CG&E to Seek Increase in Natural Gas Base Rates.

Business Editors

CINCINNATI--(BUSINESS WIRE)--June 28, 2001

The Cincinnati Gas & Electric Co., an affiliate of Cinergy Corp. (NYSE:CIN), announced today that it intends to file an application with the Public Utilities Commission of Ohio to increase base rates for natural gas distribution service by approximately $26 million, or 5.7 percent, annually.

"Since our last base rate increase in 1996, we have continued to make reliable and safe gas service our priority by investing $146 million in our gas distribution facilities," said Joe Hale, president of CG&E. "By carefully controlling other expenses, we have been able to keep this request well below the cost of living index which has increased nearly 15 percent since CG&E's last gas base rate increase five years ago."

The proposed increase in base rates recovers the company's costs to operate and maintain its gas distribution system, which consists of the facilities and equipment necessary to deliver gas to customers' homes and businesses. Base rates are separate from the Gas Cost Recovery portion of customers' bills, which reflects the cost of gas CG&E purchases from natural gas producers/suppliers to meet customers' needs. These gas costs are billed to customers on a dollar-for-dollar basis without any profit to CG&E.

If the proposed rates are approved by the PUCO, a typical residential customer of CG&E would see an increase of $4.90, or 6.1 percent, making their monthly bill $85.40 compared with $80.50 currently. Rates for non-residential firm transportation customers would increase about 2.3 percent, while non-residential interruptible rates would increase about 4.6 percent. These percentages are based on the costs incurred by the company to provide service to each customer class.

CG&E has also initiated an accelerated gas main replacement project, estimated to cost approximately $715 million, to improve the reliability and safety of the gas distribution system. This gas main replacement program will be carried out over the next ten years and is aimed at replacing about 1,250 miles, or about 20 percent, of the company's system that consists of cast iron and steel pipe. The oldest of the pipe has been in service for more than 125 years.

"The main replacements will allow CG&E to continue to provide reliable, efficient and safe gas service, while helping to keep future operation and maintenance expenses at the lowest reasonable level," said L. C. Randolph, Jr., vice president of gas operations. "It will also allow us to operate at the higher pressures that will be necessary to serve new technologies, such as distributed electric generation facilities which are expected to use gas to generate electricity onsite at industrial parks, commercial offices and shopping centers as well as residential developments."

CG&E is requesting that the costs associated with the main replacement capital improvements be recovered in rates over the next ten years through an additional monthly customer charge for residential and firm commercial customers and through an additional throughput charge for large volume interruptible users. For residential customers, the charge would add about $1.00 monthly during the first year that will begin in the spring of 2002. Thereafter, it would be updated annually based upon the cost of construction completed by the company during the previous year.

CG&E, which expects the new rates to take effect in the spring of 2002, serves approximately 400,000 natural gas customers in southwestern Ohio.