| Investments in Debt and Equity Securities |
INVESTMENTS IN DEBT AND EQUITY SECURITIES AVAILABLE-FOR-SALE SECURITIES The Duke Energy Registrants classify their investments in debt and equity securities as available-for-sale. Duke Energy’s available-for-sale securities are primarily comprised of investments held in (i) the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to OPEB plans, (iii) Duke Energy’s captive insurance investment portfolio, and (iv) Duke Energy’s foreign operations investment portfolio. Duke Energy classifies all other investments in debt and equity securities as long-term, unless otherwise noted. Investment Trusts The investments within the NDTF investments and the Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana grantor trusts (Investment Trusts) are managed by independent investment managers with discretion to buy, sell, and invest pursuant to the objectives set forth by the trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt and equity securities within the Investment Trusts are considered other-than-temporary impairments and are recognized immediately. Investments within the Investment Trusts generally qualify for regulatory accounting, and accordingly realized and unrealized gains and losses are deferred as a regulatory asset or liability. Certain investments held in Duke Energy Florida's NDTF were acquired in a settlement with FMJO and do not qualify for regulatory accounting. Unrealized gains and losses on these assets are included in other comprehensive income until realized, unless it is determined the carrying value of an investment is other-than-temporarily impaired, and realized gains and losses are included within Other income and expense, net on the Consolidated Statements of Operations. The value of these assets have not materially changed since the assets were acquired from FMJO. As a result, there is no material impact on earnings of the Duke Energy Registrants. Other Available-for-Sale Securities Unrealized gains and losses on all other available-for-sale securities are included in other comprehensive income until realized, unless it is determined the carrying value of an investment is other-than-temporarily impaired. If an other-than-temporary impairment exists, the unrealized loss is included in earnings based on the criteria discussed below. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value should be considered other-than-temporary. Criteria used to evaluate whether an impairment associated with equity securities is other-than-temporary includes, but is not limited to, (i) the length of time over which the market value has been lower than the cost basis of the investment, (ii) the percentage decline compared to the cost of the investment, and (iii) management’s intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery in market value. If a decline in fair value is determined to be other-than-temporary, the investment is written down to its fair value through a charge to earnings. If the entity does not have an intent to sell a debt security and it is not more likely than not management will be required to sell the debt security before the recovery of its cost basis, the impairment write-down to fair value would be recorded as a component of other comprehensive income, except for when it is determined a credit loss exists. In determining whether a credit loss exists, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than the amortized cost basis, (ii) changes in the financial condition of the issuer of the security, or in the case of an asset backed security, the financial condition of the underlying loan obligors, (iii) consideration of underlying collateral and guarantees of amounts by government entities, (iv) ability of the issuer of the security to make