A VIE is an entity that is evaluated for consolidation using more than a simple analysis of voting control. The analysis to determine whether an entity is a VIE considers contracts with an entity, credit support for an entity, the adequacy of the equity investment of an entity and the relationship of voting power to the amount of equity invested in an entity. This analysis is performed either upon the creation of a legal entity or upon the occurrence of an event requiring reevaluation, such as a significant change in an entity's assets or activities. A qualitative analysis of control determines the party that consolidates a VIE. This assessment is based on (i) what party has the power to direct the most significant activities of the VIE that impact its economic performance, and (ii) what party has rights to receive benefits or is obligated to absorb losses that are significant to the VIE. The analysis of the party that consolidates a VIE is a continual reassessment. Other than the discussion below related to CRC, no financial support was provided to any of the VIEs during the years ended December 31, 2013, 2012 and 2011, or is expected to be provided in the future, that was not previously contractually required.

The table below shows the VIEs that Duke Energy, Duke Energy Carolinas and Duke Energy Progress consolidate and how these entities impact their respective Consolidated Balance Sheets.


		December 31, 2013
(in millions)		DERF^(a)		DEPR^(b)		CRC		CinCapV		Renewables		Other		Total
ASSETS
Current Assets
Restricted receivables of variable interest entities		$	673	$	416	$	595	$	17	$	18	$	―	$	1,719
Other			―		―		―		10		89		2		101
Investments and Other Assets
Other			―		―		―		51		29		―		80
Property, Plant and Equipment
Property, plant and equipment, cost^(c)			―		―		―		―		1,662		18		1,680
Accumulated depreciation and amortization			―		―		―		―		(170)		(5)		(175)
Regulatory Assets and Deferred Debits
Other			1		1		―		―		34		―		36
Total assets			674		417		595		78		1,662		15		3,441
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable			―		―		―		―		2		―		2
Taxes accrued			―		―		―		―		10		―		10
Current maturities of long-term debt			―		―		―		14		66		―		80
Other			―		―		―		10		17		―		27
Long-term Debt^(d)			400		300		325		34		907		―		1,966
Deferred Credits and Other Liabilities
Other			1		―		―		13		333		―		347
Total liabilities			401		300		325		71		1,335		―		2,432
Net assets of consolidated variable interest entities		$	273	$	117	$	270	$	7	$	327	$	15	$	1,009

(a)	DERF is consolidated by Duke Energy Carolinas and Duke Energy.
(b)	DEPR is consolidated by Duke Energy Progress and Duke Energy.
(c)	Restricted as collateral for non-recourse debt of VIEs.
(d)	Non-recourse to the general assets of Duke Energy.


		December 31, 2012
(in millions)		DERF^(a)		CRC		CinCapV		Renewables		Other		Total
ASSETS
Current Assets
Restricted receivables of variable interest entities		$	637	$	534	$	15	$	16	$	(1)	$	1,201
Other			―		―		4		133		2		139
Investments and Other Assets
Other			―		―		62		14		2		78
Property, Plant and Equipment
Property, plant and equipment, cost^(b)			―		―		―		1,543		15		1,558
Accumulated depreciation and amortization			―		―		―		(98)		(5)		(103)
Regulatory Assets and Deferred Debits
Other			―		―		―		40		―		40
Total assets			637		534		81		1,648		13		2,913
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable			―		―		―		1		―		1
Notes payable and commercial paper			―		312		―		―		―		312
Taxes accrued			―		―		―		62		―		62
Current maturities of long-term debt			―		―		13		459		―		472
Other			―		―		4		25		―		29
Long-term Debt^(c)			300		―		48		504		―		852
Deferred Credits and Other Liabilities
Deferred income taxes			―		―		―		154		―		154
Asset retirement obligation			―		―		―		23		―		23
Other			―		―		10		39		―		49
Total liabilities			300		312		75		1,267		―		1,954
Net assets of consolidated variable interest entities		$	337	$	222	$	6	$	381	$	13	$	959

(a)	DERF is consolidated by Duke Energy Carolinas and Duke Energy.
(b)	Restricted as collateral for non-recourse debt of VIEs.
(c)	Non-recourse to the general assets of Duke Energy.

