Good day and welcome to the Duke Energy Fourth Quarterly Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Bill Currens. Please go ahead.

Thank you, Whitney. Good morning, everyone and welcome to Duke Energy’s fourth quarter 2013 earnings review and business update. Leading our call is Lynn Good, President and CEO; along with Steve Young, Executive Vice President and Chief Financial Officer. Today’s discussion will include forward-looking information and the use of non-GAAP financial measures. Slide 2 presents the Safe Harbor statement, which accompanies our presentation materials. You should also refer to the information in our 2012 10-K and other SEC filings concerning factors that could cause future results to differ from this forward-looking information. A reconciliation of non-GAAP financial measures can be found on our website at duke-energy.com and in today’s materials. Please note that the appendix to today’s presentation includes supplemental information and additional disclosures to help you analyze the company’s performance and our financial outlook. We have a lot of material to cover today. Lynn will provide an overview of our key 2013 accomplishments and our key priorities for 2014. And Steve will review our 2013 financial results, introduce our 2014 earnings per share guidance range, and discuss our longer term earnings growth objectives. Additionally, we will have commentary on yesterday’s announcement that we have begun a process to exit the Midwest generation business. Our prepared remarks today will be a little longer than normal. We will try to get to as many of you as possible during the Q&A portion of today’s call. For those we are not able to get to, the Investor Relations is available for any follow-up you may have. So now, I will turn the call over to Lynn.

Good morning, everyone and thank you for joining us today. 2013 was a year of great accomplishment for Duke, our first full year as a combined company. Our 2012 merger with Progress Energy give us the unique platform to drive efficiencies and grow the business. We are pleased with all that has been accomplished over the last year and a half and also recognize we still have important work ahead of us. As we announced earlier today, we delivered 2013 adjusted diluted earnings per share of $4.35 and introduced guidance for 2014 of $4.25 to $4.50 per share with the midpoint reflecting 5% earnings growth over the midpoint of our 2013 guidance range. We also confirmed our earnings per share growth objective of 4% to 6% through 2016 off of a base of 2013. Dividend growth has been and will remain central to our value proposition and our balance sheet remained strong. Our total shareholder return for 2013 was 13%, exceeding the UTY return of 11%. Our primary focus on 2013 was on positioning our regulated businesses for the future and I believe we accomplished this objective. Our goals were clear, we had to complete our fleet modernization program, achieved constructed outcomes and five rate cases and resolve key issues including the future of the Crystal River 3 nuclear station. Additionally we had focus on improving the performance of our entire nuclear fleet and realizing our merger integration plan. Let me summarize each of these is outlined on slide 5, during 2013 we completed our $9 billion fleet modernization program. This program added approximately 5600 megawatts of new combined-cycle natural gas and state of the art coal capacity in the Carolinas and Indiana replacing a similar amount of capacity for older plants we have or are retiring by 2015. The…

Thanks Lynn. As Lynn highlighted, 2013 was a very good year for Duke. Let me start with our financial results for the year as outlined on Slide 8. As expected, our fourth quarter results were significantly higher than 2012 due to settlements in our 2013 rate cases, the adoption of nuclear levelization in the Carolinas growth of our wholesale business and the benefits of cost control. Our adjusted diluted earnings per share for the fourth quarter were $1 compared to $0.70 for the prior year quarter. On a reported basis, our quarterly earnings were $0.97 compared to $0.62 for prior year. I will focus most of my comments on our full year results. For more details on our quarterly earnings drivers, see our press release materials from earlier this morning. As Lynn reported, for the full year, we recognized 2013 adjusted diluted earnings per share of $4.35 compared to $4.32 for the prior year. On a reported basis, our full year earnings were $3.76 per share compared to $3.07 in 2012. Here are highlights of our results compared to our original expectations. For the year, our regulated utilities experienced favorable O&M expenses compared to 2012 supported by the impact of increased merger synergies and the adoption of nuclear levelization. Just have to offset the impact of unfavorable weather during the year, a consolidated results benefited from a lower than expected effective tax rate of 33% for the year which is principally in our other category. These improved results help offset lower commercial power contributions which included results that renewables lower Midwest coal generation margins and a lack of favorable decision on our Ohio cost base capacity volume. Results of our International Energy were consistent with our expectations, for the year we experienced unfavorable foreign exchange rates as well as lower…

