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10-Q
false
N.A.
2009-06-30
Duke Energy CORP
0001326160
DUK
--12-31
Yes
No
Yes
Large Accelerated Filer
906000000
-280000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>11. Discontinued Operations and Assets Held for
Sale</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">(Loss) Income From Discontinued
Operations, net of tax, was a loss of approximately $2 million and
income of approximately $1 million for the three and six months
ended June 30, 2009, respectively, and income of approximately
$13 million and $15 million for the three and six months ended
June 30, 2008, respectively. There were no Assets Held for
Sale and Liabilities Associated with Assets Held for Sale in the
Consolidated Balance Sheets as of June 30, 2009 or
December 31, 2008.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The income recorded during the three
and six months ended June 30, 2008 primarily relates to
Commercial Power’s gain on the sale of its 480 MW natural
gas-fired peaking generating station located near Brownsville,
Tennessee to Tennessee Valley Authority for approximately $55
million in April 2008. This transaction resulted in Duke Energy
recognizing an approximate $23 million pre-tax gain at
closing.</font></p>
</div>
0.48
0.48
241000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>14. Commitments and Contingencies</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Environmental</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy is subject to
international, federal, state and local regulations regarding air
and water quality, hazardous and solid waste disposal and other
environmental matters. These regulations can be changed from time
to time, imposing new obligations on Duke Energy.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Remediation Activities.</b> Duke
Energy and its affiliates are responsible for environmental
remediation at various contaminated sites. These include some
properties that are part of ongoing Duke Energy operations, sites
formerly owned or used by Duke Energy entities, and sites owned by
third parties. Remediation typically involves management of
contaminated soils and may involve groundwater remediation. Managed
in conjunction with relevant federal, state and local agencies,
activities vary with site conditions and locations, remedial
requirements, complexity and sharing of responsibility. If
remediation activities involve statutory joint and several
liability provisions, strict liability, or cost recovery or
contribution actions, Duke Energy or its affiliates could
potentially be held responsible for contamination caused by other
parties. In some instances, Duke Energy may share liability
associated with contamination with other potentially responsible
parties, and may also benefit from insurance policies or
contractual indemnities that cover some or all cleanup costs. All
of these sites generally are managed in the normal course of
business or affiliate operations. During 2009, Duke Energy has
recorded additional reserves associated with remediation activities
at certain sites and it is anticipated that additional costs
associated with remediation activities at certain of its sites will
be incurred.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Included in Other within Deferred
Credits and Other Liabilities and Other within Current Liabilities
on the Consolidated Balance Sheets were total accruals related to
extended environmental-related activities of approximately $65
million and $55 million as of June 30, 2009 and
December 31, 2008, respectively. These accruals represent Duke
Energy’s provisions for costs associated with remediation
activities at some of its current and former sites, as well as
other relevant environmental contingent liabilities. Management, in
the normal course of business, continually assesses the nature and
extent of known or potential environmental-related contingencies
and records liabilities when losses become probable and are
reasonably estimable.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Clean Water Act 316(b).</b> The EPA
finalized its cooling water intake structures rule in July 2004.
The rule established aquatic protection requirements for existing
facilities that withdraw 50 million gallons or more of water
per day from rivers, streams, lakes, reservoirs, estuaries, oceans
or other U.S. waters for cooling purposes. Fourteen of the 23 coal
and nuclear-fueled generating facilities in which Duke Energy is
either a whole or partial owner are affected sources under that
rule. On April 1, 2009, the U.S. Supreme Court ruled in favor
of the appellants that the EPA may consider costs when determining
which technology option each site should implement. Depending on
how the cost-benefit analysis is incorporated into the revised EPA
rule, the analysis could narrow the range of technology options
required for each of the 14 affected facilities. Because of the
wide range of potential outcomes, Duke Energy is unable to estimate
its costs to comply at this time.</font></p>
<p style=
"PADDING-BOTTOM: 4px; MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Clean Air Interstate Rule
(CAIR).</b> The EPA finalized its CAIR in May 2005. The CAIR limits
total annual and summertime NO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">x</sub>
emissions and annual SO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>
emissions from electric generating facilities across the Eastern
U.S. through a two-phased cap-and-trade program. Phase 1 begins in
2009 for NO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">x</sub>
and in 2010 for SO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>.
Phase 2 begins in 2015 for both NO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">x</sub>
and SO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>.
On March 25, 2008, the U.S. Court of Appeals for the District
of Columbia (D.C. Circuit) heard oral argument in a case involving
multiple challenges to the CAIR. On July 11, 2008, the D.C.
Circuit issued its decision in <i>North Carolina v. EPA</i>
No. 05-1244 vacating the CAIR. The EPA filed a petition for
rehearing on September 24, 2008 with the D.C. Circuit asking
the court to reconsider various parts of its ruling vacating the
CAIR. In December</font> <font size="1" face="ARIAL">2008, the
D.C. Circuit issued a decision remanding the CAIR to the EPA
without vacatur. The EPA must now conduct a new rulemaking to
modify the CAIR in accordance with the court’s July 11,
2008 opinion. This decision means that the CAIR as initially
finalized in 2005 remains in effect until the new EPA rule takes
effect. The court did not impose a deadline or schedule on the EPA.
It is uncertain how long the current CAIR will remain in effect or
how the new rulemaking will alter the CAIR.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The emission controls Duke Energy has
installed to comply with state specific clean air legislation will
contribute significantly to achieving compliance with the CAIR
requirements. Additionally, Duke Energy plans to spend
approximately $120 million between 2009 and 2013
(approximately $85 million in Ohio and $35 million in Indiana) to
comply with Phase 1 of the CAIR. Duke Energy is currently unable to
estimate the costs to comply with any new rule the EPA will issue
in the future as a result of the D.C. District Court’s
December 2008 decision discussed above. The IURC issued an order in
2006 granting Duke Energy Indiana approximately $1.07 billion in
rate recovery to cover its estimated Phase 1 compliance costs of
the CAIR and the Clean Air Mercury Rule in Indiana. Duke Energy
Ohio will recover most of the depreciation and financing costs
related to environmental compliance projects for 2009-2011 through
its ESP.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Coal Combustion Product (CCP)
Management.</b> Duke Energy currently estimates that it will spend
approximately $365 million over the period 2009-2013 to
install synthetic caps and liners at existing and new CCP landfills
and to convert some of its CCP handling systems from wet to dry
systems.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Litigation</b></font></p>
<p style=
"PADDING-BOTTOM: 4px; MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>New Source Review (NSR).</b> In
1999-2000, the U.S. Department of Justice, acting on behalf of the
EPA and joined by various citizen groups and states, filed a number
of complaints and notices of violation against multiple utilities
across the country for alleged violations of the NSR provisions of
the Clean Air Act (CAA). Generally, the government alleges that
projects performed at various coal-fired units were major
modifications, as defined in the CAA, and that the utilities
violated the CAA when they undertook those projects without
obtaining permits and installing the best available emission
controls for SO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>,
NO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">x</sub>
and particulate matter. The complaints seek injunctive relief to
require installation of pollution control technology on various
generating units that allegedly violated the CAA, and unspecified
civil penalties in amounts of up to $32,500 per day for each
violation. A number of Duke Energy’s plants have been subject
to these allegations. Duke Energy asserts that there were no CAA
violations because the applicable regulations do not require
permitting in cases where the projects undertaken are
“routine” or otherwise do not result in a net increase
in emissions.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In 2000, the government brought a
lawsuit against Duke Energy in the U.S. District Court in
Greensboro, North Carolina. The EPA claims that 29 projects
performed at 25 of Duke Energy’s coal-fired units in the
Carolinas violate these NSR provisions. Three environmental groups
have intervened in the case. In August 2003, the trial court issued
a summary judgment opinion adopting Duke Energy’s legal
positions on the standard to be used for measuring an increase in
emissions, and granted judgment in favor of Duke Energy. The trial
court’s decision was appealed and ultimately reversed and
remanded for trial by the U.S. Supreme Court. At trial, Duke Energy
will continue to assert that the projects were routine or not
projected to increase emissions. No trial date has been
set.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In November 1999, the U.S. brought a
lawsuit in the U.S. Federal District Court for the Southern
District of Indiana against Cinergy, Duke Energy Ohio and Duke
Energy Indiana alleging various violations of the CAA for various
projects at six Duke Energy owned and co-owned generating stations
in the Midwest. Three northeast states and two environmental groups
have intervened in the case. A jury trial commenced on May 5,
2008 and jury verdict was returned on May 22, 2008. The jury
found in favor of Cinergy, Duke Energy Ohio and Duke Energy Indiana
on all but three units at Wabash River. Additionally, the
plaintiffs had claimed that Duke Energy violated an Administrative
Consent Order entered into in 1998 between the EPA and Cinergy
relating to alleged violations of Ohio’s State Implementation
Plan (SIP) provisions governing particulate matter at Duke Energy
Ohio’s W.C. Beckjord Station.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">On October 21, 2008, plaintiffs
filed a motion for a new liability trial claiming that defendants
misled the plaintiffs and the jury by, among other things, not
disclosing a consulting agreement with a fact witness and by
referring to that witness as “retired” during the
liability trial when in fact he was working for Duke Energy under
the referenced consulting agreement in connection with the trial.
On December 18, 2008, the court granted plaintiffs’
motion for a new liability trial on claims for which Duke Energy
was not previously found liable. That new trial commenced on
May 11, 2009. On May 19, 2009, the jury announced its
verdict finding in favor of Duke Energy on 4 of the remaining 6
projects at issue. The 2 projects in which the jury found
violations were undertaken at Units 1 and 3 of the Gallagher
Station in Indiana. A remedy trial on those two violations has been
scheduled to commence on January 25, 2010.</font><font size=
"1"> </font></p>
<p style=
"PADDING-BOTTOM: 4px; MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The remedy trial for violations
previously established at the Wabash River and W.C. Beckjord
Stations was held during the week of February 2, 2009. On
May 29, 2009, the Court issued its remedy ruling and ordered
the following relief: (1) Wabash River units 2, 3 & 5 to
be permanently retired by September 30, 2009;
(2) surrender of SO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>
allowances equal the emissions from Wabash 2, 3 & 5 from
May 22, 2008 through September 20, 2009; (3) civil
penalty in the amount of $687,500 for Beckjord violations; and
(4) installation of a particulate continuous emissions
monitoring system (PM CEMS) at the W.C. Beckjord Station Units 1
and 2. The civil penalty has been paid and Duke Energy is currently
evaluating its options for appeal. On June 12, 2009, Duke
Energy filed a motion with the District Court for a Judgment as a
Matter of Law and Request for a New Trial. On July 24, 2009, that
motion was denied, thereby starting the 60-day appeal
timeline.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">On April 3, 2008, the Sierra Club
filed a lawsuit in the U.S. District Court for the Southern
District of Indiana against Duke Energy Indiana and certain
affiliated companies. Sierra Club alleges NSR and Title V
violations of the CAA at the Edwardsport generating station in Knox
County, Indiana. Sierra Club claims that Duke Energy Indiana
violated the CAA when it undertook various maintenance projects at
Edwardsport without obtaining permits and installing the best
available emission controls. Sierra Club states that it intends to
file suit for additional alleged violations of the CAA and the
Indiana State Implementation Plan. On June 30, 2008,
defendants filed a motion to dismiss, or alternatively to stay,
this litigation on jurisdictional grounds. The District Court
denied that motion and the case is now in the discovery phase.
Trial has been set to commence in January 2011.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">On July 31, 2009, the EPA served a
request for information under section 114 of the CAA on Duke
Energy, Duke Energy Ohio and Duke Energy Business Services, Inc.,
requesting information pertaining to various maintenance projects
and emissions and operations data relevant to the Miami Fort and
W.C. Beckjord stations in Ohio. Duke Energy is required to respond
to the EPA’s section 114 request within 45 days of
receipt.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">It is not possible to estimate the
damages, if any, that Duke Energy might incur in connection with
these matters. Ultimate resolution of these matters relating to
NSR, even in settlement, could have a material adverse effect on
Duke Energy’s consolidated results of operations, cash flows
or financial position. However, Duke Energy will pursue appropriate
regulatory treatment for any costs incurred in connection with such
resolution.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Cliffside Unit 6 Permit.</b> On
July 16, 2008, the Southern Alliance for Clean Energy,
Environmental Defense Fund, National Parks Conservation
Association, Natural Resources Defenses Council, and Sierra Club
(collectively referred to as Citizen Groups) filed suit in federal
court alleging that Duke Energy Carolinas violated the CAA when it
commenced construction of Cliffside Unit 6 at Cliffside Steam
Station in Rutherford County, North Carolina without obtaining a
determination that the MACT emission limits will be met for all
prospective hazardous air emissions at that plant. The Citizen
Groups claim the right to injunctive relief against further
construction at the plant as well as civil penalties in the amount
of up to $32,500 per day for each alleged violation. In July 2008,
Duke Energy Carolinas voluntarily performed a MACT assessment of
air emission controls planned for Cliffside Unit 6 and submitted
the results to the DENR. On August 8, 2008 the plaintiffs
filed a motion for summary judgment. On December 2, 2008, the
Court granted summary judgment in favor of the Plaintiffs and
entered judgment ordering Duke Energy Carolinas to initiate a MACT
process before the DAQ. The court did not order an injunction
against further construction, but retained jurisdiction to monitor
the MACT proceedings. On December 4, 2008, Duke Energy
Carolinas submitted its MACT filing and supporting information to
the DAQ specifically seeking the DAQ’s concurrence as a
threshold matter that construction of Cliffside Unit 6 is not a
major source subject to section 112 of the Clean Air Act and
submitting a MACT determination application. Concurrent with the
initiation of the MACT process, Duke Energy Carolinas filed a
notice of appeal to the Fourth Circuit Court of Appeals of the
Court’s December 2, 2008 order to reverse the
Court’s determination that Duke Energy Carolinas violated the
CAA. The DAQ issued the revised permit on March 13, 2009, see
above discussion. Based upon DAQ’s minor-source
determination, Duke Energy Carolinas filed a motion requesting that
the court abstain from further action on the matter and dismiss the
plaintiffs’ complaint. The court granted Duke Energy
Carolinas motion to abstain and dismissed the plaintiffs’
complaint without prejudice. Duke Energy Carolinas is considering
whether it will further pursue the pending appeal.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">It is not possible to predict with
certainty whether Duke Energy Carolinas will incur any liability or
to estimate the damages, if any, that Duke Energy Carolinas might
incur in connection with this matter. To the extent that a court of
proper jurisdiction halts construction of the plant, Duke Energy
Carolinas will seek to meet customers’ need for power through
other resources. In addition, Duke Energy Carolinas will seek
appropriate regulatory treatment for the investment in the
plant.</font></p>
<p style=
"PADDING-BOTTOM: 4px; MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Carbon Dioxide (CO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>)
Litigation.</b> In July 2004, the states of Connecticut, New York,
California, Iowa, New Jersey, Rhode Island, Vermont, Wisconsin and
the City of New York brought a lawsuit in the U.S. District Court
for the Southern District of New York
against</font> <font size="1" face="ARIAL">Cinergy, American
Electric Power Company, Inc., American Electric Power Service
Corporation, The Southern Company, Tennessee Valley Authority, and
Xcel Energy Inc. A similar lawsuit was filed in the U.S. District
Court for the Southern District of New York against the same
companies by Open Space Institute, Inc., Open Space Conservancy,
Inc., and The Audubon Society of New Hampshire. These lawsuits
allege that the defendants’ emissions of CO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>
from the combustion of fossil fuels at electric generating
facilities contribute to global warming and amount to a public
nuisance. The complaints also allege that the defendants could
generate the same amount of electricity while emitting
significantly less CO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>.
The plaintiffs are seeking an injunction requiring each defendant
to cap its CO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>
emissions and then reduce them by a specified percentage each year
for at least a decade. In September 2005, the District Court
granted the defendants’ motion to dismiss the lawsuit. The
plaintiffs have appealed this ruling to the Second Circuit Court of
Appeals. Oral arguments were held before the Second Circuit Court
of Appeals on June 7, 2006. It is not possible to predict with
certainty whether Duke Energy will incur any liability or to
estimate the damages, if any, that Duke Energy might incur in
connection with this matter.</font></p>
<p style=
"PADDING-BOTTOM: 4px; MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Alaskan Global Warming Lawsuit.</b>
On February 26, 2008, plaintiffs filed suit against Peabody
Coal and various oil and power company defendants, including Duke
Energy and certain of its subsidiaries. Plaintiffs, the governing
bodies of an Inupiat village in Alaska brought the action on their
own behalf and on behalf of the village’s approximately 400
residents. The lawsuit alleges that defendants’ emissions of
CO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">2</sub>
contributed to global warming and constitute a private and public
nuisance. Plaintiffs also allege that certain defendants, including
Duke Energy, conspired to mislead the public with respect to global
warming. Plaintiffs seek unspecified monetary damages,
attorney’s fees and expenses. On June 30, 2008, the
defendants filed a motion to dismiss on jurisdictional grounds,
together with a motion to dismiss the conspiracy claims. Oral
argument on the motion that was scheduled for May 2009 was taken
off of the calendar and it is expected that the judge will not hold
a hearing before issuing her decision. It is not possible to
predict with certainty whether Duke Energy will incur any liability
or to estimate the damages, if any, that Duke Energy might incur in
connection with this matter.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Hurricane Katrina Lawsuit.</b> In
April 2006, Duke Energy and Cinergy were named in the third amended
complaint of a purported class action lawsuit filed in the U.S.
District Court for the Southern District of Mississippi. Plaintiffs
claim that Duke Energy and Cinergy, along with numerous other
utilities, oil companies, coal companies and chemical companies,
are liable for damages relating to losses suffered by victims of
Hurricane Katrina. Plaintiffs claim that defendants’
greenhouse gas emissions contributed to the frequency and intensity
of storms such as Hurricane Katrina. On August 30, 2007, the
court dismissed the case. The plaintiffs have filed their appeal to
the Fifth Circuit Court of Appeals and oral argument was heard on
August 6, 2008. Due to the late recusal of one of the judges
on the Fifth Circuit panel, the court held a new oral argument on
November 3, 2008. It is not possible to predict with certainty
whether Duke Energy will incur any liability or to estimate the
damages, if any, that Duke Energy might incur in connection with
this matter.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Price Reporting Cases.</b> A total
of 13 lawsuits have been filed against Duke Energy affiliates and
other energy companies. Ten of these cases have been consolidated
into a single proceeding, including the case originally filed in
Wisconsin state court in March 2009. In February 2008, the judge in
this proceeding granted a motion to dismiss one of the cases and
entered judgment in favor of Duke Energy Trading and Marketing, LLC
(DETM). Plaintiffs’ motion to reconsider was, in large part,
denied and on January 9, 2009, the court ruled that plaintiffs
lacked standing to pursue their remaining claims and granted
certain defendants’ motion for summary judgment. In February
2009, the same judge dismissed Duke Energy Carolinas from that case
as well as four other of the consolidated cases. One case was filed
in Tennessee state court, which dismissed the case on filed rate
and preemption grounds. That case was appealed to the Tennessee
Court of Appeals, where oral argument was heard in November 2007.
The Tennessee Court of Appeals reversed this lower court ruling in
October 2008 and defendants’ application for permission to
appeal to the Tennessee Supreme Court was granted in April 2009. On
January 13, 2009, another case pending in Missouri state
court, was dismissed on the grounds that the plaintiff lacked
standing to bring the case and the plaintiffs have filed an appeal.
Each of these cases contains similar claims, that the respective
plaintiffs, and the classes they claim to represent, were harmed by
the defendants’ alleged manipulation of the natural gas
markets by various means, including providing false information to
natural gas trade publications and entering into unlawful
arrangements and agreements in violation of the antitrust laws of
the respective states. Plaintiffs seek damages in unspecified
amounts. In October 2008, a settlement in principle was reached
with the class plaintiffs in five of the eleven consolidated cases.
A settlement agreement has been executed by the parties and awaits
approval by the court. The settlement, as currently structured,
will not have a material adverse effect on Duke Energy’s
consolidated results of operations, cash flows or financial
position. It is not possible to predict with certainty whether Duke
Energy will incur any liability or to estimate the damages, if any,
that Duke Energy might incur in connection with the remaining
matters.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Duke Energy Retirement Cash
Balance Plan.</b> A class action lawsuit was filed in federal court
in South Carolina against Duke Energy and the Duke Energy
Retirement Cash Balance Plan, alleging violations of Employee
Retirement Income Security Act (ERISA) and the Age Discrimination
in Employment Act (ADEA). These allegations arise out of the
conversion of the Duke Energy Company
Employees’</font> <font size="1" face="ARIAL">Retirement
Plan into the Duke Energy Retirement Cash Balance Plan. The
case also raises some Plan administration issues, alleging errors
in the application of Plan provisions (i.<i>e.</i>, the calculation
of interest rate credits in 1997 and 1998 and the calculation of
lump-sum distributions). The plaintiffs seek to represent present
and former participants in the Duke Energy Retirement Cash
Balance Plan. This group is estimated to include approximately
36,000 persons. The plaintiffs also seek to divide the putative
class into sub-classes based on age. Six causes of action are
alleged, ranging from age discrimination, to various alleged ERISA
violations, to allegations of breach of fiduciary duty. The
plaintiffs seek a broad array of remedies, including a retroactive
reformation of the Duke Energy Retirement Cash Balance Plan
and a recalculation of participants’/ beneficiaries’
benefits under the revised and reformed plan. Duke Energy
filed its answer in March 2006. A portion of this contingent
liability was assigned to Spectra Energy in connection with the
spin-off in January 2007. A hearing on the plaintiffs’ motion
to amend the complaint to add an additional age discrimination
claim, defendant’s motion to dismiss and the respective
motions for summary judgment was held in December 2007. On
June 2, 2008, the court issued its ruling denying
plaintiffs’ motion to add the additional claim and dismissing
a number of plaintiffs’ claims, including the claims for
ERISA age discrimination. Since that date, plaintiffs have notified
Duke Energy that they are withdrawing their ADEA claim. No trial
date has been set. At mediation, plaintiffs quantified their claims
as being in excess of $150 million. It is not possible to predict
with certainty the damages, if any, that Duke Energy might incur in
connection with this matter.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Ohio Antitrust Lawsuit.</b> In
January 2008, four plaintiffs, including individual, industrial and
non-profit customers, filed a lawsuit against Duke Energy Ohio in
federal court in the Southern District of Ohio. Plaintiffs allege
that Duke Energy Ohio (then The Cincinnati Gas & Electric
Company (CG&E)), conspired to provide inequitable and unfair
price advantages for certain large business consumers by entering
into non-public option agreements with such consumers in exchange
for their withdrawal of challenges to Duke Energy Ohio’s
(then CG&E’s) pending RSP, which was implemented in early
2005. Duke Energy Ohio denies the allegations made in the lawsuit.
Following Duke Energy Ohio’s filing of a motion to dismiss
plaintiffs’ claims, plaintiffs amended their complaint on
May 30, 2008. Plaintiffs now contend that the contracts at
issue were an illegal rebate which violate antitrust and Racketeer
Influenced and Corrupt Organizations (RICO) statutes. Defendants
have again moved to dismiss the claims. On March 31, 2009, the
District Court granted Duke Energy Ohio’s motion to dismiss.
Plaintiffs have filed a motion to alter or set aside the
judgment.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Duke Energy International
Paranapanema Lawsuit.</b> On July 16, 2008, Duke Energy
International Geracao Paranapanema S.A. (DEIGP) filed a lawsuit in
the Brazilian federal court challenging the merits of two
resolutions promulgated by the Brazilian electricity regulatory
agency (ANEEL) (collectively, the “Resolutions”). The
Resolutions purport to impose additional transmission fees
(retroactive to July 1, 2004 and effective through
June 30, 2009) on generation companies located in the State of
São Paulo for utilization of the electric transmission system.
The new assessments are based upon a flat-fee charge that fails to
take into account the locational usage by each generator. DEIGP has
been assessed approximately $45 million, inclusive of interest.
