ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures such as adjusted earnings and adjusted EPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy Corporation and its subsidiaries. Duke Energy Carolinas, LLC, Progress Energy, Inc., Duke Energy Progress, LLC, Duke Energy Florida, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC and Piedmont Natural Gas Company, Inc. However, none of the registrants make any representation as to information related solely to Duke Energy or the subsidiary registrants of Duke Energy other than itself.
Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the years ended December 31, 2024, 2023 and 2022.
See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for a discussion of variance drivers for the year ended December 31, 2023, as compared to December 31, 2022.
DUKE ENERGY
Duke Energy, an energy company headquartered in Charlotte, North Carolina, operates in the U.S. primarily through its subsidiaries, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of the Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.
Executive Overview
This is a dynamic and exciting time for our industry and our company in particular as we move further into the energy transition. While 2024 presented unprecedented challenges as it relates to a historic storm season, we are now in the early stages of the approval and planned construction of significant new generation investments and anticipate growing energy demands in the coming decades from continued migration into our attractive service territories, onshoring of domestic industries, electrification, and data centers and other investments from the expected artificial intelligence revolution. At Duke Energy, we remain focused on continuing to advance our energy transition, maintaining reliability and affordability for our customers while providing cleaner energy and delivering on our commitments to our communities, employees, investors, and other stakeholders. The fundamentals of our business remain strong, allowing us to deliver growth in earnings and dividends in a low-risk, predictable and transparent way.
In 2024, we responded to the most significant hurricane season in our company's history. While several historic, back-to-back hurricanes challenged our operations and required incremental financing costs, we met our near-term financial commitments and continued to make progress, generating positive regulatory and strategic outcomes, advancing key actions related to our energy transition and continuing to provide the safe and reliable service that our communities depend on. We continue to rebuild the most heavily damaged infrastructure impacted by storms in our service territories, engage with our customers and make critical investments to support our ongoing energy transition and a business portfolio that delivers a reliable and growing dividend, with 2024 representing the 98th consecutive year Duke Energy paid a cash dividend on its common stock.
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MD&A DUKE ENERGY
Financial Results
(a)See Results of Operations below for Duke Energy’s definition of adjusted earnings and adjusted EPS as well as a reconciliation of this non-GAAP financial measure to net income available to Duke Energy and net income available to Duke Energy per basic share.
Duke Energy's 2024 Net Income Available to Duke Energy Corporation (GAAP Reported Earnings) increased primarily due to higher impairments on the sale of the Commercial Renewables business in the prior year. Additional drivers primarily include growth from rate increases and riders, improved weather and higher sales volumes, partially offset by higher interest expense, depreciation on a growing asset base and storm costs, along with a higher effective tax rate. See “Results of Operations” below for a detailed discussion of the consolidated results of operations and a detailed discussion of financial results for each of Duke Energy’s reportable business segments, as well as Other.
2024 Areas of Focus and Accomplishments
Hurricane Response and Operational Excellence. The reliable and safe operation of our power generating facilities, electric distribution system and natural gas infrastructure in our communities continues to be foundational to serving our customers, our financial results, and our credibility with stakeholders. Our workforce and contract partners work hard to prepare for storm season, through drills, material planning, call center readiness, contingency planning and customer communications. Additionally, operational excellence is especially critical to successfully navigate effective storm response and to efficiently provide the continuity of service our customers demand, regardless of weather or circumstance.
In 2024, with three consecutive major hurricanes Debby, Helene and Milton, this preparation was critical as we responded to several unprecedented and catastrophic weather events across our service territories. The historic nature of these storms required a new level of coordination and teamwork across every organization at our company. In August 2024, Hurricane Debby made landfall in Florida as a Category 1 storm, impacting the Duke Energy Florida territory as well as the Duke Energy Carolinas and Duke Energy Progress territories in North Carolina and South Carolina and causing approximately 700,000 customer outages. In late September 2024, Hurricane Helene made landfall in Florida as a Category 4 storm and subsequently impacted all of Duke Energy's service territories as the storm moved inland, with the most severe damage occurring in Florida and the Carolinas. Approximately 3.5 million customers were impacted by Hurricane Helene across Duke Energy's system, the largest number of companywide outages from a single event on our system ever reported. Then, in October 2024, Hurricane Milton made landfall in Florida as a Category 3 storm, causing severe damage across our Florida service territory as a result of high winds, rain and flooding and resulting in more than 1 million customer outages.
In such extreme circumstances, our immediate priority is, and always will be, executing the extensive storm preparation and response work to ensure the safe, timely, and efficient restoration of service to impacted customers as quickly as possible. Around-the-clock power restoration efforts continued following the historic damage inflicted by these storms with lineworkers, tree trimmers and removal experts, state department of transportation workers and countless others, working to repair and, in certain areas, completely rebuild, the critical electricity infrastructure that powers and supports the communities we serve. Our operations teams worked diligently, restoring power to approximately 5.5 million customers. We've also seen the benefits of ongoing grid hardening investments, leveraging self-healing technologies and remote restoration capabilities to automate the rerouting of power, more effectively deploy resources, and reduce the frequency or duration of outages for many of our customers during severe weather events.
Preparation, sound execution, and a comprehensive communication strategy helped us respond quickly and build stakeholder loyalty and support as we continue the important work of rebuilding our communities, including power infrastructure in the hardest-hit areas of our service territories. While these historic storms created incremental financing needs, we are working with our state commissions to appropriately track and recover storm costs under approved regulatory frameworks on a timely basis. We also remain focused on balancing the bill impacts on our customers, including seeking insurance recovery and the securitization of related costs in certain jurisdictions, as appropriate. For more information, see "Matters Impacting Future Results," "Liquidity and Capital Resources," and Notes 4 and 7 to the Consolidated Financial Statements, "Regulatory Matters" and "Debt and Credit Facilities."
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MD&A DUKE ENERGY
Despite the extreme weather and operational challenges with storm response, our generation fleet and nuclear sites delivered strong performance throughout the year and our electric distribution system performed well. In addition to unprecedented storm response, most of our service territories experienced above-average temperatures this summer, including the warmest July on record in Florida, new energy peaks in the Carolinas and weather alerts from PJM and MISO in the Midwest. In January 2025, due to 65 hours of freezing or below freezing temperatures, Duke Energy Carolinas and Duke Energy Progress achieved a new record combined peak usage. We prepared for the arrival of extreme weather and delivered on our customer commitments, identifying potential risks, effectively maintaining adequate short-term planning reserves, leveraging outage scheduling optimization, and controlling planned and emergent equipment issues. Effective operations and flexibility by our generation and transmission teams managed these tight margins in an efficient manner and ensured the integrity of the grid our customers rely upon. We will continue to practice our forecasting, grid assessment, oversight, and governance processes as extreme weather challenges operations from time to time, evaluate lessons learned and enhance our strategy and communications to effectively serve our customers now and in the future. Our ability to effectively handle all facets of the 2024 storm response efforts while making ongoing investments to enhance the reliability and physical security of the grid is a testament to our team’s extensive preparation and coordination, applying lessons learned from previous storms, and on-the-ground management throughout the restoration efforts. Duke Energy has received 20 Emergency Response Awards since EEI began recognizing storm response in 1998 (including 11 for assisting other utilities).
The safety and health of our workforce is a core value and we remain an industry leader in personal safety as measured by the Occupational Safety and Health Administration's (OSHA) Total Incident Case Rate (TICR). We closely tracked 2023's record-setting safety results with our 2024 TICR coming in below target and anticipate ranking first among North American combined gas and electric companies in an annual industry safety survey for the 10th consecutive year. We expect our gas operations organization to finish in the top 10% according to a gas industry survey for the fourth year in a row. Following on our historic success from 2023, we finished 2024 with less than 100 OSHA recordable injuries. In addition, we achieved significant year-over-year improvement in environmental performance as measured by internal metrics and had no significant environmental events.
Constructive Regulatory and Legislative Outcomes. Modernized regulatory constructs provide benefits, which include improved earnings and cash flows through more timely recovery of investments, as well as stable pricing for customers. One of our long-term strategic goals was to achieve modernized regulatory constructs across all of our jurisdictions. With PBR and MYRP in North Carolina, MYRP in Florida, and grid investment riders in the Midwest, 2024 marked a significant milestone for utilizing these structures across most of our service territories.
Overall, 2024 was a very active year as it relates to regulatory filings, which reflects the important investments and ongoing energy transition across all of our service territories. We continued to move a variety of regulatory initiatives forward this year, including the following:
•In January 2024, Duke Energy Carolinas filed a South Carolina rate case. In May 2024, we reached a constructive comprehensive settlement with certain parties and in July 2024, the PSCSC issued an order approving the settlement and revising recovery of certain environmental compliance costs. New rates were effective August 1, 2024.
