News Release
Oct. 21, 1999

DUKE ENERGY: STRONG EARNINGS GROWTH IN UNREGULATED BUSINESSES DRIVE THIRD QUARTER RESULTS

CHARLOTTE, N.C. – Duke Energy (NYSE: DUK) today reported strong growth in year-over- year earnings before interest and taxes (EBIT) for the third quarter 1999, driven by EBIT growth in the company’s unregulated energy businesses of 62 percent. This growth included a 600-percent increase from Duke Energy Field Services and a total 288-percent increase from Duke Energy International and Duke Energy North America. Basic earnings for the quarter that ended Sept. 30 were $1.20 per share, up from $1.18 per share for the same quarter in 1998.

"The strength of our unregulated businesses continues to grow as we implement our global energy merchant strategy," said Richard B. Priory, Duke Energy’s chairman, president and chief executive officer. "During the past three months our activities both domestically and internationally have focused on achieving long-term earnings growth and shareholder value.

Our Energy Services’ portfolio of businesses and leading market position in natural gas liquids (NGL), as well as the continued unyielding performance of our energy transmission and electric operations businesses, are delivering on our promise of growth."

Overall, Duke Energy posted earnings for common stock of $436 million for the third quarter on revenue of $6.7 billion compared to $424 million on revenue of $5.3 billion for the third quarter of 1998. Year-to-date basic earnings per share as of Sept. 30, 1999, were $4.62, which includes $1.82 extraordinary after-tax gain on the sale of the Midwest Pipelines in the first quarter. Year-to-date earnings per share for the same period last year of $2.81 included approximately $0.27 per share from the Midwest Pipelines, which were sold March 31, 1999.

Unregulated Businesses Drive Results

Duke Energy Field Services reported EBIT for the quarter of $49 million, an increase of more than $40 million from third quarter 1998. The rise is attributable to an increase in NGL prices that improved throughout the third quarter from the historically low prices seen early in the year, averaging $0.16 more per gallon than the third quarter of 1998. In addition, the increase is also attributable to the acquisition of UPFuels at the end of the first quarter, combined with continued efficiencies realized from the integration of UPFuels’ assets.

"Our strategic investments earlier this year in key midstream assets are providing an attractive return to our shareholders," said Priory. "These assets give us a competitive advantage in the market that will result in continued earnings growth."

Duke Energy’s Energy Services group delivered on its promise of aggressive growth. The strong performance was led by Duke Energy International (DEI) and Duke Energy North America (DENA), which reported a total EBIT of $128 million -- a 288-percent increase from last year.

DEI rapidly became one of Latin America’s leading energy companies, announcing three significant acquisitions during the last week of July, expanding its generating portfolio by approximately 3,800 gross megawatts. DEI purchased controlling interest in Brazil’s 11th largest electric generating company, Companhia de Geracão de Energia Eléctrica Paranapanema (Paranapanema) with approximately 2,300 megawatts of hydroelectric generation.

DEI also purchased controlling interest in two thermal generating companies in El Salvador, Generadora Acajutla S. A. de CV (Acajutla) and Generadora Salvadoreña, S. A. de C.V. with a combined total of 275 megawatts of thermal generation. In addition, DEI announced a $75 million modernization of the Acajutla facility to add 155 megawatts of combined cycle generation. Completion is expected in late 2001.

DEI announced an agreement to purchase Dominion Resources Inc.’s controlling interests in a portfolio of hydroelectric, natural gas and diesel power generation businesses in Argentina, Belize, Bolivia and Peru totaling 1,200 megawatts. DEI’s Latin American marketing and trading office, based in Buenos Aires, Argentina, is also providing financial products and energy-related services throughout the region.

DEI launched construction of the 495-mile Eastern Gas Pipeline (EGP), which will introduce a competitive gas supply to the Australian states of New South Wales and Victoria. The $297 million project will be operating in time for the Sydney 2000 Olympics. Additionally, DEI announced gas supply sales and marketing agreements with EnergyAustralia that will provide gas transmission and supply through existing infrastructure as of October 1999 and through EGP beginning in October 2000.