DEIGP challenged the assessment in Brazilian federal court. Based
on DEIGP’s continuing refusal to tender payment of the
disputed sums, on April 1, 2009, ANEEL assessed an additional
fine against DEIGP in the amount of approximately $7 million. DEIGP
filed a request to enjoin payment of the fine and for an expedited
decision on the merits or, alternatively, a result that all
disputed sums be deposited in the court’s registry in lieu of
direct payment to the distribution companies.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">On June 30, 2009, the court issued
a ruling in which it granted DEIGP’s request for injunction
regarding the second fine and denied DEIGP’s request for an
expedited decision or payment into the court registry. As a result
of the Court’s order, DEIGP will be forced to make payment
directly to the distribution companies on the approximate $45
million assessment pending resolution on the merits. The
court’s ruling allows DEIGP to make monthly installment
payments (36 installments retroactive to January 1, 2009) on
the outstanding obligation, without waiver of any rights to press
forward on the merits. DEIGP has filed an appeal of those
rulings.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In the second quarter of 2009, as a
result of the Court’s ruling, Duke Energy recorded a pre-tax
charge of approximately $33 million associated with this
matter.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Asbestos-related Injuries and
Damages Claims.</b> Duke Energy has experienced numerous claims for
indemnification and medical cost reimbursement relating to damages
for bodily injuries alleged to have arisen from the exposure to or
use of asbestos in connection with construction and maintenance
activities conducted by Duke Energy Carolinas on its electric
generation plants prior to 1985.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Amounts recognized as asbestos-related
reserves related to Duke Energy Carolinas in the Consolidated
Balance Sheets totaled approximately $1,005 million and $1,031
million as of June 30, 2009 and December 31, 2008,
respectively, and are classified in Other within Deferred Credits
and Other Liabilities and Other within Current Liabilities. These
reserves are based upon the minimum amount in Duke Energy’s
best estimate of the range of loss for current and future asbestos
claims through 2027. Management believes that it
is</font> <font size="1" face="ARIAL">possible there will be
additional claims filed against Duke Energy Carolinas after 2027.
In light of the uncertainties inherent in a longer-term forecast,
management does not believe that they can reasonably estimate the
indemnity and medical costs that might be incurred after 2027
related to such potential claims. Asbestos-related loss estimates
incorporate anticipated inflation, if applicable, and are recorded
on an undiscounted basis. These reserves are based upon current
estimates and are subject to greater uncertainty as the projection
period lengthens. A significant upward or downward trend in the
number of claims filed, the nature of the alleged injury, and the
average cost of resolving each such claim could change our
estimated liability, as could any substantial adverse or favorable
verdict at trial. A federal legislative solution, further state
tort reform or structured settlement transactions could also change
the estimated liability. Given the uncertainties associated with
projecting matters into the future and numerous other factors
outside our control, management believes that it is possible Duke
Energy Carolinas may incur asbestos liabilities in excess of the
recorded reserves.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy has a third-party insurance
policy to cover certain losses related to Duke Energy
Carolinas’ asbestos-related injuries and damages above an
aggregate self insured retention of $476 million. Duke Energy
Carolinas’ cumulative payments began to exceed the self
insurance retention on its insurance policy during the second
quarter of 2008. Future payments up to the policy limit will be
reimbursed by Duke Energy’s third party insurance carrier.
The insurance policy limit for potential future insurance
recoveries for indemnification and medical cost claim payments is
$1,074 million in excess of the self insured retention. Insurance
recoveries of approximately $1,007 million and $1,032 million
related to this policy are classified in the Consolidated Balance
Sheets in Other within Investments and Other Assets and Receivables
as of June 30, 2009 and December 31, 2008, respectively.
Duke Energy is not aware of any uncertainties regarding the legal
sufficiency of insurance claims. Management believes the insurance
recovery asset is probable of recovery as the insurance carrier
continues to have a strong financial strength rating.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy Indiana and Duke Energy
Ohio have also been named as defendants or co-defendants in
lawsuits related to asbestos at their electric generating stations.
The impact on Duke Energy’s consolidated results of
operations, cash flows or financial position of these cases to date
has not been material. Based on estimates under varying assumptions
concerning uncertainties, such as, among others: (i) the
number of contractors potentially exposed to asbestos during
construction or maintenance of Duke Energy Indiana and Duke Energy
Ohio generating plants; (ii) the possible incidence of various
illnesses among exposed workers, and (iii) the potential
settlement costs without federal or other legislation that
addresses asbestos tort actions, Duke Energy estimates that the
range of reasonably possible exposure in existing and future suits
over the foreseeable future is not material. This estimated range
of exposure may change as additional settlements occur and claims
are made and more case law is established.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Other Litigation and Legal
Proceedings.</b> Duke Energy and its subsidiaries are involved in
other legal, tax and regulatory proceedings arising in the ordinary
course of business, some of which involve substantial amounts. Duke
Energy believes that the final disposition of these proceedings
will not have a material adverse effect on its consolidated results
of operations, cash flows or financial position.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy has exposure to certain
legal matters that are described herein. As of June 30, 2009
and December 31, 2008, Duke Energy has recorded reserves,
including reserves related to the aforementioned asbestos-related
injuries and damages claims, of approximately $1 billion and $1.1
billion, respectively, for these proceedings and exposures. Duke
Energy has insurance coverage for certain of these losses incurred.
These reserves represent management’s best estimate of
probable loss as defined by SFAS No. 5, <i>“Accounting
for Contingencies”</i> (SFAS No. 5). As of June 30,
2009 and December 31, 2008, Duke Energy recognized
approximately $1,007 million and $1,032 million, respectively, of
probable insurance recoveries related to these losses.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy expenses legal costs
related to the defense of loss contingencies as
incurred.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Other Commitments and Contingencies</b></font></p>
<p style=
"PADDING-BOTTOM: 4px; MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>DEGS of Narrows, L.L.C.
Investigation.</b> In October 2006, Duke Energy began an internal
investigation into improper data reporting to the EPA regarding air
emissions under the NO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">x</sub>
Budget Program at Duke Energy’s DEGS of Narrows, L.L.C. power
plant facility in Narrows, Virginia. The investigation has revealed
evidence of falsification of data by an employee relating to the
quality assurance testing of its continuous emissions monitoring
system to monitor heat input and NO<sub style=
"POSITION: relative; VERTICAL-ALIGN: baseline; TOP: 0.4ex">x</sub>
emissions. In December 2006, Duke Energy voluntarily disclosed the
potential violations to the EPA and Virginia Department of
Environmental Quality (VDEQ), and in January 2007, Duke Energy made
a full written disclosure of the investigation’s findings to
the EPA and the VDEQ. In December 2007, the EPA issued a notice of
violation. On March 19, 2009, the EPA advised that it will not
pursue criminal charges against Duke Energy, and negotiations can
resume resolving the civil violation of the Clean Air Act
identified in the December 2007 notice of violation. Duke Energy
has taken appropriate disciplinary action, including termination,
with respect to the employees involved with the false reporting. It
is not possible to predict with</font> <font size="1" face=
"ARIAL">certainty whether Duke Energy will incur any liability or
to estimate the damages, if any, that Duke Energy might incur in
connection with civil proceedings in this matter.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>General.</b> As part of its normal
business, Duke Energy is a party to various financial guarantees,
performance guarantees and other contractual commitments to extend
guarantees of credit and other assistance to various subsidiaries,
investees and other third parties. To varying degrees, these
guarantees involve elements of performance and credit risk, which
are not included on the Consolidated Balance Sheets. The
possibility of Duke Energy having to honor its contingencies is
largely dependent upon future operations of various subsidiaries,
investees and other third parties, or the occurrence of certain
future events. For further information see Note 15.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In addition, Duke Energy enters into
various fixed-price, non-cancelable commitments to purchase or sell
power (tolling arrangements or power purchase contracts),
take-or-pay arrangements, transportation or throughput agreements
and other contracts that may or may not be recognized on the
Consolidated Balance Sheets. Some of these arrangements may be
recognized at market value on the Consolidated Balance Sheets as
derivatives or qualifying hedge positions.</font></p>
</div>
0.70
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>21. Comprehensive Income and Accumulated Other
Comprehensive Income</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Comprehensive Income</b>.
Comprehensive income includes net income and all other non-owner
changes in equity. The table below provides the components of other
comprehensive income and total comprehensive income for the three
months ended June 30, 2009 and 2008. Components of other
comprehensive income and total comprehensive income for the six
months ended June 30, 2009 and 2008 are presented in the
Consolidated Statements of Equity and Comprehensive
Income.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Total Comprehensive Income</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="74%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Common<br />
Stockholders’<br />
Equity</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Noncontrolling<br />
Interests</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Total<br />
Equity</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="8" align="middle"><font size="1" face=
"ARIAL"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font size="1" face=
"ARIAL"><b>Three Months Ended June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL"><b>Net Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">276</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">6</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">282</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other comprehensive income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Foreign currency translation adjustments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">183</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">9</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">192</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Net unrealized gain on cash flow hedges<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Reclassification into earnings from cash flow
hedges<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">SFAS No. 158 amortization<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(c)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">17</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">17</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Unrealized gain on investments in available for sale
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Other<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(e)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other comprehensive income, net of tax</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">209</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">9</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">218</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL"><b>Total Comprehensive Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">485</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">15</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">500</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of
insignificant tax expense for the three months ended June 30,
2009.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(b)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $4
million tax expense for the three months ended June 30,
2009.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(c)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $9
million tax expense for the three months ended June 30,
2009.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(d)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $1
million tax expense for the three months ended June 30,
2009.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(e)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of
insignificant tax expense for the three months ended June 30,
2009.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="73%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Common<br />
Stockholders’<br />
Equity</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Noncontrolling<br />
Interests</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Total<br />
Equity</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="10" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font size="1" face=
"ARIAL"><b>Three Months Ended June 30, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL"><b>Net Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">351</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">349</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other comprehensive income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Foreign currency translation adjustments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">85</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">6</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">91</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Net unrealized loss on cash flow hedges<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Reclassification into earnings from cash flow
hedges<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">SFAS No. 158 amortization<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(c)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">11</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">11</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Unrealized loss on investments in auction rate
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Reclassification of losses on investments in auction
rate securities and other available for sale securities into
earnings<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(e)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 5.29em"><font size="1"
face="ARIAL">Other<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(f)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other comprehensive income, net of tax</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">88</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">6</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">94</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL"><b>Total Comprehensive Income</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">439</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">443</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of
insignificant tax benefit for the three months ended June 30,
2008.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(b)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $1
million tax expense for the three months ended June 30,
2008.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(c)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $7
million tax expense for the three months ended June 30,
2008.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(d)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $3
million tax benefit for the three months ended June 30,
2008.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(e)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $2
million tax expense for the three months ended June 30,
2008.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(f)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net of $6
million tax benefit for the three months ended June 30,
2008.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>7. Debt and Credit Facilities</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Unsecured Debt.</b> In January 2009,
Duke Energy issued $750 million principal amount of 6.30% senior
notes due February 1, 2014. Proceeds from the issuance were
used to redeem commercial paper and for general corporate
purposes.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In June 2008, Duke Energy issued $500
million principal amount of senior notes, of which $250 million
carries a fixed interest rate of 5.65% and matures June 15,
2013 and $250 million carries a fixed interest rate of 6.25% and
matures June 15, 2018. Proceeds from the issuance were used to
redeem commercial paper, to fund capital expenditures in Duke
Energy’s unregulated businesses in the U.S. and for general
corporate purposes.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>First and Refunding Mortgage
Bonds.</b> In March 2009, Duke Energy Ohio issued $450 million
principal amount of first mortgage bonds, which carry a fixed
interest rate of 5.45% and mature April 1, 2019. Proceeds from
this issuance were used to repay short-term notes and for general
corporate purposes, including funding capital
expenditures.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In March 2009, Duke Energy Indiana
issued $450 million principal amount of first mortgage bonds, which
carry a fixed interest rate of 6.45% and mature April 1, 2039.
Proceeds from this issuance were used to fund capital expenditures,
to replenish cash used to repay $97 million of senior notes which
matured on March 15, 2009, to fund the repayment at maturity
of $125 million of first mortgage bonds due July 15, 2009, and
for general corporate purposes, including the repayment of
short-term notes.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In January 2008, Duke Energy Carolinas
issued $900 million principal amount of mortgage refunding bonds,
of which $400 million carry a fixed interest rate of 5.25% and
mature January 15, 2018 and $500 million carry a fixed
interest rate of 6.00% and mature January 15, 2038. Proceeds
from the issuance were used to fund capital expenditures and for
general corporate purposes, including the repayment of commercial
paper. In anticipation of this debt issuance, Duke Energy Carolinas
executed a series of interest rate swaps in 2007 to lock in the
market interest rates at that time. The value of these interest
rate swaps, which were terminated prior to issuance of the fixed
rate debt, was a pre-tax loss of approximately $18 million. This
amount was recorded as a component of Accumulated Other
Comprehensive Loss and is being amortized as a component of
Interest Expense over the life of the debt.</font><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In April 2008, Duke Energy Carolinas
issued $900 million principal amount of mortgage refunding bonds,
of which $300 million carries a fixed interest rate of 5.10% and
matures April 15, 2018 and $600 million carries a fixed
interest rate of 6.05% and matures April 15, 2038. Proceeds
from the issuance were used to fund capital expenditures and for
general corporate purposes. In anticipation of this debt issuance,
Duke Energy Carolinas executed a series of interest rate swaps in
2007 to lock in the market interest rates at that time. The value
of these interest rate swaps, which were terminated prior to
issuance of the fixed rate debt, was a pre-tax loss of
approximately $23 million. This amount was recorded as a component
of Accumulated Other Comprehensive Loss and is being amortized as a
component of Interest Expense over the life of the debt.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Other Debt.</b> In June 2009, Duke
Energy Indiana issued $55 million of tax-exempt fixed rate term
bonds, which are due August 1, 2039 and carry a fixed interest
rate of 6.00%. The proceeds from this issuance were used to refund
$55 million of tax-exempt variable rate demand bonds on
July 1, 2009.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In January 2009, Duke Energy Indiana
refunded $271 million of tax-exempt auction rate bonds through the
issuance of $271 million of tax-exempt variable-rate demand bonds,
which are supported by direct-pay letters of credit, of which $144
million had initial rates of 0.7% reset on a weekly basis with $44
million maturing May 2035, $23 million maturing March 2031 and $77
million maturing December 2039. The remaining $127 million had
initial rates of 0.5% reset on a daily basis with $77 million
maturing December 2039 and $50 million maturing October
2040.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In April 2008, Duke Energy Carolinas
refunded $100 million of tax-exempt auction rate bonds through the
issuance of $100 million of tax-exempt variable-rate demand bonds,
which are supported by a direct-pay letter of credit. The
variable-rate demand bonds, which are due November 1, 2040,
had an initial interest rate of 2.15% and is subject to reset on a
weekly basis.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Available Credit Facilities.</b> The
total credit facility capacity under Duke Energy’s master
credit facility is approximately $3.14 billion. Duke Energy has the
unilateral ability under the master credit facility to increase or
decrease the borrowing sub limits of each borrower, subject to
maximum cap limitations, at any time. See table below for the
borrowing sub limits at June 30, 2009 for each of the Duke
Energy entities with borrowing capacity under this credit facility.
The amount available under the master credit facility has been
reduced by draw downs of cash and the use of the master credit
facility to backstop the issuances of commercial paper, letters of
credit and certain pollution control bonds.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style=
"PADDING-BOTTOM: 3px; MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px">
<font size="2" face="ARIAL"><b>Master Credit Facility Summary as of
June 30, 2009 (in millions)<font size="1" face=
"ARIAL"><sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(</sup></font><font size="1"
face="ARIAL"><sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">a)</sup></font> </b></font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="45%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Credit<br />
Facility<br />
Capacity</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Commercial<br />
Paper</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Draw<br />
Down on<br />
Credit<br />
Facility</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Letters of<br />
Credit</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Pollution<br />
Control<br />
Bonds</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Total<br />
Amount<br />
Utilized</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Available<br />
Credit<br />
Facility<br />
Capacity</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font size="1" face=
"ARIAL"><b>Duke Energy Corporation</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">$3,137 multi-year syndicated<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b),
(c), (d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3,137</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">597</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">750</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">126</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">340</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,813</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,324</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">This
summary excludes certain demand facilities and committed facilities
that are insignificant in size or which generally support very
specific requirements, which primarily include facilities that
backstop various outstanding pollution control bonds.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(b)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Credit
facility expires June 2012. The credit facility contains an option
allowing borrowing up to the full amount of the facility on the day
of initial expiration for up to one year.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(c)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Credit
facility contains a covenant requiring the debt-to-total
capitalization ratio to not exceed 65% for each
borrower.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(d)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Contains
sub limits at June 30, 2009 as follows: $1,097 million for
Duke Energy, $840 million for Duke Energy Carolinas, $650 million
for Duke Energy Ohio, $450 million for Duke Energy
Indiana and $100 million for Duke Energy Kentucky.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">At June 30, 2009, Duke Energy and
its wholly owned subsidiaries, Duke Energy Ohio, Duke Energy
Indiana and Duke Energy Kentucky (collectively referred to as the
borrowers), had outstanding borrowings of approximately $750
million under Duke Energy’s master credit facility as
follows:</font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="83%"></td>
<td valign="bottom" width="15%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Amounts Borrowed<br />
Under Master Credit<br />
Facility</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Duke Energy Corporation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">274</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Duke Energy Ohio</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">279</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Duke Energy Indiana</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">123</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Duke Energy Kentucky</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">74</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">750</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The loans under the master credit
facility are revolving credit loans that currently bear interest at
one-month London Interbank Offered Rate (LIBOR) plus an applicable
spread ranging from 19 to 24 basis points. The loan for Duke Energy
has a stated maturity of June 2012, while the loans for all of the
other borrowers have stated maturities of September 2009; however,
the borrowers have the ability under the master credit facility to
renew the loans due in September 2009 up through the date the
master credit facility matures in June 2012. Except for Duke Energy
Ohio, all of the borrowers have the intent and ability to refinance
these obligations on a long-term basis, either through renewal of
the terms of the loan through the master credit facility, which has
non-cancelable terms in excess of one-year, or through issuance of
long-term debt to replace the amounts drawn under the master credit
facility. Accordingly, borrowings of approximately $471 million are
reflected as Long-Term Debt on the Consolidated Balance Sheets at
both June 30, 2009 and December 31, 2008. As Duke Energy
Ohio does not have the intent to refinance its borrowings on a
long-term basis, amounts outstanding at both June 30, 2009 and
December 31, 2008 of approximately $279 million are reflected
in Notes Payable and Commercial Paper within Current Liabilities on
the Consolidated Balance Sheets.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">At June 30, 2009 and
December 31, 2008, approximately $1,023 million and $779
million, respectively, of pollution control bonds were classified
as Long-Term Debt on the Consolidated Balance Sheets. Of this
amount, the master credit facility served as a backstop for
approximately $440 million of these pollution control bonds (of
which approximately $100 million is in the form of letters of
credit), with the remaining balance backstopped by other specific
credit facilities separate from the master credit facility.
Additionally, at June 30, 2009 and December 31, 2008,
approximately $477 million and $450 million, respectively, of
commercial paper issuances were classified as Long-Term Debt on the
Consolidated Balance Sheets. These pollution control bonds and
commercial paper issuances, which are short-term obligations by
nature, are classified as long-term due to Duke Energy’s
intent and ability to utilize such borrowings as long-term
financing. As Duke Energy’s master credit facility and other
specific purpose credit facilities have non-cancelable terms in
excess of one year as of the balance sheet date, Duke Energy has
the ability to refinance these short-term obligations on a
long-term basis.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Restrictive Debt Covenants.</b> Duke
Energy’s debt and credit agreements contain various financial
and other covenants. Failure to meet those covenants beyond
applicable grace periods could result in accelerated due dates
and/or termination of the agreements. As of June 30, 2009,
Duke Energy was in compliance with all covenants related to its
significant debt agreements. In addition, some credit agreements
may allow for acceleration of payments or termination of the
agreements due to nonpayment, or the acceleration of other
significant indebtedness of the borrower or some of its
subsidiaries. None of the debt or credit agreements contain
material adverse change clauses.</font></p>
</div>
-18000000
12000000
1621000000
305000000
5035000000
716000000
821000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>12. Risk Management, Derivative Instruments and Hedging
Activities</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The primary risks Duke Energy manages
by utilizing derivative instruments are commodity price risk and
interest rate risk. Duke Energy closely monitors the risks
associated with commodity price changes and changes in interest
rates on its operations and, where appropriate, uses various
commodity and interest rate instruments to manage these risks.
Certain of these derivative instruments are designated as hedging
instruments under SFAS No. 133 “<i>Accounting for
Derivative Instruments and Hedging Activities</i>” (SFAS
No. 133) while others either do not qualify as a hedge or have
not been designated as hedges by Duke Energy (hereinafter referred
to as undesignated contracts). Duke Energy’s primary use of
energy commodity derivatives is to hedge its generation portfolio
against exposure to the prices of power and fuel. Interest rate
swaps are entered into to manage interest rate risk primarily
associated with Duke Energy’s variable-rate and fixed-rate
borrowings.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">SFAS No. 133 requires the
recognition of all derivative instruments as either assets or
liabilities at fair value in the Consolidated Balance Sheets. In
accordance with SFAS No. 133, Duke Energy may elect to
designate qualifying commodity and interest rate derivatives as
either cash flow hedges or fair value hedges.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">For derivative instruments that are
designated and qualify as cash flow hedges, the effective portion
of the gain or loss is reported as a component of Accumulated Other
Comprehensive Income (AOCI) and reclassified into earnings in the
same period or periods during which the hedged transaction affects
earnings. Any gains or losses on the derivative that represent
either hedge ineffectiveness or hedge components excluded from the
assessment of effectiveness are recognized in current earnings. For
derivative instruments that are designated and qualify as a fair
value hedge, the gain or loss on the derivative as well as the
offsetting loss or gain on the hedged item are recognized in
earnings in the current period. Duke Energy includes the gain or
loss on the derivative in the same line item as the offsetting loss
or gain on the hedged item in the Consolidated Statements of
Operations. Additionally, Duke Energy enters into derivative
agreements that are economic hedges that either do not qualify for
hedge accounting or have not been designated as a hedge. These
derivative instruments are typically reflected on the Consolidated
Balance Sheets at fair value with changes in the value of the
derivative instrument reflected in regulatory assets or
liabilities, as discussed below, or possibly in current
earnings.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As Duke Energy’s regulated
operations within its U.S. Franchised Electric and Gas and
Commercial Power business segments apply the provisions of SFAS
No. 71, certain gains and losses associated with undesignated
contracts are deferred as regulatory liabilities and assets,
respectively, thus there is no immediate earnings impact associated
with the change in fair values of these derivative
contracts.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Commodity Price Risk</b></font></p>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 4px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy is exposed to the impact of
market changes in the future prices of electricity (energy,
capacity and financial transmission rights), coal, natural gas and
emission allowances (sulfur dioxide (SO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">2</sub>),
seasonal nitrogen oxide (NO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">X</sub>)
and annual NO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">X</sub>)
as a result of its energy operations such as electric generation
and the transportation and sale of natural gas. With respect to
commodity price risks associated with electric generation, Duke
Energy is exposed to changes including, but not limited to, the
cost of the coal and natural gas used to generate electricity, the
prices of electricity in wholesale markets, the cost of capacity
required to purchase and sell electricity in wholesale markets and
the cost of emission allowances for SO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">2</sub>,
seasonal NO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">X</sub>
and annual NO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">X</sub>,
primarily at Duke Energy’s coal fired power plants. Duke
Energy closely monitors the risks associated with commodity price
changes on its future operations and, where appropriate, uses
various commodity contracts to mitigate the effect of such
fluctuations on operations. Duke Energy’s exposure to
commodity price risk is influenced by a number of factors,
including, but not limited to, the term of the contract, the
liquidity of the market and delivery location.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Commodity derivatives associated with
the risk management of Duke Energy’s energy operations are
accounted for as either cash flow hedges or fair value hedges if
the derivative instrument qualifies as a hedge under SFAS
No. 133, or as an undesignated contract if either the
derivative instrument does not qualify as a hedge or Duke Energy
has elected to not designate the contract as a hedge. Additionally,
Duke Energy enters into various contracts that qualify for the
normal purchase and normal sales (NPNS) exception described in
paragraph 10 of SFAS No. 133, as amended and interpreted by
Derivatives Implementation Group Issue C15, “<i>Scope
Exceptions: Normal Purchases and Normal Sales Exception for
Option-Type Contracts and Forward Contracts in
Electricity,</i>” and SFAS No. 149, “<i>Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities.</i>” Duke Energy primarily applies the NPNS
exception to contracts within the U.S. Franchised Electric and Gas
and Commercial Power business segments that relate to the physical
delivery of electricity over the next 12 years.</font><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>Commodity Fair Value Hedges.</i> At
June 30, 2009, Duke Energy did not have any open commodity
derivative instruments that were designated as fair value hedges
under SFAS No. 133.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>Commodity Cash Flow Hedges</i>. Duke
Energy uses commodity instruments, such as swaps, futures, forwards
and options, to protect margins for a portion of future revenues
and fuel and purchased power expenses. Duke Energy generally uses
commodity cash flow hedges to mitigate exposures to the price
variability of the underlying commodities for a maximum period of 1
year.</font></p>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 4px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>Undesignated Contracts</i>. Duke
Energy uses derivative contracts as economic hedges to manage the
market risk exposures that arise from providing electric generation
and capacity to large energy customers, energy aggregators and
other wholesale companies. Undesignated contracts include contracts
not designated as a hedge, contracts that do not qualify for hedge
accounting, derivatives that no longer qualify for the NPNS scope
exception, and de-designated hedge contracts that were not
re-designated as a hedge. The contracts in this category as of
June 30, 2009 are primarily associated with forward power
sales and coal purchases, as well as forward SO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">2</sub>
emission allowances, for the Commercial Power and U.S. Franchised
Electric and Gas business segments. Undesignated contracts also
include contracts associated with operations that Duke Energy
continues to wind down or has included as discontinued
operations.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Interest Rate Risk</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy is exposed to risk
resulting from changes in interest rates as a result of its
issuance or anticipated issuance of variable and fixed-rate debt
and commercial paper. Duke Energy manages its interest rate
exposure by limiting its variable-rate exposures to a percentage of
total capitalization and by monitoring the effects of market
changes in interest rates. To manage risk associated with changes
in interest rates, Duke Energy may enter into financial contracts,
primarily interest rate swaps and U.S. Treasury lock agreements.
