Duke Energy CORP

Previous wording

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.

Current wording

Duke Energy is an energy company headquartered in Charlotte, North Carolina and 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. Duke Energy’s consolidated financial information includes the results of the Subsidiary Registrants, which along with Duke Energy are collectively referred to as the Duke Energy Registrants.

Previous wording

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, 2024, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the six months ended June 30, 2024, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Advancing Our Clean Energy Transition. During the three months ended March 31, 2024, we continued to execute on our clean energy transition, remaining focused on reliability and affordability while delivering increasingly clean energy and providing strong, sustainable value for shareholders, customers, communities and employees.

Current wording

Advancing Our Clean Energy Transition. During the six months ended June 30, 2024, we continued to execute on our clean energy transition, remaining focused on reliability and affordability while delivering increasingly clean energy and providing strong, sustainable value for shareholders, customers, communities and employees.

Previous wording

•In January 2024, we filed supplemental modeling and analysis with the NCUC and PSCSC related to our combined systemwide Carolinas Resource Plan filed in August 2023. These updates were necessary due to substantially increased load forecasts resulting from continued economic development successes in the Carolinas occurring since the systemwide integrated resource plan was prepared. In March 2024, we filed for CPCNs for new generation facilities at the sites of the current Marshall Steam Station and Roxboro Plant in the Carolinas. Our energy transition strategy continues to focus on delivering a path to cleaner energy in a manner that protects grid reliability and affordability, all while meeting the energy demands of the growing and economically vibrant communities that we serve.

Current wording

•In January 2024, we filed supplemental modeling and analysis with the NCUC and PSCSC related to our combined systemwide Carolinas Resource Plan filed in August 2023. These updates were necessary due to substantially increased load forecasts resulting from continued economic development successes in the Carolinas occurring since the systemwide integrated resource plan was prepared. In March 2024, we filed for: (i) CPCNs with the NCUC for new natural gas generation facilities at the sites of the current Marshall Steam Station and Roxboro Plant in the Carolinas; and (ii) a Certificate of Environmental Compatibility and Public Convenience and Necessity with the PSCSC for a new solar center and associated facilities in Chesterfield and Darlington counties, South Carolina. Our energy transition strategy continues to focus on delivering a path to cleaner energy in a manner that protects grid reliability and affordability, all while meeting the energy demands of the growing and economically vibrant communities that we serve.

Previous wording

•As we continue to strengthen our grid and bring clean energy resources online, our customers are important partners in our clean energy future. In January 2024, we received approval for PowerPair SM, a new incentive-based pilot program for installing home solar generation with battery energy storage in our Duke Energy Carolinas and Duke Energy Progress North Carolina service territories. Enrollment options for residential customers that participate in the pilot include a one-time incentive of up to $9,000 for the installation of a solar plus battery system.

Current wording

•As we continue to strengthen our grid and bring clean energy resources online, our customers are important partners in our clean energy future. In January 2024, we received approval for PowerPair SM, a new incentive-based pilot program for installing home solar generation with battery energy storage in our Duke Energy Carolinas and Duke Energy Progress North Carolina service territories. Enrollment options for residential customers that participate in the pilot include a one-time incentive of up to $9,000 for the installation of a solar plus battery system. The program was launched in May 2024 and successfully enrolled more than 1,300 customers in its first three months, providing another impactful way for our customers to save energy and money, while exploring new solutions to help manage low carbon grids of the future.

Previous wording

Regulatory Activity. During the three months ended March 31, 2024, we continued to move our regulatory strategy forward. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

Current wording

Regulatory Activity. During the six months ended June 30, 2024, we continued to move our regulatory strategy forward. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

Previous wording

•In January 2024, Duke Energy Carolinas filed a South Carolina rate case requesting an overall increase in revenues of approximately $323 million, prior to proposed mitigation efforts including the acceleration of the return of certain EDIT balances. This is the first base rate case filed by Duke Energy Carolinas in the state since 2018 and reflects the South Carolina retail allocation of significant investments, including approximately $1.5 billion of transmission and distribution assets and certain coal ash related compliance costs.

