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Duke Energy to Sell Off Power Plants

Posted on: Tuesday, 13 September 2005, 21:00 CDT

CHARLOTTE, N.C. - Duke Energy Corp. will sell its wholesale electricity power plants in the western and northeast United States because it did not expect the segment to break even by 2007 without taking heavy business risks, the company said Tuesday.

The Charlotte-based energy company said it will take a pretax charge of about $1.3 billion, or about 88 cents a share, in its third-quarter earnings. The company said it is increasing its 2005 earnings per share estimate for employee incentive bonuses - which aims to track ongoing basic per-share earnings - from $1.60 to $1.65.

Duke Energy will keep the wholesale plants it acquires through its planned merger with Cincinnati-based Cinergy Corp. announced in May. The plants Duke Energy plans to sell in the next year would provide about 15 percent of the combined company's owned or operated 54,000 megawatts of electric generation in the United States, Canada and Latin America.

Duke said it will combine its merchant power plants in the Midwest, which generate about 3,600 megawatts of power, with Cinergy's commercial operations in the region.

The proposed merger, which must be approved by regulators, would allow Duke to complement its gas-fired operations in the Midwest with Cinergy's coal-fired plants.

The merger, in which Duke would buy Cinergy in a $9 billion that all-stock deal, would create one of the top five electricity generating companies in the United States. The company's combined natural gas operations would be the largest in North America, Duke said.

The company will have 3.7 million retail electric customers and 1.7 million retail gas customers in Ohio, Kentucky, Indiana, North Carolina, South Carolina and Ontario, Canada.

Duke decided to leave the business "because we are not willing to increase our risk profile," Chairman and CEO Paul Anderson said in a statement.

Analysts surveyed by Thomson Financial project third-quarter earnings of 48 cents per share on revenue of $6.34 billion, and a full-year profit of $1.56 per share on $23.58 billion in revenue.

Duke shares rose 12 cents in after-hours trading. The stock fell 6 cents to close at $28.98 Tuesday on the New York Stock Exchange, before Duke released the news.

Source: Associated Press/AP Online

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