Under existing accounting guidance, fair value is considered to be the exchange price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date. The fair value definition focuses on an exit price. An exit price is the price that would be received to sell an asset or paid to transfer a liability. Fair value measurements require use of market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, corroborated by market data, or generally unobservable. Valuation techniques are required to maximize use of observable inputs and minimize use of unobservable inputs. A midmarket pricing convention (the midpoint price between bid and ask prices) is permitted for use as a practical expedient.

The Duke Energy Registrants classify recurring and non-recurring fair value measurements based on the fair value hierarchy. The hierarchy is prescribed by the accounting guidance for fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels.

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities an entity has the ability to access. An active market is one in which transactions for an asset or liability occur with sufficient frequency and volume to provide ongoing pricing information.

Level 2—A fair value measurement utilizing inputs other than a quoted market price that are observable, either directly or indirectly, for an asset or liability. Level 2 inputs include, but are not limited to, (i) quoted prices for similar assets or liabilities in an active market, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, and (iii) inputs other than quoted market prices that are observable for the asset or liability, such as interest rate curves and yield curves observable at commonly quoted intervals, volatilities, credit risk and default rates. A Level 2 measurement cannot have more than an insignificant portion of its valuation based on unobservable inputs. Instruments in this category include non-exchange-traded derivatives, such as over-the-counter forwards, swaps and options; certain marketable debt securities; and financial instruments traded in less than active markets.

Level 3—Any fair value measurement which includes unobservable inputs for an asset or liability for more than an insignificant portion of the valuation. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value. Level 3 instruments may include longer-term instruments that extend into periods in which quoted prices or other observable inputs are not available.

The fair value accounting guidance for financial instruments permits entities to elect to measure many financial instruments and certain other items at fair value that are not required to be accounted for at fair value under other GAAP. The Duke Energy Registrants have not elected to record any of these items at fair value. However, in the future, the Duke Energy Registrants may elect to measure certain financial instruments at fair value in accordance with this accounting guidance.

Transfers between levels represent (i) assets or liabilities previously categorized as a higher level for which the inputs to the estimate became less observable or (ii) assets and liabilities that were previously classified as Level 2 or 3 for which the lowest significant input became more observable during the period. The Duke Energy Registrant's policy is to recognize transfers between levels of the fair value hierarchy at the end of the period. There were transfers out of level 3 at Duke Energy, Progress Energy, and Duke Energy Florida due to observability of inputs during the three and nine months ended September 30, 2013.

Investments in equity securities, other than those accounted for as equity and cost method investments, are typically valued at the closing price in the principal active market as of the last business day of the reporting period. Principal active markets for equity prices include published exchanges such as NASDAQ and NYSE. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. Prices have not been adjusted to reflect after-hours market activity. The majority of investments in equity securities are valued using Level 1 measurements. When (i) the Duke Energy Registrants lack the ability to redeem investments valued on a net asset value per share basis at net asset value per share in the near future or (ii) net asset value per share is not available at the measurement date, the fair value measurement of the investment is categorized as Level 3.

Duke Energy and Duke Energy Carolinas hold auction rate securities for which an active market does not currently exist. Auction rate securities held are student loan securities. At September 30, 2013, approximately 80 percent are ultimately backed by the U.S. government and approximately 18 percent of these securities are AAA rated. As of September 30, 2013 and December 31, 2012, all of these auction rate securities are classified as long-term investments and are valued using Level 3 measurements. The methods and significant assumptions used to determine the fair values of the investment in auction rate debt securities represent estimations of fair value using internal discounted cash flow models. These models incorporate primarily management's own assumptions as to the term over which such investments will be recovered at par (ranging from 10 to 19 years), the current level of interest rates (less than 0.2%), and the appropriate risk-adjusted discount rates (up to 5.6% reflecting a tenor of up to 19 years). In preparing the valuations, all significant value drivers were considered, including the underlying collateral (primarily evaluated on the basis of credit ratings, parity ratios, and the percentage of loans backed by the U.S. government).

