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 June 30, 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.



	June 30, 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	$	—	$	—	$	116	$	—	$	—	$	115
Equity securities	2,837		40		4,988		2,805		27		4,914
Corporate debt securities	5		12		560		17		2		570
Municipal bonds	2		4		341		4		3		344
U.S. government bonds	7		20		991		11		7		1,027
Other debt securities	—		3		128		—		1		118
Total NDTF Investments	$	2,851	$	79	$	7,124	$	2,837	$	40	$	7,088
Other Investments
Cash and cash equivalents	$	—	$	—	$	15	$	—	$	—	$	15
Equity securities	46		—		109		59		—		123
Corporate debt securities	—		1		68		1		—		57
Municipal bonds	1		1		87		2		1		83
U.S. government bonds	—		1		52		—		—		41
Other debt securities	—		1		45		—		1		44
Total Other Investments	$	47	$	4	$	376	$	62	$	2	$	363
Total Investments	$	2,898	$	83	$	7,500	$	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)	June 30, 2018
Due in one year or less	$	89
Due after one through five years	518
Due after five through 10 years	543
Due after 10 years	1,122
Total	$	2,272

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three and six months ended June 30, 2018, and from sales of AFS securities for the three and six months ended June 30, 2017, were as follows.



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2018		June 30, 2018
FV-NI:
Realized gains	$	47	$	66
Realized losses	31		44
AFS:
Realized gains	5		10
Realized losses	12		25



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2017		June 30, 2017
Realized gains	$	40	$	133
Realized losses	37		99

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.



	June 30, 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	$	—	$	—	$	32	$	—	$	—	$	32
Equity securities	1,544		23		2,732		1,531		12		2,692
Corporate debt securities	2		8		347		9		2		359
Municipal bonds	1		1		72		—		1		60
U.S. government bonds	2		12		474		3		4		503
Other debt securities	—		3		124		—		1		112
Total NDTF Investments	$	1,549	$	47	$	3,781	$	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)	June 30, 2018
Due in one year or less	$	12
Due after one through five years	163
Due after five through 10 years	286
Due after 10 years	556
Total	$	1,017



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2018		June 30, 2018
FV-NI:
Realized gains	$	26	$	36
Realized losses	17		22
AFS:
Realized gains	4		9
Realized losses	8		18



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2017		June 30, 2017
Realized gains	$	24	$	90
Realized losses	23		63

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.



	June 30, 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	$	—	$	—	$	84	$	—	$	—	$	83
Equity securities	1,293		17		2,256		1,274		15		2,222
Corporate debt securities	3		4		213		8		—		211
Municipal bonds	1		3		269		4		2		284
U.S. government bonds	5		8		517		8		3		524
Other debt securities	—		—		4		—		—		6
Total NDTF Investments	$	1,302	$	32	$	3,343	$	1,294	$	20	$	3,330
Other Investments
Cash and cash equivalents	$	—	$	—	$	11	$	—	$	—	$	12
Municipal bonds	1		—		47		2		—		47
Total Other Investments	$	1	$	—	$	58	$	2	$	—	$	59
Total Investments	$	1,303	$	32	$	3,401	$	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)	June 30, 2018
Due in one year or less	$	69
Due after one through five years	286
Due after five through 10 years	207
Due after 10 years	488
Total	$	1,050



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2018		June 30, 2018
FV-NI:
Realized gains	$	21	$	30
Realized losses	14		22
AFS:
Realized gains	1		1
Realized losses	4		7



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2017		June 30, 2017
Realized gains	$	15	$	42
Realized losses	14		35

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.



	June 30, 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	$	—	$	—	$	46	$	—	$	—	$	50
Equity securities	995		13		1,819		980		12		1,795
Corporate debt securities	2		3		153		6		—		149
Municipal bonds	1		3		268		4		2		283
U.S. government bonds	4		6		339		5		2		310
Other debt securities	—		—		2		—		—		4
Total NDTF Investments	$	1,002	$	25	$	2,627	$	995	$	16	$	2,591
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	1
Total Other Investments	$	—	$	—	$	1	$	—	$	—	$	1
Total Investments	$	1,002	$	25	$	2,628	$	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)	June 30, 2018
Due in one year or less	$	24
Due after one through five years	214
Due after five through 10 years	150
Due after 10 years	374
Total	$	762



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2018		June 30, 2018
FV-NI:
Realized gains	$	17	$	25
Realized losses	12		20
AFS:
Realized gains	1		1
Realized losses	3		5



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2017		June 30, 2017
Realized gains	$	11	$	35
Realized losses	11		30

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.



	June 30, 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	$	—	$	—	$	38	$	—	$	—	$	33
Equity securities	298		4		437		294		3		427
Corporate debt securities	1		1		60		2		—		62
Municipal bonds	—		—		1		—		—		1
U.S. government bonds	1		2		178		3		1		214
Other debt securities	—		—		2		—		—		2
Total NDTF Investments^(b)	$	300	$	7	$	716	$	299	$	4	$	739
Other Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	1
Municipal bonds	1		—		47		2		—		47
Total Other Investments	$	1	$	—	$	48	$	2	$	—	$	48
Total Investments	$	301	$	7	$	764	$	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 six months ended June 30, 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)	June 30, 2018
Due in one year or less	$	45
Due after one through five years	72
Due after five through 10 years	57
Due after 10 years	114
Total	$	288



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2018		June 30, 2018
FV-NI:
Realized gains	$	4	$	5
Realized losses	2		2
AFS:
Realized gains	—		—
Realized losses	1		2



	Three Months Ended		Six Months Ended
(in millions)	June 30, 2017		June 30, 2017
Realized gains	$	4	$	7
Realized losses	3		5

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.



	June 30, 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	$	36	$	—	$	74	$	49	$	—	$	97
Corporate debt securities	—		—		8		—		—		3
Municipal bonds	—		1		33		—		1		28
Total Investments	$	36	$	1	$	115	$	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)	June 30, 2018
Due in one year or less	$	3
Due after one through five years	20
Due after five through 10 years	4
Due after 10 years	14
Total	$	41