke						Duke			Duke			Duke			Duke
	Interest		Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Rate		Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Unsecured debt, maturing 2016 - 2073	4.68	%	$	12,960		$	1,152		$	3,850		$	—		$	150		$	765		$	740
Secured debt, maturing 2016 - 2037	2.37	%	2,361			425			479			254			225			—			—
First mortgage bonds, maturing 2016 - 2045^(a)	4.74	%	18,980			6,161			9,750			5,975			3,775			750			2,319
Capital leases, maturing 2016 - 2051^(b)	5.39	%	1,335			24			300			144			156			13			14
Tax-exempt bonds, maturing 2017 - 2041^(c)	2.59	%	1,053			355			48			48			—			77			572
Notes payable and commercial paper^(d)	0.88	%	4,258			—			—			—			—			—			—
Money pool/intercompany borrowings			—			300			1,458			359			813			128			150
Fair value hedge carrying value adjustment			6			6			—			—			—			—			—
Unamortized debt discount and premium, net^(e)			1,712			(17		)	(28		)	(16		)	(8		)	(28		)	(8		)
Unamortized debt issuance costs^(f)			(164		)	(39		)	(85		)	(37		)	(32		)	(4		)	(19		)
Total debt	4.15	%	$	42,501		$	8,367		$	15,772		$	6,727		$	5,079		$	1,701		$	3,768
Short-term notes payable and commercial paper			(3,633		)	—			—			—			—			—			—
Short-term money pool/intercompany borrowings			—			—			(1,308		)	(209		)	(813		)	(103		)	—
Current maturities of long-term debt^(g)			(2,026		)	(356		)	(315		)	(2		)	(13		)	(106		)	(547		)
Total long-term debt^(g)			$	36,842		$	8,011		$	14,149		$	6,516		$	4,253		$	1,492		$	3,221


(a)	Substantially all electric utility property is mortgaged under mortgage bond indentures.


(b)	Duke Energy includes $114 million and $731 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.


(c)	Substantially all tax-exempt bonds are secured by first mortgage bonds or letters of credit.


(d)	Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for commercial paper was 15 days.


(e)	Duke Energy includes $1,798 million in purchase accounting adjustments related to the merger with Progress Energy.


(f)	Duke Energy includes $59 million in purchase accounting adjustments primarily related to the merger with Progress Energy.


(g)	Refer to Note 17 for additional information on amounts from consolidated VIEs.

Current Maturities of Long-Term Debt

The following table shows the significant components of Current maturities of Long-Term Debt on the Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.



(in millions)	Maturity Date	Interest Rate		December 31, 2016
Unsecured Debt
Duke Energy (Parent)	April 2017	1.226	%	$	400
Duke Energy (Parent)	August 2017	1.625	%	700
Piedmont Natural Gas	September 2017	8.510	%	35
First Mortgage Bonds
Duke Energy Progress	March 2017	1.146	%	250
Duke Energy Florida	September 2017	5.800	%	250
Duke Energy Progress	November 2017	1.111	%	200
Secured
Duke Energy	June 2017	2.365	%	45
Duke Energy	June 2017	2.260	%	34
Tax-exempt Bonds
Duke Energy Carolinas	February 2017	3.600	%	77
Duke Energy Carolinas	February 2017	0.810	%	10
Duke Energy Carolinas	February 2017	0.790	%	25
Other^(a)				293
Current maturities of long-term debt				$	2,319


(a)	Includes capital lease obligations, amortizing debt and small bullet maturities.

Maturities and Call Options

The following table shows the annual maturities of long-term debt for the next five years and thereafter. Amounts presented exclude short-term notes payable and commercial paper and money pool borrowings for the Subsidiary Registrants.



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy^(a)		Carolinas		Energy		Progress		Florida		Ohio		Indiana
2017	$	2,319	$	116	$	778	$	452	$	326	$	1	$	3
2018	3,466		1,629		559		—		561		3		3
2019	3,316		5		1,992		902		292		551		63
2020	2,112		755		469		152		319		25		653
2021	3,699		501		1,473		602		372		49		70
Thereafter	31,090		6,597		12,270		4,903		4,255		1,255		2,994
Total long-term debt, including current maturities	$	46,002	$	9,603	$	17,541	$	7,011	$	6,125	$	1,884	$	3,786


(a)	Excludes $1,893 million in purchase accounting adjustments related to the Progress Energy merger and the Piedmont acquisition.

