EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT RETIREMENT PLANS

Duke Energy maintains, and the Subsidiary Registrants participate in, qualified, non-contributory defined benefit retirement plans. The plans cover most U.S. employees using a cash balance formula. Under a cash balance formula, a plan participant accumulates a retirement benefit consisting of pay credits equal to a percentage of current eligible earnings based on age or the combination of age and years of service and interest credits. Certain employees are covered under plans that use a final average earnings formula. Under these average earnings formulas, a plan participant generally accumulates a retirement benefit based on their (i) highest three-year or four-year average earnings, (ii) years of participation or credited service, and (iii) various plan formula provisions (e.g., caps on years of participation or credited service). Duke Energy also maintains, and the Subsidiary Registrants participate in, non-qualified, non-contributory defined benefit retirement plans which cover certain executives. The qualified and non-qualified, non-contributory defined benefit plans are closed to new and rehired non-union and certain unionized employees.

Duke Energy’s policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants. The following table includes information related to Duke Energy's contributions to its U.S. qualified defined benefit pension plans. Duke Energy did not make any contributions to its U.S. qualified defined benefit pension plans during the nine months ended September 30, 2016.

Nine Months Ended September 30, 2015

Duke

Energy

Progress

Energy

(in millions)

Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Contributions

143

Net periodic benefit costs disclosed in the tables below represent the cost of the respective benefit plan 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. Amounts presented in the tables below for the Subsidiary Registrants represent the amounts of pension and other post-retirement benefit costs allocated by Duke Energy for employees of the Subsidiary Registrants. Additionally, the Subsidiary Registrants are allocated their proportionate share of pension and post-retirement benefit costs for employees of Duke Energy’s shared services affiliate that provides support to the Subsidiary Registrants. These allocated amounts are included in the governance and shared service costs discussed in Note 9. Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations.

QUALIFIED PENSION PLANS

The following tables include the components of net periodic pension costs for qualified pension plans.



	Three Months Ended September 30, 2016
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Service cost	$	36		$	12		$	11		$	6		$	4		$	1		$	2
Interest cost on projected benefit obligation	83			21			27			12			14			5			7
Expected return on plan assets	(128		)	(35		)	(42		)	(21		)	(21		)	(6		)	(10		)
Amortization of actuarial loss	33			8			14			6			7			1			3
Amortization of prior service credit	(4		)	(2		)	(1		)	—			(1		)	—			—
Other	2			1			1			—			1			—			—
Net periodic pension costs	$	22		$	5		$	10		$	3		$	4		$	1		$	2



	Three Months Ended September 30, 2015
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Service cost	$	40		$	13		$	11		$	6		$	5		$	1		$	3
Interest cost on projected benefit obligation	81			21			26			12			14			5			7
Expected return on plan assets	(129		)	(35		)	(43		)	(20		)	(22		)	(7		)	(10		)
Amortization of actuarial loss	44			10			17			8			8			3			3
Amortization of prior service credit	(4		)	(2		)	(1		)	—			—			—			—
Other	2			1			1			—			—			—			—
Net periodic pension costs	$	34		$	8		$	11		$	6		$	5		$	2		$	3



	Nine Months Ended September 30, 2016
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Service cost	$	109		$	36		$	32		$	18		$	14		$	3		$	6
Interest cost on projected benefit obligation	249			64			80			37			42			15			21
Expected return on plan assets	(386		)	(106		)	(126		)	(62		)	(63		)	(20		)	(31		)
Amortization of actuarial loss	99			24			41			17			21			3			9
Amortization of prior service credit	(12		)	(6		)	(3		)	(1		)	(1		)	—			—
Other	6			2			2			1			1			—			—
Net periodic pension costs	$	65		$	14		$	26		$	10		$	14		$	1		$	5



	Nine Months Ended September 30, 2015
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Service cost	$	119		$	38		$	33		$	18		$	15		$	3		$	8
Interest cost on projected benefit obligation	244			62			78			36			41			14			21
Expected return on plan assets	(387		)	(104		)	(127		)	(61		)	(66		)	(20		)	(31		)
Amortization of actuarial loss	131			30			51			25			24			8			10
Amortization of prior service credit	(11		)	(6		)	(3		)	(1		)	(1		)	—			—
Other	6			2			2			1			1			—			—
Net periodic pension costs	$	102		$	22		$	34		$	18		$	14		$	5		$	8

NON-QUALIFIED PENSION PLANS

The following tables include the components of net periodic pension costs for non-qualified pension plans for registrants with non-qualified pension costs.



