News Release October 16, 2001

CHARLOTTE, N.C. – Reaping the benefits of its portfolio management energy strategy, Duke Energy continues to produce strong financial results, delivering earnings per share of $1.02 in third quarter 2001 -- a 46-percent increase over the 70 cents per share reported in third quarter 2000, which excluded a gain of 34 cents on the sale of DukeNet Communications’ interest in the BellSouth PCS business. All 2000 numbers are adjusted for a Jan. 26, 2001, two-for-one stock split.

Revenues for the quarter were $16.7 billion, an increase of 7 percent compared to third quarter 2000, primarily due to the continued expansion of North American wholesale natural gas and power sales.

For year-to-date 2001, Duke Energy earned $2.30 per share, which excludes the 13 cent one-time charge related to the cumulative effect of a change in accounting principle for FAS 133 in first quarter 2001. This represents a 41-percent increase over the $1.63 per share earned in the first three quarters of 2000, which excludes the DukeNet Communications gain and the one-time $54 million gain on sale of the LNG ships during first quarter 2000. Year-to-date revenue totaled $48.8 billion, a 44-percent increase over last year’s total of $33.9 billion.

Year-to-date total segment earnings before interest and taxes (EBIT) increased 33 percent to $3.5 billion from $2.7 billion last year, which excluded one-time items. The company’s competitive businesses contributed 60 percent of segment EBIT in the first three quarters of 2001.

"Duke Energy’s integrated strategy continues to deliver outstanding results to shareholders, even in periods of economic uncertainty," said Richard B. Priory, chairman, president and chief executive officer. "Our third-quarter performance underscores our ability to find the upside reward in volatility, and to continue growing and shaping our businesses to meet the energy challenges of this decade."

Last month, Duke Energy announced plans to greatly expand its position in the North American natural gas marketplace by acquiring Westcoast Energy (TSE:W; NYSE:WE), a leading energy company with a significant network of Canadian-based assets, in a cash and stock transaction valued at approximately US$8.5 billion, including debt assumed. That acquisition is expected to close in first quarter 2002. The combination of Westcoast Energy’s strategically placed assets in growing supply regions with Duke Energy’s merchant skills and leadership in the development of new transportation infrastructure will strengthen the company’s ability to connect energy supply and energy markets in Canada and the United States.

"Duke Energy's 2001 earnings have been driven by outstanding execution of a solid business strategy, as well as by exceptionally strong market conditions," Priory said. "While such market conditions are unlikely to continue, we do expect to continue superior performance. Looking ahead, we'd anticipate delivering earnings in 2002 that will be toward the high end of our guidance of 10 percent to 15 percent annual EPS growth from our 2000 base of $2.10 per share."

RESULTS BY BUSINESS SEGMENT

Duke Energy Services contains the company’s diversified portfolio of energy merchant and supporting services business segments, including North American Wholesale Energy, International Energy and Other Energy Services. These business segments continue to deliver outstanding results with third-quarter EBIT of $670 million, a 169-percent increase over third quarter 2000. Year to date, Duke Energy Services EBIT is $1.4 billion, an increase of more than 140 percent over the same period in 2000, excluding the LNG ship sales.

North American Wholesale Energy Grows EBIT by 163 Percent

The North American Wholesale Energy segment, comprised of Duke Energy North America (DENA) and Duke Energy Merchants (DEM), reported another quarter of record earnings, delivering $618 million in EBIT. This was a 163-percent increase above third quarter 2000. Year to date, EBIT is $1.2 billion, an increase of 185 percent over the same period in 2000.

DENA’s significant growth results from the disciplined execution of Duke Energy’s portfolio management strategy. DENA’s ability to build or buy strategically located assets and capture incremental value through structured transactions, trading and divestitures delivers strong earnings from its North American merchant energy portfolio.

During the quarter, DENA’s portfolio increased to more than 13,000 megawatts operating or under construction, with the addition of five DENA-built facilities and the acquisition of New Albany, a 350-megawatt peaking facility in Mississippi. DENA also closed on the sale of its remaining 77-percent interest in the McClain Energy Facility to NRG and the asset swap of the Madison and Cadiz generating facilities with Cinergy Capital & Trading.

International Energy Continues Global Expansion

The company’s International Energy segment, comprised of the Asia Pacific, European and Latin American regional subsidiaries of Duke Energy International (DEI), continued its expansion in Australia and other regions. For the quarter, International Energy reported EBIT of $74 million, a decrease of 11 percent from third quarter 2000. Year-to-date EBIT of $218 million is basically flat from the first three quarters of 2000, excluding the one-time gain on sale of the LNG ships during first quarter 2000.

These results include the effects of the reduced consumption of power due to the Brazilian government’s mandatory energy rationing during a period of drought. DEI’s overall portfolio diversity helped to partially offset this negative impact on earnings through increased earnings from the company’s thermal generation in Central America, which saw an increase in demand, as well as through increased commercial activity in the southern cone of Latin America.

In Australia, construction is underway on a 43-megawatt expansion to the Bairnsdale Power Station in Victoria, doubling the capacity of the facility, and permitting work continues on the Tasmanian Gas Pipeline. In Europe, DEI continues to build commercial structures to expand its trading and marketing activities, opening offices in Paris, Rome and Stuttgart during the quarter. Other DEI European offices include locations in London and The Hague.

