Good day and welcome to the Duke Energy First Quarter 2014 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the conference over to Mr. Bill Currens. Please go ahead.

Thank you, Kay. Good morning, everyone and welcome to Duke Energy’s first quarter 2014 earnings review and business update. 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. A reconciliation of non-GAAP financial measures can be found on 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. Leading our call today is Lynn Good, President and CEO along with Steve Young, Executive Vice President and Chief Financial Officer. After our prepared remarks on the topics outlined on Slide 3, we will take your questions. Other members of the executive management team will be available during this portion of the call. Now, I will turn the call over to Lynn.

Thank you, Bill and good morning everyone. Duke Energy’s value proposition, as outlined on Slide 4, has remained consistent over time. We strive for excellence in our day-to-day operations and to deliver affordable and reliable services to our customers while leveraging our competitive advantages, including the additional capabilities we gained from the merger with Progress Energy in 2012. This focus gives us opportunities to deliver attractive returns to our investors through long-term earnings per share growth as well as the dividends. Our financial objectives have remained consistent over time and we have a strong track record of delivering on our commitments. I am very pleased with our overall strong first quarter. We reported first quarter adjusted diluted earnings per share of $1.17 supported by revised customer rates and strong weather normalized retail customer load growth. These results leave us on track to achieve our previously announced 2014 guidance range of $4.45 to $4.60. We responded well operationally to challenging winter weather conditions and the Dan River ash discharge. I want to thank our dedicated team of employees who worked for these challenging conditions with great discipline and resolve. Before I turn the call over to Steve for more detail on the quarter, I would like to provide some business updates, review the status of our strategic initiatives in our commercial businesses, and discuss our progress on our growth investment opportunities. Turning to Slide 5, let me start with Dan River. By now, you have heard a great deal about the accidental discharge of coal ash that resulted from a pipe break under an ash basin in early February. We have taken responsibility and have moved aggressively on a number of fronts. I will talk about Dan River, the immediate actions we have taken and the longer term strategy we are…

Thank you, Lynn. Today I will focus on three primary areas. First, I will discuss the key drivers to our first quarter results and update you on the status of our earnings guidance range for 2014. I will also review the first quarter and full year accounting implications related to the exit of our Midwest generation fleet. Second, I will discuss our volume trends and the economic conditions within our service territories. Finally, I will close with our progress towards achieving our overall financial objectives. First quarter 2014 adjusted diluted earnings per share were $1.17. These results as shown on Slide 13 exceeded 2013’s first quarter results of $1.02 per share. Our quarterly adjusted results were supported by revised customer rates and strong growth in weather normal retail customer demand. The impact of favorable weather was largely offset by increased storm restoration costs. As Lynn mentioned in her prepared remarks, we have affirmed our 2014 earnings guidance range of $4.45 to $4.60 per share. On a reported basis, the company experienced a quarterly net loss of $0.14 per share compared to $0.89 of per share earnings last year. Reported earnings this quarter were impacted by a pre-tax impairment charge of $1.4 billion or a loss of $1.23 per share associated with the exit of the Midwest generation business. This impairment was based upon a fair value estimate for these assets and it has been treated as a special item. Our fair value assumptions will be refined if necessary as we move through the sales process. A reconciliation of our reported results to our adjusted results is included in the supplemental materials. Adjusted earnings at our regulated utilities business increased by $0.11 per share primarily due to revised customer rates and strong weather normalized retail customer load growth. Increased pricing and…

Thanks Steve. I am proud of how our team responded to the operational challenges of the first quarter, while remaining focused on our mission to provide customers with safe, reliable and cost effective service. We also made great progress on our 2014 and longer-term financial objectives and have taken important steps on our strategic initiatives to build a stronger future. We will continue to execute on our mission to deliver exceptional results to benefit our customers, communities and investors. Now let’s open up the lines for questions.

(Operator Instructions) And we will go first to Dan Eggers with Credit Suisse.

Hey, good morning guys.

Good morning Dan.

Good morning.

