Cinergy/PSI, GE, Bechtel to Explore Building Cleaner Coal Power Plant.

CINCINNATI -- Cinergy/PSI, General Electric Company and Bechtel Corporation have signed a letter of intent to study the feasibility of constructing a commercial, integrated gasification combined cycle (IGCC) generating station. This is the first plant of its kind announced under the recently proposed GE-Bechtel alliance.

PSI Energy, the Indiana operating company of Cinergy Corp., would own and operate the facility. Cinergy/PSI is considering several sites, including the site of its coal-fired station in Edwardsport, Ind. The plant would produce 500 to 600 megawatts of electricity to help meet increased electrical demand over the next decade. The letter of intent is the first step toward reaching a contract to design and construct the plant. Earlier this month GE and Bechtel announced their intent to develop a standard commercial offering for integrated gasification combined cycle projects in the United States.

Integrated gasification combined cycle plants turn coal to gas, removing most of the sulfur dioxide and other emissions before the gas is used to fuel a combustion turbine generator. The hot exhaust gases are then used to heat steam, driving a steam turbine generator. The technology uses less water and has fewer emissions than a conventional coal-fired plant with currently required pollution control equipment. Another benefit is the potential to remove mercury and carbon dioxide upstream of the combustion process at a lower cost than conventional plants.

"We face the need for additional generation in Indiana," said James E. Rogers, chairman and chief executive of Cinergy Corp. "Given the high price of oil and the limited supplies of natural gas available, coal is the most practical alternative. Our challenge is to find ways to use an abundant resource in an economic and environmentally clean way. Coal gasification has proven to be efficient, and there is no cleaner coal technology."

Several months of study lie ahead before a decision will be made whether to proceed with the project and at which location. The study is expected to be completed in 90 to 120 days and will result in site-specific data for assessing the economic feasibility of the project, plant performance and output, emissions, and the plant footprint. The companies also will work together during this period to develop public and government support for the project and a preliminary project execution plan.

"We are very pleased to be participating in the beginning stages of this important project," said John Rice, president and chief executive officer for GE Energy, a division of General Electric Company. "The Cinergy proposal is clear evidence of the growing interest in this technology among utilities and power developers across the U.S. power sector today."

Scott Ogilvie, president of Bechtel Power Corporation, added: "We look forward to working with GE and Cinergy to make this IGCC project a reality for reliable, affordable, clean electricity. The current environmental benefits of this technology, coupled with the potential to meet future environmental regulations at a lower cost to the customer, can lead to the successful commercialization of an advantaged clean coal power plant for Cinergy."

GE Energy is a leading supplier of gas turbines for IGCC applications, having provided gas turbines for more than 60 percent of the world's operating gas combined cycle plants. The company recently purchased the ChevronTexaco gasification business, whose technology has been applied to many of the world's gasification combined cycle plants.

Bechtel Corporation is one of the world's leading engineering, procurement and construction companies, with significant experience in the design and construction of all forms of power generation, including integrated gasification combined cycle plants. GE Energy has worked with Bechtel on a number of IGCC projects, including the 100-megawatt Cool Water plant in California, a demonstration project completed in 1984, and the Tampa Electric Company's 250-megawatt Polk Power Station in Florida, which began operation in 1996.

Cinergy Corp. (NYSE:CIN) has a balanced, integrated portfolio consisting of two core businesses: regulated operations and commercial businesses. Cinergy's regulated public utilities in Ohio, Indiana, and Kentucky serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated company owns 7,000 megawatts of generation. Cinergy's competitive commercial businesses have 6,300 megawatts of generating capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration. Cinergy's integrated businesses make it a Midwest leader in providing both low-cost generation and reliable electric and gas service. (www.cinergy.com)

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate", "believe", "intend", "estimate", "expect", "continue", "should", "could", "may", "plan", "project", "predict", "will", and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to, unanticipated weather conditions; unscheduled generation outages; unusual maintenance or repairs; unanticipated changes in costs; environmental incidents, including costs of compliance with existing and future environmental requirements; electric transmission or gas pipeline system constraints; legislative and regulatory initiatives; additional competition in electric or gas markets and continued industry consolidation; financial or regulatory accounting principles; political, legal, and economic conditions and developments in the countries in which we have a presence; changing market conditions and other factors related to physical energy and financial trading activities; the performance of projects undertaken by our non-regulated businesses and the success of efforts to invest in and develop new opportunities; availability of, or cost of, capital; employee workforce factors; delays and other obstacles associated with mergers, acquisitions, and investments in joint ventures; and costs and effects of legal and administrative proceedings, settlements, investigations, and claims. Please refer to the company's SEC filings for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to update the information contained herein.