DEI 2015 Sustainability Report

2015 SUSTAINABILITY REPORTgeneration/next

TABLE OF CONTENTS3 4 5 8ABOUT THIS LETTER FROM LETTER FROM ABOUT DEIREPORT THE PRESIDENT THE VICE PRESIDENT14 20 22 24DEI STRATEGY STAKEHOLDER MATERIALITY ORGANIZATIONAL IDENTIFICATION EXCELLENCE & ENGAGEMENT44 62 76 86ENVIRONMENTAL SAFETY CULTURE SOCIAL GRI G4FOOTPRINT & QUALITY COMMITMENT CONTENT WORKFORCE INDEX

NEW PATAGONIA NATIONAL PARK, AYSÉN REGION - CHILEABOUT THIS REPORT G4-28, G4-29, G4-30, G4-31Duke Energy International (DEI) is proud to share with you our eighth annual sustainability report.This year’s theme—“Generation/Next”—aligns with Duke Energy’s corporate report and reflects ourcompany’s focus on the future. To ensure DEI’s ongoing success, we are committed to providingcompetitive, reliable energy to current customers while developing sustainable energy solutions forfuture generations.Our current sustainability report covers calendar year 2015. Published in accordance with the GlobalReporting Initiative (GRI) G4 Core option guidelines, the flags throughout the report identify the GRIG4 Indicator disclosed. While the data in this report have not been externally assured, this reportsuccessfully completed the GRI Content Index Service in June 2016.If you have any questions or comments about this report, please contact Michael Bernard, VicePresident, International EHS and Operational Excellence, at [email protected]. 2015 SUSTAINABILITY REPORT / 3 /

LETTER FROM THE PRESIDENT G4-1 year without a reportable employee incident. We also experienced the best contractorARMANDO HENRIQUES Dear Stakeholders: safety performance in our company’s history.PRESIDENT, DUKE ENERGY Our employees and contractors have provenINTERNATIONAL It is with great pleasure that I present that it is possible to deliver the highest quality the Duke Energy International (DEI) 2015 of customer service while also meeting the Sustainability Report. The theme of this year’s highest standards of workplace safety. report is “Generation/Next,” reflecting how we are working tirelessly to provide clean, safe, Throughout our organization, we reliable and affordable energy for our current continue looking for ways to improve upon and future customers. In 2015, we revisited ourworld-class safety culture. Each of our and refreshed our Materiality Assessment to business units conducts gap assessments focus this report on the sustainability topics of our Safety Behaviors Standards; we will most important to our many stakeholders. use these results to further refine our safety performance. We remain confident in our This last year has been a time of great change ability to achieve zero recordable injuries for DEI, as my former colleague Andrea Bertone ina calendar year on or before 2018. announced her departure from DEI in March 2016. I join all DEI employees and stakeholders FINANCIAL PERFORMANCE in thanking Andrea for her eight years of dedicated service. Despite this change, we In 2015, DEI increased sales of generated continue advancing our strong Safety Culture power by 3.1 percent, to 19.2 million GWh. and Operational Excellence Program to achieve However, the continued extreme drought in year-over-year improvements in performance Brazil combined with widespread economic and drive our people, processes and technology slowdowns throughout Latin America to excel. contributed to a 23.2 percent decline in our operating revenue from 2014. Our leadership SAFETY CULTURE remains strong and we are confident that our focus on safety, environmental stewardship In 2015, DEI achieved a significant milestone and operational excellence position us well toward achieving our bold “2018-Year Zero” for growth moving forward. Strategy. In April, facilities completed one fiscal\ 4 \ DUKE ENERGY INTERNATIONAL

DEI PRESIDENT, ARMANDO HENRIQUES, ENGAGING DUKE ENERGY BRAZIL EMPLOYEES G4-1 OPERATIONAL EXCELLENCEENVIRONMENTAL PROGRESS DEI is implementing programs that will transform the customer experience and engage employeesIn 2015, through continued investments in and stakeholders. Our Operational Excellencecleaner energy sources such as hydroelectric Management System (OEMS), launched in 2015,power, we decreased our carbon dioxide emphasizes the importance of Operations acrossemissions even as we increased total generation. the organization through standardized principlesOur carbon intensity improved from 0.28 and formal processes for internal communication.pounds of CO2/kWh in 2014 to 0.24 pounds/ The new OEMS supports our culture of safetykWh in 2015. I am proud of DEI’s contribution and environmental stewardship and marks ourto Duke Energy’s corporate goal of lowering most robust approach to date in meeting ourcarbon intensity to 0.94 pounds/kWh by 2020. Organizational Excellence objectives. The OEMS is already producing desirable results;Our energy portfolio, particularly our hydroelectric in 2015, DEI reached a total annual availabilityoperations, relies heavily on abundant sources of rate of 91.4 percent, exceeding our target offresh water. At the end of 2015, DEI completed 90.9 percent. I am proud of our nearly 1,200water footprint assessments in six of the seven employees who have demonstrated a greatLatin American countries in which we operate. ability to meet any challenge presented in ourBy early 2016, we will complete the last of 18-year history. They work each day to makethese assessments as we look to gain a deeper our energy as safe and reliable as possible, and Iunderstanding of how we can minimize DEI’s am honored to lead such a talented and devotedenvironmental impact and improve the quality group of people. As I look to 2016 and beyond,of life in our surrounding communities. We I am excited about the opportunities before us onshare the results of this initiative and our other The Road Ahead.environmental accomplishments in this report. Sincerely,DEI reached a total annualavailability rate of 91.4%, Armando de Azevedo Henriquesexceeding our target of 90.9%. President 2015 SUSTAINABILITY REPORT / 5 /

LETTER FROM THE VICE PRESIDENTMICHAEL BERNARD Dear Stakeholders, and commemorated the achievement with aVICE PRESIDENT, company-wide Safety Stand Down. LookingINTERNATIONAL EHS AND I am pleased to share DEI’s eighth annual ahead, we remain on track to reach ourOPERATIONAL EXCELLENCE Sustainability Report, which captures the ways 2018-Year Zero goal of operating an entire in which we continue to build upon our many calendar year without a reportable incident. successes in safety, environmental stewardship, operational excellence and our commitment to In 2015, each business unit completed the communities where we operate. Despite new environmental risk assessments to ensure the challenges faced in 2015, DEI continues potential hazards remain properly identified and to set new performance standards in safety controlled. The results of these assessments and sustainability year over year. We received will enable each DEI facility to develop stronger further external recognition for our safety preventive measures moving forward. Our waste performance as evidenced by The National minimization efforts also continue to produce Safety Council recently naming our former significant results. In 2015, we reduced fuel President, Andrea Bertone, as one of seven combustion by-products by 44.9 percent and corporate leaders “Who Get It” and demonstrate increased the amount of non-hazardous waste an unrelenting personal dedication to the safety recycled by over 30 percent. of their workforce. As our new President Armando Henriques Internally, we experienced another noted in his letter, we remain focused on groundbreaking year in safety performance, leveraging our strengths through a commitment achieving new record lows in both Total to continuous improvement over time. To this Incident Case Rate and Lost Workday end, we implemented our new Operational Case Rate for all DEI contractors. In April, Excellence Management System (OEMS) to we completed 12 consecutive months provide DEI with standardized, formal processes without a reportable employee incident, to meet sustainable objectives over time.\ 6 \ DUKE ENERGY INTERNATIONAL

HUASCARÁN NATIONAL PARK - PERUWe also launched the Operational Excellence an unrelenting focus on improving our safetyGap Assessment program to identify key areas performance, achieving operational excellenceof improvement across DEI. We discuss the and providing our customers with the highestresults of these initiatives in this report. quality of service daily. I would like to thank each of our employees for their tireless efforts inDEI’s Social Commitment initiatives such making DEI an industry leader in providing safeas Women Entrepreneurs continue to and reliable electricity to our customers. I inviteexpand across our operating area. In 2015, five you to read about our many accomplishmentscountries celebrated the first graduating class in this 2015 sustainability report.from this signature two-year program. ThroughWomen Entrepreneurs and other initiatives, Sincerely,DEI invested nearly $2.3 million in communitydevelopment in 2015, and our collective efforts Michael D. Bernardpositively affected over 204,000 lives. In Vice President, International EHSaddition to our social investments, nearly and Operational Excellence400 DEI employees—more than one-third ofour workforce—volunteered their time in 2015.We remain committed to our goal of increasingsocial program funding 20 percent over 2011totals by 2019.The coming year will be a time of great changefor DEI and for our workforce. Despite thechallenges that lie ahead, we remain dedicatedto excellence and the continuous improvementof our operations. Each of us will maintain 2015 SUSTAINABILITY REPORT / 7 /

EL CHAÑAR COMPENSATION DAM, CERROS COLORADOS COMPLEX - DUKE ENERGY ARGENTINA \ 8 \ DUKE ENERGY INTERNATIONAL

ABOUT DEIMain Business Operations G4-6, G4-8, G4-9DEI, a wholly owned subsidiary of Duke Energy Corporation, beganinvesting in Latin America in 1998. We own, operate and managepower generation facilities in seven countries in Central and SouthAmerica: Argentina, Brazil, Chile, Ecuador, El Salvador, Guatemalaand Peru. As a wholesaler of electricity, DEI’s customers includeelectric utilities, large-scale industrial and commercial companies,distributors, independent generators and energy marketers. DEIenhances people’s lives by providing affordable and reliableenergy services in a sustainable manner.Hydroelectric power comprises abouttwo-thirds of DEI’s generating capacity,and 100 percent of the electricity wegenerate in Brazil is from renewablehydroelectric sources.DEI is one of largest private generators of electricity in South andCentral America based on net capacity. We create value throughportfolio optimization and efficiency of our international energyoperations. The majority of the power DEI generates is eithercontracted or receiving a capacity payment.In addition to our power generation facilities, DEI also engages insales and marketing of electric power in Central and South Americaand natural gas in Argentina and Peru. We have an equity investmentin National Methanol Company, a Saudi Arabian regional producer ofmethanol and methyl tertiary butyl ether (MTBE), a gasoline additive.This report covers only our Latin American operations. Generation Diversity (Percent Owned Capacity) 70.0% H ydro 21.9% Thermo (Fuel Oil) 6.2% Thermo (Natural Gas) 1.8% Thermo (Coal) 2015 SUSTAINABILITY REPORT / 9 /

