1. William F. Tyndall Vice President, Corporate Development and Strategy Cinergy Corp. William F. Tyndall Vice President, Corporate Development and Strategy Cinergy Corp. Cinergy’s Perspective on the Climate Challenge

2. The Challenge Cinergy Faces Cinergy owns 32 coal-fired generation units Coal fuels vast majority of power we provide customers Cinergy consumes 30 million tons of coal per year 2000 CO2 emissions were approximately 74 million tons Climate Issue is but one facing coal – as further SO2, NOx and mercury emissions reductions on horizon Coal is the fuel of choice for more than 50% of U.S. (and 80% of Midwest) power generation – economic consequences if this fuel option is lost Cinergy owns 32 coal-fired generation units Coal fuels vast majority of power we provide customers Cinergy consumes 30 million tons of coal per year 2000 CO2 emissions were approximately 74 million tons Climate Issue is but one facing coal – as further SO2, NOx and mercury emissions reductions on horizon Coal is the fuel of choice for more than 50% of U.S. (and 80% of Midwest) power generation – economic consequences if this fuel option is lost

3.         Market Capitalization$7.3 billion Electric sales*65.2 million MWh Electric trading*175.2 million MWh Gas sales*1,516,150 Mcf Gas Trading*58.2 Bcf/d Generating capacity13,331 MW Energy Services Projects 56 projects / 5,357 MW PSICG&E Legend Generation Supply Basins Wholesale Gas End-Use Customers Gas Storage Areas Gas Marketing Operations Energy Services Electric Gas Combination Regulated Platform Commercial Platform * Preliminary 2004 Who is Cinergy?

4. Cinergy’s Generation Fleet Total capacity Total PSI (Reg.)7,358.8 MW Total CG&E (Reg.)5,498.6 MW Merchant (Non-Reg.)1,031.4 MW Total13,888.8 MW

5. Cinergy Generation Fuel Mix (13,331 MW) Coal 73% Oil 4%Nat Gas 23% Cinergy’s Generation Fuel Mix (13,331 MW)

6. Cinergy and the Environment About 35% of generation is fitted with SO2 controls and 50% with NOx controls In the last five years, spent more than $1 billion on SCR’s for NOx Between 1990 and 2004, total emissions of NOx and SO2 have declined despite a 47% increase in electric generation over the period Additional $1.8 billion construction program underway to add SO2 and NOx controls, as well as mercury and fine particulate controls, to more units Key reality: No “bolt-on” machine available to reduce CO2 emissions from existing coal-fired power plants

7. What is Cinergy Doing on Climate? Disclosure –2004 AIRS Report GHG Reduction Commitment Building the Generation Fleet of the 21 st Century Disclosure –2004 AIRS Report GHG Reduction Commitment Building the Generation Fleet of the 21 st Century

8. Air Issues Report to Stakeholders (“AIRS Report”) Purpose: To describe the potential impact on Cinergy, the region it operates in, and the U.S. economy, if mandatory greenhouse gas (GHG) limits are imposed (along with tighter restrictions on NOx, SO2 and Mercury) Process: Prepared in-house with extensive collaboration with a major stakeholder (Presbyterian Church USA), as well Ceres, Environmental Groups and other independent experts –Endorsed by Cinergy’s Board of Directors Report available at : www.cinergy.com/sustain/environmental_improvement.asp Purpose: To describe the potential impact on Cinergy, the region it operates in, and the U.S. economy, if mandatory greenhouse gas (GHG) limits are imposed (along with tighter restrictions on NOx, SO2 and Mercury) Process: Prepared in-house with extensive collaboration with a major stakeholder (Presbyterian Church USA), as well Ceres, Environmental Groups and other independent experts –Endorsed by Cinergy’s Board of Directors Report available at : www.cinergy.com/sustain/environmental_improvement.asp

9. AIRS Report – Key Points Legislative and regulatory uncertainty is the major difficulty in planning capital expenditures to meet growing demand for electricity –Cinergy does not expect Congress to constrain GHG’s before 2008 Longer term, prudent to assume a carbon constrained world; therefore, we will assume CO2 limitations in making long-term investment decisions Most existing coal plants will remain economically viable under any reasonable GHG program –Focusing additional controls on largest and newest units that remain economic under a “Kyoto” scenario Legislative and regulatory uncertainty is the major difficulty in planning capital expenditures to meet growing demand for electricity –Cinergy does not expect Congress to constrain GHG’s before 2008 Longer term, prudent to assume a carbon constrained world; therefore, we will assume CO2 limitations in making long-term investment decisions Most existing coal plants will remain economically viable under any reasonable GHG program –Focusing additional controls on largest and newest units that remain economic under a “Kyoto” scenario

10. In Cinergy’s View, Any U.S. GHG Program Must: Preserve coal as a major energy source Include market-based cap and trade principles – no mandated technology or restrictions on flexibility Gradually and predictably reduce GHG emissions Provide incentives to develop new technologies Minimize distortions and irrational wealth transfers Involve all sectors of the economy, not just the energy industry Work toward inclusion of China and India Preserve coal as a major energy source Include market-based cap and trade principles – no mandated technology or restrictions on flexibility Gradually and predictably reduce GHG emissions Provide incentives to develop new technologies Minimize distortions and irrational wealth transfers Involve all sectors of the economy, not just the energy industry Work toward inclusion of China and India