scheduled interest or principal payments, and (v) any changes to the rating of the security by rating agencies. If a credit loss exists, the amount of impairment write-down to fair value is split between credit loss and other factors. The amount related to credit loss is recognized in earnings. The amount related to other factors is recognized in other comprehensive income. There were no credit losses as of December 31, 2015 and 2014. DUKE ENERGY The following table presents the estimated fair value of investments in available-for-sale securities. | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | | December 31, 2014 | | Gross |
| | Gross |
| | | | Gross |
| | Gross |
| | | | Unrealized |
| | Unrealized |
| | | | Unrealized |
| | Unrealized |
| | | | Holding |
| | Holding |
| | Estimated |
| | Holding |
| | Holding |
| | Estimated |
| (in millions) | Gains |
| | Losses(b) |
| | Fair Value |
| | Gains |
| | Losses(b) |
| | Fair Value |
| NDTF | | | | | | | | | |
| | | Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 179 |
| | $ | — |
| | $ | — |
| | $ | 136 |
| Equity securities | 1,823 |
| | 58 |
| | 3,590 |
| | 1,926 |
| | 29 |
| | 3,650 |
| Corporate debt securities | 7 |
| | 8 |
| | 432 |
| | 14 |
| | 2 |
| | 454 |
| Municipal bonds | 5 |
| | 1 |
| | 185 |
| | 5 |
| | — |
| | 184 |
| U.S. government bonds | 11 |
| | 5 |
| | 1,254 |
| | 19 |
| | 2 |
| | 978 |
| Other debt securities | — |
| | 4 |
| | 177 |
| | 1 |
| | 2 |
| | 147 |
| Total NDTF(c) | $ | 1,846 |
| | $ | 76 |
| | $ | 5,817 |
| | $ | 1,965 |
| | $ | 35 |
| | $ | 5,549 |
| Other Investments | |
| | |
| | |
| | |
| | |
| | |
| Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 29 |
| | $ | — |
| | $ | — |
| | $ | 15 |
| Equity securities | 32 |
| | 1 |
| | 95 |
| | 34 |
| | — |
| | 96 |
| Corporate debt securities | 1 |
| | 3 |
| | 92 |
| | 1 |
| | 1 |
| | 58 |
| Municipal bonds | 3 |
| | 1 |
| | 74 |
| | 3 |
| | 1 |
| | 76 |
| U.S. government bonds | — |
| | — |
| | 45 |
| | — |
| | — |
| | 27 |
| Other debt securities | — |
| | 2 |
| | 62 |
| | 1 |
| | 1 |
| | 80 |
| Total Other Investments(a) | $ | 36 |
| | $ | 7 |
| | $ | 397 |
| | $ | 39 |
| | $ | 3 |
| | $ | 352 |
| Total Investments | $ | 1,882 |
| | $ | 83 |
| | $ | 6,214 |
| | $ | 2,004 |
| | $ | 38 |
| | $ | 5,901 |
|
(a) These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets. | | (b) | Substantially all these amounts are considered other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset. |
| | (c) | The increase in estimated fair value of the NDTF as of December 31, 2015, is primarily due to NDTF assets acquired with the purchase of NCEMPA's ownership interest in certain generating assets and the NDTF assets acquired in a settlement with FMJO. This is partially offset due to reimbursements from the NDTF for Duke Energy Florida's costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Plant. Refer to Note 2 for further information. |
The table below summarizes the maturity date for debt securities. | | | | (in millions) | December 31, 2015 |
| Due in one year or less | 120 |
| Due after one through five years | 775 |
| Due after five through 10 years | 598 |
| Due after 10 years | 828 |
| Total | 2,321 |
|
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows. | | | | | | | | | | | | | | Years Ended December 31, | (in millions) | 2015 |
| | 2014 |
| | 2013 |
| Realized gains | $ | 193 |
| | $ | 271 |
| | $ | 209 |
| Realized losses | 98 |
| | 105 |
| | 65 |
|
DUKE ENERGY CAROLINAS The following table presents the estimated fair value of investments in available-for-sale securities. | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | | December 31, 2014 | | Gross |
| | Gross |
| | | | Gross |
| | Gross |
| | | | Unrealized |
| | Unrealized |
| | | | Unrealized |
| | Unrealized |
