INVESTMENTS IN DEBT AND EQUITY SECURITIES

TRADING SECURITIES

Investments in debt and equity securities held in rabbi trusts associated with certain deferred compensation plans are classified as trading securities. The fair value of these investments was $5 million at December 31, 2016.

AVAILABLE-FOR-SALE 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 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 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 OTTIs and are recognized immediately.

Investments within the Investment Trusts generally qualify for regulatory accounting and accordingly realized and unrealized gains and losses are generally deferred as a regulatory asset or liability.

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 OTTI 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 material credit losses as of December 31, 2016 and 2015.

DUKE ENERGY

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



	December 31, 2016						December 31, 2015
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses_(a)		Fair Value		Gains		Losses_(a)		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	111	$	—	$	—	$	179
Equity securities	2,092		54		4,106		1,823		58		3,590
Corporate debt securities	10		8		528		7		8		432
Municipal bonds	3		10		331		5		1		185
U.S. government bonds	10		8		984		11		5		1,254
Other debt securities	—		3		124		—		4		177
Total NDTF	$	2,115	$	83	$	6,184	$	1,846	$	76	$	5,817
Other Investments
Cash and cash equivalents	$	—	$	—	$	25	$	—	$	—	$	29
Equity securities	38		—		104		32		1		95
Corporate debt securities	1		1		66		1		3		92
Municipal bonds	2		1		82		3		1		74
U.S. government bonds	—		1		51		—		—		45
Other debt securities	—		2		42		—		2		62
Total Other Investments^(b)	$	41	$	5	$	370	$	36	$	7	$	397
Total Investments	$	2,156	$	88	$	6,554	$	1,882	$	83	$	6,214


(a)	Substantially all these amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.

(b) These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2016
Due in one year or less	$	94
Due after one through five years	653
Due after five through 10 years	515
Due after 10 years	946
Total	$	2,208

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2016		2015		2014
Realized gains	$	246	$	193	$	271
Realized losses	187		98		105

DUKE ENERGY CAROLINAS

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



	December 31, 2016						December 31, 2015
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses_(a)		Fair Value		Gains		Losses_(a)		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	18	$	—	$	—	$	34
Equity securities	1,157		28		2,245		1,021		27		2,094
Corporate debt securities	5		6		354		3		5		292
Municipal bonds	1		2		67		1		—		33
U.S. government bonds	2		5		458		3		3		438
Other debt securities	—		3		116		—		4		147
Total NDTF	$	1,165	$	44	$	3,258	$	1,028	$	39	$	3,038
Other Investments
Other debt securities	$	—	$	1	$	3	$	—	$	1	$	3
Total Other Investments^(b)	$	—	$	1	$	3	$	—	$	1	$	3
Total Investments	$	1,165	$	45	$	3,261	$	1,028	$	40	$	3,041


(a)	Substantially all these amounts represent OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.


(b)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2016
Due in one year or less	$	3
Due after one through five years	230
Due after five through 10 years	260
Due after 10 years	505
Total	$	998

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2016		2015		2014
Realized gains	$	157	$	158	$	109
Realized losses	121		83		93

PROGRESS ENERGY

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



	December 31, 2016						December 31, 2015
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses_(a)		Fair Value		Gains		Losses_(a)		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	93	$	—	$	—	$	145
Equity securities	935		26		1,861		802		31		1,496
Corporate debt securities	5		2		174		4		3		140
Municipal bonds	2		8		264		4		1		152
U.S. government bonds	8		3		526		8		2		816
Other debt securities	—		—		8		—		—		30
Total NDTF	$	950	$	39	$	2,926	$	818	$	37	$	2,779
Other Investments
Cash and cash equivalents	$	—	$	—	$	21	$	—	$	—	$	18
Municipal bonds	2		—		44		3		—		45
Total Other Investments^(b)	$	2	$	—	$	65	$	3	$	—	$	63
Total Investments	$	952	$	39	$	2,991	$	821	$	37	$	2,842


(a)	Substantially all these amounts represent OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.


(b)	These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2016
Due in one year or less	$	84
Due after one through five years	347
Due after five through 10 years	187
Due after 10 years	398
Total	$	1,016

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2016		2015		2014
Realized gains	$	84	$	33	$	157
Realized losses	64		13		11

DUKE ENERGY PROGRESS

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



	December 31, 2016						December 31, 2015
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses_(a)		Fair Value		Gains		Losses_(a)		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	45	$	—	$	—	$	110
Equity securities	704		21		1,505		596		25		1,178
Corporate debt securities	4		1		120		3		2		96
Municipal bonds	2		8		263		4		1		150
U.S. government bonds	5		2		275		6		2		486
Other debt securities	—		—		5		—		—		18
Total NDTF	$	715	$	32	$	2,213	$	609	$	30	$	2,038
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	1
Total Other Investments^(b)	$	—	$	—	$	1	$	—	$	—	$	1
Total Investments	$	715	$	32	$	2,214	$	609	$	30	$	2,039


(a)	Substantially all these amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.

(b) These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2016
Due in one year or less	$	28
Due after one through five years	190
Due after five through 10 years	142
Due after 10 years	303
Total	$	663

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2016		2015		2014
Realized gains	$	71	$	26	$	19
Realized losses	55		11		5

DUKE ENERGY FLORIDA

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



	December 31, 2016						December 31, 2015
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses_(a)		Fair Value		Gains		Losses_(a)		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	48	$	—	$	—	$	35
Equity securities	231		5		356		206		6		318
Corporate debt securities	1		1		54		1		1		44
Municipal bonds	—		—		1		—		—		2
U.S. government bonds	3		1		251		2		—		330
Other debt securities	—		—		3		—		—		12
Total NDTF^(b)	$	235	$	7	$	713	$	209	$	7	$	741
Other Investments
Cash and cash equivalents	$	—	$	—	$	4	$	—	$	—	$	6
Municipal bonds	2		—		44		3		—		45
Total Other Investments^(c)	$	2	$	—	$	48	$	3	$	—	$	51
Total Investments	$	237	$	7	$	761	$	212	$	7	$	792


(a)	Substantially all these amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.


(b)	The decrease in estimated fair value of the NDTF as of December 31, 2016, is primarily due to reimbursements from the NDTF for costs related to ongoing decommissioning activity of Crystal River Unit 3.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2016
Due in one year or less	$	56
Due after one through five years	157
Due after five through 10 years	45
Due after 10 years	95
Total	$	353

Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows.



	Years Ended December 31,
(in millions)	2016		2015		2014
Realized gains	$	13	$	7	$	138
Realized losses	9		2		5

DUKE ENERGY INDIANA

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



	December 31, 2016						December 31, 2015
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses_(a)		Fair Value		Gains		Losses_(a)		Fair Value
Other Investments
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—	$	2
Equity securities	33		—		79		27		—		71
Corporate debt securities	—		—		2		—		—		2
Municipal bonds	—		1		28		—		1		26
U.S. government bonds	—		—		1		—		—		—
Total Other Investments^(b)	$	33	$	1	$	110	$	27	$	1	$	101
Total Investments	$	33	$	1	$	110	$	27	$	1	$	101


(a)	Substantially all these amounts are considered OTTIs on investments within Investment Trusts that have been recognized immediately as a regulatory asset.

(b) These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2016
Due in one year or less	$	3
Due after one through five years	13
Due after five through 10 years	9
Due after 10 years	6
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 years ended December 31, 2016, 2015 and 2014.