Duke Energy (DUK)

Shareholder Resolution on Use of Plutonium Fuel

Dear Fund Manager:

I am writing on behalf of the Nuclear Control Institute, a nuclear non-proliferation research and advocacy center, regarding an important shareholder resolution that will appear on the proxy ballot for Duke Energy’s annual meeting on April 20. (A copy of the resolution is enclosed.) Because you manage a portfolio that includes a large block of Duke Energy shares, we wanted to inform you about Duke’s so-called “mixed-oxide” (“MOX”) plutonium fuel program, which poses a threat to the future financial position of the company, raises safety and security risks for its customers, and undermines global efforts to eliminate civilian use of weapons-grade nuclear materials.

In 1998, Duke-Cogema-Stone & Webster, a consortium that includes two Duke Energy affiliates (Duke Power and Duke Engineering and Services), signed a contract with the U.S. Department of Energy (DOE) to fabricate plutonium recovered from dismantled nuclear warheads into MOX fuel for use in four Duke nuclear power plants. Plutonium is both a nuclear explosive and a radioactive poison, requiring extraordinary security and safety measures.

A resolution opposing the MOX fuel program was tabled at Duke’s 1999 annual meeting by Mr. Robert Mills and other Duke shareholders. The initiative received 7.7 percent of the vote, enough to qualify a similar initiative for consideration at the shareholders meeting this year. Duke engaged in legal maneuvers to keep Mr. Mills’ new resolution off the 2000 proxy ballot, but the Securities and Exchange Commission rejected these efforts. The SEC required Duke to include the anti-MOX resolution as “Shareholder Proposal 4: Use of Mixed Oxide Fuel in Nuclear Reactors” on the proxy for its 2000 annual meeting, scheduled for April 20 in Charlotte, North Carolina.

Please take a moment to read the enclosed fact sheet we have prepared on Duke’s ill-conceived MOX fuel plan. Duke Energy is jeopardizing the future viability and economic competitiveness of its nuclear-power program in exchange for doubtful future savings amounting to only a small fraction of its nuclear-fuel costs. Because of the financial, safety and security risks explained in our fact sheet, use of plutonium-MOX fuel is an imprudent risk that Duke shareholders should not allow the company to undertake on their behalf.

We hope you will vote YES in support of the anti-MOX initiative on your Duke Energy proxy ballot. Please contact Steven Dolley, NCI research director (phone 202-822-8444; e-mail dolley@nci.org) if you have any questions or need more information. We would also welcome the opportunity to brief you directly on Duke’s MOX program. Thank you for considering this important issue.

Sincerely,

Paul Leventhal

President

Enclosures

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