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                             Duke Energy Corporation
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                                                             [LOGO] Duke Energy
                                                             (R)


                                                                          Proxy
                                                                      Statement

                                                                  and notice of
                                                            2002 Annual Meeting




               [LOGO] Duke Energy (R)

                                                        526 South Church Street
                                                       Charlotte, NC 28202-1802

March 27, 2002

Dear Shareholder:


I am pleased to invite you to our annual meeting to be held on April 25, 2002
in the O. J. Miller Auditorium located in our Charlotte headquarters building.
We will discuss our 2001 performance and our goals for 2002, and respond to any
questions you may have. Enclosed with this proxy statement are your proxy card,
voting instructions and Duke Energy's 2001 annual report.


Within the proxy statement you will see that the Board of Directors has
proposed for your approval certain amendments to our Articles of Incorporation.
These proposed changes are designed to modernize this important document and
bring it in line with those of many of our peer companies. On behalf of the
Board of Directors, I urge your support for these important proposals.

As in the past, we are offering you the opportunity to cast your vote by
telephone or online via the Internet. Whether you choose to vote by proxy card,
telephone or Internet, it would help if you would vote as soon as possible.

I look forward to seeing you at the annual meeting.

Sincerely,
/s/ R.B. Priory
R.B. PRIORY
Chairman of the Board, President
and Chief Executive Officer




              [LOGO] Duke Energy (R)

                                                           526 South Church
                                                           Street
                                                           Charlotte, NC
                                                           28202-1802

                   Notice of Annual Meeting of Shareholders
                                April 25, 2002

March 27, 2002

We will hold the annual meeting of shareholders of Duke Energy Corporation on
Thursday,
April 25, 2002, at 10:00 a.m. in the O. J. Miller Auditorium in the Energy
Center located at
526 South Church Street in Charlotte, North Carolina.

The purpose of the annual meeting is to consider and take action on the
following:

1.  Election of four nominees as Class II directors and one nominee as a Class
    I director.
2.  Ratification of Deloitte & Touche LLP as Duke Energy's independent auditors
    for 2002.

Amendment to the Articles of Incorporation to:

3A.  Update the corporate purpose clause.
3B.  Authorize serial preferred stock.
3C.  Increase the shareholder vote required to change the By-Laws.
3D.  Decrease the permissible range of size of the Board of Directors.

4.  A shareholder proposal relating to investments in alternative energy
    sources, if properly presented at the annual meeting.
5.  A shareholder proposal relating to the role of the Board of Directors in
    long-term strategic planning, if properly presented at the annual meeting.
6.  A shareholder proposal relating to the appointment of independent auditors
    who only render audit services, if properly presented at the annual meeting.
7.  A shareholder proposal relating to a study of the risk and responsibility
    for public harm due to Duke Energy's nuclear program, if properly presented
    at the annual meeting.

Shareholders of record as of February 28, 2002 can vote at the annual meeting.
This proxy statement, proxy card and voting instructions, along with our 2001
annual report to shareholders, are being distributed on or about March 27, 2002.

Your vote is very important. If voting by mail, please sign, date and return
the enclosed proxy card in the enclosed prepaid envelope, and allow sufficient
time for the postal service to deliver your proxy before the meeting. If voting
by telephone or on the Internet, please follow the instructions on your proxy
card.

By order of the Board of Directors
/s/ Richard W. Blackburn
Richard W. Blackburn
Executive Vice President,
General Counsel and Secretary




Table of Contents
--------------------------------------------------------------------------------




                                                                                    

Commonly Asked Questions and Answers About the Annual Meeting.........................   1

Proposals to be Voted Upon

    Proposal 1:  Election of Directors................................................   3

    Proposal 2:  Ratification of Deloitte & Touche LLP as
              Duke Energy's Independent Auditors for 2002.............................   3

Amendment to the Articles of Incorporation to:

    Proposal 3A:  Update the Corporate Purpose Clause.................................   3

    Proposal 3B:  Authorize Serial Preferred Stock....................................   4

    Proposal 3C:  Increase the Shareholder Vote Required to Change the By-Laws........   6

    Proposal 3D:  Decrease the Permissible Range of Size of the Board of Directors....   7

Shareholder Proposals:

    Proposal 4:  Investments in Alternative Energy Sources............................   7

    Proposal 5:  Role of the Board of Directors in Long-Term Strategic Planning.......   8

    Proposal 6:  Appointment of Independent Auditors Who Only Render Audit Services...   9

    Proposal 7:  Study of the Risk and Responsibility for Public Harm Due to Duke
              Energy's Nuclear Program................................................  11

The Board of Directors................................................................  13

Beneficial Ownership..................................................................  17

Information on the Board of Directors.................................................  18

Report of the Audit Committee.........................................................  20

Report of the Compensation Committee..................................................  21

Performance Graph.....................................................................  24

Compensation

    Summary Compensation Table........................................................  25

    Option Grants in 2001.............................................................  27

    Option Exercises and Year-End Values..............................................  28

    Employment Contracts and Termination of Employment and Change-in-Control
      Arrangements....................................................................  29

    Retirement Plan Information.......................................................  30

Other Information.....................................................................  31

    Exhibit A -  Extract from the Articles of Incorporation of Duke Energy Corporation
               showing proposed amendments to Article IV.............................. A-1

    Exhibit B -  Extract from the Articles of Incorporation of Duke Energy Corporation
               showing proposed amendment to Article VII.............................. B-1





Commonly Asked Questions and Answers About the Annual Meeting
--------------------------------------------------------------------------------


Q: What am I voting on?

A: .  Election of five directors: the nominees are G. Alex Bernhardt, Sr.,
      William A. Coley, Max Lennon, Leo E. Linbeck, Jr. and James T. Rhodes;
   .  Ratification of Deloitte & Touche LLP as Duke Energy's independent
      auditors for 2002;
   .  Amendment to the Articles of Incorporation to:
     .  Update the corporate purpose clause;
     .  Authorize serial preferred stock;
     .  Increase the shareholder vote required to change the By-Laws;

     .  Decrease the permissible range of size of the Board of Directors;

   .  Shareholder proposals, if properly presented at the annual meeting,
      relating to:
     .  Investments in alternative energy sources;

     .  The role of the Board of Directors in long-term strategic planning;

     .  The appointment of independent auditors who only render audit services;
        and
     .  A study of the risk and responsibility for public harm due to Duke
        Energy's nuclear program.

Q: Who can vote?

A: Common shareholders of Duke Energy as of the close of business on the record
   date, February 28, 2002, can vote at the annual meeting, either in person or
   by proxy. Each share of Duke Energy Common Stock has one vote.

Q: How do I vote?

A: Sign and date each proxy card that you receive and return it in the prepaid
   envelope or vote by telephone or on the Internet. If we receive your signed
   proxy card (or properly transmitted telephone or Internet proxy) before the
   annual meeting, we will vote your shares as you direct. You can specify when
   submitting your proxy whether your shares should be voted for all, some or
   none of the nominees for director. You can also specify whether you approve,
   disapprove or abstain from voting on the other 9 proposals.

   If you use the proxy card and simply sign, date and return it without making
   any selections, your proxy will be voted in accordance with the
   recommendations of the Board of Directors:
   .  in favor of the election of the nominees for director named in Proposal 1;
   .  in favor of Proposals 2, 3A, 3B, 3C and 3D; and
   .  against Proposals 4, 5, 6 and 7.


Q: May I change my vote?

A: You may change your vote by:

   .  casting another vote either in person at the meeting or by one of the
      other methods discussed above; or
   .  notifying the Corporate Secretary, in care of the Investor Relations
      Department, at Post Office Box 1005, Charlotte, NC 28201-1005.

Q: Can I vote my shares by telephone or on the Internet?

A: If you hold your shares in your own name, you may vote by telephone or on
   the Internet, by following the instructions included on your proxy card.
   Your deadline for voting by telephone or on the Internet is 11:59 p.m.,
   April 23, 2002.

   If your shares are held in "street name" (in a brokerage account, for
   example), you will need to contact your broker or other nominee holder to
   find out whether you will be able to vote by telephone or on the Internet.

Q: Will my shares be voted if I do not provide my proxy?

A: No. If you hold your shares directly in your own name, they will not be
   voted if you do not provide a proxy unless you vote in person at the
   meeting. Brokerage firms generally have the authority to vote customers'
   unvoted shares on certain "routine" matters. If your shares are held in the
   name of a brokerage firm, the brokerage firm can vote your shares for the
   election of directors and for Proposals 2, 3A and 3D (but not the other
   proposals) if you do not timely provide your proxy because these matters are
   considered "routine" under the applicable rules.


Q: As a Duke Energy employee, how do I vote shares held in my account in the
   Duke Energy Retirement Savings Plan?

A: If you are a participant in the Duke Energy Retirement Savings Plan, you
   have the right to direct the Plan trustee in the voting of those shares of
   Duke Energy Common Stock that are held by the Plan and allocated to your
   Plan account on any issues presented at the annual meeting. Plan participant
   proxies will be treated confidentially.

   If you elect not to vote by proxy, shares allocated to your Plan account
   will be voted by the Plan trustee in the same proportion as those shares
   held by the Plan for which the Plan trustee has received direction from Plan
   participants.


                                                                             1



Commonly Asked Questions and Answers About the Annual Meeting
--------------------------------------------------------------------------------


Q: What constitutes a quorum?

A: As of the record date, February 28, 2002, 778,199,474 shares of Duke Energy
   Common Stock were issued and outstanding and entitled to vote at the
   meeting. In order to conduct the annual meeting, a majority of the shares
   entitled to vote must be present in person or by proxy. This is referred to
   as a "quorum." If you submit a properly executed proxy card or vote by
   telephone or on the Internet, you will be considered part of the quorum.
   Abstentions and broker "non-votes" will be counted as present and entitled
   to vote for purposes of determining a quorum. A broker "non-vote" occurs
   when a nominee holding shares for a beneficial owner does not vote on a
   particular proposal because the nominee does not have discretionary voting
   power with respect to that item and has not received instructions from the
   beneficial owner.

Q: What vote is needed for these proposals to be adopted?


A: Directors are elected by a plurality of the votes cast at the meeting.
   "Plurality" means that the nominees receiving the largest number of votes
   cast are elected as directors up to the maximum number of directors to be
   chosen at the meeting. A majority of the votes cast at the meeting is
   required to approve the other proposals, except that 80% of the Common Stock
   outstanding on February 28, 2002 is required to approve Proposal 3D. For the
   election of directors, abstentions and broker "non-votes" will not be
   counted. For the other proposals, abstentions and broker "non-votes" will
   not be counted as votes cast.


Q: Who conducts the proxy solicitation and how much will it cost?

A: Duke Energy is asking for your proxy for the annual meeting and will pay all
   the costs of asking for shareholder proxies. We have hired Georgeson
   Shareholder Communications, Inc. to help us send out the proxy materials and
   ask for proxies. Georgeson's fee for these services is $22,500, plus
   out-of-pocket expenses. We can ask for proxies through the mail or
   personally by telephone, telegram, fax or other means. We can use directors,
   officers and regular employees of Duke Energy to ask for proxies. These
   people do not receive additional compensation for these services. We will
   reimburse brokerage houses and other custodians, nominees and fiduciaries
   for their reasonable out-of-pocket expenses for forwarding solicitation
   material to the beneficial owners of Duke Energy Common Stock.


Q: How does a shareholder nominate someone to be a director of Duke Energy or
   bring business before the annual meeting?

A: Nominations for director may be made only by the Board of Directors or by a
   shareholder who has given the proper notice, as provided in the By-Laws,
   between 90 and 120 days prior to the first anniversary of the previous
   year's annual meeting. For the 2003 annual meeting, we must receive this
   notice on or after December 26, 2002, and on or before January 25, 2003.

   Other business may be brought before an annual meeting by a shareholder who
   has delivered notice (containing certain information specified in the
   By-Laws) within the time limits described above for delivering notice of a
   nomination for the election of a director. These requirements apply to any
   matter that a shareholder wishes to raise at an annual meeting other than
   through the SEC's shareholder proposal procedures. If you intend to use the
   SEC procedures and wish to have your proposal included in next year's proxy
   statement, you must deliver the proposal in writing to our Corporate
   Secretary by November 27, 2002.

   A copy of the full text of the By-Law advance notice provisions discussed
   above may be obtained by writing to the Office of the Corporate Secretary,
   Post Office Box 1006, Charlotte, North Carolina 28201-1006.


2



Proposals to be Voted Upon
--------------------------------------------------------------------------------


PROPOSAL 1:
Election of Directors

The Board of Directors recommends a vote FOR each nominee.

The Board of Directors of Duke Energy consists of 12 members, divided into
three classes. The three-year terms of the classes are staggered so that the
term of one class expires at each annual meeting. The terms of the four Class
II directors will expire at the 2002 annual meeting. In addition, James T.
Rhodes, who was appointed as a Class I director by the Board of Directors on
October 30, 2001, will stand for election at the 2002 annual meeting. If
elected, his term will expire at the 2004 annual meeting.


The Board of Directors has nominated the following Class II directors for
election: G. Alex Bernhardt, Sr., William A. Coley, Max Lennon and Leo E.
Linbeck, Jr. It has nominated James T. Rhodes for election as a Class I
director.



If any director is unable to stand for election, the Board of Directors may
reduce the number of directors or designate a substitute. In that case, shares
represented by proxies may be voted for a substitute director. We do not expect
that any nominee will be unavailable or unable to serve.


As part of our agreement to acquire Westcoast Energy Inc., the Board of
Directors agreed to appoint Michael E.J. Phelps, Westcoast's Chief Executive
Officer, as a director of Duke Energy following consummation of the
transaction. Since such consummation did not occur in sufficient time to permit
the Board of Directors to nominate Mr. Phelps and have him included in this
proxy statement as a nominee for election to the Board of Directors, he will be
appointed as a director in Class I at the next regular meeting of the Board of
Directors following the consummation of the Westcoast acquisition. The Board of
Directors intends to nominate Mr. Phelps for election to the Board of Directors
at the 2003 annual meeting.

PROPOSAL 2:
Ratification of Deloitte & Touche LLP as Duke Energy's Independent Auditors for
2002

The Board of Directors recommends a vote FOR this proposal.

The Board of Directors, upon recommendation of the Audit Committee, has
reappointed, subject to shareholder ratification, the firm of Deloitte & Touche
LLP, certified public accountants, as independent auditors to examine Duke
Energy's accounts for the year 2002. If the shareholders do not ratify this
appointment, the Board of Directors will consider other certified public
accountants upon recommendation of the Audit Committee.

A representative of Deloitte & Touche LLP will, as in prior years, attend the
annual meeting and will have the opportunity to make a statement and be
available to respond to appropriate questions.

PROPOSALS 3A through 3D:
Amendments to the Articles of Incorporation

While our Articles of Incorporation have been amended many times over the years
as the need arose, until recently no attempt has been made to determine whether
this document as a whole reflects modern corporate practices. As a result of a
recent analysis, the Board of Directors has determined that a number of
provisions contained in the Articles of Incorporation are either outmoded or no
longer necessary and recommends that the shareholders approve the adoption of
proposed amendments to those provisions as discussed below.

PROPOSAL 3A:
Updating of the Corporate Purpose Clause

The Board of Directors recommends a vote FOR this proposal.

State law allows a corporation to state in its Articles of Incorporation the
purpose or purposes for which it is organized. The corporate purpose clause
currently set forth in Article III of our Articles of Incorporation was adopted
in 1917 and, consistent with the practice at that time, is very specific. While
augmented in later years and now of considerable length, it does not reflect
Duke Energy's current operations. The Board of Directors believes it would be
advisable to replace this outdated provision with a modern Article which states
that Duke Energy may engage in any lawful act or activity for which
corporations may be organized under the business corporation statute of North
Carolina, as amended from time to time. The proposed amendment is not intended
to change or otherwise affect Duke Energy's current business strategy. Rather,
it is standard language frequently used by North Carolina corporations and is a
desirable part of the set of proposals designed to modernize Duke Energy's
Articles of Incorporation.

                                                                             3



Proposals to be Voted Upon
--------------------------------------------------------------------------------


PROPOSAL 3B:
Authorization of Serial Preferred Stock

The Board of Directors recommends a vote FOR this proposal.

Under Article IV of the Articles of Incorporation, Duke Energy is currently
authorized to issue 2,000,000,000 shares of Common Stock, without par value,
12,500,000 shares of Preferred Stock, $100 par value per share, 10,000,000
shares of Preferred Stock A, $25 par value per share, and 1,500,000 shares of
Preference Stock, $100 par value per share. As of February 28, 2002, there were
outstanding 778,199,474 shares of Common Stock, five series of Preferred Stock
without sinking fund requirements having an aggregate par value of
$178,000,000, two series of Preferred Stock with sinking fund requirements
having an aggregate par value of $38,000,000 and one series of Preferred Stock
A without sinking fund requirements having a par value of $31,000,000. There
were no shares of Preference Stock outstanding as of that date.

