PNY Piedmont Natural Gas Company, Inc.

Notes to Financial Statements

The following description of Piedmont Natural Gas Company, Inc. (the “Company”) 401(k) Plan (“the Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information.

General : The Plan is a defined contribution plan providing benefits to participating employees or their beneficiaries upon retirement, death or termination of employment (following a break in service, as defined in the Plan). As a result of a plan merger effective on October 1, 2001, participants’ accounts in the Company’s employee stock ownership plan (ESOP) were transferred into the Plan. Former ESOP participants may remain invested in Piedmont Natural Gas Company, Inc. (“Piedmont”) common stock in the Plan or may sell the common stock at any time and reinvest the proceeds in other available investment options.

Employees become eligible to participate in the Plan after they have completed thirty days of continuous service with the Company and have attained age 18. The Benefits Committee of the Board of Directors of the Company controls and manages the operation and administration of the Plan. The Benefits Committee establishes an organizational structure with respect to the management, administration and investments of the Plan including the designation of a Benefit Plan Committee to serve as the named fiduciary of the Plan and to manage the day-to-day operational and administrative aspects of the Plan. The Benefit Plan Committee determines the appropriateness of the Plan’s investment offerings, monitors investment performance and reports to the Benefits Committee. Wells Fargo Bank, N.A. (“Wells Fargo”) serves as the trustee of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

On October 24, 2015, the Company entered into an Agreement and Plan of Merger (Merger Agreement) with Duke Energy Corporation (Duke Energy) and Forest Subsidiary, Inc. (Merger Sub), a new wholly owned subsidiary of Duke Energy. The Merger Agreement provides for the merger of the Merger Sub with and into Piedmont, with Piedmont surviving as a wholly owned subsidiary of Duke Energy (the acquisition). At the effective time of the Acquisition, subject to receipt of required shareholder and regulatory approvals and meeting specified customary closing conditions, each share of Piedmont common stock issued and outstanding immediately prior to the closing will be converted automatically into the right to receive $60 in cash per share, without interest, less any applicable withholding taxes. Upon consummation of the Acquisition, Piedmont common stock will be delisted from the New York Stock Exchange.

Plan administration : The Plan is administered by the Benefits Committee. Wells Fargo is responsible for the custody and management of the Plan’s assets.

Contributions : Employees are able to contribute up to 50% of eligible pay to the Plan on a pre-tax basis, up to the Tax Code annual contribution limit. Employees are able to receive a company match of 100% up to the first 5% of eligible pay contributed. The Company automatically enrolls all newly eligible employees in the Plan at a 2% contribution rate unless the employee chooses not to participate by notifying the Plan trustee. For employees who are automatically enrolled in the Plan, the Company will automatically increase their contributions by 1% each year to a maximum of 5% unless the employee chooses to opt out of the automatic increase by contacting the trustee. If the employee does not make an investment election, employee contributions and matches are automatically invested in a diversified portfolio of funds. Participants may invest in Piedmont common stock up to a maximum of 20% of their account. Employees may change their contribution rate and investments at any time. Additional amounts

5

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

may be contributed by the Company at the discretion of the Company’s Board of Directors. There were no discretionary Company contributions during the year ended December 31, 2015. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans.

Participant accounts : Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution, the Company’s matching contribution, and allocations of Company discretionary contributions, if applicable, and Plan earnings, and charged with any benefit payments, and allocations of Plan losses and expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Investments : Participants direct the investment of their contributions into various investment options offered by the Plan. Currently, the Plan offers eleven mutual funds, two collective investment trust funds, and one common stock fund as investment options for participants.

Vesting : All participant contributions and earnings thereon are fully vested and non-forfeitable upon allocation to the participants’ accounts. A participant will become 100% vested in his employer matching contributions after the participant completes six months of service.

Notes receivable from participants : Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their account balances, whichever is less. Loans must be entirely repaid within 5 years unless the loan is for the purchase of a primary residence. Effective September 2014, the loan policy was amended to allow for only one loan to be outstanding at a time. The loans are secured by the balance in the participant’s account. Principal and interest are paid ratably through payroll deductions. Interest rates on loans ranged from 5.25% to 6.77% at December 31, 2015.

Payment of benefits : The Plan allows distributions for retirement, long-term disability, termination of employment, hardship or death. The vested balance of a participant’s account will be paid to the participant, or, in the case of death, to the spouse or beneficiary, if any, in a single, lump sum of cash or common stock as permitted by the Plan.

The Plan was amended on December 15, 2014 to allow for Age 59  ¹ ⁄ ₂ in-service withdrawals, effective January 1, 2015.

Basis of accounting : The accompanying financial statements of the Plan are prepared under the accrual method of accounting.

Use of estimates : The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the financial statements and accompanying notes. Actual results could differ from those estimates.

Investment contracts : As described in the authoritative guidance, fully benefit-responsive investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan.

6

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

The Plan invests in investment contracts through a collective investment trust fund in the Wells Fargo Stable Return Fund (N). As required by the guidance, the statements of net assets available for benefits present the fair value of the investments in the collective investment trust fund as well as the adjustment of the investment in the collective investment trust fund from fair value to contract value relating to the investment contracts. The statement of changes in net assets available for benefits is prepared on a contract value basis.

Investment valuation and income recognition : Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 7 for disclosure of the Plan’s fair value measurements.

The Plan utilizes market data or assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally observable. The Plan primarily applies the market approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, the Plan uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Plan is able to classify fair value balances based on the observance of those inputs into the fair value hierarchy levels as set forth in the fair value accounting guidance.

