S-3/A

As filed with the Securities and Exchange Commission on December 22, 2005

Registration No. 333-126966

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

Form S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Carolina Power & Light Company

d/b/a Progress Energy Carolinas, Inc.

(Exact name of registrant as specified in its charter)

410 S. Wilmington Street

Raleigh, North Carolina 27601

(919) 546-6111

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

North Carolina	56-0165465
(State of Incorporation)	(I.R.S. Employer Identification No.)

Peter M. Scott III

Executive Vice President and Chief Financial Officer

410 S. Wilmington Street

Raleigh, North Carolina 27601

(919) 546-6111

(Names and addresses, including zip codes, and telephone numbers, including area codes, of agents for service)

It is respectfully requested that the Commission send copies of all notices, orders and communications to:

Timothy S. Goettel, Esq.
Hunton & Williams LLP
421 Fayetteville Street Mall
Raleigh, North Carolina 27601
(919) 899-3094 E. N. Ellis, IV, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
(212) 259-8000

     Approximate date of commencement of proposed sale to the public: From time to time as market conditions warrant after the registration statement becomes effective.

     If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.    o

     If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.    x

     If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.    o

     If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.    o

     The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

SUBJECT TO COMPLETION, DATED DECEMBER 22, 2005

Prospectus

Carolina Power & Light Company d/b/a

Progress Energy Carolinas, Inc.

$1,000,000,000

First Mortgage Bonds

Senior Notes

Debt Securities

Preferred Stock

These securities are not obligations of, nor guaranteed by, Progress Energy, Inc.,

our corporate parent.

Investing in our securities involves risks. See the “Risk Factors”

section on page 6 of this prospectus.

       We will provide specific terms of these securities, and the manner in which they are being offered, in supplements to this prospectus. You should read this prospectus and any supplement carefully before you invest. We cannot sell any of these securities unless this prospectus is accompanied by a prospectus supplement.

       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This Prospectus is dated December    , 2005

ABOUT THIS PROSPECTUS

      This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process. Under this shelf registration process, we may sell any combination of the securities described in this prospectus in one or more offerings up to a total dollar amount of $1,000,000,000. We may offer any of the following securities: First Mortgage Bonds, Senior Notes, other Debt Securities and/or Preferred Stock.

      This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. Any prospectus supplement may also add, update or change information contained in this prospectus. The registration statement we filed with the SEC includes exhibits that provide more detail on descriptions of the matters discussed in this prospectus. You should read this prospectus and the related exhibits filed with the SEC and any prospectus supplement together with additional information described under the heading “WHERE YOU CAN FIND MORE INFORMATION.”

OUR COMPANY

      We are a public service corporation formed under the laws of North Carolina in 1926. We are primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina, including a substantial portion of the coastal plain of North Carolina extending to the Atlantic coast between the Pamlico River and the South Carolina border, the lower Piedmont section of North Carolina, an area in western North Carolina in and around the City of Asheville, and an area in northeastern South Carolina. All of our common stock is held by Progress Energy, Inc., a North Carolina corporation. Since 2003, we have operated our business under the assumed name Progress Energy Carolinas, Inc., although our legal name is still Carolina Power & Light Company.

      Our principal executive offices are located at 410 South Wilmington Street, Raleigh, North Carolina 27601. Our telephone number is (919) 546-6111.

      Unless the context requires otherwise, references in the prospectus to the terms “we,” “us,” “our” or other similar terms mean Progress Energy Carolinas, Inc.

USE OF PROCEEDS

      Unless we state otherwise in any prospectus supplement, we will use the net proceeds from the sale of the offered securities:

•  to finance the construction of new facilities and the maintenance of existing facilities;

•  to finance the future acquisition of other entities or their assets;

•  to refund, repurchase, retire, redeem, or reduce outstanding short-or long-term indebtedness; and

•  for other general corporate purposes.

      In the event that any proceeds are not immediately applied, we may temporarily invest them in U.S., state or municipal government or agency obligations, commercial paper, bank certificates of deposit, or repurchase agreements collateralized by U.S. government or agency obligations, or we may deposit the proceeds with banks.

RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

      Our ratio of earnings to fixed charges for each of the following periods was:

For the Twelve Months Ended September 30,
	2005		2004
		3.93x		4.69x

For the Twelve Months Ended December 31,
2004		2003		2002		2001		2000
	4.44x		4.60x		3.81x		3.19x		4.02x

      Our ratio of earnings to combined fixed charges and preferred stock dividends for each of the following periods was:

For the Twelve Months Ended September 30,
	2005		2004
		3.86x		4.60x

For the Twelve Months Ended December 31,
2004		2003		2002		2001		2000
	4.33x		4.51x		3.75x		3.13x		3.94x

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      The ratios for the twelve months ended December 31, 2002 and 2001, include impairment and one-time charges of $133.3 million and $156.7 million, respectively, related to Caronet Inc.’s telecommunications assets and our investment in Interpath Communications, Inc.

      These computations include us and our subsidiaries, and certain other companies in which we hold an equity interest. We define “earnings” as income before income taxes and cumulative effect of change in accounting principles plus fixed charges. We define “fixed charges” as the sum of interest on long-term debt, other interest, and an imputed interest factor included in rentals.

WHERE YOU CAN FIND MORE INFORMATION

      We are required to file annual, quarterly and special reports, current reports, proxy statements, and other information with the SEC. Our SEC filing number is 1-03382. Our SEC filings are available to the public over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at the SEC’s Public Reference Room in Washington, D.C. The SEC’s Public Reference Room in Washington is located at 100 F Street, N.E., Room 1580, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on its public reference rooms. Additionally, information about us and our SEC filings is available on our web site at http://www.cplc.com. The contents of our web site do not constitute a part of this prospectus or any prospectus supplement hereto.

DOCUMENTS INCORPORATED BY REFERENCE

      The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede the information in this prospectus. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all of the securities being registered; provided, however, that we are not incorporating by reference any information furnished under Item 9, Item 12, Item 2.02 or Item 7.01 of any Current Report on Form 8-K.

•  Our Annual Report on Form 10-K for the year ended December 31, 2004, also referred to as our “2004 Form 10-K.”

•  Our Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2005.

•  Our Current Reports on Form 8-K filed January 28, March 4, March 22 (two filed), April 1, May 11, May 24, July 18, July 19, November 15, November 28 (two filed) and November 30, 2005.

      We frequently make our SEC filings on joint basis with Progress Energy, Inc., our corporate parent and Florida Power Corporation, one of our affiliates. Any information included in such SEC filings that relates solely to Progress Energy or Florida Power is not and shall not be deemed to be incorporated by reference into this prospectus or any prospectus supplement.

      You may request a copy of these filings at no cost, by writing or calling us at the following address:

Progress Energy Carolinas, Inc.

c/o Progress Energy, Inc.

Investor Relations

410 South Wilmington Street

Raleigh, North Carolina 27601

Telephone: (919) 546-7474

      You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. We are not making any offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the respective dates on the front of those documents.

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SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

      This prospectus, any supplement hereto, and the documents incorporated by reference herein or therein contain or will contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words or phrases such as “anticipate,” “will likely result,” “will continue,” “intend,” “may,” “expect,” “believe,” “plan,” “will,” “estimate,” “should,” and variations of such words and similar expressions in this prospectus, any supplement hereto, and in the documents incorporated by reference herein or therein are used to identify such forward-looking statements. The matters discussed throughout this prospectus and any supplement hereto, including the documents incorporated by reference herein or therein, that are not historical facts are forward-looking and, accordingly, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made.

      Examples of factors that you should consider with respect to any forward-looking statements made throughout this prospectus include, but are not limited to, the following:

•  the impact of fluid and complex government laws and regulations, including those relating to the environment and the recently enacted Energy Policy Act of 2005;

•  deregulation or restructuring in the electric industry that may result in increased competition and unrecovered (stranded) costs;

•  the uncertainty regarding the timing, creation and structure of GridSouth or other regional transmission organizations;

•  our ability to recover the costs associated with significant weather events through the regulatory process, and the timing of such recovery of such costs;

•  weather conditions that directly influence the demand for electricity;

•  recurring seasonal fluctuations in demand for electricity;

•  fluctuations in the price of energy commodities and purchased power;

•  economic fluctuations and the corresponding impact on the our commercial and industrial customers;

•  the inherent risks associated with the operation of nuclear facilities, including environmental, health, regulatory and financial risks;

•  the impact of any terrorist acts generally and on our generating facilities and other properties;

•  the future need for additional baseload generation in our regulated service territories and the accompanying regulatory and financial risks;

•  the ability to successfully access capital markets on favorable terms;

•  our ability to maintain our current credit ratings and the impact on our financial condition and our ability to meet our cash and other financial obligations in the event our credit ratings are downgraded below investment grade;

•  the impact that increases in leverage may have on us;

•  the impact of derivative contracts we use in the normal course of business;

•  investment performance of pension and benefit plans;

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•  our ability to control costs, including pension and benefit expense, and achieve our cost management targets;

•  the outcome of any ongoing or future litigation or similar disputes and the impact of any such outcome or related settlements; and

•  unanticipated changes in operating expenses and capital expenditures.

      These and other factors are detailed from time to time in our SEC filings which are incorporated herein. Many, but not all of the factors that may impact actual results are discussed in the “Risk Factors” section of our 2004 Form 10-K, which is incorporated by reference into this prospectus. You should carefully read that “Risk Factors” section. All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond our control. New factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the effect of each such factor on us.

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RISK FACTORS

      Investing in our securities involves risks that could affect us and our business, as well as the energy industry generally. Please see the risk factors described in our 2004 Form 10-K, which is incorporated into this prospectus. Much of the business information, as well as the financial and operational data contained in our risk factors, is updated in our periodic and current reports, which are also incorporated by reference into this prospectus and future supplements hereto. Although we have tried to discuss key factors, please be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial condition or performance. Before purchasing our securities, you should carefully consider the risks discussed in our 2004 Form 10-K and the other information in this prospectus and any supplement hereto, as well as the documents incorporated by reference herein or therein. Each of the risks described could result in a decrease in the value of our securities and your investment therein.

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DESCRIPTION OF FIRST MORTGAGE BONDS

General

      We will issue First Mortgage Bonds under a Mortgage and Deed of Trust, dated as of May 1, 1940, with The Bank of New York (formerly Irving Trust Company) (the “Mortgage Trustee”) and Frederick G. Herbst (Douglas J. MacInnes, successor), as Trustees. The Mortgage and Deed of Trust is supplemented by supplemental indentures. In the following discussion, we will refer to the Mortgage and Deed of Trust and all indentures supplemental to the Mortgage and Deed of Trust together as the “Mortgage.” We will refer to all of our bonds, including those already issued and those to be issued in the future, as “First Mortgage Bonds.” As of the date of this prospectus, we had approximately $2.9 billion aggregate principal amount of First Mortgage Bonds outstanding, including $400.0 million aggregate principal amount issued to secure our Senior Notes and approximately $668.7 million aggregate principal amount issued to secure our pollution control obligations.

      The information we are providing you in this prospectus concerning the First Mortgage Bonds and the Mortgage is only a summary of the information provided in those documents and the summary is qualified in its entirety by reference to the provisions of the Mortgage. You should consult the First Mortgage Bonds themselves, the Mortgage and other documents for more complete information on the First Mortgage Bonds or any particular series thereof. These documents appear as exhibits to the registration statement of which this prospectus is a part, or are incorporated by reference as exhibits to such registration statement, or will appear as exhibits to other documents that we file with the SEC, which are incorporated by reference into this prospectus. The Mortgage has been qualified under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and you should refer to the Trust Indenture Act for additional provisions that apply to the First Mortgage Bonds. In the summary below, we have included references to applicable section numbers of the Mortgage so that you can easily locate these provisions.

Provisions of a Particular Series

      The First Mortgage Bonds may from time to time, be issued in one or more series. You should consult the prospectus supplement relating to any particular issue of the First Mortgage Bonds for the following information:

•  the designation, series and aggregate principal amount of the First Mortgage Bonds;

•  the percentage of the principal amount for which we will issue and sell the First Mortgage Bonds;

•  the date of maturity for the First Mortgage Bonds;

•  the rate at which the First Mortgage Bonds will bear interest and the method of determining that rate;

•  the dates on which interest is payable;

•  the denominations in which we will authorize the First Mortgage Bonds to be issued, if other than $1,000 or integral multiples of $1,000;

•  whether we will offer the First Mortgage Bonds in the form of global bonds and, if so, the name of the depositary for any global bonds;

•  redemption terms; and

•  any other specific terms.

For more information see Mortgage, Article II.

      Unless the applicable prospectus supplement states otherwise, the covenants contained in the Mortgage will not afford holders of the First Mortgage Bonds protection in the event we have a change in control.

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Form and Exchanges

      Unless otherwise specified in the applicable prospectus supplement, we will issue the First Mortgage Bonds as registered bonds without coupons. Holders may exchange them, free of charge, for other First Mortgage Bonds of different authorized denominations, in the same aggregate principal amount. Holders may also transfer the First Mortgage Bonds free of charge except for any stamp taxes or other governmental charges that may apply.

Interest and Payment

      The prospectus supplement for any First Mortgage Bonds will state the interest rate, the method of determination of the interest rate, and the date on which interest is payable. Unless the prospectus supplement states otherwise, principal and interest will be paid at The Bank of New York in New York City.

      Pursuant to the Mortgage, we will pay interest on any overdue principal and, to the extent enforceable under law, on any overdue installment of interest on the First Mortgage Bonds at the rate of 6% annually. For more information, see Mortgage, Section 78.

Redemption and Purchase of First Mortgage Bonds

      If the First Mortgage Bonds are redeemable, the redemption terms will appear in the prospectus supplement. We may declare redemptions on at least thirty (30) days notice:

•  for the sinking fund if we chose to establish a sinking fund for a designated series of First Mortgage Bonds;

•  with certain deposited cash;

•  with the proceeds of released property; or

•  at our option, unless otherwise specified in the applicable supplemental indenture and the prospectus supplement.

      If we have not deposited the redemption funds with the Mortgage Trustee when we give notice of redemption, the redemption shall be subject to the deposit of those funds on or before the redemption date. Notice of redemption will not be effective unless the Mortgage Trustee has received the redemption funds.

      Cash that is deposited under any Mortgage provisions may be applied to the purchase of First Mortgage Bonds of any series, with certain exceptions.

      For more information, see Mortgage, Article X.

Maintenance and Replacement of Mortgaged Property

      Pursuant to the Mortgage, we are required to maintain, preserve and keep the mortgaged property in good repair, working order and condition. Each calendar year, we are required to spend and/or accrue 15% of our gross operating revenues, as defined in the Mortgage, for maintenance of and replacements for the mortgaged property and certain of our automotive equipment. If we spend more for these purposes in a given year, we may credit that amount against the 15% requirement in any of the five subsequent years. If a regulatory authority does not permit us to spend and/or accrue as much as 15% of our gross operating revenues for these purposes, we will spend only the amount permitted.

      For more information, see Mortgage, Section 38; Seventy-second Supplemental Indenture, Section 3.

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Security

      All First Mortgage Bonds are secured by the Mortgage, which constitutes, in the opinion of our counsel, a first mortgage lien on all our present properties. This lien is subject to:

•  leases of small portions of our property to others for uses which, in the opinion of our counsel, do not interfere with our business;

•  leases of certain property which we own but do not use in our electric utility business; and

•  certain excepted encumbrances, minor defects and irregularities.

      This lien does not cover the following property:

•  merchandise, equipment, materials or supplies held for sale, and fuel, oil and similar consumable materials and supplies;

•  vehicles and automobiles;

•  cash, securities, receivables and all contracts, leases and operating agreements that are not pledged or required to be pledged; and

•  electric energy and other materials or products generated, manufactured, produced or purchased by us for sale, distribution or use in the ordinary course of business.

      The Mortgage contains provisions subjecting to the lien of the Mortgage certain other property that is acquired after the date of the delivery of the Mortgage. These provisions for subjecting additional property to the lien of the Mortgage are limited in the case of consolidation, merger or sale of substantially all of our assets. For more information, see Mortgage, Article XV.

      The Trustees will have a lien upon the mortgaged property, prior to the First Mortgage Bonds, for the payment of their reasonable compensation and expenses and for indemnity against certain liabilities. For more information, see Mortgage, Section 96.

Issuance of Additional First Mortgage Bonds

      Generally, we may issue an unlimited principal amount of First Mortgage Bonds under the Mortgage (except as described in the next paragraph). We may issue First Mortgage Bonds of any series from time to time based on any of the following:

•  70% of property additions after adjustments to offset retirement of property;

•  retirement of First Mortgage Bonds or prior lien bonds; or

•  deposit of cash.

      With certain exceptions in the case of retirement of First Mortgage Bonds or prior lien bonds, we may issue First Mortgage Bonds only if adjusted net earnings for 12 out of the preceding 15 months, before interest and income taxes, is at least twice the annual interest requirements on, or at least 10% of the principal amount of, the sum of all First Mortgage Bonds outstanding at the time, including the additional First Mortgage Bonds we may issue under this shelf registration process or other First Mortgage Bonds we may issue in the future, and all indebtedness of prior or equal rank. Adjusted net earnings is net of provision for repairs, maintenance and retirement of property equal to the maintenance and replacement fund requirements for this period. Cash deposited for the issuance of First Mortgage Bonds may be withdrawn to the extent of 70% of property additions after adjustments to offset retirement of property or retirement of First Mortgage Bonds or prior lien bonds. For further discussion, see “Modification of the Mortgage” below.

      Property additions must consist of electric property, or property used or useful in connection with electric property, acquired after December 31, 1939. Property additions may not include securities, vehicles or automobiles. Pursuant to Section 5 of Article IV of the Twenty-third Supplemental Indenture, dated as

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of June 1, 1978, we have reserved the right to amend the Mortgage, at our sole discretion, to make available as property additions any form of space satellites, including solar power satellites, space stations and other similar facilities. We estimate that, as of September 30, 2005, approximately $4.3 billion of net property additions were available for the issuance of First Mortgage Bonds. Therefore, using the 70% test described above, the available net property additions provide a basis for issuing approximately $3.0 billion of additional First Mortgage Bonds as of September 30, 2005. As of the date of this prospectus, we could issue approximately $1.6 billion based upon retirements of previously issued First Mortgage Bonds.

      The Mortgage includes restrictions on the issuance of First Mortgage Bonds against property subject to liens and upon the increase of the amount of any liens. For more information, see Mortgage, Sections 4-7, 20-30 and 46; Twenty-third Supplemental Indenture, Section 5.

Dividend Restrictions

      Unless otherwise specified in the prospectus supplement, in the case of First Mortgage Bonds issued under this shelf registration process, and so long as any First Mortgage Bonds are outstanding, cash dividends and distributions on our common stock, and purchases by us of our common stock, are restricted to aggregate net income available for them, since December 31, 1948, plus $3,000,000, less the amount of all preferred and common stock dividends and distributions, and all common stock purchases, since December 31, 1948.

      No portion of our retained earnings at September 30, 2005 is restricted by this provision. For further discussion, see “Modification of the Mortgage” below.

Modification of the Mortgage

     General

      Bondholders’ rights may be modified with the consent of the holders of 66²/3% of the First Mortgage Bonds. If less than all series of the First Mortgage Bonds are affected, the modification must also receive the consent of the holders of 66²/3% of the First Mortgage Bonds of each series affected. In general, no modification of the terms of payment of principal or interest, and no modification affecting the lien or reducing the percentage required for modification (except as noted above), is effective against any holder of the First Mortgage Bonds without that holder’s consent. For more information, see Mortgage, Article XVIII as amended in its entirety by the Seventy-second Supplemental Indenture, Section 2.

     Reserved Amendments

      With respect to all First Mortgage Bonds issued on or after September 1, 2003, the date of the Seventy-second Supplemental Indenture, we have reserved the right to amend the Mortgage, at our sole discretion, after all of the First Mortgage Bonds issued prior to September 1, 2003 are retired or redeemed, without the consent of the holders of the then outstanding First Mortgage Bonds for any of the following purposes:

•  to except from the lien of the Mortgage all property not funded or eligible to be funded under the Mortgage for the issuance of First Mortgage Bonds, the release of property or any other purpose under the Mortgage;

•  to ease the requirements of the net earnings test (see the first paragraph of the Section entitled “Issuance of Additional First Mortgage Bonds” above) by allowing the calculation to be made for 12 months within the last 18, rather than the last 15, months;

•  to allow the release of property from the lien of the Mortgage at cost or at the value of the property at the time it became funded property;

•  to simplify the release of unfunded property from the lien of the Mortgage, if after the release we will have at least one dollar ($1) in unfunded property remaining; and

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•  to increase the amount of funded property that may be released or retired on the basis of the retirement of First Mortgage Bonds from 100% to 143% of the principal amount of such First Mortgage Bonds.

      Collectively, we refer to these amendments as the “Reserved Amendments.” For more information, see Seventy-second Supplemental Indenture, Sections 3 through 9, Seventy-third Supplemental Indenture, Article II and Seventy-forth Supplemental Indenture, Article II.

      As of the date of this prospectus, we had outstanding approximately $1.4 billion in aggregate principal amount of First Mortgage Bonds that were issued prior to September 1, 2003.

     Consents to Reserved Amendments

      We issued an aggregate principal amount of $600 million First Mortgage Bonds in two series in September 2003 (the “2003 Bonds”), an aggregate principal amount of $500 million First Mortgage Bonds in two series in March 2005 (the “March 2005 Bonds”), and an aggregate principal amount of $400 million in one series in November 2005 (the “November 2005 Bonds” and together with the 2003 Bonds and March 2005 Bonds, the “Consented Bonds”) in underwritten public offerings. Upon their issuance, the underwriters of the Consented Bonds, as the initial holders of the Consented Bonds, irrevocably consented to the Reserved Amendments. Such consents are binding on subsequent purchasers of Consented Bonds, including those that purchased directly from the underwriters. The Consented Bonds include an express consent to the Reserved Amendments and each current and future holder of the Consented Bonds shall be deemed to have consented to the Reserved Amendments. As of the date of this prospectus, we have consents to the Reserved Amendments from approximately 51.7% of the First Mortgage Bonds outstanding.

      In order to effectuate the Reserved Amendments, we may also solicit consents from some or all of the current holders of our First Mortgage Bonds. We also expect to seek consents from future holders concurrent with the issuance of any new series of First Mortgage Bonds to such holders.

     Modification of Dividend Covenant

      Additionally, we may choose to modify the dividend covenant applicable to a particular series of First Mortgage Bonds. See “Dividend Restrictions” above. The purpose for a modification of the applicable dividend covenant would be to provide that we may declare and pay dividends in cash or property on our common stock only out of surplus or out of net profits for the preceding fiscal year. Dividends may not be paid out of net profits, however, if our capital has been diminished to an extent specified in the Mortgage.

Defaults and Notice of Default

      An “Event of Default” means, with respect to any series of First Mortgage Bonds, any of the following:

•  default in payment of principal of a series of First Mortgage Bonds when due and payable;

•  default for 30 days in payment of interest on a series of First Mortgage Bonds;

•  default in payment of interest on or principal of prior lien bonds continued beyond applicable grace periods, if any, specified in the prior lien securing such bond;

•  default for 60 days in payment installments of funds for retirement of First Mortgage Bonds, including the maintenance and replacement funds;

•  certain events in bankruptcy, insolvency or reorganization; and

•  default for 90 days after notice in performance of any other covenants.

For more information, see Mortgage, Section 65; Twentieth Supplemental Indenture, Article IV, Section 5.

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      If the Trustees deem it to be in the interest of the holders of the First Mortgage Bonds, they may withhold notice of default, except in payment of principal, interest or funds for retirement of First Mortgage Bonds. For more information, see Mortgage, Section 66; Third Supplemental Indenture, Section 15.

      If a default occurs, the Trustee may (and, upon the written direction of the holders of a majority of the principal amount of outstanding First Mortgage Bonds, shall) and holders of 25% of the First Mortgage Bonds may declare all principal and interest immediately due and payable. If the default has been cured, however, the holders of a majority of the First Mortgage Bonds may annul the declaration and destroy its effect. For more information, see Mortgage, Section 67. No holder of First Mortgage Bonds may enforce the lien of the Mortgage unless the holder has given the Trustees written notice of a default and unless the holders of 25% of the First Mortgage Bonds have requested the Trustees in writing to act and have offered the Trustees reasonable opportunity to act. For more information, see Mortgage, Section 80. The Trustees are not required to risk their funds or to incur personal liability if there is a reasonable ground for believing that repayment to the Trustees is not reasonably assured. For more information, see Mortgage, Section 94. Holders of a majority of the First Mortgage Bonds may establish the time, method and place of conducting any proceedings for any remedy available to the Trustees, or exercising any trust or power conferred upon the Trustees. For more information, see Mortgage, Section 71.

Evidence to Be Furnished to the Mortgage Trustee Under the Mortgage

      We will demonstrate compliance with Mortgage provisions by providing written statements to the Mortgage Trustee from our officers or persons we select. For instance, we may select an engineer to provide a written statement regarding the value of property being certified or released, or an accountant regarding net earnings certificate, or counsel regarding property titles and compliance with the Mortgage generally. In certain significant matters, applicable law requires that an accountant or engineer must be independent. (See Section 314(d) of the Trust Indenture Act.) We must file certificates and other papers each year and whenever certain events occur. Additionally, we must provide evidence from time to time demonstrating our compliance with the conditions and covenants under the Mortgage.

Relationship with the Mortgage Trustee

      In the normal course of business, the Mortgage Trustee or its affiliates may, from time to time, provide certain commercial banking, investment banking and securities underwriting services to us and our affiliates.

DESCRIPTION OF SENIOR NOTES

General

      We may issue one or more new series of Senior Notes under the Indenture (For Senior Notes), dated as of March 1, 1999, as supplemented and amended (the “Senior Note Indenture”), between us and The Bank of New York, as trustee (the “Senior Note Trustee”). The information we are providing you in this prospectus concerning the Senior Note Indenture and related documents is only a summary of the information provided in those documents and the summary is qualified in its entirety by reference to the provisions of the Senior Note Indenture. You should consult the Senior Notes themselves, the Senior Note Indenture, any indentures supplemental to the Senior Note Indenture and other documents for more complete information on the Senior Notes. These documents appear as exhibits to the registration statement of which this prospectus is a part, or are incorporated by reference as exhibits to such registration statement, or will appear as exhibits to other documents that we file with the SEC, which are incorporated by reference into this prospectus. The Senior Note Indenture has been qualified under the Trust Indenture Act and you should refer to the Trust Indenture Act for the provisions that apply to the

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Senior Notes. In the summary below, we have included references to applicable section numbers of the Senior Note Indenture so that you can easily locate these provisions.

      Until the Release Date (defined below), all of the Senior Notes will be secured by one or more series of First Mortgage Bonds, which we will issue and deliver to the Senior Note Trustee. For more information, see “Security” and “Release Date” below.

      On the Release Date, the Senior Notes

•  will cease to be secured by First Mortgage Bonds;

•  will become our unsecured obligations; and

•  will rank as equal with our other unsecured indebtedness, including senior Debt Securities.

      The Senior Note Indenture provides that, in addition to the Senior Notes offered under this shelf registration process, additional Senior Notes may be issued later, without limitation as to aggregate principal amount. Before the Release Date, however, the amount of Senior Notes that we may issue cannot exceed the amount of First Mortgage Bonds that we are able to issue under the Mortgage. As of the date of this prospectus, we had $400 million aggregate principal amount of Senior Notes outstanding. For more information, see “Description of First Mortgage Bonds — Issuance of Additional First Mortgage Bonds” above.

Provisions of a Particular Series

      The Senior Notes may from time to time, be issued in one or more series. You should consult the prospectus supplement relating to any particular issue of Senior Notes for the following information:

•  the title of the Senior Notes;

•  any limit on aggregate principal amount of the Senior Notes or the series of which they are a part;

•  the date on which the principal of the Senior Notes will be payable;

•  the rate, including the method of determination if applicable, at which the Senior Notes will bear interest, if any; and

—  the date from which any interest will accrue;

—  the dates on which we will pay interest; and

—  the record date for any interest payable on any interest payment date;

•  the place where,

—  the principal of, premium, if any, and interest on the Senior Notes will be payable;

—  you may register transfer of the Senior Notes;

—  you may exchange the Senior Notes; and

—  you may serve notices and demands upon us regarding the Senior Notes;

•  the Security Registrar for the Senior Notes and whether the principal of the Senior Notes is payable without presentment or surrender of them;

•  the terms and conditions upon which we may elect to redeem any Senior Notes;

•  the terms and conditions upon which the Senior Notes must be redeemed or purchased due to our obligations pursuant to any sinking fund or other mandatory redemption provisions, or at the holder’s option, including any applicable exceptions to notice requirements;

•  the denominations in which we may issue Senior Notes;

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•  the manner in which we will determine any amounts payable on the Senior Notes which are to be determined with reference to an index or other fact or event ascertainable outside the Senior Note Indenture;

•  the currency, if other than United States currency, in which payments on the Senior Notes will be payable;

•  terms according to which elections can be made by us or the holder regarding payments on the Senior Notes in currency other than the currency in which the notes are stated to be payable;

•  the portion of the principal amount of the Senior Notes payable upon declaration of acceleration of their maturity;

•  if payments are to be made on the Senior Notes in securities or other property, the type and amount of the securities and other property or the method by which the amount shall be determined;

•  the terms applicable to any rights to convert Senior Notes into or exchange them for our securities or those of any other entity;

•  if we issue Senior Notes as global securities,

—  any limitations on transfer or exchange rights or the right to obtain the registration of transfer;

—  any limitations on the right to obtain definitive certificates for the Senior Notes; and

—  any other matters incidental to the Senior Notes;

•  whether we are issuing the Senior Notes as bearer securities;

•  any limitations on transfer or exchange of Senior Notes or the right to obtain registration of their transfer, and the terms and amount of any service charge required for registration of transfer or exchange;

•  any exceptions to the provisions governing payments due on legal holidays, or any variations in the definition of Business Day with respect to the Senior Notes;

•  any addition to the Events of Default applicable to any Senior Notes and any additions to our covenants for the benefit of the holders of the Senior Notes;

•  if we are issuing any Senior Notes prior to the Release Date, the designation of the series of Senior Note First Mortgage Bonds (defined below) to be delivered to the Senior Note Trustee for security for the Senior Notes;

•  any other terms of the Senior Notes not inconsistent with the provisions of the Senior Note Indenture; and

•  any other collateral security, assurance or guarantee for the Senior Notes.

For more information, see Section 301 of the Senior Note Indenture.

      Senior Notes may be sold at a substantial discount below their principal amount. You should consult the applicable prospectus supplement for a description of certain special United States federal income tax considerations which may apply to Senior Notes sold at an original issue discount or denominated in a currency other than United States dollars.

      Unless the applicable prospectus supplement states otherwise, the covenants contained in the Senior Note Indenture will not afford holders of Senior Notes protection in the event we have a change in control or are involved after the Release Date in a highly-leveraged transaction.

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Security

      Until the Release Date, described in the following section, all of the Senior Notes will be secured by one or more series of First Mortgage Bonds, which we will issue and deliver to the Senior Note Trustee. For more information on the First Mortgage Bonds, see “Description of First Mortgage Bonds” above. When we issue a series of Senior Notes prior to the Release Date, we will simultaneously issue and deliver to the Senior Note Trustee, as security for all of the Senior Notes, a series of Senior Note First Mortgage Bonds. These First Mortgage Bonds will have the same stated interest rate — or interest calculated in the same manner — interest payment dates, stated maturity and redemption provisions, and will be in the same aggregate principal amount as the series of Senior Notes we are issuing. For more information, see Sections 401, 402 and 403 of the Senior Note Indenture. Payments we make to the Senior Note Trustee on a series of Senior Notes will satisfy our obligations with respect to the corresponding payments due on the related series of Senior Note First Mortgage Bonds.

      Each series of Senior Note First Mortgage Bonds will be a series of First Mortgage Bonds, all of which are secured by a lien on certain property we own. For more discussion of the lien, see “Description of First Mortgage Bonds — Security” above. In certain circumstances prior to the Release Date, we may reduce the aggregate principal amount of Senior Note First Mortgage Bonds held by the Senior Note Trustee. In no event, however, may we reduce that amount to an amount lower than the aggregate outstanding principal amount of the Senior Notes then outstanding. For more information, see Section 409 of the Senior Note Indenture. Following the Release Date, we will close the Mortgage and not issue any additional First Mortgage Bonds under the Mortgage. For more information, see Section 403 of the Senior Note Indenture.

Release Date

      On The Release Date the Senior Note First Mortgage Bonds Will No Longer Secure the Senior Notes, and the Senior Notes Will Become Our Unsecured General Obligations. For more information, see Section 407 of the Senior Note Indenture.

      The “Release Date” means the date as of which all First Mortgage Bonds, other than Senior Note First Mortgage Bonds, and other than outstanding First Mortgage Bonds which do not in aggregate principal amount exceed the greater of 5% of our Net Tangible Assets or 5% of our Capitalization, have been retired through payment, redemption, or otherwise at, before or after their maturity, provided that no default or Event of Default has occurred and is continuing. In the preceding sentence the following terms have the meanings indicated:

•  “Capitalization” means the total of all the following items appearing on, or included in, our consolidated balance sheet: (i) liabilities for indebtedness maturing more than 12 months from the date of determination; and (ii) common stock, preferred stock, premium on capital stock, capital surplus, capital in excess of par value, and retained earnings (however the foregoing may be designated), less, to the extent not otherwise deducted, the cost of shares of our capital stock held in our treasury. Capitalization shall be determined in accordance with generally accepted accounting principles and practices applicable to the type of business in which we are engaged and approved by the independent accountants regularly retained by us, and may be determined as of a date not more than 60 days prior to the happening of the event for which the determination is being made.

•  “Net Tangible Assets” means the amount shown as total assets on our consolidated balance sheet, less (i) intangible assets including, but without limitation, such items as goodwill, trademarks, trade names, patents, unamortized debt discount and expense and certain regulatory assets, and (ii) appropriate adjustments, if any, on account of minority interests. Net Tangible Assets shall be determined in accordance with generally accepted accounting principles and practices applicable to the type of business in which we are engaged and approved by the independent accountants regularly retained by us, and may be determined as of a date not more than 60 days prior to the happening of the event for which such determination is being made.

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      The Senior Note Trustee will give the Senior Note holders notice when the Release Date occurs. See “Description of Senior Notes — Defeasance” below for a discussion of another situation in which outstanding Senior Notes would not be secured by Senior Note First Mortgage Bonds.

Form, Exchange, and Transfer

      Unless the applicable prospectus supplement states otherwise, we will issue Senior Notes only in fully registered form without coupons and in denominations of $1,000 and integral multiples of that amount. For more information, see Sections 201 and 302 of the Senior Note Indenture.

      Holders may present Senior Notes for exchange or for registration of transfer, duly endorsed or accompanied by a duly executed instrument of transfer, at the office of the Security Registrar or at the office of any Transfer Agent we may designate. Exchanges and transfers are subject to the terms of the Senior Note Indenture and applicable limitations for global securities. We may designate ourselves the Security Registrar. No charge will be made for any registration of transfer or exchange of Senior Notes, but we may require payment of a sum sufficient to cover any tax or other governmental charge the holder must pay in connection with the transaction. Any transfer or exchange will become effective upon the Security Registrar or Transfer Agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. For more information, see Section 305 of the Senior Note Indenture.

      The applicable prospectus supplement will state the name of any Transfer Agent, in addition to the Security Registrar initially designated by the Company for any Senior Notes. We may at any time designate additional Transfer Agents or withdraw the designation of any Transfer Agent or make a change in the office through which any Transfer Agent acts. We must, however, maintain a Transfer Agent in each place of payment for the Senior Notes of each series. For more information, see Section 702 of the Senior Note Indenture.

      We will not be required to:

•  issue, register the transfer of, or exchange any Senior Note or any tranche of any Senior Note during a period of 15 days immediately preceding the day of the mailing of a notice of redemption of any Senior Note called for redemption; or

•  register the transfer of, or exchange any Senior Note selected for redemption except the unredeemed portion of any Senior Note being partially redeemed.

For more information, see Section 305 of the Senior Note Indenture.

Payment and Paying Agents

      Unless the applicable prospectus supplement states otherwise, we will pay interest on a Senior Note on any interest payment date to the person in whose name the Senior Note is registered at the close of business on the regular record date for the interest payment. For more information, see Section 307 of the Senior Note Indenture.

