News Release
Oct. 20, 1998


CHARLOTTE, N.C. -- Duke Energy today reported 1998 third quarter basic earnings of $1.18 per share, up 42 percent from 83 cents per share for the same quarter in 1997.

Duke Energy posted earnings for common stock of $423.8 million for the third quarter, compared to $298.4 million reported for the same quarter in 1997. Overall earnings before interest and taxes (EBIT) for the third quarter of 1998 was $870.9 million versus $632.2 million for the third quarter of 1997.

There were two main factors in the earnings increase. In Electric Operations, overall electric sales rose 7.8 percent versus last year. In Energy Services, EBIT rose 110 percent from last year’s quarter. In that unit, improved results from Duke Energy’s Global Asset Development and Duke Energy Trading and Marketing more than offset lower margins posted by Duke Energy Field Services due to lower natural gas liquids prices.

"During the third quarter, we continued to execute our strategy to develop regional centers of energy assets. We also leveraged Duke Energy’s strong, diverse portfolio of assets," said Richard B. Priory, chairman and chief executive officer of Duke Energy. "In the energy business, many external forces can affect revenues. The diversity of our portfolio provides some offsets so that negative factors for one line of business can be positive for another."

Earnings were positively affected by a $39 million non-recurring gain on a resolution of gas supply realignment costs issue by the company’s Texas Eastern Transmission Corp. Absent from this quarter was a $46.8 million non-recurring charge taken during last year’s quarter due to a workforce reduction in the company’s Electric Operations.

Business Unit Results

In Electric Operations, which serves nearly 2 million customers in the Carolinas through Duke Power, EBIT for the quarter was $590.5 million versus $453.6 million for the same quarter last year.

Warm summer weather led to an increase of overall electric sales. Sales to residential customers accounted for much of the increase, rising 13 percent for the quarter. Commercial and general service usage rose 8 percent. Industrial sales fell 1.8 percent for the quarter. Textile sales, a large component of the industrial sector, fell 5.2 percent.

"Increased commercial sales resulted from the robust economy of the Carolinas, while weather was the main driver for residential sales," said Priory. "Outside of the decrease in textile usage, other industrial sales were relatively flat for the quarter. Overall, our power generation and distribution teammates did an excellent job of delivering electricity during the quarter."

EBIT at Duke Energy’s Natural Gas Transmission operations rose 32 percent to $177.7 million, versus $134.6 million for last year’s quarter.

Natural Gas Transmission earnings were affected by the resolution of Texas Eastern Transmission’s gas supply realignment costs, which added $39 million to third quarter results.

In the past, Texas Eastern and other pipelines entered into certain gas purchase contracts to maintain pipeline gas supply. Federal changes 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. These buyout expenses were shared between the customers and the pipelines.

Beginning in 1993, Texas Eastern set aside reserves for the settlement of these contracts. Recent resolution of these gas supply realignment costs resulted in $39 million being added to third-quarter results.

Also in the quarter, Texas Eastern received approval from the Federal Energy Regulatory Commission for its Customer Rate Initiative plan that will reduce customer rates and will make the pipeline more competitive in the future.

"With these legal and regulatory issues behind us in our Natural Gas Transmission area, we can now focus our total efforts on providing better results to customers and shareholders," said Priory.

In Energy Services, EBIT for the quarter was $78.8 million compared to $37.5 million reported for last year’s quarter. Although lower natural gas liquids prices resulted in lower margins for Duke Energy’s Field Services, other business units showed better results.

During the quarter, Duke Energy’s Global Asset Development advanced the company’s regional strategies with the announcement of new power plants in Maine and Florida. New England, Florida and California are regions of the United States where Duke Energy is concentrating its resources and skills to leverage the company’s expertise across the energy value chain. Also during the quarter, the company’s Bridgeport (Conn.) Energy Facility began operating after completing construction of phase 1 in just 10 months. The company also completed acquisition of three power plants in California, which were efficient, reliable performers during the state’s first summer as a competitive electricity market. The business unit also began operating a recently acquired gas pipeline in Australia, where it will take a similar strategic approach to energy assets.

"Every quarter, we sharpen our focus on building regional energy platforms to serve our customers," said Priory. "The asset mix and skills we described when we formed Duke Energy more than a year ago are delivering results every day."

DukeSolutions, the company’s energy services business unit, announced expansion plans during the quarter. In September, it acquired Tescor Energy Service Inc. of Toronto – one of Canada’s largest energy services companies.

Duke Energy Trading and Marketing also had a strong quarter. Helped by favorable market conditions, the unit posted EBIT of $31.6 – versus a loss of $5.4 million from last year’s third quarter.

"Our business units continue to make strategic decisions that advance our regional strategy," said Priory. "We’ll be looking for opportunities that complement our overall mission and the mission of our respective units – whether it is supplying energy in its various forms or providing energy-related products and services."

For the nine months ending Sept. 30, 1998, Duke Energy earned $2.81 per share, up from the $2.10 per share reported for the same period in 1997.

Duke Energy Corporation (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


Duke Energy Corporation
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Contact: Randy Wheeless
Phone: 704/382-8379
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