News Release
July 01, 1998

DUKE ENERGY COMPLETES ACQUISITION OF 2,645 MEGAWATTS IN CALIFORNIA

CHARLOTTE, N.C. (July 1, 1998) -- Duke Energy Power Services announced today that it has completed its purchase of three electric generating stations from Pacific Gas & Electric Company (PG&E) for $501 million. The three California plants, which have a combined capacity of 2,645 megawatts, are located in Moss Landing in Monterey County; Morro Bay in San Luis Obispo County; and Oakland in Alameda County.

"The purchase of these three plants represents Duke Energy’s largest acquisition of power plants," said Paula Rosput, president of Duke Energy Power Services. "We believe these plants will be very successful in California’s competitive wholesale electricity market and we look forward to maximizing their value as the market matures."

Duke assigned several key employees from its offices in Charlotte and Houston to operate the plants and hired the majority of the plants’ professional staff from PG&E. The majority of the current craft work force will stay on as PG&E contractors under a two-year operating and maintenance agreement. Duke Energy Trading and Marketing will manage the delivery of natural gas used for fuel at the plants and work with Duke Energy Power Services to market the plants’ electricity.

"We have had Duke employees in California working non stop since early this year to establish our California operations," said Bill Hall, vice president of Duke Energy Power Services~ California operations. "We have met with residents of the plants’ neighboring communities as well as worked extensively with the California Independent System Operator (Cal-ISO) to assure the best possible outcome for these assets in the nation’s first deregulated electricity market. We feel that we are ready to hit the ground running."

"Pacific Gas and Electric Company is pleased that an experienced leader in the utility industry will own these facilities," said Gordon R. Smith, president and CEO of PG&E. "Duke’s record of excellent management, operational skill and community involvement points toward a bright future for these plants."

Directors of Pacific Gas & Electric Company and its parent company PG&E Corporation approved the sale of the three plants to Duke Energy Power Services on Nov. 18, 1997.

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

Duke Energy (NYSE:DUK) is a global energy company with more than $24 billion in assets. Duke Energy companies provide electric service to approximately 2 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: (704) 382-3747
24 Hour Phone: (704) 382-8333
Email: tcwillia@duke-energy.com