Following is a description of the valuation methodologies used for the Plan’s investment assets measured at fair value. There have been no changes in the methodologies used at December 31, 2015 and 2014.

Common stock fund : Calculated based on the closing price reported on the active market on which the securities in the fund are traded.

Mutual funds : Valued at the NAV of shares held by the Plan at year-end.

Collective investment trust funds : Valued at NAV based on information provided by the trustee and using the audited financial statements of the collective investment trust funds at year-end.

Level 1 inputs are quoted prices (unadjusted) or NAVs in active markets that can be accessed as of the reporting date and consist of investments in common stock and mutual funds. Level 2 inputs are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly corroborated or observable as of the reporting date and generally use valuation methodologies, and consist of collective investment trust funds as discussed in “Investment contracts” in Note 2. These investments are classified as Level 2 as their fair value is estimated using NAV as a practical expedient. Level 3 inputs include significant pricing inputs that are generally less observable from objective sources.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

7

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

The Plan’s Benefit Plan Committee determines the Plan’s valuation policies utilizing information provided by its investment advisor and custodian.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Management fees and operating expenses charged to the Plan for investments in the mutual funds and collective investment trust funds are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments. Additionally, the Plan received revenue sharing income of $110,200 during 2015. This income is reflected as an addition to the investment return for such investments.

New Accounting Pronouncements : In May 2015, the FASB issued ASU 2015-7, Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or its Equivalent). The ASU is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. In July 2015, the FASB issued ASU 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965). The ASU is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. The Plan’s Benefit Plan Committee is still determining the impact to the Plan of these two ASUs but expects that it will be limited to certain investment disclosures and will not impact the financial statements.

Contributions : Contributions from employees of the Plan Sponsor and matching contributions from the Plan Sponsor are recorded in the year in which the employee contributions are withheld along with the applicable matching contribution. All employee and employer contributions are participant-directed.

Notes from participants : Notes from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed as they are incurred. No allowance for credit losses has been recorded as of December 31, 2015 or 2014. Delinquent notes from participants are treated as distributions based upon the terms of the plan document.

Payment of benefits : Benefit payments to participants are recorded when paid.

Expenses : As provided by the Plan document, administrative expenses of the Plan are paid by the Plan.

Subsequent events : The Plan monitors significant events occurring after the statement of net assets available for benefits date and prior to the issuance of the financial statements to determine the impact, if any, of events on the financial statements to be issued. All subsequent events of which the Plan is aware were evaluated through the filing date of this Form 11-K.

8

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

During 2015, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $4,259,202 as follows:

The Plan invests in a fully benefit-responsive investment contract through the Wells Fargo Stable Return Fund in 2015 and 2014. The accounts are maintained in a general account. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The objective of the Fund is to protect principal while providing a higher rate of return than shorter maturity investments, such as money market funds or certificates of deposit. To achieve this, the Fund invests in instruments which are not expected to experience significant price fluctuations in most economic or interest rate environments. However, there is no assurance that this objective can be achieved.

Market value events may limit the ability of the Fund to transact at contract value with the issuer. Such events may include but are not limited to: Fund administration is amended or changed, merger or consolidation of investors, group terminations or layoffs, implementation of an early retirement program, termination or partial termination of the Fund, and failure to meet certain tax qualifications. The Plan does not believe that such events are likely to occur.

The fair value of the investment contract at December 31, 2015 and 2014 was $38,024,330 and $39,491,792, respectively. The average yield earned based on actual earnings was 1.6% and 1.3% for 2015 and 2014, respectively.

9

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

The Plan’s participants invest in various investment securities offered by the Plan. These investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur and that such changes could materially affect participants’ account balances and the amounts reported in the financial statements.

The Internal Revenue Service has determined and informed the Company by a letter dated November 25, 2014, that the Plan was designed in accordance with the applicable regulations of the Internal Revenue Code (“IRC”). The Benefits Committee believes the Plan is currently designed and is being operated in compliance with the applicable requirements of the IRC and that the Plan and related trust continue to be tax exempt.

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan. Management evaluated the Plan’s tax positions and concluded that the Plan had maintained its tax exempt status and had taken no uncertain tax positions that require recognition or disclosure in the financial statements. With few exceptions, the Plan is no longer subject to income tax examinations by the U.S. federal, state, or local tax authorities for years before 2012.

Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.

Certain plan investments are units of participation in collective investment trust funds managed by Wells Fargo. Wells Fargo is the trustee as defined by the Plan, and therefore, these transactions qualify as exempt party-in-interest transactions. Fees paid by the Plan to Wells Fargo for investment management services amounted to $221,333 for the year ended December 31, 2015 and are included in the expenses line item in the Statement of Changes in Net Assets Available for Benefits. Additional expenses not paid to Wells Fargo include investment advisory fees and other various expenses.

At December 31, 2015 and 2014, the Plan held 388,919 and 400,969 units, respectively, of common stock of the Company, the sponsoring employer, with a cost basis of $7,837,818 and $7,486,323, respectively, and fair value of $14,208,966 and $10,288,742, respectively.

10

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

The investments reported in the Statement of Net Assets Available for Benefits, are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Plan’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and their consideration within the fair value hierarchy levels. The following tables set forth, by level within the fair value hierarchy, the assets measured at fair value as of December 31, 2015 and 2014:

11

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

12

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Notes to Financial Statements

The following is a reconciliation of the net increase in net assets available for benefits per the financial statements to the Form 5500:

13

Table of Contents

Piedmont Natural Gas Company, Inc. 401(k) Plan

Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)

December 31, 2015

Plan #007

EIN: 56-0556998