News Release
July 02, 2001

DUKE ENERGY RELEASES CALIFORNIA ISO, INTERNAL RECORDS THAT CONFIRM APPROPRIATE OPERATION OF SOUTH BAY PLANT

SALT LAKE CITY – Duke Energy today released previously confidential records that demonstrate changes in power output at its South Bay power plant near San Diego were directed by the California Independent System Operator (ISO), which operates the state’s power grid.

Records from the ISO’s Automatic Dispatch System demonstrate that Duke Energy Trading and Marketing (DETM) received instructions from the ISO for increasing and decreasing the power output from the South Bay plant. Those instructions were relayed by DETM to operators in the plant control room. DETM is the California ISO certified scheduler for the Duke Energy plants.

The records graphically refute allegations made by three former San Diego Gas & Electric (SDG&E) employees that reductions in output at South Bay during the period January 16-18, 2001, were made at Duke Energy’s own direction.

"The records released today are clear proof that the units were made fully available and followed the direction of the ISO," said Jeff Stokes, Duke Energy’s executive vice president, western natural gas and power for Duke Energy North America. "Duke Energy has been in the business of generating electricity for nearly a century. We are proud that our California plants produced 50 percent more electricity in 2000 than in 1999 and achieved reliability records that exceeded national standards."

In a media webcast today, Stokes reviewed the plant logs for the three days in question and the corresponding ISO automatic dispatch logs to demonstrate the plant was following the direction of the state agency. He also reviewed DETM logs that demonstrated that the full capacity of both units was offered to the ISO on the days in question.

Stokes noted that the ISO relies on natural gas plants like South Bay to help balance supply and demand on the electrical grid – essential for system reliability. For that reason, the logs show frequent changes in power levels as the ISO worked to keep supply and demand in balance.

In order to be able to call on a plant for grid balancing, the ISO purchases what are known as "ancillary services" from generators. Purchasing ancillary services essentially puts the generating capacity on hold, allowing the ISO to call upon it as needed to meet increases or decreases in demand.

Stokes displayed charts from the three days in question that showed the portion of the power from the South Bay units that was purchased by the ISO as ancillary services or that was offered and not purchased, as well as the actual generation from the plant.

"It is important to understand that the reliability of California’s power supply depends not only on adequate energy flows, but on the ability of the grid operator to keep supply and demand perfectly balanced. Duke Energy has deep expertise in grid operations and knows that having ancillary services at their disposal is critical to ISO’s mission of keeping the power on," Stokes said.

A replay of Stokes’ webcast with the charts may be seen in the News Center at www.duke-energy.com.

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.

To see the June 28, 2001 memo from the California ISO, go to the Duke Energy Web site at: www.duke-energy.com/decorp/content/newscenter/newsreleases/2001/jul/ISO.pdf

Or, from the Duke Energy Web site, click here to go directly to the California ISO statement: Statement from California ISO:

Contact: Tom Williams
Phone: 805/595-4270
24 Hour Phone: 704/382-8333
Email: tcwillia@duke-energy.com
Contact: Jennifer Hillings Epstein
Phone: 704/382-1221
24 Hour Phone: 704/382-8333
Email: jhepstein@duke-energy.com