•In April 2024, we filed formal requests for new base rates across several jurisdictions including Duke Energy Florida, Duke Energy Indiana and Piedmont.
◦Duke Energy Florida filed a three-year rate plan to begin in January 2025. In August 2024, the FPSC approved our constructive comprehensive settlement with certain parties and new rates were effective January 1, 2025.
◦Duke Energy Indiana filed a general rate case with the IURC and received a constructive order in January 2025. New rates are expected to be effective by March 2025.
◦Piedmont filed a general rate case with the NCUC and reached a constructive comprehensive settlement with certain parties in September 2025. Revised interim rates were effective November 1, 2024, subject to refund and pending NCUC approval of the settlement and a final order, which was received in January 2025.
•Also, in April 2024, Duke Energy Progress issued $177 million of storm recovery bonds, our first issuance under South Carolina's 2022 securitization legislation, which provided the necessary framework for us to lower the bill impacts on our customers related to critical storm restoration activities. In December 2024, we initiated securitization filings in North Carolina related to the unprecedented back-to-back hurricanes of 2024 and are also pursuing timely recovery of storm costs under existing regulatory mechanisms in Florida.
•In December 2024, Duke Energy Kentucky filed an electric base rate case and new rates are anticipated to go into effect in July 2025.
In 2024, we also began to sell nuclear PTCs as allowed under the Inflation Reduction Act. These proceeds are expected to have significant benefits to customers and lower the cost of the energy transition as the sales proceeds, net of associated costs, are flowed back to customers through lower rates under regulatory mechanisms in applicable jurisdictions.
Energy Transition. Faced with anticipated long-term growth not seen for decades, our industry continues to experience an unprecedented level of change and 2024 was a dynamic year for our company as we navigated storm response and continued to execute on our strategic priorities.
Generating Reliable, Affordable and Cleaner Energy
We continue to balance reliability and affordability in light of expected increases in long-term demand for electricity in our service territories in the coming decades. While we continue to target a transition out of coal by 2035, subject to regulatory approvals, our focus remains on meeting the growing and evolving energy needs of our customers through a long-range, enterprise strategy that involves modernizing our assets with reliability and affordability top of mind. Although our path will not be linear as we retire coal and bring new generation resources online, we have made strong progress to date in reducing carbon emissions from electricity generation (a 44% reduction from 2005) and have established goals to do more (50% reduction by 2030, 80% by 2040, and net zero by 2050). We are also working to reduce Scope 2 and certain Scope 3 emissions, including emissions from upstream purchased power and fossil fuel purchases, as well as downstream customer use of natural gas, by 50% by 2035, on the way to net zero by 2050.
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MD&A DUKE ENERGY
Over the next decade, we expect to deploy between approximately $190 billion and $200 billion of capital into our regulated businesses, driven by energy transition investments designed to ensure reliable, affordable, and cleaner energy while meeting expected growth in energy demand in the coming decades. These investments will maintain reliability and affordability, drive economic benefits for the communities we serve, deliver cleaner energy and reduce our customers' exposure to fuel volatility. We have filed and refined comprehensive IRPs consistent with this strategy in multiple jurisdictions, allowing us to make needed investments to increase grid resiliency and enable coal plant retirements, renewables and energy storage.
As we look beyond 2030, we will need additional tools to continue our progress. We will actively work to advocate for research and development and deployment of carbon-free, dispatchable resources. This includes longer-duration energy storage, advanced nuclear technologies, carbon capture and zero-carbon fuels.
Carolinas Resource Plan
Our energy transition strategy continues to focus on delivering a path to cleaner energy in a manner that protects grid reliability and affordability, all while meeting the energy demands of the growing and economically vibrant communities that we serve. In January 2024, we filed supplemental modeling and analysis with the NCUC and PSCSC related to our combined systemwide Carolinas Resource Plan filed in 2023. These updates were necessary due to substantially increased load forecasts resulting from continued economic development successes in the Carolinas occurring since the systemwide integrated resource plan was prepared. In March 2024, we filed CPCNs for new natural gas generation facilities in North Carolina and made a similar filing in South Carolina for a new solar facility. In 2024, these generation facility filings were approved along with receiving broader approval and direction on the Carolinas Resource Plan from both the NCUC and PSCSC.
Modernizing the Power Grid and Natural Gas Infrastructure
We are leveraging new technology, digital tools and data analytics across the business in response to a transforming landscape and our grid improvement programs continue to be a key component of our growth strategy. Modernization of the electric grid, including smart meters, storm hardening, self-healing and targeted undergrounding, helps to ensure the system is better prepared for severe weather, improves the system's reliability and flexibility, and provides better information and services for our customers. We continue to enhance our customers' experience with the Self-Optimizing Grid (SOG), our flagship grid improvement program spanning all of Duke Energy’s regulated utilities. In 2024, our SOG investments helped to avoid approximately 925,000 customer interruptions across our six-state electric service area, preventing customers from having more than 8.6 million hours of lost outage time during major events.
Investments in integrity management of our natural gas infrastructure continue to be of importance to ensure reliable, safe, and increasingly clean delivery of natural gas to our customers. In our LDC business, we remain focused on reducing methane emissions, leveraging our partnerships, emissions platform, sensors and other technologies to find and fix leaks in near real time. We also use cross compression to avoid releasing natural gas into the atmosphere during certain operational activities.
Macroeconomic Environment. Duke Energy has a demonstrated track record of executing on our business plans while driving efficiencies and productivity in the business. Despite higher interest rates and navigating the operational and financial impacts of unprecedented hurricanes across our service territories, we achieved financial results within our adjusted EPS guidance and continued our cost-management journey with a focus on driving productivity, increasing flexibility and prioritizing spend based on risk and strategic value to our customers and investors. We've built a culture of continuous improvement and continue to identify ways to reduce operating costs, remaining focused on organization simplification, automation, outsourcing and continued operational excellence.
Volatile commodity prices led to rapid fuel cost increases in 2022, impacting the price of electricity in all of our jurisdictions. We actively worked to manage and maintain prices at lower levels than they otherwise would have been in light of increased commodity prices, working with our regulators to extend recovery periods in certain jurisdictions in a way that was manageable for our customers. We've experienced increased stability in these markets and have now fully recovered these deferred fuel costs, with remaining balances back in line with our historical average as of December 31, 2024. Additionally, while interest rates and inflation have moderated to a degree, we continued to successfully navigate supply chain challenges for major equipment components for new generation and the grid. For solar panels, we've executed longer supply agreements and we continue to proactively secure equipment in advance of hurricane season. Our procurement teams also continue to execute on action plans to enhance planning, augment supply, amend operations and leverage our scale to continue to mitigate these risks to the extent possible.
Recent macroeconomic headwinds aside, the level of economic development success and growth experienced in our service territories is significantly above what we have experienced over the last two decades. We successfully worked with our state partners to win 78 economic development projects in 2024 alone, representing approximately $26 billion in new capital investment and over 16,000 new jobs within our service territories. These projects include transformational life sciences, automotive, and semiconductors facilities as well as data centers. Supporting the increasing generation load demands expected from projects like these in the coming years is an immense opportunity for our Company and the communities we proudly serve.
Customer Satisfaction. Duke Energy continues to transform the customer experience through our use of customer data to better inform operational priorities and performance levels. This data-driven approach allows us to identify the investments that are most important to the customer experience. While customer satisfaction across our industry continues to be impacted by the macroeconomic environment and the impacts of inflationary pressures including higher fuel prices and interest rates on customer bills, our work continues to be recognized by our customers, with strong customer satisfaction scores in our jurisdictions including Piedmont, which was ranked No. 1 in customer satisfaction by J.D. Power for residential natural gas service in the south for the third year in a row.
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MD&A DUKE ENERGY
Duke Energy Objectives – 2025 and Beyond
At Duke Energy, our business strategy centers on meeting growing energy needs and powering the modern economy, while delivering reliable, affordable and cleaner energy to our customers and communities. To meet these goals, we are safely transforming and readying our system by investing in secure and innovative technologies, modernizing our gas and electric infrastructure and integrating efficiency and demand management programs. As we transition our business to meet anticipated increased long-term demand while delivering more efficient sources of energy, we are focused on creating sustainable value for our customers and shareholders by leveraging business transformation to exceed customer expectations, optimizing investments to drive attractive shareholder returns and providing new product offerings and solutions that deliver growth and customer value. To achieve these objectives, we are partnering with stakeholders, championing public policy that advances innovation and continuing to leverage regulatory models that support the delivery of reliable energy, timely cost recovery and affordable customer rates.
Matters Impacting Future Results
The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.