Just following up on maybe Steve’s kind of closing comments about your load growth and what you are seeing, first quarter represented yet another quarter of better than planned load in trailing 12 months is pretty supportive of a higher growth rate than what you talked about. When are you guys going to decide that maybe growth is at a higher level and what bearing will that have on – how you are prioritizing the growth CapEx you have laid out in the slides today?

Dan, I will take a stab at it and Steve I am sure will have something to add to it. We are optimistic about what we are seeing with three quarters. I think when we look at a really weather impacted quarter, however, the science to pull weather out isn’t perfect, and so we would love to see another quarter of strength before we formally revise estimates. So that’s how we are looking at it, but we feel like we have seen some strength here that gives us some optimism about the future. In terms of prioritization of investments, we continue to focus on deploying about 85% to 90% of our capital into our regulated businesses. We are also continuing to focus on building our commercial renewables business. And so you I would think about those initiatives progressing and the timing will really be dictated in many ways by regulatory approvals and as these opportunities develop. So that’s where I would leave it on the prioritization.

And then I guess on your commercial ops with the impairment this quarter, can you just give us an update A, on where that process sits, where you expect – when do you expect something to be announced or formalized. And then with your AEP and FirstEnergy both talking about the idea of long-term contracting or some sort of re-regulation in Ohio, is that going to prospectively change your timing for moving forward with the sale?

Dan, we are continuing to progress with the sale process. We are targeting first round bids here in this quarter, so second quarter and then we would expect the process to continue. And we will update as we go and meet milestones on that process. In parallel, we are of course monitoring what’s going on in Ohio. AEP in particular has put forward an ESP that has a non-bypassable charge intended to provide customers with some stability around what could be market volatility. I think they have introduced the OVAC asset and potentially others. So we will continue to monitor that. I think Ohio has begun to recognize that extreme weather conditions such as the Polar Vortex may be creating reliability concerns for the state. So we will monitor how that conversation progresses.

So, could that change your decision to sell if it looks like there was an alternative to contracts in Ohio or to some sort of other structure?

Dan, we are not thinking about it that way at this point. We are moving through the sale process. We think that makes the – fits with our strategic objectives to reduce that volatility in those assets, but we will update you as that process progresses and as we have more to say about how it’s progressing.

Okay. Thank you.

Thank you.

We will take our next question from Julien Dumoulin-Smith, UBS.

Thank you. Good morning.

Good morning.

So perhaps the follow-up, a little bit on the last question. Shifting over to Indiana, could you perhaps give us a little bit of an update as far as you see recovery of both O&M and purchase power, and how do you the latest sub-docket working out as far as Edwardsport goes?

So, actually in the slide deck, Julien, there are a couple of Slides, 9 and 25 that lay out the sub-dockets that are pending in Indiana. So, a sub-docket has been opened on fuel recovery really focused on the latter part of 2013 and the issue raised by interveners on negative generation. We do not yet have a procedural schedule on that and we will need to just progress that and update as it occurs. Our focus in Indiana is really on continuing to ramp up and complete our performance testing, optimizing the asset and moving through this important transition. I am pleased that generation has improved in March and April, and the team is very focused on continuing to deliver strong results out of the asset. So I think we will have to move through the regulatory process in the weeks and months to come, and as we have items to update, we will certainly do that.

Perhaps to clarify rather, is it that both purchase power and O&M is at risk, or is it one versus the other; just if you could perhaps elaborate a little bit on that?

Julien, there are two types of riders, right. So it’s a fuel is the one I just spoke about where the commission has opened a sub-docket on fuel and focusing specifically on this negative generation in the fourth quarter. That proceeding is specific to fuel. There are also ongoing filings in the IGCC riders, which addresses return and address O&M recovery. And so I believe the commission has approved through IGC 11, we have 12 that we are waiting for approval on and we are filing 13. And so those would be the dockets in which interveners could challenge costs and O&M and so on. And I think that’s something we will have to monitor over time.

Great. And then following up on the results in the quarter here in Brazil, especially given the hedging, how is this meeting your plan that you articulated earlier this year, how are you feeling about that. And ultimately, how do you think about the energy rationing as it stands today and the prospects for that and how would that impact you or what have you?