Current wording

•In January 2024, Duke Energy Carolinas filed a South Carolina rate case, the first base rate case filed by Duke Energy Carolinas in the state since 2018 and reflecting the South Carolina retail allocation of significant investments, including approximately $1.5 billion of transmission and distribution assets. In May 2024, we reached a constructive comprehensive settlement with certain parties and in July 2024, the PSCSC issued an order approving the settlement and revising recovery of certain environmental compliance costs. New rates were effective August 1, 2024.

Previous wording

•Duke Energy Florida filed a three-year rate plan that would begin in January 2025, once its current base rate settlement agreement concludes at the end of 2024, andproposed approximately $4.9 billion in investments to reduce outages, expand solar generation, and increase generation unit efficiency. The overall additional base rate revenue requirement would be $820 million over the three-year period and, if approved by the FPSC, will facilitate improved grid reliability for a growing customer base, reduced fuel consumption at existing power plants, and the construction of 14 new solar plants, providing 1,050 MW of clean energy to Florida's grid.

Current wording

•Duke Energy Florida filed a three-year rate plan that would begin in January 2025, once its current base rate settlement agreement concludes at the end of 2024, andproposed approximately $4.9 billion in incremental investments to reduce outages, expand solar generation, and increase generation unit efficiency. In July 2024, we reached a constructive comprehensive settlement with certain parties on the rate plan which, if approved by the FPSC, will allow us to continue making important investments to reduce outages, shorten response times, meet future energy demands, increase clean, solar generation and explore innovative technologies to generate cost savings for our customers.

Previous wording

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 led to an increase in the under collection of fuel costs from customers in jurisdictions including Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida. These amounts have been deferred in regulatory assets and impacted the cash flows of the registrants, including increased borrowings to temporarily finance related expenditures until recovery. Regulatory filings have been made and approved for recovery of all remaining uncollected 2022 fuel costs. Across all jurisdictions, Duke Energy is currently on pace to recover approximately $1.9 billion of deferred fuel costs in 2024.We anticipate being in line with our historical average balance of deferred fuel costs by the end of this year.

Current wording

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 led to an increase in the under collection of fuel costs from customers in jurisdictions including those served by Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida. These amounts have been deferred in regulatory assets and impacted the cash flows of the registrants, including increased borrowings to temporarily finance related expenditures until recovery. Regulatory filings have been made and approved for recovery of all remaining uncollected 2022 fuel costs. Across all jurisdictions, Duke Energy is currently on pace to recover approximately $1.9 billion of deferred fuel costs in 2024 and we anticipate being in line with our historical average balance of deferred fuel costs by the end of this year.

Previous wording

In April 2024, the EPA issued a final rule under the Resource Conservation and Recovery Act, which significantly expands the scope of the CCR Rule by establishing regulatory requirements for inactive surface impoundments at retired generating facilities and previously unregulated coal ash sources at regulated facilities. The EPA also issued a final rule under section 111 of the Clean Air Act regulating GHG emissions from existing coal-fired and new natural gas-fired power plants. Duke Energy is reviewing these final rules and analyzing the potential impacts they could have on the Company, which could be material. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. Duke Energy is evaluating potential legal challenges to the final rules. For more information, see "Other Matters."

Current wording

In April 2024, the EPA issued a final rule under section 111 of the Clean Air Act (EPA Rule 111) regulating GHG emissions from existing coal-fired and new natural gas-fired power plants. Duke Energy is analyzing the potential impacts the rule could have on the Company, which could be material and may influence the timing, nature, and magnitude of future generation investments in our service territories. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. Duke Energy is participating in and monitoring legal challenges to the final rule. For more information, see "Other Matters."

Previous wording

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.

Current wording

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 basic 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 Basic Earnings (Loss) Per Share, respectively.

Previous wording

Discontinued operations primarily represents the operating results and impairments recognized related to the sale of the Commercial Renewables business disposal group.

Current wording

Discontinued operations primarily represents the operating results and impairments recognized related to the sale of Duke Energy's Commercial Renewables Disposal Groups.

Previous wording

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s first quarter 2024 adjusted EPS was $1.44 compared to $1.20 for the first quarter of 2023. The increase in adjusted EPS was primarily due to improved weather and favorable rate case impacts along with growth from riders and other margin, partially offset by higher interest expense.