Regulatory Matters
Coal Ash Costs
In April 2024, the EPA issued the 2024 CCR Rule, which significantly expands the scope of the 2015 CCR Rule by establishing regulatory requirements for inactive surface impoundments at retired generating facilities and previously unregulated coal ash sources at regulated facilities. Duke Energy is participating in legal challenges to the 2024 CCR Rule. Cost recovery for future expenditures is anticipated and will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of reasonable and prudently incurred costs associated with Duke Energy’s regulated operations. For more information, see “Other Matters” and Notes 4 and 10 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations."
Storm Cost Recovery
From August through October 2024, a series of major storm events occurred that resulted in significant damage to utility infrastructure within our service territories and primarily impacted Duke Energy Carolinas', Duke Energy Progress' and Duke Energy Florida's electric utility operations. Hurricanes Debby, Helene and Milton caused widespread outages and included unprecedented damage to certain assets, including the hardest-hit areas on the western coast of Florida and certain regions in western North Carolina and upstate South Carolina. Appropriate storm cost recovery mechanisms are in place to track and recover incremental costs from such events. Funding restoration activities and, in some cases, the complete rebuild of critical infrastructure, for a series of sequential events of this magnitude has resulted in incremental financing needs until cost recovery occurs and may impact the near-term results of operations, financial position, or cash flows of the impacted registrants. For more information related to storm cost estimates, regulatory asset deferrals, and financing activities, see "Liquidity and Capital Resources" and Notes 4 and 7 to the Consolidated Financial Statements, "Regulatory Matters" and "Debt and Credit Facilities."
EPA Regulations of GHG Emissions
In April 2024, the EPA issued final rules under section 111 of the Clean Air Act (EPA Rule 111) regulating GHG emissions from existing coal-fired and new natural gas-fired power plants. Duke Energy is analyzing the potential impacts the rules could have on the Company, which could be material and may influence the timing, nature, and magnitude of future generation investments in our service territories. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of reasonable and prudently incurred costs associated with Duke Energy’s regulated operations. Duke Energy is participating in legal challenges to the final rules. For more information, see "Other Matters."
Supply Chain
The Company continues to monitor the ongoing stability of markets for key materials and public policy outcomes, including the potential impacts from possible new tariffs or other actions from the new presidential administration that could disrupt or impact Duke Energy's supply chain, future financial results, capital plan execution or the achievement of its energy transition.
Goodwill
The Duke Energy Registrants performed their annual goodwill impairment tests as of August 31, 2024, as described in Note 12 to the Consolidated Financial Statements, "Goodwill and Intangible Assets." As of this date, all of the Duke Energy Registrants' reporting units' estimated fair values materially exceeded the carrying values except for the GU&I reporting unit of Duke Energy Ohio. While no goodwill impairment charges have been recorded in the accompanying Consolidated Statements of Operations, the potential for deteriorating economic conditions impacting GU&I's future cash flows or equity valuations of peer companies could impact the estimated fair value of GU&I, and goodwill impairment charges could be recorded in the future.
Other
Duke Energy continues to monitor general market conditions, including the potential for interest rate pressures on the Company's cost of capital, which may impact Duke Energy's execution of its capital plan, future financial results, or the achievement of its energy transition.
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MD&A DUKE ENERGY
Results of Operations
Non-GAAP Measures
Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. These items represent income from continuing operations available to Duke Energy common stockholders in dollar and per share amounts, adjusted for the dollar and per share impact of special items. As discussed below, special items include certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. Management believes the presentation of adjusted earnings and adjusted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.
Management uses these non-GAAP financial measures for planning and forecasting, and for reporting financial results to the Board of Directors, employees, stockholders, analysts and investors. Adjusted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and EPS Available to Duke Energy Corporation common stockholders (GAAP Reported EPS), respectively.
Special items included in the periods presented include the following, which management believes do not reflect ongoing costs:
•Organizational Optimization represents costs associated with strategic repositioning to a fully regulated utility.
•Regulatory Matters primarily represents net impairment charges related to Duke Energy Carolinas' and Duke Energy Progress' North Carolina and South Carolina rate case orders and Duke Energy Carolinas' North Carolina rate case settlement, and charges related to Duke Energy Indiana post-retirement benefits.
•System Post-Implementation Costs represents the net impact of charges related to nonrecurring customer billing adjustments as a result of implementation of a new customer system.
•Preferred Redemption Costs represents charges related to the redemption of Series B Preferred Stock.
•Noncore Asset Sales and Net Impairments primarily represents charges related to certain joint venture electric transmission projects and certain renewable natural gas investments.
•Captive Storm Deductible represents charges related to an insurance deductible for Hurricane Helene property losses.
Discontinued operations primarily includes impairments on the sale of the Commercial Renewables business and results from Duke Energy's Commercial Renewables Disposal Groups.
Duke Energy’s adjusted earnings and adjusted EPS may not be comparable to similarly titled measures of another company because other companies may not calculate the measures in the same manner.
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Reconciliation of GAAP Reported Amounts to Adjusted Amounts
The following table presents a reconciliation of adjusted earnings and adjusted EPS to the most directly comparable GAAP measures.
Years Ended December 31,
(in millions, except per share amounts) Earnings EPS Earnings EPS
Adjustments to Reported:
Organizational Optimization(a) — — 95 0.13
System Post-Implementation Costs(c) 16 0.02 — —
Preferred Redemption Costs(d) 16 0.02 — —
Noncore Asset Sales and Net Impairments(e) 54 0.07 — —
Captive Storm Deductible(f) 18 0.02 — —
Note: Total EPS may not foot due to rounding.
(a) Net of tax benefit of $29 million. $110 million recorded within Operations, maintenance and other and $14 million within Impairment of assets and other charges.
(b) Net of tax benefits of $15 million and $20 million for the years ended December 31, 2024 and 2023, respectively. $42 million recorded within Impairment of assets and other charges, $29 million recorded within Operating revenues, $2 million within Operations, maintenance and other, $11 million reduction recorded within Interest Expense, and a $4 million reduction within NCI for the year ended December 31, 2024. $68 million within Impairment of assets and other charges and $16 million within Operations, maintenance and other for the year ended December 31, 2023.
(c) Net of tax benefit of $5 million. $17 million recorded within Operating Revenues, $1 million recorded within Operations, maintenance and other, and $3 million recorded within Other income and expenses.
(d) Recorded within Preferred Redemption Costs.
(e) Net of $11 million tax benefit. $69 million recorded within Equity in (losses) earnings of unconsolidated affiliates and $4 million recorded within Gains on sales of other assets and other, net.
(f) Net of $5 million tax benefit. $23 million recorded within Operations, maintenance and other.
(g) Recorded in Income (Loss) from Discontinued Operations, net of tax, and Net Income (Loss) Attributable to NCI.
Year Ended December 31, 2024, as compared to 2023
GAAP Reported EPS was $5.71 for the year ended December 31, 2024, compared to $3.54 for the year ended December 31, 2023. In addition to the drivers below, the increase in GAAP Reported Earnings/EPS was also due to higher impairments on the sale of the Commercial Renewables business in the prior year.
As discussed and shown in the table above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $5.90 for the year ended December 31, 2024, compared to $5.56 for the year ended December 31, 2023. The increase in Adjusted Earnings/Adjusted EPS was primarily due to growth from rate increases and riders, improved weather and higher sales volumes, partially offset by higher interest expense, depreciation on a growing asset base and storm costs, along with a higher effective tax rate.
SEGMENT RESULTS
The remaining information presented in this discussion of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to NCI and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Consolidated Financial Statements.
Duke Energy's segment structure includes Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I). The remainder of Duke Energy’s operations is presented as Other. See Note 3 to the Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.
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MD&A SEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE
Electric Utilities and Infrastructure
Years Ended December 31,
Operating Expenses
Fuel used in electric generation and purchased power 9,285 9,164 121
Impairment of assets and other charges 37 75 (38)
Gains on Sales of Other Assets and Other, net 3 28 (25)
Other Income and Expenses, net 528 517 11
Less: Income Attributable to Noncontrolling Interest 88 99 (11)
Year Ended December 31, 2024, as compared to 2023
EU&I’s results were driven by higher revenues from rate cases across multiple jurisdictions, improved weather, and higher weather-normal retail sales volumes, partially offset by higher depreciation. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The variance was driven primarily by:
•a $684 million increase due to higher pricing from jurisdictional rate cases primarily at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Kentucky and the 2021 Settlement at Duke Energy Florida;
•a $286 million increase in retail sales due to improved weather compared to prior year, including the impacts of decoupling;
•a $204 million increase in weather-normal retail sales volumes;
•a $120 million increase in fuel revenues primarily due to net higher fuel cost recovery in the current year;
•a $103 million increase in rider revenues primarily for the SPP at Duke Energy Florida and the Distribution Capital Investment Rider at Duke Energy Ohio; and
•a $92 million increase in other revenues for customer programs at Duke Energy Florida.
