BUSINESS SEGMENTS

Operating segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business. Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income includes intercompany revenues and expenses that are eliminated on the Condensed Consolidated Financial Statements.

Duke Energy

Due to the Piedmont acquisition and the sale of International Energy in the fourth quarter of 2016, Duke Energy's segment structure was realigned to include the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. Prior period information has been recast to conform to the current segment structure. See Note 2 for further information on the Piedmont and International Energy transactions.

The Electric Utilities and Infrastructure segment includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The regulated electric utilities conduct operations through the Subsidiary Registrants that are substantially all regulated and, accordingly, qualify for regulatory accounting treatment. Electric Utilities and Infrastructure also includes Duke Energy's electric transmission infrastructure investments.

The Gas Utilities and Infrastructure segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky, and Duke Energy's natural gas storage and midstream pipeline investments. Gas Utilities and Infrastructure's operations are substantially all regulated and, accordingly, qualify for regulatory accounting treatment.

Commercial Renewables is primarily comprised of nonregulated utility scale wind and solar generation assets located throughout the U.S.

The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of corporate interest expense, unallocated corporate costs, contributions to the Duke Energy Foundation and the operations of Duke Energy’s wholly owned captive insurance subsidiary, Bison Insurance Company Limited (Bison). Other also includes Duke Energy's 25 percent interest in NMC, a large regional producer of methyl tertiary butyl ether (MTBE) located in Saudi Arabia. In October 2017, Duke Energy's economic ownership interest in NMC decreased from 25 percent to 17.5 percent. The investment in NMC is accounted for under the equity method of accounting.

Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.



	Three Months Ended September 30, 2017
	Electric		Gas					Total
	Utilities and		Utilities and		Commercial			Reportable
(in millions)	Infrastructure		Infrastructure		Renewables			Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	6,122	$	249	$	95		$	6,466	$	16		$	—		$	6,482
Intersegment revenues	7		23		—			30		19			(49		)	—
Total revenues	$	6,129	$	272	$	95		$	6,496	$	35		$	(49	)	$	6,482
Segment income (loss)^(a)(b)(c)	$	1,020	$	19	$	(49	)	$	990	$	(34	)	$	—		$	956
Add back noncontrolling interests																1
Loss from discontinued operations, net of tax																(2		)
Net income																$	955
Segment assets	$	118,323	$	11,361	$	4,216		$	133,900	$	2,240		$	185		$	136,325



	Three Months Ended September 30, 2016
	Electric		Gas					Total
	Utilities and		Utilities and		Commercial			Reportable
(in millions)	Infrastructure		Infrastructure		Renewables			Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	6,332	$	89	$	139		$	6,560	$	16		$	—		$	6,576
Intersegment revenues	8		—		—			8		16			(24		)	—
Total revenues	$	6,340	$	89	$	139		$	6,568	$	32		$	(24	)	$	6,576
Segment income (loss)^(a)(c)	$	1,189	$	15	$	(24	)	$	1,180	$	(181	)	$	—		$	999
Add back noncontrolling interests																2
Income from discontinued operations, net of tax^(d)																180
Net income																$	1,181



	Nine Months Ended September 30, 2017
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	16,211	$	1,175	$	333	$	17,719	$	47		$	—		$	17,766
Intersegment revenues	23		68		—		91		56			(147		)	—
Total revenues	$	16,234	$	1,243	$	333	$	17,810	$	103		$	(147	)	$	17,766
Segment income (loss)^(a)(b)(c)	$	2,384	$	179	$	2	$	2,565	$	(205	)	$	—		$	2,360
Add back noncontrolling interests															5
Loss from discontinued operations, net of tax															(4		)
Net income															$	2,361



	Nine Months Ended September 30, 2016
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	16,406	$	355	$	365	$	17,126	$	40		$	—		$	17,166
Intersegment revenues	24		3		—		27		51			(78		)	—
Total revenues	$	16,430	$	358	$	365	$	17,153	$	91		$	(78	)	$	17,166
Segment income (loss)^(a)(c)	$	2,557	$	63	$	13	$	2,633	$	(436	)	$	—		$	2,197
Add back noncontrolling interests															5
Income from discontinued operations, net of tax^(d)															190
Net income															$	2,392


(a)	Other includes costs to achieve the Piedmont acquisition. See Notes 2 and 10 for additional information.


(b)	For the three and nine months ended September 30, 2017, Electric Utilities and Infrastructure includes an impairment charge related to the Florida settlement agreement. See Note 4 for additional information.


(c)	Commercial Renewables includes impairment charges related to certain wind projects. See discussion below.


(d)	For the three and nine months ended September 30, 2016, Income from Discontinued Operations includes an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. See Note 2 for additional information.

