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Employee Benefit Plans
12 Months Ended
Dec. 31, 2017
Retirement Benefits [Abstract]  
Employee Benefit Plans
EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT RETIREMENT PLANS
Duke Energy and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified, non-contributory defined benefit retirement plans. The Duke Energy plans cover most employees using a cash balance formula. Under a cash balance formula, a plan participant accumulates a retirement benefit consisting of pay credits based upon a percentage of current eligible earnings, age or age and years of service and interest credits. Certain employees are eligible for benefits that use a final average earnings formula. Under these final average earnings formulas, a plan participant accumulates a retirement benefit equal to the sum of percentages of their (i) highest three-year, four-year, or five-year average earnings, (ii) highest three-year, four-year, or five-year average earnings in excess of covered compensation per year of participation (maximum of 35 years), (iii) highest three-year average earnings times years of participation in excess of 35 years. Duke Energy also maintains, and the Subsidiary Registrants participate in, non-qualified, non-contributory defined benefit retirement plans that cover certain executives. The qualified and non-qualified, non-contributory defined benefit plans are closed to new participants.
Duke Energy approved plan amendments to restructure its qualified non-contributory defined benefit retirement plans, effective January 1, 2018. The restructuring involved (i) the spin-off of the majority of inactive participants from two plans into a separate inactive plan and (ii) the merger of the active participant portions of such plans, along with a pension plan acquired as part of the Piedmont transaction, into a single active plan. Benefits offered to the plan participants remain unchanged except that the Piedmont plan's final average earnings formula was frozen as of December 31, 2017, and affected participants were moved into the active plan's cash balance formula. Actuarial gains and losses associated with the Inactive Plan will be amortized over the remaining life expectancy of the inactive participants. The longer amortization period is expected to lower Duke Energy's 2018 pretax qualified pension plan expense by approximately $33 million.
Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations.
Net periodic benefit costs disclosed in the tables below represent the cost of the respective benefit plan for the periods presented. However, portions of the net periodic benefit costs disclosed in the tables below have been capitalized as a component of property, plant and equipment. Amounts presented in the tables below for the Subsidiary Registrants represent the amounts of pension and other post-retirement benefit cost allocated by Duke Energy for employees of the Subsidiary Registrants. Additionally, the Subsidiary Registrants are allocated their proportionate share of pension and post-retirement benefit cost for employees of Duke Energy’s shared services affiliate that provide support to the Subsidiary Registrants. These allocated amounts are included in the governance and shared service costs discussed in Note 13.
Duke Energy’s policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants. The following table includes information related to the Duke Energy Registrants’ contributions to its qualified defined benefit pension plans.
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont(a)

Anticipated Contributions:  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
 
Total anticipated 2018 contributions
$
148

 
$
46

 
$
45

 
$
25

 
$
20

 
$

 
$
8

 
$
7

Contributions made January 2, 2018
141

 
46

 
45

 
25

 
20

 

 
8

 

Contributions to be made in 2018
$
7

 
$

 
$

 
$

 
$

 
$

 
$

 
$
7

Contributions Made:  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
 
2017
$
19

 
$

 
$

 
$

 
$

 
$
4

 
$

 
$
11

2016
155

 
43

 
43

 
24

 
20

 
5

 
9

 


2015
302

 
91

 
83

 
42

 
40

 
8

 
19

 



(a)
Piedmont contributed $10 million to its U.S. qualified defined benefit pension plan during the two months ended December 31, 2016, and for each of the years ended October 31, 2016, and 2015, respectively.
QUALIFIED PENSION PLANS
Components of Net Periodic Pension Costs
  
Year Ended December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Service cost  
$
159

 
$
48

 
$
45

 
$
26

 
$
19

 
$
4

 
$
9

 
$
10

Interest cost on projected benefit obligation  
328

 
79

 
100

 
47

 
53

 
18

 
26

 
14

Expected return on plan assets  
(545
)
 
(142
)
 
(167
)
 
(82
)
 
(85
)
 
(27
)
 
(42
)
 
(24
)
Amortization of actuarial loss  
146

 
31

 
52

 
23

 
29

 
5

 
12

 
11

Amortization of prior service credit
(24
)
 
(8
)
 
(3
)
 
(2
)
 
(1
)
 
(1
)
 
(2
)
 
(2
)
Settlement charge
12

 

 

 

 

 

 

 
12

Other  
8

 
2

 
2

 
1

 
1

 

 
1

 
1

Net periodic pension costs(a)(b)
$
84


$
10

 
$
29

 
$
13

 
$
16

 
$
(1
)
 
$
4

 
$
22

  
Year Ended December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Service cost  
$
147

 
$
48

 
$
42

 
$
24

 
$
19

 
$
4

 
$
9

Interest cost on projected benefit obligation  
335

 
86

 
106

 
49

 
55

 
19

 
28

Expected return on plan assets  
(519
)
 
(142
)
 
(168
)
 
(82
)
 
(84
)
 
(27
)
 
(42
)
Amortization of actuarial loss  
134

 
33

 
51

 
23

 
29

 
4

 
11

Amortization of prior service (credit)
(17
)
 
(8
)
 
(3
)
 
(2
)
 
(1
)
 

 
(1
)
Settlement charge
3

 

 

 

 

 

 

Other  
8

 
2

 
3

 
1

 
1

 
1

 
1

Net periodic pension costs(a)(b)
$
91

 
$
19

 
$
31

 
$
13

 
$
19

 
$
1

 
$
6

  
Year Ended December 31, 2015
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Service cost  
$
159

 
$
50

 
$
44

 
$
23

 
$
20

 
$
4

 
$
10

Interest cost on projected benefit obligation  
324

 
83

 
104

 
48

 
54

 
18

 
27

Expected return on plan assets  
(516
)
 
(139
)
 
(171
)
 
(79
)
 
(87
)
 
(26
)
 
(42
)
Amortization of actuarial loss  
166

 
39

 
65

 
33

 
31

 
7

 
13

Amortization of prior service (credit) cost
(15
)
 
(7
)
 
(3
)
 
(2
)
 
(1
)
 

 
1

Other  
8

 
2

 
3

 
1

 
1

 

 
1

Net periodic pension costs(a)(b)
$
126

 
$
28

 
$
42

 
$
24

 
$
18

 
$
3

 
$
10


(a)
Duke Energy amounts exclude $7 million, $8 million and $9 million for the years ended December 2017, 2016 and 2015, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
(b)
Duke Energy Ohio amounts exclude $3 million, $4 million and $4 million for the years ended December 2017, 2016 and 2015, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
  
Piedmont
 
Two Months Ended
 
Years Ended October 31,
(in millions)  
December 31, 2016
 
2016
 
2015
Service cost  
$
2

 
$
11

 
$
11

Interest cost on projected benefit obligation  
2

 
9

 
12

Expected return on plan assets  
(4
)
 
(24
)
 
(24
)
Amortization of actuarial loss  
2

 
8

 
9

Amortization of prior service credit
(1
)
 
(2
)
 
(2
)
Settlement charge
3

 

 

Net periodic pension costs
$
4

 
$
2

 
$
6


Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets
  
Year Ended December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Regulatory assets, net (decrease) increase
$
(212
)
 
$
(70
)
 
$
(49
)
 
$
(37
)
 
$
(11
)
 
$
9

 
$
(19
)
 
$
(64
)
Accumulated other comprehensive loss (income)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred income tax expense
$

 

 
3

 

 

 

 

 

Prior year service cost arising during the year
1

 

 

 

 

 

 

 