The Duke Energy Registrants have the ability under certain debt facilities to call and repay the obligation prior to its scheduled maturity. Therefore, the actual timing of future cash repayments could be materially different than as presented above.

Short-Term Obligations Classified as Long-Term Debt

Tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder and certain commercial paper issuances and money pool borrowings are classified as Long-Term Debt on the Consolidated Balance Sheets. These tax-exempt bonds, commercial paper issuances and money pool borrowings, which are short-term obligations by nature, are classified as long term due to Duke Energy’s intent and ability to utilize such borrowings as long-term financing. As Duke Energy’s Master Credit Facility and other bilateral letter of credit agreements have non-cancelable terms in excess of one year as of the balance sheet date, Duke Energy has the ability to refinance these short-term obligations on a long-term basis. The following tables show short-term obligations classified as long-term debt.



	December 31, 2016
			Duke		Duke		Duke		Duke
	Duke		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Progress		Ohio		Indiana
Tax-exempt bonds	$	347	$	35	$	—	$	27	$	285
Commercial paper^(a)	625		300		150		25		150
Total	$	972	$	335	$	150	$	52	$	435



	December 31, 2015
			Duke		Duke		Duke		Duke
	Duke		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Progress		Ohio		Indiana
Tax-exempt bonds	$	347	$	35	$	—	$	27	$	285
Commercial paper^(a)	625		300		150		25		150
Total	$	972	$	335	$	150	$	52	$	435


(a)	Progress Energy amounts are equal to Duke Energy Progress amounts.

Summary of Significant Debt Issuances

Piedmont Acquisition Financing

In August 2016, Duke Energy issued $3.75 billion of senior unsecured notes in three separate series. The net proceeds were used to finance a portion of the Piedmont acquisition. The $4.9 billion Bridge Facility was terminated following the issuance of this debt. See Note 2 for additional information on the Piedmont acquisition.

Nuclear Asset-Recovery Bonds

In June 2016, DEFPF issued $1,294 million of nuclear asset-recovery bonds and used the proceeds to acquire nuclear asset-recovery property from its parent, Duke Energy Florida. The nuclear asset-recovery bonds are payable only from and secured by the nuclear asset-recovery property. DEFPF is consolidated for financial reporting purposes; however, the nuclear asset-recovery bonds do not constitute a debt, liability or other legal obligation of, or interest in, Duke Energy Florida or any of its affiliates other than DEFPF. The assets of DEFPF, including the nuclear asset-recovery property, are not available to pay creditors of Duke Energy Florida or any of its affiliates. Duke Energy Florida used the proceeds from the sale to repay short-term borrowings under the intercompany money pool borrowing arrangement and make an equity distribution of $649 million to the ultimate parent, Duke Energy (Parent), which repaid short-term borrowings. See Notes 4 and 17 for additional information.

Solar Facilities Financing

In August 2016, Emerald State Solar, LLC, an indirect wholly owned subsidiary of Duke Energy, entered into a $333 million portfolio financing of approximately 22 North Carolina Solar facilities. Tranche A of $228 million is secured by substantially all the assets of the solar facilities and is nonrecourse to Duke Energy. Tranche B of $105 million is secured by an Equity Contribution Agreement with Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures related to the Emerald State Solar, LLC portfolio. The initial interest rate on the loans was six months London Interbank Offered Rate (LIBOR) plus an applicable margin of 1.75 percent plus a 0.125 percent increase every three years thereafter. In connection with this debt issuance, Emerald State Solar, LLC entered into two interest rate swaps to convert the substantial majority of the loan interest payments from variable rates to fixed rates of approximately 1.81 percent for Tranche A and 1.38 percent for Tranche B, plus the applicable margin. See Note 14 for further information on the notional amounts of the interest rate swaps.

Duke Energy Florida Bond Issuance

In January 2017, Duke Energy Florida issued $900 million of first mortgage bonds. The issuance was split between a $250 million, three-year series and a $650 million, 10-year series. The net proceeds from the issuance were used to repay at maturity $250 million aggregate principal amount of bonds due September 2017, as well as to fund capital expenditures for ongoing construction and capital maintenance and for general corporate purposes.

The following tables summarize significant debt issuances (in millions).



