In reaction to the downfall of Enron Corp. that eventually led to its buyout by Dynegy Corp., Duke Energy executives took an hour on Monday to reassure the investment community about its portfolio and risk management system, and also talked about the future of energy trading, whether or not a merger takes place. But what top management was attempting to do most was put most succinctly by CFO Mary Gilbert, when she firmly explained that they will hear “no surprises from Duke Energy.”

In one of its regular monthly “chats” to discuss Duke’s business, CEO Jim Donnell and Gilbert talked in general about what was going on at Duke, formal risk management procedures in place, and its ongoing business relationship with Enron. Donnell, who also reiterated that the company would meet its 2001 earnings forecast, also hinted that the company may be making some “asset acquisitions” in the near-term, but he declined to elaborate.

Most of the questions from analysts following the presentation centered on Duke and its relationship now and into the future with Enron and/or Dynegy. Gilbert said that Duke continually updates its risk management procedures, and while not being specific about any changes that may have been made within the past three weeks, she said that Duke would “continually monitor” its risk management program “as details of the combined transaction take shape” and make changes accordingly. Donnell added that currently, it’s business as usual.

“We continue to trade with Enron today as we have in the past in everything as well as credit,” said Donnell. “Exposure is not material. Most of our transactions (with Enron) are collateralized, with very few total exposure.” He estimated that Duke’s total net exposure to Enron was $100 million. “That is what they owe us,” he added. Assuming the Dynegy-Enron merger is approved, Donnell added that it would have “minimal” impact on Duke. Both Dynegy and Enron are “large counterparties of ours whether they are separate or together,” he said.

Donnell was quick to add that he expected a “handful of trading platforms” to survive no matter what happened with the Dynegy-Enron merger. “Enron is a very large player today. Dynegy is a large player; so is Duke. I don’t see there being any competitive issue. One thing lost in the discussion about (Enron’s) EnronOnline is the fact that ICE (InterContinental Exchange) “has been for the past three or four months the market maker for electricity in the eastern U.S.” Duke is a partner in ICE. “So, it doesn’t concern us with (Enron and Dynegy) getting together.”

In what is likely to be a regular part of any company’s discussion on earnings and current operations in the future, the executives also spent a few minutes explaining their off-balance sheet transactions, the crux of what eventually led to Enron’s demise in the stock market. Duke currently has about $600 million in off-balance sheet transactions, which executives explained at length. All of them involve ongoing projects, including pipeline construction in North America.

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