U-1

                                                       File No. 70-______

                   SECURITIES AND EXCHANGE COMMISSION
                            450 FIFTH STREET
                         WASHINGTON, D.C.  20549
               __________________________________________
                    FORM U-1 APPLICATION-DECLARATION
                                  UNDER
             THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
              ____________________________________________
                              Cinergy Corp.
                     Cinergy Global Resources, Inc.
                    Cinergy Capital & Trading, Inc.
                         139 East Fourth Street
                         Cincinnati, Ohio  45202

                (Name of companies filing this statement
               and address of principal executive offices)

                              Cinergy Corp.

                (Name of top registered holding company)

                           William L. Sheafer
                       Vice President & Treasurer
                              Cinergy Corp.
                             (address above)

                 (Name and address of agent for service)

Applicants request the Commission to send notices, orders and
communications to the following (at the address listed above for
individuals affiliated with Cinergy Corp.):

William J. Grealis                      Madeleine W. Ludlow
Vice President/Cinergy Corp.            Vice President/Cinergy Corp.
Chief Strategic Officer/Cinergy Corp.   Chief Financial Officer/Cinergy
                                        Corp.

Cheryl M. Foley                         Michael J. Cyrus
Vice President/Cinergy Corp.            Vice President/Cinergy Corp.
President/Cinergy Global Resources, Inc.President/Cinergy Capital &
                                        Trading, Inc.

William C. Weeden                       William T. Baker, Jr.
Skadden Arps Slate Meagher & Flom       Thelen Reid & Priest LLP
1400 New York Avenue, N.W.              40 West 57th Street
Washington, D.C.  20005                 New York, New York  10019

                            TABLE OF CONTENTS

TABLE OF CONTENTS                                                      1

Item 1 Description of Proposed Transactions                            3

       A. Introduction                                                 3

       1. Proposed Increase in Investment Authority; Business
          Imperatives                                                  3
       2. Satisfaction of Applicable Standards                         7

       B. Industry Dynamics/Company Growth Strategy                    8

       1. State Restructuring/Generation Divestitures                  8
       2. Foreign Utility Privatizations & Acquisitions               11
       3. Cinergy's Growth Strategy/5 in 5 on 5 Goals                 12

       C. Proposed Financing Authority                                13

       1. Existing Authority                                          13
       2. Proposed Authority                                          14

       D. Cinergy and Subsidiaries/Overview                           20

       E. Exempt Projects/Domestic/ECBU                               23

       1. Cinergy's Energy Commodities Business Unit                  24
       2. Future Investments in U.S. EWGs                             26

       F. Exempt Projects/Foreign/IBU                                 32

       1. Cinergy's International Business Unit                       32
       2. Existing Foreign Investments/September 30, 1999             36
       3. Future Investments in Foreign Utilities                     43

Item 2. Fees, Commissions and Expenses                                47

Item 3. Applicable Statutory Provisions                               47

       A. Project Review Procedures/Risk Mitigation Techniques        49

       1. Strategic Planning Process                                  50
       2. Global Risk Management Function                             50
       3. Capital Investment Review Process/Project Safeguard         51
       4. International Project Review and Performance
          Management                                                  53
       5. Risk Mitigation/Specific Project Risks                      54
       6. General Factors Mitigating Project Risks                    60

       B. Financial Results & Other Benefits/Prior Investments        62

       C. Current Financial Condition of Cinergy & Operating
          Companies                                                   63

       1. Cinergy                                                     63
       2. Operating Companies                                         65

       D. Insulation of Operating Companies from Direct Effects;
          Additional Protections; Meetings with State Commissions     67

       E. Financing Plan for New Investments; Merrill Lynch Opinion   68

       F. 1994 Merger Settlement Agreements/1999 Ohio Electric
          Deregulation Statute                                        69

       1. Indiana                                                     69
       2. Ohio                                                        72
       3. Kentucky                                                    75
       4. Conclusion/Settlement Agreements & Ohio Electric
          Deregulation Legislation                                    77

Item 4. Regulatory Approval                                           77

Item 5. Procedure                                                     77

Item 6. Exhibits and Financial Statements                             79

       (a) Exhibits                                                   79
       (b) Financial Statements                                       80

Item 7. Information as to Environmental Effects                       80

SIGNATURE                                                             81

Item 1.     Description of Proposed Transactions

       A.   Introduction

       By order dated March 23, 1998 (HCAR No. 26848) ("100% Order"),
the Commission amended certain prior orders issued to Cinergy
Corp. ("Cinergy" or the "Company"), a registered holding company
under the Public Utility Holding Company Act of 1935, as amended
("Act" or "1935 Act"), authorizing Cinergy to apply the proceeds
of certain financing transactions to an aggregate investment in
exempt wholesale generators ("EWGs") and foreign utility companies ("FUCOs"
and collectively with EWGs, "Exempt Projects") not
to exceed 100% of Cinergy's consolidated retained earnings ("100%
Cap"), subject to various conditions.  (As used herein, "aggregate
investment" and "consolidated retained earnings" have the
meanings assigned in Rule 53(a)(1).)

            1.   Proposed Increase in Investment Authority; Business
                 Imperatives

       For the reasons explained below, Cinergy now requests greater
authority to invest in Exempt Projects.  Specifically, from time to time
beginning with the effective date of the Commission's order granting and
permitting this application to become effective and continuing for a period
of five years thereafter ("Authorization Period"), Cinergy proposes to
apply proceeds from financing transactions authorized herein to additional
investments in Exempt Projects, provided that Cinergy's aggregate
investment does not exceed the sum of (i) an aggregate investment equal to
100% of consolidated retained earnings plus (ii) $2,000,000,000
(collectively, "Proposed Cap"), excluding Cinergy's aggregate investment in
one or more EWG affiliates formed to acquire all or a substantial portion
of the existing generating facilities owned by Cinergy's utility
subsidiaries, not to exceed the net book value of such facilities at the
time of transfer ("Restructuring Investment").  The current net book
value of the utility subsidiaries' generating assets is approximately $2.9
billion.  Cinergy specifically requests authority as well, over the same
period, to apply proceeds from financing transactions authorized herein to
make the Restructuring Investment.

       At September 30, 1999, Cinergy's aggregate investment and
consolidated retained earnings were approximately $568 million and $993
million, respectively, leaving available investment capacity under the 100%
Order of approximately $425 million.  After deducting funds earmarked for
projects in development, for which internal approvals have been received,
Cinergy has a total of approximately $325 million available.

       The remaining capacity is not sufficient to enable Cinergy to
grow its business and adapt to industry-wide restructuring.  Even if
Cinergy's investment balance were zero, and all the capacity under the 100%
Order were available, this would still be the case.

       The problem is readily illustrated.  Cinergy was able to
consummate its recent joint venture with Duke Energy Corporation,
providing for the construction of approximately 1400 megawatts
("MW") of gas-fired merchant peaking EWG facilities in the Midwest, only
because, several months previous, Cinergy had sold off its ownership
interest in Midlands Electricity plc., a British regional electric company
("Midlands").  Without this sale (freeing up over $450 million in
capacity), the 100% Cap would have precluded the partnership with Duke,
which will add significant peaking capacity by the summer of 2000,
mitigating concerns related to growing demand and transmission constraints
in the region.  As the partnership with Duke exemplifies, with the growing
deregulation of the electric industry in the United States, giving retail
consumers the right to choose their supplier, most new generating capacity,
and much existing generating capacity, is itself being deregulated - built
on an EWG basis or reclassified to EWG status.  The 100% Cap does not
accommodate this fundamental development.

       More broadly, Cinergy's proposal is driven by the following
industry developments, strategic goals and regulatory imperatives:

     Industry Changes; "Utility"/"Nonutility:"  Utility markets
     throughout the world continue to be restructured, moving away
     from government regulation and ownership toward deregulated,
     competitive market structures.  In the United States,
     wholesale electricity markets are already competitive, and
     most states have adopted or are considering proposals granting
     retail customers the right to choose their electric supplier,
     often requiring incumbent utilities to reduce market power by
     divesting their ownership of generating assets.  Abroad,
     countries are revising their laws to encourage foreign
     investment and private ownership of utility assets; many are
     "privatizing" state-owned utility systems, auctioning all or
     part of those systems to private investors including American
     utilities.  Spurred by these reforms, the industry has become
     increasingly global in scope, with foreign utilities acquiring
     U.S. utilities and power plants just as many U.S. utilities
     expand their operations abroad.

     In the U.S., competition and deregulation are redefining
     the utility business.  The prototype "utility company"-
     vertically integrated, operating entirely on a local or
     regional basis, deriving substantially all earnings from
     regulated, monopoly sales - is or soon will be defunct.  To
     prepare for the onset of fully competitive markets, utilities
     are "reinventing" themselves - restructuring their businesses,
     including through asset sales (whether voluntarily or as a
     result of state or other regulatory mandates), pursuing
     mergers and acquisitions including "convergence" gas/electric
     transactions, and diversifying into non-traditional businesses,
     such as wholesale energy marketing and foreign utility
     acquisitions.  To compete effectively in this new environ     ment,
     Cinergy must be afforded the opportunity to build scale and scope
     in these non-traditional - but now not only commonplace,
     but integral and vital - "nonutility" businesses.

     Cinergy's 5 in 5 on 5 Growth Strategy:  Against this backdrop
     of growing competition and restructuring, Cinergy is striving
     to transform itself into a growth energy company.  In 1997,
     Cinergy announced its goal of competing with and becoming one
     of the industry's top five companies within five years based
     on five performance measures.  The "top five" performance
     measures are market capitalization, number of customers,
     productivity, and - directly relevant here - wholesale energy
     marketing and international operations.  The success of these
     two platforms hinges on Cinergy's ability to invest in Exempt
     Projects at levels sufficient to create superior earnings
     growth.

     Generation Divestitures; Foreign Privatizations/Acquisitions:
     One of the most significant industry dynamics is the growing
     divestiture of generating assets in the U.S. by traditional
     electric utilities, in many cases under legislative or
     regulatory mandates.  Since 1997, over 30 U.S. utilities,
     about one-third of all investor-owned electric utilities
     ("IOUs"), have offered for sale over 70 gigawatts ("GW") of
     generating capacity, or nearly 13 percent of total IOU
     capacity, with over 40 GW sold or under contract to be sold at
     year-end 1998./1/

     Another key dynamic is the privatization of state-owned utility
     systems by foreign governments together with strategic investments in
     privatized utilities or their assets by U.S. companies.
     Privatizations emerged as an important trend early
     in the 1990s, but the pace of transactions,
     including secondary sales of privatized companies or
     their assets, has accelerated in the last several
     years.  In 1997 and 1998, over a hundred
     transactions closed for electric assets alone, with
     a total dollar value of approximately $56 billion,
     substantially in excess of the total dollars
     invested in the preceding six years./2/  By year-end
     1998 forty countries had privatized all or part of
     their power sectors, with nine selling off assets
     for the first time in 1998./3/  U.S. utilities have
     played an increasingly large role as acquirers of
     privatized facilities, in connection with both the
     initial privatizations and secondary offerings.
     Exhibit L lists over 30 investments by U.S.
     utilities of at least $400 million since 1995.
     The 100% Cap, covering investments in both U.S.
     wholesale generating facilities and foreign utility
     assets, prevents Cinergy from actively participating
     as a buyer or bidder in even one of these markets,
     much less both.  The reason is the large dollar
     investments required to close major transactions, as
     compared to the investment capacity available under
     the 100% Cap.  The capability to bid on the full
     range of available opportunities in both markets -
     including especially the larger, more significant
     transactions - is vital to Cinergy's growth
     strategies, just as it is with Cinergy's
     competitors.  To survive in the restructured utility
     industry, Cinergy needs to compete on an equal
     footing with other participants.

     Transfer to EWG Affiliates of Existing CG&E/PSI Generation:
     In addition to investments in new projects, Cinergy must
     restructure its existing retail-based regulated generation for
     a competitive environment.

     Cinergy's two primary utility subsidiaries, The
     Cincinnati Gas & Electric Company, an Ohio electric
     and gas utility ("CG&E"), and PSI Energy, Inc., an
     Indiana electric utility ("PSI"), together own
     electric generating plants in Ohio, Indiana and
     Kentucky with total installed capacity of 11,200 MW
     and a current net book value of approximately $2.894
     billion ($1.76 billion of which represents CG&E's
     share).

     Recently enacted electricity deregulation
     legislation in Ohio permits all retail customers in
     the state to choose their electric supplier
     beginning January 1, 2001.  The practical effect of
     the Ohio legislation is to promote divestiture or
     restructuring of generating assets held by incumbent
     utilities.

     Thus the legislation requires incumbent utilities to
     "unbundle" the competitive retail sale of electric
     generation function from transmission and
     distribution functions, moving the former into a
     separate corporation.  After January 1, 2001,
     Cinergy may not market and supply competitive
     electric services to retail customers in Ohio
     through CG&E, but only through an affiliated power
     marketer to which CG&E has transferred its
     competitive retail sale of generation function
     pursuant to a corporate separation plan and
     affiliate code of conduct approved by the Public
     Utilities Commission of Ohio ("PUCO").  The new law
     also requires incentives to induce 20 percent of the
     loads by customer class to switch providers by no
     later than December 31, 2003.

     Cinergy is preparing its transition plan for
     submission to the PUCO by year-end 1999.  In that
     filing Cinergy will state its intention to transfer
     CG&E's generating facilities to one or more EWG
     affiliates.

     Cinergy operates its electric utility system on an
     integrated basis, with the operating companies' generating
     assets being centrally and economically dispatched.  Operating
     half of these assets as EWG facilities, with the other half
     remaining in the regulated utility, could impair continued
     integrated operations and the realization of maximum production cost
     efficiencies.

     Although Indiana has not yet enacted electric industry
     restructuring legislation, nor is proposed legislation
     currently pending, Indiana's "alternative utility regulation"
     statute, enacted in 1995 in recognition of increasing
     competition for energy services in Indiana and the United States,
     confers considerable flexibility on the Indiana Utility
     Regulatory Commission ("IURC") to approve jurisdictional
     transactions upon a showing of public interest.  Pursuant to
     the alternative regulation statute or subsequently enacted
     customer choice legislation, Cinergy may  likewise seek approval
     from the IURC to transfer PSI's generating assets   to one or
     more separate EWG affiliates.

     Cinergy will provide additional, detailed information
     concerning the proposed transfer of its existing retail-based
     generating assets to EWG affiliates following the filing of
     the Company's transition plan with the PUCO.

            2.   Satisfaction of Applicable Standards

     In the second half of this application, Cinergy will show that
its proposal satisfies all relevant standards under the Act.  In
particular, with respect to Rule 53(c), investing at the higher
level proposed herein:

     "will not have a substantial adverse impact upon the
     financial integrity of [Cinergy's] holding company system;"
     and

     "will not have an adverse impact on any utility subsidiary
     of [Cinergy], or its customers, or on the ability of any
     affected state commission to protect such utility or its
     customers."

     Among other reasons, Cinergy submits proposed investments to a
series of pre-investment screens and reviews; and after the decision is
made to commit funds, the Company closely monitors project performance,
using effective measures to reduce risks.  Cinergy's track record attests
to the Company's skills.  Cinergy and its domestic utility subsidiaries are
in strong financial condition, and Cinergy's plan to finance the proposed
new projects will not impair the financial integrity of Cinergy or
the utility subsidiaries.  In that regard Cinergy retained Merrill Lynch &
Co. ("Merrill Lynch") to review the financing plan and potential credit
impacts.  Cinergy will shortly be submitting into the record Merill's
opinion letter.  In any event, Cinergy will not issue any additional debt
to finance investments in Exempt Projects covered by the Proposed Cap if
Cinergy's senior debt is not rated investment grade by at least one of the
major ratings agencies.  Finally, Cinergy has had numerous meetings and
other communications with its three state commissions - the PUCO, the IURC
and the Kentucky Public Service Commission ("KPSC") - regarding this
application prior to its filing with this Commission.

     B.   Industry Dynamics/Company Growth Strategy

     Fundamental industry dynamics impel Cinergy's proposal,
specifically:

     the growing divestiture of power plants in the U.S. by
     traditional utilities, often due to state restructuring
     mandates, and

     the increase in privatizations or other sales to private
     investors of foreign utility companies and assets.

     The 100% Cap - which covers investments in domestic wholesale
electric generating facilities as well as foreign utilities -
effectively precludes Cinergy from being able to compete for
major opportunities within both categories of projects.  The
basic reason is the large size of representative transactions
relative to the investment cap.  In fact, even within just one of
these areas - generation divestitures or privatizations - Cinergy
is hamstrung in its ability to pursue major transactions.

     Cinergy is competing against both U.S. and foreign companies
for these types of investments, and the great majority of these
companies are not saddled with this artificial constraint.

     Cinergy's wholesale energy marketing and international
businesses are central to the Company's corporate strategy for
success in the evolving industry.  Neither can succeed if both
are foreclosed from making the necessary investments in physical
assets.  Asset investments of this type provide more than the
opportunity to earn a return in the market.  Additionally, they
provide a necessary risk mitigation alternative which in many
cases cannot be replicated financially.

     All of these points are elaborated immediately below.

            1.   State Restructuring/Generation Divestitures

     The trend of generation divestitures by vertically integrated
utilities is a hallmark of the ongoing restructuring of the U.S.
electric industry toward fully competitive markets.  Industry
restructuring was set in motion by federal initiatives dating back to the
late 1970s.  Only in the last several years, by contrast, have the states
begun phasing in electric competition at the retail level.

     These federal initiatives - the Public Utility Regulatory Policies Act
of 1978 ("PURPA"), the Energy Policy Act of 1992 and Orders 888 and 889
issued by the Federal Energy Regulatory Commission ("FERC") in 1996,
requiring utilities to provide non-discriminatory, open-access transmission
service upon request - have introduced competition into wholesale power
markets.  While FERC Orders 888 and 889 required "functional" unbundling of
transmission from generation by vertically integrated utilities,
they did not mandate legal separation.

     The states have taken the lead in promoting competition at the
retail level.  Their efforts began in earnest following Orders 888 and 889.
As of November 1, 1999, 24 states had implemented legislation or regulatory
orders that will permit retail customers to choose their electricity
supplier, and nearly all of the remaining states were actively considering
similar "retail access" or "customer choice" proposals./4/  Although each
state's plan differs in details, all have certain common features,
including granting all customers the right to choose their supplier by a
date certain (ranging between 1998 and 2003) and allowing incumbent
utilities recovery of at least some portion of "stranded assets" (the
remaining costs of uneconomic generating or regulatory assets), while
obligating them to provide distribution service to competing suppliers./5/
In addition, many of the plans compel local utilities to sell their power
plants, often but not always to nonaffiliates, in order to reduce
market power and bring in new competitors.  (Restructuring initiatives in
the three states in which Cinergy's utility subsidiaries provide retail
service are discussed later.)

     Pursuant to these state restructuring mandates, conditions imposed by
the FERC in merger proceedings, and/or voluntary, strategic decisions,
increasing numbers of traditional utilities are auctioning off their
generating assets in complete or partial divestitures.  This trend emerged
as a significant industry-wide development only in 1997.

     At the end of 1998, a total of 77.4 GW of capacity had been put up for
sale by over 30 utilities, one-third of all IOUs./6/ This amount represents
nearly a 50 percent increase over the total generation offered for sale at
the end of 1997.  Of the generating capacity being divested, a total of 42
GW had sales agreements, with 20.3 GW of the sales finalized and the
balance awaiting final regulatory approvals.  The total sales price for
this 42 GW of capacity is $14.1 billion, compared to a total book
value for the assets sold of $7.3 billion, a premium of almost two times
book value.  The average book value of the assets sold is $175 per kilowatt
("kw"), as against the average sales price of $337 per kw./7/

     More than three-quarters of the buyers have been nonutility affiliates
of IOUs.  In some cases sellers of assets in one region were buyers in
another.  For example, while PG&E Corp. was divesting power plants on the
West Coast, US Generating Co. ("US Gen"), its affiliated independent power
developer, was purchasing generation being divested by utilities in the
East, such as NEES. Foreign companies or their U.S. affiliates have also
been buyers. Examples include Sithe Energies and Amergen, the joint venture
between British Energy and PECO Energy formed to acquire and operate
nuclear generation facilities worldwide.  Once the pending sales are
finalized and the assets are reclassified as nonutility generation (in many
cases EWGs), the total U.S. nonutility capacity of 70.3 GW will more than
double in comparison to 1997 levels.  Alternatively stated, a projected 18
percent of U.S. capacity is expected to be owned by nonutility generators
by the end of 1999./8/

     As noted, prices paid generally have been high.  Reasons include the
competitiveness of the auctions and the quality and size of the assets
sold, often in bundles of multiple power plants.  In March 1999, for
example, Unicom, the holding company for Commonwealth Edison, agreed to
sell 16 power plants in Illinois to Edison Mission, an affiliate of
California-based Edison International, for $4.8 billion.  In November 1998,
GPU agreed to sell 23 plants to Sithe Energies, a New York-based affiliate
of the French company, Vivendi S.A., for $1.72 billion.  Consolidated
Edison of New York sold its New York City electric generating plants in
three packages, an 1,855 MW bundle to Orion Power Holdings (a joint venture
including affiliates of Baltimore Gas and Electric Co. and Goldman Sachs)
for $550 million, a 2,168 MW bundle to Brooklyn-based KeySpan Energy for
$597 million, and a third bundle, representing 1,456 MW, to NRG Energy,
Inc., a subsidiary of Northern States Power Co., for $505 million.  In
August 1998, Edison Mission agreed to buy a single 1,896 MW plant from GPU
and New York State Electric & Gas for $1.8 billion.  And in one of the
first significant auctions, NEES agreed in August 1997 to sell 18 power
plants to a subsidiary of US Gen for $1.59 billion.  Exhibit K lists more
than 20 generation divestitures announced since August 1997 with sales
prices greater than $250 million.

     As discussed below, Cinergy is committed to growing its wholesale
electricity marketing business to "top five" status.  To accomplish this
goal, Cinergy must have the flexibility both to acquire existing generating
facilities and/or to develop and construct new generating facilities in key
regions of the U.S., which would be operated as EWGs.  Ownership of
physical assets bolsters Cinergy's wholesale energy commodity business by
hedging price risks and permitting growth into new regions, with an asset
base to anchor the wholesale trading operations.  Conversely, Cinergy's
power marketing business, with its trading expertise and knowledge of the
marketplace, serves to maximize the value of EWG facilities that Cinergy
acquires, while mitigating associated risks.

     Given the importance to the Company of developing its wholesale energy
marketing business, the ability to bid on large generation divestitures by
other utilities is an important strategic option.  The 100% Cap severely
limits this option, because of the size of many representative
transactions.  This constraint - one not confronting Cinergy's
non-registered competitors - is compounded by the fact that the cap covers
foreign utility acquisitions as well.  These too are essential to
Cinergy's corporate goals.  But just as with generation divestitures in the
U.S., major foreign privatizations and secondary offerings typically
require the ability on the part of the purchaser to make sizable recourse
investments to close the deal.

            2.   Foreign Utility Privatizations & Acquisitions

     Restructuring and deregulation of energy markets is hardly an
American phenomenon.  Many nations are farther along than the U.S. in
introducing competition to their utility sectors.  All over the world
countries are rewriting legal codes to foster competition and permit
private ownership of utility assets.  Foreign governments are
"privatizing," or selling off, state-owned utility systems, seeking to
raise cash, reduce prices to customers, and improve operations.  Privatized
facilities are available for purchase in an increasing number of countries
around the world.  This trend toward privatizations of foreign utility
systems, which emerged at the beginning of this decade, has grown in
significance, and like restructuring and generation divestitures in the
U.S., presents Cinergy with important investment opportunities.

     For the period 1991 through 1998, international power privatization
activity (including secondary sales of privatized companies and assets)
comprised over 220 separate transactions valued at approximately $93
billion.  The pace of activity has been accelerating.  From 1991 through
1996 approximately $36.4 billion changed hands in 120 transactions,
compared to $56.5 billion in 104 transactions in 1997 and 1998.  Total
dollars invested for 1997 alone nearly matched that of the preceding
six-year period./9/  As of December 31, 1998, 40 countries had privatized
electric assets, nine selling off assets for the first time in 1998.
Although privatizations have become increasingly widespread, a small number
of countries have accounted for the bulk of the activity.  More than
two-thirds of the total dollars invested in electric privatizations over
the period 1991 through 1998 have been invested in six countries -
Argentina, Australia, Brazil, Columbia, Spain and the United Kingdom
("U.K.")./10/

     Just as privatization activity has been concentrated, so have
major transactions required large dollar investments.  The average size for
transactions closed in 1997-1998 was over $500 million.  Exhibit L lists
acquisitions by U.S. utilities of privatized or publicly-traded foreign
utilities, including subsequent "sell-downs" by initial purchasers, dating
back to 1995, when the pace of transactions markedly increased.  The
chart lists approximately 40 acquisitions where the purchase price (or the
identified company's allocable share of the total purchase price, for joint
venture acquisitions) was at least $400 million.  The transactions include
Cinergy's and GPU Inc.'s joint acquisition in 1996 of Midlands Electricity
plc, as well as Cinergy's sale of its 50 percent share to GPU in July 1999.

     As noted above, Cinergy has completed one major foreign utility
acquisition, acquiring 50% of Midlands in 1996 for approximately $1.3
billion, including an equity investment of $500 million.  Since then,
Cinergy has also bought privatized electric utility assets in Zambia and
Estonia, in significantly smaller transactions.  The Midlands acquisition
was accomplished under the Commission's "safe harbor" for EWG and FUCO
investments, where the total investment does not exceed an amount
equal to 50% of consolidated retained earnings.

     The Midlands acquisition exhausted Cinergy's capacity under
the safe harbor, however.  In 1997 Cinergy applied to the Commission for
greater investment authority, and in 1998 the Commission authorized Cinergy
recourse funds equal to 100% of consolidated retained earnings.  But in
practical terms this increase resulted in only $500 million in additional
investment capacity.  Cinergy's July 1999 sale of its interest in Midlands
to GPU temporarily freed up significant investment capacity, but
most of that has now been exhausted by the Duke transaction.  The
present application is necessary for Cinergy to build scale in its energy
marketing and international businesses, while restructuring its regulated
generation to EWG status consistent with Ohio customer choice legislation.

            3.   Cinergy's Growth Strategy/5 in 5 on 5 Goals

     Cinergy's wholesale marketing and international businesses are
critical elements of Cinergy's overall strategy to compete in a
deregulated environment.

     With the advent of electric industry restructuring, Cinergy
has taken aggressive steps to accommodate change.  The Company is
focused on transitioning from a mid-sized regulated utility to a
large-cap growth energy company.  The Company believes that over time only
the larger companies will prevail and that it must generate superior and
sustainable earnings growth from its nonutility businesses, given modest
sales growth (2-3%) in its retail utility businesses and the inevitable
loss of customers and revenues when those businesses are fully open to
competition.

     In this context, Cinergy announced in 1997 its goal of becoming one of
the top five U.S. utilities by 2002 on five criteria - market
capitalization, total U.S. retail electric and gas customers, productivity,
wholesale electric and gas marketing, and net income from international
operations./11/

     To date, Cinergy has made limited progress toward achieving
"top five" status.  Although Cinergy's generating plants rank in the top
five in productivity (based on 1998 data),/12/ the energy marketing
operations do not rank among the industry's top ten when measured by volume
of sales.  Cinergy's international operations ranked ninth in percentage
contribution to earnings (7.8%) and fifth in percentage contribution to
total revenues (25%), based on 1997 data (excluding extraordinary items).
With respect to market capitalization and customers, ongoing
fundamental changes occurring within the industry have given rise
to increasing consolidation, which has widened the gap separating
Cinergy from top five status.

     A merger or business combination is necessary for Cinergy to
reach the desired scale in market cap and customers.  That is not
necessarily the case for attaining top tier status in energy marketing and
international operations.  Most basically, a determinant for success in
these areas is the ability to make the investments in physical assets - by
acquisition or otherwise - that build scale and lay the foundation for
sustained growth. The Proposed Cap is essential for this purpose and the
larger goal of enabling the Company to succeed in a competitive,
deregulated environment.

     C.   Proposed Financing Authority

     In order to implement the request herein for new investment
authority, Cinergy requests various revisions to the terms of
outstanding orders issued by the Commission.

            1.   Existing Authority

     Under the terms of the following orders ("Financing Orders"),
the Commission authorized Cinergy to issue common stock, debt
securities and guarantees for general corporate purposes
including, among other things, investing in Exempt Projects up to
the 100% Cap:

     1.   Short-term debt/$2 billion overall debt cap/common
          stock.  Order dated January 20, 1998, HCAR No. 26819
          ("January 1998 Order"), in which the Commission
          authorized Cinergy to issue and sell, from time to
          time through December 31, 2002, (a) short-term notes
          and commercial paper in an aggregate principal amount
          not to exceed - together with the principal amount of
          the debentures referred to below and (prior to the
          March 1999 Order) certain guarantees - $2 billion at
          any time outstanding, and (b) up to 30,867,385
          additional shares of Cinergy common stock, $.01 par
          value per share (i.e., 30 million new shares plus the
          remaining shares authorized for issuance under a prior
          order).

     2.   Long-term debentures.  Order dated August 21, 1998,
          HCAR No. 26909 ("August 1998 Order"), in which the
          Commission authorized Cinergy to issue and sell, from
          time to time through December 31, 2002, unsecured
          debentures with maturities of two to 15 years in an
          aggregate principal amount at any time outstanding not
          to exceed $400 million, subject to the overall debt
          cap of $2 billion just noted.

     3.   Guarantees; $1 billion cap.  Order dated March 1,
          1999, HCAR No. 26984 ("March 1999 Order"), in
          which the Commission (a) consolidated authority
          granted to Cinergy under prior orders to issue
          guarantees of obligations of system companies,
          while (b) imposing an overall cap of $1 billion
          (separate from the $2 billion debt cap) on the
          amount of Cinergy guarantees issued and
          outstanding from time to time through December
          31, 2003.  This order modified the January 1998
          Order by removing guarantees from the coverage of
          the $2 billion debt cap.

          Among other things, the March 1999 Order also expanded
          Cinergy's existing authority to create intermediate
          subsidiaries to hold interests in nonutility businesses,
          including Exempt Projects.

               2.   Proposed Authority

     Cinergy now proposes to replace the January and August 1998 Orders in
their entirety, and to supersede the March 1999 Order solely to the extent
of the guarantee authority granted therein, by new financing authority the
terms of which are set forth below.  As with the existing authority, the
new authority would be used for general corporate purposes, not merely to
fund investments in Exempt Projects (see "use of proceeds" below).

     The requested authority is intended to enable Cinergy to respond
quickly and efficiently to the Company's financing needs and available
conditions in capital markets.  The general approach embodied in this
request is consistent with similarly broad financing authority granted to
other registered holding companies in recent orders./13/

     Subject to the terms and conditions described below, from time
to time through the Authorization Period, Cinergy proposes to issue and/or
sell, without further authorization from the Commission, including with
respect to the specific terms of sale, (1) up to $4.4 billion aggregate
principal amount at any time outstanding of any combination of short- and
long-term debt; (2) up to $2 billion aggregate principal amount at any time
outstanding of guarantees; and (3) up to 75 million additional shares of
common stock.

     In addition to the other terms and conditions hereinafter specified,
the following restrictions will govern the proposed financing transactions:
(i) Cinergy's common equity will comprise at least 30 percent of Cinergy's
consolidated capitalization; (ii) the effective cost of money for
short-term debt securities will not exceed 300 basis points over the
comparable term London interbank offered rate and for long-term debt
securities will not exceed 300 basis points over the comparable term U.S.
Treasury securities; (iii) the underwriting fees, commissions or similar
remuneration paid in connection with the issue, sale or distribution of any
securities authorized hereunder (excluding interest rate risk management
instruments, as to which separate provisions governing fees and expenses
are proposed below) will not exceed 5 percent of the principal or face
amount the securities issued or gross proceeds of the financing; and (iv)
solely with respect to investments in Exempt Projects pursuant to
the Proposed Cap, Cinergy will not issue any additional debt securities to
finance such investments if upon original issuance thereof Cinergy's senior
debt obligations are not rated investment grade by at least one of Standard
& Poor's Corporation ("S&P"), Fitch Investor Service ("Fitch"), Duff &
Phelps Credit Rating Co. ("D&P") or Moody's Investor Service ("Moody's").