2015 DEI Business Unit Operations G4-4, G4-EU1, G4-EU2GUATEMALA SAUDI ARABIAMW Fuel Oil................................. 171MW Fuel Oil/Diesel......................... 89 BRAZILMW Coal....................................... 83MW Diesel..................................... 18 Paranapanema–MW Hydro........ 2,241MW Total...................................361 DEB–MW Hydro............................. 33 MW Total................................2,274EL SALVADOR ARGENTINA OfficeMW Fuel Oil................................. 161 Fuel OilMW Fuel Oil/Diesel....................... 164 MW Natural Gas............................ 97 Natural GasMW Total...................................325 MW Hydro................................... 479 Coal MW Total...................................576 Hydro ECUADOR MW Diesel................................... 192 MW Total...................................192 PERU Egenor–MW Hydro....................... 352 Aguaytia–MW Natural Gas............ 192 MW Total...................................544 CHILE MW Diesel/Natural Gas................. 222 MW Hydro................................... 140 MW Total...................................3622015 DEI Generation PortfolioHydro Total Installed Owned MW Capacity Total MWh % of TotalThermo (Fuel Oil) MW Capacity Electricity GeneratedThermo (Natural Gas) 3,014 86%Thermo (Coal) 3,245 956 15,404,179 9%Total 1,017 280 1,646,844 4% 83 770,774 1% 289 232,875 83 4,333 100% 18,054,672 4,634\ 10 \ DUKE ENERGY INTERNATIONAL

2015 DEI Generation Portfolio (continued)G4-4, G4-EU1, G4-EU2Country / Facility Location Total Installed Owned Total MWhBusiness Unit MW Capacity MW Electricity GeneratedArgentina 576 Capacity 1,278,349 97 523 331,172Duke Energy Alto Valle Thermoelectric Plant Neuquen Province 88 947,177Argentina 479 435 11,908,173 Cerros Colorados Hydroelectric Complex Neuquen Province 2,274 471,656 2,087 1,490,151Brazil 101 96 431,347 414 425,062 Jurumirim Hydroelectric Plant Piraju, Sao Paulo State 394 517,981 73 69 3,835,280 Chavantes Hydroelectric Plant Chavantes, Sao Paulo State 72 34 2,435,882 83 39 2,218,174Duke Energy Salto Grande Hydroelectric Plant Salto Grande, Sao Paulo State 619Brazil/DEI Canoas II Hydroelectric Plant Palmital, Sao Paulo State 525 588 82,640Geraçao Canoas I Hydroelectric Plant Candido Mota, Sao Paulo State 354 499 350,874Paranapanema Capivara Hydroelectric Plant Taciba, Sao Paulo State 337 33 0 Taquaruçu Hydroelectric Plant Sandovalina, Sao Paulo State 31 362 350,874 Rosana Hydroelectric Plant Rosana, Sao Paulo State 362 357,412 222DEB Palmeiras and Retiro Small Guara municipality, 222 357,412 Hydroelectric Plants Sao Paulo State 140 140 847,255Chile 192 773,530 163 Yungay Thermoelectric Plant Cabrero municipality, 192 48,716Duke Energy Chile Bio-Bio Region 163 Quilleco and Santa Barbara 325 25,009 Duqueco Hydroelectric Complex municipalities, Bio-Bio Region 144 293 675,052 130 342,027Ecuador 164 100,073 148 232,875Duke Energy Electroquil Thermoelectric Plant Guayaquil, Guayas Province 17Ecuador 15 77(Electroquil S.A.) 361 2,637,557 361 1,572,790El Salvador 171 171 625,165 Acajutla Diesel Thermoelectric Plant Acajutla Port, Sonsonate Department 89 83 89 439,602Duke Energy Acajutla Vapor & Gas Acajutla Port, Sonsonate Department 18 83El Salvador Thermoelectric Plant 544 18 Soyapango Thermoelectric Plant Soyapango, San Salvador 247 544 Department 90 247 10 90Guatemala 10 5Duke Energy Arizona Thermoelectric Plant San Jose Port, 5Guatemala Escuintla Department 192 Las Palmas Thermoelectric Plant Escuintla, Escuintla Department 192 Las Palmas II Thermoelectric Plant Escuintla, Escuintla Department Laguna Thermoelectric Plant Amatitlan, Guatemala DepartmentPeru Cañon del Pato Hydroelectric Plant Huallanca, Ancash RegionDEI Egenor Carhuaquero Hydroelectric Plant Cajamarca Region Carhuaquero IV Hydroelectric Plant Cajamarca Region Caña Brava (Carhuaquero V) Cajamarca Region Hydroelectric PlantAguaytia Energy Aguaytia Thermoelectric Plant Ucayali Regiondel Peru*Duke Energy Argentina has a minority interest (3%) in Termoelectrica San Martin (TSM),Termoelectrica Manuel Belgrano (TMB) 1644 MW Natural Gas Power Plant located in the Buenos Aires Province. 2015 SUSTAINABILITY REPORT / 11 /

CAPIVARA 619 MW HYDROELECTRIC PLANT - DUKE ENERGY BRAZIL\ 12 \ DUKE ENERGY INTERNATIONAL

2015 Awards & RecognitionMany organizations have recognized DEI for our outstanding contributions to the communities where we operate.Honoree Award/RecognitionDuke EnergyDuke Energy Dow Jones Sustainability Index—North America for 10th Consecutive YearInternational(Houston) Harvard Business Review: #13 of the top 50 Most Empathetic Companies on Twitter. Duke Energy is among the bestDuke Energy corporate tweeters, providing reassurance, authenticity and emotional connection to make customers feel valued.Argentina The National Safety Council: Outgoing DEI President Andrea Bertone was named as one of the seven 2016 CEOs WhoDuke Energy Brazil “Get It.” This award is presented annually to organizational leaders who demonstrate continued and outstanding dedication to employee safety and well-being both on and off the job.Duke Energy ChileDuke Energy United States Chamber of Commerce: Special mention at the Business Citizenship AwardEl SalvadorDuke Energy Awarded for: Our “Renewable Energy for Patagonia” ProjectGuatemala In 2015, Duke Energy Brazil received a CDP Climate Change score of 96-C, exceeding the average of 87-C for the BrazilianDuke Energy Peru energy sector. This represents the best evaluation for Duke Energy Brazil since they began submitting to CDP in 2011, and also demonstrates how we maintain a transparent communication on the management of our emissions. Sustainability Studies Center (GVces) of Sao Paulo Business Management School (FGV-EAESP) and the “Getulio Vargas” (FGV) Foundation: National Greenhouse Protocol Program Golden Seal Awarded for: Demonstrating consistency and adherence to ISO 14065:2007 greenhouse gases emissions inventory criteria to the Brazilian GHG Protocol Program “Exame” Magazine 2015 Sustainability Guide: Model company in Corporate Social Responsibility This publication highlighted DEI’s excellent environmental performance, research and development on ways to increase power generation without the construction of new power plants, thus avoiding additional environmental impacts. Great Place to Work (GPTW) Institute: Top 5 Great Places to Work in Brazil Duke Energy Brazil ranked #5 of 1,454 companies HR Management Magazine: The 100 Best Companies on Corporate Citizenship: Awarded for demonstrating best practices on employee and leadership development and organizational climate improvement 150 Best Companies in People Management Practices (PGPs) 2015 Top 10 Best Companies for Diversity 100 Best Companies in Brazil in Human Development One of the most admired HRs in Brazil Among the 50 Best Psychologically Healthy Companies 100+ Innovative use of IT This is the 13th time DEI was recognized for the application of technology in business innovation. Duke Energy: James B. Duke Award awarded to Mr. Marco Zannuto, Duke Energy Brazil employee Awarded for: Valuable volunteer work developing contractors at Salto Grande Hydroelectric Plant Charrúa E-1104 School recognized Duke Energy Chile’s contribution on obtaining the National System Environmental Certification for Educational Establishments (SNCAE), achieving the level of Excellence. This distinction recognizes DEI’s permanent environmental commitment and its support to the educational community. TOP + Companies of America (Central and South America and the Caribbean): #5 “Best Company per Country” Awarded for: Outstanding Cultural and Organizational Climate This is the 3rd consecutive year DEI received this recognition, ranking among the Top Ten Companies in this category. TOP + Companies of America (Central and South America and the Caribbean): #1 “Best Company per Country” Awarded for: Outstanding Cultural and Organizational Climate This is the 3rd consecutive year DEI received this recognition, ranking among the top ten companies in this category. Great Place to Work Institute of Peru: # 7 in Top Great Places to Work in Peru for the 11th year Duke Energy Peru was the only recognized company from the energy sector in Peru. Special Recognition for Excellence in Participatory Social Responsibility This special award recognizes the best companies promoting active participation of employees and relatives in social responsibility programs. National Society of Mining, Petroleum and Energy (SNMPE) of Peru: Sustainable Development Award honorable mention This distinction recognized DEI’s efforts to measure and manage its water footprint at the Aguaytia Thermoelectric Plant. 2015 SUSTAINABILITY REPORT / 13 /

ALTO VALLE 97 MW THERMOELECTRIC PLANT - DUKE ENERGY ARGENTINA\ 14 \ DUKE ENERGY INTERNATIONAL

DEI STRATEGYSustainability Approach & GovernanceDEI aims to contribute to Latin America’s environmental andeconomic well-being by providing safe, reliable electricity that powersour customers’ lives and the vitality of our communities. Our companyanticipates and meets its end users’ high expectations by takingsteps to optimize our energy portfolio and pursuing cleaner andmore efficient operations.DEI’s Sustainability Vision is to become aregional leader in clean power generationwhile maintaining an uncompromisingcommitment to our customers andcommunities, improving the safetyand quality of life for our employees andminimizing our environmental footprint.Our approach to managing Environmental, Health and Safety(EHS) issues aligns with Duke Energy Corporation’s strategy andexpectations. We developed a Sustainability Management System(SMS) to formalize sustainable decision-making across our company.The SMS also informs goals and action items that address each ofour Strategic Sustainability Priorities (SSPs). For more information,refer to page 16. G4-34The DEI President oversees our sustainability strategy and leadsother executives and regional presidents in meeting the objectivesset forth by our SSPs. Our leadership sets the tone for DEI’s entireculture, reinforcing the accountability necessary to maintain thehighest standards of safety and integrity within each business unit.The Duke Energy Board of Directors receives presentations onthe company’s strategy, including sustainability and corporatesocial responsibility issues. In-depth strategic discussion occursannually at a two-day meeting. In addition, two committees of theboard, the Corporate Governance Committee and the RegulatoryPolicy and Operations Committee, have oversight over a variety ofsustainability issues. These committees receive periodic updates onthe sustainability issues that they oversee. The same applies to DEI’sSafety and Sustainability Oversight Committee and the SustainabilityManagement System Development Committee. 2015 SUSTAINABILITY REPORT / 15 /

