WHAT IS CINERGY DOING TO ADDRESS ITS GREENHOUSE GAS EMISSIONS?

We have taken steps to reduce our dependence on coal. In the last five years, we spent about $1 billion to add 2,000 megawatts of natural gas-fired generating capacity. We converted one of our oldest coal plants to natural gas. These actions allow us to meet peak electricity demand with reduced emissions. For example, gas-fired plants produce electricity with two-thirds less CO₂ emissions than typical coal plants. Our total coal-fired generation capacity has dropped from approximately 87 to 73 percent since 1998.

And, we stepped up our activities to address GHG emissions in 2004. First, we announced our plans to meet the GHG reduction commitments we made in 2003. Between 2004 and 2010, we will spend approximately $21 million on projects to reduce or offset GHG emissions. Developed in collaboration with Environmental Defense, these projects will improve the efficiency of our generating units and expand our renewable energy portfolio of hydroelectric and landfill gas plants to include wind and photovoltaic demonstration projects.

Second, we published a report on the impact of reducing GHG on our electric generation system. It was written in collaboration with scientists, economists, environmentalists, customers and investors, including Mission Responsibility Through Investment and Environmental Justice of the Presbyterian Church (USA). We invite you to review our Air Issues Report to Stakeholders, which can be found on Cinergy.com.

Third, we co-sponsored a two-day national summit meeting on the future of coal with the University of Kentucky. Entitled “Coal 2020 — Burning Questions,” the conference attracted national and regional experts. Copies of all the presentations are on Cinergy.com.

Fourth, we announced our intention to study the feasibility of building one of the first full-scale Integrated Gasification Combined Cycle (IGCC) plants with General Electric and Bechtel Corporation. IGCC technology turns coal into cleaner-burning gas, while using less water and producing fewer emissions than a conventional coal-fired plant, with state of the art scrubbers. John Rice, the CEO of GE Energy, and David Hawkins of the Natural Resources Defense Council (NRDC), both believe that this technology, along with sequestration of CO₂, has the potential to dramatically improve the business of using coal throughout the industrialized and developing world. You will meet both of them later in this report.

We will continue to look for opportunities to reduce our CO₂ emissions in the future.