Other Energy Services

Other Energy Services, the financial reporting unit comprised of DukeSolutions, Duke Engineering & Services and Duke/Fluor Daniel (D/FD) reported an EBIT loss of $22 million, compared with an EBIT loss of $69 million in the prior-year quarter. The results for 2001 include approximately $29 million of charges at Duke Engineering & Services for goodwill impairment. The results for 2000 included a $42 million charge by D/FD related to a financial loss on a 730-megawatt power plant project at the Rouge complex in Dearborn, Mich. Other Energy Services EBIT in 2000 was also negatively affected by a change to a more conservative revenue recognition approach at DE&S to more closely align revenue with work completed for and billed to customers.

D/FD, North America's largest thermal generation engineering, procurement and construction (EPC) company, grew its position for construction of natural gas-fired power projects in the United States. During the quarter, D/FD announced it had been awarded contracts to perform EPC services for 3,000 megawatts of power generation in Florida and Oklahoma. For the first three quarters of 2001, D/FD has been engaged for EPC work at new power generating plants representing more than 10,000 megawatts of capacity. D/FD has a backlog of some 8,000 megawatts to 10,000 megawatts of projects per year over the next three years.

Natural Gas Transmission Earnings Increase Due to Acquisitions and Expansions

The Natural Gas Transmission segment reported third-quarter EBIT of $143 million compared to $132 million in the same period last year. Third-quarter EBIT benefited from the earnings of Market Hub Partners, a natural gas salt dome storage business, acquired in September 2000, and other expansion projects. For the year to date, EBIT for Natural Gas Transmission was $460 million, compared to $418 million for year-to-date 2000. Year-to-date EBIT benefited from new businesses acquired last year – East Tennessee Natural Gas Company and Market Hub Partners.

During the quarter, Duke Energy announced plans to acquire Westcoast Energy, a Vancouver-based company with a significant network of mainly Canadian-based energy assets. This acquisition will enhance the company’s ability to connect rapidly expanding incremental supply to fast growing markets in both Canada and the United States. When the transaction is completed in 2002, DEGT will increase its projected annual growth in EBIT to 7- 9 percent from 5-7 percent.

Also during the quarter, DEGT’s East Tennessee Natural Gas (ETNG) subsidiary filed an application with the Federal Energy Regulatory Commission (FERC) seeking approval of the Patriot project to meet the growing energy needs of the southeastern United States. The $289 million project will bring natural gas service to portions of southwest Virginia for the first time and introduce a competitive supply of natural gas to North Carolina from Appalachian and Gulf Coast producers. Additionally, DEGT announced that the first sections of offshore Florida pipe were laid in Tampa Bay as offshore construction activities continue on the 753-mile Gulfstream Natural Gas System. The $1.6 billion Gulfstream system, a joint venture with Williams, will have capacity to transport approximately 1.1 billion cubic feet of natural gas per day. It is the first new natural gas transportation system to serve Florida in more than 40 years.

Field Services

The Field Services business segment, which represents Duke Energy’s majority interest in Duke Energy Field Services, reported EBIT of $75 million, a decrease of 12 percent from the same period last year. The decrease was primarily due to reductions in NGL prices, partially offset by cost reductions and asset integration. Also, DEFS benefited from the acquisitions of Canadian Midstream Services, Ltd., which doubled DEFS’ net natural gas processing capacity in western Canada, and Gas Supply Resources, Inc., a propane distribution company serving New England.

Year-to-date EBIT for DEFS increased 23 percent, primarily due to the combination of Duke Energy’s natural gas gathering and processing business with Phillips Petroleum’s gas processing and marketing business and the acquisition of assets from Conoco in March 2000.

Franchised Electric

The Franchised Electric business segment, comprised of Duke Power and Electric Transmission, reported EBIT of $607 million in the quarter, a decrease of 1 percent from the same period last year. This decrease is primarily due to the reclassification of $33 million in nuclear insurance distributions to a suspense account pending the outcome of the previously announced regulatory audit, partially offset by lower operating expenses.

For year-to-date 2001, Franchised Electric EBIT results decreased by 3 percent, due to increased nuclear outage costs, primarily at Oconee Nuclear Station and the impact of a slowing economy on sales to industrial customers.

Duke Ventures

The Duke Ventures business segment, comprised of Crescent Resources, DukeNet Communications and Duke Capital Partners, reported EBIT of $51 million, an increase of approximately 34 percent from third quarter 2000, excluding the 2000 sale by DukeNet of its interest in the BellSouth PCS joint venture. The results were primarily due to increased commercial project sales by Crescent Resources.

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.

An earnings conference call is scheduled for 10 a.m. ET on Wednesday, October 17. Robert Brace, executive vice president and chief financial officer, will discuss highlights. The conference call can be accessed via Duke Energy’s Web site at http://www.duke-energy.com or by dialing 800/946-0782 in the United States or 719/457-2657 outside the United States. The confirmation code is 723536. Please call in 5 to 10 minutes prior to the scheduled start time. A replay of the conference call will be available through October 29, 2001, by dialing 888/203-1112 with a confirmation code of 723536. The international replay number is 719/457-0820, confirmation code 723536. A replay also will be available on Duke Energy’s Web site by accessing the "investors" tab.

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Duke Energy believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include regulatory developments, the timing and extent of changes in commodity prices for oil, gas, coal, electricity and interest rates, the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas and electric markets, the performance of electric generation, pipeline and gas processing facilities, the timing and success of efforts to develop domestic and international power, pipeline, gathering, processing and other infrastructure projects and conditions of the capital markets and equity markets during the periods covered by the forward-looking statements.

Contact: Terry Francisco
thfrancisco@duke-energy.com
Phone: 704/373-6680
24-Hour: 704/382-8333