DEI Sustainability Governance Structure DEI Sustainability Strategy Strategic Sustainability Priorities (SSPs)G4-34 Duke Energy Corporation Board of Directors Chief Executive Officer Executive DEI President Duke Energy Strategic Sustainability Priority Goals Vice President Operating &External Affairs & Functional Executives Initiatives Strategic Policy & Management Our company implements Duke Energy’s corporate Presidents, International EHS DEI Functional governance policies and systems in complianceRegional Operations & Operational Executives & with the U.S. Securities and Exchange Commission, Excellence Management Sarbanes-Oxley Act of 2002, New York Stock Exchange and the regulations of the countries where we operate. Safety & Sustainability For a complete overview of our corporate governanceSustainability Management System structure, including committees responsible for decision making on economic, environmental and social impacts, Oversight Development see the Corporate Governance Committee Charter page Committee Committee on Duke Energy Corporation’s website.DEI’s Strategic Sustainability Priorities (SSPs)Since 2012, we have used SSPs to guide our decision-making and drive continuous improvements in four key areas:Organizational Excellence, Environmental Footprint, Safety Culture and Quality Workforce and Social Commitment. Strategic Sustainability Why It Matters Priority (SSP)1 Organizational Excellence Organizational excellence is fundamental to the long-term success of our business and is essential to achieving our environmental and social goals.2 Environmental Footprint As an energy company, we have an impact on the environment and rely on natural resources for fuel. As a result, it is essential to the future of our organization and our communities to take steps to minimize our environmental footprint.3 Safety Culture & The success and future of our organization depends on the safety, quality, creativity, Quality Workforce and engagement of our greatest asset, our workforce.4 Social Commitment Our success links inherently to the positive relationships with the strong communities that we serve.Employees at every level are responsible for upholding our SSPs, which drive our long-term safety and sustainability performance.These priorities reflect DEI’s greatest values and keep us focused on working together as a single enterprise—not as individualbusiness units—to achieve our goals. In 2015, we made significant progress in meeting the corresponding goals for each priority,which we detail later in this report.\ 16 \ DUKE ENERGY INTERNATIONAL

DEI Strategic Sustainability Priority GoalsTo encourage ongoing progress in our SSPs, we set 16 Strategic Sustainability Priority Goals.Our leaders develop individual objectives, as needed, to align our company’s everyday activities with our long-term sustainabilitystrategy. We share our performance results internally at our quarterly and annual Safety and Sustainability meetings and externallyin our annual sustainability report.Strategic GoalSustainability 1.1Priority (SSP) 1.2 Sustainability As a central component of our organizational sustainability efforts, DEI will integrate Strategy the Strategic Sustainability Priorities of our Sustainability Strategy throughout theOrganizational 1.3 entire organization.Excellence Sustainable Decision Recognizing the organizational, stakeholder and environmental value of sustainability, DEI will 1.4 Making incorporate sustainable criteria into our decision-making and strategy development processes. 1.5 Organizational Aligned with our priority of achieving and maintaining organizational excellence, DEI will Excellence increase the percentage of plant capacity certified under international management systems 2.1 for environment, safety and quality. ContinuousEnvironmental 2.2 Improvement As our organization continues to drive innovation and sustainable solutions, DEI will leverageFootprint 2.3 Program the Continuous Improvement Program (PMC) database to develop projects across all DEI operating regions. 2.4 Supplier Code of Conduct Through our commitment to organizational transparency and best practices, DEI will 3.1 incorporate the Duke Energy Supplier Code of Conduct to encourage and improve sustainable Climate Change practices along our supply chain.Safety Culture 3.2 Strategy& Quality 3.3 To support the Duke Energy Sustainability Plan and minimize our organizational environmentalWorkforce Organizational footprint, DEI will ensure participation and contribution to the Duke Energy Corporate Carbon Environmental Goal and Climate Change Strategy. 3.4 Transparency Carbon Organizational environmental transparency is critical to a positive long-term relationshipSocial 4.1 Footprint with our stakeholders. Therefore, DEI will proactively disclose our carbon impact onCommitment 4.2 the environment. 4.3 Environmental Stewardship While maintaining a fuel agnostic growth strategy, DEI will favor hydroelectric and renewable energy projects over higher carbon intensity alternatives. Safety Culture With the objective of reducing the environmental impact of our operations on the Human Rights communities we serve, DEI will work toward ensuring efficient energy consumption and waste and water reduction. Employee Engagement Through the pursuit, innovation and implementation of international best practices, DEI is Employee committed to maintaining a world-class safety culture, ensuring contractors and employees Retention & leave the workplace healthy and safe. Development Stakeholder DEI pledges to respect and preserve the human rights of all employees and contractors, while Engagement rejecting child labor, forced or compulsory labor and any conduct that creates an unsafe, Community intimidating or offensive work environment. Involvement Investment Recognizing that our workforce is our greatest asset, DEI will leverage the results of the annual in Local Employee Opinion Survey (EOS) to drive and reinforce integrity, rigor, safety and teamwork. Communities As part of our commitment to retain, develop and attract top-tier employees, DEI will leverage the knowledge, best practices and collaboration skills of our valued workforce through the implementation of an international cross-country training program. To better listen to, understand, prioritize and engage our stakeholders, DEI will conduct regional stakeholder engagement assessments across the entire organization. Understanding the importance of engaging our communities, DEI will enhance the development and support for cultural and social initiatives within the areas that we operate. Through the promotion of infrastructure development projects in the regions that we serve, DEI will continue to further our commitment to building strong relationships and resilient communities. 2015 SUSTAINABILITY REPORT / 17 /

2015 ProgressGOAL 1.1 DEI made significant strides in 2015 toward achieving our 16 SSP Goals. While many link directly to specific sustainability topics covered in this report, the three highlighted below extend beyondSUSTAINABILITY one topic and demonstrate DEI’s strategic approach to sustainability.STRATEGY SUSTAINABILITY STRATEGYAs a central component of ourorganizational sustainability Continual improvement remains a central component of our sustainability strategy. In 2015, DEIefforts, DEI will integrate adopted a new Sustainability Policy reflecting our company’s commitment to operate in a sociallythe Strategic Sustainability and environmentally responsible way. This policy, aligned with both Duke Energy’s EnvironmentalPriorities of our Sustainability Policy and Health and Safety Policy, serves as a guide in setting challenging goals and assessingStrategy throughout the our performance over time.entire organization. We also continue to roll out three sustainability guidelines: Stakeholder Mapping and Analysis,GOAL 1.2 Stakeholder Engagement and Sustainability Risk and Impact Assessment. Each of our business units identified and prioritized stakeholders and assessed sustainability risk for their respectiveSUSTAINABLE countries. Looking ahead, they will develop stakeholder engagement strategies to focus on theDECISION stakeholders and issues that matter most in their countries.MAKING SUSTAINABLE DECISION MAKINGRecognizing the organizational,stakeholder and environmental DEI developed its OEMS to reflect our Company’s commitment to protect and benefit our people, ourvalue of sustainability, DEI will contractors and suppliers, the environment and communities where we operate. We discuss this newincorporate sustainable criteria system in the Organizational Excellence section of this report.into our decision-making andstrategy development processes. Throughout 2015, we added several sustainability metrics for our business processes, which we use to assess the safety, environmental and social aspects of each potential project and acquisition. We also developed new guidelines for energy efficiency and water stewardship, which support the Sustainability Management System. We will roll out these guidelines in early 2016. DEI’s long-term success depends on our ability to adapt to changing conditions and weather events.GOAL 2.1 NEUQUÉN PROVINCE, PATAGONIA REGION - ARGENTINACLIMATE CHANGE CLIMATE CHANGE STRATEGYSTRATEGY DEI’s long-term success depends on our ability to adapt to changing conditions and weather events—such as extended periods of rain or drought—caused by climate change. We engageTo support the Duke Energy stakeholders along river systems to develop long-term water supply plans and drought resilienceSustainability Plan and capabilities. Through Duke Energy, we support climate change policies that will result in reductionsminimize our organizational in greenhouse gas emissions at achievable rates over time. At the same time, we must balanceenvironmental footprint, DEI impacts to our customers’ rates, the economies of our service territories and the reliability thatwill ensure participation and our customers count on. Details of how we actively work to reduce CO2 emissions are discussedcontribution to the Duke in Environmental Footprint (page 50).Energy Corporate Carbon Goaland Climate Change Strategy.\ 18 \ DUKE ENERGY INTERNATIONAL

Strategic Memberships G4-16DEI’s sustainability strategy involves active membership and leadership in many organizations and associations. Our continuedparticipation at the local, national and global level reinforces our resolve to be stewards of environmental and social responsibilityin the regions where we operate.Business Unit Association Business Unit AssociationDEIDuke Energy Occupational Resource Council (ORC) - Worldwide Duke Energy Federation of Industries of the State ofArgentina Occupational Safety and Health Group Brazil Sao Paulo (FIESP/SIESP) (continued)Duke Energy National Safety Council (NSC) Engineers Union of the State of Sao Paulo (SEESP)Brazil Duke Energy American Society of Safety Engineers (ASSE) Chile Union of Electricians of Ipaussu Region American Chamber of Commerce - Argentina Duke Energy Union of Electricians of Campinas (AmCham) Ecuador (Electroquil American Chamber of Commerce - Association of Electric Power Generators S.A.) Chile (AmCham) of Argentina (AGEERA) Duke Energy Centre for Business Sustainability (NBS) Dam Safety Foundation El Salvador Generating Trade Association of Chile Argentine Renewable Energy Chamber (CADER) Duke Energy Guatemala American Chamber of Commerce - Global Sustainable Electricity Partnership (GSEP) Ecuador (AmCham) Duke Energy Brazilian Association of Electricity Peru Guayaquil Chamber of Industry Consumers (ABCE) Business Centre for Sustainable Development Brazilian Association of Power Generating of Ecuador (CEMDES) Companies (ABRAGE) Regional Electric Integration Commission - Brazilian Association of Independent Power Ecuador Chapter (ECUACIER) Producers (APINE) American Chamber of Commerce - Brazilian Association of Energy Traders El Salvador (AmCham) (ABRACEEL) National Association of Private Companies (ANEP) American Chamber of Commerce - Brazil (AmCham) Chamber of Industry and Commerce of El Salvador Brazilian Association of Wind Power (ABEEOLICA) American Chamber of Commerce - Chamber of Energy Commercialization (CCEE) Guatemala (AmCham) Brazilian National Committee of Production Chamber of Industry of Guatemala (CIG) and Transmission of Electricity (CIGRÉ) Chamber of Commerce of Guatemala (CCG) Instituto Acende Brasil American Chamber of Commerce - Advisory Board of the Tejupa Environmental Peru (AmCham) Protection Area (APA) Swiss Chamber of Commerce in Peru Advisory Board of the Morro do Diabo State Park Area (PEMD) Association for the Promotion of National Infrastructure (AFIN) Alto Paranapanema Watershed Committee National Society of Mining, Petroleum Baixo Paranapanema Watershed Committee and Energy (SNMPE) Medio Paranapanema Watershed Committee Lambayeque Chamber of Commerce Paranapanema Federal Committee Pucallpa Chamber of Commerce Foundation COGE 2015 SUSTAINABILITY REPORT / 19 /