      Unless the applicable prospectus supplement provides otherwise, we will pay principal and any premium and interest on Senior Notes at the office of the Paying Agent whom we will designate for this purpose. Unless the applicable prospectus supplement states otherwise, the corporate trust office of the Senior Note Trustee in New York City will be designated as our sole Paying Agent for payments with respect to Senior Notes of each series. Any other Paying Agents initially designated by us for the Senior Notes of a particular series will be named in the applicable prospectus supplement. We may at any time add or delete Paying Agents or change the office through which any Paying Agent acts. We must, however, maintain a Paying Agent in each place of payment for the Senior Notes of a particular series. For more information, see Section 702 of the Senior Note Indenture.

      All money we pay to a Paying Agent for the payment of the principal and any premium or interest on any Senior Note which remains unclaimed at the end of two years after payment is due will be repaid to

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us. After that date, the holder of that Senior Note may look only to us for these payments. For more information, see Section 703 of the Senior Note Indenture.

Redemption

      You should consult the applicable prospectus supplement for any terms regarding optional or mandatory redemption of Senior Notes. Except for the provisions in the applicable prospectus supplement regarding Senior Notes redeemable at the holder’s option, Senior Notes may be redeemed only upon notice by mail not less than 30 nor more than 60 days prior to the redemption date. Further, if less than all the Senior Notes of a series, or any tranche of a series, are to be redeemed, the Senior Notes to be redeemed will be selected by the method provided for the particular series. In the absence of a selection provision, the Senior Note Trustee will select a fair and appropriate method of random selection. For more information, see Sections 503 and 504 of the Senior Note Indenture.

      A notice of redemption we provide may state:

•  that redemption is conditioned upon receipt by the Paying Agent on or before the redemption date of money sufficient to pay the principal and any premium and interest on the Senior Notes; and

•  that if the money has not been received, the notice will be ineffective and we will not be required to redeem the Senior Note.

For more information, see Section 504 of the Senior Note Indenture.

Consolidation, Merger, and Sale of Assets

      We may not consolidate with or merge into any other person, nor may we transfer or lease substantially all of our assets and property to any person, unless:

•  the corporation formed by the consolidation or into which we are merged, or the person which acquires by conveyance or transfer, or which leases, substantially all of our property and assets,

—  is organized and validly existing under the laws of any domestic jurisdiction;

—  expressly assumes our obligations on the Senior Notes and under the Senior Note Indenture; and

—  prior to the Release Date, expressly assumes our obligations under the Senior Note First Mortgage Bonds and under the Mortgage;

•  immediately after the transaction becomes effective, no Event of Default, and no event which would become an Event of Default, shall have occurred and be continuing; and

•  we will have delivered to the Senior Note Trustee an officer’s certificate and opinion of counsel as provided in the Senior Note Indenture.

For more information, see Section 1201 of the Senior Note Indenture.

Events of Default

      “Event of Default” under the Senior Note Indenture with respect to Senior Notes of any series means any of the following:

•  failure to pay any interest due on the Senior Notes within 30 days;

•  failure to pay principal or premium when due on a Senior Note;

•  breach of or failure to perform any other covenant or warranty in the Senior Note Indenture with respect to the particular series of Senior Notes for 60 days (subject to extension under certain circumstances for another 120 days) after we receive notice from the Senior Note Trustee, or we and the Senior Note Trustee receive notice from the holders of at least 33% in principal amount of

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	the Senior Notes of that series outstanding under the Senior Note Indenture according to the provisions of the Senior Note Indenture;
•	prior to the Release Date, the occurrence of a default under the Mortgage (see “Description of First Mortgage Bonds — Events of Default” above);
•	certain events of bankruptcy, insolvency or reorganization; and
•	any other Event of Default set forth in the applicable prospectus supplement.

For more information, see Section 901 of the Senior Note Indenture.

      An Event of Default with respect to a particular series of Senior Notes does not necessarily constitute an Event of Default with respect to the Senior Notes of any other series issued under the Senior Note Indenture.

      If an Event of Default with respect to a particular series of Senior Notes occurs and is continuing, either the Senior Note Trustee or the holders of at least 33% in principal amount of the outstanding Senior Notes of that series may declare the principal amount of all of the Senior Notes of that series to be due and payable immediately. If the Senior Notes of that series are discount notes or similar Senior Notes, only the portion of the principal amount as specified in the applicable prospectus supplement may be immediately due and payable. If an Event of Default occurs and is continuing with respect to all series of Senior Notes — including all Events of Default relating to bankruptcy, insolvency or reorganization — the Senior Note Trustee or the holders of at least 33% in principal amount of the outstanding Senior Notes of all series, considered together, may declare an acceleration of the principal amount of all Senior Notes. In the event of an acceleration prior to the Release Date with respect to all Senior Notes, the Trustee will make a demand for acceleration of all amounts due under all of the Senior Note First Mortgage Bonds, but this demand will only result in such an acceleration if allowed by the acceleration provisions of the Mortgage.

      At any time after a declaration of acceleration with respect to the Senior Notes of a particular series, and before a judgment or decree for payment of the money due has been obtained, and before the acceleration of the Senior Note First Mortgage Bonds, the Event or Events of Default giving rise to the declaration of acceleration will, without further action, be deemed to have been waived, and the declaration and its consequences will be deemed to have been rescinded and annulled, if:

•  we have paid or deposited with the Senior Note Trustee a sum sufficient to pay:

—  all overdue interest on all Senior Notes of the particular series;

—  the principal of and any premium on any Senior Notes of that series which have become due otherwise than by the declaration of acceleration and any interest at the rate prescribed in the Senior Notes;

—  interest upon overdue interest at the rate prescribed in the Senior Notes, to the extent payment is lawful; and

—  all amounts due to the Senior Note Trustee under the Senior Note Indenture; and

•  any other Event of Default with respect to the Senior Notes of the particular series, other than the failure to pay the principal of the Senior Notes of that series which has become due solely by the declaration of acceleration, has been cured or waived as provided in the Senior Note Indenture.

For more information, see Section 902 of the Senior Note Indenture.

      The Senior Note Indenture includes provisions as to the duties of the Senior Note Trustee in case an Event of Default occurs and is continuing. Consistent with these provisions, the Senior Note Trustee will be under no obligation to exercise any of its rights or powers at the request or direction of any of the holders, unless those holders have offered to the Senior Note Trustee reasonable indemnity. For more information, see Section 1003 of the Senior Note Indenture. Subject to these provisions for

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indemnification, the holders of a majority in principal amount of the outstanding Senior Notes of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Senior Note Trustee, or exercising any trust or power conferred on the Senior Note Trustee, with respect to the Senior Notes of that series. For more information, see Section 912 of the Senior Note Indenture.

      No Senior Note holder may institute any proceeding regarding the Senior Note Indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the Senior Note Indenture unless:

•  the holder has previously given to the Senior Note Trustee written notice of a continuing Event of Default of that particular series;

•  the holders of a majority in principal amount of the outstanding Senior Notes of all series with respect to which an Event of Default is continuing have made a written request to the Senior Note Trustee, and have offered reasonable indemnity to the Senior Note Trustee to institute the proceeding as trustee; and

•  the Senior Note Trustee has failed to institute the proceeding, and has not received from the holders of a majority in principal amount of the outstanding Senior Notes of that series a direction inconsistent with the request, within 60 days after notice, request and offer of reasonable indemnity.

For more information, see Section 907 of the Senior Note Indenture.

      The preceding limitations do not apply, however, to a suit instituted by a Senior Note holder for the enforcement of payment of the principal of or any premium, if any, or interest on the Senior Note on or after the applicable due date stated in the Senior Note. For more information, see Section 908 of the Senior Note Indenture.

      We must furnish annually to the Senior Note Trustee a statement by an appropriate officer as to that officer’s knowledge of our compliance with all conditions and covenants under the Senior Note Indenture. Our compliance is to be determined without regard to any grace period or notice requirement under the Senior Note Indenture. For more information, see Section 706 of the Senior Note Indenture.

Modification and Waiver

      The Company and the Senior Note Trustee, without the consent of the holders of the Senior Notes, may enter into one or more supplemental Senior Note Indentures for any of the following purposes:

•  to evidence the assumption by any permitted successor of our covenants in the Senior Note Indenture and the Senior Notes;

•  to add one or more covenants or other provisions for the benefit of the holders of outstanding Senior Notes or to surrender any right or power conferred upon us by the Senior Note Indenture;

•  to add any additional Events of Default;

•  to change or eliminate any provision of the Senior Note Indenture or add any new provision to it (but if this action will adversely affect the interests of the holders of any particular series of Senior Notes in any material respect, the action will become effective with respect to that series only when there is no Senior Note of that series remaining outstanding under the Senior Note Indenture);

•  to provide collateral security for the Senior Notes;

•  to establish the form or terms of Senior Notes according to the provisions of the Senior Note Indenture;

•  to evidence the acceptance of appointment of a successor Senior Note Trustee under the Senior Note Indenture with respect to one or more series of the Senior Notes and to add to or change any of the provisions of the Senior Note Indenture as necessary to provide for the administration of the trusts under the Senior Note Indenture by more than one trustee;

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•  to provide for the procedures required to permit using a noncertificated system of registration for any Senior Notes series;

•  to change any place where

—  the principal of and any premium and interest on any Senior Notes is payable,

—  any Senior Notes may be surrendered for registration of transfer or exchange, or

—  notices and demands to or upon us regarding Senior Notes and the Senior Note Indenture may be served; or

•  to cure any ambiguity or inconsistency (but any of these changes or additions will not adversely affect the interests of the holders of Senior Notes of any series in any material respect).

For more information see Section 1301 of the Senior Note Indenture.

      The holders of at least a majority in aggregate principal amount of the outstanding Senior Notes of any series may waive:

•  compliance by us with certain provisions of the Senior Note Indenture (see Section 707 of the Senior Note Indenture); and

•  any past default under the Senior Note Indenture, except a default in the payment of principal, premium, or interest, and certain covenants and provisions of the Senior Note Indenture that cannot be modified or amended without consent of the holder of each outstanding Senior Note of the series affected (see Section 913 of the Senior Note Indenture).

      The Trust Indenture Act may be amended after the date of the Senior Note Indenture to require changes to the Senior Note Indenture. In this event, the Senior Note Indenture will be deemed to have been amended so as to effect the changes, and we and the Senior Note Trustee may, without the consent of any holders, enter into one or more Supplemental Senior Note Indentures to evidence or effect the amendment. For more information, see Section 1301 of the Senior Note Indenture.

      Except as provided in this section, the consent of the holders of a majority in aggregate principal amount of the outstanding Senior Notes, considered as one class, is required to change in any manner the Senior Note Indenture pursuant to one or more supplemental Senior Note Indentures. If less than all of the series of Senior Notes outstanding are directly affected by a proposed supplemental Senior Note Indenture, however, only the consent of the holders of a majority in aggregate principal amount of the outstanding Senior Notes of all series directly affected, considered as one class, will be required. Furthermore, if the Senior Notes of any series have been issued in more than one tranche and if the proposed supplemental Senior Note Indenture directly affects the rights of the holders of one or more, but not all tranches, only the consent of the holders of a majority in aggregate principal amount of the outstanding Senior Notes of all tranches directly affected, considered as one class, will be required. In addition, an amendment or modification:

•  may not, without the consent of the holder of the Senior Note,

—  change the maturity of the principal of, or any installment of principal of or interest on, any Senior Note,

—  reduce the principal amount or the rate of interest, or the amount of any installment of interest, or change the method of calculating the rate of interest,

—  reduce any premium payable upon the redemption of the Senior Note,

—  reduce the amount of the principal of any Senior Note originally issued at a discount from the stated principal amount that would be due and payable upon a declaration of acceleration of maturity,

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—  change the currency or other property in which a Senior Note or premium or interest on a Senior Note is payable, or

—  impair the right to institute suit for the enforcement of any payment on or after the stated maturity (or, in the case of redemption, on or after the redemption date) of any Senior Note;

•  may not reduce the percentage of principal amount requirement for consent of the holders for any supplemental Senior Note Indenture, or for any waiver of compliance with any provision of or any default under the Senior Note Indenture, or reduce the requirements for quorum or voting, without the consent of the holder of each outstanding Senior Note of each series or tranche effected;

•  may not prior to the Release Date,

—  impair the interest of the Senior Note Trustee in the Senior Note First Mortgage Bonds,

—  reduce the principal amount of any series of Senior Note First Mortgage Bonds to an amount less than that of the related series of Senior Notes, or

—  alter the payment provisions of the Senior Note First Mortgage Bonds in a manner adverse to the holders of the Senior Notes; and

•  may not modify provisions of the Senior Note Indenture relating to supplemental Senior Note Indentures, waivers of certain covenants and waivers of past defaults with respect to the Senior Notes of any series, or any tranche of a series, without the consent of the holder of each outstanding Senior Note affected.

      A supplemental Senior Note Indenture will be deemed not to affect the rights under the Senior Note Indenture of the holders of any series or tranche of the Senior Notes if the supplemental Senior Note Indenture:

•  changes or eliminates any covenant or other provision of the Senior Note Indenture expressly included solely for the benefit of one or more other particular series of Senior Notes or tranches of them; or

•  modifies the rights of the holders of Senior Notes of any other series or tranches with respect to any covenant or other provision.

For more information, see Section 1302 of the Senior Note Indenture.

      If we solicit from holders of the Senior Notes any type of action, we may at our option by board resolution fix in advance a record date for the determination of the holders entitled to vote on the action. We shall have no obligation, however, to do so. If we fix a record date, the action may be taken before or after the record date, but only the holders of record at the close of business on the record date shall be deemed to be holders for the purposes of determining whether holders of the requisite proportion of the outstanding Senior Notes have authorized the action. For that purpose, the outstanding Senior Notes shall be computed as of the record date. Any holder action shall bind every future holder of the same security and the holder of every security issued upon the registration of transfer of or in exchange for or in lieu of the security in respect of anything done or permitted by the Senior Note Trustee or us in reliance on that action, whether or not notation of the action is made upon the security. For more information, see Section 104 of the Senior Note Indenture.

Defeasance

      Unless the applicable prospectus supplement provides otherwise, any Senior Note, or portion of the principal amount of a Senior Note, will be deemed to have been paid for purposes of the Senior Note Indenture, and, at our election, our entire indebtedness in respect to the Senior Note, or portion of it, will be deemed to have been satisfied and discharged, if we have irrevocably deposited with the Senior Note Trustee or any Paying Agent other than us in trust money, certain Eligible Obligations, or a combination of the two, sufficient to pay principal of, any premium and interest due and to become due on

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the Senior Note or portion of it. For more information, see Section 801 of the Senior Note Indenture. For this purpose, unless the applicable prospectus supplement provides otherwise, Eligible Obligations include direct obligations of, or obligations unconditionally guaranteed by, the United States, entitled to the benefit of full faith and credit of the United States, and certificates, depositary receipts or other instruments which evidence a direct ownership interest in these obligations or in any specific interest or principal payments due in respect to those obligations.

Resignation of Senior Note Trustee

      The Senior Note Trustee may resign at any time by giving written notice to us or may be removed at any time by an action of the holders of a majority in principal amount of outstanding Senior Notes delivered to the Senior Note Trustee and us. No resignation or removal of the Senior Note Trustee and no appointment of a successor trustee will become effective until a successor trustee accepts appointment in accordance with the requirements of the Senior Note Indenture. So long as no Event of Default or event which would become an Event of Default has occurred and is continuing, and except with respect to a Senior Note Trustee appointed by an action of the holders, if we have delivered to the Senior Note Trustee a resolution of our Board of Directors appointing a successor trustee and the successor trustee has accepted the appointment in accordance with the terms of the Senior Note Indenture, the Senior Note Trustee will be deemed to have resigned and the successor trustee will be deemed to have been appointed as trustee in accordance with the Senior Note Indenture. For more information, see Section 1010 of the Senior Note Indenture.

Notices

      We will give notices to holders of Senior Notes by mail to their addresses as they appear in the Security Register. For more information, see Section 106 of the Senior Note Indenture.

Title

      The Senior Note Trustee and its agents, and we and our agents, may treat the person in whose name a Senior Note is registered as the absolute owner of that Note, whether or not that Senior Note may be overdue, for the purpose of making payment and for all other purposes. For more information, see Section 308 of the Senior Note Indenture.

Governing Law

      The Senior Note Indenture and the Senior Notes will be governed by, and construed in accordance with, the law of the State of New York. For more information, see Section 112 of the Senior Note Indenture.

Relationship with the Trustee

      In the normal course of business, the Trustee or its affiliates may, from time to time, provide certain commercial banking, investment banking and securities underwriting services to us and our affiliates.

DESCRIPTION OF DEBT SECURITIES

General

      The Debt Securities offered by this prospectus will be our direct unsecured general obligations. This prospectus describes certain general terms of the Debt Securities offered through this prospectus. When we offer to sell a particular series of Debt Securities, we will describe the specific terms of that series in a prospectus supplement. The Debt Securities will be issued under the Indenture (For Debt Securities), dated as of October 28, 1999, between us and JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), as trustee, or one or more additional indentures for Debt Securities between us

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and a trustee elected by us. The Indenture (For Debt Securities) appears in a prior registration statement of ours and is incorporated by reference into the registration statement of which this prospectus is a part. The form of any additional indenture, between us and a trustee which we will name, under which we may issue Debt Securities is filed as an exhibit to the registration statement. In this prospectus we refer to each of the Indenture (For Debt Securities) and the form of indenture for Debt Securities, as applicable, as the “Debt Securities Indenture.” We refer to the trustee under any Debt Securities Indenture as the “Debt Securities Trustee.”

      The prospectus supplement applicable to a particular series of Debt Securities may state that a particular series of Debt Securities will be subordinated obligations of our company. The form of debt securities indenture includes optional provisions (designated by brackets (“[ ]”)) that will appear in a separate indenture for subordinated debt securities in the event we issue subordinated debt securities. In the following discussion, we refer to any of these subordinated obligations as the “Subordinated Debt Securities.” Unless the applicable prospectus supplement provides otherwise, we will use a separate Debt Securities Indenture for any Subordinated Debt Securities that we may issue. The Indenture (for Debt Securities) dated October 28, 1999 has been, and any future Debt Securities Indenture will be, qualified under the Trust Indenture Act and you should refer to the Trust Indenture Act for the provisions that apply to the Debt Securities.

      We have summarized selected provisions of the Debt Securities Indenture below. Each Debt Securities Indenture will be independent of any other Debt Securities Indenture unless otherwise stated in a prospectus supplement. The summary that follows is not complete and the summary is qualified in its entirety by reference to the provisions of the applicable Debt Securities Indenture. You should consult the Debt Securities themselves, the Debt Securities Indenture, any supplemental indentures, officers’ certificate, and other related documents for more complete information on the Debt Securities. These documents appear as exhibits to the registration statement of which this prospectus is a part, or are incorporated by reference as exhibits to such registration statement, or will appear as exhibits to other documents that we file with the SEC, which are incorporated by reference into this prospectus. In the summary below, we have included references to applicable section numbers of the Debt Securities Indenture so that you can easily locate these provisions.

Ranking

      Our Debt Securities that are not designated Subordinated Debt Securities will be effectively subordinated to all of our currently outstanding and future First Mortgage Bonds (including, prior to the Release Date, Senior Notes secured by First Mortgage Bonds) to the extent of the value of the collateral securing such First Mortgage Bonds. The First Mortgage Bond holders have a first lien on substantially all of our assets. After the Release Date, our Senior Notes will rank equally with our Debt Securities that are not designated Subordinated Debt Securities. Our Debt Securities that are designated Subordinated Debt Securities will be subordinate to all of our currently outstanding and future First Mortgage Bonds, Senior Notes and Debt Securities that are not designated Subordinated Debt Securities. As of the date of this prospectus, we had an aggregate principal amount of $2.9 billion First Mortgage Bonds outstanding, including $400 million issues to secure our Senior Notes and an aggregate principal amount of $800 million Debt Securities outstanding, none of which were Subordinated Debt Securities. The Indenture (For Debt Securities) does not limit the amount of First Mortgage Bonds or Senior Notes that we may issue.

Provisions of a Particular Series

      The Debt Securities may from time to time, be issued in one or more series. You should consult the prospectus supplement relating to any particular series of Debt Securities for the following information:

•  the title of the Debt Securities;

•  any limit on aggregate principal amount of the Debt Securities or the series of which they are a part;

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•  the date on which the principal of the Debt Securities will be payable;

•  the rate, including the method of determination if applicable, at which the Debt Securities will bear interest, if any; and

—  the date from which any interest will accrue;

—  the dates on which we will pay interest; and

—  the record date for any interest payable on any interest payment date;

•  the place where,

—  the principal of, premium, if any, and interest on the Debt Securities will be payable;

—  you may register transfer of the Debt Securities;

—  you may exchange the Debt Securities; and

—  you may serve notices and demands upon us regarding the Debt Securities;

•  the Security Registrar for the Debt Securities and whether the principal of the Debt Securities is payable without presentment or surrender of them;

•  the terms and conditions upon which we may elect to redeem any Debt Securities;

•  the terms and conditions upon which the Debt Securities must be redeemed or purchased due to our obligations pursuant to any sinking fund or other mandatory redemption provisions, or at the holder’s option, including any applicable exceptions to notice requirements;

•  the denominations in which we may issue Debt Securities;

•  the manner in which we will determine any amounts payable on the Debt Securities that are to be determined with reference to an index or other fact or event ascertainable outside the applicable indenture;

•  the currency, if other than United States currency, in which payments on the Debt Securities will be payable;

•  the terms according to which elections can be made by us or the holder regarding payments on the Debt Securities in currency other than the currency in which the Debt Securities are stated to be payable;

•  the portion of the principal amount of the Debt Securities payable upon declaration of acceleration of their maturity;

•  if payments are to be made on the Debt Securities in securities or other property, the type and amount of the securities and other property or the method by which the amount shall be determined;

•  the terms applicable to any rights to convert Debt Securities into or exchange them for other of our securities or those of any other entity;

•  if we issue Debt Securities as global securities,

—  any limitations on transfer or exchange rights or the right to obtain the registration of transfer;

—  any limitations on the right to obtain definitive certificates for the Debt Securities; and

—  any other matters incidental to the Debt Securities;

•  whether we are issuing the Debt Securities as bearer securities;

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•  any limitations on transfer or exchange of Debt Securities or the right to obtain registration of their transfer, and the terms and amount of any service charge required for registration of transfer or exchange;

•  any exceptions to the provisions governing payments due on legal holidays, or any variations in the definition of business day with respect to the Debt Securities;

•  any credit enhancement applicable to the Debt Securities;

•  any addition to the Events of Default applicable to any Debt Securities and any additions to our covenants for the benefit of the holders of the Debt Securities; and

•  any other terms of the Debt Securities not in conflict with the provisions of the applicable Debt Securities Indenture.

For more information, see Section 301 of the applicable Debt Securities Indenture.

      Debt Securities may be sold at a substantial discount below their principal amount. You should consult the applicable prospectus supplement for a description of certain special United States federal income tax considerations that may apply to Debt Securities sold at an original issue discount or denominated in a currency other than dollars.

      Unless the applicable prospectus supplement states otherwise, the covenants contained in the applicable indenture will not afford holders of Debt Securities protection in the event we have a change in control or are involved in a highly-leveraged transaction.

Subordination

      The applicable prospectus supplement may provide that a series of Debt Securities will be Subordinated Debt Securities, subordinate and junior in right of payment to all of our Senior Indebtedness, as defined below. If so, we will issue these securities under a separate Debt Securities Indenture for Subordinated Debt Securities. In the event that we issue Subordinated Debt Securities, the rights of the holders of the Subordinated Debt Securities will be subrogated to the rights of the holders of Senior Indebtedness (as defined below), including our Debt Securities that are not designated as Subordinated Debt Securities, to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on the Subordinated Debt Securities are paid in full. For further information see “— Ranking” above.

      No payment of principal of, including redemption and sinking fund payments, or any premium or interest on, the Subordinated Debt Securities may be made if:

•  any Senior Indebtedness is not paid when due;

•  any applicable grace period with respect to default in payment of any Senior Indebtedness has ended, and the default has not been cured or waived; or

•  the maturity of any Senior Indebtedness has been accelerated because of a default.

      Upon any distribution of our assets to creditors upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal of, and any premium and interest due or to become due on all outstanding Senior Indebtedness must be paid in full before the holders of the Subordinated Debt Securities are entitled to payment. For more information, see Section 1502 of the applicable Debt Securities Indenture. The rights of the holders of the Subordinated Debt Securities will be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on the Subordinated Debt Securities are paid in full. For more information, see Section 1504 of the applicable Debt Securities Indenture.

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      As defined in the Subordinated Debt Securities Indenture, the term “Senior Indebtedness” means:

•  obligations (other than non-recourse obligations and the indebtedness issued under the Subordinated Debt Securities Indenture) of, or guaranteed or assumed by, us:

—  for borrowed money (including both senior and subordinated indebtedness for borrowed money, but excluding the Subordinated Debt Securities); or

—  for the payment of money relating to any lease that is capitalized on our consolidated balance sheet in accordance with generally accepted accounting principles; or

•  indebtedness evidenced by bonds, debentures, notes or other similar instruments.

      In the case of any such indebtedness or obligations, Senior Indebtedness includes amendments, renewals, extensions, modifications and refundings, whether existing as of the date of the Subordinated Debt Securities Indenture or subsequently incurred by us.

      The Subordinated Debt Securities Indenture does not limit the aggregate amount of Senior Indebtedness that we may issue.

Form, Exchange and Transfer

      Unless the applicable prospectus supplement states otherwise, we will issue Debt Securities only in fully registered form without coupons and in denominations of $1,000 and integral multiples of that amount. For more information, see Sections 201 and 302 of the applicable Debt Securities Indenture.

      Holders may present Debt Securities for exchange or for registration of transfer, duly endorsed or accompanied by a duly executed instrument of transfer, at the office of the security registrar or at the office of any Transfer Agent we may designate. Exchanges and transfers are subject to the terms of the applicable indenture and applicable limitations for global securities. We may designate ourselves the security registrar. No charge will be made for any registration of transfer or exchange of Debt Securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge that the holder must pay in connection with the transaction. Any transfer or exchange will become effective upon the security registrar or Transfer Agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. For more information, see Section 305 of the applicable Debt Securities Indenture.

      The applicable prospectus supplement will state the name of any Transfer Agent, in addition to the security registrar initially designated by us, for any Debt Securities. We may at any time designate additional Transfer Agents or withdraw the designation of any Transfer Agent or make a change in the office through which any Transfer Agent acts. We must, however, maintain a Transfer Agent in each place of payment for the Debt Securities of each series. For more information, see Section 602 of the applicable Debt Securities Indenture.

      We will not be required to:

•  issue, register the transfer of, or exchange any Debt Securities or any tranche of any Debt Securities during a period of 15 days immediately preceding the mailing of a notice of redemption of any Debt Securities called for redemption; or

•  register the transfer of, or exchange any Debt Securities selected for redemption except the unredeemed portion of any Debt Securities being partially redeemed.

For more information, see Section 305 of the applicable Debt Securities Indenture.

Payment and Paying Agents

      Unless the applicable prospectus supplement states otherwise, we will pay interest on a Debt Security on any interest payment date to the person in whose name the Debt Security is registered at the close of

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business on the regular record date for the interest payment. For more information, see Section 307 of the applicable Debt Securities Indenture.

      Unless the applicable prospectus supplement provides otherwise, we will pay principal and any premium and interest on Debt Securities at the office of the Paying Agent whom we will designate for this purpose. Unless the applicable prospectus supplement states otherwise, the corporate trust office of the Debt Securities Trustee in New York City will be designated as our sole Paying Agent for payments with respect to Debt Securities of each series. Any other Paying Agents initially designated by us for the Debt Securities of a particular series will be named in the applicable prospectus supplement. We may at any time add or delete Paying Agents or change the office through which any Paying Agent acts. We must, however, maintain a Paying Agent in each place of payment for the Debt Securities of a particular series. For more information, see Section 602 of the applicable Debt Securities Indenture.

      All money we pay to a Paying Agent for the payment of the principal and any premium or interest on any Debt Security that remains unclaimed at the end of two years after payment is due will be repaid to us. After that date, the holder of that Debt Security may look only to us for these payments. For more information, see Section 603 of the applicable Debt Securities Indenture.

Redemption

      You should consult the applicable prospectus supplement for any terms regarding optional or mandatory redemption of Debt Securities. Except for the provisions in the applicable prospectus supplement regarding Debt Securities redeemable at the holder’s option, Debt Securities may be redeemed only upon notice by mail not less than 30 nor more than 60 days prior to the redemption date. Further, if less than all of the Debt Securities of a series, or any tranche of a series, are to be redeemed, the Debt Securities to be redeemed will be selected by the method provided for the particular series. In the absence of a selection provision, the Debt Securities Trustee will select a fair and appropriate method of random selection. For more information, see Sections 403 and 404 of the applicable Debt Securities Indenture.

      A notice of redemption we provide may state:

•  that redemption is conditioned upon receipt by the Paying Agent on or before the redemption date of money sufficient to pay the principal of and any premium and interest on the Debt Securities; and

•  that if the money has not been received, the notice will be ineffective and we will not be required to redeem the Debt Securities.

For more information, see Section 404 of the applicable Debt Securities Indenture.

Consolidation, Merger and Sale of Assets

      We may not consolidate with or merge into any other person, nor may we transfer or lease substantially all of our assets and property to any person, unless:

•  the corporation formed by the consolidation or into which we are merged, or the person that acquires by conveyance or transfer, or that leases, substantially all of our property and assets:

—  is organized and validly existing under the laws of any domestic jurisdiction; and

—  expressly assumes our obligations on the Debt Securities and under the applicable indentures;

•  immediately after the transaction becomes effective, no Event of Default, and no event that would become an Event of Default, shall have occurred and be continuing; and

•  we will have delivered to the Debt Securities Trustee an officer’s certificate and opinion of counsel as provided in the applicable indentures.

For more information, see Section 1101 of the applicable Debt Securities Indenture.

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Events of Default

      “Event of default” under the applicable indenture with respect to Debt Securities of any series means any of the following:

•  failure to pay any interest due on Debt Securities of that series within 30 days;

•  failure to pay principal or premium when due on any Debt Security of that series;

•  breach of or failure to perform any other covenant or warranty in the applicable indenture with respect to Debt Securities of that series for 60 days (subject to extension under certain circumstances for another 120 days) after we receive notice from the Debt Securities Trustee, or we and the Debt Securities Trustee receive notice from the holders of at least 33% in principal amount of the Debt Securities of that series outstanding under the applicable indenture according to the provisions of the applicable indenture;

•  certain events of bankruptcy, insolvency or reorganization; and

•  any other Event of Default set forth in the applicable prospectus supplement.

For more information, see Section 801 of the applicable Debt Securities Indenture.

      An Event of Default with respect to a particular series of Debt Securities does not necessarily constitute an Event of Default with respect to the Debt Securities of any other series issued under the applicable indenture.

      If an Event of Default with respect to a particular series of Debt Securities occurs and is continuing, either the Debt Securities Trustee or the holders of at least 33% in principal amount of the outstanding Debt Securities of that series may declare the principal amount of all of the Debt Securities of that series to be due and payable immediately. If the Debt Securities of that series are discount securities or similar Debt Securities, only the portion of the principal amount as specified in the applicable prospectus supplement may be immediately due and payable. If an Event of Default occurs and is continuing with respect to all series of Debt Securities issued under a Debt Securities Indenture, including all Events of Default relating to bankruptcy, insolvency or reorganization, the Debt Securities Trustee or the holders of at least 33% in principal amount of the outstanding Debt Securities of all series issued under that Debt Securities Indenture, considered together, may declare an acceleration of the principal amount of all series of Debt Securities issued under that Debt Securities Indenture. There is no automatic acceleration, even in the event of our bankruptcy or insolvency.

      The applicable prospectus supplement may provide, with respect to a series of Debt Securities to which a credit enhancement is applicable, that the provider of the credit enhancement may, if a default has occurred and is continuing with respect to the series, have all or any part of the rights with respect to remedies that would otherwise have been exercisable by the holder of that series.

      At any time after a declaration of acceleration with respect to the Debt Securities of a particular series, and before a judgment or decree for payment of the money due has been obtained, the Event of Default giving rise to the declaration of acceleration will, without further action, be deemed to have been waived, and the declaration and its consequences will be deemed to have been rescinded and annulled, if:

•  we have paid or deposited with the Debt Securities Trustee a sum sufficient to pay:

—  all overdue interest on all Debt Securities of the particular series;

—  the principal of and any premium on any Debt Securities of that series that have become due otherwise than by the declaration of acceleration and any interest at the rate prescribed in the Debt Securities;

—  interest upon overdue interest at the rate prescribed in the Debt Securities, to the extent payment is lawful; and

—  all amounts due to the Debt Securities Trustee under the applicable indenture; and

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•  any other Event of Default with respect to the Debt Securities of the particular series, other than the failure to pay the principal of the Debt Securities of that series that has become due solely by the declaration of acceleration, has been cured or waived as provided in the applicable indenture.

For more information, see Section 802 of the applicable Debt Securities Indenture.

      The applicable Debt Securities Indenture includes provisions as to the duties of the Debt Securities Trustee in case an Event of Default occurs and is continuing. Consistent with these provisions, the Debt Securities Trustee will be under no obligation to exercise any of its rights or powers at the request or direction of any of the holders unless those holders have offered to the Debt Securities Trustee reasonable indemnity. For more information, see Section 903 of the applicable Debt Securities Indenture. Subject to these provisions for indemnification, the holders of a majority in principal amount of the outstanding Debt Securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Debt Securities Trustee, or exercising any trust or power conferred on the Debt Securities Trustee, with respect to the Debt Securities of that series. For more information, see Section 812 of the applicable Debt Securities Indenture.

      No holder of Debt Securities may institute any proceeding regarding the applicable indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the applicable indenture unless:

•  the holder has previously given to the Debt Securities Trustee written notice of a continuing Event of Default of that particular series;

•  the holders of a majority in principal amount of the outstanding Debt Securities of all series with respect to which an Event of Default is continuing have made a written request to the Debt Securities Trustee, and have offered reasonable indemnity to the Debt Securities Trustee, to institute the proceeding as trustee; and

•  the Debt Securities Trustee has failed to institute the proceeding, and has not received from the holders of a majority in principal amount of the outstanding Debt Securities of that series a direction inconsistent with the request, within 60 days after notice, request and offer of reasonable indemnity.

For more information, see Section 807 of the applicable Debt Securities Indenture.

      The preceding limitations do not apply, however, to a suit instituted by a holder of a Debt Security for the enforcement of payment of the principal of or any premium or interest on the Debt Securities on or after the applicable due date stated in the Debt Securities. For more information, see Section 808 of the applicable Debt Securities Indenture.

      We must furnish annually to the Debt Securities Trustee a statement by an appropriate officer as to that officer’s knowledge of our compliance with all conditions and covenants under each of the indentures for Debt Securities. Our compliance is to be determined without regard to any grace period or notice requirement under the respective indenture. For more information, see Section 606 of the applicable Debt Securities Indenture.

Modification and Waiver

      We and the Debt Securities Trustee, without the consent of the holders of the Debt Securities, may enter into one or more supplemental indentures for any of the following purposes:

•  to evidence the assumption by any permitted successor of our covenants in the applicable indenture and the Debt Securities;

•  to add one or more covenants or other provisions for the benefit of the holders of outstanding Debt Securities or to surrender any right or power conferred upon us by the applicable indenture;

•  to add any additional Events of Default;

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•  to change or eliminate any provision of the applicable indenture or add any new provision to it, but if this action would adversely affect the interests of the holders of any particular series of Debt Securities in any material respect, the action will not become effective with respect to that series while any Debt Securities of that series remain outstanding under the applicable indenture;

•  to provide collateral security for the Debt Securities;

•  to establish the form or terms of Debt Securities according to the provisions of the applicable indenture;

•  to evidence the acceptance of appointment of a successor Debt Securities Trustee under the applicable indenture with respect to one or more series of the Debt Securities and to add to or change any of the provisions of the applicable indenture as necessary to provide for trust administration under the applicable indenture by more than one trustee;

•  to provide for the procedures required to permit the use of a noncertificated system of registration for any series of Debt Securities;

•  to change any place where

—  the principal of and any premium and interest on any Debt Securities are payable,

—  any Debt Securities may be surrendered for registration of transfer or exchange, or

—  notices and demands to or upon us regarding Debt Securities and the applicable indentures may be served; or

•  to cure any ambiguity or inconsistency, but only by means of changes or additions that will not adversely affect the interests of the holders of Debt Securities of any series in any material respect.

For more information, see Section 1201 of the applicable Debt Securities Indenture.

