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Duke Focuses on Power Growth Areas

Duke Focuses on Power Growth Areas

Duke Energy, which is targeting its strategy in U.S. growth markets, has zeroed in on the right side of the U.S. map, expecting power generation there to surpass the rest of the country. The natural gas giant expects Florida to grow at a rate of 4.5% annually, the Southeast and Texas to grow at 3%; and the East Coast and Upper Midwest to reach 2.5%.

Florida's growth will be the highest, more than doubling the national average of 2%, said Sue Becht, vice president of investor relations. Speaking to analysts in Houston last week at the Dain Rauscher Wessels Energy Conference, she said that along with Florida, higher-than-national growth is predicted in every area that Duke wants to target for business expansion.

"We have kept an eye on where the growth markets are," said Becht, and "refocused our attention. This is where we view the markets." Duke has a stake in the major eastern pipelines, Maritimes, Algonquin, East Tennessee, Texas Eastern and the newest, Florida's Buccaneer.

To meet the increased power forecast, she said that Duke is expanding its gas storage capabilities. The Moss Bluff, TX facility will increase to 16 Bcf from its current 11.3. The Egan, LA facility will move up to 16 Bcf from the current 11.4. And two new facilities, now being developed, also will add to Duke's storage capacity. The Tioga, PA facility will hold up to 15 Bcf, and the Copiah, AL facility will hold up to 9 Bcf.

"We have acquired storage where we didn't have it before," she said.

Duke also is "powering up" its electric generation market, already having completed 16 projects totaling 7,800 MW with a potential gas burn of 1.6 Bcf/d. Duke also has 55 projects "under negotiations" that when complete, will add 32,200 MW with a potential gas burn of 6.4 Bcf/d. "Our ramp up has been tremendous," said Becht.

"There is no question that this country is short of power generation today," she said. "Duke has done everything it could to avoid building new power plants to avoid the stranded costs that go with deregulation." But, she said, the growth demand is expected across "all sectors of service," and 90% of the new capacity will be gas-fueled combustion turbine.

Three project expansions are planned in California, and two in Arizona, areas she said that are clearly short of power generation.

"It's very clear there are market answers to the problems in California, and the state is short of power supply," she said. "California is a terrific market, and we are going forward with our expansions. It's very attractive to us, even with the ISO price cap (maintained at $250 per MWh). At those rates, Duke could sell all day long. We plan to be a player in California for a long time to come."

Carolyn Davis, Houston

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