Thank you, Steve. Let me briefly close with our priorities for 2014 and beyond as outlined on Slide 21. Simply stated, we will focus on achieving our financial objectives, including our earnings per share guidance range for 2014 as well as the growing a dividend and maintaining a strong balance sheet. We will also focus on driving further productivity in our businesses and deploying capital for the benefit of our customers and shareholders. As I mentioned, we will also turn our attention to enhance value from our commercial businesses, including advancing our process to access the Midwest generation business. We will maintain our focus on strong outreach to our important state and federal stakeholders as overall industry times and regulations continue to evolve. Duke Energy is a low-risk long-term holding with an excellent track record of performance. I am honored to lead this company and work with an extremely talented team. I am very pleased with what we have accomplished in 2013 and our platform gives us many opportunities to grow the company and create value for our customers, investors and communities. With that, let’s open the phone lines for your questions.

(Operator Instructions) And we will take our first question from Shar Pourreza with Citigroup.

Good morning, Shar.

We have sort of reiterated your EPS growth trajectory of 4% to 6% off for 2013, but looking at Slide 17, it looks like your CapEx profile looks flat beyond 2016, is that sort of a placeholder and how should we think about the EPS growth trajectory if you were to exit the Ohio business given the fact it could be accretive?

I think our CapEx profile does grow beyond 2016. I think back in our appendices we show that our rate base growth moves in the range of 6% beyond 2016 as we ramp up the lead combined cycle plants essential for the Florida combined cycle. And also we will see a change in 2016 and beyond as we become a significant taxpayer in a decrease and deferred taxes now put on to push on our rate base as well, Shar. So I think we do have growth in the earnings base.

Got you. Very helpful. And then just when you think about potential uses of cash as you exit Ohio generation, is there any areas that we should be not thinking about as far as the source of cash or I think when you are maybe potentially quoted in media as so the cash could be buybacks, is there anything we should focus or what we could roll out?

Yeah sure. We haven't made a decision on use of proceeds; we would like this process to mature over the course of 2014 and we will look at incremental investment opportunities that maybe right and what I also would say is we would not roll out a share buyback but this decisions will made down the road as we complete the process.

And we will take our next question from Dan Eggers with Credit Suisse.

Glad you guys (indiscernible) determination on commercial operations, can you just clarify when that the earnings contributions included in guidance for both 14 number and the growth rate and then if it comes out what are you using for substitution to help sustain the growth rate beyond 2014?

Dan the earnings contribution of the Midwest generation is in 2014 and then as we think about the build-up for growth over the 14 to 16 period we believe that redeployment of the proceeds will be accretive and be a strong contributor to the 4% to 6% growth rate.

Do you have a place holder beyond ’14 for using some assumption of cash for debt pay down or some other reinvestment to support the growth rate is that the right way to think about it?

That’s correct.

And then on International if I look at kind of the contribution of your growth rate drivers usually kind by business line out through ’16, your International looks like you kind of hit at zero contribution through the growth rates which is kind of trending water over those years. How does that slow the flat looking outlook effect the strategy review you guys are going through right now?

Dan I would say it's an catalyst for the review. We look at a strategic review of the International probably 5 or 6 years. We think it's appropriate to do so again, we do this periodically for all of our businesses. We’re pleased with the International business, the contributions that they have made overtime but we would like to explore positioning for better growth and for optimization of cash flow so that will be your focus in ’14.

Is the impairment you guys took on commercial or the money will take given that extra cash surplus, does that make it easier to think about monetize International because you’ve a better offset to maybe any refilteration [ph] cash you would have to deal with?

Dan I wouldn’t jump to monetization of International. What I would suggest is let us work through the process and evaluate a range of options and as we complete our review we will be in a position to talk further about it.

And we will take our next question from Jonathan Arnold with Deutsche Bank.

Couple of quick questions just to clarify on things that you’ve already just answered them I’m afraid. On the Midwest and you said the use of proceeds will be accretive and in the other statement net of losing the earnings of business and the accretion, okay so it's an aggregate state it's not just you will have accretive offset.

That’s right.

That’s correct.

And then on International you talked about a 6% CAGR I think somewhere in the slides for the pricing assumption in Brazil. Can you just is that something you’ve clear line of sight on currently how much of that is already priced and how much of that is an assumption?

We have pretty good line of sight for that Jonathan. Our revenue pricing in our contracts in Brazil is tagged to inflation indices that have been pretty consistent and they are on lagging indices so we have already seen some of those metric come through and the forecast for inflation in Brazil and so forth are pretty stable and so we feel pretty good about this pricing metrics.