      The holders of at least a majority in aggregate principal amount of the outstanding Debt Securities of any series may waive:

•  compliance by us with certain provisions of the applicable indenture (see Section 607 of the applicable Debt Securities Indenture); and

•  any past default under the applicable indenture, except a default in the payment of principal, premium, or interest, and certain covenants and provisions of the applicable indenture that cannot be modified or amended without consent of the holder of each outstanding Debt Security of the series affected (see Section 813 of the applicable Debt Securities Indenture).

      The Trust Indenture Act may be amended after the date of the applicable indenture to require changes to the indenture. In this event, the indenture will be deemed to have been amended so as to effect the changes; and we and the Debt Securities Trustee may, without the consent of any holders, enter into one or more supplemental indentures to evidence or effect the amendment. For more information, see Section 1201 of the applicable Debt Securities Indenture.

      Except as provided in this section, the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities issued pursuant to a Debt Securities Indenture, considered as one class, is required to change in any manner the applicable indenture pursuant to one or more supplemental indentures. If less than all of the series of Debt Securities outstanding under a Debt Securities Indenture are directly affected by a proposed supplemental indenture, however, only the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities of all series directly affected, considered as one class, will be required. Furthermore, if the Debt Securities of any series have been issued in more than one tranche and if the proposed supplemental indenture directly affects the rights of the holders of one or more, but not all, tranches, only the consent of the holders of a

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majority in aggregate principal amount of the outstanding Debt Securities of all tranches directly affected, considered as one class, will be required. In addition, an amendment or modification:

•  may not, without the consent of the holder of each outstanding Debt Security affected:

—  change the maturity of the principal of, or any installment of principal of or interest on, any Debt Securities;

—  reduce the principal amount or the rate of interest, or the amount of any installment of interest, or change the method of calculating the rate of interest;

—  reduce any premium payable upon the redemption of the Debt Securities;

—  reduce the amount of the principal of any Debt Security originally issued at a discount from the stated principal amount that would be due and payable upon a declaration of acceleration of maturity;

—  change the currency or other property in which a Debt Security or premium or interest on a Debt Security is payable; or

—  impair the right to institute suit for the enforcement of any payment on or after the stated maturity, or in the case of redemption, on or after the redemption date, of any Debt Securities;

•  may not reduce the percentage of principal amount requirement for consent of the holders for any supplemental indenture, or for any waiver of compliance with any provision of or any default under the applicable indenture, or reduce the requirements for quorum or voting, without the consent of the holder of each outstanding Debt Security of each series or tranche affected; and

•  may not modify provisions of the applicable indenture relating to supplemental indentures, waivers of certain covenants and waivers of past defaults with respect to the Debt Securities of any series, or any tranche of a series, without the consent of the holder of each outstanding Debt Security affected.

      A supplemental indenture will be deemed not to affect the rights under the applicable indenture of the holders of any series or tranche of the Debt Securities if the supplemental indenture:

•  changes or eliminates any covenant or other provision of the applicable indenture expressly included solely for the benefit of one or more other particular series of Debt Securities or tranches thereof; or

•  modifies the rights of the holders of Debt Securities of any other series or tranches with respect to any covenant or other provision.

For more information, see Section 1202 of the applicable Debt Securities Indenture.

      If we solicit from holders of the Debt Securities any type of action, we may at our option by board resolution fix in advance a record date for the determination of the holders entitled to vote on the action. We shall have no obligation, however, to do so. If we fix a record date, the action may be taken before or after the record date, but only the holders of record at the close of business on the record date shall be deemed to be holders for the purposes of determining whether holders of the requisite proportion of the outstanding Debt Securities have authorized the action. For that purpose, the outstanding Debt Securities shall be computed as of the record date. Any holder action shall bind every future holder of the same security and the holder of every security issued upon the registration of transfer of or in exchange for or in lieu of the security in respect of anything done or permitted by the Debt Securities Trustee or us in reliance on that action, whether or not notation of the action is made upon the security. For more information, see Section 104 of the applicable Debt Securities Indenture.

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Defeasance

      Unless the applicable prospectus supplement provides otherwise, any Debt Security, or portion of the principal amount of a Debt Security, will be deemed to have been paid for purposes of the applicable indenture, and, at our election, our entire indebtedness in respect of the Debt Security, or portion thereof, will be deemed to have been satisfied and discharged, if we have irrevocably deposited with the Debt Securities Trustee or any Paying Agent other than us, in trust money, certain eligible obligations, as defined in the applicable indenture, or a combination of the two, sufficient to pay principal of and any premium and interest due and to become due on the Debt Security or portion thereof. For more information, see Section 701 of the applicable Debt Securities Indenture. For this purpose, unless the applicable prospectus supplement provides otherwise, eligible obligations include direct obligations of, or obligations unconditionally guaranteed by, the United States, entitled to the benefit of full faith and credit of the United States, and certificates, depositary receipts or other instruments that evidence a direct ownership interest in those obligations or in any specific interest or principal payments due in respect of those obligations.

Resignation, Removal of Debt Securities Trustee; Appointment of Successor

      The Debt Securities Trustee may resign at any time by giving written notice to us or may be removed at any time by an action of the holders of a majority in principal amount of outstanding Debt Securities delivered to the Debt Securities Trustee and us. No resignation or removal of the Debt Securities Trustee and no appointment of a successor trustee will become effective until a successor trustee accepts appointment in accordance with the requirements of the applicable indenture. So long as no Event of Default or event that would become an Event of Default has occurred and is continuing, and except with respect to a Debt Securities Trustee appointed by an action of the holders, if we have delivered to the Debt Securities Trustee a resolution of our board of directors appointing a successor trustee and the successor trustee has accepted the appointment in accordance with the terms of the applicable indenture, the Debt Securities Trustee will be deemed to have resigned and the successor trustee will be deemed to have been appointed as trustee in accordance with the applicable indenture. For more information, see Section 910 of the applicable Debt Securities Indenture.

Notices

      We will give notices to holders of Debt Securities by mail to their addresses as they appear in the security register. For more information, see Section 106 of the applicable Debt Securities Indenture.

Title

      The Debt Securities Trustee and its agents, and we and our agents, may treat the person in whose name a Debt Security is registered as the absolute owner of that Debt Security, whether or not that Debt Security may be overdue, for the purpose of making payment and for all other purposes. For more information, see Section 308 of the applicable Debt Securities Indenture.

Governing Law

      The Debt Securities Indentures and the Debt Securities, including any Subordinated Debt Securities Indentures and Subordinated Debt Securities, will be governed by, and construed in accordance with, the law of the State of New York. For more information, see Section 112 of the applicable Debt Securities Indenture.

Relationship with the Trustee

      In the normal course of business, the Trustee under our Indenture (for Debt Securities), dated as of October 28, 1999, or its affiliates provides, and any future trustees or their affiliates, may, from time to time, provide, certain commercial banking, investment banking and securities underwriting services to us and our affiliates.

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DESCRIPTION OF PREFERRED STOCK

      The following summary of the characteristics of our preferred stock is a summary and is qualified in all respects by reference to our restated charter and bylaws, each as amended, copies of which are filed as exhibits to the registration statement of which this prospectus is a part. You should carefully read each of these documents in order to fully understand the terms and provisions of our preferred stock. Reference is also made to the laws of the State of North Carolina.

General

      Our authorized preferred stock consists of the following classes with the following number of authorized shares per class:

•  $5 Preferred Stock — 300,000 shares with no par value;

•  Serial Preferred Stock — 20,000,000 shares with no par value; and

•  Preferred Stock A — 5,000,000 shares with no par value.

      As of September 30, 2005, we had issued and outstanding 236,997 shares of $5 Preferred Stock, 349,850 shares of Serial Preferred Stock, and no shares of Preferred Stock A. Generally, each class of our preferred stock ranks equally with each other class and senior to our preference stock and our common stock.

      Our board of directors may authorize the preferred stock to be issued from time to time as one or more series of $5 Preferred Stock, Serial Preferred Stock, or Preferred Stock A. For each new series of preferred stock, the board of directors, within the limitations and restrictions stated in Article Fourth of our restated charter, may establish the number of shares in each series and to fix the designation, powers, preferences and rights of each such series and the qualifications, limitations or restrictions thereof.

$5 Preferred Stock

      Our charter authorizes 300,000 shares of $5 Preferred Stock, 236,997 of which are outstanding as of September 30, 2005. The terms of the $5 Preferred Stock generally include:

•  cumulative annual dividends of $5 per share;

•  a liquidation preference, which may vary depending on the issuance date of the $5 Preferred Stock. The liquidation preference is $100 per share if the $5 Preferred Stock was issued prior to June 1, 1980, and if issued on or after June 1, 1980, the liquidation preference is fixed by the board of directors at the time the series is issued;

•  voting rights of one vote per share; and

•  redemption rights exercisable upon the affirmative vote of a majority the holders of our outstanding common stock for $110 per share, plus accrued and unpaid dividends.

Serial Preferred Stock

      Our charter authorizes 20,000,000 shares of Serial Preferred Stock. We have designated 100,000 shares as $4.20 Serial Preferred, all of which are outstanding as of September 30, 2005, and 250,000 shares as $5.44 Serial Preferred, 249,850 of which are outstanding as of September 30, 2005. The terms of the Serial Preferred Stock generally include:

•  cumulative dividends at the rate fixed for such series as determined by the board of directors. Currently, the $4.20 Serial Preferred has a dividend rate of $4.20 per annum, and the $5.44 Serial Preferred has a dividend rate of $5.44 per annum;

•  a liquidation preference, which may vary depending on the issuance date of the Serial Preferred Stock. The liquidation preference is $100 per share if the Serial Preferred Stock was issued prior to

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	June 1, 1980, and if issued on or after June 1, 1980, the liquidation preference is fixed by the board of directors at the time the series is issued. The liquidation preference for each of our $4.20 Serial Preferred and $5.44 Serial Preferred is $100 per share;
•	voting rights of one vote per share; and
•	redemption rights exercisable upon the affirmative vote of a majority of the board of directors at the redemption price fixed by the board of directors at the time the series is issued, plus accrued and unpaid dividends. The redemption price for the $4.20 Serial Preferred is $102 per share, and the redemption price for the $5.44 Serial Preferred is $101 per share.

Preferred Stock A

      Our charter authorizes 5,000,000 shares of Preferred Stock A, none of which are outstanding as of September 30, 2005. The terms of the Preferred Stock A generally include:

•  cumulative dividends at the rate fixed for such series as determined by the board of directors;

•  a liquidation preference, which may vary depending on the issuance date of the Preferred Stock A. The liquidation preference is $100 per share if the Preferred Stock A was issued prior to June 1, 1980, and if issued on or after June 1, 1980, the liquidation preference is fixed by the board of directors at the time the series is issued; and

•  redemption rights exercisable upon the affirmative vote of a majority of the board of directors at the redemption price fixed by the board of directors at the time the series is issued, plus accrued and unpaid dividends.

Certain Voting Rights of Preferred Stock Holders

      Holders of our $5 Preferred Stock and Serial Preferred Stock are generally entitled to one vote per share, while holders of our Preferred Stock A do not have a right to vote in elections of directors or on any other matter, except as required by law or as specifically required under our restated charter. In the event that we have not made distributions with respect to any of our preferred stock for a period of at least four quarters, until all dividends accumulated through the current dividend period have been paid, our restated charter permits the holders of each class of our preferred stock to elect a majority of the directors to our board of directors. Additionally, our restated charter permits the holders of each class of our preferred stock to vote on certain amendments to our restated charter that materially and adversely affect the rights, preferences, or privileges of the preferred stock. When entitled to vote, each share of our Preferred Stock A is generally entitled to one vote per share.

Dividend Restrictions and Certain Covenants

      If and so long as any dividend on any of our preferred stock is in arrears, or if there shall be any voluntary or involuntary liquidation and the amount payable with respect to any of our preferred stock is not paid in full, or if we shall not have made all payments due under the terms of the sinking fund for the purchase or redemption of any series of our Preferred Stock A, we cannot pay or declare any dividends on, or make any other distribution on, or redeem, purchase or otherwise acquire for value any shares of our common stock, preference stock, or any other class of stock ranking subordinate to our preferred stock as to the payment of dividends or distribution of assets.

      We cannot create or authorize a new class of stock ranking prior to or on a parity with any of our preferred stock as to dividends or distributions, or create or authorize any security convertible into shares of such stock, unless the holders of at least two-thirds of the outstanding shares of the class of preferred stock affected consent thereto.

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      So long as any shares of our preferred stock are outstanding, we cannot, without the consent of the holders of a majority of the of the outstanding shares of the applicable class of preferred stock:

•  increase the total authorized amount of any class of our preferred stock;

•  merge or consolidate with or into any other corporation, unless such merger or consolidation shall have been ordered, approved or permitted by the SEC under the provisions of the Public Utility Holding Company Act of 1935;

•  issue shares of any preferred stock or any other class of stock ranking prior to or on a parity with any of our preferred stock as to dividends or distributions, unless:

—  our net income available for the payment of dividends for a period of 12 consecutive months within the 15 calendar months immediately preceding the issuance is at least equal to twice the annual dividend requirements on all outstanding shares of our preferred stock and of all other classes of stock ranking prior to or on a parity with any of our preferred stock as to dividends or distributions, including the shares to be issued; and

—  our gross income available for the payment of interest for a period of 12 consecutive months within the 15 calendar months immediately preceding the issuance is at least equal to one and one-half times the sum of (i) the annual interest charges on all interest bearing indebtedness and (ii) the annual dividend requirements on all outstanding shares of our preferred stock and of all other classes of stock ranking prior to or on a parity with any of our preferred stock as to dividends or distributions, including the shares to be issued; and

•  issue shares of any preferred stock or any other class of stock ranking prior to or on a parity with any of our preferred stock as to dividends or distributions, unless the aggregate of our surplus and the capital applicable to our common stock is not less than the aggregate stated value of our preferred stock, and of all other classes of stock ranking prior to or on a parity with any of our preferred stock as to dividends or distributions, to be outstanding immediately after such issuance (excluding from the foregoing calculation all indebtedness and stock to be retired in connection with such issuance); provided, however, that no portion of the surplus used to meet the foregoing requirements shall be available for dividends or distributions upon our common stock after such issuance and until such shares or a like number of any other class of stock ranking prior to or on a parity with such shares shall have been retired.

      So long as any shares of our preferred stock are outstanding, we cannot pay dividends (other than dividends on our common stock payable by the issuance of our common stock) on, or make any distribution on, or redeem, purchase or otherwise acquire for value, any of our common stock, preference stock or other stock ranking subordinate to our preferred stock as to the payment of dividends or distribution of assets, if, after giving effect to any such payment, distribution, redemption, purchase or other acquisition, the aggregate amount of such payments, distributions, redemptions, purchases and other acquisitions subsequent to December 31, 1945 exceeds:

•  50% of the aggregate of net income available for common stock subsequent to December 31, 1945, if at the end of the calendar month immediately preceding the dividend declaration date, the common stock equity (as defined below) is less than 20% of total capitalization, including surplus; or

•  75% of the aggregate of net income available for common stock subsequent to December 31, 1945, if at the end of the calendar month immediately preceding the dividend declaration date, the common stock equity is less than 25% but at least 20% of total capitalization, including surplus;

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provided that, if and so long as the common stock equity is at least 25% of total capitalization, including surplus, all restrictions on the payment of dividends on, the purchase or acquisition of, or distributions on our common stock shall be eliminated; provided further that,

•  after we have reached a ratio of 25% of total capitalization once, dividends on, distributions on, or purchases or other acquisitions of our common stock aggregating an amount in excess of 75% of our current year’s earnings available for common stock shall not be made if after such payment, distribution, purchase or acquisition, the ratio of common stock equity to total capitalization, including surplus, will be less than 25% but not less than 20%; and

•  after we have reached a ratio of 20% of total capitalization once, dividends on, distributions on, or purchases or other acquisitions of our common stock aggregating an amount in excess of 50% of our current year’s earnings available for common stock shall not be made if after such payment, distribution, purchase or acquisition, the ratio of common stock equity to total capitalization, including surplus, will be less than 20%.

      As used herein under the caption “Description of Preferred Stock — Dividend Restrictions and Certain Covenants”, the term “common stock equity” shall mean the aggregate of the stated value of our common stock (including proceeds from the sale or issuance of our common stock since December 31, 1945) and surplus.

Transfer Agent

      The transfer agent and registrar for our $5 Preferred Stock, $4.20 Serial Preferred, and $5.44 Serial Preferred is Computershare (formerly EquiServe). The transfer agent and registrar for our other series of preferred stock will be set forth in the applicable prospectus supplement.

Future Series of Preferred Stock

      Our board of directors may authorize the preferred stock to be issued from time to time as one or more series of $5 Preferred Stock, Serial Preferred Stock, or Preferred Stock A. All shares of preferred stock of all series shall be of equal rank and all shares of any particular series of preferred stock shall be identical, except as to the date or dates from which dividends thereon shall be cumulative. For each new series of preferred stock, the board of directors, within the limitations and restrictions stated in Article Fourth of our charter, may establish:

•  the number of shares in each series;

•  the annual dividend rate;

•  the date from which dividends shall be cumulative;

•  the redemption price(s) (if any);

•  the terms and conditions on which shares may be redeemed;

•  any sinking fund provisions;

•  amounts payable upon voluntary or involuntary liquidation;

•  the terms and conditions upon which shares may be converted; and

•  the qualifications, limitations or restrictions thereof.

GLOBAL SECURITIES

      We may issue some or all of our securities of any series as global securities. We will register each global security in the name of a depositary identified in the applicable prospectus supplement. The global securities will be deposited with a depositary or nominee or custodian for the depositary and will bear a

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legend regarding restrictions on exchanges and registration of transfer as discussed below and any other matters to be provided pursuant to the indenture.

      As long as the depositary or its nominee is the registered holder of a global security, that person will be considered the sole owner and holder of the global security and the securities represented by it for all purposes under the securities and the indenture. Except in limited circumstances, owners of a beneficial interest in a global security:

•  will not be entitled to have the global security or any securities represented by it registered in their names;

•  will not receive or be entitled to receive physical delivery of certificated securities in exchange for the global security; and

•  will not be considered to be the owners or holders of the global security or any securities represented by it for any purposes under the securities or the indenture.

      We will make all payments of principal and any premium and interest on a global security to the depositary or its nominee as the holder of the global security. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. These laws may impair the ability to transfer beneficial interests in a global security.

      Ownership of beneficial interests in a global security will be limited to institutions having accounts with the depositary or its nominee, called “participants” for purposes of this discussion, and to persons that hold beneficial interests through participants. When a global security is issued, the depositary will credit on its book entry, registration and transfer system the principal amounts of securities represented by the global security to the accounts of its participants. Ownership of beneficial interests in a global security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by:

•  the depositary, with respect to participants’ interests; or

•  any participant, with respect to interests of persons held by the participants on their behalf.

      Payments by participants to owners of beneficial interests held through the participants will be the responsibility of the participants. The depositary may from time to time adopt various policies and procedures governing payments, transfers, exchanges and other matters relating to beneficial interests in a global security. None of the following will have any responsibility or liability for any aspect of the depositary’s or any participant’s records relating to, or for payments made on account of, beneficial interests in a global security, or for maintaining, supervising or reviewing any records relating to those beneficial interests:

•  us or our affiliates;

•  the trustee under any indenture; or

•  any agent of any of the above.

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PLAN OF DISTRIBUTION

      We may sell the securities in any of three ways:

•  through underwriters or dealers;

•  directly through a limited number of institutional purchasers or to a single purchaser; or

•  through agents.

      The applicable prospectus supplement will set forth the terms under which the securities are offered, including:

•  the names of any underwriters, dealers or agents;

•  the purchase price and the net proceeds to us from the sale;

•  any underwriting discounts and other items constituting underwriters’ compensation;

•  any initial public offering price; and

•  any discounts or concessions allowed, re-allowed or paid to dealers.

      We or any underwriters or dealers may change from time to time any initial public offering price and any discounts or concessions allowed or re-allowed or paid to dealers.

      If we use underwriters in the sale, the securities will be acquired by the underwriters for their own account and may be resold in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of the sale. Unless the applicable prospectus supplement states otherwise, the obligations of the underwriters to purchase the securities will be subject to certain conditions, and the underwriters will be severally obligated to purchase all of the securities, except that in certain cases involving a default by an underwriter, less than all of the securities may be purchased. If we sell securities through an agent, the applicable prospectus supplement will state the name and any commission payable by us to the agent. Unless the prospectus supplement states otherwise, any agent acting for us will be acting on a best efforts basis for the period of its appointment.

      The applicable prospectus supplement will state whether we will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase securities at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified future date. These contracts will be subject to the conditions set forth in the prospectus supplement. Additionally, the prospectus supplement will set forth the commission payable for solicitation of these contracts.

      Agents and underwriters may be entitled, under agreements with us, to indemnification by us against certain civil liabilities, including liabilities under the Securities Act of 1933.

EXPERTS

      The financial statements and the related financial statement schedule incorporated in this prospectus by reference from Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference (which report on the consolidated financial statements expresses an unqualified opinion and includes an explanatory paragraph concerning the adoption of new accounting principles in 2003), and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

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LEGAL MATTERS

      Frank A. Schiller, Vice President of Progress Energy Service Company, LLC and counsel to Progress Energy Carolinas, Inc. and Hunton & Williams LLP, our outside counsel, will issue opinions about the legality of the offered securities for us. In addition, the prospectus supplement may identify special counsel that will issue certain opinions regarding South Carolina law. The underwriters will be advised about issues relating to this offering by their legal counsel, Dewey Ballantine LLP of New York, New York. As of November 30, 2005, Mr. Schiller owned 10,806 shares of Progress Energy, Inc. common stock. Mr. Schiller is acquiring additional shares of Progress Energy, Inc. common stock at regular intervals as a participant in the Progress Energy 401(k) Savings & Stock Ownership Plan.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

		Estimated
Item		Total
Securities and Exchange Commission registration fee		$	117,700.00
Rating agencies’ fees		$	700,000.00
Trustees’ fees		$	150,000.00
Counsels’ fees		$	350,000.00
Accountants’ fees		$	100,000.00
Printing and engraving		$	60,000.00
Blue Sky fees		$	25,000.00
Miscellaneous		$	25,000.00
	Total	$	1,527,700.00

      All amounts other than the registration fee are estimated.

Item 15. Indemnification of Directors and Officers

      Sections 55-8-51 through 55-8-57 of the General Statutes of North Carolina and our Restated Charter and By-Laws provide for indemnification of our directors and officers in a variety of circumstances, which may include liabilities under the Securities Act of 1933, as amended. We have insurance covering our expenditures which might arise in connection with the lawful indemnification of our directors and officers for their liabilities and expenses. Our officers and directors also have insurance which insures them against certain liabilities and expenses.

      As authorized by the NCBCA, and to the fullest extent permitted by it, our Restated Charter provides that a director will not be liable to us or to any of our shareholders for monetary damages arising from the director’s breach of his or her duties as a director. The NCBCA permits these provisions, except for (i) acts or omissions that the director at the time of the breach knew or believed were clearly in conflict with the best interests of the corporation, (ii) unlawful distributions, and (iii) any transaction from which the director derived an improper personal benefit.

      The NCBCA provides directors and officers with a right to indemnification relating to official conduct when the director or officer has been wholly successful in defense of a claim. In addition, a director or officer without the right to indemnification may apply to a court for an order requiring the corporation to indemnify the director or officer in a particular case.

      The NCBCA also authorizes a corporation to indemnify directors and officers beyond the indemnification rights granted by law. Our By-laws provide that any person who is or was a director or officer and any person who at our request serves or has served as an officer or director (or in any position of similar authority) of any other corporation or other enterprise, including as an individual trustee under any employee benefit plan, will be reimbursed and indemnified against liability and expenses incurred by that person in connection with any action, suit or proceeding arising out of that person’s status with us as a director or officer if that person’s acts or omissions were not known or believed by him or her to be clearly in conflict with our best interests.

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Item 16. Exhibits

Exhibit
Number				Description
	1(	a)	—	Form of Underwriting Agreement for First Mortgage Bonds.
	1(	b)	—	Form of Underwriting Agreement for Senior Notes.
	1(	c)	—	Form of Underwriting Agreement for Debt Securities.
	1(	d)	—	Form of Underwriting Agreement for Preferred Stock.
	*3(	a)	—	Restated Charter of Carolina Power & Light Company, as amended (filed as Exhibit 3(i) to Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997, File No. 1-3382).
	*3(	b)	—	By-Laws of Carolina Power & Light Company, as amended (filed as Exhibit 3(ii)(b) to Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004, File No. 1-3382).
	*4(	a)	—	Mortgage and Deed of Trust dated as of May 1, 1940 between Carolina Power & Light Company and The Bank of New York (formerly, Irving Trust Company) and Frederick G. Herbst (Douglas J. MacInnes, Successor), Trustees and the First through Fifth Supplemental Indentures thereto (Exhibit 2(b), File No. 2-64189); the Sixth through Sixty-sixth Supplemental Indentures (Exhibit 2(b)-5, File No. 2-16210; Exhibit 2(b)-6, File No. 2-16210; Exhibit 4(b)-8, File No. 2-19118; Exhibit 4(b)-2, File No. 2-22439; Exhibit 4(b)-2, File No. 2-24624; Exhibit 2(c), File No. 2- 27297; Exhibit 2(c), File No. 2-30172; Exhibit 2(c), File No. 2-35694; Exhibit 2(c), File No. 2-37505; Exhibit 2(c), File No. 2-39002; Exhibit 2(c), File No. 2-41738; Exhibit 2(c), File No. 2-43439; Exhibit 2(c), File No. 2-47751; Exhibit 2(c), File No. 2-49347; Exhibit 2(c), File No. 2-53113; Exhibit 2(d), File No. 2-53113; Exhibit 2(c), File No. 2-59511; Exhibit 2(c), File No. 2-61611; Exhibit 2(d), File No. 2-64189; Exhibit 2(c), File No. 2-65514; Exhibits 2(c) and 2(d), File No. 2- 66851; Exhibits 4(b)-1, 4(b)-2, and 4(b)-3, File No. 2-81299; Exhibits 4(c)-1 through 4(c)-8, File No. 2-95505; Exhibits 4(b) through 4(h), File No. 33-25560; Exhibits 4(b) and 4(c), File No. 33-33431; Exhibits 4(b) and 4(c), File No. 33-38298; Exhibits 4(h) and 4(I), File No. 33-42869; Exhibits 4(e)-(g), File No. 33-48607; Exhibits 4(e) and 4(f), File No. 33-55060; Exhibits 4(e) and 4(f), File No. 33-60014; Exhibits 4(a) and 4(b) to Post-Effective Amendment No. 1, File No. 33-38349; Exhibit 4(e), File No. 33-50597; Exhibit 4(e) and 4(f), File No. 33-57835; Exhibit to Current Report on Form 8-K dated August 28, 1997, File No. 1-3382; Form of Carolina Power & Light Company First Mortgage Bond, 6.80% Series Due August 15, 2007 filed as Exhibit 4 to Form 10-Q for the period ended September 30, 1998, File No. 1-3382; Exhibit 4(b), File No. 333-69237; and Exhibit 4(c) to Current Report on Form 8-K dated March 19, 1999, File No. 1-3382); the Sixty-eighth Supplemental Indenture (Exhibit No. 4(b) to Current Report on Form 8-K dated April 20, 2000, File No. 1-3382); the Sixty-ninth and Seventieth Supplemental Indentures (Exhibit Nos. 4(b)(2) and 4(b)(3) respectively, to the Form 10-K dated March 29, 2001, File No. 1-3382); the Seventy-first Supplemental Indenture (Exhibit No. 4(b)(2) to the Form 10-K dated March 28, 2002, File No. 1-3382); the Seventy-second Supplemental Indenture (Exhibit 4 to Current Report on Form 8-K dated September 12, 2003, File No. 1-3382); the Seventy-third Supplemental Indenture (Exhibit 4 to Current Report on Form 8-K dated March 22, 2005, File No. 1-3382); and the Seventy-forth Supplemental Indenture (Exhibit 4 to Current Report on Form 8-K dated November 30, 2005, File No. 1-3382).
	*4(	b)	—	Form of Supplemental Indenture relating to First Mortgage Bonds (Filed as Exhibit 4(b) to Carolina Power & Light Company’s Registration Statement on Form S-3 (No. 333-58800) as filed with the SEC on April 12, 2001).

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Exhibit
Number				Description
	*4(	c)	—	Indenture (for Senior Notes), dated as of March 1, 1999 between Carolina Power & Light Company and The Bank of New York, as Trustee (filed as Exhibit No. 4(a) to Current Report on Form 8-K dated March 19, 1999, File No. 1-3382), and the First and Second Supplemental Senior Note Indentures thereto (Exhibit No. 4(b) to Current Report on Form 8-K dated March 19, 1999, File No. 1-3382); Exhibit No. 4(a) to Current Report on Form 8-K dated April 20, 2000, File No. 1-3382).
	*4(	d)	—	Indenture (For Debt Securities), dated as of October 28, 1999 between Carolina Power & Light Company and The Chase Manhattan Bank, as Trustee (filed as Exhibit 4(a) to Current Report on Form 8-K dated November 5, 1999, File No. 1-3382).
	*4(	e)	—	Form of Indenture relating to Debt Securities (filed as Exhibit 4(e) to Carolina Power & Light Company’s Registration Statement on Form S-3 (No. 333-58800) as filed with the SEC on April 12, 2001).
	*4(	f)	—	Description of Preferred Stock and the rights of the holders thereof (as set forth in Article Fourth of the Restated Charter of Carolina Power & Light Company, as amended, and Sections 1-9, 15, 16, 22-27, and 31 of the By-Laws of Carolina Power & Light Company, as amended, each incorporated by reference in Exhibits 3(a) and 3(b), respectively, hereto).
	**5		—	Opinion of Hunton & Williams LLP.
	12		—	Computation of Ratio of Earnings to Fixed Charges.
	23(	a)	—	Consent of Deloitte & Touche LLP.
	**23(	b)	—	The consent of Hunton & Williams LLP is contained in its opinion filed as Exhibits 5.
	**24		—	The Power of Attorney is contained on the signature page of this Registration Statement.
	**25(	a)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Mortgage relating to First Mortgage Bonds.
	**25(	b)	—	Form T-2 Statement of Eligibility under the Trust Indenture Act of 1939 of Douglas J. MacInnes, as Trustee under the Mortgage relating to First Mortgage Bonds.
	**25(	c)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Indenture (For Senior Notes).
	**25(	d)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of JPMorgan Chase Bank, N.A. as Trustee under the Indenture (For Debt Securities).
	†25(	e)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee under an additional indenture relating to Debt Securities.

* Incorporated herein by reference as indicated.

**	Previously filed on July 28, 2005.
†	To be filed on Form 305(b)(2) (or an appropriate successor form) subsequent to effectiveness of this Registration Statement and incorporated by reference.

Item 17. Undertakings

      (a) The undersigned registrant hereby undertakes:

      1. file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

      (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

      (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range

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may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b), if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

      (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

      2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

      4. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

      (i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

      (ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

      5. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

      The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such

II-4

purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

      (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

      (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

      (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

      (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

      (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

      (d) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee under the Indenture to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of the Trust Indenture Act.

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Raleigh, State of North Carolina, on the 22nd day of December, 2005.

Carolina Power & Light Company

d/b/a Progress Energy Carolinas, Inc.

By:  /s/ Fred N. Day IV
 

Fred N. Day IV

President and Chief Executive Officer

      Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ Robert B. McGehee* Robert B. McGehee	Chairman of the Board	December 22, 2005
/s/ Fred N. Day IV Fred N. Day IV	President and Chief Executive Officer	December 22, 2005
/s/ Peter M. Scott III Peter M. Scott III	Executive Vice President and Chief Financial Officer	December 22, 2005
/s/ Jeffrey M. Stone Jeffrey M. Stone	Controller and Chief Accounting Officer	December 22, 2005
/s/ Edwin B. Borden* Edwin B. Borden	Director	December 22, 2005
/s/ James E. Bostic, Jr.* James E. Bostic, Jr.	Director	December 22, 2005
/s/ David L. Burner* David L. Burner	Director	December 22, 2005
/s/ Charles W. Coker* Charles W. Coker	Director	December 22, 2005
/s/ Richard L. Daugherty* Richard L. Daugherty	Director	December 22, 2005
/s/ W. D. Frederick, Jr.* W. D. Frederick, Jr.	Director	December 22, 2005

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Signature		Title	Date
/s/ W. Steven Jones* W. Steven Jones		Director	December 22, 2005
/s/ William O. McCoy* William O. McCoy		Director	December 22, 2005
/s/ E. Marie McKee* E. Marie McKee		Director	December 22, 2005
/s/ John H. Mullin, III* John H. Mullin, III		Director	December 22, 2005
/s/ Peter S. Rummell* Peter S. Rummell		Director	December 22, 2005
/s/ Carlos A. Saladrigas* Carlos A. Saladrigas		Director	December 22, 2005
/s/ Theresa M. Stone* Theresa M. Stone		Director	December 22, 2005
/s/ Jean Giles Wittner* Jean Giles Wittner		Director	December 22, 2005
*By:	/s/ Frank A. Schiller Frank A. Schiller, as Attorney-in-Fact

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INDEX TO EXHIBITS

Exhibit
Number				Description
	1(	a)	—	Form of Underwriting Agreement for First Mortgage Bonds.
	1(	b)	—	Form of Underwriting Agreement for Senior Notes.
	1(	c)	—	Form of Underwriting Agreement for Debt Securities.
	1(	d)	—	Form of Underwriting Agreement for Preferred Stock.
	*3(	a)	—	Restated Charter of Carolina Power & Light Company, as amended (filed as Exhibit 3(i) to Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997, File No. 1-3382).
	*3(	b)	—	By-Laws of Carolina Power & Light Company, as amended (filed as Exhibit 3(ii)(b) to Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004, File No. 1-3382).
	*4(	a)	—	Mortgage and Deed of Trust dated as of May 1, 1940 between Carolina Power & Light Company and The Bank of New York (formerly, Irving Trust Company) and Frederick G. Herbst (Douglas J. MacInnes, Successor), Trustees and the First through Fifth Supplemental Indentures thereto (Exhibit 2(b), File No. 2-64189); the Sixth through Sixty-sixth Supplemental Indentures (Exhibit 2(b)-5, File No. 2-16210; Exhibit 2(b)-6, File No. 2-16210; Exhibit 4(b)-8, File No. 2-19118; Exhibit 4(b)-2, File No. 2-22439; Exhibit 4(b)-2, File No. 2-24624; Exhibit 2(c), File No. 2-27297; Exhibit 2(c), File No. 2-30172; Exhibit 2(c), File No. 2-35694; Exhibit 2(c), File No. 2-37505; Exhibit 2(c), File No. 2-39002; Exhibit 2(c), File No. 2-41738; Exhibit 2(c), File No. 2-43439; Exhibit 2(c), File No. 2-47751; Exhibit 2(c), File No. 2-49347; Exhibit 2(c), File No. 2-53113; Exhibit 2(d), File No. 2-53113; Exhibit 2(c), File No. 2-59511; Exhibit 2(c), File No. 2-61611; Exhibit 2(d), File No. 2-64189; Exhibit 2(c), File No. 2-65514; Exhibits 2(c) and 2(d), File No. 2-66851; Exhibits 4(b)-1, 4(b)-2, and 4(b)-3, File No. 2-81299; Exhibits 4(c)-1 through 4(c)-8, File No. 2-95505; Exhibits 4(b) through 4(h), File No. 33-25560; Exhibits 4(b) and 4(c), File No. 33-33431; Exhibits 4(b) and 4(c), File No. 33-38298; Exhibits 4(h) and 4(I), File No. 33-42869; Exhibits 4(e)-(g), File No. 33-48607; Exhibits 4(e) and 4(f), File No. 33-55060; Exhibits 4(e) and 4(f), File No. 33-60014; Exhibits 4(a) and 4(b) to Post-Effective Amendment No. 1, File No. 33-38349; Exhibit 4(e), File No. 33-50597; Exhibit 4(e) and 4(f), File No. 33-57835; Exhibit to Current Report on Form 8-K dated August 28, 1997, File No. 1-3382; Form of Carolina Power & Light Company First Mortgage Bond, 6.80% Series Due August 15, 2007 filed as Exhibit 4 to Form 10-Q for the period ended September 30, 1998, File No. 1-3382; Exhibit 4(b), File No. 333-69237; and Exhibit 4(c) to Current Report on Form 8-K dated March 19, 1999, File No. 1-3382); the Sixty-eighth Supplemental Indenture (Exhibit No. 4(b) to Current Report on Form 8-K dated April 20, 2000, File No. 1-3382); the Sixty-ninth and Seventieth Supplemental Indentures (Exhibit Nos. 4(b)(2) and 4(b)(3) respectively, to the Form 10-K dated March 29, 2001, File No. 1-3382); the Seventy-first Supplemental Indenture (Exhibit No. 4(b)(2) to the Form 10-K dated March 28, 2002, File No. 1-3382); the Seventy-second Supplemental Indenture (Exhibit 4 to Current Report on Form 8-K dated September 12, 2003, File No. 1-3382); the Seventy-third Supplemental Indenture (Exhibit 4 to Current Report on Form 8-K dated March 22, 2005, File No. 1-3382); and the Seventy-forth Supplemental Indenture (Exhibit 4 to Current Report on Form 8-K dated November 30, 2005, File No. 1-3382).
	*4(	b)	—	Form of Supplemental Indenture relating to First Mortgage Bonds (Filed as Exhibit 4(b) to Carolina Power & Light Company’s Registration Statement on Form S-3 (No. 333-58800) as filed with the SEC on April 12, 2001).

