Duke Energy Carolinas Advances Plan to Meet Growing Customer Demand

Duke Energy Carolinas today asked regulators in North Carolina for permission to build two combined cycle, natural gas-fired generating units to serve its customers.

The company filed applications with the North Carolina Utilities Commission requesting Certificates of Public Convenience and Necessity (CPCN) to add two 620-megawatt combined cycle, natural gas-fired units at two existing facilities – Buck Steam Station in Rowan County and Dan River Steam Station in Rockingham County. The units will serve intermediate power demand. The plan also includes retiring two older, less efficient coal units at each facility.

The utility’s request is part of a comprehensive, long-term plan to add new generation, modernize the fleet, maintain a diverse fuel portfolio, and manage customer costs while delivering a high-quality, reliable power supply.

“Our forecast shows a significant need for new power resources,” said Ellen Ruff, president of Duke Energy Carolinas. “Over the next 20 years, we will aggressively pursue more renewable technology, energy efficiency and demand side management programs in addition to baseload, intermediate and peaking generation.”

The company is pursuing baseload generation with the addition of an advanced clean coal unit at the existing Cliffside Steam Station, and has submitted an application for a combined operating license for the proposed Lee Nuclear Station.

The Buck and Dan River projects will employ state-of-the art environmental control technology to minimize plant emissions. These controls, in combination with the retirement of older coal-fired units at both facilities, will result in a net reduction of environmental emissions of NOX and SO2 at the sites.

The projects will use cooling towers to minimize the impact on the Yadkin and Dan Rivers. The use of cooling towers will also minimize potential generation curtailments during drought conditions.

Duke Energy Carolinas is also committed to reducing its carbon footprint. The company will retire approximately 1,000 MW of older, less efficient coal units as new energy efficiency savings are achieved. As part of the Buck and Dan River projects, two coal units at each facility will be shut down.

The addition of natural gas generation fits with the company’s strategy to maintain a diverse fuel portfolio - an important tool in managing customer costs.

“Our customers benefit from an appropriate mix of company-owned generation, which allows for long-term fuel contracts and market purchases,” said Ruff. “Owning the resource helps us better address potential fuel price volatility.”

Construction will begin after the company receives the necessary regulatory approvals. Buck Steam Station could begin commercial operation as early as the summer of 2010 with Dan River following in 2011.

The proposed new gas-fired units are the first combined cycle generating units on the Duke Energy Carolinas system. They offer greater efficiency than traditional combustion turbines and operational flexibility to provide intermediate level generation.

A combined cycle unit uses combustion turbine generators, boilers and a steam turbine generator to produce electricity. Natural gas is burned in the combustion turbines to produce mechanical power that is converted in to electrical power by the generators. For increased efficiency, the hot exhaust gases from the combustion turbines are used to create steam in the boilers which spins a steam turbine-generator and creates additional power.

Duke Energy Carolinas has a long history in the communities surrounding the Buck and Dan River sites – generating electricity at the Buck Steam Station since 1926 and at the Dan River Steam Station since 1949.

“We appreciate the local support we’ve already received in Rowan and Rockingham counties for the projects, and look forward to enhancing our investment in these communities,” said Ruff.

Duke Energy’s Carolinas’ operations include nuclear, coal-fired, natural gas and hydroelectric generation. That diverse fuel mix provides nearly 21,000 megawatts of safe, reliable and competitively priced electricity to more than 2.3 million electric customers in a 24,000-square-mile service area of North Carolina and South Carolina.

Duke Energy, one of the largest electric power companies in the United States, supplies and delivers energy to approximately 4 million U.S. customers. The company has approximately 36,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky. In addition, Duke Energy has more than 4,000 megawatts of electric generation in Latin America, and is a joint-venture partner in a U.S. real estate company.

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.