Edgar Filing: CAROLINA POWER & LIGHT CO

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
OR
¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
_________________________

Commission file number			Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, and Telephone Number			IRS Employer Identification No.
1-32853			DUKE ENERGY CORPORATION (a Delaware corporation) 550 South Tryon Street Charlotte, North Carolina 28202-1803 704-382-3853			20-2777218
Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, and Telephone Number			Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, and Telephone Number
1-4928	DUKE ENERGY CAROLINAS, LLC (a North Carolina limited liability company) 526 South Church Street Charlotte, North Carolina 28202-1803 704-382-3853 56-0205520			1-3274	DUKE ENERGY FLORIDA, INC. (a Florida corporation) 299 First Avenue North St. Petersburg, Florida 33701 704-382-3853 59-0247770
1-15929	PROGRESS ENERGY, INC. (a North Carolina corporation) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-2155481			1-1232	DUKE ENERGY OHIO, INC. (an Ohio corporation) 139 East Fourth Street Cincinnati, Ohio 45202 704-382-3853 31-0240030
1-3382	DUKE ENERGY PROGRESS, INC. (a North Carolina corporation) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-0165465			1-3543	DUKE ENERGY INDIANA, INC. (an Indiana corporation) 1000 East Main Street Plainfield, Indiana 46168 704-382-3853 35-0594457

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Duke Energy Corporation (Duke Energy)	Yes x	No ¨	Duke Energy Florida, Inc. (Duke Energy Florida)	Yes x	No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)	Yes x	No ¨	Duke Energy Ohio, Inc. (Duke Energy Ohio)	Yes x	No ¨
Progress Energy, Inc. (Progress Energy)	Yes x	No ¨	Duke Energy Indiana, Inc. (Duke Energy Indiana)	Yes x	No ¨
Duke Energy Progress, Inc. (Duke Energy Progress)	Yes x	No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Duke Energy	Yes x	No ¨	Duke Energy Florida	Yes x	No ¨
Duke Energy Carolinas	Yes x	No ¨	Duke Energy Ohio	Yes x	No ¨
Progress Energy	Yes x	No ¨	Duke Energy Indiana	Yes x	No ¨
Duke Energy Progress	Yes x	No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

Duke Energy	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
Duke Energy Carolinas	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Progress Energy	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
Duke Energy Progress	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Duke Energy Florida	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Duke Energy Ohio	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨
Duke Energy Indiana	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Duke Energy	Yes ¨	No x	Duke Energy Florida	Yes ¨	No x
Duke Energy Carolinas	Yes ¨	No x	Duke Energy Ohio	Yes ¨	No x
Progress Energy	Yes ¨	No x	Duke Energy Indiana	Yes ¨	No x
Duke Energy Progress	Yes ¨	No x

Number of shares of Common Stock outstanding at May 6, 2013:


Registrant	Description	Shares
Duke Energy	Common Stock, $0.001 par value	705,739,261
Duke Energy Carolinas	All of the registrant’s limited liability company member interests are directly owned by Duke Energy.
Progress Energy	All of the registrant’s common stock is directly owned by Duke Energy.
Duke Energy Progress	All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Florida	All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Ohio	All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Indiana	All of the registrant’s common stock is indirectly owned by Duke Energy.

This combined Form 10-Q is filed separately by seven registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.

Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.

TABLE OF CONTENTS
Safe Harbor for Forward-Looking Statements

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	Duke Energy Corporation Financial Statements		4

	Duke Energy Carolinas, LLC Financial Statements		9

	Progress Energy, Inc. Financial Statements		13

	Duke Energy Progress, Inc. Financial Statements		17

	Duke Energy Florida, Inc. Financial Statements		21

	Duke Energy Ohio, Inc. Financial Statements		25

	Duke Energy Indiana, Inc. Financial Statements		29

	Combined Notes to Condensed Consolidated Financial Statements
		Note 1 - Organization and Basis of Presentation	33
		Note 2 - Acquisitions and Dispositions	35
		Note 3 - Business Segments	37
		Note 4 - Regulatory Matters	40
		Note 5 - Commitments and Contingencies	47
		Note 6 - Debt and Credit Facilities	54
		Note 7 - Goodwill	57
		Note 8 - Risk Management, Derivative Instruments and Hedging Activities	57
		Note 9 - Fair Value of Financial Instruments	73
		Note 10 - Investments in Debt and Equity Securities	83
		Note 11 - Variable Interest Entities	90
		Note 12 - Earnings Per Common Share	95
		Note 13 - Stock-Based Compensation	95
		Note 14 - Employee Benefit Plans	95
		Note 15 - Severance	97
		Note 16 - Income Taxes and Other Taxes	98
		Note 17 - Related Party Transactions	99
		Note 18 - Accumulated Other Comprehensive Income	100
		Note 19 - New Accounting Standards	101
		Note 20 - Subsequent Events	101