Reasons for the Proposed Amendment

The basic structure of Article IV relating to the issuance of the Preferred
Stock and the Preferred Stock A (Preferred Stocks) by series was adopted during
the 1950's based upon statutory authorization enacted many years earlier, and
has a number of features prevalent at that time that are no longer desirable.
These include a two-thirds class vote of the Preferred Stocks for issuances
exceeding 250,000 shares in the case of Preferred Stock or 1,000,000 shares in
the case of Preferred Stock A unless certain earnings and assets tests are met,
and for the approval of certain mergers and consolidations involving Duke
Energy regardless of size and whether or not Duke Energy is the surviving
corporation. Article IV also does not permit the Board of Directors to issue
series of the Preferred Stocks having general voting power.


The Board of Directors believes that it would be advisable to amend Article IV
to authorize a new class of Preferred Stock, to be known as "Serial Preferred
Stock," consisting of 20,000,000 shares issuable in series, which would provide
the flexibility needed to meet current requirements of the securities market or
the exigencies of negotiations for the acquisition of other corporations or
properties. The proposed Serial Preferred Stock would not be set aside for any
specific purpose, but would be subject to issuance in the discretion of the
Board of Directors from time to time for any proper corporate purpose without
further action by the shareholders. The terms of any new series will be
dependent largely on conditions existing at the time of issuance and therefore
cannot be indicated at the present time.


The Board of Directors has no immediate intention to enter into any
negotiations, agreements or understandings with respect to the proposed Serial
Preferred Stock, but considers it advisable and in the best interests of Duke
Energy to have such shares authorized and available for issuance to meet future
requirements if and when the need arises. Requiring the shareholders to meet
and approve each separate issuance of a series would be time-consuming and
costly, particularly in those instances where the number of shares to be issued
may be small in relation to the total capital of Duke Energy. Moreover, if
shareholder approval of such securities were postponed until a specific need
arose, the delay could, in some instances, deprive Duke Energy of opportunities
otherwise available.

If the shareholders approve the proposed amendment to Article IV, Duke Energy
will no longer issue any shares of Preferred Stock or Preferred Stock A and
anticipates that over time it will redeem or otherwise retire the outstanding
series of those classes of stock when it is deemed cost-efficient to do so and
otherwise advantageous under the circumstances. One of the outstanding series
of Preferred Stock with sinking fund requirements must be redeemed by Duke
Energy in December of this year, and the other outstanding series is
mandatorily redeemable in installments commencing in June 2003. By that time,
all outstanding series of Preferred Stock without sinking fund requirements
will be subject to redemption at the option of Duke Energy. The outstanding
series of Preferred Stock A without sinking fund requirements will be subject
to redemption at the option of Duke Energy commencing in December 2003.

The proposal of the Board of Directors contemplates that when all series of
Preferred Stock and Preferred Stock A are redeemed or otherwise retired, the
Articles of Incorporation will be amended, without further shareholder
authorization, to delete all references to the Preferred Stock and the
Preferred Stock A in Article IV of the Articles of Incorporation. At such time,
the Serial Preferred Stock, if and when issued, will become the senior equity
securities of Duke Energy.

4



Proposals to be Voted Upon
--------------------------------------------------------------------------------

Proposal 3B continued

Proposed Serial Preferred Stock

The Serial Preferred Stock will rank junior to the Preferred Stock and the
Preferred Stock A and senior to the Preference Stock and the Common Stock with
respect to dividends and distribution of assets upon liquidation, dissolution
or winding up of Duke Energy.

The Board of Directors will be authorized to determine at the time of creating
each series the designations, preferences, limitations and relative rights of
the series permitted to be fixed by the Board of Directors pursuant to proposed
Article IV, including, but not limited to, the distinctive designation of and
the number of shares in the series, the terms of any dividend payable thereon,
the terms, if any, on which shares of the series may be redeemed, the terms of
any applicable sinking fund, any conversion or voting rights of the series and
the amount payable upon liquidation, dissolution or winding up of Duke Energy.
All shares of Serial Preferred Stock of the same series will be identical in
all respects and, except for the permitted variances and differences between
series expressly provided for in the resolutions creating the series as
contemplated by the proposed Article IV, all shares of Serial Preferred Stock
of all series will be identical in all respects.

Subject to the prior rights of the Preferred Stocks, each series of Serial
Preferred Stock with dividend rights will be entitled to receive, if declared
by the Board of Directors, and before any dividends are paid on the Preference
Stock or the Common Stock, dividends upon such terms as may be fixed by the
Board of Directors for such series.

Duke Energy will be permitted to redeem, pursuant to the provisions of any
applicable sinking fund or otherwise, any series of Serial Preferred Stock, or
any part thereof, upon such terms as the Board of Directors may fix at the time
it creates such series.

If so provided by the Board of Directors at the time of creation of the series,
the shares of a series of Serial Preferred Stock may be convertible or
exchangeable into shares of Common Stock or other securities of Duke Energy or
of any other corporation or other entity, upon terms fixed at the time of
creation of the series.


In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Duke Energy, the holders of each series of Serial Preferred Stock
will be entitled to receive, subject to the prior payment in full of the
amounts payable in such event to the holders of the Preferred Stocks and before
any distribution is made to the holders of the Preference Stock or the Common
Stock, the distributive amount fixed by the Board of Directors at the time such
series was created.


The holders of the Serial Preferred Stock will have such voting rights as a
series or otherwise with respect to the election of directors or otherwise as
may be fixed by the Board of Directors at the time of the creation of the
series, in addition to any voting rights provided by law.

If so provided by the Board of Directors at the time of creation of the series,
the shares of a series of Serial Preferred Stock may be subject to restrictions
and conditions upon the issuance of any additional Serial Preferred Stock
ranking on a parity with or prior to such shares as to dividends or upon
dissolution.

The holders of the Serial Preferred Stock will have no preemptive rights. The
Serial Preferred Stock, when issued, will be fully paid and nonassessable.

The full text of the proposed Article IV of the Articles of Incorporation,
which includes the provisions for the proposed Serial Preferred Stock, is set
forth in Exhibit A to this proxy statement. The foregoing description of the
proposed Serial Preferred Stock is qualified in its entirety by reference to
such provisions.

Anti-Takeover Aspects

The Board of Directors has undertaken not to issue the Serial Preferred Stock
for the principal purpose of acting as an anti-takeover device and to seek
shareholder approval prior to authorizing the issuance of any Serial Preferred
Stock for that purpose.

Serial Preferred Stock can be, and has been, used by corporations specifically
for anti-takeover purposes. For example, shares of Serial Preferred Stock can
be privately placed with purchasers who support a board of directors in
opposing a tender offer or other hostile takeover bid, or can be issued to
dilute the stock ownership and voting power of a third party seeking a merger
or other extraordinary corporate transaction. Under these and similar
circumstances, the Serial Preferred Stock can serve to perpetuate incumbent
management and can adversely affect shareholders who may want to participate in
the tender offer or other transaction.

The Board of Directors is sensitive to these issues, particularly because Duke
Energy's Articles of Incorporation and By-Laws already contain provisions that
may have an anti-takeover effect. These provisions require, among other things,
(i) a classified Board of Directors, (ii) a vote of at least

                                                                             5



Proposals to be Voted Upon
--------------------------------------------------------------------------------

Proposal 3B continued

80% of Duke Energy's voting power to amend certain provisions of its Articles
of Incorporation, and (iii) advance notice procedures with respect to
shareholder proposals and nominations of directors. Duke Energy also has a
shareholder rights plan, the effect of which may be to discourage attempts to
gain control of Duke Energy without the approval of the Board of Directors. The
shareholder rights plan would not be affected by the proposed authorization of
shares of Serial Preferred Stock.

The proposal to amend Article IV is not part of a plan to adopt a series of
anti-takeover measures, and Duke Energy has no present intent to propose other
anti-takeover measures in future proxy solicitations. To emphasize this point,
the Board of Directors has adopted resolutions that state that the Serial
Preferred Stock authorized by the proposed amendment of Article IV:

a) not be used for the principal purpose of acting as an anti-takeover device
   without shareholder approval; and

b) not be given supermajority voting rights except possibly with respect to
   proposed amendments to the Articles of Incorporation altering materially
   existing provisions of the Serial Preferred Stock or creating, or increasing
   the authorized amount of, any class of stock ranking, as to dividend or
   assets, prior to the Serial Preferred Stock.


                                   --------
Unless required by North Carolina law, no further authorization for the
issuance of the Serial Preferred Stock would be necessary, but any such
issuance would be subject to the approval of the North Carolina Utilities
Commission and The Public Service Commission of South Carolina.

Financial Statements




A copy of the annual report to shareholders was mailed on or about March 27,
2002 to each shareholder of record on February 28, 2002. Reference is made to
the consolidated financial statements of Duke Energy, selected quarterly data
and management's discussion and analysis of results of operations and financial
condition, all appearing in such report, which are incorporated herein by this
reference. The consolidated financial statements of Duke Energy incorporated
herein have been examined by Deloitte & Touche LLP, independent auditors, to
the extent and for the periods indicated in their report thereon.


PROPOSAL 3C:
Requiring a Majority Vote of Holders of Outstanding Shares to Adopt, Amend or
Repeal the By-Laws

The Board of Directors recommends a vote FOR this proposal.

North Carolina law currently permits the shareholders to adopt, amend or repeal
the by-laws of a corporation at a meeting of the shareholders at which a
majority of the shares entitled to vote on the matter is present in person or
by proxy if the votes cast at the meeting favoring the action exceed the votes
cast at the meeting opposing the action. This could allow a minority (and in
certain circumstances a small minority) of the shareholders, without any
involvement by the board of directors of the corporation in the process, to
effect significant changes in a corporation's by-laws.


The Board of Directors believes that the By-Laws of Duke Energy, which,
together with its Articles of Incorporation, constitute its fundamental
governing documents, should be changed by the shareholders only when holders of
a majority of the outstanding shares entitled to vote on the matter favor such
change. Accordingly, the Board of Directors proposes to add a new Article VII
to the Articles of Incorporation, which would, as permitted by North Carolina
law, require the affirmative vote of the holders of at least a majority of the
combined voting power of the then outstanding shares of stock of all classes
entitled to vote generally in the election of directors, voting together as a
single class, for the shareholders to adopt, amend or repeal any provisions in
the By-Laws. This voting requirement would also apply to any amendment or
repeal of new Article VII of the Articles of Incorporation or the adoption of
any provision inconsistent with the new Article.


The full text of the proposed Article VII of the Articles of Incorporation,
which would replace current Article VII which is no longer required to be
included as part of the Articles of Incorporation, is set forth in Exhibit B to
this proxy statement.

6



Proposals to be Voted Upon
--------------------------------------------------------------------------------



PROPOSAL 3D:

Decrease the Permissible Range of Size of the Board of Directors


The Board of Directors recommends a vote FOR this proposal.

The By-Laws of Duke Energy have provided since 1986 that the number of
directors constituting the Board of Directors will be not less than twelve nor
more than twenty-four as fixed from time to time within those limits by the
Board of Directors. In that year the number of directors was fixed at twenty.
This By-Law provision was carried forward into the Articles of Incorporation of
Duke Energy in 1991 when certain amendments were made to that document. At that
time the number of directors was fixed at nineteen.


Consistent with modern governance principles, the Board of Directors has tended
in recent years to favor a smaller board as being more effective and has fixed
the number of directors at twelve, commencing with the date of the 2002 annual
meeting. The Board of Directors believes that the number of directors
constituting the Board of Directors should be not less than nine nor more than
eighteen, with the actual number of directors within that range continuing to
be fixed by the Board of Directors, and deems advisable a proposed amendment to
clause (a) of Article VIII of the Articles of Incorporation effecting this
change. The Board of Directors has made a corresponding change in the By-Laws,
subject to shareholder approval of the proposed amendment, to take effect on
the date of such approval.




SHAREHOLDER PROPOSALS


The following four proposals have been submitted by shareholders for inclusion
in this proxy statement. Upon oral or written request, we will promptly furnish
the names and addresses of the shareholders submitting the proposals, as well
as the number of shares they held at the time the proposals were submitted.


PROPOSAL 4:
Investments in Alternative Energy Sources

The Board of Directors recommends a vote AGAINST this shareholder proposal.

Invest in Clean Energy (I.C.E.) Proposal

Be it resolved that Duke Energy shall invest sufficient resources to build new
electrical generation from solar and wind power sources to replace
approximately one percent (1%) of system capacity yearly for the next twenty
years with the goal of having the company producing twenty percent (20%) of
generation capacity from clean renewable sources in 20 years.

Supporting Statement

Utility deregulation demands the company present a good public image, and the
public is demanding progress towards clean energy.
Efforts must be made to slow down changes in global climate so that we can
continue to survive on planet earth.

The proposal allows flexibility in schedule for the Board of Directors to
implement this proposal. The 20% figure is just a reasonable and conservative
goal to aim for.

A one percent yearly addition to generation capacity allows for small pilot
plants to be built and tried as the program advances.

The company should look to building facilities that are made to last a long
time.

Solar power towers, wind farms, solar photovoltaic arrays and parabolic solar
thermal collectors already exist in other places in this range of power
production, proving that Duke could realistically build such facilities in the
Carolinas and elsewhere.

Opposing Statement of the Board of Directors

A proposal identical to this proposal was submitted at last year's annual
meeting by one of the two shareholders making this proposal and was opposed by
over 95% of the shareholders voting at the meeting. The Board of Directors
believes that this proposal is contrary to the best interests of Duke Energy
and the shareholders.

Duke Energy considers the development of clean, renewable energy sources to be
a matter of importance. It also supports research in the development and
commercial deployment of such technologies and closely monitors technological
developments in this sector. Duke Energy has developed several different
commercial projects utilizing these kinds of technologies and participates in
commercial developments that are consistent with its business strategy and
capital investment requirements. As with other generation technologies deployed
by Duke Energy, renewable energy generation technologies must be economically
attractive in addition to their having technological feasibility.

The proponents would have shareholders require Duke Energy to pursue certain
renewable energy sources without reference to any economic, scientific or
technical data on which to evaluate such actions. If adopted, the proposal
would require Duke Energy to replace its electric generating system capacity
with solar and wind power sources by approximately 1% per year, regardless of
whether 1% replacements are practical and regardless of cost, and to commit to
that timetable for the next 20 years.

                                                                             7



Proposals to be Voted Upon
--------------------------------------------------------------------------------

Proposal 4 continued

The proposal generally requires Duke Energy to replace portions of its electric
generation system in artificial, predetermined percentage amounts according to
an artificial, predetermined timetable. Changes in the composition of electric
generation systems, however, do not occur in successive increments of
approximately 1% and are not implemented on the basis of the sort of timetable
that the proposal specifies. Moreover, the proposal could require Duke Energy
to dismantle system capacity that might be highly productive in order to
replace it with solar and wind power technologies, replacements that would
involve very substantial costs with respect to construction and maintenance.
Based on data provided by the World Energy Assessment conducted by the United
Nations Development Programme, the technologies included in the proposal
presently are 3 times to 40 times as expensive as current conventional
generation technologies.

The timing and advisability of entering into any new business, such as
renewables, including research and marketing decisions relating to it, require
the judgment of experienced management. Duke Energy has experience in renewable
energy. It has participated in past research and development and commercial
ventures involving renewable energy, including biomass and solar energy.
However, the long-term commitment and scale of investment required by the
proposal would not, in the Board's opinion, be in the best interests of
shareholders or customers.

The Board of Directors opposes this proposal because it requires Duke Energy to
adopt a highly restrictive and costly plan with respect to Duke Energy's future
electric operations. Duke Energy remains committed through research, technology
and innovation to meet consumers' demands for new products and services. Duke
Power, a Duke Energy company, is participating in a collaborative effort to
develop a voluntary green power program for North Carolina electric consumers.

The Board of Directors believes, however, that the requirement in the proposal
that Duke Energy should actively pursue a business activity such as renewable
energy sources, irrespective of consumers' demands, technical data and economic
factors, is unwarranted and not in the best interests of shareholders.

The Board of Directors recommends a vote AGAINST this proposal for the reasons
set forth above.

PROPOSAL 5:
Role of the Board of Directors in Long-Term Strategic Planning

The Board of Directors recommends a vote AGAINST this shareholder proposal.


Resolved, that the shareowners of Duke Energy Corporation ("Company") hereby
urge that the Board of Directors prepare a description of the Board's role in
the development and monitoring of the Company's long-term strategic plan.
Specifically, the disclosure should include the following: (1) A description of
the Company's corporate strategy development process, including timelines; (2)
an outline of the specific tasks performed by the Board in the strategy
development and the compliance monitoring processes, and (3) a description of
the mechanisms in place to ensure director access to pertinent information for
informed director participation in the strategy development and monitoring
processes. This disclosure of the Board's role in the strategy development
process should be disseminated to shareowners through appropriate means,
whether it be posted on the Company's website or sent via a written
communication to shareowners.


Statement of Support

The development of a well-conceived corporate strategy is critical to the
long-term success of a corporation. While senior management of our Company is
primarily responsible for development of the Company's strategic plans, in
today's fast-changing environment it is more important than ever that the Board
engage actively and continuously in strategic planning and the ongoing
assessment of business opportunities and risks. It is vitally important that
the individual members of the Board, and the Board as an entity, participate
directly and meaningfully in the development and continued assessment of our
Company's strategic plan.