So the Brazilian operation is off to a strong start for the first quarter, Julien. And we actually benefited from the hedging strategy because we had the opportunity to sell generation into a high priced spot market. As we continue to look at the balance of the year, we are watching this very closely. We like the fact that we have a little bit more flexibility in our contracting position which gives us some protection if the regulator or government were to move into a rationing or voluntary rationing situation, but we do not have any further information on that at this point. I think given the political environment in Brazil, the World Cup, the elections, I think that’s going to be reviewed very closely by the government and by the regulator. So we are watching it everyday. We are watching rainfall. We are looking at dispatch. We are looking at spot prices. And of course, also looking ahead to 2015 and how that could impact our contracting strategy for 2015.

Great. And the last detail, have you delineated O&M versus capital costs for coal ash in Carolina and elsewhere?

We have not – what we have put forward are ranges of costs around closure, around investment to dry handling and the installation of certain of these capital costs will drive O&M, but we have not provided specific ranges on the O&M at this point.

Great. Thank you.

Thanks Julien.

Our next question comes from Steve Fleishman with Wolfe Research.

Yes. Hi good morning.

Hi Steve.

So just a few questions on the coal ash issues, the independent engineering report that you are doing, that’s going to be done by the end of May, are you going to have to make that public right then to us or how is that going to get released?

Steve we are moving through the third party engineering in a sequential way kind of working through all of the basins and to the extent, there are items identified that we should address from a maintenance standpoint. We are addressing those. And what we have committed to do is provide periodic updates on our short-term and longer term actions when we reach specific milestones. We are also updating the regulators on these milestones. So, I haven’t – we haven’t made a specific commitment on what we will do around May 31, but you can expect us to make updates on the progress on our short-term plans as the year progresses.

Okay. And then just on the legislative session, you said there is a short session, just what are the proposals that you are expecting to hear and how long is this session?

It should wrap up in early July, Steve, so May 15 to early July.

That’s correct.

Okay.

And I think proposals will develop as the session gets started. I have referenced in my comments that there has been a lot of work by the legislative body on education trying to understand the complex topic. So, I think as the session starts, we will have more information on specifics. I think you are aware we have put forward a plan that lays out specific actions around certain plants. We have also laid out a plan to accelerate investment in dry fly ash handling also moving forward with dewatering certain of the retired ponds. So we are moving forward on those actions and would expect those to be considered, although we can’t speak fully to how the legislature will address the issue broadly, but certainly that plan would be considered I think as part of the go-forward strategy.

Okay. Just last question, where do you stand overall on your coal piles maybe you can just give some color there? And are you having to take any actions to kind of preserve coal into the summer?

Steve, we are in good shape. It has been a challenging delivery time during the first quarter, but we feel comfortable with where our inventory is across the system.

Okay, thank you.

Thank you.

We will now take Jonathan Arnold with Deutsche Bank.

Good morning.

Good morning, Jonathan.

Good morning.

Couple of questions. First on Edwardsport, Lynn, it’s good to hear that it’s running about March and April, but can you be a bit more specific what type of range of cap factor have you been able to achieve more recently? Are we just talking about the combined cycle or is this also the gasifier piece of it as well? Just a bit more color on what you mean by running better?

So, Jonathan, when I talk about running better, I am talking about running on the gasifiers. And so, the month of April was the third best month since the plant has been in service. I don’t have a specific capacity factor in front of me, but kind of trending up March was a strong month and then April stronger. So, we do provide monthly updates to the IURC on our generation statistics. So I think if you follow up with IR, we could probably give you little more specifics on how that generation is occurring.

Okay. And you feel confident that it’s going to sort of ramp from here or is there another sort of period where it has to sort of go through more testing and step back a bit or as we…

Yes, we are finalizing performance testing with General Electric hopefully in the month of May. And we have taken the outage in February to address some of the issues that we experienced from severe weather earlier in the year. So, I think at this point, Jonathan, it’s continuing to improve performance as optimizing procedures. And I think the team if they were on the call would tell you, they have increasing experiences – increasing experience on the operating profile of the plant is improving over time, there is greater confidence in operations, but it’s a complex project and we are learning everyday, but I feel like we have the right resources devoted to it and we are working hard to continue to improve operations.

