Duke Energy Annual Meeting Highlights Company's Transition from Energy 'Superstore' to Two Pure-Play Powerhouses - Duke Energy

News Release
Oct. 24, 2006

Duke Energy Annual Meeting Highlights Company's Transition from Energy 'Superstore' to Two Pure-Play Powerhouses

CHARLOTTE, N.C. – The leaders of Duke Energy today outlined how going from an energy “superstore” to separate electric and natural gas companies will benefit customers and shareholders.

Paul M. Anderson, chairman of Duke Energy and incoming chairman of the company’s proposed stand-alone natural gas business, and James E. Rogers, president and chief executive officer of Duke Energy, used today’s annual meeting of shareholders to outline their visions for developing two companies into premier, pure-play operations. Approximately 200 shareholders attended the company’s annual meeting, held at its Charlotte headquarters.

Today’s meeting is expected to be the final one Duke Energy will hold as a conglomerate of electricity and natural gas operations. The company is targeting a Jan. 1, 2007, effective date to spin off its natural gas-related businesses into a separate, autonomous company, temporarily named Gas SpinCo, Inc. (GasCo).

Duke Energy shareholders will receive 100 percent of GasCo’s shares based on a distribution ratio to be announced later this year.

“Considering all of the factors, it became clear to us that today’s market places a higher value on pure-play companies than on energy superstores – and that’s where we needed to go,” said Anderson at the opening of today’s meeting.

“Our goal is for each company to have a simple, straightforward roadmap to where it is going – a roadmap that all stakeholders can easily understand,” Rogers added.

“It’s important you understand that the stock price for Duke, with the ticker symbol DUK, probably will be lower when the spin is completed than it was just the day before,” Rogers told shareholders. “This is because some of the value of the company – we’re estimating somewhere between 35 and 40 percent – is being transferred to GasCo, which will have its own ticker symbol.

“So you’ll need to look at the two companies together to see what your total investment is.”

The annual dividend will be split proportionately as well. The dividend payment from the two companies is expected to add up to what shareholders now receive, $1.28 per share of Duke Energy common stock.

“We believe over the long term, the value you will have in both companies will be higher than it would have been if we had not split the company,” Rogers said.

Rogers sees the new Duke Energy, which will become a pure-play electric company after the spin, growing ongoing diluted earnings per share by an average of 4 to 6 percent over at least the next three years.

These increases will come from solid organic growth, with electricity demand expected to rise an average of 1 to 1.5 percent annually over the next three years in the five states served by the company, merger savings, and the development of new power generation projects to meet future customer demand.

To moderate electricity demand growth, Duke Energy last week launched its majorenergy efficiency initiative, which it calls “the fifth fuel” to complement coal, natural gas, nuclear and renewable energy in meeting customers’ energy demands.

“We have two simple but important goals,” Rogers said. “Help our customers use energy more wisely and earn a return for our investors through our fifth-fuel initiatives.”

For GasCo, “Our vision is simple – to be the premier, pure-play midstream natural gas company in North America,” Anderson said. The company is expecting to grow ongoing diluted earnings per share by an average of 5 to 7 percent over at least the next three years.

Anderson said this growth will be driven by the strategic locations of GasCo’s assets, which are connected to the fastest growing markets and the most diverse supplies in North America and by expansion opportunities being presented by changes in the natural gas industry.

“This new company will begin its life with a strong inheritance from Duke Energy andits predecessor companies,” Anderson said, “with a proud history of customer service, operational excellence and steadfast integrity.”

During the meeting, shareholders re-elected all 15 members of the board of directors to one-year terms. In accordance with a resolution passed at last year’s annual meeting, all directors must be elected annually.

Shareholders also approved Duke Energy’s 2006 Long-Term Incentive Plan and ratified the selection of Deloitte & Touche as the company’s independent public accountant for 2006.

Duke Energy is a diversified energy company with a portfolio of natural gas andelectric 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: www.duke-energy.com.

Non-GAAP Financial Measures

This release includes a discussion of anticipated growth in ongoing diluted earnings per share (“EPS”) over at least the next three years for post-spinoff Duke Energy and for GasCo. These growth percentages are based on anticipated ongoing diluted EPS for future periods and are non-GAAP financial measures, as they represent diluted EPS from continuing operations adjusted for the impact of special items. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing diluted EPS is reported diluted EPS from continuing operations, which includes the impact of special items. Due to the forward-looking nature of ongoing diluted EPS for future periods, information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast any special items for future periods.

Forward-looking statement

This release 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. One can typically identify forward-looking statements by the use of forward-looking words such as: may, will, could, project, believe, expect, estimate, continue, potential, plan, forecast and other similar words. Those statements represent Duke Energy’s intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and otherfactors, many of which are outside Duke Energy’s control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Those factors include: state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures, and affect the speed at and degree to which competition enters the electric and natural gas industries; the outcomes of litigation and regulatory investigations, proceedings or inquiries; industrial, commercial and residential growth in Duke Energy’s service territories; additional competition in electric or gas markets and continued industry consolidation; the influence of weather and other natural phenomena on company operations, including the economic, operational and other effects of hurricanes, ice storms, tornados or other natural phenomena; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; general economic conditions, including any potential effects arising from terrorist attacks and any consequential hostilities; changes in environmental and other laws and regulations to which Duke Energy and its subsidiaries are subject; the results of financing efforts, including Duke Energy’s ability to obtain financing on favorable terms, which can be affected by various factors, including Duke Energy’s credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy’s defined benefit pension plans; the level of creditworthiness of counterparties to Duke Energy’s transactions; the amount ofcollateral required to be posted from time to time in Duke Energy’s transactions; growth in opportunities for Duke Energy’s business units, including the timing and success of efforts to develop domestic and international power, pipeline, gathering, liquefied natural gas, processing and other projects; the performance of electric generation, pipeline and gas processing facilities; the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas and electric markets; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; conditions of the capital markets and equity markets during the periods covered by the forward-looking statements; the ability to successfully complete merger, acquisition or divestiture plans, including the prices in which Duke Energy is able to sell assets; regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of the business following a merger, acquisition or divestiture.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Information contained in this release is unaudited, and is subject to change.

Contact: Tom Shiel
Phone: 704-382-2355
24-Hour Phone: 704-382-8333
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