News Release
March 04, 1999


CHARLOTTE, N.C. -- The state of Florida moved a step closer to a competitive wholesale electricity market, as the Public Service Commission (PSC) today approved plans by Duke Energy Power Services LLC and the Utilities Commission of New Smyrna Beach (UCNSB) to build the state’s first merchant power plant.

The 514-megawatt New Smyrna Beach Station, which will be fueled by clean-burning natural gas, will provide 30 megawatts of electricity to the UCNSB for resale to its more than 20,000 customers. The remaining 484 megawatts is to be marketed to other investor- and municipally owned utilities and electric cooperatives on the open wholesale market.

"The Public Service commissioners have made a very difficult and courageous decision that paves the way for Florida to enjoy the benefits of wholesale competition," said Michael C. Green, vice president for Duke Energy in Florida."The PSC has made it clear that there is a need for this power plant, both to help the Utilities Commission of New Smyrna Beach serve its customers, and to cost-effectively help Peninsular Florida meet its growing need for new generating capacity."

The PSC has projected that the state of Florida will need an additional 8,000 megawatts of new electric capacity over the next decade. "This plant will provide reliable, clean, efficient and low-cost wholesale power to the Florida market to help meet that growing need," said Green. "This plant will lower our cost for purchased power and allow our utility to strengthen its financial position," said Ronald L. Vaden, director of the UCNSB. "Even though we already have some of the lowest rates in Florida, this plant will help us lower rates to our customers even further."

Merchant power plants sell wholesale power on a competitive basis to utilities and power marketers that need low-cost power to meet the needs of their customers. However, utilities and power marketers are not required to buy power from merchant plants. In order to be successful, such plants must be able to generate electricity at prices more attractive than other power plants operating in the same market. Merchant plants cannot sell retail electricity to businesses or individuals.

In traditional power plant siting and construction, the costs to build a plant are paid by a utility’s customers, through its regulated rate base. The entire $160 million cost of the New Smyrna Beach plant, however, will be paid by Duke Energy. "This truly is a no-risk, no-obligation way for Florida to help meet its electricity needs," said Green.

The plant must now seek approval from the Florida Department of Environmental Protection before a final decision is made by the governor and Florida’s cabinet. A final decision is expected later this year. Pending final approval, the plant could be operational by 2001.

The 1992 Federal Energy Policy Act promotes enhanced competition in the wholesale electricity market by providing open access to the electricity transmission grid. Almost all of Florida’s investor- and municipally owned utilities currently participate in the wholesale market. In fact, nearly 20 percent of the electricity sold in Florida is sold on the wholesale market.

Although this plant will be a first for Florida, merchant plants are proliferating throughout the United States. Duke Energy currently operates or is building merchant plants in California, Connecticut, Maine and Texas. FPL Energy, a subsidiary of Florida Power & Light, recently announced plans to build merchant plants in Texas and Washington state.

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 about 2 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 World Wide Web at:

Contact: Randy Wheeless
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