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 nine months ended September 30, 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 third quarter of 2022, we continued to execute on our clean energy transformation, delivering strong, sustainable value for shareholders, customers, communities and employees.

• In October 2022, we announced an additional interim target to reduce carbon emissions from electric generation by 80% by 2040. We also adopted a goal of reducing 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. Duke Energy is one of the first utilities to address the totality of its impact – 95% of the company's greenhouse gas emissions are now tied to a measurable net-zero goal. Over the next decade, we expect to deploy approximately $145 billion of capital into our regulated businesses, driven by clean energy transition investments.

• In August 2022, we announced a strategic review of our commercial renewables business, which has been an integral part of Duke Energy's renewable energy platform over the past 15 years. Since 2007, we have built a portfolio of approximately 5,000 megawatts of commercial wind, solar and battery projects across the U.S., and established a robust development pipeline. As we look forward to the remainder of this decade and beyond, we have line of sight to significant renewable, grid and other investment opportunities within our faster-growing regulated operations. In November 2022, the Board of Directors committed to a plan to sell the Commercial Renewables business segment, excluding the Offshore Wind lease for Carolina Long Bay. See Note 1 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation," for additional information.

• In August 2022, Duke Energy launched the utility industry’s first sustainable commercial paper notes focused on socioeconomic advancement. The company plans to disburse or allocate an amount equal to the net proceeds from the sustainable commercial paper notes to fund expenditures and programs related to enabling opportunities for diverse businesses.

• In August 2022, Duke Energy Carolinas filed for approval of a new demand response pilot program expected to launch in 2023 for customers in the Duke Energy Carolinas (DEC) service area. Pilot incentives will reduce vehicle lease payments for program participants who lease an eligible electric vehicle, including Ford F-150 Lightning trucks. In exchange, customers will allow their electric vehicles to feed energy back to the grid – helping to balance it during peak demand. Also in August 2022, Duke Energy Florida announced a research and development pilot program to test and evaluate the viability of the new Ford F-150 Lightning all-electric truck's high-capacity batteries as a grid edge resource.

Regulatory Activity. During the third 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 October 2022, Duke Energy Florida received approval from the FPSC for its proposed ten year storm protection plan, with minor modifications. This plan will continue to provide for investments to enhance the integrity and reliability of the state's electric grid. Also in October 2022, as a result of rising interest rates and as allowed under the 2021 Settlement, the FPSC approved an increase in Duke Energy Florida's ROE band, increasing the ROE midpoint effective in January 1, 2023 base rates from 9.85% to 10.1%.

• In October 2022, Duke Energy Progress filed a rate case in North Carolina to request an increase in base rate retail revenues. This proposal is the first by Duke Energy Progress in North Carolina to increase base rates since 2019 and is our first rate case filing in North Carolina to include a Performance Based Regulation Application and a Multiyear Rate Plan as allowed under HB 951. Duke Energy Progress’ rate request before the NCUC proposes a gradual rate increase over three years as the company continues to strengthen the electricity grid, reducing power outages for customers and facilitating the clean energy transition in a manner that supports economic development across the state.

• In September 2022, Duke Energy Progress filed a rate case in South Carolina to request an increase in base rate retail revenues. This proposal is the first by Duke Energy Progress in South Carolina to increase base rates since 2018 and is driven by ongoing investments to improve resiliency, work toward an orderly transition to a secure energy future and improve the customer experience. Duke Energy Progress’ rate request before the PSCSC proposes a step in of the proposed rate increase over two years.

• In September 2022, Duke Energy Ohio reached an electric distribution base rate settlement with the PUCO's technical staff and other parties, subject to review and approval of the PUCO.

MD&A			MATTERS IMPACTING FUTURE RESULTS

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.

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. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional coal 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

On November 1, 2022, the Board of Directors committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind lease for Carolina Long Bay. Duke Energy is actively marketing the business as two separate disposal units, the utility scale solar and wind unit and the distributed generation unit. Non-binding offers were received for the utility scale solar and wind unit in late October 2022. We are evaluating the initial offers and expect to receive final offers from select bidders in early 2023. Non-binding offers for the distributed generation unit are also expected in early 2023. Duke Energy expects to dispose of both units in mid-2023. In the fourth quarter of 2022, Duke Energy will reclassify the Commercial Renewables business segment to assets held for sale and report it as a discontinued operation. Duke Energy could record a material impairment loss in the fourth quarter of 2022 if the carrying value of one or both of the units is not expected to be recovered. If the proceeds exceed the carrying value of one or both of the units, a gain would be recognized at the closing of the transaction in mid-2023. Proceeds from a successful sale are expected to be used for debt reduction and avoidance.

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, which could impact the timing of in-service dates and may result in adverse impacts on operating results. The company is also monitoring the potential impacts on future financial results and clean energy goals due to supply chain challenges regarding the availability of transformers and renewable components like solar panels and batteries.

Other

Duke Energy is monitoring general market conditions, including rising interest rates, and evaluating the impact to its results of operations, financial position and cash flows in the future. Duke Energy is developing mitigation plans to partially offset the impacts of these general market conditions. These mitigation plans could result in charges related to a reduction in workforce, primarily in corporate and operational support roles as work is reassessed, real estate modifications to leased office space or asset impairments on property, plant and equipment.

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.

• Mark-to-Market represents the income statement impact of derivative instruments that do not qualify for hedge accounting or regulatory accounting.