STAKEHOLDER IDENTIFICATION & ENGAGEMENTGOAL 4.1 G4-24, G4-25, G4-26STAKEHOLDER One of DEI’s Strategic Sustainability Priority Goals focuses on engaging stakeholders such asENGAGEMENT customers, employees, suppliers, investors, industry regulators, government officials and communities. As a result, we regularly review our approach to stakeholder engagement at the business unit levelTo better listen to, and update our efforts as the need arises. For example, in 2015, each business unit used ourunderstand, prioritize and Stakeholder Mapping and Analysis Guideline to identify the most significant stakeholder groups andengage our stakeholders, summarize the different interests, risks and opportunities presented by each. Each business unitDEI will conduct regional then developed a Stakeholder Engagement Strategy based on their in-country Stakeholder Mappingstakeholder engagement and Analysis results.assessments across theentire organization. To ensure we listen to our stakeholders’ most important topics and concerns, we regularly engage them. The feedback they provide influences our sustainability priorities and reporting. In 2015, we communicated our sustainability strategy and performance to stakeholders through our annual sustainability report, company and regional websites, awareness and training videos, newsletters, press releases, bulletins and other publications and social media. The table below details our current stakeholder groups and highlights some of DEI’s key engagement activities.2015 Stakeholder Engagement ActivitiesStakeholder Group Engagement Highlights Engagement FrequencyCustomers Customer surveys V aries across business units; twice a year in Brazil, once Customer forums a year in Argentina DEI plans to measure and evaluate more closely in 2016Employees Employee surveys Once a year Open forums & meetings with executives QuarterlyCommunities Continuous Improvement Program (PMC) Continuously throughout the year M eetings with local authorities and When necessary but at least once a yearSuppliers community organizations When requiredInvestors Plant toursGovernment: Legislators Supplier registration systems C ontinuously and every time DEI engages with a& Regulators Regular meetings with key suppliers new supplier Annual investor/shareholder meetings Once a year or when requiredAcademia Meetings with regulatory agencies When required or at least once a yearTrade Associations School of Business Program (Brazil) Annual programNongovernmental Duke at the Universities (Peru) Once a year and when requested by universitiesOrganizations (NGOs) Internships Plant visit program Regular forums and meetings Varies across business unitsMedia Ongoing dialogues with key groups When required Strategic alliances for project development Interviews & press calls When required Interviews and press calls Plant visits and tours Social media\ 20 \ DUKE ENERGY INTERNATIONAL

Key Topics & Concerns G4-27 COMMUNITIESThroughout 2015, our stakeholders provided In the communities where we operate,valuable feedback, insights and key concerns initiatives to provide new jobs and sustainedabout our business. Their key topics and economic development matter most. Residentsconcerns include: also expect DEI to protect community and environmental health and resources throughCUSTOMERS safe and responsible operating practices. They want our company to invest in localIncreasing population and rising power infrastructure such as lighting, pavement andgeneration costs create new challenges for water channel improvements. Locals wouldproviding affordable and reliable energy to our like social investment projects to support thecustomers. In addition to expectations that we elderly, children and community health. Wecomply with contractual conditions, customers highlight our efforts in the report sections ofbelieve we should focus on keeping energy Protecting Natural & Cultural Resources (pageprices competitive while enhancing the capacity 48), Water Quality & Availability (page 55),and reliability of DEI’s energy portfolio through Emissions & Air Quality (page 50), Wasteinfrastructure improvements. Learn about our Reduction (page 58), Community Developmentapproach to managing Reliable Electricity (page (page 78), Volunteerism (page 82) and Public32), Competitive Electricity Prices (page 36) Safety (page 85).and Customer Engagement (page 39). INVESTORSEMPLOYEES Profitability and competitive returns rankDEI’s sustainable business practices highest in importance to DEI’s investors. Otherare important to employees—along priorities include sustainable business practices,with environmental stewardship and operational excellence, zero safety incidents andsocial responsibility programs, employees strong corporate governance. This sustainabilitywant financial stability to provide long-term report transparently addresses investor interestemployment with competitive pay and benefits. in Profitability (page 29), OrganizationalAdditionally, our employees expect us to provide Excellence (page 25), Environmental Footprinta safe and healthy workplace. They also want (page 45), Worker Safety & Health (page 64)ample career development and professional and DEI Strategy (page 15).growth opportunities, while being able tobalance work and family life. Read how we GOVERNMENT & NONGOVERNMENTALmanage Worker Safety & Health (page 64) ORGANIZATIONS (NGOS)and Employee Attraction, Development &Retention (page 70). Our legislators, regulators and NGOs desire increased transparency in DEI’s reporting, regulatory and contractual compliance, as well as reliable and affordable electricity. These organizations also expect responsible operations supported by collaborative and ethical behavior. Learn more about our focus on Ethics & Compliance (page 41).ALUMINÉ AND MOQUEHUE LAKES, PATAGONIA REGION - ARGENTINA 2015 SUSTAINABILITY REPORT / 21 /

MATERIALITY Internal Materiality Review G4-18, G4-19 Our senior leaders use internal and external stakeholder feedback, plus relevant sustainability topics identified by Duke Energy Corporation, to determine our most important sustainability issues. In 2015, we evaluated the sustainability themes covered in our 2014 Sustainability Report and identified areas needing refinement. We used new materiality assessments conducted by our business units in Peru and Brazil to help refresh and prioritize our most important focus areas. Then, we validated our updated list of topics against the material sustainability issues identified by the Electric Power Research Institute (EPRI).ELECTROQUIL 192 MW THERMOELECTRIC PLANT - ECUADOR\ 22 \ DUKE ENERGY INTERNATIONAL

DEI’s Most Material Issues & Boundary G4-20, G4-21Our most important sustainability topics align with our stakeholders’ current needs and support our SSPs and Goals. Usingguidance from the Global Reporting Initiative, we considered the boundary for each material issue and determined whetherour impact lies primarily within or outside of our company. The topics covered in depth in this 2015 sustainability report are:Material Topic & Definition Boundary Report Page 29Organizational Excellence Internal, all DEI employees; External, 32 all DEI stakeholders 36Profitability: Long-term financial success, measured by total shareholder return—a 39commonly used investment calculation that reflects the change in stock price plus Internal, Operations; External, all 41dividends paid. DEI customers 42 Internal; External, all DEI customersReliable Electricity: Providing electricity with few to no interruptions. If interruptions 48occur, they are typically short. Internal, Marketing & Sales; External, 50 all DEI customers 55Competitive Electricity Prices: Overcoming rising costs in today’s electric utility 58industry to provide competitive rates to our customers. Internal, all DEI employees 64Customer Engagement: Involving customers and their interests in our activities and Internal, Procurement; External; DEI’s 70decision-making process to the extent practicable. We must continue to provide suppliers and communitiesexceptional customer service as we pursue operational excellence. 78 Internal, Operations; External, all 82Ethics & Compliance: Setting expectations and monitoring adherence to corporate DEI stakeholders 85values and applicable laws and regulations. Internal, Operations; External, allSupply Chain Sustainability: Collaborating with suppliers to lessen the environmental DEI stakeholdersand social impacts associated with sourcing, manufacturing and delivering productsand services as well as the disposal or reuse of materials as they reach their end of life. Internal, Operations; External, all stakeholders who share DEI’sEnvironmental Footprint water resources Internal; External, communities whereProtecting Natural & Cultural Resources: Preserving the natural habitats and the DEI operates and disposes of wastespecies that live within our operating areas, as well as buildings, objects, features,locations and structures having scientific, historic or cultural value. Internal, all DEI employees; External, all DEI contractorsEmissions & Air Quality: Reducing greenhouse gas and toxic air emissions, Internal, all DEI employees; External,particularly in countries where we produce electricity from thermoelectric facilities prospective employees in communitiesusing fossil fuels. where DEI operatesWater Quality & Availability: Minimizing the impact of electricity production on water Internal; External, all communitiesquality, in terms of chemical, nutrients and thermal pollution. Ensuring the short and where DEI operateslong-term availability of water for electricity generation while supporting all other uses. Internal, all DEI employees; External,Waste Reduction: Reducing the amount of waste produced, and reusing or recycling all communities where DEI operateswaste instead of disposing of it in a landfill. Internal, all DEI employees; External, all regions where DEI operatesSafety Culture & Quality WorkforceWorker Safety & Health: Implementing programs to protect the safety and health ofemployees and contractors.Employee Attraction, Development & Retention: Identifying skilland talent gaps in the workforce and then implementing programs to develop and/oracquire talent and improve employee engagement, retention and satisfaction.Social CommitmentCommunity Development: Contributing our resources to environmental, cultural,social, economic and infrastructure development programs to make communitiesstronger and more resilient.Volunteerism: Sharing our time and talent to strengthen the communities andenvironment where we operate.Public Safety: Providing education and awareness to prepare for both natural andmanmade disasters, as well as to prevent incidental contact with electric power linesand natural gas lines. 2015 SUSTAINABILITY REPORT / 23 /