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		102

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		119

Item 4.	Controls and Procedures		119

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		121

Item 1A.	Risk Factors		121

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		121

Item 6.	Exhibits		122

	Signatures		124

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions. These forward-looking statements, which are intended to cover Duke Energy and the applicable Duke Energy Registrants, are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook,” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:

· State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;

· The ability to recover eligible costs and earn an adequate return on investment through the regulatory process;

· The costs of retiring Duke Energy Florida’s Crystal River Unit 3 could prove to be more extensive than is currently identified. All costs associated with the retirement Crystal River Unit 3 asset, including replacement power may not be fully recoverable through the regulatory process;

· The ability to maintain relationships with customers, employees or suppliers post-merger;

· The ability to successfully integrate the Progress Energy businesses and realize cost savings and any other synergies expected from the merger;

· The risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect;

· The impact of compliance with material restrictions or conditions related to the Progress Energy merger imposed by regulators could exceed our expectations;

· Costs and effects of legal and administrative proceedings, settlements, investigations and claims;

· Industrial, commercial and residential growth or decline in the respective Duke Energy Registrants’ service territories or customer bases resulting from customer usage patterns, including energy efficiency efforts and uses of alternative energy sources;

· Additional competition in electric markets and continued industry consolidation;

· Political and regulatory uncertainty in other countries in which Duke Energy conducts business;

· The influence of weather and other natural phenomena on each of the Duke Energy Registrants’ operations, including the economic, operational and other effects of storms, hurricanes, droughts and tornadoes;

· The ability to successfully operate electric generating facilities and deliver electricity to customers;

· The ability to recover, in a timely manner, if at all, costs associated with future significant weather events through the regulatory process;

· The impact on the Duke Energy Registrants’ facilities and business from a terrorist attack, cyber security threats and other catastrophic events;

· The inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks;

· The timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates and the ability to recover such costs through the regulatory process, where appropriate;

· Unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints;

· The performance of electric generation facilities and of projects undertaken by Duke Energy’s nonregulated businesses;

· The results of financing efforts, including the Duke Energy Registrants’ ability to obtain financing on favorable terms, which can be affected by various factors, including the respective Duke Energy Registrants’ credit ratings and general economic conditions;

· Declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy’s defined benefit pension plans and nuclear decommissioning trust funds;

· The level of creditworthiness of counterparties to Duke Energy Registrants’ transactions;

· Employee workforce factors, including the potential inability to attract and retain key personnel;

· Growth in opportunities for the respective Duke Energy Registrants’ business units, including the timing and success of efforts to develop domestic and international power and other projects;

· Construction and development risks associated with the completion of Duke Energy Registrants’ capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from ratepayers in a timely manner or at all;

· The Subsidiary Registrants ability to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);

· The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;

· The impact of potential goodwill impairments;

· The ability to reinvest retained earnings of foreign subsidiaries or repatriate such earnings on a tax free basis; and

· The ability to successfully complete future merger, acquisition or divestiture plans.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. The Duke Energy Registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
Condensed Consolidated Statements Of Operations
(Unaudited)

			Three Months Ended March 31,
(in millions, except per-share amounts)				2013		2012
Operating Revenues
	Regulated electric		$	4,889	$	2,501
	Nonregulated electric, natural gas, and other			824		958
	Regulated natural gas			185		171
	Total operating revenues			5,898		3,630
Operating Expenses
	Fuel used in electric generation and purchased power - regulated			1,703		777
	Fuel used in electric generation and purchased power - nonregulated			454		448
	Cost of natural gas and coal sold			104		102
	Operation, maintenance and other			1,421		746
	Depreciation and amortization			660		479
	Property and other taxes			343		184
	Impairment charges			―		402
		Total operating expenses		4,685		3,138
Gains on Sales of Other Assets and Other, net				2		3
Operating Income				1,215		495
Other Income and Expenses
	Equity in earnings of unconsolidated affiliates			36		45
	Impairments on sales of unconsolidated affiliates			―		(5)
	Other income and expenses, net			80		89
		Total other income and expenses		116		129
Interest Expense				367		224
Income From Continuing Operations Before Income Taxes				964		400
Income Tax Expense from Continuing Operations				330		103
Income From Continuing Operations				634		297
Income From Discontinued Operations, net of tax				―		2
Net Income				634		299
Less: Net Income Attributable to Noncontrolling Interests				―		4
Net Income Attributable to Duke Energy Corporation			$	634	$	295