Partially offset by:
•a $190 million decrease in storm revenues at Duke Energy Florida;
•a $30 million decrease in wholesale revenues, including fuel, primarily due to the expiration of a wholesale customer contract at Duke Energy Indiana;
•a $29 million decrease in retail revenues due to an increase of a regulatory liability associated with certain employee post-retirement benefits at Duke Energy Indiana; and
•a $29 million decrease in franchise tax revenue primarily due to decreased revenues over prior year at Duke Energy Florida.
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MD&A SEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE
Operating Expenses. The variance was driven primarily by:
•a $444 million increase in depreciation and amortization primarily due to lower amortization of the DOE settlement regulatory liability and higher depreciable base at Duke Energy Florida and higher depreciable base and higher net amortizations driven by the North Carolina rate cases at Duke Energy Carolinas and Duke Energy Progress; and
•a $121 million increase in fuel used in electric generation and purchased power due to higher recovery of fuel expense at Duke Energy Carolinas and Duke Energy Progress, partially offset by lower deferred fuel amortization and lower fuel prices and volumes at Duke Energy Indiana, Duke Energy Florida and Duke Energy Ohio.
Partially offset by:
•a $124 million decrease in operation, maintenance and other primarily driven by lower storm amortization at Duke Energy Florida, partially offset by higher storm costs and service company allocations; and
•a $38 million decrease in impairment of assets and other charges primarily related to the prior year North Carolina rate case impacts at Duke Energy Carolinas and Duke Energy Progress.
Gains on Sales of Other Assets and Other, net. The decrease was primarily due to the sale of property in the prior year at Duke Energy Carolinas.
Interest Expense. The increase was primarily driven by higher outstanding debt balances and interest rates.
Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income, partially offset by an increase in the amortization of EDIT and PTCs. The ETRs for the years ended December 31, 2024, and 2023, were 14.4% and 14.7%, respectively.
Gas Utilities and Infrastructure
Years Ended December 31,
Operating Expenses
Operation, maintenance and other 478 455 23
Impairment of assets and other charges — (4) 4
Other income and expenses, net 10 106 (96)
Less: Loss Attributable to Noncontrolling Interest (1) (2) 1
Year Ended December 31, 2024, as compared to 2023
GU&I’s results were impacted primarily by higher depreciation and amortization, impairments for investments in SustainRNG projects, higher interest expense and higher property and other taxes, partially offset by higher margin growth. The following is a detailed discussion of the variance drivers by line item.
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MD&A SEGMENT RESULTS - GAS UTILITIES AND INFRASTRUCTURE
Operating Revenues.The variance was driven primarily by:
•a $50 million increase due to North Carolina base rate increases;
•a $38 million increase due to higher base rates, primarily from the Duke Energy Ohio rate case, partially offset by lower rider revenue at Duke Energy Ohio;
•a $26 million increase due to Tennessee ARM revenue;
•a $21 million increase due to unregulated RNG revenue;
•a $14 million increase due to rate stabilization mechanisms in South Carolina; and
•a $10 million increase due to customer growth.
Partially offset by:
•a $40 million decrease due to lower natural gas costs passed through to customers, partially offset by higher rates, higher volumes and lower secondary marketing sales.
Operating Expenses.The variance was driven primarily by:
•a $51 million increase in depreciation and amortization primarily due to higher depreciable base and higher depreciation for certain unregulated RNG projects;
•a $23 million increase in operations, maintenance and other primarily due to higher operating costs for unregulated RNG projects, higher pipeline safety and integrity work and higher information technology project costs; and
•a $20 million increase in property and other taxes due to a higher base upon which property taxes are levied.
Partially offset by:
•a $28 million decrease in cost of natural gas due to lower natural gas costs passed through to customers, partially offset by higher rates, higher volumes and lower secondary marketing.
Other Income and Expenses, net. The decrease was primarily due to impairments for investments in SustainRNG projects, lower revenue at SustainRNG and the revision in the prior year related to ACP ARO closure cost.
Interest Expense.The increase was primarily due to higher outstanding debt balances and interest rates.
Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income. The ETRs for the years ended December 31, 2024, and 2023, were 17.9% and 18.3%, respectively.
Other
Years Ended December 31,
Gains on Sales of Other Assets and Other, net 22 24 (2)
Other Income and Expenses, net 257 258 (1)
Less: Preferred Dividends 106 106 —
Less: Preferred Redemption Costs 16 — 16
Year Ended December 31, 2024, as compared to 2023
Other's results were impacted by higher interest expense and lower income tax and franchise tax benefits, partially offset by lower severance costs in the current year.
Operating Revenues. The increase was driven by favorable premiums related to captive insurance.
Operating Expenses. The decrease was driven by lower severance costs and lower franchise tax benefits, partially offset by higher contributions to the Duke Energy Foundation.
Interest Expense. The variance was primarily due to higher outstanding long-term debt balances and interest rates.
Income Tax Benefit. The decrease in the tax benefit was primarily due to the benefits associated with tax efficiency efforts in the prior year, partially offset by an increase in pretax losses. The ETRs for the years ended December 31, 2024, and 2023, were 31.8% and 45.2%,
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MD&A SEGMENT RESULTS - OTHER
respectively. The decrease in the ETR was primarily due to benefits associated with tax efficiency efforts in the prior year. In 2023, the Company evaluated the deductibility of certain items spanning periods open under federal statute, including items related to interest on company-owned life insurance. As a result of this analysis, the Company recorded a favorable adjustment in the prior year of approximately $120 million.
Preferred Redemption Costs. The increase was due to the redemption of the Company’s Series B Preferred Stock.
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
Years Ended December 31,
Income (Loss) From Discontinued Operations, net of tax $ 10 $ (1,455) $ 1,465
Year Ended December 31, 2024, as compared to 2023
The variance was primarily driven by higher impairments on the sale of the Commercial Renewables business in the prior year.
49
MD&A DUKE ENERGY CAROLINAS
SUBSIDIARY REGISTRANTS
Basis of Presentation
The results of operations and variance discussion for the Subsidiary Registrants is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.
DUKE ENERGY CAROLINAS
Results of Operations
Years Ended December 31,
Operating Expenses
Fuel used in electric generation and purchased power 3,251 2,524 727
Impairment of assets and other charges 31 44 (13)
Gains on Sales of Other Assets and Other, net 2 26 (24)
Other Income and Expenses, net 247 238 9
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Carolinas. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year 2024
Residential sales 4.6 %
Commercial sales 2.1 %
Industrial sales 0.5 %
Wholesale power sales 14.0 %
Joint dispatch sales (3.2) %
Total sales 3.9 %
Average number of customers 2.2 %
Year Ended December 31, 2024, as compared to 2023
Operating Revenues.The variance was driven primarily by:
•a $692 million increase in fuel revenues due to higher fuel rates and volumes;
•a $454 million increase due to higher pricing from the North Carolina and South Carolina rate cases;
•a $151 million increase in retail sales due to improved weather compared to prior year, including the impacts of decoupling;
•an $80 million increase in weather-normal retail sales volumes; and
•a $26 million increase in wholesale power revenues primarily due to higher contractual demand and sales.
Operating Expenses. The variance was driven primarily by:
•a $727 million increase in fuel used in electric generation and purchased power primarily due to the recovery of fuel expense and higher volumes, partially offset by lower natural gas prices;
•a $175 million increase in depreciation and amortization primarily due to higher depreciable base and higher net amortizations driven by the North Carolina rate case; and
•a $26 million increase in property and other taxes primarily due to higher franchise taxes.
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MD&A DUKE ENERGY CAROLINAS
Partially offset by:
•a $34 million decrease in operation, maintenance and other primarily due to lower outage costs and lower customer charge-offs, partially offset by higher storm costs; and
•a $13 million decrease in impairment of assets and other charges primarily related to the prior year North Carolina rate case order and the current year South Carolina rate case order.
Gains on Sales of Other Assets and Other, net. The decrease was primarily due to the sale of property in the prior year.
Interest Expense. The increase was primarily due to higher outstanding debt balances and interest rates.
Income Tax Expense.The increase in tax expense was primarily due to an increase in pretax income, partially offset by an increase in the amortization of EDIT.
PROGRESS ENERGY
Results of Operations
Years Ended December 31,
Operating Expenses
Fuel used in electric generation and purchased power 4,755 5,026 (271)
Impairment of assets and other charges 6 28 (22)
Gains on Sales of Other Assets and Other, net 27 27 —
Other Income and Expenses, net 235 201 34
Year Ended December 31, 2024, as compared to 2023
Operating Revenues. The variance was driven primarily by:
•a $198 million increase due to higher pricing from the North Carolina and South Carolina rate cases at Duke Energy Progress and the 2021 Settlement at Duke Energy Florida;
•a $111 million increase in weather-normal retail sales volumes at Duke Energy Progress;
•a $95 million increase in retail sales due to improved weather compared to prior year, including the impacts of decoupling, at Duke Energy Progress and Duke Energy Florida;
•a $92 million increase in higher transmission revenues, higher Clean Energy Connection subscription revenues and higher residential fixed bill program revenues at Duke Energy Florida; and
•a $56 million increase in rider revenues primarily due to higher rates for the SPP, Energy Conservation Cost Recovery and Environmental Cost Recovery at Duke Energy Florida.