| | | | Holding |
| | Holding |
| | Estimated |
| | Holding |
| | Holding |
| | Estimated |
| (in millions) | Gains |
| | Losses(b) |
| | Fair Value |
| | Gains |
| | Losses(b) |
| | Fair Value |
| NDTF | | | | | | | | | | | |
| Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 34 |
| | $ | — |
| | $ | — |
| | $ | 51 |
| Equity securities | 1,021 |
| | 27 |
| | 2,094 |
| | 1,102 |
| | 17 |
| | 2,162 |
| Corporate debt securities | 3 |
| | 5 |
| | 292 |
| | 8 |
| | 2 |
| | 316 |
| Municipal bonds | 1 |
| | — |
| | 33 |
| | 1 |
| | — |
| | 62 |
| U.S. government bonds | 3 |
| | 3 |
| | 438 |
| | 7 |
| | 1 |
| | 308 |
| Other debt securities | — |
| | 4 |
| | 147 |
| | 1 |
| | 2 |
| | 133 |
| Total NDTF | $ | 1,028 |
| | $ | 39 |
| | $ | 3,038 |
| | $ | 1,119 |
| | $ | 22 |
| | $ | 3,032 |
| Other Investments | |
| | |
| | |
| | |
| | |
| | |
| Other debt securities | $ | — |
| | $ | 1 |
| | $ | 3 |
| | $ | — |
| | $ | 1 |
| | $ | 3 |
| Total Other Investments(a) | $ | — |
| | $ | 1 |
| | $ | 3 |
| | $ | — |
| | $ | 1 |
| | $ | 3 |
| Total Investments | $ | 1,028 |
| | $ | 40 |
| | $ | 3,041 |
| | $ | 1,119 |
| | $ | 23 |
| | $ | 3,035 |
|
(a) These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets. | | (b) | Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset. |
The table below summarizes the maturity date for debt securities. | | | | | (in millions) | December 31, 2015 |
| Due in one year or less | $ | 13 |
| Due after one through five years | 187 |
| Due after five through 10 years | 275 |
| Due after 10 years | 438 |
| Total | $ | 913 |
|
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows. | | | | | | | | | | | | | | Years Ended December 31, | (in millions) | 2015 |
| | 2014 |
| | 2013 |
| Realized gains | $ | 158 |
| | $ | 109 |
| | $ | 115 |
| Realized losses | 83 |
| | 93 |
| | 12 |
|
PROGRESS ENERGY The following table presents the estimated fair value of investments in available-for-sale securities. | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | | December 31, 2014 | | Gross |
| | Gross |
| | | | Gross |
| | Gross |
| | | | Unrealized |
| | Unrealized |
| | | | Unrealized |
| | Unrealized |
| | | | Holding |
| | Holding |
| | Estimated |
| | Holding |
| | Holding |
| | Estimated |
| (in millions) | Gains |
| | Losses(b) |
| | Fair Value |
| | Gains |
| | Losses(b) |
| | Fair Value |
| NDTF | | | | | | | | | | | | Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 145 |
| | $ | — |
| | $ | — |
| | $ | 85 |
| Equity securities | 802 |
| | 31 |
| | 1,496 |
| | 824 |
| | 12 |
| | 1,488 |
| Corporate debt securities | 4 |
| | 3 |
| | 140 |
| | 6 |
| | — |
| | 138 |
| Municipal bonds | 4 |
| | 1 |
| | 152 |
| | 4 |
| | — |
| | 122 |
| U.S. government bonds | 8 |
| | 2 |
| | 816 |
| | 12 |
| | 1 |
| | 670 |
| Other debt securities | — |
| | — |
| | 30 |
| | — |
| | — |
| | 14 |
| Total NDTF(c) | $ | 818 |
| | $ | 37 |
| | $ | 2,779 |
| | $ | 846 |
| | $ | 13 |
| | $ | 2,517 |
| Other Investments | |
| | |
| | |
| | |
| | |
| | |
| Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 18 |
| | $ | — |
| | $ | — |
| | $ | 15 |
| Municipal bonds | 3 |
| | — |
| | 45 |
| | 3 |
| | — |
| | 43 |
| Total Other Investments(a) | $ | 3 |
| | $ | — |
| | $ | 63 |
| | $ | 3 |
| | $ | — |
| | $ | 58 |
| Total Investments | $ | 821 |
| | $ | 37 |
| | $ | 2,842 |
| | $ | 849 |
| | $ | 13 |
| | $ | 2,575 |
|
(a) These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets. | | (b) | Substantially all these amounts are considered other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset. |
