Duke Energy had a solid quarter with a much smaller loss from its Duke Energy North America (DENA) merchant subsidiary ($17 million compared to $411 million a year earlier), improvements in its electric utility results and a sharp increase in results from its field services division due to higher commodity prices. The company met analysts’ estimates, reporting ongoing earnings per share of 38 cents compared to 35 cents in 3Q2003.

“With three solid quarters behind us, we expect to finish 2004 ahead of the financial plans we laid out at the beginning of the year,” said Chairman Paul Anderson. “We are now focused on realizing further improvements to our financial and operational results for 2005.” The company now expects to exceed its debt reduction goal of $4 billion for this year, including $840 million in debt retired through the sale of its Australian assets.

Duke reported net income, including special one-time items, of 41 cents/share compared to 5 cents in 3Q2003. Electric utility earnings before interest and taxes (EBIT) were $453 million, compared to $436 million in the same quarter last year. EBIT was affected by higher non-nuclear operating and maintenance costs, including $10 million in storm costs primarily related to Hurricane Ivan, and lower bulk power sales, Duke said. However, the company added 40,000 more customers.

DENA’s much smaller loss for the quarter was mainly a result of continued expense reductions and a positive $40 million in mark-to-market earnings, net of minority interest. Results were negatively affected by lower margins and lower than expected production at DENA’s generation assets due to cooler than expected weather in the Midwest.

Overall year-to-date EBIT loss from continuing operations for DENA was $612 million, largely driven by a loss of $360 million related to the sale of Duke’s Southeast power generation assets and $23 million in mark-to-market losses, net of minority interest. This compares to an EBIT loss from continuing operations of $177 million in 2003.

Duke Energy Gas Transmission (DEGT) reported EBIT of $265 million compared to $280 million. Pipeline results were positively affected by expansion projects and a $12 million favorable impact from the stronger Canadian currency. DEGT also realized a $5 million gain on the sale of its interest in the Millennium Pipeline project.

Meanwhile, Duke also noted that DEGT held a successful comprehensive open season in which eastern North American markets indicated substantial interest in transportation and storage infrastructure expansion opportunities on any one or a combination of Algonquin, Texas Eastern and Union Gas. In addition, DEGT filed with FERC to build an 11-mile lateral to connect Texas Eastern to BP’s proposed liquefied natural gas import terminal at Logan, NJ.

Duke Energy Field Services reported third quarter EBIT from continuing operations of $67 million, compared to $51 million in the third quarter of 2003. Year-to-date EBIT from continuing operations for Field Services was $253 million, compared with $136 million in 2003, with the increase largely attributed to higher commodity prices.

Duke’s International division reported EBIT from continuing operations of $64 million, compared to $44 million in the third quarter of 2003. And its Crescent Resources subsidiary reported $43 million in EBIT, compared to $39 million.

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