News Release
Oct. 01, 1998

TEXAS EASTERN TRANSMISSION CORPORATION RESOLVES GAS SUPPLY REALIGNMENT COSTS ISSUE

HOUSTON — Texas Eastern Transmission Corporation has resolved its gas supply realignment costs (GSR) issues with the recent settlement of gas purchase contracts.

The resolution will add approximately $39 million to Texas Eastern’s third quarter results.

"This is the first time in Texas Eastern’s history that the company does not have any gas supply purchase obligations," said Bobby Evans, president. "This has been a long and arduous process but we have finally brought it to a successful conclusion."

In the past, during the normal course of business, Texas Eastern and other pipelines entered into certain gas purchase contracts to maintain pipeline gas supply. The implementation of Order 636 in 1993 resulted in the pipelines moving from buying and selling natural gas to transporting it. In order to make the transition, pipelines bought out the gas purchase contracts. Those buyout expenses were shared between the customers and the pipelines.

In 1993, Texas Eastern took a $100 million charge to reflect the impact of the Order 636 settlement. In the fourth quarter of 1995, based upon producers’ discoveries of additional natural gas reserves, Texas Eastern took an additional $40 million charge.

"The recent resolution of the final gas supply contracts has allowed Texas Eastern to resolve the remaining GSR costs issues for Texas Eastern and its customers," Evans said. "We have worked hard to minimize the cost to our customers by negotiating with producers to limit the liability on the contracts. As a result of these negotiations, Texas Eastern can now release $39 million that was previously reserved for the settlement of these liabilities, which brings us back in line with the original charge made in 1993."

Texas Eastern Transmission Corporation is a subsidiary of Duke Energy. 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: John P. Barnett
Phone: (713) 627-4072
24 Hour Phone: (704) 382-8333
Email: media-relations@duke-energy.com