News Release
April 21, 1999

DUKE ENERGY: BIG GAIN PROPELS RECORD EARNINGS TO $2.65 PER SHARE

CHARLOTTE, N.C. – Duke Energy today reported 1999 first quarter basic earnings of $2.65 per share of common stock, compared with 87 cents from the same quarter in 1998.

In late March, Duke Energy completed its $1.9 billion sale of Panhandle Eastern Pipe Line Co. and Trunkline Gas Co. to Michigan-based CMS Energy. The sale resulted in a one-time gain of $1.82 per share for the quarter and an after-tax gain of $660 million. Without the sale, and the absence of an extraordinary item from last year’s quarter, basic first-quarter earnings were 83 cents per share versus 89 cents last year.

Overall, Duke Energy posted earnings for common stock of $962 million for the first quarter ($660 million being from the one-time sale) on revenue of $4.2 billion compared to $314 million on revenue of $4.1 billion reported for the same quarter in 1998. Earnings before interest and taxes (EBIT) for the first quarter of 1999 were $683 million versus $678 for the first quarter of 1998. An increase in interest expenses led to much of the difference between the two quarters.

"This quarter highlighted our ability to reposition assets to create greater long-term shareholder value," said Richard B. Priory, chairman, president and chief executive officer of Duke Energy. "We have been able to redirect the capital gained from the Midwest pipeline sale to areas that offer us greater opportunities for the future."

Duke Energy completed a number of acquisitions during the first quarter. The most notable was the $1.35 billion purchase of the midstream natural gas business from Union Pacific Resources at the end of March. The company also began construction on a new merchant power plant in Hidalgo County, Texas.

"Duke Energy is planting the flag around the globe building energy businesses that will lead us to be the premier energy company in the world," said Priory. "I’m proud of how our team has kept an eye on opportunities around the world and has followed up by making those opportunities become a reality for Duke Energy."

Duke Energy’s efforts were noted during the quarter by Fortune magazine. The company was named the nation’s Most Admired Electric and Gas Utility in the magazine’s Annual List of Most Admired Companies.

Business Unit Results

In electric operations, which serves 2 million customers in North Carolina and South Carolina, EBIT for the quarter was $407 million versus $378 million for the same quarter last year.

Overall electric sales for the quarter were up 1.5 percent. Residential sales were up 0.4 percent for the quarter – helped by slightly cooler weather and the addition of 40,000 new customers. General service and commercial sales were up 3.6 percent for the quarter.

Overall industrial sales dropped 3.5 percent for the quarter. Textile sales, a large component of the industrial sector, fell 8 percent.

In natural gas transmission, EBIT for the first quarter was $208 million, basically unchanged from last year’s $209 million. Earnings growth in the Northeast Pipelines, spurred by expansion projects, basically offset lower earnings from the Midwest Pipelines and the effect of a state tax refund in 1998.

In field services, EBIT for the quarter was $12 million versus $48 million for last year’s quarter, primarily due to the 1998 gain on an asset sale. Lower natural gas liquids prices continued to hurt margins in field services, but the unit was helped by the performance of TEPPCO Partners, L.P., in which Duke Energy has an ownership interest.

"We are seeing a major improvement in natural gas liquids prices," said Priory. "Through acquisitions and other efforts, our field services operations are well positioned to take advantage as this market resumes normal pricing."

In the company’s trading and marketing operation, EBIT was $33 million versus $13 million for the same quarter last year. A 39 percent increase in the amount of natural gas marketed helped boost margins.

"Our trading and marketing operations continue to grow and turn in solid results," said Priory. "We have managed to grow the business through very different market conditions – from last year’s volatile summer to the more calmer conditions of this quarter."

Growth continues at the company’s domestic and international energy development businesses. Increased project activity helped spur EBIT for the quarter to $32 million versus $9 million from last year. The businesses were helped by projects in Connecticut, California and Australia that have been brought on line in the past year.

"Our merchant megawatt capacity has grown more than 50 percent in the past year," said Priory. "Whether it is domestic or international, our development businesses have done an excellent job at establishing the energy platforms that we will build upon for future growth."

Duke Energy (NYSE:DUK) is a global energy company with more than $26 billion in assets. Headquartered in Charlotte, N.C., the company reaches into more than 50 countries, producing energy, transporting energy, marketing energy and providing energy services. In the United States, Duke Energy companies provide electric service to approximately two million customers in North Carolina and South Carolina; operate interstate pipelines that deliver natural gas to

various regions of the country; and are leading marketers of electricity, natural gas and natural gas liquids. Additional information about the company is available on the Internet at: www.duke-energy.com.

Contact: Randy Wheeless
Phone: (704) 382-8379
24 Hour Phone: (704) 382-8333
Email: crwheele@duke-energy.com