Duke Energy Corporation (Holding Company) · NYSE:DUK

Duke Energy Corporation (Holding Company) — Q4 2014 Earnings Presentation

96 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, Feb 18, 2015

1. Slide 1: Earnings Review and Business Update

   Earnings Review and Business Update February 18, 2015 | Fourth Quarter 2014 Lynn Good, President and CEO | Steve Young, Executive VP and CFO

2. Slide 2: Safe Harbor

   Safe Harbor Safe Harbor statement Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to t

3. Slide 3: Topics for today's call

   Topics for today’s call  2014 highlights  Update on Commercial Businesses  2014 financial results  Economic conditions and customer load growth update  2015 financial plan & guidance  Longer term adjusted earnings growth expectations  Financial objectives 3 | Fourth Quarter 2014 Earnings Revi

4. Slide 4: 2014 highlights

   2014 highlights Meeting financial objectives Optimizing operational performance  Achieved 2014 adjusted diluted EPS of $4.55,  Met record customer demand during the 2014 within guidance range polar vortex  Established an annual net generation record for  Adjusted diluted EPS growth through 2014

5. Slide 5: New growth projects support long-term adjusted diluted EPS growth

   New growth projects support long-term adjusted diluted EPS growth Midwest ($1.3 B) (1) Carolinas ($2.0 B) (1)  7-year T&D infrastructure  NCEMPA asset purchase investments in Indiana (SB 560) WV VA  W.S. Lee CCGT Carolinas  Regulated solar investments TN Commercial Businesses ($1.9 B) (1)(2) GA

6. Slide 6: Strategic review of International completed

   Strategic review of International completed Results of Strategic Review Benefits of Cash Repatriation  Strategic review commenced in February 2014  Tax efficient access to considerable cash with the following objectives: source over a multi-year period – $373 million deferred tax liability recogni

7. Slide 7: Sale of non-regulated MW generation to fund balanced recapitalization

   Sale of non-regulated MW generation to fund balanced recapitalization Status & Timeline Expected Use of Proceeds  Agreement to sell MW Generation business to  Due to tax net operating losses, the entire Dynegy for $2.8 billion reached in August 2014 $2.8 billion in proceeds will be available for u

8. Slide 8: 2014 adjusted diluted EPS results within guidance range

   2014 adjusted diluted EPS results within guidance range 2014 Adjusted Diluted EPS vs. Expectations Segment results vs. Original Plan (1) Regulated utilities exceeded plan by ~$40 M $4.50 - $4.65 $4.45 - $4.60 ▲ Favorable weather $4.55 ▼ O&M costs due to storm restoration & Dan River clean up Commerc

9. Slide 9: Regulated Utilities weather-normal volume trends

   Regulated Utilities weather-normal volume trends Residential (-0.1% 2014 vs. 2013) Retail customer & volume trends  ~1% growth in average number of customers; offset by lower usage per customer due to: – Changes in energy efficiency and conservation – Median household incomes and unemployment trend

10. Slide 10: 2015 adjusted diluted EPS growth drivers

    2015 adjusted diluted EPS growth drivers (1) 2015 Guidance Range Segment Adjusted EPS Drivers Key 2015 Assumptions REGULATED UTILITIES +$0.07  Capex of $7.4 - 7.8 billion $4.55-$4.75 ▲Retail & wholesale volume growth  Retail load growth of 0.5 - 1.0% ▲Earnings on regulated investments ▼Normal weat

11. Slide 11: Financing our growth investments

    Financing our growth investments Key Messages Forecasted 2015 Summary Cash Flows (1) (2)  Financing plan supports our strong Adjusted net income $ 3,260 Depreciation & amortization 3,655 balance sheet and credit quality Deferred and accrued taxes 1,325 (3)  No planned equity issuances through Othe

12. Slide 12: Adjusted EPS growth through 2017 supported by robust capital plan

    Adjusted EPS growth through 2017 supported by robust capital plan 2015 – 2019 Capital Expenditures Plan 2015 – 2017 earnings growth drivers ($ in billions) $9.8  Long-term retail load growth of ~1% $8.0 $8.4  Growth from wholesale contracts $7.8 $7.8 $5.5  Regulated earnings base growth $5.4 $4.0

13. Slide 13: Financial objectives

    Financial objectives Current year Long-term Balance Dividend earnings earnings sheet growth guidance growth strength – Achieve 2015 earnings – Deliver earnings – Continue growing – Maintain strong, per share within per share growth of the dividend within investment-grade guidance range of 4 - 6% (1)