Current wording

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s second quarter 2024 adjusted EPS was $1.18 compared to $0.91 for the second quarter of 2023. The increase in adjusted EPS was primarily due to growth from rate increases and riders, higher sales volumes and favorable weather, partially offset by higher interest expense and higher depreciation on a growing asset base.

Previous wording

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

Current wording

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

Previous wording

GAAP reported EPS was $1.44 for the first quarter of 2024 compared to $1.01 in the first quarter of 2023. In addition to the drivers below, GAAP reported EPS increased primarily due to impairments on the sale of the Commercial Renewables business in the prior year.

Current wording

GAAP Reported EPS was $2.57 for the six months ended June 30, 2024, compared to $0.69 for the six months ended June 30, 2023. In addition to the drivers below, GAAP reported EPS increased primarilydue to impairments on the sale of the Commercial Renewables business in the prior year.

Previous wording

EU&I’s results were driven by higher revenues from rate cases across multiple jurisdictions, improved weather, and higher weather-normal retail sales volumes, partially offset by higher depreciation related to additional plant in service. The following is a detailed discussion of the variance drivers by line item.

Current wording

EU&I’s results were driven by higher revenues from rate cases across multiple jurisdictions, improved weather, and higher weather-normal retail sales volumes, partially offset by higher depreciation. The following is a detailed discussion of the variance drivers by line item.

Previous wording

•a $147 million increase due to higher pricing from jurisdictional rate cases primarily at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Kentucky;

Current wording

•a $159 million increase due to higher pricing from jurisdictional rate cases primarily at Duke Energy Carolinas and Duke Energy Progress and the 2021 Settlement at Duke Energy Florida;

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•a $49 million decrease in fuel revenues primarily due to net lower fuel cost recovery in the current year.

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•a $150 million increase in fuel revenues primarily due to net higher fuel cost recovery in the current year;

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•a $62 million increase in weather-normal retail sales volumes at Duke Energy Progress;

Current wording

•a $62 million increase in rider revenues primarily due to a decrease in the return of EDIT to customers at Duke Energy Carolinas; and

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•a $58 million increase in depreciation and amortization primarily due to lower amortization of the DOE settlement regulatory liability and higher depreciable base; and

Current wording

•a $58 million increase in depreciation and amortization primarily due to higher depreciable base and higher net amortizations driven by the North Carolina rate cases at Duke Energy Carolinas and Duke Energy Progress, and lower amortization of the DOE settlement regulatory liability and higher depreciable base at Duke Energy Florida; and

Previous wording

•a $47 million increase in operation, maintenance and other primarily driven by higher storm amortization at Duke Energy Florida, higher storm and nuclear outage costs at Duke Energy Progress, and higher storm costs at Duke Energy Carolinas.

Current wording

•a $79 million decrease in operation, maintenance and other primarily driven by lower storm amortization at Duke Energy Florida, lower storm and nuclear outage costs at Duke Energy Progress, partially offset by higher storm costs at Duke Energy Carolinas.

Previous wording

•a $41 million decrease in fuel used in electric generation and purchased power due to lower deferred fuel amortization and lower fuel prices and volumes at Duke Energy Indiana, Duke Energy Florida and Duke Energy Ohio, partially offset by change in generation mix and higher recovery of fuel expense at Duke Energy Carolinas and Duke Energy Progress; and

Current wording

•a $148 million increase in fuel used in electric generation and purchased power due to higher recovery of fuel expense at Duke Energy Carolinas and Duke Energy Progress, partially offset by lower deferred fuel amortization and lower fuel prices and volumes at Duke Energy Indiana, Duke Energy Florida and Duke Energy Ohio; and

Previous wording

•a $31 million increase in depreciation and amortization primarily due to a higher depreciable base, and higher net amortizations driven by the North Carolina rate case; and

Current wording

•a $31 million increase in impairment of assets and other charges primarily related to the South Carolina rate case order at Duke Energy Carolinas.

Previous wording

Income Tax Expense. The increase in tax expense was prima rily due to an increase in pretax income, partially offset by an increase in the amortization of EDIT. The ETRs for the three months ended March 31, 2024, and 2023, were 14.3% and 15.5%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of EDIT.

Current wording

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income, partially offset by an increase in the amortization of EDIT. The ETRs for the six months ended June 30, 2024, and 2023, were 15.3% and 15.4%, respectively.

