Edgar Filing: Duke Energy CORP

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2014
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
_________________________

Commission file number		Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, and Telephone Number	IRS Employer Identification No.
1-32853		DUKE ENERGY CORPORATION (a Delaware corporation) 550 South Tryon Street Charlotte, North Carolina 28202-1803 704-382-3853	20-2777218

Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number	Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
1-4928	DUKE ENERGY CAROLINAS, LLC (a North Carolina limited liability company) 526 South Church Street Charlotte, North Carolina 28202-1803 704-382-3853 56-0205520	1-3274	DUKE ENERGY FLORIDA, INC. (a Florida corporation) 299 First Avenue North St. Petersburg, Florida 33701 704-382-3853 59-0247770
1-15929	PROGRESS ENERGY, INC. (a North Carolina corporation) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-2155481	1-1232	DUKE ENERGY OHIO, INC. (an Ohio corporation) 139 East Fourth Street Cincinnati, Ohio 45202 704-382-3853 31-0240030
1-3382	DUKE ENERGY PROGRESS, INC. (a North Carolina corporation) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-0165465	1-3543	DUKE ENERGY INDIANA, INC. (an Indiana corporation) 1000 East Main Street Plainfield, Indiana 46168 704-382-3853 35-0594457

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Duke Energy Corporation (Duke Energy)	Yes x	No ¨	Duke Energy Florida, Inc. (Duke Energy Florida)	Yes x	No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)	Yes x	No ¨	Duke Energy Ohio, Inc. (Duke Energy Ohio)	Yes x	No ¨
Progress Energy, Inc. (Progress Energy)	Yes x	No ¨	Duke Energy Indiana, Inc. (Duke Energy Indiana)	Yes x	No ¨
Duke Energy Progress, Inc. (Duke Energy Progress)	Yes x	No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Duke Energy	Yes x	No ¨	Duke Energy Florida	Yes x	No ¨
Duke Energy Carolinas	Yes x	No ¨	Duke Energy Ohio	Yes x	No ¨
Progress Energy	Yes x	No ¨	Duke Energy Indiana	Yes x	No ¨
Duke Energy Progress	Yes x	No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

Duke Energy	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
Duke Energy Carolinas	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Progress Energy	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Duke Energy Progress	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Duke Energy Florida	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Duke Energy Ohio	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Duke Energy Indiana	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Duke Energy	Yes ¨	No x	Duke Energy Florida	Yes ¨	No x
Duke Energy Carolinas	Yes ¨	No x	Duke Energy Ohio	Yes ¨	No x
Progress Energy	Yes ¨	No x	Duke Energy Indiana	Yes ¨	No x
Duke Energy Progress	Yes ¨	No x

Number of shares of Common Stock outstanding at May 6, 2014:


Registrant	Description	Shares
Duke Energy	Common Stock, $0.001 par value	707,237,462
Duke Energy Carolinas	All of the registrant’s limited liability company member interests are directly owned by Duke Energy.
Progress Energy	All of the registrant’s common stock is directly owned by Duke Energy.
Duke Energy Progress	All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Florida	All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Ohio	All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Indiana	All of the registrant’s common stock is indirectly owned by Duke Energy.

This combined Form 10-Q is filed separately by seven registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.

Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.

TABLE OF CONTENTS
Safe Harbor for Forward-Looking Statements

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	Duke Energy Corporation Financial Statements		4

