TEXT-Fitch rates Duke Energy Corp and units

July 6 - Fitch Ratings has assigned initial Issuer Default Ratings (IDR) and
instrument ratings to Duke Energy Corp. (DUK) and its operating
subsidiaries as follows:

DUK
--IDR 'BBB+';
--Senior unsecured debt 'BBB+'.

Duke Energy Carolinas, LLC (DEC)
--IDR 'A-';
--Secured debt 'A+'.

Duke Energy Indiana, Inc. (DEI)
Duke Energy Ohio, Inc. (DEO)
Duke Energy Kentucky, Inc. (DEK)
--IDR 'BBB+';
--Secured debt 'A'.

The Rating Outlook for all entities is Stable. A detailed list of rating actions
appears at the end of this release.

The existing ratings of recently acquired Progress Energy, Inc. (PGN, 'BBB' IDR)
and its operating subsidiaries Carolina Power & Light Co. (PEC, d/b/a Progress
Energy Carolinas, Inc.; 'A-' IDR) and Florida Power Corp. (PEF, d/b/a Progress
Energy Florida; 'BBB+' IDR) are unchanged.

Key Rating Drivers

PGN merger: The ratings incorporate DUK's increased scale and enhanced financial
flexibility as a result of the merger with PGN. Longer-term, economies of scale
and the geographic proximity of the service territories should create synergy
opportunities that strengthen credit quality measures. The recently announced
resignation of the Chief Executive Officer did not affect the ratings.

Utility Operations: The consolidated ratings are supported by the credit
strength and cash flow diversity of six regulated utility subsidiaries operating
in six states. Post-merger, utility operations will provide approximately 85% of
consolidated earnings and cash flow. DUK's two largest and financially sound
utility subsidiaries, DEC and PEC (IDR 'A-' for both companies), will account
for approximately 55% - 60% of utility earnings.

Credit Metrics: In 2013, the first full year of operation for the combined
entity Fitch estimates consolidated EBITDA/interest, FFO/interest and FFO/debt
of approximately 4.75 times (x), 5.0x, and 20% respectively, which is consistent
with Fitch's target ratios for 'BBB+' issuers and DUK's peer group of utility
parent companies. Debt/EBITDA, however, will be somewhat weak for the rating
category with 2013 Debt/EBITDA projected by Fitch to be about 4.25x, trending
down to about 4.0x over the next two years.

Construction Expenditures: Consolidated capital expenditures for the merged
entity trend downward through 2013, as current modernization projects come on
line through 2012. Expenditures then begin to increase in 2014 reflecting
environmental expenditures, an expected increase in customer connections
relative to recent years, potential new generation and discretionary
expenditures.

Liquidity: DUK has sufficient liquidity to meet its operational needs and debt
refinancing requirements, but will require continued capital market access. In
November 2011, the company entered into a new $6 billion, five-year master
credit facility; $4 billion became available at closing and the remaining $2
billion became available following the completion of the PGN merger.

Rating Concerns

Consolidated Leverage: The acquisition of the more levered PGN increases the
proportion of debt at the parent level (DUK plus PGN). Pre-merger, Duke had
approximately 20% of its $23 billion consolidated debt at the parent level,
compared to about 33% for PGN. Post-merger parent debt (DUK plus PGN) is
expected to approximate 25% - 27% of total debt.

Achieving synergies: DUK is at risk for system fuel savings included as part of
the merger settlement agreement with the North and South Carolina Commission's.
The companies agreed to guarantee $650 million in system fuel savings for
Carolina retail customers over the next five years (plus an additional 18 months
if coal consumption at certain plants is less than originally forecast due to
low gas prices).

Environmental Exposure: Pre-merger, DUK (excluding PGN) derived approximately
60% of its electric generation from coal-fired facilities and Fitch expects
environmental spending to increase over the five-year period 2012-2016. DEI
and DEK are authorized to recover environmental spending through tracker
mechanisms. Both PEC and PEF are relatively well positioned to meet
environmental compliance regulations and have more modest capital investment
requirements.

What would lead to consideration of a negative rating action?

--Adverse regulatory outcomes;

--An increase in the percentage of parent level debt.

What would lead to consideration of a positive rating action?

--Not likely at parent or Duke Carolinas;

--Ratings of DEI could improve with continued rate support, while any
improvement in the DEO ratings would be dependent on more clarity with respect
to the proposed asset transfer and regulatory environment in Ohio.

Duke Energy Carolinas, LLC

Key Rating Drivers

Credit metrics: Credit metrics are strong and should improve in 2012, due to
rate increases implemented in North and South Carolina effective January 2012.
Fitch expects EBITDA/interest and FFO/interest coverage measures to approximate
5.5x and 6.0x, respectively in 2012 and debt to EBITDA roughly 3.5x.

Constructive regulatory environment: Fitch considers regulation in North
Carolina, DEC's primary regulatory jurisdiction, to be constructive. NC state
regulation permits annual tariff adjustments to recover fuel, demand side
management, energy efficiency and certain renewable costs.

