The New Energy LandscapeJanice Hager, Vice President,

Integrated Resource Planning and Analytics

1%

55%36%

5%3% 3%

38%

35%

24%

Duke Energy: scale, diversity and flexibility

Carolinas

USFE&G geographic diversity (1)

(2) Pre-merger business mix based upon 2011 Duke Energy adjusted net income; post-merger business mix based upon midpoint of 2013 adjusted diluted EPS guidance range of $4.20 - $4.45; all amounts exclude “Other”

(3) 2005 represents pro-forma regulated generation combining Duke Energy and Progress Energy. Crystal River 3 excluded from 2015. Assumes CR1-2 retirement, (no definitive decision has been made), but does not assume replacement generation

67%

24%

9%

85%

12%

− Total assets: ~$114 billion − Market capitalization: ~ $47 billion− U.S. generation capacity: ~ 58 GW diversified portfolio− Electric customers: 7.2 million

Largest utility in the United States (1)

Highly-regulated business with earnings diversity (2)

Pre-Merger Post-Merger

USFE&G International Commercial Power

3%

(1) Total assets, US generation capacity, and electric customers as of June 30, 2013; market cap as of Aug. 30, 2013

2005 201555% 38%

CoalNuclearNatural GasOilHydro

Region Electric Customers

Carolinas 3.9 million

Florida 1.7 million

Midwest 1.6 million

Midwest

Florida

USFE&G fuel diversity (MWh output) (3)

2

Integrated Resource Planning

3

Environmentally Compliant

Least Cost

Reliable

Resource Options

Resource Options – Coal & Nuclear

PROS CONS

Abundant, indigenous resource Environmental impacts

Relatively low cost fuel EPA has virtually foreclosed option for new coal

Dispatchable baseload resource Rules for existing coal uncertain

Aging of existing units

PROS CONS

Very low cost, low volatility fuel High capital cost

No greenhouse gas emissions Lack of Greenhouse Gas regulation hurts economics

Dispatchable baseload resource Long term waste disposal uncertain

Not very flexible for operation

COAL

NUCLEAR

Resource Options – Natural Gas and Hydroelectric

PROS CONS

Abundant, indigenous resource Traditionally very volatile cost

Relatively low cost fuel Current policies leading to “eggs in one basket”

Dispatchable baseload resource Some environmental impact

Units can ramp up & down quickly

PROS CONS

No cost fuel Very limited options for new hydro

Very flexible resource High capital cost

Energy can be stored (similar to battery) Energy limited resource, rainfall dependent on quantity

NATURAL GAS

HYDRO

Resource Options – Solar, Wind, and Energy Efficiency

PROS CONS

No fuel cost Not dispatchable

No air, water, waste emissions Intermittent

Price has been dropping Large quantities can make system operation challenging

Some correlation with load

PROS CONS

No fuel cost Not very dispatchable; impacts on system

No air, water, waste emissions Intermittent

Price has dropped Wind profile not a good match for peak load

Best sites are typically not aligned with load

PROS CONS

No fuel cost Depends on customer participation

No air, water, waste emissions Erodes utility revenues that cover fixed costs

Helps customers lower bills Some not cost effective

Some very low cost

SOLAR

WIND

ENERGY EFFICIENCY

What’s the answer? Diversity – some of each!

9

Public Policy Issues

Greenhouse gas (climate change) EPA Regulations Congressional Action?

Cap and Trade Clean Energy Standard legislation

Renewable resource Renewable portfolio standards (with or without energy efficiency standards) Tax incentives (investment tax credits or production tax credits)

Nuclear Influenced by Greenhouse Gas legislation Tax incentives Waste disposal

Questions?

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APPENDIX

Hr00Hr02

Hr04Hr06

Hr08Hr10

Hr12Hr14

Hr16Hr18

Hr20Hr22

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Summer Day

load profile (% of peak demand) Solar profile (% of nameplate)

Solar Resource Capacity Contribution Coincidence with System Peak

Hr00Hr02

Hr04Hr06

Hr08Hr10

Hr12Hr14

Hr16Hr18

Hr20Hr22

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Winter Day

load profile (% of peak demand) solar profile (% of nameplate)

system peak

solar peak

40% coincidence

PJM ascribes 38% capacity credit to solar

0% coinci-dence

ILLUSTRATIVE

0% coinci-dence

Hour of the day Hour of the day

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Shale Gas Developments – Estimated Growth by Basin

13

shal

e ga

s pr

oduc

tion

(dry

)bi

llion

cubi

c fe

et p

er d

ay

Estimated growth of nearly 25 Bcf/d from 2005 to 2013

Shale Gas Becomes the Future of US Supply (in trillion cubic feet)

14

2005 2010 2015 2020 2025 203016

18

20

22

24

26

28

2005 2010 2020 203016

18

20

22

24

26

28

Alaskan Production

LNG Imports

Net Pipeline Imports

Base Domestic Production

Unconventional Production

2006 View 2013 View

Shale Gas

Other

Net Pipeline Imports

Changing Long Term Natural Gas Market Prices

15

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21$2

$3

$4

$5

$6

$7

$8

$9

$10

$11

$12

$13

$14

July 2008 January 2009 January 2010 January 2011 January 2012 January 2013

Natu

ral G

as P

rice

($/m

mBt

u)

Changing Natural Gas Supply

Majority of historical gas supply originated in Gulf

Evolution of shale gas in last 5 years has been a game changer

As a result, sourcing and market has changed significantly

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