A recent report by PricewaterhouseCoopers entitled "Corporate Governance and
the Board - What Works Best" examined the issue of director involvement in
corporate strategy development. The Corporate Governance Report found that
chief executives consistently rank strategy as one of their top issues, while a
poll of directors showed that board contributions to the strategic planning
process are lacking. It states: "Indeed, it is the area most needing
improvement. Effective boards play a critical role in the development process,
by both ensuring a sound strategic planning process and scrutinizing the plan
itself with the rigor required to determine whether it deserves endorsement."

8



Proposals to be Voted Upon
--------------------------------------------------------------------------------

Proposal 5 continued


The Company's proxy statement, and corporate proxy statements generally,
provides biographical and professional background information on each director,
indicates his or her compensation, term of office, and board committee
responsibilities. While this information is helpful in assessing the general
capabilities of individual directors, it provides shareholders no insight into
how the directors, individually and as a team, participate in the critically
important task of developing the Company's operating strategy. And while there
is no one best process for board involvement in the strategy development and
monitoring processes, shareholder disclosure on the Board's role in strategy
development would provide shareholders information with which to better assess
the performance of the board in formulating corporate strategy. Further, it
would help to promote "best practices" in the area of meaningful board of
director involvement in strategy development.

We urge your support for this important corporate governance reform.

Opposing Statement of the Board of Directors

The Board of Directors believes that this proposal is contrary to the best
interests of Duke Energy and the shareholders.

The Board of Directors annually reviews management's long-term strategic plan
and reviews strategic updates. It also reviews management's specific goals at
the beginning of the year and actual performance periodically. These duties are
consistent with Duke Energy's board governance principles, and the Board of
Directors fully recognizes the importance of these obligations. The Corporate
Performance Review Committee of the Board of Directors is responsible for
assessing the implementation of strategy by business unit or function.

The Board of Directors believes that no useful purpose would be served by
providing the shareholders with a detailed description of the role of the Board
of Directors in the development and monitoring of Duke Energy's long-term
strategic plan, as requested by the proposal.

A detailed description of the role of the Board of Directors in the strategy
development process would soon become obsolete in many respects. The
opportunities that appear to be available for a given future time period when a
strategic plan is designed are often very different from the opportunities that
actually materialize. Further, variances from a strategic plan typically
develop as performances are realized. For these reasons, the Board of Directors
evaluates Duke Energy's strategic plan and management's actual performance in
achieving Duke Energy's goals by using a dynamic process that analyzes numerous
factors and peer comparisons. Of necessity, this process changes over time.

The detailed description of Duke Energy's corporate strategy development
process, including timelines, as envisioned by the proposal, could compromise
sensitive corporate information. It thus could put Duke Energy at a competitive
disadvantage without in any way aiding the oversight function of the Board of
Directors.

Approval of the proposal would not in itself result in disclosure of the role
of the Board of Directors in the development and monitoring of Duke Energy's
long-term strategic plan. Approval by the shareholders would only serve to urge
the Board of Directors to provide the requested information. Disclosure would
actually occur only after the Board of Directors exercises its collective
business judgment in determining that making the disclosure would be in the
best interests of Duke Energy and the shareholders.

The Board of Directors recommends a vote AGAINST this proposal for the reasons
set forth above.

PROPOSAL 6:
Appointment of Independent Auditors Who Only Render Audit Services

The Board of Directors recommends a vote AGAINST this shareholder proposal.

RESOLVED: That the shareholders of Duke Energy request that the Board of
Directors adopt a policy that in the future the firm that is appointed to be
the Company's independent accountants will only provide audit services to the
Company and not provide any other services.

Supporting Statement

The Securities and Exchange Commission passed new proxy statement rules that
took effect February 5, 2001, which require companies to disclose how much they
pay their accounting firms for audit services and non-audit services.

The results have been startling. According to a Wall Street Journal article of
April 10, 2001: "The nation's biggest companies last year paid far more money
than previously estimated to their independent accounting firms for services
other than auditing, newly disclosed figures show, renewing questions about
whether such fees create conflicts of interest for auditing firms... At issue:
How objective can an accounting firm be in an audit when it is also making
millions of dollars providing the client with other services."

                                                                             9



Proposals to be Voted Upon
--------------------------------------------------------------------------------

Proposal 6 continued

That Wall Street Journal article reported that of the 307 S&P 500 companies it
had surveyed, the average fees for non-audit services were nearly three times
as big as the audit fees. The Company's 2001 proxy statement revealed that it
had paid its independent auditor $3.3 million for its audit work and $11.7
million for other work.

When the SEC was seeking comments on its accountant disclosure rules,
substantial institutional investors urged that auditors should not accept
non-audit fees from companies. The California Public Employees' Retirement
System's General Counsel, Kayla J. Gillan, wrote: "The SEC should consider
simplifying its Proposal and drawing a bright-line test: no non-audit services
to an audit client." TIAA-CREF's Chairman/CEO John H. Biggs wrote:
"...independent public audit firms should not be the auditors of any company
for which they simultaneously provide other services. It's that simple."

It is respectfully submitted that it would be in the best interests of the
Company's shareholders if the Board of Directors adopts a policy that in the
future any firm appointed to be the Company's independent accountants shall
only provide audit services to the Company and not provide any other services.

Opposing Statement of the Board of Directors

The Board of Directors believes that adoption of this proposal would not be in
the best interests of Duke Energy or its shareholders.

Duke Energy is closely monitoring developments and public concerns in the area
of auditor independence and will readily comply with evolving legal and
regulatory requirements. As Deloitte & Touche LLP has announced its intention
to split its management consulting business from its audit services business,
the Board of Directors believes that this proposal is unnecessary.


As noted in the discussion under "Fees Paid to Independent Auditors" under
"Other Information" below in this proxy statement, Duke Energy has retained
Deloitte & Touche LLP to advise it on a number of matters in addition to its
core auditing functions. As set forth in that section, Duke Energy engaged
Deloitte & Touche LLP to perform various "nonaudit" services in 2001 for which
that firm billed approximately $27.6 million. This amount included $21.9
million for tax services and $5.7 million primarily for advice related to
acquisitions and divestitures and for the issuance of consents and comfort
letters in connection with SEC filings and financing transactions. These
nonaudit services are compatible with maintaining auditor independence. Indeed,
the SEC stated in its release promulgating the auditor independence rules that
"[a]ccountants will continue to be able to provide a wide variety of non-audit
services to their audit clients."


Decisions to engage a particular accounting firm are made by Duke Energy only
when two conditions are met. The first is a determination that the accounting
firm's particular expertise, coupled with its knowledge of Duke Energy and
management and financial systems, provides substantial assurance of
high-quality and timely results with tangible cost savings. The second is a
determination that the engagement is consistent with the maintenance of auditor
independence as required by the auditor independence rules of the SEC. These
determinations are reviewed regularly with the Audit Committee, as noted in the
Report of the Audit Committee.

Discretion in determining the best allocation of tasks among accounting (and
other) firms is an essential component of the ability of the Board of Directors
and the Audit Committee to discharge their responsibilities to Duke Energy and
its shareholders. The Board of Directors believes that the retention of this
discretion is entirely consistent with Duke Energy's ability to monitor and
ensure the independence of its auditors. In the area of tax services, Duke
Energy uses a number of different firms and does not rely on any firm
exclusively.


The Executive Vice President and Chief Financial Officer, the Corporate
Controller and the Audit Committee monitor and evaluate the performance of
Deloitte & Touche LLP in both its auditing services and its nonaudit services,
the magnitude of the fees paid for such services and the compatibility of the
nonaudit services with the maintenance of the firm's independence. Moreover, in
late 2000, Duke Energy adopted restrictions beyond the requirements of the
auditor independence rules of the SEC by prohibiting Deloitte & Touche LLP from
providing internal auditing services or financial information systems design
and implementation services. Duke Energy will adopt further prohibitions on
various nonaudit services as warranted by the circumstances.


In addition to these internal procedures, Duke Energy annually seeks
shareholder ratification of its selection of independent auditors. Duke Energy
also provides to its shareholders information relating to fees paid to its
auditors as well as disclosure of the Audit Committee's consideration of
whether the provision of nonaudit services is compatible with maintaining their
independence, all as required by the rules of the SEC.

10



Proposals to be Voted Upon
--------------------------------------------------------------------------------

Proposal 6 continued

Given the recent announcement of Deloitte & Touche LLP about its consulting
business, the protective measures already in place and the disclosures required
when independent auditors are selected for nonaudit work, the Board of
Directors believes there is little chance for abuse and no benefit to Duke
Energy or its shareholders from an arbitrary limitation on the power of
management and the Board of Directors to exercise business judgment in the
selection of auditors.

The Board of Directors recommends a vote AGAINST this proposal for the reasons
set forth above.

PROPOSAL 7:
Study of the Risk and Responsibility for Public Harm Due to Duke Energy's
Nuclear Program

The Board of Directors recommends a vote AGAINST this shareholder proposal.

Nuclear Risk and Responsibility

The shareholders request the Board of Directors to conduct an open
comprehensive study, utilizing independent public resources, oversight, and
participation (but excluding proprietary and confidential information),
defining Duke Energy's risk of, and potential responsibility for, causing
public harm due to the company's continued participation in nuclear energy
programs, and to prepare, at reasonable expense, a report for the next annual
shareholders' meeting in 2003.

Supporting Statement

Duke Energy's Environmental, Health & Safety Policy states:

   Duke Energy highly values the health and safety of our employees, customers
   and communities.

   Duke Energy will engage in partnerships that enhance public environmental,
   health & safety awareness and address common environmental, health & safety
   issues.

   Duke Energy will foster open dialogue and informed decision making through
   meaningful and regular communication of environmental, health and safety
   information with management, employees and the public.

Additional Supporting Statement

The last Nuclear Regulatory Commission study of reactor accident consequences
was done by the Sandia National Laboratory in 1981.


Duke Energy has made application to the Nuclear Regulatory Commission to renew
the operating licenses for the McGuire and Catawba nuclear plants for an
additional 20 years and, if approved, will have authorization to operate these
plants until the years 2041-2046. License approval by the Nuclear Regulatory
Commission, and subsequent operation of the reactors, would extend by 20 years
the risks associated with plant aging and the threats associated with terrorism.




The Nuclear Regulatory Commission acknowledges the threat of terrorism attacks
on nuclear facilities. While ongoing analysis at the federal level is
essential, when such questions are raised at the local level, they are often
considered generic and not within the scope of the license renewal process.

Opposing Statement of the Board of Directors

The Board of Directors believes that this proposal is contrary to the best
interests of Duke Energy and the shareholders.

Duke Energy takes very seriously its responsibility to operate its nuclear
facilities safely, and it has an outstanding record in discharging its
responsibility in this regard. Duke Energy continues to be one of the top
performers in the U.S. nuclear industry in terms of regulatory safety as
indicated by reviews of the Nuclear Regulatory Commission (NRC) and the
Institute of Nuclear Power Operations.

Duke Energy conducts probabilistic risk assessments for its nuclear facilities,
which are reactor safety studies that consider the likelihood of various
accident sequences and the likely results. These studies use the most current
risk assessment methodology and the most current reliability information. Duke
Energy uses these studies to identify changes that would enable it to continue
to operate its nuclear facilities in a safe manner. These studies are shared
with various federal regulatory agencies as appropriate and are updated as
necessary.

The proposal asks that an open comprehensive study utilizing independent public
resources be undertaken and implies that a meaningful study of this kind can be
conducted and a report thereon can be issued. In fact, a meaningful study of
the sort requested by the proposal would likely be impossible to conduct and
the report that is requested by the proposal may run counter to national
security interests. This is because a substantial amount of information that is
used to develop probabilistic risk assessments for Duke Energy's nuclear
facilities is not, and never has been, available to the public. Due to
restrictions placed on the public availability of information by the NRC
following the terrorist attacks of September 11, 2001, certain information that
previously was available to the public

                                                                             11



Proposals to be Voted Upon
--------------------------------------------------------------------------------

Proposal 7 continued

has since been restricted. To the extent that the proposal requests an analysis
of vulnerabilities to terrorist attack, that analysis would require the
consideration of security-sensitive information which has never been publicly
available. Disclosure of this kind of information could raise substantial
homeland security concerns.

Duke Energy also has in place effective aging management programs for its
nuclear facilities which have been approved by the NRC. Duke Energy is
committed to implementing additional aging management programs in the context
of license renewals for those facilities as necessary to mitigate the effects
of aging during any extended periods of operation.

The Board of Directors believes that a meaningful study and report of the kind
the proposal requests, using the sources the proposal requires and conducted in
the manner the proposal specifies, cannot be generated. Such a study would also
be unnecessary since Duke Energy's analyses and assessments already address the
kinds of risks that the proposal could legitimately have the new study address.
The Board of Directors thus believes that adoption of the proposal is not in
the best interests of Duke Energy and its shareholders.

The Board of Directors recommends a vote AGAINST this proposal for the reasons
set forth above.

12



The Board of Directors
--------------------------------------------------------------------------------


Nominees for election at the annual meeting are marked with an asterisk (*).

[PHOTO] G. Alex Bernhardt, Sr.




G. Alex Bernhardt, Sr. *
Director since 1991
Chairman and CEO, Bernhardt Furniture Company, furniture manufacturer
Age 58

Mr. Bernhardt has been associated with Bernhardt Furniture Company of Lenoir,
North Carolina, since 1965. He was named President and a director in 1976 and
became Chairman and CEO in 1996.

[PHOTO] Robert J. Brown



Robert J. Brown
Director since 1994
Chairman and CEO, B&C Associates, Inc., marketing research and public relations
firm
Age 67

Mr. Brown founded B&C Associates, Inc., High Point, North Carolina, in 1960,
served as its President from 1960 until 1968 and has been its Chairman and CEO
since 1973. He is a director of Wachovia Corporation, Sonoco Products Company
and AutoNation, Inc. He is a Class III director with a term expiring in 2003.

[PHOTO] William A. Coley





William A. Coley *

Director since 1990
Group President, Duke Power, franchised electric operations of Duke Energy
Age 58

Mr. Coley joined Duke Energy in 1966. He was named President of Duke Energy's
Associated Enterprises Group in 1994 and was appointed to his present position
in June 1997. He is a director of CT Communications, Inc. and SouthTrust
Corporation.

                                                                             13



The Board of Directors
--------------------------------------------------------------------------------


[PHOTO] William T. Esry



William T. Esrey
Director since 1985
Chairman and CEO, Sprint Corporation,
a diversified telecommunications holding company
Age 62


Mr. Esrey has served as Chairman of Sprint Corporation since 1990 and as its
CEO since 1985. He was President of Sprint Corporation from 1985 to 1996. Mr.
Esrey is a director of Sprint Corporation, General Mills, Inc., and Exxon Mobil
Corporation and had been a director of PanEnergy Corp since 1985. He is a Class
III director with a term expiring in 2003.


[PHOTO] Ann Maynard Gray



Ann Maynard Gray
Director since 1994
Former Vice President, ABC, Inc. and Former President, Diversified Publishing
Group of ABC, Inc., television, radio and publishing
Age 56


Ms. Gray was President, Diversified Publishing Group of ABC, Inc. from 1991
until 1997, and was a Corporate Vice President of ABC, Inc. and its
predecessors from 1979 to 1998. She is a director of JP Morgan Funds, Elan
Corporation, plc, and The Phoenix Companies, Inc. and had been a director of
PanEnergy Corp since 1994. Ms. Gray is a Class I director with a term expiring
in 2004.


[PHOTO] Dennis R. Hendrix



Dennis R. Hendrix
Director since 1990
Retired Chairman of the Board, PanEnergy Corp
Age 62


Mr. Hendrix was Chairman of the Board of PanEnergy Corp from 1990 to 1997, CEO
from 1990 to 1995, and President from 1990 to 1993. He served as a director of
Texas Eastern Transmission Corporation (now Texas Eastern Transmission, LP)
from 1990 to 1997 and as its President and CEO from 1990 to 1994. Mr. Hendrix
is a director of Allied Waste Industries, Inc., International Power, PLC and
Newfield Exploration Company. He is a Class I director with a term expiring in
2004.


14



The Board of Directors
--------------------------------------------------------------------------------


[PHOTO] George Dean Johnson, Jr.




George Dean Johnson, Jr.
Director since 1986
CEO, Extended Stay America,
development, ownership and management of extended-stay lodging facilities
Age 59

Mr. Johnson was a co-founder of Extended Stay America and has served as its CEO
since 1995. He is a director of Extended Stay America, Boca Resorts, Inc. and
AutoNation, Inc. Mr. Johnson is a Class III director with a term expiring in
2003.

[PHOTO] Max Lennon




Max Lennon *
Director since 1988
Retired President, Mars Hill College, Mars Hill, NC
Age 61

Dr. Lennon served as President of Mars Hill College from 1996 until 2002. He
served as President of Eastern Foods, Inc. from 1994 through 1995. He was
previously involved in higher education from 1966 to 1994, his last tenure
being at Clemson University where he served as President for eight years. Dr.
Lennon is a director of Delta Woodside Industries, Inc. and Delta Apparel.

[PHOTO] Leo E. Linbeck, Jr.




Leo E. Linbeck, Jr. *
Director since 1986
Chairman, President and CEO, Linbeck Corporation,
holding company of four construction-related firms
Age 67

Mr. Linbeck assumed his present position in 1990 after serving as Chairman,
President and CEO of Linbeck Construction Corporation from 1975 to 1990. He
served as a director of PanEnergy Corp from 1986.