	Duke Energy Carolinas, LLC Financial Statements		9

	Progress Energy, Inc. Financial Statements		13

	Duke Energy Progress, Inc. Financial Statements		17

	Duke Energy Florida, Inc. Financial Statements		21

	Duke Energy Ohio, Inc. Financial Statements		25

	Duke Energy Indiana, Inc. Financial Statements		29

	Combined Notes to Condensed Consolidated Financial Statements
		Note 1 - Organization and Basis of Presentation	33
		Note 2 - Dispositions	35
		Note 3 - Business Segments	36
		Note 4 - Regulatory Matters	38
		Note 5 - Commitments and Contingencies	42
		Note 6 - Debt and Credit Facilities	50
		Note 7 - Goodwill	51
		Note 8 - Related Party Transactions	51
		Note 9 - Derivatives and Hedging	53
		Note 10 - Investments in Debt and Equity Securities	61
		Note 11 - Fair Value Measurements	67
		Note 12 - Variable Interest Entities	74
		Note 13 - Common Stock	78
		Note 14 - Stock-Based Compensation	79
		Note 15 - Employee Benefit Plans	79
		Note 16 - Income Taxes	81
		Note 17 - Subsequent Events	81

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		82

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		100

Item 4.	Controls and Procedures		100

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		102

Item 1A.	Risk Factors		102

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		102

Item 6.	Exhibits		103

	Signatures		105

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook,” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:

· State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements or climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;

· The extent and timing of the costs and liabilities relating to the Dan River ash basin release and future regulatory changes related to the management of coal ash;

· The ability to recover eligible costs, including those associated with future significant weather events, and earn an adequate return on investment through the regulatory process;

· The costs of decommissioning Crystal River Unit 3 could prove to be more extensive than are currently identified and all costs may not be fully recoverable through the regulatory process;

· The risk that the credit ratings of the company or its subsidiaries may be different from what the companies expect;

· Costs and effects of legal and administrative proceedings, settlements, investigations and claims;

· Industrial, commercial and residential growth or decline in service territories or customer bases resulting from customer usage patterns, including energy efficiency efforts and use of alternative energy sources, including self-generation and distributed generation technologies;

· Additional competition in electric markets and continued industry consolidation;

· Political and regulatory uncertainty in other countries in which Duke Energy conducts business;

· The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts and tornadoes;

· The ability to successfully operate electric generating facilities and deliver electricity to customers;

· The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, and other catastrophic events;

· The inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks;

· The timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;

· The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general economic conditions;

· Declines in the market prices of equity and fixed income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans, and nuclear decommissioning trust funds;

· Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;

· The ability to control operation and maintenance costs;

· The level of creditworthiness of counterparties to transactions;

· Employee workforce factors, including the potential inability to attract and retain key personnel;

· The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);

· The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;

· The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;

· The impact of potential goodwill impairments;

· The ability to reinvest retained earnings of foreign subsidiaries or repatriate such earnings on a tax-free basis; and

· The ability to successfully complete future merger, acquisition or divestiture plans.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made; the Duke Energy Registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
Condensed Consolidated Statements Of Operations
(Unaudited)

		Three Months Ended March 31,
(in millions, except per-share amounts)			2014		2013
Operating Revenues
Regulated electric		$	5,578	$	4,889
Nonregulated electric, natural gas, and other			824		824
Regulated natural gas			222		185
	Total operating revenues		6,624		5,898
Operating Expenses
Fuel used in electric generation and purchased power - regulated			2,000		1,703
Fuel used in electric generation and purchased power - nonregulated			409		454
Cost of natural gas and other			122		104
Operation, maintenance and other			1,506		1,421
Depreciation and amortization			790		660
Property and other taxes			358		343
Impairment charges			1,382		―
	Total operating expenses		6,567		4,685
Gains on Sales of Other Assets and Other, net			1		2
Operating Income			58		1,215
Other Income and Expenses
Equity in earnings of unconsolidated affiliates			36		36
Other income and expenses, net			95		80
	Total other income and expenses		131		116
Interest Expense			406		367
(Loss) Income From Continuing Operations Before Income Taxes			(217)		964
Income Tax (Benefit) Expense from Continuing Operations			(127)		330
(Loss) Income From Continuing Operations			(90)		634
Loss From Discontinued Operations, net of tax			(3)		―
Net (Loss) Income			(93)		634
Less: Net Income Attributable to Noncontrolling Interests			4		―
Net (Loss) Income Attributable to Duke Energy Corporation		$	(97)	$	634