     The following additional terms and conditions apply to the
proposed financing transactions.

                 a.   Debt

     Pursuant to the Financing Orders, and subject to the terms and
conditions thereof, Cinergy is authorized to issue and sell and have
outstanding at any time through December 31, 2002 up to $2 billion
aggregate principal amount of short-term notes, commercial paper and
15-year debentures, provided that not more than $400 million thereof
consists of debentures.

     At September 30, 1999, Cinergy had issued and outstanding debt
securities totaling $405 million in aggregate principal amount, consisting
of (i) short-term bank notes aggregating $5 million and (ii) long-term
debentures aggregating $400 million.

     Cinergy now proposes to replace the existing debt authority.
From time to time through the Authorization Period, Cinergy proposes to
issue and sell short- and long-term debt securities in an aggregate
principal amount at any time outstanding not to exceed $4,400,000,000,
subject to the terms and conditions set forth above and the following
additional terms and conditions.  Subject to this $4.4 billion ceiling,
Cinergy proposes to issue such short- and long-term debt in any proportion,
without a separate, lower cap on long-term debt, as under the existing
authority with respect to debentures.

              i.   Short-term notes

     Cinergy proposes to make short-term borrowings from banks or
other financial institutions.  Such borrowings will be evidenced
by (1) "transactional" promissory notes to be dated the date of such
borrowings and to mature not more than one year after the date thereof or
(2) "grid" promissory notes evidencing all outstanding borrowings from the
respective lender, to be dated as of the date of the first borrowing
evidenced thereby, with each such borrowing maturing not more than one year
thereafter.  Any such note may or may not be prepayable, in whole or in
part, with or without a premium in the event of prepayment.  The amount of
any premium payable by Cinergy would not exceed an amount equivalent to the
present value of the stated interest payable on the note in the event the
note had not been prepaid, plus accrued interest to the date of prepayment.

            ii.  Commercial paper

     Cinergy also proposes to issue and sell commercial paper through one
or more dealers or agents or directly to a limited number of purchasers if
the resulting cost of money is equal to or less than that available from
commercial paper placed through dealers or agents.

     Cinergy proposes to issue and sell the commercial paper at market
rates with varying maturities not to exceed 270 days.  The commercial paper
will be in the form of book-entry unsecured promissory notes with varying
denominations of not less than $25,000 each.  In commercial paper sales
effected on a discount basis, no commission or fee will be payable in
connection therewith; however, the purchasing dealer will re-offer the
commercial paper at a rate less than the rate to Cinergy.  The discount
rate to dealers will not exceed the maximum discount rate per annum
prevailing at the date of issuance for commercial paper of comparable
quality and the same maturity.  The purchasing dealer will re-offer the
commercial paper in such a manner as not to constitute a public offering
within the meaning of the Securities Act of 1933, as amended ("Securities
Act").

            iii. Long-term debt

     Cinergy also proposes to issue and sell long-term debt securities
("Notes") in one or more series.  If issued on a secured basis, Notes of
any series would be secured by common stock of nonutility subsidiaries and
possibly other assets or property, in any event excluding common stock or
other assets of utility subsidiaries.  Notes of any series (a) will have
maturities ranging from one to 50 years, (b) may be subject to optional
and/or mandatory redemption, in whole or in part, at par or at various
premiums above the principal amount thereof, and (c) may be entitled to
mandatory or optional sinking fund provisions.  Interest accruing on Notes
of any series may be fixed or floating or "multi-modal" (where the interest
is periodically reset, alternating between fixed and floating interest
rates for each reset period, with all accrued and unpaid interest together
with interest thereon becoming due and payable at the end of each such
extension period).  Notes will be issued under one or more indentures to be
entered into between Cinergy and financial institution(s) acting as
trustee(s); supplemental indentures may be executed in respect of separate
offerings of one or more series of Notes.

     Notes may be issued in private or public transactions.  With respect
to the former, notes of any series may be issued and sold directly to one
or more purchasers in privately negotiated transactions or to one or more
investment banking or underwriting firms or other entities who would resell
the Notes without registration under the Securities Act of 1933 in reliance
upon one or more applicable exemptions from registration thereunder.
From time to time Cinergy may also issue and sell Notes of one or
more series to the public either (i) through underwriters selected by
negotiation or competitive bidding or (ii) through selling agents acting
either as agent or as principal for resale to the public either directly or
through dealers.

     The maturity dates, interest rates, redemption and sinking fund
provisions, if any, with respect to the Notes of a particular series, as
well as any associated placement, underwriting or selling agent fees,
commissions and discounts, if any, will be established by negotiation or
competitive bidding and reflected in the applicable indenture or supplement
thereto and purchase agreement or underwriting agreement setting forth
such terms.

          iv.  Interest rate risk management

     In connection with the issuance and sale of the short- and long-term
debt securities described above, Cinergy proposes to mitigate interest rate
risk through the use of various interest rate management instruments
commonly used in today's capital markets, such as interest rate swaps,
caps, collars, floors, options, forwards, futures and similar products
designed to manage and mitigate interest rate risks.

     Cinergy will enter into such derivative transactions pursuant
to agreements with counterparties that are highly rated financial
institutions - i.e., whose senior secured debt, at the date of execution of
the agreement with Cinergy, is rated at least "A-" by S&P, Fitch or D&P or
"A3" by Moody's.  The derivative transactions will be for fixed periods and
in no case will the notional principal amount exceed the principal amount
of the underlying debt security.  Cinergy will not engage in "leveraged"
or "speculative" derivative transactions.

     Fees, commissions and annual margins in connection with any interest
rate management agreements will not exceed 100 basis points in respect of
the principal or notional amount of the related debt securities or interest
rate management agreement.  In addition, with respect to options such as
caps and collars, Cinergy may pay an option fee which, on a net basis
(i.e., when netted against any other option fee payable with respect to the
same security), would not exceed 10% of the principal amount of
the debt covered by the option.

               b.   Guarantees

     In the March 1999 Order, the Commission authorized Cinergy to
guarantee the debt or other securities or obligations of various system
companies, provided that the total amount of guarantees outstanding at any
time through December 31, 2003 did not exceed $1 billion, and provided
further, that (i) any guarantees of Exempt Projects would also be subject
to the 100% Cap, and (ii) any guarantees of "energy-related companies," as
defined in rule 58 ("Rule 58 Companies"), would also be subject to the
aggregate investment cap of rule 58.

     At September 30, 1999, Cinergy had guarantees outstanding
(including in respect of letter of credit transactions) totaling
$658 million./14/

     Cinergy now proposes to replace the existing guarantee authority.
From time to time through the Authorization Period, Cinergy requests
authority to guarantee, obtain letters of credit and otherwise provide
credit support (each, a "Guarantee") in respect of the debt or other
securities or obligations of any or all of Cinergy's subsidiary companies
(including system companies formed or acquired at any time over the
Authorization Period), provided that the total amount of Guarantees at any
time outstanding does not exceed $2,000,000,000, and provided further,
that (i) any Guarantees of Exempt Projects would also be subject
to the Proposed Cap or Restructuring Investment, as applicable; and (ii)
any Guarantees of Rule 58 Companies would also be subject to the aggregate
investment cap of rule 58.

     The terms and conditions of any Guarantees would be established at
arm's length based upon market conditions, but in any case would comply
with the applicable conditions described earlier.

               c.   Common stock

     The January 1998 Order authorized Cinergy to issue and sell up
to 30,867,385 additional shares of common stock through December 31, 2002,
exclusive of shares issued under various stock-based plans./15/

     At September 30, 1999, Cinergy had 600 million shares of common stock
authorized for issuance, 158,917,210 shares of which were issued and
outstanding.  Cinergy has issued 771,258 shares of common stock pursuant to
the January 1998 Order.

     Cinergy now proposes to supersede the common stock authority granted
in the January 1998 Order.  From time to time through the Authorization
Period, Cinergy proposes to issue and sell up to 75 million additional
shares of common stock (as such figure may be adjusted for stock splits and
similar events).

     Cinergy proposes to issue and sell the additional shares from
time to time (i) through solicitations of proposals from underwriters or
dealers, (ii) through negotiated transactions with underwriters or dealers,
(iii) directly to a limited number of purchasers or to a single purchaser,
and/or (iv) through agents.

     The price applicable to additional shares sold in any such
transaction will be based on several factors, including the current market
price of the common stock and prevailing capital market conditions.

     Cinergy also requests authorization to issue common stock as
consideration for acquisitions by Cinergy or any nonutility subsidiary
thereof of securities of businesses, the acquisition of which (a) is exempt
under the Act or the rules thereunder or (b) has been authorized by prior
Commission order issued to Cinergy or any nonutility subsidiary thereof,
subject in either case to applicable limitations on total investments in
any such businesses.  The shares of Cinergy common stock issued in any
such transaction would be valued at market value based on the closing price
on the day before closing of the sale, on average high and low prices for a
period prior to the closing of the sale, or on some other method negotiated
by the parties.

     Finally, Cinergy requests authority to issue up to 250,000 of
the additional shares to Cinergy system employees, including officers, in
gift or award transactions from time to time through the Authorization
Period.  (This requested authority corresponds to similar authority granted
in the January 1998 Order.)

               d.   Use of proceeds

     Cinergy proposes to issue the short-term notes, commercial paper,
debentures and additional shares of common stock described above for
general corporate purposes, including without limitation (i) payments,
redemptions, acquisitions, and refinancings of outstanding securities
issued by Cinergy, (ii) acquisitions of and investments in Exempt Projects,
provided that Cinergy's aggregate investment therein does not exceed the
Proposed Cap or Restructuring Investment, as applicable, (iii) acquisitions
of and investments in Rule 58 Companies, provided that Cinergy's aggregate
investment therein does not exceed the aggregate investment limitation of
Rule 58, (iv) loans to and investments in other system companies, including
through the Cinergy system money pool, and (v) other lawful corporate
purposes.

     D.   Cinergy and Subsidiaries/Overview

     The following is an overview of Cinergy's holding company
system.

     Cinergy is a combination holding company, with five direct
subsidiaries (see Exhibit I showing Cinergy and all of its
subsidiaries at September 30, 1999):

     1.   CG&E, an Ohio electric and gas utility;
     2.   PSI, an Indiana electric utility;
     3.   Cinergy Investments, Inc. ("Cinergy
          Investments"), which holds all of Cinergy's
          domestic nonutility businesses and interests
          (excluding certain minor interests held by CG&E
          and PSI and certain investments in U.S. EWGs or
          qualifying facilities under PURPA held by CGR);
     4.   Cinergy Global Resources, Inc. ("Cinergy Global
          Resources" or "CGR"), which holds all of
          Cinergy's foreign businesses and interests (and
          certain domestic interests as just noted); and
     5.   Cinergy Services, Inc. ("Cinergy Services"),
          Cinergy's service company subsidiary which
          provides a variety of support services to its
          utility and nonutility affiliates.

     Cinergy was created in 1994 through the merger of CG&E and PSI's
then-parent company, PSI Resources, Inc. ("PSI Resources"), both of which
prior to the merger had been exempt holding companies./16/  Cinergy
registered under the Act on October 25, 1994.  At and for the nine months
ended September 30, 1999, Cinergy had total consolidated assets of
approximately $9.5 billion and operating revenues of approximately $4.5
billion.

     Together PSI and CG&E generate, transmit, distribute and sell
electricity and transport and sell natural gas to approximately 1.4 million
electric and 470,000 gas customers in Ohio, Indiana and Kentucky.  The term
"Operating Companies" refers to PSI and CG&E, including CG&E's utility
subsidiaries.

     PSI produces, transmits, distributes and sells electricity in north
central, central and southern Indiana, serving an estimated population of
2.1 million people located in 69 of the state's 92 counties including the
cities of Bloomington, Columbus, Kokomo, Lafeyette, New Albany and Terre
Haute.  At and for the nine months ended September 30, 1999, PSI had total
consolidated assets of approximately $4 billion and operating revenues of
approximately $1.7 billion.

     CG&E and its four wholly-owned utility subsidiaries - The Union Light,
Heat and Power Company, a Kentucky electric and gas utility ("ULH&P"),
Lawrenceburg Gas Company, an Indiana gas utility ("Lawrenceburg"), The West
Harrison Gas and Electric Company, an Indiana electric utility ("West
Harrison"), and Miami Power Corporation ("Miami"), an electric utility
(solely by virtue of its ownership of certain transmission assets) -
provide electric and gas service in the southwestern portion of Ohio and
adjacent areas in Kentucky and Indiana.  The area served with electricity,
gas or both covers approximately 3,200 square miles and has an estimated
population of two million.  CG&E produces, transmits, distributes and sells
of electricity and sells and transports natural gas in the southwestern
portion of Ohio, serving an estimated population of 1.6 million people in
10 of the state's 88 counties including the cities of Cincinnati and
Middletown.  ULH&P transmits, distributes and sells electricity and sells
and transports natural gas in northern Kentucky, serving an estimated
population of 322,000 people in a 500 square-mile area encompassing six
counties and including the cities of Newport and Covington./17/  At and for
the nine months ended September 30, 1999, CG&E had total consolidated
assets of approximately $5 billion and operating revenues of approximately
$1.9 billion.

     The PUCO regulates the retail electric and gas rates of CG&E; the IURC
regulates the retail electric rates of PSI (as well as the retail gas and
electric rates of Lawrenceburg and West Harrison); and the KPSC regulates
the retail electric and gas rates of ULH&P.  In connection with the 1994
merger, Cinergy and the primary Operating Companies (CG&E, PSI and ULH&P)
made extensive commitments to these three commissions, as well as other
interested parties, addressing concerns regarding potential impediments to
effective state regulation of the Operating Companies arising from
Cinergy's holding company structure and regulation under the Act as a
registered holding company.

     For reasons of internal management, efficiency and accountability,
Cinergy has functionally organized its overall business into four "business
units."  The initial reorganization took place in 1996.  Since then, the
business unit structure has undergone further changes to better reflect and
focus the Company's business strategies, taking into account ongoing
industry developments.

     As of November 1, 1999, there are four business units:  the Energy
Commodities Business Unit ("ECBU"), the Energy Delivery Business Unit
("EDBU"), the Cinergy Investments Business Unit ("CIBU") and the
International Business Unit ("IBU").  All of the business units are
supported by Cinergy's "Corporate Center," another functional designation,
comprising various departments or functions, or portions thereof, within
Cinergy Services.  The Corporate Center provides strategic direction,
performance measurement, and shared services to Cinergy's business units.

     The traditional, vertically-integrated utility functions are managed
by the ECBU and EDBU.  The ECBU operates and maintains virtually all of
Cinergy's domestic electric generation facilities, as further described
below.

     The EDBU manages Cinergy's domestic transmission and distribution
operations.  It plans, designs, builds, operates and maintains wire and
pipe systems to deliver energy commodities to customers.  The EDBU operates
approximately 37,000 circuit miles of electric lines to provide regulated
distribution service to 1.4 million electric customers.  It also operates
approximately 7,000 miles of gas mains and service lines to provide
regulated distribution service to approximately 470,000 gas customers.  The
EDBU is also responsible for Cinergy's relationships with retail customers,
including electric and gas sales and marketing to both native load and
other retail customers, meter reading, order completion, billing, credit
collection services, and account problem solving.  In addition, the EDBU
manages Cinergy's participation in the Midwest Independent System
Operator./18/  The EDBU's regulated operations are conducted through the
Operating Companies.

     The CIBU is responsible for the management and performance of
Cinergy's domestic nonutility businesses that market services to
retail customers.  The CIBU is not responsible for nonutility
businesses that focus on wholesale energy markets; the
responsibility for these resides in the ECBU.  (In terms of
corporate structure, as noted above the great majority of
Cinergy's domestic nonutility subsidiaries - including those
under the responsibility of the CIBU and ECBU, respectively - are
held underneath Cinergy Investments.)

     The IBU is responsible for Cinergy's international investments
which are held by Cinergy Global Resources and its subsidiaries.  The IBU
is described in detail below.

     For more information on Cinergy's business and operations, see
Cinergy's reports on Forms 10-Q and 10-K filed under the Securities
Exchange Act of 1934 (Commission File No 1-11377).  See also Cinergy's
reports on Forms U-9C-3, U5S and U-13-60 filed under the Act.

     E.   Exempt Projects/Domestic/ECBU

     At September 30, 1999 Cinergy had ownership interests in five
domestic EWG generating facilities - 100 percent ownership of a 30 MW
merchant peaking facility in Pennsylvania and a 25 MW wind-powered facility
in Wyoming and, through the joint venture with Duke Energy Corporation, 50
percent ownership of three merchant peaking facilities under construction
in Ohio and Indiana with approximately 1400 MW of total capacity.

     Prior to 1999, all of Cinergy's Exempt Projects were located outside
the United States.  For several years, this was due entirely to the large
size of the Midlands investment.  Completed in mid-1996 and involving an
aggregate investment of roughly $500 million, that transaction used up all
of Cinergy's available capacity under the Commission's investment
limitation which then applied, capping Cinergy's aggregate investment in
EWGs and FUCOs at 50 percent of consolidated retained earnings.  This lower
investment cap remained in place until March 1998, when the Commission
issued its order to Cinergy raising the ceiling to 100 percent of
consolidated retained earnings.  Accordingly, for nearly two years after
the Midlands acquisition, Cinergy was foreclosed from any further recourse
investments, whether in the U.S. or abroad.

     More fundamentally, opportunities in domestic power markets were
significantly less attractive and less available several years ago than
today.  In 1996 the FERC issued Orders 888 and 889, the foundation for
competitive wholesale power markets in the U.S.  In the past several years,
many states have enacted, and most of the rest are considering, legislation
providing for competitive supply of electricity to retail consumers, in
most cases also requiring or encouraging divestiture of generating
assets by franchised utilities.  At the same time, peak demand for
electricity has been steadily growing, and in several regions capacity
margins have been decreasing.  These factors help explain the boom in
nonutility greenfield development (i.e., new power plant construction) - in
1998 over 9,000 MW of nonutility greenfield projects were financed in the
U.S. - and the buoyant sellers' market that has prevailed for auctioned
generation.  Most of these greenfield projects are designated as either
"merchant" or "partial merchant" plants, in that they intend to sell all or
most their output into wholesale markets, without long-term sales
agreements.  Merchant plants are a testament to the growing competitiveness
of U.S. power markets./19/

     These developments have thus greatly enhanced the attractiveness of
owning EWG facilities in the U.S.  But to compete with other buyers and
developers in this marketplace, Cinergy needs substantially greater
investment authority.  As noted earlier, Cinergy could not have closed its
joint venture with Duke, providing for 1400 MW of greenfield EWG merchant
facilities in the Midwest, had the Company not earlier that summer divested
its interest in Midlands; without the sale, the Duke transaction would have
caused Cinergy to exceed the 100% Cap./20/  And even if, in the absence of
the Midlands sale, the Company had been able to arrange non-recourse
financing such that the Duke transaction could have "fit" under the 100%
Cap, it would have left insignificant capacity under the cap for further
EWG or FUCO acquisitions.  This dilemma is compounded by the Company's need
to restructure existing regulated generation to EWG status, in order to
prepare for deregulation in its franchised markets.

          1.   Cinergy's Energy Commodities Business Unit

     Within Cinergy, the ECBU is exclusively responsible for investments in
and operation of all U.S. domestic Exempt Projects, except for those
falling under the IBU's renewable energies strategy described below./21/

     As set forth in Exhibit J, at September 30, 1999, CG&E and PSI owned
electric generating facilities, or portions thereof in the case of
jointly-owned facilities, having approximately 11,200 MW of total
generating capacity - 5,200 MW owned by CG&E (net book value at September
30, 1999 of approximately $1.76 billion) and 6,000 MW owned by PSI (net
book value at September 30, 1999 of approximately $1.13 billion).  The
generating facilities are located exclusively in Ohio and Indiana (other
than with respect to one facility located in Kentucky) and are primarily
coal-fired.  For 1998, substantially all of the electricity sold by CG&E
and PSI from their generating facilities was produced by the coal-fired
facilities.  (ULH&P, the largest of the Operating Companies after CG&E and
PSI, owns no electric generating facilities, but purchases substantially
all the electricity required to supply its retail franchise customers from
CG&E.)

     The ECBU operates and maintains CG&E's and PSI's generating plants
(other than certain of the jointly-owned plants), producing electricity for
CG&E, PSI and ULH&P retail franchise ("native load") customers.  It
dispatches those plants and, when economic or necessary, purchases power
for native load customers.  It is also coordinates the purchase of coal and
other fuel supplies by the Operating Companies for their electric utility
businesses and natural gas by CG&E and its subsidiaries to support their
gas utility businesses.  (The EDBU is responsible for the subsequent
delivery of electricity and purchased gas to native load customers and for
billing and other transactions with native load customers.)  As previously
noted, the Operating Companies' electric generating plants are among the
most efficient in the country, ranking in the top five for
productivity.

     In addition to its activities supporting Cinergy's electric and gas
utility businesses, the ECBU also engages in nonutility businesses -
specifically, wholesale energy marketing (involving primarily electricity
and natural gas), the acquisition of domestic EWGs and other physical
assets to support the marketing business, and the provision to
nonaffiliated utilities and owners of independent power projects of
transactional or restructuring services focusing on power purchase
arrangements.  The ECBU's nonutility strategies involving the acquisition
and operation of EWG facilities will be carried out exclusively by Cinergy
Capital & Trading, Inc., a direct subsidiary of Cinergy Investments
("Cinergy Capital & Trading" or "CC&T"), and its subsidiaries, which will
hold these assets.  The president of CC&T also functions as president of
the ECBU.

     Following the 1994 merger, Cinergy's initial activities in wholesale
electricity marketing centered in the Midwest where the Company's
generating facilities are located.  Cinergy then took steps to expand the
business nationwide, although it did not own generating facilities in these
new regions.  For example, Cinergy initiated marketing operations in
several Western states including California.  Based on these early efforts,
Cinergy believes that ownership of supporting physical assets located in
key regions of the country - not merely electric generation plants but also
other physical facilities (not relevant here) such as gas storage and
pipeline facilities - is a prerequisite to a successful national energy
commodity business.  (This asset-backed strategy is discussed further
below.)  Accordingly, in 1998 the ECBU realigned the wholesale power
marketing operations to focus on the Midwest and select adjoining markets,
thereby capitalizing on the residual availability of Cinergy's 11,200 MW
of installed generation in Ohio, Indiana and Kentucky (i.e., capacity
available after the needs of Operating Company native load customers are
satisfied).

     Recent acquisitions have expanded the ECBU's wholesale marketing
business beyond electricity.  In June 1998, Cinergy, through CC&T, acquired
Producers Energy Marketing, LLC (subsequently renamed Cinergy Marketing &
Trading, LLC, "CMT") from Apache Corporation ("Apache") and Oryx Energy
Company ("Oryx").  CMT has exclusive marketing rights to certain natural
gas production owned or controlled by Apache and Oryx, representing
approximately 1.1 billion cubic feet per day of dedicated natural gas
supply.  These supplies, combined with the active marketing of third-party
gas, are geographically diverse, located throughout the Southwest, Rocky
Mountains, Gulf Coast, Gulf of Mexico, and Michigan.  The acquisition of
CMT complemented Cinergy's June 1997 acquisition, through CC&T, of
the assets of Greenwich Energy Partners, L.P., which specializes in energy
risk management and trading in derivative commodity instruments covering a
range of energy commodities, especially natural gas.

     In February 1999, CC&T took a first step toward expanding the
electricity marketing business through EWG acquisitions, purchasing a 30 MW
plant located in Schuylkill County, Pennsylvania from Westwood Energy
Properties L.P.  CC&T subsidiaries operate the facility - a fluidized bed,
waste coal-fired unit - as a merchant plant, selling its output primarily
into the Pennsylvania-New Jersey-Maryland Power Pool in times of peak
demand./22/  The facility is attractive in part because of its strategic
location in a state in the vanguard of electricity restructuring.  As the
president of Cinergy's ECBU stated:

          This acquisition is part of our stated and continuing
     goal of owning generating assets in key markets.  Westwood
     is both environmentally attractive and strategically located
     in an area where electric markets are open to competition./23/

     At September 30, 1999, Cinergy's aggregate investment in the
two EWG subsidiaries that together own and operate the Pennsylvania plant
was approximately $8.8 million.

     To meet the continuing growth in energy demand in the Midwest,
CC&T and Duke Energy North America consummated a joint venture transaction
in September 1999, under which they will jointly own on a 50-50 basis, and
CC&T is expected to operate, three gas-fired EWG facilities currently under
development in Indiana and Ohio totaling about 1400 MW of capacity.  The
facilities are located in Cinergy's service area and will be operated on a
merchant basis selling power into regional wholesale markets in periods of
peak demand.  Cinergy has invested or committed to invest a total of
approximately $365 million in connection with these facilities.

     Another aspect of CC&T's business involves structured transactions in
energy markets.  To date this work has involved the restructuring of "out
of market," long-term wholesale power purchase agreements ("PPAs")
originally entered into between nonaffiliated utilities and owners of
independent power projects ("IPPs").  At September 30, 1999, CC&T had
closed two of these transactions, valued at more than $250 million, with
Central Maine Power Company ("Central Maine").  In both transactions,
special-purpose subsidiaries of CC&T agreed to supply power to Central
Maine under the terms of restructured PPAs originally entered into between
Central Maine and the IPP owner.

          2.   Future Investments in U.S. EWGs

     U.S. EWGs are crucial to Cinergy's growth strategy for its wholesale
energy marketing business.  As explained below, first, ownership of
generating facilities is essential to support the wholesale energy
business, providing a hedge if power cannot be purchased at economic prices
from third parties.  The increasing divestiture of power plants by
utilities presents significant opportunities for Cinergy to expand its
marketing business geographically, through acquisitions of quality assets
in commercial operation to anchor the trading in those new regions.
For Cinergy to build the size, scale and national scope necessary
for success in its marketing business, EWG investments must play
a central role.

     Apart from Cinergy's growth strategies, the Company needs to be able
to move existing regulated generation, with a net book value approximating
$3 billion, to EWG status in order to adapt to ongoing electric industry
restructuring in its home states.

                 a.   Wholesale Marketing/Physical Assets

     Centered in the Midwest and select adjoining markets, where the
Company's 11,200 MW of regulated generating assets are located or can
practicably reach; Cinergy's wholesale electricity marketing business (even
without taking into account the Duke transaction) can take advantage of the
residual capacity of this 11,200 MW of regulated generation, after
satisfaction of requirements of native load customers.  Cinergy's wholesale
marketing business is thus fundamentally "asset-backed," since
Cinergy-controlled generation assets are available to support the
bulk trades.

     Owning electric generating facilities to support, or anchor, the
wholesale power marketing business is important for several important
reasons.  In the first place, having electric generation assets in the
region can serve to minimize or avoid transmission charges and mitigate
delivery risks for trades in that region.  Second, physical assets hedge
risks inherent in the marketing business, notably price risk.

     If a company has agreed to sell power sometime in the future, it can
hedge its price risk by simultaneously or subsequently buying power to
cover its obligations.  However, if it chooses a "no-hedge" strategy, it is
exposed to the full price risk for power in any given hour.  Ownership of
power plants limits this exposure to price risk, by always giving the
seller the option to run the power plant rather than buying power to meet
its obligations.

     Price risk can grow because of the fact that U.S. wholesale
markets today, while competitive, are not yet fully liquid.  In
some geographic markets at some times there are not sufficient
numbers of buyers and sellers to allow significant trading
activity at marketing clearing levels.  In that situation, a
marginal increase in demand can produce a dramatic increase in
price.

     This beneficial relationship between energy commodity
marketing and physical assets works in both directions.
Cinergy's wholesale marketing business itself mitigates the risks
of owning EWGs - for example, risks associated with selling power
into wholesale markets.  In competitive markets, where supply and
demand dictate the price for energy, an essential "tool" to
manage such EWG-related risks is, like Cinergy, to maintain a
skilled trading organization involved in the markets day to day.
The ECBU's traders can identify trends and manage risks on a
daily, monthly and year-forward basis.  It is also imperative to
maintain, as Cinergy does, an active supply and demand analysis
of each market as well as a forward price curve (expectation) for
energy markets.  The ECBU continually analyzes not only market
dynamics, but also the cost to operate generating facilities.
Thus, Cinergy's ECBU serves to substantially reduce risks
associated with owning domestic EWGs - at the same time that the
trading operations themselves benefit from such ownership.

     To conduct a successful U.S. generation business in a
competitive environment, participation in all segments of the
"value chain" is essential - from production through wholesale
marketing on to structured transactions.  Asset ownership not
only is a key component in itself, but also underpins the other
components.  Conversely, a marketing and trading organization can
enhance returns on and reduce the risks of the physical assets.

                 b.   Available Opportunities/Divestitures, etc.

     To build essential size, scale and scope in its wholesale
power marketing business, Cinergy must be able to make
significant investments in EWG assets, beyond the Duke
transaction.

     Future investments by CC&T will be a mix of greenfield
projects and acquisitions of existing assets, including
potentially generation divested by utilities.  CC&T will operate
the facilities as IPPs or merchant plants.  Given the growing
divestiture of assets by utilities, the increasing demand for new
generation capacity, and the spreading competition in electricity
markets reflected by the advent of merchant plants, there is a
robust market for EWG facilities.

     Utilities divested generating assets with over 21,500 MW of
capacity in 1998, with more sales scheduled for 1999 and 2000,
and additional sales to come as more states restructure their
electric industries./24/

     The U.S. and Canada are projected to require more than 186 GW
of new generating capacity by 2010, according to a 1998 report by
Resource Data International.  The report found that all North
American Electric Reliability Council planning regions will need
capacity by 2004, as a result of growing markets and the need to
replace current capacity, particularly nuclear plants scheduled
for retirement.  The new growth represents about $90 billion
worth of projects./25/

     One result has been a surge in the U.S. share of world orders
for power stations.  During the mid-1990s, power plant orders
from the U.S. accounted for only about 6 percent of the world
total.  In 1998, U.S. power plant developers made reservations
for about $12 billion in new plants, or nearly 40 percent of
global orders, for plants with total output of 40 GW.  In the
next decade, about $80 billion will be invested in new power
plants in North America, according to the Arlington, Virginia-based energy
consulting firm Hagler Bailly./26/

     Over 10,200 MW of nonutility greenfield generation projects
were financed in North America in 1998, 90 percent of them in the
U.S.  Seventy percent of the greenfield activity in the U.S. in
1998 involved projects under construction or in development in
New England and Texas./27/  As the events of the summers of 1998
and 1999 have shown, however, there is growing demand for new
projects in the Midwest.

     Most of these projects will be operated in whole or in part on
a "merchant," or market, basis.  By definition, merchant plants
produce energy to sell on the competitive wholesale market.  The
viability of these plants is not tied to long-term contracts but,
among other factors, on the ability to sell the plant's output at
market clearing prices.  This distinguishes merchant plants from
IPP facilities, which historically have been supported by long-term PPAs
with the local utility or other purchaser.  In
September 1996, the E.J. Stoneman plant, a 53 MW coal-fired
facility in Cassville, Wisconsin, became the first plant to sell
its electricity entirely on a merchant basis./28/
Notwithstanding the lack of long-term power sales and other
offtake agreements, some merchant plants have been able to secure
investment grade ratings, based on low marginal cost position and
other relevant factors./29/

     Although a new phenomenon, then, merchant plants have already
become a fixture in the utility landscape.  According to Resource
Data International, as much as 47 GW of additional merchant
plants have been proposed for construction by early in the next
century.  Nearly all of the new plants would be gas-fired, with
about half of the new capacity sited in the Northeast./30/  Many
of the plants sold in utility divestitures will be run by their
new owners as merchant plants.

     Merchant plants are a direct result of the growing competition
in U.S. electricity markets, fostered by FERC orders 888 and 889
and state deregulation.

                 c.   Transfer to EWG Status of CG&E/PSI Generation

     The proposed transactions are also necessary for Cinergy to
conform to state restructuring impacting its own regulated
utility operations.  Pursuant to these developments, Cinergy
intends to transfer all or a substantial portion of the
generating assets now held by CG&E and possibly PSI to newly
created EWG affiliates.

     As noted earlier, CG&E and PSI own significant electric
generating assets.  The generating assets are located in Ohio and
Indiana (one of CG&E's plants is located in Kentucky); have
11,200 MW of installed capacity; and a net book value of $2.894
billion at September 30, 1999.  CG&E's generating assets have
5,200 MW of installed capacity and a net book value of $1.762
billion.  PSI's have 6,000 MW of installed capacity and a net
book value of $1.133 billion.  None of Cinergy's other utility
subsidiaries own any electric generating facilities.