Is this something about the technology and very cold weather or that might impair its performance in the future in winter time or was it because you were in startup?

Jonathan, I do think we learned some things from the weather in Indiana, which was 30 degrees below what we would normally experience. So, my hope and expectation is that we saw the worst of the worst this winter and have been able to address operational challenges as a result of that. But let me turn it over to Keith Trent or Dhiaa who have been very involved in this and see if they have anything to add to that.

Sure. Jonathan, I would just add one thing and that is there is nothing that was unique about the technology that was impacted specifically by the cold weather. As Lynn said, it was extremely cold, 30 degrees below what we have seen in the past, but it was more exposure of components to extreme cold like transmitters, those sorts of things that are not any kind of unique technology, but we learned from that and we can apply heating methods, which we have done, so that we can remedy that, but there is nothing unique about the technology that’s causing us concerns.

Great, thank you. Then I if I might I will just – on another just a big picture, if another quarter confirms what you seem to suspect, which is that your sales have begun to tick higher, how should we think about that as it would impact your overall plan? Does it push out rate case timings? Does it mean we are going to have to step up capital spending in certain areas? Well, how would uptick in sales sort of change what you have laid out for us?

Jonathan, I feel like an uptick in sales is the best possible thing that can happen, not only to Duke Energy, but to the economies that we serve. When you see improvement in the industrial base, in commercial and new customers being added, I think it’s all around a good outcome. I think it will give us some things to think about in terms of timing of rate cases and capital deployment and we have begun some of that thinking and when we are prepared to share it with you, we will give you some more feedback on it, but generally, I think this is a very good thing.

Yes, I think that we are in the process now Jonathan of updating our forecasts and we go through this process every year for the integrated resource planning process, which is our long-term planning mechanism that we share with the commission and that drives a lot of our generation planning and rate case planning and so forth. So we will be putting through those mechanisms and these changes and see what it yields.

And what will the timing of resource plan updates be?

We typically – it varies per jurisdiction. We will typically do it in the spring and the fall in the Carolinas as an example.

Thank you very much guys.

Thank you, Jonathan.

Our next question comes from Chris Turnure with JPMorgan.

Good morning, Lynn and Steve.

Good morning.

Could you guys give us a little bit more color on the RFP process in North Carolina for the new pipeline? I am thinking kind of along the lines of total cost and then when we would actually see incremental information as to whether or not you are going to offer in a self-build proposal?

Chris, we are early in the process. So, we have announced a solicitation with an expectation on the timeline that would put us in a position to announce a winning bid, if you will, by the end of this year. And we are evaluating a range of options, which would also include ownership interest on the part of Duke and Piedmont. And we will update you as we go. We have not disclosed nor do we have a broad range of investment at this point. We are anxious to talk with the various bidders about what they see the potential to be and as we have more information we will share it with you. I think this is a terrific opportunity, not only to underpin infrastructure for electricity, but I think it’s opportunity for economic development in the eastern part of North Carolina. So, we are at work putting together a project that we think could be very strategic for the state.

Okay, great. And then any updated thoughts on M&A given what we have seen in the past couple of weeks here in utility lines?

Nothing different than what we have said previously. We like the business mix that we have. We like the complement of jurisdictions that we serve. We would consider M&A, but it would need to be an opportunistic type thing. It’s certainly not something that we see as a must-have from a strategic standpoint. So we are monitoring all of it, Chris and would consider opportunities, but nothing beyond that at this point.

Great, thanks.

Thank you.

We will now take Brian Chin with Bank of America/Merrill Lynch. Brian Chin - Bank of America/Merrill Lynch: Hi, good morning.

Hi, Brian.

Good morning. Brian Chin - Bank of America/Merrill Lynch: Going back to the coal ash issue, would it be reasonable for us to think about the projections you have given on the different options for North Carolina that’s roughly comparable to how we think about the costs of coal ash remediation in other states where you have similar pond issues, is that sort of the right way to think about it or are the coal – North Carolina coal ash issues so site specific that it wouldn’t be reasonable to broadly assume those cost assumptions for other ponds?