There were no other-than-temporary impairments associated with investments in auction rate debt securities during the three and nine months ended September 30, 2013 or 2012.

Most debt investments are valued based on a calculation using interest rate curves and credit spreads applied to the terms of the debt instrument (maturity and coupon interest rate) and consider the counterparty credit rating. Most debt valuations are Level 2 measurements. If the market for a particular fixed income security is relatively inactive or illiquid, the measurement is Level 3. U.S. Treasury debt is typically Level 1.

The pricing for commodity derivatives is primarily a calculated value that incorporates forward prices and is adjusted for liquidity (bid-ask spread), credit or non-performance risk (after reflecting credit enhancements such as collateral), and discounted to present value. The primary difference between a Level 2 and a Level 3 measurement relates to the level of activity in forward markets for the commodity. If the market is relatively inactive, the measurement is deemed to be Level 3. Commodity derivatives with clearinghouses are classified as Level 1. For commodity derivative contracts classified as Level 3, Duke Energy utilizes internally-developed financial models based upon the income approach (discounted cash flow method) to measure fair values. The primary inputs to these models are forward commodity prices used to develop forward price curves for the respective instrument. Pricing inputs are derived from published exchange transaction prices and other observable or public data sources. In the absence of observable market information that supports the pricing inputs, there is a presumption the transaction price is equal to the last observable price for a similar period. For commodity derivative contracts classified as Level 3, pricing inputs for natural gas and electricity forward price curves are not observable for the full term of the related contracts. In isolation, increases (decreases) in unobservable natural gas forward prices would result in favorable (unfavorable) fair value adjustments for gas purchase contracts. In isolation, increases (decreases) in unobservable electricity forward prices would result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate fair value of gas purchase contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.

Most over-the-counter interest rate contract derivatives are valued using financial systems that utilize observable inputs for similar instruments and are classified as Level 2. Such systems are standard in the market and are commonly used across industries to value derivative contracts. The Duke Energy Registrants utilize various inputs and factors including market data and assumptions market participants would use in pricing assets or liabilities as well as assumptions about risks inherent in the inputs to valuation technique. Inputs and factors may include forward interest rate curves, notional amounts, interest rates and credit quality of the Duke Energy Registrants and their counterparties.

See Note 12, Goodwill and Intangible Assets, to the Consolidated Financial Statements included in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of the valuation of goodwill and long-lived assets.

The following tables provide fair value amounts for assets and liabilities recorded on Duke Energy's Condensed Consolidated Balance Sheets. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Duke Energy's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Derivative amounts in the table below exclude cash collateral, which are disclosed in Note 8. See Note 9 for additional information related to investments by major security type.


		September 30, 2013
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Investments in available-for-sale auction rate securities^(a)		$	25	$	―	$	―	$	25
Nuclear decommissioning trust fund equity securities			3,280		3,199		59		22
Nuclear decommissioning trust fund debt securities			1,525		392		1,083		50
Other trading and available-for-sale equity securities^(b)			93		83		10		―
Other trading and available-for-sale debt securities^(c)			414		57		357		―
Derivative assets^(b)			127		32		22		73
	Total assets		5,464		3,763		1,531		170
Derivative liabilities^(d)			(473)		(15)		(347)		(111)
	Net assets	$	4,991	$	3,748	$	1,184	$	59


		December 31, 2012
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Investments in available-for-sale auction rate securities^(a)		$	29	$	―	$	―	$	29
Nuclear decommissioning trust fund equity securities			2,837		2,762		54		21
Nuclear decommissioning trust fund debt securities			1,405		317		1,040		48
Other trading and available-for-sale equity securities^(b)			72		63		9		―
Other trading and available-for-sale debt securities^(c)			602		40		562		―
Derivative assets^(b)			103		18		22		63
	Total assets		5,048		3,200		1,687		161
Derivative liabilities^(d)			(756)		(17)		(591)		(148)
	Net assets	$	4,292	$	3,183	$	1,096	$	13

(a)	Included in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
(b)	Included in Other within Current Assets and Other within Investments and Other Assets on the Condensed Consolidated Balance Sheet.
(c)	Included in Other within Investments and Other Assets and Short-term Investments on the Condensed Consolidated Balance Sheets.
(d)	Included in Other within Current Liabilities and Other within Deferred Credits and Other Liabilities on the Condensed Consolidated Balance Sheets.