The majority of Duke Energy’s derivative instruments related
to interest rate risk are categorized as undesignated
contracts.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Additionally, in anticipation of
certain fixed-rate debt issuances, Duke Energy may execute a series
of forward starting interest rate swaps to lock in components of
the market interest rates at the time and terminate these
derivatives prior to or upon the issuance of the corresponding
debt. When these transactions occur within a business that applies
SFAS No. 71, any pre-tax gain or loss recognized from
inception to termination of the hedges may be recorded as a
regulatory asset or liability and amortized as a component of
interest expense over the life of the debt. Alternatively, Duke
Energy may designate these derivatives as hedges. If so, any
pre-tax gain or loss recognized from inception to termination of
the hedges is recorded in AOCI and amortized as a component of
interest expense over the life of the debt.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">At June 30, 2009, the total
notional amount of Duke Energy’s receive fixed/pay-variable
interest rate swaps (fair value hedge) was $25 million and the
total notional amount of Duke Energy’s receive
variable/pay-fixed interest rate swaps (cash flow hedge) was $96
million.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Volumes</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table shows information
relating to the volume of Duke Energy’s derivative activity
outstanding as of June 30, 2009. Amounts disclosed represent
the notional volumes of commodities and the notional dollar amounts
of debt subject to derivative contracts accounted for at fair value
in accordance with SFAS No. 133. For option contracts,
notional amounts include only the delta-equivalent volumes which
represent the notional volumes times the probability of exercising
the option based on current price volatility. Volumes associated
with contracts qualifying for the NPNS exception have been excluded
from the table below. Amounts disclosed represent the absolute
value of notional amounts. Duke Energy has netted contractual
amounts where offsetting purchase and sale contracts exist with
identical delivery locations and times of delivery.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p>
<font size="1"> </font>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
<font face="ARIAL" size="2"><b>Underlying Notional Amounts for
Derivative Instruments Accounted for At Fair Value</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>June 30, 2009</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Commodity contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Electricity-energy (Gigawatt hours)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,705</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Emission allowances: SO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">2</sub>
(thousands of tons)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">91</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Emission allowances: NO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">X</sub>
(thousands of tons)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Natural gas (millions of decatherms)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">116</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Coal (millions of tons)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4</font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Financial contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest rates (dollars in millions)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">121</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table shows fair value
amounts of derivative contracts as of June 30, 2009 and the
line item(s) in the Consolidated Balance Sheets in which such
amounts are included. The fair values of derivative contracts are
presented on a gross basis, even when the derivative instruments
are subject to master netting arrangements. Cash collateral
payables and receivables associated with the derivative contracts
have not been netted against the fair value amounts.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
<font face="ARIAL" size="2"><b>Location and Fair Value Amounts of
Derivatives Reflected in the Consolidated Balance
Sheets</b></font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="82%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="ARIAL" size="1"><b>June 30,
2009</b></font></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="WIDTH: 82pt; BORDER-BOTTOM: #000000 1px solid">
<font face="ARIAL" size="1"><b>Balance Sheet
Location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>Asset<br />
Derivatives</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>Liability<br />
Derivatives</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="5"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Derivatives Designated as Hedging Instruments Under
SFAS No. 133</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Commodity contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Investments and Other Assets: Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Interest rate contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Current Assets: Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Current Liabilities: Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Deferred Credits and Other Liabilities:
Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Total Derivatives Designated as Hedging
Instruments Under SFAS No. 133</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Derivatives Not Designated as Hedging Instruments Under
SFAS No. 133</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Commodity contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Current Assets: Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">100</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">15</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Investments and Other Assets: Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">119</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">13</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Current Liabilities: Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">176</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">346</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Deferred Credits and Other Liabilities:
Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">49</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">182</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Interest rate contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Current Liabilities: Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Deferred Credits and Other Liabilities:
Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">5</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Total Derivatives Not Designated as Hedging
Instruments Under SFAS No. 133</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">444</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">564</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Total Derivatives</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">446</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">566</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table shows the amount of
the gains and losses recognized on derivative instruments
designated and qualifying as cash flow hedges by type of derivative
contract during the three and six months ended June 30, 2009
and the financial statement line items in which such gains and
losses are included.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
<font face="ARIAL" size="2"><b>Cash Flow Hedges – Location
and Amount of Pre-Tax Losses Recognized in Comprehensive
Income</b></font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="80%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Three Months<br />
Ended<br />
June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Six Months<br />
Ended<br />
June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="6"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Location of Pre-tax Losses Reclassified from AOCI into
Earnings<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Commodity contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Revenue, non-regulated electric, natural gas and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(12</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Fuel used in electric generation and purchased
power-non-regulated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Interest rate contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Total Pre-tax Losses Reclassified from AOCI
into Earnings</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(22</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(a)</font></td>
<td valign="top" align="left"><font face="ARIAL" size=
"1">Represents the gains and losses on cash flow hedges previously
recorded in AOCI during the term of the hedging relationship and
reclassified into earnings during the current period.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The effective portion of gains or
losses on cash flow hedges that were recognized in AOCI during the
three and six months ended June 30, 2009 were insignificant.
In addition, there was no hedge ineffectiveness during the three
and six months ended June 30, 2009. No gains or losses have
been excluded from the assessment of hedge effectiveness. As of
June 30, 2009, approximately $6 million of pre-tax deferred
net losses on derivative instruments related to commodity and
interest rate cash flow hedges were accumulated on the Consolidated
Balance Sheets in AOCI and are expected to be recognized in
earnings during the next twelve months as the hedged transactions
occur.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table shows the amount of
the pre-tax gains and losses recognized on undesignated hedges by
type of derivative instrument during the three and six months ended
June 30, 2009 and the line item(s) in the Consolidated
Statements of Operations in which such gains and losses are
included or deferred on the Consolidated Balance Sheets as
regulatory assets.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
<font face="ARIAL" size="2"><b>Undesignated Hedges – Location
and Amount of Pre-Tax Gains and (Losses) Recognized in Income or as
Regulatory Assets</b></font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="80%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Three Months<br />
Ended<br />
June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Six Months<br />
Ended<br />
June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="6"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Location of Pre-Tax Gains (Losses) Recognized in
Earnings</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Commodity contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Revenue, non-regulated electric, natural gas and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(12</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">16</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Fuel used in electric generation and purchased
power-non-regulated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(16</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(24</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Interest rate contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Total Pre-tax Losses Recognized in
Earnings</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(27</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Location of Pre-Tax Gains (Losses) Recognized
as Regulatory Assets</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Commodity contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Regulatory Asset</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">42</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(37</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><u>Interest rate contracts</u></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Regulatory Asset</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Total Pre-tax Gains (Losses) Recognized as
Regulatory Assets</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">44</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(37</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Certain of Duke Energy’s
derivative contracts contain contingent credit features, such as
material adverse change clauses or payment acceleration clauses
that could result in immediate payments, the posting of letters of
credit or the termination of the derivative contract before
maturity if specific events occur, such as a downgrade of Duke
Energy’s credit rating below investment
grade.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table shows information
with respect to derivative contracts that are in a net liability
position and contain objective credit-risk related payment
provisions. The amounts disclosed in the table below represents the
aggregate fair value amounts of such derivative instruments at the
end of the reporting period, the aggregate fair value of assets
that are already posted as collateral under such derivative
instruments at the end of the reporting period, and the aggregate
fair value of additional assets that would be required to be
transferred in the event that credit-risk-related contingent
features were triggered at June 30, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
<font face="ARIAL" size="2"><b>Information Regarding Derivative
Instruments that Contain Credit-risk Related Contingent
Features</b></font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="90%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>June 30,<br />
2009</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="2"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Aggregate Fair Value Amounts of Derivative
Instruments in a Net Liability Position</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">386</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Collateral Already Posted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">193</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Additional Cash Collateral or Letters of Credit in
the Event Credit-risk-related Contingent Features were Triggered at
the End of the Reporting Period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">20</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Netting of Cash Collateral and
Derivative Assets and Liabilities Under Master Netting
Arrangements.</b> In accordance with FASB Staff Position (FSP) No.
FIN 39-1, “<i>Amendment of FASB Interpretation No 39,
Offsetting of Amounts Related to Certain Contracts</i>” (FSP
No. FIN 39-1), Duke Energy offsets fair value amounts (or amounts
that approximate fair value) recognized on its Consolidated Balance
Sheets related to cash collateral amounts receivable or payable
against fair value amounts recognized for derivative instruments
executed with the same counterparty under the same master netting
agreement. At June 30, 2009 and December 31, 2008, Duke
Energy had receivables related to the right to reclaim cash
collateral of approximately $148 million and $86 million,
respectively, and had payables related to obligations to return
cash collateral of insignificant amounts, respectively, that have
been offset against net derivative positions in the Consolidated
Balance Sheets. Duke Energy had collateral receivables of
approximately $46 million and $64 million under master netting
arrangements that have not been offset against net derivative
positions at June 30, 2009 and December 31, 2008,
respectively. Duke Energy had insignificant cash collateral
payables under master netting arrangements that have not been
offset against net derivative positions at June 30, 2009 and
December 31, 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">See Note 16 for additional information
on fair value disclosures related to derivatives required by SFAS
No. 157, “<i>Fair Value Measurements”</i> (SFAS
No. 157).</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>5. Stock-Based Compensation</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy accounts for stock-based
compensation under the provisions of SFAS No. 123(R),
“<i>Share-Based Payment</i>” (SFAS No. 123(R)).
SFAS No. 123(R) established accounting for stock-based awards
exchanged for employee and certain nonemployee services.
Accordingly, for employee awards, equity classified stock-based
compensation cost is measured at the grant date, based on the fair
value of the award, and is recognized as expense over the requisite
service period.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p>
<font size="1"> </font>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy recorded pre-tax
stock-based compensation expense included in Income From Continuing
Operations for each of the three and six months ended June 30,
2009 and 2008 as follows:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="72%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="ARIAL" size=
"1"><b>Three Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="ARIAL" size=
"1"><b>Six Months Ended<br />
June 30,</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>2009<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>2009<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="11"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Stock Options</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Phantom Awards</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">11</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">11</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Performance Awards</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">8</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">7</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">12</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">13</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">12</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">11</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">25</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">25</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(a)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">Excludes
stock-based compensation cost capitalized of approximately $1
million and $2 million for the three and six months ended June 30,
2009, respectively. No amounts were capitalized during the three or
six months ended June 30, 2008.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The tax benefit associated with the
expense recorded in Income From Continuing Operations for both the
three months ended June 30, 2009 and 2008 was approximately $5
million. The tax benefit associated with the expense recorded in
Income From Continuing Operations for both the six months ended
June 30, 2009 and 2008 was approximately $10
million.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy’s 2006 Long-term
Incentive Plan (the 2006 Plan) reserved 60 million shares of
common stock for awards to employees and outside directors. The
2006 Plan superseded the 1998 Long-term Incentive Plan, as amended
(the 1998 Plan), and no additional grants will be made from the
1998 Plan. Under the 2006 Plan, the exercise price of each option
granted cannot be less than the market price of Duke Energy’s
common stock on the date of grant and the maximum option term is 10
years. The vesting periods range from immediate to five years. Duke
Energy has historically issued new shares upon exercising or
vesting of share-based awards. In 2009, Duke Energy may use a
combination of new share issuances and open market repurchases for
share-based awards which are exercised or become vested; however,
Duke Energy has not determined with certainty the amount of such
new share issuances or open market repurchases.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The 2006 Plan allows for a maximum of
15 million shares of common stock to be issued under various
stock-based awards other than options and stock appreciation
rights.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Stock Option Activity</b></font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="80%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="ARIAL" size="1"><b>Options<br />
(in thousands)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>Weighted-<br />
Average<br />
Exercise<br />
Price</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at December 31, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">19,790</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">17</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">603</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">15</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Exercised</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(203</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">9</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Forfeited or expired</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(1,093</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">17</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at June 30, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">19,097</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">17</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Exercisable at June 30, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">18,494</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">17</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">There were 603,015 stock options
granted during the six months ended June 30, 2009, and no
stock options granted during the six months ended June 30,
2008. The options granted during the six months ended June 30,
2009 were expensed immediately. Therefore, there is no future
compensation cost associated with these options.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Weighted-Average Assumptions for Option
Pricing</b></font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="92%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="ARIAL" size="1"><b>June 30,<br />
2009</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Risk-free interest rate<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(1)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2.0%</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Expected dividend yield<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(2)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">5.4%</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Expected life<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(3)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6.0 yrs.</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Expected volatility<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(4)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">26.7%</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(1)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">The risk
free rate is based upon the U.S. Treasury Constant Maturity rates
as of the grant date.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(2)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">The
expected dividend yield is based upon annualized dividends and the
1-year average closing stock price.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(3)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">The
expected term of options is derived from historical
data.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(4)</font></td>
<td valign="top" align="left"><font face="ARIAL" size=
"1">Volatility is based upon 50% historical and 50% implied
volatility. Historic volatility is based on Duke Energy’s
historical volatility over the expected life using daily stock
prices. Implied volatility is the average for all option contracts
with a term greater than six months using the strike price closest
to the stock price on the valuation date.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On December 31, 2008, Duke Energy
had approximately 19 million exercisable options with a $17
weighted-average exercise price. The total intrinsic value of
options exercised during the six months ended June 30, 2009
and 2008 was approximately $1 million and $10 million,
respectively. Cash received from options exercised during the six
months ended June 30, 2009 and 2008 was approximately $2
million and $23 million, respectively, with a related tax benefit
of approximately $1 million and $4 million,
respectively.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Phantom Stock Awards</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Phantom stock awards issued and
outstanding under the 2006 Plan generally vest over periods from
immediate to four years. Phantom stock awards issued and
outstanding under the 1998 Plan generally vest over periods from
immediate to five years. Duke Energy awarded 1,087,001 shares (fair
value of approximately $16 million, based on the market price of
Duke Energy’s common stock at the grant date) during the six
months ended June 30, 2009. Duke Energy awarded 931,260 shares
(fair value of approximately $17 million, based on the market price
of Duke Energy’s common stock at the grant date) during the
six months ended June 30, 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table summarizes
information about phantom stock awards outstanding at June 30,
2009:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="ARIAL" size="1"><b>Shares<br />
(in thousands)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Number of Phantom Stock Awards:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at December 31, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,446</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,087</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Vested</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(1,003</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(26</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at June 30, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,504</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As of June 30, 2009, Duke Energy
had approximately $15 million of unrecognized compensation cost
which is expected to be recognized over a weighted-average period
of 2.0 years.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Performance Awards</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Stock-based performance awards issued
and outstanding under both the 2006 Plan and the 1998 Plan
generally vest over three years if performance targets are met.
Duke Energy awarded 3,426,244 shares (fair value of approximately
$44 million) during the six months ended June 30, 2009. Duke
Energy awarded 2,375,445 shares (fair value of approximately $37
million) during the six months ended June 30, 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table summarizes
information about stock-based performance awards outstanding at
June 30, 2009:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="ARIAL" size="1"><b>Shares<br />
(in thousands)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Number of Stock-based Performance
Awards:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at December 31, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4,980</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,426</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Vested</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(1,069</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(321</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at June 30, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">7,016</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As of June 30, 2009, Duke Energy
had approximately $46 million of unrecognized compensation cost
which is expected to be recognized over a weighted-average period
of 1.7 years.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Other Stock Awards</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Other stock awards issued and
outstanding under the 1998 Plan vest over periods from three to
five years. There were no other stock awards issued during the six
months ended June 30, 2009 or 2008.</font><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p>
<font size="1"> </font>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table summarizes
information about other stock awards outstanding at June 30,
2009:</font><font size="1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="ARIAL" size="1"><b>Shares<br />
(in thousands)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Number of Other Stock Awards:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at December 31, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">219</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Vested</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(36</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Outstanding at June 30, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">183</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As of June 30, 2009, Duke Energy
had approximately $2 million of unrecognized compensation cost
which is expected to be recognized over a weighted-average period
of 1.5 years.</font></p>
</div>
19000000
4933000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>10. Investments in Equity Method Unconsolidated
Affiliates</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In connection with the renegotiation of
its debt agreements in June 2008, Crescent management modified its
existing business strategy to focus some of its efforts on
producing near term cash flows from its non-strategic real estate
projects in order to improve liquidity. As a result of its revised
business strategy to accelerate certain cash flows resulting from
the June 2008 amendments to its debt agreements, Crescent updated
its recoverability assessments for its real estate projects as
required under SFAS No. 144. Under SFAS No. 144, the
carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result
from the use and eventual disposition of the asset. For certain of
Crescent’s non-strategic assets, it was determined as of
June 30, 2008 that certain projects’ projected
undiscounted cash flows did not exceed the carrying value of the
projects based on the revised business strategy assumptions, and an
impairment loss was recorded equal to the amount by which the
carrying amount of each impaired project exceeded its estimated
fair value. The methods for determining fair value included
discounted cash flow models, as well as valuing certain properties
based on recent offer prices for bulk-sale transactions and other
price data for similar assets. During the three months ended
June 30, 2008, Crescent recorded impairment charges on certain
of its property holdings, primarily in its residential division, of
which Duke Energy’s proportionate pre-tax share was
approximately $113 million. Duke Energy’s proportionate
pre-tax share of impairment charges associated with Crescent was
approximately $124 million for the six months ended June 30,
2008. These amounts are recorded in Equity in Earnings (Losses) of
Unconsolidated Affiliates in Duke Energy’s Consolidated
Statements of Operations.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">During the third quarter of 2008, Duke
Energy recorded its proportionate share of additional impairment
charges recorded by Crescent which reduced the carrying value of
Duke Energy’s investment in Crescent to zero. Accordingly,
Duke Energy discontinued applying the equity method of accounting
to its investment in Crescent in the third quarter of 2008 and did
not record its proportionate share of any Crescent earnings or
losses in subsequent periods. See Note 15 for a discussion of a
charge recorded in the first quarter of 2009 related to performance
guarantees issued by Duke Energy on behalf of Crescent. Crescent
filed Chapter 11 petitions in a U.S. Bankruptcy Court in June
2009.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>16. Fair Value of Financial Assets and
Liabilities</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">On January 1, 2008, Duke Energy
adopted SFAS No. 157 for financial instruments and
non-financial derivatives. In February 2008, the FASB issued
FSP No. FAS 157-2, <i>“Effective Date of FASB Statement
No. 157,”</i> which delayed the effective date of SFAS
No. 157 until January 1, 2009 for non-financial assets
and liabilities, except for items that are recognized or disclosed
at fair value in the financial statements on a recurring basis.
Accordingly, effective January 1, 2009, Duke Energy adopted
SFAS No. 157 for non-financial assets and liabilities. Duke
Energy did not record any cumulative effect adjustment to retained
earnings as a result of the adoption of SFAS
No. 157.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in GAAP in the
U.S. and expands disclosure requirements about fair value
measurements. Under SFAS No. 157, fair value is considered to
be the exchange price in an orderly transaction between market
participants to sell an asset or transfer a liability at the
measurement date. The fair value definition under SFAS No. 157
focuses on an exit price, which is the price that would be received
by Duke Energy to sell an asset or paid to transfer a liability
versus an entry price, which would be the price paid to acquire an
asset or received to assume a liability. Although SFAS No. 157
does not require additional fair value measurements, it applies to
other accounting pronouncements that require or permit fair value
measurements.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy determines fair value of
financial assets and liabilities based on the following fair value
hierarchy, as prescribed by SFAS No. 157, which prioritizes
the inputs to valuation techniques used to measure fair value into
three levels:</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 3%">
<font size="1" face="ARIAL"><b>Level 1 inputs</b>—unadjusted
quoted prices in active markets for identical assets or liabilities
that Duke Energy has the ability to access. An active market for
the asset or liability is one in which transactions for the asset
or liability occur with sufficient frequency and volume to provide
ongoing pricing information. Duke Energy does not adjust quoted
market prices on Level 1 inputs for any blockage factor.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 3%">
<font size="1" face="ARIAL"><b>Level 2 inputs</b>—inputs
other than quoted market prices included in Level 1 that are
observable, either directly or indirectly, for the asset or
liability. Level 2 inputs include, but are not limited to, quoted
prices for similar assets or liabilities in an active market,
quoted prices for identical or similar assets or liabilities in
markets that are not active and inputs other than quoted market
prices that are observable for the asset or liability, such as
interest rate curves and yield curves observable at commonly quoted
intervals, volatilities, credit risk and default rates.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 3%">
<font size="1" face="ARIAL"><b>Level 3
inputs</b>—unobservable inputs for the asset or
liability.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">In February 2007, the FASB issued SFAS
No. 159, “<i>The Fair Value Option for Financial Assets
and Financial Liabilities- including an amendment of FASB Statement
No. 115</i>” (SFAS No. 159), which permits entities
to elect to measure many financial instruments
and</font> <font size="1" face="ARIAL">certain other items at
fair value. For Duke Energy, SFAS No. 159 was effective as of
January 1, 2008 and had no impact on amounts presented for
periods prior to the effective date. Duke Energy does not currently
have any financial assets or financial liabilities for which the
provisions of SFAS No. 159 have been elected. However, in the
future, Duke Energy may elect to measure certain financial
instruments at fair value in accordance with this
standard.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The following tables provide the fair
value measurement amounts for assets and liabilities recorded on
Duke Energy’s Consolidated Balance Sheets at fair value at
June 30, 2009 and December 31, 2008. Derivative amounts
in the table below exclude cash collateral amounts which are
disclosed in Note 12.</font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="74%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face="ARIAL"><b>Total
Fair<br />
Value<br />
Amounts at<br />
June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Level 1</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Level 2</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Level 3</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="14" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"><font size="2" face=
"ARIAL"><b>Description</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top" colspan="5"></td>
<td valign="top"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Investments in available-for-sale auction rate
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">207</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">207</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Nuclear decommissioning trust fund equity
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">898</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">898</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Nuclear decommissioning trust fund debt
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">615</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">93</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">522</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Other long-term available-for-sale equity
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">57</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">52</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Other long-term available-for-sale debt
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">238</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">27</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">211</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Derivative assets<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">193</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">28</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">165</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Total Assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2,208</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,070</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">766</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">372</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Derivative liabilities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(c)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(313</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(148</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(72</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(93</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Net Assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,895</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">922</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">694</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">279</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face=
"ARIAL">Approximately $203 million of auction rate securities are
included in Other within Investments and Other Assets and
approximately $4 million are classified as Short-Term Investments
within Current Assets on the Consolidated Balance
Sheets.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(b)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Included
in Other within Current Assets and Other within Investments and
Other Assets on the Consolidated Balance Sheets. See Note 12 for
additional information regarding derivatives.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(c)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Included
in Other within Current Liabilities and Other within Deferred
Credits and Other Liabilities on the Consolidated Balance Sheets.