Let me try to jump in on that, Brian. So and I am sure in the back of your mind, you are referencing the testimony that we presented to the Commission or the Environmental Commission in the legislature. As we have put out our $5 billion to $6 billion estimate for the 10-year environmental plan that has included addressing – ash pond closure results have included addressing conversion to dry bottom ash and fly ash in anticipation of where the steam effluent guidelines will go. We have as part of our short-term action plan modified that estimate for four sites in the Carolinas by evaluating a closure option that actually moves all the ash to a lined landfill. And so that has added roughly $500 million to our estimates. So it’s moved from 4.5 to 5.5 to 5 to 6. Further refinement of the estimate around waste will be accomplished as we complete our strategic review side by side of all of our ash basins around our system. And so it’s really premature for us to give you more specifics on the estimate or how it will be implicated in other jurisdictions because it will be dependent upon a couple of things. First of all, our strategy and in the case of North Carolina what we expect to be legislation in the state. As we talk about our other jurisdictions, we do not see an immediate push around legislation or change in policies in the same manner as we are seeing in North Carolina. Brian Chin - Bank of America/Merrill Lynch: Understood, very helpful. And on that last point about other jurisdictions, is it right now your expectation that resolution in North Carolina will likely lead how other states and your conversations will be resolved on coal ash or is there a possibility that the discussion with those other jurisdictions has been accelerated, given what’s happened with North Carolina and you could see resolution in other states potentially setting a precedent for how North Carolina looks at this?

At least among our jurisdictions, Brian, North Carolina is in the lead in terms of this discussion. And I think if you think back into the earlier part of the 2000s, North Carolina put forward industry leading set of legislation called Clean Smokestacks where they were instrumental in accelerating investments in environmental around air. And so I think this represents an opportunity for North Carolina to do the same around ash. And as we have moved through this short session, we will have a better sense of how the policy will be developed for the state. And I do think we have an opportunity in North Carolina to lead. Brian Chin - Bank of America/Merrill Lynch: Very good. And then one last quick one, for the strategic review on the international front, in the past when the strategic review has concluded, basically we haven’t seen a major confirmation from the company in terms of direction one way or another. With the conclusion of this strategic review, is it the intention of the company to provide a positive conclusion regardless of what the decisions is or is it more likely that it will simply be concluded privately and no more future mention of that will happen until the next strategic review?

We intend to disclose from the strategic reviews completing what our conclusions are. Brian Chin - Bank of America/Merrill Lynch: Thank you very much.

Thank you, Brian.

We will now take Angie Storozynski with Macquarie.

Thank you. Good morning, given that you are in the process of selling your plants in the Midwest, should we expect that this process will impact your bidding strategy into the PJM auction?

Angie I have not spent any time on bidding strategy for the PJM auction.

I do not think that will impact our strategy, the sales process, it will not change any strategic intent there.

But let’s follow-up on that with the IR team on PJM bidding strategy to the...

Secondly, on the load growth I do see the numbers, but they do seem impressive, however, they tend to be significantly skewed towards the residential and commercial load, the strength and those two groups tends to be most impacted by the weather, right. I mean the fact that there is such a big discrepancy in the industrial load growth versus residential and commercial could suggest that – as you said yourself that those weather minimization models are a little bit off or it could be that your service territory is specifically different, meaning less industrial, how would you describe that?

I think there are a couple of things I would point to and Steve can certainly add to this. We did see an increase in usage per customer, Angie. So in addition to strong customer growth, we saw an increase in the usage per customer. It’s hard to know exactly why that’s occurring, but frankly because of the extreme weather we had parts of the Carolinas that were home for days at a time. And we do think we had a little bit of additional usage on a per customer basis as a result of that. The other thing I would point to is when I look at the residential trend, third quarter was up 1.1%, fourth quarter was up 0.7%, both of which are pretty strong numbers. Similarly, commercial was up 1.6% in the third quarter and 1.2% in the fourth quarter. So the other thing I would point you to is over a rolling 12 months period we are kind of at 1.6%. So I don’t have a perfect answer to – do we have a little bit of weather in the volumes, I think that there is a possibility we have some weather. That’s why we are continuing to monitor the second quarter, will give us another good indication. It will not be as weather influenced. So when we look at all of the factors together including their performance in third and fourth quarter, we believe we are seeing a trend.