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Exhibit
Number				Description
	*4(	c)	—	Indenture (for Senior Notes), dated as of March 1, 1999 between Carolina Power & Light Company and The Bank of New York, as Trustee (filed as Exhibit No. 4(a) to Current Report on Form 8-K dated March 19, 1999, File No. 1-3382), and the First and Second Supplemental Senior Note Indentures thereto (Exhibit No. 4(b) to Current Report on Form 8-K dated March 19, 1999, File No. 1-3382); Exhibit No. 4(a) to Current Report on Form 8-K dated April 20, 2000, File No. 1-3382).
	*4(	d)	—	Indenture (For Debt Securities), dated as of October 28, 1999 between Carolina Power & Light Company and The Chase Manhattan Bank, as Trustee (filed as Exhibit 4(a) to Current Report on Form 8-K dated November 5, 1999, File No. 1-3382).
	*4(	e)	—	Form of Indenture relating to Debt Securities (filed as Exhibit 4(e) to Carolina Power & Light Company’s Registration Statement on Form S-3 (No. 333-58800) as filed with the SEC on April 12, 2001).
	*4(	f)	—	Description of Preferred Stock and the rights of the holders thereof (as set forth in Article Fourth of the Restated Charter of Carolina Power & Light Company, as amended, and Sections 1-9, 15, 16, 22-27, and 31 of the By-Laws of Carolina Power & Light Company, as amended, each incorporated by reference in Exhibits 3(a) and 3(b), respectively, hereto).
	**5		—	Opinion of Hunton & Williams LLP.
	12		—	Computation of Ratio of Earnings to Fixed Charges.
	23(	a)	—	Consent of Deloitte & Touche LLP.
	**23(	b)	—	The consent of Hunton & Williams LLP is contained in its opinion filed as Exhibits 5.
	**24		—	The Power of Attorney is contained on the signature page of this Registration Statement.
	**25(	a)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Mortgage relating to First Mortgage Bonds.
	**25(	b)	—	Form T-2 Statement of Eligibility under the Trust Indenture Act of 1939 of Douglas J. MacInnes, as Trustee under the Mortgage relating to First Mortgage Bonds.
	**25(	c)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Indenture (For Senior Notes).
	**25(	d)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of JPMorgan Chase Bank, N.A. as Trustee under the Indenture (For Debt Securities).
	†25(	e)	—	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee under an additional indenture relating to Debt Securities.

* Incorporated herein by reference as indicated.

**	Previously filed on July 28, 2005.
†	To be filed on Form 305(b)(2) (or an appropriate successor form) subsequent to effectiveness of this Registration Statement and incorporated by reference.

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Exhibit 1(a)

CAROLINA POWER & LIGHT COMPANY
d/b/a PROGRESS ENERGY CAROLINAS, INC.

First Mortgage Bonds

UNDERWRITING AGREEMENT

                    , 20__

To the Representative named in Schedule I hereto
of the Underwriters named in Section 1 herein

Dear Ladies and Gentlemen:

     The undersigned Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (the “Company”) hereby confirms its agreement with each of the several Underwriters hereinafter named as follows:

     1. Underwriters and Representative. The term “Underwriters” as used in this Underwriting Agreement (this “Agreement”) shall be deemed to mean the following firms, and any underwriter substituted as provided in paragraph 7 hereof, and the term “Underwriter” shall be deemed to mean any one of such Underwriters:

     [                    ]

     [                    ]

     [                    ]

     The term “Representative” as used herein shall be deemed to mean the firm or the firms named in Schedule I hereto, collectively. If any firm or firms named as Representative in Schedule I hereto are the only firm or firms serving as underwriters, then the terms “Underwriters” and “Representative,” as used herein, shall each be deemed to refer to such firm or firms. If more than one firm is named in Schedule I hereto, such firms represent, jointly and severally, that they have been authorized by the Underwriters to execute this Agreement on their behalf and to act for them as Representative in the manner herein provided. All obligations of the Underwriters hereunder are several and not joint. If more than one firm is named as Representative in Schedule I hereto, any action under or in respect of this Agreement may be taken by such firms jointly as the Representative or by one of the firms acting on behalf of the Representative, and such action will be binding upon all the Underwriters.

     2. Description of Securities. The Company proposes to issue and sell its First Mortgage Bonds of the designation, with the terms and in the amount specified in Schedule I hereto (the “Securities”), under its Mortgage and Deed of Trust, dated as of May 1, 1940, with The Bank of New York (formerly Irving Trust Company) and Frederick G. Herbst (Douglas J. MacInnes, successor), as Trustees, as supplemented and as it will be further supplemented by a supplemental indenture relating to the Securities (the “Supplemental Indenture”), in substantially the form heretofore delivered to the Representative, said Mortgage and Deed of Trust as

supplemented and to be supplemented by the Supplemental Indenture being hereinafter referred to as the “Mortgage.”

     3. Representations and Warranties of the Company. The Company represents and warrants to each of the Underwriters that:

     (a) The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3, as amended (No. 333-___) (the “New Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), for the registration of up to an aggregate of $                     principal amount of First Mortgage Bonds, Debt Securities and Preferred Stock in unallocated amounts. The New Registration Statement also constituted post-effective amendment no. 1 to a registration statement on Form S-3 (No. 333-___) (the “Post-Effective Amendment” and together with the New Registration Statement, the “Registration Statement”) under the Securities Act relating to an aggregate of $                     principal amount of the Company’s securities, which had been previously registered under the Securities Act but remained unsold at the time the Post-Effective Amendment became effective. The Registration Statement contained a combined prospectus for the sale of up to an aggregate of $                     principal amount of the Company’s First Mortgage Bonds, Debt Securities and Preferred Stock (the “Registered Securities”) in unallocated amounts. The Registration Statement was declared effective by the Commission on                     , 20___. As of the date hereof, the Company has sold an aggregate of $                     principal amount of the Registered Securities. The term “Registration Statement” shall be deemed to include all amendments to the date hereof and all documents incorporated by reference therein (the “Incorporated Documents”). The base prospectus filed as part of the Registration Statement, in the form in which it has most recently been filed with the Commission prior to the date of this Agreement, is hereinafter called the “Basic Prospectus.” The Basic Prospectus included in the Registration Statement, as supplemented by a preliminary prospectus supplement, dated                     , 20___, relating to the Securities, and all prior amendments or supplements thereto (other than amendments or supplements relating to Registered Securities other than the Securities), including the Incorporated Documents, is hereinafter referred to as the “Preliminary Prospectus.” The Preliminary Prospectus, as amended and supplemented, including the Incorporated Documents, at or immediately prior to the Applicable Time (as defined below) is hereinafter called the “Pricing Prospectus.” The Basic Prospectus included in the Registration Statement, as it is to be supplemented by a prospectus supplement, dated on the date hereof, substantially in the form delivered to the Representative prior to the execution hereof, relating to the Securities (the “Prospectus Supplement”) and all prior amendments or supplements thereto (other than amendments or supplements relating to securities of the Company other than the Securities), including the Incorporated Documents, is hereinafter referred to as the “Prospectus.” Any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Securities Act and the filing of any document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), deemed to be incorporated therein after the date hereof and prior

2

to the termination of the offering of the Securities by the Underwriters; and any references herein to the terms “Registration Statement” or “Prospectus” at a date after the filing of the Prospectus Supplement shall be deemed to refer to the Registration Statement or the Prospectus, as the case may be, as each may be amended or supplemented prior to such date.

     For purposes of this Agreement, the “Applicable Time” is ___(New York City time) on the date of this Agreement; the documents listed in Schedule II, taken together, are collectively referred to as the “Pricing Disclosure Package.”

     (b) The Registration Statement, at the time and date it was declared effective by the Commission, complied, and the Registration Statement, the Prospectus and the Mortgage, as of the date hereof and at the Closing Date (as defined herein), will comply, in all material respects, with the applicable provisions of the Securities Act and the Trust Indenture Act of 1939, as amended (the “1939 Act”), and the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Pricing Disclosure Package as of the Applicable Time did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Prospectus, as of its date and at the Closing Date, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this subparagraph (b) shall not apply to statements or omissions made in reliance upon and in conformity with information furnished herein or in writing to the Company by the Representative or by or on behalf of any Underwriter through the Representative expressly for use in the Prospectus or to any statements in or omissions from the Statements of Eligibility (Forms T-1 and T-2) of the Trustees. The Incorporated Documents, at the time they were each filed with the Commission, complied in all material respects with the applicable requirements of the Exchange Act and the instructions, rules and regulations of the Commission thereunder; and any documents so filed and incorporated by reference subsequent to the date hereof and prior to the termination of the offering of the Securities by the Underwriters will, at the time they are each filed with the Commission, comply in all material respects with the requirements of the Exchange Act and the instructions, rules and regulations of the Commission thereunder; and, when read together with the Registration Statement, the Pricing Prospectus, the Permitted Free Writing Prospectuses (as defined in paragraph 5(a) hereof) and the Prospectus, none of such documents included or includes or will include any untrue statement of a material fact or omitted or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each Permitted Free Writing Prospectus listed on Schedule II does not conflict in any material respect with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus.

3

     (c) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of North Carolina; has corporate power and authority to own, lease and operate its properties and to conduct its business as contemplated under this Agreement and the other material agreements to which it is a party; and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (d) The historical financial statements incorporated by reference in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly the financial condition and operations of the Company at the respective dates or for the respective periods to which they apply; such financial statements have been prepared in each case in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except that the quarterly financial statements, if any, incorporated by reference from any Quarterly Reports on Form 10-Q contain condensed footnotes prepared in accordance with applicable Exchange Act rules and regulations; and Deloitte & Touche LLP, which has audited certain of the financial statements is an independent registered public accounting firm as required by the Securities Act or the Exchange Act and the rules and regulations of the Commission thereunder.

     (e) Except as reflected in, or contemplated by, the Registration Statement and the Pricing Prospectus, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, and prior to the Closing Date, (i) there has not been any material adverse change in the business, properties, results of operations or financial condition of the Company, (ii) there has not been any material transaction entered into by the Company other than transactions contemplated by the Registration Statement and the Pricing Prospectus or transactions arising in the ordinary course of business and (iii) the Company has no material contingent obligation that is not disclosed in the Registration Statement and the Pricing Prospectus that could likely result in a material adverse change in the business, properties, results of operations or financial condition of the Company.

     (f) The Company has full power and authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and the fulfillment of the terms hereof on the part of the Company to be fulfilled have been duly authorized by all necessary corporate action of the Company in accordance with the provisions of its restated charter (the “Charter”), by-laws and applicable law; and the Securities, when issued and delivered as provided herein, will constitute legal, valid and binding obligations of the Company in accordance with their terms subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws affecting mortgagees’ and other creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity and except for the effect on enforceability of federal or state law limiting,

4

delaying or prohibiting the making of payments outside the United States); provided, however, that certain remedies, waivers and other provisions of the Securities may not be enforceable, but such unenforceability will not render the Securities invalid as a whole or affect the judicial enforcement of (i) the obligation of the Company to repay the principal, together with the interest thereon as provided in the Securities or (ii) the right of the Trustees to exercise their right to foreclose under the Mortgage.

     (g) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, the Charter, the Company’s by-laws, applicable law or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (h) The Securities conform in all material respects to the description contained in the Pricing Disclosure Package and the Prospectus.

     (i) The Company has no subsidiaries that meet the definition of “significant subsidiary” as defined in Section 210.1-02(w) of Regulation S-X promulgated under the Securities Act.

     (j) The Mortgage (A) has been duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery of the Supplemental Indenture by the Trustees, constitutes a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity and except for the effect on enforceability of federal or state law limiting, delaying or prohibiting the making of payments outside the United States); and (B) conforms in all material respects to the description thereof in the Prospectus. The Mortgage has been qualified under the 1939 Act.

     (k) The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”).

     (l) Except as described in or contemplated by the Pricing Prospectus, there are no pending or, to the knowledge of the Company, threatened actions, suits or proceedings (regulatory or otherwise) against or affecting the Company or its properties that are likely in the aggregate to result in any material adverse change in the business, properties, results of operations or financial condition of the Company, or that are likely in the aggregate to materially and adversely affect the Mortgage, the Securities or the consummation of this Agreement or the transactions contemplated herein or therein.

5

     (m) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions herein contemplated or for the due execution, delivery or performance of the Mortgage by the Company, except such as have already been made or obtained or as may be required under the Securities Act or state securities laws and except for the qualification of the Mortgage under the 1939 Act.

     4. Purchase and Sale. On the basis of the representations, warranties and covenants herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to each of the Underwriters, severally and not jointly, and each such Underwriter agrees, severally and not jointly, to purchase from the Company, the respective principal amount of Securities set forth opposite the name of such Underwriter below a purchase price of                     % of the principal amount thereof:

Underwriter	Principal Amount of Securities
[                    ]
[                    ]
[                    ]
Total

     5. Reoffering by Underwriters. The Underwriters agree to make promptly a bona fide public offering of the Securities to the public for sale as set forth in the Prospectus, subject, however, to the terms and conditions of this Agreement. The Underwriters agree that (i) no sales of the Securities will occur before investors are presented with the information that is contained in the Pricing Disclosure Package and (ii) such information that is presented to investors is consistent with the information that is contained in the Pricing Disclosure Package.

     6. Free Writing Prospectuses.

     (a) The Company represents and agrees that, without the prior consent of the Representative, it has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus; each Underwriter represents and agrees that, without the prior consent of the Company and the Representative, it has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus or a free writing prospectus that is not required to be filed by the Company pursuant to Rule 433 under the Securities Act (an “Underwriter Free Writing Prospectus”). Any such free writing prospectus the use of which is consented to by the Company and the Representative is referred to herein as a “Permitted Free Writing Prospectus”. The only Permitted Free Writing Prospectus as of the time of this Agreement is the pricing term sheet referred to in paragraph 6(b) below.

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     (b) The Company agrees to file a pricing term sheet, in the form of Schedule I hereto and approved by the Representative pursuant to Rule 433(d) under the Securities Act within the time period prescribed by such Rule.

     (c) The Company and the Underwriters have complied and will comply with the requirements of Rule 433 under the Securities Act applicable to any free writing prospectus, including timely Commission filing where required and legending.

     (d) The Company agrees that if at any time following issuance of a Permitted Free Writing Prospectus any event occurred or occurs as a result of which such Permitted Free Writing Prospectus would conflict in any material respect with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representative and, if requested by the Representative, will prepare and furnish without charge to each Underwriter a Permitted Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in a Permitted Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative, expressly for use therein.

7. Time and Place of Closing; Default of Underwriters.

     (a) Payment for the Securities shall be made at the office of Hunton & Williams LLP, located at 421 Fayetteville Street Mall, Raleigh, North Carolina 27601 on the date specified in Schedule I hereto against delivery of the Securities at the office of The Bank of New York, Corporate Trust Department, 101 Barclay Street, Suite 8W, New York, New York, 10286 or such other place, time and date as the Representative and the Company may agree. The hour and date of such delivery and payment are herein called the “Closing Date.” Payment for the Securities shall be by wire transfer of immediately available funds against delivery to The Depository Trust Company or to The Bank of New York, as custodian for The Depository Trust Company, in fully registered global form registered in the name of CEDE & Co., as nominee for The Depository Trust Company, for the respective accounts specified by the Representative not later than the close of business on the business day prior to the Closing Date or such other date and time not later than the Closing Date as agreed by The Depository Trust Company or The Bank of New York. For the purpose of expediting the checking of the certificates by the Representative, the Company agrees to make the Securities available to the Representative not later than 10:00 A.M. New York time, on the last full business day prior to the Closing Date at said office of The Bank of New York.

     (b) If one or more Underwriters shall, for any reason other than a reason permitted hereunder, fail to take up and pay for the principal amount of the Securities to be purchased by such one or more Underwriters, the Company shall immediately notify the Representative, and the non-defaulting Underwriters shall be obligated to take up and pay for (in addition to the respective principal amount of the Securities set forth opposite

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their respective names in paragraph 4) the principal amount of such Securities that such defaulting Underwriter or Underwriters failed to take up and pay for, up to a principal amount thereof equal to 10% of the principal amount of such Securities. Each non-defaulting Underwriter shall do so on a pro rata basis according to the amounts set forth opposite the name of such non-defaulting Underwriter in paragraph 4, such non-defaulting Underwriters shall have the right, within 24 hours of receipt of such notice, either to take up and pay for (in such proportion as may be agreed upon among them), or to substitute another Underwriter or Underwriters, satisfactory to the Company, to take up and pay for the remaining principal amount of the Securities that the defaulting Underwriter or Underwriters agreed but failed to purchase. If any unpurchased Securities still remain, then the Company or the Representative shall be entitled to an additional period of 24 hours within which to procure another party or parties, members of the National Association of Securities Dealers, Inc. (or if not members of such Association, who are not eligible for membership in said Association and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with said Association’s Conduct Rules) and satisfactory to the Company, to purchase or agree to purchase such unpurchased Securities on the terms herein set forth. In any such case, either the Representative or the Company shall have the right to postpone the Closing Date for a period not to exceed three full business days from the date agreed upon in accordance with this paragraph 7, in order that the necessary changes in the Registration Statement and Prospectus and any other documents and arrangements may be effected. If (i) neither the non-defaulting Underwriters nor the Company has arranged for the purchase of such unpurchased Securities by another party or parties as above provided and (ii) the Company and the non-defaulting Underwriters have not mutually agreed to offer and sell the Securities other than the unpurchased Securities, then this Agreement shall terminate without any liability on the part of the Company or any Underwriter (other than an Underwriter that shall have failed or refused, in accordance with the terms hereof, to purchase and pay for the principal amount of the Securities that such Underwriter has agreed to purchase as provided in paragraph 4 hereof), except as otherwise provided in paragraph 8 and paragraph 9 hereof.

8. Covenants of the Company. The Company covenants with each Underwriter that:

     (a) As soon as reasonably possible after the execution and delivery of this Agreement, the Company will file the Prospectus with the Commission pursuant to Rule 424 under the Securities Act (“Rule 424”), setting forth, among other things, the necessary information with respect to the terms of offering of the Securities and make any other required filings pursuant to Rule 433 under the Securities Act. Upon request, the Company will promptly deliver to the Representative and to counsel for the Underwriters, to the extent not previously delivered, one fully executed copy or one conformed copy, certified by an officer of the Company, of the Registration Statement, as originally filed, and of all amendments thereto, if any, heretofore or hereafter made (other than those relating solely to Registered Securities other than the Securities), including any post-effective amendment (in each case including all exhibits filed therewith and all documents incorporated therein not previously furnished to the Representative), including signed copies of each consent and certificate included therein or filed as an exhibit

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thereto, and will deliver to the Representative for distribution to the Underwriters as many conformed copies of the foregoing (excluding the exhibits, but including all documents incorporated therein) as the Representative may reasonably request. The Company will also send to the Underwriters as soon as practicable after the date of this Agreement and thereafter from time to time as many copies of the Prospectus and the Preliminary Prospectus as the Representative may reasonably request for the purposes required by the Securities Act.

     (b) During such period (not exceeding nine months) after the commencement of the offering of the Securities as the Underwriters may be required by law to deliver a Prospectus, if any event relating to or affecting the Company, or of which the Company shall be advised in writing by the Representative shall occur, which in the Company’s reasonable opinion (after consultation with counsel for the Representative) should be set forth in a supplement to or an amendment of the Prospectus in order to make the Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser, or if it is necessary to amend the Prospectus to comply with the Securities Act, the Company will forthwith at its expense prepare and furnish to the Underwriters and dealers named by the Representative a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus which will supplement or amend the Prospectus so that as supplemented or amended it will comply with the Securities Act and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading. In case any Underwriter is required to deliver a Prospectus after the expiration of nine months after the commencement of the offering of the Securities, the Company, upon the request of the Representative, will furnish to the Representative, at the expense of such Underwriter, a reasonable quantity of a supplemented or amended prospectus, or supplements or amendments to the Prospectus, complying with Section 10(a) of the Securities Act.

     (c) The Company will make generally available to its security holders, as soon as reasonably practicable, but in any event not later than 16 months after the end of the fiscal quarter in which the filing of the Prospectus pursuant to Rule 424 occurs, an earnings statement (in form complying with the provisions of Section 11(a) of the Securities Act, which need not be certified by independent public accountants) covering a period of twelve months beginning not later than the first day of the Company’s fiscal quarter next following the filing of the Prospectus pursuant to Rule 424.

     (d) The Company will use its best efforts promptly to do and perform all things to be done and performed by it hereunder prior to the Closing Date and to satisfy all conditions precedent to the delivery by it of the Securities.

     (e) As soon as reasonably possible after the Closing Date, the Company will cause the Supplemental Indenture to be recorded in all recording offices in the States of North Carolina and South Carolina in which the property intended to be subject to the lien of the Mortgage is located.

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     (f) The Company will advise the Representative, or the Representative’s counsel, promptly of the filing of the Prospectus pursuant to Rule 424 and of any amendment or supplement to the Prospectus or Registration Statement or of official notice of institution of proceedings for, or the entry of, a stop order suspending the effectiveness of the Registration Statement and, if such a stop order should be entered, use its best efforts to obtain the prompt removal thereof.

     (g) The Company will use its best efforts to qualify the Securities, as may be required, for offer and sale under the Blue Sky or legal investment laws of such jurisdictions as the Representative may designate and will file and make in each year such statements or reports as are or may be reasonably required by the laws of such jurisdictions; provided, however, that the Company shall not be required to qualify as a foreign corporation or dealer in securities, or to file any general consents to service of process, under the laws of any jurisdiction.

     (h) Prior to the termination of the offering of the Securities, the Company will not file any amendment to the Registration Statement or supplement to the Pricing Prospectus or the Prospectus (in each case other than amendments or supplements relating to Registered Securities other than the Securities) which shall not have previously been furnished to the Representative or of which the Representative shall not previously have been advised or to which the Representative shall reasonably object in writing and which has not been approved by the Representative or its counsel.

     9. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the printing and filing of the Registration Statement and the printing of this Agreement, (ii) the delivery of the Securities to the Underwriters, (iii) the fees and disbursements of the Company’s counsel and accountants, (iv) the expenses in connection with the qualification of the Securities under securities laws in accordance with the provisions of paragraph 8(g), including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith, such fees and disbursements not to exceed $7,500, (v) the printing and delivery to the Underwriters of copies of the Registration Statement and all amendments thereto, of the Preliminary Prospectus, any Permitted Free Writing Prospectus and the Prospectus and any amendments or supplements thereto, (vi) the printing and delivery to the Underwriters of copies of the Blue Sky Survey and (vii) the preparation, execution, filing and recording by the Company of the Supplemental Indenture (such filing and recordation to be promptly made after execution and delivery of the Supplemental Indenture to the Trustees under the Mortgage in the counties in which the mortgaged property of the Company is located); and the Company will pay all taxes, if any (but not including any transfer taxes), on the issue of the Securities and the filing and recordation of the Supplemental Indenture. The fees and disbursements of Underwriters’ counsel shall be paid by the Underwriters (subject, however, to the provisions of this paragraph 9 requiring payment by the Company of fees and disbursements not to exceed $7,500); provided, however, that if this Agreement is terminated in accordance with the provisions of paragraph 10, 11 or 13 hereof, the Company shall reimburse the Representative for the account of the Underwriters for the fees and disbursements of Underwriters’ counsel. The Company shall not be required to pay any amount for any expenses of the Representative or of any other of the Underwriters except as provided in

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paragraph 8 hereof and in this paragraph 9. The Company shall not in any event be liable to any of the Underwriters for damages on account of the loss of anticipated profit.

     10. Conditions of Underwriters’ Obligations. The several obligations of the Underwriters to purchase and pay for the Securities shall be subject to the accuracy of the representations and warranties on the part of the Company as of the date hereof and the Closing Date, to the performance by the Company of its obligations to be performed hereunder prior to the Closing Date, and to the following further conditions:

     (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect on the Closing Date and no proceedings for that purpose shall be pending before, or, to the Company’s knowledge, threatened by, the Commission on the Closing Date. The Representative shall have received, prior to payment for the Securities, a certificate dated the Closing Date and signed by the Chairman, President, Treasurer or a Vice President of the Company to the effect that no such stop order is in effect and that no proceedings for such purpose are pending before or, to the knowledge of the Company, threatened by the Commission.

     (b) At the time of execution of this Agreement, or such later date as shall have been consented to by the Representative, there shall have been issued, and on the Closing Date there shall be in full force and effect, orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Securities, which shall not contain any provision unacceptable to the Representative by reason of its being materially adverse to the Company (it being understood that no such order in effect on the date of this Agreement and heretofore furnished to the Representative or counsel for the Underwriters contains any such unacceptable provision).

     (c) At the Closing Date, the Representative shall receive favorable opinions from: (1) Hunton & Williams LLP, counsel to the Company, which opinion shall be satisfactory in form and substance to counsel for the Underwriters, and (2) Dewey Ballantine LLP, counsel for the Underwriters, in each of which opinions (except Hunton & Williams LLP as to matters of North Carolina law and except as to subdivision (vi) (as to documents incorporated by reference, at the time they were filed with the Commission) as to which Dewey Ballantine LLP need express no opinion) said counsel may rely as to all matters of North Carolina and South Carolina law upon the opinions of Frank A. Schiller, Esq., Vice President of Progress Energy Service Company LLC, acting as counsel to the Company, and [South Carolina counsel], respectively, to the effect that:

     (i) The Mortgage has been duly and validly authorized by all necessary corporate action, has been duly and validly executed and delivered by the Company, and is a valid and binding mortgage of the Company enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws affecting mortgagees’ and other creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealing (with this opinion only required in the opinions of Hunton & Williams LLP and Dewey Ballantine LLP as to the supplemental indentures subsequent to the Sixty-fourth

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Supplemental Indenture); provided, however, that certain remedies, waivers and other provisions of the Mortgage may not be enforceable, but such unenforceability will not render the Mortgage invalid as a whole or affect the judicial enforcement of (i) the obligation of the Company to repay the principal, together with the interest thereon as provided in the Securities or (ii) the right of the Trustees to exercise their right to foreclose under the Mortgage;

     (ii) The Mortgage has been duly qualified under the 1939 Act;

     (iii) Assuming authentication of the Securities by the Trustee in accordance with the Mortgage and delivery of the Securities to and payment for the Securities by the Underwriters, as provided in this Agreement, the Securities have been duly and validly authorized, executed and delivered and are legal, valid and binding obligations of the Company enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other laws affecting mortgagees’ and other creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealings, and are entitled to the benefits of the security afforded by the Mortgage, and are secured equally and ratably with all other bonds outstanding under the Mortgage except insofar as any sinking or other fund may afford additional security for the bonds of any particular series;

     (iv) The statements made in the Prospectus under the caption “Description of First Mortgage Bonds” and in the Prospectus Supplement under the captions “Certain Terms of the Bonds” and “Description of First Mortgage Bonds,” insofar as they purport to constitute summaries of the documents referred to therein, are accurate summaries in all material respects;

     (v) This Agreement has been duly and validly authorized, executed and delivered by the Company;

     (vi) The Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses and the Prospectus, at the time each was filed with, or transmitted for filing to, the Commission pursuant to Rule 424 (except as to the financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein, upon which such opinions need not pass), complied as to form in all material respects with the requirements of the Securities Act and the 1939 Act and the applicable instructions, rules and regulations of the Commission thereunder; the documents or portions thereof filed with the Commission pursuant to the Exchange Act and deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus and the Prospectus pursuant to Item 12 of Form S-3 (except as to financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein and that part of the Registration Statement that constitutes the Statements of Eligibility on Form T-1 and Form T-2, upon which such opinions need not pass), at the time they were filed with the Commission, complied as to

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form in all material respects with the requirements of the Exchange Act and the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement has become effective under the Securities Act and, to the best of the knowledge of said counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and not withdrawn, and no proceedings for a stop order with respect thereto are threatened or pending under Section 8 of the Securities Act; and

     (vii) Nothing has come to the attention of said counsel that would lead them to believe that the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and nothing has come to the attention of said counsel that would lead them to believe that (x) the Pricing Disclosure Package as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (y) the Prospectus, as of its date and, as amended or supplemented, at the Closing Date, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except as to financial statements and other financial and statistical data constituting a part of the Registration Statement, the Pricing Disclosure Package or the Prospectus or incorporated by reference therein and that part of the Registration Statement that constitutes the Statements of Eligibility on Form T-1 and Form T-2, upon which such opinions need not pass);

     (d) At the Closing Date, the Representative shall receive from Frank A. Schiller, Esq., Vice President of Progress Energy Service Company, LLC, acting as counsel to the Company, a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the same effect with respect to the matters enumerated in subdivisions (i), (iii), (v) and (vii) of subparagraph (c) of this paragraph 10 as the opinions required by said subparagraph (c), and to the further effect that:

     (i) The Company is a validly organized and existing corporation under the laws of the State of North Carolina and is in good standing under the laws of the State of North Carolina and is duly qualified to do business in the State of South Carolina;

     (ii) The Company is duly authorized by its Charter to conduct the business that it is now conducting as set forth in the Prospectus;

     (iii) The Company has valid and subsisting franchises, licenses and permits adequate for the conduct of its business, except where the failure to hold such franchises, licenses and permits would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company;

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     (iv) The Company has good and marketable title, with minor exceptions, restrictions and reservations in conveyances, and defects that are of the nature ordinarily found in properties of similar character and magnitude and that, in his opinion, will not in any substantial way impair the security afforded by the Mortgage, to all the properties described in the granting clauses of the Mortgage and upon which the Mortgage purports to create a lien, except certain rights-of-way over private property on which are located transmission and distribution lines formerly owned by the Tide Water Power Company (merged into the Company on February 29, 1952), title to which can be perfected by condemnation proceedings. The description in the Mortgage of the above-mentioned properties (including those formerly owned by Tide Water Power Company) is legally sufficient to constitute the Mortgage a lien upon said properties, including without limitation properties hereafter acquired by the Company (other than those expressly excepted and reserved therefrom). Said properties constitute substantially all the permanent physical properties and franchises (other than those expressly excepted and reserved therefrom) of the Company and are held by the Company free and clear of all liens and encumbrances except the lien of the Mortgage and Excepted Encumbrances, as defined in the Mortgage. The Company has followed the practice generally of acquiring (i) certain rights-of-way and easements and certain small parcels of fee property appurtenant thereto and for use in conjunction therewith and (ii) certain other properties of small or inconsequential value, without an examination of title and, as to the title to lands affected by said rights-of-way and easements, of not examining the title of the lessor or grantor whenever the lands affected by such rights-of-way and easements are not of such substantial value as in the opinion of the Company to justify the expense attendant upon examination of titles in connection therewith. In the opinion of said counsel, such practice of the Company is consistent with sound economic practice and with the method followed by other companies engaged in the same business and is reasonably adequate to assure the Company of good and marketable title to all such property acquired by it. It is the opinion of said counsel that any such conditions or defects as may be covered by the above recited exceptions are not, except as to certain rights-of-way on which are located transmission lines acquired from Tide Water Power Company, substantial and would not materially interfere with the Company’s use of such properties or with its business operations. The Company has the right of eminent domain in the States of North Carolina and South Carolina under which it may, if necessary, perfect or obtain title to privately owned land or acquire easements or rights-of-way required for use or used by the Company in its public utility operations;

     (v) The Company’s Mortgage and Deed of Trust dated as of May 1, 1940 and the First through the [Seventy-fourth] Supplemental Indentures thereto have been filed for record both as a real estate mortgage and as a chattel mortgage or security interest in all counties in the States of North Carolina and South Carolina in which any of the property described in the Mortgage as subject thereunder to the lien thereof is located; and the Supplemental Indenture relating to the Securities is in proper form for filing for record both as a real estate

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mortgage and as a security interest in all counties in the States of North Carolina and South Carolina in which any of the property described therein or in the Mortgage as subject to the lien of the Mortgage is located. By virtue of filing financing statements with the Offices of the Secretaries of State of North Carolina and South Carolina, the Trustees have a perfected security interest in that portion of the collateral described therein to which Article 9 of the Uniform Commercial Code of North Carolina or South Carolina is applicable and in which a security interest is perfected by the central filing of a financing statement to perfect a security interest in collateral of a transmitting utility under the UCC;

     (vi) The Mortgage constitutes a valid, direct and first mortgage lien of record upon all franchises and properties now owned by the Company (other than those expressly excepted therefrom and other than those franchises and properties which are not, individually or in the aggregate, material to the Company or the security afforded by the Mortgage) situated in the States of North Carolina and South Carolina, as described or referred to in the granting clauses of the Mortgage, subject to the exceptions as to bankruptcy, insolvency and other laws stated in subdivision (i) of subparagraph (c) above;

     (vii) The issuance and sale of the Securities have been duly authorized by all necessary corporate action on the part of the Company;

     (viii) Orders have been entered by the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Securities, and to the best of the knowledge of said counsel, said orders are still in force and effect; and no further filing with, approval, authorization, consent or other order of any public board or body (except such as have been obtained under the Securities Act and as may be required under the state securities or Blue Sky laws of any jurisdiction) is legally required for the consummation of the transactions contemplated in this Agreement;

     (ix) Except as described in or contemplated by the Prospectus, there are no pending actions, suits or proceedings (regulatory or otherwise) against the Company or any properties that are likely, in the aggregate, to result in any material adverse change in the business, properties, results of operations or financial condition of the Company or that are likely, in the aggregate, to materially and adversely affect the Mortgage, the Securities or the consummation of this Agreement, or the transactions contemplated herein or therein; and

     (x) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not (i) result in a breach of any of the terms or provisions of, or constitute a default under, the Charter or the Company’s by-laws or (ii) result in a material breach of any terms or provisions of, or constitute a default under, any applicable law, indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or

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court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would have a material adverse effect on business, properties, results of operations or financial condition of the Company.

     In said opinion such counsel may rely as to all matters of South Carolina law on the opinion of [South Carolina counsel].

     (e) At the Closing Date, the Representative shall receive from [South Carolina counsel], a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the effect that:

     (i) The Company is an electrical utility engaged in the business of generating, transmitting, distributing and selling electric power to the general public in the States of South Carolina and North Carolina, and the Company conducts its South Carolina retail operations subject to the jurisdiction of the South Carolina Public Service Commission pursuant to South Carolina Code Annotated, Sections 58-27-10 et seq. (1976 as amended);

     (ii) The Company is duly qualified to transact business in the State of South Carolina;

     (iii) The Company’s Mortgage and Deed of Trust dated as of May 1, 1940, and the First through the [Seventy-fourth] Supplemental Indentures thereto, have been recorded and filed in such manner and in such places as may be required by law, in the State of South Carolina, in order to fully preserve and protect the security of the bondholders and all rights of the Trustees thereunder. By virtue of filing financing statements with the Offices of the Secretaries of State of North Carolina and South Carolina, the Trustees have a perfected security interest in that portion of the collateral described therein to which Article 9 of the Uniform Commercial Code of North Carolina or South Carolina is applicable and in which a security interest is perfected by the central filing of a financing statement to perfect a security interest in collateral of a transmitting utility under the UCC;

     (iv) The Supplemental Indenture relating to the Securities is in the proper form for the filing as a real estate mortgage and a security agreement in all counties in the State of South Carolina where the Mortgage is filed and the Supplemental Indenture is to be filed and upon such filing creates a lien and/or security interest in that property located within such counties that is described in the Mortgage or in the Supplemental Indenture as being subject to the lien of the Mortgage (except that property which has been expressly excepted from the lien in the Supplemental Indenture and the Mortgage, as heretofore supplemented); and

     (v) Said counsel has reviewed the opinion letter of even date therewith addressed to you by Frank A. Schiller, Esq., Vice President of Progress Energy

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Service Company, LLC, and said counsel concurs in the opinions which Mr. Schiller has expressed therein insofar as they relate to the laws of the State of South Carolina.