Earnings Per Share - Basic and Diluted
	Income from continuing operations attributable to Duke Energy Corporation common shareholders
		Basic	$	0.89	$	0.65
		Diluted	$	0.89	$	0.65
	Income from discontinued operations attributable to Duke Energy Corporation common shareholders
		Basic	$	―	$	0.01
		Diluted	$	―	$	0.01
	Net Income attributable to Duke Energy Corporation common shareholders
		Basic	$	0.89	$	0.66
		Diluted	$	0.89	$	0.66
	Dividends declared per share		$	0.765	$	0.75
	Weighted-average shares outstanding
		Basic		705		446
		Diluted		705		446

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements Of Comprehensive Income
(Unaudited)

		Three Months Ended March 31,
(in millions)		2013		2012
Net Income		$	634	$	299
Other Comprehensive Income (Loss), Net of Tax
	Foreign currency translation adjustments		4		44
	Pension and OPEB adjustments^(a)		3		4
	Net unrealized gain on cash flow hedges^(b)		10		13
	Reclassification into earnings from cash flow hedges^(c)		―		(1)
	Unrealized gain on investments in available for sale securities^(d)		―		1
	Reclassification into earnings from available for sale securities^(e)		―		(1)
Other Comprehensive Income, Net of Tax			17		60
Comprehensive Income			651		359
Less: Comprehensive Income Attributable to Noncontrolling Interests			―		4
Comprehensive Income Attributable to Duke Energy Corporation		$	651	$	355


(a)	Net of $1 million tax expense in 2013 and $2 million tax expense in 2012.
(b)	Net of $4 million tax expense in 2013 and $5 million tax expense in 2012.
(c)	Net of $1 million tax expense in 2013 and insignificant tax expense in 2012.
(d)	Net of insignificant tax expense in 2012.
(e)	Net of insignificant tax expense in 2012.

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)

(in millions)		March 31, 2013		December 31, 2012
ASSETS
Current Assets
Cash and cash equivalents		$	1,296	$	1,424
Short-term investments			288		333
Receivables (net of allowance for doubtful accounts of $32 at March 31, 2013 and $34 at December 31, 2012)			1,503		1,516
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $42 at March 31, 2013 and $44 at December 31, 2012)			1,304		1,201
Inventory			3,096		3,223
Other			2,062		2,425
	Total current assets		9,549		10,122
Investments and Other Assets
Investments in equity method unconsolidated affiliates			478		483
Nuclear decommissioning trust funds			4,536		4,242
Goodwill			16,371		16,365
Intangibles, net			356		372
Notes receivable			69		71
Restricted other assets of variable interest entities			54		62
Other			2,466		2,399
	Total investments and other assets		24,330		23,994
Property, Plant and Equipment
Cost			99,605		98,833
Cost, variable interest entities			1,579		1,558
Accumulated depreciation and amortization			(32,501)		(31,969)
Generation facilities to be retired, net			130		136
	Net property, plant and equipment		68,813		68,558
Regulatory Assets and Deferred Debits
Regulatory assets			10,778		11,004
Other			196		178
	Total regulatory assets and deferred debits		10,974		11,182
Total Assets		$	113,666	$	113,856
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable		$	1,985	$	2,444
Notes payable and commercial paper			1,361		745
Non-recourse notes payable of variable interest entities			325		312
Taxes accrued			425		459
Interest accrued			478		448
Current maturities of long-term debt			3,323		3,110
Other			2,068		2,511
	Total current liabilities		9,965		10,029
Long-term Debt			35,084		35,499
Non-recourse Long-term debt of Variable Interest Entities			1,255		852
Deferred Credits and Other Liabilities
Deferred income taxes			10,518		10,490
Investment tax credits			454		458
Accrued pension and other post-retirement benefit costs			2,380		2,520
Asset retirement obligations			5,229		5,169
Regulatory liabilities			5,555		5,584
Other			2,196		2,221
	Total deferred credits and other liabilities		26,332		26,442
Commitments and Contingencies
Preferred Stock of Subsidiaries			―		93
Equity
Common stock, $0.001 par value, 2 billion shares authorized; 706 million and 704 million shares outstanding at March 31, 2013 and December 31, 2012, respectively			1		1
Additional paid-in capital			39,263		39,279
Retained earnings			1,978		1,889
Accumulated other comprehensive loss			(289)		(306)
	Total Duke Energy Corporation shareholders' equity		40,953		40,863
Noncontrolling interests			77		78
	Total equity		41,030		40,941
Total Liabilities and Equity		$	113,666	$	113,856