The obligations of these VIEs are non-recourse to Duke Energy, Duke Energy Carolinas and Duke Energy Progress. These entities have no requirement to provide liquidity to purchase assets of, or guarantee performance of these VIEs unless noted in the following paragraphs.

On a daily basis, Duke Energy Receivables Finance Company, LLC (DERF), a bankruptcy remote, special purpose subsidiary of Duke Energy Carolinas, buys certain accounts receivable arising from the sale of electricity and/or related services from Duke Energy Carolinas. DERF is a wholly owned limited liability company with a separate legal existence from its parent, and its assets are not generally available to creditors of Duke Energy Carolinas. DERF borrows $400 million under a credit facility to buy the receivables. Borrowing is limited to the amount of qualified receivables sold, which is expected to be in excess of $400 million. The receivables are used as collateral for commercial paper issued through third parties. The credit facility expires in October 2016 and is reflected on the Consolidated Balance Sheets as Long-term Debt. The secured credit facility was not structured to meet the criteria for sale accounting treatment under the accounting guidance for transfers and servicing of financial assets.

The most significant activity that impacts the economic performance of DERF is the decisions made to manage delinquent receivables. Duke Energy Carolinas consolidates DERF as it makes those decisions.

On a daily basis, Duke Energy Progress Receivables Company, LLC (DEPR), a bankruptcy remote, special purpose subsidiary of Duke Energy Progress formed in 2013, buys certain accounts receivable arising from the sale of electricity and/or related services from Duke Energy Progress. DEPR is a wholly owned limited liability company with a separate legal existence from its parent, and its assets are not generally available to creditors of Duke Energy Progress. DEPR borrows $300 million under a credit facility to buy the receivables. Borrowing is limited to the amount of qualified receivables sold, which is expected to be in excess of $300 million. The receivables are used as collateral for commercial paper issued through third parties. The credit facility expires in December 2016 and is reflected on the Consolidated Balance Sheets as Long-term Debt. The secured credit facility was not structured to meet the criteria for sale accounting treatment under the accounting guidance for transfers and servicing of financial assets.

The most significant activity that impacts the economic performance of DEPR is the decisions made to manage delinquent receivables. Duke Energy Progress consolidates DEPR as it makes those decisions.

On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity and/or related services from Duke Energy Ohio and Duke Energy Indiana. Receivables sold are securitized by CRC through a facility managed by two unrelated third parties and are used as collateral for commercial paper issued by the unrelated third parties. Proceeds Duke Energy Ohio and Duke Energy Indiana receive from the sale of receivables to CRC are typically 75 percent cash and 25 percent in the form of a subordinated note from CRC. The subordinated note is a retained interest in the receivables sold. Cash collections from the receivable are the sole source of funds to satisfy the related debt obligation. Depending on experience with collections, additional equity infusions to CRC may be required by Duke Energy to maintain a minimum equity balance of $3 million. There were no infusions to CRC during the years ended December 31, 2013 and 2012. For the year ended December 31, 2011, Duke Energy infused $6 million of equity to CRC to remedy net worth deficiencies. Borrowings fluctuate based on the amount of receivables sold. The credit facility expires in November 2016. The secured credit facility is reflected on the Consolidated Balance Sheets as Long-term Debt. CRC is considered a VIE because (i) equity capitalization is insufficient to support its operations, (ii) power to direct the most significant activities that impact economic performance of the entity are not performed by the equity holder, Cinergy, and (iii) deficiencies in net worth of CRC are not funded by Cinergy, but by Duke Energy. The most significant activity of CRC relates to the decisions made with respect to the management of delinquent receivables. Duke Energy consolidates CRC as it makes these decisions. Neither Duke Energy Ohio nor Duke Energy Indiana consolidate CRC.

CinCap V was created to finance and execute a power sale agreement with Central Maine Power Company for approximately 35 MW of capacity and energy. This agreement expires in 2016. CinCap V is considered a VIE because the equity capitalization is insufficient to support its operations. Duke Energy consolidates CinCap V as it has power to direct the most significant activities that impact the economic performance of the entity, which are the decisions to hedge and finance the power sales agreement.

