INCOME TAXES

EFFECTIVE TAX RATES

The effective tax rates from continuing operations for each of the Duke Energy Registrants are included in the following table.



	Three Months Ended
	March 31,
	2017		2016
Duke Energy	32.4	%	30.4	%
Duke Energy Carolinas	35.4	%	34.1	%
Progress Energy	34.1	%	36.7	%
Duke Energy Progress	34.1	%	35.4	%
Duke Energy Florida	36.6	%	37.9	%
Duke Energy Ohio	35.4	%	26.9	%
Duke Energy Indiana	39.3	%	30.2	%
Piedmont	37.9	%	38.0	%

The increase in the effective tax rate (ETR) for Duke Energy for the three months ended March 31, 2017, is primarily due to lower investment tax credits due to lower solar investments in the current year, the inclusion of Piedmont's earnings at a higher ETR, and a tax charge related to the implementation of a new accounting standard related to stock compensation; partially offset by higher production tax credits related to wind projects placed in service. See Note 1 for additional information on the new accounting standard.

The increase in the ETR for Duke Energy Carolinas for the three months ended March 31, 2017, is primarily due to a favorable state resolution booked in 2016 related to prior year tax returns.

The decrease in the ETR for Progress Energy for the three months ended March 31, 2017, is primarily due to higher AFUDC equity and the amortization of excess North Carolina deferred tax.

The decrease in the ETR for Duke Energy Progress for the three months ended March 31, 2017, is primarily due to the amortization of excess North Carolina deferred tax.

The decrease in the ETR for Duke Energy Florida for the three months ended March 31, 2017, is primarily due to higher AFUDC equity.

The increase in the ETR for Duke Energy Ohio for the three months ended March 31, 2017, is primarily due to an immaterial out of period adjustment in the prior year related to deferred tax balances associated with property, plant and equipment.

The increase in the ETR for Duke Energy Indiana for the three months ended March 31, 2017, is primarily due to an immaterial out of period adjustment in the prior year related to deferred tax balances associated with property, plant and equipment.

TAXES ON FOREIGN EARNINGS

As of December 31, 2015, Duke Energy's intention was to indefinitely reinvest any future undistributed foreign earnings earned after December 31, 2014. In February 2016, Duke Energy announced it had initiated a process to divest the International Disposal Group and, accordingly, no longer intended to indefinitely reinvest post-2014 undistributed foreign earnings. This change in the company's intent, combined with the extension of bonus depreciation by Congress in late 2015, allowed Duke Energy to more efficiently utilize foreign tax credits and reduce U.S. deferred tax liabilities associated with historical unremitted foreign earnings by approximately $95 million for the three months ended March 31, 2016. Due to the classification of the International Disposal Group as discontinued operations, income tax amounts related to the International Disposal Group's foreign earnings are presented within Income from Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations. See Note 2 for additional information related to the sale of the International Disposal Group.