Amortization of prior year actuarial losses  
(7
)
 

 
(7
)
 

 

 

 

 

Net amount recognized in accumulated other comprehensive income  
$
(6
)
 
$

 
$
(4
)
 
$

 
$

 
$

 
$

 
$

  
Year Ended December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Regulatory assets, net increase
$
214

 
$
4

 
$
34

 
$
18

 
$
16

 
$
2

 
$
9

Accumulated other comprehensive (income) loss  
  

 
  

 
  

 
  

 
  

 
  

 
  

Deferred income tax expense
$
4

 
$

 
$

 
$

 
$

 
$

 
$

Prior year service credit arising during the year  
(2
)
 

 

 

 

 

 

Amortization of prior year actuarial losses  
(7
)
 

 
(1
)
 

 

 

 

Net amount recognized in accumulated other comprehensive income  
$
(5
)
 
$

 
$
(1
)
 
$

 
$

 
$

 
$


Piedmont's regulatory asset net increase was $34 million, $35 million and $20 million for the two months ended December 31, 2016, and for the years ended October 31, 2016, and 2015, respectively.
Reconciliation of Funded Status to Net Amount Recognized
  
Year Ended December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Change in Projected Benefit Obligation  
  

 
  
 
  
 
  
 
  
 
  
 
  
 
 
Obligation at prior measurement date  
$
8,131

 
$
1,952

 
$
2,512

 
$
1,158

 
$
1,323

 
$
447

 
$
658

 
$
344

Service cost  
159

 
48

 
45

 
26

 
19

 
4

 
9

 
10

Interest cost  
328

 
79

 
100

 
47

 
53

 
18

 
26

 
14

Actuarial loss
455

 
68

 
158

 
57

 
99

 
35

 
26

 
38

Transfers  

 
27

 
(32
)
 
(2
)
 
(15
)
 
12

 

 

Plan amendments  
(61
)
 

 

 

 

 


 

 
(61
)
Benefits paid  
(537
)
 
(145
)
 
(146
)
 
(75
)
 
(69
)
 
(37
)
 
(50
)
 
(5
)
Benefits paid - settlements
(27
)
 

 

 

 

 

 

 
(27
)
Obligation at measurement date  
$
8,448


$
2,029


$
2,637


$
1,211


$
1,410


$
479


$
669

 
$
313

Accumulated Benefit Obligation at measurement date  
$
8,369

 
$
2,029

 
$
2,601

 
$
1,211

 
$
1,375

 
$
468

 
$
652

 
$
313

Change in Fair Value of Plan Assets  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
 
Plan assets at prior measurement date  
$
8,531

 
$
2,225

 
$
2,675

 
$
1,290

 
$
1,352

 
$
428

 
$
657

 
$
346

Employer contributions
19

 

 

 

 

 
4

 

 
11

Actual return on plan assets  
1,017

 
265

 
317

 
153

 
161

 
51

 
77

 
43

Benefits paid  
(537
)
 
(145
)
 
(146
)
 
(75
)

(69
)

(37
)

(50
)
 
(5
)
Benefits paid - settlements

(27
)
 

 

 

 

 

 

 
(27
)
Transfers  

 
27

 
(32
)
 
(2
)

(15
)

12



 

Plan assets at measurement date  
$
9,003

 
$
2,372

 
$
2,814

 
$
1,366

 
$
1,429

 
$
458

 
$
684

 
$
368

Funded status of plan  
$
555

 
$
343

 
$
177

 
$
155

 
$
19

 
$
(21
)
 
$
15

 
$
55

  
Year Ended December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Change in Projected Benefit Obligation  
 
 
  
 
  
 
  
 
  
 
  
 
  
Obligation at prior measurement date  
$
7,727

 
$
1,995

 
$
2,451

 
$
1,143

 
$
1,276

 
$
453

 
$
649

Obligation assumed from acquisition
352

 

 

 

 

 

 

Service cost  
147

 
48

 
42

 
24

 
19

 
4

 
9

Interest cost  
335

 
86

 
106

 
49

 
55

 
19

 
28

Actuarial loss
307

 
46

 
111

 
52

 
57

 
13

 
41

Transfers  

 
14

 
(3
)
 
(3
)
 

 
(3
)
 

Plan amendments  
(52
)
 
(3
)
 

 

 

 
(3
)
 
(15
)
Benefits paid  
(679
)
 
(234
)
 
(195
)
 
(107
)
 
(84
)
 
(36
)
 
(54
)
Impact of settlements
(6
)
 

 

 

 

 

 

Obligation at measurement date  
$
8,131

 
$
1,952

 
$
2,512

 
$
1,158

 
$
1,323

 
$
447

 
$
658

Accumulated Benefit Obligation at measurement date  
$
8,006

 
$
1,952

 
$
2,479

 
$
1,158

 
$
1,290

 
$
436

 
$
649

Change in Fair Value of Plan Assets  
  

 
  

 
  

 
  

 
  

 
  

 
  

Plan assets at prior measurement date  
$
8,136

 
$
2,243

 
$
2,640

 
$
1,284

 
$
1,321

 
$
433

 
$
655

Assets received from acquisition
343

 

 

 

 

 

 

Employer contributions
155

 
43

 
43

 
24

 
20

 
5

 
9

Actual return on plan assets  
582

 
159

 
190

 
92

 
95

 
29

 
47

Benefits paid  
(679
)
 
(234
)
 
(195
)
 
(107
)
 
(84
)
 
(36
)
 
(54
)
Impact of settlements
(6
)
 

 

 

 

 

 

Transfers  

 
14

 
(3
)
 
(3
)
 

 
(3
)
 

Plan assets at measurement date  
$
8,531

 
$
2,225

 
$
2,675

 
$
1,290

 
$
1,352

 
$
428

 
$
657

Funded status of plan  
$
400

 
$
273

 
$
163

 
$
132

 
$
29

 
$
(19
)
 
$
(1
)

  
Piedmont
 
Two Months Ended
 
Years Ended
(in millions)  
December 31, 2016
 
 October 31, 2016
Change in Projected Benefit Obligation  
 
 
  
Obligation at prior measurement date  
$
352

 
$
312

Service cost  
2

 
11

Interest cost  
2

 
9

Actuarial gain
(5
)
 
34

Benefits paid  
(1
)
 
(14
)
Impact of settlements
(6
)
 

Obligation at measurement date  
$
344

 
$
352

Accumulated Benefit Obligation at measurement date  
$
289

 
$
296

Change in Fair Value of Plan Assets  
  

 
  

Plan assets at prior measurement date  
$
343

 
$
329

Employer contributions
10

 
10

Actual return on plan assets  

 
18

Benefits paid  
(1
)
 
(14
)
Impact of settlements
(6
)
 

Plan assets at measurement date  
$
346

 
$
343

Funded status of plan  
$
2

 
$
(9
)

Amounts Recognized in the Consolidated Balance Sheets
  
December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Prefunded pension(a)
$
680

 
$
343

 
$
245

 
$
155

 
$
87

 
$
8

 
$
16

 
$
55

Noncurrent pension liability(b)
$
125

 
$

 
$
68

 
$

 
$
68

 
$
29

 
$
1

 
$

Net asset (liability) recognized  
$
555


$
343


$
177


$
155


$
19


$
(21
)

$
15

 
$
55

Regulatory assets  
$
1,886

 
$
406

 
$
756

 
$
341

 
$
415

 
$
90

 
$
152

 
$
73

Accumulated other comprehensive (income) loss  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Deferred income tax benefit
$
(41
)
 
$

 
$
(3
)
 