MD&A			DUKE ENERGY

• Workplace and Workforce Realignment represents costs attributable to business transformation, including long-term real estate strategy changes and workforce realignment.

• Regulatory Settlements represents an impairment charge related to the South Carolina Supreme Court decision on coal ash, insurance proceeds and the Duke Energy Carolinas and Duke Energy Progress coal ash settlement.

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

Three Months Ended September 30, 2022, as compared to September 30, 2021

GAAP reported EPS was $1.81 for the third quarter of 2022 compared to $1.79 in the third quarter of 2021. GAAP reported EPS increased primarily due to regulatory settlements in the prior year and higher volumes and lower operations and maintenance expense in the current year, partially offset by lower Commercial Renewables earnings, higher depreciation and interest expense and lower returns on investments..

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s third quarter 2022 adjusted EPS was $1.78 compared to $1.88 for the third quarter of 2021. The decrease in adjusted EPS was primarily due to lower Commercial Renewables earnings, higher depreciation and interest expense and lower returns on investments, partially offset by higher volumes and lower operation and maintenance expense.

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

			Three Months Ended September 30,
			2022												2021
(in millions, except per share amounts)			Earnings						EPS						Earnings						EPS
GAAP Reported Earnings/GAAP Reported EPS			$	1,383					$	1.81					$	1,366					$	1.79
Adjustments:
Mark-to-Market(a)			(4)						—						—						—
Workplace and Workforce Realignment(b)			—						—						7						—
Regulatory Settlements(c)			—						—						64						0.09
Gas Pipeline Investments(d)			—						—						(2)						—
Discontinued Operations(e)			(23)						(0.03)						—						—
Adjusted Earnings/Adjusted EPS			$	1,356					$	1.78					$	1,435					$	1.88

(a)Net of tax expense of $2 million.

(b)Net of tax benefit of $2 million.

(c)Net of tax benefit of $19 million.

(d)Net of tax expense of $1 million.

(e)Represents the net impact of the expiration of statutes related to the International Disposal Group.

Nine Months Ended September 30, 2022, as compared to September 30, 2021

GAAP Reported EPS was $4.03 for the nine months ended September 30, 2022, compared to $4.00 for the nine months ended September 30, 2021. In addition to the drivers below, GAAP reported EPS increased due to higher volumes, favorable weather and workplace and workforce realignment costs in the prior year, partially offset by the net impact of charges related to the 2022 Indiana Supreme Court ruling on coal ash, higher operations and maintenance expense, including storm costs, the impact of GIC minority interest sale and lower returns on investments.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was $4.22 for the nine months ended September 30, 2022, compared to $4.30 for the nine months ended September 30, 2021. The decrease in adjusted EPS was primarily due to lower Commercial Renewables earnings and higher operations and maintenance expense, including storm costs,, the impact of the GIC minority interest sale and lower returns on investments, partially offset by higher volumes and favorable weather in the current year.

MD&A			DUKE ENERGY

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

			Nine Months Ended September 30,
			2022												2021
(in millions, except per share amounts)			Earnings						EPS						Earnings						EPS
GAAP Reported Earnings/GAAP Reported EPS			$	3,094					$	4.03					$	3,070					$	4.00
Adjustments:
Regulatory Matters(a)			157						0.20						—						—
Mark-to-Market(b)			12						0.02						—						—
Workplace and Workforce Realignment(c)			—						—						142						0.19
Regulatory Settlements(d)			—						—						64						0.09
Gas Pipeline Investments(e)			—						—						15						0.02
Discontinued Operations(f)			(23)						(0.03)						—						—
Adjusted Earnings/Adjusted EPS			$	3,240					$	4.22					$	3,291					$	4.30

(a)Net of tax benefit of $80 million and $20 million in noncontrolling interests.

(b)Net of tax benefit of $3 million.

(c)Net of tax benefit of $42 million.

(d)Net of tax benefit of $19 million.

(e)Net of tax benefit of $4 million.

(f)Represents the net impact of the expiration of statutes related to the International Disposal Group.

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 September 30,																		Nine Months Ended September 30,
(in millions)			2022						2021						Variance						2022						2021						Variance
Operating Revenues			$	7,439					$	6,569					$	870					$	19,576					$	17,185					$	2,391
Operating Expenses
Fuel used in electric generation and purchased power			2,653						1,864						789						6,481						4,760						1,721
Operation, maintenance and other			1,257						1,363						(106)						4,011						3,907						104
Depreciation and amortization			1,170						1,084						86						3,411						3,154						257
Property and other taxes			336						330						6						1,004						949						55
Impairment of assets and other charges			8						202						(194)						214						203						11
Total operating expenses			5,424						4,843						581						15,121						12,973						2,148
Gains on Sales of Other Assets and Other, net			7						9						(2)						12						11						1
Operating Income			2,022						1,735						287						4,467						4,223						244
Other Income and Expenses, net			114						220						(106)						381						421						(40)
Interest Expense			377						365						12						1,144						1,066						78
Income Before Income Taxes			1,759						1,590						169						3,704						3,578						126
Income Tax Expense			207						160						47						448						393						55
Less: Income Attributable to Noncontrolling Interest			12						5						7						19						5						14
Segment Income			$	1,540					$	1,425					$	115					$	3,237					$	3,180					$	57
Duke Energy Carolinas GWh sales			24,554						25,033						(479)						69,125						67,357						1,768
Duke Energy Progress GWh sales			19,608						19,219						389						54,492						51,555						2,937
Duke Energy Florida GWh sales			13,555						12,983						572						35,797						32,731						3,066
Duke Energy Ohio GWh sales			7,074						6,844						230						18,635						18,586						49
Duke Energy Indiana GWh sales			8,934						8,788						146						24,528						23,880						648
Total Electric Utilities and Infrastructure GWh sales			73,725						72,867						858						202,577						194,109						8,468
Net proportional MW capacity in operation																					49,520						49,749						(229)

