Indiana Utility Regulators Approve Settlement Agreement on Cinergy, Duke Merger - Duke Energy

News Release
March 15, 2006

Indiana Utility Regulators Approve Settlement Agreement on Cinergy, Duke Merger

CINCINNATI -- Cinergy Corp. (NYSE:CIN) announced today that the Indiana Utility Regulatory Commission has approved an agreement resolving all issues related to the commission's review of the company's planned merger with Duke Energy (NYSE:DUK).

PSI Energy Inc., the Indiana utility subsidiary of Cinergy Corp., reached a settlement agreement last December with the staff of the Indiana Utility Regulatory Commission, the Indiana Office of Utility Consumer Counselor, and the PSI Industrial Group. Some of the key elements of the agreement include:

  • $40 million merger savings rate credit: PSI will credit to its Indiana electric customers $40 million over one year beginning 30 to 60 days following the close of the merger. 
  • $5 million for low-income energy assistance and clean coal technology: After the merger closes, PSI will make an annual contribution of $1 million for five years, starting in 2006 and ending in 2010. PSI will split the funds equally between the state Low Income Home Energy Assistance Program and the Indiana Center for Coal Technology Research based at Purdue University.
  • Service quality and customer service standards: PSI agreed to file quarterly performance reports with state regulators on customer service standards, such as the number and length of power outages as well as average speed of answer in the company’s customer Call Center. If benchmarks are not met, PSI will implement a service remediation plan as approved by state regulators.

“During a period of rising fuel and environmental costs, customers will benefit from the merger’s efficiencies and cost savings,” said PSI President Kay Pashos. “We’ve also committed to service quality benchmarks and are joining with a company that is ranked first in its region when it comes to customer service.”

The merger, announced May 9, 2005, was approved by both companies’ shareholders March 10 and has been approved by state regulators in Ohio, Kentucky and South Carolina as well as Indiana; by the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission. The companies also have satisfied Federal Trade Commission and U.S. Department of Justice review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.  Regulators in North Carolina are currently considering a settlement agreement reached between the company and the North Carolina Utilities Commission Public Staff. The companies hope to receive an order from regulators in North Carolina later this month and expect to close the merger around the first of April. The new company’s Indiana operations, including ratemaking, will continue to be regulated by the Indiana Utility Regulatory Commission.

Upon closing, the existing electric and gas utilities – PSI Energy in Indiana; Cincinnati Gas & Electric in Ohio; Union Light, Heat and Power in Kentucky; and Duke Power in North Carolina and South Carolina – will all do business using the Duke Energy name.  Paul M. Anderson, currently chairman and chief executive officer of Duke Energy, will become chairman of the board of the new Duke Energy. James E. Rogers, currently chairman and chief executive officer of Cinergy, will be president and CEO. 

PSI is Indiana’s largest electric supplier, serving more than 750,000 customers in portions of 69 of Indiana’s 92 counties. It is an affiliate of Cinergy Corp., 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.

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 the Americas. 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.

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.

Contact: News Contact: Angeline Protogere
Phone: Work: 317/838-1338, Pager: 317/367-3306
24-Hour Phone: n/a
e-mail: Angeline.Protogere@Cinergy.com
Contact: News Contact: Steve Brash
Phone: Work: 513/287-2226; Cell: 513/543-7489
24-Hour Phone: n/a
e-mail: Steve.Brash@Cinergy.com
Contact: Investor Contact: Brad Arnett
Phone: 513/287-3024
24-Hour Phone: n/a
e-mail: Brad.Arnett@Cinergy.com