BUSINESS SEGMENTS

Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income, as discussed below, includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.

Operating segments are determined based on information used by the chief operating decision maker in deciding how to allocate resources and evaluate the performance.

Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost. Segment assets as presented in the tables that follow exclude all intercompany assets.

DUKE ENERGY

Duke Energy has the following reportable operating segments: Regulated Utilities, International Energy and Commercial Power.

Regulated Utilities conducts operations primarily through Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana, and the regulated transmission and distribution operations of Duke Energy Ohio. These electric and gas operations are subject to the rules and regulations of the FERC, NCUC, PSCSC, FPSC, PUCO, IURC and KPSC. Substantially all of Regulated Utilities’ operations are regulated and, accordingly, these operations qualify for regulatory accounting treatment.

International Energy principally operates and manages power generation facilities and engages in sales and marketing of electric power, natural gas and natural gas liquids outside the U.S. Its activities principally target power generation in Latin America. Additionally, International Energy owns a 25 percent interest in National Methanol Company (NMC), a large regional producer of methyl tertiary-butyl ether (MTBE) located in Saudi Arabia. The investment in NMC is accounted for under the equity method of accounting.

Commercial Power builds, develops and operates renewable generation and energy transmission projects throughout the continental U.S. As discussed in Note 2, Duke Energy entered into an agreement to sell Commercial Power's nonregulated Midwest generation business to Dynegy in a transaction that is expected to close in the fourth quarter of 2014 or the first quarter of 2015. As a result of this divestiture, the results of operations of the nonregulated Midwest generation business have been reclassified to Discontinued Operations on the Condensed Consolidated Statements of Operations. Certain costs such as interest and general and administrative expenses previously allocated to the Disposal Group were not reclassified to discontinued operations.

The remainder of Duke Energy’s operations is presented as Other. While it is not an operating segment, Other primarily includes unallocated corporate interest expense, certain unallocated corporate costs, Bison Insurance Company Limited (Bison), Duke Energy’s wholly owned, captive insurance subsidiary, and contributions to the Duke Energy Foundation. On December 31, 2013, Duke Energy sold its interest in DukeNet Communications Holdings, LLC (DukeNet) to Time Warner Cable, Inc.



	Three Months Ended September 30, 2014
(in millions)	Regulated Utilities		International Energy		Commercial Power			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	5,975	$	366	$	50		$	6,391	$	4		$	—		$	6,395
Intersegment revenues	11		—		—			11		21			(32		)	—
Total revenues	$	5,986	$	366	$	50		$	6,402	$	25		$	(32	)	$	6,395
Segment income (loss)^(a)	$	920	$	80	$	(17	)	$	983	$	(92	)	$	(3	)	$	888
Add back noncontrolling interests component																3
Income from discontinued operations, net of tax																378
Net income																$	1,269
Segment assets	$	105,172	$	5,159	$	6,196		$	116,527	$	2,944		$	185		$	119,656

(a) Other includes costs to achieve the Progress Energy merger.



	Three Months Ended September 30, 2013
(in millions)	Regulated Utilities		International Energy		Commercial Power			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues^(a)	$	5,768	$	370	$	56		$	6,194	$	23		$	—		$	6,217
Intersegment revenues	18		—		2			20		24			(44		)	—
Total revenues	$	5,786	$	370	$	58		$	6,214	$	47		$	(44	)	$	6,217
Segment income (loss)^(a)(b)	$	923	$	116	$	(28	)	$	1,011	$	(64	)	$	(5	)	$	942
Add back noncontrolling interests component																4
Income from discontinued operations, net of tax																62
Net income																$	1,008


(a)	In September 2013, Duke Energy Carolinas implemented revised customer rates approved by the NCUC and the PSCSC. These rate increases impact Regulated Utilities.


(b)	Other includes costs to achieve the Progress Energy merger.



	Nine Months Ended September 30, 2014
(in millions)	Regulated Utilities		International Energy		Commercial Power			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	17,041	$	1,111	$	195		$	18,347	$	19		$	—		$	18,366
Intersegment revenues	33		—		—			33		60			(93		)	—
Total revenues	$	17,074	$	1,111	$	195		$	18,380	$	79		$	(93	)	$	18,366
Segment income (loss)^(a)(b)	$	2,346	$	356	$	(70	)	$	2,632	$	(269	)	$	(7	)	$	2,356
Add back noncontrolling interests component																11
Loss from discontinued operations, net of tax																(578		)
Net income																$	1,789


(a)	Commercial Power recorded a pretax impairment charge of $94 million related to reducing the carrying value of OVEC to zero. See Note 13 for additional information.


(b)	Other includes costs to achieve the Progress Energy merger.



	Nine Months Ended September 30, 2013
(in millions)	Regulated Utilities		International Energy		Commercial Power			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues^(a)(b)(c)(d)	$	15,731	$	1,168	$	184		$	17,083	$	49		$	—		$	17,132
Intersegment revenues	35		—		5			40		64			(104		)	—
Total revenues	$	15,766	$	1,168	$	189		$	17,123	$	113		$	(104	)	$	17,132
Segment income (loss)^{(a)(b)(c)(d)(e)(f)}	$	1,932	$	300	$	(54	)	$	2,178	$	(278	)	$	(10	)	$	1,890
Add back noncontrolling interest																12
Income from discontinued operations, net of tax																82
Net income																$	1,984


(a)	In May 2013, the PUCO approved a Duke Energy Ohio settlement agreement that provides for a net annual increase in electric distribution revenues beginning in May 2013. This rate increase impacts Regulated Utilities.