The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.

		Three Months Ended September 30, 2013
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at June 30, 2013		$	26	$	71	$	(87)	$	10
Total pretax realized or unrealized gains (losses) included in earnings:
	Revenue: Regulated electric		―		―		4		4
	Revenue: Nonregulated electric, natural gas, and other		―		―		9		9
Total pretax gains included in other comprehensive income:
	Gains on available for sale securities and other		1		―		―		1
Purchases, sales, issuances and settlements:
	Purchases		―		2		―		2
	Sales		―		(2)		―		(2)
	Issuances		―		―		4		4
	Settlements		(2)		―		(3)		(5)
Transfers in and out of Level 3 due to observability of inputs			―		―		34		34
Total gains (losses) included on the Consolidated Balance Sheet as regulatory assets or liabilities			―		1		1		2
Balance at September 30, 2013		$	25	$	72	$	(38)	$	59
Pretax amounts included in the Consolidated Statements of Comprehensive Income related to Level 3 measurements outstanding at September 30, 2013
	Revenue: Regulated electric	$	―	$	―	$	3	$	3
	Revenue: Nonregulated electric, natural gas, and other		―		―		(2)		(2)
Total		$	―	$	―	$	1	$	1


		Three Months Ended September 30, 2012
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at June 30, 2012		$	41	$	64	$	(19)	$	86
Amounts acquired in Progress Merger			―		―		(30)		(30)
Total pretax realized or unrealized gains (losses) included in earnings:
	Revenue: Regulated electric		―		―		12		12
	Revenue: Nonregulated electric, natural gas, and other		―		―		(6)		(6)
Total pretax gains included in other comprehensive income:
Purchases, sales, issuances and settlements:
	Purchases		―		1		―		1
	Issuances		―		―		(24)		(24)
	Settlements				―		(10)		(10)
Total gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities			―		1		2		3
Balance at September 30, 2012		$	41	$	66	$	(75)	$	32


		Nine Months Ended September 30, 2013
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at December 31, 2012		$	29	$	69	$	(85)	$	13
Total pretax realized or unrealized gains (losses) included in earnings:
	Revenue: Regulated electric		―		―		5		5
	Revenue: Nonregulated electric, natural gas, and other		―		―		(13)		(13)
Total pretax gains included in other comprehensive income:
	Losses on available for sale securities and other		(1)		―		―		(1)
Purchases, sales, issuances and settlements:
	Purchases		―		5		21		26
	Sales		―		(5)		―		(5)
	Issuances		―		―		9		9
	Settlements		(3)		―		(5)		(8)
Transfers in and out of Level 3 due to observability of inputs			―		―		34		34
Total gains (losses) included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities			―		3		(4)		(1)
Balance at September 30, 2013		$	25	$	72	$	(38)	$	59
Pretax amounts included in the Condensed Consolidated Statement of Operations related to Level 3 measurements outstanding at September 30, 2013
	Revenue: Regulated electric	$	―	$	―	$	5	$	5
	Revenue: Nonregulated electric, natural gas, and other		―		―		(26)		(26)
Total		$	―	$	―	$	(21)	$	(21)