     (f) The Representative shall have received on the date hereof and shall receive on the Closing Date from Deloitte & Touche LLP, a letter addressed to the Representative containing statements and information of the type ordinarily included in accountants’ SAS 72 “comfort letters” to underwriters with respect to the audit reports, financial statements and certain financial information contained in or incorporated by reference into the Prospectus.

     (g) At the Closing Date, the Representative shall receive a certificate of the Chairman, President, Treasurer or a Vice President of the Company, dated the Closing Date, to the effect that the representations and warranties of the Company in this Agreement are true and correct as of the Closing Date.

     (h) The Permitted Free Writing Prospectus, and any other material required pursuant to Rule 433(d) under the Securities Act, shall have been filed by the Company with the Commission within the applicable time periods prescribed by Rule 433.

     (h) All legal proceedings taken in connection with the sale and delivery of the Securities shall have been satisfactory in form and substance to counsel for the Underwriters, and the Company, as of the Closing Date, shall be in compliance with any governing orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina, except where the failure to comply with such orders would not be material to the offering or validity of the Securities.

     In case any of the conditions specified above in this paragraph 10 shall not have been fulfilled or waived by 2:00 P.M. on the Closing Date, this Agreement may be terminated by the Representative by delivering written notice thereof to the Company. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 8 and 9 hereof.

     11. Conditions of the Company’s Obligations. The obligations of the Company to deliver the Securities shall be subject to the following conditions:

     (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect on the Closing Date, and no proceedings for that purpose shall be pending before or threatened by the Commission on the Closing Date.

     (b) Prior to 12:00 Noon, New York time, on the day following the date of this Agreement, or such later date as shall have been consented to by the Company, there shall have been issued and on the Closing Date there shall be in full force and effect orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale by the Company of the Securities, which shall not contain any provision unacceptable to the Company by reason of its being materially adverse to the Company (it being understood that no such order in effect as of the date of this Agreement contains any such unacceptable provision).

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     In case any of the conditions specified in this paragraph 11 shall not have been fulfilled at the Closing Date, this Agreement may be terminated by the Company by delivering written notice thereof to the Representative. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 8 and 9 hereof.

     12. Indemnification.

     (a) The Company agrees to indemnify and hold harmless each Underwriter, each officer and director of each Underwriter and each person who controls any Underwriter within the meaning of Section 15 of the Securities Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each such Underwriter, each such officer and director, and each such controlling person for any legal or other expenses (including to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement, or alleged untrue statement, of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus, or in the Registration Statement or Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or in any free writing prospectus used by the Company other than a Permitted Free Writing Prospectus, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the indemnity agreement contained in this paragraph 12 shall not apply to any such losses, claims, damages, liabilities, expenses or actions arising out of or based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with information furnished herein or in writing to the Company by any Underwriter through the Representative expressly for use in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus, or any amendment or supplement to any thereof, or arising out of, or based upon, statements in or omissions from that part of the Registration Statement that shall constitute the Statements of Eligibility under the 1939 Act (Form T-1 and Form T-2) of the Trustees, and provided, further, that the indemnity agreement contained in this paragraph 12 shall not inure to the benefit of any Underwriter (or of any person controlling such Underwriter) on account of any such losses, claims, damages, liabilities, expenses or actions arising from the sale of the Securities to any person if a copy of the Permitted Free Writing Prospectus or Prospectus (excluding documents incorporated by reference therein) shall not have been given or sent to such person by or on behalf of such Underwriter at or prior to the entry into the contract of sale, unless such Prospectus or Permitted Free Writing Prospectus failed to correct the omission or misstatement. The indemnity agreement of the Company contained in this paragraph 12 and the representations and warranties of the Company contained in paragraph 3 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter, and such officer or director or any such controlling person and shall survive the delivery of the Securities. The Underwriters agree to notify

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promptly the Company, and each other Underwriter, of the commencement of any litigation or proceedings against them or any of them, or any such officer or director or any such controlling person, in connection with the sale of the Securities.

     (b) Each Underwriter severally, and not jointly, agrees to indemnify and hold harmless the Company, its officers who signed the Registration Statement and its directors, and each person who controls the Company within the meaning of Section 15 of the Securities Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each of them for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages, or liabilities, or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses, the Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or any Underwriter Free Writing Prospectus used by such Underwriter (but only to the extent that the content of such Underwriter Free Writing Prospectus that is subject to indemnification is materially inconsistent with the information contained in the Permitted Free Writing Prospectus or the Prospectus) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished herein or in writing to the Company by such Underwriter or through the Representative on behalf of such Underwriter expressly for use in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectus or the Prospectus or any amendment or supplement to any thereof. The indemnity agreement of all the respective Underwriters contained in this paragraph 12 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company or any other Underwriter, or any such officer or director or any such controlling person, and shall survive the delivery of the Securities. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers or directors, or any such controlling person, in connection with the sale of the Securities.

     (c) The Company and each of the Underwriters agree that, upon the receipt of notice of the commencement of any action against it, its officers or directors, or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, it will promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder. The Company and each of the Underwriters agree that the notification required by the preceding sentence shall be a material term of this Agreement. The omission so to notify such indemnifying party or parties of any such action shall relieve such indemnifying party or parties from any liability that it or they may have to the indemnified party on account of any indemnity agreement contained herein if such indemnifying party was materially prejudiced by such omission, but shall

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not relieve such indemnifying party or parties from any liability that it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, such indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of such action, in which event such defense shall be conducted by counsel chosen by such indemnifying party (or parties) and satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, and such defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of such action, such indemnifying parties will reimburse such indemnified party or parties for the reasonable fees and expenses of any counsel retained by them, as such expenses are incurred; provided, however, if the defendants (including any impleaded parties) in any such action include both the indemnified party and the indemnifying party, and counsel for the indemnified party shall have concluded, in its reasonable judgment, that there may be a conflict of interest involved in the representation by such counsel of both the indemnifying party and the indemnified party, the indemnified party or parties shall have the right to select separate counsel, satisfactory to the indemnifying party, to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to one local counsel) representing the indemnified parties who are parties to such action). Each of the Company and the several Underwriters agrees that without the other party’s prior written consent, which consent shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any claim in respect of which indemnification may be sought under the indemnification provisions of this Agreement, unless such settlement, compromise or consent (i) includes an unconditional release of such other party from all liability arising out of such claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of such other party.

     (d) If the indemnification provided for in subparagraphs (a) or (b) above is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions that resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and

20

the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Securities as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subparagraph (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to above in this subparagraph (d). The rights of contribution contained in this paragraph 12 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter of the Company and shall survive delivery of the Securities. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this subparagraph (d), each officer and director of each Underwriter and each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. The Underwriters’ respective obligations to contribute pursuant to this subparagraph (d) are several in proportion to the number of Securities set forth opposite their respective names in paragraph 4 and not joint.

     (e) For purposes of this paragraph 12, it is understood and agreed that the only information provided by the Underwriters expressly for use in the Registration Statement, the Pricing Prospectus, the Permitted Free Writing Prospectuses and Prospectus were the following parts of the section titled “Underwriting”:                                                             .

     13. Termination Date of this Agreement. This Agreement may be terminated by the Representative at any time prior to the Closing Date by delivering written notice thereof to the Company, if on or after the date of this Agreement but prior to such time (a) there shall have occurred any general suspension of trading in securities on the New York Stock Exchange, or there shall have been established by the New York Stock Exchange or by the Commission or by any federal or state agency or by the decision of any court, any limitation on prices for such trading or any restrictions on the distribution of securities or (b) there shall have occurred any new outbreak of hostilities including, but not limited to, significant escalation of hostilities that existed prior to the date of this Agreement, or any national or international calamity or crisis, or any material adverse change in the financial markets of the United States, the effect of which outbreak, escalation, calamity or crisis, or material adverse change on the financial markets of the United States shall be such as to make it impracticable, in the reasonable judgment of the Representative, for the Underwriters to enforce contracts for the sale of the Securities, or (c) the Company shall have sustained a substantial loss by fire, flood, accident or other calamity that

21

renders it impracticable, in the reasonable judgment of the Representative, to consummate the sale of the Securities and the delivery of the Securities by the several Underwriters at the initial public offering price, or (d) there shall have been any downgrading or any notice of any intended or potential downgrading in the rating accorded the Company’s securities by any “nationally recognized statistical rating organization” as that term is defined by the Commission for the purposes of Securities Act Rule 436(g)(2), or any such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Securities, or any of the Company’s other outstanding debt, the effect of which in the reasonable judgment of the Representative, makes it impracticable or inadvisable to consummate the sale of the Securities and the delivery of the Securities by the several Underwriters at the initial public offering price or (e) there shall have been declared, by either federal or New York authorities, a general banking moratorium. This Agreement may also be terminated at any time prior to the Closing Date if in the reasonable judgment of the Representative the subject matter of any amendment or supplement to the Registration Statement, the Pricing Prospectus or Prospectus (other than an amendment or supplement relating solely to the activity of any Underwriter or Underwriters) filed after the execution of this Agreement shall have materially impaired the marketability of the Securities. Any termination hereof pursuant to this paragraph 13 shall be without liability of any party to any other party except as otherwise provided in paragraphs 8 and 9.

     14. Miscellaneous. The validity and interpretation of this Agreement shall be governed by the laws of the State of New York. Unless otherwise specified, time of day refers to New York City time. This Agreement shall inure to the benefit of, and be binding upon, the Company, the several Underwriters, and with respect to the provisions of paragraph 12 hereof, the officers and directors and each controlling person referred to in paragraph 12 hereof, and their respective successors. Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. The term “successors” as used in this Agreement shall not include any purchaser, as such purchaser, of any of the Securities from any of the several Underwriters.

     15. Nature of Relationship. The Company acknowledges and agrees that (i) in connection with all aspects of each transaction contemplated by this Agreement, the Company and the Underwriters have an arms length business relationship that creates no fiduciary duty on the part of any party and each expressly disclaims any fiduciary relationship, (ii) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, (iii) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate, and (iv) any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.

     16. Notices. All communications hereunder shall be in writing or by telefax and, if to the Underwriters, shall be mailed, transmitted by any standard form of telecommunication or delivered to the Representative at                                                                                 , and if

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to the Company, shall be mailed or delivered to it at 410 South Wilmington Street, Raleigh, North Carolina 27601, Attention: Thomas R. Sullivan, Treasurer.

     17. Counterparts. This Agreement may be simultaneously executed in counterparts, each of which when so executed shall be deemed to be an original. Such counterparts shall together constitute one and the same instrument.

     18. Defined Terms. Unless otherwise defined herein, capitalized terms used in this Underwriting Agreement shall have the meanings assigned to them in the Registration Statement.

[The remainder of this page has been intentionally left blank]

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     If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed duplicate hereof whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.

		Very truly yours,
		CAROLINA POWER & LIGHT COMPANY
		d/b/a PROGRESS ENERGY CAROLINAS, INC.
		By:
			Authorized Representative
Accepted as of the date first above written, as Underwriter named in, and as the Representative of the other Underwriters named in, Section 1 of this Agreement.
[REPRESENTATIVE]
By:
	Authorized Representative

[Signature Page of First Mortgage Bond Underwriting Agreement]

SCHEDULE I

PRICING TERM SHEET

Underwriting Agreement dated                     , 20__

Representative(s):

Supplemental Indenture:	, dated as of                     , 20__
Designation:	First Mortgage Bonds, ____% Series due ____
	Principal Amount:	, ___
	Date of Maturity:	$
	Interest Rate: _____% per annum, payable                      and                      of each year, commencing                     , ____.
	Purchase Price: ______% of the principal amount thereof, plus accrued interest, if any, from                     , ____, if settlement occurs after that date.
	Public Offering Price: ______% of the principal amount thereof, plus accrued interest, if any, from                     , ____, if settlement occurs after that date.
Redemption Terms:
Closing Date:	, ___

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov (and more specifically, at the URL link http://sec.gov/cgi-bin/browse-edgar?company=carolina+power&CIK=&filenum=&State=&SIC=&owner=include&a ction=getcompany). Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free at 1-8[xx-xxx-xxxx].

SCHEDULE II

PRICING DISCLOSURE PACKAGE

1)	Prospectus dated                     , 20___
2)	Preliminary Prospectus Supplement dated                     , 20___(which shall be deemed to include the Incorporated Documents)
3)	Permitted Free Writing Prospectuses

a) Pricing Term Sheet attached as Schedule I hereto

EX-1.A

Ex-1(a)

EX-1.B

Exhibit 1(b)

CAROLINA POWER & LIGHT COMPANY
d/b/a PROGRESS ENERGY CAROLINAS, INC.

Senior Notes, ________% Series Due _______

UNDERWRITING AGREEMENT

                    , 20___          

To the Representative named in Schedule I hereto
of the Underwriters named in Section 1 herein

Dear Ladies and Gentlemen:

     The undersigned Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (the “Company”) hereby confirms its agreement with each of the several Underwriters hereinafter named as follows:

     1. Underwriters and Representative. The term “Underwriters” as used in this Underwriting Agreement (this “Agreement”) shall be deemed to mean the following firms, and any underwriter substituted as provided in paragraph 6 hereof, and the term “Underwriter” shall be deemed to mean any one of such Underwriters:

[                    ]
[                    ]
[                    ]

     The term “Representative” as used herein shall be deemed to mean the firm or the firms named in Schedule I hereto, collectively. If any firm or firms named as Representative in Schedule I hereto are the only firm or firms serving as underwriters, then the terms “Underwriters” and “Representative,” as used herein, shall each be deemed to refer to such firm or firms. If more than one firm is named in Schedule I hereto, such firms represent, jointly and severally, that they have been authorized by the Underwriters to execute this Agreement on their behalf and to act for them as Representative in the manner herein provided. All obligations of the Underwriters hereunder are several and not joint. If more than one firm is named as Representative in Schedule I hereto, any action under or in respect of this Agreement may be taken by such firms jointly as the Representative or by one of the firms acting on behalf of the Representative, and such action will be binding upon all the Underwriters.

     2. Description of Securities. The Company proposes to issue and sell its Senior Notes of the designation, with the terms and in the amount specified in Schedule I hereto (the “Securities”) under a governing indenture (together with any supplements, the “Senior Note Indenture”) each between the Company and The Bank of New York, as trustee (the “Senior Note Trustee”), in substantially the form heretofore delivered to the Representative. Until the Release Date (as defined in the Senior Note Indenture), the Securities will be secured by one or more series of Senior Note First Mortgage Bonds (as defined in the Senior Note Indenture) issued and delivered by the Company to the Senior Note Trustee. On the Release Date, the Securities will

cease to be secured by the Senior Note First Mortgage Bonds and will become unsecured obligations of the Company. The Senior Note First Mortgage Bonds securing the Notes will be issued under the Company’s Mortgage and Deed of Trust, dated as of May 1, 1940, with The Bank of New York (formerly Irving Trust Company) and Frederick G. Herbst (Douglas J. MacInnes, successor) as Mortgage Trustees, as supplemented and as it will be further supplemented by a supplemental indenture relating to the Senior Note First Mortgage Bonds (the “Supplemental Indenture”), in substantially the form heretofore delivered to the Representative, said Mortgage and Deed of Trust as supplemented and to be supplemented by the Supplemental Indenture being hereinafter referred to as the “Mortgage”.

     3. Representations and Warranties of the Company. The Company represents and warrants to each of the Underwriters that:

     (a) The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3, as amended (No. 333-          ) (the “New Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), for the registration of up to an aggregate of $                     principal amount of First Mortgage Bonds, Senior Notes, Debt Securities and Preferred Stock in unallocated amounts. The New Registration Statement also constituted post-effective amendment no. 1 to a registration statement on Form S-3 (No. 333-            ) (the “Post-Effective Amendment” and together with the New Registration Statement, the “Registration Statement”) under the Securities Act relating to an aggregate of $                     principal amount of the Company’s securities, which had been previously registered under the Securities Act but remained unsold at the time the Post-Effective Amendment became effective. The Registration Statement contained a combined prospectus for the sale of up to an aggregate of $                     principal amount of the Company’s First Mortgage Bonds, Senior Notes, Debt Securities and Preferred Stock (the “Registered Securities”) in unallocated amounts. The Registration Statement was declared effective by the Commission on                     , 20___. As of the date hereof, the Company has sold an aggregate of $                     principal amount of the Registered Securities. The term “Registration Statement” shall be deemed to include all amendments to the date hereof and all documents incorporated by reference therein (the “Incorporated Documents”). The base prospectus filed as part of the Registration Statement, in the form in which it has most recently been filed with the Commission prior to the date of this Agreement, is hereinafter called the “Basic Prospectus.” The Basic Prospectus included in the Registration Statement, as supplemented by a preliminary prospectus supplement, dated                     , 20___, relating to the Securities, and all prior amendments or supplements thereto (other than amendments or supplements relating to Registered Securities other than the Securities), including the Incorporated Documents, is hereinafter referred to as the “Preliminary Prospectus.” The Preliminary Prospectus, as amended and supplemented, including the Incorporated Documents, at or immediately prior to the Applicable Time (as defined below) is hereinafter called the “Pricing Prospectus.” The Basic Prospectus included in the Registration Statement, as it is to be supplemented by a prospectus supplement, dated on the date hereof, substantially in the form delivered to the Representative prior to the execution hereof, relating to the Securities (the “Prospectus Supplement”) and all prior amendments or supplements thereto (other than amendments or supplements relating to securities of the Company

2

other than the Securities), including the Incorporated Documents, is hereinafter referred to as the “Prospectus.” Any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Securities Act and the filing of any document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), deemed to be incorporated therein after the date hereof and prior to the termination of the offering of the Securities by the Underwriters; and any references herein to the terms “Registration Statement” or “Prospectus” at a date after the filing of the Prospectus Supplement shall be deemed to refer to the Registration Statement or the Prospectus, as the case may be, as each may be amended or supplemented prior to such date.

     For purposes of this Agreement, the “Applicable Time” is                      (New York City time) on the date of this Agreement; the documents listed in Schedule II, taken together, are collectively referred to as the “Pricing Disclosure Package.”

     (b) The Registration Statement, at the time and date it was declared effective by the Commission, complied, and the Registration Statement, the Prospectus, the Senior Note Indenture and the Mortgage, as of the date hereof and at the Closing Date (as defined herein), will comply, in all material respects, with the applicable provisions of the Securities Act and the Trust Indenture Act of 1939, as amended (the “1939 Act”), and the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Pricing Disclosure Package as of the Applicable Time did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Prospectus, as of its date and at the Closing Date, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this subparagraph (b) shall not apply to statements or omissions made in reliance upon and in conformity with information furnished herein or in writing to the Company by the Representative or by or on behalf of any Underwriter through the Representative expressly for use in the Prospectus or to any statements in or omissions from the Statements of Eligibility (Forms T-1 and T-2) of the trustees under the Mortgage and the Senior Note Indenture. The Incorporated Documents, at the time they were each filed with the Commission, complied in all material respects with the applicable requirements of the Exchange Act and the instructions, rules and regulations of the Commission thereunder; and any documents so filed and incorporated by reference subsequent to the date hereof and prior to the termination of the offering of the Securities by the Underwriters will, at the time they are each filed with the Commission, comply in all material respects with the requirements of the Exchange Act and the instructions, rules and regulations of the Commission thereunder; and, when read together with the Registration Statement, the Pricing Prospectus, the Permitted Free Writing Prospectuses

3

(as defined in paragraph 5(a) hereof) and the Prospectus, none of such documents included or includes or will include any untrue statement of a material fact or omitted or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each Permitted Free Writing Prospectus listed on Schedule II does not conflict in any material respect with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus.

     (c) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of North Carolina; has corporate power and authority to own, lease and operate its properties and to conduct its business as contemplated under this Agreement and the other material agreements to which it is a party; and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (d) The historical financial statements incorporated by reference in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly the financial condition and operations of the Company at the respective dates or for the respective periods to which they apply; such financial statements have been prepared in each case in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except that the quarterly financial statements, if any, incorporated by reference from any Quarterly Reports on Form 10-Q contain condensed footnotes prepared in accordance with applicable Exchange Act rules and regulations; and Deloitte & Touche LLP, which has audited certain of the financial statements is an independent registered public accounting firm as required by the Securities Act or the Exchange Act and the rules and regulations of the Commission thereunder.

     (e) Except as reflected in, or contemplated by, the Registration Statement and the Pricing Prospectus, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, and prior to the Closing Date, (i) there has not been any material adverse change in the business, properties, results of operations or financial condition of the Company, (ii) there has not been any material transaction entered into by the Company other than transactions contemplated by the Registration Statement and the Pricing Prospectus or transactions arising in the ordinary course of business and (iii) the Company has no material contingent obligation that is not disclosed in the Registration Statement and the Pricing Prospectus that could likely result in a material adverse change in the business, properties, results of operations or financial condition of the Company.

     (f) The Company has full power and authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and the fulfillment of the terms hereof on the part of the Company to be fulfilled have been duly authorized by all

4

necessary corporate action of the Company in accordance with the provisions of its restated charter (the “Charter”), by-laws and applicable law; and the Securities, when issued and delivered as provided herein, will constitute legal, valid and binding obligations of the Company in accordance with their terms except as limited by bankruptcy, insolvency or other laws affecting mortgagees’ and other creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealings.

     (g) The Senior Note First Mortgage Bonds, when issued and delivered as provided herein, will constitute legal, valid and binding obligations of the Company in accordance with their terms except as limited by bankruptcy, insolvency or other laws affecting mortgagees’ and other creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealings; provided, however, that certain remedies, waivers and other provisions of the Senior Note First Mortgage Bonds may not be enforceable, but such unenforceability will not render the Senior Note First Mortgage Bonds invalid as a whole or affect the judicial enforcement of (i) the obligation of the Company to repay the principal, together with the interest thereon as provided in the Senior Note First Mortgage Bonds or (ii) the right of the Mortgage Trustees to exercise their right to foreclose under the Mortgage.

     (h) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, the Charter, the Company’s by-laws, applicable law or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (i) The Securities conform in all material respects to the description contained in the Pricing Disclosure Package and the Prospectus.

     (j) The Company has no subsidiaries that meet the definition of “significant subsidiary” as defined in Section 210.1-02(w) of Regulation S-X promulgated under the Securities Act.

     (k) The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”).

     (l) Except as described in or contemplated by the Pricing Prospectus, there are no pending or, to the knowledge of the Company, threatened actions, suits or proceedings (regulatory or otherwise) against or affecting the Company or its properties that are likely in the aggregate to result in any material adverse change in the business, properties, results of operations or financial condition of the Company, or that are likely in the aggregate to materially and adversely affect the Senior Note Indenture, the Mortgage, the Securities, the Senior Note First Mortgage Bonds or the consummation of this Agreement or the transactions contemplated herein or therein.

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     (m) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions herein contemplated or for the due execution, delivery or performance of the Senior Note Indenture and the Mortgage by the Company, except such as have already been made or obtained or as may be required under the Securities Act or state securities laws and except for the qualification of the Indenture under the 1939 Act.

     (n) The Senior Note Indenture and the Mortgage (A) have been duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery by the Trustee and the Mortgage Trustees, respectively, constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws affecting mortgagee’s and other creditor’s rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity and except the effect on enforceability of federal or state law limiting, delaying or prohibiting the making of payments outside the United States); and (B) conform in all material respects to the descriptions thereof in the Pricing Disclosure Package and the Prospectus.

       4. Purchase and Sale. On the basis of the representations, warranties and covenants herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to each of the Underwriters, severally and not jointly, and each such Underwriter agrees, severally and not jointly, to purchase from the Company, the respective principal amount of Securities set forth opposite the name of such Underwriter below at a purchase price of ___% of the principal amount thereof:

Underwriter Principal Amount of Securities

[                    ]
[                    ]
[                    ]

          Total

     The Underwriters agree to make promptly a bona fide public offering of the Securities to the public for sale as set forth in the Prospectus, subject, however, to the terms and conditions of this Agreement. The Underwriters agree that (i) no sales of the Securities will occur before investors are presented with the information that is contained in the Pricing Disclosure Package and (ii) such information that is presented to investors is consistent with the information that is contained in the Pricing Disclosure Package.

     5. Free Writing Prospectuses.

     (a) The Company represents and agrees that, without the prior consent of the Representative, it has not made and will not make any offer relating to the Securities that

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would constitute a “free writing prospectus” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus; each Underwriter represents and agrees that, without the prior consent of the Company and the Representative, it has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus or a free writing prospectus that is not required to be filed by the Company pursuant to Rule 433 under the Securities Act (an “Underwriter Free Writing Prospectus”). Any such free writing prospectus the use of which is consented to by the Company and the Representative is referred to herein as a “Permitted Free Writing Prospectus”. The only Permitted Free Writing Prospectus as of the time of this Agreement is the pricing term sheet referred to in paragraph 5(b) below.

     (b) The Company agrees to file a pricing term sheet, in the form of Schedule I hereto and approved by the Representative pursuant to Rule 433(d) under the Securities Act within the time period prescribed by such Rule.

     (c) The Company and the Underwriters have complied and will comply with the requirements of Rule 433 under the Securities Act applicable to any free writing prospectus, including timely Commission filing where required and legending.

     (d) The Company agrees that if at any time following issuance of a Permitted Free Writing Prospectus any event occurred or occurs as a result of which such Permitted Free Writing Prospectus would conflict in any material respect with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representative and, if requested by the Representative, will prepare and furnish without charge to each Underwriter a Permitted Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in a Permitted Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative, expressly for use therein.

     6. Time and Place of Closing; Default of Underwriters.

     (a) Payment for the Securities shall be made at the office of Hunton & Williams LLP, located at 421 Fayetteville Street Mall, Raleigh, North Carolina 27601 on the date specified in Schedule I hereto against delivery of the Securities at the office of The Bank of New York, Corporate Trust Department, 101 Barclay Street, New York, New York 10286, or such other place, time and date as the Representative and the Company may agree. The hour and date of such delivery and payment are herein called the “Closing Date.” Payment for the Securities shall be by wire transfer of immediately available funds against delivery to The Depository Trust Company or to The Bank of New York, as custodian for The Depository Trust Company, in fully registered global form registered in the name of CEDE & Co., as nominee for The Depository Trust Company, for the respective accounts specified by the Representative not later than the

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close of business on the business day prior to the Closing Date or such other date and time not later than the Closing Date as agreed by The Depository Trust Company or The Bank of New York. For the purpose of expediting the checking of the certificates by the Representative, the Company agrees to make the Securities available to the Representative not later than 10:00 A.M. New York time, on the last full business day prior to the Closing Date at said office of The Bank of New York.

     (b) If one or more Underwriters shall, for any reason other than a reason permitted hereunder, fail to take up and pay for the principal amount of the Securities to be purchased by such one or more Underwriters, the Company shall immediately notify the Representative, and the non-defaulting Underwriters shall be obligated to take up and pay for (in addition to the respective principal amount of the Securities set forth opposite their respective names in paragraph 4) the principal amount of such Securities that such defaulting Underwriter or Underwriters failed to take up and pay for, up to a principal amount thereof equal to 10% of the principal amount of such Securities. Each non-defaulting Underwriter shall do so on a pro-rata basis according to the amounts set forth opposite the name of such non-defaulting Underwriter in paragraph 4, and such non-defaulting Underwriters shall have the right, within 24 hours of receipt of such notice, either to take up and pay for (in such proportion as may be agreed upon among them), or to substitute another Underwriter or Underwriters, satisfactory to the Company, to take up and pay for the remaining principal amount of the Securities that the defaulting Underwriter or Underwriters agreed but failed to purchase. If any unpurchased Securities still remain, then the Company or the Representative shall be entitled to an additional period of 24 hours within which to procure another party or parties, members of the National Association of Securities Dealers, Inc. (or if not members of such Association, who are not eligible for membership in said Association and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with said Association’s Conduct Rules) and satisfactory to the Company, to purchase or agree to purchase such unpurchased Securities on the terms herein set forth. In any such case, either the Representative or the Company shall have the right to postpone the Closing Date for a period not to exceed three full business days from the date agreed upon in accordance with this paragraph 6, in order that the necessary changes in the Registration Statement and Prospectus and any other documents and arrangements may be effected. If (i) neither the non-defaulting Underwriters nor the Company has arranged for the purchase of such unpurchased Securities by another party or parties as above provided and (ii) the Company and the non-defaulting Underwriters have not mutually agreed to offer and sell the Securities other than the unpurchased Securities, then this Agreement shall terminate without any liability on the part of the Company or any Underwriter (other than an Underwriter that shall have failed or refused, in accordance with the terms hereof, to purchase and pay for the principal amount of the Securities that such Underwriter has agreed to purchase as provided in paragraph 4 hereof), except as otherwise provided in paragraph 7 and paragraph 8 hereof.

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     7. Covenants of the Company. The Company covenants with each Underwriter that:

     (a) As soon as reasonably possible after the execution and delivery of this Agreement, the Company will file the Prospectus with the Commission pursuant to Rule 424 under the Securities Act (“Rule 424”), setting forth, among other things, the necessary information with respect to the terms of offering of the Securities and make any other required filings pursuant to Rule 433 under the Securities Act. Upon request, the Company will promptly deliver to the Representative and to counsel for the Underwriters, to the extent not previously delivered, one fully executed copy or one conformed copy, certified by an officer of the Company, of the Registration Statement, as originally filed, and of all amendments thereto, if any, heretofore or hereafter made (other than those relating solely to Registered Securities other than the Securities), including any post-effective amendment (in each case including all exhibits filed therewith and all documents incorporated therein not previously furnished to the Representative), including signed copies of each consent and certificate included therein or filed as an exhibit thereto, and will deliver to the Representative for distribution to the Underwriters as many conformed copies of the foregoing (excluding the exhibits, but including all documents incorporated therein) as the Representative may reasonably request. The Company will also send to the Underwriters as soon as practicable after the date of this Agreement and thereafter from time to time as many copies of the Prospectus and the Preliminary Prospectus as the Representative may reasonably request for the purposes required by the Securities Act.

     (b) During such period (not exceeding nine months) after the commencement of the offering of the Securities as the Underwriters may be required by law to deliver a Prospectus, if any event relating to or affecting the Company, or of which the Company shall be advised in writing by the Representative shall occur, which in the Company’s reasonable opinion (after consultation with counsel for the Representative) should be set forth in a supplement to or an amendment of the Prospectus in order to make the Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser, or if it is necessary to amend the Prospectus to comply with the Securities Act, the Company will forthwith at its expense prepare and furnish to the Underwriters and dealers named by the Representative a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus which will supplement or amend the Prospectus so that as supplemented or amended it will comply with the Securities Act and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading. In case any Underwriter is required to deliver a Prospectus after the expiration of nine months after the commencement of the offering of the Securities, the Company, upon the request of the Representative, will furnish to the Representative, at the expense of such Underwriter, a reasonable quantity of a supplemented or amended prospectus, or supplements or amendments to the Prospectus, complying with Section 10(a) of the Securities Act.

     (c) The Company will make generally available to its security holders, as soon as reasonably practicable, but in any event not later than 16 months after the end of

9

the fiscal quarter in which the filing of the Prospectus pursuant to Rule 424 occurs, an earning statement (in form complying with the provisions of Section 11(a) of the Securities Act, which need not be certified by independent public accountants) covering a period of twelve months beginning not later than the first day of the Company’s fiscal quarter next following the filing of the Prospectus pursuant to Rule 424.

     (d) The Company will use its best efforts promptly to do and perform all things to be done and performed by it hereunder prior to the Closing Date and to satisfy all conditions precedent to the delivery by it of the Securities.

     (e) The Company will advise the Representative, or the Representative’s counsel, promptly of the filing of the Prospectus pursuant to Rule 424 and of any amendment or supplement to the Prospectus or Registration Statement or of official notice of institution of proceedings for, or the entry of, a stop order suspending the effectiveness of the Registration Statement and, if such a stop order should be entered, use its best efforts to obtain the prompt removal thereof.

     (f) The Company will use its best efforts to qualify the Securities, as may be required, for offer and sale under the Blue Sky or legal investment laws of such jurisdictions as the Representative may designate, and will file and make in each year such statements or reports as are or may be reasonably required by the laws of such jurisdictions; provided, however, that the Company shall not be required to qualify as a foreign corporation or dealer in securities, or to file any general consents to service of process under the laws of any jurisdiction.

     (g) Prior to the termination of the offering of the Securities, the Company will not file any amendment to the Registration Statement or supplement to the Pricing Prospectus or the Prospectus (in each case other than amendments or supplements relating to Registered Securities other than the Securities) which shall not have previously been furnished to the Representative or of which the Representative shall not previously have been advised or to which the Representative shall reasonably object in writing and which has not been approved by the Representative or its counsel.

     8. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the printing and filing of the Registration Statement and the printing of this Agreement, (ii) the delivery of the Securities to the Underwriters, (iii) the fees and disbursements of the Company’s counsel and accountants, (iv) the expenses in connection with the qualification of the Securities under securities laws in accordance with the provisions of paragraph 7(f) hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith, such fees and disbursements not to exceed $7,500, (v) the printing and delivery to the Underwriters of copies of the Registration Statement and all amendments thereto, of the Preliminary Prospectus, any Permitted Free Writing Prospectus and the Prospectus and any amendments or supplements thereto, (vi) the printing and delivery to the Underwriters of copies of the Blue Sky Survey, (vii) the preparation and execution by the Company of the Supplemental Indenture; and the Company will pay all taxes, if any (but not including any transfer taxes), on the issue of the Securities, and (viii) any filings required in order to perfect the interests of the Senior Note Trustee in the Senior

10

Note First Mortgage Bonds and the proceeds thereof. The fees and disbursements of Underwriters’ counsel shall be paid by the Underwriters (subject, however, to the provisions of this paragraph 8 requiring payment by the Company of fees and disbursements not to exceed $7,500); provided, however, that if this Agreement is terminated in accordance with the provisions of paragraph 9, 10 or 12 hereof, the Company shall reimburse the Representative for the account of the Underwriters for the fees and disbursements of Underwriters’ counsel. The Company shall not be required to pay any amount for any expenses of the Representative or of any other of the Underwriters except as provided in paragraph 7 hereof and in this paragraph 8. The Company shall not in any event be liable to any of the Underwriters for damages on account of the loss of anticipated profit.

     9. Conditions of Underwriters’ Obligations. The several obligations of the Underwriters to purchase and pay for the Securities shall be subject to the accuracy of the representations and warranties on the part of the Company as of the date hereof and the Closing Date, to the performance by the Company of its obligations to be performed hereunder prior to the Closing Date, and to the following further conditions:

     (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect on the Closing Date and no proceedings for that purpose shall be pending before, or, to the Company’s knowledge, threatened by, the Commission on the Closing Date. The Representative shall have received, prior to payment for the Securities, a certificate dated the Closing Date and signed by the Chairman, President, Treasurer or a Vice President of the Company to the effect that no such stop order is in effect and that no proceedings for such purpose are pending before or, to the knowledge of the Company, threatened by the Commission.

     (b) At the time of execution of this Agreement, or such later date as shall have been consented to by the Representative, there shall have been issued, and on the Closing Date there shall be in full force and effect, orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Securities and the Senior Note First Mortgage Bonds, which shall not contain any provision unacceptable to the Representative by reason of its being materially adverse to the Company (it being understood that no such order in effect on the date of this Agreement and heretofore furnished to the Representative or counsel for the Underwriters contains any such unacceptable provision).