$

 
$

 
$

 
$

 
$

Prior service credit  
(5
)
 

 

 

 

 

 

 

Net actuarial loss  
116

 

 
9

 

 

 

 

 

Net amounts recognized in accumulated other comprehensive loss
$
70

 
$

 
$
6

 
$

 
$

 
$

 
$

 
$

Amounts to be recognized in net periodic pension costs in the next year  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Unrecognized net actuarial loss  
$
132

 
$
29

 
$
44

 
$
21

 
$
23

 
$
5

 
$
7

 
$
11

Unrecognized prior service credit  
(32
)
 
(8
)
 
(3
)
 
(2
)
 
(1
)
 

 
(2
)
 
(9
)
  
December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Prefunded pension(a)
$
518

 
$
273

 
$
225

 
$
132

 
$
91

 
$
6

 
$

 
3

Noncurrent pension liability(b)
$
118

 
$

 
$
62

 
$

 
$
62

 
$
25

 
$
1

 

Net asset recognized  
$
400

 
$
273

 
$
163

 
$
132

 
$
29

 
$
(19
)
 
$
(1
)
 
$
3

Regulatory assets  
$
2,098

 
$
476

 
$
805

 
$
378

 
$
426

 
$
81

 
$
171

 
$
137

Accumulated other comprehensive (income) loss  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
 
Deferred income tax benefit
$
(41
)
 
$

 
$
(6
)
 
$

 
$

 
$

 
$

 
$

Prior service credit  
(6
)
 

 

 

 

 

 

 

Net actuarial loss  
123

 

 
16

 

 

 

 

 

Net amounts recognized in accumulated other comprehensive loss
$
76

 
$

 
$
10

 
$

 
$

 
$

 
$

 
$

Amounts to be recognized in net periodic pension costs in the next year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net actuarial loss
$
147

 
$
31

 
$
52

 
$
23

 
$
29

 
$
5

 
$
8

 
$
13

Unrecognized prior service credit
$
(24
)
 
$
(8
)
 
$
(3
)
 
$
(2
)
 
$
(1
)
 
$

 
$
(2
)
 
$
(2
)

(a)
Included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.
(b)
Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.
Information for Plans with Accumulated Benefit Obligation in Excess of Plan Assets
  
December 31, 2017
 
 
 
Duke

Duke

 
Duke

Progress

Energy

Energy

(in millions)  
Energy

Energy

Florida

Ohio

Projected benefit obligation  
$
1,386

$
718

$
718

$
337

Accumulated benefit obligation  
1,326

683

683

326

Fair value of plan assets  
1,260

650

650

308

  
December 31, 2016
 
 
 
Duke

Duke

 
Duke

Progress

Energy

Energy

(in millions)  
Energy

Energy

Florida

Ohio

Projected benefit obligation  
$
1,299

$
665

$
665

$
311

Accumulated benefit obligation  
1,239

633

633

299

Fair value of plan assets  
1,182

604

604

286


Assumptions Used for Pension Benefits Accounting
The discount rate used to determine the current year pension obligation and following year’s pension expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.
The average remaining service period of active covered employees is 13 years for Duke Energy and Duke Energy Progress, 12 years for Duke Energy Carolinas, Progress Energy, and Duke Energy Florida, 14 years for Duke Energy Ohio and Duke Energy Indiana, and nine years for Piedmont.
The following tables present the assumptions or range of assumptions used for pension benefit accounting.
  
 
December 31,
  
 
2017
 
2016
 
2015
Benefit Obligations
 
 
 
  
 
 
 
  
 
 
 
  
Discount rate  
 
 
 
3.60%
 
 
 
4.10%
 
 
 
4.40%
Salary increase
 
3.50
%
4.00%
 
4.00
%
4.50%
 
4.00
%
4.40%
Net Periodic Benefit Cost
 
 
 
  
 
 
 
  
 
 
 
  
Discount rate  
 
 
 
4.10%
 
 
 
4.40%
 


 
4.10%
Salary increase  
 
4.00
%
4.50%
 
4.00
%
4.40%
 
4.00
%
4.40%
Expected long-term rate of return on plan assets  
 
6.50
%
6.75%
 
6.50
%
6.75%
 


 
6.50%

 
 
Piedmont
  
 
Two Months Ended
 
Years Ended October 31,
  
 
December 31, 2016
 
2016
 
2015
Benefit Obligations
 
  
 
  
 
  
Discount rate  
 
4.10
%
 
3.80
%
 
4.34
%
Salary increase
 
4.50
%
 
4.05
%
 
4.07
%
Net Periodic Benefit Cost
 
 
 
  

 
  

Discount rate  
 
3.80
%
 
4.34
%
 
4.13
%
Salary increase  
 
4.05
%
 
4.07
%
 
3.68
%
Expected long-term rate of return on plan assets  
 
6.75
%
 
7.25
%
 
7.50
%

Expected Benefit Payments
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Years ending December 31,  
  
  
  
  
  
  
  
 
2018
$
642

$
185

$
161

$
85

$
75

$
36

$
47

$
29

2019
644

185

164

86

77

36

46

26

2020
661

195

172

90

80

36

44

24

2021
666

194

175

93

81

37

44

24

2022
672

197

176

92

83

36

44

23

2023-2027
3,099

865

888

449

435

166

210

103


NON-QUALIFIED PENSION PLANS
Components of Net Periodic Pension Costs
  
Year Ended December 31, 2017
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Service cost  
$
2

$
1

$

$

$

$

$

$

Interest cost on projected benefit obligation  
13

1

5

1

2




Amortization of actuarial loss  
8


2

1

1




Amortization of prior service credit  
(2
)







Net periodic pension costs  
$
21

$
2

$
7

$
2

$
3

$

$

$

  
Year Ended December 31, 2016
 
 
Duke

 
Duke

Duke

Duke

Duke

 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Service cost  
$
2

$

$

$

$

$

$

Interest cost on projected benefit obligation  
14

1

5

1

2



Amortization of actuarial loss  
8

1

1

1

1



Amortization of prior service credit  
(1
)






Net periodic pension costs  
$
23

$
2

$
6

$
2

$
3

$

$

  
Year Ended December 31, 2015
 
 
Duke

 
Duke

Duke

Duke

Duke

 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Service cost  
$
3

$

$
1

$

$

$

$

Interest cost on projected benefit obligation  
13

1

4

1

2



Amortization of actuarial loss  
6


2

1

2


1

Amortization of prior service credit  
(1
)

(1
)




Net periodic pension costs  
$
21

$
1

$
6

$
2

$
4

$

$
1


  
Piedmont
 
Years Ended October 31,
(in millions)  
2016
2015
Amortization of prior service cost
$

$
1

Settlement charge
1


Net periodic pension costs
$
1

$
1


Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets and Liabilities
  
Year Ended December 31, 2017
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Regulatory assets, net (decrease) increase   
$
5

$
(1
)
$
3

$
1

$
2

$

$

$

Accumulated other comprehensive (income) loss  
  

  

  

  

  

  

  

  

Deferred income tax benefit   
$
(1
)
$

$

$

$

$

$

$

Actuarial loss arising during the year  
2








Net amount recognized in accumulated other comprehensive loss (income)   
$
1

$

$

$

$

$

$

$

  
Year Ended December 31, 2016
 
 
Duke

 
Duke

Duke

Duke

Duke

 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Regulatory assets, net (decrease) increase   
$
(3
)
$
(2
)
$
2

$
1

$
1

$

$
(1
)
Accumulated other comprehensive (income) loss  
 
 
 
 
 