MD&A			SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

Three Months Ended September 30, 2022, as compared to September 30, 2021

Electric Utilities and Infrastructure’s higher segment income is due to favorable retail sales volumes, lower operations and maintenance expense, and a prior year impairment charge related to the South Carolina Supreme Court decision on coal ash, 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 $732 million increase in fuel revenues primarily due to higher fuel prices and retail sales volumes;

• an $85 million increase in weather-normal retail sales volumes;

• a $72 million increase in wholesale revenues primarily due to higher capacity volumes; and

• a $48 million increase in rider revenues primarily due to storm securitization in North Carolina and energy efficiency programs.

Operating Expenses. The variance was driven primarily by:

• a $789 million increase in fuel used in electric generation and purchased power due to higher fuel prices and volumes from customer demand; and

• an $86 million increase in depreciation and amortization primarily due to higher plant in service and resolution of prior year rate cases.

Partially offset by:

• a $194 million decrease in impairment of assets and other charges due to a prior year impairment charge related to the South Carolina Supreme Court decision on coal ash; and

• a $106 million decrease in operation, maintenance and other primarily driven by lower employee benefits.

Other Income and Expenses, net. The decrease is primarily due to coal ash insurance litigation proceeds received in the prior year.

Interest Expense. The variance was primarily driven 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 a decrease in the amortization of excess deferred taxes. The ETRs for the three months ended September 30, 2022, and 2021, were 11.8% and 10.1%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of excess deferred taxes.

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Electric Utilities and Infrastructure’s higher segment income is due to higher retail sales volumes and favorable weather, partially offset by higher depreciation and higher storm costs. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

• a $1,526 million increase in fuel revenues primarily due to higher fuel prices and retail sales volumes;

• a $356 million increase in weather-normal retail sales volumes;

• a $238 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;

• a $149 million increase in wholesale revenues primarily due to higher capacity volumes

• a $117 million increase in rider revenues primarily due to higher sales volumes and storm securitization in North Carolina; and

• a $71 million increase in retail sales due to favorable weather compared to prior year.

Partially offset by

• a $60 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 $1,721 million increase in fuel used in electric generation and purchased power due to higher fuel prices and volumes from customer demand;

• a $257 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;

• a $104 million increase in operation, maintenance and other primarily driven by higher storm costs and higher outage and maintenance costs;

• a $55 million increase in property and other taxes primarily due to higher property taxes as well as higher revenue related taxes; and

• an $11 million increase in impairment of assets and other charges primarily due to the Indiana Supreme Court ruling on recovery of certain coal ash costs, partially offset by a prior year impairment charge related to the South Carolina Supreme Court decision on coal ash.

MD&A			SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

Other Income and Expenses, net. The decrease is primarily due to coal ash insurance litigation proceeds received in the prior year, partially offset by a 2022 settlement with the Department of Energy over spent nuclear fuel storage and higher AFUDC equity.

Interest Expense. The variance was primarily driven 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 a decrease in the amortization of excess deferred taxes. The ETRs for the nine months ended September 30, 2022, and 2021, were 12.1% and 11.0%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of excess deferred taxes.

Gas Utilities and Infrastructure

			Three Months Ended September 30,																		Nine Months Ended September 30,
(in millions)			2022						2021						Variance						2022						2021						Variance
Operating Revenues			$	427					$	289					$	138					$	1,912					$	1,391					$	521
Operating Expenses
Cost of natural gas			189						75						114						859						430						429
Operation, maintenance and other			115						102						13						410						302						108
Depreciation and amortization			80						74						6						241						216						25
Property and other taxes			29						30						(1)						103						92						11
Impairment of assets and other charges			(12)						—						(12)						(12)						—						(12)
Total operating expenses			401						281						120						1,601						1,040						561
Gains on Sales of Other Assets and Other, net			—						—						—						4						—						4
Operating Income			26						8						18						315						351						(36)
Other Income and Expenses, Net			25						25						—						61						52						9
Interest Expense			45						37						8						127						105						22
Income (Loss) Before Income Taxes			6						(4)						10						249						298						(49)
Income Tax Expense (Benefit)			2						(1)						3						(28)						39						(67)
Segment Income (Loss)			$	4					$	(3)					$	7					$	277					$	259					$	18
Piedmont LDC throughput (dekatherms)			157,145,659						134,549,588						22,596,071						463,863,034						390,210,785						73,652,249
Duke Energy Midwest LDC throughput (Mcf)			9,559,214						10,268,918						(709,704)						63,346,715						62,220,827						1,125,888

Three Months Ended September 30, 2022, as compared to September 30, 2021

Gas Utilities and Infrastructure’s results were impacted primarily by margin growth and the partial reversal of the prior year impairment related to the propane caverns in Ohio, partially offset by higher operation and maintenance costs. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

• a $114 million increase due to increased off-system sales natural gas costs and higher natural gas costs passed through to customers;

• a $17 million increase due to rider revenues related to Ohio Capital Expenditure Program (CEP); and

• a $5 million increase due to base rate increases.

