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, 2023, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.

Executive Overview

Advancing Our Clean Energy Transformation

During the first quarter of 2023, we continued to execute on our clean energy transformation, delivering strong, sustainable value for shareholders, customers, communities and employees.

• In November 2022, the Board approved pursuing the sale of the Commercial Renewables business, excluding the offshore wind contract for Carolina Long Bay. We are continuing to market the business through three disposal groups. 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. We expect to dispose of these groups in the second half of 2023. See Note 2 to the Condensed Consolidated Financial Statements, "Dispositions," for additional information.

• In March 2023, we began operating the largest battery system in North Carolina, an 11-MW project in Onslow County, which will operate in conjunction with an adjacent 13-MW solar facility located on a leased site within Marine Corps Base (MCB) Camp Lejeune. Both projects are connected to a Duke Energy substation and will be used to serve all Duke Energy Progress customers. As part of an ongoing collaboration with the Department of Defense, further work could enable the solar and battery systems to improve the resiliency of MCB Camp Lejeune against outages.

• In March 2023, Duke Energy Florida announced two new solar projects as part of Clean Energy Connection, the company's community solar program. Once complete, each 74.9-MW solar facility will generate enough carbon-free electricity to power what would be the equivalent to around 23,000 homes. Additionally, in March 2023, Duke Energy Florida announced its first floating solar array pilot. The project will feature more than 1,800 floating solar modules and occupy approximately 2 acres of water surface on an existing cooling pond at the Duke Energy Hines Energy Complex in Bartow. The pilot is part of Duke Energy's Vision Florida program, which is designed to test innovative projects such as microgrids and battery energy storage, among others, to prepare the power grid for a clean energy future. We now operate 1,200 MW of solar in Florida, with plans to continue adding approximately 300 MW a year going forward.

Regulatory Activity. During the first quarter of 2023, we continued to monitor developments while moving our regulatory strategy forward. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

• In February 2023, the PSCSC approved a constructive comprehensive settlement with all parties in the Duke Energy Progress South Carolina rate case. Duke Energy Progress implemented new customer rates effective April 1, 2023.

• In February 2023, the Indiana Court of Appeals issued an opinion finding certain coal ash related expenditures should be disallowed under a statute specific to federally mandated projects and also denied a petition for rehearing on the matter. Duke Energy Indiana is evaluating whether to file a petition to transfer the case to the Indiana Supreme Court.

• In January 2023, Duke Energy Carolinas filed a rate case in North Carolina, which incorporates elements of PBR and MYRP as allowed under HB 951. HB 951 provides the framework for many of the benefits of modernized regulatory constructs in North Carolina under the direction of the NCUC. Duke Energy Progress filed its first rate case utilizing these benefits, including both PBR and MYRP, in North Carolina in October 2022, and reached partial settlements on key matters in April and May 2023.

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 be recovered in future rate cases or rider filings. The majority of spend is expected to occur over the next 10 to 15 years.

MD&A			MATTERS IMPACTING FUTURE RESULTS

Duke Energy Indiana has interpreted the CCR (Coal Combustion Residuals) 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 application and interpretation of the CCR rule for some of the ash basins at its Gallagher Station. In response to the letter, Duke Energy Indiana has submitted revised closure plans for those basins to the Indiana Department of Environmental Management (IDEM). Those closure plans are pending review by IDEM. See Notes 4 and 5 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and "Commitments and Contingencies," respectively, for more information.

Fuel Cost Recovery

As a result of rapidly rising commodity costs during 2022, including natural gas, fuel and purchased power prices in excess of amounts included in fuel-related revenues has led to an increase in the under collection of fuel costs from customers at certain jurisdictions including Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida. These amounts have been deferred in regulatory assets and have impacted the cash flows of the registrants, including increased borrowings to temporarily finance related expenditures until recovery. The Duke Energy Registrants are working with various state commissions on the timing of recovery of these amounts.

Commercial Renewables

In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables Disposal Groups. The Commercial Renewables Disposal Groups were classified as held for sale and as discontinued operations in the fourth quarter of 2022. Marketing of the disposal groups continues and Duke Energy expects to complete the sales of the disposal groups in the second half of 2023. If necessary, the loss on the sale of the assets will be updated based on market changes or the final sales price, including all closing adjustments, and could be materially different than the estimated loss. Additionally, certain other costs resulting from the transactions may be recognized in the period incurred. Proceeds from the sales are expected to be used for debt avoidance. For more information, see Note 2 to the Consolidated Financial Statements, "Dispositions."