                                                                             15



The Board of Directors
--------------------------------------------------------------------------------


[PHOTO] James G. Martin



James G. Martin, Ph.D.
Director since 1994
Vice President, Carolinas HealthCare System
Age 66

Dr. Martin was named to his present position in 1995. He served as Governor of
the State of North Carolina from 1985 to 1993 and was a member of the United
States House of Representatives, representing the Ninth District of North
Carolina, from 1973 to 1984. Dr. Martin is a director of Palomar Medical
Technologies, Inc., aaiPharma Inc. and Family Dollar Stores, Inc. He is a Class
III director with a term expiring in 2003.

[PHOTO] Richard B. Priory



Richard B. Priory
Director since 1990
Chairman of the Board, President and CEO, Duke Energy Corporation
Age 55


Mr. Priory became Chairman of the Board and CEO in June 1997 upon the merger of
Duke Energy and PanEnergy Corp and became President in November 1998. He had
served as President and Chief Operating Officer of Duke Energy from 1994 until
June 1997. He is a director of Dana Corporation and US Airways Group, Inc. and
serves on the boards of the Edison Electric Institute and the Institute of
Nuclear Power Operations. Mr. Priory is also a member of the National Academy
of Engineering. He is a Class III director with a term expiring in 2003.


[PHOTO] James T. Rhodes


James T. Rhodes *
Retired Chairman, President and CEO, Institute of Nuclear Power Operations
Age 60

Dr. Rhodes was appointed a director of Duke Energy Corporation in October 2001.
He was Chairman and CEO of the Institute of Nuclear Power Operations from 1998
to 2001 and Chairman, President and CEO from 1999 until 2001. He served as
President and CEO of Virginia Electric & Power Company, a subsidiary of
Dominion Resources, Inc., from 1989 until 1997.

16



Beneficial Ownership
--------------------------------------------------------------------------------



This table indicates how much Duke Energy Common Stock was beneficially owned
by the current directors, the executive officers listed in the Summary
Compensation Table under "Compensation" below ("Named Executive Officers") and
by all current directors and executive officers as a group as of February 28,
2002.

..  The shares listed as "Beneficially Owned" include shares held as of February
   28, 2002 in our employee benefit plans and in trust for the current
   directors under their compensation plan.

..  Beneficial ownership of shares by current directors and executive officers
   as a group represents beneficial ownership of less than 1% of the
   outstanding shares of Duke Energy Common Stock.




                                                       Shares of Common Stock
Name or Identity of Group                        Beneficially         Total
                                                    Owned     Beneficially Owned /2/
                                                        
G.A. Bernhardt, Sr.                                 21,618             26,718
R.P. Brace/1/                                       20,559            132,359
R.J. Brown                                          12,043             17,143
W.A. Coley/1/                                       45,235            407,785
W.T. Esrey                                          49,962             55,062
F.J. Fowler/1/                                     104,723            648,172
A.M. Gray                                           33,571             38,671
D.R. Hendrix                                       420,763            425,863
H.S. Hook                                           42,504             47,604
G.D. Johnson, Jr.                                   27,047             32,147
M. Lennon                                           21,802             26,902
L.E. Linbeck, Jr.                                   45,011             50,111
J.G. Martin                                         12,170             14,670
R.J. Osborne/1/                                     19,050            144,050
H.J. Padewer/1/                                     21,939            238,789
R.B. Priory/1/                                      32,354            809,154
J.T. Rhodes                                          4,380              4,380
Directors and executive officers as a group (21)   990,543          3,894,642




/1/  Also own Common Stock equivalents under Duke Energy executive compensation
     and benefits arrangements as of February 28, 2002 in the following
     amounts: R.B. Priory, 383,281; R.P. Brace, 13,107; F.J. Fowler, 82,511;
     H.J. Padewer, 111,533; W.A. Coley, 162,677; R.J. Osborne, 82,409.

/2/  Includes shares that may be acquired within 60 days after February 28,
     2002.

This table shows how many units of limited partnership interests in TEPPCO
Partners, L.P. were beneficially owned on February 28, 2002 by directors of
Duke Energy, Named Executive Officers, and by directors and executive officers
of Duke Energy as a group. TEPPCO Partners, L.P. is a publicly traded master
limited partnership, and Texas Eastern Products Pipeline Company, an indirect
subsidiary of Duke Energy, is its general partner. As of February 28, 2002, the
number of units beneficially owned by directors and executive officers of Duke
Energy as a group was less than 1% of the outstanding units. None of these
persons had the right to acquire units within 60 days after February 28, 2002.




                                                      Number of Units
         Name or Identity of Group                   Beneficially Owned
                                                  
         R.J. Brown                                               1,500
         F.J. Fowler                                              3,100
         D.R. Hendrix                                             7,400
         H.S. Hook                                                4,000
         R.J. Osborne                                             1,000
         Directors and executive officers as a group             18,100



                                                                             17




Information on the Board of Directors

--------------------------------------------------------------------------------


Board Meetings and Attendance

The Board of Directors had ten meetings during 2001. No director attended less
than 75% of the total of the board meetings and the meetings of the committees
upon which he or she served.

Board Committees

The Board of Directors has the five standing committees described below:

..  The Audit Committee recommends to the Board of Directors the engagement of
   Duke Energy's independent auditors; provides independent oversight with
   respect to financial reporting and internal controls, the internal audit
   function and the independent auditors; determines whether the independent
   auditors are independent and makes recommendations on audit matters and
   internal controls to the Board of Directors.

..  The Compensation Committee sets the salaries and other compensation of all
   executive officers of Duke Energy except the Chairman of the Board and Chief
   Executive Officer. This Committee makes recommendations to the Board of
   Directors regarding the salary and other compensation of the Chairman of the
   Board and Chief Executive Officer for consideration and action by the Board
   of Directors, without the presence or participation of the Chairman of the
   Board and Chief Executive Officer. The Committee also makes recommendations
   to the Board of Directors on compensation for outside directors.

..  The Corporate Governance Committee considers matters related to corporate
   governance and formulates and periodically revises principles for board
   governance, recommends to the Board of Directors the size and composition of
   the Board of Directors within the limits set forth in the Articles of
   Incorporation and By-Laws and recommends potential successors to the Chief
   Executive Officer. This Committee considers nominees for the Board of
   Directors recommended by shareholders.

..  The Corporate Performance Review Committee assesses the level of operational
   risk and monitors and makes recommendations for improving Duke Energy's
   overall operational performance. It also determines whether current
   operating practices provide sufficient support for Duke Energy's emphasis on
   continuous improvement.

..  The Finance and Risk Management Committee reviews Duke Energy's financial
   and fiscal affairs and makes recommendations to the Board of Directors
   regarding dividend, financing and fiscal policies. It reviews the financial
   exposure of Duke Energy together with mitigating strategies and determines
   whether actions taken by management with respect to financial matters are
   consistent with internal controls approved by the Audit Committee.

Board Committee Membership Roster




                                                      Corporate  Finance and
                                          Corporate  Performance    Risk
          Name         Audit Compensation Governance   Review    Management
                                                  
   G.A. Bernhardt, Sr.                                    X*          X
   R.J. Brown                                             X           X
   W.T. Esrey                     X           X
   A.M. Gray             X                                X
   D.R. Hendrix                               X           X
   H.S. Hook             X                                X
   G.D. Johnson, Jr.              X                                   X*
   M. Lennon             X*       X
   L.E. Linbeck, Jr.     X        X*
   J.G. Martin                    X           X*
   R.B. Priory                                X                       X
   J.T. Rhodes           X                                X
   Number of
   meetings in 2001      7        6           5           6           6
   -------------------------------------------------------------------------

* Chair

18




Information on the Board of Directors

--------------------------------------------------------------------------------


Resignation and Retirement Policies

We have a policy stating that members of the Board of Directors are to submit
their resignations when they change employment or have another significant
change in their professional roles and responsibilities. The normal retirement
of those individuals who were members of the Board of Directors when the policy
was adopted in 1998 is not considered a change for this purpose. The Corporate
Governance Committee will determine whether any such resignation will be
accepted. Any resignation that is accepted will likely be effective as of the
end of the term of the director tendering the resignation.

Our Board of Directors retirement policy states that normal retirement for each
director will occur at the annual shareholders meeting following his or her
seventieth birthday.

Compensation of Directors

Annual Retainer and Fees. We pay outside directors an annual retainer of
$40,000. We also pay an outside director serving as Chairman of the Audit,
Compensation, Corporate Governance, Corporate Performance Review or Finance and
Risk Management Committee an additional $4,000 per year. Outside directors also
receive a fee of $1,000 for attendance at each meeting of the Board of
Directors, each committee meeting and other functions requiring their presence,
together with expenses of attendance.

A director may elect to receive 50% of his or her retainer and attendance fees
in the form of Duke Energy Common Stock or may defer that portion by having it
held in trust for the director's benefit and invested in Duke Energy Common
Stock at market price. The director may elect to receive the remaining 50% of
such compensation in cash or may elect to defer, until termination of his or
her service on the Board of Directors, that portion and invest the deferred
amounts among several investment options, including Duke Energy Common Stock.

Stock Options and Stock Awards. In January and July of each year, each outside
director is credited with 200 shares of Duke Energy Common Stock to be held in
trust. Dividends paid on this stock are reinvested in Duke Energy Common Stock.
An outside director will receive, generally upon termination of service from
the Board of Directors, the shares held in trust for his or her account on the
basis of the distribution schedule that he or she has chosen.

Outside directors receive annual non-qualified stock option grants under the
Duke Energy 1998 Long-Term Incentive Plan. Each outside director is granted an
option for 4,000 shares at the same time executive officers receive annual
long-term incentive awards. The grant for 2002 was made on December 19, 2001,
consistent with the grant date for 2002 awards to executive officers.

Charitable Giving Program. After ten years on the Board of Directors, eligible
directors participate in the Directors' Charitable Giving Program. Under this
program, Duke Energy will make, upon the director's death, donations of up to
$1,000,000 to charitable organizations selected by the director. A director may
request that Duke Energy make donations under this program during the
director's lifetime, in which case the maximum donation will be reduced on a
net present value basis. We maintain life insurance policies upon eligible
directors to fund donations under the program. Eligible directors include only
those who were members of the Board of Directors on February 18, 1998, and
certain former directors who previously qualified for this benefit.

Stock Ownership Guidelines. Outside directors are subject to stock ownership
guidelines which establish a target level of ownership of Duke Energy Common
Stock (or Common Stock equivalents) of 4,000 shares. Each outside director is
expected to attain this ownership level within five years from January 1, 1997,
the implementation date of the guidelines, or from the beginning of his or her
service on the Board of Directors, if after that date. The targeted ownership
level has been met by all directors whose stock ownership guideline date was
January 1, 2002.

                                                                             19



Report of the Audit Committee
--------------------------------------------------------------------------------


The Audit Committee of the Board of Directors is composed entirely of
nonemployee directors, all of whom are independent. The Audit Committee's
responsibilities are described under the caption "Board Committees" under
"Information on the Board of Directors" above in this proxy statement. The
Board of Directors readopted a written charter for the Audit Committee in 2002.
The Audit Committee held seven meetings during 2001.

The financial statements of Duke Energy are prepared by management, which is
responsible for their objectivity and integrity. With respect to the financial
statements for the calendar year ended December 31, 2001, the Audit Committee
reviewed and discussed the audited financial statements and the quality of
financial reporting with management and the independent auditors. It also
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees)
and received and discussed with the independent auditors the matters in the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). The Audit Committee also
considered the compatibility of nonaudit services with the auditors'
independence.

Based upon the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors, and the Board of Directors authorized,
the inclusion of the audited financial statements in Duke Energy's Annual
Report on Form 10-K for the year ended December 31, 2001, for filing with the
SEC. The Audit Committee also recommended to the Board, subject to shareholder
ratification, the selection of Duke Energy's independent auditors.

This report has been provided by the Audit Committee.

Max Lennon, Chairman
Ann M. Gray
Harold S. Hook
Leo E. Linbeck, Jr.
James T. Rhodes

20



Report of the Compensation Committee
--------------------------------------------------------------------------------


The Committee's Responsibilities

The Compensation Committee of the Board of Directors is composed entirely of
nonemployee directors. The Compensation Committee is responsible for setting
and administering policies which govern Duke Energy's executive compensation
programs. The purpose of this report is to summarize the compensation
philosophy and policies that the Compensation Committee applied in making
executive compensation decisions in 2001.

Compensation Philosophy

The Compensation Committee has approved compensation programs intended to:

..  Attract and retain talented executive officers and key employees by
   providing total compensation competitive with that of other executives
   employed by companies of similar size, complexity and lines of business;

..  Motivate executives and key employees to achieve strong financial and
   operational performance;

..  Emphasize performance-based compensation, which balances rewards for
   short-term and long-term results;

..  Reward individual performance;

..  Link the interests of executives with shareholders by providing a
   significant portion of total pay in the form of stock-based incentives and
   requiring target levels of stock ownership; and

..  Encourage long-term commitment to Duke Energy.

Stock Ownership Guidelines


To underscore the importance of linking executive and shareholder interests,
the Board of Directors has adopted stock ownership guidelines for executive
officers and other members of senior management. The target level of ownership
of Duke Energy Common Stock (or Common Stock equivalents) is established as a
fixed number of shares. The target level for the Chairman of the Board,
President and Chief Executive Officer is 100,000 shares. The target level for
the remaining members of the Policy Committee, including Messrs. Padewer,
Brace, Fowler and Osborne, is 28,000 shares. The Policy Committee consists of
eight senior executive officers and is responsible for strategic planning and
setting policy and management principles for the entire Duke Energy enterprise.
Each employee subject to the guidelines is expected to achieve the ownership
target within five years from the date on which the employee became subject to
the guidelines, with January 1, 2002 being the first of such dates. All
executive officers whose stock ownership guideline date was January 1, 2002,
have met the ownership target. Common Stock beneficially held for an
executive's Duke Energy Retirement Savings Plan account, Common Stock
equivalents earned through non-qualified deferred compensation programs and any
other beneficially owned Common Stock are included in determining compliance
with the guidelines. Shares that executives have the right to acquire through
the exercise of stock options are not included in the calculation of stock
ownership for guideline purposes.


Compensation Methodology

Each year the Compensation Committee reviews data from market surveys, proxy
statements and independent consultants to assess Duke Energy's competitive
position with respect to the following three components of executive
compensation:

..  base salary;
..  annual incentives; and
..  long-term incentives.


The Compensation Committee also considers individual performance, level of
responsibility and skills and experience in making compensation decisions for
each executive.


Components of Compensation

..  Base Salary: Base salaries for executives are determined based upon job
   responsibilities, level of experience, individual performance, comparisons
   to the salaries of executives in similar positions obtained from market
   surveys, and competitive data obtained from consultants and staff research.
   The goal for the base pay component is to compensate executives at a level
   which approximates the median salaries of individuals in comparable
   positions and markets. The Compensation Committee approves all salary
   increases for executive officers. Base pay increases were approved,
   effective January 1, 2001, for Messrs. Padewer, Brace, Fowler and Osborne.
   Mr. Priory's base salary increase was approved effective February 1, 2001.

..  Annual Incentives: Annual cash incentives are provided to executives to
   promote the achievement of performance objectives of Duke Energy and the
   executive's particular business unit. In 2001, the Compensation Committee
   administered two annual incentive plans that permitted the award of annual
   cash incentives to

                                                                             21



Report of the Compensation Committee
--------------------------------------------------------------------------------


  executive officers. Policy Committee members, including the Named Executive
  Officers set forth in the Summary Compensation Table under "Compensation"
  below, earned incentive compensation under the Duke Energy Policy Committee
  Short-Term Incentive Plan, while executive officers not on the Policy
  Committee earned incentive compensation under the Duke Energy Corporation
  Annual Incentive Plan, under which certain Duke Energy employees receive a
  short-term incentive opportunity. Target incentive opportunities for
  executives under both plans are established as a percentage of base salary,
  using survey data for individuals in comparable positions and markets.
  Incentive amounts are intended to provide competitive incentive amounts for
  individuals in comparable positions and markets when target performance is
  achieved. Incentive amounts may equal up to 200% of target when outstanding
  financial results are achieved.

  Awards under Duke Energy's Policy Committee Short-Term Incentive Plan were
  calculated based upon Duke Energy's earnings per share (EPS) results. The
  Compensation Committee established minimum, target and maximum performance
  levels prior to the beginning of 2001, and participants could receive up to
  200% of their short-term incentive targets. EPS performance for 2001 resulted
  in payments of 200% of bonus targets to the Policy Committee members,
  including the Named Executive Officers.

  Awards under the Duke Energy Corporation Annual Incentive Plan, in which
  executive officers other than members of the Policy Committee participate,
  were determined on the basis of a combination of: (1) EPS measures, (2)
  earnings before interest and income taxes (EBIT) measures and, in some
  instances, other measures unique to individual business groups, (3) return on
  capital employed (ROCE) measures, and (4) individual objectives. EPS
  measures, the combination of EBIT (and individual business group measures, if
  applicable) and ROCE measures, and individual objectives determined, on
  average, 67%, 25% and 8%, respectively, of each executive officer's bonus.