Earnings Per Share - Basic and Diluted
(Loss) Income from continuing operations attributable to Duke Energy Corporation common shareholders
	Basic	$	(0.13)	$	0.89
	Diluted	$	(0.13)	$	0.89
Loss from discontinued operations attributable to Duke Energy Corporation common shareholders
	Basic	$	(0.01)	$	―
	Diluted	$	(0.01)	$	―
Net (Loss) Income attributable to Duke Energy Corporation common shareholders
	Basic	$	(0.14)	$	0.89
	Diluted	$	(0.14)	$	0.89
Weighted-average shares outstanding
	Basic		706		705
	Diluted		706		705

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements Of Comprehensive Income
(Unaudited)

		Three Months Ended March 31,
(in millions)		2014		2013
Net (Loss) Income		$	(93)	$	634
Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustments			24		4
Pension and OPEB adjustments			(1)		3
Net unrealized gain on cash flow hedges^(a)			―		10
Other Comprehensive Income, Net of Tax			23		17
Comprehensive (Loss) Income			(70)		651
Less: Comprehensive Income Attributable to Noncontrolling Interests			5		―
Comprehensive (Loss) Income Attributable to Duke Energy Corporation		$	(75)	$	651

(a)	Net of $4 million tax expense in 2013.

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)

(in millions)		March 31, 2014		December 31, 2013
ASSETS
Current Assets
Cash and cash equivalents		$	1,531	$	1,501
Short-term investments			6		44
Receivables (net of allowance for doubtful accounts of $17 at March 31, 2014 and $30 at December 31, 2013)			597		1,286
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $54 at March 31, 2014 and $43 at December 31, 2013)			2,199		1,719
Inventory			2,908		3,250
Assets held for sale			515		―
Regulatory assets			1,148		895
Other			1,661		1,821
	Total current assets		10,565		10,516
Investments and Other Assets
Investments in equity method unconsolidated affiliates			386		390
Nuclear decommissioning trust funds			5,231		5,132
Goodwill			16,342		16,340
Assets held for sale			2,341		107
Other			3,251		3,432
	Total investments and other assets		27,551		25,401
Property, Plant and Equipment
Cost			99,874		103,115
Accumulated depreciation and amortization			(33,519)		(33,625)
	Net property, plant and equipment		66,355		69,490
Regulatory Assets and Deferred Debits
Regulatory assets			9,138		9,191
Other			183		181
	Total regulatory assets and deferred debits		9,321		9,372
Total Assets		$	113,792	$	114,779
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable		$	1,892	$	2,391
Notes payable and commercial paper			1,737		839
Taxes accrued			423		551
Interest accrued			478		440
Current maturities of long-term debt			885		2,104
Liabilities associated with assets held for sale			222		7
Regulatory liabilities			243		316
Other			1,612		1,996
	Total current liabilities		7,492		8,644
Long-term Debt			39,000		38,152
Deferred Credits and Other Liabilities
Deferred income taxes			11,852		12,097
Investment tax credits			438		442
Accrued pension and other post-retirement benefit costs			1,270		1,322
Liabilities associated with assets held for sale			71		66
Asset retirement obligations			4,994		4,950
Regulatory liabilities			6,125		5,949
Other			1,761		1,749
	Total deferred credits and other liabilities		26,511		26,575
Commitments and Contingencies
Equity
Common stock, $0.001 par value, 2 billion shares authorized; 707 million and 706 million shares outstanding at March 31, 2014 and December 31, 2013, respectively			1		1
Additional paid-in capital			39,372		39,365
Retained earnings			1,713		2,363
Accumulated other comprehensive loss			(377)		(399)
	Total Duke Energy Corporation stockholders' equity		40,709		41,330
Noncontrolling interests			80		78
	Total equity		40,789		41,408
Total Liabilities and Equity		$	113,792	$	114,779

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements Of Cash Flows
(Unaudited)

