30371--3/6/2006--DUKE_ENERGY

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{operation, natural, condition}

{condition, economic, financial}

{cost, regulation, environmental}

{cost, contract, operation}

{product, liability, claim}

{financial, litigation, operation}

{debt, indebtedness, cash}

{regulation, change, law}

Duke Energy is subject to business uncertainties and contractual restrictions as a result of the anticipated merger with Cinergy, which could adversely affect its business. Gas transmission, distribution, gathering, and processing activities involve numerous risks that may result in accidents and other operating risks and costs. Duke Energy s franchised electric revenues, earnings and results are dependent on state legislation and regulation that affect electric generation, transmission, distribution and related activities, which may limit Duke Energy s ability to recover costs. Duke Energy may incur substantial costs and liabilities due to Duke Energy s ownership and operation of nuclear generating facilities. Duke Energy s sales may decrease if Duke Energy is unable to gain adequate, reliable and affordable access to transmission and distribution assets. Duke Energy may be unable to secure long term power purchase agreements or transmission agreements, which could expose Duke Energy s sales to increased volatility. The long-term financial condition of Duke Energy s U.S. and Canadian natural gas transmission, distribution, gathering and processing businesses are dependent on the continued availability of natural gas reserves. Competition in the unregulated markets in which Duke Energy operates may adversely affect the growth and profitability of Duke Energy s business. Duke Energy must meet credit quality standards. If Duke Energy or Duke Energy s rated subsidiaries are unable to maintain an investment grade credit rating, Duke Energy would be required under trading agreements to provide collateral in the form of letters of credit or cash, which may materially adversely affect Duke Energy s liquidity. Duke Energy cannot be sure that Duke Energy and its rated subsidiaries will maintain investment grade credit ratings. Duke Energy relies on access to short-term money markets and longer-term capital markets to finance Duke Energy s capital requirements and support Duke Energy s liquidity needs, and Duke Energy s access to those markets can be adversely affected by a number of conditions, many of which are beyond Duke Energy s control. Duke Energy s investments and projects located outside of the United States expose Duke Energy to risks related to laws of other countries, taxes, economic conditions, political conditions and policies of foreign governments. These risks may delay or reduce Duke Energy s realization of value from Duke Energy s international projects. Duke Energy s investments and projects located outside of the United States expose Duke Energy to risks related to fluctuations in currency rates. These risks, and Duke Energy s activities to mitigate such risks, may adversely affect Duke Energy s cash flows and results of operations. Duke Energy will be exposed to market risk and may incur losses from the trading operations and/or activities Duke Energy takes to mitigate Duke Energy s commodity exposure. Duke Energy s plan to dispose of DENA s assets may result in additional charges and dispositions of DENA s assets may not yield the benefits that Duke Energy expects. Duke Energy is exposed to credit risk of counterparties with whom Duke Energy does business. Poor investment performance of pension plan holdings and other factors impacting pension plan costs could unfavorably impact Duke Energy s liquidity and results of operations. Aboriginal claims have been asserted in British Columbia and Alberta which could impact Duke Energy s future access to public lands. Duke Energy is subject to numerous environmental laws and regulations that require significant capital expenditures, can increase Duke Energy s cost of operations, and which may impact or limit Duke Energy s business plans, or expose Duke Energy to environmental liabilities. Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs that could adversely affect Duke Energy s financial condition, results of operations or cash flows and Duke Energy s utilities businesses. Duke Energy is involved in numerous legal proceedings, the outcome of which are uncertain, and resolution adverse to Duke Energy could negatively affect Duke Energy s cash flows, financial condition or results of operations. Duke Energy s results of operations may be negatively affected by sustained downturns or sluggishness in the economy, including low levels in the market prices of commodities, all of which are beyond Duke Energy s control. Duke Energy s operating results may fluctuate on a seasonal and quarterly basis. Duke Energy s business is subject to extensive regulation that will affect Duke Energy s operations and costs Certain events in the energy markets beyond Duke Energy s control have increased the level of public and regulatory scrutiny in the energy industry and in the capital markets and could result in new laws or regulations which could have a negative impact on Duke Energy s results of operations. Duke Energy s gas transmission and storage operations are subject to government regulations and rate proceedings that could have an adverse impact on Duke Energy s ability to recover the costs of operating Duke Energy s pipeline facilities. Potential terrorist activities or military or other actions could adversely affect Duke Energy s business.

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30371--3/6/2006--DUKE_ENERGY_CORP