Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy and Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. 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.

DUKE ENERGY

Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy 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.

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the three months ended March 31, 2022, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2021.

Executive Overview

Advancing Our Clean Energy Transformation

During the first quarter, we continued to execute on our clean energy transformation, delivering strong, sustainable value for shareholders, customers, communities and employees.

• We’re targeting energy generated from coal to represent less than 5% by 2030 and a full exit by 2035, subject to regulatory approvals. We’ve made strong progress in reducing carbon emissions from electricity generation (a 44% reduction from 2005) and have committed to do more (at least 50% reduction by 2030 and net-zero by 2050).

• We continued to execute financings under our Sustainable Financing Framework, raising approximately $2 billion during the quarter under the structure, with proceeds being allocated to eligible projects such as electric grid investments that support the deployment of renewables, new solar generation and battery storage, storm hardening and electric vehicle infrastructure, as well as expenditures that enable opportunities for diverse and small businesses.

Regulatory Activity. During the first quarter of 2022, we continued to monitor developments while moving our regulatory strategy forward. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

• In April 2022, the MGP Settlement was approved without modification by the PUCO. The MGP Settlement resolved certain issues related to MGP remediation costs and the Tax Act as it related to Duke Energy Ohio’s natural gas operations.

• In April 2022, Piedmont Natural Gas filed a request with the South Carolina Public Service Commission to recover recent capital investments and update its operating costs and billing rates through a general rate case proceeding.

• In March 2022, the Indiana Supreme Court issued an opinion, which absent IURC preapproval of deferred accounting treatment determined DEI could not recover coal ash closure costs incurred between base rate cases. In connection with the rate case application filed in Indiana in 2019 by Duke Energy Indiana, the IURC issued an order in June 2020, which among other things provided for recovery of approximately $211 million of certain coal ash closure costs incurred by DEI prior to the IURC Order. The Court remanded the matter back to the IURC for proceedings consistent with the opinion. Duke Energy Indiana filed a request for rehearing with the Supreme Court on April 11, 2022.

• In February 2022, the NCUC adopted rules to govern the application and review process for the PBR authorized under HB 951. In April 2022, the NCUC adopted rules to govern the securitization of 50% of the North Carolina retail portion of the remaining net book value of retiring coal plants pursuant to HB 951. The rules are constructive and consistent with the policy objectives of HB 951. We remain engaged in next steps including developing an initial carbon reduction plan.

• In January 2022, the NCUC issued an order approving the stipulation of partial settlement related to the 2021 Piedmont North Carolina Rate Case, which included a base rate increase of $67 million, subject to completion of the Robeson County LNG facility and the Pender Onslow County expansion project.

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

Future spending of coal ash costs, including amounts recorded for depreciation and liability accretion, is expected to continue to be deferred and recovered in future rate cases or rider filings. The majority of spend is expected to occur over the next 15-20 years.

MD&A			MATTERS IMPACTING FUTURE RESULTS

Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's (IDEM) partial approval of five of Duke Energy Indiana’s ash pond site closure plans at Gallagher Station. The petition does not challenge the other basin closures approved by IDEM at other Indiana stations. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash. In January 2022, Duke Energy Indiana received a letter from the EPA regarding interpretation of the CCR rule. See Note 4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies" for more information.

Commercial Renewables

Duke Energy continues to monitor recoverability of renewable merchant plants located in the ERCOT West market and in the PJM West market, due to fluctuating market pricing and long-term forecasted energy prices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future undiscounted cash flows for the assets under review. A continued decline in energy market pricing or other factors unfavorably impacting the economics would likely result in a future impairment. Impairment of these assets could result in adverse impacts. For additional information, see Note 2 to the Condensed Consolidated Financial Statements, "Business Segments."

In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the ERCOT market. Duke Energy has been named in multiple lawsuits arising out of this winter storm. For more information, see Note 4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies."

Supply Chain

Duke Energy is monitoring supply chain disruptions, including the cost and availability of key components of planned generating facilities, which could impact the timing of in-service or economics of renewable projects and may result in adverse impacts on operating results. The Company is also monitoring the impacts on future financial results and clean energy goals due to the availability of solar panels as a result of the U.S. Department of Commerce investigation into the potential circumvention of anti-dumping and countervailing duties by certain Chinese companies.