That’s right. We have added 70,000 customers. So that’s a stronger number than we have seen. And some of the data that we look at median household income, that’s looking at middle income growth is stronger than we have seen before in the past. The unemployment rate changes are significant as well. So it feels like the economic recovery is broadening and deepening a bit and getting into the pockets of smaller businesses and middle income residences.

And my last question, so about your coal plant, so you are showing us this very high potential capital that’s associated with coal ash remediation. And then we are approaching June 1 when the EPA is supposed to issue carbon dioxide emission rules and I am trying to understand given that both of these are actually going to properly resolve in a pretty significant uptick in your electric rates, how do you think can all of this CapEx and additional costs be recovered without actually a rate shock?

Angie, I think the thing to keep in mind on ash is that that expenditure is going to occur over a very long period of time. So even on the short-term action plan that we put forward of $500 million, it is going to occur over like two to five years. And over the – if you look at some of the higher end numbers that we have put forward assuming that all ash gets moved, those numbers are over 20 to 30 years. It will just physically take that long to accomplish. So I think that’s an important consideration for you to think about when you think about ash. And I think on greenhouse gases in general, we are going to have to evaluate how those rules come out, how they come forward, what kind of flexibility is offered in the states. I do think there is a lot of focus on the part of the EPA on reliability and giving the states flexibility. And so I think we will have to evaluate where those rules come out before we can conclude what the implication will be to rates.

But your current RFP for solar in the Carolinas and potentially putting it into the rate base is not in anyway related to potential carbon regulations in your attempt to offset your carbon footprint?

Yes. It is in connection with both a customer demand for solar, but also we have a renewable energy portfolio standard in North Carolina, Angie. And this would be a part of the compliance with that standard.

Okay. Thank you.

Thank you.

We will now take Michael Lapides with Goldman Sachs.

Hey guys. Congrats on a good start of the year.

Thank you, Michael.

Thank you.

You’re welcome. A question, one for Steve, one for Lynn. Lynn, can you talk about just the range of options when you think about a strategic review of the Latin American business, what’s off the table?

Michael, I am not sure that there is anything off the table. What we try to do when we come to a strategic review like this is consider all options that we are looking at. We have got a great business, a great position, profitable businesses that have been a strong contributor to the company over time. We have some headwinds in the form of foreign currency. We don’t see the growth that we would like to see in that business. So, we are really solving for two things. Is there a way we can better position the business for growth? Is there a better way we can position the business to optimize cash flow? And over what timeframe and what are the trade-offs that we need to consider to accomplish that? So, I wouldn’t say there is anything off the table at this point, but we are trying to be open-minded and explore as many options as we can think of.

Got it. And Steve, you made some comments about O&M both in the quarter, but also about maybe moving forward some O&M, can you – and I know you had the storm related O&M during the first quarter of this year. Can you just talk about O&M trajectory how 2014 looks like versus what your original guidance for O&M was in ‘14? And then what does that mean for beyond ‘14?

Certainly, certainly. The O&M trajectory has not changed and we intend to keep non-fuel O&M flat through ‘16 and we see very positive trends thus far in ‘14. When you pull the storm cost out, we actually see O&M down a bit and we are continuing to find through integration projects and moving people to similar processes and platforms and IT systems additional benefits to offset emergent costs. So, we feel very good about our O&M trajectory.

Got it. Thanks, Steve. Thanks, Lynn. Much appreciated.

Thank you, Mike.

And that does conclude the question-and-answer session. At this time, I would like to turn the conference back to Lynn Good for any additional or closing remarks.

Well, thank you everyone. Thank you for your interest and investment in Duke and we look forward to seeing many of you in the weeks and months to come. Thanks again.

Once again, ladies and gentlemen that does conclude today’s conference. Thank you for your participation.