		Nine Months Ended September 30, 2012
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at December 31, 2011		$	71	$	53	$	(39)	$	85
Amounts acquired in Progress Energy Merger			―		―		(30)		(30)
Total pretax realized or unrealized losses included in earnings:
	Revenue: Regulated electric		―		―		37		37
	Revenue: Nonregulated electric, natural gas, and other		―		―		(9)		(9)
Total pretax gains included in other comprehensive income:
	Gains on available for sale securities and other		9		―		―		9
Purchases, sales, issuances and settlements:
	Purchases		―		10		22		32
	Issuances		―		―		(24)		(24)
	Settlements		(39)		―		(34)		(73)
Total gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities			―		3		2		5
Balance at September 30, 2012		$	41	$	66	$	(75)	$	32
Pretax amounts included in the Condensed Consolidated Statement of Operations related to Level 3 measurements outstanding at September 30, 2012.
	Revenue: Nonregulated electric, natural gas, and other	$	―	$	―	$	5	$	5
Total		$	―	$	―	$	5	$	5

The following tables provide fair value amounts for assets and liabilities recorded on Duke Energy Carolinas' Condensed Consolidated Balance Sheets at fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Duke Energy Carolinas' assessment of the significance of a particular input to the fair value measurement requires judgment and may affect valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Derivative amounts in the table below exclude cash collateral, which are disclosed in Note 8. See Note 9 for additional information related to investments by major security type.


		December 31, 2012
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Investments in available-for-sale auction rate securities^(a)		$	3	$	―	$	―	$	3
Nuclear decommissioning trust fund equity securities			1,592		1,523		48		21
Nuclear decommissioning trust fund debt securities			762		155		559		48
	Total assets		2,357		1,678		607		72
Derivative liabilities^(b)			(12)		―		―		(12)
	Net Assets	$	2,345	$	1,678	$	607	$	60

(a)	Included in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
(b)	Included in Other within Current Liabilities and Other within Deferred Credits and Other Liabilities on the Condensed Consolidated Balance Sheet.

The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.

		Three Months Ended September 30, 2013
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at June 30, 2013		$	3	$	71	$	(4)	$	70
Purchases, sales, issuances and settlements:
	Purchases		―		2		―		2
	Sales		―		(2)		―		(2)
Total gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities			―		1		―		1
Balance at September 30, 2013		$	3	$	72	$	(4)	$	71


		Three Months Ended September 30, 2012
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at June 30, 2012		$	6	$	64	$	―	$	70
Purchases, sales, issuances and settlements:
	Purchases		―		1		―		1
	Issuances		―		―		(14)		(14)
	Settlements		―		―		2		2
Total gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities			―		1		―		1
Balance at September 30, 2012		$	6	$	66	$	(12)	$	60


		Nine Months Ended September 30, 2013
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at December 31, 2012		$	3	$	69	$	(12)	$	60
Purchases, sales, issuances and settlements:
	Purchases		―		5		―		5
	Sales		―		(5)		―		(5)
	Settlements		―		―		8		8
Total gains included on the Consolidated Balance Sheet as regulatory assets or liabilities			―		3		―		3
Balance at September 30, 2013		$	3	$	72	$	(4)	$	71
Pretax amounts included in the Condensed Consolidated Statements of Operations and Comprehensive Income related to Level 3 measurements outstanding at September 30, 2013
	Operating Revenues	$	―	$	―	$	(4)	$	(4)
Total		$	―	$	―	$	(4)	$	(4)

		Nine Months Ended September 30, 2012
(in millions)		Available-for-Sale Auction Rate Securities		Available-for-Sale NDTF Investments		Derivatives (net)		Total
Balance at December 31, 2011		$	12	$	53	$	―	$	65
Total pretax gains included in other comprehensive income:
	Gains on available for sale securities and other		2		―		―		2
Purchases, sales, issuances and settlements:
	Purchases		―		10		―		10
	Issuances		―		―		(14)		(14)
	Settlements		(8)		―		2		(6)
Total gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities			―		3		―		3
Balance at September 30, 2012		$	6	$	66	$	(12)	$	60

The following tables provide fair value amounts for assets and liabilities recorded on Progress Energy's Condensed Consolidated Balance Sheets. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Progress Energy's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Derivative amounts in the table below exclude cash collateral, which are disclosed in Note 8. See Note 9 for additional information related to investments by major security type.