See Note 12 for additional information regarding
derivatives.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(d)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">See Note
17 for additional information related to investments by major
security type.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="70%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face="ARIAL"><b>Total
Fair<br />
Value<br />
Amounts at<br />
December 31,<br />
2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Level 1</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Level 2</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Level 3</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="14" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"><font size="2" face=
"ARIAL"><b>Description</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Investments in available-for-sale auction rate
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)(e)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">224</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">224</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Nuclear decommissioning trust fund<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(e)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,436</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">853</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">583</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Other long-term available-for-sale
securities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)(e)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">314</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">74</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">240</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Derivative assets<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(c)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">251</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">9</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">70</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">172</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Total Assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2,225</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">936</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">893</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">396</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Derivative liabilities<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(d)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(341</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(88</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(115</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(138</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Net Assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,884</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">848</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">778</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">258</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face=
"ARIAL">Approximately $173 million of auction rates securities are
included in Other within Investments and Other Assets and
approximately $51 million are classified as Short-Term Investments
within Current Assets on the Consolidated Balance
Sheets.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(b)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Included
in Other within Investments and Other Assets on the Consolidated
Balance Sheets.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(c)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Included
in Other within Current Assets and Other within Investments and
Other Assets on the Consolidated Balance Sheets.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(d)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Included
in Other within Current Liabilities and Other within Deferred
Credits and Other Liabilities on the Consolidated Balance
Sheets.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(e)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">See Note
17 for additional information related to investments by major
security type.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The following table provides a
reconciliation of beginning and ending balances of assets measured
at fair value on a recurring basis where the determination of fair
value includes significant unobservable inputs (Level
3):</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="1" face=
"ARIAL"><b>Rollforward of Level 3 measurements</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="73%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Available-for-Sale<br />
Auction Rate<br />
Securities</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Derivatives<br />
(net)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Total</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="10" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font size="1" face=
"ARIAL"><b>Three Months Ended June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at April 1, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">215</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">46</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">261</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total pre-tax realized or unrealized gains included in
earnings:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Revenue, non-regulated electric, natural gas, and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Fuel used in electric generation and purchased
power-non-regulated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Net purchases, sales, issuances and
settlements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">10</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total gains included on balance sheet as regulatory
asset or liability or as non-current liability</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">12</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">12</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at June 30, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">207</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">72</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">279</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font size="1" face=
"ARIAL"><b>Three Months Ended June 30, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at April 1, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">280</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">21</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">301</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total pre-tax realized or unrealized gains included in
earnings:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Revenue, non-regulated electric, natural gas, and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">63</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">63</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other income and expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total pre-tax losses included in other comprehensive
income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(6</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(9</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Net purchases, sales, issuances and
settlements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(20</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(20</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total gains included on balance sheet as regulatory
asset or liability or as non-current liability</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">33</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">33</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at June 30, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">273</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">91</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">364</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font size="1" face=
"ARIAL"><b>Six Months Ended June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at January 1, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">224</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">34</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">258</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total pre-tax realized or unrealized gains included in
earnings:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Revenue, non-regulated electric, natural gas, and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">21</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">21</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Fuel used in electric generation and purchased
power-non-regulated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total pre-tax (losses) gains included in other
comprehensive income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(9</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Net purchases, sales, issuances and
settlements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total gains included on balance sheet as regulatory
asset or liability or as non-current liability</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">9</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">9</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at June 30, 2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">207</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">72</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">279</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Pre-tax amounts included in the Consolidated
Statements of Operations related to Level 3 measurements
outstanding at June 30, 2009:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Revenue, non-regulated electric, natural gas, and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">16</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">16</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Fuel used in electric generation and purchased
power-non-regulated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other income and expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">21</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">21</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"><font size="1" face=
"ARIAL"><b>Six Months Ended June 30, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at January 1, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">15</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">23</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Transfers in to Level 3</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">285</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">285</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total pre-tax realized or unrealized gains included in
earnings:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Revenue, non-regulated electric, natural gas, and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">79</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">79</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other income and expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total pre-tax losses included in other comprehensive
income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(23</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(9</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(32</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Net purchases, sales, issuances and
settlements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(35</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(35</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total gains included on balance sheet as regulatory
asset or liability or as non-current liability</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">48</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">48</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Balance at June 30, 2008</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">273</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">91</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">364</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Pre-tax amounts included in the Consolidated
Statements of Operations related to Level 3 measurements
outstanding at June 30, 2008:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Revenue, non-regulated electric, natural gas, and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">66</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">66</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Other income and expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">66</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">62</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Valuation methods of the primary fair
value measurements disclosed above are as follows:</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Investments in equity
securities:</b> Investments in equity securities are typically
valued at the closing price in the principal active market as of
the last business day of the quarter. Principal active markets for
equity prices include published exchanges such as NASDAQ and NYSE.
Foreign equity prices are translated from their trading currency
using the currency exchange rate in effect at the close of the
principal active market. Duke Energy does not adjust prices to
reflect for after-hours market activity. The majority of Duke
Energy’s investments in equity securities are valued using
Level 1 measurements.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Investments in available-for-sale
auction rate securities:</b> As of June 30, 2009, Duke Energy
has approximately $261 million par value (approximately $207
million fair value) of auction rate securities for which an active
market does not currently exist. The majority of these auction rate
securities are AAA rated student loan securities for which
substantially all the values are ultimately backed by the U.S.
government. All of these securities were valued as of June 30,
2009 using measurements appropriate for Level 3 investments. The
methods and significant assumptions used to determine the fair
values of Duke Energy’s investment in auction rate debt
securities represented a combination of broker-provided quotations
and estimations of fair value using validation of such quotations
through internal discounted cash flow models which incorporated
primarily Duke Energy’s own assumptions as to the term over
which such investments will be recovered at par, the current level
of interest rates, and the appropriate risk-adjusted (for liquidity
and credit) discount rates when relevant observable inputs are not
available to determine present value of such cash flows. In
preparing the valuations, all significant value drivers were
considered, including the underlying collateral.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">As discussed further in Note 17, during
the first quarter of 2009, Duke Energy adopted the provisions of
FSP No. FAS 157-4, “<i>Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not
Orderly,</i>” (FSP No. FAS 157-4) and FSP No. FAS 115-2 and
FAS 124-2, “<i>Recognition and Presentation of Other-
Than-Temporary Impairments,”</i> (FSP No. FAS 115-2 and FAS
124-2) and applied the principles of these FSP’s to the
valuation of its investments in auction rate debt securities. There
were no other-than-temporary impairments associated with
investments in auction rate debt securities necessary during the
three or six months ended June 30, 2009.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Investments in debt securities:</b>
Most debt investments are valued based on a calculation using
interest rate curves and credit spreads applied to the terms of the
debt instrument (maturity and coupon interest rate) and consider
the counterparty credit rating. Most debt valuations are Level 2
measures. If the market for a particular fixed income security is
relatively inactive or illiquid, the measurement is a Level 3
measurement. U.S. Treasury debt is typically a Level 1
measurement.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Commodity derivatives:</b> The
pricing for commodity derivatives is primarily a calculated value
which incorporates the forward price and is adjusted for liquidity
(bid-ask spread), credit or non-performance risk (after reflecting
credit enhancements such as collateral) and discounted to present
value. The primary difference between a Level 2 and a Level 3
measurement has to do with the level of activity in forward markets
for the commodity. If the market is relatively inactive, the
measurement is deemed to be a Level 3 measurement. Some commodity
derivatives are NYMEX contracts, which Duke Energy classifies as
Level 1 measurements.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><b>Fair Value Disclosures Required
Under FSP No. FAS 107-1 and APB 28-1, “</b><b><i>Interim
Disclosures About Fair Value of Financial
Instruments.</i></b><b>”</b> The fair value of financial
instruments, excluding financial assets and certain financial
liabilities included in the scope of SFAS No. 157 disclosed in
the tables above, is summarized in the following table. Judgment is
required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates determined as of
June 30, 2009 and December 31, 2008 are not necessarily
indicative of the amounts Duke Energy could have realized in
current markets.</font><font size="1"> </font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="68%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="5" align="middle"><font size="1" face="ARIAL"><b>As of
June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="5" align="middle"><font size="1" face="ARIAL"><b>As of
December 31,<br />
2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Book<br />
Value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Approximate<br />
Fair Value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Book<br />
Value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Approximate<br />
Fair Value</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="11" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Long-term debt, including current
maturities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">15,334</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">15,890</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">13,896</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">13,981</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The fair value of cash and cash
equivalents, accounts and notes receivable, accounts payable and
commercial paper are not materially different from their carrying
amounts because of the short-term nature of these instruments
and/or because the stated rates approximate market
rates.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
</div>
19000000
394000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>9. Goodwill and Intangible Assets</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table shows goodwill by
business segment at June 30, 2009 and December 31,
2008:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="73%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>Balance<br />
December 31,<br />
2008</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Changes</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>Balance<br />
June 30,<br />
2009</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="8"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">U.S. Franchised Electric and Gas</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,500</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,500</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Commercial Power</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">960</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">960</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">International Energy</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">260</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">21</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">281</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total consolidated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4,720</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">21</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4,741</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The carrying amount and accumulated
amortization of intangible assets as of June 30, 2009 and
December 31, 2008 are as follows:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="82%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>December 31,<br />
2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="6"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Emission allowances</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">286</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">300</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Gas, coal and power contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">296</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">296</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Wind development rights<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">127</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">161</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">69</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">68</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total gross carrying amount</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">778</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">825</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Accumulated amortization—gas, coal and power
contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(129</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(117</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Accumulated amortization—other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total accumulated amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(157</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(145</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total intangible assets, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">621</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">680</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(a)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">As
discussed further below and in Note 3, the decrease in wind
development rights primarily relates to the sale of certain
projects that were acquired as part of Catamount in September
2008.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Emission allowances in the table above
include emission allowances acquired by Duke Energy as part of its
merger with Cinergy, which were recorded at the then fair value on
the date of the merger in April 2006, and emission allowances
purchased by Duke Energy. Additionally, Duke Energy is allocated
certain zero cost emission allowances on an annual basis. The
change in the gross carrying value of emission allowances during
the six months ended June 30, 2009 is as follows:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="90%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="2"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Gross carrying value at beginning of
period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">300</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Purchases of emission allowances</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">38</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Sales and consumption of emission
allowances<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)(b)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(54</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Other changes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Gross carrying value at end of period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">286</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(a)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">Carrying
value of emission allowances are recognized via a charge to expense
when consumed. Carrying value of emission allowances sold or
consumed during the six months ended June 30, 2008 was
approximately $66 million.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(b)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">See Note
3 for a discussion of gains and losses on sales of emission
allowances by Commercial Power and U.S. Franchised Electric and Gas
during the three and six months ended June 30, 2009 and
2008.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Amortization expense for gas, coal and
power contracts and other intangible assets was approximately $6
million and $5 million for the three months ended June 30,
2009 and 2008, respectively, and approximately $12 million for each
of the six months ended June 30, 2009 and 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As discussed in Note 3, Duke Energy
completed the acquisition of Catamount in September 2008, resulting
in the recognition of approximately $117 million of intangible
assets related to wind farm development rights. Of this amount, a
portion of the intangible asset value was assigned to projects that
Duke Energy disposed of through sale in the first quarter of 2009.
The intangible assets recorded in connection with the Catamount
acquisition primarily represent land use rights and interconnection
agreements acquired by Duke Energy</font> <font face="ARIAL" size=
"1">as part of the purchase price. Since these intangible assets
relate to development projects for which commercial operations have
not commenced, amortization of the intangible asset value assigned
to each of these projects will not begin until commercial operation
is achieved. Duke Energy will evaluate the useful lives of these
intangible assets as the projects begin commercial operations,
which is anticipated to be in the years 2010 through 2012. Duke
Energy currently estimates the useful lives of these projects, once
in commercial operation, will be the shorter of the lease term of
the land or the estimated lives of the projects, which is
approximately 25 years.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Intangible Liabilities.</b> In
connection with the merger with Cinergy in April 2006, Duke Energy
recorded an intangible liability of approximately $113 million
associated with the RSP in Ohio, which was recognized in earnings
over the regulatory period that ended on December 31, 2008.
This liability became fully amortized in the fourth quarter of
2008. Duke Energy also recorded approximately $56 million of
intangible liabilities associated with other power sale contracts
in connection with its merger with Cinergy. The carrying amount of
these intangible liabilities associated with other power sale
contracts was approximately $13 million and $16 million at
June 30, 2009 and December 31, 2008, respectively. During
the three and six months ended June 30, 2009, Duke Energy
amortized approximately $2 million and $3 million, respectively, to
income related to these intangible liabilities. During the three
and six months ended June 30, 2008, Duke Energy amortized
approximately $18 million and $36 million, respectively, to income
related to these intangible liabilities. Intangible liabilities are
classified as Other within Deferred Credits and Other Liabilities
on the Consolidated Balance Sheets.</font></p>
</div>
0.48
0.48
1000000
0.00
0.00
25000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>19. Income Taxes and Other Taxes</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy or its subsidiaries file
income tax returns in the U.S. with federal and various state
governmental authorities, and in certain foreign
jurisdictions.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table details the changes
in Duke Energy’s unrecognized tax benefits from
January 1, 2009 to June 30, 2009.</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="84%"></td>
<td valign="bottom" width="14%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Increase/(Decrease)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="2"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Unrecognized Tax Benefits—January 1,
2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">572</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Unrecognized Tax Benefits Changes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Gross increases—tax positions in prior
periods</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Gross decreases—tax positions in prior
periods</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Gross increases—current period tax
positions</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Settlements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(11</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5.29em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total Changes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Unrecognized Tax Benefits—June 30,
2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">567</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">At June 30, 2009 and
December 31, 2008, Duke Energy had approximately $298 million
and $294 million, respectively, of unrecognized tax benefits that,
if recognized, would affect the effective tax rate or a regulatory
liability. At this time, Duke Energy is unable to estimate the
specific effect to either. At June 30, 2009, Duke Energy has
approximately $15 million that, if recognized, would affect Income
From Discontinued Operations, net of tax.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">It is reasonably possible that Duke
Energy will reflect an approximate $50 million reduction in
unrecognized tax benefits within the next twelve months due to
expected settlements.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy has the following tax years
open.</font><font size="1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="9%"></td>
<td valign="bottom" width="2%"></td>
<td width="89%"></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="WIDTH: 40pt; BORDER-BOTTOM: #000000 1px solid">
<font face="ARIAL" size="1"><b>Jurisdiction</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap">
<p style="WIDTH: 35pt; BORDER-BOTTOM: #000000 1px solid">
<font face="ARIAL" size="1"><b>Tax Years</b></font></p>
</td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Federal</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">1999 and after
(except for Cinergy and its subsidiaries, which are open for years
2005 and after)</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">State</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">Majority closed
through 2001 except for certain refund claims for tax years
1978-2001 and any adjustments related to open federal
years</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">International</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">2000 and
after</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As of June 30, 2009 and
December 31, 2008, approximately $831 million and $490
million, respectively, of federal income taxes receivable were
included in Other within Current Assets on the Consolidated Balance
Sheets. At June 30, 2009, this balance exceeded 5% of total
current assets.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The effective tax rate increased for
the three months ended June 30, 2009 (38.4%) compared to
the same period in 2008 (33.0%) primarily due to an increase
in state deferred taxes and a true up of prior year taxes related
to adjustments to the manufacturing deduction. The effective tax
rate increased for the six months ended June 30, 2009
(36.1%) compared to the same period in 2008
(32.7%) primarily due to an increase in state deferred taxes
and a true up of prior year taxes related to adjustments to the
manufacturing deduction.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Excise Taxes</b>. Certain excise
taxes levied by state or local governments are collected by Duke
Energy from its customers. These taxes, which are required to be
paid regardless of Duke Energy’s ability to collect from the
customer, are accounted for on a gross basis. When Duke Energy acts
as an agent, and the tax is not required to be remitted if it is
not collected from the customer, the taxes are accounted for on a
net basis. Duke Energy’s excise taxes accounted for on a
gross basis and recorded as operating revenues in the accompanying
Consolidated Statements of Operations were approximately $64
million and $144 million for the three and six months ended
June 30, 2009, respectively, and approximately $66 million and
$144 million for the three and six months ended June 30, 2008,
respectively.</font></p>
</div>
356000000
-300000000
49000000
227000000
1000000
50000000
-200000000
40000000
370000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>6. Inventory</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Inventory consists primarily of
materials and supplies and coal held for electric generation and is
recorded primarily using the average cost method. Inventory related
to Duke Energy’s regulated operations is valued at historical
cost consistent with ratemaking treatment. Materials and supplies
are recorded as inventory when purchased and subsequently charged
to expense or capitalized to plant when installed. Inventory
related to Duke Energy’s non-regulated operations is valued
at the lower of cost or market.</font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="82%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>December 31,<br />
2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="5" align="middle"><font size="1" face=
"ARIAL"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Materials and supplies</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">670</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">661</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Coal held for electric generation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">695</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">471</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Natural gas</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total inventory</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,368</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,135</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>17. Investments in Debt and Equity
Securities</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy applies SFAS
No. 115<i>, “Accounting For Certain Investments in Debt
and Equity Securities”</i> (SFAS No. 115), to its
investments in debt and equity securities and classifies its
investments into two categories – trading and
available-for-sale. Certain investments in debt and equity
securities held in grantor trusts associated with certain deferred
compensation plans are classified as trading securities and are
reported at fair value in the Consolidated Balance Sheets with net
realized and unrealized gains and losses included in earnings each
period. All other investments in debt and equity securities are
classified as available-for-sale securities, which are also
reported at fair value on the Consolidated Balance Sheets with
unrealized gains and losses excluded from earnings and reported
either as a regulatory asset or liability, as discussed further
below, or as a component of other comprehensive income until
realized.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy’s available-for-sale
securities are primarily comprised of investments held in the
nuclear decommissioning trust fund (NDTF), investments in a grantor
trust at Duke Energy Indiana related to other post-retirement
benefit plans as required by the IURC, the captive insurance
investment portfolio and investments in auction rate debt
securities. The investments within the NDTF and Duke Energy
Indiana’s grantor trust are managed by independent investment
managers with discretion to buy, sell and invest pursuant to the
objectives set forth by the trust agreements. Therefore, Duke
Energy has limited oversight of the day-to-day management of these
investments. Since day-to-day investment decisions, including buy
and sell decisions, are made by the investment manager, the ability
to hold investments in unrealized loss positions is outside the
control of Duke Energy. Accordingly, all unrealized losses
associated with equity securities within the NDTF and Duke Energy
Indiana’s grantor trust are considered other-than-temporary
and are recognized immediately when the fair value of individual
investments is less than the cost basis of the investment. With
respect to investments in debt securities within the NDTF and Duke
Energy Indiana’s grantor trust, Duke Energy applies the
provisions of FSP No. FAS 115-2 and FAS 124-2, which is discussed
further below. However, pursuant to regulatory accounting, all
unrealized losses associated with investments in debt and equity
securities within the NDTF and Duke Energy Indiana’s grantor
trust are deferred as a regulatory asset, thus there is no impact
on the earnings of Duke Energy as a result of any
other-than-temporary impairments that would otherwise be required
to be recognized in earnings under SFAS No. 115 or FSP No. FAS
115-2 and FAS 124-2, as discussed further below. For all other
investments in debt and equity securities, unrealized gains and
losses are included in other comprehensive income until realized,
unless it is determined that the carrying value of an investment is
other-than-temporarily impaired, at which time the write-down to
fair value may be included in earnings based on the criteria
discussed below.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">For available-for-sale equity
securities outside of the NDTF and Duke Energy Indiana grantor
trust, which are discussed separately above, Duke Energy analyzes
all investment holdings each reporting period to determine whether
a decline in fair value should be considered other-than-temporary.
Criteria used to evaluate whether an impairment associated with
equity securities is other-than-temporary includes, but is not
limited to, the length of time over which the market value has been
lower than the cost basis of the investment, the percentage decline
compared to the cost of the investment and management’s
intent and ability to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in
market value. If a decline in fair value is determined to be
other-than-temporary, the investment is written down to its fair
value through a charge to earnings.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">With respect to investments in debt
securities, during the first quarter of 2009, Duke Energy adopted
the provisions of FSP No. FAS 115-2 and FAS 124-2, which modified
the other-than-temporary impairment guidance related to investments
in debt securities. Under FSP No. FAS 115-2 and FAS 124-2, if the
entity does not have an intent to sell the security and it is not
more likely than not that management will be required to sell the
debt security before the recovery of its cost basis, the impairment
write-down to fair value would be recorded as a component of other
comprehensive income, except for when it is determined that a
credit loss exists. In determining whether a credit loss exists,
management considers, among other things, the length of time and
the extent to which the fair value has been less than the amortized
cost basis, changes in the financial condition of the issuer of the
security, or in the case of an asset backed security, the financial
condition of the underlying loan obligors, ability of the issuer of
the security to make scheduled interest or principal payments and
any changes to the rating of the security by rating agencies. If it
is determined that a credit loss exists, the amount of impairment
write-down to fair value would be split between the credit loss,
which would be recognized in earnings, and the amount attributable
to all other factors, which would be recognized in other
comprehensive income. The adoption of FSP No. FAS 115-2 and FAS
124-2 primarily impacts Duke Energy’s investments in auction
rate debt securities and the investments held in the captive
insurance portfolio since, as discussed above, the debt securities
held in the NDTF and Duke Energy Indiana’s grantor trust
receive regulatory deferral treatment of all unrealized losses.
Since management believes, based on consideration of the criteria
above, that no credit loss exists as of June 30, 2009 and
management does not have the intent to sell its investments in
auction rate debt securities and the investments in debt securities
within its captive insurance portfolio, and it is not more likely
than not that management will be required to sell these
securities</font> <font size="1" face="ARIAL">before the
anticipated recovery of their cost basis, management concluded that
there were no other-than-temporary impairments necessary as of
June 30, 2009. However, during the second quarter of 2008,
Duke Energy did record a pre-tax impairment charge to earnings of
approximately $4 million related to certain investments in auction
rate debt securities. See Note 16 for additional information
related to fair value measurements for investments in auction rate
debt securities that were not part of its NDTF or captive insurance
portfolio.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Management will continue to monitor the
carrying value of its entire portfolio of investments in the future
to determine if any other-than-temporary impairment losses should
be recognized.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Investments in debt and equity
securities are classified as either short-term investments or
long-term investments based on management’s intent and
ability to sell these securities, taking into consideration
illiquidity factors in the current markets with respect to certain
short-term investments that have historically provided for a high
degree of liquidity, such as investments in auction rate debt
securities.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><i>Short-term investments.</i> At
June 30, 2009 and December 31, 2008, Duke Energy had
approximately $4 million carrying value (approximately $6 million
par value) and $51 million carrying value (approximately $55
million par value), respectively, of short-term investments. The
balance at June 30, 2009 and December 31, 2008 consisted
primarily of investments in auction rate debt securities that are
considered available-for-sale securities under SFAS No. 115.
These investments in auction rate debt securities have been
classified as short-term investments as these investments either
had a stated maturity within the next 12 months or Duke Energy
believed the investments were reasonably expected to be refunded
within the next 12 months based on notification of a refunding plan
by the issuer. At December 31, 2008, management believed that
approximately $49 million par value of investments in auction rate
debt securities were reasonably expected to be refunded within the
next twelve months based on notification of refunding by the
issuer. However, due to an ongoing delay in that refunding plan,
Duke Energy reclassified these securities to long-term investments
in the second quarter of 2009. The remaining balance of investments
in auction rate debt securities at December 31, 2008 were
included in long-term investments and are discussed
below.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL"><i>Other Long-term investments</i>.
Duke Energy classifies its investments in debt and equity
securities held in the NDTF, in the Duke Energy Indiana grantor
trust and the captive insurance investment portfolio as long-term.
Additionally, approximately $255 million par value (approximately
$203 million carrying value) and approximately $215 million par
value (approximately $173 million carrying value) of investments in
auction rate debt securities have been classified as long-term at
June 30, 2009 and December 31, 2008, respectively, due to
market illiquidity factors as a result of continued failed
auctions. All of these investments are classified as
available-for-sale under SFAS No. 115 and, therefore, are
reflected on the Consolidated Balance Sheets at estimated fair
value based on either quoted market prices or management’s
best estimate of fair value based on expected future cash flow
using appropriate risk-adjusted discount rates. Since management
does not intend to use these investments in current operations,
these investments are classified as long-term. As of June 30,
2009 and December 31, 2008, Duke Energy’s long-term
available-for-sale investments had a fair market value of $1,982
million and $1,855 million, respectively.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The estimated fair values of short-term
and long-term investments classified as available-for-sale are as
follows (in millions):</font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="48%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" rowspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="9" align="middle"><font size="1" face=
"ARIAL"><b>June 30, 2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="9" align="middle"><font size="1" face=
"ARIAL"><b>December 31, 2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Gross<br />
Unrealized<br />
Holding<br />
Gains</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Gross<br />
Unrealized<br />
Holding<br />
Losses<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Estimated<br />
Fair<br />
Value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Gross<br />
Unrealized<br />
Holding<br />
Gains</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Gross<br />
Unrealized<br />
Holding<br />
Losses<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Estimated<br />
Fair<br />
Value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Short-term Investments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">51</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Total short-term investments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">51</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Equity Securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">166</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(17</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">950</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">161</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(20</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">880</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Corporate Debt Securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">7</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">180</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">124</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Municipal Bonds</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">107</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">150</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">U.S. Government Bonds</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">11</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">295</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">18</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">292</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Auction Rate Debt Securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(52</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">203</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(42</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">173</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">247</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">236</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 2.94em"><font size="1"
face="ARIAL">Total long-term investments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">190</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(70</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,982</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">189</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(63</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1,855</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Losses of
approximately $100 million and $190 million as of June 30,
2009 and December 31, 2008, respectively, associated with
investments held in the NDTF have been excluded from the table
since, as discussed above, unrealized losses are deferred as a
regulatory asset pursuant to regulatory accounting.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Debt securities held at June 30,
2009, which includes auction rate securities based on the stated
maturity date, mature as follows: $20 million in less than one
year, $140 million in one to five years, $162 million in six to ten
years and $574 million thereafter.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Excluding amounts associated with
investments in the NDTF, the fair values and gross unrealized
losses of available-for-sale debt and equity securities which are
in an unrealized loss position for which other-than-temporary
impairment losses have not been recorded, summarized by investment
type and length of time that the securities have been in a
continuous loss position, are presented in the table below as of
June 30, 2009 and December 31, 2008.</font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="58%"></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="9" align="middle"><font size="1" face="ARIAL"><b>As of
June 30, 2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Fair<br />
Value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Unrealized Loss Position<br />
>12 months</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Unrealized Loss Position<br />
<12 months</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="9" align="middle"><font size="1" face=
"ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Equity Securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">52</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(16</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Auction Rate Debt Securities <sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">207</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(54</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">48</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">307</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(56</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(16</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="58%"></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="9" align="middle"><font size="1" face="ARIAL"><b>As of
December 31, 2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Fair<br />
Value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Unrealized Loss Position<br />
>12 months</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>Unrealized Loss Position<br />
<12 months</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="9" align="middle"><font size="1" face=
"ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Equity Securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">47</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(18</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Auction Rate Debt Securities <sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">224</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(46</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">32</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 1.76em"><font size="1"
face="ARIAL">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">303</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(65</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">See Note
16 for information about fair value measurements related to
investments in auction rate debt securities.</font></td>
</tr>
</tbody>
</table>
</div>
35000000
836000000
-2133000000
1017000000
620000000
147000000
1209000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>1. Basis of Presentation</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Nature of Operations and Basis of
Consolidation.</b> Duke Energy Corporation (collectively with its
subsidiaries, Duke Energy) is an energy company primarily located
in the Americas. These Unaudited Consolidated Financial Statements
include, after eliminating intercompany transactions and balances,
the accounts of Duke Energy and all majority-owned subsidiaries
where Duke Energy has control and those variable interest entities
where Duke Energy is the primary beneficiary. These Unaudited
Consolidated Financial Statements also reflect Duke Energy’s
proportionate share of certain generation and transmission
facilities in South Carolina, Ohio, Indiana and
Kentucky.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">These Unaudited Consolidated Financial
Statements have been prepared in accordance with generally accepted
accounting principles (GAAP) in the United States of America (U.S.)
for interim financial information and with the instructions to Form
10-Q and Regulation S-X. Accordingly, these Unaudited Consolidated
Financial Statements do not include all of the information and
notes required by GAAP in the U.S. for annual financial statements.
