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Duke Energy International

Profile:

Duke Energy International operates power generation facilities, and engages in sales and marketing of electric power and natural gas outside the United States and Canada. Its primary focus is on power generation activities in Latin America, where it owns approximately 4,100 net megawatts of capacity in seven countries.

During 2003, DEI made the strategic decision to exit the European and Asia-Pacific markets, reducing the overall exposure of Duke Energy to international markets. DEI sold its investment in Indonesia, a power plant in northwest France and its Dutch gas marketing business, collectively generating gross proceeds of over $400 million for Duke Energy. Duke Energy retains a diversified portfolio of generating assets that are well-positioned to benefit from strengthening energy markets and economies in Latin America. This table presents operating data for DEI's continuing operations.

Operating Data:

	2003		2002		2001		2000		1999
International Energy
Sales, gigawatt-hours	16,374		18,350		15,749		14,154		4,812
Capacity in operation, megawattsa	4,121		3,917		3,968		3,768		2,415
a Represents share of capacity owned by DEI.

Performance Highlights:

• 2003 was a solid year from an operating standpoint for DEI's continuing operations in Latin America and its investment in National Methanol Company in Saudi Arabia.
• Strong operating results were driven by successful recontracting efforts in Brazil, stronger market prices in Peru, completion of the second phase of a greenfield plant in Guatemala, solid results from National Methanol and significant cost reductions of approximately $30 million over 2002.
• DEI Guatemala brought the second phase of the 160-megawatt Planta Arizona on line, and is completing a conversion this year which will allow the plant to run on Orimulsion® in addition to fuel oil. The plant's dual-fuel capability will position Planta Arizona as one of the most flexible, efficient and low-cost generators in the region.
• DEI Peru became the first company in Peru, and the first Duke Energy company, to obtain simultaneous international certifications for operations management (ISO 9001), environmental management (ISO 14001) and occupational health and safety practices (OHSAS 18001).
• For the second consecutive year, DEI Brazil Paranapanema received the Medalha Eloy Chaves Award as recognition for the best safety record in the Brazilian electric generation sector. It is the only company ever to have received this award for two consecutive years. DEI Brazil also reached 4 million work-hours without a lost-time incident.

Strategy Going Forward:

• Focus on Latin America, with an emphasis on increasing overall returns through:
  • Organic growth through sales and marketing efforts
  • Asset optimization for all facilities
  • Cost reduction
  • Portfolio/balance sheet management.
• Identify and assess opportunities in Latin America to capitalize on economic growth, regulatory reform and strengths of the existing portfolio.
• Complete exit from the European and Asia-Pacific regions.