Richard W. Blackburn
Executive Vice President
General Counsel
Chief Administrative Officer

OUR BOARD OF DIRECTORS PROVIDES ETHICAL AND ACCOUNTABLE LEADERSHIP.

Mistrust of corporate governance due to real and perceived abuses has given rise to new legislation and regulation – in the energy industry and throughout the business world. Our corporate governance remains strong and accountable, and in compliance with recent reforms.

Even before the Sarbanes-Oxley Act was signed into law in 2002, Duke Energy’s policies and practices guarded against conflicts of interest, supported independent and involved oversight of management by the Board of Directors, and provided other safeguards now required by the legislation. For example, since 1993, Duke Energy has provided employees with a telephone hotline to anonymously report suspected violations of law or of the company’s Code of Business Ethics. And a recent policy change prohibits senior officers from using the company’s external auditor for any personal services.

We have further strengthened our policies and practices to reflect the requirements of the Sarbanes-Oxley Act. Duke Energy prohibits loans to executive officers, for instance, and this year the board’s Audit Committee will begin pre-approving all services provided by Duke Energy’s auditor.

New governance rules proposed by the New York Stock Exchange (NYSE), and under review by the Securities and Exchange Commission, require that companies have written governance principles. We’ve had written principles since 1998. In addition, we’ve had practices in place that reflect other NYSE proposed, but not yet required, standards. For example, the members of our Board of Directors’ Audit, Compensation and Corporate Governance Committees are independent. And, the Corporate Governance Committee reviews directors’ and executive officers’ service on other boards for possible conflicts of interest, and to ensure they can adequately focus on their responsibilities to Duke Energy’s shareholders.

Duke Energy welcomes these constructive reforms. But what they say is true: “You can’t legislate morality.” There’s no substitute for a commitment to the ethical core of this company. Our board, our management, our employees and our auditors are accountable for fulfilling both the spirit and the letter of the law. That’s the kind of responsible performance that will get our industry back on track.