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements Of Cash Flows
(Unaudited)

					Three Months Ended March 31,
(in millions)					2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income				$	634	$	299
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation, amortization and accretion (including amortization of nuclear fuel)			762		544
			Equity component of AFUDC			(42)		(59)
			Gains on sales of other assets			(2)		(3)
			Impairment of other long-lived assets			―		407
			Deferred income taxes			353		65
			Equity in earnings of unconsolidated affiliates			(36)		(45)
			Voluntary opportunity cost deferral			―		(101)
			Accrued pension and other post-retirement benefit costs			87		28
			(Increase) decrease in
				Net realized and unrealized mark-to-market and hedging transactions		36		(2)
				Receivables		(118)		172
				Inventory		126		(162)
				Other current assets		(38)		110
			Increase (decrease) in
				Accounts payable		(246)		(270)
				Taxes accrued		(31)		(62)
				Other current liabilities		(312)		10
			Other assets			(78)		3
			Other liabilities			(4)		(62)
				Net cash provided by operating activities		1,091		872
CASH FLOWS FROM INVESTING ACTIVITIES
	Capital expenditures					(1,375)		(988)
	Investment expenditures					(3)		(13)
	Acquisitions					(32)		(42)
	Purchases of available-for-sale securities					(1,255)		(948)
	Proceeds from sales and maturities of available-for-sale securities					1,179		821
	Net proceeds from the sales of other assets, and sales of and collections on notes receivable					20		17
	Change in restricted cash					(34)		(35)
	Other					35		8
				Net cash used in investing activities		(1,465)		(1,180)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from the:
		Issuance of long-term debt				1,009		392
		Issuance of common stock related to employee benefit plans				5		8
	Payments for the:
		Redemption of long-term debt				(747)		(821)
		Redemption of preferred stock of a subsidiary				(96)		―
	Notes payable and commercial paper					627		28
	Distributions to noncontrolling interests					(3)		(1)
	Dividends paid					(542)		(335)
	Other					(7)		(2)
				Net cash provided by (used in) financing activities		246		(731)
	Net decrease in cash and cash equivalents					(128)		(1,039)
	Cash and cash equivalents at beginning of period					1,424		2,110
	Cash and cash equivalents at end of period				$	1,296	$	1,071
	Supplemental Disclosures:
	Significant non-cash transactions:
		Accrued capital expenditures			$	465	$	270
		Extinguishment of debt related to investment in Attiki Gas Supply, S. A.				―		66

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CORPORATION

Condensed Consolidated Statements Of Equity

(Unaudited)

(in millions)

Common

Stock

Common

Stock

Additional

Paid-in

Capital

Retained

Earnings

Accumulated

Other

Comprehensive

Loss

Common

Stockholders'

Equity

Noncontrolling

Interests

Total

Equity

Balance at December 31, 2011

445

21,132

1,873

(234)

22,772

22,865

Net income

―

295

―

295

299

Other comprehensive income

―

Common stock issuances, including dividend reinvestment and employee benefits

―

(11)

―

(11)

―

(11)

Common stock dividends

―

(335)

―

(335)

―

(335)

Balance at March 31, 2012

446

21,121

1,833

(174)

22,781

22,878

Balance at December 31, 2012

704

39,279

1,889

(306)

40,863

40,941

Net income

―

634

―

634

―

634

Other comprehensive income

―

Common stock issuances, including dividend reinvestment and employee benefits

(16)

―

(16)

―

(16)

Common stock dividends

―

(542)

―

(542)

―

(542)

Premium on the redemption of preferred stock of subsidiaries

(3)

Changes in noncontrolling interest in subsidiaries

―

(1)

Balance at March 31, 2013

706

39,263

1,978

(289)

40,953

41,030

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements Of Operations And Comprehensive Income
(Unaudited)