Results of Operations

Non-GAAP Measures

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. 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 presented may not be comparable to similarly titled measures used by other companies because other companies may not calculate the measures in the same manner.

Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. Adjusted earnings and adjusted EPS represent income from continuing operations available to Duke Energy Corporation common stockholders in dollar and per share amounts, adjusted for the dollar and per share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings (Loss) and GAAP Reported Earnings (Loss) Per Share, respectively.

Special items included in the periods presented below include the following, which management believes do not reflect ongoing costs:

• Regulatory Matters represents the net impact of charges related to the 2022 Indiana Supreme Court ruling on coal ash.

• Gas Pipeline Investments represents additional exit obligations related to ACP.

Three Months Ended March 31, 2022, as compared to March 31, 2021

GAAP reported EPS was $1.08 for the first quarter of 2022 compared to a $1.25 in the first quarter of 2021. In addition to the drivers below, GAAP reported EPS decreased primarily due to charges related to the Indiana Supreme Court ruling on coal ash.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s first quarter 2022 adjusted EPS was $1.30 compared to $1.26 for the first quarter of 2021. The increase in adjusted EPS was primarily due to higher volumes, partially offset by higher operation and maintenance expense, including storm costs, and lower returns on benefit trusts.

MD&A			DUKE ENERGY

The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.

			Three Months Ended March 31,
			2022												2021
(in millions, except per share amounts)			Earnings						EPS						Earnings						EPS
GAAP Reported Earnings/GAAP Reported EPS			$	818					$	1.08					$	953					$	1.25
Adjustments:
Regulatory Matters(a)			173						0.22						—						—
Gas Pipeline Investments(b)			—						—						5						0.01
Adjusted Earnings/Adjusted EPS			$	991					$	1.30					$	958					$	1.26

(a)Net of tax benefit of $62 million and $22 million in noncontrolling interests.

(b)Net of tax benefit of $1 million.

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 noncontrolling interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements.

Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 2 to the Condensed Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.

Electric Utilities and Infrastructure

									Three Months Ended March 31,
(in millions)																					2022						2021						Variance
Operating Revenues																					$	6,002					$	5,281					$	721
Operating Expenses
Fuel used in electric generation and purchased power																					1,837						1,462						375
Operation, maintenance and other																					1,426						1,282						144
Depreciation and amortization																					1,131						1,057						74
Property and other taxes																					337						311						26
Impairment of assets and other charges																					214						—						214
Total operating expenses																					4,945						4,112						833
Gains on Sales of Other Assets and Other, net																					2						—						2
Operating Income																					1,059						1,169						(110)
Other Income and Expenses, net																					114						104						10
Interest Expense																					376						340						36
Income Before Income Taxes																					797						933						(136)
Income Tax Expense																					83						113						(30)
Add: Loss Attributable to Noncontrolling Interest																					9						—						9
Segment Income																					$	723					$	820					$	(97)
Duke Energy Carolinas GWh sales																					22,549						21,962						587
Duke Energy Progress GWh sales																					17,969						16,537						1,432
Duke Energy Florida GWh sales																					9,902						8,554						1,348
Duke Energy Ohio GWh sales																					5,997						6,004						(7)
Duke Energy Indiana GWh sales																					7,950						7,726						224
Total Electric Utilities and Infrastructure GWh sales																					64,367						60,783						3,584
Net proportional MW capacity in operation																					49,340						50,026						(686)

Three Months Ended March 31, 2022, as compared to March 31, 2021

Electric Utilities and Infrastructure’s lower segment income is due to the Indiana Supreme Court ruling on recovery of certain coal ash costs and higher storm costs, partially offset by higher retail sales volumes. The following is a detailed discussion of the variance drivers by line item.

MD&A			SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

Operating Revenues. The variance was driven primarily by:

• a $266 million increase in fuel revenues primarily due to higher fuel prices and retail sales volumes;

• a $243 million increase in weather-normal retail sales volumes;

• a $126 million increase in retail base rate pricing due to general rate cases in North Carolina, net of rider impacts as well as multiyear rate adjustments in Florida; and

• a $46 million increase in wholesale revenues primarily due to higher capacity volumes.