Because the interim Unaudited Consolidated Financial Statements and
Notes do not include all of the information and notes required by
GAAP in the U.S. for annual financial statements, the Unaudited
Consolidated Financial Statements and other information included in
this quarterly report should be read in conjunction with the
Consolidated Financial Statements and Notes in Duke Energy’s
Form 10-K for the year ended December 31, 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">These Unaudited Consolidated Financial
Statements reflect all normal recurring adjustments that are, in
the opinion of management, necessary to fairly present Duke
Energy’s financial position and results of operations.
Amounts reported in the interim Unaudited Consolidated Statements
of Operations are not necessarily indicative of amounts expected
for the respective annual periods due to the effects of seasonal
temperature variations on energy consumption, regulatory rulings,
the timing of maintenance on electric generating units, changes in
mark-to-market valuations, changing commodity prices and other
factors.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Use of Estimates.</b> To conform to
GAAP in the U.S., management makes estimates and assumptions that
affect the amounts reported in the Consolidated Financial
Statements and Notes. Although these estimates are based on
management’s best available information at the time, actual
results could differ.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Reclassifications.</b> Certain prior
period amounts on the Unaudited Consolidated Financial Statements
have been reclassified in connection with the adoption of Financial
Accounting Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 160, <i>“Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB
No. 51,”</i> (SFAS No. 160) on January 1,
2009, as discussed in Note 18, the effects of which require
retrospective application to the Unaudited Consolidated Financial
Statements.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Unbilled Revenue.</b> Revenues on
sales of electricity and gas are recognized when either the service
is provided or the product is delivered. Unbilled retail revenues
are estimated by applying an average revenue per kilowatt-hour or
per thousand cubic feet (Mcf) for all customer classes to the
number of estimated kilowatt-hours or Mcfs delivered but not
billed. Unbilled wholesale energy revenues are calculated by
applying the contractual rate per megawatt-hour (MWh) to the number
of estimated MWh delivered but not yet billed. Unbilled wholesale
demand revenues are calculated by applying the contractual rate per
megawatt (MW) to the MW volume delivered but not yet billed. The
amount of unbilled revenues can vary significantly from period to
period as a result of numerous factors, including seasonality,
weather, customer usage patterns and customer mix. Unbilled
revenues, which are primarily recorded as Receivables in the
Consolidated Balance Sheets, were approximately $406 million and
$390 million at June 30, 2009 and December 31, 2008,
respectively. Additionally, Duke Energy Ohio, Inc. (Duke Energy
Ohio), Duke Energy Kentucky, Inc. (Duke Energy Kentucky) and Duke
Energy Indiana, Inc. (Duke Energy Indiana) sell, on a revolving
basis, nearly all of their retail and wholesale accounts receivable
and related collections to Cinergy Receivables Company, LLC
(Cinergy Receivables), a bankruptcy remote, special purpose entity
that is a wholly-owned limited liability company of Cinergy Corp.
(Cinergy), a wholly-owned subsidiary of Duke Energy. The
securitization transaction was structured to meet the criteria for
sale treatment under SFAS No. 140, “<i>Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities – a replacement of FASB Statement
No. 125</i>” (SFAS No. 140), and, accordingly, the
transfers of receivables are accounted for as sales. Receivables
for unbilled revenues of approximately $192 million and $266
million at June 30, 2009 and December 31, 2008,
respectively, related to retail and wholesale accounts receivable
at Duke Energy Ohio, Duke Energy Kentucky and Duke Energy Indiana
were included in the sales of accounts receivable to Cinergy
Receivables. See Note 20 for additional information regarding
Cinergy Receivables.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Other Liabilities.</b> At
June 30, 2009 and December 31, 2008, approximately $2,218
million and $2,162 million, respectively, of regulatory liabilities
associated with asset removal costs are included in Other within
Deferred Credits and Other Liabilities in the Consolidated Balance
Sheets. At June 30, 2009 and December 31, 2008, this
balance exceeded 5% of total liabilities.</font><!--##PBEnd##-->
<!--##PBEnd##--></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Dividends payable, which are recorded
in Other within Current Liabilities in the Consolidated Balance
Sheets, were approximately $323 million and $10 million at
June 30, 2009 and December 31, 2008, respectively. At
June 30, 2009, this balance exceeded 5% of total current
liabilities.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Reapplication of SFAS No. 71 to
Portions of Generation in Ohio.</b> Commercial Power’s
generation operations in the Midwest include generation assets
located in Ohio that are dedicated to serve Ohio native load
customers. These assets, as excess capacity allows, also generate
revenues through sales outside the native load customer base, and
such revenue is termed non-native.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Prior to December 17, 2008,
Commercial Power did not apply the provisions of SFAS No. 71,
“<i>Accounting for the Effects of Certain Types of
Regulation</i>” (SFAS No. 71), due to the comprehensive
electric deregulation legislation passed by the state of Ohio in
1999. As described further below, effective December 17, 2008,
the Public Utilities Commission of Ohio (PUCO) approved the Duke
Energy Ohio Electric Security Plan (ESP), which resulted in the
reapplication of SFAS No. 71 to certain portions of Commercial
Power’s operations as of that date.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">From January 1, 2005 through
December 31, 2008, Commercial Power had been operating under a
Rate Stabilization Plan (RSP), which was a market-based standard
service offer. Although the RSP contained certain trackers that
enhanced the potential for cost recovery, there was no assurance of
stranded cost recovery upon the expiration of the RSP on
December 31, 2008 since it was initially anticipated that,
upon the expiration of the RSP, there would be a move to full
competitive markets. Accordingly, Commercial Power did not apply
the provisions of SFAS No. 71 to any of its generation
operations prior to December 17, 2008. As discussed further in
Note 13, in April 2008, new legislation (SB 221) was passed in Ohio
and signed by the Governor of Ohio on May 1, 2008. The new law
codified the PUCO’s authority to approve an electric
utility’s standard service offer either through an ESP or a
Market Rate Option (MRO). The MRO is a price determined through a
competitive bidding process. On July 31, 2008, Duke Energy
Ohio filed an ESP, and with certain amendments, the ESP was
approved by the PUCO on December 17, 2008. The ESP became
effective on January 1, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In connection with the approval of the
ESP, Duke Energy reassessed the applicability of SFAS No. 71
to Commercial Power’s generation operations as SB 221
substantially increased the PUCO’s oversight authority over
generation in the state of Ohio, including giving the PUCO complete
approval of generation rates and the establishment of an earnings
test to determine if a utility has earned significantly excessive
earnings. Duke Energy determined that certain costs and related
rates (riders) of Commercial Power’s operations related to
generation serving native load meet the criteria established by
SFAS No. 71 for regulatory accounting treatment as SB 221 and
Duke Energy Ohio’s approved ESP enhanced the recovery
mechanism for certain costs of its generation serving native load
and increased the likelihood that these operations will remain
under a cost recovery model for certain costs for the remainder of
the ESP period.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Under the ESP, Commercial Power bills
for its native load generation via numerous riders. SB 221 and the
ESP resulted in the approval of an enhanced recovery mechanism for
certain of these riders, which includes, but is not limited to, a
price-to-compare fuel and purchased power rider and certain
portions of a price-to-compare cost of environmental compliance
rider. Accordingly, Commercial Power began applying SFAS
No. 71 to the corresponding RSP riders that enhanced the
recovery mechanism for recovery under the ESP on December 17,
2008. The remaining portions of Commercial Power’s Ohio
native load generation operations, revenues from which are
reflected in rate riders for which the ESP does not specifically
allow enhanced recovery, as well as all generation operations
associated with non-native customers, including Commercial
Power’s Midwest gas-fired generation assets, continue to not
apply regulatory accounting as those operations do not meet the
criteria of SFAS No. 71. Moreover, generation remains a
competitive market in Ohio and native load customers continue to
have the ability to switch to alternative suppliers for their
electric generation service. As customers switch, there is a risk
that some or all of the regulatory assets will not be recovered
through the established riders. Duke Energy will continue to
monitor the amount of native load customers that have switched to
alternative suppliers when assessing the probability of recovery of
its regulatory assets established for its native load generation
operations.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Despite certain portions of the Ohio
native load operations not being subject to the accounting
provisions of SFAS No. 71, all of Commercial Power’s
Ohio native load operations’ rates are subject to approval by
the PUCO, and thus these operations are referred to here-in as
Commercial Power’s regulated operations. Accordingly,
beginning January 1, 2009, these revenues and corresponding
fuel and purchased power expenses are recorded in Regulated
Electric within Operating Revenues and Fuel Used in Electric
Generation and Purchased Power – Regulated within Operating
Expense, respectively, on the Consolidated Statements of
Operations.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Net Income Attributable to Duke
Energy Corporation.</b> The amounts included in the Consolidated
Statements of Operations representing earnings attributable to Duke
Energy common shareholders are as follows:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="82%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="ARIAL" size=
"1"><b>Three Months Ended<br />
June 30,</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="6"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income From Continuing Operations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">278</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">338</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">(Loss) Income From Discontinued Operations, Net of
Tax</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">13</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Net Income Attributable to Duke Energy
Corporation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">276</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">351</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="7" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="ARIAL" size=
"1"><b>Six Months Ended<br />
June 30,</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="6"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income From Continuing Operations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">619</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">801</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income From Discontinued Operations, Net of
Tax</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">15</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Net Income Attributable to Duke Energy
Corporation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">620</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">816</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
</div>
1000000
186000000
-14000000
122000000
27000000
596000000
33000000
1845000000
114000000
66000000
1900000000
500000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>8. Employee Benefit Obligations</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Net periodic benefit costs disclosed in
the tables below for the qualified, non-qualified and
other-postretirement benefit plans represent the cost of the
respective benefit plan for the periods presented. However,
portions of the net periodic benefit costs disclosed in the tables
below have been capitalized as a component of property, plant and
equipment.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Qualified Pension Plans</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The following table shows the
components of the net periodic pension costs for the Duke Energy
U.S. qualified pension plans.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Components of Net Periodic Pension Costs: Qualified
Pension Costs</b></font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="72%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="6" align="middle"><font size="1" face=
"ARIAL"><b>Three Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="6" align="middle"><font size="1" face=
"ARIAL"><b>Six Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2009<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2008<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2009<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2008<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="14" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">22</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">22</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">42</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">46</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Interest cost on projected benefit
obligation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">63</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">66</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">128</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">128</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Expected return on plan assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(89</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(84</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(180</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(170</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Amortization of prior service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Amortization of loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">6</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">9</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">10</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Net periodic pension costs</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">12</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">23</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p>
<font size="1"> </font>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net
periodic qualified pension costs for the three months ended
June 30, 2009 and 2008 excludes regulatory asset amortization
of approximately $3 million and $4 million, respectively, resulting
from purchase accounting adjustments associated with Duke
Energy’s merger with Cinergy in April 2006.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(b)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net
periodic qualified pension costs for each of the six months ended
June 30, 2009 and 2008 excludes regulatory asset amortization
of approximately $6 million, resulting from purchase accounting
adjustments associated with Duke Energy’s merger with Cinergy
in April 2006.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy’s policy is to fund
amounts for its U.S. qualified pension plans on an actuarial basis
to provide assets sufficient to meet benefit payments to be paid to
plan participants. In February 2009, Duke Energy made an
approximate $500 million contribution to its U.S. qualified pension
plans. Duke Energy does not anticipate making additional
contributions to its qualified or non-qualified pension plans
during the remainder of 2009. There were no contributions to the
U.S. qualified pension plans during the six months ended
June 30, 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Non-Qualified Pension Plans</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The following table shows the
components of the net periodic pension costs for the Duke Energy
U.S. non-qualified pension plans.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Components of Net Periodic Pension Costs: Non-Qualified
Pension Costs</b></font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="72%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="5" align="middle"><font size="1" face=
"ARIAL"><b>Three Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="5" align="middle"><font size="1" face=
"ARIAL"><b>Six Months Ended<br />
June 30,</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2008</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="11" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Interest cost on projected benefit
obligation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Amortization of prior service cost</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Amortization of loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Net periodic pension costs</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">4</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">7</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">8</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Other Post-Retirement Benefit Plans</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">The following table shows the
components of the net periodic post-retirement benefit costs for
the Duke Energy U.S. other post-retirement benefit
plans.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Components of Net Periodic Post-Retirement Benefit
Costs</b></font></p>
<table border="0" cellspacing="0" cellpadding="0" width="100%"
align="center"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="72%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="6" align="middle"><font size="1" face=
"ARIAL"><b>Three Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="6" align="middle"><font size="1" face=
"ARIAL"><b>Six Months Ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2009<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2008<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(a)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2009<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
colspan="2" align="middle"><font size="1" face=
"ARIAL"><b>2008<sup style=
"POSITION: relative; BOTTOM: 0.8ex; VERTICAL-ALIGN: baseline">(b)</sup></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="14" align="middle"><font size="1"
face="ARIAL"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Service cost benefit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Interest cost on accumulated post—retirement
benefit obligation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">12</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">12</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">23</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">25</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Expected return on plan assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Amortization of net transition liability</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">5</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Amortization of prior service credit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Amortization of (gain) loss</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">1</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL"> </font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">2</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -0.59em; MARGIN-LEFT: 0.59em"><font size="1"
face="ARIAL">Net periodic post-retirement benefit costs</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">8</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">12</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">17</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1" face="ARIAL">$</font></td>
<td valign="bottom" align="right"><font size="1" face=
"ARIAL">26</font></td>
<td valign="bottom" nowrap="nowrap"><font size="1" face=
"ARIAL">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(a)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net
periodic other post-retirement benefit costs for the three months
ended June 30, 2009 and 2008 excludes regulatory asset
amortization of approximately $3 million and $1 million,
respectively, resulting from purchase accounting adjustments
associated with Duke Energy’s merger with Cinergy in April
2006.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0"
cellpadding="0" width="100%">
<tbody>
<tr>
<td valign="top" width="3%" align="left"><font size="1" face=
"ARIAL">(b)</font></td>
<td valign="top" align="left"><font size="1" face="ARIAL">Net
periodic other post-retirement benefit costs for the six months
ended June 30, 2009 and 2008 excludes regulatory asset
amortization of approximately $5 million and $3 million,
respectively, resulting from purchase accounting adjustments
associated with Duke Energy’s merger with Cinergy in April
2006.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>Employee Savings Plans</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy also sponsors employee
savings plans that cover substantially all U.S. employees. Duke
Energy made pre-tax employer matching contributions of
approximately $17 million and $44 million during the three and six
months ended June 30, 2009, respectively. Duke Energy made
pre-tax employer matching contributions of approximately $18
million and $45 million during the three and six months ended
June 30, 2008, respectively.</font></p>
</div>
-8000000
-148000000
2064000000
286000000
0
1826000000
44000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>13. Regulatory Matters</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>U.S. Franchised Electric and Gas.</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Rate Related Information.</b> The
NCUC, PSCSC, Indiana Utility Regulatory Commission (IURC) and
Kentucky Public Service Commission (KPSC) approve rates for retail
electric and gas services within their states. The PUCO approves
rates for retail gas and electric service within Ohio, except that
non-regulated sellers of gas and electric generation also are
allowed to operate in Ohio (see “Commercial Power”
below). The FERC approves rates for electric sales to wholesale
customers served under cost-based and market-based
rates.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Carolinas’ 2007
North Carolina Rate Case.</b> On December 20, 2007, the NCUC issued
its Order Approving Stipulation and Deciding Non-Settled Issues
(Order), which required that Duke Energy Carolinas’ test
period for operating costs reflect an annualized level of the
merger cost savings actually experienced in the test period.
However, the NCUC recognized that its treatment of merger savings
would not produce a fair result. Therefore, on February 18,
2008, the NCUC issued an order authorizing a 12-month increment
rider, beginning January 2008, of approximately $80 million
designed to provide a more equitable sharing of the actual merger
savings achieved on an ongoing basis. Duke Energy Carolinas
implemented the rate rider effective January 1, 2008 and
terminated the rider effective January 1, 2009. The Order
ultimately resulted in an overall average rate decrease of 5% in
2008, increasing to 7% upon expiration of this one-time rate
rider.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Carolinas’ 2009
North Carolina Rate Case</b>. On June 2, 2009, Duke Energy
Carolinas filed an Application for Adjustment of Rates and Charges
Applicable to Electric Service in North Carolina to increase its
base rates by approximately 12.6%, constituting an increase in
annual revenues from North Carolina retail operations of
approximately $496 million. The Application is based upon a
historical test year consisting of the 12 months ended
December 31, 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The NCUC issued a procedural order
setting five public hearings during September 2009 in various
cities within Duke Energy Carolinas’ North Carolina service
territory and an evidentiary hearing beginning October 19,
2009. Duke Energy Carolinas anticipates that new rates resulting
from the proceeding, if approved, would be effective
January 1, 2010. However, Duke Energy Carolinas cannot predict
the outcome of this proceeding.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Carolinas’ 2009
South Carolina Rate Case</b>. On July 27, 2009, Duke Energy
Carolinas filed its Application for Authority to Increase and
Adjust Rates and Charges for an increase in rates and charges in
South Carolina. Duke Energy Carolinas has requested approval to
raise general rates by an average of 9.3%, constituting an increase
in annual revenues of approximately $104 million; however,
customers would only experience a 7.2% increase if the PSCSC
approves Duke Energy Carolinas’ plan to return money
previously collected from customers for energy efficiency and
demand side management (DSM) programs. Additionally, Duke Energy
Carolinas also requested that the PSCSC approve a charge to
customer bills to pay for Duke Energy Carolinas’ new energy
efficiency efforts. This is Duke Energy Carolinas’ first base
rate increase filing in South Carolina since 1991.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Ohio Electric Rate
Filings.</b> New legislation (SB 221) codifies the PUCO’s
authority to approve an electric utility’s standard service
offer through an ESP, which would allow for pricing structures
similar to those under the historic RSP. Electric utilities are
required to file an ESP and may also file an application for a MRO
at the same time. The MRO is a price determined through a
competitive bidding process. SB 221 provides for the PUCO to
approve non-by-passable charges for new generation, including
construction work-in-process from the outset of construction, as
part of an ESP. The new law grants the PUCO discretion to approve
single issue rate adjustments to distribution and transmission
rates and establishes new alternative energy resources (including
renewable energy) portfolio standards, such that a utility’s
portfolio must consist of at least 25% of these resources by 2025.
SB 221 also provides a separate requirement for energy efficiency,
which must reduce a utility’s load by 22% before 2025. A
utility’s earnings under the ESP is subject to an annual
earnings test and the PUCO must order a refund if it finds that the
utility’s earnings significantly exceed the earnings of
benchmark companies with similar business and financial risks. The
earnings test acts as a cap to the ESP price. SB 221 also limits
the ability of a utility to transfer its designated generating
assets to an exempt wholesale generator (EWG) absent PUCO
approval.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On July 31, 2008, Duke Energy Ohio
filed an ESP to be effective January 1, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On December 17, 2008, the PUCO
issued its finding and order adopting a modified Stipulation with
respect to Duke Energy Ohio’s ESP filing. The PUCO agreed to
Duke Energy Ohio’s request for a net increase in base
generation revenues of $36 million, $74 million and $98 million in
2009, 2010 and 2011, respectively, including the termination of the
residential and non-residential Regulatory Transition Charge, the
recovery of expenditures incurred to deploy the SmartGrid
infrastructure and the implementation of save-a-watt. The
Stipulation also allowed Duke Energy Ohio to defer up to $50
million of certain operation and maintenance costs incurred at the
W.C. Beckjord generating station and to amortize those costs over
the three-year ESP period. The PUCO modified the Stipulation to
permit certain non-residential customers to opt out of
utility-sponsored energy efficiency initiatives and to allow
residential governmental aggregation customers who leave Duke
Energy Ohio’s system to avoid some charges. Applications for
rehearing of the PUCO’s decision were filed by environmental
groups and a residential customer advocate group. On
February 11, 2009, the PUCO issued an Entry denying the
rehearing requests. On April 13, 2009, the Office of the Ohio
Consumers’ Counsel (OCC) filed a notice of appeal to the Ohio
Supreme Court, challenging the PUCO’s interpretation of the
system-reliability-adjustment capacity dedication rider (SRA-CD).
The OCC claims that the PUCO incorrectly determined that SRA-CD is
unavoidable for residential governmental aggregation customers.
Duke Energy Ohio has moved to intervene as an appellee in the
proceeding.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As discussed further below within
“Commercial Power” and in Note 1, as a result of the
approval of the ESP, effective December 17, 2008, Commercial
Power reapplied SFAS No. 71 to certain portions of its
operations.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Ohio Gas Rate Case.</b>
In July 2007, Duke Energy Ohio filed an application with the PUCO
for an increase in its base rates for gas service. Duke Energy Ohio
sought an increase of approximately $34 million in revenue, or
approximately 5.7%, to be effective in the spring of 2008. The
application also requested approval to continue tracker recovery of
costs associated with the accelerated gas main replacement program.
On February 28, 2008, Duke Energy Ohio reached a settlement
agreement with the PUCO Staff and all of the intervening parties on
its request for an increase in natural gas base rates. The
settlement called for an annual revenue increase of approximately
$18 million in base revenue, or 3% over current revenue, permitted
continued recovery of costs through 2018 for Duke Energy
Ohio’s accelerated gas main replacement program and permitted
recovery of carrying costs on gas stored underground via its
monthly gas cost adjustment filing. The settlement did not resolve
a proposed rate design for residential customers, which involved
moving more of the fixed charges of providing gas service, such as
capital investment in pipes and regulating equipment, billing and
meter reading, from the per unit charges to the monthly charge. On
May 28, 2008, the PUCO approved the settlement in its entirety
and the proposed rate design. On June 28, 2008, the OCC and
Ohio Partners for Affordable Energy (OPAE) filed Applications for
Rehearing opposing the rate design. On July 23, 2008, the PUCO
issued an Entry denying the rehearing requests of OCC and OPAE. On
September 16 and 19, 2008, the OCC and OPAE, respectively,
filed their notices of appeal to the Ohio Supreme Court opposing
the residential rate design issue. Merit briefs were filed with the
Ohio Supreme Court on February 2, 2009. On April 10,
2009, the OCC provided statutory notice of its intent to seek a
stay of the implementation of Stage 3 of the approved rate design.
On June 1, 2009, the Ohio Supreme Court denied the OCC’s
motion to stay. As a result, Stage 3 of the straight fixed variable
rate design was implemented effective June 1, 2009. On
July 7, 2009, the Ohio Supreme Court scheduled oral argument
for September 16, 2009. At this time, Duke Energy Ohio cannot
predict whether the Ohio Supreme Court will reverse the
PUCO’s decision of May 28, 2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Ohio Electric
Distribution Rate Case.</b> On June 25, 2008, Duke Energy Ohio
filed notice with the PUCO that it would seek a rate increase for
electric delivery service of approximately $86 million, or 4.8% of
total electric revenues, to be effective in the second quarter of
2009. On December 22, 2008, Duke Energy Ohio filed an
application requesting deferral of approximately $31 million
related to damage to its distribution system from a
September 14, 2008 windstorm, which was granted by the PUCO.
