Duke Energy Carolinas Announces Special Power Purchase and Seeks Cost Recovery

CHARLOTTE, N.C. - Duke Energy Carolinas announced today that, due to persistent drought conditions, it has purchased an option for 520 megawatts of additional generating capacity to help ensure customer electricity needs are met.

In addition, the company filed an application with the North Carolina Utilities Commission (NCUC) to recover the costs associated with the purchase of this power.

“We are committed to taking proactive steps to deliver reliable, cost-effective power to our customers despite this unprecedented drought affecting our service area,” said Ellen T. Ruff, Duke Energy Carolinas president. “We continue managing the drought by reducing our hydro operations, working with local major water suppliers to encourage conservation, modifying power plants and purchasing power.”

According to data published in January 2008 by the U.S. Department of Commerce, National Oceanic and Atmospheric Administration, 2007 was the second driest year for the Southeast U.S. Region in 113 years; the driest year in North Carolina; and the fifth driest for South Carolina. Duke Energy Carolinas’ service area rainfall was 27.9 inches, which is more than 18 inches below normal.

Also, much of Duke Energy Carolinas’ service area continues to be ranked in “exceptional drought,” the most severe category, by the U.S. Drought Monitor.

Duke Energy purchased an option for 520 megawatts of additional generating capacity from Columbia Energy LLC at an undisclosed, confidential price. The power will be generated at a natural gas combined cycle plant located in Gaston, S.C.

“The purchased power is basically drought insurance for our customers,” Ruff added. “By purchasing at the end of 2007, we avoided potential shortages in the wholesale power market and corresponding higher prices during times of high demand.” Duke Energy has a legal obligation to provide electricity to its customers.

If approved by the NCUC, customers would pay an additional charge on their power bills for a 12-month period. This monthly amount for an average residential customer using 1,000 kilowatt-hours per month would be about 36 cents, adding to a total of $4.32 for the one-year recovery period.

If the drought abates, and the special purchased power is not needed by Duke Energy Carolinas customers, it can be sold, and customers will receive 90 percent of the North Carolina portion of the net revenues of these sales. However, persistent drought conditions in the region may require additional power purchases to ensure a reliable supply of power for the region.

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.