 
 
Prior service credit arising during the year
$
(1
)
$

$

$

$

$

$

Actuarial gains arising during the year  
1







Net amount recognized in accumulated other comprehensive loss (income)   
$

$

$

$

$

$

$


Reconciliation of Funded Status to Net Amount Recognized
  
Year Ended December 31, 2017
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Change in Projected Benefit Obligation  
  

  

  

  

  

  

  

 
Obligation at prior measurement date  
$
332

$
14

$
114

$
33

$
46

$
4

$
3

$
4

Service cost  
2

1







Interest cost  
13

1

5

1

2




Actuarial losses (gains)
15


5

4

2




Benefits paid  
(31
)
(2
)
(8
)
(3
)
(3
)



Obligation at measurement date  
$
331

$
14

$
116

$
35

$
47

$
4

$
3

$
4

Accumulated Benefit Obligation at measurement date  
$
331

$
14

$
116

$
35

$
47

$
4

$
3

$
4

Change in Fair Value of Plan Assets  
  

  

  

  

  

  

  

  

Benefits paid  
$
(31
)
$
(2
)
$
(8
)
$
(3
)
$
(3
)
$

$

$

Employer contributions  
31

2

8

3

3




Plan assets at measurement date  
$

$

$

$

$

$

$

$


  
Year Ended December 31, 2016
 
 
Duke

 
Duke

Duke

Duke

Duke

 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Change in Projected Benefit Obligation  
  
  

  

  

  

  

  

Obligation at prior measurement date  
$
341

$
16

$
112

$
33

$
46

$
4

$
5

Obligation assumed from acquisition
5







Service cost  
2







Interest cost  
14

1

5

1

2



Actuarial losses (gains)
4

(1
)
5

2

1


(2
)
Plan amendments
(2
)





 
Benefits paid  
(32
)
(2
)
(8
)
(3
)
(3
)


Obligation at measurement date  
$
332

$
14

$
114

$
33

$
46

$
4

$
3

Accumulated Benefit Obligation at measurement date  
$
332

$
14

$
114

$
33

$
46

$
4

$
3

Change in Fair Value of Plan Assets  
  

  

  

  

  

  

  

Benefits paid  
$
(32
)
$
(2
)
$
(8
)
$
(3
)
$
(3
)


Employer contributions  
32

2

8

3

3



Plan assets at measurement date  
$

$

$

$

$

$

$


  
Piedmont
 
Two Months Ended
 
Years Ended
(in millions)  
December 31, 2016
 
 October 31, 2016
Change in Projected Benefit Obligation  
 
 
  
Obligation at prior measurement date  
$
5

 
$
6

Actuarial gain
(1
)
 

Impact of settlements

 
(1
)
Obligation at measurement date  
$
4

 
$
5

Accumulated Benefit Obligation at measurement date  
$

 
$
5

Change in Fair Value of Plan Assets  
  

 
  

Plan assets at prior measurement date  
$

 
$
1

Impact of settlements

 
(1
)
Plan assets at measurement date  
$

 
$


Amounts Recognized in the Consolidated Balance Sheets
  
December 31, 2017
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Current pension liability(a)
$
23

$
2

$
8

$
3

$
3

$

$

$

Noncurrent pension liability(b)
308

12

108

32

44

4

3

4

Total accrued pension liability  
$
331

$
14

$
116

$
35

$
47

$
4

$
3

$
4

Regulatory assets  
$
78

$
4

$
21

$
8

$
13

$
1

$

$
1

Accumulated other comprehensive (income) loss  
 
  

  

  

  

  

  

  

Deferred income tax benefit
$
(4
)
$

$
(3
)
$

$

$

$

$

Prior service credit
(1
)







Net actuarial loss  
12


9






Net amounts recognized in accumulated other comprehensive loss
$
7

$

$
6

$

$

$

$

$

Amounts to be recognized in net periodic pension expense in the next year  
 
  

  

  

  

  

  

  

Unrecognized net actuarial loss  
$
8

$

$
2

$
1

$
1

$

$

$

Unrecognized prior service credit  
(2
)







  
December 31, 2016
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Current pension liability(a)
$
28

$
2

$
8

$
2

$
3

$

$

$

Noncurrent pension liability(b)
304

12

106

31

43

4

3

4

Total accrued pension liability  
$
332

$
14

$
114

$
33

$
46

$
4

$
3

$
4

Regulatory assets  
$
73

$
5

$
18

$
7

$
11

$
1

$

$
1

Accumulated other comprehensive (income) loss  
  

  

  

  

  

  

  

  

Deferred income tax benefit
$
(3
)
$

$
(3
)
$

$

$

$

$

Prior service credit
(1
)







Net actuarial loss
10


9






Net amounts recognized in accumulated other comprehensive loss  
$
6

$

$
6

$

$

$

$

$

Amounts to be recognized in net periodic pension expense in the next year
 
 
 
 
 
 
 
 
Unrecognized net actuarial loss
$
7

$

$
2

$
1

$
1

$

$

$

Unrecognized prior service credit
$
(2
)
$

$

$

$

$

$

$


(a)    Included in Other within Current Liabilities on the Consolidated Balance Sheets.
(b)
Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.
Information for Plans with Accumulated Benefit Obligation in Excess of Plan Assets
  
December 31, 2017
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Projected benefit obligation  
$
331

$
14

$
116

$
35

$
47

$
4

$
3

$
4

Accumulated benefit obligation  
331

14

116

35

47

4

3

4

  
December 31, 2016
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Projected benefit obligation  
$
332

$
14

$
114

$
33

$
46

$
4

$
3

$
4

Accumulated benefit obligation  
332

14

114

33

46

4

3

4


Assumptions Used for Pension Benefits Accounting
The discount rate used to determine the current year pension obligation and following year’s pension expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.
The average remaining service period of active covered employees is 11 years for Duke Energy and Duke Energy Progress, 14 years for Progress Energy, 15 years for Duke Energy Florida, eight years for Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana, and nine years for Piedmont. The following tables present the assumptions used for pension benefit accounting.
  
 
December 31,
  
 
2017
 
2016

 
2015

Benefit Obligations  
 
 
 
  

 
  

 
  

Discount rate  
 


 
3.60
%
 
4.10
%
 
4.40
%
Salary increase   
 
3.50
%
4.00
%
 
4.40
%
 
4.40
%
Net Periodic Benefit Cost  
 
 
 
  

 
  

 
  

Discount rate  
 
 
 
4.10
%
 
4.40
%
 
4.10
%
Salary increase  
 
 
 
4.40
%
 
4.40
%
 
4.40
%

 
 
Piedmont
  
 
Two Months Ended
 
Years Ended October 31,
  
 
December 31, 2016
 
2016
 
2015
Benefit Obligations
 
  
 
  
 
  
Discount rate  
 
4.10
%
 
3.80
%
 
3.85
%
Net Periodic Benefit Cost
 
 
 
  

 
  

Discount rate  
 
3.80
%
 
3.85
%
 
3.69
%

Expected Benefit Payments
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Years ending December 31,  
  
  
  
  
  
  
  
 
2018
$
23

$
2

$
8

$
3

$
3

$

$

$

2019
21

1

8

2

3




2020
21

1

8

2

3




2021
22

1

8

2

3




2022
25

1

8

2

3




2023-2027
117

6

36

11

15

1

1

2


OTHER POST-RETIREMENT BENEFIT PLANS
Duke Energy provides, and the Subsidiary Registrants participate in, some health care and life insurance benefits for retired employees on a contributory and non-contributory basis. Employees are eligible for these benefits if they have met age and service requirements at retirement, as defined in the plans. The health care benefits include medical, dental and prescription drug coverage and are subject to certain limitations, such as deductibles and copayments.
Duke Energy did not make any pre-funding contributions to its other post-retirement benefit plans during the years ended December 31, 2017, 2016 or 2015.
Components of Net Periodic Other Post-Retirement Benefit Costs
  
