INVESTMENTS IN DEBT AND EQUITY SECURITIES

Duke Energy’s investments in debt and equity 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 (iii) Bison. The Duke Energy Registrants classify investments in debt securities as available-for-sale (AFS) and investments in equity securities as fair value through net income (FV-NI).

For investments in debt securities classified as AFS, the unrealized gains and losses are included in other comprehensive income until realized, at which time, they are reported through net income. For investments in equity securities classified as FV-NI, both realized and unrealized gains and losses are reported through net income. Substantially all of Duke Energy’s investments in debt and equity securities qualify for regulatory accounting, and accordingly, all associated realized and unrealized gains and losses on these investments are deferred as a regulatory asset or liability.

Duke Energy classifies the majority of 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 securities within the Investment Trusts are considered OTTIs and are recognized immediately and deferred to regulatory accounts where appropriate.

Other AFS Securities

Unrealized gains and losses on all other AFS 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 OTTI exists, the unrealized credit loss is included in earnings. There were no material credit losses as of March 31, 2018, and December 31, 2017.

Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.

DUKE ENERGY

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.



	March 31, 2018^(a)						December 31, 2017
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	143	$	—	$	—	$	115
Equity securities	2,751		38		4,857		2,805		27		4,914
Corporate debt securities	7		8		549		17		2		570
Municipal bonds	1		5		333		4		3		344
U.S. government bonds	6		18		1,014		11		7		1,027
Other debt securities	—		2		130		—		1		118
Total NDTF Investments	$	2,765	$	71	$	7,026	$	2,837	$	40	$	7,088
Other Investments
Cash and cash equivalents	$	—	$	—	$	15	$	—	$	—	$	15
Equity securities	57		—		130		59		—		123
Corporate debt securities	—		1		64		1		—		57
Municipal bonds	1		1		80		2		1		83
U.S. government bonds	—		1		51		—		—		41
Other debt securities	—		—		48		—		1		44
Total Other Investments	$	58	$	3	$	388	$	62	$	2	$	363
Total Investments	$	2,823	$	74	$	7,414	$	2,899	$	42	$	7,451


(a)	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2018
Due in one year or less	$	100
Due after one through five years	535
Due after five through 10 years	530
Due after 10 years	1,104
Total	$	2,269

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three months ended March 31, 2018 and from sales of AFS securities for the three months ended March 31, 2017 were as follows.



	Three Months Ended
(in millions)	March 31, 2018
FV-NI:
Realized gains	$	19
Realized losses	13
AFS:
Realized gains	5
Realized losses	13



	Three Months Ended
(in millions)	March 31, 2017
Realized gains	$	93
Realized losses	62

DUKE ENERGY CAROLINAS

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.



	March 31, 2018^(a)						December 31, 2017
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	50	$	—	$	—	$	32
Equity securities	1,502		20		2,669		1,531		12		2,692
Corporate debt securities	3		5		333		9		2		359
Municipal bonds	—		1		69		—		1		60
U.S. government bonds	2		11		494		3		4		503
Other debt securities	—		2		122		—		1		112
Total NDTF Investments	$	1,507	$	39	$	3,737	$	1,543	$	20	$	3,758


(a)	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2018
Due in one year or less	$	11
Due after one through five years	178
Due after five through 10 years	285
Due after 10 years	544
Total	$	1,018



	Three Months Ended
(in millions)	March 31, 2018
FV-NI:
Realized gains	$	10
Realized losses	5
AFS:
Realized gains	5
Realized losses	10



	Three Months Ended
(in millions)	March 31, 2017
Realized gains	$	66
Realized losses	40

PROGRESS ENERGY

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.