(b)	In June 2013, NCUC approved a Duke Energy Progress settlement agreement that included an increase in rates in the first year beginning in June 2013. This rate increase impacts Regulated Utilities.


(c)	In September 2013, Duke Energy Carolinas implemented revised customer rates approved by the NCUC and the PSCSC. These rate increases impact Regulated Utilities.


(d)	Regulated Utilities recorded an impairment charge related to Duke Energy Florida's Crystal River Unit 3. See Note 4 for additional information.

(e)

Regulated Utilities recorded an impairment charge related to the letter Duke Energy Progress filed with the NRC requesting the NRC to suspend its review activities associated with the combined construction and operating license (COL) at Harris site. Regulated Utilities also recorded an impairment charge related to the write-off of the wholesale portion of the Levy investments at Duke Energy Florida in accordance with the 2013 Settlement. See Note 4 for additional information.


(f)	Other includes costs to achieve the Progress Energy merger.

DUKE ENERGY OHIO

Duke Energy Ohio has two reportable operating segments, Regulated Utilities and Commercial Power.

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

As discussed in Note 2, Duke Energy entered into an agreement to sell Commercial Power's nonregulated Midwest generation business to Dynegy in a transaction that is expected to be completed in the fourth quarter of 2014 or the first quarter of 2015. As a result of this divestiture, the results of operations of the nonregulated Midwest generation business have been reclassified to Discontinued Operations on the Condensed Consolidated Statements of Operations and Comprehensive Income. Amounts remaining in Commercial Power relate to assets not included in the Disposal Group. Certain costs such as interest and general and administrative expenses previously allocated to the Disposal Group were not reclassified to discontinued operations.

The remainder of Duke Energy Ohio’s operations is presented as Other. While it is not considered an operating segment, Other primarily includes certain governance costs allocated by its parent, Duke Energy. See Note 9 for additional information. All of Duke Energy Ohio’s revenues are generated domestically and its long-lived assets are all in the U.S.



	Three Months Ended September 30, 2014
(in millions)	Regulated Utilities		Commercial Power			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	440	$	6		$	446	$	—		$	—		$	446
Intersegment revenues	1		—			1		—			(1		)	—
Total revenues	$	441	$	6		$	447	$	—		$	(1	)	$	446
Segment income (loss)	$	43	$	(13	)	$	30	$	(4	)	$	—		$	26
Income from discontinued operations, net of tax														$	413
Net income														439
Segment assets	$	7,297	$	3,266		$	10,563	$	131		$	(622	)	$	10,072



	Three Months Ended September 30, 2013
(in millions)	Regulated Utilities		Commercial Power			Total Reportable Segments		Other			Eliminations		Consolidated
Unaffiliated revenues	$	421	$	17		$	438	$	—		$	—	$	438
Total revenues	$	421	$	17		$	438	$	—		$	—	$	438
Segment income (loss)	$	42	$	(13	)	$	29	$	(5	)	$	—	$	24
Income from discontinued operations, net of tax													35
Net income													$	59



	Nine Months Ended September 30, 2014
(in millions)	Regulated Utilities		Commercial Power			Total Reportable Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	1,416	$	17		$	1,433	$	—		$	—		$	1,433
Intersegment revenues	1		—			1		—			(1		)	—
Total revenues	$	1,417	$	17		$	1,434	$	—		$	(1	)	$	1,433
Segment income (loss)^(a)	$	151	$	(101	)	$	50	$	(11	)	$	—		$	39
Loss from discontinued operations, net of tax														(597		)
Net loss														$	(558	)


a)	Duke Energy Ohio recorded a pretax impairment charge of $94 million related to reducing the carrying value of OVEC to zero. See Note 13 for additional information.



	Nine Months Ended September 30, 2013
(in millions)	Regulated Utilities		Commercial Power			Total Reportable Segments		Other			Eliminations		Consolidated
Unaffiliated revenues	$	1,317	$	32		$	1,349	$	—		$	—	$	1,349
Total revenues	$	1,317	$	32		$	1,349	$	—		$	—	$	1,349
Segment income (loss)	$	122	$	(51	)	$	71	$	(14	)	$	—	$	57
Income from discontinued operations, net of tax													39
Net income													$	96

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

The remaining Subsidiary Registrants each have one reportable operating segment, Regulated Utility, which generates, transmits, distributes and sells electricity. The remainder of each company’s operations is classified as Other. While not considered a reportable segment for any of these companies, Other consists of certain unallocated corporate costs. Other for Progress Energy also includes interest expense on corporate debt instruments of $58 million and $64 million for the three months ended September 30, 2014 and 2013, respectively and $181 million and $235 million for the nine months ended September 30, 2014 and 2013, respectively. The following table summarizes the net loss for Other at each of these registrants.



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2014			2013			2014			2013
Duke Energy Carolinas	$	(19	)	$	(26	)	$	(67	)	$	(69	)
Progress Energy	(48		)	(72		)	(145		)	(205		)
Duke Energy Progress	(10		)	(20		)	(23		)	(40		)
Duke Energy Florida	(5		)	(6		)	(16		)	(18		)
Duke Energy Indiana	(3		)	(5		)	(10		)	(13		)

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