Cinergy, Duke Call it Quits on Joint Generating Co.

Cinergy Capital and Trading Inc. and Duke Energy North America (DENA) reported late last week that they have signed an agreement through their respective subsidiaries to dissolve VMC Generating Co. Through the 50/50 general partnership that was formed in September 1999, VMC owns 100% of CinCap VII LLC (Cadiz), Duke Energy Vermillion LLC and Duke Energy Madison LLC.

Under the dissolution agreement, VMC's 100% interest in Madison and Cadiz will be transferred to Cinergy Capital and Trading, while Vermillion, and an undisclosed amount of cash, will be transferred to an affiliate of DENA. The companies said completion of the agreement is subject to obtaining all necessary regulatory approvals. Neither company disclosed the financial terms of the transaction.

"Cinergy continues its strong relationship with Duke Energy and we're certainly pleased with the benefits the partnership has netted since it's inception," said Michael J. Cyrus, CEO of Cinergy's Energy Merchant business unit. "This restructuring however creates greater operational and financial flexibility for both organizations."

Jim Donnell, DENA's CEO, said "Asset swaps are a fundamental part of Duke Energy's portfolio management approach. The swap of our 50% interests in Madison and Cadiz for 100% in Vermillion is a trade that gives Duke Energy operational control of a strategically located asset."

Vermillion owns a 640 MW gas-fired generation facility in operation, located in Vermillion County, IN, while Madison owns a 640 MW simple cycle generation facility in operation, located in Butler County, OH. Cadiz is in the process of developing a 129 MW gas-fired plant in Henry County, IN.

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