			Three Months Ended March 31,
(in millions)			2014		2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) Income			$	(93)	$	634
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
	Depreciation, amortization and accretion (including amortization of nuclear fuel)			884		762
	Equity component of AFUDC			(28)		(42)
	Gains on sales of other assets			―		(2)
	Impairment charges			1,382		―
	Deferred income taxes			(178)		353
	Equity in earnings of unconsolidated affiliates			(36)		(36)
	Accrued pension and other post-retirement benefit costs			27		87
	(Increase) decrease in
		Net realized and unrealized mark-to-market and hedging transactions		45		36
		Receivables		29		(118)
		Inventory		272		126
		Other current assets		(297)		(38)
	Increase (decrease) in
		Accounts payable		(97)		(246)
		Taxes accrued		(175)		(31)
		Other current liabilities		(346)		(312)
	Other assets			(22)		(78)
	Other liabilities			6		(4)
	Net cash provided by operating activities			1,373		1,091
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures				(1,232)		(1,375)
Investment expenditures				(36)		(3)
Acquisitions				―		(32)
Purchases of available-for-sale securities				(967)		(1,255)
Proceeds from sales and maturities of available-for-sale securities				1,004		1,179
Net proceeds from the sales of other assets				4		20
Change in restricted cash				(27)		(34)
Other				(32)		35
	Net cash used in investing activities			(1,286)		(1,465)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
	Issuance of long-term debt			875		1,009
	Issuance of common stock related to employee benefit plans			19		5
Payments for the:
	Redemption of long-term debt			(1,287)		(747)
	Redemption of preferred stock of a subsidiary			―		(96)
Notes payable and commercial paper				898		627
Distributions to noncontrolling interests				(3)		(3)
Dividends paid				(553)		(542)
Other				(6)		(7)
	Net cash (used in) provided by financing activities			(57)		246
Net increase (decrease) in cash and cash equivalents				30		(128)
Cash and cash equivalents at beginning of period				1,501		1,424
Cash and cash equivalents at end of period			$	1,531	$	1,296
Supplemental Disclosures:
Significant non-cash transactions:
	Accrued capital expenditures		$	361	$	465

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes In Equity
(Unaudited)

								Accumulated Other Comprehensive Loss
(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		Foreign Currency Translation Adjustments		Net Gains (Losses) on Cash Flow Hedges		Pension and OPEB Adjustments		Common Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2012	704	$	1	$	39,279	$	1,889	$	(116)	$	(100)	$	(90)	$	40,863	$	78	$	40,941
Net income	―		―		―		634		―		―		―		634		―		634
Other comprehensive income	―		―		―		―		4		10		3		17		―		17
Common stock issuances, including dividend reinvestment and employee benefits	2		―		(16)		―		―		―		―		(16)		―		(16)
Common stock dividends	―		―		―		(542)		―		―		―		(542)		―		(542)
Premium on the redemption of preferred stock of subsidiaries	―		―		―		(3)		―		―		―		(3)		―		(3)
Changes in noncontrolling interest in subsidiaries	―		―		―		―		―		―		―		―		(1)		(1)
Balance at March 31, 2013	706	$	1	$	39,263	$	1,978	$	(112)	$	(90)	$	(87)	$	40,953	$	77	$	41,030

Balance at December 31, 2013	706	$	1	$	39,365	$	2,363	$	(307)	$	(40)	$	(52)	$	41,330	$	78	$	41,408
Net (loss) income	―		―		―		(97)		―		―		―		(97)		4		(93)
Other comprehensive (loss) income	―		―		―		―		23		―		(1)		22		1		23
Common stock issuances, including dividend reinvestment and employee benefits	1		―		7		―		―		―		―		7		―		7
Common stock dividends	―		―		―		(553)		―		―		―		(553)		―		(553)
Distribution to noncontrolling interest in subsidiaries	―		―		―		―		―		―		―		―		(3)		(3)
Balance at March 31, 2014	707	$	1	$	39,372	$	1,713	$	(284)	$	(40)	$	(53)	$	40,709	$	80	$	40,789