     (c) At the Closing Date, the Representative shall receive favorable opinions from: (1) Hunton & Williams LLP, counsel to the Company, which opinion shall be satisfactory in form and substance to counsel for the Underwriters, and (2) Dewey Ballantine LLP, counsel for the Underwriters, in each of which opinions (except Hunton & Williams LLP as to matters of North Carolina law and except as to subdivision (vi) (as to documents incorporated by reference, at the time they were filed with the Commission) as to which Dewey Ballantine LLP need express no opinion) said counsel may rely as to all matters North Carolina and South Carolina law upon the opinions of Frank A. Schiller, Esq., Vice President of Progress Energy Service Company LLC, acting as counsel to the Company, and [South Carolina counsel], respectively, to the effect that:

11

     (i) the Senior Note Indenture has been duly and validly authorized by all necessary corporate action, has been duly and validly executed and delivered by the Company, and is a valid and binding obligation of the Company enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws affecting creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealings;

     (ii) The Mortgage has been duly and validly authorized by all necessary corporate action, has been duly and validly executed and delivered by the Company, and is a valid and binding mortgage of the Company enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws affecting mortgagees’ and other creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealing (with this opinion only required in the opinions of Hunton & Williams LLP and Dewey Ballantine LLP as to the supplemental indentures subsequent to the Sixty-fourth Supplemental Indenture); provided, however, that certain remedies, waivers and other provisions of the Mortgage may not be enforceable, but such unenforceability will not render the Mortgage invalid as a whole or affect the judicial enforcement of (i) the obligation of the Company to repay the principal, together with the interest thereon as provided in the Senior Note First Mortgage Bonds or (ii) the right of the Trustees to exercise their right to foreclose under the Mortgage;

     (iii) the Mortgage and the Senior Note Indenture have been duly qualified under the 1939 Act;

     (iv) assuming authentication of the Securities by the Trustee in accordance with the Indenture and delivery of the Securities to and payment for the Securities by the Underwriters, as provided in this Agreement, the Securities have been duly and validly authorized, executed and delivered and are legal, valid and binding obligations of the Company enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other laws affecting creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealings, and are entitled to the benefits of the Indenture;

     (v) The Senior Note First Mortgage Bonds have been duly and validly authorized, executed and delivered by the Company and, assuming authentication by the Corporate Trustee (as defined in the Mortgage) in accordance with the Mortgage and delivery to and payment for the Securities by the Underwriters, as provided in this Agreement, the Senior Note First Mortgage Bonds are legal, valid and binding obligations of the Company enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other laws affecting mortgagees’ and other creditors’ rights and general equitable principles, and the Senior Note First Mortgage Bonds are entitled to the benefits of the security afforded by the Mortgage and are secured equally and ratably with all other bonds outstanding under the Mortgage except insofar as any sinking or other fund may afford additional security for the bonds of any particular series;

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     (vi) the statements made in the Prospectus under the captions “Description of First Mortgage Bonds” and “Description of Senior Notes” insofar as they purport to constitute summaries of the documents referred to therein, are accurate summaries in all material respects;

     (vii) this Agreement has been duly and validly authorized, executed and delivered by the Company;

     (viii) the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses and the Prospectus, at the time each was filed with, or transmitted for filing to, the Commission pursuant to Rule 424 (except as to the financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein, upon which such opinions need not pass), complied as to form in all material respects with the requirements of the Securities Act and the 1939 Act and the applicable instructions, rules and regulations of the Commission thereunder; the documents or portions thereof filed with the Commission pursuant to the Exchange Act and deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus and the Prospectus pursuant to Item 12 of Form S-3 (except as to financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein and that part of the Registration Statement that constitutes the Statement of Eligibility on Form T-1, upon which such opinions need not pass), at the time they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement has become effective under the Securities Act and, to the best of the knowledge of said counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and not withdrawn and no proceedings for a stop order with respect thereto are threatened or pending under Section 8 of the Securities Act; and

     (ix) nothing has come to the attention of said counsel that would lead them to believe that the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and nothing has come to the attention of said counsel that would lead them to believe that (x) the Pricing Disclosure Package, as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (y) the Prospectus, as of its date and, as amended or supplemented, at the Closing Date, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except as to financial statements and other

13

financial and statistical data constituting a part of the Registration Statement, the Pricing Disclosure Package or the Prospectus or incorporated by reference therein and that part of the Registration Statement that constitutes the Statement of Eligibility on Form T-1, upon which such opinions need not pass).

     (d) At the Closing Date, the Representative shall receive from Frank A. Schiller, Esq., Vice President of Progress Energy Service Company, LLC, acting as counsel to the Company, a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the same effect with respect to the matters enumerated in subdivisions (i) through (vii) and (ix) of subparagraph (c) of this paragraph 9 as the opinions required by said subparagraph (c), and to the further effect that:

     (i) the Company is a validly organized and existing corporation under the laws of the State of North Carolina and is in good standing under the laws of the State of North Carolina and is duly qualified to do business in the State of South Carolina;

     (ii) the Company is duly authorized by its Charter to conduct the business that it is now conducting as set forth in the Prospectus;

     (iii) the Company is an electrical utility engaged in the business of generating, transmitting, distributing and selling electric power to the general public in the States of North Carolina and South Carolina;

     (iv) the Company has valid and subsisting franchises, licenses and permits adequate for the conduct of its business, except where the failure to hold such franchises, licenses and permits would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company;

     (v) The Company has good and marketable title, with minor exceptions, restrictions and reservations in conveyances, and defects that are of the nature ordinarily found in properties of similar character and magnitude and that, in his opinion, will not in any substantial way impair the security afforded by the Mortgage, to all the properties described in the granting clauses of the Mortgage and upon which the Mortgage purports to create a lien, except certain rights-of-way over private property on which are located transmission and distribution lines formerly owned by the Tide Water Power Company (merged into the Company on February 29, 1952), title to which can be perfected by condemnation proceedings. The description in the Mortgage of the above-mentioned properties (including those formerly owned by Tide Water Power Company) is legally sufficient to constitute the Mortgage a lien upon said properties, including without limitation properties hereafter acquired by the Company (other than those expressly excepted and reserved therefrom). Said properties constitute substantially all the permanent physical properties and franchises (other than those expressly excepted and reserved therefrom) of the Company and are held by the Company free and clear of all liens and

14

encumbrances except the lien of the Mortgage and Excepted Encumbrances, as defined in the Mortgage. The Company has followed the practice generally of acquiring (i) certain rights-of-way and easements and certain small parcels of fee property appurtenant thereto and for use in conjunction therewith and (ii) certain other properties of small or inconsequential value, without an examination of title and, as to the title to lands affected by said rights-of-way and easements, of not examining the title of the lessor or grantor whenever the lands affected by such rights-of-way and easements are not of such substantial value as in the opinion of the Company to justify the expense attendant upon examination of titles in connection therewith. In the opinion of said counsel, such practice of the Company is consistent with sound economic practice and with the method followed by other companies engaged in the same business and is reasonably adequate to assure the Company of good and marketable title to all such property acquired by it. It is the opinion of said counsel that any such conditions or defects as may be covered by the above recited exceptions are not, except as to certain rights-of-way on which are located transmission lines acquired from Tide Water Power Company, substantial and would not materially interfere with the Company’s use of such properties or with its business operations. The Company has the right of eminent domain in the States of North Carolina and South Carolina under which it may, if necessary, perfect or obtain title to privately owned land or acquire easements or rights-of-way required for use or used by the Company in its public utility operations;

     (vi) The Company’s Mortgage and Deed of Trust dated as of May 1, 1940 and the First through the [Seventy-fourth] Supplemental Indentures thereto have been filed for record both as a real estate mortgage and as a chattel mortgage or security interest in all counties in the States of North Carolina and South Carolina in which any of the property described in the Mortgage as subject thereunder to the lien thereof is located; and the Supplemental Indenture relating to the Senior Note First Mortgage Bonds is in proper form for filing for record both as a real estate mortgage and as a security interest in all counties in the States of North Carolina and South Carolina in which any of the property described therein or in the Mortgage as subject to the lien of the Mortgage is located. By virtue of filing financing statements with the Offices of the Secretaries of State of North Carolina and South Carolina, the Mortgage Trustees have a perfected security interest in that portion of the collateral described therein to which Article 9 of the Uniform Commercial Code of North Carolina or South Carolina is applicable and in which a security interest is perfected by the central filing of a financing statement to perfect a security interest in collateral of a transmitting utility under the UCC;

     (vii) The Mortgage constitutes a valid, direct and first mortgage lien of record upon all franchises and properties now owned by the Company (other than those expressly excepted therefrom and other than those franchises and properties which are not, individually or in the aggregate, material to the Company or the security afforded by the Mortgage) situated in the States of North Carolina and South Carolina, as described or referred to in the granting clauses of the

15

Mortgage, subject to the exceptions as to bankruptcy, insolvency and other laws stated in subdivision (ii) of subparagraph (c) above;

     (viii) the issuance and sale of the Securities and the issuance and deliver of the Senior Note First Mortgage Bonds have been duly authorized by all necessary corporate action on the part of the Company;

     (ix) orders have been entered by the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Securities and the Senior Note First Mortgage Bonds; and to the best of the knowledge of said counsel, said orders are still in force and effect; and no further filing with, approval, authorization, consent or other order of, any public board or body (except such as have been obtained under the Securities Act and as may be required under the state securities or Blue Sky laws of any jurisdiction) is legally required for the consummation of the transactions contemplated in this Agreement;

     (x) except as described in or contemplated by the Prospectus, there are no pending actions, suits or proceedings (regulatory or otherwise) against the Company or any properties that are likely, in the aggregate, to result in any material adverse change in the business, properties, results of operations or financial condition of the Company or that are likely, in the aggregate, to materially and adversely affect the Senior Note Indenture, the Securities or the consummation of this Agreement, or the transactions contemplated herein or therein; and

     (xi) the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not (i) result in a breach of any of the terms or provisions of, or constitute a default under, the Charter or the Company’s by-laws or (ii) result in a material breach of any terms or provisions of, or constitute a default under, any applicable law, indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would have a material adverse effect on business, properties, results of operations or financial condition of the Company.

     In said opinion such counsel may rely as to all matters of South Carolina law on the opinion of [South Carolina counsel].

     (e) At the Closing Date, the Representative shall receive from [South Carolina counsel], a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the effect that:

     (i) The Company is an electrical utility engaged in the business of generating, transmitting, distributing and selling electric power to the general

16

public in the States of South Carolina and North Carolina, and the Company conducts its South Carolina retail operations subject to the jurisdiction of the South Carolina Public Service Commission pursuant to South Carolina Code Annotated, Sections 58-27-10 et seq. (1976 as amended);

     (ii) The Company is duly qualified to transact business in the State of South Carolina;

     (iii) The Company’s Mortgage and Deed of Trust dated as of May 1, 1940, and the First through the [Seventy-fourth] Supplemental Indentures thereto, have been recorded and filed in such manner and in such places as may be required by law, in the State of South Carolina, in order to fully preserve and protect the security of the bondholders and all rights of the Mortgage Trustees thereunder. By virtue of filing financing statements with the Offices of the Secretaries of State of North Carolina and South Carolina, the Mortgage Trustees have a perfected security interest in that portion of the collateral described therein to which Article 9 of the Uniform Commercial Code of North Carolina or South Carolina is applicable and in which a security interest is perfected by the central filing of a financing statement to perfect a security interest in collateral of a transmitting utility under the UCC;

     (iv) The Supplemental Indenture relating to the Senior Note First Mortgage Bonds is in the proper form for the filing as a real estate mortgage and a security agreement in all counties in the State of South Carolina where the Mortgage is filed and the Supplemental Indenture is to be filed and upon such filing creates a lien and/or security interest in that property located within such counties that is described in the Mortgage or in the Supplemental Indenture as being subject to the lien of the Mortgage (except that property which has been expressly excepted from the lien in the Supplemental Indenture and the Mortgage, as heretofore supplemented); and

     (v) Said counsel has reviewed the opinion letter of even date therewith addressed to you by Frank A. Schiller, Esq., Vice President of Progress Energy Service Company, LLC, and said counsel concurs in the opinions which Mr. Schiller has expressed therein insofar as they relate to the laws of the State of South Carolina.

     (f) The Representative shall have received on the date hereof and shall receive on the Closing Date from Deloitte & Touche LLP, a letter addressed to the Representative containing statements and information of the type ordinarily included in accountants’ SAS 72 “comfort letters” to underwriters with respect to the audit reports, financial statements and certain financial information contained in or incorporated by reference into the Prospectus.

     (g) At the Closing Date, the Representative shall receive a certificate of the Chairman, President, Treasurer or a Vice President of the Company, dated the Closing

17

Date, to the effect that the representations and warranties of the Company in this Agreement are true and correct as of the Closing Date.

     (h) The Permitted Free Writing Prospectus, and any other material required pursuant to Rule 433(d) under the Securities Act, shall have been filed by the Company with the Commission within the applicable time periods prescribed by Rule 433.

     (i) All legal proceedings taken in connection with the sale and delivery of the Securities shall have been satisfactory in form and substance to counsel for the Underwriters, and the Company, as of the Closing Date, shall be in compliance with any governing orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina, except where the failure to comply with such order would not be material to the offering or validity of the Securities.

     In case any of the conditions specified above in this paragraph 9 shall not have been fulfilled or waived by 2:00 P.M. on the Closing Date, this Agreement may be terminated by the Representative by delivering written notice thereof to the Company. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 7 and 8 hereof.

     10. Conditions of the Company’s Obligations. The obligations of the Company to deliver the Securities and the Senior Note First Mortgage Bonds shall be subject to the following conditions:

     (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect on the Closing Date, and no proceedings for that purpose shall be pending before or threatened by the Commission on the Closing Date.

     (b) Prior to 12:00 Noon, New York time, on the day following the date of this Agreement, or such later date as shall have been consented to by the Company, there shall have been issued and on the Closing Date there shall be in full force and effect orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale by the Company of the Securities and the Senior Note First Mortgage Bonds, which shall not contain any provision unacceptable to the Company by reason of its being materially adverse to the Company (it being understood that no such order in effect as of the date of this Agreement contains any such unacceptable provision).

     In case any of the conditions specified in this paragraph 10 shall not have been fulfilled at the Closing Date, this Agreement may be terminated by the Company by delivering written notice thereof to the Representative. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 7 and 8 hereof.

     11. Indemnification.

     (a) The Company agrees to indemnify and hold harmless each Underwriter, each officer and director of each Underwriter and each person who controls any Underwriter within the meaning of Section 15 of the Securities Act against any and all

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losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each such Underwriter, each such officer and director, and each such controlling person for any legal or other expenses (including to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement, or alleged untrue statement, of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus, or in the Registration Statement or Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or in any free writing prospectus used by the Company other than a Permitted Free Writing Prospectus, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the indemnity agreement contained in this paragraph 11 shall not apply to any such losses, claims, damages, liabilities, expenses or actions arising out of or based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with information furnished herein or in writing to the Company by any Underwriter through the Representative expressly for use in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus, or any amendment or supplement to any thereof, or arising out of, or based upon, statements in or omissions from that part of the Registration Statement that shall constitute the Statements of Eligibility under the 1939 Act (Form T-1 and T-2) of the Mortgage Trustees under the Mortgage and the Senior Note Trustee under the Senior Note Indenture, and provided, further, that the indemnity agreement contained in this paragraph 11 shall not inure to the benefit of any Underwriter (or of any person controlling such Underwriter) on account of any such losses, claims, damages, liabilities, expenses or actions arising from the sale of the Securities to any person if a copy of the Permitted Free Writing Prospectus or Prospectus (excluding documents incorporated by reference therein) shall not have been given or sent to such person by or on behalf of such Underwriter at or prior to the entry into the contract of sale, unless such Prospectus or Permitted Free Writing Prospectus failed to correct the omission or misstatement. The indemnity agreement of the Company contained in this paragraph 11 and the representations and warranties of the Company contained in paragraph 3 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter, and such officer or director or any such controlling person and shall survive the delivery of the Securities. The Underwriters agree to notify promptly the Company, and each other Underwriter, of the commencement of any litigation or proceedings against them or any of them, or any such officer or director, or any such controlling person, in connection with the sale of the Securities.

     (b) Each Underwriter severally, and not jointly, agrees to indemnify and hold harmless the Company, its officers who signed the Registration Statement and its directors, and each person who controls the Company within the meaning of Section 15 of the Securities Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each of them

19

for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages, or liabilities, or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses, the Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or any Underwriter Free Writing Prospectus used by such Underwriter (but only to the extent that the content of such Underwriter Free Writing Prospectus that is subject to indemnification is materially inconsistent with the information contained in the Permitted Free Writing Prospectus or the Prospectus) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished herein or in writing to the Company by such Underwriter or through the Representative on behalf of such Underwriter expressly for use in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectus or the Prospectus or any amendment or supplement to any thereof. The indemnity agreement of all the respective Underwriters contained in this paragraph 11 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company or any other Underwriter, or any such officer or director or any such controlling person, and shall survive the delivery of the Securities. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers or directors, or any such controlling person, in connection with the sale of the Securities.

     (c) The Company and each of the Underwriters agree that, upon the receipt of notice of the commencement of any action against it, its officers or directors, or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, it will promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder. The Company and each of the Underwriters agree that the notification required by the preceding sentence shall be a material term of this Agreement. The omission so to notify such indemnifying party or parties of any such action shall relieve such indemnifying party or parties from any liability that it or they may have to the indemnified party on account of any indemnity agreement contained herein if such indemnifying party was materially prejudiced by such omission, but shall not relieve such indemnifying party or parties from any liability that it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, such indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of such action, in which event such defense shall be conducted by counsel chosen by such indemnifying party (or parties) and satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, and such defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall

20

elect not to assume the defense of such action, such indemnifying parties will reimburse such indemnified party or parties for the reasonable fees and expenses of any counsel retained by them, as such expenses are incurred; provided, however, if the defendants (including any impleaded parties) in any such action include both the indemnified party and the indemnifying party, and counsel for the indemnified party shall have concluded, in its reasonable judgment, that there may be a conflict of interest involved in the representation by such counsel of both the indemnifying party and the indemnified party, the indemnified party or parties shall have the right to select separate counsel, satisfactory to the indemnifying party, to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to one local counsel) representing the indemnified parties who are parties to such action). Each of the Company and the several Underwriters agrees that without the other party’s prior written consent, which consent shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any claim in respect of which indemnification may be sought under the indemnification provisions of this Agreement, unless such settlement, compromise or consent includes an unconditional release of such other party from all liability arising out of such claim.

     (d) If the indemnification provided for in subparagraphs (a) or (b) above is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions that resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Securities as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subparagraph (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other

21

method of allocation that does not take account of the equitable considerations referred to above in this subparagraph (d). The rights of contribution contained in this paragraph 11 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter of the Company and shall survive delivery of the Securities. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this subparagraph (d), each officer and director of each Underwriter and each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. The Underwriters’ respective obligations to contribute pursuant to this subparagraph (d) are several in proportion to the number of Securities set forth opposite their respective names in paragraph 4 and not joint.

     (e) For purposes of this paragraph 11, it is understood and agreed that the only information provided by the Underwriters expressly for use in the Registration Statement, the Pricing Prospectus, the Permitted Free Writing Prospectuses and Prospectus were the following parts of the section titled “Underwriting”:           .

     12. Termination Date of this Agreement. This Agreement may be terminated by the Representative at any time prior to the Closing Date by delivering written notice thereof to the Company, if on or after the date of this Agreement but prior to such time (a) there shall have occurred any general suspension of trading in securities on the New York Stock Exchange, or there shall have been established by the New York Stock Exchange or by the Commission or by any federal or state agency or by the decision of any court, any limitation on prices for such trading or any restrictions on the distribution of securities or (b) there shall have occurred any new outbreak of hostilities including, but not limited to, significant escalation of hostilities that existed prior to the date of this Agreement or any national or international calamity or crisis, or any material adverse change in the financial markets of the United States, the effect of which outbreak, escalation, calamity or crisis, or material adverse change on the financial markets of the United States shall be such as to make it impracticable, in the reasonable judgment of the Representative, for the Underwriters to enforce contracts for the sale of the Securities, or (c) the Company shall have sustained a substantial loss by fire, flood, accident or other calamity that renders it impracticable, in the reasonable judgment of the Representative, to consummate the sale of the Securities and the delivery of the Securities by the several Underwriters at the initial public offering price, or (d) there shall have been any downgrading or any notice of any intended or potential downgrading in the rating accorded the Company’s securities by any “nationally recognized statistical rating organization” as that term is defined by the Commission for the purposes of Securities Act Rule 436(g)(2), or any such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Securities, the Senior Note First Mortgage Bonds or any of the Company’s other outstanding debt, the effect of which in the reasonable judgment of the Representative, makes it impracticable or inadvisable to consummate the sale of the Securities and the delivery of the Securities by the several Underwriters at the initial public offering price or (e) there shall have

22

been declared, by either federal or New York authorities, a general banking moratorium. This Agreement may also be terminated at any time prior to the Closing Date if in the reasonable judgment of the Representative the subject matter of any amendment or supplement to the Registration Statement, the Pricing Prospectus or Prospectus (other than an amendment or supplement relating solely to the activity of any Underwriter or Underwriters) filed after the execution of this Agreement shall have materially impaired the marketability of the Securities. Any termination hereof pursuant to this paragraph 12 shall be without liability of any party to any other party except as otherwise provided in paragraphs 7 and 8.

     13. Miscellaneous. The validity and interpretation of this Agreement shall be governed by the laws of the State of New York. Unless otherwise specified, time of day refers to New York City time. This Agreement shall inure to the benefit of, and be binding upon, the Company, the several Underwriters, and with respect to the provisions of paragraph 11 hereof, the officers and directors and each controlling person referred to in paragraph 11 hereof, and their respective successors. Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. The term “successors” as used in this Agreement shall not include any purchaser, as such purchaser, of any of the Securities from any of the several Underwriters.

     14. Nature of Relationship. The Company acknowledges and agrees that (i) in connection with all aspects of each transaction contemplated by this Agreement, the Company and the Underwriters have an arms length business relationship that creates no fiduciary duty on the part of any party and each expressly disclaims any fiduciary relationship, (ii) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, (iii) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate, and (iv) any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.

     15. Notices. All communications hereunder shall be in writing or by telefax and, if to the Underwriters, shall be mailed, transmitted by any standard form of telecommunication or delivered to the Representative at            , and if to the Company, shall be mailed or delivered to it at 410 S. Wilmington Street, Raleigh, North Carolina 27601-1748, attention of Thomas R. Sullivan, Treasurer.

     16. Counterparts. This Agreement may be simultaneously executed in counterparts, each of which when so executed shall be deemed to be an original. Such counterparts shall together constitute one and the same instrument.

     17. Defined Terms. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings assigned to them in the Registration Statement.

[The remainder of this page has been intentionally left blank.]

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     If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed duplicate hereof whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.

Very truly yours,
CAROLINA POWER & LIGHT COMPANY
d/b/a PROGRESS ENERGY CAROLINAS, INC.
By:
	Authorized Representative

Accepted as of the date first
above written, as Underwriter
named in, and as the Representative
of the other Underwriters named in,
Section 1 of this Agreement.

[REPRESENTATIVE]

By:
	Authorized Representative

[Signature Page for the Senior Notes Underwriting Agreement]

SCHEDULE I

PRICING TERM SHEET

Underwriting Agreement dated                     , 20___

Representative(s):

Supplemental Indenture:	, dated as of                     , 20
Designation:	Senior Notes,           % Series due
Principal Amount:	$
Secured by:	First Mortgage Bonds,           % Senior Note Series due
Maturity:	,
Interest Rate:	% per annum, payable                      and                      of each year, commencing                     ,           .
Interest Payment Dates:	Payable                      on                                                                                 ,
	commencing                     ,           .
Purchase Price:	% of the principal amount thereof.
Public Offering Price:	% of the principal amount thereof.
Redemption Terms:	.
Closing Date:	, 20

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov (and more specifically, at the URL link http://sec.gov/cgi-bin/browse-
edgar?company=carolina+power&CIK=&filenum=&State=&SIC=&owner=include&action=getcompany). Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free at 1-8[xx-xxx-xxxx].

SCHEDULE II

PRICING DISCLOSURE PACKAGE

1)	Prospectus dated                     , 20___
2)	Preliminary Prospectus Supplement dated                     , 20___(which shall be deemed to include the Incorporated Documents)
3)	Permitted Free Writing Prospectuses

a) Pricing Term Sheet attached as Schedule I hereto

EX-1.C

Exhibit 1(c)

CAROLINA POWER & LIGHT COMPANY
d/b/a PROGRESS ENERGY CAROLINAS, INC.

[Title of Debt Security]

UNDERWRITING AGREEMENT

                    , 20__

To the Representative named in Schedule I hereto
of the Underwriters named in Section 1 herein

Dear Ladies and Gentlemen:

     The undersigned Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (the “Company”) hereby confirms its agreement with each of the several Underwriters hereinafter named as follows:

     1. Underwriters and Representative. The term “Underwriters” as used in this Underwriting Agreement (this “Agreement”) shall be deemed to mean the following firms, and any underwriter substituted as provided in paragraph 6 hereof, and the term “Underwriter” shall be deemed to mean any one of such Underwriters:

     [                    ]

     [                    ]

     [                    ]

     The term “Representative” as used herein shall be deemed to mean the firm or the firms named in Schedule I hereto, collectively. If any firm or firms named as Representative in Schedule I hereto are the only firm or firms serving as underwriters, then the terms “Underwriters” and “Representative,” as used herein, shall each be deemed to refer to such firm or firms. If more than one firm is named in Schedule I hereto, such firms represent, jointly and severally, that they have been authorized by the Underwriters to execute this Agreement on their behalf and to act for them as Representative in the manner herein provided. All obligations of the Underwriters hereunder are several and not joint. If more than one firm is named as Representative in Schedule I hereto, any action under or in respect of this Agreement may be taken by such firms jointly as the Representative or by one of the firms acting on behalf of the Representative, and such action will be binding upon all the Underwriters.

     2. Description of Securities. The Company proposes to issue and sell its debt securities of the designation, with the terms and in the amount specified in Schedule I hereto (the “Securities”) under a governing indenture dated as of October 28, 1999 (the “Base Indenture”) between the Company and JPMorgan Chase Bank (as successor to The Chase Manhattan Bank), as trustee (the “Trustee”), as supplemented and amended, and as further supplemented and amended by an officer’s certificate dated as of                     , 20___(the “Officer’s Certificate”; and the Base Indenture as so supplemented, the “Indenture”) in substantially the form heretofore delivered to the Representative.

     3. Representations and Warranties of the Company. The Company represents and warrants to each of the Underwriters that:

     (a) The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3, as amended (No. 333-___) (the “New Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), for the registration of up to an aggregate of $                     principal amount of First Mortgage Bonds, Debt Securities and Preferred Stock in unallocated amounts. The New Registration Statement also constituted post-effective amendment no. 1 to a registration statement on Form S-3 (No. 333-___) (the “Post-Effective Amendment” and together with the New Registration Statement, the “Registration Statement”) under the Securities Act relating to an aggregate of $                     principal amount of the Company’s securities, which had been previously registered under the Securities Act but remained unsold at the time the Post-Effective Amendment became effective. The Registration Statement contained a combined prospectus for the sale of up to an aggregate of $                     principal amount of the Company’s First Mortgage Bonds, Debt Securities and Preferred Stock (the “Registered Securities”) in unallocated amounts. The Registration Statement was declared effective by the Commission on                     , 20___. As of the date hereof, the Company has sold an aggregate of $                     principal amount of the Registered Securities. The term “Registration Statement” shall be deemed to include all amendments to the date hereof and all documents incorporated by reference therein (the “Incorporated Documents”). The base prospectus filed as part of the Registration Statement, in the form in which it has most recently been filed with the Commission prior to the date of this Agreement, is hereinafter called the “Basic Prospectus.” The Basic Prospectus included in the Registration Statement, as supplemented by a preliminary prospectus supplement, dated                     , 20___, relating to the Securities, and all prior amendments or supplements thereto (other than amendments or supplements relating to Registered Securities other than the Securities), including the Incorporated Documents, is hereinafter referred to as the “Preliminary Prospectus.” The Preliminary Prospectus, as amended and supplemented, including the Incorporated Documents, at or immediately prior to the Applicable Time (as defined below) is hereinafter called the “Pricing Prospectus.” The Basic Prospectus included in the Registration Statement, as it is to be supplemented by a prospectus supplement, dated on the date hereof, substantially in the form delivered to the Representative prior to the execution hereof, relating to the Securities (the “Prospectus Supplement”) and all prior amendments or supplements thereto (other than amendments or supplements relating to securities of the Company other than the Securities), including the Incorporated Documents, is hereinafter referred to as the “Prospectus.” Any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Securities Act and the filing of any document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), deemed to be incorporated therein after the date hereof and prior to the termination of the offering of the Securities by the Underwriters; and any references herein to the terms “Registration Statement” or “Prospectus” at a date after the filing of the Prospectus Supplement shall be deemed to refer to the Registration

2

     Statement or the Prospectus, as the case may be, as each may be amended or supplemented prior to such date.

     For purposes of this Agreement, the “Applicable Time” is                      (New York City time) on the date of this Agreement; the documents listed in Schedule II, taken together, are collectively referred to as the “Pricing Disclosure Package.”

     (b) The Registration Statement, at the time and date it was declared effective by the Commission, complied, and the Registration Statement, the Prospectus and the Indenture, as of the date hereof and at the Closing Date (as defined herein), will comply, in all material respects, with the applicable provisions of the Securities Act and the Trust Indenture Act of 1939, as amended (the “1939 Act”), and the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Pricing Disclosure Package as of the Applicable Time did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Prospectus, as of its date and at the Closing Date, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this subparagraph (b) shall not apply to statements or omissions made in reliance upon and in conformity with information furnished herein or in writing to the Company by the Representative or by or on behalf of any Underwriter through the Representative expressly for use in the Prospectus or to any statements in or omissions from the Statement of Eligibility (“Form T-1”) of the Trustee. The Incorporated Documents, at the time they were each filed with the Commission, complied in all material respects with the applicable requirements of the Exchange Act and the instructions, rules and regulations of the Commission thereunder; and any documents so filed and incorporated by reference subsequent to the date hereof and prior to the termination of the offering of the Securities by the Underwriters will, at the time they are each filed with the Commission, comply in all material respects with the requirements of the Exchange Act and the instructions, rules and regulations of the Commission thereunder; and, when read together with the Registration Statement, the Pricing Prospectus, the Permitted Free Writing Prospectuses (as defined in paragraph 5(a) hereof) and the Prospectus, none of such documents included or includes or will include any untrue statement of a material fact or omitted or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each Permitted Free Writing Prospectus listed on Schedule II does not conflict in any material respect with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus.

     (c) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of North Carolina; has corporate power and authority to own, lease and operate its properties and to conduct its business as

3

contemplated under this Agreement and the other material agreements to which it is a party; and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (d) The historical financial statements incorporated by reference in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly the financial condition and operations of the Company at the respective dates or for the respective periods to which they apply; such financial statements have been prepared in each case in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except that the quarterly financial statements, if any, incorporated by reference from any Quarterly Reports on Form 10-Q contain condensed footnotes prepared in accordance with applicable Exchange Act rules and regulations; and Deloitte & Touche LLP, which has audited certain of the financial statements is an independent registered public accounting firm as required by the Securities Act or the Exchange Act and the rules and regulations of the Commission thereunder.

     (e) Except as reflected in, or contemplated by, the Registration Statement and the Pricing Prospectus, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, and prior to the Closing Date, (i) there has not been any material adverse change in the business, properties, results of operations or financial condition of the Company, (ii) there has not been any material transaction entered into by the Company other than transactions contemplated by the Registration Statement and the Pricing Prospectus or transactions arising in the ordinary course of business and (iii) the Company has no material contingent obligation that is not disclosed in the Registration Statement and the Pricing Prospectus that could likely result in a material adverse change in the business, properties, results of operations or financial condition of the Company.

     (f) The Company has full power and authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and the fulfillment of the terms hereof on the part of the Company to be fulfilled have been duly authorized by all necessary corporate action of the Company in accordance with the provisions of its restated charter (the “Charter”), by-laws and applicable law.

     (g) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, the Charter, the Company’s by-laws, applicable law or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would

4

have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (h) The Securities conform in all material respects to the description contained in the Pricing Disclosure Package and the Prospectus.

     (i) The Company has no subsidiaries that meet the definition of “significant subsidiary” as defined in Section 210.1-02(w) of Regulation S-X promulgated under the Securities Act.

     (j) The Indenture (i) has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Trustee, constitutes a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to (A) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws affecting creditors’ rights generally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity and except for the effect on enforceability of federal or state law limiting, delaying or prohibiting the making of payments outside the United States); and (ii) conforms in all material respects to the description thereof in the Pricing Disclosure Package and the Prospectus. The Indenture has been qualified under the 1939 Act.

     (k) The Securities have been duly authorized by the Company and, when authenticated in the manner provided for in the Indenture and delivered against payment of the required consideration therefor, will constitute valid and legally binding obligations of the Company, entitled to the benefits of the Indenture enforceable against the Company in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity and except for the effect on enforceability of federal or state law limiting, delaying or prohibiting the making of payments outside the United States).

     (l) The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”).

     (m) Except as described in or contemplated by the Pricing Prospectus, there are no pending or, to the knowledge of the Company, threatened actions, suits or proceedings (regulatory or otherwise) against or affecting the Company or its properties that are likely in the aggregate to result in any material adverse change in the business, properties, results of operations or financial condition of the Company, or that are likely in the aggregate to materially and adversely affect the Indenture, the Securities or the consummation of this Agreement or the transactions contemplated herein or therein.

     (n) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder in

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connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions herein contemplated or for the due execution, delivery or performance of the Indenture by the Company, except such as have already been made or obtained or as may be required under the Securities Act or state securities laws and except for the qualification of the Indenture under the 1939 Act.

     4. Purchase and Sale. On the basis of the representations, warranties and covenants herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to each of the Underwriters, severally and not jointly, and each such Underwriter agrees, severally and not jointly, to purchase from the Company, the respective principal amount of Securities set forth opposite the name of such Underwriter below at a purchase price of ___% of the principal amount thereof:

Underwriter	Principal Amount of Securities
[                    ]
[                    ]
[                    ]
Total

     The Underwriters agree to make promptly a bona fide public offering of the Securities to the public for sale as set forth in the Prospectus, subject, however, to the terms and conditions of this Agreement. The Underwriters agree that (i) no sales of the Securities will occur before investors are presented with the information that is contained in the Pricing Disclosure Package and (ii) such information that is presented to investors is consistent with the information that is contained in the Pricing Disclosure Package.

     5. Free Writing Prospectuses.

     (a) The Company represents and agrees that, without the prior consent of the Representative, it has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus; each Underwriter represents and agrees that, without the prior consent of the Company and the Representative, it has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus or a free writing prospectus that is not required to be filed by the Company pursuant to Rule 433 under the Securities Act (an “Underwriter Free Writing Prospectus”). Any such free writing prospectus the use of which is consented to by the Company and the Representative is referred to herein as a “Permitted Free Writing Prospectus”. The only Permitted Free Writing Prospectus as of the time of this Agreement is the pricing term sheet referred to in paragraph 5(b) below.

     (b) The Company agrees to file a pricing term sheet, in the form of Schedule I hereto and approved by the Representative pursuant to Rule 433(d) under the Securities Act within the time period prescribed by such Rule.

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     (c) The Company and the Underwriters have complied and will comply with the requirements of Rule 433 under the Securities Act applicable to any free writing prospectus, including timely Commission filing where required and legending.

     (d) The Company agrees that if at any time following issuance of a Permitted Free Writing Prospectus any event occurred or occurs as a result of which such Permitted Free Writing Prospectus would conflict in any material respect with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representative and, if requested by the Representative, will prepare and furnish without charge to each Underwriter a Permitted Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in a Permitted Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative, expressly for use therein.

     6. Time and Place of Closing; Default of Underwriters.

     (a) Payment for the Securities shall be made at the office of Hunton & Williams LLP, located at 421 Fayetteville Street Mall, Raleigh, North Carolina 27601 on the date specified in Schedule I hereto against delivery of the Securities at the office of JPMorgan Chase Bank, 4 New York Plaza, New York, New York 10004, or such other place, time and date as the Representative and the Company may agree. The hour and date of such delivery and payment are herein called the “Closing Date.” Payment for the Securities shall be by wire transfer of immediately available funds against delivery to The Depository Trust Company or to JPMorgan Chase Bank, as custodian for The Depository Trust Company, in fully registered global form registered in the name of CEDE & Co., as nominee for The Depository Trust Company, for the respective accounts specified by the Representative not later than the close of business on the business day prior to the Closing Date or such other date and time not later than the Closing Date as agreed by The Depository Trust Company or JPMorgan Chase Bank. For the purpose of expediting the checking of the certificates by the Representative, the Company agrees to make the Securities available to the Representative not later than 10:00 A.M. New York time, on the last full business day prior to the Closing Date at said office of JPMorgan Chase Bank.

