Public Utilities Commission of Ohio Approves Cinergy/Duke Merger - Duke Energy

News Release
Dec. 21, 2005

Released By Cinergy

Public Utilities Commission of Ohio Approves Cinergy/Duke Merger

CINCINNATI – Cinergy Corp. (NYSE:CIN) announced today that the Public Utilities Commission of Ohio has approved an agreement resolving all issues related to the Commission’s review of the company’s planned merger with Duke Energy.

“With the approval today, Ohio becomes the third state to recognize the benefits for all stakeholders from the combination of Duke and Cinergy,” said Greg Ficke, president of The Cincinnati Gas & Electric Co., Cinergy’s Ohio operating company. “Our focus now is to continue to provide the service quality and reasonable prices our customers have come to expect.”

Key elements of the agreement include:

  • $20.6 million merger savings rate credit. Cinergy/CG&E will credit to its gas and electric customers in Ohio a total of approximately $20.6 million in the first year following the closing of the merger. Electric distribution customers will receive a credit of approximately $16.4 million and gas distribution customers approximately $4.2 million. 
  • $15.2 million rate stabilization credit. Beginning January 1, 2006, Cinergy/CG&E will provide a rate credit of approximately $15.2 million for one year to mitigate increases from its pending electric distribution rate application and its rate stabilization plan.
  • Guaranteed income tax payments and charitable support. Cinergy/CG&E will guarantee that the City of Cincinnati will receive no less than $11.79 million in personal income tax revenue from 2006 through 2008, as well as corporate income tax and franchise fee payments of at least $1.5 million per year during the three-year period. It will also provide a contribution to the City to encourage economic development and other priorities. Additionally, minimum annual charitable contributions in the Cinergy utility service areas in 2007-2008 will be no less than the annual average contributions of approximately $5 million in 2004-2005.

As part of the agreement, Cinergy/CG&E provided a list of merger commitments designed to protect its customers from adverse impacts in retail customer service, customer satisfaction and reliability in achieving merger savings.  Retail rates will not be impacted by the costs associated with the new Duke Energy acquiring Cinergy stock or any premium paid in the acquisition.

The agreement was reached with the City of Cincinnati, Interstate Gas Supply, Kroger Company, Ohio Energy Group and Buckeye Association of School Administrators, Ohio Association of School Business Officials and the Ohio School Board Association.

In other action, the PUCO also approved an agreement on CG&E’s first increase in rates for Ohio electric distribution service in more than 10 years.  The increase of $51.5 million, or approximately four percent in annual revenues, will take effect in January 2006.

The agreement recognizes in rates the investment of $734 million by CG&E over the last 12 years to improve the reliability of its electric delivery system. It also reflects increases in electric transmission costs from the Midwest Independent System Operator, as approved by the Federal Energy Regulatory Commission and the PUCO. 

Coupled with an increase in the generation rate approved last year under CG&E’s rate stabilization plan, a typical residential customer using 1,000 kilowatthours a month would see an increase in their total bill from the current $79.64 per month to $105.53. The merger rate credits approved today will reduce the increase by $1.32 on January 1, 2006 and an additional $1.42 after the merger closes.    

Cinergy/CG&E serves approximately 650,000 customers in Southwest Ohio and is an affiliate of Cinergy Corp. (NYSE:CIN), which has a balanced, integrated portfolio consisting of two core businesses: regulated operations and commercial businesses. Cinergy’s regulated public utilities in Ohio, Indiana, and Kentucky serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated company owns 7,000 megawatts of generation. Cinergy’s competitive commercial businesses have 6,300 megawatts of generating capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration. Cinergy’s integrated businesses make it a Midwest leader in providing both low-cost generation and reliable electric and gas service.

Forward-Looking Statements
This document includes statements that do not directly or exclusively relate to historical facts. Such statements are “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. These forward-looking statements include statements regarding benefits of the proposed mergers and restructuring transactions, integration plans and expected synergies, anticipated future financial operating performance and results, including estimates of growth. These statements are based on the current expectations of management of Duke Energy and Cinergy. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this document. For example, (1) the companies may be unable to obtain shareholder approvals required for the transaction; (2) the companies may be unable to obtain regulatory approvals required for the transaction, or required regulatory approvals may delay the transaction or result in the imposition of conditions that could have a material adverse effect on the combined company or cause the companies to abandon the transaction; (3) conditions to the closing of the transaction may not be satisfied; (4) problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; (5) the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies; (6) the transaction may involve unexpected costs or unexpected liabilities, or the effects of purchase accounting may be different from the companies’ expectations; (7) the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; (8) the businesses of the companies may suffer as a result of uncertainty surrounding the transaction; (9) the industry may be subject to future regulatory or legislative actions that could adversely affect the companies; and (10) the companies may be adversely affected by other economic, business and/or competitive factors. Additional factors that may affect the future results of Duke Energy and Cinergy are set forth in their respective filings with the Securities and Exchange Commission ("SEC"), which are available at  www.duke-energy.com/investors and www.cinergy.com/investors, respectively. Duke Energy and Cinergy undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information and Where to Find It

In connection with the proposed transaction, a registration statement of Duke Energy Holding Corp. (Registration No. 333-126318), which includes a preliminary prospectus and a preliminary joint proxy statement of Duke Energy and Cinergy, and other materials have been filed with the SEC and are publicly available. WE URGE INVESTORS TO READ THE DEFINITIVE JOINT PROXY STATEMENT-PROSPECTUS WHEN IT BECOMES AVAILABLE AND THESE OTHER MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT DUKE ENERGY, CINERGY, DUKE ENERGY HOLDING CORP. AND THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the joint proxy statement-prospectus as well as other filed documents containing information about Duke Energy and Cinergy at http://www.sec.gov, the SEC’s Web site. Free copies of Duke Energy’s SEC filings are also available on Duke Energy’s Web site at  http://www.duke-energy.com/investors/, and free copies of Cinergy’s SEC filings are also available on Cinergy’s Web site at http://www.cinergy.com.

Participants in the Solicitation

Duke Energy, Cinergy and their respective executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from Duke Energy’s or Cinergy’s stockholders with respect to the proposed transaction. Information regarding the officers and directors of Duke Energy is included in its definitive proxy statement for its 2005 annual meeting filed with the SEC on March 31, 2005. Information regarding the officers and directors of Cinergy is included in its definitive proxy statement for its 2005 annual meeting filed with the SEC on March 28, 2005. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by securities, holdings or otherwise, will be set forth in the registration statement and proxy statement and other materials to be filed with the SEC in connection with the proposed transaction.

Contact: Steve Brash
Phone: 513-287-2226
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Contact: Kathy Meinke
Phone: 513-287-2121
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