..  Long-Term Incentive Compensation: The Compensation Committee has structured
   long-term incentive compensation to provide for an appropriate balance
   between rewarding performance and encouraging employee retention, and to
   provide a degree of flexibility to executives in selecting the form in which
   compensation is received.

  For 2001, executives could elect to receive up to 20% of the annualized value
  of their long-term incentive compensation in the form of phantom stock, with
  the remainder being provided in the form of stock options. For 2002,
  executives could elect to receive up to 30% of such value in the form of
  phantom stock. The purpose of stock options and phantom stock is to align
  compensation directly with increases in shareholder value. The number of
  options granted is determined by reviewing survey data to determine the
  annualized value of long-term incentive compensation made to other executives
  and management employees in comparable positions and markets (target value)
  and then dividing the portion of target value elected to be received by the
  executive in the form of stock options by an expected present value of the
  option, as determined by using the Black-Scholes option pricing model. The
  number of phantom stock units granted is determined by dividing the portion
  of target value elected to be received by the executive in the form of
  phantom stock units by the fair market value of a share of Duke Energy Common
  Stock on the date of grant. In determining the number of options and phantom
  stock units to be awarded, the Compensation Committee, or, in some cases, its
  designee, also considers the grant recipient's qualitative and quantitative
  performance, the size of stock option and other stock-based awards in the
  past, and expectations of the grant recipient's future performance.

  In late 2001, as a component of 2002 compensation, the Compensation Committee
  approved awards of non-qualified stock options (as described under "Option
  Grants in 2001" below) and phantom stock (as described in the Summary
  Compensation Table under "Compensation" below) to members of the Policy
  Committee with the exception of Mr. Priory. Messrs. Padewer, Brace, Fowler
  and Osborne each elected to receive 30% of the annualized value of their 2002
  long-term incentive compensation in the form of phantom stock. In late 2001,
  as a component of 2002 compensation, the Compensation Committee also approved
  the award of non-qualified stock options and phantom stock to executive
  officers who were not members of the Policy Committee. All of the stock
  option and phantom stock awards were granted under the Duke Energy 1998
  Long-Term Incentive Plan.




  Executives may also elect to receive stock options in lieu of up to 50% of
  their annual cash bonus under the Short-Term Incentive Exchange Program.
  Under this program, participants receive a non-qualified stock option whose


22



Report of the Compensation Committee
--------------------------------------------------------------------------------



  present value on the grant date is two times the amount of cash bonus
  exchanged. The exercise price is equal to the fair market value of Duke
  Energy Common Stock on the grant date. Because executives elect to forego
  cash compensation to receive options under the program, the options vest 100%
  at grant.





  Awards under this program for incentives earned in 2001 were made in early
  2002 (as described in the Summary Compensation Table under "Compensation"
  below) to Messrs. Brace, Fowler and Osborne, who elected to exchange 50%,
  30%, and 20%, respectively, of their annual incentives for a stock option.
  Awards of non-qualified stock options under this program to executive
  officers who were not members of the Policy Committee were also made in early
  2002. All of the stock option awards were granted under the Duke Energy 1998
  Long-Term Incentive Plan.


Compliance with Section 162(m) of the Internal Revenue Code

Under Section 162(m) of the Internal Revenue Code, Duke Energy may not deduct
annual compensation in excess of $1 million paid to certain employees,
generally its Chief Executive Officer and its four other most highly
compensated executive officers, unless that compensation qualifies as
performance-based compensation. While the Compensation Committee intends to
structure performance-related awards in a way that will preserve the maximum
deductibility of compensation awards, the Compensation Committee may from time
to time approve awards which would vest upon the passage of time or other
compensation which would not result in qualification of those awards as
performance-based compensation. It is not anticipated that compensation
realized by any executive officer under Duke Energy plans and programs now in
effect will result in a material loss of tax deductions.

Compensation of the Chief Executive Officer

The Compensation Committee reviews annually the compensation of the Chief
Executive Officer and recommends any adjustments to the Board of Directors for
approval. In 2001, the Compensation Committee retained the consulting firm of
Frederic W. Cook and Co. to conduct a review of the compensation of the Chief
Executive Officer. The Chief Executive Officer participates in the same
programs and receives compensation based upon the same criteria as Duke
Energy's other executive officers. However, the Chief Executive Officer's
compensation reflects the greater policy- and decision-making authority that
the Chief Executive Officer holds and the higher level of responsibility he has
with respect to the strategic direction of Duke Energy and its financial and
operating results. The components of Mr. Priory's 2001 compensation were:

..  Base Salary: After considering Duke Energy's overall performance and
   competitive practices, the Compensation Committee recommended, and the Board
   of Directors approved, a 14.3% increase in Mr. Priory's base salary, to
   $1,100,000, effective February 1, 2001.

..  Annual Incentives: Annual incentive compensation for Mr. Priory is based
   solely upon EPS results. Based on 2001 EPS performance, Mr. Priory received
   a payment of $2,177,088, representing 200% of his target incentive
   opportunity.


..  Long-Term Incentives: In February 2001, Mr. Priory received a stock option
   award for 400,000 shares of Duke Energy Common Stock with an exercise price
   at fair market value on the date of grant, and an award for 24,240 phantom
   stock units. The stock option has a ten-year term, and both the stock option
   and phantom stock awards will vest 25% on each of the first four
   anniversaries of the grant date.


The Compensation Committee conducts its annual review of Chief Executive
Officer performance and compensation in February of each year, to assure
thorough consideration of year-end results. Actions taken by the Board of
Directors in February 2002 with respect to Mr. Priory's 2002 compensation will
be reflected in the proxy statement for the 2003 annual meeting, which will
include, among other things, an award to Mr. Priory of non-qualified stock
options with respect to 408,400 shares and a phantom stock award for 48,810
phantom stock units.

It is the Compensation Committee's intention that, when taken together, the
components of Mr. Priory's pay, including base salary, annual incentives and
long-term incentives, will result in compensation which approximates the 50th
percentile of the market when incentive plan performance expectations are met
and in compensation as high as the 75th percentile of the market when incentive
plan performance expectations are exceeded.

This report has been provided by the Compensation Committee.

Leo E. Linbeck, Jr., Chairman
William T. Esrey
George Dean Johnson, Jr.
Max Lennon
James G. Martin

                                                                             23



Performance Graph
--------------------------------------------------------------------------------



Comparison of Five-Year Cumulative Total Return Among the Corporation, S&P 500
Index, S&P Utilities Index, and DJ Utilities


                                    [CHART]

                         Assumes $100 invested on December 31, 1996, in Duke
                         Energy Common Stock, S&P 500 Index, S&P Utilities
                         Index, and DJ Utilities. Assumes reinvestment of
                        dividends.


                                       Duke Energy   S&P 500 Index   S&P
                        Utilities   DJ Utilities
                        1996               100            100           100
                                100
                        1997               124            133           124
                                122
                        1998               149            171           141
                                145
                        1999               122            206           129
                                137
                        2000               212            188           205
                                205
                        2001               201            166           143
                                152

24



Compensation
--------------------------------------------------------------------------------



Summary Compensation Table





                                             Annual Compensation                                   Long-Term Compensation
                                 --------------------------------------------  --------------------------------------------
                                                                                           Awards
                                 --------------------------------------------  -------------------------------  -----------
                                                                                 Restricted       Securities
                                                                Other Annual       Stock          Underlying       LTIP
                                      Salary ($) Bonus ($)/2/ Compensation ($) Award(s) ($)/4/ Options/SARS (#) Payouts ($)
Name and Principal Position      Year ---------- -----------  ---------------- --------------  ---------------- -----------
----------------------------------------------------------------------------------------------------------------------------
                                                                                           
R.B. Priory                      2001 1,088,544   2,177,088          319,150         996,991       400,000
Chairman of the Board, President 2000   954,164   1,908,328          300,384                       400,000
and Chief Executive Officer      1999   895,420     997,140          109,708
H.J. Padewer                     2001   600,000     900,000           98,267         742,673       164,700
Group President                  2000   500,004     750,006           91,111         450,388       173,600
Energy Services                  1999   400,008     311,814            7,921      375,938/5/       693,800
R.P. Brace/ 1/                   2001   550,000     715,000     1,126,722/3/    1,330,759/6/       406,200
Executive Vice President
and Chief Financial Officer
F.J. Fowler                      2001   500,004     750,006           79,305         535,810       119,000
Group President                  2000   450,000     585,000           70,940         270,575       104,000
Energy Transmission              1999   385,830     257,796           32,495                       157,000
R.J. Osborne                     2001   500,004     750,006           70,960         486,072       107,800
Executive Vice President         2000   399,996     520,195           66,867         270,575       104,000
and Chief Risk Officer           1999   366,250     244,714           19,827                       124,000










                                      All Other
                                 Compensation ($)/ 7/
Name and Principal Position      -------------------
-----------------------------------------------------
                              
R.B. Priory                             224,202
Chairman of the Board, President        156,596
and Chief Executive Officer             148,501
H.J. Padewer                             83,622
Group President                          51,331
Energy Services                          94,112
R.P. Brace/ 1/                           26,498
Executive Vice President
and Chief Financial Officer
F.J. Fowler                             209,961
Group President                      139,812/8/
Energy Transmission                  163,101/8/
R.J. Osborne                             69,194
Executive Vice President                 45,363
and Chief Risk Officer                   42,751


/1/  Mr. Brace joined Duke Energy on January 1, 2001.

/2/  Messrs. Brace, Fowler and Osborne elected to forego a portion of their
     2001 cash bonus for stock options under the Short-Term Incentive Exchange
     Program described in the Report of the Compensation Committee above as
     follows: Mr. Brace, $357,500 for 66,800 option shares; Mr. Fowler,
     $225,002 for 42,100 option shares; Mr. Osborne, $150,001 for 28,000 option
     shares. The awards were granted under the Duke Energy 1998 Long-Term
     Incentive Plan on January 17, 2002 at the fair market value on that date
     of $38.33, as provided under the Plan. The number of option shares awarded
     is calculated by dividing the foregone bonus amount by 50% of the present
     value of a share of Duke Energy Common Stock on the date of grant. The
     options were 100% vested at grant. These stock options will be reported in
     the proxy statement for the 2003 annual meeting.

/3/  Includes a one-time payment of $983,608, including partial reimbursement
     of the related tax liability, in connection with Mr. Brace's relocation
     from the United Kingdom to North Carolina.

/4/  Messrs. Priory, Padewer, Brace, Fowler and Osborne elected to receive a
     portion of the value of the long-term incentive component of their 2002
     and 2001 compensation in the form of phantom stock. The awards were
     granted under the Duke Energy 1998 Long-Term Incentive Plan. The 2002 and
     2001 awards for Messrs. Padewer, Brace, Fowler and Osborne were made on
     December 19, 2001 and December 20, 2000, respectively. Mr. Priory's 2001
     award was made on February 27, 2001. Phantom stock is represented by units
     denominated in shares of Duke Energy Common Stock. Each phantom stock unit
     represents the right to receive, upon vesting, one share of Duke Energy
     Common Stock. One quarter of each award vests on each of the first four
     anniversaries of the grant date provided the recipient continues to be
     employed by Duke Energy or his or her employment terminates on account

                                                                             25



Compensation
--------------------------------------------------------------------------------


   of retirement. The awards fully vest in the event of the recipient's death
   or disability or a change in control of Duke Energy as specified in the
   Plan. If the recipient's employment terminates other than on account of
   retirement, death or disability, any unvested shares remaining on the
   termination date are forfeited. The phantom stock awards also grant an equal
   number of dividend equivalents, which represent the right to receive cash
   payments equivalent to the cash dividends paid on the number of shares of
   Duke Energy Common Stock represented by the phantom stock units awarded,
   until the related phantom stock units vest or are forfeited. Mr. Priory's
   phantom stock award with respect to 2002 compensation was awarded on
   February 26, 2002, and, accordingly, will be reported in the proxy statement
   for the 2003 annual meeting.

   The aggregate number of phantom stock units held by Messrs. Priory, Padewer,
   Brace, Fowler and Osborne at December 31, 2001 and their values on that date
   are as follows:



                                 Number of          Value At
                            Phantom Stock Units December 31, 2001
                                          
               R.B. Priory        24,240            $  951,662
               H.J. Padewer       27,600             1,083,576
               R.P. Brace         12,690              498,209
               F.J. Fowler        18,960              744,370
               R.J. Osborne       17,640              692,546


/5/  Mr. Padewer received an award of restricted stock upon his employment with
     Duke Energy. Mr. Padewer's aggregate restricted stock holdings at December
     31, 2001 were 7,500 shares, with a value on that date of $294,450.
     Dividends are paid on such shares. One quarter of the restricted stock
     award to Mr. Padewer (3,750 shares) vested on each of January 3, 2000,
     January 2, 2001 and January 2, 2002. The remaining 3,750 shares will vest
     on January 2, 2003.

/6/  Mr. Brace received an award of restricted stock upon his employment with
     Duke Energy. Mr. Brace's aggregate restricted stock holdings at December
     31, 2001 were 20,000 shares, with a value on that date of $785,200.
     Dividends are paid on such shares. The shares will vest on January 1, 2004.

/7/  All Other Compensation column includes the following for 2001:

   a. Matching contributions under the Duke Energy Retirement Savings Plan as
      follows: R.B. Priory, $10,200; H.J. Padewer, $10,200; R.P. Brace,
      $10,200; F.J. Fowler, $10,200; R.J. Osborne, $9,792.

   b. Make-whole matching contribution credits under the Duke Energy Executive
      Savings Plan as follows: R.B. Priory, $169,612; H.J. Padewer, $70,800;
      R.P. Brace, $14,550; F.J. Fowler, $54,900; R.J. Osborne, $51,408.

   c. Above-market interest earned on account balances in the Duke Energy
      Executive Savings Plan, Supplemental Account as follows: R.B. Priory,
      $11,635; H.J. Padewer, $0; R.P. Brace, $0; F.J. Fowler, $0; R.J. Osborne,
      $6,016.

   d. Economic value of life insurance coverage provided under life insurance
      plans as follows:
      R.B. Priory, $18,844; H.J. Padewer, $2,622; R.P. Brace, $1,748; F.J.
      Fowler, $4,902; R.J. Osborne, $1,978.

   e. The cost to Duke Energy of supplemental life insurance coverage under the
      Duke Energy Supplemental Insurance Plan as follows: R.B. Priory, $13,108;
      H.J. Padewer, $0; R.P. Brace, $0; F.J. Fowler, $0; R.J. Osborne, $0.

   f. The economic benefit of split-dollar life insurance coverage pursuant to
      the Duke Energy Estate Conservation Plan as follows: R.B. Priory, $803;
      H.J. Padewer, $0; R.P. Brace, $0; F.J. Fowler, $0; R.J. Osborne, $0.


/8/  Adjusted to reflect EPS unit credits earned by Mr. Fowler during 1999 and
     2000 as a result of earnings per share exceeding a pre-defined base amount
     in those years. The credits were granted in tandem with certain stock
     option awards and may be applied towards the exercise price of those stock
     options.


26



Compensation
--------------------------------------------------------------------------------


Option Grants in 2001


This table shows options granted to the Named Executive Officers during 2001,
along with the present value of the options on the date they were granted,
calculated as described in footnote 2 to the table. Grants shown in the table
with an expiration date of December 19, 2011 were awarded on December 19, 2001
and relate to compensation for 2002. The grant shown with an expiration date of
February 1, 2011 was awarded to R.P. Brace on February 1, 2001, following his
employment with Duke Energy on January 1, 2001. The grant to R.B. Priory having
an expiration date of February 27, 2011 was awarded on February 27, 2001 as a
component of 2001 compensation. R.B. Priory's option grant with respect to 2002
compensation was awarded on February 26, 2002 and, accordingly, will be
reported in the proxy statement for the 2003 annual meeting.


Option/SAR Grants in Last Fiscal Year



                                                                Grant Date
                                 Individual Grants                 Value
                  Number
                 of Shares      % of Total  Exercise
                Underlying     Options/SARS or Base             Grant Date
               Options/SARS     Granted to   Price   Expiration   Present
  Name         Granted/ 1/ (#)  Employees    ($/Sh)     Date    Value/ 2/ ($)
                                                 
  R.B. Priory     400,000          5.2%     41.5000   2/27/2011  4,025,500
  H.J. Padewer    164,700          2.1%     37.6800  12/19/2011  1,732,644
  R.P. Brace      180,000          2.3%     36.7700   2/01/2011  1,605,011
                  120,000          1.6%     36.7700   2/01/2011  1,070,007
                  106,200          1.4%     37.6800  12/19/2011  1,117,224
  F.J. Fowler     119,000          1.5%     37.6800  12/19/2011  1,251,880
  R.J. Osborne    107,800          1.4%     37.6800  12/19/2011  1,134,056


/1/  Duke Energy has not granted any SARs to the Named Executive Officers or
     any other persons.