BECOMING A LEADER IN SAFE, RELIABLE AND SUSTAINABLE ENERGY SERVICES\ 24 \ DUKE ENERGY INTERNATIONAL

ORGANIZATIONAL EXCELLENCEIntroduction/OverviewOne of our Strategic Sustainability Priorities (SSPs), Organizational WHY IT MATTERSExcellence, represents DEI’s continual effort to develop internalstandards and processes that strengthen our ability to power the lives Organizational excellenceof our customers and vitality of our communities. We uphold policies is fundamental to theand programs that drive positive change throughout the company and long-term success of ourinform the management of several material topics, including: business and is essential to achieving our environmentalProfitability Customer Engagement and social goals.Reliable Electricity Ethics and ComplianceCompetitive Electricity Prices Supply Chain SustainabilityOperational ExcellenceOperational Excellence—a strategic and relentless pursuit ofimprovements in our people, processes and technology—is atthe core of our approach to Organizational Excellence. It buildsupon DEI’s existing strengths through a commitment to safety,transparency, environmental stewardship, accountability, reliabilityand efficiency. In 2015, DEI made significant strides in this areaby developing an OEMS model supported by a vision, mission andcore values.Operational Operational Operational ExcellenceExcellence Vision Excellence Mission Core ValuesTo be a leader in Providing safe, reliable Reliability and Efficiencysafe, reliable and and responsible power Committed to Safetysustainable energy to enhance economic Environmental Stewardshipservices development in the Transparency communities we serve Accountability CommunitiesOrganizational Excellence builds upon DEI’sexisting strengths through a commitmentto safety, transparency, environmentalstewardship, accountability, reliabilityand efficiency. 2015 SUSTAINABILITY REPORT / 25 /

Operational Excellence Management System In 2015, DEI used elements of the SMS and ISO 55000 to develop an OEMS that formally established principles and processes used to meet our Organizational Excellence objectives. The new framework aligns with corporate strategies such as The Road Ahead and reflects our commitment to sustained high performance. The OEMS comprises four interconnected focus areas: Business Planning Implementation Measurement Performance ImprovementOperational Excellence Holistic ViewBUSINESS PLANNING INESS PLANNING IM IMPLEMENTATIONVision, Mission & Benchmarking ORMANCE IMPROVEMENT BUS OEMS PLEMENTATION Guidelines & ProceduresElement 1: R oles, Responsibilities POLICY Element 7: Governace & Labor Relations Element 8: Compliance Management & Accountabilitites MEASUREMENT PERF Element 9: Contractor, Supplier &Element 2: S takeholder Identification Partner Relationships & Analysis Element 10: Stewardship &Element 3: Risk ManagementElement 4: E mergency Preparedness Community Relations Element 11: Operations Reliability & ResponseElement 5: Security & EfficiencyElement 6: Goals & Objective Setting Element 12: Maintenance Effectiveness Element 13: Communications & ReportingPERFORMANCE IMPROVEMENT MEASUREMENTImplementation of Best Practices& Certification KPI’s & AuditsElement 18: Incident & Event Reporting Element 14: B usiness Performance & Investigation MeasurementElement 19: Audits & Assessment Element 15: Document ControlElement 20: H uman Performance Element 16: Asset Life Cycle & Training ManagementElement 21: Business Performance Eleme nt 17: Management of Change Review\ 26 \ DUKE ENERGY INTERNATIONAL

BUSINESS PLANNINGAfter defining the desired OEMS results, we establish the programs and activities needed to reachthese outcomes. DEI management uses the OEMS to create a shared vision and set expectationsaround each objective, assign roles and responsibilities for each task and provide the training andresources necessary for each person to succeed. We set high accountability standards within eachrole and promote open communication between employees and managers.IMPLEMENTATIONProper execution of DEI business plans helps strengthen operational reliability and efficiency andpromotes a strong ethical culture throughout our company. We encourage behaviors that help usachieve goals and targets, applying OEMS best practices to each task—every day and during eachshift. This consistency allows us to act quickly on new business opportunities and respond tochanges in stakeholder concerns and expectations.To develop our OEMS we added eight elements to our existing sustainability management system.These elements range from operations reliability and efficiency, to asset life cycle management, tobusiness performance review. After developing an assessment tool based on international bestpractices, a gap assessment of the eight new elements in each country showed effective implementationof the majority of elements, with room to improve in communication and reporting, as well as training.DEI will work through 2017 to define the activities and tasks within each new element.New Elements of Sustainability Management System Level 1 Level 2 Level 3 Level 4 Level 5 Not Observed Exploring Functional Effective Best Practice Implementation Program/Elements Program/Elements Program/Elements Best in Class have not been Currently Exist. Complete. Program/Elements Program. observed. Complete. Currently taking Not used frequently Continuous actions to reach or have areas for Usually effective improvement plan Functional status. improvement. however, does not in place to meet best practice maintain quality. standards.Operations Reliability 3.16& Efficiency 3.13MaintenanceEffectiveness 2.89 Overall 3.13 AverageCommunication 3.25& Reporting 3.06Document ControlAsset Life CycleManagementManagement of Change 3.13Human Performance 2.84& TrainingBusiness Performance 3.04Review 0.0 1.0 2.0 3.0 4.0 5.0 2015 SUSTAINABILITY REPORT / 27 /

MEASUREMENT Organizational Excellence relies on constant evaluation of our management systems, using several key indicators to assess our OEMS policies, goals and targets. For example, the Management of Change guidelines enhance worker safety by identifying potential risks in daily activities. In addition, reviewing historical Operations and Maintenance data leads to greater efficiency and a longer expected life of capital assets such as generating equipment. DEI tracks and reports monthly progress in the following nine key performance indicators (KPIs) for generation operations. Operational Excellence Evaluation Metrics KPI Benefits to DEI Equivalent Availability Factor (EAF) D emonstrates a unit’s equivalent availability over a given time Availability Factor (AF) period, and includes de-ratings. Planned Outage Factor (POF) Indicates machinery health/condition to justify the cost and budget for Unplanned (Forced) any needed repairs or upgrades. Outage Factor (UOF) Starting Reliability (SR) Indicates a unit’s ability/readiness to operate regardless of O&M Budget Performance (OMBP) its capacity. Gross Generation (GG) Net Generation (NG) Planned outages reduce unit availability to the market and can reduce sales. Relevant Events Optimizing outages improves availability, may increase sales and normally lowers cost. R educing unplanned outages will increase MW sales opportunities and improve reliability. A higher starting reliability will improve the plant’s opportunity to sell MW to the grid (within the required dispatch timeframe). Indicates that plant O&M non-fuel costs are budgeted and spent as anticipated; a good measure of effective management. Helps the plant to minimize auxiliary power loads. H elps the plant to minimize auxiliary power loads. There will be no penalty for operating under dispatch direction (e.g., for voltage or frequency control). T racks items that negatively affect performance, so the team can then investigate and address the causes using an Root Cause Analysis (RCA) process. PERFORMANCE IMPROVEMENT The greatest benefit of the OEMS is performance improvement over time. Through our management approach, we routinely conduct audits to identify performance gaps and develop action plans to address them. All facilities must report and investigate incidents and events to determine root causes and unsafe behaviors. We communicate the “lessons learned” from these interventions across DEI, which often leads to further refinements of our OEMS goals and strategies. In future assessments, we will use 2015 as the baseline year for OEMS improvements. Based on the results of our 2015 gap assessment, we identified three specific focus areas for 2016: F inalize development of a high-function Root Cause Analysis and Corrective Action Program (RCA/CA) that will be centrally administered and applied throughout the organization. Implement a “best-in-class” Workforce Qualification and Training program addressing employee progression from on-boarding to succession planning. Establish the standards, measures, principles and implementation methods of a “best practice” Human Performance Improvement program. We will continually assess and update the OEMS and set challenging goals that ensure industry-leading performance.\ 28 \ DUKE ENERGY INTERNATIONAL

ProfitabilityLong-term financial success, measured by total shareholder return—a commonly usedinvestment calculation that reflects the change in stock price plus dividends paid. G4-DMAWe are committed to the long-term growth of our company to benefit our shareholders and thecommunities we serve. Sustained profitability is the cornerstone of our Organizational ExcellencePrograms. Our financial performance directly affects the well-being of employees and thecommunities where we operate. DEI’s annual profitability will either enhance or limit our abilityto achieve overall sustainability goals and objectives.Each of the activities described in this report has a positive effect on profitability. For example,the way we manage other material topics, such as Competitive Electricity Pricing and EnergyReliability, aims to increase revenue and lower our cost of operations. Focusing on Organizationaland Operational Excellence enhances efficiency and therefore increases our ability to meetcorporate growth goals. External factors, including foreign exchange rates and the price andavailability of raw inputs such as water, coal and fuel oil, also can positively or negativelyinfluence financial performance.2015 PERFORMANCECollectively, DEI produces about 13 percent of Duke Energy’s adjusted net income. In 2015,DEI sold 19,211 gigawatt hours (GWh) of electricity in Latin America, compared to 18,629 GWhin 2014. While generation increased, our operating revenue declined to $1,088 million, downfrom $1,417 million in 2014. An extended drought in Brazil limited our ability to generate enoughhydropower to meet the obligations of our Power Purchase Agreements. This compelled us topurchase thermal generated power at a higher price, negatively affecting financial performance.A sustained economic slowdown throughout Latin America also contributed to the decrease in2015 operating revenue.ROSANA 354 MW HYDROELECTRIC PLANT - DUKE ENERGY BRAZIL 2015 SUSTAINABILITY REPORT / 29 /

G4-EC1 DEI Financial Highlights, 2011–2015 (in Millions of U.S. Dollars) Operating Revenues 2011 2012 2013 2014 2015 Operating Expenses 1,467 1,549 1,546 1,417 1,088 Gains/Losses on Sales Assets & Other, Net 1,403 1,000 1,007 Operating Income 938 805 Other Income & Expenses, Net -1 0 3 6 6 Interest Expenses 506 549 416 Income Before Interest & Income Taxes 528 171 125 190 289 Income Tax Expense 174 101 Minority Interest Tax Expense 76 86 93 Latin America EBIT 23 439 588 513 85 679 149 166 305 195 76 13 14 9 74 15 328 330 6 543 326 174 DEI Sales, 2011–2015 5,000 4,277 4,584 4,600 4,340 4,333 20,000 4,500 2011 2012 2013 2014 4,000 18,889 15,000 3,500 20,132 3,000 20,306 Sales in GWh 2,500 18,629 2,000 19,211 10,000 Proportional Capacity 1,500 1,000 2015 in Operation (MW) 500 5,000 0 0 2015 Economic Impacts, DEI Total by Business Unit (in Thousands of U.S. Dollars) Business Unit Capital Number of Total Tax Salaries Total Benefits Investment Jobs Created Payments Argentina 5,665 905 Brazil 965 0 5,019 12,547 4,222 Chile 15,116 1 49,876 Ecuador 0 -4,951 3,231 194 El Salvador 1,218 1 -7,301 1,094 227 Guatemala 6,065 0 5,498 788 Peru 5,222 0 2,860 7,769 502 DEI Total 2,296 10 842 15,890 2,836 14,305 12 51,694 9,674 Year 45,187 30,786 Number of 77,131 Salaries Total Benefits 2011 Capital Jobs Created 2012 Investment Total Tax 42,594 9,933 2013 34 Payments 42,720 16,886 2014 113,515 32 48,984 15,747 2015 550,777 81 127,482 53,685 14,198 58 143,569 51,694 66,726 12 155,453 9,674 65,708 45,187 64,844 77,131\ 30 \ DUKE ENERGY INTERNATIONAL