14. Slide 14: Appendix materials

    Appendix materials Item Slides 2014 performance against guidance assumptions 15-20 2015 guidance support 21-35 Growth investments detail 36-42 Financing assumptions 43-50 Regulated Utilities supplement 51-59 International Energy supplement 60-65 Commercial Power supplement 66-69 Environmental overvi

15. Slide 15: 2014 performance against guidance assumptions

    2014 performance against guidance assumptions 15 | Fourth Quarter 2014 Earnings Review and Business Update

16. Slide 16: Update on key 2014 adjusted earnings guidance assumptions

    Update on key 2014 adjusted earnings guidance assumptions ($ in millions) 2014 2014 Assumptions Actual Adjusted segment income (expense) (1): Regulated Utilities $2,855 $2,897 International Energy $430 $428 Commercial Power $130 $109 Other ($215) ($216) Duke Energy Consolidated $3,200 $3,218 Additio

17. Slide 17: 4Q-2014 adjusted earnings summary and primary drivers

    4Q-2014 adjusted earnings summary and primary drivers Adjusted diluted EPS 4Q-2014 Primary adjusted segment income drivers (1) REGULATED UTILITIES (-$56 million) -$0.08 ▼Higher O&M, including nuclear outage cost levelization and timing of fossil plant outages -$0.10 $4.36 $4.55 INTERNATIONAL ENERGY

18. Slide 18: Fuel and Joint Dispatch savings update

    Fuel and Joint Dispatch savings update Fuel and Joint Dispatch (JDA) Savings Quarterly Savings Results ($ in millions) Guaranteed $687 million in fuel and joint $50 $450 dispatch savings to Carolinas customers over $400 $40 5 years (1) $350 $300 – Cumulative savings of $420 million through $30 $250

19. Slide 19: Weather normalized volume trends, by jurisdiction

    Weather normalized volume trends, by jurisdiction Full-year 2014 Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Regulated Carolinas Progress Florida Indiana Ohio/Kentucky Utilities 3.5% 2.4% 1.9% 1.6% 1.7% 1.3% 1.4% 1.3% 1.2% 0.9% 0.9% 1.0% 1.0% 1.0% 0.8% 0.7% 0.6% -0.1% -0.1% -0.1% -0.

20. Slide 20: Regulated Utilities quarterly weather impacts

    Regulated Utilities quarterly weather impacts Weather segment income 2014 2013 to normal: Pretax impact Weighted avg. EPS impact – Pretax impact Weighted avg. EPS impact – diluted shares favorable / diluted shares favorable / (unfavorable) (unfavorable) First Quarter $100 706 $0.09 $25 705 $0.02 Sec

21. Slide 21: 2015 guidance support

    2015 guidance support 21 | Fourth Quarter 2014 Earnings Review and Business Update

22. Slide 22: Business segment structure

    Business segment structure DUKE ENERGY REGULATED COMMERCIAL INTERNATIONAL UTILITIES POWER ENERGY North and South Duke Energy Duke Energy Carolinas Carolina Renewables North and South Duke Energy Duke Energy Progress Carolina Retail (1) Electric & Gas Duke Energy Florida Florida Transmission Duke Ene

23. Slide 23: Key 2015 adjusted earnings guidance assumptions

    Key 2015 adjusted earnings guidance assumptions ($ in millions) 2014 2015 2015 Interest Expense Assumption Actual Assumptions (Consolidated Total $1,670) Adjusted segment income (expense) (1): $380 Regulated Utilities $2,897 $2,950 International Energy $428 $345 $60 $80 Commercial Power $109 $185 (3

24. Slide 24: Key 2015 earnings sensitivities

    Key 2015 earnings sensitivities Driver EPS Impact Regulated Utilities 100 bps change in earned return on equity +/- $0.40 $1 billion change in rate base +/- $0.08 1% change in Regulated Utilities volumes +/- $0.10 International 10% change in BRL/US$ foreign exchange rate +/- $0.03 $10/barrel change

25. Slide 25: Regulated adjusted book ROEs

    Regulated adjusted book ROEs (1) 2014 Adjusted Book ROEs 2015 Forecast Adjusted Book ROEs 11.2% 11.00% – 11.50% 10.6% 10.6% 10.0% – 10.50% 9.75% – 10.25% 9.50% – 10.00% 9.4% Carolinas(2) Florida Indiana OH/KY  Current allowed ROE’s by jurisdiction are: – Carolinas – 10.2% – Florida – 9.5% - 11.5% C