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements Of Operations And Comprehensive Income
(Unaudited)

		Three Months Ended March 31,
(in millions)		2014		2013
Operating Revenues		$	2,000	$	1,729
Operating Expenses
Fuel used in electric generation and purchased power			658		518
Operation, maintenance and other			487		457
Depreciation and amortization			242		222
Property and other taxes			104		100
	Total operating expenses		1,491		1,297
Gains on Sales of Other Assets and Other, net			―		2
Operating Income			509		434
Other Income and Expenses, net			49		36
Interest Expense			101		82
Income Before Income Taxes			457		388
Income Tax Expense			171		144
Net Income			286		244
Other Comprehensive Income, net of tax
Reclassification into earnings from cash flow hedges			1		―
Comprehensive Income		$	287	$	244

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)

(in millions)		March 31, 2014		December 31, 2013
ASSETS
Current Assets
Cash and cash equivalents		$	17	$	23
Receivables (net of allowance for doubtful accounts of $3 at March 31, 2014 and December 31, 2013)			114		186
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $6 at March 31, 2014 and December 31, 2013)			705		673
Receivables from affiliated companies			102		75
Notes receivable from affiliated companies			337		222
Inventory			886		1,065
Regulatory assets			320		295
Other			269		309
	Total current assets		2,750		2,848
Investments and Other Assets
Nuclear decommissioning trust funds			2,900		2,840
Other			994		1,000
	Total investments and other assets		3,894		3,840
Property, Plant and Equipment
Cost			35,296		34,906
Accumulated depreciation and amortization			(12,125)		(11,894)
	Net property, plant and equipment		23,171		23,012
Regulatory Assets and Deferred Debits
Regulatory assets			1,459		1,527
Other			45		46
	Total regulatory assets and deferred debits		1,504		1,573
Total Assets		$	31,319	$	31,273
LIABILITIES AND MEMBER'S EQUITY
Current Liabilities
Accounts payable		$	540	$	701
Accounts payable to affiliated companies			182		161
Taxes accrued			144		147
Interest accrued			136		97
Current maturities of long-term debt			47		47
Regulatory liabilities			44		65
Other			348		393
	Total current liabilities		1,441		1,611
Long-term Debt			8,089		8,089
Long-term Debt Payable to Affiliated Companies			300		300
Deferred Credits and Other Liabilities
Deferred income taxes			5,727		5,706
Investment tax credits			208		210
Accrued pension and other post-retirement benefit costs			158		161
Asset retirement obligations			1,617		1,594
Regulatory liabilities			2,601		2,576
Other			667		676
	Total deferred credits and other liabilities		10,978		10,923
Commitments and Contingencies			-		-
Member's Equity
Member's Equity			10,525		10,365
Accumulated other comprehensive loss			(14)		(15)
	Total member's equity		10,511		10,350
Total Liabilities and Member's Equity		$	31,319	$	31,273

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements Of Cash Flows
(Unaudited)

			Three Months Ended March 31,
(in millions)			2014		2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income			$	286	$	244
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization (including amortization of nuclear fuel)			309		281
	Equity component of AFUDC			(22)		(26)
	Gains on sales of other assets and other, net			―		(2)
	Deferred income taxes			87		146
	Accrued pension and other post-retirement benefit costs			6		10
	(Increase) decrease in
		Net realized and unrealized mark-to-market and hedging transactions		3		(7)
		Receivables		11		(8)
		Receivables from affiliated companies		(27)		(54)
		Inventory		181		50
		Other current assets		(59)		(25)
	Increase (decrease) in
		Accounts payable		(100)		(16)
		Accounts payable to affiliated companies		21		(16)
		Taxes accrued		(3)		(48)
		Other current liabilities		(26)		(34)
	Other assets			14		(28)
	Other liabilities			(9)		(15)
	Net cash provided by operating activities			672		452
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures				(426)		(435)
Purchases of available-for-sale securities				(584)		(504)
Proceeds from sales and maturities of available-for-sale securities				579		492
Notes receivable from affiliated companies				(115)		(15)
Other				(6)		(3)
	Net cash used in investing activities			(552)		(465)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to parent				(126)		―
Other				―		(1)
Net cash used in financing activities				(126)		(1)
Net decrease in cash and cash equivalents				(6)		(14)
Cash and cash equivalents at beginning of period				23		19
Cash and cash equivalents at end of period			$	17	$	5
Supplemental Disclosures:
Significant non-cash transactions:
	Accrued capital expenditures		$	133	$	132

