News Release
Feb. 26, 2001

DUKE ENERGY LAWSUITS ON HOLD AS SETTLEMENT TALKS CONTINUE

MORRO BAY, CALIF. – Duke Energy announced today that two lawsuits filed against the state of California and various energy agencies have been suspended as progress continues toward a negotiated solution.

The company reached an interim settlement in connection with its lawsuit against Governor Gray Davis regarding his commandeering of long-term power contracts on which California utilities had defaulted. Under the settlement, the California Department of Water Resources (CDWR) will purchase the power from Duke Energy that was previously being provided under contracts to Southern California Edison and Pacific Gas & Electric. The interim settlement is set to expire April 30.

"We’re pleased we were able to reach this interim agreement," said Bill Hall, head of Duke Energy’s California operations. "It gives California consumers the benefit of the long-term contract price that was negotiated with the utilities before they defaulted. And it allows Duke Energy to provide the electricity through an entity that can pay us for it. We hope that the interim settlement will give us enough time to develop a comprehensive long-term solution that works for everyone."

As a result of separate transactions between Duke Energy and CDWR, the company also suspended for 30 days a separate suit against the Independent System Operator (ISO). That suit seeks to enforce credit and security provisions in the ISO tariff that are necessary to assure that power sold on the daily spot market is purchased only by entities that can pay for it. The company hopes the suspension of the suit will allow time for a negotiated solution to the issues.

"We are encouraged by the state’s short-term actions and will continue to work with Governor Davis and the California legislature on a long-term solution to the energy crisis," said Hall.

Duke Energy, a diversified multinational energy company, creates value for customers and shareholders through an integrated network of energy assets and expertise. Duke Energy manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses -- generating revenues of more than $49 billion in 2000. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

Contact: Tom Williams
Phone: 805/595-4270
24 Hour Phone: 704/382-8333
Email: tcwillia@duke-energy.com
Contact: Cathy Roche
Phone: 704/373-4860
24 Hour Phone: 704/382-8333
Email: csroche@duke-energy.com