     The recently enacted Ohio electric customer choice legislation
provides a strong impetus to move generating assets, built to
serve monopoly loads, out of the regulated utility.  The
legislation requires utilities to transfer the competitive retail
sale of generation function into a separate corporation and to
fashion incentives to induce 20 percent of the loads by customer
class to switch providers.  Customer switching is expected to
result in excess generating capacity held by CG&E.  Although
comprehensive restructuring legislation has not yet been enacted
in Indiana, existing statutory provisions for "alternative"
regulation of utilities provide a basis for Cinergy to seek
approval from the IURC to transfer PSI's generating facilities to
EWG affiliates.

     Cinergy's electric utility system functions as a single
integrated system.  The utility companies' generating assets are
centrally and economically dispatched out of Cinergy's control
center in Cincinnati, with savings shared equally between CG&E
and PSI.  Operating half of these generating assets on an EWG
basis, with the other half remaining in the regulated utility,
could impair continued integrated operations and reduce operating
efficiencies.

     Cinergy will be filing a transition plan with the PUCO by
year-end 1999, in which the Company will state that it intends to
transfer CG&E's generating assets to one or more EWG affiliates.
Likewise, Cinergy contemplates that it may make a formal filing
with the IURC in the near future requesting approval to transfer
PSI's generating facilities to one or more separate EWG
affiliates.  In connection with these transfers, Cinergy will
seek the findings from its state regulators required under
section 32 of the Act.

     The following provides more detailed information on the status
of electric customer choice legislation in Ohio and Indiana./31/

     Comprehensive electric restructuring legislation was
introduced in early 1999 in both houses of the Ohio General
Assembly.  One of these bills - Senate Bill 3 - subsequently
received approval by both houses, and in July 1999 Ohio Governor
Robert Taft signed the restructuring legislation into law.  The
law went into effect in October 1999./32/

     Under the new law, all retail customers in Ohio are entitled
to choose their electric supplier commencing January 1, 2001.
The legislation deregulates electric generation and supply, with
electric transmission and distribution continuing as regulated
utility functions.  As an incumbent Ohio utility, CG&E is
required to separate its existing functions pertaining to
competitive retail sale of generation service from those
pertaining to transmission and distribution service, transferring
the former into a separate corporate entity.  After January 1,
2001, Cinergy may not market and supply competitive electric
services to retail customers in Ohio through CG&E, but only
through an affiliated power marketer to which CG&E has
transferred its competitive retail sale of generation function
pursuant to a corporate separation plan and affiliate code of
conduct approved by the PUCO.  Other provisions of the law
include:

     A 5 percent cut in the generation component of rates for
     every residential customer beginning January 1, 2001.

     Utility rates otherwise are frozen for non-switching
     customers through each utility's market development period
     (ending no later than December 31, 2005).

     The filing of a transition plan by each utility within 90
     days after the effective date of the law (the PUCO is given
     275 days to approve or reject a utility's filing).  The
     transition plan must include a rate unbundling plan, a
     corporate separation plan, an operational support plan, an
     employee assistance plan and a consumer education plan.
     The transition plan may also include a quantification of
     utility transition costs and an application to receive
     transition revenues.

     The establishment of a market development period, which is
     the transition period to full market competition.

     The recovery of transition costs through the market
     development period, as determined by the PUCO.

     The recovery of regulatory assets through December 31,
     2010, as approved by the PUCO.

     The transfer of either ownership or control of transmission
     assets to an independent transmission entity before
     December 31, 2003.

     The establishment of incentives to induce 20 percent of the
     loads by customer class to switch providers by no later
     than December 31, 2003.

     A requirement that incumbent utilities provide retail
     electric service to native load customers who decline to
     switch to different suppliers or who desire to return to
     service from the incumbent utility.

     Thus, while not requiring restructuring or divestiture of
generating assets, the new Ohio legislation encourages that
result, as a means of fostering generation supplier diversity and
curbing potential market power of incumbent utilities.

     With regard to Indiana, the Indiana General Assembly has
actively considered electricity competition issues for a number
of years.  Most recently, proposed customer-choice legislation
was introduced into the Indiana legislature by a large group of
industrial customers in January 1999.  The bill did not pass in
the 1999 session of the Indiana General Assembly which concluded
in April 1999.  Cinergy anticipates that electric restructuring
legislation will again be introduced in the "short session" in
Indiana in 2000.

     In 1995 the Indiana Legislature enacted an Alternative Utility
Regulation statute/33/ which, among other subjects, recognized
"that competition is increasing in the provision of energy
services in Indiana and the United States"/34/ and required
annual reports to the Regulatory Flexibility Committee of the
General Assembly to allow that Committee to monitor changes and
competition in the energy utility industry./35  The Alternative
Utility Regulation statute provides the IURC with considerable
flexibility including the authority, notwithstanding other laws
or rules, to authorize jurisdictional transactions (or to decline
to exercise its jurisdiction) upon a showing of public
interest./36/

     After it files its transition plan with the PUCO, Cinergy will
supplement this application with more detailed information
concerning the proposed restructuring of CG&E's and potentially
PSI's generation facilities.

     F.   Exempt Projects/Foreign/IBU

          1.   Cinergy's International Business Unit

     Cinergy's investments in foreign Exempt Projects are made
under the strategic direction of the IBU.  (Pursuant to its
renewable energies strategy, the IBU also has responsibility for
clean energy projects in the U.S.)  Cinergy's investments in
foreign Exempt Projects are held under Cinergy Global Resources,
which is a direct subsidiary of Cinergy.  The president of CGR is
also the president of the IBU.

     Set forth below is a brief overview of the development of
Cinergy's international business.  A detailed summary of the
specific projects held by CGR at September 30, 1999 is provided
later.

     Cinergy's international investments pre-date the creation of
Cinergy.  In 1992, in connection with privatization of the
electric utility industry by the Argentine government, and
pursuant to Commission orders under Section 3(b) of the Act, PSI
Resources acquired minority equity interests in two Argentine
FUCOs for approximately $20 million - Central Costanera, S.A., a
1260 MW electric generating facility located in Buenos Aires,
Argentina, and Edesur, S.A., an electric distribution network
serving approximately 2.1 million customers in the southern half
of Buenos Aires, Argentina./37/  Cinergy succeeded to these
interests upon consummation of the Cinergy merger in October
1994, in which PSI Resources was merged out of existence.
Cinergy no longer holds either of these investments, selling the
investment in Central Costanera in late 1995 and the investment
in Edesur in late 1998, in each case at a profit.

     Cinergy made no new investments in Exempt Projects from the
date of the Cinergy merger until the Midlands transaction in mid-1996.
During this period, the Company focused on successful
integration of CG&E and PSI under the merged company and the
realization of projected merger savings./38/  In addition, all
the nonutility businesses that Cinergy succeeded to as a result
of the merger were evaluated and several were divested or
discontinued.

     In June 1996, Cinergy and GPU acquired Midlands in a 50-50
joint venture transaction for approximately $2.6 billion.  A
major portion of the purchase price - about $1.6 billion - was
funded through non-recourse bank borrowings by the joint venture
company formed for the acquisition.  The remaining $1 billion was
funded through equal equity contributions by GPU and Cinergy.

     As a result of the Midlands acquisition, Cinergy essentially
had no remaining capacity for additional recourse investments in
Exempt Projects under the safe harbor provisions of Rule 53.  In
March 1997, following meetings with Cinergy's state regulators,
Cinergy filed an application with the Commission requesting
increased authority to invest in EWGs and FUCOs, capped at 100%
of consolidated retained earnings.

     The next step in the development of Cinergy's international
business was the acquisition from Midlands of its team of
experienced project developers, along with rights to certain
projects in development and future projects.  In addition to its
core business of supplying and distributing electricity to 2.2
million customers in mid-central England, Midlands had a separate
wholly-owned subsidiary, Midlands Power International Ltd.
("MPI"), which developed and invested in independent power
projects on a global basis.  More specifically, at the time of
the Cinergy/GPU acquisition, MPI had invested a total of
approximately 181 million pounds sterling (US$293 million) in 9
power projects in the U.K. and other countries, including:

     Teesside Power Station - an 1875 MW gas-fired electric
     generating station located in Wilton, Teesside, in which
     MPI had a 26.7% ownership interest.  Commissioned in April
     1993, Teesside Power Station was the first independent
     power project built in the U.K. and at the time the largest
     in the world.

     Humber Power Station - a 1250 MW gas-fired electric
     generating station located in Stallingborough, Humberside,
     U.K., being developed in two stages, phase 1 of which (750
     MW) was then under construction.  MPI had an 18.75%
     ownership interest in this project.

     Uch Power Limited - a 586 MW gas-fired electric generating
     station being developed in Baluchistan, Pakistan, the first
     such independent power project in Pakistan to utilize
     indigenous fuel.  MPI had a 40% ownership interest.

     Trakya Elektrik A.S. - a 480 MW gas-fired electric
     generating facility being developed in Marmara Ereglisi,
     Turkey, in which MPI had a 31% ownership interest.

     In September 1997 Cinergy and GPU reached an agreement whereby
Cinergy acquired at nominal cost substantially all of the project
development team of MPI (over 30 individuals) together with
certain projects under development by MPI and all future projects
of MPI.  Midlands retained all of the MPI projects in operation
and certain projects under development, such as Uch and Trakya.
The individuals hired from MPI became employees of Cinergy Global
Power Services Ltd ("Cinergy Global Power Services" or "CGPS"), a
UK company and indirect, wholly-owned subsidiary of CGR./39/
Headquartered in Stratford-upon-Avon, CGPS acts as the primary
project development arm of CGR.

     In March 1998, the Commission approved Cinergy's application
to raise the investment ceiling to 100% of consolidated retained
earnings.  In May 1998, Cinergy formed Cinergy Global Resources
to hold Cinergy's international businesses.  Previously, the
international businesses had been held, together with the
domestic nonutility subsidiaries, by Cinergy Investments and PSI.
The creation of CGR was intended to focus, organize and manage
Cinergy's international investments as one business.  A secondary
purpose was to raise the profile of Cinergy's international
activities, centralizing and marketing the investments under a
separate entity and name.

     Since the Commission issued the 100% Order, Cinergy has made a
series of investments in different countries under a three-pronged strategy
focusing on (i) acquiring and modernizing
existing energy assets in Central and Nordic Europe, (ii) owning
and operating clean energy sources, and (iii) participating in
privatizations or greenfield energy projects in developing
countries.  Late in 1998, Cinergy monetized the remaining pre-merger
investment in Argentina, selling its equity in Edesur, the
electric distribution company, at a profit.

     Throughout this period, Cinergy also concentrated on enhancing
the value of its substantial investment in Midlands.  One major
focus was reengineering, where Cinergy has considerable expertise
from its own operations./40/  Business changes implemented by
Midlands as a result of this reengineering campaign are projected
to achieve significant cost savings, through increased
efficiencies in areas such as business support, information
technology costs, network costs, contracting, procurement and
customer management.  Under the British regulatory system, the
benefits of such cost savings accrue primarily to Midlands'
shareholders.

     In November 1998, Midlands entered into an agreement,
contingent on U.K. government and regulatory approval, to sell
its electric supply business for approximately $300 million plus
other consideration to National Power plc, one of the U.K.'s
principal generation companies.  Midlands will continue to own
and operate its electric distribution business, which will remain
a regulated monopoly.  By contrast, the supply of electricity
(i.e., the purchase of electricity from generators for resale to
consumers) is now open to full competition in the U.K.

     In April 1999, the necessary U.K. approvals were obtained for
the sale to National Power, and the transaction closed in June
1999.  With the closing of that transaction, Midlands became the
first of the 14 U.K. regional electric companies ("RECs") to
"exit" the electric supply business and focus solely on the
electric distribution business.  The distribution business
accounted for approximately 90% of Midlands' net income before
interest and including taxes for the fiscal year ended March
1998.  In August 1999, the Office of Gas and Electricity Markets,
the U.K.'s primary electricity regulator, proposed substantial
cuts in the RECs' electric distribution rates, covering the five-year
period beginning April 1, 2000.  The regulator's average
proposed cut was between 25 and 30 percent for the first year,
with a further cut of 3 percent below the inflation rate annually
thereafter.

     On July 15, 1999, Cinergy and GPU completed a transaction
announced earlier that month, pursuant to which GPU acquired
Cinergy's 50 percent ownership interest in Avon Energy Holdings,
the parent company of Midlands, for approximately $700 million in
cash.  As a result Midlands became a wholly-owned subsidiary of
GPU.  Cinergy will retain Midlands' natural gas marketing
operations headquartered in London and the Redditch Power
Station, a 29 MW electric generating facility in the U.K.  The
Midlands sale contributed $0.43 per share to Cinergy's third
quarter 1999 earnings.

          2.   Existing Foreign Investments/September 30, 1999

     At September 30, 1999, approximately $194 million of Cinergy's
aggregate investment of $568 million was devoted to a variety of
foreign projects.  This total understates the extent of Cinergy's
foreign business, since with the recent monetization transaction
the roughly $500 million investment in Midlands - historically by
far the largest single project - is no longer included.  The
foreign projects are located in six countries, Bangladesh, Czech
Republic, Estonia, Spain, U.K. and Zambia.

     Under the IBU's direction, CGR has been assembling a portfolio
of project investments, diversified by geographic location and
type of project (greenfield projects vs. existing assets),
intended to balance near-term earnings against long-term value
creation and higher returns.  CGR has been guided by the
following specific strategies in implementing the authority
granted under the 100% Order:

     1.   Asset Acquisition Strategy:  This strategy focuses on
          acquiring and modernizing existing energy assets in
          areas of Central and Nordic Europe and Central America
          using Cinergy's operational and reengineering
          expertise.  These are frequently projects where
          significant value can be added by restructuring,
          repowering, expanding or reengineering.  At September
          30, 1999, CGR's investments under this strategy were
          located in the Czech Republic and Estonia.

     2.   Renewable Energies Strategy: This strategy focuses on
          owning and operating clean energy sources - wind,
          hydro and biomass-fired electric generation facilities
          - throughout the world.  At September 30, 1999, CGR's
          international renewable investments were located in
          Spain and the U.K.  CGR holds interests in two U.S.
          wind-powered generating facilities - a PURPA
          qualifying facility in California and an EWG in
          Wyoming.

     3.   Developing Countries Strategy:  This strategy focuses
          on participating in privatizations or "fuel-to-power"
          projects in developing countries, especially Africa
          and Asia.  In many developing countries, there is
          insufficient electric generating capacity to meet
          demand, severely limiting the economic growth of the
          country.  This situation, prevalent in many countries
          of Asia and Africa, has created opportunities to
          develop power projects with governments who require
          private foreign investment to add electric generation
          capacity.  At September 30, 1999, CGR had invested in
          two such projects - a fuel-to-power project in
          Bangladesh and an electric transmission and
          distribution privatization in Zambia.  (Cinergy had
          also made preliminary commitments to invest funds in a
          greenfield generation project under development in
          Baghabari, Bangladesh.)

     The following table lists Cinergy's investments in all of its
Exempt Projects as of September 30, 1999./41/



   EXEMPT PROJECTS

                                         
                                                                 RULE 53
PROJECT                       COUNTRY             STATUS                   INVESTMENT

1.  Copperbelt Energy         Zambia         commerical operation          $30.8 million
     Corporation plc

2 & 3.  EOS Pax I, S.L.       Spain          commerical operation          $8.3 million
     & EOS Pax Iia, S.L.

4.  Construcciones y          Spain          commerical operation          $4.1 million
    Representaciones
    Industriales S.A.

5.  Parque Eolico De          Spain          commerical operation          $0 /42/
    Ascoy, S.A.

7.  Midlands Hydrocarbons     Bangledesh     development                   $8.9 million
    (Bangladesh) Limited

8.  Moravske Teplarny a.s.    Czech Republic commerical operation          $40.1 million

9.  Plzenska Energetika       Czech Republic commerical operation          $23.8 million
    s.r.o.

10.  EPR Ely Ltd.             U.K.           Construction                  $6.4 million

11.  Aktsiaselts Narva        Estonia        commercial operation          $5.3 million

12.  Dessarrollo Eolico       Spain          commerical operation          $3.3 million
     Del Ebro, S.A.

13.  Cinergetika U/L a.s.     Czech Republic commerical operation          $26.6 million

14.  Teplarna Otrokovice,     Czech Republic commerical operation          $1.5 million
     a.s.

15.  Energetika Chropyne,     Czech Republic commericaloperation           $2.8 million
     a.s.

16 & 17.  Westwood Operating  U.S./PA        commerical operation          $8.2 million
     Company LLC/CinCap VI,
     LLC

18.  Foote Creek III, LLC     U.S./WY        commerical operation          $14.2 million

19.  VMC Generating           U.S./OH & IN   construction                  $365 million
     Company /43/





     The following provides more detailed information for each of
these projects (other than the Westwood and Duke projects,
previously discussed).

               a.   Copperbelt Energy Corporation plc

     In November 1997, Cinergy and National Grid Company plc ("National
Grid") acquired electric transmission and distribution assets spun-off in
connection with the privatization of the copper mining industry in Zambia.
The transaction was the first under the IBU's developing countries
strategy.

     The assets were transferred by Zambia Consolidated Copper Mines Ltd.
("ZCCM") into a newly created subsidiary, Copperbelt Energy Corporation
plc, a UK company ("CEC"), in which each of Cinergy and National Grid
acquired a 39% ownership interest, with ZCCM retaining a 20% ownership
interest and a local management team (unaffiliated with Cinergy) holding
the balance.  CEC's electric assets are located in and around the city of
Kitwe in Copperbelt Province in north central Zambia and include 129 miles
of 220 kV and 363 miles of 66 kV overhead transmission lines, together with
associated low voltage distribution facilities and 80 MW of standby gas
turbine generation.  CEC delivers 700 MW of power to Zambia's copper mines
and other power consumers within the Copperbelt Province, comprising over
two-thirds of Zambia's total electric demand.

                 b & c.         EOS PAX I, S.L. & EOS PAX IIa, S.L.

     In March 1998, Cinergy, together with Tomen Power Company, a Japanese
construction company, acquired EOS Pax I, S.L. & EOS Pax IIa, S.L.
(collectively, "EOS"), two wind farms located in Galicia in northwest
Spain.  The wind farms (each of which consists of over 30 wind turbines)
have an aggregate installed generating capacity of approximately 40 MW.
Cinergy and Tomen are 50-50 owners of each wind farm.  EOS is in commercial
operation and supplies electricity to Union Fenosa, the regional electric
utility.  This transaction was the first under the IBU's renewable energy
strategy.

                 d.   Construcciones y Representaciones Industriales
                      S.A.

     In April 1998, Cinergy acquired 95% ownership of Construcciones y
Representaciones Industriales S.A. ("Crisa"), another renewable energy
investment.  Crisa is located near Murcia in southern Spain and consists of
five mini hydro plants with a total installed electric generating capacity
of approximately 6 MW.  The plants are in commercial operation and
supply electricity to Iberdrola, the regional electric utility.
Cinergy acquired its interest in Crisa from Midlands, pursuant to
the 1997 agreement with GPU noted above.

                 e.   Parque Eolico de Ascoy

     In April 1998, Crisa purchased a 19.5% interest in Parque Eolico de
Ascoy ("Ascoy"), a wind farm located in Murcia Province in southeastern
Spain.  Nine 660 kW wind turbines provide an installed electric generating
capacity of approximately 6 MW.  Commercial operations commenced in January
1999.  Ascoy supplies electricity to Iberdrola, the regional utility.

                 f.   Midlands Hydrocarbons (Bangladesh) Ltd.

     Midlands Hydrocarbons is an EWG that is developing a "gas to power"
project in Bangladesh.  The project addresses the urgent need in Bangladesh
for commercially available supplies of indigenous fuels for power
generation.

     The project is proceeding in two stages, involving first, the
exploration of fuel for, and second the construction of a power plant.

     In the first stage, now underway, Midlands Hydrocarbons, Shell
and Cairn Energy, a UK-based gas and oil exploration company, are
conducting seismic surveys, drilling and otherwise exploring and
developing natural gas concession rights which they own to the
Semutang gas field located 37 miles north of Chittagong in
Bangladesh.  Midlands Hydrocarbons has a 30% ownership interest
in this gas concession.  Cinergy acquired Midlands Hydrocarbons'
rights to the gas concession in the spring of 1998 from Midlands.

     In the second stage, Midlands Hydrocarbons and the other
investors would develop, construct, own and operate a power plant
sited at or near the Semutang gas field, fired by the available
gas reserves.  Initially the power plant would have at least 40
MW of installed capacity.  The plant would include nine miles of
132 kV transmission line to connect with the national grid.

                 g.   Moravske Teplarny a.s.

     Moravske Teplarny a.s. ("Teplarny") is a combined heat and power plant
in the city of Zlin, located in the south Moravian region of the Czech
Republic.  The plant consists of five coal-fired turbine generators with 48
MW of installed capacity, along with associated distribution assets, which
supply electricity to the regional electric distribution company,
Jihomoravska Energetika ("JME"), together with 10 boilers ranging from 22
to 150 tons/hour of steam output with 410 MW of installed capacity
which supply district heating and process steam to the Svit
industrial complex and heating to the eastern 40 percent of the
city.  CGR acquired 100% ownership of Teplarny in June 1998.

     Teplarny was the first acquisition under CGR's strategy to
acquire and modernize existing energy assets located in Central
Europe and other regions capitalizing on Cinergy's operational
and reengineering expertise.  CGR has already implemented various
measures to optimize this investment.  A computer model has been
created to perform economic analysis of the plant more
efficiently and allow for the evaluation of new equipment.  CGR
has also conducted a reengineering study for comparison against
the corporate management model.  Third, CGR is adding a new
boiler/turbine to the site.  The fluidized bed boiler will
provide 125 tons/hour of steam output, while the condensing
turbine generator will have 30 MW of electric capacity.  The
project is scheduled for completion by the 2001-2002 heating
season.

                 h.   Plzenska Energetika s.r.o.

     In September 1998, CGR acquired 100% ownership of Plzenska
Energetika s.r.o. ("Energetika"), a combined heat and power plant
located in the city of Plzen, approximately 70 miles southwest of
Prague in the Czech Republic.

     The plant consists of three coal-fired turbine generators with
84 MW of installed capacity, along with associated transmission
and distribution assets, which supply electricity to the nearby
Skoda industrial complex, the largest industrial engineering
conglomerate in the Czech Republic, and Ceske Energeticke Zavody,
the Czech electric transmission grid, together with five boilers
ranging from 75 to 160 tons/hour of steam output which have over
400 MW of heating capacity and supply district heating and
process steam to the Skoda complex.

     Since closing on this acquisition, CGR has developed a long-term
reengineering plan for Energetika, which is well underway.
Organizational restructuring has already reduced material and
labor expenses and created a system of objective performance
measurements.  Second, capital improvements have been made to
increase performance and produce higher returns.  Another process
of adding value is the divestiture of non-core business lines in
order to focus on the core energy business.  CGR has restructured
these businesses and, to date, has sold all but one of these non-core
lines.

                      i.EPR Ely Ltd.

     EPR Ely Ltd. ("Ely") is a 36 MW straw-fired electric
generation facility under construction in Ely, Cambridgeshire in
the U.K.  CGR acquired a 30% interest in Ely in September 1998.
The remaining equity is held by Energy Power Resources Ltd., a
major independent developer of renewable energy projects in the
U.K.

     The facility is expected to begin commercial operation in
autumn 2000 and will supply electricity to Eastern Electricity
plc, a REC.  When completed, Ely is expected to be the world's
largest straw-fired power plant, consuming about 200,000 tons of
straw per year and generating enough electricity to supply about
80,000 homes.  The project has a number of environmental
benefits; for example, it will produce virtually no waste
products.

                 j.   Aktsiaselts Narva Elektrivork

     Aktsiaselts Narva Elektrivork ("Narva") owns and uses
facilities for the distribution and sale of electricity at retail
in northeastern Estonia, including the cities of Narva, Narva-Joesuu and
Sillamae.  The facilities include approximately 300 substations of
different voltage and capacity characteristics, and a distribution network
of voltages up to 110 kV over an area of approximately 610 square miles.
The current maximum system demand is 61 MW.

     CGR acquired its interest in Narva pursuant to the Estonian
Government's privatization of Narva's electric distribution
network.  In November 1998, CGR and an Estonian investment
company, Sthenos Grupp, jointly acquired a 49% ownership interest
in Narva (CGR's allocable share being 33%).  In April 1999, the
Estonian Privatization Agency selected CGR and the Sthenos Grupp
to acquire the remaining 51 percent from the Estonian Government.
This transaction closed in May 1999, as a result of which CGR
indirectly owns 67 percent of Narva.

                 k.   Dessarrollo Eolico del Ebro, S.A.

     Cinergy acquired 50% ownership of Dessarrollo Eolico del Ebro,
S.A. ("Desebro") in December 1998.  Desebro is a 15 MW wind-powered
facility in northeast Spain near the City of Zaragoza,
which supplies electricity to Electricas Reunidas de Zaragoza,
S.A., a local utility company.  The wind farm began commercial
operations in August 1999.

                 l.   Cinergetika U/L a.s.

     Cinergetika U/L a.s. (formerly Setuza Energetika a.s.)
("Cinergetika") is a combined heat and power plant located in the
city of Usti nad Labem in northwestern Czech Republic.  CGR
acquired 100% ownership of Cinergetika in February 1999.  The
plant consists of two coal-fired turbine generators with 14 MW of
capacity, along with associated transmission and distribution
assets, which supply electricity to the nearby Setuza complex
(one of the largest Czech producers of food, household and
oleochemical products) and Severoceska Energetika, the regional
electric distribution company, together with four boilers ranging
from 60 to 75 tons/hour of steam output with 230 MW of capacity,
which supply district heating and process steam to the Setuza
complex and a wholesale housing administrator.

                 m.   Teplarna Otrokovice a.s.

     Teplarna Otrokovice a.s. ("Otrokovice") is a combined heat and
power plant located in Otrokovice, near Moravske Teplarny, in the
Czech Republic.  CGR acquired a 11.4% ownership interest in
Otrokovice in March 1999.  The plant consists of two coal-fired
turbine generators with 37 MW of electric capacity, which supply
electricity to JME, together with five boilers ranging from 110
to 375 tons/hour of steam output with 349 MW of capacity, which
supply the district heating needs and process steam for local
industrial plants.

                 n.   Energetika Chropyne, a.s.

     Energetika Chropyne a.s. ("Chropyne") is a combined heat and
power plant located in Chropyne, near Moravske Teplarny, in the
Czech Republic.  CGR acquired 100% ownership of Chropyne in May
1999.  The plant consists of one natural gas-fired turbine
generator with up to 2.5 MW of electric capacity, which supplies
electricity to Technoplast industrial complex via Chropyne's own
power and power purchased from JME, together with three boilers
ranging from 20 to 44 tons/hour of steam output with 48 MW of
capacity, which supply the district heating needs and process
steam for the Technoplast industrial complex and local
residential housing.  This is CGR's most recent investment in the
Czech Republic under its asset acquisition strategy.

                 O.   Foote Creek III, LLC

     In August 1999, Cinergy acquired 100 percent ownership of
Foote Creek III, LLC ("Foote Creek"), a wind farm located near
Laramie, Wyoming.  The installed electric generating capacity of
25 MW is provided by 33 wind turbines.  Commercial operations
commenced in June 1999.  Foote Creek supplies electricity to
Public Service Company of Colorado.  Foote Creek is CGR's first
domestic EWG.

            3.   Future Investments in Foreign Utilities

     The actual use of the proposed investment authority will of
course depend upon available opportunities for investment, but in
general these opportunities are widespread and increasing.  They
arise both from the growing need for new generating capacity in
developing countries/44/ and the worldwide movement toward
privatized and competitive energy markets, as governments open up
state-owned monopolies to private investors in response to
economic and political imperatives.

     The IBU continues to develop and acquire projects under the
three-pronged strategy described above.  The Proposed Cap would
enable CGR not only to expand its international business along
existing lines, but also to bid for additional large
privatizations and secondary sales, while at the same time
enabling the ECBU to build its generation business in the United
States.

                 a.   Renewables/Asset Acquisition/Developing
                      Countries Strategies

     The following outlines the IBU's ongoing efforts to develop
Cinergy's international business under the existing strategies.
All of these strategies are subject to change.  As CGR pursues
its strategies in these three areas, it continues to look for
opportunities in new markets.  For example, much of the expertise
gained in connection with the asset acquisitions strategy and
renewables projects can be transferred to new regions, such as
Central America.

     1.   Renewable Energies Strategy:  CGR continues to develop
          its renewables strategy in Spain where its investments
          are concentrated, while at the same time investigating
          other opportunities in the rest of Europe, in the
          United States and in Africa.  By becoming a key player
          in the renewables market, and building upon
          relationships, CGR is able to consider a variety of
          wind, hydro and biomass projects.

     2.   Asset Acquisition Strategy:   With its Narva
          acquisitions in late 1998 and spring 1999, CGR began
          expanding its asset acquisition strategy north into
          the Nordic countries where there is significant
          opportunity for adding value through refurbishment, as
          well as new opportunities that are emerging through
          industry consolidation.  The opening of the European
          Union to electric competition has created new
          opportunities for cross-border acquisitions and energy
          marketing (see discussion below).  The growing
          portfolio of projects in the Czech Republic has
          created a strong base to expand eastward into
          countries of the former Soviet Union.  Recently
          announced privatization programs have created new
          opportunities in these countries.  CGR is also
          actively considering opportunities in Central America.

     3.   Developing Countries Strategy:     CGR's initial
          investment in Zambia through CEC has opened up
          opportunities in Africa.  With significant power
          shortages delaying economic growth in many African
          countries, governments are eager to privatize assets
          and sponsor IPP development.  There is large potential
          for development of hydropower in central Africa, as
          well as in certain countries of west Africa.  CGR
          believes that the experience it is acquiring through
          its investment in CEC, as well as its fuel-to-power
          and greenfield projects in Bangladesh, will benefit it
          in competing for additional African and Asian
          projects.

          With reference to the developing countries strategy, an
          important CGR project in an advanced stage of development is
          known as Baghabari, located in western Bangladesh.  Baghabari
          will be a combined cycle, gas-fired power plant with an installed
          capacity of 170 MW.  Initially CGR will own 100 percent of the
          project, which is included in the World Bank Power System Master
          Plan for Bangladesh.

          Baghabari will purchase gas from PetroBangla under a 22-year gas
          supply agreement, and supply electricity to the Bangladesh Power
          Development Board under a 22-year power purchase agreement.
          Construction is scheduled to begin late in 1999, with simple
          cycle operations in late 2000 and combined cycle operations in
          late 2001.  CGR is the main O&M contractor.  Total project cost
          is expected not to exceed $97 million.  In order to expedite the
          project, Cinergy has agreed to balance sheet financing.

                 b.   Privatizations/Secondary Sales/Public Company
                      Acquisitions

     According to Cambridge Energy Research Associates, the pace of
electric privatizations will accelerate in 1999 and 2000 as sales in Brazil
and other Latin American countries continue, the scope of transactions
expand in Europe, and a number of countries in Asia conduct asset sales for
the first time./45/  More specifically, CERA reports that privatizations
are expected to remain strong in Latin America, led by the sell-off of
generation assets in Brazil, the completion of privatization programs in
Colombia, Peru and Central America, and the potential for a commencement of
asset sales in Mexico./46/  Additional important privatization sales are
anticipated in Europe, especially Italy, where up to 15,000 MW of power
plants could be auctioned by 2003./47/  In Asia, South Korea recently
announced that it intends to open up its state-run power generation
industry to foreign investors./48/

     The evolving situation in Western Europe points up the range of
opportunities stemming from the continued liberalization and integration of
global energy markets.  One of the main catalysts has been the European
Commission, the executive arm of the European Union ("EU"), through its
efforts to introduce competition in the energy sectors of member
countries./49/  The EC's Electricity Directive called for the formal
opening of electricity markets by February 19, 1999, permitting large-scale
consumers (at least 40 GW-hours per year) to shop for their electricity
supplier, with choice extending in phases up to 2003, when electric
customers using 9 GW-hours per year will be able to switch suppliers.
(Under the EU's Gas Directive, phased competition in gas supply is to begin
in 2000.)   Meanwhile, many member countries have been opening their market
more rapidly.  Even before the Electricity Directive went into effect,
nearly two-thirds of the EU market already enjoyed some level of retail
competition for electric supply, including consumers in Germany,
the U.K., Spain and the Scandinavian countries./50/

     This growing electric competition has been accompanied by the
creation of regional power pools to promote and coordinate wholesale
trading.  The U.K. Electricity Pool (launched in 1990, involving English
and Welsh participants), Nordpool (launched in 1996, involving Swedish,
Finnish and Norwegian participants, with Denmark a provisional member) and
the Amsterdam Power Exchange (launched in June 1999, involving, among
others, Dutch, German, Belgian, Scandinavian and U.S. participants), among
other similar arrangements, are offering or developing U.S.-style power
trading instruments, such as spot and futures contracts, to meet the
demands of counterparties.  As in the U.S., the liquidity and products
afforded by these electricity pools should improve management of system
capacity and lead to lower electricity prices./51/

     The Electricity Directive has also sparked a surge in cross-border
acquisitions, joint ventures and strategic stake-building throughout
Western Europe.  Examples include Electricite de France's acquisition of
London Electricity for $3.18 billion and the $1.95 billion acquisition of
Stockholm Energi by Imatran Voima, the Finnish power group./52/  U.S.
companies establishing beachheads on the continent include Southern
Company, which in 1997 acquired a 26 percent stake in Bewag, the Berlin
utility, for $830 million, and Reliant Energy, which in March 1999
announced a deal to acquire the Dutch generation group,
Energieproduktiebedrijf UNA, for $2.4 billion.  Indeed, falling
electricity prices in Germany have ignited a dramatic consolidation of the
industry there, as witnessed by the recently announced $14.1 billion merger
between Veba A.G., Germany's second-largest utility, and Viag A.G, the
nation's third largest utility; and RWE A.G., Germany's biggest power
company, recently announced that it will acquire VEW A.G., a big regional
provider./53/

     Acquisitions of foreign utilities can offer many financial and
strategic benefits to the acquiror.  One is control of extensive utility
systems already in commercial operation serving large numbers of customers
in a stable political and legal environment.  Another is the potential for
significant, immediately accretive impacts on earnings.  These transactions
thus help to balance and make practicable investments in greenfield
projects, with their longer lead times and greater risk.  And acquisitions
made in the early stages of governmental privatization and deregulation can
serve as strategic "points of entry," opening up opportunities for building
scale economies through additional transactions (in that country or
neighboring regions), as the industry further consolidates, including
through sell-downs by initial purchasers.

