The Lodge at Ballantyne Charlotte, North Carolina February 7, 2007 Panel Discussion: The Role of Coal Generation in a World of Greenhouse Gas Regulation National Association of Regulatory Utility Commissioners Summer Meeting July 17, New York, N.Y. Keith Trent, Group Executive and Chief Strategy, Policy and Regulatory Officer

Building a Bridge To a Low-carbon Economy ■ No longer if but when and how we address climate change ■ Marathon, not a sprint ■ Balance is key ■ No “silver bullet” - need all available fuels ■ Nuclear, coal, gas, renewables and “fifth fuel” – energy efficiency ■ Criteria for choosing fuel / technology ■ Available? ■ Affordable? ■ Reliable? ■ Clean?

The Role of Coal ■ Nation’s most abundant energy resource ■ Enhances energy security ■ Fuels economic growth ■ Supports manufacturing sector ■ Less expensive, less volatile Challenge: Advance technology to keep coal generation affordable

Our Nation’s Energy Workhorse 28% 64% 95% 10% 66% 95% 72% 7% 75% 85% 46% 1% 94% 46% 37% 78% 62% 53% 85% 48% 40% 67% 48% 25% 58% 94% 2% 14% 37% 57% 64% 39% 91% 45% 55% 98% 60% 61% 1% 14% NH 17% RI 0% CT 12% NJ 19% MA 25% VT 0% DE 59% MD 56% DC 0% < 30% 30 – 50% > 50% Hydro Source: Energy Information Administration, November % 87%

Duke Energy’s Approach Develop IGCC generation ■ Proposed plant in Indiana ■ Strong carbon capture and storage potential ■ Carbon capture and sequestration R&D ■ 3 regional DOE partnerships ■ Hosting field test at station in Kentucky ■ Working to advance the “fifth fuel” – energy efficiency ■ Filed “save-a-watt” program in North Carolina ■ Plan to offer in 5 states we serve ■ “Utility of the Future” pilot technology programs ■ Expanding use of nuclear and renewable energy

National Climate Policy ■ Duke’s criteria for successful policy ■ Economy-wide and market-based ■ Customer-focused ■ Promotes new technology ■ Cap-and-trade based on historical emission levels ■ Gives price signals that enable long-term planning ■ Has a price “safety valve” ■ Consistent with NARUC draft principles ■ Must get it right the first time

State Support is Critical ■ Incentives to develop clean-coal technology ■ Timely recovery of construction and operating costs ■ Investment tax credits ■ Support for expansion and development of other 4 fuels ■ Nuclear ■ Natural gas ■ Renewable energy ■ Energy efficiency With an array of fuel and technology options, we can lighten our nation’s carbon footprint