Partially offset by

• a $46 million decrease due to the Indiana Supreme Court ruling on recovery of certain coal ash costs.

Operating Expenses. The variance was driven primarily by:

• a $375 million increase in fuel used in electric generation and purchased power due to higher fuel prices and volumes from customer demand;

• a $214 million increase in impairment of assets and other charges primarily due to the Indiana Supreme Court ruling on recovery of certain coal ash costs;

• a $144 million increase in operation, maintenance and other primarily driven by higher storm costs and higher outage and maintenance costs;

• a $74 million increase in depreciation and amortization primarily due to higher plant in service and resolution of prior year rate cases, partially offset by lower depreciation related to the extension of the lives of nuclear facilities; and

• a $26 million increase in property and other taxes primarily due to higher payroll taxes due to CARES Act employee retention credits in the prior year, increased property tax as well as higher revenue related taxes.

Interest Expense. The variance was primarily driven by interest expense on excess deferred tax liabilities.

Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income. The ETRs for the three months ended March 31, 2022, and 2021, were 10.4% and 12.1%, respectively. The decrease in the ETR was primarily due to the amortization of excess deferred taxes in relation to lower pretax income.

Gas Utilities and Infrastructure

									Three Months Ended March 31,
(in millions)																					2022						2021						Variance
Operating Revenues																					$	1,032					$	775					$	257
Operating Expenses
Cost of natural gas																					481						276						205
Operation, maintenance and other																					182						102						80
Depreciation and amortization																					79						68						11
Property and other taxes																					41						35						6
Total operating expenses																					783						481						302
Operating Income																					249						294						(45)
Other Income and Expenses, Net																					17						17						—
Interest Expense																					40						33						7
Income Before Income Taxes																					226						278						(52)
Income Tax (Benefit) Expense																					(28)						33						(61)
Segment Income																					$	254					$	245					$	9
Piedmont LDC throughput (dekatherms)																					180,187,101						149,626,582						30,560,519
Duke Energy Midwest LDC throughput (Mcf)																					37,246,072						37,109,003						137,069

Three Months Ended March 31, 2022, as compared to March 31, 2021

Gas Utilities and Infrastructure’s results were impacted primarily by margin growth. The following is a detailed discussion of the variance drivers by line item.

MD&A			SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE

Operating Revenues. The variance was driven primarily by:

• a $205 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs, partially offset by lower residential volumes;

• a $35 million increase due to base rate increases;

• a $7 million increase due to rider revenues related to Ohio Capital Expenditure Program (CEP); and

• a $6 million increase due to customer growth.

Partially offset by:

• a $15 million decrease due to the MGP settlement.

Operating Expenses. The variance was driven primarily by:

• a $205 million increase in cost of natural gas due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs, partially offset by lower residential volumes;

• an $80 million increase in operation, maintenance and other primarily due to the MGP settlement; and

• an $11 million increase in depreciation and amortization due to additional plant in service and lower CEP deferrals.

Income Tax Benefit. The decrease in tax expense was primarily due to an increase in the amortization of excess deferred taxes related to the Ohio MGP Settlement and a decrease in pretax income. The ETRs for the three months ended March 31, 2022, and 2021, were -12.4% and 11.9%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes related to the Ohio MGP Settlement.

Commercial Renewables

									Three Months Ended March 31,
(in millions)																					2022						2021						Variance
Operating Revenues																					$	121					$	119					$	2
Operating Expenses
Operation, maintenance and other																					82						72						10
Depreciation and amortization																					60						53						7
Property and other taxes																					10						9						1
Total operating expenses																					152						134						18
Losses on Sales of Other Assets and Other, net																					(1)						—						(1)
Operating Loss																					(32)						(15)						(17)
Other Income and Expenses, net																					—						(25)						25
Interest Expense																					18						13						5
Loss Before Income Taxes																					(50)						(53)						3
Income Tax Benefit																					(33)						(29)						(4)
Add: Loss Attributable to Noncontrolling Interests																					28						51						(23)
Segment Income																					$	11					$	27					$	(16)
Renewable plant production, GWh																					2,988						2,588						400
Net proportional MW capacity in operation(a)																					4,753						4,294						459

(a)Certain projects are included in tax equity structures where investors have differing interests in the project's economic attributes. One hundred percent of the tax equity project's capacity is included in the table above.

