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Goodwill

9 Months Ended

Sep. 30, 2012

7. Goodwill, Intangible Assets and Impairments

Goodwill
	The following tables show goodwill by segment for Duke Energy and Duke Energy Ohio:

Duke Energy
(in millions)		USFE&G		Commercial Power		International Energy		Total
Balance at December 31, 2011:
Goodwill		$	3,483	$	940	$	297	$	4,720
Accumulated Impairment Charges			―		(871)		―		(871)
Balance at December 31, 2011, as adjusted for accumulated impairment charges			3,483		69		297		3,849
Balance at September 30, 2012:
Goodwill			3,483		940		297		4,720
Acquisitions ^(a)			12,342		―		―		12,342
Accumulated Impairment Charges			―		(871)		―		(871)
Foreign Exchange and Other Changes			―		(7)		(4)		(11)
Balance at September 30, 2012, as adjusted for accumulated impairment charges		$	15,825	$	62	$	293	$	16,180

(a)	Represents goodwill resulting from the merger with Progress Energy. See Note ##ACQ for additional information.

Duke Energy Ohio
(in millions)	Franchised Electric & Gas		Commercial Power		Total
Balance at December 31, 2011:
Goodwill	$	1,137	$	1,188	$	2,325
Accumulated Impairment Charges		(216)		(1,188)		(1,404)
Balance at December 31, 2011, as adjusted for accumulated impairment charges		921		―		921
Balance at September 30, 2012:
Goodwill		1,137		1,188		2,325
Accumulated Impairment Charges		(216)		(1,188)		(1,404)
Balance at September 30, 2012, as adjusted for accumulated impairment charges	$	921	$	―	$	921

Duke Energy and Duke Energy Ohio are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy and Duke Energy Ohio update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. As the fair value of Duke Energy and Duke Energy Ohio's reporting units exceeded their respective carrying values at the date of the annual impairment analysis, Duke Energy and Duke Energy Ohio did not record any impairment charges in the third quarter of 2012

Intangible Assets. On August 8, 2011, the EPA's final rule to replace CAIR was published in the Federal Register. As further discussed in Note 5, the CSAPR established state-level annual SO2 and NOx caps that were required to take effect on January 1, 2012, and state-level ozone-season NOx caps that were to take effect on May 1, 2012. The CSAPR did not utilize CAA emission allowances as the original CAIR provided. Under the CSAPR, the EPA was expected to issue new emission allowances to be used exclusively for purposes of complying with the CSAPR cap-and-trade program. After this ruling was published in 2011, Duke Energy evaluated the effect of the CSAPR on the carrying value of emission allowances recorded at its USFE&G and Commercial Power segments. Based on the provisions of the CSAPR, Duke Energy Ohio had more SO2 allowances than were needed to comply with the continuing CAA acid rain cap-and-trade program (excess emission allowances). Duke Energy Ohio incurred a pre-tax impairment of $79 million in the third quarter of 2011 to write down the carrying value of excess emission allowances held by Commercial Power to fair value. The charge is recorded in Impairment charges on Duke Energy and Duke Energy Ohio's Condensed Consolidated Statement of Operations. This amount was based on the fair value of excess allowances held by Commercial Power for compliance under the continuing CAA acid rain cap-and-trade program as of September 30, 2011.

Other Impairments. As a result of project cost overages related to the Edwardsport IGCC plant, Duke Energy Indiana recorded pre-tax charges to earnings of $600 million and $222 million for the nine months ended September 30, 2012 and 2011, respectively. See Note 4 for a further discussion of the Edwardsport IGCC project.

In the third quarter of 2012, Duke Energy and Duke Energy Carolinas recorded pre-tax impairment charges of $86 million and $31 million, respectively, in conjunction with the merger with Progress Energy. See Note 2 for additional information.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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