		December 31, 2012
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Nuclear decommissioning trust fund equity securities		$	1,245	$	1,239	$	6	$	―
Nuclear decommissioning trust fund debt securities and other			643		162		481		―
Other trading and available-for-sale debt securities and other^(a)			57		17		40		―
Derivative assets^(b)			11		―		11		―
	Total assets		1,956		1,418		538		―
Derivative liabilities^(c)			(440)		―		(402)		(38)
	Net assets	$	1,516	$	1,418	$	136	$	(38)

(a)	Included in Other within Investments and Other Assets in the Condensed Consolidated Balance Sheets.
(b)	Included in Other Current Assets within Current Assets and Other within Investments and Other Assets in the Condensed Consolidated Balance Sheets.
(c)	Included in Other within Current Liabilities and Other within Deferred Credits and Other Liabilities in the Condensed Consolidated Balance Sheets.

The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.

		Derivatives (net)
		Three Months Ended September 30,
(in millions)				2013		2012
Balance at beginning of period			$	(35)	$	(30)
Total pretax realized or unrealized gains included in earnings:
	Revenue: Regulated electric			―		2
Purchases, sales, issuances and settlements:
	Issuances			2		(16)
	Settlements			―		4
Total (losses) gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities				(1)		4
Transfers in and out of Level 3 due to observability of inputs				34		―
Balance at end of period			$	―	$	(36)


		Derivatives (net)
		Nine Months Ended September 30,
(in millions)				2013		2012
Balance at beginning of period			$	(38)	$	(24)
Total pretax realized or unrealized gains included in earnings:
	Operating Revenues			―		2
Purchases, sales, issuances and settlements:
	Issuances			10		(16)
	Settlements			―		4
Total losses included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities				(6)		(2)
Transfers in and out of Level 3 due to observability of inputs				34		―
Balance at end of period			$	―	$	(36)
Pretax amounts included in the Condensed Consolidated Statements of Operations and Comprehensive Income related to Level 3 measurements outstanding at September 30, 2013
	Revenue: Regulated electric		$	10	$	―
Total			$	10	$	―

The following tables provide fair value amounts for assets and liabilities recorded on Duke Energy Progress' Condensed Consolidated Balance Sheets. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Duke Energy Progress' assessment of the significance of a particular input to the fair value measurement requires judgment and may affect valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Derivative amounts in the table below exclude cash collateral which are disclosed in Note 8. See Note 9 for additional information related to investments by major security type.


		December 31, 2012
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Nuclear decommissioning trust fund equity securities		$	811	$	811	$	―	$	―
Nuclear decommissioning trust fund debt securities and other			448		119		329		―
Other trading and available-for-sale debt securities and other^(a)			3		3		―		―
Derivative assets^(b)			2		―		2		―
	Total assets		1,264		933		331		―
Derivative liabilities^(c)			(166)		―		(128)		(38)
	Net assets	$	1,098	$	933	$	203	$	(38)

(a)	Included in Other within Investments and Other Assets in the Condensed Consolidated Balance Sheets.
(b)	Included in Other Current Assets within Current Assets and Other within Investments and Other Assets in the Condensed Consolidated Balance Sheets.
(c)	Included in Other within Current Liabilities and Other within Deferred Credits and Other Liabilities in the Condensed Consolidated Balance Sheets.

The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.