Partially offset by:
•a $223 million decrease in fuel and capacity revenues primarily due to lower fuel and capacity rates billed to retail customers at Duke Energy Florida, partially offset by an increase in fuel rates and volumes at Duke Energy Progress;
•a $190 million decrease in storm revenues at Duke Energy Florida; and
•a $29 million decrease in franchise tax revenue primarily due to decreased revenues over prior year at Duke Energy Florida.
Operating Expenses. The variance was driven primarily by:
•a $271 million decrease in fuel used in electric generation and purchased power primarily due to lower fuel costs driven by lower natural gas prices and fuel cost recovery, and lower purchased power costs driven by the expiration of contracts in the current year at Duke Energy Florida, partially offset by recovery of fuel expenses and higher volumes at Duke Energy Progress;
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MD&A PROGRESS ENERGY
•a $173 million decrease in operation, maintenance and other primarily due to lower storm amortization at Duke Energy Florida;
•a $27 million decrease in property and other taxes primarily due to lower property taxes and lower franchise and gross receipts tax driven by lower revenues at Duke Energy Florida; and
•a $22 million decrease in impairment of assets and other charges due to prior year rate case impacts at Duke Energy Progress.
Partially offset by:
•a $242 million increase in depreciation and amortization due to lower amortization of the DOE settlement regulatory liability and higher depreciable base at Duke Energy Florida and higher depreciation rates driven by the North Carolina rate case and higher depreciable base at Duke Energy Progress.
Other Income and Expenses, net. The increase was primarily driven by miscellaneous income and AFUDC equity due to higher AFUDC base compared to the prior year at Duke Energy Progress.
Interest Expense. The increase was primarily due to higher outstanding debt balances and interest rates at Duke Energy Progress and Duke Energy Florida.
Income Tax Expense.The increase in tax expense was primarily due to an increase in pretax income, partially offset by an increase in PTCs.
DUKE ENERGY PROGRESS
Results of Operations
Years Ended December 31,
Operating Expenses
Fuel used in electric generation and purchased power 2,409 2,203 206
Operation, maintenance and other 1,388 1,379 9
Impairment of assets and other charges 6 29 (23)
Gains on Sales of Other Assets and Other, net 2 3 (1)
Other Income and Expenses, net 143 124 19
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Progress. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year 2024
Residential sales 3.9 %
Commercial sales 3.5 %
Industrial sales (3.3) %
Wholesale power sales 3.8 %
Joint dispatch sales 3.4 %
Total sales 3.4 %
Average number of customers 2.1 %
Year Ended December 31, 2024, as compared to 2023
Operating Revenues. The variance was driven primarily by:
•a $256 million increase in fuel revenues due to higher fuel rates and volumes;
•a $127 million increase due to higher pricing from the North Carolina and South Carolina rate cases;
•a $111 million increase in weather-normal retail sales volumes; and
•a $72 million increase in retail sales due to improved weather compared to prior year, including the impacts of decoupling.
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MD&A DUKE ENERGY PROGRESS
Operating Expenses. The variance was driven primarily by:
•a $206 million increase in fuel used in electric generation and purchased power primarily due to the recovery of fuel expenses and higher volumes, partially offset by lower natural gas prices; and
•a $70 million increase in depreciation and amortization primarily due to higher depreciation rates driven by the North Carolina rate case and higher depreciable base.
Partially offset by:
•a $23 million decrease in impairment of assets and other charges primarily due to prior year rate case impacts.
Other Income and Expenses, net. The increase was driven primarily by miscellaneous income and AFUDC equity due to higher AFUDC base compared to the prior year.
Interest Expense. The increase was driven primarily by higher outstanding debt balances and interest rates.
Income Tax Expense.The increase in tax expense was primarily due to an increase in pretax income.
DUKE ENERGY FLORIDA
Results of Operations
Years Ended December 31,
Operating Expenses
Fuel used in electric generation and purchased power 2,346 2,823 (477)
Impairment of assets and other charges — (1) 1
Gains on Sales of Other Assets and Other, net 3 2 1
Other Income and Expenses, net 86 78 8
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Florida. The below percentages for retail customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year 2024
Residential sales 1.3 %
Commercial sales 0.8 %
Industrial sales (3.2) %
Wholesale power sales 3.9 %
Total sales 1.1 %
Average number of customers 2.1 %
Year Ended December 31, 2024, as compared to 2023
Operating Revenues. The variance was driven primarily by:
•a $479 million decrease in fuel and capacity revenues primarily due to lower fuel and capacity rates;
•a $190 million decrease in storm revenues; and
•a $29 million decrease in franchise tax revenue primarily due to decreased revenues over the prior year.
Partially offset by:
•a $92 million increase in higher transmission revenues, higher Clean Energy Connection subscription revenues and higher residential fixed bill program revenues;
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MD&A DUKE ENERGY FLORIDA
•a $71 million increase due to higher pricing from the 2021 Settlement;
•a $56 million increase in rider revenues primarily due to higher rates for the SPP, Energy Conservation Cost Recovery and Environmental Cost Recovery; and
•a $23 million increase in retail sales due to improved weather compared to the prior year.
Operating Expenses. The variance was driven primarily by:
•a $477 million decrease in fuel used in electric generation and purchased power primarily due lower fuel costs driven by lower natural gas prices and fuel cost recovery and lower purchased power costs driven by the expiration of contracts in the current year;
•a $184 million decrease in operation, maintenance and other primarily due to lower storm amortization; and
•a $40 million decrease in property and other taxes primarily due to lower franchise and gross receipts tax driven by lower revenues.
Partially offset by:
•a $172 million increase in depreciation and amortization primarily due to lower amortization of the DOE settlement regulatory liability and higher depreciable base.
Interest Expense. The increase was primarily driven by lower interest credits on recovery clauses due to lower deferred balances, higher outstanding debt balances and interest rates, partially offset by lower intercompany interest expense.
DUKE ENERGY OHIO
Results of Operations
Years Ended December 31,
Operating Revenues
Operating Expenses
Fuel used in electric generation and purchased power 538 608 (70)
Operation, maintenance and other 485 478 7
Impairment of assets and other charges — 3 (3)
Gains on Sales of Other Assets and Other, net 1 1 —
Other Income and Expenses, net 19 41 (22)
Income Before Income Taxes 405 397 8
Income Tax Expense 64 63 1
The following table shows the percent changes in GWh sales of electricity, MCF of natural gas delivered and average number of electric and natural gas customers for Duke Energy Ohio. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Electric Natural Gas
Increase (Decrease) over prior year 2024 2024
Residential sales 4.5 % (6.0) %
Commercial sales 4.1 % (4.0) %
Industrial sales (3.8) % 20.2 %
Wholesale electric power sales 16.6 % n/a
Other natural gas sales n/a (1.1) %
Total sales 2.9 % (2.0) %
Average number of customers 1.1 % 0.8 %
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MD&A DUKE ENERGY OHIO
Year Ended December 31, 2024, as compared to 2023
Operating Revenues. The variance was driven primarily by:
•a $62 million increase in retail revenue riders primarily due to the Distribution Capital Investment Rider, Distribution Storm Rider and Uncollectible Expense Rider, partially offset by a decrease in the Energy Efficiency Rider;
•a $42 million increase in revenues related to higher Ohio Valley Electric Corporation (OVEC) rider collections and OVEC sales into PJM Interconnection, LLC;
•a $34 million increase due to higher pricing from the Duke Energy Ohio natural gas rate case, net of decreases in the Ohio CEP rider and Accelerated Main Replacement Program Rider;
•a $32 million increase due to higher pricing from the Duke Energy Kentucky electric rate case;
•an $18 million increase in transmission revenue; and
•a $16 million increase due to improved weather compared to prior year.
Partially offset by:
•a $177 million decrease in fuel-related revenues primarily due to lower full-service retail sales volumes, as well as decreased natural gas costs.
Operating Expenses. The variance was driven primarily by:
•a $91 million decrease in fuel expense primarily driven by lower retail prices for natural gas and purchased power and a decrease in purchased power volumes.