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements Of Changes in Member's Equity
(Unaudited)

			Accumulated Other Comprehensive Loss
(in millions)	Member's Equity		Net Losses on Cash Flow Hedges		Unrealized Losses on Available for Sale Securities		Total
Balance at December 31, 2012	$	9,888	$	(15)	$	(1)	$	9,872
Net income		244		―		―		244
Balance at March 31, 2013	$	10,132	$	(15)	$	(1)	$	10,116

Balance at December 31, 2013	$	10,365	$	(14)	$	(1)	$	10,350
Net income		286		―		―		286
Other comprehensive income				1		―		1
Distributions to parent		(126)		―		―		(126)
Balance at March 31, 2014	$	10,525	$	(13)	$	(1)	$	10,511

See Notes to Condensed Consolidated Financial Statements

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements Of Operations And Comprehensive Income
(Unaudited)

		Three Months Ended March 31,
(in millions)		2014		2013
Operating Revenues		$	2,541	$	2,186
Operating Expenses
Fuel used in electric generation and purchased power			1,043		860
Operation, maintenance and other			595		561
Depreciation and amortization			276		194
Property and other taxes			151		141
	Total operating expenses		2,065		1,756
Gains on Sales of Other Assets and Other, net			1		―
Operating Income			477		430
Other Income and Expenses, net			15		23
Interest Expense			169		198
Income From Continuing Operations Before Taxes			323		255
Income Tax Expense From Continuing Operations			119		101
Income From Continuing Operations			204		154
Loss From Discontinued Operations, net of tax			(1)		―
Net Income			203		154
Less: Net Income Attributable to Noncontrolling Interest			1		1
Net Income Attributable to Parent		$	202	$	153

Net Income		$	203	$	154
Other Comprehensive Income, net of tax
Reclassification into earnings from pension and OPEB adjustments			1		1
Net unrealized gain on cash flow hedges			1		1
Other Comprehensive Income, net of tax			2		2
Comprehensive Income		$	205	$	156

See Notes to Condensed Consolidated Financial Statements

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)

(in millions)		March 31, 2014		December 31, 2013
ASSETS
Current Assets
Cash and cash equivalents		$	36	$	58
Receivables (net of allowance for doubtful accounts of $6 at March 31, 2014 and $14 at December 31, 2013)			51		528
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $8 at March 31, 2014)			856		417
Receivables from affiliated companies			4		4
Notes receivable from affiliated companies			176		75
Inventory			1,391		1,424
Regulatory assets			530		353
Other			565		726
	Total current assets		3,609		3,585
Investments and Other Assets
Nuclear decommissioning trust funds			2,330		2,292
Goodwill			3,655		3,655
Other			767		804
	Total investments and other assets		6,752		6,751
Property, Plant and Equipment
Cost			36,460		36,480
Accumulated depreciation and amortization			(13,093)		(13,098)
	Net property, plant and equipment		23,367		23,382
Regulatory Assets and Deferred Debits
Regulatory assets			4,157		4,155
Other			99		96
	Total regulatory assets and deferred debits		4,256		4,251
Total Assets		$	37,984	$	37,969
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable		$	655	$	836
Accounts payable to affiliated companies			237		123
Notes payable to affiliated companies			922		1,213
Taxes accrued			102		105
Interest accrued			195		181
Current maturities of long-term debt			18		485
Regulatory liabilities			172		207
Other