			Three Months Ended March 31,
(in millions)			2013			2012
Operating Revenues			$	1,729	$	1,501
Operating Expenses
	Fuel used in electric generation and purchased power			518		380
	Operation, maintenance and other			457		331
	Depreciation and amortization			222		228
	Property and other taxes			100		90
		Total operating expenses		1,297		1,029
Gains on Sales of Other Assets and Other, net				2		3
Operating Income				434		475
Other Income and Expenses, net				36		39
Interest Expense				82		97
Income Before Income Taxes				388		417
Income Tax Expense				144		151
Net Income and Comprehensive Income			$	244	$	266

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)

(in millions)		March 31, 2013		December 31, 2012
ASSETS
Current Assets
Cash and cash equivalents		$	5	$	19
Receivables (net of allowance for doubtful accounts of $3 at March 31, 2013 and December 31, 2012)			150		188
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $6 at March 31, 2013 and December 31, 2012)			680		637
Receivables from affiliated companies			57		3
Note receivable from affiliated companies			397		382
Inventory			1,010		1,062
Other			428		439
	Total current assets		2,727		2,730
Investments and Other Assets
Nuclear decommissioning trust funds			2,519		2,354
Other			941		934
	Total investments and other assets		3,460		3,288
Property, Plant and Equipment
Cost			34,559		34,190
Accumulated depreciation and amortization			(11,663)		(11,437)
Generation facilities to be retired, net			68		73
	Net property, plant and equipment		22,964		22,826
Regulatory Assets and Deferred Debits
Regulatory assets			1,707		1,727
Other			69		71
	Total regulatory assets and deferred debits		1,776		1,798
Total Assets		$	30,927	$	30,642
LIABILITIES AND MEMBER'S EQUITY
Current Liabilities
Accounts payable		$	520	$	599
Accounts payable to affiliated companies			112		128
Taxes accrued			65		114
Interest accrued			139		96
Current maturities of long-term debt			406		406
Other			409		490
	Total current liabilities		1,651		1,833
Long-term Debt			7,734		7,735
Non-recourse Long-term Debt of Variable Interest Entities			300		300
Long-term Debt Payable to Affiliated Companies			300		300
Deferred Credits and Other Liabilities
Deferred income taxes			5,281		5,181
Investment tax credits			214		215
Accrued pension and other post-retirement benefit costs			215		221
Asset retirement obligations			1,990		1,959
Regulatory liabilities			2,214		2,102
Other			912		924
	Total deferred credits and other liabilities		10,826		10,602
Commitments and Contingencies
Member's Equity
Member's Equity			10,132		9,888
Accumulated other comprehensive loss			(16)		(16)
	Total member's equity		10,116		9,872
Total Liabilities and Member's Equity		$	30,927	$	30,642

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements Of Cash Flows
(Unaudited)

					Three Months Ended March 31,
(in millions)					2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income				$	244	$	266
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization (including amortization of nuclear fuel)			281		288
			Equity component of AFUDC			(26)		(36)
			Gains on sales of other assets and other, net			(2)		(3)
			Deferred income taxes			146		154
			Voluntary opportunity cost deferral			―		(101)
			Accrued pension and other post-retirement benefit costs			10		10
			(Increase) decrease in
				Net realized and unrealized mark-to-market and hedging transactions		(7)		―
				Receivables		(8)		134
				Receivables from affiliated companies		(54)		(17)
				Inventory		50		(100)
				Other current assets		(25)		(3)
			Increase (decrease) in
				Accounts payable		(16)		(196)
				Accounts payable to affiliated companies		(16)		(37)
				Taxes accrued		(48)		(65)
				Other current liabilities		(34)		109
			Other assets			(28)		(18)
			Other liabilities			(15)		(32)
				Net cash provided by operating activities		452		353
CASH FLOWS FROM INVESTING ACTIVITIES
	Capital expenditures					(435)		(483)
	Purchases of available-for-sale securities					(504)		(627)
	Proceeds from sales and maturities of available-for-sale securities					492		615
	Notes receivable from affiliated companies					(15)		625
	Other					(3)		(5)
				Net cash (used in) provided by investing activities		(465)		125
CASH FLOWS FROM FINANCING ACTIVITIES
	Payments for the redemption of long-term debt					―		(751)
	Other					(1)		(1)
				Net cash used in financing activities		(1)		(752)
	Net decrease in cash and cash equivalents					(14)		(274)
	Cash and cash equivalents at beginning of period					19		289
	Cash and cash equivalents at end of period				$	5	$	15
	Supplemental Disclosures:
	Significant non-cash transactions:
		Accrued capital expenditures			$	132	$	115

