News Release
Jan. 11, 1999

DUKE ENERGY ANNOUNCES LEASE OF PLANT IN CHULA VISTA, CA

CHARLOTTE, N.C – Duke Energy Power Services (DEPS) announced today that it recently agreed to a 10-year lease with the Port Of San Diego to operate and eventually replace its 706-megawatt South Bay Power Plant located just south of San Diego in the city of Chula Vista.

"We are very pleased to have reached an agreement with the Port Of San Diego to lease and operate the South Bay plant and we look forward to dispatching the plant in California’s competitive wholesale market," said Bill Hall, DEPS vice president of California operations. "The plant has historically operated at high capacity levels and is very well positioned in Southern California’s transmission grid to meet the region’s growing electricity demand."

In November 1998, the Port of San Diego announced it would purchase the plant from San Diego Gas & Electric Company for a cash payment of $110 million. DEPS is expected to close on the lease by mid-1999. At the end of the lease, DEPS plans to dismantle the plant and use the facility’s air permits to build a new power plant to serve the region.

A small transition team is working at the plant to transfer the permits and handle issues necessary for Duke to begin its lease. San Diego Gas & Electric employees currently working at the plant will work as DEPS contractors under a two-year operating and maintenance agreement when the lease begins.

The lease will bring DEPS’ total generation capacity in operation or under development in California to approximately 5,000 megawatts.

Duke Energy Power Services, a subsidiary of Duke Energy, 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 $26 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. 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