Business Segments

6 Months Ended

Jun. 30, 2012

Business Segments

3. Business Segments

Effective with the first quarter of 2012, management began evaluating segment performance based on Segment Income. Segment Income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment Income, as discussed below, includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements. In conjunction with management's use of the new reporting measure, certain governance costs that were previously unallocated have now been allocated to each of the segments. In addition, direct interest expense and income taxes are included in segment income. Prior year segment profitability information has been recast to conform to the current year presentation.None of these changes impacts the reportable operating segments or the Duke Energy Registrants' previously reported consolidatedrevenues, net income or earnings-per-share.

Duke Energy

Duke Energy has the following reportable operating segments: U.S. Franchised Electric and Gas (USFE&G), Commercial Power and International Energy.

USFE&G generates, transmits, distributes and sells electricity in central and western North Carolina, western South Carolina, central, north central and southern Indiana, and northern Kentucky. USFE&G also transmits and distributes electricity in southwestern Ohio. Additionally, USFE&G transports and sells natural gas in southwestern Ohio and northern Kentucky. It conducts operations primarily through Duke Energy Carolinas, regulated portions of Duke Energy Ohio including Duke Energy Kentucky, and Duke Energy Indiana.

Commercial Power owns, operates and manages power plants and engages in the wholesale marketing and procurement of electric power, fuel and emission allowances related to these plants, as well as other contractual positions. Commercial Power also has a retail sales subsidiary, Duke Energy Retail Sales, LLC (Duke Energy Retail), which is certified by the PUCO as a Competitive Retail Electric Service provider in Ohio. Through Duke Energy Generation Services, Inc. and its affiliates (DEGS), Commercial Power engages in the development, construction and operation of renewable energy projects. In addition, DEGS develops commercial transmission projects. DEGS also owns and operates electric generation for large energy consumers, municipalities, utilities and industrial facilities.

International Energy principally operates and manages power generation facilities and engages in sales and marketing of electric power and natural gas outside the U.S. It conducts operations primarily through Duke Energy International, LLC and its affiliates and its activities principally target power generation in Latin America. Additionally, International Energy owns a 25% interest in National Methanol Company, located in Saudi Arabia, which is a large regional producer of methanol and methyl tertiary butyl ether.

The remainder of Duke Energy's operations is presented as Other. While it is not considered an operating segment, Other primarily includes unallocated corporate costs, which include costs not allocable to Duke Energy's reportable business segments, primarily governance, costs to achieve mergers and divestitures, and costs associated with certain corporate severance programs. It also includes, Bison Insurance Company Limited (Bison), Duke Energy's wholly owned, captive insurance subsidiary, Duke Energy's 50% interest in DukeNet Communications, LLC (DukeNet) and related telecommunications businesses, and Duke Energy Trading and Marketing, LLC, which is 40% owned by Exxon Mobil Corporation and 60% owned by Duke Energy.

Business Segment Data
								Segment Income/
		Unaffiliated		Intersegment		Total		Consolidated
(in millions)		Revenues		Revenues		Revenues		Net Income(a)
Three Months Ended June 30, 2012
USFE&G		$	2,688	$	9	$	2,697	$	337
Commercial Power			488		14		502		28
International Energy			397		―		397		105
	Total reportable segments		3,573		23		3,596		470
Other			4		12		16		(25)
Eliminations			―		(35)		(35)		―
Add back of noncontrolling interest component			―		―		―		4
Income from Discontinued Operations, net of tax			―		―		―		(1)
	Total consolidated	$	3,577	$	―	$	3,577	$	448
Three Months Ended June 30, 2011
USFE&G		$	2,540	$	9	$	2,549	$	297
Commercial Power			592		3		595		30
International Energy			406		―		406		127
	Total reportable segments		3,538		12		3,550		454
Other			(4)		13		9		(19)
Eliminations			―		(25)		(25)		―
Add back of noncontrolling interest component			―		―		―		6
	Total consolidated	$	3,534	$	―	$	3,534	$	441

								Segment Income/
		Unaffiliated		Intersegment		Total		Consolidated
(in millions)		Revenues		Revenues		Revenues		Net Income(a)
Six Months Ended June 30, 2012
USFE&G(b)		$	5,348	$	17	$	5,365	$	473
Commercial Power			1,052		30		1,082		59
International Energy			799		―		799		247
	Total reportable segments		7,199		47		7,246		779
Other			8		23		31		(41)
Eliminations			―		(70)		(70)		―
Add back of noncontrolling interest component			―		―		―		8
Income from Discontinued Operations, net of tax			―		―		―		1
	Total consolidated	$	7,207	$	―	$	7,207	$	747
Six Months Ended June 30, 2011
USFE&G		$	5,214	$	18	$	5,232	$	638
Commercial Power			1,234		5		1,239		79
International Energy			754		―		754		255
	Total reportable segments		7,202		23		7,225		972
Other			(5)		25		20		(26)
Eliminations			―		(48)		(48)		―
Add back of noncontrolling interest component			―		―		―		8
	Total consolidated	$	7,197	$	―	$	7,197	$	954
(a)	Segment results exclude noncontrolling interests and results of entities classified as discontinued operations.
(b)	As discussed further in Note ##REGMAT, Duke Energy recorded pre-tax impairment and other charges of $420 million in the first quarter of 2012 related to the Edwardsport IGCC project.