See Notes to Condensed Consolidated Financial Statements

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements Of Equity
(Unaudited)

			Accumulated Other Comprehensive Loss
(in millions)	Member's Equity		Net Losses on Cash Flow Hedges		Net Losses on Available for Sale Securities		Total
Balance at December 31, 2011	$	9,473	$	(17)	$	(2)	$	9,454
Net income		266		―		―		266
Balance at March 31, 2012	$	9,739	$	(17)	$	(2)	$	9,720

Balance at December 31, 2012	$	9,888	$	(15)	$	(1)	$	9,872
Net income		244		―		―		244
Balance at March 31, 2013	$	10,132	$	(15)	$	(1)	$	10,116

See Notes to Condensed Consolidated Financial Statements

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements Of Operations And Comprehensive Income
(Unaudited)

			Three Months Ended March 31,
(in millions)			2013		2012
Operating Revenues			$	2,186	$	2,102
Operating Expenses
	Fuel used in electric generation and purchased power			860		901
	Operation, maintenance and other			561		535
	Depreciation and amortization			194		166
	Property and other taxes			141		138
		Total operating expenses		1,756		1,740
Gains on Sales of Other Assets and Other, net				―		1
Operating Income				430		363
Other Income and Expenses, net				23		39
Interest Expense				198		185
Income From Continuing Operations Before Taxes				255		217
Income Tax Expense From Continuing Operations				101		76
Income From Continuing Operations				154		141
Income From Discontinued Operations, net of tax				―		11
Net Income				154		152
Less: Net Income Attributable to Noncontrolling Interest				1		2
Net Income Attributable to Parent			$	153	$	150

Net Income			$	154	$	152
Other Comprehensive Income, net of tax
	Reclassification into earnings from pension and OPEB adjustments^(a)			1		1
	Net unrealized gain on cash flow hedges^(b)			1		2
	Reclassification into earnings from cash flow hedges^(c)			―		2
Other Comprehensive Income, net of tax				2		5
Comprehensive Income			$	156	$	157


(a)	Net of insignificant tax expense in 2013 and 2012.
(b)	Net of insignificant tax expense in 2013 and $2 million tax expense in 2012.
(c)	Net of $2 million tax expense in 2012.

See Notes to Condensed Consolidated Financial Statements

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)

(in millions)		March 31, 2013		December 31, 2012
ASSETS
Current Assets
Cash and cash equivalents		$	35	$	231
Receivables (net of allowance for doubtful accounts of $15 at March 31, 2013 and $16 at December 31, 2012)			812		790
Receivables from affiliated companies			18		15
Notes receivable from affiliated companies			20		―
Inventory			1,405		1,441
Other			709		766
	Total current assets		2,999		3,243
Investments and Other Assets
Nuclear decommissioning trust funds			2,017		1,888
Goodwill			3,655		3,655
Other			531		530
	Total investments and other assets		6,203		6,073
Property, Plant and Equipment
Cost			35,369		35,130
Cost, variable interest entities			16		16
Accumulated depreciation and amortization			(12,624)		(12,512)
Generation facilities to be retired, net			62		63
	Net property, plant and equipment		22,823		22,697
Regulatory Assets and Deferred Debits
Regulatory assets			5,158		5,292
Other			102		100
	Total regulatory assets and deferred debits		5,260		5,392
Total Assets		$	37,285	$	37,405
LIABILITIES AND COMMON STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable		$	822	$	1,066
Accounts payable to affiliated companies			64		30
Notes payable to affiliated companies			980		455
Taxes accrued			155		83
Interest accrued			195		192
Current maturities of long-term debt			718		843
Other			924		1,118
	Total current liabilities		3,858		3,787
Long-term Debt			13,506		13,311
Long-term Debt Payable to Affiliated Companies			―		274
Deferred Credits and Other Liabilities
Deferred income taxes			2,540		2,558
Investment tax credits			93		95
Accrued pension and other post-retirement benefit costs			1,610		1,608
Asset retirement obligations			2,441		2,413
Regulatory liabilities			2,324		2,469
Other			578		612
	Total deferred credits and other liabilities		9,586		9,755
Commitments and Contingencies
Preferred Stock of Subsidiaries			―		93
Common Stockholder's Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at March 31, 2013 and December 31, 2012			―		―
Additional paid-in capital			7,465		7,465
Retained earnings			2,933