Three Months Ended March 31, 2022, as compared to March 31, 2021

Commercial Renewables' results were unfavorable primarily driven by fewer project investments financed by tax equity being placed into service in the current year and higher operating expenses for projects placed in service since the prior year, offset by the impacts for losses experienced in the prior year from Texas Storm Uri.

Operating Expenses. The variance was primarily driven by a $14 million increase for higher operating expenses, depreciation, property tax expense, and other development costs from the growth of new projects and a $4 million increase for higher operating expenses attributed to maintenance and other operating expenses.

Other Income and Expenses, net. The increase was primarily due to $29 million of losses experienced in the prior year from Texas Storm Uri offset by approximately $5 million decrease in equity earnings.

Interest Expense. The increase is primarily due to a $4 million gain recorded in the prior year for an interest rate swap that did not qualify for hedge accounting.

MD&A			SEGMENT RESULTS — COMMERCIAL RENEWABLES

Income Tax Benefit. The increase in the tax benefit was primarily due to a decrease in taxes associated with tax equity investments.

Loss Attributable to Noncontrolling Interests. The variance was driven by a $23 million decrease for fewer projects placed in service financed with tax equity in the current year and a $12 million net decrease in losses allocated to tax equity members from existing tax equity structures offset by a $12 million increase for losses experienced in the prior year from Texas Storm Uri.

Other

									Three Months Ended March 31,
(in millions)																					2022						2021						Variance
Operating Revenues																					$	30					$	26					$	4
Operating Expenses																					33						28						5
Gains on Sales of Other Assets and Other, net																					1						—						1
Operating Loss																					(2)						(2)						—
Other Income and Expenses, net																					(6)						21						(27)
Interest Expense																					159						151						8
Loss Before Income Taxes																					(167)						(132)						(35)
Income Tax Benefit																					(36)						(32)						(4)
Less: Preferred Dividends																					39						39						—
Net Loss																					$	(170)					$	(139)					$	(31)

Three Months Ended March 31, 2022, as compared to March 31, 2021

The higher net loss was driven by lower return on investments and higher interest expense partially offset by higher equity earnings from the NMC investment.

Other Income and Expenses, net. The variance was primarily due to lower return on investments that fund certain employee benefit obligations partially offset by higher equity earnings from the NMC investment.

Interest Expense. The variance was primarily due to higher outstanding long-term debt.

Income Tax Benefit. The increase in the tax benefit was primarily due to an increase in pretax losses, partially offset by unfavorable tax impacts related to lower investment returns on certain employee benefit obligations. The ETRs for the three months ended March 31, 2022, and 2021, were 21.6% and 24.2%, respectively. The decrease in the ETR was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations.

DUKE ENERGY CAROLINAS

Results of Operations

			Three Months Ended March 31,
(in millions)			2022						2021						Variance
Operating Revenues			$	1,888					$	1,716					$	172
Operating Expenses
Fuel used in electric generation and purchased power			448						422						26
Operation, maintenance and other			512						441						71
Depreciation and amortization			379						359						20
Property and other taxes			93						83						10
Impairment of assets and other charges			3						—						3
Total operating expenses			1,435						1,305						130
Operating Income			453						411						42
Other Income and Expenses, net			55						48						7
Interest Expense			141						124						17
Income Before Income Taxes			367						335						32
Income Tax Expense			27						23						4
Net Income			$	340					$	312					$	28

MD&A			DUKE ENERGY CAROLINAS

The following table shows the percent changes in GWh sales and average number of customers. The 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			2022
Residential sales			(3.6)		%
General service sales			4.2		%
Industrial sales			4.7		%
Wholesale power sales			(4.6)		%
Joint dispatch sales			(30.0)		%
Total sales			2.7		%
Average number of customers			2.0		%

Three Months Ended March 31, 2022, as compared to March 31, 2021

Operating Revenues. The variance was driven primarily by:

• a $99 million increase in weather-normal retail sales volumes;

• a $31 million increase in fuel revenues due to higher prices and volumes in the current year; and

• a $20 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers.

