News Release
July 13, 2004

DUKE ENERGY TO RESOLVE FERC REFUND AND WESTERN ENERGY CRISIS ISSUES

CHARLOTTE, N.C. – Duke Energy today announced it has reached a settlement agreement in principle with the states of California, Washington and Oregon; federal regulators; California’s three largest investor-owned utilities; and other parties to resolve refund proceedings and other significant litigation related to the western energy markets during 2000-2001.

As part of the agreement, Duke Energy will provide $207.5 million in cash and credits. In exchange, the parties to the agreement will forego all claims relating to refunds or other monetary damages for sales of electricity during the settlement period, and claims alleging Duke Energy received unjust or unreasonable rates for the sale of electricity during the settlement period, January 2000 through June 2001. 

The settlement resolves:

  • All western refund proceedings pending before the Federal Energy Regulatory Commission (FERC)
  • Market price investigations by attorneys general in California, Washington and Oregon
  • Private electricity-related class action suits filed on behalf of California, Washington, Oregon, Idaho and Utah ratepayers
  • Natural gas price issues raised by the California attorney general, Pacific Gas and Electric Company, Southern California Edison and San Diego Gas & Electric Company.

Duke Energy will record an estimated $104.9 million pre-tax charge in the second quarter of 2004 to reflect the settlement agreement.

FERC’s refund proceedings stem from the commission’s effort to correct market prices it considered unreasonable during the western energy crisis of 2000-2001.  As part of these proceedings, all participants in the western electricity markets – including Duke Energy -- have refund obligations, even though Duke Energy acted appropriately and within the market rules.

“Today’s announcement brings welcome closure to these protracted proceedings, removing the associated risks and burdens of regulatory and legal uncertainty,” said Fred Fowler, Duke Energy president and chief operating officer. “It also eliminates the time and costs necessary to litigate these issues.

“Settlement is in the best interest of our shareholders, our company and western energy consumers as we resolve these issues and focus on meeting the current and future energy needs of California and other western states,” Fowler said.

FINANCIAL EFFECT OF SETTLEMENT

($ in millions)

 

Cash

  $ 85.1

Write-off of receivables and credits due Duke Energy

  $122.4

Settlement total

  $207.5

Previously announced reserve and associated offsets

($102.6)

2Q2004 estimated pre-tax earnings impact

  $104.9

The parties to the settlement agreement include FERC staff, the state of California, the state of Washington, the state of Oregon, Pacific Gas and Electric Company, Southern California Edison, San Diego Gas & Electric Company, the California Department of Water Resources, private plaintiffs in the electricity-related class action suits, and Duke Energy. The settlement is subject to approval by FERC and the California Public Utilities Commission, and the class action settlements are subject to court approval.

Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in North America and selected international markets. In 2004, the company celebrates a century of service with the 100th anniversary of its electric utility Duke Power. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: http://www.duke-energy.com.

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 are discussed in Duke Energy’s filings with the Securities and Exchange Commission.   

Contact: Peter Sheffield
Phone: 704/373-4503
24-Hour Phone: 704/382-8333
e-mail: pvsheffield@duke-energy.com