Partially offset by:
•a $36 million increase in depreciation and amortization primarily driven by an increase in distribution plant in service and depreciation rates resulting from the Duke Energy Kentucky electric rate case implemented in 2023 and CEP deferrals in 2024; and
•a $36 million increase in property and other taxes primarily due to a higher base upon which property taxes are levied, partially offset by lower franchise taxes.
Other Income and Expenses, net. The decreasewas primarily driven by lower intercompany interest income.
Interest Expense. The increase was primarily driven by higher outstanding debt balances and interest rates.
DUKE ENERGY INDIANA
Results of Operations
Years Ended December 31,
Operating Expenses
Fuel used in electric generation and purchased power 964 1,217 (253)
Operation, maintenance and other 671 713 (42)
Property and other taxes 50 59 (9)
Other Income and Expenses, net 62 76 (14)
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MD&A DUKE ENERGY INDIANA
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Indiana. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.
Increase (Decrease) over prior year 2024
Residential sales 4.4 %
Commercial sales 4.6 %
Industrial sales (0.2) %
Wholesale power sales (7.7) %
Total sales 1.5 %
Average number of customers 1.7 %
Year Ended December 31, 2024, as compared to 2023
Operating Revenues. The variance was driven primarily by:
•a $238 million decrease in retail fuel revenues primarily due to lower fuel rates;
•a $55 million decrease in wholesale revenues, including fuel, primarily due to the expiration of wholesale customer contracts;
•a $29 million decrease in retail revenues due to an increase of a regulatory liability associated with certain employee post-retirement benefits; and
•a $15 million decrease in revenues primarily due to the provision for rate refund related to the Load Control Adjustment rider.
Operating Expenses. The variance was driven primarily by:
•a $253 million decrease in fuel used in electric generation and purchased power primarily due to lower deferred fuel amortization and lower purchased power expense, partially offset by higher coal and natural gas costs; and
•a $42 million decrease in operation, maintenance and other primarily due to lower outage costs and lower customer charge-offs.
Other Income and Expenses, net. The decrease is primarily due to lower intercompany interest income.
Interest Expense. The increase is primarily due to higher outstanding debt balances and interest rates.
Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of EDIT.
PIEDMONT
Results of Operations
Years Ended December 31,
Operating Expenses
Operation, maintenance and other 359 344 15
Property and other taxes 55 59 (4)
Impairment of assets and other charges — (4) 4
Other Income and Expenses, net 62 66 (4)
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MD&A PIEDMONT
The following table shows the percent changes in Dth delivered and average number of customers. The percentages for all throughput deliveries represent billed and unbilled sales. Amounts are not weather-normalized.
Increase (Decrease) over prior year 2024
Residential deliveries 10.1 %
Commercial deliveries 6.9 %
Industrial deliveries (0.3) %
Power generation deliveries 10.5 %
For resale (0.6) %
Total throughput deliveries 8.2 %
Secondary market volumes (4.4) %
Average number of customers 1.6 %
Year Ended December 31, 2024, as compared to 2023
Operating Revenues.The variance was driven primarily by:
•a $50 million increase due to North Carolina base rate increases;
•a $26 million increase due to Tennessee ARM revenue;
•a $14 million increase due to rate stabilization mechanisms in South Carolina;
•a $10 million increase due to customer growth; and
•a $9 million increase due to North Carolina IMR.
Partially offset by:
•a $15 million decrease due to secondary marketing sales.
Operating Expenses.The variance was driven primarily by:
•a $24 million increase in depreciation and amortization due to higher depreciable base; and
•a $15 million increase in operations, maintenance and other primarily due to higher outside services, information technology project costs and service company costs.
Partially offset by:
•a $7 million decrease in the cost of natural gas due to lower natural gas costs passed through to customers, partially offset by higher volumes, higher rates, and lower secondary marketing.
Interest Expense. The increase was primarily due to higher outstanding debt balances and interest rates.
Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Preparation of financial statements requires the application of accounting policies, judgments, assumptions and estimates that can significantly affect the reported results of operations, cash flows or the amounts of assets and liabilities recognized in the financial statements. Judgments made include the likelihood of success of particular projects, possible legal and regulatory challenges, earnings assumptions on pension and other benefit fund investments and anticipated recovery of costs, especially through regulated operations.
Management discusses these policies, estimates and assumptions with senior members of management on a regular basis and provides periodic updates on management decisions to the Audit Committee. Management believes the areas described below require significant judgment in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods.
For further information, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."
Regulated Operations Accounting
Substantially all of Duke Energy’s regulated operations meet the criteria for application of regulated operations accounting treatment. As a result, Duke Energy is required to record assets and liabilities that would not be recorded for nonregulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities are recorded when it is probable that a regulator will require Duke Energy to make refunds to customers or reduce rates to customers for previous collections or deferred revenue for costs that have yet to be incurred.
Management continually assesses whether recorded regulatory assets are probable of future recovery by considering factors such as:
•applicable regulatory environment changes;
•historical regulatory treatment for similar costs in Duke Energy’s jurisdictions;
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MD&A CRITICAL ACCOUNTING POLICIES AND ESTIMATES
•litigation of rate orders;
•recent rate orders to other regulated entities;
•levels of actual return on equity compared to approved rates of return on equity; and
•the status of any pending or potential deregulation legislation.
If future recovery of costs ceases to be probable, asset write-offs would be recognized in operating income. Additionally, regulatory agencies can provide flexibility in the manner and timing of the depreciation of property, plant and equipment, recognition of asset retirement costs and amortization of regulatory assets, or may disallow recovery of all or a portion of certain assets.
As required by regulated operations accounting rules, significant judgment can be required to determine if an otherwise recognizable incurred cost qualifies to be deferred for future recovery as a regulatory asset. Significant judgment can also be required to determine if revenues previously recognized are for entity-specific costs that are no longer expected to be incurred or have not yet been incurred and are therefore a regulatory liability.
For further information, see Note 4 to the Consolidated Financial Statements, "Regulatory Matters."
Goodwill Impairment Assessments
Duke Energy performed its annual goodwill impairment tests for all reporting units as of August 31, 2024. Additionally, Duke Energy monitors all relevant events and circumstances during the year to determine if an interim impairment test is required. Such events and circumstances include an adverse regulatory outcome, declining financial performance and deterioration of industry or market conditions. As of August 31, 2024, all of the reporting units' estimated fair value of equity exceeded the carrying value of equity. The fair values of the reporting units were calculated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries.
Estimated future cash flows under the income approach are based on Duke Energy’s internal business plan. Significant assumptions used are growth rates, future rates of return expected to result from ongoing rate regulation and discount rates. Management determines the appropriate discount rate for each of its reporting units based on the Weighted Average Cost of Capital (WACC) for each individual reporting unit. The WACC takes into account both the after-tax cost of debt and cost of equity. A major component of the cost of equity is the current risk-free rate on 20-year U.S. Treasury bonds. In the 2024 impairment tests, Duke Energy considered implied WACCs for certain peer companies in determining the appropriate WACC rates to use in its analysis. As each reporting unit has a different risk profile based on the nature of its operations, including factors such as regulation, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company-specific risk premiums. The discount rates used for calculating the fair values as of August 31, 2024, for each of Duke Energy’s reporting units ranged from 6.3% to 6.5%. The underlying assumptions and estimates are made as of a point in time. Subsequent changes, particularly changes in the discount rates, authorized regulated rates of return or growth rates inherent in management’s estimates of future cash flows, could result in future impairment charges.
One of the most significant assumptions utilized in determining the fair value of reporting units under the market approach is implied market multiples for certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of August 31. The implied market multiples used for calculating the fair values as of August 31, 2024, for each of Duke Energy's reporting units ranged from 9.1 to 11.7.
Duke Energy primarily operates in environments that are rate-regulated. In such environments, revenue requirements are adjusted periodically by regulators based on factors including levels of costs, sales volumes and costs of capital. Accordingly, Duke Energy’s regulated utilities operate to some degree with a buffer from the direct effects, positive or negative, of significant swings in market or economic conditions. However, significant changes in discount rates or implied market multiples over a prolonged period may have a material impact on the fair value of equity.
Duke Energy has $19.3 billion in Goodwill at both December 31, 2024, and 2023. For further information, see Note 12 to the Consolidated Financial Statements, "Goodwill and Intangible Assets."
Asset Retirement Obligations
AROs are recognized for legal obligations associated with the retirement of property, plant and equipment at the present value of the projected liability in the period in which it is incurred, if a reasonable estimate of fair value can be made. Duke Energy has $10.0 billion and $9.2 billion of AROs as of December 31, 2024, and 2023, respectively. See Note 10, "Asset Retirement Obligations," for further details including a rollforward of related liabilities.
The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding the amount and timing of future cash flows, regulatory, legal, and legislative decisions, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change.
