Organization and Basis of Presentation

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Index to Combined Notes to Condensed Consolidated Financial Statements

The unaudited notes to the Condensed Consolidated Financial Statements that follow are a combined presentation. The following list indicates the registrants to which the footnotes apply.

Applicable Notes

Registrant

Duke Energy

•

Duke Energy Carolinas

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Indiana

•

Piedmont

•

Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.

ORGANIZATION AND BASIS OF PRESENTATION

BASIS OF PRESENTATION

These Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all information and notes required by GAAP for annual financial statements and should be read in conjunction with the Consolidated Financial Statements in the Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2021.

The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Condensed Consolidated Financial Statements. However, none of the registrants make any representations as to information related solely to Duke Energy or the subsidiaries of Duke Energy other than itself.

These Condensed Consolidated Financial Statements, in the opinion of the respective companies’ management, reflect all normal recurring adjustments necessary to fairly present the financial position and results of operations of each of the Duke Energy Registrants. Amounts reported in Duke Energy’s interim Condensed Consolidated Statements of Operations and each of the Subsidiary Registrants’ interim Condensed Consolidated Statements of Operations and Comprehensive Income are not necessarily indicative of amounts expected for the respective annual periods due to effects of seasonal temperature variations on energy consumption, regulatory rulings, timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices and other factors.

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

BASIS OF CONSOLIDATION

These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 12 for additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities.

COMMERCIAL RENEWABLES STRATEGIC REVIEW

On November 1, 2022, the Board of Directors committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind lease for Carolina Long Bay. Duke Energy is actively marketing the business as two separate disposal units, the utility scale solar and wind unit and the distributed generation unit. Non-binding offers were received for the utility scale solar and wind unit in late October 2022. We are evaluating the initial offers and expect to receive final offers from select bidders in early 2023. Non-binding offers for the distributed generation unit are also expected in early 2023. Duke Energy expects to dispose of both units in mid-2023. In the fourth quarter of 2022, Duke Energy will reclassify the Commercial Renewables business segment to assets held for sale and report it as a discontinued operation. Duke Energy could record a material impairment loss in the fourth quarter of 2022 if the carrying value of one or both of the units is not expected to be recovered. If the proceeds exceed the carrying value of one or both of the units, a gain would be recognized at the closing of the transaction in mid-2023. Proceeds from a successful sale are expected to be used for debt reduction and avoidance.

NONCONTROLLING INTEREST

Duke Energy maintains a controlling financial interest in certain less than wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Condensed Consolidated Balance Sheets.

Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of earnings, tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the Hypothetical Liquidation at Book Value (HLBV) method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of income or loss allocated to each owner for the reporting period.

During September 2021, Duke Energy completed the initial minority interest investment in a portion of Duke Energy Indiana to an affiliate of GIC. GIC's ownership interest in Duke Energy Indiana represents a noncontrolling interest. See Note 2 for additional information on the sale.

Other operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.

The following table presents allocated losses to noncontrolling interest for the three and nine months ended September 30, 2022, and 2021.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021




Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method	$	11	$	119	$	78	$	217
Allocated (income) losses to noncontrolling members based on pro rata shares of ownership	(2)		10		(5)		30
Total Noncontrolling Interest Allocated Losses	$	9	$	129	$	73	$	247

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. See Notes 10 and 12 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Condensed Consolidated Balance Sheets.


	September 30, 2022										December 31, 2021
			Duke				Duke		Duke				Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Duke		Energy		Progress		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida		Energy		Carolinas		Energy		Progress		Florida
Current Assets
Cash and cash equivalents	$	453	$	36	$	101	$	58	$	25	$	343	$	7	$	70	$	35	$	23
Other	164		5		34		17		17		170		—		39		—		39
Other Noncurrent Assets
Other	12		1		2		2		—		7		1		4		4		—
Total cash, cash equivalents and restricted cash	$	629	$	42	$	137	$	77	$	42	$	520	$	8	$	113	$	39	$	62

INVENTORY

Provisions for inventory write-offs were not material at September 30, 2022, and December 31, 2021. The components of inventory are presented in the tables below.


	September 30, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,583	$	863	$	1,167	$	786	$	381	$	91	$	329	$	13
Coal	556		215		202		87		115		18		121		—
Natural gas, oil and other fuel	348		34		180		107		73		9		2		122
Total inventory	$	3,487	$	1,112	$	1,549	$	980	$	569	$	118	$	452	$	135


	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,397	$	793	$	1,067	$	729	$	338	$	80	$	311	$	14
Coal	486		195		167		94		73		19		105		—
Natural gas, oil and other fuel	316		38		164		98		66		17		2		95
Total inventory	$	3,199	$	1,026	$	1,398	$	921	$	477	$	116	$	418	$	109

OTHER NONCURRENT ASSETS

Duke Energy, through a nonregulated subsidiary, was the winner of the Carolina Long Bay offshore wind auction in May 2022 and recorded an asset of $150 million related to the arrangement in Other within Other noncurrent assets.

NEW ACCOUNTING STANDARDS

No new accounting standards were adopted by the Duke Energy Registrants in 2022.