     All of these points apply to Cinergy's investment in Midlands.
The Company must not be artificially constrained from completing
transactions of similar magnitude and commensurate benefits.  The
ability to compete for major privatizations, large secondary
offerings and public company acquisitions is crucial to Cinergy's
international business.  In turn that business is a linchpin of
the Company's overall corporate strategy for success.

Item 2.     Fees, Commissions and Expenses

     Other than the fees relating to proposed financing transactions, which
are described previously, the fees, commissions, and expenses paid or to be
paid or incurred by Applicants or any associate companies thereof in
connection with the proposed transactions, including the fees of Thelen
Reid & Priest, Skadden Arps and Merrill Lynch, will be supplied by
amendment.

Item 3.     Applicable Statutory Provisions

     Sections 6(a), 7, 12(b), 32 and 33 of the Act and Rules 45, 53
and 54 are or may be applicable to the proposed transactions.  Rule 53
provides that if each of the conditions of paragraph (a) is met, and none
of the conditions of paragraph (b) is applicable, then the Commission may
not make certain adverse findings under Sections 7 and 12 of the Act in
determining whether to approve a proposal by a registered holding company
to issue securities in order to finance an investment in any EWG or
to guarantee the securities of any EWG.

     Giving effect to the proposed transactions, Cinergy will satisfy all
of the conditions of Rule 53(a) except for clause (1), since Cinergy is
proposing that its aggregate investment exceed 50% of consolidated retained
earnings.  None of the conditions specified in Rule 53(b) is applicable.

     Rule 53(c) states that in connection with a proposal to issue
and sell securities to finance an investment in any EWG, or to guarantee
the securities of any EWG, a registered holding company that is unable to
satisfy the requirements of paragraph (a) or (b) must affirmatively
demonstrate that such proposal:

     will not have a substantial adverse impact upon the
     financial integrity of the registered holding company
     system; and

     will not have an adverse impact on any utility subsidiary
     of the registered holding company, or its customers, or on
     the ability of State commissions to protect such subsidiary
     or customers.

     The Commission has held that these same tests apply to
registered holding company financings of FUCO acquisitions.

     The proposed transactions will not result in any such adverse
impacts.  As discussed below:

     1. Cinergy subjects potential investments in Exempt Projects
to a series of project review screens before any funds are
committed.  Once funds have been invested, Cinergy closely
monitors project performance and uses a variety of techniques to
mitigate specific risks.  More generally, Cinergy's portfolio
diversification approach serves to mitigate the risks presented
by any single project.  Open access transmission service,
increasing competition in bulk power markets and the growing
demand for new generating capacity also mitigate risks of U.S.
EWG projects.

     2. Wherever practicable Cinergy finances Exempt Projects
with non-recourse debt.  Cinergy's 50 percent stake in Midlands
was financed with $800 million in non-recourse bank borrowings,
in addition to Cinergy's $500 million equity investment.  In any
event, the Operating Companies will never finance, lend their
credit to, or mortgage their assets in respect of any Exempt
Project, other than potentially in connection with a transfer of
existing regulated generation to EWG status.

     3. Cinergy's has a successful track record, as borne out by
the recent sale of the Company's sizable investment in Midlands.

     4. Credit ratings and other indicators attest that Cinergy
and its utility subsidiaries are in sound financial condition.
The Operating Companies are not expected to need any funds from
Cinergy to finance capital requirements through at least year-end
2004.

     5. Just as with the existing and prior investments, Cinergy
will prudently finance the new investments, to preserve the
financial integrity of Cinergy and the Operating Companies.
Cinergy has developed a comprehensive financial model addressing
the expected financing and likely impacts of the proposed new
investments, the results of which indicate that the financial
performance of Cinergy will be enhanced without undermining the
financial integrity of the Operating Companies.  Cinergy retained
Merrill Lynch to perform a credit analysis with respect to the
proposed new investments and will supplement the record with
their conclusions, which are expected to issue shortly.  Finally,
Cinergy will not issue any additional debt to finance investments
in Exempt Projects covered by the Proposed Cap if Cinergy's
senior debt is not then rated investment grade by at least one
major ratings agency.

     6. The Operating Companies and their customers will remain
insulated from the direct effects of Cinergy's project
investments.  In the first place, the Operating Companies will
continue to have no involvement in financing the acquisition of
any Exempt Projects, except potentially in connection with the
transfer of existing generating facilities owned by them to EWG
affiliates.  Any transfer of such assets to EWG status will
conform to the requirements of section 32 of the Act, including
the requirement for specific findings from Cinergy's state
commissions.  Third, Cinergy will not seek recovery through
higher rates to the Operating Companies' customers for any losses
or inadequate returns from project investments.

     7. Cinergy's 1994 merger commitments, and the recently
enacted legislation in Ohio providing for customer choice in the
supply of electricity, provide further assurances that the
proposed transactions will not adversely affect the Operating
Companies or their customers or the affected state commissions.

     8. Prior to filing this application, Cinergy held numerous
meetings with the commissioners and staff of the Ohio, Indiana
and Kentucky commissions.

     A.   Project Review Procedures/Risk Mitigation
          Techniques

     Cinergy subjects all proposed investments in Exempt Projects
to a series of screens, analyses and reviews before any funds are
committed.  Thereafter Cinergy regularly monitors project
performance.  These processes - enhanced since the Commission
issued the 100% Order - mitigate the risks presented by Exempt
Projects and serve to protect the financial integrity of Cinergy
and the Operating Companies.  As described below, these processes
consist of:

     Cinergy's annual strategic planning process, including
     key performance indicators, or KPIs, and quarterly
     reviews;

     Cinergy's global risk management function, which has
     responsibility for evaluating and mitigating risks
     arising from Cinergy's investments;

     Cinergy's capital investment process (Project
     Safeguard) for allocating funds to specific projects;
     and

     The additional prior review and monitoring processes
     specifically applicable to foreign utility
     investments.

     In addition to these processes, Cinergy uses various techniques to
minimize the specific types of risks posed by Exempt Projects.  These
techniques are also described below, after an overview of the investment
screens and reviews, which immediately follows.

            1.   Strategic Planning Process

     Cinergy has a number of processes in place in order to ensure
that EWG and FUCO projects will not impair Cinergy or the Operating
Companies.  One of the first processes, or screens, is Cinergy's strategic
planning process.

     The strategic planning process is both an annual process and
an ongoing process throughout the year.  Each proposed EWG or FUCO project
is scrutinized with a view to whether it fits strategically with the
direction of Cinergy.  In order to assess strategic fit, there are five
criteria which each project must meet:  does it give the organization a
sustainable competitive advantage? add to shareholder value? does it link
with the internal corporate strategies effectively? is the risk profile of
the project acceptable to Cinergy? and is the size of the opportunity
satisfactory?  Besides strategic fit, other items which are reviewed during
the strategic planning process are the proformas of the proposed project,
the key assumptions associated with the proformas, and key decisions which
need to be made in order to move forward with the project.

     In addition to the above information, proposed EWG and FUCO projects
are requested during the strategic planning process to supply key
performance indicators ("KPIs"), or quantification of expected business
results, which indicate if the project is adding value to the firm.  The
KPIs established through the strategic planning process are monitored not
only by the strategic planning organization, but also through Cinergy's
quarterly review process of its business units (see above for more
information on Cinergy's business units).

     Each quarter, Cinergy's business units are required to meet with the
chief executive officer and chief financial officer of Cinergy to discuss
not only their quarterly financial results, including EWG/FUCO projects,
but also how they are performing against their KPIs for their business
unit, including EWG/FUCO projects.

     Therefore, through the strategic planning process, including
establishment of KPIs and quarterly reviews, Exempt Projects are
subjected to rigorous advance screening and continuous review to
ensure that they are consistent with Cinergy's strategic
objectives and adding value to the organization.

            2.   Global Risk Management Function

     Cinergy has taken an enterprise-wide approach to risk.  Within
Cinergy's finance department is a group charged with global risk
management for Cinergy and its subsidiaries.  With the support of
Cinergy's Board of Directors, this group, or function, is responsible for
identifying, measuring, mitigating and monitoring the full spectrum of
risks affecting the business of Cinergy and its subsidiaries.

     For instance, this group led the effort to put in place
"Project Safeguard" (described below), a project which resulted
in mandatory, formal investment committee review for all
investments above a certain dollar amount.  This group is also
responsible for identifying energy commodity marketing risks, and
making sure that risks above a certain level are brought before
Cinergy's Risk Policy Committee.  Cinergy's global risk
management function has helped the corporation understand that
risk management spans all aspects of Cinergy's business - from
making good initial decisions, managing transactions after
closing, and exiting when appropriate.

            3.   Capital Investment Review Process/Project Safeguard

     Since filing the 100% application, Cinergy has implemented a
comprehensive capital investment review process applicable to all
proposed investments.  This process, developed through a
consulting relationship with Price Waterhouse Coopers, is known
as Project Safeguard.  Each proposed investment is subjected to a
three-phased review process including decisional checkpoints, the
primary responsibility for which resides in the business unit
that originated the proposal.  Cinergy's Global Risk Management
group helps to coordinate the entire Project Safeguard process.
Depending on the size of the proposed investment, before funds
are committed, approval must be obtained for the investment from
the business unit president, Cinergy's Investment Committee and
the chief executive officer, and/or Cinergy's Board of Directors.

     The first phase, the "identification phase," includes an
initial strategy screen and an initial analysis screen by the
business unit project sponsors.  The initial strategy screen
determines whether a proposed investment fits within the
Company's and business unit's explicitly stated strategy.  The
initial analysis screen is designed to evaluate the high level
economics and risks of a project.

     The second, or "assessment phase," includes a detailed
analysis screen and a due diligence screen by the business unit.
The detailed analysis screen consists of activities to develop a
more detailed economic analysis.  A discounted cash flow analysis
is completed that accounts for project economic elements,
drivers, opportunities, and risks.  The due diligence screen is a
risk mitigation process that focuses on understanding all
relevant issues and risks related to the project valuation
identified during the economic valuation as well as those
identified subsequent to the valuation.

     The "management review and approval phase" consists of the
execution and monitoring steps of the process.  The execution of
a project occurs after final approval is received from the
appropriate internal authority (see below).  Once a project is
executed and is operational, the business unit has responsibility
for tracking the performance of the project.  Actual project
results are compared to anticipated results and differences are
adequately researched and explained.

     In addition to the identification, assessment and management
processes just described, which are carried out at the business
unit level, Cinergy's capital investment review process can
involve many individuals across the corporation with varying
levels of responsibility.  The level of involvement, and the need
for prior internal approvals outside the particular business
unit, depends on the size of the proposed investment.  For these
purposes, there are three levels of investment (up to $5 million
and between $5 and $25 million being the first two thresholds),
with all proposed investments in equity, corporate guarantees or
recourse financial debt in an amount greater than $25 million
(the third threshold) requiring prior approval from Cinergy's
Board of Directors.  (The specific dollar thresholds currently in
effect are subject to change.)

     The business unit project sponsors have the primary
responsibility for managing projects throughout the investment
process.  This responsibility includes, but is not limited to:

     1.   Originating project ideas
     2.   Developing project economics
     3.   Leading the project through the approval process
     4.   Presenting the project for approval
     5.   Executing the project
     6.   Monitoring project performance

     The role of the Corporate Center in the review process is to
assist and advise the business units in developing complete
project proposals.  As such, various groups within Corporate
Center are required to review and sign-off on projects prior to
their presentation to management when called upon by the business
unit initiating the project or by Cinergy's Global Risk
Management group.

     Business unit presidents have final approval authority for all
projects up to a certain threshold level (currently $5 million)
originating from their respective business units.  Additionally,
business unit presidents have responsibility for reviewing and
sponsoring projects in excess of $5 million submitted for review
to Cinergy's Investment Committee.

     The Investment Committee is a corporate oversight group that
assists in ensuring significant investments made by Cinergy's
business units are consistent with corporate strategy and have
been adequately analyzed to identify value, risks, and benefits
to the corporation.  The committee consists of senior executives
of Cinergy, namely:

     Presidents of each of the business units
     Corporate Chief Financial Officer
     Vice President of Corporate Services
     General Counsel

     The committee is responsible for reviewing and making
recommendations to Cinergy's chief executive officer ("CEO") on
all capital projects in excess of $5 million.  Additionally, the
committee is responsible for reviewing unique/new-to-the-Company
investments on an informational/screening level at the initial
analysis gate of the investment process.

     The CEO has final approval authority for all projects between
$5 million and $25 million.  Additionally, the CEO is responsible
for reviewing and making recommendations to the Board of
Directors on all capital projects in excess of $25 million.

     The Board of Directors approves all investment projects in
excess of $25 million.  The Executive Committee of the Board
reviews projects requiring Board of Directors approval if
presented between formal board meetings.

     Thus, through Project Safeguard, all business units must
analyze projects using the same rigorous criteria.  And depending
on the size of the project, progressively greater scrutiny
throughout Cinergy is applied, with the requirement for
Investment Committee and CEO approval (in addition to approval
from the president of the business unit sponsoring the project)
for all projects in excess of $5 million and Board of Directors
approval for all projects greater than $25 million.  Project
Safeguard helps to ensure that Cinergy's Exempt Projects will not
adversely impact the Company or its utility subsidiaries.

            4.   International Project Review and Performance
                 Management

     International projects undergo additional rigorous screening,
analysis, and review processes.  Senior management of Cinergy
Global Power Services, or CGPS (Cinergy's international project
development subsidiary, earlier described), CGR and, under
certain circumstances, Cinergy itself are extensively involved in
the up-front decision making before projects are bid on and in
the continual monitoring of existing project results.

     New projects must pass multiple criteria and five key review
points in order to move to financial closure.  Throughout the
process, risks are monitored to ensure they can be effectively
mitigated.  Potential projects are first identified by the CGPS
or CGR development groups.  Second, analyses are made regarding
country characteristics and financial considerations.  Key
project evaluation factors include the host country, host
government, partner profile, energy demand, and project
structure.  The Project Safeguard team in Cinergy's Global Risk
Management group is typically notified of the project under
consideration at this point, so that they can work in conjunction
with the International Business Unit in moving the project
further through the screening process.  The third phase involves
due diligence and formal analysis including preliminary financial
analysis.  Due diligence typically involves both resources from
CGR and the Cincinnati Corporate office.  Fourth, an initial
decision is made whether to proceed further or not.  If the
project has progressed this far, third party consultants are
typically brought in to provide additional legal and financial
advice.  The fifth key analysis is a financial model which
assesses the net present value and internal rate of return of the
project.  The model is run based on different risk scenarios.
Having successfully completed this process, final approval is
then sought in compliance with the Project Safeguard parameters
before an actual bid is submitted.  Depending on the size of the
bid, prior approval will be required from the IBU president (up
to $5 million), the Investment Committee and CEO (>$5 million to
$25 million) and/or Cinergy's Board of Directors (>$25 million).

     Cinergy Global Resources and CGPS management have determined
key value drivers for all projects in order to extract the most
value from each asset held in the International Business Unit.
Key performance indicators are defined for each business by
metric and time scale such that management can effectively
monitor existing assets.  Examples of such key performance
indicators include financial reengineering, business
restructuring, and asset upgrades.  On a quarterly basis the
international management team along with Cinergy's CEO meet to
review individual project's progress against those goals (see
discussion above, "strategic planning process").

     In addition, when existing businesses are acquired, monthly
board meetings with the project companies are held to review
performance.  Cinergy Global Power Services also conducts monthly
internal management meetings, which include personnel from CGR
and Cinergy Services in Cincinnati, to discuss the status of all
existing projects, including those under development.

     For projects under construction, the primary development
manager for the project is responsible for monitoring progress.
Additionally, monthly construction reports are distributed to
provide updated information regarding progress versus the
budgeted completion time and costs.

     To monitor Cinergy's investment in Midlands, monthly
management meetings were held along with periodic visits to the
U.K.  These were normally attended by the president and chief
financial officer of the International Business Unit.  Financing
tools, hedge agreements, and progress toward reengineering goals
were all continually monitored.

            5.   Risk Mitigation/Specific Project Risks

     In conjunction with the project review processes described in
the preceding sections, Cinergy carefully evaluates, and takes
steps to mitigate, the various types of risks presented by Exempt
Projects.  The significant risks are as follows:

                 a.   Operating Risks

     Operating risks are those risks that present themselves in the
day to day course of operating power plants and other Exempt
Projects assets.  Examples include fuel supply, safety issues,
mechanical malfunctions and labor disruptions.  These risks are
addressed by Cinergy in a number of ways.

     First, Cinergy's expertise and competence in electric and gas
utility technologies serves to minimize operating risks of
projects in which it invests.  Through its domestic utility
businesses, Cinergy owns and/or operates 11,200 MW of electric
generation facilities, as well as extensive electric transmission
and electric and natural gas distribution facilities.  Cinergy's
safety record is outstanding and operating achievements numerous.
Cinergy thus has gained a wealth of technical expertise and
practical knowledge in managing a broad range of operating risks
intrinsic to electric and gas utility systems.

     Second, extensive due diligence is performed before each
development project is commenced or acquisition of existing
assets is closed to ensure that all significant risks are
identified and addressed up front.  This due diligence is
conducted by Cinergy engineering staff having extensive technical
expertise in the particular technology involved.  In addition,
outside technical consultants may be retained, both in the due
diligence process and after the project has been acquired or
development has begun, in order to maximize the project's value
and further minimize risks.  In certain cases the due diligence
review may result in the transaction being aborted.

     Fuel price risk for generation facilities can be managed in
many ways:  through supplier contract terms; through some level
of cost pass through to customers; or by designing a facility to
burn dual or multiple fuels.  Other operating risks can be
addressed through equipment warranties, casualty insurance,
equipment supplier guarantees and other insurance.

                 b.   Construction Risks

     Any development project or acquisition that requires
substantial reconstruction or overhaul will present construction
risks to be managed.  As with operating risks, Cinergy has a
long, successful history of construction project management, in
the areas of electric generation and transmission and electric
and gas distribution facilities.  Longstanding relationships
exist with original equipment manufacturers, architectural and
engineering firms and construction companies.  Cinergy has
extensive experience in working with outside contractors to
manage the multitude of construction-type risks that could arise.

     Some construction risks are managed through contract terms.
This can be done through fixed price contracts, performance
guarantees such as heat rate or availability, or construction
milestone incentives or penalty provisions.  To manage the credit
risks some contractors may present, Cinergy attempts to deal
mainly with large, national contracting firms.  In all cases, the
contractors must be approved as to their creditworthiness, and
when necessary Cinergy requires appropriate bonding, letters of
credit and/or damage provisions.

                 c.   Commercial Risks

     Historically, independent power projects tended to rely on the
"off-take" and payment commitments of a single power purchaser,
usually the local utility company, to eliminate all or most of
the risk of variation in revenues.  In cases where this model
still applies, Cinergy would make an assessment of the credit-worthiness of
the power purchaser over the life of the project,
with the risk of non-payment being factored into the overall
project risk.

     As previously discussed, however, in today's increasingly
competitive markets traditional IPPs are becoming more the
exception than the rule.  They are being displaced by merchant
plants, which sell their power into the spot or forward markets,
where electricity prices are determined by the economic laws of
supply and demand.  For merchant plants (such as the Duke and
Westwood projects), Cinergy conducts extensive investigations of
the electricity markets to determine the viability of long-term
demand in these environments.  In general, Cinergy seeks to
ensure that the merchant plant will be capable of producing
electricity at or below the long-run marginal cost in the region,
so that the project can be a competitive supplier in a non-regulated
environment.

     In addition, Cinergy's wholesale energy marketing business
benefits domestic EWG projects in which Cinergy may invest,
significantly reducing commercial risks.  In competitive energy
markets, where supply and demand balances and imbalances dictate
the price for energy, the single most effective risk management
tool is to have a sophisticated market and trading organization
that is actively involved in energy markets on a continuous
basis, as Cinergy does.  The energy traders can identify emerging
trends and manage risks on a daily, monthly and year forward
basis.  It is also imperative to maintain, as Cinergy does, an
active supply and demand analysis of each market as well as a
forward price curve (expectation) for energy markets.  And as
previously explained, an important hedge in the power industry is
owning physical assets such as electric generating facilities;
there is thus a mutually beneficial relationship between power
marketing businesses and ownership or control of the underlying
physical assets.  The ECBU continually analyzes not only market
dynamics, but the cost to operate generating facilities.  In
short, an active, skilled energy trading organization is an
essential complement to, and risk-reducer of, owned electric
generation assets, including Exempt Projects.

                 d.   Financial Risks

     Cinergy addresses financial risks associated with investments
in Exempt Projects in a variety of ways.

     First and foremost, Cinergy seeks to leverage each Exempt
Project in which it invests with the maximum principal amount of
permanent non-recourse debt that the Exempt Project can obtain in
the marketplace and prudently incur.

     For these purposes "non-recourse debt" means debt that is
fully or partially non-recourse to Cinergy, secured solely or
primarily by the EWG or FUCO (including any special-purpose
subsidiary created to acquire or hold the EWG or FUCO investment)
and its assets and revenues.  Under such a financing structure,
by definition, the debt is that of the Exempt Project and not
Cinergy or its other system companies, so that upon default, the
non-recourse lenders have no (or only limited) recourse to
Cinergy for repayment of the funds borrowed by or on behalf of
the Exempt Project, but must exercise remedies exclusively
against the Exempt Project and its assets and revenues.

     Such non-recourse lending serves also as an independent check
and validation of the due diligence procedures performed by
Cinergy prior to investing in the EWG or FUCO, since the non-recourse
lenders will not commit to lend to the project unless
they are satisfied that it will support repayment of their
principal and carrying charges.

     The amount of non-recourse debt that Cinergy will be able to
arrange in connection with its investments in Exempt Projects
will necessarily depend in part on the existing capitalization of
the Exempt Project in question; for example, the project company
may already have a significant amount of debt on its balance
sheet, limiting its capacity for further leverage.

     Where Cinergy is successful in obtaining non-recourse debt
financing, the project debt will be carefully structured to match
the characteristics of the project.  For example, if the value of
the project depends on a long-term, fixed price, off-take PPA,
the project debt would typically be designed to have a similar
term, with scheduled debt payments usually covered by fixed
payments of at least an equal amount under the PPA (usually the
capacity payment component in the contract).

     On the other hand, where there is no long-term, fixed source
of revenue (as with merchant plants), the percentage of non-recourse debt
financing would typically be smaller.

     Approximately 60 percent of the purchase price paid by Cinergy
and GPU for Midlands in 1996 (about $1.6 billion, Cinergy's share
of which was $800 million) was financed with non-recourse bank
borrowings.

                 e.   Interest Rate Risk

     Another financial risk - interest rate variability/54/ - is
addressed, in part, by borrowing on a fixed-rate basis or by
purchasing financial instruments that fix or cap variable
interest rates.  The effects of interest rate volatility can be
mitigated principally through two strategies:  hedging and
diversifying.  Hedging is designed to limit or remove exposure to
risk.  For example, interest rate hedging could be in the form of
purchasing U.S. Treasury securities before the issuance of debt
to lock-in most of the coupon spread on an ensuing sale of long-term debt
(the position is unwound at pricing and the gain/loss
on the hedge offsets any change in the general level of interest
rates on the debt).  After an issuance, hedging could be effected
through the purchase of interest rate caps, which limit the rate
payable on floating rate debt to a certain prescribed maximum, or
swaps, which would fix the rate at a known level for a period of
time.  Diversification involves spreading liabilities  among
short- and long-term debt instruments and fixed and floating
interest obligations.

                 f.   Foreign Currency Exchange Risk

     Cinergy implements foreign currency risk minimization
strategies when it enters into projects that subject it to
material foreign exchange rate risk.  For instance, this risk can
be significantly mitigated where project-related debt is borrowed
in the same currency as the project revenues and expenses,
ensuring a match between debt service obligations and operating
income.  In addition, Cinergy evaluates the various approaches
available to mitigate foreign currency exchange risk based on the
anticipated project return and timing of cash flows.  Various
types of both option-based (e.g., call, put and average rate
options) and fixed rate instruments (e.g., futures contracts and
currency swaps) are readily available from numerous domestic and
foreign counterparties.

                 g.   Legal Risks

     Legal risks are addressed by careful review of any potential
investment by qualified legal counsel (including local and
international counsel, if applicable).  The legal review
typically focuses on such concerns as (i) regulatory, permitting
and environmental risks; (ii) status of title to utility
property; (iii) human resource and employment issues; and (iv)
the nature and extent of the obligations, and enforceability
thereof, of the project parties under the project agreements and
instruments, including both the commercial and operating
agreements and the shareholder or equity agreements, debt
financing agreements, third-party guarantees and the like.

                 h.   Country Risks

     In addition to the specific risks mentioned above, investing
outside the U.S. can entail country-specific risks related to
political or economic performance.  Cinergy evaluates country
risk as part of the project review process (described above) and
mitigates this risk through a number of measures.  Most
important, this review process ensures that the political and
economic stability of any country in which Cinergy invests has
been scrutinized at several managerial levels before any
investment occurs.  In addition to a general review, the country
analysis focuses specifically on the country's energy sector and
the government's support for private ownership.  If appropriate,
introductory discussions are arranged to facilitate dialogue
between the local political community and Cinergy management.

     Also at the outset of development work in a foreign country,
Cinergy may seek local and international partners who are
experienced in doing business in the host country and
internationally.  For many of the existing investments that
Cinergy has described above, Cinergy is partnering with other
equity investors in the project, quite often investors who
themselves have had extensive experience in building, operating
or investing in international energy projects.  Such partners can
be a very important element in mitigating the risk of
expropriation or unfair regulatory treatment.

     Cinergy has also, in effect, partnered with numerous official
or multilateral agencies for many of its projects.  When funds
for a project are supplied by government-sponsored export credit
agencies or other governments or institutions, such as the World
Bank through its International Finance Corporation affiliate, the
host country has strong incentives not to take actions which
would harm the project's viability.  Political and currency
convertibility risk can often be addressed through insurance
obtained from the Overseas Private Investment Corporation, a
United States agency, or the Multilateral Investment Guaranty
Agency, a World Bank affiliate, or in the commercial insurance
market.  Political risk insurance is available to insure the
project debt or the return of an investor's equity and can also
protect against outright, expropriation, acts of civil violence
or even "creeping" nationalization brought about by punitive
regulation.  Cinergy typically analyzes the perceived political
risk of a project and the associated costs, and obtains insurance
when the costs associated with the risk exceed the costs of the
related insurance coverage.

                      i.   Liquidity Risk

     An "exit" strategy is an important element of liquidity risk
mitigation.  Investment liquidity is analyzed during the project
review process by identifying exit options, such as potential
investors.  In addition to partners already committed to the
investment, potential investors typically include local and
international businesses which may seek vertical or horizontal
integration./55/  Increased investment liquidity enhances the
ability to maximize economic performance and the ability to
optimize returns./56/

     In 1995, Cinergy employed this return-maximization strategy in
liquidating its investment in Central Costanera.  In 1998,
Cinergy repeated this return-maximization strategy in liquidating
its investment in Edesur.  Cinergy realized a substantial after-profit gain
in each case.

     The most important instance, however, is Cinergy's recent
disposition of its investment in Midlands.  On July 15, 1999,
Cinergy sold its 50 percent ownership interest in Avon Energy
Holdings, the parent company of Midlands, to GPU for
approximately $700 million in cash, contributing $0.43 per share
to Cinergy's third quarter 1999 earnings.

     Since acquiring half-ownership of Midlands in 1996, Cinergy
had realized significant financial and other benefits from the
investment.  However, with Midlands' agreement in late 1998 to
sell its electric supply business to National Power and focus on
regulated distribution, the growth opportunities of this
investment had become limited.  Moreover, the general expectation
was that the distribution rates for Midlands and the other RECs
would decrease by up to 20 percent starting April 1, 2000.  In
fact, shortly after Cinergy closed the sale to GPU, the U.K.
Office of Gas and Electricity Markets proposed even more
substantial cuts, between 25 and 30 percent for the first year,
with a further cut of 3 percent below the inflation rate annually
for the next four years.

     With respect to the domestic market, in recent years there has
been a strong seller's market for (non-nuclear) generating
assets.  Partly this reflects the growing demand for electricity
as well as the high quality of many of the assets being divested
in utility auctions.  There are many buyers seeking to gain
market share, reduce risks through ownership of assets in
different regions of the country, and/or enter new markets.

            6.   General Factors Mitigating Project Risks

                 a.   Portfolio Diversification

     The risks inherent in any particular investment cannot be
eliminated entirely, even by the most careful approach to project
development.  Given these practical realities, the best long-term
approach to managing risks is portfolio diversification, both in
terms of the location and the type of project.

     With regard to location, Cinergy is committed to diversifying
its investments throughout key markets in the U.S. and across
countries and regions of the world.  Regional diversification
outside the U.S. is important because economic and political
instability may affect multiple countries within a single region.
Cinergy has substantial investments in the U.S., Europe, Africa
and Asia and previously invested successfully in South America.

     With regard to risk mitigation through diversification in
project type, Cinergy seeks a balance between facilities in
commercial operation and greenfield projects (new construction).
Many of Cinergy's investments have been in the former category -
existing projects or companies with established markets and
customer bases.  Midlands is the prime example.  Others include
the Czech acquisitions described above, the Zambian transaction
and the investment in Narva.  These acquisitions reduce the risk
of Cinergy's overall business by producing near-term earnings
without significant development or construction risk.

     Together with investments in existing facilities, Cinergy also
invests in greenfield projects.  Greenfield projects involve a
higher degree of risk because of development and construction.
Funds are expended during the early years, and a return on
investment is not earned until the project is in operation.
Although these projects have higher levels of risk and deferred
returns, they are an important component of a diversified
portfolio, since they are expected to produce higher rates of
return than investments in existing assets.  Here the leading
example is the joint venture with Duke.  The Baghabari, Semutang
gas-to-power, and Ely biomass projects also fall into this
category.

     The objective of such a portfolio strategy is to ensure that
Cinergy is not dependent on any single country, regulatory
environment, or type of asset for its earnings from EWGs and
FUCOs.

                 b.   Domestic EWGs/Open Access Transmission &
                      Subsequent Developments

     As discussed above, in 1996 the FERC put in place the
foundation necessary for competitive wholesale power markets in
the United States - open access transmission.