DENA demonstrated its asset management expertise by announcing a new partnership with Cinergy Capital & Trading Inc. The two companies will jointly own three wholesale electric generating facilities currently under development in Indiana and Ohio, totaling approximately 1,400 megawatts of capacity. By selling 50-percent interest in its 640-megawatt Butler County, Ohio, plant and 640-megawatt Vermillion County, Ind., plant as part of the partnership, DENA was able to realize value and will use this capital for even further expansion in North America. DENA broke ground for construction of the two 640-megawatt plants in August. The plants will enhance regional power supply reliability and will begin operation by the summer of 2000.

DENA also gained an early entrance into the Southwest power market by acquiring a 50-percent interest in the Griffith Energy Project, a 600-megawatt merchant power plant in development in Kingman, Ariz. The gas-fired combined cycle facility is expected to be in service by July 2001.

"The results of DEI and DENA are once again outstanding," stated Priory. "These businesses are platforms for our continued global expansion and they are delivering excellent results. The significant growth they have achieved this quarter is just the beginning. Through the pursuit of the company’s energy merchant strategy, DEI and DENA combined now have more than 9,000 megawatts of net power generation capacity, including the announced purchase of Dominion Resources, Inc.’s Latin American assets, and 112 Tbtu of natural gas pipeline capacity operating or under construction."

Regulated Businesses Continue Strong Performance

Electric Operations EBIT was $617 million for the third quarter of 1999, a $26 million increase over last year, primarily driven by strong electricity sales. Strong performance by Electric Operations’ generating plants contributed to the business unit’s ability to meet customers’ demand. For the year-to-date, Electric Operations reported EBIT of $1,343 million, up from $1,331 million last year.

Natural Gas Transmission reported EBIT of $128 million for the quarter, down from last year’s third quarter of $178 million, which included $37 million from the Midwest Pipelines sold at the end of the first quarter this year and a $39 million gas supply realignment (GSR) provision release. EBIT for the Northeast Pipelines increased $16 million from market expansion projects and lower operating expenses, excluding the GSR provision release.

Other Businesses’ Results

Duke Energy Merchants (DEM), the energy trading and marketing subsidiary of Duke Energy,

contributed EBIT of $60 million through the first three quarters of 1999 and $3 million for the third quarter before drilling expenses. DEM’s non-operating working interest participation programs have yielded discoveries of approximately 28 Bcfe during the quarter. Significant production and earnings from this program will begin next quarter. DEM also finalized a transaction with a unit of Northeast Utilities to purchase 15 percent of the output from Millstone number 2 and number 3 nuclear units for two years beginning Jan. 1, 2000. This firm purchase will provide DEM with approximately 300 megawatts of unit contingent energy and capacity to support NEPOOL power marketing and trading activities.

DEM’s results for the quarter were negatively impacted by reduced gas and power trading margins and expenses for drilling. Overall, DEM’s 1999 year-to-date and third quarter results contributed EBIT of $50 million and a loss of $6 million respectively.

Duke/Fluor Daniel (D/FD) continued to gain recognition as the premier engineering, procurement and construction (EPC) provider to the electric power industry. D/FD announced it has been awarded a contract by a subsidiary of Sonat Energy Services to provide EPC services for a 650-megawatt natural gas and distillate oil-fired plant in Upson County, Ga.

The $180 million plant is expected to be fully operational by June 2000. D/FD also has been selected by South Carolina Electric & Gas Co. to design and build a $180 million gas turbine generation project in Aiken County, S. C., that will provide new electric generation and improve air emissions. The 300-megawatt combined cycle facility will replace older coal-fired equipment and will be used primarily for serving peak loads.