11. Cinergy’s Voluntary GHG Reduction Commitment In 2003, Cinergy agreed to stabilize CO2 emissions at 5% below 2000 levels during the 2010- 2012 time period –Based on levels in pending federal legislation Review commitment and determine new target for period after 2012 Spend at least $21 million from 2004- 2010 on GHG reduction projects and offsets Commitment designed with Environmental Defense and subject to third party verification In 2003, Cinergy agreed to stabilize CO2 emissions at 5% below 2000 levels during the 2010- 2012 time period –Based on levels in pending federal legislation Review commitment and determine new target for period after 2012 Spend at least $21 million from 2004- 2010 on GHG reduction projects and offsets Commitment designed with Environmental Defense and subject to third party verification

12. GHG Expenditures To Achieve Goal Cinergy will spend $21 million from 2004- 2010 on GHG reduction and offset projects –Fund ensures progress towards 2010 goal without specific interim reduction targets –Cinergy will spend 2/3 of the fund for on-system projects –Cinergy can count BAU expenditures that meet criteria such as ongoing sequestration projects, natural gas distribution improvements, DSM, CHP, technology investments, etc. Cinergy will spend $21 million from 2004- 2010 on GHG reduction and offset projects –Fund ensures progress towards 2010 goal without specific interim reduction targets –Cinergy will spend 2/3 of the fund for on-system projects –Cinergy can count BAU expenditures that meet criteria such as ongoing sequestration projects, natural gas distribution improvements, DSM, CHP, technology investments, etc.

13. Cinergy GHG Status Report Cinergy Corporate 2000 Baseline Calculation –Includes legacy units, merchant units, natural gas, vehicles, Cinergy Solutions, SF 6 –Ownership and operation Cinergy Corporate 2000 Baseline Calculation –Includes legacy units, merchant units, natural gas, vehicles, Cinergy Solutions, SF 6 –Ownership and operation 2000 Cinergy Baseline Legacy Units69,768,000 Merchant0 Natural Gas409,000 C S3,454,000 Vehicles36,000 SF 6 176,000 Total73,843,000

14. How Will Cinergy Get There? Many reduction and offsetting initiatives already underway or planned –Efficiency improvements at plants –CHP –End-User Conservation –Renewable Energy –Sequestration –Materials Recycling All reductions and offsets subject to independent 3 rd party verification Many reduction and offsetting initiatives already underway or planned –Efficiency improvements at plants –CHP –End-User Conservation –Renewable Energy –Sequestration –Materials Recycling All reductions and offsets subject to independent 3 rd party verification

15. Building 21 st Century Generation Fleet Cinergy already invested in many “next- generation” power sources –Fuel cells –Industrial combined heat and power –Biomass Considering major expansion into wind due to new favorable wind maps for Indiana and Ohio Cinergy already invested in many “next- generation” power sources –Fuel cells –Industrial combined heat and power –Biomass Considering major expansion into wind due to new favorable wind maps for Indiana and Ohio

16. Coal Gasification –The Best Hope for the Future? Many environmentalists and industry players have focused on coal gasification as the best central plant technology for the future –Utilizes abundant U.S. supply of coal –CO2 separation and sequestration more feasible Cinergy signed a letter of intent in October 2004 with General Electric and Bechtel to start initial planning for building a commercial, Integrated Gasification Combined Cycle (IGCC) power plant It was the first plant of its kind announced under the proposed GE-Bechtel alliance Many environmentalists and industry players have focused on coal gasification as the best central plant technology for the future –Utilizes abundant U.S. supply of coal –CO2 separation and sequestration more feasible Cinergy signed a letter of intent in October 2004 with General Electric and Bechtel to start initial planning for building a commercial, Integrated Gasification Combined Cycle (IGCC) power plant It was the first plant of its kind announced under the proposed GE-Bechtel alliance

17. How IGCC Works Coal gasification system converts coal into a synthesis gas (syngas) The hot syngas is processed to remove sulfur compounds and particulate matter Syngas fuels a combustion turbine generator The heat in the exhaust gases from the combustion turbine is recovered to generate steam, which then drives a steam turbine generator Coal gasification system converts coal into a synthesis gas (syngas) The hot syngas is processed to remove sulfur compounds and particulate matter Syngas fuels a combustion turbine generator The heat in the exhaust gases from the combustion turbine is recovered to generate steam, which then drives a steam turbine generator

18. How IGCC Works

19. IGCC Costs Capital costs for IGCC are estimated to be 10 – 20% higher than for conventional PC –But IGCC may be more attractive due to permitting delays and opposition that conventional PC faces in some regions Financial incentives will play a key role in getting the “next generation” of commercial IGCC plants deployed –Incentives need to create momentum in both States with regulated utilities and in States with deregulated systems –Incentives need to address long lead times, huge scale, operational risks Capital costs for IGCC are estimated to be 10 – 20% higher than for conventional PC –But IGCC may be more attractive due to permitting delays and opposition that conventional PC faces in some regions Financial incentives will play a key role in getting the “next generation” of commercial IGCC plants deployed –Incentives need to create momentum in both States with regulated utilities and in States with deregulated systems –Incentives need to address long lead times, huge scale, operational risks