				Year Ended December 31, 2016
						Duke		Duke		Duke		Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress		Florida		Ohio		Indiana
Unsecured Debt
April 2016^(a)	April 2023	2.875	%	$	350	$	350	$	—	$	—	$	—	$	—	$	—
August 2016	September 2021	1.800	%	750		750		—		—		—		—		—
August 2016	September 2026	2.650	%	1,500		1,500		—		—		—		—		—
August 2016	September 2046	3.750	%	1,500		1,500		—		—		—		—		—
Secured Debt
June 2016^(b)	March 2020	1.196	%	183		—		—		—		183		—		—
June 2016^(b)	September 2022	1.731	%	150		—		—		—		150		—		—
June 2016^(b)	September 2029	2.538	%	436		—		—		—		436		—		—
June 2016^(b)	March 2033	2.858	%	250		—		—		—		250		—		—
June 2016^(b)	September 2036	3.112	%	275		—		—		—		275		—		—
August 2016	June 2034	2.747	%	228		—		—		—		—		—		—
August 2016	June 2020	2.747	%	105		—		—		—		—		—		—
First Mortgage Bonds
March 2016^(c)	March 2023	2.500	%	500		—		500		—		—		—		—
March 2016^(c)	March 2046	3.875	%	500		—		500		—		—		—		—
May 2016^(d)	May 2046	3.750	%	500		—		—		—		—		—		500
June 2016^(c)	June 2046	3.700	%	250		—		—		—		—		250		—
September 2016^(e)	October 2046	3.400	%	600		—		—		—		600		—		—
September 2016^(c)	October 2046	3.700	%	450		—		—		450		—		—		—
November 2016^(f)	December 2026	2.950	%	600		—		600		—		—		—		—
Total issuances				$	9,127	$	4,100	$	1,600	$	450	$	1,894	$	250	$	500


(a)	Proceeds were used to pay down outstanding commercial paper and for general corporate purposes.


(b)	The nuclear asset recovery bonds are sequential pay amortizing bonds. The maturity date above represents the scheduled final maturity date for the bonds.


(c)	Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance and for general corporate purposes.


(d)	Proceeds were used to repay $325 million of unsecured debt due June 2016, $150 million of first mortgage bonds due July 2016 and for general corporate purposes.


(e)	Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance, to repay short-term borrowings under the intercompany money pool borrowing arrangement and for general corporate purposes.


(f)	Proceeds were used to repay at maturity $350 million aggregate principal amount of certain bonds due December 2016, as well as to fund capital expenditures for ongoing construction and capital maintenance and for general corporate purposes.



				Year Ended December 31, 2015
						Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress
Unsecured Debt
November 2015^(a)(b)	April 2024	3.750	%	$	400	$	400	$	—	$	—
November 2015^(a)(b)	December 2045	4.800	%	600		600		—		—
First Mortgage Bonds
March 2015^(c)	June 2045	3.750	%	500		—		500		—
August 2015^(a)(d)	August 2025	3.250	%	500		—		—		500
August 2015^(a)(d)	August 2045	4.200	%	700		—		—		700
Total issuances				$	2,700	$	1,000	$	500	$	1,200


(a)	Proceeds were used to repay short-term money pool and commercial paper borrowing issued to fund a portion of the NCEMPA acquisition, see Note 2 for further information.


(b)	Proceeds were used to refinance at maturity $300 million of unsecured notes at Progress Energy due January 2016.


(c)	Proceeds were used to redeem at maturity $500 million of first mortgage bonds due October 2015.


(d)	Proceeds were used to refinance at maturity $400 million of first mortgage bonds due December 2015.

Available Credit Facilities

Duke Energy has a Master Credit Facility with a capacity of $7.5 billion through January 2020. The Duke Energy Registrants, excluding Progress Energy (Parent) and Piedmont, have borrowing capacity under the Master Credit Facility up to specified sublimits for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder. Duke Energy Carolinas and Duke Energy Progress are also required to each maintain $250 million of available capacity under the Master Credit Facility as security to meet obligations under plea agreements reached with the U.S. Department of Justice in 2015 related to violations at North Carolina facilities with ash basins.

Piedmont has a separate five-year revolving syndicated credit facility, with a capacity of $850 million through December 2020 and an expansion option of up to an additional $200 million. The facility provides a line of credit for letters of credit of $10 million.

The table below includes the current borrowing sublimits and available capacity under these credit facilities.



