PSI Energy Reaches Settlement On Environmental Plan

PLAINFIELD, Ind., December 14, 2005 — PSI Energy Inc., the Indiana operating company of Cinergy Corp. (NYSE:CIN), has reached a settlement with the Indiana Office of Utility Consumer Counselor and the PSI Industrial Group on the company’s environmental compliance plan. The environmental construction program will further reduce PSI’s power plant emissions in response to new federal environmental rules to improve air quality.

PSI is seeking Indiana Utility Regulatory Commission approval of the settlement and expects a commission decision in the first half of 2006.

“This is our company’s largest environmental construction program,” said PSI President Kay Pashos. “We will invest more than $1 billion to burn coal more cleanly and improve air quality. In addition, the work will generate more than 1,000 to 1,400 construction jobs in Indiana.”

In two separate rulemakings, the U.S. Environmental Protection Agency has mandated significant reductions in sulfur dioxide, nitrogen oxide and mercury emissions from power plants. Phase 1 of PSI’s environmental plan totals $1.07 billion and primarily includes:

• Flue gas desulfurization equipment, or “scrubbers,” at larger coal- fired generating units that are not already scrubbed, including three units at Gibson Station near Princeton and two units at Cayuga Station north of Terre Haute. Scrubbers are primarily a sulfur dioxide control technology for coal-fired plants that burn bituminous coals. Scrubbers remove sulfur dioxide from exhaust gas streams by way of a chemical reaction, which ultimately transforms the sulfur dioxide from a gas to a solid byproduct. Scrubber installations will allow the use of a greater variety of coal and lessen the companies’ dependence on volatile sulfur dioxide emission allowance markets.
• Scrubber upgrades at other larger coal-fired units, including two units at Gibson Station. This involves modifying some existing scrubbers to improve the removal of sulfur dioxide.
• Bag house technology at Gallagher Station. The bag houses will allow Gallagher to use lower-sulfur coal, which will reduce the station’s sulfur dioxide emission rate. The bag houses also enable more aggressive operation of low- nitrogen oxide burners, which will help reduce particulate as well as nitrogen oxide emissions.

The settlement agreement calls for approval of PSI’s Phase 1 environmental plan, including timely cost recovery of depreciation, operation and maintenance expenses, and financing costs associated with the equipment. PSI has agreed that rather than fixing the overall rate of return at 8 percent for these projects as previously requested, the company will use its then-current weighted cost of capital (e.g. 7.09 percent as of June 2005). In the settlement PSI has agreed to cap the costs of the Gallagher Station bag houses and defer the decision on whether to construct activated carbon injection systems at Gallagher.

The current environmental plan is in addition to the significant emission reductions the Cinergy companies already have achieved under existing federal and state mandates. Cinergy has invested more than $1.7 billion since 1990 to reduce sulfur dioxide and nitrogen oxide emissions, reducing those emission rates by 50 percent and 45 percent respectively.

PSI Energy is Indiana’s largest electric supplier, serving more than 750,000 customers in portions of 69 of Indiana’s 92 counties.

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate", "believe", "intend", "estimate", "expect", "continue", "should", "coul d", "may", "plan", "project", "predict", "will", and similar expressions. Forward- looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to, unanticipated weather conditions; unscheduled generation outages; unusual maintenance or repairs; unanticipated changes in costs; environmental incidents, including costs of compliance with existing and future environmental requirements; electric transmission or gas pipeline system constraints; legislative and regulatory initiatives; additional competition in electric or gas markets and continued industry consolidation; financial or regulatory accounting principles; political, legal, and economic conditions and developments in the countries in which we have a presence; changing market conditions and other factors related to physical energy and financial trading activities; the performance of projects undertaken by our non-regulated businesses and the success of efforts to invest in and develop new opportunities; availability of, or cost of, capital; employee workforce factors; delays and other obstacles associated with mergers, acquisitions, and investments in joint ventures; and costs and effects of legal and administrative proceedings, settlements, investigations, and claims. Please refer to the company's SEC filings for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. The company undertakes no obligation to update the information contained herein.