PLAINFIELD, Ind. — Duke Energy (NYSE: DUK) has reached a settlement agreement with the Indiana Office of Utility Consumer Counselor and key consumer groups on a proposal to begin modernizing its electric grid to create an intelligent power delivery system.

The initiative – called “smart grid” – would employ advanced digital technology to save energy, improve the reliability of the power delivery system, improve customer service and reduce the impact on the environment.

Duke Energy (NYSE: DUK)

The settlement was reached between Duke Energy, the Indiana Office of Utility Consumer Counselor, the Duke Energy Indiana Industrial Group, Nucor Steel, and the Citizens Action Coalition of Indiana Inc.

“The existing power grid is an engineering marvel, but its design is more than a century old. It’s an analog-based system designed to deliver power with little communication between the utility, the power grid, the meters and our customers,” said Jim Stanley, president of Duke Energy Indiana. “Smart grid, with its digital, two-way communication capabilities, will transform how we operate our system – improving customer service, power reliability, and the efficiency of our transmission and distribution system.”

According to the company, benefits of a smarter energy grid include:

• The ability to provide customers with more detailed information regarding their electricity usage and more information for managing their bills. Today, customers receive only their total usage for the month. With smart grid, customers will be able to know their usage daily. As smarter appliances become available, combined with home energy management systems, customers will be able to control their level of comfort, convenience, cost and environmental footprint.
• The digital gateway necessary to eventually offer customers a variety of sophisticated cost-saving energy efficiency programs. For example, customers could eventually monitor and manage their real-time energy usage online.
• A state-of-the-art communications system along thousands of miles of power lines in Indiana to help detect and prevent power line trouble before outages or other electricity delivery problems develop. Today, most utilities don’t know that a customer is out of power until the customer reports the trouble.
• New smart meters that allow two-way electronic communication between the utility and the meters, greatly reducing the expense of on-site meter reading, providing more detailed usage information, enabling service to be reconnected or transferred remotely.
• Advanced technology to further monitor and automate Duke Energy’s power delivery system, which will increase overall reliability.

If the settlement is approved by the Indiana Utility Regulatory Commission, Duke Energy will work to begin installing smarter energy meters and related equipment within six months.

The settlement provides for periodic program evaluation by all the parties and gradually ramping up meter installations. Duke Energy’s goal is to install more than 800,000 smart meters throughout its 69-county service area over approximately five to six years.

In addition, the settlement agreement provides for a renewable “distributed generation” pilot, in which photovoltaic panels, wind turbines and solar thermal water heaters will be installed at a specified number of homes and small businesses. Further, the company will pilot advanced pricing options for customers, plug-in hybrid electric vehicles and residential home energy management systems. The residential home energy management system pilot would allow participating customers to manage their energy usage through an Internet portal.

“The energy future demands an intelligent power grid to handle distributed generation, plug-in hybrid electric vehicles, and provide our customers with more energy efficient options and control,” said Todd Arnold, Duke Energy senior vice president of smart grid and customer systems. “When combined with our smart grid rollout already under way in Ohio, Duke Energy continues its leadership position in the transition to a smarter power grid.”

Arnold also said the company will soon apply for economic stimulus funds provided through the 2009 American Recovery and Reinvestment Act to help offset the costs associated with deployment of the smart grid system. Over the five- to six-year deployment schedule, the company is expected to invest approximately $445 million.

PLAINFIELD, Ind. — The Indiana Utility Regulatory Commission today approved Duke Energy’s revised cost estimate of $2.35 billion for its clean coal gasification power plant under construction in southwest Indiana.

Duke Energy (NYSE: DUK)

The commission also approved the company’s $17 million request to study capturing a portion of the plant’s carbon dioxide emissions. Duke Energy would like to explore capturing and storing carbon dioxide permanently in underground geologic formations. Carbon dioxide is a greenhouse gas associated with global warming.

Duke Energy (NYSE: DUK) filed its $365 million cost increase request with state regulators in May. International demand for materials and rising labor costs were the main drivers for the cost increase. The company has now negotiated contracts with major suppliers and can better forecast project costs.

The plant is expected to have a total estimated average customer rate impact of about 18 percent. The rate impact will be phased in between now and 2013.

The Edwardsport project is the first major new coal-fired power plant to be constructed in Indiana in more than 20 years. The Indiana State Utility Forecasting Group predicts that Indiana will need new power generation equal to five projects the size of this plant by 2012.

The approximately 630-megawatt plant will use advanced integrated gasification combined cycle technology. The new plant will produce 10 times as much power as the existing plant at Edwardsport, yet it will emit less sulfur dioxide, nitrogen oxide and mercury than the plant it replaces. Due to the plant’s superior efficiency, it also will emit 45 percent less carbon dioxide per megawatt-hour than the existing facility.

Duke Energy selected an existing power plant site in Edwardsport, Ind., for the project. The company will retire the existing plant – with coal and oil units built between 1944 and 1951 – prior to startup of the new facility. Construction began early last year and is scheduled to be completed in 2012.

“When it’s completed, this will be one of the cleanest, most efficient coal-fired plants in the world,” said Duke Energy Indiana President Jim Stanley. “In the Midwest, coal is plentiful and relatively low-cost, and finding ways to burn it cleanly is fundamental to meeting our customers’ demand for power. If greenhouse gases are going to be regulated, and we believe they will be, then coal gasification plants with carbon capture and sequestration technology hold tremendous promise to reduce carbon dioxide emissions and help address global climate change.”

Integrated gasification combined cycle technology uses a coal gasification system to convert coal into a synthesis gas (syngas). The syngas is processed to remove sulfur, mercury and ash before being sent to a traditional combined cycle power plant, using two combustion turbines and a steam turbine to efficiently produce electricity.

Duke Energy also is meeting increased Indiana power demands through green power sources such as wind energy. Last year, the company began purchasing power from a Benton County, Ind., wind farm.

Duke Energy’s Indiana operations provide approximately 7,300 net megawatts of electricity to approximately 775,000 electric customers, making it the state’s largest electric supplier.

Duke Energy, one of the largest electric power companies in the United States, supplies and delivers electricity to approximately 4 million U.S. customers and natural gas service to approximately 520,000 customers in its regulated jurisdictions. The company has approximately 35,000 net megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky. In addition, Duke Energy has more than 4,000 net megawatts of electric generation in Latin America, and is a joint-venture partner in a U.S. real estate company.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

PLAINFIELD, Ind., — Duke Energy Indiana (NYSE: DUK) today proposed a sweeping modernization of its power delivery system including the installation of more than 800,000 new digital “smart meters” — one for virtually every home and business in each of the 69 counties served by the state’s largest utility.

The five-year initiative — called “Smart Grid,” referring to the power delivery system — would employ extensive digital and other advanced technology to save energy, bolster system reliability and improve customer service.

The multi-pronged initiative would allow the company to reduce voltage levels along its power delivery system with no customer service impact, saving enough energy to power 40,000 homes for a year.

The initiative also would allow the company to potentially lessen the frequency and duration of power outages.

In addition, the Smart Grid initiative includes a proposed demonstration project that would place electricity-generating solar panels or other renewable energy sources on the property of interested customers.

“The entire electric utility industry nationwide is moving in the direction Duke Energy hopes to move in Indiana,” said Jim Stanley, president of Duke Energy Indiana.

“Smart Grid would replace less efficient analog technology with advanced digital technology, bringing our electricity delivery system in Indiana into the 21st century,” Stanley said.

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