26. Slide 26: Wholesale sales growth provides earnings support

    Wholesale sales growth provides earnings support  2015 total wholesale net margin is Wholesale Net Margin (2) expected to be ~$1.1 billion  New long-term contracts in the Carolinas $1.0 B ~$950 M – New 20-year contract with NCEMC at Duke Energy Progress began in 2013 – 18-year contract with Centra

27. Slide 27: 2015 pension funding and costs

    2015 pension funding and costs  Duke Energy’s pension funding policy: – The company is committed to funding its pension obligations and Pension Costs has consistently contributed above legal minimum requirements 2013A 2014A 2015E ($ in millions) – In September 2013, Duke Energy adopted a de-risking

28. Slide 28: Regulated Utilities weather-normalized volume trends

    Regulated Utilities weather-normalized volume trends (in % change since prior year) Residential Commercial 1.0% 0.8% - 1.2% 0.5% - 0.8% 0.7% 0.8% 0.3% 0.1% -0.1% 2012A 2013A 2014A(1) 2015E 2012A 2013A 2014A 2015E Industrial Regulated Utilities Total 1.0% 0.9% 1.0% 0.6% - 0.9% 0.5% - 1.0% 0.6% 0.6% 0

29. Slide 29: Regulated Utilities end of year earnings base

    Regulated Utilities end of year earnings base (1) ($ in billions) 2013A 2014A 2015E 2016E 2017E 2018E 2019E Duke Energy Carolinas $19.0 $19.8 $20.5 $21.4 $22.2 $22.8 $23.4 Duke Energy Progress 11.0 11.6 12.6 14.9 15.6 16.6 17.6 Duke Energy Florida 8.7 8.7 9.1 10.1 12.3 (2) 12.7 13.1 Duke Indiana 7.2

30. Slide 30: New generation capital by project

    New generation capital by project Carolinas 2015 – 2017 2018 - 2019 Keyy Messages g Lee CCGT (1)  New generation and large Regulated Solar (1) nuclear projects drive rate NCEMPA Acquisition base growth Fast Start CT’s CC Chiller Uprates  ~85% of this capital is 2020 / 2022 CC Capacity allocated to

31. Slide 31: Capital Expenditures, by recovery mechanism

    Capital Expenditures, by recovery mechanism Growth Capital – By Recovery Mechanism Total Capex – 2015 through 2019 Capital Type Amount Recovery Mechanism Generation Growth 11% Carolinas / Indiana $5.7 B Base rates Florida $1.6 B GBRA – per settlement Grid modernization / T&D Ohio / Indiana $3.0 B Ri

32. Slide 32: Capital expenditures profile

    Capital expenditures profile (1) ($ in millions) 2014A 2015E 2016E 2017E 2018E 2019E 2015 - 2019 New Generation $ 174 $ 825 $ 1,000 $ 850 $ 1,100 $ 1,350 $ 5,125 NCEMPA Asset Purchase - - 1,200 - - - 1,200 (2) Environmental 300 650 675 650 600 575 3,150 Nuclear Fuel 525 450 475 425 450 475 2,275 Maj

33. Slide 33: Capital expenditures by utility

    Capital expenditures by utility (1) ($ in millions) Duke Energy Carolinas 2014A 2015E 2016E 2017E 2018E 2019E 2015 - 2019 New Generation $ 50 $ 200 $ 175 $ 100 $ 150 $ 350 $ 975 (2) Environmental 25 225 300 325 225 175 1,250 Nuclear Fuel 300 275 300 275 275 325 1,450 Major Nuclear 125 125 50 50 75 7

34. Slide 34: Capital expenditures by utility, (Cont'd)

    Capital expenditures by utility, (Cont’d) (1) ($ in millions) Duke Energy Florida 2014A 2015E 2016E 2017E 2018E 2019E 2015 - 2019 New Generation $ 75 $ 300 $ 750 $ 325 $ 125 $ 50 $ 1,550 Environmental 25 - - - 25 25 50 Major Nuclear 25 25 - - - - 25 Customer Additions 50 50 75 75 100 100 400 Grid Mo