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 (Parent) has been named in multiple lawsuits arising out of this winter storm. The legal actions against Duke Energy (Parent) related to these lawsuits will remain with Duke Energy (Parent) and any future activity related to Duke Energy (Parent) as a defendant in these lawsuits will be presented in discontinued operations. For more information, see Note 5 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.

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, adjusted earnings and adjusted EPS, discussed below. Non-GAAP financial measures are numerical measures 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.

Discontinued operations includes an estimated impairment on the sale of the Commercial Renewables business in the current year and results from Duke Energy's Commercial Renewables Disposal Groups.

Three Months Ended March 31, 2023, as compared to March 31, 2022

GAAP reported EPS was $1.01 for the first quarter of 2023 compared to $1.08 in the first quarter of 2022. GAAP reported EPS decreased primarily due to unfavorable weather, the estimated impairment on the sale of the Commercial Renewables business, higher interest expense and lower volumes, partially offset by charges from the Indiana Supreme Court ruling on coal ash in the prior year, growth from riders and other margin, lower storm costs and favorable rate case impacts.

MD&A			DUKE ENERGY

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s first quarter 2023 adjusted EPS was $1.20 compared to $1.29 for the first quarter of 2022. The decrease in adjusted EPS was primarily due to unfavorable weather, higher interest expense and lower volumes, partially offset by growth from riders and other margin, lower storm costs and favorable rate case impacts.

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

			Three Months Ended March 31,
			2023												2022
(in millions, except per share amounts)			Earnings						EPS						Earnings						EPS
GAAP Reported Earnings/GAAP Reported EPS			$	765					$	1.01					$	818					$	1.08
Adjustments:
Regulatory Matters(a)			—						—						173						0.23
Discontinued Operations(b)			145						0.19						(12)						(0.02)
Adjusted Earnings/Adjusted EPS			$	910					$	1.20					$	979					$	1.29

(a)Net of tax benefit of $62 million. $211 million recorded within Impairment of assets and other charges, $46 million within Regulated electric (Operating revenues) and $22 million within Net Loss Attributable to Noncontrolling Interests.

(b)Recorded in Loss from Discontinued Operations, net of tax, and Net Loss Attributable to Noncontrolling Interests.

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: EU&I and GU&I. The remainder of Duke Energy’s operations is presented as Other. See Note 3 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)																					2023						2022						Variance
Operating Revenues																					$	6,398					$	6,002					$	396
Operating Expenses
Fuel used in electric generation and purchased power																					2,396						1,837						559
Operation, maintenance and other																					1,269						1,426						(157)
Depreciation and amortization																					1,096						1,131						(35)
Property and other taxes																					348						337						11
Impairment of assets and other charges																					7						214						(207)
Total operating expenses																					5,116						4,945						171
Gains on Sales of Other Assets and Other, net																					1						2						(1)
Operating Income																					1,283						1,059						224
Other Income and Expenses, net																					130						114						16
Interest Expense																					452						376						76
Income Before Income Taxes																					961						797						164
Income Tax Expense																					149						83						66
Less: Income (Loss) Attributable to Noncontrolling Interest																					21						(9)						30
Segment Income																					$	791					$	723					$	68
Duke Energy Carolinas GWh sales																					20,919						22,549						(1,630)
Duke Energy Progress GWh sales																					15,345						17,969						(2,624)
Duke Energy Florida GWh sales																					8,990						9,902						(912)
Duke Energy Ohio GWh sales																					5,642						5,997						(355)
Duke Energy Indiana GWh sales																					7,350						7,950						(600)
Total Electric Utilities and Infrastructure GWh sales																					58,246						64,367						(6,121)
Net proportional MW capacity in operation																					49,784						49,340						444

Three Months Ended March 31, 2023, as compared to March 31, 2022

EU&I’s higher segment income is due to the prior year Indiana Supreme Court ruling on recovery of certain coal ash costs and lower storm costs, partially offset by higher interest expense. 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 $606 million increase in fuel revenues primarily due to higher fuel prices and cost recovery in the current year;

• a $43 million increase in rider revenues primarily due to a decrease in the return of EDIT to customers compared to the prior year at Duke Energy Carolinas and increased Storm Protection Plan rider revenue driven by higher debt and equity returns from increased capital expenditures in the current year at Duke Energy Florida;

• a $37 million increase due to the provision for rate refund recognized in the prior year related to the Indiana Supreme Court ruling; and

• a $33 million increase in price due to 2022 Duke Energy Ohio Electric retail rate case and Ohio tax reform deferrals in prior year.

