Good day, and welcome to the Duke Energy Third Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Mike Callahan. Please go ahead, sir.

Thank you, Rachael. Good morning, everyone, and thank you for joining Duke Energy's third quarter 2016 earnings review and business update. Leading our call today is Lynn Good, Chairman, 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. A reconciliation of non-GAAP financial measures can be found on duke-energy.com and in today's materials. Please note the appendix for today's presentation includes supplemental information and additional disclosures. As summarized on Slide 3, Lynn will cover the key milestones we reached in the quarter as we near the completion of our portfolio transition and provide a brief overview of our new business segments. She will also discuss our third quarter financial and operational highlights and provide an update on our growth initiatives. Steve will then provide an overview of our third quarter financial results, and lower growth trends as well as an update on regulatory activity. He will also provide insight into our expectations for 2017 before closing before closing with our key investor considerations. With that, I'll turn the call over to Lynn.

Good morning, everyone, and thank you for joining us today. We have a strong third quarter at Duke Energy. Delivering very solid financial results and demonstrating significant progress in the execution of our business portfolio transition. We closed the Piedmont Natural Gas acquisition and we also announce the sale of our Latin American assets. This transition of our business portfolio strengthens our franchise of high quality stable and growing energy infrastructure businesses. Starting on Slide 4, let me begin with our business portfolio transition. On October 3rd, we closed the Piedmont Natural Gas acquisition following approval by the North Carolina Utilities Commission. We’re delighted to bring Piedmont's industry leading expertise into our company as we expand our natural gas platform. Supporting our transition to a lower carbon future and growing investments and important natural gas infrastructure. We've worked with and admired Piedmont for many years and our post-closing integration efforts are well underway. In addition on October 10th, we announced agreements with the China Three Gorges Corporation and I Squared Capital to sell our Latin American generation assets. China Three Gorges will buy our assets in Brazil for approximately $1.2 billion including the assumption of debt. We expect to complete the transaction in 2 to 4 months once we’ve received required approvals in Brazil and China. We’re making good progress. In fact to this morning the Brazilian anti-trust agency preliminarily approved the transactions without any restrictions. This begins a 15 day statutory objection period and if no objections are filed the approval will become final. I Squared Capital will buy our remaining assets in South and Central America in a separate transaction also valued at approximately $1.2 billion. We expect to close this transaction within the next three to five months. The proceeds available will be used to reduce Duke…

Thanks, Lynn. Today, I’ll walk you through the key drivers from the third quarter as well as provide updates on the current retail volume trends within our service territories and regulatory activity underway in our jurisdictions. I’ll close with looking heads to 2017 and our key investor considerations. I'll start with the quarterly results on Slide 9 and discuss our adjusted earnings per share variances compared to the prior year quarter. For more detailed information on segment variances versus last year and a reconciliation of reported results to adjusted results, please refer to the supporting materials that accompany today's press release and presentation. As a remainder, this is the last quarter for existing segment structure. We began managing the business under new segments at the beginning of the fourth quarter upon the completion of the Piedmont acquisition. On a reported or GAAP basis, 2016 third quarter earnings per share were $1.70 compared to $1.35 last year. Third quarter adjusted diluted earnings per share were $1.68 compared to $1.47 in the third quarter of 2015. Regulated Utilities quarterly adjusted results increased by $0.34 per share quarter-over-quarter. This strong performance was primarily driven by warmer weather across all of our service territories which added $0.14. We also recognized a lower effective tax rate primarily due to prior year tax adjustments which contributed to an $0.08 increase. Higher revenues from energy efficiency riders in the Carolina's and grid investments riders in Ohio continue to be favorable drivers of earnings adding $0.05 to results for the quarter. Whether normal retail volumes also added $0.04 with growth primarily in the Carolina and Florida, I’ll discuss those details in a moment. Finally, our cost management efforts across the business provided the $0.02 uplift, despite additional storm cost in the third quarter. Our ongoing commitment to managing…

Thank you. [Operator Instruction] We will take our first question from Michael Weinstein from Credit Suisse.

Could you discuss in a little more detail the -- I think you said that there was a -- the results from commercial renewables was not as what you expected. Just wondering if you could discuss some of the issues surrounding that.

Michael, I would you direct you to the Slide 16 of the deck which gives you a comparison of where we are for year-to-date results against original expectations. Can you see commercial has delivered about 65 million of net income against our original expectations of a 140 million. We are not expecting that will deliver a 140 million for ’16. Some of that short fall will be the result of lesser capital deployment as Steve mentioned, returns have been very market driven, so break for customers but load for investors. And then we continue to expect to be slightly behind on wind on solar resources as a result of what we've seen in weather patterns. So those are the two things that I would point too.

