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Peoples Energy, Dominion complete financing of Elwood Power Plant

CHICAGO, Oct. 30, 2001 — Elwood Energy LLC, a joint venture between subsidiaries of Peoples Energy Corporation and Dominion, today announced that it has successfully closed its $402 million bond issuance.

The 25-year bond financing of the 1,409-megawatt gas-fired facility rests primarily on cash flows whose revenues are derived from three separate power sales agreements, the last of which expires in 2017.

“This financing of Elwood is the latest major step in growing our power generation business,” said Thomas Patrick, president and COO of Peoples Energy and vice chairman of its subsidiaries. “Elwood’s success demonstrates anew the effectiveness of the company’s diversified strategy. This is a milestone in the relationship between Peoples and Dominion and is indicative of the commitment and contribution of talent from both companies.”

Thomas F. Farrell, chief executive officer of Dominion’s electric generation subsidiary, said, “Elwood Energy is an important component of our growing generation portfolio and continues to play a vital role in our strategy to be the premier energy provider in the Midwest-Northeast-Mid- Atlantic region, home to 40 percent of the nation’s demand for energy. The creativity of this transaction reflects the effectiveness and ingenuity that has become the standard at Elwood.”

The non-recourse senior secured obligations carry a coupon of 8.159%, with the final amortizing principal payment occurring in 2026. The bonds have been rated Baa3 by Moody’s and BBB- by Standard & Poors. Proceeds of the issuance will be used primarily to reimburse the sponsors for a portion of the equity investments they have contributed since the joint venture was formed in 1998.

“This is a landmark transaction because it is the first peaking facility with merchant exposure to be financed in the debt capital markets,” said Peoples Energy CFO Thomas Nardi.

Thomas Linquist, assistant vice-president of Project/Structured Finance at Peoples Energy and Don Burnette manager of structured finance at Dominion led the effort on behalf of the Elwood partnership. Credit Suisse First Boston was the sole lead manager and ABN AMRO Incorporated and West LB were co-managers on the transaction.

One of the largest independent peaking power generation facilities in the country, Elwood began operation in the summer of 1999. The facility, which is located 60 miles southwest of Chicago in Elwood, Illinois, was recently expanded to nine natural gas-fired turbines from four turbines.

The facility is adjacent to multiple interstate natural gas pipelines that provide access to competitively priced gas supplies from all major gas producing regions of the United States. The facility is also close to a high capacity ComEd transmission corridor that provides access to the wholesale electric market.

Peoples Energy is a diversified energy company comprised of five primary business segments: Gas Distribution, Power Generation, Midstream Services, Retail Energy Services, and Oil and Gas Production. The Gas Distribution business serves about 1 million retail customers in Chicago and northeastern Illinois. Visit the Peoples Energy web site at PeoplesEnergy.com.

Dominion, headquartered in Richmond, Va., is one of the nation’s largest producers of energy, with a production capability of 2.8 trillion British Thermal Units (BTUs) of energy per day. Its 22,000-megawatt generation portfolio is expected to grow to more than 28,000 megawatts by 2005. In addition to its existing 3 trillion cubic feet equivalent of natural gas reserves and more than 300 billion cubic feet equivalent of annual production, Dominion also owns and operates 7,600 miles of natural gas transmission pipeline with a delivery capability of 6.3 billion cubic feet per day. The company also operates the nation’s largest underground natural gas storage system with more than 950 billion cubic feet of storage capacity. Dominion serves nearly 4 million retail natural gas and electric customers in five states and owns a managing equity interest in Dominion Fiber Ventures LLC, owner of Dominion Telecom. Visit Dominion’s web site at www.dom.com .