     (b) If one or more Underwriters shall, for any reason other than a reason permitted hereunder, fail to take up and pay for the principal amount of the Securities to be purchased by such one or more Underwriters, the Company shall immediately notify the Representative, and the non-defaulting Underwriters shall be obligated to take up and pay for (in addition to the respective principal amount of the Securities set forth opposite their respective names in paragraph 4) the principal amount of such Securities that such defaulting Underwriter or Underwriters failed to take up and pay for, up to a principal amount thereof equal to 10% of the principal amount of such Securities. Each non-defaulting Underwriter shall do so on a pro-rata basis according to the amounts set forth

7

opposite the name of such non-defaulting Underwriter in paragraph 4, and such non-defaulting Underwriters shall have the right, within 24 hours of receipt of such notice, either to take up and pay for (in such proportion as may be agreed upon among them), or to substitute another Underwriter or Underwriters, satisfactory to the Company, to take up and pay for the remaining principal amount of the Securities that the defaulting Underwriter or Underwriters agreed but failed to purchase. If any unpurchased Securities still remain, then the Company or the Representative shall be entitled to an additional period of 24 hours within which to procure another party or parties, members of the National Association of Securities Dealers, Inc. (or if not members of such Association, who are not eligible for membership in said Association and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with said Association’s Conduct Rules) and satisfactory to the Company, to purchase or agree to purchase such unpurchased Securities on the terms herein set forth. In any such case, either the Representative or the Company shall have the right to postpone the Closing Date for a period not to exceed three full business days from the date agreed upon in accordance with this paragraph 6, in order that the necessary changes in the Registration Statement and Prospectus and any other documents and arrangements may be effected. If (i) neither the non-defaulting Underwriters nor the Company has arranged for the purchase of such unpurchased Securities by another party or parties as above provided and (ii) the Company and the non-defaulting Underwriters have not mutually agreed to offer and sell the Securities other than the unpurchased Securities, then this Agreement shall terminate without any liability on the part of the Company or any Underwriter (other than an Underwriter that shall have failed or refused, in accordance with the terms hereof, to purchase and pay for the principal amount of the Securities that such Underwriter has agreed to purchase as provided in paragraph 4 hereof), except as otherwise provided in paragraph 7 and paragraph 8 hereof.

     7. Covenants of the Company. The Company covenants with each Underwriter that:

     (a) As soon as reasonably possible after the execution and delivery of this Agreement, the Company will file the Prospectus with the Commission pursuant to Rule 424 under the Securities Act (“Rule 424”), setting forth, among other things, the necessary information with respect to the terms of offering of the Securities and make any other required filings pursuant to Rule 433 under the Securities Act. Upon request, the Company will promptly deliver to the Representative and to counsel for the Underwriters, to the extent not previously delivered, one fully executed copy or one conformed copy, certified by an officer of the Company, of the Registration Statement, as originally filed, and of all amendments thereto, if any, heretofore or hereafter made (other than those relating solely to Registered Securities other than the Securities), including any post-effective amendment (in each case including all exhibits filed therewith and all documents incorporated therein not previously furnished to the Representative), including signed copies of each consent and certificate included therein or filed as an exhibit thereto, and will deliver to the Representative for distribution to the Underwriters as many conformed copies of the foregoing (excluding the exhibits, but including all documents incorporated therein) as the Representative may reasonably request. The Company will also send to the Underwriters as soon as practicable after the date of this

8

Agreement and thereafter from time to time as many copies of the Prospectus and the Preliminary Prospectus as the Representative may reasonably request for the purposes required by the Securities Act.

     (b) During such period (not exceeding nine months) after the commencement of the offering of the Securities as the Underwriters may be required by law to deliver a Prospectus, if any event relating to or affecting the Company, or of which the Company shall be advised in writing by the Representative shall occur, which in the Company’s reasonable opinion (after consultation with counsel for the Representative) should be set forth in a supplement to or an amendment of the Prospectus in order to make the Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser, or if it is necessary to amend the Prospectus to comply with the Securities Act, the Company will forthwith at its expense prepare and furnish to the Underwriters and dealers named by the Representative a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus which will supplement or amend the Prospectus so that as supplemented or amended it will comply with the Securities Act and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading. In case any Underwriter is required to deliver a Prospectus after the expiration of nine months after the commencement of the offering of the Securities, the Company, upon the request of the Representative, will furnish to the Representative, at the expense of such Underwriter, a reasonable quantity of a supplemented or amended prospectus, or supplements or amendments to the Prospectus, complying with Section 10(a) of the Securities Act.

     (c) The Company will make generally available to its security holders, as soon as reasonably practicable, but in any event not later than 16 months after the end of the fiscal quarter in which the filing of the Prospectus pursuant to Rule 424 occurs, an earning statement (in form complying with the provisions of Section 11(a) of the Securities Act, which need not be certified by independent public accountants) covering a period of twelve months beginning not later than the first day of the Company’s fiscal quarter next following the filing of the Prospectus pursuant to Rule 424.

     (d) The Company will use its best efforts promptly to do and perform all things to be done and performed by it hereunder prior to the Closing Date and to satisfy all conditions precedent to the delivery by it of the Securities.

     (e) The Company will advise the Representative, or the Representative’s counsel, promptly of the filing of the Prospectus pursuant to Rule 424 and of any amendment or supplement to the Prospectus or Registration Statement or of official notice of institution of proceedings for, or the entry of, a stop order suspending the effectiveness of the Registration Statement and, if such a stop order should be entered, use its best efforts to obtain the prompt removal thereof.

     (f) The Company will use its best efforts to qualify the Securities, as may be required, for offer and sale under the Blue Sky or legal investment laws of such

9

jurisdictions as the Representative may designate, and will file and make in each year such statements or reports as are or may be reasonably required by the laws of such jurisdictions; provided, however, that the Company shall not be required to qualify as a foreign corporation or dealer in securities, or to file any general consents to service of process under the laws of any jurisdiction.

     (g) Prior to the termination of the offering of the Securities, the Company will not file any amendment to the Registration Statement or supplement to the Pricing Prospectus or the Prospectus (in each case other than amendments or supplements relating to Registered Securities other than the Securities) which shall not have previously been furnished to the Representative or of which the Representative shall not previously have been advised or to which the Representative shall reasonably object in writing and which has not been approved by the Representative or its counsel.

     8. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the printing and filing of the Registration Statement and the printing of this Agreement, (ii) the delivery of the Securities to the Underwriters, (iii) the fees and disbursements of the Company’s counsel and accountants, (iv) the expenses in connection with the qualification of the Securities under securities laws in accordance with the provisions of paragraph 7(f) hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith, such fees and disbursements not to exceed $7,500, (v) the printing and delivery to the Underwriters of copies of the Registration Statement and all amendments thereto, of the Preliminary Prospectus, any Permitted Free Writing Prospectus and the Prospectus and any amendments or supplements thereto, (vi) the printing and delivery to the Underwriters of copies of the Blue Sky Survey, and (vii) the preparation and execution by the Company of the Indenture; and the Company will pay all taxes, if any (but not including any transfer taxes), on the issue of the Securities. The fees and disbursements of Underwriters’ counsel shall be paid by the Underwriters (subject, however, to the provisions of this paragraph 8 requiring payment by the Company of fees and disbursements not to exceed $7,500); provided, however, that if this Agreement is terminated in accordance with the provisions of paragraph 9, 10 or 12 hereof, the Company shall reimburse the Representative for the account of the Underwriters for the fees and disbursements of Underwriters’ counsel. The Company shall not be required to pay any amount for any expenses of the Representative or of any other of the Underwriters except as provided in paragraph 7 hereof and in this paragraph 8. The Company shall not in any event be liable to any of the Underwriters for damages on account of the loss of anticipated profit.

     9. Conditions of Underwriters’ Obligations. The several obligations of the Underwriters to purchase and pay for the Securities shall be subject to the accuracy of the representations and warranties on the part of the Company as of the date hereof and the Closing Date, to the performance by the Company of its obligations to be performed hereunder prior to the Closing Date, and to the following further conditions:

     (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect on the Closing Date and no proceedings for that purpose shall be pending before, or, to the Company’s knowledge, threatened by, the Commission on the Closing Date. The Representative shall have received, prior to payment for the

10

Securities, a certificate dated the Closing Date and signed by the Chairman, President, Treasurer or a Vice President of the Company to the effect that no such stop order is in effect and that no proceedings for such purpose are pending before or, to the knowledge of the Company, threatened by the Commission.

     (b) At the time of execution of this Agreement, or such later date as shall have been consented to by the Representative, there shall have been issued, and on the Closing Date there shall be in full force and effect, orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Securities, which shall not contain any provision unacceptable to the Representative by reason of its being materially adverse to the Company (it being understood that no such order in effect on the date of this Agreement and heretofore furnished to the Representative or counsel for the Underwriters contains any such unacceptable provision).

     (c) At the Closing Date, the Representative shall receive favorable opinions from: (1) Hunton & Williams LLP, counsel to the Company, which opinion shall be satisfactory in form and substance to counsel for the Underwriters, and (2) Dewey Ballantine LLP, counsel for the Underwriters, in each of which opinions (except Hunton & Williams LLP as to matters of North Carolina law and except as to subdivision (vi) (as to documents incorporated by reference, at the time they were filed with the Commission) as to which Dewey Ballantine LLP need express no opinion) said counsel may rely as to all matters North Carolina and South Carolina law upon the opinions of Frank A. Schiller, Esq., Vice President of Progress Energy Service Company LLC, acting as counsel to the Company, and [South Carolina counsel], respectively, to the effect that:

     (i) the Indenture has been duly and validly authorized by all necessary corporate action, has been duly and validly executed and delivered by the Company, and is a valid and binding obligation of the Company enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws affecting creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealings;

     (ii) the Indenture has been duly qualified under the 1939 Act;

     (iii) assuming authentication of the Securities by the Trustee in accordance with the Indenture and delivery of the Securities to and payment for the Securities by the Underwriters, as provided in this Agreement, the Securities have been duly and validly authorized, executed and delivered and are legal, valid and binding obligations of the Company enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other laws affecting creditors’ rights and general equitable principles and any implied covenant of good faith and fair dealings, and are entitled to the benefits of the Indenture;

     (iv) the statements made in the Prospectus under the caption “Description of Debt Securities,” insofar as they purport to constitute summaries

11

of the documents referred to therein, are accurate summaries in all material respects;

     (v) this Agreement has been duly and validly authorized, executed and delivered by the Company;

     (vi) the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses and the Prospectus, at the time each was filed with, or transmitted for filing to, the Commission pursuant to Rule 424 (except as to the financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein, upon which such opinions need not pass), complied as to form in all material respects with the requirements of the Securities Act and the 1939 Act and the applicable instructions, rules and regulations of the Commission thereunder; the documents or portions thereof filed with the Commission pursuant to the Exchange Act and deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus and the Prospectus pursuant to Item 12 of Form S-3 (except as to financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein and that part of the Registration Statement that constitutes the Statement of Eligibility on Form T-1, upon which such opinions need not pass), at the time they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement has become effective under the Securities Act and, to the best of the knowledge of said counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and not withdrawn and no proceedings for a stop order with respect thereto are threatened or pending under Section 8 of the Securities Act; and

     (vii) nothing has come to the attention of said counsel that would lead them to believe that the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and nothing has come to the attention of said counsel that would lead them to believe that (x) the Pricing Disclosure Package, as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (y) the Prospectus, as of its date and, as amended or supplemented, at the Closing Date, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except as to financial statements and other financial and statistical data constituting a part of the Registration Statement, the Pricing Disclosure Package or the Prospectus or incorporated by reference therein

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and that part of the Registration Statement that constitutes the Statement of Eligibility on Form T-1, upon which such opinions need not pass).

     (d) At the Closing Date, the Representative shall receive from Frank A. Schiller, Esq., Vice President of Progress Energy Service Company, LLC, acting as counsel to the Company, a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the same effect with respect to the matters enumerated in subdivisions (i), (iii), (v) and (vii) of subparagraph (c) of this paragraph 9 as the opinions required by said subparagraph (c), and to the further effect that:

     (i) the Company is a validly organized and existing corporation under the laws of the State of North Carolina and is in good standing under the laws of the State of North Carolina and is duly qualified to do business in the State of South Carolina;

     (ii) the Company is duly authorized by its Charter to conduct the business that it is now conducting as set forth in the Prospectus;

     (iii) the Company is an electrical utility engaged in the business of generating, transmitting, distributing and selling electric power to the general public in the States of North Carolina and South Carolina;

     (iv) the Company has valid and subsisting franchises, licenses and permits adequate for the conduct of its business, except where the failure to hold such franchises, licenses and permits would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company;

     (v) the issuance and sale of the Securities have been duly authorized by all necessary corporate action on the part of the Company;

     (vi) orders have been entered by the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Securities; and to the best of the knowledge of said counsel, said orders are still in force and effect; and no further filing with, approval, authorization, consent or other order of, any public board or body (except such as have been obtained under the Securities Act and as may be required under the state securities or Blue Sky laws of any jurisdiction) is legally required for the consummation of the transactions contemplated in this Agreement;

     (vii) except as described in or contemplated by the Prospectus, there are no pending actions, suits or proceedings (regulatory or otherwise) against the Company or any properties that are likely, in the aggregate, to result in any material adverse change in the business, properties, results of operations or financial condition of the Company or that are likely, in the aggregate, to materially and adversely affect the Indenture, the Securities or the consummation of this Agreement, or the transactions contemplated herein or therein; and

13

     (viii) the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not (i) result in a breach of any of the terms or provisions of, or constitute a default under, the Charter or the Company’s by-laws or (ii) result in a material breach of any terms or provisions of, or constitute a default under, any applicable law, indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would have a material adverse effect on business, properties, results of operations or financial condition of the Company.

     In said opinion such counsel may rely as to all matters of South Carolina law on the opinion of [South Carolina counsel].

     (e) At the Closing Date, the Representative shall receive from [South Carolina counsel], a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the effect that:

     (i) The Company is an electrical utility engaged in the business of generating, transmitting, distributing and selling electric power to the general public in the States of South Carolina and North Carolina, and the Company conducts its South Carolina retail operations subject to the jurisdiction of the South Carolina Public Service Commission pursuant to South Carolina Code Annotated, Sections 58-27-10 et seq. (1976 as amended);

     (ii) The Company is duly qualified to transact business in the State of South Carolina;

     (f) The Representative shall have received on the date hereof and shall receive on the Closing Date from Deloitte & Touche LLP, a letter addressed to the Representative containing statements and information of the type ordinarily included in accountants’ SAS 72 “comfort letters” to underwriters with respect to the audit reports, financial statements and certain financial information contained in or incorporated by reference into the Prospectus.

     (g) At the Closing Date, the Representative shall receive a certificate of the Chairman, President, Treasurer or a Vice President of the Company, dated the Closing Date, to the effect that the representations and warranties of the Company in this Agreement are true and correct as of the Closing Date.

     (h) The Permitted Free Writing Prospectus, and any other material required pursuant to Rule 433(d) under the Securities Act, shall have been filed by the Company with the Commission within the applicable time periods prescribed by Rule 433.

     (i) All legal proceedings taken in connection with the sale and delivery of the Securities shall have been satisfactory in form and substance to counsel for the Underwriters, and the Company, as of the Closing Date, shall be in compliance with any

14

governing orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina, except where the failure to comply with such order would not be material to the offering or validity of the Securities.

     In case any of the conditions specified above in this paragraph 9 shall not have been fulfilled or waived by 2:00 P.M. on the Closing Date, this Agreement may be terminated by the Representative by delivering written notice thereof to the Company. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 7 and 8 hereof.

     10. Conditions of the Company’s Obligations. The obligations of the Company to deliver the Securities shall be subject to the following conditions:

     (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect on the Closing Date, and no proceedings for that purpose shall be pending before or threatened by the Commission on the Closing Date.

     (b) Prior to 12:00 Noon, New York time, on the day following the date of this Agreement, or such later date as shall have been consented to by the Company, there shall have been issued and on the Closing Date there shall be in full force and effect orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale by the Company of the Securities, which shall not contain any provision unacceptable to the Company by reason of its being materially adverse to the Company (it being understood that no such order in effect as of the date of this Agreement contains any such unacceptable provision).

     In case any of the conditions specified in this paragraph 10 shall not have been fulfilled at the Closing Date, this Agreement may be terminated by the Company by delivering written notice thereof to the Representative. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 7 and 8 hereof.

     11. Indemnification.

     (a) The Company agrees to indemnify and hold harmless each Underwriter, each officer and director of each Underwriter and each person who controls any Underwriter within the meaning of Section 15 of the Securities Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each such Underwriter, each such officer and director, and each such controlling person for any legal or other expenses (including to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement, or alleged untrue statement, of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus, or in the Registration Statement or Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or

15

in any free writing prospectus used by the Company other than a Permitted Free Writing Prospectus, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the indemnity agreement contained in this paragraph 11 shall not apply to any such losses, claims, damages, liabilities, expenses or actions arising out of or based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with information furnished herein or in writing to the Company by any Underwriter through the Representative expressly for use in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus, or any amendment or supplement to any thereof, or arising out of, or based upon, statements in or omissions from that part of the Registration Statement that shall constitute the Statement of Eligibility under the 1939 Act (Form T-1) of the Trustee, and provided, further, that the indemnity agreement contained in this paragraph 11 shall not inure to the benefit of any Underwriter (or of any person controlling such Underwriter) on account of any such losses, claims, damages, liabilities, expenses or actions arising from the sale of the Securities to any person if a copy of the Permitted Free Writing Prospectus or Prospectus (excluding documents incorporated by reference therein) shall not have been given or sent to such person by or on behalf of such Underwriter at or prior to the entry into the contract of sale, unless such Prospectus or Permitted Free Writing Prospectus failed to correct the omission or misstatement. The indemnity agreement of the Company contained in this paragraph 11 and the representations and warranties of the Company contained in paragraph 3 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter, and such officer or director or any such controlling person and shall survive the delivery of the Securities. The Underwriters agree to notify promptly the Company, and each other Underwriter, of the commencement of any litigation or proceedings against them or any of them, or any such officer or director, or any such controlling person, in connection with the sale of the Securities.

     (b) Each Underwriter severally, and not jointly, agrees to indemnify and hold harmless the Company, its officers who signed the Registration Statement and its directors, and each person who controls the Company within the meaning of Section 15 of the Securities Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each of them for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages, or liabilities, or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses, the Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or any Underwriter Free Writing Prospectus used by such Underwriter (but only to the extent that the content of such Underwriter Free Writing Prospectus that is subject to indemnification is materially inconsistent with the information contained in the Permitted Free Writing Prospectus or the Prospectus) or the omission or alleged omission to state

16

therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished herein or in writing to the Company by such Underwriter or through the Representative on behalf of such Underwriter expressly for use in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectus or the Prospectus or any amendment or supplement to any thereof. The indemnity agreement of all the respective Underwriters contained in this paragraph 11 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company or any other Underwriter, or any such officer or director or any such controlling person, and shall survive the delivery of the Securities. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers or directors, or any such controlling person, in connection with the sale of the Securities.

     (c) The Company and each of the Underwriters agree that, upon the receipt of notice of the commencement of any action against it, its officers or directors, or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, it will promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder. The Company and each of the Underwriters agree that the notification required by the preceding sentence shall be a material term of this Agreement. The omission so to notify such indemnifying party or parties of any such action shall relieve such indemnifying party or parties from any liability that it or they may have to the indemnified party on account of any indemnity agreement contained herein if such indemnifying party was materially prejudiced by such omission, but shall not relieve such indemnifying party or parties from any liability that it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, such indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of such action, in which event such defense shall be conducted by counsel chosen by such indemnifying party (or parties) and satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, and such defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of such action, such indemnifying parties will reimburse such indemnified party or parties for the reasonable fees and expenses of any counsel retained by them, as such expenses are incurred; provided, however, if the defendants (including any impleaded parties) in any such action include both the indemnified party and the indemnifying party, and counsel for the indemnified party shall have concluded, in its reasonable judgment, that there may be a conflict of interest involved in the representation by such counsel of both the indemnifying party and the indemnified party, the indemnified party or parties shall have the right to select separate counsel, satisfactory to the indemnifying party, to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to one local counsel) representing the indemnified parties who are parties to such action). Each

17

of the Company and the several Underwriters agrees that without the other party’s prior written consent, which consent shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any claim in respect of which indemnification may be sought under the indemnification provisions of this Agreement, unless such settlement, compromise or consent includes an unconditional release of such other party from all liability arising out of such claim.

     (d) If the indemnification provided for in subparagraphs (a) or (b) above is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions that resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Securities as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subparagraph (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to above in this subparagraph (d). The rights of contribution contained in this paragraph 11 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter of the Company and shall survive delivery of the Securities. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this subparagraph (d), each officer and director of each Underwriter and each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of

18

Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. The Underwriters’ respective obligations to contribute pursuant to this subparagraph (d) are several in proportion to the number of Securities set forth opposite their respective names in paragraph 4 and not joint.

     (e) For purposes of this paragraph 11, it is understood and agreed that the only information provided by the Underwriters expressly for use in the Registration Statement, the Pricing Prospectus, the Permitted Free Writing Prospectuses and Prospectus were the following parts of the section titled “Underwriting”:      .

     12. Termination Date of this Agreement. This Agreement may be terminated by the Representative at any time prior to the Closing Date by delivering written notice thereof to the Company, if on or after the date of this Agreement but prior to such time (a) there shall have occurred any general suspension of trading in securities on the New York Stock Exchange, or there shall have been established by the New York Stock Exchange or by the Commission or by any federal or state agency or by the decision of any court, any limitation on prices for such trading or any restrictions on the distribution of securities or (b) there shall have occurred any new outbreak of hostilities including, but not limited to, significant escalation of hostilities that existed prior to the date of this Agreement or any national or international calamity or crisis, or any material adverse change in the financial markets of the United States, the effect of which outbreak, escalation, calamity or crisis, or material adverse change on the financial markets of the United States shall be such as to make it impracticable, in the reasonable judgment of the Representative, for the Underwriters to enforce contracts for the sale of the Securities, or (c) the Company shall have sustained a substantial loss by fire, flood, accident or other calamity that renders it impracticable, in the reasonable judgment of the Representative, to consummate the sale of the Securities and the delivery of the Securities by the several Underwriters at the initial public offering price, or (d) there shall have been any downgrading or any notice of any intended or potential downgrading in the rating accorded the Company’s securities by any “nationally recognized statistical rating organization” as that term is defined by the Commission for the purposes of Securities Act Rule 436(g)(2), or any such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Securities, or any of the Company’s other outstanding debt, the effect of which in the reasonable judgment of the Representative, makes it impracticable or inadvisable to consummate the sale of the Securities and the delivery of the Securities by the several Underwriters at the initial public offering price or (e) there shall have been declared, by either federal or New York authorities, a general banking moratorium. This Agreement may also be terminated at any time prior to the Closing Date if in the reasonable judgment of the Representative the subject matter of any amendment or supplement to the Registration Statement, the Pricing Prospectus or Prospectus (other than an amendment or supplement relating solely to the activity of any Underwriter or Underwriters) filed after the execution of this Agreement shall have materially impaired the marketability of the Securities. Any termination hereof pursuant to this paragraph 12 shall be without liability of any party to any other party except as otherwise provided in paragraphs 7 and 8.

     13. Miscellaneous. The validity and interpretation of this Agreement shall be governed by the laws of the State of New York. Unless otherwise specified, time of day refers to New York City time. This Agreement shall inure to the benefit of, and be binding upon, the

19

Company, the several Underwriters, and with respect to the provisions of paragraph 11 hereof, the officers and directors and each controlling person referred to in paragraph 11 hereof, and their respective successors. Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. The term “successors” as used in this Agreement shall not include any purchaser, as such purchaser, of any of the Securities from any of the several Underwriters.

     14. Nature of Relationship. The Company acknowledges and agrees that (i) in connection with all aspects of each transaction contemplated by this Agreement, the Company and the Underwriters have an arms length business relationship that creates no fiduciary duty on the part of any party and each expressly disclaims any fiduciary relationship, (ii) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, (iii) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate, and (iv) any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.

     15. Notices. All communications hereunder shall be in writing or by telefax and, if to the Underwriters, shall be mailed, transmitted by any standard form of telecommunication or delivered to the Representative at        , and if to the Company, shall be mailed or delivered to it at 410 S. Wilmington Street, Raleigh, North Carolina 27601-1748, attention of Thomas R. Sullivan, Treasurer.

     16. Counterparts. This Agreement may be simultaneously executed in counterparts, each of which when so executed shall be deemed to be an original. Such counterparts shall together constitute one and the same instrument.

     17. Defined Terms. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings assigned to them in the Registration Statement.

[The remainder of this page has been intentionally left blank.]

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     If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed duplicate hereof whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.

Very truly yours,

CAROLINA POWER & LIGHT COMPANY

d/b/a PROGRESS ENERGY CAROLINAS, INC.

By:

                    Authorized Representative

Accepted as of the date first
above written, as Underwriter
named in, and as the Representative
of the other Underwriters named in,
Section 1 of this Agreement.

[REPRESENTATIVE]

By:                                                             
                     Authorized Representative

[Signature Page for the Debt Securities Underwriting Agreement]

SCHEDULE I

PRICING TERM SHEET

Underwriting Agreement dated                      , 20___
Representative(s):
Designation:	[Title of debt securities]
Principal Amount:	$
Maturity:	, ___
Interest Rate:	.
Interest Payment Dates:	Payable ___on       , commencing ___, ___.
Public Offering Price:	___% of the principal amount thereof.
Redemption Terms:	.
Settlement:	___, 20___
CUSIP:	___

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov (and more specifically, at the URL link http://sec.gov/cgi-bin/browse-edgar?company=carolina+power&CIK=&filenum=&State=&SIC=&owner=include&a ction=getcompany). Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free at 1-8[xx-xxx-xxxx].

SCHEDULE II

PRICING DISCLOSURE PACKAGE

     1) Prospectus dated ___, 20___

     2) Preliminary Prospectus Supplement dated ___, 20___(which shall be deemed to include the Incorporated Documents)

     3) Permitted Free Writing Prospectuses

a) Pricing Term Sheet attached as Schedule I hereto

EX-1.D

Exhibit 1(d)

CAROLINA POWER & LIGHT COMPANY
d/b/a PROGRESS ENERGY CAROLINAS, INC.

Preferred Stock¹

UNDERWRITING AGREEMENT

                    , 20__

To the Representative named in Schedule I hereto
of the Underwriters named in Section 1 herein

Dear Ladies and Gentlemen:

     The undersigned, Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (the “Company”), hereby confirms its agreement with each of the several Underwriters hereinafter named as follows:

     1. Underwriters and Representative. The term “Underwriters” as used in this Underwriting Agreement (this “Agreement”) shall be deemed to mean the following firms, and any underwriter substituted as provided in paragraph 7 hereof, and the term “Underwriter” shall be deemed to mean one of such Underwriters:

     [                    ]

     [                    ]

     [                    ]

     The term “Representative” as used herein shall be deemed to mean the firm or the firms named in Schedule I hereto, collectively. If any firm or firms named as Representative in Schedule I hereto are the only firm or firms serving as underwriters, then the terms “Underwriters” and “Representative,” as used herein, shall each be deemed to refer to such firm or firms. If more than one firm is named in Schedule I hereto, such firms represent, jointly and severally, that they have been authorized by the Underwriters to execute this Agreement on their behalf and to act for them as Representative in the manner herein provided. All obligations of the Underwriters hereunder are several and not joint. If more than one firm is named as Representative in Schedule I hereto, any action under or in respect of this Agreement may be taken by such firms jointly as the Representative or by one of the firms acting on behalf of the Representative, and such action will be binding upon all the Underwriters.

     2. Description of Securities. The Company proposes to issue and sell to the several Underwriters                     shares of its preferred stock (no par value) in the amount specified in Schedule I hereto (the “Firm Shares”). The Company also proposes to issue and sell to the several Underwriters not more than an additional                     shares of its preferred stock (no

¹ Class of preferred stock ($5 Preferred Stock, Serial Preferred Stock or Preferred Stock A) to be determined at time of offering.

par value) (the “Option Shares”) if and to the extent the Representative shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of preferred stock granted to the Underwriters in paragraph 4 hereof. The Firm Shares and the Option Shares are hereinafter collectively referred to as the “Shares.” The shares of preferred stock (no par value) of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the “Preferred Stock.” The terms of the Shares will be set forth in an amendment to the Company’s Restated Charter relating to the preferred stock (“Articles of Amendment”) to be filed by the Company with the Secretary of State of the State of North Carolina (“NCSOS”).

     3. Representations and Warranties of the Company. The Company represents and warrants to each of the Underwriters that:

     (a) The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3, as amended (No. 333-          ) (the “New Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), for the registration of up to an aggregate of $                     principal amount of First Mortgage Bonds, Senior Notes, Debt Securities and Preferred Stock in unallocated amounts. The New Registration Statement also constituted post-effective amendment no. 1 to a registration statement on Form S-3 (No. 333-          ) (the “Post-Effective Amendment” and together with the New Registration Statement, the “Registration Statement”) under the Securities Act relating to an aggregate of $                     principal amount of the Company’s securities, which had been previously registered under the Securities Act but remained unsold at the time the Post-Effective Amendment became effective. The Registration Statement contained a combined prospectus for the sale of up to an aggregate of $                     principal amount of the Company’s First Mortgage Bonds, Senior Notes, Debt Securities and Preferred Stock (the “Registered Securities”) in unallocated amounts. The Registration Statement was declared effective by the Commission on                     , 20_. As of the date hereof, the Company has sold an aggregate of $                     principal amount of the Registered Securities. The term “Registration Statement” shall be deemed to include all amendments to the date hereof and all documents incorporated by reference therein (the “Incorporated Documents”). The base prospectus filed as part of the Registration Statement, in the form in which it has most recently been filed with the Commission prior to the date of this Agreement, is hereinafter called the “Basic Prospectus.” The Basic Prospectus included in the Registration Statement, as supplemented by a preliminary prospectus supplement, dated                     , 20___, relating to the Shares, and all prior amendments or supplements thereto (other than amendments or supplements relating to Registered Securities other than the Shares), including the Incorporated Documents, is hereinafter referred to as the “Preliminary Prospectus.” The Preliminary Prospectus, as amended and supplemented, including the Incorporated Documents, at or immediately prior to the Applicable Time (as defined below) is hereinafter called the “Pricing Prospectus.” The Basic Prospectus included in the Registration Statement, as it is to be supplemented by a prospectus supplement, dated on the date hereof, substantially in the form delivered to the Representative prior to the execution hereof, relating to the Shares (the “Prospectus Supplement”) and all prior amendments or supplements thereto (other than amendments or supplements relating to securities of the Company other than the

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Shares), including the Incorporated Documents, is hereinafter referred to as the “Prospectus.” Any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Securities Act and the filing of any document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), deemed to be incorporated therein after the date hereof and prior to the termination of the offering of the Shares by the Underwriters; and any references herein to the terms “Registration Statement” or “Prospectus” at a date after the filing of the Prospectus Supplement shall be deemed to refer to the Registration Statement or the Prospectus, as the case may be, as each may be amended or supplemented prior to such date.

     For purposes of this Agreement, the “Applicable Time” is                      (New York City time) on the date of this Agreement; the documents listed in Schedule II, taken together, are collectively referred to as the “Pricing Disclosure Package.”

     (b) The Registration Statement, at the time and date it was declared effective by the Commission, complied, and the Registration Statement and the Prospectus, as of the date hereof and at the Closing Date (as defined herein), will comply, in all material respects, with the applicable provisions of the Securities Act and the applicable rules and regulations of the Commission thereunder; the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Pricing Disclosure Package as of the Applicable Time did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Prospectus, as of its date and at the Closing Date, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this subparagraph (b) shall not apply to statements or omissions made in reliance upon and in conformity with the Underwriter Information (as defined in paragraph 12(e)). The Incorporated Documents, at the time they were filed with the Commission, complied in all material respects with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder; and any documents so filed and incorporated by reference subsequent to the date hereof and prior to the termination of the offering of the Shares by the Underwriters will, at the time they are filed with the Commission, comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder; and, when read together with the Registration Statement, the Pricing Prospectus, the Permitted Free Writing Prospectuses (as defined in paragraph 6(a) hereof) and the Prospectus, none of such documents included or includes or will include any untrue statement of a material fact or omitted or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each Permitted Free Writing Prospectus listed on

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Schedule II does not conflict in any material respect with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus.

     (c) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of North Carolina; has corporate power and authority to own, lease and operate its properties and to conduct its business as contemplated under this Agreement and the other material agreements to which it is a party; and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (d) The historical financial statements incorporated by reference in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly the financial condition and operations of the Company at the respective dates or for the respective periods to which they apply; such financial statements have been prepared in each case in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except that the quarterly financial statements, if any, incorporated by reference from any Quarterly Reports on Form 10-Q contain condensed footnotes prepared in accordance with applicable Exchange Act rules and regulations; and Deloitte & Touche LLP, which has audited certain of the financial statements is an independent registered public accounting firm as required by the Securities Act or the Exchange Act and the rules and regulations of the Commission thereunder.

     (e) Except as reflected in, or contemplated by, the Registration Statement and the Pricing Prospectus, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, and prior to the Closing Date, (i) there has not been any material adverse change in the business, properties, results of operations or financial condition of the Company, (ii) there has not been any material transaction entered into by the Company other than transactions contemplated by the Registration Statement and the Pricing Prospectus or transactions arising in the ordinary course of business and (iii) the Company has no material contingent obligation that is not disclosed in the Registration Statement and the Pricing Prospectus that could likely result in a material adverse change in the business, properties, results of operations or financial condition of the Company.

     (f) The Company has full power and authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and the fulfillment of the terms hereof on the part of the Company to be fulfilled have been duly authorized by all necessary corporate action of the Company in accordance with the provisions of its restated charter (the “Charter”), by-laws and applicable law.

     (g) The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions

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of, or constitute a default under, the Charter, the Company’s by-laws, applicable law or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would have a material adverse effect on the business, properties, results of operations or financial condition of the Company.

     (h) The Shares conform in all material respects to the description thereof contained in the Pricing Disclosure Package and the Prospectus.

     (i) The Company has no subsidiaries that meet the definition of “significant subsidiary” as defined in Section 210.1-02(w) of Regulation S-X promulgated under the Securities Act.

     (j) The authorized capital stock of the Company is 300,000 shares of $5 preferred stock, 20,000,000 shares of serial preferred stock, 5,000,000 shares of preferred stock A, 10,000,000 shares of preference stock and 100,000,000 shares of common stock, of which                     shares of $5 preferred stock were issued and outstanding,                     shares of serial preferred shares were issued and outstanding,                     shares of preferred stock A were issued and outstanding, no shares of preference stock were issued and outstanding and                     shares of common stock are issued and outstanding (except for subsequent issuances, if any, pursuant to this Agreement, or pursuant to agreements or employee benefit plans referred to in the Pricing Prospectus). The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of capital stock of the Company were issued in violation of the preemptive or other similar rights, if any, of any securityholder of the Company.

     (k) The issuance of the Shares has been duly authorized by the Company and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights. The Articles of Amendment have been duly authorized and adopted by the Company and will be effective upon filing with the NCSOS.

     (l) [The Shares will, upon issuance, be listed on the New York Stock Exchange.]

     (m) The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”).

     (n) Except as described in or contemplated by the Pricing Prospectus, there are no pending or, to the knowledge of the Company, threatened actions, suits or proceedings against or affecting the Company or its properties that are likely, in the aggregate, to result in any material adverse change in the business, properties, results of operations or financial condition of the Company or that are likely, in the aggregate, to materially and adversely affect the consummation of this Agreement or the transactions contemplated herein or therein.

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     (o) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder in connection with the offering, issuance or sale of the Shares hereunder or the consummation of the transactions herein contemplated, except such as have already been made or obtained or as may be required under the Securities Act or state securities laws.

     (p) The Company is not in violation of its Charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreements or instruments to which the Company is a party or by which it may be bound or to which any of the property or assets of the Company is subject except for such defaults that would not result in a material adverse change in the business, properties, results of operations or financial condition of the Company.

     (q) Except as described in the Pricing Prospectus and except as would not, in the aggregate, result in a material adverse change in the business, properties, results of operations or financial condition of the Company, the Company is not in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof that individually or in the aggregate is expected by the Company to result in a material adverse effect in the business, properties, results of operations or financial condition of the Company or which individually or in the aggregate is expected by the Company to materially and adversely affect the consummation of this Agreement or the transactions contemplated herein or therein.

     (r) There are no persons with registration rights or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act.

     4. Purchase and Sale.

     (a) On the basis of the representations, warranties and covenants herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to each of the Underwriters, severally and not jointly, and each such Underwriter agrees, severally and not jointly, to purchase from the Company, the respective number of Shares set forth opposite the name of such Underwriter below at a price of $  per share (the “Purchase Price”).

Underwriter	Number of Shares
[                    ]
[                    ]
[                    ]
Total

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     (b) On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Underwriters the Option Shares, and the Underwriters shall have a right to purchase, severally and not jointly, the Option Shares at the Purchase Price. Option Shares may be purchased as provided in this paragraph 4 in whole or in part from time to time, on the Closing Date and up to two times thereafter as provided herein, solely for the purpose of covering overallotments made in connection with the offering of the Firm Shares. If any Option Shares are to be purchased, each Underwriter agrees, severally and not jointly, to purchase the number of Option Shares (subject to such adjustments to eliminate fractional shares as the Representative may determine) that bears approximately the same proportion to the total number of Option Shares to be purchased as the number of Firm Shares set forth in paragraph 4(a) opposite the name of such Underwriter bears to the total number of Firm Shares.