ARAUCARIA ARAUCANA, PATAGONIA REGION - ARGENTINA & CHILE 2015 SUSTAINABILITY REPORT / 31 /

Reliable Electricity Providing electricity with few to no interruptions. If interruptions occur, they are typically short. G4-DMA Providing a steady supply of electricity is critically important in our industry. The energy we generate supports national grids that power businesses, hospitals and homes, helps maintain the quality of life within the communities we serve and drives economic growth in developing regions. Maximizing our energy reliability helps us to leverage additional business opportunities from new and existing customers, which enhances our financial stability. It also reduces operating risks associated with equipment failures and unplanned outages. OPERATIONS & MAINTENANCE MANAGEMENT DEI’s approach to operations and maintenance (O&M) reinforces our position as a leader in providing reliable electricity. Operations Directors oversee the ongoing maintenance of each facility in their region. We maintain a systematic maintenance program for all critical equipment that references the principles outlined in the OEMS Policy and incorporates best practices within the energy industry. Our Argentina business unit developed an excellent operations planning and control system, Aurora, to track more than 20 Operations KPIs. We plan to leverage this in-house software across all business units to maximize efficiency of all company assets while complying with current laws. This tool will enable us to achieve the greatest return with the least environmental impact. Aurora’s strategic objectives include: Q uality: Provide timely and exact information to make better decisions Security: Protect company assets S ervice: Provide proactive, safe, reliable, low cost and high quality service Efficiency: Achieve operational excellence through continuous improvement Communication: Distribute operations information to other parts of the company Regulatory agencies inspect all DEI facilities to assess the condition of our power plants. We combine the feedback received from these audits with findings from our own internal reviews to identify gaps and improve our future management activities. G4-EU10 We use projected long-term demand for electricity to plan our future generation capacity in each operating region. This is challenging because several factors, including economic activity, conservation, legislation, governmental regulations, weather and additional generation capacities can affect the supply and demand for electricity. Improving system reliability requires determining the causes behind unplanned outages, maintenance delays and other unexpected events when they occur. In 2015, we initiated the review of an upgraded standardized Root Cause Analysis (RCA) Program, which we will finalize in 2016 and start implementing in 2017. DEI’s approach to operations and maintenance reinforces our position as a leader in providing reliable electricity.\ 32 \ DUKE ENERGY INTERNATIONAL

PEUCHÉN SURGE CHAMBER, DUQUECO HYDROELECTRIC COMPLEX - DUKE ENERGY CHILEEXCHANGING KNOW-HOW IN PERU & CHILEDEI identified a need to establish a standardized, integrated and systematic tool toanalyze failures, incidents or accidents. As a result, Duke Energy Peru developeda RCA methodology supported by theoretical/practical training in which teams ofemployees identify the origin of problems in our operations and propose creativesolutions to ensure that the faults do not recur.Two teams demonstrated excellent performance in the analysis process andproposed creative solutions—one for the thermal generation process and another forthe hydroelectric generation process. In recognition of their efforts, the Peruvian teamsvisited Duke Energy Chile in October 2015. In addition to touring the facilities of theDuqueco Hydroelectric Plant and the Yungay Thermoelectric Plant, the teams conductedan RCA workshop for the personnel in Chile, sharing their experiences in failure analysisand their proposed solutions for the problems they analyzed.The representatives of Duke Energy Chile liked the model developed by their colleaguesin Peru and agreed to use it in their business unit. “They provided a clear and preciseasset management planning program that demonstrates the operational excellence towhich we all aspire. Experiences such as this allow us to share good practices, whichwere timely in this case, for continual O&M improvement,” affirmed Cristobal Avello,Maintenance Supervisor of the Duqueco Hydroelectric Complex.“This is a way to recognize the performance and commitment of our employeeswith specific acts which go beyond diplomas and congratulations. This trip has beena very enriching experience for all, since it is not just a classic technical visit, but italso resulted in a more extensive exchange of know-how,” commented OperationsDirector Cesar Vega. 2015 SUSTAINABILITY REPORT / 33 /

ISO RECERTIFICATION IN CENTRAL AMERICA For the past nine years, our operations in Central America have utilized the international management standards ISO 9001, ISO 14001 and OHSAS 18001. In January 2015, external auditors evaluated DEI Central America’s Integrated Management System against international standards for two reasons: first, to determine whether system results met previously established requirements, and second, to verify if the requirements were appropriate to achieve the proposed objectives. DEI Central America’s Integrated Management System achieved recertification for the third time in 2015. This year’s audit identified only a few opportunities to improve our activities. This third recertification reflects the entire team’s efforts to maintain high performance management—once again showing our commitment to achieving efficiency in all of our processes. ISO CERTIFICATION Our Strategic Goal 1.3: Organizational Excellence demonstrates our commitment to follow international health, safety and quality-management system standards. DEI set targets to achieve ISO 9001 certification for 35 percent of operating capacity, ISO 14001 certification for 80 percent of operating capacity and OHSAS 18001 certification for 60 percent of operating capacity by 2020. In 2015, our operations in Brazil and Chile continued their preparations for achieving ISO Certification for various facilities and management systems, with plans to receive certification in the near future.GOAL 1.3 Percentage of DEI Total Operating Capacity with Certified Management Systems, 2011–2015ORGANIZATIONALEXCELLENCE 40% 35% 35% 39% 41% 41% 30% 26% 24% 24%Aligned with our priority of 20% 22% 20% 20% 24% 24%achieving and maintaining 10% 22% 22%organizational excellence, 2011 2012 2013 2% 2%DEI will increase the 0% 2014 2015percentage of plant capacitycertified under international ISO 9001: Quality Management Systemsmanagement systems ISO 14001: Environmental Management Systemsfor environment, safety OHSAS 18001: Occupational Health & Safety Management Systemsand quality. NBR 16001: Social Responsibility Systems (Brazil)\ 34 \ DUKE ENERGY INTERNATIONAL

CONTINUOUS IMPROVEMENT PROGRAM (PMC) TEAM - DUKE ENERGY GUATEMALAAVAILABILITY TARGETSSystem availability measures the amount of time that facilities operate as planned. We showDEI’s commitment to meeting customers’ demands through ambitious system reliability goals thatsignificantly exceed regulatory targets. Through the Short-term Performance Program, DEI linksemployee compensation to strong performance in this area. Improving our system availability directlysupports corporate Road Ahead priorities, and we communicate progress in monthly reports andquarterly meetings.Reaching annual availability targets requires our business units to work together and share bestpractices that minimize unexpected disruptions, maintenance delays and other mechanical problems.In 2015, DEI reached a total availability rate of 91.4 percent, which exceeded our target of 90.9percent. Continuing to exceed our availability targets will provide us with additional competitiveadvantage over other energy suppliers. G4-EU30 2011 2012 2013 2014 2015 94 94 94 94 92.5Business Unit 95 94 92 91 90.4Argentina 83 80 93.1Brazil 96 99.5 92 62 85.3Chile 93 98 98 96 96.3Ecuador 98 79 95 94 89.5El Salvador 82 91 90 93Guatemala 99 87 99 89 94.0Peru Egenor 94 96 93 90Peru Aguaytia 93 91.4DEI Equivalent Total 94 92.4 89.6 90.9Target 2015 SUSTAINABILITY REPORT / 35 /

Competitive Electricity Prices Overcoming rising costs in today’s electric utility industry to provide competitive rates to our customers. G4-DMA DEI competes directly with other generators and sellers of electricity, including publicly and privately owned companies and local distribution firms. We sell nearly all generated power through long-term purchase agreements; therefore, a failure to manage electricity prices has the potential to hurt our profitability for an extended period. Properly assessing our various proposals’ risks helps us to enter into “win-win” agreements with customers that secure long-term revenue and contribute to strong financial performance. G4-EC2 DEI must strike a balance between offering attractive prices to customers and managing our business risk for a given supply period. To remain competitive and provide sustainable energy to the next generation of DEI customers, we must learn how to manage the risks that climate change and severe weather events pose to our business. For example, extended droughts may limit our ability to run hydroelectric generating plants and force us to substitute other energy sources at an increased cost. MANAGING RISK Business units negotiate the sale of electricity under national rules and regulations. Although local market conditions largely influence energy values, DEI has several corporate policies to help regional managers assess the risks of different contract proposals. The Business Risk Management Committee sets bid parameters based on current and expected market conditions, and the Commodity Risk and Credit Risk Policies ensure consistent risk evaluation across all proposals. In certain regions, securing advance sales contracts for our available energy helps to maximize profitability. For example, Duke Energy Brazil monitors their Contracted Energy Volume on a monthly basis to measure sales performance. In 2015, they reached their goal of selling 90 percent of generated energy under contract. Looking ahead, Duke Energy Brazil made a portion of its generated energy available for sale through 2021. As part of continuous improvement, Brazil’s quality sales management system received ISO 9001 recertification. Duke Energy Brazil’s quality sales management system received ISO 9001 recertification. SALTO GRANDE ELECTRIC SUBSTATION - DUKE ENERGY BRAZIL\ 36 \ DUKE ENERGY INTERNATIONAL

CONTROL ROOM, CARHUAQUERO HYDROELECTRIC PLANT - DUKE ENERGY PERUCONTRACTS IN CHILEIn 2015, Duke Energy Chile brokered a deal with an energy distributor to supply 39gigawatt-hours of electricity to pasta maker Carozzi to operate its plant in San Bernardo,Santiago. This was DEI’s first contract that includes an indexing system allowing thecompany to raise the prices it charges to the client if the cost of withdrawal rises abovea specific ceiling—reducing risk in the event of a possible increase in system costs.The possibility of working with the distributor for future agreements is an added benefitof this contract. With the closing of this deal, Duke Energy Chile met its 2015 salesgoals, allowing the business unit to focus on negotiating contracts for 2016 forward. 2015 SUSTAINABILITY REPORT / 37 /