/2/  Based on the Black-Scholes option valuation model. The following table
     lists key input variables used in valuing the options:




                              400,000 Share Option
                              Grant to R.B. Priory
                                and 180,000 and
                              120,000 Share Option
      Input Variable          Grants to R.P. Brace All Other Option Grants
                                             
      Risk-free Interest Rate         5.45%                  5.23%
      Dividend Yield                  3.70%                  3.37%
      Stock Price Volatility         25.88%                 29.71%
      Option Term                    10 years               10 years



  With respect to Mr. Priory's 400,000 share option grant and Mr. Brace's
  180,000 and 120,000 share option grants, the volatility variable reflected
  weekly historical stock price trading data with respect to Duke Energy Common
  Stock from November 30, 1997 through November 30, 2000. With respect to all
  other option grants listed in the table, the volatility variable reflected
  historical monthly stock price trading data from November 30, 1998 through
  November 30, 2001. An adjustment was made with respect to each valuation for
  risk of forfeiture during the vesting period. The actual value, if any, that
  a grantee may realize will depend on the excess of the stock price over the
  exercise price on the date the option is exercised, so that there is no
  assurance the value realized will be at or near the value estimated based
  upon the Black-Scholes model.

                                                                             27



Compensation
--------------------------------------------------------------------------------


Option Exercises and Year-End Values

This table shows aggregate exercises of options during 2001 by the Named
Executive Officers and the aggregate year-end value of the unexercised options
held by them. The value assigned to each unexercised "in-the-money" stock
option is based on the positive spread between the exercise price of the stock
option and the split-adjusted fair market value of Duke Energy Common Stock on
December 31, 2001, which was $39.65. The fair market value is the average of
the high and low prices of a share of Duke Energy Common Stock on that date as
reported on the New York Stock Exchange Composite Transactions Tape. The
ultimate value of a stock option will depend on the market value of the
underlying shares on a future date.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values




                                             Number of Securities
                                                  Underlying      Value of Unexercised
                                                 Unexercised          In-the-Money
                                               Options/SARS at      Options/SARS at
                                                 FY-End* (#)           FY-End ($)
                Shares
             Acquired on                         Exercisable/         Exercisable/
Name         Exercise (#) Value Realized ($)    Unexercisable        Unexercisable
                                                      
R.B. Priory    250,000        4,162,400      376,800 / 1,100,000  4,251,906 / 8,373,730
H.J. Padewer   298,450        2,988,269       91,850 /   641,800    715,849 / 3,598,332
R.P. Brace          --               --         --   /   406,200      --    / 1,073,214
F.J. Fowler     12,436          345,354      429,022 /   435,500  5,744,608 / 3,023,260
R.J. Osborne    71,000          815,723       57,000 /   327,800    458,025 / 1,942,912



* Duke Energy has not granted any SARs to the Named Executive Officers or any
other persons.

28



Compensation
--------------------------------------------------------------------------------


Employment Contracts and Termination of Employment and Change-in-Control
Arrangements

Duke Energy entered into a severance agreement and a change-in-control
agreement with H.J. Padewer, which became effective on April 18, 2001 and
January 1, 2000, respectively. The change-in-control agreement replaced Mr.
Padewer's employment agreement with certain exceptions. Duke Energy had entered
into severance agreements and change-in-control agreements with Messrs. Fowler
and Osborne, which became effective on August 18, 1999, and with Mr. Priory,
which became effective on August 19, 1999, in each case upon expiration of the
executive's employment agreement. Duke Energy entered into a change-in-control
agreement with Mr. Brace which became effective on January 1, 2001. The
severance agreements and change-in-control agreements remain in effect for a
two-year period from the effective time specified above (in each case, the
"Effective Time") or for such longer period as may be mutually agreed upon by
the parties (the "Employment Period"). The principal terms and conditions of
the severance agreements and change-in-control agreements are described below.

The severance agreements for Messrs. Priory, Padewer, Fowler and Osborne
provide for severance payments and benefits to the executive in the event of
termination of employment other than upon death or disability or for "cause"
(as defined in the severance agreements) by Duke Energy as follows: (1) a
lump-sum payment equal to two times the sum of the executive's then-current
base salary and target bonus, plus a pro rata amount of the executive's target
bonus for the year in which the termination occurs; (2) a lump-sum payment
equal to the present value of the amount Duke Energy would have contributed or
credited to the executive's pension and savings accounts during the two years
following the termination date; (3) continued medical, dental and basic life
insurance coverage for a two-year period following the termination date or
retiree medical benefits, if the executive would have become eligible for such
benefits within two years following the termination date, from the date of
eligibility; and (4) continued vesting of long-term incentive awards, including
stock options or restricted stock but excluding performance share awards, held
but not vested or exercisable on the termination date, in accordance with their
terms for two years following the termination date, with any options or similar
rights thereafter remaining exercisable for 90 days, if their term has not
expired. If Messrs. Priory, Padewer, Fowler and Osborne receive a payment under
their severance agreements, no payment will be made under the performance share
award. The severance agreements contain restrictive covenants which prohibit
Messrs. Priory, Padewer, Fowler and Osborne from competing with Duke Energy or
soliciting Duke Energy's employees or customers for one year following
termination, and from disclosing certain confidential information.


The change-in-control agreements for Messrs. Priory, Padewer, Brace, Fowler and
Osborne provide for payments and benefits to the executive in the event of
termination of employment for "good reason" by the executive or other than for
"cause" by Duke Energy within a two-year period following a "change-in-control"
(each such term as defined in the change-in-control agreements) as follows: (1)
a lump-sum payment equal to the sum of the executive's then-current base salary
and target bonus for each year of the three-year period after termination,
including a pro rata amount for any partial years in such period, plus a pro
rata amount of the executive's target bonus for the year in which the
termination occurs; (2) a lump-sum payment equal to the present value of the
amount Duke Energy would have contributed or credited to the executive's
pension and savings accounts during the three years following the termination
date; (3) continued medical, dental and basic life insurance coverage for a
three-year period following the termination, or retiree medical benefits, if
the executive would have become eligible for such benefits within two years
following the termination date, from the date of eligibility; and (4) continued
vesting of long-term incentive awards, including stock options or restricted
stock but excluding performance share awards, held but not vested or
exercisable on the termination date, in accordance with their terms for three
years following the termination date, with any options or similar rights
thereafter remaining exercisable for 90 days, if their term has not expired. If
the executive becomes eligible for normal retirement at age sixty-five within
the three-year period following termination, the three-year period mentioned
above will be reduced to the period from the termination date to the eligible
executive's normal retirement date. In the event that any of the payments or
benefits provided for in the change-in-control agreement would constitute a
"parachute payment" (as defined in section 280G(b)(2) of the Internal Revenue
Code), the executive is entitled to receive an additional payment such that,
after the payment of all income and excise taxes, he will be in the same
after-tax position as if no excise tax under section 4999 of the Internal
Revenue Code had been imposed.


A provision continuing from Mr. Padewer's prior employment agreement provides
that Duke Energy would contribute $315,000 to Mr. Padewer's opening balance in
the Duke Energy Executive Cash Balance Plan, with vesting to occur on the third
anniversary of his employment or upon his disability, death, or termination of
employment for

                                                                             29



Compensation
--------------------------------------------------------------------------------


reasons other than for cause, if any of such events occur before the third
anniversary of his employment. This amount vested on January 1, 2002, the third
anniversary of Mr. Padewer's employment. An additional continuing provision
provides that Mr. Padewer will be credited for twelve years of service for the
purpose of determining vacation benefits.

Retirement Plan Information

Executive officers and other eligible employees of Duke Energy participate in
the Duke Energy Retirement Cash Balance Plan, a noncontributory, qualified,
defined benefit retirement plan. In addition, selected managers are eligible to
participate in the Duke Energy Executive Cash Balance Plan, which is a
noncontributory, nonqualified, defined benefit retirement plan. A portion of
the benefits earned in the Executive Cash Balance Plan is attributable to
compensation in excess of the Internal Revenue Service annual compensation
limit ($170,000 for 2001) and deferred compensation, as well as reductions
caused by maximum benefit limitations that apply to qualified plans from the
benefits that would otherwise be provided under the Retirement Cash Balance
Plan. The Retirement Benefit Equalization Plan is designed to restore benefit
reductions caused by the maximum benefit limitations that apply to qualified
plans from benefits that would otherwise be provided under the Retirement Cash
Balance Plan for eligible employees of Duke Energy who do not participate in
the Executive Cash Balance Plan. Benefits under the Retirement Cash Balance
Plan, the Executive Cash Balance Plan and the Retirement Benefit Equalization
Plan are based on eligible pay, generally consisting of base pay, short-term
incentives and lump-sum merit increases. The Retirement Cash Balance Plan and
the Retirement Benefit Equalization Plan exclude deferred compensation, other
than deferrals pursuant to Sections 401(k) and 125 of the Internal Revenue Code.

Under the benefit accrual formula used to determine benefits under the
Retirement Cash Balance Plan, an eligible employee's plan account receives a
pay credit at the end of each month in which the employee remains eligible and
receives eligible pay for services. The monthly pay credit is equal to a
percentage of the employee's monthly eligible pay. For most eligible employees,
the percentage depends on age and completed years of service at the beginning
of the year, as shown below:



                       Age and Service Monthly Pay Credit
                                           Percentage
                                    
                         34 or less            4%
                         35 to 49              5%
                         50 to 64              6%
                         65 or more            7%


In addition, the employee receives an additional 4% for any portion of eligible
pay above the Social Security taxable wage base ($80,400 for 2001). However,
for certain eligible employees, the total percentage is a flat 3% of eligible
pay. Employee accounts also receive monthly interest credits on their balances.
The rate of the interest credit is adjusted quarterly and equals the yield on
30-year U.S. Treasury Bonds during the third week of the last month of the
previous quarter, subject to a minimum rate of 4% per year and a maximum rate
of 9% per year.

Assuming that the Named Executive Officers continue in their present positions
at their present salaries until retirement at age 65, their estimated annual
pensions in a single life annuity form under the applicable plans attributable
to such salaries would be: R.B. Priory, $765,817; H.J. Padewer, $211,932; R.P.
Brace, $144,221; F.J. Fowler, $284,528; and R.J. Osborne, $336,670. These
estimates are calculated assuming interest credits at an annual rate of 4% and
using a future Social Security taxable wage base equal to $80,400.

30



Other Information
--------------------------------------------------------------------------------


Discretionary Voting Authority

As of the date this proxy statement went to press, we did not anticipate that
any matter other than the proposals set out in this proxy statement would be
raised at the annual meeting. If any other matters are properly presented at
the annual meeting, the persons named as proxies will have discretion to vote
on those matters according to their best judgment.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely on information furnished to us and contained in reports filed with
the SEC, as well as any written representations that no other reports were
required, we believe that during 2001 all SEC filings of our directors and
executive officers complied with the requirements of Section 16 of the
Securities Exchange Act, except that F.J. Fowler did not timely report an
exercise of options in February 2001, and J.G. Martin did not timely report an
exercise of options in February and May 2001 and a sale of 20 shares in May
2001. The failure to timely report such option exercises was due to
administrative oversight on the part of Duke Energy.

Fees Paid to Independent Auditors

The following table presents fees for professional audit services rendered by
Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their
respective affiliates (collectively, "Deloitte") for the audit of Duke Energy's
annual financial statements for 2001, and fees billed for other services
rendered by Deloitte for fiscal 2001:



                                                    (In millions)
                                                 
               Audit fees (a)                           $ 5.6
               Financial information systems design
               and implementation (b)                       0
               All other fees:
                 Tax matters (c)                         21.9
                 Other (d)                                5.7
                                                        -----
               Total all other fees                     $27.6

--------
(a) Audit fees include review of the financial statements set forth in Duke
    Energy's Quarterly Reports on Form 10-Q for 2001.

(b) Duke Energy internal policy prohibits the engagement of the independent
    auditors for financial information systems design and implementation
    services.


(c) Tax-related services comprise tax compliance (including U.S. federal and
    international returns), tax examination assistance and tax planning.


(d) Primarily consists of fees for advice related to acquisitions and
    divestitures and for the issuance of consents and comfort letters in
    connection with SEC filings and financing transactions.

The Audit Committee has considered the compatibility of nonaudit services with
the auditors' independence.

Online Access to Annual Reports and Proxy Statements

Save Duke Energy future postage and printing expense by consenting to view
future annual reports and proxy statements online on the Internet.

Most shareholders can elect to view future proxy statements and annual reports
over the Internet instead of receiving paper copies in the mail. Those
shareholders will be given the opportunity to consent to future Internet
delivery when they vote their proxy. For some shareholders, this option is only
available if you vote on the Internet.

If you are not given an opportunity to consent to Internet delivery when you
vote your proxy, contact the bank, broker or other holder of record through
which you hold your shares and inquire about the availability of such an option
for you.

If you consent, your account will be so noted and, when Duke Energy's annual
report for 2002 and proxy statement for the 2003 annual meeting become
available, you will be notified on how to access them on the Internet.
Shareholders of record may indicate their consent on this year's proxy card,
and will receive a paper proxy card for next year's annual meeting in the mail.

If you elect to receive your Duke Energy materials via the Internet, you can
still request paper copies by contacting Investor Relations at (800) 488-3853
or by e-mail at InvestDUK@duke-energy.com.

                                                                             31



                                   Exhibit A

     Extract from the Articles of Incorporation of Duke Energy Corporation
   showing proposed amendments to Article IV. Italics indicate additions and
                         brackets indicate deletions.

                                  Article IV

The total number of authorized shares of this Corporation is 2,044,000,000
shares, divided into 12,500,000 shares of Preferred Stock of the par value of
$100 each (hereafter called Preferred Stock), 10,000,000 shares of Preferred
Stock A of the par value of $25 each (hereafter called Preferred Stock A),
20,000,000 shares of Serial Preferred Stock without par value (hereafter called
Serial Preferred Stock), 1,500,000 shares of Preference Stock of the par value
of $100 each (hereafter called Preference Stock), and 2,000,000,000 shares of
Common Stock without [nominal or] par value (hereafter called Common Stock).

The Preferred Stock and the Preferred Stock A (sometimes collectively referred
to as the Preferred Stocks) shall rank equally with no preference or priority
of the Preferred Stock over the Preferred Stock A or of the Preferred Stock A
over the Preferred Stock with respect to dividends and distribution of assets
upon liquidation, dissolution or winding up of the Corporation. The Serial
Preferred Stock shall rank junior to the Preferred Stocks and senior to the
Preference Stock with respect to dividends and distribution of assets upon
liquidation, dissolution or winding up of the Corporation.

(a)  Preferred Stock and Preferred Stock A

    (1)The Board of Directors is hereby empowered, subject to the provisions of
       paragraph (9) of this section (a) of Article IV, to cause the authorized
       and unissued shares of the Preferred Stock and of the Preferred Stock A
       to be issued in one or more series from time to time, upon such
       consideration (not less than the par value thereof), upon such terms,
       and in such manner, and with such variations as to (i) the rates of
       dividend payable thereon, (ii) the periods of time during which
       dividends shall accrue and the dates on which dividends shall become
       payable on the shares of such series, (iii) the terms on which the same
       may be redeemed, (iv) the terms or amount of any sinking fund provided
       for the purpose of redemption thereof, and (v) the terms upon which the
       holders thereof may convert the same into stock of any other class or
       classes, or into one or more series of the same class, or of another
       class or classes, as may be determined by the Board of Directors at the
       time of the creation of each series, but the amount at which said stock
       may be redeemed shall in no case be less than the par value thereof.

    (2)The shares of each series of the Preferred Stock and of the Preferred
       Stock A shall entitle the holders thereof to receive out of the retained
       earnings of the Corporation or net profits earned during the current or
       preceding accounting period (each said period to be not less than six
       months or more than one year in duration) or, if retained earnings and
       net profits are not available, out of capital surplus, a dividend at the
       annual rate fixed for the particular series, but not exceeding such
       rate, cumulative from and after the date of issuance thereof, payable
       quarterly on the 16th day of March, June, September and December of each
       year (or, if any such day shall not be a business day, on the next
       succeeding business day) or at such intervals and on such dates as
       otherwise are expressly set forth in the resolution of the Board of
       Directors creating such series or, if such intervals and dividend
       payment dates shall vary from time to time for such series, the method
       by which such intervals and dates shall be determined, before any
       dividend shall be set apart for or paid on the Serial Preferred Stock,
       the Preference Stock or the Common Stock. Any dividends declared or paid
       on the Preferred Stock or the Preferred Stock A in an amount less than
       full cumulative dividends payable at such time upon all shares of the
       Preferred Stock or the Preferred Stock A outstanding shall, if more than
       one series be outstanding, be divided among the different series in
       proportion to the aggregate amounts that would be distributable to the
       Preferred Stock simultaneously declared and paid thereon at such time
       without regard to the applicable dividend payment dates.

    (3)All series of the Preferred Stock shall rank equally and be alike in all
       respects except for the variations and differences between series herein
       expressly provided for, and all series of the Preferred Stock A shall
       rank equally and be alike in all respects except for the variations and
       differences between series herein expressly provided for.