Operating Expenses**.** The variance was driven primarily by:

• a $71 million increase in operation, maintenance and other expense primarily due to higher storm restoration costs and higher outage and maintenance costs;

• a $26 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices and changes in the generation mix, partially offset by the recovery of fuel expenses and lower coal prices; and

• a $20 million increase in depreciation and amortization primarily due to an increase in assets placed into service, and new depreciation rates associated with the North Carolina rate case, partially offset by the extension of the lives of nuclear facilities.

Interest Expense. The variance was driven by interest expense on excess deferred tax liabilities.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income, partially offset by amortization of excess deferred taxes.

PROGRESS ENERGY

Results of Operations

			Three Months Ended March 31,
(in millions)			2022						2021						Variance
Operating Revenues			$	2,992					$	2,505					$	487
Operating Expenses
Fuel used in electric generation and purchased power			1,064						795						269
Operation, maintenance and other			645						601						44
Depreciation and amortization			536						485						51
Property and other taxes			152						142						10
Total operating expenses			2,397						2,023						374
Gains on Sales of Other Assets and Other, net			2						—						2
Operating Income			597						482						115
Other Income and Expenses, net			35						43						(8)
Interest Expense			211						192						19
Income Before Income Taxes			421						333						88
Income Tax Expense			67						43						24
Net Income			354						290						64

Three Months Ended March 31, 2022, as compared to March 31, 2021

Operating Revenues. The variance was driven primarily by:

• a $237 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year;

• a $124 million increase in weather-normal retail sales volumes;

MD&A			PROGRESS ENERGY

• a $106 million increase in retail pricing due to the North Carolina rate case and base rate adjustments at Duke Energy Florida related to annual increases from the 2021 Settlement Agreement and the solar base rate adjustment; and

• a $32 million increase in wholesale revenues, net of fuel, due to higher capacity volumes.

Partially offset by:

• a $22 million decrease in capacity revenue primarily due to accelerated recovery of retired Crystal River coal units in 2021.

Operating Expenses. The variance was driven primarily by:

• a $269 million increase in fuel used in electric generation and purchased power primarily due to higher demand and higher natural gas prices;

• a $51 million increase in depreciation and amortization primarily due to increased rates at Duke Energy Florida and higher amortization of deferred coal ash and storm costs at Duke Energy Progress, partially offset by the extension of the lives at nuclear facilities at Duke Energy Progress; and

• a $44 million increase in operation, maintenance and other expense primarily due to higher storm costs at Duke Energy Progress.

Interest Expense. The variance was driven primarily by interest expense on excess deferred tax liabilities and higher outstanding debt at Duke Energy Progress.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes.

DUKE ENERGY PROGRESS

Results of Operations

			Three Months Ended March 31,
(in millions)			2022						2021						Variance
Operating Revenues			$	1,632					$	1,401					$	231
Operating Expenses
Fuel used in electric generation and purchased power			574						436						138
Operation, maintenance and other			391						357						34
Depreciation and amortization			306						285						21
Property and other taxes			49						49						—
Total operating expenses			1,320						1,127						193
Gains on Sales of Other Assets and Other, net			1						—						1
Operating Income			313						274						39
Other Income and Expenses, net			22						24						(2)
Interest Expense			85						69						16
Income Before Income Taxes			250						229						21
Income Tax Expense			35						19						16
Net Income			$	215					$	210					$	5

The following table shows the percent changes in GWh sales and average number of customers. The 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 period			2022
Residential sales			(4.5)		%
General service sales			10.3		%
Industrial sales			27.8		%
Wholesale power sales			1.0		%
Joint dispatch sales			51.4		%
Total sales			8.7		%
Average number of customers			2.0		%

Three Months Ended March 31, 2022, as compared to March 31, 2021

Operating Revenues. The variance was driven primarily by:

• a $120 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year;

• a $56 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers;

MD&A			DUKE ENERGY PROGRESS

• a $33 million increase in weather-normal retail sales volumes in the current year; and

• a $16 million increase in wholesale revenues, net of fuel, due to higher capacity volumes.