Operating Expenses. The variance was driven primarily by:

• a $114 million increase due to increased off-system sales natural gas costs and higher natural gas costs passed through to customers;

• a $13 million increase in operations, maintenance and other primarily due to higher spend on internal and contract labor costs and materials; and

• a $6 million increase in depreciation and amortization due to additional plant in service.

Partially offset by:

• a $12 million decrease in impairment of assets and other charges due to the partial reversal of the prior year impairment related to the propane caverns in Ohio.

Interest Expense. The increase was primarily due to higher debt outstanding.

Income Tax Expense (Benefit). The increase in tax expense was primarily due to an increase in pretax income. The ETRs for the three months ended September 30, 2022, and 2021, were 33.3% and 25.0%, respectively. The increase in the ETR was primarily due to the amortization of excess deferred taxes in relation to higher pretax income.

MD&A			SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Gas Utilities and Infrastructure’s results were impacted primarily by margin growth, partially offset by higher operation and maintenance costs. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

• a $429 million increase due to higher natural gas costs passed through to customers, increased off-system sales activity and higher volumes;

• a $50 million increase due to base rate increases;

• a $32 million increase due to rider revenues related to Ohio CEP; and

• a $5 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 $429 million increase due to higher natural gas costs passed through to customers, increased off-system sales activity and higher volumes;

• a $108 million increase in operations, maintenance and other primarily due to the MGP settlement and higher spend on internal and contract labor costs, fleet and materials;

• a $25 million increase in depreciation and amortization due to additional plant in service and lower CEP deferrals; and

• an $11 million increase in property and other taxes due to lower CEP deferrals.

Partially offset by:

• a $12 million decrease in impairment of assets and other charges due to the partial reversal of the prior year impairment related to the propane caverns in Ohio.

Interest Expense**.** The increase was primarily due to lower AFUDC debt income and higher debt outstanding.

Income Tax Expense (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 nine months ended September 30, 2022, and 2021, were (11.2)% and 13.1%, 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 September 30,																		Nine Months Ended September 30,
(in millions)			2022						2021						Variance						2022						2021						Variance
Operating Revenues			$	130					$	117					$	13					$	372					$	355					$	17
Operating Expenses
Operation, maintenance and other			87						90						(3)						251						240						11
Depreciation and amortization			61						58						3						181						167						14
Property and other taxes			11						10						1						31						28						3
Total operating expenses			159						158						1						463						435						28
Losses on Sales of Other Assets and Other, net			—						—						—						(1)						—						(1)
Operating Loss			(29)						(41)						12						(92)						(80)						(12)
Other Income and Expenses, net			—						(2)						2						—						(24)						24
Interest Expense			18						20						(2)						55						53						2
Loss Before Income Taxes			(47)						(63)						16						(147)						(157)						10
Income Tax Benefit			(29)						(6)						(23)						(98)						(56)						(42)
Add: Loss Attributable to Noncontrolling Interests			20						135						(115)						92						253						(161)
Segment Income			$	2					$	78					$	(76)					$	43					$	152					$	(109)
Renewable plant production, GWh			2,742						2,567						175						9,160						7,942						1,218
Net proportional MW capacity in operation(a)																					4,759						4,630						129

(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.

MD&A			SEGMENT RESULTS — COMMERCIAL RENEWABLES

Three Months Ended September 30, 2022, as compared to September 30, 2021

Commercial Renewables' results were unfavorable to prior year primarily driven by fewer project investments financed by tax equity being placed into service in the current year.

Operating Revenues. The variance was primarily driven by a $10 million increase due to higher wind resource and higher market prices impacting the wind portfolio and a $6 million gain related to derivative contracts that do not qualify for hedge accounting, partially offset by a $4 million decrease in the distributed energy portfolio primarily due to fewer projects placed in service.

Income Tax Benefit. The increase in the tax benefit was primarily due to fewer project investments financed by tax equity being placed into service in the current year.

Loss Attributable to Noncontrolling Interests. The variance was primarily driven by a $100 million decrease for fewer projects placed in service financed with tax equity in the current year and a $15 million net decrease in losses allocated to tax equity members from existing tax equity structures.

Nine Months Ended September 30, 2022, as compared to September 30, 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 expenses from projects placed in service since the prior year, partially offset by the impacts for losses experienced in the prior year from Texas Storm Uri.

Operating Revenues. The variance was primarily driven by a $41 million increase due to higher wind resource and market prices impacting the wind portfolio, partially offset by a $15 million loss related to derivative contracts that do not qualify for hedge accounting and an $8 million decrease for market sales in excess of market purchases experienced during Texas Storm Uri in the prior year.

Operating Expenses. The variance was primarily driven by a $33 million increase due to higher operating expenses, depreciation, property tax expense and other development costs from the growth of new projects, partially offset by a $5 million decrease for lower 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.

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

Loss Attributable to Noncontrolling Interests. The variance was primarily driven by a $133 million decrease for fewer projects placed in service financed with tax equity in the current year and a $40 million net decrease in losses allocated to tax equity members from existing tax equity structures, partially offset by a $12 million increase for losses experienced in the prior year from Texas Storm Uri.