35. Slide 35: Capital expenditures by utility, (Cont'd)

    Capital expenditures by utility, (Cont’d) (1) ($ in millions) Duke Energy Ohio / Kentucky 2014A 2015E 2016E 2017E 2018E 2019E 2015 - 2019 Environmental $ - $ - $ - $ 25 $ 25 $ 25 $ 75 Customer Additions 50 50 75 75 75 75 350 Grid Modernization - - 75 75 25 - 175 Other T&D Projects 125 225 300 350 32

36. Slide 36: Growth Investments

    Growth Investments 36 | Fourth Quarter 2014 Earnings Review and Business Update

37. Slide 37: Growth investments of $23-26B from 2015-2019

    Growth investments of $23-26B from 2015-2019 New Generation ($7-10 B) Infrastructure ($12 B) Compliance & Other ($4 B)  Florida CC / CT  Grid modernization and  EPA regulations, Investments T&D at all utilities including existing and  Carolinas CC / CT  New customer potential air, water and Inv

38. Slide 38: New regulated generation projects update

    New regulated generation projects update 2018 Citrus County CC – Florida ($1.5 Billion Investment) Major Generation Projects  1,640 MW CCGT, expected online in 2018  CPCN issued by FPSC in October 2014 ($ millions) 2017 Lee CC – Carolinas ($600 Million Investment) (1)  750 MW CCGT, expected onlin

39. Slide 39: Atlantic Coast Pipeline investment opportunity of ~$2 billion

    Atlantic Coast Pipeline investment opportunity of ~$2 billion (1) Joint Venture Ownership Structure Next Steps and Necessary Approvals (2) Parent Company Ownership Percentage Event Timing 45% NCUC approval of affiliate agreement Fall 2014  40% Pre-filing with FERC File FERC application Fall 2014 

40. Slide 40: Agreement in place to purchase NCEMPA's joint ownership

    Agreement in place to purchase NCEMPA’s joint ownership  Agreement to purchase the North Carolina Eastern Municipal Power Agency (NCEMPA) joint ownership in several Duke Energy Progress plants (1) for ~$1.2 billion(2)  Transaction was approved by FERC and US Department of Justice in 4Q 2014  Requ

41. Slide 41: Growing renewables portfolio

    Growing renewables portfolio (~$2 – 3 billion of investments over the next five years through 2019) Commercial Renewables Regulated Solar Rooftop solar installation in NC Los Vientos Wind Farm Wind North Carolina Solar RFP – Construction of Los Vientos III and IV wind projects – On Sept. 15th, compa

42. Slide 42: Duke Energy Indiana files $1.9 billion T&D infrastructure plan

    Duke Energy Indiana files $1.9 billion T&D infrastructure plan  Filed a seven-year T&D infrastructure improvement plan with the Indiana Utility Regulatory Commission (IURC) under the provisions of Senate Enrolled Act 560  Total investments of ~$1.9 billion over 7-year term – Transmission & Distrib

43. Slide 43: Financing assumptions

    Financing assumptions 43 | Fourth Quarter 2014 Earnings Review and Business Update

44. Slide 44: Established track record of dividend growth

    Established track record of dividend growth  DUK is growing the dividend annually, but DUK annual dividend per share (1) at a rate slower than the growth in adjusted EPS (2)  Achieved the upper end of targeted 65-70% payout ratio in 2014 (2) – Now that the targeted dividend payout range is achieve

45. Slide 45: Simplified financing structure

    Simplified financing structure Duke Energy (HoldCo) Cinergy Corp. Duke Energy Progress Energy (HoldCo) International (HoldCo) (1) Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Carolinas Ohio Indiana Progress Florida Duke Energy Commercial Paper and LT Financings Duke Energy Money Pool

46. Slide 46: 2015 financing plan

    2015 financing plan (as of February 18, 2015) (1) ($ in millions) $1,200 $1,000 $800 $600 $400 $200 $- Holding Duke Duke Duke Duke Duke Duke Renewables International Company Energy Energy Energy Energy Energy Energy Carolinas Progress Florida Indiana Ohio Kentucky 2015 Maturities & Debt Reduction Ex

47. Slide 47: Long-term debt maturities

    Long-term debt maturities (1) ($ in millions) $2,724 $92 Regulated Utilities Maturities Detail $2,145 2015 2016 2017 $1,878 $198 Duke Energy Carolinas (2) $ 507 $ 356 $ 116 $161 Duke Energy Progress (2)(3) 945 2 453 $2,176 $837 Duke Energy Florida (2) 562 12 262 $907 Duke Energy Indiana 5 480 3 Duke

