Duke Energy DUK

Duke Energy’s long-term strategy requires the extensive capital investment in generation and transmission facilities. The construction of new projects, either wholly owned or partially owned, which such projects involve a number of risks, including construction delays, delays in or failure to receive required regulatory approvals and/or sitting siting or environmental permits, nonperformance by equipment and other third-party suppliers, and increases in equipment and labor costs. To limit costs beyond expectations. Uncertainty in long-term customer usage patterns or lower than anticipated load growth could impact the risks nature, timing or magnitude of these construction projects, the Company’s investments, and consequently, the achievement of the Company’s growth objectives. Additionally, to support expected demand growth, Duke Energy Registrants enter into equipment purchase orders will have compounding risks due to the simultaneous development and construction contracts and incur engineering and design service costs in advance of receiving necessary regulatory approvals and/or siting or environmental permits. If any multiple facilities. Completion of these types of large projects are canceled is subject to substantial delay or cost overrun risks that have, or may occur again, in the future, including those related to labor costs, availability of materials, productivity of workforce/equipment; as well as supply chain issues including, quality, availability, disruptions and potential tariff impacts; weather related delays; start up issues; public and regulatory support; transmission grid interconnection issues; and potential for any reason, increased financing costs as a result of interest rates and impact of delays including failure to receive necessary regulatory approvals and/or siting or environmental permits, loss of otherwise available tax credits and incentives. Project cancellations may result in significant cancellation penalties under the equipment purchase orders and construction contracts could occur. In addition, if any or impairment charges. If a construction work or investments have been recorded as an asset, an impairment may need to be recorded in the event the project is canceled. completed, the total costs may be higher than estimated or deemed imprudent and may be disallowed or otherwise not recoverable through regulated rates.

Operational Excellence. The reliable and safe operation of our power generating facilities, electric transmission and distribution systems and natural gas infrastructure in our communities continues to be foundational to serving our customers, our financial results and our credibility with stakeholders. Operational excellence is especially critical to successfully navigate effective storm response and to efficiently provide the continuity of service our customers demand, regardless of weather or circumstance. Our workforce and contract partners work hard to prepare for storm season through drills, material planning, call center readiness, contingency planning and customer communications. In such extreme circumstances, our immediate priority is, and always will be, executing the extensive storm preparation and response work to ensure the safe, timely, timely and efficient restoration of service to impacted customers as quickly as possible. Around-the-clock power restoration efforts continued following the historic damage inflicted by these storms with lineworkers, tree trimmers and removal experts, state department of transportation workers and countless others, working to repair and, in certain areas, completely rebuild, the critical electricity infrastructure that powers and supports the communities we serve. Our operations teams worked diligently, restoring power to approximately 5.5 million customers. We've also seen the benefits of ongoing grid hardening investments, leveraging self-healing technologies and remote restoration capabilities to automate the rerouting of power, more effectively deploy resources, resources and reduce the frequency or duration of outages for many of our customers during severe weather events. Our ability to effectively handle all facets of storm response efforts while making ongoing investments to enhance the reliability and physical security of the grid is a testament to our team’s extensive preparation and coordination, applying lessons learned from previous storms, and on-the-ground management throughout the restoration efforts. Duke Energy is proud to have received 22 Emergency Response Awards since EEI began recognizing storm response in 1998 (including 11 for assisting other utilities), including for the severe storm season of 2024.

On December 4, 2024, the town of Carrboro, North Carolina, filed a lawsuit against Duke Energy in the North Carolina Superior Court, Orange County, alleging that Duke Energy and its predecessor companies knew since the late 1960s that fossil-fuel fossil fuel emissions could cause global climate changes and engaged in a campaign to conceal the dangers of fossil fuel emissions from the public, regulators, legislators, and others, resulting in a delayed transition away from fossil fuel emissions and worsening climate change. The lawsuit also alleges that Duke Energy misled the public regarding Duke Energy’s support for, and actions toward, transitioning its fossil fuel portfolio to renewable energy. The damages alleged range from road and stormwater-system impacts to increased electricity costs and recurring invasions and interferences from extreme weather events. The lawsuit asserts state-law claims for public nuisance, private nuisance, trespass, negligence, and gross negligence, and is seeking an unspecified amount of monetary damages. The case has been transferred to the North Carolina Business Court. Duke Energy cannot predict filed a motion to dismiss the outcome litigation based on lack of this matter. subject-matter jurisdiction on March 17, 2025, and filed a motion to dismiss based on failure to state a claim on which relief can be granted on May 9, 2025. Oral argument regarding Duke Energy's motions to dismiss was held on September 25, 2025. As requested by the court, supplemental briefing addressing various aspects of causation, including traceability and proximate cause, was filed on October 25, 2025. On February 12, 2026, the court granted Duke Energy's motion to dismiss the litigation based on lack of subject-matter jurisdiction. In light of the dismissal, the court denied the motion to dismiss for failure to state a claim as moot.

Duke Energy, through a nonregulated subsidiary, was the winner of the Carolina Long Bay offshore wind auction in May 2022 and recorded an asset 2022. The historical cost of the rights acquired from the auction, totaling $150 million related to the contract is recorded in Other within Other noncurrent assets on the Duke Energy's Consolidated Balance Sheets as of December 31, 2024 2025, and 2023. The asset is recorded at historical cost and is subject to impairment testing should circumstances indicate the carrying value may not be recoverable. In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay, which was moved to the EU&I segment. See Notes 2 and 3 for further information. 2024.