Other

			Three Months Ended September 30,																		Nine Months Ended September 30,
(in millions)			2022						2021						Variance						2022						2021						Variance
Operating Revenues			$	29					$	28					$	1					$	89					$	81					$	8
Operating Expenses			29						46						(17)						78						282						(204)
Gains (Losses) on Sales of Other Assets and Other, net			—						(1)						1						1						(1)						2
Operating Income (Loss)			—						(19)						19						12						(202)						214
Other Income and Expenses, net			5						25						(20)						(8)						78						(86)
Interest Expense			205						163						42						529						470						59
Loss Before Income Taxes			(200)						(157)						(43)						(525)						(594)						69
Income Tax Benefit			(52)						(63)						11						(131)						(166)						35
Less: Net (Loss) Income Attributable to Noncontrolling Interests			(1)						1						(2)						—						1						(1)
Less: Preferred Dividends			39						39						—						92						92						—
Net Loss			$	(186)					$	(134)					$	(52)					$	(486)					$	(521)					$	35

Three Months Ended September 30, 2022, as compared to September 30, 2021

The higher net loss was driven by current year higher interest rates on commercial paper, higher outstanding long-term debt and lower return on investments that fund certain employee benefit obligations.

Operating Expenses. The decrease was primarily driven by prior year asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business moved to a hybrid and remote workforce strategy and lower return on investments on certain employee benefit obligations in the current year.

Other Income and Expenses, net. The variance was primarily due to lower return on investments that fund certain employee benefit obligations.

Interest Expense. The variance was primarily due to higher interest rates on commercial paper and higher outstanding long-term debt.

PART I

Income Tax Benefit. The decrease in the tax benefit was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations, partially offset by an increase in pretax losses. The ETRs for the three months ended September 30, 2022, and 2021, were 26.0% and 40.1%, respectively. The decrease in the ETR was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations.

Nine Months Ended September 30, 2022, as compared to September 30, 2021

The lower net loss was driven by prior year asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business moved to a hybrid and remote workforce strategy, partially offset by lower return on investments that fund certain employee benefit obligations, higher outstanding long-term debt and higher interest rates on commercial paper in the current year.

Operating Expenses. The decrease was primarily driven by prior year asset impairments to optimize the company's real estate portfolio and reduce office space as parts of the business moved to a hybrid and remote workforce strategy and lower return on investments on certain employee benefit obligations in the current year.

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 and higher interest rates on commercial paper.

Income Tax Benefit. The decrease in the tax benefit was primarily due to a decrease in pretax losses and unfavorable tax impacts related to lower investment returns on certain employee benefit obligations. The ETRs for the nine months ended September 30, 2022, and 2021, were 25% and 27.9%, respectively. The decrease in the ETR was primarily due to unfavorable tax impacts related to lower investment returns on certain employee benefit obligations.

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

			Three Months Ended September 30,																		Nine Months Ended September 30,
(in millions)			2022						2021						Variance						2022						2021						Variance
Income From Discontinued Operations, net of tax			$	23					$	—					$	23					$	23					$	—					$	23

Three Months Ended September 30, 2022, as compared to September 30, 2021

The variance was primarily driven by a reduction to a previously accrued liability as a result of the expiration of tax statutes related to the International Disposal Group.

Nine Months Ended September 30, 2022, as compared to September 30, 2021

The variance was primarily driven by a reduction to a previously accrued liability as a result of the expiration of tax statutes related to the International Disposal Group.

DUKE ENERGY CAROLINAS

Results of Operations

			Nine Months Ended September 30,
(in millions)			2022						2021						Variance
Operating Revenues			$	5,844					$	5,430					$	414
Operating Expenses
Fuel used in electric generation and purchased power			1,423						1,218						205
Operation, maintenance and other			1,410						1,347						63
Depreciation and amortization			1,138						1,088						50
Property and other taxes			258						248						10
Impairment of assets and other charges			(3)						238						(241)
Total operating expenses			4,226						4,139						87
Gains on Sales of Other Assets and Other, net			4						1						3
Operating Income			1,622						1,292						330
Other Income and Expenses, net			172						218						(46)
Interest Expense			415						400						15
Income Before Income Taxes			1,379						1,110						269
Income Tax Expense			87						40						47
Net Income			$	1,292					$	1,070					$	222

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			0.6		%
General service sales			5.4		%
Industrial sales			2.7		%
Wholesale power sales			(1.2)		%
Joint dispatch sales			(35.6)		%
Total sales			2.6		%
Average number of customers			1.8		%

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Operating Revenues. The variance was driven primarily by:

• a $173 million increase in fuel revenues due to higher fuel prices and weather-normal retail sales volumes in the current year;

• a $121 million increase in weather-normal retail sales volumes;

• a $45 million increase in rider revenues primarily due to energy efficiency, storm securitization, and competitive procurement of renewable energy programs; and

• a $36 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 $205 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 $63 million increase in operation, maintenance and other expense primarily due to higher storm restoration costs and higher outage and maintenance costs; and

• a $50 million increase in depreciation and amortization primarily due to an increase in assets placed into service, new depreciation rates associated with the North Carolina rate case and a higher depreciable base, partially offset by the extension of the lives of nuclear facilities.

