Cinergy Operating Companies to Reduce Power Plant Emissions, Improve Air Quality

CINCINNATI--(BUSINESS WIRE)--Sept. 2, 2004--Cinergy Corp.'s (NYSE:CIN) operating companies, The Cincinnati Gas & Electric Co. and PSI Energy Inc., are beginning an environmental construction program that will reduce their power plant emissions in response to pending new federal environmental rules to improve air quality.

"According to the U.S. Environmental Protection Agency, these new rules will trigger the largest investment in air quality improvement in the history of the United States," said Cinergy Chairman, President and Chief Executive Officer James E. Rogers. "This will be our companies' largest environmental construction program, generating more than 1,000 construction jobs in Indiana and Ohio. Importantly, this plan enables us to burn coal more cleanly and to continue using a low-cost source of generating electricity for our customers."

“This will be our companies' largest environmental construction program, generating more than 1,000 construction jobs in Indiana and Ohio. Importantly, this plan enables us to burn coal more cleanly and to continue using a low-cost source of generating electricity for our customers.”

In two separate rulemakings, the EPA has proposed significant reductions in sulfur dioxide, nitrogen oxide and mercury emissions from power plants. Because the rules are not yet finalized, Cinergy's operating companies are addressing the potential rules in two phases: Phase 1 focuses primarily on projects that would be necessary under a variety of rulemaking outcomes, and Phase 2 centers on projects that can wait until the EPA finalizes certain rules and more information is known about the reduction requirements, deadlines and performance of mercury removal technology. Phase 1 of the plan primarily includes:

-- Flue gas desulfurization equipment, or "scrubbers," at certain larger coal-fired generating units that are not already scrubbed. Scrubbers are primarily a sulfur dioxide control technology for coal-fired plants that burn bituminous coals. Scrubbers remove sulfur dioxide from exhaust gas streams by way of a chemical reaction, which ultimately transforms the sulfur dioxide from a gas to a solid byproduct. Scrubber installations will allow the use of a greater variety of coal and lessen the companies' dependence on volatile sulfur dioxide emission allowance markets.

-- Scrubber upgrades at other larger coal-fired units. This involves modifying some existing scrubbers to improve the removal of sulfur dioxide.

-- "Selective catalytic reduction equipment" at PSI Energy's Cayuga Generating Station. Selective catalytic reduction equipment is primarily a nitrogen oxide control technology. With this equipment, nitrogen oxide emissions are reduced when the exhaust gas stream passes through a catalyst and a chemical reaction turns nitrogen oxide emissions into nitrogen and water vapor. Notably, the combination of a scrubber and selective catalytic reduction equipment on a unit, in addition to removing sulfur dioxide and nitrogen oxide, will also remove a significant amount of mercury from emissions.

-- Additionally, Cinergy is planning to construct and test the combination of activated carbon injection with baghouse technology at one of its smaller power plants. Although not yet demonstrated in full-scale utility applications, this combination technology appears to be promising for removing substantial amounts of mercury and particulates from exhaust gases.

The companies will finalize Phase 2 of their plan when more information is known about the EPA reduction requirements, deadlines and performance of mercury removal technology. Depending on the final environmental rules, Cinergy's companies estimate that they will invest approximately $1.8 billion to reduce emissions under Phase 1 and more than $2 billion for both phases. In anticipation of these rules, PSI Energy announced earlier this year that it began construction of a new scrubber at Gibson Unit 3 in the spring of 2004. Cinergy's operating companies are also beginning construction on several other projects in the near future, including scrubbers at Cayuga Unit 2 and Gibson Unit 2 in Indiana and Miami Fort Units 7 and 8 in Ohio.

"We need to be in a position to time our construction with spring and fall plant maintenance down-times in order to maintain our ability to provide reliable, economical service and still work toward meeting potential mandated deadlines," Rogers said. "That's why we are starting work now. It also gives us early access to skilled trade labor and construction materials that other companies will also be seeking."

The current environmental plan is in addition to the significant emission reductions the Cinergy companies already have achieved under existing federal and state mandates. Cinergy has invested more than $1.7 billion since 1990 to reduce sulfur dioxide and nitrogen oxide emissions, reducing those emission rates by 50 percent and 45 percent respectively.

Cinergy Corp. has a balanced, integrated portfolio consisting of two core businesses: regulated operations and commercial businesses. Cinergy's regulated delivery operations in Ohio, Indiana, and Kentucky serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated operations own 7,000 megawatts of generation. Cinergy's commercial business unit is a Midwest leader in low-cost generation owning 6,300 megawatts of capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration.

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate", "believe", "intend", "estimate", "expect", "continue", "should", "could", "may", "plan", "project", "predict", "will", and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to, unanticipated weather conditions; unscheduled generation outages; unusual maintenance or repairs; unanticipated changes in costs; environmental incidents, including costs of compliance with existing and future environmental requirements; electric transmission or gas pipeline system constraints; legislative and regulatory initiatives; additional competition in electric or gas markets and continued industry consolidation; financial or regulatory accounting principles; political, legal, and economic conditions and developments in the countries in which we have a presence; changing market conditions and other factors related to physical energy and financial trading activities; the performance of projects undertaken by our non-regulated businesses and the success of efforts to invest in and develop new opportunities; availability of, or cost of, capital; employee workforce factors; delays and other obstacles associated with mergers, acquisitions, and investments in joint ventures; and costs and effects of legal and administrative proceedings, settlements, investigations, and claims. Please refer to the company's SEC filings for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. The company undertakes no obligation to update the information contained herein.