Operating Expenses. The variance was driven primarily by:

• a $138 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices and changes in the generation mix, partially offset by the recovery of fuel expenses and lower coal prices;

• a $34 million increase in operation, maintenance and other expense primarily due to higher storm costs; and

• a $21 million increase in depreciation and amortization due to higher amortization of deferred coal ash costs and amortization related to deferred storm costs, partially offset by lower depreciation related to the extension of the lives of nuclear facilities.

Interest Expense. The variance was driven primarily by interest expense on excess deferred tax liabilities and higher outstanding debt.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and the amortization of excess deferred taxes.

DUKE ENERGY FLORIDA

Results of Operations

			Three Months Ended March 31,
(in millions)			2022						2021						Variance
Operating Revenues			$	1,355					$	1,101					$	254
Operating Expenses
Fuel used in electric generation and purchased power			490						359						131
Operation, maintenance and other			249						242						7
Depreciation and amortization			231						200						31
Property and other taxes			103						93						10
Total operating expenses			1,073						894						179
Gains on Sales of Other Assets and Other, net			1						—						1
Operating Income			283						207						76
Other Income and Expenses, net			15						18						(3)
Interest Expense			84						80						4
Income Before Income Taxes			214						145						69
Income Tax Expense			43						28						15
Net Income			$	171					$	117					$	54

The following table shows the percent changes in GWh sales and average number of customers. The 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 period			2022
Residential sales			0.9		%
General service sales			4.0		%
Industrial sales			(0.9)		%
Wholesale and other			77.4		%
Total sales			15.8		%
Average number of customers			1.9		%

Three Months Ended March 31, 2022, as compared to March 31, 2021

Operating Revenues. The variance was driven primarily by:

• a $117 million increase in fuel revenue primarily due to higher retail sales volumes and higher fuel rate in current year in response to an increase in natural gas prices;

• a $91 million increase in weather-normal retail sales volumes;

• a $50 million increase in retail pricing due to base rate adjustments related to annual increases from the 2021 Settlement Agreement and the solar base rate adjustment; and

• a $16 million increase in wholesale power revenues, net of fuel, primarily due to higher capacity revenues and bulk power sales.

Partially offset by:

• a $22 million decrease in capacity revenue primarily due to accelerated recovery of the retired coal units Crystal River 1 and 2 in 2021.

MD&A			DUKE ENERGY FLORIDA

Operating Expenses. The variance was driven primarily by:

• a $131 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices;

• a $31 million increase in depreciation and amortization primarily due to an increase in depreciation rates starting in January 2022; and

• a $10 million increase in property and other taxes primarily due to an increase in gross receipts taxes.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income.

DUKE ENERGY OHIO

Results of Operations

			Three Months Ended March 31,
(in millions)			2022						2021						Variance
Operating Revenues
Regulated electric			$	412					$	363					$	49
Regulated natural gas			226						169						57
Total operating revenues			638						532						106
Operating Expenses
Fuel used in electric generation and purchased power			127						82						45
Cost of natural gas			107						51						56
Operation, maintenance and other			178						108						70
Depreciation and amortization			80						74						6
Property and other taxes			101						92						9
Total operating expenses			593						407						186
Operating Income			45						125						(80)
Other Income and Expenses, net			6						5						1
Interest Expense			30						25						5
Income Before Income Taxes			21						105						(84)
Income Tax (Benefit) Expense			(56)						14						(70)
Net Income			$	77					$	91					$	(14)

The following table shows the percent changes in GWh sales of electricity, dekatherms of natural gas delivered and average number of electric and natural gas customers. The 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			2022			2022
Residential sales			(4.9)		%	1.5		%
General service sales			(1.0)		%	1.0		%
Industrial sales			(2.9)		%	(2.3)		%
Wholesale electric power sales			(19.0)		%	n/a
Other natural gas sales			n/a			(2.8)		%
Total sales			(0.1)		%	0.4		%
Average number of customers			1.0		%	0.8		%

Three Months Ended March 31, 2022, as compared to March 31, 2021

Operating Revenues. The variance was driven primarily by:

• a $93 million increase in fuel related revenues primarily due to higher natural gas prices and increased volumes;

• a $10 million increase in retail revenue riders, primarily due to the Ohio Capital Expenditure Program (CEP), Distribution Capital Investment Rider (DCI), excise tax riders as a result of increased revenue and Kentucky Gas Weather Normalization rider, partially offset by decreases in Kentucky Environmental Surcharge Mechanism and the Ohio Tax Cuts and Jobs Act rider;

• a $9 million increase in weather-normal retail sales volumes;

• a $6 million increase in revenues related to OVEC collections and OVEC sales into PJM; and

• a $5 million increase in PJM transmission revenues as a result of increased capital spend.

Partially offset by:

• a $15 million decrease due to the MGP settlement.

MD&A			DUKE ENERGY OHIO

Operating Expenses. The variance was driven primarily by:

• a $101 million increase in fuel expense primarily driven by higher retail prices and increased volumes for natural gas and purchased power;

• a $70 million increase in operation, maintenance and other expense primarily due to the MGP settlement and higher storm costs;

• a $9 million increase in property and other taxes primarily due to increased plant in service, higher kilowatt and natural gas distribution taxes due to increased usage and a lower Network Integration Transmission Service tax deferral; and

• a $6 million increase in depreciation and amortization primarily driven by lower CEP deferrals and an increase in distribution plant in service.

Income Tax Benefit. The decrease in tax expense was primarily due to an increase in the amortization of excess deferred taxes related to the MGP Settlement and a decrease in pretax income.

DUKE ENERGY INDIANA

Results of Operations

			Three Months Ended March 31,
(in millions)			2022						2021						Variance
Operating Revenues			$	822					$	745					$	77
Operating Expenses
Fuel used in electric generation and purchased power			319						217						102
Operation, maintenance and other			192						178						14
Depreciation and amortization			156						152						4
Property and other taxes			25						21						4
Impairment of assets and other charges			211						—						211
Total operating expenses			903						568						335
Operating (Loss) Income			(81)						177						(258)
Other Income and Expenses, net			10						9						1
Interest Expense			45						50						(5)
(Loss) Income Before Income Taxes			(116)						136						(252)
Income Tax (Benefit) Expense			(37)						24						(61)
Net (Loss) Income			$	(79)					$	112					$	(191)

The following table shows the percent changes in GWh sales and average number of customers. The 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			2022
Residential sales			(3.8)		%
General service sales			0.3		%
Industrial sales			(5.3)		%
Wholesale power sales			11.9		%
Total sales			2.9		%
Average number of customers			1.3		%

Three Months Ended March 31, 2022, as compared to March 31, 2021

Operating Revenues. The variance was driven primarily by:

• a $77 million increase in fuel revenues primarily due to higher fuel cost recovery driven by customer demand and fuel prices;

• a $16 million increase in weather-normal retail sales volumes driven by higher nonresidential customer demand;

• a $14 million increase in wholesale revenues primarily due to an increase in BPM sharing provision; and

• a $9 million increase in retail sales due to favorable weather in the current year.

Partially offset by:

• a $46 million decrease due to the Indiana Supreme Court ruling on recovery of certain coal ash costs.

MD&A			DUKE ENERGY INDIANA

Operating Expenses. The variance was driven primarily by:

• a $211 million increase in impairment of assets and other charges primarily due to the Indiana Supreme Court ruling on recovery of certain coal ash costs;

• a $102 million increase in fuel used in electric generation and purchased power expense primarily due to higher purchased power expense and higher natural gas costs; and

• a $14 million increase in operation, maintenance and other primarily due to higher storm costs and employee benefits.

Income Tax Benefit. The decrease in tax expense was primarily due to the change in pretax income from the coal ash impairment based on the Indiana Supreme Court Opinion.