    (4)In case of liquidation or dissolution or distribution of the assets of
       the Corporation, there shall be paid (a) to the holders of the Preferred
       Stock (i) in case such liquidation, dissolution or distribution shall be
       voluntary, $105 per share, and (ii) in case such liquidation,
       dissolution or distribution shall be involuntary, $100 per share, and
       (b) to the holders of the Preferred Stock A (i) in case such
       liquidation, dissolution or distribution shall be voluntary, $26.25 per
       share, and (ii) in case such liquidation, dissolution or distribution
       shall be involuntary, $25 per share, plus in each case the amount of
       dividends (if any) accumulated and unpaid thereon, before any amount
       shall be payable to the holders of the Serial Preferred Stock, the
       Preference Stock or the Common Stock; the balance of the assets of the
       Corporation, subject to the rights of the holders of the Serial
       Preferred Stock and the holders of the Preference Stock, shall be
       distributed ratably among the holders of the Common Stock.

    (5)Holders of the Preferred Stock and of the Preferred Stock A shall not be
       entitled to any payment by way of dividends or otherwise, or have any
       rights in the property of the Corporation or in the distribution
       thereof, other than specifically provided in the preceding paragraphs.

                                                                            A-1



    (6)The Preferred Stock or the Preferred Stock A may be called for
       redemption in whole or in part on any dividend date at the option of the
       Board of Directors by mailing notice thereof to the holders of record of
       the shares to be redeemed at least thirty (30) days prior to the date
       fixed for redemption, and such shares may be then redeemed by paying for
       each share so called all accrued and unpaid dividends thereon to the
       date fixed for such redemption and such additional sum as shall have
       been fixed by the Board of Directors as the redemption price of stock of
       the series of which the stock so to be redeemed is a part. Whenever less
       than all of the outstanding shares of the Preferred Stock or of the
       Preferred Stock A of any series are to be redeemed, either (i) the
       shares of such series to be redeemed shall be selected by lot in such
       manner as may be prescribed by the Board of Directors, or (ii) the
       redemption shall be made in such manner that each holder of the
       Preferred Stock or of the Preferred Stock A of the series to be redeemed
       shall participate therein in the proportion that the number of shares of
       such series to be redeemed bears to the whole number of shares of stock
       of that series then outstanding, provided that there shall be no
       obligation to redeem less than a whole share. From and after the date of
       redemption, unless default be made by the Corporation in payment of the
       redemption price pursuant to such notice, all dividends on the shares
       called for redemption shall cease to accrue, and all rights of the
       holders thereof in respect of such stock, except the right to receive
       the redemption price plus accrued and unpaid dividends to the date fixed
       for such redemption, shall cease and determine.

    (7)No holder of any of the Preferred Stock or of the Preferred Stock A
       shall be entitled to vote at any election of directors or, except as
       otherwise required by statute and except as provided in paragraphs (8),
       (9), (10) and (11) of this section (a) of Article IV, on any other
       matter submitted to the shareholders, provided that if and whenever
       dividends on any part of the Preferred Stock or of the Preferred Stock A
       shall be in arrears in an amount equivalent to the aggregate dividends
       required to be paid on such Preferred Stock or such Preferred Stock A in
       any period of twelve (12) calendar months the holders of the Preferred
       Stock as a class shall thereafter at all elections of directors have the
       exclusive right to elect such number of directors of the Corporation as
       shall constitute a majority of the authorized number of directors, the
       holders of the Preferred Stock A as a class shall thereafter at all
       elections of directors have the exclusive right to elect two directors,
       and the holders of the Common Stock of the Corporation [as a class] and
       the holders of such series of the Serial Preferred Stock as are entitled
       to vote generally with respect to the election of directors, voting
       together, shall have the exclusive right, subject to the right, if any,
       of holders of the Serial Preferred Stock to elect directors, and the
       right of the holders of the Preference Stock as a class to elect two
       directors, under certain circumstances, to elect the remaining number of
       directors of the Corporation which right of the holders of the Preferred
       Stocks, however, shall cease when all accrued and unpaid dividends on
       the Preferred Stocks shall have been paid in full. The terms of office
       of all persons who may be directors of the Corporation at the time when
       the right to elect directors shall accrue to the holders of the
       Preferred Stocks, as herein provided, shall terminate upon the election
       of their successors at the next annual meeting of the shareholders or at
       an earlier special meeting of the shareholders held as hereinafter
       provided. Such special meeting shall be held at any time after the
       accrual of such voting power, upon notice similar to that provided in
       the By-Laws for an annual meeting, which notice shall be given at the
       request in writing of the holders of not less than ten (10%) percent of
       the number of shares of the then outstanding Preferred Stocks, addressed
       to the Secretary of the Corporation at its principal business office.
       Upon the termination of such right of the holders of the Preferred
       Stocks to elect directors of the Corporation, the terms of office of all
       the directors of the Corporation shall terminate upon the election of
       their successors at the next annual meeting of the shareholders or at an
       earlier special meeting of the shareholders held as hereinafter
       provided. Such special meeting shall be held at any time after the
       termination of such right of the holders of the Preferred Stocks to
       elect directors, upon notice similar to that provided in the By-Laws for
       an annual meeting, which notice shall be given at the request in writing
       of the holders of not less than ten (10%) percent of the number of the
       [shares of] then outstanding [Common Stock] shares of stock of all
       classes of the Corporation entitled to vote generally with respect to
       the election of directors, addressed to the Secretary of the Corporation
       at its principal business office.

    (8)(i)So long as any of the Preferred Stock remains outstanding, the
          authorization of the holders of at least two-thirds (2/3) of the
          Preferred Stock then outstanding, voting as a class regardless of
          series (given at a meeting called for that purpose), shall be
          necessary for effecting or validating the amendment, alteration,
          change or repeal of any of the express terms of the Preferred Stock,
          or any series thereof, then outstanding, in a manner prejudicial to
          the holders thereof; provided that if any such amendment, alteration,
          change or repeal would be prejudicial to the holders of the shares of
          one or more, but not all, of the series of the Preferred Stock at the
          time outstanding, such authorization shall be required only of the
          holders of at least two-thirds (2/3) of the total number of
          outstanding shares of all series so affected.

      (ii)So long as any of the Preferred Stock A remains outstanding, the
          authorization of the holders of at least two-thirds (2/3) of the
          Preferred Stock A then outstanding, voting as a class regardless of
          series (given at a meeting called for that purpose), shall be
          necessary for effecting or validating the amendment, alteration,
          change or repeal of any of the express terms of the Preferred Stock
          A, or any series thereof, then outstanding, in a manner prejudicial
          to the holders thereof; provided that if any such amendment,
          alteration, change or repeal would be prejudicial to the holders of
          the shares of one or more, but not all, of the series of the
          Preferred Stock A at the time outstanding, such authorization shall
          be required only of the holders of at least two-thirds (2/3) of the
          total number of outstanding shares of all series so affected.

    (9)So long as any of the Preferred Stock or of the Preferred Stock A
       remains outstanding, the affirmative vote of the holders of at least
       two-thirds (2/3) of the Preferred Stock then outstanding, voting as a
       class regardless of series, and the affirmative vote of the holders of
       at least two-thirds (2/3) of the Preferred Stock A then outstanding,
       voting as a class regardless of series, shall be necessary to enable the
       Corporation to issue shares of Preferred Stock in excess of 250,000
       shares or shares of Preferred Stock A in excess of 1,000,000 shares,

A-2



       or any other class of stock having rights in the distribution of the
       earnings or assets of the Corporation prior to or on a parity with those
       of the Preferred Stock or of the Preferred Stock A, or any obligations
       convertible into or evidencing the right to purchase any of such shares
       of stock, unless both

       (i)the net earnings of the Corporation available for dividends on the
          Preferred Stock and on the Preferred Stock A, determined in
          accordance with generally accepted accounting practices, for any
          twelve (12) consecutive calendar months within the fifteen (15)
          calendar months preceding the month within which the additional
          shares shall be issued, shall have been at least twice the dividend
          requirements for a twelve (12) months' period upon the entire amount
          of the Preferred Stock and of the Preferred Stock A and all such
          other stock ranking prior to or on a parity with the Preferred Stock
          and the Preferred Stock A as to dividends or other distributions to
          be outstanding immediately after the proposed issue of shares of the
          Preferred Stock or of the Preferred Stock A or such other stock, and

      (ii)the total net assets of the Corporation at a date not more than
          ninety (90) days prior to the date on which the proposed stock is to
          be issued shall equal at least twice the aggregate amount payable,
          upon the involuntary liquidation of the Corporation, to the holders
          of the Preferred Stock and of the Preferred Stock A and such other
          stock to be outstanding immediately after the proposed issue of such
          additional shares.

   (10)So long as any of the Preferred Stock or of the Preferred Stock A
       remains outstanding, the affirmative vote of the holders of at least
       two-thirds (2/3) of the Preferred Stock then outstanding, voting as a
       class regardless of series, and the affirmative vote of the holders of
       at least two-thirds (2/3) of the Preferred Stock A then outstanding,
       voting as a class regardless of series, shall be necessary to authorize
       the creation of, or an increase in the authorized number of shares of,
       any stock having preferential rights in the distribution of earnings or
       assets of the Corporation prior to or on a parity with those of the
       outstanding Preferred Stock or of the outstanding Preferred Stock A.

   (11)So long as any of the Preferred Stock or of the Preferred Stock A
       remains outstanding, the consent or authorization of the holders of at
       least two-thirds (2/3) of the Preferred Stock then outstanding, voting
       as a class regardless of series (given at a meeting called for that
       purpose), and the consent or authorization of the holders of at least
       two-thirds (2/3) of the Preferred Stock A then outstanding, voting as a
       class regardless of series (given at a meeting called for that purpose),
       shall be necessary for effecting or validating (i) the sale or exchange
       of all, or substantially all, of the property and assets of the
       Corporation, or (ii) the merger or consolidation of the Corporation with
       any other corporation or corporations (other than subsidiaries of the
       Corporation); provided that the provisions of this paragraph shall not
       apply to the purchase or other acquisition by the Corporation of
       franchises or other assets of another corporation, or to any merger or
       consolidation ordered or authorized by the Federal Power Commission or
       by any succeeding regulatory authority of the United States having
       jurisdiction in the premises.

   (12)At any meeting at which the holders of the Preferred Stock or of the
       Preferred Stock A shall have the right to vote as a class, the presence
       in person or by proxy of the holders of a majority of the outstanding
       shares of the Preferred Stock or of the Preferred Stock A shall be
       required to constitute a quorum of such class. Whenever the holders of
       the outstanding Preferred Stock or of the outstanding Preferred Stock A
       shall have the right to vote, each holder thereof shall be entitled to
       one vote for each share standing in his name.

(b)Serial Preferred Stock

    (1)The Serial Preferred Stock may be issued from time to time as herein
       provided in one or more series. The Board of Directors is hereby
       expressly granted authority, subject to the provisions of this Article
       IV, to issue from time to time Serial Preferred Stock in one or more
       series out of the then authorized and unissued shares of Serial
       Preferred Stock and with respect to each series to fix, by resolution or
       resolutions providing for the issuance of such series, such
       designations, preferences, limitations and relative rights of such
       series as may be permitted to be fixed by the Board of Directors by the
       laws of the State of North Carolina as in effect at the time the
       particular series is authorized, including, without limitation,
       authority so to fix any one or more of the following:

       (i)the designation of such series;

      (ii)the number of shares of the series

     (iii)the dividend rate or rates, if any, thereof (or method of determining
          such dividends), the conditions and dates upon which such dividends
          shall be payable, the preference or relation of such dividends,
          subject to the provisions of this Article IV, to dividends payable on
          any other class or classes of capital stock of the Corporation, and
          whether such dividends shall be cumulative or noncumulative;

      (iv)whether the shares of such series shall be subject to redemption by
          the Corporation, and, if made subject to such redemption, the times,
          prices, rates, adjustments and other terms and conditions of such
          redemption;

       (v)the terms and amount of any sinking or similar fund provided for the
          purchase or redemption of the shares of such series;

                                                                            A-3



      (vi)providing that the shares of such series may be convertible into or
          exchangeable for shares of Common Stock or other securities of the
          Corporation or of any other corporation or other entity and the
          times, prices, rates, adjustments and other terms and conditions of
          such conversion or exchange;

     (vii)the extent, if any, to which the holders of the shares of such series
          shall be entitled to vote as a series or otherwise, subject to the
          provisions of this Article IV and as otherwise may be provided by
          law, with respect to the election of directors or otherwise;

    (viii)the restrictions and conditions, if any, upon the issue of any
          additional Serial Preferred Stock ranking on a parity with or prior
          to such shares as to dividends or upon dissolution;

      (ix)the rights of the holders of the shares of such series upon the
          liquidation, dissolution or distribution of the assets of the
          Corporation, which rights may be different in case such liquidation,
          dissolution or distribution shall be voluntary or involuntary; and

       (x)any other preferences, limitations or relative rights of shares of
          such series consistent with this Article IV and applicable law.

All shares of the Serial Preferred Stock of the same series shall be identical
in all respects. All shares of the Serial Preferred Stock, irrespective of
series, shall constitute one and the same class of stock, shall be of equal
rank and shall be identical in all respects except that to the extent not
otherwise limited in this Article IV any series may differ from any other
series with respect to any one or more of the designations, preferences,
limitations and relative rights described or referred to in subparagraphs (i)
to (x), inclusive above.

(c) Preference Stock

    (1)The Preference Stock may be issued from time to time as herein provided
       in one or more series. The Board of Directors of the Corporation is
       hereby expressly granted authority, subject to the provisions of this
       Article IV, to issue from time to time Preference Stock in one or more
       series out of the then authorized and unissued shares of Preference
       Stock and with respect to each series to fix, by resolution or
       resolutions providing for the issuance of such series, such
       designations, preferences, limitations and relative rights of such
       series as may be permitted to be fixed by the Board of Directors by the
       laws of the State of North Carolina as in effect at the time the
       particular series is authorized by the Board of Directors, including,
       without limitation, authority so to fix any one or more of the following:

       (i)the distinctive designation of such series and the number of shares
          which shall constitute such series;

      (ii)the annual dividend rate for the shares of such series;

     (iii)the terms on which shares of such series may be redeemed, including,
          without limitation, the redemption price or prices for such series,
          which may consist of a redemption price or scale of redemption prices
          applicable only to redemption in connection with a sinking fund and
          the same or a different redemption price or scale of redemption
          prices applicable to any other redemption;

      (iv)the terms and amount of any sinking fund provided for the purchase or
          redemption of shares of such series;

       (v)the amount per share payable on the shares of such series upon the
          voluntary and involuntary liquidation, dissolution or winding up of
          the Corporation, which amount may vary depending upon whether such
          liquidation, dissolution or winding up is voluntary or involuntary;
          and

      (vi)the terms and conditions, if any, upon which holders of shares of
          such series may convert the same into, or exchange the same for,
          Common Stock, as well as provisions for adjustment of the conversion
          rate in such events as the Board of Directors shall determine.

       All shares of Preference Stock of the same series shall be identical in
       all respects. All shares of Preference Stock, irrespective of series,
       shall constitute one and the same class of stock, shall be of equal rank
       and shall be identical in all respects except that to the extent not
       otherwise limited in this Article IV any series may differ from any
       other series with respect to any one or more of the designations,
       preferences, limitations and relative rights described or referred to in
       subparagraphs (i) to (vi), inclusive above.

    (2)Subject to full dividends accrued on all outstanding shares of Preferred
       Stocks and Serial Preferred Stock for all past dividend periods and for
       the then current dividend period having been paid or declared and set
       apart for payment, holders of the Preference Stock shall be entitled to
       receive, but only when and as declared by the Board of Directors out of
       funds legally available for the declaration and payment of dividends,
       cumulative dividends in cash at the annual dividend rate per share fixed
       for the particular series, and no more, payable in respect of each
       quarterly dividend period, commencing on the date specified for the
       first dividend payment to shareholders of record on the respective dates
       fixed in advance for the purpose by the Board of Directors prior to the
       payment of each such dividend, which record date for each dividend shall
       be the same for all series.


A-4



       Dividends on shares of each series of the Preference Stock shall be
       cumulative:

       (i)on shares of any series issued prior to the first dividend payment
          date for such series, from the date of issuance of such shares; and

      (ii)on shares of any series issued on or after such first dividend
          payment date, from the quarterly dividend payment date next preceding
          the date of issuance of such shares or from the date of issuance if
          that be a dividend payment date.

       No dividend shall be declared on any series of the Preference Stock for
       any quarterly dividend period unless there shall have been paid or
       declared and set apart for payment like proportionate dividends,
       ratably, in proportion to the annual dividend rates fixed therefor, on
       all shares at the time outstanding of all series of the Preference
       Stock, in respect of the same quarterly dividend period to the extent
       that such shares are entitled to receive dividends for such quarterly
       dividend period.

       The expression "dividends accrued," as used in this paragraph (2) and in
       any resolutions providing for the issuance of series of the Preference
       Stock, shall mean the sum of amounts in respect of shares of the
       particular class or series then outstanding which, as to each share,
       shall be an amount computed at the dividend rate per annum fixed for the
       particular share from the date from which dividends on such share became
       cumulative to the date with reference to which the expression is used,
       irrespective of whether such amount or any part thereof shall have been
       declared as dividends or there shall have existed any funds legally
       available for the declaration and payment thereof, less the aggregate of
       all dividends paid on such share.

