Led by its unregulated wholesale energy operations, Duke Energyput in a whopper quarter, exceeding analysts expectations. Earningsbefore interest and taxes from its wholesale group jumped 175%.

Power sales rose 164% to 89,967 gigawatt hours. Wholesale gassales grew 15% to 12 trillion Btu/d (11.7 Bcf/d) from 10.4 TBtu/d(10.1 Bcf/d).

Excluding a one-time pre-tax gain of $407 million, or anafter-tax gain of 67 cents per share, on the sale of Duke’sinterest in BellSouth Carolina PCS, third quarter earnings were$1.41 compared with $1.20 for the third quarter of 1999, an 18%increase, and earnings before interest and taxes totaled $1.6billion, a 71% increase.

“We have kept our eye on the ball with disciplined, focusedgrowth and have exceeded expectations throughout the year,” saidCEO Richard B. Priory.

James M. Donnell, CEO of Duke Energy North America (DENA), whichis the wholesale energy division, said the company has athree-pronged strategy for success: developing its resourcesthrough a holistic approach; making a commitment to remainingcompetitive; and embracing technology. Donnell was a keynotespeaker at PowerMart 2000.

“These are fun times for our industry, but we still facesubstantial challenges,” Donnell said of the overall energyindustry picture. “Technology will bridge the gap to meet ourcustomers’ expectations.”

Pointing to DENA’s venture into InterContinental Exchange (seeDaily GPI, Oct. 13, Sept. 1, Aug. 25, July 27), a B2B tradingplatform, Donnell said that these types of platforms offershareholders a way to instantly “know the score.” He predicted that by2005, there would be a “clear segmentation” between the retail andwholesale energy markets, with even more consolidation of players.

“I see a handful of national players, with a handful of nicheplayers operating regionally,” Donnell said, adding that he expectsDuke Energy to be one of those national players.

But technology overall will be the “wildcard,” said Donnell.”It’s not difficult to imagine almost anything happening.Imbalances will be a thing of the past.” He said that on the retailside, more corporate giants such as AT&T, Sprint and AmericanExpress will enter the energy market. On the wholesale side, hepredicted that companies will “fight it out” over bandwidth.

“We have to be challenged by different ways of thinking,” hesaid. “It’s the only way to close the gap.”

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