Duke's Emission Reduction Credit Certificate

CERTIFICATE NUMBER: 694-Z1

ISSUED TO: Duke Energy Morro Bay LLC

LEGAL OWNER 1290 Embarcadero Road, Morro Bay, California 93442

Pursuant to Section 40709 of the California State Health and Safety Code and Rule 211 of the San Luis Obispo County Air Pollution Control District, it is hereby certified that the following emission reduction credit is recorded in the name of the legal owner listed above.

This emission reduction occurred from the elimination fuel oil firing in the Morro Bay Power Plant boilers, Permit to Operate 113, application number 2894, and bank log number 2000-35.

POLLUTANT: SOx
CREDIT AMOUNT: 194.93 tons/year
1st QUARTER: 50%
2nd QUARTER: 16.7%
3rd QUARTER: 0%
4th QUARTER: 33.3%

POLLUTANT: PM10
CREDIT AMOUNT: 17.22 tons/year
1st QUARTER: 50%
2nd QUARTER: 16.7%
3rd QUARTER: 0%
4th QUARTER: 33.3%

POLLUTANT: NOx
CREDIT AMOUNT: 8.19 tons/year
1st QUARTER: 50%
2nd QUARTER: 16.7%
3rd QUARTER: 0%
4th QUARTER: 33.3%

CONDITIONS:

1. Transfer of all or any portion of this Emission Reduction Credit (ERC) shall be in writing signed by the holder of the ERC in any form authorized by law. Transfer of title shall be complete upon filing such a deed or other instrument in the District’s office and payment of the fee required by District Rule 306.
2. The use of banked Emission Reduction Credits to offset proposed increases are subject to the approval of the Air Pollution Control Officer and subject to all applicable rules and regulations in effect at the time of use.
3. Except as otherwise set forth above, the legal owner shall have exclusive rights to use and to authorize the use of the approved credits.
4. The emission reduction credits represented in this certificate for NOx, SOx and PM10 are not valid until December 31, 2002.
5. The emission reduction credits represented in this certificate for NOx are not valid unless the Morro Bay Power Plant has a permit condition limiting the emissions from boiler unit number 4 to 10 ppm at 3% oxygen on a dry basis or until the boiler is permanently shutdown.
6. The emission reduction credits represented in this certificate are not valid unless the Morro Bay Power Plant completes a modification of Permit to Operate Number 113 that prohibits the use of oil as a fuel.

The emission reduction credits represented in this certificate are limited for use as offsets for projects at the Morro Bay Power Plant site.

ISSUANCE DATE: November 20, 2000
{signed}
ROBERT W. CARR
AIR POLLUTION CONTROL OFFICER