INVESTMENTS IN UNCONSOLIDATED AFFILIATES

EQUITY METHOD INVESTMENTS

Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method.

The following table presents Duke Energy’s investments in unconsolidated affiliates accounted for under the equity method, as well as the respective equity in earnings, by segment.



	Years Ended December 31,
	2018					2017					2016
			Equity in					Equity in					Equity in
(in millions)	Investments		earnings			Investments		earnings			Investments		earnings
Electric Utilities and Infrastructure	$	97	$	6		$	89	$	5		$	93	$	5
Gas Utilities and Infrastructure	1,003		27			763		62			566		19
Commercial Renewables	201		(1		)	190		(5		)	185		(82		)
Other	108		51			133		57			81		43
Total	$	1,409	$	83		$	1,175	$	119		$	925	$	(15	)

During the years ended December 31, 2018, 2017 and 2016, Duke Energy received distributions from equity investments of $108 million, $13 million and $31 million, respectively, which are included in Other assets within Cash Flows from Operating Activities on the Consolidated Statements of Cash Flows. During the years ended December 31, 2018, and 2017, Duke Energy received distributions from equity investments of $137 million and $281 million, respectively, which are included in Return of investment capital within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows.

During the years ended December 31, 2018, and 2017, and the two months ended December 31, 2016, and the year ended October 31, 2016, Piedmont received distributions from equity investments of $1 million, $4 million, $1 million and $26 million, respectively, which are included in Other assets within Cash Flows from Operating Activities and $3 million, $2 million, $1 million and $18 million, respectively, which are included within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows.

Significant investments in affiliates accounted for under the equity method are discussed below.

Electric Utilities and Infrastructure

Duke Energy owns a 50 percent interest in DATC and in Pioneer, which build, own and operate electric transmission facilities in North America.

Gas Utilities and Infrastructure

The table below outlines Duke Energy's ownership interests in natural gas pipeline companies and natural gas storage facilities.



			Investment Amount (in millions)
	Ownership		December 31,			December 31,
Entity Name	Interest		2018			2017
Pipeline Investments
Atlantic Coast Pipeline, LLC^(a)	47	%	$	797		$	397
Sabal Trail Transmission, LLC	7.5	%	112		^(d)	219
Constitution Pipeline, LLC^(a)	24	%	25			81
Cardinal Pipeline Company, LLC^(b)	21.49	%	10			11
Storage Facilities
Pine Needle LNG Company, LLC^(b)	45	%	13			13
Hardy Storage Company, LLC^(b)	50	%	46			42
Total Investments^(c)			$	1,003		$	763


(a)	During the year ended December 31, 2017, Piedmont transferred its share of ownership interest in ACP and Constitution to a wholly owned subsidiary of Duke Energy at book value.


(b)	Piedmont owns the Cardinal, Pine Needle and Hardy Storage investments.


(c)	Duke Energy includes purchase accounting adjustments related to Piedmont.


(d)	Sabal Trail returned capital of $112 million during the year ended December 31, 2018.

In October 2017, Duke Energy entered into a guarantee agreement to support its share of the ACP revolving credit facility. See Note 7 for additional information. As a result of the financing, ACP returned capital of $265 million to Duke Energy.

Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016, for $160 million resulting in an after tax gain of $81 million during the year ended October 31, 2016. Piedmont's Equity in Earnings in SouthStar was $19 million for the year ended October 31, 2016.

During the fourth quarter of 2018, ACP received several adverse court rulings as described in Note 4. As a result, Duke Energy evaluated this investment for impairment and determined that fair value approximated carrying value and therefore no impairment was necessary.

For regulatory matters and other information on the ACP, Sabal Trail and Constitution investments, see Notes 4 and 17.

Commercial Renewables

Duke Energy has a 50 percent interest in DS Cornerstone, LLC, which owns wind farm projects in the U.S.

Impairment of Equity Method Investments

During the year ended December 31, 2018, Duke Energy recorded an OTTI of the Constitution investment of $55 million within Equity in earnings of unconsolidated affiliates on Duke Energy's Consolidated Statements of Operations. The charge represents the excess carrying value over the estimated fair value of the project, which was based on a Level 3 Fair Value measurement that was determined from the income approach using discounted cash flows. The impairment was primarily due to the recent actions taken by the courts and regulators to uphold the NYSDEC's denial of the certification and uncertainty associated with the remaining legal and regulatory challenges. For additional information on the Constitution investment, see Note 4.

During the year ended December 31, 2016, Duke Energy recorded an OTTI of certain wind project investments. The $71 million pretax impairment was recorded within Equity in earnings (losses) of unconsolidated affiliates on Duke Energy's Consolidated Statements of Operations. The other-than-temporary decline in value of these investments was primarily attributable to a sustained decline in market pricing where the wind investments are located, projected net losses for the projects and a reduction in the projected cash distribution to the class of investment owned by Duke Energy.

Other

Duke Energy owns a 17.5 percent indirect interest in NMC, which owns and operates a methanol and MTBE business in Jubail, Saudi Arabia. Duke Energy's economic ownership interest decreased from 25 to 17.5 percent with the successful startup of NMC's polyacetal production facility in 2017. Duke Energy retains 25 percent of the board representation and voting rights of NMC.