Is it that the market for investment has become more competitive than you expected, let's say, a year ago, that returns on acquisitions are just smaller than you thought? Or is this more of a weather issue?

I think returns are lower, Michael and I think the other thing to consider for Duke as an investor we are in an NOL position as a result of bonus depreciation and so as we look at returns we consider that the monetization of tax credits need to reflect when we will be a cash tax payer, so the DCF of that can challenge our returns. So that's something that we’ll continue to monitor. As the time progresses we understand the market well, we have great expertise in both wind and solar base on the business that we've built, we still like for business, but we are declined in the way we deploy the capital based on the returns we’re seeing in the market.

How long does that NOL position go out to? What do you expect?

As currently we are expecting assuming there are no further extensions of bonus that we would come out of the NOL position in 2019. We would then begin using tax credits ITC production tax credits, so we would still not be a significant cash tax player for a few years after that.

But that, in theory, could make the renewables business a little more competitive for you, right?

I think as we get closer to that period of tax where we burn off the NOL that will impact our view of returns Michael, because the relative value the tax credits will be greater.

Alright, understood. Thank you.

Will take our question from Ali Agha of SunTrust.

First question, Steve, the proceeds from the international sale, as you mentioned, you are going to use to pay off parent debt. Can you remind me, on average, what's the average interest rate on the debt that you are paying off?

When we did the calculation, we come up with roughly $0.05. We’re looking at long-term holding company rate, might be in the 3.5% to 4% type range of that nature. So that's the basis of what we’re looking at and we've baked that into our financing plans anticipating that to happen we’ll initially take down some bridge facilities of shorter term with the proceeds.

Okay. But there is enough -- that high cost, or relatively high cost, debt available to get that kind of savings?

Well, what I'm speaking about is, we’ve anticipated this and baked it into our financing plans to avoid issuances of hold co. at that higher level.

So, Ali, if you think about it, as 1.7 billion to 1.9 billion of proceeds coming into the holding company. So the average rate as Steve reference is consistent with that.

I see. Then second, the commercial results that you are getting, $65 million year-to-date, or $140 million for the year, I guess a little lower now -- how much of that roughly is the recognition of tax credits?

Tax credits are going to be a significant part of the renewable return. Ali, I don’t have an exact number in front of me, we do have a modest amount of contribution in commercial fund of pipelines at this point to the third quarter, we’ll move that to the gas infrastructure segment in the fourth quarter.

That’s correct. The results for the commercial portfolio reflects small amounts of AFUDC on the pipelines, that will be growing. But right now it is primarily from the renewables business and that is heavily driven by the recognition of the tax benefits.

Got it. Last question. Lynn, as you look at this portfolio now, post the international sale, and you look at your utility footprint, is everything essentially core as far as Duke is concerned? And related to that, as you are looking at growth over at least the next three, four years, does M&A come back into the mix for you as you are looking to deliver growth for shareholders?

So Ali, the businesses that we earned coming out the transition are all core and I think the strength of the franchises we own in the South-east both Gas and Electric and then a strong position in mid-West are core businesses. And we’ll be looking to drive growth for investment that build on cleaner forms of generation and strengthening our grid and driving growth and providing value to customers, that will be job one at Duke. I believe M&A represents something that we will continue to look at as opportunity for rise, and I think we’ve demonstrated a track record of successful integration of M&A candidates, but job one, as I said is growing core businesses that we own.

Thank you.

[Operator Instruction] We will take our next question from Maxwell Burke with Citi.

So maybe just jumping back to your renewable portfolio, when you are underwriting these investments, do you generally assume that the PPA cash flows are going to cover the full investment cost? Or do you assume some residual value, post-PPA, in order to recover that investment?

We will typically assign some terminal value beyond the contract period.

Okay, got it. And maybe just as a follow-up, can you provide any guidance on how you think about valuation, post-PPA? Do you make some assumption around re-contracting, or do you apply a dollar KW [ph] multiple, or some other method?

We look at a variety of things as we think about terminal value including forward curves as well as market experience. And so our contracts are the majority of the value that we are looking at and so terminal was something and we look at a range of possible outcomes.

Got it, thanks.

It appears there are no further questions at this time. I would like to turn the conference back to Ms. Lynn Good for closing remarks.

Thank you everyone for your interest and investment in Duke Energy. We have made tremendous progress this quarter and look forward to see many of you in the coming months and at the EDI Financial Conference next week. Thank you.