TRANSFORMING OUR CUSTOMERS’ EXPERIENCE - DUKE ENERGY PERU\ 38 \ DUKE ENERGY INTERNATIONAL

Customer EngagementInvolving customers and their interests in our activities and decision-making process to theextent practicable. We must continue to provide exceptional customer service as we pursueoperational excellence. G4-DMAMeeting or exceeding our customers’ needs is the quickest way to secure future business andpotential new customers. Building customer loyalty is particularly critical in the energy sector, wherelong-term sales agreements are commonplace and regaining a lost customer can take several years.We must increase customer loyalty through transparent operations and superior service. Our goalis to address potential issues before customers voice their concerns.TRANSFORMING THE CUSTOMER EXPERIENCEThe Road Ahead strategy aims to transform the customer experience by enhancing basic services,improving our information systems and delivering personalized solutions based on customers’ needsand wants. In 2015, we began to implement programs that support this objective. Our businessunits in Argentina, Brazil and Peru offer Online Monitoring to allow their customers to track detailedenergy usage, including contracted vs. actual demand and pricing. These business units alsoorganize annual seminars with energy experts who provide valuable information regarding issuesimportant to DEI customers. G4-PR5As part of our ongoing stakeholder engagement, we solicit open and honest feedback fromcustomers to identify and address areas of concern. For example, Duke Energy Brazil closelymonitors its customer satisfaction through a biannual survey issued by a third party. In 2015,they exceeded their goal and set a new record by reaching a 96 percent customer satisfaction rate.This far surpassed the market average of 81 percent. Customers also reported a price satisfactionrate of 89.3 percent compared to an industry average of 69.8 percent.Duke Energy Brazil achieved a 96 percent Customer Satisfaction Rate.TAQUARUÇU 525 MW HYDROELECTRIC PLANT - DUKE ENERGY BRAZIL 2015 SUSTAINABILITY REPORT / 39 /

COMPLIANCE DAY WORKSHOP - DUKE ENERGY BRAZIL COMPLIANCE DAY IN BRAZIL In 2015, Duke Energy Brazil held the second annual Compliance Day to celebrate and increase our workforce’s commitment to adhering to the company’s ethical values and upholding current laws and regulations. During the day, activities reinforced the importance of practicing compliance principles and concepts in daily routines and always doing the right thing. For Monica Brito, Duke Energy Brazil’s internal control manager, the program’s objectives include dissemination of a compliance culture throughout the company; monitoring indicators related to Brazilian anticorruption and U.S. Foreign Corrupt Practices Act (FCPA) laws, policies and procedures; and SOX controls and audits. Duke Energy Brazil employees’ bonuses depend, in part, on these indicators. The event marked the publication of the Compliance Manual, which contains guidelines on principles, goals, protection mechanisms, policies and management systems of the Duke Compliance program. The manual will serve to promote continuous improvement of our Culture of Compliance into the future. “This year we published the Compliance Manual with the principles and objectives of the program, as well as links to information related to this subject. This is also a day to reflect on our values,” Monica concluded.\ 40 \ DUKE ENERGY INTERNATIONAL

Ethics & ComplianceSetting expectations and monitoring adherence to corporate values and applicable laws and regulations. G4-DMA annual basis. These training activities are a GOAL 3.2 condition of employment at DEI, and help keepDEI serves as a guiding example of ethics and ethical decision-making front-of-mind across HUMAN RIGHTScompliance in our regions by conducting our the workforce. In 2015, 100 percent of ourbusiness in an honest and transparent manner. employees completed CoBE training. DEI pledges to respect andComplying with the laws and regulations preserve the human rights ofgoverning DEI minimizes our risk of incurring G4-57 all employees and contractors,regulatory and legal fines and, in extreme cases, while rejecting child labor,losing the right to operate. Carefully managing The Duke Compliance program provides forced or compulsory laborthis topic will strengthen our ability to attract employees and executives with several tools and any conduct that createsadditional business and will minimize the to help them identify and address ethical an unsafe, intimidating orpossibility of losing key talent and customers. issues, report improper conduct and foster offensive work environment. a culture of integrity and accountability. The G4-56, G4-SO3, G4-SO4 Ethics Line provides an anonymous channel to report violations and suspicious behavior bothCODE OF BUSINESS ETHICS internally and externally. DEI provides access to all ethics and compliance policies andDuke Energy’s Code of Business Ethics (CoBE) procedures on an internal employee portal.applies to all DEI employees. It guides ourapproach to areas of ethical risk, provides An effective compliance program requiresmechanisms to report unethical conduct and continuous monitoring across the organization.fosters a culture of compliance and doing what We utilize regular audits to evaluate programis right. The values and principles described implementation and effectiveness. DEI usesin the CoBE support DEI’s Strategic Goal 3.2 a Compliance Dashboard available to allto preserve human rights and inform our daily employees to track performance against goals.activities. All DEI employees must renew their We also developed a Self-Assessment ToolCoBE training and receive refresher training for the CoBE, which will assist the internalfor the Foreign Corrupt Practices Act on an evaluation process beginning in 2016. G4-HR3In 2015, we achieved 100 percent of DEI’s Compliancetargets across the company, and encountered zero incidentsof discrimination in our operations.CONDUCTING BUSINESS IN A HONEST AND TRANSPARENT MANNER 2015 SUSTAINABILITY REPORT / 41 /

GOAL 1.5 Supply Chain SustainabilitySUPPLIER CODE Collaborating with suppliers to lessen the environmental and social impacts associated withOF CONDUCT sourcing, manufacturing and delivering products and services as well as the disposal or reuse of materials as they reach their end of life.Through our commitment toorganizational transparency G4-12, G4-EU4and best practices, DEI willincorporate the Duke Energy Power generation relies on water, natural gas, fuel oil and coal as primary inputs. In addition, suppliersSupplier Code of Conduct provide the equipment and materials our company needs to build and maintain our facilities. With theto encourage and improve exception of water, we transport these raw inputs to DEI’s plants via rail, road and water.sustainable practices alongour supply chain. DEI’s 842 kilometers of transmission lines move electricity from our generation plants to the distribution sites that provide power to end users. Key suppliers provide materials and equipment for the construction and maintenance of transmission infrastructure (towers, poles, wire and cable, electrical substations) and contracted services for the maintenance of rights-of-way. Regular vegetation maintenance within the rights-of-way avoids disruption to overhead power lines and towers. Highly refined insulating mineral oils cool transformers and provide electrical insulation between live (energized) components, and Sulfur Hexafluoride (SF6) gas provides insulation for electrical switching equipment, cables, tubular transmission lines and transformers. DEI uses chemical products, including herbicides, for right-of-way vegetation maintenance. G4-DMA Effective management of suppliers, contractors and other vendors contributes to DEI’s Organizational Excellence through increased efficiency, reduced operating costs and effective stakeholder relationships. Improving our supply chain sustainability also helps us achieve other goals and objectives related to our Environmental Footprint and Social Commitment SSPs. For example, a portion of our generation fleet uses coal and fuel oil as inputs to producing energy; therefore, we must pay close attention to the waste disposal methods these facilities use. Sharing DEI’s approach to waste management with suppliers and contractors will enhance supply chain sustainability, have a significant positive effect on the natural environment and strengthen our reputation and relationships with local communities. SUPPLIER CODE OF CONDUCT Activities within DEI’s supply chain directly influence our reputation as a responsible company. We drive superior supplier performance through strict social and environmental management expectations. The Duke Energy Supplier Code of Conduct (SCC) and Indigenous People Policy (IPP) provide guidelines and expectations for health and safety, legal and regulatory compliance and human rights. The SCC also provides effective governance of key environmental concerns within the supply chain, including the handling, transportation and proper disposal of hazardous and non-hazardous waste. All suppliers must commit to applying these principles within their operations as a condition of doing business with our company. We manage supply chain activities at the regional level. Each business unit maintains a list of preferred suppliers and contractors that favors local businesses, and many facilities apply their own local standards to evaluate potential partners. In 2015, our operations in Peru began implementing a Safety Accreditation Process to establish uniform guidelines for evaluating and approving their new suppliers and contractors. Existing contractors utilize DEI’s Contractor Development Program to improve their performance in accordance with our SCC. In 2015, DEI completed development of the SCC and IPP Self-Assessment Tools, which will identify performance gaps in the supply chain. Moving forward, our auditors will use these in implementing action plans to address execution of supply chain policies as needed.\ 42 \ DUKE ENERGY INTERNATIONAL

G4-EC92015 Spending With Local Suppliers,DEI Total By Business Unit (Thousands of U.S. Dollars) $8,203 Argentina $5,745 El Salvador $32,874 B razil $11,952 G uatemala $2,918 Chile $19,437 P eru $2,753 EcuadorDEI Spending With Local Suppliers, 2011–2015100% 91% $246,42184% 85% 72% 74% $300,000 90% 2011 $273,48120122013 2014 2015 $250,000 80% $162,807 $200,000 70% $115,739 $150,000 60% $83,882 $100,000 50% $50,000 40% $0 30% 20% 10% 0% Spending with Local Suppliers (in Thousands of U.S. Dollars) Purchases from Local Suppliers (%)CHACABUCO VALLEY, REGION XI - CHILE 2015 SUSTAINABILITY REPORT / 43 /

COCHRANE RIVER, REGION XI - CHILE\ 44 \ DUKE ENERGY INTERNATIONAL

ENVIRONMENTAL FOOTPRINTIntroduction/Overview WHY IT MATTERSProviding safe and reliable electricity in an economically, As an energy company,environmentally and socially responsible manner can be challenging. we have an impact on theDEI understands that energy generation can affect the biodiversity, environment and rely onnatural and cultural resources surrounding our communities—as natural resources for fuel.well as produce greenhouse gases (GHGs) that contribute to climate Therefore, it is essential tochange. Therefore, it is essential to minimize our environmental the future of our organizationfootprint from operations, and ensure that our performance does not and our communities that welimit the next generation’s ability to thrive. take steps to minimize our environmental footprint.DEI is committed to operate in a way that protects and benefits ourstakeholders and our long-term business success. We follow twoimportant principles—Prevention and Stewardship—in our operations.Prevention Principle—We will: W ork to protect the environment and the well-being of employees, contractors, communities and ecosystems consistent with the application of sound science. B e prepared to respond effectively in the event that an incident should occur.Stewardship Principle—We will: U se natural resources and energy efficiently to reduce consumption, waste, discharges and emissions. Integrate sustainable considerations and practices into planning, design, construction and operational decisions. S upport community efforts in environmental education, protection and conservation. Engage in partnerships that enhance public sustainability awareness and address common issues.In 2015, we made significant progress in implementing the strategieslaid out by our Environmental Footprint SSP goals, which we detail inthe following pages.We will use natural resources and energyefficiently to reduce consumption, waste,discharges and emissions. 2015 SUSTAINABILITY REPORT / 45 /