48. Slide 48: Credit metrics in line with targets and support strong credit quality

    Credit metrics (1) FFO/Debt Consolidated 32% Target > 17% 28% 27% 29% 27% 26% 27% 27% 27% 25% 21% 21% 18% 19% 18% 19% 19% 18% 2014A 2015E 2016E 2014A 2015E 2016E 2014A 2015E 2016E 2014A 2015E 2016E 2014A 2015E 2016E 2014A 2015E 2016E (2)(4) Duke Carolinas(4) Duke Progress(4) Duke Florida Duke Indian

49. Slide 49: Liquidity summary

    Liquidity summary (as of December 31, 2014) ($ in millions) Duke Duke Duke Duke Duke Duke Duke Energy Energy Energy Energy Energy Energy Energy Carolinas Progress Florida Indiana Ohio Kentucky Total (1)(2) $ 2,250 $ 1,000 $ 750 $ 650 $ 700 $ 550 $ 100 $ 6,000 Master Credit Facility Less: Notes payab

50. Slide 50: Credit ratings

    Credit ratings (as of February 18, 2015) Holding companies Operating companies Fitch Moody's S&P Fitch Moody's S&P DUKE ENERGY Stable Stable Positive DUKE ENERGY CAROLINAS Positive Stable Positive Corporate Credit / Issuer Rating BBB+ A3 BBB+ Senior Secured Debt A+ Aa2 A Senior Unsecured Debt BBB+ A

51. Slide 51: Regulated Utilities supplement

    Regulated Utilities supplement 51 | Fourth Quarter 2014 Earnings Review and Business Update

52. Slide 52: Nuclear outage levelization

    Nuclear outage levelization  Retail portion of planned nuclear outages will Utility Plant Unit Refueling Last Cycle Outage be deferred to a regulatory asset and amortized DEC Catawba (1) Unit 1 18 months Spring 2014 over the applicable fuel cycle DEC Catawba (1) Unit 2 18 months Fall 2013 – Amortiz

53. Slide 53: Nuclear refueling outages

    Nuclear refueling outages 2013 2014 2015 2016 2017 Actual Actual Planned Planned Planned Brunswick 1 ● ● Brunswick 2 ● ● ● Catawba 1 ● ● ● Catawba 2 ● ● ● Harris ● ● ● McGuire 1 ● ● ● ● McGuire 2 ● ● ● Oconee 1 ● ● Oconee 2 ● ● ● Oconee 3 ● ● Robinson ● ● ● Total Number of Outages 6 6 7 6 6 53 | Fou

54. Slide 54: Our goal is to achieve top-quartile performance in each KPI

    Nuclear KPIs by year 2008 2009 2010 2011 2012 Key Performance Indicator Legacy Legacy Legacy Legacy New (KPI) Duke Duke Duke Duke Duke (1) 2013 2014 Personal Safety (TISAR) Radiological Safety (Dose) Nuclear Safety (Scrams) Capacity Factor TBD Forced Loss Rate INPO Index Total Operating Cost TBD Top

55. Slide 55: Open Major Regulatory Proceedings

    Open Major Regulatory Proceedings Entity Filing Docket Status Intervener Staff Filing Evidentiary Expected number filings Hearings Order Ohio 2014 ESP 14-0841-EL- Intervener and PUCO staff Sep. 26, 2014 Oct. 2, 2014 Oct. 22, 2014 1H 2015 SSO testimony filed, evidentiary hearing in process Indiana IG

56. Slide 56: Edwardsport IGCC rider summary

    Edwardsport IGCC rider summary Six-Month Revenue Tracker Costs Thru (1) Rates Effective Status Requirement IGCC-1 Feb. 2008 Jan. 2009 Approved $ 8 million IGCC-2 Sept. 2008 May 2009 Approved $ 17 million IGCC-3 Mar. 2009 Dec. 2009 Approved $ 27 million IGCC-4 Sept. 2009 July 2010 Approved $ 49 milli

57. Slide 57: Current rate information by jurisdiction

    Current rate information by jurisdiction North South Ohio Kentucky Florida Indiana Carolina Carolina Electric Gas Electric Gas $15.7B (1) (DEC) Retail Rate Base $9.2B (2) $7.0B (3) $1.1B $900M (5) $600M (6) $200M (7) $7.8B (1) (DEP) $1 B (DEC) 3Q 2013 $0.3M Wholesale Rate Base $1.0B (2) $600M N/A $0

