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5. Joint Ownership of Generating Facilities

Joint Ownership of Catawba Nuclear Station(a)

(a)   Facility operated by Duke Energy

As of December 31, 2003, $564 million of property, plant and equipment and $291 million of accumulated depreciation and amortization represented Duke Energy's undivided interest in Catawba Nuclear Station Units 1 and 2. Duke Energy's share of revenues and operating costs is included in the Consolidated Statements of Operations.

Contractual agreements to purchase declining percentages of the station's generating capacity and energy through the year 2000 made purchased capacity costs subject to rate levelization and deferral. For the North Carolina jurisdiction the cost of capacity purchased but not reflected in current rates is included in Other Current Assets, and Other Regulatory Assets and Deferred Debits. In the South Carolina rate jurisdiction Duke Energy is currently overcollected on purchased capacity costs. The amount of the overcollection is included in Other Current Liabilities and Other Deferred Credits and Other Liabilities on the Consolidated Balance Sheets. Those net costs were $(43) million as of December 31, 2003 and $151 million as of December 31, 2002. Duke Energy expects to recover the remaining asset balance, including a return, during 2004. Duke Energy is currently reducing the liability amounts annually through a rate decrement.