		Derivatives (net)
		Three Months Ended September 30,
(in millions)				2013		2012
Balance at beginning of period			$	(35)	$	(28)
Total pretax realized or unrealized gains (losses) included in earnings:
	Operating Revenues			―		2
Purchases, sales, issuances and settlements:
	Issuances					(16)
	Settlements			2		4
Total (losses) gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities				(1)		2
Transfers in and out of Level 3 due to observability of inputs				34		―
Balance at end of period			$	―	$	(36)
Pretax amounts included in the Condensed Consolidated Statements of Operations and Comprehensive Income related to Level 3 measurements outstanding at September 30, 2013
	Revenue: Regulated electric		$	1	$	―
Total			$	1	$	―


		Derivatives (net)
		Nine Months Ended September 30,
(in millions)				2013		2012
Balance at beginning of period			$	(38)	$	(24)
Total pretax realized or unrealized gains (losses) included in earnings:
	Operating Revenues			―		2
Purchases, sales, issuances and settlements:
	Issuances			9		(16)
	Settlements			―		4
Total losses included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities				(5)		(2)
Transfers in and out of Level 3 due to observability of inputs				34		―
Balance at end of period			$	―	$	(36)
Pretax amounts included in the Condensed Consolidated Statements of Operations and Comprehensive Income related to Level 3 measurements outstanding at September 30, 2013
	Revenue: Regulated electric		$	10	$	―
Total			$	10	$	―

The following tables provide fair value amounts for assets and liabilities recorded on Duke Energy Florida's Condensed Balance Sheets. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Duke Energy Florida's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Derivative amounts in the table below exclude cash collateral which are disclosed in Note 8. See Note 9 for additional information related to investments by major security type.


		December 31, 2012
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Nuclear decommissioning trust fund equity securities		$	435	$	429	$	6	$	―
Nuclear decommissioning trust fund debt securities and other			194		43		151		―
Other trading and available-for-sale debt securities and other^(a)			43		3		40		―
Derivative assets			9		―		9		―
	Total assets		681		475		206		―
Derivative liabilities^(b)			(270)		―		(270)		―
	Net assets (liabilities)	$	411	$	475	$	(64)	$	―

(a)	Included in Other within Investments and Other Assets in the Condensed Balance Sheets.
(b)	Included in Other within Current Liabilities and Other within Deferred Credits and Other Liabilities in the Condensed Balance Sheets

The following tables provide fair value amounts for assets and liabilities recorded on Duke Energy Ohio's Condensed Consolidated Balance Sheets. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Duke Energy Ohio's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Derivative amounts in the table below exclude cash collateral, which are disclosed in Note 8.


		December 31, 2012
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Derivative assets^(a)		$	59	$	48	$	2	$	9
Derivative liabilities^(b)			(38)		(15)		(8)		(15)
	Net assets (liabilities)	$	21	$	33	$	(6)	$	(6)

(a)	Included in Other within Current Assets and Other within Investments and Other Assets in the Condensed Consolidated Balance Sheets.
(b)	Included in Other within Current Liabilities and Other within Deferred Credits and Other Liabilities in the Condensed Consolidated Balance Sheets.

The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.

		Derivatives (net)
		Three Months Ended September 30,
(in millions)				2013		2012
Balance at beginning of period			$	(19)	$	(2)
Total pretax realized or unrealized gains (losses) included in earnings:
	Revenue: Regulated electric			―		1
	Revenue: Nonregulated electric and other			11		(6)
Purchases, sales, issuances and settlements:
	Settlements			2		(1)
Balance at end of period			$	(6)	$	(8)
Pretax amounts included in the Condensed Consolidated Statements of Operations and Comprehensive Income related to Level 3 measurements outstanding at September 30, 2013:
	Revenue: Nonregulated electric and other		$	(3)	$	―
Total			$	(3)	$	―


		Derivatives (net)
		Nine Months Ended September 30,
(in millions)				2013		2012
Balance at beginning of period			$	(6)	$	(3)
Total pretax realized or unrealized gains (losses) included in earnings:
	Revenue: Regulated electric			―		1
	Revenue: Nonregulated electric and other			(4)		(5)
Purchases, sales, issuances and settlements:
	Purchases			1		―
	Settlements			―		1
Total gains (losses) included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities				3		(2)
Balance at end of period			$	(6)	$	(8)
Pretax amounts included in the Consolidated Statements of Operations and Comprehensive Income related to Level 3 measurements outstanding at September 30, 2013:
	Revenue: Nonregulated electric and other		$	(16)	$	1
Total			$	(16)	$	1

The following tables provide fair value amounts for assets and liabilities recorded on Duke Energy Indiana's Condensed Consolidated Balance Sheets. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Duke Energy Indiana's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Derivative amounts in the table below exclude cash collateral which are disclosed in Note 8. See Note 9 for additional information related to investments by major security type.