     (c) The Company hereby agrees that, without the prior written consent of the Representative, it will not during the period ending ___days after the date of this Agreement (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of or otherwise transfer or dispose of, directly or indirectly, or to register or announce the sale or offering of any shares of preferred stock of the Company or any securities convertible into or exercisable or exchangeable for such preferred stock or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of such preferred stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of such preferred stock or such other securities, in cash or otherwise.

     (d) The foregoing subparagraph (c) shall not apply to (i) the Shares to be sold hereunder; (ii) the issuance by the Company of shares of preferred stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof of which the Underwriters have been advised in writing and to which the Representative has consented; and (iii) agreements or arrangements in connection with acquisition transactions involving the issuance or sale of shares of preferred stock or relating to options, rights, warrants or any securities convertible into or exercisable or exchangeable for shares of preferred stock, where the acquisition transactions are consummated more than ___days after the date of the Prospectus.

     5. Reoffering by Underwriters. The Underwriters agree to make promptly a bona fide public offering of the Shares to the public for sale as set forth in the Prospectus, subject, however, to the terms and conditions of this Agreement. The Underwriters agree that (i) no sales of the Shares will occur before investors are presented with the information that is contained in the Pricing Disclosure Package and (ii) such information that is presented to investors is consistent with the information that is contained in the Pricing Disclosure Package.

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     6. Free Writing Prospectuses.

     (a) The Company represents and agrees that, without the prior consent of the Representative, it has not made and will not make any offer relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus; each Underwriter represents and agrees that, without the prior consent of the Company and the Representative, it has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Rule 405 under the Act, other than a Permitted Free Writing Prospectus or a free writing prospectus that is not required to be filed by the Company pursuant to Rule 433 under the Securities Act (an “Underwriter Free Writing Prospectus”). Any such free writing prospectus the use of which is consented to by the Company and the Representative is referred to herein as a “Permitted Free Writing Prospectus”. The only Permitted Free Writing Prospectus as of the time of this Agreement is the pricing term sheet referred to in paragraph 6(b) below.

     (b) The Company agrees to file a pricing term sheet, in the form of Schedule I hereto and approved by the Representative pursuant to Rule 433(d) under the Securities Act within the time period prescribed by such Rule.

     (c) The Company and the Underwriters have complied and will comply with the requirements of Rule 433 under the Securities Act applicable to any free writing prospectus, including timely Commission filing where required and legending.

     (d) The Company agrees that if at any time following issuance of a Permitted Free Writing Prospectus any event occurred or occurs as a result of which such Permitted Free Writing Prospectus would conflict in any material respect with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representative and, if requested by the Representative, will prepare and furnish without charge to each Underwriter a Permitted Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in a Permitted Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative, expressly for use therein.

     7. Time and Place of Closing; Default of Underwriters.

     (a) Payment for the Firm Shares shall be made at the office of Hunton & Williams LLP, located at 421 Fayetteville Street Mall, Raleigh, North Carolina 27601 on the date specified in Schedule I hereto against delivery of the Shares to the office of the Representative, or such other place and date as the Representative and the Company may agree. Payment for the Firm Shares shall be by wire transfer of immediately available funds against delivery of the Firm Shares to the Representative or upon its order at the office of the Representative, at 10:00 A.M., New York City time, on the third business day (unless postponed in accordance with the provisions of this Agreement) following the date of this Agreement, or if pricing takes place after 4:30 P.M. New York City time, on

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the fourth business day following the date of this Agreement (unless postponed in accordance with the provisions of this Agreement), or at such other time on the same or such other earlier date, as shall be agreed upon by the Representative and the Company. The hour and date of such delivery and payment are herein referred to as the “Closing Date.”

     (b) Payment for all or any portion of the Option Shares shall be made from time to time by or on behalf of the several Underwriters by the wire transfer of immediately available funds to the Company’s account. Such payment shall be made upon delivery of such Option Shares to the Representative or upon its order at the office of the Representative, at 10:00 A.M., New York City time, on the third business day (unless postponed in accordance with the provisions of this Agreement) following the giving of the notice described below, but in no event on more than two such dates in addition to the Closing Date, each as shall be designated in written notices from the Representative to the Company of the Representative’s determination, on behalf of the Underwriters, to purchase a number, specified in said notices, of Option Shares, or on such other date as shall be agreed upon by the Representative and the Company. The time and date of any such payments are hereinafter referred to as an “Option Closing Date” (the Closing Date or any Option Closing Date, as applicable, is hereinafter referred to as the “Relevant Closing Date”). The notices of a determination to exercise the option to purchase all or any portion of the Option Shares and of an Option Closing Date may be given at any time within 30 days after the date of this Agreement.

     (c) On the Relevant Closing Date, the Company shall deliver, or cause to be delivered a credit representing the Firm Shares or the Option Shares, as the case may be, to an account or accounts at The Depository Trust Company as designated by the Representative for the accounts of the Representative and the several Underwriters against the irrevocable release of a wire transfer of immediately available funds for the amount of the purchase price therefor. Time shall be of the essence, and delivery at the time and place specified in this Agreement is a further condition to the obligations of the Underwriters.

     (d) If one or more Underwriters shall, for any reason other than a reason permitted hereunder, fail to take up and pay for the number of Shares to be purchased by such one or more Underwriters, the Company shall immediately notify the Representative, and the non-defaulting Underwriters shall be obligated to take up and pay for (in addition to the respective number of Shares set forth opposite their respective names in paragraph 4 hereof) the number of Shares that such defaulting Underwriter or Underwriters failed to take up and pay for, up to 10% of the aggregate number of Shares to be purchased on the Relevant Closing Date, and each non-defaulting Underwriter shall do so on a pro rata basis according to the number of Shares set forth opposite the name of such non-defaulting Underwriter in paragraph 4 hereof, and such non-defaulting Underwriters shall have the right, within 24 hours of receipt of such notice, either to take up and pay for (in such proportion as may be agreed upon among them), or to substitute another Underwriter or Underwriters, satisfactory to the Company, to take up and pay for the remaining number of Shares that the defaulting Underwriter or Underwriters agreed but failed to purchase. If any unpurchased Shares still remain, then the Company or the

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Representative shall be entitled to an additional period of 24 hours within which to procure another party or parties, members of the National Association of Securities Dealers, Inc. (or if not members of such Association, who are not eligible for membership in said Association and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with said Association’s Conduct Rules) and satisfactory to the Company, to purchase or agree to purchase such unpurchased Shares on the terms herein set forth. In any such case, either the Representative or the Company shall have the right to postpone the Relevant Closing Date for a period not to exceed three full business days from the date agreed upon in accordance with this paragraph 7, in order that the necessary changes in the Registration Statement and Prospectus and any other documents and arrangements may be effected. If (i) neither the non-defaulting Underwriters nor the Company has arranged for the purchase of such unpurchased Shares by another party or parties as above provided and (ii) the Company and the non-defaulting Underwriters have not mutually agreed to offer and sell the Shares other than the unpurchased Shares, then this Agreement, or the obligations of the several Underwriters to purchase Option Shares on a date which is after the Closing Date, as the case may be, shall terminate without any liability on the part of the Company or any Underwriter (other than an Underwriter that shall have failed or refused, for any reason not permitted hereunder, to purchase and pay for the number of Shares that such Underwriter has agreed to purchase as provided in paragraph 4 hereof), except as otherwise provided in paragraph 8 and paragraph 9 hereof.

     8. Covenants of the Company. The Company covenants with each Underwriter that:

     (a) As soon as reasonably possible after the execution and delivery of this Agreement, the Company will file the Prospectus with the Commission pursuant to Rule 424 under the Securities Act (“Rule 424”), setting forth, among other things, the necessary information with respect to the terms of offering of the Shares and make any other required filing pursuant to Rule 433 under the Securities Act. Upon request, the Company will promptly deliver to the Representative and to counsel for the Underwriters, to the extent not previously delivered, one fully executed copy or one conformed copy, certified by an officer of the Company, of the Registration Statement, as originally filed, and of all amendments thereto, if any, heretofore or hereafter made, (other than those relating solely to Registered Securities other than the Shares), including any post-effective amendment (in each case including all exhibits filed therewith and all documents incorporated therein not previously furnished to the Representative), including signed copies of each consent and certificate included therein or filed as an exhibit thereto, and will deliver to the Representative for distribution to the Underwriters as many conformed copies of the foregoing (excluding the exhibits, but including all documents incorporated therein) as the Representative may reasonably request. The Company will also send to the Underwriters as soon as practicable after the date of this Agreement and thereafter from time to time as many copies of the Prospectus and the Preliminary Prospectus as the Representative may reasonably request for the purposes required by the Securities Act.

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     (b) During such period (not exceeding nine months) after the commencement of the offering of the Shares as the Underwriters may be required by law to deliver a Prospectus, if any event relating to or affecting the Company, or of which the Company shall be advised in writing by the Representative shall occur, which in the Company’s reasonable opinion, after consultation with counsel for the Underwriters, should be set forth in a supplement to or an amendment of the Prospectus in order to make the Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser, or if it is necessary to amend the Prospectus to comply with the Securities Act, the Company will forthwith at its expense prepare and furnish to the Underwriters and dealers named by the Representative a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus which will supplement or amend the Prospectus so that as supplemented or amended it will comply with the Securities Act and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading. In case any Underwriter is required to deliver a Prospectus after the expiration of nine months after the commencement of the offering of the Shares, the Company, upon the request of the Representative, will furnish to the Representative, at the expense of such Underwriter, a reasonable quantity of a supplemented or amended prospectus, or supplements or amendments to the Prospectus, complying with Section 10(a) of the Securities Act.

     (c) The Company will make generally available to its security holders, as soon as reasonably practicable, but in any event not later than 16 months after the end of the fiscal quarter in which the filing of the Prospectus pursuant to Rule 424 occurs, an earning statement (in form complying with the provisions of Section 11(a) of the Securities Act, which need not be certified by independent public accountants) covering a period of twelve months beginning not later than the first day of the Company’s fiscal quarter next following the filing of the Prospectus pursuant to Rule 424.

     (d) The Company will use its best efforts promptly to do and perform all things to be done and performed by it hereunder prior to the Relevant Closing Date and to satisfy all conditions precedent to the delivery by it of the Shares.

     (e) The Company will advise the Representative, or its counsel, promptly of the filing of the Prospectus pursuant to Rule 424 and of any amendment or supplement to the Prospectus or Registration Statement or of official notice of institution of proceedings for, or the entry of, a stop order suspending the effectiveness of the Registration Statement and, if such a stop order should be entered, use its best efforts to obtain the prompt removal thereof.

     (f) The Company will use its best efforts to qualify the Shares, as may be required, for offer and sale under the Blue Sky or legal investment laws of such jurisdictions as the Representative may designate, and will file and make in each year such statements or reports as are or may be reasonably required by the laws of such jurisdictions; provided, however, that the Company shall not be required to qualify as a foreign corporation or dealer in securities, or to file any general consents to service of process under the laws of any jurisdiction.

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     (g) Prior to the termination of the offering of the Shares, the Company will not file any amendment to the Registration Statement or supplement to the Pricing Prospectus or the Prospectus (in each case other than amendments or supplements relating to Registered Securities other than the Shares) which shall not have previously been furnished to the Representative or of which the Representative shall not previously have been advised or to which the Representative shall reasonably object in writing and which has not been approved by the Representative or its counsel.

     (h) The Company will file the Articles of Amendment with the FSOS on or prior to the Closing Date.

     9. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the printing and filing of the Registration Statement and the printing of this Agreement, (ii) the delivery of the Shares to the Underwriters, (iii) the fees and disbursements of the Company’s counsel and accountants, (iv) the expenses in connection with the qualification of the Shares under securities laws in accordance with the provisions of subparagraph (f) of paragraph 8 hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith, such fees and disbursements (excluding filing fees) not to exceed $7,500, (v) the printing and delivery to the Underwriters of copies of the Registration Statement and all amendments thereto, of the Preliminary Prospectus, any Permitted Free Writing Prospectus and of the Prospectus and any amendments or supplements thereto and (vi) the printing and delivery to the Underwriters of copies of the Blue Sky Survey, if any; and the Company will pay all taxes, if any (but not including any transfer taxes), on the issue of the Shares.

     The fees and disbursements of Underwriters’ counsel shall be paid by the Underwriters (subject, however, to the provisions of clause (iv) of the preceding paragraph requiring payment by the Company of certain fees and disbursements (excluding filing fees) not to exceed $7,500); provided, however, that if this Agreement is terminated in accordance with the provisions of paragraph 10, 11 or 13 hereof, the Company shall reimburse the Representative for the account of the Underwriters for the reasonable and documented fees and disbursements of Underwriters’ counsel. The Company shall not be required to pay any amount for any expenses of the Representative or of any other of the Underwriters except as provided in paragraph 8 hereof and in this paragraph 9. The Company shall not in any event be liable to any of the Underwriters for damages on account of the loss of anticipated profit.

     10. Conditions of Underwriters’ Obligations. The several obligations of the Underwriters to purchase and pay for the Shares shall be subject to the accuracy of the representations and warranties on the part of the Company as of the date hereof and the Closing Date, to the performance by the Company of its obligations to be performed hereunder prior to the Closing Date, and to the following further conditions:

     (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect on the Closing Date; and no proceedings for that purpose shall be pending before, or, to the Company’s knowledge, threatened by, the Commission on the Closing Date. The Representative shall have received, prior to payment for the Shares, a certificate dated the Closing Date and signed by the Chairman, President, Treasurer or a

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Vice President of the Company to the effect that no such stop order is in effect and that no proceedings for such purpose are pending before or, to the knowledge of the Company, threatened by the Commission.

     (b) At the time of execution of this Agreement, or such later date as shall have been consented to by the Representative, there shall have been issued, and on the Closing Date there shall be in full force and effect, orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Shares, none of which shall contain any provision unacceptable to the Representative by reason of its being materially adverse to the Company (it being agreed that no such order in effect on the date of this Agreement and heretofore furnished to the Representative or counsel for the Underwriters contains any such unacceptable provision).

     (c) At the Closing Date, the Representative shall receive favorable opinions from: (1) Hunton & Williams LLP, counsel to the Company, which opinion shall be satisfactory in form and substance to counsel for the Underwriters, and (2) Dewey Ballantine LLP, counsel for the Underwriters, in each of which opinions (except Hunton & Williams LLP as to matters of North Carolina law and except as to subdivision (vi) (as to documents incorporated by reference, at the time they were filed with the Commission) as to which Dewey Ballantine LLP need express no opinion) said counsel may rely as to all matters of North Carolina and South Carolina law upon the opinions of Frank A. Schiller, Esq., Vice President of Progress Energy Service Company LLC, acting as counsel to the Company, [and South Carolina counsel], respectively, to the effect that:

     (i) assuming delivery to and payment for the Shares by the Underwriters, as provided in this Agreement, the Shares will be validly issued, fully paid and non-assessable;

     (ii) the shareholders of the Company are not entitled to statutory preemptive or, to such counsel’s knowledge, other similar contractual rights to subscribe for the Shares, [and the Shares have been duly authorized for listing on the New York Stock Exchange];

     (iii) the form of the certificates for the Shares conforms in all material respects to the requirements of the North Carolina Business Corporation Act [and the New York Stock Exchange];

     (iv) the statements made in the Prospectus under the caption “Description of Preferred Stock,” insofar as they purport to constitute summaries of the documents referred to therein, are accurate summaries in all material respects;

     (v) this Agreement has been duly and validly authorized, executed and delivered by the Company;

     (vi) the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, the Preliminary

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Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses and the Prospectus, at the time each was filed with, or transmitted for filing to, the Commission pursuant to Rule 424 (except as to the financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein, upon which such opinions need not pass), complied as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder; the documents or portions thereof filed with the Commission pursuant to the Exchange Act and deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus and the Prospectus pursuant to Item 12 of Form S-3 (except as to financial statements and other financial and statistical data constituting a part thereof or incorporated by reference therein and that part of the Registration Statement that constitutes Statements of Eligibility on Form T-1 and Form T-2, upon which such opinions need not pass), at the time they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the applicable rules and regulations of the Commission thereunder; the Registration Statement has become effective under the Securities Act and, to the best of the knowledge of said counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and not withdrawn and no proceedings for a stop order with respect thereto are threatened or pending under Section 8 of the Securities Act; and

     (vii) nothing has come to the attention of said counsel that would lead them to believe that the Registration Statement, at the time and date it was declared effective by the Commission and as of the date hereof, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and nothing has come to the attention of said counsel that would lead them to believe that (x) the Pricing Disclosure Package, as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (y) the Prospectus, as of its date and, as amended or supplemented, at the Closing Date, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except, in each case, as to financial statements and other financial and statistical data constituting a part of the Registration Statement, the Pricing Disclosure Package or the Prospectus or incorporated by reference therein and that part of the Registration Statement that constitutes the Statements of Eligibility on Form T-1 and Form T-2, upon which such opinions need not pass);

provided, however, that Dewey Ballantine LLP will not provide the opinion contained in subparagraphs (b)(ii) or (b)(iii) (as to the requirements of the North Carolina Business Corporation Act) of this paragraph 10.

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     (d) At the Closing Date, the Representative shall receive from Frank A. Schiller, Esq., Vice President of Progress Energy Service Company, LLC, acting as counsel for the Company, a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the same effect with respect to the matters enumerated in subdivisions (i) through (v) and subdivision (vii) of subparagraph (c) of this paragraph 10 as the opinions required by said subparagraph (c), and to the further effect that:

     (i) the Company is a validly organized and existing corporation under the laws of the State of North Carolina and is in good standing under the laws of the State of North Carolina and is duly qualified to do business in the State of South Carolina;

     (ii) the Company is duly authorized by its Charter to conduct the business which it is now conducting as set forth in the Prospectus; the Company has valid and subsisting franchises, licenses and permits adequate for the conduct of its business, except where the failure to hold such franchises, licenses and permits would not have a material adverse effect on the business, properties, results of operations or financial condition of the Company;

     (iii) the issuance and sale of the Shares have been duly authorized by all necessary corporate action on the part of the Company; the Articles of Amendment have been duly authorized and adopted by the Company and will be effective upon filing with the NCSOS.

     (iv) the authorized capital stock of the Company is 300,000 shares of $5 preferred stock, 20,000,000 shares of serial preferred stock, 5,000,000 shares of preferred stock A, 10,000,000 shares of preference stock and 100,000,000 shares of common stock; the shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; and none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company to subscribe for such stock;

     (v) Orders have been entered by the North Carolina Utilities Commission and the Public Service Commission of South Carolina authorizing the issuance and sale of the Shares, and to the best of the knowledge of said counsel, said orders are still in force and effect; and no further filing with, approval, authorization, consent or other order of any public board or body (except such as have been obtained under the Securities Act and as may be required under the state securities or Blue Sky laws of any jurisdiction) is legally required for the consummation of the transactions contemplated in this Agreement;

     (vi) to the best of his knowledge, there are no persons with registration rights or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act;

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     (vii) except as described in or contemplated by the Prospectus, there are no pending actions, suits or proceedings (regulatory or otherwise) against the Company or any of its properties which are likely in the aggregate to result in any material adverse change in the business, properties, results of operations or financial condition of the Company or which are likely in the aggregate, to materially and adversely affect the consummation of this Agreement or the transactions contemplated herein or therein;

     (viii) the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not (i) result in a breach of any of the terms or provisions of, or constitute a default under, the Charter or the Company’s by-laws or (ii) result in a material breach of any terms or provisions of, or constitute a default under, any applicable law, indenture, mortgage, deed of trust or other agreement or instrument to which the Company is now a party or any judgment, order, writ or decree of any government or governmental authority or agency or court having jurisdiction over the Company or any of its assets, properties or operations that, in the case of any such breach or default, would have a material adverse effect on business, properties, results of operations or financial condition of the Company; and

     In said opinion such counsel may rely as to all matters of South Carolina law on the opinion of [South Carolina counsel].

     (e) At the Closing Date, the Representative shall receive from [South Carolina counsel], a favorable opinion in form and substance satisfactory to counsel for the Underwriters, to the effect that:

     (i) The Company is an electrical utility engaged in the business of generating, transmitting, distributing and selling electric power to the general public in the States of South Carolina and North Carolina, and the Company conducts its South Carolina retail operations subject to the jurisdiction of the South Carolina Public Service Commission pursuant to South Carolina Code Annotated, Sections 58-27-10 et seq. (1976 as amended);

     (ii) The Company is duly qualified to transact business in the State of South Carolina;

     (f) The Representative shall have received on the date hereof and shall receive on the Closing Date from Deloitte & Touche LLP, a letter addressed to the Representative containing statements and information of the type ordinarily included in accountants’ SAS 72 “comfort letters” to underwriters with respect to the audit reports, financial statements and certain financial information contained in or incorporated by reference into the Prospectus.

     (g) At the Closing Date, the Representative shall receive a certificate of the Chairman, President, Treasurer or a Vice President of the Company, dated the Closing Date, to the effect that the representations and warranties of the Company in this Agreement are true and correct as of the Closing Date.

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     (h) The Permitted Free Writing Prospectus, and any other material required pursuant to Rule 433(d) under the Securities Act, shall have been filed by the Company with the Commission within the applicable time periods prescribed by Rule 433.

     (i) All legal proceedings taken in connection with the sale and delivery of the Shares shall have been satisfactory in form and substance to counsel for the Underwriters and the Company, as of the Closing Date, shall be in compliance with any governing orders of the North Carolina Utilities Commission and the Public Service Commission of South Carolina, except where the failure to comply with such orders would not be material to the offering or validity of the Shares.

     (j) [At the Closing Date, the Shares shall have been approved for listing on the New York Stock Exchange, subject only to official notice of issuance.]

     (k) At the date of this Agreement, the Representative shall have received an agreement substantially in the form of Exhibit A to Schedule III hereto signed by the persons listed on Schedule III hereto.

     (l) If the Underwriters exercise their option provided in paragraph 4(b) hereof to purchase all or any portion of the Option Shares, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company hereunder shall be true and correct as of each Option Closing Date and, at each Option Closing Date, the Representative shall have received:

     (i) Officers’ Certificate. A certificate, dated such Option Closing Date, of the Chairman, President, Treasurer or a Vice President of the Company confirming that the certificates delivered at the Closing Date pursuant to paragraphs 10(a) and 10(g) hereof remain true and correct as of such Option Closing Date.

     (ii) Opinion of Counsel for the Company. The favorable opinion of Hunton & Williams LLP, of counsel to the Company, together with the favorable opinion of Frank A. Schiller, Esq., [and South Carolina Counsel], each in form and substance satisfactory to counsel for the Underwriters, dated such Option Closing Date, relating to the Option Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinions required by paragraphs 10(c), 10(d) and 10(e), respectively, hereof.

     (iii) Opinion of Counsel for the Underwriters. The favorable opinion of Dewey Ballantine LLP, counsel for the Underwriters, dated such Option Closing Date, relating to the Option Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by paragraph 10(c) hereof.

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     (iv) Bring-down Comfort Letter. A letter from Deloitte & Touche LLP, in form and substance satisfactory to the Representative and dated such Option Closing Date, substantially in the same form and substance as the letters furnished to the Representative pursuant to paragraph 10(f) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three days prior to such Option Closing Date.

     In case any of the conditions specified above in this paragraph 10 shall not have been fulfilled or waived by 2:00 P.M. on the Relevant Closing Date, this Agreement or, in the case of any condition to the purchase of Option Shares, on a date which is after the Closing Date, the obligations of the several Underwriters to purchase the relevant Option Shares, may be terminated by the Representative by delivering written notice thereof to the Company. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 8 and 9 hereof.

     11. Conditions of the Company’s Obligations. The obligations of the Company to deliver the Shares on the Relevant Closing Date shall be subject to the conditions set forth in the first sentence of subparagraph (a) of paragraph 10 hereof and in subparagraph (b) of paragraph 10 hereof. In case these conditions shall not have been fulfilled at the Relevant Closing Date, this Agreement may be terminated by the Company by mailing or delivering written notice thereof to the Representative. Any such termination shall be without liability of any party to any other party except as otherwise provided in paragraphs 8 and 9 hereof.

     12. Indemnification.

     (a) The Company agrees to indemnify and hold harmless each Underwriter, each officer and director of each Underwriter and each person who controls any Underwriter within the meaning of Section 15 of the Securities Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each such Underwriter, each such officer and director and each such controlling person for any legal or other expenses (including to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement, or alleged untrue statement, of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus, or in the Registration Statement or Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or in any free writing prospectus used by the Company other than a Permitted Free Writing Prospectus, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the indemnity agreement contained in this paragraph 12 shall not apply to any such losses, claims, damages, liabilities, expenses or actions arising out of, or based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon and in conformity with the Underwriter Information and provided, further, that the indemnity

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agreement contained in this paragraph 12 shall not inure to the benefit of any Underwriter (or of any person controlling such Underwriter) on account of any such losses, claims, damages, liabilities, expenses or actions arising from the sale of the Shares to any person if a copy of the Permitted Free Writing Prospectus or Prospectus (excluding documents incorporated by reference therein) shall not have been given or sent to such person by or on behalf of such Underwriter at or prior to entry into the contract of sale, unless such Prospectus or Permitted Free Writing Prospectus failed to correct the omission or misstatement. The indemnity agreement of the Company contained in this paragraph 12 and the representations and warranties of the Company contained in paragraph 3 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any such officer or director or any such controlling person and shall survive the delivery of the Shares. The Underwriters agree to notify promptly the Company, and each other Underwriter, of the commencement of any litigation or proceedings against them or any of them, or any such controlling person, in connection with the sale of the Shares.

     (b) Each Underwriter severally, and not jointly, agrees to indemnify and hold harmless the Company, its officers who signed the Registration Statement and directors, and each person who controls the Company within the meaning of Section 15 of the Securities Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject and to reimburse each of them for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them, when and as incurred, in connection with investigating any such losses, claims, damages, or liabilities, or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectuses or the Prospectus as amended or supplemented (if any amendments or supplements thereto shall have been furnished), or any Underwriter Free Writing Prospectus used by such Underwriter (but only to the extent that the content of such Underwriter Free Writing Prospectus that is subject to indemnification is materially inconsistent with the information contained in the Permitted Free Writing Prospectus or the Prospectus) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with Underwriter Information. The indemnity agreement of all the respective Underwriters contained in this paragraph 12 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company or any other Underwriter, or any such controlling person, and shall survive the delivery of the Shares. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers or directors, or any such controlling person, in connection with the sale of the Shares.

     (c) The Company and each of the Underwriters agree that, upon the receipt of notice of the commencement of any action against it, its officers and directors, or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, it will promptly give written

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notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder. The Company and each of the Underwriters agree that the notification required by the preceding sentence shall be a material term of this Agreement. The omission so to notify such indemnifying party or parties of any such action shall relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party on account of any indemnity agreement contained herein if such indemnifying party was materially prejudiced by such omission, but shall not relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, such indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of such action, in which event such defense shall be conducted by counsel chosen by such indemnifying party (or parties) and satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, and such defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of such action, such indemnifying parties will reimburse such indemnified party or parties for the reasonable fees and expenses of any counsel retained by them, as such expenses are incurred; provided, however, if the defendants (including any impleaded parties) in any such action include both the indemnified party and the indemnifying party, and counsel for the indemnified party shall have concluded, in its reasonable judgment, that there may be a conflict of interest involved in the representation by such counsel of both the indemnifying party and the indemnified party, the indemnified party or parties shall have the right to select separate counsel, satisfactory to the indemnifying party, to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to one local counsel) representing the indemnified parties who are parties to such action). Each of the Company and the several Underwriters agrees that without the other party’s prior written consent, which consent shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any claim in respect of which indemnification may be sought under the indemnification provisions of this Agreement, unless such settlement, compromise or consent (i) includes an unconditional release of such other party from all liability arising out of such claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of such other party.

     (d) If the indemnification provided for in subparagraphs (a) or (b) above is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Shares pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the

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one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions or alleged statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Shares pursuant to this Agreement (before deducting expenses) received by the Company and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Shares as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subparagraph (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subparagraph (d). The rights of contribution contained in this paragraph 12 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or the Company and shall survive delivery of the Shares. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this subparagraph (d), each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. The Underwriters’ respective obligations to contribute pursuant to this subparagraph (d) are several in proportion to the number of Shares set forth opposite their respective names in paragraph 4 hereof and not joint.

     (e) For purposes of this paragraph 12, it is understood and agreed that the “Underwriter Information” is the information provided in the                      paragraphs under “Underwriting” in the Preliminary Prospectus, the Pricing Prospectus, the Permitted Free Writing Prospectus or the Prospectus Supplement.

     13. Termination Date of this Agreement. This Agreement, or the obligations of the several Underwriters to purchase Option Shares on a date which is after the Closing Date, may be terminated by the Representative at any time prior to the Relevant Closing Date by delivering written notice thereof to the Company, if on or after the date of this Agreement but prior to such time (a) there shall have occurred any general suspension of trading in securities on the New York Stock Exchange, or there shall have been established by the New York Stock Exchange or by the Commission or by any federal or state agency or by the decision of any court any

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limitation on prices for such trading or any restrictions on the distribution of securities, or (b) there shall have occurred any new outbreak of hostilities, including, but not limited to, significant escalation of hostilities that existed prior to the date of this Agreement, or any national or international calamity or crisis, or any material adverse change in the financial markets of the United States, the effect of which outbreak, escalation, calamity, crisis or material adverse change, shall be such as to make it impracticable, in the reasonable judgment of the Representative, for the Underwriters to enforce contracts for the sale of the Shares, or (c) the Company shall have sustained a substantial loss by fire, flood, accident or other calamity which renders it impracticable, in the reasonable judgment of the Representative, to consummate the sale of the Shares and the delivery of the Shares by the several Underwriters at the initial public offering price or (d) there shall have been any downgrading or any notice of any intended or potential downgrading in the rating accorded the Company’s securities by any “nationally recognized statistical rating organization” as that term is defined by the Commission for the purposes of Securities Act Rule 436(g)(2), or any such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Shares or any of the Company’s outstanding debt, the effect of which, in the reasonable judgment of the Representative, makes it impracticable or inadvisable to consummate the sale of the Shares and the delivery of the Shares by the several Underwriters at the initial public offering price or (e) there shall have been declared, by either federal or New York authorities, a general banking moratorium. This Agreement (or such obligation to purchase Option Shares) may also be terminated at any time prior to the Relevant Closing Date if, in the reasonable judgment of the Representative, the subject matter of any amendment or supplement to the Registration Statement, the Pricing Prospectus or Prospectus (other than an amendment or supplement relating solely to the activity of any Underwriter or Underwriters) filed after the execution of this Agreement but prior to such Relevant Closing Date shall have materially impaired the marketability of the Shares. Any termination hereof pursuant to this paragraph 13 shall be without liability of any party to any other party except as otherwise provided in paragraphs 8 and 9 hereof.

     14. Miscellaneous. The validity and interpretation of this Agreement shall be governed by the laws of the State of New York. Unless otherwise specified, time of day refers to New York City time. This Agreement shall inure to the benefit of, and be binding upon, the Company, the several Underwriters, and with respect to the provisions of paragraph 12 hereof, the officers and directors and each controlling person referred to in paragraph 12 hereof, and their respective successors. Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. The term “successors” as used in this Agreement shall not include any purchaser, as such purchaser, of any of the Shares from any of the several Underwriters.

     15. Nature of Relationship. The Company acknowledges and agrees that (i) in connection with all aspects of each transaction contemplated by this Agreement, the Company and the Underwriters have an arms length business relationship that creates no fiduciary duty on the part of any party and each expressly disclaims any fiduciary relationship, (ii) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, (iii) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby

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and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate, and (iv) any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.

     16. Notices. All communications hereunder shall be in writing or by telefax and, if to the Underwriters, shall be mailed, transmitted by any standard form of telecommunication or delivered to the Representative at                                         , and if to the Company, shall be mailed or delivered to it at 410 S. Wilmington Street, Raleigh, North Carolina 27601-1748, attention of Thomas R. Sullivan, Treasurer.

     17. Counterparts. This Agreement may be simultaneously executed in counterparts, each of which when so executed shall be deemed to be an original. Such counterparts shall together constitute one and the same instrument.

     18. Defined Terms. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings assigned to them in the Registration Statement.

[Remainder of page intentionally left blank]

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     If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed duplicate hereof whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.

Very truly yours, CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.
By:
	Authorized Representative

Accepted as of the date first
above written, as Underwriter
named in, and as the Representative
of the other Underwriters named in,
Section 1 of this Agreement.

[REPRESENTATIVE]

By:
	Name:
	Title:

[Signature Page for the Preferred Stock Underwriting Agreement]

SCHEDULE I

Pricing Term Sheet

Underwriting Agreement dated                     , 20   

Representative(s):

Designation: Preferred Stock

Listing:                     

Amount:                     shares

Purchase Price: $  per share

Public Offering Price: $  per share.

Redemption Terms:                     

Settlement Date:                                         , 20   ;

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov (and more specifically, at the URL link http://sec.gov/cgi-bin/browse-edgar?company=carolina+power&CIK=&filenum=&State=&SIC=&owner=include&a ction=getcompany). Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free at 1-8[xx-xxx-xxxx].

SCHEDULE II

Pricing Disclosure Package

1)	Prospectus dated                         , 20
2)	Preliminary Prospectus Supplement dated                         , 20    (which shall be deemed to include the Incorporated Documents)
3)	Permitted Free Writing Prospectuses

a) Pricing Term Sheet attached as Schedule I hereto

SCHEDULE III

Persons Executing Lock-Up Agreements

Exhibit A

[Form of Lock-Up Agreement]

EX-12

Exhibit 12

PROGRESS ENERGY CAROLINAS, INC.
EXHIBIT NO. 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED DIVIDENDS COMBINED AND RATIO OF EARNINGS TO FIXED CHARGES

(million of dollars)
Twelve Months Ended September 30	2005			2004
Earnings, as defined:
Income before cumulative effect of change in accounting principles	$	441		$	509
Fixed charges, as below		217			205
Income taxes, as below		199			252
Total earnings, as defined	$	857		$	966
Fixed Charges, as defined:
Interest on long-term debt	$	187		$	186
Other interest		25			13
Imputed interest factor in rentals – charged principally to operating expenses		6			7
Total fixed charges, as defined	$	218		$	206
Preferred dividends, as defined	$	4		$	4
Total fixed charges and preferred dividends combined	$	222		$	210
Income Taxes:
Income tax expense	$	204		$	251
Included in AFUDC – deferred taxes in book depreciation		(5	)		(5	)
Total income taxes	$	199		$	252
Ratio of Earnings to Fixed Charges		3.93			4.69
Ratio of Earnings to Fixed Charges and Preferred Dividends Combined		3.86			4.60

(million of dollars)
Years Ended December 31	2004			2003			2002			2001			2000
Earnings, as defined:
Income before cumulative effect of change in accounting principles	$	461		$	505		$	431		$	364		$	461
Fixed charges, as below		202			205			224			264			246
Income taxes, as below		234			233			199			215			282
Total earnings, as defined	$	897		$	943		$	854		$	843		$	989
Fixed Charges, as defined:
Interest on long-term debt	$	183		$	187		$	205		$	246		$	224
Other interest		12			11			12			11			17
Imputed interest factor in rentals – charged principally to operating expenses		7			7			7			7			5
Total fixed charges, as defined	$	202		$	205		$	224		$	264		$	246
Preferred dividends, as defined	$	5		$	4		$	4		$	5		$	5
Total fixed charges and preferred dividends combined	$	207		$	209		$	228		$	269		$	251
Income Taxes:
Income tax expense	$	239		$	241		$	207		$	223		$	290
Included in AFUDC – deferred taxes in book depreciation		(5	)		(8	)		(8	)		(8	)		(8	)
Total income taxes	$	234		$	233		$	199		$	215		$	282
Ratio of Earnings to Fixed Charges		4.44			4.60			3.81			3.19			4.02
Ratio of Earnings to Fixed Charges and Preferred Dividends Combined		4.33			4.51			3.75			3.13			3.94

EX-23.A

Exhibit 23(a)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement No. 333-126966 on Form S-3 of our reports dated March 7, 2005, relating to the consolidated financial statements and financial statement schedule of Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (PEC) (which report on the consolidated financial statements expresses an unqualified opinion and includes an explanatory paragraph concerning the adoption of new accounting principles in 2003), appearing in the Annual Report on Form 10-K of PEC for the year ended December 31, 2004 and to the reference to us under the heading “Experts” in the Prospectus, which is part of this Registration Statement.

/s/ Deloitte & Touche LLP

Raleigh, North Carolina
December 22, 2005