OVERVIEW Although the Duke Energy Corp. board of directors claimed a good faith exercise of its fiduciary duty in appointing a new CEO following the close of the merger with Progress Energy Inc., we view the lack of transparency associated with this process and with some board members--and which resulted in regulatory hearings and investigations in North Carolina--as significantly heightening regulatory risk for Duke Energy and weakening its consolidated business risk profile. We are lowering our corporate credit ratings on Duke Energy and its subsidiaries to 'BBB+' from 'A-' and are affirming our 'A-2' short-term rating on Duke Energy. We are removing the ratings from CreditWatch with negative implications. We are affirming our corporate credit rating on Progress Energy and