Duke Engineering & Services (DE&S) is working with Washington-based International Resources Group LLC to help the government of Nepal develop an infrastructure for hydropower development. Nepal has the potential to become the second-largest hydropower producer in the world, next to Brazil, with electricity export capabilities to supply growing demand from densely populated India, China and other neighboring countries. DE&S also recorded a one-time charge of $38 million for the quarter to reposition the company for growth and profitability in its current markets. The charge is related to strategic moves in the nuclear services business area to reduce the volume of low-margin engineering services in favor of higher-value, higher-margin offerings to the industry.

DukeSolutions continued its investment in marketing, sales and infrastructure development as it builds its leadership position in retail energy services, including positioning the company for growth by focusing on its most profitable product and service lines. DukeSolutions signed significant contracts across North America that will drive future earnings in all of its key product/service lines. These contracts included a steam outsourcing project with Formica; supply management contracts with Mitsubishi, Nestlé and Sara Lee; an electric supply contract with Procter & Gamble in California; and efficiency construction contracts with Eastman Chemical, IBM, Kraft, Cadillac Fairview, Veterans Affairs and NASA.

DukeSolutions also announced a long-term investment in one of the nation’s largest privately held hydroelectric systems and thermal generating assets with Inexcon in Maine. DukeSolutions has provided an investment to Great Northern Paper Inc. that will facilitate upgrades of power systems. In addition, DukeSolutions established itself as Canada’s largest retail energy services provider through continued deal signings and the acquisition in August of Montreal-based CMA Chalifour, Marcotte & Associés, a 23-year-old energy services firm with a substantial customer base in Quebec and Ontario.

Duke Energy’s real estate subsidiary, Crescent Resources, reported EBIT of $32 million for the quarter compared with $33 million for the same period last year. Increased sales of residential development properties were offset by decreased lake lot sales, due to the completion of the lake lot sales program in 1998 and decreased project sales.

"All of our business units continue to be solid contributors to our growth," said Priory. "Our strategy to have a diversified portfolio of energy businesses is allowing us to maintain earnings growth throughout the year without significant earnings sensitivities from the effects of weather. This is a clear indicator of our leadership position as a dynamic, growing energy company around the world."

Duke Energy (NYSE:DUK) is a global energy company with more than $29 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.

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September 1999
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months Ended
September 30,

Year To Date
September 30,



(In millions, except where noted)

1999

1998

1999

1998


COMMON STOCK DATA

Earnings Per Share (before extraordinary item)

  Basic

$1.20

$1.18

$2.80

$2.83

  Dilutive

1.19

1.17

2.80

2.82

Earnings Per Share

  Basic

1.20

1.18

4.62

2.81

  Dilutive

1.19

1.17

4.61

2.80

Dividends Per Share

-

-

1.65

1.65

Book Value Per Share

25.53

22.24

Actual Shares Outstanding

365

362

365

362

Weighted Average Shares Outstanding

  Basic

365

361

364

361

  Dilutive

366

362

365

362


INCOME

Operating Revenues

$6,694

$5,299

$15,545

$13,427

Earnings Before Interest and Taxes (EBIT)

908

871

2,159

2,131

Interest Expense

153

139

405

385

Minority Interests (a)

31

30

99

62

Income Taxes

283

274

619

648

Extraordinary Gain (Loss)

-

-

660

(8)

Net Income

441

428

1,696

1,028

Preferred Stock Dividends and Redemption Premiums

5

4

15

16

Earnings Available for Common Stockholders

$436

$424

$1,681

$1,012


CAPITALIZATION

Common Equity

44%

48%

Minority Interest

6%

2%

Preferred Stock

2%

2%

Trust Preferred Securities

6%

5%

Total Debt

42%

43%

SEC Fixed Charges Coverage

4.6

5.0

Total Debt

$9,092

$7,286


CAPITAL AND INVESTMENT EXPENDITURES

Electric Operations

$194

$146

$497

$386

Natural Gas Transmission

80

78

187

202

Field Services

58

74

1,595

205

Trading and Marketing

6

2

37

4

Global Asset Development

1,144

724

1,782

829

Other Energy Services

77

26

87

39

Real Estate Operations

82

73

235

163


EBIT BY BUSINESS SEGMENT

Electric Operations

$617

$591

$1,343

$1,331

Natural Gas Transmission

128

178

482

534

Field Services

49

7

97

68

Trading and Marketing

(6)