So you don’t have kind of recontracting embedded in that assumption, that’s just the current contracts in place?

That’s correct.

And we will take our next question from Julien Dumoulin-Smith with UBS Investments.

Quick question following up on the International strategic review, could you elaborate perhaps on what those options are more specifically?

Yes, Julien, I think it’s premature to talk about the range of options. What I would say is just emphasizing looking at rate to position the business to grow and also ways to further optimize cash flow. The fact that we were able to identify an bring 750 million home, I think is a good indication of works that we put underway in 2013 and we will just continue that strategic focus in ‘14 as we have more information, we will of course sharing.

And just to be clear, anything you would do would need to be accretive?

I think that’s a good turning point.

Alright, just to be clear. And then perhaps looking at the earned ROE assumption in the buildup if you will of the 4 to 6 years of regulatory lag plus depreciation of minus 3%, what kind of earned ROE degradation or what have you are you assuming as you think about the New Year period, the three-year?

We project that we are going to be earning very close to our allowed returns in all of our jurisdictions. You do have regulatory lag, but you have also got new investments that are going into Reuters and accruing AFUDC and earnings and so forth. Additionally, one of the big key elements that gets us to a rate freeze period is being able to eliminate rate lag due to O&M increases keeping O&M flat is very significant here and should help us to earn our allowed returns.

And then lastly quick question on the ‘14 assumption on guidance, there is a big other jump from minus 128 to minus 215, could you talk about that quickly?

Yes, in the other area that we are looking at two things that occur there, you got Holdco interest expense, which goes up as you issue a Holdco debt to fund some of the growth in the business and then we do expect our effective tax rate to jump and increase by roughly 1% and the effective tax rate goes up for a couple of reasons. One is that as you move forward, the Progress entity has less permanent differences, less tax benefits, so when it’s mixed into the Duke entity as a whole, which has renewables and international, it pushes the effective tax rate up a bit. Also we are seeing that we have less AFUDC equity impacts in the tax rate, so that drives the effective tax rate up a bit as well.

Great, thank you.

Thank you.

And we will take our next question from Brian Chin with Merrill Lynch.

Good morning Brian.

Hi, good morning, Lynn. Good morning Steve. For your comments on Slide 18 on transmission and gas infrastructure, could you talk a little bit more about what opportunities might manifest themselves as you complete your evaluations?

Brian, this is an early stage evaluation of infrastructure in the Southeast as we continue look at adding gas fired generation in the Carolinas, in particular, we have independent CGR on a pipeline infrastructure that we brought to explore other options. And so this is something that is on our radar screen for strategic growth and objective that we would like to achieve. We also think it’s important for reliability for customers and so we will be exploring that over the next year or two to see if an investment makes sense.

Should we be thinking about that in the terms of gas or pipeline investments potentially that connect to your gas fired generation? Is that sort of the primary thrust of where that thought process is going?

Yes.

Great. And then just one other question on this slide for commercial solar and your wind assets in general, just how do you think about the opportunity to construct a Yieldco like some of your peers?

We have looked at Yieldcos, Brian. And we will continue to keep an eye on those types of financing vehicles, but a couple of things to keep in mind on a Yieldco that we are looking now. One is that we trade as a Yieldco already and so isolating assets there may not have as much incremental benefit for our shareholders. Another thing you have to keep an eye with Yieldcos is they require very disciplined investment profile. You typically have to match up the investments with tax benefits that roll off under accelerated depreciation and it requires quite a disciplined investment in capital and that flexibility in our capital planning maybe a hurdle in setting up a yield curve.

And we will take our next question from Hugh Wynne with Sanford Bernstein.

My question goes to the ash pond cleanup issue, you’ve been under some you have been fighting some legal suits in the Carolinas regarding supposed groundwater contamination if I remember correctly and now we have the Dan River break and at the end of this year I think EPA will come out with it's coal ash regulations. What is long term thinking of regarding how you’re going to handle that? Are those cost included in your environmental CapEx and what will be the prospects for recovery?

Let me break that question down. I will speak first of all about Dan River, we have been very focused over the last two weeks with a 24/7 operation to put a permanent solution in place and to begin remediation. We will take the learning from this experience and look for ways that we can improve overall management of our ash ponds and we are very focused on ensuring the integrity of our basins throughout our system and so that effort will continue. If I could position [ph] to the broader level about ash pond remediation and implications of the coal combustion residuals we do expect the two rules by the end of this year and when Steve talked about the $4.5 billion to $5 billion that does include ash pond closures, it also includes conversions to dry handling and so those estimates will continue to be updated and evolve as these regulations are finalized.