Partially offset by:

• a $241 million decrease in impairment of assets and other charges due to the prior year optimization of the company's real estate portfolio and reduction of office space as parts of the business moved to a hybrid and remote workforce strategy and an adjustment to the South Carolina Supreme Court decision on coal ash.

Other Income and Expenses. The variance was driven by the coal ash insurance litigation proceeds received in the prior year, partially offset by an increase in AFUDC equity due to higher AFUDC base.

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 an increase in the amortization of excess deferred taxes.

MD&A			PROGRESS ENERGY

PROGRESS ENERGY

Results of Operations

			Nine Months Ended September 30,
(in millions)			2022						2021						Variance
Operating Revenues			$	10,087					$	8,417					$	1,670
Operating Expenses
Fuel used in electric generation and purchased power			3,927						2,702						1,225
Operation, maintenance and other			1,829						1,863						(34)
Depreciation and amortization			1,607						1,430						177
Property and other taxes			472						419						53
Impairment of assets and other charges			4						79						(75)
Total operating expenses			7,839						6,493						1,346
Gains on Sales of Other Assets and Other, net			6						9						(3)
Operating Income			2,254						1,933						321
Other Income and Expenses, net			150						167						(17)
Interest Expense			616						592						24
Income Before Income Taxes			1,788						1,508						280
Income Tax Expense			289						174						115
Net Income			1,499						1,334						165
Less: Net Income Attributable to Noncontrolling Interests			1						1						—
Net Income Attributable to Parent			$	1,498					$	1,333					$	165

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Operating Revenues. The variance was driven primarily by:

• a $1,182 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year;

• a $202 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;

• a $171 million increase in weather-normal retail sales volumes;

• a $63 million increase in wholesale revenues, net of fuel, due to higher capacity volumes; and

• a $30 million increase in retail sales due to favorable weather.

Partially offset by:

• a $62 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 $1,225 million increase in fuel used in electric generation and purchased power primarily due to higher demand and higher natural gas prices;

• a $177 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 $53 million increase in property and other taxes primarily due to an increase in gross receipts taxes at Duke Energy Florida.

Partially offset by:

• a $75 million decrease in impairment of assets and other charges due to the prior year South Carolina Supreme Court decision on coal ash and optimization of the company's real estate portfolio and reduction of office space as parts of the business moved to hybrid and remote workforce strategy; and

• a $34 million decrease in operation, maintenance and other expense primarily due to reduced storm amortization at Duke Energy Florida, partially offset by higher storm costs at Duke Energy Progress.

Other Income and Expenses, net. The decrease is primarily due to coal ash insurance litigation proceeds received in the prior year at Duke Energy Progress, partially offset by a 2022 settlement with the Department of Energy over spent nuclear fuel storage at Duke Energy Florida.

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

MD&A			PROGRESS ENERGY

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

			Nine Months Ended September 30,
(in millions)			2022						2021						Variance
Operating Revenues			$	5,182					$	4,417					$	765
Operating Expenses
Fuel used in electric generation and purchased power			1,916						1,368						548
Operation, maintenance and other			1,101						1,092						9
Depreciation and amortization			890						811						79
Property and other taxes			136						129						7
Impairment of assets and other charges			4						60						(56)
Total operating expenses			4,047						3,460						587
Gains on Sales of Other Assets and Other, net			2						8						(6)
Operating Income			1,137						965						172
Other Income and Expenses, net			83						111						(28)
Interest Expense			260						226						34
Income Before Income Taxes			960						850						110
Income Tax Expense			129						50						79
Net Income			$	831					$	800					$	31

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			—		%
General service sales			3.1		%
Industrial sales			10.0		%
Wholesale power sales			2.1		%
Joint dispatch sales			43.2		%
Total sales			5.7		%
Average number of customers			1.9		%

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Operating Revenues. The variance was driven primarily by:

• a $514 million increase in fuel revenues due to higher fuel prices and retail sales volumes in the current year;

• a $111 million increase due to higher pricing from the North Carolina retail rate case, net of a return of EDIT to customers;

• a $48 million increase in weather-normal retail sales volumes;

• a $34 million increase in wholesale revenues, net of fuel, due to higher capacity volumes;

• a $29 million increase in rider revenues primarily due to storm securitization and energy efficiency, partially offset by renewable energy and energy efficiency portfolio standard programs; and

• a $19 million increase in retail sales due to favorable weather compared to prior year.

Operating Expenses. The variance was driven primarily by:

• a $548 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 expense; and

• a $79 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.

Partially offset by:

• a $56 million decrease in impairment of assets and other charges primarily due to the prior year South Carolina Supreme Court decision on coal ash and optimization of the company's real estate portfolio and reduction of office space as parts of the business moved to a hybrid and remote workforce strategy.

MD&A			DUKE ENERGY PROGRESS

Other Income and Expenses, net. The variance was primarily due to coal ash insurance litigation proceeds received in the prior year.

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 a decrease in the amortization of excess deferred taxes.