		December 31, 2012
(in millions)		Total Fair Value		Level 1		Level 2		Level 3
Available-for-sale equity securities^(a)		$	49	$	49	$	―	$	―
Available-for-sale debt securities^(a)			29		―		29		―
Derivative assets^(b)			10		―		―		10
	Total assets		88		49		29	$	10
Derivative liabilities^(c)			(63)		―		(63)		―
	Net assets (liabilities)	$	25	$	49	$	(34)	$	10

(a)	Included in Other within Investments and Other Assets on the Condensed Consolidated Balance Sheets.
(b)	Included in Other within Current Assets on the Condensed Consolidated Balance Sheets.
(c)	Included in Other within Current Liabilities and Other within Deferred Credits and Other Liabilities on the Condensed Consolidated Balance Sheets.

The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.

		Derivatives (net)
		Three Months Ended September 30,
(in millions)				2013		2012
Balance at beginning of period			$	18	$	22
Total pretax realized or unrealized gains (losses) included in earnings:
	Operating Revenues			3		11
Purchases, sales, issuances and settlements:
	Settlements			(10)		(16)
Total gains included on the Condensed Consolidated Balance Sheet as regulatory assets or liabilities				3		―
Balance at end of period			$	14	$	17

QUANTITATIVE DISCLOSURES ABOUT UNOBSERVABLE INPUTS

The following table includes quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.

	September 30, 2013
Investment Type	Fair Value (in millions)		Valuation Technique	Unobservable Input	Range
Duke Energy
Commodity natural gas contracts	$	(43)	Discounted cash flow	Forward natural gas curves - price per MMBtu	$	3.47	-	10.36
FERC mitigation power sale agreements		(4)	Discounted cash flow	Forward electricity curves - price per megawatt-hour (MWh)		25.79	-	48.34
Financial transmission rights (FTRs)		15	RTO market pricing	FTR price - per MWh		(1.53)	-	10.86
Commodity power contracts		5	Discounted cash flow	Forward electricity curves - price per MWh		26.20	-	54.19
Commodity capacity contracts		(3)	Discounted cash flow	Forward capacity curves - price per MW day		95.16	-	122.64
Commodity capacity option contracts		4	Discounted cash flow	Forward capacity option curves - price per MW day		29.30	-	100.80
Reserves		(12)		Bid-ask spreads, implied volatility, probability of default
Total Level 3 derivatives	$	(38)
Duke Energy Carolinas
FERC mitigation power sale agreements	$	(4)	Discounted cash flow	Forward electricity curves - price per MWh	$	25.79	-	48.34
Duke Energy Ohio
Financial transmission rights (FTRs)	$	1	RTO market pricing	FTR price - per MWh	$	(0.09)	-	0.46
Commodity power contracts		13	Discounted cash flow	Forward electricity curves - price per MWh		26.20	-	54.19
Commodity natural gas contracts		(9)	Discounted cash flow	Forward natural gas curves - price per MMBtu		3.47	-	4.55
Reserves		(11)		Bid-ask spreads, implied volatility, probability of default
Total Level 3 derivatives	$	(6)
Duke Energy Indiana
Financial transmission rights (FTRs)	$	14	RTO market pricing	FTR price - per MWh	$	(1.53)	-	10.86