Partially offset by:

• a $191 million decrease in retail sales due to unfavorable weather compared to prior year;

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

• a $61 million decrease in wholesale revenues primarily due to lower capacity revenues.

Operating Expenses. The variance was driven primarily by:

• a $559 million increase in fuel used in electric generation and purchased power due to higher fuel prices and higher amortizations of deferred fuel.

Partially offset by:

• a $207 million decrease in impairment of assets and other charges primarily due to the Indiana Supreme Court ruling on recovery of certain coal ash costs in the prior year;

• a $157 million decrease in operation, maintenance and other primarily driven by lower storm costs in the current year; and

• a $35 million decrease in depreciation and amortization primarily due to the amortization of the Department of Energy settlement regulatory liability at Duke Energy Florida.

Other Income and Expenses, net. The increase is primarily due to higher returns on deferred costs.

Interest Expense. The variance was primarily driven by higher interest rates and outstanding debt balances.

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 March 31, 2023, and 2022, were 15.5% and 10.4%, 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 March 31,
(in millions)																					2023						2022						Variance
Operating Revenues																					$	911					$	1,032					$	(121)
Operating Expenses
Cost of natural gas																					298						481						(183)
Operation, maintenance and other																					119						182						(63)
Depreciation and amortization																					85						79						6
Property and other taxes																					31						41						(10)
Impairment of assets and other charges																					1						—						1
Total operating expenses																					534						783						(249)
Operating Income																					377						249						128
Other Income and Expenses, Net																					23						17						6
Interest Expense																					50						40						10
Income Before Income Taxes																					350						226						124
Income Tax Expense (Benefit)																					63						(28)						91
Segment Income																					$	287					$	254					$	33
Piedmont LDC throughput (dekatherms)																					161,463,793						180,187,101						(18,723,308)
Duke Energy Midwest LDC throughput (Mcf)																					32,001,725						37,246,072						(5,244,347)

Three Months Ended March 31, 2023, as compared to March 31, 2022

GU&I’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 $183 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs.

Partially offset by:

• a $15 million increase due to the MGP Settlement in prior year;

• a $13 million increase due to secondary marketing sales;

• a $13 million increase due to rider revenues related to Ohio CEP;

• a $6 million increase due to North Carolina IMR; and

• a $5 million increase due to customer growth.

Operating Expenses. The variance was driven primarily by:

• a $183 million decrease in cost of natural gas due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs;

• a $63 million decrease in operations, maintenance and other primarily due to the MGP Settlement in prior year.

Interest Expense. The increase was primarily due to higher interest rates and outstanding debt balances.

Income Tax Expense. The increase in tax expense was primarily due to a decrease in the amortization of excess deferred taxes related to the MGP Settlement recorded in the prior year and an increase in pretax income. The ETRs for the three months ended March 31, 2023, and 2022, were 18.0% and -12.4%, respectively. The increase in the ETR was primarily due a decrease in the amortization of excess deferred taxes related to the MGP Settlement recorded in the prior year.

Other

									Three Months Ended March 31,
(in millions)																					2023						2022						Variance
Operating Revenues																					$	31					$	30					$	1
Operating Expenses																					29						30						(1)
Gains on Sales of Other Assets and Other, net																					6						1						5
Operating Income																					8						1						7
Other Income and Expenses, net																					62						(5)						67
Interest Expense																					256						158						98
Loss Before Income Taxes																					(186)						(162)						(24)
Income Tax Benefit																					(57)						(30)						(27)
Less: Preferred Dividends																					39						39						—
Net Loss																					$	(168)					$	(171)					$	3

Three Months Ended March 31, 2023, as compared to March 31, 2022

The lower net loss was driven by higher return on investments, lower loss experience related to captive insurance claims and an increase in the tax benefit, partially offset by higher interest expense.

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

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

Income Tax Benefit. The increase in the tax benefit was primarily due to higher state tax benefits, favorable tax impacts related to higher investment returns on certain employee benefit obligations and an increase in pretax losses. The ETRs for the three months ended March 31, 2023, and 2022, were 30.6% and 18.5%, respectively. The increase in the ETR was primarily due to higher state tax benefits and favorable tax impacts related to higher investment returns on certain employee benefit obligations.