Accordingly, a regulatory asset was recorded as of
December 31, 2008 for $31 million. On March 31, 2009,
Duke Energy Ohio and Parties to the case filed a Stipulation and
Recommendation which settles all issues in the case. The
Stipulation provided for a revenue increase of $55.3 million, or
approximately a 2.9% overall increase. The Parties also agreed that
Duke Energy Ohio will recover any approved costs associated with
the September 14, 2008 wind storm restoration through a
separate rider recovery mechanism. Duke Energy Ohio agreed to file
a separate application to set the rider and the PUCO will review
the request and determine the appropriate amount of storm costs
that should be recovered. The Stipulation includes, among other
things, a weatherization and energy efficiency program, and
recovery of bad debt expenses through a rider mechanism. The
Stipulation was approved in its entirety by the PUCO on
July 8, 2009. An application for rehearing was filed on July
21, 2009 and Duke Energy Ohio filed a memorandum in opposition on
July 31, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Kentucky Gas Rate
Cases.</b> In 2002, the KPSC approved Duke Energy Kentucky’s
gas base rate case which included, among other things, recovery of
costs associated with an accelerated gas main replacement program.
The approval authorized a tracking mechanism to recover certain
costs including depreciation and a rate of return on the
program’s capital expenditures. The Kentucky Attorney General
appealed to the Franklin Circuit Court the KPSC’s approval of
the tracking mechanism as well as the KPSC’s subsequent
approval of annual rate adjustments under this tracking mechanism.
In 2005, both Duke Energy Kentucky and the KPSC requested that the
court dismiss these cases.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In February 2005, Duke Energy Kentucky
filed a gas base rate case with the KPSC requesting approval to
continue the tracking mechanism and for a $14 million annual
increase in base rates. A portion of the increase was attributable
to recovery of the current cost of the accelerated gas main
replacement program in base rates. In June 2005, the Kentucky
General Assembly enacted Kentucky Revised Statute 278.509 (KRS
278.509), which specifically authorizes the KPSC to approve tracker
recovery for utilities’ gas main replacement programs. In
December 2005, the KPSC approved an annual rate increase of $8
million and re-approved the tracking mechanism through 2011. In
February 2006, the Kentucky Attorney General appealed the
KPSC’s order to the Franklin Circuit Court, claiming that the
order improperly allows Duke Energy Kentucky to increase its rates
for gas main replacement costs in between general rate cases, and
also claiming that the order improperly allows Duke Energy Kentucky
to earn a return on investment for the costs recovered under the
tracking mechanism which permits Duke Energy Kentucky to recover
its gas main replacement costs.</font><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In August 2007, the Franklin Circuit
Court consolidated all the pending appeals and ruled that the KPSC
lacks legal authority to approve the gas main replacement tracking
mechanism, which were approved prior to enactment of KRS 278.509.
To date, Duke Energy Kentucky has collected approximately $9
million in annual rate adjustments under the tracking mechanism.
Per the KPSC order, Duke Energy Kentucky collected these revenues
subject to refund pending the final outcome of this litigation.
Duke Energy Kentucky and the KPSC have requested that the Kentucky
Court of Appeals grant a rehearing of its decision. On
February 5, 2009, the Kentucky Court of Appeals denied the
rehearing requests of both Duke Energy Kentucky and the KPSC. Duke
Energy Kentucky filed a motion for discretionary review to the
Kentucky Supreme Court on March 9, 2009. At this time, Duke
Energy Kentucky cannot predict whether the Kentucky Supreme Court
will accept the case for review.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On July 1, 2009, Duke Energy
Kentucky filed its application for an increase of approximately
$17.5 million in base natural gas rates. Duke Energy Kentucky also
proposed to implement a new rate design for residential customers,
which involves moving more of the fixed charges of providing gas
service, such as capital investment in pipes and regulating
equipment, billing and meter reading, from the per unit charges to
the monthly charge. The application is pending and at this time,
Duke Energy Kentucky cannot predict the outcome of this proceeding.
A procedural schedule excluding a hearing date was issued on July
31, 2009. Intervenor testimony is due on October 12, 2009.
Discovery from intervenors must be completed by November 9, 2009.
Duke Energy must file rebuttal testimony by November 23,
2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Carolinas Energy
Efficiency.</b> On May 7, 2007, Duke Energy Carolinas filed
its save-a-watt application with the NCUC. The save-a-watt proposal
is based on the avoided cost of generation not needed as a result
of the success of Duke Energy Carolinas’ energy efficiency
programs. On February 26, 2009, the NCUC issued an order
(i) approving Duke Energy Carolinas’ energy efficiency
programs; (ii) requesting additional information on Duke
Energy Carolinas’ returns under eight different compensation
scenarios; and (iii) authorizing Duke Energy Carolinas’
to implement its rate rider pending approval of a final
compensation mechanism by the NCUC. Duke Energy Carolinas filed the
additional information requested by the NCUC on March 31,
2009. On June 12, 2009, Duke Energy Carolinas filed with the
NCUC a settlement agreement between Duke Energy Carolinas and the
Public Staff and several environmental intervenors. Testimony of
non-settling parties in response to the settlement agreement was
due July 27, 2009. A hearing on the settlement has been
scheduled for August 19, 2009. Duke Energy Carolinas began
offering energy conservation programs to North Carolina retail
customers and billing a conservation-only rider on June 1,
2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On May 6, 2009, the PSCSC approved Duke
Energy Carolinas’ request for (i) approval of conservation
and demand response programs; (ii) cancellation of certain existing
demand response programs; (iii) deferral of the costs incurred to
develop and implement the energy efficiency programs from June 1,
2009 until the date these costs are reflected in electric rates;
and (iv) assurance that Duke Energy Carolinas may true-up
incentives for costs deferred pursuant to the petition in
accordance with the PSCSC order on the appropriate compensation
mechanism in Duke Energy Carolinas’ 2009 general rate
proceeding. Duke Energy Carolinas began offering demand response
and conservation programs to South Carolina retail customers
effective June 1, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Ohio Energy
Efficiency.</b> On July 11, 2007, the PUCO approved Duke
Energy Ohio’s Demand Side Management/Energy Efficiency
Program (DSM Program). The DSM programs were first proposed in 2006
and were endorsed by the Duke Energy Community Partnership, which
is a collaborative group made up of representatives of
organizations interested in energy conservation, efficiency and
assistance to low-income customers. The program costs are recouped
through a cost recovery mechanism that will be adjusted annually to
reflect the previous year’s activity. Duke Energy Ohio is
permitted to recover lost revenues, program costs and shared
savings (once the programs reach 65% of the targeted savings level)
through the cost recovery mechanism based upon impact studies to be
provided to the Staff of the PUCO. Duke Energy Ohio filed the
save-a-watt Energy Efficiency Plan as part of its ESP filed with
the PUCO on July 31, 2008 (discussed above). On December 17,
2008, the PUCO approved the ESP, including allowing for the
implementation of a new save-a-watt energy efficiency compensation
model. However, the PUCO determined that certain non-residential
customers may opt out of Duke Energy Ohio’s energy efficiency
initiative. Applications for rehearing of this decision have been
filed by environmental groups and a residential customer advocate
group.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Indiana Energy
Efficiency.</b> In October 2007, Duke Energy Indiana filed its
petition with the IURC requesting approval of an alternative
regulatory plan to increase its energy efficiency efforts in the
state. Duke Energy Indiana seeks approval of a plan that will
be available to all customer groups and will compensate Duke Energy
Indiana for verified reductions in energy usage. Under the
plan, customers would pay for energy efficiency programs through an
energy efficiency rider that would be included in their power bill
and adjusted annually through a proceeding before the
IURC. The energy efficiency rider proposal is based on the
save-a-watt compensation model of avoided cost of
generation. A number of parties have intervened in the
proceeding. Duke Energy Indiana has reached a settlement with all
intervenors except one, the Citizens Action Coalition of Indiana,
Inc. (CAC), and has filed such settlement agreement with the IURC.
An evidentiary hearing with the IURC was held on February 27,
2009 and March 2, 2009, and an order is expected in the second
half of 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Kentucky Energy
Efficiency.</b> On November 15, 2007, Duke Energy Kentucky
filed its annual application to continue existing energy efficiency
programs, consisting of nine residential and two commercial and
industrial programs, and to true-up its gas and electric tracking
mechanism for recovery of lost revenues, program costs and shared
savings. On February 11, 2008, Duke Energy Kentucky filed a
motion to amend its energy efficiency programs and applied to
reinstitute a low income Home Energy Assistance Program. The KPSC
bifurcated the proposed Home Energy Assistance Program from the
other energy efficiency programs. On May 14, 2008, the KPSC
approved the energy efficiency programs. On September 25,
2008, the KPSC approved Duke Energy Kentucky’s Home Energy
Assistance program, making it available for customers at or below
150% of the federal poverty level. On December 1, 2008, Duke
Energy Kentucky filed an application for a save-a-watt Energy
Efficiency Plan. The application seeks a new energy efficiency
recovery mechanism similar to what was proposed in Ohio. An
evidentiary hearing with the KPSC is scheduled to occur on
August 27, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Renewable Resources.</b> On
June 6, 2008, Duke Energy Carolinas filed an application with
the NCUC seeking approval to implement a solar photovoltaic
distributed generation program (Program). Duke Energy Carolinas
proposed to invest $100 million over two years to install
electricity generating solar panels at up to 850 North Carolina
sites including homes, schools, stores and factories. The Program
will help Duke Energy Carolinas meet the requirement of North
Carolina’s Renewable and Energy Efficiency Portfolio Standard
(REPS). It will also enable Duke Energy Carolinas to evaluate the
role of distributed generation on Duke Energy Carolinas’
electrical system and gain experience in owning and operating
renewable energy resources. Because the Program involves the
construction of electrical generating facilities, Duke Energy
Carolinas required a Certificate of Public Convenience and
Necessity (CPCN) from the NCUC. The REPS statute provides for the
recovery of costs Duke Energy Carolinas incurs to comply with its
requirements, principally through an annual rate rider.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In response to concerns raised by the
Public Staff and various solar energy groups, Duke Energy Carolinas
agreed to reduce the size of the Program to invest $50 million to
install up to 10 MWs of solar photovoltaic capacity. Based upon the
revised size and availability of state and federal tax credits,
Duke Energy Carolinas estimates that the Program would result in a
monthly charge of approximately $0.08 for residential customers. On
December 31, 2008, the NCUC issued its Order Granting CPCN
Subject to Conditions. The conditions are (i) reducing the
program size from 20 MWs to 10 MWs (as previously agreed upon by
Duke Energy Carolinas); and (ii) limiting program costs
recoverable through the REPS rider to program costs equivalent to
the cost of the third place bid in Duke Energy Carolinas’
2007 request for proposal for renewable energy. The Order leaves
open the opportunity to recover the excess costs through other
recovery mechanisms.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On May 6, 2009, in response to
Duke Energy Carolinas’ request for reconsideration, the NCUC
issued an Order allowing Duke Energy Carolinas to proceed with the
Program and allowed Duke Energy Carolinas to recover all costs
incurred in executing the Program through a combination of the REPS
rider and base rates, subject to the NCUC’s review of the
reasonableness and prudence of Duke Energy Carolinas’
execution of the Program. However, the NCUC declined to remove the
limitation on costs recoverable through the REPS
rider.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Carolinas’
Deferral of Costs.</b> On February 4, 2009, Duke Energy
Carolinas filed petitions with the NCUC and the PSCSC requesting an
accounting order to defer the incremental costs incurred from the
September 2008 purchase of a portion of Saluda River’s
ownership interest in the Catawba Nuclear Station and certain
post-in-service costs that are being or will be incurred in
connection with the addition of the Allen Steam Station flue gas
desulfurization equipment related to environmental compliance
scheduled to go into service in the spring of 2009. The costs Duke
Energy Carolinas sought to defer are the incremental costs that are
being incurred or will be incurred from the date these assets are
placed in service to the date Duke Energy Carolinas is authorized
to begin reflecting in rates the recovery of such costs on an
ongoing basis. On February 25, 2009 and March 31, 2009, the
PSCSC and NCUC, respectively, approved the deferral of these costs.
Duke Energy Carolinas began deferring costs in the first quarter
2009. These costs are included in the Duke Energy Carolinas
application to adjust rates filed in North Carolina on June 2,
2009 and in South Carolina on July 27, 2009, as discussed
above.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Broad River Energy Center.</b> On
August 25, 2007, Duke Energy Carolinas experienced a
disturbance on its bulk electric system which initiated at the
Broad River Energy Center, a generating station owned and operated
by a third party. The disturbance resulted in the tripping of six
Duke Energy Carolinas generating units and the temporary opening of
five 230 kilovolt transmission lines. The event resulted in no loss
of load. In September 2008 the FERC initiated a preliminary,
non-public investigation to determine if there were any potential
violations by Duke Energy Carolinas of the North American Electric
Reliability Council (NERC) Reliability Standards. This
investigation was coordinated with an ongoing Compliance Violation
Investigation conducted by SERC Reliability Corporation
(SERC). On March 5, 2009, FERC presented its preliminary
findings about the event to Duke Energy Carolinas and solicited
Duke Energy Carolinas’ responsive views about the event and
the findings. On March 27, 2009, Duke Energy Carolinas
conveyed its responsive views to FERC Staff. This investigation
could result in penalties being assessed.</font><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="1"><b>Capital Expansion Projects.</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Overview.</b> U.S. Franchised
Electric and Gas is engaged in planning efforts to meet
projected load growth in its service territories. Capacity
additions may include new nuclear, integrated gasification combined
cycle (IGCC), coal facilities or gas-fired generation units.
Because of the long lead times required to develop such assets,
U.S. Franchised Electric and Gas is taking steps now to ensure
those options are available.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>William States Lee III Nuclear
Station.</b> On December 12, 2007, Duke Energy Carolinas filed
an application with the Nuclear Regulatory Commission (NRC), which
has been docketed for review, for a combined Construction and
Operating License (COL) for two Westinghouse AP1000 (advanced
passive) reactors for the proposed William States Lee III Nuclear
Station at a site in Cherokee County, South Carolina. Each reactor
is capable of producing approximately 1,117 MW. Submitting the COL
application does not commit Duke Energy Carolinas to build nuclear
units. On December 7, 2007, Duke Energy Carolinas filed
applications with the NCUC and the PSCSC for approval of Duke
Energy Carolinas’ decision to incur development costs
associated with the proposed William States Lee III Nuclear
Station. The NCUC had previously approved Duke Energy’s
decision to incur the North Carolina allocable share of up to $125
million in development costs through 2007. The 2007 requests cover
a total of up to $230 million in development costs through 2009,
which is comprised of $70 million incurred through
December 31, 2007 plus an additional $160 million of
anticipated costs in 2008 and 2009. The PSCSC approved Duke Energy
Carolinas’ William States Lee III Nuclear Station project
development cost application on June 9, 2008, and the NCUC
issued its approval order on June 11, 2008. On July 24,
2008, environmental intervenors filed motions to rescind or amend
the approval orders issued by the NCUC and the PSCSC, and Duke
Energy Carolinas subsequently filed responses in opposition to the
motions. On August 13 and August 25, 2008, the PSCSC and
NCUC, respectively, denied the environmental intervenor motion. The
NRC review of the COL application continues and the current
schedule concludes the COL may be granted in mid-2012. Duke Energy
Carolinas filed with the DOE for a federal loan guarantee, which
has the potential to significantly lower financing costs associated
with the proposed William States Lee III Nuclear Station; however,
it was not among the four projects selected by the DOE for the
final phase of due diligence for the federal loan guarantee
program. The project could be selected in the future if the program
funding is expanded or if any of the current finalists drop
out.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Cliffside Unit 6.</b> On
June 2, 2006, Duke Energy Carolinas filed an application with
the NCUC for a CPCN to construct two 800 MW state of the art coal
generation units at its existing Cliffside Steam Station in North
Carolina. On March 21, 2007, the NCUC issued an Order allowing
Duke Energy Carolinas to build one 800 MW unit. On
February 27, 2009, Duke Energy Carolinas filed its latest
updated cost estimate of $1.8 billion (excluding up to
approximately $0.6 billion of AFUDC) for the approved new Cliffside
Unit 6. Duke Energy Carolinas believes that the overall cost of
Cliffside Unit 6 will be reduced by approximately $125 million in
federal advanced clean coal tax credits, as discussed further
below. On May 6, 2009, the North Carolina Waste Awareness
Network filed a motion to revoke the CPCN. Certain environmental
intervenors filed comments in support of the motion whereas Duke
Energy Carolinas and the NCUC Public Staff filed comments opposing
the motion. The NCUC has not yet issued an order on the
motion.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On February 20, 2008, Duke Energy
Carolinas entered into an amended and restated engineering,
procurement, construction and commissioning services agreement,
valued at approximately $1.3 billion, with an affiliate of The Shaw
Group, Inc., of which approximately $950 million relates to
participation in the construction of Cliffside Unit 6, with the
remainder related to a flue gas desulfurization system on an
existing unit at Cliffside.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On January 29, 2008, the North
Carolina Department of Environment and Natural Resources (DENR)
issued a final air permit for the new Cliffside Unit 6 and on-site
construction has begun. In March 2008, four contested case
petitions, which have since been consolidated, were filed appealing
the final air permit. On May 12, 2009, the Administrative Law
Judge issued rulings favorable to DENR and Duke Energy, dismissing
several of petitioners’ claims and granting summary judgment
against petitioners on other claims. A hearing on remaining claims
is not expected before the end of 2009. See Note 14 for a
discussion of a lawsuit filed by the Southern Alliance for Clean
Energy, Environmental Defense Fund, National Parks Conservation
Association, Natural Resources Defenses Council, and Sierra Club
(collectively referred to as Citizen Groups) related to the
construction of Cliffside Unit 6.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On October 14, 2008, Duke Energy
Carolinas submitted revised hazardous air pollutant (HAPs)
emissions determination documentation including revised emission
source information to the Division of Air Quality (DAQ) indicating
that no maximum achievable control technology (MACT) or MACT-like
requirements apply because Cliffside Unit 6 has been demonstrated
to be a minor source of HAPs. On October 24, 2008, Duke Energy
Carolinas filed to amend its air permit to include emission limits
to assure the public of the minor source status of Cliffside Unit
6. After issuing a draft permit and holding public hearings on that
draft permit in January 2009, the DAQ issued the revised permit on
March 13, 2009, finding that Cliffside Unit 6 is a minor
source of HAPs and imposing operating conditions to assure that
emissions stay below the major source threshold. In May 2009, four
contested case petitions were filed appealing the March 13,
2009 final air permit. The North Carolina DAQ has moved to
consolidate all four cases with each other and with the four
consolidated cases filed in 2008. Once consolidated, the same
schedule will govern all eight cases. The four new cases have not
yet been consolidated.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Dan River Steam Station and Buck
Steam Station.</b> On June 29, 2007, Duke Energy Carolinas
filed with the NCUC preliminary CPCN information to construct a 620
MW combined cycle natural gas-fired generating facility at its
existing Dan River Steam Station, as well as updated preliminary
CPCN information to construct a 620 MW combined cycle natural
gas-fired generating facility at its existing Buck Steam Station.
On December 14, 2007, Duke Energy Carolinas filed CPCN
applications for the two combined cycle facilities. The NCUC
consolidated its consideration of the two CPCN applications and
held an evidentiary hearing on the applications on March 11,
2008. The NCUC issued its order approving the CPCN applications for
the Buck and Dan River combined cycle projects on June 5,
2008. On May 5, 2008, Duke Energy Carolinas entered into an
engineering, construction and commissioning services agreement for
the Buck combined cycle project, valued at approximately $275
million, with Shaw North Carolina, Inc. On November 5, 2008,
Duke Energy Carolinas notified the NCUC that since the issuance of
the CPCN Order, recent economic factors have caused increased
uncertainty with regard to forecasted load and near-term capital
expenditures, which has resulted in a modification of the
construction schedule. Under the revised schedule, the Buck Project
is expected to be delayed for a period of up to one year and is
currently anticipated to begin operation in simple cycle mode in
the summer of 2011 and convert to combined cycle mode in the summer
of 2012. The Dan River Project is expected to begin operation in
combined cycle mode in 2012 as originally planned, but without a
phased-in simple cycle commercial operation.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On October 15, 2008, the DAQ
issued a final construction permit authorizing construction of the
Buck combined cycle natural gas-fired generating units.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Edwardsport Integrated Gasification
Combined Cycle Plant.</b> On September 7, 2006, Duke Energy
Indiana and Southern Indiana Gas and Electric Company d/b/a Vectren
Energy Delivery of Indiana (Vectren) filed a joint petition with
the IURC seeking a CPCN</font> <font face="ARIAL" size="1">for
the construction of a 630 MW IGCC power plant at Duke Energy
Indiana’s Edwardsport Generating Station in Knox County,
Indiana. The facility was initially estimated to cost approximately
$2 billion (including approximately $120 million of AFUDC). In
August 2007, Vectren formally withdrew its participation in the
IGCC plant and a hearing was conducted on the CPCN petition based
on Duke Energy Indiana owning 100% of the project. On
November 20, 2007, the IURC issued an order granting Duke
Energy Indiana a CPCN for the proposed IGCC Project, approved the
cost estimate of $1.985 billion and approved the timely recovery of
costs related to the project. On January 25, 2008, Duke Energy
Indiana received the final air permit from the Indiana Department
of Environmental Management. The CAC, Sierra Club, Save the Valley,
Inc. and Valley Watch, Inc. have appealed the air
permit.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On May 1, 2008, Duke Energy
Indiana filed its first semi-annual IGCC Rider and ongoing review
proceeding with the IURC as required under the CPCN Order issued by
the IURC in November 2007, which approved the IGCC Project. In its
filing, Duke Energy Indiana requested approval of a new cost
estimate for the IGCC Project of $2.35 billion (including
approximately $125 million of AFUDC) and for approval of plans to
study carbon capture as required by the IURC’s November 2007
CPCN Order. An evidentiary hearing was conducted on August 25,
2008. On January 7, 2009, the IURC approved Duke Energy
Indiana’s request, including the new cost estimate of $2.35
billion, and cost recovery associated with a study on carbon
capture. Duke Energy Indiana was also required to file its plans
for studying carbon storage related to the project within 60 days
of the order. The OUCC filed a motion of clarification of this
order concerning a ratemaking issue related to deferred taxes. The
order was not otherwise appealed. The IURC denied the OUCC’s
motion on April 1, 2009. On November 3, 2008, Duke Energy
Indiana filed its second semi-annual IGCC Rider and ongoing review
proceeding with the IURC and an evidentiary hearing with the IURC
was held on March 9, 2009. On May 13, 2009, the IURC
approved Duke Energy Indiana’s request in full. On
May 1, 2009, Duke Energy Indiana filed its third semi-annual
IGCC Rider and ongoing review proceeding with the IURC and an
evidentiary hearing is scheduled for August 26,
2009.</font></p>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 4px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy Indiana filed a petition
with the IURC requesting approval of its plans for studying carbon
storage, sequestration and/or enhanced oil recovery (EOR) for the
CO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">2</sub>
from the Edwardsport IGCC facility on March 6, 2009. On
July 7, 2009, Duke Energy Indiana filed its case-in-chief
testimony requesting approval for cost recovery of a $121 million
site assessment and characterization plan for CO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">2</sub>
sequestration options including deep saline sequestration, depleted
oil and gas sequestration and enhanced oil recovery for the
CO<sub style=
"VERTICAL-ALIGN: baseline; POSITION: relative; TOP: 0.4ex">2</sub>
from the Edwardsport IGCC facility. An evidentiary hearing is
scheduled to begin October 13, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Under the Edwardsport IGCC CPCN order
and statutory provisions, Duke Energy Indiana is entitled to
recover the costs reasonably incurred in reliance on the CPCN
Order. Duke Energy Indiana has begun construction on the
Edwardsport IGCC plant and entered into a $200 million engineering,
procurement and construction management agreement with Bechtel
Power Corporation in December 2008 in connection with the
construction of the plant.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Federal Advanced Clean Coal Tax
Credits.</b> Duke Energy has been awarded approximately $125
million of federal advanced clean coal tax credits associated with
its construction of Cliffside Unit 6 and approximately $134 million
of federal advanced clean coal tax credits associated with its
construction of the Edwardsport IGCC plant. In March 2008, two
environmental groups, Appalachian Voices and the Canary Coalition,
filed suit against the Federal government challenging the tax
credits awarded to incentivize certain clean coal projects.