58. Slide 58: Current rate information by jurisdiction (Cont'd)

    Current rate information by jurisdiction (Cont’d) General Rate Case Provisions North South Ohio Kentucky Carolina Carolina Florida Indiana Electric Gas Electric Gas Notice of Intent Yes Yes Yes Yes (2) Yes Yes Yes Yes Required? Notice Period 30 Days 30 Days 60 Days Varies 30 Days 30 Days 28 Days 28

59. Slide 59: Overview of state commissions by jurisdiction

    Overview of state commissions by jurisdiction North Carolina South Carolina Florida Indiana Ohio Kentucky Number 7 commissioners 7 commissioners 5 commissioners 5 commissioners 5 commissioners 3 commissioners Term 6-year terms 4-year terms 4-year terms 4-year terms 5-year terms 4-year terms Appointe

60. Slide 60: International Energy supplement

    International Energy supplement 60 | Fourth Quarter 2014 Earnings Review and Business Update

61. Slide 61: International Energy overview

    International Energy overview Houston Office Diverse Portfolio MEXICO Strong Earnings Diversity and Cash Flows: – Highly contracted business BELIZE GUATEMALA GUATEMALA HONDURAS 277 MW (bunker & diesel) NICARAGUA 83 MW (coal) COSTA RICA PANAMA VENEZUELA – Self-funding cash flows Guatemala City Office

62. Slide 62: Brazil – highly contracted business reduces risk

    Brazil – highly contracted business reduces risk Brazil – YE Contractible Capacity (~1,000 MW) Under Firm Contract – Highly contracted position in Brazil – 91% 88% average tenor over 5 years 80% – 2015 contracted position less than 59% 44% 2014, considering the ongoing drought – Revenue: 2015 2016 2

63. Slide 63: Duke Energy International – Foreign Currency

    Duke Energy International – Foreign Currency Brazil FX – R$ / US$ 3.50 3.30 3.10 Unfavorable 2.90 2.70 2.50 2.30 Favorable 2.10 1.90 1.70 1.50 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Historical DEI Forecast Real/US Dollar Brazilian Real – Annual Average Key Earnings Sensitivit

64. Slide 64: Brazil's reservoir levels – SE region

    Brazil’s reservoir levels – SE region 90 80 Reservoir Level (% Maximum Volume) 70 60 50 43.18 40.30 38.80 37.40 40 34.60 36.30 36.30 34.40 30 30.30 25.30 19.40 19.40 20 16.80 16.00 18.70 10 2001 2012 2014 2015 0 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec  Reservoir levels as of Q4 2014 are

65. Slide 65: Duke Energy International – National Methanol Company (NMC)

    Duke Energy International – National Methanol Company (NMC)  Background – NMC is a producer of methanol and MTBE in Saudi Arabia – Current ownership: Saudi Basic Industries Corporation (SABIC) - 50%, Celanese - 25%, and Duke Energy - 25% – JV agreement extended to 2032 (effective April 1, 2010) – U

66. Slide 66: Commercial Power supplement

    Commercial Power supplement 66 | Fourth Quarter 2014 Earnings Review and Business Update

67. Slide 67: Midwest Generation guidance assumptions – 2015

    Midwest Generation guidance assumptions – 2015 2015 Guidance Assumptions (1) Generation Volumes (MM MWh’s) 40,000 Midwest Generation Owned Capacity (in MWs) 5,700 megawatts 30,000 PJM Capacity Revenues $125 million 20,000 Assumed Economic Generation Volumes ~18 million MWh’s 10,000 Wholesale Energy

68. Slide 68: Duke Energy Renewables – Grown to scale since entry in 2007

    Duke Energy Renewables – Grown to scale since entry in 2007 Happy Jack Wind Farm, Wyoming Current Operating Portfolio of 1,812 net owned MW (1) Wind – 1,627 MW Solar – 185 MW Low risk profile with long-term PPAs – Continue wind investment and accelerate growth in solar (1) 100-percent capacity of th

69. Slide 69: Commercial Transmission announced project pipeline

    Commercial Transmission announced project pipeline (1)(3)(4) Project / Total Cost of Milestones Next 2015-2019 2020 & Beyond In-service date Project Achieved Milestone (Total ~$250M) (Total ~$1.1B) Pioneer – 50/50 JV formed in 2008 with AEP MISO Segment $350 million (2) ROW Acquisitions Continue ROW