PART I

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX

									Three Months Ended March 31,
(in millions)																					2023						2022						Variance
Loss From Discontinued Operations, net of tax																					$	(209)					$	(15)					$	(194)

Three Months Ended March 31, 2023, as compared to March 31, 2022

The variance was primarily driven by the estimated impairment on the sale of the Commercial Renewables business recorded in 2023.

DUKE ENERGY CAROLINAS

Results of Operations

			Three Months Ended March 31,
(in millions)			2023						2022						Variance
Operating Revenues			$	1,934					$	1,888					$	46
Operating Expenses
Fuel used in electric generation and purchased power			623						448						175
Operation, maintenance and other			440						512						(72)
Depreciation and amortization			366						379						(13)
Property and other taxes			95						93						2
Impairment of assets and other charges			2						3						(1)
Total operating expenses			1,526						1,435						91
Operating Income			408						453						(45)
Other Income and Expenses, net			59						55						4
Interest Expense			160						141						19
Income Before Income Taxes			307						367						(60)
Income Tax Expense			35						27						8
Net Income			$	272					$	340					$	(68)

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			2023
Residential sales			(4.3)		%
General service sales			0.8		%
Industrial sales			(5.5)		%
Wholesale power sales			(0.5)		%
Joint dispatch sales			39.2		%
Total sales			(7.2)		%
Average number of customers			1.6		%

Three Months Ended March 31, 2023, as compared to March 31, 2022

Operating Revenues. The variance was driven primarily by:

• a $153 million increase in fuel revenues due to higher fuel prices; and

• a $29 million increase in rider revenues primarily due to a decrease in the return of EDIT to customers compared to the prior year and increases in energy efficiency and competitive procurement of renewable energy program riders.

Partially offset by:

• a $93 million decrease in retail sales due to unfavorable weather compared to prior year; and

• a $49 million decrease in weather-normal retail sales volumes.

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

• a $175 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.

MD&A			DUKE ENERGY CAROLINAS

Partially offset by:

• a $72 million decrease in operation, maintenance and other expense primarily due to lower storm restoration costs and a decrease in spend on outside services; and

• a $13 million decrease in depreciation and amortization primarily due to the prior year South Carolina Supreme Court decision on coal ash and an increase in Grid Improvement Plan deferrals.

Interest Expense. The variance was driven by higher interest rates and outstanding debt balances.

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

PROGRESS ENERGY

Results of Operations

			Three Months Ended March 31,
(in millions)			2023						2022						Variance
Operating Revenues			$	3,048					$	2,992					$	56
Operating Expenses
Fuel used in electric generation and purchased power			1,191						1,064						127
Operation, maintenance and other			568						645						(77)
Depreciation and amortization			504						536						(32)
Property and other taxes			168						152						16
Impairment of assets and other charges			5						—						5
Total operating expenses			2,436						2,397						39
Gains on Sales of Other Assets and Other, net			6						2						4
Operating Income			618						597						21
Other Income and Expenses, net			59						35						24
Interest Expense			246						211						35
Income Before Income Taxes			431						421						10
Income Tax Expense			72						67						5
Net Income			359						354						5

Three Months Ended March 31, 2023, as compared to March 31, 2022

Operating Revenues. The variance was driven primarily by:

• a $183 million increase in fuel cost recovery at Duke Energy Florida driven by higher fuel rates in the current year; and

• a $23 million increase in rider revenues at Duke Energy Florida primarily due to increased Storm Protection Plan rider revenue driven by higher debt and equity returns from increased capital expenditures in the current year.

Partially offset by:

• a $54 million decrease in retail sales due to unfavorable weather compared to prior year;

• a $54 million decrease in weather-normal retail sales volumes; and

• a $45 million decrease in wholesale revenues, net of fuel, due to lower capacity volumes.

Operating Expenses. The variance was driven primarily by:

• a $127 million increase in fuel used in electric generation and purchased power primarily due to higher amortization of deferred fuel balances at Duke Energy Florida; and

• a $16 million increase in property and other taxes primarily due to higher property tax valuation adjustments at Duke Energy Florida.

Partially offset by:

• a $77 million decrease in operation, maintenance and other expense due to lower storm costs at Duke Energy Progress and lower storm amortization at Duke Energy Florida; and

• a $32 million decrease in depreciation and amortization primarily due to the amortization of Department of Energy settlement regulatory liability at Duke Energy Florida.

