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Business Segments
 6 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
Business Segments
BUSINESS SEGMENTS
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, as discussed below, includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.
Operating segments are determined based on information used by the chief operating decision maker in deciding how to allocate resources and evaluate the performance.
Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost. Segment assets as presented in the tables that follow exclude all intercompany assets.
DUKE ENERGY
Duke Energy has the following reportable operating segments: Regulated Utilities, International Energy and Commercial Power.
Regulated Utilities conducts operations primarily through Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana, and the regulated transmission and distribution operations of Duke Energy Ohio. These electric and gas operations are subject to the rules and regulations of the FERC, NCUC, PSCSC, FPSC, PUCO, IURC and KPSC. Substantially all of Regulated Utilities’ operations are regulated and, accordingly, these operations qualify for regulatory accounting treatment.
International Energy principally operates and manages power generation facilities and engages in sales and marketing of electric power, natural gas and natural gas liquids outside the U.S. Its activities principally target power generation in Latin America. Additionally, International Energy owns a 25 percent interest in National Methanol Company (NMC), a large regional producer of methyl tertiary-butyl ether (MTBE) located in Saudi Arabia. The investment in NMC is accounted for under the equity method of accounting.
Commercial Power owns, operates and manages power plants and engages in the wholesale marketing and procurement of electric power, fuel and emission allowances related to these plants as well as other contractual positions. Commercial Power’s generation operations consist primarily of Duke Energy Ohio’s coal-fired and gas-fired nonregulated generation assets located in the Midwest region of the U.S. and wind and solar generation located throughout the U.S. The asset portfolio has a diversified fuel mix with baseload and mid-merit coal-fired units as well as combined cycle and peaking natural gas-fired units. In addition, Commercial Power operates and develops transmission projects.
The remainder of Duke Energy’s operations is presented as Other. While it is not an operating segment, Other primarily includes unallocated corporate interest expense, certain unallocated corporate costs, Bison Insurance Company Limited (Bison), Duke Energy’s wholly owned, captive insurance subsidiary, and contributions to the Duke Energy Foundation. On December 31, 2013, Duke Energy sold its interest in DukeNet Communications Holdings, LLC (DukeNet) to Time Warner Cable, Inc.
 
Three Months Ended June 30, 2014
(in millions)
Regulated Utilities

 
International
Energy

 
Commercial
Power

 
Total
Reportable
Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues
$
5,272

 
$
364

 
$
304

 
$
5,940

 
$
9

 
$
—

 
$
5,949

Intersegment revenues
11

 
—

 
5

 
16

 
19

 
(35
)
 
—

Total revenues
$
5,283

 
$
364

 
$
309

 
$
5,956

 
$
28

 
$
(35
)
 
$
5,949

Segment income (loss)(a)(b)
$
689

 
$
146

 
$
(120
)
 
$
715

 
$
(103
)
 
$
—

 
$
612

Add back noncontrolling interests component
 
 
 
 
 
 
 
 
 
 
 
 
4

Loss from discontinued operations, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
(3
)
Net income
 
 
 
 
 
 
 
 
 
 
 
 
$
613

Segment assets
$
101,070

 
$
5,463

 
$
5,652

 
$
112,185

 
$
2,807

 
$
181

 
$
115,173

(a)
Commercial Power includes a mark-to-market loss of $136 million, net of a tax benefit of $77 million, on economic hedges of the input and output commodities related to its fossil generation assets.
(b)
Other includes costs to achieve the Progress Energy merger.
 
Three Months Ended June 30, 2013
(in millions)
Regulated Utilities

 
International
Energy

 
Commercial
Power

 
Total
Reportable
Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues(a)(b)
$
4,911

 
$
406

 
$
547

 
$
5,864

 
$
15

 
$
—

 
$
5,879

Intersegment revenues
9

 
—

 
10

 
19

 
21

 
(40
)
 
—

Total revenues
$
4,920

 
$
406

 
$
557

 
$
5,883

 
$
36

 
$
(40
)
 
$
5,879

Segment income (loss)(a)(b)(c)(d)(e)
$
353

 
$
87

 
$
41

 
$
481

 
$
(139
)
 
$
—

 
$
342

Add back noncontrolling interests component
 
 
 
 
 
 
 
 
 
 
 
 
3

Loss from discontinued operations, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
(3
)
Net income
 
 
 
 
 
 
 
 
 
 
 
 
$
342

(a)
In May 2013, the PUCO approved a Duke Energy Ohio settlement agreement that provides for a net annual increase in electric distribution revenues beginning in May 2013. This rate increase impacts Regulated Utilities.
(b)
In May 2013, the NCUC approved a Duke Energy Progress settlement agreement that included an increase in rates beginning in June 2013. This rate increase impacts Regulated Utilities.
(c)
Regulated Utilities recorded an impairment charge related to Duke Energy Florida's Crystal River Unit 3. See Note 4 for additional information.
(d)
Regulated Utilities recorded an impairment charge related to the letter Duke Energy Progress filed with the NRC requesting the NRC to suspend its review activities associated with the combined construction and operating license (COL) at the Shearon Harris Nuclear Station (Harris) site. Regulated Utilities also recorded an impairment charge related to the write-off of the wholesale portion of the Levy investments at Duke Energy Florida in accordance with the 2013 Settlement. See Note 4 for additional information.
(e)
Other includes costs to achieve the Progress Energy merger.
 