Year Ended December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Service cost  
$
4

 
$
1

 
$

 
$

 
$

 
$

 
$

 
$
1

Interest cost on accumulated post-retirement benefit obligation  
34

 
8

 
13

 
7

 
6

 
1

 
3

 
1

Expected return on plan assets  
(14
)
 
(8
)
 

 

 

 

 
(1
)
 
(2
)
Amortization of actuarial loss (gain)  
10

 
(2
)
 
21

 
12

 
9

 
(2
)
 
(1
)
 
1

Amortization of prior service credit  
(115
)
 
(10
)
 
(84
)
 
(54
)
 
(30
)
 

 
(1
)
 

Curtailment credit (c)
$
(30
)
 
$
(4
)
 
$
(16
)
 
$

 
$
(16
)
 
$
(2
)
 
$
(2
)
 
$

Net periodic post-retirement benefit costs(a)(b)
$
(111
)
 
$
(15
)
 
$
(66
)
 
$
(35
)
 
$
(31
)
 
$
(3
)
 
$
(2
)
 
$
1


  
Year Ended December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Service cost  
$
3

 
$
1

 
$
1

 
$

 
$
1

 
$

 
$

Interest cost on accumulated post-retirement benefit obligation  
35

 
8

 
15

 
8

 
7

 
1

 
4

Expected return on plan assets  
(12
)
 
(8
)
 

 

 

 

 
(1
)
Amortization of actuarial loss (gain)  
6

 
(3
)
 
22

 
13

 
9

 
(2
)
 
(1
)
Amortization of prior service credit  
(141
)
 
(14
)
 
(103
)
 
(68
)
 
(35
)
 

 
(1
)
Net periodic post-retirement benefit costs(a)(b)
$
(109
)
 
$
(16
)
 
$
(65
)
 
$
(47
)
 
$
(18
)
 
$
(1
)
 
$
1

  
Year Ended December 31, 2015
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Service cost  
$
6

 
$
1

 
$
1

 
$
1

 
$
1

 
$

 
$
1

Interest cost on accumulated post-retirement benefit obligation  
36

 
9

 
15

 
8

 
7

 
2

 
4

Expected return on plan assets  
(13
)
 
(8
)
 

 

 

 
(1
)
 
(1
)
Amortization of actuarial loss (gain)  
16

 
(2
)
 
28

 
18

 
10

 
(2
)
 
(2
)
Amortization of prior service credit  
(140
)
 
(14
)
 
(102
)
 
(68
)
 
(35
)
 

 

Net periodic post-retirement benefit costs(a)(b)
$
(95
)
 
$
(14
)
 
$
(58
)
 
$
(41
)
 
$
(17
)
 
$
(1
)
 
$
2


(a)
Duke Energy amounts exclude $7 million, $8 million and $10 million for the years ended December 2017, 2016 and 2015, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
(b)
Duke Energy Ohio amounts exclude $2 million, $2 million and $3 million for the years ended December 2017, 2016 and 2015, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.
(c)
Curtailment credit resulted from a reduction in average future service of plan participants due to a plan amendment.
  
Piedmont
 
Years Ended October 31,
(in millions)  
2016
2015
Service cost  
$
1

$
1

Interest cost on projected benefit obligation  
1

2

Expected return on plan assets  
(2
)
(2
)
Amortization of actuarial loss  
1


Net periodic pension costs
$
1

$
1


Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets and Liabilities
  
Year Ended December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Regulatory assets, net increase (decrease)
$
71

 
$

 
$
81

 
$
42

 
$
39

 
$

 
$
(5
)
 
$
(11
)
Regulatory liabilities, net increase (decrease)  
$
(27
)
 
$
(2
)
 
$

 
$

 
$

 
$
(3
)
 
$
(7
)
 
$

Accumulated other comprehensive (income) loss  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred income tax benefit   
$
(1
)
 
$

 
$

 
$

 
$

 
$

 
$

 
$

Amortization of prior year prior service credit  
3

 

 

 

 

 

 

 

Net amount recognized in accumulated other comprehensive income  
$
2

 
$

 
$

 
$

 
$

 
$

 
$

 
$

  
Year Ended December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Regulatory assets, net increase (decrease)
$
53

 
$

 
$
47

 
$
38

 
$
9

 
$

 
$
(6
)
Regulatory liabilities, net increase (decrease)  
$
(114
)
 
$
(22
)
 
$
(51
)
 
$
(25
)
 
$
(26
)
 
$
(2
)
 
$
(12
)
Accumulated other comprehensive (income) loss  
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred income tax benefit   
$
(2
)
 
$

 
$

 
$

 
$

 
$

 
$

Actuarial losses arising during the year  
3

 

 

 

 

 

 

Amortization of prior year prior service credit 
1

 

 
1

 

 

 

 

Net amount recognized in accumulated other comprehensive income  
$
2

 
$

 
$
1

 
$

 
$

 
$

 
$


Piedmont's regulatory assets net decreased $1 million for the two months ended December 31, 2016, and increased $2 million and $1 million for the years ended October 31, 2016, and 2015, respectively.
Reconciliation of Funded Status to Accrued Other Post-Retirement Benefit Costs
  
Year Ended December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Change in Projected Benefit Obligation  
  

 
  
 
  
 
  
 
  
 
  
 
  
 
 
Accumulated post-retirement benefit obligation at prior measurement date  
$
868

 
$
201

 
$
357

 
$
191

 
$
164

 
$
32

 
$
83

 
$
39

Service cost  
4

 
1

 

 

 

 

 

 
1

Interest cost  
34

 
8

 
13

 
7

 
6

 
1

 
3

 
1

Plan participants' contributions  
17

 
3

 
6

 
3

 
3

 
1

 
2

 

Actuarial (gains) losses
4

 
(3
)
 
4

 
1

 
3

 

 
3

 
1

Transfers  

 
2

 
(1
)
 

 
(1
)
 
1

 

 

Plan amendments  
(28
)
 
(5
)
 
(3
)
 
(1
)
 
(2
)
 
(2
)
 
(2
)
 
(9
)
Benefits paid  
(86
)
 
(18
)
 
(34
)
 
(17
)
 
(17
)
 
(3
)
 
(11
)
 
(1
)
Accumulated post-retirement benefit obligation at measurement date  
$
813

 
$
189

 
$
342

 
$
184

 
$
156

 
$
30

 
$
78

 
$
32

Change in Fair Value of Plan Assets  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Plan assets at prior measurement date  
$
244

 
$
137

 
$
1

 
$

 
$

 
$
7

 
$
22

 
$
29

Actual return on plan assets  
25

 
15

 
1

 

 

 
2

 
1

 
3

Benefits paid  
(86
)
 
(18
)
 
(34
)
 
(17
)
 
(17
)
 
(3
)
 
(11
)
 
(1
)
Employer contributions (reimbursements)
25

 
(4
)
 
26

 
14

 
14

 

 
(3
)
 

Plan participants' contributions  
17

 
3

 
6


3


3


1


2

 

Plan assets at measurement date  
$
225

 
$
133

 
$

 
$

 
$

 
$
7

 
$
11

 
$
31


  
Year Ended December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

Change in Projected Benefit Obligation  
  
 
  