	December 31, 2016
				Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy^(a)			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana
Facility size^(b)	$	8,350		$	3,400		$	1,100		$	1,000		$	950		$	450		$	600
Reduction to backstop issuances
Commercial paper^(c)	(2,022		)	(977		)	(300		)	(150		)	(84		)	(31		)	(150		)
Outstanding letters of credit	(78		)	(69		)	(4		)	(2		)	(1		)	—			—
Tax-exempt bonds	(116		)	—			(35		)	—			—			—			(81		)
Coal ash set-aside	(500		)	—			(250		)	(250		)	—			—			—
Available capacity	$	5,634		$	2,354		$	511		$	598		$	865		$	419		$	369


(a)	Includes amounts related to Piedmont's $850 million credit facility.


(b)	Represents the sublimit of each borrower.


(c)	Duke Energy issued $625 million of commercial paper and loaned the proceeds through the money pool to Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio and Duke Energy Indiana. The balances are classified as Long-Term Debt Payable to Affiliated Companies in the Consolidated Balance Sheets.

Term Loan Facility

In 2016, Duke Energy (Parent) entered into a $1.5 billion term loan facility, as amended (Term Loan) maturing on July 31, 2017. During 2016, Duke Energy (Parent) drew the full amount available under the Term Loan and used $750 million of proceeds to fund a portion of the Piedmont acquisition and the remaining $750 million to manage short-term liquidity and for general corporate purposes. The terms and conditions of the Term Loan are generally consistent with those governing Duke Energy’s Master Credit Facility. In December 2016, Duke Energy (Parent) repaid the $1.5 billion term loan which terminated this credit facility.

Other Debt Matters

In September 2016, Duke Energy filed a Registration statement (Form S-3) with the SEC. Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy, may issue debt and other securities in the future at amounts, prices and with terms to be determined at the time of future offerings. The registration statement was filed to replace a similar prior filing upon expiration of its three-year term and also allows for the issuance of common stock by Duke Energy.

Duke Energy has an effective Form S-3 with the SEC to sell up to $3 billion of variable denomination floating-rate demand notes, called PremierNotes. The Form S-3 states that no more than $1.5 billion of the notes will be outstanding at any particular time. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Duke Energy PremierNotes Committee, or its designee, on a weekly basis. The interest rate payable on notes held by an investor may vary based on the principal amount of the investment. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Duke Energy or at the investor’s option at any time. The balance as of December 31, 2016 and 2015 was $1,090 million and $1,121 million, respectively. The notes are short-term debt obligations of Duke Energy and are reflected as Notes payable and commercial paper on Duke Energy’s Consolidated Balance Sheets.

In January 2017, Duke Energy amended its Form S-3 to add Piedmont as a registrant and included in the amendment a prospectus for Piedmont under which it may issue debt securities in the same manner as other Duke Energy Registrants.

Duke Energy guaranteed debt issued by Duke Energy Carolinas of $762 million and $767 million, respectively, as of December 31, 2016 and 2015.

Money Pool

The Subsidiary Registrants, excluding Progress Energy, are eligible to receive support for their short-term borrowing needs through participation with Duke Energy and certain of its subsidiaries in a money pool arrangement. Under this arrangement, those companies with short-term funds may provide short-term loans to affiliates participating in this arrangement. The money pool is structured such that the Subsidiary Registrants, excluding Progress Energy, separately manage their cash needs and working capital requirements. Accordingly, there is no net settlement of receivables and payables between money pool participants. Duke Energy (Parent), may loan funds to its participating subsidiaries, but may not borrow funds through the money pool. Accordingly, as the money pool activity is between Duke Energy and its wholly owned subsidiaries, all money pool balances are eliminated within Duke Energy’s Consolidated Balance Sheets.

Money pool receivable balances are reflected within Notes receivable from affiliated companies on the Subsidiary Registrants’ Consolidated Balance Sheets. Money pool payable balances are reflected within either Notes payable to affiliated companies or Long-Term Debt Payable to Affiliated Companies on the Subsidiary Registrants’ Consolidated Balance Sheets.

Restrictive Debt Covenants

The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio not to exceed 65 percent for each borrower. Piedmont's credit facility contains a debt-to-total capitalization ratio covenant not to exceed 70 percent. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements. As of December 31, 2016, each of the Duke Energy Registrants were in compliance with all covenants related to their debt agreements. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.

Other Loans

As of December 31, 2016 and 2015, Duke Energy had loans outstanding of $661 million, including $39 million at Duke Energy Progress and $629 million, including $41 million at Duke Energy Progress, respectively, against the cash surrender value of life insurance policies it owns on the lives of its executives. The amounts outstanding were carried as a reduction of the related cash surrender value that is included in Other within Investments and Other Assets on the Consolidated Balance Sheets.