Duke to Close California Plants

Duke Energy Corp. said Tuesday that it would close power plants in California as part of a plan to shut its money-losing wholesale power and trading business.

The company, based in Charlotte, N.C., said it would be unable to turn a profit in its Duke Energy North America subsidiary without risking more money in trading and marketing.

Duke’s California plants are in Oakland, Monterey County, Morro Bay and Chula Vista and together can produce more than 4,400 megawatts of electricity, according to the company’s website. That’s enough to serve about 3.3 million typical homes.

The company will sell a total of 6,200 megawatts of generation, including power plants in Arizona, Connecticut, Maine, Missouri and Ontario, Canada, along with its power-trading contracts, spokesman Peter Sheffield said. Duke will take a third-quarter pretax charge of about $1.3 billion.

“Achieving our objective of break-even for Duke Energy North America by the end of 2006 is not realistic without taking on an extraordinary amount of additional risk,” Duke Chief Executive Paul Anderson said in the statement.

Duke, which is acquiring Cinergy Corp. to expand its traditional utility business, started paring its wholesale unit after the bankruptcy filing of Enron Corp. and the collapse of wholesale electricity prices in 2001 and 2002. The company sold the wholesale unit’s power plants in the Southeast for less than they cost to build.

In July 2004, Duke reached a $207.5-million settlement with California and several utilities in the state to resolve allegations that the company overcharged for power in the summer of 2000.

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Bloomberg News was used in compiling this report.