SUSTAINABILITY MANAGEMENT SYSTEM (SMS) LEADING PERFORMANCE INDICATORS Our SMS guidelines provide a framework for DEI uses several leading performance managing DEI’s significant environmental topics: indicators to provide a forward-looking view of our environmental performance. Each Protection of Natural and Cultural Resources quarter, we track the number of environmental permits and requirements submitted on E missions and Air Quality time to authorities; the percentage of critical suppliers and contractors assessed for EHS W ater Quality and Availability criteria; and our effectiveness completing environmental inspections and closing related Waste Reduction action items. Most importantly, we focus on near misses—events that could have caused Element 9 of this framework—Stewardship significant environmental impacts. We evaluate and Community Relations—details how we the percentage of environmental catastrophic/ manage the use of natural resources and major impact near-miss incidents investigated, energy as an integral part of our business; the root causes identified and corrective protect the environment; and prevent pollution actions scheduled. We are pleased to report to maintain quality of life and reduce resource that DEI reached 100 percent of our goals for consumption, waste, discharges and emissions environmental leading indicators in 2015. on our operations. DEI also fosters open communication to build trust and cooperation with the communities we serve. One or more SMS guidelines outline successful sustainability performance for each topic, and ensure our stakeholders continue to recognize DEI as a leader in environmental management. We describe the relevant guidelines on the following pages. Environmental Leading Indicators 100% 90% 95% 100% 90% 75% 80% 85% 85% 70% 60% 50% 50% 40% 25% 30% 20% DEI Performance 0% 10% DEI Index 0% % of Environmental Permits/Requirements submitted on time with the Environmental Authority per quarter % EHS Assessment completed per quarter of Critical Suppliers/Contractors % of environmental inspections completed (both scheduled & unscheduled) & related action items closed per quarter % of environmental catastrophic/major impact near-miss incidents investigated, root cause identified & corrective actions scheduled per quarter Goal\ 46 \ DUKE ENERGY INTERNATIONAL

ENVIRONMENTAL RISK ASSESSMENTS CARBON DISCLOSURE GOAL 2.2In 2015, each business unit re-evaluated their Across the organization, we operate in an ORGANIZATIONALenvironmental risk assessments to ensure that honest and transparent manner with all ENVIRONMENTALthe potential of environmental hazards—such stakeholders—and we proudly share TRANSPARENCYas fires, explosions, chemical or oil spills, water information about our environmental impact.discharge and toxic air emissions—within Through Duke Energy, we currently report Organizational environmentalDEI’s operating areas were properly identified on GHGs, energy use and the risks and transparency is criticaland controlled. For each risk, business units opportunities from the changing climate via to a positive long-termdetermined the probability and severity of our CDP Climate Change response. Over the relationship with ouranticipated regulatory changes, environmental next several years, DEI will achieve Strategic stakeholders. Therefore,compliance, releases to the environment, Goal 2.2: Organizational Environmental DEI will proactively disclosecontingent liabilities, public relations and Transparency by voluntarily responding to our carbon impact onstakeholder perceptions as well as financial the CDP Climate Change questionnaire at the environment.impact. Each business unit then maps identified the business unit level.risks on a matrix to prioritize environmentalrisks in that region. DEI operations in Brazil already submit a CDP Climate Change response. In 2015, thisCross-functional teams are now evaluating business unit won an award for demonstratedthe results of these assessments and forming consistency and adherence to ISO 14065:2007action plans to reduce our operational risk and Greenhouse gases emissions inventory criteriaenvironmental footprint. We will reinforce existing and the Brazilian GHG Protocol Program. Incontrol measures, implement additional controls 2015, Duke Energy Brazil shared with otherto reduce risk levels and review the effectiveness business units their experience reporting toof controls. Following the implementation of CDP. Using their best practices, we will engagethese action plans, each DEI facility will have the same consulting company utilized bystronger preventive measures in place to guard Duke Energy Brazil to conduct carbon footprintagainst environmental incidents. assessments in Argentina, Chile, Guatemala and El Salvador in 2016. These countries,Business units will provide quarterly together with Brazil, represent 71 percentprogress reports and will update their action of DEI business units. We plan to assessplans annually. The environmental impact Peru and Ecuador in 2017, completing 100assessments are a major component of the final percent of business units before our goalEnvironmental Impact Reports, which are used target date 2020.to assist in identifying and mitigating potentialrisks for future development projects.GUANACO (LAMA GUANICOE), REGION XI - CHILE 2015 SUSTAINABILITY REPORT / 47 /

Protecting Natural & Cultural Resources Preserving the natural habitats and the species that live within our operating areas, as well as buildings, objects, features, locations and structures having scientific, historic or cultural value. G4-DMA, G4-EN12 other stakeholders for greater conservation. Some of our biodiversity initiatives include In our operations, we emphasize protecting reforestation and forestry promotion programs, natural and cultural resources to benefit the creation of biodiversity corridors, environmental communities where we live and work. DEI education and biodiversity awareness programs, employees and contractors understand the fauna conservation and fish release programs. importance of maintaining the ecological balance within natural habitats while providing safe Our management plans also sustain the national and reliable electricity to customers. We have heritage of our communities. We work to a duty to protect environmentally sensitive or minimize impacts to sites, landmarks and/or diverse areas near our facilities that contain artifacts of potential cultural or archaeological untapped medical and technological resources importance; protect historical sites, historical that may improve our quality of life. DEI is landmarks and artifacts, or archaeological committed to safeguarding these precious assets sites during land-disturbing activities; increase through management efforts that demonstrate awareness of our employees, contractors and environmental and cultural stewardship. communities about cultural resources; and ensure that DEI complies with in-country regulations. Many of our facilities are in sensitive, ecologically diverse areas. As such, we incorporate By safeguarding natural and cultural resources, protections into our operational planning and we maintain our “license to operate” in our execution—locally and across the organization. regions and minimize the risk of regulatory fines Our Environmental Management Plans serve as and work stoppages. We must work together with a guide for working in areas of high biodiversity. stakeholders to preserve cultural history and the These plans ensure compliance with the biodiversity of our natural environment. in-country and/or international environmental and social requirements. As part of continuous improvement, regular audits measure the effectiveness of our We evaluate natural and cultural resources as management systems and identify gaps in our part of our environmental and social impact performance. DEI’s goal is to remain 100 percent assessments, enabling us to identify, manage compliant with our environmental permits and and mitigate potential impacts. These impact our guidelines that, in many cases, go beyond assessments provide a preventive management compliance with local regulations. Looking ahead, and decision-making tool when planning for DEI is evaluating the need to add a Natural and new projects or renovating installations. This is Cultural Resources Management guideline to the important because our large hydroelectric plants SMS to provide a more systematic approach to have potential impacts on both biodiversity and protecting natural and cultural resources. cultural resources. Nonetheless, it is important to highlight that none of our facilities are located 2015 PERFORMANCE near protected areas. G4-EN29 Business units proactively assess opportunities to avoid or mitigate negative impacts from our DEI proudly reports that, for the second year, activities while also working in partnership with we paid no fines or penalties for environmental regulatory citations. Environmental Regulatory Citations Citations 2011 2012 2013 2014 2015 Fines/Penalties (U.S. dollars) 1 0 3 3 3 0 0 0 $7,415 $66,000\ 48 \ DUKE ENERGY INTERNATIONAL

SPILLS & RELEASES G4-EN24DEI discloses when oil or hazardous substance spills are reportable—quantities that may beharmful to public health or the environment and are required to be reported to a regulatory agency.To promote transparency and actively manage our performance, we also disclose recordable spills,which are smaller quantities not required to be reported externally. In 2015, DEI had three reportablespills, with a recovery rate of 93 percent. Our largest spill occurred at our thermoelectric Alto VallePlant in Argentina, where a transformer fire produced a large spill that was released into a secondarycontainment area. In this instance, we recovered 100 percent of the 2,640 gallons spilled.2011–2015 Historical Reportable & Recordable SpillsYear Reportable Recordable Fuel Handled Total Spills Recovered Spills Spills (in Thousands of (in Thousands (in %)2011 of U.S. Gallons)2012 0 13 U.S. Gallons) 852013 0 8 0.37 982014 2 119,523 982015 2 24 0.02 71 3 4 122,251 93 7 4.54 95,482 0.33 95,973 3.15 103,060MAINTAINING ECOLOGICAL BALANCE WHILE PROVIDING SAFE AND RELIABLE ELECTRICITY 2015 SUSTAINABILITY REPORT / 49 /

Emissions & Air Quality Reducing greenhouse gas and toxic air emissions, particularly in countries where we produce electricity from thermoelectric facilities using fossil fuels.GOAL 2.3 G4-DMA approach that minimizes air emissions in the short term, and anticipates and plans for futureCARBON Air quality and emissions from thermoelectric requirements, will reduce our operating risks andFOOTPRINT power plants matter to both DEI and our open up new opportunities to the company. stakeholders, who wish to see electric utilitiesWhile maintaining a fuel and other industries reduce their emissions Through active management, DEI has reducedagnostic growth strategy, from fuel combustion. Effectively addressing CO2 emissions from generation for severalDEI will favor hydroelectric this concern decreases GHGs that affect years. We disconnected from the grid sixand renewable energy climate change; lowers the risk of health old and inefficient thermoelectric plants inprojects over higher carbon issues related to air quality; and lessens the Peru—the Chiclayo (10 MW), Piura (25 MW)intensity alternatives. likelihood of regulatory fines and other severe and Chimbote (20 MW) Thermoelectric Plants sanctions. Furthermore, many DEI customers in 2014; the Paita (6 MW) and Sullana (9 MW) actively promote emissions reduction from Thermoelectric Plants in 2011; and the Trujillo their operations. Meeting these customer (20 MW) Thermoelectric Plant in 2010. In expectations helps DEI maintain their business. addition to these plant closures, we added the Duqueco Hydroelectric Complex to our Emissions are among the most significant aspects generation portfolio in 2012; this provides a of DEI’s environmental footprint, with 30 percent total of 140 MW of cleaner electricity. Recently, of our generation coming from the burning of the repowering of Chavantes and Capivara fossil fuels such as fuel oil, natural gas and Hydroelectric Plants in Brazil represent an coal. Adopting a strategic and transparent additional 11.6 MW of cleaner electricity. G4-EN15 2011–2015 Historical CO2 Emissions from Generation 3,500 3,096 21,000 3,000 20,000 2,500 2,398 2,500 19,000 2,000 18,000 2,265 17,000 16,000 2,052 15,000 14,000 1,500 1,000 500 16,562 19,762 18,865 17,106 18,055 0 2011 2012 2013 2014 2015 Total Generation (in GWh) CO2 Emissions (in Thousand Tons)\ 50 \ DUKE ENERGY INTERNATIONAL