Other Income and Expenses, net. The increase is primarily due to higher debt returns at Duke Energy Florida.

MD&A			PROGRESS ENERGY

Interest Expense. The variance was driven primarily by higher outstanding debt balances and interest rates at Duke Energy Florida and Duke Energy Progress.

DUKE ENERGY PROGRESS

Results of Operations

			Three Months Ended March 31,
(in millions)			2023						2022						Variance
Operating Revenues			$	1,533					$	1,632					$	(99)
Operating Expenses
Fuel used in electric generation and purchased power			545						574						(29)
Operation, maintenance and other			350						391						(41)
Depreciation and amortization			315						306						9
Property and other taxes			48						49						(1)
Impairment of assets and other charges			4						—						4
Total operating expenses			1,262						1,320						(58)
Gains on Sales of Other Assets and Other, net			—						1						(1)
Operating Income			271						313						(42)
Other Income and Expenses, net			29						22						7
Interest Expense			102						85						17
Income Before Income Taxes			198						250						(52)
Income Tax Expense			29						35						(6)
Net Income			$	169					$	215					$	(46)

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			2023
Residential sales			(7.4)		%
General service sales			(9.4)		%
Industrial sales			(25.0)		%
Wholesale power sales			(10.1)		%
Joint dispatch sales			(28.5)		%
Total sales			(14.6)		%
Average number of customers			1.6		%

Three Months Ended March 31, 2023, as compared to March 31, 2022

Operating Revenues. The variance was driven primarily by:

• a $54 million decrease in retail sales due to unfavorable weather compared to prior year;

• a $26 million decrease in wholesale revenues, net of fuel, due to lower capacity volumes; and

• a $16 million decrease in weather-normal retail sales volumes.

Operating Expenses. The variance was driven primarily by:

• a $41 million decrease in operation, maintenance and other expense primarily due to lower storm costs; and

• a $29 million decrease in fuel used in electric generation and purchased power primarily due to lower volumes, partially offset by the recovery of fuel expenses and higher natural gas prices.

Partially offset by:

• a $9 million increase in depreciation and amortization due to higher depreciable base.

Interest Expense. The variance was driven primarily by higher outstanding debt balances and interest rates.

MD&A			DUKE ENERGY FLORIDA

DUKE ENERGY FLORIDA

Results of Operations

			Three Months Ended March 31,
(in millions)			2023						2022						Variance
Operating Revenues			$	1,510					$	1,355					$	155
Operating Expenses
Fuel used in electric generation and purchased power			646						490						156
Operation, maintenance and other			213						249						(36)
Depreciation and amortization			190						231						(41)
Property and other taxes			120						103						17
Impairment of assets and other charges			1						—						1
Total operating expenses			1,170						1,073						97
Gains on Sales of Other Assets and Other, net			1						1						—
Operating Income			341						283						58
Other Income and Expenses, net			30						15						15
Interest Expense			115						84						31
Income Before Income Taxes			256						214						42
Income Tax Expense			51						43						8
Net Income			$	205					$	171					$	34

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			2023
Residential sales			(0.8)		%
General service sales			1.9		%
Industrial sales			1.9		%
Wholesale and other			(47.9)		%
Total sales			(9.2)		%
Average number of customers			1.6		%

Three Months Ended March 31, 2023, as compared to March 31, 2022

Operating Revenues. The variance was driven primarily by:

• a $183 million increase in fuel and capacity revenues primarily due to an increase in fuel and capacity rates billed to retail customers; and

• a $23 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.

Partially offset by:

• a $38 million decrease in weather-normal retail sales volumes; and

• a $19 million decrease in wholesale power revenues, net of fuel, primarily due to lower capacity revenue and bulk power sales.

Operating Expenses. The variance was driven primarily by:

• a $156 million increase in fuel used in electric generation and purchased power primarily due to higher amortization of deferred fuel and capacity expense; and

• a $17 million increase in property and other taxes primarily due to property tax valuation adjustments.

Partially offset by:

• a $41 million decrease in depreciation and amortization primarily due to the amortization of Department of Energy settlement regulatory liability; and

• a $36 million decrease in operation, maintenance and other primarily due to reduced storm amortization.

Other Income and Expenses, net. The increase is primarily due to an increase in clause recovery interest income.

Interest Expense. The increase was primarily due to higher outstanding debt balances and interest rates.

MD&A			DUKE ENERGY FLORIDA

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and EDIT amortization, partially offset by new PTCs.