Segment Assets
	Segment assets in the following table exclude all intercompany assets.
(in millions)		June 30, 2012		December 31, 2011
USFE&G		$	48,451	$	47,977
Commercial Power			7,268		6,939
International Energy			4,678		4,539
	Total reportable segments		60,397		59,455
Other			2,593		2,961
Reclassifications(a)			41		110
	Total consolidated assets	$	63,031	$	62,526
(a)	Primarily represents reclassification of federal tax balances in consolidation.

Duke Energy Ohio

Duke Energy Ohio has two reportable operating segments, Franchised Electric and Gas and Commercial Power.

Franchised Electric and Gas transmits and distributes electricity in southwestern Ohio and generates, transmits, distributes and sells electricity in northern Kentucky. Franchised Electric and Gas also transports and sells natural gas in southwestern Ohio and northern Kentucky. It conducts operations primarily through Duke Energy Ohio and its wholly owned subsidiary Duke Energy Kentucky.

Commercial Power owns, operates and manages power plants and engages in the wholesale marketing and procurement of electric power, fuel and emission allowances related to these plants, as well as other contractual positions. Duke Energy Ohio's Commercial Power reportable operating segment does not include the operations of DEGS or Duke Energy Retail, which is included in the Commercial Power reportable operating segment at Duke Energy.

The remainder of Duke Energy Ohio's operations is presented as Other. While it is not considered an operating segment, Other primarily includes certain governance costs allocated by its parent, Duke Energy (see Note 17).

Business Segment Data
				Segment Income/
		Unaffiliated		Consolidated
(in millions)		Revenues(a)		Net Income
Three Months Ended June 30, 2012
Franchised Electric and Gas		$	387	$	30
Commercial Power			342		17
	Total reportable segments		729		47
Other			―		(2)
Eliminations			(12)		―
	Total consolidated	$	717	$	45
Three Months Ended June 30, 2011
Franchised Electric and Gas		$	315	$	29
Commercial Power			379		6
	Total reportable segments		694		35
Other			―		(2)
	Total consolidated	$	694	$	33

				Segment Income/
		Unaffiliated		Consolidated
(in millions)		Revenues(a)		Net Income
Six Months Ended June 30, 2012
Franchised Electric and Gas		$	860	$	64
Commercial Power			796		61
	Total reportable segments		1,656		125
Other			―		(6)
Eliminations			(27)		―
	Total consolidated	$	1,629	$	119
Six Months Ended June 30, 2011
Franchised Electric and Gas		$	779	$	77
Commercial Power			794		34
	Total reportable segments		1,573		111
Other			―		(5)
	Total consolidated	$	1,573	$	106
(a)	There was an insignificant amount of intersegment revenues for the three and six months ended June 30, 2011.

Segment Assets
	Segment assets in the following table exclude all intercompany assets.
(in millions)		June 30, 2012		December 31, 2011
Franchised Electric and Gas		$	6,559	$	6,293
Commercial Power			4,742		4,740
	Total reportable segments		11,301		11,033
Other			142		259
Reclassifications(a)			(465)		(353)
	Total consolidated assets	$	10,978	$	10,939
(a)	Primarily represents reclassification of federal tax balances in consolidation.

Duke Energy Carolinas and Duke Energy Indiana

Duke Energy Carolinas and Duke Energy Indiana each have one reportable operating segment, Franchised Electric, which generates, transmits, distributes and sells electricity in central and western North Carolina and western South Carolina, and north central, central and southern Indiana, respectively.

The remainder of Duke Energy Carolinas' and Duke Energy Indiana's operations are presented as Other. While it is not considered an operating segment, Other primarily includes costs to achieve certain mergers and divestitures, certain corporate severance programs, andcertain costs for use of corporate assets as allocated to Duke Energy Carolinas or Duke Energy Indiana.

At June 30, 2012 and December 31, 2011 all of Duke Energy Carolinas' and Duke Energy Indiana's assets are each owned by the Franchised Electric operating segment. For the three andsix months ended June 30, 2012 and 2011, substantially all revenues and expenses are from the Franchised Electric operating segment of each registrant.