 
  
 
  
 
  
 
  
 
  
Accumulated post-retirement benefit obligation at prior measurement date  
$
828

 
$
200

 
$
354

 
$
188

 
$
164

 
$
35

 
$
87

Obligation assumed from acquisition
39

 

 

 

 

 

 

Service cost  
3

 
1

 
1

 

 
1

 

 

Interest cost  
35

 
8

 
15

 
8

 
7

 
1

 
4

Plan participants' contributions  
19

 
3

 
7

 
4

 
3

 
1

 
2

Actuarial (gains) losses
33

 
5

 
16

 
8

 
8

 

 
3

Transfers  

 
1

 

 

 

 

 

Plan amendments  
(1
)
 

 

 

 

 
(1
)
 

Benefits paid  
(88
)
 
(17
)
 
(36
)
 
(17
)
 
(19
)
 
(4
)
 
(13
)
Accumulated post-retirement benefit obligation at measurement date  
$
868

 
$
201

 
$
357

 
$
191

 
$
164

 
$
32

 
$
83

Change in Fair Value of Plan Assets  
  

 
  

 
  

 
  

 
  

 
  

 
  

Plan assets at prior measurement date  
$
208

 
$
134

 
$

 
$

 
$
1

 
$
8

 
$
19

Assets received from acquisition
29

 

 

 

 

 

 

Actual return on plan assets  
14

 
8

 
1

 

 

 
1

 
2

Benefits paid  
(88
)
 
(17
)
 
(36
)
 
(17
)
 
(19
)
 
(4
)
 
(13
)
Employer contributions  
62

 
9

 
29

 
13

 
15

 
1

 
12

Plan participants' contributions  
19

 
3

 
7

 
4

 
3

 
1

 
2

Plan assets at measurement date  
$
244

 
$
137

 
$
1

 
$

 
$

 
$
7

 
$
22


  
Piedmont
 
Two Months Ended
 
Years Ended
(in millions)  
December 31, 2016
 
 October 31, 2016
Change in Projected Benefit Obligation  
 
 
  
Accumulated post-retirement benefit obligation at prior measurement date  
$
39

 
$
38

Service cost  

 
1

Interest cost  

 
1

Actuarial gain

 
2

Benefits paid  

 
(3
)
Accumulated post-retirement benefit obligation at measurement date  
$
39

 
$
39

Change in Fair Value of Plan Assets  
  

 
  

Plan assets at prior measurement date  
$
29

 
$
28

Employer contributions

 
3

Actual return on plan assets  

 
1

Benefits paid  

 
(3
)
Plan assets at measurement date  
$
29

 
$
29


Amounts Recognized in the Consolidated Balance Sheets
  
December 31, 2017
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Current post-retirement liability(a)
$
36

 
$

 
$
29

 
$
15

 
$
14

 
$
2

 
$

 
$

Noncurrent post-retirement liability(b)
552

 
56

 
313

 
169

 
142

 
21

 
67

 
1

Total accrued post-retirement liability  
$
588

 
$
56

 
$
342

 
$
184

 
$
156

 
$
23

 
$
67

 
$
1

Regulatory assets  
$
125

 
$

 
$
129

 
$
80

 
$
49

 
$

 
$
46

 
$
(4
)
Regulatory liabilities  
$
147

 
$
44

 
$

 
$

 
$

 
$
16

 
$
64

 
$

Accumulated other comprehensive (income) loss  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Deferred income tax expense
$
4

 
$

 
$

 
$

 
$

 
$

 
$

 
$

Prior service credit  
(2
)
 

 

 

 

 

 

 

Net actuarial gain  
(10
)
 

 

 

 

 

 

 

Net amounts recognized in accumulated other comprehensive income  
$
(8
)
 
$

 
$

 
$

 
$

 
$

 
$

 
$

Amounts to be recognized in net periodic pension expense in the next year  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Unrecognized net actuarial loss  
$
5

 
$
3

 
$
1

 
$

 
$
1

 
$

 
$

 
$

Unrecognized prior service credit
(19
)
 
(5
)
 
(7
)
 
(1
)
 
(6
)
 
(1
)
 
(1
)
 
(2
)
  
December 31, 2016
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont

Current post-retirement liability(a)
$
38

 
$

 
$
31

 
$
17

 
$
15

 
$
2

 
$

 
$

Noncurrent post-retirement liability(b)
586

 
64

 
325

 
174

 
149

 
23

 
63

 
10

Total accrued post-retirement liability  
$
624

 
$
64

 
$
356

 
$
191

 
$
164

 
$
25

 
$
63

 
$
10

Regulatory assets  
$
54

 
$

 
$
48

 
$
38

 
$
10

 
$

 
$
51

 
$
7

Regulatory liabilities  
$
174

 
$
46

 
$

 
$

 
$

 
$
19

 
$
71

 
$

Accumulated other comprehensive (income) loss  
  

 
  

 
  

 
  

 
  

 
  

 
  

 
  

Deferred income tax expense
$
5

 
$

 
$

 
$

 
$

 
$

 
$

 
$

Prior service credit  
(5
)
 

 

 

 

 

 

 

Net actuarial gain  
(10
)
 

 

 

 

 

 

 

Net amounts recognized in accumulated other comprehensive income  
$
(10
)
 
$

 
$

 
$

 
$

 
$

 
$

 
$

Amounts to be recognized in net periodic pension expense in the next year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net actuarial loss (gain)
$
10

 
$
(2
)
 
$
21

 
$
12

 
$
9

 
$
(2
)
 
$
(6
)
 
$

Unrecognized prior service credit
(115
)
 
(10
)
 
(85
)
 
(55
)
 
(30
)
 

 
(1
)
 

(a)
Included in Other within Current Liabilities on the Consolidated Balance Sheets. 
(b)
Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.
Assumptions Used for Other Post-Retirement Benefits Accounting
The discount rate used to determine the current year other post-retirement benefits obligation and following year’s other post-retirement benefits expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected. The average remaining service period of active covered employees is nine years for Duke Energy, eight years for Duke Energy Carolinas, seven years for Duke Energy Florida, Duke Energy Ohio, and Piedmont, and six years for Progress Energy, Duke Energy Progress, and Duke Energy Indiana.
The following tables present the assumptions used for other post-retirement benefits accounting.
  
 
December 31,
  
 
2017

 
2016

 
2015

Benefit Obligations  
 
  

 
  

 
  
Discount rate  
 
3.60
%
 
4.10
%
 
4.40
%
Net Periodic Benefit Cost  
 
  

 
  

 
  
Discount rate  
 
4.10
%
 
4.40
%
 
4.10
%
Expected long-term rate of return on plan assets  
 
6.50
%
 
6.50
%
 
6.50
%
Assumed tax rate  
 
35
%
 
35
%
 
35
%

 
 
Piedmont
  
 
Two Months Ended
 
Years Ended October 31,
  
 
December 31, 2016
 
2016
 
2015
Benefit Obligations
 
  
 
  
 
  
Discount rate  
 
4.10
%
 
3.80
%
 
4.38
%
Net Periodic Benefit Cost
 
 
 
  

 
  

Discount rate  
 
3.80
%
 
4.38
%
 
4.03
%
Expected long-term rate of return on plan assets  
 
6.75
%
 
7.25
%
 
7.50
%
Assumed Health Care Cost Trend Rate
  
December 31,
  
2017

 
2016

Health care cost trend rate assumed for next year  
7.00
%
 
7.00
%
Rate to which the cost trend is assumed to decline (the ultimate trend rate)  
4.75
%
 
