Duke Energy Carolinas NC Storm Funding II LLC Annual Report - How They Did This Year

I’m here to help you break down the latest annual report for Duke Energy Carolinas NC Storm Funding II LLC. Think of this as a plain-English guide to help you understand what this company does, how it performs, and what you should watch if you are considering an investment.

1. What does this company do?

Duke Energy Carolinas NC Storm Funding II LLC is a specialized entity created by Duke Energy Carolinas. Its only job is to issue "Storm Recovery Bonds." These bonds pay for the costs of restoring power after major storms. By separating these costs into this specific entity, the company secures lower interest rates. Customers in North Carolina pay these costs back through a mandatory "Storm Recovery Charge" on their utility bills. This structure keeps the debt separate from the parent company’s general business, which protects bondholders.

2. How did they perform this year?

The company’s main activity this year was issuing $682.5 million in bonds on September 30, 2025. These bonds are split into three groups with repayment dates ranging from 2027 to 2040. The company does not earn profit like a typical business. Instead, it receives money collected from utility customers. This money is used strictly to pay back the bondholders and cover administrative costs, which totaled about $1.2 million this year.

3. Financial health and oversight

The company is "bankruptcy remote," meaning its assets—the right to collect storm charges—are legally protected if the parent company faces financial trouble. A strict payment plan governs how money is handled. Every year, the company reports its progress to the North Carolina Utilities Commission. For 2025, auditors at Deloitte & Touche confirmed the company followed its rules. Additionally, U.S. Bank Trust Company verified that all collected funds were correctly used to pay the debt.

4. Key risks to watch

The biggest risk is the "true-up" process. If customer payments fall short of what is needed to pay the bonds—perhaps because people use less electricity—the state commission must raise the charges. Also, the company relies on Duke Energy Carolinas to handle billing. If the parent company has technical or operational issues, it could disrupt the collection process.

5. Leadership and strategy

As of January 2026, Abigail L. Motsinger manages the company’s administrative compliance. The strategy is simple and passive. The company has very low expenses and uses Duke Energy’s existing billing system to collect funds. The goal is to maintain high credit ratings by following all state-mandated rules. The company is not allowed to expand or start new business lines.

6. Future outlook

The company’s path is set by a 15-year repayment plan. Investors can expect very predictable, steady cash flow. The company will operate until the bonds are paid off in 2040. Because state law protects the revenue stream, this is a defensive, income-focused investment rather than a growth stock. Future updates will focus on state filings to ensure collection rates remain high enough to cover the remaining debt.

Investor Takeaway: If you are looking for a high-growth opportunity, this isn't it. However, if you are looking for a stable, bond-based investment backed by state-mandated utility charges, this entity offers a clear, predictable structure. Keep an eye on the North Carolina Utilities Commission filings; those documents are the best way to track whether the "true-up" process is keeping the bond payments on schedule.