	Three Months Ended September 30, 2016
				Duke				Duke		Duke
	Duke			Energy		Progress		Energy		Energy
(in millions)	Energy			Carolinas		Energy		Progress		Florida
Service cost	$	1		$	—	$	—	$	—	$	—
Interest cost on projected benefit obligation	4			—		2		—		—
Amortization of actuarial loss	2			—		1		1		1
Amortization of prior service credit	(1		)	—		—		—		—
Net periodic pension costs	$	6		$	—	$	3	$	1	$	1



	Three Months Ended September 30, 2015
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida
Service cost	$	1	$	—	$	—	$	—	$	—
Interest cost on projected benefit obligation	3		—		1		—		1
Amortization of actuarial loss	2		—		1		—		—
Net periodic pension costs	$	6	$	—	$	2	$	—	$	1



	Nine Months Ended September 30, 2016
				Duke				Duke		Duke
	Duke			Energy		Progress		Energy		Energy
(in millions)	Energy			Carolinas		Energy		Progress		Florida
Service cost	$	2		$	—	$	—	$	—	$	—
Interest cost on projected benefit obligation	11			1		4		1		1
Amortization of actuarial loss	6			—		2		1		1
Amortization of prior service credit	(1		)	—		—		—		—
Net periodic pension costs	$	18		$	1	$	6	$	2	$	2



	Nine Months Ended September 30, 2015
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida
Service cost	$	2	$	—	$	1	$	—	$	—
Interest cost on projected benefit obligation	10		1		3		1		2
Amortization of actuarial loss	5		—		2		—		1
Net periodic pension costs	$	17	$	1	$	6	$	1	$	3

OTHER POST-RETIREMENT BENEFIT PLANS

Duke Energy provides, and the Subsidiary Registrants participate in, some health care and life insurance benefits for retired employees on a contributory and non-contributory basis. Employees are eligible for these benefits if they have met age and service requirements at retirement, as set forth in the plans. The health care benefits include medical, dental, vision and prescription drug coverage and are subject to certain limitations, such as deductibles and co-payments.

The following tables include the components of net periodic other post-retirement benefit costs.



	Three Months Ended September 30, 2016
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Service cost	$	—		$	—		$	1		$	—		$	—		$	—		$	—
Interest cost on accumulated post-retirement benefit obligation	9			2			4			2			3			—			1
Expected return on plan assets	(2		)	(2		)	(1		)	—			—			—			—
Amortization of actuarial loss (gain)	2			—			5			3			2			(1		)	—
Amortization of prior service credit	(35		)	(4		)	(26		)	(16		)	(8		)	—			(1		)
Net periodic other post-retirement benefit costs	$	(26	)	$	(4	)	$	(17	)	$	(11	)	$	(3	)	$	(1	)	$	—



	Three Months Ended September 30, 2015
				Duke						Duke			Duke			Duke		Duke
	Duke			Energy			Progress			Energy			Energy			Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio		Indiana
Service cost	$	1		$	—		$	—		$	—		$	—		$	—	$	—
Interest cost on accumulated post-retirement benefit obligation	9			2			4			2			2			—		1
Expected return on plan assets	(3		)	(2		)	—			—			—			—		—
Amortization of actuarial loss	6			—			7			5			3			—		—
Amortization of prior service credit	(35		)	(4		)	(26		)	(17		)	(9		)	—		—
Net periodic other post-retirement benefit costs	$	(22	)	$	(4	)	$	(15	)	$	(10	)	$	(4	)	$	—	$	1



	Nine Months Ended September 30, 2016
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Service cost	$	2		$	—		$	1		$	—		$	—		$	—		$	—
Interest cost on accumulated post-retirement benefit obligation	26			6			11			6			6			1			3
Expected return on plan assets	(9		)	(6		)	(1		)	—			—			—			(1		)
Amortization of actuarial loss (gain)	5			(2		)	16			9			7			(2		)	(1		)
Amortization of prior service credit	(106		)	(10		)	(77		)	(50		)	(26		)	—			(1		)
Net periodic other post-retirement benefit costs	$	(82	)	$	(12	)	$	(50	)	$	(35	)	$	(13	)	$	(1	)	$	—



	Nine Months Ended September 30, 2015
				Duke						Duke			Duke			Duke		Duke
	Duke			Energy			Progress			Energy			Energy			Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio		Indiana
Service cost	$	4		$	1		$	1		$	—		$	—		$	—	$	—
Interest cost on accumulated post-retirement benefit obligation	27			6			11			6			5			1		3
Expected return on plan assets	(9		)	(6		)	—			—			—			—		—
Amortization of actuarial loss (gain)	19			(1		)	21			14			8			—		(1		)
Amortization of prior service credit	(105		)	(11		)	(77		)	(50		)	(25		)	—		—
Net periodic other post-retirement benefit costs	$	(64	)	$	(11	)	$	(44	)	$	(30	)	$	(12	)	$	1	$	2

EMPLOYEE SAVINGS PLAN

Duke Energy sponsors, and the Subsidiary Registrants participate in, an employee savings plan that covers substantially all U.S. employees. Most employees participate in a matching contribution formula where Duke Energy provides a matching contribution generally equal to 100 percent of employee before-tax and Roth 401(k) contributions of up to 6 percent of eligible pay per pay period. Dividends on Duke Energy shares held by the savings plan are charged to retained earnings when declared and shares held in the plan are considered outstanding in the calculation of basic and diluted earnings per share.

For new and rehired non-union and certain unionized employees who are not eligible to participate in Duke Energy’s defined benefit plans, an additional employer contribution of 4 percent of eligible pay per pay period, subject to a three-year vesting requirement, is provided to the employee’s savings plan account.

The following table presents employer contributions made by Duke Energy and expensed by the Subsidiary Registrants.



			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Three Months Ended September 30,
2016	$	39	$	13	$	12	$	8	$	3	$	1	$	2
2015	34		11		10		7		3		—		1
Nine Months Ended September 30,
2016	$	130	$	44	$	39	$	27	$	11	$	3	$	6
2015	120		40		36		26		10		2		5