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Employee Benefit Obligations

9 Months Ended

Sep. 30, 2012

15. Employee Benefit Obligations

Net periodic benefit costs disclosed in the tables below for the qualified pension, non-qualified pension and other post-retirement benefit plans represent the cost of the respective benefit plan to the Duke Energy Registrants for the periods presented. However, portions of the net periodic benefit costs disclosed in the tables below have been capitalized as a component of property, plant and equipment.

Each of the Subsidiary Registrants participate in qualified pension plans, non-qualified pension plans and other post-retirement benefit plans sponsored by Duke Energy. The net periodic benefit costs shown in the tables below represent the allocated cost of the respective benefit plan for the periods presented. Additionally, the Subsidiary Registrants are allocated their proportionate share of pension and other post-retirement benefit cost for employees of Duke Energy's shared services affiliate that provide support to the respective Subsidiary Registrant. These allocated amounts are included in the governance and shared services costs for each Subsidiary Registrant discussed in Note 18.

Duke Energy

The following table shows the components of the net periodic benefit costs for the Duke Energy U.S. qualified pension, non-qualified pension and other post-retirement benefit plans.

		Three Months Ended						Three Months Ended
		September 30, 2012						September 30, 2011
(in millions)		Qualified Pension Plans^(a)		Non-Qualified Pension Plans		Other Post-Retirement Benefit Plans^(b)		Qualified Pension Plans^(a)		Non-Qualified Pension Plans		Other Post-Retirement Benefit Plans^(b)
Service cost		$	39	$	―	$	7	$	24	$	―	$	1
Interest cost on projected benefit obligation			94		5		19		58		2		8
Expected return on plan assets			(142)		―		(4)		(96)		―		(3)
Amortization of prior service cost (credit)			3		―		(2)		1		―		(2)
Amortization of net transition liability			―		―		3		―		―		2
Amortization of loss			47		1		8		20		1		―
Special termination charge			―		―		9		―		―		―
Other			2		―		―		4		―		―
Net periodic costs		$	43	$	6	$	40	$	11	$	3	$	6

(a)	Excludes regulatory asset amortization of $3 million and $4 million for each of the three months ended September 30, 2012 and 2011, respectively, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.
(b)	Excludes regulatory asset amortization of $3 million and $2 million for the three months ended September 30, 2012 and 2011, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.

		Nine Months Ended						Nine Months Ended
		September 30, 2012						September 30, 2011
(in millions)		Qualified Pension Plans^(a)		Non-Qualified Pension Plans		Other Post-Retirements Benefit Plans^(b)		Qualified Pension Plans^(a)		Non-Qualified Pension Plans		Other Post-Retirements Benefit Plans^(b)
Service cost		$	84	$	1	$	10	$	72	$	1	$	5
Interest cost on projected benefit obligation			214		8		36		174		6		26
Expected return on plan assets			(330)		―		(12)		(288)		―		(11)
Amortization of prior service cost (credit)			6		1		(6)		4		1		(6)
Amortization of net transition liability			―		―		7		―		―		7
Amortization of loss (gain)			96		2		5		58		1		(2)
Special termination charge			―		―		9		―		―		―
Other			4		―		―		13		―		―
Net periodic costs		$	74	$	12	$	49	$	33	$	9	$	19

(a)	Excludes regulatory asset amortization of $10 million and $11 million for the nine months ended September 30, 2012 and 2011, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.
(b)	Excludes regulatory asset amortization of $7 million and $6 million for the nine months ended September 30, 2012 and 2011, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.

Duke Energy Carolinas
		Three Months Ended						Three Months Ended
		September 30, 2012						September 30, 2011
(in millions)			Qualified Pension Plans		Other Post-Retirement Benefit Plans		Qualified Pension Plans		Other Post-Retirement Benefit Plans
Service cost		$	9	$	1	$	9	$	―
Interest cost on projected benefit obligation			23		4		21		4
Expected return on plan assets			(36)		(3)		(37)		(2)
Amortization of prior service (credit) cost			―		(2)		1		(1)
Amortization of net transition liability			―		2		―		2
Amortization of loss			11		1		9		1
Special termination charge			―		1		―		―
Other			―		―		1		―
Net periodic costs^(a)		$	7	$	4	$	4	$	4

(a)	Components of net periodic costs for Duke Energy Carolinas' non-qualified pension plans were an insignificant amount for the three months ended September 30, 2012 and 2011.

