Exhibit 10.2

SEVERANCE AND CONSULTING AGREEMENT

This Severance and Consulting Agreement (the “Agreement”), which is effective as of this 24 th  day of October 2006, is entered into by and between Dr. Ruth G. Shaw (the “Executive”) and Duke Energy Corporation, a Delaware corporation, and its subsidiaries and affiliates (collectively, “Duke”), with the mutual exchange of promises as consideration (collectively, the “Parties”).

Recitals

A.            WHEREAS, the Parties have agreed to the termination of the Executive’s employment effective April 30, 2007 (the “Termination Date”); and

B.            WHEREAS, as of the Termination Date, the Executive will become entitled to severance benefits under the Key Employee Severance Agreement and Release entered into by and between the Executive and Duke Energy Corporation, a North Carolina corporation, dated August 18, 1999 (the “KESA”); and

C.            WHEREAS, Duke would like to engage the Executive to provide certain consulting services to Duke as well as any successors thereto.

D.            NOW, THEREFORE, Duke and the Executive enter into the following Agreement:

Agreement

1.             KESA.  Duke agrees to provide the Executive the severance benefits described in Section 2(c) of the KESA contingent upon her continued compliance with the post-termination obligations contained in the KESA, including but not limited to, the obligations set forth in Sections 3, 4, 5 and 16 of the KESA.

2.             Consulting Arrangement.  The Executive agrees to serve as a consultant to Duke for the period beginning on May 1, 2007 and ending on April 30, 2009 (the “Consulting Period”).  The consulting services to be provided by the Executive during the Consulting Period will consist of consultation with, and advice to, the officers and managerial employees of Duke, as requested by the Chief Executive Officer of Duke Energy Corporation (or his successor), on matters relating to Duke’s business affairs about which the Executive has historical knowledge and experience.  When requested by Duke, the Executive will perform the consulting services at reasonable times, as determined by mutual agreement between Duke and the Executive; provided, however, that in no event will the Executive be required, pursuant to this Agreement, to provide more than (i) 80 hours of consulting services to Duke in any calendar month during the first twelve months of the Consulting Period, or (ii) 25 hours of consulting services to Duke in any calendar month during the second twelve months of the Consulting Period, without her consent.  With respect to the