Certain of Duke Energy's renewable energy facilities are VIEs due to power purchase agreements with terms that approximate the expected life of the projects. These fixed price agreements effectively transfer commodity price risk to the buyer of the power. Certain other of Duke Energy's renewable energy facilities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Assets are restricted and cannot be pledged as collateral or sold to third parties without prior approval of debt holders. The most significant activities that impact the economic performance of these renewable energy facilities were decisions associated with siting, negotiating purchase power agreements, engineering, procurement and construction, and decisions associated with ongoing operations and maintenance-related activities. Duke Energy consolidated the entities as it makes all of these decisions.

The tables below disclose VIEs the Duke Energy Registrants do not consolidate and how these entities impact the Duke Energy Registrants' respective Consolidated Balance Sheets.


		December 31, 2013
		Duke Energy
(in millions)		Renewables		Other		Total		Duke Energy Ohio^(a)		Duke Energy Indiana^(b)
Receivables		$	―	$	―	$	―	$	114	$	143
Investments in equity method unconsolidated affiliates			153		60		213		―		―
Intangibles			―		96		96		96		―
Investments and other assets			―		4		4		―		―
Total assets			153		160		313		210		143
Other current liabilities			―		3		3		―		―
Deferred credits and other liabilities			―		15		15		―		―
Total liabilities			―		18		18		―		―
Net assets		$	153	$	142	$	295	$	210	$	143

(a)	Reflects OVEC and retained interest in CRC.
(b)	Reflects retained interest in CRC.


		December 31, 2012
		Duke Energy
(in millions)		DukeNet		Renewables		FPC Capital I Trust^(c)		Other		Total		Duke Energy Ohio^(a)		Duke Energy Indiana^(b)
Receivables		$	―	$	―	$	―	$	―	$	―	$	97	$	116
Investments in equity method unconsolidated affiliates			118		147		―		27		292		―		―
Intangibles			―		―		―		104		104		104		―
Investments and other assets			―		―		9		2		11		―
Total assets			118		147		9		133		407		201		116
Other current liabilities			―		―		―		3		3		―		―
Deferred credits and other liabilities			―		―		319		17		336		―		―
Total liabilities			―		―		319		20		339		―		―
Net assets (liabilities)		$	118	$	147	$	(310)	$	113	$	68	$	201	$	116

(a)	Reflects OVEC and retained interest in CRC.
(b)	Reflects retained interest in CRC.
(c)	The entire balance of Investments and other assets and $274 million of the Deferred Credits and Other Liabilities balance applies to Progress Energy.

The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the power purchase agreement with the Ohio Valley Electric Corporation (OVEC), which is discussed below, and various guarantees, reflected in the table above as Deferred credits and other liabilities.

Until December 31, 2013, Duke Energy owned a 50 percent ownership interest in DukeNet. DukeNet was considered a VIE because it has entered into certain contractual arrangements that provide it with additional forms of subordinated financial support. The most significant activities that impacted DukeNet's economic performance relate to its business development and fiber optic capacity marketing and management activities. The power to direct these activities was jointly and equally shared by Duke Energy and the other joint venture partner.

On December 31, 2013, Duke Energy completed the sale of its ownership interest in DukeNet to Time Warner Cable, Inc. For more information on the sale of DukeNet, refer to Note 12.

Duke Energy has investments in various renewable energy project entities. Some of these entities are VIEs due to power purchase agreements with terms that approximate the expected life of the project. These fixed price agreements effectively transfer commodity price risk to the buyer of the power. Duke Energy does not consolidate these VIEs because power to direct and control key activities is shared jointly by Duke Energy and other owners.

At December 31, 2012, Progress Energy had variable interests in the FPC Capital I Trust (the Trust). The Trust, a finance subsidiary, was established for the sole purpose of issuing $300 million of 7.10% Cumulative QUIPS due 2039, and using the proceeds thereof to purchase $300 million of 7.10% Junior Subordinated Deferrable Interest Notes due 2039 from Florida Progress Funding Corporation (Funding Corp.). Funding Corp. was formed for the sole purpose of providing financing to Duke Energy Florida. On February 1, 2013, Duke Energy redeemed the QUIPS and subsequently terminated the Trust.

