Duke Energy, Vectren Seek Permit for Clean Coal Power Plant - Duke Energy

News Release
Sept. 7, 2006

Duke Energy, Vectren Seek Permit for Clean Coal Power Plant

PLAINFIELD, Ind. – Duke Energy Indiana and Vectren Energy Delivery of Indiana have filed an application with the Indiana Utility Regulatory Commission for “Certificates of Public Convenience and Necessity” (CPCN) to construct an approximately 630-megawatt power plant that will use advanced integrated gasification combined cycle (IGCC) technology.

If the project proceeds, it will be one of the first commercial-scale IGCC power plants built in the United States in the last 10 years.

“This filing is in step with Indiana’s strategic energy plan and is a milestone in our two-and-a-half-year effort to advance clean coal technology with a large and highly efficient power plant,” said Duke Energy Indiana President Kay E. Pashos. “In the Midwest, coal is plentiful and low-cost, and finding ways to burn it cleanly is fundamental to meeting our customers’ demand for power.

“We continue to review the economics related to the project and hope to make a decision whether or not to proceed with building the plant next year.  If we proceed with the project, construction could begin as early as mid-2007, following the commission’s review,” Pashos said.

Duke Energy Indiana has selected its existing power plant site in Edwardsport, Ind., as the site for the new IGCC plant. Upon completion of the IGCC project, the existing plant -- with coal and oil units built between 1944 and 1951 – will be retired.

Based on industry data, a 630-megawatt IGCC plant could cost approximately $1.3 to $1.6 billion. The project would use an average of 800 to 900 construction workers over a three-year period, with a peak work force of 2,000. Ongoing plant operations would employ approximately 100 people.

The IGCC project is located in Knox County and has received support from local and area residents. The Knox County Commission unanimously approved tax incentives for the project. Recent Indiana state legislation to encourage clean coal technology also has made tax incentives available to the project.

Duke Energy Indiana is exploring co-ownership of the plant with Vectren Energy Delivery of Indiana. Both companies are working with GE Energy and Bechtel Corporation on an engineering and design study for the plant, which is expected to be completed by the second quarter of 2007.

“We have an identified need for additional generation to serve our customers in southwestern Indiana. We are exploring the IGCC project as an opportunity to meet future needs in a cost-efficient and environmentally-friendly manner,” said Carl Chapman, Vectren Corporation executive vice president and chief operating officer. “In addition, the use of local coal is a strategic investment in the Indiana economy.”

Integrated gasification combined cycle technology uses a coal gasification system to convert coal into a synthesis gas (syngas). The syngas is processed to remove sulfur, mercury and ash before being sent to a traditional combined cycle power plant, using two combustion turbines and a steam turbine to efficiently produce electricity.

IGCC technology could also remove the carbon dioxide from coal during the syngas conversion process to enable it to be stored or sequestered in underground geologic formations. This is not in the current scope of the IGCC plant project, but it could be added as carbon dioxide capture and sequestration technology advances and if it is determined that the Edwardsport site has the appropriate geology to sequester carbon dioxide underground.

“IGCC technology holds tremendous promise to reduce carbon dioxide emissions to address increasing concerns and evidence of global climate change,” Pashos added.

Duke Energy Indiana’s Wabash River Station is the site of the 260-megawatt Wabash River Coal Gasification project, which was one of the first demonstrations of using coal gasification to produce electricity.

About Duke Energy

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, including 28,000 megawatts of regulated generating capacity in the United States. Duke Energy’s Indiana operations provide 7,200 megawatts of safe, reliable and competitively priced electricity to more than 750,000 electric customers, making it the state’s largest electric supplier. 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.

About Vectren

Vectren Corporation is an energy holding company headquartered in Evansville, Ind. Vectren's energy delivery subsidiaries provide gas and/or electricity to more than one million customers in adjoining service territories that cover nearly two-thirds of Indiana and west central Ohio. Vectren's non-utility subsidiaries and affiliates currently offer energy-related products and services to customers throughout the Midwest and Southeast. These include gas marketing and related services; coal production and sales; and energy infrastructure services. To learn more about Vectren, visit www.vectren.com.

Safe Harbor for Forward Looking Statements

This document contains forward-looking statements, which are based on management's beliefs and assumptions that derive from information currently known by management. Vectren wishes to caution readers that actual results could differ materially from those contained in this document. Additional detailed information concerning a number of factors that could cause actual results to differ materially from the information that is provided to you is readily available in our annual report on Form 10-K filed with the Securities and Exchange.

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