     Since that time, the industry has undergone sweeping
restructuring activity, including a movement by many states to
create retail competition, the growing divestiture of generation
plants by traditional electric utilities, and a significant
increase in the number of mergers between traditional electric
utilities and between electric and gas utilities./57/

     Many new competitors are entering the industry, such as power
marketers and IPP developers.  For example, in the first quarter
of 1995, there were eight power marketers (either independent or
affiliated with traditional utilities) actively trading in
wholesale power markets, but by the second quarter of 1998, there
were 108 actively trading power marketers./58/  The FERC has
granted market-based rate authority to well over 500 wholesale
power marketers, some of which are independent of traditional
investor-owned utilities, while others are affiliated with
traditional utilities or are traditional utilities
themselves./59/  At the same time, there has been a significant
growth in the volume of trading in the wholesale electricity
market.  In the first quarter of 1995, power marketer sales
totaled 1.8 million MWh, but by the second quarter of 1998, power
marketer sales had escalated to 513 MWh./60/  Nonutility
generation is increasingly being operated as merchant plants,
relying on the ability to sell power at market prices, rather
than as IPPs supported by long-term PPAs.  Up to 47 GW of new
electric capacity in the U.S. will be built as merchant plants
between now and early in the next century./61/

     The advent of open access transmission service, introducing
competition to wholesale markets, together with the growing need
for new generating capacity, have thus fueled a major expansion
in the number of U.S. generating facilities being built or
operated as EWGs.  These exogenous factors - open access
transmission and the need for more generating capacity - have
served to mitigate risks of EWG ownership.

       B.   Financial Results & Other Benefits/Prior
            Investments

     Cinergy's investments in Exempt Projects have benefited
shareholders and the public, and have not had any adverse impact
on Cinergy's utility subsidiaries.

     Cinergy's earnings from international operations increased
from $15 million in 1996, adding 10 cents to Cinergy's earnings
per share ("EPS"); to $29 million in 1997, adding 18 cents to EPS
(before Cinergy's shares of the windfall profits tax, equal to 69
cents per share); to $31 million in 1998, adding 20 cents to
EPS./62/

     Earnings from the Midlands investment contributed to the
decision later in 1996 to increase the quarterly dividend paid to
Cinergy's shareholders, from $1.72 to $1.80 per share on an
annualized basis.

     Cinergy has proven too that it is skilled in extracting
financial benefits from opportune "cash outs," or
"monetizations," of project investments, where that action is
appropriate under the circumstances.  For example, the Company
sold both of the Argentine investments originally acquired in
1992, realizing a $6.4 million gain (net of taxes) on the 1995
sale of its interest in Central Costanera, and a $13 million gain
(net of taxes) on the 1998 sale of its interest in Edesur.

     This expertise is especially apparent in regard to Cinergy's
largest investment, Midlands.  As discussed in more detail above,
Cinergy held on to and committed significant resources to its
$500 million investment for three years, before agreeing, in
light of various factors, to sell it to the other co-owner, GPU,
for $700 million in June 1999.  The sale, consummated in July,
contributed $0.43 per share to Cinergy's third quarter 1999
earnings.  The timing was particularly auspicious.  The
transaction preceded an announcement by the U.K.'s primary
utility regulator proposing sharp reductions (significantly
higher than expected) to Midlands' electric distribution rates,
Midlands sole remaining electric business following the recent
sale of its supply operations.

     The Midlands investment also provided important non-financial
benefits.  For one thing, Cinergy gained valuable, "hands-on"
experience in competitive electricity markets.  Unlike the U.S.,
the U.K. has completely opened up its retail electricity supply
markets to competition.  The lessons learned from this experience
have helped Cinergy prepare for impending competition in its own
retail markets.  And through its Midlands investment, Cinergy
laid the foundation for further growth in its international
business, by acquiring (at nominal cost to Cinergy) the MPI
project development team and rights to various projects in
preliminary stages of developments (see discussion earlier).
These individuals now work out of the U.K. for Cinergy Global
Power Services, forming the core of Cinergy's international
project development team.

     Benefits to the public also accrue from the specific
strategies that CGR has been implementing.  Clean energy projects
are one strategic priority, with CGR now holding numerous wind
farms and other renewable energy projects in operation or under
construction the U.S., the U.K. and the Continent.  Renewable
resources provide an unlimited fuel supply for electricity
generation and in turn produce little or no waste.  Savings are
passed on to the public and the environment in various forms,
including lower prices and less consumption of irreplaceable
fuels.

     Similarly, CGR's asset acquisition strategy, which to date has
focused on Central Europe, is predicated on refurbishing and
modernizing energy assets that often are antiquated, "dirty" and
in substandard operating condition.

     Another of CGR's strategies seeks to address the increased
demand for power in developing countries, a notable example of
which are the two projects under development in Bangladesh
(Semutang and Baghabari), one of the poorest countries in the
world.  Today's new power plants are cheaper, smaller and
quieter.  The plants are more efficient because they use more of
the fuel's energy than older plants and emit less pollution (both
the Semutang and Baghabari projects will deploy state-of-the-art
gas-fired, combustion turbine technology).  Power projects
benefit the people and the economy in countries such as
Bangladesh by providing reliable, efficient power at a reasonable
cost.

     C.   Current Financial Condition of Cinergy &
          Operating Companies

     Cinergy and the Operating Companies are in sound financial
condition.

          1.   Cinergy

     At September 30, 1999, Cinergy's consolidated capitalization
ratios were 44.7% equity and 55.3% debt (including short-term
debt of $395.5 million), which is consistent with the average
ratio of total debt to capital of 57% for "BBB" rated utilities
as published by Merrill Lynch./63/

     Cinergy's senior unsecured debt is rated investment grade by
all the major rating agencies.  The following ratings were in
effect as of September 30, 1999:

                 D&P       Fitch     Moody's   S&P

                 BBB+      BBB+      Baa2      BBB+

     At September 30, 1999, Cinergy had a market-to-book ratio of
1.74, which exceeds the average market-to-book ratio of 1.64 for
a benchmark group consisting of the largest 25 electric utilities
and the average of the companies included in the S&P electric
index./64/  Market-to-book ratio reflects the market's
expectations of future performance.

     Cinergy's dividend payout ratio exceeded the benchmark average
for 1998 and 1997, partly due to certain one-time charges against
income resulting from, with respect to the ratio for 1998,
implementation of a 1989 settlement of a dispute with Wabash
Valley Power Association, Inc. based on cancellation of PSI's
Marble Hill nuclear power station in 1984 and, with respect to
the ratio for 1997, Cinergy's share of the windfall profits tax
assessed against Midlands by the British Government.  (For
further information see Cinergy's Annual Reports on Form 10-K for
the years ended December 31, 1998 and 1997.)

               9/30/99 /65/     1998      1997    1996
Cinergy          75.6%          109%      111%    82%
Benchmark Average/66/           67%       72%     86%

     With respect to relevant financial benchmarks specifically
contemplated by the terms of Rule 53, none of the conditions
enumerated in paragraph (b) thereof is applicable:

     1.   there has been no bankruptcy of a Cinergy associate
          company (cf. Rule 53(b)(1));

     2.   Cinergy's consolidated retained earnings for the four
          most recent quarterly periods have not decreased by 10%
          from the average for the preceding four quarterly periods
          (cf. Rule 53(b)(2)); and

     3.   Cinergy has never reported a full-year "operating loss"
          attributable to its Exempt Projects (cf. Rule 53(b)(3)).

     Cinergy will notify the Commission in writing if any of the
circumstances described in Rule 53(b) arise during the
Authorization Period.  Cinergy will remain in compliance with the
requirements of Rule 53(a), other than Rule 53(a)(1), at all
times during the Authorization Period.

          2.   Operating Companies

               a.   Indicators of current financial strength

     The Operating Companies are in strong financial condition, as
indicated by such factors as debt/equity ratios, interest
coverages and securities ratings.

     Debt (including short-term debt) ratios of the Operating
Companies at September 30, 1999 and December 31, 1998 are
generally consistent with industry averages for "A-" rated
electric utilities, which stood at 58 and 56 percent,
respectively/67/:

                    Total Debt as % of Capitalization

                      9/30/99        1998      1997      1996
CG&E/68/                 48%           48%       50%       52%
ULH&P                    44%           45%       36%       39%
PSI                      59%           56%       48%       49%

     CG&E's and ULH&P's interest coverages have generally exceeded
industry averages for "A-" rated electric utilities, reflecting a
strong ability to meet interest requirements.  Industry ratios at
September 30, 1999 and December 31, 1998 stood at 3.27 and 3.35,
respectively./69/  PSI's ratios for 1998 and 1999 year-to-date
have not met the industry standard, due to certain charges
against income.  (For further information see PSI's Annual Report
on Form 10-K for the year ended December 31, 1998 and Current
Report on Form 8-K dated August 10, 1999.)  All of the Operating
Companies anticipate having more than adequate earnings to meet
their interest coverages in the foreseeable future.

                   Ration of Earnings to Fixed Charges

                 9/30/99/70/         1998      1997      1996
CG&E/71/            4.35              4.16      3.99      3.77
ULH&P               3.99              4.17      5.09      4.98
PSI                 2.95              1.78      3.31      3.35

     Securities of CG&E, PSI and ULH&P are highly rated by the
major rating agencies.  Among other things, secured debt of each
of these companies is rated "A-" (or its equivalent) or
better./72/  The Operating Company ratings in effect as of
September 30, 1999 are included in the following table:

                              D&P      Fitch     Moody's    S&P

 CG&E
     Secured Debt             A-        A-        A3 /73/   A-
     Senior Unsecured Debt    BBB+      BBB+      Baa1      BBB+
     Junior Unsecured Debt    BBB       BBB+      Baa1      BBB
     Preferred Stock          BBB       BBB+      baa1      BBB

 PSI
     Secured Debt             A-        A-        A3        A-
     Unsecured Debt           BBB+      BBB+      Baa1      BBB+
     Junior Unsecured Debt    BBB       BBB       Baa1      N/R/74/
     Preferred Stock          BBB       BBB       baa1      BBB

 ULH&P
     Secured Debt             A-        N/R       A3        A-
     Unsecured Debt           N/R       N/R       Baa1      BBB+


               b.   Ability to fund operations without Cinergy
                    contributions

     Additional project investments will not have a negative impact
on the Operating Companies' ability to fund their operations,
since the Operating Companies do not depend on Cinergy for
capital.  Since the merger, with the exception of a December 1994
$160 million capital contribution from Cinergy to PSI,/75/ the
Operating Companies have financed their capital needs entirely
with their own internal funds and proceeds of external financings
by them.  Cinergy's most recent five-year projections for
Operating Company capital requirements extend through December
31, 2004, and indicate that Cinergy should not have to make any
equity investments in the Operating Companies through the entire
five-year period of those projections.

       D.   Insulation of Operating Companies from Direct
            Effects; Additional Protections; Meetings with
            State Commissions

     The Operating Companies will remain insulated from the direct
effects of EWG and FUCO investments.

     In the first place, any losses in connection with EWGs and
FUCOs would have no direct effect on the wholesale or retail
electric or gas rates of the Operating Companies.

     Second, Cinergy commits that it will not seek recovery through
higher rates to the Operating Companies' utility customers in
order to compensate Cinergy for any losses it may sustain on
investments in any Exempt Projects (including with respect to the
Restructuring Investment) or for any inadequate returns on those
investments.

     Third, in accordance with sections 33(f) and (g) of the Act:

      no Operating Company has issued any security for the
      purpose of financing the acquisition, ownership or
      operation of any FUCO in which Cinergy has invested;

      no Operating Company has assumed any obligation or
      liability as guarantor, endorser, surety or otherwise in
      respect of any security issued by any FUCO in which Cinergy
      has invested; and

      no Operating Company has pledged or encumbered any part of
      its utility assets for the benefit of an associate FUCO.

     Fourth, no Operating Company has engaged in any such
transaction with respect to any EWG in which Cinergy has invested
to date.  Nor in the future will Cinergy cause or permit any
Operating Company to engage in any such transactions with respect
to any FUCO or EWG in which Cinergy invests, except potentially
in connection with the transfer of generation facilities
currently owned by CG&E and PSI to one or more EWG affiliates (as
to which see the next paragraph).

     Fifth, with regard to the potential transfer of CG&E and PSI
generating facilities to EWG affiliates, any such transaction
will conform in all respects to the requirements of section 32 of
the Act, including in particular the requirement for certain
enumerated findings from Cinergy's three state commissions as a
condition to such transfer.

     Sixth, Cinergy has complied and will continue to comply with
the other conditions of Rule 53(a) conferring specific
protections on customers of the Operating Companies and their
state commissions, namely:

     the requirements of Rule 53(a)(2) regarding the preparation
     and making available of books and records and financial
     reports regarding Exempt Projects;

     the requirements of Rule 53(a)(3) regarding the limitation
     on the use of Operating Company employees in connection
     with providing services to Exempt Projects; and

     the requirement of Rule 53(a)(4) regarding filing of copies
     of applications and reports.

     Further, in addition to providing the PUCO, IURC and KPSC with
copies of FUCO notices filed with this Commission and EWG
applications filed with the FERC - apprising the state
commissions of each specific project in which the Company invests
- - Cinergy will furnish to its state commissions, concurrently
with submission to the Commission, copies of the quarterly
reports Cinergy will file in this docket pursuant to rule 24 (see
below, Item 5, "Procedure").  These reports will furnish
comprehensive information on a periodic basis concerning the
transactions proposed in this application.

     Finally, prior to filing this application, Cinergy conducted
numerous meeting with the commissioners and staff of the PUCO,
IURC and KPSC concerning the Company's proposal.

     E.   Financing Plan for New Investments; Merrill
          Lynch Opinion

     The additional investments in new projects are necessary for
Cinergy to successfully grow the Company and will create
significant value for Cinergy and its shareholders.

     Cinergy has developed an extensive financial model addressing
the manner in which Cinergy expects to finance the additional
investments and their likely impacts on the Company.  (The model
does not address financing of the Restructuring Investment.)
Cinergy expects to finance the additional investments through a
combination of internal cash returns generated from the
investments and external capital sources such as unsecured debt
and long-term debt and common stock.  The model's results
indicate that the investments will enhance Cinergy's financial
performance without adversely affecting the Operating Companies'
financial integrity.

     Cinergy's model necessarily incorporates various operating
assumptions.  Among the most important are that:  (i) appropriate
investment opportunities exist for Cinergy to invest up to $2
billion in EWGs and FUCOs over the next five years; (ii) the
incremental investments are consistent with Cinergy's corporate
strategy and current risk tolerance levels; (iii) the expected
investment returns are reasonable; (iv) Cinergy is able to obtain
debt and equity financing at acceptable rates and terms; and (v)
Cinergy will finance the additional investments on an aggregate basis
(including through growth in retained earnings) such that the resulting
consolidated capital structure would be comprised of 40 percent debt and 60
percent equity.

     Cinergy has engaged Merrill Lynch to review its financing plan
and assumptions and undertake an analysis of the likely credit
impacts resulting from the proposed $2 billion in incremental
investments.  After Merrill Lynch completes its review, expected
to occur shortly, Cinergy will file a copy of their opinion as an
exhibit to this application.

     F.   1994 Merger Settlement Agreements/1999 Ohio
          Electric Deregulation Statute

     The scope and magnitude of the commitments made by Cinergy to
its state regulators and other parties in connection with the
settlement of merger proceedings in 1994 provide additional,
unique assurances that the proposal will not have an adverse
impact on the ability of the state commissions to protect
Cinergy's utility subsidiaries or their customers.  Copies of all
of these settlement agreements and merger approvals were
submitted by Cinergy into the record in the Commission proceeding
approving the Cinergy merger (see amended Application-Declaration
in File No. 70-8427) and were discussed by the Commission in its
order granting Cinergy's application (see Rel. No. 35-26146,
October 21, 1994).

     In their letters to this Commission in connection with the
100% Order, each of Cinergy's state commissions cited these
arrangements as one reason why Cinergy's proposal would not
impair their ability to regulate the Operating Companies or their
customers.

     The recently enacted Ohio retail electric deregulation
legislation provides important additional protections to the
PUCO.

     The following is a detailed summary of the relevant provisions
of the 1994 merger settlement agreements and commitments, as well
as the additional statutory protections recently conferred on the
PUCO.

            1.   Indiana

     On March 3, 1994, PSI, Cinergy, Resources and representatives
of various Indiana retail electric customers of PSI ("Indiana
Settling Parties") entered into a comprehensive Settlement
Agreement ("Indiana Settlement Agreement") in the context of
proceedings before the FERC concerning the Cinergy merger.  The
IURC approved the Indiana Settlement Agreement in its March 29,
1994 order in Cause No. 39897.

     The Indiana Settlement Agreement ensures the continuing
effectiveness of state regulation in a number of important
respects, including the following:

     Waiver of SEC Preemption.  PSI agreed that it would not
     seek to reverse or otherwise challenge any order or
     decision of the IURC relating to the recovery or ratemaking
     treatment of costs incurred by PSI as a result of any
     contract or transaction with an affiliate on the basis that
     the contract or transaction was approved by the SEC.
     Specifically, PSI agreed that:

            [I]t shall not seek to overturn, reverse, set
            aside, change or enjoin, whether through appeal or
            the initiation of or maintenance of any action in
            any forum, a decision or order of the IURC which
            pertains to recovery, disallowance, allowance,
            deferral, or ratemaking treatment of any expense,
            charge, cost, or allocation incurred or accrued by
            PSI in or as a result of a contract, agreement,
            arrangement, or transaction with any "Affiliate" of
            PSI   on the basis that such expense, charge, cost,
            or allocation has itself been filed with or approved
            by the SEC, or was incurred pursuant to a contract,
            arrangement, agreement, or allocation method which
            was filed with or approved by the SEC.  (Indiana
            Settlement Agreement, sec. 13.2.)

     Affiliate Contracts.  PSI and Cinergy further agreed that
     (a) any proposed amendment to the Cinergy system operating
     agreement filed under Section 205 of the Federal Power Act
     with the FERC (the "Operating Agreement") or to the Cinergy
     system utility service agreement approved by the SEC in its
     1994 merger order (the "Service Agreement") and (b) certain
     other proposed affiliates contracts to which PSI would be a
     party that are required to be filed with and/or approved by
     the FERC or the SEC would not become effective unless and
     until the proposed amendment or affiliate contract had been
     filed with and approved, or not finally rejected,
     disapproved, or found unreasonable by the IURC.

     Books and Records, etc.  PSI and Cinergy agreed that in any
     pending proceeding before the IURC, PSI and Cinergy would
     make available to the IURC and the Indiana Office of
     Utility Consumer Counselor ("UCC") all books and records,
     and employees and officers of Cinergy, PSI and any
     affiliate or subsidiary of Cinergy or PSI.

     As part of the Indiana Settlement Agreement, the Indiana
Settling Parties agreed to certain "Principles of
Diversification."  These principles apply to Cinergy's or PSI's
participation in non-utility businesses or in public utility
businesses outside of the United States.  In particular, Section
11.2 of the Indiana Settlement Agreement provides that:

     [T]he Cinergy Companies recognize and acknowledge that
     the IURC under I.C. 8-1-2 [i.e., Indiana Code 8-1-2] has
     continuing authority over [PSI's] capital structure,
     financings and cost of capital for ratemaking purposes
     sufficient to enable the IURC to protect [PSI's] retail
     electric customers from any material adverse affects that
     may result from [PSI's] or Cinergy's participation in
     non-utility businesses or in public utility businesses
     outside of the United States of America.

     The foregoing statement is consistent with the following
statements contained in a July 2, 1992 letter from the then-Chairman of the
IURC to the SEC /76/ concerning a proposed investment by Resources in a
public utility business in Argentina:

          In general, the IURC's continuing authority over PSI
     Energy's capital structure, financings and cost of capital
     for ratemaking purposes will enable the IURC to protect PSI
     Energy's retail electric customers from any financial effects
     resulting from the activities in PSI Argentina.  The IURC
     has authority to investigate transactions between utilities and
     their subsidiaries, pursuant to Indiana Code ("I.C.") 8-1-1-11, to
     prescribe the form of all books, accounts, papers and
     records of utilities, I.C. 8-1-2-12 and 14, and is required to inquire
     into the management of the business of all public utilities, I.C.
     8-1-2-48, and to keep itself informed as to the manner and method in
     which such business is conducted, I.C.
     8-1-2-49.  The IURC can use these powers, in addition to its
     general ratemaking authority as noted above, to ensure that
     PSI Argentina's activities do not adversely affect PSI Energy's
     ratepayers.

     . . .

          In sum, the IURC has both general and specific authority
     and will exercise its authority, as appropriate, to protect
     Indiana ratepayers.

     With respect to the furnishing of pertinent information by PSI
     to the IURC concerning the diversification activities of PSI or
     Cinergy, Section 11.3 of the Indiana Settlement Agreement further
     provides:

          In addition to the annual information filings to be made
     by PSI under the Affiliate Guidelines attached hereto as
     Appendix "E", PSI agrees that it shall on an annual basis
     file with the IURC and provide to the UCC the following
     information for each applicable PSI Affiliate (as defined in
     the Affiliate Guidelines attached hereto as Appendix "E" [which
     definition includes, among others, all subsidiaries of Cinergy]):

     1. The capital structure of each Affiliate as of the
        end of the applicable period;
     2. A statement of the changes in the capital
        structure of each Affiliate during the
        applicable period;
     3. An assessment of the effects on PSI's capital
        structure and PSI's ability to attract
        capital of the activities of each Affiliate
        during the applicable period; and
     4. If requested by the IURC or the UCC, the
        names and job descriptions of any employees of
        PSI transferred to, or for whom 75 percent of their
        time has been allotted to, an Affiliate during the applicable
        period.

     In short, the Indiana Settlement Agreement confers additional
significant rights on the IURC, beyond those otherwise accruing
to it under state law, the net effect of which is to preserve
unimpaired the ability of the IURC to protect Cinergy's utility
subsidiaries and their customers in the context of the instant
proposal.

            2.   Ohio

     Ohio's recently enacted electric industry deregulation bill
confers important new authority on the PUCO.  These protections
further bolster the additional protections conferred on the PUCO
with respect to CG&E and Cinergy stemming from the 1994 merger
settlement agreement involving those parties.

               a.   1999 Ohio Electric Deregulation Statute

     The recently passed Ohio retail electric deregulation
legislation requires CG&E to transfer its competitive retail sale
of electric generation functions into a separate corporate
entity, pursuant to a corporate separation plan and affiliate
code of conduct approved by the PUCO as part of Cinergy's
Transition Plan./77/  Cinergy cannot operate as a competitive
retail electric supplier in Ohio after January 1, 2001, without
an approved separation plan and code of conduct.  Indeed the only
separation action that Cinergy can take under the new statute
without PUCO approval is divestiture of CG&E's generation assets
to a non-affiliated third party.  The new legislation grants the
PUCO certification jurisdiction over generation suppliers through
Revised Code Section 4928.08.  It also allows the PUCO to regulate customer
protections provided by certified suppliers, including Cinergy or its
affiliates, pursuant to Revised Code Section 4928.10.

     Any transfer by CG&E of its generating assets to an affiliated
EWG will not impair the PUCO's ability to regulate CG&E.  For example,
under Revised Code Section 4928.02, the new law extends and enhances state
regulatory authority over CG&E and its non-regulated affiliates to prevent
anti-competitive practices and cross-subsidization.  The legislation
expands the PUCO's jurisdiction over utility mergers and allows the PUCO to
subject CG&E to severe penalties for infractions related to its
separation plan and code of conduct.

     In addition to these new statutory powers, the PUCO continues
to have full regulatory jurisdiction over CG&E.  The PUCO determines and
regulates the minimum service standards of CG&E, may initiate
investigations, gather information, including financial information, from
CG&E and its affiliates, and may hear complaints from CG&E's customers
regarding quality of service and alleged violations of either the corporate
separation plan or affiliate code of conduct.  The PUCO also continues to
have full ratemaking jurisdiction over CG&E, and full discretion to adjust
CG&E's rates to counteract any change to its cost of capital.

     Similarly, the PUCO continues to have authority to regulate the
financial integrity of CG&E.  Revised Code Section 4905.40 specifically
governs utility financing transactions, including the issuance of certain
types of notes, bonds and scrip, capitalization, and mergers.  Likewise,
Section 4935.04 allows the Commission to gather information concerning the
availability and reliable delivery of power to CG&E customers.

                 b.   1994 Ohio Settlement Agreement

     The new protections inuring to the PUCO from the electric
deregulation legislation supplement those negotiated in 1994 in
connection with the Cinergy merger.

     Specifically, as part of a comprehensive merger settlement, Cinergy
entered into an Ohio Joint Stipulation and Agreement ("Ohio Settlement
Agreement") that was filed with FERC on March 4, 1994.  The Ohio Settlement
Agreement, which was signed by Cinergy, CG&E, the PUCO, and the Office of
the Ohio Consumers' Counsel ("OCC"), ensures the continuing effectiveness
of state regulation in a number of ways, including the following:

     Waiver of SEC Preemption.  CG&E and Cinergy agreed to
     restrictions similar to those described above binding PSI
     with respect to potential challenges to PUCO actions
     addressing recovery or disallowance in retail rates of
     costs incurred by CG&E under contracts or transactions with
     affiliates based on SEC approval of those same contracts or
     transactions with affiliates.  Specifically, Paragraph 5A
     of the Ohio Settlement Agreement provides that all
     contracts, agreements, or arrangements of any kind required
     to be filed with or approved by the SEC pursuant to the
     1935 Act between CG&E and any associate company thereof
     must contain and be conditioned upon the following (without
     modification or alteration):

          [CG&E] and [Cinergy] will not seek to overturn,
          reverse, set aside, change or enjoin, whether
          through appeal or the initiation or maintenance of
          any action in any forum, a decision or order of the
          [PUCO] which pertains to recovery, disallowance,
          allowance, deferral, or ratemaking treatment of any
          expense, charge, cost, or allocation incurred or
          accrued by [CG&E] in or as a result of a contract,
          agreement, arrangement, or transaction with any
          affiliate, associate, holding, mutual service or
          subsidiary company on the basis that such expense,
          charge, cost, or allocation has itself been filed
          with or approved by the [SEC], or was incurred
          pursuant to a contract, arrangement, agreement, or
          allocation method which was filed with or approved
          by the [SEC].

     Paragraph 5A further provides that failure to include the
     above language in any such contract, agreement, or arrangement will
     render the same voidable at the sole discretion of the PUCO.  Like
     wise, if the above language is altered or invalidated by any court
     or governmental agency, such contract, agreement, or arrangements
     will be voidable at the sole discretion of the PUCO.

     Affiliate Contracts.  CG&E and Cinergy also agreed that
     (a) any proposed amendment to the Operating Agreement or
     the Service Agreement and (b) certain other proposed
     affiliates contracts to which CG&E would be a party that
     are required to be filed with and/or approved by the FERC
     or the SEC would not become effective unless and until
     the proposed amendment or affiliate contract had been
     filed with and approved, or not finally rejected,
     disapproved, or found unreasonable by the PUCO.

     Books and Records, etc.  CG&E and Cinergy agreed that in
     any pending proceeding before the PUCO, CG&E and Cinergy
     would make available to the PUCO and the OCC all books and
     records, and employees and officers of Cinergy, CG&E and
     any affiliate or subsidiary of Cinergy or CG&E.

     In addition, as part of the merger settlement process, CG&E
agreed in February 1994 to certain Principles of Diversification
similar to the PSI principles discussed above.  In these
principles, CG&E and Cinergy:

     recognize and acknowledge that the [PUCO] under Title 49 of
     The Ohio Revised Code has continuing authority over CG&E's
     capital structure, financings and cost of capital for
     ratemaking purposes sufficient to enable the [PUCO] to
     protect CG&E's retail electric customers from any material
     adverse [e]ffects that may result from CG&E's or Cinergy's
     Participation in Diversified Business./78/

Principles of Diversification Section V.

     As part of the Principles, CG&E also agreed to make certain
informational filings with the PUCO (with copies to the OCC),
including:

     1.   The capital structure of each Affiliate as of the end of
          the applicable period;
     2.   A statement of the changes in the capital structure of
          each Affiliate during the applicable period;
     3.   An assessment of the effects on CG&E's capital structure
          and CG&E's ability to attract capital of the activities
          of each Affiliate during the applicable period; and
     4    If requested by the [PUCO] or the OCC, the names and job
          descriptions of any employees of CG&E transferred to, or
          for whom 100 percent of their time has been allocated to,
          an Affiliate during the applicable period.

Principles of Diversification Section VI.

     Finally, the Principles of Diversification specify (in Exhibit
B thereof) that the financial policies and guidelines for
transactions between CG&E and its affiliates shall reflect
certain cross-subsidization principles, including:

     CG&E's utility customers shall not subsidize the activities
     of CG&E's non-utility affiliates or CG&E's utility
     affiliates.

     Neither CG&E's non-utility affiliates nor CG&E's utility
     affiliates shall subsidize the public utility activities of
     CG&E.

     CG&E's costs for jurisdictional rate purposes shall reflect
     only those costs attributable to its jurisdictional
     customers.

     CG&E shall maintain and utilize accounting systems and
     records which are sufficient to identify and appropriately
     allocate costs between CG&E and its affiliates, consistent
     with these cross-subsidization principles and such
     financial policies and guidelines.

     In sum, the numerous protections built into the Ohio
Settlement Agreement and ancillary agreements give substantial
assurance that the proposal before this Commission will not have
an adverse impact on the ability of the PUCO to protect Cinergy's
utility subsidiaries or their customers.

            3.   Kentucky

     As with Indiana and Ohio, the KPSC secured various commitments
through the merger settlement process that ensure its ability to
protect Cinergy utility subsidiaries and their customers.  In its
order issued May 13, 1994 in Case No. 94-104 conditionally
approving the Cinergy merger ("KPSC Order"), the KPSC accepted
certain commitments made by Cinergy and CG&E during the course of
that proceeding "to ensure that the creation of Cinergy does not
impair the [KPSC's] regulatory authority over ULH&P   ."  These
initial commitments included:

     Waiver of SEC Preemption.  Cinergy and CG&E committed to
     the KPSC that "No claim of SEC preemption claim will be
     raised before the Commission or in any action in any forum
     in the event that any affiliated costs, other than those
     included in ULH&P's purchased power cost, are excluded for
     ratemaking purposes."  KPSC Order at 5.

     Affiliate Contracts.  The ability of the KPSC to review and
     approve or reject certain affiliate contracts involving
     Cinergy system companies.

     Books and Records.  Access to the accounts and records of
     Cinergy, Cinergy's service company subsidiary, Cinergy
     Services, Inc., and any affiliates and subsidiaries
     controlled by Cinergy to verify transactions with ULH&P.

      Beyond these commitments, the KPSC in its merger order imposed
certain additional conditions, all of which were accepted in
writing by Cinergy and CG&E.  As summarized in detail below,
these conditions focused on three areas: (1) protection of
utility resources; (2) the KPSC's ability to monitor the
corporate activities of ULH&P, CG&E, Cinergy and Cinergy's other
affiliates; and (3) reporting requirements.  Specifically, to
implement these protections, the KPSC imposed certain "conditions
and requirements," including but not limited to:

     1.   Protection of utility resources:  The KPSC stated that in
future proceedings it will be the responsibility of ULH&P to show
that its allocation methodologies have not resulted in any
cross-subsidization.  As part of that showing, ULH&P should be prepared
to disclose fully all allocated costs, the portion allocated to
each subsidiary of Cinergy, complete details of the methods of
allocation, and the justification for the amount and the method.
The KPSC also noted that the accounting and other procedures and
controls established by Cinergy, CG&E, and ULH&P will be reviewed
periodically, and in ULH&P proceedings as appropriate.  KPSC
Order at 13.

     In furtherance of its ability to protect the utility's
resources, the KPSC stated the following:

          For rate-making purposes, the [KPSC] has
     jurisdiction over ULH&P's capital structure, financing,
     and cost of capital.  Through this authority, the [KPSC]
     can protect ratepayers from the financial effect of non-utility
     activities.  No new debt, preferred stock, or common equity can be
     issued without its prior approval.  This prevents significant
     deviations from the approved capital structure, which is the key to
     ensuring that ULH&P maintains its financial integrity.  Supplementing
     this financial control, the [KPSC] must approve any
     guarantee of debt obligations by ULH&P for Cinergy and
     its affiliates.

KPSC Order at 16.  Thus, the KPSC's substantial ability to
protect the financial resources of the utility, as discussed in
its order, will not be impaired in any way by the proposal under
consideration before this Commission.

     2.   Ability to monitor corporate activities of ULH&P, CG&E,
Cinergy and Cinergy's other affiliates:  Noting that "the most
indispensable requirement is open access to all books, records,
and personnel of Cinergy and each subsidiary," the KPSC stated
that it "will have access, as necessary in the exercise of its
statutory duties, to the books and records of Cinergy and its
other affiliates and subsidiaries as the books and records may be
related to transactions with ULH&P.  If the subsidiaries or
affiliates of Cinergy do not transact business with ULH&P, ULH&P
will verify, if necessary, the absence of such transactions
through independent sources."  KPSC Order at 17-18.