PIEDMONT

Results of Operations

			Three Months Ended March 31,
(in millions)			2022						2021						Variance
Operating Revenues			$	805					$	606					$	199
Operating Expenses
Cost of natural gas			374						225						149
Operation, maintenance and other			95						78						17
Depreciation and amortization			54						48						6
Property and other taxes			16						14						2
Total operating expenses			539						365						174
Operating Income			266						241						25
Other Income and Expenses, net			13						17						(4)
Interest Expense			32						29						3
Income Before Income Taxes			247						229						18
Income Tax Expense			33						26						7
Net Income			$	214					$	203					$	11

The following table shows the percent changes in dekatherms 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			2022
Residential deliveries			(4.7)		%
Commercial deliveries			2.9		%
Industrial deliveries			1.1		%
Power generation deliveries			45.8		%
For resale			(3.9)		%
Total throughput deliveries			20.4		%
Secondary market volumes			18.8		%
Average number of customers			1.6		%

The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The weather normalization adjustment mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

Three Months Ended March 31, 2022, as compared to March 31, 2021

Operating Revenues. The variance was driven primarily by:

• a $149 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs, partially offset by lower residential volumes;

• a $35 million increase due to base rate increases; and

• a $6 million increase due to customer growth.

Operating Expenses. The variance was driven primarily by:

• a $149 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs, partially offset by lower residential volumes.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes.

MD&A			LIQUIDITY AND CAPITAL RESOURCES

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, Duke Energy does not expect to be a significant federal cash taxpayer until around 2030. Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2021, included a summary and detailed discussion of projected primary sources and uses of cash for 2022 to 2024.

As of March 31, 2022, Duke Energy had approximately $853 million of cash on hand and $6.1 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 Note 5 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for information regarding Duke Energy's debt issuances and maturities, and available credit facilities including the Master Credit Facility.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.

						Three Months Ended
						March 31,
(in millions)						2022						2021
Cash flows provided by (used in):
Operating activities						$	1,795					$	2,088
Investing activities						(2,699)						(3,137)
Financing activities						1,404						1,185
Net increase in cash, cash equivalents and restricted cash						500						136
Cash, cash equivalents and restricted cash at beginning of period						520						556
Cash, cash equivalents and restricted cash at end of period						$	1,020					$	692

OPERATING CASH FLOWS

The following table summarizes key components of Duke Energy’s operating cash flows.

						Three Months Ended
						March 31,
(in millions)						2022						2021						Variance
Net income						$	820					$	941					$	(121)
Non-cash adjustments to net income						1,582						1,446						136
Payments for asset retirement obligations						(119)						(114)						(5)
Working capital						(488)						(185)						(303)
Net cash provided by operating activities						$	1,795					$	2,088					$	(293)

The variance was primarily due to timing of accruals and payments in working capital accounts.

INVESTING CASH FLOWS

The following table summarizes key components of Duke Energy’s investing cash flows.

						Three Months Ended
						March 31,
(in millions)						2022						2021						Variance
Capital, investment and acquisition expenditures						$	(2,568)					$	(2,215)					$	(353)
Other investing items						(131)						(922)						791
Net cash used in investing activities						$	(2,699)					$	(3,137)					$	438

The variance relates primarily to payment made in 2021 to fund ACP's outstanding debt and lower overall investments in the Commercial Renewables segment, partially offset by increases in capital expenditures due to higher overall investments in the Electric Utilities and Infrastructure and Gas Utilities and Infrastructure segments.

MD&A			LIQUIDITY AND CAPITAL RESOURCES

FINANCING CASH FLOWS

The following table summarizes key components of Duke Energy’s financing cash flows.

						Three Months Ended
						March 31,
(in millions)						2022						2021						Variance
Issuances of long-term debt, net						$	2,291					$	532					$	1,759
Issuances of common stock						—						5						(5)
Notes payable, commercial paper and other short-term borrowings						(44)						1,187						(1,231)
Dividends paid						(799)						(783)						(16)
Contributions from noncontrolling interests						23						303						(280)
Other financing items						(67)						(59)						(8)
Net cash provided by financing activities						$	1,404					$	1,185					$	219

The variance was primarily due to:

• a $1.8 billion increase in net proceeds from issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term debt.

Partially offset by:

• a $1.2 billion decrease in net borrowings from notes payable and commercial paper; and

• a $280 million decrease in contributions from noncontrolling interests.

OTHER MATTERS

Environmental Regulations

The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants. Refer to Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.