4.75
%
Year that rate reaches ultimate trend  
2024

 
2023


Sensitivity to Changes in Assumed Health Care Cost Trend Rates
  
Year Ended December 31, 2017
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

1-Percentage Point Increase  
  
  
  
  
  

  
  
 
Effect on total service and interest costs  
$
1

$

$
1

$
1

$

$

$

$

Effect on post-retirement benefit obligation  
27

6

11

6

5

1

3

1

1-Percentage Point Decrease
 
 
 
 
 
 
 
 
Effect on total service and interest costs  
(1
)







Effect on post-retirement benefit obligation  
(24
)
(6
)
(10
)
(5
)
(5
)
(1
)
(2
)
(1
)

Expected Benefit Payments
 
 
Duke

 
Duke

Duke

Duke

Duke

 
 
Duke

Energy

Progress

Energy

Energy

Energy

Energy

 
(in millions)  
Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

Years ending December 31,
  
  
  
  
  
  

  
 
2018
$
78

$
17

$
30

$
16

$
14

$
3

$
9

$
2

2019
76

17

29

15

14

3

9

2

2020
73

17

29

15

14

3

8

2

2021
71

17

28

15

13

3

7

3

2022
68

17

27

14

13

3

7

3

2023 – 2027
290

70

117

63

54

12

29

13


PLAN ASSETS
Description and Allocations
Duke Energy Master Retirement Trust
Assets for both the qualified pension and other post-retirement benefits are maintained in the Duke Energy Master Retirement Trust. Qualified pension and other post-retirement assets related to Piedmont were transferred into the Duke Energy Master Retirement Trust during 2017. Approximately 98 percent of the Duke Energy Master Retirement Trust assets were allocated to qualified pension plans and approximately 2 percent were allocated to other post-retirement plans (comprised of 401(h) accounts), as of December 31, 2017, and 2016. The investment objective of the Duke Energy Master Retirement Trust is to achieve reasonable returns, subject to a prudent level of portfolio risk, for the purpose of enhancing the security of benefits for plan participants.
As of December 31, 2017, Duke Energy assumes pension and other post-retirement plan assets will generate a long-term rate of return of 6.50 percent. The expected long-term rate of return was developed using a weighted average calculation of expected returns based primarily on future expected returns across asset classes considering the use of active asset managers, where applicable. The asset allocation targets were set after considering the investment objective and the risk profile. Equity securities are held for their higher expected returns. Debt securities are primarily held to hedge the qualified pension plan liability. Hedge funds, real estate and other global securities are held for diversification. Investments within asset classes are diversified to achieve broad market participation and reduce the impact of individual managers or investments.
In 2013, Duke Energy adopted a de-risking investment strategy for the Duke Energy Master Retirement Trust. As the funded status of the pension plans increase, the targeted allocation to fixed-income assets may be increased to better manage Duke Energy’s pension liability and reduce funded status volatility. Duke Energy regularly reviews its actual asset allocation and periodically rebalances its investments to the targeted allocation when considered appropriate.
The Duke Energy Master Retirement Trust is authorized to engage in the lending of certain plan assets. Securities lending is an investment management enhancement that utilizes certain existing securities of the Duke Energy Master Retirement Trust to earn additional income. Securities lending involves the loaning of securities to approved parties. In return for the loaned securities, the Duke Energy Master Retirement Trust receives collateral in the form of cash and securities as a safeguard against possible default of any borrower on the return of the loan under terms that permit the Duke Energy Master Retirement Trust to sell the securities. The Duke Energy Master Retirement Trust mitigates credit risk associated with securities lending arrangements by monitoring the fair value of the securities loaned, with additional collateral obtained or refunded as necessary. The fair value of securities on loan was approximately $195 million and $156 million at December 31, 2017, and 2016, respectively. Cash and securities obtained as collateral exceeded the fair value of the securities loaned at December 31, 2017, and 2016, respectively. Securities lending income earned by the Duke Energy Master Retirement Trust was immaterial for the years ended December 31, 2017, 2016 and 2015, respectively.
Qualified pension and other post-retirement benefits for the Subsidiary Registrants are derived from the Duke Energy Master Retirement Trust, as such, each are allocated their proportionate share of the assets discussed below.
The following table includes the target asset allocations by asset class at December 31, 2017, and the actual asset allocations for the Duke Energy Master Retirement Trust.
  
  
 
Actual Allocation at
 
Target

 
December 31,
  
Allocation

 
2017

 
2016(a)

U.S. equity securities  
10
%
 
11
%
 
11
%
Non-U.S. equity securities  
8
%
 
8
%
 
8
%
Global equity securities  
10
%
 
10
%
 
10
%
Global private equity securities  
3
%
 
2
%
 
2
%
Debt securities  
63
%
 
63
%
 
63
%
Hedge funds  
2
%
 
2
%
 
2
%
Real estate and cash  
2
%
 
2
%
 
2
%
Other global securities  
2
%
 
2
%
 
2
%
Total  
100
%
 
100
%
 
100
%

(a)
Excludes Piedmont Pension Assets, which had a targeted asset allocation of 60 percent return-seeking and 40 percent liability hedging fixed-income. Actual asset allocations were 61 percent return-seeking and 39 percent liability hedging fixed-income at December 31, 2016.
Other post-retirement assets
Duke Energy's other post-retirement assets are comprised of Voluntary Employees' Beneficiary Association (VEBA) trusts and 401(h) accounts held within the Duke Energy Master Retirement Trust. Duke Energy's investment objective is to achieve sufficient returns, subject to a prudent level of portfolio risk, for the purpose of promoting the security of plan benefits for participants.  
The following table presents target and actual asset allocations for the VEBA trusts at December 31, 2017.
  
  
 
Actual Allocation at
 
Target

 
December 31,
  
Allocation

 
2017

 
2016

U.S. equity securities  
32
%
 
41
%
 
39
%
Non-US equity securities
6
%
 
8
%
 
%
Real estate
2
%
 
2
%
 
2
%
Debt securities  
45
%
 
36
%
 
37
%
Cash  
15
%
 
13
%
 
22
%
Total  
100
%
 
100
%
 
100
%

Fair Value Measurements
Duke Energy classifies recurring and non-recurring fair value measurements based on the fair value hierarchy as discussed in Note 16.
Valuation methods of the primary fair value measurements disclosed below are as follows:
Investments in equity securities
Investments in equity securities 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 the price of an institutional commingled fund is unpublished, it is not categorized in the fair value hierarchy, even though the funds are readily available at the fair value.
Investments in corporate debt securities and U.S. government securities
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 2.
Investments in short-term investment funds
Investments in short-term investment funds are valued at the net asset value of units held at year end and are readily redeemable at the measurement date. Investments in short-term investment funds with published prices are valued as Level 1. Investments in short-term investment funds with unpublished prices are valued as Level 2.
Investments in real estate limited partnerships
Investments in real estate limited partnerships are valued by the trustee at each valuation date (monthly). As part of the trustee’s valuation process, properties are externally appraised generally on an annual basis, conducted by reputable, independent appraisal firms, and signed by appraisers that are members of the Appraisal Institute, with the professional designation MAI. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three valuation techniques that can be used to value investments in real estate assets: the market, income or cost approach. The appropriateness of each valuation technique depends on the type of asset or business being valued. In addition, the trustee may cause additional appraisals to be performed as warranted by specific asset or market conditions. Property valuations and the salient valuation-sensitive assumptions of each direct investment property are reviewed by the trustee quarterly and values are adjusted if there has been a significant change in circumstances related to the investment property since the last valuation. Value adjustments for interim capital expenditures are only recognized to the extent that the valuation process acknowledges a corresponding increase in fair value. An independent firm is hired to review and approve quarterly direct real estate valuations. Key inputs and assumptions used to determine fair value includes among others, rental revenue and expense amounts and related revenue and expense growth rates, terminal capitalization rates and discount rates. Development investments are valued using cost incurred to date as a primary input until substantive progress is achieved in terms of mitigating construction and leasing risk at which point a discounted cash flow approach is more heavily weighted. Key inputs and assumptions in addition to those noted above used to determine the fair value of development investments include construction costs and the status of construction completion and leasing. Investments in real estate limited partnerships are valued at net asset value of units held at year end and are not readily redeemable at the measurement date. Investments in real estate limited partnerships are not categorized within the fair value hierarchy.
Duke Energy Master Retirement Trust
The following tables provide the fair value measurement amounts for the Duke Energy Master Retirement Trust qualified pension and other post-retirement assets.
  