70. Slide 70: Environmental overview

    Environmental overview 70 | Fourth Quarter 2014 Earnings Review and Business Update

71. Slide 71: Environmental compliance expenditures by category

    Environmental compliance expenditures by category ($ in millions) Category 2015 – 2017 2018 - 2019 Key Messages Air (MATS) $250 $50  Total estimated Water (316b) $250 environmental compliance expenditures of ~$3.2 Waste (conversions) (3) $1,300 billion in 2015-2019 Waste (closure) $1,300 – Excludes

72. Slide 72: Pending environmental regulations

    Pending environmental regulations Rule overview Potential impacts to Duke Energy  Regulates Hazardous Air Pollutants (e.g., mercury & non-mercury HAPs)  Additional air emissions control Mercury and Air  Compliance deadline April 16, 2015 with possible one-year extension equipment Toxics Standards

73. Slide 73: Pending environmental regulations, cont.

    Pending environmental regulations, cont. Rule overview Potential impacts to Duke Energy  Regulates coal combustion residuals (e.g., coal ash)  Close most wet ash ponds Coal Combustion  EPA signed final rule December 19, 2014  Convert remaining wet ash handling to Residuals Rule (CCR)  Effective

74. Slide 74: Pending EPA regulations will impact U.S. generation

    Pending EPA regulations will impact U.S. generation Major regulations Duke Energy domestic generation (as of 12/31/14) Considerations for EPA Coal generation profile Transition period must Coal Combustion Residuals Rule (Coal Ash) TODAY – 4% POST MODERNIZATION (2) – be reasonable to allow 21.2 GW (

75. Slide 75: Positioning our coal fleet for EPA regulations

    Positioning our coal fleet for EPA regulations Coal generation profile – as of 12/31/14 Plans for coal generation without controls Duke Carolinas 4.3 GW 2.5 GW 0.2 – Lee 1&2 ~200 MW retired November 6, 2014 ~7.0 GW GW – Lee 3 ~170 MW expected to be converted to gas in 2015 Duke Progress 3.3 GW ~3.3

76. Slide 76: Duke Energy steam facility data

    Duke Energy steam facility data (As of 12/31/14) Owned capacity – Fuel Current cooling Ash Handling (2) Structure Operating state Jurisdiction Steam unit facility summer rating (MW) type method Air Emissions controls (flyash; bottom ash) Regulated In Operation DE Carolinas Allen 1,127 Coal Once-Thro

77. Slide 77: Duke Energy steam facility data, cont.

    Duke Energy steam facility data, cont. (As of 12/31/14) Owned capacity – Fuel Current cooling Ash Handling (3) Structure Operating state Jurisdiction Steam unit facility summer rating (MW) type method Air Emissions controls (flyash; bottom ash) Scrubber; SCR Under Wet Sluice (Dry Under Regulated In

78. Slide 78: Coal Ash Supplement

    Coal Ash Supplement 78 | Fourth Quarter 2014 Earnings Review and Business Update

79. Slide 79: Ash Basins: Dedicated company website

    Ash Basins: Dedicated company website Visit: www.duke-energy.com/ash-management for up-to-date information 79 | Fourth Quarter 2014 Earnings Review and Business Update

80. Slide 80: Coal ash management activities moving forward

    Coal ash management activities moving forward Recent Activities Coal Ash Management Act of 2014 – Filed excavation plans for four high-priority sites, as required North Carolina law enacted in September 2014 by Coal Ash Management Act – Requires North Carolina ash basins to be closed over a 5 -15 –

81. Slide 81: Upcoming Events & Other

    Upcoming Events & Other 81 | Fourth Quarter 2014 Earnings Review and Business Update

82. Slide 82: Upcoming events

    Upcoming events Event Date 1Q 2015 earnings call (tentative) May 1, 2015 2Q 2015 earnings call (tentative) August 6, 2015 3Q 2015 earnings call (tentative) November 5, 2015 82 | Fourth Quarter 2014 Earnings Review and Business Update

83. Slide 83: Investor Relations App

    Investor Relations App  Free mobile app for Investor Relations materials now available for iPhone, iPad, and Android mobile devices  The Duke Energy app provides mobile access to commonly used IR materials, including: – SEC Filings – Earnings Materials – Company Presentations – Press Releases  Se