       No dividend shall be declared or paid or set aside for payment or other
       distribution declared or made upon the Common Stock, nor shall any
       Common Stock be purchased or otherwise acquired for any consideration by
       the Corporation or any subsidiary, while any of the Preference Stock is
       outstanding, unless, in each case:

       (a)full dividends accrued on all outstanding shares of the Preference
          Stock for all past dividend periods shall have been paid or declared
          and set apart for payment; and

       (b)the Corporation shall have made, or set aside for payment, all
          payments, if any, then or theretofore due under the requirements of
          any sinking fund for the purchase or redemption of shares of any
          series of the Preference Stock.

    (3)Except as otherwise provided by law, the holders of the Preference Stock
       shall not have any right to vote for the election of directors or for
       any other purpose except as set forth below:

       (i)In the event that at any time, or from time to time:

           (a)six (6) or more quarterly dividends, whether consecutive or not,
              on any series of the Preference Stock shall be in arrears and
              unpaid, whether or not earned or declared; or

           (b)the Corporation shall not have made, or set aside for payment,
              all payments, if any, then or theretofore due under the
              requirements of any sinking fund for the purchase or redemption
              of shares of any series of the Preference Stock;

          the holders of the Preference Stock of all series then outstanding,
          voting as a class without regard to series, shall have, subject to
          the rights of the holders of the Preferred Stocks and the rights, if
          any, of holders of the Serial Preferred Stock to elect directors
          under certain circumstances, the exclusive right to elect two
          directors at the next annual meeting of shareholders. In any such
          event, subject to the voting rights of the Preferred Stocks and the
          voting rights, if any, of the Serial Preferred Stock to elect
          directors under certain circumstances, the holders of the Common
          Stock and the holders of such series of the Serial Preferred Stock as
          are entitled to vote generally with respect to the election of
          directors, to the exclusion of the holders of the Preference Stock
          entitled to elect two members of the Board pursuant to this paragraph
          (3), voting together, shall be entitled to elect the balance of the
          Board of Directors.

          The voting rights of the holders of the Preference Stock to elect two
          directors shall continue until:

           (x)all dividends on the Preference Stock in arrears shall have been
              paid in full and dividends on the Preference Stock for the
              current dividend period shall have been paid or declared and set
              aside for payment; and

           (y)all payments, if any, then or theretofore due under the
              requirements of any sinking fund for the purchase or redemption
              of shares of any series of the Preference Stock shall have been
              made or set aside for payment;

          in which event the voting rights of the holders of the Preference
          Stock to elect two directors shall terminate, subject to revival as
          aforesaid, upon the occurrence of any of the events specified in (a)
          or (b) of this clause (i) of this paragraph (3), and in the event of
          the termination of such voting right, the directors who have been
          elected by the holders of the Preference Stock shall continue in
          office until the next annual meeting of shareholders.

                                                                            A-5



      (ii)The affirmative approval of the holders of at least two-thirds (2/3)
          of the Preference Stock at the time outstanding, voting as a class
          without regard to series, shall be required for any amendment of the
          Articles of Incorporation altering materially any existing provision
          of the Preference Stock or for the creation, or an increase in the
          authorized amount, of any class of stock ranking, as to dividends or
          assets, prior to the Preference Stock, and the affirmative approval
          of the holders of at least a majority of the Preference Stock at the
          time outstanding, voting as a class without regard to series, shall
          be required for an increase in the authorized amount of the
          Preference Stock or for the creation, or an increase in the
          authorized amount, of any class of stock ranking, as to dividends or
          assets, on a parity with the Preference Stock; provided, however,
          that if any amendment of the Articles of Incorporation shall affect
          adversely the rights or preferences of one or more, but not all, of
          the series of Preference Stock at the time outstanding or shall
          unequally adversely affect the rights or preferences of different
          series of Preference Stock at the time outstanding, the affirmative
          approval of the holders of at least two-thirds (2/3) of such shares
          of each such series so adversely or unequally adversely affected
          shall be required in lieu of or (if such affirmative approval is
          required by law) in addition to the affirmative approval of the
          holders of at least two-thirds (2/3) of the outstanding shares of
          Preference Stock as a class.

          At any meeting at which the holders of the Preference Stock shall
          have the right to vote as a class, the presence in person or by proxy
          of the holders of a majority of the outstanding shares of Preference
          Stock shall be required to constitute a quorum of such class. Each
          holder of Preference Stock entitled to vote at any particular time
          shall have one vote for each share of stock held of record by him.

    (4)The Preference Stock shall rank junior to the Preferred Stocks and the
       Serial Preferred Stock with respect to the distribution of assets of the
       Corporation. After the payment to the holders of the Preferred Stocks
       and the Serial Preferred Stock of all amounts payable to them in the
       event of any liquidation or dissolution or distribution of the assets
       (whether voluntary or involuntary) of the Corporation, in the event of
       any liquidation, dissolution or winding up (whether voluntary or
       involuntary) of the Corporation, the holders of each series of the
       Preference Stock at the time outstanding shall be entitled to be paid in
       cash the distributive amount fixed for the particular series, which
       shall include dividends accrued thereon to the date fixed for payment of
       such distributive amounts, and no more, before any such distribution or
       payment shall be made to the holders of Common Stock. Neither the
       consolidation nor merger of the Corporation with or into any other
       corporation or corporations, nor the sale or transfer by the Corporation
       of all or any part of its assets, shall be deemed a liquidation,
       dissolution or winding up of the Corporation.

       In the event of any liquidation, dissolution or winding up (whether
       voluntary or involuntary) of the Corporation, no payment shall be made
       to the holders of any series of the Preference Stock unless there shall
       likewise be paid at the same time to the holders of all shares at the
       time outstanding of each series of the Preference Stock like
       proportionate distributive payments, ratably, in proportion to the full
       distributive payments to which they are respectively entitled.

    (5)The Corporation, at the option of the Board of Directors, may redeem at
       any time or times, and from time to time, all or any part of any one or
       more series of Preference Stock outstanding upon notice duly given as
       hereinafter specified, by paying for each share the then applicable
       redemption price fixed by the Board of Directors as provided herein,
       plus an amount equal to dividends accrued thereon to the date fixed for
       redemption; provided, however, that a notice specifying the shares to be
       redeemed and the time and place of redemption shall be mailed, addressed
       to the holders of record of the Preference Stock to be redeemed at their
       respective addresses as the same shall appear upon the books of the
       Corporation, not less than thirty (30) days prior to the date fixed for
       redemption. If less than the whole amount of any outstanding series of
       Preference Stock is to be redeemed, the shares of such series to be
       redeemed shall be selected by lot or pro rata in any manner determined
       by resolution of the Board of Directors to be fair and proper. From and
       after the date fixed in any such notice as the date of redemption
       (unless default shall be made by the Corporation in providing moneys at
       the time and place of redemption for the payment of the redemption
       price) all dividends upon the Preference Stock so called for redemption
       shall cease to accrue, and all rights of the holders of said Preference
       Stock as shareholders in the Corporation, except the right to receive
       the redemption price upon surrender of the certificate representing the
       Preference Stock so called for redemption, duly endorsed for transfer,
       if required, shall cease and determine. With respect to any shares of
       Preference Stock so called for redemption, if, before the redemption
       date, the Corporation shall deposit with a bank or trust company in the
       Borough of Manhattan, City of New York, having a capital and surplus of
       at least $5,000,000, funds necessary for such redemption, in trust, to
       be applied to the redemption of the shares of Preference Stock so called
       for redemption, then from and after the date of such deposit, all rights
       of the holders of such shares of Preference Stock, so called for
       redemption, shall cease and determine, except the right to receive, on
       and after the redemption date, the redemption price upon surrender of
       the certificates representing such shares of Preference Stock, so called
       for redemption, duly endorsed for transfer, if required. Any interest
       accrued on such funds shall be paid to the Corporation from time to
       time. Any funds so deposited and unclaimed at the end of six (6) years
       from such redemption date shall be released or repaid to the
       Corporation, after which the holders of such shares of Preference Stock
       so called for redemption shall look only to the Corporation for payment
       of the redemption price.

       If at any time the Corporation shall have failed to declare and pay or
       set apart for payment dividends in full upon the Preference Stock of all
       series for all past dividend periods, or shall not have made, or set
       aside for payment, all payments, if any, then or theretofore due under
       the requirements of any sinking fund for the purchase or redemption of
       shares of any series of the Preference Stock, thereafter and until all
       such dividends shall have been paid in full or declared and set apart
       for payment and all sinking fund payments shall have

A-6



       been made, or set aside for payment, the Corporation shall not redeem or
       purchase, or permit any subsidiary to purchase, for any purpose, any
       shares of Preference Stock of any series, unless all shares of
       Preference Stock of all series then outstanding shall be redeemed or
       purchased.

(d)Common Stock

    (1)The Corporation may, from time to time, issue and sell any of its
       authorized and unissued shares of Common Stock for such consideration,
       upon such terms and in such manner as may from time to time be fixed and
       determined by the Board of Directors, and any and all such shares so
       issued, the full consideration for which shall have been paid, shall be
       conclusively deemed to be fully paid and nonassessable.

    (2)Whenever the full dividends on the Preferred Stocks, on the Serial
       Preferred Stock and on the Preference Stock at the time outstanding for
       all past dividend periods and for the then current dividend period shall
       have been paid, or declared and a sum sufficient for the payment thereof
       set apart, then, and then only, such dividends (payable in cash, stock
       or otherwise) as may be determined by the Board of Directors, may be
       declared and paid on the Common Stock, from time to time, out of the
       remaining retained earnings or net profits of the Corporation, and the
       Preferred Stocks, the Serial Preferred Stock or the Preference Stock
       shall not be entitled to participate in any such dividends, whether
       payable in cash, stock or otherwise.

    (3)In the event of any liquidation, dissolution or winding up of the
       Corporation, whether voluntary or involuntary, after payment in full has
       been made to the holders of the Preferred Stocks, to the holders of the
       Serial Preferred Stock and to the holders of the Preference Stock of the
       amounts to which they are respectively entitled or sufficient sums have
       been set apart for the payment thereof, the holders of the Common Stock
       shall be entitled to receive ratably any and all assets remaining to be
       paid or distributed, and neither the holders of the Preferred Stocks,
       the holders of the Serial Preferred Stock nor the holders of the
       Preference Stock shall be entitled to share therein.

    (4)Holders of the Common Stock shall be entitled to one (1) vote for each
       share of such stock held at any and all meetings of the shareholders of
       the Corporation, and, except as otherwise stated in this Article IV or
       as otherwise provided by law or by the resolution or resolutions fixing
       the designations, preferences, limitations and relative rights of any
       series of Serial Preferred Stock, the exclusive voting power for all
       purposes shall be vested in the holders of the Common Stock.

                                                                            A-7



                                   Exhibit B

 Extract from the Articles of Incorporation of Duke Energy Corporation showing
            the proposed amendment. Italics indicate the addition.

                                  Article VII

In addition to any requirements of the By-Laws and the North Carolina Business
Corporation Act as in effect from time to time (and notwithstanding the fact
that a lesser vote may be specified by the By-Laws or the North Carolina
Business Corporation Act), the affirmative vote of the holders of at least a
majority of the combined voting power of the then outstanding shares of stock
of all classes of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required for the
shareholders of the Corporation to adopt, amend, alter, change or repeal any
provisions contained in the By-Laws of the Corporation. The provisions of this
Article VII may not be altered, amended or repealed in any respect, nor may any
provision inconsistent therewith be adopted, unless such alteration, amendment,
repeal or adoption is approved by the affirmative vote of the holders of at
least a majority of the combined voting power of the then outstanding shares of
stock of all classes of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.

                                                                            B-1



                                                             [LOGO] Duke Energy
                                                             (R)





Duke Energy will conduct its annual shareholders meeting on April 25, 2002 at
10:00 a.m. in the O.J. Miller Auditorium, located in the Energy Center at 526
South Church Street in Charlotte, North Carolina.

DIRECTORS
1.  Class II Directors:  01- G. Alex Bernhardt, Sr. 02- William A. Coley
                         03- Max Lennon             04- Leo E. Linbeck, Jr.
    Class I Director:    05- James T. Rhodes

Directors Recommend
For ALL -

PROPOSALS

2. Ratification of appointment of auditors.                             For -

   Amendment of articles of incorporation to:

3A. update corporate purpose clause.                                    For -

3B. authorize serial preferred stock.                                   For -

3C. increase shareholder vote required to change by-laws.               For -

3D. decrease permissible range of size of board of directors.           For -

 4.  Shareholder proposal regarding investments in alternative
        energy sources.                                                Against -

 5.  Shareholder proposal regarding role of board of directors
 in long-term strategic planning.                                      Against -

 6.  Shareholder proposal regarding appointment of independent
        auditors who only render audit services.                       Against -

 7.  Shareholder proposal regarding study of risk and
        responsibility for public harm due to nuclear program.         Against -


Account         As of February 28, 2002          [LOGO]


To vote, mark an "X" in the appropriate box.

1. For ALL Nominees                   For ALL EXCEPT the following:
                                      (Write number[s] of nominee[s] below)

   Withhold Authority
For   Against   Abstain

                                      The Board of Directors recommends a
2.                                    vote "FOR" each of the nominees
                                      listed at left, "FOR" Proposals 2,
                                      3A, 3B, 3C, 3D and "AGAINST"
   For Against Abstain                Proposals 4, 5, 6 and 7.

3A.
   For Against Abstain

3B.
   For Against Abstain                        Mark this box if, in the
                                              future, you would prefer
3C.                                           to view the annual report
                                              and proxy statement via
   For Against Abstain                        the Duke Energy website
                                              (www.duke-energy.com).
3D.                                           You will still receive this
   For Against Abstain                        voting form by U.S.Mail
                                              if you mark the box.
4.
   For Against Abstain
                                          ---------------
5.                                        See reverse for
   For Against Abstain                    telephone and
                                          Internet voting
6.                                        instructions.
   For Against Abstain                    ---------------

7.






If you are voting by mail, sign here as name(s) appear(s) above.

----------------------------------------------------------------
                                      Date              ,2002
----------------------------------------------------------------

If you are voting by mail, please sign and date this proxy and return it
promptly whether or not you plan to attend the meeting. If signing for a
corporation or partnership or as agent, attorney or fiduciary, indicate the
capacity in which you are signing. Each joint owner should sign. If you do
attend the meeting and decide to vote by ballot, such vote will supersede this
proxy.



DUKE ENERGY CORPORATION
Annual Meeting of Shareholders
April 25, 2002 at 10:00 a.m.
Energy Center - O.J. Miller Auditorium
526 South Church Street
Charlotte, North Carolina


PROXY SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS


The undersigned hereby appoints R.B. Priory, R.P.
Brace and R.W. Blackburn, and each of them,
proxies, with the powers the undersigned would
possess if personally present, and with full power
of substitution, to vote all shares of Common Stock of
Duke Energy Corporation of the undersigned at the
annual meeting of shareholders to be held in the
Energy Center, 526 South Church Street, Charlotte,
North Carolina, on April 25, 2002, and at any
adjournment thereof, upon all subjects that may
come before the meeting, including the matters
described in the proxy statement furnished herewith,
subject to any directions indicated on the reverse
side of this card. If no directions are given, the
individuals designated above will vote for the
election of all director nominees, in accord with
the directors' recommendations on the other
subjects listed on the reverse of this card and at
their discretion on any other matter that may
come before the meeting.

Your vote for the election of directors may be
indicated on the reverse. Nominees are
G. Alex Bernhardt, Sr., William A. Coley, Max
Lennon, Leo E. Linbeck, Jr. and James T. Rhodes.


If you are voting by mail, please sign on the
reverse and return promptly in the enclosed return
envelope. To vote by telephone or Internet, see
instructions to the right.


Investor Relations Department
526 South Church Street
PO Box 1005
Charlotte, NC 28201-1005
(704) 382-3853 Charlotte
(800) 488-3853 Toll-Free
(704) 382-3814 Fax


VOTE BY TELEPHONE OR INTERNET
q u i c k  o  e a s y  o  i m m e d i a t e

Your telephone or Internet vote authorizes the named right of this form.
proxies to vote your shares in the same manner as if you marked, signed and
returned your proxy card.

VOTE BY PHONE:

You will be asked to enter a control number located in the box in the lower
right of this form

Option A: To vote as the Board of Directors recommends for all nominees and on
          all proposals: Press 1

Option B: If you choose to vote on each item separately, press 0. You will hear
          these instructions:

          Directors: To vote FOR ALL nominees, press 1;
                     To WITHHOLD FOR ALL nominees, press 9;
                     To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and
                     listen to the instructions.

          Proposals: To vote FOR, press 1;
                     To vote AGAINST, press 9;
                     To ABSTAIN, press 0.

          The instructions are the same for all proposals to be voted.

When asked, you must confirm your vote by pressing 1.

VOTE BY INTERNET:

The Website address is www.proxyvoting.com/dukeenergy

You will be asked to enter the control number located in the box in the
lower right of this form. Then follow the instructions on the screen.

TO VOTE BY PHONE                                         ------------
Call -- Toll Free -- On a Touch Tone Telephone
1-888-457-2966  Anytime
There is NO CHARGE to you for this call.                 ------------

                                 Control Number - For Telephone/Internet Voting

If you vote by phone or Internet, DO NOT mail the proxy card. Thank you for
voting.