     3.   Reporting requirements:  The KPSC's order also imposed
substantial reporting requirements "[i]n order to monitor
effectively the activities of ULH&P, Cinergy and its related
subsidiaries, and protect ratepayers . . . ."  KPSC Order at 19.
Among the reporting required by the KPSC, ULH&P is to "furnish
financial statements of Cinergy including consolidating
adjustments of Cinergy and its subsidiaries with a brief
explanation of each adjustment and all periodic reports filed
with the SEC." KPSC Order at 19.

          4.   Conclusion/Settlement Agreements & Ohio Electric
               Deregulation Legislation

     In sum, the 1994 merger settlement agreements and commitments,
together with the legislation enacted in 1999 in Ohio
deregulating that state's electric industry, confer substantial
additional protections on Cinergy's three state commissions -
e.g., through waiver of potential claims of SEC preemption with
respect to the recoverability in retail rates of certain costs or
expenses approved by the SEC; through prior approval rights over
affiliate contracts; through access to the books, records and
employees not only of the utility but also its subsidiaries and
affiliates; through continued control of each utility's operating
expenses and capital structure; through the imposition of
accounting procedures and controls; and through the various
reporting requirements - to help ensure that the utility
subsidiaries and their customers will not be adversely affected
by the proposed transactions.

Item 4.     Regulatory Approval

     The proposed transactions are not subject to the jurisdiction
of any state or federal commission other than this Commission.

Item 5.     Procedure

     Applicants request that the Commission issue an order as soon
as practicable after the expiration of the applicable public
notice period granting and permitting this Application-Declaration to
become effective.

     Applicants waive a recommended decision by a hearing officer
or other responsible officer of the Commission; consent that the
Staff of the Division of Investment Management may assist in the
preparation of the Commission's order; and request that there be
no waiting period between the issuance of the Commission's order
and its effectiveness.

     Pursuant to rule 24 under the Act, within 60 days after the
end of each calendar quarter commencing with the first full
calendar quarter following the Commission's order herein, Cinergy
proposes to file a quarterly certificate with the Commission
(concurrently submitting a copy thereof to each of the PUCO, IURC
and KPSC), containing the following information (in each case as
of the end of the calendar quarter just completed, except as
otherwise noted)./79/

     1.   With respect to the Proposed Cap:

          a.   A computation in accordance with rule 53(a) setting
forth Cinergy's "consolidated retained earnings" and "aggregate
investment" in all Exempt Projects covered by the Proposed Cap,
together with a calculation of remaining capacity under the
Proposed Cap;

          b.   A breakdown showing Cinergy's aggregate investment
in each individual Exempt Project covered by the Proposed Cap;

          c.   Cinergy's consolidated capitalization ratios, in
terms of debt, common equity and preferred stock;

          d.   The market-to-book ratio of Cinergy's common stock;

          e.   Identification of any new Exempt Projects covered by
the Proposed Cap in which Cinergy invested or committed to invest
during the preceding quarter;

          f.   Growth in consolidated retained earnings,
segregating total earnings growth attributable to Exempt Projects
covered by the Proposed Cap from that attributable to all other
subsidiaries of Cinergy; and

          g.   Year-to-date revenues and net income of each Exempt
Project covered by the Proposed Cap.

     2.   With respect to the Restructuring Investment:

          a.   A computation in accordance with rule 53(a) of
Cinergy's "aggregate investment" in all EWGs subject to the
Restructuring Investment, together with a breakdown showing
Cinergy's aggregate investment in each individual EWG subject to
the Restructuring Investment; and

          b.   Identification of each "eligible facility" (as
defined in section 32 of the Act) acquired by any such EWG during
the preceding calendar quarter, together with the net book value
of each such eligible facility at the time of transfer to such
EWG.

     3.   With respect to the financing authority proposed in Item
          1.C:

          a.   The principal amount of debt and guarantees
outstanding and the total number of shares of common stock issued
and outstanding pursuant to the authority requested herein; and

          b.   Summary information concerning any securities issued
during the preceding calendar quarter pursuant to the authority
requested herein, together with a statement confirming that
Cinergy met the applicable terms and conditions as set forth in
Item 1.C.

Item 6.     Exhibits and Financial Statements

     (a)  Exhibits

     A-1       Certificate of incorporation of Cinergy
(incorporated by reference from Cinergy's 1993 Form 10-K in File
No. 1-11377)

     A-2       By-laws of Cinergy as amended January 25, 1996
(incorporated by reference from exhibit filed in File No. 70-9439)

     A-3       Specimen Cinergy common stock certificate
(incorporated by reference from File No. 70-8477)

     A-4       Form of note for bank borrowings (incorporated
by reference from File No. 70-8587)

     A-5       Form of commercial paper note (incorporated by
reference from File No. 70-8587)

     A-6       Form of debenture (incorporated by reference
from File No. 70-8993)

     A-7       Form of indenture (incorporated by reference
from File No. 70-8993)

     A-8       Form of supplemental indenture (incorporated by
reference from File No. 70-8993)

     B-1       Form of underwriting agreement for common stock
(incorporated by reference from Registration No. 33-55713)

     B-2       Form of purchase agreement for debentures
(incorporated by reference from File No. 70-8993)

     C  Form of registration statement for additional
shares (incorporated by reference from Registration No. 33-55713)

     D  Not applicable

     E  Not applicable

     F-1       Preliminary Opinion of Counsel (to be filed by
amendment)

     G  Form of Federal Register Notice

     I  Cinergy and Subsidiary Companies/September 30,
1999

     J  CG&E/PSI Generating Facilities/September 30,
1999

     K  Generation Divestitures/Significant
Transactions

     L  Foreign Utility Privatizations/Acquisitions by
U.S. Utilities

     M  Cinergy Financing Plan and Assumptions (to be
filed by amendment under request for confidential treatment)

     N  Merrill Lynch Opinion (to be filed by
amendment)

     (b)  Financial Statements

     FS-1      Cinergy Consolidated Financial Statements,
dated September 30, 1999

     FS-2      Cinergy Financial Statements, dated September
30, 1999

     FS-3      Cinergy Global Resources Consolidated Financial
Statements, dated September 30, 1999 (filed under request for
confidential treatment)

     FS-4      Cinergy Capital & Trading Consolidated
Financial Statements, dated September 30, 1999 (filed under
request for confidential treatment)

     FS-5      Cinergy Consolidated Financial Data Schedule
(filed as part of electronic submission only)

     FS-6      Cinergy Financial Data Schedule (filed as part
of electronic submission only)

Item 7.     Information as to Environmental Effects

     (a)  In light of the nature of the proposed transactions, the
Commission's action in this matter will not constitute any major
federal action significantly affecting the quality of the human
environment.

     (b)  No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed
transactions.


                      SIGNATURE

       Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this Application-Declaration on Form U-1 to be signed on their
behalf by the officers indicated below.

Dated:  November 16, 1999

                                   CINERGY CORP.

                                   By:  /s/William J. Grealis
                                   Vice President & Chief Strategic
                                   Officer

                                   CINERGY GLOBAL RESOURCES, INC.

                                   By:  /s/Cheryl M. Foley
                                   President

                                   CINERGY CAPITAL & TRADING, INC.

                                   By:  /s/Michael J. Cyrus
                                   President

                                ENDNOTES

/1/    Edison Electric Institute ("EEI"), "Electric Industry Key
Trends/November 1998" ("Electric Key Trends"), at 3.

/2/    Cambridge Energy Research Associates ("CERA"), Global
Power Horizons 1999: Portfolio Strategies & Regional Outlooks
("Global Power Horizons 1999"), at Figure 3.

/3/    CERA, Global Power Horizons 1999, supra, at Table 1.

/4/    As of November 1, 1999, customer choice legislation or
comprehensive regulatory plans had been adopted in Arizona,
Arkansas, California, Connecticut, Delaware, Illinois, Maine,
Maryland, Massachusetts, Michigan, Montana, Nevada, New
Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma,
Oregon, Pennsylvania, Rhode Island, Texas, Vermont and Virginia.
Source:  Energy Information Administration.

/5/    Oregon's electricity deregulation legislation is an
exception, affording only large industrial and commercial
customers access to competing electricity suppliers by October 1,
2001.  Residential customers and small businesses will continue
to receive power from the state's two investor-owned utilities,
which under the legislation will be required to offer these
customers a portfolio of options that include rate-regulated
power, market-priced power and electricity produced from
renewable resources.

/6/    The capacity offered for sale has been 84% fossil-fueled,
7% hydro, 5% purchased power agreements, and 4% nuclear.  EEI,
"Divestiture Action & Analysis/February 1999 Issue" ("Divestiture
Report"), at 10.

/7/    EEI, Divestiture Report, supra, at 7-10.

/8/    Ibid.

/9/    CERA, Global Power Horizons 1999, supra, at Figure 3.

/10/   Id. at Table 1.

/11/   See Summary Annual Reports of Cinergy for 1997 and 1998,
Letter to Stakeholders.  Productivity for these purposes is
measured by electric customer service expense per customer,
electric transmission and distribution expense per customer, gas
distribution expense per customer, and generation expenses per
megawatt-hour.

/12/   As measured by cost per megawatt ("MW") -hour (a sum of
fuel expense, nonfuel operation and maintenance ("O&M") expenses,
incremental capital expenditures, and a carrying cost for fuel
and O&M inventories) derived from 1998 FERC Form 1's for a
benchmark group of the 25 largest electric and gas utilities
(based on revenues).

/13/   See, e.g., Conectiv, Inc., HCAR No. 26833, Feb. 26, 1998;
Ameren Corporation, HCAR No. 26809, Dec. 30, 1997; New Century
Energies, Inc., HCAR No. 26750, Aug. 1, 1997; The Columbia Gas
System, Inc., HCAR No. 26634, Dec. 23, 1996; Gulf States
Utilities Company, HCAR No. 26451, Jan. 16, 1996.

/14/   This sum represents the face amount of all guarantees and
not the current balance of transactions presently outstanding
which are supported by the guarantees.

/15/   See HCAR No. 26505, Dec. 1, 1995 (authorizing Cinergy to
issue and sell, from time to time through December 31, 2000, up
to 22,386,696 shares of common stock under dividend reinvestment
and stock purchase plan and certain other stock-based plans);
HCAR No. 26505, April 17, 1996 (authorizing Cinergy to issue and
sell, from time to time through December 31, 2000, up to 7
million shares of common stock under long-term incentive
compensation plan); see also HCAR No. 26987, March 5, 1999
(notice of filing of application requesting authority for Cinergy
to issue up to 250,000 additional shares of common stock under
retirement plans for directors).  Cinergy is not currently
permitted to apply proceeds from shares issued under these plans
to investments in Exempt Projects up to the 100% Cap, and Cinergy
is not here requesting any amendment to the terms of these
orders.

/16/   See HCAR No. 26146, dated October 21, 1994 (approving
Cinergy merger and related transactions).

/17/   Lawrenceburg sells and transports natural gas to
approximately 20,000 people in a 60 square-mile area in
southeastern Indiana.  West Harrison sells electricity over a 3-square mile
area with a population of approximately 1,000 in West
Harrison, Indiana and bordering rural areas.  Miami owns a 138 kV
transmission line running from the Miami Fort Power Station in
Ohio to a point near Madison, Indiana.

/18/   During 1998, the FERC approved the formation of a Midwest
Independent System Operator ("Midwest ISO").  The Midwest ISO is
the result of Cinergy's collaboration with other Midwestern
utility companies to form an Independent System Operator ("ISO")
that will assume functional control of their combined
transmission systems and facilitate a reliable, efficient market
for electric power.  The ISO will provide non-discriminatory open
transmission access consistent with FERC Order 888.  The ISO will
also be responsible for system reliability and administration of
a regional transmission tariff, which will eliminate "pancaking"
of transmission rates in the region.  The Midwest ISO will be
governed by a disinterested Board of Directors.

As of November 1, 1999, there were 14 transmission owners
participating in the Midwest ISO, one of the largest ISOs in the
country.  The participating transmission owners cover territories
with over 47,000 miles of transmission lines that extend into 11
states, constituting over $7 billion of transmission investment.

/19/   CERA, Global Power Horizons 1999, supra, at 19.

/20/   See certificates of notification in File No. 70-9011
covering the quarterly periods ended June 30 and September 30,
1999, respectively.

/21/   Pursuant to its renewable energies strategy, the IBU has
invested and is considering further investments in U.S. wind-powered
electric generation facilities (and potentially other
types of non-fossil-fueled U.S. generating facilities) which may
be held as QFs or EWGs.

/22/   CinCap VI, L.L.C. owns the facility and Westwood
Operating Company, L.L.C., another CC&T subsidiary, will operate
the facility.

/23/   Cinergy Press Release, February 2, 1999.

/24/   CERA, Global Power Horizons 1999, supra, at 20 and Table
2.

/25/   Resource Data International ("RDI"), "Outlook for Power
in the U.S. 1998" ("U.S. Power Outlook"), at "Executive Summary."

/26/   As reported in The Financial Times, July 2, 1999.

/27/   CERA, Global Power Horizons 1999, supra, at 19-20 and
Figure 7.

/28/   RDI, U.S. Power Outlook, at "Issues and
Assumptions/Industry Trends."

/29/   See Megawatt Daily, July 14, 1999, at 6, "Credit Ratings
Group Sets Merchant Plant Criteria."

/30/   RDI, U.S. Power Outlook, at "Issues and
Assumptions/Industry Trends."

/31/   In Kentucky, an executive task force comprised of members
from the Governor's office and the Kentucky General Assembly is
studying electric restructuring in anticipation of the next
legislative session, which meets in January 2000.  It is unclear
whether an electric restructuring bill will be introduced at that
time.

With respect to its retail gas distribution business, CG&E
currently participates in a program in Ohio providing for
customer-choice in the supply of natural gas.  This program,
which made customer choice available to all residential and small
commercial customers in November 1997, was extended during 1998.
Prior to November 1997, large industrial, commercial, and
educational institution customers already had the ability to
select their own gas supplier.  Gas customers in approximately
two-thirds of the state of Ohio are now eligible to participate
in competitive supply programs.  Cinergy Resources, Inc.,
Cinergy's gas retail marketing subsidiary, had been one of the
entities competing for customer gas supply business in these
programs, but has discontinued taking new customers effective
fall 1999.

/32/   Ohio Rev. Code Ann. sec. 4928.01 et seq. (1999).

/33/   Ind. Code sec. 8-1-2.5-1 et seq. (1999).

/34/   Id. at sec. 8-1-2.5-1(2).

/35/   Id. at sec. 8-1-2.5-9(a).

/36/   Id. at sec. 8-1-2.5-5.

/37/   See HCAR No. 25570, July 2, 1992 (Edesur); HCAR No.
25674, November 13, 1992 (Central Costanera).

/38/   In 1995, the first full year following the merger,
Cinergy achieved non-fuel operation and maintenance savings of
approximately $42 million, significantly exceeding the Company's
initial public statements of projected first-year merger
benefits.  The merger enabled the Operating Companies to reduce
fuel costs and capital spending in 1995 by $13 million and $170
million, respectively.

As discussed below, Cinergy also began a reengineering initiative
in 1995.  These efforts have resulted in significant additional
cost savings throughout Cinergy's organization.  Cinergy's
demonstrated expertise in realizing cost efficiencies in its own
organization should benefit Exempt Projects in which the Company
invests, where Cinergy owns the project outright or has operating
responsibility or participation.

/39/   CGPS provides the following services to CGR and its
subsidiaries:
Project Development Activities:  This core activity involves
identifying, bidding on and developing investment prospects,
hiring advisers, and preparing or assisting in the preparation,
review and negotiation of project bidding, development,
investment/financing, operational and commercial contracts,
documents and filings.
Asset Management Services:  CGPS also provides asset management
services by which, after financial closing and acquisition of the
project investment, the project investment is managed, i.e.,
advice is given to the specific Cinergy investing entity and
further support services may be provided, e.g., negotiation of
additional investment or disposal of the investment.
1.On-Site Technical Services:  Third, after financial closing,
CGPS may also provide operational and maintenance and other
technical and support services directly to or on behalf of the
in-country asset-owning entity (i.e., the FUCO itself or the EWG
that directly holds the eligible facility).  This is more likely
to occur in cases where Cinergy owns a controlling interest in
the project company.
CGPS had 35 employees at year-end 1998, working in the following
areas:  (i) project development/asset management, (ii) finance
and (iii) company administration.  The bulk of the employees fall
into the project development/asset management function.  Both
those employees and the finance staff may provide any combination
of project development, asset management and in-country services.
The company administration staff generally provide only internal
support services.

/40/   Cinergy's reengineering efforts began in 1995, shortly
after merger consummation.  These initial efforts resulted in
process adjustments that Cinergy projects will result in over
$519 million in 5-year net cash flow savings, primarily in labor,
material and service procurement, and material and fuel
inventory.  In 1998, a new reengineering initiative identified
additional estimated 5-year cash flow savings of over $300
million.  These savings derive primarily from increased
efficiencies in Cinergy's overall business processes as well as
from material and service procurement.  And in 1999, Cinergy
commenced another reengineering campaign, targeted at reducing
A&G costs by clarifying the roles of the Corporate Center and the
business units and by improving the alignment of internal service
offerings with business unit needs.

/41/   Cinergy's September 30, 1999 aggregate investment of $568
million also included approximately (a) $15 million in funds
advanced to CGPS, Cinergy's project development subsidiary, (b)
$1.5 million in preliminary expenses for the Baghabari project,
and (c) $1.6 million in preliminary expenses relating to Cinergy
Global Power (UK) Limited, which holds title to the Redittch
generating facility referred to above.

/42/   This FUCO is a subsidiary of Construcciones y
Representaciones Industriales S.A., which acquired its interest
therein with funds entirely non-recourse to Cinergy.

/43/   This is the partnership created pursuant to the joint
venture with Duke that, through three special-purpose entities,
holds indirect title to the 1400 MW of EWG facilities being
developed at three sites in Ohio and Indiana.

/44/   Worldwide energy consumption is projected to increase by
65 percent from 1996 to 2020, with much of the growth occurring
in developing countries.  Electricity continues to be the most
rapidly growing form of energy consumption, with world net
electricity consumption expected to increase by over 80 percent,
from 12 trillion kilowatthours in 1996 to 22 trillion
kilowatthours in 2020.  Electricity consumption in developing
countries is forecast to grow at more than twice the rate of
growth in the industrialized countries (4.4% vs. 1.6%), with
aggregate consumption nearly tripling between 1996 and 2020, to
approximately 9.5 trillion kilowatthours.  Developing countries
are expected to account for 43 percent of the world's total
electricity consumption in 2020, compared with only 28 percent in
1996.  Energy Information Administration, U.S. Department of
Energy ("EIA"), "International Energy Outlook 1999," at 1,6, 101-102.

/45/   CERA, Global Power Horizons 1999, supra, at 3.

/46/   Id. at 59; with respect to potential privatization in
Mexico, see The New York Times, Feb. 4, 1999, "Mexican Chief
Backs Privatization of Power Industry" (reporting proposed
constitutional reforms supported by President Ernesto Zedillo
that would reverse Mexico's nationalization of the power industry
and allow private companies to invest in the leasing and
construction of power plants and regional transmission lines).

/47/   CERA, Global Power Horizons 1999, supra, at 60.

/48/   See The New York Times, Sept. 3, 1999, "Korean Power
Company Moves Toward Privatization" (reporting announcement by
the state-owned Korea Electric Power Corp., the only power
generation company in South Korea, that it will spin-off six
independent companies in November 1999, and that in September
1999 the government will offer the six companies for sale to both
domestic and foreign investors).

/49/   The member countries of the EU are Austria, Belgium,
Denmark, Finland, France, Germany, Greece, the Netherlands,
Ireland, Italy, Luxembourg, Portugal, Spain, Sweden and the U.K.

/50/   The London Financial Times, February 15, 1999, "Power
Shake-Up Energises EU Price Competition."

/51/   See http://www.commodities-now.com/online/dec98/elecdereg.html.

/52/   The London Financial Times, February 15, 1999, "Power
Shake-Up Energises EU Price Competition."

/53/   See generally The New York Times, October 28, 1999,
"Cheaper Power to the People/In Germany, a Radical Deregulation
Benefits Households"; see also Megawatt Daily, November 4, 1999,
"German Utility RWE to Shop in Britain."

/54/   Interest rate variability and volatility are closely
related in that both describe uncertainty arising from exposure
to floating rates of interest.  Variability usually relates to
longer-term exposure, measured in months or years, especially as
regards existing obligations.  For example, to minimize exposure
to interest rate variability on debt borrowed to fund a long-lived asset,
Cinergy might "match-fund" with a significant amount
of fixed-rate debt.  Exposure to risk on amounts kept floating
(for flexibility of redemption) could be minimized through
various derivative instruments.  Volatility, on the other hand,
usually describes exposure that is much shorter in duration, such
as daily swings in interest rates or indices.  In addition, it
relates to risk exposure on existing obligations and planned
issuances.  Therefore, to minimize interest rate volatility on
the day of pricing a new bond, various hedging techniques are
available as described in the text.  Cinergy's Treasury
Department has responsibility to analyze the cost and
desirability of using various hedging instruments to mitigate
interest rate risk exposure, and to purchase and monitor such
instruments as necessary.

/55/   For example, companies that have complementary businesses
(e.g., an electric distribution company which owns another
electric distribution business or a water or gas distribution
business) are said to be horizontally integrated.  Vertical
integration encompasses a spectrum of functionally distinct
business operations or processes within a particular industry,
such as  the generation, transmission and distribution of
electricity.

/56/   The ability to "cash-out" of, or "monetize," an
investment expeditiously and on advantageous terms represents an
important value of that investment.  A company may no longer
desire to own an investment perhaps because the investment is
perceived to be at its maximum market value or it is not
achieving its pre-defined goals.  Likewise, an alternative
investment may be preferred, or there may simply be a need to
raise cash.  In any of these hypotheticals, the ability to
achieve such a disposition is critical.

/57/   See generally 87 FERC Par. 61,173, Docket No. RM99-2-000,
May 13, 1999 (Notice of Proposed Rulemaking/ Regional
Transmission Organizations) ("RTO NOPR"); EEI, Electric Key
Trends, supra, at 7.

/58/   RTO NOPR, supra, at 22.

/59/   Ibid.

/60/   Id. at 21 (based on power marketer quarterly filings and
caveating that a significant portion of such sales involve
multiple resales of the same generation).

/61/   RDI, U.S. Power Outlook, supra, at "Issues and
Assumptions/Industry Trends."

/62/   Cinergy has submitted information to the Commission on
the individual earnings from each Exempt Project in quarterly
certificates filed pursuant to the 100% Order in File No. 70-9011, as well
as in the Annual Report on Form U5S.

/63/   Source:  Merrill Lynch, Electric Utilities, Fourth
Quarter 1998 Report.

/64/   Bloomberg Financial Services.  The average market-to-book
ratio of the benchmark group is as of June 30, 1999.

/65/   The 75.6% ratio is based on trailing 12 months earnings.

/66/   As reported by George Pugh & Co.  The benchmark group
consists of 26 electric and gas utilities including Cinergy.

/67/   Source: Merrill Lynch, Electric Utilities, Second Quarter
1999 and Fourth Quarter 1998 Reports.

/68/   CG&E percentages are consolidated.

/69/   Source: Merrill Lynch, Electric Utilities, Second Quarter
1999 and Fourth Quarter 1998 Reports.

/70/   The 9/30/99 ratios are based on trailing 12 months
earnings.

/71/   CG&E percentages are consolidated.

/72/   The average rating for utility company senior debt is A-
from S&P and A3 from Moody's.

/73/   An "A3" rating from Moody's is equivalent to an "A-"
rating from any of the other three agencies.

/74/   Not rated.

/75/   In December 1994 Cinergy issued and sold over 7 million
shares of its common stock to the public and contributed $160
million of the net proceeds to the equity capital of PSI (see
Rule 24 certificate in File No. 70-8477).  PSI used the funds for
general corporate purposes, including repayment of short-term
indebtedness incurred for construction financing.

/76/   See PSI Resources, Inc., et al., Release No. 35-25674,
November 13, 1992 (text accompanying notes 21 and 22).

/77/   Ohio Rev. Code sec. 4928.17.

/78/   "Diversified Business" was defined in the Principles to
mean (i) a non-utility business, or (ii) a public utility
business outside the United States of America.  "Participation"
was defined to mean "an acquisition of securities, or any
interest in a business, which results in either CG&E becoming a
direct owner of a Diversified Business or a Diversified Business
becoming an Affiliate of CG&E."  Principles of Diversification
II D and G.

/79/   The rule 24 reporting obligations proposed herein would
supersede the (1) corresponding reporting obligations imposed by
the 100% Order and (2) with respect to the proposed financing
authority detailed above in Item 1.C, the corresponding reporting
obligations imposed by the January 1998 Order and, to the extent
duplicative (i.e., regarding guarantees), the March 1999 Order.

EX-99.G

                                                                Exhibit G
                                                    Form of Public Notice

Securities and Exchange Commission
(Release No. 35-_________)

     Cinergy Corp., a registered holding company ("Cinergy" or
"Company"), and its direct wholly-owned nonutility subsidiaries
Cinergy Global Resources, Inc. ("CGR") and Cinergy Investments,
Inc. ("Cinergy Investments"), all at 139 East Fourth Street,
Cincinnati, Ohio 45202, have filed an application-declaration
("Application") with the Commission under sections 6(a), 7,
12(b), 32 and 33 of the Act and rules 45, 53and 54 thereunder.

     By order dated March 23, 1998 (HCAR No. 26848) ("100% Order"),
the Commission amended certain prior orders issued to Cinergy,
authorizing Cinergy to apply the proceeds of certain financing
transactions to an aggregate investment in exempt wholesale
generators ("EWGs") and foreign utility companies ("FUCOs" and
collectively with EWGs, "Exempt Projects") not to exceed 100% of
Cinergy's consolidated retained earnings ("100% Cap"), subject to
various conditions.  (The terms "aggregate investment" and
"consolidated retained earnings" have the meanings assigned in
Rule 53(a)(1).)

     At September 30, 1999, Cinergy's aggregate investment and
consolidated retained earnings were approximately $568 million
and $993 million, respectively, leaving available investment
capacity under the 100% Order of approximately $425 million.
Cinergy states that, in practical terms (i.e., after deducting
funds earmarked for projects in development, for which internal
approvals have been received), the Company has only approximately
$325 million available for new investments.

     Cinergy asserts that the remaining capacity is not sufficient
to enable the Company to grow its business and adapt to industry-wide
restructuring.  Accordingly, Cinergy now requests greater
authority to invest in Exempt Projects.  Specifically, from time
to time beginning with the effective date of the Commission's
order granting and permitting the Application to become effective
and continuing for a period of five years thereafter
("Authorization Period"), Cinergy proposes to apply proceeds from
financing transactions authorized in the Application to
additional investments in Exempt Projects, provided that
Cinergy's aggregate investment does not exceed the sum of (i) an
aggregate investment equal to 100% of consolidated retained
earnings plus (ii) $2,000,000,000 (collectively, "Proposed Cap"),
excluding Cinergy's aggregate investment in one or more EWG
affiliates formed to acquire all or a substantial portion of the
existing generating facilities owned by Cinergy's utility
subsidiaries, not to exceed the net book value of such facilities
at the time of transfer ("Restructuring Investment").  Cinergy
states that the current net book value of the utility
subsidiaries' generating assets is approximately $2.9 billion.
Cinergy specifically requests authority to apply proceeds from
the financing transactions authorized in the Application to make
the Restructuring Investment as well as additional investments
under the Proposed Cap.

     As noted, Cinergy proposes to apply proceeds from financing
transactions authorized in the Application to additional
investments in Exempt Projects, subject to the Proposed Cap and
the Restructuring Investment.  Under the following outstanding
orders, Cinergy is currently authorized to issue common stock,
debt securities and guarantees for general corporate purposes
including, among other things, investing in Exempt Projects up to
the 100% Cap:

     Short-term debt/$2 billion overall debt cap/common stock.
Order dated January 20, 1998, HCAR No. 26819 ("January 1998
Order"), in which the Commission authorized Cinergy to issue and
sell, from time to time through December 31, 2002, (a) short-term
notes and commercial paper in an aggregate principal amount not
to exceed - together with the principal amount of the debentures
referred to below and (prior to the March 1999 Order) certain
guarantees - $2 billion at any time outstanding, and (b) up to
30,867,385 shares of Cinergy common stock, $.01 par value per
share (i.e., 30 million new shares plus the remaining shares
authorized for issuance under a prior order).

     Long-term debentures.  Order dated August 21, 1998, HCAR No.
26909 ("August 1998 Order"), in which the Commission authorized
Cinergy to issue and sell, from time to time through December 31,
2002, unsecured debentures with maturities of two to 15 years in
an aggregate principal amount at any time outstanding not to
exceed $400 million, subject to the overall debt cap of $2
billion just noted.

     Guarantees; $1 billion cap.  Order dated March 1, 1999, HCAR
No. 26984 ("March 1999 Order"), in which the Commission (a)
consolidated authority granted to Cinergy under prior orders to
issue guarantees of obligations of system companies, while (b)
imposing an overall cap of $1 billion (separate from the $2
billion debt cap) on the amount of Cinergy guarantees issued and
outstanding from time to time through December 31, 2003.  This
order modified the January 1998 Order by removing guarantees from
the coverage of the $2 billion debt cap.  Among other things, the
March 1999 Order also expanded Cinergy's existing authority to
create intermediate subsidiaries to hold interests in nonutility
businesses, including Exempt Projects.

     Cinergy now proposes to replace the January and August 1998
Orders in their entirety, and to supersede the March 1999 Order
solely to the extent of the guarantee authority granted therein,
by new financing authority the terms of which are set forth
below.  As with the existing authority, the new authority would
be used for general corporate purposes, not merely to fund
investments in Exempt Projects, as more specifically set forth
below.

     Subject to the terms and conditions described below, from time
to time through the Authorization Period, Cinergy proposes to
issue and/or sell, without further authorization from the
Commission, including with respect to the specific terms of sale,
(1) up to $4.4 billion aggregate principal amount at any time
outstanding of any combination of short- and long-term debt; (2)
up to $2 billion aggregate principal amount at any time
outstanding of guarantees; and (3) up to 75 million additional
shares of common stock.

     In addition to the other terms and conditions hereinafter
specified, the following restrictions will govern the proposed
financing transactions: (i) Cinergy's common equity will comprise
at least 30 percent of Cinergy's consolidated capitalization;
(ii) the effective cost of money for short-term debt securities
will not exceed 300 basis points over the comparable term London
interbank offered rate and for long-term debt securities will not
exceed 300 basis points over the comparable term U.S. Treasury
securities; (iii) the underwriting fees, commissions or similar
remuneration paid in connection with the issue, sale or
distribution of any securities authorized hereunder (excluding
interest rate risk management instruments, as to which separate
provisions governing fees and expenses are proposed below) will
not exceed 5 percent of the principal or face amount the
securities issued or gross proceeds of the financing; and (iv)
solely with respect to investments in Exempt Projects pursuant to
the Proposed Cap, Cinergy will not issue any additional debt
securities to finance such investments if upon original issuance
thereof Cinergy's senior debt obligations are not rated
investment grade by at least one of Standard & Poor's Corporation
("S&P"), Fitch Investor Service ("Fitch"), Duff & Phelps Credit
Rating Co. ("D&P") or Moody's Investor Service ("Moody's").

     The following additional terms and conditions apply to the
proposed financing transactions.

     1.   Debt

     Under the outstanding financing orders summarized above, and
subject to the terms and conditions thereof, Cinergy is
authorized to issue and sell and have outstanding at any time
through December 31, 2002 up to $2 billion aggregate principal
amount of short-term notes, commercial paper and 15-year
debentures, provided that not more than $400 million thereof
consists of debentures.

     At September 30, 1999, Cinergy had issued and outstanding debt
securities totaling $405 million in aggregate principal amount,
consisting of (i) short-term bank notes aggregating $5 million
and (ii) long-term debentures aggregating $400 million.