The most significant of the Other non-consolidated VIEs is Duke Energy Ohio's 9 percent ownership interest in OVEC. Through its ownership interest in OVEC, Duke Energy Ohio has a contractual arrangement to buy power from OVEC's power plants through June 2040. Proceeds from the sale of power by OVEC to its power purchase agreement counterparties are designed to be sufficient to meet its operating expenses, fixed costs, debt amortization and, interest expense, as well as earn a return on equity. Accordingly, the value of this contract is subject to variability due to fluctuations in power prices and changes in OVEC's costs of business, including costs associated with its 2,256 MW of coal-fired generation capacity. As discussed in Note 5, proposed environmental rulemaking could increase the costs of OVEC, which would be passed through to Duke Energy Ohio. The initial carrying value of this contract was recorded as an intangible asset when Duke Energy acquired Cinergy in April 2006. This amount is included in the table above for Duke Energy and Duke Energy Ohio.

In addition, Duke Energy has guaranteed performance of certain entities in which it no longer has an equity interest.

See discussion under Consolidated VIEs for additional information related to CRC.

The subordinated notes held by Duke Energy Ohio and Duke Energy Indiana are stated at fair value and are classified within Receivables in their Consolidated Balance Sheets. Carrying values of retained interests are determined by allocating carrying value of the receivables between assets sold and interests retained based on relative fair value. The allocated basis of the subordinated notes are not materially different than their face value because (i) the receivables generally turnover in less than two months, (ii) credit losses are reasonably predictable due to the broad customer base and lack of significant concentration, and (iii) the equity in CRC is subordinate to all retained interests and thus would absorb losses first. The hypothetical effect on fair value of the retained interests assuming both a 10 percent and a 20 percent unfavorable variation in credit losses or discount rates is not material due to the short turnover of receivables and historically low credit loss history. Interest accrues to Duke Energy Ohio and Duke Energy Indiana on the retained interests using the acceptable yield method. This method generally approximates the stated rate on the notes since the allocated basis and the face value are nearly equivalent. An impairment charge is recorded against the carrying value of both retained interests and purchased beneficial interest whenever it is determined that an other-than-temporary impairment has occurred.

Key assumptions used in estimating the fair value in 2013 and 2012 is detailed in the following table.

	Duke Energy Ohio				Duke Energy Indiana
	2013		2012		2013		2012
Anticipated credit loss ratio	0.6	%	0.7	%	0.3	%	0.3	%
Discount rate	1.2	%	1.2	%	1.2	%	1.2	%
Receivable turnover rate	12.8	%	12.7	%	10.3	%	10.2	%

The following table shows the gross and net receivables sold.

	Duke Energy Ohio				Duke Energy Indiana
	December 31,				December 31,
(in millions)		2013	2012		2013		2012
Receivables sold	$	290	$	282	$	340	$	289
Less: Retained interests		114		97		143		116
Net receivables sold	$	176	$	185	$	197	$	173

The following tables show sales and cash flows related to receivables sold.

	Duke Energy Ohio						Duke Energy Indiana
	Years Ended December 31,						Years Ended December 31,
(in millions)	2013		2012		2011		2013		2012		2011
Sales
Receivables sold	$	2,251	$	2,154	$	2,390	$	2,985	$	2,773	$	2,658
Loss recognized on sale		12		13		21		11		12		16
Cash Flows
Cash proceeds from receivables sold		2,220		2,172		2,474		2,944		2,784		2,674
Collection fees received		1		1		1		1		1		1
Return received on retained interests		5		5		12		6		7		13

Cash flows from the sale of receivables are reflected within Operating Activities on Duke Energy Ohio's and Duke Energy Indiana's Consolidated Statements of Cash Flows.

Collection fees received in connection with the servicing of transferred accounts receivable are included in Operation, maintenance and other on Duke Energy Ohio's and Duke Energy Indiana's Consolidated Statements of Operations and Comprehensive Income. The loss recognized on sales of receivables is calculated monthly by multiplying the receivables sold during the month by the required discount. The required discount is derived monthly utilizing a three-year weighted-average formula that considers charge-off history, late charge history, and turnover history on the sold receivables, as well as a component for the time value of money. The discount rate, or component for the time value of money, is calculated monthly by summing the prior month-end LIBOR plus a fixed rate of 1.00 percent.