	Nine Months Ended						Nine Months Ended
	September 30, 2012						September 30, 2011
(in millions)		Qualified Pension Plans		Non-Qualified Pension Plans		Other Post-Retirement Benefit Plans		Qualified Pension Plans		Non-Qualified Pension Plans		Other Post-Retirement Benefit Plans
Service cost	$	26	$	―	$	2	$	28	$	―	$	1
Interest cost on projected benefit obligation		68		1		12		64		1		12
Expected return on plan assets		(109)		―		(8)		(112)		―		(7)
Amortization of prior service cost (credit)		1		―		(4)		1		―		(4)
Amortization of net transition liability		―		―		5		―		―		7
Amortization of loss		34		―		2		27		―		2
Special termination charge		―		―		1		―		―		―
Other		1		―		―		5		―		―
Net periodic costs	$	21	$	1	$	10	$	13	$	1	$	11

Duke Energy Ohio
		Three Months Ended				Three Months Ended
		September 30, 2012				September 30, 2011
(in millions)			Qualified Pension Plans^(a)		Other Post-Retirement Benefit Plans^(b)		Qualified Pension Plans^(a)		Other Post-Retirement Benefit Plans^(b)
Service cost		$	2	$	1	$	2	$	1
Interest cost on projected benefit obligation			7		1		8		1
Expected return on plan assets			(11)		(1)		(11)		―
Amortization of prior service credit			―		―		―		(1)
Amortization of loss (gain)			2		(1)		2		(1)
Other			―		―		1		―
Net periodic costs^(c)		$	―	$	―	$	2	$	―

(a)	Excludes regulatory asset amortization of $2 million for each of the three months ended September 30, 2012 and 2011, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.
(b)	Excludes regulatory asset amortization of an insignificant amount and $1 million for each of the three months ended September 30, 2012 and 2011, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.
(c)	Components of net periodic costs for Duke Energy Ohio's other post-retirement benefit plans and non-qualified pension plans were an insignificant amount for each of the three months ended September 30, 2012 and 2011.

		Nine Months Ended				Nine Months Ended
		September 30, 2012				September 30, 2011
(in millions)			Qualified Pension Plans^(a)		Other Post-Retirement Benefit Plans^(b)		Qualified Pension Plans^(a)		Other Post-Retirement Benefit Plans^(b)
Service cost		$	5	$	1	$	5	$	1
Interest cost on projected benefit obligation			23		2		24		2
Expected return on plan assets			(33)		(1)		(33)		―
Amortization of prior service credit			―		―		―		(1)
Amortization of loss (gain)			7		(2)		6		(2)
Other			―		―		2		―
Net periodic costs^(c)		$	2	$	―	$	4	$	―

(a)	Excludes regulatory asset amortization of $5 million for each of the nine months ended September 30, 2012 and 2011, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.
(b)	Excludes regulatory asset amortization of $1 million and $2 million for the nine months ended September 30, 2012 and 2011, respectively, resulting from purchase accounting adjustments associated with Duke Energy’s merger with Cinergy in April 2006.
(c)	Components of net periodic costs for Duke Energy Ohio's non-qualified pension plans were an insignificant amount for each of the nine months ended September 30, 2012 and 2011.

Duke Energy Indiana
		Three Months Ended				Three Months Ended
		September 30, 2012				September 30, 2011
(in millions)			Qualified Pension Plans		Other Post-Retirement Benefit Plans		Qualified Pension Plans		Other Post-Retirement Benefit Plans
Service cost		$	2	$	1	$	3	$	1
Interest cost on projected benefit obligation			8		1		8		1
Expected return on plan assets			(12)		―		(12)		―
Amortization of prior service cost			1		―		―		―
Amortization of loss			3		―		3		―
Other			―		―		1		―
Net periodic costs^(a)		$	2	$	2	$	3	$	2

(a)	Components of net periodic costs for Duke Energy Indiana's non-qualified pension plans were an insignificant amount for each of the three months ended September 30, 2012 and 2011.

		Nine Months Ended				Nine Months Ended
		September 30, 2012				September 30, 2011
(in millions)			Qualified Pension Plans		Other Post-Retirement Benefit Plans		Qualified Pension Plans		Other Post-Retirement Benefit Plans
Service cost		$	7	$	1	$	8	$	1
Interest cost on projected benefit obligation			23		5		23		5
Expected return on plan assets			(35)		(1)		(34)		(1)
Amortization of prior service cost			2		1		1		―
Amortization of loss (gain)			10		(1)		10		1
Other			―		―		2		―
Net periodic costs^(a)		$	7	$	5	$	10	$	6

(a)	Components of net periodic costs for Duke Energy Indiana's non-qualified pension plans were an insignificant amount for each of the nine months ended September 30, 2012 and 2011.

Employee Savings Plan

Duke Energy sponsors employee savings plans that cover substantially all U.S. employees. Duke Energy made pre-tax employer contributions of $30 million and $18 million for the three months ended September 30, 2012 and 2011, respectively. Duke Energy made pre-tax employer contributions of $77 million and $68 million for the nine months ended September 30, 2012 and 2011, respectively.

The Subsidiary Registrants participate in Duke Energy sponsored employee savings plans. The following table shows the respective Subsidiary Registrants' expense related to its proportionate share of pre-tax employer contributions.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)		2012		2011		2012		2011
Duke Energy Carolinas	$	8	$	8	$	28	$	28
Duke Energy Ohio		1		1		3		3
Duke Energy Indiana		2		1		5		6

- Definition

The entire disclosure for pension and other postretirement benefits.

+ References

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