84. Slide 84: For additional information on Duke Energy, please visit

    For additional information on Duke Energy, please visit: www.duke-energy.com/investors 84 | Fourth Quarter 2014 Earnings Review and Business Update

85. Slide 85: Adjusted to Reported Earnings Reconciliation, Three Months Ended Dec 31, 2014

    DUKE ENERGY CORPORTATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended December 31, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Midwest International Adjusted Progress Generation Litigation Tax Discontinued Total Reported Earnings Merger Ope

86. Slide 86: Adjusted to Reported Earnings Reconciliation, Twelve Months Ended Dec 31, 2014

    DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Economic Achieve, Midwest International Hedges Adjusted Progress Asset Generation Litigation Asset Tax (Mark-to- Discontin

87. Slide 87: Adjusted to Reported Earnings Reconciliation, Three Months Ended Dec 31, 2013

    DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended December 31, 2013 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Crystal River Midwest Adjusted Progress Litigation Unit 3 Generation Discontinued Total Reported Earnings Merger R

88. Slide 88: Adjusted to Reported Earnings Reconciliation, Twelve Months Ended Dec 31, 2013

    DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2013 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Nuclear Crystal River Midwest Adjusted Progress Development Litigation Unit 3 Generation Discontinued Total Repor

89. Slide 89: Adjusted Effective Tax Reconciliation, Twelve Months Ended Dec 31, 2014

    DUKE ENERGY CORPORATION ADJUSTED EFFECTIVE TAX RECONCILIATION Twelve Months Ended December 31, 2014 (Dollars in millions) Twelve Months Ended December 31, 2014 Balance Effective Tax Rate Adjusted Earnings, Pre-Tax Income* $ 4,715 Costs-to-Achieve, Progress Energy Merger (205) Midwest Generation Oper

90. Slide 90: Available Liquidity Reconciliation

    Duke Energy Corporation Available Liquidity Reconciliation As of December 31, 2014 (In millions) Cash and Cash Equivalents $ 2,036 Short-Term Investments - Subtotal 2,036 Less: Certain Amounts Held in Foreign Jurisdictions (442) Less: Unavailable Domestic Cash (34) 1,560 Plus: Remaining Availability

91. Slide 91: 2015 Forecasted Cash Flow Reconciliation

    Duke Energy Corporation 2015 Forecasted Cash Flow Reconciliation, Required by SEC Regulation G 2015 Analyst Meeting February 18, 2015 ($ in millions) Forecast 2015 Primary Sources: Adjusted net income (1) (a) $ 3,260 Depreciation & amortization (a) 3,655 Deferred and accrued taxes (a) 1,325 Other so

92. Slide 92: Adjusted Book Return on Equity

    DUKE ENERGY CORPORATION ADJUSTED BOOK RETURN ON EQUITY (ROEs) dollars in millions Duke Energy Duke Energy Duke Energy Duke Energy Duke Energy Ohio Regulated Carolinas Progress Total Carolinas Florida Indiana Utilities Reported Net Income 2014 $ 1,072 $ 467 $ 1,539 $ 548 $ 359 $ 202 (2) Special Items

93. Slide 93: Non-GAAP Reconciliations

    Duke Energy Corporation Non-GAAP Reconciliations Fourth Quarter Earnings Review & Business Update February 18, 2015 Adjusted Diluted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Fourth Quarter Earnings Review and Business Update on February 18, 2015 include a di

94. Slide 94: items and the mark-to-market impacts of economic hedges in the Commercial Power segment (as

    items and the mark-to-market impacts of economic hedges in the Commercial Power segment (as discussed above under Adjusted Diluted EPS). Special items represent certain charges and credits which management believes will not be recurring on a regular basis, although it is reasonably possible such cha

95. Slide 95: materials also include a discussion of the 2014 and 2015 forecasted adjusted ETR. Adjusted

    materials also include a discussion of the 2014 and 2015 forecasted adjusted ETR. Adjusted ETR is a non- GAAP financial measure as the rate is calculated using a pre-tax earnings and income tax expense, both adjusted for the impact of special items and the mark-to-market impacts of economic hedges i

96. Slide 96: availability under the master credit facility. The most directly comparable GAAP financial measure for

    availability under the master credit facility. The most directly comparable GAAP financial measure for available liquidity is cash and cash equivalents. A reconciliation of available liquidity as of December 31, 2014 to the most directly comparable GAAP measure is included here-in.

Duke Energy — Q4 2014 Earnings Presentation on 6ix