Is recovery ordinarily available in the place where the plants are located?

Yes. We have had a good history of environment recovery and I think 85% of our environmental costs are in Indiana and the Carolinas and we have again through the recovery of environmental cost in both of those jurisdictions.

Just a quick follow-up of an earlier question regarding the other segment, the significant decline in expense in that segment relative to your expectations. I think you were expecting something like 205 million and you ended up incurring only 128 million. Is that also attributable to upgrade law change in the effective tax rate or are there other factors apply?

Income taxes were a large portion of that. We have found have some state optimization tax benefit opportunities that we took advantage of, there were also some lower cost in our captive insurance area as well.

The losses from your insurance policies are not as high as you had anticipated?

That’s correct.

And we will take our next question from Michael Lapides with Goldman Sachs.

I want to ask about the dividend and dividend growth, at what point do you think you will be at a stage where dividend growth is within the same range or close to earnings growth and is there ever a stage coming for Duke where dividend growth is faster than earnings growth?

I will take the first part of the question Michael, we’re trending to 70% in 2014 and so we will look very closely at increasing the level of the dividend in working with the Board of course but it's ultimately their decision but our aspiration is to grow the dividend ever trying consistent with earnings growth. I think the latter part of our question is probably something that is few years out that we look at the way the macro trends in the business continue to evolve. So I think our objective is always put together a combination of earnings growth and dividend that’s attracted to our shareholders and that objective won't change.

And then an environmental question, I mean there is obviously lots of talk about potential carbon rules coming out this summer or a little later. Could you talk a little bit about what’s in your expectations in terms of what the rules for both coal ash and 316(b) could look like?

We have specifics and key trends here. Michael let me direct the question to Keith, he can give you a little bit of visibility and what’s in our plan over the next three years and then you can talk me on that.

Michael with respect to coal ash we do expect that it will be designated as non-hazardous so that’s the general assumption that we’re working with, in terms of specific investment we have very detailed plan. What I would tell you is the four largest categories of spend one is on (indiscernible) and then we have precipitator refurbishment at six plants we have dry ash conversion at multiple plants and then also ash pond closure. So this was the four biggest conversions, biggest spins that we have in this category. But again in terms of CCR we’re expecting non-hazardous.

Got it. Last item just a tax, cash flow related question. What do you see I noticed the guidance for commercial power and the commercial business you know it's a seems like it's been driven largely by tax benefit, am I interpretation that correctly that acting as one of the slides and I want to make sure you assume a 40% to 50%, 50% to 60% tax benefit at that business?

At the renewables business a great deal of the economics are driven by tax benefits that’s correct Michael.

So the assumption then that the actual EBITDA that business combined of a commercial power is kind of pretty low but the renewable business the tax benefits drive kind of the uptick in earnings power from the business?

That’s correct Michael.

We will take our next question from Kit Konolige with BGC.

So to get back for a second to the Midwest generation, can you elaborate a little bit on the discussion of your expectation for taking the charge on that business if I wrote it down correctly you said that you expected a charge of 1 billion to 2 billion in 2014 which as I understood it, it would be the difference between the your kind of projected fair market value versus the book value?

That’s correct Kit.

And Steve what’s the book value currently on that?

The net book value of the property, plant and equipment net of accumulated depreciations in the ballpark of 3.5 billion. There will be other items that could come into play in this calculation, inventories deferred taxes, some of those kind of things. I don’t want to be over precise by 3.5 billion is the property, plant and equipment.

And you said you don’t expect any transaction to close in 2014?

That’s correct.

So can we understand from that that the sale process might take something like what six months or something like that?

I think the facts were announced yesterday and we’re taking advisors in play. So I think we will be in a position to give you more clarity on timing as we move into the first quarter call but based on our present expectations we think a 12 month period is probably a reasonable planning assumption.

A 12 month period Lynn from now until closing or now until an announcement of the sale?

Now until closing.

That concludes today’s question and answer session. Mr. Bill Currens at this time I will turn the conference back over to you for any additional or closing remarks.

Thank you and thank you for interesting in Duke Energy. We look forward to seeing many of you in the weeks and months ahead. So thanks again.

This now concludes the presentation. Thank you for your participation.