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Duke Energy Gas Transmission
Refocus on Growth

Duke Energy Gas Transmission (DEGT) pipelines are strategically located with access to diverse supply basins and growing markets throughout North America, and our storage facilities offer customers reliability and seasonal flexibility.

We expect demand for natural gas to grow by an average 2 to 3 percent annually in our key markets over the next five years. Our challenge is to keep pace with that demand, by developing the infrastructure needed to connect new supplies to growing markets.

Major accomplishments:

• Three natural gas pipeline and two gas storage expansion projects began to serve DEGT customers in 2004, adding delivery capacity for customers in the U.S. Northeast, Southeast and Mid-Atlantic states. Storage facility expansions in Louisiana and Virginia increased available gas storage capacity by 1.8 billion cubic feet.
• The 110-mile extension of the Gulfstream pipeline from central Florida to the state’s east coast was completed in February 2005, doubling the pipeline’s firm contracted capacity. (Gulfstream is a joint development of Duke Energy and Williams.)

Plant operator Charles Barker monitors storage operations at the Kingsport liquefied natural gas storage facility, on DEGT’s East Tennessee Natural Gas pipeline system.

• Multiple peak-volume days on our Texas Eastern, Algonquin, East Tennessee, Gulfstream and Union Gas systems demonstrated our ability to operate reliably and provide access to growing markets.
• In August, DEGT employees mobilized quickly and effectively in response to a fire at our Moss Bluff gas storage facility near Houston. We regret that this incident occurred and the inconvenience that it caused our neighbors and customers.
• A successful “open season” in the northeast United States and eastern Canada signaled strong customer demand for new natural gas transportation and storage solutions. Many of those responses should result in new contracts and several expansion projects over the next three to five years.
• Union Gas added more than 31,000 new customers in 2004 through focused marketing efforts and reliable service.
• Rate proceedings involving our BC Pipeline and Union Gas businesses were resolved fairly for both customers and shareholders.

Over the next several years, we plan to invest more than $1 billion in DEGT facility expansions. We expect liquefied natural gas (LNG) to play a major role in North America’s future natural gas supply. LNG import terminals are proposed along the Gulf Coast and the northern East Coast, including the Canadian Maritimes, and most of them would have ready access to Duke Energy’s existing pipelines and storage facilities. We intend to be a major player in providing the pipeline expansion and storage needed to connect this new supply to growth markets.

Our assets are equally well-positioned in the growing Western Canadian Sedimentary Basin, and the addition of ConocoPhillips’ natural gas liquids operations and DEFS’ gathering and processing facilities to our system in 2005 will enhance that position. We are ready and willing to expand further, as natural gas drilling activity increases in northeastern British Columbia.

As I move on to pursue new career opportunities at Duke Energy, I am confident about the continued success of the business that Martha Wyrsch will now lead.

— Tom O’Connor, President and Chief Executive Officer, Duke Energy Gas Transmission

Profile: Duke Energy Gas Transmission serves its customers by transporting natural gas from North America’s major supply areas to growing markets in the northeastern and southeastern United States and in Canada. DEGT also stores natural gas, distributes natural gas to retail customers in Ontario, and gathers and processes natural gas for customers in western Canada.

Operating Data

	2004		2003		2002		2001		2000
Natural Gas Transmission
Throughput, trillion British thermal units (TBtu)a	3,332		3,362		3,160		1,781		1,771
Storage capacity, billion cubic feet	258		257		254		101		98
a Represents share of capacity owned by DEGT.