News Release
March 26, 2001

DUKE ENERGY STANDS BY ITS CALIFORNIA PRICES; WILL OFFSET CREDIT PREMIUMS CHARGED WHEN PAST-DUE PAYMENTS ARE RECEIVED

HOUSTON – Duke Energy made a compliance filing Friday with the Federal Energy Regulatory Commission (FERC) regarding the prices it bid for power in California during Stage 3 emergencies in January and February 2001. The prices Duke Energy bid were reasonable and reflected market conditions and the prevailing credit issues surrounding sales to the California Independent System Operator (ISO) and California Power Exchange (PX).

Duke Energy’s filing was in response to FERC orders issued on March 9 and March 16 requiring electricity suppliers in California to refund or offset prices that exceeded the FERC-determined market clearing price or to submit information supporting the prices bid.

During the months of January and February, Duke Energy’s bids included a commercially based credit premium to cover the substantial risk of non-payment that existed at the time.

To date, Duke Energy has been paid a small percentage of the amounts owed it by the ISO and the PX, a fact that demonstrates the need for the credit premiums that were included in Duke Energy’s bids. The credit premiums, along with unsettled market conditions, were largely responsible for Duke Energy’s bids exceeding the FERC-determined market-clearing price in January and February. Although the credit premiums were appropriate, Duke Energy has agreed in its filing to offset the credit premium amounts against the bid price, provided it is paid what it is owed based on the FERC-determined market-clearing price.

"We cannot lose sight of the fact that most energy suppliers have yet to be paid for a substantial amount of the energy consumed in California in January and February," said Jim Donnell, president and chief executive officer of Duke Energy North America. "The prices bid by Duke Energy reflect the continued uncertainty over whether we will be paid. Such risk premiums are standard business practice. We could be willing to forego collection of the credit premiums for these months, provided we were paid the FERC clearing price. If we are not assured payment, the credit premiums are obviously appropriate and we would reserve our right to collect the entire amount of the bids that are subject to the FERC order."

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: Jeremy Dreier
Phone: 704/382-8343
24 Hour Phone: 704/382-8333
Email: jwdreier@duke-energy.com