1. Over 3,300 Megawatts and Counting Growing and Transforming One of Nation’s Largest DSM Portfolios

2. ABOUT DUKE ENERGY Six regulated operating companies: Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana, Duke Energy Ohio, Duke Energy Kentucky About Duke Energy

3. Examples of Programs Impacting Demand Energy Efficiency Programs Interruptible Service Time of Use Rate Offerings Real Time Pricing Demand Side Management (DSM) Programs Results – Defer the need for additional power plants, delay the need for transmission and distribution upgrades, and reduce fuel costs used in generation.

4. 1,157 MW Residential, 1,851 MW Commercial Summer DSM Capabilities

5. Duke Energy DR Portfolio = 2,100+ Winter MW Carolinas Duke Energy Progress Residential 10 MW Commercial 233 MW Duke Energy Carolinas Commercial 450 MW Midwest Duke Energy Indiana Commercial 346 MW Duke Energy Ohio Duke Energy Kentucky Florida Duke Energy Florida Residential 685 MW Commercial 433 MW 695 MW Residential 1,462 MW Commercial Winter DSM Capabilities

6. Duke Energy – DSM Programs A “Traditional” DSM Program EnergyWise Home Duke Energy Progress

7. Residential - EnergyWise Home Overview – Control of Residential AC Units, Heat Pump Strip Heat, and Water Heaters using cycling strategies – One-way RF paging switches using commercial paging – Both Summer and Winter Program Options – Summer - AC only, entire service territory, in 2014 120,000 customers yielding 251 MW – Winter - Water heaters, HP strip heat, western region only, in 2014 6,000 customers yielding 10 MW – 15% market penetration in 5 years Summer Program (System Wide) – Control Season – May through September – Control AC Units for up to 4 hours daily and up to 60 hours during control season – Participants receive an initial $25 bill credit and $25 annual bill credits – Participants have the ability to “opt-out” of control events twice per season (average of 46 per control event or 0.04%)

8. Residential - EnergyWise Home Winter Program (Western Region Only) – Control Heat Pump Strip Heat for up to 4 hours daily and up to 60 hours during control season Control Season – December through March Participants receive an initial $25 bill credit and $25 annual bill credits Participants have the ability to “opt-out” of control events twice each season (average of 2 per control event or 0.02%) Participants receive an initial $25 bill credit and $25 annual bill credits – Control Water Heating for up to 4 hours daily with no maximum limitation throughout calendar year Participants receive an initial $25 bill credit and $25 annual bill credits Customer Satisfaction – High customer satisfaction =>90% four years in a row Current and Future Growth Initiatives – Multi-family rental market – Two-way Wi-Fi thermostats – Expand Winter Program to entire service territory 5 yr Growth Summer MWs

9. Cycling Based DSM Technology A/C Compressor Run Times On 48 minutes Off 12 minutes Average Run Time per hour (example 48 out of 60 minutes) On - 24 min Off - 36 min 65% cycle On - 16.8min Off - 43.2 min On 4.2 min Off 10.8min On 4.2 min Off 10.8min On 4.2 min Off 10.8min On 4.2 min Off 10.8min On 6 min Off 9 min On 6 min Off 9 min On 6 min Off 9 min On 6 min Off 9 min 50% cycle

10. Cycling Strategies Two Schools of thought as to cycling strategies and the extent of their deployment – Deploy it as often as possible irrespective of necessity: – Use the maximum program hours per season – Employ higher cycling rates Result: Satisfies DSM needs, can cause program participants unnecessary discomfort and an increase in attrition rates Deploy it when it becomes absolutely necessary: – Use to satisfy system requirements due to capacity limitations or constraints – Use lowest possible cycling rates Result: Satisfies DSM needs, minimizes unnecessary participant discomfort, maximizes satisfaction and minimizes attrition

11. DSM Program Strategies Use participant based DSM Strategies that: Can be deployed effectively when needed; That effectively lessen the need for supply side resources, as designed, when those resources are in short supply or constrained; and Maintain the pool of existing participants and to attract new program participants

12. Duke Energy – DSM Programs A “non-Traditional” DSM ProgramDSDR

13. DSDR - Duke Energy Progress The Distribution System Demand Response (DSDR) Program is comprised of a system of enhanced equipment and operating controls which enables the reduction of peak load using the Company’s distribution system. DSDR is definitely a “Non-Traditional” DSM Program.

14. DSDR - Duke Energy Progress DSDR might be considered a “Non-Traditional” Energy Efficiency program as well. In any event …….. DSDR is an innovative voltage control program which is on the “leading edge” of grid technology and is an element of the Company’s overall Smart Grid strategy.

15. DSDR – What Does it Do? DSDR provides the ability to reduce peak load requirements which would otherwise require building peak load generation capacity. At present DSDR can provide over 320 MW. DSDR reduces system line losses (~32,000 MWH annually) DSDR reduces spinning reserves and related fuel requirements An additional benefit of DSDR is its capability to communicate with and help accommodate distributed generation and renewable resources

16. DSDR – How Does It Work? For a typical distribution feeder, voltage leaves the substation in proximity to the highest allowable voltage level and drops as it goes farther down the feeder to a level close to the lowest allowable level. The DSDR Program essentially provides and maintains consistent voltage to all customers served from the feeder. Consistent voltage across feeders maximizes the ability to reduce voltage when supply side resources are in short supply or constrained.

17. DSDR – Voltage “Equity” Lower Regulatory Limit Upper Regulatory Limit Illustrative Example of Voltage Control – Pre & Post DSDR Pre-DSDR Post DSDR Feeder Voltage Feeder Length

18. DSDR Principle of Operation Lower Regulatory Limit Upper Regulatory Limit Flattened profile allows greater Voltage Reduction Existing Flattened Profile after feeder conditioning Lower Voltage to Reduce MWs Feeder Voltage Feeder Length

19. DSDR – What Does it Need? Real Time Data from Substations and Feeder Devices Real time status of breakers, switches and reclosers The Distribution Management System (DMS) is the integral component of DSDR DMS utilizes approximately 240,000 data points Average of 200 points per feeder A typical feeder has 1,500 customers, 10 MWs, line regulators, an electronic recloser and an average of 1.5 Medium Voltage sensors 19

20. DSDR Illustrative Overview RegulatorCapacitor SUB DSCADA Distribution Management System Medium Voltage Sensor Low Voltage Sensor DMS receives telemetered data from substation devices, line regulators, cap banks, and MV/LV sensors. DMS runs load flow on GIS network model. DMS runs state estimation and calibrates the load flow calculations using the telemetered data. DMS will send out ‘switching sequences’ to change the ‘setpoints’ of regulators and status of capacitor banks. 20

21. Growing Customer Load Trajectory of Load (dotted) System Load (DEP) System Load for 4 Hours During 2014 Polar Vortex Generating Limit DSDR Load Reduction 5 AM 6 AM 7 AM 8 AM 9 AM 10 AM Example - Distribution System Demand Response Performance