| | (c) | The increase in estimated fair value of the NDTF as of December 31, 2015, is primarily due to NDTF assets acquired with the purchase of NCEMPA's ownership interest in certain generating assets and the NDTF assets acquired in a settlement with FMJO. This is partially offset due to reimbursements from the NDTF for Duke Energy Florida's costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Plant. Refer to Note 2 for further information. |
The table below summarizes the maturity date for debt securities. | | | | | (in millions) | December 31, 2015 |
| Due in one year or less | $ | 94 |
| Due after one through five years | 496 |
| Due after five through 10 years | 254 |
| Due after 10 years | 339 |
| Total | $ | 1,183 |
|
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows. | | | | | | | | | | | | | | Years Ended December 31, | (in millions) | 2015 |
| | 2014 |
| | 2013 |
| Realized gains | $ | 33 |
| | $ | 157 |
| | $ | 90 |
| Realized losses | 13 |
| | 11 |
| | 46 |
|
DUKE ENERGY PROGRESS The following table presents the estimated fair value of investments in available-for-sale securities. | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | | December 31, 2014 | | Gross |
| | Gross |
| | | | Gross |
| | Gross |
| | | | Unrealized |
| | Unrealized |
| | | | Unrealized |
| | Unrealized |
| | | | Holding |
| | Holding |
| | Estimated |
| | Holding |
| | Holding |
| | Estimated |
| (in millions) | Gains |
| | Losses(b) |
| | Fair Value |
| | Gains |
| | Losses(b) |
| | Fair Value |
| NDTF | | | | | | | | | | | | Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 110 |
| | $ | — |
| | $ | — |
| | $ | 50 |
| Equity securities | 596 |
| | 25 |
| | 1,178 |
| | 612 |
| | 10 |
| | 1,171 |
| Corporate debt securities | 3 |
| | 2 |
| | 96 |
| | 5 |
| | — |
| | 97 |
| Municipal bonds | 4 |
| | 1 |
| | 150 |
| | 4 |
| | — |
| | 120 |
| U.S. government bonds | 6 |
| | 2 |
| | 486 |
| | 9 |
| | 1 |
| | 265 |
| Other debt securities | — |
| | — |
| | 18 |
| | — |
| | — |
| | 8 |
| Total NDTF(c) | $ | 609 |
| | $ | 30 |
| | $ | 2,038 |
| | $ | 630 |
| | $ | 11 |
| | $ | 1,711 |
| Other Investments | |
| | |
| | |
| | |
| | |
| | |
| Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 1 |
| | $ | — |
| | $ | — |
| | $ | — |
| Total Other Investments(a) | $ | — |
| | $ | — |
| | $ | 1 |
| | $ | — |
| | $ | — |
| | $ | — |
| Total Investments | $ | 609 |
| | $ | 30 |
| | $ | 2,039 |
| | $ | 630 |
| | $ | 11 |
| | $ | 1,711 |
|
(a) These amounts are recorded in Other with Investments and Other Assets on the Consolidated Balance Sheets. | | (b) | Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset. |
| | (c) | As of December 31, 2015, the estimated fair value of the NDTF includes NDTF assets acquired with the purchase of NCEMPA's ownership interest in certain generating assets. Refer to Note 2 for further information. |
The table below summarizes the maturity date for debt securities. | | | | | (in millions) | December 31, 2015 |
| Due in one year or less | $ | 15 |
| Due after one through five years | 285 |
| Due after five through 10 years | 206 |
| Due after 10 years | 244 |
| Total | $ | 750 |
|
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows. | | | | | | | | | | | | | | Years Ended December 31, | (in millions) | 2015 |
| | 2014 |
| | 2013 |
| Realized gains | $ | 26 |
| | $ | 19 |
| | $ | 58 |
| Realized losses | 11 |
| | 5 |
| | 26 |
|
DUKE ENERGY FLORIDA The following table presents the estimated fair value of investments in available-for-sale securities. | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | | December 31, 2014 | | Gross |
| | Gross |
| | | | Gross |
| | Gross |
| | | | Unrealized |
| | Unrealized |
| | | | Unrealized |
| | Unrealized |
| | | | Holding |
| | Holding |
| | Estimated |
| | Holding |
| | Holding |
| | Estimated |
| (in millions) | Gains |
| | Losses(b) |
| | Fair Value |
| | Gains |
| | Losses(b) |
| | Fair Value |
| NDTF | | | | | | | | | | | | Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 35 |