	December 31, 2012
Investment Type	Fair Value (in millions)		Valuation Technique	Unobservable Input	Range
Duke Energy
Commodity natural gas contracts	$	(53)	Discounted cash flow	Forward natural gas curves - price per MMBtu	$	2.33	-	9.99
FERC mitigation power sale agreements		(23)	Discounted cash flow	Forward electricity curves - price per MWh		25.83	-	48.69
Financial transmission rights (FTRs)		11	RTO market pricing	FTR price - per MWh		23.63	-	39.22
Commodity power contracts		(8)	Discounted cash flow	Forward electricity curves - price per MWh		24.82	-	77.96
Commodity capacity contracts		(3)	Discounted cash flow	Forward capacity curves - price per MW day		95.16	-	105.36
Commodity capacity option contracts		3	Discounted cash flow	Forward capacity option curves - price per MW day		4.68	-	77.96
Reserves		(12)		Bid-ask spreads, implied volatility, probability of default
Total Level 3 derivatives	$	(85)
Duke Energy Carolinas
FERC mitigation power sale agreements	$	(12)	Discounted cash flow	Forward electricity curves - price per MWh	$	25.83	-	48.69
Progress Energy
Commodity natural gas contracts	$	(27)	Discounted cash flow	Forward natural gas curves - price per MMBtu	$	4.07	-	4.45
FERC mitigation power sale agreements		(11)	Discounted cash flow	Forward electricity curves - price per MWh		25.83	-	48.69
Total Level 3 derivatives	$	(38)
Duke Energy Progress
Commodity natural gas contracts	$	(27)	Discounted cash flow	Forward natural gas curves - price per MMBtu	$	4.07	-	4.45
FERC mitigation power sale agreements		(11)	Discounted cash flow	Forward electricity curves - price per MWh		25.83	-	48.69
Total Level 3 derivatives	$	(38)
Duke Energy Ohio
Financial transmission rights (FTRs)	$	1	RTO market pricing	FTR price - per MWh	$	27.17	-	39.22
Commodity power contracts		(1)	Discounted cash flow	Forward electricity curves - price per MWh		25.90	-	57.50
Commodity natural gas contracts		5	Discounted cash flow	Forward natural gas curves - price per MMBtu		3.30	-	4.51
Reserves		(11)		Bid-ask spreads, implied volatility, probability of default
Total Level 3 derivatives	$	(6)
Duke Energy Indiana
Financial transmission rights (FTRs)	$	10	RTO market pricing	FTR price - per MWh	$	23.63	-	35.43

OTHER FAIR VALUE DISCLOSURES

The fair value and book value of long-term debt, including current maturities, is summarized in the following table. Judgment is required in interpreting market data to develop estimates of fair value. Accordingly, estimates determined are not necessarily indicative of amounts the Duke Energy Registrants could have settled in current markets. The fair value of long-term debt is determined using Level 2 measurements.

		September 30, 2013				December 31, 2012
(in millions)		Book Value		Fair Value		Book Value		Fair Value
Duke Energy ^(a)		$	39,709	$	42,142	$	39,461	$	44,001
Duke Energy Carolinas^(b)			8,739		9,445		8,741		10,096
Progress Energy			13,815		14,989		14,428		16,563
Duke Energy Progress			4,936		5,053		4,840		5,277
Duke Energy Florida			4,887		5,424		5,320		6,222
Duke Energy Ohio			2,188		2,263		1,997		2,117
Duke Energy Indiana			3,798		4,143		3,702		4,268

(a)	Includes book value of Non-recourse long-term debt of variable interest entities of $1,265 million and $852 million September 30, 2013 and December 31, 2012, respectively.
(b)	Includes book value of Non-recourse long-term debt of variable interest entities of $300 million at both September 30, 2013 and December 31, 2012, respectively.

At both September 30, 2013 and December 31, 2012, the fair value of cash and cash equivalents, accounts and notes receivable, accounts payable, notes payable and commercial paper, and non-recourse notes payable of variable interest entities are not materially different from their carrying amounts because of the short-term nature of these instruments and/or because the stated rates approximate market rates.