DUKE ENERGY OHIO

Results of Operations

			Three Months Ended March 31,
(in millions)			2023						2022						Variance
Operating Revenues
Regulated electric			$	474					$	412					$	62
Regulated natural gas			235						226						9
Total operating revenues			709						638						71
Operating Expenses
Fuel used in electric generation and purchased power			176						127						49
Cost of natural gas			92						107						(15)
Operation, maintenance and other			123						178						(55)
Depreciation and amortization			90						80						10
Property and other taxes			80						101						(21)
Total operating expenses			561						593						(32)
Operating Income			148						45						103
Other Income and Expenses, net			8						6						2
Interest Expense			36						30						6
Income Before Income Taxes			120						21						99
Income Tax Expense (Benefit)			20						(56)						76
Net Income			$	100					$	77					$	23

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			2023			2023
Residential sales			(5.4)		%	(12.6)		%
General service sales			(1.9)		%	(26.6)		%
Industrial sales			6.8		%	7.7		%
Wholesale electric power sales			(78.9)		%	n/a
Other natural gas sales			n/a			(3.7)		%
Total sales			(5.9)		%	(14.1)		%
Average number of customers			1.3		%	0.8		%

Three Months Ended March 31, 2023, as compared to March 31, 2022

Operating Revenues. The variance was driven primarily by:

• a $51 million increase in fuel-related revenues primarily due to higher retail sales volumes and higher fuel rates in the current year;

• a $33 million increase in price due to 2022 Duke Energy Ohio Electric retail rate case and Ohio tax reform deferrals in prior year; and

• a $15 million increase due to the MGP settlement in the prior year.

Partially offset by:

• a $14 million decrease due to unfavorable weather compared to prior year; and

• a $9 million decrease in retail revenue riders primarily due to the decrease in Distribution Capital Investment Rider (DCI) partially offset by increase in the Ohio CEP rider.

Operating Expenses. The variance was driven primarily by:

• a $55 million decrease in operation, maintenance and other expense primarily due to the MGP settlement in the prior year; and

• a $21 million decrease in property and other taxes primarily due to an Ohio property tax true up partially offset by franchise taxes.

MD&A			DUKE ENERGY OHIO

Partially offset by:

• a $34 million increase in fuel expense primarily driven by higher retail prices and increased volumes for natural gas and purchased power; and

• a $10 million increase in depreciation and amortization primarily driven by an increase in distribution plant in service and depreciation rates resulting from the 2022 Duke Energy Ohio Electric retail rate case implemented in 2023.

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

DUKE ENERGY INDIANA

Results of Operations

			Three Months Ended March 31,
(in millions)			2023						2022						Variance
Operating Revenues			$	975					$	822					$	153
Operating Expenses
Fuel used in electric generation and purchased power			449						319						130
Operation, maintenance and other			184						192						(8)
Depreciation and amortization			158						156						2
Property and other taxes			18						25						(7)
Impairment of assets and other charges			—						211						(211)
Total operating expenses			809						903						(94)
Operating Income (Loss)			166						(81)						247
Other Income and Expenses, net			14						10						4
Interest Expense			52						45						7
Income (Loss) Before Income Taxes			128						(116)						244
Income Tax Expense (Benefit)			22						(37)						59
Net Income (Loss)			$	106					$	(79)					$	185

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			2023
Residential sales			(9.3)		%
General service sales			(0.3)		%
Industrial sales			13.1		%
Wholesale power sales			(21.2)		%
Total sales			(7.5)		%
Average number of customers			1.2		%

Three Months Ended March 31, 2023, as compared to March 31, 2022

Operating Revenues. The variance was driven primarily by:

• a $152 million increase in retail fuel revenues primarily due to higher fuel cost recovery driven by higher fuel prices; and

• a $37 million increase primarily due to the provision for rate refund recognized in the prior year related to the Indiana Supreme Court ruling.

Partially offset by:

• a $21 million decrease in retail sales due to unfavorable weather; and

• a $16 million decrease in wholesale revenues, including fuel revenues, driven by lower rates and sales as well as lower bulk power marketing price and sharing.

Operating Expenses. The variance was driven primarily by:

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

Partially offset by:

• a $130 million increase in fuel used in electric generation and purchased power primarily due to higher deferred fuel amortization, partially offset by lower purchased power expense and natural gas costs.

