Duke Energy Senior Notes Rated 'A' By Fitch Ratings.

Business Editors

NEW YORK---(BUSINESS WIRE)--Nov. 18, 2002

Fitch Ratings has assigned an 'A' rating to Duke Energy Corp.'s two new issues of senior notes aggregating $510 million. The offerings include $110 million five-year and $400 million 10-year notes. The notes will rank equal in priority with Duke Energy's existing and future unsecured debt. Proceeds will be used to repay commercial paper and for general corporate purposes. The Rating Outlook is Negative due to the continued weakness in merchant energy markets, the uncertain financial impact of on-going investigations by the Federal Energy Regulatory Commission (FERC) and the Securities and Exchange Commission (SEC) and the execution risk associated with Duke's plan to raise approximately $1 billion from non-core asset sales over the next year.

Reflecting lower volume and compressed margins in wholesale energy markets, Duke Energy North America's (DENA) earnings before interest and taxes (EBIT) is expected to fall to about $500 million in 2002 from $1.6 billion the prior year. Financing merchant plants has also driven up interest expense. DENA's earnings could erode further in 2003 without some improvement in spark spreads, which currently appears doubtful. The poor earning performance by DENA has been mitigated by the acquisition of Westcoast Energy earlier this year. With the acquisition of Westcoast Energy, EBIT from the gas transportation segment should increase to about $1.2 billion in 2002 compared to about $600 million in 2001. The acquisition lowered business risk, increasing the EBIT contribution from the interstate gas pipeline and franchised electric utility operations to about 70% of consolidated EBIT in 2002.

The lower income forecast is offset, in part, by the planned reductions in capital expenditures of about $7 billion over the 2002-2004 time period. Internally generated cash and non-core asset sales are expected to be sufficient to fund the revised capital expenditures in 2003 and 2004. In October, management also delivered on its commitment to issue $1 billion of common stock. Proceeds were used to repay an equivalent amount of commercial paper issued to fund a portion of the Westcoast Energy acquisition in March 2002.

Duke's liquidity position is relatively strong. Both Duke Energy and Duke Capital recently renewed their bank credit facilities that total about $3.4 billion. About $1.5 billion is currently available under the various credit agreements. Duke also has temporary committed credit facilities with financial institutions totaling $1 billion that provide an additional liquidity cushion to meet debt maturities of about $1.3 billion in 2003. Duke is targeting $1 billion of asset sales in 2003 that if successful will be used, in part, to retire debt.