Although Duke Energy was not a party to the case, the allegations
center on the tax incentives provided for Duke Energy’s
Cliffside project. The initial complaint alleged a failure to
comply with the National Environmental Policy Act. The first
amended complaint, filed in August, 2008, added an Endangered
Species Act claim and also sought declaratory and injunctive relief
against the U.S. Department of Energy and the U.S. Department of
the Treasury. On November 10, 2008, the District Court
dismissed the case, finding that plaintiffs lacked standing to
pursue their claims. The plaintiff’s motion for
reconsideration of the ruling remains pending.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="1"><b>Other U.S. Franchised Electric and Gas
Matters.</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Ohio Riser Leak Investigation.</b>
In April 2005, the PUCO issued an order opening a statewide
investigation into riser leaks in gas pipeline systems throughout
Ohio. The investigation followed four explosions since 2000 caused
by gas riser leaks, including an April 2000 explosion in Duke
Energy Ohio’s service area. In November 2006, the PUCO Staff
released the expert report, which concluded that certain types of
risers are prone to leaks under various conditions, including
over-tightening during initial installation. The PUCO Staff
recommended that natural gas companies continue to monitor the
situation and study the cause of any further riser leaks to
determine whether further remedial action is warranted. As of
January 1, 2009, Duke Energy Ohio had approximately 80,000 of
these risers on its distribution system. If the PUCO orders natural
gas companies to replace all of these risers, Duke Energy Ohio
estimates a replacement cost of approximately $40 million. As part
of the rate case filed in July 2007 (see “Duke Energy Ohio
Gas Rate Case” above), Duke</font> <font face="ARIAL" size=
"1">Energy Ohio requested approval from the PUCO to accelerate its
riser replacement program. The riser replacement program is
contained in the settlement approved by the PUCO and is expected to
be completed at the end of 2012.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>City of Orangeburg, South Carolina
Wholesale Sales.</b> On June 28, 2008, Duke Energy Carolinas
filed notice with the NCUC that it intends to sell electricity to
the City of Orangeburg, South Carolina (City of Orangeburg), a
wholesale customer, at native load priority. Duke Energy Carolinas
and the City of Orangeburg also filed a joint petition asking the
NCUC to declare that the City of Orangeburg contract and all future
Duke Energy Carolinas native load priority wholesale contracts will
be treated for ratemaking and reporting purposes in the same manner
as such existing wholesale contracts (<i>i.e.</i>, revenues from
those contracts will be allocated to wholesale jurisdiction and
costs will be allocated to wholesale jurisdiction based on system
average costs). On March 30, 2009, the NCUC issued its Order
in which it concluded that Duke Energy Carolinas can proceed with
the City of Orangeburg contract at its own risk; however, Duke
Energy Carolinas cannot treat the City of Orangeburg’s load
as Duke Energy Carolinas native load. Further, the NCUC concluded
that based on the evidence presented, a future Commission should
allocate costs based upon incremental costs in any future
ratemaking case. The NCUC distinguished the City of Orangeburg from
wholesale customers that have been historically served by Duke
Energy Carolinas because the City of Orangeburg has not shared in
the costs of Duke Energy Carolinas’ existing system. In April
2009, the City of Orangeburg terminated its contract with Duke
Energy Carolinas and informed Duke Energy Carolinas that it will
continue to take service from South Carolina Electric and Gas
Company through the end of 2010. On April 29, 2009, Duke
Energy Carolinas and the City of Orangeburg filed a Notice of
Appeal with the North Carolina Court of Appeals. Additionally, on
July 2, 2009, the City of Orangeburg filed a Petition for
Declaratory Order with the FERC seeking relief from the NCUC Order
on various grounds, including violation of the Public Utility
Regulatory Policies Act voluntary coordination provisions and
federal preemption.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy Carolinas has also filed
advance notices of its intent to serve additional wholesale
customers; namely, the City of Greenwood, South Carolina and
Haywood Electric Membership Corp., at native load priority. Given
that these wholesale customers were historically served by Duke
Energy Carolinas for a portion of their load, Duke Energy Carolinas
will seek to distinguish these contracts from the Orangeburg
decision. On July 20, 2009, the NCUC issued an order
concluding that Duke Energy Carolinas can proceed with the
Greenwood purchased power agreement and that Greenwood’s load
may be treated the same as retail native load.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Indiana SmartGrid and
Distributed Renewable Generation Demonstration Project.</b> Duke
Energy Indiana filed a petition and case-in-chief testimony
supporting its request to build an intelligent distribution grid in
Indiana. The proposal requests approval of distribution formula
rates or, in the alternative, a SmartGrid Rider to recover the
return on and of the capital costs of the build-out and the
recovery of incremental operating and maintenance expenses and lost
revenues. The petition also includes a pilot program for the
installation of small solar photovoltaic and wind generation on
customer sites, for approximately $10 million over a three-year
period. Duke Energy Indiana filed supplemental testimony in January
2009 to reflect the impacts of new favorable tax treatment on the
cost/benefit analysis for SmartGrid. The intervenors filed
testimony generally supporting SmartGrid, but claiming that Duke
Energy Indiana’s plan was too fast and too large, with not
enough customer benefits in terms of time differentiated rate
options and behind the meter energy management systems. The
intervenors also opposed the distribution formula rate and the
rider request claiming that costs should be recovered in a rate
case, or possibly deferred. Duke Energy Indiana filed rebuttal
testimony agreeing to slow its deployment, and agreeing to work
with the parties collaboratively to design time differentiated rate
and energy management system pilots. On June 4, 2009, Duke
Energy Indiana filed with the IURC a settlement agreement with the
OUCC, the CAC, Nucor Corporation, and the Duke Energy Indiana
Industrial Group which provided for a full deployment of Duke
Energy Indiana’s SmartGrid initiative at a slower pace,
including cost recovery through a tracking mechanism. The
settlement also included increased reporting and monitoring
requirements, approval of Duke Energy Indiana’s renewable
distributed generation pilot and the creation of a collaborative
design to initiate several time differentiated pricing pilots, an
electric vehicle pilot and a home area network pilot. Additionally,
the settlement agreement provided for tracker recovery of the costs
associated with the SmartGrid initiative, subject to cost recovery
caps and a termination date for the tracker. The tracker will also
include a reduction in costs associated with the adoption of a new
depreciation study. An evidentiary hearing was held on
June 29, 2009 and an order from the IURC is expected in the
third or fourth quarter of 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Duke Energy Ohio SmartGrid.</b> Duke
Energy Ohio filed an application on June 30, 2009 to establish
rates for recovering its SmartGrid net costs incurred for gas and
electric distribution service through the end of 2008. The rider
for recovering electric SmartGrid costs was approved by the PUCO in
its order approving the ESP, as discussed above. Duke Energy Ohio
proposed its gas SmartGrid rider as part of its most recent gas
distribution rate case. The PUCO Staff has begun its audit of the
filing but no procedural schedule has been established. Approval of
the rider is expected in the fourth quarter of
2009.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Gibson Unit 4 Outage.</b> In a 2008
fuel clause proceeding, the IURC granted a motion by the Industrial
Group and Nucor Corporation to establish a subdocket to examine
whether imprudence in Duke Energy Indiana’s maintenance
practices led to a forced outage at Gibson Station Unit 4 during
January-March 2008. The outage contributed to notably higher fuel
and purchased power costs during the outage. A hearing on this
subdocket proceeding was held in January 2009. The IURC authorized
Duke Energy Indiana to collect through rates the costs for which it
sought recovery in the subdocket proceeding subject to refund
(similar to prior subdockets) pending the outcome of this new
subdocket related to maintenance practices for Gibson Station Unit
4. An order is expected from the IURC in the third quarter of
2009.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="1"><b>Commercial Power.</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As discussed in Note 1, effective
December 17, 2008, Commercial Power reapplied the provisions
of SFAS No. 71 to certain portions of its operations due to
the passing of SB 221 and the PUCO’s approval of the ESP.
However, since certain portions of Commercial Power’s
operations are not subject to regulatory accounting pursuant to
SFAS No. 71, reported results for Commercial Power are subject
to volatility due to the over- or under-collection of certain costs
for which recovery is not automatic under the ESP. Commercial
Power may be impacted by certain of the regulatory matters
discussed above, including the Duke Energy Ohio electric rate
filings.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>FERC 203 Application.</b> On
April 23, 2008 (supplemented on May 6, 2008), Duke Energy
Ohio and certain affiliates filed an application with the FERC
requesting approval to transfer Duke Energy Ohio’s electric
generating facilities, some of which are designated to serve Ohio
customers, to affiliate companies. The FERC filing, if approved,
does not obligate Duke Energy to make the transfer of the electric
generating facilities, and does not impact Duke Energy Ohio’s
current rates. As part of the settlement that was approved by the
PUCO on December 17, 2008 (see discussion above). Duke Energy
Ohio agreed to withdraw that portion of its application for
approval related to the transfer of its generating facilities
designated to serve Ohio customers and the PUCO approved of the
transfer for the remaining generating facilities. Duke Energy Ohio
filed a new application requesting FERC approval to transfer to
affiliate companies only the remaining generating facilities not
designated to serve Ohio customers, which was conditionally
approved by the FERC on February 19, 2009.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p>
<font size="1"> </font>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Other Matters.</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Pioneer Transmission LLC Joint
Venture.</b> On August 8, 2008, Duke Energy announced the
formation of a 50-50 joint venture, called Pioneer Transmission LLC
(Pioneer Transmission), with American Electric Power Company, Inc.
(AEP) to build and operate 240 miles of extra-high-voltage 765KV
transmission lines and related facilities in Indiana. Pioneer
Transmission will be regulated by the FERC and the IURC. Both Duke
Energy and AEP own an equal interest in the joint venture and will
share equally in the project costs, which are currently estimated
at approximately $1 billion, of which approximately $500 million is
anticipated to be financed by Pioneer Transmission and the
remaining amount split equally between Duke Energy and AEP. The
joint venture will operate in Indiana as a transmission utility.
The earliest possible in-service date for the project is in 2014 or
2015. On March 27, 2009, the FERC issued an order granting
favorable rate treatment for the project, including requested rate
incentives. As is customary in formula rate cases, the FERC set the
formula rate that transmission customers would pay for hearing and
settlement procedures to address various challenges by intervenors
to the inputs and calculations underlying the formula
rate.</font></p>
</div>
729000000
6225000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>15. Guarantees and Indemnifications</b></font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy and its subsidiaries have
various financial and performance guarantees and indemnifications
which are issued in the normal course of business. As discussed
below, these contracts include performance guarantees, stand-by
letters of credit, debt guarantees, surety bonds and
indemnifications. Duke Energy and its subsidiaries enter into these
arrangements to facilitate commercial transactions with third
parties by enhancing the value of the transaction to the third
party.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">On January 2, 2007, Duke Energy
completed the spin-off of its natural gas businesses to
shareholders. Guarantees that were issued by Duke Energy, Cinergy,
or International Energy, or were assigned to Duke Energy prior to
the spin-off remained with Duke Energy subsequent to the spin-off.
Guarantees issued by Spectra Energy Capital, LLC (Spectra Capital)
or its affiliates prior to the spin-off remained with Spectra
Capital subsequent to the spin-off, except for certain guarantees
that are in the process of being assigned to Duke Energy. During
this assignment period, Duke Energy has indemnified Spectra Capital
against any losses incurred under these guarantee obligations. The
maximum potential amount of future payments associated with the
guarantees issued by Spectra Capital is approximately $320
million.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy has issued performance
guarantees to customers and other third parties that guarantee the
payment and performance of other parties, including certain
non-wholly-owned entities, as well as guarantees of debt of certain
non-consolidated entities and less than wholly-owned consolidated
entities. If such entities were to default on payments or
performance, Duke Energy would be required under the guarantees to
make payments on the obligations of the less than wholly-owned
entity. The maximum potential amount of future payments Duke Energy
could have been required to make under these guarantees as of
June 30, 2009 was approximately $459 million. Of this amount,
approximately $212 million relates to guarantees issued on behalf
of less than wholly-owned consolidated entities, with the remainder
related to guarantees issued on behalf of third parties and
unconsolidated affiliates of Duke Energy. Approximately $156
million of the guarantees expire between 2010 and 2019, with the
remaining performance guarantees having no contractual
expiration.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Included in the maximum potential
amount of future payments discussed above is approximately $63
million of maximum potential amounts of future payments associated
with guarantees issued to customers or other third parties related
to the payment or performance obligations of certain entities that
were previously wholly owned by Duke Energy but which have been
sold to third parties, such as DukeSolutions, Inc. (DukeSolutions)
and Duke Engineering & Services, Inc. (DE&S). These
guarantees are primarily related to payment of lease obligations,
debt obligations, and performance guarantees related to provision
of goods and services. Duke Energy has received back-to-back
indemnification from the buyer of DE&S indemnifying Duke Energy
for any amounts paid related to the DE&S guarantees. Duke
Energy also received indemnification from the buyer of
DukeSolutions for the first $2.5 million paid by Duke Energy
related to the DukeSolutions guarantees. Further, Duke Energy
granted indemnification to the buyer of DukeSolutions with respect
to losses arising under some energy services agreements retained by
DukeSolutions after the sale, provided that the buyer agreed to
bear 100% of the performance risk and 50% of any other risk up to
an aggregate maximum of $2.5 million (less any amounts paid by the
buyer under the indemnity discussed above). Additionally, for
certain performance guarantees, Duke Energy has recourse to
subcontractors involved in providing services to a customer. These
guarantees have various terms ranging from 2009 to 2019, with
others having no specific term.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy has guaranteed certain
issuers of surety bonds, obligating itself to make payment upon the
failure of a non-wholly-owned entity to honor its obligations to a
third party, as well as used bank-issued stand-by letters of credit
to secure the performance of</font> <font size="1" face=
"ARIAL">non-wholly-owned entities to a third party or customer.
Under these arrangements, Duke Energy has payment obligations which
are triggered by a draw by the third party or customer due to the
failure of the non-wholly-owned entity to perform according to the
terms of its underlying contract. Substantially all of guarantees
issued by Duke Energy relate to projects at Crescent, which filed
Chapter 11 petitions in a U.S. Bankruptcy Court in June 2009.
During the first quarter of 2009, Duke Energy determined that it
was probable under SFAS No. 5 that it will be required to
perform under certain of these guarantee obligations and recorded a
charge of approximately $33 million associated with these
obligations. At the time the charge was recorded, the face value of
the guarantees was approximately $70 million, which has since been
reduced to approximately $50 million as of June 30, 2009 as
Crescent continues to complete some of its obligations under these
guarantees.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">Duke Energy has entered into various
indemnification agreements related to purchase and sale agreements
and other types of contractual agreements with vendors and other
third parties. These agreements typically cover environmental, tax,
litigation and other matters, as well as breaches of
representations, warranties and covenants. Typically, claims may be
made by third parties for various periods of time, depending on the
nature of the claim. Duke Energy’s potential exposure under
these indemnification agreements can range from a specified amount,
such as the purchase price, to an unlimited dollar amount,
depending on the nature of the claim and the particular
transaction. Duke Energy is unable to estimate the total potential
amount of future payments under these indemnification agreements
due to several factors, such as the unlimited exposure under
certain guarantees.</font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">At June 30, 2009, the amounts
recorded on the Consolidated Balance Sheets for the guarantees and
indemnifications mentioned above, including performance guarantees
associated with projects at Crescent for which it is probable that
Duke Energy will be required to perform, is approximately $33
million. This amount is primarily recorded in Other within Deferred
Credits and Other Liabilities on the Consolidated Balance
Sheets.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>18. New Accounting Standards</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following new accounting standards
were adopted by Duke Energy subsequent to June 30, 2008 and
the impact of such adoption, if applicable, has been presented in
the accompanying Consolidated Financial Statements:</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>SFAS No. 141R.</i> In December
2007, the FASB issued SFAS No. 141R, which replaces SFAS
No. 141, “<i>Business Combinations</i>.” SFAS
No. 141R retains the fundamental requirements in SFAS
No. 141 that the acquisition method of accounting be used for
all business combinations and that an acquirer be identified for
each business combination. This statement also establishes
principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any noncontrolling (minority)
interests in an acquiree, and any goodwill acquired in a business
combination or gain recognized from a bargain purchase. For Duke
Energy, SFAS No. 141R must be applied prospectively to
business combinations for which the acquisition date occurs on or
after January 1, 2009. The impact to Duke Energy of applying
SFAS No. 141R for periods subsequent to implementation will be
dependent upon the nature of any transactions within the scope of
SFAS No. 141R. SFAS No. 141R changes the accounting for
income taxes related to prior business combinations, such as Duke
Energy’s merger with Cinergy. Subsequent to the effective
date of SFAS No. 141R, the resolution of any tax contingencies
relating to Cinergy that existed as of the date of the merger will
be required to be reflected in the Consolidated Statements of
Operations instead of being reflected as an adjustment to the
purchase price via an adjustment to goodwill.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial
Statements—an amendment of Accounting Research Bulletin (ARB)
No. 51” (SFAS No. 160).</i> In December 2007, the
FASB issued SFAS No. 160, which amends ARB No. 51,
“<i>Consolidated Financial Statements</i>,” to
establish accounting and reporting standards for the noncontrolling
(minority) interest in a subsidiary and for the deconsolidation of
a subsidiary. SFAS No. 160 clarified that a noncontrolling
interest in a subsidiary is an ownership interest in a consolidated
entity that should be reported as equity in the consolidated
financial statements. This statement also changed the way the
consolidated income statement is presented by requiring
consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling
interest. In addition, SFAS No. 160 established a single
method of accounting for changes in a parent’s ownership
interest in a subsidiary that do not result in deconsolidation. For
Duke Energy, SFAS No. 160 was effective as
of</font> <font face="ARIAL" size="1">January 1, 2009,
and has been applied prospectively, except for certain presentation
and disclosure requirements that were applied retrospectively. The
adoption of SFAS No. 160 impacted the presentation of
noncontrolling interests in Duke Energy’s Consolidated
Financial Statements, as well as the calculation of Duke
Energy’s effective tax rate.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>SFAS No. 161,
“Disclosures about Derivative Instruments and Hedging
Activities—an amendment to FASB Statement No. 133”
(SFAS No. 161).</i> In March 2008, the FASB issued SFAS
No. 161, which amends and expands the disclosure requirements
for derivative instruments and hedging activities prescribed by
SFAS No. 133, “<i>Accounting for Derivative Instruments
and Hedging Activities</i>.” SFAS No. 161 requires
qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of
and gains and losses on derivative instruments, and disclosures
about credit-risk-related contingent features in derivative
agreements. Duke Energy adopted SFAS No. 161 as of
January 1, 2009. The adoption of SFAS No. 161 did not
have any impact on Duke Energy’s consolidated results of
operations, cash flows or financial position. See Note 12 for the
disclosures required under SFAS No. 161.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>FSP No. APB 14-1, “Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)” (FSP APB
14-1).</i> In May 2008, the FASB issued FSP APB 14-1, which
addressed the accounting for convertible debt securities that, upon
conversion, may be settled by the issuer fully or partially in
cash. FSP APB 14-1 does not change the accounting for more
traditional types of convertible debt securities that do not have a
cash settlement feature and FSP APB 14-1 does not apply if, under
existing GAAP for derivatives, the embedded conversion feature must
be accounted for separately from the rest of the instrument. For
Duke Energy, FSP APB 14-1 was applicable as of January 1, 2009
and must be applied retrospectively to all prior periods presented,
even if the instrument has matured, has been converted, or has
otherwise been extinguished as of the effective date of FSP APB
14-1. Since FSP APB 14-1 did not change the accounting for
Duke Energy’s 2003 issuance of $770 million of convertible
debt that was fully converted to common stock during the years
ended December 31, 2005, 2006 and 2007, the adoption of FSP
APB 14-1 did not have any impact on Duke Energy’s historical
financial statements. Future impacts of FSP APB 14-1 will be
determined by whether Duke Energy issues convertible debt with cash
settlement options.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>FSP No. EITF 03-6-1.</i> See Note 4
for a discussion of Duke Energy’s adoption of FSP No. EITF
03-6-1.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following new accounting standards
have been issued, but have not yet been adopted by Duke Energy as
of June 30, 2009:</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>FSP No. FAS 132(R)-1,
“Employers’ Disclosure about Postretirement Benefit
Plan Assets” (FSP FAS 132(R)-1).</i> In December 2008, the
FASB issued FSP FAS 132(R)-1, which amends SFAS No. 132(R) to
require more detailed disclosures about employers’ plan
assets, concentrations of risk within plan assets, and valuation
techniques used to measure the fair value of plan assets.
Additionally, companies will be required to disclose their pension
assets in a fashion consistent with SFAS No. 157 (i.e., Level
1, 2, and 3 of the fair value hierarchy) along with a roll-forward
of the Level 3 values each year. For Duke Energy, FSP FAS 132(R)-1
is effective for Duke Energy’s Form 10-K for the year ended
December 31, 2009. The adoption of FSP FAS 132(R)-1 will not
have any impact on Duke Energy’s results of operations, cash
flows or financial position.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>SFAS No. 166, “Accounting
for Transfers of Financial Assets–an amendment of FASB
Statement No. 140” (SFAS No. 166)</i>. In June
2009, the FASB issued SFAS No. 166, which revises SFAS
No. 140, “<i>Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities</i>”
(SFAS No. 140), to require additional information about
transfers of financial assets, including securitization
transactions, as well as additional information about an
enterprise’s continuing exposure to the risks related to
transferred financial assets. SFAS No. 166 also eliminates the
concept of a qualifying special-purpose entity (QSPE) and requires
those entities, which were not subject to consolidation under SFAS
No. 140 and FASB Interpretation No. 46R,
“<i>Consolidation of Variable Interest Entities</i>”
(FIN No. 46R), to now be assessed for consolidation. In
addition, this statement clarifies and amends the derecognition
criteria for transfers of financial assets (including transfers of
portions of financial assets) and requires additional disclosures
about a transferor’s continuing involvement in transferred
financial assets. For Duke Energy, SFAS No. 166 is effective
prospectively for transfers of financial assets occurring on or
after January 1, 2010, and early adoption of this statement is
prohibited. As described further in Note 20, since 2002, Duke
Energy Ohio, Duke Energy Indiana, and Duke Energy Kentucky have
sold, on a revolving basis, nearly all of their accounts receivable
and related collections through Cinergy Receivables Company
(Cinergy Receivables), a bankruptcy-remote QSPE. The securitization
transaction was structured to meet the criteria for sale accounting
treatment under SFAS No. 140, and accordingly, Duke Energy has
not consolidated Cinergy Receivables, and the transfers have been
accounted for as sales. Upon adoption of SFAS No. 166, the
accounting treatment and/or financial statement presentation of
Duke Energy’s accounts receivable securitization programs
could potentially be impacted, as Cinergy Receivables must be
assessed for consolidation and any transfers of accounts
receivables on or after the effective</font> <font face=
"ARIAL" size="1">date of SFAS No. 166 would be subject to that
statement’s amended derecognition criteria for financial
assets. Duke Energy is currently evaluating the potential impact of
the adoption of SFAS No. 166, and is unable to estimate at
this time the impact of SFAS No. 166 on its consolidated
results of operations, cash flows or financial position.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>SFAS No. 167, “Amendments
to FASB Interpretation No. 46R” (SFAS No. 167).</i>
In June 2009, the FASB issued SFAS No. 167, which amends FIN
No. 46R to eliminate the exemption from consolidation for
QSPEs, and clarifies, but does not significantly change, the
criteria for determining whether an entity meets the definition of
a variable interest entity (VIE). SFAS No. 167 also requires
an enterprise to qualitatively assess the determination of the
primary beneficiary of a VIE based on whether that enterprise has
both the power to direct matters that most significantly impact the
activities of a VIE and the obligation to absorb losses or the
right to receive benefits of a VIE that could potentially be
significant to a VIE. In addition, SFAS No. 167 modifies FIN
No. 46R to require an ongoing evaluation of a VIE’s
primary beneficiary and amends the types of events that trigger a
reassessment of whether an entity is a VIE. Furthermore, SFAS
No. 167 requires enterprises to provide additional disclosures
about their involvement with VIEs and any significant changes in
their risk exposure due to that involvement. For Duke Energy, SFAS
No. 167 is effective beginning on January 1, 2010, and is
applicable to all entities in which Duke Energy is involved with,
including entities previously subject to the provisions of FIN
No. 46R, as well as any QSPEs that exist as of the effective
date. Early adoption of SFAS No. 167 is prohibited. Duke
Energy is currently evaluating the potential impact of the adoption
of SFAS No. 167, and is unable to estimate at this time the
impact of SFAS No. 167 on its consolidated results of
operations, cash flows or financial position.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><i>SFAS No. 168, “The FASB
Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles”</i> (SFAS No. 168). In
June 2009, the FASB issued SFAS No. 168, which identifies the
sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with
GAAP. Rules and interpretive releases of the Securities and
Exchange Commission (SEC) under authority of federal securities
laws are also sources of authoritative GAAP. On the effective date
of SFAS No. 168, which is for financial statements issued for
interim and annual periods ending after September 15, 2009,
the Codification will supersede all then-existing non-SEC
accounting and reporting standards. Once the Codification is in
effect, all of its content will carry the same level of authority,
thus superseding SFAS No. 162, <i>“The Hierarchy of
Generally Accepted Accounting Principles,”</i> and the GAAP
hierarchy will include only two levels of GAAP: authoritative and
non-authoritative. While the adoption of SFAS No. 168 will not
have an impact on the accounting followed in Duke Energy’s
consolidated financial statements, SFAS No. 168 will impact
the references to authoritative and non-authoritative accounting
literature contained within the Notes.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size="2" face=
"ARIAL"><b>22. Subsequent Events</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; TEXT-INDENT: 3%; MARGIN-BOTTOM: 0px">
<font size="1" face="ARIAL">For information on subsequent events
related to regulatory matters, commitments and contingencies and
variable interest entities, see Notes 13, 14 and 20, respectively.