Six Months Ended June 30, 2014
(in millions)
Regulated Utilities

 
International
Energy

 
Commercial
Power

 
Total
Reportable
Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues
$
11,067

 
$
746

 
$
746

 
$
12,559

 
$
14

 
$
—

 
$
12,573

Intersegment revenues
21

 
—

 
12

 
33

 
39

 
(72
)
 
—

Total revenues
$
11,088

 
$
746

 
$
758

 
$
12,592

 
$
53

 
$
(72
)
 
$
12,573

Segment income (loss)(a)(b)(c)
$
1,426

 
$
276

 
$
(999
)
 
$
703

 
$
(185
)
 
$
—

 
$
518

Add back noncontrolling interests component
 
 
 
 
 
 
 
 
 
 
 
 
8

Loss from discontinued operations, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
(6
)
Net income
 
 
 
 
 
 
 
 
 
 
 
 
$
520


(a)
Commercial Power includes an impairment charge related to the planned disposition of the Midwest Generation assets. See Note 2 for additional information.
(b)
Commercial Power includes a mark-to-market loss of $158 million, net of a tax benefit of $89 million, on economic hedges of the input and output commodities related to its fossil generation assets.
(c)
Other includes costs to achieve the Progress Energy merger.
 
Six Months Ended June 30, 2013
(in millions)
Regulated Utilities

 
International
Energy

 
Commercial
Power

 
Total
Reportable
Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues(a)(b)
$
9,963

 
$
798

 
$
986

 
$
11,747

 
$
30

 
$
—

 
$
11,777

Intersegment revenues
17

 
—

 
23

 
40

 
41

 
(81
)
 
—

Total revenues
$
9,980

 
$
798

 
$
1,009

 
$
11,787

 
$
71

 
$
(81
)
 
$
11,777

Segment income(a)(b)(c)(d)(e)
$
1,009

 
$
184

 
$
(1
)
 
$
1,192

 
$
(216
)
 
$
—

 
$
976

Add back noncontrolling interest
 
 
 
 
 
 
 
 
 
 
 
 
3

Loss from discontinued operations, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
(3
)
Net income
 
 
 
 
 
 
 
 
 
 
 
 
$
976

(a)
In May 2013, the PUCO approved a Duke Energy Ohio settlement agreement that provides for a net annual increase in electric distribution revenues beginning in May 2013. This rate increase impacts Regulated Utilities.
(b)
In May 2013, the NCUC approved a Duke Energy Progress settlement agreement that included an increase in rates in the first year beginning in June 2013. This rate increase impacts Regulated Utilities.
(c)
Regulated Utilities recorded an impairment charge related to Duke Energy Florida's Crystal River Unit 3. See Note 4 for additional information.
(d)
Regulated Utilities recorded an impairment charge related to the letter Duke Energy Progress filed with the NRC requesting the NRC to suspend its review activities associated with the combined construction and operating license (COL) at the Shearon Harris Nuclear Station (Harris) site. Regulated Utilities also recorded an impairment charge related to the write-off of the wholesale portion of the Levy investments at Duke Energy Florida in accordance with the 2013 Settlement. See Note 4 for additional information.
(e)
Other includes costs to achieve the Progress Energy merger.
DUKE ENERGY OHIO
Duke Energy Ohio has two reportable operating segments, Regulated Utilities and Commercial Power.
Regulated Utilities transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Kentucky. Regulated Utilities also 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.
Commercial Power owns, operates and manages power plants and engages in the wholesale marketing and procurement of electric power, fuel and emission allowances related to these plants, as well as other contractual positions.
The remainder of Duke Energy Ohio’s operations is presented as Other. While it is not considered an operating segment, Other primarily includes certain governance costs allocated by its parent, Duke Energy. See Note 8 for additional information. All of Duke Energy Ohio’s revenues are generated domestically and its long-lived assets are all in the U.S.
 