DUKE ENERGY FLORIDA

Results of Operations

			Nine Months Ended September 30,
(in millions)			2022						2021						Variance
Operating Revenues			$	4,890					$	3,987					$	903
Operating Expenses
Fuel used in electric generation and purchased power			2,011						1,335						676
Operation, maintenance and other			716						760						(44)
Depreciation and amortization			717						619						98
Property and other taxes			335						290						45
Impairment of assets and other charges			—						19						(19)
Total operating expenses			3,779						3,023						756
Gains on Sales of Other Assets and Other, net			5						1						4
Operating Income			1,116						965						151
Other Income and Expenses, net			74						54						20
Interest Expense			258						239						19
Income Before Income Taxes			932						780						152
Income Tax Expense			181						149						32
Net Income			$	751					$	631					$	120

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			3.9		%
General service sales			5.1		%
Industrial sales			6.4		%
Wholesale and other			48.7		%
Total sales			9.4		%
Average number of customers			1.7		%

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Operating Revenues. The variance was driven primarily by:

• a $668 million increase in fuel revenue primarily due to higher retail and wholesale sales volumes and a higher fuel rate in the current year in response to an increase in natural gas prices;

• a $123 million increase in weather-normal retail sales volumes;

• a $91 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;

• a $43 million increase in rider revenues primarily due to increased Storm Protection Plan rider revenue driven by higher debt and equity returns from increased capital expenditures in the current year;

• a $29 million increase in wholesale power revenues, net of fuel, primarily due to higher capacity revenues and bulk power sales; and

• an $11 million increase in retail sales due to favorable weather in the current year.

Partially offset by:

• a $62 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 $676 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices;

• a $98 million increase in depreciation and amortization primarily due to an increase in depreciation rates starting in January 2022; and

• a $45 million increase in property and other taxes primarily due to an increase in gross receipt taxes driven by higher revenues and franchise and property taxes.

Partially offset by:

• a $44 million decrease in operation, maintenance and other primarily due to reduced storm amortization and reduced vegetation management costs, partially offset by increased charge-offs; and

• a $19 million decrease in impairment of assets and other charges due to the prior year optimization of the company's real estate portfolio and reduction of office space as parts of the business moved to hybrid and remote workforce strategy.

Other Income and Expenses, net. The increase is primarily due to a 2022 settlement with the Department of Energy over spent nuclear fuel storage.

Interest Expense. The increase in interest expense was primarily due to higher outstanding debt.

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

DUKE ENERGY OHIO

Results of Operations

			Nine Months Ended September 30,
(in millions)			2022						2021						Variance
Operating Revenues
Regulated electric			$	1,320					$	1,119					$	201
Regulated natural gas			491						375						116
Total operating revenues			1,811						1,494						317
Operating Expenses
Fuel used in electric generation and purchased power			439						294						145
Cost of natural gas			174						76						98
Operation, maintenance and other			408						335						73
Depreciation and amortization			247						228						19
Property and other taxes			272						266						6
Impairment of assets and other charges			(11)						5						(16)
Total operating expenses			1,529						1,204						325
Operating Income			282						290						(8)
Other Income and Expenses, net			16						14						2
Interest Expense			92						82						10
Income Before Income Taxes			206						222						(16)
Income Tax (Benefit) Expense			(30)						34						(64)
Net Income			$	236					$	188					$	48

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			0.6		%	6.1		%
General service sales			(2.2)		%	1.7		%
Industrial sales			(8.5)		%	2.6		%
Wholesale electric power sales			(25.0)		%	n/a
Other natural gas sales			n/a			(4.8)		%
Total sales			0.3		%	1.8		%
Average number of customers			1.3		%	0.5		%

MD&A			DUKE ENERGY OHIO

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Operating Revenues. The variance was driven primarily by:

• a $227 million increase in fuel related revenues primarily due to higher retail sales volumes and a higher fuel rates in the current year in response to an increase in natural gas prices and purchased power expense;

• a $36 million increase in retail revenue riders primarily due to the Ohio CEP and Distribution Capital Investment Rider (DCI);

• a $30 million increase in other electric revenues primarily due to Distribution Decoupling rider adjustments recorded in 2021; and

• an $11 million increase in revenues related to OVEC collections and OVEC sales into PJM.

Partially offset by:

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

Operating Expenses. The variance was driven primarily by:

• a $243 million increase in fuel expense primarily driven by higher retail prices and increased volumes for natural gas and purchased power;

• a $73 million increase in operation, maintenance and other expense primarily due to the MGP settlement and higher storm costs; and

• a $19 million increase in depreciation and amortization primarily driven by lower CEP deferrals and an increase in distribution plant in service.

Partially offset by:

• a $16 million decrease in impairment of assets and other charges primarily due to the partial reversal of the prior year impairment related to the propane caverns in Ohio.

Interest Expense. The increase was primarily due to interest costs on long term debt.

Income Tax (Benefit) Expense. 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

			Nine Months Ended September 30,
(in millions)			2022						2021						Variance
Operating Revenues			$	2,835					$	2,366					$	469
Operating Expenses
Fuel used in electric generation and purchased power			1,234						710						524
Operation, maintenance and other			551						543						8
Depreciation and amortization			478						458						20
Property and other taxes			60						57						3
Impairment of assets and other charges			211						8						203
Total operating expenses			2,534						1,776						758
Operating Income			301						590						(289)
Other Income and Expenses, net			27						31						(4)
Interest Expense			138						148						(10)
Income Before Income Taxes			190						473						(283)
Income Tax Expense			1						77						(76)
Net Income			$	189					$	396					$	(207)

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			0.6		%
General service sales			2.1		%
Industrial sales			(9.2)		%
Wholesale power sales			11.2		%
Total sales			2.7		%
Average number of customers			1.4		%

MD&A			DUKE ENERGY INDIANA

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Operating Revenues. The variance was driven primarily by:

• a $406 million increase in retail fuel revenues primarily due to higher fuel cost recovery driven by retail sales volumes and fuel prices;

• an $86 million increase primarily due to wholesale revenues, including fuel revenues, driven by higher rates and BPM sharing provision; and

• a $37 million increase in weather-normal retail sales volumes driven by higher nonresidential customer demand.