Previous wording

GU&I’s results were impacted primarily by margin growth, partially offset by higher interest expense and operation, maintenance and other expense. The following is a detailed discussion of the variance drivers by line item.

Current wording

GU&I’s results were impacted primarily by higher depreciation and amortization and interest expense, partially offset by higher margin growth. The following is a detailed discussion of the variance drivers by line item.

Previous wording

•a $21 million increase due to higher base rates, primarily from the Duke Energy Ohio rate case, partially offset by lower rider revenues at Duke Energy Ohio;

Current wording

•a $6 million increase due to higher base rates, primarily from the Duke Energy Ohio rate case, partially offset by lower rider revenues as Duke Energy Ohio;

Previous wording

•an $8 million increase due to North Carolina IMR.

Current wording

•an $8 million increase in property and other taxes due to a higher base upon which property taxes are levied; and

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•a $7 million increase due to South Carolina RSA.

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•a $7 million increase in operations, maintenance and other primarily due to higher outside services, labor and service company costs.

Previous wording

Income Tax Expense. The increase in tax expense was primarily due to a decrease in the amortization of EDIT and an increase in pretax income. The ETRs for the three months ended March 31, 2024, and 2023, were 19.5% and 18.0%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of EDIT.

Current wording

Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income. The ETRs for the three months ended June 30, 2024, and 2023, were 25% and 21.9%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of EDIT.

Previous wording

•a $9 million increase due to customer growth;

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•a $12 million increase due to customer growth;

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•a $13 million increase in depreciation and amortization due to higher depreciable base, lower CEP deferrals, an increase in rider amortization and higher depreciation for Foothills and Upper Piedmont projects; and

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•a $25 million increase in depreciation and amortization due to higher depreciable base, higher depreciation for certain unregulated RNG projects and lower CEP deferrals;

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Other's results were impacted by higher interest expense driven by higher outstanding long-term debt.

Current wording

Other's results were impacted by higher interest expense driven by higher outstanding long-term debt balances and interest rates.

Previous wording

Income Tax Benefit. The increase in the tax benefit was primarily due to higher pretax losses. The ETRs for the three months ended March 31, 2024, and 2023, were 28.1% and 30.6%, respectively. The decrease in the ETR was primarily due to tax levelization, partially offset by non-deductible interest on company owned life insurance in the prior year.

Current wording

Income Tax Benefit. The increase in the tax benefit was primarily due an increase in pretax losses and tax levelization. The ETRs for the three months ended June 30, 2024, and 2023, were 29.3% and 23.8%, respectively. The increase in the ETR was primarily due to tax levelization and non-deductible interest on Company-owned life insurance in the prior year.

Previous wording

Operating Expenses. The increase was primarily driven by obligations to the Duke Energy Foundation and lower loss experience related to captive insurance claims in the prior year.

Current wording

Operating Expenses. The increase was primarily driven by contributions to the Duke Energy Foundation, higher claim reserves related to captive insurance, and franchise tax benefits in the prior year.

Previous wording

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

Current wording

The variance was primarily driven by impairments on the sale of the Commercial Renewables business recorded in the prior year.

Previous wording

•a $238 million increase in fuel revenues due to higher fuel rates and volumes;

Current wording

•a $460 million increase in fuel revenues due to higher fuel rates and volumes;

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•a $31 million increase in rider revenues primarily due to the decrease in the return of EDIT to customers compared to the prior year; and

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•a $66 million increase in rider revenues primarily due to the decrease in the return of EDIT to customers compared to the prior year; and

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•a $25 million increase in operation, maintenance and other primarily due to higher storm costs and higher nuclear outage costs, net of levelization; and

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

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•a $63 million increase in retail sales due to improved weather compared to the prior year, including impacts of decoupling, at Duke Energy Progress;

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•a $115 million increase in retail sales due to improved weather compared to prior year, including the impacts of decoupling, at Duke Energy Progress and Duke Energy Florida;

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•a $10 million increase in wholesale revenues, net of fuel, due to higher capacity rates at Duke Energy Progress.

Current wording

•a $19 million increase in wholesale revenues, net of fuel, due to higher sales volumes and capacity rates at Duke Energy Progress; and