	March 31, 2018^(a)						December 31, 2017
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	93	$	—	$	—	$	83
Equity securities	1,249		18		2,188		1,274		15		2,222
Corporate debt securities	4		3		216		8		—		211
Municipal bonds	1		4		264		4		2		284
U.S. government bonds	4		7		520		8		3		524
Other debt securities	—		—		8		—		—		6
Total NDTF Investments	$	1,258	$	32	$	3,289	$	1,294	$	20	$	3,330
Other Investments
Cash and cash equivalents	$	—	$	—	$	10	$	—	$	—	$	12
Municipal bonds	1		—		47		2		—		47
Total Other Investments	$	1	$	—	$	57	$	2	$	—	$	59
Total Investments	$	1,259	$	32	$	3,346	$	1,296	$	20	$	3,389


(a)	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2018
Due in one year or less	$	75
Due after one through five years	300
Due after five through 10 years	198
Due after 10 years	482
Total	$	1,055



	Three Months Ended
(in millions)	March 31, 2018
FV-NI:
Realized gains	$	9
Realized losses	8
AFS:
Realized losses	3



	Three Months Ended
(in millions)	March 31, 2017
Realized gains	$	27
Realized losses	21

DUKE ENERGY PROGRESS

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.



	March 31, 2018^(a)						December 31, 2017
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	59	$	—	$	—	$	50
Equity securities	959		14		1,765		980		12		1,795
Corporate debt securities	3		2		153		6		—		149
Municipal bonds	1		4		263		4		2		283
U.S. government bonds	3		5		326		5		2		310
Other debt securities	—		—		5		—		—		4
Total NDTF Investments	$	966	$	25	$	2,571	$	995	$	16	$	2,591
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	1
Total Other Investments	$	—	$	—	$	1	$	—	$	—	$	1
Total Investments	$	966	$	25	$	2,572	$	995	$	16	$	2,592


(a)	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2018
Due in one year or less	$	19
Due after one through five years	216
Due after five through 10 years	144
Due after 10 years	368
Total	$	747



	Three Months Ended
(in millions)	March 31, 2018
FV-NI:
Realized gains	$	8
Realized losses	8
AFS:
Realized losses	2



	Three Months Ended
(in millions)	March 31, 2017
Realized gains	$	24
Realized losses	19

DUKE ENERGY FLORIDA

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.



	March 31, 2018^(a)						December 31, 2017
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	34	$	—	$	—	$	33
Equity securities	290		4		423		294		3		427
Corporate debt securities	1		1		63		2		—		62
Municipal bonds	—		—		1		—		—		1
U.S. government bonds	1		2		194		3		1		214
Other debt securities	—		—		3		—		—		2
Total NDTF Investments^(b)	$	292	$	7	$	718	$	299	$	4	$	739
Other Investments
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—	$	1
Municipal bonds	1		—		47		2		—		47
Total Other Investments	$	1	$	—	$	47	$	2	$	—	$	48
Total Investments	$	293	$	7	$	765	$	301	$	4	$	787


(a)	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.


(b)	During the three months ended March 31, 2018, Duke Energy Florida continued to receive 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)	March 31, 2018
Due in one year or less	$	56
Due after one through five years	84
Due after five through 10 years	54
Due after 10 years	114
Total	$	308



	Three Months Ended
(in millions)	March 31, 2018
FV-NI:
Realized gains	$	1
AFS:
Realized losses	1



	Three Months Ended
(in millions)	March 31, 2017
Realized gains	$	3
Realized losses	2

DUKE ENERGY INDIANA

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are measured at FV-NI and debt investments are classified as AFS.



	March 31, 2018^(a)						December 31, 2017
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
Investments
Equity securities	$	48	$	—	$	96	$	49	$	—	$	97
Corporate debt securities	—		—		5		—		—		3
Municipal bonds	—		1		26		—		1		28
Total Investments	$	48	$	1	$	127	$	49	$	1	$	128


(a)	Realized and unrealized gains and losses where regulatory accounting is applied are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

The table below summarizes the maturity date for debt securities.



(in millions)	March 31, 2018
Due in one year or less	$	3
Due after one through five years	15
Due after five through 10 years	6
Due after 10 years	7
Total	$	31

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three months ended March 31, 2018, and from sales of AFS securities for the three months ended March 31, 2017, were insignificant.