New Nuclear Update Chris Fallon, Vice President Nuclear Development

October 17, 2014

Agenda

Overview of Duke Energy

Overview of Lee and Levy projects

Economic and political environment 2005-2013

Political environment

Carbon legislation and pricing

Forecast of various macroeconomic factors

Challenges facing new nuclear

2 Confidential and Propritary

Facts About Duke Energy

7.2 million electric customers / 500,000 natural gas customers

Fortune 250 company

$115 billion in assets

Stock dividends for 85+ years

Traded on NYSE as DUK

Dow Jones Sustainability Index

100 Best Corporate Citizens by Corporate Responsibility magazine

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Duke Energy Nuclear Fleet

10.5 GW

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Levy and Lee Licensing Timelines

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LEE

Licensing Milestones

Levy Plant Lee Plant

Application Submittal July 2008 Dec 2007

Safety Review

Phase A - Requests for Additional Information

(RAIs) and Supplemental RAIs

03/29/10 - A 05/20/10 - A

Phase B - Advanced SER without Open Items 09/16/11 – A

Sept. 2014

May 2015

Phase C - ACRS meeting on Advanced FSER 12/07/11 – A

01/18/13-A (CEUS)

Oct. 2014 (PXS)*

Sept. 2015

Phase D - Final SER March 2015 Dec. 2015

Environmental Review

EIS Scoping Summary Report Issued 05/28/09 - A 09/11/08 - A

Draft EIS Issued to EPA 08/06/10 - A 12/13/11-A

FEIS Issued to EPA 4/27/12 – A 12/23/13 - A

Combined Operating License

Mandatory Hearing (NRC Commissioners) July 2015* April 2016

Contested Hearing (ASLB) 10/31/12 - A NA

COL Issued August 2015* June 2016*

A – actual date * Schedule is Duke estimate.

CEUS – review of impact of updated seismic hazards for central and eastern United States nuclear plants

PXS – review of the Westinghouse condensate return design change to address deficiencies in the collection of condensate to support passive cooling

LEVY

• 2, 234 megawatts

• Two Westinghouse AP1000 pressurized water reactors

Nuclear energy is a critical element of the Duke Energy portfolio

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0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

Cap

acit

y (M

W)

Year

Nuclear Plant License Expirations3

5132 MW

8684 MW

Nuclear , 43.9%

Coal , 28.2%

Gas, 20.0%

Hydro , 1.0%

Other, 6.9%

Nuclear , 51.0%

Coal , 33.0%

Gas, 10.0%

Hydro , 3.4% Other, 2.6%

PEC 2013

Energy by

Fuel Type1

DEC 2013

Energy by

Fuel Type2 1 – Source 2012 PEC IRP 2 – Source 2012 DEC IRP 3 – Does not include non-Duke portion of co-owned plants

Factors Influencing Nuclear Development - Summary

Factor 2005 Forecast 2013 Forecast Impact Comments

Carbon Prices

Sensitivity analysis on $7

per ton starting in 2015

$20 per ton by 2030

$17 per ton starting in 2020

$40 per ton by 2030

Type and timing of future legislation, if any, is uncertain; however, the general trend relative

to 2005 expectations is for higher carbon prices occurring later in time (2020 vs. 2015).

Carbon price is required for new nuclear to be cost-competitive with natural gas at current

gas prices.

Natural Gas Prices $9/mmBTU in 2005

escalating at 1.5%

$4/mmBTU in 2012 escalating at 4-

5% over the long term

Projections for natural gas have been volatile over the period. In 2009, actual prices hit

$14 per million BTU.

Nuclear Capital

Costs ~$2,000/kW ~$5,000/kW

Projected nuclear capital costs rose significantly between 2005 and 2013. Since 2008 the

costs have escalated around the rate of inflation.

Cost of Capital Weighted average cost of

capital over 9%

Weighted average cost of capital

under 7%

Reduced financing costs in both the debt and equity markets have a substantial beneficial

impact on the viability of capital intensive nuclear investment

EPA Regulations

and Coal

Retirements

Minimal impact from EPA

regulations on coal-fired

generation - no plans for

coal retirements

New air, water, and waste

regulations target coal-fired

generation; Duke Energy has

retired approximately 3,000 MW of

coal production in the Carolinas

EPA’s regulatory agenda targeting coal-fired generation added significant cost and drove

numerous retirements. Proposed CO2 standard for new coal generation seen as barrier to

the development of new coal-fired power plants. Continued environmental regulations may

lead to further coal retirements. If EPA regulations require system reductions in CO2 output

new nuclear must be part of the equation.

Load Load growth on the order of

3% per year

Peak load predicted to grow ~1.4%

per year

Years of flat or negative load growth during the recent recession coupled with reductions in

projected future load have extended the time horizon for deploying all types of new

generation capacity, including new nuclear.

Renewables State renewable mandates

were not in place

NC requires 12.5% renewable retail

sales by 2020; SC solar legislation

under consideration

Renewable mandates have lowered the need for other types of new generation.

Nuclear Retirements

Earliest 60-year retirement

was Robinson, 25 years in

the future

Robinson retirement is only 17

years in the future.

As nuclear plant retirements get closer, the need to replace those plants’ reliable base load,

CO2 free generation becomes that more acute. The nuclear industry is evaluating another

20-year license renewal for some operating nuclear plants (up to 80-year life). 7

Challenges with the Deployment of New Nuclear

Project costs

Construction timeframe

New licensing regime

Changing regulatory requirements

Nuclear supply chain

Qualified workers

Codes and standards

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Appendix

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Research Needs - New Plants

Fusing process for High Density Polyethylene (HDPE) piping

Aging degradation mechanisms for HDPE piping

Updated water chemistry guidelines

Generic latent debris sampling methods to address containment sump blockage concerns

Self-consolidating concrete

Welding

Real-time NDE

Elimination of dissimilar metal welds

Seismic modelling

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Research Needs – Operating Plants (Subsequent License Renewal)

Reactor Vessel Internals

Crack initiation and crack growth prediction models

Reactor Vessel

Neutron fluence on reactor vessel materials and embrittlement

Structures

Reactor cavity concrete after 80 years of exposure

Impact of boric acid on spent fuel pools

Alkali-Silica Reaction (ASR) Screening

Radiation damage to reactor pressure vessel supports

Electrical cables

Temperature and radiation dose effect

Service aged cable – remaining qualified life

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12 Confidential and Propritary