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Board Committees

The Board of Directors has the five standing committees described below:

• The Audit Committee appoints Duke Energy's independent auditor; provides independent oversight for financial reporting and internal controls, the internal audit function and the independent auditor; determines the independence of auditors; and makes recommendations on audit matters and internal controls to the Board of Directors.
   
• The Compensation Committee sets the salaries and other compensation of all executive officers of Duke Energy. This committee also makes recommendations to the Board of Directors on compensation for outside directors. The Compensation Committee established, effective February 22, 2005, a subcommittee that sets performance-based compensation for executive officers for purposes of Section 162(m) of the Internal Revenue Code.
   
• The Corporate Governance Committee considers matters related to corporate governance and formulates and periodically revises governance principles. It recommends the size and composition of the Board of Directors, within the limits of the Restated Articles of Incorporation and By-Laws, as amended, and recommends potential successors to the Chief Executive Officer. This committee also considers nominees recommended by shareholders for the Board of Directors. This committee may engage an external search firm or third party to identify or evaluate or to assist in identifying or evaluating a potential nominee.
   
• The Finance and Risk Management Committee reviews Duke Energy's financial and fiscal affairs and makes recommendations to the Board of Directors regarding dividends, financing and fiscal policies. It reviews the financial exposure of Duke Energy, as well as mitigating strategies, and determines whether actions taken by management with respect to financial matters are consistent with Duke Energy's internal controls.
   
• The Nuclear Oversight Committee provides oversight of the nuclear safety, operational and financial performance, and long-term plans and strategies of Duke Energy's nuclear power program. The oversight role is one of review, observation and comment and in no way alters management authority, responsibility or accountability.

Each committee operates under a written charter adopted by the Board of Directors. The charters are posted on Duke Energy's Internet Web site: http://www.duke-energy.com/investors/corporate.htm and are available in print to any shareholder upon request.