LATIN AMERICA

Some companies are pulling back from Latin America because they lack the skills and capabilities to integrate traditional assets and trading and marketing. These skills are essential in a merchant market. In 1999 DEI established a lead position by building Latin America's first regional power generation and energy trading and marketing business through several significant acquisitions. Duke Energy also exited non-core assets, leveraging its position into more strategic holdings.

By the end of 1999 DEI had controlling interest in 3,500 gross MW of generating capacity in five countries and a trading and marketing business based in Buenos Aires, Argentina. DEI acquired controlling interest in Companhia de Geração de Energia Elètrica Paranapanema, one of Brazil's largest power producers. With a total installed capacity of 2,300 MW, Paranapanema is strategically located in Brazil's industrial heartland. Like Brazil, El Salvador is privatizing energy companies. DEI purchased controlling interest in Generadora Acajutla S.A. de C.V. and Generadora Salvadoreña S.A. de C.V., with a combined 275 MW of power generation. DEI plans to add generation at this location. DEI acquired 90 percent interest in EGENOR S.A.A., which owns 525 MW of thermal and hydroelectric power generation in northern Peru. DEI's initial interest in EGENOR was acquired from Dominion Resources, Inc. in a broader transaction in which the company agreed to purchase Dominion's controlling interest in a portfolio of hydroelectric, natural gas and diesel power generation businesses in Argentina, Belize, Bolivia and Peru, totaling 1,200 gross MW.

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