During the three and nine months ended September 30, 2017, Duke Energy recorded a pretax impairment charge of $69 million on a wholly owned non-contracted wind project. The impairment was recorded within Impairment charges on Duke Energy’s Condensed Consolidated Statements of Operations. The charge represents the excess carrying value over the estimated fair value of the project, which was based on a Level 3 Fair Value measurement that was determined from the income approach using discounted cash flows. The impairment was primarily due to the non-contracted wind project being located in a market that has experienced declining market pricing during 2017 and declining long-term forecasted energy and capacity prices, driven by low natural gas prices, additional renewable generation placed in service and lack of significant load growth.

During the three and nine months ended September 30, 2016, Duke Energy recorded an other than temporary impairment (OTTI) of certain Commercial Renewables wind project investments accounted for under the equity method. The $71 million pretax impairment was recorded within Equity in earnings (losses) of unconsolidated affiliates on Duke Energy's Condensed Consolidated Statements of Operations. The other than temporary decline in value of these investments was primarily attributable to a sustained decline in market pricing where the wind investments are located, the continued projected net losses for the projects and a reduction in the projected cash distributions to the class of investment owned by Duke Energy.

Duke Energy Ohio

Duke Energy Ohio has two reportable operating segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure.

Electric Utilities and Infrastructure transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. Gas Utilities and Infrastructure transports and sells natural gas in portions of Ohio and Northern Kentucky. It conducts operations primarily through Duke Energy Ohio and its wholly owned subsidiary, Duke Energy Kentucky.

The remainder of Duke Energy Ohio's operations is presented as Other, which is primarily comprised of governance costs allocated by its parent, Duke Energy, and revenues and expenses related to Duke Energy Ohio's contractual arrangement to buy power from the Ohio Valley Electric Corporation's (OVEC) power plants. See Note 9 for additional information on related party transactions.



	Three Months Ended September 30, 2017
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Consolidated
Total revenues	$	371	$	90	$	461	$	10		$	471
Segment income (loss)	50		14		64		(8		)	56
Loss from discontinued operations, net of tax										(1		)
Net income										55
Segment assets	$	5,006	$	2,708	$	7,714	$	51		$	7,765



	Three Months Ended September 30, 2016
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Consolidated
Total revenues	$	390	$	89	$	479	$	10		$	489
Segment income (loss)	52		12		64		(9		)	55
Income from discontinued operations, net of tax^(a)										34
Net income										$	89



	Nine Months Ended September 30, 2017
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Consolidated
Total revenues	$	1,036	$	360	$	1,396	$	30		$	1,426
Segment income (loss)	96		56		152		(24		)	128
Loss from discontinued operations, net of tax										(1		)
Net income										$	127



	Nine Months Ended September 30, 2016
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Consolidated
Total revenues	$	1,053	$	358	$	1,411	$	22		$	1,433
Segment income (loss)	107		57		164		(29		)	135
Income from discontinued operations, net of tax^(a)										36
Net income										$	171


(a)	For the three and nine months ended September 30, 2016, Income from Discontinued Operations includes an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. See Note 2 for additional information.

DUKE ENERGY CAROLINAS, PROGRESS ENERGY, DUKE ENERGY PROGRESS, DUKE ENERGY FLORIDA, DUKE ENERGY INDIANA AND PIEDMONT

Piedmont has one reportable segment, Gas Utilities and Infrastructure, which transports and sells natural gas. The remainder of Piedmont's operations is presented as Other, which is comprised of certain unallocated corporate costs, including acquisition-related expenses, and earnings from Piedmont's equity method investment in SouthStar prior to its sale. Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016. Piedmont's income, net of tax, from SouthStar for the three and nine months ended September 30, 2016, was $2 million and $12 million, respectively.

The remaining Subsidiary Registrants each have one reportable operating segment, Electric Utilities and Infrastructure, which generates, transmits, distributes and sells electricity. The remainder of each company's operations is presented as Other, which is comprised of certain unallocated corporate costs. Other for Progress Energy also includes interest expense on corporate debt instruments of $56 million and $167 million for the three and nine months ended September 30, 2017, respectively, and $55 million and $166 million for the three and nine months ended September 30, 2016, respectively. The following table summarizes the net (loss) income of Other for each of these entities.



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2017			2016			2017			2016
Duke Energy Carolinas	$	(6	)	$	(16	)	$	(18	)	$	(50	)
Progress Energy	(32		)	(45		)	(120		)	(139		)
Duke Energy Progress	(4		)	(10		)	(11		)	(26		)
Duke Energy Florida	(2		)	(5		)	(7		)	(14		)
Duke Energy Indiana	(2		)	(3		)	(5		)	(10		)
Piedmont	(5		)	—			(18		)	7

The assets at Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana are substantially all included within the Electric Utilities and Infrastructure segment at September 30, 2017. The assets at Piedmont are substantially all included within the Gas Utilities and Infrastructure segment at September 30, 2017.