Obligations for nuclear decommissioning are based on site-specific cost studies. Duke Energy Carolinas and Duke Energy Progress assume prompt dismantlement of the nuclear facilities after operations are ceased. During 2020, Duke Energy Florida, closed an agreement for the accelerated decommissioning of the Crystal River Unit 3 nuclear power station after receiving approval from the NRC and FPSC. The retirement obligations for the decommissioning of Crystal River Unit 3 nuclear power station are measured based on accelerated decommissioning from 2020 continuing through 2027. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida also assume that spent fuel will be stored on-site until such time that it can be transferred to a yet-to-be-built DOE facility.
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MD&A CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Obligations for closure of ash basins are based upon discounted cash flows of estimated costs for site-specific plans. In April 2024, the EPA issued the 2024 CCR Rule, which significantly expands the scope of the 2015 CCR Rule by establishing regulatory requirements for inactive surface impoundments at retired generating facilities and previously unregulated coal ash sources at regulated facilities. AROs recorded on the Duke Energy Registrants' Consolidated Balance Sheets include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of these regulations and agreements.
For further information, see Notes 4, 5 and 10 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations."
Discontinued Operations
Duke Energy calculated an estimated impairment on the disposition of its Commercial Renewables Disposal Groups as of December 31, 2022. The impairment was recorded to write-down the carrying amount to fair value, less cost to sell. The fair value was primarily determined from the income approach using discounted cash flows, but also considered market information obtained through the bidding process. Estimated future cash flows under the income approach were based on Duke Energy's forecast, which was informed by existing power purchase agreements with offtakers and forward merchant curves. Significant assumptions used in the income approach include forward merchant curves and discount rates. The discount rates considered both the after-tax cost of debt and cost of equity. Duke Energy monitored the sales of the Commercial Renewables Disposal Groups and recorded adjustments to the impairments as warranted by progression in the disposition process and changes in market information.
The actual losses for the Commercial Renewables Disposal Groups could differ from the estimated losses recorded as of December 31, 2024, as the disposition process is finalized, but any differences are not expected to be material.
For further information, see Note 2 to the Consolidated Financial Statements, "Dispositions."
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
Duke Energy relies primarily upon cash flows from operations, debt and equity issuances and its existing cash and cash equivalents to fund its liquidity and capital requirements. Duke Energy’s capital requirements arise primarily from capital and investment expenditures, repaying long-term debt and paying dividends to shareholders. Additionally, due to its existing tax attributes and projected tax credits to be generated relating to the IRA, Duke Energy does not expect to be a significant federal cash taxpayer until around 2030. In 2024, Duke Energy Carolinas and Duke Energy Progress began recording nuclear PTC deferred tax assets related to the IRA and began monetizing the PTCs in the transferability markets established by the IRA beginning in October 2024. Duke Energy Carolinas and Duke Energy Progress are working with the state utility commissions on the appropriate regulatory process to pass the net realizable value back to customers over time. See Note 24 to the Consolidated Financial Statements, "Income Taxes," for more information.
From August through October 2024, a series of major storm events occurred that resulted in significant damage to utility infrastructure within our service territories and primarily impacted Duke Energy Carolinas', Duke Energy Progress' and Duke Energy Florida's electric utility operations. As discussed in Note 4, to the Consolidated Financial Statements, "Regulatory Matters," hurricanes Debby, Helene and Milton caused widespread outages and included unprecedented damage to certain assets, including the hardest-hit areas on the western coast of Florida and certain regions in western North Carolina and upstate South Carolina. Funding restoration activities and, in some cases, the complete rebuild of critical infrastructure, for a series of sequential events of this magnitude has resulted in incremental financing needs until cost recovery occurs. See "Matters Impacting Future Results" for further details and Note 7 to the Consolidated Financial Statements, "Debt and Credit Facilities," for information regarding term loans executed in response to these major storm events.
See Note 2 to the Consolidated Financial Statements, "Dispositions," for the timing and use of proceeds from the sale of certain Commercial Renewables assets to affiliates of Brookfield and ArcLight.
Capital Expenditures
Duke Energy continues to focus on reducing risk and positioning its business for future success and will invest principally in its strongest business sectors. Duke Energy’s projected capital and investment expenditures, including AFUDC debt and capitalized interest, for the next three fiscal years are included in the table below.
Total projected capital and investment expenditures $ 14,850 $ 15,200 $ 16,600
(a) Includes nuclear fuel of approximately $2.1 billion in 2025-2027.
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MD&A LIQUIDITY AND CAPITAL RESOURCES
Debt
Long-term debt maturities and the interest payable on long-term debt each represent a significant cash requirement for the Duke Energy Registrants. See Note 7 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for information regarding the Duke Energy Registrants' long-term debt at December 31, 2024, the weighted average interest rate applicable to each long-term debt category and a schedule of long-term debt maturities over the next five years.
As discussed in Note 18 to the Consolidated Financial Statements, "Variable Interest Entities," Duke Energy terminated and repaid CRC in March 2024, Duke Energy Florida terminated and repaid DEFR in April 2024 and Duke Energy Carolinas terminated and repaid DERF in January 2025. As a result of these repayments, CRC, DEFR and DERF have ceased operations and no longer acquire the receivables of Duke Energy’s subsidiaries. Duke Energy Progress continues to evaluate financing opportunities and anticipates termination and repayment of the borrowing facility of DEPR prior to its scheduled termination date in April 2025.
Fuel and Purchased Power
Fuel and purchased power includes firm capacity payments that provide Duke Energy with uninterrupted firm access to electricity transmission capacity and natural gas transportation contracts, as well as undesignated contracts and contracts that qualify as NPNS. Duke Energy’s contractual cash obligations for fuel and purchased power as of December 31, 2024, are as follows:
Payments Due by Period
Other Purchase Obligations
Other purchase obligations includes contracts for software, telephone, data and consulting or advisory services, contractual obligations for Engineering, Procurement, and Construction agreement costs for new generation plants, solar facilities, plant refurbishments, maintenance and day-to-day contract work and commitments to buy certain products. Amount excludes certain open purchase orders for services that are provided on demand for which the timing of the purchase cannot be determined. Total cash commitments for related other purchase obligation expenditures are $13,336 million, with $13,015 million expected to be paid in the next 12 months.
See Note 6 to the Consolidated Financial Statements, “Leases” for a schedule of both finance lease and operating lease payments over the next five years. See Note 10 to the Consolidated Financial Statements, “Asset Retirement Obligations” for information on nuclear decommissioning trust funding obligations and the closure of ash impoundments.
Duke Energy performs ongoing assessments of its respective guarantee obligations to determine whether any liabilities have been incurred as a result of potential increased nonperformance risk by third parties for which Duke Energy has issued guarantees. See Note 8 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further details of the guarantee arrangements. Issuance of these guarantee arrangements is not required for the majority of Duke Energy’s operations. Thus, if Duke Energy discontinued issuing these guarantees, there would not be a material impact to the consolidated results of operations, cash flows or financial position. Other than the guarantee arrangements discussed in Note 8 and off-balance sheet debt related to non-consolidated VIEs, Duke Energy does not have any material off-balance sheet financing entities or structures. For additional information, see Note 18 to the Consolidated Financial Statements, "Variable Interest Entities."
Cash and Liquidity
The Subsidiary Registrants generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Subsidiary Registrants, excluding Progress Energy, support their short-term borrowing needs through participation with Duke Energy and certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loans to affiliates participating under this arrangement. See Note 7 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for additional information on the money pool arrangement.
Duke Energy and the Subsidiary Registrants, excluding Progress Energy, may also use short-term debt, including commercial paper and the money pool, as a bridge to long-term debt financings. The levels of borrowing may vary significantly over the course of the year due to the timing of long-term debt financings and the impact of fluctuations in cash flows from operations. From time to time, Duke Energy’s current liabilities exceed current assets resulting from the use of short-term debt as a funding source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its businesses.
As of December 31, 2024, Duke Energy had approximately $314 million of cash on hand, $5.8 billion available under its $9 billion Master Credit Facility. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Refer to Notes 7 and 20 to the Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders' Equity," respectively, for information regarding Duke Energy's debt and equity issuances, debt maturities and available credit facilities including the Master Credit Facility.
Credit Facilities and Registration Statements
See Note 7 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding credit facilities and shelf registration statements available to Duke Energy and the Duke Energy Registrants.
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Dividend Payments
In 2024, Duke Energy paid quarterly cash dividends for the 98th consecutive year and expects to continue its policy of paying regular cash dividends in the future. There is no assurance as to the amount of future dividends because they depend on future earnings, capital requirements, financial condition and are subject to the discretion of the Board of Directors.
Duke Energy targets a dividend payout ratio of between 60% and 70%, based upon adjusted EPS. Duke Energy increased the dividend by approximately 2% annually in both 2024 and 2023, and the Company remains committed to continued growth of the dividend.