31

50

59

Global Asset Development

128

33

185

57

Other Energy Services

(47)

6

(58)

15

Real Estate Operations

32

33

78

97

Other Operations

7

(8)

(18)

(30)

Total EBIT

$908

$871

$2,159

$2,131


(a) Includes expense related to the Trust Preferred Securities of $24 million and $12 million for the three months ended and $60 million and $26 million for the nine months ended September 30, 1999 and 1998, respectively.

September 1999
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months Ended
September 30,

Year To Date
September 30,



(In millions, except where noted)

1999

1998

1999

1998


ELECTRIC OPERATIONS

Operating Revenues

$1,503

$1,438

$3,659

$3,608

Operating Expenses

908

876

2,379

2,353

Other Income (Expenses)

22

29

63

76





EBIT

$617

$591

$1,343

$1,331





Sales, GWh

23,141

23,365

62,462

63,458


NATURAL GAS TRANSMISSION

Operating Revenues

$263

$375

$925

$1,152

Operating Expenses

139

205

457

640

Other Income (Expenses)

4

8

14

22





EBIT

$128

$178

$482

$534





Throughput, TBtu

338

527

1,489

1,896


FIELD SERVICES

Operating Revenues

$1,208

$725

$2,334

$2,123

Operating Expenses

1,158

716

2,237

2,085

Other Income (Expenses)

(1)

(2)

-

30





EBIT

$49

$7

$97

$68





Natural Gas Gathered and Processed/Transported, TBtu/day

5.8

3.7

4.9

3.7

Natural Gas Liquids Production, MBbl/d

224.7

115.4

182.5

111.5

Natural Gas Marketed, TBtu/day

0.5

0.5

0.5

0.5

Average Natural Gas Price per MMBtu

$2.59

$1.99

$2.16

$2.13

Average Natural Gas Liquids Price per Gallon

$0.40

$0.24

$0.31

$0.27


TRADING AND MARKETING

Operating Revenues

$3,720

$2,754

$8,552

$6,493

Operating Expenses

3,727

2,723

8,508

6,435

Other Income (Expenses)

1

-

6

1





EBIT

$(6)

$31

$50

$59





Natural Gas Marketed, TBtu/day

10.4

7.5

10.4

7.5

Electricity Marketed, GWh

34,131

37,000

78,147

80,426


GLOBAL ASSET DEVELOPMENT

Operating Revenues

$304

$111

$526

$208

Operating Expenses

166

86

369

167

Other Income (Expenses)

(10)

8

28

16





EBIT

$128

$33

$185

$57





Proportional MW Capacity Owned

(includes under construction or under contract)

NA

NA

7,928

4,435

Proportional Maximum Pipeline Capacity, Tbtu

(includes under construction or under contract)

NA

NA

112

45

Estimated Proportional Investment in Project Net Assets

(includes under construction or under contract)

NA

NA

$2,818

(a)

$1,535

(a)


OTHER ENERGY SERVICES

Operating Revenues

$151

$127

$464

$378

Operating Expenses

198

122

522

364

Other Income (Expenses)

-

1

-

1





EBIT

$(47)

$6

$(58)

$15






REAL ESTATE OPERATIONS

Operating Revenues

$43

$41

$109

$120

Operating Expenses

11

8

31

23

Other Income (Expenses)

-

-

-

-





EBIT

$32

$33

$78

$97






(a) Includes total proportional estimated costs to complete projects under construction or under contract of $353 million and $352 million as of September 30, 1999 and 1998, respectively.

NA = Not applicable

Contact: Bryant Kinney
Phone: 704/382-2208
24 Hour Phone: 704/382-8333
Email: jbkinney@duke-energy.com