| | $ | — |
| | $ | — |
| | $ | 35 |
| Equity securities | 206 |
| | 6 |
| | 318 |
| | 212 |
| | 2 |
| | 317 |
| Corporate debt securities | 1 |
| | 1 |
| | 44 |
| | 1 |
| | — |
| | 41 |
| Municipal bonds | — |
| | — |
| | 2 |
| | — |
| | — |
| | 2 |
| U.S. government bonds | 2 |
| | — |
| | 330 |
| | 3 |
| | — |
| | 405 |
| Other debt securities | — |
| | — |
| | 12 |
| | — |
| | — |
| | 6 |
| Total NDTF(c) | $ | 209 |
| | $ | 7 |
| | $ | 741 |
| | $ | 216 |
| | $ | 2 |
| | $ | 806 |
| Other Investments | |
| | |
| | |
| | |
| | |
| | |
| Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 6 |
| | $ | — |
| | $ | — |
| | $ | 1 |
| Municipal bonds | 3 |
| | — |
| | 45 |
| | 3 |
| | — |
| | 43 |
| Total Other Investments(a) | $ | 3 |
| | $ | — |
| | $ | 51 |
| | $ | 3 |
| | $ | — |
| | $ | 44 |
| Total Investments | $ | 212 |
| | $ | 7 |
| | $ | 792 |
| | $ | 219 |
| | $ | 2 |
| | $ | 850 |
|
(a) These amounts are recorded in Other with Investments and Other Assets on the Consolidated Balance Sheets. | | (b) | Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset. |
| | (c) | The decrease in estimated fair value of the NDTF as of December 31, 2015, is primarily due to reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3 Nuclear Plant, partially offset by the NDTF asset acquired in a settlement with FMJO. Refer to Note 2 for further information. |
The table below summarizes the maturity date for debt securities. | | | | | (in millions) | December 31, 2015 |
| Due in one year or less | $ | 79 |
| Due after one through five years | 211 |
| Due after five through 10 years | 48 |
| Due after 10 years | 95 |
| Total | $ | 433 |
|
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were as follows. | | | | | | | | | | | | | | Years Ended December 31, | (in millions) | 2015 |
| | 2014 |
| | 2013 |
| Realized gains | $ | 7 |
| | $ | 138 |
| | $ | 32 |
| Realized losses | 2 |
| | 5 |
| | 20 |
|
DUKE ENERGY INDIANA The following table presents the estimated fair value of investments in available-for-sale securities. | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | | December 31, 2014 | | Gross |
| | Gross |
| | | | Gross |
| | Gross |
| | | | Unrealized |
| | Unrealized |
| | | | Unrealized |
| | Unrealized |
| | | | Holding |
| | Holding |
| | Estimated |
| | Holding |
| | Holding |
| | Estimated |
| (in millions) | Gains |
| | Losses(b) |
| | Fair Value |
| | Gains |
| | Losses(b) |
| | Fair Value |
| Other Investments | | | | | | | | | | | | Cash and cash equivalents | $ | — |
| | $ | — |
| | $ | 2 |
| | $ | — |
| | $ | — |
| | $ | — |
| Equity securities | 27 |
| | — |
| | 71 |
| | 28 |
| | — |
| | 71 |
| Corporate debt securities | — |
| | — |
| | 2 |
| | — |
| | — |
| | — |
| Municipal bonds | — |
| | 1 |
| | 26 |
| | — |
| | 1 |
| | 30 |
| Total Other Investments(a) | $ | 27 |
| | $ | 1 |
| | $ | 101 |
| | $ | 28 |
| | $ | 1 |
| | $ | 101 |
| Total Investments | $ | 27 |
| | $ | 1 |
| | $ | 101 |
| | $ | 28 |
| | $ | 1 |
| | $ | 101 |
|
(a) These amounts are recorded in Other within Investments and Other Assets on the Consolidated Balance Sheets. | | (b) | Substantially all these amounts represent other-than-temporary impairments on investments within Investment Trusts that have been recognized immediately as a regulatory asset. |
The table below summarizes the maturity date for debt securities. | | | | | (in millions) | December 31, 2015 |
| Due in one year or less | $ | 2 |
| Due after one through five years | 14 |
| Due after five through 10 years | 9 |
| Due after 10 years | 3 |
| Total | $ | 28 |
|
Realized gains and losses, which were determined on a specific identification basis, from sales of available-for-sale securities were insignificant for the years ended December 31, 2015, 2014 and 2013. |