December 31, 2017
 
Total Fair

 
 
 
 
 
 
 
Not

(in millions)  
Value

 
Level 1

 
Level 2

 
Level 3

 
Categorized(b)

Equity securities  
$
2,823

 
$
1,976

 
$

 
$

 
847

Corporate debt securities  
4,694

 

 
4,694

 

 

Short-term investment funds  
246

 
192

 
54

 

 

Partnership interests  
137

 

 

 

 
137

Hedge funds  
226

 

 

 

 
226

Real estate limited partnerships  
135

 

 

 

 
135

U.S. government securities  
762

 

 
762

 

 

Guaranteed investment contracts  
28

 

 

 
28

 

Governments bonds – foreign  
38

 

 
38

 

 

Cash  
6

 
6

 

 

 

Government and commercial mortgage backed securities  
2

 

 
2

 

 

Net pending transactions and other investments  
17

 
15

 
2

 

 

Total assets(a)
$
9,114

 
$
2,189

 
$
5,552

 
$
28


$
1,345

(a)
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana, and Piedmont were allocated approximately 27 percent, 30 percent, 15 percent, 15 percent, 5 percent, 8 percent, and 4 percent, respectively, of the Duke Energy Master Retirement Trust at December 31, 2017. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)
Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.
  
December 31, 2016
 
Total Fair

 
 
 
 
 
 
 
Not

(in millions)  
Value

 
Level 1

 
Level 2

 
Level 3

 
Categorized(b)

Equity securities  
$
2,472

 
$
1,677

 
$
27

 
$
9

 
759

Corporate debt securities  
4,330

 
8

 
4,322

 

 

Short-term investment funds  
476

 
211

 
265

 

 

Partnership interests  
157

 

 

 

 
157

Hedge funds  
232

 

 

 

 
232

Real estate limited partnerships  
144

 
17

 

 

 
127

U.S. government securities  
734

 

 
734

 

 

Guaranteed investment contracts  
29

 

 

 
29

 

Governments bonds – foreign  
32

 

 
32

 

 

Cash  
17

 
15

 
2

 

 

Net pending transactions and other investments  
32

 
1

 
6

 

 
25

Total assets(a)
$
8,655

 
$
1,929

 
$
5,388

 
$
38

 
$
1,300

(a)
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana were allocated approximately 27 percent, 30 percent, 15 percent, 15 percent, 5 percent and 8 percent, respectively, of the Duke Energy Master Retirement Trust and Piedmont's Pension assets at December 31, 2016. Accordingly, all amounts included in the table above are allocable to the Subsidiary Registrants using these percentages.
(b)
Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy.
The following table provides a reconciliation of beginning and ending balances of Duke Energy Master Retirement Trust qualified pension and other post-retirement assets and Piedmont Pension Assets at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3).
(in millions)  
2017

 
2016

Balance at January 1  
$
38

 
$
31

Combination of Piedmont Pension Assets

 
9

Sales  
(2
)
 
(2
)
Total gains (losses) and other, net  
1

 

Transfer of Level 3 assets to other classifications
(9
)
 

Balance at December 31  
$
28

 
$
38


Other post-retirement assets
The following tables provide the fair value measurement amounts for VEBA trust assets.
  
December 31, 2017
 
Total Fair

 
 
(in millions)  
Value

 
Level 2

Cash and cash equivalents  
$
8

 
$
8

Real estate
1

 
1

Equity securities  
28

 
28

Debt securities  
21

 
21

Total assets  
$
58

 
$
58

  
December 31, 2016
 
Total Fair

 
 
(in millions)  
Value

 
Level 2

Cash and cash equivalents  
$
14

 
$
14

Real estate
1

 
1

Equity securities  
26

 
26

Debt securities  
25

 
25

Total assets  
$
66

 
$
66

 
EMPLOYEE SAVINGS PLANS
Retirement Savings Plan
Duke Energy or its affiliates sponsor, and the Subsidiary Registrants participate in, employee savings plans that cover substantially all U.S. employees. Most employees participate in a matching contribution formula where Duke Energy provides a matching contribution generally equal to 100 percent of employee before-tax and Roth 401(k) contributions of up to 6 percent of eligible pay per pay period (5 percent for Piedmont employees). Dividends on Duke Energy shares held by the savings plans are charged to retained earnings when declared and shares held in the plans are considered outstanding in the calculation of basic and diluted EPS.
As of January 1, 2014, for new and rehired non-union and certain unionized employees (excludes Piedmont employees until 2018 plan year, discussed below) who are not eligible to participate in Duke Energy’s defined benefit plans, an additional employer contribution of 4 percent of eligible pay per pay period, which is subject to a three-year vesting schedule, is provided to the employee’s savings plan account.
The following table includes pretax employer matching contributions made by Duke Energy and expensed by the Subsidiary Registrants.
 
 
 
Duke

 
 
 
Duke

 
Duke

 
Duke

 
Duke

 
 
 
Duke

 
Energy

 
Progress

 
Energy

 
Energy

 
Energy

 
Energy

 
 
(in millions)  
Energy

 
Carolinas

 
Energy

 
Progress

 
Florida

 
Ohio

 
Indiana

 
Piedmont(a)

Years ended December 31,  
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
2017
$
179

 
$
61

 
$
53

 
$
37

 
$
16

 
$
3

 
$
9

 
$
7

2016
169

 
57

 
50

 
35

 
15

 
3

 
8

 

2015
159

 
54

 
48

 
34

 
13

 
3

 
7

 


(a)
Piedmont's pretax employer matching contributions were $1 million, $7 million and $7 million during the two months ended December 31, 2016 and for the years ended October 31, 2016 and 2015, respectively.
Money Purchase Pension Plan
Piedmont sponsors the MPP plan, which is a defined contribution pension plan that allows employees to direct investments and assume risk of investment returns. Under the MPP plan, Piedmont annually deposits a percentage of each participant’s pay into an account of the MPP plan. This contribution equals 4 percent of the participant’s eligible compensation plus an additional 4 percent of eligible compensation above the Social Security wage base up to the IRS compensation limit. The participant is vested in MPP plan after three years of service. No contributions were made to the MPP plan during the two months ended December 31, 2016. Piedmont contributed $2 million to the MPP plan during each of the years ended December 31, 2017, October 31, 2016 and 2015. Effective December 31, 2017, the MPP Plan was merged into the Retirement Savings Plan and the money purchase plan formula was discontinued. Beginning with the 2018 plan year, the former MPP Plan participants are eligible to receive the additional employer contribution under the Retirement Savings Plan, discussed above.