MD&A			DUKE ENERGY INDIANA

Income Tax Expense (Benefit). The increase in tax expense was primarily due to a decrease in pretax income.

PIEDMONT

Results of Operations

			Three Months Ended March 31,
(in millions)			2023						2022						Variance
Operating Revenues			$	675					$	805					$	(130)
Operating Expenses
Cost of natural gas			206						374						(168)
Operation, maintenance and other			89						95						(6)
Depreciation and amortization			57						54						3
Property and other taxes			16						16						—
Impairment of assets and other charges			1						—						1
Total operating expenses			369						539						(170)
Operating Income			306						266						40
Other Income and Expenses, net			16						13						3
Interest Expense			40						32						8
Income Before Income Taxes			282						247						35
Income Tax Expense			50						33						17
Net Income			$	232					$	214					$	18

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			2023
Residential deliveries			(22.5)		%
Commercial deliveries			(19.2)		%
Industrial deliveries			(4.5)		%
Power generation deliveries			(6.1)		%
For resale			(25.5)		%
Total throughput deliveries			(10.4)		%
Secondary market volumes			(26.8)		%
Average number of customers			1.5		%

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, 2023, as compared to March 31, 2022

Operating Revenues. The variance was driven primarily by:

• a $168 million decrease due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs.

Partially offset by:

• a $13 million increase due to secondary marketing sales;

• a $6 million increase due to North Carolina IMR; and

• a $5 million increase due to customer growth.

Operating Expenses. The variance was driven primarily by:

• a $168 million decrease in cost of natural gas due to lower natural gas costs passed through to customers, lower volumes, and decreased off-system sales natural gas costs.

Interest Expense. The increase was primarily due to higher outstanding debt balances and interest rates.

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

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 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, 2022, included a summary and detailed discussion of projected primary sources and uses of cash for 2023 to 2025.

As of March 31, 2023, Duke Energy had approximately $451 million of cash on hand and $5.4 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 6 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.

In April 2023, Moody’s Investors Service, Inc. (Moody's) maintained the credit ratings and affirmed the ratings outlook for all of the Duke Energy Registrants, including Duke Energy Ohio. Operations in Kentucky are conducted through Duke Energy Ohio's wholly owned subsidiary, Duke Energy Kentucky. Moody's lowered Duke Energy Kentucky's ratings outlook from stable to negative while maintaining Duke Energy Kentucky's credit rating of Baa1 for senior unsecured debt.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.

						Three Months Ended
						March 31,
(in millions)						2023						2022
Cash flows provided by (used in):
Operating activities						$	1,483					$	1,795
Investing activities						(3,209)						(2,699)
Financing activities						1,747						1,404
Net increase in cash, cash equivalents and restricted cash						21						500
Cash, cash equivalents and restricted cash at beginning of period						603						520
Cash, cash equivalents and restricted cash at end of period						$	624					$	1,020

OPERATING CASH FLOWS

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

						Three Months Ended
						March 31,
(in millions)						2023						2022						Variance
Net income						$	761					$	820					$	(59)
Non-cash adjustments to net income						1,563						1,582						(19)
Payments for asset retirement obligations						(117)						(119)						2
Working capital						(724)						(488)						(236)
Net cash provided by operating activities						$	1,483					$	1,795					$	(312)

The variance is primarily due to the 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)						2023						2022						Variance
Capital, investment and acquisition expenditures						$	(3,152)					$	(2,568)					$	(584)
Other investing items						(57)						(131)						74
Net cash used in investing activities						$	(3,209)					$	(2,699)					$	(510)

The variance is primarily due to higher overall investments in the EU&I segment.

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)						2023						2022						Variance
Issuances of long-term debt, net						$	2,705					$	2,291					$	414
Notes payable, commercial paper and other short-term borrowings						(265)						(44)						(221)
Dividends paid						(815)						(799)						(16)
Contributions from noncontrolling interests						206						23						183
Other financing items						(84)						(67)						(17)
Net cash provided by financing activities						$	1,747					$	1,404					$	343

The variance was primarily due to:

• a $414 million increase in net proceeds from issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term debt; and

• a $183 million increase in contributions from noncontrolling interests.

Partially offset by:

• a $221 million decrease in net borrowings from notes payable and commercial paper.

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 4, "Regulatory Matters," in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2022, for more information regarding potential plant retirements and Note 4, "Regulatory Matters," to the Condensed Consolidated Financial Statements, for further information regarding regulatory filings related to the Duke Energy Registrants.