Cinergy joins energy risk management initiative

CINCINNATI, June 6, 2002 — Cinergy Corp. announced recently that it has joined in the formation of an energy industry committee made up of chief risk officers that will identify best practices in risk management.

Called the Committee of CROs, the group will seek to develop commonly understood and accepted risk management procedures for the energy merchant business, following the expansion of wholesale competition in the natural gas and electricity markets. It will also develop proposals for standardization in areas such as risk management metrics, credit practices and disclosure.

“The formation of the Committee of CROs comes at a critical time for the energy markets,” said R. Foster Duncan, executive vice president and chief financial officer of Cinergy. “Our stakeholders in the financial and regulatory communities are seeking greater clarity about the energy merchant business, and the development of common standards for risk management can play a significant role in responding to their needs.”

“A key element in the work of the Committee is to define more specific valuation techniques and metrics so that capital at risk can be more accurately quantified for energy marketing and trading. Standardizing these processes will result in greater transparency and confidence in the marketplace.”

Cinergy will be represented on the Committee of CROs by Gary Lavey, vice president and chief risk officer of Cinergy Services. Other members of the committee are American Electric Power, Constellation Energy, Duke Energy, Mirant, Tractebel North American and TXU.

Cinergy Corp. has a balanced, integrated portfolio consisting of two core businesses: regulated operations and energy merchant. Cinergy owns regulated delivery operations in Ohio, Indiana, and Kentucky that serve 1.5 million electric customers and about 500,000 gas customers. In addition, its Indiana regulated operations own 6,000 megawatts of generation.

Cinergy’s energy merchant business is a Midwest provider of generation owning 7,000 megawatts of capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration.


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