8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2012

DUKE ENERGY CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-32853	20-2777218
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

550 South Tryon Street, Charlotte, North Carolina  28202-4200

(Address of Principal Executive Offices, including Zip code)

(704) 382-3853

(Registrant’s telephone number, including area code)

DUKE ENERGY CAROLINAS, LLC

 (Exact Name of Registrant as Specified in its Charter)

North Carolina	001-04928	56-0205520
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

526 South Church Street, Charlotte, North Carolina  28202-1904

(Address of Principal Executive Offices, including Zip code)

(704) 382-3853

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

xWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

Item 8.01.   Other Events.

On May 8, 2012, Duke Energy Corporation and Progress Energy, Inc. entered into a supplemental merger settlement agreement (the “Supplemental Agreement”) with the North Carolina Public Staff which was filed with the North Carolina Utilities Commission (the “NCUC”) in connection with the companies’ proposed merger.  The Supplemental Agreement addresses state regulatory issues raised by the market power mitigation proposal filed by the companies with the Federal Energy Regulatory Commission (the “FERC”) on March 26, 2012 and clarifies provisions in a previous settlement agreement filed September 2, 2011.

Pursuant to the Supplemental Agreement, the companies will continue to guarantee $650 million in system savings for Carolinas retail customers which will be achieved through fuel blending and purchases and jointly operating the Carolinas generation fleets.  However, the Supplemental Agreement clarifies a number of issues related to the $650 million guarantee and provides up to 18 months beyond the original five-year timeframe in which the savings can be achieved if coal consumption at certain plants is less than originally forecasted due to declines in natural gas prices.  The companies also agree not to seek recovery from North Carolina retail customers for the seven transmission projects detailed in the mitigation proposal, estimated to cost approximately $110 million, for five years following the closing of the merger.  After five years, the companies may seek to recover the costs of the transmission projects but must show that the projects are needed to provide adequate and reliable retail service regardless of the merger.  During the two to three year period that the transmission projects are being constructed and the interim mitigation power sales are in place, the companies will reduce retail rates by approximately $70 million which will be apportioned between Duke Energy Carolinas and Progress Energy Carolinas retail customers.  Duke Energy Carolinas and Progress Energy Carolinas will not seek recovery from North Carolina retail customers for any revenue shortfalls or fuel-related costs associated with the three-year interim mitigation power sales agreements, which are estimated at approximately $40-50 million over the term of the interim mitigation, nor will they seek recovery from North Carolina retail customers for the allocable portion of merger severance costs, estimated to be approximately $220 to $230 million total.  The Supplemental Agreement is subject to the approval of the NCUC, and is also contingent upon the approval by the FERC, without material condition or change, of the market power mitigation proposal as well as the joint dispatch agreement and joint open access transmission tariff that were previously filed by the companies with the FERC.

An overview providing additional detail on the Supplemental Agreement is attached to this Form 8-K as Exhibit 99.1.

Item 9.01.    Financial Statements and Exhibits.

(d)   Exhibits.

99.1       Summary of Settlement Agreement with N.C. Utilities Commission Public Staff

2

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DUKE ENERGY CORPORATION
Date: May 8, 2012	By:	/s/ Marc E. Manly
	Name:	Marc E. Manly
	Title:	Group Executive, Chief Legal Officer and Corporate
	DUKE ENERGY CAROLINAS, LLC
Date: May 8, 2012	By:	/s/ Marc E. Manly
	Name:	Marc E. Manly
	Title:	President, Group Executive and Chief Legal Officer

3

EXHIBIT INDEX

Exhibit	Description
99.1	Summary of Settlement Agreement with N.C. Utilities Commission Public Staff

4

EX-99.1

Exhibit 99.1

SETTLEMENT AGREEMENT WITH N.C. UTILITIES COMMISSION PUBLIC STAFF On May 8, 2012, Duke Energy Carolinas and Progress Energy Carolinas (the “Companies”) entered into a supplemental settlement agreement with the N.C. Utilities Commission Public Staff (revising the original agreement dated Sept 2, 2011) The agreement, which is subject to N.C. Utilities Commission approval, addresses certain state regulatory issues related to the revised FERC mitigation plan and clarifies provisions of the original settlement agreement 1 Key Supplemental Settlement Terms Estimated Cost Permanent Mitigation For five years following merger close, the Companies will not seek recovery of costs for the transmission projects; such recovery may be requested after five years ~$110 MM Interim Mitigation The Companies will not seek recovery of losses and costs associated with the interim mitigation power sales agreements ~$40 - $50 MM During interim mitigation period, the Companies will reduce rates to reflect the plant capacity no longer available to retail customers ~$70 MM Joint Dispatch and Fuel The Companies will continue to guarantee $650 million in fuel and joint dispatch savings for Carolinas retail customers, but have up to 18 additional months beyond the original five-year timeframe to achieve these savings if decreases in natural gas prices significantly reduce coal burn at certain plants -- The Companies may request recovery of capital investments associated with achieving fuel blending savings The Companies may request recovery of reagent costs associated with achieving fuel blending savings Other The Companies will not seek recovery of N.C. allocable portion of merger-related employee severance costs (total combined company costs estimated at $220-230 million) N.C. allocable portion TBD