News Release
Dec. 01, 1998

DUKE ENERGY ANNOUNCES PLANT MODERNIZATION PROGRAMS IN MOSS LANDING AND MORRO BAY, CALIFORNIA

Duke Energy Power Services announced today initial plans to invest approximately $700___ million to modernize its power plant sites in Moss Landing and Morro Bay, California.

"Since we purchased the plants from Pacific Gas & Electric (PG&E) last July, we have been looking at innovative ways to prepare our sites so they continue to help meet California’s electricity needs into the 21st century," said Bill Hall, vice president of Duke Energy Power Services’ California operations. "We are in the early stages of designing plans to modernize our Morro Bay and Moss Landing sites. Our focus is on demolishing and removing some of the large 1950s and 1960s vintage equipment that is no longer used or efficient in today’s marketplace. This equipment will be replaced with new, state-of-the-art units that are smaller and very environmentally friendly."

The new units are approximately 40 percent more efficient than traditional power plants, due in large part to their compact, combined-cycle design. About two-thirds of their electricity is generated by two turbines, fueled by air mixed with natural gas. The leftover heat in the exhaust from this process, which is largely unused in traditional power plants, is utilized to produce steam to drive another electricity generator. This dramatically improves the efficiency of the plant and keeps emissions extremely low because the plant’s own heat is recycled to drive a third generator without using any additional fuel.

Duke Energy Power Services is a national leader in designing and building natural gas combined-cycle power plants. Last August, the company brought on-line the first phase of a 520-megawatt combined cycle plant in Bridgeport, Conn., and on Oct. 1st began construction of its second 520-megawatt plant on the shores of the Penobscot River north of Bangor, Maine. The company also is planning to build a 520-megawatt combined-cycle plants in New Smyrna Beach, Fla., and Edinburg, TX., in 1999.

Although the proposal is still being fine-tuned and will be finalized next spring in a permit filing with the California Energy Commission, plans for the Morro Bay Power Plant include retiring units 1 and 2 from service (340 megawatts and vintage 1955 and 1956) and replacing them with a new, 530-megawatt, combined-cycle plant.

The modern Morro Bay plant:

Tentative plans call for locating the new units just north of units 1 and 2. These plans will be finalized in early 1999.

Plans for the Moss Landing Power Plant include adding a new, 10680-megawatt, natural gas-fueled, combined-cycle plant to the site.

The modern Moss Landing plant:

The Moss Landing project also includes plans to demolish and remove unit 1’s through 5’s eight 225-foot exhaust stacks and 10 oil tanks with a total capacity of 1.5 million barrels from the Moss Landing site.

It is also noteworthy that Morro Bay units 3 and 4, which represent 680 megawatts of capacity, and Moss Landing units 6 and 7, which represent 1,478 megawatts of capacity, underwent substantial upgrades in the mid-1990s to reduce their nitrogen oxide air emissions by approximately 50 percent. Approximately $50 million will be spent on Moss Landing units 6 and 7 by 2002 to reduce nitrogen oxide emissions an additional 85 percent.

"This is the first major step in modernizing our Moss Landing and Morro Bay sites," said Hall. "We look forward to following through with these and other plans to improve the appearance of our sites. To date, we have been pleased with our success in the competitive market, which is the driving force behind our decision to invest approximately $___ $700 million in our Moss Landing and Morro Bay sites."

The plans for the Morro Bay and Moss Landing plants will also be financially beneficial to the local and regional communities. Both projects will employ up to 250 people during the peak construction period. Whenever possible, priority will be given to local workers and vendors. The new units also will have a substantial positive impact on tax revenues.

Hall said that he and members of his leadership team will be in contact with union representatives in the coming months to involve them in the Morro Bay and Moss Landing modernization plans.

Following the successful conclusion of the California Energy Commission’s 12- to 15-month review process, permits will be issued. Permitting is anticipated to be completed in mid-2000. Once a permit is issued, construction is expected to take approximately 18 months.

Duke Energy Power Services is a national leader in designing and building natural gas, combined-cycle power plants. Last August, the company brought on line the first phase of a 520-megawatt, combined cycle plant in Bridgeport, Conn., and on Oct. 1 began construction of its second 520-megawatt plant on the shores of the Penobscot River north of Bangor, Maine. The company plans to break ground on 520-megawatt, combined-cycle plants in Edinburg, Texas, in early 1999 and New Smyrna Beach, Florida, in early 2000.

Duke Energy Power Services, a subsidiary of Duke Energy, develops, owns and operates electric generation projects in the United States and Canada.

DDuke Energy (NYSE:DUK) is a global energy company with more than $24 billion in assets. Duke Energy companies provide electric service to approximately two million customers; operate pipelines that deliver 12 percent of the natural gas consumed in the United States; and are leading marketers of electricity, natural gas and natural gas liquids. Globally, the companies develop, own and operate energy facilities and provide engineering, management, operating and environmental services. Contact Duke Energy on the World Wide Web at http://www.duke-energy.com.

Contact: Tom Williams
Phone: 805 595-5514
24 Hour Phone: 704 382-8333
Email: tcwillia@duke-energy.com