Capital expenditures: DEC is nearing the end of a major construction cycle with
the expected completion in 2012 of two major projects. Both the 825 MW Cliffside
coal-fired unit and the 620 MW Dan River combined cycle gas-fired unit are
expected to enter commercial operation before year-end. Capex is expected to
ramp up after 2013 primarily due to environmental spending.

Rate support: Continued rate support is critical for maintenance of existing
ratings. Duke Carolinas expects to file a rate case in North Carolina in 2012
with rates to be effective in 2013. The 2012 filing is the last of a three-year
plan (2009, 2011 and 2013) to recover modernization investments.

Duke Energy Indiana

Key Rating Drivers

Credit metrics: Credit metrics are strong and should begin to trend upward
following the expected recovery of additional Edwardsport financing costs later
this year. Fitch expects EBITDA/interest and FFO/interest coverage measures to
approximate 5.5x and 5.0x, respectively in 2012. Leverage is moderately high
with 2012 debt to EBITDA and FFO/debt projected at approximately 4.0x and 17%,
respectively.

Regulatory environment: Fitch considers regulation in Indiana to be
constructive. Favorably Indiana statutes permit recovery of environmental costs.

Settlement Agreement: In April 2012, DEI entered into a settlement agreement
that largely resolves the regulatory treatment of the company's investment in
the Edwardsport integrated gasification combined cycle (IGCC) plant. The
agreement establishes a $2.59 billion cap on costs to be reflected in customer
rates compared to a final estimated cost of $3.3 billion. The company also
agreed not to request a retail base rate increase prior to March 2013, with
rates in effect no earlier than April 1, 2014.

However, due to the settlement, customer rates will increase approximately 9.6%
above the approximately 5% impact already in rates through a rider mechanism.
Due to the settlement agreement, DEI wrote-off $420 million, in addition to
previous write downs of $222 million and $44 million. To restore DEI's balance
sheet and achieve its authorized regulatory equity ratio of 51%, DUK is
foregoing dividends from DEI in 2012.

Duke Energy Ohio

Key Rating Drivers

Credit metrics: Credit metrics are very strong but will trend downward due to
the new electric security plan (ESP) implemented Jan. 1, 2012. The ESP
effectively moved all generation to market based rates effective Jan. 1, 2012.
The current market price for energy is well below the power prices embedded in
its previous ESP.

ESP: The ESP provides for competitive auctions to supply the load obligations of
customers that do not choose an alternative energy supplier. Supply costs are
recovered from rate payers. The ESP requires DEO to transfer its generating
assets at net book value to an affiliate by Dec. 31, 2014 and establishes a
non-bypassable charge of $110 million per year for the three-year period 2012 -
2014 that will mitigate the impact of losing the above market margins on retail
supply under the previous ESP. The ESP stipulates that the transferred
generation cannot receive credit support from Duke Ohio. DUK will provide credit
support, if needed, through an inter-company loan agreement.

Recapitalization: To reflect the higher merchant risk of the generating assets
and to maintain credit quality, DEO will be recapitalized by refinancing
approximately $900 million of debt at DUK. The debt transfer will be
accomplished by refinancing $500 million of maturing debt (Sept. 15, 2012) with
new parent debt and remarketing $400 million of tax-exempt debt at the parent
thereby avoiding any make-whole premiums.

Duke Energy Kentucky

Key Rating Drivers

Credit metrics: Credit metrics are strongly positioned in the 'BBB+' rating
category. In the near term, credit metrics are expected by Fitch to trend
downward but remain supportive of the current ratings, due to high capex and a
two year rate freeze agreed to as part of the settlement agreement approving the
merger with PGN. Fitch expects EBITDA/interest and FFO/interest coverage
measures to approximate 6.0x in 2012 and to trend moderately downward in 2013.

Regulatory environment: Fitch considers regulation in Kentucky to be
constructive. Regulatory statutes permit recovery of environmental costs, which
is particularly important given the company's reliance on coal-fired generation.

Environmental exposure: Relatively large capital expenditures are required to
comply with environmental regulations. Fitch expects the financial impact to be
mitigated by the environmental cost recovery clause in Kentucky, but credit
metrics are expected to trend down from currently very strong levels.

Fitch has assigned the following ratings with a Stable Outlook:

Duke Energy Corp.
--Long-term IDR 'BBB+';
--Senior unsecured debt 'BBB+';
--Short-term IDR 'F2';
--Commercial paper 'F2'

Duke Energy Carolinas, LLC
--Long-term IDR 'A-';
--First mortgage bonds 'A+';
--Senior unsecured debt 'A';
--Short-term IDR 'F2'

Duke Energy Indiana, LLC
--Long-term IDR 'BBB+';
--First mortgage bonds 'A';
--Senior unsecured debt 'A-';
--Short-term IDR 'F2'

Duke Energy Ohio, LLC
--Long-term IDR 'BBB+';
--First mortgage bonds 'A';
--Senior unsecured debt 'A-';
--Short-term IDR 'F2'

Duke Energy Kentucky, LLC
--Long-term IDR 'BBB+';
--First mortgage bonds 'A';
--Senior unsecured debt 'A-';
--Short-term IDR 'F2'