RELATED PARTY TRANSACTIONS

The Subsidiary Registrants engage in related party transactions in accordance with the applicable state and federal commission regulations. Refer to the Consolidated Balance Sheets of the Subsidiary Registrants for balances due to or due from related parties. Material amounts related to transactions with related parties included in the Consolidated Statements of Operations and Comprehensive Income are presented in the following table.



	Years Ended December 31,
(in millions)	2017		2016		2015
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	858	$	831	$	914
Indemnification coverages^(b)	23		22		24
JDA revenue^(c)	49		38		51
JDA expense^(c)	145		156		183
Intercompany natural gas purchases^(d)	9		2		—
Progress Energy
Corporate governance and shared service expenses^(a)	$	736	$	710	$	712
Indemnification coverages^(b)	38		35		38
JDA revenue^(c)	145		156		183
JDA expense^(c)	49		38		51
Intercompany natural gas purchases^(d)	77		19		—
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	438	$	397	$	403
Indemnification coverages^(b)	15		14		16
JDA revenue^(c)	145		156		183
JDA expense^(c)	49		38		51
Intercompany natural gas purchases^(d)	77		19		—
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	298	$	313	$	309
Indemnification coverages^(b)	23		21		22
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	363	$	356	$	342
Indemnification coverages^(b)	5		5		6
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	370	$	366	$	349
Indemnification coverages^(b)	8		8		9
Piedmont
Corporate governance and shared service expenses^(a)	$	50
Indemnification coverages^(b)	2
Intercompany natural gas sales^(d)	86

(a)

The Subsidiary Registrants are charged their proportionate share of corporate governance and other shared services costs, primarily related to human resources, employee benefits, information technology, legal and accounting fees, as well as other third-party costs. These amounts are primarily recorded in Operation, maintenance and other on the Consolidated Statements of Operations and Comprehensive Income.


(b)	The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison, Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation, maintenance and other on the Consolidated Statements of Operations and Comprehensive Income.

(c)

Duke Energy Carolinas and Duke Energy Progress participate in a JDA, which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power and expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues and Fuel used in electric generation and purchased power, respectively, on the Consolidated Statements of Operations and Comprehensive Income.

(d)

Piedmont provides long-term natural gas delivery service to certain Duke Energy Carolinas and Duke Energy Progress natural gas-fired generation facilities. Piedmont records the sales in Regulated natural gas revenues, and Duke Energy Carolinas and Duke Energy Progress record the related purchases in Fuel used in electric generation and purchased power on their respective Consolidated Statements of Operations and Comprehensive Income. The amounts are not eliminated in accordance with rate-based accounting regulations. For the two months ended December 31, 2016, and for sales made subsequent to the acquisition for the year ended October 31, 2016, Piedmont recorded $14 million and $7 million, respectively, of natural gas sales with Duke Energy. For sales made prior to the acquisition for the year ended October 31, 2016, and for the year ended October 31, 2015, Piedmont recorded $74 million and $83 million, respectively of natural gas sales with Duke Energy.

In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions and their proportionate share of certain charged expenses. See Note 6 for more information regarding money pool. These transactions of the Subsidiary Registrants were not material for the years ended December 31, 2017, 2016 and 2015.

As discussed in Note 17, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.

Refer to Note 2 for further information on the sale of the Midwest Generation Disposal Group.

Equity Method Investments

Piedmont has related party transactions as a customer of its equity method investments in natural gas storage and transportation facilities. The following table presents expenses that are included in Cost of natural gas on Piedmont's Consolidated Statements of Operations and Comprehensive Income.



		Year Ended December 31,		Two Months Ended December 31,		Years Ended October 31,
(in millions)	Type of expense	2017		2016		2016		2015
Cardinal	Transportation Costs	$	8	$	2	$	9	$	9
Pine Needle	Natural Gas Storage Costs	8		2		11		11
Hardy Storage	Natural Gas Storage Costs	9		2		9		9
Total		$	25	$	6	$	29	$	29

Piedmont had accounts payable to its equity method investments of $2 million at December 31, 2017, and 2016 related to these transactions. These amounts are included in Accounts payable on the Consolidated Balance Sheets.

Intercompany Income Taxes

Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.



	Duke				Duke		Duke		Duke		Duke
	Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
December 31, 2017
Intercompany income tax receivable	$	—	$	168	$	—	$	44	$	22	$	—	$	7
Intercompany income tax payable	44		—		21		—		—		35		—

December 31, 2016
Intercompany income tax receivable	$	1	$	—	$	—	$	37	$	—	$	—	$	—
Intercompany income tax payable	—		37		90		—		1		3		38