Dividend and Other Funding Restrictions of Duke Energy Subsidiaries
As discussed in Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” Duke Energy’s public utility operating companies have restrictions on the amount of funds that can be transferred to Duke Energy through dividends, advances or loans as a result of conditions imposed by various regulators in conjunction with merger transactions. Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures and Articles of Incorporation, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Additionally, certain other Duke Energy subsidiaries have other restrictions, such as minimum working capital and tangible net worth requirements pursuant to debt and other agreements that limit the amount of funds that can be transferred to Duke Energy. At December 31, 2024, the amount of restricted net assets of subsidiaries of Duke Energy that may not be distributed to Duke Energy in the form of a loan or dividend does not exceed a material amount of Duke Energy’s net assets. Other than a prohibition from declaring common stock dividends should dividend payments be deferred on the Series A Preferred Stock, Duke Energy does not have any legal or other restrictions on paying common stock dividends to shareholders out of its consolidated equity accounts. Although these restrictions cap the amount of funding the various operating subsidiaries can provide to Duke Energy, management does not believe these restrictions will have a significant impact on Duke Energy’s ability to access cash to meet its payment of dividends on common stock and other future funding obligations.
Cash Flows From Operating Activities
Cash flows from operations of EU&I and GU&I are primarily driven by sales of electricity and natural gas, respectively, and costs of operations. These cash flows from operations are relatively stable and comprise a substantial portion of Duke Energy’s operating cash flows. Weather conditions, working capital and commodity price fluctuations and unanticipated expenses including unplanned plant outages, storms, legal costs and related settlements can affect the timing and level of cash flows from operations.
As part of Duke Energy’s continued effort to improve its cash flows from operations and liquidity, Duke Energy works with vendors to improve terms and conditions, including the extension of payment terms. To support this effort, Duke Energy has a voluntary supply chain finance program (the “program”) under which suppliers, at their sole discretion, may sell their receivables from Duke Energy to the participating financial institution. The financial institution administers the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. A significant deterioration in the credit quality of Duke Energy, economic downturn or changes in the financial markets could limit the financial institutions willingness to participate in the program. Duke Energy does not believe such risk would have a material impact on our cash flows from operations or liquidity, as substantially all our payments are made outside the program.
Duke Energy believes it has sufficient liquidity resources through the commercial paper markets, and ultimately, the Master Credit Facility, to support these operations. Cash flows from operations are subject to a number of other factors, including, but not limited to, regulatory constraints, economic trends and market volatility (see Item 1A, “Risk Factors,” for additional information).
Debt and Equity Issuances
Depending on availability based on the issuing entity, the credit rating of the issuing entity, and market conditions, the Subsidiary Registrants prefer to issue first mortgage bonds and secured debt, followed by unsecured debt. This preference is the result of generally higher credit ratings for first mortgage bonds and secured debt, which typically result in lower interest costs. Duke Energy Corporation primarily issues unsecured debt.
In 2025, Duke Energy anticipates issuing additional securities of $12.2 billion through debt capital markets. In certain instances, Duke Energy may utilize instruments other than senior notes, including equity-content securities such as subordinated debt or preferred stock. Proceeds will primarily be for the purpose of funding capital expenditures and debt maturities. See Note 7 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt issuances. In addition, in order to fund incremental growth capital, Duke Energy plans to issue $6.5 billion of common stock equity from 2025-2029, including $1 billion in 2025, through the dividend reinvestment and ATM programs. See Note 20 to the Consolidated Financial Statements, “Stockholders’ Equity” for further details.
Duke Energy’s capitalization is balanced between debt and equity as shown in the table below.
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Restrictive Debt Covenants
Duke Energy’s debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio to not exceed 65% for each borrower, excluding Piedmont, and 70% for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements or sublimits thereto. The Duke Energy Registrants were in compliance with all other covenants related to their debt agreements as of December 31, 2024. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.
Credit Ratings
Moody’s Investors Service, Inc. and S&P provide credit ratings for various Duke Energy Registrants. The following table includes Duke Energy and certain subsidiaries’ credit ratings and ratings outlook as of February 2025.
Moody's S&P
Duke Energy Corporation Stable Stable
Issuer Credit Rating Baa2 BBB+
Senior Unsecured Debt Baa2 BBB
Junior Subordinated Debt/Preferred Stock Baa3/Ba1 BBB-
Commercial Paper P-2 A-2
Duke Energy Carolinas Stable Stable
Senior Secured Debt Aa3 A
Senior Unsecured Debt A2 BBB+
Progress Energy Stable Stable
Senior Unsecured Debt Baa1 BBB
Duke Energy Progress Stable Stable
Senior Secured Debt Aa3 A
Duke Energy Florida Stable Stable
Senior Secured Debt A1 A
Senior Unsecured Debt A3 BBB+
Duke Energy Ohio Stable Stable
Senior Secured Debt A2 A
Senior Unsecured Debt Baa1 BBB+
Duke Energy Indiana Stable Stable
Senior Secured Debt Aa3 A
Senior Unsecured Debt A2 BBB+
Duke Energy Kentucky Stable Stable
Senior Unsecured Debt Baa1 BBB+
Piedmont Natural Gas Stable Stable
Senior Unsecured A3 BBB+
Credit ratings are intended to provide credit lenders a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold. The Duke Energy Registrants’ credit ratings are dependent on the rating agencies’ assessments of their ability to meet their debt principal and interest obligations when they come due. If, as a result of market conditions or other factors, the Duke Energy Registrants are unable to maintain current balance sheet strength, or if earnings and cash flow outlook materially deteriorates, credit ratings could be negatively impacted.
Cash Flow Information
The following table summarizes Duke Energy’s cash flows for the two most recently completed fiscal years.
Years Ended December 31,
Cash flows provided by (used in):
Net increase (decrease) in cash, cash equivalents and restricted cash 64 (246)
Cash, cash equivalents and restricted cash at beginning of period 357 603
Cash, cash equivalents and restricted cash at end of period $ 421 $ 357
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OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows for the two most recently completed fiscal years.
Years Ended December 31,
Contributions to qualified pension plans (100) (100) —
Net cash provided by operating activities $ 12,328 $ 9,878 $ 2,450
The variance was driven primarily by:
•a $1,435 million increase in net income, after adjustment for non-cash items, primarily due to growth from rate increases and riders, improved weather, higher sales volumes, and net proceeds from the sales of transferable tax credits, partially offset by higher interest expense and storm costs, along with a higher effective tax rate; and
•an $928 million increase in net working capital and changes in other assets and liabilities amounts, primarily due to higher recovery of deferred fuel costs and the timing of accruals and payments, partially offset by higher deferred storm costs.
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows for the two most recently completed fiscal years.
Years Ended December 31,
Debt and equity securities, net 100 63 37
Net cash used in investing activities $ (13,123) $ (12,475) $ (648)
The variance relates primarily to the disposal of the Commercial Renewables business, with higher sales proceeds received in the prior year, partially offset by lower capital expenditures in the current year.
The primary use of cash related to investing activities is typically capital, investment and acquisition expenditures, net of return of investment capital, detailed by reportable business segment in the following table.
Years Ended December 31,
FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows for the two most recently completed fiscal years.
Years Ended December 31,
Redemption of preferred stock (1,000) — (1,000)
Notes payable and commercial paper (927) 142 (1,069)
Contributions from noncontrolling interests 47 278 (231)
Net cash provided by financing activities $ 859 $ 2,351 $ (1,492)
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The variance was driven primarily by:
•a $1,069 million decrease in net borrowings from notes payable and commercial paper;
•a $1,000 million decrease due to the redemption of Series B preferred stock in the current year; and
•a $231 million decrease in contributions from NCI, primarily due to the prior year sale of the Commercial Renewables business.
Partially offset by:
•a $397 million increase in proceeds from issuances of common stock in the current year; and
•a $308 million increase in proceeds from net issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term debt.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management Policies
The Enterprise Risk Management policy framework at Duke Energy includes strategic, operational, project execution and financial or transaction related risks. Enterprise Risk Management includes market risk as part of the financial and transaction related risks in its framework.
Duke Energy is exposed to market risks associated with commodity prices, interest rates and equity prices. Duke Energy has established comprehensive risk management policies to monitor and manage these market risks. Duke Energy’s Chief Executive Officer and Chief Financial Officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The Finance and Risk Management Committee of the Board of Directors receives periodic updates from the Chief Risk Officer and other members of management on market risk positions, corporate exposures and overall risk management activities. The Chief Risk Officer is responsible for the overall governance of managing commodity price risk, including monitoring exposure limits.
The following disclosures about market risk contain forward-looking statements that involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. See Item 1A, “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Information” for a discussion of the factors that may impact any such forward-looking statements made herein.