     Cinergy now proposes to replace the existing debt authority.
From time to time through the Authorization Period, Cinergy
proposes to issue and sell short- and long-term debt securities
in an aggregate principal amount at any time outstanding not to
exceed $4,400,000,000, subject to the terms and conditions set
forth above and the following additional terms and conditions.
Subject to this $4.4 billion ceiling, Cinergy proposes to issue
such short- and long-term debt in any proportion, without a
separate, lower cap on long-term debt, as under the existing
authority with respect to debentures.

     a.   Short-term notes

     Cinergy proposes to make short-term borrowings from banks or
other financial institutions.  Such borrowings will be evidenced
by (1) "transactional" promissory notes to be dated the date of
such borrowings and to mature not more than one year after the
date thereof or (2) "grid" promissory notes evidencing all
outstanding borrowings from the respective lender, to be dated as
of the date of the first borrowing evidenced thereby, with each
such borrowing maturing not more than one year thereafter.  Any
such note may or may not be prepayable, in whole or in part, with
or without a premium in the event of prepayment.  The amount of
any premium payable by Cinergy would not exceed an amount
equivalent to the present value of the stated interest payable on
the note in the event the note had not been prepaid, plus accrued
interest to the date of prepayment.

       b. Commercial paper

     Cinergy also proposes to issue and sell commercial paper
through one or more dealers or agents or directly to a limited
number of purchasers if the resulting cost of money is equal to
or less than that available from commercial paper placed through
dealers or agents.

     Cinergy proposes to issue and sell the commercial paper at
market rates with varying maturities not to exceed 270 days.  The
commercial paper will be in the form of book-entry unsecured
promissory notes with varying denominations of not less than
$25,000 each.  In commercial paper sales effected on a discount
basis, no commission or fee will be payable in connection
therewith; however, the purchasing dealer will re-offer the
commercial paper at a rate less than the rate to Cinergy.  The
discount rate to dealers will not exceed the maximum discount
rate per annum prevailing at the date of issuance for commercial
paper of comparable quality and the same maturity.  The
purchasing dealer will re-offer the commercial paper in such a
manner as not to constitute a public offering within the meaning
of the Securities Act of 1933, as amended ("Securities Act").

     c.  Long-term debt

     Cinergy also proposes to issue and sell long-term debt
securities ("Notes") in one or more series.  If issued on a
secured basis, Notes of any series would be secured by common
stock of nonutility subsidiaries and possibly other assets or
property, in any event excluding common stock or other assets of
utility subsidiaries.  Notes of any series (a) will have
maturities ranging from one to 50 years, (b) may be subject to
optional and/or mandatory redemption, in whole or in part, at par
or at various premiums above the principal amount thereof, and
(c) may be entitled to mandatory or optional sinking fund
provisions.  Interest accruing on Notes of any series may be
fixed or floating or "multi-modal" (where the interest is
periodically reset, alternating between fixed and floating
interest rates for each reset period, with all accrued and unpaid
interest together with interest thereon becoming due and payable
at the end of each such extension period).  Notes will be issued
under one or more indentures to be entered into between Cinergy
and financial institution(s) acting as trustee(s); supplemental
indentures may be executed in respect of separate offerings of
one or more series of Notes.

     Notes may be issued in private or public transactions.  With
respect to the former, notes of any series may be issued and sold
directly to one or more purchasers in privately negotiated
transactions or to one or more investment banking or underwriting
firms or other entities who would resell the Notes without
registration under the Securities Act of 1933 in reliance upon
one or more applicable exemptions from registration thereunder.
From time to time Cinergy may also issue and sell Notes of one or
more series to the public either (i) through underwriters
selected by negotiation or competitive bidding or (ii) through
selling agents acting either as agent or as principal for resale
to the public either directly or through dealers.

     The maturity dates, interest rates, redemption and sinking
fund provisions, if any, with respect to the Notes of a
particular series, as well as any associated placement,
underwriting or selling agent fees, commissions and discounts, if
any, will be established by negotiation or competitive bidding
and reflected in the applicable indenture or supplement thereto
and purchase agreement or underwriting agreement setting forth
such terms.

     d.   Interest rate risk management

     In connection with the issuance and sale of the short- and
long-term debt securities described above, Cinergy proposes to
mitigate interest rate risk through the use of various interest
rate management instruments commonly used in today's capital
markets, such as interest rate swaps, caps, collars, floors,
options, forwards, futures and similar products designed to
manage and mitigate interest rate risks.

     Cinergy will enter into such derivative transactions pursuant
to agreements with counterparties that are highly rated financial
institutions - i.e., whose senior secured debt, at the date of
execution of the agreement with Cinergy, is rated at least "A-"
by S&P, Fitch or D&P or "A3" by Moody's.  The derivative
transactions will be for fixed periods and in no case will the
notional principal amount exceed the principal amount of the
underlying debt security.  Cinergy will not engage in "leveraged"
or "speculative" derivative transactions.

     Fees, commissions and annual margins in connection with any
interest rate management agreements will not exceed 100 basis
points in respect of the principal or notional amount of the
related debt securities or interest rate management agreement.
In addition, with respect to options such as caps and collars,
Cinergy may pay an option fee which, on a net basis (i.e., when
netted against any other option fee payable with respect to the
same security), would not exceed 10% of the principal amount of
the debt covered by the option.

     2.   Guarantees

     In the March 1999 Order, the Commission authorized Cinergy to
guarantee the debt or other securities or obligations of various
system companies, provided that the total amount of guarantees
outstanding at any time through December 31, 2003 did not exceed
$1 billion, and provided further, that (i) any guarantees of
Exempt Projects would also be subject to the 100% Cap, and (ii)
any guarantees of "energy-related companies," as defined in rule
58 ("Rule 58 Companies"), would also be subject to the aggregate
investment cap of rule 58.

     At September 30, 1999, Cinergy had guarantees outstanding
(including in respect of letter of credit transactions) totaling
$658 million.

     Cinergy now proposes to replace the existing guarantee
authority.  From time to time through the Authorization Period,
Cinergy requests authority to guarantee, obtain letters of credit
and otherwise provide credit support (each, a "Guarantee") in
respect of the debt or other securities or obligations of any or
all of Cinergy's subsidiary companies (including system companies
formed or acquired at any time over the Authorization Period),
provided that the total amount of Guarantees at any time
outstanding does not exceed $2,000,000,000, and provided further,
that (i) any Guarantees of Exempt Projects would also be subject
to the Proposed Cap or Restructuring Investment, as applicable;
and (ii) any Guarantees of Rule 58 Companies would also be
subject to the aggregate investment cap of rule 58.

     The terms and conditions of any Guarantees would be
established at arm's length based upon market conditions, but in
any case would comply with the applicable conditions described
earlier.

          3.   Common stock

     The January 1998 Order authorized Cinergy to issue and sell up
to 30,867,385 additional shares of common stock through December
31, 2002, exclusive of shares issued under various stock-based
plans./1/

     At September 30, 1999, Cinergy had 600 million shares of
common stock authorized for issuance, 158,917,210 shares of which
were issued and outstanding.  Cinergy has issued 771,258 shares
of common stock pursuant to the January 1998 Order.

     Cinergy now proposes to supersede the common stock authority
granted in the January 1998 Order.  From time to time through the
Authorization Period, Cinergy proposes to issue and sell up to 75
million additional shares of common stock (as such figure may be
adjusted for stock splits and similar events).

     Cinergy proposes to issue and sell the additional shares from
time to time (i) through solicitations of proposals from
underwriters or dealers, (ii) through negotiated transactions
with underwriters or dealers, (iii) directly to a limited number
of purchasers or to a single purchaser, and/or (iv) through
agents.

     The price applicable to additional shares sold in any such
transaction will be based on several factors, including the
current market price of the common stock and prevailing capital
market conditions.

     Cinergy also requests authorization to issue common stock as
consideration for acquisitions by Cinergy or any nonutility
subsidiary thereof of securities of businesses, the acquisition
of which (a) is exempt under the Act or the rules thereunder or
(b) has been authorized by prior Commission order issued to
Cinergy or any nonutility subsidiary thereof, subject in either
case to applicable limitations on total investments in any such
businesses.  The shares of Cinergy common stock issued in any
such transaction would be valued at market value based on the
closing price on the day before closing of the sale, on average
high and low prices for a period prior to the closing of the
sale, or on some other method negotiated by the parties.

     Finally, Cinergy requests authority to issue up to 250,000 of
the additional shares to Cinergy system employees, including
officers, in gift or award transactions from time to time through
the Authorization Period.  (This requested authority corresponds
to similar authority granted in the January 1998 Order.)

     4.   Use of proceeds

     Cinergy proposes to issue the short-term notes, commercial
paper, debentures and additional shares of common stock described
above for general corporate purposes, including without
limitation (i) payments, redemptions, acquisitions, and
refinancings of outstanding securities issued by Cinergy, (ii)
acquisitions of and investments in Exempt Projects, provided that
Cinergy's aggregate investment therein does not exceed the
Proposed Cap or Restructuring Investment, as applicable, (iii)
acquisitions of and investments in Rule 58 Companies, provided
that Cinergy's aggregate investment therein does not exceed the
aggregate investment limitation of Rule 58, (iv) loans to and
investments in other system companies, including through the
Cinergy system money pool, and (v) other lawful corporate
purposes.

     With respect to the Restructuring Investment, Cinergy states
that, as a result of state restructuring, it intends to transfer
all or a substantial portion of the generating assets owned by
its utility subsidiaries to one or more newly created EWG
affiliates.  Cinergy has two primary utility subsidiaries, PSI
Energy, Inc. ("PSI") and The Cincinnati Gas & Electric Company
("CG&E").

     PSI produces, transmits, distributes and sells electricity in
north central, central and southern Indiana, serving an estimated
population of 2.1 million people located in 69 of the state's 92
counties including the cities of Bloomington, Columbus, Kokomo,
Lafeyette, New Albany and Terre Haute.  At and for the nine
months ended September 30, 1999, PSI had total consolidated
assets of approximately $4 billion and operating revenues of
approximately $1.7 billion.

     CG&E and its four wholly-owned utility subsidiaries - The
Union Light, Heat and Power Company, a Kentucky electric and gas
utility ("ULH&P"), Lawrenceburg Gas Company, an Indiana gas
utility ("Lawrenceburg"), The West Harrison Gas and Electric
Company, an Indiana electric utility ("West Harrison"), and Miami
Power Corporation ("Miami"), an electric utility (solely by
virtue of its ownership of certain transmission assets) - provide
electric and gas service in the southwestern portion of Ohio and
adjacent areas in Kentucky and Indiana.  The area served with
electricity, gas or both covers approximately 3,200 square miles
and has an estimated population of two million.  CG&E produces,
transmits, distributes and sells of electricity and sells and
transports natural gas in the southwestern portion of Ohio,
serving an estimated population of 1.6 million people in 10 of
the state's 88 counties including the cities of Cincinnati and
Middletown.  ULH&P transmits, distributes and sells electricity
and sells and transports natural gas in northern Kentucky,
serving an estimated population of 322,000 people in a 500
square-mile area encompassing six counties and including the
cities of Newport and Covington./2/  At and for the nine months
ended September 30, 1999, CG&E had total consolidated assets of
approximately $5 billion and operating revenues of approximately
$1.9 billion.

     As of September 30, 1999, CG&E and PSI owned electric
generating facilities, or portions thereof in the case of
jointly-owned facilities, having approximately 11,200 MW of total
generating capacity and a net book value of approximately $2.9
billion.  CG&E owns electric generating facilities with 5,200 MW
of capacity having a total net book value of approximately $1.76
billion.  PSI owns electric generating facilities with 6,000 MW
of capacity having a total net book value of approximately $1.13
billion.  The generating facilities are located exclusively in
Ohio and Indiana (other than with respect to one facility located
in Kentucky) and are primarily coal-fired.  For 1998,
substantially all of the electricity sold by CG&E and PSI from
their generating facilities was produced by the coal-fired
facilities./3/

     In October 1999 comprehensive electric restructuring
legislation went into effect in Ohio./4/  Under the new law, all
retail customers in Ohio are entitled to choose their electric
supplier commencing January 1, 2001.  The legislation deregulates
electric supply, with electric transmission and distribution
continuing as regulated utility functions.  As an incumbent Ohio
utility, CG&E is required to separate its existing functions
pertaining to competitive retail sale of generation service from
those pertaining to transmission and distribution service,
transferring the former into a separate corporate entity.  After
January 1, 2001, Cinergy may not market and supply competitive
electric services to retail customers in Ohio through CG&E, but
only through an affiliated power marketer to which CG&E has
transferred its competitive retail sale of generation function
pursuant to a corporate separation plan and affiliate code of
conduct approved by the Public Utilities Commission of Ohio
("PUCO").

     Other provisions of the law include:

     A 5 percent cut in the generation component of rates for
     every residential customer beginning January 1, 2001.

     Utility rates otherwise are frozen for non-switching
     customers through each utility's market development period
     (ending no later than December 31, 2005).

     The filing of a transition plan by each utility within 90
     days after the effective date of the law (the PUCO is given
     275 days to approve or reject a utility's filing).  The
     transition plan must include a rate unbundling plan, a
     corporate separation plan, an operational support plan, an
     employee assistance plan and a consumer education plan.
     The transition plan may also include a quantification of
     utility transition costs and an application to receive
     transition revenues.

     The establishment of a market development period, which is
     the transition period to full market competition.

     The recovery of transition costs through the market
     development period, as determined by the PUCO.

     The recovery of regulatory assets through December 31,
     2010, as approved by the PUCO.

     The transfer of either ownership or control of transmission
     assets to an independent transmission entity before
     December 31, 2003.

     The establishment of incentives to induce 20 percent of the
     loads by customer class to switch providers by no later
     than December 31, 2003.

     A requirement that incumbent utilities provide retail
     electric service to native load customers who decline to
     switch to different suppliers or who desire to return to
     service from the incumbent utility.

     Cinergy states that although the new law does not require
restructuring or divestiture of generating assets held by
incumbent utilities, the practical effect of the foregoing
provisions is to encourages that result, as a means of fostering
generation supplier diversity and curbing potential market power
of incumbent utilities.

     Cinergy states that it is preparing its transition plan under
the new legislation for submission to the PUCO by year-end 1999.
Cinergy states that in that filing it will declare its intention
(subject to prior receipt of all required state commission
findings pursuant to section 32 of the Act) to transfer CG&E's
generating facilities to one or more EWG affiliates.

     Cinergy operates its electric utility system on an integrated
basis, with the operating companies' generating assets being
centrally and economically dispatched.  According to Cinergy,
operating half of these assets as EWG facilities, with the other
half remaining in the regulated utility, could impair continued
integrated operations and the realization of maximum production
cost efficiencies.

     Although Indiana has not yet enacted electric industry
restructuring legislation, nor is proposed legislation currently
pending, Cinergy states that Indiana's "alternative utility
regulation" statute, enacted in 1995 in recognition of increasing
competition for energy services in Indiana and the United States,
confers considerable flexibility on the Indiana Utility
Regulatory Commission ("IURC") to approve jurisdictional
transactions upon a showing of public interest./5/  Pursuant to
the alternative regulation statute or subsequently enacted
customer choice legislation, Cinergy states that it may likewise
seek approval from the IURC to transfer PSI's generating assets
to one or more separate EWG affiliates.

     Cinergy states that it will supplement the Application to
provide additional information concerning the proposed transfer
of its existing retail-based generating assets to EWG affiliates,
after it files its transition plan with the PUCO.

     For the Commission, by the Division of Investment Management,
pursuant to delegated authority.

                                ENDNOTES

/1/  See HCAR No. 26505, Dec. 1, 1995 (authorizing Cinergy to
issue and sell, from time to time through December 31, 2000, up
to 22,386,696 shares of common stock under dividend reinvestment
and stock purchase plan and certain other stock-based plans);
HCAR No. 26505, April 17, 1996 (authorizing Cinergy to issue and
sell, from time to time through December 31, 2000, up to 7
million shares of common stock under long-term incentive
compensation plans); see also HCAR No. 26987, March 5, 1999
(notice of filing of application requesting authority for Cinergy
to issue up to 250,000 additional shares of common stock under
retirement plans for directors).  Cinergy is not currently
permitted to apply proceeds from shares issued under these plans
to investments in Exempt Projects up to the 100% Cap, and Cinergy
is not here requesting any amendment to the terms of these
orders.

/2/  Lawrenceburg sells and transports natural gas to
approximately 20,000 people in a 60 square-mile area in
southeastern Indiana.  West Harrison sells electricity over a 3-square mile
area with a population of approximately 1,000 in West
Harrison, Indiana and bordering rural areas.  Miami owns a 138 kV
transmission line running from the Miami Fort Power Station in
Ohio to a point near Madison, Indiana.

/3/  ULH&P, the largest of the Operating Companies after CG&E and
PSI, owns no electric generating facilities, but purchases
substantially all the electricity required to supply its retail
franchise customers from CG&E.

/4/  Ohio Rev. Code Ann. sec. 4928.01 et seq. (1999).

/5/  Ind. Code sec. 8-1-2.5-1 et seq. (1999).

EX-99.I

               CINERGY SYSTEM CORPORATE STRUCTURE/9-30-99

Cinergy Corp. (Delaware, 6/30/1993)

       Cinergy Services, Inc. (Delaware, 2/23/1994)

       The Cincinnati Gas & Electric Company (Ohio, 4/3/1837)

            The Union Light, Heat and Power Company (Kentucky,
            3/20/1901)
            Tri-State Improvement Company (Ohio, 1/14/1964)
            Lawrenceburg Gas Company (Indiana, 5/5/1868)
            The West Harrison Gas and Electric Company (Indiana,
            8/19/1942)
            Miami Power Corporation (Indiana, 3/25/1930)
            KO Transmission Company (Kentucky, 4/11/1994)
            Ohio Valley Electric Corporation (Ohio, 10/1/52) /1/

       PSI Energy, Inc. (Indiana, 9/6/1941)

            South Construction Company, Inc. (Indiana, 5/31/1934)

       Cinergy Investments, Inc. (Delaware, 10/24/1994)

            (see below for listing of subsidiaries)

       Cinergy Global Resources, Inc. (Delaware, 5/15/1998)

            (see below for listing of subsidiaries)

Cinergy Foundation, Inc. (Indiana, 12/7/1988)



                                DOMESTIC
                        NON-UTILITY CORPORATIONS

Cinergy Investments, Inc. (Delaware, 10/24/1994) /2/

       Cinergy-Cadence, Inc. (Indiana, 12/27/1989; formerly PSI Power
       Resource Operations, Inc.)
          Cadence Network LLC (Delaware, 9/3/1997) /3/
       Cinergy Capital & Trading, Inc. (Indiana, 10/8/1992; formerly
       Wholesale Power Services, Inc.)
          CinCap MVC OpCo, LLC (Delaware, 9/28/99)
          CinCap IV, LLC (Delaware, 12/3/1997) /4/
          CinCap V, LLC (Delaware, 7/21/98) /5/
          CinCap VI, LLC (Delaware, 9/18/98)
          CinCap VIII, LLC (Delaware, 12/2/98)
            VMC Generating Company /6/
                 CinCap VII, LLC (Delaware, 12/2/98)
                 Duke Energy Madison, LLC
                 Duke Energy Vermillion, LLC
          Westwood Operating Company, LLC (Delaware, 10/2/98)
          CinPower I, LLC (Delaware, 6/12/1998)
          Cinergy Marketing & Trading, LLC (Delaware, 10/27/95;
          formerly Producers Energy Marketing, LLC)
       Cinergy Communications, Inc. (Delaware, 9/20/1996)
          Lattice Communications, LLC (Delaware, 1/7/99) /7/
       Cinergy Engineering, Inc. (Ohio, 3/28/1997)
       Cinergy-Centrus, Inc. (Delaware, 4/23/98; formerly Cinergy-Ideon,
       Inc.)
          Centrus, LLP (Indiana, 7/7/1998) /8/
       Cinergy-Centrus Communications, Inc. (Delaware, 7/17/98)
       Cinergy Resources, Inc. (Delaware, 1/10/1994; formerly CG&E
       Resource Marketing, Inc.)
       Cinergy Solutions, Inc. (Delaware, 2/11/1997)
          Cinergy Business Solutions, Inc. (Delaware, 4/6/98)
          Cinergy Customer Care, Inc. (Delaware, 8/21/98)
          Cinergy EPCOM, LLC (Delaware, 8/20/99)
          Cinergy EPCOM College Park, LLC (Delaware, 8/20/99)
          Cinergy Solutions of Golden, Inc.(Delaware, 3/22/99)
          Cinergy Solutions of Tuscola, Inc. (Delaware, 10/13/98)
          Energy Equipment Leasing LLC (Delaware, 11/12/98) /9/
          Trigen-Cinergy Solutions LLC (Delaware, 2/18/1997) /10/
          Trigen-Cinergy Solutions of Baltimore LLC (Delaware,
          11/10/98) /9/
          Trigen-Cinergy Solutions of Boca Raton, LLC (Delaware
          9/4/98) /11/
          Trigen-Cinergy Solutions of Cincinnati LLC (Ohio,
          8/29/1997) /12/
          Trigen-Cinergy Solutions of College Park, LLC (Delaware
          2/18/99) /9/
          Trigen-Cinergy Solutions of Illinois L.L.C. (Delaware,
          4/17/1997) /9/
          Trigen-Cinergy Solutions of Orlando LLC (Delaware,
          6/12/1998) /11/
          Trigen-Cinergy Solutions of St. Paul LLC (Delaware
          8/13/98) /9/
          Trigen-Cinergy Solutions of Tuscola, LLC (Delaware,
          8/21/98) /9/
       Cinergy Supply Network, Inc. (Delaware, 1/14/98)
          Reliant Services, LLC (Indiana, 6/25/98) /13/
       Cinergy Technology, Inc. (Indiana, 12/12/1991; formerly PSI
       Environmental Corp.)
       Enertech Associates, Inc. (Ohio, 10/26/1992) /14/


                              INTERNATIONAL
                        NON-UTILITY CORPORATIONS

Cinergy Global Resources, Inc. (Delaware, 5/15/1998) /15/

       Cinergy Global Power, Inc. (Delaware, 9/4/1997; formerly
       Cinergy Investments MPI, Inc.)
            Cinergy Global Ely, Inc. (Delaware, 8/28/98)
                 EPR Ely Power Limited (England, 5/7/98) /16/
                      EPR Ely Limited (England, 7/10/97)
            Cinergy Global Foote Creek, Inc. (Delaware, 5/4/99)
                 Foote Creek III, LLC (Delaware, 1/8/99)
            Cinergy Global Power Services Limited (England,
            8/14/1997; formerly MPI International Limited)
                 Cinergy Global Power Limited (England, 2/5/98)
                 MPI International Limited (England, 2/5/98; formerly
                 Cinergy Global Power Services Limited)
            Cinergy Global Power (UK) Limited (England, 2/5/98)
                 Cinergy Global Trading Limited
            Cinergy Global San Gorgonio, Inc. (Delaware, 10/13/98)
                 San Gorgonio Westwinds II, LLC (California,
                 10/13/98) /17/
            Cinergy Global Holdings, Inc. (Delaware, 12/18/98)
                 Cinergy Holdings B.V. (The Netherlands, 4/7/48;
                 formerly Watercorner Investments B.V.)
                      (please see attached list of subsidiaries)
            Cinergy Global (Cayman) Holdings, Inc. (Cayman Islands,
            9/4/1997; formerly Cinergy MPI III, Inc.)
                 Cinergy Global Hydrocarbons Pakistan (Cayman
                 Islands, 9/4/1997; formerly Cinergy MPI I, Inc.)
                 Cinergy Global Tsavo Power (Cayman Islands,
                 9/4/1997; formerly Cinergy MPI II, Inc.)
                 Cinergy MPI IV, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI V, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI VI, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI VII, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI VIII, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI IX, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI X, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI XI, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI XII, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI XIII, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI XIV, Inc. (Cayman Islands, 9/4/1997)
                 Cinergy MPI XV, Inc. (Cayman Islands, 9/4/1997)
            Midlands Hydrocarbons (Bangladesh) Limited (England,
            6/29/93)
            Powermid No. 1 (England, 9/6/97) /18/
       Cinergy UK, Inc. (Delaware, 5/1/1996)
       PSI Argentina, Inc. (Indiana, 4/10/1992)
            Costanera Power Corp. (Indiana, 4/10/1992)
       PSI Energy Argentina, Inc. (Indiana, 6/5/1992)


                              INTERNATIONAL
                        NON-UTILITY CORPORATIONS

Cinergy Global Resources, Inc. (Delaware, 5/15/1998)

       Cinergy Global Power, Inc. (Delaware, 9/4/1997; formerly
       Cinergy Investments MPI, Inc.)

            Cinergy Global Holdings, Inc. (Delaware, 12/18/98)

       Cinergy Holdings B.V. (The Netherlands, 4/7/48;
       formerly Watercorner Investments B.V.)
                      Cinergy Zambia B.V. (The Netherlands, 11/18/85;
                      formerly MPII (Zambia) B.V.)
       Copperbelt Energy Corporation PLC (Republic of Zambia, 9/19/97)/19/
                      Cinergy Turbines B.V. (The Netherlands, 7/7/83;
                      formerly Cedarwood B.V.)
                         EOS PAX I S.L. /20/ (Spain)
                         EOS PAX IIa S.L. /20/ (Spain)
                      Cinergy Hydro B.V. (The Netherlands, 2/13/95;
                      formerly Midlands Power International B.V.)
                         Sociedad Construcciones y Representaciones
                         Industriales S.A. /21/ (Spain)
                            Cinergy Global Power Iberia, S.A. (Spain,
                            6/17/98)
                            Parque Eolico de Ascoy, S.A. (Spain,
                            4/1/98)/22/
                          Vendresse Limited (Isle of Man, 3/2/95)
                          Cinergy 1 B.V. (The Netherlands, 9/11/64;
               formerly Midlands Power I B.V.)
                             Startekor Investeeringute OU /23/
                                Aktsiaselts Narva Elektrivork
                          Cinergy Global Resources 1 B.V. (The Netherlands,
                          5/31/68; formerly Midlands Power Europe B.V.)
                             Moravske Teplarny a.s. (formerly Teplarna
                             Svit a.s.)
                             Plzenska Energetika s.r.o. (formerly
                             Skoda Energetika s.r.o.)
                             Cinergy Global Resources a.s.
                             Cinergetika U/L a.s. (formerly SETUZA
                             energetika a.s.)/24/
                             Energetika Chropyne a.s.
                             Teplarna Otrokovice a.s. /25/
                           Cinergy 2 B.V. (The Netherlands, 6/14/38;
                           formerly Midlands Power Asia B.V.)
                             Desarrollo Eolico del Ebro S.A. /26/
                             Northeolic Pico Gallo, S.L. (Spain,
                             8/18/99)/27/
                     Cinergy Global Baghabari I B.V. (The Netherlands,
                     3/5/99)
                        Baghabari Power Company Limited /28/
                     Cinergy Global Baghabari II B.V. (The Netherlands,
                    3/5/99)
                        Baghabari Power Company Limited /28/
                    Cinergy Global 3 B.V. (The Netherlands,
                    7/15/99)
                    Cinergy Global 4 B.V. (The Netherlands,
                    7/15/99)

                                ENDNOTES

/1/  Jointly owned 9% by The Cincinnati Gas & Electric Company,
39.9% by American Electric Power Company, Inc., 4.3% by Columbus
Southern Power Company, 4.9% by The Dayton Power and Light
Company, 2.5% by Kentucky Utilities Company, 4.9% by Louisville
Gas and Electric Company, 16.5% by Ohio Edison Company, 1.5% by
Southern Indiana Gas and Electric Company, 4% by The Toledo
Edison Company, 12.5% by West Penn Power Company.

/2/  Some of the subsidiaries listed are not currently engaged in
active business operations.

/3/  Jointly owned 33-1/3% each with Progress Holdings, Inc. and
New Century-Cadence, Inc.

/4/  Jointly owned 10% by Cinergy Capital & Trading, Inc. and 90%
by other investors managed via the 1998 CinPower Trust.

/5/  Jointly owned 10% by Cinergy Capital & Trading, Inc. and 90%
by other investors managed via the 1999 CinPower Trust.

/6/  Jointly owned 50% by CinCap VIII, LLC and 50% by Duke Energy
Trenton, LLC.

/7/  Jointly owned 43.5% by Cinergy Communications, Inc., 43.5%
Lattice Investors, L.P., and 13% by Lattice Partners LTD.

/8/ Jointly owned 33-1/3% each with New Century-Centrus, Inc. and
Progress Centrus, Inc.

/9/ Jointly owned 49% by Cinergy Solutions, Inc. and 51% by
Trigen Solutions, Inc.

/10/  Jointly owned 50% each with Trigen Solutions, Inc., a
subsidiary of Trigen Energy Corporation.

/11/ Jointly owned 51% by Cinergy Solutions, Inc. and 49% by
Trigen Solutions, Inc.

/12/  Effective August 29, 1997, the former Cinergy Cooling Corp. was
merged with and into Trigen-Cinergy Solutions of Cincinnati LLC, with said
LLC being the surviving company jointly owned 51% by Cinergy Solutions,
Inc. and 49% by Trigen Solutions, Inc.

/13/ Jointly owned 50% each with IGC Energy, Inc.

/14/  Formerly Power International, Inc. and formerly Enertech Associates
International, Inc.

/15/ Some of the subsidiaries listed are not currently engaged in active
business operations.

/16/  Jointly owned 30% by Cinergy Global Ely, Inc., and 70% by Energy
Power Resources Limited.

/17/ Jointly owned 50% by Cinergy Global San Gorgonio, Inc., 20% by Heller
Financial, and 30% by Caithness LLC.

/18/ Jointly owned 50% by Cinergy Global Power, Inc. and 50% by Cinergy
Zambia B.V.)

/19/  Jointly owned 40% by Cinergy Zambia B.V., 40% by National Grid
Holland B.V. (changed its name to National Grid Zambia B.V. on January 12,
1998), 20% was retained by Zambia Consolidated Copper Mines Limited.  The
local management of Copperbelt Energy Corporation PLC are entitled to a 1%
interest in the issued share capital of Copperbelt Energy Corporation PLC
vesting in installments over a 4 year period, without payment, and to
purchase up to a further 2%, dependent on the company's performance.
Cinergy Zambia B.V. is only responsible for providing half of any such
share entitlements. Cinergy Zambia B.V., formerly MPII (Zambia) B.V.,
formerly Seascope Holding B.V., was originally organized in The Netherlands
on November 18, 1985.  The name was changed to Cinergy Zambia B.V.
effective September 18, 1998 and MPII (Zambia) B.V. effective November 19,
1997.

/20/ Jointly owned 48.5% by Cinergy Turbines B.V., 48.5% by Tomen (Europe)
B.V., and 3% by Gestion Energetica de Galicia S.A.

/21/ c. 95% owned by Cinergy Hydro B.V.

/22/  Jointly owned 19.5% by Sociedad Construcciones y Representaciones
Industriales S.A., 41% by Elecdey, 10% by Nuevos Riesgos del Progreso,
18.5% by I.D.A.E., and 10.5% by Caja de Catalu a.

/23/ Jointly owned 67% by Cinergy 1 B.V. and 33% by AS Sthenos Grupp, an
Estonian investment company.

/24/  700 out of 701 shares of stock acquired by Cinergy Global Resources,
B.V.  One Share retained by the seller, SETUZA a.s.

/25/  Jointly owned 12% by Cinergy Global Resources 1 B.V., 86% by newton
Stock Investments a.s., and 2% by small investors.

/26/ Jointly owned 50% by Cinergy 2 B.V., 38% by Jorge S.A. and 12% by
Valle del Ebro Ingenieria y Consultoria, S.L.

/27/ Jointly owned 20% by Cinergy 2 B.V. and 79.9% by Northeolic, S.A.

/28/ Same company; Under the Bangladesh Companies Act the Baghabari Power
Company Limited will require two founding shareholders.

