Kentucky PSC Approves New ULH&P Gas Distribution Rates

NEWPORT, Ky., December 22, 2005 — The Union Light, Heat and Power Co. announced today that the Kentucky Public Service Commission has approved an increase of $8.1 million in rates for natural gas distribution service.

The increase is necessary for ULH&P to continue improving the reliability and safety of its gas system. Approximately $4.5 million of the approved increase reflects revenue which has already been recovered through a tracking mechanism.

The rate increase application, which was filed in February, 2005, was required by the Kentucky PSC to allow continuation of the annual recovery of costs associated with ULH&P’s accelerated main replacement program under a tracking mechanism approved by the PSC in 2002.

The gas main replacement project was initiated to improve the reliability and safety of the gas distribution system. ULH&P has replaced approximately 110 miles of cast iron and bare steel pipe through 2005, or about 50 percent of the cast iron and bare steel mains in its system. This program has reduced gas leaks repaired in the ULH&P system by more than 45 percent.

Pending a decision on its request by the PSC, ULH&P implemented the increase in October, subject to refund as permitted under Kentucky law. For a typical residential customer using 108 ccf of natural gas per month, the monthly bill in January will decrease from $210.32 to $204.07, as a result of the base rate being reduced from the amount implemented subject to refund. These amounts are based on the approved gas cost adjustments for January.

This base rate increase request covers investments of approximately $123 million in improvements that ULH&P is making to its system and other cost increases. The requested increase was partially offset by reduced maintenance expenses because the improvements in the gas distribution system will lower the number of leak repairs.

Base rates are for the delivery of gas and cover the company’s costs to operate and maintain its physical gas system, which consists of the facilities and equipment necessary to deliver gas to customers’ homes and businesses. Base rates are separate from the cost of gas ULH&P purchases from suppliers to meet customer needs. Gas costs are billed to customers on a dollar-for-dollar basis without any profit to ULH&P.

ULH&P serves approximately 92,000 natural gas customers in six Northern Kentucky counties. It is an affiliate of Cinergy Corp. (NYSE:CIN) , one of the nation’s leading diversified energy companies.