Management has evaluated these Unaudited Consolidated Financial
Statements and Notes for subsequent events up through
August 7, 2009, which is the date of filing of the Unaudited
Consolidated Financial Statements with the SEC.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>20. Variable Interest Entities</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Accounts Receivable Securitization</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Cinergy Receivables
Company</b><i>.</i> During 2002, Duke Energy Ohio, Duke Energy
Indiana and Duke Energy Kentucky entered into an agreement to sell
certain of their accounts receivable and related collections
through Cinergy Receivables, a bankruptcy-remote, QSPE. Cinergy
Receivables is a wholly-owned limited liability company of Cinergy
and was formed in 2002 through a $5 million equity contribution by
Cinergy to purchase certain accounts receivable of Duke Energy
Ohio, Duke Energy Indiana and Duke Energy Kentucky. The purpose of
the formation of Cinergy Receivables was to improve liquidity at
the lowest possible financing cost. As a result of the
securitization, Duke Energy Ohio, Duke Energy Indiana and Duke
Energy Kentucky sell, on a revolving basis, nearly all of their
retail accounts receivable and related collections. The
securitization transaction was structured to meet the criteria for
sale treatment under SFAS No. 140 and, accordingly, Duke
Energy does not consolidate Cinergy Receivables and the transfers
of receivables are accounted for as sales. Duke Energy accounts for
Cinergy Receivables under the equity method of accounting and all
of the earnings or losses of Cinergy Receivables are therefore
reflected in Duke Energy’s consolidated earnings. However, as
discussed further in Note 18, the accounting treatment and/or the
financial statement presentation of Cinergy Receivables could
potentially be impacted by the adoption of SFAS No. 166 and
SFAS No. 167 on January 1, 2010.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The proceeds obtained from the sales of
receivables are largely cash but do include a subordinated note
from Cinergy Receivables for a portion of the purchase price
(typically approximates 25% of the total proceeds). The note, which
amounts to approximately $286 million and $292 million at
June 30, 2009 and December 31, 2008, respectively, is
subordinate to senior loans that Cinergy Receivables obtains from
commercial paper conduits controlled by unrelated financial
institutions. Cinergy Receivables provides credit enhancement
related to senior loans in the form of over-collateralization of
the purchased receivables. However, the over-collateralization is
calculated monthly and does not extend to the entire pool of
receivables held by Cinergy Receivables at any point in time. As
such, these senior loans do not have recourse to all assets of
Cinergy Receivables. These loans provide the cash portion of the
proceeds paid to Duke Energy Ohio, Duke Energy Indiana and Duke
Energy Kentucky.</font><font size="1"> </font><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">This subordinated note is a retained
interest (right to receive a specified portion of cash flows from
the sold assets) under SFAS No. 140 and is classified within
Receivables in the accompanying Consolidated Balance Sheets at
June 30, 2009 and December 31, 2008. In addition, Duke
Energy’s investment in Cinergy Receivables constitutes a
purchased beneficial interest (purchased right to receive specified
cash flows, in this case residual cash flows), which is subordinate
to the retained interests held by Duke Energy Ohio, Duke Energy
Indiana and Duke Energy Kentucky.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In 2008, Cinergy Receivables and Duke
Energy Ohio, Duke Energy Kentucky and Duke Energy Indiana amended
the governing purchase and sale agreement to allow Cinergy
Receivables to convey its bankrupt receivables to the applicable
originator for consideration equal to the fair market value of such
receivables as of the disposition date. The amount of bankrupt
receivables sold is limited to 1% of aggregate sales of the
originator during the most recently completed 12 month period.
Cinergy Receivables and Duke Energy Ohio, Duke Energy Kentucky and
Duke Energy Indiana completed a sale under this amendment in
2008.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Per the governing purchase and sale
agreement, Cinergy Receivables is required to maintain a minimum
net worth of $3 million. In December 2008, Cinergy Receivables
recorded a $15 million increase in its provision for uncollectible
accounts which reduced its net worth below the $3 million
threshold. During the first quarter of 2009, Cinergy infused
approximately $3.5 million of equity into Cinergy Receivables to
remedy the net worth deficiency. In June 2009, Cinergy Receivables
recorded a $5 million increase in its provision for uncollectible
accounts which reduced its net worth below the $3 million
threshold. During July 2009, Cinergy infused $7 million of equity
into Cinergy Receivables to remedy the net worth deficiency. The
greater amount of receivables in arrears is partially attributable
to the economic downturn starting in 2008 having a negative impact
on customers’ ability to pay their utility bills. Cinergy
Receivables, Duke Energy Ohio, Duke Energy Kentucky and Duke Energy
Indiana will continue to monitor arrearages to determine whether an
other-than-temporary impairment has occurred.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy Ohio retains servicing
responsibilities for its role as a collection agent on the amounts
due on the sold receivables. However, Cinergy Receivables assumes
the risk of collection on the purchased receivables without
recourse to Duke Energy Ohio, Duke Energy Indiana and Duke Energy
Kentucky in the event of a loss. While no direct recourse to Duke
Energy Ohio, Duke Energy Indiana and Duke Energy Kentucky exists,
these entities risk loss in the event collections are not
sufficient to allow for full recovery of their retained interests.
No servicing asset or liability is recorded since the servicing fee
paid to Duke Energy Ohio approximates a market rate.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The carrying values of the retained
interests are determined by allocating the carrying value of the
receivables between the assets sold and the interests retained
based on relative fair value. The key assumptions used in
estimating the fair value for 2009 were an anticipated credit loss
ratio of 0.6%, a discount rate of 2.8% and a receivable turnover
rate of 11.6%. Because (a) the receivables generally turnover
in less than two months, (b) credit losses are reasonably
predictable due to the broad customer base and lack of significant
concentration, and (c) the purchased beneficial interest is
subordinate to all retained interests and thus would absorb losses
first, the allocated bases of the subordinated notes are not
materially different than their face value. The hypothetical effect
on the fair value of the retained interests assuming both a 10% and
a 20% unfavorable variation in credit losses or discount rates is
not material due to the short turnover of receivables and
historically low credit loss history. Interest accrues to Duke
Energy Ohio, Duke Energy Indiana and Duke Energy Kentucky on the
retained interests using the accretable yield method, which
generally approximates the stated rate on the notes since the
allocated basis and the face value are nearly equivalent. Duke
Energy records income from Cinergy Receivables in a similar manner.
An impairment charge would be recorded against the carrying value
of both the retained interests and purchased beneficial interest in
the event it is determined that an other-than-temporary impairment
has occurred.</font><font size="1"> </font><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following tables show the gross and
net receivables sold, retained interests, purchased beneficial
interest, sales, and cash flows during the three and six months
ended June 30, 2009:</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="84%"></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Three Months Ended</b></font><br />
<font face="ARIAL" size="1"><b>June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="2"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Receivables sold as of June 30,</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">585</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Less: Retained interests</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">286</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Net receivables sold as of
June 30,</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">299</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Purchased beneficial interest</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Sales</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Receivables sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,200</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Loss recognized on sale</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1"><b>Cash flows</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Cash proceeds from receivables sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,166</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Collection fees received</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Return received on retained interests</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="86%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Six Months Ended</b></font><br />
<font face="ARIAL" size="1"><b>June 30,</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>2009</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="2"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Sales</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Receivables sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,798</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Loss recognized on sale</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">22</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Cash flows</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Cash proceeds from receivables sold</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,781</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Collection fees received</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Return received on retained interests</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">14</font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Cash flows from the sale of receivables
are reflected within Operating Activities on the Consolidated
Statements of Cash Flows.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Collection fees received in connection
with the servicing of transferred accounts receivable are included
in Operation, maintenance and other on the Consolidated Statements
of Operations.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The loss recognized on the sale of
receivables is calculated monthly by multiplying the receivables
sold during the month by the required discount which is derived
monthly utilizing a three year weighted average formula that
considers charge-off history, late charge history, and turnover
history on the sold receivables, as well as a component for the
time value of money. The discount rate, or component for the time
value of money, is calculated monthly by summing the prior
month-end LIBOR rate plus a fixed rate of 2.39%.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>2. Business Segments</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy operates the following
business segments, which are all considered reportable business
segments under SFAS No. 131, “<i>Disclosures about
Segments of an Enterprise and Related Information</i>”: U.S.
Franchised Electric and Gas (which consists of the regulated
operations of Duke Energy Carolinas, LLC (Duke Energy Carolinas),
Duke Energy Indiana, Duke Energy Kentucky, and certain regulated
operations of Duke Energy Ohio), Commercial Power and International
Energy. Duke Energy’s chief operating decision maker
regularly reviews financial information about each of these
business units in deciding how to allocate resources and evaluate
performance. There is no aggregation within Duke Energy’s
reportable business segments.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The remainder of Duke Energy’s
operations is presented as Other. While it is not considered a
business segment, Other primarily includes certain unallocated
corporate costs, Bison Insurance Company Limited (Bison), Duke
Energy’s wholly-owned, captive insurance subsidiary, Duke
Energy’s effective 50% interest in the Crescent JV (Crescent)
and DukeNet Communications, LLC and related telecommunications
businesses. Additionally, Other includes the remaining portion of
the former Duke Energy North America (DENA) businesses that were
not disposed or transferred to Commercial Power, primarily Duke
Energy Trading and Marketing, LLC (DETM), which is 40% owned by
Exxon Mobil Corporation and 60% owned by Duke Energy and management
is currently in the process of winding down.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Duke Energy’s reportable segments
offer different products and services and are managed separately as
business units. Accounting policies for Duke Energy’s
segments are the same as those described in the Notes to the
Consolidated Financial Statements in Duke Energy’s Annual
Report on Form 10-K for the year ended December 31, 2008.
Management evaluates segment performance based on earnings before
interest and taxes from continuing operations, after deducting
expenses attributable to noncontrolling interests related to those
profits (EBIT). On a segment basis, EBIT excludes discontinued
operations, represents all profits from continuing operations (both
operating and non-operating) before deducting interest and taxes,
and is net of the expenses attributable to noncontrolling interests
related to those profits.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Cash, cash equivalents and short-term
investments are managed centrally by Duke Energy, so the associated
realized and unrealized gains and losses from foreign currency
transactions and interest and dividend income on those balances are
excluded from the segments’ EBIT.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Segment EBIT includes transactions
between reportable segments.</font><font size="1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Business Segment Data</b></font><font size=
"1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="44%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Unaffiliated<br />
Revenues</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Intersegment<br />
Revenues</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>Total<br />
Revenues</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Segment EBIT /<br />
Consolidated Income<br />
From Continuing<br />
Operations Before<br />
Income Taxes</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Depreciation and<br />
Amortization</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="17"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Three Months Ended June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">U.S. Franchised Electric and Gas</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,141</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,149</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">500</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">319</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Commercial Power</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">473</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">474</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">79</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">49</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">International Energy</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">271</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">271</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">68</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">19</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5.29em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total reportable segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,885</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">9</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,894</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">647</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">387</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">28</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">42</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(38</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">20</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Eliminations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(186</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest income and other<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">31</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Add back of noncontrolling interest component of
reportable segment and Other EBIT</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total consolidated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,913</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,913</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">461</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">407</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Three Months Ended June 30, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">U.S. Franchised Electric and Gas</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,396</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,402</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">503</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">333</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Commercial Power</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">479</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">481</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">235</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">42</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">International Energy</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">334</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">334</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">116</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">21</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5.29em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total reportable segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,209</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">8</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,217</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">854</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">396</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">20</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">15</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">35</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(189</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">22</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Eliminations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(23</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(194</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest income and other<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">29</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Add back of noncontrolling interest component of
reportable segment and Other EBIT</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total consolidated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,229</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,229</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">503</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">418</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Six Months Ended June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">U.S. Franchised Electric and Gas</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4,641</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">16</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4,657</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,057</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">641</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Commercial Power</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,008</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,011</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">193</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">104</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">International Energy</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">526</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">526</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">161</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">38</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5.29em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total reportable segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,175</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">19</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,194</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,411</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">783</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">50</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">28</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">78</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(128</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">38</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Eliminations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(47</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(47</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(370</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest income and other<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">58</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Add back of noncontrolling interest component of
reportable segment and Other EBIT</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">15</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total consolidated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,225</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,225</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">986</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">821</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="44%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
</tr>
<!-- 7 Split_Table * DO NOT REMOVE OR EDIT -->
<!-- 10 Repeat_Tbl_Hdr_Start * DO NOT REMOVE OR EDIT -->
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Unaffiliated<br />
Revenues</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Intersegment<br />
Revenues</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size="1"><b>Total<br />
Revenues</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Segment EBIT /<br />
Consolidated Income<br />
From Continuing<br />
Operations Before<br />
Income Taxes</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>Depreciation and<br />
Amortization</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="17"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<!-- 11 Repeat_Tbl_Hdr_End * DO NOT REMOVE OR EDIT -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Six Months Ended June 30, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">U.S. Franchised Electric and Gas</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">4,991</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">12</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">5,003</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,140</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">665</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Commercial Power</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">926</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">5</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">931</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">381</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">85</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">International Energy</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">623</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">623</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">230</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">42</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5.29em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total reportable segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,540</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">17</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,557</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,751</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">792</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">26</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">30</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">56</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(265</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">39</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Eliminations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(47</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(47</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">(376</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Interest income and other<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">72</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Add back of noncontrolling interest component of
reportable segment and Other EBIT</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">7</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total consolidated</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,566</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">6,566</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,189</font></td>
<td valign="bottom" nowrap="nowrap"><font face="ARIAL" size=
"1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">831</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: -6px"><font size=
"1"> </font></p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(a)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">Other
within Interest Income and Other includes foreign currency
transaction gains and losses and additional noncontrolling interest
amounts not allocated to the reportable segments and Other
results.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Segment assets in the following table
exclude all intercompany assets.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>Segment Assets</b></font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="82%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>June 30,<br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>December 31,<br />
2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="5"><font face="ARIAL"
size="1"><b>(in millions)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">U.S. Franchised Electric and Gas</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">40,542</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">39,556</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Commercial Power</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">7,582</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">7,467</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">International Energy</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,708</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">3,309</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total reportable segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">51,832</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">50,332</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,584</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2,605</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Reclassifications<sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(a)</sup></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">293</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1"> </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">140</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2.94em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Total consolidated assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">54,709</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">53,077</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="3%"><font face="ARIAL" size=
"1">(a)</font></td>
<td valign="top" align="left"><font face="ARIAL" size="1">Primarily
represents reclassification of federal tax balances in
consolidation.</font></td>
</tr>
</tbody>
</table>
</div>
305000000
353000000
898000000
1659000000
1285000000
1284000000
18000000
338000000
-130000000
986000000
917000000
38000000
27000000
-1000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>3. Acquisitions and Dispositions and Sales of Other
Assets</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Acquisitions.</b> In June 2009, Duke
Energy completed the purchase of the remaining 25% noncontrolling
interest in the Aguaytia Integrated Energy Project (Aguaytia),
located in Peru, for approximately $28 million. Subsequent to this
transaction, Duke Energy owns 100% of Aguaytia. As the carrying
value of the noncontrolling interest was approximately $42 million
at the date of acquisition, Duke Energy’s consolidated equity
increased approximately $14 million as a result of this
transaction. Cash paid for acquiring this additional ownership
interest is included in Distributions to minority interests within
Net cash provided by financing activities on the Consolidated
Statements of Cash Flows.</font></p>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 4px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In June 2009, Duke Energy acquired
North Allegheny Wind, LLC (North Allegheny) in Western Pennsylvania
for approximately $124 million, of which approximately $114 million
was paid on the transaction date, with the remaining $10 million
paid in July 2009. The fair value of the net assets acquired were
determined primarily using a discounted cash flow model as the
output of North Allegheny is contracted for 23 <font size=
"1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative"> 1</sup></font><font size="1">/</font><font size="1">2</font>
<font face="ARIAL" size="1">years under a fixed price purchased
power agreement. Substantially all of the fair value of the
acquired net assets has been attributed to property, plant and
equipment. There was no goodwill associated with this transaction.
North Allegheny owns 70 MW of power generating assets that are
expected to begin commercially generating electricity in the third
quarter of 2009.</font></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">On September 30, 2008, Duke Energy
completed the purchase of a portion of Saluda River Electric
Cooperative, Inc.’s (Saluda) ownership interest in the
Catawba Nuclear Station. Under the terms of the agreement, Duke
Energy paid approximately $150 million for the additional ownership
interest in the Catawba Nuclear Station. Following the closing of
the transaction, Duke Energy owns approximately 19% of the Catawba
Nuclear Station. No goodwill was recorded as a result of this
transaction. See Note 13 for discussion of the North Carolina
Utilities Commission</font> <font face="ARIAL" size="1">(NCUC) and
the Public Service Commission of South Carolina (PSCSC) approval of
Duke Energy’s petition requesting an accounting order to
defer incremental costs incurred from the purchase of this
additional ownership interest.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In June 2008, Duke Energy announced the
execution of a definitive agreement to acquire Catamount Energy
Corporation (Catamount) from Diamond Castle Partners. Catamount is
a leading wind power company located in Rutland, Vermont. The
acquisition closed in September 2008 and expanded Duke
Energy’s renewable energy portfolio to include over 300 MW of
power generating assets, including 283 net MW in the Sweetwater
wind power facility in West Texas, and 20 net MW of biomass-fueled
cogeneration in New England. The acquisition also included
approximately 1,750 MW of wind assets with the potential for
development in the U.S. and United Kingdom. This transaction
resulted in a purchase price of approximately $245 million plus the
assumption of approximately $80 million of debt. The purchase
accounting entries recorded upon acquisition primarily consisted of
approximately $190 million of equity method investments,
approximately $117 million of intangible assets related to wind
development rights, approximately $70 million of goodwill, none of
which is deductible for tax purposes, and approximately $80 million
of debt.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Dispositions.</b> In the first
quarter of 2009, Duke Energy completed the sale of two United
Kingdom wind projects acquired in the Catamount acquisition. No
gain or loss was recognized on these transactions. As these
projects did not meet the definition of a disposal group as defined
by SFAS No. 144, <i>“Accounting for the Impairment or
Disposal of Long-lived Assets”</i> (SFAS No. 144), these
projects were not reflected as held for sale on the Consolidated
Balance Sheets prior to the completion of the sale.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1"><b>Sales of Emission Allowances and
Other Assets.</b> For the three and six months ended June 30,
2009, the sale of other assets resulted in proceeds of
approximately $17 million and $23 million, respectively, and
net pre-tax gains of approximately $13 million and $19 million,
respectively, which are recorded in Gains on Sales of Other Assets
and Other, net on the Consolidated Statements of Operations. These
amounts primarily relate to sales of zero cost basis emission
allowances by U.S. Franchised Electric and Gas and Commercial
Power. For the three and six months ended June 30, 2008, the
sale of other assets resulted in proceeds of approximately $33
million and $54 million, respectively, and net pre-tax gains
of approximately $33 million and $51 million, respectively, which
are recorded in Gains on Sales of Other Assets and Other, net on
the Consolidated Statements of Operations. These amounts primarily
relate to Commercial Power’s sales of zero cost basis
emission allowances.</font></p>
</div>
631000000
11000000
630000000
845000000
310000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face="ARIAL"
size="2"><b>4. Earnings Per Common Share (EPS)</b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Basic EPS is computed by dividing net
income attributable to Duke Energy by the weighted-average number
of common shares outstanding during the period. Diluted EPS is
computed by dividing net income attributable to Duke Energy, as
adjusted, by the diluted weighted-average number of common shares
outstanding during the period. Diluted EPS reflects the potential
dilution that could occur if securities or other agreements to
issue common stock, such as stock options, phantom shares and
stock-based performance unit awards were exercised or
settled.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">In June 2008, the FASB issued FASB
Staff Position (FSP) No. EITF 03-6-1 <i>“Determining Whether
Instruments Granted in Share-Based Payment Transactions Are
Participating Securities,”</i> (FSP No. EITF 03-6-1) to
address whether instruments granted in share-based payment
transactions may be participating securities prior to vesting and,
therefore, need to be included in the earnings allocation in
computing basic EPS pursuant to the two-class method described in
SFAS No. 128. The FASB concluded that rights to dividends
or dividend equivalents (whether paid or unpaid) on unvested
share-based payment awards that provide a noncontingent transfer of
value (such as a nonforfeitable right to receive cash when
dividends are paid to common stockholders, irrespective of whether
the award ultimately vests) to the holder of the share-based
payment award constitute participation rights and, therefore,
should be included in the computation of basic EPS using the
two-class method. Duke Energy issues certain share-based payment
awards under which rights to dividends during the vesting period
are nonforfeitable. For Duke Energy, FSP No. EITF 03-6-1 was
effective as of January 1, 2009 and all prior-period EPS data
was adjusted retrospectively to conform to the provisions of FSP
EITF 03-6-1. The adoption of FSP No. EITF 03-6-1 did not have
a material impact on Duke Energy’s current or historical EPS
amounts.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">The following table illustrates Duke
Energy’s basic and diluted EPS calculations and reconciles
the weighted-average number of common shares outstanding to the
diluted weighted-average number of common shares outstanding for
the three and six months ended June 30, 2009 and
2008.</font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="73%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>    Income    </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="ARIAL" size="1"><b>Average</b></font><br />
<font face="ARIAL" size=
"1"><b>    Shares    </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="ARIAL" size=
"1"><b>    EPS    </b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="7"><font face="ARIAL"
size=
"1"><b>(in millions, except per-share amounts)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Three Months Ended June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">278</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,288</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.22</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Effect of dilutive securities:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Stock options, phantom, performance and unvested
stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">278</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,289</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.22</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Three Months Ended June 30, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">338</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,264</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.27</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Effect of dilutive securities:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Stock options, phantom, performance and unvested
stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">338</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,266</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.27</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Six Months Ended June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">618</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,284</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.48</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Effect of dilutive securities:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Stock options, phantom, performance and unvested
stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">618</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,285</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.48</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face="ARIAL"
size="1"><b>Six Months Ended June 30, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">800</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,264</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.63</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Effect of dilutive securities:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1.76em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Stock options, phantom, performance and unvested
stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">2</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 0.59em; TEXT-INDENT: -0.59em"><font face=
"ARIAL" size="1">Income from continuing operations attributable to
Duke Energy common shareholders—diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">800</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">1,266</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="ARIAL" size="1">$</font></td>
<td valign="bottom" align="right"><font face="ARIAL" size=
"1">0.63</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">As of June 30, 2009 and December
31, 2008, approximately 21 million and 14 million,
respectively, of stock options and performance and unvested stock
awards were not included in the “effect of dilutive
securities” in the above table because either the option
exercise prices were greater than the average market price of the
common shares during those periods, or performance measures related
to the awards had not yet been met.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 3%">
<font face="ARIAL" size="1">Beginning in the fourth quarter of
2008, Duke Energy began issuing authorized but unissued shares of
common stock to fulfill obligations under its Dividend Reinvestment
Plan and other internal plans, including 401(k) plans. Duke Energy
currently anticipates issuing up to an aggregate of approximately
$600 million of common stock associated with these programs.
Approximately $110 million and $280 million of proceeds from the
sale of common stock were received during the three and six months
ended June 30, 2009, respectively, associated with these
plans.</font></p>
</div>
276000000
-6000000
177000000
-14000000
305000000
-18000000
1000000
-14000000
906000000
620000000
22000000
-1000000
-6000000
49000000
9000000
11000000
20000000
906000000
-18000000
-14000000
1000000
177000000
-14000000
305000000
-1000000
620000000
825000000
-6000000
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iso4217:USD
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Net unrealized gains (losses) on cash flow hedges, net of insignificant tax expense in 2009 and $5 tax benefit in 2008.
Reclassification into earnings from cash flow hedges, net of $8 tax expense in 2009 and $2 tax expense in 2008.
Net of $9 tax expense in 2009 and $7 tax expense in 2008.
Net of $3 tax benefit in 2009 and $11 tax benefit in 2008.
Net of $2 tax expense in 2008.
Net of insignificant tax expense in 2009 and $6 tax benefit in 2008.