Three Months Ended June 30, 2014
(in millions)
Regulated Utilities

 
Commercial Power

 
Total Reportable Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues(a)
$
415

 
$
116

 
$
531

 
$
—

 
$
—

 
$
531

Intersegment revenues
—

 
5

 
5

 
—

 
(5
)
 
—

Total revenues
$
415

 
$
121

 
$
536

 
$
—

 
$
(5
)
 
$
531

Segment income (loss) / Consolidated net income(a)(b)
$
52

 
$
(154
)
 
$
(102
)
 
$
(5
)
 
$
—

 
$
(107
)
Segment assets
$
7,203

 
$
2,818

 
$
10,021

 
$
103

 
$
(555
)
 
$
9,569

(a)
In May 2013, the PUCO approved a settlement agreement that provides for a net annual increase in electric distribution revenues beginning in May 2013. This increase impacts Regulated Utilities.
(b)
Commercial Power includes an after-tax mark-to-market loss of $148 million, net of a tax benefit of $84 million, on economic hedges of the input and output commodities related to its fossil generation assets.
 
Three Months Ended June 30, 2013
(in millions)
Regulated Utilities

 
Commercial Power

 
Total Reportable Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues(a)
$
404

 
$
407

 
$
811

 
$
—

 
$
—

 
$
811

Intersegment revenues
—

 
8

 
8

 
—

 
(8
)
 
—

Total revenues
$
404

 
$
415

 
$
819

 
$
—

 
$
(8
)
 
$
811

Segment income / Consolidated net income(a)
$
27

 
$
35

 
$
62

 
$
(4
)
 
$
—

 
$
58


(a)
In May 2013, the PUCO approved a settlement agreement that provides for a net annual increase in electric distribution revenues beginning in May 2013. This increase impacts Regulated Utilities.
 
Six Months Ended June 30, 2014
(in millions)
Regulated Utilities

 
Commercial Power

 
Total Reportable Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues(a)
$
977

 
$
317

 
$
1,294

 
$
—

 
$
—

 
$
1,294

Intersegment revenues
—

 
12

 
12

 
—

 
(12
)
 
—

Total revenues
$
977

 
$
329

 
$
1,306

 
$
—

 
$
(12
)
 
$
1,294

Segment income (loss) / Consolidated net loss(a)(b)(c)
$
116

 
$
(1,105
)
 
$
(989
)
 
$
(8
)
 
$
—

 
$
(997
)
(a)
In May 2013, the PUCO approved a settlement agreement that provides for a net annual increase in electric distribution revenues beginning in May 2013. This increase impacts Regulated Utilities.
(b)
Commercial Power includes an impairment charge related to the planned disposition of the Midwest Generation assets. See Note 2 for additional information.
(c)
Commercial Power includes an after-tax mark-to-market loss of $181 million, net of a tax benefit of $101 million, on economic hedges of the input and output commodities related to its fossil generation assets.
 
Six Months Ended June 30, 2013
(in millions)
Regulated Utilities

 
Commercial Power

 
Total Reportable Segments

 
Other

 
Eliminations

 
Consolidated

Unaffiliated revenues(a)
$
896

 
$
662

 
$
1,558

 
$
—

 
$
—

 
$
1,558

Intersegment revenues
—

 
19

 
19

 
—

 
(19
)
 
—

Total revenues
$
896

 
$
681

 
$
1,577

 
$
—

 
$
(19
)
 
$
1,558

Segment income (loss) / Consolidated net income(a)
$
80

 
$
(33
)
 
$
47

 
$
(10
)
 
$
—

 
$
37

(a)
In May 2013, the PUCO approved a settlement agreement that provides for a net annual increase in electric distribution revenues beginning in May 2013. This increase impacts Regulated Utilities.
DUKE ENERGY CAROLINAS, PROGRESS ENERGY, DUKE ENERGY PROGRESS, DUKE ENERGY FLORIDA AND DUKE ENERGY INDIANA
The remaining Subsidiary Registrants each have one reportable operating segment, Regulated Utility, which generates, transmits, distributes and sells electricity. The remainder of each company’s operations is classified as Other. While not considered a reportable segment for any of these companies, Other consists of certain unallocated corporate costs. Other for Progress Energy also includes interest expense on corporate debt instruments of $60 million and $70 million for the three months ended June 30, 2014 and 2013, respectively and of $123 million and $171 million for the six months ended June 30, 2014 and 2013, respectively. The following table summarizes the net loss for Other at each of these registrants.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions)
2014

 
2013

 
2014

 
2013

Duke Energy Carolinas
$
(27
)
 
$
(25
)
 
$
(48
)
 
$
(43
)
Progress Energy
(45
)
 
(55
)
 
(97
)
 
(133
)
Duke Energy Progress
(3
)
 
(14
)
 
(13
)
 
(20
)
Duke Energy Florida
(7
)
 
(7
)
 
(11
)
 
(12
)
Duke Energy Indiana
(4
)
 
(4
)
 
(7
)
 
(8
)

The respective Regulated Utility operating segments include substantially all of Duke Energy Carolinas’, Progress Energy’s, Duke Energy Progress’, Duke Energy Florida’s and Duke Energy Indiana’s assets at June 30, 2014.