Partially offset by:

• a $60 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 $524 million increase in fuel used in electric generation and purchased power expense primarily due to higher purchased power expense and higher coal and natural gas costs;

• a $203 million increase in impairment of assets and other charges primarily due to the Indiana Supreme Court ruling on recovery of certain coal ash costs; and

• a $20 million increase in depreciation and amortization primarily due to additional plant in service and the Step 2 rates true-up adjustment to depreciation expense.

Income Tax Expense. The decrease in tax expense was primarily due the change in pretax income from the coal ash impairment and an increase in the amortization of excess deferred income taxes.

PIEDMONT

Results of Operations

			Nine Months Ended September 30,
(in millions)			2022						2021						Variance
Operating Revenues			$	1,421					$	1,016					$	405
Operating Expenses
Cost of natural gas			685						354						331
Operation, maintenance and other			270						231						39
Depreciation and amortization			166						150						16
Property and other taxes			44						44						—
Impairment of assets and other charges			1						9						(8)
Total operating expenses			1,166						788						378
Gains on Sales of Other Assets and Other, net			4						—						4
Operating Income			259						228						31
Other Income and Expenses, net			41						51						(10)
Interest Expense			102						88						14
Income Before Income Taxes			198						191						7
Income Tax Expense			18						16						2
Net Income			$	180					$	175					$	5

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			(4.6)		%
Commercial deliveries			0.9		%
Industrial deliveries			0.8		%
Power generation deliveries			31.3		%
For resale			(5.1)		%
Total throughput deliveries			18.9		%
Secondary market volumes			31.8		%
Average number of customers			1.4		%

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.

MD&A			PIEDMONT

Nine Months Ended September 30, 2022, as compared to September 30, 2021

Operating Revenues. The variance was driven primarily by:

• a $331 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas costs;

• a $50 million increase due to base rate increases; and

• a $5 million increase due to customer growth.

Operating Expenses. The variance was driven primarily by:

• a $331 million increase due to higher natural gas costs passed through to customers and increased off-system sales natural gas;

• a $39 million increase in operation, maintenance and other due to higher spend on internal and contract labor costs, fleet, materials and other; and

• a $16 million increase in depreciation and amortization due to additional plant in service.

Other Income and Expenses, net. The decrease was primarily due to lower AFUDC equity income.

Interest Expense. The increase was primarily due to higher debt outstanding and lower AFUDC debt income.

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

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. 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 September 30, 2022, Duke Energy had approximately $453 million of cash on hand and $5.5 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.

						Nine Months Ended
						September 30,
(in millions)						2022						2021
Cash flows provided by (used in):
Operating activities						$	5,188					$	7,227
Investing activities						(8,630)						(8,200)
Financing activities						3,551						1,160
Net increase in cash, cash equivalents and restricted cash						109						187
Cash, cash equivalents and restricted cash at beginning of period						520						556
Cash, cash equivalents and restricted cash at end of period						$	629					$	743

MD&A			LIQUIDITY AND CAPITAL RESOURCES

OPERATING CASH FLOWS

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

						Nine Months Ended
						September 30,
(in millions)						2022						2021						Variance
Net income						$	3,113					$	2,915					$	198
Non-cash adjustments to net income						4,490						4,556						(66)
Contributions to qualified pension plans						(58)						—						(58)
Payments for asset retirement obligations						(418)						(389)						(29)
Working capital						(1,939)						145						(2,084)
Net cash provided by operating activities						$	5,188					$	7,227					$	(2,039)

The variance is primarily due to the timing of accruals and payments in working capital accounts, including fuel purchases.

INVESTING CASH FLOWS

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

						Nine Months Ended
						September 30,
(in millions)						2022						2021						Variance
Capital, investment and acquisition expenditures						$	(8,185)					$	(7,119)					$	(1,066)
Other investing items						(445)						(1,081)						636
Net cash used in investing activities						$	(8,630)					$	(8,200)					$	(430)

The variance is primarily due to higher overall investments in the Electric Utilities and Infrastructure segment, partially offset by a payment made in 2021 to fund ACP's outstanding debt.

FINANCING CASH FLOWS

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

						Nine Months Ended
						September 30,
(in millions)						2022						2021						Variance
Issuances of long-term debt, net						$	5,663					$	2,683					$	2,980
Issuances of common stock						—						5						(5)
Notes payable, commercial paper and other short-term borrowings						269						(723)						992
Dividends paid						(2,389)						(2,340)						(49)
Contributions from noncontrolling interests						132						1,556						(1,424)
Other financing items						(124)						(21)						(103)
Net cash provided by financing activities						$	3,551					$	1,160					$	2,391

The variance was primarily due to:

• a $3 billion increase in net proceeds from issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term debt; and

• a $992 million increase in net borrowings from notes payable and commercial paper.

Partially offset by:

• a $1.4 billion decrease in contributions from noncontrolling interests due to fewer project investments financed by tax equity being placed into service in the current year.

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.