EX-99.J

                                                     SEC File No. 70-____
                                                                Exhibit J

                     CG&E/PSI GENERATING FACILITIES


At September 30, 1999, Cinergy's utility subsidiaries owned electric
generating plants, or portions thereof in the case of jointly-owned plants,
with net capabilities (winter ratings) as shown in the following table:



   CG&E/PSI Generating Facilities

                                           
                                                            Principal      Net
                                             Percent        Fuel           Capability
Plant Name               Location            Ownership      Source     MW

CG&E
Steam Electric
Generating Plants:

Miami Fort Station            North Bend, Ohio    100.00%        Coal           243
(Units 5&6)

Miami Fort Station            North Bend, Ohio    64.00          Coal           640
(Units 7&8)

W.C. Beckjord Station         New Richmond, Ohio  100.00         Coal           704
(Units 1-5)

W. C. Beckjord Station        New Richmond, Ohio  37.50          Coal           158
(Unit 6)

J. M. Stuart Station          Aberdeen, Ohio      39.00*         Coal           913

Killen Station           Adams Cty., Ohio    33.00*         Coal           198

Conesville Station            Conesville, Ohio    40.00*         Coal           312

Wm. H. Zimmer Generating      Moscow, Ohio        46.50          Coal           605
Station

East Bend Station             Boone Cty, Kentucky 69.00          Coal           414

Combustion Turbines:

Dicks Creek Station           Middletown, Ohio    100.00         Gas            172

Miami Fort Gas Turbine        North Bend, Ohio    100.00         Oil            78
Station

W. C. Beckjord Gas            New Richmond, Ohio  100.00         Oil            245
Turbine Station

Woodsdale Generating          Butler Cty, Ohio    100.00         Gas            564

                                                            TOTAL        5,246



                                                            Principal      Net
                                             Percent        Fuel           Capability
Plant Name               Location            Ownership      Source         MW

PSI

Steam Electric Generating Plants:

Gibson Generating Station
(Units 1-4)                   Princeton, IN       100.00         Coal           2,532
(Unit 5)                 Princeton, IN       50.05     Coal           313

Wabash River Station          Terre Haute, IN     100.00         Coal           668

Cayuga Station           Cayuga, IN          100.00         Coal           1,005

R. A. Gallagher Station       New Albany, IN      100.00         Coal           560

Edwardsport Station           Edwardsport, IN     100.00         Coal           160

Noblesville Station           Noblesville, IN     100.00         Coal           90

Combustion Turbines:

Cayuga Combustion Turbine  Cayuga, IN          100.00       Gas            120

Wabash River Coal             Terre Haute, IN     100.00         Coal           262
Gasification Project

Internal Combustion Units:

Connersville Peaking     Connersville, IN    100.00         Oil            98
Station

Miami-Wabash Peaking          Wabash, IN          100.00         Oil            104
Station

Cayuga Peaking Units          Cayuga, IN          100.00         Oil            11

Wabash River Peaking     Terre Haute, IN     100.00         Oil            8
Units

Hydroelectric Generating Stations:

Markland Generating           Markland Dam, Ohio  100.00    Water     45
Station                  River

                                                         Total          5,976



*Station is not operated by CG&E

EX-99.K

                                                     SEC File No. 70-____
                                                                Exhibit K

           LARGEST POWER PLANT DIVESTITURES BY U.S. UTILITIES
                           1997 November 1999



   Largest Power Plant Divestitures

                                           
                                   Date Sale                     Total Cost
Seller              Acquirer            Announced           MW             ($ millions)

Unicom              Edison Mission      3/23/99             9.772     $4,813
                    Energy

NYSEG and           Edison Mission      8/3/98              1,896     1,800
GPU                 Energy

GPU                 Sithe               11/9/98             4,117     1,720

DQE Inc.            Orion Power    9/27/99             2,614     1,705
                    Holdings

NEES                PG&E Generating     8/6/97              5,107          1,675
                    Co.

Montana             PP&L                11/2/98             2,614     1,586
Power

Cogen Tech.         Enron          10/98               1,037     1,100

NYSEG               AES                 8/3/98              1,424     950

Central             FPL Group           1/6/98              1,185     846
Maine Power

PG&E Corp.          Southern            11/24/98            3,065     801

Southern            AES                 11/24/97            3,956     781
Cal. Edison

Consolidated        KeySpan             1/28/99             2,168     597
Edison

Consolidated        Orion Power    3/3/99              1,855     550
Edison              Holdings

Boston              Sithe               12/10/97            1,983     536
Edison

Consolidated        NRG (NSP            1/28/99             1,456     505
Edison              (Subsidiary)

PG&E Corp.          Duke                11/18/97            2,645     501

Orange &            Southern            11/24/98            1,776     480
Rockland

Northeast           NRG Energy          7/6/99              2,235          460
Utilities

Niagara             Orion Power    12/28/98       661       425
Mohawk              Holdings

San Diego           Dynegy (DYN &       12/15/98            951            356
Gas & Elec.         NRG JV)

Niagara             NRG                 12/28/98            1,360     355
Mohawk

United              Wisvest             10/6/98             1,056     272
Illuminating

EX-99.L

FOREIGN UTILITY ACQUISITIONS BY U.S. COMPANIES
1995 - NOVEMBER 1999/1/



      Foreign Utility Acquisitions by U.S. Companies

                                         
                                             Acquirier Cost
Acquirer/Project/Country           Year           ($ millions)        Ownership

Southern-SWEB-UK                   1995           $1,800              100%

PacifiCorp-PowerCor-               1995           1,600               100%
Australia

Texas Utilities-Eastern       1995           1,600               100%
Energy-Australia

UtiliCorp-United Energy            1995           600                 50%
Australia

CSW-SEEBOARD-UK                    1996           2,500               100%

Dominion Resources-East            1996           2,200               100%
Midlands-UK

MidAmerican Energy-                1996           910                 70%
Northern Electric-UK

Cinergy-Midlands-UK                1996           1,300               50%

GPU-Midlands-UK                    1996           1,300               50%

Entergy-CitiPower-                 1996           1,200               100%
Australia

GPU-PowerNet-Australia             1997           1,900               100%

Southern-CEPA-Asia                 1997           3,400               100%

Entergy-London Electricity         1997           2,100               100%
- -UK

AES-Companhia Centro-Oeste         1997           1,370               90%
de Distribuicao de Energia
Electric-Brazil

AEP-Yorkshire Electricity-         1997           1,200               50%
UK

PSC Colorado-Yorkshire             1997           1,200               50%
Electricity-UK

Southern-BEWAG-Germany             1997           820                 26%

PSEG-Rio Grande Energia-           1997           500                 33%
Brazil

AES-Light Servicos de              1996-1997      470                 13.75%
Electricidade-Brazil/2/

Texas Utilities-Energy             1998           7,400               100%
Group-UK

Enron-Elektro Electriciolade       1998           1,300               100%
e Servicos S.A.-Brazil

Reliant-Corelca-Columbia           1998           420                 32.5%

Reliant-UNA-Netherlands            1999           2,400               100%

Texas Utilities-Westar/            1999           1,020               100%
Kinetik-Australia

British Gas-Comgas-Brazil        1999        940                 64%

Edison Mission-Contact             1999           6,250               40%
Energy-New Zealand

Sempra Energy-Chilquinta           1999           415                 45%
S.A.-Chile

PSEG-Chilquinta S.A.-              1999           415                 45%
Chile

GPU-Transmission Pipelines         1999           675                 100%
Australia-Australia

AES-National Power Drax            1999           3,000               100%
Limited-UK

Duke Energy-Companhia de           1999           80                  100%
Geracao de Energia Electrica
Paranapanema-Brazil

Edison Mission-Ferrybridge         1999           2,030               100%
and Fiddlers Ferry Power
Stations-UK

Potomac Electric Power Co-         1999           724                 100%
certain gas transmission
networks-Holland

AES-Tiete-Brazil                   1999           486                 61%


                 SECONDARY SALES BY OR TO U.S. UTILITIES
                        1995 - NOVEMBER 1999 /3/
                                                          
                                        Acquirer Cost
Acquirer/Project/Seller            Year           ($ millions)        Ownership

PowerGen-East Midlands-            1998           $3,200              100%
Dominion Resources

Electricite de France-             1998           3,180               100%
London Electricity-Entergy

AEP-Citipower-Entergy              1998           1,100               100%

GPU-Midlands-Cinergy               1999           700                 50%

Duke Energy-certain Latin          1999           405                 100%
American electric generation
facilities-Dominion Resources

PP&L Resources-SWEB-Southern/4/  1996-1998   400                 51%




                                ENDNOTES

/1/    Includes completed and announced privatizations and acquisitions of
foreign utility companies or assets where purchase price at least $400
million.  All data based on publicly available information.

/2/    AES acquired its 13.75% interest in two transactions (May 1996 and
January 1997).

/3/    Includes completed and announced transactions where purchase price
at least $400 million.  All data is based on publicly available
information.

/4/    Southern sold an aggregate 51% interest in SWEB to PP&L Resources
in two transactions (July 1996 and June 1998).

EX-99

                              FINANCIAL STATEMENTS

                     TWELVE MONTHS ENDED SEPTEMBER 30, 1999
                    U. S. SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.

                                    FORM U-1

                           CINERGY CORP. CONSOLIDATED




                                   (Unaudited)

                                Pages 1 through 7







                                  CINERGY CORP.
                           CONSOLIDATED BALANCE SHEET
                            as of September 30, 1999
                                   (unaudited)
                             (dollars in thousands)

ASSETS

                                                        Pro Forma
                                           Actual      Adjustments    Pro Forma

Current Assets

  Cash and temporary cash investments    $   57,486  $ 4,000,000 (1) $   57,486
                                                       2,118,750 (4)
                                                      (6,118,750)(6)

  Restricted deposits                         1,425                       1,425
  Notes receivable                              290                         290
  Accounts receivable less accumulated
    provision for doubtful accounts of
    $31,057 at September 30, 1999, and
    $25,622 at December 31, 1998            761,768                     761,768
  Materials, supplies, and fuel -
    at average cost                         208,931                     208,931
  Energy risk management assets             135,817                     135,817
  Prepayments and other                      75,208                      75,208
                                        -----------  ------------    ----------
                                          1,240,925          -        1,240,925

Utility Plant - Original Cost

  In service

    Electric                              9,330,180                   9,330,180
    Gas                                     811,552                     811,552
    Common                                  170,772                     170,772
                                        -----------                 -----------
                                         10,312,504                  10,312,504
  Accumulated depreciation                4,206,192                   4,206,192
                                        -----------                 -----------
                                          6,106,312                   6,106,312
  Construction work in progress             266,981                     266,981
                                        -----------                 -----------
      Total Utility Plant                 6,373,293                   6,373,293

Other Assets

  Regulatory assets                       1,128,957                   1,128,957
  Investments in unconsolidated
    subsidiaries                            309,578                     309,578
  Energy risk management assets              21,507                      21,507
  Other                                     460,227    6,118,750 (6)  6,578,977
                                        -----------  -----------     ----------
                                          1,920,269    6,118,750      8,039,019

                                        $ 9,534,487  $ 6,118,750    $15,653,237











                                  CINERGY CORP.
                           CONSOLIDATED BALANCE SHEET
                            As of September 30, 1999
                                   (unaudited)
                             (dollars in thousands)


LIABILITIES AND SHAREHOLDERS' EQUITY
                                                        PRO FORMA
                                            ACTUAL     ADJUSTMENTS    PRO FORMA

Current Liabilities
  Accounts payable                       $  935,430                 $   935,430
  Accrued taxes                             248,441   $  (81,200)(3)    167,241
  Accrued interest                           37,813      232,000 (2)    269,813
  Notes payable and other short-term
    obligations                             363,780    4,000,000 (1)  4,363,780
  Long-term debt due within one year         31,822                      31,822
  Energy risk management liabilities        123,885                     123,885
  Other                                      81,854      135,000 (5)    216,854
                                         ----------   ----------    -----------
                                          1,823,025    4,285,800      6,108,825

Non-current Liabilities

  Long-term debt                          2,723,483                   2,723,483
  Deferred income taxes                   1,141,312                   1,141,312
  Unamortized investment tax credits        149,629                     149,629
  Accrued pension and other postretirement
    benefit costs                           346,994                     346,994
  Energy risk management non-current
    liabilities                             130,188                     130,188
  Other                                     488,892                     488,892
                                         ----------                  ----------
                                          4,980,498                   4,980,498
    Total Liabilities                     6,803,523                  11,089,323

Cumulative Preferred Stock of Subsidiaries
  Not Subject to Mandatory Redemption        92,597                      92,597

Common Stock Equity

  Common stock - $.01 par value;  authorized
    shares - 600,000,000;  outstanding shares
    - 158,917,210 at September 30, 1999, and
    158,664,532 at December 31, 1998          1,589          750 (4)      2,339
 Paid-in capital                          1,605,674    2,118,000 (4)  3,723,674
  Retained earnings                       1,038,660     (135,000)(5)    752,860
                                                        (232,000)(2)
                                                          81,200 (3)
  Accumulated other comprehensive loss       (7,556)                     (7,556)
                                         ----------   ----------    -----------
  Total Common Stock Equity               2,638,367    1,832,950      4,471,317

                                         $9,534,487   $6,118,750    $15,653,237












                                  CINERGY CORP.
                        CONSOLIDATED STATEMENT OF INCOME
                 for the twelve months ended SeptembeR 30, 1999
                                   (unaudited)
                    (in thousands, except per share amounts)

                                                     PRO FORMA
                                         ACTUAL     ADJUSTMENTS     PRO FORMA

Operating Revenues
  Electric                            $4,271,839                    $4,271,839
  Gas                                  1,538,518                     1,538,518
    Other                                 33,239                        33,239
                                      ----------                    ----------
                                       5,843,596                     5,843,596

Operating Expenses

  Fuel and purchased and exchanged
    power                              2,303,287                     2,303,287
  Gas purchased                        1,327,631                     1,327,631
  Other operation and maintenance        948,755                       948,755
  Depreciation and amortization          346,656                       346,656
  Taxes other than income taxes          275,197                       275,197
                                      ----------                    ----------
                                       5,201,526                     5,201,526

Operating Income                         642,070                       642,070

Other Income and (Deductions)
  Equity in Earnings of Unconsolidated
    subsidiaries                          76,568                        76,568
  Gain on sale of investment in
    unconsolidated subsidiary             99,272                        99,272
  Miscellaneous - net                     19,315                        19,315
  Interest expense                      (240,034)    $(232,000)(2)    (472,034)
                                     -----------     ---------      ----------
                                         (44,879)     (232,000)       (276,879)

Income Before Taxes                      597,191      (232,000)        365,191

Income Taxes                             212,469       (81,200)(3)     131,269

Preferred Dividend Requirements
  of Subsidiaries                          5,457                         5,457
                                      ----------     ---------      ----------

Net Income                            $  379,265     $(150,800)     $  228,465

Average Common Shares Outstanding        158,786        75,000         233,786

Earnings Per Common Share

  Net Income                               $2.39                         $0.98

Earnings Per Common Share -
  Assuming Dilution Net Income             $2.38                         $0.98

Dividends Declared Per Common Share        $1.80                         $1.80















                                  CINERGY CORP.
            CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCK EQUITY
                 For the twelve months ended September 30, 1999
                                   (unaudited)
                             (dollars in thousands)
                                                                                                      

                                                                                 ACCUMULATED
                                                                                    OTHER              TOTAL               TOTAL
                                         COMMON      PAID-IN      RETAINED      COMPREHENSIVE      COMPREHENSIVE        COMMON STOCK
                                         STOCK       CAPITAL      EARNINGS          LOSS               INCOME              EQUITY

Twelve Months Ended September 30, 1999

Balance At October 1, 1998               $1,587    $1,600,776    $  943,647      $  (3,659)                              $2,542,351
Comprehensive Income
  Net Income                                                        379,265                          $379,265               379,265
Other Comprehensive Income,
      net of tax
    Foreign currency translation
      adjustment                                                                                       (3,351)               (3,351)
    Minimum pension liability
      adjustment                                                                                           30                    30
    Unrealized loss on grantor
      trust                                                                                              (339)                 (339)
    Unrealized loss on
      securities available for sale                                                   (237)              (237)
                                                                                  --------
    Other comprehensive loss

      Total                                                                         (3,897)            (3,897)
                                                                                                     --------
Comprehensive Income Total                                                                           $375,368
                                                                                                     ========

Issuance of 369,509 shares of
  common stock - net                          2         9,700                                                                 9,702
Treasury shares purchased                              (9,191)                                                               (9,191)
Treasury shares reissued                                4,387                                                                 4,387
Dividends on common stock                                          (285,776)                                               (285,776)
Other                                                       2         1,524                                                   1,526
                                         ------    ----------    ----------      --------                                  --------

Balance at September 30, 1999           $1,589     $1,605,674    $1,038,660      $ (7,556)                               $2,638,367

Pro Forma Adjustments

(2) Interest associated with
    additional debt issued                                         (232,000)                                               (232,000)
(3) Tax benefits of additional debt                                  81,200                                                  81,200
(4) Issuance of 75,000,000 shares          750      2,118,000                                                             2,118,750
(5) Additional dividends                                           (135,000)                                               (135,000)
                                        ------      ---------    ----------      --------                                ----------

Pro Forma Balance September 30, 1999    $2,339     $3,723,674    $  752,860      $ (7,556)                               $4,471,317










                                  CINERGY CORP.

                 Pro Forma Consolidated Journal Entries to Give
          Effect to Borrowing of $4 Billion and Issuance of Additional
                        75 Million Shares of Common Stock
                    (in thousands, except per share amounts)

Entry No. 1

Cash and temporary cash investments                   $4,000,000
   Notes payable and other short-term obligations                    $4,000,000

To record issuance of additional $4 billion of debt.

Entry No. 2

Interest expense                                        $232,000
   Accrued interest                                                    $232,000

To record interest on $4 billion of additional debt at 5.8% annum.

Entry No. 3

Accrued taxes                                            $81,200
   Income taxes                                                         $81,200

To record the reduction in income taxes due to increased interest expense on
notes payable.  ($232,000 at an assumed tax rate of 35%)

Entry No. 4

Cash and temporary cash investments                   $2,118,750
   Common Stock                                                            $750
   Paid-in capital                                                   $2,118,000

To record  issuance of additional 75 million shares of stock at October 31, 1999
Closing price of $28.25 per share.

Entry No. 5

Retained Earnings                                       $135,000
   Other - Current liabilities                                         $135,000

To  record  additional  dividends  associated  with  additional  shares  issued,
assuming the historical dividend rate of $1.80 per share.

Entry No. 6

Other - Other assets                                  $6,118,750
   Cash and temporary cash investments                               $6,118,750

To record the purchase of other  investments  utilizing  the  proceeds  from the
Issuance of the debt and stock.

EX-99

                              FINANCIAL STATEMENTS

                     TWELVE MONTHS ENDED SEPTEMBER 30, 1999
                             (dollars in thousands)

                    U. S. SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.

                                    FORM U-1

                                  CINERGY CORP.

                                   (Unaudited)

                                Pages 1 through 7







                                  CINERGY CORP.
                                  BALANCE SHEET
                            as of September 30, 1999
                                   (unaudited)
                             (dollars in thousands)

ASSETS

                                                       PRO FORMA
                                            ACTUAL     ADJUSTMENTS    PRO FORMA

Current Assets

  Cash and temporary cash investments    $    3,285  $ 4,000,000 (1)  $   3,285
                                                       2,118,750 (4)
                                                      (6,118,750)(6)

  Notes receivable from affiliated
    companies                               286,496                     286,496
  Accounts receivable less accumulated
    provision for doubtful accounts of
    $0 at September 30, 1999, AND $0
    at December 31, 1998                        636                         636
  Accounts receivable from affiliated
    companies                               153,641                     153,641
  Prepayments and other                       2,147                       2,147
                                           --------  -----------     ----------
                                            446,205         -           446,205


Other Assets

  Investments in consolidated
    subsidiaries                          2,619,601                   2,619,601
  Investments in unconsolidated
    subsidiaries                             (4,100)                     (4,100)
  Other                                      20,051    6,118,750(6)   6,138,801
                                         ----------  -----------     ----------
                                          2,635,552    6,118,750      8,754,302

                                         $3,081,757  $ 6,118,750     $9,200,507











                                  CINERGY CORP.
                                  BALANCE SHEET
                            As of September 30, 1999
                                   (unaudited)
                             (dollars in thousands)


LIABILITIES AND SHAREHOLDERS' EQUITY

                                                        PRO FORMA
                                            ACTUAL     ADJUSTMENTS    PRO FORMA

Current Liabilities
  Accounts payable                       $    5,954                  $    5,954
  Accounts payable to
    affiliated companies                      8,486                       8,486
  Accrued taxes                              16,521   $  (81,200)(3)    (64,679)
  Accrued interest                            8,014      232,000 (2)    240,014
  Notes payable and other
    short-term obligations                    5,000    4,000,000 (1)  4,005,000
  Other                                        -         135,000 (5)    135,000
                                          ----------   ----------     ---------
                                             43,975    4,285,800      4,329,775

Non-current Liabilities
  Long-term debt                            399,650                     399,650
  Deferred income taxes                        (463)                       (463)
  Other                                         228                         228
                                         ----------                  ----------
                                            399,415                     399,415
    Total Liabilities                       443,390                   4,729,190

Common Stock Equity

  Common stock - $.01 par value;
    authorized shares - 600,000,000;
    outstanding shares - 158,917,210
    at September 30, 1999, and 158,
    664,532 at December 31, 1998              1,589          750 (4)      2,339
  Paid-in capital                         1,605,674    2,118,000 (4)  3,723,674
  Retained earnings                       1,038,660     (135,000)(5)    752,860
                                                        (232,000)(2)
                                                          81,200 (3)

  Accumulated other comprehensive loss       (7,556)                     (7,556)
     Total common stock equity            2,638,367    1,832,950      4,471,317
                                         ----------   ----------     ----------

                                         $3,081,757   $6,118,750     $9,200,507












                                  CINERGY CORP.
                               STATEMENT OF INCOME
                 For the Twelve Months Ended September 30, 1999
                                   (unaudited)
                    (in thousands, except per share amounts)


                                                         PRO FORMA
                                               ACTUAL   ADJUSTMENTS    PRO FORMA

Operating Expenses

  Other operation and maintenance             $  7,896                 $  7,896
  Taxes other than income taxes                    142                      142
                                              --------                 --------
                                                 8,038                    8,038

Operating Loss                                  (8,038)                  (8,038)

Equity in Earnings of Consolidated
  Subsidiaries                                 229,272                  229,272

Equity in Earnings of Unconsolidated
  Subsidiaries                                  76,569                   76,569

Gain On Sale of Investment in
  Unconsolidated Subsidiary                     99,272                   99,272

Miscellaneous - Net                             14,187                   14,187

Interest Expense                                47,371   $ 232,000 (2)  279,371
                                              --------   ---------     --------

Income Before Taxes                            363,891    (232,000)     131,891

Income Taxes                                   (15,374)    (81,200)(3)  (96,574)

Net Income                                    $379,265   $(150,800)    $228,465

Average Common Shares Outstanding              158,786      75,000      233,786

Earnings Per Common Share
  Net Income                                     $2.39                    $0.98

Earnings Per Common Share - Assuming Dilution
  Net Income                                     $2.38                    $0.98

Dividends Declared Per Common Share              $1.80                    $1.80




















                                  CINERGY CORP.
                   STATEMENT OF CHANGES IN COMMON STOCK EQUITY
                 for the Twelve Months Ended September 30, 1999
                                   (unaudited)
                             (dollars in thousands)


                                                                                                      
                                                                                     ACCUMULATED
                                                                                        OTHER             TOTAL            TOTAL
                                         COMMON        PAID-IN        RETAINED      COMPREHENSIVE     COMPREHENSIVE     COMMON STOCK
                                         STOCK         CAPITAL        EARNINGS          LOSS              INCOME            EQUITY

Twelve Months Ended September 30, 1999

Balance at October 1, 1998               $1,587      $1,600,776      $  943,647       $(3,659)                           $2,542,351
Comprehensive income
  Net income                                                            379,265                         $379,265            379,265
  Other comprehensive income,
      net of tax
    Foreign currency translation
      adjustment                                                                                          (3,351)            (3,351)
    Minimum pension liability
      adjustment                                                                                              30                 30
    Unrealized loss on grantor
      trust                                                                                                 (339)              (339)
    Unrealized loss on
      securities available for sale                                                                         (237)              (237)
                                                                                                        --------
    Other comprehensive loss

      Total                                                                            (3,897)            (3,897)
                                                                                                        --------
Comprehensive income total                                                                              $375,368
                                                                                                        ========
Issuance of 369,509 shares of
  common stock - net                          2           9,700                                                               9,702
Treasury shares purchased                                (9,191)                                                             (9,191)
Treasury shares reissued                                  4,387                                                               4,387
Dividends on common stock                                              (285,776)                                           (285,776)
Other                                                         2           1,524                                               1,526
                                         ------      ----------      ----------       -------                          ----------

Balance at September 30, 1999            $1,589      $1,605,674      $1,038,660       $(7,556)                           $2,638,367

Pro Forma Adjustments

(2)  Interest associated with
     additional debt issued                                            (232,000)                                           (232,000)
(3)  Tax benefits of additional debt                                     81,200                                              81,200
(4)  Issuance of 75,000,000 shares         750        2,118,000                                                           2,118,750
(5)  Additional dividends                                              (135,000)                                           (135,000)
                                        ------       ----------      ----------       -------                            ----------
Pro Forma Balance September 30, 1999    $2,339       $3,723,674      $  752,860       $(7,556)                           $4,471,317











                                  CINERGY CORP.

                   Pro Forma Journal Entries to Give Effect to
               Borrowing of $4 Billion and Issuance of Additional
                       75 Million Shares of Common Stock
                    (in thousands, except per share amounts)

Entry No. 1
Cash and temporary cash investments                    $4,000,000
   Notes payable and other short-term obligations                    $4,000,000

To record issuance of additional $4 billion of debt.


Entry No. 2
Interest expense                                       $232,000
   Accrued interest                                                    $232,000

To record interest on $4 billion of additional debt at 5.8% annum.


Entry No. 3
Accrued taxes                                           $81,200
   Income taxes                                                         $81,200

To record the reduction in income taxes due to increased interest expense on
notes payable.  ($232,000 at an assumed tax rate of 35%)


Entry No. 4
Cash and temporary cash investments                  $2,118,750
   Common Stock                                                            $750
   Paid-in capital                                                   $2,118,000
To record  issuance of additional 75 million shares of stock at October 31, 1999
Closing price of $28.25 per share.


Entry No. 5
Retained Earnings                                       $135,000
   Other - Current liabilities                                         $135,000

To  record  additional  dividends  associated  with  additional  shares  issued,
assuming the historical dividend rate of $1.80 per share.


Entry No. 6
Other - Other assets                                  $6,118,750
   Cash and temporary cash investments                               $6,118,750

To record the purchase of other  investments  utilizing  the  proceeds  from the
Issuance of the debt and stock.

EX-27

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

 

<ARTICLE>                                                 OPUR1
<LEGEND>

THIS  SCHEDULE  CONTAINS  SUMMARY  FINANCIAL   INFORMATION  EXTRACTED  FROM  THE
CONSOLIDATED BALANCE SHEETS,  CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS  OF CASH FLOWS AND IS  QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.


<MULTIPLIER>                                                         1,000

                                                              
<PERIOD-TYPE>                                   12-MOS              12-MOS
<FISCAL-YEAR-END>                               DEC-31-1998         DEC-31-1998
<PERIOD-START>                                  OCT-01-1998         OCT-01-1998
<PERIOD-END>                                    SEP-30-1999         SEP-30-1999
<BOOK-VALUE>                                     PER-BOOK           PRO-FORMA
<TOTAL-NET-UTILITY-PLANT>                       6,373,293            6,373,293
<OTHER-PROPERTY-AND-INVEST>                       309,578              309,578
<TOTAL-CURRENT-ASSETS>                          1,240,925            1,240,925
<TOTAL-DEFERRED-CHARGES>                        1,128,957            1,128,957
<OTHER-ASSETS>                                    481,734            6,600,484
<TOTAL-ASSETS>                                  9,534,487           15,653,237
<COMMON>                                            1,589                2,339
<CAPITAL-SURPLUS-PAID-IN>                       1,605,674            3,723,674
<RETAINED-EARNINGS>                             1,031,104              745,304
<TOTAL-COMMON-STOCKHOLDERS-EQ>                  2,638,367            4,471,317
<PREFERRED-MANDATORY>                                   0                    0
<PREFERRED>                                        92,597               92,597
<LONG-TERM-DEBT-NET>                            2,723,483            2,723,483
<SHORT-TERM-NOTES>                                363,780            4,363,780
<LONG-TERM-NOTES-PAYABLE>                               0                    0
<COMMERCIAL-PAPER-OBLIGATIONS>                          0                    0
<LONG-TERM-DEBT-CURRENT-PORT>                      31,822               31,822
<PREFERRED-STOCK-CURRENT>                               0                    0
<CAPITAL-LEASE-OBLIGATIONS>                             0                    0
<LEASES-CURRENT>                                        0                    0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                  3,684,438            3,970,238
<TOT-CAPITALIZATION-AND-LIAB>                   9,534,487           15,653,237
<GROSS-OPERATING-REVENUE>                       5,843,596            5,843,596
<INCOME-TAX-EXPENSE>                              212,469              131,269
<OTHER-OPERATING-EXPENSES>                      5,201,526            5,201,526
<TOTAL-OPERATING-EXPENSES>                      5,413,995            5,332,795
<OPERATING-INCOME-LOSS>                           429,601              510,801
<OTHER-INCOME-NET>                                195,155              195,155
<INCOME-BEFORE-INTEREST-EXPEN>                    624,756              705,956
<TOTAL-INTEREST-EXPENSE>                          240,034              472,034
<NET-INCOME>                                      384,722              233,922
<PREFERRED-STOCK-DIVIDENDS>                         5,457                5,457
<EARNINGS-AVAILABLE-FOR-COMM>                     379,265              228,465
<COMMON-STOCK-DIVIDENDS>                          285,776              420,776
<TOTAL-INTEREST-ON-BONDS>                         200,591              200,591
<CASH-FLOW-OPERATIONS>                                  0                    0
<EPS-BASIC>                                        2.39                  .98
<EPS-DILUTED>                                        2.38                  .98


 

EX-27

 

<ARTICLE>                                         OPUR1
<LEGEND>

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL  INFORMATION EXTRACTED FROM THE BALANCE
SHEETS,  STATEMENTS  OF INCOME AND  STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.


<MULTIPLIER>                                                        1,000

 
                                                               
<PERIOD-TYPE>                                  12-MOS                12-MOS
<FISCAL-YEAR-END>                              DEC-31-1998           DEC-31-1998
<PERIOD-START>                                 OCT-01-1998           OCT-01-1998
<PERIOD-END>                                   SEP-30-1999           SEP-30-1999
<BOOK-VALUE>                                   PER-BOOK              PRO-FORMA

<TOTAL-NET-UTILITY-PLANT>                                0                    0
<OTHER-PROPERTY-AND-INVEST>                      2,615,501            2,615,501
<TOTAL-CURRENT-ASSETS>                             446,205              446,205
<TOTAL-DEFERRED-CHARGES>                                 0                    0
<OTHER-ASSETS>                                      20,051            6,138,801
<TOTAL-ASSETS>                                   3,081,757            9,200,507
<COMMON>                                             1,589                2,339
<CAPITAL-SURPLUS-PAID-IN>                        1,605,674            3,723,674
<RETAINED-EARNINGS>                              1,031,104              745,304
<TOTAL-COMMON-STOCKHOLDERS-EQ>                   2,638,367            4,471,317
<PREFERRED-MANDATORY>                                    0                    0
<PREFERRED>                                              0                    0
<LONG-TERM-DEBT-NET>                               399,650              399,650
<SHORT-TERM-NOTES>                                   5,000            4,005,000
<LONG-TERM-NOTES-PAYABLE>                                0                    0
<COMMERCIAL-PAPER-OBLIGATIONS>                           0                    0
<LONG-TERM-DEBT-CURRENT-PORT>                            0                    0
<PREFERRED-STOCK-CURRENT>                                0                    0
<CAPITAL-LEASE-OBLIGATIONS>                              0                    0
<LEASES-CURRENT>                                         0                    0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                      38,740              324,540
<TOT-CAPITALIZATION-AND-LIAB>                    3,081,757            9,200,507
<GROSS-OPERATING-REVENUE>                                0                    0
<INCOME-TAX-EXPENSE>                               (15,374)             (96,574)
<OTHER-OPERATING-EXPENSES>                           8,038                8,038
<TOTAL-OPERATING-EXPENSES>                          (7,336)             (88,536)
<OPERATING-INCOME-LOSS>                              7,336               88,536
<OTHER-INCOME-NET>                                 419,300              419,300
<INCOME-BEFORE-INTEREST-EXPEN>                     426,636              507,836
<TOTAL-INTEREST-EXPENSE>                            47,371              279,371
<NET-INCOME>                                       379,265              228,465
<PREFERRED-STOCK-DIVIDENDS>                              0                    0
<EARNINGS-AVAILABLE-FOR-COMM>                      379,265              228,465
<COMMON-STOCK-DIVIDENDS>                           285,776              420,776
<TOTAL-INTEREST-ON-BONDS>                           16,767               16,767
<CASH-FLOW-OPERATIONS>                                   0                    0
<EPS-BASIC>                                         2.39                 0.98
<EPS-DILUTED>                                         2.38                 0.98